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

Back to the Bank of America Healthcare Conference. I'm Tazeen Ahmad. I'm one of the seniors med biotech analysts here at the firm. It's my pleasure to have with us our next -- our first presenting company of the morning, Amicus Therapeutics. Sitting up here with me on stage for the company are Jeff Castelli, who is Chief Development Officer; as well as Simon Harford, who is the CFO. Gentlemen, good morning, thanks for making the trip over from the East coast.

Good morning.

Good morning, Tazeen.

So we're asking everybody some natural questions right at the get go just to get those out of the way. It seems like it's quite topical these days.

So I'll start with the more recent updates, which is earlier this week, the executive order that was announced relating to most favored nation. Wanted to get your early thoughts. I know it's still in flux about what you think the end result of that could be and what it particularly means for Amicus?

Yes. I mean, like a number of these executive orders, nothing is exactly clear at this point in time. What I can say from a point of view of Amicus though is as we think about our sales breakdown. So you've got Galafold with roughly 60% of revenue coming from outside of the U.S. and 40% from within the U.S. And then within that U.S. number probably about roughly slightly less than 25% is Medicare and a few percentage points more for Medicaid that potentially could be impacted by MFN. If it goes down that path on [indiscernible], you're talking more about roughly 45% of sales globally or in the U.S. at this point in time and probably again in the region of 35% to 40% of sales of Medicare or Medicaid. So you can do the math sort of on that. I think the broader question is actually I think the President is right, it is time for Europe to step up in terms of pricing because we've clearly seen that prices are substantially different in the U.S. So part of what one will be looking at over time is what are the opportunities with this type of situation to increase prices, and you've seen what's happening with some of the big pharma companies coming out to the European Commission to talk more specifically. So we'll see. Right now, I would call it business as usual. We'll have to wait and see. But that gives you a feel at least for where some of the sort of exposure could be.

Okay. And then some related points as well, what's your general view on tariffs?

Yes. So on tariffs, as far as 2025 is concerned, really, it's a nonevent for us because we had inventory already in place for most of the sales for this year. As you know, we have been transitioning way before the tariff discussion from China to Ireland. We haven't run some worst case scenario models, assuming sort of China at 125% and European Union more in the 25-ish percent range. And what I can say to you is even in that worst case scenario, it's manageable within our sort of direction of travel of transitioning to GAAP profitability and then starting in the second half of the year, does it have an impact? Of course, it would have an impact. But it's manageable in that guidance trajectory as the way I would describe it and where we're going. I think that the -- the one other thing I would say is we are -- we announced that we are doing some dry product manufacturing going forward here in the U.S. So there are certain steps we can take. I think the bigger one, though, is as you go to Ireland, when we did the worst-case scenario, we're in China for the next couple of years, but then we transition. So in that scenario, we obviously had a much sort of larger impact, short term and longer term, but it's all managables, the way I think about it.

Is there any way of bringing everything onshore? Or would that just be too difficult?

Realistically, there are certain time lines. So -- and frankly, we are where we are at this stage. So just from a timing perspective, you can rush through certain things short term, but it's not practical to do that for everything.

Okay. And then lastly, where does your IP reside?

Our IP resides primarily here in the U.S.

Okay. So there would be -- there would be any transfer pricing?

I don't sort of see any issues on that front.

Okay. Got it. All right. So moving on from there, let's talk about the day-to-day business of Amicus. So can you talk about the trends that you've been seeing for Galafold. So this is, I guess, a mature launch by your definition in some respects, just like calendar wise. But in other ways, you're still looking for pretty big uptake in patients over the next several years. So can you walk us through how that has progressed up until this point and the efforts that you're undertaking in order to get to your targets at the end.

Jeff, do you want to?

Yes. I mean, so we're extremely pleased with Galafold in terms of how the original kind of early days of the launch went. And now we're sort of, I guess, mid launch, I would say. We're really excited by the recent settlement with Teva that gets us, we believe, IP out to 2037. We're looking at passing $500 million in sales this year of Galafold. What's really exciting for us to see is this is now driven by mostly our largest countries, the U.S., Germany, U.K. and driven by naive patients. We've always said Fabry is one of the most underdiagnosed rare diseases and genetic diseases and it really is. We know -- when you look at newborn screening, when you look at at-risk screening, there are many more people and families still living with Fabry not diagnosed and are diagnosed. And what we're seeing is physicians have a higher suspicion of kind of when to potentially suspect Fabry, they can send for panels of renal or cardiac tests to kind of in Fabry is on those panels. We're seeing newborn screening in the U.S. 8 states or screening for Fabry. And when you find that newborn, there's family screening available and you can typically find many family members because Fabry is an X-linked dominant disease. And then one thing we're investing in where we think we could potentially help even drive things further is using AI and medical records. We have a pilot project with collaborators at UPenn, and we've taken 500,000-plus of their medical records in their system, run through an AI algorithm to flag kind of risk for Fabry from 100,000 to 500,000, and we're testing the top 100 people at risk for Fabry to see if they would actually have Fabry. And just based on the prevalence rates in that 500, 1,000, we would expect there should be 100 Fabry patients. So we're very excited to leverage that. And if that is successful, we can then roll that out to other medical systems in the U.S. and even more importantly, ex-U.S.

So based on what you're saying, is the path going forward to just get more patients diagnosed relative to getting patients that just started on anything if there is such a thing?

Yes. I mean, at this point, there's still very incremental geographic expansion in some of our more recent launches. There still are some switch patients. But it's really, at this point, the future growth is going to be driven by diagnosis. Galafold is now standard of care for amenable patients. So we don't need to know where those patients are diagnosed. Anything we can do to contribute to diagnosing Fabry patients is good for the Fabry community and it's good for Amicus and it's good for our shareholders. So we're really focused on helping to drive diagnosis. And one nice thing I forgot to mention, Tazeen, is another tailwind for us is that traditionally, amenability for Galafold was 30% to 50%, it kind of varies by country, and that was very enriched for classic Fabry, what was able to be diagnosed traditionally. And a lot of that pool of existing or sort of future patients that we're going to now -- are highly enriched amenability. So it's going to be much more like 50% plus amenable rates in that kind of coming in new diagnosis group of patients. Diagnostic tailwinds, highly rich remenability, Galafold is standard of care.

And I would just add, I think there's so much focus on Pombiliti Opfolda at the moment with sort of uptake as the newer product. But the reality is Galafold is the biggest single driver of value for the foreseeable future. Why? Because as we saw 14% patient growth in the first quarter, our guidance, as you know, is sort of 10% to 15% revenue growth for the full year. Keeping on that trajectory, once we hit basically $400 million of annual sales, pretty much anything beyond that over and above that falls to the bottom line, too, because we're not increasing sort of infrastructure. Yes, there are a few continuing trials but that we are clearly leveraging the P&L. So I just want to emphasize how important that is ultimately to our valuation. And as you've articulated, the opportunity seems really, there's no reason why it shouldn't continue, let's put it that way.

So if it's the case that going forward, you have to mostly locate new patients. How should we think about like the pace of uptake going forward. Isn't that going to be a bit slower than simply having you already identified patients switching them? Or are we thinking about that incorrectly?

So it's -- there is a large existing pool of diagnosed untreated patients. I think it's actually -- 6,000 or 7,000 patients are diagnosed and untreated and sort of being watched, choose then start treatment once they're sort of severe enough. So there's that pool. And when new patients are diagnosed, it's not always that they're sort of just early with their symptoms. When you find an index patient, and then you do the family screening, you often find people that are very severe progressed along the pathway they need to go on treatment right away. So it's actually -- the growth we've seen in the last couple of years has been from just a raw number of patient adds, it's been higher than we've seen since the very early launch days. So there's a bigger base, obviously. So you know that the annual growth is slowing down a little bit. But in terms of numbers of patients, it's actually continuing to stay the same or increase from. And when you look at the numbers, we don't really see that slowing down based on how many people are left to be diagnosed.

Okay. So talk about what your goals are for where do you think penetration will land in this population?

Penetration is interesting. I think you'll continue to see many more patients diagnosed. So high double digit or double-digit growth of patient identification and diagnosis. Some of those patients will fall into the watch and wait group, some will fall into the need to treat immediately group. . Those that are amenable, I think, as I mentioned, that 30% to 50% will continue to increase in terms of percent amenable. And of the treated amenable, we're at 80%, 90% plus market share in the countries where we've been present for several years. So it's really just a matter of are they amenable? Do they need treatment? Are they diagnosed and they generally go on Galafold.

And I guess, lastly, geographically speaking, where do you think more of the patients will be found? Is it here or ex-U.S.?

So I think it's primarily in the existing markets and expansion in those markets because they tend to be a lot larger from an opportunity perspective. There are certain newer markets where we've entered in Asia Pacific and Latin America. But I don't see that as the core piece of the stage of the growth, let's say it more on existing.

Okay. Got it. So let's move on to Pompe. Can you just talk about the factors currently that you're seeing that are leading to acceleration going forward of uptake?

Yes. So if I start, and then maybe you can comment on a bit of color to the market. But the -- I think as you think about the rest of the year, we guided to the earnings to 50% to 65%, which puts at the midpoint of the range, I think, roughly about $110 million. What we have seen is quite an acceleration since the end of the quarter. April was frankly our strongest month ever since launch in terms of demand, so that's those either scheduled or actually sort of going on to treatment, which was extremely positive. We actually have a new commercial head in the U.S. because our previous head is retiring, who brings new perspectives also to the organization and that we're seeing that, that acceleration is coming from a broader group of centers, so not just the key opinion leader centers, but also more secondary centers, which is kind of interesting from a dynamic perspective, too early to sort of say is that a trend, but that's what we've seen more recently. I think there's no question that the U.S. acceleration is the most important piece to the sort of the top end and the bottom end of the guidance just because those patients are worth more than the international patients, by definition. I think as you think then about the next step, obviously, it's important that we continue to grow step by step in the existing markets, the Germanys, the U.K. is, the Spain of this world because they're reasonable sized markets. And that we are seeing happening. Then you have what I call the bigger new sort of reimbursed markets. So Italy, where we've seen first patients in recent weeks, there that will be a stepwise process again because you go through a regional formulary after reimbursement, but it's a big market. The Netherlands, we won the tender which means that there are roughly 150 patients, of which we will get probably 70-ish odd percent in total. The challenge in the Netherlands is they will come on more in a drip by drip process because there's only 1 center to get those patients through. So realistically, we're saying it could take 12 to 18 months to fully transfer everyone, but it's a great opportunity. Those in the -- that come later in the year with pricing and reimbursement, probably less of an impact for this year. They're more relevant to next year. But Japan, where we haven't yet got approval, but we anticipate by year-end, they could launch pretty quickly because it's 1 of those markets where you don't have to wait that long with pricing and reimbursement. Australia and Canada, we've also got approval already, but realistically, they will be 2026 patients.

Okay. Can you talk about the length of time a patient stays on the Sanofi therapies before transitioning over and if that time table is changing?

Yes. It's great question and 1 of the dynamics for paying close attention to. So traditionally, Lumizyme has been available for many years, and most or all treated patients were on Lumizyme. And then when Sanofi launched their next-generation ERT Nexviazyme we saw in the U.S., a pretty quick adoption. At that point, PomOp was not available. We were still going through COVID and inspection challenges. And by the time we entered the U.S. market, a lot of the patients had switched from Lumizyme and the majority of patients from Lumizyme to Nexviazyme. Outside of the U.S., it's a little bit more contemporaneous. We're often launching at the same time or slightly behind Nexviazyme, and we're seeing slightly different dynamics that we can talk about. But the U.S. was interesting because we weren't sure how long patients would -- after switching from Lumizyme to Nexviazyme, when would they be ready to switch again to a third treatment. We still believe very much in our product. We think PomOp offers a very differentiated mechanism of action, differentiated efficacy. We thought that maybe from research, it could be 6 or 12 months after starting a new treatment when patients and physicians might be ready. And what we've really seen is it takes about 2 years for them to really understand how the patient has done after switching. Going into last year, it was about 10% of the patients had been on Nexviazyme years, but coming into this year, back in January, it was about 40%. By the end of the year, it should be around 60%, 70%. So our pool of patients that now have been on Nexviazyme 2-plus years. If they are progressing or not doing well, might be looking for a switch has increased. And that's really where we're starting to see, as Simon mentioned, that expansion of centers and more experience, we're actually hearing very good positive anecdotal reports of patients when they're switching from Nexviazyme to PomOp. We've recently had some case studies that reported on those experiences. So I think as you start to get more of that kind of accelerating experience with PomOp, we'll start to see more and more transitioning and switching for the patients.

Okay. So just by that dynamic alone, why wouldn't the launch trajectory for PomOp meaningfully accelerate from here over the next quarter or two?

Yes. I think the dynamic will be how quickly, as I said, the variability in the guidance is sort of dependent on how quickly those patients. And I do think we have to be a little bit thoughtful though, it's very clear in my mind that you will, over time, get an acceleration because that pool is expanding. The question is exactly how quickly does that progress? Because the 40% are a pool of patients now some will go transition faster than others.

I guess what are the drivers of that? So when we talk to investors about Amicus when we talk about the PomOp launch and the big opportunity and the number of patients and the potential for really large peak sales, the first thing we hear is well, why is it going so slowly? So maybe you can just talk to us about what doctors are telling you about what they're looking for as the point in time where it makes sense or how patients are involved, if at all, in that decision-making process?

Yes. For us, it's still we believe, a matter of when, not if the majority of Pompe patients will be on a PomOp. What's -- as I mentioned, 1 thing we've learned is sort of there's that time period of understanding how the patient is doing now that they're on a new product, let's say it's an Nexviazyme -- they only are coming in really more every year for a major workup. We thought it was every 6 months. There has been traditionally a lack of standardization of how they're assessed. So one of the things we're starting to see is more interest in sort of energy being put into standardizing how patients are followed. So now that there's multiple options, physicians will know if their patients are stable or declining. So that's a key -- so yes, we don't really see -- I don't know, Simon, if you have anything to add to that sort of lost my train of thought.

Yes.

Okay. So what are some points you can talk about as it relates to how patients respond once they have transitioned over to PomOp? Are there any differences that they note that can help kind of spread word of mouth.

Yes. And just coming back for the topic was on before, after that 2-year period, now it's sort of a matter of, are the patients really progressing or not. And one of the things we've seen with our data was when patients switch from Lumizyme, we have great data showing they actually have benefits, improvement was possible. We don't really have a great sense yet of how many patients are at 2 years. It's not like every single patient is now ready to switch, but there are going to be some that are ready to switch at that point. And then at 3 years, and a 4 years, we believe that will continue to accelerate. So again, it's -- in the U.S., it's sort of that dynamic of we really were stuck for a little bit in that period. And now we're sort of starting to learn about how many patients when are they ready to switch. I think as we get broader experience, as I mentioned, you'll start to see more experience and more comfort switching. So it's still sort of a point where we're trying to understand those dynamics, and we do believe it will happen. But it's hard to say it's going to accelerate next quarter or this quarter, but there's a lot of positive dynamics that we're seeing that we expect to see continued long-term adoption of PomOp. I think also there's sort of a -- in some way, there's a lack of urgency sometimes like the physicians feel like, okay, I have these treatments, I can keep on in my back pocket. So there's part of that education as well, trying to say if there's potentially a product that could be deliver something that the other products couldn't. Why wouldn't you want to use that earlier? This is a progressive disease. So part of that also is us being able to educate physicians about our data, how you monitor patients and when you should think about switching.

Okay. And then just to wrap it up, how should we think about the dynamics of the switches in U.S. versus ex-U.S?

Yes. I think in terms of that, what we're seeing at the moment in the U.S. is that switches are coming proportionally from Nexviazyme and Lumizyme and from Lumizyme relates to the U.S. marketplace. As far as Europe is concerned, it's a little bit more of an even keel is the way I would describe it, just given the timing of launches is different than what we've seen in the U.S., and we are making, frankly, what I would describe as pretty strong progress. The fact that we're now the #1 product in Pompe disease in the Netherlands in Sweden or at least will be shortly, should I say. I think it's obviously, it's partly a recognition in some of those markets from a pricing point of view, but it's also a recognition of value of the product and what it brings to patients. Spain, where we pretty much launched in parallel with Sanofi, and Nexviazyme we're doing extremely well in that market, very competitive. And I think Western you had earlier about sort of how sort of patients reacting to being put on PomOp. Jeff probably has more stories than I do, but the overall, the general sentiment seems to be that it's a very strong profile with data that probably certainly in the switch patients is sort of stronger and available for us to use, let's put it that way.

Okay. Got it. So let's maybe move on now to your newest addition, DMX 200. So I guess maybe at the top, can you explain what the strategy of Amicus is with these types of acquisitions being considered going forward and why this particular asset was the right one to do at this time?

So maybe I'll just start on the bigger picture and then Jeff can comment on Dimerix. But we would have been very clear that ultimately, we wanted to do some in-licensing of products ultimately to leverage the infrastructure that we have. And we were also very clear that we wanted to sort of take a little bit baby steps, if I'm honest, because we were in the process, obviously, of launching Pombiliti on top of Galafold and trying to move to profitability as it is an organization. And so this was a great opportunity for us that fit very much our on-strategy sort of approach both from a point of view of fit with the portfolio and adjacencies to Fabry and Pompe, but also from a financing perspective. What we didn't want to do was to go out and bet the house with a huge amount of financing on something we wanted to more leverage the infrastructure and the ability to pay a $30 million upfront fee to have then the next milestone payment for us at the point where you flip the card on top line Phase III data seemed a very good risk reward profile and was very much, in our view, disciplined in what we said we would do and hit the profile. So that's kind of why we did strategically what we did and financially what we did so far. I think as you think about the future, I think it's still more about continuing to leverage infrastructure. Obviously, the dimeric deal is a U.S.-focused deal, but we also have a big international infrastructure and there are opportunities to leverage that. So that's probably more the road we will go down is in similar type of approach to what we've just done here rather than betting the house at this point in time. That's how we think about it because we're also conscious we don't want to over dilute shareholders, we want to balance that risk reward and the capital piece.

Yes. And how do you decide like what asset makes sense to you. You're a very strong commercial company. So how do you balance taking something that's ready to be marketed as opposed to something that still needs a little bit of for energy risk?

Yes. I mean -- so this obviously was a Phase III asset. We've talked about commercial assets. Commercial assets are probably the more likely or something where we've seen top line data already and they want a partner for outside of the U.S. is probably the nearer term, the more likely group, but if we found another Dimerix type deal, then absolutely, we look at it.

Okay.

And it really does leverage our late-stage clinical regulatory capabilities as well. With DMX 200, we saw FSGS as a great kind of adjacency to Fabry disease within nephrology connection. We saw a really strong mechanistic rationale for the approach of addressing the monocyte macrophage driven inflammation in many of our kidney diseases and FSGS, it's a very central role in any of those patients. We thought it was a very undervalued asset, a great chance for us to get access to a potential blockbuster market in the U.S. for as Simon said, a $30 million investment. There's 40,000 patients with FSGS in the U.S. and 5,000 diagnosed each year, and there's no current FDA-approved treatments. So we see a real opportunity there to potentially really help those patients in that community and also is successful, which we think there is a very strong probability success here, especially with us being able now to contribute to kind of putting together that final clinical end point and interacting with FDA, we're really excited about the potential there. And I'd love to have more opportunities like that Simon that we can bring in.

And frankly, in the near term, given we won't really see the top line data for probably another 2 years, actually, in the interim phase, it really doesn't affect our trajectory to GAAP profitability and free cash flow being positive during that period because we're not spending any more until we see the cards there.

Okay. Perfect. With that, we're out of time. So thank you for joining us this morning. Thanks, everybody, for sitting and listening to the fireside. We'll talk soon.

Thanks.

Thank you, Tazeen.