Amicus Therapeutics Inc (FOLD) 2013 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Amicus Therapeutics Second Quarter 2013 Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Sarah Pellegrino, Director of Investor Relations. Please go ahead.

Good evening, and thank you for joining our conference call to discuss Amicus Therapeutics' Second Quarter 2013 financial results. Speaking on today's call, we have John Crowley, our Chairman and Chief Executive Officer; and Chip Baird, our Chief Financial Officer. Bradley Campbell, our Chief Business Officer, and David Lockhart, our Chief Scientific Officer, are also on today's call and available to participate in the Q&A session.

As a reminder, today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to 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 clinical trials evaluating Amicus candidate drug products. Words such as but not limited to, look forward to, believe, expect, anticipate, estimate, intend, may, plan, would, 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 31, 2012. All forward-looking statements are qualified in their entirety by this cautionary statement, and Amicus undertakes no obligation to revise or update this presentation to reflect events or circumstances after the date hereof. At this time, it is my pleasure to turn the call over to John Crowley, Chairman and Chief Executive Officer of Amicus.

Great. Thanks, Sarah. Good evening, everyone, and welcome to the conference call update. There are three themes that we want to be able to communicate throughout this call. The first is that at Amicus we continue to build out our CHART platform technology. Again, that's our Chaperone Advanced Replacement Therapy platform, the combination of small molecule stabilizer chaperones together with next-generation replacement products.

Secondly is that we remain committed to advancing Migalastat as a monotherapy for Fabry patients with amenable mutations. And third, and Chip will elaborate on this, that we have maintained a strong balance sheet and are diligently managing our cash position to efficiently advance our programs. And, as you'll see as Chip gets into it in a little bit, that we have reduced our full year 2013 net cash spend guidance, and that we expect our cash position to support our operating plan into the fourth quarter of 2014. So, a very judicious spend of our resources.

The agenda for today's call, we'll go through a highlight of some of our key programs with both the CHART technology as well as an update on the US registration strategy for Migalastat monotherapy. I'll then turn it over to Chip for an overview of the second quarter 2013 financial results and our full year net cash spend guidance. And then I will wrap up the call and Brad Campbell, our Chief Business Officer, and David Lockhart, our Chief Scientific Officer, are also on today's call and available to participate in the Q&A session. So, we're going to begin with the combination programs, and I'm going to take them in order of their development stage.

So, beginning with the Pompe co-administration study. Again, this is with our proprietary pharmacological chaperone, our designated drug AT2220. It is co-administered with existing enzyme replacement therapies in Pompe disease. We are working with several key Pompe opinion leaders, the world leaders in Pompe. We are moving this study after positive results from our Phase 2 study, our 010 study, which was a single dose co-administered AT2220 plus Myozyme/Lumizyme. And as we saw earlier this year, that showed the increased uptake of Pompe enzyme, the recombinant GAA, into muscle compared to ERT alone. So, we think very important first proof of concept that we can positively impact the pharmacokinetic and pharmacodynamic profile of the ERT products, and we're now going to take that into its repeat dose study this next study.

Also, our Fabry co-formulation program, that's our next generation proprietary enzyme replacement therapy product being developed jointly with GSK. Again, that's Migalastat co-formulated with JCR, the Japanese pharmaceutical company also part of our partnership, with JCR it's JR051. Those two molecules put together in combination, again, with the chaperone designed to bind to and stabilize the infused alpha-gal enzyme independent of a patient's mutation.

We think that this next generation ERT co-formulated approach has the potential to benefit all patients with Fabry disease, again, another combination program with already demonstrated human proof of concept in our Phase 2 study of Migalastat co-administered with either Replagal or Fabrazyme.

We are designing together with our partners at GSK a next combination clinical study to investigate Migalastat co-formulated with JR051 proprietary ERT. But we remain on track for that to enter the clinic in the first half of 2014. And that will be a very important milestone for Amicus as we take our first of the next generation ERTs into the clinic.

We also have in our pipeline next-generation ERTs for Pompe and MPS1, so co-formulated proprietary enzyme replacement products. But we think that this part of our portfolio, the Fabry next-generation ERT, together with the Pompe and MPS1 next-generation enzyme therapies that we're developing, has the potential to be the most significant value drivers for shareholders going forward, as well as very important new therapeutic options for patients living with these rare lysosomal disorders.

Again, our CHART programs combine our proprietary enzymes co-formulated with novel pharmacological chaperones as next-generation therapies for these lysosomal disorders. In Pompe disease, our next-generation ERT consists of an Amicus developed proprietary recombinant human GAA enzyme, Pompe enzyme, co-formulated with our proprietary chaperone AT2220. And, again, here in Pompe what we're doing is leveraging the chart platform to engineer a better GAA enzyme that we believe we can make better still with the addition of our chaperone as a stabilizer. And this, together with the Fabry co-formulated product and the MPS co-formulated next-generation ERT, again, we think will be the cornerstones of our success going forward and build upon the early success that patients in the last decade or two have had with first-generation enzyme replacement therapies. And this fits in with our paradigm of developing better ERTs for patients.

We also have an MPS1 program we announced in June that we received a grant from an anonymous US-based private donor in support of our proprietary recombinant IDUA enzyme, or MPS1 enzyme, which we intend to co-formulate with a novel pharmacological chaperone, again, as a next-generation therapy for patients living with MPS1.

Based on a positive review of the initial results with this private donor that took place just over the last week or so, we have been allocated a second phase of this funding. As a reminder, we are eligible to receive a total of up to $250,000 in grant funding for the MPS1 project.

Our Migalastat monotherapy program is also moving forward. Let me reiterate that we remain committed to the further development of Migalastat as a monotherapy for people with Fabry disease who have amenable mutation. We do believe that Migalastat works, and we think it works very well in patients for whom it is intended, and we've seen these positive effects now for many years.

Our goal going forward is to build the best dataset to support an approval. We look forward to the top line stage 2, or 12-month data from the placebo controlled Phase 3 study, or Study 011 in the fourth quarter of this year. And based on our years of Phase 2 experience, as well as the interim or stage 1 data from Study 011, we expect that the effects seen with the drug to be persistent and durable.

We think that the 12-month data, together with the additional statistical analyses that are being performed will be a key element of our submission package together with the data from our second Phase 3 study, or Study 012. And, again, Study 012 compares Migalastat to ERT as a switch study, continues to go exceptionally well. The top line data from Study 012 is anticipated in the second half of 2014.

We know that based on feedback which we've already shared with you from the FDA Type C meeting held in May, that we expect our NDA submission to include a totality of the data from all clinical studies of Migalastat monotherapy. At this meeting we agreed with the FDA to a follow-up meeting after we have all of this data.

So, we do believe that the growing body of data from all of the clinical studies continues to support the potential for Migalastat to be an important new treatment option for these Fabry patients, where so much unmet medical need still exists. So, with that summary, I will turn it over to Chip to take us through the financials, including the updated guidance on our spend.

Great. Thanks, John, and good afternoon, everyone. I'll start today's financial discussion with a few comments about our current cash position and operating guidance. As indicated in this afternoon's press release, Amicus continues to maintain a strong balance sheet. At the end of the second quarter we had $74.2 million in cash and cash equivalents as compared to $99.1 million at the beginning of the year. This translates to $24.9 million of net cash spend in the first half of 2013.

We currently expect full year 2013 net cash spend to total between $47 million and $53 million compared to previous net cash spend guidance of $52 million to $58 million, including cash reimbursement received from GSK.

As a reminder, GSK is responsible for 60% of the global development costs for Migalastat for Fabry disease in 2013 and beyond. We expect our current cash position along with the anticipated GSK reimbursement to fund our current operating plan into the fourth quarter of 2014.

Our reduction in net cash spend guidance reflects lower than anticipated cash spend during the first half of 2013, as well as adjustments to our budget for the remainder of the year. We remain committed to carefully managing our cash position to efficiently advance our programs.

Turning to second quarter financial results, I'll be referring to tables 1 and 2 at the end of the press release which we issued earlier today. Additional details can be found in our quarterly report on Form 10-Q, which will be filed later this evening. For the three months ending June 30, 2013, no revenue is reported, whereas, we recognize total revenue of $10.6 million in the second quarter of 2012. The year-over-year decrease is attributed to change of revenue recognition counting onto the expanding GSK collaboration and importantly does not impact cash.

Total operating expenses for the second quarter of 2013 totaled $16 million compared to $20 million in the second quarter of 2012. The year-over-year decrease was due to both lower research and development expenses, as well as reduced general and administrative expenses.

Moving down the P&L, we had a non-operating income of $656,000 in the second quarter of 2013 compared to $4,000 of non-operating income at the same time last year. The change in non-operating income is primarily due to a change in the valuation of a warrant liability, which is a noncash item.

Net loss attributable to common stockholders in the second quarter this year was $15.3 million compared to a net loss of $9.3 million in the second quarter of last year. Net loss per share of $0.31 in the second quarter of 2013 was wider than the net loss of $0.20 in the year-ago period. The wider net loss and net loss per share values versus the year-ago period is attributed to the change in revenue recognition under the GSK collaboration. As of June 30, 2013, we had 49.6 million shares outstanding.

While the recognition of payment under the expanded GSK collaboration has changed, there is no cash impact, and the mechanics of cost-sharing under the collaboration remain the same. GSK continues to reimburse us for the portion of our actual spend that exceeds our 40% obligation. Each quarter the deferred reimbursement balance on the liability side of our balance sheet increases by the amount of reimbursement that GSK pays Amicus for share development costs. Future milestones payable by Amicus to GSK will get applied against the balance of these deferred reimbursements.

To summarize is our key financials for the second quarter of 2013, as well as our full year 2013 guidance. More information on our financials will be available in the 10-Q, which again will be available online later this evening. I'm happy to answer any questions during the Q&A, but for now I'll turn it back to John.

Great. Thanks, Chip. So, pretty straightforward on the financials. And, again, the more judicious spend on our program while still continuing to invest appropriately to make sure that they move forward. Again, I'll just reiterate the themes that I started with, that we are increasingly excited about the potential to use the CHART platform to build these next generation ERTs beginning with this next co-administration study in Pompe. But I can tell you, as I spend a lot of time with our science organization that David leads, and I see the terrific results that we're having, and now looking forward to the first half of next year, when we're actually going to put our first of these next generation ERTs into the clinic, I think it's a great step forward for Amicus in our move toward becoming a biologics company. And I also think it's a great step forward professionally and personally in terms of new options for people living with these diseases.

That, together with our programs continuing to run well, although we spent quite a bit of time in the last few months talking about the regulatory complexities in the United States of moving Migalastat monotherapy program forward, the good news is that we continue to have very good retention of patients in those studies. And we will have very rich datasets that we hope to be able to build a compelling argument with the FDA with -- I'm sorry, the totality of all the data from all of our Fabry monotherapy studies, to able to bring that therapeutic option to people both in the United States and through our partners at GSK outside the United States. So, with that, Operator, I'm concluding my finishing comments here and we'll open it up to questions.

(Operator Instructions) Our first question comes from the line of Ritu Baral with Canaccord. My apologies, it seems they have removed themselves from the queue. Our next question comes from the line of Anupam Rama with JPMorgan. Your line is open.

Hi, guys. Can you hear me? Thanks for taking the questions. Can you talk about sort of the final steps here to get AT2220 into the repeat dose study in Pompe disease? I know that you're working with KOLs and everything. The prior guidance I think was 3Q, but there is a little bit of a change here that says second half of 2013.

And the second question, you guys are making good progress with the CHART platform. I guess the one program we haven't heard about today is the AT3375 in Parkinson's. Just wondering if we can get an update there as well. Thanks.

Yes. No, of course. So, everything remains on track with AT2220. I think we just wanted to broaden the guidance a little bit and key it not off the regulatory or IRB filings, but actually first patient treated. And that looks like it will be in the second half of this year, but that may well bleed into the fourth quarter. Again, we're working with some of the top academic centers and key opinion leaders that are well known in the Pompe community.

So, in terms of the work we need to do to move that forward, I think we're confident that we will be able to dose those patients. And, again, Anupam, it's an open label study. You'll have the protocols that we'll go through here shortly, not quite ready for public dissemination . But, again, a repeat dose study with a variety of patients at multiple sites, and being open label, we expect that data, again, to begin being made public in the first half of 2014.

And, again, we're looking to see, can we, with a repeat dose, change the profile of -- the pharmacokinetic profile of the enzyme replacement therapy? Can we alter it via distribution as well as other endpoints, including immunologic endpoints that we'll look at? So, it could be a very, very important proof-of-concept for us. We'll also be very informative in terms of development of our next-generation ERT, and understanding the IV characteristics of AT2220 will be very important in that co-formulation.

So, thankfully, everything remains on track. And I can tell you, the patient and certainly the patient and physician communities on Pompe remain extremely excited to participate and support these studies, and I think that speaks to the still unmet need in the Pompe world.

The AT3375, we have not talked about in a while. We continue to do quite a bit of preclinical work with AT3375 and other molecules in Parkinson's. We expect to have more of that data here in the second half of this year. And as we've said publicly before, there is significant partner interest around our Parkinson's program, and we continue to explore our options to partner that program as well.

Great. Thanks so much for taking my questions.

Our next question comes from the line of Ritu Baral with Canaccord. Your line is open.

Hi, guys. Sorry about that. We're having some technical issues and I may have missed this part of the call. But as you look at 2220 development going forward, what enzymes are you looking to do your investigations in combination with? Obviously, there may be alternate enzymes available for Pompe in the time period we could be looking at for marketing.

Yes, absolutely, Ritu. So, we plan this next study with the marketed products, Lumizyme/Myozyme. We do know, though, in working with a number of enzyme replacement products, including several in Pompe, GAA cell lines that the deficiencies are all the same. And, again, it goes to the fact that you're taking a lysosomal enzyme, infusing it into patients in their blood at a very high pH, when the enzyme product becomes very unstable, begins to unfold and aggregate, becomes less potent and less properly targeted. That phenomenon is common across frankly all of the enzyme replacement therapies in the lysosomal disorders that we've looked at, particularly problematic in Pompe given the high doses especially of those enzymes.

So, the initial studies will be with Myozyme/Lumizyme. We think co-administration could be developed with any product that we see in development in the Pompe world today to enhance the profile and potentially the safety and efficacy of those soon-to-be, potentially marketed products.

Just to add to that, though, with our co-formulated -- because we think that's going to be the greatest benefit for patients is an ERT that is co-formulated with that chaperone to keep it stable throughout the infusion process. And there we are developing our own proprietary ERT that not only incorporates the chaperone, but we're also looking at other ways in which we could improve upon current therapies, including other tools to reduce the immunogenicity of the proteins, as well as tools to enhance the targeting. And, again, remember, too, we're also looking to use the CHART platform to deliver these proteins in novel routes of administration, including subcutaneous route.

So, we're experimenting with a range of different ERTs, including ones that we are developing internally. As we've said publicly before, there is significant investor -- I'm sorry, partner interest in our Pompe platform in products, and we continue to look at other ERTs that we could potentially use as a backbone of the next-generation ERT product. And we haven't made any final decisions on whether it's a home-grown Amicus ERT or another product in development that we would choose to combine our technologies with and move forward. So, I think more to say on that in the quarter or two to come.

Got it. And any additional detail on your MPS1 product that you mentioned? What sort of timeline would we be looking at as far as it entering the clinic?

So, we're not yet giving guidance on the clinic. It's one that we've been working on for well over a year, Ritu. It began in the first half of 2012. That program in MPS1, it is an enzyme replacement therapy, a protein product that is proprietary to Amicus that David and his science team have developed. Again, it looks to combine a proprietary small molecule chaperone as stabilizer, again, trying to solve the common problems here in the LSD enzyme replacement field. But, again, we're also looking at other potential ways in which to improve upon the MPS1 enzyme.

I think Aldurazyme is an excellent first-generation product and has offered great benefit to many people living with MPS1. But I think we have the potential to develop the next-generation product that could also offer even greater benefits and potentially better safety profile.

So, that's what we're exploring. And I would expect throughout this year and early 2014 that we'll be able to share more about that program, including some of the preclinical results that we have yet to make public.

Got it. Was this enzyme one that you sort of -- you got rights from GSK, too?

No, this is an internal Amicus program. We developed this ourselves.

Internal. Great. Thanks for taking the question, guys.

Our next question comes from the line of Kim Lee with Janney Capital. Your line is open.

Good afternoon. Thanks for taking the questions. Two questions here. One, have you received the final minutes from your meeting with the FDA on the Migalastat monotherapy? And, if so, anything new from those minutes? And then, two, can you give us a better idea, if you can, on what this next -- the study design for the next Pompe disease study will look like?

Sure. Yes, absolutely, thank you. So, on the FDA minutes, we have received the final minutes and they are consistent with the guidance that we've given previously. So, no need to change what we've already updated in terms of our strategy of moving forward with data from all of our Fabry monotherapy studies.

In terms of Pompe, again, I think we can be more specific as the protocols are finalized and approved by IRBs. But, again, we're looking to see, can we stabilize the enzyme? Is the PK profile changed? We're going to look at the biodistribution of the enzyme to see, can we get more enzyme with the addition of the chaperone into muscle tissue? We're also going to look at several immunologic endpoints to see the impact on antibodies and other key markers of an immune response.

We are anticipating that the study would be in both ERT-experienced patients as well as ERT-naive patients. So, that's a general outline, and most likely a study that last somewhere around 12 to 16 weeks. But, again, that's all in final discussions with regulators and IRBs.

Okay, appreciate the color, thanks.

Yes, of course. Thank you. Let me just add, I'm sorry. I think that will be an important study, Kim, again, for proof-of-concept in various different patient populations with the repeat dosing. Also, of course, safety will be a very important part. We want to make sure we analyze the safety of the combination thoroughly, and we've got much of that built into the current protocols. I'm sorry, Operator, go ahead, please.

Our next question comes from the line of Joseph Schwartz with Leerink. Your line is open.

Great, thanks. I just wanted to ask, since it seems you have a lot of different irons in the fire now, what your current thoughts on partnering some of these earlier stage programs that you retain full rights to?

Yes, thank you, Joe. We continue to have active business development discussions. We've already talked about active interest in our Parkinson's program, and those discussions continue. We have also had partnership interest expressed both for the Pompe program as an individual program, as well as the potential for broader platform partnerships around the CHART technology.

The standard continues to be the same. If a partner can work with us to strengthen our balance sheet and to validate the technology, and in partnership can help us move the program together faster and better in a partnership than we can alone, if all those factors are satisfied, we'll be very open to a partnership. In every case, for the CHART platform, we want to retain significant rights for future commercial interests, including similar to what we already have with GSK. So, the option to retain US commercial rights would be very important to us in these next-generation ERTs, for instance.

Parkinson's, given at its earliest stage and in the neuroscience field the development of a Parkinson's drug is going to be lengthy and expensive, although we think this has the potential to be really ground-breaking work in the field, but we would be open to more creative commercial deals in that space. So, lots of these discussions going on and, again, ones that I think could have the potential to strengthen the balance sheet going forward.

Okay, great. I was just wondering if broadly speaking you can give us any insight into you strategy when developing these next-generation ERTs? Do they share the same type of enhancements? Do they have enhanced by [consolation] or linkers something else that you're bringing to bear to improve them?

Yes, great question, Joe. So, the problems are common, although to varying degrees with all of these ERTs, and we very much have customized solutions for each of the ERTs that we look at. In every case we are looking to add the CHART platform, the stabilizing small molecule to solve for many of the problems. Depending on other problems with ERTs, we're also looking at other tool sets. So, for instance, as you indicated, we're looking at enhanced glycosylation and targeting especially to the mannose 6-phosphate receptor, where that can be improved in proteins.

If certain proteins are more immunogenic, we're also looking, in addition to the application of the CHART platform, looking at certain epitopes that are known to elicit a more severe antibody response and seeing whether they could be modified or engineered in any way. We're also looking at subcutaneous delivery where that's appropriate, or could be a significant patient benefit.

But, again, we've got a broad range of tools to draw from including the core CHART platform, but in every case it's very specific to each of the ERTs. And I think in the months to come, as we talk a lot more about these programs, Joe, as they become very real for us, I think we'll have a lot more to say.

And then with that, I also think we continue on the other side of business development, to look very aggressively at other technologies that could be a complement to what we're already doing in the next-generation ERT space, from manufacturing technologies to protein engineering technologies as well, and targeting technologies.

So, again, the goal is to build the best next-generation ERTs that we can and to translate those as rapidly as possible into the clinic. And that's the course that we're on and I think, again, is going to be the great value driver for shareholders going forward and a platform that already with our Fabry 103 and our Pompe 010 studies already have demonstrated some initial proof-of-concepts with the whole notion of this combination approach.

So, it's something we're quite bullish on and hopefully will be reflected in our equity valuation going forward as we continue to develop these programs successfully.

Are there any special challenges when developing a -- regulatory-wise when you're developing a combination product given neither of the underlying agents has been FDA approved?

Yes, this is actually one of the great advantages, Joe, because to patients and to regulators, these are ERTs, these are next-generation ERTs. Our regulatory approach, still to be finalized for much of these, but the general strategy, registration strategies could well be that we don't have to show from a regulatory standpoint superiority, although there may be aspects of these studies that show superiority on certain profiles or parts of the indication. But we do think in terms of going forward that these are superior therapies, but, again, the regulatory path may be much more straightforward in that we don't have to show superiority.

So, the FDA and the European regulators we don't believe are going to view these as two separate drugs coming together; they're going to view it as an ERT that incorporates various tools, including the chaperones. So, I think that will make it a much more straightforward regulatory path.

Okay, great. Thanks very much.

Ladies and gentlemen, I'm not showing any further questions at this time. This concludes today's question-and-answer session and concludes today's program. Thank you for participating in today's conference. You may all disconnect. Everyone, have a great day.