Amicus Therapeutics Inc (FOLD) 2009 Q2 法說會逐字稿

Good afternoon. My name is Carla, and I will be your conference facilitator today. At this time I would like to welcome everyone to the Amicus Therapeutics second quarter financial and operational results conference call. All lines have been placed on mute to prevent any background. 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 in our periodic report on Form 10-Q. These documents are available from the SEC, the Amicus website, or from our investor relations representative.

Any the 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 like 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 website, AmicusTherapeutics.com and print out the press release and related financial tables. These, particularly useful when the company reviews the financial results and reconciliation to non-GAAP measures discussed today.

It is now my pleasure to turn the call over to Mr. John Crowley, President and CEO of Amicus Therapeutics. Please go ahead sir.

Great. Thanks Carla. And good afternoon everyone, and welcome to the Amicus second quarter conference call. I'm joined on this call as before by Matt Patterson, our Chief Operating Officer, who will provide an update on our lead lysosomal disease program; Jim Dentzer, our CFO, who will provide an overview of the finance results from this quarter; and David Lockhart is in the room with us also, our Chief Scientific Officer. Dave will be available to participate in the Q&A portion of the call that will follow our formal remarks.

Going back to January of this year, we started again by noting that this would be a transformational year for Amicus and that moving Amigal for Fabry into phase 3 was our number one corporate objective.

During the second quarter I am pleased to report that we achieved that objective, and as a result we have now moved to become a late stage biopharmaceutical company. We're very proud of this significant milestone in the company's history, and we certainly intend to continue and to maintain this momentum through the rest of 2009.

We're also very pleased with the progress of our Gaucher program, the phase 2, six-month clinical trial that is ongoing. It is ongoing, and we expect to report results early in the fourth quarter. That is a very slight adjustment to our previous guidance of late in the third quarter, but we expect that again now early in the third or early in the fourth quarter. Depending on the outcome of these phase 2 results, we are prepared and have been working with our partners at Shire to advance this program into phase 3 as rapidly as possible.

Finally, we continue to make good progress on a path forward for the development of our chaperone molecule for Pompe AT2220, and we believe we will be in a position to provide an update on the next step for that program very soon.

Additionally as we have cover briefly before, we continued to make various very excellent progress with ongoing preclinical studies of AT2220 used in combination with enzyme replacement therapy. We see this approach as an important example of the breadth and the versatility of our chaperone platform technology, and we would be -- begun to develop a vision for how we can bring forward both our chaperone monotherapy and the next generation enzyme replacement therapy, incorporating the chaperone for each of these diseases, starting with Pompe.

By doing so we believe we will offer options for patients and physicians to be able to address the entire market opportunity in these diseases. Matt will elaborate for us on this vision, but we are very excited about the potential for this expansion of our technology.

So that is our overview. I will conclude here after I turn it over to Matt and then Jim. So I will turn it over to Matt to provide us an overview of our lead programs in the lysosomal storage disorders.

Thanks John. Good afternoon everyone. I will just take a few moments to expand on John's summary for the lead programs in the LSDs.

First starting with Amigal. We are extremely pleased to have reached an agreement with the FDA on the design of our phase 3 to support US approval and have commenced that study through the submission of the protocol to investigational sites.

Importantly we believe that through the multiple interactions we've had with the FDA, we have been able to increase the chances of success for this trial. Rather than re-review the summary of the trial design that is provided in the press release, I thought it would be helpful just to highlight what we feel are seven key points about the study design and the outcome with the FDA that are significant to this program.

Number one, FDA agreed with use of a surrogate primary endpoint of the change in the amount of kidney interstitial capillary GL-3, the substrate that accumulates in the cells of Fabry patients. When we started this discussion with the agency, it was not clear that the use of a surrogate endpoint would still be acceptable in this disease.

Number two, the primary endpoint will be measured using an improved methodology for the histological evaluation of GL-3 in those kidney biopsies. The improved methodology was developed through working closely with external renal pathologists, one of whom was on the FDA advisory panel for Fabrazyme and Replagal in 2003.

An analysis of the phase 2 and phase 2 extension study biopsies using the improved methodology demonstrated that all of the evaluable base point samples had detectable interstitial capillary GL-3, and that reductions were observed in eight of the nine responders. So this was quite encouraging and gives us added confidence moving forward.

Number three, the trial length is six months, and this relates closely to that primary endpoint. The ability to use the surrogate endpoint of GL-3 reduction means the trial length can be shorter than would have been required for a clinical endpoint.

Number four, the control group is a placebo. Originally we expected to compare to the existing approved treatment. The fact that we only must be superior to placebo is very encouraging to us.

Number five, the study will enroll subjects who are naive to enzyme replacement therapy or who have not received ERT for at least six months prior to the start of treatment with Amigal. The fact that we can include these latter subjects will be helpful to enrollment, in particular because we believe there a growing number of Fabry patients who are coming off of ERT for a variety of reasons, notably drug supply constraints.

Number six, we have established two eligibility criteria for the study that we believe will improve the chances of success. First is that we will require that a subject enrolled in the study is likely to be a responder based on our proprietary database created to have pre-identify subjects with responsive mutations. Secondly, we will require elevated levels of GL-3 in the urine at baseline, which we expect will enrich the study population who are subject who have a meaningful amount of GL-3 in the interstitial capillaries, which is of course what we will measure in the primary endpoint. Our phase 2 program we showed a strong correlation between base point GL-3 levels in the urine and in the interstitial capillaries.

Finally, seventh, Amicus is eligible to seek accelerated approval for Amigal according to Subpart H regulations. This means that FDA believes that Fabry is a serious disease and that Amigal may provide a meaningful benefit to patients over the existing treatment, which is of course enzyme replacement therapy. In addition, it means that a future NDA filing would be reviewed in that six-month time frame.

So taken together, you can see why we are very pleased with the outcome with FDA and why we have confidence in the potential success of the Amigal phase 3 protocol in the United States.

As far as the European phase 3 registration trial, we along with our partners at Shire have completed a series of discussions with the European regulatory authority and expect to a separate clinical study for Amigal registration in Europe.

As expected, the EMEA has recommended a registration trial evaluating the safety and efficacy of Amigal in males and females with Fabry disease compared to enzyme replacement therapy. Importantly, the EMEA agrees that the trial can enroll subjects currently receiving ERT, which will significantly help with enrollment. They also recommended that the primary endpoint should be renal function as measured by glomerular filtration rate, and the recommended primary analysis is a comparison of outcomes between Amigal and ERT groups using descriptive statistics, which is an important point because a trial using descriptive statistics will require fewer subjects than one that uses a non-inferiority statistical analysis plan.

So we're currently working with Shire to review this final EMEA feedback and expect to provide an update regarding the plan for registration in Europe and that trial specifically by the end of this year.

So all in all, excellent progress we feel across the Amigal program.

Turning to Gaucher. As John mentioned, we continued to make solid progress for our investigational drug Plicera for Gaucher, which is currently being evaluated in a phase 2 trial. As a reminder, this is a six-month study designed to evaluate safety and to demonstrate trends of efficacy in the standard endpoints in Gaucher disease. As John noted earlier, we expect to report results early in the fourth quarter, which is a slight adjustment to our previous guidance of late in the third quarter. We now expect that we will not receive the data in-house until late September due to the timing of the last couple of patients enrolled.

So we expect it will take until early Q4 to complete data analysis and prepare an update for external communication, but we envision that as a very modest adjustment in the timeline for getting data to the public.

Because of the well-defined endpoints in Gaucher and the recent history of our partner, Shire, working in this disease, we believe we can move rapidly from phase 2 to phase 3 if the data support it. And to this end we're working now with Shire to prepare aggressively for phase 3.

And finally, I will turn to Pompe. As you recall, enrollment in our phase 2 study was suspended and the IND was put on clinical hold during Q -- the first quarter of this year. We have made good progress through the valuation of all available data and are currently collaborating closely with the FDA on the appropriate next steps for the program, and we do expect to be in a position to provide an update in this regard in the next month or two.

And separately, as John noted, we remain excited about our work to evaluate the potential for a treatment that combines our chaperone AT2220 and enzyme replacement therapy, and as John said, believe that it shows the versatility of the platform -- chaperone technology platform.

As a brief reminder on the scientific background, recall that there are inherent problems with enzyme replacement therapy, especially in Pompe, specifically instability of the enzyme during infusion and in circulation, which leads to decreased efficacy and increased infusion associated reactions, and poor tissue uptake.

We now have a significant body of preclinical data demonstrating that with the addition of AT2220 we can improve the stability and the tissue uptake of the currently available ERT for Pompe. This makes logical sense in that one would expect a chaperone to bind to the recombinant version of the enzyme, just like it does the natural version made in patients. These data have been presented at several scientific conferences in 2009, and the results have been very well received by the Pompe research community.

Our vision here is that in Pompe disease we expect some patients will be treatable with the chaperone monotherapy because they have the right type of genetic background. However, for those who do not respond to the chaperone monotherapy, enzyme replacement therapy remains the treatment option of choice.

The use of the chaperone in combination with ERT appears to have the potential to create a much improved next-generation version of ERT. By offering both products, we could offer the equivalent of a toolset from which patients and physicians could work to treat Pompe, depending on the specific patient's background, monotherapy for some, next-generation ERT for others.

And not only do we believe that this would be a great improvement for the Pompe patient community, it which give Amicus the ability to address the entire Pompe market rather than just a percentage.

So for next steps to help us accomplish this vision, we will continue our preclinical work and report additional data in the appropriate scientific forum as it becomes available. In addition, we are very proactively evaluating the different ERT options in the corporate and academic communities in order to support the advancement of this next-generation ERT into the clinic as soon as possible. We will keep you updated as this progresses.

So that completes my review of the LSD programs. I hope that was helpful. I will turn the call over now to Jim, who will give a review of the financial results for the quarter.

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

We ended the second quarter with $100.4 million in cash and marketable securities and continue to expect to end the year with approximately $100 million in cash, including reimbursements and milestones from our partner, Shire.

We continue to focus on building value in our pipeline while continuing to manage our cash prudently.

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 and 3 are a reconciliation of the GAAP and non-GAAP financial results, highlighting charges for stock-based compensation.

Total revenue for the second quarter was $5.4 million, comprising $0.7 million of collaboration revenue on the upfront pavement and $4.7 million in research revenue for the reimbursement of R&D costs associated with our three lead programs partnered with Shire. For the second quarter 2008 total revenue was $3.8 million.

On a non-GAAP basis, the net loss for the quarter was $11.5 million as compared to $7.4 million for the same period in 2008. An increase in the operating loss in the second quarter of 2009 versus the same quarter last year was driven primarily by increased R&D investments in our clinical programs and research pipeline.

Now to the R&D investments. On a non-GAAP basis, we spent $12.6 million on R&D in the second quarter. This is higher than the $8.2 million in the comparable quarter last year, as we expected. The variance was primarily due to higher personnel costs associated with headcount growth, an increase in manufacturing costs due to the timing of batch production, and an increase in contract research related to clinical trials. We expect the R&D expense to continue to increase in 2009 as we continue to advance our lead clinical development programs and expand our discovery research activities.

Our G&A expense was $4 million in the second quarter 2009 and was flat compared to the same period 2008.

Our interest income for the second quarter was $0.3 million as compared to $1.3 million in the comparable quarter last year. This decrease of $1 million was due to lower cash and cash equivalents balances and a decline in average interest rates.

So that covers the income statement and balance sheet update for the second quarter. If there any other areas you would like to cover, I will be happy to address them during the Q&A part of the call.

And with that, I will turn things back over to John for closing comments.

So in summary, we are extremely pleased with the progress that we made in the first half of 2009. We believe we have a very strong team in place throughout the company and with our partners at Shire, and we remain focused on executing on all fronts and delivering results.

I'm very confident that 2009 will continue to be a transformational year for Amicus and one that will continue to bring us closer to achieving our vision in these diseases.

Thanks for your attention and for your continued support, and we're happy to take your questions.

(Operator Instructions) Geoff Meacham, JPMorgan.

This is Matt Roden in for Geoff today. I want to start off first with a question for John or Matt. What can you guys tell us about the supply constraints in the Gaucher and Fabry markets, and whether or not that has any impact on your plans to -- in clinical development? And then obviously it could have some impact to enrollment of your studies, but is there anything else that we should be thinking about?

No. I think for now we have got a very solid plan in Amigal, and we are focused on enrolling and executing that study. We do think to the extent that we believe we'll be able to include a significant number of people who have been on ERT but removed from therapy, or people who simply are newly diagnosed, naive to ERT and can't get access to enzymes, that that may help us in the enrollment and the execution of that study. But we're focused. We think we have a very, very good plan for getting that drug approved, and we're going to focus on that in Fabry.

In Gaucher I think it is a little premature. I think we need to wait and see what this data looks like in the next couple of months, evaluate that with Shire, with the FDA and determine what the right next steps are. Our plan is if the data is positive to move very rapidly into a phase 3 approval study.

Okay. And then just turning to David, if I may, it seems like the next thing that we're going to hear from you guys is the six-month data on Plicera. So walk us through the key aspects and what you expect to learn from the six-month Plicera data as you think about planning for the phase 3. And can you talk a little but about the dose and regimen, what endpoints look like. Obviously your standard endpoints in Gaucher, but what can you learn from the phase 2 that could inform your trial design?

Also as you think about what results do come up, what would be sort of a homerun for you guys versus what would be a deal breaker?

And then lastly, just on the Plicera development, is there any way the 16 patients you have enrolled here, is there any way that you can actually roll them over into phase 3, convert the existing phase 2 into a phase 2/3? Thanks a lot.

I will let David handle the first part of question. I will address the second.

That was too many questions all at once. I actually wrote a few of them down. In the Gaucher phase 2, of course the primary purpose is to evaluate safety and tolerability, and then we're also looking at the key measures of response in Gaucher disease. So those are the ones that have been established in previous Gaucher trials. There are also some excellent biomarkers for Gaucher disease that have been shown to respond to therapy, namely, CHITO and PARC. So those will be monitored as well.

So what we're hoping to see in this trial is, we have enrolled patients with different genotypes. We think that individuals with different genotypes should be able to respond to the pharmacological chaperone, and we will be measuring that.

We want to see some trends of efficacy by the usual measures as well as by the biomarkers. Remember this is only a six-month trial. So we don't expect the response to necessarily be complete after six months, but we are looking for signs of efficacy and trends of efficacy by those usual measures.

And those are the key elements of the study. Oh, and the dose and regimen. So we do have two groups. It is the same dose but two different regimens. One of three days on, four days off. One is seven days on, seven days off. Those were designed based on our previous preclinical studies, the phase 1 study, our earlier phase 2 study, and then also on our understanding of the mechanism of action on the drug.

So we -- those dose -- the dose THAT we chose is safe and well tolerated. We know that from the previous studies and based on the PK of the molecule -- the PK properties of the molecule as well as the half-life of the enzyme, we believe periods of three days on, four days off, and seven days on, seven days off are appropriate to optimize the affects of the drug.

But it is an initial, relatively small trial, six months, and we're hoping to see some clear signs of that.

And just to amplify that and to the latter part of your question there, Matt, in terms of what's a homerun versus what's a deal breaker, we don't have any predefined endpoints. This is a phase 2 dose ranging study. We would feel very, very good about the study if we show that this chaperone hits the intended target, the deficient GCase enzyme in people with Gaucher, and it raises that enzyme level by multiple measures, and that we start to see in patients with responsive mutations, clinical endpoints moving in the right direction, things like hemoglobin levels, platelet counts, spleen volume, and most importantly that the data supports moving to phase 3. That for us, taking this data and moving to phase 3 would be the homerun.

So your last part of that question was, can we roll over the 16 patients into a phase 3? We're working right now on the design of the phase 3, and I think, let's get the data in, and then I think we will be able to share what the vision is for that study.

Thanks a lot for your time today.

Bill Tanner, Lazard.

Thanks for taking the questions. Just on that phase 2 trial, how many different genotypes were actually enrolled? So we're looking at -- I was thinking that you guys had said it was actually more than 16 patients, but the actual number disclosed? You've got a couple of dosing regimens and I guess if you can tell us, how many different genotypes? So I'm curious as to your level of confidence at the end of the day you are going to have enough observations across dosing regimen and genotype to come up with reasonably clear-cut answers.

It's a good question, and I think it's -- this is a good point to remind you about the difference between Gaucher and Fabry disease. So in Fabry we are choosing a subset of the population based on their genotype. In Gaucher we took all comers, and the reason for that is because the Gaucher population is dominated by two particular mutations -- the N370S mutation and the L444P. Both of those we have shown to be responsive. And furthermore we have shown that other mutations that are less common in the population are also responsive.

So we didn't actually pre-select patients based on genotype, but given the population as it exists, most of the patients -- we have not disclosed exact mixes of genotypes but most of the patients in the trial were expected to have an N370S allele with some smaller proportion having one or two L444P alleles, and very few cases expected of people with neither of those. But we took all comers.

And then just thinking about it, I think Shire today said that they anticipate filing an sBLA for vela before the end of the quarter. Third quarter they'll have the drug out, potentially sooner than expected, perhaps kind of the beginning of the second quarter. So how do you sort of see that? They're launching a drug and trying to enroll a phase 3 program in the same disease. Obviously -- well, I guess with the exception of the manufacturing issues, they fairly locked up patient population. So is there anything we should think about just in terms of conflicting interests? Or do you think everybody's interests are really aligned here in getting this done?

Yes. No, actually, Bill, it is incredibly complementary. We addressed this in our negotiations and discussions with Shire at great length before we signed that deal. I think we always anticipated that that program would be quite ahead of our Plicera program, that it would be an ERT entrant into the market. Obviously, nobody expects to see very dramatic changes to the market space at about this time.

But I actually think it's very complimentary. These are two different approaches to Gaucher disease, and I think with the Plicera option, that that fundamentally changes the game for how the disease can be treated, and that I think is -- represents that paradigm shift in the market space, and that is why I think it is actually very complimentary as a next-generation approach after ERT.

Okay. And if I could just ask one last on -- and it may be for Matt since he was talking about it on 2220. How do we think about the commercialization of the compound as perhaps a standalone or as an enhancement to what is probably likely going to be a fairly higher-priced ERT anyway? Just help us understand that a little bit.

I think it is difficult to speculate too much until we see that through development a bit further of course and understand the kind of benefits that we're bringing to the patient through the data. But one would expect I guess that our vision is of the next-generation ERT that it would be a similar product in nature to the existing ERTs except that we will be able to provide hopefully better outcomes, a better safety profile, and obviously better efficacy. But one would expect that you're still able to command a premium pricing option for that product, but it really will have to be determined by the data as we carry it through during development.

If I can just jump in and amplify that, because I think it is a very important point that we think we have now the arsenal to address the entire market in Pompe. For the chaperone, we think those people have responsive mutations, that they would use that as their lifelong therapy for Pompe, use our work pill, the AT2220.

When we talk about the combination, we envision that most likely to be a co-formulation with an enzyme replacement product, so that to a patient it would appear to be a next-generation ERT with various components, hopefully with an ERT that potentially solves the targeting issues as well as stability. So that is where our vision would be for how we commercialize it. So it is not an add-on to the existing ERTs. It is a technology incorporated into a next-generation ERT. So pricing becomes very, very doable there.

Thanks. Very helpful. Thank you.

Geoff Meacham, JPMorgan.

Hi, guys. Thanks for taking my follow-up. It's really for Jim. Jim I wonder if you can talk a little bit about what you expect in the second half? And then if it could trigger milestones and monthly payments from Shire? To the extent that you can. Thanks a lot.

I'm sorry. We have an agreement with Shire, as we have said in prior quarters, that we don't go into detail as to what drives the different milestones. What I can say and what we have said in the past is that I would encourage you to look at the R&D spend and of course the reimbursement that goes with that spend over the last two, four and six quarters to give you an eye for what you might expect in the future couple of quarters. And then of course the difference would be milestones that we would expect in the second half of the year. And as long as you get to an end answer where our cash balance at year end on December 31 is $100 million, you are in the right ballpark.

Thanks a lot.

That does conclude our question and answer session. At this time I would like to turn it back to Mr. John Crowley for any closing or additional remarks.

Great. I have no closing remarks except again to say thank you and look forward to continuing to dial up. Have a great night.

Ladies and gentlemen that does conclude our conference for today. Again, thank you for your participation.

Thank you.