In the early days of the COVID-19, Altimune, an American biotechnology company, had planned to develop COVID-19 vaccine early, but it was finally out ahead of schedule. And now, Altimune, who is trying to catch up with industry trends in the new track of weight loss pills, seems to still be able to replicate that unforgettable past
On Tuesday, after the latest short selling report from short selling firm Kerrisdale Capital Management was released, the stock price of the biotech company plummeted nearly 19% overnight.
Kerrisdale stated in the report, "We are shorting Altimune's stock. The company is a pharmaceutical company that develops GLP-1 receptor agonists in hopes of launching a drug to get a share of the booming weight loss market."
Last December, Altimune released positive Phase II results for the GLP-1R/GCGR dual agonist Pemvidutide. The results showed that patients who took 2.4 milligrams of Pemvidutide per week lost 15.6% of their weight after 48 weeks. Since the release of the results of this experiment, Altimune's stock price has more than doubled, as people hope that the company can establish partnerships with large pharmaceutical companies, and even be acquired, thereby breaking the pattern of only "Norris" competition in the weight loss drug market.
However, Kerrisdale argued in his short selling report that after conducting in-depth research on Altimune's data, it was found that this drug has little opportunity to compete with approved existing drugs or other GLP-1 drugs undergoing clinical trials.
Kerrisdale refers to the GLP-1 drugs currently promoted by Novo Nordisk and Lilly.
Kerrisdale stated that potential compliance partners would not be willing to spend billions of dollars and years of trials chasing a product that is clearly stuck in a dead end - even though Pemvidutide can indeed reduce weight by 15.6%, it is still not good enough - Ozempic and Mounjaro (similar drugs from Novo Nordisk and Lilly) have better weight loss effects on the same basis and can also control blood sugar (Pemvidutide cannot).
Kerrisdale pointed out that given the extensive clinical research and doctors' extensive experience in using Ozempic and Mounjaro, this alone is enough to shatter Pemvidutide's hopes. And even worse, Pemvidutide's tolerance is very poor.
It is worth mentioning that Kerridale's recent series of short selling views and actions have been proven to be quite visionary afterwards.
Since its short selling report was released in October last year, airborne taxi company Joby Aviation has fallen by over 8%, while marijuana producer tillay Brands has fallen by about 31% since becoming a Kerrisdale target in September last year.
At the early stage of the COVID-19, Altimune tried to develop a nasal Covid-19 vaccine, but the company stopped the test in June 2021. Kerrisdale currently claims that Altimune's weight loss drug program will also face a similar fate.
Regarding this, Evercore ISI analyst Lisa Bayko said of Altimune's vaccine project, "They have tried it, but it was not successful, but I don't think they are necessarily fooling everyone. This just means that not everything always develops as planned."
From the stock price trend, Altimune has turned into a decline so far this year after a nearly 19% drop overnight. However, since the stock price was hyped up in December last year, its increase has still exceeded 200%.
Many Wall Street professionals have clearly been optimistic about Altimune's prospects in recent months. Among the seven analysts tracked in the industry, six rated the stock as a buy, and none believed it needed to be sold. The average target price for the stock over the next 12 months is $22, which is approximately 150% higher than the current stock price.
Citizens JMP analyst Jonathan Wollebon still recommends investors to buy on dips. He said, "We believe that once people carefully study this and find that there is not much meat to gnaw on bones, stocks will resume rising."