Latest Setback Sends Amicus Back To The Drawing Board

| About: Amicus Therapeutics, (FOLD)

Those Amicus (NASDAQ:FOLD) investors who bid the group’s valuation up to $2.5bn a year ago have, as of yesterday, yet another delay to contend with. The latest setback with Amicus’ Fabry disease project Galafold will push out the horizon for a possible return on their investment by at least three years.

The delay effectively makes the epidermolysis bullosa project Zorblisa, acquired in last year’s takeout of Scioderm, Amicus’ lead asset. In the meantime the company must design a new pivotal trial of Galafold, and hope that by the time this drug reaches the US there will still be significant market share to play for.

Before the latest delay sellside consensus, as computed by EvaluatePharma, saw Galafold seizing a firm grip on the Fabry disease market by 2022, with sales of $504m putting it neck and neck with Shire’s (NASDAQ:SHPG) Replagal at $546m, behind the market leader, Sanofi’s (NYSE:SNY) Fabrazyme.

Serious doubt

Now this has been thrown into serious doubt. Galafold – generically migalastat and formerly known as Amigal – will begin a new pivotal trial next year, with readout not expected until 2019.

As recently as September 2015 Amicus was touting a “positive” pre-NDA meeting with the US FDA after the Attract phase III study showed the project to have a positive effect on GL-3, a glycolipid that accumulates in Fabry patients’ organs. This looked to be encouraging progress after the failure of a previous phase III study, Facets.

At the time Amicus aimed to file in the US in 2015. However, this was pushed back to 2016 when the group received the FDA meeting’s final minutes and said it needed more time to integrate various datasets.

Galafold did receive EU approval in May, but it is now clear that matters in the US are much worse than feared. Yesterday after market close Amicus said the FDA had told it that an effect on GL-3, a surrogate endpoint, was no longer a suitable basis for accelerated approval, which is why it now needs a whole new study.

Thanks to a crossover design the new trial should be sufficiently powered with an enrollment target of just 35 Fabry patients, Amicus said, and will measure Galafold’s effect on diarrhea based on the fact that more than half of Fabry patients experience gastrointestinal problems. A review of the Facets data suggested that Galafold decreased diarrhea.

Amicus’ stock opened down 22% today, valuing the group at just $1bn. Including a slump on the earlier US filing delay Amicus has now fallen 63% off the peak its shares had hit in September 2015.

Oral dosing

Galafold still has the potential advantage of oral dosing versus the infused Fabrazyme and Replagal, which come with unpleasant side effects, but the FDA has shown clearly that it will not approve it without seeing decent efficacy. A third Fabry competitor, Protalix’s (NYSEMKT:PLX) injected PRX-102, is in phase III.

While Galafold will now not see US approval until at least 2020, Amicus investors have another event to pivot to: Zorblisa’s phase III readout (Upcoming events – Phase III data for Amicus and Ocular’s FDA approval, July 15, 2016).

Amicus bought Zorblisa’s originator, Scioderm, for $224m in cash and stock last year, and a further $361m and $257m are payable on the achievement of development and sales milestones respectively. Much of the $361m is likely tied to positive data and, with Zorblisa approval likely coming with a pediatric priority review voucher, readout is now a key near-term event for Amicus.

In hindsight the Scioderm deal, done at a peak Amicus valuation, looks like it could be the saving grace.

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