Amylyx Pharmaceuticals, Inc. (AMLX) Earnings Call Transcript & Summary

Good morning. My name is Morgan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amylyx Pharmaceuticals First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that this call is being recorded at the company's request. I would now like to turn the call over to your host, Lindsey Allen, Head of Investor Relations and Communications. Please proceed.

Good morning, and thank you for joining us today to discuss our first quarter 2024 financial results. With me on the call are Josh Cohen and Justin Klee, our co-CEO and Jim Frates, our Chief Financial Officer; and Dr. Camille Bedrosian, our Chief Medical 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 plans with respect to AMX0035 and AMX0114. Statements regarding current and planned clinical trials, Statements regarding regulatory developments and the expected timing thereof, our business strategy and outlook and our expected financial performance and cash runway. 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.

Good morning, and thank you all for joining us today. The first quarter of this year was a difficult one for Amylyx as an organization and especially with the ALS community. The top line results from the PHOENIX trial of AMX0035 and ALS were deeply disappointing and surprising given the prior CENTAUR trial results that had showed a meaningful benefit of AMX0035 for people living with ALS and supported an FDA approval. But as a mission, [indiscernible] the next steps were clear. We moved quickly to restructure our organization in order to continue our work for 1 day ending the suffering caused by neurodegenerative diseases. Not long after the PHOENIX trial results in early April, we announced the planned interim analysis results from our study of AMX0035 in Wolfram syndrome, a program we have been developing for nearly 7 years. The data showed stabilization or even improvement across the major outcomes in the trial. These data strengthen our belief that we've been investigating for over a decade that targeting cell death mechanisms is an important approach across many different diseases. It is therefore critical to continue to focus our resources on matching the mechanism of our treatment candidates with the mechanisms of disease and ideally incorporating measurable biomarkers in our development that are consistent with disease progression. In that spirit and in pursuit of our mission, we continue to advance our 3 key programs that have been in the works for several years, AMX0035 for the treatment of Wolfram syndrome, AMX0035 for the treatment of Progressive Supranuclear Palsy, or PSP and AMX0114, our antisense oligonucleotide opening Calpain-2 for the treatment of ALS. For Wolfram, we are seeing early evidence of benefit across multiple organ systems based on well-established outcomes such as C-peptide response. These results are consistent with our prior preclinical studies. We plan to meet with FDA to discuss next steps in the program. The PSP community continues to be excited about our trial because of the tau lowering effects we saw with AMX0035 in prior Alzheimer's study. We expect to have data from an interim analysis of this study mid next year. AMX0114 is a potent antisense oligonucleotide targeting inhibition of Calpain-2, a well-established target in a number of neurological diseases and published data suggests Calpain-2 is the primary protease that cleaves neurofilament light chain. We expect to enroll the first participants in our ALS trial later this year. Each of these programs address neurodegenerative diseases with well-defined mechanistic rationale, well defined and measurable biomarkers and the foundation of rigorous preclinical data upon which we have based our clinical work. All with the goal of bringing important therapies to communities with high unmet need. And critically, we currently have the cash runway into 2026 through meaningful milestones in each of these programs. Since founding Amylyx more than 10 years ago, we have built a foundation focused on the science behind what drives cell death and degeneration. These pathways remain critically important across many diseases of high unmet medical need and we will continue the work to further our mission. I will now turn the call over to Camille to provide an update on these key clinical programs.

Thank you, Justin, and I wish all of you a good morning. I'm going to begin today by providing an overview of the mechanistic rationale for AMX0035 at a cellular level and share why we are so excited to continue studying it in Wolfram syndrome and PSP. I also will discuss the mechanistic rationale of AMX0114 in neurodegenerative diseases. AMX0035 was designed to mitigate neurodegeneration by simultaneously targeting and reducing endoplasmic reticulum or ER stress and mitochondrial dysfunction. ER stress is activated when protein homeostasis is disrupted, leading to the accumulation of misfolded and unfolded proteins in the ER. This activation leads to an adaptive response in order to restore homeostasis. The unfolded protein response pathway is activated by initiating 3 protein cascades IRE1, PERK and ATF6. From the literature, these protein cascades act to put the cell in a defensive mode where most new protein and RNA synthesis is slowed or halted and the cell prioritizes production of chaperone proteins and phagocytic activity. Prolonged ER stress is a cause of cell death. Mitochondrial dysfunction that occurs in response to stress, results in BAX-protein activation to open a pore through which cytochrome C is released. This release in turn activates Caspase III, which is known to be the execution protein that causes apoptotic cell death. Based on existing literature and our preclinical data, there is a wealth of evidence that sodium phenylbutyrate or PB and Taurursodiol or TURSO, can prevent activation of these pathways and reduce the resulting cell death. In our experiments, we have repeatedly shown that the combination of PB and TURSO outperforms the individual events -- agents. This research has led us to Wolfram syndrome, a monogenetic disease in which ER stress and mitochondrial dysfunction are driving the underlying disease pathophysiology are aligning with the mechanism of action of AMX0035. Individuals with Wolfram syndrome generally have mutations in the WFS1 gene that encodes the protein wolframin. Wolframin spans the ER membrane and is thought to play a role in protein folding and aid in the maintenance of ER function by regulating calcium levels. Therefore, Wolfram syndrome is often characterized in the literature as a prototypical disease of ER stress given the observed activation of the 3 protein arms in the ER stress cascade. Also, there is evidence in the literature for mitochondrial dysfunction and the activation of caspase III. Wolfram is generally characterized by childhood onset diabetes mellitus, optic nerve atrophy, deafness, diabetes insipidus, and neurodegeneration, ultimately resulting in premature death. The disease has sought to impact approximately 3,000 people in the U.S. and possibly more. Over the last 7 years, we have been collaborating with Dr. Fumihiko Urano and his team at Washington University School of Medicine in St. Louis on preclinical research to evaluate the effect of AMX0035 on Wolfram. The main data from this collaboration are published in JCI Insight. We studied the compounds and people derive beta cells and neurons, harboring the clinical mutations in the WFS1 gene and then in an animal model, harboring a double knockout of the WFS1 gene. We observed sizable reductions in cell death and increased insulin production upon glucose administration in beta cells and substantially reduced cell death in neurons. In the WFS1 knockout mice, we observed that AMX0035 halted the progression of the diabetic phenotype in these animals. We initiated our Phase II Wolfram syndrome clinical study called HELIOS in April 2023 following these findings. And in April of this year, we announced promising data from a planned interim analysis of 8 of the 12 participants enrolled who had their week 24 assessment. Our hypothesis of priority was that AMX0035 could slow beta cell decline to deterioration of glycemic control and slow progression of other characteristics of the disease. In actuality, based on the interim data, treatment with AMX0035 resulted in an improvement in beta cell function as evidenced by an increase from baseline in the C-peptide response to a mixed meal challenge, the primary outcome. Improvements in other measures of glycemic control also were reported as part of the interim data. In addition, we reported some improvement in vision in a subset of participants, which was unexpected given that visual acuity worsens over time, often leading to blindness according to natural history. These results were supported by improvement or disease stability as measured by clinician and patient reported outcomes. AMX0035 was generally well tolerated in all participants and all continue in the study. Based on the strength of these interim data and the lack of approved treatment options for people living with Wolfram syndrome, we are planning to engage the FDA as soon as we can initially with these interim data. Turning to our work in PSP. We continue to plan for an interim analysis and expect data in mid-2025. PSP [indiscernible] approximately 700,000 people worldwide and affects eye movement, walking imbalance, speech and swallowing and cognitive function. There are no approved treatments for this fail disease. There is a strong genetic linkage of tau to the disease and clear tau pathology when brains from people with PSP were observed postmortem. Multiple pathways, including ER stress and mitochondrial dysfunction, have been implicated as contributors to tau dysfunction and aggregation. In the clinical trial of Alzheimer's disease, AMX0035 has been shown to target multiple pathways of neurodegeneration and significantly reduce CSF total tau and phospho-tau levels. Out of 288 measured proteins, tau was the most changed by AMX0035. We believe AMX0035 has strong scientific rationale in PSP based on these considerations. We also remain committed to the ALS community and are developing AMX0114, our antisense oligonucleotide or ASO targeting inhibition of Calpain-2. Decades of scientific literature support an essential role for Calpain-2 in the process of axonal degeneration. Calpain-2 inhibition has been studied in models of multiple sclerosis, Huntington's disease, Parkinson's disease, chemotherapy-induced peripheral neuropathy, spinal cord injury and Alzheimer's disease, to name a few, with repeatedly positive effects across the literature. In considering targeting Calpain-2, specificity and cellular localization are critical given that there are at least a dozen calpains. We leveraged ASO technology targeting the CNS or central nervous system by intrathecal delivery to initiate a program designed to effectively and specifically inhibit Calpain-2. In our hands and with collaborators, we have observed rescue of cellular degeneration and neurofilament biology in multiple cellular experiments. Having well-defined biomarkers is also essential as we progress this compound into the clinic. Calpain-2 is a protease known to cleave many substrates, including neurofilament, tau and TDP43 proteins. These proteins in addition to neurofilament light provide important disease and target engagement biomarkers. We are planning to file an IND and our team is poised to initiate a multiple ascending dose clinical trial of AMX0114 in people living with ALS in the second half of this year when the IND is cleared. Now I will turn the call over to Jim to discuss financial updates from the quarter.

Thank you, Camille. As you've heard, over the last 2 months, we took swift and comprehensive action to restructure our organization, including an approximately 70% workforce reduction to focus on delivering data from our 3 key programs in Wolfram syndrome, PST and ALS. These actions provide us with the expected cash runway into 2026. Giving us time to report additional data from each of our clinical trials. I'll now review our financial results for the quarter and our expectations on the impact of the restructuring on the quarters ahead. Net product revenues were $88.6 million for the first quarter, down from $108.4 million in the fourth quarter of 2023. For context, the rate of new prescriptions being written as well as refills of existing prescriptions started to decline immediately after our announcement on March 8 that our PHOENIX study did not meet its primary or secondary endpoints. For modeling purposes, you should anticipate us reporting no meaningful revenues after March 8. Cost of sales were $116.4 million for the quarter. This included noncash charges of approximately $110.5 million associated with the write-down of inventory and the loss on CMO purchase commitments related to the decision to voluntarily discontinue the marketing authorizations in the U.S. and Canada. We may report revenue in COGS in the months ahead due to the timing of true-ups related to our final accrual estimates as we wrap up sales for RELYVRIO and ALBRIOZA, but the expectation is that any future revenues and COGS will be immaterial as we have discontinued our commercial sales. Research and development expenses were $36.6 million, and selling, general and administrative expenses were $57.8 million for the quarter. With our restructuring, we expect our total operating spend to move down over the next few quarters as we wind down commercial operations and focus our R&D. As we move into the next year, we expect total spend on R&D and SG&A will be in the range of $30 million to $40 million per quarter, in line with our spend prior to the build-out of our commercial organization, which was happening in the first 2 quarters of 2022 in preparation for potential approvals in the U.S. and Canada. As a result of the changes to our organization announced on April 4, we also expect to incur severance and related expenses of roughly $19.1 million. These charges will be largely recorded in the second quarter with some occurring in Q3. As a result of these actions, in the first quarter, we recorded a net loss of $118.8 million or a net loss per share of $1.75. We had $373.3 million in cash and investments as of March 31, 2024, with an expected cash runway into 2026. Funding us through key milestones, including anticipated data readouts for AMX0035 in Wolfram syndrome and PSP and AMX0114 in ALS. I'll now turn the call over to Josh to provide some closing remarks.

Thanks, Jim. In closing, we believe we are well positioned to advance our compelling science shipment pipeline forward to key value-generating milestones. The interim data from our Phase II HELIOS trial of AMX0035 for the treatment of Wolfram syndrome, demonstrated early evidence of benefit on well-established outcomes such as C-peptide that are supported by prior results, including in the mouse model of the disease. Based on these compelling interim data, we are acting swiftly to engage with the FDA to discuss next steps for the program. We expect top line data on all 12 participants at week 24 in the fall of this year. Our Phase III ORION trial of AMX0035 for the treatment of PSP is progressing and we continue to anticipate data from an interim analysis in mid-2025 and we are excited to advance AMX0114 into the clinic for the treatment of ALS in the second half of this year. Calpain-2 is a well-recognized target with decades of scientific literature supporting its essential role in the process of axonal degeneration. We have an opportunity with this study to assess safety as well as biomarkers of target engagement and the disease process. We are in a strong financial position to deliver on all of these milestones and generate important data for each of our programs. Our pipeline is supported by more than a decade of our own research and bolstered by promising preclinical and clinical data. Our strategy from here is clear. We continue to follow the science, advance our pipeline and work tirelessly for communities that continue to wait for new solutions and better support. Now we'd be happy to take your questions. Operator, please open the call up to Q&A.

[Operator Instructions] Your first question comes from Corinne Johnson with Goldman Sachs.

Maybe a couple from us. Just first, in terms of the cash runway guidance into '26, I guess what specific trials and the readouts would be embedded within that guidance? And then how should we think about the trial design and your expectations for the Phase I study of AMX0014? And then when could we get that data?

Hey Corinne, maybe I'll start, it's Jim. Maybe I'll start with the expectations that are built into the numbers. And as we outlined, that will -- we expect that, that will give us kind of sort of continued operating -- continued operating mode in each of the programs that we have. So with Wolframs continue to move forward with this study that we're in now in an additional study, between now and then into 2026, it will allow us to continue to execute on the PSP study and to begin the clinical studies on 114 with, of course, some cushion in there as well as we move forward. So I think sort of full operations moving forward on the 3 programs we've outlined.

And I may just add too. We do expect the cash runway to be enough to have important kind of data milestones for each of the programs during that time frame. I'll pass to Camille on 114.

Yes. Thanks, Josh. Thanks, Corinne. Yes, so 114, as we said in the prepared remarks, will be a multiple ascending dose study in individuals with ALS. And in terms of when we'll have data, we'll report along the way and keep you updated on when we expect to have the data.

Yes. And I might just add to that one thing nice with the 114 program in general to is Calpain-2 is a protease. So there's many proteins that it's known to cleave, which provide important biomarkers of tau engagement and also biomarkers in the ALS field have generally moved along quite a lot. Particularly with neurofilament, which Calpain-2 biology has been heavily linked to. So I think as we go forward into the study, I think we have a lot of promising things to measure, and that can even be measured fairly early.

Your next question comes from Marc Goodman with Leerink.