Amicus Therapeutics Inc (FOLD) 2010 Q3 法說會逐字稿

Good afternoon and welcome to the Amicus third quarter earnings conference call. My name is Sean and I will be your facilitator today. (Operator Instructions) I will now turn the call over to Jenene Thomas, Director Investor Relations. Please begin.

Good afternoon and thank you for joining our third quarter 2010 financial results conference call. I am joined on the call by members of our executive team, including John Crowley, our Chairman and CEO; Matt Patterson, our Chief Operating Officer; David Lockhart, our Chief Scientific Officer; and Daphne Quimi our Corporate Controller.

Before I turn the call over to John, I have to remind you of the following. This conference call contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to the business operations and financial condition of Amicus, including, but not limited to, preclinical and clinical development of Amicus' candidate drug products; the timing and reporting of results from preclinical studies and clinical trials evaluating Amicus' candidate drug products; the projected cash position for the Company; including achievement of development and commercialization milestone payments and sales royalties under our collaboration with GlaxoSmithKline and business development and other transactional activities. Words such as, but not limited to, "look forward to", "believe", "expect", "anticipate", "estimate", "intend", "likely", "should" and "could" and similar expressions or words identifying forward-looking statements.

Although Amicus believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that its expectations will be realized. Actual results could differ materially from those projected in Amicus' forward-looking statements due to numerous known and unknown risks and uncertainties, including the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2009. Amicus does not undertake any obligation to publicly update any forward-looking statements to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of anticipated event.

At this time it's my pleasure to turn the call over to John Crowley, Chairman and CEO of Amicus Therapeutics.

Great. Thanks, Jenene, and good evening to all. I'll start today's call with just a few opening remarks and then hand it over to Matt and Daphne for a review of our development programs as well as the third quarter financials.

Third quarter was very strong for Amicus and we continued our significant momentum, really, in four key areas. First, we finalized a worldwide exclusive license and collaboration agreement, which as you all know, we announced about ten days ago, relating to Amigal for Fabry Disease with our partner of choice, GSK Rare Diseases.

The second, we saw continued strong execution of our ongoing Phase 3 clinical study for Amigal, a study we refer to for U.S. approval, Study 011. Thirdly, also continued to prepare for the commencement study 012, the EMEA study, for Amigal, as well as the fourth, I think, significant piece the momentum in the quarter, which was the preparation for the commencement of our Phase 2 study with Amigal co-administered with enzyme replacement therapy.

Let me just comment briefly too up-front that GSK is s terrific partner for Amicus and the deal that we announced the end of the week before last is transformation for Amicus in a number of ways. I think it strongly supports our strategic focus for the Company, by, number one, adding significant support to our global Amigal Phase 3 programs and indicates confidence, more broadly we hope, in our chaperone technology.

Secondly, two, with our partnership with GSK we think that collaboration will firmly position us a leader in research and development of technologies and products for the rare diseases. We also believe that the partnership with GSK will enable us to very judiciously drive our pipeline and to opportunistically seek that we think will be complimentary in development to our current focus in the rare diseases.

And finally, with the deal that we have with GSK, we see a strong financial component that will continue to provide added financial strength to the Company while also giving us the resources to fund our operations and capital investments through the anticipated U.S. commercial launch of Amigal.

So, in summary up front, Amigal remains our number one priority and we will work closely with our partners at GSK Rare Diseases to aggressively advance this program. We will judiciously advance our earlier-stage programs, specifically Pompe in Gaucher programs, co-administered with ERT in those disease areas, as well as our neurodegenerative genetic disease programs for Parkinson's and Alzheimer's Disease.

We remain committed to being a leader in the research and development of drugs for these rare diseases and as stated briefly before, we will certainly evaluate and pursue new rare disease opportunities where we see a strategic fit with the Amicus business plan. And we believe that we will have significant strategic flexibility to continue developing new treatments for rare diseases.

So let me turn it over to Matt.

Great. Thanks John and good evening. Well, first I'll start by just spending a minute reviewing the terms of the GSK deal. We spoke to these and we announced that deal, as John mentioned, about ten days ago, but I'll just go back through them for everyone. As a reminder, this is an exclusive license to our worldwide rights to develop, manufacture, and commercialize Amigal, which is our product currently in Phase 3 for Fabry Disease.

As part of the agreement, GSK will also have rights to our program evaluating Amigal co-administration with ERT for Fabry, but to be clear, the agreement is strictly related to Amigal and no other programs in our pipeline.

According to the terms of the agreement, we will receive an up-front and nonrefundable license payment of $30 million from GSK and we're eligible to receive further development and commercialization milestone payments of up to $170 million, as well as tier double-digit royalties on global sales of Amigal. So that means that if we achieve certain milestones we have the potential to receive up to $230 million in up-front and milestone payments for the product.

Also as a part of the agreement we will fund development costs for the remainder of 2010 - Amicus will, - but beginning in 2011, we will jointly fund development costs of the global program, with GSK, based on an agreed upon development plan. And in this case, I can provide you a few more specifics that we were able to share last time we spoke.

Specifically, the development plan provides that Amicus and GSK will share costs on a 50/50 basis in 2011 and on a 25/75 basis, respectively, in 2012 and beyond through the regulatory approvals from both the U.S. and European regulatory authorities.

In addition, our obligation to jointly fund development costs are subject to both an annual and an aggregate cap. So this is an important added fact that we didn't share last time, but obviously a share in costs, in particular when Amicus is just bearing the 25% of the costs of the program, is a significant component of this deal for Amicus and will contribute very nicely to reducing our cash burn on this program in the coming years.

Additionally, finally, GSK is purchasing 6.9 million shares of our common stock at a price of $4.56 per share. So the total value of the GSK's equity investment in the Company is $31 million and represents a 19.9% ownership position in our Company, thus making the total cash up-front to us from the cash up-front licensing payment and the equity investment to be just over $60 million.

We believe the signing of this agreement not only provides strong support for our potential success of the program, but more broadly the chaperone technology approach. And importantly, we also think it recognizes our keen scientific and clinical expertise in rare disease and in particular, on the equity side, truly highlights GSK's commitment to Amicus with a very significant investment in the Company and their desire to work closely with us moving forward on this program.

So, let me turn then, from a deal to talking a little bit about the program specifics, first on the Amigal Phase 3 program. We did, in our previous announcement about the GSK deal, provide further guidance on enrollment for Study 011, which, as John mentioned, in our study intended to support approval in the United States. We've made significant progress today. We're very pleased with the traction on enrollment, but we do now expect enrollment to complete in Q1 rather than end of this year. We have good momentum, but we think that's a more reasonable estimate at this time, based on the latest facts, and that'll give us top-line results from the study in the second half of next year.

It's a tremendous operational effort. We've spoken about that before. This trial is enrolling patients at over 40 sites around the world and we're pleased to add GSK to that project, which will allow us to really continue to focus on solid execution going forward.

Additional, we're on track with our activities to support or to start Study 012 for Amigal; 012 is a study intended to support approval in the European Union. The protocol has been found for sites and those sites are being initiated as we speak. Our best guess on patients starting treatment is perhaps at the very end of this year, but it may be beginning of next year when patients actually begin to receive drug, but we're pleased with the progress and the momentum on this.

This study is going to look a lot like Study 011, from the logistic perspective. It's a global study. Its going to involve a similar number of site. Many of those sites are the same ones we're working with on Study 011.

Additional momentum is on Study 013. That's our number for the study where we will evaluate Amigal co-administered with ERT. This is a Phase 2 study and we're working closely with GSK on this one as well. It's really at a similar point to study 012. The protocol is final. It's out the door. Sites are being initiated and again, our patient commencements on treatment is possible before the end of the year, but we think will more likely will be the very beginning of next year. So, moving on from Fabry. That's it on Fabry.

We remain enthusiastic, as John mentioned, about our other programs. We are evaluating the potential for our chaperones for Pompe and Gaucher Disease to be used in combination with enzyme replacement therapy. And we're currently in preclinical development with both of them, but we're looking closely at the appropriate next steps for how to advance those programs and we look forward to providing additional guidance as we go forward for those programs.

Finally, I'll finish on the program side, on the neurodegenerative programs. We remain very excited about these based on our continued progress in preclinical studies. Now, as a reminder, we're looking at these in genetically defined subpopulations within Parkinson's and Alzheimer's. Starting with Parkinson's, our strategy is to focus on patients who are carriers for Gauche Disease. This is clearly consistent with our overall corporate strategy of focusing on rare diseases.

I'll remind you that we had initial proof of concept established using our molecule AT2220 in animal models of Parkinson's. But through a significant medical chemistry effort in 2009, we identified new molecules that we believe improve significantly on the properties of AT2101 and that we believe will have better potential for future clinical development.

So we're focused on those in our preclinical studies today. We will continue to advance those studies and expect that to continue this year and into next year and we're hopeful that we can provide more specific guidance on next steps for this program at the beginning of 2011.

Along with the Parkinson's program, we're advancing the Alzheimer's program. It has good momentum as well. In this program we're evaluating several different enzyme targets, each of which represents a novel treatment approach to Alzheimer's. And again, we're focusing only on genetically defined subpopulations. And by building on the work we've done in the last five years to understand the chaperone mechanism of action, diseases of misfolding proteins and lysosomal enzymes, we think this program has very solid potential and look forward to continuing to preclinical studies going on today and to keeping you posted on our progress.

Finally, I'll also note that in addition to executing on our plans to advance Amigal in partnership with GSK, we do intend to remain active on the business development front and to continue to evaluate opportunities for possible partnerships on these early-stage programs. So, moving forward, we will keep those -- we'll be continuing to evaluate different options with the goal of building on our current strategic and financial foundation that John described earlier.

And with that, I'll just wrap up by saying again, really what John shared earlier, and that is its our vision to be a leader in the R&D of drugs related to or intended to treat rare diseases. And we believe the global partnership with GSK is a huge step forward in this effort and we believe the deal gives Amicus significant strategic flexibility to advance our pipeline to continue developing new treatments for rare diseases and it provides tremendous opportunity to build further shareholder value.

With that, I'll turn the call over to Daphne who will give a review of the financial results for the quarter.

Okay, thanks, Matt. Good evening to everyone. Before I review the third quarter financial results I will comment briefly on our cash position and reiterate our financial guidance.

We ended the third quarter with $57.6 million in cash and marketable securities. In light of the GSK deal for Amigal, we updated our financial guidance. We believe that our current cash and marketable securities, along with 2010 and future anticipated payments from GSK, will be sufficient to fund operations and capital expenditure requirements through the anticipated U.S. commercial launch of Amigal.

Now, as I move to the financial results, I will be referring to table one in our press release. Net loss for the quarter was $15.4 million, as compared to a net loss of $13.4 million in the same period in 2009. Reductions in operating expenses resulting from our Q4 2009 restructuring and refocused operating priorities largely offset the $4.9 million year-over-year revenue impact of terminating the Shire collaboration agreement.

R&D expense in the third quarter of 2010 was $8.9 million, representing a decrease of approximately $3.7 million or 29%, from $12.6 million for the same period in 2009. The variance was primarily attributable to lower personnel costs associated with the workforce reduction completed in the fourth quarter of 2009, a decrease in consulting costs and a decrease in contract, research and manufacturing costs due to the reduced activity within the Gaucher program.

Our third quarter 2010 G&A expense was $3.9 million, representing a decrease of $1.3 million, or 25%, from $5.2 million for the same period in 2009. The variance was primarily due to lower personnel costs associated with workforce reductions completed in the fourth quarter of 2009 and a decrease in third party legal and consulting fees.

Interest income for the third quarter was $0.03 million, as compared to $0.13 million in the comparable quarter last year. The decrease of 77% was due to lower effective interest rates and decreased cash and cash equivalents balances.

As we previously announced, in the first quarter of 2010 we raised $17.1 million of net proceeds through a registered direct offering of 4.95 million shares of common stock and warrants to purchase an additional 1.85 million common shares.

We allocated $3.3 million of our net proceeds to the warrants, which we classified as a liability on our balance sheet. Each quarter the warrant liability will be mark-to-market, with changes recorded as a non-cash, non-operating item in our P&L. The change in fair value of our warrant liability during the third quarter was $2.1 million.

So that covers the financial update for the third quarter. I will be available to address any questions during the Q&A part of the call. With that, I will turn things back over to John.

Great, thanks, Daphne.

When we had our call announcing the GSK deal a week-and-a-half ago or so, I began the call by noting that these are the days that it's good to be a biotech CEO and those days certainly continue. And we look forward to continuing executing on our programs and working very closely, continued now, with our partners at GSK.

With that, let me turn it over to the operator and see if there are any questions.

(Operator Instructions) [Arnold Panrama], JP Morgan

Hi, this is [Arnold Panrama] in for Geoff, a quick question on the Phase 2 extension study. I think the last time we got an update was in February. Just wondering when we might get another update and remind us how many patients are still in the extension study and how long the longest patient has been exposed to drug? Thanks.

Yes, go ahead. I'll ask Matt to field those questions, please.

Sure. So, as far a data update, we're working towards trying to provide that in Q1. You know the couple of genetics conferences that are very common for us and that we've used in the past is good forum for those announcements, include World LSD conference, -- the World LDN conference, excuse me, in February and the American College of Medical Genetics which is in March. So we don't have the answer for that today, but we're working towards that, so I'll be happy to update you as soon as we finalize that plan. But it is our goal to provide an update early next year, just like we did this year.

17 patients continue in that extension study and as we've talked about before, it's a really, really valuable source to continue data collection for us, both on the efficacy side with long-term data evaluating Amigal's impact on renal disease in particular, and kidney function by a couple of different measures, but in particular, also on the safety side and tier point, as far as exposure and the time on drug.

I don't have all the numbers right in front of me, but I know that there are several patients in there, maybe as many as eight now or six or seven that have been on for four years, nearly four years and counting. So that's a really great data set for us.

I think all in, we're well over 70 years of patient data now.

Great. Thanks for taking our question.

Of course.

Ritu Baral with Canaccord.

Hi guys. Thanks for taking the question. Looking on clintrials.gov at your upcoming European Phase 3 and the upcoming combo study, I noticed that you have basically enrichment criteria as part of the European trial. Will that be the same sort of enrichment criteria that you used in the U.S. trial and could you just remind us what you did use?

Sure. Go ahead, Matt.

Sure. So, well, the reminder in the Phase 3 011 study, which is the study focused on the U.S. approval, the two key enrichment criteria that we used for that trial are the genetic mutation, making sure that we're enrolling people who are likely to respond to Amigal based on what we know about their genetics, and GL3, as measured in the urine. Because, of course, the primary end point is GL3 measured in the kidney biopsies and we use urine GL3 as a proxy for GL3 in the kidney and so a little bit different from the European study; the same genetic mutation criterion will be used. It's not different, so that will still be a priority and that, of course, makes sense. We are only interested in enrolling patients who will benefit from this as a monotherapy treatment.

We don't have the urine GL3 criterion for the 012 study. There's no biopsy in the 012 study. The primary endpoint will be evaluating kidney function by glomerular filtration rate. So we'll have a criterion for extensive renal disease, as measured by a couple of different measures in the entry criteria are (inaudible) too, but it won't be a GL3 in the urine measurement.

Got it and so the combo study doesn't use any enrichment criteria. Could you just go through the strategy behind that?

Sure. That's just because it's a different approach to using the chaperone. So, in the combo approach, we're intentionally dosing the two, co-administering them at the same time with the goal of the chaperone interacting directly with ERT to stabilize the ERT and ideally have a positive impact on its pharmacokinetics and the amount of it that can get into the target tissues. So it's really dosing it in a completely different way.

In the monotherapy approach, you're dosing it every other day with an attempt to increase the level of the patient's own enzyme that's getting to the lysosome within the cells. But in the combination approach, we're intentionally dosing just once orally before they get their infusion, which happens every other week, with the goal of having a positive direct interaction on that ERT. So, it's both are chaperoning, but in different ways of course.

Got it and as far as the low dose and the high dose in the trial description, can you say what they are, at least relative to the monotherapy studies?

We can not yet share that, but we look forward to sharing it soon. Going forward, we'll work closely with GSK on announcing our details related to these studies and we'll get that the news out at that at the right time, in the right level of detail, in partnership with them.

So, I don't have that for you today, but we'll be happy to share that in the future and of course we spent a lot of time on the preclinical side advancing our combo approach and thinking about how best to dose it. And as I mentioned, we expect to dose, just like I said, which is an oral dosage ahead of the ERT infusion starting. But exactly what dose level we're going to use is going to be driven by all our preclinical work and we can walk you through that at a later date.

Got it and do you plan on taking advantage of the same centers just like you did for the 012 trial?

I expect there will be some overlap. There maybe some new ones. It's not going to be nearly as big of an effort. It's a Phase 2 kind of proof of concept approach to start off. Then we would expect to advance the program into a much more broad global efforts going into Phase 3, of course. But for this first study, I don't expect it'll be a large number of sites, but some of them will be the same that we worked with in the other trials.

Great. Thanks. I'll hop back in the queue.

Thanks, Ritu.

Thanks, Ritu.

I am not showing any other questions at this time. I'd like to turn it back over to John Crowley for closing comments.

No, that's all we have. Great, thank you all for listening and we'll be in touch soon. All the best.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.