Shares of Seattle, Washington-based Atossa Therapeutics (ATOS) have been on a tear this year, at one point up nine-fold from their early-January share price. However, the stock has come down quite a bit in the last couple of weeks, falling 36% from its late-June high of more than $8 a share.
But that’s okay, says Maxim analyst Jason McCarthy: Not only did the decline come in response to no particular bad news. Rather, momentum investors may simply have cashed out their profits after the stock was added to the Russell 2000 and Russell 3000 Indexes on June 28. The new and improved stock price may also make Atossa stock an even better bargain today.
For those not familiar with the company, Atossa is a clinical-stage biopharmaceutical company that has historically focused its efforts researching oncology treatments and infectious diseases. In recent months, of course, the infectious disease to beat has been COVID-19 — and as it turns out, that’s one of the biggest reasons McCarthy likes the stock.
On Wednesday, Atossa announced that Australia’s Human Research Ethics Committee has granted it permission to begin a clinical study of its AT-H201 inhalation therapy for “moderately to severely-ill hospitalized COVID-19 patients and for ‘long-haul’ patients with post-infection pulmonary disease.”
Although many countries in the West have made significant progress vaccinating their populations against the novel coronavirus, Atossa CEO Dr. Steven Quay notes that “many [other] regions reporting low vaccination rates combined with new SARS-CoV-2 variants [such as the much-publicized delta variant] proving more infectious and more deadly” means that, globally, COVID-19 remains “an urgent health crisis.” To meet this crisis, the world needs not just vaccines, but also therapies to treat those who have already contracted the disease. Accordingly, Atossa is developing AT-H201 for use in treating moderately ill COVID-19 patients, of which “up to one third of hospitalized patients have pulmonary function changes 60 days or more after recovering from COVID.”
Utilizing a combination of two other drugs already approved by the United States Food and Drug Administration (the blood thinner Heparin and the anti-inflammatory N-acetylcysteine), Atossa plans to use AT-H201 to treat a group of 60 mixed healthy and moderately-ill hospitalized COVID-19 patients in a Phase 1/2a placebo-controlled study. Heading into the study, Atossa noted that it believes the drugs being used in combination to form AT-H201 may be as much as “four times more potent” than Gilead Sciences’ Remdesivir coronavirus treatment, and “at least 20 times more potent” than the generic malarial medicine Hydroxychloroquine.
McCarthy, too, thinks the therapy holds promise, calling the combination “intriguing”, and observing that N-acetylcysteine has been used in treating COVID patients already, while adding a blood thinner such as Heparin “could have significant impacts on disease.”
Added to the prospects for the company’s endoxifen therapy used for treating breast cancer, McCarthy sees AT-H201 as only making Atossa more attractive as an investment, and rates the stock “buy” with a $7 target price that implies as much as 26% from Thursday’s closing price. (To watch McCarthy’s track record, click here)
Overall, only two analysts have weighed in on ATOS shares, but both agree that this is a stock to buy, making the Moderate Buy consensus rating unanimous. The stock is priced at $5.33 and the average price target of $7.50 suggests ~35% upside over the 12 months ahead. (See ATOS stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.