On Friday, Amylyx Pharmaceuticals Inc. (NASDAQ: AMLX) experienced a significant shift in its stock outlook as Goldman Sachs downgraded the company's rating from "Buy" to "Neutral." The firm also drastically reduced the price target for Amylyx shares to $4.00 from the previous $40.00.
This adjustment came in response to the disappointing results of Amylyx's Phase 3 PHOENIX trial for its drug Relyvrio in patients with amyotrophic lateral sclerosis (ALS).
The PHOENIX trial did not meet its primary or secondary endpoints, failing to show a significant difference between the drug and placebo in improving the ALS Functional Rating Scale-Revised (ALSFRS-R) total score.
The lack of efficacy observed in the trial outcomes was described as the "worst-case outcome" by the analysts. Consequently, Amylyx stock plunged by 85% during intraday trading, while the broader biotech index, XBI, rose by 2%.
Following the trial's outcome, Amylyx's stock value dipped below its cash value, which is approximately $5 per share. The company has announced plans to engage with relevant stakeholders within the next eight weeks to discuss the data and determine the future course of action. This strategy is expected to include potentially withdrawing Relyvrio from consideration.
Amylyx will now redirect its focus to advancing Relyvrio for other conditions, such as Wolfram Syndrome and Progressive Supranuclear Palsy, as well as the early-stage development of AMX0114 in ALS.
Goldman Sachs highlighted that they do not currently project any revenue from these programs. Moreover, they noted that significant catalysts for these indications, except for Wolfram Syndrome which is very rare, may not emerge for over a year.
Investors are advised to watch for an interim read-out in the Progressive Supranuclear Palsy trial, the timing of which is yet to be determined, as it may offer the next significant opportunity for value inflection for Amylyx.
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