Amicus Pipeline Still Early

Amicus Therapeutics (FOLD - Analyst Report) has three lead candidates: Amigal in phase II for Fabry disease, Plicera in phase II for Gaucher disease, and AT2220 in phase I for Pompe disease. We are optimistic with Amicus’ pharmacological chaperone technology and its three lead candidates.

We believe Amicus’ small drugs have advantages over existing therapies in each of the targeted disease area. We are also impressed by the deal with Shire PLC (SHPGY - Analyst Report) for the three lead programs. Unfortunately, all three candidates are still in early or middle stage of development and they will face substantial competition from big pharmaceutical or biotech companies if approved. We maintain our Hold rating.

The company, which began operation in 2002 and went public in June 2007, has only limited operational experiences. Amicus has generated significant losses to date and we believe it will continue to incur losses in the next few years when the company advances its programs into late development stages. As a result, Amicus may need to obtain additional funds to further fund its research and development programs and product candidates.

We arrive at our price target of $16.5 by applying the biotech industry average P/S ratio of 20 x, multiplied by our estimated 2011 revenue of $53 million, divided by 37.5 million shares outstanding at that time and discounted at 25% for two and half years. Short-term catalysts include upcoming announcement of phase II trials for Amigal and Plicera. Downside to our price target could come from negative phase II trial results.

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