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FOLD > SEC Filings for FOLD > Form 10-K on 13-Mar-2013All Recent SEC Filings

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Annual Report



Amicus Therapeutics, Inc. (Amicus) is a biopharmaceutical company focused on the discovery, development and commercialization of small molecule drugs known as pharmacological chaperones. We are developing pharmacological chaperones as next-generation medicines for a range of rare and orphan diseases, with a focus on improved therapies for lysosomal storage disorders. Our development programs include novel small molecules as monotherapy treatments and in combination with the current standard treatment for Fabry and other lysosomal storage diseases, enzyme replacement therapy (ERT). Our Chaperone-Advanced Replacement Therapy, or CHART, programs include chaperones co-administered with currently marketed ERTs, as well as proprietary therapeutic enzymes co-formulated with our pharmacological chaperones as next-generation ERTs. We believe that our pharmacological chaperone and CHART platform technologies, our advanced product pipeline, a strong balance sheet and our strategic collaboration with GlaxoSmithKline PLC (GSK) uniquely position us at the forefront of developing therapies for rare and orphan diseases.

We are developing our lead product candidate, migalastat HCl for Fabry disease, in collaboration with GSK as a monotherapy and in combination with ERT. Current development within our Fabry program includes two monotherapy Phase 3 global registration studies for patients with genetic mutations identified as amenable to this pharmacological chaperone in a cell-based assay (Study 011 and Study 012), a recently completed Phase 2 study investigating migalastat HCl co-administered with currently marketed ERTs (Study 013), and the preclinical development of migalastat HCl co-formulated with a proprietary investigational ERT.

Program Status

Migalastat HCl for Fabry Disease as a Monotherapy: Phase 3 Global Registration Program

In Study 011, we are comparing migalastat HCl to placebo to potentially support the submission of a New Drug Application, or NDA, to the U.S. Food and Drug Administration (FDA) for marketing approval in the United States as well as to other regulatory agencies. Study 011 randomized 67 patients (24 males and 43 females) diagnosed with Fabry disease who had genetic mutations considered amenable to chaperone monotherapy in a cell-based assay. For the 6-month, double-blind period (Stage 1) patients were randomized to migalastat HCl 150 mg or placebo on an every-other-day (QOD) oral dosing schedule. During the 6-12 month period of Study 011 (Stage 2) patients continued treatment with migalastat HCl or switched from placebo to migalastat HCl.

The primary analysis compared the number of responders in the migalastat HCl versus placebo groups in Stage 1, based on a 50% or greater reduction in interstitial capillary globotriaosylceramide (GL-3) as measured in kidney biopsies. Pathologists blinded to biopsy sequence are using the published, quantitative Barisoni Lipid Inclusion Scoring System with virtual microscopy (BLISS-VM)2 for the histological evaluation of interstitial capillary GL-3 in kidney biopsies from baseline to month 6 Stage 1 and from baseline to month 12 Stage 2. Secondary endpoints for Study 011 include safety and tolerability, urine GL-3 and kidney function.

In December 2012, Amicus and GSK announced top-line six-month Stage 1 results from Study 011. While encouraging, these results did not achieve statistical significance (p=0.3) according to the pre-specified primary endpoint analysis. Data from Stage 2 are anticipated in the third quarter of 2013. A meeting with the FDA is anticipated in mid-2013 to discuss a U.S. conditional approval pathway for migalastat HCl under subpart H.

Study 012 is a randomized, open-label 18-month study investigating the safety and efficacy of migalastat HCl (150 mg, every-other-day) to current standard of care ERTs (Fabrazyme® and


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Replagal®) to support global registration. In December 2012, this study achieved full enrollment of 60 patients, who were randomized 1.5:1 to switch from ERT to migalastat HCl or remain on ERT. The study recruited males and females with Fabry disease and genetic mutations shown to be amenable to migalastat HCl monotherapy in a cell-based assay. All subjects had been receiving ERT infusions for a minimum of 12 months (at least 3 months at the labeled dose). Data is anticipated in the second half of 2014 on the primary outcome measure, which is renal function assessed by iohexol Glomerular Filtration Rate (GFR) at 18 months.

Migalastat HCl Combination Programs for Fabry Disease

Study 013 is an open-label Phase 2 drug-drug interaction study that evaluated the effects of a single oral dose of migalastat HCl (150 mg or 450 mg) co-administered prior to the currently marketed ERTs for Fabry disease (Fabrazyme® or Replagal®) in males with Fabry disease. Results from this study presented in February 2013 demonstrated an increase in †-GAL A enzyme levels, the enzyme deficient in Fabry patients, in plasma and in tissue following co-administration of migalastat HCl with ERT versus ERT alone. In addition to investigating migalastat HCl co-administered with ERT, we are currently conducting preclinical formulation and IND-enabling studies of intravenous treatment of migalastat HCl co-formulated with JCR's proprietary investigational recombinant human †-GAL A enzyme (JR-051). We believe this chaperone-ERT co-formulated product has the potential to enter the clinic in late 2013 or early 2014.

AT2220 CHART Programs for Pompe Disease

We also continue to advance our pharmacological chaperone AT2220 (duvoglustat HCl) co-administered with the only approved ERTs (Myozyme®/Lumizyme®) for Pompe disease. We recently completed a Phase 2 safety and PK study (Study 010) that investigated single ascending oral doses of AT2220 (50 mg, 100 mg, 250 mg, and 600 mg) co-administered with Myozyme® or Lumizyme® in patients with Pompe disease. Each patient received one infusion of ERT alone, and then a single dose of AT2220 just prior to the next ERT infusion. Results from this study showed an increase in GAA enzyme activity in plasma and muscle compared to ERT alone. Based on these results, we expect to initiate a repeat-dose clinical study of a novel intravenous formulation of AT2220 (AT2220-IV) co-administered with Myozyme®/Lumizyme® in the third quarter of 2013.

In addition, working with our contract manufacturer Laureate Pharmaceuticals, we have initiated development of a co-formulated product which combines AT2220 (duvoglustat HCl) with our own proprietary recombinant human
(rh) GAA enzyme as a next-generation ERT for Pompe disease. We believe this approach has the potential to improve the properties of the rhGAA enzyme itself while incorporating AT2220 as a small molecule stabilizer to increase exposure and tissue uptake, and reduce immunogenicity relative to currently marketed ERTs.

CHART Programs in Other LSDs

We also plan to continue our commitment to the broader application of the CHART technology as a potential next-generation treatment approach for other lysosomal storage diseases in 2013. Our preclinical studies include the pharmacological chaperones AT3375 and afegostat tartrate (AT2101) co-administered with ERT for Gaucher disease, and new undisclosed pharmacological chaperones in combination with other ERTs. In addition, we continue our preclinical work to investigate AT3375, which targets the glucocerobrosidase (GCase) enzyme in the brain, as a potential treatment for Parkinson's disease.

We have generated significant losses to date and expect to continue to generate losses as we continue the clinical and preclinical development of our drug candidates. These activities are budgeted to expand over time and will require further resources if we are to be successful. From our inception in


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February 2002 through December 31, 2012, we have accumulated a deficit of $318.9 million. As we have not yet generated commercial sales revenue from any of our product candidates, our losses will continue and are likely to be substantial in the near term.

Collaboration with GSK

On July 17, 2012, the Company entered into the Expanded Collaboration Agreement with an affiliate of GlaxoSmithKline PLC (GSK) pursuant to which the Company and GSK will continue to develop and commercialize migalastat HCl, currently in Phase 3 development for the treatment of Fabry disease. The Expanded Collaboration Agreement amends and replaces in its entirety the License and Collaboration Agreement entered into between the Company and GSK on October 28, 2010 (the "Original Collaboration Agreement") for the development and commercialization of migalastat HCl. Under the terms of the Expanded Collaboration Agreement, the Company and GSK will co-develop all formulations of migalastat HCl for Fabry disease, including the development of migalastat HCl co-formulated with an investigational enzyme replacement therapy (ERT) for Fabry disease (the "Co-formulated Product") in collaboration with another GSK collaborator JCR Pharmaceutical Co., Ltd. The Company will commercialize all migalastat HCl products for Fabry disease in the United States while GSK will commercialize all such products in the rest of the world.

GSK is eligible to receive U.S. regulatory approval milestones totaling $20 million for migalastat HCl monotherapy and migalastat HCl for co-administration with ERT, and additional regulatory approval and product launch milestone payments totaling up to $35 million within seven years following the launch of the Co-formulated Product. The Company will also be responsible for certain pass-through milestone payments and single-digit royalties on the net U.S. sales of the Co-formulated Product that GSK must pay to a third party. In addition, the Company is no longer eligible to receive any milestones or royalties it would have been eligible to receive under the Original Collaboration Agreement other than a $3.5 million clinical development milestone achieved in the second quarter of 2012 and paid by GSK to Amicus in the third quarter of 2012.

The Company and GSK will continue to jointly fund development costs for all formulations of migalastat HCl in accordance with agreed upon development plans pursuant to which the Company and GSK will fund 25% and 75% of such costs, respectively, for the monotherapy and co-administration development of migalastat HCl for the remainder of 2012 and will fund 40% and 60%, respectively, thereafter. Effective upon entry into the Expanded Collaboration Agreement, costs for the development of the Co-formulated Product are also split 40% and 60% between Amicus and GSK, respectively.

Additionally, simultaneous with entry into the Expanded Collaboration Agreement, the Company and GSK entered into a Stock Purchase Agreement pursuant to which GSK purchased approximately 2.9 million shares of Amicus common stock at a price of $6.30 per share. The total value of this equity investment to the Company is approximately $18.6 million and changes GSK's ownership position in the Company to 19.8%. GSK previously purchased approximately 6.9 million shares of our common stock at a price of $4.56 per share for a total equity investment of approximately $31 million in connection with entry into the Original Collaboration Agreement.

Other Potential Alliances and Collaborations

We continually evaluate other potential collaborations and business development opportunities that would bolster our ability to develop therapies for rare and orphan diseases including licensing agreements and acquisitions of businesses and assets. We believe such opportunities may be important to the advancement of our current product candidate pipeline, the expansion of the development of our current technology, gaining access to new technologies and in our transformation from a development stage company to a commercial biotechnology company.


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Financial Operations Overview


Under the Original License and Collaboration Agreement, GSK paid us an initial, non-refundable license fee of $30 million and a premium of $3.2 million related to GSK's purchase of an equity investment in Amicus which was being recognized as Collaboration and Milestone Revenue on a straight-line basis over the development period. In addition, in June 2012, we recognized a $3.5 million payment for a clinical development milestone as Collaboration and Milestone Revenue. For the years ended December 31, 2012 and 2011, we recognized $6.8 million and $6.6 million, respectively, as Collaboration and Milestone Revenue.

The reimbursements for research and development costs under the Original License and Collaboration Agreement that met the criteria for revenue recognition were recognized as Research Revenue. For the years ended December 31, 2012 and 2011, we recognized $11.6 million and $14.8 million, respectively, as Research Revenue.

On July 17, 2012, we entered into the Expanded Collaboration Agreement with GSK. Due to a change in the accounting for revenue recognition for the Expanded Collaboration Agreement, all revenue recognition will be suspended until the total arrangement consideration becomes fixed and determinable. Starting on July 17, 2012, any payments received from GSK are recorded as deferred reimbursements on the balance sheet. In addition, future milestone payments we may pay GSK will be applied against the balance of this deferred reimbursements account. Revenue recognition would resume once the total arrangement consideration becomes fixed and determinable which would occur when the balance of the deferred reimbursements account is sufficient to cover all the remaining contingent milestone payments due to GSK. As a result, we no longer recognize any revenue related to Collaboration and Milestone Revenue or Research Revenue as of the date of the Expanded Collaboration Agreement. There is no cash effect of this change in accounting, and there is no scenario where Amicus would have to refund any of the upfront payment, milestone payments, or research reimbursement payments.

Research and Development Expenses

We expect to continue to incur substantial research and development expenses as we continue to develop our product candidates and explore new uses for our pharmacological chaperone technology. However, we will share future research and development costs related to migalastat HCl with GSK in accordance with the Expanded Collaboration Agreement. Research and development expense consists of:

º •
º internal costs associated with our research and clinical development activities;

º •
º payments we make to third party contract research organizations, contract manufacturers, investigative sites, and consultants;

º •
º technology license costs;

º •
º manufacturing development costs;

º •
º personnel related expenses, including salaries, benefits, travel, and related costs for the personnel involved in drug discovery and development;

º •
º activities relating to regulatory filings and the advancement of our product candidates through preclinical studies and clinical trials; and

º •
º facilities and other allocated expenses, which include direct and allocated expenses for rent, facility maintenance, as well as laboratory and other supplies.


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We have multiple research and development projects ongoing at any one time. We utilize our internal resources, employees and infrastructure across multiple projects. We record and maintain information regarding external, out-of-pocket research and development expenses on a project specific basis.

We expense research and development costs as incurred, including payments made to date under our license agreements. We believe that significant investment in product development is a competitive necessity and plan to continue these investments in order to realize the potential of our product candidates. From our inception in February 2002 through December 31, 2012, we have incurred research and development expense in the aggregate of $315.9 million.

The following table summarizes our principal product development projects through December 31, 2012, including the related stages of development for each project, and the out-of-pocket, third party expenses incurred with respect to each project (in thousands):

                                                                            Period from
                                                                         February 4, 2002
                                                                          (Inception) to
                                          Years Ended December 31,         December 31,
                                         2010        2011       2012           2012
Third party direct project expenses
Mono-therapy Studies
Migalastat HCl (Fabry Disease -
Phase 3)                                  11,956   $ 19,305   $ 14,718    $         80,053
Afegostat tartrate (Gaucher Disease
- Phase 2*)                                  362       (112 )      186              26,301
AT2220 (Pompe Disease - Phase 2)             236        109          9              13,252
Combination Studies
Migalastat HCl Co-Administration
(Fabry Disease - Phase 2)                    112      1,083      2,235               3,430
Migalastat HCl Co-Formulation (Fabry
Disease - Preclinical)                         -          -        454                 454
Afegostat tartrate Co-Administration
(Gaucher Disease - Preclinical)               27          7          -                  34
AT2220 Co-Administration (Pompe
Disease - Phase 2)                            73      1,647      2,367               4,128
Neurodegenerative Diseases
(Preclinical)                                784      2,210        417               9,026

Total third party direct project
expenses                                  13,550     24,249     20,386             136,678

Other project costs (1)
Personnel costs                           16,671     18,814     21,086             114,337
Other costs (2)                            8,821      7,793      8,801              64,878

Total other project costs                 25,492     26,607     29,887             179,215

Total research and development costs    $ 39,042   $ 50,856   $ 50,273    $        315,893

º (1)
º Other project costs are leveraged across multiple projects.


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º (2)
º Other costs include facility, supply, overhead, and licensing costs that support multiple projects.

º *
º We do not plan to advance our afegostat tartrate monotherapy program into Phase 3 development at this time.

The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of our product candidates. As a result, we are not able to reasonably estimate the period, if any, in which material net cash inflows may commence from our product candidates, including migalastat HCl or any of our other preclinical product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the conduct, duration and cost of clinical trials, which vary significantly over the life of a project as a result of evolving events during clinical development, including:

º •
º the number of clinical sites included in the trials;

º •
º the length of time required to enroll suitable patients;

º •
º the number of patients that ultimately participate in the trials;

º •
º the results of our clinical trials; and

º •
º any mandate by the FDA or other regulatory authority to conduct clinical trials beyond those currently anticipated.

Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals, and the expense of filing, prosecuting, defending and enforcing any patent claims or other intellectual property rights. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. In addition, GSK has considerable influence over and decision-making authority related to our migalastat HCl program. A change in the outcome of any of the foregoing variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development, regulatory approval and commercialization of that product candidate. For example, if the FDA or other regulatory authorities were to require us to conduct clinical trials beyond those which we currently anticipate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development. Drug development may take several years and millions of dollars in development costs.

General and Administrative Expense

General and administrative expense consists primarily of salaries and other related costs, including stock-based compensation expense, for persons serving in our executive, finance, accounting, legal, information technology and human resource functions. Other general and administrative expense includes facility-related costs not otherwise included in research, and development expense, promotional expenses, costs associated with industry and trade shows, and professional fees for legal services, including patent-related expense and accounting services. From our inception in February 2002 through December 31, 2012, we spent $132.6 million on general and administrative expense.

Interest Income and Interest Expense

Interest income consists of interest earned on our cash and cash equivalents and marketable securities. Interest expense consists of interest incurred on our capital lease facility and our equipment financing agreements.


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Critical Accounting Policies and Significant Judgments and Estimates

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the following discussion represents our critical accounting policies.

Revenue Recognition

We recognize revenue when amounts are realized or realizable and earned. Revenue is considered realizable and earned when the following criteria are met:
(1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the price is fixed or determinable; and
(4) collection of the amounts due are reasonably assured.

In multiple element arrangements, revenue is allocated to each separate unit of accounting and each deliverable in an arrangement is evaluated to determine whether it represents separate units of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value and there is no general right of return for the delivered elements. In instances when the aforementioned criteria are not met, the deliverable is combined with the undelivered elements and the allocation of the arrangement consideration and revenue recognition is determined for the combined unit as a single unit of accounting. Allocation of the consideration is determined at arrangement inception on the basis of each unit's relative selling price. In instances where there is determined to be a single unit of accounting, the total consideration is applied as revenue for the single unit of accounting and is recognized over the period of inception through the date where the last deliverable within the single unit of accounting is expected to be delivered.

Our current revenue recognition policies, which were applied in fiscal 2010, provide that, when a collaboration arrangement contains multiple deliverables, such as license and research and development services, we allocate revenue to each separate unit of accounting based on a selling price hierarchy. The selling price hierarchy for a deliverable is based on: (i) its vendor specific objective evidence (VSOE) if available, (ii) third party evidence (TPE) if VSOE is not available, or (iii) best estimated selling price (BESP) if neither VSOE nor TPE is available. We would establish the VSOE of selling price using the price charged for a deliverable when sold separately. The TPE of selling price would be established by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarly situated customers. The BESP would be established considering internal factors such as an internal pricing analysis or an income approach using a discounted cash flow model.

We also consider the impact of potential future payments we make in our role as a vendor to our customers and evaluate if these potential future payments could be a reduction of revenue from that customer. If the potential future payments to the customer are:

º •
º a payment for an identifiable benefit, and

º •
º the identifiable benefit is separable from the existing relationship between us and our customer, and

º •
º the identifiable benefit can be obtained from a party other than the customer, and


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º •
º the fair value of the identifiable benefit can be reasonably estimated,

then the payments are accounted for separately from the revenue received from that customer. If, however, all these criteria are not satisfied, then the payments are treated as a reduction of revenue from that customer.

If we determine that any potential future payments to our customers are to be considered as a reduction of revenue, we must evaluate if the total amount of revenue to be received under the arrangement is fixed and determinable. If the . . .

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