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Article by DailyStocks_admin    (03-13-12 03:00 AM)

Description

Amicus Therapt. Director, 10% Owner M JAMES BARRETT bought 925154 shares on 3-07-2012 at $ 5.7

BUSINESS OVERVIEW

Overview

We are a biopharmaceutical company focused on the discovery, development and commercialization of orally-administered, small molecule drugs known as pharmacological chaperones, a novel, first-in-class approach to treating a broad range of diseases including lysosomal storage diseases and diseases of neurodegeneration. We believe that our pharmacological chaperone technology, our advanced product pipeline, especially our lead product candidate for Fabry disease, migalastat HCl, a strong balance sheet and our strategic collaboration with GlaxoSmithKline uniquely position us at the forefront of developing therapies for rare and orphan diseases.

We are focused on the development of pharmacological chaperones as monotherapies and in combination with enzyme replacement therapy (ERT), the current standard of treatment for Fabry and other lysosomal storage diseases. In 2012, we are advancing two monotherapy programs for genetic diseases:


•

Migalastat HCl for patients with Fabry disease identified as having alpha-galactosidase A (alpha-Gal A) mutations amenable to chaperone therapy, and


•

AT3375 for Parkinson’s disease in Gaucher disease carriers and potentially the broader Parkinson’s population.

Our pharmacological chaperone-ERT combination programs for 2012 include:


•

Migalastat HCl co-administered with ERT for patients with Fabry disease receiving ERT treatment with any genetic mutation,


•

AT2220 (duvoglustat HCl) co-administered with ERT for Pompe disease,


•

AT3375 and afegostat tartrate co-administered with ERT for Gaucher disease, and


•

Several new, undisclosed pharmacological chaperone programs focused on the combination of chaperones with ERTs for additional lysosomal storage diseases.

Fabry and other lysosomal storage diseases such as Gaucher and Pompe diseases are among certain human diseases that are caused by mutations in specific genes that, in many cases, lead to the production of proteins with reduced stability. Proteins with such mutations may not fold into their correct three-dimensional shape and are generally referred to as misfolded or unstable proteins. Misfolded or unstable proteins are often recognized by cells as having defects and, as a result, may be eliminated prior to reaching their intended location in the cell. The reduced biological activity of these proteins leads to impaired cellular function and ultimately to disease.

Our novel approach to the treatment of human genetic diseases consists of using pharmacological chaperones that selectively bind to the target protein, increasing the stability of the protein and helping it fold into the correct three-dimensional shape. This allows proper trafficking of the protein 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, migalastat HCl for Fabry disease, is in late Phase 3 development. We are developing and commercializing migalastat HCl with an affiliate of GlaxoSmithKline PLC (GSK) pursuant to a License and Collaboration Agreement entered into in October 2010. Our partnership with GSK allows us to utilize GSK’s significant expertise in clinical, regulatory, commercial and manufacturing matters in the development of migalastat HCl. In addition, the cost-sharing arrangements and potential milestone and royalty payments under the License and Collaboration Agreement provide us with the financial resources to continue the development of migalastat HCl while also advancing our other programs. We also believe this collaboration is important in validating our status as a leader in the development of treatments for rare diseases given the increasing focus placed on the rare disease field.

Our Phase 3 clinical development program for the use of migalastat HCl as monotherapy in Fabry disease includes two global registration studies for patients with Fabry disease identified as having alpha-Gal A mutations amenable to migalastat HCl: Study 011 and Study 012. We completed enrollment of 67 patients in Study 011, our placebo-controlled Phase 3 study, in December 2011 and expect results in the third quarter of 2012. We plan to use the data from Study 011 to support the submission of a New Drug Application, or NDA, to the U.S. Food and Drug Administration (FDA) for marketing approval in the United States and other regulatory agencies. Study 012 is our second Phase 3 study for migalastat HCl study intended to support the worldwide registration of migalastat HCl for Fabry disease. We dosed the first patient in Study 012 in September 2011 to compare the safety and efficacy of migalastat HCl and ERT and expect to complete enrollment of approximately 50 patients by the end of 2012.

We believe migalastat HCl may have advantages over ERT. While ERT compensates for the reduced level of activity of specific enzymes through regular infusions of recombinant forms of the enzyme, our approach uses orally-administered small molecule pharmacological chaperones to improve the function of the enzyme that is made by the patient’s own body. We believe this approach to treating these diseases could provide benefits to patients through better bio-distribution and ease of use.

In addition to potential benefits pharmacological chaperones may provide as a monotherapy, we also believe the use of pharmacological chaperones co-administered with ERT may address certain key limitations of ERT. The use of pharmacological chaperones co-administered with ERT may improve the characteristics of ERT by, among other effects, prolonging the half-life of infused enzymes in the circulation, increasing uptake of the infused enzymes into cells and tissues, mitigating immunogenicity, and increasing enzyme activity and substrate reduction in target tissues compared to that observed with ERT alone. We, along with our partner GSK, are currently conducting a Phase 2 study (Study 013) to evaluate migalastat HCl co-administered with ERT in Fabry patients. We recently presented preliminary positive data from Study 013 which included, in part, increases in levels of active enzyme in plasma and skin demonstrating a positive drug-drug interaction between migalastat HCl and ERT. We expect to complete Study 013 in the first half of 2012.

In addition, we are conducting another Phase 2 co-administration study (Study 010) evaluating our pharmacological chaperone AT2220 (duvoglustat HCl) co-administered with ERT in Pompe patients. Unlike migalastat HCl, we own exclusive rights to the development of AT2220. We expect to announce preliminary results from Study 010 in the first half of 2012. We also plan to increase our commitment to the broader application of the chaperone-ERT combination technology as a potential next-generation treatment approach for multiple lysosomal storage diseases in 2012. We are continuing our preclinical work investigating our pharmacological chaperones AT3375 and afegostat tartrate co-administered with ERT for Gaucher disease, and have initiated new undisclosed pharmacological chaperone research and development programs to investigate the use of chaperones in combination with other ERTs.

Although Fabry, Gaucher and Pompe are relatively rare diseases, they represent substantial commercial markets due to the severity of the symptoms and the chronic nature of the diseases. The publicly-reported worldwide net product sales for the six currently approved therapeutics to treat Fabry, Gaucher and Pompe disease were approximately $2.0 billion in 2011.

While our initial clinical efforts have focused on the use of pharmacological chaperones to treat lysosomal storage diseases, we believe that our technology may be applicable to the treatment of certain diseases of neurodegeneration. We have been a pioneer in investigating the link between Gaucher and Parkinson’s disease, and have been exploring the possibility of using pharmacological chaperones that target glucocerebrosidase (GCase), the enzyme deficient in Gaucher disease, for more than five years. In 2011, numerous peer-reviewed publications in leading scientific journals reported additional information on the underlying mechanisms that link Gaucher and Parkinson’s, and further validated GCase as a target for the treatment of the disease. In particular, these new papers demonstrated a direct connection between GCase and alpha-synuclein, whose accumulation in the brain is a hallmark of Parkinson’s, and showed that increased GCase activity in the brain of mouse models could reduce alpha-synuclein pathology and other deficits. We will continue preclinical and IND-enabling studies for the pharmacological chaperone AT3375, which targets the same GCase enzyme that is deficient in Gaucher disease. These preclinical studies are anticipated to be complete by year-end 2012 and are funded in part by a grant awarded by the Michael J. Fox Foundation.

Our Pharmacological Chaperone Technology

In the human body, proteins are involved in almost every aspect of cellular function. Proteins are linear strings of amino acids that fold and twist into specific three-dimensional shapes in order to function properly. Certain human diseases result from mutations that cause changes in the amino acid sequence of a protein, and these changes often reduce protein stability and may prevent them from folding properly. The majority of genetic mutations that lead to the production of less stable or misfolded proteins are called missense mutations. These mutations result in the substitution of a single amino acid for another in the protein. Because of this type of error, missense mutations often result in proteins that have a reduced level of biological activity.

Proteins generally fold in a specific region of the cell known as the endoplasmic reticulum (ER). The cell has quality control mechanisms that ensure that proteins are folded into their correct three-dimensional shape before they can move from the ER to the appropriate destination in the cell, a process generally referred to as protein trafficking. Misfolded proteins are often eliminated by the quality control mechanisms after initially being retained in the ER. In certain instances, misfolded or unstable proteins can accumulate in the ER before being eliminated.

Overview

Our most advanced product candidate, migalastat HCl, is an investigational, orally-administered, small molecule pharmacological chaperone for the treatment of Fabry disease. In October, 2010, we entered into a License and Collaboration Agreement with GSK to develop and commercialize migalastat HCl. Under the terms of the License and Collaboration Agreement, GSK received an exclusive worldwide license to develop, manufacture and commercialize migalastat HCl. In consideration of the license grant, we received an upfront license payment of $30 million and are eligible to receive further payments of up to approximately $170 million upon the successful achievement of development, regulatory and commercialization milestones, as well as tiered double-digit royalties on global sales of migalastat HCl. We are jointly funding development costs with GSK in accordance with an agreed upon development plan, pursuant to which we funded 50% of the development costs in 2011 and will fund only 25% of the development costs for 2012 and beyond, subject to annual and aggregate caps.

Clinical Studies of Migalastat HCl Monotherapy for Fabry Disease

Study 011 is a six-month, placebo-controlled global Phase 3 study of migalastat HCl for Fabry disease to support marketing applications for the FDA and other regulatory agencies. In September 2009, the first patient was randomized in Study 011 to receive migalastat HCl 150 mg or placebo on an every-other-day (QOD) oral dosing schedule for a six-month double-blinded treatment period. During a six-month open-label follow up period, patients continue treatment with migalastat HCl or switch from placebo to migalastat HCl. We exceeded our target enrollment of 60 patients for Study 011 when we enrolled our 67 th and final patient in December 2011. As of December 31, 2011, 24 of 26 patients who have completed the six-month treatment and six-month follow-up periods are currently enrolled in the ongoing Phase 3 extension study and remain on migalastat HCl treatment. We expect results from this study in the third quarter of 2012.

The primary efficacy endpoint for Study 011 is a change in interstitial capillary globotriaosylceramide (GL-3), the substrate that accumulates in Fabry disease, as measured by kidney biopsy. Patients in Study 011 with a reduction of GL-3 deposits per capillary of at least 50% at six months will be considered responders. The final analysis will compare the number of responders in the migalastat HCl group vs. the placebo group. Secondary endpoints for Study 011 include safety and tolerability, urine GL-3, renal function, and quality of life (QOL). Urine GL-3 will be analyzed using the first analytically validated GLP assay, which was developed by Amicus to measure forms of GL-3 found in kidney cells. Renal function will be assessed by measuring iohexol glomerular filtration rate (GFR), eGFR, and 24-hour urine protein.

Study 012 is our second Phase 3 study intended to support the worldwide registration of migalastat HCl for Fabry disease. Study 012 is a randomized, open-label, 18-month Phase 3 study to compare the safety and efficacy of migalastat HCl and ERT in male and female patients with Fabry disease. The study will randomize approximately 50 patients (30 to switch to migalastat HCl and 20 to remain on ERT) identified as having alpha-Gal A mutations amenable to migalastat HCI and who have been treated with either of the ERTs currently marketed (Fabrazyme ® (agalsidase beta) or Replagal ® (agalsidase alfa)) for Fabry disease for at least 12 months. Subjects in the migalastat HCl treatment arm will receive 150 mg of migalastat HCl every other day, while those in the ERT alone arm will continue on their current dose and regimen. The primary outcome of efficacy will be renal function as measured by glomerular filtration rate (GFR) for the migalastat HCl and ERT groups at 18 months. The primary analysis will use descriptive statistics to compare the mean changes in GFR for each arm. Secondary outcomes of efficacy include renal function as measured by 24-hour urine protein and other clinical outcomes. The first patient in Study 012 commenced dosing in September 2011 and we expect to complete enrollment by the end of 2012, although timelines may be influenced by the continuing ERT shortage.

Causes of Fabry Disease and Rationale for Use of Migalastat HCl

Fabry disease is a lysosomal storage disease resulting from a deficiency in a -GAL A. Symptoms can be severe and debilitating, including kidney failure and increased risk of heart attack and stroke. The deficiency of a -Gal A in Fabry patients is caused by inherited genetic mutations. Certain of these mutations cause changes in the amino acid sequence of a -Gal A that may result in the production of a -Gal A with reduced stability that does not fold into its correct three-dimensional shape. Although a -Gal A produced in patient cells often retains the potential for some level of biological activity, the cell’s quality control mechanisms recognize and retain misfolded a -Gal A in the ER, until it is ultimately moved to another part of the cell for degradation and elimination. Consequently, little or no a -Gal A moves to the lysosome, where it normally breaks down GL-3. This leads to accumulation of GL-3 in cells, which is believed to be the cause of the symptoms of Fabry disease. In addition, accumulation of the misfolded a -Gal A enzyme in the ER may lead to stress on cells and inflammatory-like responses, which may contribute to cellular dysfunction and disease.

Migalastat HCl is designed to act as a pharmacological chaperone for a -Gal A by selectively binding to the enzyme, which increases its stability and helps the enzyme fold into its correct three-dimensional shape. This stabilization of a -Gal A allows the cell’s quality control mechanisms to recognize the enzyme as properly folded so that trafficking of the enzyme to the lysosome is increased, enabling it to carry out its intended biological function, the metabolism of GL-3. As a result of restoring the proper trafficking of a -Gal A from the ER to the lysosome, migalastat HCl also reduces the accumulation of misfolded protein in the ER, which may alleviate stress on cells and some inflammatory-like responses that may be contributing factors in Fabry disease.

Because migalastat HCl increases levels of a patient’s naturally produced a -GAL, those Fabry disease patients with a missense mutation or other genetic mutations that result in production of a -Gal A that is less stable but with some residual enzyme activity are the ones most likely to respond to treatment with migalastat HCl. We estimate that approximately fifty percent of patients with Fabry disease may have alpha-Gal A mutations that are amenable to migalastat HCl as a monotherapy. Patients with genetic mutations leading to a partially made a -Gal A enzyme or a -Gal A enzyme with an irreversible loss of activity are less likely to respond to treatment with migalastat HCl as a monotherapy. However, we believe that all Fabry patients are potentially treatable with migalastat HCl in combination with ERT.

Fabry Disease Background

The clinical manifestations of Fabry disease span a broad spectrum of severity and roughly correlate with a patient’s residual a -Gal A levels. The majority of currently treated patients are referred to as classic Fabry disease patients, most of whom are males. These patients experience disease of various organs, including the kidneys, heart and brain, with disease symptoms first appearing in adolescence and typically progressing in severity until death in the fourth or fifth decade of life. A number of studies suggest that there are a large number of undiagnosed males and females that have a range of Fabry disease symptoms, such as impaired cardiac or renal function and strokes, that usually first appear in adulthood.

MANAGEMENT DISCUSSION FROM LATEST 10K

Overview

Amicus Therapeutics, Inc. (Amicus) is a biopharmaceutical company focused on the discovery, development and commercialization of orally-administered, small molecule drugs known as pharmacological chaperones, a novel, first-in-class approach to treating a broad range of diseases including lysosomal storage diseases and diseases of neurodegeneration. We believe that our pharmacological chaperone technology, our advanced product pipeline, especially our lead product candidate, migalastat HCl, and our strategic collaboration with GSK uniquely position us as a leader in the development of treatments for rare and orphan diseases.

We are focused on the development of pharmacological chaperone monotherapy programs and pharmacological chaperones in combination with enzyme replacement therapy (ERT), the current standard of treatment for Fabry and other lysosomal storage disease. In 2012, we are advancing two pharmacological chaperone monotherapy programs for genetic diseases:


•

Migalastat HCl for patients with Fabry disease identified as having alpha-galactosidase A (alpha-Gal A) mutations amenable to chaperone therapy, and


•

AT3375 for Parkinson’s disease in Gaucher disease carriers and potentially the broader Parkinson’s population.

Our pharmacological chaperone-ERT combination programs for 2012 include:


•

Migalastat HCl co-administered with ERT for patients with Fabry disease receiving ERT treatment with any genetic mutation,


•

AT2220 (duvoglustat HCl) co-administered with ERT for Pompe disease,


•

AT3375 and afegostat tartrate co-administered with ERT for Gaucher disease, and


•

Several new, undisclosed pharmacological chaperone programs focused on the combination of chaperones with ERTs for additional lysosomal storage 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, migalastat HCl for Fabry disease, is in late Phase 3 development. We are developing and commercializing migalastat HCl with an affiliate of GSK pursuant to a License and Collaboration Agreement entered into in October 2010. Our partnership with GSK allows us to utilize GSK’s significant expertise in clinical, regulatory, commercial and manufacturing matters in the development in migalastat HCl. In addition, the cost-sharing arrangements and potential milestone and royalty payments under the License and Collaboration Agreement provide us with financial strength and allow us to continue the development of migalastat HCl while also advancing our other programs. We also believe this collaboration is important in validating our status as a leader in the development of treatments for rare diseases given the increasing focus placed on the rare disease field.

Our Phase 3 clinical development program for the use of migalastat HCl as monotherapy in Fabry disease includes two global registration studies for patients with Fabry disease identified as having alpha-Gal A mutations amenable to migalastat HCl: Study 011 and Study 012. We completed enrollment of 67 total patients in Study 011, our placebo-controlled Phase 3 study, in December 2011 and expect results in the third quarter of 2012. We plan to use the data from Study 011 to support the submission of a New Drug Application, or NDA, to the FDA for marketing approval in the United States and to potentially support marketing applications for other regulatory agencies. Study 012 is our second phase 3 study for migalastat HCl intended to support the worldwide registration of migalastat HCl for Fabry disease. We dosed the first patient in Study 012 in September 2011 to compare the safety and efficacy of migalastat HCl and ERT (agalsidase beta or agalsidase alfa) and expect to complete enrollment of approximately 50 patients by the end of 2012, although timelines may be influenced by the continuing ERT shortage.

While our initial clinical efforts have focused on the use of pharmacological chaperones to treat lysosomal storage diseases, we believe that our technology may be applicable to the treatment of certain diseases of neurodegeneration.

We have been a pioneer in investigating the link between Gaucher and Parkinson’s disease, and have been exploring the possibility of using pharmacological chaperones that target glucocerebrosidase (GCase), the enzyme deficient in Gaucher disease, for more than five years. In 2011, numerous peer-reviewed publications in leading scientific journals reported additional information on the underlying mechanisms that link Gaucher and Parkinson’s, and further validated GCase as a target for the treatment of the disease. In particular, these new papers demonstrated a direct connection between GCase and alpha-synuclein, whose accumulation in the brain is a hallmark of Parkinson’s, and showed that increased GCase activity in the brain of mouse models could correct alpha-synuclein pathology and other deficits. We will continue preclinical and IND-enabling studies for the pharmacological chaperone AT3375, which targets the same GCase enzyme that is deficient in Gaucher disease. These preclinical studies are anticipated to be complete by year-end 2012 and are funded in part by a grant awarded by the Michael J. Fox Foundation.

We have generated significant losses to date and expect to continue to generate losses as we continue the clinical development of our drug candidates, including migalastat HCl, 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 December 31, 2011, we have accumulated a deficit of $270.1 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 in the near term.

Collaboration with GSK

On October 28, 2010, we entered into the License and Collaboration Agreement with Glaxo Group Limited, an affiliate of GSK, to develop and commercialize migalastat HCl. Under the terms of the License and Collaboration Agreement, GSK received an exclusive worldwide license to develop, manufacture and commercialize migalastat HCl. In consideration of the license grant, we received an upfront, license payment of $30 million from GSK and we are eligible to receive further payments of up to $173.5 million upon the successful achievement of development, regulatory and commercialization milestones, as well as tiered double-digit royalties on global sales of migalastat HCl. Potential payments include up to (i) $13.5 million related to the attainment of certain clinical development objectives and the acceptance of regulatory filings in select worldwide markets, (ii) $80 million related to market approvals for migalastat HCl in selected territories throughout the world, and (iii) $80 million associated with the achievement of certain sales thresholds. We and GSK are jointly funding development costs in accordance with an agreed upon development plan pursuant to which we funded 50% of the development costs in 2011 and we will fund only 25% of the development costs in 2012 and beyond, subject to annual and aggregate caps. Additionally, GSK purchased approximately 6.9 million shares of our common stock at a price of $4.56 per share. The total value of this equity investment to us was approximately $31 million and represents a 19.8% ownership position in us as of December 31, 2011. Under the terms of the collaboration agreement, while we will collaborate with GSK, GSK will have decision-making authority over clinical, regulatory and commercial matters. Additionally, GSK will have primary responsibility for interactions with regulatory agencies and prosecuting applications for marketing and reimbursement approvals worldwide.

Other Potential Alliances and Collaborations

We continually evaluate other potential collaborations and business development opportunities that would bolster our ability to develop therapies for rare and orphan diseases including licensing agreements and acquisitions of businesses and assets. We believe such opportunities may be important to the advancement of our current product candidate pipeline, the expansion of the development of our current technology, gaining access to new technologies and in our transformation from a development stage Company to a commercial biotechnology Company.

Financial Operations Overview

Revenue

In November 2010, GSK paid us an initial, non-refundable license fee of $30 million and a premium of $3.2 million related to GSK’s purchase of an equity investment in us. The total upfront consideration received of $33.2 million will be recognized as Collaboration Revenue on a straight-line basis over the development period of the collaboration agreement which is approximately 5.2 years. For the year ended December 31, 2011, we recognized approximately $6.6 million of the total upfront consideration as Collaboration Revenue and approximately $14.8 million of Research Revenue for reimbursed research and development costs.

General and Administrative Expense

General and administrative expense consists primarily of salaries and other related costs, including stock-based compensation expense, for persons serving in our executive, finance, accounting, 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 December 31, 2011, we spent $113.2 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 agreements.

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. We believe that the following discussion represents our critical accounting policies.

Revenue Recognition

We recognize 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 multiple element arrangements, revenue is allocated to each separate unit of accounting and each deliverable in an arrangement is evaluated to determine whether it represents separate units of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value and there is no general right of return for the delivered elements. In instances when the aforementioned criteria are not met, the deliverable is combined with the undelivered elements and the allocation of the arrangement consideration and revenue recognition is determined for the combined unit as a single unit of accounting. Allocation of the consideration is determined at arrangement inception on the basis of each unit’s relative selling price. In instances where there is determined to be a single unit of accounting, the total consideration is applied as revenue for the single unit of accounting and is recognized over the period of inception through the date where the last deliverable within the single unit of accounting is expected to be delivered.

Our current revenue recognition policies, which were applied in fiscal 2010, provide that, when a collaboration arrangement contains multiple deliverables, such as license and research and development services, we allocate revenue to each separate unit of accounting based on a selling price hierarchy. The selling price hierarchy for a deliverable is based on (i) its vendor specific objective evidence (VSOE) if available, (ii) third party evidence (TPE) if VSOE is not available, or (iii) estimated selling price (BESP) if neither VSOE nor TPE is available. We would establish the VSOE of selling price using the price charged for a deliverable when sold separately. The TPE of selling price would be established by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarly situated customers. The best estimate of selling price would be established considering internal factors such as an internal pricing analysis or an income approach using a discounted cash flow model.

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. We record these reimbursements as revenue and not as a reduction of research and development expenses as we have not commenced our planned principal operations (i.e., selling commercial products) and we are a development stage enterprise, therefore development activities are part of our ongoing central operations.

Our collaboration agreement with GSK provides for, and any future collaboration agreements we may enter into also may provide for contingent milestone payments. In order to determine the revenue recognition for these contingent milestones, we evaluate the contingent milestones using the criteria as provided by the FASB guidance on the milestone method of revenue recognition at the inception of a collaboration agreement. The criteria requires that (i) we determine if the milestone is commensurate with either our performance to achieve the milestone or the enhancement of value resulting from our activities to achieve the milestone, (ii) the milestone be related to past performance, and (iii) the milestone be reasonable relative to all deliverable and payment terms of the collaboration arrangement. If these criteria are met then the contingent milestones can be considered as substantive milestones and will be recognized as revenue in the period that the milestone is achieved.

Results of Operations

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Revenue. Total revenue for the year ended December 31, 2011 consisted of payments received from GSK for shared development costs for migalastat HCl (research revenue) and the recognized portion of the $33.2 million upfront cash payment received from GSK (collaboration revenue). For the year ended December 31, 2011, we recognized $6.6 million of the total upfront consideration as Collaboration Revenue, compared to $0.9 million in the prior year and $14.8 million of Research Revenue for reimbursed research and development costs in 2011. We did not recognize any Research Revenue in 2010 and we have not generated any commercial sales revenue since our inception.

Research and Development Expense. Research and development expense was $50.9 million in 2011 representing an increase of $11.9 million or 31% from $39.0 million in 2010. The variance was primarily attributable to a $7.4 million increase in contract research related to clinical trials, a $4.5 million increase in GSK collaboration fees, and higher personnel costs of $2.1 million, partially offset by a $3.0 million decrease in license fees and $1.4 million decrease in manufacturing costs.

General and Administrative Expense. General and administrative expense was $19.9 million in 2011, an increase of $4.2 million or 27% from $15.7 million in 2010. The variance was primarily due to additional stock option compensation expense recognized of $2.7 million as a result of the change in the terms of the Chief Executive Officer’s stock options resulting from his resignation and subsequent reappointment to the Chief Executive Officer position as well as a severance related compensation charge of $0.6 million related to the resignation of our former President and the vesting of his restricted stock award. In addition, there were increases in recruitment fees, professional fees, and consulting fees of $1.0 million.

Depreciation and Amortization. Depreciation and amortization expense was $1.6 million in 2011, a decrease of $0.5 million or 24% from $2.1 million in 2010. The decrease in depreciation was due to a smaller depreciable asset base at December 31, 2011.

Interest Income and Interest Expense. Interest income was $0.2 million in both 2011 and 2010. Interest expense was $0.1 million in 2011, a decrease of $0.2 million from $0.3 million in 2010.

Change in Fair Value of Warrant Liability. In connection with the sale of our common stock and warrants from the registered direct offering in March 2010, we recorded the warrants as a liability at their fair value using a Black-Scholes model and will remeasure the fair value at each reporting date until exercised or expired. Changes in the fair value of the warrants are reported in the statements of operations as non-operating income or expense. For the year ended December 31, 2011, we reported a gain of $2.8 million related to the decrease in fair value of these warrants from the year ended December 31, 2010. The market price for our common stock has been and may continue to be volatile. Consequently, future fluctuations in the price of our common stock may cause significant increases or decreases in the fair value of these warrants.

Other Income/Expense. Other income decreased due to funds received from the U.S. Treasury Department in 2010 of $1.4 million compared to $0.1 million in 2011 for the Qualified Therapeutic Discovery Projects tax credit and grant program.

Tax Benefit. During 2010 and 2011, we sold a portion of our New Jersey state net research and development credits, which resulted in the recognition of $1.1 million and $3.6 million in income tax benefits for the years ended December 31, 2010 and 2011, respectively. Assuming the State of New Jersey continues to fund this program, which is uncertain, the future amount of net operating loss and research and development credit carry forwards which we may sell will also depend upon the allocation among qualifying companies of an annual pool established by the State of New Jersey.

Net Operating Loss Carry forwards. As of December 31, 2011, the Company had federal and state net operating loss carry forwards, or NOLs, of approximately $110 million and $179 million, respectively. The federal carry forward will begin to expire in 2026 and will end in 2031. The state carry forwards acquired prior to 2009 will begin to expire in 2013 and will end in 2017. Section 382 of the Internal Revenue Code of 1986, as amended, contains provisions which limit the amount of NOLs that companies may utilize in any one year in the event of cumulative changes in ownership over a three-year period in excess of 50%. During 2011, there was no ownership change in excess of 50%; therefore there was no write-down to net realizable value of the federal NOLs subject to the 382 limitations.

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

Revenue. Total revenue for the year ended December 31, 2010 was $0.9 million compared to $64.5 million for the year ended December 31, 2009. In November 2010, GSK paid us an initial, non-refundable license fee of $30 million and a premium of $3.2 million related to GSK’s purchase of an equity investment in Amicus. The total upfront consideration received of $33.2 million will be recognized as Collaboration Revenue on a straight-line basis over the development period of the collaboration agreement which is approximately 5.2 years. For the year ended December 31, 2010, we recognized $0.9 million of the total upfront consideration as Collaboration Revenue. We have not generated any commercial sales revenue since our inception.

Research and Development Expense. Research and development expense was $39.0 million in 2010 representing a decrease of $9.1 million or 19% from $48.1 million in 2009. The variance was primarily attributable to lower personnel costs of $2.1 million associated with the 2009 work force reduction, a $0.7 million decrease in contract manufacturing costs due to the timing of batch production and a $6.0 million decrease in contract research related to clinical trials.

MANAGEMENT DISCUSSION FOR LATEST QUARTER
Overview
Amicus Therapeutics, Inc. (Amicus) is a biopharmaceutical company focused on the discovery, development and commercialization of orally-administered, small molecule drugs known as pharmacological chaperones for the treatment of rare diseases. Pharmacological chaperones are a novel, first-in-class approach to treating a broad range of diseases including lysosomal storage disorders and diseases of neurodegeneration. Our current areas of focus include the following:
• the Phase 3 development of our lead product candidate, Amigal for Fabry disease;
• the preclinical and clinical development of pharmacological chaperones co-administered with enzyme replacement 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) for Fabry disease, is in Phase 3 development. We are developing and commercializing Amigal with an affiliate of GlaxoSmithKline PLC (GSK) pursuant to a License and Collaboration Agreement entered into in October 2010. Our partnership with GSK allows us to utilize GSK’s significant expertise in clinical, regulatory, commercial and manufacturing matters in the development of Amigal. In addition, the cost-sharing arrangements and potential milestone and royalty payments under the License and Collaboration Agreement provide us with financial strength and allow us to continue the development of Amigal while also advancing our other programs for the treatment of other lysosomal storage disorders and neurodegenerative diseases. We also believe this collaboration is important in validating our status as a leader in the development of treatments for rare diseases given the increasing focus placed on the rare disease field.
Our Phase 3 clinical development program for the use of Amigal as monotherapy in Fabry disease includes two clinical trials: Study 011 and Study 012. Patient recruitment in Study 011 is closed and we continue to anticipate full enrollment by the end of 2011. In addition, the first patient in Study 012 commenced dosing in the third quarter of 2011. We plan to use the data from Study 011 to support the filing of a New Drug Application, or NDA, for marketing approval in the United States and the data from Study 012 to support the filing of an application for marketing authorization in Europe.
In addition to potential benefits pharmacological chaperones may provide as a monotherapy, we also believe the use of pharmacological chaperones co-administered with ERT may address certain key limitations of ERT. The use of pharmacological chaperones co-administered with ERT may significantly enhance the safety and efficacy of ERT by, among other effects, prolonging the half-life of infused enzymes in the circulation, increasing uptake of the infused enzymes into cells and tissues, and increasing enzyme activity and substrate reduction in target tissues compared to that observed with ERT alone. We are evaluating the use of pharmacological chaperones co-administered with ERT in two Phase 2 clinical studies, one evaluating the use of Amigal co-administered with ERT for Fabry disease and another evaluating the use of AT2220 co-administered with ERT for Pompe disease. We are also continuing preclinical studies evaluating the use of a pharmacological chaperone co-administered with ERT for the treatment of Gaucher disease.

While our initial clinical efforts have focused on the use of pharmacological chaperones to treat lysosomal storage disorders, we believe that our technology may be applicable to the treatment of certain diseases of neurodegeneration. Our lead preclinical program in this area is focused on Parkinson’s disease, where we expect to complete late-stage preclinical proof of concept studies, including IND-enabling activities, for our pharmacological chaperone molecule AT3375 during 2011. Our second preclinical program in this area is focused on Alzheimer’s disease. Our preclinical work in both Parkinson’s and Alzheimer’s disease is presently focused on genetically-defined subpopulations of Parkinson’s and Alzheimer’s patients and leverages our expertise and knowledge in the rare disease field.
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 September 30, 2011, we have accumulated a deficit of $261.4 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 at least the next couple of years.
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. 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 $17.1 million.
Program Status
Amigal for Fabry Disease: Phase 3 Global Registration Program
We and our partner GSK are conducting two Phase 3 registration studies to support the global approval of Amigal for the treatment of Fabry disease. Both studies are evaluating Fabry patients with genetic mutations that may be addressable with Amigal monotherapy.
Study 011 is a six-month, randomized, double-blind, placebo-controlled study to support marketing applications to the FDA and other regulatory agencies. Patient recruitment is closed at 37 centers worldwide, and the study is expected to achieve target enrollment in the fourth quarter of 2011.
During the third quarter of 2011, we and GSK dosed the first patient in Study 012 to support the global approval of Amigal. Study 012 is a randomized, open-label, 18-month Phase 3 study to compare the safety and efficacy of Amigal and ERT. Approximately 50 male or female patients that are currently on ERT will be randomized (30 to switch to Amigal and 20 to remain on ERT). The primary outcome of efficacy will be renal function as measured by glomerular filtration rate (GFR).
Pharmacological Chaperone-ERT (PC-ERT) Co-Administration for Lysosomal Storage Disorders
The broader use of pharmacological chaperones co-administered with ERT represents an important extension of the Company’s chaperone technology platform. Results of preclinical studies in animal models of Fabry and Pompe diseases have consistently demonstrated that a pharmacological chaperone can selectively bind to and stabilize the infused ERT, prevent the loss of activity of ERT in the circulation, increase tissue uptake of the ERT, and increase substrate reduction over ERT alone.
Two Phase 2 PC-ERT co-administration studies are currently underway to build from these preclinical proof-of-concept results and potentially create a platform for expansion into other lysosomal storage disorders that are currently treated with ERT.

We plan to announce preliminary results in the fourth quarter of 2011 from a Phase 2 study (Study 013) being conducted with GSK investigating drug-drug interactions between Amigal and ERT. After an initial ERT infusion, patients will return two weeks later to receive Amigal at one of two oral dose levels, prior to a second ERT infusion. The primary outcome measures will be safety and a comparison of the ERT activity in plasma, with and without co-administration of Amigal, in up to 18 male patients with Fabry disease.
We have also initiated sites for a Phase 2 study (Study 010) of AT2220 co-administered with ERT (Myozyme/Lumizyme) in individuals with Pompe disease. This study is on track to dose the first patient in the fourth quarter of 2011 and follows the same principle as Study 013 to investigate drug-drug interactions between AT2220 and ERT. The primary outcome measures will be safety and a comparison of the ERT activity in plasma, with and without co-administration of AT2220.
Pharmacological Chaperones for the Treatment of Parkinson’s and Alzheimer’s Disease
Based on genetic links between Parkinson’s and Gaucher disease, we are developing AT3375 for Parkinson’s disease. AT3375 is a pharmacological chaperone targeted at glucocerobrosidase (GCase), the enzyme deficient in Gaucher disease. Mutations in the GBA1 gene for GCase are the most common genetic risk factor known for Parkinson’s disease. Gaucher carriers, who have one mutant copy of GCase, are approximately five times more frequent in the Parkinson’s disease population. In addition, Gaucher patients, who have two mutant copies of GCase, have an estimated 20-fold increased risk of developing Parkinson’s disease.
We believe that AT3375 has the potential to address Parkinson’s patients who are Gaucher carriers. We continue to evaluate AT3375 in preclinical studies for Parkinson’s disease, and plan to report late-stage preclinical proof-of-concept results prior to the end of 2011.
We are also currently researching novel approaches to treating patients with Genetic (Familial) Alzheimer’s through a Presenillin-1 target and those with Sporadic Alzheimer’s, with a focus on a lysosomal enzyme target. Our work in Alzheimer’s also builds on the understanding of pharmacological chaperones we have developed over the past several years examining treatment of lysosomal storage disorders and our work in Parkinson’s disease.
Collaboration with GSK
On October 28, 2010, the Company entered into the License and Collaboration Agreement with Glaxo Group Limited, an affiliate of GSK, to develop and commercialize Amigal. Under the terms of the License and Collaboration Agreement, GSK received an exclusive worldwide license to develop, manufacture and commercialize Amigal. In consideration of the license grant, the Company received an upfront, license payment of $30 million from GSK and is eligible to receive further payments of $173.5 million in aggregate upon the successful achievement of development, regulatory and commercialization milestones, as well as tiered double-digit royalties on global sales of Amigal. Potential payments include up to (i) $13.5 million related to the attainment of certain clinical development objectives and the acceptance of regulatory filings in select worldwide markets, (ii) $80 million related to market approvals for Amigal in selected territories throughout the world, and (iii) $80 million associated with the achievement of certain sales thresholds. GSK and the Company will jointly fund development costs in accordance with an agreed upon development plan. This plan provides that the Company will fund 50% of the development costs for 2011 and 25% of the development costs in 2012 and beyond. The Company’s development costs are subject to annual and aggregate caps. Additionally, GSK purchased approximately 6.9 million shares of the Company’s common stock at a price of $4.56 per share. The total value of this equity investment to the Company is approximately $31 million and represents a 19.9% ownership position in the Company. Under the terms of the collaboration agreement, while we will collaborate with GSK, GSK will have decision-making authority over clinical, regulatory and commercial matters related to Amigal. Additionally, GSK will have primary responsibility for interactions with regulatory agencies and prosecuting applications for marketing and reimbursement approvals worldwide.

Financial Operations Overview
Revenue
In November 2010, GSK paid us an initial, non-refundable license fee of $30 million and a premium of $3.2 million related to GSK’s purchase of an equity investment in Amicus. The total upfront consideration received of $33.2 million will be recognized as Collaboration Revenue on a straight-line basis over the development period of the collaboration agreement which is approximately 5.2 years. For the nine months ended September 30, 2011, we recognized approximately $5.0 million of the total upfront consideration as Collaboration Revenue. For the nine months ended September 30, 2011, we recognized $10.8 million of Research Revenue for reimbursed research and development costs. We have not generated any commercial sales revenue since our inception.
Research and Development Expenses
We expect to continue to incur substantial research and development expenses as we continue to develop our product candidates and explore new uses for our pharmacological chaperone technology. However, we will share future research and development costs related to Amigal with GSK in accordance with the License and Collaboration Agreement. 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 September 30, 2011, we have incurred research and development expense in the aggregate of $251.2 million.

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 September 30, 2011, we spent $109.3 million on general and administrative expense.
Interest Income and Interest Expense
Interest income consists of interest earned on our cash and cash equivalents and marketable securities. Interest expense consists of interest incurred on our capital lease facility and our equipment financing agreement.
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 September 30, 2011 to the items that we disclosed as our significant accounting policies and estimates described in Note 2 to the Company’s financial statements as contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our critical accounting policies.
Revenue Recognition
We recognize 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 multiple element arrangements, revenue is allocated to each separate unit of accounting and each deliverable in an arrangement is evaluated to determine whether it represents separate units of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value and there is no general right of return for the delivered elements. In instances when the aforementioned criteria are not met, the deliverable is combined with the undelivered elements and the allocation of the arrangement consideration and revenue recognition is determined for the combined unit as a single unit of accounting. Allocation of the consideration is determined at arrangement inception on the basis of each unit’s relative selling price. In instances where there is determined to be a single unit of accounting, the total consideration is applied as revenue for the single unit of accounting and is recognized over the period of inception through the date where the last deliverable within the single unit of accounting is expected to be delivered.
Our current revenue recognition policies, which were applied in fiscal 2010, provide that, when a collaboration arrangement contains multiple deliverables, such as license and research and development services, we allocate revenue to each separate unit of accounting based on a selling price hierarchy. The selling price hierarchy for a deliverable is based on (i) its vendor specific objective evidence (VSOE) if available, (ii) third party evidence (TPE) if VSOE is not available, or (iii) estimated selling price (BESP) if neither VSOE nor TPE is available. We would establish the VSOE of selling price using the price charged for a deliverable when sold separately. The TPE of selling price would be established by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarly situated customers. The best estimate of selling price would be established considering internal factors such as an internal pricing analysis or an income approach using a discounted cash flow model.

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. We record these reimbursements as revenue and not as a reduction of research and development expenses as we have not commenced our planned principal operations (i.e., selling commercial products) and we are a development stage enterprise, therefore development activities are part of our ongoing central operations.
Our collaboration agreement with GSK provides for, and any future collaboration agreements we may enter into also may provide for, contingent milestone payments. In order to determine the revenue recognition for these contingent milestones, we evaluate the contingent milestones using the criteria as provided by the FASB guidance on the milestone method of revenue recognition at the inception of a collaboration agreement. The criteria requires that (i) we determine if the milestone is commensurate with either our performance to achieve the milestone or the enhancement of value resulting from our activities to achieve the milestone, (ii) the milestone be related to past performance, and (iii) the milestone be reasonable relative to all deliverable and payment terms of the collaboration arrangement. If these criteria are met then the contingent milestones can be considered as substantive milestones and will be recognized as revenue in the period that the milestone is achieved.
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:
• fees owed to contract research organizations in connection with preclinical and toxicology studies and clinical trials;
• fees owed to investigative sites in connection with clinical trials;
• fees owed to contract manufacturers in connection with the production of clinical trial materials;
• fees owed for professional services, and
• unpaid salaries, wages and benefits.
Stock-Based Compensation
We apply 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.

Results of Operations
Three Months Ended September 30, 2011 Compared to Three Months Ended September 30, 2010
Revenue. In November 2010, GSK paid us an initial, non-refundable license fee of $30 million and a premium of $3.2 million related to GSK’s purchase of an equity investment in Amicus. The total upfront consideration received of $33.2 million will be recognized as Collaboration Revenue on a straight-line basis over the development period of the collaboration agreement which is approximately 5.2 years. For the three months ended September 30, 2011, we recognized $1.7 million of the total upfront consideration as Collaboration Revenue. For the three months ended September 30, 2011, we recognized $4.1 million of Research Revenue for reimbursed research and development costs. We have not generated any commercial sales revenue since our inception.
Research and Development Expense. Research and development expense was $13.7 million for the three months ended September 30, 2011, representing an increase of $4.8 million or 54% from $8.9 million for the three months ended September 30, 2010. The variance was primarily attributable to an increase in contract research and manufacturing costs due to the increased activity within the Fabry program and higher personnel costs.
General and Administrative Expense. General and administrative expense was $4.8 million for the three months ended September 30, 2011, representing a increase of $0.9 million or 23% from $3.9 million for the three months ended September 30, 2010. The variance was primarily due to an increase in personnel costs associated with a severance charge of $0.6 million for our former President.
Interest Income and Interest Expense. Interest income was $0.03 million for the three months ended September 30, 2011 and 2010. Interest expense was approximately $0.03 million for the three months ended September 30, 2011 compared to $0.06 for the three months ended September 30, 2010. The decrease was due to less outstanding debt during the period on the secured loan.
Change in Fair Value of Warrant Liability. In connection with the sale of our common stock and warrants from the registered direct offering in March 2010, we recorded the warrants as a liability at their fair value using a Black-Scholes model and remeasure the fair value at each reporting date until exercised or expired. Changes in the fair value of the warrants are reported in the statements of operations as non-operating income or expense. For the three months ended September 30, 2011, we reported a gain of $3.4 million related to the decrease in fair value of these warrants compared to a loss of $2.1 million for the three month period ending September 30, 2010. The market price for our common stock has been and may continue to be volatile. Consequently, future fluctuations in the price of our common stock may cause significant increases or decreases in the fair value of these warrants.

CONF CALL

Jenene Thomas

Good afternoon and thank you for joining our third quarter 2010 financial results conference call. I am joined on the call by a number of our executive team including John Crowley, our Chairman and CEO; Matt Patterson, our Chief Operating Officer; David Lockhart, our Chief Scientific Officer and Daphne Quimi, our Corporate Controller.

Before I turn the call over to John I have to remind you of the following. This conference call contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to the business operations and financial condition of Amicus including, but not limited to preclinical and clinical development of Amicus’ candidate drug products, the timing and reporting of both, from preclinical studies and clinical trials evaluating Amicus’ candidate drug product, the projected cash position for the company including achievement of development and commercialization milestone payments and sales royalties under our collaboration with GlaxoSmithKline of business development and other transactional activities. Word such as, but not limited to look forward to, believe, expect, anticipate, estimate and plan like we should incurred and some [work expressions] words identifying forward-looking statement.

Although Amicus believes we have [13 shares] reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that this expectations will be available at.

Actual results could differ materially from those projected in Amicus’s forward looking statement due to numeric known and unknown risks and uncertainties including the risk factors that thrive in our annual report on Form-10k for the year ended December 31, 2009. Amicus does not undertake any obligation to public update any forward looking statement to reflect events or circumstances after the date on which any such statement is made, or to reflect the occurrence of unanticipated investment.

At this time it is my pleasure to turn the call over to John Crowley, Chairman and CEO of Amicus Therapeutics.

John Crowley

Great thanks Janine, and good evening to all. I’ll start today’s call with just a few opening remarks and then had it over to Matt for a review of our development program as well as the third quarter financial. Third quarter was very strong for Amicus and we continued our significant momentum really in four key areas: First, we finalized a worldwide exclusive license and collaboration agreement which as you all know we announced about 10 days ago. Relating to Amigal for separating these with our partner Choice and GSK rare diseases. The second we saw continued strong execution of our ongoing Phase III clinical study for Amigal, the study we refer to for US approval study of 1 to 1. Thirdly also continue to prepare for the commencement of study 012 the EMEA study for Amigal, as well as the fourth I think significant piece of momentum in the quarter which was the preparation for the commencement of our Phase II study with Amigal co-administered with enzyme replacement therapy.

Let me just comment briefly to our products that GSK is a terrific partner for Amicus and the deal that we announced the end of the week before last years transformational for Amicus in a number of ways I think it strongly supports our strategic focus for the company by number 1 adding significant support to our global Amigal Phase III program and indicates confidence more broadly we hope in our chaperone technology. And secondly to with our partnership with GSK we think that the collaboration will firmly position us for the leader in research and development of technologies and products for the rare diseases.

We also believe that the partnership with GSK will enable us to very judiciously drive our pipeline and to opportunistically seeks products that we think will be complimentary in development to our focus and the rare diseases. And finally the deal what we have with GSK we see strong financial component that will continue to provided added financial strength to the company, while also giving us the research just to fund our operation and capital investment, through the anticipated US commercial launch of Amigal.

So in summary upfront Amigal remains our number one priority and we will work closely with pour partners at GSK where diseases to aggressively advance this program, we will judiciously advance our earlier stage programs specifically Pompe and Gaucher programs co-administered with ERT in those disease areas.

As well as our neurodegenerative genetic disease programs for Parkinson’s and Alzheimer’s disease. We remain committed to being the leader in the research and development of drugs for these rare diseases and as I stated briefly before, we will certainly evaluate and pursue new rare disease opportunities where we see a strategic fit with the Amicus business plan, and we believe that we will significant strategic flexibility to continue developing new treatment for rare diseases. So, let me turn it over to Matt.

Matt Patterson

Great. Thanks John and good evening. Well, first I’ll start by just spending a minute for viewing terms of the GSK deal we spoke to these and when we now set deals, John’s mentioned about 10 days ago. First, I’ll just go back through it for everyone.

As a reminder, this is an exclusive license to worldwide rights to develop, manufacture and commercialize Amigal which is a product currently in Phase III for Fabry disease. As a priority agreement, GSK will also have rights to a program evaluating Amigal co-administration with ERT for Fabry, but to be clear the agreement was strictly related to Amigal and no other programs in our pipeline.

According to the terms of the agreement we will receive an upfront and non-refundable license payment of $30 million from GSK, and we will also receive further development and commercialization milestone payments of up to $170 million, as well as tier double-digit royalties on global sales of Amigal.

So that means that we achieved certain milestones. We have the potential to receive $230 million in upfront and milestone payments for the product. Also as a part of the agreement, we will fund development costs for the remainder of 2010, Amicus will, but beginning in 2011 we will jointly fund development costs of the global program with GSK based on an agreed-upon development plan. And in this case I can provide you a few more specifics than we were able to share the last time we spoke.

Specifically, the development plan provides that Amicus and GSK will share costs on a 50-50 basis in 2011 and on a 25-75 basis respectively in 2012 and beyond through the regulatory approvals from both the US and European regulatory authorities. In addition, our obligation is to join a fund development cost that are subject to both annual and an aggregate cap. So this an important fact that we didn’t share last time, but obviously our sharing costs in particular when Amicus is just bearing the 25% of the cost of the program is a significant component of this deal for Amicus and we will contribute very nicely to reducing our cash burn on this program in the coming years.

Additionally finally, GSK is purchasing 6.9 million shares of our common stock at a price of $4.56 per share. So the total value of GSK’s equity investment in the company is $31 million and represents a 19.9% ownership position in our company. That’s making the total cash upfront to us from the cash upfront licensing payment and the equity investment to be just over $60 million.

We believe assigning of this agreement not only provides strong support for all the potential success of the program, but more broadly the chaperone technology approach and importantly we also think it recognizes our team’s scientific and clinical expertise in rare diseases and in particular on the equity side, it really highlights GSK’s commitment to Amicus with a very significant investment in the company and their desire to work closely with us moving forward on this program.

So let me turn then to from the deal to talking a little bit about the program specifics. First on the Amigal Phase 3 program, we did in our previous announcement about the GSK deal will provide further guidance on enrollment for study 011 which as John mentioned is our study intended to support approval in the United States. We made significant progress today. We are very pleased with the traction on enrollment, but we do now expect enrollment to complete in Q1 rather than end of this year. We have good momentum but we think that’s more reasonable asset understand base and all the way to Sachs and that will give us topline results from the study in the second half of next year. If there are tremendous operational efforts which spoken about that before this trial is en-rolling patients at over 40 sites around the world and we are pleased to add GSK to that project which will allow us to really continue to focus on solid execution going forward.

Additionally, we are on track for our activities to support to start 012 Amigal 012 is a study intended to support two on the European Union, the protocol has been and those sites will be initiative as we speak that guess in-patient starting treatment is perhaps at the very end of this year, but it may be beginning the next year when patients are clearly going to receive drug but we are pleased with the progress and the momentum on this. This study is going to look a lot like study 011 from the logistics prospective its global study it’s going to involve a similar number of sites many of those are the same what we are working with on.

Additional momentum is on study 013 that’s our number for the study where we will evaluate Amigal co-administered with ERT it’s the phase II study and we are working closely with GSK on this one as well its really at a similar point after say 012 to the protocol is final in terms the sites are being initiated and again our patient commencement on treatment is possible probably over the year, but we likely will be the very beginning next year.

So moving on to (inaudible) as John mentioned about our other programs we are evaluating the potential for chaperones for Pompe and Gaucher is used to be used in combination with enzyme replacement therapy and we are currently in preclinical development with full we are looking closely at the appropriate next step for how to advance those programs and look forward to providing additional guidance as we go forward to providing additional values as we go forward for those programs.

Now finally I’ll finish on the programs side on a note to genitive programs. We remain very excited about these based on our continued progress in preclinical studies. Now as a reminder we are looking at these in genetically defined sub-populations within Parkinson’s and Alzheimer’s.

Starting with Parkinson’s; our strategy is to focus on patients who are carriers for Gaucher disease. This is clearly consistent with our overall corporate strategy of focusing on rare diseases, reminding that we have initial group of concept in studies of our molecule AT2101 in animal models for Parkinson’s, but there is significant medicinal chemistry efforts. In 2009 we identified new modules that we believed improved significantly on the properties of AT2101 and that we believe will have better potential for future clinical development. So we are focused on those in our preclinical studies today. And we will continue to advance those studies and expect that to continue this year and into next year. And we are hopeful that we can provide more specific guidance on the next steps for this program I think in 2011.

Along with the Parkinson’s program, we are advancing in the Alzheimer’s program; it has good momentum as well. In this program, we are evaluating several different enzyme targets, each of which represents a novel treatment approach to Alzheimer’s, and again we are focusing only on genetically defined sub populations. But I don’t have to work this down to the last side here is to understand the chaperone mechanism of action diseases of misfolded proteins and lysosomal enzymes, we think this program has very solid potential and we look forward to continuing to work, continue to preclinical studies going on today, keeping you posted on our progress.

Finally, also note that in addition to executing on our plans to advance Amigal in partnership with GSK, we do intend to remain active on the business development front and to continue to evaluate opportunities for possible partnerships on these early stage programs. So we will very forward, we will keep those, we will be continuing to evaluate different options with the goal of building on our terms strategic and financial foundation that John described earlier.

And with that, I’ll just wrap up by saying again what John shared earlier and that is our vision to be a leader in the R&D of drugs related to or intended to treat rare diseases and we believe the global partnership with GSK is a huge step forward in this effort, and we believe this gives Amicus, the deal gives Amicus significant strategic flexibility to advance our pipeline, to continue developing new treatments for rare diseases and provides tremendous opportunity to build further shareholder value.

With that, I’ll turn the call over to Daphne, who will review of the financial results for the quarter.

Daphne Quimi

Thanks Matt. Good evening to everyone. I’m going to review the third quarter financial results. I will comment briefly on our cash position and reiterate our financial guidance.

The end of the third quarter was $57.6 million in cash and marketable securities. In light of this GSK deal for Amigal we updated our financial guidance. We believe that our current cash and marketable securities along with 2010 and future anticipated payments for GSK will be sufficient to fund operations in capital expenditure requirements through the anticipated US commercial launch of Amigal.

Now, as I move to the financial results I will be referring to table 1 in our press release.

Net loss for the quarter was $15.4 million as compared to a net loss of $13.4 million for the same period in 2009. Reductions in operating expenses resulting from our Q4 2009 restructuring and refocused operating priorities largely offset the $4.9 million year-over-year revenue impact of terminating the Shire collaboration agreement.

R&D expense in the third quarter of 2010 was $8.9 million representing a decrease of approximately $3.7 million or 29% from $12.6 million for the same period in 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.

Our third quarter 2010 G&A expense was $3.9 million representing a decrease of $1.3 million or 25% from $5.2 million for the same period in 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 for the third quarter was $0.03 million as compared to $0.13 million in the comparable quarter last year.

The decrease of 77% was due to lower effected interest rate and decreased cash and cash equivalents balances. As we previously announced in the first quarter of 2010, we raised $17.1 million of net proceeds through a registered direct offering of 4.95 million of shares of common stock and warrants to purchase an additional 1.85 million common shares. We allocated $3.3 million of our net proceeds to the ones which we classified as a liability on our balance sheet. Each quarter, the warrant liability will be mark-to-market with changes recorded as a non-cash non-operating item in our P&L.

The change in fair value of our warrant liability during the third quarter was $2.1 million. So that covers the financial update for the third quarter. I will be available to address any questions during the Q&A part of the call. With that, I will turn things back over to John.

John Crowley

Great. Thanks Daphne. When we had our call announcing the GSK deal a week and half ago or so, I began the call by noting that these are the days that it's good to be a biotech CEO and those days certainly continue and we look forward to continuing executing on our programs and working very closely continued now with our partners at GSK. With that, let me turn it over to the operator and see if there are any questions.

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