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

Great. Good morning, everyone. We'll get started. I'm very pleased to have Bradley Campbell, the President and COO of Amicus Therapeutics here with us. this morning, and I'll maybe open it up with a quick 30-second, 1-minute intro commentary.

Sure, yes. First of all, thanks a lot to you for hosting and to Goldman for having us here. It's a great conference, and good to be together for the first time in a long time, it seems, which is great. So just top line in Amicus. So we are very focused on, I think, 3 key priorities. First is to continue to grow Galafold, our core business for Fabry disease, confident we'll do $350 million to $365 million in sales this year, which will continue our strong double-digit growth that we continue to foresee going forward. Very focused on getting AT-GAA approved. We're -- I'm sure we'll talk a lot more about that, but we're excited to be approaching our PDUFA dates here in the United States with the BLA, in particular, in October 29th this year, and we can talk more about that, I'm sure, and then also on file with Europe, with the CHMP expected by the end of this year. So hopefully launching our second product, second home-grown product. And then last, continuing to stick to our financial goals. We've said that we hope to get to non-GAAP profitability next year and continue to be, I think, prudent in our expense management, but also again focused on growing the top line in order to reach those goals. So a very exciting time for Amicus and especially, I think in these markets where many of us in the space are struggling with raising capital and with getting to the first approvals, I think we're a rare company in that we do have a commercial business that's viable and growing, and a great opportunity to add that with AT-GAA for Pompe. But with that, I'll pause and happy to dive into questions.

Great. So starting on that last point, you mentioned there on profitability in 2023. Could you describe kind of what's baked into that and then what your expectations are on the operating expenses, and how you see those playing out over the course of this year into MAX?

Sure. Yes. Thanks. So of course, the biggest driver is continuing to grow Galafold. And so that business continues to be a great platform of growth for us and I think underpins our value. We do expect that Pompe will contribute to that next year from a top line perspective based on approvals this year. On the expense side, really important points, and I'll highlight a few things. First of all, we continue to guide to $470 million to $485 million in OpEx this year. That's a bit larger than it has been in part because of our continued investment in inventory for our anticipated launch of AT-GAA, also in part due to certain onetime costs associated with our unwinding and winding down of a big chunk of our gene therapy portfolio. I would say that you should expect this quarter, second quarter to see the high watermark for this year in part because some of those onetime costs are hitting us this year. And then we should expect to come in within that guidance for the remainder of the year. And again, you'll see R&D OpEx come down a little bit in the third and fourth quarter from where it is this quarter. And then next year and then really going forward, we expect it to be more in line with where we have been historically, which is more the sort of $400 million, $415 million, $420 million range. We'll tighten that up as we go forward into next year. But we can deliver on that because, again, the gene therapy costs go away. The large cost for the clinical development of AT-GAA start to come down inventory moves, of course, from an expense line over to the balance sheet and then into cost of goods. And we continue to maintain, I think, a similarly sized organization for the foreseeable future. And importantly, we can leverage the commercial infrastructure that we've built for Galafold to launch Pompe.

Great. So it sounds like the PDUFA extensions don't really impact your thinking on the time to profitability?

Yes. We're still very comfortable, I think, with the current time lines that we can get to profitability. We do have some other levers, of course, around what we're spending on our gene therapy for Pompe and Fabry. That's a modest investment, but I think we're still doing some fundamental science there that could be important in the longer term. So there's some additional levers depending on the timing of the launch that I think would be able to get us there.

Okay. Understood. So jumping into the PDUFAs for AT-GAA. So they -- we all know they were extended to allow the FDA additional time to review the nonclinical requests related to the submission. If you could kind of speak to that and any color, additional color you can provide there.

Sure. Yes. So to your point, the PDUFA extensions were part of the nonclinical data that appeared in both submissions, both the small molecule and the biologic. And effectively, they asked for a study report that supported those data. So it's not new data, it's just a full study report to support data that was already in the submissions. And again, because it impacted both the NDA submission and the BLA submission, they extended both dates. That, we think, is relatively straightforward. It's not something that we're overly focused on. However, I think there is a silver lining there, which is we think it buys more time, of course, for the inspection, which the agency has said that is rate limiting to their approval. As part of the inspection, we've talked a lot about this before, but the FDA has indicated their desire to go to the WuXi facility in person, and that certainly would be a standard in kind of, I guess, a non-COVID world that they would conduct the inspection in person. But we do know that there are multiple forms of inspection that could take place to satisfy their inspection needs. One of which we've talked a little bit about before, which is we do understand they have a team on site in China, who could go and inspect the facility with support from the U.S. team. There was a similar inspection of that nature conducted in November of last year at the WuXi facility. So we know that's one option. And then they can always do a paper-based inspection as well. So that's a choice they can make. And I think with -- now with the time that we have in front of us, it gives them a chance to execute on 1 of those 3.

Got it. And so how comfortable can we be around completing the inspection, I guess, prior to that August 29th date? And do you think they will look for an in-person inspection from a person from the U.S. team?

So I think there's plenty of time now to be -- for them to be able to conduct 1 of those 3 inspections. Of course, the decision is up to the agency so I can't speak on their behalf. But what we do know is that the calendar gives us lots of time for them to be able to conduct any one of those things. Yet the margins, we're following the same news, everybody is. Shanghai seems to be loosening up. So that gives you, I think, some more confidence that they can send somebody from the Shanghai team. We know that there is increased travel back and forth from China, so perhaps there's an ability then to open up somebody coming from here. But again, at the end of the day, they can do the paper-based inspection as well, which is literally they're requesting documents back and forth, virtually, but not actually sending somebody on site.

Got it. And then moving on to the launch strategy and the launch outlook. As the second generation behind Nexviazyme to come online, how do you anticipate the market share will play out?

Yes, it's a good question. So I think, fundamentally, the most important thing that we focus on is there's still an unmet medical need in Pompe disease. That's been well studied with the previous standard of care. And I think there's -- the biggest differentiation between us and Nexviazyme, I think is the way we designed our study. So Nexviazyme studied naive patients and randomize their patients either to Myozyme or to Nexviazyme. And we studied mixed population or broad population, but majority of those patients were experienced patients who've been on therapy for at least 2 years. We also studied a cohort of naive patients. And so #1, the trial design and therefore, the data set, I think, are very important. Our outcome measures were a numerical benefit in the overall population in 6-minute walk, just missed statistical significance and then a nominal statistical benefit in forced vital capacity in the overall population. But I think really importantly, in the switch population, which is the majority of we think of the commercial opportunity for the foreseeable future. We saw not only statistically significant superior outcomes, both in 6-minute walk and forced vital capacity. And if you think about what is really the need in the Pompe community today, again, it's that well-published decline, unfortunately, in both of those outcomes. And so if you think about, to your point about sort of market share and market opportunity, from our perspective, we want to convince patients and physicians that they can improve on AT-GAA, and we think the data and the experience shows that, that can happen. And I think in the long run, it's that data, that experience, which leads you to significant uptake in the population. And so we think this has the ability potentially to become the standard of care for treating Pompe patients. And if you think about a $1.2 billion revenue market today, growing to a $2 billion-plus market over the next 10 years, that creates a significant product opportunity for us, which I think is not baked into the share price today.

Got it. And just I guess, honing in on those switch patients, if you could frame how big that commercial opportunity in and of itself is versus the naive.

Yes. So like I said, there's about 3,200 patients that make up the treated market today. So the vast majority of the opportunity for the next few years will be switching patients. There's about 150 to 200 we think naive patients have come on treatment every year. So an important portion, but by far, the minority portion in the near term. In terms of our indication statement, still negotiating with the agency, and we announced at our quarterly call that we're making great progress there. So there's still some scenarios there. Is it a broad indication, or is it a narrower indication statement, and we're still working through that. But I think in either case, I think for me, it's the data set that we've generated and the differentiated data, in particular, in switch patients, that is the important piece. And then over time, if we don't have the broad label that we want, and also, frankly, for pediatric patients, where we're not seeking an indication with this data set, we have a number of studies ongoing in pediatric patients that we would hope to augment the label with or expand the label with. And then likewise, you could see, over time, bringing in naive data sets as well.

And what has the feedback been like from physicians, specifically as they think about -- as you think about uptake in the switch patients and patients reaching that plateau on standard of care?

Yes. I think there have been some -- we've done a whole host of market research that says that patients and physicians really acknowledge that unmet need and that decline on standard of care. And if you think about it, these patients haven't had a choice for more than a decade. It's great that there are multiple choices out there. It's great for patients. It's great for the community. And so I think #1, patients and physicians are just excited for more alternatives. That's always a positive thing. I think there's a natural inclination, and this is borne out in our market research, and I think there's been some secondary research that's been published that says physicians look at the way that studies were designed and kind of niche them to the study population. So maybe niche us to experience and niche the competitor to naive patients. And again, we talked about kind of those dynamics and how they might play out. But we're also not in the market yet. So part of it, of course, is being in front of a physician, walking them through the data, having your medical affairs and your sales team, talk to them. And I think -- and then it's sort of how do they actually do on the drug and how does that long-term data translate. And I think thereto, we've published on our long-term data from our Phase I/II study that shows a persistent and durable effect. So those improvements that we saw when patients switched and when the naive patients came on have been sustained. And I think that durability and that long-term data will also be a critical piece. So it's yes, there's a need. Yes, we have a differentiated data set, we believe. But then how do they do on the drug and how long does that effect last? And I think our data suggests that we have an opportunity to really make a major difference.

And on that long-term data, if you could kind of walk us through the sustained improvements in both FVC, I think, in the 6-minute walk test?

Yes, that's right. So if you look at our Phase I/II data, you see that after -- what we published was out to 3 years, we show that those initial effects, those improvements in FVC and in 6-minute walk are sustained out to 3 years with a roughly similar effect size to the initial study population. We'll look to publish on the PROPEL data as well. And one thing I should note is that the label, the data we submitted in the label was just a controlled portion of the PROPEL study. So those long-term data will be in publications, be a part of medical education, but not necessarily part of the label discussions.

Understood. And then the IP around AT-GAA, we've gotten a lot of questions about that and whether there are separate considerations for each component.

Yes, so good point. So the majority of the IP is around the biologic, which is ATB200, is the component of AT-GAA, which is the enzyme replacement therapy. We do have composition of matter, the majority of that patent estate goes out to the late 2030s. The small molecule is actually a generic miglustat. So by definition, it's generic, there isn't novel patents on the composition of matter there. However, we do have IP around methods of treatment using those products together. And so you have the composition of -- sorry, the combined IP, which is using the 2 products together, and then you have the specific IP as it relates to the biologic. The reality is the portion of value that comes from the small molecule from a revenue perspective is de minimis in theory. I don't think there's a risk, first of all, because there's not a lot of economics associated nor is there a lot of benefit to try to do something with a small molecule. It's really the value is the biologic. So the IP -- and that's why the IP is concentrated there.

Got it. So on that point, how should we think about pricing assumptions and anything you can say there?

Yes. Look, we've been pretty public. We feel like in this space, in particular, the focus is on access, right? So -- and frankly, it's part of our blue statement, which says these products must be fairly priced and broadly accessible, but that's also been a sound business strategy. If you look at how we applied that principle in Fabry, same thing, we're generally parity or modest discount to standard of care. And what that means is, effectively, patients can get access to drug, and so you can move more quickly through the reimbursement process and you're getting more patients on drug as quickly as possible. So of course, it's better for them, but the reality is negotiating for the extra, whatever x hundred or x thousand dollars of price point versus putting it up to the physician and patient to determine -- to effectively get access and then choose which product works the best for them, that, we think leads to a much faster uptake in many more patients on drug, and we think that is far more important and again, in the context of what we think is the right thing to do from a belief perspective. But from a business perspective, it's far more important to get as many patients on as quickly as possible than spending time negotiating for an extra dollar.

Great. And maybe one more on AT-GAA. If you could remind us of how you plan to message around the PDUFA dates and cadence.

So the -- we do have 2 PDUFA dates. Both of them were extended as we discussed. However, we still anticipate that there will be 1 approval for both submissions. We're guiding people to expect that to be in the October time line, so the later of the dates. And -- but again, we expect them to be approved together.

Great. So moving on to Galafold. You are guiding to a $1 billion annual sales opportunity at peak. If you could walk us through some of the assumptions underlying that and how you plan to get there.

Sure. Yes. So a couple, I think, of fundamental assumptions there. The first is, remember, we think we'll get to $350 million to $365 million in sales this year, and we think that growth is sustainable. One of the biggest pieces is simply to continue to execute and switch patients. So what we've said is, right now, we have about a 45% or 50% share of treated amenable patients, but that means there's an equal number that are still left to be switched. So maybe another sort of $350-or-so million in switch opportunity. And then the question is, well, can you get to those patients. And we know that in the countries where we've been approved the longest, we're getting to 80% or 90% market share. So we think very much you can simply just continue to execute, continue to switch the remaining patients in the existing pool today, and that gets you well past $0.5 billion and beyond. So that's 1 important growth segment. The other piece is geographic expansion. So we're present in about 30 to 40 countries around the world in various stages of either launch or reimbursement negotiations. But there's still another 20% or so of the commercial footprint where we're not present. We have a couple of big countries left. So Turkey is 1 of the biggest ones. Latin America, we're starting to -- Latin and South America, we're starting to make headway, but there's still a lot of growth opportunity there, in a couple of big countries that we haven't launched in there. And then there's a smattering of Middle East, North Africa, Central and Eastern Europe, Asia Pacific. And so that all of those kind of collectively make up again about 20% of the market. So that's an opportunity. And then just in the existing market today, there's almost an equal number of diagnosed untreated patients. And so we estimate there's probably between 9,000 and 10,000 patients treated today with some form of treatment, but there's probably another 7,000 or so who are diagnosed untreated. And so we've also said that we have about 55% of our patients were originally switched which means the other half were naive roughly. And so we know we can grow the market. So that's another kind of existing segment. So just with all of those kind of buckets there, I think you can get well north of $750 million, approaching that $1 billion. I also think that, and we've shown and many people have talked about, Fabry disease is a very underdiagnosed disease. And so there's just an underlying growth rate through finding more patients that has been happening and is sustaining that kind of high single-digit growth rate in the Fabry market that we would continue to expect. So if you couple all of that with our IP, which, in particular, that competition of matter patent that was issued recently gets us out to the late 2030s, that's how you see that kind of continued growth up to that $1 billion-plus opportunity.

Got it. And you've discussed kind of broadening the amenable mutations for Galafold. Where does that stand? And I think you've said it was a little bit easier in Europe to get the amenable mutations kind of on board versus the U.S.? So is that still a lever that you're looking into?

Yes. So I think there's 2 important pieces there. The first is the Europeans have been, I think, more open to the notion of extending amenability to theoretical mutations versus finding a patient with that mutation. And so there, we actually characterize all the known Fabry mutations, tested them in our [ Heck ] assay or amenability assay, with Galafold and describe now, I think it's over 1,300 mutations that are in the European label, although there isn't necessarily a patient who's been found with each of those mutations. The U.S. has been a little bit more strict, although still buying into the notion of applying that same amenability. But in this case, every time we find a patient with a new mutation, we characterize the mutation and we look into it now, we have all of them characterized. So we say, okay, this is amenable and then we have to update the label kind of one by one. But either way, I think the point is that I think we've really pioneered new ground around just kind of pharmacogenetic label, which I think is really important from a regulatory science and a medical science perspective, but it's also important from an IP perspective because all of those mutations are listed in the label and are part of our patent estate. And so any generic would have to actually replicate each of those mutations in order to get a label.

Got it. So switching over to the pipeline now. You have a gene therapy portfolio, but it's not expected to enter the clinic for a few years. So what is your strategy for growth through R&D going forward?

Yes, it's a great point. So from an R&D perspective, look, we still think that we have a very differentiated approach to Fabry and Pompe gene therapy. And frankly, to just thinking about the transgenes that are expressed through these, in this case, gene therapy viral-vector delivered transgenes but also, frankly, in any delivery vector, we think what's being expressed is just as important as how it's being expressed or where it's being delivered. And so we think our Fabry and Pompe gene therapy programs are unique and differentiated in that way. That being said, as we've all seen, we're -- the gene therapy space has clearly hit some challenging times. There are still big questions that I think we have to answer in order to come up with a viable gene therapy, especially where there's an existing set of therapies. So what are some of those questions? Manufacturability, can you make it for an affordable price, which allows you to charge, I think, a price that health care systems are more willing to pay for. Immunogenicity, how many patients are able to take the gene therapy if they already have preexisting antibodies to certain AAV vectors. Redosing, which is also, I think, tied to durability of effects. Just so many challenges around how long these effects lasting. And gosh, if you could just redose, I think you could set up a pricing model and an efficacy model that the system would be more used to delivery. So is it through a viral vector? Is it through a non-viral vector? So part of what we're doing is kind of going back and trying to answer some of those fundamental questions. And boy, if you could change 1 or 2 of those, if you could solve 1 or 2 of those either on our own or with a collaborator, then I think you really could have a great opportunity to move Fabry or Pompe forward in a broadly regenerative medicine kind of approach. And I think we need to continue to be leaders in the Fabry and Pompe base space. So in a very efficient way, we're still looking into other opportunities in that space. All of it's early and it's kind of bound in the curtain right now. But over time, I think you should continue to expect us to be leaders in that space and continue to look for next-generation therapies. But I don't think you're going to see a therapy for Fabry or Pompe, a genetic medicine approach anytime soon. Again, they've got to go head-to-head against standard of care. You've got multiple approved modalities. You've got -- in Fabry, you've got small molecule and large molecule. In Pompe now, hopefully, soon you'll have 3 different enzyme replacement therapies, all will, if we get approved, have superior outcomes on a clinical endpoint. That's a really high bar for a gene therapy. And fundamentally, I think the FDA is looking at what's the risk benefit ratio there. And the benefit has to be really high and somewhere where there's an improved therapy. Where there's not approved therapies, I think there'll be more opportunity for some of these gene therapies to go forward. We do still have our Batten program, our CLN3 program, which reads out later this year. So I think that certainly could be interesting for the medical community, if it continues to look good. So there might be an opportunity to do something with that, either give it back to the community or partner it depending on what we see coming out of those data. But I don't think you're going to see us investing significantly in R&D besides that kind of fundamental work that I described earlier. And it will be an output of our financial goals. In other words, revenues we bring in with Fabry and Pompe, the expense management that I talked about earlier and then what do we have left over and still get to non-GAAP profitability next year. That's what we can put towards that. Over time, as we get our financial footing, as we become self-sustainable, I think there's opportunities to look at the earlier part of the pipeline. But I hope there's also opportunities to leverage our commercial infrastructure and our late-stage development infrastructure. I think we're in a rare position with an established global infrastructure, lots of leverage there, again, a viable commercial business, and especially given where we are with the markets today, I think there'll be more companies looking for larger partners to help them with some of those commercial activities.

So on that point of kind of leveraging commercial infrastructure, between Galafold and AT-GAA, if you could speak to how much you can leverage between those 2, and then the very kind of close-knit physician community, how that would play out?

Yes. No, it's a great point, and that's one of the, I think, again, if you think about where -- how we're valued today and how much value we think we can create with the addition of AT-GAA. So what we've said is there's less than a dozen -- sorry, FTEs that we need to bring on to launch Galafold for the next year. So primarily in kind of direct marketing, direct medical and in the United States, some patient services because we have our own hub, so sort of to deal with the increased volume. But by and large, the vast, vast majority of our commercial team will be the same when we launch Pompe. And I think, again, that's really unusual. How do we get that kind of leverage? To a large extent, it's the overlap in the physicians and the centers that are caring for these patients. So we did a study that said that over half of the physicians -- in our major markets, it wasn't everywhere around the world, but in the major markets, kind of over half of the physicians are the same treating physicians. I think 3/4 of the centers were the same. So it may not be the same physician, but it's somebody within that center. And then the vast majority of cities are the same. And so you can effectively have your field force calling on either the same doc or the same center or at least be in the same city. And I think that gives us that kind of leverage, which is great.

Great. I'll see if there are any questions from the audience? Any questions? And I guess, supply chain issues kind of remain top of mind. If you could walk us through how your manufacturing is laid out for both Galafold and AT-GAA and -- yes.

Sure. Yes. One of the things, just as a reminder, we were running the AT-GAA study during COVID, and we were obviously supplying commercially Galafold during COVID, and that was very successful, no supply chain interruptions. On the small molecule side for Galafold, it's pretty straightforward. We have an external manufacturer CARBOGEN AMCIS, who does our API manufacturing. We do fill finish with another well-established player in terms of drug substance and then the blistering and the welding. And then we distribute to regional partners, primarily in Europe and internationally and then to the United States. And then we have specialty pharmacies that typically bring it to the end customer. So it's pretty straightforward. It's a small molecule. It's relatively stable. It's relatively inexpensive to distribute. So that's pretty straightforward. And the way we generally manage risk there is we keep a lot of -- it's because it has a long shelf life, we keep a lot of product. We just make -- we hold a lot of inventory. On AT-GAA, there's a small molecule component of that, again, made through an external manufacturing party and fairly straightforward there. Then you have the biologic, of course, manufactured by WuXi Biologics based in Wuxi City. That's our primary source of manufacturing today. And they make both our drug substance and our drug product. Similarly, we have -- we bring product out of China and put it into 2 regional depots and then from there, we can deliver it. I think the more important piece, as you think about, to your point of kind of global supply chain and the impacts there, #1, we continue to move goods out of China, and we have successfully done that. And we move product to our sites earlier so that we have some backup supply sort of locally that we can use to distribute. That's what we did during COVID, we just pushed more product into the channel. But the other important piece is WuXi is far along in the opening of their second facility for our manufacturing purposes in Ireland. So WuXi Ireland is on track to be able to bring commercial supply into the supply chain in sort of the 2024 time line. And that's really important, and that was by design because that's when we think that you'll see the second wave of launches in Europe really kick in. And so in the long term, we'll have -- #1, that means we have dual site manufacturing; #2, it has some geographic derisking, bringing it out of China, putting it into Ireland. And those 2 facilities, I think, will be sufficient to support the manufacturing for the call it, the next 5 to 7 years. And then we'll think about if the product can grow the way we think it can, then we're already talking to WuXi about kind of what's next. And the good news is they continue to expand their business continue to build out infrastructure in the United States, in Europe and in China. And so there's lots of opportunity to either do something with them or maybe even do something on our own at some point. But I think they've been a great partner and have continued to build their business, and we can rely on them for the entire life cycle if we wanted to.

Great. And last question here. What do you think investors are maybe overlooking about the Amicus story right now?

Yes. Look, I think at this share price, I still believe that we're undervalued for Galafold on its own. I think part of that is starting to get more and more people comfortable with the IP situation and how long we have to, I think, protect this product. We should expect ANDA filings. It's a small molecule that's going to happen. And then it should happen, frankly, this year based on the time line. But that's something we've been anticipating, and so we think people are probably not paying as much attention to the IP situation because they're focused on Pompe, which I guess is natural. But if we continue to grow the way we think we can, if this is a $0.75 billion to $1 billion product, I think that's not in our market cap today. And then I think, obviously, with AT-GAA, I think it's getting comfortable around the approval. We're very confident that this product is on track for approval. And I think its confidence in what this product opportunity can be based on the label, based on our commercial experience together, I think where the markets are today with some, at its face, confusion around the 2 PDUFA dates and kind of just the complexity there. I think maybe that it takes a couple of conversations to work people through that. But I think once you sort of dive in and you really look at where we are, you look at where we are with the agency and the labeling, you look at the time that we have now from the inspection, you look at the data that we've generated and the experience that patients, physicians have had with the product, I think this is going to be a significant opportunity for -- to really change the way Pompe patients are treated, and again, be a very valuable product for Amicus. And I think that's -- I think people aren't taking that into account as well. And look, in this market, I think there aren't that many of us, frankly, who are kind of in our size, who have a viable commercial business, who have a strong financial profile with another big product right around the corner. And I think that will give us a chance to really continue to differentiate and hopefully, be a place that people can see real value appreciation in the near term and long term.

Great. With that, thank you so much for joining us.

Thank you.

So happy to have you.

Thanks a lot.