Amicus Therapeutics(FOLD) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements and Notes (unaudited) Financial statements reflect Galafold-driven revenue growth, operating losses, and strengthened cash from recent private placement Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $385,903 | $163,240 | | Investments in marketable securities | $171,057 | $320,029 | | Total Assets | $956,675 | $886,520 | | Long-term debt | $388,719 | $389,254 | | Total Liabilities | $580,046 | $600,140 | | Total Stockholders' Equity | $376,629 | $286,380 | Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Net product sales | $79,545 | $67,437 | $223,360 | $190,315 | | Gross profit | $67,849 | $59,038 | $196,745 | $168,688 | | Research and development | $59,333 | $70,419 | $186,453 | $229,150 | | Selling, general, and administrative | $46,107 | $37,850 | $135,109 | $112,722 | | Loss from operations | $(42,399) | $(52,761) | $(134,288) | $(182,163) | | Net loss | $(50,294) | $(64,011) | $(167,183) | $(205,451) | | Net loss per share | $(0.19) | $(0.25) | $(0.63) | $(0.80) | Consolidated Statements of Cash Flows Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(131,977) | $(183,468) | | Net cash provided by investing activities | $146,850 | $9,197 | | Net cash provided by financing activities | $212,177 | $241,310 | | Net increase in cash | $222,909 | $67,084 | Notes to Consolidated Financial Statements Notes detail business, lead products Galafold and AT-GAA, planned gene therapy spin-off, and financial policies - The company's lead product is Galafold for Fabry disease, and its lead biologic program is AT-GAA for Pompe disease, with PDUFA target action dates of May 29, 2022 (NDA) and July 29, 2022 (BLA)[35] - In September 2021, the company announced its intent to spin off its gene therapy business into a new company, Caritas Therapeutics, via a SPAC business combination, with Amicus becoming the largest stockholder with an approximate 36% ownership stake[37][42] - In September 2021, the company raised approximately $199.8 million in net proceeds from a private placement of common stock and pre-funded warrants[44][78] - The remaining $2.8 million principal of Convertible Notes due 2023 were exchanged for approximately 472,356 shares of common stock during Q1 and Q3 2021, resulting in a net loss from extinguishment of debt of $0.3 million[73] - A regulatory milestone was reached in September 2021 related to the FDA's acceptance of the BLA submission for the ATB-200 Pompe disease program, triggering a $6.0 million milestone payment[93] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Galafold performance, AT-GAA progress, gene therapy spin-off, and sufficient cash for self-sustainability Overview and Strategy - The company's strategy focuses on developing first- or best-in-class medicines for rare metabolic diseases, particularly Fabry (Galafold) and Pompe (AT-GAA) diseases[108] - A key strategic move is the planned launch of Caritas Therapeutics through a SPAC transaction to house the Amicus gene therapy business, with Amicus retaining a ~36% stake[101][102][106] - The company believes its cash position of $557.0 million as of September 30, 2021, is sufficient to fund operations to achieve self-sustainability[111] Commercial Product and Product Candidates - Galafold (Fabry Disease): This oral precision medicine is approved in over 40 countries, including E.U. approval for adolescents aged 12 and older in July 2021[111] - AT-GAA (Pompe Disease): The Phase 3 PROPEL study's primary endpoint (6-minute walk distance) was numerically greater for AT-GAA but did not achieve statistical superiority (p=0.072), though a key secondary endpoint, Forced Vital Capacity (FVC), showed a statistically significant and clinically meaningful benefit (p=0.023)[114][115] - Gene Therapy Pipeline: The company is advancing multiple gene therapy programs for Fabry, Pompe, and various Batten disease types (CLN6, CLN3, CLN1), which are part of the planned spin-off into Caritas Therapeutics[112][118][122] Consolidated Results of Operations Comparison of Three Months Ended September 30 (in thousands) | Account | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Net product sales | $79,545 | $67,437 | $12,108 | | Research and development | $59,333 | $70,419 | $(11,086) | | Selling, general, and administrative | $46,107 | $37,850 | $8,257 | | Net loss | $(50,294) | $(64,011) | $13,717 | Comparison of Nine Months Ended September 30 (in thousands) | Account | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Net product sales | $223,360 | $190,315 | $33,045 | | Research and development | $186,453 | $229,150 | $(42,697) | | Selling, general, and administrative | $135,109 | $112,722 | $22,387 | | Net loss | $(167,183) | $(205,451) | $38,268 | - The decrease in R&D expense for the nine months ended Sep 30, 2021, was primarily due to the timing of clinical research and manufacturing costs for the Pompe and gene therapy programs, and decreased personnel costs from strategic realignment[137] Liquidity and Capital Resources - As of September 30, 2021, the company had cash, cash equivalents, and marketable securities totaling $557.0 million[141] - Net cash provided by financing activities for the nine months ended Sep 30, 2021, was $212.2 million, primarily reflecting $199.8 million in net proceeds from the September 2021 private placement[146] - The company believes its current cash position, including expected revenues and proceeds from the recent private placement, is sufficient to fund operations and research programs to achieve self-sustainability[150] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks relate to interest rates on investments and debt, and foreign currency exchange rates - The company is exposed to interest rate risk on its $400 million Senior Secured Term Loan, which bears interest at 3-month LIBOR (with a 1% floor) plus 6.5%, where a hypothetical 100 basis point change would result in a $1.0 million change in annual interest expense[159] - The company faces foreign exchange risk from international operations but believes a hypothetical 10% change in exchange rates would not materially impact its consolidated financial statements[161] Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Based on an evaluation as of September 30, 2021, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures are effective[163] PART II. OTHER INFORMATION Item 1. Legal Proceedings A complaint filed by Teva Pharmaceuticals Development, Inc. against the company was dismissed with prejudice on September 2, 2021 - A complaint filed by Teva Pharmaceuticals Development, Inc. was dismissed with prejudice on September 2, 2021[165] Item 1A. Risk Factors A new risk factor highlights that the proposed gene therapy spin-off may not be completed or achieve anticipated benefits - A new risk factor highlights that the proposed spin-off of the gene therapy business into Caritas Therapeutics may not be completed in the expected timeframe, or at all, and may not achieve the expected strategic or financial benefits[167][169] - The spin-off is subject to customary conditions, including approval by ARYA's shareholders and the SEC declaring the Form S-4 registration statement effective[168] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities but repurchased shares to satisfy tax obligations from restricted stock awards - There were no unregistered sales of equity securities in the period[171] Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2021 | 3,130 | $9.18 | | August 2021 | 5,826 | $10.58 | | September 2021 | 4,901 | $11.14 | | Total | 13,857 | $10.46 | Represents shares withheld to satisfy taxes associated with vesting of restricted stock awards Item 6. Exhibits This section lists key exhibits filed, including agreements for the Caritas Therapeutics transaction and recent private placement - Exhibits filed include the Business Combination Agreement with ARYA Sciences Acquisition Corp IV, and Securities Purchase Agreements with Redmile Group and Perceptive Life Sciences Master Fund, among others, for the recent private placement[177]