This is the first time I’m writing about Atossa Therapeutics (NASDAQ:ATOS) stock and in doing my research, I felt like the company’s story was one I heard before.
There is a saying that history doesn’t repeat itself, but it frequently rhymes, and the price movement in ATOS stock reminds me of another biotech. That other company is Ocugen (NASDAQ:OCGN).
In 2021, ATOS stock is up 252%. In that same period, OCGN stock is up 149%. Both stocks have been the focus of Reddit traders at different times, and both companies are pre-revenue companies. That is, neither has brought a product to market.
One reason for the parallel performance of both companies’ stocks is that each is making a pivot to a relevant position in the ongoing fight against Covid-19.
As investors discovered last year, any company that had any potential involvement in the race to provide a therapeutic treatment or vaccine for Covid-19 was handsomely rewarded. This occurred regardless of how likely their programs were to succeed.
However, many of these companies have seen a sharp pullback in their stocks since Covid-19 vaccines became available via Emergency Use Authorizations (EUAs) from the U.S. Food & Drug Administration (FDA).
It seems the more the medical community learns about Covid-19, the more they realize they don’t know. That’s not a criticism; it’s part of the scientific process.
It does seem that the novel coronavirus will become something that our world will be living with in some form or fashion for years to come.
A Closer Look at ATOS
This is where Atossa comes in. The company has two Covid-19 programs in development.
Neither one will be available in the short term. However, the one that is closest to approval is its AT-301 Covid-19 nasal spray. The drug is created using a proprietary formula and is intended for in-home use immediately after diagnosis in patients who do not yet have symptoms that are severe enough to be hospitalized.
The spray is being tested as a way to relieve symptoms and slow the infection rate until the individual’s immune system can effectively fight the virus.
In the company’s own write-up about AT-301 it states that the goal of AT-301 was to be a potential “bridge to the vaccine.” Of course with three vaccines already in widespread use (and potentially more on the way), it calls into question the available market.
The more ambitious of the company’s treatments is what Atossa calls its COVID-19 HOPE program. This is a program that combines two drugs that have been previously approved by the FDA as a treatment for other diseases.
The goal is that this therapy would improve lung function and reduce the time that Covid-19 patients are on ventilators.
I would encourage you to look at the company’s website for their description of what this therapy (called AT-H201) is designed to do. But suffice it to say that the surge in Covid-19 hospitalizations due to the Delta variant is making this therapy more relevant.
Avoid ATOS Stock for Now
Atossa Therapeutics is a pre-revenue company. This means that the company has to find other ways to pay the bills. In the case of Atossa, as it is with many small-cap biotechs, the answer is to issue more shares.
As other InvestorPlace contributors have written, the company is scheduled to hold a special meeting in September to approve the issuance of new shares to raise funds for operations.
As with Ocugen, there may come a day when Atossa Therapeutics develops drugs that will allow it to generate revenue. Based on where those drugs are in the company’s pipeline, that day is not today. Nor is it tomorrow.
I know that waiting for Atossa generate revenue may not put you on the ground floor for superior gains. But the opportunity cost of holding ATOS stock is simply too much for many investors to bear. If you must buy the stock at least wait until after the meeting in September.
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On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.
