- Amicus Therapeutics will spin off its gene therapy portfolio and merge it with a publicly traded "blank check" company in an about-face for a biotech that began developing genetic medicines only three years ago.
- Called Caritas Therapeutics, the new company will be led by longtime Amicus CEO John Crowley and come equipped with $400 million in cash and rights to a variety of experimental gene therapy programs for rare diseases. Amicus will own 36% of Caritas, which will trade under the ticker symbol "SPES" when the deal closes.
- Amicus, meanwhile, has received a concurrent $200 million cash infusion and will now focus its attention on the two small molecule drugs it's best known for: the Fabry disease medicine Galafold and an experimental Pompe disease treatment called AT-GAA. The Food and Drug Administration on Wednesday agreed to review the Pompe treatment, a boost for Amicus given the mixed results it produced in clinical testing.
When Amicus acquired a privately held biotech called Celenex in 2018, it appeared to signal a new direction for a company that had already been around for almost two decades. Amicus spent all that time developing chemical drugs known as "pharmacological chaperones," and after a series of ups and downs, had finally brought the first of them, Galafold, to market.
Acquiring Celenex, however, made Amicus a gene therapy developer too. Celenex had several research programs that originated within Nationwide Children's Hospital, one of the nation's top gene therapy hubs. Amicus has since bought several others from the University of Pennsylvania, further establishing gene therapy research as a top priority and quietly giving the New Jersey biotech one of the larger portfolios in the industry.
But Amicus has paid a price, as it still isn't profitable despite having an approved product. The company spent nearly $500 million on expenses last year, largely to fund its pipeline. Its shares also continue to hover around $11 apiece, almost exactly where they were when the biotech began its gene therapy work three years ago.
The value of those assets "has largely gone unrecognized to date," Crowley said on a conference call with analysts. Executives believe housing those assets in a separate company "is the best way to unlock that value for shareholders," he said.
To do this, Amicus has sold its gene therapy business into a special purpose acquisition company, or SPAC, a popular tool of late for biotech investors to take their startups public or acquire stakes in emerging biotechs. The business has been renamed Caritas and will trade on the Nasdaq stock exchange when the deal closes either later this year or early next.
Crowley, who has led Amicus from the start, will join Caritas, which will start with two gene therapies for Batten's disease in clinical testing, several others behind it, more than 115 employees and $400 million in cash. But Amicus will also be able to benefit from Caritas' progress. According to Bradley Campbell, Amicus' chief operating officer and soon-to-be replacement CEO, the company will still hold a 36% stake in its spinout, partial rights to preclinical gene therapies for Fabry and Pompe, and "rights of first negotiation" to others for certain muscular dystrophies.
The companies also believe splitting in two will help each move faster, with Caritas investing solely in gene therapy development and manufacturing and Amicus working to broaden use of Galafold and secure approvals of AT-GAA. Amicus is also getting a $200 million investment from Perceptive and other investors in the deal.
The transaction makes sense given it could "enhance investor interest" in Amicus's gene therapy work, wrote SVB Leerink analyst Joseph Schwartz. Even so, the deal may raise questions about Amicus's long-term growth prospects beyond its two top drugs, wrote Stifel analyst Dae Gon Ha.
"We think investors may question the timing, and its potential significance in the grand scheme of AT-GAA and [Amicus] shares," he wrote.
Amicus shares briefly jumped 10% pre-market before those gains were erased.