The US Food and Drug Administration (FDA) approved Amylyx Pharmaceuticals (NASDAQ: AMLX) drug RELYVRIO (previously known as AMX0035 in the US) for slowing the progression of amyotrophic lateral sclerosis (ALS) and potentially delaying death.
What Does Amylyx Pharmaceuticals Do?
Amylyx Pharmaceuticals, Inc. operates as a pharmaceutical company. The company develops a proprietary therapeutic for amyotrophic lateral sclerosis (ALS) and other neurodegenerative diseases. Amylyx Pharmaceuticals serves customers worldwide.
AMLX is focused on the development and potential global commercialization of its product candidate, AMX0035 (sodium phenylbutyrate and taurursodiol), for the treatment of ALS.
AMX0035 is commercially named ALBRIOZA in Canada and RELYVRIO in the US.
In June 2022, the drug received marketing authorization from Health Canada, and commercial sales of ALBRIOZA began in the region in Q3.
ALS is a relentlessly progressive and fatal neurodegenerative disorder caused by motor neuron death in the brain and spinal cord. Motor neuron loss in ALS leads to deteriorating muscle function, the inability to move and speak, respiratory paralysis and eventually, death. The disorder is sometimes called Lou Gehrig's disease after the baseball player diagnosed with it.
More than 90% of people with ALS have sporadic disease, showing no apparent family history. ALS affects approximately 29,000 people in the United States.
Amylyx Pharmaceuticals' principal drug RELYVRIO is an oral, fixed-dose combination therapy for treating adults with ALS. In the Phase 2 trial involving 137 patients, the outcome showed those taking RELYVRIO lived about ten months longer than those who didn't. The drug also appeared to delay hospitalizations and slow the loss of physical function.
Detailed data from the CENTAUR clinical trial were published in the New England Journal of Medicine, Muscle & Nerve, and the Journal of Neurology, Neurosurgery and Psychiatry.
The FDA approval came with seven positive votes to two. The two negative votes would have liked to wait for Phase 3 results. But the company doesn't expect top-line results from its Phase 3 Phoenix trial until 2024.
A Controversial Decision
The news is widely welcomed as federal health advisors previously ruled against drug approval in March with six negative votes to four.
The ALS Association, which helped fund Amylyx's research, said the FDA's March review did not consider "the speed and severity of ALS and the few treatment options available."
It's a controversial subject because approving a drug despite uncertainty about its effectiveness could lead to untold problems. This type of approval doesn't usually come before a Phase 3 trial.
Nevertheless, with few treatment options available, patients and their families are desperate for a glimmer of hope.
Indeed, ALS patients and their families have rallied behind Amylyx's drug since its data was first published in 2020. Thus, launching an aggressive lobbying campaign and enlisting members of Congress to push the FDA to grant approval.
Joshua Cohen and Justin Klee, Co-CEOs of Amylyx, said:
Today’s FDA approval of RELYVRIO is an exciting milestone for the ALS community and is a major step toward achieving our mission to one day end the suffering caused by neurodegenerative diseases,
We want to give a heartfelt thank you to the broader ALS community, including healthcare professionals and those living with ALS, for their guidance, support of our clinical programs, and for sharing their experiences with us. Their stories inspired us and helped our team to better understand the ALS clock, instilling in us a deep sense of urgency that will continue to drive us forward. This is just the beginning and there is much more to be done.
However, the FDA approval is based on a small Phase 2 trial, which is not as extensive as would usually be expected in an approval process. But no two diseases are the same, and in the case of ALS, advocates for the drug believe something is better than nothing.
Leading ALS advocacy organizations remarked in a statement:
Our organizations have been on a mission to create a world free of ALS. With today’s approval, we are encouraged that RELYVRIO can offer people living with ALS and their families the potential of more time with functional independence.
This is especially important for a rapidly progressive disease with a median survival time from diagnosis of just two to three years.
Adverse Effects
Data from the CENTAUR trial showed the most common adverse events occurring with RELYVRIO (at least 15% and at least 5% greater than placebo) were diarrhea, abdominal pain, nausea, and upper respiratory tract infection. Gastrointestinal-related adverse reactions occurred throughout the study but were more frequent during the first three weeks of treatment.
How Does Amylyx Pharmaceuticals Make Money?
Amylyx Pharmaceuticals is not yet making money, but with sales of ALBRIOZA in Canada underway, the company has begun generating cash flow in Q3. Now, with the FDA approval of RELYVRIO, this should tick up in the coming year.
After considering the input of many stakeholders throughout the ALS community in the United States, Amylyx decided to price RELYVRIO below the latest FDA-approved product available to people with ALS.
AMLX Stock Financials
During the first half of 2022, Amylyx made a net loss of -$101.9m compared with a net loss of -$36.4m Y/Y.
For Q2, Amylyx reported earnings per share (EPS) of -$0.93, missing the FactSet consensus of -$0.87.
AMLX is expected to report its next earnings update, for Q3, on November 30. FactSet analyst consensus estimates have projected EPS at -$0.97 and sales at $0.13m.
Over the past year, AMLX stock has traded between $6.51 and $33.41. Today it trades at around $33. Year-to-date, the Amylyx Pharmaceuticals stock price is up by 67%, while the S&P 500 is down -24.1% over the same period.
FactSet analysts have an Overweight rating on AMLX stock with a target share price of $44.25.
AMLX stock has a price-to-book-value (P/BV) of 8.9, which is above the industry benchmark of 5.6. AMLX stock does not provide a shareholder dividend.
Amylyx Pharmaceuticals Growth Potential
As part of its longer-term growth strategy, Amylyx plan to evaluate AMX0035 in other indications and develop additional product candidates.
It may choose to in-license or acquire other product candidates and commercial products to treat patients suffering from neurodegenerative diseases and CNS or other disorders with significant unmet medical needs and limited treatment options.
AMLX Stock Risks
AMLX stock went public in January 2022. This comes with larger operating costs, such as legal, accounting, and investor relations. Therefore, the company will likely need additional funding to support its continuing operations and growth strategy. This could potentially lead to stock price dilution.
Developing additional product candidates will require time-consuming development efforts, including preclinical studies, clinical trials and approval processes.
All product candidates are prone to the inherent risks of failure in pharmaceutical product development. There are no guarantees of efficacy or safety.
Economic strains are weighing on stocks, with riskier investments prone to share price destruction.
Is AMLX Stock a Good Investment?
The FDA approval of RELYVRIO is a pivotal moment for the company and exciting for shareholders. However, the company has not yet disclosed how much it charges for the drug, so it's unclear how much revenue potential it has in the near term.
Pharmaceutical R&D is a risky sector to invest in, and the company will need to raise funds to continue. For several reasons, the AMLX share price will likely remain volatile.
