Cranbury Aug 10, 2020 (Thomson StreetEvents) -- Edited Transcript of Amicus Therapeutics Inc earnings conference call or presentation Monday, August 10, 2020 at 12:30:00pm GMT

Amicus Therapeutics, Inc. - Director of IR

* Bradley L. Campbell

Amicus Therapeutics, Inc. - President, COO & Director

* Daphne E. Quimi

Amicus Therapeutics, Inc. - CFO

* Jeffrey P. Castelli

Amicus Therapeutics, Inc. - Chief Development Officer

* John F. Crowley

Amicus Therapeutics, Inc. - Chairman & CEO

* Debjit D. Chattopadhyay

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

Good morning, ladies and gentlemen, and welcome to the Amicus Therapeutics, Inc.'s Second Quarter 2020 Financial Results Conference Call and Webcast. (Operator Instructions) As a reminder, this conference call is being recorded.

I'd now like to turn the conference over to your host, Mr. Andrew Faughnan, Director of Investor Relations. You may begin.

Andrew Faughnan, Amicus Therapeutics, Inc. - Director of IR [2]

Good morning. Thank you for joining our conference call to discuss Amicus Therapeutics' second quarter 2020 financial results and corporate highlights.

Speaking on today's call, we have John Crowley, Chairman and Chief Executive Officer; Bradley Campbell, President and Chief Operating Officer; Daphne Quimi, Chief Financial Officer; and Dr. Jeff Castelli, Chief Development Officer.

As referenced on Slide 2, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our business as well as our plans and prospects. Our forward-looking statements should not be regarded as representation by us that any of our plans will be achieved. Any or all of the forward-looking statements made on this call may turn out to be wrong and can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. You are cautioned not to place undue reliance on any forward-looking statements, which speak only to the date hereof.

All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to revise or update this presentation and conference call to reflect events or circumstances after the date hereof. For a full discussion of such forward-looking statements and the risks and uncertainties that may impact them, we refer you to the forward-looking statements and Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2019, and the quarterly report on Form 10-Q for the quarter ended June 30, 2020, to be filed later today with the Securities and Exchange Commission.

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

John F. Crowley, Amicus Therapeutics, Inc. - Chairman & CEO [3]

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Great. Thank you, Andrew. Good morning, and welcome, everyone, to our second quarter 2020 results conference call.

As we did last quarter, let me start by stating that I hope everybody and their families are well and safe.

Our leadership team at Amicus continues to emphasize a range of programs and initiatives to protect and support our global workforce during this ongoing pandemic. While adapting to all of the changes brought about by the global pandemic, for Amicus, the first half of 2020 has been a period of excellent growth and execution across all aspects of our business, including science, clinical, regulatory, and as you see, our commercial effort, as we continue to build one of the next great global biotechnology companies poised to impact people around the world living with rare diseases.

As we did in this morning's press release, I'd like to highlight several key accomplishments. First, Galafold continues its strong launch performance and remains the cornerstone of our success. With $62.4 million in second quarter revenue, the Galafold launch continues to exceed expectations. Second quarter revenue represents the performance across the global business, including new patient starts from both switched and treatment-naive patients throughout the quarter in all major regions, including those hardest hit by COVID-19.

Second, our R&D time lines remain on track. We continue to expect the Phase III PROPEL study of AT-GAA in late-onset Pompe disease to read out in the first half of 2021. Additionally, the rolling BLA submission for AT-GAA remains on schedule, and we expect the first submission later this year. Within our gene therapy pipeline, we continue to move forward our lead Batten disease programs with CLN6 and CLN3 as well as our most advanced preclinical programs in gene therapy.

And third, following our strategic financing in July, Amicus' cash position is sufficient now to achieve profitability without the need for any future diluted financings.

Our continued revenue growth, prudent expense management and growth potential has allowed us to reach this important milestone of self-sustainability as we continue to realize our vision of delivering groundbreaking and potentially curative new medicines for people living with rare diseases around the world.

Turning now to Slide 4. We are well on track to achieve our 5 key strategic priorities for 2020, including, first, Galafold, our precision medicine for Fabry disease. We will continue to drive Galafold to more people living with Fabry disease with a minimal variance in existing and new markets around the world. We look to achieve global product revenue this year of $250 million to $260 million.

Second, we are increasing the clinical regulatory manufacturing and pre-commercial activities and planning surrounding our Pompe program for AT-GAA as we move this important therapy toward approval.

Third, again, we are advancing our industry-leading rare disease gene therapy portfolio. Standing from our new Global Research and Gene Therapy Center of Excellence in Philadelphia, we will be advancing the clinical development, manufacturing and regulatory discussions for both our CLN6 and CLN3 Batten programs.

Fourth, in addition, we are progressing our Pompe gene therapy towards IND, and we plan to disclose up to 2 additional IND candidates this year. A lot of work is underway with our manufacturing partners with the manufacture and scale-up of the Pompe gene therapy as well as our other potential IND candidates. So again, we look forward to sharing the additional IND candidates from our Penn collaboration later this year.

Just, again, we will continue to maintain a strong financial position as we carefully manage our expenses and our investments, and we remain fully funded now to profitability.

So with that, before I turn the call over to our team to provide more detail on the strong quarter, I just wanted to take a moment to acknowledge Dr. Ted Love's retirement from the Amicus Board of Directors. Ted, as many of you know, is a remarkable leader, a great friend of mine and a fierce advocate for innovation for patients. Now Ted and I will continue to work closely together as the Chair and Vice Chair of the Emerging Companies section, on the Bio Board, and I would very personally like to thank him for his nearly decade of service on our Board. He has helped to put Amicus in a much stronger position. So thank you, Ted.

So with that, let me turn the call now over to Bradley Campbell, our President and Chief Operating Officer, to further highlight the strong Galafold performance. Brad?

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Bradley L. Campbell, Amicus Therapeutics, Inc. - President, COO & Director [4]

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Great. Thanks, John. Good morning, everyone. As John mentioned, I'll now walk you through in more detail our Galafold performance for the quarter, and let me start on the continued growth of Galafold revenue in the second quarter of 2020 here on Slide 6. And this is where we give our global snapshot of the Galafold commercial progress.

For the second quarter, as John mentioned, total product revenue was $62.4 million, driven by strong patient demand, favorable reimbursement dynamics and business continuity even during the worst quarter of COVID so far. And importantly, our global compliance and adherence rates continue to exceed 90%.

The geographic breakdown of revenue during the quarter was $41.5 million or 67% of revenue generated outside the United States, and the remaining $20.8 million or 33% coming from within the United States. On a sequential basis, you'll note that ex-U. S., quarterly revenue did decline slightly from Q1 to Q2 due to the timing of orders. However, we continue to see strong growth in patients added during the second quarter, and that strength has continued now into the first month of Q3, so we expect to finish the year around 70-30 ex-U. S. to U.S. sales. And as a reminder, we have now over 4 countries around the world with regulatory approvals, and commercial sales now in over 30 of those countries. And this expanding global footprint is important not just to support the continued growth of patients with access to Galafold, but it really lays a strong foundation that is highly leverageable to support the potential launch of AT-GAA for Pompe and our future products as well.

One other interesting aspect of the expanding market access to Galafold, which is highlighted on this slide, and this is quite unique, is that we now have added over 1,000 additional amenable mutations to the European label. The previous 300 mutations were all associated with specific patients who have been identified with those mutations. These new mutations represent nearly all of the possible missense mutations in the GLA gene that are amenable to Galafold, as determined by our amenability assay. So if the physician now diagnoses a new patient with one of these mutations, they'll no longer have to wait for us to characterize the mutation and run it through the amenability assay, a process which previously could take several months. Now the physician can simply refer to the website and check the amenability of the mutation, and the patient can get immediate access to Galafold. Again, a really exciting application and a really unique application of the pharmacogenetic aspects of this medicine, and one that we're looking to apply to other geographies as well.

Turning now to Slide 7. We've had a very strong quarter even in the face of the COVID-19 pandemic. Our global supply chain remains fully intact. Our customers have great confidence that they can access Galafold, and our field team has been able to achieve a significant portion of their pre-COVID touch points through digital, telephonic and other means of interacting with their physicians. All of this has led to continued uptake with new patient starts all throughout the crisis in both switch and treatment-naive patients. Even in the hardest hit countries like the U.K., France, Italy, Spain, Japan, U.S. and many others, we are able to bring on patients to Galafold throughout the quarter.

And it's important to note that on a country-by-country basis, as local conditions allow, and in a very carefully prescribed manner, we're now allowing our field organization to go back out to visit their physicians and key accounts. We believe that these dynamics may continue to provide some tailwinds, even as the evolving global pandemic inevitably has caused some headwinds, which will continue to closely monitor as the full impact of the pandemic currently remains unknown.

From a numbers perspective, you can see that the second quarter sales increased 41% from second quarter 2019, which does include a 2% negative impact from foreign exchange. So from a true operational perspective, sales increased by 43% compared to last year.

On the left-hand side, we show our quarterly performance over the past several quarters. And as we've mentioned on previous calls, while we continue to expect strong growth quarter-to-quarter, due to a variety of factors, the rate of growth is typically nonlinear. Looking to the back half of the year, as we've seen in many years past, we expect a higher quarter-on-quarter growth in Q4 as compared to Q3, which means we expect a larger portion of the revenue in the second half of the year will fall into the fourth quarter. But overall, as we've just finished the 7th month of the year, here in July, we continue to be very confident in our guidance of $250 million to $260 million in full year global sales.

Now on Slide 8, with several years of performance behind us and now launched at most major markets around the world, we can confidently say we are on a path to that $500 million of sales opportunity in 2023.

As I've outlined previously, to get to that $500 million, we expect a 5-year average CAGR of about 40% from 2018 to 2023, and we expect to generate $1 billion in cumulative revenue between 2020 and 2022 alone, which goes a long way towards funding our R&D and OpEx over that period.

We also have even further confidence now in the $1 billion revenue opportunity at peak as we continue to see significant growth in the Fabry market globally, driven by continued diagnosis from high-risk screening, newborn screening and other diagnostic initiatives, in addition to penetration into the diagnosed untreated population.

As we have orphan exclusivity in the U.S. and Europe, in addition to our multiple orange book-listed patents that give us IP coverage into the late 2030s, so we have lots of opportunity to provide access to Galafold for a long period to come.

With that, let me hand the call now over to Dr. Jeff Castelli, our Chief Development Officer, who will further highlight our lead pipeline programs. Jeff?

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Jeffrey P. Castelli, Amicus Therapeutics, Inc. - Chief Development Officer [5]

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Yes. Thanks, Bradley, and good morning, everyone.

Moving on to our R&D updates on Slide 10. We wanted to remind everyone of our highly differentiated Pompe therapy, AT-GAA, and its mechanism of action. AT-GAA is our novel next-generation therapy consisting of ATB 200 or alglucosidase alfa, an investigational human recombinant GAA enzyme designed to target muscle cells throughout the body, administered via IV infusions, combined with AT2221, an orally administered enzyme stabilizer. AT2221 is administered shortly before the infusion of ATB200 begins and is intended to bind and stabilize ATB200 in circulation, allowing more active enzyme to be taken up into cells and deliver to lysosomes. The combination of ERT and enzyme stabilizer is one major distinction from the standard of care and other treatments in development for Pompe.

The other and, we believe, potentially more impactful distinction is the unique carbohydrate profile of the enzyme itself. Dr. Hung Do, our Chief Science Officer, and his team have been working over the past decade to develop a Pompe ERT, which improved binding the target receptors for efficient uptake in the cells, while importantly retaining the ability of the ERT to be processed by those cells after it's taken up to the mature, more active form of GAA.

With that in mind, and now turning to Slide 11, we would like to highlight a recent publication in the Molecular Therapy - Methods & Clinical Development journal, where Dr. Nina Raben's team at the National Institute of Health published findings from an independent preclinical study, building upon previous work with AT-GAA that showed additional improvements with longer-term treatment to knock out mice. The studies show that AT-GAA was successful in completely reversing excess glycogen simulation, restoring muscle strength and significantly improving a cascade of secondary abnormality. Including the elimination or reduction of autophagic buildup in muscle fibers, improvements in markers of lysosomal damage and in cell signaling. These are particularly exciting findings as these impacts have not been observed in previously disclosed studies.

Finally, on Slide 12, we want to remind everyone of the integrity of our Pompe Phase III PROPEL clinical trial. We reiterate that steady time lines remain on track, with data expected in the first half of '20 -- I think first half of 2021. To date, more than 97% of the 2,800 plus planned infusions and off-study assessments for the ongoing PROPEL study have been completed on schedule. Additionally, we continue to enroll patients in our pediatric studies and advanced manufacturing to support a 2021 BLA and MAA.

We want to express thanks to all Pompe clinical study participants and their families, to all our investigators and their staff and to our cross-functional Amicus Pompe team for their collective unwavering commitment and supportive efforts during this unprecedented time.

Moving on now to Slides 14 and 15. I'll briefly highlight here our industry-leading portfolio of gene therapies for rare diseases. During this time of COVID, we've been able to maintain our critical science and lead programs across the gene therapy portfolio, including CLN6 and CLN3 Batten disease as well as the Pompe and Fabry gene therapy programs with University of Pennsylvania.

Starting with our Batten disease franchise in CLN6, we previously reported positive interim data in our clinical study that demonstrates meaningful impact of our AAV gene therapy in this extremely devastating form of Batten disease. In October, at the virtual Child Neurology Society Annual Meeting, we're expecting additional data from the CLN6 Phase I/II study. We continue to advance regulatory discussions to finalize the clinical and regulatory path, and expect to provide an update in early 2021.

We believe this initial CLN6 data provide an important readthrough for our clinical study in CLN3 Batten disease, which is the most common form of childhood neuro generation. We plan to report initial data from the ongoing Phase I/II CLN3 study early next year based on scheduling changes for some of the major gene therapy conferences. Concurrent with the data, early next year, we will provide the expected regulatory path for the CLN3 program.

We continue to make great progress in all of our commercial manufacturing process for both CLN6 and CLN3, and we remain on track to begin dosing additional patients in both of these programs next year.

Moving on to Slide 16. I would like to remind everyone of the research collaboration with the University of Pennsylvania, which will be an important driver of growth for Amicus in the future. This collaboration with the Wilson Lab at Penn combines Amicus' protein engineering and glycobiology expertise with Penn's gene transfer technologies and expertise to deliver novel gene therapies that are designed for optimal cellular uptake, targeting, dosing, safety and manufacturability. As part of this collaboration, Amicus has rights to over 50 different diseases, in addition to the active ongoing preclinical programs.

Several Amicus presentations were given at the American Society of Gene & Cell Therapy Annual Meeting back in the second quarter. This data was highlighted by our Pompe gene therapy results, which showed the Amicus engineered GAA protein had improved targeting and clearance of glycogen storage in Pompe diseased minds. Additionally, preliminary data in nonhuman primates suggested therapeutically relevant expression levels in target organ, which is a key factor as we move to larger species.

We remain very encouraged by this data and continue to progress our Pompe gene therapy towards an IND. We also continue to make progress across our preclinical gene therapy programs and look to disclose up to 2 additional IND candidates later this year.

With that, I would like now to turn the call over to Daphne to review our financial results, guidance and outlook. Daphne?

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Daphne E. Quimi, Amicus Therapeutics, Inc. - CFO [6]

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Thank you, Jeff, and good morning, everyone.

Our financial overview begins on Slide 18 with our income statement for the quarter ended June 30, 2020.

For the second quarter, we achieved Galafold revenue of $62.4 million, which is a 41% increase over the second quarter of 2019. This includes year-over-year operational revenue growth measured at constant currency exchange rates of 43%, offset by a negative currency impact of 2%. Cost of goods sold as a percentage of net sales was 10.8% in the second quarter as compared to 12.1% for the prior year period. Cost of goods sold as a percent of revenue was favorable as Galafold revenue continues to grow in the United States, where we do not owe royalties; as well as in other countries, where we are subject to lower royalties.

Total operating expenses were $107 million in the second quarter of 2020, which decreased as compared to $115.2 million in the second quarter of 2019. On a non-GAAP basis, total operating expenses were $95.9 million in the second quarter of 2020 as compared to $103.6 million in the second quarter of 2019. The decrease in research and development costs reflects decreased travel and third-party costs, offset by continued investments to support the PROPEL study and in our gene therapy pipeline.

Our investment in research and development includes the impact of the implementation of the cost reduction measures that were previously announced, as does the decrease in selling, general and administrative expenses.

Due to the timing of expenses, the non-GAAP operating expense is expected to increase in the third quarter of 2020 as compared to the second quarter of 2020. We define non-GAAP operating expense as research and development and SG&A expenses, excluding share-based compensation, changes in fair value of contingent consideration and depreciation.

Net loss for the second quarter was $52.5 million or $0.20 per share as compared to net loss of $84.6 million or $0.36 per share for the prior year period. As of June 30, 2020, we had approximately 257 million shares outstanding.

Turning now to Slide 19. As John mentioned, following our $400 million senior secured term loan facility, we are now on a clear path to profitability without the need for any future dilutive financing. As we initially laid out last year at our Analyst Day, we have achieved this milestone by our continued revenue growth with Galafold as well as driving efficiencies, cost savings and careful expense management. Securing this financing with market setting turns gives us a strong financial platform to advance both patient and Amicus shareholder interest. Going forward, again, to emphasize, we expect total non-GAAP operating expenses in 2020 to remain relatively flat from 2019 as we, first, leverage the commercial infrastructure that is already in place for the AT-GAA launch and other products in our pipeline; secondly, we transitioned the costs associated with the development of AT-GAA to multiple gene therapy programs in our pipeline; and third, maintain financial discipline while meeting our objective.

To reiterate, all high priority research programs in gene therapy are moving ahead on schedule, especially in CLN3, CLN6, Pompe and Fabry, and we continue to fully support the work with Jim Wilson and Penn.

A few comments about our cash position and 2020 financial guidance. Cash, cash equivalents and marketable securities were $309.6 million at June 30, 2020 compared to $452.7 million at December 31, 2019. Following the receipt of net proceeds from the July debt facility and retiring the prior term loan of $150 million, Amicus has a cash position of over $530 million as of July 31. We are reaffirming our full year Galafold revenue guidance of $250 million to $260 million in addition to our non-GAAP operating expense guidance of $410 million to $420 million.

And with that, let me turn the call back to John for closing remarks.

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John F. Crowley, Amicus Therapeutics, Inc. - Chairman & CEO [7]

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Great. Thank you, Daphne, Jeff and Bradley.

So as you can see, we have been relentlessly focused on performance across the business despite all of the unprecedented change and challenges that have been brought about by the global pandemic. We have a great global team of passionate entrepreneurs at Amicus, who have led and will continue to lead us through this. I am confident that as the world emerges from this crisis, Amicus will emerge even stronger.

So with that, operator, we're happy to take any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question comes from the line of Anupam Rama from JPMorgan.

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Anupam Rama, JPMorgan Chase & Co, Research Division - VP and Analyst [2]

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Just a quick question on the PROPEL study. For those small number of patients, who did not get an on-time infusion -- schedule an infusion, do these patients ultimately get an infusion outside of the window? Or was it just a skip infusion, and then they got the next one?

Link:
Edited Transcript of FOLD earnings conference call or presentation 10-Aug-20 12:30pm GMT - Yahoo Finance

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