Amicus: July 29 PDUFA Makes It A Hold (NASDAQ:FOLD)

Amicus Therapeutics, Inc. (NASDAQ:FOLD) stock is not able to get to its proper potential despite the company’s excellence in running its business. Every time I revisit the company, I am astounded by the compelling thesis, the value-market mismatch, and the ensuing opportunity – and yet the stock fails to deliver.

Amicus has Galafold (migalastat) approved for Fabry Disease. In 2021, this product made $305.5mn in revenue. 2022 guidance for the product is at least $350 million to $365 million, which is a 17% YOY growth. With a market cap of $2.5bn, this gives us a price to sales ratio of around 8. That sounds like a very good number to me.

Yet the stock is trading near its 52-week low. In late 2020, the stock was trading at all-time highs near $24. Then the PROPEL data came out, the stock fell 50% overnight, and the stock hasn’t recovered since. This is despite Galafold’s excellent performance and “mitigating circumstances” surrounding PROPEL, some of which I discussed in my earlier coverage.

Broadly, there are three positives here that give us hope that AT-GAA will be approved for Pompe Disease.

First, the primary endpoint of the PROPEL trial was change in 6MWD from baseline after 12 months. In this, AT-GAA did not reach statistical significance. However, Forced Vital Capacity or FVC was a secondary endpoint, and then, AT-GAA achieved stat sig. Now, 6MWD is a motor function test, while FVC is a lung function test. More Pompe patients die from lung impairment than from anything else, so for AT-GAA to score well on this parameter is a good thing.

On a side note, AT-GAA did much better in the treatment-experienced or switch patients than with the treatment-naive patients, as noted in the company’s earnings call and elsewhere. 90% of the opportunity, according to the company, is in the switch population. So that adds a positive dimension to the trial data.

As Amicus said in its earnings call:

And again, in that population, we showed – prespecified in our statistical analysis plan, we showed superiority to standard of care, statistical superiority on forced vital capacity, on six-minute walk, we showed superiority often with statistical significance in multiple other secondary endpoints. So an incredibly strong data set in the switch population.

Secondly, before PROPEL, Amicus had an open label phase 1/2 trial which announced data in early 2019. This data was very positive. I believe PROPEL set too high a bar for itself, and then failed to meet it. On a side note, long term data from the phase 1/2 study was presented last month, and long term data from PROPEL will be announced sometime this year, although I am not aware whether that will happen before the PDUFAs. The announced data was as follows, and in line with the solid data from this study:

The company said patients treated with AT-GAA for up to 3 years showed persistent and durable effects on six-minute walk test (6MWT) distance and other measures of motor function and muscle strength, stability or increases in forced vital capacity (FVC), and reductions in biomarkers of muscle damage and disease substrate.

Lastly, Sanofi’s (SNY) Nexviazyme (avalglucosidase alfa-ngpt) also failed to achieve stat sig in its primary endpoint in the COMET trial, but still got approved by the FDA on a secondary endpoint. However, I must note that COMET and PROPEL’s primary and secondary endpoints were the exact opposites of each other. So, for COMET the primary endpoint was FVC, which it failed, but the secondary endpoint was 6MWD, which it passed. Nexviazyme was approved because it did well in an endpoint in which AT-GAA did not do well. That could be the bearish way to look at it.

The most important story here is that despite the trial “failure,” the FDA accepted a rolling BLA/NDA submission for the two molecules that constitute AT-GAA. The FDA has accepted the Biologics License Application (BLA) for cipaglucosidase alfa and the New Drug Application (NDA) for miglustat for AT-GAA, with a PDUFA action date of May 29, 2022, for the NDA and July 29, 2022, for the BLA. This is certainly very positive for Amicus. In December, the EMA also validated the Marketing Authorization Applications (MAA) for AT-GAA.

In their earnings call, the company sounded quite upbeat about the regulatory process:

We recently completed the mid-cycle review with the FDA, and we remain confident in AT-GAA’s approvability and its potential to become the next standard of care in Pompe disease.

Further in the call, the company reiterated their confidence in the process through their experience in the mid-cycle review. They are aware that an FDA inspection of their WuXi facility will be required. The company also stated that they are building up inventory for what they expect would be “extraordinary demand for AT-GAA” in both the U.S. and EU, geographies where it will be launched this year.

One aspect I haven’t touched on here is the unraveling of the company’s gene therapy SPAC deal. In their earnings call, the company blamed this on the poor market condition. They also colored it positively, saying their other cost-cutting measures will save them $400mn in the next several years, which is about the same amount as the value of the deal. In the process, though, Amicus will shelve all of its upcoming gene therapy pipeline projects, and also abandon plans to build a manufacturing facility. It thus hopes to attain profitability by 2023.

Profitability was once a concern for Amicus, but with the progress of Galafold, which the company says may become a $1bn blockbuster at peak, there now seems hope that the company will become profitable soon. As the CEO said:

And third and importantly, Amicus has maintained our financial – our strong financial position and remains committed to achieving profitability in 2023 as we continue to execute on the global expansion of Galafold and prepare for the global launch of AT-GAA. We have no need for any equity or equity-linked financings to achieve profitability.

Bottom Line

While Galafold is the mainstay of Amicus, and its only revenue generator, the biotech investment market is one that always looks forward and ahead and values companies based on upcoming opportunities rather than on existing ones. That means, even if Galafold keeps doing superbly well, Amicus stock will rise and fall with AT-GAA. Given the various bullish angles I discussed here for approval, I believe there’s a strong chance we will hear something positive before July-end. I will continue holding on to my shares until then.