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July 30, 2009
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On Aug 5, Amicus Therapeutics (FOLD) is scheduled to declare its second quarter earnings. We expect the company to post a GAAP net loss of $15.3 million on revenues of $4.4 million. The company does not have any marketable products, hence it derives its revenues primarily from collaboration and license agreements.
Amicus Therapeutics develops small, oral molecule drug candidates for rare genetic diseases using its pharmacological chaperone technology. Apart from Amigal (meant for the treatment of Fabry disease), which is in a phase III trial, the other two pipeline candidates at Amicus - Plicera and AT2220 - are in phase II trials for the treatment of Gaucher disease and Pompe disease, respectively.
Viewing the potential of these three candidates, Shire Plc (SHPGY) and Amicus decided to develop these drugs jointly (in 2007), which triggered an initial, non-refundable license payment of US$50 million. This partnership is beneficial to Amicus as development costs towards global approval of the three compounds will be shared equally.
Additionally, the company is eligible to receive another $150 million on achievement of certain clinical and regulatory milestones through approvals. Amicus is also eligible to receive up to US$240 million in sales-based milestones, as well as tiered double-digit royalties.
Not including royalties and cost sharing, the deal is valued at up to US$ 440 million.
Amicus will lead worldwide development operations through the end of phase II clinical trials. The companies will share responsibility for phase III clinical trial execution. This will leverage Shire's significant ex-US regulatory and clinical experience, as well as its commercial infrastructure.
The approval of Amigal, which is currently in a phase III trial, can turn the fortune of the company. But, it is likely to face tough competition from the already-approved drugs like Genzyme's (GENZ) Fabrazyme and Shire's Replagal. However, the total market size is close to $700 million at present and likely to cross $1 billion within the next two to three years.
In February 2009, Amicus received a serious setback when it had to suspend the enrollment for a phase II clinical trial of AT2220 based on a verbal notice from the US FDA. We hope the issue will be resolved soon.
We remain cautious on the clinical trial for Amigal, as the drug is in an advanced stage and any kind of setback will hurt the company. We maintain our Hold recommendation on the stock.
Read the full analyst report on "FOLD"
Read the full analyst report on "SHPGY"
Read the full analyst report on "GENZ"
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