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

[Audio Gap] at the Bank of America Health Care Conference. I'm 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 with us for the next 30 minutes. Speaking for Amicus Therapeutics is President and CEO, Brad Campbell. Brad, thanks for making the trip out West.

Thanks, Tazeen, and thanks to Bank of America for having us. It's always a pleasure to be here with you guys and a great set of clients, too. So I appreciate that. So maybe just a few words to kick us off.

Yes. So maybe you could do the 2-minute intro about the company, and then we can go into specific questions.

Excellent. Excellent. So as folks probably know, Amicus Therapeutics. We are a global biotechnology company. We focus on delivering next-generation therapies for people living with rare diseases. We have a core franchise with Galafold, which is our small molecule chaperone for people living with Fabry disease with certain genetic mutations. And that business has just continued to grow and grow, which is fantastic. We came into the year and reported our first quarter numbers with 16% growth, which was $99 million in revenue for the quarter. And importantly, that led us to raise our guidance for the year from 11% to 16% to 13% to 17% annual growth. So we're really excited to see that continue to go forward. And then we'll talk more about the drivers of that growth and the opportunity there. We think that product is on its way to $0.75 billion to $1 billion in global sales. Our second product, which I know we'll also spend a lot of time on or second therapy, I should say, is a 2-component therapy, Pombiliti and Opfolda for the treatment of late onset Pompe disease patients. We do hope to bring in younger patients over time as well. That product was launched last year in the United States, in Germany, in the U.K., in Austria. And we just launched in Spain here recently. So really exciting momentum there. We gave guidance for Pompe of $62 million to $67 million in annual sales. We did that on our first quarter call. And I know we'll talk more about that. But really exciting to add that to the portfolio to see that gain traction and build momentum. And we see that again as a $0.75 billion to $1 billion peak product opportunity. And then I think the last piece for Amicus is now with 25% to 30% top line growth. With I think continued prudent expense management, we intend to deliver our first year -- full year of non-GAAP profitability as we close out this year. So I think lots of opportunity on the top line with both the core franchise, the new product and now hopefully turning non-GAAP profitable for a full year and going forward.

Okay. Perfect. Maybe we'll start with Pompe, and you can talk to us about the guidance that you gave. And yes, so how are you getting to that $62 million to $67 million? Like what are the drivers that you look at? It's early in the year, how are you thinking about seasonality or geographic anomalies, for example, in getting to that number? I think people would be looking for color on that. I think sell side was probably a bit more bullish about what first year sales would be. So interested in hearing how we should be thinking about it because maybe we've not been thinking about it correctly.

Yes. Thank you, Tazeen. Good question. So a couple of things that are sort of packed in there. So first and foremost, for us, the goal has always been to maximize the number of patients on drug by the end of the year and to see, I think, healthy trends as it relates to how we're getting those patients from the 2 competitor products, Lumizyme and Nexviazyme. And we'll talk a lot more about that. But that's the first piece is maximizing the number of patients on drug, and we feel like we're in a great place now to be able to see how we're doing with that and we're on a really good trend there. And in particular, what we shared in terms of new patient starts was we came into the year and reported 120 patients either on drug or scheduled to go on drug. In the first quarter, what we said was the rate of new patient starts was nearly double of what it was last year. And then we shared that April was actually the best month we've had so far. And that led us to report a number of 155 patients on drug or scheduled to start drug. And then we clarify because it helps tie the revenue that, that was 135 patients on drug as of that time point. A couple of other trends that we look at, then I'll unpack the revenue piece and some of the geographic dynamics that you talked about. So a couple of other important things that we look to see. The first is that we're taking share proportionally in the markets where we're launched. So in the U.S., Nexviazyme, which is Sanofi's second generation product was launched a little over 2 years ago, so maybe 2.5 years. And so they have a 65% or 75% share of patients now on Nexviazyme. And that's exactly the rate of switches that we're seeing in the United States. So 75% of our prescriptions, our commercial prescriptions, I should say, came from Nexviazyme and then the balance came from Lumizyme. Outside the United States, where Nexviazyme was launched much more recently, we're taking much more share from Lumizyme, which is the large portion of the population. But we're also getting naive patients, which is an important segment outside the U.S., and we're getting Nexviazyme switch patients, too. So in terms of like a switch dynamic, all that is going really well. And then the other piece, though, and I think this is probably the most unique dynamic for the U.S. in addition to the launch timing. Also, I think, describes the disconnect from an expectations perspective and what we guided to from a revenue perspective. And that's really a timing of revenue perspective. In the U.S., as you know, you start with a prescription. And what we said is that we've targeted about 90 days from prescription to infusion in the beginning of the launch. And then as you start to get on formularies in the U.S., both hospital and payers, we would like to see that trend down to more like 30 to 45 days. As of the Q1 call, we're down to 70 days, which is great. And what we shared is the more recent patients were more down to 30 to 45 days. So all of that is going well. The one piece that was harder for us to anticipate and I guess in hindsight, makes sense, but I think this is part of the disconnect there was getting the clinical trial sites to convert a clinical trial patient just to write the prescription, took longer than we had anticipated. Why? Because they already have access to drugs, so there's not a lot of urgency. It was at the end of the year. It is a bit of a hassle to start that process for the first time. The new commercial patients have gone through much faster. And now we've worked through that clinical trial bolus, but I think that timing was a piece of what was the disconnect, and those are the higher-priced patients. So it sort of cost you more just from a revenue run rate. But the good news is we're through that process now. We're tracking towards that faster reimbursement time line. And like I said, the more important piece, which is like the patient capture and the switch trends, I think, are showing us that this is on track to do exactly what we hoped it would do.

Okay. That's good color. You mentioned that 25% of your patients are ones that are ones switching from Lumizyme. Why would they skip over Nexviazyme?

I hope and I believe it's because they think that Pombiliti and Opfolda offers them an opportunity to improve based on the data that we've demonstrated. Remember, we're the only drug that in a controlled setting, it showed improvement when switching off of standard of care, in particular, Lumizyme. So we believe it's because they see an opportunity for better outcomes on Pombiliti + Opfolda. I also think that historically, there was only two options, Lumizyme and Nexviazyme, in the United States, and now you have PomOp available. And so I think physicians and patients are able to choose that for the first time.

Do you think that doctors are going to mostly follow the path of Lumizyme to Nexviazyme and then to the Amicus offering. Because patients over time stop responding to therapy or need something else. And for the longest time, our doctor checks, for example, say we want to leave the Amicus product for last because we want to make sure that we can keep the patient on this for as long as we can. So just curious on what you're hearing on that?

Yes. So we've heard that concept as well, which is like eventually you're going to kind of step through Nexviazyme and then end up on Pombiliti + Opfolda and sort of a flippant response might be, okay, that's fine. It means you'll get them eventually, right? So it's okay if we're considered the biggest gun to say for the end. The reality is, I don't think that's how these products are working. And I think now that physicians and patients have a choice. The data we're seeing, which is now Europe and U.S. says that's not the case. I think the data says that physicians and patients are going to want to try to use the best product that they think is available to them. And I think we're starting to demonstrate that, that's Pombiliti + Opfolda. In Europe, as an example, the vast majority of the patients are coming from Lumizyme because those are the most patients that are available. And the one market where we have sort of head-to-head-to-head data, which is the U.K., where we've been available together for about 2 years, both from the expanded access time frame and the commercial time frame, we're -- we've said this on the call, we're about 1/3 market share after 2-ish years. And I think there's every chance that over the course of this year, we'll be the leading market share. And again, I think that's a preference choice.

Okay. So in Europe, where you're not label restricted to switch. Why would a patient go on from the [ Pompe first ], for example?

Yes. I think it's for the same reasons, which is if you believe this is the best therapy, why would you start on an inferior therapy? And again, I know in other classes of medicines, you have that kind of step through concept, MS would be another good one. Parkinson's maybe. But I think in the Pompe world and a progressive genetic disease, I think you would want to start the best place you could. And in the European label, it very clearly acknowledges the outcomes we had in naive patients, a small portion of the population, but very clearly shows that there was an improvement in those patients who came on to Pombiliti + Opfolda.

Okay. So for the guidance that you've given for the year, is there a sense on what proportion of that is going to be U.S. sales versus ex U.S.?

Yes. Just because of the -- remember, we came into the year, we had 105 clinical trial and EAP patients from the 3 markets that we had launched. The majority of those, 2/3-ish, came from the U.K. and Germany. And then as I mentioned, even though the rate of new patient starts and the rate of prescriptions is quite high in the U.S., comparatively, it's the largest market of the three. In terms of that just revenue lag, it's still a smaller portion. So I think this year, you'll see the larger portion of revenue, maybe 2/3-ish plus from Europe. Over time, the U.S. will become probably more like 40% of the revenue between the -- all the regions. And that's largely because of the -- it's the largest single market, but it also has a significantly higher price point.

Yes. On the price point, in general, what kind of discount should we expect to see in Europe over U.S?

Yes. So what we've shared publicly is in the United States, and remember, our strategy is to maximize access and we do that by pricing at parity or modest discount to standard of care, which is typically Lumizyme. So in the U.S., we priced at $650,000 from a list price, and that's for an average 70-kilogram adult. And then what we've shared is you can figure about a 20% net price off of that. So 80% is what you get, but you got 20% discount. Because of the mandatory Medicare and Medicaid 340B discounts. So that's kind of the weighted average exposure to that buying segment. So that's what a $520-ish kind of price point in the United States. Outside of the U.S., the average -- in Europe, specifically in the average list price is about $400,000. And again, that's kind of pegged to Myozyme. And then you can assume behind the scenes that there are confidential discounts at a country level that gets you to about again, a 20% discount off of that list price. So call it, $320,000 and as an average price. Now it may not be surprised, but U.K., Southern Europe tend to be on the lower side of that corridor, Germany, the Nordics, Netherlands tend to be on the higher side of that corridor, but I think that's a pretty reasonable place to peg your average.

Okay. And as you move forward, do you think you'll have any type of exposure to things like IRA, for example?

Not that we see, right? So number one, we're orphan, number two, we're single indication products. And when we've looked at the -- just a sort of a risk mitigation, as we've looked at where we sit on the cost exposure for Medicare and Medicaid, it's hundreds of products down the list. So we're nowhere near on the radar screen today. I think there's very little risk for these products that be impacted by IRA.

Okay. Maybe let's just talk about manufacturing and where is the product manufactured?

I'll give you one guess. So we're manufactured by WuXi Biologics. The current facility is in Wuxi, China. That's where the product was developed and that's where we've had manufacturer from clinical trials and launch. We took the decision to -- with WuXi's Capital to invest in another site. They built the plant, they invested in it, but we jointly agreed that we wanted to have a site outside of Mainland China. And so that's in Ireland, Dundalk, Ireland. That product -- or that facility is well on track for the time line that we had anticipated, which is getting to licensed product coming into the supply chain, call it, back half of next year, early '26. So that's been an important part of the evolution. And then overall, and I'm sure we'll get into the some of the congressional proposals that are out there. But overall, we have a supply chain risk mitigation strategy of having -- we target 18 to 24 months of inventory throughout the supply chain. And then we took the decision about 1 year ago to start to move a big chunk of that. We targeted about a year's worth out of China, so finished product out of China. And then since then, we've now evolved that so that we've pushed it even further into the U.S. and Europe and the U.K. So about 60%, 65% of our product is outside of China today, which we think just gives us good sort of geographic and geopolitical mitigation on the current supply chain, but I know we can talk about kind of the next generation and the legislation.

Yes. I did want to go into a little bit of detail on the Biosecure Act and what exactly that means? Because yes, you will be a manufacturing site not located in China, but it's still owned by WuXi. And as far as sourcing your API, would that still be coming from China, at least for the time being?

Yes. So we believe that WuXi Ireland would be included within the WuXi footprint if the Biosecure Act were to come to bear, and I'm sure folks follow it. But the proposal from the original version of the legislation effectively was looking to derisk the United States biotech manufacturing away from China and also protect against Chinese companies from doing something nefarious with our human genetic data. So that was kind of the original impetus. What has evolved over time, which we knew it would, and now you could see in the latest markup of the legislation is that -- what that original version didn't take into account, and I think what gave -- spooked everybody was it didn't acknowledge that you can't just stop manufacturing in China and start manufacturing somewhere else when you're talking about a biologic manufacturing process. And so what you've seen in the latest draft of the legislation, which was the market coming out of the Senate is now allowing for a grandfathering or transition period. I've heard it sort of referred in different ways that would go out to 2032. So effectively says, if we pass the legislation, let's say, in the fall, then companies have 8 years to transition away from China. I think that would also be intended to include component parts, API, et cetera. So from our perspective, that would give us plenty of time to transition the whole process out of China and put it into a different source or site of manufacture. The good news is we've already started that process. It wasn't with thinking about China or Biosecure. It was frankly with an idea that, number one, we wanted to reduce the cost of goods of the product, and our target is like by 20% or 30%, which would be significant. And then number two, is it prudent then to have a second source, i.e., a second manufacturing partner aside from WuXi. And I think now that would prove to be a prudent decision. And that would take us, we believe, about 4 to 5 years to execute from today. So we think we have plenty of time to make sure we're in line with whatever legislation is passed.

Okay. I guess based on what you know about your API needs, do you know if the API can be sourced elsewhere?

100%. Yes, we had already started that process, too. Again, it's kind of just more supply chain risk mitigation. It didn't wasn't specifically around this news, which the bill is only, what, 2 months old. So -- but yes, the full stop, there is -- there are plenty of sources of all the component parts of Pombiliti that come outside of China.

Okay. What was it about WuXi in particular that made Amicus all those years ago choose WuXi as the partner? And what is it that you might need to particularly pay attention to if you're looking for a replacement?