Edited transcript of the interview - yesterday - with Bradley Campbell, President and CEO of Amicus - read to the end - heaps of fascinating information!!
(note: editing has interviewer and interviewee back to front):
Full transcript - Goldman Sachs 46th Annual Global Healthcare Conference:
Bradley Campbell, President and CEO, Anicus Therapeutics: Bradley Campbell, the President and CEO of Anicus Therapeutics. Thank you so much for being here.
Unidentified speaker: Thank you for having us. Thanks to Goldman for hosting the conference. Nice to see everybody here today. Bradley Campbell, President and CEO, Anicus Therapeutics: Thank you. And to start off with a big picture question, can you give us a snapshot of your business today and your strategy with regard to commercial execution in the half of the year?
Unidentified speaker: Sure. Yes. At Amicus, our mission is to develop and deliver next generation therapies for people living with rare diseases. We are grounded in our core business, Galafold, which is the only oral therapy approved for Fabry disease. We will pass $500,000,000 in sales this year.
We have twelve more years of exclusivity on our way to $1,000,000,000 in peak sales, so very important part of our growth story. We’ve guided to 10% to 15% growth this year for Galafold. For Pompe disease, we’ve recently launched our new therapy, Pombility and Upholda for the treatment of Pompe disease. We’ll pass $100,000,000 in sales this year. Our guidance is 50% to 65% growth, well on our way again to $1,000,000,000 in sales.
We’re very excited about that with some additional development opportunities in particular in the pediatric population. And then we have our brand new asset, DMX200, which we licensed from Dimerix, indicated for FSGS, which is a rare kidney disease, high unmet need, really exciting new mechanism of action, and again, potential blockbuster potential.
So all of that is then underpinned by I think significant financial discipline. We’re on our way for a major milestone this year of GAAP profitability in the second half. And in a few short years, by the end of twenty twenty eight, we expect to see $1,000,000,000 in combined sales.
So we’ll continue to drive these exciting therapies forward in Fabry and Pompe, build to the story with FSGS and other opportunities going forward, and then continue to maintain financial discipline so we’re self sustainable and getting to profitability and positive free cash flow.
Bradley Campbell, President and CEO, Anicus Therapeutics: That’s wonderful. But what part of Anakus’ story do you think The Street is not appreciating enough, given the recent stock movements of it fair
Unidentified speaker: to say all of it? Is that a fair answer to the question? So no, it’s a great question. I think there’s a big piece of it, which I know we’ll get into, which is the macro environment. That’s hitting our whole sector and sharing some stories with investors who’ve been in the space for a long time.
Sometimes memories are short, but we’ve been in these kinds of dark days before. From macro perspective, I am highly confident, and we can talk more about it, that we’ll easily work our way out. I think Amicus is actually uniquely positioned to exit this period within a very strong trajectory. I do think if you just look at those core areas of our business that we talked about, Galafold as an example, clearly undervalued today. I think a few things that maybe people either look past when they’re looking more at the launch or don’t fully appreciate is, look, this is a $2,000,000,000 global market today.
It’s growing to $3,000,000,000 over the next ten years. Again, we’re starting this year, we believe, at over $05,000,000,000 in global sales for Fabry disease. We’ve got twelve more years of exclusivity on this product. I don’t think at all people are giving full credit to where Fabry is going just based on our track record. I also think there’s lots of reasons to believe that there could be even more diagnosis in the space and we could talk more about what those might be, but I think just Galafold alone, if we were a single product company with just that asset, I think we’d be a much more valuable company today.
The piece of course is Pompe and I know people are laser focused on the launch and we can talk about why we have great confidence in the launch. But again, if you just take a big step back and say, okay, year of launch into what is today over $1,500,000,000 market, growing again to over $2,000,000,000 over the next ten years. We’re already at $100,000,000 based on our guidance and sales this year over $100,000,000 So we’re off to a great start, and we can talk about why we think we’ll get more traction there, but clearly we don’t get full credit for Pompe or maybe any credit for Pompe.
And then maybe because FSGS is new to the story and we need to do some education why we’re so excited, but there’s no chance that that’s baked in. Again, if we were a single asset company with a highly derisked late phase three product for FSGS, we’d be worth a lot more than I think we would get credit for today.
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So look, I get the macro environment and happy to talk about why we think that we can work through those things, but I think there’s a lot of opportunity for investors. If you’re looking in a world today with so many companies who are starved for capital, who are running out of money, have big binary events that might be zeros or might be something positive, And then you look at Amicus, is delivering consistent growth, soon to be profitable growth, and now adding to the portfolio, I think there’s a lot of opportunity for us to put points on the board and create value for investors.
Bradley Campbell, President and CEO, Anicus Therapeutics: Definitely. And then if we just speak to the macro a bit, how would you say Amicus is positioned in the environment when you have tariff risks, IP, transfer pricing, most favored nation, all these dynamics?
Unidentified speaker: All the stuff. Yeah. Yeah. You know, Clearly the world, we all hate uncertainty and markets in particular hate uncertainty. I think part the issue is just macro uncertainty, impacts all of us.
Specifically for Amicus though, I do think that the potential risk is perhaps painted with a heavier brush on Amicus and our core business. But we really believe in fact that the actual impact of these various factors will be minimal if anything. I think a great example of this and maybe a lesson for all of us is the Biosecure Act. As a reminder, Biosecure last year was a big deal. It was talking about moving manufacturing from China to The United States, etcetera.
Huge impact for many of us who manufactured in China. And at the end of the day, the bill was never even passed. It was a total non factor. And the eventual bill was actually quite supportive of what would have been a very orderly transition to The US. So I think that’s a great example of this perceived black swan event that we very carefully had risk mitigated around and in the end was not a factor at all.
And if you had been smart, you could have taken advantage of some of that dislocation. If you think about what’s facing us this year, let’s start with tariffs. So tariffs are, you can debate the macroeconomic benefit or cost of tariffs, but as it relates to our business, what we’ve said very definitively is there is a nonmaterial impact on our business this year. Why is that? Because of all, the majority of our revenue comes from Galafold.
Galafold has a tiny, tiny cost of goods. It’s manufactured in Switzerland and so very, very little impact of any kind of potential tariff coming out of Switzerland. As it relates to Palmdale Ulfolda, we’re manufactured today in China. We’re moving that manufacturing to Ireland. It will enter The US supply chain in the back half of next year or early twenty twenty seven.
But even before then, for general supply chain continuity and security, we moved all of our commercial launch material to The United States already. So all of the material this year and a significant portion of what we have anticipating for next year is already in The US, so that’s not subject to tariffs. And frankly, if you take the most conservative view of tariffs and you apply that to some portion of the Pompe cost of goods going forward, The reality is it probably looks something like a 5% increase in cost of goods. So it is not, by any stretch, a significant material issue that we need to be worried about. And oh, by the way, we’re already long down the road of reducing our cost of goods through our generation process, and the benefits from that savings will more than outweigh any potential cost of tariffs, which who knows if they even survive through the next term of Congress or whomever.
So I think tariffs, again, are overblown as it relates to how they might impact Amicus. The one you mentioned is IP and transfer pricing. Good news is our IP sits in The United States, so there is no real issue there. MSN, that’s another one. Again, I’m not a trained economist, but I think we’ve seen a pattern of big headlines that then lead to something that’s much more pragmatic or reasonable as it relates to how this administration is operating.
And again, leaving aside whether we should or shouldn’t be paying more or less than Europe, just thinking about how this might impact amicus. I think the reality is, at least from what we see, what we believe, we think that there’s very little legal framework to enact what the president described in his executive order, his direction to CMS. Even if it does take effect, I think it goes something like the way IRA went, which is it focuses on the most expensive drugs in the space and typically rare diseases are excerpted from that. So I think there’s every chance that even if something does pass like that, we would be exempted from that just like with the IRA. And then the last piece is the reality is if you were to say worst case scenario, let’s just say that MFN does pass and so for Medicare, Medicaid business, you’re getting some sort of negotiation.
If you look at our global business across Fabry and Pompe and you assume a 50% reduction to that, that’s probably a 5% impact to our long term business. So again, do I want that outcome? No. Do I think it’s negative for innovation? 100%.
So I think there’s lots of different ways to do that and to work on pricing and access and affordability. But even in the worst case scenario, Amicus is actually fairly insulated from that outcome. So I think if you put all those things together, I get that there’s uncertainty, I get that that creates dislocations in value and I think we’re caught up in that. I think it’s a real opportunity to take advantage of that dislocation as it relates to amicus. The one piece that you didn’t mention, which I think is actually an opportunity, is the FDA.
So we heard a lot coming into the year about what happened to the FDA. You saw some very familiar, I think very industry friendly or industry neutral figures in the FDA forced to leave. And the question was, oh gosh, what’s gonna happen here? I think the reality is the new leadership has been very clear about supporting rare disease regulatory reform. And so I think the net net of all of this actually may be very positive reforms from a rare disease perspective.
And if you think about our new asset in FSGS, we very much could benefit from some of those changes.
Bradley Campbell, President and CEO, Anicus Therapeutics: That’s really helpful color. Now speaking to your guidance, so Amicus expects to achieve positive net income in the second half of ’twenty five. What is baked into this guidance? And what are your expectations around on the operating expense side heading into the later half of this year and on the forward, given Amicus has done an exceptional job in managing that to now?
Unidentified speaker: Sure. Thank you. Yes. So really the key drivers of how you get to the GAAP net income, of course we delivered our year of non GAAP net income positive last year, which is great. For this year, of course you have the top line revenue growth, our guidance is 15% to 22%, so very strong top line growth.
On the bottom line, or excuse me, the expense line, even with the new licensing payment from Dimerix, we’ve guided to $380,000,000 to $400,000,000 in expenses. So significantly more revenue than expenses gets you to that GAAP income in the of this year. And as it relates to go forward, if you look at just the core business right now without including DMX or any other future opportunities, what we’ve said is we will continue to tighten our OpEx spending. You’ll see a little bit of spend towards our ongoing registry and post marketing commitments. You’ll see a little bit of spend towards generation manufacturing.
But by and large, that will be largely flat or maybe some inflationary increases with a significant top line growth. So that will lead to naturally going from GAAP net income in sometime during the half to a full year to EBITDA and positive free cash flow. That’s what I think one of the challenges for a lot of other companies in the space right now is, yes, they have these macro issues. Yes, there’s other things going on and a lot of them need to raise capital. And that’s where you really get into trouble and that’s where Amicus is, I think, has differentiated itself.
So that’s kind of in the short term. One other exciting part about the DMX transaction is super excited about the asset, excited to collaborate with Dimerix, and I know we’ll talk more about that whole opportunity. But the way the deal was structured, we don’t have to invest a single dollar into R and D until we turn over the phase three data card. So it’s very smartly structured in the sense of, yes, we paid the $30,000,000 upfront for a billion dollar potential asset. We think that’s a great price to pay, and we don’thave to invest anything else from a development perspective at all during the transaction, but even from a commercial perspective, we don’t have to make those investments until we see a positive outcome.
So we think it’s very smartly structured and that’s another way to keep those expenses relatively flat where we grow the top line.
Bradley Campbell, President and CEO, Anicus Therapeutics: That’s great. Okay, last few minutes, we have to touch upon Dimerix.
Unidentified speaker: Yes.
Bradley Campbell, President and CEO, Anicus Therapeutics: And can you walk us through the due diligence that went through selecting this particular asset for licensing? So
Unidentified speaker: remember, we had said originally we wanted to bring in a derisked late stage asset that we could fit into our commercial capabilities. And we were very open to regional deals, although to be fair, we thought there was probably gonna be ex US deals primarily because a lot of companies in The United States are looking to leverage our ex Symphosate. Still could be an opportunity for us. We think it will be over time. Dimerix, Australian company, had already licensed the rights in Europe and in Japan to DMX two hundred, fit very well into our adjacent capabilities, rare disease, rare kidney disease, a lot of similarities with Fabry disease, significant unmet need.
So over forty thousand patients suffer from FSGS typically leads to significant morbidity and mortality. No approved therapies, so lots of the things that we look for for the right kind of opportunity. And then we looked at the diligence and said, okay, what does this look like? We saw a very clear mechanism of action pre clinically, so very straightforward from that perspective. We saw great phase two data, not just in FSGS where eighty five percent of patients had a reduction in proteinuria in the phase two, but also in multiple other diseases where they showed safety and efficacy on similar endpoints, so a broader population.
We also got to take a confidential look at the patient level data which gave us further confirmation of the effect that we were seeing in the broad population there. Then they entered into a phase three which is already underway, made Dimerix before we did the deal, and importantly had done an interim analysis that showed a statistically significant benefit in the treatment arm versus the control arm for a subset of the population that had been enrolled to that point. So another de risking event and we got a chance to look at some blinded data there too, which further supported the statistics. And then the last piece was you had the positive feedback from the FDA, which was a contingent to completing the deal And you saw just before we announced our deal, Dimerix, announced the FDA feedback, which confirmed proteinuria as the primary endpoint with GFR as a supportive endpoint. So put all those things together, we believe high probability of success, high unmet need.
And then the last piece was we thought a very, very risk reward based deal. So relatively low upfront, 30,000,000 to access the phase three data, which would get you to a billion dollar plus opportunity.
Bradley Campbell, President and CEO, Anicus Therapeutics: Okay. And then just in terms of the FSGS market, we have a bunch of other companies like Appellis, Vertex, who are exploring different mechanisms for this disease. How do you think DMX200 is differentiated over here? Unidentified speaker: So just as a reminder, this is kind of a cascade effect. You have hemodynamic impairment from an original insult to the kidney, be genetic, can be obesity or other comorbidities. That leads to a cascade of inflammation, monocyte macrophage activation, MCP-one elevates, leads to proteinuria, GFR scarring of the kidney and then you enter into this feedback loop. I think very fundamentally, most of the other mechanisms are focused on either the hemodynamic aspects of the disease or some other part of the disease. DMX is focused very much on the monocyte macrophage inflammation and elevated MCP-one.
What we’ve seen in phase two is that by blocking the signaling of MCP-one you can lead to lower proteinuria and a subset of the population that isn’t addressed by some of those other mechanisms. So we do think there could be synergistic applications of some of these different products, but we think we’re in a very differentiated mechanism, a very important subset of the population, and we think a very likely, a high probability of success phase three that acts specifically on that target area of the disease, which leads to a significant opportunity for patients.
Bradley Campbell, President and CEO, Anicus Therapeutics: That’s really interesting. And just one last question on business development following Dimerix. Has your strategy changed? What’s the outlook there?
Unidentified speaker: I would say strategy hasn’t changed. Like, Ink is still kind of drying on the Dimerix deal, so I wouldn’t expect anything right away. I do still think that in the backdrop of a highly leverageable Ex U. S. Infrastructure, there’s an opportunity to bring something into that part of the business.
I think in kind of the medium or long term, like Amicus five years from now, we’ll be generating again free cash flow, profitability. I would like to see us use some of that to put towards new development opportunities in Fabry and Pompe or perhaps other disease areas. So the amicus of five years from now, significant revenue growth, profitability, more commercial products like DMX200, and then hopefully some interesting products in the clinic as well.
Bradley Campbell, President and CEO, Anicus Therapeutics: Great, thank you so much. Thank done with the session. Unidentified speaker: Of course, thanks very much, appreciate it.
Bradley Campbell, President and CEO, Anicus Therapeutics: Yeah. This is great having you, and thank you to everyone who’s attended the session.
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