Shire Steps Up Pressure on Genzyme

If there was any doubt that ultra-specialist drugs for ultra-niche diseases are highly valued these days, look no further than Shire’s deal with Amicus Therapeutics, announced today.

Shire paid $50 million up front and promised up to $150 million in clinical and regulatory milestones for ex-US rights to Amicus’ Phase II oral programs in Gaucher's and Fabry disease, and its Phase I candidate for Pompe disease. These are rare, inherited disorders that affect only a few thousand patients worldwide, for whom the current treatment is enzyme replacement therapy—available by infusion only.

Shire takes on half of all development costs from now on, and will pay tiered double-digit royalties on all three compounds. Not bad—especially as Amicus gets to keep the US rights, and as lead compounds migalastat (Amigal) in Fabry and isofagomine (Plicera) in Gaucher haven’t even reached proof of concept yet (although apparently Shire was offered access during its due diligence to more of the ongoing Phase II data than the rest of us).

Amicus’ President & CEO John Crowley points out that there were several bidders at the table—unsurprising, given the size of the deal, and its timing ahead of preliminary Phase II data due year-end. Nor is Shire exactly an unusual choice: it has been building up its presence in specialist biologics, and in particular in lysosomal storage disorders, since its $1.6 billion acquisition of TKT in 2005.

Since that deal, Shire has already been brushing shoulders with Genzyme, who pioneered the use of enzyme replacement therapy with Gaucher treatment Cerezyme and its predecessor Ceredase, launched in 1991. Shire sells a competitor to Genzyme’s Fabry treatment Fabrazyme in Europe, and it sells the only available treatment for Hunter Syndrome, Elaprase (“one that got away”, from Genzyme’s point of view, although the US biotech did claw back Asian rights.)

Shire is, from today, stepping up the competitive pressure on Genzyme’s rare diseases franchise (get the picture, now?)—which, despite the group’s considerable diversification, still accounts for half of Genzyme’s $3.7 billion revenues. The cosy exclusivity it has enjoyed since first creating this business—helped along by orphan drug status for its drugs--is coming to an end. (You can read more about what Genzyme’s doing about this in December’s IN VIVO.)

It’s not just because of Amicus’ oral therapies—although these, being in a pill form, could potentially provide a significant shift in treatment-paradigms for patients. It’s also, in the near-term, because of Protalix’s and, you guessed it, Shire’s own enzyme replacement therapies for Gaucher’s, due on the market in 2009 and 2010 respectively.

Granted, any competitor faces a job cracking Genzyme’s hold on this market—secured by strong patient, physician and payor relationships, well-established support structures, huge commitment and a good track record. But as Shire gains more product candidates in rare diseases, it increases its own visibility, credibility, network and leverage opportunities in this specialist niche.

Genzyme does have its own oral contender, for Gaucher’s at least, also in Phase II—using a substrate reduction approach which it, unsurprisingly, rates above Amicus' pharmacological chaperone technology, and claims will be applicable to a larger patient group.

But the deal removes--or at least complicates the use of--a potential safety net that was available to serial-acquiror Genzyme should anything go wrong with its in-house oral candidate: buying Amicus.