Investors should buy biopharma stock Altimmune as it can double from here depending on the success of a new obesity drug, according to Goldman Sachs. Analyst Corinne Jenkins initiated coverage of Altimmune with a buy rating, saying she strongly expects a study on pemvidutide as a treatment for obesity will yield positive results. “We take a positive view on the probability of a successful outcome for the Ph2 MOMENTUM study of ALT’s lead asset, pemvidutide, in patients with obesity based on our assessment of the clinical data and a proprietary logistic growth model,” Jenkins wrote in a Wednesday note. “A positive outcome from this trial provides proof-of-concept for pemvidutide in obesity, unlocking a significant commercial opportunity for the agent where we also see a high degree of strategic interest in clinically proven, Ph3-ready candidates,” Jenkins added. Altimmune, which announced in April it started a 48-week trial for the treatment, is not the only biopharmaceutical company focusing on developing drugs for obesity. Other large, notable players include Novo Nordisk A/S and Eli Lilly . However, the analyst expects that the growing obesity market is not a “zero-sum game” and has niches for new players. “We believe that cardiovascular and lipid benefits conferred by pemvidutide will allow ALT to earn meaningful market share and blockbuster revenues,” Jenkins wrote. The analyst expects further studies on the pemvidutide’s treatment on other diseases could also help differentiate the drug. “Beyond obesity, we note incremental read-outs in NASH and Type 2 Diabetes over the next six months which will build out the profile of pemvidutide across metabolic diseases, which we see as the key to differentiation across an emerging competitive landscape,” Jenkins wrote. Shares of Altimmune are up 8% this year, but the analyst expects they’ll advance further. Her $20 price target implies roughly 101% upside from Wednesday’s closing price. The stock is up more than 4% in Thursday premarket trading. —CNBC’s Michael Bloom contributed to this report.
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