Amicus Therapeutics’ plan to spin off its gene therapy assets has run into the reality of the biotech stock market in 2022. With “market conditions” sinking the planned special purpose acquisition company merger, Amicus plans to prioritize its gene therapy pipeline as part of a push to generate $400 million in net savings through 2026.
By merging its gene therapy unit with Perceptive Advisors’ ARYA Sciences Acquisition Corp IV, Amicus planned to reduce its outgoings and step up its push for profitability. The deal would have given Amicus a chance to profit from the success of the spinout via a 36% stake in the company but free it from the cost of developing a gene therapy pipeline led by Batten disease programs.
That plan looked viable in September. Now? Not so much. Since Amicus disclosed the merger, the price of the $XBI fund that tracks the biotech market has fallen by more than 30% to $85. The investor exodus has sunk the SPAC merger plan and left Amicus needing a new path to profitability.
“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 stand-alone gene therapy companies,” Amicus wrote in a statement. Neither Amicus nor the SPAC will pay a termination fee as the decision was mutual.
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Amicus has responded by outlining plans to make cuts. Full details are yet to emerge, but the overall goal is to generate $400 million in net savings up to 2026 through “the prioritization” of the gene therapy pipeline and “alignment” of the internal R&D organization. The savings are in the same ballpark as what Amicus would have achieved through the SPAC merger.
The termination of the SPAC merger affects the future of Amicus CEO John Crowley, who was set to swap his current position for the chance to lead the spinout. With the merger collapsing, Crowley plans to step aside as CEO in August, vacating the position for Bradley Campbell as previously planned, and start a two-year stint as executive chairman of Amicus.
For ARYA, the termination of the merger leaves it with a little more than one year to identify and execute a new business combination. In a statement, ARYA CEO Adam Stone said the team “is well positioned to identify and execute on an opportunity that meets its key investment criteria and that can deliver value for its shareholders within that time period.”