Amylyx Stock: Future Looks Good After Surprise Approval, But Unpredictable

In March, after I wrote that Amylyx Pharmaceuticals, Inc.’s (NASDAQ:AMLX) adcom approval is chancy, AMX0035 did fail to win a positive nod from the members, with 4 voting for and 6 voting against drug efficacy. However, the stock has more than doubled since my article. Why? Because in a stunning comeback, 5 months after the original rejection, a second adcom voted 7 for and 2 against approval. Within a month, Relyvrio was approved by the FDA for ALS or amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease.

There are too many twists and turns in this story, which does not put the FDA’s neuro team in a positive light. Last year, the FDA actually told AMLX to file an NDA based on phase 2 data alone. The company’s CEO told Evaluate that while the FDA does not directly comment on chances of approval in pre-NDA meetings – “But they made it clear that they thought we should submit an NDA and that it would merit a review.”

But then the FDA turned around and produced a scathingly negative briefing document in March, leading to a negative adcom vote. Then, in an unprecedented move, it called for a second advisory committee meeting with 9 of the same participants. Even here, the FDA repeated its negative briefing doc. However, once the adcom voted positively, the FDA did another flip flop – I have unfortunately lost count how many it did, and whether we are at a flip or a flop now – and approved the drug.

On top of everything, in another seemingly impossible move, the FDA had AMLX’s CEO publicly pledge to withdraw the drug if the ongoing confirmatory phase 3 trial failed – which will topline sometime in 2024.

This is a result of Aduhelm. The neuro panel is on the backfoot ever since that fiasco, and are doing all it can to pass the buck, so to say. However, this sort of scrutiny is good for medicine, broadly, even if investors are taken on a rollercoaster ride.

AMX0035 was approved in Canada in June, and was available in the market by August, branded albrioza. It will be approved in Europe sometime in the middle of 2023.

A number of ALS trials have failed in recent years. Brainstorm’s NurOwn, Orphazyme’s arimoclomol and Astrazeneca’s Ultomiris are some of the failed trials. Biogen’s tofersen NDA review has been extended to April 25, 2023. However, tofersen, targeting the Sod1 mutation which occurs in only 2% of ALS patients, is no competition to AMX0035, which can potentially help all ALS patients. Mitsubishi Tanabe’s edaravone was approved by the FDA as both IV and oral formulations. The Centaur trial did have its problems, some of which I discussed earlier. Not only was it a small trial with just 137 patients, but the company used a modified intent to treat population, or mITT, by excluding two patients who died before they could be scored on ALSFRS-R. Had they been included, and if the company had followed a type of analysis recommended by the FDA, the trial would not have attained statistical significance.

So that begs the question: how is the phase 3 trial going to turn out? And what will really happen if the drug is commercially successful, has no adverse event issues, but fails this trial? Although the CEO has publicly said he will withdraw the drug, in later statements, he has modified that original pledge, saying, in essence, that the trial results should not be read in isolation to real life effect of the drug.

Note also that the ALS Foundation was behind the drug’s approval all the way. As has been said by Fierce Pharma:

The ALS Association is also celebrating the approval. That organization invested $2.2 million of funds raised through 2014’s ALS ice bucket challenge into the development of the drug, the association said in a statement. It also led the years-long advocacy campaign to get the treatment approved, including submitting over 50,000 signatures to the FDA in September 2020 calling on the agency to approve the drug.

Financials

AMLX has a market cap of $2.49bn and a cash reserve of $162mn. There was a little bit of revenue in this quarter, but that’s going to be changing – substantially. Research and development expenses were $24.9 million for the quarter, while selling, general and administrative expenses were $29.9 million. The company has no other clinical stage drug, although AMX0035 is in two other trials, and there are two preclinical drugs. Thus, this cash reserve will mostly go towards marketing right now. I think they have enough to last them a while, until the revenue kicks in. On top of that, they just launched an upsized $214mn secondary offering in October.

Relyvrio has a list price of $158,000 per year. There are some 30,000 ALS patients in the U.S. About this pricing, a number of ALS advocacy groups and even the ICER, have expressed their unhappiness. Here’s ICER’s take:

At ICER, a nonprofit that estimates the cost-effectiveness of drugs, executives do not believe Relyvrio’s price tag is appropriate. In a report released earlier this year, ICER previously said a fair price for Relyvrio would fall somewhere between $9,100 and $30,000 per year. Amylyx set the drug’s price at about six to 17 times higher.

One scenario could be a reduced pricing over the coming months as a result of pressure from patient groups, who have been very vocal in the approval process. Some analysts see sales upwards of half a billion dollars in the next year itself.

Bottom Line

Although AMLX is up a lot since my previous coverage, I am not bothered. This was an exceptional event, and there’s no way anybody can predict what would have happened here. In the normal course of things, after a failed adcom, a stock would have gone down – and it did. There’s no precedence for a second adcom. So, all those who held it through it all, great job, but don’t expect that to happen again with another stock.

As for the future, AMLX’s only drug Relyvrio has been pegged at $2.6bn in peak sales by 2026. That could well be achieved – assuming PHOENIX does not disappoint. It is tough to predict this thing because, a) CENTAUR wasn’t a slam dunk and yet Relyvrio got full approval, and b) who’s to say PHOENIX won’t fail and still Relyvrio will stay in the market because of pressure from the patients? After all, unlike aduhelm, Relyvrio is safe enough.

Thus, if you are buying or holding Amylyx Pharmaceuticals, Inc. for its future potential, it is a blind gamble. All gambles are somewhat blind, but this one, there’s no way to predict anything. I will stay on the sidelines, even though I am aware that if successful with commercialization and then with PHOENIX, Amylyx Pharmaceuticals stock may double, even quadruple, in the next 3-4 years.