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Does Amicus' 16% Tumble Last Month Make It a Bargain?

By Todd Campbell - Sep 9, 2015 at 12:04PM

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The potential approval of Amicus Therapeutics' Galafold for Fabry disease could make shares worth buying.

Source: Amicus Therapeutics.

What: After its shares more than doubled through the first seven months of this year, investor profit-taking knocked Amicus Therapeutics (FOLD 2.20%) lower by 16.3% in August. Whether Amicus' sell-off makes it a bargain, however, depends a lot on regulators.

So what: Amicus Therapeutics' lead drug is Galafold, a therapy that could offer hope to as many as half of patients diagnosed with a rare enzyme deficiency known as Fabry disease.

Although Fabry disease isn't common, existing treatments made by Shire and Sanofi generate more than a combined $900 million annually and that suggests that if regulators give Galafold an OK, then Amicus Therapeutics investors could be similarly rewarded with a nine-digit revenue stream.

Amicus Therapeutics has already filed for Galafold's approval in Europe and regulators' acceptance of its application for approval there in June suggests that Galafold, which will be reviewed under an accelerated pathway, could get an up or down vote in the first half of next year.

A filing for Galafold's approval in the U.S. is also expected before the end of this year, which could lead to an FDA decision by the end of 2016.

Now what: Galafold is an interesting drug because it works differently than current standards of care. Both Shire and Sanofi's drugs replace the missing enzyme, while Galafold helps the enzyme work more efficiently in patients who still produce some of it.

Because Galafold has a different mechanism of action, Amicus Therapeutics is studying its use as an adjunct to competing therapies, and if those trials pan out, then Galafold's total market opportunity could expand significantly.

Amicus Therapeutics could also reward investors with a cash windfall if regulators eventually approve a therapy for a rare pediatric skin condition being developed by Scioderm, a company that Amicus Therapeutics acquired last month for $125 million in cash and $104 million in stock up front, plus milestones.

If Scioderm's therapy, which is in phase 3 clinical trials, gets an FDA go-ahead, it would likely result in the issuance of a priority review voucher that can be sold to another biotech company, and recently, those vouchers have been commanding $300 million plus on the open market. If Amicus Therapeutics receives and sells such a voucher, it will need to give the lesser of 50% of the sales price or $100 million to Scioderm, but that could still leave Amicus Therapeutics with a windfall that would offset a lot of the cost of this acquisition.

Because of Galafold's potential sales, other drugs in Amicus Therapeutics' pipeline, and upside associated with this potential voucher, buying shares at these levels may prove to be market savvy.

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