e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2008
OR
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o |
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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)
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Delaware
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20-0422823_ |
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(State or Other Jurisdiction of
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(I.R.S. Employer |
Incorporation or Organization) |
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Identification Number) |
6 Cedar Brook Drive, Cranbury, NJ 08512
(Address of Principal Executive Offices and Zip Code)
Registrants Telephone Number, Including Area Code: (609) 662-2000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days: Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated
filer o Accelerated filer o Non-accelerated
filer þ Smaller reporting company o
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act): Yes o No þ
The number of shares outstanding of the registrants common stock, $.01 par value
per share, as of April 25, 2008 was 22,521,463 shares.
AMICUS THERAPEUTICS, INC
Form 10-Q for the Quarterly Period Ended March 31, 2008
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Page |
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PART I. FINANCIAL INFORMATION |
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4 |
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Item 1.
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Financial Statements (unaudited)
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4 |
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Consolidated Balance Sheets as of December 31,
2007 and March 31, 2008
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4 |
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Consolidated Statements of Operations for the
Three Ended March 31, 2007 and 2008, and
period February 4, 2002 (inception) to March
31, 2008
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5 |
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Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2007 and 2008,
and period February 4, 2002 (inception) to
March 31, 2008
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6 |
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Notes to Consolidated Financial Statements
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7 |
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Item 2.
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Managements Discussion and Analysis of Financial
Condition and Results of Operations
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11 |
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk |
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19 |
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Item 4T.
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Controls and Procedures
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19 |
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PART II. OTHER INFORMATION |
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20 |
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Item 1.
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Legal Proceedings
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20 |
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Item 1A.
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Risk Factors
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20 |
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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20 |
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Item 3.
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Defaults Upon Senior Securities
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21 |
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Item 4.
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Submission of Matters to a Vote of Security Holders
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21 |
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Item 5.
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Other Information
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21 |
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Item 6.
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Exhibits
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22 |
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SIGNATURES |
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23 |
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INDEX TO EXHIBITS |
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24 |
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EX-31.1 |
EX-31.2 |
EX-32 |
We have filed applications to register certain trademarks in the United States and abroad,
including AMICUSTM, AMICUS THERAPEUTICSTM (and design), AMIGALTM
and PLICERATM.
-2-
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains forward-looking statements that involve
substantial risks and uncertainties. All statements, other than statements of historical facts,
included in this quarterly report on Form 10-Q regarding our strategy, future operations, future
financial position, future revenues, projected costs, prospects, plans and objectives of management
are forward-looking statements. The words anticipate, believe, estimate, expect, intend,
may, plan, predict, project, will, would and similar expressions are intended to
identify forward-looking statements, although not all forward-looking statements contain these
identifying words.
The forward-looking statements in this quarterly report on Form 10-Q include, among other
things, statements about:
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our plans to develop and commercialize Amigal, Plicera and AT2220; |
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our ongoing and planned discovery programs, preclinical studies and clinical trials; |
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our ability to enter into selective collaboration arrangements; |
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the timing of and our ability to obtain and maintain regulatory approvals for our product candidates; |
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the rate and degree of market acceptance and clinical utility of our products; |
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our ability to quickly and efficiently identify and develop product candidates; |
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the extent to which our scientific approach may potentially address a broad range of diseases across multiple
therapeutic areas; |
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our commercialization, marketing and manufacturing capabilities and strategy; |
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our intellectual property position; |
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our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; |
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our belief about our ability to fund our operating expenses; and |
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our eligibility to receive milestone payments under our collaboration agreement with Shire Pharmaceuticals Ireland Ltd. |
We may not actually achieve the plans, intentions or expectations disclosed in our
forward-looking statements, and you should not place undue reliance on our forward-looking
statements. Actual results or events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements we make. We have included important
factors in the cautionary statements included in Part I Item 1A of the Annual Report on Form 10-K
for the year ended December 31, 2007 that we believe could cause actual results or events to differ
materially from the forward-looking statements that we make. Our forward-looking statements do not
reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures,
collaborations or investments we may make.
You should read this quarterly report on Form 10-Q and the documents that we reference
herein. We do not assume any obligation to update any forward-looking statements.
-3-
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Amicus Therapeutics, Inc.
(a development stage company)
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)
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December 31, |
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March 31, |
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2007 |
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2008 |
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Assets: |
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Current assets: |
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Cash and cash equivalents |
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$ |
44,188 |
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$ |
18,203 |
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Investments in marketable securities |
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117,339 |
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136,355 |
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Prepaid expenses and other current assets |
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1,513 |
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1,076 |
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Total current assets |
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163,040 |
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155,634 |
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Property and equipment, less accumulated depreciation and amortization of
$2,793 and $3,114 at December 31, 2007 and March 31, 2008, respectively |
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3,790 |
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3,631 |
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Other non-current assets |
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267 |
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267 |
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Total Assets |
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$ |
167,097 |
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$ |
159,532 |
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Liabilities and Stockholders Equity |
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Current liabilities: |
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Accounts payable |
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$ |
530 |
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$ |
1,050 |
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Accrued expenses |
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9,935 |
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7,728 |
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Current portion of capital lease obligations |
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1,527 |
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1,420 |
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Current portion of deferred revenue |
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3,801 |
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4,612 |
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Total current liabilities |
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15,793 |
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14,810 |
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Deferred revenue, less current portion |
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46,813 |
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46,119 |
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Capital lease obligations, less current portion |
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1,194 |
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918 |
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Commitments
and contingencies |
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Stockholdersequity: |
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Common stock, $.01 par value, 50,000,000 shares authorized, 22,408,731
shares
issued and outstanding at December 31, 2007, 50,000,000 shares
authorized,
22,491,134 shares issued and outstanding at March 31, 2008 |
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285 |
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285 |
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Additional paid-in capital |
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227,438 |
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229,035 |
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Accumulated other comprehensive income |
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408 |
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930 |
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Deficit accumulated during the development stage |
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(124,834 |
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(132,565 |
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Total stockholders equity |
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103,297 |
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97,685 |
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Total Liabilities and Stockholders Equity |
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$ |
167,097 |
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$ |
159,532 |
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See accompanying notes to consolidated financial statements
-4-
Amicus Therapeutics, Inc.
(a development stage company)
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share amounts)
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Period from |
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February 4, |
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2002 |
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Three Months |
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(inception) |
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Ended March 31, |
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to March 31, |
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2007 |
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2008 |
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2008 |
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Revenue: |
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Research revenue |
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$ |
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$ |
2,466 |
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$ |
3,841 |
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Collaboration revenue |
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694 |
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1,103 |
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Total revenue |
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3,160 |
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4,944 |
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Operating Expenses: |
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Research and development |
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$ |
7,085 |
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$ |
6,941 |
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$ |
96,819 |
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General and administrative |
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2,850 |
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5,186 |
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43,256 |
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Impairment of leasehold
improvements |
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1,030 |
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Depreciation and amortization |
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297 |
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321 |
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3,115 |
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In-process
research and development |
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418 |
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Total operating expenses |
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10,232 |
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12,448 |
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144,638 |
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Loss from operations |
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(10,232 |
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(9,288 |
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(139,694 |
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Other income (expenses): |
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Interest income |
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693 |
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1,702 |
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9,643 |
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Interest expense |
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(92 |
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(70 |
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(1,500 |
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Change in fair value of
warrant liability |
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(64 |
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(454 |
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Other expense |
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(1,180 |
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Loss before tax benefit |
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(9,695 |
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(7,656 |
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(133,185 |
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(Provision for)/benefit
from income taxes |
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(75 |
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620 |
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Net loss |
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(9,695 |
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(7,731 |
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(132,565 |
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Deemed dividend |
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(19,424 |
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Preferred stock accretion |
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(41 |
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(802 |
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Net loss attributable to common
stockholders |
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$ |
(9,736 |
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$ |
(7,731 |
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$ |
(152,791 |
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Net loss attributable to common
stockholders per
common share basic and diluted |
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$ |
(10.21 |
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$ |
(0.34 |
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Weighted-average common shares
outstanding basic and diluted |
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953,959 |
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22,412,689 |
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See accompanying notes to consolidated financial statements
-5-
Amicus Therapeutics, Inc.
(a development stage company)
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
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Period from |
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February 4, 2002 |
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Three Months |
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(inception) to |
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Ended March 31, |
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March 31, |
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2007 |
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2008 |
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2008 |
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Operating activities |
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Net loss |
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$ |
(9,695 |
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$ |
(7,731 |
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$ |
(132,565 |
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Adjustments to reconcile net loss to net cash used
in operating activities: |
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Non-cash interest expense |
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525 |
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Depreciation and amortization |
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297 |
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321 |
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3,113 |
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Amortization of non-cash compensation |
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522 |
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Stock-based compensation employees |
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705 |
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1,347 |
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7,985 |
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Stock-based compensation non-employees |
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57 |
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853 |
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Stock-based license payments |
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1,220 |
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Change in fair value of warrant liability |
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64 |
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454 |
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Impairment of leasehold improvements |
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1,030 |
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Non-cash charge for in-process research and development |
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418 |
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Beneficial conversion feature related to bridge financing |
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135 |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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(66 |
) |
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437 |
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(1,076 |
) |
Other non-current assets |
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(155 |
) |
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(288 |
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Accounts payable and accrued expenses |
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(1,943 |
) |
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(1,687 |
) |
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8,778 |
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Deferred revenue |
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117 |
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50,731 |
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Net cash used in operating activities |
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(10,736 |
) |
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(7,196 |
) |
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(58,165 |
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Investing activities |
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Sale and redemption of marketable securities |
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21,565 |
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30,781 |
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199,847 |
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Purchases of marketable securities |
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(26,844 |
) |
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(49,275 |
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(335,389 |
) |
Purchases of property and equipment |
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(204 |
) |
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(162 |
) |
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(7,773 |
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Net cash used in investing activities |
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(5,483 |
) |
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(18,656 |
) |
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(143,315 |
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Financing activities |
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Proceeds from the issuance of preferred stock,
net of issuance costs |
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24,053 |
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143,022 |
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Proceeds from the issuance of common stock, net of issuance costs |
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68,093 |
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Proceeds from the issuance of convertible notes |
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5,000 |
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Payments of capital lease obligations |
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|
(314 |
) |
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(383 |
) |
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(3,249 |
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Proceeds from exercise of stock options |
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206 |
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|
250 |
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|
942 |
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Proceeds from exercise of warrants (common and preferred) |
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264 |
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Proceeds from capital asset financing arrangement |
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5,611 |
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Net cash provided by/(used in) financing activities |
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23,945 |
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(133 |
) |
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219,683 |
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Net increase/(decrease) in cash and cash equivalents |
|
|
7,726 |
|
|
|
(25,985 |
) |
|
|
18,203 |
|
Cash and cash equivalents at beginning of period |
|
|
12,127 |
|
|
|
44,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
19,853 |
|
|
$ |
18,203 |
|
|
$ |
18,203 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest |
|
$ |
92 |
|
|
$ |
70 |
|
|
$ |
1,206 |
|
|
|
|
|
|
|
|
|
|
|
Non-cash activities |
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes payable to preferred stock |
|
|
|
|
|
|
|
|
|
$ |
5,000 |
|
|
|
|
|
|
|
|
|
|
|
Conversion of preferred stock to common stock |
|
$ |
|
|
|
$ |
|
|
|
$ |
148,591 |
|
|
Accretion of redeemable convertible preferred stock |
|
$ |
41 |
|
|
$ |
|
|
|
$ |
802 |
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature related to the issuance
of Series C redeemable convertible preferred stock |
|
$ |
|
|
|
$ |
|
|
|
$ |
19,424 |
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements
-6-
Note 1. Description of Business and Significant Accounting Policies
Corporate Information, Status of Operations and Management Plans
Amicus Therapeutics, Inc. (the Company) was incorporated on February 4, 2002 in Delaware for
the purpose of creating a premier drug development company at the forefront of therapy for human
genetic diseases initially based on intellectual property in-licensed from Mount Sinai School of
Medicine. The Companys activities since inception have consisted principally of raising capital,
establishing facilities, and performing research and development, including clinical trials.
Accordingly, the Company is considered to be in the development stage.
In November 2007, the Company entered into a License and Collaboration Agreement with
Shire Pharmaceuticals Ireland Ltd. (Shire). Under the agreement, the Company and Shire will
jointly develop the Companys three lead pharmacological chaperone compounds for lysosomal
storage disorders: Amigal (migalastat hydrochloride), Plicera (isofagomine tartrate) and
AT2220. For further information, see Note 6. Development and Commercialization Agreement
with Shire.
The Company has an accumulated deficit of approximately $132.6 million at March 31, 2008 and
anticipates incurring losses through the year 2008 and beyond. The Company has not yet generated
commercial sales revenues and has been able to fund its operating losses to date through the sale
of its redeemable convertible preferred stock, issuance of convertible notes, net proceeds from our
initial public offering (IPO), the upfront licensing payment from Shire and other financing
arrangements. The Company believes that its existing cash and cash equivalents and short-term
investments will be sufficient to covers its cash flow requirements for 2008.
Basis of Presentation
The Company has prepared the accompanying unaudited consolidated financial statements in
accordance with accounting principles generally accepted in the United States of America (U.S.
GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10-01 of
Regulations S-X. Accordingly, they do not include all of the information and disclosures required
by generally accepted accounting principles for complete financial statements. In the opinion of
management, the accompanying unaudited financial statements reflect all adjustments, which include
only normal recurring adjustments, necessary to present fairly the Companys interim financial
information.
The accompanying unaudited consolidated financial statements and related notes should be read
in conjunction with the Companys financial statements and related notes as contained in the
Companys Annual Report on Form 10-K for the year ended December 31, 2007. For a complete
description of the Companys accounting policies, refer to the Annual Report on Form 10-K for the
fiscal year ended December 31, 2007.
Revenue Recognition
The Company recognizes revenue in accordance with the Securities and Exchange Commission
(SEC) Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements
(SAB 101), as amended by Staff Accounting Bulletin No. 104, Revision of Topic 13 (SAB 104).
In determining the accounting for collaboration agreements, the Company follows the
provisions of Emerging Issues Task Force (EITF) Issue 00-21, Revenue Arrangements with
Multiple Deliverables (EITF 00-21). EITF 00-21 provides guidance on whether an arrangement
involves multiple revenue-generating deliverables that should be accounted for as a single
unit of accounting or divided into separate units of accounting for revenue recognition
purposes and, if this division is required, how the arrangement consideration should be
allocated among the separate units of accounting. If the arrangement represents a single unit
of accounting, the revenue recognition policy and the performance obligation period must be
determined (if not already contractually defined) for the entire arrangement. If the
arrangement represents separate units of accounting according to the EITF separation criteria,
a revenue recognition policy must be determined for each unit. Revenues for non-refundable
upfront license fee payments will be recognized on a straight line basis as Collaboration
Revenue over the period of the performance obligations.
-7-
Reimbursements for research and development costs under collaboration agreements are
recognized as revenue in accordance with EITF Issue 99-19, Reporting Revenue Gross as a Principal
Versus Net as an Agent (EITF 99-19). The revenue associated with these reimbursable amounts is
included in Research Revenue and the costs associated with these reimbursable amounts are included
in research and development expenses. The Company records these reimbursements as revenue and not
as a reduction of research and development expenses as the Company has the risks and rewards as the
principal in the research and development activities.
Income Taxes
The Company accounts for income taxes under the liability method. Under this method deferred
income tax liabilities and assets are determined based on the difference between the financial
statement carrying amounts and tax basis of assets and liabilities and for operating losses and tax
credit carryforwards, using enacted tax rates in effect in the years in which the differences are
expected to reverse. A valuation allowance is recorded if it is more likely than not that a
portion or all of a deferred tax asset will not be realized.
During the quarter ended March 31, 2008, the Company recorded an income tax provision of
approximately $0.1 million for minimum federal income taxes related to temporary differences in
revenue recognition between U.S. GAAP and applicable federal tax law.
Investment in Marketable Securities
Marketable securities consist of fixed income investments with a maturity of greater than
three months and other highly liquid investments that can be readily purchased or sold using
established markets. In accordance with Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and
Equity Securities, these investments are classified as available-for-sale and are reported at fair
value on the Companys balance sheet. Unrealized holding gains and losses are reported within
accumulated other comprehensive income/ (loss) as a separate component of stockholders
(deficiency) equity. If a decline in the fair value of a marketable security below the Companys
cost basis is determined to be other than temporary, such marketable security is written down to
its estimated fair value as a new cost basis and the amount of the write-down is included in
earnings as an impairment charge. No other than temporary impairment charges have been recorded.
New Accounting Standards
In March 2008, the FASB issued SFAS No. 161, Disclosures About Derivative Instruments and
Hedging Activities (SFAS No. 161) which requires enhanced disclosures about an entitys
derivative and hedging activities in order to improve the transparency of financial reporting.
SFAS No. 161 is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008, with early application encouraged. The Company
does not expect this will have a significant impact on the financial statements of the
Company.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measures (SFAS No. 157).
SFAS No. 157 defines fair value, establishes a framework for measuring fair value and enhances
disclosures about fair value measures required under other accounting pronouncements, but does
not change existing guidance as to whether or not an instrument is carried at fair value. The
Company adopted SFAS No. 157 at the beginning of the Companys 2008 fiscal year and this
adoption had no impact as all the investments in marketable securities are reported at Level 1
fair value using quoted prices in active markets for identical assets.
Note 2. Stock-Based Compensation
During the three months ended March 31, 2008, the Company recorded compensation expense of
approximately $1.3 million. The stock-based compensation expense had no impact on the Companys
cash flows from operations and financing activities. As of March 31, 2008, the total unrecognized
compensation cost related to non-vested stock options granted was $14.8 million and is expected to
be recognized over a weighted average period of 2.9 years.
-8-
The fair value of the options granted is estimated on the date of grant using a
Black-Scholes-Merton option pricing model with the following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2007 |
|
2008 |
Expected stock price volatility |
|
|
78.8 |
% |
|
|
78.2 |
% |
Risk free interest rate |
|
|
4.7 |
% |
|
|
2.9 |
% |
Expected life of options (years) |
|
|
6.25 |
|
|
|
6.25 |
|
Expected annual dividend per
share |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
A summary of option activities related to the Companys stock options for the three months
ended March 31, 2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
Weighted |
|
Average |
|
|
|
|
Number |
|
Average |
|
Remaining |
|
Aggregate |
|
|
of |
|
Exercise |
|
Contractual |
|
Intrinsic |
|
|
Shares |
|
Price |
|
Life |
|
Value |
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
(in millions) |
Balance at December 31, 2007 |
|
|
2,443.2 |
|
|
$ |
8.08 |
|
|
|
|
|
|
|
|
|
Options granted |
|
|
751.7 |
|
|
$ |
10.20 |
|
|
|
|
|
|
|
|
|
Options exercised |
|
|
(83.0 |
) |
|
$ |
3.09 |
|
|
|
|
|
|
|
|
|
Options forfeited |
|
|
(68.0 |
) |
|
$ |
8.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2008 |
|
|
3,043.9 |
|
|
$ |
8.71 |
|
|
8.5 years |
|
$ |
8.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and unvested expected
to vest, March 31, 2008 |
|
|
2,799.6 |
|
|
$ |
8.55 |
|
|
8.4 years |
|
$ |
8.2 |
|
Exercisable at March 31, 2008 |
|
|
740.4 |
|
|
$ |
4.90 |
|
|
7.2 years |
|
$ |
4.3 |
|
Note 3. Basic and Diluted Net Loss Attributable to Common Stockholders per Common Share
The Company calculates net loss per share in accordance with SFAS No. 128, Earnings Per Share.
The Company has determined that its series A, B, C, and D redeemable convertible preferred stock
represented participating securities in accordance with EITF 03-6 Participating Securities and the
TwoClass Method under FASB Statement No. 128. However, because the Company operates at a loss,
and losses are not allocated to the redeemable convertible preferred stock, the two-class method
does not affect the Companys calculation of earnings per share. The Company has a net loss for
all periods presented; accordingly, the inclusion of common stock options and warrants would be
anti-dilutive. Therefore, the weighted average shares used to calculate both basic and diluted
earnings per share are the same.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
(In thousands, except per share amounts) |
|
2007 |
|
2008 |
|
|
|
|
|
Statement of Operations |
|
|
|
|
|
|
|
|
Net loss attributable to common stockholders |
|
$ |
(9,736 |
) |
|
$ |
(7,731 |
) |
Net loss attributable to common stockholders per
common share basic and diluted |
|
$ |
(10.21 |
) |
|
$ |
(0.34 |
) |
-9-
Note 4. Comprehensive Loss
The components of comprehensive loss are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2007 |
|
|
2008 |
|
Net loss |
|
$ |
(9,695 |
) |
|
$ |
(7,731 |
) |
Change in unrealized net gain on marketable
securities |
|
|
2 |
|
|
|
522 |
|
|
|
|
|
|
|
|
Comprehensive loss |
|
$ |
(9,693 |
) |
|
$ |
(7,209 |
) |
|
|
|
|
|
|
|
Accumulated other comprehensive loss equals the unrealized net gains on marketable securities
which are the only components of other comprehensive loss included in the Companys financial
statements.
Note 5. Capital Structure
Common Stock
As of March 31, 2008, the Company was authorized to issue 50,000,000 shares of common
stock. Dividends on common stock will be paid when, and if declared by the board of directors.
Each holder of common stock is entitled to vote on all matters and is entitled to one vote
for each share held.
Redeemable Convertible Preferred Stock
In March 2007, the Company issued an additional 1,976,527 shares of its Series D redeemable
convertible preferred stock for gross proceeds of $24.1 million.
On June 5, 2007, all outstanding shares of the Companys Series A redeemable convertible
preferred stock, Series B redeemable convertible preferred stock, Series C redeemable convertible
preferred stock and Series D redeemable convertible preferred stock were automatically converted
into shares of common stock at the closing of the Companys IPO.
Note 6. Development and Commercialization Agreement with Shire
In November 2007, the Company entered into a License and Collaboration Agreement with
Shire. Under the agreement, the Company and Shire will jointly develop the Companys three
lead pharmacological chaperone compounds for lysosomal storage disorders: Amigal, Plicera and
AT2220. The Company granted Shire the rights to commercialize these products outside the U.S.
The Company retains all rights to its other programs and to develop and commercialize Amigal,
Plicera and AT2220 in the U.S.
The Company received an initial, non-refundable license fee payment of $50 million from
Shire. Joint development costs toward conduct of clinical trials and pursuing global approval
of the three compounds will be shared 50/50 going forward. In addition, the Company is
eligible to receive, for all three drug product candidates, aggregate potential milestone
payments of up to $150 million if certain clinical and regulatory milestones are achieved for
all three of the programs, and $240 million in sales-based milestones. The Company will also
be eligible to receive tiered double-digit royalties on net sales of the products which are
marketed outside of the U.S.
In accordance with the guidance in EITF 00-21, the Company determined that its various
deliverables due under the collaboration agreement represent as a single unit of accounting
for revenue recognition purposes. The initial, non-refundable upfront license fee payment of
$50 million will be recognized on a straight line basis as Collaboration Revenue over the
period of the performance obligations. The Company determined that the period of performance
obligations is 18 years as contractually defined.
-10-
During the quarter ended March 31, 2008, the Company recorded $0.7 million in Collaboration
Revenue and deferred $2.8 million of current deferred revenue. As of March 31, 2008, the Company
had recorded $46.1 million of long-term deferred revenue related to the $50 million upfront
payment.
During the quarter ended March 31, 2008, the Company recorded $2.5 million in Research
Revenue and deferred $1.8 million of reimbursed research and development costs to the current
portion of deferred revenue.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a clinical-stage biopharmaceutical company focused on the discovery, development
and commercialization of novel small molecule, orally-administered drugs, known as
pharmacological chaperones, for the treatment of a range of human genetic diseases. Certain
human diseases result from mutations in specific genes that, in many cases, lead to the
production of proteins with reduced stability. Proteins with such mutations may not fold into
their correct three-dimensional shape and are generally referred to as misfolded proteins.
Misfolded proteins are often recognized by cells as having defects and, as a result, may be
eliminated prior to reaching their intended location in the cell. The reduced biological
activity of these proteins leads to impaired cellular function and ultimately to disease. Our
novel approach to the treatment of human genetic diseases consists of using pharmacological
chaperones that selectively bind to the target protein increasing the stability of the protein
and helping it fold into the correct three-dimensional shape. This allows proper trafficking
of the protein, thereby increasing protein activity, improving cellular function and
potentially reducing cell stress. We are researching the applicability of our platform
pharmacological chaperone technology to treating various diseases in our discovery program and
developing the use of our lead compounds in our clinical development program.
We have three
compounds in clinical development: Amigal (migalastat hydrochloride) for Fabry disease,
Plicera (isofagomine tartrate) for Gaucher disease and AT2220 for Pompe disease.
Amigal:
We completed our Phase 2 clinical trials of Amigal and, along with our development partner
Shirc, are planning to meet with the U.S. Food and Drug Administration (FDA) and the European
Medicines Agency to discuss the conduct of Phase 3 clinical trials. In March, clinical
investigators presented positive results from Phase 2 clinical trials of Amigal at the American College
of Medical Genetics (ACMG) meeting. The data showed that Amigal was generally safe and well-tolerated
at all doses evaluated and no drug-related serious adverse events were reported. In addition,
Amigal increased the level of the enzyme deficient in Fabry patients in 24 of 26 study subjects and in a
majority of study subjects, the treatment resulted in a reduction of kidney GL-3 as measured in
urine. In parallel with the regulatory process, 23 of the original 26 patients continue
to be treated with Amigal in the voluntary Phase 2 extension study to monitor long term safety
and efficacy. In addition, the Company will evaluate modified doses and dose regimens in these
23 patients.
Plicera:
We are currently conducting Phase 2 clinical trials of Plicera. At the ACMG meeting in March,
clinical investigators presented full data from a 4 week Phase 2 study in Gaucher patients who
switched from
enzyme replacement therapy (ERT) with imiglucerase to the pharmacological chaperone Plicera.
Results showed
that Plicera was generally safe and well tolerated at all doses and increased target enzyme activity levels in a majority
of patients. In the trial, GCase activity, as measured in white blood
cells, was increased in 20 of the 26 patients with evaluable GCase
data, and 5 of the 6 patients without a clear increase were either in the lowest dose cohort
or the cohort dosed least frequently. As expected in this short term study, the levels of relevant
hematological markers of Gaucher disease remained stable. Amicus has amended the protocol for the 6-month
Phase 2 clinical trial of Pliccra patients naive to ERT to include modified doses
and dose regimens.
AT2220:
We completed Phase 1 clinical trials of AT2220. We are
planning a Phase 2 clinical trial for
AT2220 in Pompe disease. At the ACMG meeting in March clinical investigators presented results from an ex vivo
response study in cells from patients with Pompe disease as well as three Phase 1 clinical trials of AT2220
in healthy volunteers. The ex vivo response study was designed to test the effect of AT2220
on various Pompe mutations. Blood and skin samples were collected from 30 Pompe patients (26 adults,
3 juveniles and 1 infant) with a variety of different mutations in acid alpha-glucosidase (GAA),
the target enzyme in Pompe disease. Cells from these samples where then treated with AT2220.
Of the 26 patients with available data, 24 had cells that showed a dose responsive increase in GAA
levels including 22 patients who had at least 1 copy of the common splice site mutation IVS1-13T>G.
Data from the Phase 1 trials in a total of 72 healthy volunteers showed that AT2220
was generally safe and well tolerated at all doses.
Research:
We also continue to research the applicability of our platform pharmacological chaperone technology to disease
targets in neurodegenerative and metabolic disorders. In 2008, we expect to increase this
discovery research activity and to allocate more of our research resources to this activity.
As part of this effort, we continue to conduct preclinical studies in Parkinsons
disease, funded in part by a grant from the Michael J. Fox Foundation.
We have generated significant losses to date and expect to continue to generate losses as
we continue the clinical development of Amigal, Plicera and AT2220 and conduct research on
other programs. From our inception in February 2002 through March 31, 2008, we have
accumulated a deficit of $132.6 million. As we have not yet generated commercial sales
revenue from any of our product candidates, our losses will continue as we conduct our
research and development activities. These activities are budgeted to expand over time and
will require further resources if we are to be successful. As a result, our operating losses
are likely to be substantial over the next several years. Shire Pharmaceuticals Ireland Ltd.
(Shire) will be responsible for a portion of the costs associated with the clinical
development of Amigal, Plicera and AT2220 as discussed below. We may need to obtain
additional funds to further develop our research and development programs and product
candidates.
In June 2007, we completed our initial public offering (IPO) of 5,000,000 shares of
common stock at a public offering price of $15.00 per share. Net cash proceeds from the IPO
were approximately $68.1 million after deducting underwriting discounts, commissions and
offering expenses payable by us. In connection with the closing of the IPO, all of the
Companys shares of redeemable convertible preferred stock outstanding at the time of the
offering were automatically converted into 16,112,721 shares of common stock.
-11-
Collaboration with Shire
On November 7, 2007, we entered into a license and collaboration agreement with Shire.
Under the agreement, Amicus and Shire will jointly develop Amicus three lead pharmacological
chaperone compounds for lysosomal storage disorders: Amigal, Plicera and AT2220. We granted
Shire the rights to commercialize these products outside the United States (U.S.). We will
retain all rights to our other programs and to develop and commercialize Amigal, Plicera and
AT2220 in the U.S.
We received an initial, non-refundable license fee payment of $50 million from Shire.
Joint development costs associated with clinical development and pursuing global approval of
the three compounds will be shared on a 50/50 basis going forward. In addition, we are
eligible to receive, for all three drug product candidates, aggregate potential milestone
payments of up to $150 million if certain clinical and regulatory milestones are achieved for
all three of the programs, and $240 million in sales-based milestones for all three of the
programs. We will also be eligible to receive tiered double-digit royalties on net sales of
the products which are marketed outside of the U.S.
Financial Operations Overview
Revenue
In connection with our collaboration agreement with Shire, Shire paid us an initial,
non-refundable license fee of $50 million and reimbursed us for certain research and
development costs associated with our lead clinical development programs. For the quarter
ended March 31, 2008, we recognized approximately $0.7 million of the license fee in
Collaboration Revenue and $2.5 million of Research Revenue for reimbursed research and
development costs. The license fee will be recognized as Collaboration Revenue over the 18
year performance obligation period. We have not generated any commercial sales revenue since
our inception.
Research and Development Expenses
We expect our research and development expense to increase as we continue to develop our
product candidates and explore new uses for our pharmacological chaperone technology. Research
and development expense consists of:
|
|
|
internal costs associated with our research and clinical development
activities; |
|
|
|
|
payments we make to third party contract research organizations, contract
manufacturers, investigative sites, and consultants; |
|
|
|
|
technology and intellectual property license costs; |
|
|
|
|
manufacturing development costs; |
|
|
|
|
personnel related expenses, including salaries, benefits, travel, and related
costs for the personnel involved in drug discovery and development; |
|
|
|
|
activities relating to regulatory filings and the advancement of our product
candidates through preclinical studies and clinical trials; and |
|
|
|
|
facilities and other allocated expenses, which include direct and allocated
expenses for rent, facility maintenance, as well as laboratory and other supplies. |
We have multiple research and development projects ongoing at any one time. We utilize
our internal resources, employees and infrastructure across multiple projects. We record and
maintain information regarding external, out-of-pocket research and development expenses on a
project specific basis.
We expense research and development costs as incurred, including payments made to date
under our license agreements. We believe that significant investment in product development
is a competitive necessity and plan to continue these investments in order to realize the
potential of our product candidates. From our inception in February 2002 through March 31,
2008, we have incurred research and development expense in the aggregate of $96.8 million.
-12-
The following table summarizes our principal product development programs, including the
related stages of development for each product candidate in development, and the out-of-pocket,
third party expenses incurred with respect to each product candidate (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from |
|
|
|
|
|
|
|
|
|
|
|
February 4, 2002 |
|
|
|
Three Months Ended |
|
|
(inception) to |
|
|
|
March 31, |
|
|
March 31, |
|
Product Candidate |
|
2007 |
|
|
2008 |
|
|
2008 |
|
Third party direct project expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Amigal (Fabry Disease Phase II) |
|
$ |
591 |
|
|
$ |
703 |
|
|
$ |
21,733 |
|
Plicera (Gaucher Disease Phase II) |
|
|
2,027 |
|
|
|
486 |
|
|
|
16,594 |
|
AT2220 (Pompe Disease Phase I) |
|
|
938 |
|
|
|
485 |
|
|
|
8,673 |
|
|
|
|
|
|
|
|
|
|
|
Total third party direct project
expenses |
|
|
3,556 |
|
|
|
1,674 |
|
|
|
47,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Other project costs (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs |
|
|
2,299 |
|
|
|
3,381 |
|
|
|
27,812 |
|
Other costs (2) |
|
|
1,230 |
|
|
|
1,886 |
|
|
|
22,007 |
|
|
|
|
|
|
|
|
|
|
|
Total other project costs |
|
|
3,529 |
|
|
|
5,267 |
|
|
|
49,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development costs |
|
$ |
7,085 |
|
|
$ |
6,941 |
|
|
$ |
96,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Other project costs are leveraged across multiple projects.
|
|
(2) |
|
Other costs include facility, supply, overhead, and licensing costs that support multiple
clinical and preclinical projects. |
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, or the period, if any, in which material
net cash inflows may commence from Amigal, Plicera, AT2220 or any of our other preclinical product
candidates. This uncertainty is due to the numerous risks and uncertainties associated with the
conduct, duration and cost of clinical trials, which vary significantly over the life of a project
as a result of differences arising 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; and |
|
|
|
|
the results of our clinical trials. |
Our expenditures are subject to additional uncertainties, including the terms and timing of
regulatory approvals, and the expense of filing, prosecuting, defending and enforcing any patent
claims or other intellectual property rights. We may obtain unexpected results from our clinical
trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or
focus on others. A change in the outcome of any of the foregoing variables with respect to the
development of a product candidate could mean a significant change in the costs and timing
associated with the development of that product candidate. For example, if the U.S. Food and Drug
Administration (FDA) or other regulatory authorities were to require us to conduct clinical trials
beyond those which we currently anticipate, or if we experience significant delays in enrollment in
any of our clinical trials, we could be required to expend significant additional financial
resources and time on the completion of clinical development. Drug development may take several
years and millions of dollars in development costs.
General and Administrative Expense
General and administrative expense consists primarily of salaries and other related costs,
including stock-based compensation expense, for persons serving in our executive, finance,
accounting, information technology and human resource functions. Other general and administrative
expense includes facility-related costs not otherwise included in research and development expense,
promotional expenses, costs associated with industry and trade shows, and professional fees for
legal services, including patent-related expense and accounting services. We expect that our
general and administrative expenses will increase as we add personnel and are subject to the
reporting obligations
-13-
applicable to public companies. From our inception in February 2002 through March 31, 2008, we
spent $43.3 million on general and administrative expense.
Interest Income and Interest Expense
Interest income consists of interest earned on our cash and cash equivalents and marketable
securities. Interest expense consists of interest incurred on our capital lease facility.
Critical Accounting Policies and Significant Judgments and Estimates
The discussion and analysis of our financial condition and results of operations are based on
our financial statements, which we have prepared in accordance with U.S. generally accepted
accounting principles. The preparation of these financial statements requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as well as the reported
revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates
and judgments, including those described in greater detail below. We base our estimates on
historical experience and on various other factors that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.
While there were no significant changes during the quarter ended March 31, 2008 to the items
that we disclosed as our significant accounting policies and estimates described in Note 2 to the
Companys financial statements as contained in the Companys Annual Report on Form 10-K for the
year ended December 31, 2007, we believe that the following accounting policies are the most
critical to aid you in fully understanding and evaluating our financial condition and results of
operations.
Revenue Recognition
The Company recognizes revenue in accordance with the Securities and Exchange Commission
(SEC) Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements
(SAB 101), as amended by Staff Accounting Bulletin No. 104, Revision of Topic 13 (SAB 104).
In determining the accounting for collaboration agreements, the Company follows the
provisions of Emerging Issues Task Force (EITF) Issue 00-21, Revenue Arrangements with
Multiple Deliverables (EITF 00-21). EITF 00-21 provides guidance on whether an arrangement
involves multiple revenue-generating deliverables that should be accounted for as a single
unit of accounting or divided into separate units of accounting for revenue recognition
purposes and, if this division is required, how the arrangement consideration should be
allocated among the separate units of accounting. If the arrangement represents a single unit
of accounting, the revenue recognition policy and the performance obligation period must be
determined (if not already contractually defined) for the entire arrangement. If the
arrangement represents separate units of accounting according to the EITF separation criteria,
a revenue recognition policy must be determined for each unit. Revenues for non-refundable
upfront license fee payments will be recognized on a straight line basis as Collaboration
Revenue over the period of the performance obligations.
Reimbursements for research and development costs under collaboration agreements are
recognized as revenue in accordance with EITF Issue 99-19, Reporting Revenue Gross as a Principal
Versus Net as an Agent (EITF 99-19). The revenue associated with these reimbursable amounts is
included in Research Revenue and the costs associated with these reimbursable amounts are included
in research and development expenses. The Company records these reimbursements as revenue and not
as a reduction of research and development expenses as the Company has the risks and rewards as the
principal in the research and development activities.
Accrued Expenses
As part of the process of preparing our financial statements, we are required to estimate
accrued expenses. This process involves identifying services that have been performed on our
behalf and estimating the level of service
-14-
performed and the associated cost incurred for the service when we have not yet been invoiced
or otherwise notified of actual cost. The majority of our service providers invoice us monthly in
arrears for services performed. We make estimates of our accrued expenses as of each balance sheet
date in our financial statements based on facts and circumstances known to us. Examples of
estimated accrued expenses include:
|
|
|
fees owed to contract research organizations in connection with preclinical and
toxicology studies and clinical trials; |
|
|
|
|
fees owed to investigative sites in connection with clinical trials; |
|
|
|
|
fees owed to contract manufacturers in connection with the production of clinical trial
materials; |
|
|
|
|
fees owed for professional services, and |
|
|
|
|
unpaid salaries, wages and benefits. |
Stock-Based Compensation
Effective January 1, 2006, we adopted SFAS No. 123(R), Share-Based Payment, using the fair
value method, 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. Our
financial statements as of and for the three months ended March 31, 2007 and 2008 reflect the
impact of SFAS No. 123(R). 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 requisite service period of the last separately vesting portion of each award. Expected
volatility was calculated based on a blended weighted average of historical information of our
stock and the weighted average of historical information of similar public entities for which
historical information was available. The average expected life was determined using the SEC
shortcut approach as described in Staff Accounting Bulletin, Disclosure about Fair Value of
Financial Instruments, which is the mid-point between the vesting date and the end of the
contractual term. The risk-free interest rate is based on U.S. Treasury, zero-coupon issues with a
remaining term equal to the expected life assumed at the date of grant.
We account for equity instruments issued to non-employees in accordance with the provisions of
Emerging Issues Task Force No. 96-18, Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. The equity
instruments, consisting of stock options, are valued using the Black-Scholes-Merton valuation
model. The measurement of stock-based compensation is subject to periodic adjustments as the
underlying equity instruments vest.
Basic and Diluted Net Loss Attributable to Common Stockholders per Common Share
We calculated net loss per share in accordance with SFAS No. 128, Earnings Per Share. We have
determined that the Series A, B, C, and D redeemable convertible preferred stock represented
participating securities in accordance with EITF 03-6, Participating Securities and the Two
Class Method under FASB Statement No. 128. However, because we operate at a loss, and losses are
not allocated to the redeemable convertible preferred stock, the two class method does not affect
our calculation of earnings per share. We had a net loss for all periods presented; accordingly,
the inclusion of common stock options and warrants would be anti-dilutive. Therefore, the weighted
average shares used to calculate both basic and diluted earnings per share are the same.
-15-
The following table provides a reconciliation of the numerator and denominator used in
computing basic and diluted net loss attributable to common stockholders per common share and pro
forma net loss attributable to common stockholders per common share:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
(In thousands, except per share amount) |
|
2007 |
|
|
2008 |
|
Historical |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(9,695 |
) |
|
$ |
(7,731 |
) |
Accretion of redeemable
convertible preferred stock |
|
|
(41 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common
stockholders |
|
$ |
(9,736 |
) |
|
$ |
(7,731 |
) |
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding basic and diluted |
|
|
953,959 |
|
|
|
22,412,689 |
|
|
|
|
|
|
|
|
Dilutive common stock equivalents would include the dilutive effect of convertible securities,
common stock options and warrants for common stock equivalents. Potentially dilutive common stock
equivalents totaled approximately 18.3 million and 24.9 million for the three months ended March
31, 2007 and 2008, respectively. Potentially dilutive common stock equivalents were excluded from
the diluted earnings per share denominator for all periods because of their anti-dilutive effect.
Results of Operations
Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
Research and Development Expense. Research and development expense was $6.9 million for the
three months ended March 31, 2008 representing a decrease of $0.2 million or 3% from $7.1 million
for the three months ended March 31, 2007. The variance was primarily attributable to lower
contract research costs due to the timing of studies, offset by higher personnel costs associated
with headcount growth and an increase in consulting and lab supplies due to the continued progress
of existing programs. We expect research and development expense to increase in the third and
fourth quarters of 2008 as we move forward with clinical trials relating to our lead clinical
development compounds and expand our discovery research activities.
General and Administrative Expense. General and administrative expense was $5.2 million for
the three months ended March 31, 2008, an increase of $2.3 million or 79% from $2.9 million from
the three months ended March 31, 2007. The variance was primarily attributable to higher personnel
costs associated with headcount growth and increased administrative costs associated with being a
public company.
Interest Income and Interest Expense. Interest income was $1.7 million for the three months
ended March 31, 2008, compared to $0.7 million for the three months ended March 31, 2007. The
increase of $1.0 million or 143% was due to higher cash balances as a result of the proceeds from
the IPO in June 2007 and the receipt of the $50 million upfront licensing payment from Shire.
Interest expense was $0.1 million for the three months ended March 31, 2008 and 2007.
-16-
Liquidity and Capital Resources
Source of Liquidity
As a result of our significant research and development expenditures and the lack of any
approved products to generate product sales revenue, we have not been profitable and have
generated operating losses since we were incorporated in 2002. We have funded our operations
principally with $148.7 million of proceeds from redeemable convertible preferred stock
offerings, $75.0 million of gross proceeds from our IPO in June 2007 and $50.0 million from
the non-refundable license fee from the Shire collaboration agreement in November 2007. The
following table summarizes our significant funding sources as of March 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximate |
|
|
|
|
|
|
|
|
|
|
|
Amount
(1) |
|
Funding |
|
Year |
|
|
No. Shares |
|
|
(in thousands) |
|
Series A Redeemable
Convertible Preferred Stock |
|
|
2002 |
|
|
|
444,443 |
|
|
$ |
2,500 |
|
Series B Redeemable
Convertible Preferred Stock |
|
|
2004, 2005, 2006, 2007 |
|
|
|
4,917,853 |
|
|
|
31,189 |
|
Series C
Redeemable Convertible Preferred Stock |
|
|
2005, 2006 |
|
|
|
5,820,020 |
|
|
|
54,999 |
|
Series D
Redeemable Convertible Preferred Stock |
|
|
2006, 2007 |
|
|
|
4,930,405 |
|
|
|
60,000 |
|
Common Stock |
|
|
2007 |
|
|
|
5,000,000 |
|
|
|
75,000 |
|
Upfront License Fee from Shire |
|
|
2007 |
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,112,721 |
|
|
$ |
273,688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents gross proceeds |
In addition, in conjunction with the Shire collaboration agreement, we received
reimbursement of research and development expenditures from the date of the agreement
(November 7, 2007) through March 31, 2008 of $6.7 million.
As of March 31, 2008, we had cash, cash equivalents and marketable securities of $154.6
million. We hold our cash and investment balances in a variety of interest-bearing
instruments, including obligations of U.S. government agencies and money market accounts. We
invest cash in excess of our immediate requirements with regard to liquidity and capital
preservation. Wherever possible, we seek to minimize the potential effects of concentration
and degrees of risk.
Also, we maintain cash balances with financial institutions in excess of insured limits. We do
not anticipate any losses with respect to such cash balances.
Net Cash Used in Operating Activities
Net cash used in operations was $10.7 million for the three months ended March 31,
2007 due to the net loss for the three months ended March 31, 2007 of $9.7 million and the
change in operating assets and liabilities of $2.2 million, offset by non-cash charges for
depreciation and amortization of $0.3 million and stock-based compensation expense of
$0.7 million.
Net cash used in operations for the three months ended March 31, 2008 was $7.2 million due to
the net loss for the three months ended March 31, 2008 of $7.7 million and the change in operating
assets and liabilities of $1.1 million, offset primarily by non-cash charges for depreciation and
amortization of $0.3 million and stock-based compensation of $1.3 million.
Net Cash Used in Investing Activities
Net cash used in investing activities for the three months ended March 31, 2007 was
$5.5 million and consisted of $26.8 million of purchases of marketable securities and $0.2 million
for the acquisition of property and equipment offset by $21.6 million from the sale and redemption
of marketable securities.
-17-
Net cash used in investing activities for the three months ended March 31, 2008 was
$18.7 million. Net cash used in investing activities reflects $49.3 million for the purchase of
marketable securities and $0.2 million for the acquisition of property and equipment, partially
offset by $30.8 million for the sale and redemption of marketable securities.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the three months ended March 31, 2007 was
$23.9 million, consisting primarily of $24.0 million from issuance of preferred stock and
$0.2 million proceeds from exercise of stock options offset by payments of equipment debt financing
obligations of $0.3 million.
Net cash used in financing activities for the three months ended March 31, 2008 was
$0.1 million, consisting primarily of $0.4 million of payments of capital lease obligations offset
by $0.3 million of proceeds from exercise of stock options.
Funding Requirements
We expect to incur losses from operations for the foreseeable future. We expect to incur
increasing research and development expenses, including expenses related to the hiring of
personnel and additional clinical trials. We expect that our general and administrative
expenses will also increase as we expand our finance and administrative staff, add
infrastructure, and incur additional costs related to being a public company, including
directors and officers insurance, investor relations programs, and increased professional
fees. Our future capital requirements will depend on a number of factors, including the
continued progress of our research and development of products, the progress and results of
our clinical trials, the duration and cost of discovery, preclinical development, laboratory
testing and clinical trials for our product candidates, the timing and outcome of regulatory
review of our product candidates, the number and development requirements of other product
candidates that we pursue, the costs involved in preparing, filing, prosecuting, maintaining,
defending, and enforcing patent claims and other intellectual property rights, the acquisition
of licenses to new products or compounds, the status of competitive products, the availability
of financing, our success in developing markets for our product candidates and the costs of
commercialization activities, including product marketing, sales and distribution.
We believe that our existing cash and cash equivalents and short-term investments,
together with the expected reimbursement of research and development expenses and research
milestones from our collaboration with Shire, will be sufficient to enable us to fund our
operating expenses and capital expenditure requirements at least until 2011.
We do not anticipate that we will generate revenue from commercial sales for at least the next
several years, if at all. In the absence of additional funding, we expect our continuing operating
losses to result in increases in our cash used in operations over the next several quarters and
years.
Financial Uncertainties Related to Potential Future Milestone Payments
We have acquired rights to develop and commercialize our product candidates through
licenses granted by various parties. Two of these agreements contain milestone payments that
are due with respect to Plicera only if certain specified pre-commercialization events occur.
Amigal and AT2220 do not trigger such milestone payments. Upon the satisfaction of certain
milestones and assuming successful development of Plicera, we may be obligated, under the
agreements that we have in place, to make future milestone payments aggregating up to
approximately $7.9 million. In general, potential milestone payments for Plicera may or may
not be triggered under these licenses, and may vary in size, depending on a number of
variables, almost all of which are currently uncertain.
The events that trigger these payments include:
|
|
|
completion of Phase 2 clinical trials; |
|
|
|
|
commencement of Phase 3 clinical trials; |
-18-
|
|
|
submission of an NDA to the FDA or foreign equivalents; and |
|
|
|
|
receipt of marketing approval from the FDA or foreign equivalents. |
Under our license agreements, if we owe royalties on net sales for one of our products to
more than one of the above licensors, then we have the right to reduce the royalties owed to
one licensor for royalties paid to another. The amount of royalties to be offset is generally
limited in each license and can vary under each agreement. For Amigal and AT2220, we will owe
royalties only to Mt. Sinai School of Medicine (MSSM). We expect to pay royalties to all three
licensors with respect to Plicera. To date, we have not made any royalty payments on sales of
our products and believe we are several years away from selling any products that would
require us to make any such royalty payments. Whether we will be obligated to make milestone
or royalty payments in the future is subject to the success of our product development efforts
and, accordingly, is inherently uncertain. In conjunction with the $50 million upfront
payment from Shire in November 2007, we recorded an accrual of $2.7 million for our best
estimate of royalties due to MSSM on the upfront payment.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
The primary objective of our investment activities is to preserve our capital to fund
operations. We also seek to maximize income from our investments without assuming significant
risk. To achieve our objectives, we maintain a portfolio of cash equivalents and investments in a
variety of securities of high credit quality. As of March 31, 2008, we had cash, cash equivalents
and current and long-term investments in marketable securities of $154.6 million. A portion of our
investments may be subject to interest rate risk and could fall in value if market interest rates
increase. However, because our investments are short-term in duration, we believe that our
exposure to interest rate risk is not significant and a 1% movement in market interest rates would
not have a significant impact on the total value of our portfolio. We actively monitor changes in
interest rates.
ITEM 4T. CONTROLS AND PROCEDURES
As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation of
the effectiveness of our disclosure controls and procedures (pursuant to Rule 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) was carried out
under the supervision of our Chief Executive Officer and Chief Financial Officer (our principal
executive officer and principal financial officer), with the participation of our management.
Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded
that, as of the end of such period, our disclosure controls and procedures are effective in
recording, processing, summarizing and reporting, on a timely basis, information required to be
disclosed by us in the reports that we file or submit under the Exchange Act and are effective in
ensuring that information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure.
During the fiscal quarter covered by this report, there has been no change in our internal
control over financial reporting that occurred during the fiscal quarter that has materially
affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
-19-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
ITEM 1A. RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider
the risk factors included in Part I Item 1A of the Annual Report on Form 10-K for the year ended
December 31, 2007, as well as other information in this report, before deciding to invest in shares
of our common stock. The occurrence of any of the following risks could harm our business,
financial condition, results of operations and/or growth prospects. In that case, the trading price
of our common stock could decline, and you may lose all or part of your investment.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
None.
Use of Proceeds
Our initial public offering of common stock was effected through a Registration Statement on
Form S-1 (File No. 333-141700) that was declared effective by the Securities and Exchange
Commission on May 30, 2007, which registered an aggregate of 5,750,000 shares of our common stock.
On June 5, 2007, at the closing of the offering, 5,000,000 shares of common stock were sold on our
behalf at an initial public offering price of $15.00 per share, for aggregate offering proceeds of
$75.0 million. The initial public offering was underwritten and managed by Morgan Stanley, Merrill
Lynch & Co., JPMorgan, Lazard Capital Markets and Pacific Growth Equities, LLC. Following the sale
of the 5,000,000 shares, the public offering terminated.
We paid to the underwriters underwriting discounts totaling approximately $5.3 million in
connection with the offering. In addition, we incurred additional costs of approximately $1.6
million in connection with the offering, which when added to the underwriting discounts paid by us,
amounts to total expenses of approximately $6.9 million. Thus, the net offering proceeds to us,
after deducting underwriting discounts and offering expenses, were approximately $68.1 million. No
offering expenses were paid directly or indirectly to any of our directors or officers (or their
associates) or persons owning ten percent or more of any class of our equity securities or to any
other affiliates.
As of May 1, 2008, we had invested the $68.1 million in net proceeds from the offering in
money market funds and in investment-grade, interest bearing instruments, pending their use.
Through May 1, 2008, we have not used the net proceeds from the offering. We intend to use the
proceeds for clinical development of our drug candidates, for research and development activities
relating to additional preclinical programs and to fund working capital and other general corporate
purposes, which may include the acquisition or licensing of complementary technologies, products or
businesses.
-20-
Issuer Purchases
of Equity Securities
The following table sets forth purchases of our common stock for the three months ended
March 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Total number of |
|
|
|
|
|
|
|
|
(b) |
|
shares purchased as |
|
(d) Maximum number of shares |
|
|
(a) Total number |
|
Average |
|
part of publicly |
|
that may yet be |
|
|
of shares |
|
Price Paid |
|
announced plans or |
|
purchased under the plans or |
Period |
|
purchased |
|
per Share |
|
programs |
|
programs |
|
January 1, 2008 - January 31, 2008 |
|
|
220 |
|
|
$ |
10.34 |
|
|
|
|
|
|
|
7,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 1, 2008 - February 29,
2008 |
|
|
220 |
|
|
$ |
10.50 |
|
|
|
|
|
|
|
7,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 1, 2008 - March 31, 2008 |
|
|
220 |
|
|
$ |
9.91 |
|
|
|
|
|
|
|
6,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Pursuant to a restricted stock award dated October 2, 2006 between Amicus Therapeutics
and James E. Dentzer, Chief Financial Officer, Mr. Dentzer was granted 40,000 shares, 25% of
which vested on October 2, 2007 and the remaining shares vest in a series of thirty-six
successive equal monthly installments commencing on November 1, 2007, with the final
installment vesting on November 1, 2010. In order to comply with the minimum statutory
federal tax withholding rate of 25% plus 1.45% for Medicare, Mr. Dentzer surrenders a portion
of his vested shares on each vesting date, representing 26.45% of the total value of the
shares then vested, to Amicus Therapeutics in connection with his withholding obligations.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
-21-
ITEM 6. EXHIBITS
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Exhibit |
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Number |
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Description |
3.1(1) |
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Restated Certificate of Incorporation |
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3.2(2) |
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Amended and Restated By-laws |
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10.1(3) |
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Amendment, dated as of February 5, 2008, to the Amended and Restated Employment Agreement, dated
as of April 28, 2006 by and between the registrant and John F. Crowley |
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31.1*
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Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated pursuant
to the Securities Exchange Act of 1934, as amended |
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31.2*
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Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated pursuant
to the Securities Exchange Act of 1934, as amended |
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32.1*
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Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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32.2*
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Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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(1) |
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Incorporated by reference to Exhibit 3.2 to our Registration Statement
on Form S-1 (Commission File No. 333-141700) |
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(2) |
|
Incorporated by reference to Exhibit 3.4 to our Registration Statement
on Form S-1 (Commission File No. 333-141700) |
|
(3) |
|
Incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed February 11, 2008 (File No. 001-33497) |
|
* |
|
These certifications are being furnished solely to accompany this
quarterly report pursuant to 18 U.S.C. Section 1350, and are not being
filed for purposes of Section 18 of the Securities Exchange Act of
1934 and are not to be incorporated by reference into any filing of
Amicus Therapeutics, Inc., whether made before or after the date
hereof, regardless of any general incorporation language in such
filing. |
-22-
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
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AMICUS THERAPEUTICS, INC. |
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Date: May 13, 2008
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By:
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/s/ JOHN F. CROWLEY
John F. Crowley
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President and Chief Executive Officer |
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(Principal Executive Officer) |
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Date: May 13, 2008
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By:
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/s/ JAMES E. DENTZER
James E. Dentzer
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Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
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-23-
INDEX TO EXHIBITS
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|
Exhibit |
|
|
Number |
|
Description |
3.1(1) |
|
Restated Certificate of Incorporation |
|
|
|
3.2(2) |
|
Amended and Restated By-laws |
|
|
|
10.1(3) |
|
Amendment, dated as of February 5, 2008, to the Amended and Restated Employment Agreement, dated
as of April 28, 2006 by and between the registrant and John F. Crowley |
|
|
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated pursuant
to the Securities Exchange Act of 1934, as amended |
|
|
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated pursuant
to the Securities Exchange Act of 1934, as amended |
|
|
|
32.1*
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.2*
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
(1) |
|
Incorporated by reference to Exhibit 3.2 to our Registration Statement
on Form S-1 (Commission File No. 333-141700) |
|
(2) |
|
Incorporated by reference to Exhibit 3.4 to our Registration Statement
on Form S-1 (Commission File No. 333-141700) |
|
(3) |
|
Incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed February 11, 2008 (File No. 001-33497) |
|
* |
|
These certifications are being furnished solely to accompany this
quarterly report pursuant to 18 U.S.C. Section 1350, and are not being
filed for purposes of Section 18 of the Securities Exchange Act of
1934 and are not to be incorporated by reference into any filing of
Amicus Therapeutics, Inc., whether made before or after the date
hereof, regardless of any general incorporation language in such
filing. |
-24-
exv31w1
Exhibit 31.1
CERTIFICATIONS PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
I, John F. Crowley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Amicus Therapeutics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
(b) evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(c) disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control over
financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting.
|
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Date: May 13, 2008
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/s/ John F. Crowley
John F. Crowley
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President and Chief Executive Officer |
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|
-25-
exv31w2
Exhibit 31.2
CERTIFICATIONS PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION BY CHIEF FINANCIAL OFFICER
I, James E. Dentzer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Amicus Therapeutics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
(b) evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(c) disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control over
financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrants internal control over financial reporting.
|
|
|
|
|
Date: May 13, 2008
|
|
/s/ James E. Dentzer
James E. Dentzer
|
|
|
|
|
Chief Financial Officer |
|
|
-26-
exv32
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Amicus
Therapeutics, Inc. (the Company), that, to his knowledge, the Quarterly Report of the Company on
Form 10-Q for the period ended March 31, 2008, fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the
information contained in such report fairly presents, in all material respects, the financial
condition and results of operations of the Company. This written statement is being furnished to
the Securities and Exchange Commission as an exhibit to such Form 10-Q. A signed original of this
statement has been provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
|
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|
|
Date: May 13, 2008
|
|
By:
|
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/s/ John F. Crowley
John F. Crowley
|
|
|
|
|
|
|
President and Chief Executive Officer |
|
|
|
|
|
|
|
|
|
Date: May 13, 2008
|
|
By:
|
|
/s/ James E. Dentzer
James E. Dentzer
|
|
|
|
|
|
|
Chief Financial Officer |
|
|
-27-