EXTRAORDINARY
PATIENT
FOCUS.
2020
A N N U A L R E P O R T
Noah, Age 10
Whitby, Ontario
Living with Pompe Disease
A R RE
COMPANY.
Amicus Therapeutics is a global, patient-
dedicated biotechnology company
focused on discovering, developing and
delivering high-quality medicines for people
living with rare metabolic diseases.
As of December 31, 2020
~$261M
NET PRODUCT SALES
GLOBAL
FOOTPRINT
ROBUST PIPELINE
OF PROGRAMS FOR
RARE METABOLIC DISEASES
$483M
CASH ON HAND
480+
DEDICATED EMPLOYEES
FIRST ORAL PRECISION
MEDICINE FOR FABRY DISEASE:
GALAFOLD
Kiera, Age 14
Dexter, MI
Living with CDKL5 Deficiency Disorder
Our dedication to patients goes
hand in hand with our commitment
to our environmental, social and
governance (ESG) responsibilities.
Building strong ESG practices and oversight into our scientific and business
activities creates a culture of integrity at every level of our organization
while safely and effectively delivering on our founding beliefs:
Be at the forefront of
therapies for rare and
orphan diseases
Create long-term
value for our
stakeholders
Foster teamwork and
respect for individual
contributions
To access the full ESG report, please visit the Responsibility section of our corporate website.
R E S P O N S I B I L I T Y
Diversity, Equity, Inclusion
Our "Three Pillars of DEI" are interwoven into Amicus culture. For our employees,
these three pillars are a touchstone for inspiration, guidance and encouragement.
PEOPLE
PATIENTS
PHILANTHROPY
Embed DEI into activities of our
business units, Amicus Belief
Statement, and Mission-
focused Behaviors
Ensure diverse representation in
next generation Talent initiatives
Attract talent through a diverse
lens (candidate slates, interview
teams, inclusive hiring processes)
Ensure diversity in Board of
Directors and Senior Leadership
Team representation
Ensure diverse representation
in our clinical trials
Support non-profits that
impact diverse communities
Create patient education to
impact health literacy
Address the impact of
socioeconomics and access
through advocacy
Work towards global access
to treatments for patients
Invest in the next generation of
innovators through partnerships
with STEM programs
Build awareness of rare
diseases as diverse populations
Galafold® Remains Cornerstone of Amicus’ Success
◻
◻
◻
1,400+ patients and ~$261M global sales in FY20
FY21 revenue guidance of $300M-$315M
$1B+ addressable market opportunity at peak
AT-GAA in Pompe: Potential to Become Standard of Care
◻
◻
◻
Advancing key global regulatory submissions for approval throughout 2021
150+ Pompe patients treated with AT-GAA by YE20
$1B-$2B+ market opportunity
Advancing Our Industry Leading Rare Disease
Gene Therapy Portfolio
◻
◻
◻
Gene therapy platform with rights to 50+ lysosomal
disorders and 12 additional rare diseases
Two clinical-stage gene therapy programs in CLN6
and CLN3 Batten disease
$1B+ peak recurring market opportunity
A leading, fully integrated, global rare
disease biotechnology company
DISCOVERY
PRECLINICAL
PHASE 1/2
PHASE 3
REGULATORY
COMMERCIAL
Megan Crowley, Age 24
Princeton, NJ
Living with Pompe Disease
FABRY FRANCHISE
Galafold® (migalastat) monotherapy
Fabry Gene Therapy
POMPE FRANCHISE
AT-GAA (Novel ERT + Enzyme Stabilizer)
Pompe Gene Therapy
ADDITIONAL GENE THERAPY PROGRAMS
CLN6 Batten Disease
CLN3 Batten Disease
CLN1 Batten Disease
NEXT-GENERATION RESEARCH PROGRAMS AND CNS GENE THERAPIES
CDKL5 Deficiency Disorder GTx / ERT
Angelman Syndrome
Others
MPS FRANCHISE
Mepsevii™ (vestronidase alfa) (Japan only)
Next-generation MPSIIIA
MPSIIIB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 001-33497
Amicus Therapeutics, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
3675 Market Street, Philadelphia, PA
(Address of Principal Executive Offices)
71-0869350
(I.R.S. Employer
Identification Number)
19104
(Zip Code)
(215) 921-7600
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
FOLD
NASDAQ Global Market
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 ☒ No
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 No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in
Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
Accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report . ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes □ No ☒
The aggregate market value of the 255,379,926 shares of voting common equity held by non-affiliates of the registrant, computed by reference to the closing
price 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, 2020)
was $3,851,129,284. Shares of voting and non-voting stock held by executive officers, directors, and holders of more than 10% of the outstanding stock have been
excluded from this calculation because such persons or institutions may be deemed affiliates. This determination of affiliate status is not a conclusive determination
for other purposes.
The number of shares outstanding of the registrant's common stock, $0.01 par value per share, as of February 19, 2021 was 264,316,074 shares.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Proxy Statement for the registrant's 2021 Annual Meeting of Stockholders which is
to be filed subsequent to the date hereof are incorporated by reference into Part III of this Annual Report on Form 10-K.
Table of Contents
BUSINESS
Item 1.
Item 1A. RISK FACTORS
Item 1B. UNRESOLVED STAFF COMMENTS
Item 2.
PROPERTIES
Item 3.
LEGAL PROCEEDINGS
Item 4. MINE SAFETY DISCLOSURES
PART I
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Item 6.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
SELECTED FINANCIAL DATA
OPERATIONS
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Item 9.
Item 9A. CONTROLS AND PROCEDURES
Item 9B. OTHER INFORMATION
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Item 11. EXECUTIVE COMPENSATION
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
SIGNATURES
PART IV
5
30
71
72
72
72
73
75
76
89
90
127
127
127
128
128
128
128
128
129
135
We have filed applications to register certain trademarks in the United States and abroad, including AMICUS
THERAPEUTICS and design, AMICUS ASSIST and design, CHART and design, AT THE FOREFRONT OF THERAPIES
FOR RARE AND ORPHAN DISEASES, HEALING BEYOND DISEASE, OUR GOOD STUFF, and Galafold® and design.
Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements that involve risks, uncertainties, and assumptions.
Forward-looking statements are all statements, other than statements of historical facts, that discuss our current expectation and
projections relating to our strategy, future operations, future financial position, future revenues, projected costs, prospects,
plans, and objectives of management. These statements may be preceded by, followed by or include the words "aim,"
"anticipate," "believe," "can," "could," "estimate," "expect," "forecast," "intend," "likely," "may," "outlook," "plan," "potential,"
"predict," "project," "seek," "should," "will," "would," the negatives or plurals thereof, and other words and terms of similar
meaning, although not all forward-looking statements contain these identifying words.
We have based these forward-looking statements on our current expectations and projections about future events.
Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot
assure you that the assumptions and expectations will prove to be correct. You should understand that the following important
factors could affect our future results and could cause those results or other outcomes to differ materially from those expressed
or implied in our forward-looking statements:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the scope, progress, results and costs of our clinical trials of our drug candidates and gene therapy candidates,
including but not limited to AT-GAA, CLN6 and CLN3;
the cost of manufacturing drug supply for our clinical and preclinical studies, including the cost of manufacturing
Pompe Enzyme Replacement Therapy ("ERT" or "ATB200" or "cipaglucosidase alfa") and gene therapies;
the future results of on-going preclinical research and subsequent clinical trials for cyclin-dependent kinase-like 5
("CDKL5") deficiency disorder, Pompe gene therapy, Fabry gene therapy, Mucopolysaccharidosis Type IIIB ("MPS
IIIB"), next generation Mucopolysaccharidosis Type IIIA ("MPS IIIA") and other pipeline candidates we may identify
from time to time, including our ability to obtain regulatory approvals and commercialize these therapies and obtain
market acceptance for such therapies;
the costs, timing, and outcome of regulatory review of our product candidates, including AT-GAA;
any changes in regulatory standards relating to the 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 successfully commercialize Galafold® (also referred to as "migalastat HCl") and, if our regulatory filings
are accepted and approved, AT-GAA;
our ability to manufacture or supply sufficient clinical or commercial products, including Galafold®, AT-GAA and our
gene therapy candidates;
our ability to obtain reimbursement for Galafold® and, if our regulatory filings are accepted and approved, AT-GAA;
our ability to satisfy post-marketing commitments or requirements for continued regulatory approval of Galafold®;
our ability to obtain market acceptance of Galafold® and, if our regulatory filings are accepted and approved, AT-
GAA;
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 acquired 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;
our ability to establish collaborations, partnerships or other similar arrangements and to obtain milestone, royalty, or
other payments from any such collaborators;
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Table of Contents
•
•
•
•
our ability to adjust to changes in the European and United Kingdom markets in the wake of the United Kingdom
leaving the European Union;
the extent to which our business could be adversely impacted by the effects of the novel coronavirus ("COVID-19")
outbreak, including due to actions by us, governments, our customers or suppliers or other third parties to control the
spread of COVID-19, or by other health epidemics or pandemics;
fluctuations in foreign currency exchange rates; and
changes in accounting standards.
In light of these risks and uncertainties, we may not actually achieve the plans, intentions or expectations disclosed in our
forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or
events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make.
We have included important factors in the cautionary statements included in this Annual Report on Form 10-K, particularly in
Part I, Item 1A "— Risk Factors", a summary of which may be found below, that we believe could cause actual results or
events to differ materially from the forward-looking statements that we make. Those factors and the other risk factors described
herein are not necessarily all of the important factors that could cause actual results or developments to differ materially from
those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results.
Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint
ventures, collaborations or investments we may make. Consequently, there can be no assurance that actual results or
developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences
to, or effects on, us. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking
statements.
You should read this Annual Report on Form 10-K and the documents that we incorporate by reference in this Annual
Report on Form 10-K completely and with the understanding that our actual future results may be materially different from
what we expect. These forward-looking statements speak only as of the date of this report. We undertake no obligation, and
specifically decline any obligation, to publicly update or revise any forward-looking statements, even if experience or future
developments make it clear that projected results expressed or implied in such statements will not be realized, except as may be
required by law.
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Table of Contents
Summary Risk Factors
The following is a summary of the principal risks that make an investment in our common stock speculative or risky. This
summary does not address all of the risks that we face and is qualified in its entirety by reference to the more detailed
descriptions included in Part I, Item 1A "— Risk Factors". This summary should be read together with those more detailed
descriptions, along with our other SEC filings before making an investment decision.
• We depend heavily on sales of Galafold® in Europe, the U.S. and Japan. If we are delayed or unable to commercialize
Galafold® successfully, our business could be materially harmed.
If we are not able to obtain, or delayed in obtaining, required regulatory approvals, we will not be able to commercialize
our product or product candidates, material impairing our ability to generate revenue.
If we are unable to establish and maintain sales and marketing capabilities, or relationships, to market and sell our product
or, if approved, product candidates, their commercialization may suffer.
If the market opportunities for our product or product candidates are smaller than we believe they are, then our revenues
may be adversely affected, and our business may suffer.
•
•
•
• Galafold® or any of our product candidates that receive regulatory approval may fail to achieve the degree of market
acceptance necessary for commercial success.
• We face substantial competition, which may result in others discovering, developing or commercializing products before or
more successfully than we do.
• A variety of risks associated with international operations could adversely affect our business.
• The impact of Brexit on our international operations could have a material impact on our business.
• Our product or any product candidates receiving approval may become subject to unfavorable pricing regulations, third-
party coverage and reimbursement practices or healthcare reform initiatives.
•
If we are found to have promoted off-label uses by regulatory authorities, we may become subject to significant liability.
• Product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of any
products that we may develop.
•
If applicable regulatory authorities approve generic or biosimilar products with claims that compete with our product or
any of our product candidates, it could reduce our sales.
• We may expend our limited resources to pursue a particular product, product candidate or indication and fail to capitalize
on an alternative for which there is a greater likelihood of success.
• Our product or product candidates may cause undesirable side effects or have other properties that could delay or prevent
their regulatory approval or commercialization.
• Any product or product candidate we obtain marketing approval for could be subject to restrictions or withdrawal from the
market and we may be subject to penalties or enforcement actions if we fail to comply with regulatory requirements.
• Certain relationships will be subject to applicable anti-kickback, fraud and abuse, anti-bribery and corruption and other
healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages,
reputational harm and diminished profits and future earnings.
•
•
•
•
•
If clinical trials of our product candidates do not produce results satisfactory to regulatory authorities, the development and
commercialization of our product candidates may not be completed.
If we experience unforeseen events in connection with our clinical trials, potential regulatory approval or
commercialization of our product candidates could be delayed or prevented.
If we experience delays or difficulties in the enrollment of patients in our clinical trials, our receipt of necessary regulatory
approvals could be delayed or prevented.
Initial results from a clinical trial do not ensure that the trial will be successful and success in preclinical or early stage
clinical trials does not ensure success in later-stage clinical trials.
If our competitors obtain orphan drug exclusivity for their products and we do not, we may not unable to have competing
products approved in the applicable jurisdiction for a significant period of time.
• Failure to obtain or maintain regulatory approval outside the U.S. would prevent us from marketing our products abroad.
• Our business activities involve the use of hazardous materials which could subject us to significant adverse consequences if
we fail to comply with the applicable laws regulating their use.
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Table of Contents
•
If we are unable to obtain marketing approval, or if approved unable to successfully commercialize AT-GAA, our business
could be materially harmed.
• Our gene therapy product candidates are based on novel technologies, which makes it difficult to predict the time and cost
of their development and subsequently obtaining regulatory approval.
• We may encounter difficulties manufacturing our gene therapy which could impact timing and availability of clinical and
commercial supply.
• Use of third parties to manufacture our product or product candidates may increase the risk that we will not have sufficient
quantities of our product or product candidates or such quantities at an acceptable cost, which could delay, prevent or
impair our development or commercialization efforts.
• We rely on third parties to conduct certain preclinical development activities and our clinical trials, and those third parties
may not perform satisfactorily.
• We may not be successful in maintaining or establishing collaborations, which could adversely affect our ability to develop
and, particularly in international markets, commercialize products.
• Materials necessary to manufacture our product or product candidates may not be available on commercially reasonable
terms, which may delay their development and commercialization.
• Manufacturing issues may arise that could increase costs or delay commercialization.
• We have incurred significant losses and anticipate that we will continue to incur losses in the future.
• We may never become profitable even though we currently generate revenue from the sale of products.
•
If we require, and fail to obtain, additional necessary financing, we may be unable to complete the development and
commercialization of our product and product candidates.
• Raising additional capital may cause dilution to our existing stockholders, restrict our operations, or require us to relinquish
rights to our technologies, Galafold® or product candidates.
• We may not have sufficient cash flow from our business to pay our substantial debt.
• Foreign currency exchange rate fluctuations could harm our financial results.
• Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
• Our executive officers, directors and principal stockholders maintain the ability to exert significant influence and control
over matters submitted to our stockholders for approval.
• Because we do not anticipate paying any cash dividends on our capital in the foreseeable future, capital appreciation, if
any, will be our stockholders sole source of gain.
•
If we are unable to obtain and maintain sufficiently broad patent protection, our ability to successfully commercialize our
technology and products may be adversely affected.
• We may become involved in lawsuits to protect or enforce our patents or other intellectual property.
• Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights which could
have a material adverse effect on the success of our business.
• We may be subject to claims by third parties asserting that we or our employees have misappropriated their intellectual
property, or claiming ownership of what we regard as our own intellectual property.
•
If we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose license rights
that are important to our business.
• Failure to secure trademark registrations could adversely affect our business.
• Our rights to develop and commercialize our gene therapy product candidates are subject, in part, to the terms and
conditions of licenses granted to us by others.
• The novel coronavirus ("COVID-19") pandemic may negatively impact our business and operations.
• Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.
• We expect to expand our development, regulatory and sales and marketing capabilities, and as a result, we may encounter
difficulties in managing our growth, which could disrupt our operations.
• Our employees, independent contractors, principal investigators, consultants and vendors may engage in misconduct or
•
improper activities which could lead to significant liability and harm our reputation.
If our enterprise risk program, global risk committee and other compliance methods are not effective, our business,
financial condition and operating results may be adversely affected.
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Table of Contents
Item 1. BUSINESS
Overview
PART I
We are a global, patient-dedicated biotechnology company focused on discovering, developing, and delivering novel
medicines for rare diseases. We have a portfolio of product opportunities led by the first, oral monotherapy for Fabry disease
that has achieved widespread global approval, a differentiated biologic for Pompe disease, and an industry leading rare disease
gene therapy portfolio.
The cornerstone of our portfolio is Galafold® (also referred to as "migalastat"), the first and only approved oral precision
medicine for people living with Fabry disease who have amenable genetic variants. Migalastat is currently approved under the
trade name Galafold® in the United States ("U.S."), European Union ("E.U."), United Kingdom ("U.K."), and Japan, with
multiple additional approvals granted and applications pending in several geographies around the world.
The lead biologics program of our pipeline is Amicus Therapeutics GAA ("AT-GAA", also known as ATB200/AT2221, or
cipaglucosidase alfa/miglustat), a novel, clinical-stage, potential best-in-class treatment paradigm for Pompe disease. In
February 2019, the U.S. Food and Drug Administration ("FDA") granted Breakthrough Therapy designation ("BTD") to AT-
GAA for the treatment of late onset Pompe disease. We initiated the rolling Biologic License Application ("BLA") submission
to the FDA in the fourth quarter of 2020.
We have established an industry leading gene therapy portfolio of potential therapies for people living with rare metabolic
diseases, through a license with Nationwide Children's Hospital ("Nationwide Children’s") and an expanded collaboration with
the University of Pennsylvania ("Penn"). Our pipeline includes gene therapy programs in rare, neurologic lysosomal disorders
("LDs"), specifically: CLN6, CLN3, and CLN1 Batten disease, Pompe disease, Fabry disease, CDKL5 deficiency disorder
("CDD"), Mucopolysaccharidosis Type IIIB ("MPS IIIB"), as well as a next generation program in Mucopolysaccharidosis
Type IIIA ("MPS IIIA"). Our expanded collaboration with Penn also provides us with exclusive disease-specific access and the
option rights to develop potentially disruptive new gene therapy platform technologies and programs for most LDs and a
broader portfolio of more prevalent rare diseases, including Rett Syndrome, Angelman Syndrome, Myotonic Dystrophy, and
select other muscular dystrophies. In the first quarter of 2020, the FDA granted Fast Track designation to the CLN3 Batten
disease gene therapy, AT-GTX-502, for the treatment of pediatric patients less than 18 years of age. In September 2020 and
February 2021, the European Medicines Agency ("EMA") granted Priority Medicines ("PRIME") designation and the FDA
granted Fast Track designation, respectively, to the CLN6 Batten disease gene therapy, AT-GTX-501, for the treatment of
patients with variant late infantile neuronal ceroid lipofuscinosis 6 ("vLINCL6").
In July 2020, we entered into a definitive agreement for a $400 million credit facility with Hayfin Capital Management
(“Senior Secured Term Loan due 2026”) with an interest rate equal to 3-month LIBOR, subject to a 1% floor, plus 6.5% per
annum and requires interest-only payments until mid-2024 and matures in six years in 2026. This transaction resulted in net
proceeds of $385.9 million, after deducting fees and expenses. There were no warrants or equity conversion features associated
with the Senior Secured Term Loan due 2026. Additionally, we used $156.3 million of the proceeds to voluntarily settle the
principal amount, accrued interest, and early settlement premiums of the Senior Secured Term Loan with BioPharma Credit
PLC that was due in 2023 ("Senior Secured Term Loan due 2023").
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Our Strategy
Our strategy is to create, manufacture, test, and deliver the highest quality medicines for people living with rare metabolic
diseases through internally developed, acquired, or in-licensed products and product candidates that have the potential to
obsolete current treatments, provide significant benefits to patients, and be first- or best-in-class. In addition to our programs in
Fabry and Pompe diseases, we are leveraging our global capabilities to develop and expand our robust pipeline in genomic
medicine. We have made significant progress toward fulfilling our vision of building a leading global biotechnology company
focused on rare metabolic diseases.
Our operations have not been significantly impacted from the novel coronavirus (“COVID-19”) pandemic in 2020;
however, we observed increased lag times between patient identification and Galafold® initiation due to the resurgence of
COVID-19 in the fourth quarter. We have maintained operations in all geographies, secured our global supply chain for our
commercial and clinical products, as well as maintained the operational integrity of our clinical trials, with minimum
disruptions. Our ability to continue to operate without any significant disruptions will depend on the continued health of our
employees, the ongoing demand for Galafold® and the continued operation of our global supply chain. We have continued to
provide uninterrupted access to medicines for those in need of treatment, while prioritizing the health and safety of our global
workforce. However, our results of operations in future periods may be negatively impacted by unknown future impacts from
the COVID-19 pandemic.
Highlights of our progress include:
•
•
•
Commercial and regulatory success in Fabry disease. For the year ended December 31, 2020, Galafold® revenue
totaled $260.9 million, an increase of $78.6 million compared to the prior year. We continue to see strong commercial
momentum and expansion into additional geographies. In countries where we have been operating the longest, such as
Germany and the U.K., we see an increasing proportion of previously untreated patients come onto Galafold®. In the
U.S., we continue to see a significant increase in patients from a growing and very wide prescriber base. Across all
markets, we see a high rate of compliance and adherence to this oral treatment option.
Pompe clinical program milestones. In December 2020, we completed last patient, last visit in our global Phase 3
pivotal study of AT-GAA (ATB200-03, also known as "PROPEL") with 123 patients at 62 sites in 24 countries and
initiated the rolling BLA submission to the FDA for AT-GAA. In February 2021, we subsequently reported topline
results for the PROPEL study. Additionally, in 2020, orphan drug designation was received in Japan and the British
Medicines and Healthcare Products Regulatory Agency issued a Promising Innovative Medicine ("PIM") designation
for AT-GAA for the treatment of late-onset Pompe disease. Previously, the U.S. FDA granted BTD for AT-GAA for
the treatment of late-onset Pompe disease.
Pipeline advancement and growth. We have established an industry leading gene therapy portfolio of medicines for
people living with rare metabolic diseases through a license with Nationwide Children’s and an expanded
collaboration with Penn. During the first quarter of 2020, we initiated the long-term follow-up of the initial participants
in the CLN6 Phase 1/2 study. In October 2020, we reported additional positive interim safety and efficacy data in our
ongoing CLN6 clinical study. Additionally, the research collaboration with Penn was expanded to pursue research and
development of novel gene therapies for Pompe disease, Fabry disease, CDD, CLN1, MPS IIIB, as well as a next
generation program in MPS IIIA.
• Manufacturing. We continued to manufacture our Pompe biologic at commercial scale (1,000L) for our clinical
studies, including our pivotal PROPEL study, and early commercial inventory. Our supply agreement with WuXi
Biologics and current capacity are expected to produce sufficient quantities to support commercial needs after receipt
of applicable regulatory approvals if obtained. For gene therapy, we are working with our strategic partners to support
our clinical manufacturing capabilities. During 2020 and thus far in 2021, our global supply chains have not been
interrupted and we have thus far maintained our ability to manufacture Galafold® as well as our clinical supply during
the COVID-19 pandemic.
•
Financial strength. Total cash, cash equivalents, and marketable securities as of December 31, 2020 was $483.3
million. Based on current operating models, we believe that the current cash position, which includes the net proceeds
from the Senior Secured Term Loan due 2026 and expected revenues is sufficient to fund our operations and ongoing
research programs to achieve self-sustainability. Potential impacts of the COVID-19 pandemic, business development
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collaborations, pipeline expansion, and investment in manufacturing capabilities could impact our future capital
requirements.
Our Commercial Product and Product Candidates
Galafold® (Migalastat HCl) for Fabry Disease
Our oral precision medicine Galafold® was granted accelerated approval by the FDA in August 2018 under the brand name
Galafold® for the treatment of adults with a confirmed diagnosis of Fabry disease and an amenable galactosidase alpha gene
("GLA") variant based on in vitro assay data. The FDA approved Galafold® for 348 amenable GLA variants. Galafold® was
approved in the E.U. and U.K. in May 2016 as a first-line therapy for long-term treatment of adults and adolescents, aged 16
years and older, with a confirmed diagnosis of Fabry disease and who have an amenable mutation (variant). The approved E.U.
and U.K. labels include 1,384 mutations amenable to Galafold® treatment, which represent up to half of all patients with Fabry
disease. In countries where mutations are provided only on the amenability website, these 1,384 amenable mutations are now
available. Marketing authorization approvals have been granted in over 40 countries around the world, including the U.S., E.U.,
U.K., Japan, and others. We plan to continue to launch Galafold® in additional countries during 2021.
As an orally administered monotherapy, Galafold® is designed to bind to and stabilize an endogenous alpha-galactosidase
A ("alpha-Gal A") enzyme in those patients with genetic variants identified as amenable in a GLP cell-based amenability assay.
Galafold® is an oral precision medicine intended to treat Fabry disease in patients who have amenable genetic variants, and at
this time, it is not intended for concomitant use with ERT.
Gene Therapy for Fabry Disease
We are committed to continued innovation for all people living with Fabry disease. For people living with Fabry disease
who have non-amenable variants, which are not suitable for Galafold® as a monotherapy, our strategy is to develop a Fabry
gene therapy. In October 2018, we expanded our gene therapy portfolio through a collaboration agreement with Penn to pursue
research and development of novel gene therapies, including Fabry disease, and other indications. In October 2019, we
disclosed preliminary data from a Fabry adeno-associate viral ("AAV") gene therapy using an Amicus-engineered transgene
that demonstrated high levels of GLA activity and robust GL-3 reduction in a mouse model of Fabry disease. In February 2021,
we presented initial preclinical data from our investigational AAV gene therapy program. This initial preclinical study assessed
a range of single doses of AAV in Gla knockout mice with either wild-type hGLA (“unmodified hGLA”) or an Amicus/Penn
engineered hGLA transgenes (“engineered hGLA” or “AT-GTX-701”). The engineered hGLA AAV gene therapy
demonstrated stable homodimer formation, enhanced temperature, plasma and neutral ph stability compared to the unmodified
hGLA AAV gene therapy. In the lowest tested dose of AT-GTX-701, Gla knockout mice showed partial substrate reduction,
while highest tested dose resulted in near complete substrate reduction. Additionally, AT-GTX-701 demonstrated significantly
greater lyso-Gb3/GL-3 substrate reduction across all Fabry disease relevant tissues including the dorsal root ganglia (“DRG”),
kidney, and heart, with reductions at low dose being equal to or greater than the reductions observed at higher doses with
wildtype transgene and provided the first evidence for DRG storage reduction in a Fabry mouse model treated with an AAV
gene therapy.
Fabry Disease Background
Patients with Fabry disease have an inherited deficiency of the alpha-Gal A enzyme that would normally degrade the lipid
substrate globotriaosylceramide in the lysosome. Genetic variants that cause changes in the amino acid sequence of alpha-Gal A
result in an unstable enzyme that does not efficiently fold into its correct three-dimensional shape and cannot be trafficked
properly in the cell, even if it has the potential for biological activity. Galafold® is an oral small molecule pharmacological
chaperone that is designed to bind to and stabilize a patient’s own endogenous target protein. This is considered a precision
medicine because Galafold® targets only patients with GLA variants amenable to Galafold®.
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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 to be either absent or deficient. When alpha-Gal A is absent or deficient the substrates, GL-3
and lyso-Gb3 accumulate, leading to damage of cells within affected parts of the individual's body and causing the various
pathologies seen in Fabry disease. 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. Fabry disease requires
lifelong medical intervention to manage the complications of this devastating disease across multiple organ systems.
Fabry disease is a relatively rare disorder. The annual incidence of Fabry disease in newborn males has been historically
estimated to be 1:40,000-1:60,000 (Journal of the American Medical Association January 1999 and The Metabolic and
Molecular Bases of Inherited Disease 8th edition 2001). However, more recent newborn screening studies in Italy, Taiwan,
Austria, Spain and the U.S., which collectively screened more than 500,000 male and female newborns, found the incidence of
GLA mutations to be between 1:2,445 to 1:8,454, more than ten times higher than previous estimates for classic patients
(American Journal of Human Genetics 2006, Human Mutation 2009, the Lancet 2011, Journal of Pediatrics 2017, and JAMA
Pediatrics 2018). When looking at only male newborns within these studies, the incidence of Fabry disease mutations is as high
as 1:1,316 – 1:7,575 (Circulation in Cardiovascular Genetics 2009, American Journal of Human Genetics 2006, European
Journal of Pediatrics 2017).
We believe that approximately 35-50% of the Fabry disease patient population may benefit from treatment with Galafold®
as a monotherapy. Additionally, we expect that as awareness of late-onset symptoms of Fabry disease grows, the number of
patients diagnosed with the disease will increase. Increased awareness of Fabry disease, particularly for specialists not
accustomed to treating Fabry disease patients, may lead to increased testing and diagnosis of patients with the disease.
Currently, two other products, both ERTs, are approved for the treatment of Fabry disease: agalsidase beta by Sanofi
Aventis and agalsidase alfa by Takeda, the latter of which is not approved in the U.S.
Novel ERT for Pompe Disease
We are leveraging our biologics capabilities to develop AT-GAA, a novel treatment paradigm for Pompe disease. AT-GAA
consists of a uniquely engineered rhGAA enzyme, ATB200, or cipaglucosidase alfa, with an optimized carbohydrate structure
to enhance lysosomal uptake, administered in combination with AT2221, or miglustat, that functions as an enzyme stabilizer.
The small molecule enzyme stabilizer, miglustat or AT2221, binds to and stabilizes ATB200, or cipaglucosidase alfa, in
circulation to improve the uptake of active enzyme in key disease-relevant tissues, resulting in increased clearance of
accumulated substrate, glycogen. Miglustat is not an active ingredient that contributes directly to substrate reduction
("glycogen").
We initiated ATB200-03 (or "PROPEL"), a global Phase 3 clinical study of AT-GAA in adult patients with late onset
Pompe disease in December 2018 and completed last patient, last visit in December 2020. In February 2021, we reported
topline results from the Phase 3 PROPEL study.
Patients enrolled in PROPEL were randomized 2:1 so that for every two patients randomized to be treated with AT-GAA,
one was randomized to be treated with alglucosidase alfa. Of the Pompe patients enrolled, 77% were being treated with
alglucosidase alfa (n=95) immediately prior to enrollment (“Switch”) and 23% had never been treated with any ERT (n=28)
(“Naïve”). 117 patients completed the PROPEL study and all 117 voluntarily enrolled in the long-term extension study.
The primary endpoint of the study was the mean change in 6-minute walk distance as compared with baseline
measurements at 52 weeks across the combined ERT Switch and ERT Naïve patient populations. In this combined population
patients taking AT-GAA (n=85) walked on average 21 meters farther at 52 weeks compared to 7 meters with those treated with
alglucosidase alfa (n=37). This primary endpoint in the combined population was assessed for superiority and while
numerically greater, statistical significance for superiority on this combined population was not achieved for the AT-GAA arm
as compared to the alglucosidase alfa arm (p=0.072).
Per the hierarchy of the statistical analysis plan, the first key secondary endpoint of the study was the mean change in
percent-predicted Forced Vital Capacity (“FVC”) at 52 weeks across the combined population. In this combined population
patients taking AT-GAA demonstrated a nominally statistically significant and clinically meaningful difference for superiority
over those treated with alglucosidase alfa. AT-GAA significantly slowed the rate of respiratory decline in patients after 52
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weeks. Patients treated with AT-GAA showed a 0.9% absolute decline in percent-predicted FVC, compared to a 4.0% absolute
decline in the alglucosidase alfa arm (p=0.023).
Patients within the combined study population demonstrated statistically significant improvements on the GSGC (“Gait,
Stairs, Gower’s Chair”) key secondary endpoint, which captures strength, coordination and mobility, compared to a worsening
for alglucosidase alfa treated patients in the overall population (p<0.05). Additionally, lower MMT (Manual Muscle Testing),
Patient-Reported Outcomes Measurement Information System (“PROMIS”) physical function and PROMIS fatigue secondary
endpoints favored AT-GAA treated patients over alglucosidase alfa treated patients. Results also showed improvements in the
two important biomarker endpoints of Pompe disease (Hex-4 and CK), which significantly favored AT-GAA compared to
alglucosidase alfa (p<0.001). AT-GAA demonstrated a similar safety profile to alglucosidase alfa.
The PROPEL Switch patients entered the study having been treated with alglucosidase alfa for a minimum of two years.
More than two thirds (67%+) of those patients had been on ERT treatment for more than five years prior to entering the
PROPEL study (mean of 7.4 years). A pre-specified analysis of the patients switching from alglucosidase alfa on 6-minute walk
distance showed that after 52 weeks from switching, AT-GAA treated patients (n=65) walked 16.9 meters farther than their
baseline, compared to 0.0 meters for those patients who were randomized to remain on alglucosidase alfa (n=30) (p=0.046).
A pre-specified analysis of the patients switching from alglucosidase alfa on percent-predicted FVC showed that AT-GAA
treated patients stabilized and slightly improved their respiratory function on this important measure while those patients
remaining on alglucosidase alfa continued to significantly decline in respiratory muscle function. AT-GAA patients showed a
0.1% absolute increase in percent-predicted FVC while the alglucosidase alfa patients showed a 4.0% absolute decline over the
course of the year (p=0.006).
The PROPEL Naïve patients treated with AT-GAA for 52 weeks (n=20) walked 33 meters farther than their baseline, on
the 6-minute walk distance endpoint. The Naïve patients treated with alglucosidase alfa (n=7) walked 38 meters further than
their baseline. The difference between the two groups was not statistically significant (p=0.60). Additionally, patients never
previously treated with any ERT showed similar declines in percent-predicted FVC at 52 weeks of –4.1% for AT-GAA treated
patients and –3.6% for alglucosidase alpha treated patients. The difference between the two groups was not statistically
significant (p=0.57).
Gene Therapy for Pompe Disease
As part of our long-term commitment to provide multiple solutions to address the significant unmet needs of the Pompe
community, we are also advancing a next-generation gene therapy treatment for Pompe disease. In October 2018, we expanded
our gene therapy portfolio through a collaboration agreement with Penn to pursue research and development of novel gene
therapies for Pompe disease and other indications.
In April 2019, we presented initial preclinical data from our investigational AAV gene therapy program for Pompe disease.
This initial preclinical study in Pompe knockout mice administered a single high dose of AAV gene therapy with either
unmodified wild-type hGAA ("unmodified hGAA") or an Amicus/Penn engineered hGAA transgene with a Lysosomal-
Targeting Cell receptor binding motif ("engineered hGAA"). The engineered hGAA AAV gene therapy demonstrated more
robust and consistent glycogen reduction compared to unmodified hGAA AAV gene therapy, in all key tissues assessed in a
Pompe mouse model. In the central nervous system, the engineered hGAA AAV gene therapy also showed robust glycogen
reduction in neuronal cells, suggesting this may be an effective way to address neuronal aspects of Pompe disease. Unmodified
hGAA AAV gene therapy showed minimal glycogen reduction in neuronal cells. This preclinical study provided initial
validation for combining Amicus-engineered transgenes with Penn's AAV gene therapy technologies.
In May 2020, we presented preclinical data with the engineered hGAA AAV in single and combined central nervous
system ("CNS") and systemic directed gene therapy in a mouse model of Pompe disease with advanced disease at treatment.
The engineered hGAA AAV showed better targeting and clearance of glycogen storage at low doses in Pompe mice compared
to unmodified hGAA AAV. High dose IV therapy showed strength rescue and the addition of high dose intracerabroventricular
("ICV") therapy to high dose IV provided incremental benefit.
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Pompe Disease Background
Like Fabry disease, Pompe disease is an LD that results from a deficiency in an enzyme, GAA. Signs and symptoms of
Pompe disease can be severe and debilitating and include progressive muscle weakness throughout the body, particularly the
heart and skeletal muscles. GAA deficiency causes accumulation of glycogen in cells, which is believed to result in the clinical
manifestations of Pompe disease. Pompe disease ranges from a rapidly fatal infantile form with severe cardiac involvement to a
more slowly progressive, late-onset form primarily affecting skeletal muscle. All forms are characterized by severe muscle
weakness that worsens over time. In the early-onset form, patients are usually diagnosed shortly after birth and often experience
enlargement of the heart and severe muscle weakness. In late-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 at Massachusetts General Hospital, there are 5,000-10,000 patients with Pompe disease
worldwide.
Currently, one product, an ERT, is approved for the treatment of Pompe disease: alglucosidase alfa by Sanofi Aventis.
Gene Therapy for Various Types of Batten Disease
Through our license with Nationwide Children’s and expanded collaboration with Penn, we are researching potential first-
in-class gene therapies for multiple forms of Batten disease. Batten disease is the common name for a broad class of rare, fatal,
inherited disorders of the nervous system also known as neuronal ceroid lipofuscinoses ("NCLs"). In these diseases, a defect in
a specific gene triggers a cascade of problems that interferes with a cell's ability to recycle certain molecules. Each gene is
called ceroid lipofuscinosis, neuronal ("CLN") and given a different number designation as its subtype. There are 13 known
forms of Batten disease often referred to as CLN1-8; 10-14. The various types of Batten disease have similar features and
symptoms but vary in severity and age of onset.
Most forms of Batten disease/NCLs usually begin during childhood. The clinical course often involves progressive loss of
independent adaptive skills such as mobility, feeding, and communication. Patients may also experience vision loss, personality
changes, behavioral problems, learning impairment, and seizures. Patients typically experience progressive loss of motor
function and eventually those affected become wheelchair-bound, are then bedridden, and die prematurely.
We have two clinical programs in CLN6 and CLN3 Batten disease, and several preclinical programs including CLN1 and
other types of Batten disease. CLN6 Batten disease results from a mutation in the CLN6 gene which primarily affects the
nervous system and results in a late-infantile form of Batten disease. CLN3 Batten disease, the most common form of Batten
disease, results from a mutation in the CLN3 gene which primarily affects the nervous system and results in a juvenile form of
Batten disease. CLN1 Batten disease results from a mutation in the CLN1 gene which primarily affects the nervous system and
results in an infantile form of Batten disease.
Our Phase 1/2 study in CLN6 Batten disease enrolled thirteen patients who received a single one-time intrathecal
administration of AAV-CLN6 gene therapy. In October 2020, we reported additional positive interim results from our CLN6
Batten disease AAV-CLN6 gene therapy program, AT-GTX-501. Interim safety data are available for 13 patients with CLN6
Batten disease. Interim safety data demonstrated the treatment with AT-GTX-501 was generally well tolerated. The majority of
adverse events ("AEs") were mild and unrelated to treatment. No pattern of adverse events related to AAV or CLN6
immunogenicity was observed. Interim efficacy data are available within the Hamburg Motor and Language scores and showed
a meaningful effect in slowing disease progression for twelve patients reaching the 12-month timepoint and for eight patients up
to 24 months, post-administration of the AAV-CLN6 gene therapy. Additionally, in October 2019, we reported interim clinical
data that suggested stabilization of various components of Hamburg Seizure and Vision scores in most patients from baseline to
month 12 or 24, in particular those patients treated at a younger age, compared to the progression expected in matched untreated
patients. The CLN6 Batten population is approximately 1,000 patients across our commercial landscape today and there are no
approved therapies for this disorder.
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In the fourth quarter of 2018, we announced the initiation of a Phase 1/2 study to evaluate the safety and efficacy of a
single intrathecal administration of an AAV serotype AT-GTX-502 gene therapy in patients with CLN3 Batten disease. In the
Phase 1/2 study, a total of three patients were dosed in the low-dose group, and based on the safety profile to date, the data
safety monitoring board cleared us to begin enrollment in the high-dose cohort. One patient is currently dosed in the high-dose
cohort. In February 2021, we announced initial safety for the first four patients up to 15 months post-administration of AT-
GTX-502 and preliminary efficacy data for the first three patients in the low-dose cohort for up 15 months post-administration
of AT-GTX-502, as well as one patient in the high-dose cohort for up to 3 months post-administration of AT-GTX-502. Initial
results of the study suggest that AT-GTX-502 was well tolerated and demonstrated potential early signs of disease stabilization
compared to a natural history dataset. CLN3 impacts approximately 5,000 patients across our commercial landscape today and
there are no approved therapies for this disorder.
CDKL5 Deficiency Disorder
We are researching a potential first-in-class genetic medicine for CDD consisting of a CDKL5 protein engineered for cross
correction, delivered as either a protein replacement or as a gene therapy through our collaboration with Penn. CDKL5 is a gene
on the X-chromosome encoding the CDKL5 protein that regulates the expression of several essential proteins for normal brain
development. Genetic mutations in the CDKL5 gene result in CDKL5 protein deficiency and CDD. This disorder manifests
clinically as persistent seizures starting in infancy, followed by severe impairment in neurological development. Most children
affected by CDD cannot walk or care for themselves and may also suffer from scoliosis, visual impairment, sensory issues, and
gastrointestinal complications.
Other Preclinical Gene Therapies
We have a number of additional gene therapies in active preclinical development, including gene therapies for MPS IIIB as
well as a next generation program in MPS IIIA. Our strategy is to develop first or best in class AAV gene therapies for these
rare devastating pediatric neurological lysosomal storage diseases.
Strategic Alliances and Arrangements
We will continue to evaluate 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 technologies or
products with a focus on rare metabolic diseases. We are exploring potential collaborations, alliances, and other business
development opportunities on a regular basis. These opportunities may include the acquisition of preclinical-stage, clinical-
stage, or marketed products so long as such transactions are consistent with our strategic plan to develop and provide therapies
to patients living with rare and orphan diseases.
Acquisitions
Celenex, Inc.
In September 2018, we expanded our pipeline by acquiring the rights and related intellectual property of ten gene therapy
programs through the acquisition of Celenex, Inc. ("Celenex"). Celenex is a private, clinical stage gene therapy company whose
lead programs are ten gene therapy programs including CLN6 and CLN3, which are in clinical stage, and several programs in
pre-clinical stage. Pursuant to the terms of the agreement, we agreed to pay up to an additional $10 million in connection with
the achievement of certain development milestones, $220 million in connection with the achievement of certain regulatory
approval milestones across multiple programs and up to $75 million in tiered sales milestone payments. Celenex has an
exclusive license agreement with Nationwide Children’s Hospital ("Nationwide Children’s"). Under this license agreement,
Nationwide Children’s is eligible to receive development and sales-based milestones of up to $7.8 million for each product.
MiaMed, Inc.
In July 2016, we acquired MiaMed, Inc., ("MiaMed"), which is a pre-clinical biotechnology company focused on
developing protein replacement therapy for CDD and related diseases. As part of the transaction, we may be obligated to pay up
to an additional $83.0 million in connection with the achievement of certain clinical, regulatory, and commercial milestones, for
a potential aggregate deal value of $89.5 million.
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Callidus Biopharma, Inc.
In connection with our acquisition of Callidus Biopharma, Inc. ("Callidus"), we may be obligated to make additional
payments to the former stockholders of Callidus upon the achievement of certain clinical milestones of up to $35 million and
regulatory milestones of up to $80 million set forth in the merger agreement, provided that the aggregate merger consideration
shall not exceed $130 million.
Intellectual Property
Patents and Trade Secrets
Our success depends in part on our ability to maintain proprietary protection surrounding our product candidates,
technology, and know-how, to operate without infringing the proprietary rights of others, and to prevent others from infringing
our proprietary rights. Our policy is to seek to protect our proprietary position by filing U.S. and foreign patent applications
related to our proprietary technology, including both new inventions and improvements of existing technology, that are
important to the development of our business, unless this proprietary position would be better protected using trade secrets. Our
patent strategy includes obtaining patent protection, where possible, on compositions of matter, methods of manufacture,
methods of use, combination therapies, dosing and administration regimens, formulations, therapeutic monitoring, screening
methods, and assays. We also rely on trade secrets, know-how, continuing technological innovation, in-licensing, and
partnership opportunities to develop and maintain our proprietary position. Lastly, we monitor third parties for activities that
may infringe our proprietary rights, as well as the progression of third-party patent applications that may have the potential to
create blocks to our products or otherwise interfere with the development of our business. We are aware, for example, of U.S.
patents, and corresponding international counterparts, owned by third parties that contain claims related to ERTs, and small
molecules for stabilizing enzymes. If any of these patents were to be asserted against us, there is no assurance that a court
would find in our favor or that, if we choose or are required to seek a license, a license to any of these patents would be
available to us on acceptable terms or at all.
We own or hold license rights to several issued patents and numerous pending and issued applications, filed in the U.S.,
Europe, Japan, and other jurisdictions that are related to Galafold® and our ongoing clinical programs:
•
•
We own issued U.S. patents that cover the use of migalastat, the active pharmaceutical ingredients in Galafold®,
in the treatment of Fabry disease, which expire in 2027, 2028, 2029, 2037 or 2038 and are listed in the FDA
Orange Book. Foreign counterparts of the U.S. patents are pending or issued in Europe, Japan, and certain other
jurisdictions. Further, we have pending U.S. patent applications covering various aspects of Galafold®,
including methods of treating a patient diagnosed with Fabry disease with migalastat and their foreign
counterparts. Any patents issuing from these applications will expire in 2036, 2038, 2039, 2040, or 2041.and we
anticipate listing these patents in the FDA Orange Book if issued.
We own several issued U.S. patents that cover various aspects of our investigational new treatment for Pompe
disease, AT-GAA (ATB200/AT2221, an ERT/pharmacological chaperone combination) as well as foreign
counterparts to the issued patents, most of which are still pending. Issued U.S. patents cover ATB200
compositions-of-matter, formulations, methods of manufacturing and methods of treatment and will expire in
2033, 2035 or 2037. We also have pending U.S. patent applications covering compositions, methods of
treatment, methods of manufacture, and formulations with anticipated expiry in 2033, 2035, 2036, 2037, 2038,
2040, or 2042.
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•
•
From the Celenex acquisition, we acquired an exclusive license to composition-of-matter and intrathecal
method of treatment patent applications covering the gene therapy for treating Batten disease that are pending in
the U.S., Europe, Japan, and other jurisdictions. Any patents issued from these applications will expire in 2033
or 2040. The patent covering an intrathecal method of treatment, which expires in 2033, has issued in Europe
and Japan.
From our agreement with Penn, we have license to Penn’s patent portfolio pertaining to vector and other
platform technologies for treating Pompe disease, Fabry disease, CDD, CLN1, MPS IIIB, as well as a next
generation program in MPS IIIA. Any patents issued from these applications will expire in 2039.
Patent term extensions and adjustments, supplementary protection certificates, and pediatric exclusivity periods are not
reflected in the expiration dates listed above and may extend protection.
In addition to our clinical programs, we actively monitor and file patent applications in the U.S. and in foreign countries on
relevant technologies and pre-clinical programs. For example, we own or hold license rights to U.S. and foreign patents or
patent applications covering the following:
•
•
Gene therapy protein engineering technology;
Gene therapy (e.g., Pompe, Fabry, CDLK5, MPS IIIB and next generation MPS IIIA) and ERT (e.g., CDKL5)
programs and the use to treat specified diseases.
We cannot be certain, however, that issued patents will be enforceable or provide adequate protection or that pending
patent applications will result in issued patents.
•
Individual patents extend for varying periods depending on the effective date of filing of the patent application
or the date of patent issuance, and the legal term of the patents in the countries in which they are obtained.
Generally, patents issued in the U.S. are effective for 20 years from the earliest nonprovisional filing date. This
period may be shortened by terminal disclaimer or further extended by patent term adjustment or extension. The
term of foreign patents varies in accordance with provisions of applicable local law, but typically is 20 years
from the earliest nonprovisional 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 for a portion of the time spent in clinical development and regulatory
review. However, the maximum extension is five years and the extension cannot extend the patent beyond 14 years from the
new drug application ("NDA") approval. Similar extensions are available in European countries, known as Supplemental
Protection Certificate ("SPC") extensions, Japan, and other countries. However, in the U.S. we will not know what, if any,
extensions are available until a drug is approved. In addition, in the U.S., under provisions of the Best Pharmaceuticals for
Children Act, we may be entitled to an additional six-month period of patent protection or market exclusivity for completing
pediatric clinical studies in response to an FDA issued Pediatric Written Request before said exclusivities expire.
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The patent positions of companies like ours are generally uncertain and involve complex legal, technical, scientific, and
factual questions. Our ability to maintain and solidify our proprietary position for our technology will depend on our success in
promptly filing patent applications on new discoveries, and in obtaining effective claims and enforcing those claims once
granted. We focus special attention on filing patent applications for formulations and delivery regimens for our products in
development to further enhance our patent exclusivity for those products. We seek to protect our proprietary technology and
processes, in part, by contracting with our employees, collaborators, scientific advisors, and our commercial consultants to
ensure that any inventions resulting from the relationship are disclosed promptly, maintained in confidence until a patent
application is filed, and preferably until publication of the patent application, and assigned to us or subject to a right to obtain a
license. We do not know whether any of our owned patent applications or those patent applications that are licensed to us will
result in the issuance of any patents. Our issued patents and those that may issue in the future, or those licensed to us, may be
challenged, narrowed, invalidated, circumvented, or be found to be invalid or unenforceable, which could limit our ability to
stop competitors from marketing related products and reduce the term of patent protection that we may have for our products.
Neither we nor our licensors can be certain that we were the first to invent the inventions claimed in our owned or licensed
patents or patent applications. In addition, our competitors may independently develop similar technologies or duplicate any
technology developed by us and the rights granted under any issued patents may not provide us with any meaningful
competitive advantages against these competitors. Furthermore, because of the extensive time required for development,
testing, and regulatory review of a potential product, it is possible that any related patent may expire prior to or shortly after
commencing commercialization, thereby reducing the advantage of the patent to our business and products.
We may rely, in some circumstances, on trade secrets to protect our technology. However, trade secrets are difficult to
protect. We seek to protect our trade secret technology and processes, in part, by entering into confidentiality agreements with
commercial partners, collaborators, employees, consultants, scientific advisors, and other contractors, and by contracting with
our employees and some of our commercial consultants to ensure that any trade secrets resulting from such employment or
consulting are owned by us. We also seek to preserve the integrity and confidentiality of our data and trade secrets by
maintaining physical security of our premises and physical and electronic security of our information technology systems.
While we have confidence in these individuals, organizations, and systems, agreements or security measures may be breached,
and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be
discovered independently by others. To the extent that our consultants, contractors, or collaborators use intellectual property
owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
Collaboration and License Agreements
We have acquired rights to develop and commercialize our product candidates through licenses granted by various parties.
The following summarizes our material rights and obligations under those licenses:
Nationwide Children's Hospital
In September 2018, we expanded our pipeline by acquiring the rights and related intellectual property of ten gene therapy
programs through our acquisition of Celenex. Celenex has an exclusive license agreement with Nationwide Children’s. Under
this license agreement, Nationwide Children’s is eligible to receive development and sales-based milestones of up to $7.8
million for each product.
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University of Pennsylvania
In October 2018, as amended, we entered into a collaboration agreement with Penn to pursue research and development
of novel gene therapies. Our gene therapy portfolio pipeline expanded to include Pompe disease, Fabry disease, CDD, CLN1,
MPS IIIB, as well as a next generation program in MPS IIIA. This expanded collaboration with Penn also provides us with
exclusive disease-specific access and option rights to develop potentially disruptive new gene therapy platform technologies
and programs for most LDs and a broader portfolio of rare diseases, including Rett Syndrome, Angelman Syndrome,
Myotonic Dystrophy, and select other muscular dystrophies.
Under the expanded collaboration agreement with Penn, Penn is eligible to receive certain milestone, royalty and discovery
research payments with respect to licensed products for each indication. Milestone payments are payable following the
achievement of certain development and commercial milestone events in each indication, up to an aggregate of $88.0 million
per indication. Royalty payments are based on net sales of licensed products on a licensed product-by-licensed product and
country- by-country basis. We will provide $10.0 million each year during the five-year agreement to fund the discovery
research program. In connection with the collaboration agreement, in 2018, we made an upfront payment of $7 million in cash
to Penn that was expensed to research and development expense in the Consolidated Statements of Operations.
GlaxoSmithKline
In July 2012, as amended in November 2013, we entered into an agreement with GlaxoSmithKline ("GSK"), pursuant to
which Amicus obtained global rights to develop and commercialize Galafold® as a monotherapy and in combination with ERT
for Fabry disease (“Collaboration Agreement”). Under the terms of the Collaboration Agreement, 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 eight major markets
outside the U.S.
Manufacturing
We continue to rely on contract manufacturers to supply the active biopharmaceutical ingredients and final drug product
for Galafold®, other pharmacological chaperones, our next-generation ERT product candidates, and our gene therapy product
candidates. The active biopharmaceutical ingredients and final formulations for these products are manufactured under current
Good Manufacturing Practice ("cGMP"). The components in the final formulation for each product are commonly used in other
biopharmaceutical products and are well characterized ingredients. Although we rely on contract manufacturers, we have
personnel with extensive manufacturing and quality experience to oversee our contract manufacturers. We have implemented
appropriate controls for assuring the quality of both active biopharmaceutical ingredients and final drug products. Product
specifications will be established in concurrence with regulatory bodies at the time of product registration.
While our third-party manufacturers have met our current manufacturing requirements, we anticipate taking steps to
increase our manufacturing capabilities for our gene therapy platform. Our current arrangement with third-party manufacturers
provide sufficient quantities of our program materials to meet anticipated clinical trial demands.
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Competition
Overview
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition,
and a strong emphasis on proprietary products. In addition, several large pharmaceutical companies are increasingly focused on
developing therapies for the treatment of rare diseases through organic growth, acquisitions, and partnerships. While we believe
that our technologies, knowledge, experience, and scientific resources, provide us with competitive advantages, we face
potential competition from many different sources, including commercial enterprises, academic institutions, government
agencies, and private and public research institutions. Any product candidates that we successfully develop and commercialize
will compete with both existing and new therapies that may become available in the future.
Many of our competitors may have significantly greater financial resources and expertise associated with research and
development, regulatory approvals, and marketing approved products. These competitors also compete with us in recruiting and
retaining qualified scientific and management personnel, as well as in acquiring technologies complementary to, or necessary
for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through
collaborative arrangements with large and established companies.
Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize products that
are safer, more effective, have fewer side effects, are more convenient, and/or are less expensive than products that we may
develop. In addition, our ability to compete may be affected because in some cases insurers or other third-party payors seek to
encourage the use of generic products. This may have the effect of making branded products less attractive to buyers.
Major Competitors
Our major competitors include pharmaceutical and biotechnology companies in the U.S. and abroad that have approved
therapies or therapies in development for LDs. Other competitors are pharmaceutical and biotechnology companies that have
approved therapies or therapies in development for rare diseases for which pharmacological chaperone technology, 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 these companies are
currently working to develop products that would directly compete with ours. We are also aware of several pharmaceutical and
biotechnology companies who are developing various treatments for novel ERTs and gene therapy. The key competitive factors
affecting the success of our product candidates are likely to be their efficacy, safety, convenience, and price.
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Any product candidates that we successfully develop and commercialize will compete with existing therapies and new
therapies that may become available in the future. The following table lists our principal competitors and publicly available
information on the status of their clinical-stage product offerings:
Competitor (1)
Indication
Product
Class of Product
Status
Sanofi Aventis
Fabry Disease
Fabrazyme®
Pompe Disease
Myozyme®/ Lumizyme®
ERT
ERT
Fabry Disease
GZ402671
Oral GCS Inhibitor
Pompe Disease
GZ402666 ("neo GAA")
Takeda
Idorsia
Fabry Disease
Fabry Disease
Protalix Biotherapeutics
Fabry Disease
Avrobio
Freeline
Sangamo
AskBio (Bayer)
Audentes (Astellas)
Fabry Disease
Fabry Disease
Fabry Disease
Pompe Disease
Pompe Disease
Replagal®
Lucerastat
PRX-102
AVR-RD-01
FLT190
ST-920
ACTUS-101
AT845
ERT
ERT
Oral Therapy
ERT
Gene Therapy
Gene Therapy
Gene Therapy
Gene Therapy
Gene Therapy
Marketed
Marketed
Phase 2
Regulatory Review
Marketed
Phase 3
Phase 2/3
Phase 1/2
Phase 1/2
Phase 1/2
Phase 1/2
Phase 1/2
Roche (Spark)
______________________________
(1) Reflects commercial products and product candidates for which IND has been filed or are in clinical development.
Pompe Disease
Gene Therapy
Phase 1/2
SPK3006
2020 Sales
(in millions)
€817
€948
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Government Regulation
FDA Approval Process
In the U.S., biopharmaceutical products, including gene therapies, are subject to extensive regulation by the FDA. The
Federal Food, Drug, and Cosmetic Act, Public Health Services Act, and other federal and state statutes and regulations, govern,
among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and
marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of 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 a marketing application, to issue Complete Response letters or to not approve pending
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 an Investigational New Drug application ("IND"), which must become effective before clinical
testing may commence, and adequate and well-controlled clinical trials to establish the safety and effectiveness of the drug for
each indication for which FDA approval is sought. Satisfaction of FDA pre-market approval requirements typically takes many
years and the actual time required 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, potential safety, 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 toxicity and carcinogenicity, continue during the IND phase of development. Reproductive toxicity
studies are required to allow inclusion of women of childbearing potential in clinical trials, whereas carcinogenicity studies are
required for registration. The results of these long-term studies would eventually be described in product 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 becomes effective 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 clinical hold.
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Clinical trials usually involve the administration of the investigational new drug to healthy volunteers or patients under the
supervision of a qualified investigator. Clinical trials must be conducted in compliance with applicable government regulations,
Good Clinical Practice ("GCP"), as well as under protocols detailing the objectives of the trial, the parameters to be used in
monitoring safety, and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and
subsequent protocol amendments must be submitted to the FDA as part of the IND.
The FDA may order the temporary or permanent discontinuation of a clinical trial at any time or impose other sanctions if
it believes that the clinical trial is not being conducted in accordance with FDA requirements or presents an unacceptable risk to
the clinical trial patients. The study protocol and informed consent information for patients in clinical trials must also be
submitted to an Institutional Review Board ("IRB"), for approval. An IRB may also require the clinical trial at the site to be
halted, either temporarily or permanently, for failure to comply with the IRB's requirements, or may impose other conditions.
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, side effects 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, dosage tolerance, and optimum dosage, and identify common adverse effects and safety risks. If a
compound demonstrates evidence of efficacy and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are
undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients over longer
treatment periods, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk
relationship of the drug and to provide adequate information for the labeling of the drug.
The FDA has established the Office of Tissue and Advanced Therapies within the Center for Biologics Evaluation and
Research, or CBER, to consolidate the review of gene therapy and related products, and has established the Cellular, Tissue and
Gene Therapies Advisory Committee to advise CBER in its review.
In addition to the regulations discussed above, there are a number of additional standards that apply to clinical trials
involving gene therapies. The FDA has issued various guidance documents regarding gene therapies, which outline additional
factors that the FDA will consider at each of the above stages of development and relate to, among other things: the proper
preclinical assessment of gene therapies; the CMC information that should be included in an IND application; the proper design
of tests to measure product potency in support of an IND or BLA application; and measures to observe delayed adverse effects
in subjects who have been exposed to investigational gene therapies when the risk of such effects is high. Further, the FDA
usually recommends that sponsors observe subjects for potential gene therapy-related delayed adverse events for a 15-year
period, including a minimum of five years of annual examinations followed by 10 years of annual queries, either in person or
by questionnaire. NIH and the FDA have a publicly accessible database, the Genetic Modification Clinical Research
Information System, which includes information on gene therapy trials and serves as an electronic tool to facilitate the reporting
and analysis of adverse events on these trials.
After completion of the required clinical testing, an NDA or BLA is prepared and submitted to the FDA for the
determination of efficacy and safety. FDA approval of 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, and other testing and a compilation of data
relating to the product's pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting an NDA or
BLA is substantial. Under federal law, the submission of most NDAs and BLAs is additionally subject to a substantial
application user fee; although for orphan drugs 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 are typically increased annually.
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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 threshold determination that it is sufficiently complete to permit substantive review. Once the submission
is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of
NDAs. Marketing applications are assigned review status during the filing period. Review status could be either standard or
priority. Most such applications for standard review are reviewed within 12 months under PDUFA V (two months for filing
plus ten months for review). The FDA attempts to review a drug candidate that is eligible for priority review within six months,
as discussed below. The review process may be extended by the FDA for three additional months to evaluate major
amendments submitted during the pre-specified PDUFA V review clock. The FDA may also refer applications for novel drug
products or drug products which present difficult questions of safety or efficacy to an Advisory Committee 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. The FDA is not bound by the recommendation of an Advisory Committee, but it generally
follows such recommendations. Before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to
assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured.
The FDA may also undertake an audit of nonclinical and clinical trial sites. The FDA will not approve the product unless
compliance with cGMP is satisfactory and the NDA or BLA contains data that provide substantial evidence that the drug is safe
and effective in the indication studied and to be marketed. During the product approval process, the FDA also will determine
whether a risk evaluation and mitigation strategy, or REMS, is necessary to assure the safe use of the product candidate. A
REMS could include medication guides, physician communication plans and elements to assure safe use, such as restricted
distribution methods, patient registries, and other risk minimization tools. If the FDA concludes a REMS is needed, the sponsor
of the BLA must submit a proposed REMS; the FDA will not approve the BLA without a REMS, if required.
After the FDA evaluates the NDA or BLA and the manufacturing facilities, it issues an approval letter or a complete
response letter. Complete response letters outline the deficiencies in the submission that prevent approval and may require
substantial additional testing or information for the FDA to reconsider the application. 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 issue an approval letter.
The FDA has committed to reviewing such resubmissions in two or six months depending on the type and extent of information
included.
An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific
indications. As a condition of NDA approval, the FDA may require substantial post-approval commitments or requirements to
conduct additional testing and/or surveillance to monitor the drug's safety or efficacy and may impose other conditions,
including distribution and labeling restrictions which can materially affect the potential market and profitability of the drug.
Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained, problems are
identified following 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 or approved 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 Products with Therapeutic Equivalence Evaluations,
commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential competitors in
support of approval of an Abbreviated New Drug Application ("ANDA"). An ANDA provides for marketing of a drug product
that has the same route of administration, 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 or effectiveness of their drug product,
other than the requirement for bioequivalence testing. Drugs approved in this way are commonly referred to as "generic
equivalents" to the listed drug and can often be substituted by pharmacists under prescriptions written for the original listed
"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, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed
patent has expired; (iii) the listed patent has not expired but will expire on a particular date and approval is sought after patent
expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. A certification that the new product
will not infringe the already approved 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 have expired.
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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 and patent holders once the ANDA has been accepted for filing by the FDA. The NDA
and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph 4 certification. The
filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph 4 certification automatically prevents the
FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit or a decision
in the infringement case that is favorable to the ANDA applicant.
Patent term and data exclusivity run in parallel. An ANDA application also will not be approved until any non-patent
exclusivity, such as exclusivity for obtaining approval of an NCE, listed in the Orange Book for the referenced product has
expired ("New Chemical Entity Market Exclusivity"). Federal law provides a period of five years following approval of a drug
containing no previously approved active ingredients, during which ANDAs for generic versions of those drugs cannot be
submitted unless the submission contains a Paragraph 4 certification that challenges a listed patent, in which case the
submission may be made four years following the original product approval.
Federal law provides for a period of three years of exclusivity following approval of a listed drug that contains previously
approved active ingredients but is approved in a new dosage form, route of administration or combination, or for a new use, the
approval of which was required to be supported by new clinical trials conducted by or for the sponsor, during which 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, or new 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-approval marketing 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. Products approved under Subpart H or Subpart E carry additional post-marketing
considerations and requirements.
Drugs may be promoted only for approved indications and in accordance with the provisions of the approved labeling.
Changes to some of the conditions established in an approved application, including changes in indications, new safety
information, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA, NDA
supplement, BLA, or BLA supplement before the change can be implemented. New efficacy claims require submission 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 in reviewing NDA and BLA supplements as it does in reviewing NDAs and BLAs. Additional
exclusivity may be granted for new efficacy claims. Generic ANDAs cannot 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 place conditions on an approval that could restrict the distribution
or use of the product. In addition, quality control as well as drug manufacture, packaging, and labeling procedures must
continue to conform to cGMP, after approval. Drug manufacturers and certain subcontractors are required to register their
establishments with FDA and certain state agencies and are subject to routine inspections by the FDA during which the agency
inspects manufacturing facilities to access compliance with cGMP. Accordingly, manufacturers must continue to expend time,
money, and effort in the areas of production and quality control to maintain compliance with cGMP. Regulatory authorities may
withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters
problems following initial marketing, or if previously unrecognized problems are subsequently discovered.
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Orphan Drugs
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or
condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the U.S. Orphan drug
designation must be requested before submitting an NDA or BLA. After the FDA grants orphan drug designation, the generic
identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey
any advantage in or shorten the duration of the regulatory review and approval process. The first NDA or BLA applicant with
FDA orphan drug designation for a particular active ingredient to receive FDA approval of the designated drug for the disease
indication for which it has such designation, is entitled to a seven-year exclusive marketing period ("Orphan Drug Exclusivity")
in the U.S. for that product, for that indication. During the seven-year period, the FDA may not finally approve any other
applications to market the same drug for the same disease, except in limited circumstances, such as a showing of clinical
superiority to the product with orphan drug exclusivity or if the license holder cannot supply sufficient quantities of the product.
Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the
same drug for a different disease or condition, provided that the sponsor has conducted appropriate clinical trials required for
approval. Among the other benefits of orphan 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 the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing
and administration for each pediatric subpopulation for which the drug is safe and effective. The FDA may grant deferrals for
submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does not apply to any drug for an
indication for which orphan designation has been granted.
Fast Track Designation
Under the Fast Track program, the sponsor of an IND may request the FDA to designate the drug candidate as a Fast Track
drug if it is intended to treat a serious condition and fulfill an unmet medical need. The FDA must determine if the drug
candidate qualifies for Fast Track designation within 60 days of receipt of 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 drug by providing
more frequent communication with and guidance to the sponsor.
In addition to other benefits such as greater interactions with the FDA, the FDA may initiate review of sections of 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 schedule for the submission of the remaining information and the applicant pays applicable user fees.
However, the FDA's review period as specified under PDUFA V for filing 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 be withdrawn 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 on one or more clinically significant endpoints. A Breakthrough
Therapy designation conveys all of the Fast Track program features, as well as more intensive FDA guidance 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 six months from submission for a non-NME if the drug candidate provides a significant
improvement compared to marketed drugs in the treatment, diagnosis, or prevention of a disease. A Fast Track designated drug
candidate would ordinarily meet the FDA's criteria for priority review. The FDA makes its determination of priority or standard
review during the 60-day filing period after an initial NDA or BLA submission.
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Accelerated Approval
Under the FDA's accelerated approval regulations, the FDA may approve a drug for a serious or life-threatening illness that
provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably
likely to predict clinical benefit. This approval mechanism is provided 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 for approval. 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 on irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality
or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of
alternative treatments. This surrogate endpoint substitutes for a direct measurement of how a patient feels, functions, or survives
and is considered reasonably likely to predict clinical benefit. Such surrogate endpoints may be measured more easily or more
rapidly than clinical endpoints. A drug candidate approved on this basis is subject to rigorous post-marketing compliance
requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint.
When the Phase 4 commitment is successfully completed, the biomarker is deemed to be a surrogate endpoint. Failure to
conduct required post-approval studies or confirm a clinical benefit during post-marketing studies, could lead the FDA to
withdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved under
accelerated regulations are subject to prior review by 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, commonly referred to as a Section 505(b) (2) NDA, which enables the applicant to rely, in part, on the
safety and efficacy data of an existing product, or published literature, in support of its application.
505(b) (2) NDAs often provide an alternate path to FDA approval for new or improved formulations or new uses of
previously approved products. Section 505(b)(2) permits the submission of an NDA for which at least some of the information
required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a
right of reference. The applicant may rely upon certain preclinical or clinical studies conducted for an approved product. The
FDA may also require companies to perform additional studies or measurements to support the change from the approved
product. The FDA may then approve the new product candidate for all or some of the label indications for which the referenced
product has been approved, as well as for any new indication sought by the Section 505(b) (2) applicant.
To the extent that the Section 505(b) (2) applicant is relying on studies conducted for an already-approved product, the
applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the
same extent as an ANDA applicant. Thus approval of a 505(b)(2) NDA can be stalled until all the listed patents claiming the
referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of an NCE, listed
in the Orange Book for the referenced product has expired, and, in the case of a Paragraph 4 certification and subsequent patent
infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable
to the Section 505(b)(2) applicant.
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Biologics Price Competition and Innovation Act
The Biologics Price Competition and Innovation Act of 2009 ("BPCIA"), which was enacted as part of the Patient
Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010
("PPACA") created an abbreviated approval pathway for biological 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 no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and
potency. Biosimilarity is demonstrated in steps beginning with rigorous analytical studies or "fingerprinting", in vitro studies, in
vivo animal studies, and generally at least one clinical study, absent a waiver from the Secretary of Health and Human Services.
The biosimilarity exercise tests the hypothesis that the investigational product and the reference product are the same. 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 expected to 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 reference product and biosimilar
product is not greater than the risk of maintaining the patient on the reference product. Complexities associated with the larger,
and often more complex, structures of biological products, as well as the process by which such products are manufactured,
pose significant hurdles to implementation that are 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 reference product.
Anti-Kickback, False Claims Laws, the Prescription Drug Marketing Act and Other Regulations
In addition to FDA restrictions on marketing of pharmaceutical products, several other types of state and federal laws have
been applied to restrict certain marketing practices in the pharmaceutical industry in recent years. These laws include anti-
kickback statutes and false claims statutes as well as regulations related to payments and transfers of value to healthcare
providers, the protection of the security and privacy of protected health information, and other compliance efforts. The federal
healthcare program anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, or
receiving remuneration to induce or in return for purchasing, leasing, ordering, or arranging for the purchase, lease or order of
any healthcare item or service reimbursable under Medicare, Medicaid, or other federally financed healthcare programs. This
statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers,
purchasers, and formulary managers on the other. Violations of the anti-kickback statute are punishable by imprisonment,
criminal fines, civil monetary penalties, and exclusion from participation in federal healthcare programs. Although there are a
number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution or other
regulatory sanctions, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to
induce prescribing, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exemption or safe
harbor.
Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for
payment to the federal government, or knowingly making, or causing to be made, a false statement to have a false claim paid.
Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly inflating
drug prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid
reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill
federal programs for the product. In addition, certain marketing practices, including off-label promotion, may also violate false
claims laws. The majority of states also have statutes or regulations similar to the federal anti-kickback law and false claims
laws, which apply to items and services, reimbursed under Medicaid and other state programs, or, in several states, apply
regardless of the payor.
Physician Drug Samples
As part of the sales and marketing process, pharmaceutical companies frequently provide samples of approved drugs to
physicians. The Prescription Drug Marketing Act (the "PDMA") imposes requirements and limitations upon the provision of
drug samples to physicians, as well as prohibits states from licensing distributors of prescription drugs unless the state licensing
program meets certain federal guidelines that include minimum standards for storage, handling, and record keeping. In addition,
the PDMA sets forth civil and criminal penalties for violations.
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Regulation Outside the U.S.
In addition to regulations in the U.S., we are subject to a variety of regulations in other jurisdictions governing clinical
studies, commercial sales, and distribution of our products. Most countries outside the U.S. require that clinical trial
applications be submitted to and approved by the local regulatory authority for 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 regulatory authorities of
countries outside the U.S. before we can commence clinical studies or marketing of the product in those countries. The approval
process varies from country to country, and the time may be longer or shorter than that required for FDA approval.
To obtain regulatory approval of an orphan drug under the E.U. regulatory system, we are mandated to submit a marketing
authorization application ("MAA") to be assessed in the Centralized Procedure. The centralized procedure, which came into
operation in 1995, allows applicants to obtain a marketing authorization that is valid throughout the E.U. It is compulsory for
medicinal products manufactured using biotechnological processes, for orphan medicinal products and for human products
containing a new active substance which was not authorized 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 the
Community before 20 May 2004 or for products which constitute a significant therapeutic, scientific or technical innovation or
for which a Community authorization 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 the centralized procedure, it sends an application directly to the European
Medicines Agency ("EMA"), 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 E.U. Member States. Centrally-authorized products may be
marketed in all Member States. Centralized procedure: Full copies of the MA application are sent to a rapporteur and a co-
rapporteur designated by the competent EMA scientific committee. They coordinate the EMA's scientific assessment of the
medicinal product and prepare draft reports. Once the draft reports are prepared (other experts might be called upon for this
purpose), they are sent to the CHMP, whose comments or objections are communicated to the applicant. The rapporteur is
therefore the privileged 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 this debate, prepare a final assessment report. Once the evaluation is completed, the CHMP
gives a favorable or unfavorable opinion as to whether to grant the authorization. When the opinion is favorable, it shall include
the draft summary of the product's characteristics, the package leaflet and the texts proposed for the various 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 active substance and the conditions of the
marketing authorization ("Annex 2"); and the labelling and the package leaflet ("Annex 3"). The annexes are translated into the
22 other official languages of the E.U. During the decision-making process, the Commission services verify that the marketing
authorization complies 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 the draft 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 of these committees) for their opinions. The Centralized Procedure provides for the grant of a single
marketing authorization that is valid for all E.U. member states. The Decentralized Procedure provides for approval by one or
more other, or concerned, member states of an assessment of an application performed by one member state, known as the
reference member state. Under this procedure, an applicant submits an application, or dossier, and related materials including a
draft summary of product characteristics, and draft labeling and package leaflet, to the reference member state and concerned
member states. The reference member state prepares a draft assessment and drafts of the related materials within 120 days after
receipt of a valid application. Within 90 days of receiving the reference member state's assessment report, each concerned
member state must decide whether to approve the assessment report and related materials. If a member state cannot approve the
assessment report and related materials on the grounds of potential serious risk to the public health, the disputed points may
eventually be referred to the European Commission, whose decision is binding on all member states.
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We have obtained an orphan medicinal product designation in the E.U. from the EMA for Galafold® for the treatment of
Fabry disease and the combination product, ATB200/AT2221, for the treatment of Pompe disease. Applications from persons
or companies seeking "orphan medicinal product designation" for products they intend to develop for the diagnosis, prevention,
or treatment of life-threatening or very serious conditions that affect not more than 5 in 10,000 persons in the E.U. are reviewed
by the Committee for Orphan Medicinal Products ("COMP"). In addition, orphan drug designation can be granted if the drug is
intended for a life threatening, seriously debilitating, or serious and chronic condition in the E.U. and that without incentives it
is unlikely that sales of the drug in the E.U. would be sufficient to justify developing the drug. Orphan drug designation is only
available if there is no other satisfactory method approved in the E.U. 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, protocol assistance and access to the centralized
procedure before and during the first year after marketing approval. Fee reductions are not limited to the first year after
marketing approval for small and medium enterprises. In addition, if a product which has an orphan drug designation
subsequently receives EMA marketing approval for the indication for which it has such designation, the product is entitled to
orphan market exclusivity, which means the EMA may not approve any other application to market a similar drug for the same
indication for 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 the product is sufficiently profitable not to justify maintenance of market exclusivity.
Competitors may receive marketing approval of different drugs or biologics for the indications for which the orphan product
has exclusivity. In order to do so, however, they must demonstrate that the new drugs or biologics are clinically superior over
the existing orphan product. This demonstration of clinical superiority may be done at the time of initial approval or in post-
approval studies, depending on the type of marketing authorization granted.
In March 2016, the EMA launched an initiative, the Priority Medicines (“PRIME”) scheme, to facilitate development of
product candidates in indications, often rare, for which few or no therapies currently exist. The PRIME scheme is intended to
encourage drug development in areas of unmet medical need and provides accelerated assessment of products representing
substantial innovation reviewed under the centralized procedure. Many benefits accrue to sponsors of product candidates with
PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions
on clinical trial designs and other development program elements, and accelerated MAA assessment once a dossier has been
submitted. Importantly, a dedicated contact and rapporteur from the CHMP is appointed early in the PRIME scheme facilitating
increased understanding of the product at EMA’s committee level. An initial meeting initiates these relationships and includes a
team of multidisciplinary experts at the EMA to provide guidance on the overall development and regulatory strategies. In
September 2020, AT-GTX-501 was granted PRIME designation.
We have obtained a positive opinion for our pediatric investigation plan ("PIP") in the E.U. for Galafold® for the treatment
of Fabry disease as well. A PIP is a development plan aimed at ensuring that the necessary data are obtained to support the
authorization of a medicine for children, through studies in children. All applications for marketing authorization for new
medicines have to include the results of studies as described in an agreed PIP, unless the medicine 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 and incentives for the development of pediatric medicines for children are available in the E.U.
Medicines authorized across the E.U. with the results of studies from a PIP included in the product information are eligible for
an extension of their supplementary protection certificate by six months. This is the case even when the studies' results are
negative. For orphan medicines, the incentive is an additional two years of market exclusivity. Scientific advice and protocol
assistance at the Agency are free of charge for questions relating to the development of pediatric medicines. Medicines
developed specifically for children that are already authorized but are not protected by a patent or supplementary protection
certificate are eligible for a pediatric-use marketing authorization ("PUMA"). If a PUMA is granted, the product will benefit
from 10 years of market protection as an incentive.
The U.K. left the E.U. on January 31, 2020 following which, existing E.U. medicinal product legislation continued to apply
in the U.K. during the transition period under the terms of the E.U.-U.K. Withdrawal Agreement. A transition period, which
ended on December 31, 2020, maintained access to the E.U. single market and to the global trade deals negotiated by the E.U.
on behalf of its members. The transition period provided time for the U.K. and E.U. to negotiate a framework for partnership
for the future, which was then crystallized in the Trade and Cooperation Agreement ("TCA") and became effective on January
1, 2021.
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From January 1, 2021, the Medicines and Healthcare products Regulatory Agency ("MHRA") will be the U.K.’s
standalone medicines and medical devices regulator. As a result of the Northern Ireland protocol, different rules will apply in
Northern Ireland than in England, Wales and Scotland (together Great Britain, "GB"); broadly, Northern Ireland will continue
to follow the E.U. regulatory regime, but its national competent authority will remain the MHRA. The MHRA has published a
draft guidance on how various aspects of the U.K. regulatory regime for medicines will operate in GB and in Northern Ireland
following the expiry of the Brexit transition period on December 31, 2020. The guidance includes clinical trials, marketing
authorizations, importing, exporting and pharmacovigilance and is relevant to any business involved in the research,
development or commercialization of medicines in the U.K. The new guidance will be given effect via the Human Medicines
Regulations ("Amendment etc.") ("E.U. Exit") Regulations 2019 (the "Exit Regulations"). The U.K. regulatory regime largely
mirrors that of the E.U.
The MHRA has introduced changes to national licensing procedures, including procedures to prioritize access to new
medicines that will benefit patients, an accelerated assessment procedure and new routes of evaluation for novel products and
biotechnological products. All existing E.U. MAs for centrally authorized products will automatically be converted ("grand
fathered") into U.K. MAs free-of-charge on January 1, 2021. Galafold® now has a U.K. MA and we will have until January 1,
2022 to submit essential baseline data in order to support the conversion process.
There will be no pre-marketing authorization orphan designation. Instead, the MHRA will review applications for orphan
designation in parallel to the corresponding MA application. The criteria are essentially the same, but have been tailored for the
GB market, i.e. the prevalence of the condition in GB (rather than the E.U.) must not be more than 5 in 10,000. Should an
orphan designation be granted, the period or market exclusivity will be set from the date of first approval of the product in GB
or E.U./European Economic Area, wherever is earliest.
The PIP application process for applicants is simplified by offering an expedited assessment where possible, and by
mirroring the submission format, content and terminology of the E.U.-PIP system. The MHRA is taking decisions on PIP and
waiver opinions, modifications and compliance statements to support pediatric market authorization decisions, while
acknowledging that Northern Ireland continues to be part of the E.U.’s system for pediatric medicines development including
agreement of E.U. PIPs or waivers.
The MHRA has maintained the Early Access to Medicine Scheme ("EAMS"). EAMS is designed to give patients with life
threatening or seriously debilitating conditions access to medicines that do not yet have a marketing authorization when there is
a clear unmet medical need. It is anticipated that medicines with a positive EAMS opinion could be made available to patients
12-18 months ahead of formal marketing authorization. As the initial step in this process, the applicant must apply for and be
granted a Promising Innovative Medicine (“PIM”) designation. The designation will be issued after an MHRA scientific
designation meeting on the basis of non-clinical and clinical data available on the product, in a defined disease area. Following
designation, the applicant is expected to complete a clinical development program within a reasonable time period, in order to
continue with an application under the EAMS. In January 2020, the MHRA issued a PIM designation for AT-GAA for the
treatment of late-onset Pompe disease.
We have obtained orphan drug designation in Japan for migalastat for the treatment of Fabry Disease. We also have other
Orphan Drug applications approved in other world markets including Switzerland, Australia, South Korea and Taiwan. The
Ministry of Health, Labor, and Welfare, based on the opinion of the Pharmaceutical Affairs and Food Sanitation Council, grants
orphan status to drugs intended to address serious illnesses with high unmet medical need that affect fewer than 50,000 patients
in Japan. In 2020, orphan drug designation was granted in Japan for AT-GAA for the treatment of Pompe disease. Orphan
designation provides certain benefits and incentives, including priority review for marketing authorization and a period of
10 years of market exclusivity if the drug candidate is approved for the designated indication.
U.S. Foreign Corrupt Practices Act
The U.S. Foreign Corrupt Practices Act, or FCPA, prohibits U.S. corporations and individuals from engaging in certain
activities to obtain or retain business abroad or to influence a person working in an official capacity. It is illegal to pay, offer to
pay or authorize the payment of anything of value to any foreign government official, government staff member, political party
or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official
capacity. Equivalent laws have been adopted in other foreign countries that impose similar obligations.
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Healthcare Reform
The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the
healthcare system. The United States government, state legislatures and foreign governments also have shown significant
interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price
controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.
In recent years, Congress has considered reductions in Medicare reimbursement levels for drugs administered by
physicians. CMS, the agency that administers the Medicare and Medicaid programs, also has authority to revise reimbursement
rates and to implement coverage restrictions for some drugs. Cost reduction initiatives and changes in coverage implemented
through legislation or regulation could decrease utilization of and reimbursement for any approved products. While Medicare
regulations apply only to drug benefits for Medicare beneficiaries, private payers often follow Medicare coverage policy and
payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from
federal legislation or regulation may result in a similar reduction in payments from private payers.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability
Reconciliation Act, or collectively the Affordable Care Act, substantially changed the way healthcare is financed by both
governmental and private insurers, and significantly impacts the pharmaceutical industry. The Affordable Care Act is intended
to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against
healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new
taxes and fees on pharmaceutical and medical device manufacturers, and impose additional health policy reforms. Among other
things, the Affordable Care Act expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by
increasing the minimum Medicaid rebate for both branded and generic drugs, expanded the 340B program, and revised the
definition of AMP, which could increase the amount of Medicaid drug rebates manufacturers are required to pay to states. The
legislation also extended Medicaid drug rebates, previously due only on fee-for-service Medicaid utilization, to include the
utilization of Medicaid managed care organizations as well and created an alternative rebate formula for certain new
formulations of certain existing products that is intended to increase the amount of rebates due on those drugs. On February 1,
2016, CMS issued final regulations to implement the changes to the Medicaid Drug Rebate program under the Affordable Care
Act. These regulations became effective on April 1, 2016. Since that time, there have been significant ongoing efforts to modify
or eliminate the Affordable Care Act.
On January 20, 2017, President Trump signed an executive order directing federal agencies to exercise existing authorities
to reduce burdens associated with the Affordable Care Act pending further action by Congress. In October 2017, he signed an
Executive Order which directed federal agencies to modify how the Affordable Care Act is implemented. The Tax Act, enacted
on December 22, 2017, repealed the shared responsibility payment for individuals who fail to maintain minimum essential
coverage under section 5000A of the Internal Revenue Code of 1986, as amended, or the Code, commonly referred to as the
individual mandate.
Other legislative changes have been proposed and adopted since passage of the Affordable Care Act. The Budget Control
Act of 2011, among other things, created the Joint Select Committee on Deficit Reduction to recommend proposals in spending
reductions to Congress. The Joint Select Committee did not achieve its targeted deficit reduction of an amount greater than $1.2
trillion for the fiscal years 2012 through 2021, triggering the legislation’s automatic reductions to several government programs.
These reductions included aggregate reductions to Medicare payments to healthcare providers of up to 2.0% per fiscal year,
which went into effect in April 2013. Subsequent litigation extended the 2% reduction, on average, to 2030 unless additional
Congressional action is taken. However, pursuant to the Coronavirus Aid, Relief and Economic Security Act, or CARES Act,
the 2% Medicare sequester reductions have been suspended from May 1, 2020 through March 31, 2021 due to the COVID-19
pandemic. On January 2, 2013, the American Taxpayer Relief Act was signed into law, which, among other things, reduced
Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and
increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
Further legislative and regulatory changes under the Affordable Care Act remain possible, although the new Administration
under President Biden has signaled that it plans to build on the Affordable Care Act and expand the number of people who are
eligible for subsidies under it. President Biden indicated that he intends to use executive orders to undo changes to the
Affordable Care Act made by the former administration and would advocate for legislation to build on the Affordable Care Act.
It is unknown what form any such changes or any law would take, and how or whether it may affect our business in the future.
We expect that changes or additions to the Affordable Care Act, the Medicare and Medicaid programs, changes allowing the
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federal government to directly negotiate drug prices and changes stemming from other healthcare reform measures, especially
with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the
healthcare industry.
The Affordable Care Act has been subject to challenges in the courts. On December 14, 2018, a Texas U.S. District Court
Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by
Congress. On December 18, 2019, the Fifth Circuit U.S. Court of Appeals held that the individual mandate is unconstitutional
and remanded the case to the Texas District Court to reconsider its earlier invalidation of the entire Affordable Care Act. An
appeal was taken to the U.S. Supreme Court which heard oral arguments in the case on November 10, 2020. A ruling is
expected in 2021.
The Affordable Care Act requires pharmaceutical manufacturers of branded prescription drugs to pay a branded
prescription drug fee to the federal government. Each individual pharmaceutical manufacturer pays a prorated share of the
branded prescription drug fee, based on the dollar value of its branded prescription drug sales to certain federal programs
identified in the law. Furthermore, the law requires manufacturers to provide a 50% discount off the negotiated price of
prescriptions filled by beneficiaries in the Medicare Part D coverage gap, referred to as the “donut hole.” The Bipartisan Budget
Act of 2018 (the “BBA”), among other things, amended the Affordable Care Act , effective January 1, 2019, to close the
coverage gap in most Medicare drug plans, commonly referred to as the “donut hole,” by increasing from 50 percent to 70
percent the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D.
The Affordable Care Act also expanded the Public Health Service’s 340B drug pricing program. The 340B drug pricing
program requires participating manufacturers to agree to charge statutorily-defined covered entities no more than the 340B
“ceiling price” for the manufacturer’s covered outpatient drugs. The Affordable Care Act expanded the 340B program to
include additional types of covered entities: certain free-standing cancer hospitals, critical access hospitals, rural referral centers
and sole community hospitals, each as defined by the Affordable Care Act. Because the 340B ceiling price is determined based
on AMP and Medicaid drug rebate data, revisions to the Medicaid rebate formula and AMP definition could cause the required
340B discounts to increase.
Payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives as well. For example,
CMS may develop new payment and delivery models, such as bundled payment models. Recently, there has been heightened
governmental scrutiny over the manner in which manufacturers set prices for their marketed products. Such scrutiny has
resulted in several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to,
among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient
programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for
pharmaceutical products.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control
pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product
access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from
other countries and bulk purchasing.
We expect that additional federal, state and foreign healthcare reform measures will be adopted in the future, any of which
could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in
limited coverage and reimbursement and reduced demand for our products, once approved, or additional pricing pressures.
Human Capital
At Amicus, one of our founding principles is that we believe in each other to foster teamwork and respect for each
individuals' contribution. Our passion for making a difference unites us. Supporting our globally diverse employees is an
essential part of the core values and culture at Amicus. Tied to these values and culture, we believe our success and our ability
to help patients depends on our capability to attract, develop and retain key personnel.
We also believe that diversity of experience and thought is essential. At Amicus, we are committed to the advancement of
diversity and inclusion in the workplace. Diversity is the representation of all our varied identities and differences (race,
ethnicity, gender, disability, sexual orientation, gender identity, national origin, tribe, socio-economic status, thinking and
communication styles, etc.), collectively and as individuals. Equity seeks to ensure fair treatment, equality of opportunity, and
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fairness in access to information and resources for all. Inclusion means that all individuals feel respected, accepted, and valued.
Inclusion builds a culture of belonging, by actively inviting the contribution and participation of all people. Combined,
Diversity, Equity and Inclusion ("DEI") creates a work environment where every voice is heard and valued, resulting in a
dimensional way of thinking that is used when meeting company goals. DEI at Amicus is about creating an environment that
supports bringing the authentic employee to the workplace. Our unique experiences, cultures, and backgrounds are what make
us so great at putting patients at the forefront of what we do and pushing ideas as far and fast as possible. As of December 31,
2020, we had 483 full-time employees. Currently, 50% of our executive management team are women and 20% of our board of
directors are women.
We believe it is critical that our employees are informed and engaged. We communicate frequently and transparently with
our employees through a variety of communication methods, including video and written communications, town hall meetings,
round tables, employee pulse surveys, company intranet, and acknowledge individual contributions through a number of reward
and recognition programs. We believe these engagement efforts keep employees informed about our strategy, culture and
purpose and motivated to do their best work. As a result of the COVID-19 pandemic, we also further strengthened our digital
communication and social networking platforms. Our communications during the pandemic have kept our employees informed
on critical priorities, important actions being taken by management in response to the pandemic, and continued efforts to protect
employee’s health, safety and well-being.
We support and develop our employees through global training and development programs that build and strengthen
employees’ leadership and professional skills. These are further emphasized through our engagement on employee career paths
through the annual goal process, a tuition reimbursement program, providing the ability to attend industry conferences and
trainings, and holding patient-mission focused Lunch and Learns. Additionally, we strive to attract and retain the most talented
employees in the industry and across the globe by offering competitive compensation and benefits that support their health,
financial and emotional well-being. Our compensation philosophy is based on rewarding each employee’s individual
contributions and striving to achieve equal pay for equal work regardless of gender, race or ethnicity. We use a combination of
fixed and variable pay including base salary, bonuses, and share based compensation.
Our Corporate Information
We were incorporated under the laws of the State of Delaware on February 4, 2002. On February 1, 2021, we changed our
global headquarters from 1 Cedar Brook Drive, Cranbury, NJ 08512 to 3675 Market Street, Philadelphia, PA 19104 and our
telephone number is 215-921-7600. 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 furnish such 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, Corporate Governance Guidelines, and information concerning our senior management team, Board of
Directors, including Board Committees and Committee charters, and transactions in our securities by directors and executive
officers, is available on our website at www.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.
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ITEM 1A. RISK FACTORS
You should carefully consider these risk factors, together with all of the other information included in this Annual Report
on Form 10-K, including our consolidated financial statements and the related notes thereto, before you decide whether to make
an investment in our securities. The risks set forth below are not the only risks we face. Additional risks and uncertainties not
currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business,
prospects, financial condition, cash flows, liquidity, funds from operations, results of operations, stock price and ability to
service our indebtedness. In such case, the value of our common stock and the trading price of our securities could decline, and
you may lose all or a significant part of your investment. Some statements in the following risk factors constitute forward
looking statements. Please refer to the explanation of the qualifications and limitations on forward-looking statements under
“Forward-Looking Statements” of this Form 10-K.
Risks Related to our Ability to Generate and Sustain Revenue
We depend heavily on sales of our first product, Galafold®, in Europe, the U.S. and Japan. Moreover, if we are
unable to commercialize Galafold® successfully, or experience significant delays in doing so, our business could be
materially harmed.
We have invested a significant portion of our efforts and financial resources in the development of Galafold® for the
treatment of Fabry disease and rely upon sales of Galafold® primarily in Europe and growing sales in the U.S. and Japan. Our
ability to generate material product revenues will depend heavily on the successful development, regulatory approval, and
commercialization of Galafold®. We began the commercial launch of Galafold® in the E.U. and U.K. in May 2016, in Japan in
June 2018 and in the U.S. in August 2018 and continue to seek commercial approval in additional foreign jurisdictions.
Approvals have been granted in over 40 countries around the world. We will continue to study Galafold® in a confirmatory
Phase 4 program and other supportive Phase 4 studies. If the results of the Phase 4 studies negatively change the benefit/risk
profile of Galafold®, the commercial success of Galafold® may be substantially diminished. Any adverse market event with
respect to Galafold®, including failure to obtain sufficient market acceptance, could have a material adverse effect on our
business, financial condition and results of operations. If our sales of Galafold® were to decrease, or such sales were
substantially or completely displaced in the market, or if we are unable to achieve sufficient market acceptance of Galafold® by
physicians, patients, third-party payors and others in the medical community, or if we fail to receive commercial approval in
any additional jurisdictions, it could have a material adverse effect on our business, financial condition and results of
operations. In addition, if Galafold® or similar products from our competitors were to become the subject of litigation and/or an
adverse governmental action requiring us or such competitors, as applicable, to cease sales of Galafold®, such an event could
have a material adverse effect on our business, financial condition and results of operations. In addition, the entry into the
market of competitors with new or generic treatments, including oral, ERT and gene therapies, may erode the market for
Galafold® and have a material impact on our business.
Any delay or impediment in our ability to obtain regulatory approval in any region to commercialize, or, when approved,
obtain coverage and adequate reimbursement from third parties, including government payors, for Galafold® may cause us to be
unable to meet our revenue guidance or to generate the revenues necessary to continue our research and development pipeline
activities, thereby adversely affecting our business and our prospects for future growth.
Further, the success of Galafold® will depend on a number of factors, including the following:
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obtaining a sufficiently broad label in each territory that would not unduly restrict patient access;
obtaining additional foreign approvals for Galafold®;
continuing to build and maintain an infrastructure capable of supporting product sales, marketing, and
distribution of Galafold® in the U.S., Europe, Japan and other territories where we pursue commercialization
directly;
maintaining commercial manufacturing arrangements with third-party manufacturers;
maintaining commercial distribution agreements with third-party distributors;
launching commercial sales of Galafold®, where approved, whether alone or in collaboration with others;
acceptance of Galafold®, where approved, by patients, the medical community and third-party payors;
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effectively competing with other therapies, including potential generics and potential gene therapies;
a continued acceptable safety profile of Galafold®;
obtaining and maintaining patent and trade secret protection and regulatory exclusivity;
protecting and enforcing our rights in our intellectual property portfolio;
obtaining and maintaining a commercially viable price for our products; and
continuing to successfully mitigate the impact of the COVID-19 pandemic.
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 successfully commercialize Galafold®, 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 or product candidates, and our ability to generate revenue will be materially impaired.
Our product and product candidates, including Galafold® and AT-GAA and the activities associated with their development
and commercialization, including their testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval,
advertising, promotion, sale, distribution, commercialization and reimbursement are subject to comprehensive regulation by the
European Medicines Agency (“EMA”), the Pharmaceutical and Medical Devices Agency (“PMDA”), the Food and Drug
Administration (“FDA”), and other regulatory agencies in the U.S. and by comparable authorities in other countries. Failure to
obtain regulatory approval for our product and product candidates will prevent us from commercializing our product in
jurisdictions beyond those in which we have obtained regulatory approval for our product or in any jurisdictions for our product
candidates.
We have also acquired a pipeline of gene therapies in development to treat rare metabolic diseases, in addition to
development of AT-GAA for Pompe disease. Securing marketing approval for all our product candidates requires the
submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic
indication to establish the product candidate's safety and efficacy. We will continue to rely on third parties to assist us with
filing and supporting the applications necessary to obtain marketing approvals for product candidates in this process. Securing
marketing approval also requires the submission of information about the product manufacturing process to, and inspection of
manufacturing facilities by, the regulatory authorities. Regulatory authorities may determine that any of our products or product
candidates are not effective or only moderately effective, or have undesirable or unintended side effects, toxicities, safety
profiles or other characteristics that preclude us from obtaining marketing approval or that prevent or limit commercial use.
Obtaining approval for all of our product candidates is highly uncertain and we may fail to obtain regulatory approval in
any or all jurisdictions. The review processes and the processes of regulatory authorities, including the FDA, EMA and PMDA,
are extensive, lengthy, expensive, and uncertain, and such regulatory authorities may delay, limit, or deny approval of any of
our product candidates for many reasons, including, but not limited to:
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our failure to demonstrate to the satisfaction of the applicable regulatory authorities that any of our product
candidates, including AT-GAA are safe 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 applicable regulatory authorities for approval;
the applicable regulatory authority may disagree with the number, design, size, conduct, or implementation of
our clinical trials or conclude that the data 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 product candidate's clinical and other benefits outweigh its safety risks;
the applicable regulatory authority may disagree with our interpretation of data from preclinical studies or
clinical trials, and may reject conclusions from preclinical studies or clinical trials, or determine that primary or
secondary endpoints from clinical trials were not met, or reject safety conclusions from such studies or trials;
the applicable regulatory authority may not accept data generated at one or more of our clinical trial sites;
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the applicable regulatory authority may determine that we did not properly oversee our clinical trials or follow
the regulatory authority's advice or recommendations 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 recommend that the applicable regulatory authority require, as a condition of approval,
additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use
restrictions, or even if an advisory committee, if convened, makes a favorable recommendation, the respective
regulatory authority may still not approve the product candidate;
the applicable regulatory authority may only approve a limited label for less than the full indicated population,
as a second line or rescue therapy, or impose other label restrictions; and
the applicable regulatory authority may identify deficiencies in the chemistry, manufacturing, and control
sections of our application, our manufacturing processes, facilities, or analytical methods or those of our third-
party contract manufacturers, and this may lead to significant delays in 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 a variety of factors, including the type, complexity, and novelty of the product candidates
involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional
statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the
approval or rejection of an application. Regulatory authorities have substantial discretion in the approval process and may
refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical,
clinical, or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could
delay, limit, or prevent marketing approval of a product candidate. Any marketing approval we ultimately obtain may be limited
or subject to restrictions or post-approval commitments that render the approved product not commercially viable.
If we are unable to establish and maintain sales and marketing capabilities or enter into agreements with third parties
to market and sell our product or product candidates, we may not be successful in commercializing Galafold®, or any
product candidate, , including AT-GAA, if and when they are approved.
To achieve commercial success for any approved product, we must continue to develop and maintain a sales and marketing
organization or outsource commercialization to third parties. We have established our own sales and marketing capabilities to
promote Galafold® in Europe, Japan, the U.S. and other foreign jurisdictions with a targeted sales force. There are risks
involved with establishing and maintaining our own sales and marketing capabilities and entering into arrangements with third
parties to perform these services for any of our products or product candidates. For example, recruiting and training a sales
force is 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 and establish marketing capabilities is delayed or does not occur for any reason, we would have
prematurely or unnecessarily incurred these commercialization expenses. 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 into agreements with third parties,
including the out licensing of our product or product candidates, we may choose to reduce or eliminate our sales and marketing
operations and thereby lose our commercialization investment.
Factors that may inhibit our efforts to successfully commercialize Galafold®, or our product candidates, if and when they
are approved by regulatory authorities, including the FDA, PMDA and EMA, on our own include:
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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 with more 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.
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We may also co-promote or out license our product or product candidates in various markets with pharmaceutical and
biotechnology companies in instances where we believe that a larger sales and marketing presence will expand the market or
accelerate penetration. If we do enter into co-promote or out licensing arrangements with third parties, our product revenues
will be lower than if we directly sold and marketed our products and any revenues received under such arrangements will
depend on the skills and efforts of others.
We may not be successful in entering into distribution arrangements and marketing alliances with third parties. Our failure
to enter into these arrangements on favorable terms could delay or impair our ability to commercialize our product 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:
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we may not be able to control the amount and timing of resources that our distributors may devote to the
commercialization of our product or product candidates;
our distributors may experience financial difficulties;
our distributors may experience compliance related issues and associated government investigations;
our distributors may require transfer of the marketing authorization for our products and may refuse to
relinquish them at the end of the distribution relationship;
business combinations or significant changes in a distributor's business strategy may also adversely affect a
distributor's willingness or ability to complete its obligations under any arrangement; and
these arrangements are often terminated or allowed to expire, which could interrupt the marketing and sales of a
product and decrease our revenue.
If we are unable to establish and maintain adequate sales, marketing and distribution capabilities, whether independently or
with third parties, we may not be able to generate product revenue at our current guidance and may not ever 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, and our 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 of people who have these diseases, as well as the subset of people with these diseases who have
the potential to benefit from treatment with our product and product candidates, are based on estimates.
Currently, most reported estimates of the prevalence of these diseases are based on studies of small subsets of the
population of specific geographic areas, which are then extrapolated to estimate the prevalence of the diseases in the broader
world population. In addition, as new studies are performed the estimated prevalence of these diseases may change. There can
be no assurance that the prevalence of Fabry disease, Pompe disease, Batten disease or other rare diseases 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 Fabry disease, Pompe disease, Batten disease, or other rare diseases or of the
number of patients who may benefit from treatment with our product or product candidates prove to be incorrect, the market
opportunities for our product and product candidates may be smaller than we believe they are, our prospects for generating
revenue at our guidance levels may be adversely affected and our business may suffer.
Galafold® 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.
Galafold® and any of our other products or product candidates that receive regulatory approval may nonetheless fail to gain
sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. If these products
do not achieve an adequate level of acceptance, we may not generate significant product 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:
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the efficacy and potential advantages compared to competitive or alternative treatments, including generics and
gene therapies;
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.
Our ability to negotiate, secure and maintain third-party coverage and reimbursement may be affected by political,
economic and regulatory developments in the U.S., E.U., U.K. and other jurisdictions. Governments continue to impose cost
containment measures, and third-party payors are increasingly challenging prices charged for medicines and examining their
cost effectiveness, in addition to their safety and efficacy. These and other similar developments could significantly limit the
degree of market acceptance of Galafold® and any of our product candidates that receive marketing approval and we may fail to
meet our revenue targets.
We face substantial competition, which may result in others discovering, developing or commercializing products
before or more successfully than we do.
The development and commercialization of new drug products is highly competitive. We face competition with respect to
our current product, Galafold®, and product candidates, including AT-GAA, and any products we may seek to develop or
commercialize in the future from major pharmaceutical companies, specialty pharmaceutical companies, biotechnology and
gene therapy companies worldwide. For example, several large pharmaceutical and biotechnology companies currently market
and sell products for the treatment of lysosomal storage disorders, including Fabry disease. These products include Sanofi
Aventis' Fabrazyme® and Takeda’s Replagal®, as well as other Fabry treatment products in development. In addition, Sanofi
markets and sells Myozyme® and Lumizyme® for the treatment of Pompe disease and has another product for Pompe in
development, Neo-GAA. We are also aware of other enzyme replacement and substrate reduction therapies in development by
third parties for Pompe, as well as potential gene therapies for both Fabry and Pompe and our other product candidates.
Potential competitors also include academic institutions, government agencies and other public and private research
organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development,
manufacturing and commercialization. Our competitors may develop products that are more effective, safer, more convenient or
less costly than any that we are developing or that would render our product candidates obsolete or noncompetitive. Our
competitors may also obtain FDA, EMA, or other regulatory approval for their products more rapidly than we may obtain
approval for ours, could achieve regulatory exclusivity and block us from approval and marketing our products for a significant
period of time. 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 product candidates or any acquired products obsolete or noncompetitive either
during the research phase or once the products reaches commercialization.
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We believe that many competitors, including academic institutions, government agencies, public and private research
organizations, large pharmaceutical companies and smaller more focused companies, are attempting to develop therapies for
many of our target indications. Many of our competitors have significantly greater financial resources and expertise in research
and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, prosecuting
intellectual property rights and marketing approved products than we do. Smaller and other early stage companies may also
prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing
clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to or necessary
for our programs or advantageous to our business. In addition, if we obtain regulatory approvals for our product candidates,
manufacturing efficiency and marketing capabilities are likely to be significant competitive factors. We currently rely on third-
party manufacturers for our product and all of our product candidates including our gene therapies. Further, many of our
competitors have substantial resources and expertise in conducting collaborative arrangements, sourcing in-licensing
arrangements, manufacturing and acquiring new business lines or businesses that are greater than our own.
A variety of risks associated with international operations could materially adversely affect our business.
Galafold®, and any of our other product candidates, including AT-GAA, that may be approved in the future for
commercialization in the E.U., U.K. or in other foreign countries are or will be subject to additional risks related to international
operations or entering into international business relationships, including:
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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 doing business in another country;
workforce uncertainty in countries where labor unrest is more common than in the U.S.;
noncompliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act 2010 and similar anti-bribery
and anti-corruption laws in other jurisdictions;
tighter restrictions on privacy and the collection and use of patient data;
the impact of BREXIT on regulatory standards and operations; and
business interruptions resulting from geopolitical actions (including war and terrorism), pandemic diseases
(such as the recent spread of COVID-19 “coronavirus”), or natural disasters (including earthquakes, typhoons,
floods and fires).
In addition, there are complex regulatory, tax, labor and other legal requirements imposed by the E.U., U.K., and many of
the individual countries in Europe, Asia and Latin America with which we will need to comply. Many U.S.-based
biopharmaceutical companies have found the process of marketing their own products in Europe and other international
geographies to be very challenging.
The impact of Brexit on our international operations is currently unknown but could have a material impact on our
business.
In a referendum held in the U.K. on June 23, 2016, a majority of those voting voted for the U.K. to leave E.U., commonly
referred to as "Brexit". On March 29, 2017, the U.K. government delivered to the European Council notice of its intention to
leave the E.U. The negotiation period (under Article 50 of the Treaty on European Union) had been extended repeatedly;
however, on January 24, 2020, the U.K. and the E.U. entered into a withdrawal agreement pursuant to which the U.K. formally
left the E.U. on January 31, 2020. A transition period which ended on December 31, 2020, maintained access to the E.U. single
market and to the global trade deals negotiated by the E.U. on behalf of its members and remain subject to E.U. law.
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As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency ("MHRA") is the U.K.’s standalone
medicines and medical devices regulator. As a result of the Northern Ireland protocol, different rules will apply in Northern
Ireland than in England, Wales and Scotland (together Great Britain, "GB"); broadly, Northern Ireland will continue to follow
the E.U. regulatory regime, but its national competent authority will remain the MHRA. The MHRA has published guidance on
how various aspects of the U.K. regulatory regime for medicines will operate in GB and in Northern Ireland following the
expiry of the Brexit transition period. The guidance covers clinical trials, marketing authorizations, importing, exporting and
pharmacovigilance and is relevant to any business involved in the research, development or commercialization of medicines in
the U.K. The new guidance was given effect via the Human Medicines Regulations ("Amendment etc.") ("E.U. Exit")
Regulations 2019 (the "Exit Regulations"). The U.K. regulatory regime largely mirrors that of the E.U. but the MHRA has
introduced changes to national licensing procedures, including procedures to prioritize access to new medicines that will benefit
patients, an accelerated assessment procedure and new routes of evaluation for novel products and biotechnological products.
All existing E.U. marketing authorizations for centrally authorized products were automatically converted ("grand fathered")
into U.K. MAs free-of-charge on January 1, 2021. The ultimate impact of the “leave” vote is not clear as there are still some
legal and practical uncertainties surrounding the regulation of medicines in the U.K. and a risk of potential disruption in the
movement of goods, services and people between the U.K. and the E.U. Such uncertainties and disruptions could result in
higher costs of conducting business in the U.K. and the E.U. and negatively affect our business, operations and financial
condition.
Following the receipt of marketing approval of our product or any product candidates, the products may become
subject to unfavorable pricing regulations, 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 widely from country to country and product to product. Current and future legislation may
significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining
approvals. Some countries, including almost all of the member states of the European Economic Area, require approval of the
sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product
licensing approval is granted. In some foreign markets, including the European market, prescription pharmaceutical pricing
remains subject to continuing governmental control even after initial approval is granted and approved products are subject to
re-reviews, class reviews and other governmental controls which can negatively impact pricing originally approved. 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
commercial launch 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 marketing approval. This is particularly
true in the case of gene therapies for which payors and manufacturers must develop different pricing models for this growing
area. Current pricing for gene therapies may not be sustainable in the future which would have a negative impact on our
revenues and business.
Our ability to commercialize Galafold® or any product candidate, including AT-GAA, successfully also will depend in part
on the extent to which coverage and reimbursement for these products and related treatments will be available from government
health administration authorities, private health insurers and other organizations. Government authorities and other third-party
payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and
establish reimbursement levels. A primary trend in the European and U.S. healthcare industries and elsewhere is cost
containment. It is currently unknown what impact, if any proposed changes by the federal and state governments in the U.S. and
similar changes in foreign countries may have on pricing and reimbursement, particularly with respect to government programs
such as Medicare and Medicaid and Pharmacy Benefit Managers for commercial plans, and including reimportation, reference
pricing and limitations on manufacturer price increases.
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Prices at which we or our customers seek reimbursement for our products can be subject to challenge, reduction or denial
by the government and other payers. Increasingly, third-party payors are requiring that drug companies provide them with
predetermined discounts from list prices and are challenging the prices charged for pharmaceutical products. We cannot be sure
that coverage and reimbursement will continue to be available for Galafold® or any product that we commercialize, and in
particular gene therapies, and, if coverage and reimbursement are available, the level of reimbursement. Reimbursement may
impact the demand for, or the price of, Galafold® and any product candidate for which we obtain marketing approval. Obtaining
reimbursement for our product candidates when approved may be particularly difficult because of the higher prices typically
associated with drugs directed at smaller orphan populations of patients and the pricing and reimbursement of competitive
products. In addition, third-party payors are likely to impose strict requirements for reimbursement of a higher priced drug. If
reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any
product for which we obtain marketing approval.
The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the
healthcare system that may affect our ability to profitably sell our product and product candidates, if approved. The United
States government, state legislatures and foreign governments also have shown significant interest in implementing cost-
containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on
reimbursement and requirements for substitution of generic products for branded prescription drugs. The Affordable Care Act
was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies
against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and
fees on the health industry and impose additional health policy reforms.
There have been significant ongoing judicial, administrative, executive and legislative efforts to modify or eliminate the
Affordable Care Act. For example, the Tax Act enacted on December 22, 2017, repealed the shared responsibility payment for
individuals who fail to maintain minimum essential coverage under section 5000A of the Internal Revenue Code, commonly
referred to as the individual mandate. The Trump administration issued executive orders which sought to reduce burdens
associated with the Affordable Care Act and modified how it was implemented. Other legislative changes have been proposed
and adopted since passage of the Affordable Care Act. The Budget Control Act of 2011, among other things, created the Joint
Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select
Committee did not achieve its targeted deficit reduction of an amount greater than $1.2 trillion for the fiscal years 2012 through
2021, triggering the legislation’s automatic reductions to several government programs. These reductions included aggregate
reductions to Medicare payments to healthcare providers of up to 2.0% per fiscal year, which went into effect in April 2013.
Subsequent litigation extended the 2% reduction, on average, to 2030 unless additional Congressional action is taken. However,
pursuant to the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, the 2% Medicare sequester reductions
have been suspended from May 1, 2020 through March 31, 2021 due to the COVID-19 pandemic. On January 2, 2013, the
American Taxpayer Relief Act was signed into law, which, among other things, reduced Medicare payments to several types of
providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for
the government to recover overpayments to providers from three to five years.
The Affordable Care Act has also been subject to challenges in the courts. On December 14, 2018, a Texas U.S. District
Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed
by Congress. On December 18, 2019, the Fifth Circuit U.S. Court of Appeals held that the individual mandate is
unconstitutional and remanded the case to the Texas District Court to reconsider its earlier invalidation of the entire Affordable
Care Act. An appeal was taken to the U.S. Supreme Court which heard oral arguments in the case on November 10, 2020. A
ruling is expected in 2021.
Further changes to and under the Affordable Care Act remain possible, although the new Biden administration has signaled
that it plans to build on the Affordable Care Act and expand the number of people who are eligible for subsidies under it.
President Biden indicated that he intends to undo changes to the Affordable Care Act made by the Trump administration and
would advocate for legislation to build on the Affordable Care Act. It is unknown precisely what form any such changes or any
law would take, and how or whether it may affect our business in the future. We expect that changes or additions to the
Affordable Care Act, the Medicare and Medicaid programs, changes allowing the federal government to directly negotiate drug
prices and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or
other legislation in individual states, could have a material adverse effect on the healthcare industry.
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We expect that the Affordable Care Act, as well as other healthcare reform measures that have and may be adopted in the
future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for our
product and product candidates, if approved, and could seriously harm our future revenues. Any reduction in reimbursement
from Medicare, Medicaid, or other government programs may result in a similar reduction in payments from private payers.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate
revenue, attain and maintain profitability of our product and product candidates, if approved.
The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-
label uses. If we are found to have promoted 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 product may not be promoted in the U.S. for uses that are not approved by the FDA as reflected in the
product's approved labeling. Further, any labeling approved by the FDA for Galafold® or any of our other product candidates
may include restrictions on use, or other limitations. The FDA may impose further requirements or restrictions on the
distribution or use of any of our other product candidates as part of a REMS plan. Physicians may nevertheless prescribe such
products to their patients in a manner that is inconsistent with the approved label. If we are found to have promoted such off-
label uses, we may become subject to significant liability. Similarly, the FDA strictly regulates the promotion of investigational
products prior to approval, known as pre-approval promotion. The federal government has levied large civil and criminal fines
and / or other penalties against companies for alleged improper promotion and has investigated and / or prosecuted several
companies in relation to off-label and/or pre-approval promotion. The FDA has also requested that certain companies enter into
consent decrees or permanent injunctions under which specified promotional conduct is changed, curtailed or prohibited or
have delayed approval of investigational products due to pre-approval conduct.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of
any products that we may develop.
We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical
trials and will face an even greater risk when 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 our product candidates
or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may
result in:
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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 we would then be required to pay from other sources, if available, and would
damage our ability to obtain liability insurance at reasonable costs, or at all, in the future;
loss of revenue; and
the inability to commercialize any products that we may develop.
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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 for the commercialization of Galafold® and may increase insurance coverage when, and if, we
begin commercializing any other product candidate that receives marketing approval. Insurance coverage is increasingly
expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any
liability that may arise. On occasion, large judgments have been awarded in lawsuits based on drugs that had unanticipated side
effects. A successful product liability claim or a series of claims brought against us could cause our stock price to fall and, if
judgments exceed our insurance coverage, could decrease our available cash and adversely affect our business.
If the FDA or other applicable regulatory authorities approve generic or biosimilar products with claims that compete
with our product or any of our product candidates, it could reduce our sales of our product or those product
candidates.
In the U.S., after an NDA is approved, such as Galafold®, the product covered thereby becomes a "listed drug" which can,
in turn, be cited by potential competitors in support of approval of an abbreviated NDA, or ANDA. The Federal Food, Drug,
and Cosmetic Act, or the FD&C Act, FDA regulations and other applicable regulations and policies provide incentives to
manufacturers to create modified, non-infringing versions of a drug to facilitate the approval of an ANDA or other application
for generic substitutes. These manufacturers might only be required to conduct a relatively inexpensive study to show that their
product has the same active ingredients, dosage form, strength, route of administration, and conditions of use, 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 is bioequivalent to, our product or product candidate. These generic equivalents would be significantly less
costly than ours to bring to market and companies that produce generic equivalents are generally able to offer their products at
lower prices. Thus, after the introduction of a generic competitor, a significant percentage of the sales of any branded product
are typically lost to the generic product. Accordingly, competition from generic equivalents to our product or product
candidates, including Galafold®, would substantially limit our ability to generate revenues and therefore to obtain a return on
the investments we have made in our product or product candidates.
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" to reference products previously approved
under BLAs, including AT-GAA, if approved. The FDA may also separately determine whether "biosimilar" products are
"interchangeable" with their reference 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 BLA for the reference product was approved. FDA approval of
abbreviated BLAs 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 of their products for which they were seeking FDA approval. Accordingly, if our products such
as AT-GAA are approved under a BLA, other manufacturers potentially could develop and seek FDA approval of "biosimilar"
products at some point in the future, including a biosimilar of AT-GAA.
We may expend our limited resources to pursue a particular product, product candidate or indication and fail to
capitalize on a product, product candidates 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, we may forego or delay pursuit of opportunities with other product candidates or for other
indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to
capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and
development programs and product candidates for specific indications may not yield any commercially viable products.
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We have historically been focused on the development and commercialization of Galafold®, a small molecule for Fabry
disease and in a next generation ERT treatment for Pompe disease, AT-GAA. In 2018, we also made a significant investment in
potential gene therapies for Fabry, Pompe, CDD, Batten’s disease and other LDs. Notwithstanding our large investment in gene
therapies and Pompe ERT to date and anticipated future expenditures in related proprietary technologies, we have not yet
developed, and may never successfully develop, any marketed drugs using ERT and gene therapy approaches. As a result of
pursuing the development and commercialization of our product and product candidates using our proprietary and licensed
technologies, we may fail to develop products or product candidates, or address indications based on other scientific approaches
that may offer greater commercial potential or for which there is a greater likelihood of success. Research programs to identify
new product candidates require substantial technical, financial and human resources. These research programs may initially
show promise in identifying potential product candidates yet fail to yield product candidates for clinical development.
Risks Related to our Products and the Regulatory Approval and Clinical Development of our Product Candidates
Our product or product candidates may cause undesirable side effects or have other properties that could delay or
prevent their regulatory approval or commercialization.
Undesirable side effects caused by our product, Galafold® or product candidates including AT-GAA, CLN6 and CLN3,
could interrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA, EMA or other
regulatory authorities for any or all targeted indications, and in turn prevent us from commercializing our product or product
candidates and generating revenues from their sale. In addition, if we or others identify undesirable side effects caused by our
products or product candidates after receipt of marketing approval:
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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 substantially increase the costs and expenses of commercializing the product or product candidate, which in
turn could delay or prevent us from generating significant revenues from its sale or adversely affect our reputation.
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Any product or product candidate for which we obtain marketing approval could be subject to restrictions or
withdrawal from the market and we may be subject to penalties or other enforcement actions if we fail to comply with
regulatory requirements or if we experience unanticipated problems with our 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, EMA, PMDA and other regulatory authorities. For example, the FDA's requirements
include submissions of safety and other post-marketing information 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 healthcare
professionals and recordkeeping. Even if marketing approval of a product candidate is granted, the approval may be subject to
limitations on the indicated uses for which the product may be marketed or may be subject to significant conditions of approval,
including the requirement of a REMS. The FDA also may impose requirements 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, biologic, or gene therapy product also must be in compliance with FDA requirements which include,
among others, promotional activities, standards and regulations for direct-to-consumer advertising, promotional activities
involving the internet, and industry sponsored scientific and educational activities. In general, all product promotion must be
consistent with the labeling approved by the FDA for such product, contain a balanced presentation 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 directing a company to correct deviations from regulatory standards and enforcement actions that
can include seizures, injunctions and criminal prosecution. Failure to comply 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 us to a range of penalties that could have a significant commercial impact, including civil and
criminal fines and agreements that materially 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 failure to comply with regulatory requirements, may yield various results, including:
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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.
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Non-compliance with E.U. and U.K. requirements regarding safety monitoring or pharmacovigilance, and with
requirements related to the development of products for the pediatric population, can also result in significant financial
penalties. Similarly, failure to comply with the E.U.'s and U.K.'s requirements regarding the protection of personal information,
which are effective as of May 25, 2018, can also lead to significant penalties and sanctions and business restrictions.
If we, or our suppliers, third-party contractors, clinical investigators or collaborators are slow to adapt, or are unable to
adapt, to changes in existing regulatory requirements or adoption of new regulatory requirements or policies, we or our
collaborators may lose marketing approval for our products when and if any of them are approved, resulting in decreased
revenue from milestones, product sales or royalties.
Our relationships with customers, healthcare providers, patients, patient organizations, charitable foundations and
third-party payors will be subject to applicable anti-kickback, fraud and abuse, anti-bribery and corruption and other
healthcare laws and regulations, which could expose us to criminal sanctions, 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 obtain marketing approval. Increasingly, patients, patient organizations and charitable foundations
also can influence selection of and payment for therapies. Our future arrangements with payors, healthcare providers, patient
organizations, charitable foundations and patients may expose us to broadly applicable fraud and abuse, anti-bribery and
corruption, and other healthcare laws and regulations that may constrain the business or financial arrangements and
relationships through which we market, sell and distribute any product candidates for which we may obtain marketing approval.
Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-
party payors, federal, state and foreign healthcare laws and regulations pertaining to fraud and abuse, anti-bribery and
corruption, interaction with patient organizations, charitable foundations, and patients' rights are and will be applicable to our
business. Restrictions under applicable federal, state and foreign healthcare laws and regulations may affect our ability to
operate and expose us to areas of risk, including:
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the U.S. federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting,
offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward
either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for
which payment may be made under federal and state healthcare programs such as Medicare and Medicaid. 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 a violation. Several other countries, including the U.K., have enacted similar anti-kickback,
fraud and abuse, and healthcare laws and regulations;
the U.S. federal False Claims Act, which imposes criminal and civil penalties, including through civil
whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be
presented, to the federal government, claims for payment that are false or fraudulent or making a false statement
to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government
may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback
Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. In addition, charitable
contributions to foundations for use in supporting patients may expose those foundations and us to additional
penalties and prosecution under the False Claims Act. There is also a separate false claims provision imposing
criminal penalties. Applicable regulations of both the EMA and E.U. member states also impose liability for
failing to comply with fraud and abuse laws or improperly using information obtained in in the course of
clinical trials with the EMA or other regulatory authorities;
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The U.S. federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA") which imposes
criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false
statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does
not need to have actual knowledge of the statute to defraud any healthcare benefit program or specific intent to
violate it in order to have committed a violation. This statute also may impose monetary penalties on any offers
or transfers of remuneration to Medicare or Medicaid beneficiaries (patients) which is likely to influence the
beneficiary's selection of particular supplier of government payable items. States, such as California have
enacted their own privacy regulations and others may enact similar legislation. Similarly, the collection and use
of personal health data in the E.U. is governed by the E.U. General Data Protection Regulation (the "GDPR"),
with many requirements mandated by the GDPR for the consent of the individuals to whom the personal data
relates, the information provided to the individuals, transfer of personal data within and outside of the E.U. and
the security and confidentiality of the personal data. Enforcement of the GDPR began on May 25, 2018, and
failure to comply with the requirements of the GDPR may result in substantial fines and other administrative
penalties. The GDPR increases our responsibility and liability in relation to personal data that we process, and
we may be required to put in place additional mechanisms ensuring compliance with the GDPR. 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, which also imposes obligations on certain covered entity healthcare providers,
health plans, and healthcare clearinghouses as well as their business associates that perform certain services
involving the use or disclosure of individually identifiable health information, including mandatory contractual
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 to physicians (defined to include doctors, dentists, optometrists, podiatrists and
chiropractors) and teaching hospitals, as well as ownership or investment interests held by physicians and their
immediate family members, including under the federal Open Payments program, commonly known as the
Sunshine Act, as well as other state and foreign laws regulating marketing activities and requiring
manufacturers to report marketing expenditures, payments and other transfers of value to physicians and other
healthcare providers. Similarly, payments made to physicians in certain E.U. member states must be publicly
disclosed. Moreover, agreements with physicians often must be the subject of prior notification and approval by
the physician's employer, his or her competent professional organization and/or the regulatory authorities of the
individual E.U. member states. These requirements are provided in the national laws, industry codes or
professional codes of conduct, applicable in the E.U. member states. In addition, 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 E.U. 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, where such reported prices may be used in the calculation of reimbursement and/or
discounts on our marketed drugs. Participation in these programs and compliance 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 marketplace discounts;
U.S. Foreign Corrupt Practices Act, which prohibit us and third parties working on our behalf from making
payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-
bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate
commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of
money or 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, directly or indirectly, to a foreign official to influence the foreign official 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 any improper advantage in order to assist in obtaining or retaining business for or with, or
directing business to, any person; and
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state and foreign equivalents of each of the above laws, including foreign anti-bribery and corruption laws and
state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims
involving healthcare items or services reimbursed by non-governmental payors, including private insurers; state
laws which require pharmaceutical companies to comply with the pharmaceutical industry's voluntary
compliance guidelines and the relevant compliance guidance promulgated by the federal government or
otherwise restricting payments that may be made to healthcare providers; and state and foreign laws governing
the privacy and security of health information in certain circumstances, many of which 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, in the U.S. we
may provide reimbursement guidance and support regarding Galafold®, and our other product candidates for which we receive
regulatory approval, to our customers and patients. If a government authority were to conclude that we provided improper
advice to our customers and patients and/or encouraged the submission of false claims for reimbursement, we could face action
by government authorities. Similarly, if a government authority were to conclude that our patient support efforts or interactions
with charitable foundations were improper, we could face action by government authorities. Efforts to ensure that our business
arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial 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 these laws 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 our
operations.
If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA, EMA,
PMDA or other foreign regulatory authorities, or do not otherwise produce favorable results, we may experience
delays in completing, or ultimately be unable to complete, the development 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 development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our
product candidates in humans. Clinical testing is expensive, difficult to design 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 not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying
interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in
preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. This is particularly
the case with AT-GAA, as there can be no assurance that the Phase 3 PROPEL study results will meet regulatory standards for
approval.
In addition, the regulatory pathways for gene therapies are evolving. In some cases, the FDA will approve gene therapies
based on Phase 2 clinical trial data. If, however, the FDA decides we need to complete Phase 3 clinical trial(s), we may need to
expend significantly more capital to pursue FDA approval of gene therapies. If we are required to conduct additional clinical
trials or other testing of our product candidates, including AT-GAA, CLN6, CLN3 and other gene therapies, that we develop
beyond those tests and trials 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 are only modestly positive; or if there are safety concerns, we may:
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choose not to seek regulatory approval in the U.S., E.U., U.K. or other key jurisdictions;
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;
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be subject to additional post-marketing testing requirements, safety strategies or restrictions, such as a
requirement of a risk evaluation and mitigation 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 or commercialization of our product candidates could be delayed or prevented.
We may experience numerous unforeseen events during, or as a result of, clinical trials including ongoing clinical trials of
AT-GAA, CLN6 and CLN3 that could delay or prevent our ability to receive regulatory approval or commercialize our product
candidates, including:
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clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or
regulators may require us, to conduct additional 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 may be 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 significant treatment 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 or conduct 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 being exposed to unacceptable health risks;
regulators, institutional review boards, or independent ethics committees may require that we or our
investigators suspend or terminate clinical research for various reasons, including noncompliance with
regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;
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 insufficient or 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 or clinical 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 also could shorten any periods during which we may have
the exclusive right to commercialize our product candidates, allow our competitors to bring products to market before we do, or
impair our ability to successfully commercialize our product candidates, and so may harm our business and results of
operations.
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If we experience delays or difficulties in the enrollment of patients in our clinical trials, our receipt of necessary
regulatory approvals could be delayed or 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 patients to participate in these trials. Each of the diseases that our lead product candidates are
intended to treat are characterized by small patient populations, which could result in slow enrollment of clinical trial
participants. In addition, our competitors have ongoing clinical trials for product candidates that could be competitive with our
product candidates. As a result, potential clinical trial sites may elect to dedicate their limited resources to participation in our
competitors' clinical trials and not ours, and patients who would 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:
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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 to decline 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 in significant delays or may require us to abandon one or more
clinical trials altogether.
Initial results from a clinical trial do not ensure that the trial will be successful and success in preclinical or early
stage clinical trials does not ensure success in later-stage clinical trials.
We will only obtain regulatory approval to commercialize a product candidate if we can demonstrate to the satisfaction of
the FDA or the applicable non-U.S. regulatory authority, in well-designed and conducted clinical trials, that the product
candidate is safe and effective and otherwise meets the appropriate standards required for approval for a particular indication.
Clinical trials are lengthy, complex and extremely expensive processes with uncertain duration and results. A failure of one or
more 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. Our product
candidates may fail to show the desired safety and efficacy in clinical development despite demonstrating positive results in
preclinical studies or having successfully advanced through initial clinical trials or preliminary stages of clinical trials. For some
of our product candidates, we have no safety or efficacy data in humans. There can be no assurance that the results seen in
preclinical studies for any product candidates, including CLN6 and CLN3 will result in success in clinical trials. When
administered in humans, the product candidates may perform differently than in preclinical studies. Product candidates may
demonstrate different chemical and pharmacological properties in patients than they do in laboratory studies or animal studies,
and may interact with human biological systems in unforeseen, ineffective or harmful ways. We may be unable to generate
sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials.
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Initial results from a clinical trial do not necessarily predict final results. We cannot be assured that these trials will
ultimately be successful. In addition, patients may not be compliant with their dosing regimen or trial protocols or they may
withdraw from the clinical trial at any time for any reason. For example, we have reported data from a Phase 1/2 clinical trial of
AT-GAA in Pompe disease. The data is based on a small patient sample and therefore may not be predictive of future results.
The Phase 3 PROPEL study results may not support further development, or we may not be able to successfully complete the
development of, obtain accelerated, conditional or standard regulatory approval for, or successfully commercialize AT-GAA.
Similarly, we recently reported preliminary results from initial patients in the CLN-3 trial. Results from these initial patients
may not be predictive of results of the full data set, we may not be able to demonstrate safety and efficacy and the FDA, EMA
and other regulatory authorities may not accept this data as sufficient for approval. In addition, while the clinical trials of our
product candidates are designed based on the available relevant information, in view of the uncertainties inherent in drug
development, such clinical trials may not be designed with focus on indications, patient populations, dosing regimens, safety or
efficacy parameters or other variables that will provide the necessary safety or efficacy data to support regulatory approval to
commercialize the resulting product candidates. This is particularly the case for emerging gene therapies where we do not yet
have a defined regulatory pathway and there can be no assurance that regulators in the U.S., E.U., U.K., Japan or other
jurisdictions will accept the existing CLN-6, CLN-3 or other gene therapy clinical data sets for approval and without additional
clinical trials or that future trials will support approvals. 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 assess particular safety or
efficacy parameters may not yield statistical precision in estimating our product candidates' effects on study participants. Even
if we believe the data collected from clinical trials of our product candidates are promising, these data may not be sufficient to
support approval by the FDA or foreign regulatory authorities. Preclinical and clinical data can be interpreted in different ways.
Accordingly, the FDA or foreign regulatory authorities could interpret these data in different ways from us or our partners,
which could delay, limit or prevent regulatory approval.
In addition, certain of our product candidates are based on gene therapy technology. The product candidates in our gene
therapy program are being developed for the treatment of diseases in which there is little clinical experience, which increases
the difficulty in selecting appropriate endpoints and the risk that regulatory authorities may not consider the endpoints of
clinical trials to provide clinically meaningful results. As a result, if the FDA requires different endpoints than 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 we may be delayed in obtaining, FDA approval of our product candidates. If we are not successful in
commercializing any of our products or product candidates, or are significantly delayed in doing so, our business will be
materially harmed.
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 orphan drug exclusivity for their products, we may not be able to have competing
products approved by the applicable regulatory authority for a significant period of time.
Regulatory authorities in some jurisdictions, including the E.U., U.K., and the U.S., may designate drugs for relatively
small patient populations as orphan drugs. We obtained orphan drug designations from the FDA for Galafold® for the treatment
of Fabry disease in February 2004. We also obtained orphan medicinal product designation in the E.U. and U.K. for Galafold®
in May 2006. AT-GAA has also received this designation from the FDA, EMA, and, in 2020, from PMDA. Our competitors
have also received orphan designation. Generally, if a product with an orphan drug designation subsequently receives the first
marketing approval for the indication for which it has such designation, the product is entitled to a period of market exclusivity,
which, subject to certain exceptions, precludes the EMA from approving another marketing application for a similar medicinal
product or the FDA from approving another marketing application for the same drug for the same indication for that time
period. The FDA defines “same drug” as a drug or biologic that contains the same active moiety and is intended for the same
use. The applicable market exclusivity period for orphan drugs is ten years in the E.U. and U.K. and seven years in the U.S. The
E.U. and U.K. exclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation,
including if the drug is sufficiently profitable so that market exclusivity is no longer justified.
In the E.U. and U.K., a "similar medicinal product" is a medicinal product containing a similar active substance or
substances as contained in a currently authorized orphan medicinal product, and which is intended for the same therapeutic
indication. Obtaining orphan drug exclusivity for our product candidates, in the E.U., U.K. and U.S., may be important to the
product candidate's success. If a competitor to AT-GAA or our other product candidates obtains orphan drug exclusivity for and
approval of a product with the same indications as our product candidates as before we do and if the competitor's product is the
same drug or a similar medicinal product as ours, we could be excluded from the market for a certain period of time.
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Even if we obtain orphan drug exclusivity for other product candidates in these indications, we may not be able to maintain
it. For example, if a competitive product that 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, as applicable, any orphan drug exclusivity we
have obtained will not block the approval of such competitive product. In addition, orphan drug exclusivity will not prevent 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 sufficient quantities of the drug to meet the needs of the persons with the disease or condition for which the drug
was designated.
The FDA Reauthorization Act, signed into law in August 2017, authorizes the FDA to impose additional clinical trial
requirements on manufacturers seeking orphan drug designation and/or pediatric indications. Galafold® and AT-GAA have
obtained orphan drug designations from the FDA. The impact, however, of future regulations on other product candidates is
uncertain and could result in the need for additional clinical trials.
Failure to obtain or maintain regulatory approval in foreign jurisdictions would prevent us from marketing our
products abroad.
In order to market and sell our products in Europe and many other jurisdictions, we must obtain separate marketing
approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and
can involve additional testing. The time required to obtain approval may differ from that required to obtain FDA approval. The
regulatory approval process outside the U.S. generally includes all of the risks associated with obtaining FDA approval. In
addition, some countries outside the U.S. require approval of the sales price of a drug before it can be marketed. In many
countries, separate procedures must be followed to obtain reimbursement. We may not obtain marketing, pricing or
reimbursement approvals outside the U.S. on a timely basis, if at all. Approval by the FDA does not ensure approval by
regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the U.S. does not
ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. We may not be able to file for
marketing approvals and may not receive necessary approvals to commercialize our products in any market. Regulatory
approvals in countries outside the U.S. do not ensure pricing approvals in those countries or in any other countries, and
regulatory approvals and pricing approvals do not ensure that reimbursement will be obtained.
Our business activities involve the use of hazardous materials, which require compliance with environmental and
occupational safety laws regulating the use of such materials. If we violate these laws, we could be subject to
significant fines, liabilities or other adverse consequences.
Our research and development programs involve the controlled use of hazardous materials, including microbial agents,
corrosive, explosive and flammable chemicals and other hazardous compounds in addition to certain biological hazardous
waste. Additionally, the activities of our third-party product manufacturers of our product, and of our product candidates if and
when they reach commercialization, will also require the use of hazardous materials. Accordingly, we are subject to federal,
state and local laws governing the use, handling and disposal of these materials. Although we believe that our safety procedures
for handling and disposing of these materials comply in all material respects with the standards prescribed by local, state and
federal regulations, we cannot completely eliminate the risk of accidental contamination or injury from these materials. In
addition, although our collaborators have environmental compliance processes in place, and we include oversight of these
processes in our business reviews, they may not ultimately comply with these laws. In the event of an accident or failure to
comply with environmental laws, we could be held liable for damages that result, and any such liability could exceed our assets
and resources or we could be subject to limitations or stoppages related to our use of these materials which may lead to an
interruption of our business operations or those of our third-party contractors. While we believe that our existing insurance
coverage is generally adequate for our normal handling of these hazardous materials, it may not be sufficient to cover pollution
conditions or other extraordinary or unanticipated events. Furthermore, an accident could damage or force us to shut down our
operations. Changes in environmental laws may impose costly compliance requirements on us or otherwise subject us to future
liabilities and additional laws relating to the management, handling, generation, manufacture, transportation, storage, use and
disposal of materials used in or generated by the manufacture of our products or related to our clinical trials. In addition, we
cannot predict the effect that these potential requirements may have on us, our suppliers and contractors or our customers.
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If we are unable to obtain marketing approval for AT-GAA, or if it is approved and the label does not support
reimbursement and we are unable to successfully commercialize AT-GAA, our business could be materially harmed.
In February 2021, we announced topline data results from the AT-GAA Phase 3 Propel Study and our intention to both
complete the rolling BLA submission to the FDA and seek additional approvals worldwide. While we believe the results of the
trial will permit successful regulatory submissions, and labels to support broad use and favorable pricing and reimbursement,
there is no guarantee that the FDA or any other regulatory authority will accept our filings, or if accepted, subsequently grant
AT-GAA marketing approval, or if approved will receive favorable pricing or reimbursement.
Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information
to regulatory authorities for each therapeutic indication to establish the product candidate's safety and efficacy. Regulatory
authorities may determine that AT-GAA is not effective or only moderately effective, or have undesirable or unintended side
effects, toxicities, safety profiles or other characteristics that preclude us from obtaining marketing approval or that prevent or
limit commercial use. If AT-GAA fails to receive marketing approval, is significantly delayed in receiving marketing approval
or if the approved labeling is not as expected, AT-GAA may fail to receive market acceptance, receive reimbursement or be
able to generate material revenue, any of which could substantially harm our future business.
Risks Related to our Preclinical Product Candidates
Our gene therapy product candidates are based on novel technologies, which makes it difficult to predict the time and
cost of product candidate development and subsequently obtaining regulatory approval.
Only a few gene therapy products have been approved in the U.S., E.U., and U.K. We have acquired the rights to many
potential gene therapies and are focusing a substantial effort in our research and development efforts on these gene therapy
platforms, and our future success depends on the successful development of these therapeutic approaches. There can be no
assurance that any development problems we experience in the future related to our gene therapies will not cause significant
delays or unanticipated costs, or that such development problems can be solved. In addition, the clinical study requirements of
the FDA, the EMA, and other regulatory agencies and the criteria these regulators use to determine the safety and efficacy of a
product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential
products. The regulatory approval process for novel product candidates such as our gene therapies can be more expensive and
take longer than for other, better known or more extensively studied pharmaceutical or other product candidates. The number of
gene therapy products approved in the Western world is rapidly increasing. Approved products include Spark’s gene therapy
product, which received approval from the FDA in 2017, GlaxoSmithKline’s Strimvelis, and Novartis’s and Gilead’s CAR-T
therapies, which received approval from the FDA in 2017, Avexis’s Zolgemsa which received FDA approval in 2019, Bluebird
Bio’s Zynteglo which received E.U. and U.K. approval in 2019, and Juno Therapeutic's CAR-T therapy, Breyanzi, which
received approval in 2021. Given the few precedents of approved gene therapy products, it is difficult to determine how long it
will take or how much it will cost to obtain regulatory approvals for our product candidates in the U.S., the E.U., the U.K. or
other jurisdictions. Approvals by the EMA and the European Commission may not be indicative of what the FDA may require
for approval. Regulatory requirements governing gene and cell therapy products have evolved and may continue to change in
the future. For example, the FDA has established the Office of Cellular, Tissue and Gene Therapies within its Center for
Biologics Evaluation and Research, or CBER, to consolidate the review of gene therapy and related products, and the Cellular,
Tissue and Gene Therapies Advisory Committee to advise CBER on its review. In addition, the FDA can put an investigational
new drug application, or IND, on clinical hold if the information in an IND is not sufficient to assess the risks in patients or a
safety issue emerges in preclinical or clinical studies. Before a clinical study can begin at any institution, that institution’s
institutional review board, or IRB, and its Institutional Biosafety Committee will have to review the proposed clinical study to
assess the safety of the study. Moreover, serious adverse events or developments in clinical trials of gene therapy product
candidates conducted by others may cause the FDA or other regulatory bodies to initiate a clinical hold on our clinical trials or
otherwise change the requirements for approval of any of our product candidates. These regulatory review agencies, committees
and advisory groups and the new requirements and guidelines they promulgate may lengthen the regulatory review process,
require us to perform additional or larger studies, increase our development costs, lead to changes in regulatory positions and
interpretations, delay or prevent approval and commercialization of these treatment candidates or lead to significant post-
approval studies, limitations or restrictions. As we advance our product candidates, we will be required to consult with these
regulatory and advisory groups and comply with applicable requirements and guidelines. If we fail to do so, we may be required
to delay or discontinue development of our product candidates. Delay or failure to obtain, or unexpected costs in obtaining, the
regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient product
revenue to maintain our business.
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Risks Related to the Manufacture of our Product and Product Candidates and our Dependence on Third Parties
We may encounter difficulties manufacturing our gene therapy which could impact timing and availability of clinical
and commercial supply.
We may experience delays in developing a sustainable, reproducible and commercial-scale manufacturing process or
transferring that process to commercial partners for our gene therapy product candidates. There is intense competition for
limited commercial manufacturing capacity in gene therapy and for base materials, such as plasmids, necessary to the
manufacturing of gene therapy products. We do not currently have our own gene therapy manufacturing capacity and rely
instead on commercial manufacturing partners. These commercial manufacturing partners are expanding rapidly and there can
be no assurance that needed capacity will be available or that these partners will continue to meet evolving regulatory standards.
Any delay in securing supply of these materials and the manufacturing slots with commercial partners may prevent us from
completing our clinical studies or commercializing our products on a timely or profitable basis, if at all. In addition, FDA and
other regulatory bodies are continuing to evolve their guidance for gene therapy manufacturing and could impose rigorous
requirements relating to the manufacturing and testing of clinical and commercial products that could add time, complexity and
the risk that we or our manufacturing partners will be unable to meet these requirements.
Use of third parties to manufacture our product or product candidates may increase the risk that we will not have
sufficient quantities of our product or product candidates or such quantities at an acceptable cost, which could delay,
prevent or impair our development or commercialization efforts.
We do not currently own or operate manufacturing facilities for clinical or commercial production of our product or
product candidates. We currently lack the resources and the capabilities to manufacture ourselves any of our product or product
candidates on a clinical or commercial scale. If we choose in the future to manufacture ourselves, we would face all of the risks
and uncertainties of third-party manufacture of our products. We currently outsource all manufacturing and packaging of our
product and preclinical and clinical product candidates to third parties. The manufacture of pharmaceutical and gene therapy
products requires significant expertise and capital investment, including the development of advanced manufacturing
techniques and process controls. In particular, the manufacture of our biologic product candidate ATB200 for Pompe, is highly
complex and we may encounter difficulties in production. These problems include difficulties with production costs and yields
and quality control, including stability of the product or product candidate. Further, our gene therapies may require new or
specialized manufacturing with limited third-party manufacturers available to provide these services. The occurrence of any of
these problems could significantly delay our clinical trials or the commercial availability of our product or product candidates.
We may be unable to enter into agreements for commercial supply with third-party manufacturers or may be unable
to do so on acceptable terms. Even if we enter into these agreements, the manufacturers of each product candidate
will be single source suppliers to us for a significant period of time.
Even if we are able to establish and maintain arrangements with third-party manufacturers, reliance on third-party
manufacturers entails additional risks, including:
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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;
inability to manufacture product that meets the regulatory requirements for product approval;
inability to manufacture batches that meet specifications and quality standards;
inability to hire and retain the skilled workers necessary to manufacture our products;
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.
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The failure of any of our contract manufacturers to maintain high manufacturing standards could result in injury or death of
clinical trial participants or patients using products. Such failure could also result in product liability claims, product recalls,
product seizures or withdrawals, delays or failures in testing or delivery, cost overruns or other problems that could seriously
harm our business or profitability.
The FDA and regulatory authorities in other jurisdictions require our contract manufacturers to comply with cGMP
regulations. These regulations cover all aspects of the manufacturing, testing, quality control and recordkeeping relating to our
product candidates and any products that we may commercialize, including Galafold®,AT-GAA, and our gene therapy product
candidates.
Our manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the U.S.
Our failure or the failure of our third-party manufacturers, to comply with applicable regulations could significantly and
adversely affect regulatory approval and supplies of our product candidates. Our product candidates and any products that we
may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited
number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing our products.
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 likely would experience delays in advancing these trials while we identify and qualify
replacement suppliers and we may be unable to obtain replacement supplies on terms that are favorable to us. In addition, if we
are not able to obtain adequate supplies of our product candidates or the drug substances used to manufacture them, it will be
more difficult for us to develop our product candidates and compete effectively.
Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely
affect our future profit margins and our ability to develop product candidates and commercialize any products that 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 perform satisfactorily, 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. We rely on third parties, such as CROs, clinical data management organizations, medical institutions
and clinical investigators and collaboration partners, 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, it would delay our product development
activities.
Our reliance on these third parties for certain preclinical and clinical development activities reduces our control over these
activities but does not relieve us of our responsibilities. For example, we remain responsible for ensuring that each of our
clinical trials is conducted in accordance with the general investigational plan and 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 confidentiality of 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. Similar GCP and
transparency requirements apply in the E.U. and U.K. Failure to comply with such requirements, including with respect to
clinical trials conducted outside the E.U., U.K. and U.S., 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 our competitors. If these third parties do not successfully carry out their contractual duties, meet
expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not
be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates and will not be able to, or
may be delayed in our efforts to, successfully commercialize our product candidates. Our product development costs will
increase if we experience delays in testing or obtaining marketing approvals.
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We also rely on other third parties to obtain, store and distribute drug supplies for our preclinical development activities
and clinical trials. In addition, in some instances we are required to purchase clinical supplies from our competitors, who may
refuse to allow this purchase or do so at prohibitively high prices. Any performance failure on the part of our distributors or
inability to secure supply from our competitors could delay preclinical and clinical development or marketing approval of our
product candidates or commercialization of our products, producing additional losses and depriving us of potential product
revenue.
Extensions, delays, suspensions or terminations of our preclinical development activities or our clinical trials as a result of
the performance of our independent clinical investigators and CROs will delay, and make more costly, regulatory approval for
any product candidates that we may develop. Any change in a CRO during an ongoing preclinical development activity or
clinical trial could seriously delay that trial and potentially compromise the results of the activity or trial.
We may not be successful in maintaining or establishing collaborations, which could adversely affect our ability to
develop and, particularly in international markets, commercialize products.
We are collaborating with physicians, academic institutions, hospitals, patient advocacy groups, foundations and
government agencies in order to assist with the development of our products and each of our product candidates. We plan to
pursue similar activities in future programs and plan to evaluate the merits of retaining commercialization rights for ourselves
or entering into selective collaboration arrangements with leading pharmaceutical or biotechnology companies. We also may
seek to establish collaborations for the sales, marketing and distribution of our products in all or select geographies. If we elect
to seek collaborators in the future but are unable to reach agreements with suitable collaborators, we may fail to meet our
business objectives for the affected product or program. We face, and will continue to face, significant competition in seeking
appropriate collaborators. Moreover, collaboration arrangements are complex and time consuming to negotiate, document and
implement. We may not be successful in our efforts, if any, to establish and implement collaborations or other alternative
arrangements. The terms of any collaboration or other arrangements that we establish, if any, may not be favorable to us.
Any collaboration that we enter into may not be successful. The success of our collaboration arrangements, if any, will
depend heavily on the efforts and activities of our collaborators. It is likely that any collaborators of ours will have significant
discretion in determining the efforts and resources that they will apply to these collaborations. The risks that we may be subject
to in possible future collaborations include the following:
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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 renew development or commercialization programs, based on clinical trial results,
changes in the collaborators' strategic focus or available funding, or external 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 product candidates if the collaborators believe that competitive products are
more likely to be successfully developed or can be commercialized under terms that 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 distribution of 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 invite litigation that could jeopardize or invalidate our intellectual property or
proprietary information or expose us to potential liability;
collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and
potential liability;
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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 our products 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 commercialization of 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 of ours were to be involved in a business combination, the continued pursuit and emphasis on
our product development or commercialization program could be delayed, diminished or terminated.
Collaborations with pharmaceutical companies and other third parties often are terminated or allowed to expire by the other
party. Such terminations or expirations may adversely affect us financially and could harm our business reputation in the event
we elect to pursue collaborations that ultimately expire or are terminated.
Materials necessary to manufacture our product or product candidates may not be available on commercially
reasonable terms, or at all, which may delay the development and commercialization of our product or product
candidates.
We currently rely on the manufacturers of our product and product candidates to purchase from third-party suppliers the
materials necessary to produce the compounds for 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 obtain marketing approval, for any of our product
candidates. Suppliers may not sell these materials to our manufacturers at the time we need them or on commercially reasonable
terms and all such prices are susceptible to fluctuations in price and availability due to transportation costs, government
regulations, price controls and changes in economic climate or other foreseen circumstances. We do not have any control over
the process or timing of the acquisition of these materials by our manufacturers. We may enter into agreements to purchase
certain materials and provide them to our manufacturers, with all the risks and uncertainties of supply associated with those
purchases. If we or our manufacturers are unable to obtain these 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 for
commercial distribution of our product or, after regulatory approval has been obtained, our product candidates, the commercial
launch of our product and product candidates would be delayed or there would be a shortage in supply, which would materially
affect our ability to generate revenues from the sale of our product or product candidates.
Manufacturing
commercialization.
issues may arise
that could
increase product and regulatory approval costs or delay
Manufacturing of our product and product candidates requires us or our manufacturing partners to conduct required
stability and comparability testing. We or our partners may encounter product, packaging, equipment and process-related issues
that may require refinement or resolution in order to successfully commercialize our product and proceed with our planned
clinical trials and obtain regulatory approval for commercial marketing of our product candidates. In the future, we may identify
impurities, which could result in increased scrutiny by regulatory authorities, delays in our clinical programs and regulatory
approval, increases in our operating expenses or failure to obtain or maintain approval for our product or product candidates.
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We currently rely on WuXi App Tec Biopharmaceuticals, a company based in the People's Republic of China (the "PRC"),
as the sole supplier of our biologic product, ATB200. Accordingly, there is a risk that supplies of our product may be
significantly delayed by or may become unavailable as a result of manufacturing, equipment, process, or business-related issues
affecting that company. We may also face additional manufacturing and supply-chain risks due to the regulatory and political
structure of the PRC, or as a result of the international relationship between the PRC and the U.S. or any of the other countries
in which our products are marketed. In addition, the recent out-breaks of SARS, COVID-19 “coronavirus” or other similar
illnesses in PRC could impact operations at Wuxi. Although currently there has been no impact on operations and we and Wuxi
have robust mitigation plans in place, there can be no assurance that operations would not be impacted in the future with a
negative impact on supply of our product.
Risks Related to our Financial Position
We have incurred significant losses since our inception and anticipate that we will continue to incur losses in the
future.
To date, we have focused on developing and commercializing our first product, Galafold®, and our pipeline product AT-
GAA as well as our multiple gene therapies. Investment in pharmaceutical product development is highly speculative because it
entails substantial upfront capital expenditures and significant risk that a product candidate will fail to gain regulatory approval
or become commercially viable. Although the European Commission, PMDA and FDA have granted approval for Galafold®,
for the treatment of adults with a confirmed diagnosis of Fabry disease and who have an amenable genetic variant, and we are
generating product sales, we continue to incur significant research, development, commercialization and other expenses related
to our ongoing operations. As a result, we are not profitable and have incurred losses in each period since our inception. For the
year ended December 31, 2020, we have a net loss of $276.9 million, and we have an accumulated deficit of $2.0 billion at
December 31, 2020.
We expect to continue to incur losses for the foreseeable future, and we expect these losses to increase as we:
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continue our development and commercialization of, and seek regulatory approvals for, product candidates,
including Galafold® and AT-GAA in the U.S., the E.U., U.K., Japan and other foreign countries, as applicable;
conduct additional clinical trials to support the full approval of Galafold® in the U.S. and post-approval
commitments or trials;
continue communicating with the EMA, as necessary, regarding post-marketing requirements and clinical trials
for Galafold®;
continue to or initiate the regulatory submission process for marketing approval of Galafold® outside of the U.S.
and E.U. and other foreign jurisdictions where approved, as applicable;
build and maintain our commercial infrastructure so that it is capable of supporting product sales, marketing and
distribution of Galafold® and our other product candidates in Europe, Japan and the U.S. or other territories in
which we have received or may receive regulatory approval;
prepare for launch of AT-GAA in the U.S., E.U., U.K. and other jurisdictions if approved by regulators;
continue our preclinical studies and clinical trials on our gene therapies for Fabry, Pompe, Batten’s, MPS and
other LDs; and
continue our preclinical studies of and potentially conduct clinical studies of ERT and gene therapy for CDD.
We may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely
affect our business. The size of our future 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 clinical trials or does not gain regulatory approval, or if
approved, fails to achieve market acceptance, we may never become profitable. Even if we achieve profitability in the 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 an adverse effect on our stockholders' equity and working capital.
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We may never become profitable even though we currently generate revenue from the sale of products.
We began the commercial launch of our first product, Galafold®, in May 2016, with the U.S. and Japan commercial
launches in 2018 and are now approved in 40 countries. Our ability to generate material revenue and become profitable depends
upon our ability to successfully commercialize our existing product and product candidates, 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 product candidates,
including AT-GAA, we do not know when any of these product candidates will generate revenue for us, if at all and we may
not meet our current revenue and operating expense guidance. Our ability to generate revenue from our current or future
product and product candidates depends on a number of factors, including our ability to:
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successfully complete development activities and obtain additional regulatory and pricing and reimbursement
approvals for, and continue to successfully commercialize, Galafold®;
develop and maintain a commercial organization capable of sales, marketing, and distribution for Galafold® and
any product candidates we intend to market, in the countries where we have chosen to commercialize the
product candidates ourselves including the U.S. and Japan;
manufacture commercial quantities of our products at acceptable cost levels;
obtain 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 for Galafold® or any of our other product candidates that may 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 our gene therapies;
complete and submit regulatory submissions to the FDA, EMA, MHRA, PDMA and others and obtain
regulatory approval for our product candidates including AT-GAA and our gene therapies; 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 advance through 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 these products.
Even if we are able to generate significant revenues from the sale of our products, we may not become profitable and may
need to obtain additional funding to continue operations. 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 planned levels 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
the development and commercialization of our product and development and
commercialization of our product candidates.
to complete
Our operations have consumed substantial amounts of cash. We expect to continue to spend substantial amounts to advance
the preclinical and clinical development of our product candidates, and launch and commercialize our product and product
candidates for which we may receive regulatory approval, including continuing to build our own commercial organization. We
believe that our current cash position, including expected Galafold® revenues, is sufficient to fund ongoing Fabry and Pompe,
and gene therapy program operations to achieve self-sustainability without the need for future dilutive financing. Potential
future business development collaborations, restructurings, pipeline expansion, and investment in biologics or gene therapy
manufacturing capabilities could impact our future capital requirements. However, we may require substantial 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:
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significantly delay, scale back, or discontinue the development or the commercialization of our product or
product candidates or one or more of our other research and development initiatives;
seek collaborators for Galafold®, AT-GAA or one or more of our current or future product candidates at an
earlier stage than otherwise would be desirable, 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 or commercialize ourselves;
significantly curtail operations; or
enter into strategic partnerships on unfavorable terms, including sale of our assets for less than full value.
Our forecast of the period of time through which our financial resources will be adequate to support our operations is a
forward-looking statement and involves 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 currently expect. Our future funding
requirements, both near and long-term, will depend on many factors, including, but not limited to:
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the costs of commercialization activities, including maintaining sales, marketing, and distribution capabilities
for Galafold® and any product candidates for which we may receive regulatory approval in regions where we
choose to commercialize our products on our own, including AT-GAA;
the scope, progress, results, and costs of preclinical development, laboratory testing, and clinical trials for our
product candidates and any other product candidates that we may in-license or acquire;
the cost of manufacturing drug supply for our preclinical studies, clinical trials, and commercial supply,
including the significant cost of manufacturing AT-GAA and our gene therapies;
the cost of transferring manufacturing technologies for our gene therapies to CMOs;
the outcome, timing, and cost of the regulatory approval process by the FDA, EMA, PMDA and other foreign
regulatory authorities, including the potential for regulatory authorities to require that we perform more studies
than those that we currently anticipate for our product and product candidates including AT-GAA;
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.
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Raising additional capital may cause dilution to our existing stockholders, restrict our operations, or require us to
relinquish rights to our technologies, Galafold® or product candidates.
We may seek additional capital through a combination of private and public equity offerings, debt financings, receivables
or royalty financings, strategic collaborations and alliances, restructuring and licensing arrangements. To the extent that we
raise additional capital through the sale of equity or convertible debt securities, your ownership 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 our existing stockholders' ownership. The incurrence of additional indebtedness beyond our existing indebtedness
with the remaining convertible note holders and Senior Secured Term Loan due 2026 could also result in increased fixed
payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur further debt,
limitations on our ability to acquire or license intellectual property rights, and other operating restrictions that could have a
material adverse effect on our ability to conduct our business and may result in liens being placed on our assets and intellectual
property. If we were to default on any of our indebtedness, we could lose such assets and intellectual property. If we raise
additional funds through strategic collaborations and alliances and licensing arrangements with third parties, we may have to
relinquish valuable rights to Galafold® 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 required to delay, limit, reduce or
terminate our product development or commercialization efforts or grant rights to develop and market our technologies that we
would otherwise 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% 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. The Convertible Notes bear interest at a fixed rate of 3% per year, payable semiannually on June 15 and December 15 of
each year, beginning on June 15, 2017. The Convertible Notes will mature on December 15, 2023, unless earlier repurchased,
redeemed, or converted in accordance with their terms. The Convertible Notes are convertible at the option of the holders,
under certain circumstances and during certain periods, into cash, shares of our common stock, par value $0.01 per share, or a
combination thereof and may be settled.
During the first and second quarters of 2019, we entered into separate, privately negotiated exchange agreements (the
"Exchange Agreements") with a limited number of holders (the "Holders") of the unsecured Convertible Senior Notes due in
2023 ("Convertible Notes"). Under the terms of the Exchange Agreements, the Holders agreed to exchange an aggregate
principal amount of $247.2 million of Convertible Notes held by them in exchange for an aggregate of approximately 44.0
million shares of our common stock, par value $0.01 per share. Additionally, we terminated the Capped Call Confirmations
related to the exchange of the Convertible Notes for cash proceeds of $19.9 million.
In July 2020, we entered into the Senior Secured Term Loan due 2026 for a $400 million credit facility with Hayfin Capital
Management, with an interest rate equal to 3-month LIBOR, subject to a 1% floor, plus 6.5% per annum that requires interest-
only payments until mid-2024 and matures in six years in 2026. We received net proceeds of $385.9 million in July 2020, after
deducting fees and expenses. There were no warrants or equity conversion features associated with the Senior Secured Term
Loan due 2026. The Senior Secured Term Loan due 2026 contains a minimum liquidity covenant of $75 million, tested
monthly and in effect at all times, and an incremental minimum consolidated revenue covenant, measured as of the previous
four consecutive fiscal quarters. The minimum consolidated revenue covenant ranges from $140 million, beginning March 31,
2021, and peaks at $225 million by June 30, 2023, continuing at that level until the loan is repaid.
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 to satisfy our debt payment obligations or that we will have sufficient equity to satisfy these
obligations. Our inability to generate funds obtain financing sufficient to satisfy our debt payment obligations or remain in
compliance with the debt covenants may result in such obligations being accelerated by our lenders, which would likely have a
material adverse effect on our business, financial condition and results of operations.
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Foreign currency exchange rate fluctuations could harm our financial results.
We conduct operations in many countries involving transactions denominated in a variety of currencies other than the U.S.
dollar. The majority of our current Galafold® revenue is derived from outside the U.S. Accordingly, changes in the value of
currencies relative to the U.S. dollar may impact our consolidated revenues and operating results due to transactional and
translational remeasurement that is reflected in our earnings. The current exposures arise primarily from cash, accounts
receivable, intercompany receivables and payables, and net product sales denominated in foreign currencies. Fluctuations in
currency exchange rates have had, and will continue to have, an impact on our results as expressed in U.S. dollars. We are not
currently engaged in any foreign currency hedging activities and there can be no assurance that currency exchange rate
fluctuations will not adversely affect our results of operations, financial condition and cash flows. In addition, our outlooks do
not assume fluctuations in currency exchange rates. Adverse fluctuations in currency exchange rates from the date of our
outlooks could cause our actual results to differ materially from those anticipated in our outlooks and adversely impact our
business, results of operations and financial condition.
We also face risks arising from the imposition of exchange controls and currency devaluations. Exchange controls may
limit our ability to convert foreign currencies into U.S. dollars or to make payments by our foreign subsidiaries or businesses
located in or conducted within a country imposing controls. Currency devaluations result in a diminished value of funds
denominated in the currency of the country instituting the devaluation.
In addition, Brexit and the continued uncertainty around the full impact of it and the exact trade arrangements upon exit has
adversely impacted global markets, including currencies, and resulted in a decline and volatility in the value of the British
pound and the Euro, as compared to the U.S. dollar and other currencies. Volatility in exchange rates and global financial
markets is expected to continue due to a number of factors, including uncertainty surrounding Brexit trade arrangements and
continued political and economic uncertainty globally.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
As of December 31, 2020, we had federal and state net operating loss carry forwards ("NOLs") of approximately $1,156
million and $889.4 million respectively. The federal carry forward for losses generated prior to 2018 will expire in 2029
through 2037. Federal net operating losses incurred in 2018 and onward have an indefinite expiration under the 2017 Tax Act.
Most of the state carry forwards generated prior to 2009 have expired through 2016. The remaining state carry forwards
including those generated in 2009 through 2020 will expire in 2029 through 2040. Utilization of NOLs may be subject to a
substantial limitation pursuant to Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), as well as
similar state statutes in the event of an ownership change. Such ownership changes have occurred in the past, and could occur
again in the future Under Section 382 of the Internal Revenue Code of 1986, as amended, or Section 382, if a corporation
undergoes an "ownership change," generally defined as a greater than 50% change (by value) in its equity ownership over a
three-year period, the corporation's ability 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 be limited. 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 a detailed study of our NOLs
and determined that there was not an ownership change in excess of 50%. Ownership changes in future periods may place
additional limits 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 is suspended or otherwise limited, which could accelerate or permanently increase
state taxes owed.
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Our executive officers, directors and principal stockholders maintain the ability to exert significant influence and
control over matters submitted to our stockholders for approval.
Our executive officers, directors and affiliated stockholders beneficially own shares representing approximately 35.5% of
our common stock as of December 31, 2020. As a result, if these stockholders were to choose to act together, they would be
able to exert significant influence and control over matters submitted to our stockholders for approval, as well as our
management and affairs. For example, these persons, if they choose to act together, could influence the election of directors and
approval of any merger, consolidation, sale of all or substantially all of our assets or other business combination or
reorganization. This concentration of voting power could delay or prevent an acquisition of us on terms that other stockholders
may desire. The interests of this group of stockholders may not always coincide with the interests of other stockholders, and
they may act, whether by meeting or written consent of stockholders, in a manner that advances their best interests and not
necessarily those of other stockholders, including obtaining a premium value for their common stock, and might affect the
prevailing market price for our common stock.
Because we do not anticipate paying any cash dividends on our capital in the foreseeable future, capital appreciation,
if any, will be our stockholders sole 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 development and 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, of our common stock will be our stockholders sole
source of gain for the foreseeable future.
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 that information 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 any disclosure controls and
procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives
of the control 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.
Risks Related to our Intellectual Property
If we are unable to obtain and maintain patent protection for our technology and products, or if the scope of the
patent protection is not sufficiently broad, our competitors could develop and commercialize technology and products
similar or identical to ours, and our ability to successfully commercialize 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 U.S. and other countries
with respect to our proprietary technology and products. We seek to protect our proprietary position by filing patent
applications in the U.S. and in certain foreign jurisdictions 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 will fail to
identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, if
we license technology or product candidates from third parties in the future, these license agreements may not permit us to
control the preparation, filing and prosecution of patent applications, or to maintain or enforce the patents, covering this
intellectual property. These agreements could also give our licensors the right to enforce the licensed patents without our
involvement, or to decide not to enforce the patents at all. Therefore, in these circumstances, these patents and applications may
not be prosecuted and enforced in a manner consistent with the best interests of our business.
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The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal
and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity,
enforceability and commercial value of our patent rights are highly uncertain. 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 which effectively prevent
others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the
patent laws in the U.S. 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:
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we or our licensors were the first to make the inventions covered by each of our pending patent applications;
we or our licensors were the first to file patent applications for these inventions;
others will not independently develop similar or alternative technologies or duplicate any of our technologies;
any patents issued to us or our licensors will provide a basis for commercially viable products, will provide us
with any competitive advantages or will not be challenged by third parties;
licenses from other third parties will not be required to commercialize patented products;
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;
the patents of others will not have a negative effect on our ability to do business; or
patent authorities will not identify deficiencies in our patent applications and refuse to grant our patents.
In addition, we cannot be assured that any of our pending patent applications will result in issued patents. In particular, we
have filed patent applications in the U.S., the European Patent Office and other countries outside the U.S. that have not been
issued as patents. These pending applications include, among others, some of the patent applications for ATB200, Galafold®,
and our gene therapy platforms and product candidates. If patents are not issued in respect of our pending patent applications,
we may not be able to stop competitors from marketing similar products in Europe and other countries in which we do not have
issued patents.
The patents that we have licensed from Mt. Sinai School of Medicine relating to use of Galafold® to treat Fabry disease
expired in 2018 in the U.S. and expired in 2019 in all other jurisdictions. In addition to patent protection outside of the U.S., we
intend to seek orphan medicinal product designation of our product candidates and to rely on statutory data exclusivity
provisions in jurisdictions outside the U.S. where such protections are available, including Europe. The patent rights that we
own or have licensed relating to our product candidates are limited in ways that may affect our ability to exclude third parties
from competing against us if we obtain regulatory approval to market these product candidates. In particular:
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We do not hold composition of matter patents covering Galafold® but we have several method of treatment
patents issued and listed. We do have composition of matter patents, method of manufacture and other patents
issued for ATB200. We also have several pending applications covering Galafold®, ATB200 and gene therapy.
There can be no assurance that these applications will be allowed or that allowed applications will be issued or
that the scope of such patents, if they issue, will be sufficient to protect our product. Composition of matter
patents can provide protection for pharmaceutical products to the extent that the specifically covered
compositions are important. For our product candidates for which we do not hold composition of matter patents,
competitors who obtain the requisite regulatory approval can offer products with the same composition as our
products so long as the competitors do not infringe any method of use patents that we may hold.
For some of our product candidates the principal patent protection that covers or those we expect will cover our
product candidate is a method of use patent. This type of patent only protects the product when used or sold for
the specified method. However, this type of patent does not limit a competitor from making and marketing a
product that is identical to our product that is labeled for an indication that is outside of the patented method, or
for which there is a substantial use in commerce outside the patented method.
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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 U.S. For example, European
patent law restricts the patentability 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 to March 16, 2013, in the U.S., the first to
invent was entitled to the patent. Publications of discoveries in the scientific literature often lag behind the actual discoveries,
and patent applications in the U.S. 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 were the first to file for patent protection of such inventions.
Moreover, we may be subject to a third-party pre-issuance 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 U.S. or elsewhere, challenging our patent rights or the patent rights of others.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent
rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or
result in our inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the
breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies
from collaborating with us to license, develop or commercialize current or 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 from competing with us or otherwise provide us with any competitive advantage. Our
competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or
products in a non-infringing manner. In addition, other companies may attempt to circumvent any regulatory data protection or
market exclusivity that we obtain under applicable legislation, which may require us to allocate significant resources to
preventing such circumvention. Legal and regulatory developments in the E.U. and elsewhere may also result in clinical trial
data submitted as part of an MAA becoming publicly available. Such developments could enable other companies to
circumvent our intellectual property rights and use our clinical trial data to obtain marketing authorizations in the E.U. and in
other jurisdictions. Such developments may also require us to allocate significant resources to prevent other companies from
circumventing or violating our intellectual property rights. Our attempts to prevent third parties from circumventing our
intellectual property and other rights may ultimately be unsuccessful. We may also fail to take the required actions or pay the
necessary fees to maintain our patents.
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 the courts or patent offices in the U.S. 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 technology and products, or limit
the duration of the patent protection of our technology and products. Given the amount of time required for the development,
testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after
such candidates are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others
from commercializing products similar or identical to ours.
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Further, litigation, interferences, oppositions, inter partes reviews, administrative challenges or other similar types of
proceedings are, have been and may in the future be necessary in some instances to determine the validity and scope of certain
of our proprietary rights, and in other instances to determine the validity, scope or non-infringement of certain patent rights
claimed by third parties to be pertinent to the manufacture, use or sale of our products. We may also face challenges to our
patent and regulatory protections covering our products by third parties, including manufacturers of generics and biosimilars
that may choose to launch or attempt to launch their products before the expiration of our patent or regulatory exclusivity.
Litigation, interference, oppositions, inter partes reviews, administrative challenges or other similar types of proceedings are
unpredictable and may be protracted, expensive and distracting to management. The outcome of such proceedings could
adversely affect the validity and scope of our patent or other proprietary rights, hinder our ability to manufacture and market
our products, require us to seek a license for the infringed product or technology or result in the assessment of significant
monetary damages against us that may exceed amounts, if any, accrued in our financial statements. An adverse determination in
a judicial or administrative proceeding or a failure to obtain necessary licenses could prevent us from manufacturing or selling
our products. Furthermore, payments under any licenses that we are able to obtain would reduce our profits derived from the
covered products and services.
Additionally, our products, or the technologies or processes used to formulate or manufacture those products may now, or
in the future, infringe the patent rights of third parties. It is also possible that third parties will obtain patent or other proprietary
rights that might be necessary or useful for the development, manufacture or sale of our products. We may need to obtain
licenses for intellectual property rights from others and may not be able to obtain these licenses on commercially reasonable
terms, if at all.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be
expensive, time consuming and unsuccessful.
Competitors may infringe our patents, trademarks, copyrights or other intellectual property. To counter infringement or
unauthorized use, we may be required to file claims, which can be expensive and time consuming. Any claims we assert against
perceived infringers could provoke these parties to assert counterclaims against 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 or unenforceable,
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 grounds that 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 uncertain and 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, including our gene therapy products, may infringe or be accused of infringing one or more claims of an issued
patent or may fall within the scope of one or more claims in a published patent application that may subsequently issue and to
which we do not hold a license or other rights. Third parties may own or control these patents or patent applications in the U.S.
and abroad. These third parties could bring claims against us that would cause us to incur substantial expenses and, if successful
against us, could cause us to pay substantial damages. Further, if a patent infringement suit were brought against us, we or they
could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the
subject of the suit.
No assurance can be given that patents do not exist, have not been filed, or could not be filed or issued, which contain
claims covering our 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 allege they have patent rights encompassing our
product candidates, technology or methods.
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 of such patents, there is no assurance that a court would find in our favor. If we were to challenge
the validity of any issued U.S. patent in court, we would need to overcome a presumption of validity that attaches to every
patent. This burden is high and would require us to present clear and convincing evidence as to the invalidity of the patent's
claims. There is no assurance that a court would find in our favor on infringement or validity. Furthermore, during the course of
litigation, confidential information may be disclosed in the form of documents or testimony in connection with discovery
requests, depositions or trial testimony. Disclosure of our confidential information and our involvement in intellectual property
litigation could materially adversely affect our business.
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In order to avoid or settle potential claims with respect to any patent rights of third parties, we may choose or be required to
seek a license from a third party and be required to pay license fees or royalties or both. These licenses may not be available on
acceptable terms, or at all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which
could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from
commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened
patent infringement claims, we are unable to enter into licenses on acceptable terms. This could harm our business significantly.
There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the
pharmaceutical and biotechnology industries. In addition to infringement claims against us, we may become a party to other
patent litigation and other proceedings, including interference proceedings declared by the U.S. Patent and Trademark Office
and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to our products
and technology. Even if we prevail, the cost to us of any patent litigation or other proceeding could be substantial.
Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because
they have substantially greater resources. In addition, any uncertainties resulting from any litigation could significantly limit our
ability to continue our operations. Patent litigation and other proceedings may also absorb significant management time.
We may be subject to claims by third parties asserting that we or our employees have misappropriated their
intellectual property, or claiming ownership of 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 potential competitors. 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 to claims that we or these employees have used or
disclosed intellectual property, including trade secrets or other proprietary information, of any such employee's former
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 agreements assigning such intellectual property to us, we may be unsuccessful in executing such
an agreement with each party who in fact develops intellectual property that we 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 third parties, 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 or personnel. Even if we are successful in prosecuting or defending against such claims, litigation
could result in substantial costs and be a distraction to management.
If we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose license
rights that are important to our business.
We are a party to license agreements with Nationwide Children’s Hospital ("Nationwide Children’s") and University of
Pennsylvania ("Penn") pursuant to which we license key intellectual property relating to our gene therapy product candidates.
We expect to enter into additional licenses in the future. Our existing licenses impose, and we expect that future licenses will
impose, various diligences, milestone payment, royalty, insurance and other obligations on us. If we fail to comply with these
obligations, the licensor may have the right to terminate the license, in which event we might not be able to market any product
that is covered by the licensed patents.
We 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 trademark registration proceedings, we may receive rejections. Although we are given an opportunity to
respond to those rejections, we may be unable to overcome such rejections. In addition, in the U.S. Patent and Trademark
Office and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose 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 them against third parties than we otherwise would.
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Our rights to develop and commercialize our gene therapy product candidates are subject, in part, to the terms and
conditions of licenses granted to us by others.
The biotechnology and pharmaceutical industries, especially in the gene therapy field, are characterized by rapidly
changing technologies, significant competition and a strong emphasis on intellectual property. We face substantial competition
from many different sources, including large and specialty pharmaceutical and biotechnology companies, academic research
institutions, government agencies and public and private research institutions. We are aware of companies focused on
developing gene therapies in various indications as well as several companies addressing other methods for delivering or
modifying genes and regulating gene expression. Any advances in gene therapy technology made by a competitor may be used
to develop therapies that could compete against any of our product candidates.
Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical and
other resources than we do, such as larger research and development, clinical, marketing and manufacturing organizations.
Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being
concentrated among a smaller number of competitors. Our commercial opportunity could be reduced or eliminated if
competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more
convenient or are less expensive than any products that we may develop. Competitors also may obtain FDA or other regulatory
approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors
establishing a strong market position before we are able to enter the market. Additionally, technologies developed by our
competitors may render our potential product candidates uneconomical or obsolete, and we may not be successful in marketing
our product candidates against competitors.
In addition to our own patents, we have acquired licenses to certain patent rights and proprietary technology from third
parties, including our current partners at Nationwide Children’s and Penn, that are important or necessary to the development of
our technology and products, including technology related to our manufacturing process and our gene therapy product and
product candidates. These and other licenses may not provide exclusive rights to use such intellectual property and technology
in all relevant fields of use and in all territories in which we may wish to develop or commercialize our technology and products
in the future. As a result, we may not be able to prevent competitors from developing and commercializing competitive
products in territories included in all of our licenses. Licenses to additional third-party technology that may be required for our
development programs may not be available in the future or may not be available on commercially reasonable terms, or at all,
which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Risks Related to the COVID-19 Pandemic
The novel coronavirus ("COVID-19") pandemic and efforts to reduce its spread may negatively impact our business
and operations.
The COVID-19 pandemic has substantially burdened healthcare systems worldwide which may impact progression of our
clinical trials, development and manufacturing of our product and product candidates and continued commercialization of
Galafold®. Required inspections and reviews by regulatory agencies may also be delayed due to the focus of resources on
COVID-19 as well as travel and other restrictions. Significant delays in the timing of our clinical trials and in regulatory
reviews could adversely affect our ability to commercialize some assets in our product pipeline. Lack of normal access by
patients to the healthcare system, along with concern about the continued supply of medications, may result in changes in
buying patterns throughout the supply chain, including by patients, which could increase or decrease demand for our products.
Similarly, we have temporarily halted in-person interactions by our employees with healthcare providers, which may decrease
demand for our products. COVID-19 could also have an adverse impact on our supply chain and distribution systems, which
could impact our ability to distribute our products and the ability of third parties on which we rely to fulfill their obligations to
us, increase our expenses and have a material adverse effect on our ability to generate revenue. In addition, the conditions
created by the pandemic may intensify other risks inherent in our business, including, among other things, risks related to drug
pricing and access, intellectual property protection, product safety and efficacy concerns, product liability and other litigation,
and the impact of adverse global and local economic conditions.
As a result, while the financial impact on us has not been material to date, given the rapid and evolving nature of the virus,
COVID-19 could negatively affect our results of operations, financial condition, liquidity and cash flows in future periods,
perhaps materially. The degree to which COVID-19 affects us will depend on developments that are highly uncertain and
beyond our knowledge or control, including, but not limited to, the duration and severity of the pandemic, the actions taken to
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reduce its transmission, and the speed with which, and extent to which, more stable economic and operating conditions resume.
Should the COVID-19 pandemic and any associated mitigation measures, recession or depression continue for a prolonged
period, our results of operations, financial condition, liquidity, and cash flows could be materially impacted by lower revenues
and profitability and a lower likelihood of effectively and efficiently developing and launching new products.
Risks Related to Employment, Environmental, Social and Governance Matters
Our future success depends on our ability to retain our Chief Executive Officer and other key executives and to attract,
retain and motivate qualified personnel.
We are highly dependent on John F. Crowley, our Chairman and Chief Executive Officer, Bradley L. Campbell, our
President and Chief Operating Officer, and Daphne Quimi, our Chief Financial Officer. These executives each have significant
pharmaceutical industry experience. The loss of the services of any of these executives might impede the achievement of our
research, development and commercialization objectives and materially adversely affect our business and we 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 not maintain "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,
including our Research and Gene Therapy Center of Excellence in Philadelphia. In addition, maintaining a qualified finance 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 the competition among numerous pharmaceutical and biotechnology
companies for similar personnel, particularly in New Jersey and Philadelphia and their surrounding areas. Although we believe
we offer competitive salaries and benefits, we may have to increase spending in order to retain personnel. If we fail to retain our
remaining qualified personnel 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 and commercialization strategy. Our consultants and advisors may be employed by employers other
than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to
us.
We expect to expand our development, regulatory and sales and marketing capabilities, and as a result, we may
encounter difficulties in managing our growth, which could disrupt our operations.
As of December 31, 2020, we had 483 full-time employees. As our development and commercialization strategies develop,
we will need additional managerial, operational, sales, marketing, financial, technical operations and other resources. Our
management, personnel and systems currently in place may not be adequate to support this 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 to
operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees.
Future growth could require significant capital expenditures and may divert financial resources from other projects, such as the
development of our existing or future product candidates and we may not be able to replace key personnel in the event of
turnover. Future growth would impose significant added responsibilities on members of management, including:
•
•
•
•
•
•
•
managing the development and commercialization of 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 in connection with the commercialization of any approved product;
managing our internal development efforts effectively while complying with our contractual obligations to
licensors, licensees, contractors and other third parties;
managing our collaboration partners and associated joint steering committees;
managing any clinical or commercial collaborations with third parties;
improving our managerial, development, operational and financial systems and procedures;
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•
•
•
•
monitoring and improving diversity, inclusion and pay-equity initiatives;
developing our compliance infrastructure and processes to ensure compliance with regulations applicable to
public companies;
developing biologics and gene therapy manufacturing expertise; 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 future financial performance and our ability to commercialize our product candidates and to
compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to
manage our development efforts and clinical trials effectively and hire, train and integrate additional management,
administrative and sales and marketing personnel. We may not be able to accomplish these tasks, and our failure to accomplish
any of them could prevent us from successfully growing our company.
Our employees, independent contractors, principal investigators, CROs, consultants and vendors may engage in
misconduct or other improper activities, 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 fraudulent conduct, harassment or other illegal activity. Misconduct by these parties could include
intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates:
•
•
•
•
FDA or similar regulations of foreign regulatory authorities, including those laws requiring the reporting of true,
complete and accurate information to such authorities;
manufacturing standards;
federal and state healthcare fraud and abuse laws and regulations, anti-bribery and corruption laws, anti-
discrimination and harassment laws, privacy and similar laws and regulations established and enforced 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 also involve the improper use of
information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our
reputation. We have adopted a Code of Business Conduct and Ethics, a robust Enterprise Risk Management Program, and
conduct comprehensive training, but it is not always possible to identify and deter misconduct by employees and other third
parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or
unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a
failure to be in compliance with such laws or regulations. If any such actions are instituted 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 and results of
operations, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion
from participation in healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and
curtailment of our operations, any of which could have a material adverse effect on our ability to operate our business and our
results of operations.
If our enterprise risk program, global risk committee and other compliance methods are not effective, our business,
financial condition and operating results may be adversely affected
Our ability to identify, manage and respond to the various risks related to our business is largely dependent on our
established and maintained compliance, risk, audit and reporting systems and procedures. The Board of Directors has ultimate
responsibility for risk oversight of the Company and carries out this duty through its Committees. Our Audit and Compliance
Committee, Nominating and Corporate Governance Committee, Compensation and Leadership Development Committee and
Science and Technology Committee have each been delegated oversight authority by the Board of Directors with respect to
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issues in their applicable areas of expertise. These committees are responsible for identifying, monitoring and reporting areas of
concern to the full Board of Directors. At the Company level, our senior management team similarly monitors risk through the
Global Risk Committee, which is co-chaired by our Chief Compliance Officer and President and Chief Operating Officer.
Membership of the Global Risk Committee consists primarily of key department heads who are asked to bring to such
committee relevant items for discussion that they or their teams have identified at the numerous sub-committees these
individuals chair or attend. The Global Risk Committee then uses this information to develop an Enterprise Risk Management
Program, which identifies key risks and mitigation strategies and which is reported directly to the Audit and Compliance
Committee on a quarterly basis, and to the full Board of Directors on a yearly basis. Our international business segment also has
its own companion committee which operates in substantially the same way as the Global Risk Committee and reports key risks
to the Global Risk Committee for inclusion in the Enterprise Risk Management Program.
If our policies, procedures, and compliance systems, including our Enterprise Risk Management Program and the Global
Risk Committee are not effective, or if we are not successful in monitoring or evaluating the risks to which we are or may be
exposed, our business, reputation, financial condition and operating results could be materially adversely affected. We cannot
provide assurance that our policies and procedures will always be effective, or that our management, the Enterprise Risk
Management Program or the Global Risk Committee would be able to identify any such ineffectiveness. If our compliance and
risk management strategies are not effective, our business, financial condition and operating results may be adversely affected.
General Risk Factors
Our business and operations would suffer in the event of computer system failures or security breaches.
Despite the implementation of security measures, our internal computer systems, and those of our CROs, contract
manufacturing organizations and other third parties on which we rely, are vulnerable to damage from computer viruses,
unauthorized access, security breaches, natural disasters, terrorism, war and telecommunication and electrical failures. System
failures, accidents or security breaches could cause interruptions in our operations and could result in a material disruption of
our clinical activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy.
If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our
commercialization of our product and our product candidate development programs. For example, the loss of clinical trial data
from completed or ongoing clinical trials could result in delays in our regulatory approval efforts and significantly increase our
costs to recover or reproduce the data. To the extent that any disruptions or security breach were to result in a loss or damage to
our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur significant
unexpected losses, expenses and liabilities, we could face litigation or suffer reputational harm and the further development of
our product candidates could be delayed.
We may acquire other assets or businesses, or form collaborations or make investments in other companies or
technologies that could harm our operating 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 or licenses of assets or businesses, or strategic
alliances and collaborations, to expand our existing technologies and operations, such as our acquisition of Celenex in 2018 and
the research collaboration with Penn to develop gene therapies in 2018 and expanded in 2019 We may not identify or complete
these transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the anticipated benefits of any
such transaction, any of which could have a detrimental effect on our financial condition, results of operations, and cash flows.
We may not be able to find suitable acquisition or licensing 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
contingent liabilities in connection therewith. Integration of an acquired company or assets may also disrupt ongoing
operations, require the hiring of additional personnel and the implementation of additional internal systems and infrastructure,
especially the acquisition of commercial assets, and require management resources that would otherwise focus on developing
our existing business. We may not be able to find suitable collaboration partners or identify other investment opportunities, and
we may experience losses related to any such investments.
To finance any acquisitions, licenses or collaborations, we may choose to issue debt or shares of our common stock as
consideration. Any such issuance of shares would 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 or fund a transaction using our stock as consideration.
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Alternatively, it may be necessary for us to raise additional funds for acquisitions through public or private financings.
Additional funds may not be available on terms that are favorable to us, or at all.
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 stockholders may consider favorable, including transactions in which our stockholders might otherwise
receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the
future for shares of our common stock, thereby depressing the market price of our common stock. In addition, these provisions
may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more
difficult for stockholders to replace members of our board of directors. Because our board of directors is responsible for
appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to
replace current members of our management team. Among others, these provisions:
•
•
•
•
•
•
•
•
establish a classified board of directors, and, as a result, not all directors are elected at one time;
allow the authorized number of our directors to be changed only by resolution of our board of directors;
limit the manner in which stockholders can remove directors from our board of directors;
establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings
and nominations to our board of directors;
require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by
our stockholders by written consent;
limit who may call stockholder meetings;
authorize our board of directors to issue preferred stock, without stockholder approval, which could be used to
institute a "poison pill" that would work to dilute the stock ownership of a potential hostile acquirer, effectively
preventing acquisitions that have not been approved by our board of directors; and
require the approval of the holders of at least 67% of the 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, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging
or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15%
of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for
purchasers of our common stock.
The market price of our common stock is highly volatile and may be subject to wide fluctuations in response to numerous
factors, some of which are beyond our control. In addition to the factors discussed in this Annual Report on Form 10-K, 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;
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•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
regulatory or legal developments in the E.U., U.K., U.S. and other countries;
the impact of Brexit on our operations, supply chain, regulatory approvals and personnel;
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;
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 research coverage 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 volume fluctuations that have often been unrelated or disproportionate to the operating performance of these
companies. Broad market and industry factors may negatively affect 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 of other 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 our products. In the past, securities class action litigation has often been initiated against
companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert
our management's attention and resources, and could also require us to make substantial payments to satisfy judgments or to
settle litigation.
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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 drop significantly, 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 the holders 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 for ourselves 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 equity compensation plans. As a result, these shares can be freely sold in the public market upon issuance, subject to
volume limitations applicable to affiliates. In addition, 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 our common 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 when
entering 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 listing requirements of NASDAQ for inclusion in the Global Market to maintain such listing,
including, among other things, the maintenance of a minimum closing bid price 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 the continued 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 could face 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, possibly resulting 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 stock and 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. If securities 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 we obtain securities or industry analyst coverage, if one or more
of the analysts who covers us downgrades our common stock, the price of our common stock would likely decline. If one or
more of these analysts ceases to cover us or fails to publish regular reports on us, interest in the purchase of our common stock
could decrease, which could cause the price of our common stock or trading volume to decline.
We 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 our cash 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 use our 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 common stock 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 or long-term, investment-grade, interest-bearing securities. These investments may not yield favorable
returns. If we do not invest or apply our cash and cash equivalents 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.
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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 other proprietary information, to maintain our competitive position. We seek to protect these trade
secrets, in part, by entering into non-disclosure and confidentiality agreements 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 agreements we have executed will provide adequate protection. Any party with whom we
have executed such an agreement may breach that agreement and disclose our proprietary information, including our trade
secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed
or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition,
some courts inside and outside the U.S. are less willing or unwilling to protect trade secrets. If any of our trade secrets were to
be lawfully obtained or independently developed by 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. If any of our trade secrets were to be
obtained or independently developed by a competitor, our competitive position would be harmed.
Litigation may adversely affect our business, financial condition, results of operations or liquidity.
Our business is subject to the risk of litigation by employees, consumers, vendors, competitors, intellectual property rights
holders, shareholders, government agencies and others through private actions, class actions, administrative proceedings,
regulatory actions or other litigation. For example, we and certain of our current and former officers have previously been
parties to securities class action lawsuits against us, all of which have been settled or dismissed. The outcome of litigation,
particularly class action lawsuits, regulatory actions and intellectual property claims, is difficult to assess or quantify. Plaintiffs
in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss
relating to these lawsuits may remain unknown for substantial periods of time. In addition, certain of these lawsuits, if decided
against us or settled by us, may result in liability material to our Consolidated Financial Statements as a whole or may
negatively affect our operating results if changes to our business operation are required. The cost to defend litigation may be
significant. There also may be adverse publicity associated with litigation that could negatively affect customer perception of
our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation
may adversely affect our business, financial condition, results of operations or liquidity.
We may be exposed to employment-related claims and losses which could have an adverse effect on our business.
As we continue to increase the size of our workforce, the risk of potential employment-related claims will also increase. As
such, we may be subject to claims, allegations or legal proceedings related to employment matters including, but not limited to,
discrimination, harassment (sexual or otherwise), wrongful termination or retaliation, local, state or federal labor law violations,
injury, and wage violations. In the event we are subject to one or more employment-related claims, allegations or legal
proceedings, we may incur substantial costs, losses or other liabilities in the defense, investigation, settlement or other
disposition of such claims. In addition to the economic impact, we may also suffer reputational harm as a result of such claims,
allegations and legal proceedings and the investigation, defense and prosecution of such claims, allegations and legal
proceedings could cause substantial disruption in our business and operations. While we do have policies and procedures in
place to reduce our exposure to these risks, there can be no assurance that such policies and procedures will be effective or that
we will not be exposed to such claims, allegations or legal proceedings.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
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Item 2. PROPERTIES
The following table contains information about our current significant leased properties as of December 31, 2020.
Location
Philadelphia, Pennsylvania, U.S. (2)
Cranbury, New Jersey, U.S. (2)
Marlow, United Kingdom
Princeton, New Jersey, U.S.
Approximate
Square Feet
Use
Lease expiry date (1)
50,816 Office and laboratory
September 2044
90,000 Office and laboratory March 2021
36,796 Office
21,922 Office
August 2028
January 2022
______________________________
(1) Includes renewal options on leases which we are reasonably certain to exercise.
(2) On February 1, 2021, we changed our global headquarters from Cranbury, NJ to Philadelphia, PA.
In addition to the above, we also maintain offices in other U.S. and international jurisdictions in which we operate. We
believe that our current office and laboratory facilities are 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 at commercially reasonable rates.
Item 3. LEGAL PROCEEDINGS
We are not currently a party to any material legal proceedings.
Item 4. MINE SAFETY DISCLOSURES
None.
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Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS,
AND ISSUER PURCHASES OF EQUITY SECURITIES
PART II
Market for Our Common Stock
Our common stock has been traded on the NASDAQ Global Market under the symbol "FOLD" since May 31, 2007. Prior
to that time, there was no public market for our common stock. The closing price for our common stock as reported by the
NASDAQ Global Market on February 19, 2021 was $12.22 per share. As of February 19, 2021, there were 21 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 the development and growth of our business. We do not intend to declare or pay cash dividends to our stockholders in
the foreseeable future.
Recent Sales of Unregistered Securities
We did not sell any equity securities during the fiscal year ended December 31, 2020 in transactions that were not
registered under the Securities Act.
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Performance Graph
The following performance graph compares the cumulative total return on our common stock during the last five fiscal
years with the NASDAQ Composite Index (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 $100 invested in our common stock. Pursuant to applicable
SEC rules, all values assume reinvestment of the full amount of all dividends, however no dividends have been declared on our
common stock to date. The stockholder return shown on the graph below is not necessarily indicative of future performance,
and we do not make or endorse any predictions as to future stockholder returns.
12/31/2015
12/31/2016
12/31/2017
12/31/2018
12/31/2019
12/31/2020
Amicus Therapeutics, Inc.
NASDAQ Composite
NASDAQ Biotechnology
$100
$100
$100
$51
$108
$78
$148
$138
$95
$99
$133
$86
$100
$179
$107
$238
$257
$134
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Issuer Purchases of Equity Securities
The following table provides certain information with respect to purchase of our common stock during the three months
ended December 31, 2020:
Period
October 1, 2020 through October 31, 2020
November 1, 2020 through November 30, 2020
December 1, 2020 through December 31, 2020
Total
Total Number
of Shares
Purchased (1)
Average
Price Paid
per Share
11,654 $
3,632 $
10,306 $
25,592 $
15.98
21.75
23.80
19.95
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Maximum Number (or
Approximate Dollar Value)
of Shares That May Yet Be
Purchased Under the Plans
or Programs
—
—
—
—
—
—
—
—
______________________________
(1) Represents shares of common stock withheld to satisfy taxes associated with the vesting of restricted stock awards.
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Amicus Therapeutics, Inc.NASDAQ CompositeNASDAQ Biotechnology12/31/201512/31/201612/31/201712/31/201812/31/201912/31/2020050100150200250300
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Item 6. SELECTED FINANCIAL DATA
Statement of Operations Data (in thousands except share and per share data)
Net product sales
Cost of goods sold
Gross profit
Operating expenses:
Research and development
Selling, general, and administrative
Changes in fair value of contingent consideration payable
Loss on impairment of assets
Restructuring charges
Depreciation and amortization
Total operating expenses
Loss from operations
Other income (expense):
Interest income
Interest expense
Loss on exchange of convertible notes
Loss on extinguishment of debt
Change in fair value of derivatives
Other (expense) income
Loss before income tax
Income tax (expense) benefit
2020
2019
2018
2017
2016
Years Ended December 31,
$
260,886 $
182,237 $
91,245 $
36,930
$
31,044
229,842
308,443
156,407
3,144
—
—
8,846
476,840
21,963
160,274
286,378
169,861
3,297
—
—
4,775
464,311
14,404
76,841
270,902
127,200
3,300
—
—
4,216
405,618
(246,998)
(304,037)
(328,777)
3,226
(22,425)
—
(7,276)
—
(781)
(274,254)
(2,598)
10,249
(18,872)
(40,624)
—
—
(2,626)
(355,910)
(478)
10,461
(22,402)
—
—
(2,739)
(5,632)
(349,089)
94
6,236
30,694
149,310
88,671
(234,322)
465,427
—
3,593
472,679
(441,985)
4,096
(17,240)
—
—
—
6,008
(449,121)
165,119
4,958
833
4,125
104,793
71,151
6,760
—
69
3,242
186,015
(181,890)
1,602
(5,398)
—
(13,302)
—
(4,793)
(203,781)
3,739
Net loss attributable to common stockholders
Net loss attributable to common stockholders per common
share — basic and diluted
Weighted-average common shares outstanding — basic and
$
$
(276,852) $
(356,388) $
(348,995) $
(284,002) $
(200,042)
(1.07) $
(1.48) $
(1.88) $
(1.85) $
(1.49)
diluted
258,867,380
240,421,001
185,790,021
153,355,144
134,401,588
Balance Sheet Data (in thousands)
Cash, cash equivalents, and marketable
securities
Working capital
Total assets
Total liabilities
Accumulated deficit
Total stockholders' equity
2020
2019
2018
2017
2016
As of December 31,
$
483,269 $
452,740 $
504,152 $
358,562 $
449,793
886,520
600,140
391,261
850,207
373,782
464,971
789,951
447,039
321,925
627,024
274,174
(2,045,462)
(1,768,610)
(1,412,222)
(1,063,610)
286,380
476,425
342,912
352,850
330,351
229,105
1,036,845
676,694
(779,608)
360,151
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
We are a global, patient-dedicated biotechnology company focused on discovering, developing, and delivering novel
medicines for rare diseases. We have a portfolio of product opportunities led by the first, oral monotherapy for Fabry disease
that has achieved widespread global approval, a differentiated biologic for Pompe disease, and an industry leading rare disease
gene therapy portfolio.
The cornerstone of our portfolio is Galafold® (also referred to as "migalastat"), the first and only approved oral precision
medicine for people living with Fabry disease who have amenable genetic variants. Migalastat is currently approved under the
trade name Galafold® in the United States ("U.S."), European Union ("E.U."), United Kingdom ("U.K."), and Japan, with
multiple additional approvals granted and applications pending in several geographies around the world.
The lead biologics program of our pipeline is Amicus Therapeutics GAA ("AT-GAA", also known as ATB200/AT2221, or
cipaglucosidase alfa/miglustat), a novel, clinical-stage, potential best-in-class treatment paradigm for Pompe disease. In
February 2019, the U.S. Food and Drug Administration ("FDA") granted Breakthrough Therapy designation ("BTD") to AT-
GAA for the treatment of late onset Pompe disease. We initiated the rolling Biologic License Application ("BLA") submission
to the FDA in the fourth quarter of 2020.
We initiated ATB200-03 (or "PROPEL"), a global Phase 3 clinical study of AT-GAA in adult patients with late onset
Pompe disease in December 2018 and completed last patient, last visit in December 2020. In February 2021, we reported
topline results from the Phase 3 PROPEL study.
Patients enrolled in PROPEL were randomized 2:1 so that for every two patients randomized to be treated with AT-GAA,
one was randomized to be treated with alglucosidase alfa. Of the Pompe patients enrolled, 77% were being treated with
alglucosidase alfa (n=95) immediately prior to enrollment (“Switch”) and 23% had never been treated with any ERT (n=28)
(“Naïve”). 117 patients completed the PROPEL study and all 117 voluntarily enrolled in the long-term extension study.
The primary endpoint of the study was the mean change in 6-minute walk distance as compared with baseline
measurements at 52 weeks across the combined ERT Switch and ERT Naïve patient populations. In this combined population
patients taking AT-GAA (n=85) walked on average 21 meters farther at 52 weeks compared to 7 meters with those treated with
alglucosidase alfa (n=37). This primary endpoint in the combined population was assessed for superiority and while
numerically greater, statistical significance for superiority on this combined population was not achieved for the AT-GAA arm
as compared to the alglucosidase alfa arm (p=0.072).
Per the hierarchy of the statistical analysis plan, the first key secondary endpoint of the study was the mean change in
percent-predicted Forced Vital Capacity (“FVC”) at 52 weeks across the combined population. In this combined population
patients taking AT-GAA demonstrated a nominally statistically significant and clinically meaningful difference for superiority
over those treated with alglucosidase alfa. AT-GAA significantly slowed the rate of respiratory decline in patients after 52
weeks. Patients treated with AT-GAA showed a 0.9% absolute decline in percent-predicted FVC, compared to a 4.0% absolute
decline in the alglucosidase alfa arm (p=0.023).
Patients within the combined study population demonstrated statistically significant improvements on the GSGC (“Gait,
Stairs, Gower’s Chair”) key secondary endpoint, which captures strength, coordination and mobility, compared to a worsening
for alglucosidase alfa treated patients in the overall population (p<0.05). Additionally, lower MMT (Manual Muscle Testing),
Patient-Reported Outcomes Measurement Information System (“PROMIS”) physical function and PROMIS fatigue secondary
endpoints favored AT-GAA treated patients over alglucosidase alfa treated patients. Results also showed improvements in the
two important biomarker endpoints of Pompe disease (Hex-4 and CK), which significantly favored AT-GAA compared to
alglucosidase alfa (p<0.001). AT-GAA demonstrated a similar safety profile to alglucosidase alfa.
The PROPEL Switch patients entered the study having been treated with alglucosidase alfa for a minimum of two years.
More than two thirds (67%+) of those patients had been on ERT treatment for more than five years prior to entering the
PROPEL study (mean of 7.4 years). A pre-specified analysis of the patients switching from alglucosidase alfa on 6-minute walk
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distance showed that after 52 weeks from switching, AT-GAA treated patients (n=65) walked 16.9 meters farther than their
baseline, compared to 0.0 meters for those patients who were randomized to remain on alglucosidase alfa (n=30) (p=0.046).
A pre-specified analysis of the patients switching from alglucosidase alfa on percent-predicted FVC showed that AT-GAA
treated patients stabilized and slightly improved their respiratory function on this important measure while those patients
remaining on alglucosidase alfa continued to significantly decline in respiratory muscle function. AT-GAA patients showed a
0.1% absolute increase in percent-predicted FVC while the alglucosidase alfa patients showed a 4.0% absolute decline over the
course of the year (p=0.006).
The PROPEL Naïve patients treated with AT-GAA for 52 weeks (n=20) walked 33 meters farther than their baseline, on
the 6-minute walk distance endpoint. The Naïve patients treated with alglucosidase alfa (n=7) walked 38 meters further than
their baseline. The difference between the two groups was not statistically significant (p=0.60). Additionally, patients never
previously treated with any ERT showed similar declines in percent-predicted FVC at 52 weeks of –4.1% for AT-GAA treated
patients and –3.6% for alglucosidase alpha treated patients. The difference between the two groups was not statistically
significant (p=0.57).
We have established an industry leading gene therapy portfolio of potential therapies for people living with rare metabolic
diseases, through a license with Nationwide Children's Hospital ("Nationwide Children’s") and an expanded collaboration with
the University of Pennsylvania ("Penn"). Our pipeline includes gene therapy programs in rare, neurologic lysosomal disorders
("LDs"), specifically: CLN6, CLN3, and CLN1 Batten disease, Pompe disease, Fabry disease, CDKL5 deficiency disorder
("CDD"), Mucopolysaccharidosis Type IIIB ("MPS IIIB"), as well as a next generation program in Mucopolysaccharidosis
Type IIIA ("MPS IIIA"). Our expanded collaboration with Penn also provides us with exclusive disease-specific access and the
option rights to develop potentially disruptive new gene therapy platform technologies and programs for most LDs and a
broader portfolio of more prevalent rare diseases, including Rett Syndrome, Angelman Syndrome, Myotonic Dystrophy, and
select other muscular dystrophies. In the first quarter of 2020, the FDA granted Fast Track designation to the CLN3 Batten
disease gene therapy, AT-GTX-502, for the treatment of pediatric patients less than 18 years of age. In September 2020 and
February 2021, the European Medicines Agency granted Priority Medicines ("PRIME") designation and the FDA granted Fast
Track Designation, respectively, to the CLN6 Batten disease gene therapy, AT-GTX-501, for the treatment of patients with
variant late infantile neuronal ceroid lipofuscinosis 6 ("vLINCL6").
In July 2020, we entered into a definitive agreement for a $400 million credit facility with Hayfin Capital Management
(“Senior Secured Term Loan due 2026”) with an interest rate equal to 3-month LIBOR, subject to a 1% floor, plus 6.5% per
annum and requires interest-only payments until mid-2024 and matures in six years in 2026. This transaction resulted in net
proceeds of $385.9 million, after deducting fees and expenses. There were no warrants or equity conversion features associated
with the Senior Secured Term Loan due 2026. Additionally, we used $156.3 million of the proceeds to voluntarily settle the
principal amount, accrued interest, and early settlement premiums of the Senior Secured Term Loan with BioPharma Credit
PLC that was due in 2023 ("Senior Secured Term Loan due 2023").
Our operations have not been significantly impacted from the novel coronavirus (“COVID-19”) pandemic in 2020;
however, we observed increased lag times between patient identification and Galafold® initiation due to the resurgence of
COVID-19 in the fourth quarter. We have maintained operations in all geographies, secured our global supply chain for our
commercial and clinical products, as well as maintained the operational integrity of our clinical trials, with minimum
disruptions. Our ability to continue to operate without any significant disruptions will depend on the continued health of our
employees, the ongoing demand for Galafold® and the continued operation of our global supply chain. We have continued to
provide uninterrupted access to medicines for those in need of treatment, while prioritizing the health and safety of our global
workforce. However, our results of operations in future periods may be negatively impacted by unknown future impacts from
the COVID-19 pandemic.
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Consolidated Results of Operations
The following section generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019.
Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this Form 10-K can be
found in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which
comparisons are hereby incorporated by reference.
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
The following table provides selected financial information for the Company:
(in thousands)
Net product sales
Cost of goods sold
Cost of goods sold as a percentage of net product sales
Operating expenses:
Research and development
Selling, general, and administrative
Changes in fair value of contingent consideration payable
Depreciation and amortization
Other income (expense):
Interest income
Interest expense
Loss on exchange of convertible notes
Loss on extinguishment of debt
Other expense
Income tax expense
Years Ended December 31,
2020
2019
Change
$
260,886
$
182,237
$
78,649
31,044
11.9 %
21,963
12.1 %
9,081
(0.2) %
308,443
156,407
3,144
8,846
3,226
(22,425)
—
(7,276)
(781)
(2,598)
286,378
169,861
3,297
4,775
10,249
(18,872)
(40,624)
—
(2,626)
(478)
22,065
(13,454)
(153)
4,071
(7,023)
(3,553)
40,624
(7,276)
1,845
(2,120)
Net loss attributable to common stockholders
$
(276,852)
$
(356,388)
$
79,536
Net Product Sales. Net product sales increased $78.6 million during the year ended December 31, 2020 compared to the
same period in the prior year. The increase was primarily due to continued growth in the Europe, U.S. and Japan markets.
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 a percentage of net product sales was 11.9% during the year ended December 31, 2020 compared
to 12.1% during the same period in the prior year primarily due to the proportion of sales in countries subject to a higher royalty
burden.
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Research and Development Expense. The following table summarizes our principal product development programs for each
product candidate in development, and the out-of-pocket, third-party expenses incurred with respect to each product candidate:
(in thousands)
Projects
Third-party direct project expenses
Galafold® (Fabry Disease)
AT-GAA (Pompe Disease)
Gene therapy programs
Pre-clinical and other programs
Total third-party direct project expenses
Other project costs
Personnel costs
Other costs
Total other project costs
Total research and development costs
Years Ended December 31,
2020
2019
$
12,399 $
112,733
64,834
2,381
192,347
84,607
31,489
116,096
$
308,443 $
19,598
103,884
39,836
1,915
165,233
1
81,496
39,649
121,145
286,378
The $22.1 million increase in research and development costs was primarily due to increases in gene therapy programs
driven by the pipeline growth, and clinical research and manufacturing costs with the advancement and enrollment of clinical
studies in the Pompe program, and an increase in personnel costs primarily due to realignment with strategic priorities. These
increases were partially offset by a decrease in expense associated with the ongoing regulatory requirements, approval in new
geographies, and pediatric and other studies to support label expansion of Galafold® and a decrease in other costs, primarily
driven by reduced employee travel and professional fees.
Selling, General, and Administrative Expense. Selling, general, and administrative expense decreased $13.5 million, mainly
driven by reduction in third-party professional fees and travel.
Depreciation and Amortization. Depreciation and Amortization increased $4.1 million during the year ended December 31,
2020. The increase was primarily due to the increase in fixed assets put in service in the fourth quarter of 2019 for the
Philadelphia office.
Interest Income. Interest income decreased $7.0 million during the year ended December 31, 2020. The decrease was
primarily due to a lower average overall cash and investment balance on December 31, 2020 as compared to December 31,
2019 and reduced interest rates.
Interest Expense. Interest expense increased $3.6 million during the year ended December 31, 2020. The increase was
driven by the $400 million Senior Secured Loan due 2026 in July 2020.
Loss on Exchange of Convertible Notes. During the first and second quarters of 2019, the Company entered into separate,
privately negotiated Exchange Agreements with a limited number of holders of the Convertible Notes. As a result of this
exchange, the Company recognized a loss on exchange of debt of $40.6 million in the Consolidated Statements of Operations.
Loss on Extinguishment of Debt. In July 2020, the Company voluntarily settled the principal amount, accrued interest, and
early settlement premiums of the Senior Secured Term Loan due 2023. As a result of this early extinguishment, a loss on
extinguishment of debt of $7.3 million was recognized in the Consolidated Statements of Operations.
Income Tax Expense. The income tax expense for the year ended December 31, 2020 was $2.6 million. We are subject to
income taxes in various jurisdictions. Our tax liabilities are largely dependent on the distributions of pre-tax earnings among the
many jurisdictions in which we operate.
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Critical Accounting Policies and Significant Judgments and Estimates
The discussion and analysis of our financial condition and results of operations are based on our financial statements,
which we have prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The preparation of
these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported
revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including
those described in greater detail below. We base our estimates on historical experience and on various other factors that we
believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions. We believe that the following discussion represents our critical accounting policies.
Revenue Recognition
Our net product sales consist of sales of Galafold®
for the treatment of Fabry disease. We have recorded revenue on sales
is available either on a commercial basis or through a reimbursed early access program ("EAP"). Orders for
are generally received from distributors and pharmacies with the ultimate payor often a government authority.
where Galafold®
Galafold®
We recognize revenue when our performance obligation with our customers have been satisfied, which occurs at a point
in time when the pharmacies or distributors obtain control of Galafold®. The transaction price is determined based on fixed
consideration in our customer contracts and is recorded net of estimates for variable consideration, which are third-party
discounts and rebates. The identified variable consideration is recorded as a reduction of revenue at the time revenue from sale
of Galafold®
is recognized. We recognize revenue to the extent that it is probable that a significant revenue reversal will not
occur in a future period. These estimates may differ from actual consideration received. We evaluate these estimates each
reporting period to reflect known changes.
We elected the portfolio approach practical expedient in applying ASC Topic 606, Revenue from Contracts with
Customers, to our identified revenue streams. Contracts within each revenue stream have similar characteristics and we believe
the results of this approach would not differ materially than if we applied ASC Topic 606 to each individual contract.
Leases
The Company primarily enters into lease agreements for office space, equipment, and vehicles. The leases have varying
terms, some of which could include options to renew, extend, and early terminate. The Company determines if an arrangement
is a lease at contract inception. Operating leases are included in right-of-use ("ROU") assets and lease liabilities on the
Consolidated Balance Sheets.
ROU assets represent the Company's right to control the use of an explicitly or implicitly identified fixed asset for a period
of time and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Control of an
underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially
all of the economic benefits from using the underlying asset. ROU assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on
the information available at commencement date in determining the present value of lease payments.
Lease payments included in the measurement of the lease liability are comprised of fixed payments. Variable lease
payments are excluded from the ROU asset and lease liability and are recognized in the period in which the obligation for those
payments is incurred. Variable lease payments are presented in the Consolidated Statements of Operations in the same line item
as expenses arising from fixed lease payments for operating leases. The Company has lease agreements that include lease and
non-lease components, which the Company accounts for as a single lease component for all underlying asset categories.
The lease term for all of the Company's leases include the non-cancellable period of the lease plus any additional periods
covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise,
or an option to extend (or not to terminate) the lease controlled by the lessor.
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Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. The Company
recognizes lease expense for these leases on a straight-line basis over the lease term. The Company applies this policy to all
underlying asset categories.
The information presented for the periods prior to January 1, 2019 has not been restated and is reported under the
accounting standard in effect for those periods.
Research and Development Expenses
We expect to continue to incur substantial research and development expenses as we continue to develop our product
candidates. Research and development expense consists of:
•
•
•
•
•
•
•
•
internal costs associated with our research and clinical development activities;
fees owed to third-party contract research organizations in connection with preclinical, toxicology studies and
clinical trials;
payments we make to contract manufacturers, investigative sites, and consultants in connection with clinical
trials;
technology license costs;
manufacturing development costs;
personnel-related expenses, including salaries, benefits, travel, and related costs for the personnel involved in
drug discovery and development;
activities relating to regulatory filings and the advancement of our product candidates through preclinical
studies and clinical trials; and
facilities and other allocated expenses, which include direct and allocated expenses for rent, facility
maintenance, as well as laboratory and other supplies.
We have multiple research and development projects ongoing at any one time. We utilize our internal resources,
employees, and infrastructure across multiple projects. We record and maintain information regarding external, out-of-pocket
research and development expenses on a project-specific basis.
We expense research and development costs as incurred, including payments made to date under our license agreements.
We believe that significant investment in product development is a competitive necessity and plan to continue these investments
in order to realize the potential of our product candidates.
The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or
know the nature, timing, and costs of the efforts that will be necessary to complete the remainder of the development of our
product candidates. As a result, we are not able to reasonably estimate the period, if any, in which material net cash inflows
may commence from our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the
conduct, duration, and cost of clinical trials, which vary significantly over the life of a project as a result of evolving events
during clinical development, including:
•
•
•
•
•
the number of clinical sites included in the trials;
the length of time required to enroll suitable patients;
the number of patients that ultimately participate in the trials;
the results of our clinical trials; and
any mandate by the FDA or other regulatory authority to conduct clinical trials beyond those currently
anticipated.
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Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals, and the
expense of filing, prosecuting, defending, and enforcing any patent claims or other intellectual property rights. We may obtain
unexpected results from our clinical trials. We may elect to discontinue, delay, or modify clinical trials of some product
candidates or focus on others. A change in the outcome of any of the foregoing variables with respect to the development of a
product candidate could mean a significant change in the costs and timing associated with the development, regulatory
approval, and commercialization of that product candidate. For example, if the FDA or other regulatory authorities were to
require us to conduct clinical trials beyond those which we currently anticipate, or if we experience significant delays in
enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the
completion of clinical development. Drug development takes several years and millions of dollars in development costs.
Share-based Compensation
Stock Option Grants
In accordance with the applicable accounting guidance, we estimate the fair value of each equity award granted. We chose
the "straight-line" attribution method for allocating 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 requires management to make certain assumptions with respect to selected model inputs. Expected volatility
was based on our historical volatility since our initial public offering in May 2007. We determine the average expected life
using our actual historical data. The risk-free interest rate is based on U.S. Treasury, zero-coupon issues with a remaining term
equal to the expected life assumed at the date of grant. Forfeitures are estimated based on historical analysis of actual option
forfeitures.
Restricted Stock Units and Performance-Based Restricted Stock Units (collectively "RSUs")
RSUs awarded under the plan are generally subject to graded vesting and are contingent on an employee's continued
service on such date. RSUs are generally subject to forfeiture 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 of the shares of common stock
underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse. In addition, certain
of our share-based awards are market- and performance-based and dependent upon achieving certain goals. The related share-
based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is
recognized on a straight-line basis over the vesting term. With respect to performance-based awards, we estimate the probability
that the performance conditions will be achieved.
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Business Combinations
We assign fair value to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair
values on the acquisition date of acquired businesses. The purchase price allocation process requires management to make
significant estimates and assumptions, especially at the acquisition date with respect to intangible assets and in-process research
and development ("IPR&D"). In connection with the purchase price allocations for acquisitions, we estimate the fair value of
contingent acquisition consideration payments utilizing a probability-based income approach inclusive of an estimated discount
rate.
Although we believe the assumptions and estimates made are reasonable, they are based in part on historical experience
and information obtained from the management of the acquired businesses and are inherently uncertain. Examples of critical
estimates in valuing any contingent acquisition consideration issued or which 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 assets acquired. Purchased in-process research and development is accounted for as an indefinite lived
intangible asset until the underlying project is completed, at which point 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 partially impaired. Goodwill and
indefinite lived intangible assets are assessed annually for impairment on October 1 and whenever events or circumstances
indicate that the carrying 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 recorded in the amount by which the carrying amount of the asset exceeds its fair
value. No indicators of impairment were noted during the years ended December 31, 2020 and December 31, 2019.
Valuation of Contingent Consideration Payable
Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the
consideration is paid or becomes payable. This does not apply in circumstances when the contingent consideration meets the
definition of a derivative, in which case the amount becomes part of the basis in the asset acquired. Upon recognition of the
contingent consideration payment, the amount is included in the cost of the acquired asset or group of assets. Each period we
reassess the fair value of the contingent acquisition consideration payable associated with certain acquisitions and record
changes in the fair value as contingent consideration expense. Increases or decreases in the fair value of the contingent
acquisition consideration payable can result from changes in estimated probability adjustments with respect to regulatory
approval, changes in the assumed timing of when milestones are likely to be achieved and changes in assumed discount periods
and rates. Significant judgment is employed in determining the appropriateness of these assumptions each period. Accordingly,
future business and economic conditions, as well as changes in any of the assumptions described in the accounting for business
combinations above can materially impact the amount of contingent consideration expense that we record in any given period.
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Liquidity and Capital Resources
As a result of our significant research and development expenditures, as well as expenditures to build a commercial
organization to support the launch of Galafold®, we have not been profitable and have generated operating losses since we were
incorporated in 2002. We have historically funded our operations through stock offerings, debt issuances, Galafold® revenues,
collaborations, and other financing arrangements.
Sources of Liquidity
In July 2020, we entered into the Senior Secured Term Loan due 2026. This transaction resulted in net proceeds of $385.9
million, after deducting fees and expenses. There were no warrants or equity conversion features associated with the Senior
Secured Term Loan due 2026. Additionally, we used $156.3 million of the proceeds to voluntarily settle the principal amount,
accrued interest, and early settlement premiums of the Senior Secured Term Loan due 2023.
During the first and second quarters of 2019, we entered into separate, privately negotiated Exchange Agreements with a
limited number of holders of the Convertible Notes. Under the terms of the Exchange Agreements, the limited number of
holders agreed to exchange an aggregate principal amount of $247.2 million of Convertible Notes held by them in exchange for
an aggregate of approximately 44.0 million shares of our common stock, par value $0.01 per share. Additionally, we terminated
the Capped Call Confirmations related to the exchange of the Convertible Notes for cash proceeds of $19.9 million.
During the second quarter of 2019, we completed an underwritten equity offering and issued 18.7 million shares of
common stock at $10.75 per share, inclusive of the fully exercised option to purchase additional shares from the initial offering.
This transaction resulted in net proceeds of $189.0 million, after deducting underwriting discounts, commissions, and offering
expenses.
Cash Flow Discussion
As of December 31, 2020, we had cash, cash equivalents, and marketable securities of $483.3 million. We invest cash in
excess of our immediate requirements in regard to liquidity and capital preservation in a variety of interest-bearing instruments,
including obligations of U.S. government agencies and money market accounts. Wherever possible, we seek to minimize the
potential effects of concentration and degrees of risk. Although we maintain cash balances with financial institutions in excess
of insured limits, we do not anticipate any losses with respect to such cash balances. For more details on the cash, cash
equivalents, and marketable securities, refer to "-Note 5. Cash, Cash Equivalents, Marketable Securities, and Restricted Cash,"
in our Notes to Consolidated Financial Statements.
Net Cash Used in Operating Activities
Net cash used in operations for the year ended December 31, 2020 was $233.3 million. The components of net cash used in
operations included the net loss for the year ended December 31, 2020 of $276.9 million and the net change in operating assets
and liabilities of $32.1 million. The change in operating assets was primarily due to increases in accounts receivable by $11.2
million due to increased commercial sales of Galafold®, an increase in inventory of $4.6 million, and increase in prepaid and
other current assets of $8.8 million to support commercial activities for Galafold® launch. The net cash used in operations was
also impacted by a decrease in accounts payable and accrued expenses of $10.6 million, mainly related to program expenses
and support for the commercial launch of Galafold®, and decrease in deferred reimbursement of $1.3 million.
Net cash used in operations for the year ended December 31, 2019 was $250.4 million. The components of net cash used in
operations included the net loss for the year ended December 31, 2019 of $356.4 million, and the net change in operating assets
and liabilities of $11.6 million. The change in operating assets was primarily due to increases in accounts receivable by $11.1
million due to increased commercial sales of Galafold®, an increase in prepaid and other current assets of $3.3 million to
support commercial activities for Galafold® launch, and an increase in inventory of $5.1 million. The net cash used in
operations was also impacted by an increase in accounts payable and accrued expenses of $46.7 million, mainly related to
program expenses and support for the commercial launch of Galafold®. This was partially offset by a decrease in deferred
reimbursement of $5.5 million.
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Net Cash (Used in) Provided by Investing Activities
Net cash used in investing activities for the year ended December 31, 2020 was $13.6 million. Our investing activities have
consisted primarily of purchases, sales, and maturities of investments and capital expenditures. Net cash used in investing
activities reflects $365.2 million for the purchase of marketable securities and $3.2 million for capital expenditures, partially
offset by $354.8 million for the sale and redemption of marketable securities.
Net cash provided by investing activities for the year ended December 31, 2019 was $95.2 million. Our investing activities
have consisted primarily of purchases, sales, and maturities of investments and capital expenditures. Net cash provided by
investing activities reflects $499.0 million for the sale and redemption of marketable securities. partially offset by $383.9
million for the purchase of marketable securities and $20.0 million for capital expenditures.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the year ended December 31, 2020 was $262.9 million. Net cash provided by
financing activities primarily reflects $385.9 million in proceeds from the Senior Secured Term Loan due 2026, net of issuance
costs, and $42.3 million from the exercise of stock options. This was partially offset by $155.2 million for the voluntary
settlement of the Senior Secured Term Loan due 2023, and $10.0 million from the purchase of vested restricted stock units.
Net cash provided by financing activities for the year ended December 31, 2019 was $217.5 million. Net cash provided by
financing activities primarily reflects $189.0 million from the issuance of common stock, net of issuance costs paid, $19.9
million from termination of capped call and $12.3 million from the exercise of stock options and warrants, partially offset by
$3.2 million from the purchase of vested restricted stock units.
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Funding Requirements
We expect to incur losses from operations for the foreseeable future primarily due to research and development expenses,
including expenses related to conducting clinical trials. Our future capital requirements will depend on a number of factors,
including:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the scope, progress, results and costs of our clinical trials of our drug candidates and gene therapy candidates,
including but not limited to AT-GAA, CLN6 and CLN3;
the cost of manufacturing drug supply for our clinical and preclinical studies, including the cost of
manufacturing Pompe Enzyme Replacement Therapy ("ERT" or "ATB200"or "cipaglucosidase alfa") and gene
therapies;
the future results of on-going preclinical research and subsequent clinical trials for CDD, Pompe gene therapy,
Fabry gene therapy, MPS IIIB, next generation MPS IIIA, and other pipeline candidates we may identify from
time to time, including our ability to obtain regulatory approvals and commercialize these therapies and obtain
market acceptance for such therapies;
the costs, timing, and outcome of regulatory review of our product candidates, including AT-GAA;
any changes in regulatory standards relating to the 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 successfully commercialize Galafold® ("migalastat HCl") and, if our regulatory filings are
accepted and approved, AT-GAA;
our ability to manufacture or supply sufficient clinical or commercial products, including Galafold®, AT-GAA
and our gene therapy candidates;
our ability to obtain reimbursement for Galafold® and, if our regulatory filings are accepted and approved, AT-
GAA;
our ability to satisfy post-marketing commitments or requirements for continued regulatory approval of
Galafold®;
our ability to obtain market acceptance of Galafold® and, if our regulatory filings are accepted and approved,
AT-GAA;
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 acquired 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;
our ability to establish collaborations, partnerships or other similar arrangements and to obtain milestone,
royalty, or other payments from any such collaborators;
our ability to adjust to changes in the European and U.K. markets in the wake of the U.K. leaving the E.U.;
the extent to which our business could be adversely impacted by the effects of COVID-19 outbreak, including
due to actions by us, governments, our customers or suppliers or other third parties to control the spread of
COVID-19, or by other health epidemics or pandemics;
fluctuations in foreign currency exchange rates; and
changes in accounting standards.
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While we continue to generate revenue from product sales, in the absence of additional funding, we expect our continuing
operating losses to result in increases in our cash used in operations over the next several quarters and years. We may seek
additional funding through public or private financings of debt or equity. Based on current operating models, we believe that
the current cash position, which includes the net proceeds from the Senior Secured Term Loan due 2026 and expected revenues
is sufficient to fund our operations and ongoing research programs to achieve self-sustainability. Potential impacts of the
COVID-19 pandemic, business development collaborations, pipeline expansion, and investment in manufacturing capabilities
could impact our future capital requirements.
Financial Uncertainties Related to Potential Future Payments
Milestone Payments / Royalties
Celenex - In connection with our acquisition of Celenex in 2018, we agreed to pay up to an additional $10 million in
connection with the achievement of certain development milestones, $220 million in connection with the achievement of certain
regulatory approval milestones across multiple programs and up to $75 million in tiered sales milestone payments.
Nationwide Children’s - Celenex has an exclusive license agreement with Nationwide Children’s. Under this license
agreement, Nationwide Children’s is eligible to receive development and sales-based milestones of up to $7.8 million from us
for each product.
Penn - Under our expanded collaboration agreement with Penn, Penn is eligible to receive certain milestone, royalty, and
discovery research payments with respect to licensed products for each indication. Milestone payments are payable following
the achievement of certain development and commercial milestone events in each indication, up to an aggregate of $88.0
million per indication. Royalty payments are based on net sales of licensed products on a licensed product-by-licensed product
and country-by-country basis. We will provide $10.0 million each year during the five-year agreement to fund the discovery
research program.
GlaxoSmithKline - In July 2012, as amended in November 2013, the Company entered into an agreement with
GlaxoSmithKline ("GSK"), pursuant to which Amicus obtained global rights to develop and commercialize Galafold® as a
monotherapy and in combination with ERT for Fabry disease (“Collaboration Agreement”). Under the terms of the
Collaboration Agreement, 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 eight major markets outside the U.S.
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Contractual Obligations
The following table summarizes our significant contractual obligations and commercial commitments at December 31,
2020 and the effects such obligations are expected to have on our liquidity and cash flows in future periods:
(in thousands)
Operating lease obligations (2)
Debt obligations, including interest (3)
Purchase obligations (4)
Total fixed contractual obligations (1)
Total
Less than
1 year
1-3 years
3-5 years
Over 5 years
$
195,750 $
8,549 $
17,185 $
16,775 $
153,241
543,670
30,502
63,825
311,500
137,843
41,154 $
41,154 $
— $
— $
—
780,574 $
80,205 $
81,010 $
328,275 $
291,084
$
$
______________________________
(1) This table does not include (a) any milestone payments which may become payable to third parties under license agreements as the
timing and likelihood of such payments are not known, (b) any royalty payments to third parties as the amounts of such payments,
timing, and/or the likelihood of such payments are not known, (c) amounts, if any, that may be committed in the future to construct
additional facilities, (d) agreements with clinical research organizations and other outside contractors who are partially responsible for
conducting and monitoring our clinical trials for our drug candidates including Galafold®. These contractual obligations are not reflected
in the table above because we may terminate them without penalty, and (e) contracts that are entered into in the ordinary course of
business which are not material in the aggregate in any period presented above.
(2) Represents the future payments on operating leases for properties, equipment, and vehicles. For more details, refer to "— Note 13.
Leases," in our Notes to Consolidated Financial Statements.
(3) Represents the future payments of principal and interest to be made on our $2.8 million 3% unsecured Convertible Notes due 2023
(the "Convertible Notes") and our $400 million Secured Senior Term Loan due 2026 ("Senior Secured Term Loan due 2026"). The
Convertible Notes bear interest at a fixed rate of 3% per year, payable semiannually on June 15 and December 15 of each year, and will
mature on December 15, 2023. The Senior Secured Term Loan due 2026 bears interest at a rate equal to the 3-month LIBOR, subject to a
1% floor, plus 6.5% per year, payable quarterly and requires interest-only payments until mid-2024. The Senior Secured Term Loan due
2026 will be repaid in nine quarterly payments of $44.4 million, starting on July 2024 with the final balance due on the maturity date in
July 2026.
(4) Represents minimum purchase commitments due to third parties. Contracts for which our commitment is variable, based on volumes,
with no fixed minimum quantities, and contracts that can be canceled without payment penalties have been excluded. The purchase
obligations included above are in addition to amounts included in total recorded on our December 31, 2020 Consolidated Balance Sheet.
We have no other lines of credit or other committed sources of capital. To the extent our capital resources are insufficient
to meet future capital requirements, we will need to raise additional capital or incur indebtedness to fund our operations. We
cannot assure you that additional debt or equity financing will be available on acceptable terms, if at all.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as of December 31, 2020 and 2019.
Recent Accounting Pronouncements
Please refer to "— Note 2. Summary of Significant Accounting Policies," in our Notes to Consolidated Financial
Statements.
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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, exchange rates or other factors. Our primary market risk exposure relates to changes in interest
rates in our cash, cash equivalents, and marketable securities. We place our investments in high-quality financial instruments,
primarily money market funds, corporate debt securities, asset backed securities, and U.S. government agency notes 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 not leveraged, are classified as available-for-sale and, due to the short-term nature, are subject to
minimal interest rate risk. We believe that a 1% (100 basis points) change in average interest rates would either increase or
decrease the market value of our investment portfolio by $0.9 million as of December 31, 2020. We currently do not hedge
interest rate exposure and consistent with our investment policy, we do not use derivative financial instruments in our
investment portfolio.
We are exposed to interest rate risk with respect to variable rate debt. At December 31, 2020, we had a $400 million Senior
Secured Term Loan due 2026 that bears interest at a rate equal to the 3-month LIBOR, subject to a 1% floor, plus 6.5% per
year. We do not currently hedge our variable interest rate debt. The annual average variable interest rate for our variable rate
debt as of December 31, 2020 was 7.5%. A hypothetical 100 basis point increase or decrease in the average interest rate on our
variable rate debt would result in $1.0 million change in the interest expense as of December 31, 2020.
The Financial Conduct Authority has announced the intent to phase out the use of LIBOR by the end of 2021. If LIBOR is
discontinued, we may need to renegotiate the terms of the Senior Secured Term Loan due 2026 in order to replace LIBOR with
an alternative standard. As a result, we may incur incremental costs in transitioning to a new standard, and interest rates on our
current or future indebtedness may be adversely affected by the new standard. The potential effect of any such event on our cost
of capital cannot yet be determined, but we do not expect it to have a material impact on our consolidated financial condition,
results of operations, or cash flows.
We face foreign exchange risk as a result of entering into transactions denominated in currencies other than U.S. dollars.
We are not currently engaged in any foreign currency hedging activities. The current exposures arise primarily from cash,
accounts receivable, intercompany receivables and payables, and net product sales denominated in foreign currencies. Both
positive and negative impacts to our international product sales from movements in foreign currency exchange rates may be
partially mitigated by the natural, opposite impact that foreign currency exchange rates have on our international operating
expenses. A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have had a
material impact on our Consolidated Financial Statements.
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Item 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 in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a
process designed by, or under the supervision of the Company's principal executive and principal financial officers and effected
by the Company's board of directors, management, and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
U.S. GAAP and includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of Amicus Therapeutics, Inc.;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
Amicus therapeutics, Inc. are being made only in accordance with authorizations of management and directors
of Amicus therapeutics, Inc.; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the assets of Amicus Therapeutics, Inc. that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
We assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this
assessment, we used the criteria set forth 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, 2020, 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, 2020 has been audited by
Ernst & Young LLP, an independent registered public accounting firm, as stated in their report. This report appears on the
following page.
Dated March 1, 2021
/s/ JOHN F. CROWLEY
Chairman and Chief Executive Officer
/s/ DAPHNE QUIMI
Chief Financial Officer
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Amicus Therapeutics, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Amicus Therapeutics, Inc.’s internal control over financial reporting as of December 31, 2020, based on
criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Amicus Therapeutics, Inc. (the "Company")
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the
COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated
statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the
period ended December 31, 2020, and the related notes and our report dated March 1, 2021 expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Consolidated Financial Statements and Internal Control over Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized 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 of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Iselin, New Jersey
March 1, 2021
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Amicus Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Amicus Therapeutics, Inc. (the "Company") as of December
31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and
cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as
the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2020, 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)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated March 1, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
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Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Fair Value Measurement of the Contingent Consideration
Description of the
Matter
As described in Note 11 to the consolidated financial statements, the Company has a $25.8 million
contingent consideration liability recorded as of December 31, 2020 representing the fair value of
additional amounts that management believes are likely to be paid to the former stockholders of
Callidus Biopharma, Inc. The determination of the recorded amount of the contingent consideration
liabilities requires the Company to make significant estimates and assumptions.
We identified the measurement of the contingent consideration liability as a critical audit matter
because auditing the Company’s valuation of the contingent consideration liability involved
complex and challenging auditor judgment as the inputs to such valuation, such as the estimated
probability of achieving milestones, the assumed timing of milestones and the discount rates, are
largely unobservable.
How We
Addressed the
Matter in Our
Audit
To test the estimated fair value of the contingent consideration liability, we performed audit
procedures that included testing the operating effectiveness of internal controls relating to
management’s fair value measurement of the contingent consideration liability including controls
over the Company’s model, significant assumptions, and data.
Our procedures also included, among others, assessing the terms of the arrangement, evaluating the
methodology used, testing the significant assumptions discussed above and the completeness,
accuracy and relevance of the underlying data used by management in its analysis. We also
performed analyses of certain assumptions to assess the impact of changes in certain assumptions on
the Company’s determination of the fair value of the contingent consideration liability. Evaluating
the assumptions also involved evaluating whether the assumptions used by management were
consistent with external market data and evidence obtained in other areas of the audit.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2003.
Iselin, New Jersey
March 1, 2021
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Amicus Therapeutics, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents
Investments in marketable securities
Accounts receivable
Inventories
Prepaid expenses and other current assets
Total current assets
December 31,
2020
2019
$
163,240 $
320,029
46,923
19,556
29,721
579,469
142,837
309,903
33,284
14,041
20,008
520,073
Operating lease right-of-use assets, less accumulated amortization of $7,574 and $5,342 at December
31, 2020 and December 31, 2019, respectively
23,296
33,315
Property and equipment, less accumulated depreciation of $14,487 and $17,604 at December 31,
2020 and December 31, 2019, respectively
In-process research & development
Goodwill
Other non-current assets
Total Assets
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Accrued expenses and other current liabilities
Contingent consideration payable
Operating lease liabilities
Total current liabilities
Deferred reimbursements
Long-term debt
Contingent consideration payable
Deferred income taxes
Operating lease liabilities
Other non-current liabilities
Total liabilities
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 262,063,461 and 255,417,869 shares
issued and outstanding at December 31, 2020 and December 31, 2019, respectively
Additional paid-in capital
Accumulated other comprehensive loss:
Foreign currency translation adjustment
Unrealized (loss) gain on available-for securities
Warrants
Accumulated deficit
Total stockholders' equity
Total Liabilities and Stockholders' Equity
43,863
23,000
197,797
19,095
$
886,520 $
$
17,063 $
96,841
8,900
6,872
129,676
7,406
389,254
16,925
4,896
45,604
6,379
47,705
23,000
197,797
28,317
850,207
21,722
99,901
—
7,189
128,812
8,906
149,505
22,681
5,051
53,531
5,296
600,140
373,782
2,650
2,598
2,308,578
2,227,225
8,412
(185)
12,387
2,785
40
12,387
(2,045,462)
(1,768,610)
286,380
$
886,520 $
476,425
850,207
See accompanying Notes to Consolidated Financial Statements
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Amicus Therapeutics, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
Net product sales
Cost of goods sold
Gross profit
Operating expenses:
Research and development
Selling, general, and administrative
Changes in fair value of contingent consideration payable
Depreciation and amortization
Total operating expenses
Loss from operations
Other (expense) income:
Interest income
Interest expense
Loss on exchange of convertible notes
Loss on extinguishment of debt
Change in fair value of derivatives
Other expense
Loss before income tax
Income tax (expense) benefit
Years Ended December 31,
2020
2019
2018
$
260,886 $
182,237 $
31,044
229,842
308,443
156,407
3,144
8,846
21,963
160,274
286,378
169,861
3,297
4,775
91,245
14,404
76,841
270,902
127,200
3,300
4,216
476,840
464,311
405,618
(246,998)
(304,037)
(328,777)
3,226
(22,425)
—
(7,276)
—
10,249
(18,872)
(40,624)
—
—
(781)
(2,626)
10,461
(22,402)
—
—
(2,739)
(5,632)
(274,254)
(355,910)
(349,089)
(2,598)
(478)
94
(276,852) $
(356,388) $
(348,995)
(1.07) $
(1.48) $
(1.88)
Net loss attributable to common stockholders
Net loss attributable to common stockholders per common share — basic
and diluted
$
$
Weighted-average common shares outstanding — basic and diluted
258,867,380
240,421,001
185,790,021
See accompanying Notes to Consolidated Financial Statements
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Amicus Therapeutics, Inc.
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share amounts)
Net loss
Other comprehensive gain:
Foreign currency translation adjustment gain, net of tax impact of $1,552,
$889, and $0, respectively
Unrealized (loss) gain on available-for-sale securities, net of tax impact of
$(50), $182, and $0, respectively
Other comprehensive income
Comprehensive loss
Years Ended December 31,
2020
2019
2018
$
(276,852) $
(356,388) $
(348,995)
5,627
(225)
5,402
2,290
467
2,757
2,537
9
2,546
$
(271,450) $
(353,631) $
(346,449)
See accompanying Notes to Consolidated Financial Statements
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Amicus Therapeutics, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(in thousands, except share amounts)
Common Stock
Shares
Amount
Additional
Paid-In
Capital
Warrants
Other
Comprehensive
Gain (Loss)
Accumulated
Deficit
Total
Stockholders'
Equity
Balance at December 31, 2017
166,989,790 $
1,721 $
1,400,758 $
16,076 $
(2,095) $
(1,063,610) $
352,850
Stock issued from exercise of
stock options, net
1,397,908
Stock issued from equity financing
20,239,839
Restricted stock tax vesting
Stock-based compensation
Reclassification upon ASU
2018-02 adoption
Warrants exercised
Change in fair value of derivatives
Unrealized holding gain on
available-for-sale securities
Foreign currency translation
adjustment
Net loss
303,173
—
—
453,214
—
—
—
—
14
202
—
—
—
5
—
—
—
—
9,130
294,381
(2,832)
29,260
—
6,625
2,739
—
—
—
—
—
—
—
—
(3,013)
—
—
—
—
Balance at December 31, 2018
189,383,924
1,942
1,740,061
13,063
Stock issued from exercise of
stock options, net
1,967,087
Stock issued from equity financing
18,720,930
Restricted stock tax vesting
Stock issued for contingent
consideration
Stock-based compensation
Warrants exercised
Equity component of the
convertible notes
Termination of capped call
confirmations
Unrealized holding gain on
available-for-sale securities
Foreign currency translation
adjustment
Net loss
20
187
—
8
—
1
11,456
188,807
(3,235)
9,308
44,430
1,487
477,198
771,804
—
101,787
43,995,139
440
215,036
—
—
—
—
—
—
—
—
19,875
—
—
—
—
—
—
—
—
(676)
—
—
—
—
—
Balance at December 31, 2019
255,417,869
2,598
2,227,225
12,387
Stock issued from exercise of
stock options, net
Restricted stock tax vesting
Stock-based compensation
Unrealized holding (loss) on
available-for-sale securities
Foreign currency translation
adjustment
Net loss
5,233,672
1,411,920
—
—
—
—
52
—
—
—
—
—
42,230
(10,028)
49,151
—
—
—
—
—
—
—
—
—
—
—
—
—
(383)
—
—
9
2,537
—
68
—
—
—
—
—
—
—
—
467
2,290
—
2,825
—
—
—
(225)
5,627
—
—
—
—
—
383
—
—
—
—
9,144
294,583
(2,832)
29,260
—
3,617
2,739
9
2,537
(348,995)
(348,995)
(1,412,222)
342,912
—
—
—
—
—
—
—
—
—
—
11,476
188,994
(3,235)
9,316
44,430
812
215,476
19,875
467
2,290
(356,388)
(356,388)
(1,768,610)
476,425
—
—
—
—
—
42,282
(10,028)
49,151
(225)
5,627
(276,852)
(276,852)
Balance at December 31, 2020
262,063,461 $
2,650 $
2,308,578 $
12,387 $
8,227 $
(2,045,462) $
286,380
See accompanying Notes to Consolidated Financial Statements
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Table of Contents
Amicus Therapeutics, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount and deferred financing
Depreciation and amortization
Stock-based compensation
Loss on exchange of convertible notes
Loss on extinguishment of debt
Change in fair value of derivatives
Non-cash changes in the fair value of contingent consideration payable
Foreign currency remeasurement loss
Non-cash deferred taxes
Other
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable, accrued expenses, and other current liabilities
Other non-current assets and liabilities
Deferred reimbursements
Net cash used in operating activities
Investing activities
Sale and redemption of marketable securities
Purchases of marketable securities
Capital expenditures
Years Ended December 31,
2020
2019
2018
$
(276,852) $
(356,388) $
(348,995)
1,794
8,846
49,151
—
7,276
—
3,144
5,471
(155)
99
(11,219)
(4,639)
(8,766)
(10,610)
4,420
(1,250)
2,546
4,775
44,430
40,624
—
—
3,297
254
(1,415)
(149)
(11,114)
(5,114)
(3,287)
46,742
(10,117)
(5,500)
10,976
4,216
29,260
—
—
2,739
3,300
3,217
—
59
(13,294)
(4,205)
2,488
17,115
(581)
(6,250)
$
(233,290) $
(250,416) $
(299,955)
354,826
(365,178)
(3,227)
499,047
(383,882)
(20,012)
463,502
(578,394)
(6,308)
Net cash (used in) provided by investing activities
$
(13,579) $
95,153 $
(121,200)
Financing activities
Proceeds from issuance of common stock, net of issuance costs
—
188,994
294,584
Payment of long-term debt
Proceeds from long-term debt, net of issuance costs
Payment of finance leases
Purchase of vested restricted stock units
Proceeds from termination of capped call confirmations
Proceeds from exercise of stock options
Proceeds from exercise of warrants
Net cash provided by financing activities
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
Net increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at the beginning of the year
$
$
(155,249)
385,929
(76)
(10,028)
—
42,282
—
—
—
(420)
(3,235)
19,875
11,476
812
—
146,596
(334)
(2,832)
—
9,144
3,617
262,858 $
217,502 $
450,775
3,830 $
1,729 $
19,819
146,343
63,968
82,375
1,518
31,138
51,237
82,375
Cash, cash equivalents, and restricted cash at the end of the year
$
166,162 $
146,343 $
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Table of Contents
Supplemental disclosures of cash flow information
Tenant improvements paid through lease incentive
Cash paid during the period for interest
Contingent consideration paid in shares
Capital expenditures unpaid at the end of period
Cash paid for taxes
Years Ended December 31,
2020
2019
2018
$
$
$
$
$
470 $
24,683 $
— $
985 $
10,371 $
19,388 $
16,966 $
9,316 $
1,865 $
691 $
—
7,500
—
106
1,062
See accompanying Notes to Consolidated Financial Statements
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1. Description of Business
Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements
Amicus Therapeutics, Inc. (the "Company") is a global, patient-dedicated biotechnology company focused on discovering,
developing, and delivering novel medicines for rare diseases. The Company has a portfolio of product opportunities led by the
first, oral monotherapy for Fabry disease that has achieved widespread global approval, a differentiated biologic for Pompe
disease, and an industry leading rare disease gene therapy portfolio.
The cornerstone of the Company's portfolio is Galafold® (also referred to as "migalastat"), the first and only approved oral
precision medicine for people living with Fabry disease who have amenable genetic variants. Migalastat is currently approved
under the trade name Galafold® in the United States ("U.S."), European Union ("E.U."), United Kingdom ("U.K."), and Japan,
with multiple additional approvals granted and applications pending in several other geographies around the world.
The lead biologics program of the Company's pipeline is Amicus Therapeutics GAA ("AT-GAA", also known as ATB200/
AT2221, or cipaglucosidase alfa/miglustat), a novel, clinical-stage, potential best-in-class treatment paradigm for Pompe
disease. In February 2019, the FDA granted Breakthrough Therapy designation ("BTD") to AT-GAA for the treatment of late
onset Pompe disease. The Company initiated the rolling Biologic License Application ("BLA") submission to the FDA in the
fourth quarter of 2020.
The Company has established an industry leading gene therapy portfolio of potential therapies for people living with rare
metabolic diseases, through a license with Nationwide Children's Hospital ("Nationwide Children's") and an expanded
collaboration with the University of Pennsylvania ("Penn"). The Company's pipeline includes gene therapy programs in rare,
neurologic lysosomal disorders ("LDs"), specifically: CLN6, CLN3, and CLN1 Batten disease, Pompe disease, Fabry disease,
CDKL5 deficiency disorder ("CDD"), Mucopolysaccharidosis Type IIIB ("MPS IIIB"), as well as a next generation program in
Mucopolysaccharidosis Type IIIA ("MPS IIIA"). This expanded collaboration with Penn also provides the Company with
exclusive disease-specific access and option rights to develop potentially disruptive new gene therapy platform technologies
and programs for most LDs and a broader portfolio of more prevalent rare diseases, including Rett Syndrome, Angelman
Syndrome, Myotonic Dystrophy, and select other muscular dystrophies. In the first quarter of 2020, the FDA granted Fast Track
designation to the CLN3 Batten disease gene therapy, AT-GTX-502, for the treatment of pediatric patients less than 18 years of
age. In September 2020 and February 2021, the European Medicines Agency granted Priority Medicines designation and the
FDA granted Fast Track Designation, respectively, to the CLN6 Batten disease gene therapy, AT-GTX-501, for the treatment
of patients with variant late infantile neuronal ceroid lipofuscinosis 6 ("vLINCL6").
The Company's operations have not been significantly impacted from the novel coronavirus (“COVID-19”) pandemic in
2020; however, the Company observed increased lag times between patient identification and Galafold® initiation due to the
resurgence of COVID-19 in the fourth quarter. The Company has maintained operations in all geographies, secured its global
supply chain for its commercial and clinical products, and maintained the operational integrity of its clinical trials, with minimal
disruption. The Company believes its ability to continue to operate without any significant disruptions will depend on the
continued health of its employees, the ongoing demand for Galafold® and the continued operation of its global supply chain.
The Company has continued to provide uninterrupted access to medicines for those in need of treatment, while prioritizing the
health and safety of its global workforce. However, the Company's results of operations in future periods may be negatively
impacted by unknown future impacts from the COVID-19 pandemic.
In July 2020, the Company entered into a definitive agreement for a $400 million credit facility with Hayfin Capital
Management (“Senior Secured Term Loan due 2026”) with an interest rate equal to 3-month LIBOR, subject to a 1% floor, plus
6.5% per annum and requires interest-only payments until mid-2024 and matures in six years in 2026. This transaction resulted
in net proceeds of $385.9 million, after deducting fees and expenses. There were no warrants or equity conversion features
associated with the Senior Secured Term Loan due 2026. Additionally, the Company used $156.3 million of the proceeds to
voluntarily settle the principal amount, accrued interest, and early settlement premiums of the Senior Secured Term Loan with
BioPharma Credit PLC that was due in 2023 ("Senior Secured Term Loan due 2023").
The Company had an accumulated deficit of $2.0 billion as of December 31, 2020 and anticipates incurring losses through
the fiscal year ending December 31, 2021 and beyond. The Company has historically funded its operations through stock
offerings, debt issuances, Galafold® revenues, collaborations, and other financing arrangements.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
Based on current operating models, the Company believes that the current cash position, which includes the net proceeds
from the Senior Secured Term Loan due 2026 and expected revenues, is sufficient to fund the Company's operations and
ongoing research programs to achieve self-sustainability. Potential impacts of the COVID-19 pandemic, business development
collaborations, pipeline expansion, and investment in manufacturing capabilities could impact the Company's future capital
requirements.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company has prepared the accompanying Consolidated Financial Statements 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 in consolidation.
Foreign Currency Transactions
The functional currency for most of the Company's foreign subsidiaries is their local currency. For non-U.S. subsidiaries
that transact in a functional currency other than the U.S. dollar, assets and liabilities are translated at current rates of exchange
at the balance sheet date. Income and expense items are translated at the average foreign exchange rates for the period.
Adjustments resulting from the translation of the financial statements of the Company's foreign operations into U.S. dollars are
excluded from the determination of net income and are recorded in accumulated other comprehensive income, a separate
component of stockholders' equity.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
Additionally, the Company assessed the impact COVID-19 pandemic has had on its operations and financial results as of
December 31, 2020 and through the issuance of this report. The Company’s analysis was informed by the facts and
circumstances as they were known to the Company. This assessment considered the impact COVID-19 may have on financial
estimates and assumptions that affect the reported amounts of assets and liabilities and revenue and expenses.
Cash, Cash Equivalents, Marketable Securities, and Restricted Cash
The Company considers all highly liquid investments purchased with a maturity of three months or less at the date of
acquisition to be cash equivalents. Marketable securities consist of fixed income investments with a maturity of greater than
three months and other highly liquid investments that can be readily purchased or sold using established markets. These
investments are classified as available-for-sale and are reported at fair value on the Company's Consolidated Balance Sheets.
Unrealized holding gains and losses are reported within comprehensive income (loss) in the Statements of Comprehensive
Loss. Fair value is based on available market information including quoted market prices, broker or dealer quotations, or other
observable inputs.
Restricted cash consists primarily of funds held to satisfy the requirements of certain agreements that are restricted in their
use and is included in other current assets and other non-current assets on the Company's Consolidated Balance Sheets.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
Concentration of Credit Risk
The Company's financial instruments that are exposed to concentration of credit risk consist primarily of cash, cash
equivalents, and marketable securities. The Company maintains its cash and cash equivalents in bank accounts, which, at times,
exceed federally insured limits. The Company invests its marketable securities in high-quality commercial financial
instruments. The Company has not recognized any losses from credit risks on such accounts during any of the periods
presented. The Company believes it is not exposed to significant credit risk on its cash, cash equivalents, or marketable
securities.
The Company is subject to credit risk from its accounts receivable related to its product sales of Galafold®. The Company's
accounts receivable at December 31, 2020 have arisen from product sales primarily in Europe and the U.S. The Company will
periodically assess the financial strength of its customers to establish allowances for anticipated losses, if any. For accounts
receivable that have arisen from named patient sales, the payment terms are predetermined, and the Company evaluates the
creditworthiness of each customer on a regular basis. As of December 31, 2020, the Company recorded an allowance for
doubtful accounts of $0.1 million.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated over the estimated
useful lives of the respective assets, which range from three to five years, or the lesser of the related initial term of the lease or
useful life for leasehold improvements.
The initial cost of property and equipment consists of its purchase price and any directly attributable costs of bringing the
asset to its working condition and location for its intended use. Expenditures incurred after the fixed assets have been put into
operation, such as repairs and maintenance, are charged to income in the period in which the costs are incurred. Major
replacements, improvements, and additions are capitalized in accordance with Company policy.
Revenue Recognition
The Company’s net product sales consist of sales of Galafold® for the treatment of Fabry disease. The Company has
recorded revenue on sales where Galafold® is available either on a commercial basis or through a reimbursed early access
program ("EAP"). Orders for Galafold® are generally received from distributors and pharmacies, with the ultimate payor often a
government authority. In 2020, one customer accounted for 25% of net product sales and 12% of accounts receivable from
product sales. In 2019, one customer accounted for 22% of net product sales and 11% of accounts receivable from product
sales.
The Company recognizes revenue when its performance obligations to its customers have been satisfied, which occurs at a
point in time when the pharmacies or distributors obtain control of Galafold®. The transaction price is determined based on
fixed consideration in the Company's customer contracts and is recorded net of estimates for variable consideration, which are
third party discounts and rebates. The identified variable consideration is recorded as a reduction of revenue at the time revenue
from the sale of Galafold® is recognized. The Company recognizes revenue to the extent that it is probable that a significant
revenue reversal will not occur in a future period. These estimates may differ from actual consideration received. The Company
evaluates these estimates each reporting period to reflect known changes.
The following table summarizes the Company's net product sales from Galafold® disaggregated by geographic area:
(in thousands)
U.S.
Ex-U.S.
Total net product sales
For the Year
2020
2019
2018
$
$
80,046 $
52,478 $
180,840
129,759
260,886 $
182,237 $
7,223
84,022
91,245
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
Inventories and Cost of Goods Sold
Inventories are stated at the lower of cost and net realizable value, determined by the first-in, first-out method. Inventories
are reviewed periodically to identify slow-moving or obsolete inventory based on projected sales activity as well as product
shelf-life. In evaluating the recoverability of inventories produced, the probability that revenue will be obtained from the future
sale of the related inventory is considered and inventory value is written down for inventory quantities in excess of expected
requirements. Expired inventory is disposed of and the related costs are recognized as cost of goods sold in the Consolidated
Statements of Operations.
Cost of goods sold includes the cost of inventory sold, manufacturing and supply chain costs, product shipping and
handling costs, provisions for excess and obsolete inventory, as well as royalties payable.
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 value guidance emphasizes that fair value is a market-based measurement, not an entity-specific
measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants
would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements,
current FASB guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on
market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and
2 of the hierarchy) and the reporting entity's own assumptions that market participants assumptions 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 measurement date. 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 inputs may 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 the asset 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 of the 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 value measurement 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
significance of 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 each significant matter and assesses its potential financial exposure. If the potential loss from
any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can be reasonably estimated, the
Company will accrue a liability for the estimated loss. Because of uncertainties related to claims and litigation, accruals will be
based on the Company's best estimates based on available information. On a periodic basis, as additional information becomes
available, or based on 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 revise these estimates, which could result in material adverse adjustments to
the Company's operating results.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
Research and Development Costs
Research and development costs are expensed as incurred. Research and development expense consist primarily of costs
related to personnel, including salaries and other personnel related expenses, consulting fees, and the cost of facilities and
support services used in drug development. Assets acquired that are used for research and development and have no future
alternative use are expensed as in-process research and development.
Interest Income and Interest Expense
Interest income consists of interest earned on the Company's cash, cash equivalents, and marketable securities. Interest
expense consists of interest incurred on debt and finance leases.
Income Taxes
The Company accounts for income taxes under the liability method. Under this method deferred income tax liabilities and
assets are determined based on the difference between the financial statement carrying amounts and tax basis of assets and
liabilities and for operating losses and tax credit carry forwards, using enacted tax rates in effect in the years in which the
differences are expected to reverse. A valuation allowance is recorded if it is "more likely than not" that a portion or all of a
deferred tax asset will not be realized.
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 currency transactions and are included in the Statements of Comprehensive Loss.
Leases
The Company primarily enters into lease agreements for office space, equipment, and vehicles. The leases have varying
terms, some of which could include options to renew, extend, and early terminate. The Company determines if an arrangement
is a lease at contract inception. Operating leases are included in right-of-use ("ROU") assets and lease liabilities on the
Consolidated Balance Sheets.
ROU assets represent the Company's right to control the use of an explicitly or implicitly identified fixed asset for a period
of time and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Control of an
underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially
all of the economic benefits from using the underlying asset. ROU assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on
the information available at commencement date in determining the present value of lease payments.
Lease payments included in the measurement of the lease liability are comprised of fixed payments. Variable lease
payments are excluded from the ROU asset and lease liability and are recognized in the period in which the obligation for those
payments is incurred. Variable lease payments are presented in the Consolidated Statements of Operations in the same line item
as expenses arising from fixed lease payments for operating leases. The Company has lease agreements that include lease and
non-lease components, which the Company accounts for as a single lease component for all underlying asset categories.
The lease term for all of the Company's leases include the non-cancellable period of the lease plus any additional periods
covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise,
or an option to extend (or not to terminate) the lease controlled by the lessor.
Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. The Company
recognizes lease expense for these leases on a straight-line basis over the lease term. The Company applies this policy to all
underlying asset categories.
The information presented for the periods prior to January 1, 2019 has not been restated and is reported under the
accounting standard in effect for those periods. For additional information, see " -Note 13. Leases".
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
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 the Compensation Committee of the Board of Directors of the Company (the "Compensation
Committee"), 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 a nonqualified deferred 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 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 the Deferral Plan is included in other non-current liability in the Consolidated
Balance Sheets.
Equity-based Compensation
At December 31, 2020, the Company had one equity-based employee compensation plan, which is 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 employee services 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 that were outstanding during the reporting period. 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 17. Basic
and Diluted Net Loss per Common Share" for further discussion on net loss per share.
Segment Information
The Company currently operates in one business segment focused on the discovery, development, and commercialization
of advanced therapies to treat a range of devastating rare and orphan diseases. The Company is not organized by market and is
managed and operated as one business. A single management team reports to the chief operating decision maker who
comprehensively manages the entire business. The Company does not operate any separate lines of business or separate
business entities with respect to its products. Accordingly, the Company does not accumulate discrete financial information
with respect to separate service lines, and thus there is one reporting unit.
Business Combinations
The Company assigns fair value to the tangible and intangible assets acquired and liabilities assumed based upon their
estimated fair values on the acquisition date from acquired businesses. The purchase price allocation process requires
management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets
and in-process research and development ("IPR&D"). In connection with the purchase price allocations for acquisitions, the
Company estimates the fair value of contingent payments utilizing a probability-based income approach inclusive of an
estimated discount rate.
Contingent Consideration Payable
Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the
consideration is paid or becomes payable. This does not apply in circumstances when the contingent consideration meets the
definition of a derivative, in which case the amount becomes part of the basis in the asset acquired. Upon recognition of the
contingent consideration payment, the amount is included in the cost of the acquired asset or group of assets. The Company
determines the fair value of contingent acquisition consideration payable on the acquisition date using a probability-based
income approach utilizing an appropriate discount rate. The short term and long term portions of the contingent consideration
payable is shown on the Company's Consolidated Balance Sheets. The fair value of the contingent consideration payable will be
determined each period end and the resulting change will be recorded on the Consolidated Statements of Operations.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
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 intangible assets acquired. Purchased IPR&D is accounted for as an indefinite lived intangible asset
until the underlying project is completed, at which point 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 partially impaired. Goodwill and indefinite lived
intangible assets are assessed annually for impairment and whenever events or circumstances indicate that the carrying 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 recorded in the amount by which the carrying amount of the asset exceeds its fair value. No indicators of impairment
were noted during the years ended December 31, 2020 and December 31, 2019.
Recent Accounting Developments - Guidance Adopted in 2020
ASU 2018-15 - In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update
("ASU") 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): ("ASU 2018-15"), relating to a
customer’s accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is
hosted by a vendor. Under the new guidance, a customer will apply the same criteria for capitalizing implementation costs as it
would for an arrangement that has a software license. The new guidance does not affect the accounting for the service element
of a hosting arrangement that is a service contract. The new guidance also prescribes the balance sheet, income statement and
cash flow classification of the capitalized software costs and related amortization expense and requires additional quantitative
and qualitative disclosures. ASU 2018-15 is effective for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2019 for public companies. The Company adopted this guidance on January 1, 2020. The adoption did not
have a material impact on the Company's Consolidated Financial Statements or related disclosures.
ASU 2018-13 - In August 2018, the FASB issued ASU 2018-03, Fair Value Measurement (Topic 820): Disclosure
Framework-Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). The amendments modify
the disclosure requirements in Topic 820. ASU 2018-13 is effective for all entities for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2019. The amendments on (i) changes in unrealized gains and losses, (ii) the
range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and (iii) the
narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual
period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods
presented upon their effective date. The Company adopted this guidance on January 1, 2020. The adoption did not have a
material impact on the Company's Consolidated Financial Statements or related disclosures.
ASU 2017-04 - In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350):
Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the recognition and measurement of
a goodwill impairment loss by eliminating Step 2 of the quantitative goodwill impairment test. The guidance requires a one-step
impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an
impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, if any. ASU 2017-04 is
effective for fiscal years beginning after December 15, 2019 and should be applied on a prospective basis. The Company
adopted this guidance on January 1, 2020. The adoption did not have a material impact on the Company's Consolidated
Financial Statements or related disclosures.
ASU 2016-13 - In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 requires financial assets measured at
amortized cost basis to be presented at the net amount expected to be collected and amends guidance on the impairment of
financial instruments. ASU 2016-13 is effective for public companies who are SEC filers for fiscal years beginning after
December 15, 2019, including interim periods within those years. The Company adopted this guidance on January 1, 2020. The
adoption did not have a material impact on the Company's Consolidated Financial Statements or related disclosures.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
Recent Accounting Developments - Guidance Not Yet Adopted
ASU 2019-12 - In December 2019, the FASB issued ASU 2019-15, Income Taxes (Topic 740): Simplifying the
Accounting for Income Taxes ("ASU 2019-12"). This new guidance removes specific exceptions to the general principles in
Topic 740. It eliminates the need for an organization to analyze whether the following apply in a given period: (i) exception to
the incremental approach for intraperiod tax allocation; (ii) exceptions to accounting for basis differences when there are
ownership changes in foreign investments; and (iii) exception in interim period income tax accounting for year-to-date losses
that exceed anticipated losses. ASU 2019-12 also improves financial statement preparers’ application of income tax-related
guidance and simplifies the following: (i) franchise taxes that are partially based on income; (ii) transactions with a government
that result in a step up in the tax basis of goodwill; (iii) separate financial statements of legal entities that are not subject to tax;
and (iv) enacted changes in tax laws in interim periods. ASU 2019 is effective for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2020. Early adoption is permitted for public business entities for periods for which
financial statements have not yet been issued. The Company will adopt this guidance prospectively on January 1, 2021, and it
believes the adoption of this guidance will not have a material impact on its Consolidated Financial Statements or related
disclosures.
3. Acquisitions
Acquisition of Celenex
In September 2018, the Company expanded its pipeline by acquiring the rights and related intellectual property of ten
gene therapy programs through its acquisition of Celenex, Inc., ("Celenex"). Celenex is a private, clinical stage gene therapy
company whose lead programs are ten gene therapy programs including CLN6 and CLN3, which are in clinical stage, and
several programs in pre-clinical stage. Pursuant to the terms of the agreement, the Company agreed to pay up to an additional
$10 million in connection with the achievement of certain development milestones, $220 million in connection with the
achievement of certain regulatory approval milestones across multiple programs and up to $75 million in tiered sales
milestone payments. Celenex has an exclusive license agreement with Nationwide Children’s Hospital ("Nationwide
Children’s"). Under this license agreement, Nationwide Children’s is eligible to receive development and sales-based
milestones of up to $7.8 million for each product.
The Company evaluated the Celenex transaction and concluded that the transaction did not meet the definition of a
business and was an asset acquisition. Given the fact that the license has no alternative future use, the $100 million upfront
payment was expensed to research and development expense in the Consolidated Statements of Operations for the year ended
December 31, 2018.
4. Goodwill and Intangible Assets
As of December 31, 2020, in connection with the acquisitions, the Company had goodwill of $197.8 million and IPR&D
of $23.0 million, which are reported at fair value on the Company's Consolidated Balance Sheets. Intangible assets related to
IPR&D assets are considered to be indefinite-lived until the completion or abandonment of the associated research and
development efforts. During the period the assets 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 Company becomes aware of any events occurring or changes
in circumstances that would indicate a reduction in the fair value of the IPR&D assets below their respective carrying amounts.
Goodwill and intangible assets are assessed annually for impairment on October 1 and whenever events or circumstances
indicate that the carrying 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 recorded in the amount by which the carrying amount of the asset exceeds its fair
value.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
The following table represents the changes in IPR&D for the years ended December 31, 2020 and 2019, respectively:
Balance at December 31, 2018
Change in IPR&D
Balance at December 31, 2019
Change in IPR&D
Balance at December 31, 2020
(in millions)
$
$
$
23.0
—
23.0
—
23.0
The following table represents the changes in Goodwill for the years ended December 31, 2020 and 2019, respectively:
Balance at December 31, 2018
Change in goodwill
Balance at December 31, 2019
Change in goodwill
Balance at December 31, 2020
(in millions)
$
$
$
197.8
—
197.8
—
197.8
5. Cash, Cash Equivalents, Marketable Securities, and Restricted Cash
As of December 31, 2020, the Company held $163.2 million in cash and cash equivalents and $320.0 million of marketable
securities which are reported at fair value on the Company's Consolidated Balance Sheets. Unrealized holding gains and losses
are generally reported within accumulated other comprehensive 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 be other-than-temporary or if an
available-for-sale debt security’s fair value is determined to less than the amortized cost and the Company intends or is more
than likely to sell the security before recovery and it is not considered a credit loss, such security is written down to its
estimated fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge. If
the unrealized loss of an available-for-sale debt security is determined to be a result of credit loss the Company would recognize
an allowance and the corresponding credit loss would be included in earnings.
The Company regularly invests excess operating cash in deposits with major financial institutions, money market funds,
notes issued by the U.S. government, as well as fixed income investments and U.S. bond funds, both of which can be readily
purchased and sold using established markets. The Company believes that the market risk arising from its holdings of these
financial instruments is mitigated as many of these securities are either government backed or of the highest credit rating.
Investments that have original maturities greater than three months but less than one year are classified as current.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
Cash, cash equivalents, and marketable securities are classified as current unless mentioned otherwise below and consisted
of the following:
(in thousands)
Cash and cash equivalents
Corporate debt securities
Commercial paper
Asset-backed securities
U.S. government agency bonds
Money market
Certificates of deposit
Included in cash and cash equivalents
Included in marketable securities
As of December 31, 2020
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Fair
Value
Cost
$
163,240 $
— $
— $
163,240
39,525
217,087
9,420
53,583
350
51
$
$
483,256 $
163,240 $
320,016
4
14
18
3
—
—
39 $
— $
39
39 $
(16)
39,513
(6)
217,095
—
(4)
—
—
9,438
53,582
350
51
(26) $
483,269
— $
163,240
(26)
320,029
(26) $
483,269
Total cash, cash equivalents, and marketable securities
$
483,256 $
(in thousands)
Cash and cash equivalents
Corporate debt securities
Commercial paper
Asset-backed securities
U.S. government agency bonds
Money market
Certificates of deposit
As of December 31, 2019
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Fair
Value
Cost
$
142,837 $
— $
— $
142,837
145,875
73,659
77,731
11,999
350
51
121
53
79
2
—
—
(5)
(2)
—
(10)
—
—
145,991
73,710
77,810
11,991
350
51
$
452,502 $
255 $
(17) $
452,740
Included in cash and cash equivalents
Included in marketable securities (1)
Total cash, cash equivalents, and marketable securities
______________________________
(1) As of December 31, 2019, $9.5 million of marketable securities had maturity dates greater than 12 months and were available to
convert into cash, if needed.
309,665
452,502 $
309,903
452,740
255
255 $
(17)
(17) $
142,837 $
142,837
— $
— $
$
$
For the year ended December 31, 2020 there were nominal realized gains. For the fiscal year ended December 31, 2019,
there were no realized gains or losses. The cost of securities sold is based on the specific identification method.
Unrealized loss positions in the marketable securities as of December 31, 2020 and 2019 reflect temporary impairments
and are not a result of credit loss. Additionally, as these positions have been in a loss position for less than twelve months and
the Company does not intend to sell these securities before recovery, the losses are recognized in other comprehensive gain
(loss). The fair value of these marketable securities in unrealized loss positions was $124.9 million and $42.6 million as of
December 31, 2020 and December 31, 2019, respectively.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated
Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.
(in thousands)
Cash and cash equivalents
Restricted cash
Cash, cash equivalents, and restricted cash shown in
the Consolidated Statements of Cash Flows
December 31, 2020
December 31, 2019
December 31, 2018
$
$
163,240 $
142,837 $
2,922
3,506
79,749
2,626
166,162 $
146,343 $
82,375
6. Inventories
Inventories consist of raw materials, work in process, and finished goods related to the manufacture of Galafold®. The
following table summarizes the components of inventories:
(in thousands)
Raw materials
Work-in-process
Finished goods
Total inventories
December 31, 2020 December 31, 2019
$
$
5,547 $
7,693
6,316
6,544
3,660
3,837
19,556 $
14,041
The Company recorded a reserve for inventory of $0.1 million and $0.2 million as of December 31, 2020 and December
31, 2019, respectively.
7. Property and Equipment
Property and equipment consist of the following:
(in thousands)
Property and equipment consist of the following:
Computer equipment
Computer software
Research equipment
Furniture and fixtures
Leasehold improvements
Vehicles
Land
Construction in progress
Gross property and equipment
Less accumulated depreciation
Net property and equipment
December 31,
2020
2019
$
5,546 $
1,207
15,387
2,880
24,146
124
3,190
5,870
6,185
1,607
14,568
5,157
30,294
124
3,190
4,184
58,350
65,309
(14,487)
(17,604)
$
43,863 $
47,705
Depreciation expense was $8.4 million and $4.5 million for the years ended December 31, 2020 and December 31, 2019,
respectively.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
8. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
(in thousands)
Accrued professional fees
Accrued contract manufacturing & contract research costs
Accrued compensation and benefits
Accrued program fees
Accrued royalties
Accrued interest
Accrued milestones
Accrued sales rebates and discounts
Accrued taxes
Deferred reimbursements
Other
December 31,
2020
2019
$
3,700 $
19,617
23,025
16,599
6,550
—
—
12,079
11,177
1,500
2,594
7,832
17,800
27,156
17,016
5,196
3,679
4,000
5,900
7,300
1,250
2,772
$
96,841 $
99,901
9. Stockholders' Equity
Common Stock and Warrants
As of December 31, 2020, the Company was authorized to issue 500 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 one vote for each share held.
In February 2021, 1,050,000 warrants were exercised at $7.06 per share of common stock resulting in gross cash
proceeds of $7.4 million.
During the second quarter of 2019, the Company completed an underwritten equity offering and issued 18.7 million
shares of its common stock at $10.75 per share, inclusive of the fully exercised option to purchase additional shares from the
initial offering. This transaction resulted in net proceeds of $189.0 million, after deducting underwriting discounts and
commissions and offering expenses.
In March 2019, 101,787 warrants were exercised at $7.98 per share of common stock resulting in gross cash proceeds
of $0.8 million.
As discussed in "— Note 11. Assets and Liabilities Measured at Fair Value", during the fourth quarter of 2018, the
Company reached a clinical milestone, which was the dosing of the first patient in a Phase 3 study, related to the contingent
consideration from the acquisition of Callidus Biopharma, Inc. ("Callidus"). The milestone for this event was $9.0 million,
which was paid in Company common stock in the first quarter of 2019 and resulted in a $9.3 million impact on stockholder's
equity.
As discussed in ''— Note 12. Debt'', during the first and second quarters of 2019, the Company entered into separate,
privately negotiated Exchange Agreements with a limited number of holders of the Convertible Notes. Under the terms of
the Exchange Agreements, the holders of the Convertible Notes agreed to exchange an aggregate principal amount of $247.2
million of Convertible Notes held by them in exchange for an aggregate of approximately 44.0 million shares of Company's
common stock, par value $0.01 per share.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
In February 2018, the Company completed an underwritten offering of 20.2 million shares of its common stock at
$15.50 per share, inclusive of the fully exercised option to purchase additional shares from the initial offering. This
transaction resulted in net proceeds of $294.6 million, after deducting underwriting discounts and commissions and offering
expenses.
In April 2018, 453,214 warrants were exercised at $7.98 per share of common stock resulting in gross cash proceeds of
$3.6 million.
In June 2018, the Company’s stockholders approved an amendment to the Company’s Restated Certificate of
Incorporation to increase the number of shares of common stock, par value $0.01 per share, that the Company is authorized
to issue from 250 million shares to 500 million shares.
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 Compensation Committee, 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 a nonqualified deferred compensation plan that complies
with the provisions of Section 409A of the Internal Revenue Code of 1986 as amended.
The Company had a deferred compensation investment balance of $4.1 million and $4.4 million as of December 31, 2020
and December 31, 2019, respectively, with corresponding approximate amounts of liability.
Deferral Plan investment assets are classified as trading securities and are recorded at fair value with changes in the
investments' fair value recognized in AOCI in the period they occur. Deferred compensation liability amounts under the
Deferral Plan are included in other long-term liabilities.
Equity Incentive Plan
The Company's Amended and Restated 2007 Equity Incentive Plan (the "Plan") provides for the granting of restricted stock
units and options to purchase common stock in the Company to employees, directors, advisors, and consultants at a price to be
determined by the Company's Board of Directors. The Plan is intended to encourage ownership of stock by employees and
consultants of the Company and to provide additional incentives for them to promote the success of the Company's business.
Under the provisions of the Plan, no option will have a term in excess of 10 years. The Board of Directors, or its committee, is
responsible for determining the individuals to be granted options, the number of options each individual will receive, the option
price per share, and the exercise period of each option. Options granted pursuant to the Plan generally vest 25% on the first year
anniversary date of grant plus an additional 1/48th for each month thereafter and may be exercised in whole or in part for 100%
of the shares vested at any time after the date of grant. As of December 31, 2020, the Company has reserved up to 15,018,368
shares for issuance under the Plan.
10. Share based Compensation
The Company’s Equity Incentive Plan provides for the granting of restricted stock units and options to purchase common
stock in the Company to employees, directors. advisors, and consultants at a price to be determined by the Company’s Board
of Directors. The Plan is intended to encourage ownership of stock by employees and consultants of the Company and to
provide additional incentives for them to promote the success of the Company’s business. The Board of Directors, or its
committee, is responsible for determining the individuals to be granted options, the number of options each individual will
receive, the option price per share, and the exercise period of each option.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
On December 21, 2018, the Board of Directors of the Company approved an amendment (the "Amendment") to the Plan.
The Amendment provides for certain benefits to qualifying Plan Participants who separate from service with the Company
due to death, disability or "Retirement" (as such term is defined under the Plan) ("Qualified Participants"). Options granted
under the Plan ("Options") to a Qualified Participant shall continue to vest until the 2nd anniversary of the Qualified
Participant’s separation and all vested Options held by such Qualified Participant shall remain exercisable until the earlier of
the 4th anniversary of the Qualified Participant’s separation or the original expiration date of the Option. Options that are not
exercised during this exercise period shall be forfeited. Time-based restricted stock units and restricted stock granted to a
Qualified Participant under the Plan that was scheduled to vest within the two year period following the Qualified
Participant's separation shall accelerate and be delivered upon such separation. Any time-based restricted stock units or
restricted stock that would have vested after such two year period will be forfeited upon the Qualified Participant's separation.
Also, per the Amendment, any performance-based restricted stock units under the Plan ("PRSUs") received by the Qualified
Participant, shall remain eligible to vest after the Qualified Participant’s separation based on the actual performance of the
Company through the end of the performance period applicable to any such PRSUs.
Stock Option Grants
The Company uses the fair value method of measuring stock-based compensation, using the fair value of each equity
award granted. The Company chose the ‘‘straight-line’’ attribution method for allocating compensation costs and recognized
the fair value of each stock option on a straight-line basis over the vesting period 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 model requires management to make certain assumptions with respect to selected model inputs.
Expected volatility was based on our historical volatility since our initial public offering in May 2007. The average expected
life is determined using our actual historical data. The risk-free interest rate is based on U.S. Treasury, zero-coupon issues with
a remaining term equal to the expected life assumed at the date of grant. Forfeitures are estimated based on voluntary
termination behavior, as well as a historical analysis of actual option forfeitures.
The fair value of the stock options granted is estimated on the date of grant using a Black-Scholes option pricing model
with the following weighted-average assumptions:
Expected stock price volatility
Risk free interest rate
Expected life of options (years)
Expected annual dividend per share
Years Ended December 31,
2020
2019
2018
75.1 %
1.6 %
5.67
74.1 %
2.4 %
5.68
78.6 %
2.4 %
5.62
$
0.00
$
0.00
$
0.00
The weighted average grant-date fair value per share of options granted during 2020, 2019, and 2018 were $6.40, $6.67,
and $10.19, respectively.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
A summary of the Company's stock options for the year ended December 31, 2020 were as follows:
Number of
Shares
(in thousands)
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Years
Aggregate
Intrinsic
Value
(in millions)
Options outstanding, December 31, 2017
Granted
Exercised
Forfeited
Expired
Options outstanding, December 31, 2018
Granted
Exercised
Forfeited
Expired
Options outstanding, December 31, 2019
Granted
Exercised
Forfeited
Expired
Options outstanding, December 31, 2020
Vested and unvested expected to vest, December 31, 2020
Exercisable at December 31, 2020
15,181 $
2,348 $
(1,398) $
(313) $
(8) $
15,810 $
4,091 $
(1,967) $
(879) $
(331) $
16,724 $
4,362 $
(5,243) $
(1,376) $
(435) $
14,032 $
13,267 $
8,130 $
7.48
14.96
6.54
9.55
10.76
8.63
10.29
5.83
11.07
13.38
9.15
9.98
8.11
10.42
13.33
9.54
9.49
8.86
6.5 $
6.4 $
5.1 $
190.1
180.5
115.7
The aggregate intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $40.9
million, $11.8 million, and $11.9 million respectively. Cash proceeds from stock options exercised during the years ended
December 31, 2020, 2019, and 2018 were $42.3 million, $11.5 million, and $9.1 million, respectively. As of December 31,
2020, the total unrecognized compensation cost related to non-vested stock options granted was $29.4 million and is expected
to be recognized over a weighted average period of three years.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
Restricted Stock Units and Performance-Based Restricted Stock Units (collectively "RSUs")
RSUs awarded under the Plan are generally subject to graded vesting and are contingent on an employee's continued
service. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. The
Company expenses the cost of the RSUs, which is determined to be the fair market value of the shares of common stock
underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse. A summary of
non-vested RSU activity under the Plan for the year ended December 31, 2020 is as follows:
Number of
Shares
(in thousands)
Weighted
Average Grant
Date Fair
Value
Weighted
Average
Remaining
Years
Aggregate
Intrinsic
Value
(in millions)
Non-vested units as of December 31, 2017
Granted
Vested
Forfeited
Non-vested units as of December 31, 2018
Granted
Vested
Forfeited
Non-vested units as of December 31, 2019
Granted
Vested
Forfeited
Non-vested units as of December 31, 2020
2,575 $
1,812 $
(530) $
(145) $
3,712 $
3,526 $
(921) $
(525) $
5,792 $
4,692 $
(2,164) $
(1,240) $
7,080 $
5.85
16.11
6.01
9.65
10.59
10.92
8.49
10.52
11.18
11.29
10.70
11.14
11.35
2.3 $
158.0
For the year ended December 31, 2020, 2,163,732 RSUs have vested and all non-vested units are expected to vest over
their normal term. As of December 31, 2020, there was $59.4 million of total unrecognized compensation cost related to
unvested RSUs with service-based vesting conditions. These costs are expected to be recognized over a weighted average
period of two years.
Compensation Expense Related to Equity Awards
The following table summarizes information related to compensation expense recognized in the Consolidated Statements
of Operations related to the equity awards:
(in thousands)
Equity compensation expense recognized in:
Research and development expense
Selling, general, and administrative expense
Total equity compensation expense
Years Ended December 31,
2020
2019
2018
$
$
20,817 $
17,575 $
28,334
26,855
49,151 $
44,430 $
11,740
17,520
29,260
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
11. Assets and Liabilities Measured at Fair Value
The Company's financial assets and liabilities are measured at fair value and classified within the fair value hierarchy
which is defined as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities that the Company has the ability to
access at the measurement date.
Level 2 — Inputs other than quoted prices in active markets that are observable for the asset or liability, either
directly or indirectly.
Level 3 — Inputs that are unobservable for the asset or liability.
A summary of the fair value of the Company's recurring assets and liabilities aggregated by the level in the fair value
hierarchy within which those measurements fall as of December 31, 2020 are identified in the following tables:
(in thousands)
Assets:
Commercial paper
Asset-backed securities
Corporate debt securities
U.S. government agency bonds
Money market funds
(in thousands)
Liabilities:
Contingent consideration payable
Deferred compensation plan liability
Level 2
Total
$
217,095 $
217,095
9,438
39,513
53,582
4,427
9,438
39,513
53,582
4,427
$
324,055 $
324,055
Level 2
Level 3
Total
$
$
— $
25,825 $
25,825
4,078
—
4,078
4,078 $
25,825 $
29,903
A summary of the fair value of the Company's recurring assets and liabilities aggregated by the level in the fair value
hierarchy within which those measurements fall as of December 31, 2019 are identified in the following tables:
(in thousands)
Assets:
Commercial paper
Asset-backed securities
Corporate debt securities
U.S. government agency bonds
Money market funds
Level 2
Total
$
73,710 $
73,710
77,810
145,991
11,991
4,768
77,810
145,991
11,991
4,768
$ 314,270 $ 314,270
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
(in thousands)
Liabilities:
Contingent consideration payable
Deferred compensation plan liability
Level 2
Level 3
Total
$
$
— $
22,681 $
22,681
4,419
—
4,419
4,419 $
22,681 $
27,100
The Company’s Convertible Notes fall into the Level 2 category within the fair value level hierarchy. The fair value was
determined using broker quotes in a non-active market for valuation. The fair value of the Convertible Notes at December 31,
2020 was $10.9 million.
The Company’s Senior Secured Term Loan due 2026 falls into the Level 2 category within the fair value level hierarchy
and the fair value was determined using quoted prices for similar liabilities in active markets, as well as inputs that are
observable for the liability (other than quoted prices), such as interest rates that are observable at commonly quoted intervals.
The carrying value of the Senior Secured Term Loan due 2026 approximates the fair value.
The Company did not have any Level 3 assets as of December 31, 2020 or December 31, 2019.
Cash, Money Market Funds and Marketable Securities
The Company classifies its cash within the fair value hierarchy as Level 1 as these assets are valued using quoted prices in
an active market for identical assets at the measurement date. The Company considers its investments in marketable securities
as available-for-sale and classifies these assets and the money market funds within the fair value hierarchy as Level 2 primarily
utilizing broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs
occurred during the year ended December 31, 2020. No transfers of assets between Level 1 and Level 2 of the fair value
measurement hierarchy occurred during the year ended December 31, 2020.
Contingent Consideration Payable
The contingent consideration payable resulted from the acquisition of Callidus. The most recent valuation was determined
using a probability weighted discounted cash flow valuation approach. Gains and losses are included in the Consolidated
Statements of Operations.
The contingent consideration payable for Callidus has been classified as a Level 3 recurring liability as its valuation
requires substantial judgment and estimation of factors that are not currently observable in the market. If different assumptions
were used for the various inputs to the valuation approach, the estimated fair value could be significantly higher or lower than
the fair value the Company determined.
The following significant unobservable inputs were used in the valuation of the contingent consideration payable of
Callidus for the ATB-200 Pompe program:
Contingent Consideration
Liability
Fair Value as of
December 31, 2020
(in thousands)
Valuation Technique
Unobservable Input
Range
Clinical and regulatory
milestones
$
25,101
Probability weighted
discounted cash flow
Discount rate
Probability of achievement
of milestones
Projected year of payments
7.5%
75%-78%
2021-2022
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
Contingent consideration liabilities are remeasured to fair value each reporting period using discount rates, probabilities of
payment, and projected payment dates. Projected contingent payment amounts related to clinical and regulatory based
milestones are discounted back to the current period using a discounted cash flow model. Increases in discount rates and the
time to payment may result in lower fair value measurements. Increases or decreases in any of those inputs together, or in
isolation, may result in a significantly lower or higher fair value measurement. There is no assurance that any of the conditions
for the milestone payments will be met.
During the fourth quarter of 2018, the Company reached a clinical milestone, which was the dosing of the first patient in a
Phase 3 study, related to the contingent consideration from the acquisition of Callidus. The milestone for this event was
$9.0 million, which was paid in Company common stock in the first quarter of 2019 and resulted in a $9.3 million impact on
stockholder's equity.
The following table shows the change in the balance of contingent consideration payable for the year ended December 31,
2020 and December 31, 2019, respectively:
(in thousands)
Balance, beginning of the period
Changes in fair value during the period, included in the Consolidated Statements
of Operations
Adjustment for contingent consideration paid in stock
Balance, end of the period
Years ended December 31,
2020
2019
$
22,681 $
19,700
3,144
—
3,297
(316)
$
25,825 $
22,681
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Table of Contents
12. Debt
Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
The Company's debt consists of the following:
(in thousands)
Senior Secured Term Loan due 2026:
Principal
Less: debt discount (1)
Less: deferred financing (1)
Net carrying value of the Senior Secured Term Loan
Senior Secured Term Loan due 2023 (2):
Principal
Less: debt discount (1)
Less: deferred financing (1)
Net carrying value of the Senior Secured Term Loan
Convertible Notes (3):
Principal
Less: debt discount (1)
Less: deferred financing (1)
Net carrying value of the Convertible Notes
December 31, 2020
December 31, 2019
$
$
$
$
$
$
400,000 $
(7,434)
(5,592)
386,974 $
—
—
—
—
— $
150,000
—
—
(2,315)
(311)
— $
147,374
2,825 $
(518)
(27)
2,280 $
2,825
(659)
(35)
2,131
Net carrying value of Long-term debt
______________________________
(1) Included in the Consolidated Balance Sheets within long-term debt and amortized to interest expense over the remaining life of the
Convertible Notes and Senior Secured Term Loans using the effective interest rate method.
(2) The principle, accrued interest and early settlement premiums associated with the Senior Secured Term Loan due 2023 were fully paid and
settled in July 2020.
(3) The Convertible Notes are currently convertible as the last reported sale price of the Company's common stock was equal to or more than
130% of the conversion price for at least 20 trading days of the 30 consecutive trading days ending on the last day of the quarter.
389,254 $
149,505
$
Senior Secured Term Loan due 2026
In July 2020, the Company entered into a definitive agreement for a $400 million credit facility with Hayfin Capital
Management (“Senior Secured Term Loan due 2026”) with an interest rate equal to 3-month LIBOR, subject to a 1% floor, plus
6.5% per annum and requires interest-only payments until mid-2024. The Senior Secured Term Loan due 2026 will be repaid in
nine quarterly payments of $44.4 million, starting on July 2024 with the final balance due on the maturity date in July 2026.
This transaction resulted in net proceeds of $385.9 million, after deducting fees and expenses. There were no warrants or equity
conversion features associated with the Senior Secured Term Loan due 2026. The Company used the proceeds to voluntarily
settle the Senior Secured Term Loan with BioPharma Credit PLC that was due in 2023 ("Senior Secured Term Loan due
2023").
The Senior Secured Term Loan due 2026 is subject to mandatory prepayment provisions that require prepayment upon a
change of control, the incurrence of certain additional indebtedness, asset sale, or an event of loss, subject to certain conditions
set forth in the Senior Secured Term Loan due 2026. The Company may prepay the Senior Secured Term Loan due 2026 in
whole, at its option at any time. Any prepayment of the Senior Secured Term Loan due 2026 is subject to certain make-whole
premiums and prepayment premiums, the latter of which decrease until the fourth anniversary of the transaction date at which
point no prepayment penalty shall exist. The obligations under the Senior Secured Term Loan due 2026 are secured by a first
lien security interest in certain assets of the Company. The Senior Secured Term Loan due 2026 contains certain customary
representations and warranties, affirmative and negative covenants and events of default applicable to the Company. The Senior
Secured Term Loan due 2026 also contains a minimum liquidity covenant of $75 million, and an incremental minimum
consolidated revenue covenant, measured as of the previous four consecutive fiscal quarters. The minimum consolidated
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
revenue covenant ranges from $140 million, beginning March 31, 2021, and peaks at $225 million by June 30, 2023, continuing
at that level until the Senior Secured Term Loan due 2026 is repaid. If an event of default occurs and is continuing, Hayfin
Capital Management may declare all amounts outstanding under the Senior Secured Term Loan due 2026 to be immediately
due and payable.
Senior Secured Term Loan due 2023
In September 2018, the Company entered into a loan agreement with BioPharma Credit PLC (“Senior Secured Term
Loan due 2023") as the lender. The loan agreement provided for a $150 million senior secured term loan with an interest rate
equal to the 3-month LIBOR plus 7.5% per annum and would mature in 5 years from the maturity date. The Senior Secured
Term Loan due 2023 would be repaid in four quarterly payments equal to 12.5% thereof starting on the forty-eight month
anniversary of the date of the first credit extension with the balance due on the Maturity Date. Interest was payable quarterly in
arrears. The Senior Secured Term Loan due 2023 contained certain customary representations and warranties, affirmative and
negative covenants, and events of default applicable to the Company and certain of its subsidiaries but did not include any
financial covenants relating to the achievement or maintenance of revenue or cash flow. If an event of default occurred and was
continuing, the lender could declare all amounts outstanding under the Senior Secured Term Loan due 2023 to be immediately
due and payable. The Company received net proceeds of $146.6 million in September 2018, after deducting fees and expenses.
In July 2020, the Company used $156.3 million of the proceeds from the Senior Secured Term Loan due 2026 to
voluntarily settle the principal amount, $1.1 million accrued interest, and $5.2 million in early settlement premiums. As a result
of this early extinguishment, the Company recognized a loss on extinguishment of debt of $7.3 million in the Consolidated
Statements of Operations.
Convertible Notes
In December 2016, the Company issued at par value $250 million aggregate principal amount of Convertible Notes,
which included the exercise in full of the $25 million over-allotment option granted to the initial purchasers of the
Convertible Notes in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act (the
"Note Offering"). Interest is payable semiannually on June 15 and December 15 of each year, beginning on June 15, 2017.
The Convertible Notes will mature on December 15, 2023, unless earlier repurchased, redeemed, or converted in accordance
with their terms. The Convertible Notes are convertible at the option of the holders of the Convertible Notes (the "Holders"),
under certain circumstances and during certain periods, into cash, shares of the Company’s common stock or a combination
thereof. The net proceeds from the Note Offering were $243.0 million, after deducting fees and expenses. 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 capped call transactions ("Capped Call Confirmations") that the Company entered into in connection with the issuance of
the Convertible Notes. In accounting for the issuance of the Convertible Notes, the Company separated the Convertible Notes
into liability and equity components based on their relative values. The Convertible Notes were initially convertible into
approximately 40.8 million shares of the Company’s common stock under certain circumstances prior to maturity 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 per share of common stock, subject to adjustment under certain conditions. 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 trading days 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 than 130% 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 in which the trading price for the Convertible Notes, per $1,000 principal
amount of the Convertible Notes, for each such trading day was less than 98% 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;
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
•
•
•
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 more than 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 the average of the Last Reported Sale Prices
of the common stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day
immediately preceding the date of announcement of such issuance or distributes to all or substantially all
holders of the common stock the Company’s assets, debt securities or rights to purchase the Company’s
securities which distribution has a per share value of exceeding 10% of the Last 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; or
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 or after September 15, 2023 at any time prior to the close of business on the second
scheduled trading day immediately preceding the stated maturity date of December 15, 2023.
During the first and second quarters of 2019, the Company entered into separate, privately negotiated Exchange
Agreements with a limited number of holders of the Convertible Notes. Under the terms of the Exchange Agreements, the
limited number of Holders agreed to exchange an aggregate principal amount of $247.2 million of Convertible Notes held by
them in exchange for an aggregate of approximately 44.0 million shares of Company common stock, par value $0.01 per share.
In addition, pursuant to the Exchange Agreements, the Company made aggregate cash payments of $1.3 million to the limited
number of Holders to satisfy accrued and unpaid interest to the closing date of the transactions, along with cash in lieu of
fractional shares. These transactions resulted in $215.0 million in additional paid-in-capital and common stock of $0.4 million
on the Consolidated Balance Sheets as of December 31, 2019. Additionally, the Company recognized a loss on the exchange of
debt of $40.6 million on the Consolidated Statements of Operations during the year ended December 31, 2019. During the
second half of the year ended December 31, 2019, there were no additional debt conversion transactions.
During the first and second quarter of 2019, the Company terminated the Capped Call Confirmations related to the
exchange of the Convertible Notes for proceeds of $19.9 million.
Interest Expense
The following table sets forth interest expense recognized related to the Company's debt for the years ended December 31,
2020 and 2019 respectively:
(in thousands)
Contractual interest expense
Amortization of debt discount
Amortization of deferred financing
December 31,
2020
December 31,
2019
$ 20,933
1,267
$
$ 16,483
2,381
$
$
527
$
165
Effective interest rate of the liability component, Convertible debt
Effective interest rate of the liability component, Senior Secured Term Loan due 2026
Effective interest rate of the liability component, Senior Secured Term Loan due 2023
10.6 %
8.4 %
— %
10.6 %
— %
10.2 %
13. Leases
The Company currently has operating leases for office and research laboratory space, equipment, and vehicles under
agreements expiring at various dates through 2044, which include renewal options on leases which the Company is reasonably
certain to exercise.
For the years ended December 31, 2020, and 2019, the operating lease expense was $11.1 million and $10.8 million,
respectively. For the years ended December 31, 2020, and 2019, the Company paid $9.6 million and $4.9 million, respectively,
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
for amounts included in the measurement of operating lease liabilities and recorded $1.7 million and $21.8 million,
respectively, of right-of-use assets and $0.5 million and $19.4 million, respectively of tenant improvements paid through lease
incentives in exchange for new operating lease liabilities.
Commitments under finance leases are not significant for the years ended December 31, 2020, and 2019.
Supplemental balance sheet information related to operating leases were as follows:
(in thousands, except year and discount rate amounts)
Operating lease ROU asset
Current portion of the operating lease liabilities
Non-current portion of the operating lease liabilities
Total operating lease liability
Weighted-average remaining lease terms (years)
Weighted-average discount rate
December 31, 2020
December 31, 2019
$
$
$
23,296
6,872
45,604
52,476
$
$
$
33,315
7,189
53,531
60,720
19.8
13.0 %
18.2
13.1 %
At December 31, 2020, the future minimum operating lease payments were as follows:
(in thousands)
2021
2022
2023
2024
2025
Thereafter
Total lease payments
Less lease incentives
Less imputed interest
Total operating lease liability
At December 31, 2019, the future minimum operating lease payments were as follows:
(in thousands)
2020
2021
2022
2023
2024
Thereafter
Total lease payments
Less lease incentives
Less imputed interest
Total operating lease liability
-122-
Operating Lease
$
8,549
8,494
8,691
8,404
8,371
153,241
195,750
(28,939)
(114,335)
$
52,476
Operating Lease
$
$
9,738
10,787
10,459
10,809
10,582
163,266
215,641
(28,939)
(125,982)
$
60,720
Table of Contents
Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
Rent expense, including fees for utilities and common area maintenances under ASC 840 for the year ended December 31,
2018 was $5.7 million.
14. Income Taxes
For financial reporting purposes, loss before income taxes includes the following components:
(in thousands)
United States
Foreign
Total
Years Ended December 31,
2020
2019
2018
$
(365,332) $
(393,955) $
(309,183)
91,078
38,045
(39,906)
$
(274,254) $
(355,910) $
(349,089)
Following were the components of income tax expense (benefit) for the years ended December 31, 2020, 2019, and 2018:
(in thousands)
Current
Federal
State
Foreign
Deferred
Federal
State
Foreign
Total
2020
2019
2018
$
$
— $
—
4,163
— $
—
2,877
(1,410)
(155)
—
2,598 $
(984)
(1,415)
—
478 $
—
6
(100)
—
—
—
(94)
A reconciliation of the statutory tax rates and the effective tax rates for the years ended December 31, 2020, 2019, and
2018 are as follows:
Statutory rate
State taxes, net of federal benefit
Nondeductible IPR&D
Contingent consideration
Tax credits
Impact of foreign operations
Nondeductible executive compensation
Nondeductible debt conversion
Other
Valuation allowance
Net
Years Ended
December 31,
2020
2019
2018
(21) %
—
—
—
(7)
4
2
—
—
23
(21) %
—
—
—
(16)
9
1
(1)
(1)
29
(21) %
(4)
6
1
(10)
2
—
—
—
26
1 %
— %
— %
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act ("Tax Act"). The Tax Act significantly
revises U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax rate to 21%, imposing a
mandatory one-time transition tax on previously deferred foreign earnings, and eliminating or reducing certain income tax
deductions. The Tax Act also introduced an additional U.S. tax on certain non-U.S. subsidiaries’ earnings which are considered
to be Global Intangible Low Taxed Income (referred to as "GILTI"). After consideration of the relevant guidance and
completing the accounting for the tax effects of the Tax Act, the Company has elected to treat GILTI as a period cost.
The Company recorded an income tax expense of $4.2 million in 2020 for taxes in foreign jurisdictions and a $1.6 million
tax benefit in 2020 for taxes in U.S. federal and state jurisdictions.
The Company did not recognize interest or penalties related to income tax during the period ended December 31, 2020 and
did not accrue for interest or penalties as of December 31, 2020. The Company does not have an accrual for uncertain tax
positions as of December 31, 2020. Tax returns for years 2015 through 2019 are open to examination by tax authorities. The
Company is also subject to examination in any period for which it has net operating losses.
Deferred income taxes reflect the net effect of temporary difference between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. The significant components of the deferred tax
assets and liabilities are as follows:
(in thousands)
Deferred tax assets
Intellectual property
Amortization/depreciation
Research tax credit
Net operating loss carry forwards
Deferred reimbursements
Non-cash stock issue
Interest carry forward limitation
Lease liability
Other
Gross deferred tax assets
Deferred tax liabilities
Business acquisition
Royalty payable
Convertible notes
Advanced R&D payments
Right of use asset
Total net deferred tax assets
Less: valuation allowance
Net deferred tax liability
Years Ended
December 31,
2020
2019
$
68,209 $
46,521
489
182,651
305,876
1,912
17,553
5,655
9,235
10,855
602,435
2,329
141,669
286,850
2,230
19,058
2,224
6,983
13,921
521,785
(4,937)
(5,051)
(68,209)
(94)
(1,776)
(3,420)
(46,521)
(653)
(2,611)
(5,643)
523,999
461,306
(528,895)
(466,357)
$
(4,896) $
(5,051)
The Company records a valuation allowance for temporary differences for which it is more likely than not that the
Company will not receive future tax benefits. At December 31, 2020 and 2019, the Company recorded valuation allowances of
$528.9 million and $466.4 million, respectively, representing an increase in the valuation allowance of $62.5 million in 2020,
due to the uncertainty regarding the realization of such deferred tax assets, to offset the benefits of net operating losses
generated during those years. The deferred tax liability related to business acquisitions pertains to the basis difference 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 be realized 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 abandoned or unsuccessful.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
As of December 31, 2020, the Company had federal and state net operating loss carry forwards ("NOLs") of approximately
$1,156 million and $889.4 million, respectively. The federal carry forward for losses generated prior to 2018 will expire in
2029 through 2037. Federal net operating losses incurred in 2018 and onward have an indefinite expiration under the 2017 Tax
Act. Most of the state carry forwards generated prior to 2009 have expired through 2016. The remaining state carry forwards
including those generated in 2009 through 2020 will expire in 2029 through 2040. Utilization of NOLs may be subject to a
substantial limitation pursuant to Section 382 of the Internal Revenue Code of 1986, as amended ( the "Code") as well as
similar state statutes in the event of an ownership change. Such ownership changes have occurred in the past and could occur
again in the future. Under Section 382 of the Internal Revenue Code of 1986, as amended, or Section 382, if a corporation
undergoes an "ownership change," generally defined as a greater than 50% change (by value) in its equity ownership over a
three-year period, the corporation's ability 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 be limited. The Company may experience ownership changes in
the future as a result of shifts in the stock ownership some of which are outside the Company's control. The Company
completed a detailed study of the NOLs and determined that there was not an ownership change in excess of 50%. Ownership
changes in future periods may place additional limits on the Company's 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 is suspended or otherwise limited,
which could accelerate or permanently decrease the amount of state attributes and increase state taxes owed.
The Company also has research and experimentation and orphan drug credit carryforwards of approximately $30.4 million
and $141.8 million, respectively, which will expire in the years 2021 through 2040. Deferred tax assets for these carryforwards
are subject to a full valuation allowance.
15. Collaborative Agreements
University of Pennsylvania
In October 2018, as amended, the Company entered into a collaboration agreement with Penn to pursue research and
development of novel gene therapies. The Company's gene therapy portfolio pipeline expanded to include Pompe disease,
Fabry disease, CDD, CLN1, MPS IIIB, as well as a next generation program in MPS IIIA. This expanded collaboration with
Penn also provides the Company with exclusive disease-specific access and option rights to develop potentially disruptive
new gene therapy platform technologies and programs for most LDs and a broader portfolio of rare diseases, including Rett
Syndrome, Angelman Syndrome, Myotonic Dystrophy, and select other muscular dystrophies.
Under the expanded collaboration agreement with Penn, Penn is eligible to receive certain milestone, royalty and
discovery research payments with respect to licensed products for each indication. Milestone payments are payable following
the achievement of certain development and commercial milestone events in each indication, up to an aggregate of
$88.0 million per indication. Royalty payments are based on net sales of licensed products on a licensed product-by-licensed
product and country- by-country basis. The Company will provide $10.0 million each year during the five-year agreement to
fund the discovery research program. In connection with the collaboration agreement, the Company made an upfront payment
of $7 million in cash to Penn in 2018 that was expensed to research and development expense in the Consolidated Statements
of Operations.
GlaxoSmithKline
In July 2012, as amended in November 2013, the Company entered into an agreement with GlaxoSmithKline ("GSK"),
pursuant to which Amicus obtained global rights to develop and commercialize Galafold® as a monotherapy and in
combination with ERT for Fabry disease (“Collaboration Agreement”). Under the terms of the Collaboration Agreement,
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 eight major markets outside the U.S.
The contingent milestone payments due to GSK are recorded within the short term and long term deferred
reimbursements accounts on the Consolidated Balance Sheets. Sales based tiered royalties due to GSK are recorded within
the cost of goods sold within the Consolidated Statements of Operations.
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Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
For the year ended December 31, 2020, under the GSK collaboration agreements, the Company paid $1.3 million in
sales-based milestones and the Company incurred approximately $21.7 million of royalty expenses. As of December 31,
2020, $8.9 million was recorded as deferred reimbursements and the Company recognized a liability of $6.6 million related
to royalties payable to GSK in accounts payable and accrued expenses in the Consolidated Balance Sheets.
16. Basic and Diluted Net Loss per Common Share
The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net
loss attributable to common stockholders per common share:
(in thousands, except per share amounts)
Numerator:
Years Ended December 31,
2020
2019
2018
Net loss attributable to common stockholders
$
(276,852) $
(356,388) $
(348,995)
Denominator:
Weighted average common shares outstanding — basic and diluted
258,867,380
240,421,001
185,790,021
Dilutive common stock equivalents would include the dilutive effect of common stock options, convertible debt units,
RSUs and warrants for common stock equivalents. Potentially dilutive common stock equivalents were excluded from the
diluted earnings per share denominator for all periods because of their anti-dilutive effect.
The table below presents potential shares of common stock that were excluded from the computation as they were anti-
dilutive using the treasury stock method:
(in thousands)
Options to purchase common stock
Convertible notes
Outstanding warrants, convertible to common stock
Unvested restricted stock units
Years ended December 31,
2019
2018
2020
14,032
16,724
462
2,555
7,080
462
2,555
5,792
15,810
40,850
2,657
3,712
63,029
Total number of potentially issuable shares
24,129
25,533
17. Selected Quarterly Financial Data (Unaudited)
(in thousands except per share data)
2020
Net product sales
Net loss
Basic and diluted net loss per common share (1)
2019
Net product sales
Net loss
Basic and diluted net loss per common share (1)
_______________________________
$
$
$
$
$
$
March 31
June 30
September 30
December 31
Quarters Ended
60,525 $
62,353 $
67,437 $
70,571
(88,948) $
(52,492) $
(64,011) $
(71,401)
(0.35) $
(0.20) $
(0.25) $
(0.27)
34,046 $
44,130 $
48,768 $
55,293
(120,299) $
(84,551) $
(61,809) $
(89,729)
(0.56) $
(0.36) $
(0.24) $
(0.35)
(1) Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts do not
add to the annual amounts because of differences on the weighted-average common shares outstanding during each period principally
due to the effect of the Company issuing shares of its common stock during the year.
-126-
Table of Contents
Amicus Therapeutics, Inc.
Notes To Consolidated Financial Statements — (Continued)
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
Item 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the
effectiveness of our disclosure controls and procedures as of December 31, 2020. 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 submit under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated
and communicated to the Company's management, including its principal executive and principal financial officers, as
appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and
management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation of our disclosure controls and procedures as of December 31, 2020, our principal executive officer and
principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the
reasonable assurance level.
There have been no changes in our internal controls over financial reporting during the fourth quarter of the year ended
December 31, 2020 that have materially 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 Financial Reporting" and the "Report of Independent Registered Public Accounting Firm" are
incorporated by reference from "Item 8. Financial Statements and Supplementary Data."
Item 9B. OTHER INFORMATION.
None.
-127-
Table of Contents
PART III
Certain information required by Part III is omitted from this Annual Report on Form 10-K as we intend to file our
definitive proxy statement for our 2021 annual meeting of stockholders, pursuant to Regulation 14A of the Securities Exchange
Act, not later than 120 days after the end of the fiscal year covered by this Annual Report 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) Beneficial Ownership 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 and directors and incorporate guidelines designed to deter wrongdoing and to promote the honest and
ethical conduct and compliance with applicable laws and regulations. In addition, the code of ethics incorporates our guidelines
pertaining to topics such as conflicts of interest and workplace behavior. We have posted the text of our code on our website at
www.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 or controller, or persons performing similar functions and (2) the nature of any waiver, including an
implicit waiver, from provision of our code of ethics that is granted to one of these specified officers, the name of such person
who is granted the waiver and the date the waiver on our website in the future.
Item 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference from the Proxy Statement under the caption
"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 Beneficial Owners and Management and Related Stockholder Matters" and "Equity Compensation Plan
Information."
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
The information required by this item is incorporated by reference from the Proxy Statement under the captions "Certain
Relationships and Related Transactions," "Director Independence," "Committee Compensation and Meetings of the Board of
Directors," and "Compensation Committee Interlock and Insider Participation."
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information required by this item is incorporated by reference from the Proxy Statement.
-128-
Table of Contents
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE
PART IV
1. Consolidated Financial Statements
The Consolidated Financial Statements are filed as part of this report.
2. Consolidated Financial Statement Schedules
All schedules are omitted because they are not required or because the required information is included in the Consolidated
Financial Statements or notes thereto.
3. Exhibits
Exhibit
No.
Filed Exhibit Description
2.1 Agreement and Plan of Merger, dated November 19,
2013, by and among Amicus Therapeutics, Inc., CB
Acquisition Corp., Callidus BioPharma, Inc., and
Cuong Do
Incorporated by Reference
to SEC Filing
Form
Form 8-K
Date
2/12/2014
2.2 Amendment to Agreement and Plan of Merger, dated
Form 8-K
9/30/2015
September 30, 2015, by and among the Registrant,
Titan Merger Sub Corp. and Scioderm, Inc.
+2.3 Agreement and Plan of Merger, dated July 5, 2016,
Form 8-K
7/6/2016
by and among MiaMed, Inc., the Registrant and
Minervas Merger Sub, Inc.
+2.4 Agreement and Plan of Merger, dated as of
September 19, 2018, by and among Amicus
Therapeutics, Inc., Columbus Merger Sub Corp.,
Celenex, Inc. and Shareholder Representative
Services LLC, solely in its capacity as the
Shareholders’ Representative
Form 8-K
9/25/2018
3.1 Restated Certificate of Incorporation of the
Form 10-K
2/28/2012
Registrant.
3.2 Restated By-laws of the Registrant.
3.3 Certificate of Amendment to the Registrant's
Restated Certificate of Incorporation, as amended.
S-1/A (333-141700)
4/27/2007
Form 8-K
6/10/2015
3.4 Certificate of Amendment to the Restated Certificate
Form 8-K
6/8/2018
of Incorporation
4.1 Specimen Stock Certificate evidencing shares of
S-1 (333-141700)
3/30/2007
common stock
4.2 Third Amended and Restated Investor Rights
S-1 (333-141700)
3/30/2007
Agreement, dated as of September 13, 2006, as
amended
4.3 Form of Warrant to Purchase Common Stock
4.4 Form of Warrant to Purchase Common Stock
4.5 Indenture, dated December 21, 2016, by and between
the Registrant and Wilmington Trust, National
Association
4.6 Form of Indenture
4.7 Description of the Registrant's securities
*10.1 2002 Equity Incentive Plan, as amended, and forms
of option agreements thereunder
-129-
Form 8-K
Form 8-K
Form 8-K
2/22/2016
7/1/2016
12/21/2016
Form S-3ASR
Form 10-K
S-1/A (333-141700)
4/24/2016
3/2/2020
4/27/2007
4.7
4.8
10.1
Exhibit
No.
Filed with this
Form 10-K
2.1
2.2
2.1
2.1
3.1
3.4
3.1
3.1
4.1
4.2
4.1
4.1
4.1
Table of Contents
Exhibit
No.
Filed Exhibit Description
Form
10.2 Form of Director and Officer Indemnification
S-1 (333-141700)
Agreement
Date
3/30/2007
Exhibit
No.
10.17
Filed with this
Form 10-K
Incorporated by Reference
to SEC Filing
*10.3 Amended and Restated 2007 Director Option Plan
Form 8-K
6/18/2010
and form of option agreement
10.4 Lease Agreement dated August 16, 2011 between the
Registrant and Cedar Brook 3 Corporate Center, L.P.
Form 8-K
8/16/2011
10.2
10.1
10.5 Securities Purchase Agreement, dated November 20,
2013 by and among the Company and the purchasers
identified therein
Form 8-K
11/20/2013
10.1
+10.6 Second Restated Agreement, dated November 19,
Form 10-K
3/3/2014
10.46
2013 by and between the Registrant and Glaxo
Group Limited
*10.7 Amicus Amicus Therapeutics, Inc. Amended and
Form 8-K
12/28/2017
10.1
Restated Restricted Stock Unit Deferral Plan
*10.8 Employment Agreement dated April 23, 2014,
Form 8-K
4/25/2014
10.1
between the Registrant and John F. Crowley
*10.9 Amended and Restated 2007 Equity Incentive Plan
DEF 14A
4/24/2020
A
*10.10 Amicus Therapeutics, Inc. Cash Deferral Plan
Form 8-K
10/28/2016
10.11 First Amendment to Lease, dated September 9, 2015,
Form 8-K
9/14/2015
by and between Cedar Brook 3 Corporate
Center, L.P. and the Registrant
10.1
10.1
10.12 Note and Warrant Purchase Agreement by and
Form 8-K
2/22/2016
10.1
among the Registrant and the purchasers identified
on the signature pages thereto, dated February 19,
2016.
10.13 Joinder to and Amendment of Note and Warrant
Form 8-K
7/1/2016
10.2
Purchase Agreement by and among Amicus
Therapeutics, Inc., Amicus Therapeutics UK
Limited, Amicus Therapeutics International
Holding LTD and the purchasers identified on the
signature pages thereto, dated as of June 30, 2016
10.14 Note Purchase Agreement, dated December 15,
Form 8-K
12/21/2016
10.7
2016, by and among the Registrant, Amicus
Therapeutics International Holding LTD and
P Redmile Ltd.
10.15 Note Purchase Agreement, dated December 15,
Form 8-K
12/21/2016
10.8
2016, by and among the Registrant, Amicus
Therapeutics International Holding LTD and
Redmile Capital Offshore Fund, Ltd.
10.16 Note Purchase Agreement, dated December 15,
Form 8-K
12/21/2016
10.9
2016, by among the Registrant, Amicus Therapeutics
International Holding LTD and Redmile Capital
Offshore Fund II, Ltd.
10.17 Note Purchase Agreement, dated December 15,
2016, by and among the Registrant, Amicus
Therapeutics International Holding LTD and
Redmile Special Opportunities Fund, Ltd.
-130-
Form 8-K
12/21/2016
10.10
Table of Contents
Exhibit
No.
10.18 Note Purchase Agreement, dated December 15,
Filed Exhibit Description
Form
Form 8-K
Date
12/21/2016
Exhibit
No.
10.11
Filed with this
Form 10-K
Incorporated by Reference
to SEC Filing
2016, by and among the Registrant, Amicus
Therapeutics International Holding LTD and
Redmile Capital Fund, LP
10.19 Note Purchase Agreement, dated December 15,
Form 8-K
12/21/2016
10.12
2016, by and between Amicus Therapeutics
International Holding LTD and GCM Grosvenor
Special Opportunities Master Fund, Ltd.
10.20 Form of Performance-Based Restricted Stock Unit
Form 8-K
12/30/2016
10.1
Award Agreement under the Amended and Restated
2007 Equity Incentive Plan
10.21 Form of Exchange Agreements Relating to
Form 8-K
1/24/2019
10.1
Company's 3.00% Convertible Senior Notes due
2023
10.22 Form of Exchange Agreements Relating to
Form 8-K
2/8/2019
10.1
Company's 3.00% Convertible Senior Notes due
2023
10.23 Form of Exchange Agreements Relating to
Form 8-K
3/13/2019
10.1
Company's 3.00% Convertible Senior Notes due
2023
10.24 Form of Exchange Agreements Relating to
Form 8-K
5/22/2019
10.1
Company's 3.00% Convertible Senior Notes due
2023
10.25 Form of Exchange Agreements Relating to
Form 8-K
6/19/2019
10.1
Company's 3.00% Convertible Senior Notes due
2023
**10.26 Amended and Restated Research, Collaboration &
Form 10-Q
8/8/2019
10.2
License Agreement, dated May 28, 2019, by and
between Amicus Therapeutics, Inc. and the Trustees
of the University of Pennsylvania
10.27 Amendment #1 to the Amicus Therapeutics, Inc.
Form 8-K
10/26/2014
10.1
Cash Deferral Plan.
10.28 Amendment #2 to the Amicus Therapeutics, Inc.
Form 8-K
12/19/2019
10.1
Cash Deferral Plan.
*10.29 Amendment No. 1 to Employment Agreement dated
Form 10-K
3/2/2020
10.44
April 23, 2014 between the Registrant and John F.
Crowley
*10.30 Employment Agreement dated February 18, 2020
Form 10-K
3/2/2020
10.45
between the Registrant and Ellen S. Rosenberg
*10.31 Employment Agreement dated February 18, 2020,
Form 10-K
3/2/2020
10.46
between the Registrant and Bradley L. Campbell
*10.32 Employment Agreement dated February 18, 2020,
between the Registrant and Jay Barth, M.D.
Form 10-K
3/2/2020
10.47
-131-
Table of Contents
Exhibit
No.
*10.33 Employment Agreement dated February 18, 2020,
between the Registrant and Daphne Quimi
Filed Exhibit Description
Form
Form 10-K
Date
3/2/2020
Exhibit
No.
10.48
Filed with this
Form 10-K
Incorporated by Reference
to SEC Filing
*10.34 Employment Agreement dated February 18, 2020
Form 10-K
3/2/2020
10.49
between the Registrant and Hung Do
10.35 First Amendment to the Amended and Restated
Form 10-Q
5/7/2020
10.1
Research, Collaboration & License Agreement dated
December 20, 2019 by and between Amicus
Therapeutics, Inc. and the Trustees of the University
of Pennsylvania.
10.36 Second Amendment to the Amended and Restated
Form 10-Q
5/7/2020
10.2
Research, Collaboration & License Agreement dated
March 26, 2020 by and between Amicus
Therapeutics, Inc. and the Trustees of the University
of Pennsylvania.
10.37 Notice of Non-Renewal of Lease Agreement dated
August 16, 2011 between the Registrant and Cedar
Brook 3 Corporate Center, L.P.
10.38 Loan Agreement, dated as of July 17, 2020, by and
among Amicus Therapeutics International Holding
Ltd, as Borrower, Amicus Therapeutics, Inc. as
Parent and a Guarantor, certain subsidiaries of Parent
as additional Guarantors, and Hayfin Services LLP
as Agent for certain lenders
*10.39 Form of Board Restricted Stock Unit Award
Agreement under the Amended and Restated 2007
Equity Incentive Plan
*10.40 Form of Restricted Stock Unit Award Agreement
under the Amended and Restated 2007 Equity
Incentive Plan
*10.41 Form of Board Stock Option Award Agreement
under the Amended and Restated 2007 Equity
Incentive Plan
*10.42 Form of Stock Option Award Agreement under the
Amended and Restated 2007 Equity Incentive Plan
21 List of Subsidiaries
23.1 Consent of Independent Registered Public
Accounting Firm.
31.1 Certification of Principal Executive Officer Pursuant
to Rule 13a-14(a) of the Securities Exchange Act of
1934.
31.2 Certification of Principal Financial Officer Pursuant
to Rule 13a-14(a) of the Securities Exchange Act of
1934.
32.1 Certificate of Principal Executive Officer pursuant to
18 U.S.C. Section 1350 and Section 906 of the
Sarbanes-Oxley Act of 2002.
-132-
Form 10-Q
8/10/2020
10.1
Form 10-Q
8/10/2020
10.2
X
X
X
X
X
X
X
X
X
Table of Contents
Exhibit
No.
Filed Exhibit Description
Form
Date
Exhibit
No.
Filed with this
Form 10-K
Incorporated by Reference
to SEC Filing
32.2 Certificate of Principal Financial Officer pursuant to
18 U.S.C. Section 1350 and Section 906 of the
Sarbanes-Oxley Act of 2002.
101 The following financial information from this
Annual Report on Form 10-K for the year ended
December 31, 2020, formatted in Inline XBRL
(Extensible Business Reporting Language) and filed
electronically herewith: (i) the Consolidated Balance
Sheets; (ii) the Consolidated Statements of
Operations; (iii) the Consolidated Statements of
Comprehensive Loss; (iv) the Consolidated
Statements of Cash Flows; (v) and the Notes to the
Consolidated Financial Statements.
104 The cover page from the Annual Report on Form 10-
K for the year ended December 31, 2020 formatted
in Inline XBRL (included in Exhibit 101).
____________________________________________________________________
X
X
X
+
Confidential treatment has been granted as to certain portions of the document, which portions have been omitted and
filed separately with the Securities and Exchange Commission.
++
Subject to confidential treatment request.
*
**
Indicates management contract or compensatory plan.
Certain confidential portions of this exhibit were omitted in accordance with Item 601(b)(10) of Regulation S-K.
The information required by this item is incorporated by reference from the Proxy Statement under the captions "Certain
Relationships and Related Transactions," "Director Independence," "Committee Compensation and Meetings of the Board of
Directors," and "Compensation Committee Interlock and Insider Participation."
-133-
Table of Contents
Item 16. FORM 10-K SUMMARY.
Registrants may voluntarily include a summary of information required by Form 10-K under this Item 16. The Company
has elected not to include such summary information.
-134-
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 1, 2021.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
AMICUS THERAPEUTICS, INC.
(Registrant)
By:
/s/ John F. Crowley
John F. Crowley
Chief Executive Officer
/s/ John F. Crowley
(John F. Crowley)
/s/ Bradley L. Campbell
(Bradley L. Campbell)
/s/ Daphne Quimi
(Daphne Quimi)
/s/ Samantha Prout
(Samantha Prout)
/s/ Robert Essner
(Robert Essner)
/s/ Margaret G. McGlynn, R.Ph.
(Margaret G. McGlynn, R.Ph.)
/s/ Michael G. Raab
(Michael G. Raab)
/s/ Glenn Sblendorio
(Glenn Sblendorio)
Chairman and Chief Executive Officer
(Principal Executive Officer)
March 1, 2021
President and Chief Operating Officer
(President)
March 1, 2021
Chief Financial Officer
(Principal Financial Officer)
March 1, 2021
Global Controller
(Principal Accounting Officer)
March 1, 2021
March 1, 2021
March 1, 2021
March 1, 2021
March 1, 2021
Director
Director
Director
Director
-135-
Table of Contents
/s/ Craig Wheeler
(Craig Wheeler)
/s/ Lynn Bleil
(Lynn Bleil)
/s/ Burke Whitman
(Burke Whitman)
/s/ Michael A. Kelly
(Michael A. Kelly)
Signature
Title
Date
Director
Director
Director
Director
March 1, 2021
March 1, 2021
March 1, 2021
March 1, 2021
-136-
C O M P A N Y I N F O R M A T I O N
H E A D Q U A R T E R S
E X E C U T I V E O F F I C E R S
Amicus Therapeutics, Inc.
3675 Market Street
Philadelphia, PA 19104
T R A N S F E R A G E N T
American Stock Transfer
& Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
718 921 8200
I N D E P E N D E N T
R E G I S T E R E D P U B L I C
A C C O U N T I N G F I R M
Ernst & Young LLP
DAVID CLARK
Chief People Officer
HUNG DO PH.D.
Chief Science Officer
SAMANTHA PROUT
Global Controller and
Principal Accounting Officer
JOHN F. CROWLEY
Chairman and
Chief Executive Officer
BRADLEY L. CAMPBELL
President and
Chief Operating Officer
DAPHNE QUIMI
Chief Financial Officer
ELLEN S. ROSENBERG
Chief Legal Officer and
Corporate Secretary
S T O C K H O L D E R I N Q U I R I E S
B O A R D O F D I R E C T O R S
All shareholder inquiries related to the
Company’s stock should be directed to:
Amicus Therapeutics Inc.
Investor Relations
ir@amicusrx.com
C O M M O N S T O C K
NASDAQ Symbol: FOLD
S E C F O R M 1 0 - K
A copy of the Company’s annual report to
the Securities and Exchange Commission
on Form 10-K will be available without
charge upon written request to Amicus
Therapeutics, Inc., 3675 Market Street,
Philadelphia, PA 19104 or via the
Company’s website at www.amicusrx.com.
A N N U A L M E E T I N G
Amicus will hold its Annual General Meeting
of Shareholders virtually on June 10, 2021
at 9:00 a.m. ET.
S A F E H A R B O R
This annual report contains certain
forward-looking statements. For a
discussion of forward-looking statements,
please see Part 1, Item 1 of our annual
report on Form 10-K for 2020.
JOHN F. CROWLEY
Chairman and
Chief Executive Officer
BRADLEY L. CAMPBELL
President and
Chief Operating Officer
MICHAEL G. RAAB
MARGARET G. MCGLYNN
Lead Independent Director
Nominating and Governance
(Chair)
Compensation and Leadership
Development (Chair)
Nominating and Governance
Audit and Compliance
Science and Technology
LYNN D. BLEIL
Compensation and
Leadership Development
Nominating and Governance
Science and Technology
ROBERT ESSNER
Audit and Compliance
MICHAEL A. KELLY
Audit and Compliance
Science and Technology
GLENN P. SBLENDORIO
Audit and Compliance (Chair)
CRAIG A. WHEELER
Science and Technology (Chair)
Compensation and
Leadership Development
BURKE W. WHITMAN
Audit and Compliance
Nominating and Governance
A M I C U S T H E R A P E U T I C S , I N C .
3675 Market Street
Philadelphia, PA 19104
+1 215-921-7600
www.amicusrx.com
Hiroki, Age 26
Nagoya, Japan
Natalie, Age 31
Los Angeles, CA
Hudson, Age 11
Columbus, OH
Living with Pompe Disease
Living with Fabry Disease
Living with Batten Disease