What happened

Shares of Altimmune (NASDAQ:ALT) dropped nearly 30% when the market opened on Tuesday. Investors are reacting to safety issues presented along with positive efficacy results for the company's lead candidate. Some of the losses have since been recovered, and the biotech stock was down 20.6% as of 10:46 a.m. EDT on Tuesday.

So what 

This morning, Altimmune revealed 12-week data from a phase 1 clinical trial with the company's lead candidate, pemvidutide, formerly known as ALT-801. This is a dual glucagon-like peptide-1 (GLP-1) receptor and glucagon receptor agonist designed to treat obesity.

Depressed investor looking at a downward sloping stock chart.

Image source: Getty Images.

The study randomized 34 volunteers to receive one of three ascending doses of pemvidutide or a placebo. On average, patients who received the mid-size pemvidutide dose lost more than 19 pounds, or around 10.3% of their body weight.

The response exhibited might be strong enough to compete with successful new weight-loss drugs such as Saxenda and Wegovy from Novo Nordisk (NYSE:NVO). Unfortunately, one of the patients experienced elevated levels of liver enzymes that quickly resolved after a pause in dosing.

Now what

One case of elevated liver enzymes might not seem like a big deal, but it would make selling this drug nearly impossible. That's because pemvidutide is intended for long-term use by people who are relatively healthy.

Having to go up against pharmaceutical giants like Novo Nordisk with a treatment that requires physicians to frequently monitor patients for elevated liver enzymes is an uphill battle Altimmune isn't cut out for. Investors can hope this was an isolated incident, but it's probably best to watch this stock from a safe distance until we have a lot more data to look at.

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