Insights

Why Amylyx Pharmaceuticals Stock Is Bolting Higher Today

What happened

Amylyx Pharmaceuticals (NASDAQ: AMLX), a clinical-stage biopharma, is off to a good start this week. Shares of the small-cap biotech are up by a healthy 12%, on above-average volume, as of 11:54 a.m. ET Tuesday morning. 

What’s sparking this double-digit rally? Amylyx’s shares are responding positively to the news that the Food and Drug Administration (FDA) has decided to reconvene a panel of experts to discuss the pros and cons of the experimental amyotrophic lateral sclerosis (ALS) drug AMX0035. 

So what 

Earlier this year, this expert panel voted six to four against approving AMX0035 as a treatment for ALS. The company said that additional analyses on the drug’s clinical trial data had led to a major amendment regarding this filing, prompting the FDA to take a second look. The agency is now slated to make a final decision on AMX0035 by Sept. 29, 2022. The drug’s target action date was previously scheduled for June 29, 2022. 

Now what

Is Amylyx stock a screaming buy after this regulatory update? It’s hard to say. On the one hand, ALS is an indication that could easily produce blockbuster sales (greater than $1 billion per year). That’s a tidy sum for a company with a market cap of approximately $1.3 billion at the moment.

The problem is that the degree of risk involved with this key regulatory decision is hard to decipher. Speaking to this point, Amylyx didn’t provide much in the way of details about the analyses that had led to this change of heart at the FDA. Without more information, this biotech is arguably suited only for investors with a high tolerance for risk.  

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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