Why Amylyx Pharmaceuticals Stock Is on Fire Today

What happened

Shares of the clinical-stage biotech Amylyx Pharmaceuticals (AMLX 3.64%) were up by a jaw-dropping 65% on heavy volume as of 10:02 a.m. ET Thursday morning. The drugmaker's shares are skyrocketing in response to a positive advisory committee vote for its amyotrophic lateral sclerosis (ALS) drug candidate AMX0035.

Specifically, a panel of experts assembled by the Food and Drug Administration (FDA) reportedly voted seven to two in favor of the available evidence supporting the drug's use as a treatment for ALS. ALS is a progressive neurodegenerative disorder that results in the loss of motor control.

Image source: Getty Images.

So what

There are currently no gold star treatments available to slow either disease progression or functional decline. So, if approved by the FDA, AMX0035 has a strong shot at quickly becoming an integral part of the care regimen for ALS patients. 

Earlier this year, the FDA's advisory committee voted against approving AMX0035 in ALS. After a new data analysis, the agency agreed to hold a second vote on the drug. This time around the panel felt comfortable giving AMX0035 the green light.

Expand

NASDAQ: AMLX

Amylyx Pharmaceuticals, Inc.

Today's Change

(-3.64%) $-0.50

Current Price

$13.24

Key Data Points

Market Cap

$1B

Day's Range

$13.03 - $13.89

52wk Range

$2.60 - $16.96

Volume

1.7M

Avg Vol

1.7M

Gross Margin

-4368.27%

Dividend Yield

N/A

The catch, if you will, is that Amylyx's management essentially agreed to pull the drug from the market if an ongoing phase 3 trial misses the mark. Data from this all-important study are due out in either late 2023 or early 2024.

Now what

Is Amylyx stock still a red-hot buy on this positive regulatory outcome? I think so. The FDA doesn't have to follow the panel's recommendation, but it usually does. As a result, AMX0035 stands a realistic shot at generating anywhere from $750 million to over $1 billion in U.S. sales in fairly short order.

Globally, the drug could rake in between $1.5 billion and over $3 billion by 2028, according to analysts covering this stock. To put these revenue estimates into context, the biotech's market cap is still only $1.7 billion even after this rocket-like move higher. In short, Amylyx's shares could be grossly undervalued right now.