Amicus Therapeutics(FOLD) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements and Notes (unaudited) This section presents the unaudited consolidated financial statements, including balance sheets, operations, cash flows, and accompanying explanatory notes Consolidated Balance Sheets The balance sheets show a slight decrease in total assets and stockholders' equity from December 31, 2023, to June 30, 2024 Consolidated Balance Sheets | Metric | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Total Assets | $749,484 | $777,880 | | Total Liabilities | $616,961 | $617,706 | | Total Stockholders' Equity | $132,523 | $160,174 | | Cash and cash equivalents | $209,335 | $246,994 | | Investments in marketable securities | $50,727 | $39,206 | | Accounts payable | $32,057 | $15,120 | | Long-term debt | $388,939 | $387,858 | Consolidated Statements of Operations Net product sales increased significantly for the three and six months ended June 30, 2024, leading to a reduced net loss Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net product sales | $126,669 | $94,503 | $237,072 | $180,773 | | Cost of goods sold | $11,261 | $9,114 | $24,828 | $16,056 | | Gross profit | $115,408 | $85,389 | $212,244 | $164,717 | | Research and development | $24,683 | $35,149 | $53,012 | $76,648 | | Selling, general, and administrative | $73,576 | $65,423 | $161,605 | $139,380 | | Income (loss) from operations | $14,967 | $(18,860) | $(12,754) | $(56,496) | | Net loss attributable to common stockholders | $(15,697) | $(43,232) | $(64,116) | $(96,164) | | Net loss per common share - basic and diluted | $(0.05) | $(0.15) | $(0.21) | $(0.33) | Consolidated Statements of Comprehensive Loss Comprehensive loss was reduced for the three and six months ended June 30, 2024, driven by lower net loss and other comprehensive income Consolidated Statements of Comprehensive Loss | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(15,697) | $(43,232) | $(64,116) | $(96,164) | | Foreign currency translation adjustment gain | $2,144 | $10,880 | $3,562 | $16,326 | | Unrealized gain (loss) on available-for-sale securities | $6 | $24 | $(9) | $(61) | | Other comprehensive gain | $2,150 | $10,904 | $3,553 | $16,265 | | Comprehensive loss | $(13,547) | $(32,328) | $(60,563) | $(79,899) | Consolidated Statements of Changes in Stockholders' Equity Movements in equity components resulted in total stockholders' equity of $132.5 million as of June 30, 2024 Consolidated Statements of Changes in Stockholders' Equity | Metric | Balance at Dec 31, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Balance at June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Common Stock Amount | $2,918 | $5 | $2,923 | | Additional Paid-In Capital | $2,836,018 | $32,907 | $2,868,925 | | Other Comprehensive Income (Loss) | $5,241 | $3,553 | $8,794 | | Accumulated Deficit | $(2,684,074) | $(64,116) | $(2,748,190) | | Total Stockholders' Equity | $160,174 | $(27,651) | $132,523 | - Stock-based compensation for the six months ended June 30, 2024, was $47,000 thousand, contributing to additional paid-in capital[16] - Net loss for the six months ended June 30, 2024, was $(64,116) thousand, increasing the accumulated deficit[16] Consolidated Statements of Cash Flows Cash used in operating activities decreased significantly, while investing and financing activities shifted from providing to using cash Consolidated Statements of Cash Flows | Metric | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,004) | $(34,202) | | Net cash (used in) provided by investing activities | $(14,440) | $86,256 | | Net cash (used in) provided by financing activities | $(14,166) | $15,848 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(37,720) | $61,218 | | Cash, cash equivalents, and restricted cash at end of period | $212,357 | $214,333 | Notes to Consolidated Financial Statements These notes provide detailed explanations of the company's business, accounting policies, and specific financial line items Note 1. Description of Business The company is a global biotechnology firm focused on rare diseases with sufficient cash to fund operations for the next 12 months - The Company is a global, patient-dedicated biotechnology company focused on discovering, developing, and delivering novel medicines for rare diseases[23] - Marketed therapies include Galafold for Fabry disease and Pombiliti + Opfolda for late-onset Pompe disease[23] - The Company had an accumulated deficit of $2.7 billion as of June 30, 2024, but believes its current cash position is sufficient to fund operations for at least the next 12 months[23][24] Note 2. Summary of Significant Accounting Policies This note outlines key accounting principles, revenue recognition policies, and disaggregated net product sales by product and geography - The unaudited Consolidated Financial Statements are prepared in accordance with U.S. GAAP for interim financial information[25] - Revenue is recognized when performance obligations are satisfied, net of estimates for variable consideration like discounts and rebates[36] Net Product Sales by Product | Product | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Galafold | $110,817 | $94,331 | $210,176 | $180,443 | | Pombiliti + Opfolda | $15,852 | $172 | $26,896 | $330 | | Total net product sales | $126,669 | $94,503 | $237,072 | $180,773 | Net Product Sales by Geographic Area | Geographic Area | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | U.S. | $50,138 | $37,128 | $87,513 | $65,959 | | Ex-U.S. | $76,531 | $57,375 | $149,559 | $114,814 | | Total net product sales | $126,669 | $94,503 | $237,072 | $180,773 | - The Company adopted ASU No. 2023-07 (Segment Reporting) on January 1, 2024, and ASU No. 2023-09 (Income Taxes) is effective for fiscal years beginning after December 15, 2024[40][41] Note 3. Cash, Cash Equivalents, Marketable Securities, and Restricted Cash The company's cash, cash equivalents, and marketable securities totaled $260.1 million as of June 30, 2024 Cash, Cash Equivalents, and Marketable Securities | Category | June 30, 2024 (Fair Value, in thousands) | December 31, 2023 (Fair Value, in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $209,335 | $246,994 | | Marketable securities (Commercial paper, Treasury bill, U.S. government agency bonds, Money market, Certificates of deposit) | $50,727 | $39,206 | | Total cash, cash equivalents, and marketable securities | $260,062 | $286,200 | - Restricted cash was $3,022 thousand as of June 30, 2024[47] - Unrealized loss positions in marketable securities totaled $45.7 million as of June 30, 2024, which are considered temporary impairments and not credit losses[46] Note 4. Inventories Total inventories increased to $81.3 million as of June 30, 2024, from $59.7 million at December 31, 2023 Inventories | Component | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Raw materials | $44,909 | $30,230 | | Work-in-process | $29,397 | $22,597 | | Finished goods | $7,014 | $6,869 | | Total inventories | $81,320 | $59,696 | - The reserve for inventory increased from $0.5 million at December 31, 2023, to $3.1 million at June 30, 2024[48] Note 5. Debt The company's long-term debt primarily consists of a $400.0 million Senior Secured Term Loan due 2029 Long-Term Debt | Component | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Principal of Senior Secured Term Loan due 2029 | $400,000 | $400,000 | | Less: debt discount | $(8,794) | $(9,650) | | Less: deferred financing | $(2,267) | $(2,492) | | Net carrying value of long-term debt | $388,939 | $387,858 | Interest Expense | Component | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :--- | :--- | :--- | | Contractual interest expense | $23,915 | $23,077 | | Amortization of debt discount | $858 | $777 | | Amortization of deferred financing | $233 | $581 | Note 6. Restructuring The company incurred $6.0 million in restructuring charges during the first quarter of 2024 related to abandoning a lease - Restructuring charges of $6,045 thousand were incurred in the first quarter of 2024, primarily for abandoning a lease to reduce operating costs[52] - The balance of facility and non-lease costs related to restructuring was $2,262 thousand as of June 30, 2024[52] Note 7. Stock-Based Compensation Total equity compensation expense for the six months ended June 30, 2024, was $47.0 million Total Equity Compensation Expense | Period | Research and development expense (in thousands) | Selling, general, and administrative expense (in thousands) | Total equity compensation expense (in thousands) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30, 2024 | $3,061 | $13,136 | $16,197 | | Three Months Ended June 30, 2023 | $4,117 | $12,460 | $16,577 | | Six Months Ended June 30, 2024 | $7,932 | $39,068 | $47,000 | | Six Months Ended June 30, 2023 | $12,600 | $38,860 | $51,470 | - As of June 30, 2024, total unrecognized compensation cost for non-vested stock options was $49.7 million and for non-vested RSUs was $70.0 million[55][56] - Stock options outstanding at June 30, 2024, were 26,536 thousand shares with a weighted average exercise price of $12.11[55] Note 8. Assets and Liabilities Measured at Fair Value Total assets measured at fair value were $58.0 million as of June 30, 2024, primarily in Level 2 marketable securities Fair Value of Assets as of June 30, 2024 | Asset | Level 1 (in thousands) | Level 2 (in thousands) | Total (in thousands) | | :--- | :--- | :--- | :--- | | Commercial paper | — | $45,657 | $45,657 | | Treasury bill | — | $4,918 | $4,918 | | U.S. government agency bonds | — | $1 | $1 | | Money market | $7,441 | — | $7,441 | | Total Assets | $7,441 | $50,576 | $58,017 | Fair Value of Liabilities as of June 30, 2024 | Liability | Level 1 (in thousands) | Level 2 (in thousands) | Total (in thousands) | | :--- | :--- | :--- | :--- | | Deferred compensation plan liability | $7,341 | — | $7,341 | | Total Liabilities | $7,341 | — | $7,341 | - The Company did not have any Level 3 assets or liabilities as of June 30, 2024, or December 31, 2023[62] Note 9. Basic and Diluted Net Loss per Common Share Potentially dilutive common stock equivalents were excluded from the diluted EPS calculation as their effect was anti-dilutive Basic and Diluted Net Loss per Common Share | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net loss attributable to common stockholders (in thousands) | $(15,697) | $(43,232) | $(64,116) | $(96,164) | | Weighted average common shares outstanding – basic and diluted | 303,773,922 | 292,797,002 | 303,336,787 | 292,071,201 | - Potentially dilutive common stock equivalents, totaling 36,081 thousand shares as of June 30, 2024, were excluded from diluted EPS as they were anti-dilutive[64][65] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and business developments Overview Amicus Therapeutics is a global biotechnology company focused on delivering novel medicines for rare diseases - Amicus Therapeutics is a global biotechnology company dedicated to rare diseases, aiming to deliver first- or best-in-class therapies[68] - The company's two marketed therapies are Galafold for Fabry disease and Pombiliti + Opfolda for late-onset Pompe disease[68] Our Strategy The company's strategy focuses on expanding its Fabry and Pompe disease franchises and investing in next-generation therapies - The strategy involves creating and delivering high-quality medicines for rare diseases and focusing on next-generation therapies[69] - Galafold revenue for the six months ended June 30, 2024, was $210.2 million, an increase of $29.7 million year-over-year[69] - Pombiliti + Opfolda generated $26.9 million in revenue for the six months ended June 30, 2024, following recent approvals[69] - Total cash, cash equivalents, and marketable securities stood at $260.1 million as of June 30, 2024[69] Our Commercial Products and Product Candidates This section details the company's two primary commercial products, Galafold and Pombiliti + Opfolda Galafold (migalastat HCl) for Fabry Disease Galafold is an oral precision medicine for Fabry disease patients with amenable genetic variants, approved in over 40 countries - Galafold is an oral precision medicine for adults with Fabry disease and amenable genetic variants, approved in over 40 countries[71] - Its mechanism involves binding to and stabilizing an endogenous alpha-galactosidase A enzyme[71] Pombiliti (cipaglucosidase alfa-atga) + Opfolda (miglustat) for Pompe Disease Pombiliti + Opfolda is a novel treatment for late-onset Pompe disease, recently approved in the U.S., E.U., U.K., and Switzerland - Pombiliti + Opfolda received approvals from the EC (June 2023), MHRA (August 2023), FDA (September 2023), and Swissmedic (July 2024)[72] - The treatment consists of an engineered rhGAA enzyme and an enzyme stabilizer that improves active enzyme uptake[72] - Clinical studies are currently underway for pediatric patients with both late-onset and infantile-onset Pompe disease[72] Next Generation Therapies Amicus Therapeutics is actively pursuing the discovery of next-generation genetic medicines for Fabry and Pompe diseases - The company is conducting discovery work for next-generation genetic medicines for Fabry and Pompe disease[73] Strategic Alliances and Arrangements The company actively evaluates business development opportunities to enhance stockholder value and access necessary resources - The Company continuously evaluates business development opportunities, such as collaborations, alliances, and acquisitions[74] - The goal is to build stockholder value and gain access to resources and intellectual property for rare and orphan diseases[74] Consolidated Results of Operations - Three Months Ended June 30, 2024 compared to June 30, 2023 Net product sales increased significantly by $32.2 million, driven by Galafold growth and the launch of Pombiliti + Opfolda Key Financial Changes (Three Months Ended June 30) | Metric | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Net product sales | $126,669 | $94,503 | $32,166 | | Cost of goods sold as % of net product sales | 8.9% | 9.6% | (0.7)% | | Research and development | $24,683 | $35,149 | $(10,466) | | Selling, general, and administrative | $73,576 | $65,423 | $8,153 | | Net loss attributable to common stockholders | $(15,697) | $(43,232) | $27,535 | - The increase in net product sales was primarily due to continued growth of Galafold and the launch of Pombiliti + Opfolda[76] - The decrease in research and development costs was mainly due to the Pombiliti + Opfolda commercial launch, which reduced clinical spend[77] Consolidated Results of Operations - Six Months Ended June 30, 2024 compared to June 30, 2023 Net product sales increased by $56.3 million, driven by strong performance of Galafold and the launch of Pombiliti + Opfolda Key Financial Changes (Six Months Ended June 30) | Metric | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Net product sales | $237,072 | $180,773 | $56,299 | | Cost of goods sold as % of net product sales | 10.5% | 8.9% | 1.6% | | Research and development | $53,012 | $76,648 | $(23,636) | | Selling, general, and administrative | $161,605 | $139,380 | $22,225 | | Restructuring charges | $6,045 | — | $6,045 | | Net loss attributable to common stockholders | $(64,116) | $(96,164) | $32,048 | - The increase in net product sales was primarily due to continued growth of Galafold and the launch of Pombiliti + Opfolda[80] - The decrease in research and development costs was mainly due to the Pombiliti + Opfolda commercial launch, which reduced clinical spend[82] - Cost of goods sold as a percentage of net product sales increased due to inventory write-offs associated with validation efforts[82] Liquidity and Capital Resources The company held $260.1 million in cash and marketable securities, deemed sufficient for the next 12 months Sources of Liquidity The company has historically funded operations through stock offerings, product revenues, and debt - The Company has historically funded operations through stock offerings, product revenues, debt issuances, and collaborations[85] - An at-the-market (ATM) equity program allows for the sale of common stock, with $184.4 million remaining available as of June 30, 2024[85] Cash Flow Discussion Net cash used in operating activities significantly decreased to $7.0 million for the six months ended June 30, 2024 - Cash, cash equivalents, and marketable securities totaled $260.1 million as of June 30, 2024[86] Net Cash Flow Activities (Six Months Ended June 30) | Activity | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,004) | $(34,202) | | Net cash (used in) provided by investing activities | $(14,440) | $86,256 | | Net cash (used in) provided by financing activities | $(14,166) | $15,848 | - The decrease in net cash used in operating activities in 2024 was due to a reduced net loss and changes in operating assets and liabilities[87] Funding Requirements The company anticipates significant future costs for R&D, clinical trials, manufacturing, and commercialization - Significant future costs are expected for research and development, clinical trials, manufacturing, and commercialization activities[92] - Future capital requirements are influenced by the scope and costs of clinical trials, manufacturing, and regulatory review[92][93] - The company believes its current cash position is sufficient for at least the next 12 months but may seek additional funding[94] Critical Accounting Policies and Significant Judgments No significant changes to the company's critical accounting policies and estimates were reported for the period - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions[95] - No significant changes to the critical accounting policies and estimates were disclosed during the six months ended June 30, 2024[96] Recent Accounting Pronouncements This section refers to Note 2 for details on recent accounting pronouncements - Refer to Note 2, 'Summary of Significant Accounting Policies,' for information on recent accounting pronouncements[97] Item 3. Quantitative and Qualitative Disclosures about Market Risk There have been no material changes to the company's market risks since December 31, 2023 - No material changes to market risks or their management have occurred since December 31, 2023[99] - Market risks are summarized in Part II, Item 7A of the Annual Report on Form 10-K for the fiscal year ended December 31, 2023[99] Item 4. Controls and Procedures The company's disclosure controls and procedures were concluded to be effective as of June 30, 2024 - Disclosure controls and procedures were evaluated and concluded to be effective as of June 30, 2024[100] - No material changes in internal control over financial reporting occurred during the fiscal quarter covered by this report[101] PART II. OTHER INFORMATION Item 1. Legal Proceedings Amicus Therapeutics is actively involved in patent infringement lawsuits concerning generic versions of Galafold - The Company filed four lawsuits against Teva, Aurobindo, and Lupin for infringement of its Galafold patents[102] - A stipulation order to stay litigation with Lupin was issued in Q4 2023, and a stipulation on disputed terms was approved in Q1 2024[102] - The Company is committed to vigorously enforcing its Galafold intellectual property rights[102] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report - No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023[103] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company purchased 35,708 shares of its common stock, primarily to satisfy taxes on vested restricted stock units - There were no recent sales of unregistered securities[103] Issuer Purchases of Equity Securities (Three Months Ended June 30, 2024) | Period | Total Number of Shares Purchased | Average Price per Share | | :--- | :--- | :--- | | April 1, 2024 through April 30, 2024 | 13,103 | $10.64 | | May 1, 2024 through May 31, 2024 | 16,030 | $9.58 | | June 1, 2024 through June 30, 2024 | 6,575 | $10.15 | | Total | 35,708 | $10.07 | - The shares purchased were primarily withheld to satisfy taxes associated with the vesting of restricted stock units[105] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[105] Item 4. Mine Safety Disclosures The company reported no mine safety disclosures - There were no mine safety disclosures[106] Item 5. Other Information No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarterly period - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarterly period[107] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including various agreements and certifications - Exhibits include an amendment to a supply agreement, officer certifications, and various Inline XBRL documents[109] SIGNATURES The report was duly signed on August 8, 2024, by the President and Chief Executive Officer and the Chief Financial Officer - The report was signed by Bradley L. Campbell (President and CEO) and Simon Harford (CFO) on August 8, 2024[111]