Viking Global Investors’ Chief Investment Officer Andreas Halvorsen (Trades, Portfolio) disclosed earlier this week he reduced his stake in Amylyx Pharmaceuticals Inc. (AMLX, Financial) by 19.52%.
As a former protégé of Tiger Management’s Julian Robertson (Trades, Portfolio), the guru's Greenwich, Connecticut-based hedge fund takes a long-term, research-intensive approach to investing. The firm selects stocks based on its understanding of the company’s fundamentals, business model and management team, while also taking cyclical and secular industry trends into consideration.
According to Real-Time Picks, a Premium GuruFocus feature based on 13D, 13G and Form 4 filings, Halvorsen sold 1.4 million shares of the Cambridge, Massachusetts-based company on Sept. 8, which had an impact of -0.17% on the equity portfolio. The stock traded for an average price of $27.03 per share on the day of the transaction.
He now holds 5.7 million shares in total, which represent 0.79% of the equity portfolio. GuruFocus estimates Halvorsen has gained 23.77% on the investment since establishing it in the first quarter of the year.
The clinical-stage pharmaceutical company, which specializes in developing therapies for treating amyotrophic lateral sclerosis (ALS) and other neurodegenerative diseases, has a $1.69 billion market cap; its shares were trading around $28.65 on Tuesday with a price-book ratio of 16.51.
Since Amylyx’s initial public offering in January, the stock has climbed more than 60%.
ALS drug pending approval
The company aims to treat ALS, also known as Lou Gehrig’s disease, by addressing the death of neurons. Amylyx’s top drug, called AMX0035, is comprised of two small molecules that each take a different approach to pathways associated with neuronal survival, allowing the neurons to live longer.
Following promising, statistically significant results from a placebo-controlled Phase 2 study of the treatment, Amylyx submitted a New Drug Application with the U.S. Food and Drug Administration in November 2021. In late December, the federal agency granted AMX0035 priority review and set the date for its Prescription Drug User Fee Act.
In March, the company faced a small setback after the FDA’s Peripheral and Central Nervous System Drugs Advisory Committee rejected the experimental drug in a narrow vote, citing concerns about there not being enough evidence of its effectiveness in slowing the progression of the disease.
That was not the end of the line for the treatment, though. In September, the committee revisited the drug after Amylyx submitted an additional analysis of its trial data that showed AMX0035 appeared to extend survival time. While some questions regarding its efficacy still remain, the committee decided to back the treatment in a 7-2 vote.
Although the advisory committee does not make the final decision, its support can influence the FDA’s ruling on the therapy, which is expected by Sept. 29.
In a statement, Amylyx’s head of Scientific Communications, Dr. Jamie Timmons, said the committee’s review of the data and support of the drug is “promising.”
“The CENTAUR trial data has consistently demonstrated potential benefits of AMX0035 on function and overall survival,” she said. “We are grateful to the advocacy community, our trial participants and their family members, the ALS clinicians, and countless others who continue to support our mission of ensuring that people living with ALS around the world can access promising new therapies as quickly and efficiently as possible.”
Financials
Amylyx reported its second-quarter financial results on Aug. 11. For the three months ended June 30, the company posted a net loss of $54.1 million, or 93 cents per share.
Research and development expenses totaled $24.3 million, which increased from $10.9 million in the prior-year quarter due to higher product manufacturing and costs associated with supporting clinical trials and launch preparation activities. General and administrative expenses came in at $30 million.
Amylyx also recorded $206.7 million in cash, cash equivalents and short-term investments.
GuruFocus rated Amylyx’s financial strength 7 out of 10, driven by a comfortable level of interest coverage. The Sloan ratio is indicative of poor earnings quality, however.
The company’s profitability scored a 1 out of 10 rating due to negative returns on equity, assets and capital that are underperforming versus competitors.
Guru investors
Halvorsen has the largest position in Amylyx currently with a 9.86% stake. Steven Cohen (Trades, Portfolio) also has a small holding.
Portfolio composition
More than half of Halvorsen’s $21.79 billion equity portfolio, which the 13F filing showed was composed of 81 stocks as of the end of the second quarter, was invested in the health care and financial services sectors.
Other companies in the biotechnology space Viking Global had positions in as of June 30 included Royalty Pharma PLC (RPRX, Financial), Biomarin Pharmaceutical Inc. (BMRN, Financial), Roivant Sciences Ltd. (ROIV, Financial), Adaptive Biotechnologies Corp. (ADPT, Financial) and BridgeBio Pharma Inc. (BBIO, Financial).
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
