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Amicus Therapeutics, Inc.

Amicus and GSK Expanded Fabry Collaboration Call

July 17, 2012 05:00 pm ET

Executives

John Crowley – Chairman & Chief Executive Officer

David Lockhart – Chief Scientific Officer

Pol Boudes, MD – Chief Medical Officer

Chip Baird – Chief Financial Officer

Bradley Campbell – Chief Business Officer

Sara Pellegrino – Associate Director, Investor Relations

Analysts

Ritu Baral – Canaccord Genuity

Anupam Rama – JP Morgan

Kim Lee – ThinkEquity

Bill Tanner – Lazard Capital Markets

Operator

Good day, ladies and gentlemen, and welcome to your Amicus and GSK Expanded Fabry Collaboration Call. (Operator instructions.) As a reminder, today’s conference is being recorded. And now I would like to introduce your host for today, Sara Pellegrino.

Sara Pellegrino

Good afternoon and thank you for joining our conference call to discuss the expansion of our collaboration with GSK to develop and commercialize co-formulations of migalastat for Fabry disease. Speaking on today’s call we have John Crowley, our Chairman and Chief Executive Officer; Bradley Campbell, our Chief Business Officer; and David Lockhart, our Chief Scientific Officer. They are joined by Chip Baird, our Chief Financial Officer, and Pol Boudes, our Chief Medical Officer, who are available to participate in the Q&A Session.

As a reminder, the presentation contains forward-looking statements within the meaning of the Private Securities Litigation 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 and business development and other transactional activities. Words such as but not limited to “look forward to,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “would,” “should,” and “could,” and similar expressions and 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. All forward-looking statements are qualified in their entirety by this cautionary statement and Amicus undertakes no obligation to revise or update this presentation 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 Crowley

Great, thank you Sara, and good evening everybody and thanks for joining. This is very, very good news that we’re happy to announce this evening. As Sara indicated I’m joined by a number of members of the Executive Team here at Amicus, and before I turn it over to Brad and David in particular to take us through a number of different slides that hopefully everybody has now available to them – and we’ll reference those throughout this presentation – let me just reiterate why this is such a significant deal for Amicus and for continued collaboration and strengthening of that collaboration with GSK.

Again, three major components to this transaction: first is the agreement that we will jointly develop with our partners at GSK a next generation proprietary enzyme replacement therapy in Fabry disease that co-formulates and utilizes our core platform technology – the use of the chaperone migalastat; so a proprietary ERT developed by GSK, and we’ll talk more about the history of that development here and how it came to be and the significance of that ERT now combined. So a propriety co-formulated ERT that’s been in development for some time.

Secondly, we have a new division of responsibilities as a result of this extended collaboration. Amicus will now have responsibility for all commercial operations relative to all of these Fabry products – so the monotherapy use of migalastat, the use of migalastat in combination with other existing ERTs as well as the sales and marketing of this future proprietary ERT as it hopefully makes its way through the clinic. And then the third component and further strengthening our relationship with GSK – GSK is increasing its ownership in Amicus to 19.9% and purchasing 2.95 million shares of our common stock at a premium to today’s market close. They’ll be purchasing that at $6.30 for a total investment of a little over $18.5 million.

So those are the three components and I’ll comment just briefly now on the rationale from Amicus’ perspective and some of the history of how this came to be. I’ll take you first to our vision and one that I reiterated earlier this year at the JP Morgan conference, and that’s that Amicus would be a company at the forefront of rare and orphan diseases and very significantly utilizing our core platform technology including the extension of that along a continuum of innovation, taking our molecules from small molecule monotherapy as we already have now in advanced development in Fabry disease; looking for co-administration therapies but also very, very aggressively developing that technology co-formulated with enzyme replacement therapy. And David will share more of the scientific rationale for that.

But it fits very much in with our business-led, science-driven motto here at Amicus, and it is in line, too, with the vision that I articulated and we have continued to articulate throughout this year that our long-term vision in building Amicus is to be fully integrated by a pharmaceutical company in the rare diseases. And with this, this now allows us to begin preparing for the commercial launch of our products in Fabry disease as they hopefully make their way through the clinic, leading of course with our 011 study, our monotherapy study which remains on track for data delivery here in Q3.

We also think too very significantly, and part of the strong rationale for this deal is that it is a very significant validation of this extension of our core technology. The whole notion that you can combine a small molecule (inaudible) chaperone directly with an enzyme replacement therapy to lead to the development of a proprietary next generation ERT is very much a strengthening of our platform and an advancement along that continuum of innovation. We think a further rationale for this deal is that it highlights the very positive working relationship we’ve had now for a year and a half with our partners at GSK Rare Diseases, strengthening that partnership.

Part of the history here, too, we’ve been working with the notion of combining the small molecules with ERTs for several years here at Amicus. We’ve talked mostly to folks in the investment community around the whole concept and even at the beginning of this year with the early preclinical data in the 013 study in Fabry, and then recently our Pompe study with the oral co-administration of a small molecule chaperone directly with another ERT. In that case, in 013 it was the ERT Fabrazyme, an already-marketed product for Fabry disease; and in Pompe disease it’s of course combined with Lumizyme.

David’s organization here at Amicus has been quite busy over the last year and a half to two years working on extending that technology with a direct co-formulation and that’s mixing the small molecule, developing it from the start to be part of the preparation, the ERT preparation. And I think that there is significant scientific and medical rationale, and now we have very strong preclinical data suggesting that that could offer an even further potential benefit for people living with Fabry disease.

So about a year ago in March of 2011 with our strong relationship with GSK and their relationship with JCR Pharmaceuticals, a Japanese biologics company that GSK has a 25% ownership interest in and with JCR is developing and has been developing enzyme replacement therapies in formulation in preclinical development in lysosomal storage diseases – we met here in New Jersey with JCR executives. We explained the rationale for how their ERT products could potentially be improved and advanced and could potentially become next generation therapies with the addition of the small molecule chaperone.

We then entered into an agreement among GSK, JCR and Amicus, a scientific collaboration. There has been 16 months of work now. The significant piece of that data, it came in pieces throughout 2011 and the first half of 2012; much of that data was reviewed at a meeting among the three companies in May of this year where the decision was made by GSK, who has licensed all of the ex-Japan rights to these ERTs, to advance the co-formulation product of chaperone plus ERT through its final clinical development and on a path towards the clinic.

And with that we began our final discussion that would enable GSK to additional intellectual property to have the rights to that development. We also began to discuss cost sharing along that program and Amicus’ very strong desire to become a US commercial company, building on our experience in [patient advocacy], medical affairs, scientific relations and the number of our individual experiences in commercial operations and lysosomal storage disorders. And I’ll let the quotes in the press release speak for itself from Marc Dunoyer, my counterpart and the Global Head of GSK Rare Diseases.

But again, before I turn it over to Brad to summarize the deal I will say that this is a great deal for Amicus in a number of different ways. For patients living with Fabry, having an option here shortly of a proprietary next generation ERT co-formulated with migalastat addresses that 50% to 60% of the population who we don’t think will be eligible for migalastat monotherapy in line with all of our previous projections based on their genotype. We also think that we are not now a commercial company; we will be a commercial company in the United States in the lysosomal storage diseases – that we have a strong foundation for it and that we will add additional resources to the company to make sure that we are a highly successful commercial organization.

And with that and under our agreement with GSK, important decisions around items like market positioning and pricing of the drug in the United States will be Amicus’ decisions. And again, this strengthens the relationship with GSK while allowing us to remain a strong independent company; and financially, of course, with the added equity from GSK we will actually end this year with more cash than we otherwise would have in the absence of this deal. So all around on many, many different levels we think this was a very good deal and one that was a series of very intense discussions with very senior counterparts at GSK, and one that I think you can judge by their tone and the quotes in the press release that they are very pleased with as are we.

So with that as my introduction let me go ahead and refer you over to Slide #4, and I’ll turn it over to Bradley Campbell, our Chief Business Officer who in the next slide will talk about the specifics of this deal; and then on the following page what that means in terms of the pipeline. So I’ll turn it over to Bradley.

Bradley Campbell

Great, thanks John, and good afternoon everybody. So again on Slide #4 I’ll take you through a little bit more detail on the terms of the new expanded alliance, a number of which John highlighted. But let me add a little color. So again (inaudible) as a co-development of all current and future uses of migalastat ACL. So in addition to the monotherapy and co-administration programs that were already part of our collaboration, this now includes the new co-formulation products with GSK’s proprietary ERT for Fabry.

And importantly, these products will be commercialized solely by Amicus in the United States and by GSK in the rest of the world, and that means that instead of royalties and milestones that we were owed from the original agreement we will realize all sales in the United States. In addition as John mentioned, GSK is purchasing an additional $18.6 million worth of Amicus’ equity. This brings them back to their 19.9% ownership that they held prior to the secondary in the spring, and the details are listed here. Importantly that represents a significant premium to the previous 15-day closing average.

A little bit more detail on the cost sharing – so this is global development cost sharing: for the remainder of this year as it relates to the co-administration and monotherapy programs, we will continue on our current 75% GSK/25% Amicus cost share arrangement. And then moving into 2013 and for the remainder of this year for co-formulation we’ll move to 60% GSK/40% Amicus.

Finally, GSK is eligible for some approval and launch milestones for the Fabry programs. I want to give a little bit of color in terms of timing of how to think of these. So as it relates to the monotherapy and co-administration programs, the only near-term milestones are US regulatory approval and product launch milestones totaling $20 million. There are additional regulatory- and time-based milestones totaling up to $35 million but those are all in relation to the co-formulation product and go up through seven years following the launch of that product. Finally, there are some pass through milestones and single digit royalties on US net sales of the co-formulated chaperone ERT products that GSK must pay to a third party. Amicus will be responsible for those but they are not material.

So with that, let me turn you to the next slide just as a reminder of where we sit with the pipeline as it is associated with the Fabry program, and this is on Slide #5. So up top we have the migalastat monotherapy program. As a reminder we’ve got the study 011 which enrollment is complete in that program and we still have data expected in Q3 of this year. That study will serve as the US registration study. We have study 012 ongoing where we’ve announced that final enrollment is anticipated by the end of this year, 2012, and that will serve as the rest of the world registration study. And of course in co-administration we have the study 013 whose data we’ve released earlier this year, and full data are expected later in the year.

And then finally and importantly, to echo John’s comments, we do have the new co-formulation program with the new proprietary ERT from GSK. This program has been several years in development. It’s something that started obviously with Amicus and our notion that we could expand into a combination therapy platform with our chaperone and ERT. And so while it may be a relatively new focus of the collaboration with GSK there’s quite a bit of work that’s been done that David will highlight in a few moments, and it is really a late stage preclinical program.

One of the things to highlight here is that as a reminder, as part of this collaboration GSK does not have any other rights to our other programs and so we continue to own the rest of our portfolio ourselves. So with that let me turn it over to John who will take us through Slide #6.

John Crowley

Right, I just want to talk a little bit on Slide #6. Again, you can see from the banner of this slide here that it talks about the formulation and preclinical studies that have been conducted over the past 16 months. This was a very robust effort among all three parties here – Amicus, GSK and JCR – to investigate the scientific potential of the combination of migalastat with the JCR enzyme known as 051.

With JCR, too, I do want to highlight that this is a company, a publicly-traded company in Japan; again, one where GSK has a 25% ownership interest; a company with more than 20 years’ experience in biologics manufacturing. They currently manufacture and market in Japan two recombinant proteins, EPO and Human Growth Hormone, so they do have biologics experience both from a development and a commercialization standpoint. They have announced publicly that they have five recombinant proteins in development including this 051 protein for Fabry, and the JCR/GSK collaboration by about a year predates our relationship with GSK.

But I do think, and I do want to throw out kudos to Marc and the team at GSK – this really fits in with their vision of being a leading global player in the rare diseases, including bringing together companies with complementary technologies for the benefit of people living with these diseases. And this is I think a stunning example of that vision coming to life.

The CEO, Dr. Ashida, of JCR was the founder of the company in the 1970’s and is still very active as Chairman and CEO of that business. Dr. Ashida and I have met in London, in Japan, in New Jersey over the course of the last half a year and we have developed, together with our teams, a very strong relationship and one that we expect will continue going forward. And the capacity and capabilities of JCR I think are very important to understanding the advanced nature of this program and the confidence we have that we can move it from bench to bedside.

So we’ll obviously talk more about that relationship particularly as more and more of the data is revealed over the course of the next half a year or so. But if you’ll move to Slide #7 and for instance, this is a slide that is a direct pull from the investor presentation that we’ve used since the first half of 2012, and that is the whole problem that we are seeking to address with the lysosomal storage disease. And enzyme replacement therapy, the notion that placing enzyme replacement therapies, lysosomal enzymes that usually for all of us without disease are made in the ER, trafficked to the lysosome and for several days live within the cell compartment in the lysosome – putting those enzymes into the infusion, into the very high PH environment of the blood is one problem that we’ve addressed with co-administration.

But we’ve also talked about the instability in the infusion bag. These infusions are multi-hour infusions and the PH in the infusion bag as well is not a friendly environment for these proteins. We think this is an added part of the scientific rationale and why in animals we’ve seen an even greater benefit over co-administration, and that’s the enhanced potency and stability of the protein preventing the aggregation, and essentially chaperoning the proprietary ERT here from infusion bag through infusion line, to plasma, to target tissue; and enabling it to be taken up in greater quantities and to be taken up in a more stable form.

And likewise we see on the bottom of Slide #7, by doing so, when it’s introduced into the plasma environment to mute the immune response mounted by many people with these diseases. So this is a lot of different pieces of the rationale for why a co-formulated proprietary ERT product with the migalastat chaperone in Fabry we believe has the potential to be a significant added benefit and a nice new option for people living with Fabry disease; and one that we and GSK now are very committed to moving into the clinic.

Moving on to Slide #8, and this is a slide, too, that we began sharing at the early part of this year when we had the first human proof of concept and validation that the addition of a chaperone to an ERT can enhance the stability of the ERT, moving from a standard of care of ERT alone to of course our chaperone monotherapy program in Fabry, again for 40% to 50% of people living with Fabry disease. Too, as we’ve demonstrated now in the first half of 2012, the chaperone ERT co-administration here in Fabry disease as with our 013 study; and then also, too, we’ve talked about the chaperone ERT co-formulation and we did consider co-formulating our molecule migalastat with Fabrazyme or Repligal.

We’ve done experiments, but we did have the good fortune through the GSK collaboration and the relationship with JCR to have access to a proprietary ERT, one that as David will describe seems very similar to Fabrazyme but we think with the addition of a migalastat chaperone is now a significantly improved molecule and one in pre-clinical studies that has demonstrated the potential for greater tissue uptake and greater GL3 reduction. So moving along that continuum again in a multi-product offering for people living with Fabry we have our chaperone monotherapy, of course in its Phase III; our chaperone ERT co-administration with Fabrazyme and that’s now also in Phase II [with Repligal]. That continues to advance nicely, and then we now have this new product, the proprietary co-formulated chaperone ERT product in Fabry that’s now in late preclinical development.

So with that as an introduction let me turn it over to David on the next slide, Slide #9 I believe in your deck, and David can take us through the next couple of slides. It’s a very high level of a number of science experiments that have given us great enthusiasm for this product. David?

David Lockhart

Thanks, John. Hello, everyone. I’m going to show a few of the key measurements that support a lot of the things that John just said about the small molecule being able to stabilize the JR-051 alpha GLA enzyme to be able to make it so that enzyme is better taken up into cells in the animal model; and then most importantly perhaps it’s being able to show that that extra stability and extra uptake then leads to greater reduction of the substrate. And what I’ll show is in the kidney and the heart of the Fabry knock-out animals.

So on Slide #9 you can see the experiment where the enzymes, the lysosomal enzymes are simply placed into human blood at 370. And under those conditions these enzymes unfold, and when they unfold they lose enzymatic activity. So you can see the lower red and black curve. If you look at Fabrazyme of JR-051 the activity as a function of time in the blood at 370 goes down, and it goes down very rapidly with a half-life of about four hours. And JR-051 and Fabrazyme both share that property, and we’ve seen similar things with other lysosomal enzymes as well.

But if you do exactly the same experiment with JR-051 in the presence of migalastat, instead of losing activity the activity over the course of the entire 24 hours is maintained. And in fact it’s increased to a significant amount. So that was something that we were actually pleasantly surprised by. We’ve measured that many times and we’ve been through it with other enzymes as well. So the interaction of the small molecule preserves the activity. The job of the small molecule is to bind and stabilize the enzyme so that it never unfolds, because unfolding is irreversible and when the enzymes unfold they no longer have the activity they need and in fact they don’t even get into cells.

So that’s the basic physical experiment showing that the small molecule can stabilize the enzyme. If you go to Slide #10, these show the measurements of JR-051 and Fabrazyme, and in patient-derived cells. So these were cells that were derived from patients with Fabry disease. We’ve measured this with cells derived from patients with different mutations; this is just for one particular mutation. The data for JR-051 are at the top; Fabrazyme at the bottom, and you can see that at baseline these are cells from patients with very little activity so there’s very little activity.

When the cells are incubated for five hours with JR-051 or Fabrazyme there is measurable activity. If you do exactly the same experiments during the five hours of incubation and you add a low concentration of migalastat there’s more activity found in the cells two days after the five-hour incubation. And then if you go even further and raise the dose of migalastat to a little bit higher concentration even more of the enzyme is taken up. And you can see on the top and the bottom that with JR-051 and Fabrazyme the results are pretty similar, so the small molecule stabilizes as we’ve shown in the previous slide and then on this slide it’s pretty clear that it increases the uptake of active enzyme. This is an activity measurement; we’re measuring the amount of it after [the drug’s] been taken up into cells.

And then on the right is the reduction of the storage material. And you can see that there’s a lot of storage material at the start. These are Fabry patient-derived cells. In the presence of the enzyme alone that goes down to some extent. In the presence of the enzyme plus migalastat it goes down even more and with a little bit higher dose of migalastat it goes down even further. So you can see that with Fabrazyme and with JR-051 the addition of the enzyme plus the small molecule leads to the greatest substrate reductions.

If you go to the next slide, Slide #11, this shows some of the key experiments in the Fabry knock-out animals. So these are animals in which alpha GLA enzyme has been totally knocked out. These animals accumulate the key substrate for the enzymes known as GL-3. They accumulate the substrates in cells throughout the body; what we’re showing here are for the heart and for the kidney. So if you go to the left for the heart you can see that… Oh, let me describe the axes. So the 100 is the amount that the knock-out animals have at baseline without any treatment. The zero level is where it would be with a wild-type animal without disease, so the full function of the enzyme.

So you can see that with Fabrazyme alone or with JR-051 alone, the data was for 051 but they’re very similar, you can see in both the heart and the kidney it comes down from 100. So there is a reduction. This is for a single thirty-minute infusion, so this is just a single infusion of either enzyme. And there’s a noticeable reduction at a medium dose of the enzyme. If you do exactly the same experiment then in the presence of migalastat the reduction is even greater. And so you can see that with Fabrazyme of with JR-051 alone there’s a reduction in both the heart and kidney, a greater reduction in the presence of the small molecule.

What we have found is that it’s possible to go even higher in dose with the enzyme, and by having the possibility of the small molecule muting the immune response it may be possible to give a higher dose of the enzyme to get an even greater effect; and then to have a greater effect further with the small molecule. And you can see that on the right. On the right-hand side with both the heart and the kidney, if we just increased the dose of JR-051 given in a single infusion there’s even further reduction of the substrate and then in the presence of the small molecule it’s greater further. And in fact in the heart after only a single administration of JR-051 plus migalastat the substrate levels are almost back to wild-type levels.

And the kidney, which is always the most difficult tissue to treat and to get the substrate as low ,all the way down to wild-type level, you can see that with the single administration of the higher dose of the small molecule it’s about 25% of wild-type levels. So a remarkable reduction in the presence of the enzymes plus the small molecule. So those are the key data showing that the JR-051 enzyme works as we hoped it would and that also in the presence of a small molecule it’s made better still.

Bradley Campbell

Great, thanks David. So now I’m going to move to Slide #12 just to quickly touch on the market, and as John alluded to earlier we believe this expanded deal further highlights are ability to bring patients a treatment with migalastat HCl either as a monotherapy or in combination with ERT. And as we said, we believe that patients who have a [metal] mutation which we believe is about 40% to 50% of the population can take their chaperone monotherapy as their only treatment for Fabry disease.

For the rest of the patients who don’t have a metal mutation they could take migalastat HCl either as a co-administration or importantly as a co-formulation with this new proprietary ERT. And over time while the co-administration is likely to come first as John alluded to, we believe that over time there will be benefits to co-formulation so that will become the lion’s share of the treatment opportunity for patients who did not have a metal mutation to the chaperone monotherapy. So we believe that this is an important step forward along the continuum and we hope that we’ll be able to continue to bring value to patients with each of these product opportunities.

With that I’ll turn it over to John to wrap us up on the slide presentation.

John Crowley

Thanks, Brad. I’ll just warp up very briefly before we turn over to Q&A, and thanks both of you for those comments. Again, the data that David presented at a very high level, I think the importance and the significance of this data and why we and GSK and JCR are very excited to be moving this forward – there is a significant amount of data that’s been generated over the last 16 months and we would expect in the second half of 2012 at the appropriate scientific conferences to be able to talk more in the right forums about that data, being respectful of course of our intellectual property and trade secrets that have been and are being developed; and also certain rules around the publication and what we can now disclose around this data. But hopefully it gives you a flavor for the significance of this technology moving forward.

This is a great next option for people living with Fabry disease. It builds on the success we’ve seen to date with migalastat as a monotherapy. We continue to remain very confident in the 011 study (before) and again reiterate that data coming later in Q3. So 011 is on track; 012, the monotherapy study for European approval and our Phase IV commitment to the US regulators continue to still exceed its enrollment targets although we’re still guiding for full enrollment by the end of this year. That program does continue on track.

And with respect to this deal I’ll just again emphasize the important scientific validation here, that this is a great validation. It’s a very important aspect of our core platform technology and certainly in Fabry disease. And it’s very rewarding now to see this moving for a year and a half from almost a preclinical development to now further final preclinical studies into we believe in 2013 the clinic. We believe by the end of this year we’ll have a better sense of what that exact timeline is but I can assure you there are many, many activities that are moving forward around that.

Again, we keep all other aspects to our technology as before with GSK. GSK does not have any rights to our technology in Pompe or any of the other programs that we’re working on, so there are still 100% Amicus-owned programs. There is no standstill agreement as part of this, however we believe with part of this agreement that we will remain an independent company and continue to strengthen the Amicus technology, people and our ability to deliver value for shareholders and do medicines for people living with Fabry. So with that, Operator, we’re happy to take any questions.

Question-and-Answer Session

Operator

(Operator instructions.) And we’ll take our first question coming from Ritu Baral from Canaccord. Please go ahead.

Ritu Baral – Canaccord Genuity

Hi guys, thanks for taking the questions. The first one I have is on the deal structure: are there any royalties going back and forth between you and GSK either on US sales or European sales?

John Crowley

No there are not, Ritu, and that was a very important part of the structure here in trying to figure out the values that we each brought to the table. We can go into more background if you’d like but the important part is there are no royalties and no milestones now. It’s a very clear division of commercial responsibilities with the exception of a milestone that we would pay with respect to the co-formulated ERT product alone. And I believe those are highlighted in the press release and they’re in the deck here, and I can have Brad go through those again if you’d like but those are the only ones.

Bradley Campbell

Ritu, let me add a little color there. So the only near-term milestones as we said were the ones around US regulatory approval and launch for migalastat monotherapy and co-administration, and then the bulk of the economics for GSK at any rate are around that $35 million around the co-formulation products which are both regulatory- and time-based milestones. The only royalties in the deal are small, single-digit pass through royalties to a third party. We’ll own all of the US sales of all of the products that come out of the collaboration.

John Crowley

Is that clear, Ritu?

Ritu Baral – Canaccord Genuity

Yep, absolutely. And moving on to the co-formulation, what do you guys see as the development strategy there especially in regards to the regulatory authorities? Assuming that you’d have at least US approval for migalastat at that point, how could you leverage that moving forward into Phase I, II, III trials?

John Crowley

Sure, yeah I think throughout the second half of this year we’ll be able to provide more clarity. We’ve obviously spent quite a bit of time on development plans and timelines and regulatory strategies. Certainly having migalastat in the clinic with the strong safety record that we have we think is an advantage. There may be a potential to be able to save time and resources on some preclinical and toxicology studies to support a filing and we’re investigating that very thoroughly. But it should be clear to everybody that this ERT, this proprietary ERT product that’s now co-formulated with migalastat is a new ERT and it will have to go through full development. So we would expect a [new IND] to be filed. We would expect of course to have the CNC clinical and preclinical tox sections of that to support the filing, and I think over the next couple of months we’ll have more to say about the exact regulatory strategy for the Phase I/II study that would follow.

Ritu Baral – Canaccord Genuity

For that co-formulation would you need to do separate stability studies? And how do you envision the final product looking? Is it going to be sort of a lyophilized vial, a powder that needs to be reconstituted or will it be a liquid?

John Crowley

Sure. To the patient it is an ERT. We don’t expect these to be administered separately; we expect them at some point through the purification and the final formulation process to be mixed together and for it to be one ERT product with the chaperone as an important component of that. In terms of final formulation we’re still working through that with JCR and with GSK. There could well be the potential for a liquid formulation as well as lyophilized formulations; and I think again in the second half of this year that’s additional data we can provide.

David Lockhart

There’s a chance, we have the opportunity to do something here that you probably can’t do with ERT alone because the enzyme is more stable in the presence of a small molecule. So it has been difficult for some of these to have stable, liquid formulations and that’s not out of the question any longer because of the added stability of the small molecule. So just keep that in mind as a possibility.

John Crowley

And very importantly we are not limited to pre-selected doses based on manufacturing capacity, based on preclinical models; and we are fully exploring and have explored multiple doses including doses that David indicated that are a higher dose than Fabrazyme to date. And we have the ability to do that because of the addition of the chaperone that adds to the stability not just in formulation but we believe in the tolerability and potency of the protein. So it’s a very important aspect of the combination technology here.

Ritu Baral – Canaccord Genuity

Got it. And just the last question here on the co-formulation: the development, the joint development going forward, how will that be overseen? Are you continuing with the same joint development committee and how is that made up?

John Crowley

It continues to be made up of equal representatives from GSK and from Amicus, and that governance structure will remain intact. So it will be joint development for GSK and for Amicus, and again, because GSK has licensed complete rights to this 051 protein from JCR, although we will have a strong working relationship with JCR our agreement and our relationship are solely with GSK.

Bradley Campbell

Really the most important difference, Ritu, from a governance structure is that each party will have final say in their own territories related to commercial activities.

John Crowley

Very important for us, again, on matters around product positioning and product pricing in the United States for all of these products.

Ritu Baral – Canaccord Genuity

Great, thanks for taking the questions, guys.

Operator

Okay, thank you. And we’ll take our next question from Anupam Rama from JP Morgan. Please go ahead.

Anupam Rama – JP Morgan

Hi guys, thanks for taking the question. So now that you’re responsible for the US launch of migalastat, do you guys have a plan for timeline for [field force] or are you waiting for the 011 data before starting this? And then how should we think about the size and the scope of a US-based field force for you guys?

John Crowley

Yeah, I’ll answer the beginning part of that and then I’ll let Brad as the key (inaudible) officer add a little bit more color to that. We have been doing quite a bit of work. We do have a joint Amicus/GSK Team that is working on joint commercial development. They have been prior to this deal even being in place – so market research surveys, logos, divisioning, pricing surveys, all of the premarket commercial activities that you’d expect a company to be doing we’ve been doing jointly with GSK and we’ll continue to do with GSK.

I think that’s very important, that a lot of those strategic planning, commercial planning activities will still be done jointly with the companies. The only difference is that rather than products flowing through any one of the GSK sales forces in the United States the migalastat monotherapy first and then we would hope later the co-administration and then this proprietary ERT would be Amicus sales forces. So Brad, I don’t know if you want to add any more color on some of the background and activities but it’s been an important part of our work here in the last couple of months.

Bradley Campbell

Right, it has been and as you’ll recall, we always described our role as something of a co-commercial role in the sense that we continue to have a medical affairs and patient advocacy presence in the field; and as John mentioned have been involved all along in terms of the strategy and preparation for the market developments leading up to launch. That being said, to answer your question in terms of how to think about what’s the size and scope and timing of the commercial organization, we’re confident that we can execute on the established orphan drug launch strategy that we’ve seen other successful companies use in the rare disease space.

Fabry of course is an ultra-orphan disease so it’s going to require a highly specialized, highly targeted sales force; and the emphasis is going to continue to be on medical affairs and patient advocacy which are two areas of proven strength for us. We are committed to taking a measured approach to doing this, and we’re not going to build the next Genzyme or the next [Biomarin]. We’re going to do it the right way using those models of course but doing it as it’s appropriate for Amicus and our partnership for GSK. And we will over time, using certain de-risking events invest more of that, so it [has to be] the right way for our medicines and our approach.

John Crowley

Yes, Genzyme and Shire have been very, very successful and have done a great service to patients.

Bradley Campbell

Yes they have, they have – sorry. So I think we’re confident that we can do that. There is a successful model in place that many great companies have followed in the past but we’ll make it our own and we will use certain de-risking events so that we’re investing appropriately over time.

Anupam Rama – JP Morgan

Okay, and just a quick question: now that you’ll have a US commercial sales force, how should we think about that in terms of the Pompe program? Will you guys be looking to keep the US rights to that? What’s your current thinking on that program in light of today’s news?

John Crowley

Yeah, I think this gives us greater leverage to be able to advance that program as a wholly-owned independent program here at Amicus together with the rest of our pipeline, Anupam. So as we’ve said before, our business development strategy is to find a way to maximize shareholder value and to ensure that we will have a sales and marketing force in any geography that can ensure that patients get access to our medicine. With an existing infrastructure being built off our success hopefully with Fabry, we could very likely at least in the United States be looking to replicate that for Pompe and beyond.

So we very much want to continue being a commercial presence as we build that out in the United States so I think that gives us further leverage here. And again, I think for each of the drugs in our pipeline that will be on a case-by-case basis. There may still be some that we would want to consider that might be earlier in our pipeline for global partnering rights similar to what we’ve had in place the last year and a half for GSK. But I think more and more the default will be at least in the United States we would intend to commercialize our products.

Anupam Rama – JP Morgan

Great, thanks for taking our questions.

Operator

Thank you. And we’ll take our next question coming from Kim Lee with ThinkEquity. Please go ahead with your question.

Kim Lee – ThinkEquity

Good afternoon, congrats on the collaboration. Just a couple of questions on how will milestones to Amicus be recognized and also the same question of [R&D] reimbursement?

John Crowley

Our Chief Financial Officer Chip Baird is here, and I’ll let Chip answer. I can tell you that there are no milestones to Amicus as part of this deal. We did qualify to earn a $3.5 million milestone under our prior deal with GSK and that remains intact. That was related to a clinical milestone that we earned in June, last month, and that will be paid this quarter. And then, Chip, if you want to talk about the cost share?

Chip Baird

Yeah, sure. So the cost share will continue to operate in much the same way that it does today where Amicus will incur expenses in the development of migalastat. GSK will also incur expenses in the development of migalastat. And then on a quarterly basis there’ll be a true-up payment such that the net effect will be that Amicus this year will spend 25% of the total expenses and GSK will spend the 75% of the whole; and then starting in 2013 and beyond that ratio will shift to 40%/60% on a go forward basis. So it’s quarterly reconciliation that will cover monotherapy development, co-ad, and co-formulation development.

Kim Lee – ThinkEquity

Okay, great. And then the milestone that you’re going to get this quarter, the $3.5 million, is that a direct cash payment or is that going to be-

Chip Baird

Yeah, we would expect that. It was achieved in Q2 and we would expect to receive a payment here in Q3.

Kim Lee – ThinkEquity

Okay, so that should be a one lump sum payment, not amortized over time.

Chip Baird

Yep.

John Crowley

And just to clarify we have our earnings call coming up in early August and we’ll be able to discuss in-depth financial performance or Q2 as well as our projections for the rest of 2012. But given how we’ve structured this deal with the cost share for the major clinical programs for migalastat – the monotherapy, the co-admin – for the balance of this year remaining 75% GSK/25% Amicus, we would expect if there are any changes to our projected cash spend that they would be minimal and not material. But we can provide tighter guidance here in a few weeks.

Kim Lee – ThinkEquity

Okay, great.

John Crowley

And again, just to emphasize that with that $3.5 million milestone and with the $18.5 million in equity we will end the year with more cash than we had previously projected to the street.

Kim Lee – ThinkEquity

Right, well great. And also so looking at, I know that you guys are all filing separately for study 011 and for 012, do you guys plan to file at the same time for combination therapy? Or will this be like monotherapy where you filed US first and then Europe later?

Bradley Campbell

You mean in terms of development will we have a separate US and rest of the world development strategy?

Kim Lee – ThinkEquity

Yeah.

Bradley Campbell

Yeah, so I think that the monotherapy strategy evolved that way in part because of feedback with the agencies. Of course you do have the benefit of the OM2 study serving as our confirmatory study for the US, and so there’s some synergy there. Our goal all along is to have a unified global development strategy and that’s what we’ll pursue, but again it depends in part on feedback from the agency.

Kim Lee – ThinkEquity

Great, and then just one final thing in looking at the strategies for that co-formulation with JR-051: do you expect any potential capitalization of migalastat co-admin with ERT or not? Or are you looking at totally different ERTs?

John Crowley

We do. We think that for an ERT product a better solution for patients is likely to be a co-formulated proprietary ERT. So along the continuum of innovation, Kim, we will have our monotherapy of course; and then for people who would remain on ERT, we think that given the more advanced development of co-admin that that would be a first option for people – that it could provide the stability of the protein in plasma, and we believe has the potential to be clinically meaningful for people and an improvement.

But we also think for a number of different reasons potentially a higher dose of enzyme, potentially an ability to mute the immune response by stabilizing it in the infusion bag – for all those reasons we think that that has a strong potential to be a superior product and that the market would immediately divide into patients with Fabry disease. If you have a response [mutation] we still anticipate that even with this proprietary next generation ERT, that the migalastat monotherapy would be a very effective product where you would never still need to take an ERT; that you should take, we believe, migalastat as a monotherapy. This is geared toward the 50% to 60% of the market who still need to take an ERT. We think that this just may be a much better approach.

Bradley Campbell

And importantly you’re bringing better value to patients for the reasons that John mentioned, but also you have the economics associated with co-administration versus co-formulation are slightly different because in the case of co-administration of course Genzyme would be recognizing the Fabrazyme economics and we’d be recognizing the chaperone component; whereas with the co-formulated product in the US, for example, we’d be recognizing all those economics. So there’s a difference in what we would receive from that product as well.

Kim Lee – ThinkEquity

Gotcha. Great, thanks for that clarity.

Operator

Thank you. We’ll take our next question from Bill Tanner from Lazard Capital. Please go ahead, Bill.

Bill Tanner – Lazard Capital Markets

Thanks for taking the questions. I’m sorry; I’m not in the office so I wasn’t able to see the slides. I’m just curious what 051 and Fabrazyme look like from a biochemical perspective plus/minus the chaperone, if they look relatively equivalent, David, either in cells or any kind of biochemical assay.

David Lockhart

Bill, this is David. You can see on the slide, when you have a chance to look at the slides you’ll see that we have data side-by-side to compare 051 and Fabrazyme, and you can see that in terms of the physical stability they’re similar. When it comes to the uptake into patient-derived cells, that’s similar; the amount of reduction due to GL-3, that’s also similar. So they’re not identical molecules but their basic behavior and their physical behavior, their cellular behavior, their in-vivo behavior is actually quite similar. The place where the co-formulation with JR-051 is really showing considerable superiority is in the data on Slide #10 where we look at the knock-out mice, where we’re able to use the higher dose of JR-051 in combination with the small molecule, and that leads to substrate reduction in the kidney and heart that is very large and considerably greater than what you get with just 1 mg/kg Fabrazyme.

Bill Tanner – Lazard Capital Markets

Okay, so I mean is it fair to look at this as saying minimally the co-formulation with 051 is a way to get 051 in the market? Obviously you’ve got some entrenched competition, theoretically you’re making it better.

John Crowley

I think without migalastat I think that’s a good way to look at it, Bill. I think you could view 051 as one mg/kg as a biosimilar to Fabrazyme. With the addition of a chaperone and all the positive effects that that confers together with the potential for an even higher dose of the ERT or the 051 ERT, we’ve seen along a number of different parameters this now has the potential to be I think very significantly a bio-better, and that’s why we characterize it as a proprietary next generation ERT product.

Bill Tanner – Lazard Capital Markets

Yep. And John, you mentioned that with this transaction with Glaxo, their ownership in the company came back to where it was prior to the recent secondary. I mean was there anything contractual with respect to them being able to take their ownership back up? Because I’m just thinking about the timing – I mean unless one thought that the stock was fairly priced for success in the monotherapy, I’m just wondering why would you be doing it now?

John Crowley

They had no contractual rights whatsoever. They had no right to participation in the offering. As we indicated back in March, GSK indicated to us that they would like to participate however given the speed of that deal they weren’t able to advance it through its committees; plus it allowed us to further diversify our shareholder base. So we really do have a strong relationship with GSK, so in the context of this deal they expressed an interest to increase their ownership back to 19.9% which became an important part of the swapping of values here – swapping of royalties and milestones for territories, our granting GSK intellectual property rights very significantly to enable the development of the co-formulated ERT. So it was a true collaborative decision and part of a very intense discussion and negotiation over the last couple of months.

Bill Tanner – Lazard Capital Markets

So then one really shouldn’t read the timing ahead of data release as an indication of lack of confidence that the monotherapy’s going to work, because I mean presumably your stock would be somewhat higher if you knew that it was going to (inaudible).

John Crowley

No, quite the opposite even. I would say, and I’ll take Marc’s quote in the press release for what it is, that it’s a strengthening of the relationship with Amicus that very much is based on the desire and decision to advance the ERT for the other half of the Fabry population while remaining very confident that the 011 monotherapy – and as part of that, GSK having the ability to share in further equity upside in Amicus. The timing is really driven by the advancement of the proprietary ERT product. So whether it was before or after the monotherapy we don’t think is of significance.

Bill Tanner – Lazard Capital Markets

Okay, thank you.

Operator

Okay, thank you. I’m showing our final question from Ritul Baral from Canaccord. Please go ahead.

Ritu Baral – Canaccord Genuity

Hi guys, thanks for taking the last follow-up question. Given that you’re now sort of on the hook for additional R&D costs, have you guys decided, you and GSK decided what you might do for other geographies beyond Europe – maybe Japan or Asia, and what kind of trials might be required? I’m assuming that you would be responsible for a proportion of those development costs as well.

John Crowley

Correct, it’s worldwide sharing, so just as we share in their territory they share in ours for cost sharing, Ritu. But I can tell you the territories beyond Europe have already been anticipated as part of the development plan, including for instance Japan as we’ve publicly talked about having a regulatory strategy and also now having a clinical site in our 012 study in Japan as well. So that’s already been part of the plan and the spending; in fact, we already have at least one – I have to check on the numbers but at least one patient I already know of enrolled in Japan. So two – the Chief Medical Officer tells me two.

Ritu Baral – Canaccord Genuity

Got it. And David, any thoughts as to why you’re seeing that increased potency for the enzyme with the co-formulation?

David Lockhart

It’s an interesting observation. We saw the same thing with [GK] also. It seems that the interaction with the small molecule at the active site actually… You can think of it as kind of pre-setting the active site for a good interaction with the substrate. Because the small molecule is similar to the substrate the binding prepositions the enzyme in a way that’s favorable for the interaction with the substrate. So it wasn’t something we expected, it wasn’t something that we need for it to be better – we were just hoping to maintain the activity that was already there. But the additional boost following the interaction with the small molecule is a pleasant surprise, and like I said it wasn’t unique to alpha GLA. We’ve seen it with other alpha GLA enzymes as well.

Ritu Baral – Canaccord Genuity

So priming the enzyme, essentially.

David Lockhart

Right, that’s one way to say it, exactly. And if you look at the papers that we published with Greg [Petsko’s group at Brandeis], some of this is described as well with the [GK enzyme for Gochet].

Ritu Baral – Canaccord Genuity

Great, thanks. I was so focused on my questions I didn’t even congratulate you guys on the deal. Thanks for taking the questions.

Operator

Okay, thank you. I would like to turn the conference back over to your hosts for concluding remarks.

John Crowley

Great, so that’s all I have. I think we’ve covered quite a bit of territory here. We’re obviously happy to continue the discussions offline with anybody. Please coordinate through Sara Pellegrino, and tonight, tomorrow we’re happy to continue the discussions. But again, I think this is a great day for Amicus and a great, great realization and validation of this important new aspect of our technology, and very, very quickly moving along our continuum of innovation. So thanks all for listening; have a great day.

Operator

Okay, ladies and gentlemen this does conclude your conference. You may now disconnect and have a great day.

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Source: Amicus Therapeutics' CEO Hosts GSK Expanded Fabry Collaboration Call (Transcript)

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