Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) Q2 2023 Earnings Call Transcript

Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) Q2 2023 Earnings Call Transcript August 10, 2023

Amylyx Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $0.31, expectations were $0.01.

Operator: Good afternoon. My name is Tom, and I will be your conference operator today. At this time I would like to welcome everyone to the Amylyx Pharmaceuticals Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. [Operator instructions] Please be advised that this call is being recorded at the company’s request. I would now like to turn the conference over to Lindsey Allen Head of Investor Relations and Communications. Please go ahead.

Lindsey Allen: Good afternoon and thank you for joining us today to discuss our second quarter 2023 earnings. With me on the call are Josh Cohen and Justin Klee, our Co-CEOs; Margaret Olinger, our Chief Commercial Officer; and Jim Frates, our Chief Financial Officer. Before we begin, I would like to remind everyone that any statements we make or information presented on this call that are not historical facts are forward-looking statements that are made based on our current beliefs, plans and expectations and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include but are not limited to our expectations with respect to RELYVRIO and ALBRIOZA, statements regarding our clinical trial and regulatory developments and the expected timing thereof, our business strategy and outlook and our expected financial performance.

Actual events and results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in our most recent filings with the SEC and any other future filings that we may make with the SEC. You are cautioned not to place any undue reliance on these forward-looking statements and Amylyx disclaims any obligation to update such statements unless required by law. Now, I will turn the call over to Justin.

Justin Klee: Thank you, Lindsey, and good afternoon. In the second quarter, we made significant progress in bringing RELYVRIO and ALBRIOZA to people with ALS in the US and Canada respectively and advancing our mission of one day ending the suffering caused by ALS and other neurodegenerative diseases. We are incredibly proud of our entire team, who has continued to deliver on the goals that we outlined, following the full FDA approval of RELYVRIO last September. These goals included raising awareness and educating people living with ALS with — and physicians about RELYVRIO, working with insurers to provide access to our approved treatment, helping people who have been prescribed RELYVRIO through our Amylyx Care Team patient support program, and deepening our understanding of the ALS market.

Let me walk you through our progress. Our commercial organization is off to a strong start educating and raising awareness about RELYVRIO as evidenced by the strong and steady demand we saw in the second quarter. As of June 30, 2023, there were roughly 3,800 people on RELYVRIO in the US, up from roughly 3,000 people on RELYVRIO as of March 31, 2023 and just over 1,300 at the end of 2022. As for an insurance coverage adoption has been rapid and a vast majority of policies have been broad and supportive. Insurers covering nearly all people living with ALS have published formal policies and are covering RELYVRIO, and people living with ALS that have been prescribed RELYVRIO are now able to start therapy more quickly. The average time between the prescription being written and RELYVRIO being shipped was about 25 days in the second quarter, down from around 30 days in the first quarter of this year and a little over 45 days when we shared this metric on our fourth quarter earnings call.

Turning to Canada, we reached our one-year anniversary of the Health Canada approval with conditions in June. As we reflect on our progress, we are pleased with what we have achieved on behalf of the Canadian ALS community. In the fourth quarter of last year, we announced that all major private insurers in Canada covered ALBRIOZA and we are pleased to share today that by the end of August, we expect ALBRIOZA coverage to be in place for the vast majority of publicly insured lives in Canada. The early success of our commercial launches has enabled us to both invest in bringing RELYVRIO to more people living with ALS globally and advance our pipeline opportunities that support our mission. We continue to expect a final opinion on our MAA from CHMP in the fall and prepare to execute a successful launch in the EU if approved.

We are excited to initiate our new Phase 3 ORION clinical trial of AMX0035 in progressive supranuclear palsy later this year. And of course, we continue to work diligently to complete the PHOENIX trial with topline results anticipated in mid-2024. In summary, we are proud of our progress so far in 2023 and excited about what we can achieve as an organization. We have a clear mission and we are executing on our goals. I’ll now turn the call over to Margaret to provide an update on our commercial performance.

Margaret Olinger: Thank you, Justin. In the second quarter, we continued to make significant progress on our three key priorities. The first is our effort to drive awareness and educate about the benefits of RELYVRIO among people living with ALS and clinicians. This includes educating that RELYVRIO is the first and only approved drug for adults with ALS to demonstrate a statistically significant benefit and function in a clinical trial as well as the survival benefit and a longer term post hoc analysis. As a reminder, clinical trial data published in the New England Journal of Medicine demonstrated that after 24 weeks, participants treated with RELYVRIO scored on average 2.32 points higher on the ALSFRS scale than the placebo group.

Even a one-point change in the ALSFRS score can indicate a significant difference in a person’s ability to function independently with activities of daily living including eating, bathing, dressing, or walking. Participants treated with RELYVRIO at the start of the clinical trial, which means that they both started RELYVRIO six months earlier and were on it for longer than participants starting on placebo, saw a greater survival benefit. During the second quarter, interest in and demand for RELYVRIO continued to build at a steady pace from both those that are newly diagnosed and people who have been living with ALS for years. As a result of our educational efforts, as of June 30th, there were roughly 3,800 people on RELYVRIO in the United States.

We are very pleased that so many people have gained access to this important new treatment so quickly. Now, let me run through a few key metrics that demonstrate our progress and growth opportunities ahead of us. Prescribing remains fairly concentrated with just over 80 prescribers mostly at major ALS centers representing approximately half of all RELYVRIO prescriptions at the end of the quarter. We are encouraged by the level of interest among this group and believe that we have an opportunity for growth as we bring our message to more prescribers and deepen our relationships within these key ALS centers. By the end of the second quarter, approximately 75% of the top 500 US prescribers and nearly all of the key ALS centers have prescribed RELYVRIO to at least 1% since launch.

We are focused on driving awareness and education and on deepening our penetration within the top prescribers and key ALS centers. In addition, we have a large untapped opportunity for growth outside of this group of top prescribers as we expand our outreach and educational efforts more broadly. Our second priority is engaging with payers to work to help ensure that every eligible person who could benefit from RELYVRIO treatment has access as quickly and efficiently as possible. Consistent with the targets we previously outlined, by the end of the second quarter, our estimates suggest that US insurers representing nearly all ALS-covered lives had published formal coverage policies. The vast majority of these insurers provide broad access to RELYVRIO.

This is a significant accomplishment just three quarters into our commercial launch. Our third priority is ensuring eligible people living with ALS have positive interactions through their treatment journey with RELYVRIO and ALS clinics have positive interactions with Amylyx. This includes facilitating an organized clear process to get people who have been prescribed RELYVRIO access to therapy as quickly as possible and optimizing people’s experience obtaining RELYVRIO as best we can. Our team has done a tremendous job of facilitating the process, increasing the speed between a prescription being written and RELYVRIO being shipped. In the second quarter, on average this timeline was shortened to about 25 days, aided by the increase in insurance coverage.

Our team continues to work expeditiously to get people living with ALS who have been prescribed RELYVRIO on therapy as quickly as possible. Turning to our launch in Canada, interest in ALBRIOZA remains high. We have made significant progress on our public insurance coverage efforts. We are thrilled that five Canadian provinces Ontario, Quebec, British Columbia, New Brunswick and most recently Alberta announced public reimbursement of ALBRIOZA. By the end of August we expect ALBRIOZA coverage to be in place for the vast majority of publicly insured lives in Canada. Our goal is to ultimately change the way people living with ALS are treated. And we believe RELYVRIO is becoming a foundational therapy for ALS. As we move into the third quarter, our team remains focused on driving awareness and education about RELYVRIO among people living with ALS and clinicians.

I will now turn the call over to Jim to discuss our financial results for the second quarter.

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Jim Frates: Thanks, Margaret. We’re encouraged by the strong interest and demand we continue to see from the ALS community in the second quarter. From a financial point of view, our business remains strong. Net product revenues were $98.2 million for the quarter, compared to net product revenue of $71.4 million for the first quarter of 2023, with the vast majority of that revenue coming from the United States. Gross to net adjustments were approximately 10% in the quarter, which is a little lower than that we would normally anticipate due to the favorable true-up of reserve estimates in the second quarter based on our actual experience in the past nine months. Going forward, we anticipate gross to net discounts will be in the 12% to 15% range.

Inventory levels at the quarter end were as expected, with approximately two weeks of inventory in the channel at specialty pharmacies, similar to what we’ve seen in previous quarters. Cost of sales were $5.6 million for the quarter roughly 6% for net product revenues and our expectation is that COGS will remain in the range of 6% to 10% of sales going forward. Note that we fully expensed all of our remaining royalty obligations this quarter and will not be incurring any additional royalty expenses related to sales in ALS going forward. For modeling purposes, keep in mind that roughly 10% of the people on RELYVRIO are receiving it for free, through either our interim access program or patient assistance program. Research and development expenses were $29 million for the quarter.

You should expect R&D expenses to be in the $30 million to $40 million range per quarter for the remainder of the year. As we outlined in our Q1 call, our expectation is that R&D expenses will move toward the higher end of this range later this year as we start enrolling patients in our new Phase 3 trial in PSP. Selling, general and administrative expenses or SG&A were $43.4 million for the quarter, in line with the $45 million per quarter run rate that we mentioned on our first quarter call. We continue to expect SG&A expenses in this range for the remainder of the year. These results led to an excellent bottom line. We generated $22.1 million in net income, representing our second quarter in a row of profitability. Finally, we ended the quarter with cash and short-term investments of $357.3 million and zero debt.

We’re pleased with our strong financial results and with the disciplined execution throughout the organization. From a capital perspective, we have the resources we need to execute on our mission. We’re well positioned to grow our top line, invest in our pipeline to provide more much needed treatments for neurodegenerative diseases and deliver on our bottom line. I’ll now turn the call over to Josh to discuss our R&D programs.

Josh Cohen: Thanks, Jim. We have demonstrated the benefit of AMX0035 in ALS and believe it could help in other neurodegenerative diseases. When we originally developed AMX0035 our goal was to target endoplasmic reticulum stress or ER stress and mitochondrial dysfunction two connected central pathways that lead to neurodegeneration. As we announced on our last call, we intend to initiate a global pivotal Phase 3 study in PSP later this year called Orion. Orion is a well-powered study that will enroll approximately 600 participants and it was designed and planned in collaboration with key global academic leaders, people living with PSP and advocacy groups. PSP is a rare but recognizable progressive and fatal neurodegenerative disease with clear and well-known clinical hallmarks that include progressive disability with respect to eye movement, walking imbalance, speech and swallowing and cognitive function.

There are currently no disease-modifying treatments for PSP and we are hopeful that AMX0035 might be able to help. PSP is characterized as a tauopathy, with genetic and pathological findings, supporting a primary role for tau in this disease. Given AMX0035’s proposed mechanism of action that targets pathways upstream of tau aggregation and the Phase 2 placebo-controlled PEGASUS clinical trial data, which demonstrated that AMX0035 significantly lowered both plasma tau 181 and total tau in the cerebrospinal fluid of people with Alzheimer’s disease, we are excited to pursue this indication in PSP. We recently hosted a webcast with Professor Dr. Gunter Hadinger, a leading expert in PSP and the primary investigator for our Phase 3 ORION trial. As part of the webcast, we shared insights into the scientific rationale for studying AMX0035 in PSP and an overview of the Phase 3 trial design.

Additionally, Dr. Hoglinger provided his perspectives on the PSP treatment landscape, the role of tau in this disease and the potential to use AMX0035 in people living with PSP should it be approved. The replay is available in the Events section of our IR website and we encourage you to listen to it, if you didn’t have a chance to join us for the live event. In addition to this exciting study in PSP, we are also pursuing a program in another rare disease Wolfram syndrome called HELIOS. Wolfram syndrome is a rare disease that leads to multisystem failure resulting in blindness, deafness, diabetes, ataxia, neurodegeneration and often death in early adulthood. Our R&D team conducted roughly four years of in vitro and in vivo studies of AMX0035 in Wolfram syndrome together with a leading researcher Dr. Fumihiko Urano at Washington University.

These studies have promising results some of which were published in the Journal of Clinical Investigation Insight. Several papers characterize the disease as a prototypical disease of ER stress. And as we have discussed in the past, we believe this study which is currently enrolling participants will provide key data to guide future studies and we expect top line results next year. We also continue to broaden our ALS and neurodegenerative disease pipeline. We believe that in order to ultimately find a cure for ALS, it’s going to take a combination approach, targeting multiple cellular pathways implicated in disease pathogenesis. We continue to progress AMX114, our antisense oligonucleotide targeting Calpain2, through IND-enabling studies. We have presented data on this candidate at the NEALS, MDA, and TIDES conferences.

We’re excited to present more data on AMX114 and other advancements in our pipeline in the future. In closing, we are proud of our team’s progress and the work that we are doing on behalf of the ALS community. We are in a very strong financial position which allows us to continue to support our launches in ALS and invest in our pipeline to find new treatment options for people living with ALS and other relentlessly progressive neurodegenerative diseases. Now, we’d be happy to take your questions. Operator, please open the call up to Q&A.

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Q&A Session

Operator: [Operator Instructions] And the first question comes from Corinne Jenkins with Goldman Sachs. Please go ahead.

Corinne Jenkins: Good afternoon everyone. Maybe just first, what are you seeing with respect to compliance and discontinuation rates? And I’ll just go ahead with my follow-up here. Are you seeing any emerging trends with respect to the primary reason for discontinuation; it would be helpful whatever you share there.

Margaret Olinger: Thanks very much for the question. Maybe just to start, as a reminder, we report on net patients on therapy. So this is inclusive of any discontinuation. We are really pleased with our ability to serve the roughly 3,800 net patients on RELYVRIO at the end of Q2. I would say it’s really too early to see any long-term trends at this point in our launch. But maybe a reference point in the CENTAUR trial, which again, as a reminder, was a six-month trial. Approximately 70% of participants remained on drug, and we’re tracking close to that in terms of the commercial setting. But I would say this is clearly an area where we’re going to continue to keep a very close eye on as we expect the patient mix to shift over time.

Justin Klee: On the compliance side of the reasons. So on the compliance side, we’ve seen most rare disease drugs, you’ll find in the 75% to 80% range in terms of drug compliance. We’re in that range as well. And in terms of reasons for discontinuation, they’re varied. People with ALS are going through many different things. Of course, one of the more common ones certainly is death and disease progression, which is expected in ALS as well.

Corinne Jenkins: Thanks.

Operator: The next question comes from Geoff Meacham with Bank of America. Please go ahead.

Geoff Meacham: Hey guys. Thanks for the question. Congrats on the quarter. I had a couple. The first is the EU, the CHMP process. I wanted to ask how you guys view that process now. And maybe just help us with how you view the next steps here. I wasn’t sure for reexamination what the protocol or the success rate could be there? And the second question is just related to capital deployment. I know you guys have done some deals, some BD. I want to ask maybe how that’s evolved over time as you look to be sustainably profitable? Thank you very much.

Justin Klee: Sure. So on the EU and CHMP, so as we’ve shared previously, the EU adopted initially a negative opinion. We strongly disagree with that opinion. And I think the basis for that is — randomized placebo-controlled study on meta pre-specified primary outcome, showing a slowing in the rate of progression on the ALS FRS, we’ve also observed a difference on overall survival. And that data, of course, led to our approval — by the US FDA approval and our approval of conditions in Health Canada. So we believe we have a data package that should in our view, support approval. But of course, ultimately, this is up to CHMP. So we submitted for reexamination. That’s roughly a four-month process under, which two new apertures are assigned and review the application.

We submitted that shortly after we got the negative opinion. So you can expect that near the end of this year, we’ll hear back regarding that opinion. In terms of capital deployment and potential BD, I’ll talk to — I’ll pass to Jim.

Jim Frates: Yes. Thanks Geoff. And clearly profitability this early on in our launch is very gratifying. I mean, I think that ultimately is a direct result of the need in this patient — in this area and the vast — the dearth of options that people living with ALS have had so far. So we’re very proud to be filling some of that need. You know, I think the other thing I would say too is we’re really focused on what we have on our plate now, right with obviously still in the middle of the launch in the United States and Canada, working through what’s going to happen in Europe and potentially hopefully looking forward to a launch next year. We’ve started off and are interacting with the Japanese and other places around the world too to see where we can continue to take this drug.