Amicus Therapeutics Inc (FOLD) 2008 Q4 法說會逐字稿

Good afternoon. At this time I would like to welcome everyone to the Amicus Therapeutics conference call. All lines have been placed on mute to prevent any background noise. After Amicus's remarks there will be a question-and-answer period. (Operator Instructions).

During this call, Amicus may make various remarks about the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Company's most recent annual report on Form 10-K and our periodic reports on Form 10-Q.

These documents are available from the SEC, the Amicus Web site or from our Investor Relations representative.

In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may look to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our estimates change.

Before we begin we would ask everyone to go to the Investor Relations section of the Company's Web site amicustherapeutics.com and print out the press release and related financial tables. These will be particularly useful when the Company reviews the financial results and reconciliation to non-GAAP financial measures discussed today.

Now I am happy to turn the call over to John F. Crowley, President and CEO. Please go ahead, Sir.

Great. Thank you and good afternoon, everyone, and welcome to our fourth quarter full year 2008 conference call.

I am joined on this call by other members of our management team, including Matt Patterson, Chief Operating Officer. Matt will provide an update on our lead lysosomal disease programs.

I am also joined by Jim Dentzer, Chief Financial Officer, and Jim will be providing an overview of the financial results for the quarter and for the full year 2008.

David Lockhart is also here, our Chief Scientific Officer. And David, as always, will be available to participate in the Q&A portion of the call that will follow our remarks.

Let me begin by saying we are very pleased with 2008. We think it was an excellent year for Amicus. We achieved our planned development milestones; and by doing so, we've made significant regulatory and clinical progress in each of our three lead programs in the lysosomal storage diseases, and this is consistent with our guidance.

In addition, we also continued to invest in the pharmacological chaperone platform more broadly. In particular, we generated very encouraging preclinical data demonstrating the potential breadth and versatility of our science. And we'll talk more about that in a short while as Matt goes through his section.

And finally, we maintained a strong financial profile ending the year with $121 million in cash and marketable securities.

So in 2008, we continued to build a strong foundation through solid execution on multiple fronts. We expect 2009 to be a very transformational year for Amicus. This year, we expect to achieve several key development milestones in our lead programs and to transition to a late-stage biopharmaceutical company as we move to initiate our first Phase 3 clinical study.

I will highlight our 2008 advancements with respect to our three lead programs; and then I will turn this call over to Matt to go into greater detail on each of these programs.

In 2008, we made significant progress toward the finalization of a thorough and well-designed global Phase 3 program for our product candidate Amigal, our chaperone for Fabry disease. Through multiple interactions with regulatory authorities in both the United States and in Europe, we were able to secure some very important agreements and helpful guidance in the United States.

In particular the FDA has agreed that Amigal for Fabry can pursue an accelerated approval pathway, based on a Phase 3 clinical trial comparing Amigal to placebo, using a surrogate primary endpoint of kidney GL-3 levels. We have been and continue to be very encouraged by the interactions to date, and look forward to our final discussions with the agency in the coming months and to initiating our Phase 3 program in the second quarter.

Turning briefly to Gaucher, we are very pleased also with the progress in that program. We expect to have surpassed our target enrollment in our ongoing Phase 2 clinical study, a six-month clinical trial in patients naive to enzyme replacement therapy. And we now expect to report this results in the third quarter of this year for that study. It is our goal to complete this study and to, in parallel, work with our partners at Shire to advance this program in to Phase 3 as rapidly as possible.

I will comment here finally in the introductory remarks about our Pompe program and also note continuing excellent progress on that front. Our Phase 2 trial of AT2220 is ongoing; and we expect to report results in the second half of this year.

In addition, we've recently reported on some interesting preclinical data, evaluating the potential for the combination of our chaperone AT2220, and an enzyme replacement therapy to be a potential new treatment option for people living with Pompe disease. We continue this preclinical work and we will have additional data over the course of 2009 to discuss with all of you.

So that is my introduction and I will turn the call over now to Matt Patterson, who will provide a more in-depth update on our lysosomal disease programs. Matt.

Thanks, John, and good afternoon, everyone. I will just take a few minutes to expand a bit on the summary John just provided for our lead programs.

So first, starting with Amigal for Fabry. As many of you know, our focus over the last quarter has been to continue discussions with the FDA and the EMEA regarding our global Phase 3 development program. As John mentioned we are very pleased with the progress to date.

In our update last month, the firm sent important aspects of the Phase 3 program and plan based on our recent discussions with the agency here in the United States. As John mentioned, we know that they support a focal trial comparing Amigal to placebo, based on the surrogate primary endpoint of the change in the amount of kidney GL-3 which, as a reminder, is the substrate that accumulates in cells in Fabry patients and was the biomarker used for the approval of the existing approved treatment.

Positive results from this trial would result in accelerated approval pathway mechanisms for a future new drug application for Amigal.

So we continue to have discussions with the agency in the context of a special protocol assessment procedure, or SPA procedure, which we started back in the fourth quarter of last year. We plan to continue to collaborate with the agency in the coming months to determine exactly what measure of kidney GL-3 will be used for the primary endpoint of the study, as well as other endpoint and details of the protocol. And it remains our goal to reach agreement with the agency and to initiate the study in the second quarter of the year through submission of the protocol to the investigational sites globally, which would result in the commencement of treatment subjects in the second half of the year.

In Europe, we've also continued to have production discussions with the European authorities based on these interactions. As announced last month we expect to initiate a separate clinical study designed to evaluate the safety and efficacy of Amigal compared to enzyme replacement therapy.

Along with Shire, we continue to work on the design of this study through discussions with the EMEA. And we will continue that progress and finalize the design of that trial as soon as possible.

So in parallel with the regulatory process related to Phase 3, we continue to treat patients in a voluntary Phase 2 extension study. In this study, we are collecting long-term safety and efficacy data and evaluating additional doses and dosing regimens of Amigal in 23 patients who have elected to continue treatment.

This is particularly interesting and important because a majority of these patients have been receiving Amigal for more than two years now, and some for more than three years. And we expect to report updated data from this study in the first quarter of 2009.

So turning to Gaucher, as John mentioned, we are also very pleased with the progress of our investigational drug Plicera for Gaucher. Last month we were very pleased to announce that we expect to surpass our target enrollment of 16 patients; and as John mentioned we tightened our guidance that we expect to have data from this study in Q3 of this year.

As a reminder, this is a six-month study looking at valuation of safety as well as looking at trends of efficacy and the standard endpoints of Gaucher disease.

Given how well understood the measures of Gaucher are, we expect our Phase 2 clinical trial will provide us with a clear view of the potential for Plicera and Gaucher. In addition, because of the clear endpoints and the recent history of our partner Shire and others working in this disease, we believe we can move rapidly from Phase 2 to 3 if the data are encouraging.

To this end, we are working with Shire now to prepare for Phase 3 as soon as possible.

And turning to Pompe, as you know this Pompe disease is a severe neuromuscular disease that continues to have significant unmet medical need. In the second quarter of last year we initiated our Phase 2 clinical trial of AT2220, representing the first investigational oral therapy in development for Pompe patients, and of course, the third chaperone from Amicus to enter Phase 2 studies.

This is a multi-national trial with an 11-week treatment period and an open-label design, enrolling 18 adult patients diagnosed with Pompe disease. The objectives of the trial include evaluation of safety and pharmacodynamics of multiple doses in regimens of AT2220. And as John mentioned we expect the results of this study to be available in the second half of 2009.

We are also measuring -- just to be clear, we are also measuring efficacy endpoints that have been evaluated in previous studies of adult Pompe patients. But we would not expect to see changes in these measures in the first few months. However, upon completion of the 11-week study protocol, patients will have the option of continuing on treatments in a voluntary extension study. This will hopefully allow us to a valuate the longer-term effects of AT2220, including results as measured by some of these clinical measures that have been used in past trials.

In addition to our work evaluating AT2220 as a monotherapy treatment option for Pompe, we continue to conduct preclinical studies to determine the potential therapeutic effects of administering AT2220 in combination with enzyme replacement therapy. As John mentioned, we presented encouraging results at the ASHG Conference in November of 2008 and, specifically, we presented data showing that the presence of AT2220 increases the stability and tissue uptake of recombinant human GAA, which is the enzyme deficient in Pompe disease.

These data, while early, are encouraging and highlight the versatility of our platform as John mentioned. And to help understand the potential role for this combination approach, it is important to remember that we expect that the majority of but not all Pompe patients will be treatable with AT2220 as a monotherapy.

So for some patients, enzyme replacement therapy will remain the only treatment option. If we can, through a combination approach, improve ERT we can not only improve treatment for those patients, but also give ourselves the chance to treat the entire patient -- entire Pompe patient population with AT2220 rather than just a portion.

So we are continuing those preclinical experiments and have -- expect to generate additional data throughout the course of the year. And it is our plan to share those data at relative scientific conferences over the course of 2009.

Hopefully that's helpful. And with that, I will turn the conversation over to Jim Dentzer, who is going to give us a review of the financial results for the fourth quarter. Jim?

Thanks, Matt, and welcome, everyone. I will provide a brief summary of the financial results for the fourth quarter and full year.

We ended 2008 with a strong cash position. In Q4 we burned $15 million of cash, ending the quarter and the year with $121 million in cash and marketable securities as compared to $162 million at the end of 2007.

In this difficult economic environment, our focus is on building value in our pipeline, while continuing to manage our cash prudently. We expect that our current cash, together with expected reimbursement from Shire, will enable us to fund our operations at least until 2011. This is exclusive of any milestones, some of which we expect to receive this year.

As we move to the P&L, I will be referring to the tables in our press release. Please note that GAAP financials are provided in table 1. Tables 2 through 5 are a reconciliation of the GAAP and non-GAAP financial results, highlighting charges for three non-cash charges -- stock-based compensation, preferred stock accretion, and changes in fair value for warrants.

As with last quarter, the charges for preferred stock and warrants did not impact the current period as they were converted to common stock in connection with our May 2007 IPO.

Total revenue for the fourth quarter was $4.3 million, comprising $0.7 million of collaboration revenue on the upfront payment, and $3.7 million of research revenue for the reimbursement of R&D costs associated with our three lead programs partnered with Shire. For the full year, total revenue was $15.0 million.

On a non-GAAP basis, the net loss for the quarter was $12.5 million as compared to $10.7 million for the same period in 2007. The increase in the operating loss in fourth quarter 2008 versus the quarter last year was driven primarily by increased R&D investment in our clinical programs and research pipeline.

Now to R&D investment. On a non-GAAP basis, we spent $13.1 million in R&D in the fourth quarter. This is higher than the $9.2 million in the comparable quarter last year, as we expected. We initiated and enrolled additional Phase 2 and Phase 3 clinical trials, invested in clinical drug supply, and expanded our discovery research activities.

In addition, we paid Mount Sinai $2.6 million to amend our license agreement with them so that Amicus would obtain the sole right to and control over the prosecution of patent rights.

Our non-GAAP G&A expense was $4 million in the fourth quarter of 2008 as compared to $4.6 million in the fourth quarter of 2007. Fourth quarter 2007 costs were higher primarily due to nonrecurring costs associated with completing our Shire collaboration agreement in November of 2007.

Our interest income for the fourth quarter was $0.8 million as compared to $1.8 million in the comparable quarter last year. This decrease is primarily due to lower prevailing interest rates.

I'll now turn to our financial guidance for 2009. We expect that our net cash burn for 2009 will be $20 million. This assumes we have a gross cash burn of approximately $70 million which we expect will be partially offset by an anticipated $50 million in program cost-sharing reimbursements and clinical milestone payments from Shire. Note that this cash burn guidance includes both reimbursement of R&D costs and milestones from Shire.

We anticipate ending 2009 with approximately $100 million in cash, compared with $120 million in cash at December 31, 2008. We will continue to recognize the $50 million upfront payment from Shire on a straight line basis over an 18-year period from the date of the agreement last November.

So that covers the income statement and balance sheet update on 2008. With $120 million in cash at year end, the potential for up to $150 million of additional cash in clinical milestones between now and regulatory approval, and Shire's commitment to fund half of our LSD development costs, we are well-positioned to fund further advancement of our clinical and preclinical programs.

If there are any other areas you would like to cover, I will be happy to address them during the Q&A part of the call.

With that, I'll turn things back to John for closing comments. John?

Thank you, Jim.

So as we begin 2009, we remain as committed as we ever have been to our mission of developing new and better therapies to improve the lives of people and their families touched by these serious genetic disorders. Our vision that Amicus is to become one of the leaders in the industry; and to achieve that, we will have to stay focused on executing our lead clinical programs that will generate data and build value, while also continuing to innovate and to explore new applications of our chaperone technology.

We expect 2009 to be a transformational year for Amicus and we expect it to be one that will bring us closer to achieving that vision.

To summarize, we will be focused on achieving several significant milestones across our programs. For Amigal, we will report data from the ongoing extension study in the first quarter. We will then also complete discussions with the regulatory agencies to finalize the trial designs and endpoints.

We plan to initiate the Phase 3 program for Amigal for the treatment of Fabry in the second quarter of this year. For Plicera, a program of increasing importance to our Company and our shareholders, we will report the data from the ongoing Phase 2 clinical trial in third quarter, and we will develop plans with Shire for the Phase 3 in Gaucher disease.

For AT2220, we will report the data on that study in the second half of 2009 -- that's the study in adult people living with Pompe disease -- with our chaperone AT2220. We will also continue to generate additional preclinical data on AT2220 in combination with ERT; and we will report results throughout the year at relevant scientific conferences.

And lastly, we will maintain our strong financial profile in 2009, while continuing to invest and to build value in our lead programs.

We are excited about the year and certainly look forward to updating all of you on our progress throughout 2009.

Thanks for your time. Thanks for listening. We are happy to take your questions; and as a reminder, David Lockhart is here with us as well.

So with that, operator, we will turn it over to your questions.

(Operator Instructions) Geoff Meacham with JPMorgan.

Thanks for taking the question. I have a couple of them.

First on Fabry, I know we will have a little bit more detail on the design of the US and European studies, sounds like in a few months, but can you talk a little bit about how you potentially may have to reconcile results between these two studies, if Europe is the head-to-head and the US is --?

Yes, no, it's a very good question. We actually think it will set us up for a terrific development paradigm for the program.

I will turn it over to Matt to answer the question specifically.

I think from -- reconcile, I guess -- I mean, you're welcome to give me a little more clarification there, but I think if I have it correctly, the real focus based on our feedback from FDA is they are very interested in a comparison to placebo. That that is what is going to get them to the license application; and of course, because it's accelerated approval based on the surrogate endpoint, they are interested in working with us on a Phase 4 study that would validate that surrogate over a longer period of time.

And the vision that we would like to accomplish is to make that trial that I mentioned for Europe also meet the needs toward the Phase 4 requirement for the US. So as far as that trial supporting US regulatory needs, it is really more of a Phase 4 commitment that would be available post-approval.

I got you. Okay. That makes a lot more sense. It doesn't sound like you are going to have to file with the European study.

No. Not in the United States. I mean, it'd just be common practice to give them everything that you just have available that might be relevant, but their focus is absolutely on the placebo-controlled trial. And we have already initiated discussions around the Phase 4 vision; and as I said, the vision we have today is that the European trial and the European trial also meets our needs for Phase 4 obligations for the US.

As a follow-up, would you expect just generally speaking -- I know, again, you haven't finalized the design, but the size of both those studies to be roughly the same?

To be determined. I think that US study because it's placebo-controlled trial obviously shooting for superiority, I think, as we've speculated before, we think it will be comparable. That we expect it will be comparable in size to a previous trial done for the ERT product which was a 58-patient Phase 3 trial.

So that ballpark is reasonable and obviously we will confirm that as we finalize the endpoints and the stat plan. And the European trial is a little more difficult to say, because it is not as mature as the vision for the US studies.

So I would rather not speculate on that one, but in the past we've talked about not inferiority designs and those can require a slightly larger number of patients. But the statistical analysis plan could also be designed with some flexibility that would help keep those numbers down in Europe as well.

So as soon as we know more there, I will share it with you for sure.

Thanks.

Greg Wade with Pacific Growth.

Good evening. First up for Jim, could you just break out with respect to the $50 million you are expecting in 2009, how much of that is going to be milestone-based and how much is cost-sharing?

Then for Matt, with respect to the methodology of measuring GL-3 kidney levels, is there any difference between the three different ways you might do this in the size of clinical studies that you would anticipate for Fabry?

Let me turn it over to Jim for the first part of that question about the $50 million and the break out but -- Jim, go ahead and comment.

Thanks for the question. Unfortunately we are going to be in the same position that we have been in, in prior quarters when asked about specific milestone guidance. We've had an agreement with Shire that we are actually not going to give detailed guidance on the milestones.

But I would encourage you to look at our reimbursement revenue from Shire in 2008 and then use that in your logic to extrapolate forward.

And again, just to remind you that the milestones that we will receive will be a portion of those $150 million in clinical milestones that we are entitled to receive, based on development advances over the next couple of years.

So, let me turn it to David and Matt to comment on your second question about the different ways in which we may measure that primary surrogate endpoint of kidney GL-3.

I guess, just to make sure I understood the question -- so you asked about the three different ways that we talk before about measuring GL-3 which of course include urine and [LC mass spec] and histology through the biopsy sample.

Or you -- can you help me understand the question specifically? You were wondering if we -- depending on -- would the size of the trials differ if we --?

Yes, depending on which methodology -- I'm sorry, it wasn't worded well -- depending on which methodology you use, would you anticipate that any specific way the study would be designed would result in a potentially larger or smaller study?

No. No, I would not. It's possible a small number of differences based on how the biostats would be very specifically designed, but I -- wouldn't be meaningful differences. I think for the placebo-controlled trial and the GL-3 based standpoint, the size of the trial is comparable for all of those endpoints, no matter which one would be primary.

Great. And if you just bring us up-to-date as to which methodology is looking most likely? Thanks.

I think where we are today is the same place we were last month when we talked about this. That all three methods looking at kidney GL-3, the urine and then from a biopsy looking at a LC mass spec and cell type specific histology review are all measures that, as you know we did in Phase 2 and that we've always expected to do in Phase 3.

And the question now is just working with the agency to decide exactly which one should be primary and which should be secondary and exactly how each one will be measured. And we are looking at that in great detail with the agency, including looking at each of the techniques specifically and how those methodologies have advanced over the years; and for instance, in previous trials, an [eliza] method was used, but we are proposing LC mass spec.

And so there are advancements that happened in each of these measures and that is true of the measurement for the urine, for the biopsy LC mass spec and for histology and we believe there may be improved ways of looking at histology, as well. So we are factoring all of that into our own thinking, working with our experts and working with the FDA.

And I think through that we will reach a good decision, a good agreement with the agency and have a trial that has an excellent chance of success.

Thanks, Matt.

(Operator Instructions) Matt Osborne with Lazard Capital.

Matt, have you chosen or selected a dose for the Phase 3 trial in the US for Amigal?

No, we have not. Our intention remains to get the data from the extension study that we mentioned that we're still on track to report in Q1, probably in late Q1. And as you know, in that extension we've got this opportunity to evaluate a couple of different doses and regimens.

We came out of Phase 2 feeling very good about 150 mg every other day. But in the extension we are looking at 250 and 500 on a regimen of three days on and four days off. And when we have those data and we will hope to have it all and summarize it all in our report in Q1, it is our intention to look at that and make some comparisons and decide what dose and regimen makes the most sense for Phase 3.

So I expect we will share the data in Q1 that we have and probably into Q2 as we finalize the protocol. I will make the final call there on exactly what the dose and regimen is.

And do you have expectation in terms of the types of patient you may enroll? Either severe patients with Fabry or mild disease only?

I think it's a little difficult to say because we are still -- obviously your inclusion criteria for the trial are intimately related to your choice of your primary endpoint and your secondary endpoints. But our expectation is to not just be focused on necessarily one on these sort of arbitrarily categorized statements of severe or mild.

I think it is going to be a range of Fabry patients, but we know for a fact that they are going to have mutations that are responsive to the chaperone. That is an important part of our screening. That's the pharmacokinetics angle to our science and that will be important.

And because we will have a primary endpoint that's kidney GL-3-related, we are certainly going to want to have some inclusion criteria that requires elevation of GL-3 at baseline. And just how to finalize that, we are working on with the agency now.

So other than that I expect you are going to see a pretty good spectrum of Fabry disease patients in our trial just like in the Phase 2.

Great. Two more questions if I may. Can you remind us what's assumed if it is biopsy measuring GL-3? What are the goalposts that you see that would be measured and how would you design the trial around that? Is it simply going from a score of 2 or 1, down to 0?

Or are there other endpoints within that biopsy measure?

If I can, rather than get into some of the details given that we are in the midst of those discussions and finalization of the programs with FDA and out of respect for the ongoing discussions and confidences, it's probably best right now if we don't get into that level of detail except to refer you back to our Phase 2 study, and remind you and everyone that we did do those measures for all patients and to refer back to that data.

And then of course, we will have quite a bit more data here in the first quarter as we look through the extension study data. So --.

Okay. Last question. Do you anticipate any data or any trials on patients who have switched from [Fabrizime] over to Amigal?

It's a possibility that the -- for instance, the European trial that we have talked about before, the trial where it's an active control versus ERT. That's certainly is a possibility that will be a switching study, but to be determined through the final discussions.

And so I suppose that stands out as the most likely possibility. In the big picture, we actually are very enthusiastic about the way this program is coming together with the placebo control trial as requested and working with the FDA on and the active control trial for the Europeans. Because in the big picture, it not only meets our regulatory needs for both regions, but also results in a product label and an information package post-approval for physicians and patients.

That is as robust and broad as possible, meaning that we have data from both people who are naive to enzyme replacement therapy and people switching from enzyme replacement therapy and a comparison to placebo and a comparison to ERT.

So I think in the end, this Phase 3 program is going to be very robust for both regulatory and, hopefully, for marketing purposes.

Thanks. Congratulations on progress.

Getting there. Thank you.

There are no further questions at this time. I would like to turn things back to Mr. Crowley for any closing remarks.

Thank you, operator, and that is all we have. Thank you all for participating in this fourth quarter and full year 2008 conference call. This will be a very exciting year for us and, again, will be a transformational year for Amicus, and we will keep you updated, of course, on our development and the work that we continue to do.

So thank you so much for listening. Have a good night.

Thanks to everyone. That does conclude today's conference. You may now disconnect.