INSTITUTIONAL RESEARCH Biotechnology COMPANY UPDATE Member FINRA/SIPC

Transcription

1 INSTITUTIONAL RESEARCH Biotechnology COMPANY UPDATE Member FINRA/SIPC Toll Free: North Federal Highway - Suite 500 Boca Raton, FL Altimmune (Nasdaq/ALT) BUY Investment Highlights R&D Progress on NasoVAX, NasoShield Altimmune is developing products to stimulate robust and durable immune responses for the prevention and treatment of disease. 1) Altimmune recently announced additional positive data from its Phase 2a study of NasoVAX, the Company s intranasal influenza vaccine. Subjects in the Phase 2a trial were monitored for an additional six months after vaccination to assess the durability of the antibody response, and these new NasoVAX data demonstrated three additional responses: 1) a durable, dose dependent protective immune response; 2) significant mucosal immune response one month after vaccination compared to both placebo and Sanofi s (SNY, Not Rated) Fluzone; and 3) a continued clean safety profile. An influenza specific mucosal antibody (IgA) response was demonstrated at all dose levels of NasoVAX, with the highest responses in the highest dose groups (particularly the two highest dosages), while Fluzone and placebo groups demonstrated no response. Serum antibody levels for NasoVAX were very stable through at least six months, unlike Fluzone where antibody levels declined by over 50% during that time period, a key attribute given that flu season typically runs from October through March, or longer in certain latitudes and in some years. Next step for Altimmune for NasoVAX will be to initiate a quadrivalent formulation Phase 2b trial addressing a wider range of healthy, elderly adults (next year) and also a dosage confirmation trial timed to overlap the 2019 and 2020 influenza season. Altimmune will also present the full-data set from the NasoVAX Phase 2 trial at the upcoming IDWeek in San Francisco in early October. 2) In other pipeline-related activity, Altimmune recently announced initial data from its Phase 1 study of NasoShield as a potential anthrax vaccine. The 145-healthy, five-cohort volunteer study assessed the safety and immunogenicity of a single intranasal dose of NasoShield at four dose cohort levels, with an additional cohort receiving a repeated dose of NasoShield at Day 21. Based on initial data from the single-dose cohorts, NasoShield was safe and well-tolerated with no serious adverse events, although limited immunogenicity was also evident, possibly indicating that like other September 18, 2018 Robert M. Wasserman Senior Research Analyst rwasserman@dawsonjames.com Current Price $4.27 Price Target $10.00 Estimates F2016A F2017A F2018E Revenues($000s) $3,236 $10,738 $11,148 1Q March ,691 A 2Q June 746 3,038 2,417 A 3Q September 901 4,592 2,520 E 4Q December 688 2,809 3,520 E EPS (diluted) ($49.72) ($120.32) ($21.87) 1Q December (21.30) (20.37) (7.54) A 2Q March (7.50) (7.73) (10.35) A 3Q June (21.30) (61.57) (3.60) E 4Q September 0.38 (27.26) (2.80) E EBITDA/Share ($43.37) ($131.39) ($22.59) EV/EBITDA (x) N/A N/A N/A Stock Data 52-Week Range $4.50-$94.80 Shares Outstanding (mil.) 1.3 Market Capitalization (mil.) $5.6 Enterprise Value (mil.) $2.1 Debt to Capital (6/18) 3.5% Book Value/Share (6/18) $27.55 Price/Book 0.2 x Average Trading Volume (3-month) 33,000 Insider Ownership 14.3% Institutional Ownership 1.7% Short interest 74,000 Dividend / Yield $0.00/0.0% Price target and ratings changes over the past 3 yrs: Initiated - May 29, Buy - Price Target $2.00 Updated for reverse split Buy September 19, 2018 Price Target $10 Please find Important Disclosures beginning on Page 5. Page 1 of 6

2 anthrax vaccines, NasoShield may require more than one dose. Altimmune believes that NasoShield s ease of nasal delivery, no need for an adjuvant, ease of storage, and recent evidence of better tolerance than Emergent s (EBS, NR) BioThrax will prove attractive to the US Biomedical Advanced Research and Development Authority (BARDA), and that the additional annual funding periods will be released by the agency (for a Phase 2 study) as part of the three years and $105 million remaining on the original 5-year contract. 3) Altimmune has also been busy on the corporate side of the ledger in recent months, including bringing on a new Chief Business Officer, Jose Ochoa, formerly of IDT Biologika and Emergent BioSolutions, and appointing current board member Dr. Mitchel Sayare as Board Chairman. The Company also recently completed a 1-30 reverse split of its shares and announced restructuring agreements with substantially all (97%) of the remaining Series B investors, converting the Series B shares into common and terminating all outstanding warrants. In the Company s recent Q2/18 earnings report, Altimmune recorded revenues of $2.4 million as compared to $3.0 million in the prior year period, and a net loss of $9.8 million or ($0.34) per share, which included non-cash charges of $5.2 million in the quarter. At the end of June, Altimmune had cash and equivalents of approximately $4.8 million in hand, with an additional $1.1 million in cash received subsequent to the end of the quarter related to UK research and development tax credits. Depending on the timing of pending BARDA contract funding this year, Altimmune may need to raise additional capital before the end of this year, and the Company filed a public registration statement in July in anticipation of a potential equity offering. Conclusion Following a recent name change and merger just last year, Altimmune shares have lagged others in its industry, perhaps due to the investors lack of familiarity with the new company and its additional vaccine and therapeutic programs. However, with a new management team and board of directors, a number of clinical programs showing progress so far this year, and a solid balance sheet backed by several significant government funding awards, we believe both long-term value-oriented and short-term event-focused investors will soon discover these undervalued shares, and thus, we are maintaining our BUY rating on ALT shares with a month price target of $10.00 after adjusting for a recent reverse split. (For additional information on our Stock Valuation for ALT shares, please refer to out Initiation Report dated May 29, 2018.) Risk Factors In addition to normal economic and market risk factors that impact most equities and the common risks shared by Altimmune with other companies in the industry, we believe an investment in ALT involves the following risks: Reliance on key management At present, ALT relies on several key members of its management team and board of directors who have been in these key positions for an extended period of time. Should one or more of these key executives leave the Company, ALT could find it difficult to replace their long-standing knowledge of operations and industry expertise. In addition, the Company is currently seeking to appoint a permanent Chief Financial Officer, and there can be no assurance that this will occur in the near future. Reliance on future collaborations and partnerships To date, ALT has signed several large development contracts in the vaccine area, and is also seeking potential development collaborations and/or partnerships for pipeline R&D programs. Oftentimes in the case of government contracts, partnerships or joint ventures, certain factors related to research and/or new product development may be determined by third parties and out of the control of Company management. Altimmune 9/18/2018 Page 2 of 6

3 Limited stock liquidity Trading volume in ALT on the Nasdaq exchange is comparatively light as these shares have a relatively limited history of trading compared with other healthcare stocks. As such, news regarding ALT, its target market, partners and/or competitors could lead to significant volatility in the stock price. Competitive markets The Company and its potential collaborative partners are expected to compete in its target vaccine market with a number of companies, many of which are considerably larger than the Company. There can be no assurance that the Company and its partners will be able to successfully compete and launch new products and services into these competitive markets in the future. FDA and regulatory risks ALT is subject to regulatory review for ongoing research and development efforts, including approval and review processes of the US Food and Drug Administration and potentially other international regulatory agencies. In addition, the operation of the Company's facilities will be subject to ongoing oversight and regulation, and any negative correspondence from the FDA or other regulatory agencies in the future could have an adverse effect on the ongoing operations of the Company. Lack of historic profitability ALT has not achieved operating profitability since its founding, and according to our forecasts may not be expected to do so in the near future. Although the Company maintains adequate cash reserves at the present time, there can be no assurance the Company will not need to raise additional working capital in the future should operating losses continue. Need to defend trade secrets and other intellectual property ALT currently holds patents, exclusive patent licenses or has patent applications pending on a number of its key platform technologies and processes. The Company may be required to defend its patents or patent licenses in the US and overseas in the future, and there can be no assurance these defenses will be successful. Altimmune 9/18/2018 Page 3 of 6

4 Source: Dawson James Securities, Inc. estimates; Company documents Altimmune 9/18/2018 Page 4 of 6

5 Important Disclosures: Price Chart: Price target and ratings changes over the past 3 years: Initiated Buy - May 29, 2018 Price Target $2 Updated for reverse share split Buy September 18, 2018 Price Target $10 Dawson James Securities, Inc. (the Firm ) is a member of the Financial Industry Regulatory Authority ( FINRA ) and the Securities Investor Protection Corporation ( SIPC ). The Firm does not make a market in the securities of the subject company (s). The Firm has NOT engaged in investment banking relationships with ALT in the prior twelve months, as a manager or co-manager of a public offering and has NOT received compensation resulting from those relationships. The Firm may seek compensation for investment banking services in the future from the subject company(s). The Firm has NOT received other compensation from the subject company(s) in the last 12 months for services unrelated to the managing or co-managing of a public offering. Neither the research analyst(s) whose name appears on this report nor any member of his (their) household is an officer, director or advisory board member of these companies. The Firm and/or its directors and employees may own securities of the company(s) in this report and may increase or decrease holdings in the future. As of August 31, 2018, the Firm as a whole did not beneficially own 1% or more of any class of common equity securities of the subject company (s) of this report. The Firm, its officers, directors, analysts or employees may effect transactions in and have long or short positions in the securities (or options or warrants related to those securities) of the company(s) subject to this report. The Firm may effect transactions as principal or agent in those securities. Analysts receive no direct compensation in connection with the Firm's investment banking business. All Firm employees, including the analyst(s) responsible for preparing this report, may be eligible to receive non-product or service specific monetary bonus compensation that is based upon various factors, including total revenues of the Firm and its affiliates as well as a portion of the proceeds from a broad pool of investment vehicles consisting of components of the compensation generated by investment banking activities, including but not limited to shares of stock and/or warrants, which may or may not include the securities referenced in this report. Although the statements in this report have been obtained from and are based upon recognized statistical services, issuer reports or communications, or other sources that the Firm believes to be reliable, we cannot guarantee their accuracy. All opinions and estimates included in this report constitute the analyst s judgment as of the date of this report and are subject to change without notice. Information about valuation methods and risks can be found in the STOCK VALUATION and RISK FACTORS sections of this report. Altimmune 9/18/2018 Page 5 of 6

6 The securities of the company discussed in this report may be unsuitable for investors depending on their specific investment objectives and financial position. This report is offered for informational purposes only, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be prohibited. Additional information is available upon request. Ratings Definitions: 1) Buy: the analyst believes the price of the stock will appreciate and produce a total return of at least 20% over the next months; 2) Neutral: the analyst believes the price of the stock is fairly valued for the next months; 3) Sell: the analyst believes the price of the stock will decline by at least 20% over the next months and should be sold. The following chart reflects the range of current research report ratings for all companies followed by the analysts of the Firm. The chart also reflects the research report ratings relating to those companies for which the Firm has performed investment banking services in the last twelve months. Analyst Certification: The analyst(s) whose name appears on this research report certifies that 1) all of the views expressed in this report accurately reflect his (their) personal views about any and all of the subject securities or issuers discussed; and 2) no part of the research analyst s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this research report; and 3) all Dawson James employees, including the analyst(s) responsible for preparing this research report, may be eligible to receive non-product or service specific monetary bonus compensation that is based upon various factors, including total revenues of Dawson James and its affiliates as well as a portion of the proceeds from a broad pool of investment vehicles consisting of components of the compensation generated by investment banking activities, including but not limited to shares of stock and/or warrants, which may or may not include the securities referenced in this report. Altimmune 9/18/2018 Page 6 of 6