We are short shares of Altimmune Inc (ALT), a pharmaceutical company developing a GLP-1 agonist, hoping to field a drug that might grab a slice of the booming weight-loss market. In December, Altimmune reported that patients on 2.4mg/week of its pemvidutide lost 15.6% of their weight at the end of 48 weeks. Since that release, Altimmune’s stock has more than tripled on the hopes that a big-pharma partnership, or even acquisition, will follow. But investors are in for a rude awakening: a deeper examination of Altimmune’s data reveals a drug with little chance of competing against either the approved incumbents or the other GLP-1 agonists progressing through clinical trials. We don’t think legitimate prospective partners want to spend hundreds of millions of dollars and years of trials pursuing an obvious dead end.

Even if pemvidutide did result in 15.6% weight-loss, that’s not good enough. Both semaglutide and tirzepatide (Ozempic and Mounjaro) have demonstrated superior weight-loss on a comparable basis, with the added benefit of controlling blood-sugar (which pemvidutide does not). Given the mountain of clinical studies and physician experience with these two drugs, that alone would be enough to dash the pemvidutide hope. But it gets worse: pemvidutide’s tolerability is atrocious. Despite conducting a trial that offered free and unfettered weight-loss medication amidst the Ozempic social frenzy, a third of pemvidutide trial participants – and 42% of patients taking the 2.4mg dose – discontinued treatment. That bodes ill for the drug’s commercial prospects, but it also has dire implications for the drug’s looming phase-3 trial. The FDA requires phase-3 weight-loss results to include patients who discontinue treatment. For semaglutide and tirzepatide, the 15% of patients who stopped the drug in phase-3 impacted the headline weight-loss result by about 2%. If pemvidutide trial participants discontinue at the rate they did in phase-2 – and we see no reason why they won’t – that 15.6% will end up closer to a 10% headline weight-loss number. At that level of effectiveness, the drug is toast.

Meanwhile, the pharmaceutical industry has dramatically geared up its R&D effort. Over two dozen weight-loss drugs are in the pipeline, including oral formulations of the currently approved drugs as well as novel multi-mechanism compounds that have demonstrated unique characteristics such as better tolerability, improved weight-loss durability, and substantially greater weight-loss. The drugs are being developed by large pharmaceuticals with the vision and capital necessary to secure a piece of the highly competitive market. Against them, Altimmune’s inferior compound stands no chance.

The company is headed by CEO Vipin Garg, who spent two decades raising $500 million for two small-cap biotech companies that ran into the ground under his watch before coming to Altimmune and exploiting the COVID pandemic to raise $200 million in equity under the guise of a vaccine program that never made it out of phase-1. Joining him in the C-suite are CFO Rich Eisenstadt, who’s been with Garg at his two prior failures, and CMO Scott Harris, who has an entertainingly checkered past raising capital for drugs that already failed. The odds of this crew getting an edge over Novo Nordisk or Eli Lilly – with an inferior and intolerable drug – are slim.

Read our full report here.