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

Good afternoon, and welcome to the Bank of America Healthcare Conference. I am Tazeen Ahmad. I'm one of the senior SMID biotech analysts here at the bank. It's my pleasure to have our next presenting company, Amicus Therapeutics, for the next half hour or so. Sitting next to me is President and current COO, but incoming CEO, Brad Campbell. Brad, welcome.

Thank you. It's nice to see you in-person for the first time in years.

Yes, we're back live after 3 years. So maybe let's just start off with an overview of the company, for those who might not be as familiar. And from there, we can maybe go into some more detailed questions on the many things that are happening at the company.

Right, yes, never a dull moment. Thank you, Tazeen, for having us. Thanks Bank of America for hosting the conference. It's been a great conference for us. It is good to be in-person, seeing investors again. So thanks for the opportunity to do that. This is our first in-person conference. So for those of you who don't know Amicus, we're a global biopharmaceutical company focused on developing next-generation medicines for rare and orphan diseases. Our lead program is a product is, our lead product I should say, is Galafold, which is a small molecule precision medicine for the treatment of Fabry disease in patients with certain amenable mutations, which is about 1/3 to 1/2 of the market. We are on track to do $350 million to $365 million in sales for Galafold. And we're growing and we just released our quarterly numbers, which I'm sure we'll talk more about. We're growing at a healthy, this past quarter, 23% from an operational perspective, and we continue to see high 15% to 20% growth rates this year and for the foreseeable future. We have our Pompe program, which I'm sure there'll be a lot of time spent today, which is our late-stage development program for Pompe disease. It's AT-GAA, which is an enzyme replacement therapy combined with a small molecule stabilizer. We're on file with both the FDA and EMA. There's lots of news to cover, I'm sure, on both of those, so we'll save that for the conversation. But we think that has the potential to be standard of care for treatment of Pompe patients. And then I think all of that is underpinned by, which is so important in this tumultuous market, by a strong financial profile. We've committed to getting to non-GAAP profitability next year and see our way to positive free cash flow in the years following. So lots of exciting news.

Yes. So let's start with the most recent update.

Yes.

Which is for your current application with FDA. It was always a little bit complicated, right, because we're going to have 2 PDUFAs.

Right.

And you recently updated that that's now been pushed.

Yes.

Can you just talk about sort of the sequencing of events that led to that. You made an allusion to it, I think, on your earnings call that that might be a possibility and that that did happen, I think, the next day.

Yes.

So I guess, what portion of the application is the part that's causing the delay?

Sure. Yes. So and just from a timing perspective, we've been making the joke, apparently the FDA doesn't really follow our earnings schedule. So it would have been ideal to have that information ahead of time. Unfortunately, we didn't. We came late in the day. But -- so specific to your question, so it is an extension specific to nonclinical section of the review. It is a report that is on data that was already provided. So we provided a section of data. They asked for the reports that supported those data sets. And so that's what we provided to them. And that's specifically what they have pointed to as the reason for the extension is to review those reports. And to your point about the 2 different NDA and BLA because it's a small molecule and the biologic, even though it's the same review division, even though it's the same review team, technically its 2 applications, and that particular data set sits within both. The labels will be largely similar, we would anticipate. So in fact they extended both the NDA PDUFA date from May 29 until August 29 and the BLA PDUFA date from July 29 to October 29. It is more complicated than we'd like it to be, but those are sort of the facts that we have in front of us.

Okay. So leading into this, you were saying that you would probably more likely make public the seconds PDUFA once you've got the decision on the latter decision requirement, then you would tell everybody that you were…

Correct.

Is that your plan still with the revised PDUFA date?

And that was based on feedback from the FDA that they would likely approve them together. And so because the BLA is the more complex of the applications, the small molecule is a generic form of another approved product. We are orienting people to the July date and the FDA told us that they would like to approve the products together. And so for that reason, we were sort of orienting people to July.

Okay. So would they tell you about the first date or they will tell you…

Our understanding from the agency as it relates to the May, July, paradigm was that they would take no action on the NDA. If they weren't prepared to approve them both for May, they would take no action on the NDA and they will take action on both of them together in July. That was under the previous timelines.

Okay. So now with the revised timelines, how confident are you that the issue will be resolved within the new time frame?

Yes. So we very much -- of course, this extension was specific to this data set that they're reviewing, which was the 90-day delay. But obviously it gives them more time to conduct the inspection. They have told us and we indicated on the earnings call and situation is the same. They've indicated the need to inspect the plant in Wuxi City, China, in order to approve the product that's obviously standard preapproval inspections. And so we very much believe that that is the rate limiting step in the process. And so we fully expect that with more time, they'll be able to do the inspection. We have said we are looking to support sort of 3 versions of an inspection that historically has been used by the agency. The first is in person, which is the most obvious one. So people from the United States inspecting the plant in China. The second one is one that this facility in Wuxi has used before, which is a hybrid inspection. We understand the FDA has employees on the ground in Shanghai, who have traveled to this facility in Wuxi and then been supported by the team in the United States. So that would be a second version. There are also paper-based inspections. So we and our partners at Wuxi could support any one of those things and would be happy for the agency to take advantage of it. Any whichever one makes the most sense for them to finish the inspection. And I think now with more time, it gives us more confidence that they'll be able to do that.

Okay. But there is a little bit of unpredictability about China and the lockdown and what they deem allowable. And so how do you guys just -- how do you get comfortable with that? Is a virtual inspection possible at all?

Well, we know that in the past 2 years with other sponsors, we know that paper-based inspections for BLAs have been conducted. In fact, we know there are some examples of Asian-based CDMOs who have supported paper-based inspections that led to an approved product. So that is possible. The FDA can do that. Again, we also know that during COVID in November, that Wuxi hosted that hybrid inspection, which was the Shanghai team. Of course, right now, the situation in Shanghai has been relatively significantly locked down. We're all following the same news that you guys do. But we know that 4 weeks ago, we had a mock inspector, who is based in Shanghai, who we hired to effectively do a mock inspection on the facility and Wuxi was able to have her in. She came from Shanghai. So very recently, it was possible for people to move from Shanghai to Wuxi to do that. So our hope is that, again, 1 of those 3 scenarios over the next period of time now that we have more time, we'll be able to have.

Okay. So now, I guess, let's talk about the competitive landscape for Pompe for a couple of minutes. Sanofi basically owns that market and has owned it for some time. So people who talk about the opportunity that Amicus would have if you get approval, to me, it kind of -- it's a 2-pronged question. Number one, what is your label going to look like? So would you get a full label or could it be limited to, let's say, patient switch? And then secondly, how -- I guess, how entrenched do you think Sanofi is with the doctors who would be prescribing these therapies? And where do you think the opportunity would be for Amicus to penetrate. So if we can talk about those things.

Yes. Yes. So starting with just the overall market, what's the unmet need? Yes, Sanofi has been out there for decades in the Pompe field and the current approved product Myozyme, standard of care Myozyme, I should say, has been used in Pompe for quite some time. That being said, it's been well reported in multiple natural history studies. We've done our own natural history study that patients on Myozyme, tend to have an initial impact over the first year or 2 and then at some point in time begin to plateau and then decline. And that decline effect, I think, has been well established. Even with the approval of Sanofi's second-generation product, the FDA, this is their words, not ours, the FDA said specifically that they -- that there was still an unmet need in Pompe disease, and they still look forward to working with other manufacturers to develop new therapies for Pompe. So we think the unmet need is well established and still exists. In terms of our product and our potential label, I think it's important to set up the difference between the population that we studied and any of the other populations that have been studied. So we studied and we had an all-comer study that was a majority made up of switch patients, so experienced patients who came off Myozyme and went on to our product. We also had a small cohort of patients who were naive to treatment came on to our study. And we compared that to standard of care in both of those populations. The 2 other studies that have been conducted, one with Myozyme, the first generation product for Sanofi and one with NexViazyme, we're both in naive patients versus -- so Lumizyme, of course, was -- Myozyme was versus placebo and NexViazyme was versus standard of care Myozyme and Lumizyme. So ours is the only data set that has a significant portion of the controlled population that looks at switch patients. And if you think about the market opportunity that we just talked about, today the market is about $1.1 billion or $1.2 billion. That's about 3,200 or so, a little over 3,000 patients treated on Myozyme today. There's less than a 10% growth rate every year of new patients. So the vast majority of opportunity in the near term is going to be in switch patients. So if you think about the label scenarios, one scenario could be that we get a broad label indication statement. But I think the other important part of the label is what data can you promote on. And for us, if you -- and you know this dataset well, but for the audience, we have sort of 3 cuts of the data that I think are most important in both 6-minute walk and enforced vital capacity. One is in the overall population. One is in the switch population and then one is the naive population. We think the most compelling data set is in the switch population. That's the clearest and that would be the most differentiated data set we think that we could bring to physicians and patients as they think about using the drug. And it's differentiated because nobody has controlled data in that population. So as you think about the different variations of the label, one of them is it for experience or switch? And then another question is what data can you use to try to convince physicians. And again, we think probably the most important variable of all of those variables is that we have that switch data highlighted in the label. There are other ways that you could see different permutations, but we think that would be perhaps the most compelling.

So everything you say makes total sense, right? That's the majority of the market. But has there been a shift internally in the way you think about this market? What I mean by that is, I think initially, it was still a question of just really full label or not getting approved. Has there been an evolution of view that, hey, switch would be great? And if so, I guess, what's been behind that view?

We've always thought about different -- everything is a negotiation with the label, et cetera. So there's -- we've always thought about different orientations or permutations, I should say, of those different variables within the label. I think as you think about the market dynamics today in particular, with another product who are also trying to switch patients, right, it's still Sanofi. I think from our perspective, it puts more -- it just sharpens the focus on having a strong switch argument. Now I would also say that if we don't in the end, and we very much are trying to do, but if we don't, in the end, get naive patients in the indication statement, I think if you look to Galafold, we've been able to broaden that indication over time with new mutations coming on, but also going into younger patients, pediatric patients, we have a pediatric development plan. We will almost certainly be conducting a registry. So it's not that we can't come back and try to broaden that label later. But I do think the -- as the market has evolved, I think, again, just focusing on where is the most unmet need and where are we the most differentiated sort of sharpens the focus on that data set. I do think the situation in Europe perhaps is a little bit different with the status of and the appeal process that the competitor has gone through, which publicly was shown that the appeal was overturned or not granted. And so that, if nothing else, the time between launch in Europe and our launch in Europe has been significantly narrowed, which we think is a good thing. But it remains to be seen what happens in Europe with the next-generation product, but we're eager to go through that review process with EMA and on track for, we think, an approval by the end of this year.

Okay. Is there a chance that you hear label could look different from the U.S. label?

There's always a chance and -- but I think the emphasis would still be the same for us and kind of the minimum threshold or the most important thing we need is still that data set. But sure, you can always -- we're not as far along in the review process with EMA, and so you could end up slightly different there, for sure.

Okay. So if you were to hypothetically get a label that's restricted to switch patients, how does that, if at all, change your plans for what you need on your commercial footprint?

So it does not really meaningfully change. So the good news is that with the commercial organization we've built with -- for our Galafold franchise, we are present in over 25 countries around the world on a direct basis and were approved in 40. And so we have a significant infrastructure that's highly leverageable. What we've said is we don't think we need to hire more than a dozen FTEs globally to support the launch, at least in the first few years, primarily in direct medical direct marketing and then in the United States, some patient services hub support but this is a highly leverageable commercial organization. And so I don't think the label itself makes a meaningful impact on that.

Okay. Now you were able to successfully pivot from pipeline to commercial when you did the Galafold launch. What are the things that you think you learned from Galafold that you'll be able to really quickly apply to the Pompe launch assuming that made you get approved?

One of the things for sure is access. I think that's been a real strength of Amicus. We took a decision early on, which is very much in keeping with our belief statement where we say we think our medicines must be fairly priced and broadly accessible. That's part of what we're trying to do is add value to the community through developing great medicines, and therefore, they need to be accessed but it really makes good strategic sense because for us, it's all about speed to reimbursement and speed to getting patients on therapy. So if you're fighting for the extra $10,000 of pricing and you're delaying 3 or 6 or 9 months in order to get to that price point, we think that's wasted time when you could have been putting more patients on therapy. So there's kind of 2 ways to maximize the area under the curve, one of which is to get out there quickly and get more patients on drug. That's been a very successful strategy with Galafold, then the whole system, the reimbursers, the physicians, the patients, all they're focused on is the drug, not on the price of the drug. And we think that's where they should be focused. We would look to use that same strategy here, which is parity pricing or perhaps modest discount. But in general, take price off the table, focus on getting to reimbursement and access. So that's one thing. I think the second thing is in the United States for sure, patient services are critical. Pompe, because they're going through infusions is even perhaps more important. So the fact that we now have a well-oiled machine for our patient services group, which helps with not just reimbursement but also education around taking the medication. We've got a small molecule that's also combined with the enzyme replacement therapy, so that there are some differences here. So I think that really high-touch approach is really important here. And then the last thing, I think, is really competing with the data. In Galafold, we don't pay a lot of attention to it now, but the U.S. label for our Galafold is not ideal. But I think we're able to compete by doing a lot of work, and we actually highlighted this in our quarterly call for the first time in a while, a lot of work trying to generate more evidence both to the registry, through investigator-initiated studies through publications so that the medical community has a data set to draw on that can supplement what the reps are actually promote from a label perspective. And I think that relying on the data and here, too, if you think about with Pompe, how impressive we think our long-term data has been, and we would contrast that with some of the other long-term data sets that are out there. We really think that focusing on the data really in the end is what these physicians and patients want to see.

Okay. Now one of the push backs that I get on Pompe's approval is, of course, the -- well, you didn't hit the primary endpoint... Right? And so when you don't hit the primary endpoint, even though you looked great on Switch, that's by definition and exploratory endpoint now, right? So yes, the company is confident that the data is strong enough to warrant an approval. So can you kind of help us understand that the fact that you did miss the primary endpoint just supposed against the strength of, let's say, for sure, patient switch. With the view that, yes, historically in Pompe, FDA has been pretty generous with the 2 approvals that it's given. But does the agency still feel like it is such an area of undermet need given that you have 2 other approved drugs?

So as a reminder, the study was set up originally to show superiority on 6-minute walk. That was the primary endpoint in again, that combined population of switch in naive patients. We just missed statistical significance on the primary endpoint. And we had identified forced vital capacity, superiority on forced vital capacity as the key secondary endpoint. So it's a little different in the sense that this wasn't a post-hoc analysis. But technically, from a statistical perspective, it was a nominal. You spent all your alpha on the primary analysis, and so it becomes a nominally statistically significant outcome. So then you're asking for regulatory flexibility to be able to improve that product. Now as you said, the risk precedent for that in a whole host of drugs, but in Pompe, specifically, actually, Myozyme was approved under the same paradigm. They missed statistical significance on 6-minute walk. It was their primary end point effectively from a statistical perspective, they had nominal static in their forced vital capacity and that went on to approval. Now to be fair, that was prior to -- that was the first drug approved, so that you could say, well, is there still an unmet need. And again, I think it's been reported and well reported for many different studies, many different agencies even have identified this. And again, in the FDA's own words, when they approved Nexviazyme, they still pointed to a remaining unmet medical need. So I think that very clearly still exists. And then I think you look to the strength of the data and you look to, is this having a meaningful clinical impact on patients, and we think it very much is and in particular, in the highest unmet need area, which is in the switch patients. So I think for all of those reasons, there is a precedent, there's a paradigm that the FDA can use. They're allowed to do this. So it's not changing the regulatory standard of paradigm. And then I would point to some more of the contextual clues, which are -- and we shared this in our earnings call that we're well underway in label negotiations. Typically, you're not going to be down the road of label negotiations, they're minded not to approve. I would also point to just kind of the fact pattern around these extensions. Typically, when you see -- at least when we've looked in the last couple of years, when you see these extensions, the products have gone on to approval. So we think there's some evidence to suggest that if they wanted to not approve the product, they perhaps would have gone down a CRL route instead they gave us an extension. So we think there's both kind of circumstantial evidence as well as kind of the regulatory paradigm that gives us confidence. And again, we're the ones that are in front of the agency, and so we're interpreting the body language and the feedback and those kinds of things as well. But at the end of the day, you've got to finish the process and get over the finish line and we're eager to do that.

Okay. So once you let's say get approved, would you be able to launch right away?

Yes. So we have done a great job gearing up for launch. As I said, we have the team in place. So that's a good thing. We are -- if you think about sort of the reimbursement landscape in the United States, typically, it takes 3 to 6 months to get in to a payer's formulary. However, you can get paid for on an exception basis. This is a very highly high-touch physician process. All of these products have to have prior authorization. So typically, what will happen is you get a prescription request form we call them a PRF. You'll then present that to whichever payer that, that person is -- belongs to. If it's on formulary, it's pretty straightforward. If it's not, you go through the succession process. And so we would expect between 30 and 90 days between prescription and patient getting an infusion. That's what we saw with the Galafold, takes a little bit longer in the beginning, but then speeds up as you get through the process. And so PRF to prescription time is a metric that we'll follow, which will be important. I'll say that we were able to, for example, convert all of our clinical trial patients for Galafold in the first 90 days, and we'd have a similar goal here. And we would expect prescriptions to be able to come in right away and it's just as fast as you can get through that authorization and treatment process.

Okay. So if we, as analysts are trying to get a sense for what portion of the pie of the Pompe market Amicus can have, what should we be considering in all of that?

Yes. So part of it depends on the label, but the vast majority, as we said, is going to be at least in the near term, is going to be the switch opportunity. I think if you think about the long-term Pompe market, I mean, I feel like part of what you're getting at is sort of what's the potential here overall. Like I said, it's about $1.2 billion today. It's -- we think and most analysts and market watchers would say that it's growing to $2 billion plus over the next decade or so. I really believe that with the data set that we have, I think over time, we can get to a 50% or better market share of that market. And if you think about a growing market, that means you could have a $1 billion product. If we -- let's say we only get to 1/3 of that, and it's a $700 million product. I still think it's a very significant opportunity. And if you think about, again, where we are today, we get no credit for any of the potential there. And -- but no, I really believe that this could be 50% plus of the treatment utilization in Pompe disease by the time you get to the peak.

Okay. So let's switch gears to Galafold. So that's now a pretty mature launch. And I think people appreciate the speed with which you've been able to convert the patients that you've converted. And I think as we look forward, a couple of things come to mind, which is what's left in the penetration profile for you to aggressively pursue to keep increasing sales. And then we talked about this a little bit, but maybe we can do a quick summary about the impact of COVID to where the sales are today versus where you thought they would be by now.

Yes. Yes. So and the first question in terms of just penetration into the existing market, we have about a 50% market share of treated amenable patients, which again is like 1/3 to 1/2. So the Fabry market is a $2 billion market or almost $2 billion market. I'm sure we'll pass that this year. And we're -- so we have -- we're eligible about 1/3 to 1/2 of that market. So if you figure, we finished this year at $350 million, let's just call it, that's another $350 million in potential switch patients that are out there without any growth in the market. So we think there's a real opportunity to continue to do that. We're also, though, seeing real growth in -- coming from new patient starts. And so actually, the distribution of our overall patients is 55% switch patients and 45% naive patients. So that's part of the evolution of where we thought we could go as well, which is continuing to switch -- sorry, to continue to bring on diagnosed untreated patients and even newly diagnosed patients. So to your second question, so lots of near-term growth drivers. We can talk more about kind of growing the overall market, but lots of near-term growth drivers to continue to do well. In terms of COVID, you're right. I mean we -- and obviously, this was a bit of a process as we came into the start of the year and gave our guidance. We originally had a vision that we could do at least $500 million and beyond for this product. And that was at a time when there was -- we were just launching and we were trying to convince people, this could be a substantial product for us. And I'm convinced that we would have been exactly on that track, and we thought we could get there by next year 2023. I'm convinced we would have been exactly on that track. And then COVID came and just effectively, I think, shifted the growth curve. And so what we've seen is that in the worst times of COVID, and it's not in every market and it's not every center, you just see a lag between when a physician wants to start the prescription and when they can see the patient to do the work-up to get them on the drug. And I think that lag when you play it through over 2 years, has just shifted the rate of growth slightly. What gives me good confidence that it's not an overall business issue, it's just a timing issue, is that if you look at the first quarter this year, we've delivered on that, like I said, 23% operational growth when Omicron was kind of raging. So to me, it's not a business is of issue. It's a delay, and I think we're on a nice trajectory, and I'm confident that will be a way point towards what we think could be a $1 billion opportunity at peak.

Okay. And then quickly and lastly, do you intend to, with the new setup of the company, invest in R&D or is it going to be a focus on Pompe and Fabry?

Yes. So as a reminder, with the shift away from the gene therapy spin-off, we had to reprioritize our development programs. We're spending the most of our investment on growing Galafold and getting AT-GAA approved and launched. We do, though, have still a pipeline. We have our Fabry and Pompe gene therapy programs, which we think have a lot of utility and could be really exciting for the future. We just felt like it made more sense to slow those down and try to solve some of the fundamental science questions. That we think they do have value, and we still want to be leaders in the Fabry and Pompe space. And so if there are ways to bring those forward or bring other therapies forward, I think we'll continue to do that. And I think in the longer term, we can leverage the organization we built to potentially bring in other products to take advantage of the commercial infrastructure and grow Amicus on kind of both sides. In the near term, though, it's focus, focus, focus, deliver on our priorities. And again, I think in this price and in these markets, I think we're a company with a future that's incredibly bright and we look forward to executing on those priorities.

Okay. Great. With that we are out of time. So thanks, Brad, for spending the last half hour with me. And thanks, everybody, for joining.

Thank you.