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

Okay. Let's go ahead and get started. So welcome to the afternoon session of the Monday of the 41st Annual JPMorgan Healthcare Conference. My name is Anupam Rama. I'm one of the senior biotech analysts here at JPMorgan. I'm joined by Malcolm Kuno and Priyanka Grover from the team. Our next presenting company is Amicus Therapeutics and presented on behalf of the company, we have CEO, Brad Camel. Brad.

Thank you, Anupam. Good afternoon, everybody. Great to see everybody live and in living color here at JPMorgan. Thanks to Anupam and JPMorgan for inviting us here. And thanks for also setting expectations that it was going to rain all day. I don't know if anybody's been outside. It's actually bright and sunny outside. So well done, setting low expectations and meeting and beating them. I will be making certain forward-looking statements, so I'll refer you to my safe harbor statement. So just as a reminder, Amicus Therapeutics our passion is for patients. Our mission is to develop next-generation therapies, living for people living with rare and orphan diseases. And our vision is really to be a leader in the rare disease space with global clinical and commercialization capabilities around the world. And I think we've built a special and a rare company here, something that's happened over the more than a decade since our founding. Today, we have Galafold, which is our small molecule chaperone for the treatment of Fabry disease. It's a healthy and growing product we announced this morning that we'll do 12% to 17% growth in the Galafold business this year in 2023. That's at constant currency. We have a second product, AT-GAA for Pompe disease, which is in front of regulators around the world, and we anticipate seeing regulatory approvals and launches for that product. All of that is supported by our global commercialization infrastructure that we've built over time. We have global clinical development capabilities. And I think that puts us in a relatively unique position in the mid-cap biotech space with 2 products with $1.5 billion to $2 billion peak revenue combined, all of that with a very healthy balance sheet and committed to generating non-GAAP profitability in the second half of this year. So 2022, a tumultuous year, I think, in the market, certainly a lot of opportunities in the biotech space to continue to deliver value and to execute across our business. We saw a number of important milestones. We saw operational growth of Galafold of 16%, which was well within our guidance. We continue to expand our intellectual property and our patent portfolio, continuing to provide protection for Galafold to the better part of the next decade. Continue to bring data out across both our Fabry program as well as our Pompe program, and we'll talk more about that as we go on here. Growing demand now for experience with AT-GAA. We're in front of regulators, as I mentioned, but we have a number of expanded access programs around the world that continue -- that continues to involve both investigators and a growing number of patients that will be an important part of the story going forward. And of course, hitting important regulatory milestones. We'll give a lot more color today around where we are with the FDA, but also ended the year on a really positive note saw a positive CHMP opinion for Pombiliti, which is the enzyme replacement therapy portion of our AT-GAA therapy for Pompe disease. And I think that sets us up for what may be the most important year in our history as Amicus, again, continuing to bring Galafold to as many patients around the world as possible. That's the core of our business, the core of our value. But finally now on the cusp of securing regulatory approvals for Pompe disease for AT-GAA, both the FDA, EMA as well as the U.K. And then, of course, that will lead to the commercial launch of our second product, which is, again, a relatively rare feat for homegrown biotechnology companies. We do have a pipeline, both in Fabry and Pompe gene therapy, and I'll talk a little bit about that continue to believe will play a leadership role in developing new treatments for those 2 diseases and all of that with a backdrop of a very strong financial profile and again on that path to profitability. So we think 2023 will be a transformative year for Amicus and eager to continue to execute across those strategic priorities. Let me turn a minute to Galafold, of course, that's our small molecule precision medicine for Fabry disease. And just as a background of prime around the disease. Most of you probably are familiar, Fabry disease is a Lysosomal Storage Disorder. It's a genetic disease caused by a deficiency in the GLA enzyme that enzyme is responsible for recycling a substrate called GL-3. The important part of that is that when that substrate builds up over time, Fabry patients have significant morbidity and mortality, primarily Fabry disease impacts kidney, heart, CNS, also life-limiting symptoms of pain, GI distress. Importantly, it is a broad and large Lysosomal Storage Disease. Today, there are 16,000 patients diagnosed worldwide roughly 50-50 males and females. But we think it's a significantly underdiagnosed disease, and we'll talk more about that. So the Fabry market today is a little under $2 billion globally. I'm sure they'll pass that important milestone of $2 billion this year. It is a healthy and growing market, and it's really driven by, again, that under diagnosis, it's believed to be one of the most under-diagnosed and misdiagnosed human genetic diseases. And in fact, newborn screening and most of the recent high-risk population screening studies would suggest that it's potentially tenfold more prevalent than it was originally characterized. So you have a very healthy diagnosis that's fueling that market growth. And importantly, Galafold for the past 2 years has been the fastest growing of the Fabry treatments and also the largest contributor to that growth. In fact, we now have over 1,000 patients who were naive to treatment before they came on to Galafold. And so we've grown the market by 1,000 patients since our launch. And just a snapshot of what we delivered on in 2022. Again, $329 million, we announced that today in our press release, $329 million in global sales. Unfortunately, a significant impact from foreign exchange impact. We have significant exposure to the pound to the yen and to the euro. But even with that, we delivered on our operational growth guidance of, again, 16%. We now have 45 countries globally, where we are approved, and we're continuing to pursue reimbursement in those remaining markets. And again, this is a precision medicine. So we continue to expand the amenable variants that are described in the FDA label and the European label as well. That translates to about 1/3 to 1/2 of patients living with Fabry who have those amenable variants. So how do we know the business is performing well. We have a number of key performance indicators that we talk about. I think the most important one is the global demand for this medicine, which is now 2,000 patients globally take Galafold as their only treatment for Fabry disease. There was a time many of us may remember, I was back at Genzyme. When we launched Fabrazyme back in the day. I don't know if we knew that there'd ever be 2,000 patients who were diagnosed with Fabry disease, much less on treatment, much less on small molecule chaperone, Galafold. It's a really exciting indication of the number of lives we impact, but also the underlying demand of the business. A couple of things that were really important this year in 2022. First of all, net new patient trends for the past 3 months were better than the past 6 months, better than the past 12 months. So seeing some momentum. I think we're finally starting to leave the COVID impact on this business behind. Importantly, too, in the United States, the best year we've seen for net new patients since before the pandemic. So I think you're continuing to see this growth in our key markets around the world. We're now at a 50% market share of treated amenable patients. The good news is lots more patients to switch, but a really healthy share of patients who have amenable mutations who are treated now with Galafold. Also a healthy mix of switch patients versus healthy versus previously untreated patients. And all of that is underpinned by an over 90% compliance and adherence rate, and we've seen that ever since launch and, in fact, trending slightly positive to that. So really important that once a patient comes on to Galafold, they tend to stay on Galafold. In 2023, how are we going to continue to grow the business this year and over the next decade, again, continuing to penetrate into the remaining switch population, continuing to get uptake into the diagnosed untreated population, continuing our geographic expansion and begin supporting that compliance and adherence. And again, that's all supported also by positive reimbursement and access mechanisms around the world. Again, we do continue to build the body of evidence in support of Galafold. We've released a number of papers over the last year, looking at Galafold in terms of compliance, in terms of quality of life, in terms of the benefit on Fabry-associated outcomes in terms of the importance of early treatment. This continues to be an important part of the story for this oral precision medicine, and you'll continue to see us focus on this. In fact, one of the important milestones is we'll have the first publication coming out of our own follow me registry, which is our Fabry registry, and that will be exhibited at the World Symposium here in February. And really, all of that is, I think as a backdrop for where do we see this market going over time. So over the next 5 years, we think this becomes over a $2.5 billion global market -- but I think importantly, we'll pass a milestone where we see the amenable portion of the population for the patients that we can treat with Galafold, that market should increase to over $1 billion globally. So lots of opportunity for us to continue to grow this business over time. And just to give you an idea, in the markets where we've been launched the longest of the U.K., Germany, as an example, we get to 80% or 90% market share. So we really believe that we will be standard of care in those amenable population and look forward to see that backdrop of market growth as we continue to build the business over time. So switching gears now to AT-GAA, which is how we describe our 2-component therapy for Pompe disease, maybe just a prime or first on Pompe disease. Again, another Lysosomal Storage Disorder. This one primarily affecting the neuromusculature. It is a severe fatal disease if left untreated, and it's due to a deficiency of an enzyme called GAA or acid alpha-glucosidase. Again, like Fabry, now known to be more prevalent than what was originally characterized in the literature. It looks like a live birth incidence of 1 in 28,000 or even more prevalent than that. And that's all supported by newborn screening studies in the United States and around the world that continue to find more Pompe patients. Impacts both infants and adults. It's a spectrum of severity, depending on when patients are diagnosed. And again, the primary morbidity mortality here is cardiac and pulmonary respiratory failure. The global Pompe market, also a healthy and growing market. It's roughly $1.2 billion market today. That's about 3,500 to 4,000 patients who are treated. You can see on the right-hand side how this breaks up from a geographic perspective, about 40% of the market from a dollar perspective is in the United States, -- from a patient perspective, it's more evenly split. And then the remainder is split between Europe and Rest of World. And again, we see this market growing significantly. Over the next 5 years, this should be approaching a $2 billion market. And here, AT-GAA, we believe, has the ability to treat all patients with Pompe disease, again depending on the label, and I'll talk more about that over the next coming slides here. So what's different about AT-GAA? It is the only 2 component therapy in development for Pompe disease, excuse me. Effectively, we took a naturally selected cell line with a unique glycosylation pattern, highly phosphorylated enzyme replacement therapy, that's intending to solve the uptake in targeting challenges in Pompe disease. And then we combine that with a small molecule, miglustat, which acts as a stabilizer. It keeps the enzyme properly folded while it's in the circulation. Again, the only 2 component therapy in development. And then just a reminder, the data we showed in our Phase III studies, our PROPEL study, this is a mix of switch and naive patients, although the vast majority were in fact, switch patients, compared head-to-head versus standard of care. And what we saw in the primary endpoint, 6-minute walk distance, we saw a numeric benefit for AT-GAA compared to the control, just missed statistical significance and on the key secondary forced vital capacity again in the overall population, so nominally statistically significant improvement in forced vital capacity versus the control. And then if you look at the larger subpopulation, the largest subpopulation and this is really where the majority of the opportunity lies in Fabry disease, we saw nominally statistically significant improvements in 6-minute walk distance and likewise, nominally statistically significant benefit in forced vital capacity versus the control arm. We're the only program that's studied in a controlled portion of a Phase III study, the switch patients. And again, this is where you see the greatest unmet need in Pompe disease. So really exciting data. This is what drove the applications that we're now pursuing around the world. And just to give a quick update on where we are. So we've broken this now into 3 key regions. These are the 3 largest market opportunities for Pompe disease. The first is in Europe, as I mentioned earlier, Pombiliti, which is now the trade name for the enzyme replacement therapy component. There are 2 separate applications. We received a positive CHMP opinion in December. We now expect a CHMP opinion on the small molecule miglustat in the second quarter this year. That would lead us to EC decision in the first quarter for the ERT in the second quarter for the small molecule, which would get you to approvals and launches in the second half. In the United States, as I mentioned, we are also on file with the FDA. We did receive a deferred action letter at the time of our BLA. And just for clarity there, those can only be issued in instances where the inspection is the only reason for the cause of the deferral. And in fact, the technical language is that there are no deficiencies found in the application and otherwise satisfies the conditions for approval. So for us, this is a matter of when, not if this product gets approved. And the other thing that we announced at the end of last year is that we had scheduled a Type A meeting with the FDA in order to provide plans and logistics to conduct an inspection. We had that Type A meeting very successful, very collaborative, very eager to see us get to the point of scheduling and inspection. Haven't scheduled one yet. However, I think you've seen the situation on the ground in China continues to get better and better, a number of the roadblocks in terms of quarantines in terms of hospitalizations in terms of providing negative testing. Those things are going away. So we think that further supports the opportunity for us to get an inspection scheduled as soon as possible. And so we're eager to see that happen. And once that happens, we'll provide further clarity on when we expect an approval later this year. And then finally, the U.K., this is something we didn't talk a lot about, but we did actually begin the AT-GAA regulatory process in the United Kingdom, and that's through the recognition procedure that keyed off of the Pombiliti approval. So that process is now underway as well, and I'll talk a lot more about why that market is so important for us in a couple of slides. So just a little bit of a drill down into Europe. First, it's a very sizable market opportunity, as I mentioned, more than 1/3 of the global opportunity from a dollar perspective sits in the European Union. That's about a $450 million market from a dollar perspective. Importantly here, we saw a very strong indication statement coming out of the Europeans, both talking about the long-term enzyme replacement therapy, but also the point that this is to be used in all adults with late-onset Pompe disease. So really strong label coming out of Europe. There are about 1,300 patients that we think we can address there. And importantly, to continue to have a broad experience with KOLs throughout the continent, both through our clinical studies, but also through expanded access programs that are active now in France and in Germany and there are other opportunities in other markets as well. And I would note, too, that many markets around the world will actually leverage the European label as we go to pursue approvals in other markets outside of the U.S. and Europe. The U.S., we talked about, of course, largest market, about $500 million, a little over $500 million from a dollar perspective, continue to grow at a robust rate, significant uptake in the use of newborn screening in Europe as it relates to Pompe. So we continue to see this as a healthy and growing market. And as, of course, I'm sure you all know, there was a second product that was launched by Sanofi, avalaglucosidase alfa, year-to-date 9 months in the U.S., that was doing about 30% market share from a dollar perspective versus 70% for the standard of care. And the overall treated population is about 800 patients on treatment in the United States. So again, as we look to, again, that differentiating data in that experienced population, really eager to be able to bring AT-GAA to the European market once we see final approval from the United States. And then the last thing I'll touch on just from a market perspective is the U.K. It is the -- one of the -- as I said, top 3 markets, if you think about the U.S., Europe and then the United Kingdom. And there, we've begun the recognition procedure to pursue regulatory approvals. Really excited to see a growing body of experience through the EAMS program, the early access medicine scheme program dozens of patients on treatment today through this program, many centers who have experience and over 200 people in the United Kingdom are estimated to be treated. So if you think about us with dozens of patients now in AT-GAA, significant number of them will be on our therapy even at the time of launch. At all as part of the ongoing clinical experience that we're seeing with Pompe around the world. The only other detail I'll add here is that now over 75 centers around world have physicians who are using AT-GAA to treat their patients. So a growing prescriber base as we enter into regulatory approvals. Very much launch ready. We are ready to go, super eager. We have a very healthy and experienced commercial organization. And the 1 thing that we'll add here is that we have a very synergistic ability to use this commercial organization, only anticipate adding about 12 employees globally to support the launch. So just rounding out, I'll talk a little bit about the corporate outlook going forward. So first and foremost, as I mentioned, we do have a pipeline. I know all eyes are on our commercial business with Galafold anticipated approvals of Pompe. But I would orient you to our Fabry and Pompe gene therapy, which I'll talk about in a minute, also the collaboration that we announced with the University of Seville looking for next-generation chaperones for Fabry disease. They're really seeing whether we can expand the number of mutations that might be eligible, improve upon some of the chaperoning properties. So continuing to be leaders in the Fabry and Pompe space. As a reminder, we do have some legacy gene therapy programs, in particular in Batten disease. We have an ongoing Phase I/II study in CLN3 Batten intriguing data there. I think there could be utility with that. But at this point, it's likely off strategy for us, and so we're thinking about how best to move that program forward in the right way. But again, I do see some, I think, intriguing data there that it could be helpful for those patients. And then finally, some ongoing early research and discovery work just on platform, next-generation medicine approaches. And just a minute on Fabry and Pompe gene therapy. As we focus on our commercial business as we're looking to turn profitable this year, we're really, I think, investing in a judicious amount of capital here to continue these programs going forward. But just a reminder, we use our unique protein engineering capabilities to optimize the engineering, the stability, the targeting and the update of these transgenes, we think a very differentiated approach to what else you see in the market for other Fabry and Pompe gene therapies. We've shown really exciting preclinical data where we see significant uptake and impact on glycogen and GL-3 reduction in the 2 diseases. And we would look to continue to invest in these programs again once we turn profitable and put more resources behind them, but important parts of the future of Amicus. And then finally, just the key milestones that we can look forward to this year, as I said, continue to grow Galafold 12% to 17% at constant exchange rates, starting to see publications coming out of our own Fabry disease registry, regulatory approvals in key geographies for Pompe, followed by, of course, beginning the global commercial launch, critical amount for us this year. And then also, we've announced that we will have our long-term data for the PROPEL study that will be highlighted at the World Symposium. And then finally, I think, turning the corner to non-GAAP profitability in the second half of this year. And I'll leave you with look, we believe the true measure of success for Amicus is the number of lives that we impact with our medicines. The more patients that we can put on are medicines around the world, the more value we can create for patients and we think the more value that we can create for shareholders. So thank you very much for your time. And I guess we'll turn it over to questions. And maybe the management team can join me here. I guess that means I get to stand in front of you.

Maybe I'll start, I'll just also note that if you'd like to send a question via the question portal. I have this fancy iPad here that I can see your question, and I'm happy to ask on your behalf. And also, there's a mic runner in here. So if you want to ask a question, just raise your hand, and we'll make sure it happens. On the non-GAAP profitability guidance, what's assumed in there for AT-GAA specifically? And I guess what keeps you up at night, Brad and Daphne about this guidance?

Yes. Look, so the biggest contributor still will be Galafold revenue, of course. That's going to continue to be the largest part of the top line growth. But we do assume, I think, modest revenue from AT-GAA this year based on the regulatory time lines that we talked about Anupam the biggest goal for us for AT-GAA from a commercial perspective this year is to convert the patients that we can in the markets where we see approval to get approvals first then to launch and then to convert those patients, that really sets us up for a very strong base next year. I think the other piece of the puzzle is really around expenses. Maybe Daphne I'll ask you to add a little bit of color there, but prudent expense management has been part of our focus for the last 2 years, and we'll continue that going forward. And then the last piece of the puzzle is really around the inventory, which today hits the P&L, and it's significant, and that relates to the AT-GAA manufacturing. Once we get to approvals that moves over to the balance sheet. So what keeps me up at night? The biggest thing for me, I think we have clear line of sight to a great product. We have clear line of sight to a regulatory path in Europe and the U.K. I'm very confident that we're making great progress with the agency on scheduling that inspection. I think the conditions on the ground are getting better and better to support that I want that thing scheduled, so then we can provide clarity to everybody to me, that's the 1 thing that's still to be -- I think we'll really solidify that timing to profitability. I don't know Daphne on the expenses, maybe talk a little bit about the trajectory of expenses this year and going forward?

So as Bradley mentioned, there's a piece of R&D expense that will be moving to the balance sheet. So you will see a decline in total OpEx this year as -- or 2022 as compared to 2023. And then over in the outer years, as we continue to invest in our pipeline, we'll see that modestly tick up, but that's how we're thinking about the OpEx spend in the next few years.

Yes. And I think we've said before that this year, in particular, you'll see OpEx actually fall below even, I think, years sort of 2019, 2020 year. So we'll give more guidance on that at year-end call, but OpEx is an important lever for us. And to the extent that we do modestly take that up over time, revenue will far outpace the expense line.

How do we think about the SG&A line in terms of synergies between the sales force and marketing around 2 Lysosomal Storage Disease products, that -- maybe there's an uptick this year, but longer term?

Daphne, I can take it, if you can't.

Sure. So I mean, just to recall, we built out a global commercial infrastructure, which was being used just for 1 product now that we have the second product that will drive much more efficiencies and much more leverage. So that's how we're thinking about the SG&A spend. There's a modest maybe increase as we launch AT-GAA, but we basically have the infrastructure set.

Yes. We did a really cool study looking at the overlap between the Fabry treaters and the Pompe treaters. And what we found was about 30% of the treaters are actually the same between the 2 products, so obviously, highly leverageable. More than 50% of the treating centers are the same. And we tend to hire very experienced what we call key account managers. So in their mind, they're actually working with the center itself, not necessarily just the physician and then over 80% of the cities are the same. So that allows us to really get leverage out of the existing commercial team.

I guess one thing that I think sometimes folks worry about is when we put up the broader pipeline slide and you see the words gene therapy and things like that, they think a long, expensive trial, CMC, right? And that perhaps is not like longer term, if you're just thinking about bottom line growth, not optimal if you have 2 growth products, right? And so help us do work through that dynamic of why that type of investment is important?

Yes. So first of all, I think it's important for Amicus to maintain its leadership in Fabry and Pompe disease. And right now, we think between the chaperone and those 2 gene therapies, those are the best next-generation therapies that we can be investing in. But totally agree with you. That was really the pivot -- the strategic pivot earlier this year away from gene therapy is these things are costing more money at least in our hot hands with AV with the diseases we are focused on, costing more money, regulatory time lines longer than we had anticipated in them being and really not optimized, I think, for successful commercialization. So that's why we really took a step back, doing some foundational work looking at manufacturing in particular, if you can bring the cost down, I think it's a much more reasonable expense line for us but also value proposition for payers once we launch. So bring the cost down, optimize efficiency of delivery and transduction, looking at some foundational redosing immunogenicity kinds of issues. Once we solve some of those things, I think you can see us moving forward in a judicious way. But totally agree with you, the most important focus is execute on the top line business get to non-GAAP profitability and then preserve that going forward in whatever way we think about R&D expenditure.

Questions from the audience. John?

So Brad, just to make sure. So right now, you still assume the FDA would physically have to go to WuXi?

We do and that's what we're working on with them. Again, we're -- I mean, it's literally like the nuts and bolts of the logistics of an inspection. We had been -- you've probably heard this language towards the end of last year. We had been working on kind of a closed-loop inspection that would allow them to operate within the Chinese government requirements around quarantine, around documentation of negative COVID status in order to travel throughout the country. Those regulations are ending. And so I think that's going to make it even easier. We are still working carefully to provide a similar level of protection, but I think it will be in the backdrop of a much less regulated kind of environment. that's what gives us, I think, continued optimism that we'll be able to get them there in person. There are backup strategies we continue to work on. It's possible we can end up. They can do a remote inspection or a hybrid version especially now that their Chinese teams can also more freely. But right now, the focus is get them there in person, and I think they're eager to do that as well.

And what do your consultants say on the timing in which, let's say, they go to China inspect, and everything is fine? How long does that take? And just to kind of go through the nuts and bolts before they can?

The actual inspection itself typically within 1 calendar week, it's kind of bookended by weekend, occasionally, they can stay longer. I think in this case, they'll probably not want to stay more than had amount of time. I don't want to speak for them. And then once they go through that process typically takes what we understand about 60 days to go from conclusion of the inspection to the eventual approval. And that's why, again, as soon as we have clarity on the inspection happening, then we can give more line of sight to when we think an approval is going to happen.