Earnings Call Transcript - AMLX Q1 2023

Operator, Operator

Good afternoon. My name is Debbie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amylyx Pharmaceuticals First Quarter 2023 Earnings Conference Call. Please be advised that this call is being recorded at the company's request. I would now turn the call over to Lindsey Allen, Head of Investor Relations and Communications. Please proceed.

Lindsey Allen, Head, Investor Relations and Communications

Good afternoon, and thank you for joining us today to discuss our first 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 that are not historical facts are forward-looking statements based on our current beliefs, plans, and expectations. These statements include our expectations regarding RELYVRIO and ALBRIOZA, statements about regulatory developments and expected timing, our business 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 due to various risks, uncertainties, and other factors included in our recent SEC filings. You are cautioned not to place 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, Co-CEO

Thank you, Lindsey, and good afternoon. As everyone on this call knows, there is an enormous unmet need in ALS and other relentlessly progressive and fatal neurodegenerative diseases. It is our mission at Amylyx to one day end the suffering caused by these diseases. Our treatment, RELYVRIO, enables us to make meaningful advances toward and continued investment in our mission. During the first quarter, we generated $71.4 million in net product revenues, reflecting the significant progress we continue to make toward our goal of ensuring every eligible person living with ALS has access to RELYVRIO. RELYVRIO is the first and only approved treatment for ALS that met its prespecified primary outcomes in a randomized placebo-controlled trial, demonstrating a statistically significant benefit in function and showed a benefit on survival in a longer-term post-hoc analysis. These data suggest that ALS can indeed be treated. The full approval of RELYVRIO is an important step toward ALS one day being a manageable disease. The ALS community has been waiting for a meaningful treatment option since the disease was first characterized over 150 years ago, and we believe that RELYVRIO will eventually be a foundational therapy for ALS. In the first quarter, we saw a continued high level of interest from the ALS community in RELYVRIO, broadened insurance coverage, and high levels of engagement with our Amylyx Care Team, also known as ACT. Just two quarters into our launch, over 10% of the approximately 29,000 people living with ALS in the U.S. are now on RELYVRIO. Even with that success in our first six months, we have more to do. There remain many more thousands of people living with ALS in the U.S. and at least 200,000 people living with ALS globally. We are still in the early stages of our journey, and our team remains hard at work. Shifting to our plans internationally, we are diligently preparing to help bring our medicine to all eligible people living with ALS around the world. The regulatory review process in Europe remains ongoing, and we continue to expect an opinion from CHMP midyear and a decision at the earliest in Q3. Overall, we believe we have a strong scientific position that is broadly supported by the ALS medical and advocacy community, and a capable team leading our process. We continue to prepare to execute a successful launch in the EU if approved. We are proud of our team's progress on advancing our mission. And now I'll turn the call over to Margaret to share a commercial update.

Margaret Olinger, Chief Commercial Officer

Thank you, Justin. As we enter the seventh month since our U.S. launch, we remain focused on three key priorities. The first is our effort to drive awareness and education about RELYVRIO among people living with ALS and clinicians. This includes educating them that RELYVRIO is the first approved drug for adults with ALS to demonstrate a statistically significant benefit in function in a clinical trial as well as a benefit on survival in a longer-term post-hoc analysis. Our efforts to drive awareness are yielding strong results. We are seeing continued interest and demand for RELYVRIO. As of March 31, there were roughly 3,000 people on RELYVRIO in the U.S., more than double the number from the start of the quarter. We are pleased that this many people have gained access to our important treatment. It's worth spending a minute to provide some additional context on the strength of our launch. While we knew there was pent-up demand, the fourth quarter and first quarter were still well ahead of our expectations. The rate of net patient adds has begun to moderate as expected. However, we still see significant demand from people living with ALS and physicians alike. Importantly, we still have plenty of room for growth, both at the top ALS Centers and the broader neurology community. Now let me run through a few metrics that show our progress but also the growth opportunities ahead of us. By the end of the first quarter, approximately 65% of the top 500 U.S. prescribers and approximately 95% of key ALS Centers have prescribed RELYVRIO to at least one person since launch. Prescribing remains fairly concentrated, with roughly 80 prescribers, mostly at major ALS Centers, representing approximately half of all RELYVRIO prescriptions during the quarter. While we are encouraged by these data points, we see an opportunity for broader and deeper uptake at key ALS Centers and the opportunity to continue to penetrate the group of top prescribers. Additionally, we believe we have a large untapped opportunity for additional growth outside of this group of top prescribers as we expand our outreach and education efforts more broadly. Our second priority is engaging with payers to work towards our goal of ensuring that every eligible person who can benefit from RELYVRIO has access as quickly and efficiently as possible. At the end of the first quarter, U.S. insurers representing approximately 50% of covered lives have published formal coverage policies, including many of the key national and regional plans. The vast majority of these insurers provide broad access to RELYVRIO. For people living with ALS who go through the medical exception process, we are pleased that approximately 80% of prior authorization requests have been approved on the first submission. We continue to see a wide range of people living with ALS in terms of time since initial diagnosis, interested in and gaining access to RELYVRIO. Our team remains engaged with insurers across the country, and we continue to anticipate most plans will formalize their policies during the first half of this year. Our third priority is ensuring eligible people living with ALS have positive interactions throughout their treatment journey with RELYVRIO and ALS Clinics have positive interactions with Amylyx. This includes facilitating an organized, clear process to get people prescribed RELYVRIO and access to the therapy as quickly as possible, optimizing people's experience accessing RELYVRIO as best we can. Our team is working expeditiously to get people living with ALS who have been prescribed RELYVRIO started on therapy. In the first quarter, on average, it took about 30 days between receiving an enrollment form and RELYVRIO being shipped, down from a little more than 45 days in the fourth quarter. We expect to make additional progress on this metric in the second quarter with the benefit of more insurers having formal coverage decisions. In the limited cases where access hasn't been granted, our Interim Access Program and our Patient Assistance Program are available for eligible patients. In the first quarter, roughly 10% of people taking RELYVRIO were part of these programs. We are pleased with the progress we have made on our goal to ensure that every eligible person living with ALS has access to RELYVRIO, which we see as a potential foundational therapy for neurodegenerative diseases. Our launch is off to a strong start, and it is our hope that eventually RELYVRIO will become the most commonly used ALS medication. While we are clearly focused on the launch of RELYVRIO in the U.S., we also have a large opportunity internationally. ALS is a global disease, affecting more than 200,000 people worldwide. Interest in ALBRIOZA remains high in Canada, and we continue to negotiate public insurance coverage consistent with the expected public timelines for coverage. A few weeks ago, we appointed Masako Nakamura to lead our efforts in Asia Pacific and Latin America as we pursue additional opportunities to bring AMX0035 to as many people with ALS globally as possible. Masako Nakamura brings 30 years of commercial, general management, and operational leadership experience in the biopharmaceutical industry with a strong track record of introducing rare disease therapies worldwide across multiple therapeutic areas. We are very pleased that she decided to join our team to further explore opportunities for AMX0035 access around the world. I will now turn the call over to Josh to provide an important update on our R&D pipeline.

Joshua Cohen, Co-CEO

Thanks, Margaret. We are very pleased with how quickly we are bringing our important new treatment to people with ALS. Our top focus day-to-day remains the success of our commercial launches. These efforts enable the continued investment needed to bring RELYVRIO to more people living with ALS worldwide. They also enable the research and development needed to advance our pipeline in support of our mission. There's tremendous scientific interest among the neurodegenerative community to further investigate AMX0035 in other diseases. We have positive randomized clinical trial data in ALS, encouraging biomarker data from the randomized Phase II PEGASUS study in Alzheimer's disease, and a wealth of preclinical models demonstrating the effects of AMX0035 in reducing neuronal death. To prioritize which diseases to focus on, we look at the following criteria: clear unmet need, strong scientific rationale, existing and robust understanding of the natural history of the disease, biomarkers to track treatment effects, adjacencies and synergies with ALS, potential to move directly into a Phase III pivotal study, and interest and support from key opinion leaders. We are excited to announce today our plans to initiate a global pivotal Phase III study with AMX0035 in progressive supranuclear palsy or PSP, a disease which meets all of these criteria. For those of you who may not be familiar with PSP, it is a rare, progressive, and fatal neurodegenerative disorder that affects body movements, walking with imbalance, speech and swallowing, and eye movement. It is typically fatal within just 5 to 8 years. The estimated prevalence is 5 to 7 in 100,000 people worldwide, translating to between roughly 15,000 to 20,000 people in the United States. There are currently no disease-modifying treatments for PSP. In addition to PSP meeting our criteria for a significant unmet need with a well-characterized natural history, there is also a strong scientific rationale for the potential use of AMX0035 in treating PSP. PSP is both the disease of rapid and significant neurodegeneration, and its pathology is characterized by significant tau protein deposition in affected regions of the brain. In the PEGASUS Alzheimer's study of AMX0035, AMX0035 treatment demonstrated a statistically significant lowering of both phospho-tau181 and total tau in the CSF of people living with Alzheimer's disease. AMX0035 is an oral, well-tolerated, FDA-approved medication for ALS that has been shown preclinically to protect neurons against degeneration and clinically to lower tau, the hallmark protein of PSP. This has led to significant and strong support from key opinion leaders in PSP, and we are excited to work with them to test AMX0035 in a Phase III study, which I will now outline. In designing and planning the study, we have collaborated with key global academic leaders, people living with PSP, and advocacy groups working in this field. With an open IND in hand, we plan to enroll approximately 600 people in a randomized, placebo-controlled study, making this likely the largest PSP trial to date. We expect to have the study up and running by the end of this year. We are hopeful that we can provide a new treatment option, especially since there are currently no disease-modifying treatments available for this devastating disease. While we prepare to launch our pivotal Phase III study, we also remain hard at work in Wolfram syndrome. Earlier this year, we announced HELIOS, a Phase II trial studying AMX0035 in Wolfram syndrome. This study is now enrolling participants. Wolfram syndrome is a disease that leads to multisystem failure, resulting in blindness, deafness, diabetes, ataxia, neurodegeneration, and often death in early adulthood. Several papers characterize the disease as a prototypical disease of endoplasmic reticulum stress. As we have discussed in the past, we believe AMX0035 plays a role in reducing ER stress. Data on AMX0035 in models of Wolfram syndrome were published in the Journal of Clinical Investigation Insight. We believe this study will provide key data to guide future studies and expect top line results from the study next year. Importantly, we are also investing in new ALS research to continue to transform how the disease is treated. We believe that it is going to take a combination approach, targeting multiple cellular pathways implicated in disease pathogenesis to make ALS more manageable, and ultimately, to find a cure. For this reason, we are investigating other therapies with different or potentially complementary pathways to treat ALS and other neurodegenerative diseases. This includes an antisense oligonucleotide called AMX0114 that our internal R&D team has developed. IND-enabling studies of AMX0114 are underway and progressing well. We continue to expect to build our pipeline, both through internal and external sources. Before turning the call over to Jim, I wanted to share that the PHOENIX, our Phase III study of AMX0035 in people with ALS, continues to progress as planned. In February, we announced that the study was fully enrolled with 664 participants. A reminder that there will be no interim data read-out, and we expect data on the primary outcome and several secondary outcomes in mid-2024. Overall survival data will take another year or more to mature and therefore, won't be available until at least mid-2025. I will now turn the call over to Jim to review our financial results for the first quarter.

James Frates, Chief Financial Officer

Thanks, Josh. We're encouraged by the strong interest and demand we continue to see from the ALS community. From a financial point of view, our business is strong. Net product revenue was $71.4 million for the quarter, compared to net product revenue of $21.9 million for the fourth quarter of 2022, with the vast majority of that revenue from the United States. Gross to net adjustments were approximately 16% in the quarter, consistent with our expectations in the 15% to 20% range. Inventory levels at the quarter end were as expected, with approximately two weeks of inventory in the channel at specialty pharmacies. Cost of sales were $5.3 million for the quarter and in the range of our expectations as sales volume grows. For modeling purposes, keep in mind that roughly 10% of the people on RELYVRIO are receiving it for free through either our Interim Access Program or Patient Assistance Program. Research and development expenses were $24.2 million for the quarter compared to $21.5 million for the same period in 2022. These costs were primarily driven by our Phase III PHOENIX study and added personnel as we support our programs. Starting in the second quarter, we expect R&D expenses will increase as we incur meaningful expenses to initiate our Phase III pivotal study in PSP. You should expect R&D expenses to increase this year in a range of $30 million to $40 million per quarter as we move through the remainder of the year. Selling, general and administrative expenses, or SG&A, were $44 million for the quarter compared to $26.3 million for the same period in 2022. We're investing in SG&A to support our strong commercial launch and expect our spend to settle in around $45 million per quarter for the remainder of the year. Overall, we're very pleased with our results this quarter, including achieving $1.6 million of net income, just two quarters into our launch. I want to pause a moment on our overall financial results. With strong demand for RELYVRIO driving near-term profitability ahead of our expectations, we want to reiterate our long-term financial goal. Driving top-line revenue as RELYVRIO becomes the standard of care, growing profitability for our investors, and investing in a pipeline that has the potential to provide much-needed treatments for neurodegenerative diseases. We're well-positioned to build a profitable, financially strong organization for the long term. We ended the quarter with cash and short-term investments of $345.7 million and zero debt, so we're currently in a position to fund the programs we discussed today without the need to raise additional capital. Finally, just a word on guidance. Last quarter, we provided specific guidance on how the first quarter was progressing as we reported in mid-March. Since we're still early in the quarter, it's premature to provide a specific range of revenue guidance for the second quarter or for the full year at this time. The road ahead over the next few quarters is fairly simple: execute on the launch and execute on our clinical and pipeline development programs. I'm excited about the progress we've made, and most importantly, our ability to have a positive impact on the lives of so many people living with ALS. With that, I'll turn the call over to Justin for some closing remarks.

Justin Klee, Co-CEO

Thanks, Jim, and thank you to everyone for joining us today. We covered a lot of exciting news. Our commercial ramp in the U.S. and Canada is proceeding very well, and we will know more on Europe later this year. We are expanding our clinical pipeline into PSP, a market that is likely as large as ALS, with a product that has already been shown to have a favorable safety profile in another disease and that has a demonstrated effect on relevant biomarkers. And we achieved our first quarter of profitability in just the second quarter of our commercial launch in the U.S. We remain committed to our goal to help additional people with ALS and other relentlessly progressive neurodegenerative diseases gain access to new therapies. Now we'd be happy to take your questions. Operator, please open the call up to Q&A.

Operator, Operator

The first question comes from an analyst with Bank of America.

Unknown Analyst, Analyst

Great. This is a question on behalf of Geoffrey Meacham. I have two questions, please. First, you mentioned that the rate of new patient additions has moderated. Could you provide clarity on that? Secondly, could you provide more detail on your discussions with payers and what your expectations are for the remainder of the year?

Margaret Olinger, Chief Commercial Officer

Sure. This is Margaret. Thank you for your question. We continue to be incredibly pleased with our launch to date and more importantly, our ability to bring a new treatment option and hope to the ALS community, especially given that this is the first product to show in a clinical trial a statistically significant benefit in both function and survival. To reiterate a few key points, we ended the quarter with roughly 3,000 patients, again double what we started with at the beginning of the quarter. That means we are approximately 10% of the 29,000 patients living with ALS. Not surprisingly, our net patient adds can’t double forever, so in Q2, we expect the number will be lower than what we delivered in Q4 and Q1. However, we continue to see significant interest and demand for RELYVRIO from both patients and healthcare professionals, and we have a tremendous opportunity for growth both in depth and breadth at all the key ALS Centers as well as the broader neurology community. Regarding payers, we are very pleased with the progress we're making, with 50% of covered lives having published policies, and we expect that to improve further during the first half of the year.

Michael DiFiore, Analyst

Congrats on the quarter. A few for me. The first question has a follow-up to the previous ones. Now that more commercial payers have come on board, and given that you said the rate of new patient adds is beginning to moderate, could you provide any updated views on how large this initial group of patients could be and how long it could last before you achieve a steady-state?

Margaret Olinger, Chief Commercial Officer

Thank you. This is Margaret again. Regarding the bolus, it's really too early to tell when it will finish. But I can say that in Q4 and in Q1, we did see a high level of demand due to the pent-up demand, and those results were well ahead of our expectations. We have begun to see the rate of new patient adds moderate. However, we still see tremendous growth opportunities to serve all the remaining patients who are depending on us.

Justin Klee, Co-CEO

Mike, this is Justin. Thanks for your question. We continue to expect an opinion from the CHMP midyear and a decision, at the earliest, in the third quarter. In terms of the PHOENIX trial affecting conditional approval, our expectations lean toward getting conditional marketing authorization. The EMA gives conditional approval with the requirement for a follow-on study. In this case, it would be the PHOENIX trial. If we have a functional benefit, that is significant data. But ultimately, it's up to the CHMP and EMA to decide.

Corinne Jenkins, Analyst

I have a couple of questions. First, considering there are now more than 3,000 patients, how long do you anticipate it will take to reach the 10,000 patients target? And do you expect to maintain profitability for the balance of the year?

Margaret Olinger, Chief Commercial Officer

We have not provided a timeline on how long it will take us to achieve the 10,000 patients target. Our goal of reaching 10,000 patients reflects our vision that RELYVRIO will become the most commonly used ALS medication. We believe that is very achievable, given its demonstrated benefit on both function and survival. Right now, we are heavily focused on the launch execution with the goal of hitting that target as quickly as possible because patients are depending on us.

James Frates, Chief Financial Officer

Regarding profitability, we decided not to guide on that at this stage, but you can see the math of our P&L. As long as revenue growth exceeds expense growth, we can maintain profitability. Our long-term goal is to establish RELYVRIO as the #1 ALS therapy while driving long-term profitability and continuing investment in our pipeline. We don't need to go back to the market for funding due to the strong launch and interest from the community. That should differentiate us from many other companies out there.

Joshua Cohen, Co-CEO

On the topic of PSP, we have gone through an internal process to select high-priority indications for the company. PSP met the criteria we have set, showing strong support from key opinion leaders and community excitement. Our data have shown that AMX0035 protects against neurodegeneration, which applies to PSP's rapidly progressive neurodegeneration. We have shown significant reductions in tau in our Alzheimer's study. While there have been past unsuccessful attempts with anti-tau antibodies in PSP, our product has demonstrated safety and relevance.

Neena Bitritto-Garg, Analyst

Can you discuss trends regarding net adds versus total patient numbers, and any insights on the duration of therapy or dropouts you're seeing?

Margaret Olinger, Chief Commercial Officer

We haven't provided duration of treatment yet, as we are still early in the launch. The first patients who started on therapy were at the end of October and beginning of November, so they haven't been on therapy long enough to provide clarity. The general trends are in line with what we saw in the CENTAUR trial, where we observed roughly a 25% discontinuation rate at six months. However, patients haven’t been on treatment that long yet, so we'll monitor this closely.

Marc Goodman, Analyst

Can you talk about the mechanism for AMX0114? And could you provide data supporting the Wolfram study and the rationale for moving there?

Joshua Cohen, Co-CEO

AMX0114 is an antisense oligonucleotide targeting calpain-2. The Wallerian degeneration pathway has been established for a long time, and calpain-2 plays a crucial role in that pathway. Preclinical studies have demonstrated calpain-2 inhibition can be effective in several animal models of ALS, and we link it to ALS biomarkers like TDP-43. Our studies in Wolfram syndrome have shown some degree of rescue of phenotypes in both cellular and animal models, and we're excited about moving forward.

Graig Suvannavejh, Analyst

On the commercial front, do you have a sense of how the drug is being used in patients—what percent is in monotherapy versus combination? And regarding PSP, in light of past failed attempts, is there something specific about biomarkers that gives you confidence?

Margaret Olinger, Chief Commercial Officer

In terms of usage, it's a broad mix from single use of RELYVRIO to combination therapy. We're observing utility across various patient demographics, including long-time diagnosed patients and newly diagnosed patients. Some physicians may start with riluzole and then switch to or add RELYVRIO. The ease of access could impact that process, as it took up to 30 days for patients to get access to the drug. We expect this to improve as more policies come onboard.

Justin Klee, Co-CEO

Regarding biomarker-driven studies, the key opinion leaders are enthusiastic about it. AMX0035 is already an oral, safe drug that has shown efficacy in other neurodegenerative diseases, along with the significant reductions in tau seen in our studies. We believe these factors provide a robust rationale for our study in PSP.

Ananda Ghosh, Analyst

How similar is PSP to ALS regarding the downstream degeneration pathway? Also, could you share insights about how AMX0035 affects tau based on your Phase II trial results?

Joshua Cohen, Co-CEO

Both ALS and PSP involve significant cell death related to endoplasmic reticulum and mitochondrial pathways. For AMX0035's effect on tau, we have robust supporting literature linking tau and ER stress. We have seen reductions in tau in both preclinical and Phase II data, supporting its efficacy.

Operator, Operator

Thank you. There are no further questions at this time. I'll turn the call back to Mr. Klee for final comments.

Justin Klee, Co-CEO

Thank you all very much for joining us this afternoon. We covered a lot of exciting news. Our commercial ramp in the U.S. and Canada is proceeding really well. We're expanding into another clinical indication, which has a huge unmet need and has a market that is probably likely as large as ALS. We're really excited about our first quarter of profitability in just the second quarter of our U.S. launch. We are a mission-driven company with many more people to help, both with ALS and other neurodegenerative diseases. Profitability allows us to sustain our operations and continue helping more patients. Thank you for your support, and we hope you have a great rest of your day.

Operator, Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.