As the ongoing (though hopefully fading) COVID-19 pandemic demonstrated, the biggest enemy is sometimes not the one that makes the most noise but rather the negative catalyst that you don’t anticipate. In the world of high finance, analysts use the term black swan event to characterize harmful disruptions that slip beneath the radar.
Regarding personal health and wellness, one of the most devastating black swans is amyotrophic lateral sclerosis (ALS). Colloquially known as Lou Gehrig's disease named after the baseball player who eventually succumbed to the condition, ALS is incredibly taxing, both to patients and their families. Unfortunately, no cure exists.
Adding to concerns, medical researchers are still attempting to discover what causes the disease. According to the Mayo Clinic, about 5% to 10% of ALS patients inherited the condition. For the rest, the catalyst remains a mystery, meaning that preventative steps are so far limited.
Reducing smoking, per the nonprofit health center, may be the only substantive mitigation regimen. However, other factors, including environmental toxin exposure and prior military service may contribute to heightened risks for ALS, though research is continuing.
One thing is clear: battling ALS requires all hands on deck, thus bolstering sector specialist Amylyx Pharmaceuticals, Inc.’s upcoming initial public offering (IPO).
- When Is the Amylyx Pharmaceuticals IPO Date?
- Amylyx Pharmaceuticals Financial History
- Amylyx Pharmaceuticals Potential
- How to Buy Amylyx Pharmaceuticals IPO (AMLX) Stock
- AMLX Restrictions for Retail Investors
- AMLX Pre-IPO
- Is the Decades-Long Trial Over?
When Is the Amylyx Pharmaceuticals IPO Date?
Following a record-breaking tally in new listings last year, the logical deduction suggests that some private enterprises may wait until later in January before getting back on the horse. Thanks to a combination of limited pandemic-related mitigation protocols and “retail revenge” stemming from prolonged periods indoors, extended downtime for family gatherings wouldn’t have been unexpected.
Nevertheless, the IPO market is getting off to a cracking start in the new year, particularly for the biotechnology industry. Amylyx Pharmaceuticals is one of three sector-related companies recently disclosing the terms of their public deals, the others being CinCor Pharma Inc. and Vigil Neuroscience Inc. Therefore, Amylyx will encounter surprisingly stiff competition, a circumstance that management might not have anticipated earlier.
On Jan. 3, the clinical-stage pharmaceutical firm — which specializes in the research and development of novel therapeutics for ALS and other neurodegenerative diseases — announced that it intends to distribute 8.75 million shares of common stock in its public offering. The company’s leadership team expects the IPO to price between $18 and $20 per share.
At the midpoint of the estimated pricing spectrum, Amylyx will raise approximately $166 million before deducting expenses related to the offering. Should the deal proceed on these terms, the biotech firm will command a fully diluted market value of $1.1 billion.
Shares will trade on the Nasdaq exchange potentially on Jan. 7 under the ticker symbol AMLX. Goldman Sachs Group Inc. (NYSE: GS), SVB Financial Group (NASDAQ: SIVB), and Evercore Inc. (NYSE: EVR) represent the joint bookrunners for the IPO.
On paper, sustained interest in new listings bodes well for AMLX stock. Last year, U.S.-based IPOs commanded a total valuation of over $301 billion. When combined with global public market debuts, the figure extends out to $594 billion. With little evidence indicating a waning of demand for higher-risk ventures such as biotech IPOs, the timing may be fortuitous for Amylyx.
Still, prospective investors should note that history is replete with lessons about excessive speculation. Considering that stock trading on margin remains extraordinarily elevated, you must proceed with extreme caution.
Amylyx Pharmaceuticals Financial History
While compelling on multiple levels, companies like Amylyx Pharmaceuticals stand at the intersection of an awkward dichotomy. On one hand, very few people wish ill will toward biotech firms looking to develop therapeutics for currently uncurable diseases. Thus, Amylyx basically enjoys a universal cheering squad.
But on the other hand, pre-revenue firms typically depend on a sole product or service to rise above the crowd. Further, Amylyx is particularly aspirational in that several other organizations have attempted to develop a workable treatment for ALS, only to succumb to clinical woes. Based on pure statistics, AMLX stock potentially has a long and rocky road ahead.
According to the company’s Form S-1 prospectus with the U.S. Securities and Exchange Commission (SEC), Amylyx centers on its (only) product candidate, AMX0035. One of the main challenges with ALS is that unlike most cells in the body, mature neurons resist cell death and generally cannot regenerate. Therefore, keeping neurons alive — AMX0035’s primary indication — may be the solution for long-term positive outcomes for ALS patients.
As of the moment, Amylyx is actively pursuing regulatory approval for the therapeutic in Canada, the U.S. and Europe. Recently, the biotech firm initiated a Phase 3 trial — called the Phoenix trial — in the latter two markets. Encouragingly, on Dec. 29, Amylyx announced that the Food and Drug Administration (FDA) has accepted for review its new drug application (NDA) for the underlying therapy.
Despite heartening progress with AMX0035, management warns that Amylyx has “never generated revenue from product sales and may never be profitable.” And because the ALS therapeutic is the firm’s only product, failing to obtain regulatory approval for the drug or any delays to its commercialization could materially harm the business.
So far, Amylyx has generated sales through grant revenue, “which are amounts earned from performing contracted research and development services.” Generally, these grants require the company to meet certain research milestones, adding some layer of risk. In the nine months ending Sept. 30, 2021, grant revenue totaled $285 million, down 5% from the $300 million generated in the year-ago level.
More concerning for prospective investors of AMLX stock is the expanding red ink on the bottom line. In the first three quarters of 2021, Amylyx posted a net loss of $59.6 million, far more than the loss of $33.7 million in the year-ago comparison. Therefore, much rides on AMX0035’s continued upward progress.
Amylyx Pharmaceuticals Potential
According to Grand View Research, the global ALS treatment market commanded a valuation of $537.2 million in 2018. By 2026, experts in the field project that revenue for the segment could reach nearly $886 million. Another source, ResearchAndMarkets.com, forecasts that by 2027, the global treatment space could rise to a $1.2 billion valuation.
Depending on Amylyx’s progress with AMX0035, it’s possible that the company could shift to other neurodegenerative conditions. If so, the biotech firm would enjoy a total addressable market size of $39.2 billion, with projections calling for a total revenue tally of $44.9 billion by 2026, per data from Mordor Intelligence.
Still, it’s worth reminding prospective buyers of AMLX stock that the ALS market has been incredibly cruel to would-be pharmaceutical saviors. Indeed, the clinical wasteland comprises over two decades of failed treatments. To be fair, scientists have moved the needle forward, with international developments drawing the medical field closer to a viable solution.
Nevertheless, an ever-present frustration with ALS is “an inadequate understanding of disease pathogenesis” — in other words, if science can’t understand how ALS originates and develops, how can it cure it? It’s a perplexing question that will also likely challenge Amylyx.
How to Buy Amylyx Pharmaceuticals IPO (AMLX) Stock
If you decide to acquire Amylyx shares on the open (AMLX is also available on a pre-IPO basis at its initial offering price), you’ll need to know how to buy stocks. Below is a quick refresher.
Step 1: Pick a brokerage.
As market intermediaries, the best brokers provide quick transactions and access to several investing options. Therefore, take the time to find a platform that ideally suits your needs.
Step 2: Decide how many shares you want.
Pre-revenue biotech firms tend to feature volatile IPOs. Be sure to choose a balanced share count if you want to participate.
Step 3: Choose your order type.
Before trading, learn these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
- Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the current rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
AMLX Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.
Investors interested in acquiring pre-IPO shares of AMLX should submit an application request with Freedom Finance. Applications will be accepted until midnight of June 6 (essentially, by the end of June 5).
Is the Decades-Long Trial Over?
Leveraging the latest in scientific technologies and acumen, Amylyx Pharmaceuticals offers a hopeful lifeline to the countless patients worldwide suffering from ALS. In turn, the upside prospect of AMLX stock entices speculators. Still, neurodegenerative diseases are the bane of biotech firms, presenting tremendous risks for investors.