Amicus Therapeutics, Inc. (FOLD) Q2 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Amicus Therapeutics second quarter 2012 results conference call. At this time, all participants are in a listen-only mode and later, we will conduct a question and answer session and instructions will be given at that time. (Operator instructions). This call is being recorded. I would now like to introduce your host for today's conference, Sara Pelligrino. Now you may begin.

Good afternoon and thank you for joining our conference call to discuss our second quarter 2012 financial results. Speaking on today's call we have John Crowley, our Chairman and Chief Executive Officer, Bradley Campbell, our Chief Business Officer, David Lockhart, our Chief Scientific Officer, and Chip Baird, our Chief Financial Officer. They are all available to participate in the Q&A session, as well. Pol Boudes, our Chief Medical Officer, is on vacation this week. Today's prepared remarks coincide with the slide presentation that is now available on our corporate website at www.amicusrx.com. The slides are located in the Investors section under Events and Presentations right below the webcast link. On Slide 2, we have a reference to forward-looking statements in this conference within the meaning of the Private Securities 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' candidate drug products, the projected cash position for the company. Words such as but not limited to , 'believe', '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 31, 2011 and other other filings with the 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, Chairman and Chief Executive Officer of Amicus.

Great, thank you, Sara. Good evening, everybody, and as Sara indicated, we will be using the slides that are up and available to everybody on the call. We got feedback after our last conference call that that was very helpful and hopefully that will be a format that we will continue to follow here at Amicus. So with that in mind, I'll reference Slide number 3 to begin just to give you a sense of the agenda for this call. I will provide an overview of some of the general Amicus corporate highlights, go through that together with the Fabry program. I'll then turn it over to Brad Campbell, who will take us through the highlights of the Chaperone-ERT Program highlights. Chip Baird, our Chief Financial Officer, will go through the 2Q 2012 financial results together with updated guidance for full year 2012 and then I'll take the call back for some concluding remark. So if I can draw your attention now to Slide 4, I'll just provide a couple of updates on Q2 highlights including the very recent development that you've seen in the press release that we sent out just about an hour ago based on a very recent and very positive type-C meeting interaction with the FDA which we think is going to bode very well for this program, so we'll provide some more update and color on that. But just generally with our Phase 3 Program, we're happy to report that in the second quarter, we completed the six month primary treatment arm and again remember that the study 011, our Phase 3 study for US approval, it's a randomized placebo-controlled study again with a six-month double-blind primary treatment period and then if you'll recall, a six-month open label follow-up period. We are updating our patient…

Great, thanks, John, and good evening, everybody. So as John stated, our vision is to use the Chaperone-ERT combination platform to create better therapies for patients with the lysosomal storage disorders along with continuum of innovation which is outlined for you on Slide 9. So we're really focused on solving these broader issues with ERTs to address the unmet need that are still unique to each LSD and our top priority is to improve efficacy and potentially reduce the immunogenicity by combining ERTs with our specific pharmacological Chaperones. So the first step here has been our Chaperone-ERT co-administration work where we've already demonstrated positive preliminary results from Phase 2 studies in both Fabry and Pompe and the next step along the continuum is the direct combination of our Chaperone's co-formulated with proprietary next generation ERTs which we're already doing in Fabry and I'll touch on a little bit later and as John mentioned, we've already begun to explore in Pompe and other LSDs, as well. So the overall goal here for both co-administration and co-formulation is to stabilize the enzyme, keep it in its active form, and increase the uptake of active enzyme into key tissues of disease In the case of co-administration, the Chaperone is orally administered just prior to ERT to bind to and stabilize the ERT in circulation. With co-formulation, the Chaperone is combined with the enzyme to keep it stable from the beginning. So now let me go into a little bit more detail on how we've been validating this platform. For each of our Chaperone-ERT programs, Slide 10, I'll go through a little bit more detail on both the Fabry Study 013 and the Pompe Study 010. So just a reminder, while our model therapy studies are investigating an oral every other day dosing regimen…

Hello, everybody. I'm going to introduce you quickly to a new type of assay that we're using to look at the immunogenicity of Myozyme and Lumizyme and it can also be used for other protein therapeutics, as well. We had done previously studies in animals and of course, there's the issue of using a human therapeutic protein in animals to try to assess immunogenicity and there are shortcoming to that sort of approach. So instead, to complement the animal work, we're using a new type of assay that looks at a T-cell response in cells derived from human beings with different HLA types and we are also supplementing a panel of 50 cell lines derived from healthy bone tiers with a set of cell lines derived also from Pompe patients. And so as you look at the graph, this assay has previously been used to look at existing human therapeutics and what is found is that the clinical immunogenicity on the X-axis that the percentage of patients who received these different drugs that developed antibodies and then on the Y-axis is the output from the Episcreen assay which measures the T-cell response in terms of proliferation of T-cells and the cytokine secretion profile. And you can see on this plot that overall, there is a good correlation between what's observed in the (inaudible) assay using human cells from outside the body and the antibodies that are actually seen when patients are given the different drugs and some of the drugs here you'll recognize, Rocephin, Avastin, Interferon Alpha and Beta and so on. So the correlation with other human therapeutics has been good so we decided to use this assay also with Myozyme and Lumizyme and later with other LSD ERTs as well and you can see that what we've seen so far is that we are seeing that Myozyme illicit a strong T-cell response consistent with the high antibody response that is seen in many Pompe patients And we will be able to correlate this T-cell response with the HLA type with the observed IgG titer, the antibody titer, that's seen in the patient, and also with the GAA genotype and we'll be able to see which of these things are predictive of a response, of an antibody response to positive ERT and most importantly, which of these things can be reduced in the presence of AT2220. And the preliminary results are already looking promising. That was with a smaller panel of cells. We're now using the full 50 healthy volunteer panel and then, as I said, we're supplementing that with a unique panel that we've derived from the patients in our Pompe clinical studies. So more of these data will – we'll have more of these data in Q3 and also be presenting these data at various scientific conferences. So this looks very, very promising so far.

If I could just bring your attention to Slide 12 here before I hand it back to David to review a little bit of data, this is a high-level slide but we really want to make sure that we highlight our expanded relationship with GSK and their partner, JCR. Remember, JCR is a Japanese biologics company with over 20 years' of developing and commercializing recombinant proteins and as part of this expanded relationship, we now have the ability to develop our co-formulated Chaperone-ERT product which is moving rapidly through pre-clinical development. We're not going to spend a lot of time here because we covered this in good detail when we announced the extended collaboration earlier. However, let's now turn to Slide 13 and just provide you a quick reminder of why we're so excited about the development of migalastat co-formulated with JR-051 as a proprietary next generation ERT and again, I'll turn it over to David to review the data.

I'll do this very quickly because we showed these data at the last – on our last conference call but these data show that when Fabry mice – these are Fabry knock-out mice – when they are treated with a single administration of JR-051 co-formulated with migalastat with a 30-minute infusion, so mimicking the infusion situation that is followed with for Fabry patients. We've been able to measure an increase in the circulating half-life, which we've shown before. We've been able to measure increases in uptake of the enzyme and the key tissue, which we've shown before, and what's shown here is the reduction in the storage material GL-3 in both the heart and the kidney. So if you look at the darker blue bars, you can see that if you just give 1 mg/kg or a medium dose of JR-051, compare that to what's seen with FibraZyme, there is a reduction in both the heart and the kidney. If you do exactly the same experiment but with JR-051 co-formulated with migalastat, you can see the light blue bar next to it that there is a significantly greater reduction in the amount of GL-3 and again, this is only after a single co-formulated infusion. OK, so that looks very promising. Clearly the small molecule is making it so that there is more activity from the enzyme and there's more activity where it matters and in a way that matters, namely in the heart and kidney and that it results in a reduction in the storage material and as in lysosomal storage diseases, the main job of the therapy is to reduce the storage material. If you go to the right, we figured that it would be possible to do even better by giving more of the enzymes, not just stopping…

Great, onto Brad?

Thanks, so let me just close up the program update section by saying that we are extremely pleased with the progress we've made and encouraged by the data that we've generated so far and the goal now is to really look to rapidly advance the co-formulated Chaperone-ERT products as the next generation therapy along with continued innovation. So with that, let me turn the call over to our Chief Financial Officer, Chip Baird, who will review the financial results for the fourth quarter – excuse me, for the second quarter and full year 2012. Chip?

Great, thanks, Bradley, and good afternoon, everyone. I'll start on Slide 14 by reviewing our second quarter 2012 financial results for the three months ending June 30, 2012. Alternatively, these results appear in Table 1 of the press release we issued early today and additional details can be found in our 10-Q to be filed later on today. So for the quarter, total revenue was $10.7 million compared to $4.0 million in the prior period. Our total revenue consists of research revenue and collaboration milestone revenue recognized under our collaboration with GSK for migalastat. Research revenue for the second quarter 2012 was $5.5 million up from $2.4 million in the year ago period. That increase is due to higher reimbursement rate from GSK for shared development costs for migalastat which was 50% in 2011 and 75% here in 2012. As a reminder, each quarter GSK reimburses us for a portion of our actual spending fees or obligations. Amicus and GSK reconcile each parties (inaudible) in migalastat program on a quarterly basis to ensure that the costs are shared in accordance with the arrangement. Onto the arrangement, research earning is expected to fluctuate quarter-to-quarter relative to the proportion of total migalastat expenses and a percentage we're responsible for paying under the arrangement. Moving on to collaboration and milestone revenue for the second quarter of 2012 was $5.2 million compared to $1.7 million in the year ago period. This was primarily based on milestone revenue of $3.5 million recognized during the second quarter of 2012. Collaboration revenue in both periods reflected the recognized portion of the $33.2 million up-front payment received from GSK upon signing the agreement back in 2010. This up-front payment is being recognized on a straight-line basis. Total operating expenses in the second quarter of 2012 were $20 million,…

Thanks Chip and Brad and David before you. So hopefully you get the sense that a lot of activity remains at Amicus. On Slide 16, I'll just summarize some of the key activities. The check marks that you see in Fabry Pompe indicate the milestones we've already delivered on and again, to summarize for the Study 011, it is a change in guidance from Q3 to Q4. However, it's based on the encouraging type-C guidance that we received from US FDA and again, this will allow the last patient to complete the six-month follow-up period study and will allow us to collect that complete data for all 63 patients prior to the unblinding. So we think this will provide for an even more robust data set and further increase the likelihood of a successful NDA filing. Again, we remain extremely encouraged now that we've completed the primary six-month treatment period and have seen 100% conversion, 63 of 63 patients completing the primary six-month period moving now into the voluntary six-month extension arm. So all of this taken together we think is a positive for Amicus. We like the FDA's indication that it will consider efficacy as well as safety data at both the six and 12-month period. We think all of this is a great example, too, of our strong working relationship in our Fabry program with our partners at GSK. We will look forward to all the data that will come in Fabry, very encouraging, and likewise in Pompe, that program combination study moves forward together with the results on the immunogenicity studies that David highlighted for us, as well. So with that, operator, we're happy to take questions.

Thank you, sir. (Operator instructions). And our first question comes from the line of Anupam Rama with JP Morgan. Your line is open.

Hey, guys, thanks for taking the question. In your type-C meeting with FDA, did you have a chance to share any of the Phase 2 extension data and if you did, to what extent did those data have influence in the FDA accepting 12-month safety and efficacy endpoints?

Well, we certainly kept the FDA up-to-date, Anupam, on all of the data that we had collected in that extension study. It's been made public, of course, so it was available to FDA. I think that is one piece of the puzzle. Certainly from a safety standpoint, the drug continues to have an excellent side effect profile and in terms of the encouraging trends that we've seen in kidney and renal function, we think that's very positive, as well. We think, too, that while we're very confident in hitting the primary endpoint and seeing the appropriate P-value compared to placebo at the six-month endpoint, we do know from our Phase 2 studies that at 12 months, you saw an even further GL-3 clearance in the patients who remained on migalastat. So that taken together leads us to believe that it could be an even more robust data set at 12 months that could enhance the whole NDA package and hopefully make it a smoother NDA process. So for all of those reasons together with GSK, we thought it a wise investment to wait a couple of months on the unblinding.

And did you talk to any physicians about sort of the advantages of having a 12-month safety efficacy data in the label and what marketing indications this may have?

We haven't yet discussed that with physicians in designing that (inaudible). We did get significant feedback from physicians that six months would be an appropriate period compared to placebo to see a change. Obviously more data over longer period of time we think will give further confidence to physicians in prescribing this drug. So certainly we think it could also not only enhance the NDA but our ability to effectively compete against other products in the marketplace.

Cool. Thanks for taking my question.

Hey, you bet.

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

Hi, guys. Thank you for taking the question. Forgive me if I dropped off for a second because of the signal, but can you comment on whether the FDA might accept positive statistically significant (inaudible) as a provable endpoint (inaudible) miss the trend (inaudible)? What was your sort of general impression on that scenario from your discussion?

You cut out a little bit there, Ritu, I think. Let me just rephrase it and make sure I heard the question correctly. I think you were saying that if we were to miss the physical significance, the P-value at six months versus placebo, would the FDA consider filing on the efficacy data at 12 months at which point, of course, all of that is going to include data for people who have all been on drug. Is that the question?

(Inaudible).

Yes, you cut out again but I think that's what your question is so...

Yes.

OK, good, good, so that's very much – and that's the primary rationale while we are waiting for unblinding and why we think it's very encouraging, the feedback from the FDA on this type-C guidance that they would consider approval endpoints based on the six-month data and then presumably if we were to miss it at six months that they would consider the totality of the data and the full package based on 12-month efficacy. So that's why we're very encouraged by the feedback and why we are taking a couple of months extra to unblind the study to make sure that the data has the highest degree of integrity possible, for instance, preventing any potential for bias in the analysis period from the unblinding to last patient out of the 12-month period.

Ritu, this is David, if I could just add that it's – the assessment is always based on the totality of the data. The nice thing about having the data at 12 months is that for roughly half of the patients, then we will have data at both six and 12 months and then for the other half of the patients who've been on placebo for the first six months, we will have six-month treatment data for them. So the data package at 12 months is substantially larger and as people who believe that the drug actually does what it's supposed to do, that we believe that that works in our favor.

So again, we're encouraged by this. I think it is an expression of enhanced flexibility from the FDA that I think comports with the spirit and letter of the new guidelines you're seeing (inaudible) regarding innovations and rare diseases and accelerating approvals in rare diseases. So we again think it's very encouraging.

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

Oh, hi, thank you. I was just wondering if we can continue on that line of thought and maybe you could expand a little bit on why do you think the FDA is now focused on 12 months versus six months and what was different in those meetings versus your prior interactions with the FDA?

And just to be clear, it's not that the FDA (inaudible) six months. The FDA is still very interested in the six month (inaudible). Joe, you might want to mute your phone. I'm just getting some feedback there for others. To be very clear about this, the FDA has not said that they will look only at 12-month efficacy for approval. It's that they will consider both the six-month and the 12-month. So to Ritu's prior question, to frame it that if for some reason we didn't reach statistical significance for six months, that we would also have a fuller data package in 12 months. So I think that's a very, very important – that's why it's such an added advantaged we believe and why we think it weighs heavily in favor of holding off a few months on the unblinding so that we can continue with a full data package to those 63 patients.

Yes, and remember the primary efficacy endpoint should still be effective six months during the placebo period. That is the primary efficacy endpoint.

So what John is saying, what the FDA was saying is that there is a more complete data package at 12. Typically the FDA likes to see safety data for chronic disease treatment. They like to see safety data for 12 months, so that's something we had always expected. But the primary efficacy end point, so the six-month data, you can think of the 12-month data as being supportive, secondary and then of course there will be the full 12 months of safety data across all the patients.

So again, it will be a very robust data set that we'll have.

OK, great. That's helpful. Thank you for the clarification. And so could you explain to us a little bit more about why GSK returned the US rights to (inaudible) and now how you'll be addressing the commercialization there given that's still not too far away?

Well, again, to be clear, they didn't return the US rights. This was a comprehensive extension of our deal, Joe, where they bought up their equity in the company, of course, investing another nearly $20 million in the equity investment. We agreed to advance the next generation proprietary ERT. They contributed the ERT to that collaboration. We contributed the chaperone component. And we did acquire the US rights in the expanded collaboration here and, again, the rationale is that there was significant value. We did give up our rights to milestones and royalties, so very significant value that was exchanged here as well. And in addition, throughout the relationship in the last 1.5 years, I think GSK has grown increasingly confident in Amicus' ability to utilize our experience in scientific and medical affairs and patient efficacy to lay a foundation for the commercial infrastructure and again, with that, give Amicus independence of pricing in the United States. So for all of those reasons, I think it made very, very strong strategic sense, certainly for GSK as well as for Amicus to extend and expand the collaboration. Does that answer the question, Joe?

Yes, I think that's very helpful, thank you. And just one more, if I could ask another, and that would be could you remind us of your patent – your path position on migalastat and are you planning on expanding beyond those that have been granted? For example, could you patent the pharmacogenomics lookup table and at what point in this patent process would that add to the lifecycle?

Sure, so we have issued patents around the method and use of pharmacological chaperones that we've talked about here. Those are issued from what we licensed from Mount Sinai with further extensions that will take us into the early 2020s on that. In addition, we have the protections, the orphan drug laws in the United States of seven years of exclusivity. We do have manufacturing patents around the process and scale up that are pending. We've also filed certain other patent applications that we believe have the potential to further extend beyond the method and use patents that we would have. We are also looking to, for instance – what you indicated, Joe, the pharmacogenetic lookup table, other unique aspects that were unintended or unforeseen as we began the research that we think could be incorporated into the label that could significantly enhance the intellectual property of the programs. But typically, oftentimes in these orphan spaces you just see the protections of the Orphan Drug Act. We think we have that and quite a bit more, so we've built a very significant series of patents and a strong patent strategy around the program, not just in Fabry but broadly for what we're working on here.

So two other pieces – this is Brad – two other pieces of color there. In addition to what John mentioned, we're also – have also found dosing and administration patents that go later into the 2020s, 2027 and 2028. And remember, too, through combination therapy that extends the patent license as well. So for example, coformulation patents, which we're filing now, we expect to take us at least to 2033, so a significant patent portfolio built around the monotherapy first and then extending out all the way into the 2030s.

It would seem as if you've added a lot to the art. So that's good to hear. OK, thank you.

We spend a lot of time and a lot of money, quite frankly, on patents and development and patent (inaudible).

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

Good afternoon. Thanks for taking the question. I just wanted to delve a little more into your conversations with the FDA. And can you give us a little more color on who actually suggested the 12-month efficacy and safety data? Now was it the FDA who brought that up or you brought that up? And who – and what do you think the FDA saw in your data set so far that would lead them to possibly want to see 12-month efficacy data? Thanks.

Yes, again, to be clear, we and GSK, everybody remain completely blinded to the O11 study. So the FDA didn't see anything in that. What the FDA has seen is the long-term extension study data that continues to have encouraging trends in renal function, together with all the histological measures. They've of course, looked at the Blitz methodology and the recent Bitz publication. The FDA and GSK and Amicus I think were very pleased with the low dropout rate in the study and the high conversion past the primary end point which is at six months and remains at six months in the study and saw the ability to get a very robust data set because of that high 100% conversion rate in patients in that second six-month period, so a full year of data. I think all of that taken together – we've always expected that we would have some added data at 12 months certainly for safety purposes but actually now being able to look to six months and/or 12-month efficacy for approval we think is a great benefit for this program, especially since we didn't have to wait a full six months further for unblinding. It is just a couple months delay in unblinding. Does that makes sense, Kim?

Yes, no, I appreciate the clarify. And if I may, one last question for (inaudible). Can you tell us – you've given the weighted average common shares outstanding. Can you give us the exact shares outstanding for this Q2?

Yes, at the end of 2Q is 46.3 million shares outstanding.

Great, thanks.

Sure.

Thank you. This does conclude our question-and-answer session. I'd like to turn it back to management for any closing remarks.

Great, thank you, Operator, and I think that was a good call and hopefully a lot of updates and some added color and hopefully even more confidence in our lease program and monotherapy for Fabry disease and also hopefully folks get the sense that all of the technology and programs at Amicus continue to progress together with a very strong balance sheet. So we're excited about the second half of the year and very excited to see more and more data in all of these programs. So it'll be a busy five months coming up. Great, have a good day.

Thank you, ladies and gentlemen, for attending today's conference. This does conclude the call. You all may disconnect and have a good day.

Great, thank you.