Amylyx Pharmaceuticals (AMLX 5.88%) is up more than 100% over the past three months. The stock surged again on Sept. 7 after a Food and Drug Administration (FDA) advisory panel changed their minds to say they now think that Albrioza (sodium phenylbutyrate and taurursodiol), should be approved as a treatment for amyotrophic lateral sclerosis (ALS). Trading of Amylyx stock was briefly halted on the NASDAQ pending the panel's decision.

The same panel that voted 6-4 against approving Albrioza (AMX0035) back in March this week voted 7-2 to recommend its approval after looking at new data and analyses from its phase 2 clinical trial. A phase 3 trial for the drug is underway, and is expected to end in March 2024.

Getting a thumbs up from the advisory committee is a big step, but it's not the final step. The FDA still must decide whether or not to approve Albrioza.

According to Amylyx, the drug -- if approved -- would be the first marketed treatment of ALS to significantly slow the disease's progression and significantly extend survival rates. Based on a newly submitted analysis, the survival benefit from the drug is in the range of 10.6 months to 18.8 months. It could be used as a stand-alone therapy or in combination with existing approved treatments. The FDA is expected to make its decision on Albrioza by Sept. 29, the company said.

Normally, the FDA waits for a strong phase 3 study before approving a new drug application, but the lack of effective ALS therapies may tip the scales for Albrioza.

In June, Albrioza was approved by regulators in Canada. It was the first country to sign off on the therapy.

Getting back to the question

According to ALS News Today, the prevalence of ALS in the U.S. is between 5 to 7 cases per 100,000 people, meaning that there are around 15,000 to 21,000 people with the condition in the country. It's a progressive neurological disease that kills motor neurons in the brain and spinal cord that control voluntary muscles. And it's fatal, with a mean survival period of two to five years after diagnosis. Given all that, and with so few effective therapies, ALS advocates have been pushing for Albrioza's approval.

At this point, it's hard to estimate how much Albrioza will be  worth financially to Amylyx once it's approved. According to a report by QY Research Medical, the global ALS treatment market is expected to reach $520.8 million by 2030, with a compound annual growth rate of 8.1% from 2022 to 2030. However, those numbers were based only on the currently approved therapies.

Regardless, Albrioza is a game-changer for Amylyx, which went public in December. Albrioza is the only drug in the company's pipeline, and as of the second quarter, it had not begun generating revenue. Management said the company lost $54.1 million, or $0.93 per share, in Q2 compared to a net loss of $21.9 million, or $3.41 a share, in the prior-year period. Thanks to the funds raised in its initial public offering, though, the company had $206.7 million in cash on the books as of the end of the second quarter, down from $255.2 million three months earlier.

Investors will need to be patient

With Albrioza approved in Canada, the company is just beginning to produce revenue, but it will likely be a long time before it is profitable. It faces significant expenses as it ramps up production and marketing for Albrioza. At this point, much of the company's potential is baked into the stock, so the share price is likely to drop, at least in the short term.

It's also worth noting that Amylyx could soon have more competition in the ALS space. In July, Biogen got priority review status for Tofersen, which it developed with Ionis Pharmaceuticals to treat a rare genetic form of ALS, despite less-than-overwhelming phase 3 trial results. The FDA has said it plans to decide on that therapy's approval by Jan. 25.

In the long term, Amylyx has blockbuster drug potential. Though it's not a cure for ALS, it appears to be superior to the only two currently approved therapies for the condition: Riluzole, an oral drug that has been shown to increase life expectancy by three to six months; and Edaravone, an injection that may reduce ALS patients' decline in daily functioning. Whether Edaravone increases patients' life span has not been established.

The share price of the pharmaceutical company could certainly continue to rise, but it may make sense for investors to wait for it to fall back to a lower price point before buying in. Amylyx's business is all based on one potential blockbuster drug for one rare disease, though it's possible that Albrioza could earn label expansions to treat other neurodegenerative diseases.