We came across a bullish thesis on Atea Pharmaceuticals, Inc. (AVIR) on Substack by Turtles Research. In this article, we will summarize the bulls’ thesis on AVIR. Atea Pharmaceuticals, Inc. (AVIR)’s share was trading at $3.15 as of March 20th.
A clinical researcher in a lab examining a new biopharmaceutical product.
Atea Pharmaceuticals (AVIR) is at a critical juncture, with three activist investors—BML, Tang, and Bradley L. Radoff—pushing for change. These investors, who collectively own nearly 20% of shares, have openly criticized management, highlighting concerns over capital allocation and strategic direction. Their pressure coincides with the company’s recent exploration of strategic alternatives, announced just two months ago. AVIR holds approximately $5.3 per share in net cash but is burning around $1.2 per share annually, making capital efficiency a primary concern. With three of seven board seats up for election this year and two more next year, activists are well-positioned to influence the company’s future.
AVIR’s main asset is an HCV antiviral currently advancing into Phase III trials, though its development history is mixed. The company previously had a COVID-19 candidate in late-stage trials, which was ultimately discontinued, leaving HCV as its primary pipeline prospect. The uncertainty around securing a commercial partner for this program plays a crucial role in determining AVIR’s fate. If no partnership emerges, the company risks continued cash burn and increased activist pressure, possibly leading to an attempt to replace the CEO, who owns 7% of shares. A more favorable outcome would be securing a partner, which would provide a cash injection, de-risking the program and likely boosting the stock.
The most compelling scenario involves selling or discontinuing the HCV program, leading to a potential liquidation or company sale, which could drive a 50-70% upside, likely materializing in 2025. Alternatively, a reverse merger could occur instead of liquidation, still resulting in a significant stock re-rating given the current discount to net cash. Additionally, a headcount reduction seems probable following the COVID-19 program’s discontinuation. With multiple catalysts in play and activists driving change, AVIR presents an intriguing investment opportunity with a favorable risk/reward profile.
Atea Pharmaceuticals, Inc. (AVIR) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held AVIR at the end of the fourth quarter which was 13 in the previous quarter. While we acknowledge the risk and potential of AVIR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AVIR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.