Amicus Therapeutics Inc (FOLD) 2011 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Amicus Therapeutics third quarter 2011 results conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions). As a reminder, this conference call is being recorded. I would now like to hand the conference over to Ms. Sara Pellegrino, Investor Relations. Ma'am, you may begin.

Good afternoon, and thank you for joining our conference call to discuss our third quarter 2011 financial results. Speaking on today's call, we have John Crowley, our Chairman and Chief Executive Officer; Bradley Campbell, our Senior Vice President, Business Operations; and Daphne Quimi, our Corporate Controller. They are joined by executive team members David Lockhart, our Chief Scientific Officer; and Pol Boudes, our Chief Medical Officer, who are available to participate in the Q&A session.

As a reminder, this conference call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to the business operations and financial conditions 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 candidates, and the projected cash position of the Company.

Words such as but not limited to belief, expect, anticipate, estimate, intend, likely, should, and could, and similar expressions or words identify 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 31st, 2010, and our other public filings with Securities and Exchange Commission.

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 unanticipated events.

At this time, it is my pleasure to turn the call over to John Crowley, our Chairman and Chief Executive Officer of Amicus.

Great. Thanks, Sara, and welcome, everybody, to this evening's third quarter 2010 conference call. I'm pleased to lead the call on this business update. I'm joined by a number of different folks here at Amicus, as Sara indicated at the beginning of the call.

Let me begin by noting, as was put out in our press release, our strong balance sheet. And we think what this allows us to do is to judiciously invest in the most promising aspects of our pipeline. That together with our lead program in Amigal and the collaboration there with GSK, as long as our -- as well as our strategic relationship with GSK with their ownership, will allow us to continue to invest in this pipeline and to build our company to become one of the leading companies in the field of rare diseases.

We continue to focus here at Amicus on the global registration program for Fabry disease. We are now approaching final enrollment in that Phase III study of Amigal, Study 011 for approval in the United States. And we also continue to make progress on our second Phase III study, our 012 study.

We're also very, very excited about the extension of our technology. And we think the ability to create significant shareholder value through the combination of pharmacological chaperones and enzyme-replacement therapies coadministered together, we think that this aspect of the technology has the potential to be a very important expansion of the pharmacological chaperone technology and that it may be able to improve treatment for people living with lysosomal storage disorders.

So, as we move forward, our goal is to advance the current pipeline while continuing the search for additional opportunities to create multiple source of value for our shareholders. Today, we remain confident in the strength of the corporation as we head to multiple near-term milestones.

Let me, before I turn it over to Bradley Campbell, let me just talk a little bit about some of our Fabry studies. So, on our Fabry program a few weeks ago, of course, we announced the close of recruitment for Study 011, our FACETS study. This means that by closing the recruitment that the participating sites have now stopped screening new patients because Amicus together with our partners at GSK have determined that the number of patients currently randomized in addition to the number of patients completing screening now are expected to be sufficient to reach our final randomization target.

There has indeed been very positive momentum in this study, particularly over the last few months. And right now, we anticipate final enrollment of more than 60 patients by the end of this year. And again, to remind everybody, the target enrollment for this study was 60 patients.

These accomplishments in enrollment of this study are the result of a tremendous effort by people here at Amicus as well as at GSK to recruit, screen, and randomized patients into the largest study ever to be conducted for a lysosomal storage disorder, a study conducted at 37 centers worldwide on five continents with very strict entry criteria.

We believe that each and every patient with Fabry disease plays an important role in building our dataset for Amigal. So, it's a very exciting time for Amicus and GSK and everybody who's been involved in this program over the last several years and especially in designing study that some people thought would be impossible to enroll. It's nice to see that we're very likely to be overenrolled in this study.

Let me comment briefly on the Study 012. As you know, this is a second Phase III study, what we call our ATTRACT Study 012 to further support global registration of Amigal as well as our Phase IV requirement under the accelerated approval pathway with FDA.

In September, a month or two ago, we dosed the first patient in this 18-month open-label randomized study, where we are comparing Amigal to enzyme-replacement therapy. As a reminder, this 012 study will enroll approximately 50 patients who are now currently on enzyme-replacement therapy, who have also -- who also have amenable genetic mutations to Amigal as a monotherapy.

30 of the patients in this study will switch from their enzyme-replacement therapy to Amigal, and 20 will remain on ERT. We continue to make progress on enrolling this study, despite some of the severe challenges presented by the continuing Fabrazyme shortages.

And again, and I'll come back to it, and Bradley will also touch on it, but we are also very excited about our 013 study, very important proof of concept in Fabry disease, but also a very important extension of the technology and proof of concept, as data becomes -- preliminary data becomes available to us in this study by the end of this quarter.

So, in summary, as an intro, I am very proud to be leading Amicus and to have GSK as our collaborator as we work toward the future of our company. As we move forward, we'll keep patients in the front of our minds, as we always have. This is very true in the case of our Fabry program, where the current supply issues have left many people with Fabry without or with only suboptimal treatment.

Additionally, as we build our pipeline, we also have the potential to move into new areas of treatment for lysosomal storage disorders with other programs, again, especially the combination of chaperones and ERT coadministered together.

With that introduction, let me go ahead and hand the call over to Bradley, who will give you an update specifically on that chaperone-ERT coadministration.

Thanks, John. Good afternoon, everybody. Today, I'll give you an update on our lead development programs to evaluate chaperone-ERT coadministration, which, as John mentioned, represents an important potential extension of our technology platform. I'll also comment on our preclinical Parkinson's program and give a brief overview from our recent scientific meetings.

Based on the preclinical data that we've generated in animal models of Fabry and Pompe, we're conducting two Phase II open-label drug-drug interaction studies, one for Fabry and one for Pompe, to evaluate chaperone-ERT coadministration in the clinic.

Both studies are designed to show initial human proof of concept that a pharmacological chaperone can be safely coadministered with ERT. We'll also evaluate whether the presence of a chaperone increases enzyme activity in plasma and in key tissues through skin biopsies for Fabry patients and muscle biopsies for Pompe patients.

So, let me go in a little bit more detail about the objectives for each study. In Fabray Study 013, as part of our global collaboration with GSK for Fabry disease, we're investigating two dose cohorts of Amigal, 150 milligrams and 450 milligrams coadministered with ERT. The study's enrolling males with Fabry disease with each patient serving as his own control.

And as a result of the global ERT shortage, we're able to evaluate coadministration of Amigal with low and labeled doses of Fabrazyme as well as full doses of Replagal in countries where it's approved. So, we'll be able to gather data from patients on both ERTs and at multiple doses.

We continue to expect preliminary Study 013 results by year end, as John mentioned. And we're excited to generate more data on the broader potential for chaperone-ERT coadministration.

For Pompe Study 010, we'll evaluate ERT coadministered with four different doses of AT2220, which is the second pharmacological chaperone owned exclusively by Amicus. The study's expected to enroll approximately 16 male or female patients, again, with each patient to act as his or her own control. The dosing of the first patient is anticipated by year end.

Previous preclinical findings in animal models have demonstrated that AT2220 binds to and stabilizes infused ERT, increases glycogen substrate degradation, and reduces ERT-related toxicity. Given the challenges that still exist for Pompe patients today on ERT, we see significant opportunity to investigate coadministration as a potential alternative for these patients.

Finally, a brief reminder that we expect results in the fourth quarter from our preclinical studies of AT3375, which is our pharmacological chaperone for Parkinson's disease. AT3375 targets glucocerebrosidase or GCase, which is the enzyme-deficient in Gaucher disease. And it was developed in house based on our previous work with Gaucher and the observed genetic association between Parkinson's and Gaucher.

Before I turn the call over to Daphne, let me provide you with a brief overview of the posters we presented a few weeks ago at the American Society of Human Genetics Meeting, or ASHG, which is one of the larger genetics meetings of the year. For your reference, links to the posters have been provided in the body of the press release we issued earlier today to encourage you to check that out online.

One of the posters highlighted our Phase II study of Amigal in symptomatic female patients with Fabry disease, called Study 204. So, in the context of our overall Fabry program, Study 204 demonstrates we think our commitment to build additional data around females with Fabry.

As you may know, despite the fact that they represent more than half of all patients followed on Fabry registries today, females have been historically underrepresented in previous controlled studies for Fabry disease. So, we thought it was important for us to include them in Phase II, and they'll be well represented in our Phase III studies as well.

Two additional posters at ASHG were focused on our investigations of chaperone-ERT coadministration in vitro and in vivo in various animal models of Fabry and Pompe. Results from both preclinical studies indicate that chaperone-ERT coadministration increases ERT stability, enzyme activity, and substrate reduction in disease-relevant tissues compared to ERT alone.

So, now that we've reviewed some of the highlights of our development programs, I'll turn the call over to Daphne Quimi, who is our Corporate Controller, who will review our financial results for the third quarter 2011. Daphne?

Thanks, Bradley, and good afternoon, everyone. Before I turn towards the third quarter of 2011 financial results, I will quickly comment on our cash position and financial guidance and that we are confident in the strength of our financial position.

As of September 2011, cash, cash equivalents, and marketable securities totaled $69.5 million compared to $83 million at June 30, 2011. We continue to expect that our current cash position, including anticipated payments from GSK in connection with the collaboration, will be sufficient to fund our operations and capital expenditure requirements through at least the end of 2012.

As a reminder, we are eligible to receive approximately $170 million from GSK upon our successful achievement of development and commercialization milestones, as well as tiered double-digit royalties on global sales of Amigal for Fabry disease.

For full-year 2011, we continue to expect operating expenses to total $50 million to $55 million net of anticipated cost sharing related to the GSK collaboration. Amicus and GSK are equally sharing development costs for Amigal in 2011. And GSK will be responsible for 75% of these costs in 2012 and beyond.

Turning to the financial results, I will be referring to Table 1 in our press release, which is available on our corporate Website at www.amicustherapeutics.com. Additional details can also be found on our Form 10-Q, which will be filed tomorrow.

Total revenue for the third quarter of 2011 was $5.8 million compared to no revenue in the prior-year period. Our total revenue consists of research and collaboration revenues recognized under our collaboration with GSK for Amigal.

Research revenue reflects reimbursement from GSK related to our agreement to share total development costs for Amigal. Each quarter, GSK reimburses us for the portion of our actual spend that exceeds our obligations. Amicus and GSK reconcile each party's spend for the Amigal program on a quarterly basis to ensure that costs are shared in accordance with this arrangement.

For the third quarter of 2011, research revenue was $4.1 million, up from $2.4 million in the prior quarter. Quarter over quarter, GSK incurred a lower percentage of the total Amigal costs related to Amicus -- relative to Amicus. So, we were reimbursed at a higher amount.

Research revenue is expected to fluctuate quarter to quarter relative to our proportion of the total Amigal expenses and the percentage we are responsible for paying under the agreement. As of September 30th, 2011, we have recognized a total of $10.8 million as research revenue under the GSK agreement.

Collaboration revenue for the third quarter of 2011 was $1.7 million and reflected the recognized portion of the $33.2 million upfront payment received from GSK upon signing the agreement. The total upfront consideration, consisting of $30 million license fee and a $3.2 million premium on GSK's equity investment, is being recognized on a straight-line basis. As of September 30th, 2011, we have recognized a total of $5.0 million of the GSK upfront payment as collaboration revenue.

Total operating expenses for the third quarter of 2011 were $18.9 million compared to $13.3 million in the prior-year period. The increase was primarily attributed to higher expenses for research and development as well as one-time stock-based compensation expense and severance items.

Research and development, or R&D, expenses were $13.7 million in the third quarter, including $800,000 of stock-based compensation expense compared to $8.9 million in R&D expenses, including $600,000 of stock-based compensation expense in the prior-year period. The year-over-year increase in R&D was primarily a result of higher contract research and manufacturing costs within the Fabry program.

General and administrative, or G&A, expenses for the third quarter of 2011 were $4.8 million, including $1.1 million of stock-based compensation expense, up from G&A expenses of $3.9 million, including $800,000 of stock-based compensation expense in the prior-year period. The increase corresponds to the severance payment incurred with the departure of our former President in August 2011.

During the third quarter of 2011, we recorded nonoperating income of $3.4 million, primarily consisting of a recorded gain for the change in the fair value of our warrant liability. Net interest for the third quarter of 2011 consisted of a net interest expense of $1,000 compared to net interest expense of $33,000 in the comparable quarter last year, due to less outstanding debt on our secured loan.

For the third quarter of 2011, we reported nonoperating gain of $3.4 million related to the change of the fair value of warrant liability compared to a loss of $2.1 million for the change in the fair value of our warrant liability during the third quarter of last year.

Warrants issued in connection with our March 2010 registered direct offering of common stock were recorded as a liability at their fair value on the issuance date. The fair value of these warrants increase or decrease with the change in our stock price, and we report the change at each reporting date until the warrants are exercised or expired.

Net loss attributable to common stockholders for the three months ended September 30 of 2011 was $9.8 million or $0.28 per share compared to a net loss of $15.4 million or $0.56 per share for the same period in 2010. Weighted average common shares outstanding were $35.0 million and $27.6 million for the three months ended September 30th, 2011, and September 30th, 2010, respectively.

This summarizes our key financials for the third quarter of 2011. I will also be available to answer questions during the Q&A session of this call.

Before I give the floor back to John, I'll briefly mention that we are holding a special meeting of stockholders at our offices on November 21st, 2011, at 9.00 a.m. Eastern time. The purpose of this meeting is to vote on an amendment to our restated certificate of incorporation to increase the number of shares of common stock that we are authorized to issue from 50 million shares to 125 million shares. This amendment is intended to provide us with more flexibility in meeting our future capital requirements. More information on the amendment and details of the special meeting can be found in our proxy statement filed on October 26th.

With that, I turn things back to John.

Great. Thanks, Daphne. So, hopefully, you could all see the excitement here on the Amicus team. And I think a lot of the hard work and the foundation that's been laid over the last year or two are really starting to come to fruition. And we're very excited about the progress and momentum and especially now being able to reaffirm guidance that we'll be closing enrollment with final patient enrolled this quarter. In fact, the likelihood that we will overenroll this study I think is a reflection of the enthusiasm in this environment. So, very, very exciting times at Amicus.

With that, I will stop and turn it over to the operator to handle any calls. Thank you.

Thank you. (Operator Instructions). Our first question comes from Ritu Baral from Canaccord.

Hi, guys. Thanks for taking the question. Hi. Question about the dropout rate, how is that going for trial 011?

It has been lower than we had projected.

Is it -- were you anticipating that dropouts would be more driven by tolerability issues or by -- ?

-- No -- .

-- Some other factors?

No, not at all. We -- the safety profile, as you know, has been very, very strong on this drug. So, we didn't think it was tolerability at all. We just built in as a matter of the biostatistics a standard dropout rate that you'd see in studies like this. People dropout for a whole host of reasons, logistics, convenience, personal reasons. And that combined, hopefully, with the tolerability of the drug has led to the lower-than-expected dropout rate.

Okay. And will the 011 enrollment patterns help inform 012 enrollment, potentially leading to faster enrollment?

No, I don't think that's going to be the case, Ritu. I think they're two very different studies by their nature. On one hand, we're not taking biopsies in the 012 study. So, that certainly provides an incentive for people to participate versus 011.

But, with 012, of course, people have to be on a standard or near-standard dose of their ERT, which nobody in the United States is getting, right -- or very, very few people in the United States are getting right now. So, that makes that 012 study almost exclusively an ex-US study. So, also, too, with the 012 study, there is no urine GL3 threshold as well, so different dynamics.

I think this is going to be much more subject to the shortage issues. And we're working with doctors. We actually thought that this would be the easier study to enroll because of the inclusion criteria, the number of patients is a little bit lower, and the lack of biopsies. So, we'll see. We continue to work hard at it. And as we indicated, we do now have folks enrolled in this study and will be able I think in the next quarter to give better guidance as to when we think that study will be fully enrolled.

So, right now, you don't know whether it'll actually be harder to enroll or easier to enroll because of the shortages.

Yes, it's really hard to judge right now. Our focus has been on both the enrollment of those two, 011, 012 studies, as well as the combination studies, 013, and the Pompe, so a lot of efforts going on. So, it's not for lack of resources or focus here at Amicus. I think we're just subject a little bit more to the market dynamics. But, we're adjusting our tactics and resources to make sure that that study gets enrolled on time.

And again, just to remind you, too, the FDA has said that we just have to begin that study. And we've already begun it by the time we submit our NDA. So, we're well ahead of that planning period. And likewise, although the EMEA has indicated that we'll need this 012 switch study for approval, they also did indicate to us that, once we have the data in the 011 study, that we also come speak to them about potential approval based on 011 data. So, the studies are related, but still independent.

And moving to the design of the Pompe's combo therapy trial, what do you expect the endpoints of that study to be? And how did those four doses compare by factor or proportion to the dose that was used in the monotherapy study?

Yes, so, with the 010 study, the endpoints are going to be very similar to the 013 study in that we're looking, of course, at safety. Can the small molecule and the large molecule interact safely? Secondly, by drawing blood, we're going to be looking at plasma PK, seeing if we can stabilize the ERT, change it's PK profile. And then we are going to be taking muscle biopsies. So, we will look at the small molecule and then the large molecule as well, the biozyme in the muscle tissue.

So, in terms of doses, we wanted to be -- we wanted to look at a range of doses a little more broad with this drug than we did with Amigal, given the nature of Pompe disease and what could be some unique characteristics of that molecule and that disease.

But, again, if you remember, going back to our series of Phase I studies, including Phase I studies, where we took muscle biopsies from healthy volunteers, this was a very, very well-tolerated drug given as a monotherapy in those Phase I safety studies, again, much lower doses we would expect in this combination study than we have seen with any previous study with this molecule as well.

Great. Thanks.

Thank you. Our next question comes from Joseph Schwartz from Leerink Swan.

Thanks. I was wondering, as we look forward to the Phase II coadministration study for Amigal and Fabry, and you referenced a study, a preclinical study in mice that looked at the coadministration and so some interesting PK-PD dynamics. How useful are the skin biopsies in informing us as far as the effects in other tissues that are important in Fabry, like the heart and kidney?

Yes, it's important to remember Fabry, the key organs involved are heart, kidney, and skin as well. Skin is affected when it comes to the perspiration of the patients, the pain, the tingling sensation. So, skin is a relevant disease tissue. And of course, Joe, by the -- it's just much easier to take biopsies in skin. And in this short-term administration study, we think that makes good sense.

It'll be really important in this study because we're going to look at a couple of different time points when we take this skin biopsy. We're going to look at it, of course, without our small molecule. We're going to really for the first time ever have an ability to understand after a couple of days how much Fabrazyme or Repalgal is available and active in tissue. And then we'll be able to measure that when coadministered with our chaperone. So, I think it'll be a really, really important dataset.

And again, the data that we saw in mice in these multiple preclinical studies, the amount of uptake, enhanced uptake of the ERT and the addition of the further reduction of the GL3 substrate that we saw in skin in those animals was roughly equivalent to the reductions in substrate and the increase in enzyme that we saw in kidney and heart tissues in the animals, so we think pretty directly relevant.

Can you apply your new biopsy scoring system to the skin as well? And will we see the old system and -- ?

-- No. Yes, just to remind you, this is a one dose -- it's a very important study, very important proof of concept study. But, we're doing that scoring system, we're doing the biopsies in the 011 study only. And we're doing that to measure substrate reduction. In a short-term study, we don't expect to see any changes in substrate reduction in a one-dose study. We do, however, expect or we hope to see changes in the amount of enzyme and the amount of active enzyme in skin, even over that short period of time.

I see. Okay. And then on the 011 study, can you give us a sense, a greater sense of the extent of overenrollment and any -- are there expected to be any implications on powering? Is it just a few patients, or do you think it might be more meaningful?

Well, no, again, remember this. At 60 patients, this study was powered at greater than the 95th percentile confidence interval. So, this is already a very well-powered study. We're not giving guidance yet. We want to see how people work through these final stages of the pipeline, Joe, in terms of what that final number is going to be. But, again, we fully expect that it will be now more than 60. So, we will at least reach that 95th percent confidence level on the data.

Great. Thanks, again.

Thank you. Our next question comes from Geoff Meacham from J.P. Morgan.

Hi. This is Anupam Rama in for Geoff Meacham. Just a quick question on enrollment. It seems like with patient recruitment done, the most difficult part is done. But, what are the final boxes that you have to check to finally get these patients enrolled in the trial?

So, if you remember, as people present and consent to this study, a couple of things then happen for everybody in the study. Of course, they have to have Fabry disease. We also verify their mutation. So, the genotyping is important. Most people know their genotype. We reconfirm it as part of this study.

We're also then collecting urine samples as a baseline before somebody is admitted into the study for that further screen for study enrichment purposes to make sure that they have four times elevated level of GL3 in the urine, which should correspond pretty tightly with elevated levels of GL3 that we would expect to see on biopsies.

That -- our experience has been that's about a six- to eight-week process, especially if somebody presents with a new novel mutation. It takes a little bit longer. So, back in the middle of October when we announced close of recruitment, it was based on two factors, one, the amount of people already enrolled in the study who have passed all of those entry criteria, the disease criteria, the genotype, and the urine GL3 screen, plus the people that we have in the pipeline.

And again, in the last couple of months, we've seen a tremendous amount of activity at these sites, a lot of enthusiasm, a lot of momentum in the enrollment. So, we feel very confident now that we're not only going to hit the 60th patient in this quarter, but that that final patient and a number greater than 60 will come in this quarter as well.

Great. Thanks for taking our question.

Sure.

Thank you. Our next question comes from Greg Wade from Wedbush.

Hi. This is David Nierengarten in for Greg. Also, the clinical questions we had have been answered. But, I had a quick question on the presentation actually, the preclinical presentation. What kind of increases did you see in terms of the muscle uptake experiment that you did in the mouse model of Pompe? I'm just curious as to the magnitude of the benefit.

Yes, let me go ahead and ask David Lockhart, our Chief Scientific Officer, to comment on that.

Yes, so, what you -- that was measured in the Gaa knockout animals. So, they're a Pompe mouse model. And it depends on exactly which tissue. So, we measured uptake into the tissues that are relevant for Pompe disease, namely the heart, the diaphragm, and several skeletal muscles.

And the extra increase was between a factor of two and a factor of four to five. So, it was a significant increase in the amount of additional intake. And remember, it's a very well-controlled experiment because you do the exact same experiment with ERT alone and then do the identical experiment but with a pre-oral dose of the small molecule.

And so, we were able to compare with and without the small molecule in the presence of an identical administration of the ERT and show that the small molecule increase the amount of enzyme, active enzyme taken up into the tissue. And then we even went a step further than that to show that that active enzyme led to greater reduction of glycogen. And glycogen is the storage material in Pompe. And so, in these mouse -- these Pompe mice, they have extra glycogen. ERT reduces that. But, ERT plus the small molecule reduced it even more.

And how much? By how much did it reduce the glycogen?

Again, it depends on exactly which tissue. It was more by anywhere from 20% to in some cases being essentially infinitely greater in that ERT did not decrease glycogen at all, but there was a measurable decrease in the presence of the small molecule.

Okay. Great.

So, a large and significant reduction across the board and greater in some tissues than others.

Understood. Great. Thanks.

Yes, so, hopefully, you get some sense based on the significant amount of preclinical data that we have that much of it presented recently at scientific symposia, we're very excited about the potential of ERT-chaperone combinations, the coadministration of these chaperones to directly impact the stability activity and potentially even the safety profile of these proteins could be a very dramatic shift in the paradigm treatment for people who would remain on these ERTs, who in Fabry wouldn't take the drug as a monotherapy and who in Pompe we think for all people with Pompe taking the ERT could provide substantial benefit. And we look forward to the human data to hopefully continue to prove that concept.

Thank you. (Operator Instructions). I'm showing no one else in queue at this time.

Great, operator. Thank you, everybody. Thank you for listening. Take care. Have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program for today. You may all disconnect, and have a wonderful day.