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Amicus Therapeutics, Inc. (NASDAQ:FOLD)

Q4 2013 Earnings Conference Call

March 03, 2014 5:00 PM ET

Executives

Sara Pellegrino – Associate Director-Investor Relations

John F. Crowley – Chairman and Chief Executive Officer

William D. Baird, III – Chief Financial Officer

Analysts

Ritu Baral – Canaccord Genuity

Anupam Rama – JPMorgan Securities LLC

Joseph P. Schwartz – Leerink Partners LLC

Operator

Good day, ladies and gentlemen, and welcome to the Amicus Therapeutics Full Year 2013 Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session, and instructions will be given at that time. (Operator instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference, Ms. Sara Pellegrino, Director, Investor Relations. You may begin.

Sara Pellegrino

Good evening and thank you for joining our conference call to discuss Amicus Therapeutics full year 2013 financial results. This 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, cash runway 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,” “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, 2013 to be filed later today. All forward-looking statements are qualified in their entirety by this cautionary statement and Amicus undertakes no obligation to revise or update this conference call 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.

John F. Crowley

Great. Thanks, Sara. Good evening, everybody, and welcome to the conference call to review our full year 2013 financial results and also to provide a few program updates. Let me begin with a couple of key themes to highlight as we’ve been doing since the beginning of the year at the JPMorgan conference and now into March.

So first I’ll highlight that during 2013, we took a number of steps, especially in the fourth of the year to strengthen our biologics business strategy. Those included the acquisition of Callidus Biopharma, which brought to us a number of novel technologies as well as our more advanced Pompe program and the leadership of Dr. Hung Do as our Senior Vice President now of Discovery Biology here at Amicus.

We continue to strengthen the team. I think you saw hopefully the press release earlier today announcing the recent promotion of Bradley Campbell to our Chief Operating Officer. Brad has been with us since 2006 and he has served in a number of roles of increasing significance to Amicus and we certainly look forward Brad’s continued leadership.

And we’re also very pleased to welcome Dr. Jay Barth, who is with us this evening on the call as well as our new Chief Medical Officer here at Amicus. Dr. Barth comes to us most recently from another great rare disease company, PTC Therapeutics where he served as Senior Vice President of Clinical Research. Jay, welcome.

Another key theme during the year was the emphasis on the CHART and enzyme targeting technologies, CHART of course our Chaperone-Advanced Replacement Therapy. The notion that will use small molecules to enhance enzyme activity and increase enzyme uptake into tissues, which we think could also potentially address the tolerability and the immunogenicity associated with the current ERTs on the market.

We think, beginning this year in 2014, that we’re strongly positioned and well capitalized to execute on our 3-in-3 strategy in biologics and that’s advancing three next-generation ERTs into the clinic in the next three years with lead programs in Fabry, Pompe and MPS I.

Finally, we continue to remain optimistic about and committed towards advancing migalastat as a monotherapy for Fabry disease for patients with amenable mutation. In this 2014 will be a very data rich year in that program as well and I’ll have more to comment on that here shortly in the program updates.

Let me talk a little about this 3-in-3 strategy and begin with Pompe disease. Pompe is now a key focus of our company and much of our activities are geared towards the development of this next enzyme replacement therapy for people with Pompe. We still believe that there is a significant unmet need for patients and we see principally three major challenges with currently marketed products for Pompe disease.

First has to do with the lack of activity and stability of the enzyme. Second problem is one of tolerability and immunogenicity. And the third problem is one of uptake and targeting. We believe those first two problems can be addressed with the addition of a small molecule binding at the active side of the enzyme product as we do with our CHART technology and today our proprietary small molecule, AT2220 in that formulation to address the activity/stability and tolerability/immunogenicity issues.

With the new cell line that we have from our acquisition of Callidus in the fourth quarter, we also think we have an enzyme that has been uniquely engineered in its carbohydrate structure to significantly enhance the uptake in targeting of that enzyme to the mannose 6-phosphate receptor. We are also using the Callidus core technology of the addition of a peptide marker, which we think is very distinguish from any other approaches in the field to further enhance the uptake to that receptor as well.

You saw at the WORLD conference in San Diego just a few weeks ago, the first public presentation of our next generation Pompe ERT, which we’re designating AT-B200 with and without the peptide tagging technology, again this one of the problems that we had to solve for is not just the addition of high levels of mannose-6-phosphate from CHO cell produced enzyme, but also making sure the other carbohydrates attached to that structure have the right uptake mechanism and targeting mechanism, and we think we have that with this Callidus generated enzyme that even without the peptide tag within cells and in-vitro setting shows significantly enhanced uptake compared to existing products, and also that we thing has the potential with the addition of a tag to further increased that activity.

So, compared to the current standard of care we can continue to advance, we think has the potential to be a much improved therapies for patients with Pompe disease. We have a lot of work ahead of us this year that drug as we’ve talked about previously has completed its master cell banking, its with a contract manufacturer that relationship was inherited with the Callidus acquisition, it is a world class manufacturer with quite a significant team now working on this scale up and manufacture of that enzyme.

So, it’s in its advanced preclinical phase we both continue to have throughout this year and what we hope will be further proof of concept data to support the use of this next generation protein into people living with Pompe disease in the clinic in 2015.

Secondly our most advanced next generation enzyme replacement product is in Fabry disease that is in combination with an ERT migalastat HCl or small molecule Chaperone is designed again to remind everybody to bind to and stabilize the infused enzyme. Independent of a patients genetic mutation, so while we believe that if you do have a response mutation that a monotheraphy is more appropriate approach, we do believe that this next generation enzyme therapy would be appropriate for all patients with Fabry disease, if they would say chose. So we have established initially human proof of concept in our prior Phase 2 study at migalastat with the marketed enzyme Fabrazyme and Replagal.

The preclinical CHART proof-of-concept co-formulated with a JCR enzyme and that was again inherited with our relationship through GSK, We’ve shown preclinical proof-of-concept that significantly enhanced enzyme uptake in greater reduction of the GL-3 substrate in key tissues at diseases. We believe that the positive results from these clinical and preclinical studies demonstrate that the increased activity of enzyme in plasma and the greater enzyme uptake in tissues in the presence of the Chaperone compares very favorably to anyone of these ERTs alone.

I’ll just highlight specifically from our PR that was released a short while ago, you will note that in the first half of 2014, we plan to conduct a Phase 1 study to assess the pharmacokinetics of an intravenous formulation of migalastat in healthy volunteers, with this we expect to identify the optimal dose for co-formulation with the ERT very importantly.

In the second half of this year, we expect to initiate a Phase I, II study to evaluate. This new generation ERT, that’s migalastat co-formulated with JR-051 a proprietary enzyme replacement product for Fabray. We’re also currently evaluating our longer term strategy for supplying later stage clinical and commercial ERT which may include developing or in licensing a recombinant alpha-Gal enzyme is comparable to JR-051.

Finally, our third program that continues to run a very well is our MPS I program that continues to advance a proprietary recombinant human IDUA enzyme, the protein deficient in people living with little Hurler shape syndrome, MPS 1. As a reminder we are eligible to continue to receive up to a total of $400 million in grant funding for this program, so these are our three programs and I expect you a lot much more throughout the year to continue to stay at those program advance but we expect again, our Fabray next generation ERT into patients with Fabray in the second half of 2014. Our Pompe next generation ERT into Pompe patient in 2015 and we do expect some time in 2016 for MPS I program to advance enter the clinic.

Before I turn it over to Chip for our financial summary, let me talk just a little about our migalastat monotherapy program. Again, we remain committed to the further development of migalastat as a monotherapy for people with Fabry disease, who have the amenable mutations. We believe that migalastat works and we think it actually works very well in patients for whom it is intended. We’ve seen these positive effects in our long-term extension studies, in our Interim stage 1 we are 6-month data in our Phase 3 study, Study 011, and I’ll highlight where we are in patients dispositions to-date, which had a total of 137 patients in various studies over the last 8 years he was taken migalastat as a monotheraphy. As we sit here today we have 97 patients on migalastat as their only treatment for Fabry disease.

Total patient years on therapy are 330 with no drug related SAE’s. We’ve had at something on therapy for now eight year and most significantly I will highlight this disposition figure, and that’s the retention rate into next study for celebrate patients with migalastat monotherapy is 94%. So our job here is to build the best data set that we can to support approval. We very much look forward to the 12 and 24 data, that they will be the complete data set from study 001 in the second quarter of this year will remain fully on track for that. We think our Study 001 data together. Study 012 will be an important of our global registration strategy, and we think, very importantly responses to the FDA request for the totality of the data from both studies to consider for approval in the United States.

Data from Study 012, which again is a switch study, comparing migalastat to enzyme replacement therapy, is on track for data in the second half of 2014 and that study continues to go extremely well for us. So hopefully you’ll see, in migalastat monotherapy, we continue to be bullish. We do think it’s an important option that we want to see for people with these amenable mutations in Fabry and it will be very much data-driven over the next couple of quarters.

So with that strategic overview and program assessment, let me turn it over to Chip, to talk about our financials.

William D. Baird, III

Great. Thanks, John and good evening, everyone. I’ll start today’s financial discussion with a few comments about our current cash position and guidance for 2014. As indicated in this afternoon’s press release, Amicus continues to maintain a strong balance sheet. At December 2013, we had $82 million in cash and cash equivalents and that’s compare to $99.1 million at the end of 2012.

Our balance sheet was strengthened in the fourth quarter of 2013 with a $15 million equity financing and a $25 million debt financing, under which we drew $15 million in December. $10 million of that debt finance remains available through the end of 2014.

As guided at the JPMorgan conference at the beginning of the year, we expect full year 2014 net cash spend to total between $54 million and $59 million. We expect our current cash position to fund our operating plan into the second half of 2015.

So turning now to our full year 2013 financial results, I’ll be referring tables 1 and 2 in the press release, which we issued earlier today and additional details can be found in our Annual Report on Form 10-Okay, which should be filed later at this evening.

Total operating expenses for full year 2013 were $64.5 million, which represents about 10% decrease as compared to the $71.3 million in operating expenses for 2012. The year-over-year decrease was primarily due to decreases in clinical development costs on the Fabry monotherapy program. Despite the decreases in operating expenses, the GAAP defined net loss for 2013 was $59.6 million compared to a net loss of $48.8 million in the full year 2012.

Net loss per share of $1.16 in full year 2013 was wider than the net loss of $1.07 per share in the full year 2012. The wider net loss and net loss per share versus 2012 is due to the change in revenue recognition in GSK collaboration. When you look at our net cash spend for 2013 that was $47.1 million, which comes in at the low end of guide range of $47 million to $53 million for the year. Finally, as of December 31, 2013, we had $62 million shares outstanding.

This summarizes our key financials for the full year 2013 as well as our full year 2014 guidance. More information on our financials will be available in the 10-K, which as I said, will be available this evening, I’ll be happy to answer any questions during the Q&A session, but for now we’ll turn the call back to John.

John F. Crowley

Great. Thanks Chip. So hopefully everybody gets a sense at a top level at least to some of the key program activities and consistent with what we’ve been saying since the beginning of the year. And I think with all the change that we thought in 2013, especially in that fourth quarter of 2013, where for the company it was very much a strategic repositioning and strengthening of the business in a lot of different respects; program, technology, people and financial.

I think it positions us well this year as a chance to, in the first quarter, kind of settle and communicate and from the second quarter on we expect to be able to communicate an increasing amount of data, not just from the migalastat monotherapy program, but from our next-generation biologics program as we look forward to the first of those entering the clinic in the second half of this year. Again, with the whole notion that with the biologics, our job is to make products that will be distinct from what’s currently available to patients and we think by addressing the three significant problems that we see broadly in the ERTs, most notably in Pompe, that we can have a profound difference in patients’ lives and we think also continue to build a great business.

So with that, operator, we’re happy to take any question.

Question-and-Answer-Session

Operator

(Operator Instructions) Our first question comes from the line of Ritu Baral of Canaccord. Your line is open.

Ritu Baral – Canaccord Genuity

Hi, guys. Thanks for taking the question. I wanted to sort of review with you guys some of the interesting stuff that came out of the WORLD conference, especially in regards to the Pompe’s program. Could you give us just a little more detail on sort of the differential chemistry and bioactivity that you’re expecting from AT-B200 and the variant IGF-2 tag?

John F. Crowley

So, Ritu, just so I’m clear, you like us to explain a little bit more of the difference in like constellation structure?

Ritu Baral – Canaccord Genuity

Yes, and the binding as well. Yes.

John F. Crowley

Our Chief Science Officers aren’t here today. So we’ll have to follow-up with you on some of the specific technical information. But I think broadly to understand that what we have now with the Callidus’ Pompe enzyme is an enzyme that’s fully active as the Lumizyme or the other products are, but the first distinction is in the carbohydrates. And again, a clone was specifically developed and selected where it has not only a much higher level of mannose-6-phosphate, but also the other carbohydrates, and remember there are seven glycans that decorate the Pompe ERT. And the mix of complex carbohydrates there, we think, not only encourages uptake with the additional mannose-6-phosphate to the M6P receptor, it also reduces the off-target affects of having for instance, high levels of mannose derivative, which are specifically avoided.

So the basic glycosylation is significantly improved from we believe in the current product. When you then add, peptide tag you are enhancing the uptake through the shared mannose 6-phosphate, IGF2 receptor. And very importantly and distinct from other products we believe that peptide does not have an affinity for the IGF1 receptor, it is also does not have a high affinity for the Insulin receptor. So we think not only does it encourage that are un-targeted effects and uptake it actually avoid or it could be complicating all target effects as well.

Ritu Baral – Canaccord Genuity

That’s very helpful and it’s actually what I was hoping for clarity on. And then another thing that you guys had at WORLD, was the new GLP assay or detecting amenable mutations for migalastat versus the first generation assay. Can you tell us a little bit more about the evolution of that and how that might impact the data coming out of the European study later this year?

John F. Crowley

Yes, so this was a transfer from our internal scientist who have developed the assay characterize the responsiveness of the people mutations for people in Fabry disease. We think it’s a very sophisticated assay here, and we used it as we transfer from 011 to 012 studies and as a result as we’ve shown in Study 011, I believe there is 14 of the 60 patients ended-up having what would be categorized now as non-responsive mutations. Although, we have fairly had some other patients, who were non-response we now believe our responses.

So, that can found that the data a little bit and that’s the difference for instance when we show the presentation with GL-3 burden in the self-site on the continuous variable. If you cut it buy amenable mutation that’s where we actually saw a high degree of physical significance of 0.002. For our Study 012 that assay was largely in placed for the enrollment and as a result we only had four patients; two in each of the arms, migalastat and the ERT arms, who had non- amenable mutation, and in fact the proposed SAP for that study have already excludes the patients even though we think, we have a very, very small affects on the outcome.

Is that answer question in the queue?

Ritu Baral – Canaccord Genuity

Yes, all right, great thanks for taking the question, that’s helpful.

John F. Crowley

Sure.

Operator

(Operator Instructions) Our next question comes from the line of Anupam Rama of JPMorgan. Your line is open.

Anupam Rama – JPMorgan Securities LLC

Hey guys, thanks for taking the question. Just for the Callidus Pompe ERT, if I remember from the WORLD presentation, there were couple of next steps sort of listed and you’ve briefly mentioned this in your opening comments, but at the presentation you had included sort of longer dosing combination with chaperone sort of next free clinical stuffs, if you could kind of walk us through, what you think the most important next steps are for that, before you get into the clinic, thanks?

John F. Crowley

Sure, and still we do have a series of pre-clinical experiment that are now sort of beginning that will readout internally in the second and third quarters. We are looking at various combinations within the announced peptides for instance with different chaperone together with the AT2220, so it is a very, very significant study and it will just build-on the already established group of concept. We’ve seen this repeatedly in several years now with preclinical studies, but the existing ERT therapies.

And we would expect to continue to see that as we’ve already seen, and as Dr. Joe presented at the WORLD’s conference with now our own proprietary enzyme AT-B200. So we have those preclinical activities as one of the work stream separate from that we have all the manufacturing work that’s ongoing, that includes the work to continue to scale the base enzyme the AT-B200 together with the work on manufacturing the peptide as well and related formulation work.

The third work stream would be once all those are in place in the back half of this year, we would expect to begin the toxicology studies as well. So, I think those are the three gating factors, additional preclinical studies to further enhance our knowledge especially around dosing.

Secondly, the continued success in manufacturing that we’ve seen and scale up, and third the execution of the toxicology studies, which we have every reason to be believe will be favorable for us, which will allow the IMB in 2015.

Anupam Rama – JPMorgan Securities LLC

Great, thanks for taking our questions.

Operator

Thank you. And our next question comes from the line of Joseph Schwartz of Leerink Partners. Your line is open.

Joseph P. Schwartz – Leerink Partners LLC

Hi, thanks very much. So, I was wondering, if you could talk a little bit the Phase I study for migalastat and the Fabrazyme I wasn’t exact, clear what the next steps were. And then I thought I heard you talk about maybe in licensing out there ERT for those patients. So, can you help me understand what the strategy is there?

John F. Crowley

Yeah. Sure Joe, so what we are doing is we’ve made in IV formulation of migalastat and what this will allow us to do is to actually have fewer arms in the next generation ERT study. And the goal here is to have a specific locked on dose. We know very well the pharmacokinetic profile of migalastat as an oral administration. We know pre-clinically what it looks like in NIV administration and this is to continue that into patients. I am sorry actually healthy volunteers in this Phase I study.

So, that’s the principle purpose of what we are doing with the Phase I study. And again I think that hopefully the language in the press release is pretty clear that this is kind of allow us to identify the optimal dose for co-formulation. So, and it doesn’t delay it all the timeline. So, we are able to take that and then very much put it in the final formulation of the ERT.

So, we expect again to begin that Phase I, II study in patients and that said, fixed dose in migalastat co-formulated with JR-051. We’re working on protocols, we are not yet ready to describe what that study is going to look like. But we’re also now with value ratings as we’ve talk through over sometime now is our relationship with GSK is evolved that rather than using the JR-051 cell line, we are looking at up more optimized cell lines in other alternatives.

So, basically taking our – what would be our commercial ERT and seeing if we get it pull that back into our Phase III study. So, that we don’t have to do any switches we scale up to the commercial scale. Hopefully it’s a positive developments of the program and I think forward look like I think it’s a smarter way to do biologic/development these days.

Joseph P. Schwartz – Leerink Partners LLC

Okay, that does makes sense. Thanks for the clarity. And then could I actually ask about MPS I. Given what would you think sort of the unmet medical needs in this disease, which has physical as well as CNS components, is there reason to believe that or what you think, is the opportunity for a chaperone-enhanced product there? Thanks.

John F. Crowley

Yes, exactly. So I think if you look at what the chaperone in the CHART platform can do, it can increase activity and stability of an enzyme and it can enhance tolerability and reduce potential immunogenicity and that’s exactly what we’re experimenting with right now, Joe. So we’re looking at various ways in which we can de-immunize the enzyme and increase its activity. I think the BioMarin product has been a good first-generation approach for people with Hurler and particularly Hurler-Scheie Syndrome and we’re looking to see if we can advance that. I believe that enzyme does have black-box warning. So if we can make an enzyme that’s better tolerated for patients and more active and better taken up into target tissues, I’m hopeful that it could have a better clinical outcome for patients.

Joseph P. Schwartz – Leerink Partners LLC

Okay, great. Thanks very much.

John F. Crowley

Sure, Joe. Thank you.

Operator

Thank you. And I’m showing no further questions at this time. I’d like to turn it back over to John for closing remarks.

John F. Crowley

Great. Operator, thank you. I have nothing further. This has been a very straightforward call. I think you will have a much more detailed call in the quarters to come as these programs advance. So thanks for listening. Have a good night.

Operator

Ladies and gentlemen, thank you for participating on today’s conference. This does conclude the program. You may all disconnect. Everyone have a great day.

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