Amylyx Therapeutics shares have limited downside ahead of a Phase 3 trial of Relyvrio, an ALS treatment candidate, according to Baird.
Analysts have initiated coverage on the stock with an Outperform rating and a $37 price target.
In a note, Baird highlighted the upcoming phase 3 PHOENIX trial of Relyvrio in ALS, with topline results anticipated in Q2 2024 as a key catalyst for the stock.
“While reproducing successful trial results in ALS is historically challenging, we give attribute a relatively high 40% probability of success to the PHOENIX trial, because its design is relatively similar to the successful CENTAUR trial,” analysts wrote.
PHOENIX will take place in the US, while CENTAUR was conducted mainly in Europe, Baird noted.
Even if PHOENIX fails, Baird sees limited downside for AMLX stock, expecting Relyvrio to stay on the market in the US due to its full FDA approval based on the US-centric CENTAUR trial.
From a valuation standpoint, AMLX's robust financial position, ending the third quarter of 2023 with $355M in cash and positive cash flow at a $411M annual run rate, is highlighted as a mitigating factor. A less than 30% downside seems excessive unless there is a complete lack of favorable trends in the PHOENIX trial, according to analysts.
If PHOENIX success, Baird anticipates Amylyx stock could surge nearly 300%, quadrupling its market cap from almost $1 billion to around $4 billion.
“We believe this higher valuation would be driven by expectations for higher sales in the US, approval in Europe and other regions, some credit to be given for other settings (such as PSP, with phase 3 results expected in ~2026), and speculation on takeout interest in AMLX by large biotech/pharma,” analysts noted.
Shares of Amylyx were trading over 5% higher on Wednesday on the Nasdaq.