Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) Q3 2023 Earnings Call Transcript

Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) Q3 2023 Earnings Call Transcript November 11, 2023

Operator: Good morning. My name is Keith, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amylyx Pharmaceuticals Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please be advised 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 proceed, ma’am.

Lindsey Allen: Good morning, and thank you for joining us today to discuss our third 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 current and planned clinical trials and regulatory developments and the expected timing thereof, our business and marketing 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 morning. As we sit here three full quarters into our U.S. launch in ALS, we are proud of what we have accomplished. We are also keenly focused on the work we still need to do to help transform and improve the way that ALS is treated. Our progress with RELYVRIO continues. As of September 30, 2023, there were roughly 3,900 people living with ALS, taking RELYVRIO in the U.S. We generated $102.7 million in net product revenues in the third quarter and $272.3 million in the first three full quarters of launch. We are incredibly pleased with how quickly RELYVRIO has been adopted at key ALS centers and with our engagement with clinicians. While we will continue our efforts to grow within these centers, we are now expanding our focus beyond those top centers based on our experience in the field and new research that points to the fact that roughly half of all people living with ALS receive care from clinicians that do not specialize in ALS and are likely unaware of the benefits of RELYVRIO.

A key message that you will hear on our call today is that we are continuing to evolve our commercial focus as we look to transform the ALS market. We recognize that it may take time and additional data from PHOENIX to reach the many clinicians who have yet to prescribe RELYVRIO as we work towards our goal that at least 10,000 people will be taking RELYVRIO at any given time. Margaret will provide additional details. As an organization, we are focused on both delivering on our commercial and R&D goals in the near term and investing for the long-term with a pipeline focused on treating neurodegenerative diseases. Importantly, our PHOENIX study is progressing well, and we now expect to report top-line data from the 664 participant study in the second quarter of 2024.

We continue to be confident in the design and execution of the study. Josh will provide additional details on PHOENIX, review our pipeline and share the key conclusions from data we presented at the Northeast ALS Consortium meeting last month. He will also review data from CENTAUR that was recently published in a prominent peer-reviewed medical journal that reaffirm the confidence we have in the survival data for RELYVRIO. As a reminder, the CENTAUR study was the basis for the full approval from the FDA that we received for RELYVRIO in late September 2022 and our approval with conditions in Canada. We also remain committed to bringing the benefits of RELYVRIO outside the U.S. and Canada to the more than 200,000 people living with ALS worldwide.

Assuming the data from PHOENIX is supportive, we plan to seek approval in the European Union as quickly as possible. In addition, we continue to interact with key stakeholders around the world to explore opportunities for access like we did in Israel and France, and we are engaging with regulators in Japan. RELYVRIO gives us the opportunity to start to transform ALS from symptom management as standard of care to a disease with meaningful interventions, and our team is working hard to accelerate this shift because we know people living with ALS have no time to wait. While we are pleased with the progress we’ve made to date, there are so many more thousands of people to help and clear opportunities ahead of us for growth in the U.S. and Canada and throughout the world.

I will now turn the call over to Margaret to share some additional detail on our commercial launches and plans in the U.S. and Canada.

Margaret Olinger: Thank you. As Justin mentioned, we ended the quarter with roughly 3,900 people on RELYVRIO in the U.S., up from roughly 3,800 at the end of the second quarter. With our goal that at least 10,000 people living with ALS will be taking RELYVRIO at any given time, we are working hard to accelerate this growth, and I will detail some of the specific plans shortly. The interest and engagement among our prescribers remains strong, and we saw a steady cadence of new prescriptions written in the third quarter. In addition, fill times were down to about three weeks for people living with ALS enrolling in the quarter. As we think about how our growth has evolved this year, the slowdown in net adds this quarter was primarily driven by increased discontinuations for a variety of reasons.

We have already begun implementing new educational initiatives, which I will touch on in a few minutes. In addition, we are developing an updated clinician engagement and marketing program in preparation for PHOENIX. We believe support of PHOENIX’s results will reinforce the robust data currently available and help all aspects of our launch with greater awareness, demand and greater duration of use. Our hope is that these data will further demonstrate that RELYVRIO can significantly impact people living with ALS. Turning to the quarter. Prescribing remain concentrated with roughly 80 prescribers mostly at major ALS centers, representing approximately half of all RELYVRIO prescriptions and approximately 300 prescribers representing the vast majority of prescriptions.

We are pleased to have a core group of active riders at the top centers, just three full quarters into our U.S. launch. And roughly 25% of the people treated at these centers were taking RELYVRIO. There is still a clear opportunity for continued growth, as our research shows that roughly two-thirds of people living with ALS in these centers were on at least one approved ALS drug. And like I said, only 25% of patients in these centers were taking RELYVRIO. The top clinics are actively prescribing RELYVRIO, and we continue to educate, optimize and reiterate our messaging about RELYVRIO’s efficacy, including the data on early use of RELYVRIO and the importance of staying on treatment as well as the safety profile. As Justin mentioned, we have also learned through experience in the field in further market research that roughly half of all people with ALS received care from clinicians that do not specialize in ALS.

For the most part, this group is not prescribing RELYVRIO. We are developing and we’ll be rolling out new marketing initiatives to reach the group of both potential prescribers and people with ALS, who may be unaware of RELYVRIO in its benefits on both function and survival. These include increasing our digital presence, enhancing our nonpersonal efforts and optimizing our field strategy. We view this as a key source of future growth. Circling back to discontinuations. 60% of people taking RELYVRIO remain on therapy six months after initiation in the U.S. We believe some discontinuations are addressable, especially when comparing our discontinued rate in the U.S. to Canada. In Canada, roughly 80% of insured patients, both private and public are still on therapy six months after starting treatment.

Our Canadian team has made substantial efforts to educate on the importance of remaining on therapy. While the Canadian system is clearly different from the U.S., including the fact that it is a more concentrated system, we do believe we can leverage our learnings in Canada, in the U.S. and improve our discontinuation rate. We have begun to deploy the learnings and messages from Canada in the U.S. We believe the key is to educate clinicians in their offices on the benefits of RELYVRIO and right expectations with them, so they are prepared to set expectations with their patients. Overall, RELYVRIO is a well-tolerated drug, and we are optimistic that our additional educational efforts in the U.S. will result in increased prescribing and duration of use.

To summarize, we are off to a strong start with significant interest and engagement from the major ALS centers. Operationally, our team is delivering and people living with ALS are able to start therapy quickly. We are focused on three goals that will drive our commercial strategy going forward. First, we are optimizing our approach to engaging with key clinicians to maintain and continue to grow that segment of the business. Second, we will increase our programs to build awareness among clinicians and people living with ALS and their caregivers outside of the key centers. And third, we will take the learnings from Canada and our insights in the U.S. to educate on appropriate utilization and to support persistency. We have more work to do, but we are also pleased to be off to a great start and honored to continue to serve more and more of the approximately 30,000 people living with ALS in the U.S. and approximately 3,000 people living with ALS in Canada.

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

James Frates: Thanks, Margaret, and good morning. As you’ve heard, we have an excellent penetration and engagement among the top ALS centers and we remain optimistic and committed to the potential for RELYVRIO. As we adapt to our focus and await PHOENIX data, we’re confident in the long-term prospects of our business. In the meantime, we’re profitable and focused on being prepared for success when PHOENIX reads out in the second quarter of next year. Now let me turn to the financial results for the quarter. Net product revenues were $102.7 million for the third quarter compared to net product revenues of $98.2 million for the second quarter of 2023, with the vast majority of that revenue coming from the United States. Our results were impacted by a number of factors.

In addition to what Margaret mentioned earlier, there was also a higher number of people living with ALS receiving free goods, slightly over 15% versus roughly 10% in Q2. Gross-to-net adjustments were approximately 8% in the quarter. This is below our long-term expectations and was similar to Q2. We continued to see lower chargebacks and rebates than we had anticipated. Going forward, we expect our gross-to-net will settle in the range of 12% to 15%. Inventory levels at 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 $5.2 million for the quarter, roughly 5% of net product revenues. This is within the range of our expectations.

Q3 was helped by a low rate of scrap and the completion of our royalty obligations in the second quarter. Going forward, we expect COGS to be in the range of 5% to 10% of sales. Research and development expenses were $30 million for the quarter. You should expect R&D expenses to be in the range of $35 million to $40 million in the fourth quarter as we start enrolling participants in our new global Phase 3 trial in PSP and advance other programs in our portfolio. Selling, general and administrative expenses, or SG&A, were $48.7 million for the quarter compared to $43.4 million in Q2. The increase was mainly driven by increases in marketing expenses, personnel and additional charitable contributions in the quarter. We expect SG&A expenses to be in this range for the fourth quarter.

These results led to a strong bottom line. We generated $20.9 million in net income, representing our third quarter in a row of profitability. Finally, we ended the quarter with cash and short-term investments of $355 million and zero debt. Our balance sheet remains strong as our assets increased $13 million in the quarter, and we paid down approximately $18 million in payables during Q3. We’re pleased with our strong financial position, and we are well situated as we await the completion of the PHOENIX trial. Our launch has shown the value of and interest in RELYVRIO among the top ALS centers. We’re confident in our ability to continue to grow our top-line, invest in our pipeline to provide much needed additional treatments for neurodegenerative diseases and to deliver on our bottom line.

I’ll now turn the call over to Josh to discuss our R&D program updates.

Josh Cohen: Thanks, Jim. We believe RELYVRIO, also known as AMX0035, may have applicability across other neurodegenerative diseases, and we are actively advancing clinical trials to evaluate AMX0035 in progressive supranuclear palsy or PSP and Wolfram syndrome as well as advancing an antisense oligonucleotide in ALS. AMX0035 is comprised of sodium phenylbutyrate and Taurursodiol and work synergistically to prevent or slow cell death. We are on track to launch the Phase 3 ORION trial of AMX0035 in PSP during this year. We recently presented the ORION study design at the Neuro 2023 Conference and received positive feedback from the community there. Additionally, we continue to progress our Phase 2 trial in Wolfram syndrome and expect to report results in 2024.

We are also advancing AMX0114, our antisense oligonucleotide targeting Calpain-2 through IND-enabling studies and expect to enter the clinic in 2024. We recently presented preclinical data at the NEALS conference on this candidate. In addition to advancing these new therapeutic programs, we are also advancing a new composite biomarker to diagnose ALS earlier. Current data suggests that diagnosis takes about a year. The goal of this program is to create a tool that allows for earlier diagnosis of ALS, which may result in earlier treatment and better outcomes. We shared that we are conducting this program at NEALS this year. We intend to provide a full set of results from initial experimentation in 2024. For several years, we have also been working on a new taste-masked formulation of RELYVRIO.

This formulation may allow for new intellectual property. We are planning to file an IND and conduct Phase 1 testing for our innovative formulation in 2024. This quarter, we also continued to publish RELYVRIO data. RELYVRIO is the first and only approved treatment for ALS to demonstrate a statistically significant benefit in function in a clinical trial as well as a survival benefit in a longer-term post-hoc analysis. Just recently, an analysis comparing the long-term survival of participants in the trial to a historical clinical trial control group was published in the annals of clinical and translational neurology. The results of this post-hoc analysis demonstrated that the median overall survival was 10.4 months longer in the AMX0035 group than in the historical clinical trial group.

As we — finally, as we approach the top-line readout for PHOENIX, we are focused on our execution and confident in our setup for success. First, travel design is based on the success we saw in CENTAUR, which was a randomized, placebo-controlled study meeting its prespecified primary outcome. Second, while we design the study to allow for a broader entry criteria, the population that enrolled are very similar to CENTAUR, as shown in a poster presented at NEALS. Lastly, we enrolled 664 participants in a three to two randomization and serve roughly 5x the size of CENTAUR in the step. Interest among investigators is high, and we have so far executed well and enrolled per our planned timeline. In closing, our launch is off to a strong start, and we have made great progress towards our goal of RELYVRIO becoming the most commonly used medicine in ALS.

We eagerly await the data from PHOENIX now expected in Q2 2024 and are simultaneously exploring if RELYVRIO can help people with other neurodegenerative diseases, including PSP and Wolfram syndrome. Overall, we are very pleased with what we have achieved as an organization to date and with the substantial opportunity ahead of us, both with our commercial launch and our pipeline. 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: Yes, thank you. At this time, we will begin the question-and-answer session. [Operator Instructions]. And the first question comes from Corinne Jenkins with Goldman Sachs.

Corinne Jenkins: Good morning. So can you just help clarify a little bit on the discontinuations that you’re seeing? Or are these primarily due to adverse events, disease progression or kind of patients ultimately dying? Or are you in the — kind of as a follow-on from that, are you seeing any changes in the type of patients that’s coming on to drug now versus during the early launch, particularly with respect to time since diagnosis?

Margaret Olinger: Yes. Thank you very much for the question. This is Margaret. So yes, on the discontinuations, there’s a variety of reasons why people discontinue ALS therapies. But it’s important to remember that in many ways, it’s really connected to the disease state sadly. So as we mentioned, we’re deploying tactics designed to help lower the rate of these types of discontinuations, including taking the key learnings from Canada, where we heavily focused on the importance of remaining on therapy because our long-term efficacy is really based on being on therapy for the long-term. So that’s highly what we’re focused on. And the second question regarding mix of therapies. We continue to see a mix of therapies, a mix of patients coming on therapy with the prevalent patients.

But I would say in the third quarter, we’ve probably seen a slightly higher mix of patients coming on that were more newly diagnosed patients, and we define that as patients that have been diagnosed in the last six months.

Justin Klee: Yes. And maybe the only thing I’ll add there as well. Just going to the discontinuation specifically, at six months in the U.S., we’re seeing roughly 60% of people remaining on therapy. In Canada, however, we’re seeing roughly 80%. So what this tells us is that we believe that we can impact this. And so that’s what we’re going to be trying to do over the coming quarters.

Corinne Jenkins: And do we know what kind of the industry standard is for ALS drugs on the whole, like what’s sort of the average duration of therapy or discontinuation rates for the broader cost of therapies in that indication?

Josh Cohen: Yes. It’s a little hard to say. Obviously, we’re all kind of pulling different data on different therapies and probably don’t talk too much about the other therapies on the market. But again, I think our goal is to be best-in-class here. And looking at Canada and some of the data we’re seeing there, we believe this is an area we can continue to see opportunity and continue to grow.

Margaret Olinger: Yes, and I would just say — sorry, and I was just going to add to that. We continue to believe that patients who get on therapy earlier and stay on therapy longer will have better patient outcomes, and that’s certainly our objective and mission moving forward.

Corinne Jenkins: Okay. And then I guess, how quickly can we expect to see you guys toggle this, in particular, given the acceleration in patient growth in the first half of this year? Or should we expect this to be a big factor into the fourth quarter? And if you could comment on kind of trends you’re seeing there would be helpful as well.

JoshCohen: Yes, I’d say it’s probably early to comment on how the next quarters will land. But what I can say, and I think, as Margaret mentioned, we have a number of initiatives that we’re rolling out that we hope will impact things. In the top centers and while we have — percent of people on therapy with — or 25% of people on RELYVRIO, roughly 66% of people are in any ALS therapy. So we see a big opportunity there, and we’re going to continue optimizing that. And then as we share what we found is roughly half of people are not actually seen by an ALS specialist. And so there’s a big opportunity to get RELYVRIO broader beyond just the key ALS centers. And then I think finally, as we touched on, too, on the discontinuation side, we’ve seen tactics that have worked in regions. And we’re going to try to use those in the U.S. as well and hopefully continue to see growth there.

Justin Klee: And Corinne, just bringing it back to that big picture, I think in short, we see great near-term growth opportunities and also long-term growth opportunities. I mean, we have 3,900 people on treatment as of the end of the quarter, and there are roughly 30,000 people in the U.S. at any one time who have ALS. And while we have the growth opportunities, as Josh was outlining, we also have the PHOENIX study results, which we think will be a huge milestone for the ALS community, the first time that a treatment would have positive results from two studies. So I think we have great growth opportunities ahead of us right now, and we have the PHOENIX trial results, which we think will further accelerate that.

Corinne Jenkins: Thank you.

Operator: Thank you. And the next question comes from Geoff Meacham with Bank of America.

Geoff Meacham: Good morning guys. Thanks for the questions. Just had a few. So on PHOENIX, the first one is — I know it’s splitting hairs, but mid ’24 versus 2Q, is that based on a faster event rate? Or did you guys just want to get more specific with the guidance? And the second question is compassionate use in France and maybe other geographies, how much incremental revenue could we expect to see from some of these? Just thinking about going into formal full approval as you think about Europe, but does compassionate use kind of be a — is that a leading indicator, I guess of ultimate demand? Thank you.

Josh Cohen: Yes. So maybe on PHOENIX first. I think we first said mid ’24 maybe at this point over a year ago or otherwise. So I do think it’s just a case of getting more specific as we’re getting closer and nearer to the readout there. And then I’ll pass it over to Jim to talk about the compassionate use impact on revenue.

James Frates: Yes, thanks Geoff. Good morning. We just started up in France late last month. So it will be interesting, and it remains to be seen the demand that we see there. I do think this will be incremental revenue if we see it through — as we see it through 2024 and then hopefully, ultimate approval. And that said, it is going to be an important opportunity to have the key centers get experienced with RELYVRIO. And additionally, those centers tend to be more concentrated in Europe than they are in the United States. So it’s important for us to get access to patients. But given the size, frankly, of our revenues in the United States, while it will be — it will certainly be incremental, but the main driver we’re looking for is full approval in Europe.

Geoff Meacham: Got you. And just a follow-up to that real quick. When you think about filing in Europe, I know you guys have been through a back-and-forth process as of now. But for PHOENIX, do you think you would have to wait for OS to hit? Or do you think you could file theoretically, if you hit on just the functional data set for next year? Thank you.