Amicus Therapeutics hinted earlier this year that some dealmaking was on the way following a regulatory setback for its lead drug that crippled its market value. Today was apparently the day it had in mind.
Cranbury, NJ-based Amicus (NASDAQ: FOLD) today announced a series of strategic moves, including an acquisition, an equity investment, and a significant staff layoff. Essentially, these moves leave Amicus a leaner company with a new drug that is in preclinical development, but still one that has yet to successfully push a drug through a pivotal study and get it to market, and is a ways away from doing so.
“We believe we now have the optimal set of technologies, portfolio, financing and leadership team to be able to advance our vision of developing improved therapies for people living with many rare and orphan diseases,” said Amicus CEO John Crowley, in a statement.
First, GlaxoSmithKline has decided to return the rights to the Fabry Disease drug, migalastat hydrochloride, that the two had been developing together—as well as a preclinical “next-generation” enzyme replacement therapy that was part of the partnership between the two companies. The British pharma giant did so, however, while investing another $3 million in Amicus, buying 1.5 million shares at $2 apiece (shares closed today at $2.12 apiece). GSK is already Amicus’ largest shareholder, and owned 19.8 percent of the company as of April 26.
Secondly, Amicus made an acquisition of its own. The company has bought privately-held, Doylestown, PA-based Callidus Biopharma, which is developing an enzyme-replacement therapy for Pompe disease that is in preclinical development. Amicus will give Callidus shareholders $15 million of its stock as payment up front. Amicus is also on the hook for up to $10 million in milestone payments tied to development of the Pompe drug through Phase II studies, and could pay out another $105 million tied to various development and regulatory milestones.
Amicus also raised $40 million in financing. That sum consists of a $15 million equity financing from GSK and Redmile Group, and a $25 million debt financing that Amicus expects to close “in the coming weeks.”
And lastly, Amicus is taking out the corporate ax and chopping its workforce down to cut costs. It’s dropping about 14 percent of its workers, leaving it with 91 employees, and saving it about $4 million annually. Amicus is also shutting down its San Diego research facility and consolidating all of its operations to its Cranbury headquarters. David Lockhart, the company’s chief scientific officer, will step down from his post as part of the restructuring.
The moves are the fallout from Amicus’ June decision to delay filing a regulatory application for migalastat hydrochloride, feeling it needed to complete two ongoing Phase III trials before it could seek FDA approval. Shares promptly plummeted more than 20 percent on the news, but Crowley said at the time that he was “trading time for certainty,” in that Amicus would rather wait a year or two if it felt it would have a much better shot winning approval from regulators. Crowley also vowed that some strategic moves were coming. The biotech cut a collaboration deal with Biogen Idec (NASDAQ: BIIB) to develop a drug for Parkinson’s Disease shortly thereafter, but hadn’t really come up with any bigger news since.
Amicus is holding a conference call today to discuss the moves.