- Five months after promising to deliver on a "big, bold vision," Amicus Therapeutics is abandoning plans to spin off its gene therapy business as the appetite for new biotech companies slumps.
- Amicus had planned to merge the business with the "blank check" company ARYA Sciences Acquisition Corp IV, creating a new publicly traded entity called Caritas Therapeutics. At the time, Amicus promised Caritas would be "one of the world's preeminent next-generation genetic medicines companies."
- The companies are now terminating their deal, citing unfavorable market conditions and "an increasingly challenging environment for stand-alone gene therapy companies," Amicus said Thursday. Amicus and ARYA IV said the decision was mutual, so there will be no termination fees.
The planned spinoff would have helped Amicus in its goal to reach profitability next year. Even though the company has an approved drug on the market, its investments in gene therapy over the years have left Amicus with a pipeline that requires significant cash infusions.
With the deal canceled, Amicus is now retrenching to meet its goal of turning a profit in 2023. The spinoff would have saved the company about $400 million in operating expenses, so it's looking to find a similar amount of cost cuts in its current structure.
To do that, Amicus said it will trim its portfolio and reorganize its research and development teams, announcing Thursday layoffs for 7% of its workforce, or about 35 employees, mostly in R&D. The company also plans to keep its employee headcount at about 500 people for the next few years.
Additionally, Amicus will not move multiple gene therapies into clinical testing in the years ahead as previously expected. Plans to build an internal gene therapy manufacturing facility are now suspended, company CEO John Crowley said on a conference call.
Some of those adjustments already appear to be underway: In January, Amicus said it would discontinue a therapy for Batten disease after reviewing long-term study data.
Crowley, who was set to run the new gene therapy company, will still step down from his role at the top of Amicus as it restructures. Crowley will become executive chairman of Amicus starting in August, and Bradley Campbell will succeed him in the CEO position at that time.
The unraveling of Amicus' deal comes as the biotech financing market has slumped amid a series of clinical and regulatory setbacks for the industry as well as ebbing investment. Drugmaker initial public offerings are now few and far between, and stock prices for many biotech companies have tumbled over the last year.
As a special purpose acquisition company, ARYA IV now needs to navigate that environment to find a new target by its deadline of March 2, 2023. The company "believes it is well positioned to identify and execute on an opportunity that meets its key investment criteria and can deliver value for its shareholders within that time period," ARYA IV said in its own release Thursday.