Shares of Atossa Therapeutics (ATOS) have done what shares of most companies in the hunt for coronavirus solutions have done in 2020 – appreciate. Since the turn of the year, there has been 171% of upside for the Seattle-based biotech firm.
Despite the impressive gains, the micro-cap still has a market cap of only $39 million. Going by his revised outlook for Atossa, Maxim’s 5-star analyst Jason McCarthy believes the stock remains seriously undervalued.
McCarthy recently doubled his price target from $4 to $8. The implication for investors? Upside of a very hefty 119%. There’s no change to McCarthy’s rating, which remains a Buy. (To watch McCarthy’s track record, click here)
Along with the company’s core breast cancer and mammographic breast density programs, McCarthy adds recent developments in Atossa’s battle against COVID-19 as possible catalysts to drive shares even higher.
Atossa already has one COVID-19 treatment in development – AT-H201 (HOPE), for which it announced positive in vitro data in May (the drug inhibited SARS-CoV-2 from infecting VERO cells in laboratory culture). Atossa is currently awaiting FDA and IRB (institutional review board) approval to move forward with the AT-H201 HOPE study.
But last week, Atossa announcedpositive results from an in vitro study of another COVID-19 drug candidate, its nasal spray AT-301. As with AT-H201, preliminary data revealed that AT-301 successfully prevented SARS-CoV-2 infection of VERO cells.
The company has now partnered with Australia based Avance Clinical, to go ahead with a clinical trial expected to begin this quarter.
While AT-H201 focuses on severely ill patients who need mechanical ventilation, AT-301 is being developed for use in people who have yet to exhibit any symptoms but have been tested positive for COVID-19.
Although it is still early days, McCarthy believes both treatments now merit inclusion in his Atossa model.
The analyst said, “We have factored in both AT-H201 and AT-301 for COVID-19. Considering the early development stage of both assets and the uncertainty in the COVID-19 therapeutic environment, we apply a higher risk adjustment, 90%, for both AT-H201 and AT-301. Furthermore, we assume both AT-H201 and AT-301 could obtain EUA approval for healthcare workers in 2021 and 2022 respectively, followed by approval for the general population in 2022 and 2023.”
While in the long term, neither treatment can probably replace the need for a vaccine, both can have a part to play until a viable solution is bought to market.
“These candidates, while early stage,” McCarthy said, “Could offer a more near-term solution while progress continues to be made on the vaccine front by multiple companies. A vaccine for the general population could still be 12-18+ months away.”
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