Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) Q4 2022 Earnings Call Transcript

Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) Q4 2022 Earnings Call Transcript March 13, 2023

Operator: Good afternoon. My name is Gary, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amylyx Pharmaceuticals Fourth Quarter and Full Year 2022 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please be advised that this call is being recorded at the company’s request. I would now like to turn the call over to Lindsey Allen, Head of Investor Relations and Communications. Please proceed.

Lindsey Allen: Good afternoon and thank you for joining us today to discuss our fourth quarter and full year 2022 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 based on our current beliefs, plans and expectations, and are made pertinent 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 regulatory developments and the expected timing thereof, our business strategy and outlook and our expected financial performance and cash runway.

Actual events and results could differ materially from those expressed or implied by any forward-looking statement 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 everyone. Our mission is to one day end the suffering caused by ALS and other neurodegenerative diseases. We just celebrated Amylyx’s 10th birthday and as we look back we are very proud of the progress we’ve made towards our mission over those 10 years. 2022 was in many ways the most important year for us with the FDA approval of RELYVRIO for the treatment of adults with ALS in the U.S. following its approval with conditions as ALBRIOZA in Canada. ALS is a relentlessly progressive and universally fatal disease and RELYVRIO is the first approved treatment for ALS to demonstrate both a statistically significant benefit in function in the clinical trials as well as in observed benefit on survival in the longer term post hoc analyses.

We believe our therapy represents a meaningful advancement in treatment options for people living with ALS. Since the approval, we have seen strong interest in RELYVRIO and we are encouraged by the early success of our commercial launch. We are very proud of our teams for the way they have partnered with the ALS community and for the great progress they have made towards our goal of delivering RELYVRIO to every eligible person in the U.S. and Canada. But this is also just the start and all of us at Amylyx remain steadfast and committed to the work ahead in our commercial launches and as we work to transform what it means to be diagnosed with ALS. I will now pass to Jim to review our fourth quarter financial results and then to Margaret to share insights on our launch.

James Frates: Thanks Justin. We’re pleased to share that at this point in our launch we’re meaningfully ahead of our expectations and encouraged by the interest and demand we’ve seen from the ALS community. Margaret will share some of the important early metrics that we’re tracking, which should help you model our near-term opportunity and the total addressable market for the longer term, but first I’ll summarize Q4. Net product revenues were $21.9 million for the quarter and $22.2 million for the year with the vast majority of that revenue from the United States. As you’ll hear from Margaret in a few minutes, we’re seeing robust demand from the ALS community. Gross-to-net adjustments were approximately 18% in the quarter and in-line with our expectations.

We expect gross-to-net to remain in the 15% to 20% range for the year starting at the higher end of that range in Q1 due to the annual reset of co-pays and deductibles in Medicare Part D reenrollment as of January 1st. Inventory levels at December 31, were where we would have expected with roughly $7 million of inventory in the channel at specialty pharmacies. This represented approximately two weeks of sales at our year end run rate which we see is typical for a product launch at this point. Cost to sales were $2.8 million for the quarter. This is slightly higher than we expect for 2023 as a whole as a percentage of revenues given the royalty accruals we made during the quarter. We expect our ALS royalty obligations to be fully expensed in the second quarter of this year and we have no future royalties for sales in ALS going forward.

Research and development expenses were $22.8 million for the quarter, compared to $13.4 million for the same period in 2021 and $24.9 million in Q3. The increase was mainly driven by cost associated with the global Phase 3 PHOENIX trial and its open label extension phase and additional personnel related expenses. Going forward we anticipate that R&D will grow as we continue to execute on PHOENIX, manager our Phase 4 post marketing commitments, and invest in our pipeline. We expect our R&D expenses will be in the range of $25 million to $30 million per quarter as we moved towards the end of this year. Selling, general, and administrative expenses or SG&A were $40.8 million for the quarter, compared to $14.9 million for the same period in 2021 and $29.9 million in Q3.

The growth in SG&A during the fourth quarter was primarily driven by expenses to support our commercial launch activities and continued infrastructure build to support our public traded commercial company. We’re investing in SG&A to support our strong commercial launch and expect our spend will be in the range of $40 million to $45 million per quarter as we progress through the year. Now loss for the fourth quarter was $42.7 million compared to a net loss of $28.3 million for the same period in 2021. Turning to our balance sheet, we’re in a strong position. At year end we had cash in short-term investments of $346.9 million and zero debt. We continue to expect our existing cash in short-term investments will be sufficient to bring us to cash flow breakeven.

I’m excited about the progress we’ve made on the launch to date and look forward to sharing updates in the coming quarters. All of us at Amylyx remember that every day there are thousands of people living with ALS and our mission is to serve as many eligible people as possible. I’ll now pass the call to Margaret to share what we’re seeing from the market in terms of interest and demand for RELYVRIO and ALBRIOZA.

Margaret Olinger: Great, thanks Jim. Today, we are focused on three key priorities for our U.S. launch. The first is our effort to drive awareness and education about RELYVRIO for people living with ALS and clinicians. This includes educating that RELYVRIO is the first approved drug for ALS to demonstrate a statistically significant benefit and function in a clinical trial as well as an observed benefit on survival in a longer-term post hoc analysis, as well as sharing publications on supporting clinical data such as a peer-reviewed publication in the New England Journal of Medicine. Our second priority is engaging with payers to work towards our goal of ensuring that every eligible person who can benefit from RELYVRIO treatment has access as quickly and efficiently as possible.

The third is ensuring that 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 for people enrolled in the Amylyx Care Team Support program helping navigate the insurance process, being able to field questions, and optimizing peoples experience as best we can. Now let’s run through a few specific details to help illustrate the progress we are making on each of these focus areas. Starting with our first priority of ensuring broad awareness of RELYVRIO, we are seeing our efforts yield strong results and have observed rapid uptakes on the FDA’s approval on September 29. There were just over 1300 people living with ALS on RELYVRIO in the United States at the end of 2022, and uptake has continued since then.

We remain optimistic about our ability to continue growing from here as we believe people with ALS and their clinicians are eager to learn about and try new treatment options. By the end of this quarter we believe we are on our pace to roughly double the amount of people on RELYVRIO on a net basis. On the clinician side, we are encouraged by the prescriptions coming from the top ALS doctors and key ALS centers, but there is still significant opportunity for growth. Prescribing was fairly concentrated with roughly 70 prescribers, mostly at major ALS centers, representing approximately half of all RELYVRIO prescriptions during the quarter. With regard to the total clinician market, we believe there are roughly 2700 potential ALS prescribers in the United States.

Out of the roughly top 500 prescribers, approximately 55 of these clinicians prescribed RELYVRIO by the end of the fourth quarter. From the healthcare office perspective, about two thirds of the top ALS centers have prescribed RELYVRIO to at least one patient. We see these numbers as encouraging. As we expand our education efforts, we have an opportunity to see broader and deeper uptake among the key providers. Another notable part of our launch is the interest that we are seeing across the spectrum of people living with ALS when we look at the times of initial diagnosis. We are encouraged that regardless of the time since diagnosis, people with ALS are interested in and gaining access to this important new treatment. In other words, we are seeing people on RELYVRIO who have been newly diagnosed as well as others who have been diagnosed for more than three years.

Shifting gears to our second priority, insurance coverage. More people have already gained access to RELYVRIO through their insurance than we had anticipated at this point in our launch. U.S. insurers representing approximately one third of the covered lives have already published formal coverage policies and the vast majority provide broad access to RELYVRIO. In addition, many of the key players are included in this early group. We remain engaged with insurers across the country, including commercial and Medicare plans, and we continue to anticipate that the majority of them will formalize their policies during the first half of this year. Moving now to our third priority of ensuring people living with ALS, who have been prescribed RELYVRIO and ALS clinics, have positive interactions, our team is working expeditiously to get people living with ALS who have been prescribed RELYVRIO enrolled in the Amylyx Care Team Support programs, also known as ACT and on therapy.

Currently, it is taking us a little more than 45 days between receiving an enrollment form and RELYVRIO being shipped. We expect this process will speed up as more insurers implement formal coverage decisions. In this interim period, while the majority of plans are determining their coverage policies, access to RELYVRIO is generally through the medical exception/prior authorization process. We have been pleased to see that approximately 80% of prior authorization requests have been approved on the first submission despite most patients having unique coverage and related requirements. Overall, our team has had great success helping people with ALS who have been prescribed RELYVRIO gain access through their insurer. In the limited cases where access hasn’t been granted through an insurer, we have used our interim access program and our patient assistance program for eligible patients.

In the fourth quarter, roughly 10% of people taking RELYVRIO were part of these programs. Now turning to our launch in Canada, the interest ALBRIOZA remains widespread across the entire ALS ecosystem in Canada, and most importantly, with the approximately 3000 Canadians living with ALS and their families. We are encouraged by what we are seeing in treatment uptake. Mirroring our efforts in the U.S., we continue to educate Canadian payers on ALS disease progression and ALBRIOZA’s efficacy and safety data to ensure broad and equitable access to as many eligible Canadians as possible. On this front, we are pleased to have negotiated agreements with all of the largest private Canadian insurers to cover ALBRIOZA representing approximately 80% of the privately insured population.

With respect to public government funding, as expected, we are in ongoing negotiations with a Pan-Canadian Pharmaceutical Alliance or PCPA, which represents the provinces and territories in regards to the scope and breadth of coverage they will provide. As a reminder, this process typically takes up to 12 months to complete. Amylyx, as well as the ALS community at large, will continue to advocate for people who are covered by Canada’s public insurance options to have equitable and broad access to ALBRIOZA similar to what we have secured on the private side. Time is something this community just does not have a lot of and thus we have an elevated sense of urgency. It’s important to note that for now, due to expected public reimbursement process timelines, we anticipate a more limited revenue opportunity in Canada through at least the first half of 2023.

We are encouraged by the progress of our launches and our momentum to date, and I am very proud of our team, but there is much more work to be done. As we look throughout the rest of the year, our team remains vigilant in our efforts to educate ALS centers and look forward to educating the general neurologist. We believe we have a large untapped opportunity for additional growth as we conduct ongoing research outreach. We remain committed to driving access with and support to every eligible person living with ALS who can benefit from treatment. With that, I’ll turn the call over to Josh and Justin for some final updates and closing remarks.

Josh Cohen: Thanks, Margaret. I would also like to provide an update on where we see ourselves headed in the coming years in the United States and then provide updates on Europe, PHOENIX, and our new program in Wolfram syndrome. Starting with our current view of the addressable market, there are approximately 29,000 people living with ALS in the United States. Given the relentless and fatal nature of ALS disease progression and recognizing that not everyone will be interested in treatment, our hope is that eventually at least 10,000 people will be RELYVRIO at any point in time. Shifting to Europe, as expected we completed the SAG meeting last month. Certain major objections remain, and the CHMP has adopted another round of questions for us to respond to.

We have those in hand, and due to this additional round of questions, we now expect an opinion from CHMP mid-year and a decision at the earliest in Q3. Overall, we believe we have a strong scientific position that is supported broadly by the ALS community and a capable team leading our process. While the review process is ongoing, we continue to prepare to execute a successful launch in Europe if approved. Now I would like to share some updates on PHOENIX. Last month, we announced that the study was fully enrolled with 664 participants, which compares to 137 in CENTAUR. As you may recall, our goal was to include 600 participants in Phoenix, and we ended up enrolling more due to high demand. PHOENIX is studying a similar group to CENTAUR with slightly broader inclusion and exclusion criteria.

We have stratified PHOENIX based on whether people would meet the CENTAUR inclusion criteria or not, and plan to analyze the subset of participants who strictly meet the CENTAUR criteria, as well as the broader population. CENTAUR met its pre-specified primary outcome with all clinical secondary outcomes trending in the same direction, plus an observed difference on overall survival in a post hoc analysis and a well-tolerated safety profile. We are looking forward to PHOENIX top line results anticipated in mid-2024. As a reminder, while we expect to get data for the primary outcome of ALSFRS-R progression and several secondary outcomes in mid-2024, it’s likely that overall survival data will take another year or more to mature due to the normal course of disease progression in people with ALS.

This is similar to CENTAUR in which the final survival analysis was at the 3.5 year time point. So overall, we are confident in the design and execution of the study and looking forward to the outcome of PHOENIX. Turning to our R&D efforts, we are pursuing research of both AMX0035 and other novel drug candidates in ALS and other neurodegenerative diseases. We continue to work on new pipeline programs, new clinical indications and initiatives within the ALS community this year and in the coming years. As a first update today, we wanted to share more about our program to evaluate AMX0035 and Wolfram syndrome. Wolfram syndrome is an ultra-rare disease affecting fewer than 5,000 people in the United States. The disease leads to multisystem failure, resulting in blindness, deafness, diabetes, ataxia, neurodegeneration, and typically death by early adulthood.

Several papers characterized the disease as a prototypical disease of endoplasmic reticulum stress.

Fumihiko: These studies have very promising results, some of which were recently published in the Journal of Clinical Investigation Insight. At this time, we are close to kicking off a Phase 2 study at WashU. This study is a 12-participant open-label study, which we believe will provide key insights to guide future studies directed at registration. At this point, our IND is open and Dr. Urano’s site is activated and will hopefully enroll the first participant in the near-term. I’ll now turn the call over to Justin for a few closing remarks.

Justin Klee: Thank you, Josh. In parallel to all of the progress that we outlined on our call today, we are continuing to strengthen the breadth of our team’s collective experience and perspectives. We are pleased to share that we recently appointed Karen Firestone to our Board of Directors effective March 16. Prior to co-founding Aureus Asset Management, Karen spent 22 years at Fidelity where among other responsibilities, she managed the Biotechnology Sector Fund. She has a demonstrated track record of applying her strategic acumen and commercial mindset to drive progress in this space, and we look forward to her counsel as we continue working toward our mission. In closing, we take our responsibility to make a difference in the lives of people with ALS very seriously.

We are proud of the progress we have made to date and the fact that we are helping more than 1000 people and their families in their battles with ALS. There remains much work to do and we are focused on ensuring quick and efficient access to RELYVRIO for every eligible person who can benefit from it. Thank you all for your support and for your time today. Now, we’d be happy to take your questions. Operator, please open the call to Q&A.

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Q&A Session

Operator: The first question is from Geoff Meacham with Bank of America. Please go ahead.

Geoff Meacham: Good afternoon, guys. Thanks so much for the question. I just had one on commercial and then a quick one on Europe. In the U.S. you mentioned the centers that are responsible for the book of scripts, just want to get a sense as to the inquiries or the queue of patients across the broader ALS population. I’m just trying to get a sense of the breadth of awareness on whatever metric you guys can provide. And then on the European market, I know you probably can’t get into specifics, but can you, can the questions that you’ve gotten be addressed with current data you think or longer follow up, or is it fair to say that you may have to wait till the PHOENIX study? I’m just trying to get a sense whether there’s a, maybe a middle scenario with a more narrow label that you can still provide some limited EU access in the next say, 12 months or so. Thank you very much.

Margaret Olinger: Thanks, Geoff. I could take your question on the U.S. market first and then I could turn it over to Josh and Justin on the EU. So as I mentioned, there’s about 2700 physicians that prescribe for ALS, which is our broad target audience. During the first quarter, we are heavily focused on the top ALS centers and the top 500 prescribers of which 55% of them have written a prescription for RELYVRIO in the fourth quarter. So that continues to be our focus. There’s a lot of opportunity that remains in those top prescribers, but also a lot of patients are being seen by the general neurologists out in the communities, and that’s clearly our next runway that we have to continue to penetrate this market much more broadly than we have to date.

Justin Klee: Yes, and I’ll add on Europe. So first I’d say as you’ve seen in the U.S. and Canada, I think we have a really good case here. This drug has been approved twice and we have a team that’s very used to making strong scientific arguments here. So what I’d say is, I think we have the right scientific arguments to make to support the approval of this product, but ultimately the decision is up to regulators. So I guess we’ll have to wait and see, but I think we have all the right pieces in place to continue forward.

Geoff Meacham: Okay, great. Thanks so much.

Operator: The next question is from Umer Raffat with Evercore ISI. Please go ahead.

Umer Raffat: Hi guys. Thanks for taking my question and congrats on the launch. By my math, I feel like you will either be at or fairly close to breakeven in 1Q. Could you please comment on that? And could you give me a sense for whether the patient numbers at the end of December, not as of now, but at the end of December was approaching about 1500 to 2000, if you could clarify that? And then finally how much inventory was in the 4Q number that we just saw? Thank you very much.

James Frates: Yes, hey Umer, it’s Jim. I’ll start with that maybe in reverse order. So we did mention there’s about $2 million in inventory at the end of Q4 and that represented about two weeks at the run rate that we were at. So and we think that’s appropriate for where we were in the launch. The first question I know was about when we’re going to hit breakeven. I think that right now it’s still just really too early to tell, right? We’re only four months into launch. I think a lot will depend obviously on what we spend and versus the revenue that we pull in. But more specifically, I think as we’re seeing the demand increase, right? And again, Margaret mentioned there were 1300 patients on drug at the end of 12/31 and at the end of Q4, and we’re looking at roughly doubling that as we get to the end of March, so 2,600 patients plus or minus.

I think that one does have to be careful though, right? Because all those patients don’t come on at once, right? As they come on through the quarter we might get one month of revenue, we might get three months of revenue depending on when the patient started. And just as a reminder as well, we start for the first three weeks with a single dose of single sachet of product and we move two sachets a day for the remainder, the remaining 11 months of the year. So just be careful as you extrapolate revenue there. And I think I guess I would just say, we’re off to a really good launch. I think we’re probably going to be able to more than double our revenues in Q1. I’d say we’d be closer to tripling our revenues than we are to doubling our revenues, but wouldn’t want to give more guidance than that.

Umer Raffat: Thank you.

James Frates: You’re welcome.

Operator: The next question is from Neena Bitritto-Garg – Citi. Please go ahead.