One of the hottest themes in the pharmaceutical industry right now is weight loss. Medications specifically approved for weight loss, such as Wegovy and Zepbound, are taking the industry by storm.
In addition, Ozempic, Rybelsus, and Mounjaro -- though not specifically approved for obesity care by the Food and Drug Administration (FDA) -- are used to treat diabetes. However, losing weight is often a by-product of taking these drugs.
And yet, just two companies, Novo Nordisk and Eli Lilly, develop these drugs. Behemoths such as Pfizer have attempted to enter the weight loss market, but have experienced setbacks trying to penetrate the existing competition.
Earlier this year, a clinical-stage pharma company called Viking Therapeutics made headlines after a successful phase 2 trial for its obesity candidate, VK2735. Unsurprisingly, shares in Viking surged as high as 408% on the news.
While Viking's prospects are encouraging, another development-stage company has caught my attention. Altimmune (ALT +5.65%) is developing a glucagon-like peptide 1 (GLP-1) weight loss drug, similar to those offered by Lilly and Novo Nordisk. However, Altimmune's candidate has a major differentiator.
Let's dig into what Altimmune is up to, and assess if now is a good opportunity to scoop up some shares.
NASDAQ: ALT
Key Data Points
What are the risks of weight loss?
As such, Ozempic or similar products have some side effects. Most notably, losing muscle mass could be an unintended consequence of taking these GLP-1s. The reason is that medications such as Ozempic or Mounjaro effectively curb appetite. As a result, patients often consume fewer calories and may unintentionally miss out on necessary vitamins and minerals.
Earlier this year, Abbott Laboratories began marketing a new protein shake called Protality to patients experiencing muscle mass reduction as a result of GLP-1 medications. Although Abbott's protein shake could be an encouraging supplement to medications like Ozempic or Mounjaro, Altimmune's latest breakthrough may be a suitable option for patients experiencing muscle mass reduction.
Image source: Getty Images.
What makes Altimmune different?
In late March, Altimmune published data from a phase 2 trial for its weight loss candidate Pemvidutide. According to the study, roughly 75% of enrolled patients experienced weight loss from body fat tissue. The remaining 25% experienced weight loss from lean mass.
In layman's terms, the study shows that the overwhelming majority of patients testing Pemvidutide are losing weight while preserving muscle mass. This is a major differentiator from existing products on the market, and could pose a threat to leaders such as Eli Lilly and Novo Nordisk -- should Altimmune gain FDA approval at some point.
What are some potential outcomes?
One of the most obvious outcomes is that Altimmune could end up as an acquisition candidate. Even with the stock up over 100% in the last year, the company's market cap is only $630 million. By comparison, Viking's market cap is hovering near $8 billion. Given the company is pre-revenue and yet to be approved for any medications, Viking's valuation seems quite rich compared to Altimmune.
Since many large pharmaceutical companies are looking to make inroads in the weight loss space, Altimmune represents both a fast and relatively inexpensive way to enter the market. While this is a possible outcome, I see it as unlikely for now.
Altimmune is still a development-stage business, and there is no guarantee that Pemvidutide will ever come to market -- despite its current momentum and encouraging prospects.
I think the more likely scenario is for Altimmune to pursue a phase 3 trial for Pemvidutide. If successful, it'll be interesting to see how commercialization effects Novo Nordisk and Eli Lilly.
With shares down 20% this year, investors may want to keep their eyes on Altimmune. Pemvidutide definitely appears to have a major differentiator from the competition, and one that is beneficiary for patients taking existing leading obesity medications.
But for now, Altimmune remains a fairly speculative investment, and it could be years before Pemvidutide comes to market. I think investors are better off monitoring the company's progress over other clinical-stage drug developers before pouring into the stock.
