Shares of IPO stock Amylyx Pharmaceuticals crumbled Thursday after a split Food and Drug Administration committee voted against its experimental ALS treatment.
Just four of the 10 panelists voted in favor of the drug, saying the evidence so far establishes a benefit for patients with amyotrophic lateral sclerosis, also known as Lou Gehrig's disease. The neurodegenerative condition leads to progressive muscle dysfunction.
The full agency is likely to follow suit in June and deny Amylyx's request for approval, SVB Leerink analyst Marc Goodman said in a report. Amylyx based its submission on a midstage test called Centaur, but is also working on a final-phase study called Phoenix. The FDA will probably want Phoenix data in hand before considering approval, he said.
"Given that Canada and Europe may take a cue from the FDA, we are lowering our probability-of-success to 40% for all geographic regions," Goodman said. He also slashed his price target on the IPO stock to 31 from 50, though he kept his outperform rating.
On today's stock market, the IPO stock tumbled 13.9% to 12.85.
IPO Stock: Further Tests Ongoing
It's important to note the FDA isn't required to follow the advisory committee's suggestion, but it often does. So far, data from the Centaur study show Amylyx's drug improves muscle function. But the data on survival are cloudy. The Centaur study pitted the treatment against a placebo. Then, Amylyx ran a study in which patients knew they were receiving the drug.
The split vote followed a lengthy meeting that also featured comments from ALS patients and advocates. ALS patient Mark Weston was among the four panelists to vote in support of the drug's benefit. He argued the FDA should approve the drug while waiting on the Phoenix results, and noted the treatment comprises two ingredients already on the open market.
"It is preferable that this drug be approved and made available nationwide rather than having desperate persons scrambling to combine its two ingredients and self-medicate," he said. "Those of us that live with ALS often have a very, very high tolerance of risk and those people should be allowed to decide for themselves."
But the FDA posted briefing documents that doubted the drug's benefit on Monday, leading Amylyx shares to plunge 36%. Amylyx's initial public offering launched at 19 in January. But, today, the IPO stock is trading well below that price.
Another panelist, Dr. Caleb Alexander, argued the evidence doesn't establish the drug's use for ALS patients. That's based on the limitations of midstage testing, he said.
"It's clear there's a very compelling unmet need," he said. "And it's also very clear that many with ALS would accept the product as is and are willing to accept the risks associated with it, including the risk it may not work. ... Unfortunately, there are many features of Centaur that limit its persuasiveness as a stand-alone trial in a regulatory sense."
Shares Under Pressure
Evercore ISI analyst Umer Raffat kept his outperform rating on the IPO stock.
He suggested the FDA could grant Amylyx's drug an accelerated approval. This allows a drug to launch contingent upon further testing. Such was the case for Biogen's Alzheimer's drug, Aduhelm, which also faced a negative advisory committee vote.
"Would advocacy groups be strong enough to get more senior FDA folks to get actively involved and evaluate this application for an accelerated/condition approval, rather than a full approval?" he said in a report.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
