Table of Contents


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

2021

OR

o

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to

Commission file number 001-33497

Amicus Therapeutics, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

71-0869350

Delaware

71-0869350
(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification Number)

3675 Market Street,Philadelphia,PA19104
(Address of Principal Executive Offices)(Zip Code)
(215)921-7600
(Registrant's Telephone Number, Including Area Code)

1 Cedar Brook Drive, Cranbury, NJ 08512

(Address

Securities registered pursuant to Section 12(b) of Principal Executive Offices and Zip Code)

Registrant’s Telephone Number, Including Area Code: (609) 662-2000

the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareFOLDNASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:days.  Yes x☒No o

☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x☒ No o

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large"large accelerated filer,” accelerated filer”, “smaller" "accelerated filer," "smaller reporting company,”" and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

(Do not check if a smaller reporting company)

Emerging growth company o

Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x

☒

The number of shares outstanding of the registrant’sregistrant's common stock, $0.01 par value per share, as of October 31, 201727, 2021 was 166,269,300278,638,872 shares.





AMICUS THERAPEUTICS, INC.

Form 10-Q for the Quarterly Period Ended September 30, 2017

2021

Page

Page

2

3

Item 1.

2

3

2

3

3

4

4

5

6

5

8

Notes to Consolidated Financial Statements

6

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

22

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

33

34

Item 4.

Controls and Procedures

33

34

33

34

Item 1.

Legal Proceedings

33

35

Item 1A.

Risk Factors

34

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

34

35

Item 3.

Defaults Upon Senior Securities

34

36

Item 4.

Mine Safety Disclosures

34

36

Item 5.

Other Information

34

36

Item 6.

Exhibits

35

37

36

38

INDEX TO EXHIBITS

41

We have filed applications to register certain trademarks in the U.S.United States and abroad, including Amicus Therapeutics®AMICUS THERAPEUTICS and designs, At the forefront of therapies for raredesign, AMICUS ASSIST and orphan diseases™, Zorblisa™,design, CHART and Galafold™.

design, AT THE FOREFRONT OF THERAPIES FOR RARE AND ORPHAN DISEASES, HEALING BEYOND DISEASE, OUR GOOD STUFF, and Galafold® and design.


i



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly reportQuarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks, uncertainties, and uncertainties.  Allassumptions. Forward-looking statements are all statements, other than statements of historical facts, included in this quarterly report on Form 10-Q regardingthat discuss our current expectation and projections relating to our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, and objectives of management are forward-looking statements. Themanagement. These statements may be preceded by, followed by, or include the words “anticipate,” “believe,” “estimate,” “expect,” “potential,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “should,” “would”"aim," "anticipate," "believe," "can," "could," "estimate," "expect," "forecast," "intend," "likely," "may," "outlook," "plan," "potential," "predict," "project," "seek," "should," "will," "would," the negatives or plurals thereof, and other words and terms of similar expressions are intended to identify forward-looking statements,meaning, although not all forward-looking statements contain these identifying words.

The

We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in this quarterly report on Form 10-Q include, amongconnection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct. You should understand that the following important factors could affect our future results and could cause those results or other things, statements about:

·outcomes to differ materially from those expressed or implied in our forward-looking statements:

•the scope, progress, results and resultscosts of our clinical trials of our drug candidates;

·candidates and gene therapy candidates, including but not limited to AT-GAA, CLN6 and CLN3;

•the cost of manufacturing drug supply for our clinical and preclinical studies, including the significant cost of new Fabry enzyme replacement therapy (“ERT”) cell line development and manufacturing as well as the cost of manufacturing Pompe ERT;

·                                     the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our product candidates including those testing the use of pharmacological chaperones co-formulated and co-administered with ERT andEnzyme Replacement Therapy ("ERT" or "ATB200" or "cipaglucosidase alfa") for the treatment of lysosomal storage disorders;

·Pompe disease and gene therapies;

•the future results of on-going preclinical research and subsequent clinical trials for cyclin-dependent kinase-like 5 (“CDKL5”("CDKL5") deficiency disorder, Pompe gene therapy, Fabry gene therapy, Mucopolysaccharidosis Type IIIB ("MPSIIIB"), next generation Mucopolysaccharidosis Type IIIA ("MPSIIIA") and other pipeline candidates we may identify from time to time, including our ability to obtain regulatory approvals and commercialize CDKL5these therapies and obtain market acceptance for CDKL5;

·such therapies;

•the costs, timing, and outcome of regulatory review of our product candidates, including AT-GAA;
•any changes in regulatory standards relating to the review of our product candidates;

·

•the number and development requirements of other product candidates that we pursue;

·

•our ability to realize the expected benefits of our business combination agreement for our gene therapy business, which could result in additional unanticipated costs and risks;
•the costs of commercialization activities, including product marketing, sales, and distribution;

·

•the emergence of competing technologies and other adverse market developments;

·

•our ability to successfully commercialize Galafold® (also referred to as "migalastat HCl") and, if our regulatory filings are accepted and approved, AT-GAA;
•our ability to manufacture or supply sufficient clinical or commercial products, including Galafold®, AT-GAA and our gene therapy candidates;
•our ability to obtain reimbursement for migalastat HCl;

·Galafold® and, if our regulatory filings are accepted and approved, AT-GAA;

•our ability to satisfy post-marketing commitments or requirements for continued regulatory approval of Galafold®;
•our ability to obtain market acceptance of migalastat HCl in the European Union;

·Galafold® and, if our regulatory filings are accepted and approved, AT-GAA;

•the costs of preparing, filing, and prosecuting patent applications and maintaining, enforcing, and defending intellectual property-related claims;

·

•the impact of litigation that has been or may be brought against us or of litigation that we are pursuing or may pursue against others;
•the extent to which we acquire or invest in businesses, products, and technologies;

·

•our ability to successfully integrate our acquired products and technologies into our business, including the possibility that the expected benefits of the transactions will not be fully realized by us or may take longer to realize than expected; and

·

1

•our ability to establish collaborations, partnerships or other similar arrangements and to obtain milestone, royalty, or other payments from any such collaborators.

Wecollaborators;

•our ability to adjust to changes in the European and United Kingdom markets in the wake of the United Kingdom leaving the European Union;
•the extent to which our business could be adversely impacted by the effects of the novel coronavirus ("COVID-19") outbreak, including due to actions by us, governments, our customers or suppliers or other third parties to control the spread of COVID-19, or by other health epidemics or pandemics;
•fluctuations in foreign currency exchange rates; and
•changes in accounting standards.
In light of these risks and uncertainties, we may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in Part I Item 1A — Risk Factors of the Annual Report on Form 10-K as amended, for the fiscal year ended December 31, 2016,2020, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, collaborations, or investments we may make.

Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements.

You should read this quarterly reportQuarterly Report on Form 10-Q in conjunction with our Annual Report on Form 10-K for the documentfiscal year ended December 31, 2020 (including the documents incorporated by reference therein) completely and with the understanding that our actual future results may be materially different from what we reference herein.expect. These forward-looking statements speak only as of the date of this report. We do not assumeundertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements.

statements, even if experience or future developments make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law. 

2

PART I.    FINANCIAL INFORMATION

Item

ITEM 1.    Financial Statements (unaudited)

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES (UNAUDITED)

Amicus Therapeutics, Inc.

Consolidated Balance Sheets
(Unaudited)

(in thousands, except share and per share amounts)

 

 

September 30,

 

December 31,

 

 

 

2017

 

2016

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

64,133

 

$

187,026

 

Investments in marketable securities, current portion

 

347,388

 

143,325

 

Accounts receivable

 

5,974

 

1,304

 

Inventories

 

7,272

 

3,416

 

Prepaid expenses and other current assets

 

6,246

 

4,993

 

Total current assets

 

431,013

 

340,064

 

Investments in marketable securities

 

15,109

 

—

 

Property and equipment, less accumulated depreciation of $13,273 and $12,495 at September 30, 2017 and December 31, 2016, respectively

 

9,641

 

9,816

 

In-process research & development

 

23,000

 

486,700

 

Goodwill

 

197,797

 

197,797

 

Other non-current assets

 

4,219

 

2,468

 

Total Assets

 

$

680,779

 

$

1,036,845

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable, accrued expenses, and other current liabilities

 

$

53,709

 

$

41,008

 

Deferred reimbursements, current portion

 

6,250

 

13,850

 

Contingent consideration payable, current portion

 

8,200

 

56,101

 

Total current liabilities

 

68,159

 

110,959

 

Deferred reimbursements

 

16,906

 

21,906

 

Convertible notes

 

161,635

 

154,464

 

Contingent consideration payable

 

12,900

 

213,621

 

Deferred income taxes

 

9,186

 

173,771

 

Other non-current liability

 

2,313

 

1,973

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.01 par value, 250,000,000 shares authorized 165,491,141 and 142,691,986 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively

 

1,707

 

1,480

 

Additional paid-in capital

 

1,387,767

 

1,120,156

 

Accumulated other comprehensive loss:

 

 

 

 

 

Foreign currency translation adjustment

 

(1,367

)

1,945

 

Unrealized gain on available-for-sale securities

 

(101

)

102

 

Warrants

 

16,076

 

16,076

 

Accumulated deficit

 

(994,402

)

(779,608

)

Total stockholders’ equity

 

409,680

 

360,151

 

Total Liabilities and Stockholders’ Equity

 

$

680,779

 

$

1,036,845

 

September 30, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$385,903 $163,240 
Investments in marketable securities171,057 320,029 
Accounts receivable51,427 46,923 
Inventories22,072 19,556 
Prepaid expenses and other current assets20,081 29,721 
Total current assets650,540 579,469 
Operating lease right-of-use assets, net21,270 23,296 
Property and equipment, less accumulated depreciation of $18,789 and $14,487 at September 30, 2021 and December 31, 2020, respectively41,991 43,863 
In-process research & development23,000 23,000 
Goodwill197,797 197,797 
Other non-current assets22,077 19,095 
Total Assets$956,675 $886,520 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$24,474 $17,063 
Accrued expenses and other current liabilities72,453 96,841 
Contingent consideration payable17,000 8,900 
Operating lease liabilities7,175 6,872 
Total current liabilities121,102 129,676 
Deferred reimbursements7,406 7,406 
Long-term debt388,719 389,254 
Contingent consideration payable7,605 16,925 
Deferred income taxes4,896 4,896 
Operating lease liabilities43,495 45,604 
Other non-current liabilities6,823 6,379 
Total liabilities580,046 600,140 
Commitments and contingencies00
Stockholders’ equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 278,585,092 and 262,063,461 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively2,805 2,650 
Additional paid-in capital2,579,953 2,308,578 
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment6,617 8,412 
Unrealized loss on available-for-sale securities(184)(185)
Warrants83 12,387 
Accumulated deficit(2,212,645)(2,045,462)
Total stockholders’ equity376,629 286,380 
Total Liabilities and Stockholders’ Equity$956,675 $886,520 
See accompanying notesNotes to consolidated financial statements

Consolidated Financial Statements

3

Amicus Therapeutics, Inc.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)

 

 

Three Months Ended September 30,

 

Nine Months Ended September
30,

 

 

 

2017

 

2016

 

2017

 

2016

 

Revenue:

 

 

 

 

 

 

 

 

 

Net product sales

 

$

10,874

 

$

2,127

 

$

22,201

 

$

2,127

 

Cost of goods sold

 

1,790

 

344

 

3,626

 

344

 

Gross Profit

 

9,084

 

1,783

 

18,575

 

1,783

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

40,641

 

32,457

 

103,502

 

74,163

 

Selling, general and administrative

 

21,647

 

17,469

 

60,090

 

52,470

 

Changes in fair value of contingent consideration payable

 

(244,250

)

(4,110

)

(238,622

)

9,228

 

Loss on impairment of assets

 

465,427

 

—

 

465,427

 

—

 

Restructuring charges

 

—

 

11

 

—

 

69

 

Depreciation

 

851

 

896

 

2,486

 

2,336

 

Total operating expenses

 

284,316

 

46,723

 

392,883

 

138,266

 

Loss from operations

 

(275,232

)

(44,940

)

(374,308

)

(136,483

)

Other income (expenses):

 

 

 

 

 

 

 

 

 

Interest income

 

1,190

 

460

 

2,702

 

1,098

 

Interest expense

 

(4,351

)

(1,517

)

(12,820

)

(3,517

)

Other income (expense)

 

2,044

 

(910

)

5,054

 

(3,199

)

Loss before income tax benefit

 

(276,349

)

(46,907

)

(379,372

)

(142,101

)

Income tax benefit

 

164,683

 

253

 

164,578

 

706

 

Net loss attributable to common stockholders

 

$

(111,666

)

$

(46,654

)

$

(214,794

)

$

(141,395

)

Net loss attributable to common stockholders per common share — basic and diluted

 

$

(0.69

)

$

(0.33

)

$

(1.44

)

$

(1.07

)

Weighted-average common shares outstanding — basic and diluted

 

160,796,841

 

140,656,109

 

148,963,864

 

131,675,690

 

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net product sales$79,545 $67,437 $223,360 $190,315 
Cost of goods sold11,696 8,399 26,615 21,627 
Gross profit67,849 59,038 196,745 168,688 
Operating expenses:
Research and development59,333 70,419 186,453 229,150 
Selling, general, and administrative46,107 37,850 135,109 112,722 
Changes in fair value of contingent consideration payable3,288 1,034 4,780 2,680 
Depreciation and amortization1,520 2,496 4,691 6,299 
Total operating expenses110,248 111,799 331,033 350,851 
Loss from operations(42,399)(52,761)(134,288)(182,163)
Other income (expense):
Interest income108 518 323 2,898 
Interest expense(8,165)(6,784)(24,307)(14,148)
Loss on extinguishment of debt(257)(7,276)(257)(7,276)
Other income (expense)237 3,019 (2,729)29 
Loss before income tax(50,476)(63,284)(161,258)(200,660)
Income tax benefit (expense)182 (727)(5,925)(4,791)
Net loss attributable to common stockholders$(50,294)$(64,011)$(167,183)$(205,451)
Net loss attributable to common stockholders per common share — basic and diluted$(0.19)$(0.25)$(0.63)$(0.80)
Weighted-average common shares outstanding — basic and diluted267,464,637259,161,799266,085,788258,091,170
See accompanying notesNotes to consolidated financial statements

Consolidated Financial Statements

4

Amicus Therapeutics, Inc.

Consolidated Statements of Comprehensive Loss

(Unaudited)

(in thousands)

 

 

Three Months Ended
September 30,

 

Nine Months Ended September 30,

 

 

 

2017

 

2016

 

2017

 

2016

 

Net loss

 

$

(111,666

)

$

(46,654

)

$

(214,794

)

$

(141,395

)

Other comprehensive (loss)/ gain:

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment (loss)/ gain

 

(1,176

)

220

 

(3,312

)

1,062

 

Unrealized (loss)/ gain on available-for-sale securities

 

(131

)

86

 

(203

)

402

 

Other comprehensive (loss)/ income

 

$

(1,307

)

$

306

 

$

(3,515

)

$

1,464

 

Comprehensive loss

 

$

(112,973

)

$

(46,348

)

$

(218,309

)

$

(139,931

)

 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net loss$(50,294)$(64,011)$(167,183)$(205,451)
Other comprehensive gain (loss):
Foreign currency translation adjustment gain (loss), net of tax impact of $(581), $1,203, $(397), and $649, respectively(2,638)(289)(1,795)1,791 
Unrealized gain (loss) on available-for-sale securities, net of tax impact of $(3), $(91), $0, and $(25), respectively(11)(344)1 (96)
Other comprehensive (loss) income$(2,649)$(633)$(1,794)$1,695 
Comprehensive loss$(52,943)$(64,644)$(168,977)$(203,756)
See accompanying notesNotes to consolidated financial statements

Consolidated Financial Statements

5

Amicus Therapeutics, Inc.

Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
(in thousands, except share amounts)
Three Months Ended September 30, 2021
Common StockAdditional
Paid-In
Capital		WarrantsOther
Comprehensive
Gain (Loss)		Accumulated
Deficit		Total
Stockholders'
Equity
SharesAmount
Balance at June 30, 2021266,532,536 $2,685 $2,364,494 — $9,082 $(2,162,351)$213,910 
Stock options exercised, net248,617 3 1,693 — — — 1,696 
Employee withholding taxes related to restricted stock unit vesting39,007 — (262)— — — (262)
Stock-based compensation— — 11,841 — — — 11,841 
Equity component of the convertible notes468,272 5 2,635 — — — 2,640 
Common stock issued from equity financing and pre-funded warrants11,296,660 112 199,552 83 — — 199,747 
Unrealized holding gain on available-for-sale securities— — — — (11)— (11)
Foreign currency translation adjustment— — — — (2,638)— (2,638)
Net loss— — — — — (50,294)(50,294)
Balance at September 30, 2021278,585,092 $2,805 $2,579,953 $83 $6,433 $(2,212,645)$376,629 

Nine Months Ended September 30, 2021
Common StockAdditional
Paid-In
Capital		WarrantsOther
Comprehensive
Gain (Loss)		Accumulated
Deficit		Total
Stockholders'
Equity
SharesAmount
Balance at December 31, 2020262,063,461 $2,650 $2,308,578 $12,387 $8,227 $(2,045,462)$286,380 
Stock options exercised, net1,171,279 12 8,345 — — — 8,357 
Employee withholding taxes related to restricted stock unit vesting1,026,337 — (14,700)— — — (14,700)
Stock-based compensation— — 43,931 — — — 43,931 
Warrants exercised2,554,999 26 31,591 (12,387)— — 19,230 
Equity component of the convertible notes472,356 5 2,656 — — — 2,661 
Common stock issued from equity financing and pre-funded warrants11,296,660 112 199,552 83 — — 199,747 
Unrealized holding gain on available-for-sale securities— — — — 1 — 1 
Foreign currency translation adjustment— — — — (1,795)— (1,795)
Net loss— — — — — (167,183)(167,183)
Balance at September 30, 2021278,585,092 $2,805 $2,579,953 $83 $6,433 $(2,212,645)$376,629 
6

Amicus Therapeutics, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
(in thousands, except share amounts)
Three Months Ended September 30, 2020
Common StockAdditional
Paid-In
Capital		WarrantsOther
Comprehensive
Gain (Loss)		Accumulated
Deficit		Total
Stockholders'
Equity
SharesAmount
Balance at June 30, 2020258,223,842 $2,614 $2,250,849 $12,387 $5,153 $(1,910,050)$360,953 
Stock options exercised, net1,223,075 12 9,283 — — — 9,295 
Employee withholding taxes related to restricted stock unit vesting153,733 — (1,243)— — — (1,243)
Stock-based compensation— — 15,908 — — — 15,908 
Unrealized holding gain on available-for-sale securities— — — — (344)— (344)
Foreign currency translation adjustment— — — — (289)— (289)
Net loss— — — — — (64,011)(64,011)
Balance at September 30, 2020259,600,650 $2,626 $2,274,797 $12,387 $4,520 $(1,974,061)$320,269 

Nine Months Ended September 30, 2020
Common StockAdditional
Paid-In
Capital		WarrantsOther
Comprehensive
Gain (Loss)		Accumulated
Deficit		Total
Stockholders'
Equity
SharesAmount
Balance at December 31, 2019255,417,869 $2,598 $2,227,225 $12,387 $2,825 $(1,768,610)$476,425 
Stock options exercised, net2,832,310 28 20,000 — — — 20,028 
Employee withholding taxes related to restricted stock unit vesting1,350,471 — (9,340)— — — (9,340)
Stock-based compensation— — 36,912 — — — 36,912 
Unrealized holding gain on available-for-sale securities— — — — (96)— (96)
Foreign currency translation adjustment— — — — 1,791 — 1,791 
Net loss— — — — — (205,451)(205,451)
Balance at September 30, 2020259,600,650 $2,626 $2,274,797 $12,387 $4,520 $(1,974,061)$320,269 
See accompanying Notes to Consolidated Financial Statements
7

Amicus Therapeutics, Inc.
Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

Nine Months Ended September 30,

 

 

 

2017

 

2016

 

Operating activities

 

 

 

 

 

Net loss

 

$

(214,794

)

(141,395

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Amortization of debt discount and deferred financing

 

7,179

 

1,744

 

Depreciation

 

2,486

 

2,336

 

Stock-based compensation

 

17,067

 

13,087

 

Charges to research expense for stock issued in asset acquisition

 

—

 

4,607

 

Restructuring charges

 

—

 

69

 

Loss on impairment

 

465,427

 

—

 

(Gain)/ Loss on disposal of asset

 

(8

)

17

 

Change in fair value of derivative liability

 

(265

)

324

 

Non-cash changes in the fair value of contingent consideration payable

 

(238,622

)

9,228

 

Foreign currency remeasurement (gain)/ loss

 

(4,932

)

2,207

 

Non-cash deferred taxes and other tax benefits

 

(164,585

)

(706

)

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(4,288

)

(863

)

Inventories

 

(3,386

)

(3,505

)

Prepaid expenses and other current assets

 

(3,358

)

(2,803

)

Other non-current assets

 

(713

)

(660

)

Account payable and accrued expenses

 

13,037

 

(2,920

)

Non-current liabilities

 

637

 

684

 

Deferred Reimbursements

 

(12,600

)

—

 

Net cash used in operating activities

 

(141,718

)

(118,549

)

Investing activities

 

 

 

 

 

Sale and redemption of marketable securities

 

230,981

 

165,495

 

Purchases of marketable securities

 

(450,358

)

(199,829

)

Purchases of property and equipment

 

(3,398

)

(5,520

)

Net cash used in investing activities

 

(222,775

)

(39,854

)

Financing activities

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

243,036

 

97,068

 

Proceeds from unsecured loan agreement

 

—

 

30,000

 

Payment of capital leases

 

(212

)

(118

)

Payment of contingent consideration

 

(10,000

)

(5,000

)

Purchase of vested restricted stock units

 

(1,067

)

(1,010

)

Proceeds from exercise of stock options

 

8,841

 

1,456

 

Payment of deferred financing fees

 

(28

)

—

 

Net cash provided by financing activities

 

240,570

 

122,396

 

Effect of exchange rate changes on cash and cash equivalents

 

1,030

 

(363

)

Net decrease in cash and cash equivalents

 

(122,893

)

(36,370

)

Cash and cash equivalents at beginning of year/ period

 

187,026

 

69,485

 

Cash and cash equivalents at end of year/period

 

$

64,133

 

$

33,115

 

Supplemental disclosures of cash flow information

 

 

 

 

 

Cash paid during the period for interest

 

$

3,662

 

$

284

 

Contingent consideration resolution in shares

 

$

—

 

$

6,115

 

Capital expenditures funded by capital lease borrowings

 

$

—

 

$

850

 

Nine Months Ended September 30,
20212020
Operating activities
Net loss$(167,183)$(205,451)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount and deferred financing1,852 1,124 
Depreciation and amortization4,691 6,299 
Stock-based compensation43,931 36,912 
Loss on extinguishment of debt257 7,276 
Non-cash changes in the fair value of contingent consideration payable4,780 2,680 
Foreign currency remeasurement loss (gain)4,247 (1,084)
Changes in operating assets and liabilities:
Accounts receivable(6,372)(10,845)
Inventories(3,022)2,182 
Prepaid expenses and other current assets9,080 4,377 
Accounts payable and accrued expenses(22,068)(23,424)
Other non-current assets and liabilities(2,170)(2,264)
Deferred reimbursements— (1,250)
Net cash used in operating activities$(131,977)$(183,468)
Investing activities
Sale and redemption of marketable securities342,343 272,679 
Purchases of marketable securities(193,369)(261,322)
Capital expenditures(2,124)(2,160)
Net cash provided by investing activities$146,850 $9,197 
Financing activities
Payment of long-term debt— (155,249)
Proceeds from long-term debt, net of issuance costs— 385,929 
Proceeds from issuance of common stock from equity financing and pre-funded warrants199,750 — 
Proceeds from warrants exercised19,230 — 
Payment of finance leases(460)(58)
Payments of employee withholding taxes related to restricted stock unit vesting(14,700)(9,340)
Proceeds from stock options exercised, net8,357 20,028 
Net cash provided by financing activities$212,177 $241,310 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash$(4,141)$45 
Net increase in cash, cash equivalents, and restricted cash at the end of the period222,909 67,084 
Cash, cash equivalents, and restricted cash at beginning of period166,162 146,341 
Cash, cash equivalents, and restricted cash at the end of period$389,071 $213,425 
Supplemental disclosures of cash flow information
Tenant improvements paid through lease incentives$67 $470 
Cash paid during the period for interest$22,788 $16,712 
Capital expenditures unpaid at the end of period$327 $265 
Cash paid for taxes$9,854 $5,912 

See accompanying notesNotes to consolidated financial statements

Consolidated Financial Statements

8

Amicus Therapeutics, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business

Corporate Information, Status of Operations, and Management Plans

Amicus Therapeutics, Inc. (the “Company”"Company") is a global, patient-focusedpatient-dedicated biotechnology company engaged in the discovery, developmentfocused on discovering, developing, and commercialization of a diverse set ofdelivering novel treatmentsmedicines for patients living with devastating rare and orphan diseases. The Company’s leadCompany has a portfolio of product migalastat HCl, is a small molecule that can be used as aopportunities led by the first, oral monotherapy and in combination with enzyme replacement therapy (“ERT”) for Fabry disease. Migalastat was approveddisease that has achieved widespread global approval, a differentiated biologic for use in the European Union (“EU”) in May 2016Pompe disease that is under the brand name Galafold™ as a first-line therapy for long-term treatment of adults and adolescents aged 16 years and olderreview with a confirmed diagnosis of Fabry disease and who have an amenable mutation. Additionally, based on a series of discussions with and written communication received from the U.S. Food and Drug Administration (the “FDA”("FDA"), and an industry leading rare disease gene therapy portfolio.
The cornerstone of the Company's portfolio is Galafold® (also referred to as "migalastat"), the first and only approved oral precision medicine for people living with Fabry disease who have amenable genetic variants. Migalastat is currently approved under the trade name Galafold® in the United States ("U.S."), European Union ("E.U."), United Kingdom ("U.K."), and Japan, with multiple additional approvals granted and applications pending in several additional geographies around the world.
The lead biologics program of the Company's pipeline is Amicus Therapeutics GAA ("AT-GAA", also known as ATB200/AT2221, or cipaglucosidase alfa/miglustat), a novel, two-component, potential best-in-class treatment for Pompe disease. In February 2019, the FDA has informedgranted Breakthrough Therapy designation ("BTD") to AT-GAA for the Company that it may now submit atreatment of late-onset Pompe disease. In September 2021, the FDA set the Prescription Drug User Fee Act ("PDUFA") target action date of May 29, 2022 for the New Drug Application (“NDA”("NDA") for migalastat. An additional Phase 3 study previously requested bymiglustat and July 29, 2022 for the Biologics License Application ("BLA") for cipaglucosidase alfa.
The Company has established an industry leading gene therapy portfolio of potential therapies for people living with rare metabolic diseases, through a license with Nationwide Children's Hospital ("Nationwide Children's") and a research collaboration with the University of Pennsylvania ("Penn"). The Company's pipeline includes gene therapy programs in rare, neurologic/neuromuscular diseases lysosomal disorders ("LDs"), specifically: CLN6 Batten disease ("CLN6"), CLN3 Batten disease ("CLN3"), and CLN1 Batten disease ("CLN1"), Pompe disease, Fabry disease, CDKL5 deficiency disorder ("CDD"), Mucopolysaccharidosis Type IIIB ("MPSIIIB"), as well as a next generation program in Mucopolysaccharidosis Type IIIA ("MPSIIIA"). In the first quarter of 2020, the FDA to assess Gastrointestinal (“GI”) symptoms is no longer required before an NDA submission. The Company is preparing the NDA submission under Subpart H, which provides for accelerated approval, and plans to submit an NDAgranted Fast Track designation to the CLN3 gene therapy, AT-GTX-502, for the treatment of pediatric patients less than 18 years of age. In September 2020 and February 2021, the European Medicines Agency granted Priority Medicines designation and the FDA granted Fast Track Designation, respectively, to the CLN6 gene therapy, AT-GTX-501, for migalastat for Fabry disease in the fourth quartertreatment of 2017.

The Company is also investigating a novel treatment paradigm ATB200/AT2221 in patients with Pompe disease, an inherited lysosomal storage disorder caused by an enzyme deficiency that leadsvariant late infantile neuronal ceroid lipofuscinosis 6 ("vLINCL6"). The research collaboration with Penn also provides the Company with exclusive disease-specific access and option rights to accumulationdevelop potentially disruptive new gene therapy platform technologies and programs for most LDs and a broader portfolio of glycogen (disease substrate) in cells. more prevalent rare diseases, including Rett Syndrome, Angelman Syndrome, Myotonic Dystrophy, and select other muscular dystrophies.

In October 2017,September 2021, the Company announced additional positive results from our global Phase 1/2 clinical study (ATB200-02)its intent to investigate ATB200/AT2221 in patientslaunch a next-generation genetic medicine company, Caritas Therapeutics, Inc. (“Caritas”) through a definitive business combination agreement pursuant to which the Amicus gene therapy business will be acquired by ARYA Sciences Acquisition Corp IV ("ARYA"), a special purpose acquisition company (or "SPAC"), sponsored by Perceptive Advisors.
Concurrent with Pompe disease. Consistent with previous results, patients who completed six monthsthe closing of treatment with ATB200/AT2221 showed improvements in six-minute walk test (“6MWT”) distance and other measures of motor function, stability or increases in forced vital capacity (“FVC”), and further reductions in biomarkers of muscle damage and disease substrate, with consistent results reported in initial patients who completed nine months of treatment. On September 21, 2017,the transaction, the Company announced thatand Caritas will enter into a co-development and commercialization agreement (the “Co-Development and Collaboration Agreement”) pursuant to which, among other things, (i) the FDA granted orphan drug designation to ATB200/AT2221.

The Company was previously developing SD-101in late-stageand Caritas will collaborate in the research and development as a potential first-to-marketof gene therapy product candidates for the chronic, rare connective tissue disorder Epidermolysis Bullosa (“EB”). On September 13, 2017,treatment of Fabry disease and Pompe diseases, (ii) Caritas will grant the Company reported that top-line data from the randomized, double-blind, placebo-controlled Phase 3 clinical study (“ESSENCE” or “SD-005”)an exclusive license under Caritas’ intellectual property to assess the efficacyclinically develop and safety of the novel topical wound-healing agent SD-101 did not meet the primary endpoints or secondary endpoints in participants with EB. The Company plans to further analyzecommercialize certain existing and share the Phase 3 ESSENCE results with key stakeholders in the EB community including physicians, patient organizationsfuture gene therapy candidates and regulators. In the interim, in consultation with their physicians, participants in the ongoing extension studies (SD-004 and -006)(iii) Caritas will have the opportunity to continue being treated with SD-101. Based on the top-line data,grant the Company has no current plans to invest in any additional clinical studies or commercial preparation activitiesa right of first negotiation for SD-101. This event led the Company to assessnegotiate an exclusive license to develop and commercialize therapeutic products incorporating gene therapy technologies being developed by Caritas for certain muscular dystrophy indications, in each case, subject to the carrying amountterms and conditions therein.


The Company and Caritas will also enter into a transition services agreement pursuant to which, among other things, (i) the Company and/or one or more of its affiliates will provide certain transitional services to Caritas and/or one or more of its affiliates and (ii) Caritas and/or one or more its affiliates will provide certain transitional services to the Company and/or one or more of its affiliates, in each case, in order to facilitate the orderly transition of the program’s tangible and intangible assets against their respective fair values.  Based onCompany’s gene therapy business to Caritas.

9

Concurrent with the assessment,closing of the transaction, the Company recognizedwill enter into the tax receivable agreement with Caritas, ARYA and the other persons from time to time that become a loss on impairmentparty thereto (such other persons and the Company, collectively, the “TRA Participants”). Pursuant to the tax receivable agreement, ARYA will be required to pay the TRA Participants 85% of intangible assets in the amount of $463.7 millionsavings, if any, in U.S. federal, state and $1.7 millionlocal income tax that ARYA actually realizes (computed using certain simplifying assumptions) as a result of the increases in fixed assets recorded within Loss on Impairmenttax basis related to any exchanges of AssetsUnits for Caritas Common Stock. All such payments to the TRA Participants will be ARYA’s obligation, and not that of Caritas.
The business combination agreement and the transactions contemplated thereby were unanimously approved by the respective boards of directors of the Company and ARYA. The transaction is expected to close in late 2021 or early 2022, following the approval of the transaction by ARYA’s stockholders and the fulfillment of other customary closing conditions.
Prior to the closing, all expenses will continue to be reported within the Consolidated Statements of Operation. Since the study did not meet the primary and secondary endpoints, the Company has concluded that they will not make the potential milestone payments indicated in the Asset Purchase Agreement to the former Scioderm holders. Accordingly, the Company recognized a gain of $254.7 million in Changes in Fair Value of Contingent Consideration Payable in theCompany's Consolidated Statements of OperationOperations. Following the close of the transaction, Amicus will become the largest stockholder of Caritas with an approximate 36% ownership stake (assuming no redemptions by ARYA’s stockholders), through transfer of assets constituting the Company's gene therapy business and contributing $50 million in exchange for the three months endeda number of units of Caritas as an equity investment.
As of September 30, 2017 in order2021, the Company will continue to decreasefully consolidate the liability to zero. The Company also recognized $0.4 million in selling, generalgene therapy business until the close of the transaction and administrative costs and $8.1 million in research and development expenses relatedhas not applied accounting treatment under the "held for sale" guidance due to the wind-down of operations for the Phase 3 ESSENCE studyconditional regulatory and ongoing extension studies SD-004 and SD-006stockholder approvals.
Additionally, in the third quarter of 2017. See “—Note 4. Goodwill and IPR&D” for more details.

The Company is also investigating preclinical and discovery programs in other rare and devastating diseases including cyclin-dependent kinase-like 5 (“CDKL5”) deficiency. The Company believes that its platform technologies and its product pipeline uniquely position it at the forefront of advanced therapies to treat a range of devastating rare and orphan diseases.

On July 12, 2017,September 2021, the Company entered into securities purchase agreements with certain investors for the private placement of an underwriting agreement (“the Underwriting Agreement”) with J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC, as representativesaggregate of 11,296,660 shares of the several underwriters set forth on Schedule 1 thereto,  relating to an underwritten public offering of the Company’sCompany's common stock, (the “Offering”). Underat a purchase price of $10.18 per share and pre-funded warrants to purchase an aggregate of 8,349,705 shares of common stock, at a purchase price of $10.17 per pre-funded warrant. The net proceeds from these private placements were approximately $199.8 million. The Company expects to use the termsnet proceeds to further fund initiatives in the global commercialization of Galafold® and the Underwriting Agreement,anticipated global launch of AT-GAA and, in connection with the business combination, to invest $50 million in cash in Caritas.

The Company's operations have not been significantly impacted by the novel coronavirus (“COVID-19”) pandemic thus far. However, the Company issuedcontinued to observe periodic increase in lag times between patient identification and sold 21,122,449 shares at a priceGalafold® initiation due to the publicresurgence of $12.25 per share, resultingCOVID-19 into 2021. The Company has maintained operations in gross proceedsall geographies, secured its global supply chain for its commercial and clinical products, and maintained the operational integrity of $258.8 million, before deducting underwriting discounts and commissions and offering expenses payable byits clinical trials, with minimal disruption. The Company believes its ability to continue to operate without any significant disruptions will depend on the Company. The Offering closed on July 18, 2017continued health of its employees, the ongoing demand for Galafold® and the continued operation of its global supply chain. The Company receivedhas continued to provide uninterrupted access to medicines for those in need of treatment, while prioritizing the health and safety of its global workforce. However, the Company's results of operations in future periods may be negatively impacted by unknown future impacts from the COVID-19 pandemic.
The Company had an accumulated deficit of $2.2 billion as of September 30, 2021 and anticipates incurring losses through the fiscal year ending December 31, 2021 and beyond. The Company has historically funded its operations through stock offerings, Galafold® revenues, debt issuances, collaborations, and other financing arrangements.
Based on the current operating model, the Company believes that the current cash position, which includes expected revenues, and net proceeds from the Offering, after deducting underwriting discounts and commissions and offering expenses payable by the CompanySeptember 2021 private placement of $243.0 million. See “—Note 8. Equity” for more details.

The Company believes that its existing cash and cash equivalents and short-term investments will besecurities, is sufficient to fund the current operating plan intoCompany's operations and ongoing research programs to achieve self-sustainability. Potential impacts of the second half of 2019.

COVID-19 pandemic, business development collaborations, pipeline expansion, and investment in manufacturing capabilities could impact the Company's future capital requirements.
10

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The Company has prepared the accompanying unaudited consolidated financial statementsConsolidated Financial Statements in accordance with the U.S. generally accepted accounting principles generally accepted in the United States of America (“("U.S. GAAP”GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’sCompany's interim financial information.

The accompanying unaudited consolidated financial statementsConsolidated Financial Statements and related notes should be read in conjunction with the Company’sCompany's financial statements and related notes as contained in the Company’sCompany's Annual Report on Form 10-K as amended, for the fiscal year ended December 31, 2016.2020. For a complete description of the Company’sCompany's accounting policies, please refer to the Annual Report on Form 10-K as amended for the fiscal year ended December 31, 2016.

2020.

Consolidation

The consolidated financial statementsConsolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions have beenare eliminated in consolidation.

Foreign Currency Transactions

The functional currency for most of the Company’sCompany's foreign subsidiaries is their local currency. For non-U.S. subsidiaries that transact in a functional currency other than the U.S. dollar, assets and liabilities are translated at current rates of exchange at the balance sheet date. Income and expense items are translated at the average foreign exchange rates for the period. Adjustments resulting from the translation of the financial statements of the Company’sCompany's foreign operations into U.S. dollars are excluded from the determination of net income and are recorded in accumulated other comprehensive income, a separate component of stockholders’stockholders' equity.

The Company transacts business in various foreign countries and therefore, is subject to risk of foreign currency exchange rate fluctuations. As such, in June 2016, the Company entered into a forward contract to economically hedge transactional exposure associated with commitments arising from trade accounts payable denominated in a currency other than the functional currency of the respective operating entity. The Company does not designate this forward contract as a hedging instrument under applicable accounting guidance and, therefore, changes in fair value are recorded as other expense in the Consolidated Statements of Operations. The forward contract expired in June 2017.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Additionally, the Company assessed the impact COVID-19 pandemic has had on its operations and financial results as of September 30, 2021 and through the issuance of this report. The Company’s analysis was informed by the facts and circumstances as they were known to the Company. This assessment considered the impact COVID-19 may have on financial estimates and assumptions that affect the reported amounts of assets and liabilities and revenue and expenses.
Cash, Cash Equivalents, Marketable Securities, and Restricted Cash
The Company considers all highly liquid investments purchased with a maturity of three months or less at the date of acquisition to be cash equivalents. Marketable securities consist of fixed income investments with a maturity of greater than three months and other highly liquid investments that can be readily purchased or sold using established markets. These investments are classified as available-for-sale and are reported at fair value on the Company's Consolidated Balance Sheets. Unrealized holding gains and losses are reported within comprehensive income (loss) in the Statements of Comprehensive Loss. Fair value is based on available market information including quoted market prices, broker or dealer quotations, or other observable inputs.
Restricted cash consists primarily of funds held to satisfy the requirements of certain agreements that are restricted in their use and is included in other current assets and other non-current assets on the Company's Consolidated Balance Sheets.
11

Concentration of Credit Risk

The Company’sCompany's financial instruments that are exposed to concentration of credit risk consist primarily of cash, and cash equivalents, and marketable securities. The Company maintains its cash and cash equivalents in bank accounts, which, at times, exceed federally insured limits. The Company invests its marketable securities in high-quality commercial financial instruments. The Company has not recognized any losses from credit risks on such accounts during any of the periods presented. The Company believes it is not exposed to significant credit risk on its cash, and cash equivalents, or its marketable securities.

The Company is subject to credit risk from its accounts receivable related to its product sales of Galafold™Galafold®. The majority of the Company’sCompany's accounts receivable at September 30, 20172021 have arisen from product sales primarily in Europe and the EU.U.S. The Company will periodically assess the financial strength of its customers to establish allowances for anticipated losses, if any. For accounts receivable that have

arisen from named patient sales, the payment terms are predetermined, and the Company evaluates the creditworthiness of each customer on a regular basis. To date,As of September 30, 2021, the Company has not incurred any credit losses.

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2017, as compared to the significant accounting policies disclosed in Note 2recorded an allowance for doubtful accounts of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K, as amended, for the year ended December 31, 2016. However, the following accounting policies are the most critical in fully understanding and evaluating the Company’s financial condition and results of operations.

$0.1 million.    

Revenue Recognition

The Company recognizes revenue when amounts are realized or realizable and earned. Revenue is considered realizable and earned when persuasive evidence of an arrangement exists, title to product and associated risk of loss has passed to the customer, which is typically upon receipt by the end customer, the price is fixed or determinable, collection of the amounts due are reasonably assured and the Company has no further performance obligations.

The Company’sCompany's net product sales consist solely of sales of Galafold™Galafold® for the treatment of Fabry disease in the EU.disease. The Company has recorded revenue on sales where Galafold™Galafold® is available either on a commercial basis or through a reimbursed early access program.program ("EAP"). Orders for Galafold™Galafold® are generally received from distributors and pharmacies andwith the ultimate payor is typicallyoften a government authority.

The Company recordsrecognizes revenue when its performance obligations to its customers have been satisfied, which occurs at a point in time when the pharmacies or distributors obtain control of Galafold®. The transaction price is determined based on fixed consideration in the Company's customer contracts and is recorded net of estimatedestimates for variable consideration, which are third party discounts and rebates. Allowances areThe identified variable consideration is recorded as a reduction of revenue at the time revenuesrevenue from product sales arethe sale of Galafold® is recognized. The Company recognizes revenue to the extent that it is probable that a significant revenue reversal will not occur in a future period. These allowances are adjustedestimates may differ from actual consideration received. The Company evaluates these estimates each reporting period to reflect known changes in factors and may impact such allowances inchanges.
The following table summarizes the quarter those changes are known. Allowances as of September 30, 2017 are immaterial.

Company's net product sales from Galafold® disaggregated by geographic area:

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2021202020212020
U.S.$25,636 $20,278 $70,167 $58,857 
Ex-U.S.53,909 47,159 153,193 131,458 
Total net product sales$79,545 $67,437 $223,360 $190,315 
Inventories and Cost of Goods Sold

Prior to regulatory approval of Galafold™, the Company expensed all manufacturing costs related to Galafold™ as research and development expense. Upon regulatory approval, the Company began capitalizing costs related to the purchase and manufacture of Galafold™.

Inventories are stated at the lower of cost and net realizable value, determined by the first-in, first-out method. Inventories are reviewed periodically to identify slow-moving or obsolete inventory based on projected sales activity as well as product shelf-life. In evaluating the recoverability of inventories produced, the probability that revenue will be obtained from the future sale of the related inventory is considered and inventory value is written down for inventory quantities in excess of expected requirements. Expired inventory is disposed of and the related costs are recognized as cost of product salesgoods sold in the consolidated statementsConsolidated Statements of operations.

Operations.

Cost of goods sold includes the cost of inventory sold, manufacturing and supply chain costs, product shipping and handling costs, provisions for excess and obsolete inventory, as well as royalties payable.  A portion
Leases
The Company primarily enters into lease agreements for office space, equipment, and vehicles. The leases have varying terms, some of which could include options to renew, extend, and early terminate. The Company determines if an arrangement is a lease at contract inception. Operating leases are included in right-of-use ("ROU") assets and lease liabilities on the Consolidated Balance Sheets.
12

ROU assets represent the Company's right to control the use of an explicitly or implicitly identified fixed asset for a period of time and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the inventory available for sale was expensed as researcheconomic benefits from using the underlying asset. ROU assets and development costs prior to regulatory approval and as such the cost of goods sold and related gross marginsliabilities are not necessarily indicative of future cost of goods sold and gross margin.

Fair Value Measurements

The Company records certain asset and liability balances under the fair value measurements as defined by the FASB guidance. Current FASB fair value guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determinedrecognized at commencement date based on the assumptions that market participants would use in pricingpresent value of lease payments over the asset or liability. As a basis for considering market participant assumptions in fair value measurements, current FASB guidance establishes a fair value hierarchy that distinguishes between market participant assumptionslease term. The Company uses its incremental borrowing rate based on market data obtained from sources independentthe information available at commencement date in determining the present value of lease payments.

Lease payments included in the measurement of the reporting entity (observable inputslease liability are comprised of fixed payments. Variable lease payments are excluded from the ROU asset and lease liability and are recognized in the period in which the obligation for those payments is incurred. Variable lease payments are presented in the Consolidated Statements of Operations in the same line item as expenses arising from fixed lease payments for operating leases. The Company has lease agreements that are classified within Levels 1include lease and 2non-lease components, which the Company accounts for as a single lease component for all underlying asset categories.
The lease term for all of the hierarchy) andCompany's leases includes the reporting entity’s own assumptions that market participants assumptions would use in pricing assets or liabilities (unobservable inputs classified within Level 3non-cancellable period of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilitieslease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company hasis reasonably certain to exercise, or an option to extend (or not to terminate) the abilitylease controlled by the lessor.

Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company applies this policy to access at measurement date. Level 2 inputsall underlying asset categories.
Recent Accounting Developments - Guidance Adopted in 2021
ASU 2019-12 - In December 2019, the Financial Accounting Standard Board issued Accounting Standard Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). This new guidance removes specific exceptions to the general principles in Topic 740. It eliminates the need for an organization to analyze whether the following applies in a given period: (i) exception to the incremental approach for intraperiod tax allocation; (ii) exceptions to accounting for basis differences when there are inputs other than quoted prices includedownership changes in Level 1foreign investments; and (iii) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU 2019-12 also improves financial statement preparers’ application of income tax-related guidance and simplifies the following: (i) franchise taxes that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active

markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which is typicallypartially based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Contingent Liabilities

On an ongoing basis, the Company may be involved in various claims, and legal proceedings. On a quarterly basis, the Company reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can be reasonably estimated, the Company will accrue a liability for the estimated loss. Because of uncertainties related to claims and litigation, accruals will be based on the Company’s best estimates based on available information. On a periodic basis, as additional information becomes available, or based on specific events such as the outcome of litigation or settlement of claims, the Company may reassess the potential liability related to these matters and may revise these estimates, which could result in material adverse adjustments to the Company’s operating results.

Recent Accounting Pronouncements

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this Update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this Update also make certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. For public business entities, the amendment is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption, including adoption in an interim period, is permitted. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interestsincome; (ii) transactions with a Scope Exception. Part I of this Update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features)government that result in a step up in the strike price being reduced on thetax basis of the pricinggoodwill; (iii) separate financial statements of future equity offerings. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrumentlegal entities that are not subject to tax; and (iv) enacted changes in tax laws in interim periods. ASU 2019-12 is indexed to an entity’s own stock.  Part II of this Update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and years, beginning after December 15, 2018.  Early adoption is permitted for all entities, including adoption in an interim period. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718 Compensation—Stock Compensation. An entity should account for the effects of a modification unless all the following are met: 1. The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. 2. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. 3. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The ASU is effective for all entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. The amendments shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments should be applied on a modified retrospective basis, with a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently assessing the impact thatadopted this standard will haveguidance prospectively on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, ASU 2017-04 eliminates Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition. A public business entity that is a U.S. SEC filer should adopt ASU 2017-04 for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.2021. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This Accounting Standards Update clarifies the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted under certain circumstances. The amendments should be applied prospectively as of the beginning of the period of adoption. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This Accounting Standards Update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments eliminate the exception for an intra-entity transfer of an asset other than inventory. The amendments in this Update are effective for public business entities for annual periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities in the first interim period if an entity issues interim financial statements. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. The Company hasdid not completed review of the impact of this guidance and does not expect this new guidance to have a material impact on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, CompensationCompany's Consolidated Financial Statements or related disclosures.

Recent Accounting Developments - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted ASU 2016-09 on January 1, 2017. Due to the Company’s history of operating losses, the adoption did not result in changes to the Company’s Net loss or Retained earnings and the classification of excess tax benefits on the statement of cash flows for prior periods have not been adjusted. In connection with the adoption of ASU 2016-9, the Company made a policy election to continue its methodology for the development and application of its forfeiture rate.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This update requires the recognition of lease assets and lease liabilities on the balance sheet for all lease obligations and disclosing key information about leasing arrangements. This update requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous generally accepted accounting principles. This update will be effective for the Company for all annual and interim periods

beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for all public business entities and all nonpublic business entities upon issuance. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers which along with amendments issued in 2015 and 2016, will replace substantially all current US GAAP guidance on this topic and eliminate industry-specific guidance. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.   The guidance permits two methods of adoption: full retrospective method (retrospective application to each prior reporting period presented) or modified retrospective method (retrospective application with the cumulative effect of initially applying the guidance recognized at the date of initial application and providing certain additional disclosures). Guidance Not Yet Adopted

The Company has elected to adopt the new standard using the modified retrospective approach.  ASU 2014-09evaluated recent accounting pronouncements and believes that none of them will become effective for the Company during the first quarter of 2018.

The Company continues to assess the impact of ASU 2014-09 on its business and financial statements and expects the adoption of ASU 2014-09 to have an impact to its financial reporting disclosures and internal controls over financial reporting (“ICFR”).  The Company has developed implementation controls that allow the Company to properly and timely adopt the new revenue accounting standard on its effective date.  The Company will make continuous updates to the quarterly and year-end disclosures, with a focus on both status and internal controls over financial reporting.

The Company’s implementation plan includes a phased project plan, an understanding of the new standard and its requirements, assessment of the Company’s revenue streams and specific contracts in the streams.  Additionally, the Company continues to monitor modifications, clarifications and interpretations issued by the FASB that may impact its assessment.  Upon completion of the Company’s implementation plan and evaluation of the remaining revenue contracts, the Company plans to adopt additional internal controls over financial reporting for any new revenue arrangements. The Company is performing a detailed review of representative contracts and assessing the potential impacts the standard may have on previously reported revenues and future revenues. The Company is also evaluating the potential impact of costs related to obtaining and fulfilling the contracts.  The Company is completing its analysis and is on target to complete its assessment of ASU 2014-09 and the impactmaterial effect on the Company’s consolidated financial statements andCompany's Consolidated Financial Statements or related disclosures as of January 1, 2018.

disclosures.

Note 3. Acquisitions

Asset Acquisition of MiaMed, Inc.

In July 2016, the Company entered into an AgreementCash, Cash Equivalents, Marketable Securities, and Plan of Merger (the “MiaMed Agreement”) with MiaMed, Inc., (“MiaMed”). MiaMed is a pre-clinical biotechnology company focused on developing protein replacement therapy for CDKL5 and related diseases. Under the terms of the MiaMed Agreement, the former holders of MiaMed’s capital stock received an aggregate of $6.5 million, comprised of (i) approximately $1.8 million in cash (plus MiaMed’s cash and cash equivalents at closing and less any of MiaMed’s unpaid third-party fees and expenses related to the transaction), and (ii) 825,603 shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). In addition, the Company also agreed to pay up to an additional $83.0 million in connection with the achievement of certain clinical, regulatory and commercial milestones, for a potential aggregate deal value of $89.5 million. The Company evaluated the transaction based on the guidance of Accounting Standard Codification (“ASC”) 805, Business Combinations and concluded that it only acquired inputs and did not acquire any processes. The Company will need to develop its own processes in order to produce an output. Therefore, the Company accounted for the transaction as an asset acquisition and accordingly $6.5 million was expensed to research and development.

Acquisition of Scioderm, Inc.

In September 2015, the Company acquired Scioderm Inc., (“Scioderm”), a privately-held biopharmaceutical company focused on developing innovative therapies for treating the rare disease EB. The acquisition potentially leveraged the Scioderm development team’s EB expertise with the Company’s global clinical infrastructure to advance SD-101 toward regulatory approvals and the Company’s commercial, patient advocacy, and medical affairs infrastructure to support a successful global launch. The acquisition of Scioderm was accounted for as a purchase of a business in accordance with ASC 805 Business Combinations.

On September 13, 2017, the Company reported that top-line data from the randomized, double-blind, placebo-controlled Phase 3 clinical study (ESSENCE, SD-005) to assess the efficacy and safety of the novel topical wound-healing agent SD-101 did not meet the primary endpoints or secondary endpoints in participants with EB. Based on these top-line data, the Company has no current plans to invest in any additional clinical studies or commercial preparation activities for SD-101. For additional information, see “— Note 1. Description of Business.”  The associated impairment of Scioderm IPR&D is discussed in “— Note 4. Goodwill and

Intangible Assets.”

Acquisition of Callidus Biopharma, Inc.

In November 2013, the Company acquired Callidus Biopharma, Inc. (“Callidus”), a privately-held biologics company focused on developing best-in-class ERTs for lysosomal storage disorders (“LSDs”) with its lead ERT ATB200 for Pompe disease in late preclinical development. The acquisition of the Callidus assets and technology complements Amicus’ CHART™ platform for the development of next-generation ERTs.

For additional information, see “— Note 4. Goodwill and Intangible Assets.”

Note 4. Goodwill and IPR&D

In connection with the acquisitions, the Company recognized IPR&D of $486.7 million and goodwill of $197.8 million. Intangible assets related to IPR&D assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. During the period the assets are considered indefinite-lived, they will not be amortized but will be tested for impairment on an annual basis and between annual tests if the Company becomes aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D assets below their respective carrying amounts.

Goodwill and intangible assets are assessed annually for impairment on October 1 and whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that the full carrying amount of an asset is not recoverable, an impairment loss is recorded in the amount by which the carrying amount of the asset exceeds its fair value. As discussed in “— Note 1. Description of Business”,  in September 2017, the Company reported that top-line data from the randomized, double-blind, placebo-controlled Phase 3 clinical study (ESSENCE, SD-005) to assess the efficacy and safety of the novel topical wound-healing agent SD-101 did not meet the primary endpoints or secondary endpoints in participants with EB. This event led to an assessment to determine if an impairment had occurred for goodwill and IPR&D. Based on tests for impairment, the Company determined that IPR&D had been impaired, however goodwill was not impaired based on qualitative and market capitalization tests performed.

The following table represents the changes in IPR&D for the nine months ended September 30, 2017:

 

 

(in millions)

 

Balance at December 31, 2016

 

$

486.7

 

Impairment in IPR&D related to Scioderm

 

(463.7

)

Balance September 30, 2017

 

$

23.0

 

The following table represents the changes in Goodwill for the nine months ended September 30, 2017:

 

 

(in millions)

 

Balance at December 31, 2016

 

$

197.8

 

Change in goodwill

 

—

 

Balance at September 30, 2017

 

$

197.8

 

Note 5.Restricted Cash Money Market Funds and Marketable Securities

As of September 30, 2017,2021, the Company held $64.1$385.9 million in cash and cash equivalents and $362.5$171.1 million of available-for-salemarketable securities which are reported at fair value on the Company’sCompany's Consolidated Balance Sheets. Unrealized holding gains and losses are generally reported within accumulated other comprehensive income/ (loss)loss in the statementsStatements of comprehensive loss.Comprehensive Loss. If a decline in the fair value of a marketable security below the Company’sCompany's cost basis is determined to be otherother-than-temporary or if an available-for-sale debt security’s fair value is determined to less than temporary,the amortized cost and the Company intends or is more than likely to sell the security before recovery and it is not considered a credit loss, such marketable security is written down to its estimated fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge. To date, only temporary impairment adjustments have been recorded.

If the unrealized loss of an available-for-sale debt security is determined to be a result of credit loss the Company would recognize an allowance and the corresponding credit loss would be included in earnings.

The Company regularly invests excess operating cash in deposits with major financial institutions, money market funds, notes issued by the U.S. government, as well as fixed income investments and U.S. bond funds, both of which can be readily purchased

and sold using established markets. The Company believes that the market risk arising from its holdings of these financial instruments is mitigated as many of these securities are either government backed or of the highest credit rating. Investments that have original maturities greater than 3three months but less than 1one year are classified as short-term, while investments that have maturities greater than 1 yearcurrent.

13

Cash, cash equivalents and marketable securities are classified as long-term.

current unless mentioned otherwise below and consisted of the following:

 As of September 30, 2021
(in thousands)CostGross
Unrealized
Gain		Gross
Unrealized
Loss		Fair
Value
Cash and cash equivalents$385,903 $— $— $385,903 
Corporate debt securities12,143 — (2)12,141 
Commercial paper127,943 14 — 127,957 
Asset-backed securities20,547 2 — 20,549 
U.S. government agency bonds10,009 — — 10,009 
Money market350 — — 350 
Certificates of deposit51 — — 51 
$556,946 $16 $(2)$556,960 
Included in cash and cash equivalents$385,903 $— $— $385,903 
Included in marketable securities171,043 16 (2)171,057 
Total cash, cash equivalents, and marketable securities$556,946 $16 $(2)$556,960 

 As of December 31, 2020
(in thousands)CostGross
Unrealized
Gain		Gross
Unrealized
Loss		Fair
Value
Cash and cash equivalents$163,240 $— $— $163,240 
Corporate debt securities39,525 4 (16)39,513 
Commercial paper217,087 14 (6)217,095 
Asset-backed securities9,420 18 — 9,438 
U.S. government agency bonds53,583 3 (4)53,582 
Money market350 — — 350 
Certificates of deposit51 — — 51 
$483,256 $39 $(26)$483,269 
Included in cash and cash equivalents$163,240 $— $— $163,240 
Included in marketable securities320,016 39 (26)320,029
Total cash, cash equivalents, and marketable securities$483,256 $39 $(26)$483,269 
For the nine months ended September 30, 2017, the Company recognized a loss of $0.2 million, related to derivative instruments not designated as hedging instruments in other expense in the Consolidated Statements of Operations. As the forward contract expired in June 2017, there was no liability in the Consolidated Balance Sheets as of September 30, 2017.

Cash and available-for-sale securities are all current unless mentioned otherwise and consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands):

 

 

As of September 30, 2017

 

 

 

Cost

 

Gross
unrealized
Gain

 

Gross
unrealized
Loss

 

Fair
Value

 

Cash balances

 

$

64,133

 

$

—

 

$

—

 

$

64,133

 

Corporate debt securities, current portion

 

192,851

 

5

 

(75

)

192,781

 

Corporate debt securities, non-current portion

 

15,121

 

—

 

(12

)

15,109

 

Commercial paper

 

123,880

 

11

 

(10

)

123,881

 

Asset backed securities

 

30,346

 

—

 

(20

)

30,326

 

Money market

 

350

 

—

 

—

 

350

 

Certificate of deposit

 

50

 

—

 

—

 

50

 

 

 

$

426,731

 

$

16

 

$

(117

)

$

426,630

 

Included in cash and cash equivalents

 

$

64,133

 

$

—

 

$

—

 

$

64,133

 

Included in marketable securities

 

362,598

 

16

 

(117

)

362,497

 

Total cash and marketable securities

 

$

426,731

 

16

 

$

(117

)

$

426,630

 

 

 

As of December 31, 2016

 

 

 

Cost

 

Unrealized
Gain

 

Unrealized
Loss

 

Fair
Value

 

Cash balances

 

$

187,026

 

$

—

 

$

—

 

$

187,026

 

Corporate debt securities, current portion

 

74,564

 

2

 

(31

)

74,535

 

Commercial paper

 

68,258

 

132

 

—

 

68,390

 

Money market

 

350

 

—

 

—

 

350

 

Certificate of deposit

 

50

 

—

 

—

 

50

 

 

 

$

330,248

 

$

134

 

$

(31

)

$

330,351

 

Included in cash and cash equivalents

 

$

187,026

 

$

—

 

$

—

 

$

187,026

 

Included in marketable securities

 

143,222

 

134

 

(31

)

143,325

 

Total cash and marketable securities

 

$

330,248

 

134

 

$

(31

)

$

330,351

 

For the nine months ended September 30, 2017 and the year ended December 31, 2016,2021 there were no realized gains or losses. For the fiscal year ended December 31, 2020, there were nominal realized gains. The cost of securities sold is based on the specific identification method.

Unrealized loss positions in the available for salemarketable securities as of September 30, 20172021 and December 31, 20162020 reflect temporary impairments thatand are not a result of credit loss. Additionally, as these positions have been in a loss position for less than twelve months and as suchthe Company does not intend to sell these securities before recovery, the losses are recognized in other comprehensive gain/gain (loss). The fair value of these available for salemarketable securities in unrealized loss positions was $241.5$13.5 million and $58.7$124.9 million as of September 30, 20172021 and December 31, 2016,2020, respectively.

The Company holds available-for-sale investment securities which are reported at fair value on the Company’s balance sheet. Unrealized holding gainsfollowing table provides a reconciliation of cash, cash equivalents, and losses arerestricted cash reported within accumulated other comprehensive income (“AOCI”)the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the statementsConsolidated Statements of comprehensive loss.

Cash Flows.
(in thousands)September 30, 2021September 30, 2020
Cash and cash equivalents$385,903 $210,631 
Restricted cash3,168 2,794 
Cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows$389,071 $213,425 


14

Note 6.4. Inventories

Inventories consist of work in processraw materials, work-in-process, and finished goods related to the manufacture of Galafold™Galafold®. The following table summarizes the components of inventories at September 30, 2017 (in thousands):

 

 

September 30, 2017

 

December 31, 2016

 

Work-in-process

 

$

6,937

 

$

3,308

 

Finished goods

 

335

 

108

 

Total inventories

 

$

7,272

 

$

3,416

 

Inventory manufactured prior to commercialization was expensed to research and development. Inventories are reviewed periodically to identify slow-moving or obsolete inventory based on projected sales activity, as well as product shelf-life. In evaluating the recoverability of inventories produced, the Company considers the probability that revenue will be obtained from the future sale of the related inventory. Inventory becomes obsolete when it has aged past its shelf-life, cannot be recertified and is no longer usable or able to be sold, or the inventory has been damaged. In such instances, a full reserve is taken against such inventory. Expired inventory is disposed of and the related costs are recognized as cost of product sales in the consolidated statement of operations. There have been no write-downs of inventory from the time inventory was first capitalized nor have any inventory reserves been recorded to date.

Note 7.   Debt Instruments

2016 Convertible Debt

On December 21, 2016, the Company issued at par value $250 million aggregate principal amount of unsecured Convertible Senior Notes due 2023 (the “Convertible Notes”), which included the exercise in full of the $25 million over-allotment option granted to the initial purchasers of the Notes, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act (the “Note Offering”). Interest is payable semiannually on June 15 and December 15 of each year, beginning on June 15, 2017.  inventories:

(in thousands)September 30, 2021December 31, 2020
Raw materials$5,350 $5,547 
Work-in-process11,975 7,693 
Finished goods4,747 6,316 
Total inventories$22,072 $19,556 
The Notes will mature on December 15, 2023, unless earlier repurchased, redeemed, or converted in accordance with their terms.  The Notes are convertible at the option of the holders, under certain circumstances and during certain periods, into cash, shares of the Company’s Common Stock or a combination thereof and may be settled as described below. The net proceeds from the Note Offering were $243.0 million, after deducting fees and estimated expenses payable by the Company.  In addition, the Company used approximately $13.5 million of the net proceeds from the issuance of the Convertible Notes to pay the cost of the capped call transactions (“Capped Call Confirmations”) that the Company entered into in connection with the issuance of the Convertible Notes.

The Convertible Notes are governed by an indenture dated December 21, 2016 (the “Indenture”) by and between the Company and Wilmington Trust, National Association, as trustee.

The Convertible Notes are initially convertible into approximately 40,849,675 shares of the Company’s Common Stock under certain circumstances prior to maturity at a conversion rate of 163.3987 shares per $1,000 principal amount of Convertible Notes, which represents a conversion price of approximately $6.12 per share of Common Stock, subject to adjustment under certain conditions. Holders may convert their Convertible Notes at their option at specified times prior to the maturity date of December 15, 2023, only if:

·                        during any fiscal quarter commencing after March 31, 2017, the last reported sale price of the Company’s Common Stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is equal to or more than 130% of the conversion price of the Convertible Notes on the last day of such preceding fiscal quarter;

·                        a Holder submits its Convertible Notes for conversion during the five business day period following any five consecutive trading day period in which the trading price for the Convertible Notes, per $1,000 principal amount of the Convertible Notes, for each such trading day was less than 98% of the product of the last reported sale price of the Company’s Common Stock and the conversion rate of the Convertible Notes on such date;

·                        the Company issues to all or substantially all of the holders of Common Stock rights options or warrants entitling them for a period of not more than 60 calendar days after the date  of such issuance to subscribe for or purchase shares of the Common Stock, at a price per share less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance or distributes to all or substantially all holders of the Common Stock the Company’s assets, debt securities or rights to purchase the Company’s

securities which distribution has a per share value of exceeding 10% of the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the date of announcement of such distribution

·                        the Company enters into specified corporate transactions; or

·                        the Company has had a call for redemption, the holder can convert up until the second trading day immediately preceding the redemption date

The Convertible Notes will be convertible, at the option of the note holders, regardless of whether any of the foregoing conditions have been satisfied, on or after September 15, 2023 at any time prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date of December 15, 2023.

The last reported sale price of the Company’s Common Stock was equal to or more than 130% of the conversion price of the Convertible Notes for at least 20 trading days of the 30 consecutive trading days ending on the last day of the second quarter. As a result, the Convertible Notes are currently convertible into the Company’s Common stock as discussed above.

Upon the occurrence of a make-whole fundamental change or if the Company call all or any portion of the Convertible Notes for redemption prior to July 1, 2020, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its Convertible Notes in connection with such make-whole fundamental change or during the related redemption period.

Upon conversion, the Company may pay cash, shares of the Company’s Common Stock or a combination of cash and stock, as determined by the Company in its discretion.

The Company accounts for the Convertible Notes as a liability and equity component where the carrying value of the liability component will be valued based on a similar instrument. In accounting for the issuance of the Convertible Notes, the Company separated the Convertible Notes into liability and equity components. The equity component is not re-measured as long as it continues to meet the conditions for equity classification.

In accounting for the issuance of the Convertible Notes, the Company separated the Convertible Notes into liability and equity components based on their relative values. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature.  The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Convertible Notes.  The difference between the principal amount of the Convertible Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the Consolidated Balance Sheets and amortized to interest expense using the effective interest method over the seven-year term of the Convertible Notes. The equity component of the Convertible Notes of approximately $88.3 million is included in additional paid-in capital in the Consolidated Balance Sheets and is not remeasured as long as it continues to meet the conditions for equity classification.  Additionally, the Company recorded a deferred tax liabilityreserve for inventory of $29.8$0.1 million in relation to the Convertible Notes.

The Company incurred transaction costs of approximately $7.5 million, including approximately $6.9 million that was paid from the gross proceeds of the Convertible Notes offering.  In accounting for the transaction costs, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the Convertible Notes.  Transaction costs attributable to the liability component were recorded as a direct deduction from the related debt liability in the Consolidated Balance Sheets and amortized to interest expense over the seven-year term of the Convertible Notes. Transaction costs attributable to the equity component were netted with the equity component in additional-paid-in-capital.

The Convertible Notes consist of the following (in thousands): as of September 30, 20172021 and December 31, 2016:

2020, respectively.
Note 5. Debt
The Company's debt consists of the following:
(in thousands)September 30, 2021December 31, 2020
Senior Secured Term Loan due 2026:
Principal$400,000 $400,000 
Less: debt discount (1)
(6,438)(7,434)
Less: deferred financing (1)
(4,843)(5,592)
Net carrying value of the Senior Secured Term Loan$388,719 $386,974 
Convertible Notes due 2023:
Principal$— $2,825 
Less: debt discount (1)
— (518)
Less: deferred financing (1)
— (27)
Net carrying value of the Convertible Notes$— $2,280 
Net carrying value of Long-term debt$388,719 $389,254 

Liability component

 

September 30, 2017

 

December 31, 2016

 

Principal

 

$

250,000

 

$

250,000

 

Less: debt discount (1)

 

(83,972

)

(90,807

)

Less: deferred financing(1)

 

(4,393

)

(4,729

)

Net carrying value of the debt

 

$

161,635

 

$

154,464

 

(1)Included in the Consolidated Balance Sheets within Convertible Senior Notes (due 2023)long-term debt and amortized to interest expense over the remaining life of the Convertible Notes and Senior NotesSecured Term Loan using the effective interest rate method.

The fair value

During the first and third quarters of 2021, the Company entered into separate, privately negotiated exchange agreements with a limited number of holders ("Holders") of the debt atunsecured Convertible Notes due in 2023 ("Convertible Notes"). Under the terms of the Exchange Agreements, the Holders agreed to exchange the remaining aggregate principal amount of $2.8 million of Convertible Notes held by them in exchange for an aggregate of approximately 472,356 shares of Company common stock, par value $0.01 per share. This transaction resulted in $2.7 million in additional paid-in-capital and common stock of 5000 dollars on the Consolidated Balance Sheets as of September 30, 2017 was approximately $644.0 million.

2021. Additionally, the Company recognized a net loss from extinguishment of debt of $0.3 million in the Consolidated Statements of Operations during the nine months ended September 30, 2021.

15

Interest Expense
The following table sets forth total interest expense recognized related to the Convertible NotesCompany's debt for the three and nine months ended September 30, 2017:

Components (In thousands)

 

Three Months ended
September 30, 2017

 

Nine Months ended
September 30, 2017

 

Contractual interest expense

 

$

1,887

 

$

5,641

 

Amortization of debt discount

 

2,342

 

6,835

 

Amortization of deferred financing

 

122

 

344

 

Total

 

$

4,351

 

$

12,820

 

Effective interest rate of the liability component was 10.85%.

The Capped Call Confirmations of $13.5 million are expected generally to reduce the potential dilution to the Common Stock upon any conversion of the Convertible Notes and/or offset the cash payments the Company is required to make in excess of the principal amount upon conversion of the Notes in the event that the market price of the Common Stock is greater than the strike price of the Capped Call Confirmations (which initially corresponds to the initial conversion price of the Convertible Notes2021 and is subject to certain adjustments under the terms of the Capped Call Confirmations), with such reduction and/or offset subject to a cap based on the cap price of the Capped Call Confirmations. The Capped Call Confirmations have an initial cap price of $7.20 per share, which represents a premium of approximately 50% over the closing price of the Company’s Common Stock on the NASDAQ Global Market on December 15, 2016, and is subject to certain adjustments under the terms of the Capped Call Confirmations. The Capped Call Confirmations will cover, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the number of shares of Common Stock that will underlie the Convertible Notes.  The Capped Call Confirmations do not meet the criteria for separate accounting as a derivative as they are indexed to the Company’s Common Stock.  The premiums paid for the Capped Call Confirmations have been included as a net reduction to additional paid-in capital.

2020, respectively:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2021202020212020
Contractual interest expense$7,681 $6,250 $22,806 $13,245 
Amortization of debt discount$383 $395 $1,098 $869 
Amortization of deferred financing$269 $197 $754 $255 

Note 8.   Stockholders’6. Stockholders' Equity

Common Stock

During the first quarter of 2021, 1,260,000 and Warrants

As1,294,999 warrants were exercised at $7.06 and $7.98 per share of September 30, 2017, the Company was authorized to issue 250 million sharescommon stock, respectively, resulting in gross cash proceeds of Common Stock. Dividends on Common Stock will be paid when, and if, declared by the board of directors. Each stockholder is entitled to vote on all matters that are appropriate for stockholder voting and is entitled to one vote for each share held.

$19.2 million.

As discussed in “—''— Note 1. Business,” in July 2017,5. Debt'' during the first and third quarters of 2021, the Company entered into separate, privately negotiated Exchange Agreements with the Underwriting Agreement with J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC, as representativesHolders of the several underwriters set forth on Schedule 1 thereto, relating to the Offering.Convertible Notes. Under the terms of the Underwriting Agreement,Exchange Agreements, the Company issued and sold 21,122,449 shares at a priceHolders agreed to exchange the public of $12.25 per share, resulting in gross proceeds of $258.8 million, before deducting underwriting discounts and commissions and offering expenses payable by the Company. The Offering closed on July 18, 2017 and the Company received net proceeds from the Offering, after deducting underwriting discounts and commissions and offering expenses payable by the Company of $243.0 million.

As discussed in “—Note 7. Debt Instruments,” on December 21, 2016, the Company issued $250 millionremaining aggregate principal amount of $2.8 million of Convertible Notes held by them in exchange for an aggregate of approximately 472,356 shares of Company common stock, par value $0.01 per share. This transaction resulted in an increase of $2.7 million and 5000 dollars to additional paid-in-capital and common stock, respectively.

Amicus Private Placement
In September 2021, the Company entered into a securities purchase agreement with certain entities, the (“Purchase Agreements”) for the private offering. The Notes will mature on December 15, 2023, unless earlier repurchased, redeemed, or converted in accordance with their terms.  The Notes are convertibleplacement of an aggregate of 11,296,660 shares of the Company’s common stock, at a purchase price of $10.18 per share and pre-funded warrants to purchase an aggregate of 8,349,705 shares of common stock, at a purchase price of $10.17 per pre-funded warrant. Proceeds from the private placement, net of offering costs, were $199.8 million. Each pre-funded warrant has an initial exercise price of $0.01 per share and is exercisable at any time after its original issuance, subject generally to the lock-up period, at the option of each holder, in such holder’s discretion, by (i) payment in full in immediately available funds of the holders, under certain circumstances and during certain periods, into cash,initial exercise price for the number of shares of common stock purchased upon such exercise or (ii) a cashless exercise, in which case the Company’s Common Stock or a combination thereof. Priorholder would receive upon such exercise the net number of shares of common stock determined according to the closeformula set forth in the pre-funded warrant. Certain of businessthe Purchase Agreements provide for a lock-up period of either 60 days or nine months based on the business day immediately preceding September 15, 2023, the Notes are convertible at the option of the holders of the Notes only under certain conditions. On or after September 15, 2023, until the close of business on the second business day immediately preceding the maturity date, holders of the Notes may convert their Notes at their option at the conversion rate then in effect, irrespective of these conditions.  individual agreements.
Note 7. Share-Based Compensation
The Company will settle conversions of the Notes by paying or delivering, as the case may be, cash, shares of Common Stock, or a combination of cash and shares of Common Stock, at the Company’s election.  The conversion rate will initially be 163.3987 shares of Common Stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $6.12 per share of Common Stock).  The conversion rate is subject to customary adjustments upon the occurrence of certain events.

Equity Incentive Plan

The Company’s Equity Incentive Plans consist of theCompany's Amended and Restated 2007 Equity Incentive Plan (the “Plan”"Plan") and the 2007 Director Option Plan (the “2007 Director Plan”). The Plan provides for the granting of restricted stock units and options to purchase common stock in the Company to employees, directors, advisors, and consultants at a price to be determined by the Company’s boardCompany's Board of directors.Directors. The Plan is intended to encourage ownership of stock by employees and consultants of the Company and to provide additional incentives for them to promote the success of the Company’sCompany's business. The 2007 Director Plan is intended to promote the recruiting and retention of highly qualified eligible directors and strengthen the commonality of interest between directors and stockholders by encouraging ownership of common stock of the Company. The Board of Directors, or its committee, is responsible for determining the individuals to be granted options, the number of options each individual will receive, the option price per share, and the exercise period of each option.


16

Stock Option Grants

The fair value of the stock options granted is estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

 

 

Three Months

Ended September

30,

 

Nine Months

Ended September

30,

 

 

 

2017

 

2016

 

2017

 

2016

 

Expected stock price volatility

 

82.5

%

81.6

%

83.1

%

81.3

%

Risk free interest rate

 

1.8

%

1.2

%

2.0

%

1.5

%

Expected life of options (years)

 

5.89

 

6.25

 

6.21

 

6.25

 

Expected annual dividend per share

 

$

0.00

 

$

0.00

 

$

0.00

 

$

0.00

 

Beginning in the third quarter of 2017, the average expected life was determined using our actual historical data versus a “simplified” method used in prior quarters. The “simplified” method of estimating the expected exercise term uses the mid-point between the vesting date and the end of the contractual term. In earlier quarters, we did not have sufficient reliable exercise data to justify a change from the use of the “simplified” method of estimating the expected exercise term of employee stock option grants.  The impact from this change was not material.

 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Expected stock price volatility62.7 %74.2 %65.8 %75.2 %
Risk free interest rate0.8 %0.3 %0.5 %1.6 %
Expected life of options (years)5.45.75.45.7
Expected annual dividend per share$— $— $— $— 
A summary of the Company’sCompany's stock options for the nine months ended September 30, 2017 is2021 were as follows:

 

 

Number of
Shares

 

Weighted
Average
Exercise Price

 

Weighted
Average
Remaining
Contractual Life

 

Aggregate
Intrinsic
Value

 

 

 

(in thousands)

 

 

 

 

 

(in millions)

 

Options outstanding, December 31, 2016

 

15,497.5

 

$

7.37

 

 

 

 

 

Granted

 

3,279.5

 

$

6.37

 

 

 

 

 

Exercised

 

(1,451.2

)

$

6.10

 

 

 

 

 

Forfeited

 

(1,113.8

)

$

9.59

 

 

 

 

 

Options outstanding, September 30, 2017

 

16,212.0

 

$

7.13

 

7.2 years

 

$

129.5

 

Vested and unvested expected to vest, September 30, 2017

 

15,338.3

 

$

7.1

 

7.1  years

 

$

122.9

 

Exercisable at September 30, 2017

 

8,679.2

 

$

6.7

 

6.0  years

 

$

73.0

 

Number of
Shares		Weighted Average Exercise 
Price		Weighted Average Remaining
Years		Aggregate
Intrinsic
Value
 (in thousands)  (in millions)
Options outstanding, December 31, 202014,032 $9.54   
Granted2,896 $17.20   
Exercised(1,193)$7.19   
Forfeited(739)$12.76   
Expired(198)$13.36 
Options outstanding, September 30, 202114,798 $11.02 6.5$13.8 
Vested and unvested expected to vest, September 30, 202113,460 $10.81 6.4$13.8 
Exercisable at September 30, 20219,071 $9.42 5.2$13.6 
As of September 30, 2017,2021, the total unrecognized compensation cost related to non-vested stock options granted was $32.4$30.7 million and is expected to be recognized over a weighted average period of three years.

Restricted Stock Units (“RSUs”)and Performance-Based Restricted Stock Units

(collectively "RSUs")

RSUs awarded under the Plan are generally subject to graded vesting and are contingent on an employee’semployee's continued service. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. The Company expenses the cost of the RSUs, which is determined to be the fair market value of the shares of Common Stockcommon stock underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse.

A summary of non-vested RSU activity under the Plan for the nine months ended September 30, 20172021 is as follows:

 

 

Number of Share
(in thousands)

 

Weighted
Average Grant Date
Fair Value

 

Weighted Average
Remaining Years

 

Aggregate Intrinsic
Value (in millions)

 

Non-vested units as of December 31, 2016

 

744.4

 

$

7.86

 

 

 

 

 

Granted

 

2,348.7

 

$

5.69

 

 

 

 

 

Vested

 

(210.9

)

$

8.57

 

 

 

 

 

Forfeited

 

(191.9

)

$

6.27

 

 

 

 

 

Non-vested units as of September 30, 2017

 

2,690.3

 

$

6.03

 

2.68 years

 

$

40.6

 

On December 30, 2016, the Compensation Committee approved a form of Performance-Based Restricted Stock Unit Award Agreement (the “Performance-Based RSU Agreement”), to be used for performance-based RSUs granted to participants under the Amended and Restated Amicus Therapeutics, Inc. 2007 Equity Incentive Plan, including named executive officers. Certain awards under the form of Performance-Based RSU Agreement were granted in January 2017. The table above includes 401,413 market performance-based restricted stock units (“MPRSUs”) granted to executives.  Vesting of these awards is contingent upon the Company meeting certain total shareholder return (“TSR”) levels as compared to a select peer group over the next three years.  The MPRSUs cliff vest at the end of the three-year period and have a maximum potential to vest at 200% (802,826 shares) based on TSR performance.  The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term.  The estimated fair value per share of the MPRSUs was $8.08 and was calculated using a Monte Carlo simulation model.  The table above also includes 401,413 performance based awards that will vest over the next three years based on the Company achieving certain clinical milestones.

For the nine months ended September 30, 2017, 210,911 of the RSUs vested and all

Number of
Shares		Weighted
Average Grant
Date Fair
Value		Weighted 
Average
Remaining 
Years		Aggregate
Intrinsic
Value
(in thousands)(in millions)
Non-vested units as of December 31, 20207,080 $11.35   
Granted2,790 $17.77   
Vested(1,555)$16.67   
Forfeited(775)$13.45   
Non-vested units as of September 30, 20217,540 $13.81 2.4$72.0 
All non-vested units are expected to vest over their normal term. As of September 30, 2017,2021, there was $12.4$52.8 million of total unrecognized compensation cost related to unvested RSUs with service-based vesting conditions. These costs are expected to be recognized over a weighted average period of threetwo years.

17

Compensation Expense Related to Equity Awards

The following table summarizes information related to compensation expense recognized in the statementsConsolidated Statements of operationsOperations related to the equity awards (in thousands):

 

 

Three Months Ended September

30,

 

Nine Months Ended September

30,

 

 

 

2017

 

2016

 

2017

 

2016

 

Equity compensation expense recognized in:

 

 

 

 

 

 

 

 

 

Research and development expense

 

$

2,390

 

$

2,109

 

$

7,456

 

$

6,011

 

Selling, general and administrative expense

 

3,110

 

2,229

 

9,611

 

7,076

 

Total equity compensation expense

 

$

5,500

 

$

4,338

 

$

17,067

 

$

13,087

 

awards:
 Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2021202020212020
Equity compensation expense recognized in:
Research and development expense$3,775 $8,626 $13,232 $17,241 
Selling, general, and administrative expense8,066 7,282 30,699 19,671 
Total equity compensation expense$11,841 $15,908 $43,931 $36,912 

Note 9.8. Assets and Liabilities Measured at Fair Value

The Company’sCompany's financial assets and liabilities are measured at fair value and classified within the fair value hierarchy, which is defined as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 — Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly.

Level 3 — Inputs that are unobservable for the asset or liability.

A summary of the fair value of the Company’sCompany's recurring assets and liabilities aggregated by the level in the fair value hierarchy within which those measurements fall as of September 30, 20172021 are identified in the following table (in thousands):

 

 

Level 2

 

Total

 

Assets:

 

 

 

 

 

Commercial paper

 

$

123,881

 

$

123,881

 

Asset-backed securities

 

30,326

 

30,326

 

Corporate debt securities

 

207,890

 

207,890

 

Money market funds

 

2,464

 

2,464

 

 

 

$

364,561

 

$

364,561

 

 

 

Level 2

 

Level 3

 

Total

 

Liabilities:

 

 

 

 

 

 

 

Contingent consideration payable

 

$

—

 

$

21,100

 

$

21,100

 

Derivative liability

 

—

 

—

 

—

 

Deferred compensation plan liability

 

2,134

 

—

 

2,134

 

 

 

$

2,134

 

$

21,100

 

$

23,234

 

tables:

(in thousands)Level 2Total
Assets:  
Commercial paper$127,957 $127,957 
Asset-backed securities20,549 20,549 
Corporate debt securities12,141 12,141 
U.S. government agency bonds10,009 10,009 
Money market funds4,764 4,764 
 $175,420 $175,420 
(in thousands)Level 2Level 3Total
Liabilities:   
Contingent consideration payable$— $24,605 $24,605 
Deferred compensation plan liability4,388 — 4,388 
 $4,388 $24,605 $28,993 
18

A summary of the fair value of the Company’sCompany's recurring assets and liabilities aggregated by the level in the fair value hierarchy within which those measurements fall as of December 31, 20162020 are identified in the following table (in thousands):

 

 

Level 2

 

Total

 

Assets:

 

 

 

 

 

Commercial paper

 

$

68,390

 

$

68,390

 

Corporate debt securities

 

74,535

 

74,535

 

Money market funds

 

1,829

 

1,829

 

 

 

$

144,754

 

$

144,754

 

 

 

Level 2

 

Level 3

 

Total

 

Liabilities:

 

 

 

 

 

 

 

Contingent consideration payable

 

$

—

 

$

269,722

 

$

269,722

 

Derivative liability

 

265

 

—

 

265

 

Deferred compensation plan liability

 

1,479

 

—

 

1,479

 

 

 

$

1,744

 

$

269,722

 

$

271,466

 

See “—Note 7. Debt Instruments” fortables:

(in thousands)Level 2Total
Assets:
Commercial paper$217,095 $217,095 
Asset-backed securities9,438 9,438 
Corporate debt securities39,513 39,513 
U.S. government agency bonds53,582 53,582 
Money market funds4,427 4,427 
 $324,055 $324,055 
(in thousands)Level 2Level 3Total
Liabilities:   
Contingent consideration payable$— $25,825 $25,825 
Deferred compensation plan liability4,078 — 4,078 
 $4,078 $25,825 $29,903 
Previously, the carrying amount and estimated fair value of the Company’sCompany's Convertible Notes due in 2023, that fallsfell into the Level 2 category within the fair value level hierarchy. The fair value was determined using broker quotes in a non-active market for valuation.

As noted in ''— Note 5. Debt," the Convertible Notes were fully settled during the third quarter of 2021.

The Company's Senior Secured Term Loan due 2026 falls into the Level 2 category within the fair value level hierarchy and the fair value was determined using quoted prices for similar liabilities in active markets, as well as inputs that are observable for the liability (other than quoted prices), such as interest rates that are observable at commonly quoted intervals. The carrying value of the Senior Secured Term Loan due 2026 approximates the fair value.
The Company did not have any Level 3 assets as of September 30, 20172021 or as of December 31, 2016.

2020.

Cash, Money Market Funds, and Marketable Securities

The Company classifies its cash within the fair value hierarchy as Level 1 as these assets are valued using quoted prices in an active market for identical assets at the measurement date. The Company considers its investments in marketable securities as available for saleavailable-for-sale and classifies these assets and the money market funds within the fair value hierarchy as Level 2 primarily utilizing broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the nine months ended September 30, 2017. No transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the nine months ended September 30, 2017.

Contingent Consideration Payable

The contingent consideration payable resulted from the acquisition of Callidus.Callidus Biopharma, Inc. ("Callidus") in November 2013. The most recent valuation was determined using a probability weighted discounted cash flow valuation approach. Using this approach, expected future cash flows are calculated over the expected life of the agreement, are discounted, and then exercise scenario probabilities are applied. The valuation is performed quarterly. Gains and losses are included in the statementConsolidated Statements of operations.

As discussed in “—Note 3. Acquisitions,” on July 5, 2016, the Company entered into the MiaMed Agreement with MiaMed. MiaMed is a pre-clinical biotechnology company focused on developing protein replacement for CDKL5 and related diseases. Under the terms of the MiaMed Agreement, the Company agreed to pay up to an additional $83.0 million in connection with the achievement of certain clinical, regulatory and commercial milestones, for a potential aggregate deal value of $89.5 million. The MiaMed Agreement was accounted for as an asset acquisition and as such the Company determined that a liability for future milestone payments is not required to be recorded until the actual contingencies are met and will be recorded to research and development expenses when the contingency is resolved.

Operations.

The contingent consideration payable for Callidus has been classified as a Level 3 recurring liability as its valuation requires substantial judgment and estimation of factors that are not currently observable in the market. If different assumptions were used for the various inputs to the valuation approach, the estimated fair value could be significantly higher or lower than the fair value the Company determined. The Company may be required to record losses in future periods, including expenses related to CDKL5.

As discussed in “—Note 1. Business,” on September 13, 2017, the Company reported that top-line data from the randomized, double-blind, placebo-controlled Phase 3 clinical study (ESSENCE, SD-005) to assess the efficacy and safety of the novel topical wound-healing agent SD-101 did not meet the primary endpoints or secondary endpoints in participants with EB. Based on these top-line data, the Company has no current plans to invest in any additional clinical studies or commercial preparation activities for SD-101. As such, the contingent consideration related to Scioderm is no longer payable as of September 30, 2017.

On October 4, 2017, the Company announced positive results from the global Phase 1/2 clinical study (ATB200-02) to investigate ATB200/AT2221 in patients with Pompe disease. As a result of these positive results, the probability of success of ATB200 was increased from 32.0%-45.0% at June 30, 2017 to 58.0%-100.0% at September 2017, which drove the increase in fair value of the liability. With these data, the Company plans to continue a series of collaborative discussions with regulators in the US and EU, and expects to provide an update in the first half of 2018. This event was considered in the calculation of the Contingent Consideration as of September 30, 2017.

19

The following significant unobservable inputs were used in the valuation of the contingent consideration payable of Callidus for the ATB200ATB-200 Pompe disease program:

Contingent Consideration
Liability

Fair value as of
September 30,
2017

Valuation Technique

Unobservable Input

Range

Contingent Consideration
Liability

Fair Value as of September 30, 2021

Valuation Technique

Unobservable Input

Range

(in thousands)

Discount rate

12.5%

Discount rate7.5%
Clinical and regulatory milestones

$

20.7 million

23,175 

Probability weighted discounted cash flow

Probability of achievement of milestones

58.0%-100.0%

75% - 88%

Projected year of payments

2018-2022

2021 - 2022

Contingent consideration liabilities are remeasured to fair value each reporting period using discount rates, probabilities of payment, and projected payment dates. Projected contingent payment amounts related to clinical and regulatory based milestones are discounted back to the current period using a discounted cash flow model. Increases in discount rates and the time to payment may result in lower fair value measurements. Increases or decreases in any of those inputs together, or in isolation, may result in a significantly lower or higher fair value measurement. There is no assurance that any of the conditions for the milestone payments will be met.

The Company reached a regulatory milestone in September 2021, associated with the acceptance of the BLA submission for review by the FDA related to the contingent consideration of Callidus for the ATB-200 Pompe disease program. As of September 30, 2021, the milestone payment of $6.0 million, which is payable in cash, resulted in a decrease in the current portion of the contingent consideration liability and a corresponding increase in accounts payable on the Consolidated Balance Sheets.
The following table shows the change in the balance of contingent consideration payable for the three and nine months ended September 30, 20172021 and 2016, respectively (in thousands):2020, respectively:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2021202020212020
Balance, beginning of the period$27,317 $24,327 $25,825 $22,681 
Changes in fair value during the period, included in the Consolidated Statements of Operations3,288 1,034 4,780 2,680 
Milestone payment payable in cash$(6,000)$— $(6,000)$— 
Balance, end of the period (1)
$24,605 $25,361 $24,605 $25,361 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of the period

 

$

265,350

 

$

276,300

 

269,722

 

274,077

 

Payment of contingent consideration in cash

 

—

 

—

 

(10,000

)

(5,000

)

Payment of contingent consideration in stock

 

—

 

—

 

—

 

(6,115

)

Changes in fair value during the period, included in Statement of Operations

 

(244,250

)

(4,110

)

(238,622

)

9,228

 

Balance, end of the period

 

$

21,100

 

$

272,190

 

21,100

 

$

272,190

 

Deferred Compensation Plan- Investment and Liability

The Deferral Plan provides

(1) As of September 30, 2021, based on certain key employees and members of the Board of Directors with an opportunitymilestones that are expected to defer the receipt of such participant’s base salary, bonus and director’s fees, as applicable. Deferral Plan assets are classified as trading securities and recorded at fair value with changes in the investments’ fair value recognized in the period they occur. The asset investments consist of market exchanged mutual funds. The Company considers its investments in marketable securities, as available-for-sale and classifies these assets and related liabilitybe reached within the fair value hierarchynext twelve months, $17.0 million was recorded as Level 2 primarily utilizing broker quotes in a non-active market for valuation of these securities.

Foreign Currency Exchange Rate Exposure

In June 2016, the Company entered into a forward contract to economically hedge transactional exposure associated with commitments arising from trade accounts payable denominated in a currency other than the functional currency of the respective operating entity. The Company did not designate this forward contract as a hedging instrument and carried the liability of $0.3 million as other current liability in the Consolidated Balance Sheet as of December 31, 2016. The forward contract settled in June 2017. Accordingly, there is no liability as of September 30, 2017.

Sheets.
20

Note 10.9. Basic and Diluted Net Loss per Common Share

The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net loss attributable to common stockholders per common share (in thousands except share amounts):

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

(In thousands, except per share
amounts) 

 

2017

 

2016

 

2017

 

2016

 

Numerator:

 

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

 

$

(111,666

)

$

(46,654

)

$

(214,794

)

$

(141,395

)

Denominator:

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding — basic and diluted

 

160,796,841

 

140,656,109

 

148,963,864

 

131,675,690

 

share:

 Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share amounts) 2021202020212020
Numerator:  
Net loss attributable to common stockholders$(50,294)$(64,011)$(167,183)$(205,451)
Denominator:
Weighted average common shares outstanding — basic and diluted267,464,637 259,161,799 266,085,788 258,091,170 
Dilutive Common Stockcommon stock equivalents would include the dilutive effect of Common Stockcommon stock options, convertible debt units, RSUs, and warrants for Common Stockcommon stock equivalents. Potentially dilutive Common Stockcommon stock equivalents were excluded from the diluted earnings per share denominator for all periods because of their anti-dilutive effect.

Weighted average common shares outstanding includes outstanding pre-funded warrants with an exercise price of $0.01.

The table below presents potential shares of Common Stockcommon stock that were excluded from the computation as they were anti-dilutive using the treasury stock method (in thousands):

 

 

As of September 30,

 

 

 

2017

 

2016

 

Options to purchase common stock

 

16,212

 

15,773

 

Convertible debt

 

40,850

 

—

 

Outstanding warrants, convertible to common stock

 

3,110

 

3,110

 

Unvested restricted stock units

 

2,690

 

839

 

Vested restricted stock units, unissued

 

50

 

—

 

Total number of potentially issuable shares

 

62,912

 

19,722

 

Note 11. Commitments and Contingencies

Since October 1, 2015, three purported securities class action lawsuits have been commenced in the United States District Court for New Jersey, naming as defendants the Company, its Chairman and Chief Executive Officer, and in one of the actions, its Chief Medical Officer. The lawsuits allege violations of the Securities Exchange Act of 1934 in connection with allegedly false and misleading statements made by the Company related to the regulatory approval path for migalastat.  The plaintiffs seek, among other things, damages for purchasers of the Company’s Common Stock during different periods, all of which fall between March 19, 2015 and October 1, 2015. It is possible that additional suits will be filed, or allegations received from stockholders, with respect to similar matters and also naming the Company and/or its officers and directors as defendants. On May 26, 2016, the Court consolidated these lawsuits into a single action and appointed a lead plaintiff.  The lead plaintiff filed a Consolidated Amended Class Action Complaint on July 11, 2016. On August 25, 2016, the defendants filed a motion to dismiss in response to the Consolidated Amended Class Action Complaint.  This motion to dismiss was fully briefed on October 28, 2016 but has not been decided.  Lead plaintiff and defendants have reached an agreement in principal to fully and finally settle all claims asserted in the Consolidated Amended Class Action Complaint.   On June 29, 2017, the Court granted preliminary approval to the settlement. In connection with the Court’s preliminary approval, the settlement amount was paid into the plaintiff’s fund. The settlement is immaterial to the Company’s consolidated financial statements and is subject to final court approval. A fairness hearing to determine whether the settlement will be approved is now scheduled to occur on November 9, 2017. The settlement amount was covered under insurance.

On or about March 3, 2016, a derivative lawsuit was filed by an Amicus shareholder purportedly on Amicus’ behalf in the Superior Court of New Jersey, Middlesex County, Chancery Division, against various officers and directors of the Company.  Amicus itself is named as a nominal defendant.  The derivative lawsuit alleges similar facts and circumstances as the three purported securities class action lawsuits described above and further alleges claims for breach of state law fiduciary duties, waste of corporate assets, unjust enrichment, abuse of control, and gross mismanagement based on allegedly false and misleading statements made by Amicus related to the regulatory approval path for migalastat HCl. The plaintiff seeks, among other things, to require the Amicus Board to take certain actions to reform its corporate governance procedures, including greater shareholder input and a provision to permit shareholders to nominate candidates for election to the Board, along with restitution, costs of suit and attorney’s fees. On February 7, 2017, the complaint was dismissed by the Court without prejudice.

These lawsuits and any other related lawsuits are subject to inherent uncertainties and the actual cost will depend upon many unknown factors. The outcome of the litigation is necessarily uncertain and we could be forced to expend significant resources in the defense of these suits, and we may not prevail.

Note 12.  Subsequent Events

On October 4, 2017 the Company announced positive results from the global Phase 1/2 clinical study (ATB200-02) to investigate ATB200/AT2221 in patients with Pompe disease. These clinical results were featured at the 22nd International Congress of the World Muscle Society in a late-breaker poster. With these data, the Company plans to continue a series of collaborative discussions with regulators in the US and EU, and expects to provide an update in the first half of 2018. This event was considered into the calculation of the Contingent Consideration as of September 30, 2017, as discussed in “—Note 9. Assets and Liabilities at Fair Value.”

method:
 As of September 30,
(in thousands) 20212020
Options to purchase common stock14,798 16,415 
Convertible notes— 462 
Outstanding warrants, convertible to common stock— 2,555 
Unvested restricted stock units7,540 7,446 
Total number of potentially issuable shares22,338 26,878 

21

ITEM 2. MANAGEMENT’SMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a global, patient-focusedpatient-dedicated biotechnology company engagedfocused on discovering, developing, and delivering novel medicines for rare diseases. We have a portfolio of product opportunities led by the first, oral monotherapy for Fabry disease that has achieved widespread global approval, a differentiated biologic for Pompe disease that is under review with the U.S. Food and Drug Administration ("FDA"), and an industry leading rare disease gene therapy portfolio.
The cornerstone of our portfolio is Galafold® (also referred to as "migalastat"), the first and only approved oral precision medicine for people living with Fabry disease who have amenable genetic variants. Migalastat is currently approved under the trade name Galafold® in the discovery, developmentUnited States ("U.S."), European Union ("E.U."), United Kingdom ("U.K."), and Japan, with multiple additional approvals granted and applications pending in several geographies around the world.
The lead biologics program of our pipeline is Amicus Therapeutics GAA ("AT-GAA", also known as ATB200/AT2221, or cipaglucosidase alfa/miglustat), a novel, two-component, potential best-in-class treatment for Pompe disease. In February 2019, the FDA granted Breakthrough Therapy designation ("BTD") to AT-GAA for the treatment of late-onset Pompe disease. In September 2021, the FDA set the Prescription Drug User Fee Act ("PDUFA") target action date of May 29, 2022 for the New Drug Application ("NDA") for miglustat and July 29, 2022 for the Biologics License Application ("BLA") for cipaglucosidase alfa.
We have established an industry leading gene therapy portfolio of potential therapies for people living with rare metabolic diseases, through a license with Nationwide Children's Hospital ("Nationwide Children’s") and a research collaboration with the University of Pennsylvania ("Penn"). Our pipeline includes gene therapy programs in rare, neurologic/neuromuscular diseases and lysosomal disorders ("LDs"), specifically: CLN6 Batten disease ("CLN6"), CLN3 Batten disease ("CLN3"), and CLN1 Batten disease ("CLN1"), Pompe disease, Fabry disease, CDKL5 deficiency disorder ("CDD"), Mucopolysaccharidosis Type IIIB ("MPSIIIB"), as well as a next generation program in Mucopolysaccharidosis Type IIIA ("MPSIIIA"). In the first quarter of 2020, the FDA granted Fast Track designation to the CLN3 Batten disease gene therapy, AT-GTX-502, for the treatment of pediatric patients less than 18 years of age. In September 2020 and February 2021, the European Medicines Agency ("EMA") granted Priority Medicines ("PRIME") designation and the FDA granted Fast Track designation, respectively, to the CLN6 Batten disease gene therapy, AT-GTX-501, for the treatment of patients with variant late infantile neuronal ceroid lipofuscinosis 6 ("vLINCL6"). The research collaboration with Penn also provides us with exclusive disease-specific access and the option rights to develop potentially disruptive new gene therapy platform technologies and programs for most LDs and a broader portfolio of more prevalent rare diseases, including Rett Syndrome, Angelman Syndrome, Myotonic Dystrophy, and select other muscular dystrophies.
In September 2021, we announced our intent to launch a next-generation genetic medicine company, Caritas Therapeutics, Inc. (“Caritas”) through a definitive business combination agreement pursuant to which the Amicus gene therapy business will be acquired by ARYA Sciences Acquisition Corp IV ("ARYA"), a special purpose acquisition company (or "SPAC"), sponsored by Perceptive Advisors.
Concurrent with the closing of the transaction, we will enter into a co-development and commercialization agreement (the “Co-Development and Collaboration Agreement”) with Caritas pursuant to which, among other things, (i) we will collaborate with Caritas in the research and development of gene therapy product candidates for the treatment of Fabry disease and Pompe diseases, (ii) Caritas will grant us an exclusive license under Caritas’ intellectual property to clinically develop and commercialize certain existing and future gene therapy candidates and (iii) Caritas will grant us a diverse setright of novel treatmentsfirst negotiation for patientsus to negotiate an exclusive license to develop and commercialize therapeutic products incorporating gene therapy technologies being developed by Caritas for certain muscular dystrophy indications, in each case, subject to the terms and conditions therein.

We will also enter into a transition services agreement with Caritas pursuant to which, among other things, (i) we and/or one or more of our affiliates will provide certain transitional services to Caritas and/or one or more of its affiliates and (ii) Caritas and/or one or more its affiliates will provide certain transitional services to us and/or one or more of our affiliates, in each case, in order to facilitate the orderly transition of the Company’s gene therapy business to Caritas.



22

Concurrent with the closing of the transaction, we will enter into the tax receivable agreement with Caritas, ARYA and the other persons from time to time that become a party thereto (such other persons and us, collectively, the “TRA Participants”). Pursuant to the tax receivable agreement, ARYA will be required to pay the TRA Participants 85% of the amount of savings, if any, in U.S. federal, state and local income tax that ARYA actually realizes (computed using certain simplifying assumptions) as a result of the increases in tax basis related to any exchanges of Units for Caritas Common Stock. All such payments to the TRA Participants will be ARYA’s obligation, and not that of Caritas.
The business combination agreement and the transactions contemplated thereby were unanimously approved by our board of directors and the ARYA board of directors. The transaction is expected to close in late 2021 or early 2022, following approval of the transaction by ARYA’s stockholders and the fulfillment of other customary closing conditions.
Prior to the closing, all expenses will continue to be reported within the Consolidated Statements of Operations. Following the close of the transaction, we will become the largest stockholder of Caritas with an approximately 36% ownership stake (assuming no redemptions by ARYA’s stockholders), transfer of assets constituting our gene therapy business and contributing $50 million in exchange for a number of units of Caritas as an equity investment.

Additionally, in September 2021, we entered into securities purchase agreements with certain investors for the private placement of an aggregate of 11,296,660 shares of our common stock, at a purchase price of $10.18 per share and pre-funded warrants to purchase an aggregate of 8,349,705 shares of common stock, at a purchase price of $10.17 per pre-funded warrant. The net proceeds from these private placements were approximately $199.8 million. We expect to use the net proceeds to further fund initiatives in the global commercialization of Galafold® and the anticipated global launch of AT-GAA and, in connection with the business combination, to invest $50 million in cash in Caritas.
Our Strategy
Our strategy is to create, manufacture, test, and deliver the highest quality medicines for people living with devastating rare metabolic diseases through internally developed, jointly developed, acquired, or in-licensed products and product candidates that have the potential to obsolete current treatments, provide significant benefits to patients, and be first- or best-in-class. In addition to our lead programs in Fabry and Pompe diseases, we are leveraging our global capabilities to develop and expand our robust pipeline in genomic medicine through our anticipated co-development and commercialization agreement with Caritas. We have made significant progress toward fulfilling our vision of building a leading global biotechnology company focused on rare metabolic diseases.
Our operations have not been significantly impacted by the novel coronavirus (“COVID-19”) pandemic thus far. However, we continued to observe periodic increase in lag times between patient identification and Galafold® initiation due to the resurgence of COVID-19 into 2021. We have maintained operations in all geographies, secured our global supply chain for our commercial and clinical products, as well as maintained the operational integrity of our clinical trials, with minimum disruptions. Our ability to continue to operate without any significant disruptions will depend on the continued health of our employees, the ongoing demand for Galafold® and the continued operation of our global supply chain. We have continued to provide uninterrupted access to medicines for those in need of treatment, while prioritizing the health and safety of our global workforce. However, our results of operations in future periods may be negatively impacted by unknown future impacts from the COVID-19 pandemic.
Highlights of our progress include:
•Commercial and regulatory success in Fabry disease. For the nine months ended September 30, 2021, Galafold® revenue totaled $223.4 million, an increase of $33.0 million compared to the same period in the prior year. We continue to see strong commercial momentum and expansion into additional geographies. In countries where we have been operating the longest, we see an increasing proportion of previously untreated patients come onto Galafold®. In the U.S., we continue to see a significant increase in patients from a growing and very wide prescriber base. Across all markets, we see a high rate of compliance and adherence to this oral treatment option.
23

•Pompe disease clinical program milestones. In December 2020, we completed last patient, last visit in our global Phase 3 pivotal study of AT-GAA (ATB200-03, also known as "PROPEL") with 123 patients at 62 sites in 24 countries. In February 2021, we subsequently reported topline results for the PROPEL study. Additionally, in 2020, orphan diseases. Our lead product, migalastat HCl isdrug designation was received in Japan and the British Medicines and Healthcare Products Regulatory Agency ("MHRA") issued a Promising Innovative Medicine ("PIM") designation for AT-GAA for the treatment of late-onset Pompe disease. In June 2021, the MHRA granted AT-GAA a positive scientific opinion through the Early Access to Medicines Scheme ("EAMS") which permits eligible adults living with late-onset Pompe disease ("LOPD") who have received alglucosidase alfa for at least 2 years to switch to AT-GAA prior to marketing authorization in the U.K. We have also completed the submission of the rolling BLA and NDA to the FDA, which was accepted for review in September 2021.
•Pipeline advancement and growth. We have established an industry leading gene therapy portfolio of medicines for people living with rare metabolic diseases through a license with Nationwide Children’s and a research collaboration with Penn. Some recent advances include, in February 2021, we presented initial clinical data a from the Phase 1/2 CLN3 gene therapy study that suggests early signs of disease stabilization and the potential to slow the neurological disease progression in children living with CLN3. Additionally, in February 2021, we presented preclinical data from our Fabry disease gene therapy clinical candidate, AT-GTX-701, with an engineered GLA transgene improved for stability demonstrated greater substrate reduction than wild type constructs across all tissues and doses. In September 2021 we entered into a definitive business combination agreement with ARYA to launch Caritas, a next-generation genomic medicine company which, subject to the closing of the transaction, will strengthen our financial profile and accelerate our path to profitability, while preserving significant equity ownership in the gene therapy pipeline and commercial and development rights to the Fabry and Pompe gene therapy programs.
•Manufacturing. We have managed our clinical and commercial supply chains during the COVID-19 pandemic such that as of the date hereof we have not experienced supply impacts. We have been able to continue to meet required commercial demand for Galafold® as well as supply our ongoing Pompe disease clinical studies without interruption. We have secured supply for our continued needs for the Pompe disease program through a long-term supply agreement with Wuxi Biologics. The agreement allows for the continuous manufacture of our biologic to support future clinical needs and our anticipated commercial requirements should we garner regulatory approvals as planned. We have contracts in place to supply our small molecule component of ATGAA to support both clinical and future commercial requirements. Additionally, we are working with our strategic partners in Gene Therapy to fully support our clinical needs for our pipeline programs.
•Financial strength. Total cash, cash equivalents, and marketable securities as of September 30, 2021 was $557.0 million. Based on the current operating model, we believe that can be used as a monotherapythe current cash position, which includes expected revenues, and net proceeds from the September 2021 private placement of securities, is sufficient to fund our operations and ongoing research programs to achieve self-sustainability. Potential impacts of the COVID-19 pandemic, business development collaborations, pipeline expansion, and investment in combination with enzyme replacement therapy (“ERT”)manufacturing capabilities could impact our future capital requirements.
Our Commercial Product and Product Candidates
Galafold® (Migalastat HCl) for Fabry disease. MigalastatDisease
Our oral precision medicine Galafold® was approved for usegranted accelerated approval by the FDA in the European Union (“EU”) in May 2016August 2018 under the brand name Galafold™Galafold® for the treatment of adults with a confirmed diagnosis of Fabry disease and an amenable galactosidase alpha gene ("GLA") variant based on in vitro assay data. The FDA approved Galafold® for 348 amenable GLA variants. Galafold® was approved in the E.U. and U.K. in May 2016 as a first-line therapy for long-term treatment of adults and adolescents, aged 16 years and older, with a confirmed diagnosis of Fabry disease and who have an amenable mutation.mutation (variant). The approved label includes 331 Fabry-causingE.U. and U.K. labels include 1,384 mutations amenable to Galafold® treatment, which represent up to half of all patients with Fabry disease. As of September 30, 2017, weIn countries where mutations are provided only on the amenability website, these 1,384 amenable mutations are now available. Marketing authorization approvals have been authorized to commercialize Galafold™granted in 33over 40 countries around the world, including the U.S., E.U., U.K., Japan, and over 260 Fabry patients are receiving Galafold™ compared to approximately over 150 Fabry patientsothers. In July 2021, Galafold® was approved in June 2017. We remain confident in our guidance to achieve over 300 patients on Galafold™ therapy by the end of 2017. Additionally, we are preparing a New Drug Application (“NDA”) submissionE.U. for migalastat under Subpart H, which provides for accelerated approval.adolescents aged 12 years and older weighing 45 kg or more. We plan to submit an NDA to the FDA for migalastat for Fabry disease in the fourth quarter of 2017.

We are also investigating a novel treatment paradigm ATB200/AT2221 in patients with Pompe disease, an inherited lysosomal storage disorder caused by an enzyme deficiency that leads to accumulation of glycogen (disease substrate) in cells. In October 2017, we announced additional positive results from our global Phase 1/2 clinical study (ATB200-02) to investigate ATB200/AT2221 in patients with Pompe disease. Consistent with previous results, patients who completed six months of treatment with ATB200/AT2221 showed improvements in six-minute walk test (“6MWT”) distance and other measures of motor function, stability or increases in forced vital capacity (“FVC”), and further reductions in biomarkers of muscle damage and disease substrate, with consistent results reported in initial patients who completed nine months of treatment. On September 21, 2017, the Company announced that the FDA granted orphan drug designation to ATB200/AT2221.

We were previously developing SD-101 in late-stage development as a potential first-to-market therapy for the chronic, rare connective tissue disorder Epidermolysis Bullosa (“EB”). On September 13, 2017, we reported that top-line data from a randomized, double-blind, placebo-controlled Phase 3 clinical study (“ESSENCE” or “SD-005”) to assess the efficacy and safety of the novel topical wound-healing agent SD-101 did not meet the primary endpoints or secondary endpoints in participants with EB. We plan to further analyze and share the Phase 3 ESSENCE results with key stakeholders in the EB community including physicians, patient organizations and regulators. In the interim, in consultation with their physicians, participants in the ongoing extension studies (SD-004 and -006) will have the opportunity to continue being treated with SD-101. Based on the top-line data, we have no current plans to invest in any additional clinical studies or commercial preparation activities for SD-101. This event led to the need to assess the carrying amount of the program’s tangible and intangible assets against their respective fair values.  Based on the assessment, we recognized in the Consolidated Statments of Operations, a loss on impairment of intangible assets in the amount of $463.7 million and $1.7 million in fixed assets recorded within Loss on Impairment of Assets. Since the study did not meet the primary and secondary endpoints, we concluded that we will not make the potential milestone payments indicated in the Asset Purchase Agreement to the former Scioderm holders. Accordingly, we recognized a gain of $254.7 million in Changes in Fair Value of Contingent Consideration Payable in the Consolidated Statements of Operations for the three months ended September 30, 2017. We also recognized $0.4 million in selling, general and administrative costs and $8.1 million in research and development expenses related to the wind-down of operations for the Phase 3 ESSENCE study and ongoing extension studies SD-004 and SD-006 in the third quarter of 2017.

On July 12, 2017, we entered into an underwriting agreement (the “Underwriting Agreement”) with J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC, as representatives of the several underwriters set forth on Schedule 1 thereto, relating to an underwritten public offering of the our common stock (the “Offering”). Under the terms of this agreement, we issued and sold 21,122,449 shares at a price to the public of $12.25 per share, resulting in gross proceeds of $258.8 million, before deducting underwriting discounts and commissions and offering expenses payable by the Company. The Offering closed on July 18, 2017 and we received net proceeds from the Offering, after deducting underwriting discounts and commissions and offering expenses payable by us, of $243.0 million.

Our Strategy

Our strategy is to internally develop or acquire first-in-class or potentially best-in-class therapies that have the potential to provide significant benefits for individuals living with rare and devastating diseases. We intend to leverage our global capabilities to develop and commercialize our robust pipeline. Since the beginning of our last fiscal year, we made significant progress toward

fulfilling our vision to build a leading global biotechnology company focused on rare and devastating diseases. Highlights of our programs include:

·Global capabilities. We have established a world-class international commercial infrastructure, with key leadership in place to execute the international launch of migalastat HCl that is currently underway.

·Commercial success. We received full approval in the EU of migalastat HCl under the brand name Galafold™ and commenced the first commercial launch in Germany on May 30, 2016. We have achieved success with reimbursement in 12 EU member states and other parts of the world on a commercial basis or through our expanded access programs (“EAPs”). We continue to advance additional regulatory submissions in multiple countries around the world.

·NDA Submission under Subpart H. We are preparing an NDA submission under Subpart H, which provides for accelerated approval by the FDA, for migalastat HCl for Fabry Disease. We intend to base our NDA on existing data, including reduction in disease-causing substrate (GL-3), as well as the totality of data from completed clinical studies. We plan to submit our NDA in the fourth quarter of 2017 and will begin initial commercial planning efforts to support a potential US commercial launch.

·Pompe clinical study. We have reported a positive cascade of data from a clinical study to evaluate Pompe disease patients treated with our novel treatment paradigm ATB200/AT2221.

·Patient-centricity. We continue to focus on improving the lives of patients living with rare and devastating diseases, which has always been a critical component of the values of our corporate culture. The needs of patients in the rare disease community are at the center of our innovative science, our commercial organization, and our clinical programs.

Our Commercial Product and Product Candidates

Migalastat for Fabry Disease

Migalastat HCl (which we may refer to as “migalastat”) is in development for all patients with Fabry disease as a monotherapy for patients with amenable mutations and in combination with ERT for all other patients. Migalastat was approved for use in the EU in May 2016 under the brand name Galafold™ as a first-line therapy for long-term treatment of adults and adolescents aged 16 years and older with a confirmed diagnosis of Fabry disease and who have an amenable mutation. The approved label includes 331 Fabry-causing mutations, which represent up to half of all patients with Fabry disease. Outside of the EU, Israel, Canada and Switzerland, migalastat is an investigational product.

We have launched Galafold™ in several European markets, including countries such as France, Germany, Italy, Switzerland and the UK, on a commercial basis, as well as in select other European markets through reimbursed EAPs, and recognized net product sales of $10.9 million in the three months ended September 30, 2017 as compared to $7.2 million in the second quarter of 2017. We are currently pursuing the country-by-country pricing and reimbursement process in the EU member states. We have received marketing approval in Israel, Canada and Australia, and we have regulatory submissions under reviewlaunch Galafold® in additional countries during 2021, including Japan.

Based on a series of discussions withfor adolescents aged 12 years and written communication received from the FDA, the FDA has informed us that we may now submitolder.

24

As an NDA for migalastat. We planorally administered monotherapy, Galafold® is designed to submitbind to and stabilize an NDA to the FDA for migalastat for Fabry diseaseendogenous alpha-galactosidase A ("alpha-Gal A") enzyme in the fourth quarter of 2017. An additional Phase 3 study previously requested by the FDA to assess GI symptoms is no longer required before an NDA submission. We are preparing the NDA submission under Subpart H, which provides for accelerated approval. We intend to base our NDA on existing data, including reduction in disease-causing substrate (GL-3), as well as the totality of data from completed clinical studies. Progressive accumulation of GL-3 is believed to lead to the morbidity and mortality of Fabry disease, including pain, kidney failure, heart disease and stroke.

Forthose patients with non-amenable mutations, we are leveraging our CHART™ technology and advanced biologics capabilities to developgenetic variants identified as amenable in a proprietary Fabry ERT for co-formulation with migalastat. Master cell banking has been completed and process development work has commenced. MigalastatGLP cell-based amenability assay. Galafold® is an oral precision medicine intended to treat Fabry disease in patients who have amenable genetic mutations,variants, and at this time, it is not intended for concomitant use with ERT.

Gene Therapy for Fabry Disease
We are committed to continued innovation for all people living with Fabry disease. For people living with Fabry disease who have non-amenable variants, which are not suitable for Galafold® as a monotherapy, our strategy is to develop a Fabry gene therapy. In October 2018, we expanded our gene therapy portfolio through a collaboration agreement with Penn to pursue research and development of novel gene therapies, including Fabry disease, and other indications. In October 2019, we disclosed preliminary data from a Fabry adeno-associate viral ("AAV") gene therapy using an Amicus-engineered transgene that demonstrated high levels of GLA activity and robust GL-3 reduction in a mouse model of Fabry disease. In February 2021, we presented initial preclinical data from our investigational AAV gene therapy program. This initial preclinical study assessed a range of single doses of AAV in GLA knockout mice with either wild-type hGLA (“unmodified hGLA”) or an Amicus/Penn engineered hGLA transgenes (“engineered hGLA” or “AT-GTX- 701”). The engineered hGLA AAV gene therapy demonstrated stable homodimer formation, enhanced temperature, plasma and neutral ph stability compared to the unmodified hGLA AAV gene therapy. In the lowest tested dose of AT-GTX-701, Gla knockout mice showed partial substrate reduction, while the mid and highest tested doses resulted in near complete substrate reduction. Additionally, AT-GTX-701 demonstrated significantly greater lyso-Gb3/GL-3 substrate reduction across all Fabry disease relevant tissues including the dorsal root ganglia (“DRG”), kidney, and heart, with reductions at low dose being equal to or greater than the reductions observed at higher doses with wildtype transgene and provided the first evidence for DRG storage reduction in a Fabry mouse model treated with an AAV gene therapy.
Novel ERT for Pompe Disease

We are leveraging our biologics capabilities and CHART™ platform to develop AT-GAA, a novel treatment paradigm ATB200/AT2221, for Pompe disease. This ERTAT-GAA consists of a uniquely engineered recombinant human acid alpha-glucosidaserhGAA enzyme, ATB200, or cipaglucosidase alfa, with an optimized carbohydrate structure to enhance lysosomal uptake, administered in combination with a

pharmacological chaperone (AT2221)AT2221, or miglustat, that functions as an enzyme stabilizer. Miglustat binds to and stabilizes ATB200, or cipaglucosidase alfa, preventing inactiviation of rhGAA in circulation to improve activity and stability. We acquired ATB200 as well as ourthe uptake of active enzyme targeting technology through our purchasein key disease-relevant tissues, resulting in increased clearance of Callidus Biopharma, Inc. (“Callidus”).

The small molecule pharmacological chaperone AT2221accumulated substrate, glycogen. Miglustat is not an active ingredient that contributes directly to GAA substrate reduction but instead acts("glycogen").

We initiated ATB200-03 (or "PROPEL"), a global Phase 3 clinical study of AT-GAA in adult patients with late-onset Pompe disease in December 2018 and completed last patient, last visit in December 2020. In February 2021, we reported topline results from the Phase 3 PROPEL study. Patients in PROPEL were randomized 2:1 so that for every two patients randomized to stabilize ATB200. AT2221 bindsbe treated with AT-GAA, one was randomized to be treated with alglucosidase alfa. Of the Pompe disease patients enrolled, 77% were being treated with alglucosidase alfa (n=95) immediately prior to enrollment (“Switch”) and stabilizes ATB20023% had never been treated with any ERT (n=28) (“Naïve”). 117 patients completed the PROPEL study and all 117 voluntarily enrolled in the circulationlong-term extension study. The primary endpoint of the study was the mean change in 6-minute walk distance as compared with baseline measurements at 52 weeks across the combined ERT Switch and ERT Naïve patient populations. In this combined population patients taking AT-GAA (n=85) walked on average 21 meters farther at 52 weeks compared to improve7 meters with those treated with alglucosidase alfa (n=37). This primary endpoint in the uptake of active enzyme into key disease-relevant tissues. The novel combination has been patentedcombined population was assessed for method of use,superiority and ATB200, following significant manufacturing scale-up, is our first biologic to enter clinical development. In preclinical studies, administration of ATB200/AT2221 resulted in increased tissue GAA enzyme levels and decreased substrate reduction,while numerically greater, statistical significance for superiority on this combined population was not achieved for the AT-GAA arm as compared to the standardalglucosidase alfa arm (p=0.072).
Per the hierarchy of care.

Throughout 2017the statistical analysis plan, the first key secondary endpoint of the study was the mean change in percent-predicted Forced Vital Capacity (“FVC”) at 52 weeks across the combined population. In this combined population patients taking AT-GAA demonstrated a nominally statistically significant and clinically meaningful difference for superiority over those treated with alglucosidase alfa. AT-GAA significantly slowed the rate of respiratory decline in patients after 52 weeks. Patients treated with AT-GAA showed a 0.9% absolute decline in percent-predicted FVC, compared to a 4.0% absolute decline in the alglucosidase alfa arm (p=0.023). Patients within the combined study population demonstrated statistically significant improvements on the GSGC (“Gait, Stairs, Gower’s Chair”) key secondary endpoint, which captures strength, coordination and mobility, compared to a worsening for alglucosidase alfa treated patients in the overall population (p<0.05). Additionally, lower MMT (Manual Muscle Testing), Patient-Reported Outcomes Measurement Information System (“PROMIS”) physical function and PROMIS fatigue secondary endpoints favored AT-GAA treated patients over alglucosidase alfa treated patients. Results also showed improvements in the two important biomarker endpoints of Pompe disease (Hex-4 and CK), which significantly favored AT-GAA compared to alglucosidase alfa (p<0.001). AT-GAA demonstrated a similar safety profile to alglucosidase alfa.

25

The PROPEL Switch patients entered the study having been treated with alglucosidase alfa for a minimum of two years. More than two thirds (67%+) of those patients had been on ERT treatment for more than five years prior to entering the PROPEL study (mean of 7.4 years). A pre-specified analysis of the patients switching from alglucosidase alfa on 6-minute walk distance showed that after 52 weeks from switching, AT-GAA treated patients (n=65) walked 16.9 meters farther than their baseline, compared to 0.0 meters for those patients who were randomized to remain on alglucosidase alfa (n=30) (p=0.046). A pre-specified analysis of the patients switching from alglucosidase alfa on percent-predicted FVC showed that AT-GAA treated patients stabilized and slightly improved their respiratory function on this important measure while those patients remaining on alglucosidase alfa continued to significantly decline in respiratory muscle function. AT-GAA patients showed a 0.1% absolute increase in percent-predicted FVC while the alglucosidase alfa patients showed a 4.0% absolute decline over the course of the year (p=0.006).
The PROPEL Naïve patients treated with AT-GAA for 52 weeks (n=20) walked 33 meters farther than their baseline, on the 6-minute walk distance endpoint. The Naïve patients treated with alglucosidase alfa (n=7) walked 38 meters further than their baseline. The difference between the two groups was not statistically significant (p=0.60). Additionally, patients never previously treated with any ERT showed similar declines in percent-predicted FVC at 52 weeks of –4.1% for AT-GAA treated patients and –3.6% for alglucosidase alpha treated patients. The difference between the two groups was not statistically significant (p=0.57).
Gene Therapy for Pompe Disease
As part of our long-term commitment to provide multiple solutions to address the significant unmet needs of the Pompe disease community, we have reportedare also advancing a next-generation gene therapy treatment for Pompe disease. In October 2018, we expanded our gene therapy portfolio through a collaboration agreement with Penn to pursue research and development of novel gene therapies for Pompe disease and other indications.
In April 2019, we presented initial preclinical data from our investigational AAV gene therapy program for Pompe disease. This initial preclinical study in Pompe disease knockout mice administered a single high dose of AAV gene therapy with either unmodified wild-type hGAA ("unmodified hGAA") or an Amicus/Penn engineered hGAA transgene with a Lysosomal-Targeting Cell receptor binding motif ("engineered hGAA"). The engineered hGAA AAV gene therapy demonstrated more robust and consistent glycogen reduction compared to unmodified hGAA AAV gene therapy, in all key tissues assessed in a Pompe disease mouse model. In the central nervous system, the engineered hGAA AAV gene therapy also showed robust glycogen reduction in neuronal cells, suggesting this may be an effective way to address neuronal aspects of Pompe disease. Unmodified hGAA AAV gene therapy showed minimal glycogen reduction in neuronal cells. This preclinical study provided initial validation for combining Amicus-engineered transgenes with Penn's AAV gene therapy technologies.
In May 2020, we presented preclinical data with the engineered hGAA AAV in single and combined central nervous system ("CNS") and systemic directed gene therapy in a mouse model of Pompe disease with advanced disease at treatment. The engineered hGAA AAV showed better targeting and clearance of glycogen storage at low doses in Pompe disease mice compared to unmodified hGAA AAV. High dose IV therapy showed strength rescue and the addition of high dose intracerabroventricular ("ICV") therapy to high dose IV provided incremental benefit.
Gene Therapy for Various Types of Batten Disease
Through our license with Nationwide Children’s and research collaboration with Penn, we are researching potential first-in-class gene therapies for multiple forms of Batten disease. Batten disease is the common name for a broad class of rare, fatal, inherited disorders of the nervous system, also known as neuronal ceroid lipofuscinoses ("NCLs"). In these diseases, a defect in a specific gene triggers a cascade of problems that interferes with a cell's ability to recycle certain molecules. Each gene is called ceroid lipofuscinosis, neuronal ("CLN") and given a different number designation as its subtype. There are 13 known forms of Batten disease often referred to as CLN1-8; 10-14. The various types of Batten disease have similar features and symptoms but vary in severity and age of onset.
We have two clinical programs in CLN6 and CLN3, and several preclinical programs including CLN1 and other types of Batten disease.
26

The thirteen patients enrolled in our Phase 1/2 study for CLN6 have received a one-time intrathecal administration of AT-GTX-501. In October 2020, interim results were reported for the 13 patients from this program, demonstrating that treatment with AT-GTX-501 was well tolerated. The majority of AEs were mild and unrelated to treatment. No pattern of AEs related to AAV or anti-CLN6 immunogenicity was observed. Interim efficacy data based on evaluation using the Hamburg Motor and Language scores suggested a slowing of disease progression for 12 of the 13 patients at the 12-month timepoint and for eight of the 13 patients at the 24-months timepoint. Additional, interim clinical data was reported on various components of Hamburg Seizure and Vision scores in most patients from baseline to month 12 or 24, compared to the progression expected in matched untreated patients. Two study participants passed away during the long term follow up period from disease-related complications deemed by the investigator as unrelated to AT-GTX-501.
In the fourth quarter of 2018, we announced the initiation of a Phase 1/2 clinical study ATB200-02, to investigate our novel Pompe treatment paradigm in Pompe patients. The primary objective is to evaluate the safety tolerability, pharmacokinetics (“PK”), and pharmacodynamics (“PD”)efficacy of ATB200/AT2221a single intrathecal administration of an AAV serotype AT-GTX-502 gene therapy in patients with CLN3. In the Phase 1/2 study, a total of three patients were dosed in the low-dose group, and based on the safety profile to date, the data safety monitoring board cleared us to begin enrollment in the high-dose cohort. One patient is currently dosed in the high-dose cohort. In February 2021, we announced initial safety for an 18-week primary treatment period followed by a long-term extension. The three patient cohorts, enrollingthe first four patients up to ~20 total15 months post-administration of AT-GTX-502 and preliminary efficacy data for the first three patients across all cohorts, are ambulatory ERT-switch patients (Cohort 1), non-ambulatory ERT-switch patients (Cohort 2), and ERT-naïve patients (Cohort 3).

As of our latest interim analysis reported in October 2017, patients who completed six months of treatment with ATB200/AT2221 showed improvements in the 6MWT distance and other measureslow-dose cohort for up 15 months post-administration of motor function, stability or increases in FVC, and further reductions in biomarkers of muscle damage and disease substrate, with consistent results reported in initial patients who completed nine months of treatment.

On October 4, 2017 we reported additional interim data from our clinical study ATB200-02 at the 22nd International Congress of the World Muscle Society. Highlights included safety and tolerability data in all 20 patients (maximum of 72 weeks)AT-GTX-502, as well as PD (muscle damage biomarker and disease substrate biomarker) dataone patient in the high-dose cohort for 20 patients (15 ERT-switch patients and five ERT-naïve patients). To date, adverse events have been generally mild and transient. Importantly, ATB200/AT2221 has resulted in a low rate of infusion-associated reactions (IARs) following 400+ infusions (three events of IARs in two patients; < 1% of all 400+ infusions with an IAR). As previously reported, the clinical PK profile has been consistent with previously reported preclinical data. Reductions were observed in biomarkers of muscle damage (creatine kinase (CK) enzyme, alanine aminotransferase (ALT), and aspartate aminotransferase (AST)) in a majority of ERT-switch patients and ERT-naïve patients, and across the three biomarkers, mean reductions from baseline were approximately 25-35%, 5-25% and 40-55% for the ambulatory ERT-switch (n=11), non-ambulatory ERT-switch (n=4) and ERT-naïve (n=5) patients, respectively. Reduction was also observed after up to 58 weeks in a biomarker3 months post-administration of glycogen substrate - urine hexose tetrasaccharide (Hex4) - in a majority of ERT-switch patients and all ERT-naïve patients, with mean reductions from baseline of approximately 40%, 35% and 55% for the ambulatory ERT-switch (n=11), non-ambulatory ERT-switch (n=4) and ERT-naïve (n=5) patients, respectively.

AsAT-GTX-502. Initial results of the last interim analysis in October 2017, functional outcomes data from baselinestudy suggest that AT-GTX-502 was well tolerated and demonstrated potential early signs of disease stabilization compared to month 6 were also available for 18 of the 20 patients enrolled (one patient dropped out of the extension study due to travel burden and family considerations, while month 6 assessments are pending in one patient due to an incomplete visit). Muscle function improved in 16 patients and was stable in two patients at month 6. Muscle function improved in 10 out of 10 patients with available data at month 9. Mean 6MWT distance improved in both ERT-naive (+42 Meters at Month 6 (n=5) and +75 Meters at Month 9 (n=2)) and ERT-switch (+35 Meters at Month 6 (n=9) and +37 Meters at Month 9 (n=8)). Other motor function tests showed mean improvements consistent with 6MWT distance. All four non-ambulatory ERT-switch patients showed improvements in upper extremity strength (elbow and shoulder) from baseline to Month 6 as measured by quantitative muscle testing and manual muscle testing. Pulmonary function at Month 6 showed FVC improved in ERT-naive patients with a mean absolute change in percent predicted FVC of +4.2% at month 6 (n=5) and +5.0% at month 9 (n=2) and was generally stable in ERT-switch patients with mean absolute change in percent predicted FVC of -1.0% at month 6 (n=8) and -2.0% at month 9 (n=7). Maximal inspiratory pressure (MIP) and maximal expiratory pressure (MEP) were generally stable or increased in both ERT-naïve and ERT-switch patients.

natural history dataset.

CDKL5

Deficiency Disorder

We are researching a potential first-in-class genetic medicine for CDD consisting of a CDKL5 protein engineered for cross correction, delivered as either a protein replacement or as a gene therapy approach for CDKL5 deficiency in preclinical studies.through our collaboration with Penn. CDKL5 is a gene on the X-chromosome encoding the CDKL5 protein that regulates the expression of several essential proteins for normal brain development. Genetic mutations in the CDKL5 gene result in CDKL5 protein deficiency and theCDD. This disorder manifests clinically as persistent seizures starting in infancy, followed by severe impairment in neurological development. Most children affected by CDKL5 deficiencyCDD cannot walk or care for themselves and may also suffer from scoliosis, visual impairment, sensory issues, and gastrointestinal complications.

Angelman Syndrome
We are also exploring an AAV gene therapy for Angelman syndrome, a neurological disorder caused by the lack of a functional UBE3A gene in certain areas of the brain. Angelman patients are impacted by motor and balance issues, seizures, and developmental delay, all initiating early in life. There are currently no treatments that can cure the disease or address the underlying genetic defect, and patients rely on symptomatic medications for seizure control. Our novel gene therapy strategy utilizes an engineered cross-correcting version of the UBE3A protein in order to treat as many target cells as possible. With this approach, we aim to deliver sustained UBE3A function in the brain and subsequently restore neuronal function.
Other Preclinical Gene Therapies
We have a number of additional gene therapies in active preclinical development. Our strategy is to utilize our innovative program engineering approaches to develop first or best in class AAV gene therapies for these rare devastating diseases.
Strategic Alliances and Arrangements

We will continue to evaluate business development opportunities as appropriate thatto build stockholder value and provide us

with access to the financial, technical, clinical, and commercial resources necessary to develop and market pharmacological chaperone therapeutics, ERTs, and other technologies or products.products with a focus on rare and orphan diseases. We are exploring potential collaborations, alliances, and other business development opportunities on a regular basis. These opportunities may include business combinations, partnerships, the acquisitionstrategic out-licensing of certain assets, or the acquisitions of preclinical-stage, clinical-stage, or marketed products so long as such transactions areor platform technologies consistent with our strategic plan to develop and provide therapies to patients living with rare and orphan diseases,diseases.

27

Consolidated Results of Operations
Three Months Ended September 30, 2021 compared to September 30, 2020
The following table provides selected financial information for the Company:
Three Months Ended September 30,
(in thousands)20212020Change
Net product sales$79,545 $67,437 $12,108 
Cost of goods sold11,696 8,399 3,297 
Cost of goods sold as a percentage of net product sales14.7 %12.5 %2.2 %
Operating expenses:
Research and development59,333 70,419 (11,086)
Selling, general, and administrative46,107 37,850 8,257 
Changes in fair value of contingent consideration payable3,288 1,034 2,254 
Depreciation and amortization1,520 2,496 (976)
Other income (expense):
Interest income108 518 (410)
Interest expense(8,165)(6,784)(1,381)
Loss on extinguishment of debt(257)(7,276)7,019 
Other income (expense)237 3,019 (2,782)
Income tax benefit (expense)182 (727)909 
Net loss attributable to common stockholders$(50,294)$(64,011)$13,717 
Net Product Sales. Net product sales increased $12.1 million during the three months ended September 30, 2021 compared to the same period in the prior year. The increase was primarily due to continued growth in the U.S., Europe and supportJapan markets.
Cost of goods sold. Cost of goods sold includes manufacturing costs as well as royalties associated with sales of our product. Cost of goods sold as a percentage of net product sales increased 2.2% primarily due to the proportion of sales in countries subject to a higher royalty burden.
Research and Development Expense. The following table summarizes our principal product development programs for each product candidate in development and the out-of-pocket, third party expenses incurred with respect to each product candidate:
(in thousands)Three Months Ended September 30,
Projects20212020
Third party direct project expenses  
Galafold® (Fabry Disease)
$2,804 $5,117 
AT-GAA (Pompe Disease)22,875 18,601 
Gene therapy programs8,304 14,875 
Pre-clinical and other programs59 634 
Total third-party direct project expenses34,042 39,227 
Other project costs  
Personnel costs17,749 25,054 
Other costs7,542 6,138 
Total other project costs25,291 31,192 
Total research and development costs$59,333 $70,419 
The $11.1 million decrease in research and development costs was primarily due to the timing of spending on manufacturing costs within the gene therapy programs and a decrease in personnel costs primarily due to realignment with strategic priorities. This decrease was partially offset by an increase in the Pompe disease program associated with the timing of clinical research and manufacturing costs.
28

Selling, General, and Administrative Expense. Selling, general, and administrative expense increased $8.3 million, primarily driven by increased third-party professional fees.
Loss on Extinguishment of Debt. In July of 2020, the Company voluntarily settled the principal amount, accrued interest, and early settlement premiums of the Senior Secured term Loan due 2023. As a result of this early extinguishment, a loss on extinguishment of debt of $7.3 million was recognized in the Consolidated Statements of Operations, compared to a loss of $0.3 million associated with the voluntary full settlement of the 2023 Convertible Debt in August of 2021.
Other Expense. The $2.8 million variance was primarily driven by foreign exchange gains in the remeasurement of our intercompany transactions.
Income Tax Benefit (Expense). The income tax benefit for the three months ended September 30, 2021 was $0.2 million. We are subject to income taxes in various jurisdictions. Our tax liabilities are largely dependent on the distribution of pre-tax earnings among the many jurisdictions in which we operate.
Nine Months Ended September 30, 2021 compared to September 30, 2020
The following table provides selected financial information for the Company:
Nine Months Ended September 30,
(in thousands)20212020Change
Net product sales$223,360 $190,315 $33,045 
Cost of goods sold26,615 21,627 4,988 
Cost of goods sold as a percentage of net product sales11.9 %11.4 %0.5 %
Operating expenses:
Research and development186,453 229,150 (42,697)
Selling, general, and administrative135,109 112,722 22,387 
Changes in fair value of contingent consideration payable4,780 2,680 2,100 
Depreciation and amortization4,691 6,299 (1,608)
Other income (expense):
Interest income323 2,898 (2,575)
Interest expense(24,307)(14,148)(10,159)
Loss on extinguishment of debt(257)(7,276)7,019 
Other income (expense)(2,729)29 (2,758)
Income tax expense(5,925)(4,791)(1,134)
Net loss attributable to common stockholders$(167,183)$(205,451)$38,268 
Net Product Sales. Net product sales increased $33.0 million during the nine months ended September 30, 2021 compared to the same period in the prior year. The increase was primarily due to continued transformation fromgrowth in the U.S., Europe and Japan markets.
29

Research and Development Expense. The following table summarizes our principal product development programs for each product candidate in development and the out-of-pocket, third party expenses incurred with respect to each product candidate:
(in thousands)Nine Months Ended September 30,
Projects20212020
Third party direct project expenses  
Galafold® (Fabry Disease)
$6,406 $9,637 
AT-GAA (Pompe Disease)67,829 80,868 
Gene therapy programs36,768 49,611 
Pre-clinical and other programs679 2,228 
Total third-party direct project expenses111,682 142,344 
Other project costs  
Personnel costs53,914 66,753 
Other costs20,857 20,053 
Total other project costs74,771 86,806 
Total research and development costs$186,453 $229,150 
The $42.7 million decrease in research and development costs was primarily due to the timing of clinical research and manufacturing costs associated with the advancement in the Pompe disease program, decrease in gene therapy programs driven by timing of spend for manufacturing costs and a development-stage company intodecrease in personnel costs primarily due to realignment with strategic priorities.
Selling, General, and Administrative Expense. Selling, general, and administrative expense increased $22.4 million, mainly driven by increased personnel costs and third-party professional fees.
Interest Expense. Interest expense increased $10.2 million during the nine months ended September 30, 2021 compared to the same period in the prior year. The increase was driven by the $400 million Senior Secured Loan due 2026 entered in July 2020.
Loss on Extinguishment of Debt. In July of 2020, the Company voluntarily settled the principal amount, accrued interest, and early settlement premiums of the Senior Secured term Loan due 2023. As a result of this early extinguishment, a loss on extinguishment of debt of $7.3 million was recognized in the Consolidated Statements of Operations, compared to a loss of $0.3 million associated with the voluntary full settlement of the 2023 Convertible Debt in August of 2021.
Income Tax Expense. The income tax expense for the nine months ended September 30, 2021 was $5.9 million. We are subject to income taxes in various jurisdictions. Our tax liabilities are largely dependent on the distribution of pre-tax earnings among the many jurisdictions in which we operate.
Liquidity and Capital Resources
As a result of our significant research and development expenditures, as well as expenditures to build a commercial biotechnology company.

organization to support the launch of Galafold®, we have not been profitable and have generated operating losses since we were incorporated in 2002. We have historically funded our operations through stock offerings, Galafold® revenues, debt issuances, collaborations, and other financing arrangements.

Cash Flow Discussion
As of September 30, 2021, we had cash, cash equivalents, and marketable securities of $557.0 million. We invest cash in excess of our immediate requirements in regard to liquidity and capital preservation in a variety of interest-bearing instruments, including obligations of U.S. government agencies and money market accounts. Wherever possible, we seek to minimize the potential effects of concentration and degrees of risk. Although we maintain cash balances with financial institutions in excess of insured limits, we do not anticipate any losses with respect to such cash balances. For more details on the cash, cash equivalents, and marketable securities, refer to "—Note 3. Cash, Cash Equivalents, Marketable Securities, and Restricted Cash," in our Notes to Consolidated Financial Statements.
30

Net Cash Used in Operating Activities
Net cash used in operations for the nine months ended September 30, 2021 was $132.0 million. The components of net cash used in operations included the net loss for the nine months ended September 30, 2021 of $167.2 million and an overall decrease in cash from changes from operating assets and liabilities of $24.6 million. The change in operating assets and liabilities was primarily related to a decrease in accounts payable and accrued expenses of $22.1 million, mainly related to the payment of contract manufacturing and research costs. This was partially offset by $43.9 million of stock compensation and $15.8 million of other non-cash adjustments.
Net cash used in operations for the nine months ended September 30, 2020 was $183.5 million. The components of net cash used in operations included the net loss for the nine months ended September 30, 2020 of $205.5 million and the net change in operating assets and liabilities of $31.2 million. The change in operating assets was primarily due to an increase in accounts receivable by $10.8 million due to increased commercial sales of Galafold® and a decrease in prepaid and other current assets of $4.4 million to support the commercial activities for Galafold®. The net cash used in operations was also impacted by a decrease in accounts payable and accrued expenses of $23.4 million, mainly related to the payment of contract manufacturing and research costs, program expenses and personnel costs.
Net Cash Provided by Investing Activities
Net cash provided by investing activities for the nine months ended September 30, 2021 was $146.9 million. Our investing activities have consisted primarily of purchases and sales and maturities of investments and capital expenditures. Net cash provided by investing activities reflects $342.3 million for the sale and redemption of marketable securities, partially offset by $193.4 million for the purchase of marketable securities and $2.1 million for capital expenditures.
Net cash provided by investing activities for the nine months ended September 30, 2020 was $9.2 million. Our investing activities have consisted primarily of purchases and sales and maturities of investments and capital expenditures. Net cash provided by investing activities reflects $272.7 million for the sale and redemption of marketable securities, partially offset by $261.3 million for the purchase of marketable securities and $2.2 million for capital expenditures.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2021 was $212.2 million. Net cash provided by financing activities primarily reflects $199.8 million in net proceeds from the September 2021 private placement of securities, $19.2 million from the exercise of the remaining outstanding warrants and $8.4 million from the exercise of stock options, partially offset by $14.7 million from payments of employee withholding taxes related to restricted stock unit vesting.
Net cash provided in financing activities for the nine months ended September 30, 2020 was $241.3 million. Net cash provided by financing activities primarily reflects $385.9 million in proceeds from the Senior Secured Term Loan due 2026, net of issuance costs, $20.0 million from the exercise of stock options. This increase was offset by $155.2 million for the voluntary settlement of the Senior Secured Term Loan due 2023, and $9.3 million from payments of employee withholding taxes related to restricted stock unit vesting.

31

Funding Requirements
We expect to incur losses from operations for the foreseeable future primarily due to research and development expenses, including expenses related to conducting clinical trials. Our future capital requirements will depend on a number of factors, including:
•the scope, progress, results and costs of our clinical trials of our drug candidates and gene therapy candidates, including but not limited to AT-GAA, CLN6 and CLN3;
•the cost of manufacturing drug supply for our clinical and preclinical studies, including the cost of manufacturing our Enzyme Replacement Therapy ("ERT" or "ATB200" or "cipaglucosidase alfa") for the treatment of Pompe disease and gene therapies;
•the future results of on-going preclinical research and subsequent clinical trials for CDD, Pompe gene therapy, Fabry gene therapy, MPSIIIB, next generation MPSIIIA, and other pipeline candidates we may identify from time to time, including our ability to obtain regulatory approvals and commercialize these therapies and obtain market acceptance for such therapies;
•the costs, timing, and outcome of regulatory review of our product candidates, including AT-GAA;
•any changes in regulatory standards relating to the review of our product candidates;
•the number and development requirements of other product candidates that we pursue;
•our ability to realize the expected benefits of our business combination agreement for our gene therapy business, which could result in additional unanticipated costs and risks;
•the costs of commercialization activities, including product marketing, sales, and distribution;
•the emergence of competing technologies and other adverse market developments;
•our ability to successfully commercialize Galafold® ("migalastat HCl") and, if our regulatory filings are accepted and approved, AT-GAA;
•our ability to manufacture or supply sufficient clinical or commercial products, including Galafold®, AT-GAA and our gene therapy candidates;
•our ability to obtain reimbursement for Galafold® and, if our regulatory filings are accepted and approved, AT-GAA;
•our ability to satisfy post-marketing commitments or requirements for continued regulatory approval of Galafold®;
•our ability to obtain market acceptance of Galafold® and, if our regulatory filings are accepted and approved, AT-GAA;
•the costs of preparing, filing, and prosecuting patent applications and maintaining, enforcing, and defending intellectual property-related claims;
•the impact of litigation that has been or may be brought against us or of litigation that we are pursuing or may pursue against others;
•the extent to which we acquire or invest in businesses, products, and technologies;
•our ability to successfully integrate our acquired products and technologies into our business, including the possibility that the expected benefits of the transactions will not be fully realized by us or may take longer to realize than expected;
•our ability to establish collaborations, partnerships or other similar arrangements and to obtain milestone, royalty, or other payments from any such collaborators;
•our ability to adjust to changes in the European and United Kingdom markets in the wake of the United Kingdom leaving the European Union;
•the extent to which our business could be adversely impacted by the effects of COVID-19 outbreak, including due to actions by us, governments, our customers or suppliers or other third parties to control the spread of COVID-19, or by other health epidemics or pandemics;
•fluctuations in foreign currency exchange rates; and
•changes in accounting standards.
32

While we continue to generate revenue from product sales, in the absence of additional funding, we expect our continuing operating losses to result in increases in our cash used in operations over the next several quarters and years. We may seek additional funding through public or private financings of debt or equity. Based on the current operating model, we believe that the current cash position, which includes expected revenues, and net proceeds from the September 2021 private placement of securities, is sufficient to fund our operations and ongoing research programs to achieve self-sustainability. Potential impacts of the COVID-19 pandemic, business development collaborations, pipeline expansion, and investment in manufacturing capabilities could impact our future capital requirements.
Financial Uncertainties Related to Potential Future Payments
Milestone Payments / Royalties
Celenex - In connection with our acquisition of Celenex in 2018, we agreed to pay up to an additional $10 million in connection with the achievement of certain development milestones, $220 million in connection with the achievement of certain regulatory approval milestones across multiple programs and up to $75 million in tiered sales milestone payments.
Nationwide Children’s - Celenex has an exclusive license agreement with Nationwide Children’s. Under this license agreement, Nationwide Children’s is eligible to receive development and sales-based milestones of up to $7.8 million from us for each product.
Penn - Under our research collaboration agreement with Penn, Penn is eligible to receive certain milestone, royalty and discovery research payments with respect to licensed products for each indication. Milestone payments are payable following the achievement of certain development and commercial milestone events in each indication, up to an aggregate of $88.0 million per indication. Royalty payments are based on net sales of licensed products on a licensed product-by-licensed product and country-by-country basis. We will provide $10.0 million each year during the five-year agreement to fund the discovery research program.
GlaxoSmithKline - In July 2012, as amended in November 2013, we entered into an agreement with GlaxoSmithKline ("GSK"), pursuant to which Amicus obtained global rights to develop and commercialize Galafold® as a monotherapy and in combination with ERT for Fabry disease (“Collaboration Agreement”). Under the terms of the Collaboration Agreement, GSK is eligible to receive post-approval and sales-based milestones up to $40 million, as well as tiered royalties in the mid-teens in eight major markets outside the U.S.
Critical Accounting Policies and Significant Judgments and Estimates and Business Combinations

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. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There were no significant changes during the quarternine months ended September 30, 20172021 to the items that we disclosed as our significant accounting policies and estimates described in “—"—Note 2. Summary of Significant Accounting Policies”Policies" to the Company’sCompany's financial statements as contained in the Company’sCompany's Annual Report on Form 10-K as amended, for the fiscal year ended December 31, 2016.  However, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our financial condition and results of operations.

Revenue Recognition

The Company recognizes revenue when amounts are realized or realizable and earned. Revenue is considered realizable and earned when persuasive evidence of an arrangement exists, title to product and associated risk of loss has passed to the customer, which is typically upon receipt by the end customer, the price is fixed or determinable, collection of the amounts due are reasonably assured and the Company has no further performance obligations.

The Company’s net product sales consist solely of sales of Galafold™ for the treatment of Fabry disease in the EU. The Company has recorded revenue on sales where Galafold™ is available either on a commercial basis or through a reimbursed early access program. Orders for Galafold™ are generally received from pharmacies and the ultimate payor is typically a government authority.

The Company records revenue net of estimated third party discounts and rebates. Allowances are recorded as a reduction of revenue at the time revenues from product sales are recognized. These allowances are adjusted to reflect known changes in factors and may impact such allowances in the quarter those changes are known. Allowances as of September 30, 2017 are immaterial.

Inventories and Cost of Goods Sold

Prior to regulatory approval of Galafold™, the Company expensed all manufacturing costs of Galafold™ as research and development expense. Upon regulatory approval, the Company began capitalizing costs related to the purchase and manufacture of Galafold™.

Inventories are stated at the lower of cost and net realizable value determined by the first-in, first-out method. Inventories are reviewed periodically to identify slow-moving or obsolete inventory based on projected sales activity as well as product shelf-life. In evaluating the recoverability of inventories produced, the probability that revenue will be obtained from the future sale of the related inventory is considered and inventory value is written down for inventory quantities in excess of expected requirements. Expired inventory is disposed of and the related costs are recognized as cost of product sales in the consolidated statements of operations.

Cost of goods sold includes the cost of inventory sold, manufacturing and supply chain costs, product shipping and handling costs, and provisions for excess and obsolete inventory, as well as royalties payable.  A portion of the inventory available for sale was expensed as research and development costs prior to regulatory approval and as such the cost of goods sold and related gross margins are not necessarily indicative of future cost of goods sold and gross margin.

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. 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.

The following table summarizes our principal product development programs, including the related stages of development for each product candidate in development, and the out-of-pocket, third party expenses incurred with respect to each product candidate (in thousands):

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

Projects

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

Third party direct project expenses

 

 

 

 

 

 

 

 

 

Migalastat (Fabry)

 

$

3,265

 

$

2,726

 

$

8,644

 

$

9,503

 

SD-101 (EB-Epidermolysis Bullosa)

 

9,660

 

3,503

 

15,424

 

6,979

 

ATB200 + AT2221 (Pompe Disease)

 

10,456

 

5,946

 

29,594

 

12,535

 

Fabry CHART (Fabry Disease)

 

14

 

91

 

143

 

282

 

CDKL5

 

178

 

6,490

 

287

 

6,490

 

Total third party direct project expenses

 

$

23,573

 

$

18,756

 

$

54,092

 

$

35,789

 

Other project costs (1)

 

 

 

 

 

 

 

 

 

Personnel costs

 

11,410

 

9,782

 

34,162

 

27,349

 

Other costs (2)

 

5,658

 

3,919

 

15,248

 

11,025

 

Total other project costs

 

$

17,068

 

$

13,701

 

$

49,410

 

$

38,374

 

Total research and development costs

 

$

40,641

 

$

32,457

 

$

103,502

 

$

74,163

 

2020.
Recent Accounting Pronouncements

(1)   Other project costs are leveraged across multiple projects.

(2)   Other costs include facility, supply, overhead, and licensing costs that support multiple projects.

Stock Option Grants

In accordance with the applicable guidance, we estimate the fair value of each equity award granted. We chose the “straight-line” attribution method for allocating compensation costs and recognized the fair value of each stock option on a straight-line basis over the vesting period of the related awards.

We use the Black-Scholes option pricing model when estimating the grant date fair value for stock-based awards. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was based on our historical volatility since our initial public offering in May 2007. We will continue to use a blended weighted average approach using our own historical volatility and other similar public entity volatility information until our historical volatility is relevant to measure expected volatility for future option grants. Beginning in the third quarter of 2017, the average expected life was determined using our actual historical data versus a “simplified” method used in prior quarters. The “simplified” method of

estimating the expected exercise term uses the mid-point between the vesting date and the end of the contractual term. In earlier quarters, we did not have sufficient reliable exercise data to justify a change from the use of the “simplified” method of estimating the expected exercise term of employee stock option grants. The impact from this change was not material. The risk-free interest rate is based on U.S. Treasury, zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. Forfeitures are estimated based on expected turnover as well as a historical analysis of actual option forfeitures.

The weighted average assumptions used in the Black-Scholes option pricing model are as follows:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2017

 

2016

 

2017

 

2016

 

Expected stock price volatility

 

82.5

%

81.6

%

83.1

%

81.3

%

Risk free interest rate

 

1.8

%

1.2

%

2.0

%

1.5

%

Expected life of options (years)

 

5.89

 

6.25

 

6.21

 

6.25

 

Expected annual dividend per share

 

$

0.00

 

$

0.00

 

$

0.00

 

$

0.00

 

Restricted Stock Units (“RSUs”) and Performance-Based Restricted Stock Units

The RSUs awarded are generally subject to graded vesting and are contingent on an employee’s continued service on such date.  RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. We expense the cost of the RSUs, which is determined to be the fair market value of the shares of our common stock, par value $0.01 per share (“Common Stock”) underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse.

On December 30, 2016, the Compensation Committee approved a form of Performance-Based Restricted Stock Unit Award Agreement (the “Performance-Based RSU Agreement”), to be used for performance-based RSUs granted to participants under the Amended and Restated Amicus Therapeutics, Inc. 2007 Equity Incentive Plan, including named executive officers. Certain awards under the form of Performance-Based RSU Agreement were granted in January 2017. The table above includes 401,413 market performance-based restricted stock units (“MPRSUs”) granted to executives.  Vesting of these awards is contingent upon the Company meeting certain total shareholder return (TSR) levels as compared to a select peer group over the next three years.  The MPRSUs cliff vest at the end of the three-year period and have a maximum potential to vest at 200% (802,826 shares) based on TSR performance.  The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term.  The estimated fair value per share of the MPRSUs was $8.08 and was calculated using a Monte Carlo simulation model.  The table above also includes 401,413 performance based awards that will vest over the next three years based on the Company achieving certain clinical milestones.

Results of Operations

Three Months Ended September 30, 2017 versus September 30, 2016

Net Product Sales. Net product sales were $10.9 million for Galafold™ for the three months ended September 30, 2017 as compared to $2.1 million for the three months ended September 30, 2016.  Galafold™ was approved for sale in the EU in May 2016 and has been launched in over than ten European markets, as well as in select other European markets through reimbursed EAPs. We began to recognize revenue in the third quarter of 2016.

Cost of Goods Sold. Cost of goods sold includes manufacturing costs as well as royalties associated with sales of our product. Cost of goods sold as a percentage of net sales was 16.5% for the three months ended September 30, 2017 as compared to 16.2% for the three months ended September 30, 2016.

Research and Development Expense.  Research and development expense was $40.6 million during the three months ended September 30, 2017, representing an increase of $8.1 million or 24.9% from $32.5 million for the three months ended September 30, 2016. The increase in research and development costs was driven primarily by a $6.2 million increase in costs related to the EB program and $4.5 million related to increase in the Pompe program.  The increase in EB program includes accelerated clinical research costs related to the wind-down of operations for the Phase 3 ESSENCE study and ongoing extension studies SD-004 and SD-006. The increase in Pompe program costs was related to expenses associated with product manufacturing as well as expenses related to the ongoing Phase 1/2 clinical trial. The overall increase in research and development expense related to EB and Pompe programs was partially offset by the one-time expense recorded in the third quarter of 2016 of $6.5 million associated with the acquisition of the CDKL5 asset.

Selling, General and Administrative Expense.  Selling, general and administrative expense was $21.6 million during the three months ended September 30, 2017, representing an increase of $4.1 million or 23.4% from $17.5 million for the three months ended September 30, 2016. The increase was primarily due to efforts to support the ongoing commercial launch of Galafold™.

Changes in Fair Value of Contingent Consideration Payable. For the three months ended September 30, 2017, we recorded gain of $244.3 million representing a change of $240.2 million from the $4.1 million of gain for the three months ended September 30, 2016. The change in the fair value from the three months ended September 30, 2016 to the three months ended September 30, 2017 resulted primarily from a decrease in the change attributable to the Scioderm, Inc. (“Scioderm”) contingent consideration of $251.1 million and an increase in the change attributable to the Callidus contingent consideration of $10.9 million. The fair value and change in fair value are impacted by updates to the estimated probability of achievement, assumed timing of milestones and adjustments to the discount periods and rates.  The decrease in Scioderm contingent consideration was due to the results announced in September 2017 that the study did not meet the primary endpoints or secondary endpoints in participants, and, as a result, the contingent consideration is no longer payable.

Loss on Impairment of Assets: For the three months ended September 30, 2017, we recorded $465.4 million as impairment charges to assets, which primarily included $463.7 million in IPR&D. The impairment was assessed after the announcement of the results from the Phase 3 ESSENCE study.

Depreciation Expense.  Depreciation expense was $0.9 million for the three months ended September 30, 2017 and ended September 30, 2016.

Interest Income. Interest income was $1.2 million for the three months ended September 30, 2017, representing an increase of $0.7 million from $0.5 million for the three months ended September 30, 2016. The increase in interest income was due to the overall higher average cash and investment balances as a result of our financing transactions.

Interest Expense.  Interest expense was approximately $4.4 million for three months ended September 30, 2017, representing an increase of $2.9 million from $1.5 million for the three months ended September 30, 2016. Interest expense was higher due to the $250 million convertible debt offering completed in December 2016.

Other Income/ Expense.  Other income for the three months ended September 30, 2017 was $2.0 million, as compared to expense of $0.9 million for the three months ended September 30, 2016. The increase was primarily due to unrealized gain on foreign exchange transactions.

Income Tax Benefit. Income tax benefit for the three months ended September 30, 2017 was $164.7 million, as compared to $0.3 million for the three months ended September 30, 2016. The increase was primarily due to the reduction of the deferred tax liability of $164.7 million related to Scioderm IPR&D as a result of the announcement of the Phase 3 ESSENCE study.

Nine Months Ended September 30, 2017 versus September 30, 2016

Net Product Sales. Net product sales were $22.2 million for Galafold™ for the nine months ended September 30, 2017 as compared to $2.1 million for the nine months ended September 30, 2016.  Galafold™ was approved for sale in the EU in May 2016 and has been launched in over than ten European markets as well as in select other European markets through reimbursed EAPs. We began to recognize revenue in the third quarter of 2016.

Cost of Goods Sold. Cost of goods sold includes manufacturing costs as well as royalties associated with sales of our product. Cost of goods sold as a percentage of net sales was 16.3% for the nine months ended September 30, 2017 as compared to 16.2% for the nine months ended September 30, 2016.

Research and Development Expense.  Research and development expense was $103.5 million during the nine months ended September 30, 2017, representing an increase of $29.3 million or 39.5% from $74.2 million for the nine months ended September 30, 2016. The increase in research and development costs was driven primarily by $17.1 million increase in costs related to the Pompe program and $8.4 million increase in costs associated with the EB program.  The increase in EB program includes accelerated clinical research costs related to the wind-down of operations for the Phase 3 ESSENCE study and ongoing extension studies SD-004 and SD-006. The increase in Pompe program costs was related to expenses associated with product manufacturing as well as expenses related to the Phase 1/2 clinical trial. In addition to program costs, personnel costs increased by approximately $6.8 million in support of our programs. The overall increase in research and development expenses related to EB and Pompe programs was partially offset by the one-time expense recorded in the third quarter of 2016 of $6.5 million associated with the acquisition of the CDKL5 asset.

Selling, General and Administrative Expense.  Selling, general and administrative expense was $60.1 million for the nine months ended September 30, 2017, representing an increase of $7.6 million or 14.5% from $52.5 million for the nine months ended September 30, 2016. The increase was due to efforts to support the ongoing commercial launch of Galafold™.

Changes in Fair Value of Contingent Consideration Payable. For the nine months ended September 30, 2017, we recorded gain of $238.6 million representing a change of $247.8 million from the $9.2 million of expense for the nine months ended September 30, 2016. The change in the fair value from the nine months ended September 30, 2016 to the nine months ended September 30, 2017 resulted primarily from a decrease in the change attributable to the Scioderm contingent consideration of $259.4 million and an increase in the change attributable to the Callidus contingent consideration of $11.6 million. The fair value is impacted by updates to the estimated probability of achievement, assumed timing of milestones and adjustments to the discount periods and rates. The decrease in Scioderm contingent consideration was due to the results announced in September 2017 that the study did not meet the primary endpoints or secondary endpoints in participants, and, as a result, of which the contingent consideration is no longer payable.

Loss on Impairment of Assets: For the three months ended September 30, 2017, we recorded $465.4 million as impairment charges to assets, which primarily included $463.7 million in IPR&D. The impairment was assessed after the announcement of the results from the Phase 3 ESSENCE study.

Depreciation Expense.  Depreciation expense was $2.5 million for the nine months ended September 30, 2017, representing an increase of $0.2 million as compared to $2.3 million for the nine months ended September 30, 2016. Depreciation was higher due to increased asset acquisitions, resulting in a higher depreciation base in 2017.

Interest Income. Interest income was $2.7 million for the nine months ended September 30, 2017, representing an increase of $1.6 million from $1.1 million for the nine months ended September 30, 2016. The increase in interest income was due to the overall higher average cash and investment balances as a result of our financing transactions.

Interest Expense.  Interest expense was approximately $12.8 million for nine months ended September 30, 2017, representing an increase of $9.3 million from $3.5 million for the nine months ended September 30, 2016. Interest expense was higher due to the $250 million convertible debt offering completed in December 2016.

Other Income/ Expense.  Other income for the nine months ended September 30, 2017 was $5.1 million, as compared to expense of $3.2 million for the nine months ended September 30, 2016. The increase was primarily due to unrealized gain on foreign exchange transactions.

Income Tax Benefit. Income tax benefit for the nine months ended September 30, 2017 was $164.6 million, as compared to $0.7 million for the nine months ended September 30, 2016. The increase was primarily due to the reduction of the deferred tax liability of $164.7 million related to Scioderm IPR&D as a result of the announcement of the Phase 3 ESSENCE study.

Liquidity and Capital Resources

Source of Liquidity

As a result of our significant research and development expenditures as well as expenditures to build a commercial organization to support the launch of Galafold™, we have not been profitable and have generated operating losses since we were incorporated in 2002. We have historically funded our operations principally through the issuance and sale of stock, collaborations, debt financings, grants and non-refundable license fees.

Cash flows

As of September 30, 2017, we had cash and cash equivalents and marketable securities of $426.6 million. We invest cash in excess of our immediate requirements with regard to liquidity and capital preservation in a variety of interest-bearing instruments, including obligations of U.S. government agencies and money market accounts. Wherever possible, we seek to minimize the potential effects of concentration and degrees of risk. Although we maintain cash balances with financial institutions in excess of insured limits, we do not anticipate any losses with respect to such cash balances. For more details on the cash, cash equivalents and marketable securities,

Please refer to “—"—Note 5. Cash, Money Market Funds and Marketable Securities,”2. Summary of Significant Accounting Policies" in our Notes to Consolidated Financial Statements.

Net Cash Used in Operating Activities

Net cash used in operations for the nine months ended September 30, 2017 was $141.7 million due primarily to the net loss for the nine months ended September 30, 2017 of $214.8 million, and a decrease in deferred reimbursements of $12.6 million, resulting from the milestone payments to GSK. The net cash used in operations was offset by an increase in accounts payable and accrued expenses of $13.0 million related to program expenses and support for the commercial launch of Galafold™.

Net cash used in operations for the nine months ended September 30, 2016 was $118.5 million, due primarily to the net loss for the nine months ended September 30, 2016 of $141.4 million and the change in operating assets and liabilities of $10.1 million. The change in operating assets and liabilities was primarily due to a decrease in accounts payable and accrued expenses of $2.9 million, partially offset by increases in inventory of $3.5 million, prepaid assets of $2.8 million and other non-current assets of $0.7 million.

Net Cash Used in Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2017 was $222.8 million. Our investing activities have consisted primarily of purchases and sales and maturities of investments and capital expenditures. Net cash used in investing activities reflects $450.4 million for the purchase of marketable securities, $3.4 million for the acquisition of property and equipment, partially offset by $231.0 million for the sale and redemption of marketable securities.

Net cash used in investing activities for the nine months ended September 30, 2016 was $39.9 million and reflects $199.8 million for the purchase of marketable securities, $5.5 million for the acquisition of property and equipment, partially offset by $165.5 million for the sale and redemption of marketable securities.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2017 was $240.6 million. Net cash provided by financing activities reflects $243.0 million from issuance of Common Stock from the July 2017 equity financing, $8.8 million from exercise of stock options, partially offset by $10.0 million paid to Scioderm as contingent consideration and $1.1 million from vesting of RSUs.

Net cash provided by financing activities for the nine months ended September 30, 2016 was $122.4 million. Net cash provided by financing activities reflects $97.1 million from issuance of Common Stock under the ATM program, $30.0 million as proceeds from the notes sold to Redmile Capital Fund, LP and certain of its affiliates and Grosvenor Special Opportunities Master Fund, Ltd., and $1.5 million from exercise of stock options, partially offset by $5.0 million paid to Scioderm as contingent consideration and $1.0 million from vesting of RSUs.

Funding Requirements

We expect to incur losses from operations for the foreseeable future primarily due to research and development expenses, including expenses related to conducting clinical trials.  Our future capital requirements will depend on a number of factors, including:

·                                     the progress and results of our clinical trials of our drug candidates;

·                                     the cost of manufacturing drug supply for our clinical and preclinical studies, including the significant cost of new Fabry ERT cell line development and manufacturing as well as the cost of manufacturing Pompe ERT;

·                                     the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our product candidates including those testing the use of pharmacological chaperones co-formulated and co-administered with ERT and for the treatment of LSDs;

·                                     the future results of on-going preclinical research and subsequent clinical trials for CDKL5, including our ability to obtain regulatory approvals and commercialize CDKL5 and obtain market acceptance for CDKL5;

·                                     the costs, timing and outcome of regulatory review of our product candidates;

·                                     the number and development requirements of other product candidates that we pursue;

·                                     the costs of commercialization activities, including product marketing, sales and distribution;

·                                     the emergence of competing technologies and other adverse market developments;

·                                     our ability to obtain reimbursement for migalastat HCl;

·                                     our ability to obtain market acceptance of migalastat HCl in the EU;

·                                     the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims;

·                                     the extent to which we acquire or invest in businesses, products and technologies;

·                                     our ability to successfully integrate our acquired products and technologies into our business, including the possibility that the expected benefits of the transactions will not be fully realized by us or may take longer to realize than expected; and

·                                     our ability to establish collaborations and obtain milestone, royalty or other payments from any such collaborators.

While we generated revenue from product sales since the second half of 2016, in the absence of additional funding, we expect our continuing operating losses to result in increases in our cash used in operations over the next several quarters and years. We may seek additional funding through public or private financings of debt or equity. We believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund the current operating plan into the second half of 2019.

Financial Uncertainties Related to Potential Future Payments

Milestone Payments / Royalties

We acquired exclusive worldwide patent rights to develop and commercialize migalastat and other pharmacological chaperones for the prevention or treatment of human diseases or clinical conditions by increasing the activity of wild-type and mutant enzymes pursuant to a license agreement with MSSM. This agreement expires upon expiration of the last of the licensed patent rights, which will be in 2018 in the U.S. and 2019 in Europe and Japan for monotherapy. If we develop a product for combination therapy of specific pharmacological chaperone such as migalastat plus an ERT for certain LSDs such as Fabry disease and a patent issues from the pending MSSM applications covering such a combination therapy(ies), expiration for the combination product(s) will be 2024.

Under our license agreements, if we owe royalties on net sales for one of our products to more than one of the above licensors, then we have the right to reduce the royalties owed to one licensor for royalties paid to another. The amount of royalties to be offset is generally limited in each license and can vary under each agreement. For migalastat, we incurred $0.7 million of royalty expense under the agreement with MSSM for the nine months ended September 30, 2017.

In November 2013, we entered into the Revised Agreement with GlaxoSmithKline (“GSK”), pursuant to which we have obtained global rights to develop and commercialize migalastat as a monotherapy and in combination with ERT for Fabry disease. The Revised Agreement amends and replaces in its entirety the prior agreement entered into between us and GSK in July 2012. Under the terms of the Revised Agreement, there was no upfront payment from us to GSK. For migalastat monotherapy, GSK is eligible to receive post-approval and sales-based milestones up to $40 million, as well as tiered royalties in the mid-teens in eight major markets outside the U.S. In addition, because we reacquired worldwide rights to migalastat, we are no longer eligible to receive any milestones or royalties we would have been eligible to receive under the Original Collaboration Agreement. In the nine months ended September 30, 2017, we incurred approximately $2.2 million of royalty expense under the agreement with GSK.

As part of the acquisition of Callidus, we will be obligated to make additional payments to the former stockholders of Callidus upon the achievement by the Company of certain clinical milestones of up to $35 million and regulatory approval milestones of up to $105 million as set forth in the merger agreement, provided that the aggregate consideration shall not exceed $130 million. We may, at our election, satisfy certain milestone payments identified in the merger agreement aggregating $40 million in shares of our Common Stock (calculated based on a price per share equal to the average of the last closing bid price per share for the Common Stock on The NASDAQ Global Select Market for the ten trading days immediately preceding the date of payment).  The milestone payments not permitted to be satisfied in Common Stock (as well as any payments that we are permitted to, but choose not to, satisfy in Common Stock), as a result of the terms of the merger agreement, the rules of The NASDAQ Global Select Market, or otherwise, will be paid in cash. During the second quarter of 2016, we reached the first clinical milestone for Callidus, which was the dosing of the first patient in a Phase 1 or 2 study. The milestone payment for this event was $6.0 million which was paid in the Company’s stock during the second quarter of 2016.

As part of the acquisition of MiaMed, we will be obligated to make additional payments to the former stockholders of MiaMed upon the achievement by the Company of certain clinical milestones of up to $8 million, regulatory approval milestones of up to $10 million, and commercial milestones up to $65 million. Any milestone payment may be satisfied in cash, shares of Common Stock, or a combination of both. The milestone payments not permitted to be satisfied in Common Stock (as well as any payments that we are permitted to, but choose not to, satisfy in Common Stock), as a result of the terms of the merger agreement, the rules of The NASDAQ Global Select Market, or otherwise, will be paid in cash. No milestone payments in connection with the acquisition of MiaMed have been paid.

Recent Accounting Pronouncements

Please refer to “—Note 2. Summary of Significant Accounting Policies,” in our Notes to Consolidated Financial Statements.

33

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of change in fair value of a financial instrument due to changes in interest rates, equity prices, creditworthiness, financing, exchange rates, or other factors. Our primary market risk exposure relates to changes in interest rates in our cash, cash equivalents, and marketable securities. We place our investments in high-quality financial instruments, primarily money market funds, corporate debt securities, asset backed securities, and U.S. government agency notes with maturities of less than one year, which we believe are subject to limited interest rate and credit risk. The securities in our investment portfolio are not leveraged, are classified as available-for-sale and, due to the short-term nature, are subject to minimal interest rate risk. We believe that a 1% (100 basis points) change in average interest rates would either increase or decrease the market value of our investment portfolio by $1.8 million. At$0.5 million as of September 30, 2017, we held $426.6 million in cash, cash equivalents and available for sale securities and they are all due on demand or within one year.2021. We currently do not hedge interest rate exposure and consistent with our investment policy, we do not use derivative financial instruments in our investment portfolio. Our outstanding debt has a fixed interest rate and therefore, we have no exposure
We are exposed to interest rate fluctuations.

risk with respect to variable rate debt. At September 30, 2021, we had a $400 million Senior Secured Term Loan due 2026 that bears interest at a rate equal to the 3-month LIBOR, subject to a 1% floor, plus 6.5% per year. We have operated primarilydo not currently hedge our variable interest rate debt. The annual average variable interest rate for our variable rate debt as of September 30, 2021 was 7.5%. A hypothetical 100 basis point increase or decrease in the average interest rate on our variable rate debt would result in a $1.0 million change in the interest expense as of September 30, 2021.

The Financial Conduct Authority has announced the intent to phase out the use of LIBOR by the end of 2021. If LIBOR is discontinued, we may need to renegotiate the terms of the Senior Secured Term Loan due 2026 in order to replace LIBOR with an alternative standard. As a result, we may incur incremental costs in transitioning to a new standard, and interest rates on our current or future indebtedness may be adversely affected by the new standard. The potential effect of any such event on our cost of capital cannot yet be determined, but we do not expect it to have a material impact on our consolidated financial condition, results of operations, or cash flows.
We face foreign exchange risk as a result of entering into transactions denominated in currencies other than U.S. with international operations increasing since the last quarter of 2015.dollars. We do conduct some clinical activities with vendors outside the U.S. While most expenses are paidnot currently engaged in U.S. dollars, we now have increased transactions of expensesany foreign currency hedging activities. The current exposures arise primarily from cash, accounts receivable, intercompany receivables and cash flowspayables, and net product sales denominated in foreign currencies that are exposedcurrencies. Both positive and negative impacts to changesour international product sales from movements in foreign currency rates.

exchange rates may be partially mitigated by the natural, opposite impact that foreign currency exchange rates have on our international operating expenses. A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have had a material impact on our Consolidated Financial Statements.
For information regarding our exposure to certain market risks, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. There have been no material changes in our financial instrument portfolio or market risk exposures since our fiscal year ended December 31, 2020.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation of the effectiveness of our disclosure controls and procedures (pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act") was carried out under the supervision of our Principal Executive Officer and Principal Financial Officer, with the participation of our management. Based on that evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

During the fiscal quarter covered by this report, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


34

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Since October 1, 2015, three purported securities class action lawsuits have been commenced


On September 2, 2021, Teva Pharmaceuticals Development, Inc. dismissed its complaint against the Company filed in the United States District Court for New Jersey, naming as defendants the Company, its Chairman and Chief Executive Officer, and in oneEastern District of the actions, its Chief Medical Officer. The lawsuits allege violations of the Securities Exchange Act of 1934 in connectionPennsylvania with allegedly false and misleading statements made by the Company related to the regulatory approval path for migalastat.  The plaintiffs seek, among other things, damages for purchasers of the Company’s Common Stock during different periods, all of which fall between March 19, 2015 and October 1, 2015. It is possible that additional suits will be filed, or allegations received from stockholders, with respect to similar matters and also naming the Company and/or its officers and directors as defendants. On May 26, 2016, the Court consolidated these lawsuits into a single action and appointed a lead plaintiff.  The lead plaintiff filed a Consolidated Amended Class Action Complaint on July 11, 2016. On August 25, 2016, the defendants filed a motion to dismiss in response to the Consolidated Amended Class Action Complaint.  This motion to dismiss was fully briefed on October 28, 2016 but has not been decided.  Lead plaintiff and defendants have reached an agreement in principal to fully and finally settle all claims asserted in the Consolidated Amended Class Action Complaint.   On June 29, 2017, the Court granted preliminary approval to the settlement. In connection with the Court’s preliminary approval, the settlement amount was paid into the plaintiff’s fund. The settlement is immaterial to the Company’s consolidated financial statements and is subject to final court approval.  A fairness hearing to determine whether the settlement will be approved is now scheduled to occur on November 9, 2017. The settlement amount was covered under insurance.

On or about March 3, 2016, a derivative lawsuit was filed by an Amicus shareholder purportedly on Amicus’ behalf in the Superior Court of New Jersey, Middlesex County, Chancery Division, against various officers and directors of the Company.  Amicus itself is named as a nominal defendant.  The derivative lawsuit alleges similar facts and circumstances as the three purported securities class action lawsuits described above and further alleges claims for breach of state law fiduciary duties, waste

of corporate assets, unjust enrichment, abuse of control, and gross mismanagement based on allegedly false and misleading statements made by Amicus related to the regulatory approval path for migalastat HCl. The plaintiff seeks, among other things, to require the Amicus Board to take certain actions to reform its corporate governance procedures, including greater shareholder input and a provision to permit shareholders to nominate candidates for election to the Board, along with restitution, costs of suit and attorney’s fees. On February 7, 2017, the complaint was dismissed by the Court without prejudice.

These lawsuits and any other related lawsuits are subject to inherent uncertainties and the actual cost will depend upon many unknown factors. The outcome of the litigation is necessarily uncertain and we could be forced to expend significant resources in the defense of these suits, and we may not prevail.

ITEM 1A. RISK FACTORS

There have been no material changes

The following risk factor should be considered in addition to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2020.
The announced proposed spin-off of our gene therapy business may not be completed within the expected timeframe, or at all, we may not achieve the expected benefits from the spin-off, and we may incur substantial expenses in connection with the transaction.
On September 29, 2021, we announced a plan to pursue a spin-off of our gene therapy business into ARYA Sciences Acquisition Corp. IV, a special purpose acquisition company, or SPAC, a Cayman Islands exempted company (“ARYA”). Pursuant to the agreement, ARYA’s name will be changed to Caritas Therapeutics, Inc. (“Caritas”) upon closing. The Company will distribute shares of Caritas to the Company’s stockholders on a pro rata basis in a manner intended to be tax-free to the Company and its stockholders for U.S. Federal income tax purposes. The transaction is expected to be completed in the last quarter of 2021 or the first quarter of 2022. The proposed spin-off is subject to customary conditions.
No assurance can be given regarding the form that a spin-off transaction may take or the specific terms or timing thereof, or that a spin-off will in fact occur, as amended.

the transaction requires final approval by ARYA’s shareholders and ARYA’s registration statement on Form S-4 must be declared effective by the Securities and Exchange Commission. In addition, the Company expects to retain approximately 36% of the shares of Caritas at the time of the separation, with the intent to monetize in the future and provide additional proceeds to the Company. No assurance can be given that we will be able to monetize the shares of Caritas at a favorable price or at all, or the timing thereof.
The Company and Caritas may not realize some or all of the anticipated strategic, financial, operational or other benefits, including benefits under the Tax Receivable Agreement, by and among Caritas, Amicus GT Holdings, LLC and Caritas Therapeutics, LLC (“Caritas LLC”), benefits under the Co-Development and Commercialization Agreement, by and among the Company and Caritas LLC, and the benefits of any cost savings from the transaction generally. As independent publicly traded companies, the Company and Caritas will be smaller, less diversified companies with a narrower business focus and may be more vulnerable to changing market conditions, such as changes in the gene therapy or biotechnology industries, which could result in increased volatility in their respective cash flows, working capital and financing requirements and could materially and adversely affect the respective business, financial condition and results of operations. There can be no assurance that the combined value of the common stock of the two publicly traded companies will be equal to or greater than what the value of the Company’s common stock would have been had the proposed separation not occurred.
Moreover, substantial expenses will be incurred in connection with the transaction. These expenses include, but are not limited to, the prolonging of services provided under the Transition Services Agreement (the “TSA”), by and among the Company and Caritas LLC, and the reliance on external vendors to provide scientific support at a higher cost than internal support. Such expenses are difficult to estimate accurately and may exceed current estimates. Accordingly, the benefits from the transaction may be offset by costs or delays incurred in effectuating the transaction. Executing the proposed transaction and complying with the terms of the TSA, particularly if Amicus is required to provide services under the TSA for longer than expected, will require significant time and attention from the Company’s senior management and employees, which could disrupt the Company’s ongoing business and adversely affect the financial results and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None.

35

Issuer Purchases of Equity Securities

We did not repurchase any shares

The following table provides certain information with respect to purchase of our Common Stockcommon stock during the three months ended September 30, 2017. We have not announced any plans or programs for the repurchase2021:
Period
Total Number of Shares Purchased (1)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
July 1, 2021 through July 31, 20213,130 $9.18 — — 
August 1, 2021 through August 31, 20215,826 $10.58 — — 
September 1, 2021 through September 30, 20214,901 $11.14 — — 
Total13,857 $10.46 — — 

(1) Represents shares of our Common Stock. However, employees surrendered 3,368 sharescommon stock withheld to the Company, during the three months ended September 30, 2017 at a weighted average price of $13.53 per share for the payment of the minimum tax liability withholding obligations uponsatisfy taxes associated with the vesting of RSUs. We do not consider this a share buyback program.

restricted stock awards

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

None.

ITEM 5. OTHER INFORMATION

None.

36

ITEM 6. EXHIBITS

Exhibit
Number

Description

Exhibit
Number

Description

3.1(1)

Restated Certificate of Incorporation

4.1

Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Form 8-K filed on September 29, 2021).

3.2(2)

10.1

CertificateBusiness Combination Agreement, dated as of September 29, 2021, by and among ARYA Sciences Acquisition Corp IV, Amicus Therapeutics, Inc., Amicus GT Holdings, Inc. and Caritas Therapeutics, LLC (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on September 29, 2021).
10.2
Sponsor Letter Agreement, dated as of September 29, 2021, by and among ARYA Sciences Acquisition Corp IV, ARYA Sciences Holdings IV, Amicus GT Holdings, Inc. and the other parties thereto (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on September 29, 2021).
10.3
Securities Purchase Agreement, dated September 29, 2021, by and between Amicus Therapeutics, Inc. and Redmile Group LLC (incorporated by reference to Exhibit 10.3 to the Form 8-K filed on September 29, 2021).
10.4
Securities Purchase Agreement, dated September 29, 2021, by and between Amicus Therapeutics, Inc. and Perceptive Life Sciences Master Fund, Ltd. (incorporated by reference to Exhibit 10.4 to the Form 8-K filed on September 29, 2021).
10.5
Securities Purchase Agreement, dated September 29, 2021, by and among Amicus Therapeutics, Inc. and the Purchasers identified on the signature pages thereto (incorporated by reference to Exhibit 10.5 to the Form 8-K filed on September 29, 2021).
10.6
Investor Rights Agreement, dated September 29, 2021, by and among ARYA Sciences Acquisition Corp IV, Caritas Therapeutics, LLC, Perceptive Life Sciences Master Fund, Ltd., ARYA Sciences Holdings IV, Amicus GT Holdings, Inc. and the other parties thereto (incorporated by reference to Exhibit 10.6 to the Form 8-K filed on September 29, 2021).
10.7
Limited Consent and Amendment No. 1 to Loan Agreement (incorporated by reference to Exhibit 10.7 to the Form 8-K filed on September 29, 2021).
10.8
Amendment to Employment and Confidentiality Agreements, dated September 28, 2021, by and between Amicus Therapeutics, Inc. and Hung Do (incorporated by reference to Exhibit 10.8 to the Company’s Restated Certificate of Incorporation, as amendedForm 8-K filed on September 29, 2021).

10.9

Amendment #3 to the Amicus Therapeutics, Inc. Cash Deferral Plan

3.3(3)

Amended and Restated By-laws

31.1

31.1

Certification of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated pursuant to the Securities Exchange Act of 1934, as amended

31.2

Certification of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated pursuant to the Securities Exchange Act of 1934, as amended

32.1

Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

101.INS

The following financial information from this Quarterly Report on Form 10-Q forInline XBRL Instance Document - the nine months ended September 30, 2017, formattedinstance document does not appear in the Interactive Data File because its XBRL (Extensible Business Reporting Language)tags are embedded within the Inline XBRL document

101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
104Cover Page Interactive Data File (formatted in Inline XBRL and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Loss; (iv) the Consolidated Statements of Cash Flows; (v) and the Notes to the Consolidated Financial Statements

included in Exhibit 101)




37

(1)       Incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q filed on August 5, 2015.

(2)       Incorporated by reference to Exhibit 3.2 to our Quarterly Report on Form 10-Q filed on August 5, 2015.

(3)       Incorporated by reference to Exhibit 3.4 to our Registration Statement on Form S-1.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMICUS THERAPEUTICS, INC.

Date: November 8, 2017

By:

/s/ John F. Crowley

John F. Crowley

Chairman and Chief Executive Officer

(Principal Executive Officer)

Date: November 8, 2017

By:

/s/ William D. Baird III

William D. Baird III

Chief Financial Officer

(Principal Financial Officer)

AMICUS THERAPEUTICS, INC.
Date:November 9, 2021By:/s/ John F. Crowley
John F. Crowley
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date:November 9, 2021By:/s/ Daphne Quimi
Daphne Quimi
Chief Financial Officer
(Principal Financial Officer)

36


38