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business newsHollywood Ending: Amicus Gets Life Support From Glaxo
By
Brett Chase
Oct 29, 2010 2:20 pm
After fighting to find a treatment for his kids' rare disease, now CEO John Crowley is fighting to keep his company going.
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Now as CEO of Amicus Therapeutics (FOLD), Crowley wasn’t going to give up after a potentially lucrative partnership with Irish drug maker Shire (SHPGY) went south a year ago. That deal was supposed to help bring three experimental drugs for genetic diseases to market. But the partnership was abruptly dissolved without much explanation and Amicus’ shares plunged.
Now GlaxoSmithKline’s (GSK) interest in the rare disease market is propping Amicus back up again. Glaxo is paying the company up to $230 million to help bring to market an experimental Amicus drug, Amigal, that aims to treat Fabry disease. Shares of Amicus rose 6% to $4.19 in early afternoon trading.
The UK company is paying $31 million for a 20% stake in Cranbury, New Jersey-based Amicus, a deal that keeps the biotech company afloat in a difficult market for small firms. Milestone payments represent the rest of the deal’s value. The money-losing biotech is burning through cash with no revenue and its stock hasn’t recovered from the breakup with Shire. It traded at more than twice its current price and was up to $18 a share three years ago.
With the Glaxo backing, Crowley says he feels he can afford to complete human trials of the Fabry drug (one of the ultra-rare conditions targeted by Crowley’s former employer Genzyme). And he can go forward with other drug studies that are in earlier stages.
Crowley says his company had enough cash to last into the second half of next year but the Glaxo partnership allows him to see Amigal through studies and into the US approval application stage. Without a partner, small biotech companies can struggle.“It’s a very uncertain and very expensive environment,” he says to Minyanville in an interview. “It’s very difficult for CEOs to rely solely on the capital markets.”
Access to funding has been a major issue for public biotech companies over the past couple of years. More and more are selling out, licensing experimental drugs and accepting other private investments.
As of June 30, Amicus had just under $25 million in cash (and $44 million in marketable investments). It lost more than $24 million through the first six months of the year and had no revenue.
Crowley says his company drew interest from “multiple” large pharmaceutical companies. Rare diseases are a lucrative market. While they don’t add up to a large number of patients, medicine prices rise to the tens if not hundreds of thousands of dollars a year. Sanofi-Aventis’ $18.5 billion bid for Genzyme shows how strategic the drugs are to that company’s future.
Genzyme makes drugs to treat Fabry, Gaucher disease and Pompe disease, the condition that struck 43-year-old Crowley’s young son and daughter. The children are still alive and are being treated by a Genzyme drug. The family’s story inspired the movie “Extraordinary Measures” starring Harrison Ford and Brendan Fraser.
The question is what does Glaxo see that Shire didn’t?
“Amicus' scientific and clinical expertise in human genetic diseases is among the best in the industry,” Marc Dunoyer, Global Head of Glaxo’s rare diseases business says in a statement.
That’s quite an endorsement from one of the world’s biggest drug makers.
No positions in stocks mentioned.
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