Amicus Therapeutics will cut its workforce 14%, to 91 employees, as part of a far-reaching restructuring intended to reposition the company as a top-tier developer of enzyme replacement therapies (ERTs), and save itself $4 million annually.
The company said it bought back full rights to the Fabry disease compound migalastat HCl, overhauling a three-year collaboration with GlaxoSmithKline. Amicus also indicated that it acquired Callidus Biopharma, an enzyme replacement therapy developer whose lead preclinical compound has shown promise against Pompe disease, in an up-to-$130 million deal.
Amicus said its restructuring was intended to cut costs and align resources with its biologics business strategy. The company said it will shut down its San Diego research lab and consolidate all operations at its headquarters in Cranbury, NJ.
The company also said it acquired global rights from GSK to develop and commercialize migalastat HCl, both as a monotherapy and in combination with ERT for Fabry disease. Amicus will pay nothing up front, but agreed to make GSK eligible for unspecified future payments tied to regulatory and commercial milestones, plus royalty payments.
In addition, GSK agreed to take a $3 million stake in Amicus through an equity investment in a concurrent private placement in public equity (PIPE) transaction.
For the Fabry ERT, GSK is eligible to receive single-digit royalties on net sales in eight undisclosed major markets outside the United States. For migalastat HCl monotherapy, GSK can receive post-approval and sales-based milestone payments, as well as tiered royalties in the mid-teens in eight undisclosed major markets outside the United States.
The new agreement between Amicus and GSK replaces a prior version of their agreement inked in July 2012, under which the companies were to co-develop migalastat HCl globally. The agreement also stipulated that GSK had rights to commercialize migalastat HCl outside the United States. The companies began collaborating in 2010, when GSK paid Amicus $60 million in up-front and equity money, and committed itself to an additional $170 million toward migalastat HCl development costs as well as milestone payments.
In December 2012, the collaboration met with a Phase III failure after acknowledging that migalastat HCl, also known as Amigal, failed to meet its primary efficacy endpoint in one of two pivotal trials, Study 011. Six-month results showed a higher, but not statistically significant, percentage of patients achieving a 50% or greater reduction in GL3 in the kidneys of Fabry patients via migalastat HCl (41%) versus placebo (28%) in biopsies.
In June, the FDA refused to commit to using 12-month biopsy results as a possible route to approval of migalastat HCl, while directing the company to await results from the other Phase III trial (Study 012), which is ongoing and compares the compound to the current standard of treatment of ERT.
"This transaction is very important for Amicus and for our future. It delivers what we believe to be immediate and significant value to our shareholders while allowing us to maintain a strong relationship with GSK, our largest shareholder,” John F. Crowley, Amicus’ chairman and CEO, said in a statement.
Amicus also said it will acquire Callidus, a move it said will bolster its ERT pipeline with a next-generation Pompe ERT—a recombinant human acid-alpha glucosidase (rhGAA) in late preclinical development—and complementary enzyme targeting technologies.
Amicus said it will pay Callidus shareholders $15 million in stock; up to $10 million in milestone payments through Phase II development of the Pompe program; and up to $105 million for the achievement of late-stage development, regulatory, and approval milestones spread across three products.
According to Amicus, the Pompe ERT has shown superior uptake and activity compared to Lumizyme® in preclinical studies, and may be further improved by incorporating Amicus' pharmacological chaperone AT2220 as a stabilizer designed to enhance tissue uptake and reduce the ERT’s immunogenicity. Callidus' enzyme targeting technology is also applicable to multiple ERTs—and, Amicus reasons, complement its CHART™ platform for the development of bio-betters for multiple lysosomal storage diseases.
"With the addition of Callidus' Pompe program, we can move a next-generation Pompe ERT into the clinic in early 2015, approximately 12 months faster than our internal Pompe program. Even more significantly, we believe that the Callidus ERT for Pompe is a highly innovative and potentially superior ERT due to its carbohydrate structure, which should provide for greater uptake of the ERT into target muscle cells in Pompe patients,” Crowley stated.
He said Amicus will advance the next-generation ERT as quickly as possible instead of the planned Phase II study of AT2220 co-administered with ERT.
At least one firm gave the Callidus deal a somewhat good review. Leerink Swann analysts Joseph P. Schwartz and Paul Matteis retained their “market perform” rating on Amicus, but lowered their share-price projected target from $3.00 to $2.50. The lower target, they said, reflected increased shares outstanding, the debt offering, the Callidus deal, and an increased probability of success for the acquired Pompe program—from 10 to 20%, the same percentage given to Amicus’ program of migalastat HCl plus ERT for Fabry.
As part of the restructuring, Amicus said Callidus’ founder and CSO Hung Do, Ph.D., has been appointed Amicus' svp, discovery biology, while Amicus’ current CSO, David J. Lockhart, Ph.D., will step down from his position, but continue as a member of the company’s scientific advisory board.
Amicus also secured about $40 million in equity and expected debt financing toward the restructuring transactions. Of that total, $15 million was raised in a private placement of 7.5 million shares of common stock priced at $2.00 per share, plus warrants to buy another 1.6 million shares at $2.50/share between July 1, 2014 and June 30, 2015. Redmile Group and GSK took part in the private placement. The remaining $25 million in debt financing is expected to close in coming weeks, at a cost of capital of less than 10%, with no warrant coverage, Amicus said.