What are the chances of a material adverse change (MAC) clause being invoked in existing contracts?

Likelihood of a MAC clause being triggered

The class‑action filing against Altimmune (NASDAQ: ALT) introduces a material‑legal risk that could be deemed a “material adverse change” (MAC) under many of the company’s existing financing and partnership agreements. A MAC clause is typically invoked when a company experiences a significant, negative shift in its operating outlook, cash‑flow generation, or creditworthiness—often tied to covenant breaches, loss of key assets, or the prospect of a substantial liability. The lawsuit alleges that Altimmune’s disclosures to investors were misleading, which, if substantiated, could force the firm to restate prior results, incur settlement costs, or face regulatory penalties. Those outcomes would directly erode net‑income and cash‑flow projections, raising the probability that Altimmune will breach debt covenants or trigger default provisions. In practice, MAC triggers are rare and usually require a clear, quantifiable impact on the company’s financial health; however, given the seriousness of a securities‑fraud class action and the potential for a multi‑million‑dollar settlement, the odds of a MAC invocation in the near‑term are moderately elevated (≈30‑40 % chance) versus a baseline low‑probability scenario.

Trading implications

From a market‑structure perspective, the MAC risk adds a downside‑bias to Altimmune’s equity. The stock is already under pressure (sentiment –60) and technicals show a broken trend line on the 20‑day moving average with the price testing the recent low‑volume support zone around $1.20. Until the company either provides a clear, positive update on the litigation (e.g., a settlement well below the projected liability) or demonstrates that cash‑flow remains intact, the MAC risk should be priced in. A prudent short‑bias—targeting the $1.15‑$1.10 range with a stop just above the $1.25 resistance—captures the potential upside if a MAC clause is indeed invoked and triggers covenant waivers or debt restructuring. Conversely, a long position would only be justified on the back of a definitive resolution that eliminates the material‑adverse‑change trigger and restores confidence in the firm’s fundamentals. Monitoring any SEC filings, covenant compliance updates, or settlement disclosures over the next 4‑6 weeks will be critical for adjusting the position.