The Food and Drug Administration has granted Amylyx Pharmaceuticals a hard-won approval in ALS treatment, but AMLX stock sank Friday.
The approval, which came late Thursday, is based on a single study showing Amylyx's drug, now called Relyvrio, improves the rate of functional decline in patients with amyotrophic lateral sclerosis, or ALS. Also known as Lou Gehrig's disease, ALS is a progressive and life-threatening neuromuscular condition.
RBC Capital Markets analyst Brian Abrahams says the approval could broadly stoke the biotech segment. It suggests the FDA is willing to be flexible. Usually, the agency requires companies to test drugs in two final-phase studies.
In this case, Amylyx's second Phase 3 study, called Phoenix, is still ongoing. Further, Amylyx's approval trails positive Alzheimer's treatment data from Biogen.
"On the heels of a major positive readout with (Biogen's) lecanemab, we could see interest in biotech, and especially neurology, pick back up as we continue to see new mechanisms succeeding in clinical (studies) and greater regulatory flexibility," Abrahams said in a note to clients.
On today's stock market, AMLX stock tumbled 6.8% to 28.15. After the announcement late Thursday, shares initially surged 11%.
AMLX Stock: Will FDA Continue To Be Flexible?
Earlier this month, a panel of FDA experts voted 7-2 in support of the approval. At the meeting, Billy Dunn, director of the Office of Neuroscience in the FDA's Center for Drug Evaluation and Research, said the agency could exercise "regulatory flexibility" with Amylyx's ALS treatment.
It was the second advisory committee meeting for Amylyx. The first came in March and failed to work out in Amylyx's favor. Experts said it wasn't clear whether Relyvrio would help patients live longer. That point is still unclear, analysts note.
The label for Relyvrio "only briefly mentions the survival data from the open-label extension (study) and highlights that it is an exploratory analysis that should be 'interpreted cautiously,' " SVB Securities analyst Marc Goodman said in his note to clients. He has an outperform rating on AMLX stock.
However, instead of outright rejecting the ALS treatment after the March meeting, the FDA pushed back its review date. The FDA's Dunn noted there are few options on the market for patients with ALS.
"This approval provides another important treatment option for ALS, a life-threatening disease that currently has no cure," he said in a written statement. "The FDA remains committed to facilitating the development of additional ALS treatments."
But the positive news for AMLX stock follows a midstage flop for an experimental ALS treatment on Thursday. Biohaven Pharmaceutical said earlier in the day that its drug didn't outperform a placebo in ALS patients, and shares sank.
Quick U.S. Ramp Expected
Relyvrio's wholesale acquisition cost will be $158,000 a year. That's the price before insurance and discounts come into play. The Institute for Clinical and Economic Review, a nonprofit that examines drug costs and benefits, called Relyvrio cost effective at $9,100-$30,700 a year.
The nonprofit noted Radicava, an oral ALS treatment from privately held Mitsubishi Tanabe Pharma Corporation, goes for $171,000. That "far exceeds" its cost-effectiveness, ICER said. The high prices for these medicines could also make a combination approaches more difficult, critics say.
"The evidence suggests that (Relyvrio) extends life, and it is clear that oral (Radicava) is far less burdensome than its infused preparation, but prices need to be greatly reduced to align with benefits," ICER's Chief Medical Officer David Rind said in a written statement.
Further, Amylyx is still running the Phoenix study, said Goodman, the SVB analyst.
"We continue to believe that it is not very likely that Relyvrio will be pulled from the U.S. market even if the Phoenix study is negative given the significant enthusiasm and support from the patient and physician community for the drug," Goodman said.
He estimates a quick ramp up in U.S. revenue with $220 million in estimated 2023 sales growing to north of $500 million in 2024. This should help AMLX stock grind higher, he said.
Highly Rated Biotech Stock
AMLX stock is highly rated, according to IBD Digital. The stock has a best-possible Relative Strength Rating of 99. This puts its performance in the top 1% of all stocks over the past 12 months.
Bullishly, shares are also above their 50-day moving average, MarketSmith.com shows.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
