Amicus Therapeutics Inc (FOLD) 2009 Q3 法說會逐字稿

Good afternoon. My name is Jay I will be your conference facilitator today. At this time, I would like to welcome everyone to the Amicus Therapeutics third-quarter financial and operational results and business update conference call.

All lines have been placed on mute to 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 press release issued earlier today, our most recent Annual Report on Form 10-K and in our periodic reports on Form 10-Q.

These documents are available from the SEC and Amicus's website or from our investor relations representative. 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 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 are particularly useful when the Company reviews the financial results and reconciliation to non-GAAP financial 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; thank you, operator; and good afternoon, everybody. I would like to welcome you to our third-quarter financial results and our business update call. I am joined on this call by Matt Patterson, our Chief Operating Officer.

Matt will provide an update on our lead lysosomal disease programs. I am also here with Jack McAdams, our Corporate Controller, who will provide an overview of the financial results this quarter; as well as Dave Lockhart, our Chief Science Officer, who will join us for the Q&A portion of the call.

I trust that you have all had the opportunity to read our press release issued this afternoon that included some very important announcements for the Company in addition to the quarterly financial results. Let me take a few minutes to review these announcements and also share with you my perspective on it.

I will begin with the update related to our collaboration with Shire. Over the past two years, we have had the opportunity to have an excellent working relationship with Shire. They have been a tremendous partner.

In the past several weeks, we've had in-depth discussions with the Shire team, particularly related to the post Phase 2 Results for Plicera in ERT-naive Gaucher patients and our mutual decision not to move that program into Phase 3.

In addition, we also discussed the key priorities for both companies going forward, including Amicus's desire to reacquire certain development and commercial rights. The outcome of this discussion was a mutual agreement that Amicus would reacquire the global rights to Amigal, Plicera and AT2220 through a mutual termination of our collaboration agreement.

We reached this decision after very careful consideration of several factors. Really for us in the end, the decision was driven primarily by our belief that Amigal has great potential, that it should be and is a key priority for Amicus and that with global rights to this product, we could maximize the value of that program for our shareholders.

In parallel with our Shire discussions, we have also spent a significant amount of time in the past few weeks reevaluating our focus and strategic priorities at the Company, not only related to the products in the Shire collaboration, but also more broadly. From this strategic exercise, it became clear that we needed to take appropriate steps to reduce costs in order to align our resources with these key strategic priorities.

In particular, we felt it important to restructure our cost base in order to maximize the use of our existing cash. Based on our current estimates, we expect to have sufficient cash to fund our Company's operations, including the ongoing Amigal Phase 3 study for US registration through mid-2011.

To achieve this goal, we will need to prioritize our spending on the various programs. And unfortunately, we have taken actions to reduce the size of our work force, our organization by about 20%.

This has been as you would imagine a very difficult decision, but one that we believe is important for the Company and for our shareholders. We have made the changes today and they will be effective tomorrow.

I can't express enough gratitude and respect for all those employees who are leaving us today. I would like to extend my deepest appreciation for all of their passion, dedication; and in particular, their commitment to Amicus over the last several years.

In particular, I would like to recognize and thank our Chief Financial Officer, Jim Dentzer, who will be leaving the Company as well as part of this restructuring. Jim has been a critical part of our success to date. He has been a friend, a colleague, an exceptional Chief Financial Officer and we wish him all the best.

Finally the third major subject that I would like to review with you is our updated key strategic priorities. As a result of the comprehensive business review of the last few weeks that I mentioned earlier, we have identified the three areas for Amicus where we will focus our priorities and resources.

First, the Phase 3 development of our lead program, Amigal for Fabry disease, that is our number one priority and we are committed to aggressively advancing Amigal through to commercialization. We have a significant amount of data from our Phase 2 and Phase 2 extension study as well as solid agreements with regulatory authorities in the United States and the European Union. As a result, we are confident in the chance of the success for this program which is why we felt that reacquiring the ex-US rights to the product was so important to maximizing the value for our shareholders.

Second, the advancement of our lead preclinical programs utilizing our pharmacological chaperone technology for the treatment of diseases of neurodegeneration, this is our second key strategic priority for the business. We have as we have discussed with many of you, an advanced preclinical program in Parkinson's disease with unique molecules, a unique target and what we believe to be a very groundbreaking approach to treating this devastating disease.

As a result, we will continue to invest in the program. We continue to be very excited about the program as well as an earlier stage preclinical program in the field of neurodegeneration in an as yet undisclosed disease target.

Third, our third priority is the advancement of the use of our pharmacological chaperones in combination with enzyme replacement therapies for the treatment of lysosomal storage diseases and potentially more broadly with other recombinant protein therapies. This is an area of increasing interest to us and one where we are building an increasingly strong body of preclinical evidence. We continue to evaluate our options for taking those programs forward with the combination approaches and the potential to move now from preclinical to clinical proof of concept with this aspect of our technology.

By focusing our resources on these three value creating centers within Amicus, we believe that we will balance the execution of our global late stage clinical program in Fabry disease, with continued significant investment with the chaperone platform in diseases of neurodegeneration, in the lysosomal storage disorders in combination with the ERTs; both of which have the potential to yield very exciting near term and long-term value for the Company. So let me conclude before I turn it over to him Matt by stating this.

What we are doing with pharmacological chaperones is exciting. It's very innovative and very groundbreaking. We remain highly confident in the technology and believe as we focus on executing our key strategic priorities, that we have the potential to create a number of significant value creating milestones for Amicus over the next seven to eight quarters.

We look forward to providing frequent updates related to our progress going forward and after spending a lot of time with each of you, let me now turn the call over to Matt Patterson and Matt will provide us some more specific updates relative to our LSE programs.

Thanks, John; and good afternoon, everyone. I will just take a few minutes to provide a summary update related to our programs in Fabry, Gaucher and Pompe. Starting with Amigal for Fabry disease.

We are extremely pleased to have reached agreement with the FDA earlier this year on the design of our Phase 3 trial to support US approval. And as you know, we commenced that study back with the submission of the protocol to investigational sites globally back in June.

In line with our guidance, we began enrolling this trial this month which is a very exciting milestone for us and Amicus, not just for the Fabry program, but for our Company, because it represents the dosing of patients in our first Phase 3 trial. Following on what John said earlier, we currently estimate that we will complete enrollment for this trial by the end of 2010. And as a result since it's a six-month study, we expect to have data available in mid-2011.

To accomplish our goal of fully enrolling the 60 patient study in 2010, we are in the process of opening more than 30 clinical trial sites worldwide. There's a lot of work ahead but we've made a great step forward indeed in the last few months. As far as the European Phase 3 registration trial with Amigal, we expect to provide an update regarding the plan and timing for the initiation of this study in 2010.

Turning to Gaucher, earlier this month we reported pulmonary results from our Phase 2 study with Plicera for Gaucher disease. We were certainly disappointed with the outcome of this study and it clearly did not meet our expectations.

We do believe though that the study provided important insights into the biologic activity of Plicera in Gaucher disease and we think it provides specific insights and further learnings into our pharmacological chaperone platform technology. We'll continue to conduct a detailed analysis of the data to make sure we have a complete understanding. However, it's clear that based on the preliminary data, we will not move Plicera into Phase 3.

And I'll finish with our development of AT2220 for Pompe disease. As you recall, enrollment in our Phase 2 study was suspended and the IND was put on clinical hold during the first quarter of this year.

Over the course of the year, we completed a thorough evaluation of all data from the two patients that experienced the SAEs in that trial. Additionally we completed further preclinical studies of AT2220.

We took those data to the FDA and proposed a Phase 1 study in order to further evaluate the pharmacokinetics of AT2220 in muscle tissue which is the key target tissue in Pompe disease. The FDA agreed with our proposal and subsequently converted the clinical hold to a partial hold to allow us to conduct this study.

We initiated the open label single dose Phase 1 study earlier this month and expect data in the first half of next year. Based on the results of this study group, we will determine appropriate next steps for this program while working closely in collaboration with FDA.

Finally also in Pompe, we continued to be encouraged by the results of preclinical studies designed to evaluate the use of AT2220 in combination with enzyme replacement therapy. As John mentioned earlier, further evaluation of this approach is one of our key priorities going forward.

We expect to continue our preclinical work and look forward to reporting additional data from these studies at scientific conferences over the next year. Along with the preclinical programs in diseases of neurodegeneration, we see this combo approach as an important example of the breadth and versatility of our chaperone platform technology.

So that completes my review of the LSD programs. I hope that was helpful. I'll turn the call over now to Jack McAdam who will give us a review of the financial results for the quarter.

Thanks, Matt. Before I review the third quarter financial results, I'll comment briefly on our cash position and financial guidance.

We ended the third quarter with $89.3 million in cash and marketable securities. In early October, we provided updated financial guidance and based on current financial projections, we reiterate our expectation to end 2009 with $70 million to $80 million in cash. Additionally, we anticipate that our current cash and marketable securities together with the fourth quarter $5.2 million payment from Shire will be sufficient to fund operations and capital expenditure requirements into the second half of 2011.

Now as I move to the financial results, I'll be referring to the tables in our press release. Please note that the GAAP financials are provided in Table 1. Tables 2 and 3 are a reconciliation of GAAP and non-GAAP financial results, highlighting charges for stock-based compensation.

Total revenue for the third quarter was $4.9 million. This represents two different revenue streams from the Shire collaboration agreement. Upon signing the agreement in 2007, Amicus received an upfront payment of $50 million that had been recognized as revenue on a straight line basis over an 18 year period starting from the date of the agreement.

In the third quarter of 2009, we recognized $0.7 million of the Shire upfront payment and $4.2 million of research revenue on reimbursable research and development costs. On a non-GAAP basis, the net loss for the quarter was $11.5 million as compared to $6.6 million for the same period in 2008.

The increase in operating loss in the quarter of 2009 versus the same quarter last year was driven primarily by an increase in R&D investment in our clinical programs and research pipeline. On a non-GAAP basis, we spent $11.8 million on R&D in the third quarter.

As we expected, this was higher than the $7.6 million in the comparable quarter last year. The variance was primarily due to higher personnel costs associated with headcount growth and increasing manufacturing costs due to the timing of fast production and an increase in contract research related to current clinical trials mainly associated with Fabry Phase 3 study costs.

Our G&A expense was $4.1 million in the third quarter of 2009 as compared to $3.4 million for the same period in 2008. The variance was primarily due to increased legal fees and higher personnel costs.

Interest income for the third quarter was $0.1 million as compared to $1 million in the comparable quarter last year. This decrease was due to a combination of lower cash and cash equivalent balances and a decline in average interest rates.

As I wrap up the financial portion of this call, I will touch briefly on two fourth-quarter events. First relating to our announcement regarding our internal restructuring and one-time work force reduction, we estimate that a charge of approximately $0.9 million for employee severance and other benefits will be recorded in the fourth quarter of 2009.

And second as announced today, the Company will receive $5.2 million payment from Shire in the fourth quarter of 2009 in connection with the mutual agreement to terminate the collaboration. This payment represents a final settlement of all cost sharing and other liabilities and obligations between the two companies.

I'll be happy to address your questions during the Q&A portion of the call. And with that, I will turn things back to John.

Great. Thanks, Jack; and thanks, Matt. I will go ahead and turn the call back to the operator and I'm happy to take any of your questions.

(Operator Instructions) Geoff Meacham, JPMorgan.

A question for you about your cash assumptions for second half of 2011. I'm assuming that it assumes that you complete the Amigal trials in the US and Europe. But I'm wondering if it also assumes that you take 2220 to Phase 2 and are there any assumptions for Parkinson's going into the clinic or new in-licensing of other candidates baked into the cash assumptions.

Let me take you through each of those and, Jack, please feel free to ring in as well. So the assumption again is that we will have the existing cash without raising any additional finance or at least the need to raise any additional funds, that that will take us into the second half of the year. That's for the US study. That doesn't calculate in the ex-US study.

We will provide an update on that sometime in 2010. That's got a lot of factors associated with it. For AT2220, that incorporates completing the Phase 1 study, but it does not factor in the Phase 2 study. We want to get that data and then decide what to do with that if we have additional cash resources available, [your] partnering activities, finance activities.

As we look at those strategic priorities, we will evaluate what comes next after Amigal, the neuroscience program and the combo activities. To your question about Parkinson's, the cash does assume still significant spend in the R&D function, some of which will go for Parkinson's as part of that. But that that does not include a Parkinson's clinical study. We're looking at strategic options for that, including potential partnering opportunities.

A follow-up just with respect to the pipeline. So something about this right -- so Plicera, the ex vivo assay showed some activity but obviously wasn't captured in the clinic. And I'm wondering if you think Fabry is different because you're looking at not spleen or liver volume but maybe a biomarker as the output for the trials. In other words, do think that you're more predictive in the Fabry indication with the ex vivo assay than you are in Gaucher?

We think we have got a lot more data, very convincing data for Fabry. So we do think it is very different. I will have David comment in a second.

But, again for the Plicera study, just to remember, in all of those patients, we hit the intended target. We raised their deficient enzyme levels, the GCSE levels. It just -- with one exception, it didn't translate to clinical benefit. So it just wasn't enough umph to get them over to the next level in terms of increase in enzyme activity level.

So that has actually very important learnings as we think in particular around the use of our technologies and even that molecule in Parkinson's disease. Because remember, our target in Parkinson's is the Gaucher enzyme and we will be talking a lot more about that in the months to come. Let me ask David to comment specifically about why we are still so confident in Fabry.

I think the main reason that we are so confident for Fabry is the result of the Phase 2 trials. Remember, we've completed a Phase 2 trial. We saw that the enzyme was elevated but we also saw a clear reduction of the substrate and we saw a reduction of the substrate as measured in multiple different ways and that is indicative of a reduction in one of the most important target organs, the kidney.

So clearly in both cases, the molecule did the biochemical job that we set out to do, namely hitting the intended target and increasing the level of the target in both cases. And in Fabry, we have the Phase 2 data that indicates that that increase in enzyme level translated into increases in enzyme activity that led to a clear reduction in the body load of substrate. So that's why we're particularly competent in the Fabry case and also that's combined with of course the excellent safety profile now measured over 50 plus patient years.

And again, that's the bar that the FDA has set with the primary surrogate endpoint, that we have to beat placebo and show that GL3 reduction. So we remain very, very confident that we'll be able to do it. It's a good part of the reason why that remains our number one strategic priority and why we made these structural changes to be able to make sure that in the absence of any other financing, we will be able to completely fund that program and also to buy back the ex-US rights to it.

Bill Tanner, Lazard Capital.

Thanks for taking the question. John, a couple for you; just one on as it relates to Amigal. Is the contemplation then that you would go through the pivotal testing and then look for a partner or do you think if you had good data, that you'd try to raise some capital at that point in time and commercialize the drug on your own? And then secondarily as it relates to the Amigal enrollment, any thoughts on the physician enthusiasm for it in light of the Plicera outcome? Thanks.

Yes, I'll take that first one. I'll actually ask Matt to comment on the physician response to that. So actually, Matt, why don't you start with the physician response and then we'll go back to the first part of the question?

Sure. Hi, Bill. Actually it's gone extremely well. We worked hard in anticipation of some questions there coming out of the Plicera data to make sure that we communicated effectively and clearly why we feel there are important differences between Fabry and Gaucher and why continued enthusiasm on Fabry was important and we were very pleased to get the similar perspective from all the docs. We went out and touched base with all of them, in particular those that overlap on Fabry and Gaucher.

But we spent time with all of them, including at the American Society of Hemogenetics conference that actually just concluded this past week and it's really gone very well. So the enthusiasm level for the Fabry trial and that whole program amongst the medical community remains very high and so we're very optimistic that everyone is excited to work with us to get that trial enrolled and completed.

Just if I could, on the enrollment pace, I'm guessing that's a pretty educated guess given that it's a relatively small trial and certainly relatively focused. In other words, the physicians -- so you guys feel pretty comfortable about the timeline in which that could happen?

Yes, we're comfortable with that projection. Certainly as we learn more information, if there was something new to share, we will do that. But we have worked hard with all the docs to get smart and estimate those timelines.

Obviously it is pretty robust to have to go to 30-odd centers globally to get 60 patients. But this is a rare disease and that's the way these things go. But that's how we affect the timeline positively the most as we go to a large number of centers and try to get this trial enrolled quickly. We feel good about the predictions today and we will keep you updated.

Just to add to that before I get to the first part of your question, one of the reasons we were so confident and believed it was so important to have the worldwide rights to Amigal was from an execution standpoint. When we entered the deal with Shire, we had three drugs that we envisioned running roughly in parallel in two Phase 2 and Phase 3 studies. Based on data, based on regulatory feedback and timing, that has changed now and we feel that we can execute these global studies worldwide.

In fact, by prior agreement with Shire earlier this year, Amicus was delegated the worldwide responsibilities for regulatory and clinical ops for the Amigal program. So we were already down that path of opening those sites with our folks and our CROs.

So from an execution standpoint, we will continue to monitor it. We are doing everything we can to de-risk it from a an execution standpoint. And that was part of how we thought about the scope and scale of the restructuring in the Company too. We couldn't do anything that put that execution at risk.

I'll just comment briefly on the first part of your question. I think any and all of those options are possible for us. I think with good data, we will have a range of options whether we would consider re-partnering it, whether we would consider continuing with the US commercialization and maybe re-partner ex-US again. I think all of that's possible and we will get the data and see that it looks like.

And, John, when you say all that's possible, should we assume that it's possible I guess that you might partner it ahead of the data because if somebody came forth and offered you a deal you couldn't refuse, that's possibility as well?

I wouldn't take anything off the table (inaudible) yes. There's -- yes (multiple speakers)

Thanks, good luck.

And that's all the questions we do have. I would like to turn the call back over to Mr. John Crowley for any additional or closing remarks.

Great, that's all I have. Thank you all for listening tonight and we will charge on and keep on working. Thank you.

That does conclude today's conference. We do appreciate your participation.