A next-generation Fabry disease treatment may be a step closer to market under a newly revised business strategy revealed by Amicus Therapeutics Inc. The Cranbury, N.J.-based biologics developer unveiled the acquisition of Callidus Biopharma Inc., a corporate restructuring, a $40 million financing and revision of its existing agreement with Glaxosmithkline plc.
The four-pronged strategy gives Amicus a next-generation enzyme replacement therapy (ERT) for Pompe disease and complementary enzyme targeting technologies, plus full ex-U.S. rights to a next-generation Fabry disease ERT, with enough cash to fund operations into late 2015.
Amicus’ merger agreement with Callidus gives Callidus shareholders $15 million in shares of Amicus common stock, up to $10 million in milestone payments through Phase II development of the Pompe program, and up to $105 million in milestones. Callidus’ chief scientific officer, Hung Do, will join Amiucus as senior vice president of discovery biology.
Callidus’ lead product is a preclinical-stage, recombinant human acid-alpha glucosidase (rhGAA) for Pompe disease. According to Amicus, Callidus’ rhGAA has shown superior uptake and activity compared to Lumizyme (alglucoside alfa, Sanofi SA) in preclinical studies, and could be enhanced when used with Amicus’ pharmacological chaperone, AT2220.
Callidus focuses on ERTs for lysosomal storage diseases. Its platform is based on combining insulin-like growth factor 2 (IGF-2) with enzymes of therapeutic relevance. Callidus closed a Series A financing of $4.6 million earlier in 2013, which it used to advance its lead candidates in Pompe and Gaucher diseases, as well as other IGF-2-related lysosomal storage diseases.
Amicus said it believes the Callidus acquisition will allow it to get a next-generation ERT for Pompe into the clinic 12 months faster than its previous schedule. “As we got to know the team there, and the data and the programs, we became increasingly excited about the unique characteristics of their Pompe therapy,” said Amicus CEO John Crowley.
Cash Runway Extended
Amicus’ new and existing clinical programs will get a cash boost from a $40 million equity and debt financing. Amicus raised $15 million in a private placement of 7.5 million shares of common stock priced at $2 per share, plus warrants to purchase an additional 1.6 million shares at $2.50 per share, with a one-year term exercisable between July 1, 2014, and June 30, 2015. Redmile Group provided the private placement in public equity (PIPE) financing.
The company will also close on a $25 million debt financing “in the next two weeks,” according to Chip Baird, chief financial officer.
Of the total $40 million, Baird said $30 million would close by the end of the year, leaving the company with $80 million to $85 million in cash on hand at that time.
At the same time that it is expanding its pipeline and adding cash, Amicus is trimming its work force. It reduced staff by 14 percent, to 91 employees, and closed its San Diego research facility to consolidate operations in Cranbury, N.J. In connection with the restructuring, Chief Scientific Officer David Lockhart stepped down from his position, though he will continue as a member of the company’s scientific advisory board.
A final bit of news from Amicus was the restructuring of its existing partnership with GSK. The two companies revised their partnership to give Amicus global rights to develop and commercialize migalastat HCL, a pharmacological chaperone for alpha-galactosidase A, as a monotherapy and in combination with an ERT for Fabry disease. The deal requires no up-front payment from Amicus, but GSK will be eligible for single-digit royalties on net sales in eight major markets outside the U.S. In connection with the deal, GSK will make a $3 million equity investment in Amicus through a PIPE transaction.
Under the prior agreement, signed in July 2012, Amicus and GSK were co-developing migalastat HCL globally and GSK had rights to commercialize the drug outside the U.S.
That deal was itself an expansion of a previous alliance. At that time, GSK increased its ownership stake in Amicus to 19.9 percent – a level that Crowley said Amicus is maintaining – investing an additional $18.6 million to purchase 2.95 million shares of common stock at $6.30 per share. (See BioWorld Today, July 19, 2012.)
Amicus has struggled in the past year with a Phase III near miss of its Study 011 and a regulatory setback of nearly a year.
Study 011 failed to meet its primary endpoint of number of patients showing a 50 percent or greater reduction in kidney interstitial capillary GL-3 after six months of treatment with migalastat HC1 compared to placebo. The numbers favored migalastat, but the results failed to reach statistical significance. (See BioWorld Today, Dec. 21, 2012.)
Amicus had another disappointment when it met with regulators to discuss those results from Study 011. Instead of rubber-stamping the company’s plan to revise its statistical analysis for the 12-month data, the FDA asked for data from the second ongoing Phase III study, Study 012, which is designed as a switchover study – Fabry patients switching from enzyme replacement therapy to migalastat – and originally launched to complete a regulatory filing in Europe.
That translated to a delay of nine months to a year.
The reorganization, acquisition and new business strategy will replenish and advance Amicus’ pipeline, potentially putting three enzyme therapies into the clinic in the next three years, according to Crowley.
Leerink Swann analyst Joseph Schwartz adjusted the group’s price target for Amicus to $2.50 for increased shares outstanding and increased probability of success for the company’s Pompe program. “We assume a 20 percent probability of success for FOLD’s Fabry chaperone/ERT co-formulation which is entering Phase I and a 20 percent (from 10 percent previously) probability of success for FOLD’s Pompe ERT acquired from Callidus,” Schwartz wrote.
Amicus’ stock (NASDAQ:FOLD) closed Thursday at $2.07, down 5 cents.