Amicus Therapeutics, Inc (NASDAQ:FOLD)
Q2 2013 Earnings Conference Call
August 7, 2013 5:00 pm ET
Sara Pellegrino - Director, IR
John Crowley - Chairman & CEO
Chip Baird - CFO
Bradley Campbell - Chief Business Officer
David Lockhart - Chief Scientific Officer
Anupam Rama - JPMorgan
Ritu Baral - Canaccord
Kim Lee - Janney Capital
Joe Schwartz - Leerink
Good day, ladies and gentlemen. And welcome to the Amicus Therapeutics Second Quarter 2013 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator instructions)
As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Ms. Sara 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 and 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 this 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 or 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 Sara. 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 Advance Replacement Therapy platform, the combination of small molecules stabilizer chaperone together with next generation enzyme replacement products.
Secondly is that we remain committed to advancing migalastat as a monotherapy for Fabry patients with minimal 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 program and you will see as Chip gets into it a little bit that we have reduced our full-year 2013 net cash spent guidance and we expect our cash position to this quarter operating plan into the fourth quarter of 2014. So a very judicious spent of resources.
The agenda for today’s call, we will go through a highlight of some of our key programs with both the CHART technology as well as an update on the U.S. registration strategy for migalastat monotherapy. I will then turn it over to Chip for an overview of the second quarter 2013 financial results and our full year net cash and 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 are going to begin with a combination programs and I’m going to take them in order of the development stage. So beginning with the Pompe co-administration study. Again, this is with our proprietary pharmacological Chaperone, our designated drug AT2220. It’s 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 or 010 study which was a single dose co-administered AT2220 plus Myozyme/Lumizyme and as we saw earlier this year that showed the increased up take of Pompe enzyme 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 product and we are 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’s, JR-051, those two molecules put together in combination again with the chaperone design combined to and stabilized, the infused alpha-Gal A enzyme independent to the patient’s mutation.
We think that this next generation ERT co-formulated approach as 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 of clinical study to investigate migalastat co-formulated with that JR-051 proprietary ERT.
We remain on track through 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 the co-formulated proprietary enzyme replacement products. We think that this part of our portfolio that Fabry next generation ERT together with the Pompe and MPS1 next generation enzyme therapies that we are 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 real life lysosomal disorders.
Again, our short programs combine our proprietary enzyme co-formulated with novel pharmacological chaperone as next generation therapies for the lysosomal disorders.
In Pompe disease our next generation ERT consist 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 are doing is leveraging CHART platform to engineer a better GAA enzyme that we believe can make better – that we can make better still with the addition of our chaperone as a stabilizer. And this together with the Fabry co-formed product and the MPS co-formed next generation ERT, again, we think, will be the cornerstones of our success going forward and build upon the early successes that patients in the last decade or two have had with first generation enzyme replacement therapy. And that fits in with our paradigm of developing better ERTs for patients.
We also have an MPS1 program we announced in June that we received grant from an anonymous U.S. based private donor in support of our proprietary recombinant IVUA enzyme or MPS1 enzyme, which we intend to co-formulate with the novel pharmacological chaperone again as a next generation therapy for patients livings with MPS1.
Based on a positive review of the initial results of this private donor that took place just over the last week or so, we have been allocated a second phase of this funding, as reminder, we are eligible to receive a total up to $250,000 in grant funding for this 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 a minimal mutation. We do believe that migalastat works and we think it works very well in patients for whom it is candid and we’ve seen these positive effects now for many years.
Our goal going forward is to build the best data set 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 I data from study 011. We expect that the affect seen with the drug to be persistent and durable.
We think that the 12-month data together with the additional statistical analysis 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.
All that based on feedback which we have 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 with 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 from migalastat to be an important new treatment option for the Fabry patients where so much unmet medical need still exist.
So, with that summary, I’ll turn it over to Chip to take this through the financial including the updated guidance on our spent.
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 spent in the first half 2013.
We currently expect full year 2013 net cash spent total between $47 million and $53 million compared to previous net cash spent 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 cost from migalastat for Fabry disease in 2013 and beyond. We expect the current cash position along with the anticipated GSK reimbursements to fund our current operating plan into the fourth quarter of 2014.
Our reduction in net cash spent guidance reflects lower than anticipated cash spent during the first half of 2013 as well as adjustments to our budgets for the remainder of the year. We remain committed to carefully managing our cash position to efficiently advance the program.
Turning to second quarter financial results, I will be referring to tables one and two at the end of the press release, which we issued earlier today. Additional details can be found in our quarterly report on Form-Q which will be filed later this evening.
For the three months ending June 30, 2013, no revenue was reported and total revenue of $10.6 million in the second quarter of 2012. The year-over-year decrease is attributed to change in revenue recognition counting under the expanded GSK collaboration and importantly does not impact cash.
Total operating expense 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 was 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 account liability which is a non-cash item.
Net loss attributable to common stockholders in the second quarter of 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 to 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 payments under the expenditures (inaudible) 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 spent that exceeds our 40% obligation. Each quarter the deferred reimbursement balance for the liability in 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 (inaudible) the balance of these deferred reimbursements.
This summarizes 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 this evening. I am happy to answer any questions during the Q&A, but for now, I turn it back to John.
Great, thanks Chip. So pretty straight forward on the financials and again, the more judicious spent on our program, while still continuing to invest appropriately to make sure that they move forward. Again, I will just reiterate the things that I started with, we are increasingly excited about the potential to use the CHART platform to build these next generation ERT 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 lead and I see the terrific results that we are having and now looking forward to the first half of next year when we are 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 moving the 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 data sets that we hope to be able to build the compelling argument with the FDA, with the – I’m sorry the totality of all the data from all of our Fabry monotherapy studies to be able to bring that therapeutic option to people both in the United States since we are partners at GSK outside the United States.
So with that operator, I’m concluding my finishing comments here. And we will open it up for questions.
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.
Anupam Rama - JPMorgan
Hi, guys. Can you hear me?
Yes. Anupam, how are you?
Anupam Rama - JPMorgan
How are you? Thanks for taking the questions. Can just talk about sort of the final steps here to get AT2220 into the repeat dose study in Pompe disease, I know that you are working with KOL and everything. The prior guidance I think was 3Q, but there is a little bit of a change here that is second half of 2013.
And the second question, you guys are making good progress on the – with the CHART platform, I guess the one program, which I haven’t heard about today is the AT3375 and Parkinson’s just wondering if we can get an update there as well? Thanks.
Yes. Of course, so everything remains on track with AT2220, I think we just want to broaden the guidance a little bit (inaudible) also regulatory IRB filings but actually first patient treated and that looks like it will in the second half of this year. But that may well bleed into the fourth quarter. Again, we are 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 move that forward, I think we are confident that we will be able to dose those patients. And again, on a – it’s an open label study, we will have the protocol that will 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 being made public in the first half of 2014.
And again, we are looking to see, can we with the repeat dose change the profile of the pharmacokinetic profile of the enzyme replacement therapy. Can we also by via distribution as well as other endpoint including immunologic endpoint that we will look at. So, could be very, very important proof of concept for us. We will 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 certainty the patient and physician community in 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 have 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.
Anupam Rama - JPMorgan
Great. Thanks so much for taking my questions.
Our next question comes from the line of Ritu Baral with Canaccord. Your line is open.
Ritu Baral - Canaccord
Hi, guys. Sorry about that 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 maybe alternate enzymes available for Pompe in the time period we could be looking at for marketing?
Yes, absolutely Ritu. So we planned 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 there is also the fact that you are taking a lysosomal enzyme, infusing it into patients in their blood that are very high pH with the enzyme product becomes very unstable begins to unfold and aggregate becomes less potent and less properly targeted. That phenomenon is common across – quite frankly all of the enzyme replacement therapies and the lysosomal disorders that we have looked at particularly problematic in Pompe given the high doses of specialty 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 potential of the safety and efficacy of those marketed or soon to be potentially marketed projects.
Just add to that though with our co-formulated -- we think that’s going to be the greatest benefit for patients and ERT that’s 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 are also looking at other ways in which we could we could improve on current therapies including other tools to reduce the immunogenicity of the protein as well as tool to enhance the targeting and again remember two, we are also looking to use a CHART platform to deliver these proteins and novel routes of administration including subcutaneous rep.
So we are experimenting with a range of different ERTs including one that we are developing internally as we’ve said again probably before there is significant investor, I am sorry partner interest in our Pompe platform and products and we continue to look at other ERTs that we could potentially use as a backbone of the next genertation ERT product and we haven’t made any final decisions on whether it’s a home (versus) ERT or another product in development that we would choose to combine our technologies with a move forward. So I think more to say on that in the quarter two to come.
Ritu Baral - Canaccord
Got it. Any additional details on your MPS1 product that you mentioned. One, what sort of timeline we would be looking at as far as it entering the clinic?
So we are not yet giving guidance on the clinic its one that we have 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 our David and his science teams has developed. Again, it looks to combine a proprietary small molecule chaperone as a stabilizer again trying to solve the common problems here in the LSD enzyme replacement field.
But again, we are 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 are exploring and I would expect throughout this year and early 2014 that we will be able to share more about that program including some of the preclinical results that we are yet to make public.
Ritu Baral - Canaccord
Got it. With this enzyme one that you sort of -- you got rights from GSK too?
No, this is internal Amicus program, we develop this ourselves.
Ritu Baral - Canaccord
Great. Thanks for taking the question guys.
Absolutely, thanks Ritu.
Our next question comes from the line of Kim Lee with Janney Capital. Your line is open.
Kim Lee - Janney Capital
Good afternoon. Thanks for taking the question. Two questions here, one have you received the final minutes from your Type C meeting with the FDA on migalastat monotherapy, if so anything new from those minutes? And then two, can you give us a better idea if you can on what does 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 a 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 has the PK profile changed, we’re going to look at the bio distribution 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 end points to see the impact on antibodies and other key markers of an immuno response. We are anticipating that the study would be in both ERT experienced patients as well as ERT naïve patients. So, that’s a general outline and most likely the study that last somewhere around 12 to 16 weeks, but again, in final discussions with regulators and IRBs.
Kim Lee - Janney Capital
Okay, appreciate the color, thanks.
Yes, of course, thank you. It will be important, let me just add, I’m sorry. I think that will be an important study (inaudible) for proof of concept in various different patient population 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 build 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.
Joe Schwartz - Leerink
Great, thanks. I just want to ask since you (inaudible) what your current thoughts on partnering some of these early stage programs that you retain full rights to or?
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 Fabry -- I’m sorry the Pompe program is an individual program as well as the potential for a 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 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 will be very opened to a partnership in every case for the CHART platform, we want to retain significant rights for future commercial interest including similar to what we’ve already have with GSK. So, the option to retain U.S. commercial rights would be very important to us in these next generation ERTs for instance.
Parkinson’s given that its earlier stage in the neuroscience field the development of a Parkinson’s drug is going to be a lengthy and expensive although we think this has the potential to be really ground breaking work in the field that would be opened to a more accretive, a commercial deals in that space. So, a lot of these discussions going on and again, one that I think that and have the potential for strengthen the balance sheet going forward.
Joe Schwartz - Leerink
Okay, great. I was just wondering broadly speaking, you can give us any insight into your strategy when developers make next generation ERTs, do they share the same type of enhancements, do they have enhanced by translation or lingers or something else that you’re bringing there to improve them?
Yes, great question, Joe. The problems are common although to varying degrees with all of the 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 but stabilizing the small molecule to solve for many of the problems. Depending on other problems of the ERTs, we’re also looking at other tool set.
So, for instance as you’ve indicated we’re looking at enhanced (inaudible) and targeting especially to the mannose-6-phosphate receptor, well, that can be improved in proteins, if certain proteins are more immunogenic, we’re also looking an addition of the application of the CHART platform, looking at certain epitopes that are known to be -- known to (inaudible) more severe antibody response and seeing whether they can be modified or engineered in anyway.
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 its very specific to each of the ERTs. And I think in the months to comes as we talk a lot more about these program, Joe, as they will 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 for 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 clinical and that said of course they were on and I think again it’s going to be the greatest value driver for shareholders going forward and the platform that already with our Fabry 013 and our Pompe 010 studies already demonstrated from initial proof of concept with the whole notion of this combination approach. So, it’s something we are quite bullish on and hopefully it will be reflected in our equity valuation going forward as we continue to develop this program successfully.
Joe Schwartz - Leerink
Are there any special challenges when developing a regulatory wise when you’re developing a combination product given neither of the underlying agent has been FDA approved?
Yes, this is actually one of the great advantages here because to patients and to regulators, these are ERTs, these are next generation ERTs. Our regulatory approach still to be finalized for much of this, 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 aspect 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 maybe much more straight forward that we don’t have to show superiority. So the FDA and the European regulators, we don’t believe they are going to view these as two separate drugs coming together. They are going to view it as a new ERT that incorporates various tools including the chaperone. So, I think that will make it a much more straight forward regulatory path.
Joe Schwartz - Leerink
Okay, great. Thanks very much.
Yes. You bet.
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.
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