Amicus Therapeutics, Inc. (NASDAQ:FOLD) Q1 2023 Earnings Call Transcript May 10, 2023

Amicus Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-0.18 EPS, expectations were $-0.15.

Operator: Good morning ladies and gentlemen and welcome to the Amicus Therapeutics first quarter 2023 financial results conference call and webcast. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Andrew Faughnan, Vice President of Investor Relations. You may begin.

Andrew Faughnan: Good morning, thank you Gigi. Thank you for joining our conference call to discuss Amicus Therapeutics first quarter 2023 financial results and corporate highlights. Leading today’s call, we have Bradley Campbell, President and Chief Executive Officer; Daphne Quimi, Chief Financial Officer; Sébastien Martel, Chief Business Officer; and Dr. Jeff Castelli, Chief Development Officer. Joining for Q&A is Dr. Mitchell Goldman, Chief Medical Officer, and Ellen Rosenberg, Chief Legal Officer. As referenced on Slide 2, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our business, as well as our plans and prospects. Our forward-looking statements should not be regarded as representation by us that any of our plans will be achieved.

Any or all of the forward-looking statements made on this call may turn out to be wrong and can be affected by inaccurate assumptions we might make, or by known or unknown risks and uncertainties. You are cautioned not to place undue reliance on any forward-looking statements which speak only as of the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement and we undertake no obligation to revise or update this presentation and conference call to reflect or circumstances after the date hereof. For a full discussion of such forward-looking statements and the risks and uncertainties that may impact them, we refer you to the forward-looking statements and risk factors section of our annual report on Form 10-K for the year ended December 31, 2022, and the quarterly report on Form 10-Q for the quarter ended March 31, 2023, to be filed later today with the Securities and Exchange Commission.

At this time, it’s my pleasure to turn the call over to Bradley Campbell, President and Chief Executive Officer. Bradley?

Bradley Campbell: Great, thank you Andrew, and welcome everyone to our first quarter 2023 conference call. I’m pleased to report a successful start to the year across our global business. As we did in this morning’s press release, let me highlight several key points before I turn it over to the team to provide more detail. First Galafold – we continue to be very pleased with the commercial uptake of Galafold globally with $86 million in first quarter revenue, representing 14% growth from the first quarter last year on a constant currency basis. Strong trends continue across a number of our key performance indicators, including increasing demand through new patient starts from both switch and naïve populations, steady growth of in-person visits between our field team and Fabry treaters, and sustained patient compliance and adherence rates of over 90%.

We expect to see continued double-digit growth in 2023 fueled by significant demand from patients and physicians, and in fact as Sébastien will highlight in a moment, this was the best first quarter performance for net new patient starts in the past four years. Second, we continue to make great progress on our global regulatory filings and commercial planning for AT-GAA, our novel two-component therapy for Pompe disease. Importantly, I’m very happy to report that the US FDA has recently completed the required preapproval inspection of the WuXi Biologics manufacturing site in China. We’re very pleased with the outcome of the inspection and believe the comments and observations received by WuXi at the close of the inspection are all addressable.

We therefore continue to expect regulatory approval of AT-GAA in the United States in the third quarter of 2023. I’d also like to give a word of thanks to the FDA inspectors, the WuXi team, and the Amicus team for the collaborative and professional conduct leading up to and during the course of the inspection. The regulatory reviews in Europe and the U.K. also remain on track. In March, the European Commission granted approval of Pombiliti for the use in combination with Opfolda for adults with late onset Pompe disease, and as we just announced, the CHMP also adopted a positive opinion recommending marketing authorization of Opfolda, so we continue to anticipate the full approval of Pombiliti plus Opfolda to occur in the third quarter this year, and upon approval this will be the first two-component therapy available in the European Union for the treatment of adults living with late onset Pompe disease.

Finally, the U.K. regulatory process for AT-GAA was initiated in December of last year and is following a similar timeline as the U.S. in Europe, with expected approval in the third quarter this year as well. As we observed throughout 2022, we remain extremely pleased with the level of interest and participation we’re seeing in our expanded access mechanisms for AT-GAA globally. As we get through the first part of 2023 across all of our ongoing clinical studies and expanded access programs, there are now approximately 200 patients on AT-GAA, which we believe represents more than 5% of the total treated Pompe patients around the world, and we have more patients in the queue, so we expect this number to continue to trickle upward as we approach launch.

In anticipation of the regulatory approvals, our global launch planning progress continues as we eagerly anticipate the final approval of AT-GAA. We very much look forward to providing a real choice in this therapeutic area, both in the United States and in Europe, with regulatory applications in additional countries planned in the months ahead. Third, Amicus has maintained a strong financial position as we continue to execute on the global expansion of Galafold and prepare for the global launch of AT-GAA. Importantly, based on the latest assumptions on approvals and launch of AT-GAA, our current operating plan and continued careful management of expenses, we remain on track to achieve non-GAAP profitability, which we expect in the second half this year.

On Slide 4, as we laid out at the beginning of the year, we are laser focused on achieving our key strategic priorities for 2023, including: number one, sustaining that double-digit growth revenue of 12% to 17% for Galafold at constant exchange rates, delivering this important medicine to more people living with Fabry disease with amenable variants in existing and new markets; second, securing regulatory approvals of AT-GAA by the FDA, EMA and NHRA this year, as well as continuing to advance preparations for the anticipated launches; number three, continue to judiciously invest in the advancement of our best-in-class next generation Fabry and Pompe genetic medicines and capabilities, as well as our next generation chaperone for Fabry disease; and number four, as always, maintaining a strong financial position as we carefully manage our expenses and investments on our path to non-GAAP profitability.

With that overview, let me now turn the call over to Sébastien Martel, our Chief Business Officer to further highlight the Galafold performance. Sébastien?

Sébastien Martel: Thank you Bradley and good morning to everyone on the call. I will start by providing you with more details on our Galafold performance for the quarter. As you can see on Slide 6, for the first quarter 2023 Galafold reported revenue reached $86.1 million, driven primarily by strong patient demand. The geographic breakdown of revenue during the quarter consisted of $57 million or two-thirds of revenue generated outside of the U.S. and the remaining $29 million or one-third coming from within the U.S. That’s in line with the split that we expect as we continue to grow both parts of the business. As Bradley mentioned, we were pleased to see continued patient growth in countries across our leading markets. Now turning to Slide 7, our results for the first quarter highlight the strength of our global commercial efforts.

The demand for Galafold globally continues to be strong with patients added in all major markets, delivering an operational growth rate of 14% over the same period in 2022 at constant exchange rates. From a year-over-year perspective, the negative impact from foreign currencies was 4% in the period; as a result, Galafold reported revenue growth versus the same period last year was 10% for the first quarter. Galafold continues to be the fastest growing treatment for Fabry disease globally. I’m pleased to report that our monthly net new patient trends continue to increase, and if you look at the growth in net patients on Galafold globally, which is the truest measure of the underlying business, we see a high teens growth rate in patients on Galafold at the end of Q1 this year versus the same period last year, so all indications are of the continued and growing demand for Galafold.

When we ended the first quarter, we had more than 55% of global market share of treated amenable patients, and within the global mix we’re starting to see stronger uptake in naïve populations, so while we are achieving high market share in countries where we’ve been approved the longest, there’s still plenty of opportunity to continue to switch patients over to Galafold and continue to grow the market as we penetrate into the diagnosed untreated and newly diagnosed segments. All of that is underpinned by impressive compliance and adherence rates that continue to exceed 90%, reiterating our belief that those patients who go on Galafold permanently stay on Galafold. Importantly, the value of Galafold continues to be recognized by payors as we’ve got a very strong track record of successfully negotiating and renegotiating reimbursement outside of the U.S. Our relentless commitment remains on ensuring access to Galafold for anyone who needs it.

Based on the performance we’ve seen here in the first quarter of 2023, Galafold uptake continues to track very well and we are seeing those trends continue with growth across all our major markets, as well as most of our smaller markets. Turning to Slide 8, Galafold growth remains strong, as mentioned on past calls, due to a variety of factors, including uneven ordering patterns and FX fluctuations. The rate of growth within the year is typically non-linear and we expect that to continue throughout 2023. In the table that you have on the right-hand side of the slide, we have provided a five-year historical snapshot of the percent of Galafold sales that occur each quarter during a given year. We would expect that similar trends will occur this year.

Now moving onto Slide 9, we know there is significant demand for Galafold and that the segment of the global Fabry market made of patients with amenable mutations has the potential to surpass $1 billion in annual revenue in around five years. We anticipate sustained growth throughout 2023 to be driven by several key co-drivers: continuing to penetrate into existing markets, further uptake into the diagnosed untreated population, expanding into new geographies, and label extensions. As we just mentioned, all of these efforts are supported by [indiscernible] compliance and adherence rates and positive reimbursement and access mechanisms around the world. I’m pleased to share that we’re making continuous progress on expanding into new markets and also on extending our label.

To name a few examples, we recently received marketing authorization for Galafold in Hong Kong, the extension of use to adolescent patients 12 years and above has recently been approved in Canada, and we’ve submitted the marketing authorization application in New Zealand and we’ve now entered into pricing and reimbursement negotiations for Galafold driven by diagnosing patients through a variety of measures, including high risk screening, newborn screening, and other diagnostic initiatives which we continue to support and invest in as well. Also important to note here, we have orphan exclusivity in the U.S. and Europe. In addition to our now 49 Orange Book listed patents, including eight composition of matter patents, and 33 of those give us IP coverage until the late 2030s which provides us the opportunity to provide access to Galafold globally for a long time to come.

Now moving onto Slide 10, we’re happy today to stand less than a quarter from the commercial launch of Pombiliti and Opfolda. On that slide, we outline launch preparations as we are poised for another successful product launch. As you know, Amicus has a presence in over 40 countries around the world today, including all the major Fabry and Pompe markets. That team that will launch Pombiliti and Opfolda has largely stayed the same with only a few additional FTEs. They’re now fully recruited and trained to support the first wave of launch countries. I’m pleased to note that product has been positioned to support the first group of patients coming onto commercial supply. We have experience across all areas that are needed for a successful drug launch: regulatory, commercial, supply chain, experience with payors, reimbursement and access, in addition and most importantly the key relationships with physicians.

We’re confident in our world-class organization that we leverage their experience and relationships and deliver AT-GAA to people living with Pompe disease around the world. Our educational and promotional materials are ready, and training in our initial launch countries is now completed. Market mapping is also complete. From the teams in medical education and publications, our ability to market rare disease products successfully, our experience with reimbursement and access around the world, and again all the strategic planning that we’ve been doing together with building inventory with our partners at WuXi Biologics, we believe we are in a very strong position for a second successful launch at Amicus. With that, let me now hand the call over to Jeff Castelli, our Chief Development Officer, to highlight our AT-GAA program and pipeline updates.

Jeff?

Jeff Castelli: Thank you Sébastien, and good morning everyone. On Slide 12, we’ll start with our AT-GAA program. Pompe is a severe and fatal neuromuscular disease and one of the most prevalent lysosomal disorders. Multiple publications and natural history studies have shown that the initial benefits of treatment are often followed by continued long-term decline for many individuals. We recognize that Pompe disease continues to pose a range of health challenges for people affected by the disease and having therapeutic choices is crucial. Moving onto Slide 13, we remain very excited to be anticipating potential regulatory approvals in three of the largest Pompe markets in the third quarter this year, as Bradley noted. On this slide, we summarize the status of the anticipated regulatory milestones by market.

First in the EU, Pombiliti was granted European Commission approval in March. In April, the CHMP adopted a positive opinion of Opfolda and we expect an EC approval to occur in the third quarter of 2023. In the U.S., the FDA recently completed the required preapproval inspection of the WuXi Biologics manufacturing site in China, and we are very pleased with the outcome and believe that the comments and observations received by WuXi at the close of the inspection are all addressable. We continue to expect approval of both components of AT-GAA together in the third quarter of this year. Finally, the regulatory submission process for AT-GAA in the U.K. was initiated in December via the recognition procedure based on the CHMP opinion, and we’re on track for an expected MHRA approval also in the third quarter, so lots of great momentum across the key markets.

Moving onto Slide 14, we highlight our ongoing clinical studies and multiple mechanisms of expanded access that support some of the early demand for AT-GAA. For the younger Pompe community, we continue to enroll the ongoing open label ZIP study in children up to 18 years of age living with late onset Pompe disease. They have now begun enrolling the open label Rossella study for children living with infantile onset Pompe disease. Importantly, in response to the multiple requests for treatment that we continue to receive for children living with LOPD and IOPD, our expanded access programs continue to enroll those patients. We have multiple expanded access programs in place, including in the U.S., U.K. Germany, France, Japan, and other countries.

This includes the Early Access to Medicine Scheme, or EAMS in the U.K., where we continue to see significant enthusiasm for AT-GAA with physicians having requested access across all of the leading Pompe centers and dozens of patients now on treatment. Since the positive scientific opinions, interest and momentum for AT-GAA has continued to grow and we are pleased to be able to provide access to those who are eligible. With this growth in our access programs, as Bradley noted, we are pleased to report that there are approximately 200 patients now worldwide being treated with AT-GAA across our clinical extension studies and expanded access programs, and experience with AT-GAA is growing worldwide with approximately 75 centers currently participating in those different programs.

Finally, as highlighted in the pipeline slide in the appendix, for our earlier stage pipeline we continue to focus on novel approaches for Fabry and Pompe, including gene therapies to deliver our engineered GLA and GAA transgenes and the next generation Fabry chaperone. With that, I would like to now turn the call over to Daphne Quimi, our Chief Financial Officer to review our financial results, guidance and outlook. Daphne?

Daphne Quimi: Thank you Jeff, and good morning everyone. Our financial overview begins on Slide 16 with our income statement for the first quarter ending March 31, 2023. For the first quarter, we achieved total revenue of $86.3 million, which is a 10% increase over the same period in 2022. This includes year-over-year operational revenue growth measured at constant currency exchange rates of 14%, impacted by a negative currency of 4%. Cost of goods sold as a percentage of net sales was 8% in the year as compared to 9.6% for the prior year period. Total GAAP operating expenses decreased to $117 million for the first quarter of 2023, as compared to $146.5 million in the first quarter of 2022. On a non-GAAP basis, total operating expenses decreased to $80.6 million for the first quarter of 2023, as compared to $109 million for the first quarter of 2022, reflecting decreased program spend.

We define non-GAAP operating expense as research and development and SG&A expenses, excluding share-based compensation expense, loss on impairment of assets, changes in fair value of contingent consideration, and depreciation. Net loss for the first quarter of 2023 was $52.9 million or $0.18 per share as compared to a net loss of $85.3 million or $0.30 per share for the prior year period. Driven by the revenue growth of Galafold and careful expense management, we continue to make progress towards our path to non-GAAP profitability in the second half of this year. As of March 31, 2023, we had approximately 283 million shares outstanding. Turning now to Slide 17, we continue to operate from a position of financial strength, and our goal remains to achieve non-GAAP profitability in the second half of 2023, as defined in our press release.

Profitability is dependent on a number of factors, including the timing of approvals and launch of AT-GAA. Our full year 2023 non-GAAP operating expense guidance is $340 million to $360 million. The expected decrease in operating expense for 2023 as compared to 2022 will be achieved by continuing to drive efficiencies and prudent expense management offset by continued investment in the global growth of Galafold and pre-launch and launch activities for AT-GAA. We anticipate operating expenses to be non-linear this year due to these pre-launch and launch expenses, as well as certain non-recurring manufacturing costs that we expect will be incurred in the second and third quarters of this year. We also expect to see a larger portion of our operating expense to be allocated to G&A this year as we align our resources to support the launch of AT-GAA and the continued growth of Galafold.

A few comments about our cash position and 2023 financial guidance. Cash, cash equivalents and marketable securities were $267.1 million at March 31, 2023 compared to $293.6 million at December 31, 2022. Our full year Galafold revenue guidance is revenue growth of 12% to 17% at constant exchange rates in addition to our non-GAAP operating expense guidance of $340 million to $360 million. With that, let me turn the call back over to Bradley for our closing remarks.

Bradley Campbell: Great, thank you Daphne, Jeff, Sébastien for the detail there. As you can all see, we’ve been relentlessly focused on execution this year across the business and have laid a strong foundation of what we think will be an important year for Amicus. As we approach this next phase of the company, we’re confident we can continue to drive sustainable long term value and deliver life-changing therapies to people in need. Operator, we can now open the call to questions.

Q&A Session

Operator: Thank you. [Operator instructions] Your first question comes from the line of Anupam Rama from JP Morgan.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Ellie Merle from UBS.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Joseph Schwartz from SVB Securities.

Operator: Thank you. One moment for our next question. Our next comes from the line of Ritu Baral from TD Cowen.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Dae Gon Ha from Stifel.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Kristen Kluska from Cantor Fitzgerald.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Salveen Richter from Goldman Sachs.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Jeff Hung from Morgan Stanley.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Zhiqiang Shu with Berenberg.

Operator: Thank you. At this time, I would now like to turn the conference back over to Bradley Campbell for closing remarks.

Bradley Campbell: Great, thanks Operator. Thanks everybody for the participation in the call today, all your great questions. Hope everybody has a great day. Take care.

Operator: Thank you. This concludes today’s conference call. Thank you and have a great day.