Amylyx Pharmaceuticals, Inc. (NASDAQ: AMLX) was left for dead earlier in 2024 after formally withdrawing from marketing approval for RELYVRIO/ALBRIOZA in ALS trials. This was nearly a $20 stock in February, and suddenly it was under $5.00. The stock performance has yet to recapture its 75% loss, but there may be some hope on the way. This is a very speculative stock and only the boldest and bravest tactical investors would likely consider this.

Tactical Bulls tracked a significant analyst upgrade on Amylyx Pharmaceuticals. BofA Securities raised its rating to Buy from Neutral and raised its price target to $10.00 from $4.20 in that call. Even after a 7% gain to $4.84 in reaction to the upgrade, this analyst upgrade would represent more than a double if the report proves to be true. And, again, it is highly speculative with no assurances of success.

The opinions and price targets for Amylyx are from BofA Securities. Tactical Bulls does not have any recommendation nor price target or revenue and earnings projections of its own on this company.

The analyst upgrade follows news from the prior week of positive Phase II topline results showing sustained improvements with AMX0035 in people living with Wolfram Syndrome. It showed that improvement observed in pancreatic function (measured by C-peptide response) after 24 weeks of treatment with AMX0035. This drug under development is to help control blood sugar. Amylyx was shown to have acquired avexitide from Eiger Pharma this summer and the positive Phase II results have already been seen.

According to BofA’s Charlie Yang, Post-Bariatric Hypoglycemia (PBH) is a recent phenomenon. PBH is listed as a complication of bariatric surgery that produces dangerously low blood sugar in patients. Yang believes that avexitide has the potential to become the first approved treatment for PBH. There is also a standout description from Yang here from the major drugs already on the market for weight loss:

Unlike GLP-1 agonists (e.g., semaglutide), which are used to treat weight loss and lower blood sugar, avexitide, a GLP-1 antagonist, is designed to block the excessive secretion of insulin after eating a meal to prevent hypoglycemic events. PBH is a recent phenomenon stemming from the increasing number of bariatric surgeries since the 2000s (est. 2.6 million surgeries from 2011-2022). Yet many endocrinologists have had not heard of PBH until the 2010 and many primary care doctors today remain aware of it.

The report suggests that over 50,000 patients today are still at high risk of serious hypoglycemic events. And even with bariatric surgeries expected to decline 15% over the next 10 years, Yang sees the number of PBH patients only increasing overtime because PBH is a life-long condition. Here is where this report gets real interesting — the BofA report raised its estimate on the potential peak revenue opportunity to over $2 billion by 2035.

It is hard to discuss drugs a decade into the future, but Amylyx is just a $330 million market cap biotech at this point. If BofA is right, then speculative investors are likely to see it as undervalued if it owns a blockbuster drug in a new and unmet need.

At the end of the day, Amylyx’s Buy rating and $10 price target are based on avexitide’s opportunity in PBH. The BofA report calls AMX0035 as providing optionality in Wolfram Syndrome and PSP. More views are shown below.

Tactical Bulls is again reminding readers that Amylyx is highly speculative. Investors who are looking at buying or speculating on Amylyx need to understand that it could take years before any significant sales toward the $1 billion blockbuster status are seen. And, as it is a speculative biotech, this could also not pan out and be a complete financial belly flop with nothing but downside from here on out. That’s just the nature of investing in speculative biotechs.

Tactical Bulls always reminds investors and its readers that no single analyst report should ever be the sole basis to buy or sell a stock. That would be even more of the case here considering that BofA appears to be the first large brokerage firm to come back out with a much higher price target. Any decision to buy or sell, or hold (or short sell) is up to each investor and the decision should be made with a financial advisor.

There have been some other analyst calls, albeit much less aggressive since its implosion in early-2024.

On 10/18, HC Wainwright maintained its Buy rating and $8.20 price target. Very few analyst calls have been made in the aftermath of its implosion earlier in 2024.

In July, Goldman Sachs maintained its Neutral rating while raising its price target to $4 from $3 in the call. And in April, RW Baird maintained its Neutral rating but cut its price target to $3 from $40.

To show what happened back when the analyst community was hoping for a blockbuster before the implosion, here are what some of those price targets used to look like:

• $36 at Deutsche Bank
• $40 at Goldman Sachs
• $37 at RW Baird
• $32 at Mizuho
• $40 at HC Wainwright