What happened
Shares of the clinical-stage biotech Amylyx Pharmaceuticals (AMLX -1.12%) 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.
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.
