Dual Agonist Liver Disease Advances Will Drive A Future Multi Indication Metabolic Franchise

Catalysts

About Altimmune

Altimmune is a clinical-stage biopharmaceutical company focused on developing pemvidutide, a novel dual glucagon and GLP-1 agonist, for serious liver and metabolic diseases including MASH, AUD and ALD.

What are the underlying business or industry changes driving this perspective?

• Advancing pemvidutide toward Phase III in MASH with an in-person end of Phase II FDA meeting and imminent 48 week IMPACT data readout can accelerate the path to first regulatory approval and drive a step change in revenue potential.
• Growing clinical and regulatory acceptance of noninvasive tests and AI based biopsy reads for liver disease assessment aligns closely with pemvidutide's strong NIT dataset, which can shorten development timelines and improve risk adjusted earnings power.
• Increasing prevalence and diagnosis of metabolic liver disease and alcohol related liver conditions expands the addressable market, while Altimmune's parallel programs in MASH, AUD and ALD position pemvidutide as a multi indication franchise that can diversify and grow top line revenue.
• Early market research showing high physician intent to prescribe and encouraging payer feedback in Europe for pemvidutide's differentiated profile, including quality weight loss and lean mass preservation, supports attractive pricing power and potential for stronger long term net margins.
• Strengthening of the balance sheet through equity raises, expanded debt capacity and new shelf and ATM facilities provides the capital runway to execute late stage trials and launch preparation without excessive dilution, supporting future earnings leverage if pemvidutide is approved.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Altimmune's revenue will grow by 2155.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from -419575.0% today to 43.3% in 3 years time.
• Analysts expect earnings to reach $99.4 million (and earnings per share of $1.28) by about December 2028, up from $-83.9 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 28.2x on those 2028 earnings, up from -6.6x today. This future PE is greater than the current PE for the US Biotechs industry at 19.6x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.05%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Regulatory momentum toward noninvasive tests and AI based biopsy reads in MASH is still evolving, and regulators may ultimately require longer duration biopsy based endpoints or larger outcomes trials. This could delay pemvidutide approval, increase development costs and push out potential revenue and earnings inflection.
• The MASH and metabolic liver disease landscape is becoming increasingly competitive with GLP-1s, combination regimens and other dual or triple agonists. If pemvidutide fails to demonstrate clearly differentiated efficacy, tolerability or lean mass preservation in Phase III, pricing power and uptake could fall short of expectations, which could pressure future revenue growth and net margins.
• Altimmune remains a clinical stage company with no product revenue and is funding multiple late stage programs with equity raises, expanded debt facilities and a new shelf and ATM. As a result, any trial setback, safety signal or delay could force more dilutive financing or constrain spending, weighing on per share earnings potential and limiting balance sheet strength.
• The AUD and ALD opportunities depend on unproven Phase II programs in populations with complex behavioral, adherence and diagnostic challenges. If reductions in heavy drinking days or liver specific endpoints are not robust or durable, the multi indication franchise thesis could weaken, which could reduce long term addressable market size and associated revenue and earnings contribution.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $17.88 for Altimmune based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $28.0, and the most bearish reporting a price target of just $1.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be $229.4 million, earnings will come to $99.4 million, and it would be trading on a PE ratio of 28.2x, assuming you use a discount rate of 7.1%.
  
• Given the current share price of $5.31, the analyst price target of $17.88 is 70.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.