Why Amicus Therapeutics Tanked in August

What happened

Shares of rare-disease drugmaker Amicus Therapeutics (NASDAQ: FOLD) shed 20% of their value in August, according to data from S&P Global Market Intelligence. And what caused investors to head for the exits last month? Apparently, a question.

On Aug. 8, Amicus released its second-quarter earnings report. During the conference call that followed, Bank of America analyst Tazeen Ahmad noted that rival Sanofi's (NASDAQ: SNY) ongoing Phase 3 Pompe disease study for neoGAA should read out ahead of Amicus' late-stage Pompe trial for AT-GAA. The analyst also questioned whether the neoGAA study's lung function primary endpoint might be viewed more favorably among caregivers than AT-GAA's 6-minute walk test.

Chalkboard chart showing a downward pointing trend line.

Image Source: Getty Images.

So what

The stock's nosedive following this line of questioning by Ahmad is a testament to just how nervous the market is about Amicus's competitive position in Pompe disease. It's not exactly breaking news that Sanofi's neoGAA program will deliver its data almost a year ahead of AT-GAA's pivotal trial, after all. What's important to keep in mind is that Amicus is aiming to develop AT-GAA into the gold standard for Pompe disease. As such, the therapy's efficacy and safety results will be paramount -- not how quickly they are released.

Now what

Should investors take advantage of this dip? While Amicus' shares now trade well below their 52-week high, the biotech's stock valuation remains in nosebleed territory at more than 20 times the company's trailing 12-month sales. That's one of the richest valuations in the entire healthcare sector at the moment. So while it may seem like this double-digit percentage selloff has provided investors with an attractive entry point, it might be a good idea to take a cautious approach with this rare-disease stock for the time being. 

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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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