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
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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
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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