Equities

Amylyx Pharmaceuticals Faces Stock Plunge After ALS Drug Trial Failure

Amylyx to cut 70% of workforce, pull ALS drug after trial failure, impacting sales and FDA approval scrutiny.

By Jack Wilson

4/4, 07:58 EDT
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Key Takeaway

  • Amylyx Pharmaceuticals' stock fell 83% after its ALS drug, Relyvrio, failed a Phase 3 trial, showing no significant efficacy.
  • The company plans to cut 70% of its workforce and is considering pulling Relyvrio from the market following the trial's outcome.
  • FDA's approval process scrutinized as Relyvrio's failure echoes concerns raised by previous controversial drug approvals.

Drug Trial Failure

Amylyx Pharmaceuticals announced the failure of its Phase 3 trial for Relyvrio, a drug developed to slow the progression of ALS (Lou Gehrig’s disease). The trial revealed "no significant difference" in ALS severity between patients who received Relyvrio and those who received a placebo. This outcome is particularly disheartening for the ALS community, given the limited treatment options available for this fatal condition. Relyvrio, also known as Albrioza in Canada, stands as Amylyx's sole product, with no other clinical-stage assets in development. Following the trial's results, Amylyx's stock plummeted by 83% to $3.24, a stark contrast to its previous close at $18.97.

Financial Implications and FDA Scrutiny

The failure of Relyvrio's trial casts doubt on Amylyx's financial future and the FDA's drug approval process. Amylyx reported $380.8 million in sales for Relyvrio in 2023, with projections reaching up to $952 million by 2029. However, the trial's outcome has significantly diminished these expectations. The FDA's decision to approve Relyvrio in 2022, based on a single small-scale trial, is now under critical examination. This situation echoes the controversy surrounding the FDA's approval of Biogen's Alzheimer's drug in 2021, highlighting the risks of approving drugs with minimal data in diseases with high unmet medical needs.

Job Cuts and Market Withdrawal

In response to the trial's failure, Amylyx is cutting approximately 70% of its workforce and expects to incur around $19 million in severance charges. The company has also announced the discontinuation of Relyvrio's market promotion and is considering its withdrawal from the market. Despite the setback, Relyvrio will remain available for the time being as Amylyx engages with regulatory authorities and the ALS community over the next eight weeks to discuss the trial results.