Amicus Therapeutics(FOLD) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Consolidated Financial Statements and Notes (unaudited) The company's Q2 2022 financial statements reflect increased revenue but a wider net loss, driven by higher operating expenses and a non-recurring charge Consolidated Balance Sheets As of June 30, 2022, total assets decreased to $800.6 million, liabilities increased to $627.2 million, and stockholders' equity declined to $173.4 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $235,639 | $245,197 | | Total current assets | $497,643 | $596,834 | | Total Assets | $800,589 | $905,140 | | Liabilities & Equity | | | | Total current liabilities | $164,625 | $145,975 | | Long-term debt | $390,652 | $389,357 | | Total liabilities | $627,164 | $597,771 | | Total stockholders' equity | $173,425 | $307,369 | Consolidated Statements of Operations Q2 2022 net product sales increased to $80.7 million, but net loss widened to $62.2 million due to higher R&D and SG&A expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Net product sales | $80,731 | $77,413 | $159,446 | $143,815 | | Gross profit | $72,534 | $69,033 | $143,667 | $128,896 | | Research and development | $78,319 | $63,003 | $159,836 | $127,120 | | Selling, general, and administrative | $53,379 | $42,276 | $111,495 | $89,002 | | Loss from operations | $(60,613) | $(38,834) | $(135,952) | $(91,889) | | Net loss | $(62,157) | $(51,225) | $(147,417) | $(116,889) | | Net loss per share | $(0.21) | $(0.19) | $(0.51) | $(0.44) | Consolidated Statements of Cash Flows Net cash used in operating activities improved to $74.2 million in H1 2022, with overall cash decreasing by $9.6 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(74,177) | $(108,277) | | Net cash provided by investing activities | $84,505 | $112,278 | | Net cash (used in) provided by financing activities | $(7,461) | $11,064 | | Net (decrease) increase in cash | $(9,595) | $13,626 | Notes to Consolidated Financial Statements Notes detail business focus, accounting policies, AT-GAA regulatory status, a $20.0 million non-recurring charge, $6.6 million asset impairment, $400 million term loan, and $19.3 million contingent consideration - The company's lead pipeline biologic, AT-GAA for Pompe disease, is under review by the FDA and EMA. The FDA extended the PDUFA action dates to August 29, 2022 (for miglustat) and October 29, 2022 (for cipaglucosidase alfa)[38] - In Q2 2022, due to a strategic prioritization of its gene therapy portfolio, the company recorded a non-recurring $20.0 million liability for contractual obligations and recognized a $6.6 million impairment charge on fixed assets[60][54] - The company's debt consists of a $400 million Senior Secured Term Loan due 2026, with a net carrying value of $390.7 million as of June 30, 2022[69] - Contingent consideration payable for the ATB200 Pompe disease program (from the Callidus acquisition) was valued at $19.3 million as of June 30, 2022, classified as a Level 3 liability[80][82] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Galafold's success, AT-GAA's progress, and H1 2022 financial results showing revenue growth offset by wider losses due to increased expenses and one-time charges - The company's strategy is to develop first- or best-in-class medicines for rare diseases, leveraging its global capabilities to broaden its lead franchises in Fabry and Pompe disease[89] - Total cash, cash equivalents, and marketable securities were $386.8 million as of June 30, 2022. The company believes this position is sufficient to fund operations to achieve self-sustainability[92][112] - The company faces significant future potential milestone payments related to its acquisitions and collaborations, including up to $88 million remaining for the Callidus acquisition (Pompe program) and up to $88 million per indication for its collaboration with the University of Pennsylvania[120][123] Results of Operations Net product sales increased year-over-year, but operating expenses rose significantly due to non-recurring charges and higher personnel costs, leading to wider net losses Comparison of Three Months Ended June 30, 2022 and 2021 (in thousands) | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Net product sales | $80,731 | $77,413 | $3,318 | | Research and development | $78,319 | $63,003 | $15,316 | | Selling, general, and administrative | $53,379 | $42,276 | $11,103 | | Net loss | $(62,157) | $(51,225) | $(10,932) | - The $15.3 million increase in Q2 2022 R&D costs was primarily driven by a non-recurring expense from a contractual obligation related to the strategic prioritization of the gene therapy portfolio[103] Comparison of Six Months Ended June 30, 2022 and 2021 (in thousands) | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Net product sales | $159,446 | $143,815 | $15,631 | | Research and development | $159,836 | $127,120 | $32,716 | | Selling, general, and administrative | $111,495 | $89,002 | $22,493 | | Loss on impairment of assets | $6,616 | $— | $6,616 | | Net loss | $(147,417) | $(116,889) | $(30,528) | - For H1 2022, net product sales growth of $15.6 million was partially offset by an unfavorable foreign currency impact of $9.9 million[106] Liquidity and Capital Resources The company ended Q2 2022 with $386.8 million in cash and marketable securities, believing it sufficient to fund operations to self-sustainability - As of June 30, 2022, the company had cash, cash equivalents, and marketable securities of $386.8 million[112] - Net cash used in operating activities for H1 2022 was $74.2 million, an improvement from $108.3 million in H1 2021. The change was primarily due to non-cash adjustments and timing of payments for R&D and other expenses[113] - The company has significant potential future milestone and royalty payment obligations to partners including Callidus, Celenex, Nationwide Children's Hospital, University of Pennsylvania, and GSK[120][121][122][123][124] Quantitative and Qualitative Disclosures about Market Risk No material changes to the company's market risks or their management have occurred since December 31, 2021 - As of June 30, 2022, there have been no material changes to the company's market risks since the fiscal year ended December 31, 2021[129] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes in internal control over financial reporting - An evaluation concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report[130] - No change in internal control over financial reporting occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal controls[131] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[132] Risk Factors No material changes have occurred to the risk factors previously disclosed in the Annual Report on Form 10-K for FY2021 - No material changes have been made to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[133] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities, but withheld 40,812 shares at $8.15 per share for tax obligations - There were no recent sales of unregistered securities[134] Issuer Purchases of Equity Securities (Q2 2022) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2022 | 6,588 | $8.31 | | May 2022 | 23,164 | $7.64 | | June 2022 | 11,060 | $9.13 | | Total | 40,812 | $8.15 | Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[136] Exhibits The report lists various exhibits filed with the SEC, including CEO and CFO certifications and Inline XBRL documents - Exhibits filed include CEO and CFO certifications pursuant to Rules 13a-14 and 15d-14, and Section 906 of the Sarbanes-Oxley Act[139]