Rare disease has always been Amicus Therapeutics’ focus, but in recent years the company adjusted how it aimed to treat such disorders, a shift that followed a $100 million acquisition of a gene therapy startup. Amicus is now spinning out its gene therapy assets into a separate business that will be publicly traded following a merger with a blank check company.
According to transaction terms announced Wednesday, Amicus keeps its focus on its commercialized drug and therapeutic candidates in late-stage development. Meanwhile, new company Caritas Therapeutics steps out on its own as a gene therapy company with a pipeline of clinical and preclinical programs. John Crowley, Amicus’ CEO, will leave his post at the Philadelphia-based biotech to lead Caritas.
“We see this transaction sharpening the strategic focus, significantly strengthening the financial profile, as well as enhancing the operational execution of both of these companies for the benefit of all of our stakeholders,” Crowley said, speaking on a conference call.
Though Amicus and Caritas will be separate entities, they will remain closely connected. Amicus will be the largest Caritas shareholder, owning about 36% of the company. Amicus will also have the right to share in the development and commercialization of two gene therapy programs that came from its collaboration with the University of Pennsylvania. Caritas will start out well funded. The merger with ARYA Sciences Acquisition Corp IV, a special purpose acquisition company (SPAC), will provide the new company with about $400 million in total financing.
Throughout its nearly 20-year history, Amicus’ focus has been lysosomal storage disorders, which are inherited metabolic diseases in which an enzyme deficiency leads to the toxic buildup of substances in the body. Amicus has commercialized one drug, the Fabry disease treatment Galafold. Approved in 2018, the drug accounted for $260.8 million in sales last year, a 43% increase over the prior year. Amicus hopes to add Pompe disease drug candidate AT-GAA as another revenue-generating product. That therapy is currently under FDA review with a regulatory decision expected in mid-2022. But Amicus has never been profitable, and the substantial financial investment required of gene therapy research was likely to keep the biotech from reaching profitability any time soon.
Crowley said the spinout of the gene therapies will put Amicus on firm financial footing and a path to profitability in 2023. Meanwhile, the SPAC merger secures the financing needed to continue clinical development of the gene therapies. Crowley will be succeeded by Bradley Campbell, currently Amicus’s president and chief operating officer. Speaking on a conference call, Campbell said Amicus will be a late-stage global development and commercialization company focused on Fabry and Pompe. Growth will come from commercializing Galafold in new geographic markets and extending that drug’s label.
The most advanced product candidates joining the Caritas pipeline will be two clinical-stage gene therapies for Batten disease, a rare inherited nervous system disorder. Amicus added those therapies and eight others to its pipeline via its 2018 acquisition of Celenex, a spinout of Nationwide Children’s Hospital. In addition to the gene therapy programs spinning out of Amicus, Caritas inherits a collaboration with the lab of University of Pennsylvania scientist Jim Wilson, granting exclusive global rights to programs for nearly 50 rare genetic diseases as well as 11 more prevalent rare diseases. To support clinical development of its gene therapies, Caritas is building a manufacturing plant in Orlando, Florida.
The cash that will finance Caritas breaks down to $150 million from ARYA IV’s cash holdings, a $50 million equity investment from Amicus, and $200 million from investors that have agreed to purchase equity in the new company at $10 per share. Those investors include Perceptive Advisors, Redmile Group, Bain Capital Life Sciences, Invus, Avaro Capital Advisors, Surveyor Capital, Deerfield Management Company, Wellington Management, and Sphera Healthcare.
The boards of directors of both Amicus and ARYA IV have approved the merger, but it still needs approval of ARYA IV shareholders. The transaction is expected to close in the fourth quarter of this year or in early 2022.
Amicus took its name from the Latin word for “friend.” In naming the gene therapy spinout, Crowley and his team took the same inspiration, selecting caritas, which means “compassion.” When the SPAC merger is complete, Caritas is expected to list on the Nasdaq under the stock symbol “SPES,” which is the Latin word for “hope.”
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