Amicus: Another day, another delay, pretty much the same dumb reason (NASDAQ:FOLD)

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Thomas Ragina

An NDA from Amicus Therapeutics (NASDAQ: FOLD) for AT-GAA (ATB200) in Pompe disease has been delayed again. The delay continues as the FDA is unable to inspect the company’s WuXi manufacturing site located in China. Before I discuss that, let me quickly summarize the Amicus history.

Amicus has two drugs and has filed a biological license application (BLA) for cipaglucosidase alfa and a new drug application (NDA) for migalastat, the two components of AT-GAA. Migalastat is already approved as a Galafold by the FDA for Fabry disease, from which the company derives a small but steady revenue stream. The new indication is Pompe disease, and here the company did a trial called PROPEL that had the six-minute walk test or 6MWT as the primary endpoint and the pulmonary function test or FVC as the secondary endpoint. The PROPEL trial failed the primary endpoint, but did see significant statistics on FVC, which I think is more important for Pompe patients because it causes more deaths.

Now here it is the interesting; Amicus’ closest competitor is Sanofi (SNY) Nexviazyme, and did a trial called COMET, where the primary endpoint was FVC, and 6MWT was the secondary endpoint. COMET failed FVC, but was approved because it passed the 6MWT. Thus, COMET not only failed the primary endpoint, but also failed the most critical marker of Pompe disease. However, it was approved, so PROPEL looks like a complete success at the FDA, right?

And yet, here we are, 3 months after the original PDUFA date of July 29 for the BLA, and again we’re seeing another delay for the exact same reason: the FDA can’t get tickets for a flight to China.

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From every angle we look at, it looks like PROPEL should be approved. The drug combination works, the drug combination is safe, and one of its components, migalastat, has been approved for over 2 years and is consistently making money. Last year, I saw that he made over $300 million for a relatively rare disease like Fabry. If Pompe were approved, that figure could easily double. The market currently has Nexviazyme, which by all accounts seems like the second best drug. However, patients are unable to obtain Amicus’ drug combination due to reduced American tourism to China.

I cannot easily specify which installation of WuXi is being used to produce the ATB200. They have sites in Shanghai, WuXi, Suzhou and Hangzhou, with new sites planned elsewhere. Since the original Amicus-WuXi deal is almost a decade old, I’m guessing the manufacturing site is WuXi, an old historic city northwest of Shanghai. Whatever it is, Jinping appears to have taken the coronavirus as a personal affront, and his zero-Covid Politics is economically destroying the country when the rest of the world has opened up. Even conspiracy theorists and chronic paranoids COVID-19 specialists have stopped talking about the disease and have started to focus on more important things, like whether Musk will restore Trump’s Twitter account. However, Chinese COVID-19 restrictions seems to have no end in sight.

That doesn’t bode well for Amicus. In Europe, where they do not have pre-approval inspection as a condition for approval, the ATB200 is likely to gain approval later this year. However, the FDA is more bureaucratic in these matters, and there have been instances during the COVID-19 years of long delays in facility inspections. One simply did not expect this today.

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I was going through simple Covid numbers in and around Shanghai and this is what I see: there was a major spike in April-May, over 3,500 cases per day at its peak for a short period. But that was so much time ago; today, and for almost the entire half year since May, the Covid situation is about 5-6 new cases per day. And yet Shanghai Disney Park, a major local attraction, was to close yesterday – with visitors trapped inside! – due to a Covid outbreak. This is the situation the FDA is facing, and we can see how they wouldn’t want their officials to be trapped in Shanghai Disneyland when they inspect WuXi’s manufacturing facility.

So where does this leave Amicus investors? First, the company is not suffering from cash. In fact, I don’t have any updated information since my last article because they haven’t posted earnings since then. Second, Xi Jinping recently “he secured a norm-breaking third term as general secretary of the Communist Party at the recently concluded congress, and also fielded a core team packed with loyalists.” Breaking such norms is easier when the population is in lockdown, so we can see why the zero covid policy was enforced so forcefully while the congress was in progress. Now that those festivities are over, the prime minister himself is traveling abroad, and the economy is going bust, it stands to reason that politics would be phased out. Or the FDA could just waive inspection, but big nations have big bureaucracies, both the US and China, and I don’t see that kind of flexibility happening either.

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So I think I can safely say that we should see the drug approved before mid-2023 at the latest. This is just a year behind schedule and will allow Sanofi to earn a well deserved few hundred million dollars more.

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