Amicus Therapeutics
Annual Report 2016

Plain-text annual report

AMICUS THERAPEUTICS INC FORM 10-K (Annual Report) Filed 03/01/17 for the Period Ending 12/31/16 Address Telephone CIK Symbol SIC Code Industry 1 CEDAR BROOK DRIVE CRANBURY, NJ 08512 (609) 662-2000 0001178879 FOLD 2834 - Pharmaceutical Preparations Pharmaceuticals Sector Healthcare Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Use these links to rapidly review the document TABLE OF CONTENTS Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549FORM 10-KCommission File Number 001-33497Amicus Therapeutics, Inc. (Exact name of registrant as specified in its charter)Delaware (State or other jurisdiction of incorporation ororganization) 71-0869350 (IRS Employer Identification No.)1 Cedar Brook Drive, Cranbury, NJ 08512 (Address of principal executive offices) Telephone: (609) 662-2000Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon Stock, par value $0.01 pershare 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 ý No o 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 ý 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 1934during 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 requirementsfor the past 90 days. Yes ý No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required toý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2016ORo TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files). Yes ý No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§22.405) is not contained herein, and will not be contained,to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment tothis 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. Seedefinition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ý The aggregate market value of the 99,320,855 shares of voting common equity held by non-affiliates of the registrant, computed by reference to the closingprice as reported on The NASDAQ Global Market, as of the last business day of the registrant's most recently completed second fiscal quarter (June 30, 2016) wasapproximately $542,291,868. Shares of voting and non-voting stock held by executive officers, directors and holders of more than 10% of the outstanding stockhave been excluded from this calculation because such persons or institutions may be deemed affiliates. This determination of affiliate status is not a conclusivedetermination for other purposes. As of February 15, 2017, there were 194,824,362 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Proxy Statement for the registrant's 2016 Annual Meeting of Stockholders which is tobe filed subsequent to the date hereof are incorporated by reference into Part III of this Annual Report on Form 10-K. Large accelerated filer ý Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller Reporting Company oTable of Contents PART I Item 1. BUSINESS 3 Item 1A. RISK FACTORS 34 Item 1B. UNRESOLVED STAFF COMMENTS 79 Item 2. PROPERTIES 79 Item 3. LEGAL PROCEEDINGS 79 Item 4. MINE SAFETY DISCLOSURES 80 PART II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIES 81 Item 6. SELECTED FINANCIAL DATA 84 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS 85 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 100 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 101 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE 147 Item 9A. CONTROLS AND PROCEDURES 147 Item 9B. OTHER INFORMATION 147 PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 148 Item 11. EXECUTIVE COMPENSATION 148 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDER MATTERS 148 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE 148 Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 148 PART IV Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 149 SIGNATURES 156 Table of ContentsSPECIAL 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 ofhistorical 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," "potential," "intend,""may," "plan," "predict," "project," "will," "should," "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:•the progress and results of our clinical trials of our drug candidates; •the cost of manufacturing drug supply for our clinical and preclinical studies, including the significant cost of new Fabry enzyme replacementtherapy ("ERT") cell line development and manufacturing as well as the cost of manufacturing Pompe ERT; •the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our product candidates including thosetesting the use of pharmacological chaperones co-formulated and co-administered with ERT and for the treatment of lysosomal storage disorders("LSDs"); •the future results of on-going or later clinical trials for SD-101, including our ability to obtain regulatory approvals and commercialize SD-101 andobtain market acceptance of SD-101; •the future results of on-going preclinical research and later clinical trials for cyclin-dependent kinase-like 5 ("CDKL5"), including our ability toobtain regulatory approvals and commercialize CDKL5 and obtain market acceptance for CDKL5; •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; •our ability to obtain reimbursement for migalastat HCI; •our ability to obtain market acceptance of migalastat HCl in the European Union (the "EU"); •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; •our ability to successfully integrate our recent acquisitions of Scioderm, Inc. ("Scioderm") and MiaMed, Inc. ("MiaMed") and their products andtechnologies into our business, including the possibility that the expected benefits of the transactions will not be fully realized by us or may takelonger to realize than expected; and •our ability to establish collaborations and obtain milestone, royalty or other payments from any such collaborators. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on ourforward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward--1-Table of Contentslooking 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 withthe understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-lookingstatements.-2-Table of ContentsPART IItem 1. BUSINESS. Overview We are a global patient-focused biotechnology company engaged in the discovery, development and commercialization of a diverse set of novel treatments forpatients living with devastating rare and orphan diseases. Our lead product, migalastat HCl is a small molecule that can be used as a monotherapy and incombination with enzyme replacement therapy ("ERT") for Fabry disease. Also in the pipeline, SD-101 is a product candidate in late-stage development, as a potential first-to-market therapy for the chronic, rare connective tissuedisorder Epidermolysis Bullosa ("EB"). We are also leveraging our Chaperone-Advanced Replacement Therapy ("CHART™") platform technologies to developnovel ERT products for Pompe disease, Fabry disease, and potentially other lysosomal storage disorders ("LSDs"). We are also investigating preclinical anddiscovery programs in other rare and devastating diseases including cyclin-dependent kinase-like 5 ("CDKL5") deficiency. We believe that our platformtechnologies and our product pipeline uniquely position us at the forefront of advanced therapies to treat a range of devastating rare and orphan diseases.Our Strategy Our strategy is to internally develop or acquire first-in-class or potentially best-in-class therapies that have the potential to provide significant benefits forindividuals living with rare and devastating diseases. We intend to leverage our global capabilities to develop and commercialize our robust pipeline. During 2016,we made significant progress toward fulfilling our vision to build a leading global biotechnology company focused on rare and devastating diseases:•Global capabilities. We have established European headquarters in the United Kingdom ("UK") and are building a world-class global commercialinfrastructure, with key leadership in place to support the international launch of migalastat HCl. •Commercial success. We received full approval in the EU of Galafold ("migalastat HCl") and commenced the commercial launch in Germany onMay 30, 2016. We have achieved success with reimbursement in several EU member states and through our expanded access programs ("EAPs")and we continue to advance additional regulatory submissions worldwide. •Pompe clinical study. We have reported positive preliminary data from a clinical study to evaluate Pompe disease patients treated with our noveltreatment paradigm ATB200/AT2221. •Late-stage product development. We continue to investigate SD-101, a proprietary topical cream for all major types of EB, in a single Phase 3registration study that we hope will support global applications for approval in a number of countries. SD-101 has been granted BreakthroughTherapy designation by the U.S. Food and Drug Administration ("FDA"). •Patient-centricity. We continue to focus on our patient advocacy, which has always been a critical component of the values of our corporateculture, throughout all levels of the organization. The needs of patients in the rare disease community are at the center of our inventive science, ourcommercial organization, and our clinical programs.Our Product Candidates Our Fabry franchise strategy is to develop migalastat HCl (which we may refer to as "migalastat") for all patients with Fabry disease as a monotherapy forpatients with amenable mutations and in combination with ERT for all other patients. We have completed two global Phase 3 registration studies of our leadproduct candidate, migalastat HCl, an orally administered small molecule pharmacological-3-Table of Contentschaperone for the treatment of Fabry disease, an LSD. In May 2016, we announced that we had received full European Commission approval for migalastat HC1,under the product name Galafold™, as a first-line therapy for long-term treatment of adults and adolescents aged 16 years and older with a confirmed diagnosis ofFabry disease and who have an amenable mutation. The label includes 313 Fabry-causing mutations, which represent between 35% and 50% of patients currentlydiagnosed with Fabry disease. We commenced commercial shipments in the EU in the second quarter of 2016 and recognized net product sales of $5.0 million in2016. For patients with non-amenable mutations, we are leveraging our CHART™ technology and advanced biologics capabilities to move forward with aproprietary Fabry ERT for co-formulation with migalastat HCl. Master cell banking has been completed and process development work has commenced. We are also in Phase 3 clinical development of a novel topical medicine, SD-101, for the treatment of the genetic connective tissue disorder EB, for which noother pharmacological therapies are currently approved. We have also initiated a clinical study in patients with Pompe disease, another LSD, to investigate ournovel treatment paradigm that consists of ATB200, a uniquely engineered recombinant human acid alpha-glucosidase ("rhGAA") enzyme with an optimizedcarbohydrate structure to enhance uptake, co-administered with a pharmacological chaperone, AT2221, to improve activity and stability. Leveraging our biologicscapabilities and platform technologies, we are also investigating preclinical and discovery programs in other rare and devastating diseases including cyclin-dependent kinase-like 5 ("CDKL5") deficiency. We believe that our platform technologies and our advanced product pipeline uniquely position us at the forefrontof developing therapies to potentially address significant unmet needs for devastating rare and orphan diseases. On a regular basis we consider potential collaborations, alliances, and other business development opportunities to enhance our strategic plan to develop andprovide therapies to patients living with rare and orphan diseases and support our continued expansion as a commercial biotechnology company. We are currentlyexploring opportunities for licensing migalastat to further enhance the development of the product in markets around the world.Our Technology PlatformsPharmacological Chaperone Technology We are leveraging our pharmacological chaperone technology to develop next-generation treatments for human genetic diseases by targeting mutated proteinsthat are unstable, unfolded, or misfolded. In the human body, proteins are involved in almost every aspect of cellular function. Proteins are linear strings of aminoacids 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, and these changes often reduce protein stability andmay prevent them from folding properly. Pharmacological chaperones are small molecules designed to selectively bind to a target protein, increase its stability, and help keep it folded in the correctthree-dimensional shape. For LSDs, pharmacological chaperones are designed to bind to, stabilize, and facilitate trafficking of both endogenous and exogenousenzymes to the lysosome. This important feature has allowed us to develop our personalized medicine migalastat (a monotherapy) in addition to our Chaperone-Advanced Replacement Therapy ("CHART") platform of pharmacological chaperones in combination with ERT.Pharmacological Chaperone Monotherapy Many natural proteins are made in the endoplasmic reticulum ("ER") and sent to other parts of the cell. Unstable, unfolded, or misfolded proteins aregenerally eliminated or retained in the ER rather than being transported to the intended destination in the cell. The accumulation of unfolded or-4-Table of Contentsmisfolded proteins in the ER and the interruption of trafficking of important proteins to their proper cellular locations can cause several types of problemsincluding:•Complete or partial loss of appropriate protein function; •Accumulation of lipids and other substances that should be degraded; and •Disruption of cellular function and eventual cell death. These defects may lead to various types of human genetic diseases, including LSDs. As monotherapy agents for LSDs, pharmacological chaperones aredesigned to bind to and stabilize endogenous lysosomal enzymes for proper trafficking to the lysosome, which may also alleviate the buildup of mutant proteins inthe ER. Once in the lysosome, the pharmacological chaperone disassociates and the enzyme is free to break down substrate. Based on this mechanism, individualswith certain genetic mutations (amenable mutations) that result in some residual biological activity are potentially eligible for pharmacological chaperonemonotherapy.CHART Technology Platform ERT is the standard of care for several LSDs, based on the intravenous infusion of recombinant or gene-activated human enzyme. The enzyme is deliveredinto the blood in order to be taken up by cells and then transported to the lysosome. Upon entering the lysosome, this enzyme is intended to perform the function ofthe absent or deficient endogenous enzyme. However, the pH in the infusion bag and in blood is higher than the enzyme's natural acidic environment in thelysosome. As a result, the infused enzyme may unfold and lose activity and may be misdirected to non-target tissues or rapidly cleared from the body. Exposure tohigh concentrations of infused enzymes can impact efficacy or cause adverse effects. Possible problems related to the instability of infused enzyme include:•Denaturation and reduced activity; •Poor targeting and uptake into key tissues of disease; and •Poor tolerability and increased immunogenicity. In our CHART programs, each chaperone is designed to bind to and stabilize a specific therapeutic enzyme. Clinical studies of pharmacological chaperones incombination with currently marketed ERTs have established initial human proof of concept that a chaperone can stabilize enzyme activity and potentially improveERT tolerability. We believe this technology may be able to improve the stability, uptake, and activity of the enzyme, and may improve tolerability and lowerimmunogenicity compared to administration of currently marketed ERTs alone. This combination approach may benefit patients with LSDs, including patientswith inactive endogenous proteins who are not amenable to chaperone monotherapy.Enzyme Targeting Technology The uptake of ERTs into a patient's cells is mediated by a particular carbohydrate called mannose 6-phosphate ("M6P"). M6P enables binding and delivery oftherapeutic drug to lysosomes via M6P receptors on cell surfaces. Many currently approved ERTs have limited amounts of M6P, thereby limiting the uptake oftherapeutic drug into a patient's cells. We are developing novel ERTs, including ERTs with significantly higher amounts of M6P for improved lysosomal targeting compared to existing ERTs. Webelieve that this technology to enhance drug targeting, together with our CHART platform to improve enzyme stability, may be utilized to develop a pipeline ofmore effective next-generation ERTs for LSDs.-5-Table of ContentsMigalastat for Fabry DiseaseOverview Our most advanced product, migalastat, is a small molecule pharmacological chaperone for the treatment of Fabry disease that has been approved for use inthe European Union ("EU") under the brand name Galafold™ as a first-line therapy for long-term treatment of adults and adolescents aged 16 years and older witha confirmed diagnosis of Fabry disease and who have an amenable mutation. Outside of the EU and Switzerland, migalastat is an investigational product. We have launched Galafold in Germany on a commercial basis as well as in select other European markets through reimbursed EAPs. We are currentlypursuing the country-by-country pricing and reimbursement process in the EU member states. We expect to launch Galafold in additional EU member states during2017 as we secure final pricing and reimbursement. Outside of the EU, Galafold has been approved in Switzerland and we have regulatory submissions underreview in additional territories including Canada and Australia. We are targeting a first half 2017 regulatory submission (Japanese New Drug Application, or J-NDA) in Japan. As an orally administered monotherapy, migalastat is designed to bind to and stabilize an endogenous alpha-galactosidase A ("alpha-Gal A") enzyme in thosepatients with genetic mutations identified as amenable in a GLP cell-based amenability assay. We are also developing the use of migalastat in combination with anovel Fabry ERT for patients who have non-amenable genetic mutations. Patients with the fatal, X-linked Fabry disease have an inherited deficiency of the alpha-Gal A enzyme that would normally degrade the lipid substrateglobotriaosylceramide in the lysosome. Genetic mutations that cause changes in the amino acid sequence of alpha-Gal A result in an unstable enzyme that does notefficiently fold into its correct three-dimensional shape and cannot be trafficked properly in the cell, even if it has the potential for biological activity. Migalastat isan oral small molecule pharmacological chaperone that is designed to bind to and stabilize a patient's own endogenous target protein. This is considered a precisionmedicine because migalastat targets only patients with amenable mutations. We have completed two Phase 3 global registration studies of migalastat monotherapy. We have reported Phase 3 data in both treatment-naïve patients("Study 011") and ERT-switch patients ("Study 012"). Results from these studies have shown that treatment with migalastat results in reductions in diseasesubstrate, stability of kidney function, reductions in cardiac mass, and improvement in gastrointestinal symptoms in patients with amenable mutations in avalidated GLP amenability assay.Migalastat in Combination with ERT for Fabry Disease For patients with non-amenable mutations, we are leveraging our CHART™ technology and advanced biologics capabilities to move forward with aproprietary Fabry ERT for co-formulation with migalastat. Master cell banking has been completed and process development work has commenced. Migalastat isan oral precision medicine intended to treat Fabry disease in patients who have amenable genetic mutations, and at this time, it is not intended for concomitant usewith ERT.Clinical Manifestations of Fabry Disease Fabry disease is an X-linked disease caused by mutations in the GLA gene, which encodes the alpha-Gal A enzyme. These mutations can cause alpha-Gal A tobe either absent or deficient. When alpha-Gal A is absent or deficient the substrates, GL-3 and lyso-Gb 3 accumulate, leading to damage of cells within affectedparts of the individual's body and causing the various pathologies seen in Fabry disease.-6-Table of Contents Fabry disease leads to progressive, irreversible organ damage, typically involving the nervous, cardiac, and renal systems, as well as multiple other tissues.The symptoms can be severe, differ from patient to patient, and begin at an early age, resulting in significant clinical, humanistic, and healthcare costs. Fabrydisease requires lifelong medical intervention to manage the complications of this devastating disease across multiple organ systems. People with Fabry disease are generally categorized in a spectrum of disease severity from a classic onset form to a more attenuated, late-onset onset form ofthe disease. Heterozygous females can experience a variable presentation, ranging from asymptomatic or mild symptoms, to symptoms that are just as severe asthose experienced by male patients. All Fabry disease is progressive and leads to organ damage regardless of the time of symptom onset. People with Fabry disease may experience severe symptoms, or seemingly none at all, with a variety of clinical presentations in between. But even whendisease presentation is asymptomatic or mild, disease substrate can accumulate, contributing to long-term damage of organs and tissues. Organ damage in Fabry disease is caused by the accumulation of GL-3 and lyso-Gb 3 in the cells, leading to dysfunction in affected cells. These deposits canpotentially affect multiple cell types, including:•Endothelial cells: vascular and neurovascular •Cardiomyocytes •Smooth muscle cells •Neurons within the central and peripheral nervous systems •Eccrine sweat glands •Epithelial cells: cornea, lens, airway •Perithelial cells: small intestine, colon, and rectum-7-Table of Contents•Ganglion cells Individuals with Fabry disease may experience a shorter lifespan compared with the general population. Lifespans for people with Fabry disease may beshortened to approximately 50 years for men and 70 for women — 20-, and 10-year reductions, respectively. Cardiovascular disease is the most common cause ofdeath for both men and women. With more than 800 known mutations of the GLA gene, there is no single genotypic cause of Fabry disease. A variety of mutation types can give rise to Fabrydisease, such as missense mutations, splicing mutations, small deletions and insertions, and large deletions. Many genetic mutations are specific to individualfamilies affected by Fabry disease, whereas some are more widespread.Fabry Disease Prevalence and Market Opportunity Fabry disease is a relatively rare disorder. The annual incidence of Fabry disease in newborn males has been estimated to be 1:40,000-1:60,000 (Journal of theAmerican Medical Association January 1999 and The Metabolic and Molecular Bases of Inherited Disease 8th edition 2001). The current estimates ofapproximately 5,000 patients worldwide are generally based on a small number of studies in single ethnic populations in which people were screened for classicFabry disease (University of Iowa, National Kidney Foundation). Recent newborn screening studies in Italy, Taiwan, and Austria, which screened more than 263,000 newborns, found the incidence of Fabry disease mutationsto be between 1:2,400 to 1: 3,859, more than ten times higher than previous estimates for classic patients. (American Journal of Human Genetics 2006, HumanMutation 2009, and the Lancet 2011). This high incidence was attributed to a large number of newborn males with alpha-Gal A mutations often associated withlate-onset symptoms of Fabry disease, which may not have been identified in previous screening studies that relied on diagnosis based on development ofsymptoms of classic Fabry disease. We also believe that many types of genetic mutations may result in misfolded alpha-Gal A and therefore may also respond to treatment with monotherapymigalastat. Based on this, we believe that approximately 35-50% of the Fabry disease patient population may benefit from treatment with migalastat as amonotherapy. However, the entire Fabry disease patient population has the potential to benefit from migalastat in combination with ERT. We expect that as awareness of late-onset symptoms of Fabry disease grows, the number of patients diagnosed with the disease will increase. Increasedawareness of Fabry disease, particularly for specialists not accustomed to treating Fabry disease patients, may lead to increased testing and diagnosis of patientswith the disease.Existing Products for the Treatment of Fabry Disease Currently, two ERT products are approved for the treatment of Fabry disease: agalsidase beta and agalsidase alfa. Agalsidase beta is approved globally(conditionally in the U.S.) and commercialized by Sanofi Aventis through Genzyme Corporation, while agalsidase alfa is commercialized by Shire and approved inthe EU and other countries but not in the U.S. Orphan drug exclusivity for both agalsidase beta and agalsidase alfa has expired in the EU and for agalsidase beta inthe U.S. as well. The net product sales of agalsidase beta and agalsidase alfa for 2016 were approximately $747 million as publicly reported by Sanofi Aventis, and$453 million as publicly reported by Shire, respectively.SD-101 for EB In the fourth quarter of 2015, we expanded our pipeline through the acquisition of SD-101, a proprietary, topical cream for the treatment of the rare, geneticconnective tissue disorder EB. SD-101 has established proof of concept in Phase 2 studies for the treatment of lesions in patients suffering-8-Table of Contentswith EB and is currently being investigated in a Phase 3 study to support global regulatory approvals. Based on promising Phase 2 clinical data in EB patients, SD-101 became one of the first drugs to receive Breakthrough Therapy designation from the FDA in 2013, and was the first treatment in EB clinical studies to showbenefit in closure of chronic wounds and acceleration in wound healing. SD-101 is a soluble, high concentration, proprietary formulation of allantoin (6%). Allantoin is found in low concentrations (typically <1%) in several over-the-counter products and cosmetics; however, it is not soluble enough to penetrate the layers of skin affected by EB. SD-101's stable, high-concentrationformulation has been shown to penetrate the skin and enhance wound healing. With topical products, the formulation is just as important as the active ingredient in delivering the active medication across the various skin layers, withoutsystemic absorption. Comprehensive studies to assess dermal penetration of the SD-101 active ingredient at concentrations ranging from 0.5 to 9% were conductedin various skin models. Results from these studies showed that SD-101 was delivered in a dose-related manner across skin barriers. The proposed mechanism of action ("MoA") of SD-101 is multifaceted to impact inflammatory response, promote the formation of epithelial and granulationtissue, loosen protein bridges (desmosomes) that hold together hyperkeratinized cells (e.g.in calluses), and has demonstrated direct bactericidal action in vitro(Margraf and Covey 1977; Meixell and Mecca 1966; Settle 1969; Flesch 1958; Fisher 1981; Cajkovac et al., 1992; Medda 1976).SD-101 for EB: Phase 2 Human Proof of Concept Initial human proof of concept for SD-101 was demonstrated in a single-center, open-label, 8-patient Phase 2a study in EB patients of all major EB types,aged six months to nine years. All patients in this study had a target wound at baseline that was at least 10 cm 2 in size. In this single-arm study, SD-101 creamcontaining SD-101 3% was applied to the entire body once daily for three months. Seven out of eight patients (87.5%) experienced complete closure of their targetwound at month one, and a 57% reduction in affected body surface area by month three. Daily administration of SD-101 3% was generally well-tolerated. Basedon these results, SD-101 became one of the first treatments to receive Breakthrough Therapy designation from the FDA in 2013. Following the completion of the Phase 2a study and subsequent interactions with the FDA, a Phase 2b study (SD-003) was conducted to further investigateSD-101 in 48 patients with all major EB types. The Phase 2b study was a multicenter, three-arm study that included an arm with a higher concentration of SD-101(6%), an arm with the 3% concentration that was previously evalulated in the Phase 2a study, and a placebo arm. Patients with smaller wounds than the ones onpatients in the Phase 2a study, at least 5 cm 2 in size, were eligible for enrollment. Complete wound healing at month one (primary endpoint) was found for 41%(n=17), 38% (n=16), and 53% (n=15) for placebo, SD-101 3%, and SD-101 6% patients, respectively. In the month two Intent to Treat ("ITT") population,complete wound healing was found for 41% (n=17), 44% (n=16), and 60% (n=15) for placebo, SD-101 3%, and SD-101 6% patients, respectively. In post hocanalyses (month two; evaluable population), complete wound healing was found for 41% (n=17) , 44% (n=16), 82% (n=11) of placebo, SD-101 3%, and SD-1016% patients, respectively (unadjusted p=0.04 for SD 101 6% versus placebo). The treatment effect for SD-101 6% was sustained at month three.-9-Table of Contents Median time to wound closure, an important secondary endpoint, was 91, 86, and 30 days for placebo, SD-101 3%, and SD-101 6% patients, respectively, inthe evaluable population. Treatment-emergent adverse events were similar across treatment groups. No serious adverse events were reported with SD-101 6%. Allpatients that completed the SD-003 study were eligible to continue to receive SD-101 6% in the Phase 2 open-label extension study (SD-004) which is currentlyunderway.SD-101 for EB: Phase 3 Registration-directed Study (SD-005) A Phase 3 registration-directed study, SD-005, was initiated in March of 2015. SD-005 is a randomized, double-blind, placebo-controlled study beingconducted at multiple sites worldwide that is designed to evaluate the safety and efficacy of SD-101 6% in up to 150 patients with the four major types of EB, whoare at least one-month old. Participants will be randomized 1:1 to two treatment groups receiving either SD-101 6% or placebo applied over their entire body oncedaily for three months. The primary efficacy endpoints will be evaluation of closure of a selected target wound and time to wound closure. In addition, changes in full-body wound,lesion coverage, and patient/caregiver reported itching and pain will be assessed. Investigators will also assess safety. An open-label extension trial, SD-006, whichwill evaluate long-term safety, will be offered to patients completing SD-005. Based on the results and experience in the Phase 2 studies, we have incorporated key learnings from the Phase 2 studies in the design of the Phase 3 study tomaximize potential for success:1.Dose selection : SD-101 6% was identified as the optimal concentration to compare to placebo in Phase 3. Patients will be randomized 1:1 toreceive SD-101 6% or placebo; 2.Sample size of ~150 patients : the Phase 2b results were used to calculate the sample size for the Phase 3 study. A treatment difference of ~17% orgreater between the SD-101 6% arm versus placebo will result in a p-value of <= 0.05; and 3.Enrollment of patients with larger wounds ( ³ ³ 10 cm 2 instead of >= 5 cm 2 ) and evaluation of primary endpoint at month two (instead ofmonth one) to minimize placebo response . In post-hoc analyses in Phase 2b (month two; evaluable population), complete wound healing was-10-Table of Contentsfound for 41% (n=17), 44% (n=16), and 82% (n=11) of placebo patients, SD-101 3%, and SD-101 6%, respectively (nominal p=0.04 for SD 1016% versus placebo). The placebo response was even lower in the subset of patients with target wounds ³ 10 cm 2 at month two in Phase 2b: SD-1016% - 50% (n= 4) vs. Placebo — 12.5% (n=8).SD-101 for EB: Regulatory Pathway SD-101 was one of the first therapies to receive Breakthrough Therapy designation by the FDA in 2013, following the completion of the Phase 2a initialhuman proof of concept study. The FDA and EMA each have also reviewed the Phase 2b study results. Based on the currently available data and communicationswith FDA and EMA, we believe that the global regulatory pathway forward for SD-101 will require a single Phase 3 registration-directed study. The FDA agreedto a rolling NDA in the U.S., which was initiated in the fourth quarter of 2015. Following the Phase 2b study, our Paediatric Committee of the EMA has issued apositive opinion on our Paediatric Investigation Plan ("PIP") for SD-101. A PIP is part of the EMA approval process and must be accepted prior to a submission ofan MAA in the EU. Results from the Phase 3 study are anticipated in mid-2016 to support marketing applications for SD-101 in the U.S., EU, and other regions. We held a series of discussions with the Dermatology Division of the U.S. FDA regarding proposed revisions to the statistical analysis plan while remainingblinded to the Phase 3 SD-005 study. Based on conversations with FDA and written communication received from the agency, the FDA has agreed to our proposedrevisions. Importantly, the FDA agreed that "Time to Target Wound Closure" may be elevated to a co-primary endpoint. We are currently in the process offinalizing the revised Statistical Analysis Plan ("SAP") with the FDA.Epidermolysis Bullosa Background Inherited EB encompasses more than 30 phenotypically or genotypically distinct entities, which share as a common feature mechanical fragility of epitheliallined or surfaced tissues, most notably the skin. A characteristic feature of all types of EB is the presence of recurrent blistering or erosions, which is the result ofeven minor friction. There are four types of genetically inherited EB:•Simplex (EBS) •Dystrophic (DEB) •Junctional (JEB) •Kindler (an extremely rare form of EB) These four types of EB are similar phenotypically (that is, in what their physical manifestations look like), but differ genotypically (in their genetic makeup)as well as in the area of the skin where there is blistering, otherwise known as "the site of ultra-structural disruption or cleavage." There is also a rare autoimmuneform of the disorder called EB acquisita. In the more severe forms of the disease, blistering can lead to deformities such as fusion of the fingers and toes, secondary skin infections, sepsis, and evendeath. EB may also affect the mouth and esophagus, leading to eating and swallowing problems. Serious complications, including squamous cell carcinoma, mayoccur in EB patients who survive childhood, which results in a high rate of mortality. EBS accounts for the majority of these cases, with DEB the next most common form. JEB is less prevalent and Kindler is the rarest of the four. These types ofEB are defined by the precise ultra-structural level of the skin, which splits and blisters.-11-Table of ContentsEpidermolysis Bullosa Prevalence and Market Opportunity Even as a rare disease, EB presents a significant worldwide commercial opportunity supported by its profound unmet medical need, strong stakeholdersupport, and high orphan prevalence. With 30,000-40,000 diagnosed patients in major markets, we estimate that EB may represent a potential $1 billion+ globalmarket opportunity based on third party market research.Current Standard of Care for the Treatment of EB and Potential Advantages of SD-101 With no currently approved pharmacological therapies, SD-101 is a potential first-to-market therapy for EB. The current methods of care are palliative.Current standard of care is high-cost treatment with significant patient/caregiver burden, which includes: bandaging, treating the open wounds to prevent infection,and trying to manage patients' pain.-12-Table of ContentsEB Development Landscape SD-101 is the first investigational pharmaceutical therapy for EB to enter Phase 3 clinical studies and is the one of the few therapies in development to addressall major types of EB. Several therapies across treatment modalities are in earlier stages of development and focused on addressing specific types of the disease.Novel ERT for Pompe Disease We are leveraging our biologics capabilities and CHART™ platform to develop a novel treatment paradigm for Pompe disease. This ERT consists of auniquely engineered rhGAA enzyme, ATB200, with an optimized carbohydrate structure to enhance uptake, administered in combination with a pharmacologicalchaperone to improve activity and stability. We acquired ATB200 as well as our enzyme targeting technology through our purchase of Callidus Biopharma. Thenovel combination has been patented for method of use and ATB200, following significant manufacturing scale-up, is our first biologic to enter clinicaldevelopment. In preclinical studies, ATB200 demonstrated greater tissue enzyme levels and further substrate reduction compared to the currently approved ERT for Pompedisease (alglucosidase alfa), which were further improved with the addition of a chaperone. In 2013, we completed a Phase 2 safety and pharmacokinetics study(Study 010) that investigated single, ascending oral doses of a pharmacological chaperone co-administered with alglucosidase alfa or rhGAA enzyme marketed byGenzyme, in patients with Pompe disease. Each patient received one infusion of ERT alone, and then a single oral dose of the pharmacological chaperone just priorto the next ERT infusion. Results from this study showed an increase in acid alpha glucosidase ("GAA") enzyme activity in plasma and muscle when co-administered compared to ERT alone. The pharmacological chaperone, AT2221 is not an active ingredient that contributes directly to GAA substrate reduction but instead acts to stabilize ATB200.The small molecule pharmacological chaperone AT2221 binds and stabilizes ATB200 to improve the uptake of active enzyme in key disease-relevant tissues,resulting in increased clearance of accumulated substrate, glycogen. We are currently conducting a Phase 1/2 clinical study ATB200-02 to investigate our novel Pompe treatment paradigm in Pompe patients.ATB200-02 Clinical Study — Design and Objectives Primary objectives: to evaluate safety, tolerability, pharmacokinetics (PK), and pharmacodynamics (PD) of ATB200/AT2221 Study duration: 18-week primary treatment period followed by a long-term extension Patient cohorts: ambulatory ERT-switch patients (Cohort 1), non-ambulatory ERT-switch patients (Cohort 2) and ERT-naïve patients (Cohort 3). Enrolling upto ~20 total patients across all cohorts. Preliminary data now available:•Safety data for 13 patients through interim data analysis (maximum 36 weeks) •PK and PD (muscle biomarker and disease substrate biomarker) data for 10 patients (eight ERT-switch patients and two naïve patients)-13-Table of ContentsATB200-02 Study — Preliminary Data Highlights in Initial ERT-Switch and Naive Patients•ATB200/AT2221 safety measures (n=13) showed: •No serious adverse events (SAEs) •TEAEs were generally mild and transient •To date, ATB200/AT2221 has shown no infusion-associated reactions following 150+ infusions •Clinical PK profile was consistent with previously reported preclinical data (n=10). •Reductions observed in biomarkers of muscle damage (creatine kinase (CK) enzyme, alanine aminotransferase (ALT), and aspartateaminotransferase (AST)) in ambulatory switch patients (N=8, week 18) and naïve patients (N=2, week 4) •Reduction observed in a biomarker of glycogen substrate — Urine Hexose Tetrasaccharide (Hex4) — in all eight ERT-switch patients and bothnaïve patientsPompe Disease Background Like Fabry disease, Pompe disease is an LSD that results from a deficiency in an enzyme, GAA. Signs and symptoms of Pompe disease can be severe anddebilitating and include progressive muscle weakness throughout the body, particularly the heart and skeletal muscles. This leads to accumulation of glycogen incells, which is believed to result in the clinical manifestations of Pompe disease. Pompe disease ranges from a rapidly fatal infantile form with severe cardiacinvolvement to a more slowly progressive, late-onset form primarily affecting skeletal muscle. All forms are characterized by severe muscle weakness that worsensover time. In the early-onset form, patients are usually diagnosed shortly after birth and often experience enlargement of the heart and severe muscle weakness. Inlate-onset Pompe disease, symptoms may not appear until late childhood or adulthood and patients often experience progressive muscle weakness. According to reported estimates of the Acid Maltase Deficiency Association, the United Pompe Foundation, and the Lysosomal Disease Program atMassachusetts General Hospital, there are 5,000-10,000 patients with Pompe disease worldwide.CDKL5 We are researching a potential first-in-class protein replacement therapy approach for CDKL5 deficiency in preclinical studies. CDKL5 (cyclin-dependentkinase-like 5) is a gene on the X-chromosome encoding the CDKL5 protein that regulates the expression of several essential proteins for normal braindevelopment. Genetic mutations in the CDKL5 gene result in CDKL5 protein deficiency and the disorder manifests clinically as persistent seizures starting ininfancy, followed by severe impairment in neurological development. Most children affected by CDKL5 deficiency cannot walk or care for themselves and mayalso suffer from scoliosis, visual impairment, sensory issues, and gastrointestinal complications.-14-Table of ContentsAcquisitionsMiaMed, Inc In July 2016, we acquired MiaMed, Inc., ("MiaMed"), which is a pre-clinical biotechnology company focused on developing protein replacement therapy forCDKL5 and related diseases. Upon closing of the transaction we paid the former holders of MiaMed's capital stock an aggregate of $6.5 million, comprised of(i) approximately $1.8 million in cash (plus MiaMed's cash and cash equivalents at closing and less any of MiaMed's unpaid third-party fees and expenses relatedto the transaction), and (ii) 825,603 shares of our Company's common stock. In addition, we also agreed to pay up to an additional $83.0 million in connection withthe achievement of certain clinical, regulatory and commercial milestones, for a potential aggregate deal value of $89.5 million. We accounted for this transactionas an acquisition of an asset as we did not acquire any employees from MiaMed nor did we acquire any significant processes that we did not previously perform ormanage.Scioderm, Inc. In September 2015, we entered into a merger agreement with Scioderm Inc., a privately held biotechnology company that was engaged in developinginnovative therapies for treating diseases with high unmet medical needs including a novel topical cream for the treatment of EB. We acquired Scioderm in a cash and stock transaction. At closing, the Company paid Scioderm shareholders, option holders, and warrant holdersapproximately $223.9 million, of which approximately $141.1 million was paid in cash and approximately $82.8 million was paid through the issuance ofapproximately 5.9 million newly issued Amicus shares. We agreed to pay up to an additional $361 million to Scioderm shareholders, option holders, and warrantholders upon achievement of certain clinical and regulatory milestones and $257 million to Scioderm shareholders, option holders, and warrant holders uponachievement of certain sales milestones. If SD-101 is approved, EB may qualify as a rare pediatric disease under the Food and Drug Administration Safety andInnovation Act ("FDASIA") and we plan to request a Priority Review Voucher ("PRV") under FDASIA. If the PRV is obtained and subsequently sold, we will payScioderm stockholders, option holders, and warrant holders the lesser of $100 million in the aggregate or 50% of the proceeds of such sale. During the second quarter of 2016, we reached the first event-based milestone, which was the 50% enrollment of patients. The milestone payment for thisevent was $5.0 million which was paid in cash during the second quarter of 2016.Callidus Biopharma, Inc. In November 2013, we entered into a merger agreement with Callidus, a privately held biotechnology company that was engaged in developing a next-generation Pompe ERT. Callidus did not have complementary technologies but their technology was complementary to our own pharmacological chaperonetechnology. In connection with our acquisition of Callidus, we agreed to issue an aggregate of 7.2 million shares of our common stock to the former stockholders ofCallidus. In addition, we will be obligated to make additional payments to the former stockholders of Callidus upon the achievement of certain clinical milestonesof up to $35 million and regulatory milestones of up to $105 million set forth in the merger agreement, provided that the aggregate merger consideration shall notexceed $130 million. We may, at our election, satisfy certain milestone payments identified in the merger agreement aggregating $40 million in shares of ourcommon stock. The milestone payments not permitted to be satisfied in common stock (as well as any payments that we are permitted to, but chooses not to, satisfyin common stock), as a result of the terms of the merger agreement, will be paid in cash.-15-Table of Contents During the second quarter of 2016, we reached the first clinical milestone, which was the dosing of the first patient in a Phase 1 or 2 study. The milestonepayment for this event was $6.0 million, which was paid in common stock of the Company, during the second quarter of 2016.Strategic Alliances and Arrangements In November 2013, we entered into a Revised Agreement ("the Revised Agreement") with GlaxoSmithKline ("GSK"), pursuant to which, we obtained globalrights to develop and commercialize migalastat as a monotherapy and in combination with ERT for Fabry disease. The Revised Agreement amends and replaces inits entirety the earlier agreement entered into between us and GSK in July 2012. Under the terms of the Revised Agreement, for migalastat monotherapy, GSK iseligible to receive post-approval and sales-based milestones, as well as tiered royalties in the mid-teens in eight major markets outside the U.S. There was no otherconsideration paid to GSK as part of the Revised Agreement. In the second half of 2016, we recognized approximately $0.5 million of royalty expense under theRevised Agreement. We will continue to evaluate other business development opportunities as appropriate that build stockholder value and provide us with access to the financial,technical, clinical, and commercial resources necessary to develop and market pharmacological chaperone therapeutics, ERTs, skin treatments, and othertechnologies or products. We are exploring potential collaborations, alliances, and other business development opportunities on a regular basis. These opportunitiesmay include the acquisition of preclinical-stage, clinical-stage, or marketed products so long as such transactions are consistent with our strategic plan to developand provide therapies to patients living with rare and orphan diseases, and support our continued transformation from a development-stage company into acommercial biotechnology company.Intellectual PropertyPatents and Trade Secrets Our success depends in part on our ability to maintain proprietary protection surrounding our product candidates, technology, and know-how, to operatewithout infringing the proprietary rights of others, and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietaryposition by filing U.S. and foreign patent applications related to our proprietary technology, including both new inventions and improvements of existingtechnology, that are important to the development of our business, unless this proprietary position would be better protected using trade secrets. Our patent strategyincludes obtaining patent protection, where possible, on compositions of matter, methods of manufacture, methods of use, combination therapies, dosing andadministration regimens, formulations, therapeutic monitoring, screening methods, and assays. We also rely on trade secrets, know-how, continuing technologicalinnovation, in-licensing, and partnership opportunities to develop and maintain our proprietary position. Lastly, we monitor third parties for activities that mayinfringe 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 otherwiseinterfere with the development of our business. We are aware, for example, of U.S. patents, and corresponding international counterparts, owned by third partiesthat contain claims related to ERTs, small molecules for stabilizing enzymes, and therapies for EB. If any of these patents were to be asserted against us we do notbelieve 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, ifwe 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.-16-Table of Contents We own or license rights to several issued patents in the U.S., current member states of the European Patent Convention and numerous pending and issuedforeign 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 patentportfolio includes patents and patent applications with claims relating to methods of increasing and/or stabilizing deficient enzyme activity to treat genetic diseases.The patent positions for migalastat, SD-101, and ATB200/AT2221 pharmacological chaperone/ERT combination therapy are described below and include bothpatents and patent applications we own or exclusively license:•We have an exclusive license to six issued U.S. patents that cover the use of migalastat to treat Fabry disease, as well as corresponding European,Japanese, and Canadian patents. These exclusively licensed U.S. patents relating to migalastat expire in 2018 (not including the Hatch-Waxmanstatutory extension, which is described below), while the European, Japanese, and Canadian patents will expire in 2019 (not including theSupplemental Protection Certificates or SPC extensions, which are described below). The patents include claims covering methods of increasing theactivity of and preventing the degradation of alpha-Gal A, and methods for the treatment of Fabry disease using migalastat. In addition, we own twoissued U.S. patents directed to dosing regimens with migalastat that expire in 2027 (not including any extensions), as well as a pending applicationwhich, if granted, may result in a patent that also expires in 2027 (not including any extensions). Foreign counterpart patents are issued in Australia,Europe, Hong Kong, and Japan, and foreign applications are pending in Australia, Canada, Europe, Hong Kong, Japan, and Mexico. Further, weown an issued U.S. patent directed to synthetic steps related to the commercial process for preparing migalastat, which expires in 2026, as well asissued patents in China, Europe, Hong Kong, Israel, and Japan. Foreign counterpart applications are pending in Brazil and India. We jointly ownissued U.S., European, Hong Kong, and Mexican patents covering a method of determining whether male Fabry disease patients are likely torespond to treatment with migalastat which expires in 2027. We have two issued U.S. patents covering a method of treating a patient diagnosedwith Fabry disease with migalastat wherein the Fabry patient has one of several alpha-Gal A mutations. These patents will expire in 2029. We alsohave a pending U.S. application covering a method of determining which alpha-Gal A mutations are likely to be amenable to therapy withmigalastat which, if granted, will expire in 2029. Foreign counterpart patents have also been issued in Europe, Japan, Canada, Mexico, andAustralia; all of which will also expire in 2029. •We have an exclusive license to pending patent applications covering the co-administration of migalastat with ERT (recombinant alpha-Gal A).Patents covering specific combinations have issued in Europe, China, India, Hong Kong, Japan, and Mexico. These issued patents will expire in2024. Other applications from this family are pending in the U.S., Europe, Canada, Brazil, China, Hong Kong, India, Israel, Japan, and Mexico. Ifpatents issue from these applications, expiration will be in 2024. We also own a U.S. patent application covering specific doses and dosingregimens of migalastat to treat Fabry disease in combination with ERT (recombinant alpha-Gal A) in the U.S. and foreign counterpart applicationsin Australia, Brazil, Canada, China, Eurasia, Europe, Hong Kong, Israel, India, Japan, South Korea, Mexico, Singapore, Taiwan, and South Africa,and issued patents in Australia and New Zealand. Any patents issuing from these applications will expire in 2032. •We own two issued U.S. patents covering a high concentration co-formulation of recombinant acid alpha-glucosidase and pharmacologicalchaperone, as well as pending patent applications in the U.S., Canada, Europe, Japan, Mexico, and South Korea. If patents issue from theseapplications, expiration will be in 2033.-17-Table of Contents•We own a U.S. patent application covering a co-formulation of recombinant alpha-Gal A and migalastat. If a patent issues from this application,expiration will be in 2033. Foreign counterpart applications are pending in Canada, Europe, Hong Kong, and Taiwan. •As part of the Callidus acquisition, we acquired a portfolio of patent applications including an application series covering reagents and methods forcoupling targeting peptides to recombinant lysosomal enzymes, including recombinant acid alpha-glucosidase. These applications are pending inthe U.S., Europe, Japan, Brazil, Canada, China, South Korea, and other countries. If patents issue from these applications, expiration will be in 2032to 2034 depending on the specific application. Another patent application series covers a variant recombinant beta-glucocerebrosidase. This serieshas issued patents in the U.S., Europe, and China, as well as pending applications in the U.S., Europe, Japan, Brazil, Canada, China, Hong Kong,and South Korea. Any patents that issue from these applications will expire in 2031. Yet another patent application series covers novel signalsequences to improve protein expression and secretion of proteins. We have issued patents in the U.S. and China, as well as pending applications inEurope, Brazil, Canada, Hong Kong, and South Korea. If patents issue from these applications, expiration will be in 2031. •Another patent application portfolio focuses on a modified lysosomal enzyme (acid alpha-glucosidase) that binds more effectively to the receptorand more potent than conventional recombinant enzymes. This is pending in the U.S., Argentina, and Taiwan currently with options to file in anumber of other countries in the future. If patents issue from this series, they will expire in 2035. •As part of the Scioderm, Inc. acquisition, we acquired several U.S. patents and patent applications which cover the novel formulation of SD-101, itsmethod of use to treat EB, and a flexible applicator for applying SD-101. Expiration of these patents and patent applications, if and when theapplications issue, will be in 2019 (not including patent term extensions). Patent applications covering the novel formulation of SD-101 are pendingin Europe and issued in Mexico. There are other patents and applications covering more specific formulations of SD-101 and indications other thanEB. Expiration of these patents and patent applications, if and when the applications issue, will be in 2031. •As part of the acquisition of MiaMed, we acquired an exclusive worldwide license to certain patent rights held by the Università di Bologna. Thesepatent rights include an issued U.S. patent and a pending U.S. patent application directed to novel CDKL5 fusion proteins, as well as pendingcounterpart patent applications in several foreign countries. Expiration of the issued U.S. patent and the patent applications, if and when theapplications issue, will be in 2035. 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 legalterm 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. 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, and amendments thereto, more commonly known as the Hatch-Waxman Act,provides for an extension of one patent, known as a Hatch-Waxman statutory extension, for each New Chemical Entity ("NCE") to compensate-18-Table of Contentsfor a portion of the time spent in clinical development and regulatory review. However, the maximum extension is five years and the extension cannot extend thepatent beyond 14 years from NDA approval. Similar extensions are available in European countries, known as SPC extensions, Japan and other countries.However, in the United States 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 BestPharmaceuticals for Children Act, we may be entitled to an additional six month period of patent protection Market Exclusivity and Orphan Drug Exclusivity, forcompleting pediatric clinical studies in response to an 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 tomaintain and solidify our proprietary position for our technology will depend on our success in promptly filing patent applications on new discoveries, and inobtaining effective claims and enforcing those claims once granted. We focus special attention on filing patent applications for formulations and delivery regimensfor 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 relationshipare disclosed promptly, maintained in confidence until a patent application is filed, and preferably until publication of the patent application, and assigned to us orsubject to a right to obtain a license. We do not know whether any of our owned patent applications or those patent applications that are licensed to us will result inthe 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,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 ofpatent 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 ourowned or licensed patents or patent applications. In addition, our competitors may independently develop similar technologies or duplicate any technologydeveloped 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 mayexpire 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 tradesecret technology and processes, in part, by entering into confidentiality agreements with commercial partners, collaborators, employees, consultants, scientificadvisors, and other contractors, and by contracting with our employees and some of our commercial consultants to ensure that any trade secrets resulting from suchemployment or consulting are owned by us. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical securityof our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations, andsystems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwisebecome known or be discovered independently by others. To the extent that our consultants, contractors, or collaborators use intellectual property owned by othersin their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.-19-Table of ContentsLicense Agreements We have acquired rights to develop and commercialize our product candidates through licenses granted by various parties. For information regarding ourmigalastat collaboration with GSK, please see "Strategic Alliances and Arrangements". For our other license agreements, the following summarizes our materialrights and obligations under those licenses:Mt. Sinai School of Medicine We have acquired exclusive worldwide patent rights to develop and commercialize migalastat and other pharmacological chaperones for the prevention ortreatment of human diseases or clinical conditions by increasing the activity of wild-type and mutant enzymes pursuant to a license agreement with Mt. SinaiSchool of Medicine ("MSSM") of New York University. Under this agreement, to date, we have paid no upfront or annual license fees and we have no milestoneor future payments other than royalties on net sales. This agreement expires upon expiration of the last of the licensed patent rights, which will be in 2019, subjectto any patent term extension that may be granted, or 2024 if we develop a product for combination therapy (pharmacological chaperone plus/ERT) and a patentissues from the pending application covering the combination therapy, subject to any patent term extension that may be granted. 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 toreduce 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 undereach agreement. For migalastat in 2016, we incurred $0.1 million of royalty expense under the agreement with MSSM. Our rights with respect to these agreementsto develop and commercialize migalastat may terminate, in whole or in part, if we fail to meet certain development or commercialization requirements or if we donot meet our obligations to make royalty payments.Trademarks In addition to our patents and trade secrets, we own certain trademarks in the U.S. and/or abroad, including Amicus Therapeutics® and design, AmicusAssist™ and design, CHART™ and design, At the Forefront of Therapies for Rare and Orphan Diseases®, Zorblisa® and design, and Galafold™ and design.These trademarks are registered or filed with the U.S. Patent and Trademark Office and corresponding government agencies in a number of other countries.Manufacturing We continue to rely on contract manufacturers to supply the active biopharmaceutical ingredients and final drug product for migalastat, SD-101, otherpharmacological chaperones, and our next-generation ERT product candidates. The active biopharmaceutical ingredients and final formulations for these productsare manufactured under current Good Manufacturing Practice ("cGMP"). The components in the final formulation for each product are commonly used in otherbiopharmaceutical products and are well characterized ingredients. We have implemented appropriate controls for assuring the quality of both activebiopharmaceutical ingredients and final drug products. Product specifications will be established in concurrence with regulatory bodies at the time of productregistration.-20-Table of ContentsCompetitionOverview The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition, and a strong emphasis onproprietary products. In addition, several large pharmaceutical companies are increasingly focused on developing therapies for the treatment of rare diseases, boththrough organic growth and acquisitions and partnerships. While we believe that our technologies, knowledge, experience, and scientific resources, provide us withcompetitive advantages, we face potential competition from many different sources, including commercial 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 newtherapies 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, andmarketing approved products. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel, as well as inacquiring 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. Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, havefewer side effects, are more convenient, and/or are less expensive than products that we may develop. In addition, our ability to compete may be affected becausein 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 lessattractive 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 developmentfor LSDs or EB. Other competitors are pharmaceutical and biotechnology companies that have approved therapies or therapies in development for rare diseases forwhich pharmacological chaperone technology, topical EB skin treatment, or next-generation ERT 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 thesecompanies is currently working to develop products that would directly compete with ours. We are also aware of several pharmaceutical and biotechnologycompanies who are developing various treatments for EB, and ones that are developing novel ERTs. The key competitive factors affecting the success of ourproduct 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 inthe future. The following table lists our-21-Table of Contentsprincipal competitors and publicly available information on the status of their clinical-stage product offerings (U.S. dollars in millions):-22-Competitor Indication Product Class of Product Status 2016 Sales in millions Sanofi Aventis: Fabry disease Fabrazyme® ERT Marketed $747 Pompe disease Myozyme®/ Lumizyme® ERT Marketed $803 Fabry disease GZ402671 Oral GCS Inhibitor Phase 2 N/A Pompe disease GZ402666 ("neo GAA") ERT Phase 3 N/A Shire: Fabry disease Replagal® ERT Marketed $453 Epidermolysis Bullosa (DEBOnly) SHP608 Gene Therapy / Type VIICollagen Preclinical N/A Protalix Biotherapeutics Fabry disease PRX-102 ERT Phase 2/3 N/A RegeneRxBiopharmaceuticals, Inc . Epidermolysis Bullosa (JEB &DEB) RGN-137 Tß4 Topical Gel Phase 2 N/A Intercytex Ltd . Epidermolysis Bullosa (RDEBOnly) ICX-RHY Cell Therapy Phase 2 N/A Amryt Epidermolysis Bullosa (Alltypes) Oleogel S10 Herbal Medicine / Triterpene Phase 3 N/A Castle Creek Pharma Epidermolysis Bullosa(Simplex only) Diacerin Topical Phase 2 N/A Fibrocell Epidermolysis Bullosa (RDEBOnly) FCX-007 Gene Therapy / Type VIICollagen Preclinical N/A InMed Pharmaceuticals Ltd . Epidermolysis Bullosa (EBSOnly) INM-750 Phytocannabinoids TopicalFormulation Phase 1/2a N/A Abeona Pharmaceuticals Epidermolysis Bullosa (RDEBOnly) EB-101 (LZRSE-COL7A1) Gene Therapy Phase 1/2 N/A Epidermolysis Bullosa (Alltypes) EB-201 (AAV-DJCOL7A1) Gene Editing Preclinical N/A Audentes Pompe Disease AT982 Gene Therapy Preclinical N/A Table of ContentsGovernment RegulationFDA Approval Process In the U.S., biopharmaceutical products are subject to extensive regulation by the FDA. The Federal Food, Drug, and Cosmetic Act, Public Health ServicesAct, 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 biopharmaceutical 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 file amarketing application, to issue Complete Response letters or to not approve pending new drug applications (NDAs) or biologic product license applications("BLAs"), or to issue warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties,litigation, government investigation, and criminal prosecution. Biopharmaceutical product development in the U.S. typically involves nonclinical laboratory and animal tests, the submission to the FDA of anInvestigational New Drug application ("IND"), which must become effective before clinical testing may commence, and adequate and well-controlled clinicaltrials to establish the safety and effectiveness of the drug for each indication for which FDA approval is sought. Satisfaction of FDA pre-market approvalrequirements typically takes many years and the actual time required varies 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 studies to assess the characteristics, potentialsafety, and efficacy of the product. The conduct of the preclinical tests must comply with federal regulations and requirements including Good Laboratory Practice("GLP"). 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 at least one proposed clinical trial protocol. Long-term preclinical safety evaluations, such as animal tests of reproductive toxicityand carcinogenicity, continue during the IND phase of development. Reproductive toxicity studies are required to allow inclusion of women of child bearingpotential in clinical trials, whereas carcinogenicity studies are required for registration. The results of these long-term studies would eventually be described inproduct labeling. A 30-day review period after the submission and receipt of an IND is required prior to the commencement of clinical testing in humans. The IND becomeseffective 30 days after its receipt by the FDA, and trials may begin at that point unless the FDA notifies the sponsor that the investigations are subject to a clinicalhold. Clinical trials usually involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualifiedinvestigator. Clinical trials must be conducted in compliance with applicable government regulations, Good Clinical Practice ("GCP"), as well as under protocolsdetailing the objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. Each protocol involving testing onU.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 isnot being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. The study protocol and informed consentinformation for patients in clinical trials must also be submitted to an Institutional Review Board ("IRB"), for approval. An IRB may also require the clinical trialat the site to be halted, either temporarily or permanently, for failure to comply with the IRB's requirements, or may impose other conditions.-23-Table of Contents Clinical trials to support an NDA or BLA 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, sideeffects associated with increasing doses, and, if possible, early evidence on pharmacodynamics effects and effectiveness. Phase 2 usually involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication or indications, dosagetolerance, and optimum dosage, and identify common adverse effects and safety risks. If a compound demonstrates evidence of efficacy and an acceptable safetyprofile in Phase 2 evaluations, Phase 3 trials are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patientsover longer treatment periods, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drugand to provide adequate information for the labeling of the drug. After completion of the required clinical testing, an NDA or BLA is prepared and submitted to the FDA for the determination of effectiveness. FDA approvalof the NDA or BLA is required before marketing of the product may begin in the U.S. The NDA or BLA must include the results of all preclinical, clinical, andother testing and a compilation of data relating to the product's pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting an NDAor BLA is substantial. Under federal law, the submission of most NDAs and BLAs is additionally subject to a substantial application user fee; although for orphandrugs these fees are waived, and the holder of an approved NDA or BLA may also be subject to annual product and establishment user fees. These fees aretypically increased annually. The FDA has 60 days from its receipt of an NDA or BLA to determine whether the application will be accepted for filing based on the agency's thresholddetermination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. TheFDA has agreed to certain performance goals in the review of NDAs. Marketing applications are assigned review status during the filing period. Review statuscould be either standard or priority. Most such applications for standard review are reviewed within 12 months under PDUFA V (two months for filing plus tenmonths for review). The FDA attempts to review a drug candidate that is eligible for priority review within six months, as discussed below. The review processmay be extended by the FDA for three additional months to evaluate major amendments submitted during the pre-specified PDUFA V review clock. The FDA mayalso refer applications for novel drug products or drug products which present difficult questions of safety or efficacy to an Advisory Committee for public review,typically a panel that includes clinicians and other experts, for review, evaluation, and a recommendation as to whether the application should be approved. TheFDA is not bound by the recommendation of an Advisory Committee, but it generally follows such recommendations. Before approving an NDA or BLA, the FDAwill 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 ismanufactured. The FDA will not approve the product unless compliance with cGMP is satisfactory and the NDA or BLA contains data that provide substantialevidence that the drug is safe and effective in the indication studied and to be marketed. After the FDA evaluates the NDA or BLA and the manufacturing facilities, it issues an approval letter or a complete response letter. Complete response lettersoutline the deficiencies in the submission that prevent approval and may require substantial additional testing or information for the FDA to reconsider theapplication. If and when those deficiencies have been addressed to the FDA's satisfaction in an amendment submitted to the NDA or BLA, the FDA will then issuean approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type and extent of information included.-24-Table of Contents An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of NDAapproval, the FDA may require substantial post-approval commitments or requirements to conduct additional testing and/or surveillance to monitor the drug'ssafety or efficacy and may impose other conditions, including distribution and labeling restrictions which can materially affect the potential market andprofitability of the drug. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained, problems are identifiedfollowing initial marketing, or post-marketing commitments are not met.The Hatch-Waxman Act In seeking approval for a drug through an NDA, applicants are required to list with the FDA certain patent(s) with claims that cover the applicant's product orapproved method of use. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA's Approved Drug Productswith Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential competitorsin support of approval of an Abbreviated New Drug Application ("ANDA"). An ANDA provides for marketing of a drug product that has the same route ofadministration, active ingredients strength, and dosage form as the listed drug and has been shown through bioequivalence testing to be, in most cases,therapeutically equivalent to the listed drug. ANDA applicants are not required to conduct or submit results of preclinical or clinical tests to prove the safety oreffectiveness of their drug product, other than the requirement for bioequivalence testing. Drugs approved in this way are commonly referred to as "genericequivalents" to the listed drug and can often be substituted by pharmacists under prescriptions written for the original listed "innovator" drug. The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA's Orange Book. Specifically, theapplicant 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 willexpire 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. Acertification that the new product will not infringe the already approved product's 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 haveexpired. If the ANDA applicant submits a Paragraph 4 certification to the FDA, the applicant must also send notice of the Paragraph 4 certification to the NDA andpatent 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 tothe notice of the Paragraph 4 certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph 4 certification automaticallyprevents 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 casethat is favorable to the ANDA applicant. Patent term and data exclusivity run in parallel. An ANDA application also will not be approved until any non-patent exclusivity, such as exclusivity forobtaining approval of a NCE, listed in the Orange Book for the referenced product has expired (New Chemical Entity Market Exclusivity). Federal law provides aperiod of five years following approval of a drug containing no previously approved active ingredients, during which ANDAs for generic versions of those drugscannot be submitted unless the submission contains a Paragraph 4 certification that challenges a listed patent, in which case the submission may be made four yearsfollowing 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 isapproved in a new dosage form, route of-25-Table of Contentsadministration 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, duringwhich the FDA cannot grant effective approval of an ANDA based on that listed drug for the same new dosage form, route of administration or combination, ornew use.Other Regulatory Requirements Once an NDA or BLA is approved, a product will be subject to certain post-approval requirements. For instance, the FDA closely regulates the post-approvalmarketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, communications regarding unindicated uses, industry-sponsored scientific and educational activities, and promotional activities involving the internet. Drugs may be promoted only for approved indications and in accordance with the provisions of the approved labeling. Changes to some of the conditionsestablished in an approved application, including changes in indications, new safety information, labeling, or manufacturing processes or facilities, requiresubmission and FDA approval of a new NDA, NDA supplement, BLA, or BLA supplement before the change can be implemented. New efficacy claims requiresubmission and approval of an NDA supplement and BLA supplement for each new indication. The efficacy claims typically require new clinical data similar to those included in the original application. The FDA uses the same procedures and actions inreviewing NDA and BLA supplements as it does in reviewing NDAs and BLAs. Additional exclusivity may be granted for new efficacy claims. Generic ANDAscannot be labeled for these types of claims until the new exclusivity period expires. Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA or BLA. The FDA also may require post-marketing testing, known as Phase 4 testing, risk evaluation and mitigation strategies, and surveillance to monitor the effects of an approved product, or placeconditions on an approval that could restrict the distribution or use of the product. In addition, quality control as well as drug manufacture, packaging, and labelingprocedures must continue to conform to cGMP, after approval. Drug manufacturers and certain subcontractors are required to register their establishments withFDA and certain state agencies, and are subject to routine inspections by the FDA during which the agency inspects manufacturing facilities to access compliancewith cGMP. Accordingly, manufacturers must continue to expend time, money, and effort in the areas of production and quality control to maintain compliancewith cGMP. Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if itencounters 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 orcondition that affects fewer than 200,000 individuals in the U.S. Orphan drug designation must be requested before submitting an NDA or BLA. After the FDAgrants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does notconvey any advantage in or shorten the duration of the regulatory review and approval process. The first NDA or BLA applicant with FDA orphan drugdesignation for a particular active ingredient to receive FDA approval of the designated drug for the disease indication for which it has such designation, is entitledto 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 maynot finally approve any other applications to market the same drug for the same disease, except in limited circumstances, such as a showing of clinical superiorityto the product with orphan drug exclusivity or if the license holder cannot supply-26-Table of Contentssufficient quantities of the product. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or thesame drug for a different disease or condition, provided that the sponsor has conducted appropriate clinical trials required for approval. Among the other benefits oforphan drug designation are tax credits for certain research and a waiver of the NDA or BLA application user fee for the orphan indication.Pediatric Information Under the Pediatric Research Equity Act of 2007 ("PREA"), NDAs or supplements to NDAs must contain data to assess the safety and effectiveness of thedrug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which thedrug 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 notapply to any drug for an indication for which orphan designation has been granted.Fast Track Designation Under the Fast Track program, the sponsor of an IND may request the FDA to designate the drug candidate as a Fast Track drug if it is intended to treat aserious condition and fulfill an unmet medical need. The FDA must determine if the drug candidate qualifies for Fast Track designation within 60 days of receiptof the sponsor's request. Once the FDA designates a drug as a Fast Track candidate, it is required to facilitate the development and expedite the review of that drugby providing more frequent communication with and guidance to the sponsor. In addition to other benefits such as the ability to use surrogate endpoints and have greater interactions with the FDA, the FDA may initiate review of sectionsof a Fast Track drug's NDA or BLA before the application is complete. This rolling review is available if the applicant provides, and the FDA approves, a schedulefor the submission of the remaining information and the applicant pays applicable user fees. However, the FDA's review period as specified under PDUFA V forfiling and reviewing an application does not begin until the last section of the NDA or BLA has been submitted. Additionally, the Fast Track designation may bewithdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.Breakthrough Therapy Designation Breakthrough Therapy designation is intended to expedite the development and review of a candidate that is planned for use to treat a serious or life-threatening disease or condition when preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies onone or more clinically significant endpoints. A Breakthrough Therapy designation conveys all of the Fast Track program features, as well as more intensive FDAguidance on an efficient drug development program. The FDA also has an organizational commitment to involve senior management in such guidance.Priority Review Under FDA policies, a drug candidate is eligible for priority review, or review within six months from filing for a new molecular entity ("NME") or sixmonths from submission for a non-NME if the drug candidate provides a significant improvement compared to marketed drugs in the treatment, diagnosis, orprevention of a disease. A Fast Track designated drug candidate would ordinarily meet the FDA's criteria for priority review. The FDA makes its determination ofpriority or standard review during the 60-day filing period after an initial NDA or BLA submission.-27-Table of ContentsAccelerated Approval Under the FDA's accelerated approval regulations, the FDA may approve a drug for a serious or life-threatening illness that provides meaningful therapeuticbenefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit. This approval mechanism isprovided for under 21CRF314 Subpart H and Subpart E. In this case, clinical trials are conducted in which a surrogate endpoint is used as the primary outcome forapproval. A surrogate endpoint is reasonably likely to predict clinical benefit, or an effect on a clinical endpoint that can be measured earlier than an effect onirreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into accountthe severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. This surrogate endpoint substitutes for a direct measurementof how a patient feels, functions, or survives and is considered reasonably likely to predict clinical benefit. Such surrogate endpoints may be measured more easilyor more rapidly than clinical endpoints. A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including thecompletion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint. When the Phase 4 commitment is successfully completed, thebiomarker is deemed to be a surrogate endpoint. Failure to conduct required post-approval studies or confirm a clinical benefit during post-marketing studies, couldlead the FDA to withdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved under accelerated regulationsare subject to prior review by the FDA.Section 505(b) (2) New Drug Applications Most drug products obtain FDA marketing approval pursuant to an NDA, an ANDA, or a BLA. A fourth alternative is a special type of NDA, commonlyreferred 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 submission of a NDA for which at least some of the information required for approval comes from studies not conducted by or forthe 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 anapproved product. The FDA may also require companies to perform additional studies or measurements to support the change from the approved product. TheFDA 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 anynew 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 theFDA concerning any patents listed for the approved product in the Orange Book to the same extent as an ANDA applicant. Thus approval of a 505(b)(2) NDA canbe stalled until all the listed patents claiming the referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of anNCE, 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, untilthe 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.Patient Protection and Affordable Care Act of 2010 The Biologics Price Competition and Innovation Act of 2009 ("BPCIA"), which was enacted as part of the Patient Protection and Affordable Care Act of2010, as amended by the Health Care and Education Reconciliation Act of 2010 ("PPACA") created an abbreviated approval pathway for-28-Table of Contentsbiological products that are demonstrated to be "biosimilar" or "interchangeable" with an FDA-licensed reference biological product via an approved BLA.Biosimilarity to an approved reference product requires that there be no differences in conditions of use, route of administration, dosage form, and strength, and noclinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency. Biosimilarity is demonstrated insteps beginning with rigorous analytical studies or "fingerprinting", in vitro studies, in vivo animal studies, and generally at least one clinical study, absent a waiverfrom the Secretary of Health and Human Services. The biosimilarity exercise tests the hypothesis that the investigational product and the reference product are thesame. If at any point in the stepwise biosimilarity process a significant difference is observed, then the products are not biosimilar, and the development of a stand-alone NDA or BLA is necessary. In order to meet the higher hurdle of interchangeability, a sponsor must demonstrate that the biosimilar product can be expectedto produce the same clinical result as the reference product, and for a product that is administered more than once, that the risk of switching between the referenceproduct and biosimilar product is not greater than the risk of maintaining the patient on the reference product. Complexities associated with the larger, and oftenmore complex, structures of biological products, as well as the process by which such products are manufactured, pose significant hurdles to implementation thatare still being evaluated by the FDA. Under the BPCIA, a reference biologic is granted 12 years of exclusivity from the time of first licensure of the referenceproduct.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 certainmarketing practices in the pharmaceutical industry in recent years. These laws include anti-kickback statutes and false claims statutes. The federal healthcareprogram anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or in returnfor purchasing, leasing, ordering, or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid, or otherfederally financed healthcare programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand andprescribers, purchasers, and formulary managers on the other. Violations of the anti-kickback statute are punishable by imprisonment, criminal fines, civilmonetary penalties, and exclusion from participation in federal healthcare programs. Although there are a number of statutory exemptions and regulatory safeharbors protecting certain common activities from prosecution or other regulatory sanctions, the exemptions and safe harbors are drawn narrowly, and practicesthat involve remuneration intended to induce prescribing, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exemption or safeharbor. Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, orknowingly making, or causing to be made, a false statement to have a false claim paid. Recently, several pharmaceutical and other healthcare companies have beenprosecuted under these laws for allegedly inflating drug prices they report to pricing services, which in turn were used by the government to set Medicare andMedicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for theproduct. In addition, certain marketing practices, including off-label promotion, may also violate false claims laws. The majority of states also have statutes orregulations 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.-29-Table of ContentsPhysician Drug Samples As part of the sales and marketing process, pharmaceutical companies frequently provide samples of approved drugs to physicians. The Prescription DrugMarketing Act (the "PDMA") imposes requirements and limitations upon the provision of drug samples to physicians, as well as prohibits states from licensingdistributors of prescription drugs unless the state licensing program meets certain federal guidelines that include minimum standards for storage, handling, andrecord 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, commercial sales, anddistribution of our products. Most countries outside the U.S. require that clinical trial applications be submitted to and approved by the local regulatory authorityfor each clinical study. In addition, whether or not we obtain FDA approval for a product, we must obtain approval of a product by the comparable regulatoryauthorities of countries outside the U.S. before we can commence clinical studies or marketing of the product in those countries. The approval process varies fromcountry to country, and the time may be longer or shorter than that required for FDA approval. To obtain regulatory approval of an orphan drug under EU regulatory systems, we are mandated to submit MAAs in Centralized Procedure. The centralizedprocedure, which came into operation in 1995, allows applicants to obtain a marketing authorization that is valid throughout the EU. It is compulsory for medicinalproducts manufactured using biotechnological processes, for orphan medicinal products and for human products containing a new active substance which was notauthorized in the Community before 20 May 2004 (date of entry into force of Regulation (EC) No 726/2004) and which are intended for the treatment of AIDS,cancer, neurodegenerative disorder or diabetes. The centralized procedure is optional for any other products containing new active substances not authorized in theCommunity before 20 May 2004 or for products which constitute a significant therapeutic, scientific or technical innovation or for which a Communityauthorization is in the interests of patients at Community level. When a company wishes to place on the market a medicinal product that is eligible for thecentralized procedure, it sends an application directly to the European Medicines Agency, to be assessed by the Committee for Medicinal Products for Human Use("CHMP"). The procedure results in a Commission decision, which is valid in all EU Member States. Centrally-authorized products may be marketed in allMember States. Centralized procedure: Full copies of the MA application are sent to a rapporteur and a co-rapporteur designated by the competent EMA scientificcommittee. They coordinate the EMA's assessment of the medicinal product and prepare draft reports. Once the draft reports are prepared (other experts might becalled upon for this purpose), they are sent to the CHMP, whose comments or objections are communicated to the applicant. The rapporteur is therefore theprivileged interlocutor of the applicant and continues to play this role, even after the MA has been granted. The rapporteur and co-rapporteur then assess the applicant's replies, submit them for discussion to the CHMP and, taking into account the conclusions of thisdebate, prepare a final assessment report. Once the evaluation is completed, the CHMP gives a favorable or unfavorable opinion as to whether to grant theauthorization. When the opinion is favorable, it shall include the draft summary of the product's characteristics, the package leaflet and the texts proposed for thevarious packaging materials. The time limit for the evaluation procedure is 210 days. The EMA then has fifteen days to forward its opinion to the Commission.This is the start of the second phase of the procedure: the decision-making process. The Agency sends to the Commission its opinion and assessment report,together with annexes containing: the SmPC (Annex 1); the particulars of the MAH responsible for batch release, the particulars of the manufacturer of the activesubstance and the conditions of the marketing authorization (Annex 2); and the labelling and the package leaflet (Annex 3). The annexes are-30-Table of Contentstranslated into the 22 other official languages of the EU. During the decision-making process, the Commission services verify that the marketing authorizationcomplies with Union law. The Commission has fifteen days to prepare a draft decision. The medicinal product is assigned a Community registration number,which will be placed on its packaging if the marketing authorization is granted. During this period, various Commission directorates-general are consulted on thedraft marketing authorization decision. The draft decision is then sent to the Standing Committee on Medicinal Products for Human Use, (Member States have one representative each in both ofthese committees) for their opinions. The Centralized Procedure, which is compulsory for medicines produced by certain biotechnological processes and optionalfor those which are highly innovative, provides for the grant of a single marketing authorization that is valid for all EU member states. The DecentralizedProcedure provides for approval by one or more other, or concerned, member states of an assessment of an application performed by one member state, known asthe reference member state. Under this procedure, an applicant submits an application, or dossier, and related materials including a draft summary of productcharacteristics, and draft labeling and package leaflet, to the reference member state and concerned member states. The reference member state prepares a draftassessment and drafts of the related materials within 120 days after receipt of a valid application. Within 90 days of receiving the reference member state'sassessment report, each concerned member state must decide whether to approve the assessment report and related materials. If a member state cannot approve theassessment report and related materials on the grounds of potential serious risk to the public health, the disputed points may eventually be referred to the EuropeanCommission, whose decision is binding on all member states. We have obtained an orphan medicinal product designation in the EU from the EMA for migalastat for the treatment of Fabry disease ("FD") and Gaucherdisease ("GD") and for SD-101 for the treatment of Epidermolysis Bullosa ("EB"). Applications from persons or companies seeking "orphan medicinal productdesignation" for products they intend to develop for the diagnosis, prevention, or treatment of life-threatening or very serious conditions that affect not more than 5in 10,000 persons in the EU are reviewed by the Committee for Orphan Medicinal Products ("COMP").In addition, orphan drug designation can be granted if thedrug 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 thedrug 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 theEU 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 fee reductions for protocol assistance and access to the centralized regulatory procedures before andduring the first year after marketing approval, which reductions are not limited to the first year after marketing approval for small and medium enterprises. Inaddition, if a product which has an orphan drug designation subsequently receives EMA marketing approval for the indication for which it has such designation,the product is entitled to orphan drug exclusivity, which means the EMA may not approve any other application to market the same drug for the same indicationfor a period of 10 years. The exclusivity period may be reduced to six years if the designation criteria are no longer met, including where it is shown that theproduct is sufficiently profitable not to justify maintenance of market exclusivity. Competitors may receive marketing approval of different drugs or biologics forthe indications for which the orphan product has exclusivity. In order to do so, however, they must demonstrate that the new drugs or biologics provide asignificant benefit over the existing orphan product. This demonstration of significant benefit may be done at the time of initial approval or in post-approvalstudies, depending on the type of marketing authorization granted. We have obtained a positive opinion for our PIP in the EU for SD-101 for the treatment of EB and for migalastat for the treatment of Fabry disease as well. InMay 2016, we announced that we had-31-Table of Contentsreceived full European Commission approval for migalastat HC1, under the product name Galafold™, as a first-line therapy for long-term treatment of adults andadolescents aged 16 years and older with a confirmed diagnosis of Fabry disease and who have an amenable mutation. A pediatric investigation plan is adevelopment plan aimed at ensuring that the necessary data are obtained to support the authorization of a medicine for children, through studies in children. Allapplications for marketing authorization for new medicines have to include the results of studies as described in an agreed pediatric investigation plan, unless themedicine is exempt because of a deferral or waiver. This requirement also applies when a marketing-authorization holder wants to add a new indication,pharmaceutical form, or route of administration for a medicine that is already authorized and covered by intellectual property rights. Several rewards andincentives for the development of pediatric medicines for children are available in the EU. Medicines authorized across the EU with the results of studies from apediatric investigation plan included in the product information are eligible for an extension of their supplementary protection certificate by six months. This is thecase even when the studies' results are negative. For orphan medicines, the incentive is an additional two years of market exclusivity. Scientific advice and protocolassistance at the Agency are free of charge for questions relating to the development of pediatric medicines. Medicines developed specifically for children that arealready authorized but are not protected by a patent or supplementary protection certificate are eligible for a pediatric-use marketing authorization ("PUMA"). If aPUMA is granted, the product will benefit from 10 years of market protection as an incentive. GSK obtained orphan drug designation in Japan for migalastat for the treatment of Fabry Disease. Amicus has approval of migalastat in Switzerland and hasfollowed all their applicable regulations. The Ministry of Health, Labor, and Welfare, based on the opinion of the Pharmaceutical Affairs and Food Sanitation Council, grants orphan status to drugsintended to address serious illnesses with high unmet medical need that affect fewer than 50,000 patients in Japan. Orphan designation provides certain benefitsand incentives, including priority review for marketing authorization and a period of 10 years of market exclusivity if the drug candidate is approved for thedesignated indication. Now that we have acquired the rights to migalastat in Japan, we have started the administrative process to obtain the orphan drug designationthat was held by GSK.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 theavailability of reimbursement from third party payors. Third party payors include government health administrative authorities, managed care providers, privatehealth insurers, and other organizations. These third party payors are increasingly challenging the price and examining the cost-effectiveness of medical productsand services. In addition, significant uncertainty exists as to the reimbursement status of newly approved healthcare product candidates. We may need to conductexpensive 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 inproduct development. In 2003, the U.S. government enacted legislation providing a partial prescription drug benefit for Medicare recipients that began in 2006. Governmentpayment for some of the costs of prescription drugs may increase demand for any products for which we receive marketing approval. However, to obtain paymentsunder this program, we would be required to sell products to Medicare recipients through managed care organizations and other health care delivery systemsoperating 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-32-Table of Contentslegislation could limit payments for biopharmaceuticals 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 toprovide adequate coverage and reimbursement. In addition, an increasing emphasis on managed care in the U.S. has increased and will continue to increase thepressure on pharmaceutical pricing.Employees As of December 31, 2016, we had 263 full-time employees, 146 of whom were primarily engaged in research and development activities and 117 of whomprovided selling and administrative services. None of our employees were represented by a labor union. We have not experienced any work stoppages and considerour employee relations to be good.Our Corporate Information We were incorporated under the laws of the State of Delaware on February 4, 2002. Our global headquarters are located at 1 Cedar Brook Drive, Cranbury,NJ 08512 and our telephone number is (609) 662-2000. Our website address is www.amicusrx.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 furnishsuch material to, the U.S. Securities and Exchange Commission. Information relating to our corporate governance, including our Code of Business Conduct for Employees, Executive Officers and Directors, CorporateGovernance Guidelines, and information concerning our senior management team, Board of Directors, including Board Committees and Committee charters, andtransactions in our securities by directors and executive officers, is available on our website at www.amicusrx.com under the "Investors — Corporate Governance"caption and in print to any stockholder upon request. Any waivers or material amendments to the Code will be posted promptly on our website. We have filed applications to register certain trademarks in the U.S. and abroad, including Amicus Therapeutics® & design, At the forefront of therapies forrare and orphan diseases™, Zorblisa™, Galafold™, and Amigal™. Fabrazyme®, Myozyme®, Lumizyme®, and Replagal® are the property of their respectiveowners.-33-Table of ContentsITEM 1A. RISK FACTORS The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertaintiesdescribed below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may alsoimpair our business operations. Please see page 1 of this Annual Report on Form 10-K for a discussion of some of the forward-looking statements that are qualifiedby these risk factors. If any of the following risks occur, our business, financial condition, results of operations, and future growth prospects could be materiallyand adversely affected.Risks Related to our Products and the Regulatory Approval and Clinical Development of our Product CandidatesWe depend heavily on the commercial success of our first product, migalastat HCl, in the EU. Moreover, if we are unable to obtain approval from theFDA or other foreign regulatory authorities, or if we are unable to commercialize migalastat HCl successfully, or experience significant delays in doingso, our business could be materially harmed. We have invested a significant portion of our efforts and financial resources in the development of migalastat HCl for the treatment of Fabry disease. Ourability to generate material product revenues, which may not occur for the foreseeable future, if ever, will depend heavily on the successful development,regulatory approval, and commercialization of migalastat HCl. Any delay or impediment in our ability to obtain regulatory approval in any region to commercialize, or, if approved, obtain coverage and adequatereimbursement from third-parties, including government payors, for migalastat HCl may cause us to be unable to generate the revenues necessary to continue ourresearch and development pipeline activities, thereby adversely affecting our business and our prospects for future growth. Further, the success of migalastat HCl will depend on a number of factors, including the following:•obtaining a sufficiently broad label in each territory that would not unduly restrict patient access; •FDA and PMDA approvals for migalastat HCl; •building and maintaining an infrastructure capable of supporting product sales, marketing, and distribution of migalastat HCl in the EU andterritories where we pursue commercialization directly; •establishing commercial manufacturing arrangements with third party manufacturers; •establishing commercial distribution agreements with third party distributors; •launching commercial sales of migalastat HCl, where approved, whether alone or in collaboration with others; •acceptance of migalastat HCl, where approved, by patients, the medical community and third party payors; •the regulatory approval pathway that we pursue for migalastat HCl in the U.S., including whether we collect additional data on gastrointestinal (GI)symptoms in Fabry patients who have an amenable mutation and if we do collect data, whether it will be accepted by FDA; •effectively competing with other therapies; •a continued acceptable safety profile of migalastat HCl; •obtaining and maintaining patent and trade secret protection and regulatory exclusivity;-34-Table of Contents•protecting our rights in our intellectual property portfolio; and •obtaining a commercially viable price for our products If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfullycommercialize migalastat HCl, which would materially harm our business.If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our product orproduct candidates, and our ability to generate revenue will be materially impaired. Our product and product candidates, including migalastat HCl, and the activities associated with their development and commercialization, including theirtesting, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, distribution, commercialization and reimbursementare subject to comprehensive regulation by the EMA, the FDA, and other regulatory agencies in the United States and by comparable authorities in other countries.We have only obtained regulatory approval to market one product in the EU and Switzerland. Failure to obtain regulatory approval for our product and productcandidates will prevent us from commercializing our product in jurisdictions beyond those in which we have obtained regulatory approval for our product or in anyjurisdictions for our product candidates. We have only limited experience in filing and supporting the applications necessary to obtain marketing approvals for product candidates and are and willneed to rely on third party contract research organizations, or CROs, to assist us in this process. Securing marketing approval requires the submission of extensivepreclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate's safety andefficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturingfacilities by, the regulatory authorities. Regulatory authorities may determine that migalastat HCl or any of our other product candidates are not effective or onlymoderately effective, or have undesirable or unintended side effects, toxicities, safety profiles or other characteristics that preclude us from obtaining marketingapproval or that prevent or limit commercial use. Obtaining approval for our product candidates is highly uncertain and we may fail to obtain regulatory approval in any or all jurisdictions. The reviewprocesses and the processes of regulatory authorities, including the FDA, are extensive, lengthy, expensive, and uncertain, and such regulatory authorities maydelay, limit, or deny approval of migalastat HCl or any of our other product candidates for many reasons, including, but not limited to:•our failure to demonstrate to the satisfaction of the applicable regulatory authorities that migalastat HCl or any of our other product candidates aresafe and effective for a particular indication; •the results of clinical trials may not meet the level of statistical significance or other efficacy or safety parameters required by the applicableregulatory authorities for approval; •the applicable regulatory authority may disagree with the number, design, size, conduct, or implementation of our clinical trials or conclude that thedata fail to meet statistical or clinical significance; •the applicable regulatory authority may not find the data from preclinical studies and clinical trials sufficient to demonstrate that the productcandidate's clinical and other benefits outweigh its safety risks;-35-Table of Contents•the applicable regulatory authority may disagree with our interpretation of data from preclinical studies or clinical trials, and may reject conclusionsfrom preclinical studies or clinical trials, or determine that primary or secondary endpoints from clinical trials were not met, or reject safetyconclusions from such studies or trials; •the applicable regulatory authority may not accept data generated at one or more of our clinical trial sites; •the applicable regulatory authority may determine that we did not properly oversee our clinical trials or follow the regulatory authority's advice orrecommendations in designing and conducting our clinical trials; •an advisory committee, if convened by the applicable regulatory authority, may recommend against approval of our application or may recommendthat the applicable regulatory authority require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approvedlabeling or distribution and use restrictions, or even if an advisory committee, if convened, makes a favorable recommendation, the respectiveregulatory authority may still not approve the product candidate; and •the applicable regulatory authority may identify deficiencies in the chemistry, manufacturing, and control sections of our application, ourmanufacturing processes, facilities, or analytical methods or those of our third party contract manufacturers, and this may lead to significant delaysin the approval of our product candidates or to the rejection of our applications altogether. The process of obtaining marketing approvals is expensive, may take many years, if approval is obtained at all, and can vary substantially based upon avariety of factors, including the type, complexity, and novelty of the product candidates involved. Changes in marketing approval policies during the developmentperiod, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delaysin the approval or rejection of an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application ormay decide that our data are insufficient for approval and require additional preclinical, clinical, or other studies. In addition, varying interpretations of the dataobtained from preclinical and clinical testing could delay, limit, or prevent marketing approval of a product candidate. Any marketing approval we ultimatelyobtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA, EMA, or other foreign regulatoryauthorities, or do not otherwise produce favorable results, we may experience delays in completing, or ultimately be unable to complete, thedevelopment and commercialization of our product candidates. In connection with seeking marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical developmentand then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Clinical testing is expensive, difficult todesign and implement, can take many years to complete, and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing.The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do notnecessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that havebelieved their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of theirproducts. For example, if the FDA refuses to accept an NDA for accelerated approval or full approval, or accepts the filing, but ultimately decides not to approve theNDA, we may need to complete additional-36-Table of ContentsPhase 3 clinical trial(s) and may need to expend significantly more capital to pursue FDA approval of migalastat HCl, SD 101 or other product candidates. If weare required to conduct additional clinical trials or other testing of migalastat HCl, SD 101 or any other product candidate that we develop beyond those tests andtrials that we 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 areonly modestly positive; or if there are safety concerns, we may:•choose not to seek regulatory approval in the U.S.; •be delayed in obtaining marketing approval for our product candidates; •not obtain marketing approval at all; •obtain approval for indications or patient populations that are not as broad as intended or desired; •obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings; •be subject to additional post-marketing testing requirements, safety strategies or restrictions, such as a requirement of a risk evaluation andmitigation strategy, or REMS; or •have the product removed from the market after obtaining regulatory approval.If we experience any of a number of possible unforeseen events in connection with our clinical trials, potential regulatory approval orcommercialization of our product candidates could be delayed or prevented. We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive regulatory approval orcommercialize our product candidates, including:•clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conductadditional clinical trials or abandon product development programs; •the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials maybe slower than we anticipate, or patients may drop out of these clinical trials at a higher rate than we anticipate; •we may be unable to enroll a sufficient number of patients in our trials to ensure adequate statistical power to detect any statistically significanttreatment effects; •our third party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; •regulators, institutional review boards, or independent ethics committees may not authorize us or our investigators to commence a clinical trial orconduct a clinical trial at a prospective trial site; •we may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; •we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are beingexposed to unacceptable health risks; •regulators, institutional review boards, or independent ethics committees may require that we or our investigators suspend or terminate clinicalresearch for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed tounacceptable health risks;-37-Table of Contents•the cost of clinical trials of our product candidates may be greater than we anticipate; •the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficientor inadequate; or •our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators,institutional review boards or independent ethics committees to suspend or terminate the trials. Our product development costs will increase if we experience delays in testing or regulatory approvals. We do not know whether any preclinical tests orclinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant preclinical study or clinical trial delays alsocould shorten any periods during which we may have the exclusive right to commercialize our product candidates, allow our competitors to bring products tomarket before we do, or impair our ability to successfully commercialize our product candidates, and so may harm our business and results of operations.If we experience delays or difficulties in the enrollment of patients in our clinical trials, our receipt of necessary regulatory approvals could be delayedor prevented. We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patientsto participate in these trials. Each of our diseases that our lead product candidates are intended to treat are characterized by small patient populations, which couldresult in slow enrollment of clinical trial participants. For example, the entry criteria for one of our Phase 3 clinical trials in migalastat HCl for Fabry disease tosupport approval in the United States (Study 011) required that patients must have a genetic mutation that we believe is responsive to migalastat HCl, and may nothave received ERT in the past or must have stopped treatment for at least six months prior to enrolling in the study. As a result, enrollment of the clinical triallasted for over two years. In addition, our competitors have ongoing clinical trials for product candidates that could be competitive with our product candidates. Asa result, potential clinical trial sites may elect to dedicate their limited resources to participation in our competitors' clinical trials and not ours, and patients whowould otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors' product candidates. Patient enrollment is affected by other factors including:•severity of the disease under investigation; •eligibility criteria for the clinical trial in question; •perceived risks and benefits of the product candidate under study; •efforts to facilitate timely enrollment in clinical trials; •patient referral practices of physicians; •the ability to monitor patients adequately during and after treatment; and •proximity and availability of clinical trial sites for prospective patients. Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause the value of the company todecline and limit our ability to obtain additional financing. Our inability to enroll a sufficient number of patients in any of our clinical trials would result insignificant delays or may require us to abandon one or more clinical trials altogether.-38-Table of ContentsThe FDA has indicated that we will need to complete additional clinical trials to support the NDA, of migalastat HCl in the United States. We had planned, until on or about October 1, 2015 to submit an NDA for accelerated approval (Subpart H) of migalastat HCl with the FDA. Under the FDA'saccelerated approval regulations, the FDA may approve a drug for a serious or life-threatening disease or condition that provides meaningful therapeutic benefit topatients over available treatments based upon a surrogate or intermediate clinical endpoint that is reasonably likely to predict clinical benefit. The FDA has broaddiscretion over whether to grant approval based on a surrogate endpoint. Following several collaborative discussions, the FDA has indicated that (i) it hasconcluded that the surrogate endpoint we proposed is not currently a basis for accelerated approval under Subpart H, and (ii) we will need to complete anadditional clinical trial to collect additional data on GI symptoms in Fabry patients who have an amenable mutation (the "GI Study") to support the NDA ofmigalastat HCl in the United States. Despite these discussions, we may continue to evaluate other regulatory pathways. If we decide to pursue the GI Study to complete an NDA and submit a NDA for migalastat HCl, there can be no assurance that the NDA will ultimately beaccepted and/or approved. If the FDA refuses to accept an NDA or accepts the filing, but ultimately does not approve the NDA, the FDA may require additionalclinical trials beyond those already completed for us to continue to seek FDA approval. If required to complete additional trials, we may choose not to completethose trials or pursue U.S. approval, or if we do, we may need to expend significantly more capital with no assurance of the success of any such clinical trial nor ofthe FDA's ultimate decision regarding approval of migalastat HCl.If we do not or are not able to initiate the GI study, or if there are delays in conducting the GI study, there may be delays in obtaining requiredregulatory approval or required regulatory approvals of migalastat HCl may never be obtained. The protocol for any potential GI study has not yet been agreed with FDA. We and the FDA may not be able to agree to a protocol for the study or we maydetermine that a protocol acceptable to the FDA is not a study we would conduct. In addition, should we decide to conduct the GI Study, we may not be able toinitiate it if we are unable to locate and enroll a sufficient number of eligible patients to participate in the study. Fabry patients who are not currently on treatmentand have an amenable mutation and GI symptoms are a small patient population. We may experience slow enrollment of study participants or not be able to enrollthe study with sufficient patients or experience significant delays in enrollment. In addition, we may choose not to pursue or complete the GI study or pursue U.S. approval, or if we do, we may need to expend significantly more capitalwith no assurance of the success of the GI study nor of the FDA's ultimate decision regarding approval of migalastat HCl.We may expend our limited resources to pursue a particular product, product candidate or indication and fail to capitalize on a product, productcandidates or indications that may be more profitable or for which there is a greater likelihood of success. Because we have limited financial and managerial resources, we focus on research programs and product candidates for specific indications. As a result, wemay forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Ourresource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current andfuture research and development programs and product candidates for specific indications may not yield any commercially viable products.-39-Table of Contents We have based our research and development efforts on our Chaperone-Advanced Replacement Therapy ("CHART") platform technologies to develop next-generation ERT products for Fabry, Pompe, and other LSDs, and on SD-101 for the treatment of EB. Notwithstanding our large investment to date and anticipatedfuture expenditures in proprietary technologies, we have not yet developed, and may never successfully develop, any marketed drugs using this approach. As aresult of pursuing the development of our product and product candidates using our proprietary technologies, we may fail to develop products or productcandidates or address indications based on other scientific approaches that may offer greater commercial potential or for which there is a greater likelihood ofsuccess. Research programs to identify new product candidates require substantial technical, financial and human resources. These research programs may initiallyshow promise in identifying potential product candidates, yet fail to yield product candidates for clinical development.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 inlater-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 standardsrequired for approval for a particular indication. Clinical trials are lengthy, complex and extremely expensive processes with uncertain results. A failure of one ormore of our clinical trials may occur at any stage of testing. 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 notnecessarily predict final results. We cannot be assured that these trials will ultimately be successful. In addition, patients may not be compliant with their dosingregimen or trial protocols or they may withdraw from the clinical trial at any time for any reason. For example, we recently reported preliminary data from aPhase 1/2 clinical trial of ATB200/AT2221 in Pompe disease. The preliminary data is based on a small patient sample and reported before completion of the studyand therefore may not be predictive of future results, that the results of additional preliminary data or data from the completed study or any future study may notyield results that are consistent with the preliminary data presented, that we may not be able to demonstrate the safety and efficacy of ATB200/AT2221, that laterstudy results may not support further development, or even if such later results are favorable, that we will not be able to successfully complete the development of,obtain regulatory approval for, or successfully commercialize ATB200/AT2221. Similarly, we previously reported favorable results from a Phase 2 trial of SD-101 in EB. However, there can be no assurance that the results from theongoing Phase 3 trial will be favorable. Further, we remain in discussion with FDA regarding the statistical analysis plan for the Phase 3 trial results and theoutcome of those discussions may not yield positive results and even if we and FDA agree on the statistical analysis plan, we may not demonstrate safety andefficacy of SD-101 and may not obtain regulatory approval of SD-101. In addition, while the clinical trials of our product candidates are designed based on the available relevant information, in view of the uncertainties inherent indrug development, such clinical trials may not be designed with focus on indications, patient populations, dosing regimens, safety or efficacy parameters or othervariables that will provide the necessary safety or efficacy data to support regulatory approval to commercialize the resulting product candidates. In addition,individual patient responses to the dose administered of a product candidate may vary in a manner that is difficult to predict. Also, the methods we select to assessparticular safety or efficacy parameters may not yield statistical precision in estimating our product candidates' effects on study participants. Even if we believe thedata collected from clinical trials of our product candidates are promising, these data may not be sufficient to support approval by the FDA or foreign regulatoryauthorities. Preclinical and-40-Table of Contentsclinical data can be interpreted in different ways. Accordingly, the FDA or foreign regulatory authorities could interpret these data in different ways from us or ourpartners, which could delay, limit or prevent regulatory approval. In addition, our product and certain of our product candidates are based on our active-site pharmacological chaperone technology. To date, we are not awarethat any product based on active-site pharmacological chaperone technology has been approved by the FDA. As a result, if the FDA requires different endpointsthan the endpoints we anticipate using or have used in our clinical trials, or a different analysis of those endpoints, it may be more difficult for us to obtain, or wemay be delayed in obtaining, FDA approval of our product candidates. If we are not successful in commercializing any of our products or product candidates, orare 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 regulatoryapprovals, including approval by the FDA and EMA. 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 and EMA. We have only obtained regulatory approval for one product in the EU and Switzerland and are early in the process ofcommercializing that product. Our limited experience might prevent us from successfully designing or implementing a clinical trial for our product candidates. Wehave limited experience in conducting and managing the application process necessary to obtain regulatory approvals and we might not be able to demonstrate thatour product candidates meet the appropriate standards for regulatory approval. If we are not successful in conducting and managing our preclinical developmentactivities or clinical trials or obtaining regulatory approvals, we might not be able to commercialize our product candidates, or might be significantly delayed indoing so, which will materially harm our business.We may not be able to obtain or maintain orphan drug exclusivity for our product or product candidates. If our competitors are able to obtain orphandrug exclusivity for their products, we may not be able to have competing products approved by the applicable regulatory authority for a significantperiod of time. Regulatory authorities in some jurisdictions, including the EU and the United States, may designate drugs for relatively small patient populations as orphandrugs. We obtained orphan drug designations from the FDA for migalastat HCl for the treatment of Fabry disease in February 2004. We also obtained orphanmedicinal product designation in the EU for migalastat HCl in May 2006. SD-101 has also received these designations from the FDA and EMA. Generally, if aproduct with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product isentitled to a period of market exclusivity, which, subject to certain exceptions, precludes the EMA from approving another marketing application for a similarmedicinal product or the FDA from approving another marketing application for the same drug for the same indication for that time period. The applicable marketexclusivity period for orphan drugs is ten years in the EU and seven years in the United States. The EU exclusivity period can be reduced to six years if a drug nolonger meets the criteria for orphan drug designation, including if the drug is sufficiently profitable so that market exclusivity is no longer justified. In the EU, a "similar medicinal product" is a medicinal product containing a similar active substance or substances as contained in a currently authorizedorphan medicinal product, and which is intended for the same therapeutic indication. For a drug such as migalastat HCl, which is composed of small molecules, theFDA defines "same drug" as a drug that contains the same active moiety and is intended for the same use. Obtaining orphan drug exclusivity for migalastat HCl forthese indications, both in the EU and in the United States, may be important to the product candidate's and our CHART program's success. If a competitor obtainsorphan drug exclusivity for and approval of a-41-Table of Contentsproduct with the same indication as migalastat HCl before we do and if the competitor's product is the same drug or a similar medicinal product as ours, we couldbe excluded from the market for a certain period of time. Even if we obtain orphan drug exclusivity for migalastat HCl for these indications, we may not be able to maintain it. For example, if a competitive productthat is the same drug or a similar medicinal product as our product or product candidate is shown to be clinically superior to our product or product candidate, asapplicable, any orphan drug exclusivity we have obtained will not block the approval of such competitive product. In addition, orphan drug exclusivity will notprevent the approval of a product that is the same drug as our product or product candidate if the FDA finds that we cannot assure the availability of sufficientquantities of the drug to meet the needs of the persons with the disease or condition for which the drug was designated.Failure to obtain or maintain regulatory approval in international jurisdictions would prevent us from marketing migalastat or our other productsabroad. In order to market and sell migalastat HCl and our other products in the EU and many other jurisdictions, we must obtain separate marketing approvals andcomply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time requiredto obtain approval may differ from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of therisks associated with obtaining FDA approval. In addition, some countries outside the United States require approval of the sales price of a drug before it can bemarketed. In many countries, separate procedures must be followed to obtain reimbursement. We may not obtain marketing, pricing or reimbursement approvalsoutside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, andapproval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA.We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market. Regulatory approvals incountries outside the United States do not ensure pricing approvals in those countries or in any other countries, and regulatory approvals and pricing approvals donot ensure that reimbursement will be obtained.Our product or product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval orcommercialization. Undesirable side effects caused by our product or product candidates could interrupt, delay or halt clinical trials and could result in the denial of regulatoryapproval by the FDA, EMA or other regulatory authorities for any or all targeted indications, and in turn prevent us from commercializing our product or productcandidates and generating revenues from their sale. In addition, if we or others identify undesirable side effects caused by our products or product candidates afterreceipt of marketing approval:•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 additional clinical trials are conducted. Any of these events could prevent us from achieving or maintaining market acceptance of the affected product or product candidate or could substantiallyincrease the costs and expenses of commercializing the product or product candidate, which in turn could delay or prevent us from generating significant revenuesfrom its sale or adversely affect our reputation.-42-Table of ContentsIf we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product or productcandidates, we may not be successful in commercializing migalastat HCl or any product candidate if and when they are approved. We have only recently built our sales and marketing infrastructure and have little experience in the sale and marketing of pharmaceutical products. To achievecommercial success for any approved product, we must continue to develop and maintain a sales and marketing organization or outsource these functions to thirdparties. We are continuing to establish our own sales and marketing capabilities and to promote migalastat HCl in the EU with a targeted sales force, and to do thesame in the United States if or when migalastat HCl or any other product candidate is approved in the United States. There are risks involved with establishing ourown sales and marketing capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a sales forceis expensive and time consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force andestablish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercializationexpenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel. Similarly, if we enter intoagreements with third parties, including the out licensing of our product or product candidates, we may choose to reduce or eliminate our sales and marketingoperations and thereby lose our commercialization investment. Factors that may inhibit our efforts to commercialize migalastat HCl and our product candidates, if and when they are approved by regulatory authorities,including the FDA and EMA, on our own include:•our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel; •the inability of sales personnel to obtain access to adequate numbers of physicians to prescribe any future products; •the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies withmore extensive product lines; •unforeseen costs and expenses associated with creating 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 also co-promote or out license our product or product candidates in various markets with pharmaceutical and biotechnology companies in instanceswhere 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 toperform sales and marketing services, our product revenues will be lower than if we directly sold and marketed our products and any revenues received under sucharrangements 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 onfavorable terms could delay or impair our ability to commercialize our product and product candidates and could increase our costs of commercialization.Dependence on distribution arrangements and marketing alliances to commercialize our products and 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 productcandidates; •our distributors may experience financial difficulties;-43-Table of Contents•business combinations or significant changes in a distributor's business strategy may also adversely affect a distributor's willingness or ability tocomplete 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 togenerate product revenue and may not become profitable.If the market opportunities for our product or product candidates are smaller than we believe they are, then our revenues may be adversely affected andour business may suffer. Each of the diseases that our product and most advanced product candidates are being developed to address is rare. Our projections of both the number ofpeople 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 estimatedprevalence of these diseases may change. There can be no assurance that the prevalence of Fabry disease, EB or Pompe disease in the study populations,particularly in these newer studies, accurately reflects the prevalence of these diseases in the broader world population. If our estimates of the prevalence of Fabrydisease, EB or Pompe disease, or of the number of patients who may benefit from treatment with our product candidates prove to be incorrect, the marketopportunities for our product and product candidates may be smaller than we believe they are, our prospects for generating revenue may be adversely affected andour business may suffer.Migalastat HCl or any of our product candidates that receive regulatory approval may fail to achieve the degree of market acceptance by physicians,patients, third party payors and others in the medical community necessary for commercial success. Migalastat HCl and any of our other products or product candidates that receive regulatory approval may nonetheless fail to gain sufficient market acceptanceby physicians, patients, third party payors and others in the medical community. If these products do not achieve an adequate level of acceptance, we may notgenerate significant product revenues or any profits from operations. The degree of market acceptance of our product candidates, if approved for commercial sale,will depend on a number of factors, including:•the efficacy and potential advantages compared to alternative treatments; •the prevalence and severity of any side effects; •the ability to offer our product and product candidates for sale at competitive prices; •convenience and ease of administration compared to alternative treatments; •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 coverage or reimbursement.-44-Table of Contents Our ability to negotiate, secure and maintain third party coverage and reimbursement may be affected by political, economic and regulatory developments inthe United States, the EU and other jurisdictions. Governments continue to impose cost containment measures, and third party payors are increasingly challengingprices charged for medicines and examining their cost effectiveness, in addition to their safety and efficacy. These and other similar developments couldsignificantly limit the degree of market acceptance of migalastat HCl or any of our product candidates that receive marketing approval.We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than wedo. The development and commercialization of new drug products is highly competitive. We face competition with respect to our current product or productcandidates and any products we may seek to develop or commercialize in the future from major pharmaceutical companies, specialty pharmaceutical companiesand biotechnology companies worldwide. For example, several large pharmaceutical and biotechnology companies currently market and sell products for thetreatment of lysosomal storage disorders, including Fabry disease. These products include Sanofi Aventis' Fabrazyme® and Shire plc's Replagal®, as well as otherFabry treatment products in development. In addition, Sanofi markets and sells Myozyme® and Lumizyme® for the treatment of Pompe disease. We are alsoaware of other enzyme replacement and substrate reduction therapies in development by third parties for Pompe and Birken AG has completed a Phase 2 trial withOleogel-S10 for the treatment of EB. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seekpatent protection and establish collaborative arrangements for research, development, manufacturing and commercialization. Our competitors may developproducts that are more effective, safer, more convenient or less costly than any that we are developing or that would render our product candidates obsolete ornoncompetitive. Our competitors may also obtain FDA, EMA, 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 will not render our productcandidates or any acquired products obsolete or noncompetitive either during the research phase or once the products reaches commercialization. We believe that many competitors, including academic institutions, government agencies, public and private research organizations, large pharmaceuticalcompanies and smaller more focused companies, are attempting to develop therapies for many of our target indications. Many of our competitors have significantlygreater 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 significantcompetitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retainingqualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologiescomplementary to or necessary for our programs or advantageous to our business. In addition, if we obtain regulatory approvals for our products, manufacturingefficiency and marketing capabilities are likely to be significant competitive factors. We currently relay on third party manufacturers for all our products andproduct candidates, and a limited sales force and marketing infrastructure for migalastatHCI. Further, many of our competitors have substantial resources andexpertise in conducting collaborative arrangements, sourcing in-licensing arrangements, manufacturing and acquiring new business lines or businesses that aregreater than our own.-45-Table of ContentsA variety of risks associated with international operations could materially adversely affect our business. Migalastat HCl, and any of our other product candidates that may be approved in the future for commercialization in the EU, or in other foreign countries, areor will be subject to additional risks related to international operations or entering into international business relationships, including:•different regulatory requirements for maintaining approval of drugs in foreign countries; •reduced protection for contractual and intellectual property rights in some countries; •unexpected changes in tariffs, trade barriers and regulatory requirements; •economic weakness, including inflation, or political instability in particular foreign economies and markets; •compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; •foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doingbusiness in another country; •workforce uncertainty in countries where labor unrest is more common than in the United States; •noncompliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act 2010 and similar anti-bribery and anti-corruption laws in otherjurisdictions; •tighter restrictions on privacy and the collection and use of patient data; and •business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floodsand fires. We have no prior experience in these areas. In addition, there are complex regulatory, tax, labor and other legal requirements imposed by both the EU andmany of the individual countries in Europe with which we will need to comply. Many U.S.-based biopharmaceutical companies have found the process ofmarketing their own products in Europe to be very challenging.Following the receipt of marketing approval of our product or any product candidates, the products may become subject to unfavorable pricingregulations, third party coverage and reimbursement practices or healthcare reform initiatives, which would harm our business. The regulations and practices that govern marketing approvals, pricing, commercialization, coverage and reimbursement for new drug products vary widelyfrom country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and causedelays in obtaining approvals. Some countries, including almost all of the member states of the European Economic Area, require approval of the sale price of adrug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreignmarkets, including the European market, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval isgranted. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay our commerciallaunch of the product, possibly for lengthy time periods, and negatively impact any revenues we are able to generate from the sale of the product in that country.Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain marketingapproval. Our ability to commercialize migalastat HCl or any product candidate successfully also will depend in part on the extent to which coverage andreimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other-46-Table of Contentsorganizations. Government authorities and other third party payors, such as private health insurers and health maintenance organizations, decide which medicationsthey will pay for and establish reimbursement levels. A primary trend in the EU and U.S. healthcare industries and elsewhere is cost containment. It is currentlyunknown what impact, if any, the change in administration in the US will have on pricing and reimbursement. For the last several years government authorities andother third party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Prices at which we orour customers seek reimbursement for our products can be subject to challenge, reduction or denial by the government and other payers. Increasingly, third partypayors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products.We cannot be sure that coverage and reimbursement will be available for migalastat HCl or any product that we commercialize and, if coverage and reimbursementare available, the level of reimbursement. Reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketingapproval. Obtaining reimbursement for migalastat HCl may be particularly difficult because of the higher prices typically associated with drugs directed at smallerpopulations of patients. In addition, third party payors are likely to impose strict requirements for reimbursement of a higher priced drug. If reimbursement is notavailable or is available only to limited levels, we may not be able to successfully commercialize any product for which we obtain marketing approval. There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes forwhich the drug is approved by the applicable regulatory authority. Moreover, eligibility for reimbursement does not imply that any drug will be paid for in all casesor at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable,may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug and the clinicalsetting in which it is used, may be based on reimbursement levels already set for lower cost drugs, and may be incorporated into existing payments for otherservices. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any futurerelaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. In the United States,third party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. In the EU, reference pricingsystems and other measures may lead to cost containment and reduced prices. Our inability to promptly obtain coverage and profitable payment rates from bothgovernment-funded and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability to raisecapital needed to commercialize products and our overall financial condition. In addition, in the EU, for medicines authorized by the Centralised AuthorisationProcedure, an authorized trader, such as a wholesaler, can purchase a medicine in one EU member state and import the product into another EU member state. Thisprocess is called "parallel distribution." As a result, a purchaser in one EU member state may seek to import a product from another EU member state where suchproduct is sold at a lower price. This could have a negative impact on our business, financial condition, results of operations and growth if any of our productcandidates are approved in the EU.Any product or product candidate for which we obtain marketing approval could be subject to restrictions or withdrawal from the market and we maybe subject to penalties or other enforcement actions if we fail to comply with regulatory requirements or if we experience unanticipated problems withour product or our product candidates, when and if any of them are approved. Any product or product candidate 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 other regulatory authorities. TheFDA's requirements include submissions of safety and other post-marketing-47-Table of Contentsinformation and reports, registration requirements, Current Good Manufacturing Practices, or cGMP, requirements relating to manufacturing, quality control,quality assurance and complaints and corresponding maintenance of records and documents, requirements regarding the distribution of samples to healthcareprofessionals and recordkeeping. Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses forwhich the product may be marketed or may be subject to significant conditions of approval, including the requirement of a REMS. The FDA also may imposerequirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product. The labeling, advertising,promotion, marketing and distribution of a drug or biologic product also must be in compliance with FDA requirements which include, among others, promotionalactivities, standards and regulations for direct-to-consumer advertising, promotional activities involving the internet, and industry sponsored scientific andeducational activities. In general, all product promotion must be consistent with the labeling approved by the FDA for such product, contain a balancedpresentation of information on the product's uses, benefits, risks, and important safety information and limitations on use, and otherwise not be false or misleading.The FDA, has very broad enforcement authority, and failure to abide by these regulations can result in penalties, including the issuance of a warning letter directinga company to correct deviations from regulatory standards and enforcement actions that can include seizures, injunctions and criminal prosecution. Failure tocomply with applicable FDA requirements and restrictions also may subject a company to adverse publicity and enforcement action by the FDA, the U.S.Department of Justice ("DOJ") or the Office of the Inspector General of the U.S. Department of Health and Human Services ("HHS") as well as state authorities.This could subject the company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements thatmaterially restrict the manner in which a company promotes or distributes its products. In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, or failureto comply with regulatory requirements, may yield various results, including:•restrictions on such products, manufacturers or manufacturing processes; •changes to or restrictions on the labeling or marketing of a product; •restrictions on product distribution or use; •requirements to implement a REMS; •requirements to conduct post-marketing studies or clinical trials; •warning or untitled letters; •withdrawal of the products from the market; •refusal to approve pending applications or supplements to approved applications that we submit; •recall of products; •fines, restitution or disgorgement of profits or revenues; •suspension or withdrawal of marketing approvals; •refusal to permit the import or export of our products; •product seizure; •injunctions; or •the imposition of civil or criminal penalties.-48-Table of Contents Non-compliance with EU requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products forthe pediatric population, can also result in significant financial penalties. Similarly, failure to comply with the EU's requirements regarding the protection ofpersonal information can also lead to significant penalties and sanctions. 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 regulatoryrequirements or adoption of new regulatory requirements or policies, we or our collaborators may lose marketing approval for our products when and if any ofthem are approved, resulting in decreased revenue from milestones, product sales or royalties.Our relationships with customers, healthcare providers, patients, patient organizations and professionals and third party payors will be subject toapplicable anti-kickback, fraud and abuse, anti-bribery and corruption and other healthcare laws and regulations, which could expose us to criminalsanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings. Healthcare providers, physicians and payors play a primary role in the recommendation and prescription of any product candidates for which we may obtainmarketing approval. Our future arrangements with payors and customers may expose us to broadly applicable fraud and abuse, anti-bribery and corruption, andother healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute anyproduct candidates for which we may obtain marketing approval. Even though we do not and will not control referrals of healthcare services or bill directly toMedicare, Medicaid or other third party payors, federal, state and foreign healthcare laws and regulations pertaining to fraud and abuse, anti-bribery and corruptionand patients' rights are and will be applicable to our business. Restrictions under applicable federal, state and foreign healthcare laws and regulations may affectour ability to operate and expose us to areas of risk, including:•the U.S. federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, offering, receiving or providingremuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order orrecommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare andMedicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed aviolation. Several other countries, including the United Kingdom, have enacted similar anti-kickback, fraud and abuse, and healthcare laws andregulations; •the U.S. federal False Claims Act, which imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, againstindividuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false orfraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, thegovernment may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a falseor fraudulent claim for purposes of the False Claims Act. There is also a separate false claims provision imposing criminal penalties. Applicableregulations of both the EMA and EU member states also impose liability for failing to comply with fraud and abuse laws or improperly usinginformation obtained in in the course of clinical trials with the EMA or other regulatory authorities; •The U.S. federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA") which imposes criminal and civil liability for executing ascheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. Similar to the federal Anti-KickbackStatute, a person or entity does not need to have actual knowledge of the statute-49-Table of Contentsto defraud any healthcare benefit program or specific intent to violate it in order to have committed a violation. This statute also may imposemonetary penalties on any offers or transfers of remuneration to Medicare or Medicaid beneficiaries (patients) which is likely to influence thebeneficiary's selection of particular supplier of government payable items. Similarly, the collection and use of personal health data in the EU isgoverned by the EU General Data Protection Regulation (the "GDPR"), with many requirements mandated by the GDPR for the consent of theindividuals to whom the personal data relates, the information provided to the individuals, transfer of personal data within and outside of the EUand the security and confidentiality of the personal data. Failure to comply with the requirements of the GDPR may result in substantial fines andother administrative penalties. The GDPR increases our responsibility and liability in relation to personal data that we process and we may berequired to put in place additional mechanisms ensuring compliance with theGDPR. This may be onerous and adversely affect our business,financial condition, results of operations and prospects;•HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and its implementing regulations, whichalso imposes obligations on certain covered entity healthcare providers, health plans, and healthcare clearinghouses as well as their businessassociates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatorycontractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; •U.S. federal laws requiring drug manufacturers to report annually information related to certain payments and other transfers of value made tophysicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership orinvestment interests held by physicians and their immediate family members, including under the federal Open Payments program, commonlyknown as the Sunshine Act, as well as other state and foreign laws regulating marketing activities and requiring manufacturers to report marketingexpenditures, payments and other transfers of value to physicians and other healthcare providers. Similarly, payments made to physicians in certainEU member states must be publicly disclosed. Moreover, agreements with physicians often must be the subject of prior notification and approval bythe physician's employer, his or her competent professional organization and/or the regulatory authorities of the individual EU member states.These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in the EU member states. Inaddition, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase,supply, order or use of medicinal products is prohibited in the EU. Failure to comply with these requirements could result in reputational risk,public reprimands, administrative penalties, fines or imprisonment. •U.S. federal government price reporting laws, which require us to calculate and report complex pricing metrics to government programs, wheresuch reported prices may be used in the calculation of reimbursement and/or discounts on our marketed drugs. Participation in these programs andcompliance with the applicable requirements may subject us to potentially significant discounts on our products, increased infrastructure costs,potential liability for the failure to report such prices in an accurate and timely manner, and potentially limit our ability to offer certain marketplacediscounts; •US Foreign Corrupt Practices Act, which prohibit us and third parties working on our behalf from making payments to foreign government officialsto assist in obtaining or retaining business. Specifically, the anti-bribery provisions of the FCPA prohibit the willful use of the mails or any meansof instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of moneyor anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directlyor indirectly, to a foreign official to influence the foreign-50-Table of Contentsofficial in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure anyimproper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person; and•state and foreign equivalents of each of the above laws, including foreign anti-bribery and corruption laws and state anti-kickback and false claimslaws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmentalpayors, including private insurers; state laws which require pharmaceutical companies to comply with the pharmaceutical industry's voluntarycompliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restricting payments that may bemade to healthcare providers; and state and foreign laws governing the privacy and security of health information in certain circumstances, many ofwhich differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. While we do not submit claims and our customers will make the ultimate decision on how to submit claims, we may provide reimbursement guidance andsupport regarding migalastat HCl, and our product candidates for which we receive regulatory approval, to our customers and patients. If a government authoritywere to conclude that we provided improper advice to our customers and/or encouraged the submission of false claims for reimbursement, we could face action bygovernment authorities. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involvesubstantial costs. Nonetheless, it is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes,regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of theselaws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines,imprisonment, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of ouroperations.Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our productcandidates and affect the prices we may obtain. In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding thehealthcare system that could prevent or delay marketing approval of migalastat HCl or any of our product candidates, restrict or regulate post-approval activitiesand affect our ability to profitably sell any product candidates, including migalastat HCl, for which we obtain marketing approval. In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or Medicare Modernization Act, changed the wayMedicare covers and pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a newreimbursement methodology based on average sales prices for physician administered drugs. In addition, this legislation provided authority for limiting the numberof drugs that will be covered in any therapeutic class. Cost reduction initiatives and other provisions of this legislation could decrease the coverage and price thatwe receive for any approved products. While the Medicare Modernization Act applies only to drug benefits for Medicare beneficiaries, private payors often followMedicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from theMedicare Modernization Act may result in a similar reduction in payments from private payors. The pricing of pharmaceutical products, in general, and specialty drugs, in particular, has also been a topic of concern in the U.S. government, including bythe new administration. There can be no-51-Table of Contentsassurance as to how this scrutiny on pricing of pharmaceutical products will impact future pricing of our products or orphan drugs or pharmaceutical productsgenerally. In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and EducationReconciliation Act, or collectively, the Affordable Care Act, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth ofhealthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose newtaxes and fees on the health industry and impose additional health policy reforms. Effective October 1, 2010, the Affordable Care Act revised the definition of"average manufacturer price" for reporting purposes, which could increase the amount of Medicaid drug rebates to states. Further, the new law imposes asignificant annual fee on companies that manufacture or import branded prescription drug products. A significant number of provisions are not yet, or have onlyrecently become, effective, but the Affordable Care Act is likely to continue the downward pressure on pharmaceutical pricing, especially under the Medicareprogram, and may also increase our regulatory burdens and operating costs. We expect that the Affordable Care Act, as well as other healthcare reform measuresthat have been and may be adopted in the future, may result in more rigorous coverage criteria, new payment methodologies and in additional downward pressureon the price that we receive for any approved product, and could seriously harm our future revenues. Any reduction in reimbursement from Medicare or othergovernment programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcarereforms may compromise our ability to generate revenue, attain profitability or commercialize our products. Finally, there are significant ongoing efforts to modifyor eliminate the ACA. It is unknown what form any such modifications or any law proposed to replace the ACA would take, and how or whether it may affect ourbusiness in the future. Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceuticalproducts. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed,or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress ofthe FDA's approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketingtesting and other requirements. In the EU, similar political, economic and regulatory developments may affect our ability to profitably commercialize our products. In addition to continuingpressure on prices and cost containment measures, legislative developments at the EU or member state level may result in significant additional requirements orobstacles that may increase our operating costs.The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. If we are found to havepromoted off-label uses, we may become subject to significant liability. The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription drug products. In particular, a productmay not be promoted in the United States for uses that are not approved by the FDA as reflected in the product's approved labeling. In particular, any labelingapproved by the FDA for migalastat HCl, SD-101 or any of our other product candidates may include restrictions on use. The FDA may impose furtherrequirements or restrictions on the distribution or use of migalastat HCl, SD-101 or any of our other product candidates as part of a REMS plan. If we receivemarketing approval for migalastat HCl, SD-101 or any other product candidates, physicians may nevertheless prescribe such products to their patients in a mannerthat is inconsistent with the approved label. If we are found to have promoted such off-label uses, we may become subject to significant liability. The federalgovernment has levied large civil and criminal fines and / or other penalties against companies for alleged improper promotion and has investigated and /-52-Table of Contentsor prosecuted several companies in relation to off-label promotion. The FDA has also requested that certain companies enter into consent decrees or permanentinjunctions under which specified promotional conduct is changed, curtailed or prohibited.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 riskwhen we commercially sell any products that we develop, 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 ourproduct candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:•reduced resources of our management to pursue our business strategy; •decreased demand for any product candidates or products that we may develop; •injury to our reputation and significant negative media attention; •regulatory investigations, prosecutions or enforcement actions that could require costly recalls or product modifications •withdrawal of clinical trial participants; •significant costs to defend the related litigation; •increased insurance costs, or an inability to maintain appropriate insurance coverage; •substantial monetary awards to trial participants or patients, including awards that substantially exceed our product liability insurance, which wewould then be required to pay from other sources, if available, and would damage our ability to obtain liability insurance at reasonable costs, or atall, in the future; •loss of revenue; and •the inability to commercialize any products that we may develop. The amount of insurance that we currently hold may not be adequate to cover all liabilities that we may incur. We have increased our insurance coverage forthe commercialization of migalastat HCl and may increase insurance coverage when, and if, we begin commercializing any other product candidate that receivesmarketing approval. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amountadequate to satisfy any liability that may arise. On occasion, large judgments have been awarded in lawsuits based on drugs that had unanticipated side effects. Asuccessful 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, coulddecrease our available cash and adversely affect our business.If the FDA or other applicable regulatory authorities approve generic or biosimiliar products with claims that compete with our product or any of ourproduct candidates, it could reduce our sales of our product or those product candidates. In the United States, after an NDA is approved, the product covered thereby becomes a "listed drug" which can, in turn, be cited by potential competitors insupport of approval of an abbreviated NDA, or ANDA. The Federal Food, Drug, and Cosmetic Act, or the FD&C Act, FDA regulations and other applicableregulations and policies provide incentives to manufacturers to create modified,-53-Table of Contentsnon-infringing versions of a drug to facilitate the approval of an ANDA or other application for generic substitutes. These manufacturers might only be required toconduct a relatively inexpensive study to show that their product has the same active ingredients, dosage form, strength, route of administration, and conditions ofuse, or product labeling, as our product or product candidate and that the generic product is absorbed in the body at the same rate and to the same extent as, or isbioequivalent to, our product or product candidate. These generic equivalents would be significantly less costly than ours to bring to market and companies thatproduce generic equivalents are generally able to offer their products at lower prices. Thus, after the introduction of a generic competitor, a significant percentageof the sales of any branded product are typically lost to the generic product. Accordingly, competition from generic equivalents to our product or productcandidates would substantially limit our ability to generate revenues and therefore to obtain a return on the investments we have made in our product or productcandidates. The Biologics Price Competition and Innovation Act, or BPCIA, was enacted as part of the Patient Protection and Affordable Care Act of 2010, or the ACA,Pub. L. No. 111-148 (2010). The BPCIA authorizes the FDA to approve "abbreviated" BLAs for products whose sponsors demonstrate they are "biosimilar" toreference products previously approved under BLAs. The FDA may also separately determine whether "biosimilar" products are "interchangeable" with theirreference products. However, the FDA may not approve an "abbreviated" BLA for a biosimilar product until at least twelve years after the date on which the BLAfor the reference product was approved. FDA approval could be further delayed if the reference products are subject to unexpired and otherwise valid patents. Prior to the enactment of the BPCIA, information in approved BLAs could not be relied upon by other manufacturers to establish the safety and efficacy oftheir products for which they were seeking FDA approval. Accordingly, if our products are approved under a BLA, other manufacturers potentially could developand seek FDA approval of "biosimilar" products at some point in the future.Risks Related to Our Financial Position and Need for Additional CapitalWe have incurred significant losses since our inception and anticipate that we will continue to incur losses in the future. We are an early commercial-stage pharmaceutical company. To date, we have focused on developing our first product, migalastat HCl. Investment inpharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a product candidatewill fail to gain regulatory approval or become commercially viable. Since our inception we have not generated any material revenue from product sales. Althoughthe European Commission has granted full approval for the oral small molecule pharmacological chaperone migalastat HCl as a first-line therapy for long-termtreatment of adults and adolescents aged 16 years and older with a confirmed diagnosis of Fabry disease (alpha-galactosidase A deficiency) and who have anamenable mutation, neither the FDA nor any other non-EU foreign regulatory authority (other than Switzerland) has granted regulatory approval to any of ourproduct candidates, and we continue to incur significant research, development, commercialization and other expenses related to our ongoing operations. As aresult, we are not profitable and have incurred losses in each period since our inception. For the year ended December 31, 2016, we have a net loss of$200.0 million, and we have an accumulated deficit of $779.6 million at December 31, 2016.-54-Table of Contents We expect to continue to incur losses for the foreseeable future, and we expect these losses to increase as we:•continue our development and commercialization of, and seek regulatory approvals for, our product and product candidates in the United States, theEuropean Union, and other foreign countries, as applicable; •conduct additional clinical trials and/or further analysis of pre-existing clinical data to support the New Drug Application, or NDA, of migalastatHCl in the United States; •continue communicating with the EMA, as necessary, regarding post-marketing requirements and clinical trials for migalastat HCl; •continue to or initiate the regulatory submission process for marketing approval of migalastat HCl outside of the United States and EU, asapplicable; •build our commercial infrastructure so that it is capable of supporting product sales, marketing and distribution of migalastat HCl in the EU and theUS or other territories in which we may receive regulatory approval; •continue our ongoing Phase 3 clinical trial of SD-101 for the treatment of epidermolysis bullosa, or EB; •continue our preclinical studies and clinical trials on the use of pharmacological chaperones co-formulated or co-administered with enzymereplacement therapy, or ERT, for Fabry, Pompe, and other lysosomal storage disorders, or LSDs; and •continue our preclinical studies of and potentially conduct clinical studies of CDKL5. We may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. The size of ourfuture losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues. If any of our product candidates fails in clinicaltrials or does not gain regulatory approval, or if approved, fails to achieve market acceptance, we may never become profitable. Even if we achieve profitability inthe future, we may not be able to sustain profitability in subsequent periods. Our prior losses and expected future losses have had and will continue to have anadverse effect on our stockholders' equity and working capital.We currently generate no material revenue from the sale of products and may never become profitable. We began the commercial launch of our first product, migalastat HCl, in May 2016. Accordingly, we have not generated any material revenue from productsales. Our ability to generate material revenue and become profitable depends upon our ability to successfully commercialize our existing product and productcandidates, or product candidates that we may in-license or acquire in the future. Even if we are able to successfully achieve regulatory approval for our productcandidates, we do not know when any of these product candidates will generate revenue for us, if at all. Our ability to generate revenue from our current or futureproduct and product candidates depends on a number of factors, including our ability to:•successfully complete development activities and obtain additional regulatory and pricing and reimbursement approvals for, and successfullycommercialize, migalastat HCl; •develop a commercial organization capable of sales, marketing, and distribution for migalastat HCl and any product candidates we intend to market,if we receive regulatory approval, in the countries where we have chosen to commercialize the product candidates ourselves; •manufacture commercial quantities of our products at acceptable cost levels;-55-Table of Contents•obtaining a commercially viable price for our products; •obtain coverage and adequate reimbursement from third-parties, including government payors; •successfully satisfy post-marketing requirements that the FDA, EMA, or other foreign regulatory authorities may impose if migalastat HCl or anyof our other product candidates receive regulatory approval, including pediatric trials and patient registries; •successfully complete development activities, including the necessary preclinical studies and clinical trials, with respect to product candidates,including SD-101 and ATB200/ATB2221; •complete and submit NDAs to the FDA and obtain regulatory approval for our product candidates including migalastat HCl; and •complete and submit applications to, and obtain regulatory approval from, foreign regulatory authorities. In addition, because of the numerous risks and uncertainties associated with product development, including that our product candidates may not advancethrough development or achieve the safety and efficacy endpoints of applicable clinical trials, we are unable to predict the timing or amount of increased expenses,or when or if we will be able to achieve or maintain profitability. Furthermore, we anticipate incurring significant costs associated with commercializing theseproducts. Even if we are able to generate revenues from the sale of our products, we may not become profitable and may need to obtain additional funding to continueoperations. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at plannedlevels and be forced to reduce our operations.If we require substantial additional capital to fund our operations and we fail to obtain necessary financing, we may be unable to complete thedevelopment and commercialization of our product and development and commercialization of our product candidates. Our operations have consumed substantial amounts of cash. We expect to continue to spend substantial amounts to advance the clinical development of ourproduct candidates, and launch and commercialize our product and product candidates for which we may receive regulatory approval, including continuing to buildour own commercial organization. We believe that our existing cash and cash equivalents will be sufficient to fund our operations into the second half of 2018,including the commercialization of migalastat HCl in the EU, and the continuation of our development of our other product candidates. However, we may requiresubstantial additional capital for the development and commercialization of our product and further development and commercialization of our product candidates. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts,when required or on acceptable terms, we could also be required to:•significantly delay, scale back, or discontinue the development or the commercialization of our product or product candidates or one or more of ourother research and development initiatives; •seek collaborators for migalastat HCl or one or more of our current or future product candidates at an earlier stage than otherwise would bedesirable, or on terms that are less favorable than might otherwise be available; •relinquish or license on unfavorable terms our rights to our technologies, product or product candidates that we otherwise would seek to develop orcommercialize ourselves; or •significantly curtail operations.-56-Table of Contents Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement andinvolves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere in this "Risk Factors"section. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currentlyexpect. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:•the costs of commercialization activities, including establishing sales, marketing, and distribution capabilities for migalastat HCl and any productcandidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own; •the scope, progress, results, and costs of preclinical development, laboratory testing, and clinical trials for our product candidates and any otherproduct candidates that we may in-license or acquire; •the cost of manufacturing drug supply for our preclinical studies and clinical trials, including the significant cost of new Fabry ERT cell linedevelopment and manufacturing as well as the cost of manufacturing Pompe ERT; •the outcome, timing, and cost of the regulatory approval process by the FDA, EMA, and other foreign regulatory authorities, including the potentialfor regulatory authorities to require that we perform more studies than those that we currently anticipate for our product and product candidates; •the cost of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights; •the cost and timing of completion of existing or expanded commercial-scale outsourced manufacturing activities; •the cost of defending any claims asserted against us; •the emergence of competing technologies and other adverse market developments; •the extent to which we acquire or invest in additional businesses, products, and technologies; and •the cost to integrate our recent acquisitions of Scioderm, Inc., or Scioderm, and MiaMed, Inc., or MiaMed, their products and technologies into ourbusiness.Raising additional capital may cause dilution to our existing stockholders, restrict our operations, or require us to relinquish rights to our technologies,migalastat HCl or product candidates. We may seek additional capital through a combination of private and public equity offerings, debt financings, receivables or royalty financings, strategiccollaborations and alliances, and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, yourownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt,receivables, and royalty financings may be coupled with an equity component, such as warrants to purchase stock, which could also result in dilution of ourexisting stockholders' ownership. For example, stockholders may experience dilution if the holders of the convertible notes issued in connection with our privateplacement in December 2016 have their convertible notes converted. The incurrence of additional indebtedness beyond our existing indebtedness with theconvertible note holders could also result in increased fixed payment obligations and could also result in certain restrictive covenants, such as limitations on ourability to incur further debt, limitations on our ability to acquire or license intellectual property rights, and other operating restrictions that could have a materialadverse effect on our ability to conduct our business and may result in liens being placed on our assets and intellectual-57-Table of Contentsproperty. If we were to default on any of our indebtedness, we could lose such assets and intellectual property. If we raise additional funds through strategiccollaborations and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to migalastat HCl or our product candidates,or grant licenses on terms that are not favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be requiredto delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market our technologies that we wouldotherwise prefer to develop and market ourselves.Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt. On December 21, 2016, we issued $250 million aggregate principal amount of 3.00% unsecured Convertible Senior Notes due 2023 (the "ConvertibleNotes"), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Notes bear interest at a fixed rate of 3.00% peryear, payable semiannually on June 15 and December 15 of each year, beginning on June 15, 2017. The Notes will mature on December 15, 2023, unless earlierrepurchased, redeemed, or converted in accordance with their terms. The Notes are convertible at the option of the holders, under certain circumstances and duringcertain periods, into cash, shares of the Company's common stock, par value $0.01 per share ("Common Stock"), or a combination thereof and may be settled asdescribed below. There can be no assurance that our cash and cash equivalents, together with funds generated by our operations and any future financings, will be sufficient tosatisfy our debt payment obligations. Our inability to generate funds or obtain financing sufficient to satisfy our debt payment obligations may result in suchobligations being accelerated by our lenders, which would likely have a material adverse effect on our business, financial condition and results of operations.The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results. In the event the conditional conversion feature of the Convertible Notes is triggered, holders of such notes will be entitled to convert the notes at any timeduring specified periods at their option, which are set forth in the applicable indenture. If one or more holders elect to convert their Convertible Notes, we have theoption to settle conversions entirely in cash, in common stock or a combination thereof. In addition, even if holders do not elect to convert their Convertible Notes,we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-termliability, which would result in a material reduction of our net working capital.We have a limited operating history, which may make it difficult for you to evaluate the success of our business to date and to assess our futureviability. We commenced operations in February 2002. Our operations to date have been limited to organizing and staffing our company, acquiring and developing ourtechnology and undertaking preclinical studies and clinical trials of our most advanced product candidates, including our first product, migalastat HCl. We havenot yet generated any material commercial sales for any of our product candidates. We have not yet demonstrated our ability to obtain global regulatory approvals(including the US), manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessaryfor successful product commercialization. Consequently, any predictions about our future success or viability may not be as accurate as they could be if we had alonger operating history. In addition, because we were successful in obtaining from the European Union full approval for migalastat HCl, we will need to transitionfrom-58-Table of Contentsa company with a research focus to a company capable of supporting commercial activities. We have not demonstrated an ability to commercialize a product andmay not be successful in such a transition.We may not realize all of the anticipated benefits of the acquisitions of Scioderm or MiaMed. The success of our acquisitions of Scioderm and MiaMed will depend, in part, on our ability to realize the anticipated growth opportunities and synergies fromcombining the businesses of our company, Scioderm and MiaMed. Our ability to realize these benefits, and the timing of this realization, depend upon a number offactors and future events, many of which we, Scioderm and MiaMed, individually or collectively, cannot control. These factors and events include:•integrating Scioderm's and MiaMed's technology platforms into our company; •reliance on the representations and warranties given by the former Scioderm management and board and former MiaMed management and boardwhich may prove to be incomplete, inaccurate or misleading. •reliance on the opinions of neutral or other third parties referred to us by the former Scioderm management and board and the former MiaMedmanagement and board prior to the acquisitions that may prove to be incomplete, inaccurate or misleading. •obtaining and maintaining intellectual property rights relating to the Scioderm and MiaMed technologies; •enforcing our intellectual property rights covering SD-101 against third party manufacturers or compounding pharmacies; •third party manufacturers or compounding pharmacies designing around our intellectual property covering SD-101; •effectively consolidating research and development operations; •retaining and attracting key employees; •consolidating corporate and administrative functions; •any delays in enrollment in on-going clinical trials for SD-101; •the success of on-going or later clinical trials for SD-101; •maintaining new chemical entity exclusivity and/or orphan drug market exclusivity; and •minimizing the diversion of management's attention from ongoing business concerns. Acquisitions involve risks, including inaccurate assessment of undisclosed, contingent, or other liabilities or problems. Following the completion of themergers, the surviving corporations, which are now wholly owned subsidiaries of our company, possess not only all of the assets, but also all of the liabilities ofScioderm and MiaMed. It is possible that undisclosed, contingent, or other liabilities or problems may arise in the future of which we were previously unaware.These undisclosed liabilities could have an adverse effect on our business, financial condition, and prospects.We may acquire other assets or businesses, or form collaborations or make investments in other companies or technologies that could harm ouroperating results, dilute our stockholders' ownership, increase our debt, or cause us to incur significant expense. As part of our business strategy, we may continue to pursue acquisitions of assets or businesses, or strategic alliances and collaborations, to expand ourexisting technologies and operations. We may not identify or complete these transactions in a timely manner, on a cost-effective basis, or at all, and we may notrealize the anticipated benefits of any such transaction, any of which could have a detrimental-59-Table of Contentseffect on our financial condition, results of operations, and cash flows. We may not be able to find suitable acquisition candidates, and if we make any acquisitions,we may not be able to integrate these acquisitions successfully into our existing business and we may incur additional debt or assume unknown or contingentliabilities in connection therewith. Integration of an acquired company or assets may also disrupt ongoing operations, require the hiring of additional personnel andthe implementation of additional internal systems and infrastructure, especially the acquisition of commercial assets, and require management resources that wouldotherwise focus on developing our existing business. We may not be able to find suitable collaboration partners or identify other investment opportunities, and wemay experience losses related to any such investments. To finance any acquisitions or collaborations, we may choose to issue debt or shares of our common stock as consideration. Any such issuance of shareswould dilute the ownership of our stockholders. If the price of our common stock is low or volatile, we may not be able to acquire other assets or companies orfund a transaction using our stock as consideration. Alternatively, it may be necessary for us to raise additional funds for acquisitions through public or privatefinancings. Additional funds may not be available on terms that are favorable to us, or at all.Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. As of December 31, 2016, we had federal, state, and foreign net operating loss carry forwards, or NOLs, of approximately $637 million, $623 million, and$40 million respectively. The federal carry forward will expire in 2029 through 2036. Most of the state carry forwards generated prior to 2009 expired in 2015. Theremaining state carry forwards including those generated from 2009 through 2016 will expire in 2029 through 2036 due to a change in the New Jersey state lawregarding the net operating loss carry forward period. Under Section 382 of the Internal Revenue Code of 1986, as amended, or Section 382, if a corporationundergoes an "ownership change," generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation'sability to use its pre-change NOLs and other pre-change tax attributes (such as research and development tax credits) to offset its post-change income may belimited. We may experience ownership changes in the future as a result of shifts in our stock ownership some of which are outside our control. We completed adetailed study of our NOLs and determined that there was not an ownership change in excess of 50%. Ownership changes in future periods may place additionallimits on our ability to utilize net operating loss and tax credit carry forwards. In addition, at the state level, there may be periods during which the use of NOLs issuspended or otherwise limited, which could accelerate or permanently increase state taxes owed.Risks Related to our Intellectual PropertyIf we are unable to obtain and maintain patent protection for our technology and products, or if the scope of the patent protection is not sufficientlybroad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfullycommercialize our technology and products may be adversely affected. Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to ourproprietary technology and products. We seek to protect our proprietary position by filing patent applications in the United States and in certain foreignjurisdictions related to our novel technologies, product and product candidates that are important to our business. This process is expensive and time-consuming,and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we willfail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, if we license technology orproduct candidates from third parties in the future, these license agreements may not permit us to control the preparation, filing and prosecution of patentapplications, or to maintain or enforce the patents,-60-Table of Contentscovering this intellectual property. These agreements could also give our licensors the right to enforce the licensed patents without our involvement, or to decidenot to enforce the patents at all. Therefore, in these circumstances, these patents and applications may not be prosecuted and enforced in a manner consistent withthe best interests of our business. The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has inrecent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highlyuncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or whicheffectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in theUnited States and other countries may diminish the value of our patents 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 orwill 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. 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 theUnited States, the European Patent Office and other countries outside the United States that have not been issued as patents. These pending applications include,among others, some of the patent applications we license pursuant to a license agreement with Mount Sinai School of Medicine of New York University. If patentsare 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 countriesin which we do not have issued patents. The patents that we have licensed from Mt. Sinai School of Medicine relating to use of migalastat HCl to treat Fabry disease expire in 2018 in the UnitedStates and 2019 in Europe, Japan, and Canada. In addition to patent protection outside of the United States, we intend to seek orphan medicinal product designationand to rely on statutory data exclusivity provisions in jurisdictions outside the United States where such protections are available, including Europe. The patentrights 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 competingagainst us if we obtain regulatory approval to market these product candidates. In particular:•We do not hold composition of matter patents covering migalastat HCl. Composition of matter patents can provide protection for pharmaceuticalproducts to the extent that the specifically covered compositions are important. For our product candidates for which we do not hold composition ofmatter patents, competitors who obtain the requisite regulatory approval can-61-Table of Contentsoffer 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 ofuse 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 acompetitor from making and marketing a product that is identical to our product that is labeled for an indication that is outside of the patentedmethod, 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. The laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, European patent law restricts thepatentability of methods of treatment of the human body more than U.S. law does. In addition, we may not pursue or obtain patent protection in all major markets.Assuming the other requirements for patentability are met, currently, the first to file a patent application is generally entitled to the patent. However, prior toMarch 16, 2013, in the United States, the first to invent was entitled to the patent. Publications of discoveries in the scientific literature often lag behind the actualdiscoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our patents or pending patent applications, or that we werethe first to file for patent protection of such inventions. Moreover, we may be subject to a third party preissuance submission of prior art to the U.S. Patent and Trademark Office or become involved in opposition,derivation, reexamination, inter partes review, post grant review, interference proceedings or other patent office proceedings or litigation, in the United States orelsewhere, challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce thescope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, orresult in our inability to manufacture or commercialize products without infringing third party patent rights. In addition, if the breadth or strength of protectionprovided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize currentor future product candidates. Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors fromcompeting with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents bydeveloping similar or alternative technologies or products in a non-infringing manner. In addition, other companies may attempt to circumvent any regulatory dataprotection or market exclusivity that we obtain under applicable legislation, which may require us to allocate significant resources to preventing suchcircumvention. Legal and regulatory developments in the EU and elsewhere may also result in clinical trial data submitted as part of an MAA becoming publiclyavailable. Such developments could enable other companies to circumvent our intellectual property rights and use our clinical trial data to obtain marketingauthorizations in the EU and in other jurisdictions. Such developments may also require us to allocate significant resources to prevent other companies fromcircumventing or violating our intellectual property rights. Our attempts to prevent third parties from circumventing our intellectual property and other rights mayultimately be unsuccessful. We may also fail to take the required actions or pay the necessary fees to maintain our patents.-62-Table of Contents The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in thecourts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed,invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technologyand products, or limit the duration of the patent protection of our technology and products. Given the amount of time required for the development, testing andregulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As aresult, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming andunsuccessful. Competitors may infringe our patents, trademarks, copyrights or other intellectual property. To counter infringement or unauthorized use, we may be requiredto file claims, which can be expensive and time consuming. Any claims we assert against perceived infringers could provoke these parties to assert counterclaimsagainst us alleging that we infringe their intellectual property. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid orunenforceable, in whole or in part, construe the patent's claims narrowly or may refuse to stop the other party from using the technology at issue on the groundsthat our patents do not cover the technology in question.Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertainand could have a material adverse effect on the success of our business. Our research, development and commercialization activities, as well as any product candidates or products resulting from these activities, may infringe or beaccused 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 maysubsequently 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 United Statesand 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 paysubstantial 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 product candidates,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 allegethey have patent rights encompassing our product candidates, 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 proteinmisfolding. If any of these patents were to be asserted against us, while we do not believe that our product candidates would be found to infringe any valid claim ofsuch 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 with respect to such patents, suchlicense would be available to us on acceptable terms or at all. If we were to challenge the validity of any issued U.S. patent in court, we would need to overcome apresumption 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 thepatent's claims. There is no assurance that a court would find in our favor on infringement or validity.-63-Table of Contents 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 orbe 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, orat all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to thesame intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, asa 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 ifsuch claims are without merit, which would similarly harm our business. Furthermore, during the course of litigation, confidential information may be disclosed inthe form of documents or testimony in connection with discovery requests, depositions or trial testimony. Disclosure of our confidential information and ourinvolvement 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 biotechnologyindustries. In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interferenceproceedings declared by the U.S. Patent and Trademark Office and opposition proceedings in the European Patent Office, regarding intellectual property rightswith 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 greaterresources. In addition, any uncertainties resulting from any litigation could significantly limit our ability to continue our operations. Patent litigation and otherproceedings may also absorb significant management time.We may be subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property, or claiming ownershipof what we regard as our own intellectual property. Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potentialcompetitors. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject toclaims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee'sformer employer. Litigation may be necessary to defend against these claims. In addition, while we typically require our employees and contractors who may be involved in the development of intellectual property to execute agreementsassigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property thatwe regard as our own. Our and their assignment agreements may not be self-executing or may be breached, and we may be forced to bring claims against thirdparties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights orpersonnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management.-64-Table of ContentsIntellectual property litigation could cause us to spend substantial resources and could distract our personnel from their normal responsibilities. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and coulddistract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings,motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverseeffect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available fordevelopment, sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately conduct such litigation orproceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greaterfinancial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on ourability to compete in the marketplace.If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. In addition to seeking patents for some of our technology and products, we also rely on trade secrets, including unpatented know-how, technology and otherproprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentialityagreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers,consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants.However, we cannot guarantee that we have executed these agreements with each party that may have or have had access to our trade secrets or that the agreementswe have executed will provide adequate protection. Any party with whom we have executed such an agreement may breach that agreement and disclose ourproprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegallydisclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside andoutside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developedby a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. Ifany of our trade secrets were to be obtained or independently developed by a competitor, our competitive position would be harmed.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 ourbusiness. We are a party to a license agreement with the Mount Sinai School of Medicine of New York University, pursuant to which we license key intellectualproperty relating to our lead product candidates. We expect to enter into additional licenses in the future. Under our existing license, we have the right to enforcethe licensed patent rights. Our existing license imposes, and we expect that future licenses will impose, various diligences, milestone payment, royalty, insuranceand 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 beable to market any product that is covered by the licensed patents.-65-Table of ContentsWe have not yet registered our trademarks in all of our potential markets, and failure to secure those registrations could adversely affect our business. Our trademark applications may not be allowed for registration, and our registered trademarks may not be maintained or enforced. During trademarkregistration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may be unable to overcome suchrejections. In addition, in the U.S. Patent and Trademark Office and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity tooppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks,and our trademarks may not survive such proceedings. If we do not secure registrations for our trademarks, we may encounter more difficulty in enforcing themagainst third parties than we otherwise would.Obtaining and maintaining our patent protection depends on compliance with various procedural, document submissions, fee payment and otherrequirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with theserequirements. The U.S. Patent and Trademark Office and various foreign governmental patent agencies require compliance with a number of procedural, documentary, feepayment and other similar provisions during the patent application process. In addition, periodic maintenance fees on issued patents are required to be paid to theU.S. Patent and Trademark Office and foreign patent agencies in several stages over the lifetime of the patents. While an inadvertent lapse can in many cases becured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment orlapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result inabandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we fail to maintain the patents and patent applications covering our productcandidates, our competitive position would be adversely affected.Risks Related to our Dependence on Third PartiesUse of third parties to manufacture our product or product candidates may increase the risk that we will not have sufficient quantities of our product orproduct candidates or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. We do not own or operate manufacturing facilities for clinical or commercial production of our product or product candidates. We lack the resources and thecapabilities to manufacture any of our product or product candidates on a clinical or commercial scale. We currently outsource all manufacturing and packaging ofour product and preclinical and clinical product candidates to third parties. The manufacture of pharmaceutical products requires significant expertise and capitalinvestment, including the development of advanced manufacturing techniques and process controls. In particular, the manufacture of our biologic productcandidates, including ATB200 for Pompe are highly complex and we may encounter difficulties in production, particularly in scaling up initial production. Theseproblems include difficulties with production costs and yields and quality control, including stability of the product or product candidate. The occurrence of any ofthese problems could significantly delay our clinical trials or the commercial availability of our products. 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 weenter into these agreements, the manufacturers of each product candidate will be single source suppliers to us for a significant period of time.-66-Table of Contents Even if we are able to establish and maintain arrangements with third party manufacturers, reliance on third party manufacturers entails additional risks,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; •the possible misappropriation of our proprietary information, including our trade secrets and know-how; and •the possible termination or nonrenewal of the agreement by the third party 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 orpatients using products. Such failure could also result in product liability claims, product recalls, product seizures or withdrawals, delays or failures in testing ordelivery, cost overruns or other problems that could seriously harm our business or profitability. The FDA and regulatory authorities in other jurisdictions require our contract manufacturers to comply with regulations setting forth cGMP. These regulationscover 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 United States. Our failure or the failure of ourthird party manufacturers, to comply with applicable regulations could significantly and adversely affect regulatory approval and supplies of our productcandidates. 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 might be capable of manufacturing for us. If the third parties that we engage to manufacture product for our preclinical tests and clinical trials should cease to continue to do so for any reason, we likelywould experience delays in advancing these trials while we identify and qualify replacement suppliers and we may be unable to obtain replacement supplies onterms that are favorable to us. 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 andour ability to develop product candidates and commercialize any products that receive regulatory approval on a timely and competitive basis.We rely on third parties to conduct certain preclinical development activities and our clinical trials, and those third parties may not performsatisfactorily, including failing to meet deadlines for the completion of such trials. We do not independently conduct clinical trials for our product candidates or certain preclinical development activities of our product candidates, such aslong-term safety studies in animals. We rely on third parties, such as CROs, clinical data management organizations, medical institutions and clinical investigators,to perform these functions. Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, itwould delay our product development activities.-67-Table of Contents Our reliance on these third parties for preclinical and clinical development activities reduces our control over these activities but does not relieve us of ourresponsibilities. For example, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational planand protocols for the trial. Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practices, or GCP, for conducting,recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentialityof trial participants are protected. We also are required to register certain ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within particular timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions. SimilarGCP and transparency requirements apply in the EU. Failure to comply with such requirements, including with respect to clinical trials conducted outside the EUand United States, can also lead regulatory authorities to refuse to take into account clinical trial data submitted as part of an MAA. Furthermore, third parties that we rely on for our clinical development activities may also have relationships with other entities, some of which may be ourcompetitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance withregulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates andwill not be able to, or may be delayed in our efforts to, successfully commercialize our product candidates. Our product development costs will increase if weexperience delays in testing or obtaining marketing approvals. We also rely on other third parties to store and distribute drug supplies for our preclinical development activities and clinical trials. Any performance failureon the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, producingadditional losses and depriving us of potential product revenue. Extensions, delays, suspensions or terminations of our preclinical development activities or our clinical trials as a result of the performance of our independentclinical investigators and CROs will delay, and make more costly, regulatory approval for any product candidates that we may develop. Any change in a CROduring 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 ininternational markets, commercialize products. We are collaborating with physicians, patient advocacy groups, foundations and government agencies in order to assist with the development of our productsand each of our product candidates. We plan to pursue similar activities in future programs and plan to evaluate the merits of retaining commercialization rights forourselves or entering into selective collaboration arrangements with leading pharmaceutical or biotechnology companies. We also may seek to establishcollaborations for the sales, marketing and distribution of our products. If we elect to seek collaborators in the future but are unable to reach agreements withsuitable collaborators, we may fail to meet our business objectives for the affected product or program. We face, and will continue to face, significant competitionin seeking appropriate collaborators. Moreover, collaboration arrangements are complex and time consuming to negotiate, document and implement. We may notbe successful in our efforts, if any, to establish and implement collaborations or other alternative arrangements. The terms of any collaboration or otherarrangements that we establish, if any, may not be favorable to us. Any collaboration that we enter into may not be successful. The success of our collaboration arrangements, if any, will depend heavily on the efforts andactivities of our collaborators. It is likely that any collaborators of ours will have significant discretion in determining the efforts and resources-68-Table of Contentsthat they will apply to these collaborations. The risks that we may be subject to in possible future collaborations include the following:•collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations; •collaborators may not pursue development and commercialization of our product or product candidates or may elect not to continue or renewdevelopment or commercialization programs, based on clinical trial results, changes in the collaborators' strategic focus or available funding, orexternal factors such as an acquisition that diverts resources or creates competing priorities; •collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate,repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; •collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or productcandidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under termsthat are more economically attractive than ours; •a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distributionof such product or products; •collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invitelitigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; •collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; •disputes may arise between the collaborator and us as to the ownership of intellectual property arising during the collaboration; •we may grant exclusive rights to our collaborators, which would prevent us from collaborating with others; •disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of ourproducts or product candidates or that result in costly litigation or arbitration that diverts management attention and resources; and •collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercializationof the applicable product candidates. Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all. If a collaborator ofours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could bedelayed, diminished or terminated. Collaborations with pharmaceutical companies and other third parties often are terminated or allowed to expire by the other party. Such terminations orexpirations may adversely affect us financially and could harm our business reputation in the event we elect to pursue collaborations that ultimately expire or areterminated. Our initial co-formulated product candidate for Fabry Disease that we developed as part of our collaboration with GSK utilized migalastat HCl co-formulatedwith a proprietary human recombinant alpha-Gal A enzyme. We plan to continue development of a co-formulated ERT with migalastat HCl with an internallydeveloped Fabry cell line as a next-generation ERT for Fabry disease.-69-Table of Contents The risks involved with developing our own internal cell line are in addition to the risks described above with respect to securing and using third partymanufacturers and it could significantly and adversely affect the overall cost of developing the co-formulated product candidate and significantly increase thetimelines for development.Materials necessary to manufacture our product or product candidates may not be available on commercially reasonable terms, or at all, which maydelay the development and commercialization of our product or product candidates. We rely on the manufacturers of our product and product candidates to purchase from third party suppliers the materials necessary to produce the compoundsfor our preclinical studies and clinical trials, and we rely, or will rely, on these other manufacturers for commercial distribution of our product and, if we obtainmarketing approval, for any of our product candidates. Suppliers may not sell these materials to our manufacturers at the time we need them or on commerciallyreasonable terms and all such prices are susceptible to fluctuations in price and availability due to transportation costs, government regulations, price controls andchanges 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 ourmanufacturers. Moreover, we currently do not have any agreements for the commercial production of these materials. If our manufacturers are unable to obtainthese materials for our preclinical studies and clinical trials, product testing and potential regulatory approval of our product candidates would be delayed,significantly impacting our ability to develop and commercialize our product candidates. If our manufacturers or we are unable to purchase these materials forcommercial distribution of our product or, after regulatory approval has been obtained, our product candidates, the commercial launch of our product and productcandidates 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 orproduct candidates.Manufacturing issues may arise that could increase product and regulatory approval costs or delay commercialization. As we scale up manufacturing of our product and product candidates and conduct required stability testing, we may encounter product, packaging, equipmentand process-related issues that may require refinement or resolution in order to proceed with our planned clinical trials and obtain regulatory approval forcommercial marketing. In the future, we may identify impurities, which could result in increased scrutiny by regulatory authorities, delays in our clinical programsand regulatory approval, increases in our operating expenses or failure to obtain or maintain approval for our product or product candidates.Our business activities involve the use of hazardous materials, which require compliance with environmental and occupational safety laws regulatingthe 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 flammablechemicals and other hazardous compounds in addition to certain biological hazardous waste. Ultimately, the activities of our third party product manufacturerswhen a product candidate reaches commercialization will also require the use of hazardous materials. Accordingly, we are subject to federal, state and local lawsgoverning the use, handling and disposal of these materials. Although we believe that our safety procedures for handling and disposing of these materials complyin all material respects with the standards prescribed by local, state and federal regulations, we cannot completely eliminate the risk of accidental contamination orinjury from these materials. In addition, our collaborators may not comply with these laws. In the event of an accident or failure to comply with environmentallaws, we could be held liable for damages that result, and any such liability could exceed our assets and resources or we could be-70-Table of Contentssubject 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 partycontractors. While we believe that our existing insurance coverage is generally adequate for our normal handling of these hazardous materials, it may not besufficient to cover pollution conditions or other extraordinary or unanticipated events. Furthermore, an accident could damage or force us to shut down ouroperations. Changes in environmental laws may impose costly compliance requirements on us or otherwise subject us to future liabilities and additional lawsrelating to the management, handling, generation, manufacture, transportation, storage, use and disposal of materials used in or generated by the manufacture ofour 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 contractorsor our customers.Risks Related to our Business, Employee Matters and Managing GrowthOur future success depends on our ability to retain our Chief Executive Officer and other key executives and to attract, retain and motivate qualifiedpersonnel. We are highly dependent on John F. Crowley, our Chairman and Chief Executive Officer, Bradley L. Campbell, our President and Chief Operating Officer,and William D. Baird, III, our Chief Financial Officer. These executives each have significant pharmaceutical industry experience. The loss of the services of anyof these executives might impede the achievement of our research, development and commercialization objectives and materially adversely affect our business andwe may not be able to replace these executives with candidates with similar background and experience in the event of the loss of their services. We do notmaintain "key person" insurance on Mr. Crowley or on any of our other executive officers. Recruiting and retaining qualified scientific, clinical and sales and marketing personnel will also be critical to our success. In addition, maintaining a qualifiedfinance and legal department is key to our ability to meet our regulatory obligations as a public company and important in any potential capital raising activities.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 thecompetition among numerous pharmaceutical and biotechnology companies for similar personnel, particularly in New Jersey and surrounding areas. Although webelieve we offer competitive salaries and benefits, we may have to increase spending in order to retain personnel. If we fail to retain our remaining qualifiedpersonnel or replace them when they leave, we may be unable to recruit replacements nor continue our development and commercialization activities. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development andcommercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisorycontracts with other entities that may limit their availability to us.We expect to expand our development, regulatory and sales and marketing capabilities, and as a result, we may encounter difficulties in managing ourgrowth, which could disrupt our operations. As of December 31, 2016, we had 263 full-time employees. As our development and commercialization strategies develop, we will need additionalmanagerial, operational, sales, marketing, financial and other resources. Our management, personnel and systems currently in place may not be adequate to supportthis future growth. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, give rise tooperational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Future growth could requiresignificant capital expenditures and may divert financial resources from other projects, such as the development of our existing or future product candidates and wemay not be-71-Table of Contentsable to replace key personnel in the event of turnover. Future growth would impose significant added responsibilities on members of management, including:•managing the commercialization of migalastat HCl and any product candidates approved for marketing; •overseeing our ongoing preclinical studies and clinical trials effectively; •identifying, recruiting, maintaining, motivating and integrating additional employees, including any sales and marketing personnel engaged inconnection with the commercialization of any approved product; •managing our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors andother third parties; •improving our managerial, development, operational and financial systems and procedures; •developing our compliance infrastructure and processes to ensure compliance with regulations applicable to public companies; and •expanding our facilities. As our operations expand, we will need to manage additional relationships with various strategic collaborators, suppliers and other third parties. Our futurefinancial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any futuregrowth effectively. To that end, we must be able to manage our development efforts and clinical trials effectively and hire, train and integrate additionalmanagement, administrative and sales and marketing personnel. We may not be able to accomplish these tasks, and our failure to accomplish any of them couldprevent us from successfully growing our company.We could be negatively impacted by securities class action complaints. Since October 1, 2015, three purported securities class action lawsuits have been commenced in the United States District Court for New Jersey, naming asdefendants the Company, its Chairman and Chief Executive Officer, and in one of the actions, its Chief Medical Officer. The lawsuits allege violations of theSecurities Exchange Act of 1934 in connection with allegedly false and misleading statements made by the Company related to the regulatory approval path formigalastat. The plaintiffs seek, among other things, damages for purchasers of the Company's Common Stock during different periods, all of which fall betweenMarch 19, 2015 and October 1, 2015. It is possible that additional suits will be filed, or allegations received from stockholders, with respect to similar matters andalso naming the Company and/or its officers and directors as defendants. On May 26, 2016, the Court consolidated these lawsuits into a single action and appointeda lead plaintiff. The lead plaintiff filed a Consolidated Amended Class Action Complaint on July 11, 2016. On August 25, 2016, the defendants filed a motion todismiss in response to the Consolidated Amended Class Action Complaint. This motion to dismiss was fully briefed on October 28, 2016. Lead plaintiff anddefendants have reached an agreement in principal to fully and finally settle all claims asserted in the Consolidated Amended Class Action Complaint. Thesettlement is subject to, among other things, documentation and court approval, and is expected to be fully covered by insurance. On or about November 2, 2015, a derivative lawsuit was filed by an Amicus shareholder purportedly on Amicus' behalf in the Superior Court of New Jersey,Middlesex County, Chancery Division, against the individuals who serve on the Amicus Board of Directors. Amicus itself was named as a nominal defendant. Thederivative lawsuit alleged claims for breach of state law fiduciary duties, waste of corporate assets, and unjust enrichment based on allegedly false and misleadingstatements made by Amicus related to the regulatory approval path for migalastat HCl. On February 19, 2016, the complaint was dismissed by the Court andplaintiffs have not refiled.-72-Table of Contents On or about March 3, 2016, a derivative lawsuit was filed by an Amicus shareholder purportedly on Amicus' behalf in the Superior Court of New Jersey,Middlesex County, Chancery Division, against various officers and directors of the Company. Amicus itself is named as a nominal defendant. The derivativelawsuit alleges similar facts and circumstances as the three purported securities class action lawsuits described above and further alleges claims for breach of statelaw fiduciary duties, waste of corporate assets, unjust enrichment, abuse of control, and gross mismanagement based on allegedly false and misleading statementsmade by Amicus related to the regulatory approval path for migalastat HCl. The plaintiff seeks, among other things, to require the Amicus Board to take certainactions to reform its corporate governance procedures, including greater shareholder input and a provision to permit shareholders to nominate candidates forelection to the Board, along with restitution, costs of suit and attorney's fees. On February 7, 2017, the complaint was dismissed by the Court without prejudice. These lawsuits and any other related lawsuits are subject to inherent uncertainties and the actual cost will depend upon many unknown factors. The outcomeof the litigation is necessarily uncertain and we could be forced to expend significant resources in the defense of these suits, and we may not prevail.Our employees, independent contractors, principal investigators, CROs, consultants and vendors may engage in misconduct or other improperactivities, including noncompliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation. We are exposed to the risk that our employees, independent contractors, principal investigators, CROs, consultants and vendors may engage in fraudulentconduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities tous that violates:•FDA, DEA or similar regulations of foreign regulatory authorities, including those laws requiring the reporting of true, complete and accurateinformation to such authorities; •manufacturing standards; •federal and state healthcare fraud and abuse laws and regulations, anti-bribery and corruption laws, and similar laws and regulations established andenforced by foreign regulatory authorities; or •laws that require the reporting of financial information or data accurately. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud,kickbacks, self-dealing, bribery and corruption and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing,discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws alsoinvolve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. Wehave adopted a Code of Business Conduct and Ethics, but it is not always possible to identify and deter misconduct by employees and other third parties, and theprecautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us fromgovernmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions areinstituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a material adverse effect on our business andresults of operations, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation inhealthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could have amaterial adverse effect on our ability to operate our business and our results of operations.-73-Table of ContentsOur business and operations would suffer in the event of computer system failures. Despite the implementation of security measures, our internal computer systems, and those of our CROs, contract manufacturing organizations and other thirdparties on which we rely, we are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication andelectrical failures. System failures, accidents or security breaches could cause interruptions in our operations, and could result in a material disruption of ourclinical activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. If such an event were to occur andcause interruptions in our operations, it could result in a material disruption of our commercialization of our product and our product candidate developmentprograms. For example, the loss of clinical trial data from completed or ongoing clinical trials could result in delays in our regulatory approval efforts andsignificantly increase our costs to recover or reproduce the data. To the extent that any disruptions or security breach was to result in a loss or damage to our dataor applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our productcandidates could be delayed.Risks Related to our Common StockOur executive officers, directors and principal stockholders maintain the ability to exert significant influence and control over matters submitted to ourstockholders for approval. Our executive officers, directors and affiliated stockholders beneficially own shares representing approximately 38% of our common stock as ofDecember 31, 2016. As a result, if these stockholders were to choose to act together, they would be able to exert significant influence and control over matterssubmitted to our stockholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, could influence theelection of directors and approval of any merger, consolidation, sale of all or substantially all of our assets or other business combination or reorganization. Thisconcentration of voting power could delay or prevent an acquisition of us on terms that other stockholders may desire. The interests of this group of stockholdersmay not always coincide with the interests of other stockholders, and they may act, whether by meeting or written consent of stockholders, in a manner thatadvances their best interests and not necessarily those of other stockholders, including obtaining a premium value for their common stock, and might affect theprevailing 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 may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholdersmay consider favorable, including transactions in which our stockholders might otherwise receive a premium for their shares. These provisions could also limit theprice 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 forstockholders 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; -74-Table of Contents•establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board ofdirectors; •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 wouldwork to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board ofdirectors; and •require the approval of the holders of at least 67% of the outstanding voting stock 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, whichprohibits 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 thetransaction 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.The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our commonstock. The market price of our common stock is highly volatile and may be subject to wide fluctuations in response to various factors, some of which are beyond ourcontrol. In addition to the factors discussed in this prospectus, these factors include:•the success of competitive products or technologies; •regulatory actions with respect to our product or product candidates or our competitors' products or product candidates; •actual or anticipated changes in our growth rate relative to our competitors; •the outcome of any patent infringement or other litigation that may be brought against us; •announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments; •results of clinical trials of our product candidates or those of our competitors; •regulatory or legal developments in the EU, United States and other countries; •developments or disputes concerning patent applications, issued patents or other proprietary rights; •the recruitment or departure of key personnel; •the level of expenses related to our product or any of our product candidates or clinical development programs; •actual or anticipated variations in our quarterly operating results; •the number and characteristics of our efforts to in-license or acquire additional product candidates or products; •introduction of new products or services by us or our competitors; •failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public; -75-Table of Contents•actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; •variations in our financial results or those of companies that are perceived to be similar to us; •fluctuations in the valuation of companies perceived by investors to be comparable to us; •share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; •announcement or expectation of additional financing efforts; •sales of our common stock by us, our insiders or our other stockholders; •changes in accounting practices; •lawsuits and other claims asserted against us; •changes in the structure of healthcare payment systems; •market conditions in the pharmaceutical and biotechnology sectors; •general economic, industry and market conditions; •publication of research reports about us, our competitors or our industry, or positive or negative recommendations or withdrawal of researchcoverage by securities or industry analysts; •other events or factors, many of which are beyond our control; and •the other factors described in this "Risk Factors" section. In addition, the stock market in general, and pharmaceutical and biotechnology companies in particular, have experienced extreme price and volumefluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negativelyaffect the market price of our common stock, regardless of our actual operating performance. The realization of any of the above risks or any of a broad range ofother risks stated above could have a material adverse effect on the market price of our common stock. As we operate in the pharmaceutical and biotechnology industry, we are especially vulnerable to these factors to the extent that they affect our industry or ourproducts. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type oflitigation could result in substantial costs and divert our management's attention and resources, and could also require us to make substantial payments to satisfyjudgments or to settle litigation.The capped call transactions may affect the value of the Convertible Notes and our common stock. In connection with the issuance of the Convertible Notes, we entered into capped call transactions with respect to the Convertible Notes with certain hedgecounterparties. The capped call transactions will cover, subject to customary anti-dilution adjustments, the aggregate number of shares of common stockunderlying the Convertible Notes and are expected generally to reduce potential dilution to the common stock upon conversion of the Convertible Notes in excessof the principal amount of such converted Convertible Notes. In connection with establishing their initial hedges of the capped call transactions, the hedgecounterparties (or their affiliates) entered into various derivative transactions with respect to the common stock concurrently with, and/or purchased the commonstock shortly after, the pricing of the Convertible Notes. The hedge counterparties (or their affiliates) are likely to modify their hedge positions by entering into orunwinding various derivative transactions with respect to the common stock and/or by purchasing or selling the common stock or other securities of ours insecondary market transactions prior to the maturity of the Convertible Notes (and are likely to do so during the settlement averaging period under the capped calltransactions, which precedes the maturity date of the Convertible Notes, and on or around any earlier conversion date related to a conversion of-76-Table of Contentsthe Convertible Notes). The effect, if any, of any of these transactions and activities on the market price of our common stock or the Convertible Notes will dependin part on market conditions and cannot be ascertained at this time, but any of these activities could adversely affect the value of our common stock, which couldaffect the value of the Convertible Notes and the value of our common stock, if any, that the convertible noteholders receive upon any conversion of theConvertible Notes.A significant portion of our total outstanding shares may be sold into the market. This could cause the market price of our common stock to dropsignificantly, even if our business is doing well. Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that theholders of a large number of shares intend to sell shares, could reduce the market price of our common stock. Certain holders of our common stock have rights,subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file forourselves or other stockholders. We also have registered on a Form S-8 registration statement all shares of common stock that we may issue under our equitycompensation plans. As a result, these shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates. Inaddition, certain of our employees, executive officers and directors have entered into, or may enter into, Rule 10b5-1 plans providing for sales of shares of ourcommon stock from time to time. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the employee, director or officer whenentering into the plan, without further direction from the employee, officer or director. A Rule 10b5-1 plan may be amended or terminated in some circumstances.Our employees, executive officers and directors may also buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material,nonpublic information.We may fail to qualify for continued listing on The NASDAQ Global Market which could make it more difficult for investors to sell their shares. Our common stock is listed on The NASDAQ Global Market, or NASDAQ. As a NASDAQ listed company, we are required to satisfy the continued listingrequirements of NASDAQ for inclusion in the Global Market to maintain such listing, including, among other things, the maintenance of a minimum closing bidprice of $1.00 per share and stockholders' equity of at least $10.0 million. There can be no assurance that we will be able to maintain compliance with thecontinued listing requirements or that our common stock will not be delisted from NASDAQ in the future. If our common stock is delisted by NASDAQ, we couldface significant material adverse consequences, including:•a limited availability of market quotations for our securities; •reduced liquidity with respect to our securities; •a determination that our shares are a "penny stock," which will require brokers trading in our shares to adhere to more stringent rules, possiblyresulting in a reduced level of trading activity in the secondary trading market for our shares; •a limited amount of news and analyst coverage for our company; and •a decreased ability to issue additional securities or obtain additional financing in the future.If securities or industry analysts do not publish research or reports or publish unfavorable research about our business, the price of our common stockand trading volume could decline. The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. Ifsecurities or industry analysts do not initiate or continue coverage of us, the trading price for our common stock would be negatively affected. In the event weobtain 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 wouldlikely decline. If-77-Table of Contentsone 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 couldcause the price of our common stock or trading volume to decline.We have broad discretion in the use of our cash and cash equivalents and may not use them effectively. We have broad discretion in the use of our cash and cash equivalents, and investors must rely on the judgment of our management regarding the use of ourcash and cash equivalents. Our management may not use cash and cash equivalents in ways that ultimately increase the value of your investment. Our failure to useour cash and cash equivalents effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our commonstock to decline and delay the development of our product and product candidates. Pending their use, we may invest our cash and cash equivalents in short-term orlong-term, investment-grade, interest-bearing securities. These investments may not yield favorable returns. If we do not invest or apply our cash and cashequivalents in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause the price of our common stock to decline.Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. We are subject to the periodic reporting requirements of the Exchange Act. Our disclosure controls and procedures are designed to reasonably assure thatinformation required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded,processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. We believe that anydisclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of thecontrol system are met. These inherent limitations reflect the reality that judgments can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally,controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls.Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.If the common stock issued as consideration in our recent acquisitions is sold, such sales could cause our common stock price to decline. The issuance of our common stock in connection with the Scioderm and MiaMed acquisitions could have the effect of depressing the market price for ourcommon stock, through dilution of earnings per share or otherwise. All of the shares of common stock issued to the former security holders of Scioderm andMiaMed in connection with the closings of the acquisitions have been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant toautomatic shelf registration statements on Form S-3 (File Nos. 333-207210 and 333-212414, respectively for the Scioderm and MiaMed acquisitions) and may nowbe resold by the former security holders of Scioderm and MiaMed to investors in the general market.Because we do not anticipate paying any cash dividends on our capital in the foreseeable future, capital appreciation, if any, will be our stockholderssole source of gain. We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the developmentand growth of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, ofour common stock will be our stockholders sole source of gain for the foreseeable future.-78-Table of ContentsItem 1B. UNRESOLVED STAFF COMMENTS. None.Item 2. PROPERTIES. The following table contains information about our current significant leased properties as of December 31, 2016. In addition to the above, we also maintain small offices in Netherland, Italy, Spain and France. We believe that our current office and laboratory facilities areadequate and suitable for our current and anticipated needs. We believe that, to the extent required, we will be able to lease or buy additional facilities atcommercially reasonable rates.Item 3. LEGAL PROCEEDINGS. Since October 1, 2015, three purported securities class action lawsuits have been commenced in the United States District Court for New Jersey, naming asdefendants the Company, its Chairman and Chief Executive Officer, and in one of the actions, its Chief Medical Officer. The lawsuits allege violations of theSecurities Exchange Act of 1934 in connection with allegedly false and misleading statements made by the Company related to the regulatory approval path formigalastat. The plaintiffs seek, among other things, damages for purchasers of the Company's Common Stock during different periods, all of which fall betweenMarch 19, 2015 and October 1, 2015. It is possible that additional suits will be filed, or allegations received from stockholders, with respect to similar matters andalso naming the Company and/or its officers and directors as defendants. On May 26, 2016, the Court consolidated these lawsuits into a single action and appointeda lead plaintiff. The lead plaintiff filed a Consolidated Amended Class Action Complaint on July 11, 2016. On August 25, 2016, the defendants filed a motion todismiss in response to the Consolidated Amended Class Action Complaint. This motion to dismiss was fully briefed on October 28, 2016. Lead plaintiff anddefendants have reached an agreement in principal to fully and finally settle all claims asserted in the Consolidated Amended Class Action Complaint. Thesettlement is immaterial to the Company's consolidated financial statements and is subject to, among other things, documentation and court approval. Thesettlement amount is expected to be fully covered under insurance. On or about November 2, 2015, a derivative lawsuit was filed by an Amicus shareholder purportedly on Amicus' behalf in the Superior Court of New Jersey,Middlesex County, Chancery Division, against the individuals who serve on the Amicus Board of Directors. Amicus itself was named as a nominal defendant. Thederivative lawsuit alleged claims for breach of state law fiduciary duties, waste of corporate assets, and unjust enrichment based on allegedly false and misleadingstatements made by Amicus related to the regulatory approval path for migalastat HCl. On February 19, 2016, the complaint was dismissed by the Court andplaintiffs have not refiled. On or about March 3, 2016, a derivative lawsuit was filed by an Amicus shareholder purportedly on Amicus' behalf in the Superior Court of New Jersey,Middlesex County, Chancery Division, against various officers and directors of the Company. Amicus itself is named as a nominal defendant. The derivativelawsuit alleges similar facts and circumstances as the three purported securities class action lawsuits described above and further alleges claims for breach of statelaw fiduciary duties, waste of-79-LocationApproximate Square FeetUseLease expiry dateCranbury, New Jersey90,000Office and laboratorySeptember 2025Durham, North Carolina5,603OfficeJune 2018Buckinghamshire, United Kingdom9,821OfficeSeptember 2020Munich, Germany4,316OfficeApril 2017Table of Contentscorporate assets, unjust enrichment, abuse of control, and gross mismanagement based on allegedly false and misleading statements made by Amicus related to theregulatory approval path for migalastat HCl. The plaintiff seeks, among other things, to require the Amicus Board to take certain actions to reform its corporategovernance procedures, including greater shareholder input and a provision to permit shareholders to nominate candidates for election to the Board, along withrestitution, costs of suit and attorney's fees. On February 7, 2017, the complaint was dismissed by the Court without prejudice. These lawsuits and any other related lawsuits are subject to inherent uncertainties and the actual cost will depend upon many unknown factors. The outcomeof the litigation is necessarily uncertain and we could be forced to expend significant resources in the defense of these suits, and we may not prevail.Item 4. MINE SAFETY DISCLOSURES. None.-80-Table of ContentsPART II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES. 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 publicmarket for our common stock. The following table sets forth the range of high and low closing sales prices of our common stock as quoted on the NASDAQGlobal Market for the periods indicated. The closing price for our common stock as reported by the NASDAQ Global Market on February 13, 2017 was $6.05 per share. As of February 10, 2017,there were 43 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 developmentefforts, the further development of our pharmacological chaperone technology and the expansion of our business. We do not intend to declare or pay cashdividends to our stockholders in the foreseeable future.Recent Sales of Unregistered Securities We did not sell any equity securities during the fiscal year ended December 31, 2016 in transactions that were not registered under the Securities Act, otherthan as previously disclosed in our Current Report on Form 8-K filed with the SEC on February 22, 2016, July 1, 2016, July 6, 2016 and December 21, 2016.Performance Graph The following performance graph compares the cumulative total return on our common stock during the last five fiscal years with the NASDAQ CompositeIndex (U.S.) and the NASDAQ Biotechnology Index during the same period. The graph shows the value at the end of each of the last five fiscal years, of $100invested in our common stock. Pursuant to applicable SEC rules, all values assume reinvestment of the full amount of all dividends, however no dividends havebeen 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 notmake or endorse any predictions as to future stockholder returns.-81- High Low 2016 First Quarter $9.21 $5.16 Second Quarter $8.69 $5.00 Third Quarter $7.94 $5.58 Fourth Quarter $9.35 $4.53 High Low 2015 First Quarter $12.46 $7.13 Second Quarter $14.34 $10.06 Third Quarter $18.23 $12.96 Fourth Quarter $13.75 $5.95 Table of Contents The stock price performance included in this graph is not necessarily indicative of future stock price performance.Issuer Purchases of Equity Securities On December 21, 2016, the Company issued $250 million aggregate principal amount of unsecured Convertible Senior Notes due 2023 (the "ConvertibleNotes"), which included the exercise in full of the $25 million over-allotment option granted to the initial purchasers of the Notes, in a private offering to qualifiedinstitutional buyers pursuant to Rule 144A under the Securities Act. Interest is payable semiannually on June 15 and December 15 of each year, beginning onJune 15, 2017. The Notes will mature on December 15, 2023, unless earlier repurchased, redeemed, or converted in accordance with their terms. The Notes areconvertible at the option of the holders, under certain circumstances and during certain periods, into cash, shares of the Company's common stock or a combinationthereof and may be settled as described below. The Convertible Notes are governed by an indenture dated December 21, 2016 (the "Indenture") by and between Amicus and Wilmington Trust, NationalAssociation, as trustee. Prior to the close of business on the business day immediately preceding September 15, 2023, the Notes are convertible at the option of the holders of theNotes only under certain conditions, as below:•On or after September 15, 2023, until the close of business on the second business day immediately preceding the maturity date, holders of theNotes may convert their Notes at their option at the conversion rate then in effect, irrespective of these conditions. •The Company will settle conversions of the Notes by paying or delivering, as the case may be, cash, shares of Common Stock, or a combination ofcash and shares of Common Stock, at the Company's election.-82-Table of Contents The conversion rate will initially be 163.3987 shares of Common Stock per $1,000 principal amount of Notes (equivalent to an initial conversion price ofapproximately $6.12 per share of Common Stock). The conversion rate is subject to customary adjustments upon the occurrence of certain events. The Companymay redeem for cash all or part of the Notes, at its option, on or after December 19, 2020, under certain circumstances at a redemption price equal to 100% of theprincipal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date (as defined in the Indenture). The net proceeds from the Note Offering were $243.1 million, after deducting fees and estimated expenses payable by the Company. The Company also usedapproximately $13.5 million of the net proceeds from the Note Offering to pay the cost of the capped call transactions the Company entered into in connection withthe Note Offering. For additional information, see "— Note 16. Debt Instruments and Related Party Transactions" in our Notes to Consolidated FinancialStatements. We did not repurchase any shares of our Common Stock during the year ended December 31, 2016. We have not announced any plans or programs for therepurchase of our Common Stock. However employees surrendered 136,563 shares to the Company, during the year ended December 31, 2016 at a weightedaverage price of $8.13 per share for the payment of the minimum tax liability withholding obligations upon the vesting of RSUs. We do not consider this a sharebuyback program.-83-Table of ContentsItem 6. SELECTED FINANCIAL DATA. Statement of Operations Data (in thousands except share and per share data)Balance Sheet Data (in thousands)-84- 2016 2015 2014 2013 2012 Revenue: Net product sales $4,958 $— $— $— $— Research revenue — — 1,224 363 11,591 Collaboration and milestone revenue — — — — 6,820 Total revenue 4,958 — 1,224 363 18,411 Cost of goods sold 833 — — — — Gross Profit 4,125 — 1,224 363 18,411 Operating expenses: Research and development 104,793 76,943 47,624 41,944 50,273 Selling, general and administrative 71,151 47,269 20,717 18,893 19,364 Changes in fair value of contingent consideration payable 6,760 4,377 100 — — Restructuring charges 69 15 (63) 1,988 — Depreciation and amortization 3,242 1,833 1,547 1,719 1,705 Total operating expenses 186,015 130,437 69,925 64,544 71,342 Loss from operations (181,890) (130,437) (68,701) (64,181) (52,931)Other income (expenses): Interest income 1,602 929 223 174 316 Interest expense (5,398) (1,578) (1,484) (46) (89)Change in fair value of warrant liability — — — 908 653 Loss on extinguishment of debt (13,302) (952) — — — Other (expense) income (4,793) (80) (77) — 21 Loss before tax benefit (203,781) (132,118) (70,039) (63,145) (52,030)Income tax benefit 3,739 — 1,113 3,512 3,245 Net loss $(200,042)$(132,118)$(68,926)$(59,633)$(48,785)Net loss per common share — basic and diluted $(1.49)$(1.20)$(0.93)$1.16 $1.07 Weighted-average common shares outstanding — basic and diluted 134,401,588 109,923,815 74,444,157 51,286,059 45,565,217 As of December 31, 2016 2015 2014 2013 2012 Cash and cash equivalents and marketable securities $330,351 $214,033 $169,139 $82,000 $99,122 Working capital 229,105 142,985 134,392 77,817 95,374 Total assets 1,036,845 908,384 209,967 127,563 110,088 Total liabilities 676,694 560,550 87,789 81,812 40,868 Accumulated deficit (779,608) (579,566) (447,448) (378,522) (318,889)Total stockholders' equity $360,151 $347,834 $122,178 $45,751 $69,220 Table of ContentsItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Overview We are a global patient-focused biotechnology company engaged in the discovery, development and commercialization of a diverse set of novel treatments forpatients living with devastating rare and orphan diseases. Our lead product, migalastat HCl is a small molecule that can be used as a monotherapy and incombination with enzyme replacement therapy ("ERT") for Fabry disease. Also in the pipeline, SD-101 is a product candidate in late-stage development, as a potential first-to-market therapy for the chronic, rare connective tissuedisorder Epidermolysis Bullosa ("EB"). We are also leveraging our Chaperone-Advanced Replacement Therapy ("CHART™") platform technologies to developnovel ERT products for Pompe disease, Fabry disease, and potentially other lysosomal storage disorders ("LSDs"). We are also investigating preclinical anddiscovery programs in other rare and devastating diseases including cyclin-dependent kinase-like 5 ("CDKL5") deficiency. We believe that our platformtechnologies and our product pipeline uniquely position us at the forefront of advanced therapies to treat a range of devastating rare and orphan diseases.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 accordancewith U.S. generally accepted accounting principles ("U.S. GAAP"). The preparation of these financial statements requires us to make estimates and assumptionsthat 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 thereported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those described in greaterdetail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results ofwhich form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results maydiffer from these estimates under different assumptions or conditions. We believe that the following discussion represents our critical accounting policies.Revenue Recognition We recognize revenue when amounts are realized or realizable and earned, which is typically upon shipment to the end customer. Revenue is consideredrealizable and earned when persuasive evidence an arrangement exists, title to product and associated risk of loss has passed to the customer, the price is fixed ordeterminable, collection of the amounts due are reasonably assured and the we have no further performance obligations.Net Product Sales Our net product sales consist solely of sales of Galafold for the treatment of Fabry disease in the EU. We have recorded revenue on sales where Galafold isavailable either on a commercial basis or through a reimbursed early access program. Orders for Galafold are generally received from pharmacies and the ultimatepayor is typically a government authority. We record revenue net of estimated third party discounts and rebates. Allowances are recorded as a reduction of revenue at the time revenues from productsales are recognized. These allowances are adjusted to reflect known changes in factors and may impact such allowances in the quarter those changes are known.-85-Table of ContentsCollaboration Revenue In multiple element arrangements, revenue is allocated to each separate unit of accounting and each deliverable in an arrangement is evaluated to determinewhether it represents separate units of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value and there is no general rightof return for the delivered elements. In instances when the aforementioned criteria are not met, the deliverable is combined with the undelivered elements and theallocation of the arrangement consideration and revenue recognition is determined for the combined unit as a single unit of accounting. Allocation of theconsideration is determined at arrangement inception on the basis of each unit's relative selling price. In instances where there is determined to be a single unit ofaccounting, the total consideration is applied as revenue for the single unit of accounting and is recognized over the period of inception through the date where thelast deliverable within the single unit of accounting is expected to be delivered. Our current revenue recognition policies provide that, when a collaboration arrangement contains multiple deliverables, such as license and research anddevelopment services, we allocate revenue to each separate unit of accounting based on a selling price hierarchy. The selling price hierarchy for a deliverable isbased on (i) its vendor specific objective evidence ("VSOE") if available, (ii) third party evidence ("TPE") if VSOE is not available, or (iii) best estimated sellingprice ("BESP") if neither VSOE nor TPE is available. We would establish the VSOE of selling price using the price charged for a deliverable when sold separately.The TPE of selling price would be established by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarlysituated customers. The BESP would be established considering internal factors such as an internal pricing analysis or an income approach using a discounted cashflow model. We also considers the impact of potential future payments it makes in its role as a vendor to its customers and evaluates if these potential future paymentscould be a reduction of revenue from that customer. If the potential future payments to the customer are:•a payment for an identifiable benefit; •the identifiable benefit is separable from the existing relationship between the Company and its customer; •the identifiable benefit can be obtained from a party other than the customer; and •the Company can reasonably estimate the fair value of the identifiable benefit then the payments are accounted for separate from the revenue received from that customer. If, however, all these criteria are not satisfied, then the paymentsare treated as a reduction of revenue from that customer. If we determines that any potential future payments to its customers are to be considered as a reduction of revenue, it must evaluate if the total amount ofrevenue to be received under the arrangement is fixed and determinable. If the total amount of revenue is not fixed and determinable due to the uncertain nature ofthe potential future payments to the customer, then any customer payments cannot be recognized as revenue until the total arrangement consideration becomesfixed and determinable. The reimbursements for research and development costs under collaboration agreements that meet the criteria for revenue recognition are included inResearch Revenue and the costs associated with these reimbursable amounts are included in research and development expenses. In order to determine the revenue recognition for contingent milestones, we evaluate the contingent milestones using the criteria as provided by the FinancialAccounting Standards Boards ("FASB") guidance on the milestone method of revenue recognition at the inception of a collaboration-86-Table of Contentsagreement. The criteria requires that (i) we determines if the milestone is commensurate with either its performance to achieve the milestone or the enhancement ofvalue resulting from our activities to achieve the milestone, (ii) the milestone be related to past performance, and (iii) the milestone be reasonable relative to alldeliverable and payment terms of the collaboration arrangement. If these criteria are met then the contingent milestones can be considered as substantivemilestones and will be recognized as revenue in the period that the milestone is achieved.Inventories and Cost of Goods Sold Until regulatory approval of Galafold, we expensed all manufacturing costs of Galafold as research and development expense. Upon regulatory approval, webegan capitalizing costs related to the purchase and manufacture of Galafold. Inventories are stated at the lower of cost or market determined by the first-in, first-out method. Inventories are reviewed periodically to identify slow-movingor obsolete inventory based on projected sales activity as well as product shelf-life. In evaluating the recoverability of inventories produced, the probability thatrevenue will be obtained from the future sale of the related inventory is considered and inventory value is written down for inventory quantities in excess ofexpected requirements. Expired inventory is disposed of and the related costs are recognized as cost of product sales in the consolidated statements of operations. Cost of goods sold includes the cost of inventory sold, manufacturing and supply chain costs, product shipping and handling costs, provisions for excess andobsolete inventory, as well as royalties payable. A portion of the inventory available for sale was expensed as research and development costs prior to regulatoryapproval and as such the cost of goods sold and related gross margins are not necessarily indicative of future cost of goods sold and gross margin.Research and Development Expenses We expect to continue to incur substantial research and development expenses as we continue to develop our product candidates and explore new uses for ourpharmacological chaperone technology. Research and development expense consists of:•internal costs associated with our research and clinical development 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 othersupplies. We have multiple research and development projects ongoing at any one time. We utilize our internal resources, employees, and infrastructure across multipleprojects. 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 significantinvestment in product development is a competitive necessity and plan to continue these investments in order to realize the potential of our product candidates.-87-Table of Contents The following table summarizes our principal product development programs, including the related stages of development for each product candidate indevelopment, and the out-of-pocket, third party expenses incurred with respect to each product candidate (in thousands): The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing, and costsof 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 theperiod, if any, in which material net cash inflows may commence from our product candidates, including migalastat or any of our other preclinical productcandidates. This uncertainty is due to the numerous risks and uncertainties associated with the conduct, duration, and cost of clinical trials, which vary significantlyover 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 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 todiscontinue, 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 respectto the development of a product candidate could mean a significant change in the costs and timing associated with the development, regulatory approval, andcommercialization of that product candidate. For example, if the FDA or-88- Years Ended December 31, 2016 2015 2014 Projects Third party direct project expenses Monotherapy Studies Migalastat (Fabry Disease — Phase 3) $14,055 $16,805 $13,567 SD-101 (EB-Epidermolysis Bullosa — Phase 3) 9,530 1,240 — Combination Studies ATB200 + AT2221 (Pompe Disease — Phase 2) 20,548 21,003 7,478 Fabry CHART (Fabry Disease — Preclinical) 435 2,001 1,050 Neurodegenerative Diseases (Preclinical) 6,504 11 280 Total third party direct project expenses 51,072 41,060 22,375 Other project costs (1) Personnel costs 36,624 25,659 18,366 Other costs (2) 17,097 10,224 6,883 Total other project costs 53,721 35,883 25,249 Total research and development costs $104,793 $76,943 $47,624 (1)Other project costs are leveraged across multiple projects. (2)Other costs include facility, supply, overhead, and licensing costs that support multiple projects.Table of Contentsother regulatory authorities were to require us to conduct clinical trials beyond those which we currently anticipate, or if we experience significant delays inenrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinicaldevelopment. 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 equity-based compensation expense, for persons serving inour executive, finance, accounting, legal, information technology, and human resource functions. Other general and administrative expense includes facility-relatedcosts not otherwise included in research, and development expense, promotional expenses, costs associated with industry and trade shows, and professional fees forlegal services, including patent-related expense and accounting services.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 ourdebt agreements.Stock Option Grants In accordance with the applicable guidance, we estimate the fair value of each equity award granted. We chose the "straight-line" attribution method forallocating compensation costs and recognized the fair value of each stock option on a straight-line basis over the vesting period of the related awards. We use the Black-Scholes option pricing model when estimating the grant date fair value for stock-based awards. Use of a valuation model requiresmanagement to make certain assumptions with respect to selected model inputs. Expected volatility was based on our historical volatility since our initial publicoffering in May 2007. We will continue to use a blended weighted average approach using our own historical volatility and other similar public entity volatilityinformation until our historical volatility is relevant to measure expected volatility for future option grants. The average expected life was determined using a"simplified" method of estimating the expected exercise term which is the mid-point between the vesting date and the end of the contractual term. As our stockprice volatility has been over 75% and we have experienced significant business transactions, we believe that we do not have sufficient reliable exercise data inorder to justify a change from the use of the "simplified" method of estimating the expected exercise term of employee stock option grants. The risk-free interestrate 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 onexpected turnover 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:-89- Years Ended December 31, 2016 2015 2014 Expected stock price volatility 81.3% 75.9% 81.3%Risk free interest rate 1.5% 1.7% 1.9%Expected life of options (years) 6.25 6.25 6.25 Expected annual dividend per share $0.00 $0.00 $0.00 Table of ContentsRestricted Stock Units ("RSUs") The RSUs awarded are generally subject to graded vesting and are contingent on an employee's continued service on such date. RSUs are generally subject toforfeiture if employment terminates prior to the release of vesting restrictions. We expense the cost of the RSUs, which is determined to be the fair market value ofthe shares of common stock underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse. On December 30, 2016, the Compensation Committee approved a form of Performance-Based Restricted Stock Unit Award Agreement (the "Performance-Based RSU Agreement"), to be used for performance-based RSUs granted to participants under the Amended and Restated Amicus Therapeutics, Inc. 2007 EquityIncentive Plan, including named executive officers. Awards under the form of Performance-Based RSU Agreement will vest based on the Company meetingspecified performance criteria. Vesting of the RSUs is generally subject to the participant's continuous service with the Company through a specified date. As ofDecember 31, 2016, there were no RSUs issued under the Performance-Based RSU Agreement.Warrants In October 2015, we entered into the October 2015 Purchase Agreement with Redmile, who beneficially owned approximately 6.7% of the Common Stock asof December 31, 2015, as set forth in the October 2015 Purchase Agreement, whereby we sold, on a private placement basis, (a) $50.0 million aggregate principalamount of its unsecured promissory notes and (b) 1.3 million warrants that have a term of five-years. The warrants are classified as equity and included instockholder's equity. The fair value of the warrants were initially measured at $8.8 million using the Black-Scholes valuation model. In accordance with applicableguidance, we allocated the proceeds received based on the relative fair value of the notes and warrants, which resulted in $10.6 million being recorded as a debtdiscount. On February 19, 2016, we entered into a Note and Warrant Purchase Agreement (the "February 2016 Purchase Agreement") with Redmile Capital fund, LPand certain funds and accounts managed or advised by it (collectively referred to as "Redmile") whereby we sold, on a private placement basis, (a) $50 millionaggregate principal amount of unsecured promissory notes and (b) five-year warrants to purchase up to 37 shares of our Common Stock for every $1,000 of theprincipal amount of notes purchased by each purchaser, for an aggregate of up to 1,850,000 shares of Common Stock issuable under the warrants. We agreed withRedmile that in full consideration of the purchase price for the notes issued under the October 2015 Purchase Agreement, Redmile surrendered for cancellation allnotes and warrants acquired from the October 2015 Purchase Agreement and we paid Redmile any unpaid interest accrued thereunder. On June 30, 2016, following the marketing approval for migalastat in Europe, we entered into a Joinder to and Amendment of Note and Warrant PurchaseAgreement (the "Amended Purchase Agreement") with Redmile. Such amendment joined GCM Grosvenor Special Opportunities Master Fund, Ltd ("GCM") tothe February 2016 Purchase Agreement. There were no changes to the previously issued debt. Pursuant to the Amended Purchase Agreement, we sold an additional$30 million unsecured promissory notes and five year warrants to purchase up to 42 shares of the our Common Stock for every $1,000 of the principal amount ofadditional Notes purchased, for an aggregate of up to 1,260,000 shares of Common Stock issuable under the additional warrants. On December 15, 2016, we entered into a Note Purchase Agreement ("Note Purchase Agreement") with GCM and RedMile, pursuant to which we agreed toprepay all outstanding principal and accrued and unpaid interest on the notes issued by the Company and held by GCM and Redmile. Such prepayment was madeon December 21, 2016, which resulted in a non-cash loss of $13.3 million and is included as loss on extinguishment in the Consolidated Statement of Operationsfor the year-90-Table of Contentsended December 31, 2016. The Note Purchase Agreement did not cancel the warrants under the Amended Purchase Agreement described above.Business Combinations We allocate the purchase price of acquired businesses to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fairvalues on the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions, especially at theacquisition date with respect to intangible assets and in-process research and development ("IPR&D"). In connection with the purchase price allocations foracquisitions, we estimate the fair value of contingent acquisition consideration payments utilizing a probability-based income approach inclusive of an estimateddiscount rate. Although we believe the assumptions and estimates made are reasonable, they are based in part on historical experience and information obtained from themanagement of the acquired businesses and are inherently uncertain. Examples of critical estimates in valuing any contingent acquisition consideration issued orwhich may be issued and the intangible assets we have acquired or may acquire in the future include but are not limited to:•the feasibility and timing of achievement of development, regulatory and commercial milestones; •expected costs to develop the in-process research and development into commercially viable products; and •future expected cash flows from product sales. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.Intangible Assets and Goodwill We record goodwill in a business combination when the total consideration exceeds the fair value of the net tangible and identifiable intangible assetsacquired. Purchased in-process research and development is accounted for as an indefinite lived intangible asset until the underlying project is completed, at whichpoint the intangible asset will be accounted for as a definite lived intangible asset, or abandoned, at which point the intangible asset will be written off or partiallyimpaired. Goodwill and indefinite lived intangible assets are assessed annually for impairment on October 1 and whenever events or circumstances indicate that thecarrying amount of an asset may not be recoverable. If it is determined that the full carrying amount of an asset is not recoverable, an impairment loss is recordedin the amount by which the carrying amount of the asset exceeds its fair value. No indicators of impairment were noted during the year ended December 31, 2016.Valuation of Contingent Consideration Payable Each period we reassess the fair value of the contingent acquisition consideration payable associated with certain acquisitions and record changes in the fairvalue as contingent consideration expense. Increases or decreases in the fair value of the contingent acquisition consideration payable can result from changes inestimated probability adjustments with respect to regulatory approval, changes in the assumed timing of when milestones are likely to be achieved and changes inassumed discount periods and rates. Significant judgment is employed in determining the appropriateness of these assumptions each period. Accordingly, futurebusiness and economic conditions, as well as changes in any of the assumptions described in the accounting for business combinations above can materially impactthe amount of contingent consideration expense that we record in any given period.-91-Table of ContentsAccrued Expenses When we are required to estimate accrued expenses because we have not yet been invoiced or otherwise notified of actual cost, we identify services that havebeen performed on our behalf and estimate the level of service performed and the associated cost incurred. The majority of our service providers invoice usmonthly 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 andcircumstances 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.Nonqualified Cash Deferral Plan The Cash Deferral Plan (the "Deferral Plan") provides certain key employees and other service providers as selected by the Compensation Committee, with anopportunity to defer the receipt of such Participant's base salary, bonus and director's fees, as applicable. The Deferral Plan is intended to be a nonqualifieddeferred compensation plan that complies with the provisions of Section 409A of the Internal Revenue Code (the "Code"). All of the investments held in the Deferral Plan are classified as investments trading securities and recorded at fair value with changes in the investments' fairvalue recognized as earnings in the period they occur. The corresponding liability for the Deferral Plan is included in other non-current liability in our consolidatedbalance sheets.Foreign Currency Transactions and Derivative Financial Instruments We transact business in various foreign countries and therefore we are subject to risk of foreign currency exchange rate fluctuations. As such, in June 2016,we entered into a forward contract to economically hedge transactional exposure associated with commitments arising from trade accounts payable denominated ina currency other than the functional currency of the respective operating entity. We did not designate this forward contract as a hedging instrument underapplicable accounting guidance and, therefore, the change in fair value is recorded in the other income/(expense) line in the Consolidated Statements of Operations,with the corresponding liability in other current liability on the Consolidated Balance Sheet. The forward contract will settle in June 2017. There were no outstanding forward contracts at December 31, 2015. For the year ended December 31, 2016, we recognized a loss of $0.3 million, related to the foreign currency forward contract not designated as hedginginstruments in other expense in the Consolidated Statements of Operations and the corresponding liability of $0.3 million is recorded as other current liability inthe Consolidated Balance Sheets.Results of OperationsYear Ended December 31, 2016 Compared to Year Ended December 31, 2015 Revenue. Net product sales were $5.0 million for the year ended December 31, 2016 due to marketing approval of Galafold granted in May 2016.-92-Table of Contents Cost of Goods Sold. Cost of goods sold includes manufacturing costs as well as royalties associated with sales of our product. Cost of goods sold as apercentage of net sales was 16.8% for the year ended December 31, 2016. Research and Development Expense. Research and development expense was $104.8 million in 2016, representing an increase of $27.9 million or 36.3%from $76.9 million in 2015. The increase in research and development costs was primarily due to increases in clinical research costs of $11.3 million, due to theadvancement and enrollment of clinical studies, primarily for EB program of $8.3 million. Also included in the research and development expenses was$6.5 million which represents a one-time expense associated with the acquisition of the CDKL5 asset. Other increases were in personnel costs of $11.0 million. Selling, General and Administrative Expense. Selling, general and administrative expense was $71.2 million in 2016, an increase of $23.9 million or 50.5%from $47.3 million in 2015. The increase in 2016 was primarily from efforts to support the international activities and commercial launch of Galafold in May 2016.The increases were seen in personnel costs of $16.2 million, legal and audit fees of $3.2 million and travel related expenses of $1.7 million. Changes in Fair Value of Contingent Consideration Payable. For the year ended December 31, 2016, we recorded expense of $6.8 million representing anincrease of $2.4 million from the $4.4 million of expense for the year ended December 31, 2015. The change in the fair value resulted from an increase in theScioderm contingent consideration of $8.5 million and a decrease to the Callidus contingent consideration of $6.1 million. The fair value is impacted by updates tothe estimated probability of achievement, assumed timing of milestones and adjustments to the discount periods and rates. Depreciation. Depreciation expense was $3.2 million in 2016, representing an increase of $1.4 million as compared to $1.8 million in 2015. Depreciationwas higher due to increased asset acquisitions, resulting in a higher depreciation base in 2016. Interest Income. Interest income was $1.6 million for the year ended December 31, 2016, representing an increase of $0.7 million from $0.9 million for theyear ended December 31, 2015. The increase in interest income was due to the overall higher average cash and investment balances as a result of our financingtransactions. Interest Expense. Interest expense was $5.4 million in 2016 as compared to $1.6 million in 2015. Interest expense was higher due to the $50 million notespayable borrowed in October 2015 and the related revised agreement in February 2016, as well as the $250 million convertible debt secured in December 2016. Loss from Extinguishment of Debt. We recognized a non-cash loss of $13.3 million for the year ended December 31, 2016 arising from the earlyextinguishment of the $80 million secured loan in the fourth quarter of 2016. For the year ended December 31, 2015, we recognized a loss of $1.0 million arisingfrom the early extinguishment of the $15 million secured loan in the first quarter of 2015. Other Expense. Other expense was $4.8 million for the year ended December 31, 2016 as compared to $0.1 million for the year ended December 31, 2015.The change was primarily from losses on foreign exchange transactions. Tax Benefit. For the year ended December 31, 2016, the Company recorded an income tax benefit of $3.7 million, primarily consisting of $1.2 million fromreduction in its valuation allowances to reflect the income tax associated with the gain on foreign currency translation, and $2.7 million in connection with thereduction in state tax rates in North Carolina.-93-Table of ContentsYear Ended December 31, 2015 Compared to Year Ended December 31, 2014 Revenue. We recognized reimbursements for research and development costs of $1.2 million under a collaborative agreement as Research Revenue in 2014.This collaboration agreement ended in September 2014, and no revenue was recognized for the year ended December 31, 2015. Research and Development Expense. Research and development expense was $76.9 million in 2015, representing an increase of $29.3 million or 61.6%from $47.6 million in 2014. The increase in research and development costs was primarily due to an increase in contract manufacturing and clinical research costs.Contract manufacturing increased by $11.9 million and clinical research by $7.0 million due to scale up of Pompe ERT manufacturing and the continual progressof our programs through the clinical development process. Other increases were in personnel costs of $7.4 million and external program support of $2.2 million. General and Administrative Expense. General and administrative expense was $47.3 million in 2015, an increase of $26.6 million or 128.5% from$20.7 million in 2014. The increase was primarily due to consulting and legal fees of $10.4 million, personnel costs of $7.5 million, and recruiting fees of$2.4 million. The consulting and legal fees included $3.1 million for Scioderm acquisition-related transaction costs. Also included within the $26.6 million increasewas $12.7 million related to pre-commercial organization costs. Changes in Fair Value of Contingent Consideration Payable. For the year ended December 31, 2015, we recorded expense of $4.4 million representing anincrease of $4.3 million from the $0.1 million of expense for the year ended December 31, 2014. The change in the fair value resulted from an increase in theCallidus contingent consideration of $5.6 million and a decrease to the Scioderm contingent consideration of $1.2 million. The fair value is impacted by updates tothe estimated probability of achievement, assumed timing of milestones and adjustments to the discount periods and rates. Depreciation. Depreciation was $1.8 million in 2015, representing an increase of $0.3 million or 20% as compared to $1.5 million in 2014. Depreciationwas higher due to increased asset acquisitions, resulting in a higher depreciation base, in 2015. Interest Income. Interest income was $0.9 million for the year ended December 31, 2015, representing an increase of $0.7 million from $0.2 million for theyear ended December 31, 2014. The increase in interest income was due to the overall higher average cash and investment balances as a result of our financingtransactions. Interest Expense. Interest expense was $1.6 million in 2015 as compared to $1.5 million in 2014. Interest expense was higher due to the $50 million notespayable secured in October 2015, partially offset by the early retirement of the $15 million secured loan in June 2015. Loss from Extinguishment of Debt: We recognized a non-cash loss of $1.0 million for the year ended December 31, 2015 arising from the earlyextinguishment of the $15 million secured loan in the first quarter of 2015. No such loss was recorded in the year ended December 31, 2014. Other Income/Expense. Other expense was $0.1 million for both 2015 and 2014. The charge primarily includes fair value changes to deferred compensationassets and fair value changes of the success fee payable related to the $15 million loan. The $15 million term loan was paid in full during the second quarter of2015. Tax Benefit. During 2014, we sold a portion of our New Jersey state net operating loss carry forwards and research and development credits, which resultedin the recognition of $1.1 million in income tax benefit for the year ended December 31, 2014. We did not consummate any such sales in 2015.-94-Table of ContentsLiquidity and Capital ResourcesSources of Liquidity As a result of our significant research and development expenditures as well as expenditures to build a commercial organization to support the launch ofGalafold, we have not been profitable and have generated operating losses since we were incorporated in 2002. We have historically funded our operationsprincipally through the issuance and sale of stock, collaborations, debt financings, grants and non-refundable license fees. On December 21, 2016, we issued $250 million aggregate principal amount of 3.00% unsecured Convertible Senior Notes due 2023 (the "ConvertibleNotes"), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Notes bear interest at a fixed rate of 3.00% peryear, payable semiannually on June 15 and December 15 of each year, beginning on June 15, 2017. The Notes will mature on December 15, 2023, unless earlierrepurchased, redeemed, or converted in accordance with their terms. The net proceeds from the Note Offering were $243.1 million, after deducting fees andestimated expenses payable by the Company. The Company also used approximately $13.5 million of the net proceeds from the Note Offering to pay the cost ofthe capped call transactions ("Capped Call Confirmations") that the Company entered into in connection with the Note Offering. Beginning in April 2016 and through July 2016, we sold 15.0 million shares of Common Stock under an at-the-market ("ATM") equity program with Cowenand Company, LLC ("Cowen") acting as sales agent. Cowen was compensated at a fixed commission rate up to 3.0%. The ATM sales agreement resulted in netproceeds of $97.1 million, after Cowen's commission of $2.7 million and other expenses of $0.2 million. We have completed all sales under the ATM equityprogram. In June 2015, the Company issued a total of 19.5 million shares through a public offering at a price of $13.25 per share, with net proceeds of $243.0 million. In November 2014, the Company sold a total of 15.9 million shares of our common stock, par value $0.01 per share, at a public offering price of $6.50 pershare. The net offering proceeds were approximately $97.2 million. In July 2014, the Company completed a $40 million ATM equity offering under which the Company sold shares of its common stock, par value $0.01 pershares with Cowen and Company LLC as sales agent. Under the ATM equity program the Company sold 14.3 million shares of common stock resulting in netproceeds of $38.6 million.Cash flows As of December 31, 2016, we had cash and cash equivalents and marketable securities of $330.4 million. We invest cash in excess of our immediaterequirements with regard to liquidity and capital preservation in a variety of interest-bearing instruments, including obligations of U.S. government agencies andmoney market accounts. Wherever possible, we seek to minimize the potential effects of concentration and degrees of risk. Although we maintain cash balanceswith financial institutions in excess of insured limits, we do not anticipate any losses with respect to such cash balances. For more details on the cash, cashequivalents and marketable securities, refer to "— Note 5. Cash, Money Market Funds and Marketable Securities," in our Notes to Consolidated FinancialStatements.Net Cash Used in Operating Activities Net cash used in operations for the year ended December 31, 2016 was $150.5 million due primarily to the net loss for the year ended December 31, 2016 of$200.0 million and was offset by-95-Table of Contentsincrease in accounts payable and accrued expenses of $7.1 million, mainly related to program expenses and support for the commercial launch of Galafold. Net cash used in operations for the year ended December 31, 2015 was $100.1 million due primarily to the net loss for the year ended December 31, 2015 of$132.1 million and the change in operating assets and liabilities of $14.3 million. The change in operating assets and liabilities was primarily due to an increase inaccounts payable and accrued expenses of $15.5 million, mainly related to program expenses and partially offset by decrease of $0.3 million in prepaid assets.Net Cash Used in Investing Activities Net cash used in investing activities for the year ended December 31, 2016 was $4.5 million. Our investing activities have consisted primarily of purchasesand sales and maturities of investments and capital expenditures. Net cash used in investing activities reflects $219.9 million for the purchase of marketablesecurities, $6.0 million for the acquisition of property and equipment, partially offset by $221.4 million for the sale and redemption of marketable securities. Net cash used in investing activities for the year ended December 31, 2015 was $145.3 million. Our investing activities have consisted primarily of purchasesand sales and maturities of investments and capital expenditures. Net cash used in investing activities reflects $289.6 million for the purchase of marketablesecurities, $141.1 million paid to the former Scioderm shareholders as part of the Scioderm acquisition, $4.8 million for the acquisition of property and equipment,partially offset by $290.1 million for the sale and redemption of marketable securities.Net Cash Provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2016 was $272.7 million. Net cash provided by financing activities reflects$97.1 million from issuance of common stock, $272.5 million from proceeds of financing arrangements, $3.0 million from exercise of stock options, partiallyoffset by $80.2 million from payments on the secured loans and payments on capital lease arrangements, $13.5 million for capped call fees related to securing debtand $1.3 million from vesting of RSUs. Net cash provided by financing activities for the year ended December 31, 2015 was $290.9 million. Net cash provided by financing activities reflects$243.0 million from issuance of common stock, $50.0 million from proceeds of financing arrangement with Redmile Group, $11.2 million from exercise of stockoptions and $4.0 million from exercise of warrants, partially offset by $15.3 million from paying the secured loan and $2.0 million from vesting of RSUs.Funding Requirements We expect to incur losses from operations for the foreseeable future primarily due to research and development expenses, including expenses related toconducting clinical trials. Our future capital requirements will depend on a number of factors, including:•the progress and results of our clinical trials of our drug candidates; •the cost of manufacturing drug supply for our clinical and preclinical studies, including the significant cost of new ERT cell line development andmanufacturing as well as the cost of manufacturing Pompe ERT; •the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our product candidates including thosetesting the use of pharmacological chaperones co-formulated and co-administered with ERT and for the treatment of LSDs;-96-Table of Contents•the future results of on-going or later clinical trials for SD-101, including our ability to obtain regulatory approvals and commercialize SD-101 andobtain market acceptance of SD-101; •the future results of on-going preclinical and later clinical trials for CDKL5, including our ability to obtain regulatory approvals and commercializeCDKL5 and obtain market acceptance for CDKL5; •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; •our ability to obtain reimbursement for migalastat HCI; •our ability to obtain market acceptance of migalastat HCl in the EU; •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; •our ability to successfully integrate our recent acquisitions of Scioderm and MiaMed and their products and technologies into our business,including the possibility that the expected benefits of the transactions will not be fully realized by us or may take longer to realize than expected;and •our ability to establish collaborations and obtain milestone, royalty or other payments from any such collaborators. While we generated revenue from product sales in the second half of 2016, in the absence of additional funding, we expect our continuing operating losses toresult in increases in our cash used in operations over the next several quarters and years. We may seek additional funding through public or private financings ofdebt or equity. We believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund the current operating plan into thesecond half of 2018.Financial Uncertainties Related to Potential Future PaymentsMilestone Payments / Royalties We acquired exclusive worldwide patent rights to develop and commercialize migalastat and other pharmacological chaperones for the prevention ortreatment of human diseases or clinical conditions by increasing the activity of wild-type and mutant enzymes pursuant to a license agreement with MSSM. Thisagreement expires upon expiration of the last of the licensed patent rights, which will be in 2018 in the U.S. and 2019 in Europe and Japan for monotherapy. If wedevelop a product for combination therapy of specific pharmacological chaperone such as migalastat plus an ERT for certain Lysosomal Storage Disorders such asFabry disease and a patent issues from the pending MSSM applications covering such a combination therapy(ies), expiration for the combination product(s) will be2024. Under this agreement, to date we have paid no upfront or annual license fees and have no milestone or future payments other than royalties on net sales. 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 toreduce 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-97-Table of Contentscan vary under each agreement. For migalastat in 2016, we incurred $0.1 million of royalty expense under the agreement with MSSM. In November 2013, we entered into the Revised Agreement with GlaxoSmithKline ("GSK"), pursuant to which we have obtained global rights to develop andcommercialize migalastat as a monotherapy and in combination with ERT for Fabry disease. The Revised Agreement amends and replaces in its entirety the earlieragreement entered into between us and GSK in July 2012. Under the terms of the Revised Agreement, there was no upfront payment from us to GSK. Formigalastat monotherapy, GSK is eligible to receive post-approval and sales-based milestones up to $40 million, as well as tiered royalties in the mid-teens in eightmajor markets outside the U.S. In addition, because we reacquired worldwide rights to migalastat, we are no longer eligible to receive any milestones or royaltieswe would have been eligible to receive under the Original Collaboration Agreement. We will pay royalties to MSSM in addition to those owed to GSK. In thesecond half of 2016, we recognized approximately $0.5 million of royalty expense under the agreement with GSK. As part of the merger agreement with Scioderm, we have agreed to pay up to an additional $361 million to Scioderm stockholders, option holders, and warrantholders upon achievement of certain clinical and regulatory milestones, and $257 million to Scioderm stockholders, option holders, and warrant holders uponachievement of certain sales milestones. If SD-101 is approved, EB qualifies as a rare pediatric disease and we will request a Priority Review Voucher. If thePriority Review Voucher is obtained and subsequently sold, we will pay Scioderm stockholders, option holders and warrant holders the lesser of $100 million inthe aggregate or 50% of the proceeds of such sale. In April 2016, while the total clinical and regulatory approval milestone payments remain unchanged at$361 million, the allocation between the clinical and regulatory approval milestone payments were revised as follows: clinical milestones of up to $81 million andregulatory approval milestones of up to $280 million. The commercial milestone payments of up to $257 million remained unchanged. During the second quarterof 2016, we reached the first event based milestone for Scioderm, which was the 50% enrollment of patients in the Phase 3 study. The milestone payment for thisevent was $5.0 million which was paid in cash during the second quarter of 2016. As part of the acquisition of Callidus, we will be obligated to make additional payments to the former stockholders of Callidus upon the achievement by theCompany of certain clinical milestones of up to $35 million and regulatory approval milestones of up to $105 million as set forth in the merger agreement,provided that the aggregate consideration shall not exceed $130 million. We may, at our election, satisfy certain milestone payments identified in the mergeragreement aggregating $40 million in shares of our Common Stock (calculated based on a price per share equal to the average of the last closing bid price per sharefor the Common Stock on The NASDAQ Global Select Market for the ten trading days immediately preceding the date of payment). The milestone payments notpermitted to be satisfied in Common Stock (as well as any payments that the we are permitted to, but choose not to, satisfy in Common Stock), as a result of theterms of the merger agreement, the rules of The NASDAQ Global Select Market, or otherwise, will be paid in cash. During the second quarter of 2016, we reachedthe first clinical milestone for Callidus, which was the dosing of the first patient in a Phase 1 or 2 study. The milestone payment for this event was $6.0 millionwhich was paid in the Company's stock during the second quarter of 2016. As part of the acquisition of MiaMed, we will be obligated to make additional payments to the former stockholders of MiaMed upon the achievement by theCompany of certain clinical milestones of up to $8 million, regulatory approval milestones of up to $10 million, and commercial milestones up to $65 million. Anymilestone payment may be satisfied in cash, shares of Common Stock, or a combination of both. The milestone payments not permitted to be satisfied in CommonStock (as well as any payments that the we are permitted to, but choose not to, satisfy in Common Stock), as a result of the terms of the merger agreement, therules of The NASDAQ Global Select Market, or otherwise,-98-Table of Contentswill be paid in cash. No milestone payments in connection with the acquisition of MiaMed have been paid.Contractual Obligations The following table summarizes our significant contractual obligations and commercial commitments at December 31, 2016 and the effects such obligationsare expected to have on our liquidity and cash flows in future periods (in thousands). 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 availableon acceptable terms, if at all.Off-Balance Sheet Arrangements We had no off-balance sheet arrangements as of December 31, 2016 and 2015.-99- Total Less than 1 year 1-3 years 3-5 years Over 5 years Operating lease obligations (2) $20,456 $2,666 $4,904 $4,462 $8,424 Capital lease obligations, including interest (3) 844 355 489 — — Debt obligations, including interest (4) 302,396 7,083 15,000 15,000 265,313 Total fixed contractual obligations (1) $323,696 $10,104 $20,393 $19,462 $273,737 (1)This table does not include (a) any milestone payments which may become payable to third parties under license agreements as the timingand likelihood of such payments are not known, (b) any royalty payments to third parties as the amounts of such payments, timing and/orthe likelihood of such payments are not known, (c) amounts, if any, that may be committed in the future to construct additional facilities,(d) agreements with clinical research organizations and other outside contractors who are partially responsible for conducting andmonitoring our clinical trials for our drug candidates including migalastat. These contractual obligations are not reflected in the table abovebecause we may terminate them without penalty, and (e) contracts that are entered into in the ordinary course of business which are notmaterial in the aggregate in any period presented above. (2)Represents the future payments on operating leases for the United States and international locations. For more details, refer to "— Note 12.Leases," in our Notes to Consolidated Financial Statements. (3)Represents the future payments of principal and interest to be made on our capital leases. These financing arrangements of $0.9 millionhave interest of approximately 0.2-5.7%, and lease terms of 36-48 months. For more details, refer to "— Note 12. Leases," in our Notes toConsolidated Financial Statements. (4)Represents the future payments of principal and interest to be made on our $250 million 3% unsecured Convertible Senior Notes due 2023(the "Convertible Notes"). The Convertible Notes bear interest at a fixed rate of 3.00% per year, payable semiannually on June 15 andDecember 15 of each year, beginning on June 15, 2017 and will mature on December 15, 2023. For more details, refer to "— Note 16.Debt Instruments and Related Party Transactions," in our Notes to Consolidated Financial Statements.Table of ContentsRecent Accounting Pronouncements Please refer to "— Note 2. Summary of Significant Accounting Policies," in our Notes to Consolidated Financial Statements.Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Market risk is the risk of change in fair value of a financial instrument due to changes in interest rates, equity prices, creditworthiness, financing, exchangerates or other factors. Our primary market risk exposure relates to changes in interest rates in our cash, cash equivalents and marketable securities. We place ourinvestments in high-quality financial instruments, primarily money market funds, corporate debt securities, asset backed securities and U.S. government agencynotes with maturities of less than one year, which we believe are subject to limited interest rate and credit risk. The securities in our investment portfolio are notleveraged, are classified as available-for-sale and, due to the short-term nature, are subject to minimal interest rate risk. We currently do not hedge interest rateexposure and consistent with our investment policy, we do not use derivative financial instruments in our investment portfolio. At December 31, 2016, we held$330.4 million in cash, cash equivalents and available for sale securities and due to the short-term maturities of our investments, we do not believe that a 10%change in average interest rates would have a significant impact on our interest income. At December 31, 2016, our cash, cash equivalents and available for salesecurities were all due on demand or within one year. Our outstanding debt has a fixed interest rate and therefore, we have no exposure to interest rate fluctuations. We have operated primarily in the U.S. with international operations increasing since the last quarter of 2015. We do conduct some clinical activities withvendors outside the U.S. While most expenses are paid in U.S. dollars, we now have increased transactions of expenses and cash flows in foreign currencies thatare exposed to changes in foreign currency rates. Foreign currency forward contracts used to offset these exposures are not designated as hedges.-100-Table of ContentsItem 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Management's Report on Consolidated Financial Statements and Internal Control over Financial Reporting The management of Amicus Therapeutics, Inc. has prepared, and is responsible for the Company's consolidated financial statements and related footnotes.These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"). We are responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined inRule 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 Company's principalexecutive and principal financial officers and effected by the Company's board of directors, management, and other personnel, to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes thosepolicies 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 AmicusTherapeutics, Inc.; •provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of Amicus therapeutics, Inc. are being made only in accordance withauthorizations 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 AmicusTherapeutics, 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 ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate. We assessed the effectiveness of our internal control over financial reporting as of December 31, 2016. In making this assessment, we used the criteria setforth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) ("COSO") in Internal Control—Integrated Framework.Based on our assessment we believe that, as of December 31, 2016, our internal control over financial reporting is effective based on those criteria. The effectiveness of the Company's internal control over financial reporting as of December 31, 2016 has been audited by Ernst & Young LLP, anindependent registered public accounting firm, as stated in their report. This report appears on the following page.Dated March 1, 2017-101-/s/ JOHN F. CROWLEY Chairman and Chief Executive Officer /s/ WILLIAM D. BAIRD III Chief Financial OfficerTable of ContentsReport of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of Amicus Therapeutics, Inc. We have audited Amicus Therapeutics, Inc.'s internal control over financial reporting as of December 31, 2016, based on criteria established in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)(the "COSO criteria").Amicus Therapeutics, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of theeffectiveness of internal control over financial reporting included in the accompanying report on consolidated financial statements and internal control overfinancial reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessaryin the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control overfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company's assets 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 ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate. In our opinion, Amicus Therapeutics, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016,based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsof Amicus Therapeutics, Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive loss, changes instockholders' equity and cash flows for each of the three years in the period ended December 31, 2016 of Amicus Therapeutics, Inc., and our report dated March 1,2017 expressed an unqualified opinion thereon.Iselin, New Jersey March 1, 2017-102- /s/ Ernst & Young LLPTable of ContentsReport 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. as of December 31, 2016 and 2015, and the related consolidatedstatements of operations, comprehensive loss, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 2016.These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based onour audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of AmicusTherapeutics, Inc. at December 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period endedDecember 31, 2016 in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Amicus Therapeutics, Inc.'sinternal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control—Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2017 expressed an unqualified opinionthereon.Iselin, New Jersey March 1, 2017-103- /s/ Ernst & Young LLPTable of ContentsAmicus Therapeutics, Inc. Consolidated Balance Sheets (in thousands, except share and per share amounts) See accompanying notes to consolidated financial statements-104- December 31, 2016 2015 Assets Current assets: Cash and cash equivalents $187,026 $69,485 Investments in marketable securities 143,325 144,548 Accounts receivable 1,304 — Inventories 3,416 — Prepaid expenses and other current assets 4,993 2,568 Total current assets 340,064 216,601 Property and equipment, less accumulated depreciation of $12,495 and $13,353 at December 31,2016 and 2015, respectively 9,816 6,178 In-process research & development 486,700 486,700 Goodwill 197,797 197,797 Other non-current assets 2,468 1,108 Total Assets $1,036,845 $908,384 Liabilities and Stockholders' Equity Current liabilities: Accounts payable, accrued expenses, and other current liabilities $41,008 $32,216 Deferred reimbursements, current portion 13,850 — Contingent consideration payable, current portion 56,101 41,400 Total current liabilities 110,959 73,616 Deferred reimbursements 21,906 35,756 Convertible notes 154,464 — Due to related party — 41,601 Contingent consideration payable 213,621 232,677 Deferred income taxes 173,771 176,219 Other non-current liability 1,973 681 Commitments and contingencies Stockholders' equity: Common stock, $.01 par value, 250,000,000 shares authorized, 142,691,986 shares issued andoutstanding at December 31, 2016 Common stock, $.01 par value, 250,000,000 sharesauthorized, 125,027,034 shares issued and outstanding at December 31, 2015, 1,480 1,306 Additional paid-in capital 1,120,156 917,454 Accumulated other comprehensive loss: Foreign currency translation adjustment, less tax benefit of $1,293 at December 31, 2016 1,945 — Unrealized gain/ (loss) on available-for securities 102 (115)Warrants 16,076 8,755 Accumulated deficit (779,608) (579,566)Total stockholders' equity 360,151 347,834 Total Liabilities and Stockholders' Equity $1,036,845 $908,384 Table of ContentsAmicus Therapeutics, Inc. Consolidated Statements of Operations (in thousands, except share and per share amounts) See accompanying notes to consolidated financial statements-105- Years Ended December 31, 2016 2015 2014 Revenue: Net Product Sales $4,958 $— $— Research revenue — — 1,224 Total revenue 4,958 — 1,224 Cost of goods sold 833 — Gross Profit 4,125 — 1,224 Operating Expenses: Research and development 104,793 76,943 47,624 Selling, general and administrative 71,151 47,269 20,717 Changes in fair value of contingent consideration payable 6,760 4,377 100 Restructuring charges 69 15 (63)Depreciation 3,242 1,833 1,547 Total operating expenses 186,015 130,437 69,925 Loss from operations (181,890) (130,437) (68,701)Other income (expenses): Interest income 1,602 929 223 Interest expense (5,398) (1,578) (1,484)Loss on extinguishment of debt (13,302) (952) — Other expense (4,793) (80) (77)Loss before income tax benefit (203,781) (132,118) (70,039)Income tax benefit 3,739 — 1,113 Net loss attributable to common stockholders $(200,042)$(132,118)$(68,926)Net loss attributable to common stockholders per common share — basicand diluted $(1.49)$(1.20)$(0.93)Weighted-average common shares outstanding — basic and diluted 134,401,588 109,923,815 74,444,157 Table of ContentsAmicus Therapeutics, Inc. Consolidated Statements of Comprehensive Loss (in thousands, except share and per share amounts) -106- Years Ended December 31, 2016 2015 2014 Net loss $(200,042)$(132,118)$(68,926)Other comprehensive gain/ (loss): Foreign currency translation adjustment, net of tax of $1,293 1,945 — — Unrealized gain/ (loss) on available-for-sale securities 217 17 (133)Other comprehensive income/ (loss) 2,162 17 (133)Comprehensive loss $(197,880)$(132,101)$(69,059)Table of ContentsAmicus Therapeutics, Inc. Consolidated Statements of Changes in Stockholders' Equity (in thousands, except share amounts) -107- Common Stock Additional Paid-In Capital Other Comprehensive Gain/(Loss) Accumulated Deficit Total Stockholders' Equity Shares Amount Warrants Balance at December 31, 2013 61,975,416 $679 $423,593 $— $1 $(378,522)$45,751 Stock issued from exercise of stockoptions, net 965,544 10 3,663 — — — 3,673 Stock issued for Callidus acquisition 2,359,593 24 (24) — — — — Stock issued from public offering 15,927,500 159 97,010 — — — 97,169 Stock issued from ATM transactions 14,328,224 143 38,493 — — — 38,636 Stock-based compensation — — 6,008 — — — 6,008 Unrealized holding loss on available-for-sale securities — — — — (133) — (133)Net loss — — — — — (68,926) (68,926)Balance at December 31, 2014 95,556,277 $1,015 $568,743 $— $(132)$(447,448)$122,178 Stock issued from exercise of stockoptions, net 2,070,300 21 11,165 — — — 11,186 Stock issued for Scioderm acquisition 5,921,771 59 82,787 — — — 82,846 Stock issued for Callidus acquisition 25,762 — — — — — — Stock issued from financing 19,528,302 195 242,847 — — — 243,042 Stock issued from exercise of warrants 1,600,000 16 3,984 — — — 4,000 Restricted stock vesting 324,622 — (2,044) — — — (2,044)Warrants issued in debt financing — — — 8,755 — — 8,755 Stock-based compensation — — 9,972 — — — 9,972 Unrealized holding loss on available-for-sale securities — — — — 17 — 17 Net loss — — — — — (132,118) (132,118)Balance at December 31, 2015 125,027,034 $1,306 $917,454 $8,755 $(115)$(579,566)$347,834 Stock issued from exercise of stockoptions, net 723,102 7 3,029 — — — 3,036 Stock issued from ATM transactions 14,989,027 150 96,918 — — — 97,068 Stock issued for MiaMed acquisition 825,603 8 4,599 — — — 4,607 Restricted stock tax vesting 268,425 — (1,282) — — — (1,282)Stock issued for contingentconsideration 858,795 9 6,106 — — — 6,115 Receivable from investor — — 932 — — — 932 Warrants issued in debt financing — — — 7,321 — — 7,321 Equity component of the ConvertibleNotes issuance, net of issuance costsof $2,709 — — 88,346 — — — 88,346 Premium paid for Capped CallConfirmations (13,450) — (13,450)Stock-based compensation — — 17,504 — — — 17,504 Unrealized holding gain on available-for-sale securities — — — — 217 — 217 Foreign currency translationadjustment — — — — 1,945 — 1,945 Net loss — — — — — (200,042) (200,042)Balance at December 31, 2016 142,691,986 $1,480 $1,120,156 $16,076 $2,047 $(779,608)$360,151 Table of ContentsAmicus Therapeutics, Inc. Consolidated Statements of Cash Flows (in thousands) -108- Years Ended December 31, 2016 2015 2014 Operating activities Net loss $(200,042)$(132,118)$(68,926)Adjustments to reconcile net loss to net cash used in operating activities: Non-cash interest expense 2,689 492 277 Depreciation 3,242 1,833 1,547 Stock-based compensation 17,504 9,972 6,008 Restructuring charges 69 15 (63)Change in fair value of derivative liability 265 — — Non-cash changes in the fair value of contingent consideration payable 6,760 4,377 100 Charges to research expense for stock issued in asset acquisition 4,607 — — Loss on extinguishment of debt 13,302 952 — Foreign currency remeasurement loss 3,660 — — Non-cash income tax benefit (1,293) — — Non-cash deferred taxes (2,449) — — Loss on disposal of assets 17 — — Changes in operating assets and liabilities: Accounts receivable (1,419) Inventories (3,651) Receivable due from collaboration agreements — — 1,083 Prepaid expenses and other current assets (394) 308 2,293 Other non-current assets (1,357) (666) 26 Account payable and accrued expenses 7,131 15,467 6,169 Non-current liabilities 825 93 (126)Deferred reimbursements — (864) (57)Net cash used in operating activities (150,534) (100,139) (51,669)Investing activities Sale and redemption of marketable securities 221,374 290,129 55,914 Purchases of marketable securities (219,932) (289,595) (162,752)Acquisitions, net of cash acquired — (141,060) — Purchases of property and equipment (5,951) (4,817) (238)Net cash used in investing activities (4,509) (145,343) (107,076)Financing activities Proceeds from issuance of common stock and warrants, net of issuance costs 97,068 243,042 135,805 Payments of secured loan agreement (80,000) (15,291) (299)Payment of capital leases (193) — — Purchase of vested restricted stock units (1,282) (2,044) — Proceeds from exercise of stock options 3,036 11,186 3,673 Proceeds from exercise of warrants — 4,000 — Payment of contingent consideration (5,000) — — Proceeds from issuance of convertible senior notes, net of issuance costs 242,536 — — Premiums paid for Capped Call Confirmations (13,450) — — Proceeds from secured loan agreement 30,000 50,000 — Net cash provided by financing activities 272,715 290,893 139,179 Effect of exchange rate changes on cash and cash equivalents (131) — — Net increase/(decrease) in cash and cash equivalents 117,541 45,411 (19,566)Cash and cash equivalents at beginning of year/period 69,485 24,074 43,640 Cash and cash equivalents at end of year/period $187,026 $69,485 $24,074 Supplemental disclosures of cash flow information Cash paid during the period for interest $2,990 $605 $1,186 Contingent consideration paid in shares $6,115 — — Capital expenditures funded by capital lease borrowings $944 — — Table of ContentsAmicus Therapeutics, Inc. Notes To Consolidated Financial Statements 1. Description of BusinessCorporate Information, Status of Operations, and Management Plans Amicus Therapeutics, Inc. (the "Company") is a global patient-focused biotechnology company engaged in the discovery, development, andcommercialization of a diverse set of novel treatments for patients living with devastating rare and orphan diseases. The lead product, migalastat HCl is a smallmolecule that can be used as a monotherapy and in combination with enzyme replacement of therapy ("ERT") for Fabry disease. The Company's Fabry franchise strategy is to develop migalastat HCl (which the Company may refer to as "migalastat") for all patients with Fabry disease asa monotherapy for patients with amenable mutations and in combination with ERT for all other patients. In May 2016, the Company announced that the EuropeanCommission ("EC") had granted full approval for the oral small molecule pharmacological chaperone Galafold™ (migalastat) as a first-line therapy for long-termtreatment of adults and adolescents aged 16 years and older with a confirmed diagnosis of Fabry disease (alpha-galactosidase A deficiency) and who have anamenable mutation. The approved label includes 313 Fabry-causing mutations, which represent up to half of all patients with Fabry disease. The Companycommenced commercial shipments of Galafold in the EU in the second quarter of 2016 and recognized net product sales of $5.0 million in 2016. Also in the pipeline, SD-101 is a product candidate in late-stage development, as a potential first-to-market therapy for the chronic, rare connective tissuedisorder Epidermolysis Bullosa ("EB"). The Company is also leveraging its biologics and Chaperone-Advanced Replacement Therapy ("CHART™") platformtechnologies to develop novel ERT products for Pompe disease, Fabry disease, and potentially other lysosomal storage disorders ("LSDs"). The Company is alsoinvestigating preclinical and discovery programs in other rare and devastating diseases including cyclin-dependent kinase-like 5 ("CDKL5") deficiency. TheCompany believes that the platform technologies and advanced product pipeline uniquely position the Company at the forefront of advanced therapies to treat arange of devastating rare and orphan diseases. On December 21, 2016, the Company issued $250 million aggregate principal amount of 3.00% unsecured Convertible Senior Notes due 2023 (the"Convertible Notes"), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "SecuritiesAct"). Interest is payable semiannually on June 15 and December 15 of each year, beginning on June 15, 2017. The Notes will mature on December 15, 2023,unless earlier repurchased, redeemed, or converted in accordance with their terms. The Notes are convertible at the option of the holders, under certaincircumstances and during certain periods, into cash, shares of the Company's common stock, par value $0.01 per share ("Common Stock"), or a combinationthereof. The net proceeds from the issuance of the Convertible Note offering were $243.1 million, after deducting fees and estimated expenses payable by theCompany. In addition, the Company used approximately $13.5 million of the net proceeds from the issuance of the Convertible Notes to pay the cost of the cappedcall transactions ("Capped Call Confirmations") that the Company entered into in connection with the issuance of the Convertible Notes. For additionalinformation, see "— Note 16. Debt Instruments and Related Party Transactions." In July 2016, the Company expanded its biologics pipeline with a new preclinical program for CDKL5 deficiency, a rare and devastating genetic neurologicaldisease for which there is no currently approved treatment. The Company has obtained the rights and related intellectual property to a preclinical CDKL5 programthrough its acquisition of MiaMed, Inc ("MiaMed"). The aggregate value-109-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)of the deal was approximately $89.5 million, which included an upfront payment of $6.5 million and Company stock, cash and potential milestones of up to$83.0 million. For additional information, see "— Note 3. Acquisitions". Beginning in April 2016 and through July 2016, the Company sold 15.0 million shares of Common Stock under an at-the-market ("ATM") equity programwith Cowen and Company, LLC ("Cowen") acting as sales agent. Cowen was compensated at a fixed commission rate up to 3.0%. The ATM sales agreementresulted in net proceeds of $97.1 million, after Cowen's commission of $2.7 million and other expenses of $0.2 million. The Company has completed all salesunder the ATM equity program. The Company had an accumulated deficit of approximately $779.6 million at December 31, 2016 and anticipates incurring losses through the fiscal yearending December 31, 2017 and beyond. The Company has been able to fund its operating losses to date through stock offering, debt issuances, and payments frompartners during the terms of the collaboration agreements and other financing arrangements. The Company believes that its existing cash and cash equivalents and short-term investments will be sufficient to fund the current operating plan into thesecond half of 2018.2. Summary of Significant Accounting PoliciesBasis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP")and include all adjustments necessary for the fair presentation of the Company's financial position for the periods presented.Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions are eliminated inconsolidation.Foreign Currency Transactions The functional currency for most of the Company's foreign subsidiaries is their local currency. For non-U.S. subsidiaries that transact in a functional currencyother than the U.S. dollar, assets and liabilities are translated at current rates of exchange at the balance sheet date. Income and expense items are translated at theaverage foreign exchange rates for the period. Adjustments resulting from the translation of the financial statements of the Company's foreign operations into U.S.dollars are excluded from the determination of net income and are recorded in accumulated other comprehensive income, a separate component of equity. The Company transacts business in various foreign countries and therefore, is subject to risk of foreign currency exchange rate fluctuations. As such, in June2016, the Company entered into a forward contract to economically hedge transactional exposure associated with commitments arising from trade accountspayable denominated in a currency other than the functional currency of the respective operating entity. The Company does not designate this forward contract as ahedging instrument under applicable accounting guidance and, therefore, changes in fair value are recorded as other expense the Consolidated Statements ofOperations.-110-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues andexpenses during the reporting periods. Actual results could differ from those estimates.Cash, Money Market Funds, and Marketable Securities The Company considers all highly liquid investments purchased with a maturity of three months or less at the date of acquisition, to be cash equivalents. Marketable securities consist of fixed income investments with a maturity of greater than three months and other highly liquid investments that can be readilypurchased or sold using established markets. These investments are classified as available-for-sale and are reported at fair value on the Company's balance sheet.Unrealized holding gains and losses are reported within comprehensive income/ (loss) in the statements of comprehensive loss. Fair value is based on availablemarket information including quoted market prices, broker or dealer quotations or other observable inputs. See "— Note 5. Cash, Money Market Funds andMarketable Securities", for a summary of available-for-sale securities as of December 31, 2016 and 2015.Concentration of Credit Risk The Company's 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 marketablesecurities in high-quality commercial financial instruments. The Company has not recognized any losses from credit risks on such accounts during any of theperiods presented. The Company believes it is not exposed to significant credit risk on cash and cash equivalents or its marketable securities. The Company is subject to credit risk from its accounts receivable related to its product sales of Galafold. The majority of the Company's accounts receivableat December 31, 2016 have arisen from product sales in Germany. The Company will periodically assess the financial strength of its customers to establishallowances for anticipated losses, if any. For accounts receivable that have arisen from named patient sales, the payment terms are predetermined and the Companyevaluates the creditworthiness of each customer on a regular basis. To date, the Company has not incurred any credit losses.Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is calculated over the estimated useful lives of therespective 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. 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 andlocation for its intended use. Expenditures incurred after the fixed assets have been put into operation, such as repairs and maintenance, are charged to income inthe period in which the costs are incurred. Major replacements, improvements and additions are capitalized in accordance with Company policy.-111-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)Revenue Recognition The Company recognizes revenue when amounts are realized or realizable and earned, which is typically upon shipment to the end-customer. Revenue isconsidered realizable and earned when persuasive evidence an arrangement exists, title to product and associated risk of loss has passed to the customer, the priceis fixed or determinable, collection of the amounts due are reasonably assured and the Company has no further performance obligations.Net Product Sales The Company's net product sales consist solely of sales of Galafold for the treatment of Fabry disease in the EU. The Company has recorded revenue on saleswhere Galafold is available either on a commercial basis or through a reimbursed early access program. Orders for Galafold are generally received frompharmacies and the ultimate payor is typically a government authority. The Company records revenue net of estimated third party discounts and rebates. Allowances are recorded as a reduction of revenue at the time revenues fromproduct sales are recognized. These allowances are adjusted to reflect known changes in factors and may impact such allowances in the quarter those changes areknown.Collaboration Revenue In multiple element arrangements, revenue is allocated to each separate unit of accounting and each deliverable in an arrangement is evaluated to determinewhether it represents separate units of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value and there is no general rightof return for the delivered elements. In instances when the aforementioned criteria are not met, the deliverable is combined with the undelivered elements and theallocation of the arrangement consideration and revenue recognition is determined for the combined unit as a single unit of accounting. Allocation of theconsideration is determined at arrangement inception on the basis of each unit's relative selling price. In instances where there is determined to be a single unit ofaccounting, the total consideration is applied as revenue for the single unit of accounting and is recognized over the period of inception through the date where thelast deliverable within the single unit of accounting is expected to be delivered. The Company's current revenue recognition policies provide that, when a collaboration arrangement contains multiple deliverables, such as license andresearch and development services, the Company allocates revenue to each separate unit of accounting based on a selling price hierarchy. The selling pricehierarchy for a deliverable is based on (i) its vendor specific objective evidence ("VSOE") if available, (ii) third party evidence ("TPE") if VSOE is not available,or (iii) best estimated selling price ("BESP") if neither VSOE nor TPE is available. The Company would establish the VSOE of selling price using the pricecharged for a deliverable when sold separately. The TPE of selling price would be established by evaluating largely similar and interchangeable competitorproducts or services in standalone sales to similarly situated customers. The BESP would be established considering internal factors such as an internal pricinganalysis or an income approach using a discounted cash flow model. The Company also considers the impact of potential future payments it makes in its role as a vendor to its customers and evaluates if these potential futurepayments could be a reduction of revenue from that customer. If the potential future payments to the customer are:•a payment for an identifiable benefit; •the identifiable benefit is separable from the existing relationship between the Company and its customer;-112-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)•the identifiable benefit can be obtained from a party other than the customer; and •the Company can reasonably estimate the fair value of the identifiable benefit then the payments are accounted for separate from the revenue received from that customer. If, however, all these criteria are not satisfied, then the paymentsare treated as a reduction of revenue from that customer. If the Company determines that any potential future payments to its customers are to be considered as a reduction of revenue, it must evaluate if the totalamount of revenue to be received under the arrangement is fixed and determinable. If the total amount of revenue is not fixed and determinable due to the uncertainnature of the potential future payments to the customer, then any customer payments cannot be recognized as revenue until the total arrangement considerationbecomes fixed and determinable. The reimbursements for research and development costs under collaboration agreements that meet the criteria for revenue recognition are included inResearch Revenue and the costs associated with these reimbursable amounts are included in research and development expenses. In order to determine the revenue recognition for contingent milestones, the Company evaluates the contingent milestones using the criteria as provided by theFinancial Accounting Standards Boards ("FASB") guidance on the milestone method of revenue recognition at the inception of a collaboration agreement. Thecriteria requires that (i) the Company determines if the milestone is commensurate with either its performance to achieve the milestone or the enhancement ofvalue resulting from the Company's activities to achieve the milestone, (ii) the milestone be related to past performance, and (iii) the milestone be reasonablerelative to all deliverable and payment terms of the collaboration arrangement. If these criteria are met then the contingent milestones can be considered assubstantive milestones and will be recognized as revenue in the period that the milestone is achieved.Inventories and Cost of Cost of Goods Sold Until regulatory approval of Galafold, the Company expensed all manufacturing costs of Galafold as research and development expense. Upon regulatoryapproval, the Company began capitalizing costs related to the purchase and manufacture of Galafold. Inventories are stated at the lower of cost or market determined by the first-in, first-out method. Inventories are reviewed periodically to identify slow-movingor obsolete inventory based on projected sales activity as well as product shelf-life. In evaluating the recoverability of inventories produced, the probability thatrevenue will be obtained from the future sale of the related inventory is considered and inventory value is written down for inventory quantities in excess ofexpected requirements. Expired inventory is disposed of and the related costs are recognized as cost of product sales in the consolidated statements of operations. Cost of goods sold includes the cost of inventory sold, manufacturing and supply chain costs, product shipping and handling costs, provisions for excess andobsolete inventory, as well as royalties payable. A portion of the inventory available for sale was expensed as research and development costs prior to regulatoryapproval and as such the cost of goods sold and related gross margins are not necessarily indicative of future cost of goods sold and gross margin.Fair Value Measurements The Company records certain asset and liability balances under the fair value measurements as defined by the FASB guidance. Current FASB fair valueguidance emphasizes that fair value is a-113-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that marketparticipants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, current FASBguidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent ofthe reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity's own assumptions that market participantsassumptions would use in pricing assets or liabilities (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at measurementdate. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputsmay include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices),such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for theasset or liability, which is typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination ofthe fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair valuemeasurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significanceof a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.Contingent Liabilities On an ongoing basis, the Company may be involved in various claims, and legal proceedings. On a quarterly basis, the Company reviews the status of eachsignificant matter and assesses its potential financial exposure. If the potential loss from any claim, asserted or unasserted, or legal proceeding is consideredprobable and the amount can be reasonably estimated, the Company will accrue a liability for the estimated loss. Because of uncertainties related to claims andlitigation, accruals will be based on our best estimates based on available information. On a periodic basis, as additional information becomes available, or basedon specific events such as the outcome of litigation or settlement of claims, the Company may reassess the potential liability related to these matters and may revisethese estimates, which could result in a material adverse adjustments to the Company's operating results.Research and Development Costs Research and development costs are expensed as incurred. Research and development expense consists primarily of costs related to personnel, includingsalaries and other personnel related expenses, consulting fees and the cost of facilities and support services used in drug development. Assets acquired that are usedfor 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 Company's cash and cash equivalents and marketable securities. Interest expense consists of interest incurredon capital leases and debt.-114-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)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 thedifference between the financial statement carrying amounts and tax basis of assets and liabilities and for operating losses and tax credit carry forwards, usingenacted 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 aportion or all of a deferred tax asset will not be realized.Other Comprehensive Income/ (Loss) Components of other comprehensive income/(loss) include unrealized gains and losses on available-for-sale securities and gain/(loss) on foreign currencytransactions, and are included in the statements of comprehensive loss.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 leaseshave varying terms and expirations and have provisions to extend or renew the lease agreement, among other terms and conditions, as negotiated. Once theagreement 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 isrecognized 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 underthe lease is recorded in accrued expenses.Nonqualified Cash Deferral Plan The Company's Cash Deferral Plan (the "Deferral Plan"), provides certain key employees and members of the Board of Directors as selected by theCompensation Committee of the Board of Directors of the Company (the "Compensation Committee"), with an opportunity to defer the receipt of suchparticipant's base salary, bonus and director's fees, as applicable. The Deferral Plan is intended to be a nonqualified deferred compensation plan that complies withthe provisions of Section 409A of the Internal Revenue Code (the "Code"). All of the investments held in the Deferral Plan are classified as investments held-to-maturity and recorded at fair value with changes in the investments' fair value recognized as earnings in the period they occur. The corresponding liability for theDeferral Plan is included in other non-current liability in the consolidated balance sheets.Equity-based Compensation At December 31, 2016, the Company had three equity-based employee compensation plans, which are described more fully in "— Note 9. Stockholders'Equity." The Company applies the fair value method of measuring equity-based compensation, which requires a public entity to measure the cost of employeeservices received in exchange for an award of equity instruments based on the grant-date fair value of the award.Loss per Common Share The Company calculates net loss per share as a measurement of the Company's performance while giving effect to all dilutive potential common shares thatwere outstanding during the reporting period.-115-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)The Company had a net loss for all periods presented; accordingly, the inclusion of common stock options, unvested RSUs and warrants would be anti-dilutive.Therefore, the weighted average shares used to calculate both basic and diluted earnings per share are the same. See "— Note 18. Earnings per Share" for furtherdiscussion on net loss per share.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 thedevelopment and growth of the business and does not foresee payment of a dividend in any upcoming fiscal period.Segment Information The Company currently operates in one business segment focused on the discovery, development and commercialization of advanced therapies to treat a rangeof devastating rare and orphan diseases. The Company is not organized by market and is managed and operated as one business. A single management team reportsto the chief operating decision maker who comprehensively manages the entire business. The Company does not operate any separate lines of business or separatebusiness entities with respect to its products. Accordingly, the Company does not accumulate discrete financial information with respect to separate service linesand does not have separately reportable segments.Business Combinations The Company allocates the purchase price of acquired businesses to the tangible and intangible assets acquired and liabilities assumed based upon theirestimated fair values on the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions, especiallyat the acquisition date with respect to intangible assets and in-process research and development ("IPR&D"). In connection with the purchase price allocations foracquisitions, the Company estimates the fair value of contingent payments utilizing a probability-based income approach inclusive of an estimated discount rate.Contingent Consideration Payable The Company determines the fair value of contingent acquisition consideration payable on the acquisition date using a probability-based income approachutilizing an appropriate discount rate. Contingent acquisition consideration payable is shown as a non-current liability on the Company's consolidated balancesheets. The fair value of the contingent consideration payable will be determined each period end and the resulting change will be recorded on the consolidatedstatements of operations.Intangible Assets and Goodwill The Company records goodwill in a business combination when the total consideration exceeds the fair value of the net tangible and identifiable intangibleassets acquired. Purchased IPR&D is accounted for as an indefinite lived intangible asset until the underlying project is completed, at which point the intangibleasset will be accounted for as a definite lived intangible asset, or abandoned, at which point the intangible asset will be written off or partially impaired. Goodwilland indefinite lived intangible assets are assessed annually for impairment and whenever events or circumstances indicate that the carrying amount of an asset maynot be recoverable. If it is determined that the full carrying amount of an asset is not recoverable, an impairment loss is recorded in the amount by which thecarrying amount of the asset exceeds its fair value.-116-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)Recent Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . To simplifythe subsequent measurement of goodwill, ASU 2017-04 eliminates Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test isperformed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which thecarrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reportingunit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring thegoodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform aqualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitativeassessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 should be applied on a prospective basis. The nature ofand reason for the change in accounting principle should be disclosed upon transition. A public business entity that is a U.S. SEC filer should adopt ASU 2017-04for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annualgoodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently assessing the impact that this standard will have on itsconsolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This Accounting StandardsUpdate clarifies the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they haveacquired or sold a business. The amendments in this Update are effective for public companies for annual periods beginning after December 15, 2017, includinginterim periods within those periods. Early adoption is permitted under certain circumstances. The amendments should be applied prospectively as of the beginningof the period of adoption. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. ThisAccounting Standards Update changes the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how areporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under commoncontrol with the reporting entity. If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a variableinterest entity), the amendments require that reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all ofits direct variable interests in a variable interest entity and, on a proportionate basis, its indirect variable interests in a variable interest entity held through relatedparties, including related parties that are under common control with the reporting entity. The amendments in this Update are effective for public business entitiesfor fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in aninterim period. The Company adopted this ASU in 2016 and the adoption did not have a material impact on its consolidated financial statements.-117-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory . This AccountingStandards Update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.The amendments eliminate the exception for an intra-entity transfer of an asset other than inventory. The amendments in this Update are effective for publicbusiness entities for annual periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption ispermitted for all entities in the first interim period if an entity issues interim financial statements. The Company is currently assessing the impact that this standardwill have on its consolidated financial statements. We have not completed our review of the impact of this guidance and do not expect this new guidance to have amaterial impact on our Consolidated Financial Statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ThisAccounting Standards Update addresses the following eight specific cash flow issues including Debt prepayment or debt extinguishment costs, contingentconsideration payments made after a business combination and separately identifiable cash flows and application of the predominance principle. The amendmentsin this ASU apply to all entities. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, andinterim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company adopted this ASU in 2016 and theadoption did not have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting . The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-basedpayment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: ( a ) income taxconsequences; ( b ) classification of awards as either equity or liabilities; and ( c ) classification on the statement of cash flows. For public companies, theamendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted forany organization in any interim or annual period. The Company is currently assessing the impact that this standard will have on its consolidated financialstatements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . This update requires the recognition of lease assets and lease liabilities on thebalance sheet for all lease obligations and disclosing key information about leasing arrangements. This update requires the recognition of lease assets and leaseliabilities by lessees for those leases classified as operating leases under previous generally accepted accounting principles. This update will be effective for theCompany for all annual and interim periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permittedfor all public business entities and all nonpublic business entities upon issuance. The Company is currently assessing the impact that this standard will have on itsconsolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires an entity to measure in scopeinventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonablypredictable costs of completion, disposal, and transportation. The amendments apply to inventory that is measured using first-in, first-out (FIFO) or average cost.The ASU is effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods-118-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)within those fiscal years. A reporting entity should apply the amendments prospectively with earlier application permitted as of the beginning of an interim orannual reporting period. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties aboutan Entity's Ability to Continue as a Going Concern, which defines management's responsibility to assess an entity's ability to continue as a going concern, and toprovide related footnote disclosures if there is substantial doubt about its ability to continue as a going concern. The pronouncement is effective for annualreporting periods ending after December 15, 2016 with early adoption permitted. The Company adopted this ASU in 2016 and the adoption did not have a materialimpact on its consolidated financial statements. In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers which along with amendments issued in 2015 and 2016, will replacesubstantially all current US GAAP guidance on this topic and eliminate industry-specific guidance. Early adoption of this standard is permitted but not before theoriginal effective date for all annual periods and interim reporting periods beginning after December 15, 2017. The guidance permits two methods of adoption: fullretrospective method (retrospective application to each prior reporting period presented) or modified retrospective method (retrospective application with thecumulative effect of initially applying the guidance recognized at the date of initial application and providing certain additional disclosures). To complete itsassessment of the impact of the standard to its financial statements, the Company continues to assess all implications of this standard, method of adoption andrelated financial disclosures. Additionally, the Company continues to monitor modifications, clarifications and interpretations issued by the FASB that may impactits assessment.3. AcquisitionsAcquisition of MiaMed, Inc. In July 2016, the Company entered into an Agreement and Plan of Merger (the "MiaMed Agreement") with MiaMed, Inc., ("MiaMed"). MiaMed is a pre-clinical biotechnology company focused on developing protein replacement therapy for CDKL5 and related diseases. Under the terms of the MiaMed Agreement,the former holders of MiaMed's capital stock received an aggregate of $6.5 million, comprised of (i) approximately $1.8 million in cash (plus MiaMed's cash andcash equivalents at closing and less any of MiaMed's unpaid third-party fees and expenses related to the transaction), and (ii) 825,603 shares of the Company'sCommon Stock. In addition, the Company also agreed to pay up to an additional $83.0 million in connection with the achievement of certain clinical, regulatoryand commercial milestones, for a potential aggregate deal value of $89.5 million. The Company evaluated the transaction based on the guidance of AccountingStandard Codification ("ASC") 805 , Business Combinations and concluded that it only acquired inputs and did not acquire any processes. The Company will needto develop its own processes in order to produce an output. Therefore, the Company accounted for the transaction as an asset acquisition and accordingly$6.5 million was expensed to research and development.Acquisition of Scioderm, Inc. In September 2015, Amicus acquired Scioderm, a privately-held biopharmaceutical company focused on developing innovative therapies for treating the raredisease Epidermolysis Bullosa ("EB"). The acquisition leverages the Scioderm development team's EB expertise with Amicus' global clinical infrastructure toadvance SD-101 toward regulatory approvals and Amicus' commercial, patient-119-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)advocacy, and medical affairs infrastructure to support a successful global launch. The acquisition of Scioderm was accounted for as a purchase of a business inaccordance with FASB ASC 805 Business Combinations. The Company acquired Scioderm in a cash and stock transaction. At closing, the Company paid Scioderm shareholders, option holders, and warrant holdersapproximately $223.9 million, of which approximately $141.1 million was paid in cash and approximately $82.8 million was paid through the issuance ofapproximately 5.9 million newly issued Amicus shares. The Company has agreed to pay up to an additional $361 million to Scioderm shareholders, option holdersand warrant holders upon achievement of certain clinical and regulatory milestones, and $257 million to Scioderm shareholders, option holders, and warrantholders upon achievement of certain sales milestones. If SD-101 is approved, EB qualifies as a rare pediatric disease under The Food and Drug AdministrationSafety and Innovation Act ("FDSIA") and Amicus will request a Priority Review Voucher ("PRV") under the FDSIA, if available. If the PRV is obtained andsubsequently sold, the Company will pay Scioderm shareholders, option holders, and warrant holders the lesser of $100 million in the aggregate or 50% of theproceeds of such sale. If Amicus obtains the PRV and has not entered into an agreement to sell or otherwise transfer to a third party the PRV within one year of itsreceipt, the shareholders 'agent may appoint a financial advisor to conduct a process to sell the PRV. If Amicus determines in its sole discretion to use the PRV,Amicus shall give the shareholders' agent written notice thereof and shall pay to the Scioderm shareholders, option holders, and warrant holders $100 million. Theinability to sell the PRV after complying with the provisions, shall not give rise to any payment. The fair value of the contingent consideration payments on the acquisition date was $259.0 million. This was an estimate based on significant inputs that arenot observable in the market, referred to as Level 3 inputs. Key assumptions included a range of discount rates between 0.4% and 1.1% as interpolated from theU.S. Treasury constant maturity yield curve over the time frame for clinical and regulatory milestones and a range of discount rates between 1.0% and 2.2% forrevenue-based milestones. The range of outcomes and assumptions used to develop these estimates have been updated to better reflect the probability of certainmilestone outcomes and updated timelines related to clinical development and anticipated approval assumptions as of December 31, 2016 without limitation, the$5 million milestone paid in the second quarter, and milestone payments projected for 2017 (See "— Note 10. Assets and Liabilities Measured at Fair Value", foradditional discussion regarding fair value measurements of the contingent acquisition consideration payable). In April 2016, while the total clinical and regulatoryapproval milestone payments remain unchanged at $361 million, the allocation between the clinical and regulatory approval milestone payments were revised asfollows: clinical milestones of up to $81 million and regulatory approval milestones of up to $280 million. The commercial milestone payments of up to$257 million remained unchanged. The Company determined the fair value of the contingent consideration to be $260.0 million at December 31, 2016, of which $56.1 million is payable in thenext twelve months, resulting in an increase in the contingent consideration payable and related expense of approximately $7.3 million for the year endedDecember 31, 2016. The expense is recorded in the Consolidated Statement of Operations as the change within fair value of contingent consideration payable. For additional information, see "— Note 4. Goodwill and Intangible Assets." The purchase price allocation was subject to completion of the analysis of the fair value of the assets and liabilities as of the effective date of the acquisition.The final valuation was completed as of December 31, 2015. A substantial portion of the assets acquired consisted of intangible assets related to-120-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)SD-101. The Company determined that the estimated acquisition-date fair value of the indefinite lived IPR&D related to the SD-101 was $463.7 million.Acquisition of Callidus Biopharma, Inc. In November 2013, the Company acquired Callidus a privately-held biologics company focused on developing best-in-class ERTs for LSDs with its lead ERTATB200 for Pompe disease in late preclinical development. The acquisition of the Callidus assets and technology complements Amicus' CHART™ platform forthe development of next generation ERTs. The fair value of the contingent acquisition consideration payments on the acquisition date was $10.6 million and was estimated by applying a probability-based income approach utilizing an appropriate discount rate. Key assumptions included a discount rate of 13.5% and various probability factors. This estimationwas based on significant inputs that are not observable in the market, referred to as Level 3 inputs. Some of the more significant assumptions used in the valuationinclude (i) the probability and timing related to the achievement of certain developmental milestones and (ii) and the discount rate. As of December 31, 2016, therange of outcomes and assumptions used to develop these estimates has changed to better reflect the probability of certain milestone outcomes. See "— Note 10.Assets and Liabilities Measured at Fair Value", for additional discussion regarding fair value measurements of the contingent acquisition consideration payable.The Company determined the fair value of the contingent consideration to be $9.7 million at December 31, 2016, all of which is payable beyond the next twelvemonths, resulting in an decrease in the contingent consideration payable and related gain of $0.5 million year ended December 31, 2016. The expense is recordedin the Consolidated Statement of Operations within the changes in fair value of contingent consideration line item. During the second quarter of 2016, the Company reached the first clinical milestone, which was the dosing of the first patient in a Phase 1 or 2 study. Themilestone for this event was $6.0 million which was paid in Company stock during the second quarter of 2016, resulting in $6.1 million impact on stockholder'sequity. For further information, see "— Note 4. Goodwill and Intangible Assets."4. Goodwill and Intangible Assets In connection with the acquisitions discussed in "— Note 3. Acquisitions, the Company has recognized goodwill of $197.8 million. The following tablerepresents the changes in goodwill for the year ended December 31, 2016: In connection with the acquisitions discussed in "— Note 3. Acquisitions," the Company recognized IPR&D of $486.7 million. Intangible assets related toIPR&D assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. During the period theassets are considered indefinite-lived, they will not be amortized but will be tested for impairment on an annual basis and between annual tests if the Companybecomes aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of-121- (in millions) Balance at December 31, 2015 $197.8 Change in goodwill — Balance at December 31, 2016 $197.8 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)the IPR&D assets below their respective carrying amounts. The following table represents the changes in IPR&D for the year ended December 31, 2016: Goodwill and intangible assets are assessed annually for impairment on October 1 and whenever events or circumstances indicate that the carrying amount ofan asset may not be recoverable. If it is determined that the full carrying amount of an asset is not recoverable, an impairment loss is recorded in the amount bywhich the carrying amount of the asset exceeds its fair value. During the 2016 annual impairment assessment, it was determined that the goodwill and intangibleassets had not been impaired therefore there were no changes to the balances of goodwill and IPR&D in 2016.5. Cash, Money Market Funds and Marketable Securities As of December 31, 2016, the Company held $187.0 million in cash and cash equivalents and $143.3 million of available-for-sale securities which arereported at fair value on the Company's Consolidated Balance Sheets. Unrealized holding gains and losses are reported within accumulated other comprehensiveincome/ (loss) in the statements of comprehensive loss. If a decline in the fair value of a marketable security below the Company's cost basis is determined to beother 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 inearnings as an impairment charge. To date, only temporary impairment adjustments have been recorded. 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 thatthe market risk arising from its holdings of these financial instruments is mitigated as many of these securities are either government backed or of the highest creditrating. Investments that have original maturities or greater than 3 months but less than 1 year are classified as short-term and investments with maturities that aregreater than 1 year are classified as long-term. The Company transacts business in various foreign countries and therefore, is subject to risk of foreign currency exchange rate fluctuations. As such, in June2016 the Company entered into a forward contract to economically hedge transactional exposure associated with commitments arising from trade accounts payabledenominated in a currency other than the functional currency of the respective operating entity. The Company does not designate these forward contracts ashedging instruments under applicable accounting guidance and, therefore, changes in fair value are recorded within other income (expense) in the ConsolidatedStatements of Operations, with the corresponding liability in current liabilities on the Consolidated Balance Sheet. For the year ended December 31, 2016, theCompany recognized a loss of $0.3 million, related to the derivative instruments not designated as hedging instruments in other expense in the ConsolidatedStatements of Operations and the corresponding liability of $0.3 million is recorded as other current liability in the Consolidated Balance Sheets.-122- (in millions) Balance at December 31, 2015 $486.7 Change in IPR&D — Balance at December 31, 2016 $486.7 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) Cash and available for sale securities consisted of the following as of December 31, 2016 and December 31, 2015 (in thousands): For the years ended December 31, 2016 and 2015, there were no realized gains or losses. The cost of securities sold is based on the specific identificationmethod. Unrealized loss positions in the available for sale securities as of December 31, 2016 and December 31, 2015 reflect temporary impairments that have been ina loss position for less than twelve months and as such are recognized in other comprehensive gain/ (loss). The fair value of these available for sale securities inunrealized loss positions was $58.7 million and $118.5 million as of December 31, 2016 and 2015, respectively. The Company holds available-for-sale investment securities which are reported at fair value on the Company's balance sheet. Unrealized holding gains andlosses are reported within accumulated other comprehensive income ("AOCI") in the statements of comprehensive loss.-123- As of December 31, 2016 Cost Unrealized Gain Unrealized Loss Fair Value Cash balances $187,026 $— $— $187,026 Corporate debt securities, current portion 74,564 2 (31) 74,535 Commercial paper 68,258 132 — 68,390 Money market 350 — — 350 Certificate of deposit 50 — — 50 $330,248 $134 $(31)$330,351 Included in cash and cash equivalents $187,026 $— $— $187,026 Included in marketable securities 143,222 134 (31) 143,325 Total cash and marketable securities $330,248 134 $(31)$330,351 As of December 31, 2015 Cost Unrealized Gain Unrealized Loss Fair Value Cash balances $69,485 $— $— $69,485 Corporate debt securities, current portion 118,627 1 (154) 118,474 Commercial paper 25,686 38 — 25,724 Certificate of deposit 350 — — 350 $214,148 $39 $(154)$214,033 Included in cash and cash equivalents $69,485 $— $— $69,485 Included in marketable securities 144,663 39 (154) 144,548 Total cash and marketable securities $214,148 39 $(154)$214,033 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)6. Inventories Inventories consist of work in process and finished goods related to the manufacture of Galafold. The following table summarizes the components ofinventories at December 31, 2016 (in thousands): There were no inventories on-hand as of December 31, 2015. Inventory manufactured prior to commercialization was expensed to research and development.Inventories are reviewed periodically to identify slow-moving or obsolete inventory based on projected sales activity, as well as product shelf-life. In evaluating therecoverability of inventories produced, the Company considers the probability that revenue will be obtained from the future sale of the related inventory. Inventorybecomes obsolete when it has aged past its shelf-life, cannot be recertified and is no longer usable or able to be sold, or the inventory has been damaged. In suchinstances, a full reserve is taken against such inventory. Expired inventory is disposed of and the related costs are recognized as cost of product sales in theconsolidated statement of operations. There have been no write-downs of inventory from the time inventory was first capitalized.7. Property and Equipment Property and equipment consist of the following (in thousands): Depreciation expense was $3.2 million and $1.8 million for the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016,$0.2 million of the depreciation expense was related to capital lease obligation. There were no capital lease obligations outstanding as of December 31, 2015.-124- December 31, 2016 Work-in-process $3,308 Finished goods 108 Total inventories $3,416 December 31, 2016 2015 Property and equipment consist of the following: Computer equipment $3,511 $5,075 Computer software 1,347 1,354 Research equipment 7,465 6,483 Furniture and fixtures 3,018 2,444 Leasehold improvements 6,970 4,175 22,311 19,531 Less accumulated depreciation (12,495) (13,353) $9,816 $6,178 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)8. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following (in thousands):9. Stockholders' EquityCommon Stock and Warrants As of December 31, 2016, the Company was authorized to issue 250 million 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 that are appropriate for stockholder voting and is entitled to onevote for each share held. As discussed in "— Note 16. Debt Instruments and Related Party Transactions", on December 21, 2016, the Company issued $250 million aggregate principalamount of 3.0% unsecured Convertible Senior Notes due 2023 (the "Convertible Notes), in a private offering. The Notes will mature on December 15, 2023, unlessearlier repurchased, redeemed, or converted in accordance with their terms. The Notes are convertible at the option of the holders, under certain circumstances andduring certain periods, into cash, shares of the Company's common stock, par value $0.01 per share ("Common Stock"), or a combination thereof. Prior to the closeof business on the business day immediately preceding September 15, 2023, the Notes are convertible at the option of the holders of the Notes only under certainconditions. On or after September 15, 2023, until the close of business on the second business day immediately preceding the maturity date, holders of the Notesmay convert their Notes at their option at the conversion rate then in effect, irrespective of these conditions. The Company will settle conversions of the Notes bypaying or delivering, as the case may be, cash, shares of Common Stock, or a combination of cash and shares of Common Stock, at the Company's election. Theconversion rate will initially be 163.3987 shares of Common Stock per $1,000 principal amount of Notes (equivalent to an initial conversion price ofapproximately $6.12 per share of Common Stock). The conversion rate is subject to customary adjustments upon the occurrence of certain events. Beginning in April 2016 and through July 2016, the Company sold 15.0 million shares of Common Stock under an ATM equity program with Cowen andCompany, LLC ("Cowen") acting as sales agent. Cowen was compensated at a fixed commission rate up to 3.0%. The ATM sales agreement resulted in netproceeds of $97.1 million, after Cowen's commission of $2.7 million and other expenses of $0.2 million. The Company has completed all sales under the ATMequity program.-125- December 31, 2016 2015 Accounts payable $12,905 $16,477 Accrued professional fees 5,079 3,578 Accrued contract manufacturing & contract research costs 8,042 2,940 Accrued compensation and benefits 9,981 6,201 Accrued facility costs 1,740 1,321 Foreign currency forward contract 265 — Capital lease, short term portion 283 — Accrued other 2,713 1,699 $41,008 $32,216 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) As discussed in "— Note 16. Debt instruments and Related Party Transactions," the Company issued approximately 1.8 million and 1.3 million of warrants inFebruary 2016 and June 2016, respectively. The closing balance of the warrants was $16.1 million as of December 31, 2016 and is recorded within equity on theConsolidated Balance Sheets. As discussed in "— Note 3. Acquisitions, in July 2016, the Company entered into an Agreement and Plan of Merger (the "MiaMed Agreement") withMiaMed. Under the terms of the MiaMed Agreement, the former holders of MiaMed's capital stock received an aggregate of $6.5 million, comprised of(i) approximately $1.8 million in cash (plus MiaMed's cash and cash equivalents at closing and less any of MiaMed's unpaid third-party fees and expenses relatedto the transaction), and (ii) 825,603 shares of the Company's Common Stock. In addition, the Company also agreed to pay up to an additional $83.0 million inconnection with the achievement of certain clinical, regulatory and commercial milestones, for a potential aggregate deal value of $89.5 million. As discussed in "— Note 3. Acquisitions, in September 2015, the Company acquired Scioderm with cash and stock. As part of the acquisition, the Companypaid holders of Scioderm an amount equal to $223.9 million, of which approximately $141.1 million was paid in cash and approximately $82.8 million was paidthrough the issuance of 5.9 million newly issued shares. The Company agreed to pay up to an additional $361 million upon achievement of certain clinical andregulatory milestones, and $257 million to Scioderm shareholders, option holders, and warrant holders upon achievement of certain sales milestones. In June 2015, the Company issued a total of 19.5 million shares through a public offering at a price of $13.25 per share, with net proceeds of $243.0 million.The Company expects to use the net proceeds of the offering for investment in the global commercialization infrastructure for Galafold for Fabry disease, thecontinued clinical development of its product candidates and for other general corporate purposes. In November 2014, the Company sold a total of 15.9 million shares of our common stock, par value $0.01 per share, at a public offering price of $6.50 pershare. The aggregate offering proceeds were approximately $97.2 million. In July 2014, the Company completed a $40 million ATM equity offering under which the Company sold shares of its common stock, par value $0.01 pershares with Cowen and Company LLC as sales agent. Under the ATM equity program the Company sold 14.3 million shares of common stock resulting in netproceeds of $38.6 million.Nonqualified Cash Plan The Company's Deferral Plan, (the "Deferral Plan") provides certain key employees and members of the Board of Directors as selected by the CompensationCommittee, with an opportunity to defer the receipt of such participant's base salary, bonus and director's fees, as applicable. The Deferral Plan is intended to be anonqualified deferred compensation plan that complies with the provisions of Section 409A of the Internal Revenue Code of 1986 as amended. Deferred compensation amounts under the Deferral Plan as of December 31, 2016 were approximately $1.5 million, as compared to $0.7 million onDecember 31, 2015 and are included in other long-term liabilities. Deferral Plan assets as of December 31, 2016 were $1.5 million as compared to $0.7 million asof December 31, 2015 and are classified as trading securities. The Deferred Plan assets are recorded at fair value with changes in the investments' fair valuerecognized in AOCI in the period they occur. The income from investment for the year ended December 31, 2016 and 2015 was-126-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)$34 thousand and $17 thousand respectively. Unrealized gain approximated $32 thousand for the year ended December 31, 2016, as compared to unrealized loss of$50 thousand for the year ended December 31, 2015.Equity Incentive Plans The Company's Equity Incentive Plans consist of the Amended and Restated 2007 Equity Incentive Plan (the "Plan") and the 2007 Director Option Plan (the"2007 Director Plan"). The Plan provides for the granting of restricted stock and options to purchase common stock in the Company to employees, advisors andconsultants at a price to be determined by the Company's board of directors. The Plan is intended to encourage ownership of stock by employees and consultants ofthe Company and to provide additional incentives for them to promote the success of the Company's business. The 2007 Director Plan is intended to promote therecruiting and retention of highly qualified eligible directors and strengthen the commonality of interest between directors and stockholders by encouragingownership of common stock of the Company. Under the provisions of each 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 willreceive, the option price per share, and the exercise period of each option. Options granted pursuant to the Plan generally vest 25% on the first year anniversarydate 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 ofgrant. Options under the 2007 Director Plan may be granted to new directors upon joining the Board and vest in the same manner as options under the Plan. Inaddition, options are automatically granted to all directors at each annual meeting of stockholders and vest on the date of the annual meeting of stockholders of theCompany in the year following the year during which the options were granted. As of December 31, 2016, the Company has reserved up to 12,630,511 shares for issuance under the Plan and the 2007 Director Plan.Stock Option Grants The Company adopted the fair value method of measuring stock-based compensation, using the fair value of each equity award granted. The Company chosethe "straight-line" attribution method for allocating compensation costs and recognized the fair value of each stock option on a straight-line basis over the vestingperiod of the related awards. The Company uses the Black-Scholes option pricing model when estimating the grant date fair value for stock-based awards. Use of a valuation modelrequires management to make certain assumptions with respect to selected model inputs. Expected volatility was based on our historical volatility since our initialpublic offering in May 2007.The average expected life was determined using the "simplified" method of estimating the expected exercise term which is the mid-point between the vesting date and the end of the contractual term. As the Company's stock price volatility has been over 75% and it has experienced significantbusiness transactions, the Company does not have sufficient reliable exercise data in order to justify a change in the use of the "simplified" method of estimatingthe expected exercise term of employee stock option grants. The risk-free interest rate is based on U.S. Treasury, zero-coupon issues with a remaining term equalto 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 optionforfeitures.-127-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) The weighted average assumptions used in the Black-Scholes option pricing model are as follows: The weighted average grant-date fair value per share of options granted during 2016, 2015 and 2014 were $5.28, $7.51 and $2.12, respectively. The following table summarizes information about stock options outstanding: The aggregate intrinsic value of options exercised during the years ended December 31, 2016, 2015 and 2014 was $2.6 million, $14.7 million and $2.8 millionrespectively. Cash proceeds from stock options exercised during the years ended December 31, 2016, 2015, and 2014 were $3.0 million, $11.2 million, and$3.7 million, respectively. As of December 31, 2016, the total unrecognized compensation cost related to non-vested stock options granted was $33.7 million andis expected to be recognized over a weighted average period of 2.8 years.-128- Years Ended December 31, 2016 2015 2014 Expected stock price volatility 81.3% 75.9% 81.3%Risk free interest rate 1.5% 1.7% 1.9%Expected life of options (years) 6.25 6.25 6.25 Expected annual dividend per share $0.00 $0.00 $0.00 Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value (in thousands) (in millions) Options outstanding, December 31, 2013 9,041.1 $5.65 Granted 2,993.1 $2.99 Exercised (965.6)$3.80 Forfeited (1,047.9)$5.76 Options outstanding, December 31, 2014 10,020.7 $5.02 Granted 3,917.2 $11.61 Exercised (2,070.3)$5.43 Forfeited (138.4)$7.76 Options outstanding, December 31, 2015 11,729.2 $7.11 Granted 5,114.1 $7.67 Exercised (723.1)$4.20 Forfeited (622.7)$8.62 Options outstanding, December 31, 2016 15,497.5 $7.37 7.3 years $7.8 Vested and unvested expected to vest, December 31,2016 (14,593.7)$7.31 7.2 years $7.7 Exercisable at December 31, 2016 7,545.3 $6.57 5.8 years $5.8 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)Restricted Stock Units RSUs awarded under the Plan are generally subject to graded vesting and are contingent on an employee's continued service. RSUs are generally subject toforfeiture if employment terminates prior to the release of vesting restrictions. The Company expenses the cost of the RSUs, which is determined to be the fairmarket value of the shares of common stock underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse. A summary of non-vested RSU activity under the Plan for the year ended December 31, 2016 is as follows: For the year ended December 31, 2016, 0.3 million of the RSUs vested and all non-vested units are expected to vest over their normal term. As ofDecember 31, 2016, there was $4.2 million of total unrecognized compensation cost related to unvested RSUs with service-based vesting conditions. These costsare expected to be recognized over a weighted average period of 2.62 years. On December 30, 2016, the Compensation Committee approved a form of Performance-Based Restricted Stock Unit Award Agreement (the "Performance-Based RSU Agreement"), to be used for performance-based RSUs granted to participants under the Amended and Restated Amicus Therapeutics, Inc. 2007 EquityIncentive Plan, including named executive officers. Awards under the form of Performance-Based RSU Agreement will vest based on the Company meetingspecified performance criteria. Vesting of the RSUs is generally subject to the participant's continuous service with the Company through a specified date. As ofDecember 31, 2016 there were no RSUs issued under the Performance-Based RSU Agreement.-129- Number of Share Weighted Average Grant Date Fair Value Weighted Average Remaining Years Aggregate Intrinsic Value (in thousands) (in millions) Non-vested units as of December 31, 2014 955.0 $2.28 Granted 366.0 $12.63 Vested (842.5)$— Forfeited — $— Non-vested units as of December 31, 2015 478.5 $10.38 Granted 582.7 $6.21 Vested (281.9)$8.73 Forfeited (34.9)$7.71 Non-vested units as of December 31, 2016 744.4 $7.86 2.62 $— Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)Compensation Expense Related to Equity Awards The following table summarizes the equity-based compensation expense recognized in the statements of operations (in thousands):10. Assets and Liabilities Measured at Fair Value The Company's financial assets and liabilities are measured at fair value and classified within the fair value hierarchy which is defined as follows:Level 1 — Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.Level 2 — Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly.Level 3 — Inputs that are unobservable for the asset or liability. A summary of the fair value of the Company's recurring assets and liabilities aggregated by the level in the fair value hierarchy within which thosemeasurements fall as of December 31, 2016 are identified in the following table (in thousands): -130- Years Ended December 31, 2016 2015 2014 Equity compensation expense recognized in: Research and development expense $8,071 $4,600 $2,703 Selling, general and administrative expense 9,433 5,372 3,305 Total equity compensation expense $17,504 $9,972 $6,008 Level 2 Total Commercial paper $68,390 $68,390 Corporate debt securities 74,535 74,535 Money market funds 1,829 1,829 $144,754 $144,754 Level 2 Level 3 Total Liabilities: Contingent consideration payable $— $269,722 $269,722 Derivative liability 265 — 265 Deferred compensation plan liability 1,479 — 1,479 $1,744 $269,722 $271,466 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) A summary of the fair value of the Company's assets and liabilities aggregated by the level in the fair value hierarchy within which those measurements fall asof December 31, 2015 are identified in the following table (in thousands): See "— Note 16. Debt Instruments and Related Party Transactions" for the carrying amount and estimated fair value of the Company's Convertible Notes duein 2023. The Company did not have any Level 3 assets as of December 31, 2016 or 2015.Cash, Money Market Funds and Marketable Securities The Company classifies its cash and money market funds within the fair value hierarchy as Level 1 as these assets are valued using quoted prices in activemarket for identical assets at the measurement date. The Company considers its investments in marketable securities as available for sale and classifies these assetswithin the fair value hierarchy as Level 2 primarily utilizing broker quotes in a non-active market for valuation of these securities. No changes in valuationtechniques or inputs occurred during the year ended December 31, 2016. No transfers of assets between Level 1 and Level 2 of the fair value measurementhierarchy occurred during the year ended December 31, 2016.Contingent Consideration Payable The contingent consideration payable resulted from the acquisitions of Scioderm and Callidus, as discussed in "— Note 3. Acquisitions." The most recentvaluation was determined using a probability weighted discounted cash flow valuation approach. Using this approach, expected future cash flows are calculatedover the expected life of the agreement, are discounted, and then exercise scenario probabilities are applied. The valuation is performed quarterly. Gains and lossesare included in the statement of operations. As discussed in "— Note 3. Acquisitions," on July 5, 2016, the Company entered into the MiaMed Agreement with MiaMed. MiaMed is a pre-clinicalbiotechnology company focused on developing protein replacement for CDKL5 and related diseases. Under the terms of the MiaMed Agreement, the Companyagreed to pay up to an additional $83.0 million in connection with the achievement of certain clinical, regulatory and commercial milestones, for a potentialaggregate deal value of $89.5 million. The MiaMed Agreement was accounted for as an asset acquisition and as such the Company determined that a liability forfuture milestone payments is not required to be recorded until the actual-131- Level 2 Total Commercial paper 25,724 25,724 Corporate debt securities 118,474 118,474 Certificate of deposit 350 350 Market exchanged mutual funds 658 658 $145,206 $145,206 Level 2 Level 3 Total Liabilities: Contingent consideration payable $— $274,077 $274,077 Deferred compensation plan liability 667 — 667 $667 $274,077 $274,744 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)contingencies are met and will be recorded to research and development expenses when the contingency is resolved. The contingent consideration payable for Scioderm and Callidus has been classified as a Level 3 recurring liability as its valuation requires substantialjudgment and estimation of factors that are not currently observable in the market. If different assumptions were used for the various inputs to the valuationapproach the estimated fair value could be significantly higher or lower than the fair value the Company determined. The Company may be required to recordlosses in future periods, including expenses related to CDKL5. The following significant unobservable inputs were used in the valuation of the contingent consideration payable to former Scioderm stockholders: The following significant unobservable inputs were used in the valuation of the contingent consideration payable of Callidus for the ATB-200 Pompeprogram: Contingent consideration liabilities are remeasured to fair value each reporting period using projected revenues, discount rates, probabilities of payment andprojected payment dates. Projected-132-Contingent Consideration Liability Fair value as of December 31, 2016 Valuation Technique Unobservable Input Range Discount rate 0.62% - 3.8%Clinical and regulatorymilestones $237.2 million Probability weighteddiscounted cash flow Probability of achievementof milestones 66.5% - 100.0% Projected year of payments 2017-2019 Revenue volatility 58% Probability of achievementof milestones 66.5%Revenue-based milestones $22.8 million Monte Carlo Discount rate 1.47% - 2.55% Projected year of payments 2019-2029Contingent Consideration Liability Fair value as of December 31, 2016 Valuation Technique Unobservable Input Range Discount rate 12.5%Clinical and regulatorymilestones $9.3 million Probability weighteddiscounted cash flow Probability of achievement ofmilestones 30.4%-42.8% Projected year of payments 2018-2022Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)contingent payment amounts related to clinical and regulatory based milestones are discounted back to the current period using a discounted cash flow model.Revenue-based payments are valued using a monte-carlo valuation model, which simulates future revenues during the earn out-period using management's bestestimates. Projected revenues are based on our most recent internal operational budgets and long-range strategic plans. Increases in projected revenues andprobabilities of payment may result in higher fair value measurements. Increases in discount rates and the time to payment may result in lower fair valuemeasurements. Increases or decreases in any of those inputs together, or in isolation, may result in a significantly lower or higher fair value measurement. There isno assurance that any of the conditions for the milestone payments will be met. The following table shows the change in the balance of contingent consideration payable for the year ended December 31, 2016 and 2015, respectively (inthousands):Deferred Compensation Plan- Investment and Liability As disclosed in "— Note 9. Stockholders' Equity," the Deferral Plan provides certain key employees and members of the Board of Directors with anopportunity to defer the receipt of such participant's base salary, bonus and director's fees, as applicable. Deferral Plan assets are classified as trading securities andrecorded at fair value with changes in the investments' fair value recognized in the period they occur. The asset investments consist of market exchanged mutualfunds. The Company considers its investments in marketable securities, as available-for-sale and classifies these assets and related liability within the fair valuehierarchy as Level 2 primarily utilizing broker quotes in a non-active market for valuation of these securities.Foreign Currency Exchange Rate Exposure The Company transacts business in various foreign countries and therefore, is subject to risk of foreign currency exchange rate fluctuations. As such, in June2016, the Company entered into a forward contract to economically hedge transactional exposure associated with commitments arising from trade accountspayable denominated in a currency other than the functional currency of the respective operating entity. The Company did not designate this forward contract as ahedging instrument under applicable accounting guidance and, therefore, the change in fair value is recorded in the Consolidated Statements of Operations. Theforward contract settles in monthly installments with the final installment settlement in June 2017. There were no outstanding forward contracts at December 31, 2015.-133- Year ended December 31, 2016 2015 Balance, beginning of the period $274,077 $10,700 Additions, from business acquisitions — 259,000 Payment of contingent consideration in cash (5,000) — Payment of contingent consideration in stock (6,115) — Unrealized change in fair value change during the period, included in Statement ofOperations 6,760 4,377 Balance, end of the period $269,722 $274,077 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) For the year ended December 31, 2016, the Company recognized a loss of $265 thousand, related to the derivative instruments not designated as hedginginstruments in the Consolidated Statements of Operations and the corresponding liability of $265 thousand is recorded as other current liability in the ConsolidatedBalance Sheets. The impact of gains and losses on foreign exchange contracts not designated as hedging instruments related to changes in the fair value of assets and liabilitiesdenominated in foreign currencies are generally offset by net foreign exchange gains and losses, which are also included on the Consolidated Statements ofOperations in other income (expense), net for all periods presented. When the Company enters into foreign exchange contracts not designated as hedginginstruments to mitigate the impact of exchange rate volatility in the translation of foreign earnings, gains and losses will generally be offset by fluctuations in theU.S. Dollar translated amounts of each account within the Consolidated Statements of Operations in current and/or future periods.11. 401(k) Plan The Company has a 401(k) plan (the "401(k) Plan") covering all eligible employees and provides for a company match of up to 5% of salary and bonus paidduring the year. The Company's vesting policy is that the Company match vests immediately upon enrollment. There were no changes to the policy in 2016 or2015. The Company's total contribution to the 401(k) Plan was $1.2 million, $0.9 million and $0.6 million for the years ended December 31, 2016, 2015 and 2014,respectively.12. LeasesOperating Leases The Company currently leases office space and research laboratory space in various facilities under operating agreements expiring at various dates through2025. The following table contains information about our current significant leased properties as of December 31, 2016: In addition to the above, we also maintain small offices in the Italy, France, Netherlands and Spain. We believe that our current office and laboratory facilitiesare adequate and suitable for our current and anticipated needs. We believe that, to the extent required, we will be able to lease or buy additional facilities atcommercially reasonable rates. Rent expenses for the Company's facilities are recognized over the term of the lease. The Company recognizes rent starting when possession of the facility istaken from the landlord. When a lease contains a predetermined fixed escalation of the minimum rent, the Company recognizes the related rent expense on astraight-line basis and records the difference between the recognized rental expense and the amounts payable under the lease as deferred rent liability. Tenantleasehold improvement allowances are reflected in accrued expenses on the consolidated balance sheets and are amortized as a reduction to rent expense in thestatement of operations over the term of the lease.-134-Location Approximate Square Feet Use Lease expiry dateCranbury, New Jersey 90,000 Office and laboratory September 2025Durham, North Carolina 5,603 Office June 2018Buckinghamshire, United Kingdom 9,821 Office September 2020Munich, Germany 4,316 Office April 2017Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) At December 31, 2016, aggregate annual future minimum lease payments under these leases are as follows: Rent expense, including fees for utilities and common area maintenances for the years ended December 31, 2016, 2015 and 2014 were $3.5 million,$2.6 million and $2.4 million, respectively.Capital Leases In 2016, the Company purchased equipment of approximately $0.9 million through financing arrangements. These financing arrangements include interest ofapproximately 0.2-5.7%, and lease terms of 36-48 months. At December 31, 2016, aggregate annual future minimum lease payments under these leases, including interest, are as follows (in thousands):13. Income Taxes For financial reporting purposes, income (loss) before income taxes includes the following components (in thousands):-135-(in thousands) 2017 2018 2019 2020 2021 and beyond Total Minimum lease payments $2,666 $2,483 $2,421 $2,349 $10,537 $20,456 Years ending December 31: 2017 $355 2018 355 2019 134 2020 — 2021 and beyond — Total principal obligation $844 Years Ended December 31, 2016 2015 2014 United States $(174,913)$(123,697)$(70,030)Foreign (28,868) (8,421) (9)Total $(203,781)$(132,118)$(70,039)Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) A reconciliation of the statutory tax rates and the effective tax rates for the years ended December 31, 2016, 2015 and 2014 are as follows: The Company recognized a tax benefit of $1.1 million in connection with the sale of net operating losses and research and development credits in the NewJersey Transfer Program for the year ended December 31, 2014. There were no sales of net operating losses and research and development credits for the yearsended December 31, 2016 and 2015. The Company recorded an income tax benefit of $3.7 million in the Consolidated Statement of Operations for the year ended December 31, 2016. The benefitwas primarily from $2.7 million in income tax benefit in connection with the reduction in state tax rates in North Carolina, and $1.2 million from reduction in itsvaluation allowance to reflect the income tax associated with the gain on foreign currency translation recorded in the Consolidated Statement of ComprehensiveLoss for the year ended December 31, 2016. The Company did not recognize interest or penalties related to income tax during the period ended December 31, 2016 and did not accrue for interest orpenalties as of December 31, 2016. The Company does not have an accrual for uncertain tax positions as of December 31, 2016. Tax returns for all years 2009 andthereafter are subject to future examination by tax authorities.-136- Years Ended December 31, 2016 2015 2014 Statutory rate (34)% (34)% (34)%State taxes, net of federal benefit (5) (5) (4)Permanent adjustments 3 2 1 R&D credit (3) (3) (4)Foreign income tax rate differential 2 1 — Other (1) 2 1 Valuation allowance 36 37 38 Net (2)% (0)% (2)%Table of ContentsAmicus Therapeutics, Inc.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 andthe amounts used for income tax purposes. The significant components of the deferred tax assets and liabilities are as follows (in thousands): The Company records a valuation allowance for temporary differences for which it is more likely than not that the Company will not receive future taxbenefits. At December 31, 2016 and 2015, the Company recorded valuation allowances of $286.9 million and $213.7 million, respectively, representing an increasein the valuation allowance of $73.2 million in 2016 and an increase of $65.3 million in 2015, due to the uncertainty regarding the realization of such deferred taxassets, to offset the benefits of net operating losses generated during those years. The deferred tax liability related to business acquisitions pertains to the basisdifference in IPR&D acquired by the Company. The Company's policy is to record a deferred tax liability related to acquired IPR&D that may eventually berealized either upon amortization of the asset when the research is completed and a product is successfully launched or the write-off of the asset if it is abandonedor unsuccessful. As of December 31, 2016, the Company had federal, state, and foreign net operating loss carry forwards ("NOLs") of approximately $637 million,$623 million, and $40 million respectively. The federal carry forward will expire in 2029 through 2036. Most of the state carry forwards generated prior to 2009have expired through 2015. The remaining state carry forwards including those generated in 2009 through 2016 will expire in 2029 through 2036. The foreignNOLs have indefinite expiration. Utilization of NOLs may be subject to a substantial limitation pursuant to Section 382 of the Code as well as similar state statutesin the event of an ownership change. Such ownership changes have occurred in the past, and could occur again in the future As a result of these ownershipchanges, Section 382 places an annual limitation on the amount of NOLs that can be utilized to offset future taxable income each year, which is based on the valueof the company at the change date. This limitation could result in expiration of those carry forwards before utilization. In general, an ownership change, as definedby Section 382, results from transactions that increase the ownership of certain stockholders or public groups in the stock of a corporation by more than50 percentage points over a three year period. The Company completed a detailed study of its cumulative ownership changes for-137- For Years Ended December 31, 2016 2015 Non-current deferred tax assets Intellectual property $95,956 $— Amortization/depreciation 1,781 2,657 Research tax credit 32,851 27,170 Net operating loss carry forwards 253,661 159,889 Deferred revenue 14,281 14,281 Non-cash stock issue 11,649 6,767 Others 3,358 2,964 Gross deferred tax assets 413,537 213,728 Deferred tax liability related to business acquisition (173,771) (176,219)Deferred tax liability related to royalty payable (96,829) — Deferred tax liability related to convertible notes (29,845) — Total net deferred tax asset 113,092 37,509 Less valuation allowance (286,863) (213,728)Net deferred tax assets (liability) $(173,771)$(176,219)Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)2016 and determined that in 2016, there was no ownership change in excess of 50%; therefore there was no write-down to net realizable value of the federal NOLsand research and development credits subject to the 382 limitations. A tax benefit of $4.6 million associated with the exercise of stock options will be recorded inadditional paid-in capital when the associated net operating loss is recognized.14. Licenses The Company acquired rights to develop and commercialize its product candidates through licenses granted by various parties. The following summarizes theCompany's material rights and obligations under those licenses: GSK — For discussion of the royalties and milestone payments potentially due to GSK, see "— Note 15. Collaborative Agreements." Mt. Sinai School of Medicine of New York University ("MSSM") — The company acquired exclusive worldwide patent rights to develop and commercializemigalastat and other pharmacological chaperones for the prevention or treatment of human diseases or clinical conditions by increasing the activity of wild-typeand mutant enzymes pursuant to a license agreement with Mt. Sinai School of Medicine ("MSSM") of New York University. Under this agreement, to date, theCompany has paid no upfront or annual license fees and there are no milestone or future payments other than royalties on net sales. This agreement expires uponexpiration of the last of the licensed patent rights, which will be in 2019, subject to any patent term extension that may be granted, or 2024 if the Companydevelops a product for combination therapy (pharmacological chaperone plus/ERT) and a patent issues from the pending application covering the combinationtherapy, subject to any patent term extension that may be granted. 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 the Companyhas 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 andcan vary under each agreement. For migalastat, in 2016, the Company incurred $0.1 million of royalty expense under the agreement with MSSM. The Company's rights with respect to these agreements to develop and commercialize migalastat may terminate, in whole or in part, if the Company fails tomeet certain development or commercialization requirements or if the Company does not meet its obligations to make royalty payments.15. Collaborative AgreementsGSK In November 2013, Amicus entered into the Revised Agreement with GSK, pursuant to which Amicus has obtained global rights to develop andcommercialize migalastat as a monotherapy and in combination with ERT for Fabry disease. The Revised Agreement amends and replaces in its entirety the earlieragreement entered into between Amicus and GSK in July 2012. Under the terms of the Revised Agreement, there was no upfront payment from Amicus to GSK.For migalastat monotherapy, GSK is eligible to receive post-approval and sales-based milestones up to $40 million, as well as tiered royalties in the mid-teens ineight major markets outside the U.S. In the second half of 2016, the Company recognized approximately $0.5 million under the revised agreement with GSK. Under the terms of the Revised Agreement, GSK will no longer jointly fund development costs for all formulations of migalastat.-138-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) In evaluating the impact of both the Expanded Collaboration Agreement and the Revised Agreement, the Company applied the accounting guidance regardingthe impact of potential future payments it may make in its role as a vendor (i.e., Amicus) to its customer (i.e., GSK) and evaluated if these potential futurepayments could be a reduction of revenue from GSK. If the potential future payments to GSK are as follows:•a payment for an identifiable benefit, and •the identifiable benefit is separable from the existing relationship between the Company and GSK, and •the identifiable benefit can be obtained from a party other than GSK, and •the Company can reasonably estimate the fair value of the identifiable benefit,then the potential future payments would be treated separately from the collaboration and research revenue. However, if all these criteria are not satisfied, then thepotential future payments are treated as a reduction of revenue. Accordingly, the Company did not believe that, for accounting purposes, the new U.S. licensing rights to migalastat obtained from GSK under the ExpandedCollaboration Agreement, nor the ex U.S. licensing rights to migalastat obtained from GSK under the Revised Agreement, represented a separate, identifiablebenefit from the licenses in the Original Collaboration Agreement entered into between Amicus and GSK in 2010. The contingent amounts payable to GSK werenot sufficiently separable from GSK's original license and the research and development reimbursements such that Amicus could not have entered into a similarexchange transaction with another party. Additionally, the Company cannot reasonably estimate the fair value of the worldwide licensing rights to migalastat. The Company determined that the potential future payments to GSK would be treated as a reduction of revenue and that the total amount of revenue to bereceived under the arrangement is no longer fixed or determinable as the contingent milestone payments are subject to significant uncertainty. As a result, the Company no longer recognized any of the upfront license fees and premiums on the equity purchase from GSK until such time as thearrangement consideration becomes fixed or determinable, because an indeterminable amount may ultimately be payable back to GSK. These amounts (the balanceof the unrecognized upfront license fee and the premium on the equity purchases) are classified as deferred reimbursements on the balance sheet. The recognition of Research Revenue was also affected by the determination that the overall total arrangement consideration was no longer fixed anddeterminable, despite the fact that the research activities continued and that the research expense reimbursements by GSK to Amicus were received as the researchactivities related to the reimbursement had been completed. Therefore the research reimbursements from GSK were recorded as deferred reimbursements on thebalance sheet and would not recognized until the total arrangement consideration becomes fixed and determinable. As a result, all revenue recognition was suspended until the total arrangement consideration would become fixed and determinable. In addition, futuremilestone payments made by the Company will be applied against the balance of this deferred reimbursements account. Revenue recognition for research expensereimbursements, the original upfront license fee, and the equity premiums will resume once the total arrangement consideration becomes fixed and determinablewhich will occur when the balance of the deferred reimbursements account is sufficient to cover all the remaining contingent milestone payments.-139-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)Biogen In September 2013, the Company entered into a license and collaboration agreement (the "Biogen Agreement") with Biogen to discover, develop andcommercialize novel small molecules for the treatment of Parkinson's disease. Under terms of the multi-year agreement, the Company and Biogen will collaboratein the discovery of a new class of small molecules that target the GCase enzyme, for further development and commercialization by Biogen. Biogen wasresponsible for funding all discovery, development, and commercialization activities. In addition the Company was reimbursed for all full-time employees workingon the project as part of a cost sharing arrangement. The Company was also eligible to receive development and regulatory milestones, as well as modest royaltiesin global net sales. As of December 31, 2014, the Company recognized $1.2 million in Research Revenue for work performed under the cost sharing arrangement of the BiogenAgreement. In September 2014, the Company and Biogen concluded their research collaboration. The Company's most advanced Parkinson's candidate is AT3375, whichwas developed outside the collaboration and is wholly-owned by the Company.16. Debt Instruments and Related Party TransactionsOctober 2015 and February 2016 Notes and Warrants Purchase Agreement In October 2015, the Company entered into the October 2015 Purchase Agreement with Redmile, who beneficially owned approximately 6.7% of theCommon Stock as of December 31, 2015, whereby it sold, on a private placement basis, (a) $50.0 million aggregate principal amount of its unsecured promissorynotes ("Notes") and (b) five-year warrants ("Warrants") for 1.3 million shares of Common Stock. The payment terms under the purchase agreement contained twoinstallments, the first $15.0 million in October 2017 and the balance $35.0 million in October 2020. Interest was payable at 4.1% on a monthly basis over the termof the loan. Due to the embedded redemption (put and/or call) features in the note agreement, it was determined that the fair value of the warrants should bebifurcated from the value of the notes payable and recorded as a debt discount. The relative fair value of the warrants and the debt discount as related to theOctober 2015 purchase agreement was determined to be $8.8 million. This Purchase Agreement was modified in February 2016 when the Company entered into a Note and Warrant Purchase Agreement (the "February 2016Purchase Agreement") with Redmile for an aggregate amount of up to $75.0 million. The Company agreed with Redmile that in full consideration of the purchaseprice for the notes issued under the October 2015 Purchase Agreement, Redmile surrendered for cancellation all notes and warrants acquired from the October2015 Purchase Agreement and the Company paid Redmile any unpaid interest accrued thereunder. Pursuant to the February 2016 agreement, at closing, it sold, ona private placement basis (a) $50.0 million aggregate principal amount of unsecured promissory notes ("Initial Notes") and (b) five year warrants to purchase up to37 shares of the Company's Common Stock for every $1,000 of the principal amount of Initial Notes purchased ("Initial Warrants"), for an aggregate of up to1,850,000 shares of Common Stock issuable under the Initial Warrants. The payment terms contained two installments, the first $15.0 million in October 2017 andthe balance $35.0 million in October 2021. The interest rate was 3.875% and payable upon of maturity. This transaction was accounted for as a debt modificationin accordance with ASC 470-50. The incremental fair value between the warrants that were cancelled and the February issued warrants of $3.5 million wasrecorded as additional unamortized debt discount on the balance sheet and added to the prior warrant balance within equity.-140-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) The Notes mentioned above were cancelled in December 2016. For more details, refer to section December 2016 Note Purchase Agreement below in thisfootnote.June 2016 Amended Purchase Agreement In June 2016, following the marketing approval for migalastat in Europe, the Company entered into the Amended Purchase Agreement with Redmile. Suchamendment joined GCM to the February 2016 Purchase Agreement. Pursuant to the Amended Purchase Agreement, the Company sold an additional $30 millionunsecured promissory notes and five year warrants to purchase up to purchase up to 42 shares of our Common Stock, par value $0.01 per share for every $1,000 ofthe principal amount of additional notes purchased, for an aggregate of up to 1,260,000 shares of Common Stock issuable from the additional warrants. Thepayment was due in October 2021. The interest rate was 3.875% and payable upon of maturity. The Notes mentioned above were cancelled in December 2016. Formore details, refer to section December 2016 Note Purchase Agreement below in this footnote.December 2016 Note Purchase Agreement On December 15, 2016, the Company entered into a Note Purchase Agreement ("Note Purchase Agreement") with GCM and RedMile, pursuant to which theCompany agreed to prepay all outstanding principal and accrued and unpaid interest on the notes issued by the Company and held by GCM and Redmile. Suchprepayment was made on December 21, 2016. The Note Purchase Agreement did not cancel the warrants, under the Amended Purchase Agreement. The net losson extinguishment of the debt was $13.3 million and is included as loss on extinguishment in the Consolidated Statement of Operations for the year endedDecember 31, 2016.2016 Convertible Debt On December 21, 2016, the Company issued at par value $250 million aggregate principal amount of unsecured Convertible Senior Notes due 2023 (the"Convertible Notes"), which included the exercise in full of the $25 million over-allotment option granted to the initial purchasers of the Notes, in a privateoffering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. Interest is payable semiannually on June 15 and December 15 of eachyear, beginning on June 15, 2017. The Notes will mature on December 15, 2023, unless earlier repurchased, redeemed, or converted in accordance with their terms.The Notes are convertible at the option of the holders, under certain circumstances and during certain periods, into cash, shares of the Company's common stock ora combination thereof and may be settled as described below. The net proceeds from the Note Offering were $243.1 million, after deducting fees and estimatedexpenses payable by the Company. In addition, the Company used approximately $13.5 million of the net proceeds from the issuance of the Convertible Notes topay the cost of the capped call transactions ("Capped Call Confirmations") that the Company entered into in connection with the issuance of the Convertible Notes. The Convertible Notes are governed by an indenture dated December 21, 2016 (the "Indenture") by and between Amicus and Wilmington Trust, NationalAssociation, as trustee. The Convertible Notes are initially convertible into approximately 40,849,675 shares of the Company's common stock under certain circumstances prior tomaturity at a conversion rate of 163.3987 shares per $1,000 principal amount of Convertible Notes, which represents a conversion price of approximately $6.12 pershare of Common Stock, subject to adjustment under certain conditions.-141-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)Holders may convert their Convertible Notes at their option at specified times prior to the maturity date of December 15, 2023, only if:•during any fiscal quarter commencing after March 31, 2017, if the last reported sale price of the Company's common stock for at least 20 tradingdays in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is equal to or more than130% of the conversion price of the Convertible Notes on the last day of such preceding fiscal quarter; •a Holder submits its Convertible Notes for conversion during the five business day period following any five consecutive trading day period inwhich the trading price for the Convertible Notes, per $1,000 principal amount of the Convertible Notes, for each such trading day was less than98% of the product of the last reported sale price of the Company's common stock and the conversion rate of the Convertible Notes on such date; or•the Company issues to all or substantially all of the holders of common stock rights options or warrants entitling then them for a period of not morethan 60 calendar days after the date of such issuance to subscribe for or purchase shares of the Common Stock, at a price per share less than theaverage of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the TradingDay immediately preceding the date of announcement of such issuance or distributes to all or substantially all holders of the Common Stock theCompany's assets, debt securities or rights to purchase the Company's securities which distribution has a per share value of exceeding 10% of theLast Reported Sale Price of the Common Stock on the Trading Day immediately preceding the date of announcement of such distribution •the Company enters into specified corporate transactions. •the Company has had a call for redemption, the holder can convert up until the second trading day immediately preceding the redemption date The Convertible Notes will be convertible, at the option of the note holders, regardless of whether any of the foregoing conditions have been satisfied, on orafter September 15, 2023 at any time prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date ofDecember 15, 2023. Upon the occurrence of a make-whole fundamental change or if the Company call all or any portion of the Convertible Notes for redemption prior to July 1,2020, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its ConvertibleNotes in connection with such make-whole fundamental change or during the related redemption period. Upon conversion, the Company may pay cash, shares of the Company's common stock or a combination of cash and stock, as determined by the Company inits discretion. The Company accounts for the Convertible Notes as a liability and equity component where the carrying value of the liability component will be valued basedon a similar instrument. In accounting for the issuance of the Convertible Notes, the Company separated the Convertible Notes into liability and equitycomponents. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associatedconvertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liabilitycomponent from the par value of the Convertible Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referredto as the debt discount, is amortized to interest expense over the seven-year term of the Convertible Notes. The-142-Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)equity component is not re-measured as long as it continues to meet the conditions for equity classification. In accounting for the issuance of the Convertible Notes, the Company separated the Convertible Notes into liability and equity components based on theirrelative values. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associatedconvertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liabilitycomponent from the par value of the Convertible Notes. The difference between the principal amount of the Convertible Notes and the liability componentrepresents the debt discount, which is recorded as a direct deduction from the related debt liability in the Consolidated Balance Sheets and amortized to interestexpense using the effective interest method over the seven-year term of the Convertible Notes. The equity component of the Convertible Notes of approximately$88.3 million is included in additional paid-in capital in the Consolidated Balance Sheets and is not remeasured as long as it continues to meet the conditions forequity classification. Additionally, the Company recorded a deferred tax liability of $29.8 million in relation to the Convertible Notes. The Company incurred transaction costs of approximately $7.5 million, including approximately $6.9 million that was paid from the gross proceeds of theConvertible Notes offering. In accounting for the transaction costs, the Company allocated the total amount incurred to the liability and equity components usingthe same proportions as the proceeds from the Convertible Notes. Transaction costs attributable to the liability component were recorded as a direct deduction fromthe related debt liability in the Consolidated Balance Sheets and amortized to interest expense over the seven-year term of the Convertible Notes. Transaction costsattributable to the equity component were netted with the equity component in additional-paid-in-capital. The Convertible Notes consist of the following as of December 31, 2016: The fair value of the debt at December 31, 2016 was approximately $258.8 million. The following table sets forth total interest expense recognized related to the Convertible Notes for the year ended December 31, 2016:-143-Liability component (In thousands) Principal $250,000 Less: debt discount (1) (90,807)Less: deferred financing (1) (4,729)Net carrying value of the debt $154,464 (1)Included in the Consolidated Balance Sheets within Convertible Senior Notes (due 2023) and amortized to interest expense over theremaining life of the Convertible Senior Notes using the effective interest rate method.Components (In thousands) Contractual interest expense $208 Amortization of deferred financing 26 Amortization of debt discount 248 Total $482 Effective interest rate of the liability component 10.85%Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) The Capped Call Confirmations of $13.5 million are expected generally to reduce the potential dilution to the Common Stock upon any conversion of theConvertible Notes and/or offset the cash payments the Company is required to make in excess of the principal amount upon conversion of the Notes in the eventthat the market price of the Common Stock is greater than the strike price of the Capped Call Confirmations (which initially corresponds to the initial conversionprice of the Convertible Notes and is subject to certain adjustments under the terms of the Capped Call Confirmations), with such reduction and/or offset subject toa cap based on the cap price of the Capped Call Confirmations. The Capped Call Confirmations have an initial cap price of $7.20 per share, which represents apremium of approximately 50% over the closing price of the Company's Common Stock on The NASDAQ Global Market on December 15, 2016, and is subject tocertain adjustments under the terms of the Capped Call Confirmations. The Capped Call Confirmations will cover, subject to anti-dilution adjustments substantiallysimilar to those applicable to the Convertible Notes, the number of shares of Common Stock that will underlie the Convertible Notes. The Capped CallConfirmations do not meet the criteria for separate accounting as a derivative as they are indexed to the Company's Common Stock. The premiums paid for theCapped Call Confirmations have been included as a net reduction to additional paid-in capital.17. Earnings per Share The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss attributable to commonstockholders per common share (in thousands except share amounts): Dilutive common stock equivalents would include the dilutive effect of common stock options, convertible debt units, RSUs and warrants for common stockequivalents. Potentially dilutive common stock equivalents were excluded from the diluted earnings per share denominator for all periods because of their anti-dilutive effect. For the year ended 2016 there was 40.9 million potential common shares outstanding as a result of the convertible debt that was excluded from thediluted net loss per share calculation because their effect would have been anti-dilutive.-144- Years Ended December 31, Historical 2016 2015 2014 Numerator: Net loss attributable to common stockholders $(200,042)$(132,118)$(68,926)Denominator: Weighted average common shares outstanding—basic and diluted 134,401,588 109,923,815 74,444,157 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued) The table below presents potential shares of common stock that were excluded from the computation as they were anti-dilutive using the treasury stockmethod (in thousands):Note 18. Commitments and Contingencies Since October 1, 2015, three purported securities class action lawsuits have been commenced in the United States District Court for New Jersey, naming asdefendants the Company, its Chairman and Chief Executive Officer, and in one of the actions, its Chief Medical Officer. The lawsuits allege violations of theSecurities Exchange Act of 1934 in connection with allegedly false and misleading statements made by the Company related to the regulatory approval path formigalastat. The plaintiffs seek, among other things, damages for purchasers of the Company's Common Stock during different periods, all of which fall betweenMarch 19, 2015 and October 1, 2015. It is possible that additional suits will be filed, or allegations received from stockholders, with respect to similar matters andalso naming the Company and/or its officers and directors as defendants. On May 26, 2016, the Court consolidated these lawsuits into a single action and appointeda lead plaintiff. The lead plaintiff filed a Consolidated Amended Class Action Complaint on July 11, 2016. On August 25, 2016, the defendants filed a motion todismiss in response to the Consolidated Amended Class Action Complaint. This motion to dismiss was fully briefed on October 28, 2016. Lead plaintiff anddefendants have reached an agreement in principal to fully and finally settle all claims asserted in the Consolidated Amended Class Action Complaint. Thesettlement is immaterial to the Company's consolidated financial statements and is subject to, among other things, documentation and court approval. Thesettlement amount is expected to be fully covered under insurance. On or about November 2, 2015, a derivative lawsuit was filed by an Amicus shareholder purportedly on Amicus' behalf in the Superior Court of New Jersey,Middlesex County, Chancery Division, against the individuals who serve on the Amicus Board of Directors. Amicus itself was named as a nominal defendant. Thederivative lawsuit alleged claims for breach of state law fiduciary duties, waste of corporate assets, and unjust enrichment based on allegedly false and misleadingstatements made by Amicus related to the regulatory approval path for migalastat HCl. On February 19, 2016, the complaint was dismissed by the Court andplaintiffs have not refiled. On or about March 3, 2016, a derivative lawsuit was filed by an Amicus shareholder purportedly on Amicus' behalf in the Superior Court of New Jersey,Middlesex County, Chancery Division, against various officers and directors of the Company. Amicus itself is named as a nominal defendant. The derivativelawsuit alleges similar facts and circumstances as the three purported securities class action lawsuits described above and further alleges claims for breach of statelaw fiduciary duties, waste of corporate assets, unjust enrichment, abuse of control, and gross mismanagement based on allegedly false and misleading statementsmade by Amicus related to the regulatory approval path for migalastat HCl. The plaintiff seeks, among other things, to require the Amicus Board to take certainactions to reform its corporate governance procedures, including greater shareholder input and a provision to-145- Year ended December 31, 2016 2015 2014 Options to purchase common stock 15,528 11,729 10,021 Convertible debt 40,850 — — Outstanding warrants, convertible to common stock 3,110 1,350 1,600 Unvested restricted stock units 744 479 955 Total number of potentially issuable shares 60,232 13,558 12,576 Table of ContentsAmicus Therapeutics, Inc.Notes To Consolidated Financial Statements — (Continued)permit shareholders to nominate candidates for election to the Board, along with restitution, costs of suit and attorney's fees. On February 7, 2017, the complaintwas dismissed by the Court without prejudice. These lawsuits and any other related lawsuits are subject to inherent uncertainties and the actual cost will depend upon many unknown factors. The outcomeof the litigation is necessarily uncertain and we could be forced to expend significant resources in the defense of these suits, and we may not prevail.19. Subsequent Events The Company evaluated events that occurred subsequent to December 31, 2016 and found there were no material recognized or non-recognized subsequentevents during this period.20. Selected Quarterly Financial Data (Unaudited—in thousands except per share data)-146- Quarters Ended March 31 June 30 September 30 December 31 2016 Net loss $(43,691)$(51,050)$(46,654)$(58,647)Basic and diluted net loss per common share (1) (0.35) (0.40) (0.33) (0.41)2015 Net loss $(24,288)$(27,133)$(37,800)$(42,897)Basic and diluted net loss per common share (1) (0.25) (0.27) (0.32) (0.34)(1)Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts do not add tothe annual amounts because of differences on the weighted-average common shares outstanding during each period principally due to theeffect of the Company issuing shares of its common stock during the year.Table of ContentsItem 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.Item 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controlsand procedures as of December 31, 2016. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,means controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submitunder the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls andprocedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it filesor submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financialofficers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how welldesigned and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating thecost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2016, ourprincipal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonableassurance level. There have been no changes in our internal controls over financial reporting during the fourth quarter of the year ended December 31, 2016 that havematerially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.Management's Report on Internal Control Over Financial Reporting The information required by this section which includes the "Management's Report on Consolidated Financial Statements and Internal Control over FinancialReporting" and the "Report of Independent Registered Public Accounting Firm" are incorporated by reference from "Item 8. Financial Statements andSupplementary Data."Item 9B. OTHER INFORMATION. None.-147-Table of ContentsPART 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 2017annual 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 thisAnnual Report on 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. The information required by this item is incorporated by reference from the Proxy Statement under the caption "Management," "Section 16(a) BeneficialOwnership Reporting Compliance," and "Proposal No. 1 — Election of Directors" We have adopted a Code of Business Ethics and Conduct for Employees, Executive Officers and Directors that applies to our employees, officers anddirectors and incorporate guidelines designed to deter wrongdoing and to promote the honest and ethical conduct and compliance with applicable laws andregulations. In addition, the code of ethics incorporates our guidelines pertaining to topics such as conflicts of interest and workplace behavior. We have posted thetext of our code on our website at www.amicusrx.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 orcontroller, or persons performing similar functions and (2) the nature of any waiver, including an implicit waiver, from provision of our code of ethics that isgranted 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 "Compensation Discussion and Analysis."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 BeneficialOwners 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 RelatedTransactions," "Director Independence," "Committee Compensation and Meetings of the Board of Directors," and "Compensation Committee Interlock and InsiderParticipation."Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information required by this item is incorporated by reference from the Proxy Statement.-148-Table of ContentsPART 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 notesthereto. 3. Exhibits-149- Incorporated by Reference to SEC Filing Exhibit No. Filed Exhibit Description Form Date Exhibit No. Filed with this Form 10-K2.1 Agreement and Plan of Merger, dated November 19,2013, by and among Amicus Therapeutics, Inc., CBAcquisition Corp., Callidus BioPharma, Inc., andCuong Do Form 8-K 2/12/2014 2.1 +2.2 Agreement and Plan of Merger, dated August 30,2015, by and among the Registrant, Titan MergerSub Corp. and Scioderm, Inc. Form 8-K 9/3/15 2.1 2.3 Amendment to Agreement and Plan of Merger, datedSeptember 30, 2015, by and among the Registrant,Titan Merger Sub Corp. and Scioderm, Inc. Form 8-K 9/30/15 2.2 +2.4 Agreement and Plan of Merger, dated July 5, 2016,by and among MiaMed, Inc., the Registrant andMinervas Merger Sub, Inc. Form 8-K 7/6/16 2.1 3.1 Restated Certificate of Incorporation of theRegistrant. Form 10-K 2/28/12 3.1 3.2 Restated By-laws of the Registrant. S-1/A (333-141700) 4/27/07 3.4 3.3 Certificate of Amendment to the Registrant'sRestated Certificate of Incorporation, as amended. Form 8-K 6/10/2015 3.1 4.1 Specimen Stock Certificate evidencing shares ofcommon stock S-1 (333-141700) 3/30/07 4.1 4.2 Third Amended and Restated Investor RightsAgreement, dated as of September 13, 2006, asamended S-1 (333-141700) 3/30/07 4.3 4.3 Form of Warrant issued on November 20, 2013 Form 8-K 11/21/13 10.2 4.4 Form of Warrant, issued on October 1, 2015 Form 8-K 10/1/15 4.1 Table of Contents-150- Incorporated by Reference to SEC Filing Exhibit No. Filed Exhibit Description Form Date Exhibit No. Filed with this Form 10-K4.5 Form of Warrant to Purchase Common Stock Form 8-K 2/22/16 4.1 4.6 Form of Warrant to Purchase Common Stock Form 8-K 7/1/16 4.1 4.7 Form of Indenture Form S-3ASR 4/29/16 4.7 4.8 Indenture, dated December 21, 2016, by andbetween the Registrant and Wilmington Trust,National Association Form 8-K 12/21/16 4.1 *10.1 2002 Equity Incentive Plan, as amended, and formsof option agreements thereunder S-1/A (333-141700) 4/27/07 10.1 +10.2 Amended and Restated License Agreement, datedOctober, 31, 2008, by and between the Registrantand Mount Sinai School of Medicine of New YorkUniversity Form 10-K 2/6/09 10.3 +10.3 License Agreement, dated as of June 26, 2003, byand between the Registrant and University ofMaryland, Baltimore County, as amended S-1 (333-141700) 3/30/07 10.4 +10.4 Exclusive License Agreement, dated as of June 8,2005, by and between the Registrant and NovoNordisk, A/S S-1 (333-141700) 3/30/07 10.5 *10.5 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 10.6 Form of Director and Officer IndemnificationAgreement S-1 (333-141700) 3/30/07 10.17 *10.7 Amended and Restated 2007 Director Option Planand form of option agreement Form 8-K 6/18/10 10.2 *10.8 2007 Employee Stock Purchase Plan S-1/A (333-141700) 5/17/07 10.24 *10.11 Management Bonus Program Summary Form 8-K 6/9/16 10.1 *10.12 Letter Agreement, dated as of May 10, 2010 by andbetween the Registrant and Ken Valenzano Form 10-K 3/4/11 10.32 *10.14 Letter Agreement, dated as of January 3, 2011 byand between the Registrant and Enrique Dilone Form 10-K 3/4/11 10.34 10.15 Lease Agreement dated August 16, 2011 betweenthe Registrant and Cedar Brook 3 CorporateCenter, L.P. Form 8-K 8/16/11 10.1 Table of Contents-151- Incorporated by Reference to SEC Filing Exhibit No. Filed Exhibit Description Form Date Exhibit No. Filed with this Form 10-K10.17 Second Amendment to Lease Agreement dated asof May 16, 2013 by and between the Registrant andA/G Touchstone, TP, LLC. Form 8-K 5/22/13 10.1 *10.18 Letter Agreement, dated as of June 5, 2013 by andbetween the Registrant and Jeffrey P. Castelli Form 10-Q 8/7/13 10.6 *10.19 Letter Agreement, dated as of June 5, 2013 by andbetween the Registrant and Jayne Gershkowitz Form 10-Q 8/7/13 10.7 10.20 Securities Purchase Agreement, datedNovember 20, 2013 by and among the Companyand the purchasers identified therein Form 8-K 11/20/13 10.1 10.21 Credit and Security Agreement, by and betweenMidCap Funding III, LLC, as administrative agent,the Lenders listed in the Credit Facility Schedulethereto, the Registrant, and CallidusBiopharma, Inc., dated as of December 27, 2013 Form 8-K 12/30/13 10.1 +10.23 Second Restated Agreement, dated November 19,2013 by and between the Registrant and GlaxoGroup Limited Form 10-K 3/3/14 10.46 *10.24 Amicus Therapeutics, Inc. Cash Deferral Plan Form 8-K 7/2/14 10.1 10.25 Amendment No.1 to the Amicus Therapeutics, Inc.Cash Deferral Plan Form 8-K 10/16/14 10.1 *10.26 Employment Agreement dated April 23, 2014,between the Registrant and John F. Crowley Form 8-K 4/25/14 10.1 *10.27 Employment Agreement dated April 23, 2014,between the Registrant and William D. Baird, III Form 8-K 4/25/14 10.2 *10.28 Employment Agreement dated April 23, 2014,between the Registrant and Bradley L. Campbell Form 8-K 4/25/14 10.3 *10.29 Employment Agreement dated April 23, 2014,between the Registrant and Jay Barth, M.D. Form 10-Q 5/5/14 10.6 *10.30 Letter Agreement dated April 24, 2014, between theRegistrant and Julie Yu Form 10-Q 5/5/14 10.7 Table of Contents-152- Incorporated by Reference to SEC Filing Exhibit No. Filed Exhibit Description Form Date Exhibit No. Filed with this Form 10-K*10.31 Letter Agreement dated April 30, 2014, between theRegistrant and Daphne Quimi Form 10-Q 5/5/14 10.8 *10.32 Amended and Restated 2007 Equity Incentive Plan Form 8-K 6/13/16 10.1 *10.33 Amicus Therapeutics, Inc. Cash Deferral Plan Form 8-K 10/28/16 10.1 *10.34 Employment Agreement dated December 17, 2015between the Registrant and Hung Do Form 10-K 2/29/16 10.37 *10.35 Employment Agreement dated December 17, 2015between the Registrant and Dipal Doshi Form 10-K 2/29/16 10.38 *10.36 Amendment No. 1 to the Amicus Therapeutics, Inc.Cash Deferral Plan Form 8-K 10/16/14 10.1 10.37 First Amendment to Credit and Security Agreementby and between MidCap Funding III, LLC, asadministrative agent, the Lenders listed in the CreditFacility Schedule thereto, the Registrant, andCallidus Biopharma, Inc., dated as of April 27,2015. Form 8-K 4/28/15 10.1 10.38 Note and Warrant Purchase Agreement by andamong the Registrant and the purchasers identifiedon the signature pages thereto, dated October 1,2015 Form 8-K 10/1/15 10.1 10.39 First Amendment to Lease, dated September 9,2015, by and between Cedar Brook 3 CorporateCenter, L.P. and the Registrant Form 8-K 9/14/15 10.1 10.40 Sales Agreement, dated February 26, 2016, by andbetween the Registrant and Cowen andCompany, LLC Form 8-K 2/26/16 10.1 *10.41 Retention Bonus Letter, dated March 10, 2016, byand between the Registrant and Jay Barth, M.D. Form 8-K 3/15/16 10.1 10.42 Note and Warrant Purchase Agreement by andamong the Registrant and the purchasers identifiedon the signature pages thereto, dated February 19,2016. Form 8-K 2/22/16 10.1 Table of Contents-153- Incorporated by Reference to SEC Filing Exhibit No. Filed Exhibit Description Form Date Exhibit No. Filed with this Form 10-K10.43 Joinder to and Amendment of Note and WarrantPurchase Agreement by and among AmicusTherapeutics, Inc., Amicus Therapeutics UKLimited, Amicus Therapeutics InternationalHolding LTD and the purchasers identified on thesignature pages thereto, dated as of June 30, 2016 Form 8-K 7/1/16 10.1 *10.44 Amendment No. 1 to the Amended and RestatedAmicus Therapeutics, Inc. 2007 Equity IncentivePlan Form 8-K 7/29/16 10.1 *10.45 Secondment Letter, dated August 22, 2016 by andbetween the Registrant and Bradley Campbell Form 8-K 8/23/16 10.1 10.46 Base Capped Call Transaction, dated December 15,2016, by and between the Registrant and Goldman,Sachs & Co. Form 8-K 12/21/16 10.1 10.47 Base Capped Call Transaction, dated December 15,2016, by and between the Registrant and JPMorganChase Bank, National Association Form 8-K 12/21/16 10.2 10.48 Base Capped Call Transaction, dated December 15,2016, by and between the Registrant and RoyalBank of Canada Form 8-K 12/21/16 10.3 10.49 Additional Capped Call Transaction, datedDecember 19, 2016, by and between the Registrantand Goldman, Sachs & Co. Form 8-K 12/21/16 10.4 10.50 Additional Capped Call Transaction, datedDecember 19, 2016, by and between the Registrantand JPMorgan Chase Bank, National Association Form 8-K 12/21/16 10.5 10.51 Additional Capped Call Transaction, datedDecember 19, 2016, by and between the Registrantand Royal Bank of Canada Form 8-K 12/21/16 10.6 10.52 Note Purchase Agreement, dated December 15,2016, by and among the Registrant, AmicusTherapeutics International Holding LTD andP Redmile Ltd. Form 8-K 12/21/16 10.7 Table of Contents-154- Incorporated by Reference to SEC Filing Exhibit No. Filed Exhibit Description Form Date Exhibit No. Filed with this Form 10-K10.53 Note Purchase Agreement, dated December 15,2016, by and among the Registrant, AmicusTherapeutics International Holding LTD andRedmile Capital Offshore Fund, Ltd. Form 8-K 12/21/16 10.8 10.54 Note Purchase Agreement, dated December 15,2016, by among the Registrant, AmicusTherapeutics International Holding LTD andRedmile Capital Offshore Fund II, Ltd. Form 8-K 12/21/16 10.9 10.55 Note Purchase Agreement, dated December 15,2016, by and among the Registrant, AmicusTherapeutics International Holding LTD andRedmile Special Opportunities Fund, Ltd. Form 8-K 12/21/16 10.10 10.56 Note Purchase Agreement, dated December 15,2016, by and among the Registrant, AmicusTherapeutics International Holding LTD andRedmile Capital Fund, LP Form 8-K 12/21/16 10.11 10.57 Note Purchase Agreement, dated December 15,2016, by and between Amicus TherapeuticsInternational Holding LTD and GCM GrosvenorSpecial Opportunities Master Fund, Ltd. Form 8-K 12/21/16 10.12 *10.58 Form of Performance-Based Restricted Stock UnitAward Agreement under the Amended and Restated2007 Equity Incentive Plan Form 8-K 12/30/16 10.1 21 List of Subsidiaries X23.1 Consent of Independent Registered PublicAccounting Firm. X31.1 Certification of Principal Executive OfficerPursuant to Rule 13a-14(a) of the SecuritiesExchange Act of 1934. X31.2 Certification of Principal Financial Officer Pursuantto Rule 13a-14(a) of the Securities Exchange Act of1934. X32.1 Certificate of Principal Executive Officer pursuantto 18 U.S.C. Section 1350 and Section 906 of theSarbanes-Oxley Act of 2002. XTable of Contents-155- Incorporated by Reference to SEC Filing Exhibit No. Filed Exhibit Description Form Date Exhibit No. Filed with this Form 10-K32.2 Certificate of Principal Financial Officer pursuant to18 U.S.C. Section 1350 and Section 906 of theSarbanes-Oxley Act of 2002. X101 The following financial information from this AnnualReport on Form 10-K for the year endedDecember 31, 2016, formatted in XBRL (ExtensibleBusiness Reporting Language) and filedelectronically herewith: (i) the Consolidated BalanceSheets; (ii) the Consolidated Statements ofOperations; (iii) the Consolidated Statements ofComprehensive Loss; (iv) the ConsolidatedStatements of Cash Flows; (v) and the Notes to theConsolidated Financial Statements. X+Confidential treatment has been granted as to certain portions of the document, which portions have been omitted and filed separately withthe Securities and Exchange Commission. *Indicates management contract or compensatory plan.Table of ContentsSIGNATURES 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 behalfby the undersigned, thereunto duly authorized on March 1, 2017. 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 Registrantand in the capacities and on the dates indicated.-156- AMICUS THERAPEUTICS, INC. (Registrant) By: /s/ John F. Crowley John F. Crowley Chief Executive OfficerSignature Title Date /s/ John F. Crowley (John F. Crowley) Chairman and Chief Executive Officer (Principal Executive Officer) March 1, 2017/s/ William D. Baird III (William D. Baird III) Chief Financial Officer (Principal Financial Officer) March 1, 2017/s/ Daphne Quimi (Daphne Quimi) Sr. Vice President, Finance (Principal Accounting Officer) March 1, 2017/s/ Robert Essner (Robert Essner) Director March 1, 2017/s/ Donald J. Hayden (Donald J. Hayden) Director March 1, 2017/s/ Ted W. Love, M.D. (Ted W. Love, M.D.) Director March 1, 2017/s/ Margaret G. McGlynn, R.Ph. (Margaret G. McGlynn, R.Ph.) Director March 1, 2017Table of Contents-157-Signature Title Date /s/ Michael G. Raab (Michael G. Raab) Director March 1, 2017/s/ Glenn Sblendorio (Glenn Sblendorio) Director March 1, 2017/s/ Craig Wheeler (Craig Wheeler) Director March 1, 2017Table of Contents-158- Incorporated by Reference toSEC Filing Exhibit No. Filed with this Form 10-K Filed Exhibit Description Form Date Exhibit No.21 List of Subsidiaries X23.1 Consent of Independent Registered Public Accounting Firm. X31.1 Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) ofthe Securities Exchange Act of 1934. X31.2 Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) ofthe Securities Exchange Act of 1934. X32.1 Certificate of Principal Executive Officer pursuant to 18 U.S.C.Section 1350 and Section 906 of the Sarbanes-Oxley Act of 2002. X32.2 Certificate of Principal Financial Officer pursuant to 18 U.S.C.Section 1350 and Section 906 of the Sarbanes-Oxley Act of 2002. X101 The following financial information from this Annual Report on Form 10-Kfor the year ended December 31, 2016, formatted in XBRL (ExtensibleBusiness Reporting Language) and filed electronically herewith: (i) theConsolidated Balance Sheets; (ii) the Consolidated Statements ofOperations; (iii) the Consolidated Statements of Comprehensive Loss;(iv) the Consolidated Statements of Cash Flows; (v) and the Notes to theConsolidated Financial Statements. XQuickLinks -- Click here to rapidly navigate through this documentExhibit 21 List of Subsidiaries of the Registrant Callidus Biopharma, Inc. (Delaware) Scioderm, Inc. (Delaware) Scioderm Limited (Ireland) MiaMed, Inc. (Delaware) Amicus Therapeutics International Holding Limited (UK) Amicus Therapeutics UK Limited (UK) Amicus Therapeutics SAS (France) Amicus Therapeutics B.V. (Netherlands) Amicus Therapeutics GmbH (Germany) Amicus Therapeutics S.L.U. (Spain) Amicus Therapeutics S.r.l. (Italy) Amicus Therapeutics K.K.. (Japan)QuickLinks Exhibit 21 List of Subsidiaries of the Registrant QuickLinks -- Click here to rapidly navigate through this documentEXHIBIT 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the following Registration Statements:1.Registration Statement (Form S-3ASR No. 333-212414) pertaining to the Amicus Therapeutics, Inc., Automatic shelf registration statement ofsecurities of well-known seasoned issuers 2.Registration Statement (Form S-3ASR No. 333-211005) pertaining to the Amicus Therapeutics, Inc., Automatic shelf registration statement ofsecurities of well-known seasoned issuers 3.Registration Statement (Form S-3ASR No. 333-207210) pertaining to the Amicus Therapeutics, Inc., Automatic shelf registration statement ofsecurities of well-known seasoned issuers 4.Registration Statement (Form S-8 No. 333-197202) pertaining to the Amicus Therapeutics, Inc. Cash Deferral Plan, 5.Registration Statement (Form S-8 No. 333-195194) pertaining to the Amicus Therapeutics, Inc. Restricted Stock Unit Deferral Plan, 6.Registration Statement (Form S-8 No. 333-145305) pertaining to the: 1) Amicus Therapeutics, Inc. 2002 Equity Incentive Plan, as Amended,2) Amicus Therapeutics, Inc. 2007 Equity Incentive Plan, 3) Amicus Therapeutics, Inc. 2007 Director Option Plan, 4) Amicus Therapeutics, Inc.2007 Employee Stock Purchase Plan, 7.Registration Statement (Form S-8 No. 333-157219) pertaining to the: 1) Amicus Therapeutics, Inc. Amended and Restated 2007 Equity IncentivePlan and 2) Amicus Therapeutics, Inc. 2007 Director Option Plan, 8.Registration Statement (Form S-8 No. 333-174900) pertaining to the: 1) Amicus Therapeutics, Inc. Amended and Restated 2007 Equity IncentivePlan and 2) Amicus Therapeutics, Inc. Amended and Restated 2007 Director Option Plan,of our reports dated March 1, 2017 with respect to the consolidated financial statements of Amicus Therapeutics, Inc., and the effectiveness ofinternal control over financial reporting of Amicus Therapeutics, Inc. included in this Annual Report (Form 10-K) for the year ended December 31,2016./s/ Ernst & Young LLP Iselin, New Jersey March 1, 2017QuickLinks EXHIBIT 23.1 Consent of Independent Registered Public Accounting Firm QuickLinks -- Click here to rapidly navigate through this documentEXHIBIT 31.1 CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER I, John F. Crowley, certify that: 1. I have reviewed this annual report on Form 10-K of Amicus Therapeutics, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared; b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles; c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscalquarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting; 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.Date: March 1, 2017 /s/ John F. Crowley John F. Crowley Chairman and Chief Executive Officer QuickLinks EXHIBIT 31.1 CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICERQuickLinks -- Click here to rapidly navigate through this documentEXHIBIT 31.2 CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER I, William D. Baird III, certify that: 1. I have reviewed this annual report on Form 10-K of Amicus Therapeutics, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared; b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles; c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscalquarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting; 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.Date: March 1, 2017/s/ William D. Baird III William D. Baird III Chief Financial Officer QuickLinks EXHIBIT 31.2 CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER QuickLinks -- Click here to rapidly navigate through this documentEXHIBIT 32.1 Certification by the Principal Executive Officer Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to 18 U. S. C. Section 1350, I, John F. Crowley, hereby certify that, to the best of my knowledge, Amicus Therapeutics Inc., (the "Company")Annual Report on Form 10-K for the year ended December 31, 2016 (the "Report"), as filed with the Securities and Exchange Commission on March 1, 2017, fullycomplies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in theReport fairly presents, in all material respects, the financial condition and results of operations of the Company./s/ John F. Crowley John F. Crowley Chairman and Chief Executive Officer March 1, 2017 QuickLinks EXHIBIT 32.1 Certification by the Principal Executive Officer Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 QuickLinks -- Click here to rapidly navigate through this documentEXHIBIT 32.2 Certification by the Principal Financial Officer Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to 18 U. S. C. Section 1350, I, William D. Baird III, hereby certify that, to the best of my knowledge, the Amicus Therapeutics Inc. (the "Company")Annual Report on Form 10-K for the year ended December 31, 2016 (the "Report"), as filed with the Securities and Exchange Commission on March 1, 2017, fullycomplies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in theReport fairly presents, in all material respects, the financial condition and results of operations of the Company./s/ William D. Baird III William D. Baird III Chief Financial Officer March 1, 2017 QuickLinks EXHIBIT 32.2 Certification by the Principal Financial Officer Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 

Continue reading text version or see original annual report in PDF format above