On Thursday, Deutsche Bank adjusted its financial outlook for Amylyx Pharmaceuticals Inc. (NASDAQ: AMLX), lowering the company's stock price target to $4 from the previous $8, while still maintaining a Buy rating. This decision follows Amylyx's announcement of the voluntary withdrawal of its drug Relyvrio from the U.S. market and Albrioza from the Canadian market.
The company has initiated a significant restructuring process due to the withdrawal, which includes shutting down all operations outside the U.S. and commercial operations within the U.S., as well as a workforce reduction of approximately 70%.
The restructuring of Amylyx comes after a comprehensive review of data from the ongoing PHOENIX study. Despite the market withdrawal, the company will continue the PHOENIX trial and provide Relyvrio to patients who choose to stay on the treatment through a free program.
Amylyx's focus is now shifting entirely to its pipeline, which includes AMX0035 for Wolfram syndrome, with phase 2 open-label data expected to be presented on April 10th, and progressive supranuclear palsy (PSP), with phase 3 data anticipated in 2025 or 2026.
Deutsche Bank has updated its financial model for Amylyx to account for the complete withdrawal of Relyvrio and Albrioza after the first quarter of 2024. The model also includes the impact of the company's restructuring and incorporates risk-adjusted revenues for the treatments of Wolfram syndrome and PSP. The bank has assigned a 40% probability of success (PoS) for Wolfram syndrome and a 25% PoS for PSP.
Given Amylyx's current cash balance and the planned restructuring, Deutsche Bank estimates that the company's cash on hand at the end of the first quarter of 2024 will be approximately $400 million, which is expected to be sufficient to fund operations until at least the end of 2025.
The firm also notes that no to minimal value has currently been attributed to the company's Wolfram syndrome and PSP programs, which supports the continuation of a Buy rating for Amylyx shares.
InvestingPro Insights
In light of the recent developments at Amylyx Pharmaceuticals Inc. (NASDAQ: AMLX), current InvestingPro data provides a deeper financial perspective. The company's market capitalization has adjusted to $178.27M, reflecting the market's reaction to the restructuring news.
The P/E ratio stands at an attractive 3.72, with an adjusted P/E ratio for the last twelve months as of Q4 2023 at 4.36, suggesting a potentially undervalued stock if the company can successfully pivot its strategy. The astonishing revenue growth of 1612.94% over the last twelve months is indicative of the company's previous momentum, which it will aim to regain post-restructuring.
InvestingPro Tips highlight the significant discrepancy between the current price and the fair value estimates, with analyst targets suggesting a fair value of $4 and InvestingPro's own fair value estimate at $3.73.
This disparity may capture the uncertainty surrounding the company's future but also hints at potential upside if Amylyx can navigate its clinical trials successfully. With the next earnings date set for May 9, 2024, investors will be keenly watching for any signs of progress or updates on the company's pipeline.
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