AMTI: AMTI is Underappreciated

By Brad Sorensen, CFA



Applied Molecular Transport (NASDAQ:AMTI) is clinical-stage biopharmaceutical company based in San Francisco, CA using a proprietary technology platform to design and develop a pipeline of novel and respiratory biologic product candidates to treat autoimmune, inflammatory, metabolic and other diseases.

AMTI’s technology platform aims to allow biomolecules to exploit existing natural cellular trafficking pathways to facilitate the active transport of diverse therapeutic payloads across epithelial barriers. According to information from the Cleveland Clinic, the epithelium is a type of body tissue that forms the covering on all internal and external surfaces of the human body, lines body cavities and hollow organs and is the major tissue in glands. Additionally, it’s important to note that all substances that enter or leave an organ must cross the epithelial first. Examples of epithelial barriers and a couple of those that AMTI is focusing on at the present time include the intestinal epithelium (IE) and the respiratory epithelium (RE). The company notes that upon ingestion, AMTI’s formulated oral biological therapeutics are engineered to stably transit the intestinal tract for translocation across the epithelial barrier. Also, the company’s therapeutics are designed to either interact with cells or other targets in the local intestinal tissue or to be released into the bloodstream for systemic distribution.

Biologics have been used in medical treatments for approximately four decades in a variety of diseases such as:

• Rheumatoid arthritis

• Psoriasis

• Ulcerative colitis

• Diabetes

• Cancer

Unfortunately, the current biologics have severe limitations. All current biologics require injection or infusion in order to be introduced to the human body, but that comes with potential safety issues and can cause inconvenience for the patient, which often results in treatment plans not being strictly adhered to. AMTI’s technology platform aims to avoid those issues by introducing an oral transport device that has the ability to be absorbed more directly into the area where the biologics are intended to work. More detail on how this technology works is outlined below.

As mentioned, AMTI is clinical-stage company, meaning in most cases that the company has no revenue to speak of and relies on outside financing to a great extent to continue operations. Applied Molecular Transport is no different and has repeatedly gone to the capital markets to fund the vital research going on at the company, as well as provide the funds needed to continue shepherding therapies through the onerous and laborious approval process. This report will get into the financials in more detail, but for now we’ll note that the financing process the company has undertaken has resulted in a much-improved cash position that we feel very comfortable with, but at a cost of share dilution, which we believe has contributed to the poor performance of the stock AMTI over the past year. However, we also believe that the punishment incurred by AMTI is overdone and the stock as constituted at the present time present a potentially attractive investment possibility for those with a higher risk tolerance.

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