Amicus Therapeutics Inc. (FOLD, Financial) is the poster child for the malaise affecting small biotechs, especially those working on gene and cell therapy. Owners of the stock are hoping the company’s symbol isn’t a portent of things to come.
At least nine biotechs working in the field of gene therapy have announced layoffs, cost cuts or restructured their research since December, while two others have sold their manufacturing plants, reported BioPharma Dive.
The cutbacks combined with the steepest market slide for publicly traded drugmakers in years have forced fledgling startups and more well-known biotechs to make some tough choices.
"We're seeing valuations for companies take a hit, down to the point that we're seeing multiple companies at negative enterprise value, which really is quite shocking to see," said Nessan Bermingham, a venture capitalist and former CEO of the gene-editing biotech Intellia Therapeutics Inc. (NTLA, Financial).
The share prices of companies working in cell and gene therapy have been hit especially hard, but companies in other fields of biotech have shared their pain. And the outlook isn’t bright given many of their treatments are years away from hitting the market, and that’s assuming they pan out in clinical trials. All the while, they’re forced to devote precious resources on the development of the treatments and readying manufacturing. This has put pressure on balance sheets at a time when it’s difficult to attract new investment.
What’s more, many companies have been plagued by clinical and regulatory problems, which have further sapped investor interest in the industry.
Amicus has developed a pipeline of gene therapies over the past several years, but is feeling the impact of the market slump. Last September, the 20-year-old Philadelphia-based company said it was going to spin out its gene therapy business through a merger with a blank-check company. But those plans went awry and by February the company backed out of the deal due to what it said were “unfavorable market conditions” and an "increasingly challenging environment for stand-alone gene therapy companies."
Given the situation, Amicus decided to cut its losses, dropping plans to move multiple gene therapies into the clinic and putting the building of a production plant on hold. Moreover, the company cut 7% of its workforce, most of the layoffs affecting research and development workers.
Given the plethora of bad news, Amicus stock is down more than 22% year to date to about $9.30, a price at which six of seven analysts think it’s a good buy, according to Yahoo Finance.
Amicus certainly isn’t the Lone Ranger. In the past few months, it’s been joined by other biotechs that have cut jobs and curtailed R&D programs, including Sigilon Therapeutics Inc. (SGTX, Financial), Freeline Therapeutics Holdings PLC (FRLN, Financial), Gemini Therapeutics Inc. (GMTX, Financial), Passage Bio Inc. (PASG, Financial), Generation Bio Co. (GBIO, Financial), Avrobio, Inc. (AVRO, Financial), Sio Gene Therapies Inc. (SIOX, Financial) and Graphite Bio Inc. (GRPH, Financial).
"When you are in a position where you have to conserve capital, you are often going to prioritize indications which you believe have a higher probability of success as well as less competitive dynamics," Luca Issi, an analyst at RBC Capital Markets, told BioPharma Dive. "We're going to see more of that."