Don’t FOLD on Small Cap Biotech Yet

Written by GSCR Staff   
Tuesday, 24 February 2015 08:01

In yesterday’s Goldman Guide we discussed the healthcare and biotech sector performance so far in 2015.

We alluded to the fact that M&A activity has been a little slow in biotech so far this year and some deals could get things going. Right on cue, it was announced yesterday that Valeant Pharmaceuticals International, Inc. (NYSE – VRX) purchased Salix Pharmaceuticals Ltd. (NASDAQ – SLXP) for $10.4 billion. While this deal was out of our small cap price range, it is possible that the trickledown effect could start here.

 

Amicus Pharmaceuticals, Inc. (NASDAQ – FOLD - $8.69)is a stock that appears to be on a great run and making progress when it comes to FDA trials. With a short float under 5%, and a very bullish EMA for short through long term, FOLD has few contrarians and another check mark when it comes to technical analysis.

 

The Company focuses on the discovery, development, and commercialization of medicines for various rare and orphan diseases. It develops enzyme replacement therapies (ERTs) for lysosomal storage disorders (LSDs), including Fabry disease, Pompe disease, and Mucopolysaccharoidosis Type I (MPS I). The Company also develops novel small molecules as monotherapy treatments for Fabry disease and Parkinson's disease. Its chaperone-advanced replacement therapy program is used to develop next-generation ERTs by co-formulating therapeutic enzymes with proprietary pharmacological chaperones. The Company's lead programs include the small molecule pharmacological chaperones, migalastat HCl as a monotherapy that is in Phase III global registration studies for Fabry patients with genetic mutations; and AT2220 (duvoglustat HCl), which has completed Phase II safety used for the treatment of Pompe disease. Its products also comprise AT-B200, a proprietary recombinant human acid-alpha glucosidase that is in late preclinical development for Pompe disease; and AT3375 for treating Gaucher disease. The Company has strategic collaboration with GlaxoSmithKline PLC to develop and commercialize migalastat HCl

 

Earlier this month, the Company reported positive results for two of its pipeline candidates.Amicus previously reported positive Phase 3 data in both treatment naïve, or FACETS and enzyme replacement therapy (ERT) switch patients for Fabry disease. Results from these studies have shown that treatment with migalastat has resulted in reductions in disease substrate, stability of kidney function and improvement in a key cardiac parameter (left ventricular mass index, or LVMi) in patients with amenable mutations. The Company also reported significant progress with its Pompe disease in efficacy tests in mice.

 

With continued FDA success the Company should continue momentum. We think FOLD continues the upward trend all the way up to the $10.50 level by 3Q15.

 

Have a great day!

 

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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