Frenchfries57, thanks for this example, which I did some further research on.
Yes, there has been a relatively high discontinuation rate seen with this drug both during clinical trials and since its approval in late 2022. And yes, diarrhoea is the major side effect.
However, I’m not convinced the discontinuation rate for RELYVRIO can be blamed on diarrhoea.
Firstly, there has been controversy around the effectiveness of the drug. RELYVRIO received accelerated approval on the basis of Phase 2 data and managed to narrowly scrape through an initial FDA rejection and 2 separate Adcomms to get there. Data to date suggests that the drug extends patient life by a median of 5 months. Phase 3 confirmatory data is still to be released and the drug may need to be pulled from the market if the data doesn’t confirm clear effect. I’m sure that the uncertainty this creates is candy to shorters. On the other hand, DayBue was approved, without hitch, on successful Phase 3 results and doesn’t face this uncertainty.
Secondly, insurance companies have been reluctant to both commence and/or continue reimbursement of the US$158,000 drug for a US patient population estimated to be ~ 25,000-30,000. Lack of Phase 3 confirmatory data and availability of alternative treatments probably assists insurance companies in saying no. In comparison, while DayBue is more expensive, the patient population is considerably smaller, the drug was successfully tested in Phase 3 and it is the first and only drug approved in this indication. Perhaps there is less wriggle room for insurance companies.
Thirdly, if patients do get approval for RELYVRIO, they can the face high co-pays. Co-pay help has not been provided to those on government insurance. One gentleman who commenced treatment reported that the co-pay in his first month on treatment had been US$3,800. Most ALS (motor neurone disease) patients are mature adults who require multiple medical interventions. Typical length of survival, following a steady physical decline, is 2-5 years. In my opinion, high co-pays would be another reason for discontinuation. In comparison, Acadia has stated that DayBue families will have little to no co-pays.
A fourth possible reason for discontinuation is taste. The liquid medicine was described by one patient as tasting like a mix of saltwater and disinfectant. While DayBue’s taste isn’t popular with all patients, I don’t think it comes close to being that bad!
Five, as already mentioned, there are alternative approved medications. RELYVRIO is the third FDA approved therapy in the US for ALS. Patients can potentially try, discontinue and then try something else. That option doesn’t exist for Rett patients.
Finally, the maker of RELYVRIO, Amylyx Pharmaceuticals, is a relatively small pharma, with a market cap of just US$1.25bn. RELYVRIO is the company’s only approved drug. The company probably lacks the resources to launch a full-on marketing campaign and provide extensive patient support. The main rival drug in this space is owned by Mitsubishi Tanabe US Pharma, a subsidiary company of Mitsubishi Chemical Group, which is clearly much better resourced.
With respect to sales, following launch of RELYVRIO, Amylyx had been estimating net revenue of US$220m for 2023. Q4 2023 results were released overnight. Net revenue for 2023 was US$380m. Nonetheless, Amylyx had been facing class action litigation for failing to fully disclose the rate of discontinuation and thus causing stock losses to investors!
With respect to shorting, yes, there has been considerable shorting interest in Amylyx (AMLX), with 15% of stock on issue being shorted late last year. I suspect (and hope) that a number of those shorters were squeezed following release of Q$ 2023 sales figures last night which beat Wall Street’s expectations. AMLX was up 21% at end of trade.
In conclusion, I’m not convinced that the example of RELYVRIO can be used to extrapolate what happens to a company’s stock price if its drug causes diarrhoea (as shorters might try to do), but it does highlight some key differences between RELYVRIO and DayBue and it does highlight how shorters will not hesitate to leverage any uncertainty or perceived sign of weakness in order to foment.
Ironic that one of the terms for this shorter strategy is “poop and scoop”….
(20min delay)
