Eli Lilly and Novo Nordisk are two of the most important names in healthcare thanks largely to some promising weight-loss medicine of their respective portfolios. Previously 12 months, Eli Lilly has doubled in worth, whereas Novo Nordisk’s inventory is up round 50%. Those that have not invested in these shares could also be inclined to cross on them given their excessive valuations now — each are price greater than $500 billion.
There are different methods to put money into the rising weight-loss market, nonetheless. Offered that you simply’re keen to tackle some threat, one small biotech firm is displaying promise and will result in some vital returns if its efforts work out.
A weight-loss drug that might steal vital market share
By now, you might have heard of Zepbound and Wegovy, or maybe Ozempic, which is a diabetes remedy individuals have been utilizing for weight reduction. However there’s one other weight-loss drug which is not permitted but that buyers must be keeping track of: pemvidutide.
Pemvidutide is a glucagon-like peptide 1 (GLP-1) agonist which helps curb individuals’s appetites, much like how different in style weight-loss medicine work. In medical trials, it has been displaying spectacular outcomes. Sufferers misplaced a median of 15.6% of their weight throughout a 48-week trial.
However the drug is not made by Eli Lilly or Novo Nordisk. As a substitute, its developer is small-cap Altimmune (NASDAQ: ALT). The Maryland-based firm can be hoping the drug could also be a remedy for metabolic dysfunction-associated steatohepatitis (MASH), which is a kind of liver illness.
Let’s examine the place Altimmune’s efforts stand and what it might imply for buyers.
It is not a big firm, and it comes with dangers
At a market capitalization of round $570 million, Altimmune is only a fraction of the dimensions of Eli Lilly and Novo Nordisk. The a lot smaller healthcare company does additionally include vital threat. With out an permitted product in its portfolio, the corporate primarily generates income from grants and contracts it has with authorities businesses.
For buyers, because of this losses on the corporate’s backside line are extremely doubtless for the foreseeable future, and the danger of dilution (i.e., inventory choices) can be excessive. In 2023, the corporate incurred a web lack of $88.4 million on income totaling simply $426,000. Throughout the 12 months, it additionally burned by $75.8 million in money from its day-to-day operations.
However with practically $200 million in money and short-term investments on its books, the corporate is not in a dire state of affairs. Nevertheless, because the money burn continues, dilution remains to be doubtless if the corporate does not have a dependable income.
And that leaves buyers with the hope that pemvidutide obtains approval and turns into a outstanding weight-loss drug, one which may generate vital market share and be a recreation changer for the enterprise. Sadly, the drug’s encouraging outcomes got here from a part 2 trial, so it nonetheless is not on the end line.
Additionally, it is conceivable {that a} bigger healthcare firm might purchase Altimmune given its low valuation and the doubtless engaging asset it possesses.
Must you take an opportunity on Altimmune’s inventory?
Altimmune’s inventory has been struggling this 12 months, however over the previous 12 months, it stays up round 67%. It has been doing properly amid the joy surrounding GLP-1 medicine. If pemvidutide obtains approval from regulators for weight reduction, shares of Altimmune are more likely to skyrocket. If it does not get approval, after all, the outlook will look a lot worse for the inventory.
Given the encouraging trial outcomes and no vital considerations from the drug, this may very well be a calculated threat price taking. Whereas I would not recommend investing within the inventory if you’re a retiree or somebody who cannot afford or is not snug with the danger, this might make for an underrated development inventory to think about shopping for now.
Must you make investments $1,000 in Altimmune proper now?
Before you purchase inventory in Altimmune, take into account this:
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David Jagielski has no place in any of the shares talked about. The Motley Idiot recommends Novo Nordisk. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
