Filed by Bowne Pure Compliance
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
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
|
|
(IRS Employer |
incorporation or organization)
|
|
Identification No.) |
6 Cedar Brook Drive, Cranbury, NJ 08512
(Address of principal executive offices)
Telephone: (609) 662-2000
Securities registered pursuant to Section 12(b) of the Act:
|
|
|
Title of each class
|
|
Name of each exchange on which registered |
|
|
|
Common Stock, par value $0.01 per share
|
|
The NASDAQ Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. Yes o No þ
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 þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of the registrants knowledge,
in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, non-accelerated filer or a smaller reporting company. See definition of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
Large accelerated filer o
|
|
Accelerated filer o
|
|
Non-accelerated filer þ
|
|
Smaller Reporting Company o |
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
The aggregate market value of the 6,307,947 shares of voting common equity held by
non-affiliates of the registrant, computed by reference to the closing price as reported on the
NASDAQ, as of the last business day of the registrants most recently completed second fiscal
quarter (June 30, 2008) was approximately $67,368,874. Shares of voting and non-voting stock held
by executive officers, directors and holders of more than 5% of the outstanding stock have been
excluded from this calculation because such persons or institutions may be deemed affiliates. This
determination of affiliate status is not a conclusive determination for other purposes.
As of January 29, 2009, there were 22,642,716 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Proxy Statement for the registrants 2009
Annual Meeting of Stockholders which is to be filed subsequent to the date hereof are incorporated
by reference into Part III of this Annual Report on Form 10-K.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K contains forward-looking statements that involve substantial
risks and uncertainties. All statements, other than statements of historical facts, included in
this annual report on Form 10-K regarding our strategy, future operations, future financial
position, future revenues, projected costs, prospects, plans and objectives of management are
forward-looking statements. The words anticipate, believe, estimate, expect, intend,
may, plan, predict, project, will, would and similar expressions are intended to
identify forward-looking statements, although not all forward-looking statements contain these
identifying words.
The forward-looking statements in this annual report on Form 10-K include, among other things,
statements about:
|
|
|
our plans to develop, seek regulatory approval for and commercialize Amigal, Plicera and
AT2220; |
|
|
|
|
our ongoing and planned discovery programs, preclinical studies and clinical trials; |
|
|
|
|
our ability to enter into selective collaboration arrangements; |
|
|
|
|
the timing of and our ability to obtain agreement with the regulatory agencies on the
design of our Phase 3 program for Amigal; |
|
|
|
|
the timing of and our ability to obtain and maintain regulatory approvals for our
product candidates; |
|
|
|
|
the rate and degree of market acceptance and clinical utility of our products; |
|
|
|
|
our ability to quickly and efficiently identify and develop product candidates; |
|
|
|
|
the extent to which our scientific approach may potentially address a broad range of
diseases across multiple therapeutic areas; |
|
|
|
|
our commercialization, marketing and manufacturing capabilities and strategy; |
|
|
|
|
our intellectual property position; |
|
|
|
|
our estimates regarding expenses, future revenues, capital requirements and needs for
additional financing; |
|
|
|
|
our belief about our ability to fund our operating expenses; and |
|
|
|
|
our eligibility to receive milestone payments under our collaboration agreement with
Shire Pharmaceuticals Ireland Ltd. |
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 this annual report on Form 10-K, particularly in
Part I, Item 1A Risk Factors, that we believe could cause actual results or events to differ
materially from the forward-looking statements that we make. Our forward-looking statements do not
reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures,
collaborations or investments we may make.
You should read this annual report on Form 10-K and the documents that we incorporate by reference
in this annual report on Form 10-K completely and with the understanding that our actual future
results may be materially different from what we expect. We do not assume any obligation to update
any forward-looking statements.
- 1 -
PART I
Item 1. BUSINESS.
Overview
We are a clinical-stage biopharmaceutical company focused on the discovery, development
and commercialization of a new class of orally-administered, small molecule drugs, known as
pharmacological chaperones, for the treatment of a range of human genetic diseases. Our lead
product candidates in development are Amigal (migalastat hydrochloride) for Fabry disease,
Plicera (isofagomine tartrate) for Gaucher disease and AT2220 (1-deoxynojirimycin HCl) for
Pompe disease. We completed our Phase 2 clinical trials of Amigal and are currently conducting
Phase 2 clinical trials of Plicera and AT2220. Although Fabry, Gaucher and Pompe are
relatively rare diseases, they represent substantial commercial markets due to the severity of
the symptoms and the chronic nature of the diseases. The worldwide net product sales for the
five currently approved therapeutics to treat Fabry, Gaucher and Pompe disease were
approximately $2.2 billion in 2008, as publicly reported by the companies that market these
therapeutics.
Our goal is to become a leading biopharmaceutical company focused on the discovery,
development and commercialization of pharmacological chaperone therapies for the treatment of a
wide range of human diseases. Our initial clinical efforts are currently focused on developing
pharmacological chaperones for the treatment of lysosomal storage disorders, which are chronic
genetic diseases, such as Fabry, Gaucher and Pompe that frequently result in severe symptoms.
We also believe our technology may be broadly applicable to other diseases for which protein
stabilization and improved folding may be beneficial, including certain neurodegenerative and
genetically-based metabolic disorders.
Fabry, Gaucher and Pompe are among certain human diseases which result from mutations in
specific genes that, in many cases, lead to the production of proteins with reduced stability.
Proteins with such mutations may not fold into their correct three-dimensional shape and are
generally referred to as misfolded proteins. Misfolded proteins are often recognized by cells
as having defects and, as a result, may be eliminated prior to reaching their intended location
in the cell. The reduced biological activity of these proteins leads to impaired cellular
function and ultimately to disease.
Our novel approach to the treatment of human genetic diseases consists of using
pharmacological chaperones that selectively bind to the target protein; increasing the
stability of the protein and helping it fold into the correct three-dimensional shape. This
allows proper trafficking of the protein, thereby increasing protein activity, improving
cellular function and potentially reducing cell stress.
The current standard of treatment for Fabry, Gaucher and Pompe is enzyme replacement
therapy (ERT). This therapy compensates for the reduced level of activity of specialized
proteins called enzymes through regular infusions of recombinant enzyme. Instead of adding
enzymes from an external source by intravenous infusion, our approach uses small molecule,
orally-administered pharmacological chaperones to restore the function of the enzyme that is
already made by the patients own body. We believe our product candidates may have advantages
relative to ERT relating to bio-distribution and ease of use, potentially improving treatment
of these diseases.
In order to further the development of our pharmacological chaperone therapies and share
the costs of such development, in November 2007, we entered into a strategic collaboration with
Shire Pharmaceuticals Ireland Ltd. (Shire), a subsidiary of Shire plc, to jointly develop our
three lead pharmacological chaperone compounds for lysosomal storage disorders. Shire will
receive rights to commercialize these products outside of the United States (U.S.). We retain
all rights to commercialize these products in the U.S.
Our Lead Programs
We have three compounds in clinical development, each of which targets lysosomal storage
disorders. Each of these disorders results from the deficiency of a single enzyme.
|
|
|
Amigal for Fabry disease. We are developing Amigal for the treatment of Fabry disease.
As previously disclosed in August 2008, Amicus completed an End of Phase 2 meeting for
Amigal with the U.S. Food and Drug Administration (FDA). Following this End of Phase 2
meeting, we continued discussions with the FDA in the second half of 2008. The FDA
indicated that it supports a Phase 3 clinical trial comparing Amigal to placebo based on a
surrogate primary endpoint of the change in the amount of kidney GL-3, the substrate that
accumulates in the cells of Fabry patients. We plan to continue discussions with the FDA
through a Special Protocol Assessment (SPA) procedure that commenced in the fourth quarter
of 2008 in order to finalize how the primary endpoint will be measured. We expect to
complete the final protocol in the second quarter of 2009. Based on discussions with the
European Medicines Agency (EMEA), we also plan to initiate a separate clinical study
designed to evaluate the safety and efficacy of Amigal versus ERT in Fabry patients. We
and our partner, Shire, plan additional discussions with the EMEA in the first half of 2009
to finalize the design of this study. In parallel with the regulatory process, 23 of the
original 26 patients who participated in the Phase 2 clinical trial of Amigal continue to
be treated with Amigal in the voluntary Phase 2
extension study to characterize the long term safety and efficacy and evaluate additional
doses and dose regimens. Data from this extension study are expected to be available in the
first quarter of 2009 and the results will be used to finalize the dose and regimen for the
Phase 3 program. |
- 2 -
|
|
|
Plicera for Gaucher disease. We are developing Plicera for the treatment of Gaucher
disease. A Phase 2 clinical trial of Plicera in Gaucher patients naïve to ERT is ongoing.
This 6-month study is designed to evaluate safety as well as to demonstrate trends of
efficacy as measured by the standard endpoints in Gaucher disease. Target enrollment of 16
patients for this study was surpassed and the results are expected to be available in the
third quarter of 2009. In addition, we are working closely with our partner, Shire, to
prepare for Phase 3 development of Plicera pending the results of the ongoing Phase 2
trial. |
|
|
|
AT2220 for Pompe disease. We are developing AT2220 for the treatment of Pompe disease.
A Phase 2 clinical trial of AT2220 (1-deoxynojirimycin HCl) in adult Pompe patients is
ongoing. The trial includes an 11-week treatment period with an optional extension study.
The objectives of the trial include the evaluation of the safety and pharmacodynamics of
multiple doses and regimens of AT2220. The results of this study are expected to be
available in the second half of 2009. In addition, we are continuing to conduct
preclinical animal studies to evaluate the effects of administering AT2220 in combination
with ERT. Encouraging preliminary results were announced at the American Society of Human
Genetics conference in November 2008. These results indicated that AT2220 in combination
with ERT increases the stability and tissue uptake of ERT. We are conducting additional
preclinical proof-of-concept studies to determine the feasibility of a combination that may
be appropriate for Pompe patients who are not amenable to chaperone monotherapy. We expect
to announce additional results in the first quarter of 2009. |
In addition, we continue to invest in research and development to assess the potential for
using pharmacological chaperones to treat a broader range of human genetic diseases beyond
lysosomal storage diseases. As part of this effort, we continue to conduct preclinical studies in
Parkinsons disease and are investing in new research aimed at evaluating disease targets for other
neurodegenerative and genetically-based metabolic disorders. In September 2008, the Company
entered into a lease for laboratory space for a small scale research facility in San Diego, CA.
The facility supports ongoing research into new applications of the Companys platform technology.
Our Pharmacological Chaperone Technology
In the human body, proteins are involved in almost every aspect of cellular function.
Proteins are linear strings of amino acids that fold and twist into specific three-dimensional
shapes in order to function properly. Certain human diseases result from mutations that cause
changes in the amino acid sequence of a protein which reduce its stability and may prevent it from
folding properly. The majority of genetic mutations that lead to the production of less stable or
misfolded proteins are called missense mutations. These mutations result in the substitution of a
single amino acid for another in the protein. Because of this error, missense mutations often
result in proteins that have a reduced level of biological activity. In addition to missense
mutations, there are also other types of mutations that can result in proteins with reduced
biological activity.
Proteins generally fold in a specific region of the cell known as the endoplasmic reticulum
(ER). The cell has quality control mechanisms that ensure that proteins are folded into their
correct three-dimensional shape before they can move from the ER to the appropriate destination in
the cell, a process generally referred to as protein trafficking. Misfolded proteins are often
eliminated by the quality control mechanisms after initially being retained in the ER. In certain
instances, misfolded proteins can accumulate in the ER before being eliminated.
The retention of misfolded proteins in the ER interrupts their proper trafficking, and the
resulting reduced biological activity can lead to impaired cellular function and ultimately to
disease. In addition, the accumulation of misfolded proteins in the ER may lead to various types of
stress on cells, which may also contribute to cellular dysfunction and disease.
At Amicus, we have developed a novel approach to address human genetic diseases. We use small
molecule drugs, which are called pharmacological chaperones, to selectively bind to a target
protein and increase its stability. The binding of the chaperone molecule helps the protein fold
into its correct three-dimensional shape. This allows the protein to be trafficked from the ER to
the appropriate location in the cell, thereby increasing protein activity, improving cellular
function and potentially reducing cell stress.
Our proprietary approach to the discovery of pharmacological chaperone drug candidates
involves the use of rapid molecular and cell-based screening methods combined with our
understanding of the intended biological function of proteins implicated in disease. We use this
knowledge to select and develop compounds with desirable properties. In many cases, we are able to
start with specific molecules and classes of compounds already known to interact with the target
protein but not used previously as therapies. This can greatly reduce the time and cost of the
early stages of drug discovery and development.
We believe our technology may be broadly applicable to other diseases for which protein
stabilization and improved folding may be beneficial, including certain types of
neurodegenerative and genetically-based metabolic disorders. We are also exploring
other applications in which the ability of pharmacological chaperones to increase the
activity of normal proteins may provide a therapeutic benefit.
- 3 -
Potential Advantages of Pharmacological Chaperones for the Treatment of Lysosomal Storage Disorders
To date, we have focused on developing pharmacological chaperones for the treatment of
lysosomal storage disorders. Lysosomal storage disorders are a type of metabolic disorder
characterized by mutations in lysosomal enzymes, which are specialized proteins that break down
cellular substrates in a part of the cell called the lysosome. The current therapeutic standard of
care for the most common lysosomal storage disorders is enzyme replacement therapy, which involves
regular infusions of recombinant human enzyme to compensate for the deficient lysosomal enzyme. We
believe that pharmacological chaperone therapy may have advantages relative to enzyme replacement
therapy for the treatment of lysosomal storage disorders, including tissue distribution, ease of
use and method of manufacturing.
The following table compares some features of enzyme replacement therapy to pharmacological
chaperone therapy.
|
|
|
|
|
Product Characteristic |
|
Enzyme Replacement Therapy |
|
Pharmacological Chaperone Therapy |
|
|
|
|
|
Biodistribution
|
|
Variable tissue distribution
|
|
Broad tissue distribution,
including brain |
|
|
|
|
|
Ease of Use
|
|
Weekly or every other week
intravenous infusion
|
|
Oral administration |
|
|
|
|
|
Manufacturing
|
|
Recombinant protein manufacturing
|
|
Chemical synthesis |
An additional therapeutic approach to the treatment of certain lysosomal storage disorders is
substrate reduction therapy. We believe our pharmacological chaperone therapies may have
advantages relative to substrate reduction therapy as well. Like pharmacological chaperone
therapies, substrate reduction therapy uses orally-administered small molecules; however, the
underlying mechanism of action is very different. Substrate reduction therapies are designed to
prevent the production of the substrate that accumulates in disease by inhibiting an enzyme
required to make the substrate in cells, which is not the same enzyme that is deficient in the
disease. Importantly, if synthesis of the substrate is inhibited it cannot perform its normal
biological functions. Additionally, the enzyme that is inhibited is needed to make other molecules
that are used in other biological processes. As a result, inhibiting this enzyme may have adverse
effects that are difficult to predict. By contrast, our pharmacological chaperones are designed to
bind directly to the enzyme deficient in the disease, increasing its stability and helping it fold
into its correct three-dimensional shape. This in turn enables proper trafficking to the lysosome
where the enzyme can directly decrease substrate accumulation.
To date, one substrate reduction therapy product has received regulatory approval in the U.S.
and the European Union (EU) for the treatment of one lysosomal storage disorder.
Zavesca®, a substrate reduction therapy product commercialized by Actelion, Ltd., is
approved for the treatment of Gaucher disease in the U.S., the EU and other countries.
- 4 -
Our Lead Product Candidates
The following table summarizes key information about our product candidates. All of our
current product candidates are orally-administered, small molecules based on our pharmacological
chaperone technology.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage of |
|
|
Worldwide |
|
Product Candidate |
|
Indication |
|
|
Development |
|
|
Commercial Rights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amigal (migalastat hydrochloride) |
|
Fabry |
|
Phase 2 Complete |
|
Amicus U.S., |
|
|
Disease |
|
Phase 3 in Planning |
|
Shire ex-U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plicera
(isofagomine tartrate) |
|
Gaucher |
|
|
|
|
|
Amicus U.S., |
|
|
Disease |
|
Phase 2 Ongoing |
|
Shire ex-U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
AT2220
(1-deoxynojirimycin HCl) |
|
Pompe |
|
|
|
|
|
Amicus U.S., |
|
|
Disease |
|
Phase 2 Ongoing |
|
Shire ex-U.S. |
Amigal for Fabry Disease
Overview
Our most advanced product candidate, Amigal, is an orally-administered, small molecule
pharmacological chaperone for the treatment of Fabry disease. In November 2007, we entered into a
partnership with Shire to develop Amigal.
We completed four Phase 2 clinical trials of Amigal in 2007. The primary objective of the
Phase 2 trials was to evaluate the safety and tolerability of treatment with Amigal. The secondary
objective was to evaluate certain pharmacodynamic measures of
treatment, including effects on a-GAL (the target enzyme deficient in Fabry patients) and levels of GL-3 (the substrate that builds
up in the cells of patients) in cells and tissues affected by the disease. An additional objective
was the preliminary assessment of cardiac and renal function. The four open-label, multi-national
Phase 2 trials of Amigal enrolled 18 men and 9 women with Fabry disease between the ages of 17 and
65. The four studies examined various dose levels and frequencies of Amigal administration and had
12 or 24 week primary treatment arms with an optional treatment extension.
Twenty-six patients completed the primary treatment arms and all entered the optional
treatment extension. The 26 patients had 21 different missense genetic mutations that cause Fabry
disease. The mutations represented the full spectrum of Fabry patients, including those with both
early-onset and late-onset forms of the disease.
The key findings in the Phase 2 studies were:
|
|
|
Amigal was generally safe and well-tolerated at all doses evaluated and no drug-related
serious adverse events were reported. |
|
|
|
Amigal increased the level of the enzyme deficient in Fabry patients in 24 of 26 study
subjects. |
|
|
|
Amigal was shown to reduce the accumulated substrate in a majority of study subjects. |
|
|
|
Renal and cardiac function results were encouraging, including those seen in patients
treated for nearly two years. |
|
|
|
Responses in patients with different Fabry mutations were consistent with the results of
in vitro testing, thus confirming the ability to use pharmacogenetics to select likely
responders for future studies. |
|
|
|
Twenty-three of the 26 patients continue to receive Amigal in a voluntary extension
study. |
Based on the results of these Phase 2 clinical trials, Amicus and Shire engaged in discussions
with FDA and the EMEA regarding plans for a global Phase 3 clinical development program for Amigal.
As previously disclosed in August 2008, we completed a successful End of Phase 2 meeting with the
FDA. At that time, the FDA indicated that the data from the completed Phase 2 clinical studies of
Amigal support the initiation of Phase 3 development and that Amigal was eligible for Accelerated
Approval under Subpart H regulation. The FDA further indicated at that time that it was not
opposed to the use of a surrogate primary endpoint, pending further discussions with Amicus.
Following this End of Phase 2 meeting, we continued discussions with the FDA in the second
half of 2008. The FDA has indicated that it supports a Phase 3 clinical trial comparing Amigal to
placebo based on a surrogate primary endpoint of the change in the amount of kidney GL-3, the
substrate that accumulates in the cells of Fabry patients. We plan to continue discussions with
the FDA through a SPA procedure that commenced in the fourth quarter of 2008 in order to finalize
how the primary endpoint will be measured. We expect to complete the final protocol in the second
quarter of 2009.
- 5 -
Based on discussions with the EMEA, we also plan to initiate a separate clinical study
designed to evaluate the safety and efficacy of Amigal versus ERT in Fabry patients. Amicus and
Shire plan additional discussions with the EMEA to finalize the design of
this study.
In parallel with the Phase 3 regulatory discussions, 23 of the original 26 patients from the
Phase 2 studies continue to be treated in a voluntary extension study to characterize the long-term
safety and efficacy of Amigal and to evaluate additional doses and dose regimens. Data from this
extension study are expected to be available in the first quarter of 2009 and the results will be
used to finalize the dose and regimen for the Phase 3 studies.
In February 2004, the FDA granted orphan drug designation to Amigal for the treatment of Fabry
disease and in March 2006, the EMEA recommended orphan medicinal product designation for Amigal.
Causes of Fabry Disease and Rationale for Use of Amigal
Fabry disease is a lysosomal storage disorder resulting from a deficiency in a-GAL. Symptoms
can be severe and debilitating, including kidney failure and increased risk of heart attack and
stroke. The deficiency of a-GAL in Fabry patients is caused by inherited genetic mutations.
Certain of these mutations cause changes in the amino acid sequence of a-GAL that may result in the
production of a-GAL with reduced stability that does not fold into its correct three-dimensional
shape. Although a-GAL produced in patient cells often retains the potential for some level of
biological activity, the cells quality control mechanisms recognize and retain misfolded a-GAL in
the ER, until it is ultimately moved to another part of the cell for degradation and elimination.
Consequently, little or no a-GAL moves to the lysosome, where it normally breaks down GL-3. This
leads to accumulation of GL-3 in cells, which is believed to be the cause of the symptoms of Fabry
disease. In addition, accumulation of the misfolded a-GAL enzyme in the ER may lead to stress on
cells and inflammatory-like responses, which may contribute to cellular dysfunction and disease.
Amigal is designed to act as a pharmacological chaperone for a-GAL by selectively binding to
the enzyme, which increases its stability and helps the enzyme fold into its correct
three-dimensional shape. This stabilization of a-GAL allows the cells quality control mechanisms
to recognize the enzyme as properly folded so that trafficking of the enzyme to the lysosome is
increased, enabling it to carry out its intended biological function, the metabolism of GL-3. As a
result of restoring the proper trafficking of a-GAL from the ER to the lysosome, Amigal also
reduces the accumulation of misfolded protein in the ER, which may alleviate stress on cells and
some inflammatory-like responses that may be contributing factors in Fabry disease.
Because Amigal increases levels of a patients naturally produced a-GAL, those Fabry disease
patients with a missense mutation or other genetic mutations that result in production of a-GAL
that is less stable but with some residual enzyme activity are the ones most likely to respond to
treatment with Amigal. We estimate that the majority of patients with Fabry disease may respond to
pharmacological chaperone therapy. Patients with genetic mutations leading to a partially made
a-GAL enzyme or a-GAL enzyme with an irreversible loss of activity are less likely to respond to
treatment with Amigal.
Fabry Disease Background
The clinical manifestations of Fabry disease span a broad spectrum of severity and roughly
correlate with a patients residual a-GAL levels. The majority of currently treated patients are
referred to as classic Fabry disease patients, most of whom are males. These patients experience
disease of various organs, including the kidneys, heart and brain, with disease symptoms first
appearing in adolescence and typically progressing in severity until death in the fourth or fifth
decade of life. A number of recent studies suggest that there are a large number of undiagnosed
males and females that have a range of Fabry disease symptoms, such as impaired cardiac or renal
function and strokes, that usually first appear in adulthood.
Individuals with this type of Fabry disease, referred to as later-onset Fabry disease, tend to
have higher residual a-GAL levels than classic Fabry disease patients. Although the symptoms of
Fabry disease span a spectrum of severity, it is useful to classify patients as having classic or
later-onset Fabry disease when discussing the disease and the associated treatable population.
Classic Fabry Disease
Individuals with classic Fabry disease are in most instances males. They have little or no
detectable a-GAL levels and are the most severely affected. These patients first experience
disease symptoms in adolescence, including pain and tingling in the extremities, skin lesions, a
decreased ability to sweat and clouded eye lenses. If these patients are not treated, their life
expectancy is reduced and death usually occurs in the fourth or fifth decade of life from renal
failure, cardiac dysfunction or stroke. Studies reported in the Journal of the American Medical
Association (January 1999) and The Metabolic and Molecular Bases of Inherited Disease (8th edition
2001) suggest the annual incidence of Fabry disease in newborn males is 1:40,000-1:60,000. Current
estimates from the University of Iowa and the National Kidney Foundation suggest that there are a
total of approximately 5,000 classic Fabry disease patients worldwide.
- 6 -
Later-onset Fabry Disease
Individuals with later-onset Fabry disease can be male or female. They typically first
experience disease symptoms in adulthood, and often have disease symptoms focused on a single
organ. For example, many males and females with later-onset Fabry disease have enlargement of the
left ventricle of the heart. As the patients advance in age, the cardiac complications of the
disease progress and can lead to death. Studies reported in Circulation and Journal of the
American Heart Association (March 2002 and August 2004), estimated that 6-12% of patients between
40 and 60 years of age with an unexplained enlargement of the left ventricle of the heart, a
condition referred to as left ventricular hypertrophy, have Fabry disease.
A number of males and females also have later-onset Fabry disease with disease symptoms
focused on the kidney that progress to end stage renal failure and eventually death. Studies
reported in Nephrology Dialysis Transplant (2003), Clinical and Experimental Nephrology (2005) and
Nephrology Clinical Practice (2005) estimate that 0.20% to 0.94% of patients on dialysis have Fabry
disease.
In addition, later-onset Fabry disease may also present in the form of strokes of unknown
cause. A recent study reported in The Lancet (November 2005) found that approximately 4% of 721
male and female patients in Germany between the ages of 18 to 55 with stroke of unknown cause have
Fabry disease.
It was previously believed to be rare for female Fabry disease patients to develop overt
clinical manifestations of Fabry disease. Fabry disease is known as an X-linked disease
because the inherited a-GAL gene mutation is located only on the X chromosome. Females inherit
an X chromosome from each parent and therefore can inherit a Fabry mutation from either parent.
By contrast, males inherit an X chromosome (and potentially a Fabry mutation) only from their
mothers. For this reason, there are expected to be roughly twice as many females as males that
have Fabry disease mutations. Several studies reported in the Journal of Medical Genetics
(2001), the Internal Medicine Journal (2002) and the Journal of Inherited Metabolic Disease
(2001) report that, while the majority of females with Fabry disease mutations have mild
symptoms, many have severe symptoms, including enlargement of the left ventricle of the heart
and/or renal failure.
In a recent study reported in the American Journal of Human Genetics, more than thirty-seven
thousand newborn males in Italy were screened for a-GAL activity and mutations. The incidence of
Fabry mutations in this study was 1:3100, over ten times higher than previous estimates. This high
incidence was attributed to a large number of newborn males with a-GAL mutations often associated
with later-onset Fabry disease, which may not have been identified in previous screening studies
that relied on diagnosis based on development of symptoms of classic Fabry disease.
Fabry Disease Market Opportunity
Fabry disease is a relatively rare disorder. The current estimates of approximately
5,000 patients worldwide are generally based on a small number of studies in single ethnic
populations in which people were screened for classic Fabry disease. The results of these studies
were subsequently extrapolated to the broader world population assuming similar prevalence rates
across populations. We believe these previously reported studies did not account for the
prevalence of later-onset Fabry disease and, as described above, a number of recent studies suggest
that the prevalence of Fabry disease could be many times higher than previously reported.
We expect that as awareness of later-onset Fabry disease grows, the number of patients
diagnosed with the disease will increase. Increased awareness of all forms of Fabry disease,
particularly for specialists not accustomed to treating Fabry disease patients, may lead to
increased testing and diagnosis of patients with the disease. We intend to develop and launch
educational and awareness campaigns targeting cardiologists, nephrologists and neurologists
regarding Fabry disease and its diagnosis. Assuming we receive regulatory approval, we expect
these educational and awareness campaigns would continue as a part of the marketing of Amigal.
Based on published data from the Human Gene Mutation Database and our experience in the field,
we believe the majority of the known genetic mutations that cause Fabry disease are missense
mutations. There are few widely-occurring genetic mutations reported for Fabry disease, suggesting
that the frequency of a specific genetic mutation reported in the Human Gene Mutation Database
reflects the approximate frequency of that mutation in the general Fabry patient population. In
addition, data presented at the 11th International Conference on Health Problems Related to the
Chinese (2002) suggest that the vast majority of newly diagnosed patients with later-onset Fabry
disease also have missense mutations. Because missense mutations often result in less stable,
misfolded a-GAL with some residual enzyme activity, we believe patients with these mutations may
benefit from treatment with Amigal. We also believe that other types of genetic mutations may
result in misfolded a-GAL and therefore may respond to treatment with Amigal. Based on this, we
believe that a majority of the Fabry disease patient population may benefit from treatment with
Amigal.
- 7 -
Existing Products for the Treatment of Fabry Disease and Potential Advantages of Amigal
The current standard of treatment for Fabry disease is enzyme replacement therapy. Currently,
two products are approved for the treatment of Fabry disease: Fabrazyme® and
Replagal®. Fabrazyme® is approved globally and commercialized by Genzyme
Corporation. Fabrazyme® was approved in the U.S. in 2003 and in the EU in 2001, and has
orphan drug exclusivity in the U.S. until 2010 and in the EU until 2011. Replagal® is
commercialized by Shire and approved in the EU and other countries but not in the U.S.
Replagal® was approved in the EU in August 2001 and has orphan drug exclusivity in the
EU until 2011. The net product sales of Fabrazyme® for 2008 were approximately $494
million as publicly reported by Genzyme Corporation, while the net product sales for
Replagal® for the nine months ended September 30, 2008 were approximately $132 million
as publicly reported by Shire.
Prior to the availability of enzyme replacement therapy, treatments for Fabry disease were
directed at ameliorating symptoms without treating the underlying disease. Some of these
treatments include opiates, anticonvulsants, antipsychotics and antidepressants to control pain and
other symptoms, and beta-blockers, calcium channel blockers, ACE inhibitors, angiotensin receptor
antagonists and other agents to treat blood pressure and vascular disease.
For Fabry disease patients who respond to Amigal, we believe that the use of Amigal may have
advantages relative to the use of Fabrazyme® and Replagal®. Published data
for patients treated with Fabrazyme® and Replagal® for periods of up to five
years demonstrate that these drugs can lead to the reduction of GL-3 in multiple cell types in the
skin, heart and kidney. However, because they are large protein molecules, Fabrazyme®
and Replagal® are believed to have difficulty penetrating some tissues and cell types.
In particular, it is widely believed that Fabrazyme® and Replagal® are unable
to cross the blood-brain barrier and thus are unlikely to address the neurological symptoms of
Fabry disease. As a small molecule therapy that has demonstrated high oral bioavailability and
good biodistribution properties in preclinical testing, Amigal has the potential to reach cells of
all the target tissues of Fabry disease. Furthermore, treatment with Fabrazyme® and
Replagal® requires intravenous infusions every other week, frequently on-site at health
care facilities, presenting an inconvenience to Fabry patients. Oral treatment with Amigal may be
much more convenient for patients and may not have the safety risks associated with intravenous
infusions.
In February 2004, Amigal was granted orphan drug designation by the FDA for the treatment of
Fabry disease and in March 2006 the EMEA recommended orphan medicinal product designation for
Amigal. We believe that orphan drug designation of Fabrazyme® in the U.S. and of
Fabrazyme® and Replagal® in the EU will not prevent us from obtaining
marketing approval of Amigal in either geography. See Government Regulation.
Plicera for Gaucher Disease
Overview
Our second most advanced clinical product candidate, Plicera, is an orally-administered, small
molecule, pharmacological chaperone for the treatment of Gaucher disease. In November 2007, we
entered into a partnership with Shire to develop Plicera.
We completed Phase 1 clinical trials which demonstrated that Plicera was safe and well
tolerated in healthy subjects at all doses tested. We also conducted a 4 week Phase 2 study in
Gaucher patients who switched from enzyme replacement therapy with imiglucerase to Plicera. Results
showed that Plicera was generally safe and well tolerated at all doses and increased target enzyme
activity levels in a majority of patients. In the trial,
b-glucocerebrosidase (GCase) activity, as
measured in white blood cells, was increased in 20 of the 26 patients with evaluable GCase data,
and 5 of the 6 patients without a clear increase were either in the lowest dose cohort or the
cohort dosed least frequently. As expected in this short term study, the levels of relevant
hematological markers of Gaucher disease remained stable.
We are currently conducting a Phase 2 clinical trial of Plicera in Type I Gaucher patients.
This study, GAU-CL-202, involves subjects with Type I Gaucher disease who are naïve to ERT and
substrate reduction therapy. The study is designed to evaluate the safety of Plicera and its
effect on parameters that are commonly abnormal in Gaucher disease including levels of red blood
cells, platelets, liver and spleen volumes and other biomarkers related to Gaucher disease.
Patients will be assigned to one of two treatment arms and will receive treatment with Plicera for
approximately 6 months. We expect the results to be available in the third quarter of 2009.
Causes of Gaucher Disease and Rationale for Use of Plicera
Gaucher disease is a lysosomal storage disorder resulting from a deficiency in the enzyme,
GCase. Signs and symptoms can be severe and debilitating, including an enlarged liver and spleen,
abnormally low levels of red blood cells and platelets, and skeletal complications. In some forms
of the disease there is also significant impairment of the central nervous system. The deficiency
of GCase in Gaucher patients is caused by inherited genetic mutations. Certain of these mutations
cause changes in the amino acid sequence of GCase that may result in the production of GCase with
reduced stability that does not fold into its correct three-dimensional shape. Although GCase
produced in patient cells often retains the potential for some level of biological activity, the
cells quality control
mechanisms recognize and retain misfolded GCase in the ER until it is ultimately moved to
another part of the cell for degradation and elimination. Consequently, little or no GCase moves
to the lysosome, where it normally breaks down its substrate, a complex lipid called
glucocerebroside. This leads to accumulation of glucocerebroside in cells, which is believed to
result in the clinical manifestations of Gaucher disease. In addition, the accumulation of the
misfolded GCase enzyme in the ER may lead to cellular stress and inflammatory-like responses, which
may contribute to cellular dysfunction and disease.
- 8 -
Plicera is designed to act as a pharmacological chaperone for GCase by selectively binding to
the enzyme, which increases the stability of the enzyme and helps it fold into its correct
three-dimensional shape. This stabilization of GCase allows the cells quality control mechanisms
to recognize the enzyme as properly folded so that trafficking of the enzyme to the lysosome is
increased, enabling it to carry out its intended biological function, the metabolism of
glucocerebroside. As a result of restoring proper trafficking of GCase from the ER to lysosomes,
Plicera reduces the accumulation of misfolded GCase in the ER, which may alleviate cellular stress
and inflammatory-like responses that may be contributing factors in Gaucher disease.
Because Plicera increases the cellular levels of a patients naturally produced GCase, those
Gaucher disease patients with a missense mutation or other genetic mutation that results in
production of GCase that is less stable but with some residual enzyme activity are the ones most
likely to respond to treatment with Plicera. We estimate that the substantial majority of patients
with Gaucher disease may respond to pharmacological chaperone therapy. Patients with genetic
mutations leading to a partially made GCase enzyme or GCase enzyme with an irreversible loss of
activity are less likely to respond to treatment with Plicera.
Gaucher Disease Background
Gaucher disease is often described in terms of the following three clinical subtypes:
|
|
|
Type I Chronic Nonneuronopathic Gaucher Disease. Type I Gaucher disease is the most
common subtype affecting more than 90% of patients and symptoms usually first appear in
adulthood. Type I Gaucher disease is characterized by the occurrence of an enlarged spleen
and liver, anemia, low platelet counts and fractures and bone pain. Patients with Type I
Gaucher disease do not experience the neurological features associated with Types II
and III Gaucher disease. The clinical severity of Type I Gaucher disease is extremely
variable with some patients experiencing the full range of symptoms, while others are
asymptomatic throughout most of their lives. |
|
|
|
Type II Acute Neuronopathic Gaucher Disease. Type II Gaucher disease symptoms
typically appear in infancy with an average age of onset of about three months. Type II
Gaucher disease involves rapid neurodegeneration with extensive visceral involvement that
usually results in death before two years of age, typically due to respiratory
complications. The clinical presentation in Type II Gaucher disease is typically more
uniform than Type I Gaucher disease. |
|
|
|
|
Type III Subacute Neuronopathic Gaucher Disease. Type III Gaucher disease
symptoms typically first appear in infancy or early childhood and involve some
neurological symptoms, along with visceral and bone complications. Age of onset and
disease severity can vary widely. Disease progression in Type III Gaucher disease is
typically slower than in Type II Gaucher disease. |
Gaucher Disease Market Opportunity
Gaucher disease is a relatively rare disorder. According to estimates reported by the American
Society of Health-System Pharmacists (August 2003) and the National Institute of Neurological
Disorders and Stroke (updated as of January 2006), there are approximately 10,000 patients
worldwide. Type I Gaucher disease is, by far, the most common of the subtypes.
Published data, including data from the Human Gene Mutation Database, suggest that the
substantial majority of patients with Gaucher disease have a missense mutation in at least one copy
of the gene. The majority of the Type I Gaucher patients in the U.S., Europe and Israel have at
least one copy of either the N370S or the L444P mutation, both of which are missense mutations.
Based on our experience in the field and studies we have completed, including a Gaucher Ex Vivo
Response Study, we believe that the substantial majority of individuals with Gaucher disease may
benefit from treatment with Plicera. In addition, we believe that Plicera may also benefit some
patients with the neuronopathic forms of Gaucher disease (Type II and Type III) because of the
ability of the small molecule to cross the blood-brain barrier.
- 9 -
Existing Products for the Treatment of Gaucher Disease and Potential Advantages of Plicera
The current standard of treatment for Gaucher patients is enzyme replacement therapy, although
two products are currently approved for the treatment of Gaucher disease, only one of which is an
enzyme replacement therapy. Cerezyme® is an enzyme replacement therapy approved
globally and commercialized by Genzyme Corporation. Cerezyme® was approved in the U.S.
in 1994 and in the EU in 1997 and no longer has orphan drug exclusivity in the U.S. In both the
U.S. and the EU, Cerezyme® is indicated for long-term enzyme
replacement therapy for pediatric and adult patients with a confirmed diagnosis of Type I
Gaucher disease. In addition, in the EU, it is indicated for Type III Gaucher disease patients who
exhibit clinically significant non-neurological manifestations. The second product approved for
treatment of Gaucher disease is Zavesca®, a substrate reduction therapy product approved
in the U.S., the EU and other countries and commercialized by Actelion, Ltd. Zavesca®
was approved in the U.S. in 2003 and in the EU in 2002 and has orphan drug exclusivity in the U.S.
until 2010 and in the EU until 2012. It is indicated for adults with mild to moderate Type I
Gaucher disease for whom enzyme replacement therapy is not an option. The net product sales of
Cerezyme® for the year 2008 were approximately $1.2 billion as publicly reported by
Genzyme Corporation, while the net product sales for Zavesca® for the nine months ended
September 30, 2008 were approximately $29 million as publicly reported by Actelion Ltd.
For Gaucher disease patients who respond to Plicera, we believe that the use of Plicera may
have advantages relative to the use of Cerezyme®. Published data demonstrate that
treatment with Cerezyme® can lead to the reduction of glucocerebroside in multiple
tissue types, especially the liver and spleen, and to increased levels of red blood cells and
platelets. However, because it is a large protein molecule, Cerezyme® is believed to
have difficulty penetrating some tissues and cell types. In particular, it is widely believed that
Cerezyme® is unable to cross the blood-brain barrier and thus unlikely to address the
neurological symptoms of Type II and Type III Gaucher disease. In contrast, studies in animals
show that Plicera distributes throughout the body. In particular, studies show that Plicera
crosses the blood-brain barrier, suggesting that it may provide a clinical benefit to patients with
Type II and Type III Gaucher disease. Additionally, treatment with Cerezyme® requires
intravenous infusions every other week. Oral treatment with Plicera may be more convenient for
patients and may not have the safety risks associated with intravenous infusions.
We also believe that Plicera may have advantages over the use of Zavesca®, a
substrate reduction therapy. While Zavesca® is an orally-administered small molecule,
the underlying mechanism of action is very different than for pharmacological chaperones. Substrate
reduction therapies are designed to prevent the production of the substrate that accumulates in
disease by inhibiting an enzyme required to make the substrate in cells. This is not the same
enzyme that is deficient in Gaucher disease and is needed to make molecules that are used for many
types of biological processes. As a result, inhibiting this enzyme may have adverse effects that
are difficult to predict. By contrast, Plicera is designed to bind directly to GCase, increasing
its stability and helping it fold into its correct three-dimensional shape. This in turn enables
proper trafficking to the lysosome where it can directly decrease substrate accumulation. In
addition, several side effects were reported by Actelion, Ltd. in clinical trials of
Zavesca®, including diarrhea, which was observed in more than 85% of patients who
received the drug, hand tremors and numbness and tingling in the hands, arms, legs or feet.
Pliceras mechanism of action is very different from Zavesca®. We expect Plicera to
have a therapeutic and side-effect profile defined by our clinical trials. To date, Plicera has
been safe and well tolerated in the clinical studies conducted by Amicus without incidents of
side-effects similar to those of Zavesca®.
In February 2006, the FDA granted orphan drug designation for the active ingredient in Plicera
for the treatment of Gaucher disease in the U.S. We believe that the orphan drug designation of
Zavesca® in the U.S. and the EU will not prevent us from obtaining marketing approval of
Plicera in either geography. See Government Regulation.
AT2220 for Pompe Disease
Overview
Our third most advanced product candidate, AT2220, is an orally-administered small molecule
pharmacological chaperone for the treatment of Pompe disease. In November 2007, we entered into a
partnership with Shire to develop AT2220.
We completed three Phase 1 clinical trials of AT2220 for Pompe disease in 2007 and initiated a
Phase 2 clinical trial in June 2008 in adult Pompe patients who are naïve to ERT. The trial
includes an 11-week treatment period with an optional extension study. The objectives of the trial
include the evaluation of the safety and pharmacodynamics of multiple doses and regimens of AT2220.
The results of this study are expected to be available in the second half of 2009.
In addition, we are continuing to conduct preclinical animal studies to evaluate the effects
of administering AT2220 in combination with ERT. Encouraging preliminary results were announced at
the American Society of Human Genetics conference in November 2008. These results indicated that
AT2220 in combination with ERT increases the stability and tissue uptake of ERT. We are conducting
additional preclinical proof-of-concept studies to determine the feasibility of a combination that
may be appropriate for Pompe patients who are not amenable to chaperone monotherapy. We expect to
discuss additional results at relevant scientific conferences during
2009.
The FDAs Office of Orphan Products Development has granted orphan drug designation for the
active ingredient in AT2220 in the U.S.
- 10 -
Causes of Pompe Disease and Rationale for Use of AT2220
Pompe disease is a neuromuscular and lysosomal storage disorder caused by a deficiency in the
enzyme a-glucosidase (GAA). Symptoms can be severe and debilitating, including progressive muscle
weakness throughout the body, particularly the heart and skeletal
muscles. The deficiency of GAA in Pompe patients is caused by inherited genetic mutations.
Certain of these mutations cause changes in the amino acid sequence of GAA that may result in the
production of GAA with reduced stability that does not fold into its correct three-dimensional
shape. Although GAA produced in patient cells often retains the potential for biological activity,
the cells quality control mechanisms recognize and retain misfolded GAA in the ER, until it is
ultimately moved to another part of the cell for degradation and elimination. Certain other
mutations cause changes in RNA processing that lead to the production of normal GAA, but at levels
that are much lower than in an unaffected individual. In either case, little or no GAA moves to
the lysosome, where it normally breaks down its substrate, glycogen. This leads to accumulation of
glycogen in cells, which is believed to result in the majority of clinical manifestations of Pompe
disease. In addition, the accumulation and mistrafficking of GAA may lead to stress on cells and
inflammatory-like responses, which may contribute to cellular dysfunction and disease.
AT2220 is designed to act as a pharmacological chaperone for GAA by selectively binding to GAA
and increasing its stability which helps the enzyme fold into its correct three-dimensional shape.
We believe this stabilization of GAA allows the cells quality control mechanisms to recognize the
protein as properly folded so that trafficking of the enzyme to the lysosome is increased, enabling
it to carry out its intended biological function, the metabolism of glycogen. We believe AT2220
may increase proper trafficking of GAA in patients that produce unstable misfolded GAA, and in
patients that produce low levels of normal GAA because some fraction of normal GAA can also fail to
pass the cells quality control system. AT2220 has been shown to increase GAA levels in cell lines
derived from Pompe patients, in transferred cells expressing mutant forms of GAA and in healthy
mice and monkeys. In addition, as a result of increasing the proper trafficking of unstable
misfolded GAA to the lysosome, AT2220 may reduce the accumulation of misfolded GAA in the ER, which
may alleviate cellular stress and inflammatory-like responses that may be contributing factors in
Pompe disease.
Because AT2220 is believed to increase the activity of a patients naturally produced GAA,
those Pompe disease patients with a mutation that results in production of GAA with some residual
enzyme activity are the ones most likely to respond to treatment with AT2220. We therefore
estimate that the majority of patients with Pompe disease may respond to pharmacological chaperone
therapy. Patients with genetic mutations leading to a partially made GAA enzyme or GAA enzyme with
an irreversible loss of activity are less likely to respond to treatment with AT2220.
Pompe Disease Background
Pompe disease, also known as glycogen storage disease type II or acid maltase deficiency, is a
relatively rare disorder caused by mutations in GAA. The mutations in GAA result in the
accumulation of lysosomal glycogen, especially in skeletal, cardiac and smooth muscle tissues.
According to reported estimates of the Acid Maltase Deficiency Association, the United Pompe
Foundation and the Lysosomal Disease Program at Massachusetts General Hospital, there are
5,000-10,000 patients with Pompe disease worldwide.
Pompe disease ranges from a rapidly fatal infantile form with severe cardiac involvement to a
more slowly progressive, later-onset form primarily affecting skeletal muscle. All forms are
characterized by severe muscle weakness that worsens over time. In the rapid onset form, patients
are usually diagnosed shortly after birth and often experience enlargement of the heart and severe
muscle weakness. In later-onset Pompe disease, symptoms may not appear until late childhood or
adulthood and patients often experience progressive muscle weakness.
Pompe Disease Market Opportunity
Pompe disease is a relatively rare disorder. Most reported estimates project that there are
5,000 to 10,000 patients worldwide, the majority of whom have later-onset Pompe disease.
Based on published data from the Human Gene Mutation Database and our experience in the field,
we believe that many of the known genetic mutations that cause Pompe disease are mutations that
result in measurable residual enzyme activity. The majority of Pompe patients have either juvenile
or adult-onset disease, and both types of patients generally have measurable levels of residual
enzyme activity. Because pharmacological chaperone therapy is most likely to benefit patients with
some residual enzyme activity, we believe that a majority of the Pompe patient population may
benefit from treatment with AT2220. There are a few mutations reported in Pompe disease that are
more common in specific ethnic populations, including a splice-site mutation common in Caucasians
with adult-onset disease. Studies published in the Journal of Medical Genetics, Human Mutation,
and the Journal of Neurology suggest that over 70% of all Caucasians with adult-onset Pompe disease
have at least one copy of this splice-site mutation. Because this splice-site mutation results in
the production of normal GAA protein, albeit at a level lower than in a non-affected individual, we
believe patients with this mutation may be addressable with pharmacological chaperone therapy.
- 11 -
Existing Products for the Treatment of Pompe Disease and Potential Advantages of AT2220
The current standard of treatment for Pompe patients is enzyme replacement therapy. There is
currently one product approved for the treatment of Pompe disease, Myozyme®, which is
approved in the U.S. and the EU and commercialized by Genzyme Corporation. Myozyme® was
approved in the U.S. and in the EU in 2006 and has orphan drug exclusivity in the U.S. until 2013
and in the EU until
2016. Although Myozyme® is approved for use in all Pompe patients, studies
currently reported on the label included only patients with infantile-onset disease. Data from a
study looking at Myozome® in patients with later-onset disease was reported in late 2007
and is currently under review by various regulatory authorities. This study reportedly achieved
the primary endpoint of demonstrating an improvement in motor and pulmonary function. The net
product sales of Myozyme® for 2008 were approximately $296 million as publicly reported
by Genzyme Corporation.
For Pompe disease patients who respond to AT2220, we believe that the use of AT2220 may have
advantages relative to the use of Myozyme®. Available data demonstrate that treatment
with Myozyme® can improve survival in patients with the infantile form of the disease
and may slow the decline in motor and pulmonary function in patients with the later onset form of
the disease. However, because it is a large protein molecule, Myozyme® is believed to
have difficulty penetrating many tissues and cell types. Because AT2220 is a small molecule that
has demonstrated high oral bioavailability and good biodistribution properties in preclinical
testing, it has the potential to reach all cells of the target tissues of Pompe disease patients.
Furthermore, treatment with Myozyme® requires lengthy intravenous infusions every other
week, frequently on site at health care facilities, presenting an inconvenience to Pompe disease
patients. The label for Myozyme® also indicates that the infusion has safety concerns,
with infusion reactions observed in 51% of patients, and severe infusion-related reactions observed
in 14% of patients. Oral treatment with AT2220 may be more convenient for patients and may not
have the safety risks associated with intravenous infusions.
We believe that the orphan drug designation of Myozyme® in the U.S. and in the EU
will not prevent us from obtaining marketing approval of AT2220 in either geography. See
Government Regulation.
Other Programs
We believe that our pharmacological chaperone technology is applicable to the development of
drugs for the treatment of a wide range of human genetic and other diseases. We are currently
researching the use of pharmacological chaperones for the treatment of diseases other than
lysosomal storage disorders, including neurological diseases such as Parkinsons disease. An
epidemiological and biochemical link between Gaucher and Parkinsons disease has been established.
Furthermore, in 2007, we generated data showing that treatment with Plicera led to reduction in
a-synuclein in the brains of animal model for Parkinsons disease and, in 2008, we generated
data in rodents demonstrating that brain exposure for Plicera is about 18% of plasma levels.
Strategic Alliances and Arrangements
We intend to form strategic alliances to gain access to the financial, technical, clinical and
commercial resources necessary to develop and market pharmacological chaperone therapeutics. We
expect these alliances to provide us with financial support in the form of equity investments,
research and development funding, license fees, milestone payments and royalties or profit-sharing
based on sales of pharmacological chaperone therapeutics. We currently have one strategic alliance
with Shire.
On November 7, 2007, we entered into a License and Collaboration Agreement with Shire. Under
the agreement, Amicus and Shire will jointly develop Amicus three lead pharmacological chaperone
compounds for lysosomal storage disorders: Amigal, Plicera and AT2220. We granted Shire the rights
to commercialize these products outside the U.S. We will retain all rights to our other programs
and to develop and commercialize Amigal, Plicera and AT2220 in the U.S.
In 2007, we received an initial, non-refundable license fee payment of $50 million from Shire
and joint development costs toward global approval of the three compounds are being shared 50/50
per the collaboration agreement. In addition, we are eligible to receive, for all three drug
product candidates, aggregate potential milestone payments of up to $150 million if certain
clinical and regulatory milestones are achieved for all three of the programs, and $240 million in
sales-based milestones for all three of the programs. We will also be eligible to receive tiered
double-digit royalties on net sales of the products which are marketed outside of the U.S.
Intellectual Property
Patents and Trade Secrets
Our success depends in part on our ability to maintain proprietary protection surrounding our
product candidates, technology and know-how, to operate without infringing the proprietary rights
of others, and to prevent others from infringing our proprietary rights. Our policy is to seek to
protect our proprietary position by filing U.S. and foreign patent applications related to our
proprietary technology, including both new inventions and improvements of existing technology, that
are important to the development of our business, unless this proprietary position would be better
protected using trade secrets. Our patent strategy includes obtaining patent protection, where
possible, on compositions of matter, methods of manufacture, methods of use, combination therapies,
dosing and administration regimens, formulations, therapeutic monitoring, screening methods and
assays. We also rely on trade secrets, know-how, continuing technological innovation, in-licensing
and partnership opportunities to develop and maintain our proprietary position. Lastly, we monitor
third parties for activities that may infringe our proprietary rights, as well as the progression
of third party patent applications that may have the
potential to create blocks to our products or otherwise interfere with the development of our
business. We are aware, for example, of U.S. patents, and corresponding international
counterparts, owned by third parties that contain claims related to treating protein misfolding.
If any of these patents were to be asserted against us we do not believe that our proposed products
would be found to infringe any valid claim of these patents. There is no assurance that a court
would find in our favor or that, if we choose or are required to seek a license, a license to any
of these patents would be available to us on acceptable terms or at all.
- 12 -
We own or license rights to several issued patents in the U.S., current member states of the
European Patent Convention and numerous pending foreign applications, which are foreign
counterparts of many of our U.S. patents. We also own or license rights to several pending
U.S. applications. Our patent portfolio includes patents and patent applications with claims
relating to methods of increasing deficient enzyme activity to treat genetic diseases. The patent
positions for our three leading product candidates are described below and include both patents and
patent applications we own or exclusively license:
|
|
|
We have an exclusive license to five issued U.S. patents and several pending
U.S. applications that cover use of Amigal, as well as corresponding foreign applications.
U.S. patents relating to Amigal expire in 2018 (not including the Hatch-Waxman statutory
extension, which is described below), while the foreign counterpart patents, if granted,
would expire in 2019 (not including the Supplemental Protection Certificates or SPC
extensions, which are described below). The patents and the pending applications include
claims covering methods of increasing the activity of and preventing the degradation of
a-GAL, and methods for the treatment of Fabry disease using Amigal and other specific
competitive inhibitors of a-GAL. In addition, we own pending U.S. applications directed to
specific treatment and monitoring regimens with Amigal as well as to dosing regimens with
Amigal, which, if granted, may result in patents that expire in 2028. Further, we have
several pending U.S. applications directed to synthetic steps related to the commercial
process for preparing Amigal, which may result in patents that expire in 2026. Lastly, we
jointly own one pending U.S. application covering methods of diagnosing Fabry disease and
determining whether Fabry patients will respond to treatment with Amigal, which, if
granted, will expire in 2027. We have filed, or plan to file, foreign counterparts of
these applications, where appropriate, by the applicable deadlines. |
|
|
|
We have an exclusive license to seven U.S. patents and two pending U.S. applications,
and five foreign patents and several pending foreign applications that cover Plicera or its
use. Two of the U.S. patents relating to Plicera compositions of matter expire in 2015 and
2016 (not including the Hatch-Waxman statutory extension, which is described below); the
five composition of matter foreign patents and one pending foreign application, if granted,
expire in 2015 (not including the SPC extensions, which are described below). The other
five U.S. patents and two pending applications, which claim methods of increasing the
activity of and preventing the degradation of GCase, and methods for the treatment of
Gaucher disease using Plicera and other specific competitive inhibitors of GCase, expire in
2018. We own a pending U.S. application directed to the particular form of the active
agent in Plicera, which, if granted, will expire in 2027. We own one pending
U.S. application directed to dosing regimens for Plicera, which if granted, will expire in
2028. We own one pending U.S. application directed to specific treatment and monitoring
regimens with Plicera. If granted, this also will expire in 2028. Lastly, we own one
pending U.S. application directed to methods of synthesis of Plicera, which if granted,
will expire in 2028. We have filed, or plan to file, foreign counterparts of these
applications, where appropriate, by the applicable deadlines. |
|
|
|
We have an exclusive license to three U.S. patents that cover use of AT2220, two pending
U.S. applications, as well as corresponding foreign applications. The U.S. patents
relating to AT2220 expire in 2018 (not including the Hatch-Waxman statutory extension,
which is described below), while the foreign counterpart patents, if granted, would expire
in 2019 (not including the SPC extensions, which are described below). The patents and the
pending applications include claims covering methods of increasing the activity of and
preventing the degradation of GAA, and methods for the treatment of Pompe disease using
AT2220 and other specific competitive inhibitors of GAA. |
Our patent estate also includes patent applications we license or own relating to combination
compositions or uses for our product candidates or new potential product candidates. Some of these
applications are pending in the U.S. and foreign patent offices and include one family of patents
licensed from Mt. Sinai School of Medicine. Others have to date only been filed as provisional
applications in the U.S. We have filed or expect to file some of these as non-provisional
applications in U.S. and in other countries at the appropriate time. These patent applications,
assuming they issue as patents, would expire in the U.S. between 2023 and 2028.
Individual patents extend for varying periods depending on the effective date of filing of the
patent application or the date of patent issuance, and the legal term of the patents in the
countries in which they are obtained. Generally, patents issued in the U.S. are effective for:
|
|
|
the longer of 17 years from the issue date or 20 years from the earliest effective
filing date, if the patent application was filed prior to June 8, 1995; and |
|
|
|
20 years from the earliest effective filing date, if the patent application was filed on
or after June 8, 1995. |
- 13 -
The term of foreign patents varies in accordance with provisions of applicable local law, but
typically is 20 years from the earliest effective filing date.
The U.S. Drug Price Competition and Patent Term Restoration Act of 1984, more commonly known
as the Hatch-Waxman Act, provides for an extension of one patent, known as a Hatch-Waxman statutory
extension, for each NCE to compensate for a portion of the time spent in clinical development and
regulatory review. However, the maximum extension is five years and the extension cannot extend
the patent beyond 14 years from New Drug Application (NDA) approval. Similar extensions are
available in European countries, known as SPC extensions, Japan and other countries. However, we
will not know what, if any, extensions are available until a drug is approved. In addition, in the
U.S., under provisions of the Best Pharmaceuticals for Childrens Act, we may be entitled to an
additional six month period of patent protection Market Exclusivity and Orphan Drug Exclusivity,
for completing pediatric clinical studies in response to a FDA issued Pediatric Written Request
before said exclusivities expire.
The patent positions of companies like ours are generally uncertain and involve complex legal,
technical, scientific and factual questions. Our ability to maintain and solidify our proprietary
position for our technology will depend on our success in promptly filing patent applications on
new discoveries, and in obtaining effective claims and enforcing those claims once granted. We
focus special attention on filing patent applications for formulations and delivery regimens for
our products in development to further enhance our patent exclusivity for those products. We seek
to protect our proprietary technology and processes, in part, by contracting with our employees,
collaborators, scientific advisors and our commercial consultants to ensure that any inventions
resulting from the relationship are disclosed promptly, maintained in confidence until a patent
application is filed and preferably until publication of the patent application, and assigned to us
or subject to a right to obtain a license. We do not know whether any of our own patent
applications or those patent applications that are licensed to us will result in the issuance of
any patents. Our issued patents and those that may issue in the future, or those licensed to us,
may be challenged, narrowed, invalidated or circumvented or be found to be invalid or
unenforceable, which could limit our ability to stop competitors from marketing related products
and reduce the term of patent protection that we may have for our products. Neither we nor our
licensors can be certain that we were the first to invent the inventions claimed in our owned or
licensed patents or patent applications. In addition, our competitors may independently develop
similar technologies or duplicate any technology developed by us and the rights granted under any
issued patents may not provide us with any meaningful competitive advantages against these
competitors. Furthermore, because of the extensive time required for development, testing and
regulatory review of a potential product, it is possible that any related patent may expire prior
to or shortly after commencing commercialization, thereby reducing the advantage of the patent to
our business and products.
We may rely, in some circumstances, on trade secrets to protect our technology. However,
trade secrets are difficult to protect. We seek to protect our trade secret technology and
processes, in part, by entering into confidentiality agreements with commercial partners,
collaborators, employees, consultants, scientific advisors and other contractors, and by
contracting with our employees and some of our commercial consultants to ensure that any trade
secrets resulting from such employment or consulting are owned by us. We also seek to preserve the
integrity and confidentiality of our data and trade secrets by maintaining physical security of our
premises and physical and electronic security of our information technology systems. While we have
confidence in these individuals, organizations and systems, agreements or security measures may be
breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may
otherwise become known or be discovered independently by others. To the extent that our
consultants, contractors or collaborators use intellectual property owned by others in their work
for us, disputes may arise as to the rights in related or resulting know-how and inventions.
License Agreements
We have acquired rights to develop and commercialize our product candidates through licenses
granted by various parties. The following summarizes our material rights and obligations under
those licenses:
|
|
|
Mt. Sinai School of Medicine We have acquired exclusive worldwide patent rights to
develop and commercialize Amigal, Plicera and AT2220 and other pharmacological chaperones
for the prevention or treatment of human diseases or clinical conditions by increasing the
activity of wild-type and mutant enzymes pursuant to a license agreement with Mt. Sinai
School of Medicine (MSSM) of New York University. In connection with this agreement, we
issued 232,266 shares of our common stock to MSSM in April 2002. In October 2006 we issued
MSSM an additional 133,333 shares of common stock and made a payment of $1.0 million in
consideration of an expanded field of use under that license. Under this agreement, to
date we have paid no upfront or annual license fees and we have no milestone or future
payments other than royalties on net sales. However, on October 31, 2008, we amended and
restated this license agreement to, among other items, provide us with the sole right to
control the prosecution of patent rights under such agreement and to clarify the portion of
royalties and milestone payments we receive from Shire that are payable to MSSM. In
connection therewith, we agreed to pay MSSM $2.6 million in connection with the $50 million
upfront payment that we received in November 2007 from Shire, which was already accrued for
at year-end 2007, and an additional $2.6 million for the sole right to and control over the
prosecution of patent rights. This agreement expires upon expiration of the last of the
licensed patent rights, which will be in 2019 if a foreign patent is granted and 2018
otherwise, or later subject to any patent term extension that may be granted. |
- 14 -
|
|
|
University of Maryland, Baltimore County We have acquired exclusive U.S. patent rights
to develop and commercialize Plicera for the treatment of Gaucher disease from the
University of Maryland, Baltimore County. Under this agreement, to date we have paid
aggregate upfront and annual license fees of $30 thousand. We are required to make a
milestone payment upon the demonstration of safety and efficacy of Plicera for the
treatment of Gaucher disease in a Phase 2 study, and another payment upon receiving FDA
approval for Plicera for the treatment of Gaucher disease. We are also required to pay
royalties on net sales. Upon satisfaction of both milestones, we could be required to make
up to $0.2 million in aggregate payments. This agreement expires upon expiration of the
last of the licensed patent rights in 2015. |
|
|
|
Novo Nordisk A/S We have acquired exclusive patent rights to develop and commercialize
Plicera for all human indications. Under this agreement, to date we have paid an aggregate
of $0.4 million in license fees. We are also required to make milestone payments based on
clinical progress of Plicera, with a payment due after initiation of a Phase 2 clinical
trial for Plicera for the treatment of Gaucher disease, and a payment due upon each filing
for regulatory approval of Plicera for the treatment of Gaucher disease in any of the U.S.,
Europe or Japan. An additional payment is due upon approval of Plicera for the treatment
of Gaucher disease in the U.S. and a payment is also due upon each approval of Plicera for
the treatment of Gaucher disease in either of Europe or Japan. Assuming successful
development of Plicera for the treatment of Gaucher disease in the U.S., Europe and Japan,
total milestone payments would be $7.8 million. We are also required to pay royalties on
net sales. This license will terminate in 2016. |
Under our license agreements, if we owe royalties on net sales for one of our products to more
than one of the above licensors, then we have the right to reduce the royalties owed to one
licensor for royalties paid to another. The amount of royalties to be offset is generally limited
in each license and can vary under each agreement. For Amigal and AT2220, we will owe royalties
only to MSSM and will owe no milestone payments. We expect to pay royalties to all three licensors
with respect to Plicera.
Our rights with respect to these agreements to develop and commercialize Amigal, Plicera and
AT2220 may terminate, in whole or in part, if we fail to meet certain development or
commercialization requirements or if we do not meet our obligations to make royalty payments.
Trademarks
In addition to our patents and trade secrets, we have filed applications to register certain
trademarks in the U.S. and/or abroad, including AMICUS, AMICUS THERAPEUTICS (and design), AMIGAL
and PLICERA. At present, all of the U.S. trademark applications for these marks, which are based
on an intention to use these marks, have been approved by the U.S. Patent and Trademark Office and
Notices of Allowances and have been issued. We have also received foreign allowances or issued
foreign registrations for certain of these marks. Our ability to obtain and maintain trademark
registrations will in certain instances depend on making use of the mark in commerce on or in
connection with our products. For the allowed marks for our candidate products, it may be
necessary to re-apply for registration if it becomes apparent that we will not use the mark in
commerce within the prescribed time period.
Manufacturing
We continue to rely on contract manufacturers to supply the active pharmaceutical ingredients
and gelatin capsules for Amigal, Plicera and AT2220. The active pharmaceutical ingredients for all
three products are manufactured under current good manufacturing practices (cGMP), at kilogram
scale initiated with commercially available starting materials. The components in the final
formulation for each product are commonly used in other encapsulated products and are well
characterized ingredients. We have implemented appropriate controls for assuring the quality of
both active pharmaceutical ingredients and capsules. Product specifications will be established in
concurrence with regulatory bodies at the time of product registration.
Competition
Overview
The biotechnology and pharmaceutical industries are characterized by rapidly advancing
technologies, intense competition and a strong emphasis on proprietary products. While we believe
that our technologies, knowledge, experience and scientific resources provide us with competitive
advantages, we face potential competition from many different sources, including commercial
pharmaceutical and biotechnology enterprises, academic institutions, government agencies and
private and public research institutions. Any product candidates that we successfully develop and
commercialize will compete with both existing and new therapies that may become available in the
future.
Many of our competitors may have significantly greater financial resources and expertise
associated with research and development, regulatory approvals and marketing approved products.
These competitors also compete with us in recruiting and retaining qualified
scientific and management personnel, as well as in acquiring technologies complementary to, or
necessary for, our programs. Smaller or early stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with large and established companies.
- 15 -
Our commercial opportunities could be reduced or eliminated if our competitors develop and
commercialize products that are safer, more effective, have fewer side effects, are more convenient
or are less expensive than products that we may develop. In addition, our ability to compete may
be affected because in some cases insurers or other third party payors seek to encourage the use of
generic products. This may have the effect of making branded products less attractive to buyers.
Major Competitors
Our major competitors include pharmaceutical and biotechnology companies in the U.S. and
abroad that have approved therapies or therapies in development for lysosomal storage disorders
within our core programs. Other competitors are pharmaceutical and biotechnology companies that
have approved therapies or therapies in development for genetic diseases for which pharmacological
chaperone technology may be applicable. Additionally, we are aware of several early-stage, niche
pharmaceutical and biotechnology companies whose core business revolves around protein misfolding;
however, we are not aware that any of these companies is currently working to develop products that
would directly compete with ours. The key competitive factors affecting the success of our product
candidates are likely to be their efficacy, safety, convenience and price.
Any product candidates that we successfully develop and commercialize will compete with
existing therapies and new therapies that may become available in the future. The following table
lists our principal competitors and publicly available information on the status of their product
offerings (U.S. dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Competitor |
|
Indication |
|
|
Product |
|
|
Class of Product |
|
|
Status |
|
|
2008 Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Genzyme Corporation |
|
Fabry disease |
|
Fabrazyme® |
|
Enzyme Replacement Therapy |
|
Marketed |
|
$ |
494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaucher disease |
|
Cerezyme® |
|
Enzyme Replacement Therapy |
|
Marketed |
|
$ |
1,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pompe disease |
|
Myozyme® |
|
Enzyme Replacement Therapy |
|
Marketed |
|
$ |
296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaucher disease |
|
Genz-112638 |
|
Substrate Reduction Therapy |
|
Phase 2 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shire |
|
Fabry disease |
|
Replagal® |
|
Enzyme Replacement Therapy |
|
Marketed |
|
$ |
132 |
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaucher disease |
|
GA-GCB |
|
Enzyme Replacement Therapy |
|
Phase 3 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actelion, Ltd. |
|
Gaucher disease |
|
Zavesca® |
|
Substrate Reduction Therapy |
|
Marketed |
|
$ |
29 |
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Protalix Biotherapeutics |
|
Gaucher disease |
|
prGCD |
|
Enzyme Replacement |
|
Phase 3 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Therapy |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Nine Months Sales through September 30, 2008 |
We are aware of other companies that are conducting preclinical development activities for
enzyme replacement therapies to treat Gaucher disease and Pompe disease.
- 16 -
Government Regulation
FDA Approval Process
In the U.S., pharmaceutical products are subject to extensive regulation by the FDA. The
Federal Food, Drug, and Cosmetic Act and other federal and state statutes and regulations, govern,
among other things, the research, development, testing, manufacture, storage, recordkeeping,
approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting,
sampling, and import and export of pharmaceutical products. Failure to comply with applicable
U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such
as FDA refusal to approve pending new drug applications (NDAs), warning letters, product recalls,
product seizures, total or partial suspension of production or distribution, injunctions, fines,
civil penalties, and criminal prosecution.
Pharmaceutical product development in the U.S. typically involves preclinical laboratory and
animal tests, the submission to the FDA of a notice of claimed investigational exemption or an
investigational new drug application (IND), which must become effective before clinical testing may
commence, and adequate and well-controlled clinical trials to establish the safety and
effectiveness of the drug for each indication for which FDA approval is sought. Satisfaction of
FDA pre-market approval requirements typically takes many years and the actual time required may
vary substantially based upon the type, complexity and novelty of the product or disease.
Preclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as
well as animal trials to assess the characteristics and potential safety and efficacy of the
product. The conduct of the preclinical tests must comply with federal regulations and
requirements including good laboratory practices. The results of preclinical testing are submitted
to the FDA as part of an IND along with other information including information about product
chemistry, manufacturing and controls and a proposed clinical trial protocol. Long-term
preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue
after the IND is submitted.
A 30-day waiting period after the submission of each IND is required prior to the commencement
of clinical testing in humans. If the FDA has not commented on or questioned the IND within this
30-day period, the clinical trial proposed in the IND may begin.
Clinical trials involve the administration of the investigational new drug to healthy
volunteers or patients under the supervision of a qualified investigator. Clinical trials must be
conducted in compliance with federal regulations, good clinical practices (GCP), as well as under
protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and
the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and
subsequent protocol amendments must be submitted to the FDA as part of the IND.
The FDA may order the temporary or permanent discontinuation of a clinical trial at any time
or impose other sanctions if it believes that the clinical trial is not being conducted in
accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients.
The study protocol and informed consent information for patients in clinical trials must also be
submitted to an institutional review board (IRB), for approval. An IRB may also require the
clinical trial at the site to be halted, either temporarily or permanently, for failure to comply
with the IRBs requirements, or may impose other conditions.
Clinical trials to support NDAs for marketing approval are typically conducted in three
sequential phases, but the phases may overlap. In Phase 1, the initial introduction of the drug
into healthy human subjects or patients, the drug is tested to assess metabolism, pharmacokinetics,
pharmacological actions, side effects associated with increasing doses and, if possible, early
evidence on effectiveness. Phase 2 usually involves trials in a limited patient population, to
determine the effectiveness of the drug for a particular indication or indications, dosage
tolerance and optimum dosage, and identify common adverse effects and safety risks. If a compound
demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations,
Phase 3 trials are undertaken to obtain the additional information about clinical efficacy and
safety in a larger number of patients, typically at geographically dispersed clinical trial sites,
to permit FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate
information for the labeling of the drug.
After completion of the required clinical testing, an NDA is prepared and submitted to the
FDA. FDA approval of the NDA is required before marketing of the product may begin in the U.S. The
NDA must include the results of all preclinical, clinical and other testing and a compilation of
data relating to the products pharmacology, chemistry, manufacture, and controls. The cost of
preparing and submitting an NDA is substantial. Under federal law, the submission of most NDAs is
additionally subject to a substantial application user fee, and the manufacturer and/or sponsor
under an approved new drug application are also subject to annual product and establishment user
fees. These fees are typically increased annually.
- 17 -
The FDA has 60 days from its receipt of a NDA to determine whether the application will be
accepted for filing based on the agencys threshold determination that it is sufficiently complete
to permit substantive review. Once the submission is accepted for filing, the FDA begins an
in-depth review. The FDA has agreed to certain performance goals in the review of new drug
applications. Most such applications for non-priority drug products are reviewed within ten
months. The review process may be extended by FDA for three additional months to consider certain
information or clarification regarding information already provided in the submission. The FDA may
also refer applications for novel drug products or drug products which present difficult questions
of safety or efficacy to an advisory
committee, typically a panel that includes clinicians and other experts, for review,
evaluation and a recommendation as to whether the application should be approved. The FDA is not
bound by the recommendation of an advisory committee, but it generally follows such
recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical
sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the
facilities at which the drug is manufactured. FDA will not approve the product unless compliance
with current good manufacturing practices is satisfactory and the NDA contains data that provide
substantial evidence that the drug is safe and effective in the indication studied.
After FDA evaluates the NDA and the manufacturing facilities, it issues an approval letter, an
approvable letter or a not-approvable letter. Both approvable and not-approvable letters generally
outline the deficiencies in the submission and may require substantial additional testing or
information in order for the FDA to reconsider the application. If and when those deficiencies
have been addressed to the FDAs satisfaction in a resubmission of the NDA, the FDA will issue an
approval letter. FDA has committed to reviewing such resubmissions in 2 or 6 months depending on
the type of information included.
An approval letter authorizes commercial marketing of the drug with specific prescribing
information for specific indications. As a condition of NDA approval, the FDA may require
substantial post-approval testing and surveillance to monitor the drugs safety or efficacy and may
impose other conditions, including labeling restrictions which can materially affect the potential
market and profitability of the drug. Once granted, product approvals may be withdrawn if
compliance with regulatory standards is not maintained or problems are identified following initial
marketing.
The Hatch-Waxman Act
In seeking approval for a drug through an NDA, applicants are required to list with the FDA
each patent with claims that cover the applicants product. Upon approval of a drug, each of the
patents listed in the application for the drug is then published in the FDAs Approved Drug
Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed
in the Orange Book can, in turn, be cited by potential competitors in support of approval of an
abbreviated new drug application (ANDA). An ANDA provides for marketing of a drug product that has
the same active ingredients in the same strengths and dosage form as the listed drug and has been
shown through bioequivalence testing to be therapeutically equivalent to the listed drug. ANDA
applicants are not required to conduct or submit results of pre-clinical or clinical tests to prove
the safety or effectiveness of their drug product, other than the requirement for bioequivalence
testing. Drugs approved in this way are commonly referred to as generic equivalents to the
listed drug, and can often be substituted by pharmacists under prescriptions written for the
original listed drug.
The ANDA applicant is required to certify to the FDA concerning any patents listed for the
approved product in the FDAs Orange Book. Specifically, the applicant must certify that: (i) the
required patent information has not been filed; (ii) the listed patent has expired; (iii) the
listed patent has not expired, but will expire on a particular date and approval is sought after
patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new
product. A certification that the new product will not infringe the already approved products
listed patents or that such patents are invalid is called a Paragraph 4 certification. If the
applicant does not challenge the listed patents, the ANDA application will not be approved until
all the listed patents claiming the referenced product have expired.
If the ANDA applicant has provided a Paragraph 4 certification to the FDA, the applicant must
also send notice of the Paragraph 4 certification to the NDA and patent holders once the ANDA has
been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent
infringement lawsuit in response to the notice of the Paragraph 4 certification. The filing of a
patent infringement lawsuit within 45 days of the receipt of a Paragraph 4 certification
automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration
of the patent, settlement of the lawsuit or a decision in the infringement case that is favorable
to the ANDA applicant.
The ANDA application also will not be approved until any non-patent exclusivity, such as
exclusivity for obtaining approval of a new chemical entity, listed in the Orange Book for the
referenced product has expired (New Chemical Entity Market Exclusivity). Federal law provides a
period of five years following approval of a drug containing no previously approved active
ingredients, during which ANDAs for generic versions of those drugs cannot be submitted unless the
submission contains a Paragraph 4 challenge to a listed patent, in which case the submission may be
made four years following the original product approval. Federal law provides for a period of
three years of exclusivity following approval of a listed drug that contains previously approved
active ingredients but is approved in a new dosage form, route of administration or combination, or
for a new use, the approval of which was required to be supported by new clinical trials conducted
by or for the sponsor, during which FDA cannot grant effective approval of an ANDA based on that
listed drug for the same new dosage form, route of administration or combination, or new use.
- 18 -
Other Regulatory Requirements
Once an NDA is approved, a product will be subject to certain post-approval requirements. For
instance, FDA closely regulates the post-approval marketing and promotion of drugs, including
standards and regulations for direct-to-consumer advertising, off-label promotion,
industry-sponsored scientific and educational activities and promotional activities involving the
internet.
Drugs may be marketed only for the approved indications and in accordance with the provisions
of the approved labeling. Changes to some of the conditions established in an approved
application, including changes in indications, labeling, or manufacturing processes or facilities,
require submission and FDA approval of a new NDA or NDA supplement before the change can be
implemented. An NDA supplement for a new indication typically requires clinical data similar to
that in the original application, and the FDA uses the same procedures and actions in reviewing NDA
supplements as it does in reviewing NDAs.
Adverse event reporting and submission of periodic reports is required following FDA approval
of an NDA. The FDA also may require post-marketing testing, known as Phase 4 testing, risk
minimization action plans and surveillance to monitor the effects of an approved product or place
conditions on an approval that could restrict the distribution or use of the product. In addition,
quality control as well as drug manufacture, packaging, and labeling procedures must continue to
conform to current good manufacturing practices, or cGMPs, after approval. Drug manufacturers and
certain of their subcontractors are required to register their establishments with FDA and certain
state agencies, and are subject to periodic unannounced inspections by the FDA during which the
agency inspects manufacturing facilities to access compliance with cGMPs. Accordingly,
manufacturers must continue to expend time, money and effort in the areas of production and quality
control to maintain compliance with cGMPs. Regulatory authorities may withdraw product approvals
or request product recalls if a company fails to comply with regulatory standards, if it encounters
problems following initial marketing, or if previously unrecognized problems are subsequently
discovered.
Orphan Drugs
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to
treat a rare disease or condition, which is generally a disease or condition that affects fewer
than 200,000 individuals in the U.S. Orphan drug designation must be requested before submitting
an NDA. After the FDA grants orphan drug designation, the generic identity of the drug and its
potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey
any advantage in or shorten the duration of the regulatory review and approval process. The first
NDA applicant with FDA orphan drug designation for a particular active ingredient to receive FDA
approval of the designated drug for the disease indication for which it has such designation, is
entitled to a seven-year exclusive marketing period (Orphan Drug Exclusivity) in the U.S. for that
product, for that indication. During the seven-year period, the FDA may not finally approve any
other applications to market the same drug for the same disease, except in limited circumstances,
such as a showing of clinical superiority to the product with orphan drug exclusivity. Orphan drug
exclusivity does not prevent FDA from approving a different drug for the same disease or condition,
or the same drug for a different disease or condition. Among the other benefits of orphan drug
designation are tax credits for certain research and a waiver of the NDA application user fee.
Pediatric Information
Under the Pediatric Research Equity Act of 2003 (PREA), NDAs or supplements to NDAs must
contain data to assess the safety and effectiveness of the drug for the claimed indications in all
relevant pediatric subpopulations and to support dosing and administration for each pediatric
subpopulation for which the drug is safe and effective. The FDA may grant deferrals for submission
of data or full or partial waivers. Unless otherwise required by regulation, PREA does not apply
to any drug for an indication for which orphan designation has been granted.
Fast Track Designation
Under the fast track program, the sponsor of a new drug candidate may request FDA to designate
the drug candidate as a fast track drug concurrent with or after the filing of the IND for the drug
candidate. FDA must determine if the drug candidate qualifies for fast track designation within
60 days of receipt of the sponsors request. Once FDA designates a drug as a fast track candidate,
it is required to facilitate the development and expedite the review of that drug.
In addition to other benefits such as the ability to use surrogate endpoints and have greater
interactions with FDA, FDA may initiate review of sections of a fast track drugs NDA before the
application is complete. This rolling review is available if the applicant provides and FDA
approves a schedule for the submission of the remaining information and the applicant pays
applicable user fees. However, FDAs time period goal for reviewing an application does not begin
until the last section of the NDA is submitted. Additionally, the fast track designation may be
withdrawn by FDA if FDA believes that the designation is no longer supported by data emerging in
the clinical trial process.
- 19 -
Priority Review
Under FDA policies, a drug candidate is eligible for priority review, or review within a
six-month time frame from the time a complete NDA is accepted for filing, if the drug candidate
provides a significant improvement compared to marketed drugs in the treatment, diagnosis or
prevention of a disease. A fast track designated drug candidate would ordinarily meet FDAs
criteria for priority review.
Accelerated Approval
Under FDAs accelerated approval regulations, FDA may approve a drug for a serious or
life-threatening illness that provides meaningful therapeutic benefit to patients over existing
treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit.
In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a
disease or condition that substitutes for a direct measurement of how a patient feels, functions,
or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical
endpoints. A drug candidate approved on this basis is subject to rigorous post-marketing
compliance requirements, including the completion of Phase 4 or post-approval clinical trials to
confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or
confirm a clinical benefit during post-marketing studies, will allow FDA to withdraw the drug from
the market on an expedited basis. All promotional materials for drug candidates approved under
accelerated regulations are subject to prior review by FDA.
Section 505(b)(2) New Drug Applications
Most drug products obtain FDA marketing approval pursuant to an NDA or an ANDA. A third
alternative is a special type of NDA, commonly referred to as a Section 505(b)(2) NDA, which
enables the applicant to rely, in part, on the safety and efficacy data of an existing product, or
published literature, in support of its application.
505(b)(2) NDAs often provide an alternate path to FDA approval for new or improved
formulations or new uses of previously approved products. Section 505(b)(2) permits the filing of
an NDA where at least some of the information required for approval comes from studies not
conducted by or for the applicant and for which the applicant has not obtained a right of
reference. The applicant may rely upon certain preclinical or clinical studies conducted for an
approved product. The FDA may also require companies to perform additional studies or measurements
to support the change from the approved product. The FDA may then approve the new product
candidate for all or some of the label indications for which the referenced product has been
approved, as well as for any new indication sought by the Section 505(b)(2) applicant.
To the extent that the Section 505(b)(2) applicant is relying on studies conducted for an
already approved product, the applicant is required to certify to the FDA concerning any patents
listed for the approved product in the Orange Book to the same extent that an ANDA applicant would.
Thus approval of a 505(b)(2) NDA can be stalled until all the listed patents claiming the
referenced product have expired, until any non-patent exclusivity, such as exclusivity for
obtaining approval of a new chemical entity, listed in the Orange Book for the referenced product
has expired, and, in the case of a Paragraph 4 certification and subsequent patent infringement
suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement
case that is favorable to the Section 505(b)(2) applicant.
Anti-Kickback, False Claims Laws & The Prescription Drug Marketing Act
In addition to FDA restrictions on marketing of pharmaceutical products, several other types
of state and federal laws have been applied to restrict certain marketing practices in the
pharmaceutical industry in recent years. These laws include anti-kickback statutes and false
claims statutes. The federal healthcare program anti-kickback statute prohibits, among other
things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or
in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any
healthcare item or service reimbursable under Medicare, Medicaid or other federally financed
healthcare programs. This statute has been interpreted to apply to arrangements between
pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on
the other. Violations of the anti-kickback statute are punishable by imprisonment, criminal fines,
civil monetary penalties and exclusion from participation in federal healthcare programs. Although
there are a number of statutory exemptions and regulatory safe harbors protecting certain common
activities from prosecution or other regulatory sanctions, the exemptions and safe harbors are
drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases
or recommendations may be subject to scrutiny if they do not qualify for an exemption or safe
harbor.
Federal false claims laws prohibit any person from knowingly presenting, or causing to be
presented, a false claim for payment to the federal government, or knowingly making, or causing to
be made, a false statement to have a false claim paid. Recently, several pharmaceutical and other
healthcare companies have been prosecuted under these laws for allegedly inflating drug prices they
report to pricing services, which in turn were used by the government to set Medicare and Medicaid
reimbursement rates, and for allegedly providing free product to customers with the expectation
that the customers would bill federal programs for the product. In addition,
certain marketing practices, including off-label promotion, may also violate false claims
laws. The majority of states also have statutes or regulations similar to the federal
anti-kickback law and false claims laws, which apply to items and services reimbursed under
Medicaid and other state programs, or, in several states, apply regardless of the payor.
- 20 -
Physician Drug Samples
As part of the sales and marketing process, pharmaceutical companies frequently provide
samples of approved drugs to physicians. The Prescription Drug Marketing Act (the PDMA) imposes
requirements and limitations upon the provision of drug samples to physicians, as well as prohibits
states from licensing distributors of prescription drugs unless the state licensing program meets
certain federal guidelines that include minimum standards for storage, handling and record keeping.
In addition, the PDMA sets forth civil and criminal penalties for violations.
Regulation Outside the U.S.
In addition to regulations in the U.S., we will be subject to a variety of regulations in
other jurisdictions governing clinical studies and commercial sales and distribution of our
products. Whether or not we obtain FDA approval for a product, we must obtain approval of a
product by the comparable regulatory authorities of countries outside the U.S. before we can
commence clinical studies or marketing of the product in those countries. The approval process
varies from country to country, and the time may be longer or shorter than that required for FDA
approval.
To obtain regulatory approval of a drug under EU regulatory systems, we may submit marketing
authorizations either under a centralized or decentralized procedure. The centralized procedure,
which is compulsory for medicines produced by certain biotechnological processes and optional for
those which are highly innovative, provides for the grant of a single marketing authorization that
is valid for all EU member states. The decentralized procedure provides for approval by one or
more other, or concerned, member states of an assessment of an application performed by one member
state, known as the reference member state. Under this procedure, an applicant submits an
application, or dossier, and related materials including a draft summary of product
characteristics, and draft labeling and package leaflet, to the reference member state and
concerned member states. The reference member state prepares a draft assessment and drafts of the
related materials within 120 days after receipt of a valid application. Within 90 days of
receiving the reference member states assessment report, each concerned member state must decide
whether to approve the assessment report and related materials. If a member state cannot approve
the assessment report and related materials on the grounds of potential serious risk to the public
health, the disputed points may eventually be referred to the European Commission, whose decision
is binding on all member states.
We have obtained an orphan medicinal product designation in the EU from the EMEA for Amigal
for the treatment of Fabry disease and for Plicera for the treatment of Gaucher disease. We
anticipate filing for orphan medicinal product designation from the EMEA for AT2220 for the
treatment of Pompe disease. The EMEA grants orphan drug designation to promote the development of
products that may offer therapeutic benefits for life-threatening or chronically debilitating
conditions affecting not more than five in 10,000 people in the EU. In addition, orphan drug
designation can be granted if the drug is intended for a life threatening, seriously debilitating
or serious and chronic condition in the EU and that without incentives it is unlikely that sales of
the drug in the EU would be sufficient to justify developing the drug. Orphan drug designation is
only available if there is no other satisfactory method approved in the EU of diagnosing,
preventing or treating the condition, or if such a method exists, the proposed orphan drug will be
of significant benefit to patients.
Orphan drug designation provides opportunities for free protocol assistance and fee reductions
for access to the centralized regulatory procedures before and during the first year after
marketing approval, which reductions are not limited to the first year after marketing approval for
small and medium enterprises. In addition, if a product which has an orphan drug designation
subsequently receives EMEA marketing approval for the indication for which it has such designation,
the product is entitled to orphan drug exclusivity, which means the EMEA may not approve any other
application to market the same drug for the same indication for a period of ten years. The
exclusivity period may be reduced to six years if the designation criteria are no longer met,
including where it is shown that the product is sufficiently profitable not to justify maintenance
of market exclusivity. Competitors may receive marketing approval of different drugs or biologics
for the indications for which the orphan product has exclusivity. In order to do so, however, they
must demonstrate that the new drugs or biologics provide a significant benefit over the existing
orphan product. This demonstration of significant benefit may be done at the time of initial
approval or in post-approval studies, depending on the type of marketing authorization granted.
As described in the section entitled Amigal for Fabry Disease Existing Products for the
Treatment of Fabry Disease and Potential Advantages of Amigal, we believe that the orphan
designation of Fabrazyme® and Replagal® in the EU will not prevent us from
obtaining marketing approval of Amigal in the EU for the treatment of Fabry disease because Amigal
will provide significant benefits over Fabrazyme® and Replagal®. Similarly,
we believe the orphan drug designation of Zavesca® in the EU will not prevent us from
obtaining marketing approval of Plicera in the EU for the treatment of Gaucher disease because
Plicera will provide significant benefits over Zavesca®.
- 21 -
Pharmaceutical Pricing and Reimbursement
In the U.S. and markets in other countries, sales of any products for which we receive
regulatory approval for commercial sale will depend in part on the availability of reimbursement
from third party payors. Third party payors include government health administrative authorities,
managed care providers, private health insurers and other organizations. These third party payors
are increasingly challenging the price and examining the cost-effectiveness of medical products and
services. In addition, significant uncertainty exists as to the reimbursement status of newly
approved healthcare product candidates. We may need to conduct expensive pharmacoeconomic studies
in order to demonstrate the cost-effectiveness of our products. Our product candidates may not be
considered cost-effective. Adequate third party reimbursement may not be available to enable us to
maintain price levels sufficient to realize an appropriate return on our investment in product
development.
In 2003, the U.S. government enacted legislation providing a partial prescription drug benefit
for Medicare recipients that began in 2006. Government payment for some of the costs of
prescription drugs may increase demand for any products for which we receive marketing approval.
However, to obtain payments under this program, we would be required to sell products to Medicare
recipients through managed care organizations and other health care delivery systems operating
pursuant to this legislation. These organizations would negotiate prices for our products, which
are likely to be lower than we might otherwise obtain. Federal, state and local governments in the
U.S. continue to consider legislation to limit the growth of healthcare costs, including the cost
of prescription drugs. Future legislation could limit payments for pharmaceuticals such as the
drug candidates that we are developing.
The marketability of any products for which we receive regulatory approval for commercial sale
may suffer if the government and third party payors fail to provide adequate coverage and
reimbursement. In addition, an increasing emphasis on managed care in the U.S. has increased and
will continue to increase the pressure on pharmaceutical pricing.
Employees
As of December 31, 2008, we had 115 full-time employees, 79 of whom were primarily engaged in
research and development activities and 36 of whom provide administrative services. A total of 34
employees have an M.D. or Ph.D. degree. None of our employees are represented by a labor union.
We have not experienced any work stoppages and consider our employee relations to be good.
Our Corporate Information
We were incorporated under the laws of the State of Delaware on February 4, 2002. Our
principal executive offices are located at 6 Cedar Brook Drive, Cranbury, NJ 08512 and our
telephone number is (609) 662-2000. Our website address is www.amicustherapeutics.com. We
make available free of charge on our website our annual, quarterly and current reports, including
amendments to such reports, as soon as reasonably practicable after we electronically file such
material with, or furnish such material to, the U.S. Securities and Exchange Commission.
Information relating to corporate governance at Amicus Therapeutics, including our Code of
Business Conduct for Employees, Executive Officers and Directors, Corporate Governance Guidelines,
and information concerning our senior management team, Board of Directors, including Board
Committees and Committee charters, and transactions in our securities by directors and executive
officers, is available on our website at www.amicustherapeutics.com under the
InvestorsCorporate Governance caption and in print to any stockholder upon request. Any waivers
to the Codes by directors or executive officers and any material amendment to the Code of Business
Conduct and Ethics for Employees, Executive Officers and Directors will be posted promptly on our
website.
We have filed applications to register certain trademarks in the U.S. and abroad, including
AMICUS, AMICUS THERAPEUTICS and design, AMIGAL and PLICERA. We plan to seek FDA approval of
the trademarks Amigal and Plicera for migalastat hydrochloride and isofagomine tartrate,
respectively. Fabrazyme®, Cerezyme®, Myozyme®,
Replagal® and Zavesca® are the property of their respective owners.
- 22 -
Item 1A. RISK FACTORS.
The occurrence of any of the following risks could harm our business, financial condition,
results of operations and/or growth prospects. In that case, the trading price of our common
stock could decline, and you may lose all or part of your investment. Additional risks and
uncertainties not presently known to the Company; or risks that the Company currently considers
immaterial, may also impair the Companys operations.
Risks Related to Our Financial Position and Need for Additional Capital
We have incurred significant operating losses since our inception. We currently do not, and
since inception never have had, any products available for commercial sale. We expect to incur
operating losses for the foreseeable future and may never achieve or maintain profitability.
Since inception, we have incurred significant operating losses. Our net loss attributable
to common stockholders was $39.4 million, $41.5 million and $65.9 million for the years ended
2008, 2007 and 2006 respectively. As of December 31, 2008, we had an accumulated deficit of
$164.2 million. To date, we have financed our operations primarily through private placements
of our redeemable convertible preferred stock, proceeds from our initial public offering and
from our collaboration agreement with Shire. We have devoted substantially all of our efforts
to research and development, including our preclinical development activities and clinical
trials. We have not completed development of any drugs. We expect to continue to incur
significant and increasing operating losses for at least the next several years and we are
unable to predict the extent of any future losses. We anticipate that our expenses will
increase substantially as we:
|
|
|
continue our ongoing Phase 2 extension study of Amigal (migalastat hydrochloride)
for the treatment of Fabry disease and initiate a Phase 3 clinical trial of Amigal; |
|
|
|
|
continue our ongoing Phase 2 clinical trials of Plicera (isofagomine tartrate) for
the treatment of Gaucher disease and potentially conduct additional Phase 2 and
later-stage clinical trials of Plicera; |
|
|
|
|
continue our ongoing Phase 2 clinical trial of AT2220 for the treatment of Pompe
disease and potentially conduct later-stage clinical trials of AT2220; |
|
|
|
|
continue our preclinical studies on the combination use of pharmacological
chaperones and enzyme replacement therapy in Pompe disease; |
|
|
|
|
continue the research and development of additional product candidates; |
|
|
|
|
seek regulatory approvals for our product candidates that successfully complete
clinical trials; |
|
|
|
|
establish a sales and marketing infrastructure to commercialize products for which
we may obtain regulatory approval; and |
|
|
|
|
add operational, financial and management information systems and personnel,
including personnel to support our product development efforts and our obligations as a
public company. |
To become and remain profitable, we must succeed in developing and commercializing drugs
with significant market potential. This will require us to be successful in a range of
challenging activities, including the discovery of product candidates, successful completion of
preclinical testing and clinical trials of our product candidates, obtaining regulatory
approval for these product candidates and manufacturing, marketing and selling those products
for which we may obtain regulatory approval. We are only in the preliminary stages of these
activities. We may never succeed in these activities and may never generate revenues that are
large enough to achieve profitability. Even if we do achieve profitability, we may not be able
to sustain or increase profitability on a quarterly or annual basis. Our failure to become or
remain profitable could depress the market price of our common stock and could impair our
ability to raise capital, expand our business, diversify our product offerings or continue our
operations.
We will need substantial funding and may be unable to raise capital when needed, which would
force us to delay, reduce or eliminate our product development programs or commercialization
efforts.
We expect our research and development expenses to increase in connection with our ongoing
activities, particularly as we initiate a Phase 3 clinical trial of Amigal, continue our Phase
2 clinical trials of Plicera and AT2220, and for any later-stage clinical trials of our product
candidates. In addition, subject to obtaining regulatory approval of any of our product
candidates, we expect to incur significant commercialization expenses for product sales and
marketing, securing commercial quantities of product from our manufacturers and product
distribution. We currently have no additional commitments or arrangements for any additional
financing to fund the research and development and commercial launch of our product candidates
other than our collaboration agreement with Shire.
We believe that the net proceeds from our initial public offering, together with our
existing cash and cash equivalents and marketable securities, and reimbursements of development
costs, excluding potential milestone payments, from Shire will be sufficient to enable us to fund our
operating expenses and capital expenditure requirements until at
least early 2011. Capital may
not be available when needed on terms that are acceptable to us, or at all, especially in light
of the current challenging economic environment. If
adequate funds are not available to us on a timely basis, we may be required to reduce or
eliminate research development programs or commercial efforts.
- 23 -
Our future capital requirements will depend on many factors, including:
|
|
|
the progress and results of our clinical trials of Amigal, Plicera and AT2220; |
|
|
|
|
the scope, progress, results and costs of preclinical development, laboratory
testing and clinical trials for our other product candidates; |
|
|
|
|
our achievement of milestone payments under our collaboration agreement with Shire; |
|
|
|
|
the costs, timing and outcome of regulatory review of our product candidates; |
|
|
|
|
the number and development requirements of other product candidates that we pursue; |
|
|
|
|
the costs of commercialization activities, including product marketing, sales and
distribution; |
|
|
|
|
the emergence of competing technologies and other adverse market developments; |
|
|
|
|
the costs of preparing, filing and prosecuting patent applications and maintaining,
enforcing and defending intellectual property related claims; |
|
|
|
|
the extent to which we acquire or invest in businesses, products and technologies;
and |
|
|
|
|
our ability to establish collaborations and obtain milestone, royalty or other
payments from any such collaborators. |
Any capital that we obtain may not be on terms favorable to us or our stockholders or may
require us to relinquish valuable rights.
Until such time, if ever, as we generate product revenue to finance our operations, we
expect to finance our cash needs through public or private equity offerings and debt
financings, corporate collaboration and licensing arrangements and grants from patient advocacy
groups, foundations and government agencies. If we are able to raise capital by issuing equity
securities, our stockholders will experience dilution. Debt financing, if available, may
involve agreements that include covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or declaring dividends
and may include rights that are senior to the holders of our common stock. Any debt financing
or additional equity that we raise may contain terms, such as liquidation and other
preferences, which are not favorable to us or our stockholders. If we raise capital through
additional collaboration and licensing arrangements with third parties, it may be necessary to
relinquish valuable rights to our technologies, future revenue streams, research programs or
product candidates or to grant licenses on terms that may not be favorable to us or our
stockholders.
Our short operating history may make it difficult to evaluate the success of our business to
date and to assess our future viability.
We are a development stage company. We commenced operations in February 2002. Our
operations to date have been limited to organizing and staffing our company, acquiring and
developing our technology and undertaking preclinical studies and limited clinical trials of
our most advanced product candidates. We have not yet generated any commercial sales for any
of our product candidates. We have not yet demonstrated our ability to successfully complete
large-scale, clinical trials, obtain regulatory approvals, manufacture a commercial-scale
product or arrange for a third party to do so on our behalf, or conduct sales and marketing
activities necessary for successful product commercialization. Consequently, any predictions
about our future success or viability may not be as accurate as they could be if we had a
longer operating history.
In addition, as a new business, we may encounter unforeseen expenses, difficulties,
complications, delays and other known and unknown factors. If we are successful in obtaining
marketing approval for any of our lead product candidates, we will need to transition from a
company with a research focus to a company capable of supporting commercial activities. We may
not be successful in such a transition.
- 24 -
Risks Related to the Development and Commercialization of Our Product Candidates
We depend heavily on the success of our most advanced product candidates, Amigal, Plicera and
AT2220. All of our product candidates are still in either preclinical or clinical development.
Clinical trials of our product candidates may not be successful. If we are unable to
commercialize Amigal, Plicera or AT2220, or experience significant delays in doing so, our
business will be materially harmed.
We have invested a significant portion of our efforts and financial resources in the
development of our most advanced product candidates, Amigal, Plicera and AT2220. Our ability
to generate product revenue, which we do not expect will occur for at least the next several
years, if ever, will depend heavily on the successful development and commercialization of
these product candidates. The successful commercialization of our product candidates will
depend on several factors, including the following:
|
|
|
obtaining supplies of Amigal, Plicera and AT2220 for completion of our clinical
trials on a timely basis; |
|
|
|
|
successful enrollment of patients in our clinical trials on a timely basis; |
|
|
|
|
successful completion of preclinical studies and clinical trials; |
|
|
|
|
obtaining regulatory agreement in the structure and design of our Phase 3 clinical
programs; |
|
|
|
|
obtaining marketing approvals from the United States Food and Drug Administration
(FDA), and similar regulatory authorities outside the U.S.; |
|
|
|
|
establishing commercial-scale manufacturing arrangements with third party
manufacturers whose manufacturing facilities are operated in compliance with current
good manufacturing practice (cGMP) regulations; |
|
|
|
|
launching commercial sales of the product, whether alone or in collaboration with
others; |
|
|
|
|
acceptance of the product by patients, the medical community and third party payors; |
|
|
|
|
competition from other companies and their therapies; |
|
|
|
|
successful protection of our intellectual property rights from competing products in
the U.S. and abroad; and |
|
|
|
|
a continued acceptable safety and efficacy profile of our product candidates
following approval. |
If the market opportunities for our product candidates are smaller than we believe they are,
then our revenues may be adversely affected and our business may suffer.
Each of the diseases that our product candidates are being developed to address is
relatively rare. Our projections of both the number of people who have these diseases, as well
as the subset of people with these diseases who have the potential to benefit from treatment
with our product candidates, are based on estimates.
Currently, most reported estimates of the prevalence of these diseases are based on
studies of small subsets of the population of specific geographic areas, which are then
extrapolated to estimate the prevalence of the diseases in the broader world population. In
addition, as new studies are performed the estimated prevalence of these diseases may change.
In fact, as a result of some recent studies, we believe that previously reported studies do not
accurately account for the prevalence of Fabry disease and that the prevalence of Fabry disease
could be many times higher than previously reported. There can be no assurance that the
prevalence of Fabry disease, Gaucher disease or Pompe disease in the study populations,
particularly in these newer studies, accurately reflects the prevalence of these diseases in
the broader world population.
We estimate the number of potential patients in the broader world population who have
those diseases and may respond to treatment with our product candidates by further
extrapolating estimates of the prevalence of specific types of genetic mutations giving rise to
these diseases. For example, we base our estimate of the percentage of Fabry patients who may
respond to treatment with Amigal on the frequency of missense and other similar mutations that
cause Fabry disease reported in the Human Gene Mutation Database. As a result of recent
studies that estimate that the prevalence of Fabry disease could be many times higher than
previously reported, we believe that the number of patients diagnosed with Fabry disease will
increase and estimate that the number of Fabry patients who may benefit from the use of Amigal
is significantly higher than some previously reported estimates of Fabry disease generally. If
our estimates of the prevalence of Fabry disease, Gaucher disease or Pompe disease or of the
number of patients who may benefit from treatment with our product candidates prove to be
incorrect, the market opportunities for our product candidates may be smaller than we believe
they are, our prospects for generating revenue may be adversely affected and our business may
suffer.
Initial results from a clinical trial do not ensure that the trial will be successful and
success in early stage clinical trials does not ensure success in later-stage clinical trials.
We will only obtain regulatory approval to commercialize a product candidate if we can
demonstrate to the satisfaction of the FDA or the applicable non-U.S. regulatory authority, in
well-designed and conducted clinical trials, that the product candidate is safe and effective
and otherwise meets the appropriate standards required for approval for a particular
indication. Clinical trials are lengthy, complex and extremely expensive processes with
uncertain results. A failure of one or more of our clinical trials may occur at any stage of
testing. We have limited experience in conducting and managing the clinical trials necessary
to obtain regulatory approvals, including approval by the FDA.
Our efforts to develop all of our product candidates are at an early stage. Success in
preclinical testing and early clinical trials does not ensure that later clinical trials will
be successful, and initial results from a clinical trial do not necessarily predict final
results. We cannot be assured that these trials will ultimately be successful.
- 25 -
Patients may not be compliant with their dosing regimen or trial protocols or they may
withdraw from the study at any time for any reason. We note that a patient who started dosing
in March 2006 in the Phase 2 clinical trials for Amigal for the treatment of Fabry disease
elected to withdraw from the study shortly after initial dosing. This patient had a history of
hypertension and discontinued study treatment due to increased blood pressure, which was reported by the
investigator as possibly related to the study drug.
Even if our early stage clinical trials are successful, we will need to conduct additional
clinical trials with larger numbers of patients receiving the drug for longer periods for all
of our product candidates before we are able to seek approvals to market and sell these product
candidates from the FDA and regulatory authorities outside the U.S. In addition, each of our
product candidates is based on our pharmacological chaperone technology. To date, we are not
aware that any product based on chaperone technology has been approved by the FDA. As a
result, we cannot be sure what endpoints the FDA will require us to measure in later-stage
clinical trials of our product candidates. We are aware that the currently available enzyme
replacement therapy for the treatment of Fabry disease was approved by the FDA based on an
endpoint measuring GL-3 levels in a specific type of kidney cell. We cannot be certain that
the FDA will permit the use of this endpoint in our Phase 3 trials of Amigal. If the FDA
requires different endpoints than the endpoints we anticipate using, it may be more difficult
for us to obtain, or we may be delayed in obtaining, FDA approval of our product candidates.
If we are not successful in commercializing any of our lead product candidates, or are
significantly delayed in doing so, our business will be materially harmed.
We have limited experience in conducting and managing the preclinical development activities
and clinical trials necessary to obtain regulatory approvals, including approval by the FDA.
We have limited experience in conducting and managing the preclinical development
activities and clinical trials necessary to obtain regulatory approvals, including approval by
the FDA. To date, we have only three lead product candidates: Amigal, Plicera and AT2220. We
have not obtained regulatory approval nor commercialized any of these or any other product
candidates. We have completed Phase 2 clinical trials for Amigal and are currently conducting
Phase 2 clinical trials for Plicera and AT2220 but have not yet initiated a Phase 3 clinical
trial for any of our product candidates. Additionally, we are conducting preclinical studies
on the combination use of pharmacological chaperones and enzyme replacement therapy in Pompe
disease. Our limited experience might prevent us from successfully designing or implementing a
clinical trial. We have limited experience in conducting and managing the application process
necessary to obtain regulatory approvals and we might not be able to demonstrate that our
product candidates meet the appropriate standards for regulatory approval. If we are not
successful in conducting and managing our preclinical development activities or clinical trials
or obtaining regulatory approvals, we might not be able to commercialize our lead product
candidates, or might be significantly delayed in doing so, which will materially harm our
business.
We may find it difficult to enroll patients in our clinical trials.
Each of the diseases that our lead product candidates are intended to treat is relatively
rare and we expect only a subset of the patients with these diseases to be eligible for our
clinical trials. Given that each of our product candidates is in the early stages of required
testing, we may not be able to initiate or continue clinical trials for each or all of our
product candidates if we are unable to locate a sufficient number of eligible patients to
participate in the clinical trials required by the FDA or other non-U.S. regulatory agencies.
The requirements of our clinical testing mandate that a patient cannot be involved in another
clinical trial for the same indication. We are aware that our competitors have ongoing
clinical trials for products that are competitive with our product candidates and patients who
would otherwise be eligible for our clinical trials may be involved in such testing, rendering
them unavailable for testing of our product candidates. Additionally, many patients with Fabry
disease, Gaucher disease and Pompe disease may already be receiving existing therapies, such as
enzyme replacement therapy, which would render them ineligible for our current clinical trials
if they are not willing to stop receiving such therapies. Further, if we are required to
include patients in our clinical trials who have never received enzyme replacement therapy, we
may experience yet further difficulty and delay enrolling patients in our trials. Our
inability to enroll a sufficient number of patients for any of our current or future clinical
trials would result in significant delays or may require us to abandon one or more clinical
trials altogether.
If our preclinical studies do not produce positive results, if our clinical trials are delayed
or if serious side effects are identified during drug development, we may experience delays,
incur additional costs and ultimately be unable to commercialize our product candidates.
Before obtaining regulatory approval for the sale of our product candidates, we must
conduct, at our own expense, extensive preclinical tests to demonstrate the safety of our
product candidates in animals, and clinical trials to demonstrate the safety and efficacy of
our product candidates in humans. Preclinical and clinical testing is expensive, difficult to
design and implement and can take many years to complete. A failure of one or more of our
preclinical studies or clinical trials can occur at any stage of testing. We may experience
numerous unforeseen events during, or as a result of, preclinical testing and the clinical
trial process that could delay or prevent our ability to obtain regulatory approval or
commercialize our product candidates, including:
|
|
|
our preclinical tests or clinical trials may produce negative or inconclusive
results, and we may decide, or regulators may require us, to conduct additional
preclinical testing or clinical trials or we may abandon projects that we expect to be
promising; |
|
|
|
|
regulators or institutional review boards may not authorize us to commence a
clinical trial or conduct a clinical trial at a prospective trial site; |
- 26 -
|
|
|
conditions imposed on us by the FDA or any non-U.S. regulatory authority regarding
the scope or design of our clinical trials or may require us to resubmit our clinical
trial protocols to institutional review boards for re-inspection due to changes in the
regulatory environment; |
|
|
|
|
the number of patients required for our clinical trials may be larger than we
anticipate or participants may drop out of our clinical trials at a higher rate than we
anticipate; |
|
|
|
|
our third party contractors or clinical investigators may fail to comply with
regulatory requirements or fail to meet their contractual obligations to us in a timely
manner; |
|
|
|
|
we might have to suspend or terminate one or more of our clinical trials if we, the
regulators or the institutional review boards determine that the participants are being
exposed to unacceptable health risks; |
|
|
|
|
regulators or institutional review boards may require that we hold, suspend or
terminate clinical research for various reasons, including noncompliance with
regulatory requirements; |
|
|
|
|
the cost of our clinical trials may be greater than we anticipate; |
|
|
|
|
the supply or quality of our product candidates or other materials necessary to
conduct our clinical trials may be insufficient or inadequate or we may not be able to
reach agreements on acceptable terms with prospective clinical research organizations;
and |
|
|
|
|
the effects of our product candidates may not be the desired effects or may include
undesirable side effects or the product candidates may have other unexpected
characteristics. |
If we are required to conduct additional clinical trials or other testing of our product
candidates beyond those that we currently contemplate, if we are unable to successfully
complete our clinical trials or other testing, if the results of these trials or tests are not
positive or are only modestly positive or if there are safety concerns, we may:
|
|
|
be delayed in obtaining, or may not be able to obtain, marketing approval for one or
more of our product candidates; |
|
|
|
|
obtain approval for indications that are not as broad as intended or entirely
different than those indications for which we sought approval; or |
|
|
|
|
have the product removed from the market after obtaining marketing approval. |
Our product development costs will also increase if we experience delays in testing or
approvals. We do not know whether any preclinical tests or clinical trials will be initiated
as planned, will need to be restructured or will be completed on schedule, if at all.
Significant preclinical or clinical trial delays also could shorten the patent protection
period during which we may have the exclusive right to commercialize our product candidates.
Such delays could allow our competitors to bring products to market before we do and impair our
ability to commercialize our products or product candidates.
The commercial success of any product candidates that we may develop, including Amigal, Plicera
and AT2220, will depend upon the degree of market acceptance by physicians, patients, third
party payors and others in the medical community.
Any products that we bring to the market, including Amigal, Plicera and AT2220, if they
receive marketing approval, may not gain market acceptance by physicians, patients, third party
payors and others in the medical community. If these products do not achieve an adequate level
of acceptance, we may not generate significant product revenue and we may not become
profitable. The degree of market acceptance of our product candidates, if approved for
commercial sale, will depend on a number of factors, including:
|
|
|
the prevalence and severity of any side effects, including any limitations or
warnings contained in a products approved labeling; |
|
|
|
|
the efficacy and potential advantages over alternative treatments; |
|
|
|
|
the pricing of our product candidates; |
|
|
|
|
relative convenience and ease of administration; |
|
|
|
|
the willingness of the target patient population to try new therapies and of
physicians to prescribe these therapies; |
|
|
|
|
the strength of marketing and distribution support and timing of market introduction
of competitive products; |
|
|
|
|
publicity concerning our products or competing products and treatments; and |
|
|
|
|
sufficient third party insurance coverage or reimbursement. |
Even if a potential product displays a favorable efficacy and safety profile in
preclinical and clinical trials, market acceptance of the product will not be known until after
it is launched. Our efforts to educate the medical community and third party payors on the
benefits of our product candidates may require significant resources and may never be
successful. Such efforts to educate the marketplace may require more resources than are
required by the conventional technologies marketed by our competitors.
- 27 -
If we are unable to obtain adequate reimbursement from governments or third party payors for
any products that we may develop or if we are unable to obtain acceptable prices for those
products, our prospects for generating revenue and achieving profitability will suffer.
Our prospects for generating revenue and achieving profitability will depend heavily upon
the availability of adequate reimbursement for the use of our approved product candidates from
governmental and other third party payors, both in the U.S. and in other markets.
Reimbursement by a third party payor may depend upon a number of factors, including the third
party payors determination that use of a product is:
|
|
|
a covered benefit under its health plan; |
|
|
|
|
safe, effective and medically necessary; |
|
|
|
|
appropriate for the specific patient; |
|
|
|
|
cost-effective; and |
|
|
|
|
neither experimental nor investigational. |
Obtaining reimbursement approval for a product from each government or other third party
payor is a time consuming and costly process that could require us to provide supporting
scientific, clinical and cost effectiveness data for the use of our products to each payor. We
may not be able to provide data sufficient to gain acceptance with respect to reimbursement or
we might need to conduct post-marketing studies in order to demonstrate the cost-effectiveness
of any future products to such payors satisfaction. Such studies might require us to commit a
significant amount of management time and financial and other resources. Even when a payor
determines that a product is eligible for reimbursement, the payor may impose coverage
limitations that preclude payment for some uses that are approved by the FDA or non-U.S.
regulatory authorities. In addition, there is a risk that full reimbursement may not be
available for high priced products. Moreover, eligibility for coverage does not imply that any
product will be reimbursed in all cases or at a rate that allows us to make a profit or even
cover our costs. Interim payments for new products, if applicable, may also not be sufficient
to cover our costs and may not be made permanent.
A primary trend in the U.S. healthcare industry and elsewhere is toward cost containment.
We expect recent changes in the Medicare program and increasing emphasis on managed care to
continue to put pressure on pharmaceutical product pricing. For example, the Medicare
Prescription Drug Improvement and Modernization Act of 2003 provides a new Medicare
prescription drug benefit that began in 2006 and mandates other reforms. While we cannot
predict the full outcome of the implementation of this legislation, it is possible that the new
Medicare prescription drug benefit, which will be managed by private health insurers and other
managed care organizations, will result in additional government reimbursement for prescription
drugs, which may make some prescription drugs more affordable but may further exacerbate
industry wide pressure to reduce prescription drug prices. If one or more of our product
candidates reaches commercialization, such changes may have a significant impact on our ability
to set a price we believe is fair for our products and may affect our ability to generate
revenue and achieve or maintain profitability.
Governments outside the U.S. tend to impose strict price controls and reimbursement approval
policies, which may adversely affect our prospects for generating revenue.
In some countries, particularly European Union (EU) countries, the pricing of prescription
pharmaceuticals is subject to governmental control. In these countries, pricing negotiations
with governmental authorities can take considerable time (6 to 12 months or longer) after the
receipt of marketing approval for a product. To obtain reimbursement or pricing approval in
some countries, we may be required to conduct a clinical trial that compares the cost
effectiveness of our product candidate to other available therapies. If reimbursement of our
products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory
levels, our prospects for generating revenue, if any, could be adversely affected and our
business may suffer.
If we are unable to establish sales and marketing capabilities or enter into agreements with
third parties to market and sell our product candidates, we may be unable to generate product
revenue.
At present, we have no sales or marketing personnel. In order to commercialize any of our
product candidates, we must either acquire or internally develop sales, marketing and
distribution capabilities, or enter into collaborations with partners to perform these services
for us. We may not be able to establish sales and distribution partnerships on acceptable
terms or at all, and if we do enter into a distribution arrangement, our success will be
dependent upon the performance of our partner.
In the event that we attempt to acquire or develop our own in-house sales, marketing and
distribution capabilities, factors that may inhibit our efforts to commercialize our products
without strategic partners or licensees include:
|
|
|
our inability to recruit and retain adequate numbers of effective sales and
marketing personnel; |
|
|
|
|
the inability of sales personnel to obtain access to or persuade adequate numbers of
physicians to prescribe our products; |
- 28 -
|
|
|
the lack of complementary products to be offered by our sales personnel, which may
put us at a competitive disadvantage against companies with broader product lines; |
|
|
|
|
unforeseen costs associated with creating our own sales and marketing team or with
entering into a partnering agreement with an independent sales and marketing
organization; and |
|
|
|
|
efforts by our competitors to commercialize products at or about the time when our
product candidates would be coming to market. |
We may co-promote our product candidates in various markets with pharmaceutical and
biotechnology companies in instances where we believe that a larger sales and marketing
presence will expand the market or accelerate penetration. If we do enter into arrangements
with third parties to perform sales and marketing services, our product revenues will be lower
than if we directly sold and marketed our products and any revenues received under such
arrangements will depend on the skills and efforts of others.
We may not be successful in entering into distribution arrangements and marketing
alliances with third parties. Our failure to enter into these arrangements on favorable terms
could delay or impair our ability to commercialize our product candidates and could increase
our costs of commercialization. Dependence on distribution arrangements and marketing
alliances to commercialize our product candidates will subject us to a number of risks,
including:
|
|
|
we may not be able to control the amount and timing of resources that our
distributors may devote to the commercialization of our product candidates; |
|
|
|
|
our distributors may experience financial difficulties; |
|
|
|
|
business combinations or significant changes in a distributors business strategy
may also adversely affect a distributors willingness or ability to complete its
obligations under any arrangement; and |
|
|
|
|
these arrangements are often terminated or allowed to expire, which could interrupt
the marketing and sales of a product and decrease our revenue. |
If we are unable to establish adequate sales, marketing and distribution capabilities,
whether independently or with third parties, we may not be able to generate product revenue and
may not become profitable.
Product liability lawsuits against us could cause us to incur substantial liabilities and to
limit commercialization of any products that we may develop.
We face an inherent risk of product liability exposure related to the testing of our
product candidates in human clinical trials and will face an even greater risk if we
commercially sell any products that we may develop and which are approved for sale. We may be
exposed to product liability claims and product recalls, including those which may arise from
misuse or malfunction of, or design flaws in, such products, whether or not such problems
directly relate to the products and services we have provided. If we cannot successfully
defend ourselves against claims that our product candidates or products caused injuries, we
will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims
may result in:
|
|
|
decreased demand for any product candidates or products that we may develop; |
|
|
|
|
damage to our reputation; |
|
|
|
|
regulatory investigations that could require costly recalls or product
modifications; |
|
|
|
|
withdrawal of clinical trial participants; |
|
|
|
|
costs to defend the related litigation; |
|
|
|
|
substantial monetary awards to trial participants or patients, including awards that
substantially exceed our product liability insurance, which we would then be required
to pay from other sources, if available, and would damage our ability to obtain
liability insurance at reasonable costs, or at all, in the future; |
|
|
|
|
loss of revenue; |
|
|
|
|
the diversion of managements attention from managing our business; and |
|
|
|
|
the inability to commercialize any products that we may develop. |
We have liability insurance policies for our clinical trials in the geographies in which
we are conducting trials. The amount of insurance that we currently hold may not be adequate
to cover all liabilities that we may incur. Insurance coverage is increasingly expensive. We
may not be able to maintain insurance coverage at a reasonable cost and we may not be able to
obtain insurance coverage that will be adequate to satisfy any liability that may arise. On
occasion, large judgments have been awarded in class action lawsuits based on drugs that had
unanticipated side effects. A successful product liability claim or a series of claims brought
against us could cause our stock price to fall and, if judgments exceed our insurance coverage,
could decrease our available cash and adversely affect our business.
- 29 -
We face substantial competition which may result in others discovering, developing or
commercializing products before or more successfully than we do.
The development and commercialization of new drugs is highly competitive and competition
is expected to increase. We face competition with respect to our current product candidates
and any products we may seek to develop or commercialize in the future from major
pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies
worldwide. For example, several large pharmaceutical and biotechnology companies currently
market and sell products for the treatment of Fabry disease. These products include Genzyme
Corporations Fabrazyme® and Shire plcs Replagal®. In addition, Genzyme
Corporation and Actelion, Ltd. market and sell Cerezyme® and Zavesca®,
respectively, for the treatment of Gaucher disease, and Genzyme Corporation markets and sells
Myozyme® for the treatment of Pompe disease. We are also aware of other enzyme
replacement and substrate reduction therapies in development by third parties.
Potential competitors also include academic institutions, government agencies and other
public and private research organizations that conduct research, seek patent protection and
establish collaborative arrangements for research, development, manufacturing and
commercialization. Our competitors may develop products that are more effective, safer, more
convenient or less costly than any that we are developing or that would render our product
candidates obsolete or noncompetitive. Our competitors may also obtain FDA or other regulatory
approval for their products more rapidly than we may obtain approval for ours. We may also
face competition from off-label use of other approved therapies. There can be no assurance
that developments by others that will not render our product candidates obsolete or
noncompetitive either during the research phase or once the products reach commercialization.
We believe that many competitors, including academic institutions, government agencies,
public and private research organizations, large pharmaceutical companies and smaller more
focused companies, are attempting to develop therapies for many of our target indications.
Many of our competitors have significantly greater financial resources and expertise in
research and development, manufacturing, preclinical testing, conducting clinical trials,
obtaining regulatory approvals, prosecuting intellectual property rights and marketing approved
products than we do. Smaller and other early stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with large and established
companies. These third parties compete with us in recruiting and retaining qualified
scientific and management personnel, establishing clinical trial sites and patient registration
for clinical trials, as well as in acquiring technologies complementary to or necessary for our
programs or advantageous to our business. In addition, if we obtain regulatory approvals for
our products, manufacturing efficiency and marketing capabilities are likely to be significant
competitive factors. We currently have no commercial manufacturing capability, sales force or
marketing infrastructure. Further, many of our competitors have substantial resources and
expertise in conducting collaborative arrangements, sourcing in-licensing arrangements and
acquiring new business lines or businesses that are greater than our own.
Our business activities involve the use of hazardous materials, which require compliance with
environmental and occupational safety laws regulating the use of such materials. If we violate
these laws, we could be subject to significant fines, liabilities or other adverse
consequences.
Our research and development programs involve the controlled use of hazardous materials,
including microbial agents, corrosive, explosive and flammable chemicals and other hazardous
compounds in addition to certain biological hazardous waste. Ultimately, the activities of our
third party product manufacturers when a product candidate reaches commercialization will also
require the use of hazardous materials. Accordingly, we are subject to federal, state and
local laws governing the use, handling and disposal of these materials. Although we believe
that our safety procedures for handling and disposing of these materials comply in all material
respects with the standards prescribed by local, state and federal regulations, we cannot
completely eliminate the risk of accidental contamination or injury from these materials. In
addition, our collaborators may not comply with these laws. In the event of an accident or
failure to comply with environmental laws, we could be held liable for damages that result, and
any such liability could exceed our assets and resources or we could be subject to limitations
or stoppages related to our use of these materials which may lead to an interruption of our
business operations or those of our third party contractors. While we believe that our
existing insurance coverage is generally adequate for our normal handling of these hazardous
materials, it may not be sufficient to cover pollution conditions or other extraordinary or
unanticipated events. Furthermore, an accident could damage or force us to shut down our
operations. Changes in environmental laws may impose costly compliance requirements on us or
otherwise subject us to future liabilities and additional laws relating to the management,
handling, generation, manufacture, transportation, storage, use and disposal of materials used
in or generated by the manufacture of our products or related to our clinical trials. In
addition, we cannot predict the effect that these potential requirements may have on us, our
suppliers and contractors or our customers.
- 30 -
Risks Related to Our Dependence on Third Parties
Use of third parties to manufacture our product candidates may increase the risk that we will
not have sufficient quantities of our product candidates or such quantities at an acceptable
cost, and clinical development and commercialization of our product candidates could be
delayed, prevented or impaired.
We do not own or operate manufacturing facilities for clinical or commercial production of
our product candidates. We have limited personnel with experience in drug manufacturing and we
lack the resources and the capabilities to manufacture any of our product candidates on a
clinical or commercial scale. We currently outsource all manufacturing and packaging of our
preclinical and clinical product candidates and products to third parties. The manufacture of
pharmaceutical products requires significant expertise and capital investment, including the
development of advanced manufacturing techniques and process controls. Manufacturers of
pharmaceutical products often encounter difficulties in production, particularly in scaling up
initial production. These problems include difficulties with production costs and yields and
quality control, including stability of the product candidate.
We do not currently have any agreements with third party manufacturers for the long-term
commercial supply of any of our product candidates. We may be unable to enter into agreements
for commercial supply with third party manufacturers, or may be unable to do so on acceptable
terms. Even if we enter into these agreements, the manufacturers of each product candidate
will be single source suppliers to us for a significant period of time.
Reliance on third party manufacturers entails risks, to which we would not be subject if
we manufactured product candidates or products ourselves, including:
|
|
|
reliance on the third party for regulatory compliance and quality assurance; |
|
|
|
|
limitations on supply availability resulting from capacity and scheduling
constraints of the third parties; |
|
|
|
|
impact on our reputation in the marketplace if manufacturers of our products, once
commercialized, fail to meet the demands of our customers; |
|
|
|
|
the possible breach of the manufacturing agreement by the third party because of
factors beyond our control; and |
|
|
|
|
the possible termination or non-renewal of the agreement by the third party, based
on its own business priorities, at a time that is costly or inconvenient for us. |
The failure of any of our contract manufacturers to maintain high manufacturing standards
could result in injury or death of clinical trial participants or patients using products.
Such failure could also result in product liability claims, product recalls, product seizures
or withdrawals, delays or failures in testing or delivery, cost overruns or other problems that
could seriously harm our business or profitability.
Our contract manufacturers will be required to adhere to FDA regulations setting forth
cGMP. These regulations cover all aspects of the manufacturing, testing, quality control and
recordkeeping relating to our product candidates and any products that we may commercialize.
Our manufacturers may not be able to comply with cGMP regulations or similar regulatory
requirements outside the U.S. Our manufacturers are subject to unannounced inspections by the
FDA, state regulators and similar regulators outside the U.S. Our failure, or the failure of
our third party manufacturers, to comply with applicable regulations could result in sanctions
being imposed on us, including fines, injunctions, civil penalties, failure of regulatory
authorities to grant marketing approval of our product candidates, delays, suspension or
withdrawal of approvals, license revocation, seizures or recalls of product candidates or
products, operating restrictions and criminal prosecutions, any of which could significantly
and adversely affect regulatory approval and supplies of our product candidates.
Our product candidates and any products that we may develop may compete with other product
candidates and products for access to manufacturing facilities. There are a limited number of
manufacturers that operate under cGMP regulations and that are both capable of manufacturing
for us and willing to do so. If the third parties that we engage to manufacture products for
our preclinical tests and clinical trials should cease to continue to do so for any reason, we
likely would experience delays in advancing these trials while we identify and qualify
replacement suppliers and we may be unable to obtain replacement supplies on terms that are
favorable to us. Later relocation to another manufacturer will also require notification,
review and other regulatory approvals from the FDA and other regulators and will subject our
production to further cost and instability in the availability of our product candidates. In
addition, if we are not able to obtain adequate supplies of our product candidates or the drug
substances used to manufacture them, it will be more difficult for us to develop our product
candidates and compete effectively.
Our current and anticipated future dependence upon others for the manufacture of our
product candidates may adversely affect our future profit margins and our ability to develop
product candidates and commercialize any products that obtain regulatory approval on a timely
and competitive basis.
- 31 -
Materials necessary to manufacture our product candidates may not be available on commercially
reasonable terms, or at all, which may delay the development and commercialization of our
product candidates.
We rely on the manufacturers of our product candidates to purchase from third party
suppliers the materials necessary to produce the compounds for our preclinical and clinical
studies and will rely on these other manufacturers for commercial distribution if we obtain
marketing approval for any of our product candidates. Suppliers may not sell these materials
to our manufacturers at the time we need them or on commercially reasonable terms and all such
prices are susceptible to fluctuations in price and availability due to transportation costs,
government regulations, price controls and changes in economic climate or other foreseen
circumstances. We do not have any control over the process or timing of the acquisition of
these materials by our manufacturers. Moreover, we currently do not have any agreements for
the commercial production of these materials. If our manufacturers are unable to obtain these
materials for our preclinical and clinical studies, product testing and potential regulatory
approval of our product candidates would be delayed, significantly impacting our ability to
develop our product candidates. If our manufacturers or we are unable to purchase these
materials after regulatory approval has been obtained for our product candidates, the
commercial launch of our product candidates would be delayed or there would be a shortage in
supply, which would materially affect our ability to generate revenues from the sale of our
product candidates.
We rely on third parties to conduct certain preclinical development activities and our clinical
trials and those third parties may not perform satisfactorily, including failing to meet
established deadlines for the completion of such activities and trials.
We do not independently conduct certain preclinical development activities of our product
candidates, such as long-term safety studies in animals, or clinical trials for our product
candidates. We rely on, or work in conjunction with, third parties, such as contract research
organizations, medical institutions and clinical investigators, to perform this function. Our
reliance on these third parties for preclinical and clinical development activities reduces our
control over these activities. We are responsible for ensuring that each of our preclinical
development activities and our clinical trials is conducted in accordance with the applicable
general investigational plan and protocols, however, we have no direct control over these
researchers or contractors (except by contract), as they are not our employees. Moreover, the
FDA requires us to comply with standards, commonly referred to as Good Clinical Practices for
conducting, recording and reporting the results of our preclinical development activities and
our clinical trials to assure that data and reported results are credible and accurate and that
the rights, safety and confidentiality of trial participants are protected. Our reliance on
third parties that we do not control does not relieve us of these responsibilities and
requirements. Furthermore, these third parties may also have relationships with other
entities, some of which may be our competitors. If these third parties do not successfully
carry out their contractual duties, meet expected deadlines or conduct our preclinical
development activities or our clinical trials in accordance with regulatory requirements or our
stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory
approvals for our product candidates and will not be able to, or may be delayed in our efforts
to, successfully commercialize our product candidates. Moreover, these third parties may be
bought by other entities or they may go out of business, thereby preventing them from meeting
their contractual obligations.
We also rely on other third parties to store and distribute drug supplies for our
preclinical development activities and our clinical trials. Any performance failure on the
part of our existing or future distributors could delay clinical development or regulatory
approval of our product candidates or commercialization of our products, producing additional
losses and depriving us of potential product revenue.
Extensions, delays, suspensions or terminations of our preclinical development activities
and our clinical trials as a result of the performance of our independent clinical
investigators and contract research organizations will delay, and make more costly, regulatory
approval for any product candidates that we may develop. Any change in a contract research
organization during an ongoing preclinical development activity or clinical trial could
seriously delay that trial and potentially compromise the results of the activity or trial.
We may not be successful in maintaining or establishing collaborations, which could adversely
affect our ability to develop and, particularly in international markets, commercialize
products.
For each of our product candidates, we are collaborating with physicians, patient advocacy
groups, foundations and government agencies in order to assist with the development of our
products. We plan to pursue similar activities in future programs and plan to evaluate the
merits of retaining commercialization rights for ourselves or entering into selective
collaboration arrangements with leading pharmaceutical or biotechnology companies. We also may
seek to establish collaborations for the sales, marketing and distribution of our products
outside the U.S. If we elect to seek collaborators in the future but are unable to reach
agreements with suitable collaborators, we may fail to meet our business objectives for the
affected product or program. We face, and will continue to face, significant competition in
seeking appropriate collaborators. Moreover, collaboration arrangements are complex and time
consuming to negotiate, document and implement. We may not be successful in our efforts, if
any, to establish and implement collaborations or other alternative arrangements. The terms of
any collaboration or other arrangements that we establish, if any, may not be favorable to us.
- 32 -
Any collaboration that we enter into may not be successful. The success of our
collaboration arrangements, if any, will depend heavily on the efforts and activities of our
collaborators. It is likely that any collaborators of ours will have significant discretion in
determining the efforts and resources that they will apply to these collaborations. The risks
that we may be subject to in possible future collaborations include the following:
|
|
|
our collaboration agreements are likely to be for fixed terms and subject to
termination by our collaborators in the event of a material breach or lack of
scientific progress by us; |
|
|
|
|
our collaborators are likely to have the first right to maintain or defend our
intellectual property rights and, although we would likely have the right to assume
the maintenance and defense of our intellectual property rights if our collaborators
do not, our ability to do so may be compromised by our collaborators acts or
omissions; and |
|
|
|
|
our collaborators may utilize our intellectual property rights in such a way as
to invite litigation that could jeopardize or invalidate our intellectual property
rights or expose us to potential liability. |
Collaborations with pharmaceutical companies and other third parties often are terminated
or allowed to expire by the other party. Such terminations or expirations may adversely affect
us financially and could harm our business reputation in the event we elect to pursue
collaborations that ultimately expire or are terminated.
Our collaboration with Shire Pharmaceuticals Ireland Ltd. (Shire) is important to our business.
If this collaboration is unsuccessful or if Shire terminates this collaboration or its
participation in individual programs, our business could be adversely affected.
In November 2007, we entered into a license and collaboration agreement with Shire to jointly
develop our three lead pharmacological chaperone compounds for lysosomal storage disorders: Amigal,
Plicera and AT2220. Under this agreement, Shire will contribute 50% of joint development costs
toward global approval, we are eligible to receive an additional $150 million if certain clinical
and regulatory milestones are met; and we are also eligible to receive up to $240 million in
sales-based milestones, as well as tiered double-digit royalties.
Shire may elect to terminate this collaboration or its participation in the development of
individual programs under certain circumstances or in the event of a material uncured breach by
us. We expect that a substantial amount of the funding for our operations will come from this
collaboration. If this collaboration is unsuccessful, or if it is terminated in whole or in
part, our business could be adversely affected and we could require additional financing
earlier than we currently expect.
Risks Related to Our Intellectual Property
If we are unable to obtain and maintain protection for the intellectual property relating to
our technology and products, the value of our technology and products will be adversely
affected.
Our success will depend in large part on our ability to obtain and maintain protection in
the U.S. and other countries for the intellectual property covering or incorporated into our
technology and products. The patent situation in the field of biotechnology and
pharmaceuticals generally is highly uncertain and involves complex legal, technical, scientific
and factual questions. We may not be able to obtain additional issued patents relating to our
technology or products. Even if issued, patents issued to us or our licensors may be
challenged, narrowed, invalidated, held to be unenforceable or circumvented, which could limit
our ability to stop competitors from marketing similar products or reduce the term of patent
protection we may have for our products. Changes in either patent laws or in interpretations
of patent laws in the U.S. and other countries may diminish the value of our intellectual
property or narrow the scope of our patent protection.
The degree of future protection for our proprietary rights is uncertain, and we cannot
ensure that:
|
|
|
we or our licensors were the first to make the inventions covered by each of our
pending patent applications; |
|
|
|
|
we or our licensors were the first to file patent applications for these inventions; |
|
|
|
|
others will not independently develop similar or alternative technologies or
duplicate any of our technologies; |
|
|
|
|
any patents issued to us or our licensors will provide a basis for commercially
viable products, will provide us with any competitive advantages or will not be
challenged by third parties; |
|
|
|
|
we will develop additional proprietary technologies that are patentable; |
|
|
|
|
we will file patent applications for new proprietary technologies promptly or at
all; |
|
|
|
|
our patents will not expire prior to or shortly after commencing commercialization
of a product; or |
|
|
|
|
the patents of others will not have a negative effect on our ability to do business. |
- 33 -
In addition, we cannot be assured that any of our pending patent applications will result
in issued patents. In particular, we have filed patent applications in the European Patent
Office and other countries outside the U.S. that have not been issued as patents. These
pending applications include, among others, the patent applications we license pursuant to a
license agreement with Mount Sinai School of Medicine of New York University. If patents are
not issued in respect of our pending patent applications, we may not be able to stop
competitors from marketing similar products in Europe and other countries in which we do not
have issued patents.
The patents and patent applications that we own or have licensed relating to use of Amigal
expire in 2018 in the U.S. and the foreign counterparts, if issued, would expire in 2019.
Patents that we own or have licensed relating to Plicera expire between 2015 and 2016 in the
U.S. and in 2015 outside of the U.S. for composition of matter, and in 2018 in the U.S. for
methods of use. We currently have no issued patents or pending applications covering methods
of using Plicera outside of the U.S. Patents and patent applications that we own or have
licensed relating to the use of AT2220 expire in 2018 in the U.S. Further, we currently do not
have composition of matter or method of use protection for AT2220 outside of the U.S. Where we
lack patent protection outside of the U.S., we intend to seek orphan medicinal product
designation and to rely on statutory data exclusivity provisions in jurisdictions outside the
U.S. where such protections are available, including Europe. If we are unable to obtain such
protection outside the U.S., our competitors may be free to use and sell Plicera and/or AT2220
outside of the U.S. and there will be no liability for infringement or any other barrier to
competition. The patent rights that we own or have licensed relating to our product candidates
are limited in ways that may affect our ability to exclude third parties from competing against
us if we obtain regulatory approval to market these product candidates. In particular:
|
|
|
We do not hold composition of matter patents covering Amigal and AT2220, two of our
three lead product candidates. Composition of matter patents can provide protection
for pharmaceutical products to the extent that the specifically covered compositions
are important. For our product candidates for which we do not hold composition of
matter patents, competitors who obtain the requisite regulatory approval can offer
products with the same composition as our products so long as the competitors do not
infringe any method of use patents that we may hold. |
|
|
|
|
For some of our product candidates, the principal patent protection that covers or
those we expect will cover, our product candidate is a method of use patent. This type
of patent only protects the product when used or sold for the specified method.
However, this type of patent does not limit a competitor from making and marketing a
product that is identical to our product that is labeled for an indication that is
outside of the patented method, or for which there is a substantial use in commerce
outside the patented method. |
Moreover, physicians may prescribe such a competitive identical product for indications
other than the one for which the product has been approved, or off-label indications, that are
covered by the applicable patents. Although such off-label prescriptions may infringe or
induce infringement of method of use patents, the practice is common and such infringement is
difficult to prevent or prosecute.
Our patents also may not afford us protection against competitors with similar technology.
Because patent applications in the U.S. and many other jurisdictions are typically not
published until 18 months after filing, or in some cases not at all, and because publications
of discoveries in the scientific literature often lag behind the actual discoveries, neither we
nor our licensors can be certain that we or they were the first to make the inventions claimed
in our or their issued patents or pending patent applications, or that we or they were the
first to file for protection of the inventions set forth in these patent applications. If a
third party has also filed a U.S. patent application covering our product candidates or a
similar invention, we may have to participate in an adversarial proceeding, known as an
interference, declared by the U.S. Patent and Trademark Office to determine priority of
invention in the U.S. The costs of these proceedings could be substantial and it is possible
that our efforts could be unsuccessful, resulting in a loss of our U.S. patent position.
If we fail to comply with our obligations in our intellectual property licenses with third
parties, we could lose license rights that are important to our business.
We are a party to a number of license agreements including agreements with the Mount Sinai
School of Medicine of New York University, the University of Maryland, Baltimore County and
Novo Nordisk A/S, pursuant to which we license key intellectual property relating to our lead
product candidates. We expect to enter into additional licenses in the future. Under our
existing licenses, we have the right to enforce the licensed patent rights. Our existing
licenses impose, and we expect that future licenses will impose, various diligence, milestone
payment, royalty, insurance and other obligations on us. If we fail to comply with these
obligations, the licensor may have the right to terminate the license, in which event we might
not be able to market any product that is covered by the licensed patents.
- 34 -
If we are unable to protect the confidentiality of our proprietary information and know-how,
the value of our technology and products could be adversely affected.
We seek to protect our know-how and confidential information, in part, by confidentiality
agreements with our employees, corporate partners, outside scientific collaborators, sponsored
researchers, consultants and other advisors. We also have confidentiality and invention or
patent assignment agreements with our employees and our consultants. If our employees or
consultants breach these agreements, we may not have adequate remedies for any of these
breaches. In addition, our trade secrets may otherwise become known to or be independently
developed by others. Enforcing a claim that a party illegally obtained and is using our trade
secrets is difficult, expensive and time consuming, and the outcome is unpredictable. In
addition, courts outside the U.S. may be less willing to protect trade secrets. Costly and
time consuming litigation could be necessary to seek to enforce and determine the scope of our
proprietary rights, and failure to obtain or maintain trade secret protection could adversely
affect our competitive business position.
If we infringe or are alleged to infringe the intellectual property rights of third parties, it
will adversely affect our business.
Our research, development and commercialization activities, as well as any product
candidates or products resulting from these activities, may infringe or be accused of
infringing one or more claims of an issued patent or may fall within the scope of one or more
claims in a published patent application that may subsequently issue and to which we do not
hold a license or other rights. Third parties may own or control these patents or patent
applications in the U.S. and abroad. These third parties could bring claims against us that
would cause us to incur substantial expenses and, if successful against us, could cause us to
pay substantial damages. Further, if a patent infringement suit were brought against us, we or
they could be forced to stop or delay research, development, manufacturing or sales of the
product or product candidate that is the subject of the suit.
No assurance can be given that patents do not exist, have not been filed, or could not be
filed or issued, which contain claims covering our products, technology or methods. Because of
the number of patents issued and patent applications filed in our field, we believe there is a
risk that third parties may allege they have patent rights encompassing our products,
technology or methods.
We are aware, for example, of U.S. patents, and corresponding international counterparts,
owned by third parties that contain claims related to treating protein misfolding. We have
received written notice from one of these third parties indicating that it believes we may need
a license to certain of these patents in order to avoid infringing such patents. If any of
these third party patents were to be asserted against us we do not believe that our proposed
products would be found to infringe any valid claim of these patents. If we were to challenge
the validity of any issued U.S. patent in court, we would need to overcome a presumption of
validity that attaches to every patent. This burden is high and would require us to present
clear and convincing evidence as to the invalidity of the patents claims. There is no
assurance that a court would find in our favor on infringement or validity.
In order to avoid or settle potential claims with respect to any of the patent rights
described above or any other patent rights of third parties, we may choose or be required to
seek a license from a third party and be required to pay license fees or royalties or both.
These licenses may not be available on acceptable terms, or at all. Even if we or our future
collaborators were able to obtain a license, the rights may be nonexclusive, which could result
in our competitors gaining access to the same intellectual property. Ultimately, we could be
prevented from commercializing a product, or be forced to cease some aspect of our business
operations, if, as a result of actual or threatened patent infringement claims, we are unable
to enter into licenses on acceptable terms. This could harm our business significantly.
Others may sue us for infringing their patent or other intellectual property rights or
file nullity, opposition or interference proceedings against our patents, even if such claims
are without merit, which would similarly harm our business. Furthermore, during the course of
litigation, confidential information may be disclosed in the form of documents or testimony in
connection with discovery requests, depositions or trial testimony. Disclosure of our
confidential information and our involvement in intellectual property litigation could
materially adversely affect our business.
There has been substantial litigation and other proceedings regarding patent and other
intellectual property rights in the pharmaceutical and biotechnology industries. In addition
to infringement claims against us, we may become a party to other patent litigation and other
proceedings, including interference proceedings declared by the U.S. Patent and Trademark
Office and opposition proceedings in the European Patent Office, regarding intellectual
property rights with respect to our products and technology. Even if we prevail, the cost to
us of any patent litigation or other proceeding could be substantial.
Some of our competitors may be able to sustain the costs of complex patent litigation more
effectively than we can because they have substantially greater resources. In addition, any
uncertainties resulting from any litigation could significantly limit our ability to continue
our operations. Patent litigation and other proceedings may also absorb significant management
time.
- 35 -
Many of our employees were previously employed at universities or other biotechnology or
pharmaceutical companies, including our competitors or potential competitors. We try to ensure
that our employees do not use the proprietary information or know-how of others in their work
for us. However, we may be subject to claims that we or these employees have inadvertently or
otherwise used or disclosed intellectual property, trade secrets or other proprietary
information of any such employees former employer. Litigation may be necessary to defend
against these claims and, even if we are successful in defending ourselves, could result in
substantial costs to us or be distracting to our management. If we fail to defend any such
claims, in addition to paying monetary damages, we may jeopardize valuable intellectual
property rights, disclose confidential information or lose personnel.
Risks Related to Regulatory Approval of Our Product Candidates
If we are not able to obtain and maintain required regulatory approvals, we will not be able to
commercialize our product candidates, and our ability to generate revenue will be materially
impaired.
Our product candidates, including Amigal, Plicera and AT2220, and the activities
associated with their development and commercialization, including their testing, manufacture,
safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and
distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies
in the U.S. and by comparable authorities in other countries. Failure to obtain regulatory
approval for a product candidate will prevent us from commercializing the product candidate in
the jurisdiction of the regulatory authority. We have not obtained regulatory approval to
market any of our product candidates in any jurisdiction. We have only limited experience in
filing and prosecuting the applications necessary to obtain regulatory approvals and expect to
rely on third party contract research organizations to assist us in this process.
Securing FDA approval requires the submission of extensive preclinical and clinical data
and supporting information to the FDA for each therapeutic indication to establish the product
candidates safety and efficacy. Securing FDA approval also requires the submission of
information about the product manufacturing process to, and inspection of manufacturing
facilities by, the FDA. Our future products may not be effective, may be only moderately
effective or may prove to have undesirable or unintended side effects, toxicities or other
characteristics that may preclude our obtaining regulatory approval or prevent or limit
commercial use.
Our product candidates may fail to obtain regulatory approval for many reasons, including:
|
|
|
our failure to demonstrate to the satisfaction of the FDA or comparable regulatory
authorities that a product candidate is safe and effective for a particular indication; |
|
|
|
the results of clinical trials may not meet the level of statistical significance
required by the FDA or comparable regulatory authorities for approval; |
|
|
|
our inability to demonstrate that a product candidates benefits outweigh its risks; |
|
|
|
our inability to demonstrate that the product candidate is at least as effective as
existing therapies; |
|
|
|
the FDAs or comparable regulatory authorities disagreement with the manner in
which we interpret the data from preclinical studies or clinical trials; |
|
|
|
the FDAs or comparable regulatory authorities failure to approve the manufacturing
processes, quality procedures or manufacturing facilities of third party manufacturers
with which we contract for clinical or commercial supplies; and |
|
|
|
a change in the approval policies or regulations of the FDA or comparable regulatory
authorities or a change in the laws governing the approval process. |
The process of obtaining regulatory approvals is expensive, often takes many years, if
approval is obtained at all, and can vary substantially based upon a variety of factors,
including the type, complexity and novelty of the product candidates involved. Changes in
regulatory approval policies during the development period, changes in or the enactment of
additional statutes or regulations, or changes in regulatory review for each submitted product
application may cause delays in the approval or rejection of an application. The FDA and
non-U.S. regulatory authorities have substantial discretion in the approval process and may
refuse to accept any application or may decide that our data is insufficient for approval and
require additional preclinical, clinical or other studies. In addition, varying
interpretations of the data obtained from preclinical and clinical testing could delay, limit
or prevent regulatory approval of a product candidate. Any regulatory approval we ultimately
obtain may be limited or subject to restrictions or post approval commitments that render the
approved product not commercially viable. Any FDA or other regulatory approval of our product
candidates, once obtained, may be withdrawn, including for failure to comply with regulatory
requirements or if clinical or manufacturing problems follow initial marketing.
- 36 -
Our product candidates may cause undesirable side effects or have other properties that could
delay or prevent their regulatory approval or commercialization.
Undesirable side effects caused by our product candidates could interrupt, delay or halt
clinical trials and could result in the denial of regulatory approval by the FDA or other
regulatory authorities for any or all targeted indications, and in turn prevent us from
commercializing our product candidates and generating revenues from their sale. For example,
in a clinical trial of Amigal for Fabry disease, one patient with a history of hypertension experienced increased blood
pressure during the course of the trial which was reported by the investigator as possibly
related to the drug. Further, Amigal has been shown to cause reversible infertility effects in
mice.
In addition, if any of our product candidates receive marketing approval and we or others
later identify undesirable side effects caused by the product:
|
|
|
regulatory authorities may require the addition of restrictive labeling statements; |
|
|
|
regulatory authorities may withdraw their approval of the product; and |
|
|
|
we may be required to change the way the product is administered or conduct
additional clinical trials. |
Any of these events could prevent us from achieving or maintaining market acceptance of
the affected product or could substantially increase the costs and expenses of commercializing
the product candidate, which in turn could delay or prevent us from generating significant
revenues from its sale or adversely affect our reputation.
We may not be able to obtain orphan drug exclusivity for our product candidates. If our
competitors are able to obtain orphan drug exclusivity for their products that are the same
drug as our product candidates, we may not be able to have competing products approved by the
applicable regulatory authority for a significant period of time.
Regulatory authorities in some jurisdictions, including the U.S. and Europe, may designate
drugs for relatively small patient populations as orphan drugs. We obtained orphan drug
designations from the FDA for Amigal for the treatment of Fabry disease on February 25, 2004,
for the active ingredient in Plicera for the treatment of Gaucher disease on January 10, 2006
and for AT2220 for the treatment of Pompe disease on June 18, 2007. We also obtained orphan
medicinal product designation in the EU for Amigal on May 22, 2006 and for Plicera on October
23, 2007. We anticipate filing for orphan drug designation in the EU for AT2220 for the
treatment of Pompe disease. Generally, if a product with an orphan drug designation
subsequently receives the first marketing approval for the indication for which it has such
designation, the product is entitled to a period of marketing exclusivity, which precludes the
applicable regulatory authority from approving another marketing application for the same drug
for that time period. The applicable period is 7 years in the U.S. and 10 years in Europe.
For a drug composed of small molecules, the FDA defines same drug as a drug that contains the
same active molecule and is intended for the same use. Obtaining orphan drug exclusivity for
Amigal and Plicera may be important to each of the product candidates success. Even if we
obtain orphan drug exclusivity for Amigal or Plicera for these indications, we may not be able
to maintain it. For example, if a competitive product that is the same drug as our product
candidate is shown to be clinically superior to our product candidate, any orphan drug
exclusivity we have obtained will not block the approval of such competitive product and we may
effectively lose what had previously been orphan drug exclusivity.
Any product for which we obtain marketing approval could be subject to restrictions or
withdrawal from the market and we may be subject to penalties if we fail to comply with
regulatory requirements or if we experience unanticipated problems with our products, when and
if any of them are approved.
Any product for which we obtain marketing approval, along with the manufacturing
processes, post approval clinical data, labeling, advertising and promotional activities for
such product, will be subject to continual requirements of and review by the FDA and comparable
regulatory authorities. These requirements include submissions of safety and other post
marketing information and reports, registration requirements, cGMP requirements relating to
quality control, quality assurance and corresponding maintenance of records and documents,
requirements regarding the distribution of samples to physicians and recordkeeping. Even if we
obtain regulatory approval of a product, the approval may be subject to limitations on the
indicated uses for which the product may be marketed or to the conditions of approval, or
contain requirements for costly post marketing testing and surveillance to monitor the safety
or efficacy of the product. We also may be subject to state laws and registration requirements
covering the distribution of our products. Later discovery of previously unknown problems with
our products, manufacturers or manufacturing processes, or failure to comply with regulatory
requirements, may result in actions such as:
|
|
|
restrictions on such products, manufacturers or manufacturing processes; |
|
|
|
withdrawal of the products from the market; |
|
|
|
refusal to approve pending applications or supplements to approved applications that
we submit; |
|
|
|
voluntary or mandatory recall; |
- 37 -
|
|
|
suspension or withdrawal of regulatory approvals or refusal to approve pending
applications or supplements to approved applications that we submit; |
|
|
|
refusal to permit the import or export of our products; |
|
|
|
product seizure or detentions; |
|
|
|
injunctions or the imposition of civil or criminal penalties; and |
If we, or our suppliers, third party contractors, clinical investigators or collaborators
are slow to adapt, or are unable to adapt, to changes in existing regulatory requirements or
adoption of new regulatory requirements or policies, we or our collaborators may lose marketing
approval for our products when and if any of them are approved, resulting in decreased revenue
from milestones, product sales or royalties.
Failure to obtain regulatory approval in international jurisdictions would prevent us from
marketing our products abroad.
We intend to have our products marketed outside the U.S. In order to market our products
in the EU and many other jurisdictions, we must obtain separate regulatory approvals and comply
with numerous and varying regulatory requirements. The approval procedures vary among
countries and can involve additional testing and clinical trials. The time required to obtain
approval may differ from that required to obtain FDA approval. The regulatory approval process
outside the U.S. may include all of the risks associated with obtaining FDA approval. In
addition, in many countries outside the U.S., it is required that the product be approved for
reimbursement by government-backed healthcare regulators or insurance providers before the
product can be approved for sale in that country. We may not obtain approvals from regulatory
authorities outside the U.S. on a timely basis, if at all. Approval by the FDA does not ensure
approval by regulatory authorities in other countries or jurisdictions, and approval by one
regulatory authority outside the U.S. does not ensure approval by regulatory authorities in
other countries or jurisdictions or by the FDA. We may not be able to file for regulatory
approvals and may not receive necessary approvals to commercialize our products in any market.
Risks
Related to Employee Matters and Managing Growth
Our future success depends on our ability to retain our Chief Executive Officer and other key
executives and to attract, retain and motivate qualified personnel.
We are highly dependent on John F. Crowley, our President and Chief Executive Officer,
Matthew R. Patterson, our Chief Operating Officer, James E. Dentzer, our Chief Financial
Officer, and David J. Lockhart, Ph.D., our Chief Scientific Officer. These executives each
have significant pharmaceutical industry experience, including Mr. Crowley, with whom we have
entered into an employment agreement that runs for successive one year terms until either we or
Mr. Crowley elect to terminate the agreement. We may terminate Mr. Crowleys employment
without cause at any time, or we may decide not to extend Mr. Crowleys agreement at the end of
any term, or he may terminate his employment for good reason at any time, in each case subject
to certain severance payments and benefits. Mr. Crowley is a commissioned officer in the U.S.
Navy (Reserve). The U.S. recently called Mr. Crowley to service, which he fulfilled, from
September 11, 2006 to March 5, 2007, and he may be called to active duty service again at any
time. The loss of Mr. Crowley for protracted military duty could materially adversely affect
our business. We are also parties to employment agreements with each of Messrs. Patterson and
Dentzer and Dr. Lockhart. These employment agreements each provide for an initial term of two
years, and will continue thereafter for successive two-year periods until we provide the
executive with written notice of the end of the agreement in accordance with its terms. We may
terminate any of these executives without cause at any time, or one of these executives may
quit for good reason within six months of the occurrence of certain corporate changes, in each
case subject to certain severance payments and benefits. The loss of the services of any of
these executives might impede the achievement of our research, development and
commercialization objectives and materially adversely affect our business. We do not maintain
key person insurance on Mr. Crowley or on any of our other executive officers.
Recruiting and retaining qualified scientific personnel, clinical personnel and sales and
marketing personnel will also be critical to our success. Our industry has experienced a high
rate of turnover in recent years. We may not be able to attract and retain these personnel on
acceptable terms given the competition among numerous pharmaceutical and biotechnology
companies for similar personnel, particularly in New Jersey and surrounding areas. Although we
believe we offer competitive salaries and benefits, we may have to increase spending in order
to retain personnel.
We also experience competition for the hiring of scientific and clinical personnel from
universities and research institutions. In addition, we rely on consultants and advisors,
including scientific and clinical advisors, to assist us in formulating our research and
development and commercialization strategy. Our consultants and advisors may be employed by
employers other than us and may have commitments under consulting or advisory contracts with
other entities that may limit their availability to us.
- 38 -
We expect to expand our development, regulatory and sales and marketing capabilities, and as a
result, we may encounter difficulties in managing our growth, which could disrupt our
operations.
We are a development stage company with 115 full-time employees as of December 31, 2008.
Of these employees, 79 work primarily in research and development and 36 provide administrative
services. We will continue to experience growth in the number of our employees and the scope
of our operations, particularly in the areas of drug development, regulatory affairs and sales
and marketing. Assuming our plans and business conditions progress consistent with our current
projections, we plan to grow to a total of approximately 125 to 135 employees by the end of
2009. To manage our anticipated future growth, we must continue to implement and improve our
managerial, operational and financial systems, expand our facilities and continue to recruit
and train additional qualified personnel. Due to our limited resources, we may not be able to
effectively manage the expansion of our operations or recruit and train additional qualified
personnel. The physical expansion of our operations may lead to significant costs and may
divert our management and business development resources. Any inability on the part of our
management to manage growth could delay the execution of our business plans or disrupt our
operations.
Risks Related to Our Common Stock
Our executive officers, directors and principal stockholders maintain the ability to control
all matters submitted to our stockholders for approval.
Our executive officers, directors and principal stockholders beneficially own shares
representing approximately 74% of our common stock. As a result, if these stockholders were to
choose to act together, they would be able to control all matters submitted to our stockholders
for approval, as well as our management and affairs. For example, these persons, if they
choose to act together, will control the election of directors and approval of any merger,
consolidation, sale of all or substantially all of our assets or other business combination or
reorganization. This concentration of voting power could delay or prevent an acquisition of us
on terms that other stockholders may desire. The interests of this group of stockholders may
not always coincide with the interests of other stockholders, and they may act, whether by
meeting or written consent of stockholders, in a manner that advances their best interests and
not necessarily those of other stockholders, including obtaining a premium value for their
common stock, and might affect the prevailing market price for our common stock.
Provisions in our corporate charter documents and under Delaware law could make an acquisition
of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by
our stockholders to replace or remove our current management.
Provisions in our corporate charter and our bylaws that became effective upon our initial
public offering may discourage, delay or prevent a merger, acquisition or other change in
control of us that stockholders may consider favorable, including transactions in which our
stockholders might otherwise receive a premium for their shares. These provisions could also
limit the price that investors might be willing to pay in the future for shares of our common
stock, thereby depressing the market price of our common stock. In addition, these provisions
may frustrate or prevent any attempts by our stockholders to replace or remove our current
management by making it more difficult for stockholders to replace members of our board of
directors. Because our board of directors is responsible for appointing the members of our
management team, these provisions could in turn affect any attempt by our stockholders to
replace current members of our management team. Among others, these provisions:
|
|
|
establish a classified board of directors, and, as a result, not all directors are
elected at one time; |
|
|
|
allow the authorized number of our directors to be changed only by resolution of our
board of directors; |
|
|
|
limit the manner in which stockholders can remove directors from our board of
directors; |
|
|
|
establish advance notice requirements for stockholder proposals that can be acted on
at stockholder meetings and nominations to our board of directors; |
|
|
|
require that stockholder actions must be effected at a duly called stockholder
meeting and prohibit actions by our stockholders by written consent; |
|
|
|
limit who may call stockholder meetings; |
|
|
|
authorize our board of directors to issue preferred stock, without stockholder
approval, which could be used to institute a poison pill that would work to dilute
the stock ownership of a potential hostile acquirer, effectively preventing
acquisitions that have not been approved by our board of directors; and |
|
|
|
require the approval of the holders of at least 67% of the votes that all our
stockholders would be entitled to cast to amend or repeal certain provisions of our
charter or bylaws. |
Moreover, because we are incorporated in Delaware, we are governed by the provisions of
Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in
excess of 15% of our outstanding voting stock from merging or combining with us for a period of
three years after the date of the transaction in which the person acquired in excess of 15% of
our outstanding voting stock, unless the merger or combination is approved in a prescribed
manner.
- 39 -
An active trading market for our common stock may not develop.
We completed our initial public offering of equity securities in June 2007, and prior to
this offering, there was no public market for our common stock. Although we have been listed
on The NASDAQ Global Market, an active trading market for our common stock may never develop or
be sustained. If an active market for our common stock does not develop or is not sustained,
it may be difficult for our stockholders to sell shares since our initial public offering
without depressing the market price for our common stock.
If the price of our common stock is volatile, purchasers of our common stock could incur
substantial losses.
The price of our common stock is volatile. The stock market in general and the market for
biotechnology companies in particular have experienced extreme volatility that has often been
unrelated to the operating performance of particular companies. The market price for our
common stock may be influenced by many factors, including:
|
|
|
results of clinical trials of our product candidates or those of our competitors; |
|
|
|
our entry into or the loss of a significant collaboration; |
|
|
|
regulatory or legal developments in the U.S. and other countries, including changes
in the health care payment systems; |
|
|
|
variations in our financial results or those of companies that are perceived to be
similar to us; |
|
|
|
changes in the structure of healthcare payment systems; |
|
|
|
market conditions in the pharmaceutical and biotechnology sectors and issuance of
new or changed securities analysts reports or recommendations; |
|
|
|
general economic, industry and market conditions; |
|
|
|
results of clinical trials conducted by others on drugs that would compete with our
product candidates; |
|
|
|
developments or disputes concerning patents or other proprietary rights; |
|
|
|
public concern over our product candidates or any products approved in the future; |
|
|
|
future sales or anticipated sales of our common stock by us or our stockholders; and |
|
|
|
the other factors described in this Risk Factors section. |
For these reasons and others potential purchasers of our common stock should consider an
investment in our common stock as risky and invest only if they can withstand a significant
loss and wide fluctuations in the marked value of their investment.
If securities or industry analysts do not publish research or reports or publish unfavorable
research about our business, the price of our common stock and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports
that securities or industry analysts publish about us or our business. If securities or
industry analysts do not continue coverage of us the trading price for our common stock would
be negatively affected. In the event we obtain securities or industry analyst coverage, if one
or more of the analysts who covers us downgrades our common stock, the price of our common
stock would likely decline. If one or more of these analysts ceases to cover us or fails to
publish regular reports on us, interest in the purchase of our common stock could decrease,
which could cause the price of our common stock or trading volume to decline.
We will incur increased costs as a result of being a public company.
As a public company, we will incur significant legal, accounting, reporting and other
expenses that we did not incur as a private company, including costs related to compliance with
the regulations of the Sarbanes-Oxley Act of 2002. We expect these rules and regulations to
increase our legal and financial compliance costs and to make some activities more
time-consuming and costly. We also expect these new rules and regulations may make it more
difficult and more expensive for us to obtain director and officer liability insurance and we
may be required to accept reduced policy limits and coverage or incur substantially higher
costs to obtain the same or similar coverage. As a result, we may experience more difficulty
attracting and retaining qualified individuals to serve on our board of directors or as
executive officers. We cannot predict or estimate the amount of additional costs we may incur
as a result of these requirements or the timing of such costs.
- 40 -
Item 1B. UNRESOLVED STAFF COMMENTS.
None.
Item 2. PROPERTIES.
We currently lease approximately 59,000 square feet of subleased office and laboratory space
in Cranbury, New Jersey and 7,700 square feet of subleased office and laboratory space in San
Diego, California under various lease agreements that terminate no later than February 2012. We
believe that our current office and laboratory facilities are adequate and suitable for our current
and anticipated needs.
Item 3. LEGAL PROCEEDINGS.
We are not currently a party to any material legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth quarter of the year
ended December 31, 2008.
- 41 -
PART II
|
Item 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES. |
Market For Our Common Stock
Our common stock has been traded on the NASDAQ Global Market under the symbol FOLD since May
31, 2007. Prior to that time, there was no public market for our common stock. The following
table sets forth, for the periods indicated, the range of high and low closing sales prices of our
common stock as quoted on the NASDAQ Global Market for the period since our initial public offering
on May 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
High |
|
|
Low |
|
2008 |
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
11.84 |
|
|
$ |
9.00 |
|
Second Quarter |
|
|
12.35 |
|
|
|
9.00 |
|
Third Quarter |
|
|
18.00 |
|
|
|
10.52 |
|
Fourth Quarter |
|
|
15.78 |
|
|
|
7.16 |
|
|
|
|
|
|
|
|
|
|
|
|
High |
|
|
Low |
|
2007 |
|
|
|
|
|
|
|
|
Second Quarter (from May 31, 2007) |
|
$ |
16.80 |
|
|
$ |
10.30 |
|
Third Quarter |
|
|
16.75 |
|
|
|
10.00 |
|
Fourth Quarter |
|
|
18.22 |
|
|
|
9.20 |
|
The closing price for our common stock as reported by the NASDAQ Global Market on January 29,
2009 was $8.68 per share. As of January 29, 2009, there were 90 holders of record of our common
stock.
Dividends
We have never declared or paid any dividends on our capital stock. We currently intend to
retain any future earnings to finance our research and development efforts, the further development
of our pharmacological chaperone technology and the expansion of our business. We do not intend to
declare or pay cash dividends to our stockholders in the foreseeable future.
Recent Sales of Unregistered Securities
None.
Use of Proceeds from the Sale of Registered Securities
Our initial public offering of common stock was effected through a Registration Statement on
Form S-1 (File No. 333-141700) that was declared effective by the Securities and Exchange
Commission (SEC) on May 30, 2007, which registered an aggregate of 5,750,000 shares of our common
stock. On June 5, 2007, at the closing of the offering, 5,000,000 shares of common stock were sold
on our behalf at an initial public offering price of $15.00 per share, for aggregate offering
proceeds of $75.0 million. The initial public offering was underwritten and managed by Morgan
Stanley, Merrill Lynch & Co., JPMorgan, Lazard Capital Markets and Pacific Growth Equities, LLC.
Following the sale of the 5,000,000 shares, the public offering terminated.
We paid to the underwriters underwriting discounts totaling approximately $5.3 million in
connection with the offering. In addition, we incurred additional costs of approximately $1.6
million in connection with the offering, which when added to the underwriting discounts paid by us,
amounts to total expenses of approximately $6.9 million. Thus, the net offering proceeds to us,
after deducting underwriting discounts and offering expenses, were approximately $68.1 million. No
offering expenses were paid directly or indirectly to any of our directors or officers (or their
associates) or persons owning ten percent or more of any class of our equity securities or to any
other affiliates.
As of December 31, 2008, we had invested the $68.1 million in net proceeds from the offering
in money market funds and in investment-grade, interest bearing instruments, pending their use.
Through December 31, 2008, we used these proceeds for clinical development of our drug candidates,
for research and development activities relating to additional preclinical programs and to fund
working capital and other general corporate purposes, which may include the acquisition or
licensing of complementary technologies, products or businesses.
- 42 -
Performance Graph
The following performance graph shows the total shareholder return of an investment of $100
cash on May 31, 2007, the date our common stock first started trading on the NASDAQ Global Market,
for (i) our common stock, (ii) the NASDAQ Composite Index (U.S.) and (iii) the NASDAQ Biotechnology
Index as of December 31, 2008. Pursuant to applicable SEC rules, all values assume reinvestment of
the full amount of all dividends, however no dividends have been declared on our common stock to
date. The stockholder return shown on the graph below is not necessarily indicative of future
performance, and we do not make or endorse any predictions as to future stockholder returns.
|
|
|
* |
|
$100 invested on May 31, 2007 in Amicus Therapeutics, Inc. stock or in index-including
reinvestment of dividends. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May-07 |
|
|
Jun-07 |
|
|
Sep-07 |
|
|
Dec-07 |
|
|
Mar-08 |
|
|
Jun-08 |
|
|
Sep-08 |
|
|
Dec-08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amicus Therapeutics, Inc. |
|
|
100 |
|
|
|
80 |
|
|
|
116 |
|
|
|
74 |
|
|
|
74 |
|
|
|
74 |
|
|
|
105 |
|
|
|
55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NASDAQ Composite |
|
|
100 |
|
|
|
100 |
|
|
|
104 |
|
|
|
102 |
|
|
|
88 |
|
|
|
88 |
|
|
|
88 |
|
|
|
61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NASDAQ Biotechnology |
|
|
100 |
|
|
|
96 |
|
|
|
102 |
|
|
|
100 |
|
|
|
93 |
|
|
|
95 |
|
|
|
100 |
|
|
|
87 |
|
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
- 43 -
Issuer Purchases of Equity Securities
The following table sets forth purchases of our common stock for the three months ended
December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Total number of |
|
|
(d) Maximum number of |
|
|
|
|
|
|
|
|
|
|
|
shares purchased as |
|
|
shares that may yet be |
|
|
|
(a) Total number |
|
|
(b) Average |
|
|
part of publicly |
|
|
purchased under |
|
|
|
of shares |
|
|
Price Paid |
|
|
announced plans or |
|
|
the plans or |
|
Period |
|
purchased |
|
|
per Share |
|
|
programs |
|
|
programs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 1, 2008 October 31, 2008 |
|
|
220 |
|
|
$ |
15.10 |
|
|
|
|
|
|
|
5,295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 1, 2008 November 31, 2008 |
|
|
220 |
|
|
$ |
10.45 |
|
|
|
|
|
|
|
5,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 1, 2008 December 31, 2008 |
|
|
220 |
|
|
$ |
7.98 |
|
|
|
|
|
|
|
4,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pursuant to a restricted stock award dated October 2, 2006 between Amicus Therapeutics, Inc.
and James E. Dentzer, Chief Financial Officer, Mr. Dentzer was granted 40,000 shares, 25% of which
vested on October 2, 2007 and the remaining shares vest in a series of thirty-six successive equal
monthly installments which began on November 1, 2007, with the final installment due to vest on
November 1, 2010. In order to comply with the minimum statutory federal tax withholding rate of
25% plus 1.45% for Medicare, Mr. Dentzer surrenders a portion of his vested shares on each vesting
date, representing 26.45% of the total value of the shares then vested, to Amicus Therapeutics,
Inc. in connection with his withholding obligations.
- 44 -
Item 6. SELECTED FINANCIAL DATA.
(in thousands except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 4, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(inception) to |
|
|
|
Year Ended December 31 |
|
|
December 31, |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
1,375 |
|
|
$ |
12,189 |
|
|
$ |
13,564 |
|
Collaboration revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
409 |
|
|
|
2,778 |
|
|
|
3,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,784 |
|
|
|
14,967 |
|
|
|
16,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
6,301 |
|
|
|
13,652 |
|
|
|
33,630 |
|
|
|
31,074 |
|
|
|
37,764 |
|
|
|
127,642 |
|
General and administrative |
|
|
2,081 |
|
|
|
6,877 |
|
|
|
12,277 |
|
|
|
15,278 |
|
|
|
19,666 |
|
|
|
57,736 |
|
Impairment of leasehold
improvements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,030 |
|
Depreciation and
amortization |
|
|
146 |
|
|
|
303 |
|
|
|
952 |
|
|
|
1,237 |
|
|
|
1,493 |
|
|
|
4,287 |
|
In-process research and
development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
8,528 |
|
|
|
20,832 |
|
|
|
46,859 |
|
|
|
47,589 |
|
|
|
58,923 |
|
|
|
191,113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(8,528 |
) |
|
|
(20,832 |
) |
|
|
(46,859 |
) |
|
|
(45,805 |
) |
|
|
(43,956 |
) |
|
|
(174,362 |
) |
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
190 |
|
|
|
610 |
|
|
|
1,990 |
|
|
|
5,135 |
|
|
|
4,819 |
|
|
|
12,760 |
|
Interest expense |
|
|
(550 |
) |
|
|
(82 |
) |
|
|
(273 |
) |
|
|
(348 |
) |
|
|
(218 |
) |
|
|
(1,648 |
) |
Change in fair value of
warrant liability |
|
|
(2 |
) |
|
|
(280 |
) |
|
|
(23 |
) |
|
|
(149 |
) |
|
|
|
|
|
|
(454 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense |
|
|
|
|
|
|
|
|
|
|
(1,180 |
) |
|
|
|
|
|
|
|
|
|
|
(1,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax benefit |
|
|
(8,890 |
) |
|
|
(20,584 |
) |
|
|
(46,345 |
) |
|
|
(41,167 |
) |
|
|
(39,355 |
) |
|
|
(164,884 |
) |
Income tax benefit |
|
|
83 |
|
|
|
612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(8,807 |
) |
|
|
(19,972 |
) |
|
|
(46,345 |
) |
|
|
(41,167 |
) |
|
|
(39,355 |
) |
|
|
(164,189 |
) |
Deemed dividend |
|
|
|
|
|
|
|
|
|
|
(19,424 |
) |
|
|
|
|
|
|
|
|
|
|
(19,424 |
) |
Preferred stock accretion |
|
|
(126 |
) |
|
|
(139 |
) |
|
|
(159 |
) |
|
|
(351 |
) |
|
|
|
|
|
|
(802 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
common stockholders |
|
$ |
(8,933 |
) |
|
$ |
(20,111 |
) |
|
$ |
(65,928 |
) |
|
$ |
(41,518 |
) |
|
$ |
(39,355 |
) |
|
|
(184,415 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
common stockholders per
common share basic and
diluted |
|
$ |
(29.05 |
) |
|
$ |
(49.02 |
) |
|
$ |
(89.58 |
) |
|
$ |
(3.14 |
) |
|
$ |
(1.75 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding basic
and diluted |
|
|
307,539 |
|
|
|
410,220 |
|
|
|
735,967 |
|
|
|
13,235,755 |
|
|
|
22,493,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, |
|
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents and
marketable securities |
|
$ |
4,336 |
|
|
$ |
24,418 |
|
|
$ |
54,699 |
|
|
$ |
161,527 |
|
|
$ |
121,124 |
|
Working capital |
|
|
3,569 |
|
|
|
22,267 |
|
|
|
44,814 |
|
|
|
147,247 |
|
|
|
110,209 |
|
Total assets |
|
|
5,073 |
|
|
|
28,670 |
|
|
|
59,645 |
|
|
|
167,097 |
|
|
|
128,773 |
|
Total liabilities |
|
|
1,346 |
|
|
|
4,031 |
|
|
|
13,071 |
|
|
|
63,800 |
|
|
|
57,730 |
|
Redeemable convertible preferred stock |
|
|
20,013 |
|
|
|
60,469 |
|
|
|
124,089 |
|
|
|
|
|
|
|
|
|
Deficit accumulated during the
development stage |
|
|
(17,351 |
) |
|
|
(37,322 |
) |
|
|
(83,667 |
) |
|
|
(124,834 |
) |
|
|
(164,189 |
) |
Total stockholders (deficiency) equity |
|
$ |
(16,287 |
) |
|
$ |
(35,830 |
) |
|
$ |
(77,515 |
) |
|
$ |
103,297 |
|
|
$ |
71,043 |
|
- 45 -
Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Overview
Amicus Therapeutics Inc. (Amicus) is a clinical-stage biopharmaceutical company focused on the
discovery, development and commercialization of novel small molecule, orally-administered drugs,
known as pharmacological chaperones, for the treatment of a range of human genetic diseases.
Certain human diseases result from mutations in specific genes that, in many cases, lead to the
production of proteins with reduced stability. Proteins with such mutations may not fold into
their correct three-dimensional shape and are generally referred to as misfolded proteins.
Misfolded proteins are often recognized by cells as having defects and, as a result, may be
eliminated prior to reaching their intended location in the cell. The reduced biological activity
of these proteins leads to impaired cellular function and ultimately to disease. Our novel
approach to the treatment of human genetic diseases consists of using pharmacological chaperones
that selectively bind to the target protein; increasing the stability of the protein and helping it
fold into the correct three-dimensional shape. This allows proper trafficking of the protein,
thereby increasing protein activity, improving cellular function and potentially reducing cell
stress. We are researching the applicability of our platform pharmacological chaperone technology
to treat various diseases in our discovery program and developing the use of our lead compounds in
our clinical development program. We completed our Phase 2 clinical trials of Amigal (migalastat
hydrochloride) and are currently conducting Phase 2 clinical trials of Plicera (isofagomine
tartrate) and AT2220 (1-deoxynojirimycin HCl).
We have generated significant losses to date and expect to continue to generate losses as we
continue the clinical development of Amigal, Plicera and AT2220 and conduct research on other
programs. These activities are budgeted to expand over time and will require further resources if
we are to be successful. From our inception in February 2002 through December 31, 2008, we have
accumulated a deficit of $164.2 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 over
the next several years. Although Shire will be responsible for a portion of the costs associated
with the clinical development of Amigal, Plicera and AT2220 as discussed below, we may need to
obtain additional funds to further develop our research and development programs and product
candidates.
In June 2007, we completed our initial public offering (IPO) of 5,000,000 shares of common
stock at a public offering price of $15.00 per share. Net cash proceeds from the initial public
offering were approximately $68.1 million after deducting underwriting discounts, commissions and
offering expenses payable by us. In connection with the closing of the initial public offering,
all of Amicus shares of redeemable convertible preferred stock outstanding at the time of the
offering were automatically converted into 16,112,721 shares of common stock.
Collaboration with Shire Pharmaceuticals Ireland Ltd. (Shire)
On November 7, 2007, we entered into a license and collaboration agreement with Shire. Under
the agreement, Amicus and Shire will jointly develop Amicus three lead pharmacological chaperone
compounds for lysosomal storage disorders: Amigal, Plicera and AT2220. We granted Shire the rights
to commercialize these products outside the United States (U.S.). We will retain all rights to our
other programs and to develop and commercialize Amigal, Plicera and AT2220 in the U.S.
We received an initial, non-refundable license fee payment of $50 million from Shire in 2007.
Joint development costs toward global approval of the three compounds are being shared 50/50 as per
the collaboration agreement. In addition, we are eligible to receive, for all three drug product
candidates, aggregate potential milestone payments of up to $150 million if certain clinical and
regulatory milestones are achieved for all three of the programs, and $240 million in sales-based
milestones for all three of the programs. We will also be eligible to receive tiered double-digit
royalties on net sales of the products which are marketed outside of the U.S.
Financial Operations Overview
Revenue
The collaboration agreement with Shire became effective in November 2007. Shire paid us an
initial, non-refundable license fee of $50 million at that time. At December 31, 2008, we
recognized approximately $2.8 million of the license fee in Collaboration Revenue and $12.2 million
of Research Revenue for reimbursed research and development fees. The license fee is being
recognized as Collaboration Revenue over the 18 year performance obligation period. We have not
generated any commercial sales revenue since our inception.
- 46 -
Research and Development Expenses
We expect our research and development expense to increase as we continue to develop our
product candidates. Research and development expense consists of:
|
|
|
internal costs associated with our research activities; |
|
|
|
payments we make to third party contract research organizations, contract manufacturers,
investigative sites, and consultants; |
|
|
|
technology license costs; |
|
|
|
manufacturing development costs; |
|
|
|
personnel related expenses, including salaries, benefits, travel, and related costs for
the personnel involved in drug discovery and development; |
|
|
|
activities relating to regulatory filings and the advancement of our product candidates
through preclinical studies and clinical trials; and |
|
|
|
facilities and other allocated expenses, which include direct and allocated expenses for
rent, facility maintenance, as well as laboratory and other supplies. |
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, 2008, we have
incurred research and development expense in the aggregate of $127.6 million.
The following table summarizes our principal product development programs, including the
related stages of development for each product candidate in development, and the out-of-pocket,
third party expenses incurred with respect to each product candidate (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 4, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Inception) to |
|
|
|
Years Ended December 31, |
|
|
December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
2008 |
|
|
Product Candidate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third party direct project expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amigal (Fabry Disease Ended Phase 2) |
|
$ |
3,361 |
|
|
$ |
4,648 |
|
|
$ |
4,410 |
|
|
$ |
25,440 |
|
Plicera (Gaucher Disease Phase 2) |
|
|
9,905 |
|
|
|
4,378 |
|
|
|
2,796 |
|
|
|
18,904 |
|
AT2220 (Pompe Disease Phase 2) |
|
|
4,427 |
|
|
|
3,426 |
|
|
|
2,836 |
|
|
|
11,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total third party direct project
expenses |
|
|
17,693 |
|
|
|
12,452 |
|
|
|
10,042 |
|
|
|
55,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other project costs (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs |
|
|
8,187 |
|
|
|
9,720 |
|
|
|
14,535 |
|
|
|
38,966 |
|
Other costs (2) |
|
|
7,750 |
|
|
|
8,902 |
|
|
|
13,187 |
|
|
|
33,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other project costs |
|
|
15,937 |
|
|
|
18,622 |
|
|
|
27,722 |
|
|
|
72,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development costs |
|
$ |
33,630 |
|
|
$ |
31,074 |
|
|
$ |
37,764 |
|
|
$ |
127,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Other project costs are leveraged across multiple clinical and pre-clinical projects. |
|
(2) |
|
Other costs include facility, supply, overhead, and licensing costs that support multiple
clinical and preclinical projects. |
- 47 -
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, Amigal, Plicera, AT2220 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:
|
|
|
the number of clinical sites included in the trials; |
|
|
|
the length of time required to enroll suitable patients; |
|
|
|
the number of patients that ultimately participate in the trials; |
|
|
|
the results of our clinical trials; and |
|
|
|
any mandate by the U.S. Food and Drug Administration (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. 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 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. We
expect that our general and administrative expenses will increase as we add personnel and are
subject to the reporting obligations applicable to public companies. From our inception in
February 2002 through December 31, 2008, we spent $57.7 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.
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. 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 in accordance with the Securities and Exchange Commission (SEC) Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements (SAB 101), as
amended by Staff Accounting Bulletin No. 104, Revision of Topic 13 (SAB 104). Currently, we derive
all of our revenues from our collaboration agreement with Shire and expect that we will continue to
derive all, or at least a substantial portion of our revenues, from collaboration agreements over
the next several years.
- 48 -
Collaboration arrangements may contain multiple elements, including up front licensing fees,
reimbursement payments for ongoing research and development, payments for achieving research and
development and product approval milestones, sales-based milestones and royalties based on
percentages of net product sales. When evaluating multiple element arrangements, we follow the
provisions of Emerging Issues Task Force (EITF) Issue 00-21, Revenue Arrangements with Multiple
Deliverables (EITF 00-21). EITF 00-21 provides guidance on determining if an arrangement involves
a single unit of accounting or separate units of accounting and if the arrangement is
determined to have separate units, how to allocate amounts received in the arrangement for
revenue recognition purposes. If a collaboration agreement involves a single unit of accounting,
the revenue recognition policy and the performance obligation period is determined for the entire
arrangement while if separate units of accounting are involved, we determine a revenue recognition
policy for each unit.
In November 2007, we entered into a collaboration agreement with Shire. We evaluated the
multiple elements of this agreement in accordance with the guidance in EITF 00-21 and determined
that the multiple deliverables did not have value on a stand alone basis and were unable to obtain
verifiable objective evidence to determine the fair value of undelivered elements. As a result, we
concluded that there was one single unit of accounting for this collaboration and determined that
the period of our performance obligations under the agreement is 18 years. Upon execution of the
agreement in November 2007, we received an initial upfront payment of $50 million from Shire which
is being amortized to Collaboration Revenue over the period of the performance obligations which is
contractually defined at 18 years.
Additionally, under the agreement we are entitled to receive reimbursement of up to 50% of
research and development costs incurred in the development of the products covered by the
agreement. We recognize revenue for reimbursed research and development costs in accordance with
EITF Issue 99-19, Reporting Revenue Gross as a Principal Versus Net as an Agent (EITF 99-19). We
will record the revenue associated with these reimbursable amounts to Research Revenue while the
costs associated with these reimbursable amounts will be recorded in research and development
expenses.
Accrued Expenses
As part of the process of preparing our financial statements, we are required to estimate
accrued expenses. This process involves identifying services that have been performed on our
behalf and estimating the level of service performed and the associated cost incurred for the
service when we have not yet been invoiced or otherwise notified of actual cost. The majority of
our service providers invoice us monthly in arrears for services performed. We make estimates of
our accrued expenses as of each balance sheet date in our financial statements based on facts and
circumstances known to us. Examples of estimated accrued expenses include:
|
|
|
fees owed to contract research organizations in connection with preclinical and
toxicology studies and clinical trials; |
|
|
|
fees owed to investigative sites in connection with clinical trials; |
|
|
|
fees owed to contract manufacturers in connection with the production of clinical trial
materials; |
|
|
|
fees owed for professional services, and |
|
|
|
unpaid salaries, wages and benefits. |
Stock-Based Compensation
Effective January 1, 2006, we adopted the fair value recognition provisions of Financial
Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 123(R),
Share-Based Payment, (SFAS No. 123(R)) using the prospective transition method. Under the
prospective transition method, compensation expense is recognized in the financial statements on a
prospective basis for all share-based payments granted subsequent to December 31, 2005, based upon
the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). Options
granted prior to January 1, 2006, as a non-public company and accounted for using the intrinsic
value method, will continue to be expensed over the vesting period. The fair value of awards
expected to vest, as measured at grant date, is expensed on a straight-line basis over the vesting
period of the related awards. Under the prospective transition method, results for prior periods
are not restated.
We recognized stock-based compensation expense of $3.3 million, $4.0 million, and $6.4 million
for the years ended 2006, 2007 and 2008, respectively. The following table summarizes information
related to stock compensation expense recognized in the income statement (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
Stock compensation expense recognized in: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense |
|
$ |
1.7 |
|
|
$ |
1.6 |
|
|
$ |
2.5 |
|
General and administrative expense |
|
|
1.6 |
|
|
|
2.4 |
|
|
|
3.9 |
|
|
|
|
|
|
|
|
|
|
|
Total stock compensation expense |
|
$ |
3.3 |
|
|
$ |
4.0 |
|
|
$ |
6.4 |
|
|
|
|
|
|
|
|
|
|
|
- 49 -
We use the Black-Scholes option pricing model when estimating the value for stock-based
awards. The fair value of stock option awards subsequent to December 31, 2005 is amortized on a
straight-line basis over the requisite service periods of the awards, which is generally the
vesting period. Use of a valuation model requires management to make certain assumptions with
respect to selected model inputs. Expected volatility was calculated based on a blended weighted
average of historical information of our stock and the weighted average of historical information
of similar public entities for which historical information was available. We will continue to use
a
blended weighted average approach using our own historical volatility and other similar public
entity volatility information until our historical volatility is relevant to measure expected
volatility for future option grants. The average expected life was determined according to the SEC
shortcut approach as described in SAB 107, Disclosure about Fair Value of Financial Instruments
(SAB 107), which is the mid-point between the vesting date and the end of the contractual term.
The risk-free interest rate is based on U.S. Treasury, zero-coupon issues with a remaining term
equal to the expected life assumed at the date of grant. Forfeitures are estimated based on
voluntary termination behavior, as well as a historical analysis of actual option forfeitures. The
weighted average assumptions used in the Black-Scholes option pricing model are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected stock price volatility |
|
|
74.8 |
% |
|
|
78.3 |
% |
|
|
78.2 |
% |
Risk free interest rate |
|
|
4.7 |
% |
|
|
4.5 |
% |
|
|
3.0 |
% |
Expected life of options (years) |
|
|
6.25 |
|
|
|
6.25 |
|
|
|
6.25 |
|
Expected annual dividend per share |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
The weighted-average grant-date fair value per share of options granted during 2006, 2007 and
2008 were $10.20, $9.45 and $7.36, respectively.
Prior to becoming a public company, the exercise prices for options granted were set by our
board of directors, based on its determination of the fair market value of our common stock at the
time of the grants with input from our management. The members of our board of directors have
extensive experience in the life sciences industry and all but one are non-employee directors. In
connection with the IPO, we performed a retrospective determination of fair value for financial
reporting purposes of our common stock underlying stock option grants in 2005, 2006 and through
April 2007, utilizing a combination of valuation methods described in the American Institute of
Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held-Company Equity
Securities Issued as Compensation, (the Practice Aid). We utilized the same combination of
valuation methods to perform contemporaneous valuations of our common stock for each quarter
subsequent to March 31, 2006.
These assumptions and methods are more fully described in our Form S-1/A (333-141700) that was
declared effective by the SEC in May 2007.
Basic and Diluted Net Loss Attributable to Common Stockholders per Common Share
We calculated net loss per share in accordance with SFAS No. 128, Earnings Per Share. We have
determined that the Series A, B, C, and D redeemable convertible preferred stock represented
participating securities in accordance with EITF Issue No. 03-6 Participating Securities and the
Two Class Method under FASB Statement No. 128. However, because we operate at a loss, and losses
are not allocated to the redeemable convertible preferred stock, the two class method does not
affect our calculation of earnings per share. We had a net loss for all periods presented;
accordingly, the inclusion of common stock options and warrants would be anti-dilutive. Therefore,
the weighted average shares used to calculate both basic and diluted earnings per share are the
same. As a result of the IPO in May 2007, all outstanding redeemable convertible preferred stock
was converted to common stock and were no longer outstanding as of December 31, 2008.
- 50 -
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 (in
thousands except share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
Historical |
|
|
|
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(46,345 |
) |
|
$ |
(41,167 |
) |
|
$ |
(39,355 |
) |
Deemed dividend |
|
|
(19,424 |
) |
|
|
|
|
|
|
|
|
Accretion of
redeemable
convertible
preferred
stock |
|
|
(159 |
) |
|
|
(351 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to
common stockholders |
|
$ |
(65,928 |
) |
|
$ |
(41,518 |
) |
|
$ |
(39,355 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares
outstanding
basic and diluted |
|
|
735,967 |
|
|
|
13,235,755 |
|
|
|
22,493,803 |
|
|
|
|
|
|
|
|
|
|
|
Dilutive common stock equivalents would include the dilutive effect of convertible securities,
common stock options and warrants for common stock equivalents. Potentially dilutive common stock
equivalents totaled approximately 17.5 million, 24.9 million and 25.7 million for the years ended
December 31, 2006, 2007 and 2008, respectively. Potentially dilutive common stock equivalents were
excluded from the diluted earnings per share denominator for all periods because of their
anti-dilutive effect.
Results of Operations
Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
Research and Development Expense. Research and development expense was $37.8 million in 2008
representing an increase of $6.7 million or 22% from $31.1 million in 2007. The variance was
primarily attributable to higher personnel costs of $4.8 million associated with headcount growth,
a $0.7 million increase in research supplies and a $1.0 million increase in costs for travel and
meetings primarily related to clinical studies, partially offset by a reduction in contract
research and manufacturing costs due to the timing of studies and manufacturing campaigns of $0.7
million.
General and Administrative Expense. General and administrative expense was $19.7 million in
2008, an increase of $4.4 million or 29% from $15.3 million in 2007. The variance was primarily
attributable to higher personnel costs of $3.8 million associated with headcount growth and $0.7
million of governance, insurance and compliance costs associated with being a public company,
partially offset by a reduction in legal costs reflective of legal expenses associated with the
collaboration agreement with Shire.
Depreciation and Amortization. Depreciation and amortization expense was $1.5 million in 2008,
an increase of $0.3 million or 25%, from $1.2 million in 2007 due to assets acquired in 2008.
Interest Income and Interest Expense. Interest income was $4.8 million in 2008, compared to
$5.1 million in 2007. The decrease of $0.3 million or 6% was due to lower average cash and cash
equivalents balances and the decline in interest rates. Interest expense was $0.2 million in 2008,
compared to $0.3 million in 2007. The decrease of $0.1 million or 38% was due to the decrease in
capital lease borrowings.
Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
Research and Development Expense. Research and development expense was $31.1 million in 2007
representing a decrease of $2.5 million or 7% from $33.6 million in 2006. The variance was
primarily attributable to a reduction in contract research and manufacturing costs due to the
timing of studies of $4.5 million, partially offset by higher personnel costs of $1.6 million
associated with headcount growth.
General and Administrative Expense. General and administrative expense was $15.3 million in
2007, an increase of $3.0 million or 24% from $12.3 million in 2006. The variance was primarily
attributable to higher personnel costs of $2.0 million associated with headcount growth and higher
professional fees of $0.3 million related primarily to finalizing the collaboration agreement with
Shire.
- 51 -
Depreciation and Amortization. Depreciation and amortization expense was $1.2 million in
2007, an increase of $0.2 million or 20%, from $1.0 million in 2006. The increase is primarily due
to assets acquired in the first nine months of 2007.
Interest Income and Interest Expense. Interest income was $5.1 million in 2007, compared to
$2.0 million in 2006. The increase of $3.1 million or 155% was due to higher average cash and cash
equivalents balances as a result of the issuance of the Series D redeemable convertible preferred
stock, the $68.1 million of proceeds from the IPO and the receipt of the $50 million upfront
licensing payment from Shire. Interest expense was $0.3 million in 2007, compared to $0.3 million
in 2006.
Liquidity and Capital Resources
Source of Liquidity
As a result of our significant research and development expenditures and the lack of any
approved products to generate product sales revenue, we have not been profitable and have generated
operating losses since we were incorporated in 2002. We have funded our operations principally
with $148.7 million of proceeds from redeemable convertible preferred stock offerings, $75.0
million of gross proceeds from our IPO in June 2007 and $50.0 million from the non-refundable
license fee from the Shire collaboration agreement in November 2007. The following table
summarizes our significant funding sources as of December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximate |
|
|
|
|
|
|
|
|
|
|
|
Amount (1) |
|
Funding (2) |
|
Year |
|
|
No. Shares |
|
|
(in thousands) |
|
|
Series A Redeemable Convertible Preferred Stock |
|
|
2002 |
|
|
|
444,443 |
|
|
$ |
2,500 |
|
Series B Redeemable Convertible Preferred Stock |
|
|
2004, 2005, 2006, 2007 |
|
|
|
4,917,853 |
|
|
|
31,189 |
|
Series C Redeemable Convertible Preferred Stock |
|
|
2005, 2006 |
|
|
|
5,820,020 |
|
|
|
54,999 |
|
Series D Redeemable Convertible Preferred Stock |
|
|
2006, 2007 |
|
|
|
4,930,405 |
|
|
|
60,000 |
|
Common Stock |
|
|
2007 |
|
|
|
5,000,000 |
|
|
|
75,000 |
|
Upfront License Fee from Shire |
|
|
2007 |
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,112,721 |
|
|
$ |
273,688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents gross proceeds. |
|
(2) |
|
The Series A, B, C and D Redeemable Convertible Preferred Stock was converted to common
stock upon the effectiveness of our IPO. |
In addition, in conjunction with the Shire collaboration agreement, we received reimbursement
of research and development expenditures from the date of the agreement (November 7, 2007) through
year-end 2008 of $14.5 million.
As of December 31, 2008, we had cash and cash equivalents and marketable securities of $121.1
million. We invest cash in excess of our immediate requirements with 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.
Net Cash Used in and Provided by Operating Activities
Net cash used by operations for the year ended December 31, 2008 was $36.9 million due
primarily to the net loss for the year ended December 31, 2008 of $39.3 million and the change in
operating assets and liabilities of $5.5 million. The change in operating assets and liabilities
of $5.5 million was due primarily to deferred revenue related to the collaboration agreement with
Shire and lower accounts payable and accrued expenses at year-end 2008.
Net cash provided by operations for the year ended December 31, 2007 was $15.2 million due
primarily to the change in operating assets and liabilities of $51.0 million and the change in fair
value of warrant liability of $0.2 million, offset by the net loss for the year ended December 31,
2007 of $41.2 million. The change in operating assets and liabilities of $51.0 million was due
primarily to deferred revenue related to the $50 million upfront licensing payment from Shire.
Net Cash Provided by and Used in Investing Activities
Net cash provided by investing activities for the year ended December 31, 2008 was
$21.7 million. Net cash provided by investing activities reflects $178.1 million for the sale and
redemption of marketable securities, offset by $153.7 million for the purchase of marketable
securities and $2.7 million for the acquisition of property and equipment.
Net cash used in investing activities for the year ended December 31, 2007 was $75.0 million.
Net cash used in investing activities reflects $200.7 million for the purchase of marketable
securities and $0.7 million for the acquisition of property and equipment, offset by $126.4 million
for the sale and redemption of marketable securities.
- 52 -
Net Cash Used in and Provided by Financing Activities
Net cash used in financing activities for the year ended December 31, 2008 was $1.0 million,
consisting primarily of payments of equipment debt financing obligations of $1.5 million offset by
$0.5 million proceeds from exercise of stock options and warrants.
Net cash provided by financing activities for the year ended December 31, 2007 was
$91.9 million, consisting primarily of $24.1 million from the issuance of Series D redeemable
convertible preferred stock, $68.1 million from the issuance of common stock, $0.5 million from
asset financing arrangements, and $0.6 million proceeds from exercise of stock options and warrants
offset by payments of equipment debt financing obligations of $1.4 million.
Funding Requirements
We expect to incur losses from operations for the foreseeable future primarily due to
increasing research and development expenses, including expenses related to the hiring of personnel
and additional clinical trials, and greater general and administrative expenses resulting from
expanding our finance and administrative staff, adding infrastructure, and incurring additional
costs related to being a public company. Our future capital requirements will depend on a number
of factors, including:
|
|
|
the progress and results of our clinical trials of Amigal, Plicera and AT2220; |
|
|
|
|
the scope, progress, results and costs of preclinical development, laboratory
testing and clinical trials for our other product candidates; |
|
|
|
|
our achievement of milestone payments under our collaboration agreement with Shire; |
|
|
|
|
the costs, timing and outcome of regulatory review of our product candidates; |
|
|
|
|
the number and development requirements of other product candidates that we pursue; |
|
|
|
|
the costs of commercialization activities, including product marketing, sales and
distribution; |
|
|
|
|
the emergence of competing technologies and other adverse market developments; |
|
|
|
|
the costs of preparing, filing and prosecuting patent applications and maintaining,
enforcing and defending intellectual property related claims; |
|
|
|
|
the extent to which we acquire or invest in businesses, products and technologies;
and |
|
|
|
|
our ability to establish collaborations and obtain milestone, royalty or other payments
from any such collaborators. |
We do not anticipate that we will generate revenue from commercial sales for at least the next
several years, if at all. In the absence of additional funding, we expect our continuing operating
losses to result in increases in our cash used in operations over the next several quarters and
years. However, we believe that our existing cash and cash equivalents and short-term investments,
together with the expected reimbursement of research and development
expenses, excluding research
milestones, from our collaboration with Shire, will be sufficient to enable us to fund our operating
expenses and capital expenditure requirements at least until 2011.
Financial Uncertainties Related to Potential Future Payments
Milestone Payments
We have acquired rights to develop and commercialize our product candidates through licenses
granted by various parties. While our license agreements for Amigal and AT2220 do not contain
milestone payment obligations, two of these agreements related to Plicera do require us to make
such payments if certain specified pre-commercialization events occur. Upon the satisfaction of
certain milestones and assuming successful development of Plicera, we may be obligated, under the
agreements that we have in place, to make future milestone payments aggregating up to approximately
$7.9 million. However, such potential milestone payments are subject to many uncertain variables
that would cause such payments, if any, to vary in size.
The events that trigger these payments include:
|
|
|
completion of Phase 2 clinical trials; |
|
|
|
commencement of Phase 3 clinical trials; |
|
|
|
submission of a new drug application (NDA) to the FDA or foreign equivalents; and |
|
|
|
receipt of marketing approval from the FDA or foreign equivalents. |
- 53 -
Royalties
Under our license agreements, if we owe royalties on net sales for one of our products to more
than one licensor, then we have the right to reduce the royalties owed to one licensor for
royalties paid to another. The amount of royalties to be offset is generally limited in each
license and can vary under each agreement. For Amigal and AT2220, we will owe royalties only to
Mt. Sinai School of Medicine (MSSM). We expect to pay royalties to all three licensors with respect
to Plicera. To date, we have not made any royalty payments on sales of our products and believe we
are several years away from selling any products that would require us to make any such royalty
payments.
On October 31, 2008, we amended and restated its license agreement with MSSM. The amended and
restated agreement consolidated previous amendments into a single agreement, clarified the portion
of royalties and milestone payments that we receive from Shire that are payable to MSSM, and
provided us with the sole right to control the prosecution of patent rights described in the
amended and restated license agreement. Under the terms of the amended and restated license
agreement, we agreed to pay MSSM $2.6 million in connection with the $50 million upfront payment
that we received in November 2007, which was already accrued for at year-end 2007, and an
additional $2.6 million for the sole right to and control over the prosecution of patent rights.
Whether we will be obligated to make milestone or royalty payments in the future is subject to
the success of our product development efforts and, accordingly, is inherently uncertain.
Contractual Obligations
The following table summarizes our significant contractual obligations and commercial
commitments at December 31, 2008 and the effects such obligations are expected to have on our
liquidity and cash flows in future periods (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than |
|
|
1-3 |
|
|
3-5 |
|
|
Over 5 |
|
|
|
Total |
|
|
1 Year |
|
|
Years |
|
|
Years |
|
|
Years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease obligations |
|
$ |
6,162 |
|
|
$ |
2,145 |
|
|
$ |
4,017 |
|
|
|
|
|
|
|
|
|
Capital lease obligations |
|
|
1,294 |
|
|
|
957 |
|
|
|
337 |
|
|
|
|
|
|
|
|
|
Employment agreement |
|
|
2,940 |
|
|
|
2,199 |
|
|
|
741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed contractual
obligations (1) |
|
$ |
10,396 |
|
|
$ |
5,301 |
|
|
$ |
5,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This table does not include (a) any milestone payments which may
become payable to third parties under license agreements as the timing
and likelihood of such payments are not known, (b) any royalty
payments to third parties as the amounts of such payments, timing
and/or the likelihood of such payments are not known, (c) amounts, if
any, that may be committed in the future to construct additional
facilities, and (d) contracts that are entered into in the ordinary
course of business which are not material in the aggregate in any
period presented above. |
We lease office and laboratory space in Cranbury, New Jersey. One of these leases will expire
by its terms in August 2009 and the other two subleases expire in February 2012. In 2008, we
leased office and laboratory space in San Diego, CA and this lease will expire by its terms in
September 2011.
In August 2002, we entered into capital lease agreements that provide for up to $1 million of
equipment financing through August 2004. The facility was increased to $3 million in May 2005 and
to $5 million in November 2005. These financing arrangements include interest of approximately
9-12%, and lease terms of 36 or 48 months. Eligible assets under the lease lines include
laboratory and scientific equipment, computer hardware and software, general office equipment,
furniture and leasehold improvements. Upon termination of the lease agreements, we may renew the
lease or purchase the leased equipment for $1.00. We also have the option to purchase the
equipment at set prices before termination of the lease. The funding period of the facility
expired by its own term in 2007.
On April 28, 2006, we entered into an employment agreement with our president and chief
executive officer that provides for an annual base salary, a cash bonus of up to 50% of base
salary, an executive medical reimbursement contract, annual reimbursement up to $220,000 for
medical expenses not covered by the executive medical reimbursement contract or our medical or
health insurance policies, and gross up for federal and state income taxes of income tax incurred
in connection with medical reimbursement. The agreement will continue for successive one-year
terms until either party provides written notice of termination to the other in accordance with the
terms of the agreement. The table above includes costs associated with the remainder of the third
one-year term and fourth one-year term ending April 28, 2010. The cost of the executive medical
reimbursement contract is estimated based on current premiums.
We have entered into agreements with clinical research organizations and other outside
contractors who will be partially responsible for conducting and monitoring our clinical trials for
Amigal, Plicera and AT2220. These contractual obligations are not reflected in the table above
because we may terminate them without penalty.
- 54 -
Except for the Shire collaboration agreement described above, we have no other lines of credit
or other committed sources of capital. To the extent our capital resources are insufficient to
meet future capital requirements, we will need to raise additional capital or incur indebtedness to
fund our operations. We cannot assure you that additional debt or equity financing will be
available on acceptable terms, if at all.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as of December 31, 2007 and 2008.
Recent Accounting Pronouncements
In May 2008, the FASB issued FASB Staff Position (FSP) No. 14-1, Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement),
which specifies that issuers of these instruments should separately account for the liability and
equity components in a manner that reflects the entitys nonconvertible debt borrowing rate when
interest cost is recognized in subsequent periods. FSP No. 14-1 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. FSP No. 14-1 is also to be applied retrospectively to all periods presented
except if these instruments were not outstanding during any of the periods that are presented in
the annual financial statements for the period of adoption but were outstanding during an earlier
period. We do not expect that this will have a significant impact on the financial statements of
the Company.
In December 2007, the EITF of the FASB reached a consensus on Issue No. 07-1, Accounting for
Collaborative Arrangements (EITF 07-1). The EITF concluded on the definition of a collaborative
arrangement and that revenues and costs incurred with third parties in connection with
collaborative arrangements would be presented gross or net based on the criteria in EITF 99-19 and
other accounting literature. Based on the nature of the arrangement, payments to or from
collaborators would be evaluated and its terms, the nature of the entitys business, and whether
those payments are within the scope of other accounting literature would be presented. Companies
are also required to disclose the nature and purpose of collaborative arrangements along with the
accounting policies and the classification and amounts of significant financial-statement amounts
related to the arrangements. Activities in the arrangement conducted in a separate legal entity
should be accounted for under other accounting literature; however required disclosure under EITF
07-1 applies to the entire collaborative agreement. This Issue is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years, and is to be applied retrospectively to all periods presented for all
collaborative arrangements existing as of the effective date. We do not expect that this will have
a significant impact on our financial statements.
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS No. 141(R)),
which replaces SFAS No. 141, Business Combinations, requires an acquirer to recognize the assets
acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the
acquisition date, measured at their fair values as of that date, with limited exceptions. This
Statement also requires the acquirer in a business combination achieved in stages to recognize the
identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at
the full amounts of their fair values. SFAS No. 141(R) makes various other amendments to
authoritative literature intended to provide additional guidance or to confirm the guidance in that
literature to that provided in this Statement. This Statement applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. We do not expect that this will have a
significant impact on our financial statements.
In December 2007, FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements (SFAS No. 160), which amends Accounting Research Bulletin No. 51, Consolidated Financial
Statements, to improve the relevance, comparability, and transparency of the financial information
that a reporting entity provides in its consolidated financial statements. SFAS No. 160
establishes accounting and reporting standards that require the ownership interests in subsidiaries
not held by the parent to be clearly identified, labeled and presented in the consolidated
statement of financial position within equity, but separate from the parents equity. This
statement also requires the amount of consolidated net income attributable to the parent and to the
non-controlling interest to be clearly identified and presented on the face of the consolidated
statement of income. Changes in a parents ownership interest while the parent retains its
controlling financial interest must be accounted for consistently, and when a subsidiary is
deconsolidated, any retained non-controlling equity investment in the former subsidiary must be
initially measured at fair value. The gain or loss on the deconsolidation of the subsidiary is
measured using the fair value of any non-controlling equity investment. The Statement also
requires entities to provide sufficient disclosures that clearly identify and distinguish between
the interests of the parent and the interests of the non-controlling owners. This Statement
applies prospectively to all entities that prepare consolidated financial statements and applies
prospectively for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. We do not expect that this will have a significant impact on our
financial statements.
- 55 -
In June 2007, the EITF of the FASB reached a consensus on Issue No. 07-3, Accounting for
Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and
Development Activities (EITF 07-3). EITF 07-3 requires that non-refundable advance payments for
goods or services that will be used or rendered for future research and development activities
should be deferred
and capitalized. As the related goods are delivered or the services are performed, or when the
goods or services are no longer expected to be provided, the deferred amounts would be recognized
as an expense. This Issue is effective for financial statements issued for fiscal years beginning
after December 15, 2007 and earlier application is not permitted. This consensus is to be applied
prospectively for new contracts entered into on or after the effective date. The pronouncement did
not have a material effect on our financial statements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial LiabilitiesIncluding an amendment of FASB Statement No. 115 (SFAS No. 159), which is
effective for fiscal years beginning after November 15, 2007. SFAS No. 159 permits the Company to
choose to measure many financial instruments and certain other items at fair value. The objective
is to improve financial reporting by providing entities with the opportunity to mitigate volatility
in reported earnings caused by measuring related assets and liabilities differently without having
to apply complex hedge accounting provisions. SFAS No. 159 is expected to expand the use of fair
value measurement, which is consistent with the FASBs long-term measurement objectives for
accounting for financial instruments. SFAS No. 159 is effective for fiscal year 2008 but early
adoption is permitted. The pronouncement did not have a material effect on our financial
statements.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The recent and precipitous decline in the market value of certain securities backed by
residential mortgage loans has led to a large liquidity crisis affecting the broader U.S. housing
market, the financial services industry and global financial markets. Investors holding many of
these and related securities have experienced substantial decreases in asset valuations and
uncertain secondary market liquidity. Furthermore, credit rating authorities have, in many cases,
been slow to respond to the rapid changes in the underlying value of certain securities and
pervasive market illiquidity, regarding these securities.
As a result, this credit crisis may have a potential impact on the determination of the fair
value of financial instruments or possibly require impairments in the future should the value of
certain investments suffer a decline in value which is determined to be other than temporary.
Consistent with our investment policy, we do not use derivative financial instruments in our
investment portfolio. We regularly invest 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. We believe that the market risk arising from our holdings of these financial instruments
is minimal. We currently do not believe that any change in the market value of fixed income
investments in our portfolio is material, nor does it warrant a determination that there was any
other than temporary impairment.
We do not have exposure to market risks associated with changes in interest rates, as we have
no variable interest rate debt outstanding. Although we do not believe we have any material
exposure to market risks associated with interest rates, we may experience reinvestment risk as
fixed income securities mature and are reinvested in securities bearing lower interest rates.
- 56 -
Managements Report on Consolidated Financial Statements and Internal Control over Financial Reporting
The management of Amicus Therapeutics, Inc. has prepared, and is responsible for the
Companys consolidated financial statements and related footnotes. These consolidated financial
statements have been prepared in conformity with U.S. generally accepted accounting principles.
We are responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or
15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under
the supervision of the Companys principal executive and principal financial officers and effected
by the Companys board of directors, management, and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:
|
|
|
pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of Amicus Therapeutics, Inc.; |
|
|
|
provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of Amicus therapeutics, Inc. are being made
only in accordance with authorizations of management and directors of Amicus therapeutics,
Inc.; and |
|
|
|
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the assets of Amicus Therapeutics, Inc. that could have
a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
We assessed the effectiveness of our internal control over financial reporting as of
December 31, 2008. In making this assessment, it used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework. Based on our assessment we believe that, as of December 31, 2008, our internal control
over financial reporting is effective based on those criteria.
Dated February 4, 2009
|
|
|
|
|
|
|
/s/ John F. Crowley
President and Chief Executive Officer
|
|
|
|
/s/ James E. Dentzer
Chief Financial Officer
|
|
|
- 57 -
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of
Amicus Therapeutics, Inc.
We have audited the accompanying consolidated balance sheets of Amicus Therapeutics, Inc. and
subsidiary (a development stage company) as of December 31, 2008 and 2007, and the related
consolidated statements of operations, stockholders equity
(deficiency) and cash flows for each of
the three years in the period ended December 31, 2008 and the period February 4, 2002 (inception)
to December 31, 2008. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. We
were not engaged to perform an audit of the Companys internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Amicus Therapeutics, Inc. and subsidiary at
December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31, 2008, and the period February 4, 2002
(inception) to December 31, 2008, in conformity with U.S. generally accepted accounting principles.
MetroPark, New Jersey
February 4, 2009
- 58 -
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Amicus Therapeutics, Inc.
(a development stage company)
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2007 |
|
|
2008 |
|
Assets: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
44,188 |
|
|
$ |
28,073 |
|
Investments in marketable securities |
|
|
117,339 |
|
|
|
93,051 |
|
Prepaid expenses and other current assets |
|
|
1,513 |
|
|
|
2,463 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
163,040 |
|
|
|
123,587 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, less accumulated depreciation and amortization of
$2,793 and $4,260 at December 31, 2007 and 2008, respectively |
|
|
3,790 |
|
|
|
4,919 |
|
Other non-current assets |
|
|
267 |
|
|
|
267 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
167,097 |
|
|
$ |
128,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
10,465 |
|
|
$ |
8,796 |
|
Current portion of capital lease obligations |
|
|
1,527 |
|
|
|
877 |
|
Current portion of deferred revenue |
|
|
3,801 |
|
|
|
3,705 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
15,793 |
|
|
|
13,378 |
|
|
|
|
|
|
|
|
|
|
Deferred revenue, less current portion |
|
|
46,813 |
|
|
|
44,035 |
|
Capital lease obligations, less current portion |
|
|
1,194 |
|
|
|
317 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
|
|
|
|
Common stock, $.01 par value, 50,000,000 shares authorized,
22,408,731 shares issued and outstanding at December 31, 2007,
50,000,000 shares authorized, 22,634,711 shares issued and
outstanding at December 31, 2008 |
|
|
285 |
|
|
|
287 |
|
Additional paid-in capital |
|
|
227,438 |
|
|
|
234,412 |
|
Accumulated other comprehensive income |
|
|
408 |
|
|
|
533 |
|
Deficit accumulated during the development stage |
|
|
(124,834 |
) |
|
|
(164,189 |
) |
|
|
|
|
|
|
|
Total stockholders equity |
|
|
103,297 |
|
|
|
71,043 |
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Equity |
|
$ |
167,097 |
|
|
$ |
128,773 |
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
- 59 -
Amicus Therapeutics, Inc.
(a development stage company)
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 4, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Inception) to |
|
|
|
Years Ended December 31, |
|
|
December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
2008 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research revenue |
|
$ |
|
|
|
$ |
1,375 |
|
|
$ |
12,189 |
|
|
$ |
13,564 |
|
Collaboration revenue |
|
|
|
|
|
|
409 |
|
|
|
2,778 |
|
|
|
3,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
|
|
|
|
1,784 |
|
|
|
14,967 |
|
|
|
16,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
33,630 |
|
|
|
31,074 |
|
|
|
37,764 |
|
|
|
127,642 |
|
General and administrative |
|
|
12,277 |
|
|
|
15,278 |
|
|
|
19,666 |
|
|
|
57,736 |
|
Impairment of leasehold
improvements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,030 |
|
Depreciation and amortization |
|
|
952 |
|
|
|
1,237 |
|
|
|
1,493 |
|
|
|
4,287 |
|
In-process research and
development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
46,859 |
|
|
|
47,589 |
|
|
|
58,923 |
|
|
|
191,113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(46,859 |
) |
|
|
(45,805 |
) |
|
|
(43,956 |
) |
|
|
(174,362 |
) |
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
1,990 |
|
|
|
5,135 |
|
|
|
4,819 |
|
|
|
12,760 |
|
Interest expense |
|
|
(273 |
) |
|
|
(348 |
) |
|
|
(218 |
) |
|
|
(1,648 |
) |
Change in fair value of
warrant liability |
|
|
(23 |
) |
|
|
(149 |
) |
|
|
|
|
|
|
(454 |
) |
Other expense |
|
|
(1,180 |
) |
|
|
|
|
|
|
|
|
|
|
(1,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax benefit |
|
|
(46,345 |
) |
|
|
(41,167 |
) |
|
|
(39,355 |
) |
|
|
(164,884 |
) |
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(46,345 |
) |
|
|
(41,167 |
) |
|
|
(39,355 |
) |
|
|
(164,189 |
) |
Deemed dividend |
|
|
(19,424 |
) |
|
|
|
|
|
|
|
|
|
|
(19,424 |
) |
Preferred stock accretion |
|
|
(159 |
) |
|
|
(351 |
) |
|
|
|
|
|
|
(802 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common
stockholders |
|
$ |
(65,928 |
) |
|
$ |
(41,518 |
) |
|
$ |
(39,355 |
) |
|
$ |
(184,415 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common
stockholders per common share
basic and diluted |
|
$ |
(89.58 |
) |
|
$ |
(3.14 |
) |
|
$ |
(1.75 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding basic and diluted |
|
|
735,967 |
|
|
|
13,235,755 |
|
|
|
22,493,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 60 -
Amicus Therapeutics, Inc.
(a development stage company)
Consolidated Statements of Changes in Stockholders (Deficiency)/Equity
Period from February 4, 2002 (inception) to December 31, 2002,
and the six year period ended December 31, 2008
(in thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
|
During the |
|
|
Total |
|
|
|
Common Stock |
|
|
Paid-In |
|
|
Comprehensive |
|
|
Deferred |
|
|
Development |
|
|
Stockholders |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Gain/ (Loss) |
|
|
Compensation |
|
|
Stage |
|
|
(Deficiency) Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at February 4, 2002
(inception) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Issuance of common stock to
a consultant |
|
|
74,938 |
|
|
|
6 |
|
|
|
78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84 |
|
Stock issued for in-process
research and development |
|
|
232,266 |
|
|
|
17 |
|
|
|
401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
418 |
|
Deferred compensation |
|
|
|
|
|
|
|
|
|
|
209 |
|
|
|
|
|
|
|
(209 |
) |
|
|
|
|
|
|
|
|
Amortization of deferred
compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
27 |
|
Issuance of warrants with
financing arrangements |
|
|
|
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8 |
|
Accretion of redeemable
convertible preferred stock |
|
|
|
|
|
|
|
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11 |
) |
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,775 |
) |
|
|
(1,775 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2002 |
|
|
307,204 |
|
|
|
23 |
|
|
|
685 |
|
|
|
|
|
|
|
(182 |
) |
|
|
(1,775 |
) |
|
|
(1,249 |
) |
Stock issued from exercise
of stock options |
|
|
333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation |
|
|
|
|
|
|
|
|
|
|
14 |
|
|
|
|
|
|
|
(14 |
) |
|
|
|
|
|
|
|
|
Amortization of deferred
compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70 |
|
|
|
|
|
|
|
70 |
|
Issuance of stock warrants
with convertible notes |
|
|
|
|
|
|
|
|
|
|
210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
210 |
|
Issuance of stock options
to consultants |
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
Accretion of redeemable
convertible preferred stock |
|
|
|
|
|
|
|
|
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17 |
) |
Beneficial conversion
feature related to bridge
financing |
|
|
|
|
|
|
|
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,768 |
) |
|
|
(6,768 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2003 |
|
|
307,537 |
|
|
|
23 |
|
|
|
937 |
|
|
|
|
|
|
|
(126 |
) |
|
|
(8,543 |
) |
|
|
(7,709 |
) |
Deferred compensation |
|
|
|
|
|
|
|
|
|
|
68 |
|
|
|
|
|
|
|
(68 |
) |
|
|
|
|
|
|
|
|
Amortization of deferred
compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60 |
|
|
|
|
|
|
|
60 |
|
Issuance of stock options
to consultants |
|
|
|
|
|
|
|
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16 |
|
Accretion of redeemable
convertible preferred stock |
|
|
|
|
|
|
|
|
|
|
(126 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(126 |
) |
Interest waived on
converted convertible notes |
|
|
|
|
|
|
|
|
|
|
193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
193 |
|
Beneficial conversion
feature related to bridge
financing |
|
|
|
|
|
|
|
|
|
|
95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95 |
|
Comprehensive Loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding loss
on available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
(9 |
) |
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,807 |
) |
|
|
(8,807 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net total comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,816 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2004 |
|
|
307,537 |
|
|
|
23 |
|
|
|
1,183 |
|
|
|
(9 |
) |
|
|
(134 |
) |
|
|
(17,350 |
) |
|
|
(16,287 |
) |
Stock issued from exercise
of stock options |
|
|
97,156 |
|
|
|
7 |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24 |
|
Stock issued from exercise
of warrants |
|
|
133,332 |
|
|
|
10 |
|
|
|
65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75 |
|
Deferred compensation |
|
|
|
|
|
|
|
|
|
|
2,778 |
|
|
|
|
|
|
|
(2,778 |
) |
|
|
|
|
|
|
|
|
Amortization of deferred
compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
365 |
|
|
|
|
|
|
|
365 |
|
Non-cash charge for stock
options to consultants |
|
|
|
|
|
|
|
|
|
|
112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112 |
|
Accretion of redeemable
convertible preferred stock |
|
|
|
|
|
|
|
|
|
|
(139 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(139 |
) |
Comprehensive Loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding loss
on available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
(7 |
) |
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,972 |
) |
|
|
(19,972 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net total comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,979 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005 |
|
|
538,025 |
|
|
|
40 |
|
|
|
4,016 |
|
|
|
(16 |
) |
|
|
(2,547 |
) |
|
|
(37,322 |
) |
|
|
(35,829 |
) |
- 61 -
Amicus Therapeutics, Inc.
(a development stage company)
Consolidated Statements of Changes in Stockholders (Deficiency) Equity
Period from February 4, 2002 (inception) to December 31, 2002,
and the six year period ended December 31, 2008
(in thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
|
During the |
|
|
Total |
|
|
|
Common Stock |
|
|
Paid-In |
|
|
Comprehensive |
|
|
Deferred |
|
|
Development |
|
|
Stockholders |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Gain/ (Loss) |
|
|
Compensation |
|
|
Stage |
|
|
(Deficiency) Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005 |
|
|
538,025 |
|
|
|
40 |
|
|
|
4,016 |
|
|
|
(16 |
) |
|
|
(2,547 |
) |
|
|
(37,322 |
) |
|
|
(35,829 |
) |
Stock issued from exercise
of options |
|
|
265,801 |
|
|
|
20 |
|
|
|
138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158 |
|
Stock issued for license
payment |
|
|
133,333 |
|
|
|
10 |
|
|
|
1,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,220 |
|
Reversal of deferred
compensation upon adoption
of FAS 123(R) |
|
|
|
|
|
|
|
|
|
|
(2,547 |
) |
|
|
|
|
|
|
2,547 |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
53,333 |
|
|
|
|
|
|
|
2,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,816 |
|
Issuance of stock options to
consultants |
|
|
|
|
|
|
|
|
|
|
476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
476 |
|
Accretion of redeemable
convertible preferred stock |
|
|
|
|
|
|
|
|
|
|
(159 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(159 |
) |
Reclassification of warrant
liability upon exercise of
Series B redeemable
convertible preferred stock
warrants |
|
|
|
|
|
|
|
|
|
|
117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117 |
|
Beneficial conversion on
issuance of Series C
redeemable convertible
preferred stock |
|
|
|
|
|
|
|
|
|
|
19,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,424 |
|
Beneficial conversion charge
(deemed dividend) on
issuance of Series C
redeemable convertible
preferred stock |
|
|
|
|
|
|
|
|
|
|
(19,424 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,424 |
) |
Comprehensive (Loss)/ Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gain on
available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 |
|
|
|
|
|
|
|
|
|
|
|
31 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(46,345 |
) |
|
|
(46,345 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net total comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(46,314 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006 |
|
|
990,492 |
|
|
|
70 |
|
|
|
6,067 |
|
|
|
15 |
|
|
|
|
|
|
|
(83,667 |
) |
|
|
(77,515 |
) |
Stock issued from initial
public offering |
|
|
5,000,000 |
|
|
|
50 |
|
|
|
68,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,145 |
|
Stock issued from conversion
of preferred shares |
|
|
16,112,721 |
|
|
|
162 |
|
|
|
148,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
148,591 |
|
Stock issued from exercise
of stock options, net |
|
|
305,518 |
|
|
|
3 |
|
|
|
455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
458 |
|
Stock based compensation |
|
|
|
|
|
|
|
|
|
|
3,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,823 |
|
Issuance of stock options to
consultants |
|
|
|
|
|
|
|
|
|
|
162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162 |
|
Accretion of redeemable
convertible preferred stock |
|
|
|
|
|
|
|
|
|
|
(351 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(351 |
) |
Charge for warrant liability |
|
|
|
|
|
|
|
|
|
|
758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
758 |
|
Comprehensive (Loss)/ Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gain on
available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
393 |
|
|
|
|
|
|
|
|
|
|
|
393 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(41,167 |
) |
|
|
(41,167 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net total comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(40,774 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007 |
|
|
22,408,731 |
|
|
|
285 |
|
|
|
227,438 |
|
|
|
408 |
|
|
|
|
|
|
|
(124,834 |
) |
|
|
103,297 |
|
Stock issued from exercise
of stock options, net |
|
|
225,980 |
|
|
|
2 |
|
|
|
528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
530 |
|
Stock based compensation |
|
|
|
|
|
|
|
|
|
|
6,446 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,446 |
|
Comprehensive (Loss)/ Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gain on
available-for-sale
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125 |
|
|
|
|
|
|
|
|
|
|
|
125 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39,355 |
) |
|
|
(39,355 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net total comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39,230 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008 |
|
|
22,634,711 |
|
|
$ |
287 |
|
|
$ |
234,412 |
|
|
$ |
533 |
|
|
$ |
|
|
|
$ |
(164,189 |
) |
|
$ |
71,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 62 -
Amicus Therapeutics, Inc.
(a development stage company)
Consolidated Statements of Cash Flows
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 4, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Inception) to |
|
|
|
Years Ended December 31, |
|
|
December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(46,345 |
) |
|
$ |
(41,167 |
) |
|
$ |
(39,355 |
) |
|
$ |
(164,189 |
) |
Adjustments to reconcile net loss to net cash (used in)/provided by
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
525 |
|
Depreciation and amortization |
|
|
952 |
|
|
|
1,237 |
|
|
|
1,493 |
|
|
|
4,285 |
|
Amortization of non-cash compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
522 |
|
Stock-based compensation |
|
|
2,816 |
|
|
|
3,823 |
|
|
|
6,446 |
|
|
|
13,085 |
|
Non-cash charge for stock based compensation issued to consultants |
|
|
475 |
|
|
|
162 |
|
|
|
|
|
|
|
853 |
|
Change in fair value of warrant liability |
|
|
22 |
|
|
|
149 |
|
|
|
|
|
|
|
454 |
|
Loss on disposal of asset |
|
|
|
|
|
|
|
|
|
|
44 |
|
|
|
44 |
|
Stock-based license payment |
|
|
1,220 |
|
|
|
|
|
|
|
|
|
|
|
1,220 |
|
Impairment of leasehold improvements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,030 |
|
Non-cash charge for in process research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
418 |
|
Beneficial conversion feature related to bridge financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
120 |
|
|
|
(1,192 |
) |
|
|
(949 |
) |
|
|
(2,463 |
) |
Other non-current assets |
|
|
265 |
|
|
|
|
|
|
|
|
|
|
|
(288 |
) |
Account payable and accrued expenses |
|
|
6,586 |
|
|
|
1,566 |
|
|
|
(1,669 |
) |
|
|
8,796 |
|
Deferred revenue |
|
|
|
|
|
|
50,614 |
|
|
|
(2,873 |
) |
|
|
47,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in)/provided by operating activities |
|
|
(33,889 |
) |
|
|
15,192 |
|
|
|
(36,863 |
) |
|
|
(87,832 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale and redemption of marketable securities |
|
|
37,441 |
|
|
|
126,370 |
|
|
|
178,100 |
|
|
|
347,166 |
|
Purchases of marketable securities |
|
|
(62,013 |
) |
|
|
(200,743 |
) |
|
|
(153,687 |
) |
|
|
(439,801 |
) |
Purchases of property and equipment |
|
|
(2,031 |
) |
|
|
(669 |
) |
|
|
(2,667 |
) |
|
|
(10,278 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in)/provided by investing activities |
|
|
(26,603 |
) |
|
|
(75,042 |
) |
|
|
21,746 |
|
|
|
(102,913 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of preferred stock, net of issuance costs |
|
|
63,371 |
|
|
|
24,053 |
|
|
|
|
|
|
|
143,022 |
|
Proceeds from issuance of common stock, net of issuance costs |
|
|
|
|
|
|
68,093 |
|
|
|
|
|
|
|
68,093 |
|
Proceeds from the issuance of convertible notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
Payments of capital lease obligations |
|
|
(881 |
) |
|
|
(1,388 |
) |
|
|
(1,528 |
) |
|
|
(4,393 |
) |
Payments from exercise of stock options |
|
|
158 |
|
|
|
510 |
|
|
|
530 |
|
|
|
1,221 |
|
Proceeds from exercise of warrants (common and preferred) |
|
|
91 |
|
|
|
97 |
|
|
|
|
|
|
|
264 |
|
Proceeds from capital asset financing arrangement |
|
|
3,431 |
|
|
|
546 |
|
|
|
|
|
|
|
5,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in) financing activities |
|
|
66,170 |
|
|
|
91,911 |
|
|
|
(998 |
) |
|
|
218,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
|
5,678 |
|
|
|
32,061 |
|
|
|
(16,115 |
) |
|
|
28,073 |
|
Cash and cash equivalents at beginning of year/ period |
|
|
6,449 |
|
|
|
12,127 |
|
|
|
44,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year/period |
|
$ |
12,127 |
|
|
$ |
44,188 |
|
|
$ |
28,073 |
|
|
$ |
28,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest |
|
$ |
273 |
|
|
$ |
348 |
|
|
$ |
218 |
|
|
$ |
1,354 |
|
Non-cash activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of preferred stock to common stock |
|
$ |
|
|
|
$ |
148,591 |
|
|
$ |
|
|
|
|
148,951 |
|
Conversion of notes payable to Series B redeemable convertible
preferred stock |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
5,000 |
|
Accretion of redeemable convertible preferred stock |
|
$ |
159 |
|
|
$ |
351 |
|
|
$ |
|
|
|
$ |
802 |
|
Beneficial conversion feature related to issuance of the additional
issuance of Series C redeemable convertible preferred stock |
|
$ |
19,424 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
19,424 |
|
- 63 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements
1. Description of Business
Corporate Information, Status of Operations, and Management Plans
Amicus Therapeutics, Inc. (the Company) was incorporated on February 4, 2002 in Delaware for
the purpose of creating a premier drug development company at the forefront of therapy for human
genetic diseases initially based on intellectual property in-licensed from Mount Sinai School of
Medicine. The Companys activities since inception have consisted principally of raising capital,
establishing facilities, and performing research and development. Accordingly, the Company is
considered to be in the development stage.
In November 2007, the Company entered into a License and Collaboration Agreement with Shire
Pharmaceuticals Ireland Ltd. (Shire). Under the agreement, the Company and Shire will jointly
develop the Companys three lead pharmacological chaperone compounds for lysosomal storage
disorders: Amigal (migalastat hydrochloride), Plicera (isofagomine tartrate) and AT2220
(1-deoxynojirimycin HCl). For further information, see Note 12. Development and
Commercialization Agreement with Shire.
The Company had an accumulated deficit of approximately $164.2 million at December 31, 2008
and anticipates incurring losses through the year 2009 and beyond. The Company has not yet
generated commercial sales revenue and has been able to fund its operating losses to date through
the sale of its redeemable convertible preferred stock, issuance of convertible notes, net proceeds
from our initial public offering (IPO), the upfront licensing payment from Shire, reimbursed
research and development costs from Shire and other financing arrangements. The Company believes
that its existing cash and cash equivalents and short-term investments will be sufficient to covers
its cash flow requirements for 2009.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with
United States (U.S.) generally accepted accounting principles (U.S. GAAP) and include all
adjustments necessary for the fair presentation of the Companys financial position for the periods
presented.
Consolidation
The financial statements include the accounts of Amicus Therapeutics, Inc. and its wholly
owned subsidiary, Amicus Therapeutics UK Limited. All significant intercompany transactions and
balances are eliminated in consolidation. This subsidiary is not material to the overall financial
statements of the Company.
Reclassifications
Certain reclassifications have been made to the December 31, 2007 consolidated financial
statements in order to conform to the December 31, 2008 consolidated financial statements
presentation. These reclassifications do not have an effect on net loss as previously reported.
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 and Cash Equivalents
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.
- 64 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
Investment in Marketable Securities
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. In accordance with Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and
Equity Securities, these investments are classified as available-for-sale and are reported at fair
value on the Companys balance sheet. Unrealized holding gains and losses are reported within
accumulated other comprehensive income/ (loss) as a separate component of stockholders
(deficiency) equity. If a decline in the fair value of a marketable security below the Companys
cost basis is determined to be other than temporary, such marketable security is written down to
its estimated fair value as a new cost basis and the amount of the write-down is included in
earnings as an impairment charge. To date, only temporary impairment charges have been recorded in
any of the years presented herein.
The Company adopted SFAS No. 157, Fair Value Measurements (SFAS No. 157), on January 1, 2008.
SFAS No. 157 is applicable for all financial assets and liabilities that are recognized or
disclosed at fair value on a recurring basis. In accordance with SFAS No. 157, the Companys
available for sale investment securities are classified within Level 1 or Level 2 of the fair value
hierarchy. These investment securities are valued using quoted market prices, broker or dealer
quotations or other observable inputs.
Concentration of Credit Risk
The Companys financial instruments that are exposed to concentration of credit risk consist
primarily of cash and cash equivalents and marketable securities. 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 cash and cash
equivalents or its marketable securities.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation and amortization.
Depreciation is calculated over the estimated useful lives of the respective assets, which range
from three to five years, or the lesser of the related initial term of the lease or useful life for
leasehold improvements. Assets under capital leases are amortized over the terms of the related
leases or their estimated useful lives, whichever is shorter.
The initial cost of property and equipment consists of its purchase price and any directly
attributable costs of bringing the asset to its working condition and location for its intended
use. Expenditures incurred after the fixed assets have been put into operation, such as repairs
and maintenance, are charged to income in the period in which the costs are incurred. Major
replacements, improvements and additions are capitalized in accordance with Company policy.
Impairment of Long-Lived Assets
The Company performs a review of long-lived assets for impairment when events or changes in
circumstances indicate the carrying value of such assets may not be recoverable. If an indication
of impairment is present, the Company compares the estimated undiscounted future cash flows to be
generated by the asset to its carrying amount. If the undiscounted future cash flows are less than
the carrying amount of the asset, the Company records an impairment loss equal to the excess of the
assets carrying amount over its fair value. The fair value is determined based on valuation
techniques such as a comparison to fair values of similar assets or using a discounted cash flow
analysis. There were no impairment charges recognized during the years ended December 31, 2006,
2007 and 2008.
- 65 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
Revenue Recognition
The Company recognizes revenue in accordance with the Securities and Exchange Commission (SEC)
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements (SAB 101), as
amended by Staff Accounting Bulletin No. 104, Revision of Topic 13 (SAB 104).
In determining the accounting for collaboration agreements, the Company follows the provisions
of Emerging Issues Task Force (EITF) Issue 00-21, Revenue Arrangements with Multiple Deliverables
(EITF 00-21). EITF 00-21 provides guidance on whether an arrangement involves multiple
revenue-generating deliverables that should be accounted for as a single unit of accounting or
divided into separate units of accounting for revenue recognition purposes and, if this division is
required, how the arrangement consideration should be allocated among the separate units of
accounting. If the arrangement represents a single unit of accounting, the revenue recognition
policy and the performance obligation period must be determined (if not already contractually
defined) for the entire arrangement. If the arrangement represents separate units of accounting
according to the EITFs separation criteria, a revenue recognition policy must be determined for
each unit. Revenues for non-refundable upfront license fee payments will be recognized on a
straight line basis as Collaboration Revenue over the period of the performance obligations.
Revenues for research and development costs that are reimbursable under collaboration
agreements are recognized in accordance with EITF Issue 99-19, Reporting Revenue Gross as a Principal Versus Net
as an Agent (EITF 99-19). The revenue associated with these reimbursable amounts
is included in Research Revenue and the costs associated with these reimbursable amounts are
included in research and development expenses. The Company records these reimbursements as revenue
and not as a reduction of research and development expenses as the Company has the risks and
rewards as the principal in the research and development activities.
Research and Development Costs
Research and development costs are expensed as incurred. Research and development expense
consists primarily of costs related to personnel, including salaries and other personnel-related
expenses, consulting fees and the cost of facilities and support services used in drug development.
Assets acquired that are used for research and development and have no future alternative use are
expensed as in-process research and development.
Interest Income and Interest Expense
Interest income consists of interest earned on the Companys cash and cash equivalents and
marketable securities. Interest expense consists of interest incurred on capital leases.
Other Income and Expenses
During the second and third quarter of 2006, the Company deferred and capitalized $1.2 million
of costs directly attributable to the planned offering of its securities as other non-current
assets. These costs were recorded as other expenses when the planned offering was withdrawn during
the third quarter of 2006.
Income Taxes
The Company accounts for income taxes under the liability method. Under this method deferred
income tax liabilities and assets are determined based on the difference between the financial
statement carrying amounts and tax basis of assets and liabilities and for operating losses and tax
credit carryforwards, using enacted tax rates in effect in the years in which the differences are
expected to reverse. A valuation allowance is recorded if it is more likely than not that a
portion or all of a deferred tax asset will not be realized.
- 66 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes an Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 addresses the
accounting and disclosure of uncertain tax positions. FIN 48 prescribes a recognition threshold
and measurement attribute for the financial statement recognition and measurement of a tax position
taken or expected to be taken. The Company adopted FIN 48 on January 1, 2007 as required and
determined that the adoption of FIN 48 did not have a material impact on the Companys financial
position and results of operations.
Other Comprehensive Income/ (Loss)
SFAS No. 130, Reporting Comprehensive Income, requires components of other comprehensive
income/ (loss), including unrealized gains and losses on available-for-sale securities, to be
included as part of total comprehensive income/ (loss). The components of comprehensive gain/loss
are included in the statements of changes in stockholders (deficiency) equity.
Leases
In the ordinary course of business, the Company enters into lease agreements for office space
as well as leases for certain property and equipment. The leases have varying terms and
expirations and have provisions to extend or renew the lease agreement, among other terms and
conditions, as negotiated. Once the agreement is executed, the lease is assessed to determine
whether the lease qualifies as a capital or operating lease.
When a non-cancelable operating lease includes any fixed escalation clauses and lease
incentives for rent holidays or build-out contributions, rent expense is recognized on a
straight-line basis over the initial term of the lease. The excess between the average rental
amount charged to expense and amounts payable under the lease is recorded in accrued expenses.
Redeemable Convertible Preferred Stock
The carrying value of redeemable convertible preferred stock was increased by periodic
accretions so that the carrying amount would equal the redemption amount at the earliest redemption
date. These increases were reflected through charges to additional paid-in capital since the
Company did not have retained earnings. Redeemable convertible preferred stock was converted into
common stock upon completion of the Companys IPO on a one-for-one basis.
Warrants to Purchase Redeemable Convertible Preferred Stock
The Company accounted for its warrants to purchase shares of its Series B redeemable
convertible preferred stock (Series B Warrants) in accordance with FASB Staff Position 150-5:
Issuers Accounting under FASB Statement No. 150 for Freestanding Warrants and Other Similar
Instruments on Shares That Are Redeemable (FSP 150-5). As the Series B Preferred shares underling
the warrants had redemption rights, the warrants to purchase Series B shares were classified as a
liability. The Company measured the fair value of its warrant liability using the Black-Scholes
option pricing model with changes in fair value recognized as non-operating income or expense. The
value of the warrant liability at issuance was $0.4 million. In connection with the Companys IPO,
the Series B warrants were exercised for 40,797 shares of Series B redeemable convertible preferred
stock and automatically converted into common stock on a one-for-one basis.
- 67 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
Stock-Based Compensation
At December 31, 2008, the Company had three stock-based employee compensation plans, which are
described more fully in Note 7. Stock Option Plans. Until May 2007, the Company had one
stock-based employee compensation plan. Prior to January 1, 2006, the Company accounted for this
plan under the recognition and measurement provisions of Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees (APB No. 25) and related interpretations, as
permitted by SFAS No. 123, Accounting for Stock-Based Compensation. Stock-based employee
compensation cost was recognized in the statement of operations for periods prior to January 1,
2006; to the extent options granted under the plan had an exercise price that was less than the
fair market value of the underlying common stock on the date of grant. Under the prospective
transition method, compensation cost recognized for all stock-based payments granted subsequent to
January 1, 2006 is based on the grant-date fair value estimated in accordance with the provisions
of SFAS No. 123(R). Results for prior periods have not been restated.
The Company recognized stock-based compensation expense of $3.3 million, $4.0 million and $6.4
million in 2006, 2007 and 2008, respectively. The following table summarizes information related
to stock compensation expense recognized in the income statement (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
Stock compensation expense recognized in: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense |
|
$ |
1.7 |
|
|
$ |
1.6 |
|
|
$ |
2.5 |
|
General and administrative expense |
|
|
1.6 |
|
|
|
2.4 |
|
|
|
3.9 |
|
|
|
|
|
|
|
|
|
|
|
Total stock compensation expense |
|
$ |
3.3 |
|
|
$ |
4.0 |
|
|
$ |
6.4 |
|
|
|
|
|
|
|
|
|
|
|
Beneficial Conversion Charges
When the Company issues debt or equity securities which are convertible into common stock at a
discount from the common stock fair value at the date the debt or equity financing is committed, a
beneficial conversion charge is measured as the difference between the closing price and the
conversion price at the commitment date. The beneficial conversion charge is presented as a
discount or reduction to the related security, with an offsetting amount increasing additional
paid-in capital. The Company also recorded a beneficial conversion charge (also referred to as a
deemed dividend) during April of 2006 of approximately $19.4 million related to the issuance of
certain shares of Series C redeemable convertible preferred stock. The beneficial conversion
charge for equity instruments is recorded with offsetting charges and credits to additional paid in
capital with no effect on total shareholder equity. The Series C investors committed to finance
the additional issuance of the Series C redeemable convertible preferred stock on March 31, 2006.
The estimated fair value of the common stock was approximately $16.13 per share at the commitment
date of the additional issuance and the beneficial conversion charge was recognized upon issuance
of the Series C redeemable convertible preferred stock as such stock could be converted upon
issuance. The Company did not record a beneficial conversion charge for any other redeemable
convertible preferred stock issuances as the common stock fair value was less than the conversion
price of each offering on the respective commitment dates of those offerings.
Basic and Diluted Net Loss Attributable to Common Stockholders per Common Share
The Company calculates net loss per share in accordance with SFAS No. 128, Earnings Per Share.
The Company has determined that its Series A, B, C, and D redeemable convertible preferred stock
represent participating securities in accordance with EITF Issue No. 03-6, Participating Securities
and the Two Class Method under FASB Statement No. 128. However, since the Company operates at a
loss, and losses are not allocated to the redeemable convertible preferred stock, the two class
method does not affect the Companys calculation of earnings per share. The Company has a net loss
for all periods presented; accordingly, the inclusion of common stock options and warrants would be
anti-dilutive. Therefore, the weighted average shares used to calculate both basic and diluted
earnings per share are the same.
- 68 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
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 and pro
forma net loss attributable to common stockholders per common share (in thousands except share
amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
Historical |
|
|
|
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(46,345 |
) |
|
$ |
(41,167 |
) |
|
$ |
(39,355 |
) |
Deemed dividend |
|
|
(19,424 |
) |
|
|
|
|
|
|
|
|
Accretion of redeemable convertible preferred stock |
|
|
(159 |
) |
|
|
(351 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common stockholders |
|
$ |
(65,928 |
) |
|
$ |
(41,518 |
) |
|
$ |
(39,355 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding basic
and diluted |
|
|
735,967 |
|
|
|
13,235,755 |
|
|
|
22,493,803 |
|
|
|
|
|
|
|
|
|
|
|
Dilutive common stock equivalents would include the dilutive effect of convertible securities,
common stock options and warrants for common stock equivalents. Potentially dilutive common stock
equivalents totaled approximately 17.5 million, 24.9 million and 25.7 million for the years ended
December 31, 2006, 2007 and 2008, respectively. Potentially dilutive common stock equivalents were
excluded from the diluted earnings per share denominator for all periods because of their
anti-dilutive effect.
Dividends
The Company has not paid cash dividends on its capital stock to date. The Company currently
intends to retain its future earnings, if any, to fund the development and growth of the business
and do not foresee payment of a dividend in any upcoming fiscal period.
Recent Accounting Pronouncements
In May 2008, the FASB issued FASB Staff Position (FSP) No. 14-1, Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement),
which specifies that issuers of these instruments should separately account for the liability and
equity components in a manner that reflects the entitys nonconvertible debt borrowing rate when
interest cost is recognized in subsequent periods. FSP No. 14-1 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. FSP No. 14-1 is also to be applied retrospectively to all periods presented
except if these instruments were not outstanding during any of the periods that are presented in
the annual financial statements for the period of adoption but were outstanding during an earlier
period. The Company does not expect that this will have a significant impact on the financial
statements of the Company.
In December 2007, the EITF of the FASB reached a consensus on issue No. 07-1, Accounting for
Collaborative Arrangements (EITF 07-1). The EITF concluded on the definition of a collaborative
arrangement and that revenues and costs incurred with third parties in connection with
collaborative arrangements would be presented gross or net based on the criteria in EITF 99-19 and
other accounting literature. Based on the nature of the arrangement, payments to or from
collaborators would be evaluated and its terms, the nature of the entitys business, and whether
those payments are within the scope of other accounting literature would be presented. Companies
are also required to disclose the nature and purpose of collaborative arrangements along with the
accounting policies and the classification and amounts of significant financial-statement balances
related to the arrangements. Activities in the arrangement conducted in a separate legal entity
should be accounted for under other accounting literature; however required disclosure under EITF
07-1 applies to the entire collaborative agreement. This Issue is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years, and is to be applied retrospectively to all periods presented for all
collaborative arrangements existing as of the effective date. The Company does not expect that
this will have a significant impact on the financial statements of the Company.
- 69 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS No. 141(R)),
which replaces SFAS No. 141, Business Combinations, requires an acquirer to recognize the assets
acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the
acquisition date, measured at their fair values as of that date, with limited exceptions. This
Statement also requires the acquirer in a business combination achieved in stages to recognize the
identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at
the full amounts of their fair values. SFAS No. 141(R) makes various other amendments to
authoritative literature intended to provide additional guidance or to confirm the guidance in that
literature to that provided in this Statement. This Statement applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. The Company does not expect that this
will have a significant impact on the financial statements of the Company.
In December 2007, FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements (SFAS No. 160), which amends Accounting Research Bulletin No. 51, Consolidated Financial
Statements, to improve the relevance, comparability, and transparency of the financial information
that a reporting entity provides in its consolidated financial statements. SFAS No. 160
establishes accounting and reporting standards that require the ownership interests in subsidiaries
not held by the parent to be clearly identified, labeled and presented in the consolidated
statement of financial position within equity, but separate from the parents equity. This
statement also requires the amount of consolidated net income attributable to the parent and to the
non-controlling interest to be clearly identified and presented on the face of the consolidated
statement of income. Changes in a parents ownership interest while the parent retains its
controlling financial interest must be accounted for consistently, and when a subsidiary is
deconsolidated, any retained non-controlling equity investment in the former subsidiary must be
initially measured at fair value. The gain or loss on the deconsolidation of the subsidiary is
measured using the fair value of any non-controlling equity investment. The Statement also
requires entities to provide sufficient disclosures that clearly identify and distinguish between
the interests of the parent and the interests of the non-controlling owners. This Statement
applies prospectively to all entities that prepare consolidated financial statements and applies
prospectively for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. The Company does not expect that this will have a significant impact on
the financial statements of the Company.
In June 2007, the EITF of the FASB reached a consensus on Issue No. 07-3, Accounting for
Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and
Development Activities (EITF 07-3). EITF 07-3 requires that non-refundable advance payments for
goods or services that will be used or rendered for future research and development activities
should be deferred and capitalized. As the related goods are delivered or the services are
performed, or when the goods or services are no longer expected to be provided, the deferred
amounts would be recognized as an expense. This Issue is effective for financial statements issued
for fiscal years beginning after December 15, 2007 and earlier application is not permitted. This
consensus is to be applied prospectively for new contracts entered into on or after the effective
date. The pronouncement did not have a material effect on the financial statements of the Company.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial LiabilitiesIncluding an amendment of FASB Statement No. 115 (SFAS No. 159), which is
effective for fiscal years beginning after November 15, 2007. SFAS No. 159 permits the Company to
choose to measure many financial instruments and certain other items at fair value. The objective
is to improve financial reporting by providing entities with the opportunity to mitigate volatility
in reported earnings caused by measuring related assets and liabilities differently without having
to apply complex hedge accounting provisions. SFAS No. 159 is expected to expand the use of fair
value measurement, which is consistent with the FASBs long-term measurement objectives for
accounting for financial instruments. SFAS No. 159 is effective for fiscal year 2008 but early
adoption is permitted. The pronouncement did not have a material effect on the financial
statements of the Company.
- 70 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
Segment Information
The Company currently operates in one business segment focusing on the development and
commercialization of small molecule, orally administered therapies to treat a range of human
genetic diseases. The Company is not organized by market and is managed and operated as one
business. A single management team reports to the chief operating decision maker who
comprehensively manages the entire business. The Company does not operate any separate lines of
business or separate business entities with respect to its products. Accordingly, the Company does
not accumulate discrete financial information with respect to separate service lines and does not
have separately reportable segments as defined by SFAS No. 131, Disclosure About Segments of an
Enterprise and Related Information.
3. Investments in Marketable Securities
The Company adopted SFAS No. 157, Fair Value Measurements (SFAS No. 157), on January 1, 2008.
SFAS No. 157 is applicable for all financial assets and liabilities that are recognized or
disclosed at fair value on a recurring basis. SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS No. 157 requires fair value measurements be
classified and disclosed in one of the following three categories:
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.
As of December 31, 2008, the Company held $93.0 million of available for sale investment
securities. In accordance with SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities, these investments are reported at fair
value on the Companys balance sheet. Unrealized holding gains and losses are reported within
accumulated other comprehensive income/ (loss) as a separate component of stockholders
(deficiency) equity. If a decline in the fair value of a marketable security below the Companys
cost basis is determined to be other than temporary, such marketable security is written down to
its estimated fair value as a new cost basis and the amount of the write-down is included in
earnings as an impairment charge. To date, only temporary impairment charges have been recorded.
The recent and precipitous decline in the market value of certain securities backed by
residential mortgage loans has led to a large liquidity crisis affecting the broader U.S. housing
market, the financial services industry and global financial markets. Investors holding many of
these and related securities have experienced substantial decreases in asset valuations and
uncertain secondary market liquidity. Furthermore, credit rating authorities have, in many cases,
been slow to respond to the rapid changes in the underlying value of certain securities and
pervasive market illiquidity, regarding these securities.
As a result, this credit crisis may have a potential impact on the determination of the fair
value of financial instruments or possibly require impairments in the future should the value of
certain investments suffer a decline in value which is determined to be other than temporary.
Consistent with the Companys investment policy, the Company does not use derivative financial
instruments in its investment portfolio. 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 many of our securities are either
government backed or of the highest credit rating.
The Companys investment portfolio has not been adversely materially impacted by the recent
disruption in the credit markets. However, if there is continued and expanded disruption in the
credit markets, there can be no assurance that the Companys investment portfolio will not be
adversely affected in the future.
- 71 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
The Companys available for sale investment securities are classified within Level 1 or Level
2 of the fair value hierarchy. These investment securities are valued using quoted market prices,
broker or dealer quotations or other observable inputs. The fair value measurements of the
Companys available for sale investment securities are identified in the following table (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at |
|
|
|
|
|
|
|
Reporting Date using |
|
|
|
|
|
|
|
Quoted Prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
In Active |
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
Markets for |
|
|
Other |
|
|
Significant |
|
|
|
|
|
|
|
Identical |
|
|
Observable |
|
|
Unobservable |
|
|
|
December 31, |
|
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
|
|
2008 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Commercial paper |
|
$ |
22,447 |
|
|
$ |
|
|
|
$ |
22,447 |
|
|
$ |
|
|
Asset-backed securities |
|
|
7,217 |
|
|
|
|
|
|
|
7,217 |
|
|
|
|
|
U.S. government agency securities |
|
|
58,790 |
|
|
|
|
|
|
|
58,790 |
|
|
|
|
|
Corporate debt securities |
|
|
4,597 |
|
|
|
|
|
|
|
4,597 |
|
|
|
|
|
Money market fund (cash
equivalents) |
|
|
24,626 |
|
|
|
24,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
117,677 |
|
|
$ |
24,626 |
|
|
$ |
93,051 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All of the Companys available for sale investments as of December 31, 2007 and 2008 are
due in one year or less.
Unrealized gains and losses are reported as a component of accumulated other comprehensive
gain/loss in stockholders (deficiency) equity. For the years ended December 31, 2007 and
2008, unrealized holding gains included in accumulated other comprehensive income/(loss) were
$0.4 million and $0.1 million, respectively.
For the years ended December 31, 2007 and 2008, there were no realized gains or losses.
The cost of securities sold is based on specific identification method.
Unrealized loss positions in the available for sale securities as of December 31, 2007 and
2008 reflect temporary impairments that have not been recognized and have been in a loss
position for less than twelve months. The fair value of these available for sale securities in
unrealized loss positions was $14.7 million and $8.9 million as of December 31, 2007 and 2008,
respectively.
4. Property and Equipment
Property and equipment consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2007 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Property and equipment consist of the following: |
|
|
|
|
|
|
|
|
Computer equipment |
|
$ |
694 |
|
|
$ |
1,322 |
|
Computer software |
|
|
167 |
|
|
|
996 |
|
Research equipment |
|
|
3,089 |
|
|
|
4,096 |
|
Furniture and fixtures |
|
|
579 |
|
|
|
657 |
|
Leasehold improvements |
|
|
2,054 |
|
|
|
2,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,583 |
|
|
|
9,179 |
|
Less accumulated depreciation and amortization |
|
|
(2,793 |
) |
|
|
(4,260 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,790 |
|
|
$ |
4,919 |
|
|
|
|
|
|
|
|
Included in property and equipment are costs capitalized pursuant to capital lease
obligations of $5.5 million and $5.4 million at December 31, 2007 and 2008. Depreciation and
amortization expense relating to the capital lease obligations was $0.8 million, $1.1 million, $1.1
million and $3.1 million for the years ended December 31, 2006, 2007, and 2008, and for the Period
February 4, 2002 (inception) to December 31, 2008, respectively.
- 72 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
5. Accounts Payable and Accrued Expenses
Accrued expenses consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2007 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
530 |
|
|
$ |
1,987 |
|
Accrued professional fees |
|
|
979 |
|
|
|
283 |
|
Accrued contract manufacturing & contract research costs |
|
|
6,035 |
|
|
|
2,985 |
|
Accrued compensation and benefits |
|
|
2,279 |
|
|
|
2,846 |
|
Accrued facility costs |
|
|
364 |
|
|
|
281 |
|
Accrued other |
|
|
278 |
|
|
|
414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,465 |
|
|
$ |
8,796 |
|
|
|
|
|
|
|
|
6. Capital Structure
Common Stock
As of December 31, 2008, the Company was authorized to issue 50,000,000 shares of common
stock. Dividends on common stock will be paid when, and if declared by the board of directors.
Each holder of common stock is entitled to vote on all matters and is entitled to one vote for each
share held.
In June 2007, the Company closed its IPO of 5,000,000 shares of its common stock at a public
offering price of $15.00 per share. Net proceeds to the Company were approximately $68.1 million,
after deducting underwriting discounts, commissions and offering expenses totaling approximately
$6.9 million. In connection with the initial public offering, the outstanding shares of Series A
redeemable convertible preferred stock were converted into 444,443 shares of common stock, the
outstanding shares of Series B redeemable convertible preferred stock were converted into 4,877,056
shares of common stock, the outstanding shares of Series C redeemable convertible preferred stock
were converted into 5,820,020 shares of common stock and the outstanding shares of Series D
redeemable convertible preferred stock were converted into 4,930,405 shares of common stock. In
connection with the IPO, the outstanding warrants to purchase Series B redeemable convertible
preferred stock were automatically exercised and the shares of Series B redeemable convertible
preferred stock automatically converted into 40,797 shares of the common stock. As a result, the
Company no longer recognizes accretion expense for preferred stock or non-operating income or
expense for changes in the fair value of the warrant liability.
In connection with an employment agreement and director compensation agreement, the Company
issued 53,333 shares of common stock in return for services in 2005. The shares will vest over
three and four year periods. The Company recorded $0.04 million, $0.1 million and $0.1 million as
compensation expense during 2006, 2007 and 2008, respectively, in connection with the issuance of
these restricted shares.
In connection with the formation of the Company, the Company issued 232,266 shares of common
stock to the Mount Sinai School of Medicine of New York University (MSSM) in exchange for exclusive
license rights for certain intellectual property. The value of the shares was accounted for as
in-process research and development. In October of 2006, the Company amended its license agreement
MSSM to expand its exclusive worldwide patent rights to develop and commercialize pharmacological
chaperones. In connection with the amendment, the Company paid $1.0 million and issued
133,333 shares of its common stock valued at $1.2 million to MSSM.
- 73 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
Redeemable Convertible Preferred Stock
In June 2007 in connection with the IPO, all outstanding redeemable convertible preferred
stock was converted to common stock. As of the IPO conversion date, Series A, Series B, Series C,
and Series D were converted at their respected stated values (estimated fair value of $5.63 per
share, $6.32 per share, $9.45 per share, and $12.17 per share, respectively, less issuance costs
and accretion adjustments).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
Series C |
|
|
Series D |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
(in thousands) |
|
Balance at
February 4, 2002
(inception) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
Issuance of
Series A at
$5.63 per share |
|
|
444,443 |
|
|
|
2,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance costs |
|
|
|
|
|
|
(95 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion |
|
|
|
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2002 |
|
|
444,443 |
|
|
|
2,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion |
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2003 |
|
|
444,443 |
|
|
|
2,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
Series B at
$6.38 per share |
|
|
|
|
|
|
|
|
|
|
2,823,523 |
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(122 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
warrants with
Series B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(422 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion |
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2004 |
|
|
444,443 |
|
|
|
2,449 |
|
|
|
2,823,523 |
|
|
|
17,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
Series B at
$6.38 per share |
|
|
|
|
|
|
|
|
|
|
2,039,211 |
|
|
|
13,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
Series C at
$9.45 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,910,010 |
|
|
|
27,500 |
|
|
|
|
|
|
|
|
|
Issuance cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(178 |
) |
|
|
|
|
|
|
|
|
Accretion |
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
110 |
|
|
|
|
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2005 |
|
|
444,443 |
|
|
|
2,466 |
|
|
|
4,862,734 |
|
|
|
30,669 |
|
|
|
2,910,010 |
|
|
|
27,334 |
|
|
|
|
|
|
|
|
|
- 74 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A |
|
|
Series B |
|
|
Series C |
|
|
Series D |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
(in thousands) |
|
Balance at
December 31, 2005 |
|
|
444,443 |
|
|
|
2,466 |
|
|
|
4,862,734 |
|
|
|
30,669 |
|
|
|
2,910,010 |
|
|
|
27,334 |
|
|
|
|
|
|
|
|
|
Exercise of
warrants with
Series B at $6.38 |
|
|
|
|
|
|
|
|
|
|
14,322 |
|
|
|
91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
Series C at
$9.45 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,910,010 |
|
|
|
27,500 |
|
|
|
|
|
|
|
|
|
Issuance of
Series D at
$12.15 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,953,878 |
|
|
|
35,947 |
|
Issuance cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(76 |
) |
Accretion to
redemption value |
|
|
|
|
|
|
10 |
|
|
|
|
|
|
|
108 |
|
|
|
|
|
|
|
35 |
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2006 |
|
|
444,443 |
|
|
|
2,476 |
|
|
|
4,877,056 |
|
|
|
30,868 |
|
|
|
5,820,020 |
|
|
|
54,869 |
|
|
|
2,953,878 |
|
|
|
35,876 |
|
Issuance of Series
D at $12.15 per
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,976,527 |
|
|
|
24,053 |
|
Series B warrant
exercise |
|
|
|
|
|
|
|
|
|
|
40,797 |
|
|
|
98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion to
redemption value |
|
|
|
|
|
|
24 |
|
|
|
|
|
|
|
126 |
|
|
|
|
|
|
|
130 |
|
|
|
|
|
|
|
71 |
|
Conversion of
preferred stock to
common |
|
|
(444,443 |
) |
|
|
(2,500 |
) |
|
|
(4,917,853 |
) |
|
|
(31,092 |
) |
|
|
(5,820,020 |
) |
|
|
(54,999 |
) |
|
|
(4,930,405 |
) |
|
|
(60,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2007 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
During 2002, the Company issued 5,333 common stock warrants to a vendor as part of a capital
lease agreement. These warrants were outstanding at December 31, 2005 and 2006. The warrants have
an exercise price of $5.63 per share (adjusted for stock splits, stock dividends, etc.). The value
of the warrants was calculated using the Black-Scholes option pricing model and was capitalized as
debt issuance cost and amortized to interest expense over the term of the obligation. The value of
the warrants and total charge to interest expense was not material for each of the years presented.
In 2003, the Company issued 133,332 common stock warrants to certain investors in connection
with its Bridge Loans. The warrants had an exercise price of $0.56 per share (adjusted for stock
splits, stock dividends, etc.). The value of the warrants of $0.2 million was calculated using the
Black-Scholes option pricing model and was accounted for as debt discount and amortized to interest
expense over the term of the loans. These same warrant shares were exercised in 2005. The total
charge to interest expense was $0.1 million for the year ended December 31, 2004.
In 2004, the Company issued warrants to purchase 73,996 Series B shares to certain investors
as part of the Series B financing. The warrants had an exercise price of $6.38 per share (adjusted
for stock splits, stock dividends, etc.) and could have been exercised for cash or net shares at
the option of the warrant holders. During 2006 there were 14,322 warrants exercised for Series B
shares. In connection with the IPO, the remaining 40,797 warrants were automatically exercised and
converted into 40,797 common shares. As the Series B Preferred shares underling the warrants had
redemption rights, the warrants to purchase Series B shares were classified as a liability in
accordance with FSP 150-5.
- 75 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
The Company measured the fair value of its warrant liability using the Black-Scholes option
pricing model with changes in fair value recognized in earnings. The value of the warrant
liability at issuance was $0.4 million. The Company recognized changes in the fair value of the
warrant liability as non-operating income or (expense) of $0, $(0.3 million), and $(0) in 2004,
2005, and 2006, respectively. In connection with the Companys IPO, the Series B warrants were
exercised for 40,797 shares of Series B redeemable convertible preferred stock and automatically
converted into common stock on a one-for-one basis. As of December 31, 2008, there were no
warrants outstanding.
7. Stock Option Plans
In April 2002, the Companys Board of Directors and shareholders approved the Companys 2002
Stock Option Plan (the 2002 Plan). In May 2007, the Companys Board of Directors and shareholders
approved the Companys 2007 Stock Option Plan (the 2007 Plan) and 2007 Director Option Plan (the
2007 Director Plan). In June 2008, the Companys Board of Directors and shareholders approved
amendments to the 2007 Plan. Both the 2002 Plan and 2007 Plan provide for the granting of
restricted stock and options to purchase common stock in the Company to employees, advisors and
consultants at a price to be determined by the Companys board of directors. The 2002 Plan and the
2007 Plan are 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 Companys business.
The Options may be incentive stock options (ISOs) or non-statutory stock options (NSOs). Under the
provisions of each plan, no option will have a term in excess of 10 years. The 2007 Director Plan
is intended to promote the recruiting and retention of highly qualified eligible directors and
strengthen the commonality of interest between directors and stockholders by encouraging ownership
of common stock of the Company. The options granted under the 2007 Director Plan are NSOs and
under the provisions of this plan, no option will have a term in excess of 10 years.
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. Options granted pursuant to both the 2002 Plan and the 2007
Plan generally vest 25% on the first year anniversary date of grant plus an additional 1/48th for
each month thereafter and may be exercised in whole or in part for 100% of the shares vested at any
time after the date of grant. Options under the 2007 Director Plan are granted at the annual
meeting of stockholders and vest on the date of the annual meeting of stockholders of the Company
in the year following the year during which the options were automatically granted.
As of December 31, 2008, there were no shares reserved for issuance under the 2002 Plan. The
Company has reserved up to 2,055,926 shares for issuance under the 2007 Plan and the 2007 Director
Plan.
The Company recognized stock-based compensation expense of $3.3 million, $4.0 million and $6.4
million in 2006, 2007 and 2008, respectively. The following table summarizes information related
to stock compensation expense recognized in the income statement (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
Stock compensation expense recognized in: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense |
|
$ |
1.7 |
|
|
$ |
1.6 |
|
|
$ |
2.5 |
|
General and administrative expense |
|
|
1.6 |
|
|
|
2.4 |
|
|
|
3.9 |
|
|
|
|
|
|
|
|
|
|
|
Total stock compensation expense |
|
$ |
3.3 |
|
|
$ |
4.0 |
|
|
$ |
6.4 |
|
|
|
|
|
|
|
|
|
|
|
Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS
No. 123(R), Share-Based Payment (SFAS No. 123(R)), using the prospective transition method. Under
the prospective transition method, compensation expense is recognized in the financial statements
on a prospective basis for all share-based payments granted subsequent to January 1, 2006, based
upon the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). For
options granted prior to January 1, 2006, as a non-public company and accounted for using the
intrinsic value method, the Company will continue to expense any intrinsic value recognized over
the vesting period. The grant-date fair value of awards expected to vest is expensed on a
straight-line basis over the vesting period of the related awards. Under the prospective transition
method, results for prior periods are not restated and pro forma disclosures for outstanding awards
accounted for under the intrinsic value method of APB No. 25 are not presented since the Company
used the minimum value method for pro forma disclosure purposes prior to January 1, 2006.
- 76 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
SFAS No. 123(R) does not change the accounting guidance for how the Company accounts for
options issued to non-employees. The Company accounts for options issued to non-employees in
accordance with SFAS No. 123 and EITF Issue No. 96-18, Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services
(EITF 96-18). As such, the value of such options is periodically re-measured and income or expense
is recognized during the vesting terms.
The Company uses the Black-Scholes option pricing model when estimating the fair value for
stock-based awards. The fair value of stock option awards subsequent to December 31, 2005 is
amortized on a straight-line basis over the requisite service periods of the awards, which is
generally the vesting period. Use of a valuation model requires management to make certain
assumptions with respect to selected model inputs. Expected volatility was calculated based on a
blended weighted average of historical information of our stock and the weighted average of
historical information of similar public entities for which historical information was available.
The Company will continue to use a blended weighted average approach using our own historical
volatility and other similar public entity volatility information until our historical volatility
is relevant to measure expected volatility for future option grants. The average expected life was
determined according to the SEC shortcut approach as described in SAB No. 107, which is the
mid-point between the vesting date and the end of the contractual term. The risk-free interest
rate is based on U.S. Treasury, zero-coupon issues with a remaining term equal to the expected life
assumed at the date of grant. Forfeitures are estimated based on voluntary termination behavior,
as well as a historical analysis of actual option forfeitures.
The weighted-average grant-date fair value per share of options granted during 2006, 2007 and
2008 were $10.20, $9.45 and $7.36, respectively. The weighted average assumptions used in the
Black-Scholes option pricing model are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected stock price volatility |
|
|
74.8 |
% |
|
|
78.3 |
% |
|
|
78.2 |
% |
Risk free interest rate |
|
|
4.7 |
% |
|
|
4.5 |
% |
|
|
3.0 |
% |
Expected life of options (years) |
|
|
6.25 |
|
|
|
6.25 |
|
|
|
6.25 |
|
Expected annual dividend per share |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
The following table summarizes information about stock options outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Remaining |
|
|
|
|
|
|
Number of |
|
|
Exercise |
|
|
Contractual |
|
|
Aggregate |
|
|
|
Shares |
|
|
Price |
|
|
Life |
|
|
Intrinsic Value |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding, December 31, 2005 |
|
|
1,237.1 |
|
|
$ |
2.10 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
1,005.1 |
|
|
$ |
6.00 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(265.8 |
) |
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(108.0 |
) |
|
$ |
2.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding, December 31, 2006 |
|
|
1,868.4 |
|
|
$ |
4.27 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
1,035.6 |
|
|
$ |
13.16 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(308.6 |
) |
|
$ |
1.80 |
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(152.2 |
) |
|
$ |
8.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding, December 31, 2007 |
|
|
2,443.2 |
|
|
$ |
8.08 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
965.2 |
|
|
$ |
10.49 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(225.1 |
) |
|
$ |
2.48 |
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(106.0 |
) |
|
$ |
9.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding, December 31, 2008 |
|
|
3,077.3 |
|
|
$ |
9.19 |
|
|
7.9 years |
|
$ |
3.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and unvested expected to vest,
December 31, 2008 |
|
|
2,914.8 |
|
|
$ |
9.09 |
|
|
7.9 years |
|
$ |
3.5 |
|
Exercisable at December 31, 2008 |
|
|
1,266.3 |
|
|
$ |
7.36 |
|
|
7.0 years |
|
$ |
2.8 |
|
- 77 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
The aggregate intrinsic value of options exercised during the years ended December 31, 2006,
2007 and 2008, was $2.5 million, $2.7 million and $1.9 million, respectively. As of December 31,
2008, the total unrecognized compensation cost related to non-vested stock options granted was
$11.6 million and is expected to be recognized over a weighted average period of 2.4 years. Cash
proceeds from stock options exercised during the years ended December 31, 2006, 2007 and 2008 were
$0.2 million, $0.5 million and $0.6 million, respectively.
Restricted Stock Awards Restricted stock awards are granted subject to certain restrictions,
including in some cases service conditions (restricted stock). The grant-date fair value of
restricted stock awards, which has been determined based upon the market value of the Companys
shares on the grant date, is expensed over the vesting period.
The following table summarizes information on the Companys restricted stock:
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
|
Weighted |
|
|
|
Number of |
|
|
Average Grant |
|
|
|
Shares |
|
|
Date Fair Value |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at December 31, 2006 |
|
|
51.1 |
|
|
$ |
8.94 |
|
Granted |
|
|
|
|
|
$ |
|
|
Vested |
|
|
(16.1 |
) |
|
$ |
8.88 |
|
Forfeited |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
Unvested at December 31, 2007 |
|
|
35.0 |
|
|
$ |
8.96 |
|
Granted |
|
|
|
|
|
$ |
|
|
Vested |
|
|
(14.4 |
) |
|
$ |
8.85 |
|
Forfeited |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
Unvested at December 31, 2008 |
|
|
20.6 |
|
|
$ |
9.04 |
|
|
|
|
|
|
|
|
|
Upon vesting in 2008, 2,640 shares were surrendered to fund minimum statutory tax withholding
requirements. There were no restricted stock awards in 2008, 2007 or prior to 2006. As of
December 31, 2008, the total unrecognized compensation cost related to unvested restricted stock
awards was $0.2 million. This cost is expected to be recognized over a weighted average period of
1.6 years. The total fair value of restricted stock awards which vested during 2008 was $0.1
million.
8. 401(k) Plan
The Company has a 401(k) plan (the Plan) covering all eligible employees and through
December 31, 2007, the Company had not made any match of employee contributions. During 2007, the
Board of Directors approved a company matching program that began on January 1, 2008. The matching
program allows for a company match of up to 5% of salary and bonus paid during the year. The
Companys total contribution to the Plan was $0.5 million for the year ended December 31, 2008.
9. Leases
Operating Leases
The Company leases its facilities in Cranbury, NJ. One of the leases will expire in
August 2009 and the other two subleases will expire in February 2012 or on such earlier date upon
mutual agreement of both parties. In 2008, the Company entered into a lease agreement for its
laboratory and office space in San Diego, CA, which will expire in September 2011.
- 78 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
At December 31, 2008, aggregate annual future minimum lease payments under these leases are as
follows (in thousands):
|
|
|
|
|
Operating Leases
|
|
|
|
|
Years ending December 31: |
|
|
|
|
2009 |
|
$ |
2,145 |
|
2010 |
|
|
1,922 |
|
2011 |
|
|
1,839 |
|
2012 |
|
|
256 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,162 |
|
|
|
|
|
Rent expense for the years ended December 31, 2006, 2007 and 2008 were $1.6 million, $1.8
million and $2.0 million, respectively.
Capital Lease Facility
In August 2002, the Company entered into financing agreements that provides for up to
$1 million of equipment financing through August 2004. The facility was increased to $3 million in
May of 2005 and to $5 million in November 2005. These financing arrangements include interest of
approximately 9-12%, and lease terms of 36 or 48 months. Eligible assets under the lease lines
include laboratory and scientific equipment, computer hardware and software, general office
equipment, furniture, and leasehold improvements.
At December 31, 2006, the total amount available to the Company under these agreements is
$1.4 million. The funding period of the facility expired by its own term in 2007.
The remaining future minimum payments due for all non-cancelable capital leases as of
December 31, 2008 are as follows (in thousands):
|
|
|
|
|
Capital Leases |
|
|
|
|
Years ending December 31: |
|
|
|
|
2009 |
|
$ |
957 |
|
2010 |
|
|
295 |
|
2011 |
|
|
42 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
1,294 |
|
Less payments for interest |
|
|
(100 |
) |
|
|
|
|
Total principal obligation |
|
|
1,194 |
|
Less short-term portion |
|
|
(877 |
) |
|
|
|
|
|
Long-term portion |
|
$ |
317 |
|
|
|
|
|
The capital lease obligation is secured by the related assets financed by the leases.
10. Income Taxes
In June 2006, the FASB issued FIN 48 to create a single model to address accounting for
uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes, by prescribing a
minimum recognition threshold a tax position is required to meet before being recognized in the
financial statements. FIN 48 also provides guidance on de-recognition, measurement, and
classification of amounts relating to uncertain tax positions, accounting for and disclosure of
interest and penalties, accounting in interim periods, disclosures and transition relating to the
adoption of the new accounting standard. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The Company adopted FIN 48 as of January 1, 2007, as required and determined
that the adoption of FIN 48 did not have a material impact on the Companys financial position and
results of operations. The Company did not recognize interest or penalties related to income tax
during the period ended December 31, 2008 and did not accrue for interest or penalties as of
December 31, 2008. The Company does not have an accrual for uncertain tax positions as of December
31, 2008. Tax returns for all years 2002 and thereafter are subject to future examination by tax
authorities.
- 79 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
Deferred income taxes reflect the net effect of temporary difference between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for income
tax purposes. The significant components of the deferred tax assets and liabilities are as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Years Ended December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current deferred tax asset |
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock issue |
|
$ |
246 |
|
|
$ |
283 |
|
|
$ |
1,560 |
|
Others |
|
|
1,309 |
|
|
|
1,232 |
|
|
|
141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,555 |
|
|
|
1,515 |
|
|
|
1,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current deferred tax assets |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization/depreciation |
|
|
1,289 |
|
|
|
1,129 |
|
|
|
2,682 |
|
Research tax credit |
|
|
3,611 |
|
|
|
5,403 |
|
|
|
7,294 |
|
Net operating loss carry forwards |
|
|
27,257 |
|
|
|
42,282 |
|
|
|
36,196 |
|
Deferred revenue |
|
|
|
|
|
|
|
|
|
|
19,096 |
|
Others |
|
|
121 |
|
|
|
478 |
|
|
|
518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax asset |
|
|
33,833 |
|
|
|
50,807 |
|
|
|
67,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current deferred tax liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net deferred tax asset |
|
|
33,833 |
|
|
|
50,807 |
|
|
|
67,487 |
|
Less valuation allowance |
|
|
(33,833 |
) |
|
|
(50,807 |
) |
|
|
(67,487 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
The Company records a valuation allowance for temporary differences for which it is more
likely than not that the Company will not receive future tax benefits. At December 31, 2006, 2007,
and 2008, the Company recorded valuation allowances of $33.8 million, $50.8 million and
$67.5 million, respectively, representing a change in the valuation allowance of $17.0 million and
$16.7 million for the two previous fiscal year-ends, due to the uncertainty regarding the
realization of such deferred tax assets, to offset the benefits of net operating losses generated
during those years.
As of December 31, 2008, the Company had federal and state net operating loss carry forwards
of approximately $91 million and $87 million, respectively. The federal carry forward will begin
to expire in 2024 and will end in 2028. The state carry forward will begin to expire in 2012 and
will end in 2015.
- 80 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
A reconciliation of the statutory tax rates and the effective tax rates for the years ended
December 31, 2006, 2007 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
|
Statutory rate |
|
|
(34 |
)% |
|
|
(34 |
)% |
|
|
(34 |
)% |
State taxes, net of federal benefit |
|
|
(6 |
) |
|
|
(5 |
) |
|
|
(5 |
) |
Permanent adjustments |
|
|
1 |
|
|
|
3 |
|
|
|
2 |
|
R&D credit |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(5 |
) |
Other |
|
|
2 |
|
|
|
(1 |
) |
|
|
|
|
Valuation allowance |
|
|
41 |
|
|
|
41 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
There was no income tax benefit recorded for the years ended December 31, 2006, 2007 or 2008.
11. Licenses
The Company acquired rights to develop and commercialize its product candidates through
licenses granted by various parties. The following summarizes the Companys material rights and
obligations under those licenses:
Mt. Sinai School of Medicine of New York University (MSSM) The Company acquired exclusive
worldwide patent rights to develop and commercialize Amigal, Plicera and AT2220 and other
pharmacological chaperones for the treatment of diseases which can be achieved by enhancing
lysosomal enzyme activity pursuant to a license agreement with MSSM. In connection with this
agreement, the Company issued 232,266 shares of common stock to MSSM in April 2002. In 2006, the
Company amended its license agreement with MSSM to expand its exclusive worldwide patent rights to
develop and commercialize pharmacological chaperones. In connection with the amendment, the
Company paid $1.0 million and issued 133,333 shares of its common stock with an estimated fair
value of $1.2 million to MSSM. In total, the Company recorded $2.2 million of research and
development expense in connection with the amendment in 2006. This agreement expires upon
expiration of the last of the licensed patent rights, which will be in 2019 if a foreign patent is
granted and 2018 otherwise, subject to any patent term extension that may be granted. Under this
agreement, the Company has no milestone or future payments other than royalties on net sales. On
October 31, 2008, the Company amended and restated its license agreement with MSSM which
consolidated previous amendments into a single agreement, clarified the portion of royalties and
milestone payments the Company receives from Shire that are payable to MSSM, and provided the
Company with the sole right to control the prosecution of patent rights described in the amended
and restated license agreement. Under the terms of the amended and restated license agreement, the
Company agreed to pay MSSM $2.6 million in connection with the $50 million upfront payment that the
Company received from Shire in November 2007, which was already accrued for at December 31, 2007
and an additional $2.6 million paid in the fourth quarter of 2008 for the sole right to and control
over the prosecution of patent rights.
- 81 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
University of Maryland, Baltimore County The Company acquired exclusive U.S. patent rights
to develop and commercialize Plicera for the treatment of Gaucher disease from the University of
Maryland, Baltimore County. Under this agreement, the Company paid upfront and annual license fees
of $30 thousand, which were expensed as research and development expense. The Company is required
to make a milestone payment upon the demonstration of safety and efficacy of Plicera for the
treatment of Gaucher disease in a Phase 2 study, and another payment upon receiving FDA approval
for Plicera for the treatment of Gaucher disease. Upon satisfaction of both milestones, the
Company could be required to make up to $0.2 million in aggregate payments. The Company is also
required to pay royalties on net sales. This agreement expires upon expiration of the last of the
licensed patent rights in 2015.
Novo Nordisk A/S The Company acquired exclusive patent rights to develop and commercialize
Plicera for all human indications. Under this agreement, to date the Company paid $0.4 million in
license fees which were expensed as research and development expense. The Company is also required
to make milestone payments based on clinical progress of Plicera, with a payment due after
initiation of a Phase 2 clinical trial for Plicera for the treatment of Gaucher disease, and a
payment due upon each filing for regulatory approval of Plicera for the treatment of Gaucher
disease in any of the US, Europe or Japan. An additional payment is due upon approval of Plicera
for the treatment of Gaucher disease in the U.S. and a payment is also due upon each approval of
Plicera for the treatment of Gaucher disease in either Europe or Japan. Assuming successful
development of Plicera for the treatment of Gaucher disease in the U.S., Europe and Japan, total
milestone payments would be $7.8 million. The Company is also required to pay royalties on net
sales. This license will terminate in 2016.
Under its license agreements, if the Company owes royalties on net sales for one of its
products to more than one of the above licensors, then it has the right to reduce the royalties
owed to one licensor for royalties paid to another. The amount of royalties to be offset is
generally limited in each license and can vary under each agreement. For Amigal and AT2220, the
Company will owe royalties only to MSSM and will owe no milestone payments. The Company expects to
pay royalties to all three licensors with respect to Plicera.
The Companys rights with respect to these agreements to develop and commercialize Amigal,
Plicera and AT2220 may terminate, in whole or in part, if the Company fails to meet certain
development or commercialization requirements or if the Company does not meet its obligations to
make royalty payments.
12. Development and Commercialization Agreement with Shire
In November 2007, the Company entered into a License and Collaboration Agreement with Shire.
Under the agreement, the Company and Shire will jointly develop the Companys three lead
pharmacological chaperone compounds for lysosomal storage disorders: Amigal, Plicera and AT2220.
The Company granted Shire the rights to commercialize these products outside the U.S. The Company
retains all rights to its other programs and to develop and commercialize Amigal, Plicera and
AT2220 in the U.S.
The Company received an initial, non-refundable license fee payment of $50 million from Shire.
Joint development costs toward global approval of the three compounds will be shared 50/50 going
forward. In addition, the Company is eligible to receive, for all three drug product candidates,
aggregate potential milestone payments of up to $150 million if certain clinical and regulatory
milestones are achieved for all three of the programs, and $240 million in sales-based milestones.
The Company will also be eligible to receive tiered double-digit royalties on net sales of the
products which are marketed outside of the U.S.
In accordance with the guidance in EITF 00-21, the Company determined that its various
deliverables due under the collaboration agreement represent as a single unit of accounting for
revenue recognition purposes. The initial, non-refundable upfront license fee payment of $50
million will be recognized on a straight line basis as Collaboration Revenue over the period of the
performance obligations. The Company determined that the period of performance obligations is 18
years as contractually defined.
Under the collaboration agreement, the Company will also receive reimbursement of up to 50% of
research and development costs incurred in the development of the products covered by the
agreement. The Company will recognize revenue for reimbursed research and development costs in
accordance with EITF Issue 99-19 as Research Revenue when the underlying costs associated with
these reimbursable amounts are recorded in research and development expenses since the Company is
currently and for the foreseeable future, conducting all of the research activities.
- 82 -
Amicus Therapeutics, Inc.
(a development stage company)
Notes To Consolidated Financial Statements (Continued)
The Company recognized Research Revenue of $1.4 million and $12.2 million in 2007 and 2008,
respectively. The Company also deferred reimbursed research and development costs to the current
portion of deferred revenue of $1.0 million and $0.9 million at December 31, 2007 and December 31,
2008, respectively.
The Company recognized Collaboration Revenue related to the $50 million upfront license fee
payment from Shire of $0.4 million and $2.8 million in 2007 and 2008, respectively. The Company
also classified $2.8 million of the deferred revenue as current and $46.8 million as long-term at
December 31, 2007 and classified $2.8 million as current and $44.0 million as long-term at
December 31, 2008.
13. Selected Quarterly Financial Data (Unaudited in thousands except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended |
|
|
|
March 31 |
|
|
June 30 |
|
|
September 30 |
|
|
December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(9,695 |
) |
|
$ |
(9,396 |
) |
|
$ |
(10,303 |
) |
|
$ |
(11,773 |
) |
Net loss
attributable to
common
stockholders |
|
|
(9,736 |
) |
|
|
(9,706 |
) |
|
|
(10,303 |
) |
|
|
(11,773 |
) |
Basic and diluted
net loss per
common share (1) |
|
|
(10.21 |
) |
|
|
(1.37 |
) |
|
|
(0.46 |
) |
|
|
(0.53 |
) |
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(7,731 |
) |
|
|
(9,294 |
) |
|
|
(8,180 |
) |
|
|
(14,150 |
) |
Net loss
attributable to
common
stockholders |
|
|
(7,731 |
) |
|
|
(9,294 |
) |
|
|
(8,180 |
) |
|
|
(14,150 |
) |
Basic and diluted
net loss per
common share (1) |
|
|
(0.34 |
) |
|
|
(0.41 |
) |
|
|
(0.36 |
) |
|
|
(0.63 |
) |
|
|
|
(1) |
|
Per common share amounts for the quarters and full years have been
calculated separately. Accordingly, quarterly amounts do not add to
the annual amounts because of differences on the weighted-average
common shares outstanding during each period principally due to the
effect of the Companys issuing shares of its common stock during the
year. |
- 83 -
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
Item 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended (the Exchange Act),
defines the term disclosure controls and procedures as those controls and procedures designed to
ensure that information required to be disclosed by a company in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission (SEC) rules and forms and that such
information is accumulated and communicated to the companys management, including its principal
executive and principal financial officers, or persons performing similar functions, as appropriate
to allow timely decisions regarding required disclosure. Based on their evaluation as of December
31, 2008, our chief executive officer and chief financial officer have concluded that our
disclosure controls and procedures (as defined by Rules 13a-15(e) and 15d-15(e) under the Exchange
Act) were effective as of December 31, 2008.
There have been no changes in our internal controls over financial reporting during the fourth
quarter of the year ended December 31, 2008 that have materially affected, or are reasonably likely
to materially affect, our internal controls over financial reporting.
Managements Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act
of 1934, as amended. Our internal control system was designed to provide reasonable assurance to
our management and board of directors regarding the preparation and fair presentation of published
financial statements. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as
of December 31, 2008. In making this assessment, it used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework. Based on our assessment we believe that, as of December 31, 2008, our internal control
over financial reporting is effective based on those criteria.
This Annual Report on Form 10-K does not include an attestation report of the Companys
registered public accounting firm regarding internal control over financial reporting.
Managements report was not subject to attestation by the Companys registered public accounting
firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company
to provide only managements report in this Annual Report.
Item 9B. OTHER INFORMATION.
None.
- 84 -
PART III
Certain information required by Part III is omitted from this Annual Report on Form 10-K as we
intend to file our definitive proxy statement for our 2009 annual meeting of stockholders, pursuant
to Regulation 14A of the Securities Exchange Act, not later than 120 days after the end of the
fiscal year covered by this Annual Report of Form 10-K, and certain information to be included in
the proxy statement is incorporated herein by reference.
Item 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE.
Executive Officers
The following table sets forth certain information regarding our current executive officers as
of February 1, 2009.
John F. Crowley has served as President and Chief Executive Officer since January 2005, and
has also served as a Director of Amicus since August 2004, with the exception of the period from
September 2006 to March 2007 when he was not an officer or director of Amicus while he was in
active duty service in the United States Navy (Reserve). He was President and Chief Executive
Officer of Orexigen Therapeutics, Inc. from September 2003 to December 2004. Mr. Crowley was
President and Chief Executive Officer of Novazyme Pharmaceuticals, Inc., from March 2000 until that
company was acquired by Genzyme Corporation in September 2001; thereafter he served as Senior Vice
President of Genzyme Therapeutics until December 2002. Mr. Crowley received a B.S. degree in
Foreign Service from Georgetown Universitys School of Foreign Service, a J.D. from the University
of Notre Dame Law School, and an M.B.A. from Harvard Business School.
Matthew R. Patterson has served as Chief Operating Officer since September 2006. From
December 2004 to September 2006 he served as Chief Business Officer. From 1998-2004, Mr. Patterson
worked at BioMarin Pharmaceutical Inc. where he was Vice President, Regulatory and Government
Affairs from 2001 to 2003 and later Vice President, Commercial Planning from 2003-2004. From
1993-1998, Mr. Patterson worked at Genzyme Corporation in Regulatory Affairs and Manufacturing.
Mr. Patterson received a B.A. in Biochemistry from Bowdoin College.
James E. Dentzer has served as Chief Financial Officer since October 2006. From November 2003
to October 2006, Mr. Dentzer was Corporate Controller at Biogen Idec Inc. From 2001 until the 2003
merger of Biogen, Inc. and IDEC Pharmaceuticals Corporation, Mr. Dentzer served as Corporate
Controller of Biogen, Inc. Prior to that, he served in a variety of financial positions at E. I.
du Pont de Nemours and Company, most recently as Chief Financial Officer of DuPont Flooring
Systems. Mr. Dentzer received his B.A. from Boston College and his M.B.A. from the University of
Chicago.
David J. Lockhart, Ph.D., has served as Chief Scientific Officer since January 2006. Prior to
joining Amicus, Dr. Lockhart served as President, Chief Scientific Officer and co-founder of Ambit
Biosciences, a biotechnology company specializing in small molecule kinase inhibitors, from March
2001 to July 2005. Dr. Lockhart served as a consultant to Ambit Biosciences from August 2000 to
March 2001, and as a visiting scholar at the Salk Institute for Biological Studies from October
2000 to March 2001. Prior to that, Dr. Lockhart served in various positions, including Vice
President of Genomics Research at Affymetrix, and was the Director of Genomics at the Genomics
Institute of the Novartis Research Foundation from February 1999 to July 2000. He received his
Ph.D. from Stanford University and was a post-doctoral fellow at the Whitehead Institute for
Biomedical Research at the Massachusetts Institute of Technology.
David Palling, Ph.D., has served as Senior Vice President, Drug Development, since August,
2002. From September 1998 until August, 2002, Dr. Palling was with Johnson & Johnson, most
recently serving as Vice President of Worldwide Assay Research and Development at Ortho Clinical
Diagnostics, a subsidiary of Johnson & Johnson. Dr. Palling received B.Sc. and Ph.D. degrees in
Chemistry from the University of London, Kings College and conducted post-doctoral research in
Biochemistry at Brandeis University.
Gregory P. Licholai, M.D., has served as Vice President, Medical Affairs since December 2004.
From November 2002 to December 2004, Dr. Licholai was with Domain Associates, a venture capital
firm. From September 2000 to November 2002, he was director of Ventures and Business Associates
for Medtronic Neurological, a division of Medtronic, Inc. Dr. Licholai received his B.A. from
Boston College and completed Pre-Medical studies at Columbia University, his M.D. from Yale Medical
School and his M.B.A. from Harvard Business School.
S. Nicole Schaeffer has served as Vice President, Human Resources and Leadership Development
since March 2005. From 2001 to 2004, she served as Senior Director, Human Resources, for three
portfolio companies of Flagship Ventures, a venture capital firm, and in that capacity she managed
human resources for three life sciences companies. Ms. Schaeffer received her B.A. from the
University of Rochester and her M.B.A. from Boston University.
- 85 -
Bradley L. Campbell has served as Vice President, Business Planning since May 2007. From
April 2006 until May 2007, he served as Senior Director, Business Development. From 2002 until
2006, Mr. Campbell served as Senior Product Manager and later Business
Director of CV Gene Therapy at Genzyme Corporation. Mr. Campbell received his B.A. from Duke
University and his M.B.A. from Harvard Business School.
John R. Kirk has served as Vice President, Regulatory Affairs since January 1, 2008. Prior to
joining Amicus, Mr. Kirk served as Executive Director, Regulatory Affairs at Aegerion
Pharmaceuticals. From 2003 to 2007, Mr. Kirk held positions of increasing responsibility with
Esperion Therapeutics which was acquired during this time by Pfizer. From 2000 to 2002, Mr. Kirk
was Director, Worldwide Regulatory Affairs for Pfizer Global Research and Development. From 1988
to 2000, Mr. Kirk held various Regulatory positions with Parke-Davis Pharmaceutical Research. Mr.
Kirk holds both his M.S. and B.S. from Wright State University in Ohio.
Andrew Shenker, M.D., Ph.D., has served as Vice President, Clinical Research since December
2007. From 2002 to 2007, Dr. Shenker was with Bristol-Myers Squibb where he served most recently
as Medical Director in the Clinical Discovery Group. From 1995 to 2002, Dr. Shenker was Assistant
Professor of Pediatrics, Molecular Pharmacology and Biological Chemistry at Northwestern University
Medical School. Dr. Shenker obtained his Ph.D. in pharmacology and M.D. from the Mount Sinai
School of Medicine in NYC, completed his internship and residency in Pediatrics at the Johns
Hopkins Hospital and was a post-doctoral fellow at the National Institutes of Health.
Geoffrey P. Gilmore has served as Senior Vice President, General Counsel and Secretary since
March 2008. Prior to joining Amicus, from 2003 to 2008, Mr. Gilmore was in the Law Department at
Bristol-Myers Squibb Company, where most recently he served as Vice President and Senior Counsel.
From 2002 to 2003, Mr. Gilmore was a Senior Attorney at Wyeth Pharmaceuticals. From 1997 to 2002,
Mr. Gilmore held various positions in the law department of Bristol Myers Squibb Company. Prior to
joining Bristol-Myers Squibb Company, Mr. Gilmore was an associate with the law firms, Ballard
Spahr Andrews & Ingersoll, LLP, where he practiced in the Business and Finance Group, and
Montgomery, McCracken, Walker & Rhoads, LLP, where he practiced in the Corporate & Securities
Group. Mr. Gilmore received his B.A. from Franklin and Marshall College, and his J.D. from
University of Michigan Law School.
Pol F. Boudes, M.D., has served as Chief Medical Officer since January 2009. Prior to joining
Amicus, from 2004 to 2009, Dr. Boudes served as Head of Medical Development, US and Executive
Director, Gynecology & Andrology at Bayer HealthCare Pharmaceuticals (formerly Berlex, Inc.). From
1996 to 2003, Dr. Boudes was Project Director, Senior Director, and Assistant Vice-President
Worldwide Clinical Research, Womens Health and Bone, and Internal Medicine at Wyeth Research.
From 1991 to 1996 Dr. Boudes was Clinical Research Physician then Senior Clinical Research
Physician and Global Clinical Leader, Virology at Hoffman-La Roche. From 1990 to 1991, Dr. Boudes
was Global Project Manager, Immunology at Pasteur Merieux (now Sanofi Pasteur). Dr. Boudes
practiced medicine and held academic appointments at University Hospitals (Marseille and Paris),
the Paris Faculty of Medicine, the French Society of Internal Medicine and French Health Agencies.
Dr. Boudes received B.S. and M.D. degrees from the University of Marseille, France and he is
Board-certified in Geriatric Diseases, Internal Medicine, Endocrinology and Metabolic Diseases.
The other information required by this item is incorporated by reference from the definitive
proxy statement which Amicus will file with the Securities and Exchange Commission no later than
120 days after December 31, 2008 (the Proxy Statement), under the captions Election of
Directors and Section 16(a) Beneficial Ownership Reporting Compliance.
In 2007, we adopted a Code of Business Ethics and Conduct for Employees, Executive Officers
and Directors that applies to our employees, officers and directors and incorporates guidelines
designed to deter wrongdoing and to promote the honest and ethical conduct and compliance with
applicable laws and regulations. In addition, the code of ethics incorporates our guidelines
pertaining to topics such as conflicts of interest and workplace behavior. We have posted the text
of our code on our website at www.amicustherapeutics.com in connection with Investors/Corporate
Governance materials. In addition, we intend to promptly disclose (1) the nature of any amendment
to our code of ethics that applies to our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar functions and (2) the
nature of any waiver, including an implicit waiver, from provision of our code of ethics that is
granted to one of these specified officers, the name of such person who is granted the waiver and
the date the waiver on our website in the future.
Item 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference from the Proxy Statement
under the caption Executive Compensation Compensation Discussion and Analysis.
- 86 -
|
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS. |
The information required by this item is incorporated by reference from the Proxy Statement
under the captions Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters and Equity Compensation Plan Information.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
The information required by this item is incorporated by reference from the Proxy Statement
under the captions Certain Relationships and Related Transactions, Director Independence,
Committee Compensation and Meetings of the Board of Directors, and Compensation Committee
Interlock and Insider Participation.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information required by this item is incorporated by reference from the Proxy Statement
under the caption Ratification of Independent Registered Public Accounting Firm.
- 87 -
PART IV
Item 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULE.
(a) |
|
1. Consolidated Financial Statements |
The Consolidated Financial Statements are filed as part of this report.
2. Consolidated Financial Statement Schedules
All schedules are omitted because they are not required or because the required information is
included in the Consolidated Financial Statements or notes thereto.
3. Exhibits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit |
|
|
|
Incorporated by Reference to SEC Filing |
|
Filed with this |
No. |
|
Filed Exhibit Description |
|
Form |
|
Date |
|
Exhibit No. |
|
Form 10-K |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Restated Certificate of Incorporation of the Registrant.
|
|
S-1 (333-141700)
|
|
5/17/07
|
|
|
3.2 |
|
|
|
|
|
3.2
|
|
Restated By-laws of the Registrant.
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
3.4 |
|
|
|
|
|
4.1
|
|
Specimen Stock Certificate evidencing shares of common stock
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
4.1 |
|
|
|
|
|
4.2
|
|
Third Amended and Restated Investor Rights Agreement, dated as of
September 13, 2006, as amended
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
4.3 |
|
|
|
|
|
10.1
|
|
2002 Equity Incentive Plan, as amended, and forms of option agreements
thereunder
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
10.1 |
|
|
|
|
|
10.2
|
|
2007 Equity Incentive Plan and forms of option agreements
|
|
S-1/A (333-141700)
|
|
5/17/07
|
|
|
10.2 |
|
|
|
++10.3
|
|
Amended and Restated License Agreement, dated October, 31, 2008, by
and between the Registrant and Mount Sinai School of Medicine of New
York University
|
|
|
|
|
|
|
|
|
|
X |
+10.4
|
|
License Agreement, dated as of June 26, 2003, by and between the
Registrant and University of Maryland, Baltimore County, as amended
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.4 |
|
|
|
+10.5
|
|
Exclusive License Agreement, dated as of June 8, 2005, by and between
the Registrant and Novo Nordisk, A/S
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.5 |
|
|
|
|
|
10.6
|
|
Sublease Agreement, dated as of May 12, 2005, by and between the
Registrant and Purdue Pharma, L.P.
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.6 |
|
|
|
|
|
10.7
|
|
Amended and Restated Employment Agreement, dated as of December 30,
2008, by and between the Registrant and John F. Crowley
|
|
Form 8-K
Current Report
|
|
12/31/08
|
|
|
10.1 |
|
|
|
|
|
10.8
|
|
Letter Agreement, dated as of November 9, 2004, by and between the
Registrant and Matthew R. Patterson
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.8 |
|
|
|
|
|
10.9
|
|
Letter Agreement, dated as of July 27, 2006, by and
between the Registrant and James E. Dentzer
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.9 |
|
|
|
|
|
10.10
|
|
Letter Agreement, dated as of December 19, 2005, by and
between the Registrant and David Lockhart, Ph.D.
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.10 |
|
|
|
|
|
10.11
|
|
Consulting Agreement, dated as of February 28, 2006, by
and between the Registrant and Donald J. Hayden, Jr.
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.15 |
|
|
|
|
|
10.12
|
|
Form of Director and Officer Indemnification Agreement
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.17 |
|
|
|
|
|
10.13
|
|
Employment Agreement, dated as of September 11, 2006,
by and between the Registrant and Donald J. Hayden, Jr.
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
10.19 |
|
|
|
|
|
10.14
|
|
Restricted Stock Agreement, dated as of March 8, 2007, by
and between the Registrant and James E. Dentzer
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
10.20 |
|
|
|
|
|
10.15
|
|
Restricted Stock Agreement, dated as of March 8, 2007, by
and between the Registrant and Glenn P. Sblendorio
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
10.21 |
|
|
|
|
|
10.16
|
|
Lease Agreement, dated as of July 31, 2006, by and
between the Registrant and Cedar Brook II Corporate
Center, L.P.
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
10.22 |
|
|
|
- 88 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit |
|
|
|
Incorporated by Reference to SEC Filing |
|
Filed with this |
No. |
|
Filed Exhibit Description |
|
Form |
|
Date |
|
Exhibit No. |
|
Form 10-K |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17
|
|
2007 Director Option Plan and form of option agreement
|
|
S-1/A (333-141700)
|
|
5/17/07
|
|
|
10.23 |
|
|
|
|
|
10.18
|
|
2007 Employee Stock Purchase Plan
|
|
S-1/A (333-141700)
|
|
5/17/07
|
|
|
10.24 |
|
|
|
|
|
10.19
|
|
Amicus Therapeutics, Inc. 2007 Amended and Restated Equity
Incentive Plan
|
|
Form 8-K
Current Report
|
|
6/12/08
|
|
|
10.1 |
|
|
|
|
|
10.20
|
|
Lease Agreement dated as of September 11, 2008 by and between
the Registrant and A/G Touchstone, TP, LLC.
|
|
Form 8-K
Current Report
|
|
9/15/08
|
|
|
10.1 |
|
|
|
+10.21
|
|
License and Collaboration Agreement, dated as of November
7, 2007, by and between the Registrant and Shire
Pharmaceuticals Ireland, Ltd.
|
|
Form 10-K
Annual Report
|
|
2/08/08
|
|
|
10.20 |
|
|
|
|
|
10.22
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and David Lockhart, Ph.D.
|
|
Form 8-K
Current Report
|
|
12/31/08
|
|
|
10.4 |
|
|
|
|
|
10.23
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and James E. Dentzer
|
|
Form 8-K
Current Report
|
|
12/31/08
|
|
|
10.2 |
|
|
|
|
|
10.24
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and Matthew R. Patterson
|
|
Form 8-K
Current Report
|
|
12/31/08
|
|
|
10.3 |
|
|
|
|
|
10.25
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and David Palling, Ph.D.
|
|
|
|
|
|
|
|
|
|
X |
|
|
10.26
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and Bradley L. Campbell
|
|
|
|
|
|
|
|
|
|
X |
|
|
10.27
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and Gregory P. Licholai, M.D.
|
|
Form 8-K
Current Report
|
|
12/31/08
|
|
|
10.5 |
|
|
|
|
|
10.28
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and S. Nicole Schaeffer
|
|
|
|
|
|
|
|
|
|
X |
|
|
10.29
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and John R. Kirk
|
|
|
|
|
|
|
|
|
|
X |
|
|
10.30
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and Andrew Shenker, M.D., Ph.D.
|
|
|
|
|
|
|
|
|
|
X |
|
|
10.31
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and Geoffrey P. Gilmore
|
|
|
|
|
|
|
|
|
|
X |
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
|
|
|
|
|
|
X |
|
|
31.1
|
|
Certification of Principal Executive Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.
|
|
|
|
|
|
|
|
|
|
X |
|
|
31.2
|
|
Certification of Principal Financial Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934. |
|
|
|
|
|
|
|
|
|
X |
|
|
32.1
|
|
Certificate of Principal Executive Officer pursuant to 18 U.S.C.
Section 1350 and Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X |
|
|
32.2
|
|
Certificate of Principal Financial Officer pursuant to 18 U.S.C.
Section 1350 and Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X |
|
|
|
+ |
|
Confidential treated has been granted as to certain portions of the
document, which portions have been omitted and filed separately with
the Securities and Exchange Commission. |
|
++ |
|
Confidential treated has been requested as to certain portions of the
document, which portions have been omitted and filed separately with
the Securities and Exchange Commission. |
- 89 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized on February 4, 2009.
|
|
|
|
|
|
AMICUS THERAPEUTICS, INC.
(Registrant)
|
|
|
By: |
/s/ John F. Crowley
|
|
|
|
John F. Crowley |
|
|
|
Chief Executive Officer |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
|
|
|
|
|
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ John F. Crowley
(John F. Crowley)
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
February 4, 2009 |
|
|
|
|
|
/s/ James E. Dentzer
(James E. Dentzer)
|
|
Chief
Financial Officer
(Principal Financial and Accounting Officer)
|
|
February 4, 2009 |
|
|
|
|
|
/s/ Donald J. Hayden
(Donald J. Hayden)
|
|
Chairman of the Board
|
|
February 4, 2009 |
|
|
|
|
|
/s/ Alexander E. Barkas, Ph.D.
(Alexander E. Barkas, Ph.D.)
|
|
Director
|
|
February 4, 2009 |
|
|
|
|
|
/s/ Stephen Bloch, M.D.
(Stephen Bloch, M.D.)
|
|
Director
|
|
February 4, 2009 |
|
|
|
|
|
/s/ P. Sherrill Neff
(P. Sherrill Neff)
|
|
Director
|
|
February 4, 2009 |
|
|
|
|
|
/s/ Michael G. Raab
(Michael G. Raab)
|
|
Director
|
|
February 4, 2009 |
|
|
|
|
|
/s/ Glenn Sblendorio
(Glenn Sblendorio)
|
|
Director
|
|
February 4, 2009 |
|
|
|
|
|
/s/ James N. Topper, M.D., Ph.D.
(James N. Topper, M.D., Ph.D.)
|
|
Director
|
|
February 4, 2009 |
|
|
|
|
|
/s/ Sol J. Barer, Ph.D.
(Sol J. Barer, Ph.D.)
|
|
Director
|
|
February 4, 2009 |
- 90 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit |
|
|
|
Incorporated by Reference to SEC Filing |
|
Filed with this |
No. |
|
Filed Exhibit Description |
|
Form |
|
Date |
|
Exhibit No. |
|
Form 10-K |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
|
Restated Certificate of Incorporation of the Registrant.
|
|
S-1 (333-141700)
|
|
5/17/07
|
|
|
3.2 |
|
|
|
|
3.2 |
|
|
Restated By-laws of the Registrant.
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
3.4 |
|
|
|
|
4.1 |
|
|
Specimen Stock Certificate evidencing shares of common stock
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
4.1 |
|
|
|
|
4.2 |
|
|
Third Amended and Restated Investor Rights Agreement, dated as of
September 13, 2006, as amended
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
4.3 |
|
|
|
|
10.1 |
|
|
2002 Equity Incentive Plan, as amended, and forms of option agreements
thereunder
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
10.1 |
|
|
|
|
10.2 |
|
|
2007 Equity Incentive Plan and forms of option agreements
|
|
S-1/A (333-141700)
|
|
5/17/07
|
|
|
10.2 |
|
|
|
|
++10.3 |
|
|
Amended and Restated License Agreement, dated October, 31, 2008, by
and between the Registrant and Mount Sinai School of Medicine of New
York University
|
|
|
|
|
|
|
|
|
|
X |
|
+10.4 |
|
|
License Agreement, dated as of June 26, 2003, by and between the
Registrant and University of Maryland, Baltimore County, as amended
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.4 |
|
|
|
|
+10.5 |
|
|
Exclusive License Agreement, dated as of June 8, 2005, by and between
the Registrant and Novo Nordisk, A/S
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.5 |
|
|
|
|
10.6 |
|
|
Sublease Agreement, dated as of May 12, 2005, by and between the
Registrant and Purdue Pharma, L.P.
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.6 |
|
|
|
|
10.7 |
|
|
Amended and Restated Employment Agreement, dated as of December 30,
2008, by and between the Registrant and John F. Crowley
|
|
Form 8-K
Current Report
|
|
12/31/08
|
|
|
10.1 |
|
|
|
|
10.8 |
|
|
Letter Agreement, dated as of November 9, 2004, by and between the
Registrant and Matthew R. Patterson
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.8 |
|
|
|
|
10.9 |
|
|
Letter Agreement, dated as of July 27, 2006, by and
between the Registrant and James E. Dentzer
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.9 |
|
|
|
|
10.10 |
|
|
Letter Agreement, dated as of December 19, 2005, by and
between the Registrant and David Lockhart, Ph.D.
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.10 |
|
|
|
|
10.11 |
|
|
Consulting Agreement, dated as of February 28, 2006, by
and between the Registrant and Donald J. Hayden, Jr.
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.15 |
|
|
|
|
10.12 |
|
|
Form of Director and Officer Indemnification Agreement
|
|
S-1 (333-141700)
|
|
3/30/07
|
|
|
10.17 |
|
|
|
|
10.13 |
|
|
Employment Agreement, dated as of September 11, 2006,
by and between the Registrant and Donald J. Hayden, Jr.
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
10.19 |
|
|
|
|
10.14 |
|
|
Restricted Stock Agreement, dated as of March 8, 2007, by
and between the Registrant and James E. Dentzer
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
10.20 |
|
|
|
|
10.15 |
|
|
Restricted Stock Agreement, dated as of March 8, 2007, by
and between the Registrant and Glenn P. Sblendorio
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
10.21 |
|
|
|
|
10.16 |
|
|
Lease Agreement, dated as of July 31, 2006, by and
between the Registrant and Cedar Brook II Corporate
Center, L.P.
|
|
S-1/A (333-141700)
|
|
4/27/07
|
|
|
10.22 |
|
|
|
|
10.17 |
|
|
2007 Director Option Plan and form of option agreement
|
|
S-1/A (333-141700)
|
|
5/17/07
|
|
|
10.23 |
|
|
|
|
10.18 |
|
|
2007 Employee Stock Purchase Plan
|
|
S-1/A (333-141700)
|
|
5/17/07
|
|
|
10.24 |
|
|
|
|
10.19 |
|
|
Amicus Therapeutics, Inc. 2007 Amended and Restated Equity
Incentive Plan
|
|
Form 8-K
Current Report
|
|
6/12/08
|
|
|
10.1 |
|
|
|
|
10.20 |
|
|
Lease Agreement dated as of September 11, 2008 by and between
the Registrant and A/G Touchstone, TP, LLC.
|
|
Form 8-K
Current Report
|
|
9/15/08
|
|
|
10.1 |
|
|
|
|
+10.21 |
|
|
License and Collaboration Agreement, dated as of November
7, 2007, by and between the Registrant and Shire
Pharmaceuticals Ireland, Ltd.
|
|
Form 10-K
Annual Report
|
|
2/08/08
|
|
|
10.20 |
|
|
|
|
10.22 |
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and David Lockhart, Ph.D.
|
|
Form 8-K
Current Report
|
|
12/31/08
|
|
|
10.4 |
|
|
|
|
10.23 |
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and James E. Dentzer
|
|
Form 8-K
Current Report
|
|
12/31/08
|
|
|
10.2 |
|
|
|
- 91 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit |
|
|
|
Incorporated by Reference to SEC Filing |
|
Filed with this |
No. |
|
Filed Exhibit Description |
|
Form |
|
Date |
|
Exhibit No. |
|
Form 10-K |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24 |
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and Matthew R. Patterson
|
|
Form 8-K
Current Report
|
|
12/31/08
|
|
|
10.3 |
|
|
|
|
10.25 |
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and David Palling, Ph.D.
|
|
|
|
|
|
|
|
|
|
X |
|
10.26 |
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and Bradley L. Campbell
|
|
|
|
|
|
|
|
|
|
X |
|
10.27 |
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and Gregory P. Licholai, M.D.
|
|
Form 8-K
Current Report
|
|
12/31/08
|
|
|
10.5 |
|
|
|
|
10.28 |
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and S. Nicole Schaeffer
|
|
|
|
|
|
|
|
|
|
X |
|
10.29 |
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and John R. Kirk
|
|
|
|
|
|
|
|
|
|
X |
|
10.30 |
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and Andrew Shenker, M.D., Ph.D.
|
|
|
|
|
|
|
|
|
|
X |
|
10.31 |
|
|
Letter Agreement, dated as of December 30, 2008, by and between
the Registrant and Geoffrey P. Gilmore
|
|
|
|
|
|
|
|
|
|
X |
|
23.1 |
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
|
|
|
|
|
|
X |
|
31.1 |
|
|
Certification of Principal Executive Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934.
|
|
|
|
|
|
|
|
|
|
X |
|
31.2 |
|
|
Certification of Principal Financial Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934. |
|
|
|
|
|
|
|
|
|
X |
|
32.1 |
|
|
Certificate of Principal Executive Officer pursuant to 18 U.S.C.
Section 1350 and Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X |
|
32.2 |
|
|
Certificate of Principal Financial Officer pursuant to 18 U.S.C.
Section 1350 and Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X |
|
|
|
+ |
|
Confidential treated has been granted as to certain portions of the
document, which portions have been omitted and filed separately with
the Securities and Exchange Commission. |
|
++ |
|
Confidential treated has been requested as to certain portions of the
document, which portions have been omitted and filed separately with
the Securities and Exchange Commission. |
- 92 -