Amicus Therapeutics, Inc. (NASDAQ:FOLD) Q3 2023 Earnings Call Transcript

Amicus Therapeutics, Inc. (NASDAQ:FOLD) Q3 2023 Earnings Call Transcript November 8, 2023

Amicus Therapeutics, Inc. beats earnings expectations. Reported EPS is $-0.07, expectations were $-0.08.

Operator: Good morning, ladies and gentlemen and welcome to the Amicus Therapeutics Third Quarter 2023 Financial Results Conference Call and webcast. [Operator Instructions] As a reminder, this conference 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 for joining our conference call to discuss Amicus Therapeutics’ third quarter 2023 financial results and corporate highlights. Leading today’s call we have Bradley Campbell, President and Chief Executive Officer; Sebastien Martel, Chief Business Officer, Simon Harford, Chief Financial Officer, and Dr. Jeff Castelli, Chief Development Officer. Joining for Q&A is Dr. Mitchell Goldman, Chief Medical Officer, Ellen Rosenberg, Chief Legal Officer, and Mike Kaveney, President of U.S. Commercial Business and Head of Global Marketing. 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 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 to 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 events 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 September 30, 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 third quarter 2023 conference call. I’m very pleased to highlight the continued progress across our global business through what has been a tremendous third quarter for Amicus. As we did in this morning’s press release, let me highlight several key points before I turn it over to the team to give more detail. First, Galafold continues its strong performance and remains the cornerstone of our success. We are very pleased with the commercial uptake of Galafold globally, which for the first time has achieved over 100 million in quarterly revenue. Galafold’s performance represents 19% growth from the third quarter last year on a constant currency basis, and on a year-to-date basis, Galafold revenue growth was 17%, both at constant exchange rates as well as in reported numbers.

We continue to observe strong trends across our key performance indicators in all key geographies in the third quarter. This includes continued demand through new patient starts from both the switch and naive populations in all of our leading markets, a steady growth of in-person visits between our field team and Fabry treaters over the same period last year, and sustained patient compliance and adherence rates of over 90%. Growth in the third quarter was driven primarily by patient demand from net new patient starts. Based on Galafold’s strong performance throughout the first nine months, we are increasing again our full year 2023 revenue growth guidance to 16% to 18% at constant exchange rates. Second, Pombiliti and Opfolda, our novel therapy for late-onset Pompe disease, is now approved and launched in the three largest Pompe markets.

Following the recent US FDA approval of Pombiliti and Opfolda in September, the commercial launch is now well underway in Germany, the UK, and the US, which again are the three largest Pompe markets globally. As Sebastian will cover in more detail in a moment, our team is making tremendous progress in converting individuals from clinical studies and expanded access programs to commercial supply in our reimbursed geographies. We’re also already seeing new commercial patients who are switching from both of the available ERTs, and additionally in Europe, patients naive to treatment coming on to commercial drug as well. We’re pleased to share that as of early November, more than 60 patients are being treated with commercial products, and multiple additional patients have been scheduled to start their treatments.

We’re very pleased to see the early days of the launch track ahead of our expectations, and importantly, we’re well on track towards our goal of transitioning all clinical trial patients to commercial supply in these three major markets by year end. Beyond that, we’ll continue to focus on the broader patient access by expanding into the major European markets as we navigate the country by country reimbursement process and focus on additional regulatory submissions outside of Europe as well. By the end of this year, we will have submitted reimbursement dossiers in over a dozen countries. With the global launch of Pombiliti and Opfolda, we look forward to providing a real choice to challenging therapeutic expectations for both physicians and those living with Pompe disease.

Finally, we’ve continued to maintain a strong financial position as we execute on the expansion of Galafold and advance the global launch of Pombiliti and Opfolda. With the launch now well underway, the recent refinancing of our debt under more favorable terms, and continued strong growth from Galafold, we are well on track to achieve non-GAAP profitability in the fourth quarter this year. Ahead on slide four, we’re also making great progress towards achieving our key strategic priorities for 2023. First and foremost, continuing to sustain double digit growth for Galafold around the world. On the back of our strong performance year to date, we have now raised the expected annual growth rate of Galafold to 16 to 18% at constant exchange rates.

We’ve now secured regulatory approvals for Pombiliti and Opfolda by the FDA, EMA, and MHRA, and now are executing successful launches in those key markets. We’ve continued to judiciously invest in the advancement of our best in class next generation Fabre and Pompe genetic medicines and capabilities, as well as our next generation chaperone for Fabre disease. And as always, we are maintaining a strong financial position as we carefully manage our expenses and investments and continue to grow the top-line on our path to non-gap profitability. With that, let me now hand the call over to Sebastian Martel, our Chief Business Officer, to further highlight our commercial performance. Sebastian?

Sebastien Martel: Thank you, Bradley, and good morning to everyone on the call. I’ll start by providing you with more detail on our Galafold performance for the quarter. As you can see on slide six, for the third quarter 2023, Galafold reported revenue reached $100 million point seven in revenue. Galafold growth continues to be driven by strong patient demand, particularly from our leading markets. Turning to slide seven, our results here to date highlight the strengths of our global commercial efforts. The demand for Galafold globally continues to be strong with patients added in all major markets, delivering operational growth of 17% over the same nine month period in 2022 at constant exchange rates. From a year over year perspective, there’s a negligible impact from foreign currencies.

As a result, Galafold reported revenue growth versus the same period last year was also 17%. Galafold continues to be the fastest growing treatment for Fabry disease globally, with 19% growth this quarter at constant exchange rates. In fact, both growth and net new patient starts have been higher this year than the previous three years. Our leading markets such as the US, the UK, EU-five countries and Japan remain the biggest drivers of patient demand. Throughout the first nine months of 2023, the number of patients coming onto Galafold has continued to exceed internal expectations, which indicates continued growing demand for Galafold globally and a healthy return to a more normal post-COVID environment. We ended the third quarter with about 60% of the global market share of treated admittable patients.

And within the global mix, we’re seeing stronger uptake in naive populations. So we continue to achieve high market shares in countries where we’ve been approved the longest. And there’s still plenty of opportunity for patients to continue to switch and to continue to grow the market as we penetrate into the diagnosed and treated and among people naive to treatment. 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 predominantly stay on Galafold. 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-near and we expect that to continue into 2024.

On slide eight, we know there’s a significant demand for Galafold and that the segment of the global family markets made of patients with admittable mutations has the potential to reach $1 billion in annual revenue in around five years. We anticipate sustained growth throughout the end of 2023 and into 2024 to be driven by several key growth drivers. First, continuing to penetrate existing markets, further uptake into the naive population and the diagnosed and treated population, expanding into new geographies and label extensions. As we just mentioned, all of these efforts are supported by solid compliance and adherence rates, positive reimbursement and access mechanisms around the world, and increasing diagnosis globally. I’m pleased to share that we continue to make progress on expanding Galafold into new markets and extending the labels.

Just to name a few examples, we’ve recently received positive reimbursement for Galafold in Taiwan as first-line treatments for naive and eligible and admittable patients. We’ve also received reimbursement in Lithuania on a named patient basis. Additionally, we’ve received approval in New Zealand and are engaged as we speak in pricing and reimbursement negotiations for Galafold in Hong Kong, Turkey, and Singapore. In the longer term, we continue to see significant growth in the family market globally, driven by diagnosing new patients through a variety of measures, including high-risk screening, newborn screening, and other diagnostics initiatives, which we continue to support. Also important to note here, we have often exclusivity in the US and in Europe, and in addition to our now 54 orange-bophystic patents, including 10 composition of matter patents, that gives us IP coverage into the late 2030s.

This provides us with the opportunity to provide access to Galafold globally for a long time to come. We intend to continue to protect and enforce our broad intellectual property rights, and looking ahead, we expect steady double-digit growth for Galafold through the end of this year and into 2024. And we remain confident that with our strong IP protection, Galafold has a long runway well into the next decade. Let’s turn now to Pombiliti and Opfolda on slide 10. We’re incredibly excited to have Pombiliti and Opfolda approved and launching in the EU, the UK, and the US. Those three regulatory approvals are really a turning point for Amicus, placing us in the rare territory of biotech companies with multiple products on the market and on the verge of achieving non-gap profitability.

On slide seven, we outline our global launch progress with Pombiliti and Opfolda, which is being led by a world-class commercial and medical organization. This launch leverages our highly experienced cross-functional teams to quickly transition all clinical trial and expanded access program patients to commercial supply. And in parallel, ensure that we’re treating physicians have the information they need to identify those patients who would benefit from starting on or switching to Pombiliti and Opfolda in each respective launch country. The process of switching clinical trial and expanded access patients in these first three geographies started right after approval and will be complete by year end. The significant overlap of treatment centers, hospitals, physicians between Fabry and Pompidou has allowed us to optimize our business infrastructure to support a seamless transition for patients.

Within the first 30 days of approval, all core treating centers have been engaged with and we’ve had very positive feedback from HCPs and other stakeholders as to our business approach, our support, and our patient focus. As of early November, as Bradley said, more than 60 patients are being treated with commercial products and multiple additional patients are scheduled to start their treatment. Additionally, we’ve also started to see patients from both of the other approved therapies switch over to Pombiliti and Opfolda. We expect Pombiliti and Opfolda revenue to come in around $10 million for the full year 2023, which is right in line with consensus expectations. We’re working in partnership with physicians to ensure that they have all the information they need on Pombiliti and Opfolda for their patients, and we believe our two component therapy is poised to have a significant commercial opportunity.

Based on early interactions with Pompidou experts, we’re pleased with the positive feedback from physicians regarding patient experience and their engagement with the amicus field team. Finally, within these early days, we find an important metric to track is our progress within access and reimbursement. We have a highly experienced team who are engaging in positive conversations with payers to demonstrate the value of Pombiliti and Opfolda. Today, as we’re launched in Germany, in the UK, in the US, and Austria. We’re also active in pricing and reimbursement discussions with additional major European markets as we focus on securing broad patient access throughout the EU. By the end of this year, we’ll have submitted reimbursement dossiers in over a dozen countries.

On slide 12, I’m pleased to provide additional color on the even larger progress of Pombiliti and Opfolda by country. Maybe first with Germany, I’m pleased to report that all expanded access and clinical trial patients have now been transitioned to commercial products. Additionally, individuals are now starting to switch from other therapies to Pombiliti and Opfolda, in addition to those naive to treatment. We’ve also received very positive feedback from HCPs and pharmacists on their engagement with the amicus team, whose attentiveness has been critical in ensuring a straightforward transition process. In the UK, we’re seeing a very quick conversion of EAMS patients to commercial supply, as well as switches from other therapies. As a matter of fact, these conversions are occurring ahead of schedule, with now 100% of EAMS patients converted as of yesterday.

In addition, our field team has been quick to engage with all treating centers and HCPs in the UK to help facilitate a prompt conversion process. And in the US, all launch activities are underway, with first conversions progressing as planned. In fact, 66% of patients in clinical trials have already PRF submitted with their physicians, and they’re on track, and we’re on track to transition all clinical trial patients by year-end. Importantly, thanks to the launch readiness of our team, our multi-channel programs launched within the first few days of approval, and the field team has made positive headway with both prescribers and payers. So in summary, we’re very pleased with the launches of Pombiliti and Opfolda across all the first wave of countries.

The strength of our clinical data, the in-depth experience of therapy effectiveness through EAP programs, and the depth of talent we have at amicus gives us great confidence in our ability to make a real difference to people living with Pompe disease. We believe amicus is in a great position for a second successful launch, and with that, I will hand the call over to Jeff Castelli, our Chief Development Officer, to discuss the ongoing clinical studies and regulatory timelines. Jeff?

Jeff Castelli: Thank you, Sebastian, and good morning, everyone. On slide 13, we remind folks that we continue to build the body of clinical evidence for Pombiliti and Opfolda through our ongoing clinical studies as we execute on expanding commercial access through regulatory submissions. As we enter the second phase of launch, in addition to the various reimbursement dossiers that Sebastian just noted we are in the process of submitting, we also have multiple ongoing or planned regulatory submissions for marking approval in new geographies throughout 2024. Importantly for the younger Pompe community, we continue to enroll the ongoing open label ZIP study for children living with late onset Pompe disease and the ongoing open label Rosella study for children living with infantile onset Pompe disease.

And through ongoing clinical studies and the amicus Pompe registry, we expect to continue generating evidence on the differentiated mechanism of action and the long-term impact of Pombiliti and Opfolda across endpoints and patient populations. Importantly, experience with Pombiliti and Opfolda is quite broad with approximately 75 centers having participated in clinical trials in various access programs globally. 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 therapy to deliver our engineered GLA and GAA transgenes and a next generation Fabry-Chaperone. With that, I would like to now turn the call over to Simon Harford, our Chief Financial Officer, to review our financial results, guidance, and outlook.

Simon?

Simon Harford: Thank you, Jeff. Our financial overview begins on slide 15 with our income statement for the third quarter ending September the 30, 2023. For the third quarter, we achieved total revenue of $103.5 million, which is a 27% increase over the same period in 2022. At constant exchange rates, revenue grew 22%. The global geographic breakdown of total revenue during the quarter consisted of $66 million, or 63% of revenue generated outside of the United States, and the remaining $38 million, or 37%, coming from within the U.S. Cost of goods sold as a percentage of net sales was 9.6% in the third quarter 2023, as compared to 16.4% for the prior year period. Total GAAP operating expenses increased to $111 million for the third quarter of this year, as compared to $102 million in the third quarter of last year, an increase of 8%.

On a non-GAAP basis, total operating expenses increased to $19 million for the third quarter of 2023, as compared to $85 million in the third quarter 2022, an increase of 5%. We define non-GAAP operating expense as research and development and SG&A expenses, excluding stock-based compensation expense, loss on impairments of assets, changes in fair value of contingent consideration, and depreciation and amortization. Net loss for the third quarter 2023, reduced to $22 million, or $0.07 per share, as compared to a net loss of $33 million, or $0.12 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 fourth quarter of this year.

Cash, cash-equivalents, and marketable securities were $280 million at September 30, 2023, compared to $294 million at December 31, 2022. Turning now to slide 16, I am pleased to share we have revised our revenue guidance for the year. We are increasing our full year Galafold revenue growth guidance to 16% to 18% at constant exchange rates driven by strong patient demand. Our full year 2023 non-GAAP operating expense guidance remains at $330 million to $350 million. In October, we were pleased to announce the $430 million refinancing collaboration with Blackstone. Under the terms of the agreement, Blackstone will provide Amicus with $400 million in senior secured term loan to facilitate a refinancing that we have just done of our existing debt under more favorable terms, plus a $30 million investment in Amicus common stock.

This strategic agreement allows us to better align our borrowing and anticipated cash flows as we continue to grow revenue for the long term. And with that, let me turn the call back over to Bradley for our closing comments.

Bradley Campbell: Great. Thank you, Simon, Jeff, Sebastian, as well as a big thanks to all of our employees around the world, who work tirelessly for people living with rare diseases. Entering this next phase of the Company, I am confident Amicus can continue to drive sustainable long-term value and deliver life-changing therapies to more people in need. And with that, operator, we can now open the call to questions.

See also 15 Countries with the Highest Alcohol Consumption in Europe and 15 Best Gins Under $50.

Q&A Session

Operator: Thank you. [Operator instructions] Our first question comes from the line of Tazeen Ahmad of Bank of America Securities.

Tazeen Ahmad: Hi, guys. Good morning. Thank you so much for taking my question. Maybe, Brad, can you give us just a little bit more color on how you’re thinking about the cadence of this launch? So, you got approved at the tail end of the quarter. Should we expect any sort of seasonality as we continue to build out your relationships with the appropriate physicians? And at least near term, how should we think about the proportion of new patients that are going to be added versus those that you continue to convert from EAP? Thank you.

Bradley Campbell: Great. Thanks, Tazeen, for the call. Very much appreciate it. And as we said, I think overall, we’re super pleased with where we are right now with the launch. I think you asked a few questions there, kind of cadence of new patients, distribution of conversion versus new patient starts. And then is there any kind of seasonality? So I’ll take the first one first. So cadence, what we’ve said is our goal this year is really to first and foremost, convert the existing patients, both compassionate use expanded access, excuse me, and then also clinical trial patients. But as I think Sebastian highlighted in the call, we’re making great progress there with significant, all the patients converted in Germany, the majority of patients converted in the UK, and two thirds of the patients having prescriptions and now working through that process in the United States.

So I would say the majority of new patients this year will come from those conversions. But what we’re really pleased with as well, and I think we talked about this, is we’re already seeing patients switching from both existing ERTs in each of the markets. And in Europe, we’re seeing new patient starts as well. So I think if you look at all those KPIs, we’re really pleased with how that’s going. Once we get through that conversion process, which we’re on track to do this year, then next year, obviously, the majority of patients are going to come from switching from existing therapies, and then starting new patients as well in Europe and other markets, so, really pleased with the progress so far. In terms of seasonality, I think just based on kind of the flow we’ve seen with Galliford, I wouldn’t be surprised if we see a similar nonlinear kind of pattern as we go through the year.

But we’ll know a lot more as we progress through next year. And we can provide that color as we observe it so that you guys can, I think, model out progression. I think clearly next year will be a significant contribution of revenue from Pombiliti and Opfolda in particular as we maximize the run rate going into the next year.

Operator: Our next question comes from the line of Anupam Rama of JP Morgan.

Anupam Rama: Hey, guys. Thanks so much for taking the question, and congrats on the quarter. In the slides you noted related to Pombiliti and Opfolda that you’re expecting to have multiple regulatory submissions in 2024 for the product. So what are the key regions that we should be thinking about here, and when could they be contributing to the top-line?

Bradley Campbell: Thanks so much. Yeah. Thanks, Anupam. Good question. I think there’s two things that are going on here. First is regulatory submissions, and then the other, of course, is the reimbursement process that’s playing out in the rest of the major geographies in Europe. As I alluded to on the call, we’ll have more than a dozen reimbursement dossiers submitted by the end of the year. So I think you could start to see revenue from the European markets play out probably towards the back half of the year. We were really faster than average getting through the reimbursement process with Galafold, and I think you’ll see, based on the value proposition and our pricing philosophy, I think you’ll see similar fast pace. And I think as we go into next year, we can give a little bit more tight direction in terms of when we might see that additional revenue come on.

Jeff, do you want to talk a little bit about the key regulatory submissions for next year and kind of how that should play out?

Jeff Castelli: Yeah. Thanks, Brad, and thanks for the question, Anupam. So we have ongoing submissions we’re working on, others that we have planned in the other sort of major markets outside of US, UK, Europe for next year. I don’t think we’re going to list specifically which countries, what dates yet at this point, but you can expect after those submissions next year in those kind of tier two markets that, similarly to the other tier one markets, we’ll have reimbursement negotiations, so unlikely that those new submissions next year significantly contribute to revenue next year. It would more be a 2025 revenue boost from the second wave of submissions.

Operator: Our next question comes from the line of Ritu Baral of TD Cowen.

Ritu Baral: Hi, guys. Thanks for taking the question, and good morning. Brad, I wanted to ask about slide 12 and the 66% patients received PRFs. Can you clarify what the PRFs are? Are those start forms, or are they filled out start forms? I just haven’t encountered that term before. And as you look at the profile of the maybe handful of commercial patients that you have that aren’t transferred, and the start forms that you may be getting, how are you thinking of that split between the myosin converters versus the nexaviasm converters? And I think we’re all really curious about what those nexaviasm converters look like. How long do doctors give before they’re like, nope, this doesn’t work. Let’s try something else. Thanks.

Bradley Campbell: Sure. Thanks, Ritu. Great questions. Maybe, Mike, you can just talk a little bit about the progress we’re making and remind Ritu about the PRF prescription or patient referral form, excuse me, and also kind of the reimbursement progress we’re making. And then I’ll take the question around kind of the mix of patients from the different therapies.

Mike Kaveney: Sure. Thanks, Brad. Excuse me. The PRF is a patient referral form. It’s essentially our prescription. And the 66% is the percentage of those that have been sent into our hub from our clinical trial physicians. So we have approximately 40 clinical trial patients, and about 66% of those have already come in. So we’re working on a reimbursement for those. We’re doing all the benefits investigations, figuring out what each payer’s prior authorization-form looks like, and moving that with the physician to have the physician fill that out to move forward to commercial products. And reimbursement so far is going well. We have more than a handful of patients who have received full approval to begin therapy. We’re in the process of setting up that therapy now.

As different from Galafold, which was an oral, this has to be set up every two weeks. So we have to plan out with the patient and with the provider when their last dose of clinical trial product will be and when their first dose of commercial product will be. So that’s going extremely well. We haven’t really had any issues thus far with payers in terms of moving forward with our clinical trial patients. And Brad, about half of our non-clinical trial patients have been Lumazine, half have been Nexvizine. But Brad, if you want to move forward on that?

Bradley Campbell: Yeah. Yeah. So great, as Mike said, great distribution and I think, from a targeting perspective, based on the label, any patient is an eligible switch patient. So we don’t really differentiate between, what we’re talking to with physicians and patients around Pombiliti and Opfolda, regardless of which therapy they’re on in the United States. And so far, as Mike said, it’s about half and half. And the kinds of things that we’ve talked about before were two is really focusing on that improvement language. So that just gives us such an important differentiating aspect to say, look, if your patient is not improving on their existing therapy, they should consider switching to Pondylonia and Epifoldo. And we’re already seeing great, great traction there.

What we estimate, we have kind of two data sources in terms of how long we think a patient might need to be on Nexvizine initially before they consider a switch from patients. They say they’d be interested in, considering that as early as six months. From physicians, they say they’d consider, six to 12 months, roughly in that time period. And if you think about the approval timelines, a significant number of patients who had switched from Myozyme are already in that kind of six to 12 month window, and you’re seeing that play out. So all the metrics we’re tracking look great so far. And we’re really eager now to begin the commercial switch process as well.

Ritu Baral: Awesome. Brad and Mike, are PRFs, the number of PRFs, something that you would consider reporting going forward?