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George Ronan
George Ronan
Articles (53) 

Why No One Wins With Latest Amicus Therapeutics Announcement

What happened and why it is a bad day for both the company and the wider health care space

September 13, 2017 | About:

Amicus Therapeutics Inc. (NASDAQ:FOLD) has not had a great start to the week. The company just announced an investigation into the efficacy of a drug called SD-101 in a target indication of epidermolysis bullosa, or EB.

Amicus shares have not really moved on the announcement, suggesting either markets were not pricing in too high a chance of success or the reaction is yet to come. This great degree of uncertainty for the company puts a bit of residual pressure on share price regardless of the outcome of the trial in question.

So what happened, and what is next?

Before getting into the trial itself, it is worth touching on the disease. EB is a very rare skin disorder characterized by blister formation in response to mechanical trauma. Essentially, patients with this condition have extremely fragile skin, which leads to frequent breaking, tearing and blistering. It is incredibly painful and, at the more severe end of the spectrum, it is practically impossible to live any sort of a normal life with the condition. The current standard of care treatments are insufficient at best, with patients essentially having to treat and cover the skin tears as best as possible and take chronic pain medication.

With this in mind, this program was not just about bringing a treatment to market to return value to shareholders. This population desperately needs a viable therapy option and hopes were high Amicus was the company to provide it.

Unfortunately, it now looks as though this is not the case.

Its treatment, the above-mentioned SD-101, is a topical wound healing therapy designed to be administered at wound site. Its mechanism of action is rooted in wound closure, so that is what the recent trial was set up to investigate – can this topical administration therapy lead to faster wound closures in patients with EB over placebo, and can it increase the number of patients with closed wounds after three months?

These were the two primary endpoints of the study, and both failed. There was some talk of a subset group that seemed to perform relatively well, but this far from means the trial was anywhere near a success. The company also suggests a higher-than-expected placebo wound closure rate, perhaps caused by increased bandaging, might have skewed the results a little bit. Again, however, this seems to be the company grasping at straws.

As far as where things go from here, the company is continuing with an open-label extension trial, but is not going to invest any more money into the asset in the syndication. Essentially, this trial is the end of SD-101 in EB.

Again, this is not really about the company failing to prevent stroke and work, at least not from a health care space perspective. It is really about the disappointment those suffering from this disease (and in many cases, the parents of the children suffering from this disease) have after getting their hopes up and now having to look to alternative bellman stage treatments for potentially solving their condition-related problems.

As company CEO John Crowley said:

"It's important to note that there are other companies developing treatments for EB… We would rather be the first to fail than the last to try."

As a final note, it is worth mentioning the muted response to this development may be rooted in markets expecting (already pricing in the potential for) failure. This drug technically failed the study that predated its advance into a pivotal investigation, but the company moved ahead anyway based on certain elements of the data that pointed toward efficacy.

Whatever the situation, the bottom line is this is not Amicus' or the EB community's day and, unfortunately for both, there are not really any winners from this outcome.

Disclosure: The author has no positions in any of the stocks mentioned.


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