Why the ATOS Stock Rally Might End Sooner Than You Think

ATOS stock is quickly becoming one of the most talked-about stocks on the market. But does that make it a buying opportunity? We're here to answer that exact question.

Atossa Therapeutics Inc. (NASDAQ: ATOS) is a clinical-stage biotech company working to discover and develop innovative medicines in oncology and infectious disease with a current focus on breast cancer and COVID-19.

But it's likely you know about the stock from its incredible rally. ATOS is up over 170% in the last month and more than 800% over the past year.

If you're just now hearing about ATOS, you might be wondering if this is still an opportunity worth jumping on. Or maybe you've already invested and want to know if this rally can go higher.

You're in the right place.

Here's everything you need to know about ATOS, including whether it's a buy today...

Why ATOS Stock Is Surging Higher

It has been a perfect storm of good news for this stock. The shares finally broke above $5 to get out of the land of penny stocks for the first time this month.

Atossa is also going to be included in both the Russel 2000 and 3000 indexes. That was effective on Monday and had attracted buyers to the stock last week.

Even better, the company has found success with its drug development.

It also announced last week that it got approval from the Swedish Medical Product Agency to initiate a phase 2 clinical study of its oral Endoxifen for the reduction of mammographic breast density.

That followed on the heel of the announcement of the latest phase 2 drug trial results here in the United States. Atossa reported that Ki-67, a common measure of tumor cell activity, was reduced by 65% thanks to the use of oral Endoxifen. There were no significant side effects reported and no changes in vital signs. The drug appears to be effective, safe, and well tolerated by patients.

Atossa will now look to move the drug forward into the next phase of testing. The company has $138 million cash available to get the drug closer to the finish line.

Atossa is also working on several COVID-19 treatments including AT-H201 Inhalation Therapy that it hopes can be used to improve compromised lung function for moderate to severely ill, hospitalized COVID-19 patients. The active components in the drug were found to be four times more potent than Remdesivir and at least 20 times more potent than Hydroxychloroquine.

AT-301 COVID-19 nasal spray is an at-home treatment for COVID-19 that Atossa hopes will reduce symptoms of COVID-19 and slow the infection rate allowing patients' immune system to more effectively fight COVID-19.

Both of these drugs are in the very early stage of development.

As you can imagine, all the good news has investors throwing cash at the stock, which has driven up its share price.

Given all-powerful momentum of the last month, investors are right to wonder if they should join in.

Should You Buy ATOS Stock?

Of course not.

While phase 2 results are encouraging, it's not guaranteed that the drug will pass through the much more extensive and expensive phase 3 trials and gain approval.

This is a clinical stage company that is years away from actually achieving revenue. Of course, achieving revenue is entirely dependent on drugs receiving final approval and Atossa finding marketing partners to get the drug into the marketplace.

We could get a lot more excited about the stock if insiders were expressing their confidence in the future with actual cash. One of the best indicators we have found over the year of clinical stage biotechs getting ready to make a run is insider buying.

Insiders have a lot of stock options but own less than 4% of the company. Most of that is in the hands of the CEO and CFO.

We also do not see any large biotech or pharmaceutical companies that own the stock or are working with the company in drug development. It does have a research agreement with Dana-Farber Cancer Institute to work on potential breast cancer treatments, but that is in the very early stages of development.

The most bullish analyst on Wall Street has a price target of $7 for the stock. Atossa shares surpassed that mark last week.

None of the most successful biotech funds have a position in the stock as of the end of the first quarter.

Atossa Therapeutics has some interesting drugs under development, and the recent news has been positive. That appears to be more than priced into the stock at the current price. Assigning a value of over $1 billion to a company that is probably two years away from producing significant revenue if everything goes perfectly strikes us as excessively speculative.

Heavy insider buying or significant buying by institutions known to be successful investors in clinical stage biotech companies would make us reconsider our position.

Three Stocks We Like a Lot More Than ATOS

Chief Investment Strategist Shah Gilani just held his first-ever stock-picking lightning round event - running through more than 50 stocks to tell you if they are stocks to buy or stocks to sell.

Dozens are overpriced and overhyped - you should ditch them ASAP.

But Shah says THESE three stocks are "screaming buys."

All three are trading at a discount... they're under-the-radar companies most people haven't even heard of... and they have massive tailwinds ready to send their share prices into the stratosphere.

To get the company names, tickers, and price targets for Shah's picks, go here now.

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