Tuesday, December 21, 2010

2010 Alliance DOTY Nominee: GSK/Amicus Therapeutics

It's time for the IN VIVO Blog's Third Annual Deal of the Year! competition. This year we're presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (four or five in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

GlaxoSmithKline's pact with Amicus Therapeutics sums up a theme that resurfaced again and again in 2010: the rare disease renaissance.

Faced with slack pipelines and increasing payor demands, big pharma CEOs spouted the words "niche" and "orphan" more often then "primary care" and "blockbuster" this year (though they have been biting their tongues behind the scenes or crossing their fingers behind their back).

Nonetheless, GSK has gone beyond talk with action on the deal-making front, even creating a business unit exclusively devoted to rare diseases back in February. GSK's alliance with Amicus, announced in October, is the big pharma's fifth in the rare disease space in just over 12 months, and it also involves the latest-stage candidate of the bunch. Under the deal, GSK gains worldwide rights to the Phase III Fabry disease treatment Amigal (migalastat HCI), a potential first oral treatment for the genetic disease.

Partnering with Amicus required only a small upfront on the part of GSK, which paid $60 million for a 19.9% equity stake in Amicus in addition to worldwide rights to Amigal. GSK also agreed to pay $170 million in milestones, clinical development costs and tiered double-digit royalties on sales. But it stands to gain in return. As a reference point, the market-leading enzyme replacement therapy for Fabry disease – Genzyme's Fabrazyme – generated $494 million in sales in 2008, the year before Genzyme's manufacturing problems negatively impacted sales. GSK is betting there is plenty of upside potential for a more convenient oral brand. And with Genzyme embroiled in a manufacturing debacle and a hostile takeover battle by Sanofi-Aventis, it opens the door for rivals to stake a claim for the space.

For Amicus, the deal provides enough cash to see it through to the US approval of Amigal, according to management, and getting GSK on board as a partner helps validate its pharmacological chaperone technology.

Whether or not big pharmas' increasing emphasis on rare diseases ultimately plays out in its favor is yet to be seen, but we think giving it a serious shot – at least as one platform in a multi-pronged growth strategy – is worth a DOTY nod.


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