UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-33497
Amicus Therapeutics, Inc.
(Exact Name of Registrant as Specified in Its Charter) | | | | | | | | | | | | | | |
| Delaware | | 71-0869350 |
| (State or Other Jurisdiction of | | (I.R.S. Employer |
| Incorporation or Organization) | | Identification Number) |
| | |
| 47 Hulfish Street, Princeton, NJ | | 08542 |
| (Address of Principal Executive Offices) | | (Zip Code) |
| | |
| (609) | 662-2000 |
| (Registrant's Telephone Number, Including Area Code) |
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $0.01 per share | FOLD | NASDAQ Global Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
| Large accelerated filer | ☒ | | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | | Smaller reporting company | ☐ |
| | | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares outstanding of the registrant's common stock, $0.01 par value per share, as of April 25, 2024 was 296,198,963 shares.
AMICUS THERAPEUTICS, INC.
Form 10-Q for the Quarterly Period Ended March 31, 2024
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks, uncertainties, and assumptions. Forward-looking statements are all statements, other than statements of historical facts, that discuss our current expectation and projections relating to our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, and objectives of management. These statements may be preceded by, followed by or include the words "aim," "anticipate," "believe," "can," "could," "estimate," "expect," "forecast," "intend," "likely," "may," "might," "outlook," "plan," "potential," "predict," "project," "seek," "should," "will," "would," the negatives or plurals thereof, and other words and terms of similar meaning, although not all forward-looking statements contain these identifying words.
We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct. You should understand that the following important factors could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:
•the scope, progress, results and costs of clinical trials for our drug candidates;
•the cost of manufacturing drug supply for our commercial, clinical and preclinical studies, including the cost of manufacturing Pombiliti® (also referred to as "ATB200" or "cipaglucosidase alfa");
•the future results of preclinical research and subsequent clinical trials for pipeline candidates we may identify from time to time, including our ability to obtain regulatory approvals and commercialize such therapies;
•the costs, timing, and outcome of regulatory review of our product candidates;
•any changes in regulatory standards relating to the review of our product candidates;
•any changes in laws, rules or regulations affecting our ability to manufacture, transport, test, develop, or commercialize our products, including Galafold®, Pombiliti® + Opfolda®, or our product candidates;
•the costs of commercialization activities, including product marketing, sales, and distribution;
•the emergence of competing technologies and other adverse market developments;
•the estimates regarding the potential market opportunity for our products and product candidates;
•our ability to successfully commercialize Galafold® (also referred to as "migalastat HCl");
•our ability to successfully commercialize Pombiliti® + Opfolda® (together, also referred to as "AT-GAA") in the E.U., U.K., and U.S., and elsewhere, if regulatory applications are approved;
•our ability to manufacture or supply sufficient clinical or commercial products, including Galafold® and Pombiliti® + Opfolda®;
•our ability to obtain reimbursement for Galafold® and Pombiliti® + Opfolda®;
•our ability to satisfy post-marketing commitments or requirements for continued regulatory approval of Galafold® and Pombiliti® + Opfolda®;
•our ability to obtain market acceptance of Galafold® and Pombiliti® + Opfolda®, or any other product developed or acquired that has received regulatory approval;
•the costs of preparing, filing, and prosecuting patent applications and maintaining, enforcing, and defending intellectual property-related claims, including Hatch-Waxman litigation;
•the impact of litigation that has been or may be brought against us or of litigation that we are pursuing or may pursue against others, including Hatch-Waxman litigation;
•the extent to which we acquire or invest in businesses, products, and technologies;
•our ability to successfully integrate acquired products and technologies into our business, or successfully divest or license existing products and technologies from our business, including the possibility that the expected benefits of the transactions will not be fully realized by us or may take longer to realize than expected;
•our ability to establish licensing agreements, collaborations, partnerships or other similar arrangements and to obtain milestone, royalty, or other economic benefits from any such collaborators;
•the costs associated with, and our ability to comply with, emerging environmental, social and governance standards, including climate reporting requirements at the local, state and national levels;
•our ability to successfully protect our information technology systems and maintain our global operations and supply chain without interruption;
•our ability to accurately forecast revenue, operating expenditures, or other metrics impacting profitability;
•fluctuations in foreign currency exchange rates; and
•changes in accounting standards.
In light of these risks and uncertainties, we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in Part I Item 1A — Risk Factors of the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Those factors and the other risk factors described herein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Our forward-looking statements do not reflect the potential impact of any future collaborations, alliances, business combinations, partnerships, strategic out-licensing of certain assets, the acquisition of preclinical-stage, clinical-stage, marketed products or platform technologies or other investments we may make. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements.
You should read this Quarterly Report on Form 10-Q in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (including the documents incorporated by reference therein) completely and with the understanding that our actual future results may be materially different from what we expect. These forward-looking statements speak only as of the date of this report. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, even if experience or future developments make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law.
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES (UNAUDITED)
Amicus Therapeutics, Inc.
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| March 31, 2024 | | December 31, 2023 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 209,761 | | | $ | 246,994 | |
| Investments in marketable securities | 29,842 | | | 39,206 | |
| Accounts receivable | 76,433 | | | 87,632 | |
| Inventories | 60,759 | | | 59,696 | |
| Prepaid expenses and other current assets | 54,444 | | | 49,533 | |
| Total current assets | 431,239 | | | 483,061 | |
| Operating lease right-of-use assets, net | 23,003 | | | 26,312 | |
Property and equipment, less accumulated depreciation of $26,563 and $25,429 at March 31, 2024 and December 31, 2023, respectively | 32,421 | | | 31,667 | |
| Intangible assets, less accumulated amortization of $3,328 and $2,510 at March 31, 2024 and December 31, 2023, respectively | 19,672 | | | 20,490 | |
| Goodwill | 197,797 | | | 197,797 | |
| Other non-current assets | 17,657 | | | 18,553 | |
| Total Assets | $ | 721,789 | | | $ | 777,880 | |
| Liabilities and Stockholders’ Equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 9,210 | | | $ | 15,120 | |
| Accrued expenses and other current liabilities | 124,622 | | | 144,245 | |
| Operating lease liabilities | 8,270 | | | 8,324 | |
| Total current liabilities | 142,102 | | | 167,689 | |
| Long-term debt | 388,391 | | | 387,858 | |
| Operating lease liabilities | 47,831 | | | 48,877 | |
| Other non-current liabilities | 12,771 | | | 13,282 | |
| Total liabilities | 591,095 | | | 617,706 | |
| Commitments and contingencies | | | |
| Stockholders’ equity: | | | |
| Common stock, $0.01 par value, 500,000,000 shares authorized, 296,159,417 and 293,594,209 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 2,922 | | | 2,918 | |
| Additional paid-in capital | 2,853,550 | | | 2,836,018 | |
| Accumulated other comprehensive loss: | | | |
| Foreign currency translation adjustment | 6,847 | | | 5,429 | |
| Unrealized loss on available-for-sale securities | (203) | | | (188) | |
| Warrants | 71 | | | 71 | |
| Accumulated deficit | (2,732,493) | | | (2,684,074) | |
| Total stockholders’ equity | 130,694 | | | 160,174 | |
| Total Liabilities and Stockholders’ Equity | $ | 721,789 | | | $ | 777,880 | |
See accompanying Notes to Consolidated Financial Statements
Amicus Therapeutics, Inc.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2024 | | 2023 |
| Net product sales | $ | 110,403 | | | $ | 86,270 | |
| Cost of goods sold | 13,567 | | | 6,942 | |
| Gross profit | 96,836 | | | 79,328 | |
| Operating expenses: | | | |
| Research and development | 28,329 | | | 41,499 | |
| Selling, general, and administrative | 88,029 | | | 73,957 | |
| Changes in fair value of contingent consideration payable | — | | | 251 | |
| Restructuring charges | 6,045 | | | — | |
| Depreciation and amortization | 2,154 | | | 1,257 | |
| Total operating expenses | 124,557 | | | 116,964 | |
| Loss from operations | (27,721) | | | (37,636) | |
| Other expense: | | | |
| Interest income | 1,540 | | | 2,199 | |
| Interest expense | (12,436) | | | (11,844) | |
| Other expense | (4,966) | | | (5,938) | |
| Loss before income tax | (43,583) | | | (53,219) | |
| Income tax (expense) benefit | (4,836) | | | 287 | |
| Net loss attributable to common stockholders | $ | (48,419) | | | $ | (52,932) | |
| Net loss attributable to common stockholders per common share — basic and diluted | $ | (0.16) | | | $ | (0.18) | |
| Weighted-average common shares outstanding — basic and diluted | 302,903,009 | | 291,336,750 |
See accompanying Notes to Consolidated Financial Statements
Amicus Therapeutics, Inc.
Consolidated Statements of Comprehensive Loss
(Unaudited)
(in thousands)
| | | | | | | | | | | |
| | Three Months Ended March 31, |
| | 2024 | | 2023 |
| Net loss | $ | (48,419) | | | $ | (52,932) | |
| Other comprehensive gain, net of tax: | | | |
| Foreign currency translation adjustment gain | 1,418 | | | 5,446 | |
| Unrealized loss on available-for-sale securities | (15) | | | (85) | |
| Other comprehensive gain | 1,403 | | | 5,361 | |
| Comprehensive loss | $ | (47,016) | | | $ | (47,571) | |
See accompanying Notes to Consolidated Financial Statements
Amicus Therapeutics, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
(in thousands, except share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2024 |
| | | | | | | | | | | | | |
| Common Stock | | Additional
Paid-In
Capital | | Warrants | | Other
Comprehensive
Loss | | Accumulated
Deficit | | Total
Stockholders'
Equity |
| Shares | | Amount |
| Balance at December 31,2023 | 293,594,209 | | | $ | 2,918 | | | $ | 2,836,018 | | | $ | 71 | | | $ | 5,241 | | | $ | (2,684,074) | | | $ | 160,174 | |
| Stock options exercised, net | 444,497 | | | 4 | | | 3,450 | | | — | | | — | | | — | | | 3,454 | |
| Vesting of restricted stock units, net of taxes | 2,120,711 | | | — | | | (16,721) | | | — | | | — | | | — | | | (16,721) | |
| Stock-based compensation | — | | | — | | | 30,803 | | | — | | | — | | | — | | | 30,803 | |
| Unrealized loss on available-for-sale securities | — | | | — | | | — | | | — | | | (15) | | | — | | | (15) | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | 1,418 | | | — | | | 1,418 | |
| Net loss | — | | | — | | | — | | | — | | | — | | | (48,419) | | | (48,419) | |
| Balance at March 31, 2024 | 296,159,417 | | | $ | 2,922 | | | $ | 2,853,550 | | | $ | 71 | | | $ | 6,644 | | | $ | (2,732,493) | | | $ | 130,694 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2023 |
| | | | | | | | | | | | | |
| Common Stock | | Additional
Paid-In
Capital | | Warrants | | Other
Comprehensive
Gain (Loss) | | Accumulated
Deficit | | Total
Stockholders'
Equity |
| Shares | | Amount | |
| Balance at December 31,2022 | 281,108,273 | | | $ | 2,815 | | | $ | 2,664,744 | | | $ | 83 | | | $ | (12,105) | | | $ | (2,532,490) | | | $ | 123,047 | |
| Stock options exercised, net | 384,108 | | | 3 | | | 2,652 | | | — | | | — | | | — | | | 2,655 | |
| Vesting of restricted stock units, net of taxes | 1,612,975 | | | — | | | (12,806) | | | — | | | — | | | — | | | (12,806) | |
| Stock-based compensation | — | | | — | | | 34,894 | | | — | | | — | | | — | | | 34,894 | |
| Issuance of shares in connection with at-the-market offering, net of issuance costs | 195,229 | | | 2 | | | 2,352 | | | — | | | — | | | — | | | 2,354 | |
| Unrealized loss on available-for-sale securities | — | | | — | | | — | | | — | | | (85) | | | — | | | (85) | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | 5,446 | | | — | | | 5,446 | |
| Net loss | — | | | — | | | — | | | — | | | — | | | (52,932) | | | (52,932) | |
| Balance at March 31, 2023 | 283,300,585 | | | $ | 2,820 | | | $ | 2,691,836 | | | $ | 83 | | | $ | (6,744) | | | $ | (2,585,422) | | | $ | 102,573 | |
See accompanying Notes to Consolidated Financial Statements
Amicus Therapeutics, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands) | | | | | | | | | | | |
| Three Months Ended March 31, |
| 2024 | | 2023 |
| Operating activities | | | |
| Net loss | $ | (48,419) | | | $ | (52,932) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | |
| Amortization of debt discount and deferred financing | 531 | | | 667 | |
| Depreciation and amortization | 2,154 | | | 1,257 | |
| Stock-based compensation | 30,803 | | | 34,894 | |
| Non-cash changes in the fair value of contingent consideration payable | — | | | 251 | |
| Foreign currency remeasurement loss | 1,736 | | | 5,885 | |
| Deferred taxes | — | | | (4,939) | |
| Other | 5,818 | | | — | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | 9,557 | | | (1,367) | |
| Inventories | (1,678) | | | (3,158) | |
| Prepaid expenses and other current assets | (5,340) | | | 1,839 | |
| Accounts payable, accrued expenses, and other current liabilities | (24,483) | | | (72) | |
| Other non-current assets and liabilities | (374) | | | (394) | |
| Net cash used in operating activities | $ | (29,695) | | | $ | (18,069) | |
| Investing activities | | | |
| Sale and redemption of marketable securities | 38,907 | | | 54,944 | |
| Purchases of marketable securities | (29,559) | | | (16,747) | |
| Capital expenditures | (1,811) | | | (1,942) | |
| Net cash provided by investing activities | $ | 7,537 | | | $ | 36,255 | |
| Financing activities | | | |
| Payment of finance leases | (42) | | | (28) | |
| Withholding taxes paid on vested restricted stock units | (16,721) | | | (12,806) | |
| Proceeds from stock options exercised, net | 3,454 | | | 2,655 | |
| Proceeds from the issuance of shares in connection with at-the-market offering, net of issuance costs | — | | | 2,354 | |
| Net cash used in financing activities | $ | (13,309) | | | $ | (7,825) | |
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | $ | (1,816) | | | $ | 1,507 | |
| Net (decrease) increase in cash, cash equivalents, and restricted cash at the end of the period | (37,283) | | | 11,868 | |
| Cash, cash equivalents, and restricted cash at the beginning of period | 250,077 | | | 153,115 | |
| Cash, cash equivalents, and restricted cash at the end of period | $ | 212,794 | | | $ | 164,983 | |
| Supplemental disclosures of cash flow information | | | |
| Cash paid during the period for interest | $ | 11,801 | | | $ | 11,361 | |
| Capital expenditures unpaid at the end of period | $ | 1,110 | | | $ | 1,260 | |
| Cash paid for taxes | $ | 635 | | | $ | 178 | |
| Tenant improvements paid through lease incentives | $ | 52 | | | $ | — | |
See accompanying Notes to Consolidated Financial Statements
Amicus Therapeutics, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
1. Description of Business
Amicus Therapeutics, Inc. (the "Company") is a global, patient-dedicated biotechnology company focused on discovering, developing, and delivering novel medicines for rare diseases. The Company seeks to deliver the highest quality therapies that have the potential to obsolete current treatments, provide significant benefits to patients, and be first- or best-in-class. The Company's two marketed therapies are Galafold®, the first oral monotherapy for people living with Fabry disease who have amenable genetic variants, and Pombiliti® + Opfolda®, a novel treatment designed to improve uptake of active enzyme into key disease relevant tissues for adults living with late-onset Pompe disease.
Galafold® (also referred to as "migalastat"), is approved in over 40 countries around the world, including the United States ("U.S."), European Union ("E.U."), United Kingdom ("U.K."), and Japan. Additionally, Galafold® has been granted orphan drug designation in the U.S., E.U., U.K., Japan and several other countries.
Pombiliti® + Opfolda® (also referred to as "cipaglucosidase alfa-atga/miglustat"), was approved in 2023 in the three largest Pompe markets: the U.S., the E.U., and the U.K. Multiple regulatory submissions and reimbursement processes with global health authorities are currently underway. Additionally, Pombiliti® + Opfolda® has been granted orphan drug designation in the U.S., E.U., U.K., Japan and several other countries.
The Company had an accumulated deficit of $2.7 billion as of March 31, 2024 and anticipates incurring losses through the fiscal year ending December 31, 2024. The Company has historically funded its operations through stock offerings, product revenues, debt issuances, collaborations, and other financing arrangements.
Based on its current operating model, the Company believes the current cash position, which includes expected revenues, is sufficient to fund the Company's operations and ongoing research programs for at least the next 12 months. Potential business development opportunities, pipeline expansion, and investment in manufacturing capabilities could impact the Company's long-term capital requirements.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, certain financial information that is normally included in annual financial statements prepared in accordance with U.S. GAAP, but that is not required for interim reporting purposes, has been omitted. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's interim financial information. Management has determined that the Company operates in one segment focused on the discovery, development, and commercialization of advanced therapies to treat a range of devastating rare and orphan diseases.
The accompanying unaudited Consolidated Financial Statements and related notes should be read in conjunction with the Company's financial statements and related notes as contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023. For a complete description of the Company's accounting policies, please refer to the Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Consolidation
The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions are eliminated in consolidation.
Foreign Currency Transactions
The functional currency for most of the Company's foreign subsidiaries is their local currency. For non-U.S. subsidiaries that transact in a functional currency other than the U.S. dollar, assets and liabilities are translated at current rates of exchange at the balance sheet date. Income and expense items are translated at the weighted average foreign exchange rates for the
period. Adjustments resulting from the translation of the financial statements of the Company's foreign operations into U.S. dollars are excluded from the determination of net income and are recorded in accumulated other comprehensive income, a separate component of stockholders' equity. Transactions which are not in the functional currency of the entity are remeasured into the functional currency with gains or losses resulting from the remeasurement recorded in other expense.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Cash, Cash Equivalents, Marketable Securities, and Restricted Cash
The Company considers all highly liquid investments purchased with a maturity of three months or less at the date of acquisition to be cash equivalents. Marketable securities consist of fixed income investments with a maturity of greater than three months and other highly liquid investments that can be readily purchased or sold using established markets. These investments are classified as available-for-sale and are reported at fair value on the Company's Consolidated Balance Sheets. Unrealized holding gains and losses are reported within other comprehensive gain in the Company's Consolidated Statements of Comprehensive Loss. Fair value is based on available market information including quoted market prices, broker or dealer quotations, or other observable inputs.
Restricted cash consists primarily of funds held to satisfy the requirements of certain agreements that are restricted in their use and is included as a component of other non-current assets on the Company's Consolidated Balance Sheets.
Concentration of Credit Risk
The Company's financial instruments that are exposed to concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, and accounts receivable.
The Company maintains its cash and cash equivalents in bank accounts, which, at times, exceed federally insured limits. The Company invests its marketable securities in high-quality commercial financial instruments. The Company has not recognized any losses from credit risks on such accounts during any of the periods presented. The Company believes it is not exposed to significant credit risk on its cash, cash equivalents, or marketable securities.
The Company's accounts receivable at March 31, 2024 have primarily arisen from Galafold® sales in Europe, the U.S., and Japan. The Company periodically assesses the financial strength of its customers to establish allowances for anticipated losses, if any. For accounts receivable that have arisen from named patient sales, the payment terms are predetermined, and the Company evaluates the creditworthiness of each customer on a regular basis. As of March 31, 2024, the Company's allowance for doubtful accounts was $0.1 million.
Revenue Recognition
The Company has recorded revenue on sales where its products are available either on a commercial basis or through a reimbursed early access program. Product orders are generally received from distributors and pharmacies, with the ultimate payor often a government authority.
The Company recognizes revenue when its performance obligation to its customers have been satisfied, which occurs at a point in time when the pharmacies or distributors obtain control of the products. The transaction price is determined based on fixed consideration in the Company's customer contracts and is recorded net of estimates for variable consideration, which primarily consist of third-party discounts and rebates. The identified variable consideration is recorded as a reduction of revenue at the time revenue from the sale is recognized. The Company recognizes revenue to the extent that it is probable that a significant revenue reversal will not occur in a future period. These estimates may differ from actual consideration received. The Company evaluates these estimates each reporting period to reflect known changes.
The following table summarizes the Company's net product sales disaggregated by product:
| | | | | | | | | | | | | | |
| | Three Months Ended March 31, |
| (in thousands) | | 2024 | | 2023 |
Galafold® | | $ | 99,359 | | | $ | 86,112 | |
Pombiliti® + Opfolda® | | 11,044 | | | 158 | |
| Total net product sales | | $ | 110,403 | | | $ | 86,270 | |
The following table summarizes the Company's net product sales disaggregated by geographic area:
| | | | | | | | | | | | | | |
| | Three Months Ended March 31, |
| (in thousands) | | 2024 | | 2023 |
| U.S. | | $ | 37,375 | | | $ | 28,831 | |
| Ex-U.S. | | 73,028 | | | 57,439 | |
| Total net product sales | | $ | 110,403 | | | $ | 86,270 | |
Inventories and Cost of Goods Sold
Inventories are stated at the lower of cost and net realizable value, determined by the first-in, first-out method. Inventories are reviewed periodically to identify slow-moving or obsolete inventory based on projected sales activity as well as product shelf-life. In evaluating the recoverability of inventories produced, the probability that revenue will be obtained from the future sale of the related inventory is considered and inventory value is written down for inventory quantities in excess of expected requirements. Expired inventory is disposed of and the related costs are recognized as cost of goods sold in the Company's Consolidated Statements of Operations.
Cost of goods sold includes the cost of inventory sold, manufacturing and supply chain costs, product shipping and handling costs, provisions for excess and obsolete inventory, as well as royalties payable. A portion of Pombiliti® + Opfolda® inventory was expensed as research and development costs prior to regulatory approval and as such, the cost of goods sold and related gross margins are not necessarily indicative of future costs of goods sold and gross margin.
Recent Accounting Developments - Guidance Adopted in 2024
In November 2023, the Financial Accounting Standards Board ("FASB") issued the Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments expand reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments require, among other things, disclosure of the title and position of the chief operating decision maker and require that public entities with a single reportable segment provide all disclosures required by this update and existing segment disclosures in Topic 280. Annual disclosures are required for fiscal years beginning after December 15, 2023 and interim disclosures are required for periods within fiscal years beginning after December 15, 2024. Retrospective application is required unless it is impracticable, and early adoption is permitted. The Company adopted this guidance on January 1, 2024. This ASU applies to disclosure requirements only, and the Company will provide required annual disclosures as part of the 2024 Annual Report on Form 10-K and required interim disclosures as part of 2025 Quarterly Reports on Form 10-Q.
Recent Accounting Developments - Guidance Not Yet Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, must be applied prospectively with an option to apply retrospectively, and early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on the Company's consolidated financial statements.
3. Cash, Cash Equivalents, Marketable Securities, and Restricted Cash
As of March 31, 2024, the Company held $209.8 million in cash and cash equivalents and $29.8 million of marketable securities which are reported at fair value on the Company's Consolidated Balance Sheets. Unrealized holding gains and losses are generally reported within other comprehensive gain in the Consolidated Statements of Comprehensive Loss. If a decline in the fair value of a marketable security below the Company's cost basis is determined to be other-than-temporary or if an available-for-sale debt security’s fair value is determined to be less than the amortized cost and the Company intends or is more than likely to sell the security before recovery and it is not considered a credit loss such security is written down to its estimated fair value as a new cost basis and the amount of the write-down is included in the Consolidated Statements of Operations as an impairment charge. If the unrealized loss of an available-for-sale debt security is determined to be a result of credit loss, the Company would recognize an allowance and the corresponding credit loss would be included in the Consolidated Statements of Operations.
The Company regularly invests excess operating cash in deposits with major financial institutions, money market funds, notes issued by the U.S. government, as well as fixed income investments and U.S. bond funds, both of which can be readily purchased and sold using established markets. The Company believes that the market risk arising from its holdings of these financial instruments is mitigated as, in accordance with Company policy, securities are of high credit rating. Investments that have original maturities greater than three months but less than one year are classified as current.
Cash, cash equivalents and marketable securities are classified as current unless mentioned otherwise below and consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | As of March 31, 2024 |
| (in thousands) | | Cost | | Gross
Unrealized
Gain | | Gross
Unrealized
Loss | | Fair
Value |
| Cash and cash equivalents | | $ | 209,761 | | | $ | — | | | $ | — | | | $ | 209,761 | |
| Commercial paper | | 25,718 | | | — | | | (4) | | | 25,714 | |
| U.S. government agency bonds | | 3,978 | | | — | | | (1) | | | 3,977 | |
| Money market | | 100 | | | — | | | — | | | 100 | |
| Certificates of deposit | | 51 | | | — | | | — | | | 51 | |
| | $ | 239,608 | | | $ | — | | | $ | (5) | | | $ | 239,603 | |
| Included in cash and cash equivalents | | $ | 209,761 | | | $ | — | | | $ | — | | | $ | 209,761 | |
| Included in marketable securities | | 29,847 | | | — | | | (5) | | | 29,842 | |
| Total cash, cash equivalents, and marketable securities | | $ | 239,608 | | | $ | — | | | $ | (5) | | | $ | 239,603 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | As of December 31, 2023 |
| (in thousands) | | Cost | | Gross
Unrealized
Gain | | Gross
Unrealized
Loss | | Fair
Value |
| Cash and cash equivalents | | $ | 246,994 | | | $ | — | | | $ | — | | | $ | 246,994 | |
| Commercial paper | | 14,651 | | | 12 | | | — | | | 14,663 | |
| Treasury bill | | 12,944 | | | 2 | | | — | | | 12,946 | |
| U.S. government agency bonds | | 11,450 | | | — | | | (4) | | | 11,446 | |
| Money market | | 100 | | | — | | | — | | | 100 | |
| Certificate of deposit | | 51 | | | — | | | — | | | 51 | |
| | $ | 286,190 | | | $ | 14 | | | $ | (4) | | | $ | 286,200 | |
| Included in cash and cash equivalents | | $ | 246,994 | | | $ | — | | | $ | — | | | $ | 246,994 | |
| Included in marketable securities | | 39,196 | | | 14 | | | (4) | | | 39,206 |
| Total cash, cash equivalents, and marketable securities | | $ | 286,190 | | | $ | 14 | | | $ | (4) | | | $ | 286,200 | |
For both the three months ended March 31, 2024 and March 31, 2023, there were no realized gains or losses. The cost of securities sold is based on the specific identification method.
Unrealized loss positions in the marketable securities as of March 31, 2024 reflect temporary impairments and are not a result of credit loss. Additionally, as these positions have been in a loss position for less than twelve months and the Company does not intend to sell these securities before recovery, the losses are recognized as a component of other comprehensive gain. The fair value of these marketable securities in unrealized loss positions are $29.7 million and $11.4 million as of March 31, 2024 and December 31, 2023, respectively.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.
| | | | | | | | | | | | | | |
| | As of March 31, |
| (in thousands) | | 2024 | | 2023 |
| Cash and cash equivalents | | $ | 209,761 | | | $ | 160,602 | |
| Restricted cash | | 3,033 | | | 4,381 | |
| Cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows | | $ | 212,794 | | | $ | 164,983 | |
4. Inventories
The following table summarizes the components of the Company’s inventories for each of the periods indicated:
| | | | | | | | | | | | | | |
| (in thousands) | | March 31, 2024 | | December 31, 2023 |
| Raw materials | | $ | 31,613 | | | $ | 30,230 | |
| Work-in-process | | 22,146 | | | 22,597 | |
| Finished goods | | 7,000 | | | 6,869 | |
| Total inventories | | $ | 60,759 | | | $ | 59,696 | |
The Company's reserve for inventory was $2.9 million and $0.5 million as of March 31, 2024 and December 31, 2023, respectively.
5. Debt
The following table summarizes the Company's debt for each of the periods indicated:
| | | | | | | | | | | | | | |
| (in thousands) | | March 31, 2024 | | December 31, 2023 |
| Senior Secured Term Loan due 2029: | | | | |
| Principal | | $ | 400,000 | | | $ | 400,000 | |
Less: debt discount (1) | | (9,230) | | | (9,652) | |
Less: deferred financing (1) | | (2,379) | | | (2,490) | |
| Net carrying value of Long-term debt | | $ | 388,391 | | | $ | 387,858 | |
______________________________
(1) Included in the Company's Consolidated Balance Sheets within long-term debt and amortized to interest expense over the remaining life of the Senior Secured Term Loan due 2029 using the effective interest rate method.
Interest Expense
The following table sets forth interest expense recognized related to the Company's debt for the three months ended March 31, 2024 and 2023, respectively:
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | |
| (in thousands) | | 2024 | | 2023 | | | | |
| Contractual interest expense | | $ | 11,974 | | | $ | 11,230 | | | | | |
| Amortization of debt discount | | $ | 422 | | | $ | 381 | | | | | |
| Amortization of deferred financing | | $ | 109 | | | $ | 286 | | | | | |
6. Restructuring
In the first quarter of 2024, restructuring charges are primarily related to an initiative to reduce operating costs by abandoning one of the Company's leases that it no longer believes is necessary to conduct its operations.
The associated liabilities are recorded in accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets. Total charges incurred are summarized as follows:
| | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Other Facility and Non-Lease Costs | | Accelerated Depreciation | | Total |
| Balance as of December 31, 2023 | | $ | — | | | $ | — | | | $ | — | |
| Restructuring charges | | 3,201 | | | 2,844 | | | 6,045 | |
| Non-cash items | | — | | | (2,844) | | | (2,844) | |
| Cash settled | | (310) | | | — | | | (310) | |
| Balance as of March 31, 2024 | | $ | 2,891 | | | $ | — | | | $ | 2,891 | |
7. Stock-Based Compensation
The Amended and Restated 2007 Equity Incentive Plan (the "Plan") provides for the granting of restricted stock units and options to purchase common stock in the Company to employees, directors, advisors, and consultants at a price to be determined by the Board of Directors. The Plan is intended to encourage ownership of stock by employees and consultants of the Company and to provide additional incentives for them to promote the success of the business. The Board of Directors, or its committee, is responsible for determining the individuals to be granted options, the number of options each individual will receive, the option price per share, and the exercise period of each option.
Stock Option Grants
The fair value of the stock options granted were estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
| | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, | | |
| | | 2024 | | 2023 | | | | |
| Expected stock price volatility | | 57.2 | % | | 59.3 | % | | | | |
| Risk free interest rate | | 4.0 | % | | 3.9 | % | | | | |
| Expected life of options (years) | | 5.6 | | 5.5 | | | | |
| Expected annual dividend per share | | $ | — | | | $ | — | | | | | |
A summary of the Company's stock options for the three months ended March 31, 2024 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of
Shares | | Weighted Average Exercise
Price | | Weighted Average Remaining
Years | | Aggregate
Intrinsic
Value |
| | | (in thousands) | | | | | | (in millions) |
| Options outstanding, December 31, 2023 | | 23,002 | | | $ | 11.69 | | | | | |
| Granted | | 4,033 | | | $ | 14.23 | | | | | |
| Exercised | | (439) | | | $ | 7.86 | | | | | |
| Forfeited | | (271) | | | $ | 12.56 | | | | | |
| Expired | | (20) | | | $ | 17.28 | | | | | |
| Options outstanding, March 31, 2024 | | 26,305 | | | $ | 12.13 | | | 6.4 | | $ | 23.9 | |
| Vested and unvested expected to vest, March 31, 2024 | | 24,409 | | | $ | 12.08 | | | 6.2 | | $ | 23.5 | |
| Exercisable at March 31, 2024 | | 15,979 | | | $ | 11.60 | | | 4.9 | | $ | 22.3 | |
As of March 31, 2024, the total unrecognized compensation cost related to non-vested stock options granted was $52.5 million and is expected to be recognized over a weighted average period of three years.
Restricted Stock Units and Performance-Based Restricted Stock Units (collectively "RSUs")
RSUs awarded under the Plan are generally subject to graded vesting and are contingent on an employee's continued service. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. The Company expenses the cost of the RSUs, which is determined to be the fair market value of the shares of common stock underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse. A summary of non-vested RSU activity under the Plan for the three months ended March 31, 2024 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of
Shares | | Weighted
Average Grant
Date Fair
Value | | Weighted
Average
Remaining
Years | | Aggregate
Intrinsic
Value |
| | (in thousands) | | | | | | (in millions) |
| Non-vested units as of December 31, 2023 | | 10,033 | | | $ | 13.37 | | | | | |
| Granted | | 3,251 | | | $ | 15.35 | | | | | |
| Vested | | (3,332) | | | $ | 13.49 | | | | | |
| Forfeited | | (393) | | | $ | 14.66 | | | | | |
| Non-vested units as of March 31, 2024 | | 9,559 | | | $ | 13.92 | | | 2.5 | | $ | 112.6 | |
As of March 31, 2024, there was $77.7 million of total unrecognized compensation cost related to unvested RSUs with service-based vesting conditions. These costs are expected to be recognized over a weighted average period of three years.
Compensation Expense Related to Equity Awards
The following table summarizes information related to compensation expense recognized in the Company's Consolidated Statements of Operations related to the equity awards:
| | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| (in thousands) | | 2024 | | 2023 |
| Research and development expense | | $ | 4,871 | | | $ | 8,490 | |
| Selling, general, and administrative expense | | 25,932 | | | 26,404 | |
| Total equity compensation expense | | $ | 30,803 | | | $ | 34,894 | |
8. Assets and Liabilities Measured at Fair Value
The Company's financial assets and liabilities are measured at fair value and classified within the fair value hierarchy, which is defined as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly.
Level 3 — Inputs that are unobservable for the asset or liability.
A summary of the fair value of the Company's recurring assets and liabilities aggregated by the level in the fair value hierarchy within which those measurements fall as of March 31, 2024 are identified in the following tables:
| | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Level 1 | | Level 2 | | Total |
| Assets: | | | | | | |
| Commercial paper | | $ | — | | | $ | 25,714 | | | $ | 25,714 | |
| U.S. government agency bonds | | — | | | 3,977 | | | 3,977 | |
| Money market | | 7,201 | | | — | | | 7,201 | |
| | | $ | 7,201 | | | $ | 29,691 | | | $ | 36,892 | |
| | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Level 1 | | Level 2 | | Total |
| Liabilities: | | | | | | |
| Deferred compensation plan liability | | $ | 7,101 | | | $ | — | | | $ | 7,101 | |
| | | $ | 7,101 | | | $ | — | | | $ | 7,101 | |
A summary of the fair value of the Company's recurring assets and liabilities aggregated by the level in the fair value hierarchy within which those measurements fall as of December 31, 2023 are identified in the following tables:
| | | | | | | | | | | | | | | | | |
| (in thousands) | Level 1 | | Level 2 | | Total |
| Assets: | | | | | |
| Commercial paper | $ | — | | | $ | 14,663 | | | $ | 14,663 | |
| Treasury bill | — | | | 12,946 | | | 12,946 | |
| U.S. government agency bonds | — | | | 11,446 | | | 11,446 | |
| Money market | 7,631 | | | — | | | 7,631 | |
| | $ | 7,631 | | | $ | 39,055 | | | $ | 46,686 | |
| | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Level 1 | | Level 2 | | Total |
| Liabilities: | | | | | | |
| Deferred compensation plan liability | | 7,531 | | | — | | | 7,531 | |
| | | $ | 7,531 | | | $ | — | | | $ | 7,531 | |
Deferred compensation plan liability is recorded as a component of other non-current liabilities on the Company's Consolidated Balance Sheets. The Company did not have any Level 3 assets or liabilities as of March 31, 2024 or December 31, 2023.
Cash, Money Market Funds, and Marketable Securities
The Company classifies its cash within the fair value hierarchy as Level 1 as these assets are valued using quoted prices in an active market for identical assets at the measurement date. The Company considers its investments in marketable securities as available-for-sale and classifies these assets and the money market funds within the fair value hierarchy as Level 2 primarily utilizing broker quotes in a non-active market for valuation of these securities.
9. Basic and Diluted Net Loss per Common Share
The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss attributable to common stockholders per common share:
| | | | | | | | | | | | | | |
| | | Three Months Ended March 31, |
| (in thousands, except per share amounts) | | 2024 | | 2023 |
| Numerator: | | | | |
| Net loss attributable to common stockholders | | $ | (48,419) | | | $ | (52,932) | |
| Denominator: | | | | |
| Weighted average common shares outstanding — basic and diluted | | 302,903,009 | | | 291,336,750 | |
Dilutive common stock equivalents would include the dilutive effect of outstanding common stock options and unvested RSUs. Potentially dilutive common stock equivalents were excluded from the diluted earnings per share denominator for all periods because of their anti-dilutive effect. Weighted average common shares outstanding includes outstanding pre-funded warrants with an exercise price of $0.01.
The table below presents potential shares of common stock that were excluded from the computation as they were anti-dilutive using the treasury stock method:
| | | | | | | | | | | | | | |
| | | As of March 31, |
| (in thousands) | | 2024 | | 2023 |
| Options to purchase common stock | | 26,305 | | | 23,437 | |
| Unvested restricted stock units | | 9,559 | | | 9,430 | |
| Total number of potentially issuable shares | | 35,864 | | | 32,867 | |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the unaudited Consolidated Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Some of the statements we make in this section are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Quarterly Report on Form 10-Q entitled “Special Note Regarding Forward-Looking Statements”. Certain risk factors may cause actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see the section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 entitled “Risk Factors”.
Overview
We are a global, patient-dedicated biotechnology company focused on discovering, developing, and delivering novel medicines for rare diseases. We seek to deliver the highest quality therapies that have the potential to obsolete current treatments, provide significant benefits to patients, and be first- or best-in-class. Our two marketed therapies are Galafold®, the first oral monotherapy for people living with Fabry disease who have amenable genetic variants, and Pombiliti® + Opfolda®, a novel treatment designed to improve uptake of active enzyme into key disease relevant tissues for adults living with late-onset Pompe disease.
Galafold® (also referred to as "migalastat") is approved in over 40 countries around the world, including the United States ("U.S."), European Union ("E.U."), United Kingdom ("U.K."), and Japan. Additionally, Galafold® has been granted orphan drug designation in the U.S., E.U., U.K., Japan and several other countries.
Pombiliti® + Opfolda® (also referred to as "cipaglucosidase alfa-atga/miglustat") was approved in 2023 in the three largest Pompe markets: the U.S., the E.U., and the U.K. Multiple regulatory submissions and reimbursement processes with global health authorities are currently underway. Additionally, Pombiliti® + Opfolda® has been granted orphan drug designation in the U.S., E.U., U.K., Japan and several other countries.
Our Strategy
Our strategy is to create, manufacture, test, and deliver the highest quality medicines for people living with rare diseases through internally developed, jointly developed, acquired, or in-licensed products and product candidates. We are leveraging our global capabilities to develop and broaden our franchises in Fabry and Pompe disease, with focused discovery work on next generation therapies and novel technologies.
Highlights of our progress include:
•Commercial and regulatory success in Fabry disease. For the three months ended March 31, 2024, Galafold® revenue was $99.4 million of consolidated revenue, which represented an increase of $13.2 million compared the same period in the prior year. We continue to see strong commercial momentum and expansion into additional geographies.
•Pompe disease program milestones. For the three months ended March 31, 2024, Pombiliti® + Opfolda® revenue was $11.0 million of consolidated revenue. Pombiliti® + Opfolda® were approved by the European Commission ("EC") in June 2023, the Medicines and Healthcare products Regulatory Agency ("MHRA)" of the United Kingdom in August 2023, and the U.S. Food and Drug Administration ("FDA") in September 2023.
•Pipeline advancement and growth. We are leveraging our global capabilities to develop and broaden our franchises in Fabry and Pompe disease, with focused discovery work on next generation therapies and novel technologies.
•Financial strength. Total cash, cash equivalents, and marketable securities as of March 31, 2024 was $239.6 million.
Our Commercial Products and Product Candidates
Galafold® (migalastat HCl) for Fabry Disease
Our oral precision medicine Galafold® was granted accelerated approval by the FDA in August 2018 for the treatment of adults with a confirmed diagnosis of Fabry disease and an amenable galactosidase alpha gene ("GLA") variant based on in vitro assay data. Galafold® was approved in the E.U. and U.K. in May 2016 as a first-line therapy for long-term treatment of adults and adolescents, aged 16 years and older, with a confirmed diagnosis of Fabry disease and who have an amenable variant. Marketing authorization approvals as well as approvals for adolescents aged 12 years and older weighing 45 kg or more have been granted in over 40 countries around the world. We plan to continue to launch Galafold® in additional countries, including for adolescents aged 12 years and older.
As an orally administered monotherapy, Galafold® is designed to bind to and stabilize an endogenous alpha-galactosidase A ("alpha-Gal A") enzyme in those patients with genetic variants identified as amenable in a Good Laboratory Practice ("GLP") cell-based amenability assay.
Next Generation for Fabry Disease
We are committed to continued innovation for all people living with Fabry disease. As part of our long-term commitment, we are also continuing discovery for next-generation genetic medicines for Fabry disease.
Pombiliti® (cipaglucosidase alfa-atga) + Opfolda® (miglustat) for Pompe Disease
We have leveraged our biologics capabilities to develop Pombiliti® + Opfolda®, a novel treatment paradigm for late-onset Pompe disease. Pombiliti® + Opfolda® were approved by the EC in June 2023, the MHRA in August 2023, and the FDA in September 2023. Additional regulatory submissions and reimbursement processes with global health authorities are currently underway.
Pombiliti® + Opfolda® consists of a uniquely engineered rhGAA enzyme, cipaglucosidase alfa-atga, with an optimized carbohydrate structure to enhance lysosomal uptake, administered in combination with miglustat that functions as an enzyme stabilizer. Miglustat binds to and stabilizes cipaglucosidase alfa-atga reducing inactivation of rhGAA in circulation to improve the uptake of active enzyme into key disease relevant tissues. Miglustat is not an active ingredient that contributes directly to glycogen reduction.
In addition, clinical studies are ongoing in pediatric patients for both the late-onset Pompe disease ("LOPD") and infantile-onset Pompe disease ("IOPD") populations.
Next Generation for Pompe Disease
We are committed to continued innovation for all people living with Pompe disease. As part of our long-term commitment, we are also continuing discovery for next-generation genetic medicines for Pompe disease.
Strategic Alliances and Arrangements
We will continue to evaluate business development opportunities as appropriate to build stockholder value and provide us with access to the financial, technical, clinical, and commercial resources and intellectual property necessary to develop and market technologies or products with a focus on rare and orphan diseases. We are exploring potential collaborations, alliances, and various other business development opportunities on a regular basis. These opportunities may include business combinations, partnerships, the strategic out-licensing of certain assets, or the acquisition of preclinical-stage, clinical-stage, or marketed products or novel technologies consistent with our strategic plan to develop and provide therapies to patients living with rare and orphan diseases.
Consolidated Results of Operations
Three Months Ended March 31, 2024 compared to March 31, 2023
The following table provides selected financial information for the Company:
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, |
| (in thousands) | | 2024 | | 2023 | | Change |
| Net product sales | | $ | 110,403 | | | $ | 86,270 | | | $ | 24,133 | |
| Cost of goods sold | | 13,567 | | | 6,942 | | | 6,625 | |
| Cost of goods sold as a percentage of net product sales | | 12.3 | % | | 8.0 | % | | 4.3 | % |
| Operating expenses: | | | | | | |
| Research and development | | 28,329 | | | 41,499 | | | (13,170) | |
| Selling, general, and administrative | | 88,029 | | | 73,957 | | | 14,072 | |
| Changes in fair value of contingent consideration payable | | — | | | 251 | | | (251) | |
| Restructuring charges | | 6,045 | | | — | | | 6,045 | |
| Depreciation and amortization | | 2,154 | | | 1,257 | | | 897 | |
| Other expense: | | | | | | |
| Interest income | | 1,540 | | | 2,199 | | | (659) | |
| Interest expense | | (12,436) | | | (11,844) | | | (592) | |
| Other expense | | (4,966) | | | (5,938) | | | 972 | |
| Income tax (expense) benefit | | (4,836) | | | 287 | | | (5,123) | |
| Net loss attributable to common stockholders | | $ | (48,419) | | | $ | (52,932) | | | $ | 4,513 | |
Net Product Sales. Net product sales increased $24.1 million during the three months ended March 31, 2024 compared to the same period in the prior year. The increase was primarily due to both the continued growth of Galafold® in the U.S. and Europe as well as the launch of Pombiliti® + Opfolda® in Europe and the U.S.
Cost of goods sold. Cost of goods sold includes manufacturing costs as well as royalties associated with net product sales. Cost of goods sold as a percentage of net product sales increased 4.3% primarily due to inventory write-offs associated with validation efforts in the current period.
Research and Development Expense. The following table summarizes our principal development programs and the out-of-pocket, third-party expenses incurred:
| | | | | | | | | | | | | | |
| (in thousands) | | Three Months Ended March 31, |
| Projects | | 2024 | | 2023 |
| Third party direct project expenses | | | | |
Galafold® (Fabry Disease) | | $ | 1,815 | | | $ | 2,644 | |
Pombiliti® + Opfolda® (Pompe Disease) | | 11,320 | | | 15,776 | |
| Pre-clinical and other programs | | 617 | | | 600 | |
| Total third-party direct project expenses | | 13,752 | | | 19,020 | |
| Other project costs | | | | |
| Personnel costs | | 11,905 | | | 18,252 | |
| Other costs | | 2,672 | | | 4,227 | |
| Total other project costs | | 14,577 | | | 22,479 | |
| Total research and development costs | | $ | 28,329 | | | $ | 41,499 | |
The $13.2 million decrease in research and development costs was primarily driven by our Pombiliti® + Opfolda® commercial launch, decreasing both clinical spend and the number of employees supporting research and development efforts.
Selling, General, and Administrative Expense. Selling, general, and administrative expense increased $14.1 million, primarily driven by personnel costs resulting from an increase in the number of employees to support our commercial launch activities, post-approval costs not otherwise included in research and development expenses, and third-party professional fees.
Restructuring Charges. In the first quarter of 2024, restructuring charges were primarily related to an initiative to reduce operating costs by abandoning a lease that we no longer believe is useful in our operations.
Income Tax Expense. We are subject to income taxes in various jurisdictions. Our tax liabilities are largely dependent on the distributions of pre-tax earnings among the many jurisdictions in which we operate.
Liquidity and Capital Resources
As a result of our significant research and development expenditures, as well as expenditures to build a commercial organization to support the launch of Galafold® and Pombiliti® + Opfolda®, we have not been profitable and have generated operating losses since we were incorporated in 2002. We have historically funded our operations through stock offerings, product revenues, debt issuance, collaborations, and other financing arrangements.
Sources of Liquidity
In November 2022, we entered into a Sales Agreement with The Goldman Sachs & Co. LLC to create an at-the-market equity program ("ATM program"), pursuant to which we may offer to sell shares of our common stock having an aggregate offering gross proceeds of up to $250.0 million. As of March 31, 2024, an aggregate of $184.4 million worth of shares remain available to be issued and sold under the ATM program.
Cash Flow Discussion
As of March 31, 2024, we had cash, cash equivalents, and marketable securities of $239.6 million. We invest cash in excess of our immediate requirements in regard to liquidity and capital preservation in a variety of interest-bearing instruments, including obligations of U.S. government agencies and money market accounts. Wherever possible, we seek to minimize the potential effects of concentration and degrees of risk. Although we maintain cash balances with financial institutions in excess of insured limits, we do not anticipate any losses with respect to such cash balances. For more details on the cash, cash equivalents, and marketable securities, refer to "— Note 3. Cash, Cash Equivalents, Marketable Securities, and Restricted Cash," in our Notes to Consolidated Financial Statements.
Net Cash Used in Operating Activities
Net cash used in operations for the three months ended March 31, 2024 was $29.7 million. The components of net cash used in operations included the net loss for the three months ended March 31, 2024 of $48.4 million and a net decrease in changes in operating assets and liabilities of $22.3 million offset by $30.8 million of stock compensation and $10.2 million of other non-cash adjustments, . The changes in operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $24.5 million associated with payments for Pombiliti® + Opfolda® launch activities and personnel costs.
Net cash used in operations for the three months ended March 31, 2023 was $18.1 million. The components of net cash used in operations included the net loss for the three months ended March 31, 2023 of $52.9 million offset by $34.9 million of stock compensation, $3.1 million of other non-cash adjustments, and a net increase in changes in operating assets and liabilities of $3.2 million primarily due to an increase in inventory.
Net Cash Provided by Investing Activities
Net cash provided by investing activities for the three months ended March 31, 2024 was $7.5 million. Our investing activities have consisted primarily of purchases, sales, and maturities of investments and capital expenditures. Net cash provided by investing activities reflects $38.9 million from the sale and redemption of marketable securities, partially offset by $29.6 million for the purchase of marketable securities and $1.8 million for capital expenditures.
Net cash provided by investing activities for the three months ended March 31, 2023 was $36.3 million. Our investing activities have consisted primarily of purchases, sales and maturities of investments and capital expenditures. Net cash provided
by investing activities reflects $54.9 million from the sale and redemption of marketable securities, partially offset by $16.7 million for the purchase of marketable securities and $1.9 million for capital expenditures.
Net Cash Used in Financing Activities
Net cash used in financing activities for the three months ended March 31, 2024 was $13.3 million. Net cash used in financing activities primarily reflects the withholding taxes paid on vested restricted stock units of $16.7 million, partially offset by proceeds from the exercise of stock options of $3.5 million.
Net cash used in financing activities for the three months ended March 31, 2023 was $7.8 million. Net cash used in financing activities primarily reflects the purchase of vested restricted stock units of $12.8 million, partially offset by $2.7 million of proceeds from the exercise of stock options and $2.4 million of proceeds from the issuance of shares in connection with the ATM program offering, net of issuance costs.
Funding Requirements
We expect to continue to incur significant costs in the foreseeable future primarily due to research and development expenses, including expenses related to conducting clinical trials. Our future capital requirements will depend on a number of factors, including:
•the scope, progress, results and costs of clinical trials for our drug candidates;
•the cost of manufacturing drug supply for our commercial, clinical and preclinical studies, including the cost of manufacturing Pombiliti® (also referred to as "ATB200" or "cipaglucosidase alfa");
•the future results of preclinical research and subsequent clinical trials for pipeline candidates we may identify from time to time, including our ability to obtain regulatory approvals and commercialize such therapies;
•the costs, timing, and outcome of regulatory review of our product candidates;
•any changes in regulatory standards relating to the review of our product candidates;
•any changes in laws, rules or regulations affecting our ability to manufacture, transport, test, develop, or commercialize our products, including Galafold®, Pombiliti® + Opfolda®, or our product candidates;
•the costs of commercialization activities, including product marketing, sales, and distribution;
•the emergence of competing technologies and other adverse market developments;
•the estimates regarding the potential market opportunity for our products and product candidates;
•our ability to successfully commercialize Galafold® (also referred to as "migalastat HCl");
•our ability to successfully commercialize Pombiliti® + Opfolda® (together, also referred to as "AT-GAA") in the E.U., U.K., and U.S., and elsewhere, if regulatory applications are approved;
•our ability to manufacture or supply sufficient clinical or commercial products, including Galafold® and Pombiliti® + Opfolda®;
•our ability to obtain reimbursement for Galafold® and Pombiliti® + Opfolda®;
•our ability to satisfy post-marketing commitments or requirements for continued regulatory approval of Galafold® and Pombiliti® + Opfolda®;
•our ability to obtain market acceptance of Galafold® and Pombiliti® + Opfolda® or any other product developed or acquired that has received regulatory approval;
•the costs of preparing, filing, and prosecuting patent applications and maintaining, enforcing, and defending intellectual property-related claims, including Hatch-Waxman litigation;
•the impact of litigation that has been or may be brought against us or of litigation that we are pursuing or may pursue against others, including Hatch-Waxman litigation;
•the extent to which we acquire or invest in businesses, products, and technologies;
•our ability to successfully integrate our acquired products and technologies into our business, or successfully divest or license existing products and technologies from our business, including the possibility that the expected benefits of the transactions will not be fully realized by us or may take longer to realize than expected;
•our ability to establish licensing agreements, collaborations, partnerships or other similar arrangements and to obtain milestone, royalty, or other economic benefits from any such collaborators;
•the costs associated with, and our ability to comply with, emerging environmental, social and governance standards, including climate reporting requirements at the local, state and national levels;
•our ability to successfully protect our information technology systems and maintain our global operations and supply chain without interruption;
•our ability to accurately forecast revenue, operating expenditures, or other metrics impacting profitability;
•fluctuations in foreign currency exchange rates; and
•changes in accounting standards.
We may seek additional funding through public or private financings of debt or equity. Based on our current operating model, we believe that the current cash position, which includes expected revenues, is sufficient to fund our operations and ongoing research programs for at least the next 12 months. Potential impacts of business development collaborations, pipeline expansion, and investment in manufacturing capabilities could impact our long-term capital requirements.
Critical Accounting Policies and Significant Judgments
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. 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 and make changes when necessary. 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.
There were no significant changes during the three months ended March 31, 2024 to the items that we disclosed as our significant accounting policies and estimates described in "—Note 2. Summary of Significant Accounting Policies" to the Company's financial statements as contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Recent Accounting Pronouncements
Please refer to "—Note 2. Summary of Significant Accounting Policies" in our Notes to Consolidated Financial Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our market risks, and the way we manage them, are summarized in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. As of March 31, 2024, there have been no material changes to our market risks or to our management of such risks since December 31, 2023.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation of the effectiveness of our disclosure controls and procedures (pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") was carried out under the supervision of our Principal Executive Officer and Principal Financial Officer, with the participation of our management. Based on that evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
During the fiscal quarter covered by this report, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the fourth quarter of 2022, the Company received Paragraph IV Certification Notice Letters from Teva Pharmaceuticals USA, Inc. ("Teva"), Aurobindo Pharma Limited ("Aurobindo"), and Lupin Limited ("Lupin") in connection with Abbreviated New Drug Applications (“ANDA”) filed with the FDA requesting approval to market generic Galafold®. In November 2022, the Company filed four lawsuits against Teva, Lupin, and Aurobindo in the U.S. District Court for the District of Delaware for infringement of its Orange Book-listed patents. In the fourth quarter of 2023, a stipulation order to stay litigation with respect to Lupin was ordered. Additionally, in the first quarter of 2024, a stipulation was filed with the court and approved by the presiding judge, whereby the parties agreed to accept the Company’s definition of the terms that were in dispute. As such, the scheduled Markman hearing was deemed unneeded and cancelled. The Company has, and will continue to, vigorously enforce its Galafold® intellectual property rights.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
The following table provides certain information with respect to purchase of our common stock during the three months ended March 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | | Total Number of Shares Purchased (1) | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs |
| January 1, 2024 through January 31, 2024 | | 852,344 | | | $ | 13.60 | | | — | | | — | |
| February 1, 2024 through February 29, 2024 | | 125,353 | | | $ | 13.76 | | | — | | | — | |
| March 1, 2024 through March 31, 2024 | | 229,947 | | | $ | 12.00 | | | — | | | — | |
| Total | | 1,207,644 | | | $ | 13.31 | | | — | | | — | |
______________________________(1) Represents shares of common stock withheld to satisfy taxes associated with the vesting of restricted stock units
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
For the quarterly period covered by this report, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) has adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
ITEM 6. EXHIBITS | | | | | | | | | | | |
Exhibit
Number | | Description | |
| | | |
| 31.1 | | | |
| | | | |
| 31.2 | | | |
| | | | |
| 32.1 | | | |
| | | | |
| 101.INS | | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 104 | | Cover Page Interactive Data File (formatted in Inline XBRL and included in Exhibit 101) | |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | | | | |
| | AMICUS THERAPEUTICS, INC. |
| | |
| Date: | May 9, 2024 | By: | /s/ Bradley L. Campbell |
| | | Bradley L. Campbell |
| | | President and Chief Executive Officer |
| | | (Principal Executive Officer) |
| | |
| Date: | May 9, 2024 | By: | /s/ Simon Harford |
| | | Simon Harford |
| | | Chief Financial Officer |
| | | (Principal Financial Officer) |
