The market has cooled for companies trying to go public, and the latest example is Amicus Therapeutics, which was planning to spin off its gene therapies into a separate company that would become public in a merger deal. Instead, Amicus and the blank check company have called off the merger, citing unfavorable market conditions.
The termination of the merger with the special purpose acquisition company, ARYA Sciences Acquisition Corp IV, means that Amicus now needs to save $400 million—the same amount that the gene therapy company was in line to receive from the deal. The termination was announced Thursday, concurrent with Amicus’s release of 2021 financial results.
“This decision results from unfavorable market conditions affecting IPOs, follow-on financings, and SPACs in the biotech sector as well as an increasingly challenging environment for standalone gene therapy companies,” Amicus said in the financial update.
When Amicus unveiled the SPAC merger plan last September, it framed the transaction as a way to put the Philadelphia-based rare disease drug developer on a path to profitability. Since its 2002 founding, Amicus’s focus has been lysosomal storage disorders, which are inherited metabolic diseases. Galafold, a Fabry disease treatment, is Amicus’s lone commercialized drug and accounted for $305.5 million in 2021 revenue, a 17% increase over 2020 sales. The company reported a $250.5 million net loss for 2021, compared to a $276.8 million net loss in the prior year. Amicus could soon add another commercialized product to its portfolio. A Pompe disease drug candidate is currently under FDA review and a regulatory decision is expected in May.
The Amicus pipeline includes gene therapies for both Fabry and Pompe, both of them preclinical. Last month, the company discontinued one of two clinical-stage programs in Batten disease, a rare inherited nervous system disorder, following disappointing data. The Batten disease therapies and others were added via the 2018 acquisition of Celenex. The plan to spin off these therapies into a new standalone company, Caritas Therapeutics, was intended to separate Amicus’s commercialized lysosomal storage disorder drugs from the earlier-stage gene therapy candidates, which will require substantial investments to advance their development. One of those investments is a planned manufacturing facility in Florida.
Transitioning Amicus into a mainly commercial-stage business is no longer in the cards. The company will still focus on expanding the reach of Galafold by commercializing it in more geographic markets. Amicus is also preparing to commercialize its Pompe drug. At the same time, Amicus will streamline its portfolio and align the business around the company’s R&D pipeline, CEO John Crowley said in the financial report. He added that Amicus projects these moves will save about $400 million in operating expenses through 2026, which is the same amount that Caritas was expected to receive in the SPAC merger. Under this new strategy, Crowley said Amicus expects to achieve profitability in 2023 without needing to turn to any equity financings. Amicus reported its cash position at the end of 2021 was $482.5 million.
Under the original spinoff plan, Crowley was set to leave his post at Amicus in order to take on the chief executive role at Caritas. He will now continue to lead Amicus until Aug. 1, when he will be succeeded by Bradley Campbell, who is currently the company’s chief operating officer. Crowley will then become executive chairman of Amicus for a two year term.
Both Amicus and ARYA IV said that the termination of the merger was a mutual decision, and therefore neither party owes the other a termination payment. Meanwhile, the clock is ticking for ARYA IV to find another company and execute a merger, unless it extends the March 2, 2023 dissolution deadline date for the SPAC.
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