Perceptive has been actively buying Amicus Therapeutics (NASDAQ:FOLD) over the past few months. The fund bought 8,339,444 shares on May 29 of this year, and added another 4,000,000 shares on June 30. The 4,000,000 additional shares were added on the day that Amicus announced trial updates and an analysis plan for its Phase III Fabry Monotherapy Study 012.
Additionally, Perceptive bought 2.1M shares of the company during its offering last month, bringing the firms total share count to a little over 14.4M.
- Amicus History and Pipeline
Amicus is a biotechnology company focused on developing therapies for rare and orphan diseases, specifically Lysosomal Storage Disorders. The company's drug furthest along in development is Migalastat for Fabry's disease.
Fabre’s disease is a deficiency of the enzyme alpha galactosidase-A due to mutation. It causes a glycolipid to accumulate within the blood vessels, other tissues, and organs. This accumulation leads to an impairment of their proper functions. Patients typically suffer from full body or localized pain to the extremities, believed to be related to the damage of peripheral nerve fibers that transmit pain. Kidney and cardiac complications are also common, along with dermatological manifestations and clouding of the corneas. The leading causes of death for the disease are renal failure, cardiac failure, and stroke.
On April 29, 2014, the company announced positive twelve and 24-month data from the Phase III 011 study of migalastat HCl, which is designed to treat Fabry patients with amenable mutations. Migalastat HCl is a chaperone for the treatment of Fabry disease.
Afterwards, in August of 2014, the company announced positive data from its second phase III study (Study 012). On November 17th, the company announced additional positive data concerning secondary endpoints from the same Study 012.
Amicus is developing oral migalastat HCl for Fabry patients with α-Gal mutations that are amenable to this chaperone as a monotherapy. For all other Fabry patients, the company is leveraging is Chaperone-Advanced Replacement Therapy (CHART™) platform to develop migalastat HCl co-formulated with ERT as a next-generation therapy.
- Perceptive Advisor's Successful History
Looking back into Perceptive's history, we can see it has found several companies before they caught investor attention. Many of these companies have been big winners.
Perceptive had a call option position in InterMune (NASDAQ:ITMN) before it announced data this year. InterMune is a biotechnology company focused on therapies for the treatment of idiopathic pulmonary fibrosis. On February 25, 2014, the company announced that top-line data from its ASCEND Phase III trial was positive.
The data demonstrated that pirfenidone significantly reduced idiopathic pulmonary fibrosis disease progression. According to a March 31, 2014 filing, Perceptive now controls about $9 million worth of InterMune. We think the company will eventually receive approval.
One of Perceptive's larger positions is in Sarepta (NASDAQ:SRPT). Sarepta focuses on developing RNA-based treatments for rare and infectious diseases. Eteplirsen is the company's lead product and is in clinical trials for Duchenne muscular dystrophy.
It has been a bumpy road for Sarepta investors over the last couple of years, as the stock has gapped up (and down) several times on various data releases and ongoing discussions with the U.S. Food and Drug Administration (FDA). Perceptive owns about $69 million worth of Sarepta stock, which is about 7.75% of its portfolio. We have covered Sarepta several times and continue to believe that Eteplirsen will eventually receive approval in the long term.
Perceptive also has a position in Acadia Pharmaceuticals (NASDAQ:ACAD). Acadia has been one of the biggest biotech runners since late 2012, going from about $2/share to over $30/share. We covered Acadia in May 2012 when the stock was under $2, suggesting that the company could end up being a big winner. Acadia is a biopharmaceutical company that works on developing therapies to treat neurological and other related central nervous system disorders.
The company's lead drug is Pimavanserin to treat Parkinson's disease psychosis. The company announced positive Phase III data in late 2012 and the stock has been on a tear since. Perceptive has been a buyer as early as 2005 and currently holds about $16 million worth of stock.
Conclusion
We believe that Amicus has a good risk-to-reward profile at its current price level, which is about $8.30. Additionally, we have been hearing some talk about acquisition interest for the company from a couple of our sources. This makes sense that a larger pharma would want to acquire Amicus now while interest rates are still at an all-time low. With a current market cap around $775M, we feel Amicus should sell for at least $1.2B as analysts forecast the Global Fabry Disease market to grow at 18.08% annually over the period 2014-2019 with peak sales of $400 million worldwide.
However, with the additional positive data from the secondary endpoint, this number can increase significantly as migalastat HCl could become the dominant treatment in this space. If we figure an average of $300M a year in sales for five years, this equates to $1.5B. With the company's current accumulated deficit of around $475M, this is an added bonus for a larger pharma, as an acquirer can leverage the tax benefits for additional profits. In our estimation, Amicus should be acquired in the range of $12/share as the chances of FDA approval are very high. However, since the drug is not yet approved, a fair price for the company now would be between $10 and $10.50 in our estimation, which makes for a good upside trade from its current price.
