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Amicus Therapeutics Inc. (NASDAQ:FOLD)

Amicus Agreement with GSK Call

October 29, 2010 08:30 am ET

Executives

Jenene Thomas - IR

John Crowley - Chairman & CEO

Matt Patterson - COO

Analysts

Ritu Baral - Canaccord

Geoff Meacham - JPMorgan

Greg Wade - Wedbush

Joseph Schwartz - Leerink Swann

Operator

Good morning and welcome to Amicus conference call and webcast today. My name is Alison and I will be your conference facilitator today. All lines have been placed on mute to prevent any background noise. After Amicus’s remarks there will be a question-and-answer session period. (Operator Instructions) I would now like to turn the call over to Jenene Thomas, Director of Investor Relations.

Jenene Thomas

Good morning and thank you for joining our conference call to discuss our exclusive worldwide agreement with GSK to develop and commercialize Amigal for Fabry Disease. I am joined on this call by members of our executive team include John Crowley, our Chairman and CEO; Matt Patterson our Chief Operating Officer; David Lockhart our Chief Scientific Officer; Pol Boudes, Chief Medical Officer and Daphne Quimi, our Corporate Controller.

Before I turn the call over to John I have to remind you of the following. This conference call contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to the business operations and financial condition of Amicus including but not limited to preclinical and clinical development of Amicus’s candidate drug products, the timing and reporting of results from preclinical studies and clinical trials evaluating Amicus’s drug products candidate and the projected cash position for the company including achievement of development and commercialization milestone payments and sales royalties under out collaboration with GlaxoSmithKline and business development and other transactional activities.

Words such as; but not limited to, look forward to, believe, expect, anticipate, estimate, intend, likely should, incur and similar expressions or words identify forward-looking statements. Although Amicus believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions there can no be assurance that this expectations will be realized. Actual results could differ materially from those projected in Amicus’s 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, 2009.

Amicus does not undertake any obligations to publicly update any forward-looking statements through such 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 Mr. John Crowley, Chairman and CEO of Amicus Therapeutics.

John Crowley

Great. Thanks Jenene, and welcome all, good morning. These are the days when its good to be a Biotech CEO. Let me begin by just reading a couple of bullet points from the Amicus vision statement that we developed about five years ago and most of us came to this company and I think it will help us frame that the context and background for this field. We wrote at that time that we believe we must constantly build momentum in the fight against human genetic diseases. We seek to deliver the highest quality therapies for persons afflicted with these diseases. We support the disease communities and their families. We are passionate about what we do and we embrace constant innovation. This is a time when we look back on innovation and the work that we've done over the last many years in Amicus and with the risk taking involvement, innovation and the nature of developing cutting edge technologies, it also means that the other side of risk taking, sharing and the reward. We think that this deal here with our new partners at GlaxoSmithKline GSK is both positive and transformational for Amicus and our shareholders and especially for the people who we're developing medicines for.

Let me lay out for you the four fundamental reasons why we think this deal was positive and transformational. At first you think it’s a strong validation of our pharmacological chaperone technology, which is a technology we believe will promise for many rare diseases. Secondly, we think that this deal will enhance the likelihood of the clinical success of Amigal and hopefully its commercial success as well by leveraging the extensive resources and experience GSK in manufacturing regulatory affairs, clinical and commercial operation. The third we think there is a very strong strategic component of this deal. We think this collaboration with GSK will firmly position Amicus as a leader in research and development of technologies and products for rare diseases a leader in the field of rare disease drug development we think that this deal also will enable us to judiciously drive our pipeline and also to opportunistically seek products that we think we will complimentary in development.

Fourthly we think there is a very strong added financial component to this deal and the financial strength that it gives Amicus. With this deal we believe we have cash resources to fund our operations and capital investments at least through the approval, the US approval of Amigal and we will give more detailed financial guidance on our quarterly earnings call in a couple of weeks. Let me comment briefly before I turn it over to Mat Patterson to just go through it at a high level the terms of the deal.

Let me just comment briefly on why GFK is the right partner for Amicus and at this time. This was a very competitive process, there were multiple parties in discussions and multiple opportunities we evaluated broadly with similar economics at the end of the day. However with GFK we think that there are a number of reasons why it is a good strategic fit for Amicus. First we believe with GFK we share a common vision for developing new treatments for rare diseases and this strategic fit was very important part for the deal for us. Secondly GFK has extremely impressive global clinical and regulatory and commercial expertise and for this reason as well we think they will be a strong partner for us. Thirdly GFK of course has tremendous scientific expertise and I could tell you the rigor that they put into the due diligence process both on the science side as well as the clinical manufacturing and other related activities in drug development were extremely impressive to us. Also fourthly that GSK has a very strong commitment to the rare diseases. Many of you may have seen a little over a week ago GSK issued a press release where they outlined their approach to delivering advancements in the treatment of rare diseases noting the establishment this year of a discrete rare disease business unit headed by Mark a member of their corporate executive team who reports to their CEO Andrew I would encourage you to take a look at that [reality] because I think it puts in good perspective again why we think GSK will such a strong partner for Amicus.

Also to read to you the very last paragraph of that press release from GFK a week ago and Mark comments. Mark wrote that critically I believe one of the most important capabilities of GSK which is so vitally important in an area where there is a small number of patients spread worldwide is our global reach. We believe we not only have the ability to discover and develop the medicines but also to successfully deliver them to those patients who really need them. Never have I been more committed or excited about our potential to really make a difference and I think Mark's quote in that GSK press release speaks volumes as to their commitment and that shared commitment to make a difference between Amicus and GSK and the rare diseases, both for people living with these diseases and their families as well as for our shareholders. So with that let me turn it over to Matt and Matt can comment at a high level on the terms of the deal.

Matt Patterson

Thanks John and good morning everyone. As you read in the press release we issued with GSK this morning we signed a definitive agreement to develop, manufacture and commercialize Amigal which is currently in Phase III for the treatment of Fabry disease. As part of our agreement, GSK will also have rights to our program evaluating Amigal co-administration with enzyme replacement therapy for Fabry. To be clear of the agreement, it is strictly related to Amigal and to no other programs in the Amicus pipeline.

According to the terms of the agreement we will receive an upfront non-refundable license payment of 30 million and we are eligible to receive further development and commercialization milestone payments of approximately 170 million as well as tiered double-digit royalties on global sales of Amigal. Also as part of the agreement, we will jointly fund development costs for the global program through regulatory approvals from the FDA and the European regulatory authorities. This component of the agreement will be of additional significant importance for Amicus from a cash perspective.

And finally GSK is purchasing 6.9 million shares of our common stock at a price of $4.56 per share. So the total value of GSK’s equity investment at Amicus is 31 million and represents a 19.9% ownership position in our company. The total cash upfront to Amicus from GSK for this transaction with the licensing payment and the equity investment is approximately 50 million.

So that means if we achieve certain milestones we will have the potential to receive up to 230 million upfront and milestone payments for Amigal. We believe the signing of this agreement not only provides strong validation for the potential success of Amigal and more broadly our pharmacological chaperone technology, but also recognizes our team’s scientific and clinical expertise in genetic diseases. In addition, the significant investment in Amicus highlights GSK’s commitment to us going forward. And with that let me turn the call back to John for our closing remarks.

Great, thanks Matt and let me just conclude by saying we here at Amicus are very proud of our progress with Amigal over the last five years and especially over the last year in driving the program forward and also leading to this deal with our partners at GSK. We look forward to a long-term strategic collaboration with GSK and certainly an exciting day for us and with that I am happy to turn the call back over to the operator for any questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from Ritu Baral of Canaccord.

Ritu Baral - Canaccord

More questions on the structure of the deal. The joint development costs, is there a cap to these costs for you guys and also are the development costs and the royalties different across different geographies as well as part of the deal.

John Crowley

The first part yes there are caps, there are annual caps and there is an aggregate cap on development for which Amicus will be responsible and also there are tiered double-digit royalties and there is no distinction by geography.

Ritu Baral - Canaccord

These are escalating royalties?

John Crowley

Yes they are.

Ritu Baral - Canaccord

Can you give us any color on the breakout of the milestones data, driven milestones versus regulatory versus commercial or any flavor.

John Crowley

Yes we can’t comment on the specifics by our agreement with GSK, Ritu, what I can say is that there are significant clinical as well as commercial milestones including milestones that we think will be achievable in 2011. And this contributes to the cash position guidance that you have given?

John Crowley

In part together with the cost share, yes.

Ritu Baral - Canaccord

Okay and can you give us an update on what you think R&D spend will be or with the new deal?

John Crowley

We are not giving that quite yet. In a couple of weeks we have our quarterly earnings call we will prepared to give more detailed financial guidance. I will just reiterate again that one of the four key reasons for doing this deal was the added financial strength for Amicus, for our shareholders and that with this deal we believe we will have sufficient cash resources to take the company at least through US Amigal approval.

Ritu Baral - Canaccord

Got it and as part of the deal is there any standstill agreement for GSK as far as acquiring more shares of that company.

John Crowley

That’s correct, there is a standstill in place for us a period of time.

Ritu Baral - Canaccord

At this 99 level?

John Crowley

Yes

Ritu Baral - Canaccord

Can you say how long this standstill will remain into effect for?

John Crowley

I have to get back to you Ritu. I don’t think we can comment on the specific period.

Ritu Baral - Canaccord

The update on enrollment, for the Amicus Phase III is that it is in Q1 2011 now, has there been a delay is this any way related to transitioning some responsibilities to GSK of the trial?

John Crowley

I don’t think this is attributable to the deal. We just at this time together with GSK as we looked at the enrollment numbers, we made significant progress and of course GSK has done very deep diligence on the clinical operations and enrollment and we think by the time the final patients actually come on drugs, say would lead into the very first part of 2011. But again we've made tremendous progress in setting up more than 30 clinical sites on the six continents and that is to-date been a solely Amicus driven study.

Ritu Baral - Canaccord

So no change to the trial, no transmission as well.

Matt Patterson

No change to the trial design or execution.

Operator

Our next question comes from Geoff Meacham of JPMorgan. Please go ahead.

Geoff Meacham - JPMorgan

And so question for you on the Fabry data, so are there any updates and you are beyond where we've seen the Glaxo has reviewed prior to sending the deal. Like more mature Phase 2 data or (Inaudible).

John Crowley

Not that we be prepared to (Inaudible) publicly except the state the GSK has seen everything including all the confidential data that we've been previewed to as well.

Geoff Meacham - JPMorgan

And then as part of their diligence more than ongoing execution of the trial, are there any updates probably not but just checking on the FDAs view of the some of the end points with respect to GL-3 that’s measured by excretion or…?

John Crowley

No, the study remains exactly the same and that was off course part of the diligence for GSK as to get comfortable with that study designs and the likelihood of hitting that primary endpoint which again is the clearance of the GL-3 substrate from the interstitial capillaries of the kidney and we believe that given the way that we've designed and now executed the study, we are increasingly confident the likelihood of success in GSK contribute to all the work that we've done to-date on that.

Geoff Meacham - JPMorgan

And then, last question, for the topic for today I was just curious if there are any update you guys are afraid to talk about with respect to the Pompe’s program or should we wait for the earnings call?

Matt Patterson

Yes I think we’ll do a full program review with the earnings call Geoff.

Operator

Our next question comes from Greg Wade of Wedbush.

Greg Wade - Wedbush

With respect to this new partnership as to the few questions, who is going to be responsible for filing the NDA?

John Crowley

GSK will.

Greg Wade - Wedbush

Okay and what percentage of the development cost going forward is GSK taking on?

John Crowley

It’s a significant piece of it I can’t disclose the exact percent by the agreement Greg. I think that will become a little more clear as we get into financial guidance here over the coming weeks.

Greg Wade - Wedbush

So taking into account the $30 million upfront payment and just stock components on the [seeing] order milestones is the deal cash flow positive.

Matt Patterson

I think its probably best if we get in to a little more detail on the specifics that the quarterly call in a couple of weeks Greg. Again I just reiterate that with this deal including the upfront that this will take us at least through Amigal approval in the US.

Greg Wade - Wedbush

Okay. And then who is going to be managing the clinical program now?

Matt Patterson

The plan is for Amicus at least for the ‘011 study to continue to take a lead in clinical operations. Again there will be a joint development committee that will oversee the development of Amigal a joint between GSK and Amicus. But as needed to me what we expect a leverage GSK’s clinical reach and experience and certainly their regulatory experience and the drug development as well as manufacture.

Operator

Our next question comes from Joseph Schwartz of Leerink Swann. Please go ahead.

Joseph Schwartz - Leerink Swann

I was wondering if you could just give us a sense of why the enrollment is moving into the first quarter. Is it just your highly selective nature of trying to screen the patients or something else that might work?

John Crowley

No, this is all part of the plan again to make sure that we had enough patients for the 60 patient study who not only of course had Fabry disease, but also have the responsive mutations that we believe will be appropriate for treatment with Amigal as well as if you recall have the increased level of GL-3 as measured in urine which as we know correlates to GL3 levels on biopsy.

So this is a very, very complex and far-reaching study to enroll and with that we have set up more than 30 clinical sites now initiated worldwide as we have said publicly before and we have had great momentum and made great progress. We do think though as we looked at these final numbers coming in and the projection for randomization that it will bleed just into the early part of 2011 into Q1.

Joseph Schwartz - Leerink Swann

Okay and how about the EU trial initiation of second Phase III, is that still?

John Crowley

That is on track, yes, absolutely.

Joseph Schwartz - Leerink Swann

On track to start this quarter. Is there anything that you learned as a result of GSK’s due diligence that gives you incremental confidence in the trials succeeding?

John Crowley

One thing I could tell you with GSK’s scientific and clinical experience. This was many months of discussions and very, very deep diligence across science, across medicine. They had numerous calls and business with our investigators. They sent a team to India to work with and look at our toxicology contractor for instance. They visited all of our manufacturing sites. I think the partnership with GSK is going to make the Amigal drug development program an even better one.

Joseph Schwartz - Leerink Swann

Is there a joint development committee?

John Crowley

There is yes.

Joseph Schwartz - Leerink Swann

Can you help us understand how decisions will be made. It is not like you might be dividing some of the task by the two trials though, is that right?

John Crowley

Well I think that’s yet to be determined. What we did do is part of the agreement. We worked together through a joint multi-year joint development that included all the key milestones and activities as well as the budgets for those programs. We agreed upon it, that was amended through the deal. Of course that’s subject to revision as circumstances may change by the parties, but for now I think as coming out of the gate we are very much in agreement on the activities that need to be done to get Amigal approved.

Operator

I am showing no further questions at this time. And we would like to turn the call back to Mr. John Crowley.

John Crowley

Great that’s all I have and again this symbolizes a very significant step forward in making a difference for people living with Fabry. So thank you all.

Operator

Ladies and gentlemen that does conclude today’s conference. You may all disconnect and have a wonderful day.

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