Amicus Therapeutics, Inc. (FOLD) Earnings Call Transcript & Summary

I think we're live now, yes. Well, welcome to everyone who's joining us today. We're going to kick off the Credit Suisse 29th Annual Virtual -- well, first-ever virtual healthcare conference, 29th annual conference. I've got John Crowley; and Andrew Faughnan from Amicus Therapeutics to do a presentation. We have time for a few questions at the end. If anybody has any questions in the audience, please e-mail them over to me at martin.auster@credit-suisse.com. Thank you very much for joining us today, John, and kicking off the conference. I'll pass it over to you.

Great, thanks, Marty. I'll go ahead and pull up my slides, hopefully, successfully here. Can you guys see them okay?

Yes.

Great, thanks. So I'll just refer you to the safe harbor statement. I will be making forward-looking statements. And now just share a snapshot of Amicus Before I do that, let me just comment. I think we've all seen the release from Pfizer, and I'll just -- would like to congratulate Pfizer as a company, but I think broadly for the biopharmaceutical industry and the broad public-private partnership that's brought us at least to this point. In Albert's press release, he noted that it is a great day for science and for humanity, and it certainly is with much more work ahead. But congrats to everybody who's been a part of getting us this far. For Amicus side, you can see all the different ways in which we position the company here. This is exactly the way we positioned the company at the beginning of the year before we went into the COVID crisis. So what I'd like to highlight, there's really 3 key parts to Amicus today. The first is the cornerstone of our success, Galafold, our small molecule precision medicine for people living with amenable variants with Fabry disease, again, reaffirming our guidance that we will generate revenue of $250 million to $260 million this year. We think we'll be toward the top half of that range as we close in on the end of the year. So that's the cornerstone. The middle part of Amicus is our crown jewel, our AT-GAA. That's our next-generation biologic for Pompe disease, an enzyme replacement therapy combined with a small molecule chaperone that we think has the potential to become the new standard of care in Pompe disease. A lot of activities around that, gearing up for filings, for launch, for receipt of data in the first quarter now. So that's the crown jewel of Amicus. And then we have our pipeline. Over the last a little more than 2 years, we have assembled now the largest portfolio of rare disease gene therapy programs in the industry, including 2 clinical-stage gene therapies. So we'll talk more about the pipeline and those Batten programs as well. But I think if you take those 3 parts of Amicus together and underlie it with the financial strength of the company to remind everybody we completed a market setting transaction with the debt financing with Hayfin this summer. That takes us now on a path to profitability without the need to further access the capital markets for any dilutive financing. We ended Q3 with just over $0.5 billion in cash on hand, and we reaffirm our operating expense guidance for the year. So that's the snapshot of Amicus where we are. It's been a very strong Amicus for 2020, and we think on the other side of the pandemic, Amicus will emerge even stronger. So with that as a snapshot, again, the key takeaways to emphasize for everybody, Galafold's remarkable performance through this pandemic, again, reaffirming that range of $250 million to $260 million in sales; Pompe is the crown jewel; the gene therapy portfolio; and then the strong financial position of the company. Here you'll see just a little bit more about the rare disease portfolio. Again, you can see it's a little different in the last couple of quarters. We've now positioned it as a series of franchises at the top. So our Fabry franchise with Galafold, of course, our approved medicine, now approved in nearly 40 countries around the world. But we also have our Fabry gene therapy program. We, on our earnings call last week, just disclosed for the first time that we have now selected an IND candidate. That program moved much faster than we envisioned. It's using an entirely different application of our protein engineering to enhance the stability of that protein that's expressed by the gene therapy, and again, that was a partnership in collaboration with Jim Wilson and his research team at UPenn over the last 1.5 years that's now led to this exciting new candidate. And then again, you can see as we move down the portfolio, same for Pompe. Again, we previously disclosed that, again, on an accelerated timeline, we were able to select a Pompe gene therapy. And then again, you can move down from the Battens, the 2 clinical stage programs, CLN6, CLN3. And then you move down through a number of neurologic gene therapy programs and then a number of programs in the MPS. And again, there are dozens that we don't yet disclose here that are in various stages of preclinical or discovery development. And those include about a dozen very large rare diseases. We've only disclosed a handful of those myotonic dystrophy. Angelman and Rett is the larger of the rare disease targets in gene therapy that Amicus has exclusive global rights to coming out of research labs at UPenn. So that's our portfolio. Let me go ahead and dig a little bit deeper now into, again, the cornerstone of our success. It's our first commercially approved product, and that's Galafold, the precision medicine for Fabry disease. Again, orally delivered, so a differentiated product, small molecule precision medicine, obviates the need for any intravenous infusions of enzyme therapy for anybody living with Fabry disease with any one of now over 1,300 identified amenable mutations. Those are now included in the label in the EU. Very strong quarter. We just announced a few days ago for Galafold, $67.4 million in Galafold revenue again on track toward that upper half of the $250 million to $260 million guidance for the year. So we're still in the early days of launching Galafold. This year, 2020, was only the second full year of launch in the United States and Japan. We still have many more patients that we need to put on this medicine. People who are both switching from enzyme therapy as well as increasingly newly diagnosed patients or patients who for any number of [ instance ] have discontinued over the years, their enzyme replacement therapy. So still a very strong growth product, and again, exceptionally strong intellectual property well into the 2030s. Again, you see where we're going to focus over the next couple of years We, over a year ago at our R&D Day, shared this plan. It was a vision. It's now a plan for Galafold's growth, and that's a very comprehensive plan to drive us toward more than $500 million of revenue by 2023. We're well on track. We'll be more than halfway there by the end of this year. We'll see a 5-year CAGR of about 40% to get us there. And we think this is a medicine that has the potential at peak sales to generate more than $1 billion in revenue. Moving on now to AT-GAA. That's our novel enzyme replacement therapy combined with a small molecule chaperone, again, with the potential to become the next standard of care in Pompe disease. A little bit more about Pompe disease, one of the larger neuromuscular disease, rare neuromuscular diseases, a lysosomal storage disorder. First approved medicine was approved one enzyme replacement therapy from Genzyme that was approved in 2006. That generates now about $1 billion in global revenue. The disease itself, very severe muscle disease. It can affect people from the day they're born and manifest in symptoms in the most severe classic infantile forms of the disease through childhood juvenile presentations all the way through adult forms of Pompe disease. But in every case, it's a mutation on the same gene that leads to a buildup of the same substrate glycogen in the lysosomal muscles that eventually overwhelms the lysosome, disrupts the entire muscular function. It affects breathing muscles, cardiac muscles, skeletal muscles. So we knew coming into this about a decade ago when we sought to build an enzyme therapy, that there was still significant unmet need and that we needed to try to see if we could make something with the potential to be better. And that's exactly what we did. So Dr. Hung Do, our Chief Science Officer; and his team, who are among the world's leaders in glycobiology and specifically in the glycobiology of lysosomal enzymes, worked on designing an enzyme replacement therapy that would have high levels of mannose 6-phosphate that is the targeting entity necessary for uptake into muscle, together with the right and what we call the appropriate level of glycosylation, so paying attention to the 9:13 PM sialic acid, other sugars, the challenge here was not only to create that in the lab, which was a significant undertaking in itself. We also had to do it in a way that we can scale. And together with our partners over the years now, more than 7 years of work with our partners at WuXi Biologics, we've been able to successfully engineer the protein to scale it now to commercial scale. And again, we combine it with a chaperone. The bulk of the work, 80%, 90% of the work is in this newly created enzyme therapy, allowing better absorption into muscle. The small molecule is taken about an hour before the infusion. It's a 4-hour infusion in the clinical studies. And the purpose of this small molecule is to confirm stability to add additional potency to the enzyme replacement therapy. So that once the enzyme therapy is absorbed in the muscle, it's there in a more active form, but importantly, it's been stable in plasma. We think this also has the potential to lead to better tolerability of this enzyme as well. So remarkable science and protein engineering that went into this potential new medicine here. I think we did share last week -- I just will highlight briefly. Again, this speaks to the unmet need in Pompe disease. On the right, we presented this at the World Symposium all the way back actually in 2017 through a poster presentation showing the longitudinal data of the published studies in late onset Pompe disease where you can see that any benefit is conferred to the extent it's conferred in that first 2 years on the 6-minute walk. And then almost uniformly, patients plateau and decline. We actually undertook a couple of years ago our own chart review, retrospective natural history study, looking, again, longitudinal at 6-minute walk data. And you can see our results mirrored what has been known to be in the published data, again, that patients flatline from their 6-minute walk, and again, begin to regress down base -- toward baseline. So again, just speaks to the unmet need that we expect to see. And again, as a reminder, I'll speak about our PROPEL study, but specifically in a moment, but as a reminder, all of those patients have been on enzyme therapy for at least a couple of years. So any benefit to the switch patients based on all of the research we've done here looks like it would have been in those early days and already taken into account. So what do we know about this? It's been very well studied throughout a series of Phase II -- Phase I/II studies, again, multiple different types of patients. We had studied ERT switch patients who are ambulatory. We studied in Cohort 1 and Cohort 3, for instance. We studied a handful of patients who are ERT treatment-naive. We had a Cohort 2 where we actually had switch patients who were wheelchair-bound, most of them in ventilators. And you can see what the data shows is with remarkable consistency and durability, we see that patients seem to get stronger on this enzyme therapy. It doesn't just stop the progression or even keep them flat when they switch. For switch patients it seems if they could walk, they could walk further on our medicine. In this case, at month 12, for instance, the switch patients walking more than 42 meters from their baseline. The ERT treatment-naive patients walking more than 63 meters further than the headed baseline. So this gives us strong encouragement for the primary endpoint of our PROPEL study, which is 6-minute walk distance. Again, you can see multiple improvements here over time. We have one measure of pulmonary function and force vital capacity as well. Again, we looked at many other measures throughout these studies, years of Phase II studies. That helped us design this, which is our Phase III PROPEL study. It is -- it had originally been designed to be 100 patients. We actually overenrolled the study at 123 patients. This study was done at -- or is being done at 59 sites on 6 continents around the world. We felt it important that we offered this to many, many people in many countries living with Pompe. But we also felt it important that all of the world's leading experts in Pompe had experience with AT-GAA in this clinical study. Again, a 2:1 randomization. Importantly, this study includes both ERT switch and ERT-naive patients. And again, the primary endpoint is 6-minute walk test at 52 weeks. Through COVID, we've seen that we've maintained the integrity of the study. More than 97% of all of the planned infusions and all of the planned assessments have gone off on time. So we have a high degree of confidence in the integrity of the study. We're almost at the very end of the primary treatment period. Most all of the patients have completed the 12-month protocol and now gone into the extension study, where if they were in the arm getting AT-GAA, they continued on AT-GAA for the 1/3 of the patients who were randomized to the control arm. They were then offered to switch to AT-GAA. And again, virtually all of those patients now have continued into the extension arm. Last patient out is expected in December, and we've now tightened the range to indicate that data is expected in the first quarter of 2021. So we're really excited to see the data ahead. And again, the BLA submission, the first part, the first module will go in here in December, and we expect to complete the BLA submission in the second quarter. We'd also hope on the strength of the data, but also with the breakthrough therapy consignation gear that we would have a high potential for a priority review as well. So I've kind of gone through all the key takeaways of the study just on this slide. I'll emphasize that the biologic manufacturing is in a very good place. With the PPQ runs almost completed, we've completed the upstream and the downstream work which just had some further work to complete the stability studies, and then we'll be in a good position for the CMC module, which is going to be incredibly important to be a part of the BLA submission. And again, the crown jewel here is -- and we believe it has significant potential to change people's lives and for Amicus, is to be a core product for us, the only product in our portfolio with a potential for up to $2 billion in annual revenue, so very excited about this program continuing. Let me talk for a little bit about our gene therapy platforms and approaches here. So in gene therapies, what we're doing is not entirely new or novel. We're building on what we've done over the years, again, moving from pharmacological chaperones to next-generation enzyme replacement therapies, the notion of protein engineering, our being, we believe, experts in rare disease, genetic medicine. And now in the world of gene therapies, taking that experience, particularly the experience in biologics and protein engineering and apply it to gene therapies. So with Batten disease, let me speak specifically to Batten disease now. There are 13 known different types of Batten disease, again, each involving a related but different gene, each leading to lysosomal dysfunction. These are fatal brain diseases in children. They cause brain damage, vision loss, loss of cognitive function. Children go from being born perfectly healthy to, within a couple of years, parents noticing that the kids' speech is a little slurred. They're beginning to stumble, and they're having trouble remembering their ABCs. And for CLN6, for instance, over a period or short period of time, just a year or 2 in many cases, they go from being seemingly perfectly healthy to being very, very sick little children, and oftentimes dying before they reach their 10th birthday. So when you look at these diseases, there are tremendous amount of unmet need. These are the programs that we acquired from Nationwide Children's Hospital technology and the work that Dr. Brian Kaspar had in the spin-out company for Batten disease that they created several years ago called Celenex. We've taken these programs on now at Amicus. A lot of the work that we've done over the course of the last year is focused on the CMC and the analytical work development. We realized about a year ago that the FDA obviously significantly increasing the bar for filing of these programs from a CMC standpoint. So we believe we were ahead of the curve here and working with our partners at Thermo Fisher Brammer manufacturing. We've transferred the technology. We've tightened all the assays, particularly the potency assay. We're now in the process of commercial scale manufacturer, still very small-scale in hyperstacks, but we think a very high commercial quality. With that, we've also continued to follow the first dozen -- a little more than a dozen patients who were part of that clinical study in CLN6 Batten disease. And again, you can see what we show over time as against the Hamburg Motor and Language Score Index. And again, that's an assessment of walking ability and speaking ability in these children, is that now out to 2 years, we show that for most children, we see a significant slowing disease progression. You can see as we look at it on this chart on the right, even matched with a p-value here of 0.03. So this matches up with what we've been hearing and seeing anecdotally that -- particularly for the children where the disease had not completely destroyed their brain yet. Generally, the younger children, it looks like we can stave off significant declines in these children. So it gives us great encouragement and I think a great foundation to go forward. Again, moving now to CLN3 Batten disease, a lot of the work coming out of Sanford Medical Center in South Dakota, the research center there, together with Nationwide Children's Hospital. And now in the Amicus labs, you can see the preclinical data again showing significant penetration of the vector into the brain. And here, importantly, you can see significant expression of the protein as well. So the Batten programs continue to move on. I'll just comment before I go to the UPenn programs here that we've now treated 13 children with CLN6 Batten disease, 4 children with CLN3. Importantly, early in the first quarter, we'll have the first look at data from that CLN3 program. The first patient treated now for first infusion was nearly 2 years ago. A lot of work on the CMC section that's ongoing, and we will -- we continue to work with the regulators, both on the important CMC work, as well as the clinical path forward. We know we need to treat additional children with the commercial scale material. Exactly how many children and for how long, we're working through the FDA with that. Again, a lot of the work focused now on ensuring we've got the right CMC plants. So important programs for us. We have other programs in other Batten diseases as well and we'll be speaking about those in the months and quarters ahead. A significant part of our work with our science labs are 50 scientists in our Global Gene Therapy Research Center in Philadelphia, which is across the street from Jim Wilson's lab at UPenn, is that important collaboration with Jim and his team on developing next-generation gene therapies combining the Amicus protein and platform experience in protein engineering and glycobiology together with Jim and his team's experience in gene therapy, including looking at solving problems around delivery, safety, manufacturability, so an incredibly strong partnership. And you've seen some of the early results now with the Fabry and the Pompe gene therapy programs. Again, let me just comment here briefly. Many people over the last number of years have focused on the gene therapy side of the equation, the vectors, and that's incredibly important and we do as well. And again, we're able to lever with our exclusive partnership with Jim and these diseases. We're able to lever the next-generation gene therapy technology. But we also think it's important to focus on what is the protein that's being expressed by the gene therapy vector. You can't just put out any protein. You can't just put out a wild-type protein. We think it's important for targeting for maximal efficacy, but also to ensure the best safety so that we can deliver the maximum efficient dose but do it at a dose that we think would be very safe. We think high-dose systemic AAV delivery is inherently dangerous and unsafe for patients. So that was a key part of the thesis around our collaboration with Jim and his team. And you've seen some of the fruit that's come to bear from that. You saw what we were able to do by engineering in technology in the transgene to ensure that in Pompe disease, the protein that would be expressed would be highly targeted could also be targeted to the CNS. We've seen that preclinical data. And now just last week, we showed the data by introducing this technology to improve the stability in Fabry disease, engineering in specific technology, again, to enhance that stability of the protein. So we think incredibly important, unique proprietary Amicus platform technology here. And again, you can just see what on this slide, in a range of programs, Pompe, Fabry, some of the Batten's programs and others where the potential to engineer these proteins we think is broadly applicable to solve a number of problems in the field of gene therapy. Here, you can see specifically what we did with Fabry disease, and that was engineered, the GLA, the Fabry protein transgene, specifically, to show better reduction of the substrate and increased production of the protein. Very important that we engineered the dimer interface here. This is an all-new platform technology at Amicus, and we think, again, another great example of science in Amicus and the strength of the combination with Dr. Wilson and his team at UPenn. So gene therapy, clinical stage programs, we're developing increased expertise at gene therapy manufacturing. I strongly am of the belief that if we are to be among the world's leading companies in gene therapy science, we need to be among the world's leading companies in gene therapy process science and manufacturing. In gene therapy, the process is the product. And Amicus, I think, is uniquely suited in this field. We have over 70 of our employees at Amicus who work in technical operations, biologics manufacturing and quality. We're applying the exact skills that we did in making AT-GAA, our biologic enzyme replacement therapy in Pompe, arguably the most complicated glycosylator biologic ever produced in the industry. We're taking that expertise now, and we're applying it to gene therapy manufacturing with the tech transfer from the academic centers and now working side by side with our partners at Thermo Fisher Brammer, but also now planning for our own capabilities and capacity in gene therapy manufacturing. We're now completing the design work on the state-of-the-art 30,000 square feet clinical manufacturing facility, and we'll have more to say about that in the very early part of 2021. And we're already working on the designs for a larger commercial scale facility. And again, all of that ongoing work at Amicus, together with some key partners, so lots of work in gene therapy. I'll just comment here on the financial performance of the company. It was about a year ago at our R&D Day in New York where we've talked about our vision for a path toward profitability. And we talked about operating expenses, for instance, over the next several years remaining flat. And we can do that for 2 reasons. One, on the G&A side, we can do it because we've already built a global infrastructure to deliver Galafold to patients around the world. And we can lever that with very, very small additions of additional personnel to now launch AT-GAA. So significant leverage in that commercial infrastructure will keep G&A flat. Now on the R&D side, AT-GAA is a very expensive program. I can do 5 to 10 complete gene therapy programs for the call -- for what AT-GAA has cost to develop. So we can bring multiple gene therapy programs forward into the clinic, including all the manufacturing work, while transitioning all of the AT-GAA R&D spend to those programs. So with that, you can see the financial outlook for Amicus has never been stronger, again, with a path toward profitability without the need for any dilutive financings going forward. Cumulative Galafold revenue will be in the next over a 36-month period from 2020 to 2022, about $1 billion. That will fund a lot of the R&D here at the company. And again, we reaffirm our annual guidance this year for Galafold of $250 million to $260 million and operating expense of $410 million to $420 million. Again, on a major path towards self-sustainability, our strategy is really clear, we're just going to keep growing Galafold, get it to more patients. We're going to get AT-GAA to its pivotal data here in the next few months. We are working really hard on all the regulatory filings, first in the United States, but very quickly after that in Europe, Japan, other geographies And we've already begun our launch planning. And similarly, we've already begun the planning for manufacturing as well. The -- again, progress across all the gene therapies, we're going to continue to drive those, and we're going to continue to invest in science to continue to build this great pipeline. So with that, that's my presentation. Marty, I'll click out of the PowerPoint mode here, and happy to take any questions.

Yes. Absolutely, John. Thank you so much for the presentation. I had a couple of questions for you. Maybe as you talked about the AT-GAA readout coming up in 2021, if you could kind of frame what you'd see as kind of a successful outcome there. What are some of the kind of key risks you think investors are focused on and kind of just in general, kind of what's a good outcome for you from that study, obviously, that's hard to win?

Yes. There are some clinical studies you kind of hold your breath when you unveil the data. We're really eager to see this, Marty. But we've worked with these patients in this protein now for 4.5 years in clinical studies. And we understand it very well. It was a very -- it has been a very well-designed Phase III study, the PROPEL study. It's overpowered for success. As you know, the primary endpoint is 6-minute walk. We've seen the 6-minute walk data, for instance, among our switch patients at a year, which is the primary endpoint time period of PROPEL study. At a year, we showed more than 40-meter improvement for those switch patients. For the naive patients, we showed more than a 60-meter improvement. And it wasn't driven by a couple of outliers. It was consistent across almost all patients. So when we look at the PROPEL study, we only need to show about a 15- to 20-meter improvement to hit statistical significance on superiority against standard of care. And while we're looking on inferiority and there's multiple paths to get the medicine approved, of course, we are very confident in what we've designed and what we'll be able to show. So we'll see when the data comes out. But in terms of the study design and execution, I don't think it could have gone any better. We feel we're in a really good place. If you take, for instance, the 120 or so patients from the PROPEL study, all of our Phase II patients, the infants now who are getting the medicine under expanded access, we'll end the year with about 175 people around the world taking AT-GAA. One of the things we've seen throughout all the clinical studies at Amicus, we always offer patients the chance to take the medicine, continue in an extension study for all of our programs. And virtually all patients who have had that option have taken the option of taking AT-GAA, not to go back to Lumizyme, and they stay on AT-GAA. So I think that speaks, hopefully, to the patient experience. So I think we're hopefully in a really good place.