Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 June 30, 2010
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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71-0869350 |
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
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 has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes o 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 definition of large accelerated
filer, accelerated filer and smaller-reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller Reporting Company o |
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 July 23, 2010 was 27,638,378 shares.
AMICUS THERAPEUTICS, INC
Form 10-Q for the Quarterly Period Ended June 30, 2010
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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the progress and results of our clinical trials of our drug candidates, including
Amigal; |
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the scope, progress, results and costs of preclinical development, laboratory testing
and clinical trials for our product candidates; |
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the costs, timing and outcome of regulatory review of our product candidates; |
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the number and development requirements of other product candidates that we pursue; |
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the costs of commercialization activities, including product marketing, sales and
distribution; |
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the emergence of competing technologies and other adverse market developments; |
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the costs of preparing, filing and prosecuting patent applications and maintaining,
enforcing and defending intellectual property related claims; |
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the extent to which we acquire or invest in businesses, products and technologies; |
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our ability to execute our operational and business plans and realize reductions in our
expenses in line with our restructuring plan; and |
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our ability to establish collaborations and obtain milestone, royalty or other payments
from any such collaborators. |
We may not actually achieve the plans, intentions or expectations disclosed in our
forward-looking statements, and you should not place undue reliance on 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 Risk Factors of the Annual
Report on Form 10-K for the year ended December 31, 2009 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 in conjunction with 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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June 30, |
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2009 |
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2010 |
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Assets: |
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Current assets: |
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Cash and cash equivalents |
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$ |
19,339 |
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$ |
24,622 |
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Investments in marketable securities |
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58,885 |
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44,444 |
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Prepaid expenses and other current assets |
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2,262 |
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2,081 |
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Total current assets |
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80,486 |
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71,147 |
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Property and equipment, less accumulated depreciation and amortization of
$6,340 and $7,406 at December 31, 2009 and June 30, 2010, respectively |
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4,399 |
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3,472 |
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Other non-current assets |
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485 |
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267 |
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Total Assets |
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$ |
85,370 |
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$ |
74,886 |
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Liabilities and Stockholders Equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
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$ |
9,635 |
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$ |
5,752 |
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Current portion of secured loan |
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1,253 |
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1,253 |
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Current portion of capital lease obligations |
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305 |
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142 |
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Total current liabilities |
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11,193 |
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7,147 |
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Warrant liability |
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1,707 |
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Secured loan, less current portion |
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2,296 |
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1,670 |
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Capital lease obligations, less current portion |
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48 |
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Commitments and contingencies |
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Stockholders equity: |
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Common stock, $.01 par value, 50,000,000 shares authorized, 22,672,427 shares
issued and outstanding at December 31, 2009, 50,000,000 shares authorized,
27,638,378 shares issued and outstanding at June 30, 2010 |
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287 |
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337 |
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Additional paid-in capital |
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242,259 |
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259,266 |
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Accumulated other comprehensive income |
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43 |
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6 |
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Deficit accumulated during the development stage |
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(170,756 |
) |
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(195,247 |
) |
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Total stockholders equity |
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71,833 |
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64,362 |
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Total Liabilities and Stockholders Equity |
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$ |
85,370 |
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$ |
74,886 |
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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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Six Months |
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(inception) |
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Ended June 30, |
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Ended June 30, |
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to June 30, |
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2009 |
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2010 |
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2009 |
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2010 |
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2010 |
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Revenue: |
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Research revenue |
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$ |
4,667 |
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$ |
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$ |
8,580 |
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$ |
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$ |
31,108 |
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Collaboration revenue |
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694 |
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1,389 |
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50,000 |
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Total revenue |
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$ |
5,361 |
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$ |
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$ |
9,969 |
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$ |
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$ |
81,108 |
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Operating Expenses: |
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Research and development |
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$ |
13,470 |
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$ |
8,137 |
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$ |
25,345 |
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$ |
17,026 |
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$ |
192,748 |
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General and administrative |
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5,223 |
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4,020 |
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10,419 |
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7,945 |
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85,654 |
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Restructuring charges |
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1,522 |
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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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519 |
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529 |
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1,024 |
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1,066 |
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7,485 |
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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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19,212 |
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12,686 |
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36,788 |
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26,037 |
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288,857 |
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Loss from operations |
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(13,851 |
) |
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(12,686 |
) |
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(26,819 |
) |
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(26,037 |
) |
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(207,749 |
) |
Other income (expenses): |
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Interest income |
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269 |
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35 |
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|
795 |
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88 |
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13,845 |
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Interest expense |
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(41 |
) |
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(55 |
) |
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(71 |
) |
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(137 |
) |
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(2,063 |
) |
Change in fair value of warrant liability |
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1,391 |
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1,595 |
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1,141 |
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Other expense |
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(1,116 |
) |
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Loss before tax benefit |
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(13,623 |
) |
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(11,315 |
) |
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(26,095 |
) |
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(24,491 |
) |
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(195,942 |
) |
Benefit from income taxes |
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695 |
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Net loss |
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(13,623 |
) |
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(11,315 |
) |
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(26,095 |
) |
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(24,491 |
) |
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(195,247 |
) |
Deemed dividend |
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(19,424 |
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Preferred stock accretion |
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(802 |
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Net loss attributable to common stockholders |
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$ |
(13,623 |
) |
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$ |
(11,315 |
) |
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$ |
(26,095 |
) |
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$ |
(24,491 |
) |
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$ |
(215,473 |
) |
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Net loss attributable to common stockholders per
common share basic and diluted |
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$ |
(0.60 |
) |
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$ |
(0.41 |
) |
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$ |
(1.15 |
) |
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$ |
(0.94 |
) |
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Weighted-average common shares outstanding
basic and diluted |
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22,618,026 |
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27,623,297 |
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22,615,951 |
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25,956,366 |
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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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Six Months |
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(inception) to |
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Ended June 30, |
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June 30, |
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2009 |
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2010 |
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2010 |
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Operating activities |
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Net loss |
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$ |
(26,095 |
) |
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$ |
(24,491 |
) |
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$ |
(195,247 |
) |
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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|
1,024 |
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|
1,066 |
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|
7,480 |
|
Amortization of non-cash compensation |
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522 |
|
Stock-based compensation employees |
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4,069 |
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3,219 |
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|
24,092 |
|
Stock-based compensation non-employees |
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|
853 |
|
Stock-based license payments |
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1,220 |
|
Change in fair value of warrant liability |
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(1,595 |
) |
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|
(1,141 |
) |
Loss on disposal of asset |
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|
9 |
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|
239 |
|
Impairment of leasehold improvements |
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|
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|
1,030 |
|
Non-cash charge for in-process research and development |
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|
418 |
|
Beneficial conversion feature related to bridge financing |
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|
135 |
|
Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
|
|
(189 |
) |
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|
399 |
|
|
|
(2,081 |
) |
Other non-current assets |
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|
|
|
|
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|
(289 |
) |
Accounts payable and accrued expenses |
|
|
2,193 |
|
|
|
(3,883 |
) |
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|
5,752 |
|
Deferred revenue |
|
|
(2,316 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net cash used in operating activities |
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|
(21,305 |
) |
|
|
(25,285 |
) |
|
|
(156,492 |
) |
Investing activities |
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Sale and redemption of marketable securities |
|
|
76,926 |
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52,525 |
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|
531,544 |
|
Purchases of marketable securities |
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|
(68,933 |
) |
|
|
(38,125 |
) |
|
|
(576,099 |
) |
Purchases of property and equipment |
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|
(1,440 |
) |
|
|
(135 |
) |
|
|
(12,221 |
) |
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Net cash provided by/(used in) investing activities |
|
|
6,553 |
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|
14,265 |
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|
|
(56,776 |
) |
Financing activities |
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Proceeds from the issuance of preferred stock,
net of issuance costs |
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|
143,022 |
|
Proceeds from the issuance of common stock and warrants,
net of issuance costs |
|
|
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|
17,131 |
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|
85,224 |
|
Proceeds from the issuance of convertible notes |
|
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|
|
|
|
|
|
|
|
5,000 |
|
Payments of capital lease obligations |
|
|
(427 |
) |
|
|
(211 |
) |
|
|
(5,445 |
) |
Payments of secured loan agreement |
|
|
|
|
|
|
(626 |
) |
|
|
(835 |
) |
Proceeds from exercise of stock options |
|
|
11 |
|
|
|
9 |
|
|
|
1,291 |
|
Proceeds from exercise of warrants (common and preferred) |
|
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|
|
|
|
|
|
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|
264 |
|
Proceeds from capital asset financing arrangement |
|
|
|
|
|
|
|
|
|
|
5,611 |
|
Proceeds from secured loan arrangement |
|
|
2,855 |
|
|
|
|
|
|
|
3,758 |
|
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|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
2,439 |
|
|
|
16,303 |
|
|
|
237,890 |
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/ increase in cash and cash equivalents |
|
|
(12,313 |
) |
|
|
5,283 |
|
|
|
24,622 |
|
Cash and cash equivalents at beginning of period |
|
|
28,073 |
|
|
|
19,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
15,760 |
|
|
$ |
24,622 |
|
|
$ |
24,622 |
|
|
|
|
|
|
|
|
|
|
|
- 6 -
Amicus Therapeutics, Inc.
(a development stage company)
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from |
|
|
|
|
|
|
|
|
|
|
|
February 4, 2002 |
|
|
|
Six Months |
|
|
(inception) to |
|
|
|
Ended June 30, |
|
|
June 30, |
|
|
|
2009 |
|
|
2010 |
|
|
2010 |
|
Supplemental disclosures of cash flow information |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest |
|
$ |
71 |
|
|
$ |
157 |
|
|
$ |
1,761 |
|
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 |
|
|
|
|
|
$ |
|
|
|
$ |
802 |
|
Beneficial conversion feature related to the issuance of Series C redeemable convertible preferred stock |
|
$ |
|
|
|
$ |
|
|
|
$ |
19,424 |
|
See accompanying notes to consolidated financial statements
- 7 -
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 Company is focused on the discovery, development and commercialization of
orally-administered, small molecule drugs known as pharmacological chaperones. Pharmacological
chaperones are a novel, first-in-class approach to treating a broad range of diseases including
lysosomal storage disorders and neurodegenerative diseases. 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 were jointly
developing three of the Companys pharmacological chaperone compounds for lysosomal storage
disorders: Amigal (migalastat hydrochloride), Plicera (isofagomine tartrate) and AT2220
(1-deoxynojirimycin HCl). In October 2009, the Company and Shire mutually agreed to terminate the
collaboration agreement. For further information, see Note 8. Development and Commercialization
Agreement with Shire.
The Company had an accumulated deficit of approximately $195.2 million at June 30, 2010 and
anticipates incurring losses through the year 2010 and beyond. The Company has not yet generated
commercial sales revenue and has been able to fund its operating losses to date through the sale of
its common stock and redeemable convertible preferred stock, issuance of convertible notes,
payments from Shire during the term of the collaboration agreement and other financing
arrangements. In March 2010, the Company sold 4.95 million shares of its common stock and warrants
to purchase 1.85 million shares of common stock in a registered direct offering to a select group
of institutional investors for net proceeds of approximately $17.1 million. The Company believes
that its existing cash and cash equivalents and short-term investments will be sufficient to cover
its cash flow requirements for 2010.
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, 2009. For a complete
description of the Companys accounting policies, please refer to the Annual Report on Form 10-K
for the fiscal year ended December 31, 2009.
Revenue Recognition
The Company recognizes revenue when amounts are realized or realizable and earned. Revenue is
considered realizable and earned when the following criteria are met: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services have been rendered; (3) the price is
fixed or determinable; and (4) collection of the amounts due are reasonably assured.
In determining the accounting for collaboration agreements, the Company determines
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. If this division is required, 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 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.
- 8 -
The revenue associated with reimbursements for research and development costs under
collaboration agreements 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.
Fair Value Measurements
The Company records certain asset and liability balances under the fair value measurements as
defined by the Financial Accounting Standards Board (FASB) guidance. Current FASB fair value
guidance emphasizes that fair value is a market-based measurement, not an entity-specific
measurement. Therefore, a fair value measurement should be determined based on the assumptions
that market participants would use in pricing the asset or liability. As a basis for considering
market participant assumptions in fair value measurements, current FASB guidance establishes a fair
value hierarchy that distinguishes between market participant assumptions based on market data
obtained from sources independent of the reporting entity (observable inputs that are classified
within Levels 1 and 2 of the hierarchy) and the reporting entitys own assumptions about market
participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or
liabilities that the Company has the ability to access. Level 2 inputs are inputs other than
quoted prices included in Level 1 that are observable for the asset or liability, either directly
or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in
active markets, as well as inputs that are observable for the asset or liability (other than quoted
prices), such as interest rates, foreign exchange rates, and yield curves that are observable at
commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which
is typically based on an entitys own assumptions, as there is little, if any, related market
activity. In instances where the determination of the fair value measurement is based on inputs
from different levels of the fair value hierarchy, the level in the fair value hierarchy within
which the entire fair value measurement falls is based on the lowest level input that is
significant to the fair value measurement in its entirety. The Companys assessment of the
significance of a particular input to the fair value measurement in its entirety requires judgment,
and considers factors specific to the asset or liability.
New Accounting Standards
In February 2010, the FASB issued revised guidance on the disclosure of events subsequent
to the date of the financial statements but prior to issuance. The Company adopted these
changes in the disclosure in the Companys Annual Report on Form 10-K for the year ended
December 31, 2009. These changes in disclosure did not have an impact on the financial
statements of the Company.
In January 2010, the FASB issued amendments to its fair value guidance which requires
additional disclosures that include: 1) separate disclosures on significant transfers into and
out of Level 3; 2) the amount of transfers between Level 1 and Level 2 and the reasons for such
transfers; 3) lower level of disaggregation for fair value disclosures by class rather than by
major category and 4) additional details on the valuation techniques and inputs used to
determine Level 2 and Level 3 measurements. The Company has included these additional
disclosures within the Form 10-Q for the period ended June 30, 2010 and they did not have a
significant impact on the financial statements of the Company.
In October 2009, the FASB issued guidance on revenue recognition related to
multiple-element arrangements. This new guidance requires companies to allocate revenue in
multiple-element arrangements based on an elements estimated selling price if vendor-specific
or other third party evidence of value is not available. This guidance is effective
prospectively for revenue arrangements entered into or materially modified
in fiscal years beginning on or after June 15, 2010. Early adoption is permitted
retrospectively from the beginning of an entitys fiscal year. The Company does not expect
this will have a significant impact on the financial statements of the Company.
- 9 -
Subsequent Events
The Company evaluated events that occurred subsequent to June 30, 2010 and there were no
material recognized or non-recognized subsequent events during this period.
Note 2. Cash, Cash Equivalents and Available-For-Sale Investments
As of June 30, 2010, the Company held $24.6 million in cash and cash equivalents and $44.4
million of available-for-sale investment securities which 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 equity. If a decline in the
fair value of a marketable security below the Companys cost basis is determined to be other than
temporary, such marketable security is written down to its estimated fair value as a new cost basis
and the amount of the write-down is included in earnings as an impairment charge. To date, only
temporary impairment adjustments have been recorded.
Consistent with the Companys investment policy, the Company does not use derivative
financial instruments in its investment portfolio. The Company regularly invests excess
operating cash in deposits with major financial institutions, money market funds, notes issued
by the U.S. government, as well as fixed income investments and U.S. bond funds both of which
can be readily purchased and sold using established markets. The Company believes that the
market risk arising from its holdings of these financial instruments is mitigated as many of
these securities are either government backed or of the highest credit rating.
Cash and available for sale securities consisted of the following as of December 31, 2009
and June 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2009 |
|
|
|
|
|
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
|
|
Cost |
|
|
Gain |
|
|
Loss |
|
|
Value |
|
Cash balances |
|
$ |
19,339 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
19,339 |
|
U.S. government agency securities |
|
|
45,020 |
|
|
|
44 |
|
|
|
(1 |
) |
|
|
45,063 |
|
Corporate debt securities |
|
|
8,951 |
|
|
|
4 |
|
|
|
(7 |
) |
|
|
8,948 |
|
Commercial paper |
|
|
4,521 |
|
|
|
3 |
|
|
|
|
|
|
|
4,524 |
|
Certificate of deposit |
|
|
350 |
|
|
|
|
|
|
|
|
|
|
|
350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
78,181 |
|
|
$ |
51 |
|
|
$ |
(8 |
) |
|
$ |
78,224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in cash and cash equivalents |
|
$ |
19,339 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
19,339 |
|
Included in marketable securities |
|
|
58,842 |
|
|
|
51 |
|
|
|
(8 |
) |
|
|
58,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and available for sale securities |
|
$ |
78,181 |
|
|
$ |
51 |
|
|
$ |
(8 |
) |
|
$ |
78,224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 10 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2010 |
|
|
|
|
|
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
|
|
Cost |
|
|
Gain |
|
|
Loss |
|
|
Value |
|
Cash balances |
|
$ |
24,622 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
24,622 |
|
Commercial paper |
|
|
29,238 |
|
|
|
23 |
|
|
|
|
|
|
|
29,261 |
|
Corporate debt securities |
|
|
14,850 |
|
|
|
|
|
|
|
(17 |
) |
|
|
14,833 |
|
Certificate of deposit |
|
|
350 |
|
|
|
|
|
|
|
|
|
|
|
350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
69,060 |
|
|
$ |
23 |
|
|
$ |
(17 |
) |
|
$ |
69,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in cash and cash equivalents |
|
$ |
24,622 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
24,622 |
|
Included in marketable securities |
|
|
44,438 |
|
|
|
23 |
|
|
|
(17 |
) |
|
|
44,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and available for sale securities |
|
$ |
69,060 |
|
|
$ |
23 |
|
|
$ |
(17 |
) |
|
$ |
69,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All of the Companys available for sale investments as of December 31, 2009 and June 30,
2010 are due in one year or less.
Unrealized gains and losses are reported as a component of accumulated other
comprehensive income/(loss) in stockholders equity. For the year ended December 31, 2009,
unrealized holding gains included in accumulated other comprehensive income was $0.5 million.
For the six months ended June 30, 2010, unrealized holding gains included in accumulated other
comprehensive income was less than $0.04 million.
For the year ended December 31, 2009 and the six months ended June 30, 2010, there were
no realized gains or losses. The cost of securities sold is based on the specific
identification method.
Unrealized loss positions in the available for sale securities as of December 31, 2009 and
June 30, 2010 reflect temporary impairments that have not been recognized and have been in a loss
position for less than twelve months. The fair value of these available for sale securities in
unrealized loss positions was $7.8 million and $14.8 million as of December 31, 2009 and June 30,
2010, respectively.
Note 3. Basic and Diluted Net Loss Attributable to Common Stockholders per Common Share
The Company calculates net loss per share as a measurement of the Companys performance while
giving effect to all dilutive potential common shares that were outstanding during the reporting
period. The Company has a net loss for all periods presented; accordingly, the inclusion of common
stock options would be anti-dilutive. Therefore, the weighted average shares used to calculate
both basic and diluted earnings per share are the same.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
(In thousands, except per share amounts) |
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
Statement of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common stockholders |
|
$ |
(13,623 |
) |
|
$ |
(11,315 |
) |
|
$ |
(26,095 |
) |
|
$ |
(24,491 |
) |
Net loss attributable to common
stockholders per common
share basic and diluted |
|
$ |
(0.60 |
) |
|
$ |
(0.41 |
) |
|
$ |
(1.15 |
) |
|
$ |
(0.94 |
) |
Dilutive common stock equivalents would include the dilutive effect of common stock options
and warrants for common stock equivalents. Potentially dilutive common stock equivalents totaled
approximately 4.0 million and 7.1 million for the six months ended June 30, 2009 and 2010,
respectively. Potentially dilutive common stock equivalents were excluded from the diluted
earnings per share denominator for all periods because of their anti-dilutive effect.
- 11 -
Note 4. Comprehensive Loss
The components of comprehensive loss are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(13,623 |
) |
|
$ |
(11,315 |
) |
|
$ |
(26,095 |
) |
|
$ |
(24,491 |
) |
Change in
unrealized net gain
on marketable
securities |
|
|
(88 |
) |
|
|
4 |
|
|
|
(388 |
) |
|
|
(37 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
$ |
(13,711 |
) |
|
$ |
(11,311 |
) |
|
$ |
(26,483 |
) |
|
$ |
(24,528 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss equals the unrealized net gains and losses on marketable
securities which are the only components of other comprehensive loss included in the Companys
financial statements.
Note 5. Stockholders Equity
Common Stock and Warrants
As of June 30, 2010, 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.
On March 2, 2010, the Company completed the sale of 4,946,524 shares of its common stock and
the issuance of warrants to purchase 1,854,946 common shares in a registered direct offering to a
select group of institutional investors. The warrants have a term of four years and are
exercisable any time on or after the six month anniversary of the date they were issued, at an
exercise price of $4.43 per share. The Company received gross proceeds of $18.5 million, with net
cash proceeds after related expenses from this transaction of approximately $17.1 million. Of
those proceeds, the Company allocated an estimated fair value of $3.3 million to the warrants which
was determined on March 2, 2010 using the Black-Scholes model assuming a risk free interest rate of
1.78% and a volatility of 80.8%. The shares and warrants were issued pursuant to an effective
registration statement on Form S-3 (Registration No. 333-158405), which was declared effective on
May 27, 2009.
Stock Option Plans
During the three and six months ended June 30, 2010, the Company recorded compensation expense
of approximately $1.5 million and $3.2 million, respectively. The stock-based compensation expense
had no impact on the Companys cash flows from operations and financing activities. As of June 30,
2010, the total unrecognized compensation cost related to non-vested stock options granted was
$9.9 million and is expected to be recognized over a weighted average period of 2.4 years.
- 12 -
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 |
|
|
Six Months |
|
|
Three Months |
|
|
Six Months |
|
|
|
Ended |
|
|
Ended |
|
|
Ended |
|
|
Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2009 |
|
|
2009 |
|
|
2010 |
|
|
2010 |
|
Expected stock price volatility |
|
|
81.4 |
% |
|
|
80.6 |
% |
|
|
80.0 |
% |
|
|
80.5 |
% |
Risk free interest rate |
|
|
2.3 |
% |
|
|
2.1 |
% |
|
|
2.4 |
% |
|
|
2.5 |
% |
Expected life of options (years) |
|
|
6.25 |
|
|
|
6.25 |
|
|
|
6.25 |
|
|
|
6.25 |
|
Expected annual dividend per
share |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
A summary of option activities related to the Companys stock options for the six months ended
June 30, 2010 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, 2009 |
|
|
4,818.9 |
|
|
$ |
8.01 |
|
|
|
|
|
|
|
|
|
Options granted |
|
|
733.2 |
|
|
$ |
2.92 |
|
|
|
|
|
|
|
|
|
Options exercised |
|
|
(20.7 |
) |
|
$ |
0.64 |
|
|
|
|
|
|
|
|
|
Options forfeited |
|
|
(239.2 |
) |
|
$ |
8.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2010 |
|
|
5,292.2 |
|
|
$ |
7.30 |
|
|
7.9 years |
|
$ |
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and unvested
expected to vest, June 30,
2010 |
|
|
4,971.0 |
|
|
$ |
7.43 |
|
|
7.8 years |
|
$ |
0.2 |
|
Exercisable at June 30, 2010 |
|
|
2,413.4 |
|
|
$ |
8.80 |
|
|
6.5 years |
|
$ |
0.2 |
|
Note 6. Short-Term Borrowings and Long-Term Debt
In May 2009, the Company entered into a loan and security agreement with Silicon Valley
Bank that provides for up to $4 million of equipment financing through October 2012.
Borrowings under the loan agreement are collateralized by equipment purchased with the
proceeds of the loan and bear interest at a fixed rate of approximately 9%. The loan
agreement contains customary terms and conditions, including a financial covenant whereby the
Company must maintain a minimum amount of liquidity measured at the end of each month equal to
the greater of (i) $30 million of unrestricted cash, cash equivalents, and marketable
securities, or (ii) six months of trailing cash burn net of outstanding borrowings under the
loan agreement. The Company has at all times been in compliance with this covenant during the
term of the agreement.
At June 30, 2010, the current and long-term amounts due under the loan agreement were $1.2
million and $1.7 million, respectively. The carrying amount of the Companys borrowings
approximates fair value at June 30, 2010.
Note 7. Assets and Liabilities Measured at Fair Value
The Companys financial assets and liabilities are measured at fair value and classified
within the fair value hierarchy which is defined as follows:
Level 1 Quoted prices in active markets for identical assets or liabilities that the
Company has the ability to access at the measurement date.
- 13 -
Level 2 Inputs other than quoted prices in active markets that are observable for the
asset or liability, either directly or indirectly.
Level 3 Inputs that are unobservable for the asset or liability.
Cash, Money Market Funds and Marketable Securities
The Company classifies its cash and money market funds within the fair value hierarchy as
Level 1 as these assets are valued using quoted prices in active market for identical assets at the
measurement date. The Company considers its investments in marketable securities as available for
sale and classifies these assets within the fair value hierarchy as Level 2 primarily utilizing
broker quotes in a non-active market for valuation of these securities. No changes in valuation
techniques or inputs occurred during the three months ended June 30, 2010. No transfers of assets
between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the three
months ended June 30, 2010.
Secured Debt
As disclosed in Note 6, the Company has a loan and security agreement with Silicon Valley
Bank. The carrying amount of the Companys borrowings approximates fair value at June 30, 2010.
The Companys secured debt is classified as Level 2 and the fair value is estimated using quoted
prices for similar liabilities in active markets, as well as inputs that are observable for the
liability (other than quoted prices), such as interest rates that are observable at commonly quoted
intervals.
Warrants
As disclosed in Note 5, the Company allocated $3.3 million of proceeds from its March 2010
registered direct offering to warrants issued in connection with the offering that was classified
as a liability. The valuation of the warrants is determined using the Black-Scholes model. This
model uses inputs such as the underlying price of the shares issued when the warrant is exercised,
volatility, risk free interest rate and expected life of the instrument. The Company has
determined that the warrant liability should be classified within Level 3 of the fair value
hierarchy by evaluating each input for the Black Scholes model against the fair value hierarchy
criteria and using the lowest level of input as the basis for the fair value classification. There
are six inputs: closing price of Amicus stock on the day of evaluation; the exercise price of the
warrants; the remaining term of the warrants; the volatility of Amicus stock over that term;
annual rate of dividends; and the riskless rate of return. Of those inputs, the exercise price of
the warrants and the remaining term are readily observable in the warrant agreements. The annual
rate of dividends is based on the Companys historical practice of not granting dividends. The
closing price of Amicus stock would fall under Level 1 of the fair value hierarchy as it is a
quoted price in an active market. The riskless rate of return is a Level 2 input, while the
historical volatility is a Level 3 input in accordance with the fair value accounting guidance.
Since the lowest level input is a Level 3, the Company determined the warrant liability is most
appropriately classified within Level 3 of the fair value hierarchy. This liability is subject to
fair value mark-to-market adjustment each period. As a result, for the six month period ended June
30, 2010, the Company recorded a change in warrant liability income of $1.6 million. The resulting
fair value of the warrant liability at June 30, 2010 was $1.7 million.
- 14 -
A summary of the fair value of the Companys assets and liabilities aggregated by the level in
the fair value hierarchy within which those measurements fall as of June 30, 2010 are identified in
the following table (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Total |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash/Money market funds |
|
$ |
24,622 |
|
|
$ |
|
|
|
$ |
24,622 |
|
Commercial paper |
|
|
|
|
|
|
29,261 |
|
|
|
29,261 |
|
Corporate debt securities |
|
|
|
|
|
|
14,833 |
|
|
|
14,833 |
|
Certificate of deposit |
|
|
|
|
|
|
350 |
|
|
|
350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
24,622 |
|
|
$ |
44,444 |
|
|
$ |
69,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured debt |
|
$ |
|
|
|
$ |
2,923 |
|
|
$ |
|
|
|
$ |
2,923 |
|
Warrants liability |
|
|
|
|
|
|
|
|
|
|
1,707 |
|
|
|
1,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
2,923 |
|
|
$ |
1,707 |
|
|
$ |
4,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 8. 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 were jointly developing three of the Companys
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. and retained
all rights to its other programs and to develop and commercialize Amigal, Plicera and AT2220 in the
U.S.
The Company received an initial, non-refundable license fee payment of $50 million from Shire.
Joint development costs toward global approval of the three compounds were being shared 50/50. In
addition, the Company was eligible to receive milestone payments if certain clinical and regulatory
and sales-based milestones were met, as well as tiered double-digit royalties on net sales of the
products marketed outside of the U.S.
As previously disclosed, on October 29, 2009, the Company and Shire agreed to mutually
terminate the collaboration agreement. As a result of this termination, Amicus reacquired all
global development and commercialization rights from Shire for Amigal, Plicera and AT2220 programs
and now owns worldwide rights to them. Shire paid the Company $5.2 million as full and final
payment for amounts due to the Company under the collaboration agreement, and both parties are
relieved of all other future obligations thereunder, financial or otherwise.
The Company had previously determined that its various deliverables due under the
collaboration agreement represent a single unit of accounting for revenue recognition purposes.
The initial, non-refundable upfront license fee payment of $50 million was being recognized on a
straight line basis as Collaboration Revenue over the period of the performance obligations. The
Company had determined that the period of performance obligations was 18 years as contractually
defined. During the three and six months ended June 30, 2009, the Company recorded $0.7 million
and $1.4 million, respectively, in Collaboration Revenue and $4.7 million and $8.6 million,
respectively, in Research Revenue.
Note 9. Restructuring Charges
In October 2009, the Company announced a work-force reduction of approximately 20 percent, or
26 employees, as a part of a corporate restructuring, with reductions occurring across all levels
and departments within the Company. This measure was intended to reduce costs and to align the
Companys resources with its key strategic priorities. The Company recorded restructuring charges
of $0.9 million during the fourth quarter of 2009 for employment termination costs payable in cash
in connection with the workforce reduction. At June 30, 2010,
less than $0.01 million of the restructuring charges related to the employment termination
costs were unpaid and classified under accrued expenses on the balance sheet.
- 15 -
In December 2009, the Company initiated and completed a facilities consolidation effort,
closing one of its subleased locations in Cranbury, NJ. The Company recorded a charge of $0.7
million during the fourth quarter of 2009 for minimum lease payments of $0.5 million and the
write-down of fixed assets in the facility. At June 30, 2010, $0.4 million of the restructuring
charges related to the facilities consolidation were unpaid and classified under accrued expenses
on the balance sheet.
The following table summarizes the restructuring charges and utilization for the six months
ended June 30, 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
December 31, |
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
as of |
|
|
|
2009 |
|
|
Charges |
|
|
Payments |
|
|
Adjustments |
|
|
June 30, 2010 |
|
Employment
termination costs |
|
$ |
271 |
|
|
$ |
|
|
|
$ |
(267 |
) |
|
$ |
|
|
|
$ |
4 |
|
Facilities consolidation |
|
|
497 |
|
|
|
|
|
|
|
(115 |
) |
|
|
|
|
|
|
382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
768 |
|
|
$ |
|
|
|
$ |
(382 |
) |
|
$ |
|
|
|
$ |
386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a biopharmaceutical company focused on the discovery, development and commercialization
of orally-administered, small molecule drugs known as pharmacological chaperones. Pharmacological
chaperones are a novel, first-in-class approach to treating a broad range of diseases including
lysosomal storage disorders and neurodegenerative diseases. Our goal is to become a leading
biopharmaceutical company in these areas. Our current strategic priorities include the following:
|
|
|
the Phase 3 development of our lead product candidate, Amigal for Fabry disease; |
|
|
|
the preclinical and clinical development of pharmacological chaperone/enzyme replacement
therapy combination therapy; and |
|
|
|
the preclinical evaluation of the use of pharmacological chaperones for
neurodegenerative diseases. |
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 within the cell, thereby increasing protein activity,
improving cellular function and potentially reducing cell stress. We have also demonstrated
in preclinical studies that pharmacological chaperones can further stabilize normal, or
wild-type, proteins. This stabilization could lead to a higher percentage of the target
proteins folding correctly and more stably, which can increase cellular levels of that target
protein and improve cellular function, making chaperones potentially applicable to a wide
range of diseases.
Our lead product candidate, Amigal (migalastat hydrochloride), is in Phase 3 development as a
monotherapy for the treatment of Fabry disease. In addition, we are conducting preclinical studies
of our chaperone molecules in combination with enzyme replacement therapy for the treatment of
Fabry, Gaucher, and Pompe diseases, as well as in neurodegenerative diseases, including Parkinsons
and Alzheimers disease.
Amigal: The Phase 3 U.S. registration study (Study 011) of Amigal remains the Companys
number one priority. Study 011 is being conducted at approximately 40 investigational sites
worldwide, and the Company expects to complete enrollment by the end of 2010. The Company
expects to report preliminary results from this study in mid-2011. As previously announced,
Amicus expects to commence an additional Phase 3 study (Study 012)
before year end. Study 012, a registration trial designed to support approval in the European
Union, will be an 18-month, randomized, open-label study comparing Amigal to enzyme replacement
therapy (ERT) in approximately 60 subjects. The primary outcome of efficacy will be renal
function as measured by glomerular filtration rate (GFR).
- 16 -
Chaperone-ERT Co-administration Therapy Programs: Amicus continues to evaluate the
co-administration use of both Amigal and AT2220 (1-deoxynojirimycin HCl) with ERT in mouse models
of Fabry and Pompe disease, respectively. The Company previously reported that preclinical
studies of both combinations demonstrated that co-administration of the chaperone with ERT
resulted in prolonged half-life of ERT in the circulation, increased enzyme activity in cells and
greater substrate reduction in target tissues compared to that seen with ERT alone. Amicus has
also completed promising preclinical in vitro studies of its chaperone Plicera (afegostat
tartrate) co-administered with ERT for Gaucher disease. Amicus remains encouraged by these
positive preclinical data and plans to initiate a Phase 2 study with Amigal co-administered with
ERT for Fabry disease before the end of 2010. In addition, the Company continues to evaluate
options for clinical development of AT2220 and ERT for Pompe disease and Plicera and ERT for
Gaucher disease.
Neurodegenerative Disease Programs: Amicus continues to advance its preclinical
neurodegenerative disease programs. As previously reported, Amicus has presented data from
preclinical studies that evaluated the chaperone AT2101 in mouse models of Parkinsons disease.
The studies demonstrated that treatment with AT2101 increased the activity of
β-glucocerebrosidase (GCase), prevented accumulation of α-synuclein in the brain and improved
motor function as assessed in various behavioral tests. At that time, the Company also announced
that new compounds have been identified that improve on the properties of AT2101 and expand the
range of doses and regimens that show motor improvement in mouse models of the disease. Amicus
second, neurodegenerative pharmacological chaperone program is for the treatment of Alzheimers
disease. As previously announced, Amicus was awarded a grant of $0.2 million from the
Alzheimers Drug Discovery Foundation (ADDF). The grant from the ADDF is funding preclinical
studies to evaluate the use of pharmacological chaperones for the treatment of Alzheimers
disease. Additionally, Amicus continues to develop other pharmacological chaperone approaches
for the treatment of Alzheimers disease.
We have generated significant losses to date and expect to continue to generate losses as we
continue the clinical development of our drug candidates, including Amigal, and conduct preclinical
studies on other programs. These activities are budgeted to expand over time and will require
further resources if we are to be successful. From our inception in February 2002 through June 30,
2010, we have accumulated a deficit of $195.2 million. As we have not yet generated commercial
sales revenue from any of our product candidates, our losses will continue and are likely to be
substantial over the next several years and we may need to obtain additional funds to further
develop our research and development programs and product candidates.
In June 2007, we completed our initial public offering (IPO) of 5,000,000 shares of common
stock at a public offering price of $15.00 per share. Net cash proceeds from the initial public
offering were approximately $68.1 million after deducting underwriting discounts, commissions and
offering expenses payable by us. In connection with the closing of the IPO, all of Amicus shares
of redeemable convertible preferred stock outstanding at the time of the offering were
automatically converted into 16,112,721 shares of common stock.
In March 2010, we sold 4.95 million shares of our common stock and warrants to purchase
1.85 million shares of common stock in a registered direct offering to a select group of
institutional investors. The shares of common stock and warrants were sold in units
consisting of one share of common stock and one warrant to purchase 0.375 shares of common
stock at a price of $3.74 per unit. The warrants have a term of four years and are
exercisable any time on or after the six month anniversary of the date they were issued, at an
exercise price of $4.43 per share. The net proceeds of the offering were approximately $17.1
million after deducting the placement agency fee and all other estimated offering expenses.
- 17 -
Financial Operations Overview
Revenue
We have not generated any commercial sales revenue since our inception.
On November 7, 2007, we entered into a license and collaboration agreement with Shire. Under
the agreement, Amicus and Shire were jointly developing three of our pharmacological chaperone
compounds for lysosomal storage disorders: Amigal, Plicera and AT2220. In connection with this
agreement, Shire paid us an initial, non-refundable license fee of $50 million and reimbursed us
for certain research and development costs associated with these clinical development programs.
The license fee was classified as deferred revenue and was being recognized as Collaboration
Revenue on a straight line basis over the period of the performance obligations. We also
recognized any reimbursed research and development costs as Research Revenue. In October 2009, we
mutually terminated our collaboration agreement with Shire and received a cash payment of $5.2
million as full and final settlement of all amounts due under the collaboration agreement. This
final payment was recorded as Research Revenue net of a cost sharing receivable. As a result of
the termination of the agreement and as there were no further obligations under the original
agreement, we recognized all previously deferred revenue as Collaboration Revenue in the fourth
quarter of 2009.
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 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 June 30,
2010, we have incurred research and development expense in the aggregate of $192.7 million.
- 18 -
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 |
|
|
Six Months Ended |
|
|
(inception) to |
|
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
Projects |
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2010 |
|
Third party direct project expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amigal (Fabry Disease Phase 3) |
|
$ |
2,297 |
|
|
$ |
2,557 |
|
|
$ |
3,758 |
|
|
$ |
5,120 |
|
|
$ |
39,194 |
|
Plicera (Gaucher Disease Phase 2*) |
|
|
2,606 |
|
|
|
81 |
|
|
|
4,595 |
|
|
|
334 |
|
|
|
26,199 |
|
AT2220 (Pompe Disease Phase 1) |
|
|
657 |
|
|
|
135 |
|
|
|
1,262 |
|
|
|
311 |
|
|
|
13,209 |
|
Neurodegenerative Diseases
(Preclinical) |
|
|
973 |
|
|
|
57 |
|
|
|
1,554 |
|
|
|
406 |
|
|
|
6,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total third party direct project expenses |
|
|
6,533 |
|
|
|
2,830 |
|
|
|
11,169 |
|
|
|
6,171 |
|
|
|
84,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other project costs (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel costs |
|
|
4,948 |
|
|
|
4,002 |
|
|
|
9,929 |
|
|
|
8,183 |
|
|
|
65,949 |
|
Other costs (2) |
|
|
1,989 |
|
|
|
1,305 |
|
|
|
4,247 |
|
|
|
2,672 |
|
|
|
42,176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other project costs |
|
|
6,937 |
|
|
|
5,307 |
|
|
|
14,176 |
|
|
|
10,855 |
|
|
|
108,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development costs |
|
$ |
13,470 |
|
|
$ |
8,137 |
|
|
$ |
25,345 |
|
|
$ |
17,026 |
|
|
$ |
192,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
* |
|
We do not plan to advance Plicera into Phase 3 development at this time. |
The successful development of our product candidates is highly uncertain. At this time, we
cannot reasonably estimate or know the nature, timing and costs of the efforts that will be
necessary to complete the remainder of the development of our product candidates. As a result, we
are not able to reasonably estimate the period, if any, in which material net cash inflows may
commence from our product candidates, including Amigal or any of our other preclinical product
candidates. This uncertainty is due to the numerous risks and uncertainties associated with the
conduct, duration and cost of clinical trials, which vary significantly over the life of a project
as a result of evolving events during clinical development, including:
|
|
|
the number of clinical sites included in the trials; |
|
|
|
the length of time required to enroll suitable patients; |
|
|
|
the number of patients that ultimately participate in the trials; |
|
|
|
the results of our clinical trials; and |
|
|
|
any mandate by the FDA or other regulatory authority to conduct clinical trials beyond
those currently anticipated. |
Our expenditures are subject to additional uncertainties, including the terms and timing of
regulatory approvals, and the expense of filing, prosecuting, defending and enforcing any patent
claims or other intellectual property rights. We may obtain unexpected results from our clinical
trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or
focus on others. A change in the outcome of any of the foregoing variables with respect to the
development of a product candidate could mean a significant change in the costs and timing
associated with the development, regulatory approval and commercialization of that product
candidate. For example, if the FDA or other regulatory authorities were to require us to conduct
clinical trials beyond those which we currently anticipate, or if we experience significant delays
in enrollment in any of our clinical trials, we could be required to expend significant additional
financial resources and time on the completion of clinical development. Drug development may take
several years and millions of dollars in development costs.
- 19 -
General and Administrative Expense
General and administrative expense consists primarily of salaries and other related costs,
including stock-based compensation expense, for persons serving in our executive, finance,
accounting, legal, information technology and human resource functions. Other general and
administrative expense includes facility-related costs not otherwise included in research and
development expense, promotional expenses, costs associated with industry and trade shows, and
professional fees for legal services, including patent-related expense and accounting services.
From our inception in February 2002 through June 30, 2010, we spent $85.7 million on general and
administrative expense.
Interest Income and Interest Expense
Interest income consists of interest earned on our cash and cash equivalents and marketable
securities. Interest expense consists of interest incurred on our capital lease facility and our
equipment financing agreement.
Restructuring Charges
In October 2009, the Company implemented a work-force reduction plan to reduce costs and align
the Companys resources with its key strategic priorities. The restructuring charges include
employee termination costs, facilities consolidation costs related to minimum lease payments of a
subleased location that was closed and the write-down of fixed assets in this subleased location.
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 June 30, 2010 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, 2009, 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 when amounts are realized or realizable and earned. Revenue is
considered realizable and earned when the following criteria are met: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services have been rendered; (3) the price is
fixed or determinable; and (4) collection of the amounts due are reasonably assured.
In determining the accounting for collaboration agreements, the Company determines 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. If this division is required, 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 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.
- 20 -
The revenue associated with reimbursements for research and development costs under
collaboration agreements 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.
Since the termination of the collaboration agreement with Shire in October 2009, the Company has
not been a party to any collaboration agreements.
Accrued Expenses
When we are required to estimate accrued expenses because we have not yet been invoiced or
otherwise notified of actual cost, we identify services that have been performed on our behalf and
estimate the level of service performed and the associated cost incurred. 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:
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fees owed to contract research organizations in connection with preclinical and
toxicology studies and clinical trials; |
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|
fees owed to investigative sites in connection with clinical trials; |
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|
fees owed to contract manufacturers in connection with the production of clinical trial
materials; |
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|
fees owed for professional services, and |
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|
unpaid salaries, wages and benefits. |
Stock-Based Compensation
We adopted the fair value method of measuring stock-based compensation, which requires a
public entity to measure the cost of employee services received in exchange for an award of equity
instruments based upon the grant-date fair value of the award. We chose the straight-line
attribution method for allocating compensation costs and recognized the fair value of each stock
option on a straight-line basis over the vesting period of the related awards.
We use the Black-Scholes option pricing model when estimating the value for stock-based
awards. Use of a valuation model requires management to make certain assumptions with respect to
selected model inputs. Expected volatility was calculated based on a blended weighted average of
historical information of our stock and the weighted average of historical information of similar
public entities for which historical information was available. We will continue to use a blended
weighted average approach using our own historical volatility and other similar public entity
volatility information until our historical volatility is relevant to measure expected volatility
for future option grants. The average expected life was determined using the mid-point between the
vesting date and the end of the contractual term. The risk-free interest rate is based on U.S.
Treasury, zero-coupon issues with a remaining term equal to the expected life assumed at the date
of grant. Forfeitures are estimated based on voluntary termination behavior, as well as a
historical analysis of actual option forfeitures. The weighted average assumptions used in the
Black-Scholes option pricing model are as follows:
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|
Three Months |
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Six Months |
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|
Three Months |
|
|
Six Months |
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|
Ended |
|
|
Ended |
|
|
Ended |
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|
Ended |
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June 30, |
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June 30, |
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June 30, |
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|
June 30, |
|
|
|
2009 |
|
|
2009 |
|
|
2010 |
|
|
2010 |
|
Expected stock price volatility |
|
|
81.4 |
% |
|
|
80.6 |
% |
|
|
80.0 |
% |
|
|
80.5 |
% |
Risk free interest rate |
|
|
2.3 |
% |
|
|
2.1 |
% |
|
|
2.4 |
% |
|
|
2.5 |
% |
Expected life of options (years) |
|
|
6.25 |
|
|
|
6.25 |
|
|
|
6.25 |
|
|
|
6.25 |
|
Expected annual dividend per
share |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
- 21 -
Warrants
The warrants issued in connection with the March 2010 registered direct offering are
classified as a liability. The fair value of the warrants liability is evaluated at each balance
sheet date using the Black-Scholes valuation model. This model uses inputs such as the underlying
price of the shares issued when the warrant is exercised, volatility, risk free interest rate and
expected life of the instrument. Any changes in the fair value of the warrants liability is
recognized in the consolidated statement of operations. The weighted average assumptions used in
the Black-Scholes valuation model for the warrants at inception, at March 31, 2010 and at June 30,
2010 are as follows:
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|
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|
|
|
|
|
|
March 2, 2010 |
|
|
March 31, 2010 |
|
|
June 30, 2010 |
|
Expected stock price volatility |
|
|
80.8 |
% |
|
|
80.9 |
% |
|
|
79.4 |
% |
Risk free interest rate |
|
|
1.8 |
% |
|
|
2.0 |
% |
|
|
1.3 |
% |
Expected life of warrants (years) |
|
|
4.00 |
|
|
|
3.92 |
|
|
|
3.67 |
|
Expected annual dividend per
share |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
Basic and Diluted Net Loss Attributable to Common Stockholders per Common Share
We calculated net loss per share as a measurement of the Companys performance while giving
effect to all dilutive potential common shares that were outstanding during the reporting period.
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.
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:
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|
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|
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|
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|
Three Months Ended |
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|
Six Months Ended |
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|
June 30, |
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June 30, |
|
(In thousands, except per share amount) |
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
Historical |
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Numerator: |
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Net loss attributable to common
stockholders |
|
$ |
(13,623 |
) |
|
$ |
(11,315 |
) |
|
$ |
(26,095 |
) |
|
$ |
(24,491 |
) |
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|
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|
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|
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Denominator: |
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|
Weighted average common shares
outstanding basic and diluted |
|
|
22,618,026 |
|
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|
27,623,297 |
|
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|
22,615,951 |
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25,956,366 |
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|
Dilutive common stock equivalents would include the dilutive effect of common stock options
and warrants for common stock equivalents. Potentially dilutive common stock equivalents totaled
approximately 4.0 million and 7.1 million for the six months ended June 30, 2009 and 2010,
respectively. Potentially dilutive common stock equivalents were excluded from the diluted
earnings per share denominator for all periods because of their anti-dilutive effect.
- 22 -
Results of Operations
Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009
Research and Development Expense. Research and development expense was $8.1 million for the
three months ended June 30, 2010 representing a decrease of approximately $5.4 million or 40% from
$13.5 million for the three months ended June 30, 2009. The variance was primarily attributable to
lower personnel costs associated with the workforce reduction completed in the fourth quarter of
2009, a decrease in consulting costs and a decrease in contract research and manufacturing costs
due to the reduced activity within the Gaucher program.
General and Administrative Expense. General and administrative expense was $4.0 million for
the three months ended June 30, 2010, representing a decrease of $1.2 million or 23% from $5.2
million for the three months ended June 30, 2009. The variance was primarily due to lower
personnel costs associated with the workforce reduction completed in the fourth quarter of 2009 and
a decrease in third party legal and consulting fees.
Interest Income and Interest Expense. Interest income was $0.04 million for the three months
ended June 30, 2010, compared to $0.27 million for the three months ended June 30, 2009. The
decrease of $0.23 million or 85% was due to lower effective interest rates and decreased cash and
cash equivalents balances. Interest expense was approximately $0.1 million for the three months
ended June 30, 2010 and 2009. Interest expense was incurred on the secured loan obtained in June
2009.
Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009
Research and Development Expense. Research and development expense was $17.0 million for the
six months ended June 30, 2010 representing a decrease of approximately $8.3 million or 33% from
$25.3 million for the six months ended June 30, 2009. The variance was primarily attributable to
lower personnel costs associated with the workforce reduction completed in the fourth quarter of
2009, a decrease in consulting costs and a decrease in contract research and manufacturing costs
due to the reduced activity within the Gaucher program.
General and Administrative Expense. General and administrative expense was $7.9 million for
the six months ended June 30, 2010, representing a decrease of $2.5 million or 24% from $10.4
million for the six months ended June 30, 2009. The variance was primarily due to lower personnel
costs associated with the workforce reduction completed in the fourth quarter of 2009 and a
decrease in third party legal and consulting fees.
Interest Income and Interest Expense. Interest income was $0.1 million for the six months
ended June 30, 2010, compared to $0.8 million for the six months ended June 30, 2009. The decrease
of $0.7 million or 88% was due to lower effective interest rates and decreased cash and cash
equivalents balances. Interest expense was approximately $0.1 million for the six months ended
June 30, 2010 and 2009. Interest expense was incurred on the secured loan obtained in June 2009.
- 23 -
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 our inception 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 initial public offering in June 2007,
$50.0 million from the non-refundable license fee from the Shire collaboration agreement in
November 2007 and $18.5 million of gross proceeds from the registered direct offering in March
2010. The following table summarizes our significant funding sources as of June 30, 2010:
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Approximate |
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Amount(1) |
|
Funding |
|
Year |
|
|
No. Shares |
|
|
(in thousands) |
|
|
|
|
|
|
|
|
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|
Series A Redeemable
Convertible Preferred Stock |
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|
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 |
|
Registered Direct Offering |
|
|
2010 |
|
|
|
4,946,524 |
|
|
|
18,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,059,245 |
|
|
$ |
292,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 year-end 2009 of $31.1 million. However, we will not receive any
further reimbursement payments from Shire following the mutual termination of our
collaboration agreement in October 2009.
As of June 30, 2010, we had cash, cash equivalents and marketable securities of $69.0 million.
We invest cash in excess of our immediate requirements with regard to liquidity and capital
preservation in a variety of interest-bearing instruments, including obligations of U.S. government
agencies and money market accounts. Wherever possible, we seek to minimize the potential effects
of concentration and degrees of risk. Although we maintain cash balances with financial
institutions in excess of insured limits, we do not anticipate any losses with respect to such cash
balances.
Net Cash Used in Operating Activities
Net cash used in operations for the six months ended June 30, 2009 of $21.3 million was
comprised of the net loss for the six months ended June 30, 2009 of $26.1 million and a reduction
in deferred revenue of $2.3 million, partially offset by the change in other operating assets and
liabilities of $2.0 million.
Net cash used in operations for the six months ended June 30, 2010 of $25.3 million was
primarily comprised of the net loss for the six months ended June 30, 2010 of $24.5 million and the
change in other operating assets and liabilities of $3.5 million.
Net Cash Provided By Investing Activities
Net cash provided by investing activities for the six months ended June 30, 2009 was
$6.6 million. Net cash provided by investing activities reflects $76.9 million for the sale and
redemption of marketable securities, partially offset by $68.9 million for the purchase of
marketable securities and $1.4 million for the acquisition of property and equipment.
- 24 -
Net cash provided by investing activities for the six months ended June 30, 2010 was
$14.3 million. Net cash provided by investing activities reflects $52.5 million for the sale and
redemption of marketable securities, partially offset by $38.1 million for the purchase of
marketable securities and $0.1 million for the acquisition of property and equipment.
Net Cash Provided By Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2009 was
$2.4 million and reflected the proceeds from our secured loan agreement of $2.9 million, partially
offset by the payments of our capital lease obligations of $0.4 million.
Net cash provided by financing activities for the six months ended June 30, 2010 was
$16.3 million, consisting of $17.1 million from the issuance of common stock primarily offset by
the payments of our secured loan agreement and capital lease obligations of $0.6 million and $0.2
million, respectively.
Funding Requirements
We expect to incur losses from operations for the foreseeable future primarily due to research
and development expenses, including expenses related to conducting clinical trials. Our future
capital requirements will depend on a number of factors, including:
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the progress and results of our clinical trials of our drug candidates, including
Amigal; |
|
|
|
the scope, progress, results and costs of preclinical development, laboratory
testing and clinical trials for our product candidates; |
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|
the costs, timing and outcome of regulatory review of our product candidates; |
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|
|
the number and development requirements of other product candidates that we pursue; |
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|
|
the costs of commercialization activities, including product marketing, sales and
distribution; |
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|
the emergence of competing technologies and other adverse market developments; |
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|
|
the costs of preparing, filing and prosecuting patent applications and maintaining,
enforcing and defending intellectual property related claims; |
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|
the extent to which we acquire or invest in businesses, products and technologies; |
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|
our ability to execute our operational and business plans and realize reductions in
our expenses in line with our restructuring plan; and |
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|
our ability to establish collaborations and obtain milestone, royalty or other payments
from any such collaborators. |
We do not anticipate that we will generate revenue from commercial sales for at least the next
several years, if at all. In the absence of additional funding, we expect our continuing operating
losses to result in increases in our cash used in operations over the next several quarters and
years. However, we believe that our existing cash and cash equivalents and short-term investments
will be sufficient to enable us to fund our operating expenses and capital expenditure requirements
at least until the second half of 2011.
Financial Uncertainties Related to Potential Future Payments
Milestone Payments
We have acquired rights to develop and commercialize our product candidates through
licenses granted by various parties. While our license agreements for Amigal and AT2220 do not
contain milestone payment obligations, two of these agreements related to Plicera do require
us to make such payments if certain specified pre-commercialization events occur. Upon the
satisfaction of certain milestones and assuming successful development of Plicera, we may be
obligated, under the agreements that we have in place, to make future milestone payments
aggregating up to approximately $7.9 million. However, such potential milestone payments are
subject to many uncertain variables that would cause such payments, if any, to vary in size.
- 25 -
Royalties
Under our license agreements, if we owe royalties on net sales for one of our products to more
than one licensor, then we have the right to reduce the royalties owed to one licensor for
royalties paid to another. The amount of royalties to be offset is generally limited in each
license and can vary under each agreement. For Amigal and AT2220, we will owe royalties only to
Mt. Sinai School of Medicine (MSSM). We would expect to pay royalties to all three licensors with
respect to Plicera should we advance Plicera to commercialization. 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.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Market risk is the risk of change in fair value of a financial instrument due to changes in
interest rates, equity prices, creditworthiness, financing, exchange rates or other factors. Our
primary market risk exposure relates to changes in interest rates in our cash, cash equivalents and
marketable securities. We place our investments in high-quality financial instruments, primarily
money market funds, corporate debt securities, asset backed securities and U.S. government agency
notes with maturities of less than one year, which we believe are subject to limited interest rate
and credit risk. The securities in our investment portfolio are not leveraged, are classified as
available-for-sale and, due to the short-term nature, are subject to minimal interest rate risk.
We currently do not hedge interest rate exposure and consistent with our investment policy, we do
not use derivative financial instruments in our investment portfolio. At June 30, 2010, we held
$69.0 million in cash, cash equivalents and available for sale securities and due to the short-term
maturities of our investments, we do not believe that a 10% change in average interest rates would
have a significant impact on our interest income. As June 30, 2010, our cash, cash equivalents and
available for sale securities were all due on demand or within one year. Our outstanding debt has a
fixed interest rate and therefore, we have no exposure to interest rate fluctuations.
We have operated primarily in the U.S., although we do conduct some clinical activities
outside the U.S. While most expenses are paid in U.S. dollars, there are minimal payments made in
local foreign currency. If exchange rates undergo a change of 10%, we do not believe that it would
have a material impact on our results of operations or cash flows.
ITEM 4. 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) under the
Securities Exchange Act of 1934, as amended (the Exchange Act)) was carried out under the
supervision of our Principal Executive Officer and Principal Financial Officer, with the
participation of our management. Based on that evaluation, the Principal Executive Officer and the
Principal 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 Principal Executive Officer and Principal 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 (as defined in Rule 13a-15(f) under the Exchange Act) that
occurred during the fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
- 26 -
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
ITEM 1A. RISK FACTORS
There have been no material changes with respect to the Risk Factors disclosed in our Annual Report
on Form 10-K for the year ended December 31, 2009.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
None.
Use of Proceeds
Initial Public Offering
Our initial public offering of common stock was effected through a Registration Statement on
Form S-1 (File No. 333-141700) that was declared effective by the Securities and Exchange
Commission (SEC) on May 30, 2007. We 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.
After deducting expenses of approximately $6.9 million, we received net offering proceeds of
approximately $68.1 million from our initial public offering. As of June 30, 2010, approximately
$27.3 million of the net proceeds from our initial public offering were maintained in money market
funds and in investment-grade, interest bearing instruments, pending their use. We have used the
remaining proceeds of approximately $40.8 million for clinical development of our projects,
research and development activities relating to additional preclinical projects and to fund working
capital and other general corporate purposes.
March 2010 Registered Direct Offering
In March 2010, we sold 4,946,524 million shares of our common stock and warrants to purchase
1,854,946 million shares of common stock in a registered direct offering to a select group of
institutional investors through a Registration Statement on Form S-3 (File No. 333-158405) that was
declared effective by the SEC on May 27, 2009. The shares of common stock and warrants were sold in
units consisting of one share of common stock and one warrant to purchase 0.375 shares of common
stock at a price of $3.74 per unit. The warrants have a term of four years and are exercisable any
time on or after the six month anniversary of the date they were issued, at an exercise price of
$4.43 per share. The aggregate offering proceeds were $18.5 million. Leerink Swann LLC served as
sole placement agent for the offering. Following the sale of the common stock and warrants, the
public offering terminated.
We paid Leerink Swann a placement agency fee equal to 5.7% of the aggregate offering proceeds,
approximately $1.05 million. The net proceeds of the offering were approximately $17.1 million
after deducting the placement agency fee and all other estimated offering expenses. 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.
- 27 -
As of June 30, 2010, we had invested the $17.1 million in net proceeds from our registered
direct offering in money market funds and in investment-grade, interest bearing instruments,
pending their use. Through July 30, 2010, we have not used the net proceeds from this offering.
We intend to use the proceeds from this offering to further advance the development of our lead
product candidate, Amigal, including the initiation of the Phase 3 study to support registration in
the European Union and the completion of certain activities required for the submission of a
license application globally, as well as for general corporate matters.
The foregoing represents our best estimate of our use of proceeds for the period indicated.
Issuer Purchases of Equity Securities
The following table sets forth purchases of our common stock for the three months ended
June 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2010 April 30, 2010 |
|
|
220 |
|
|
$ |
3.19 |
|
|
|
|
|
|
|
1,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 1, 2010 May 31, 2010 |
|
|
220 |
|
|
$ |
3.25 |
|
|
|
|
|
|
|
1,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 1, 2010 June 30, 2010 |
|
|
220 |
|
|
$ |
2.99 |
|
|
|
|
|
|
|
895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Pursuant to a restricted stock award dated October 2, 2006 between Amicus Therapeutics,
Inc. and James E. Dentzer, our former Chief Financial Officer, Mr. Dentzer was granted 40,000
shares, 25% of which vested on October 2, 2007 and the remaining shares vest in a series of
thirty-six successive equal monthly installments which began on November 1, 2007, with the
final installment due to vest on November 1, 2010. In order to comply with the minimum
statutory federal tax withholding rate of 25% plus 1.45% for Medicare, Mr. Dentzer surrenders
a portion of his vested shares on each vesting date, representing 26.45% of the total value of
the shares then vested.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 5. OTHER INFORMATION
None.
- 28 -
ITEM 6. 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) |
|
Amended and Restated 2007 Equity Incentive Plan |
|
|
|
|
|
|
10.2 |
(3) |
|
Amended and Restated 2007 Director Option Plan |
|
|
|
|
|
|
31.1 |
* |
|
Certification of Principal 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 Principal 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 Principal Executive Officer and Principal
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 |
|
(2) |
|
Incorporated by reference to Exhibit 3.4 to our Registration Statement on Form S-1 |
|
(3) |
|
Incorporated by reference to Exhibits 10.1 and 10.2 to our Current Report on Form
8-K filed on June 18, 2010 |
|
* |
|
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. |
- 29 -
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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|
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|
|
|
AMICUS THERAPEUTICS, INC.
|
|
Date: August 5, 2010 |
By: |
/s/ JOHN F. CROWLEY
|
|
|
|
John F. Crowley |
|
|
|
Chairman, President and Chief Executive Officer
(Principal Executive Officer) |
|
|
|
|
|
Date: August 5, 2010 |
By: |
/s/ JOHN M. MCADAM
|
|
|
|
John M. McAdam |
|
|
|
Vice President, Finance and Accounting
(Principal Financial and Accounting Officer) |
|
- 30 -
INDEX TO EXHIBITS
|
|
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
|
|
|
|
|
3.1 |
(1) |
|
Restated Certificate of Incorporation |
|
|
|
|
|
|
3.2 |
(2) |
|
Amended and Restated By-laws |
|
|
|
|
|
|
10.1 |
(3) |
|
Amended and Restated 2007 Equity Incentive Plan |
|
|
|
|
|
|
10.2 |
(3) |
|
Amended and Restated 2007 Director Option Plan |
|
|
|
|
|
|
31.1 |
* |
|
Certification of Principal 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 Principal 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 Principal Executive Officer and Principal
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 |
|
(2) |
|
Incorporated by reference to Exhibit 3.4 to our Registration Statement on Form S-1 |
|
(3) |
|
Incorporated by reference to Exhibits 10.1 and 10.2 to our Current Report on Form
8-K filed on June 18, 2010 |
|
* |
|
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. |
- 31 -
Exhibit 31.1
Exhibit 31.1
CERTIFICATIONS PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER
I, John F. Crowley, certify that:
1. I have reviewed this 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)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and 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) designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) 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
(d) 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: August 5, 2010 |
/s/ John F. Crowley
|
|
|
John F. Crowley |
|
|
Chairman, President and Chief Executive Officer |
|
Exhibit 31.2
Exhibit 31.2
CERTIFICATIONS PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER
I, John M. McAdam, 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)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and 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) designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) 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
(d) 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: August 5, 2010 |
/s/ John M. McAdam
|
|
|
John M. McAdam |
|
|
Vice President, Finance and Accounting |
|
Exhibit 32.1
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND
PRINCIPAL 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 June 30, 2010, 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.
|
|
|
|
|
|
|
|
Date: August 5, 2010 |
By: |
/s/ John F. Crowley
|
|
|
|
John F. Crowley |
|
|
|
Chairman, President and Chief Executive Officer |
|
|
|
|
|
Date: August 5, 2010 |
By: |
/s/ John M. McAdam
|
|
|
|
John M. McAdam |
|
|
|
Vice President, Finance and Accounting |
|
|