He Killed His Own Promising Drug in a Morning, Then Saved His Company in 48 Hours
After his pill made patients weaker, John Crowley called regulators himself and took a 50% stock plunge before rebuilding around a better idea.
Joys of Compounding · John Crowley - Biotech's Chief Evangelist - [Art of Investing, EP.15]Late one night, John Crowley, the chief executive of Amicus Therapeutics, got a visit from his chief medical officer and his chief science officer carrying big binders. Boss, we need to talk, they said.
They were bringing results from the first two adults with Pompe disease taking the company's promising pill. They were not getting better. In fact, they were getting weaker.
The next morning, Crowley told the doctors to stop the drug immediately, asked federal regulators to put the trial on hold, and disclosed the failure publicly. The stock fell 50% in a day, wiping out years of work and forcing a scramble for a replacement.
Pompe is a rare disease that weakens muscles over time. The first rule of medicine is do no harm, Crowley said. These trial volunteers were already struggling, and the data, including biochemical tests, showed the treatment was making them weaker.
The loss was personal as well as professional. Four years of work and "millions and millions of dollars of research time had gone by," Crowley said. He recalled thinking about his children, Megan and Patrick, "I just lost four years for Megan and Patrick." The team later concluded the drug behaved differently in the muscles of people living with Pompe than it had in animals and in healthy volunteers.
For months, the company looked for another dose or a closely related molecule that could be salvaged. At an offsite meeting, the team finally agreed to quit. Crowley called knowing when to stop the hardest thing in biotech.
Then Hung Do, his longtime friend and Amicus's head of biology, said, "I think I can make a better enzyme." The idea was to pair a new enzyme with an added compound to improve its stability and possibly its safety. Amicus could not afford to start from scratch.
Hung departed to launch a separate firm backed by his brother, while the two men stayed close. Four years later, he had promising animal data, eight years after Amicus had begun work on Pompe.
By the summer of 2013, Amicus needed that science. Its lead program in another rare disease was struggling, and its big pharmaceutical partner, GSK, which owned 19.9% of the company and was paying half the budget, wanted to leave rare disease entirely. Crowley needed about $15 million to reach key trial results the next spring.
He took a plan to the board that pulled several moves together. Amicus would acquire Hung's company for about $15 million in stock, bring in $15 million through a bridge loan, downsize again, and take back GSK's half of the rights in exchange for a future royalty if the drug worked. The pieces needed to close in two days since any one of them could be material that a public company would have to disclose. He wanted this to be one big strategic repositioning.
The financing came together late on a Sunday night. The company put out its release, and the stock rose one penny. Crowley told the team they knew what to do and just had to execute. His lesson was blunt, that trials can fail and regulators can send hard letters, but a biotech company fails when it runs out of money, and he was determined Amicus would not.
Questions people ask
What exactly is Pompe disease?
Pompe is a rare inherited disorder in which the body lacks an enzyme that breaks down stored sugar in muscle cells. The sugar builds up and damages muscles, the heart, and breathing, so children and adults gradually weaken and often need wheelchairs and ventilators. It affects about 1 in 40,000 births and varies from severe infantile to slower adult forms.
What does it mean to put a trial on clinical hold?
A clinical hold is an order from the Food and Drug Administration pausing a human trial because of a safety concern. No new patients can enroll and current patients generally stop dosing until the agency agrees the problem is understood. Companies can request it themselves, as Crowley did, to prevent further harm.
Why did the 48-hour timing matter so much?
U.S. public companies must promptly tell investors about events a reasonable shareholder would consider important, usually in a press release and a securities filing. Announcing the financing, acquisition, and partner split separately would have moved the stock three times and complicated negotiations. Doing them together let Amicus present one coherent survival plan.