AMICUS THERAPEUTICS, INC. - Quarter Report: 2023 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2023

☐ 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

(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification Number)

3675 Market Street,

Philadelphia,

19104

(Address of Principal Executive Offices)

(Zip Code)

(215)

921-7600

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	FOLD	NASDAQ 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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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 the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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. ☐

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

The number of shares outstanding of the registrant's common stock, $0.01 par value per share, as of April 27, 2023 was 284,575,686 shares.

AMICUS THERAPEUTICS, INC.

Form 10-Q for the Quarterly Period Ended March 31, 2023

Page

PART I. FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements and Notes (unaudited)

Consolidated Balance Sheets as of March 3 1 , 202 3 and December 31, 2 0 2 2

Consolidated Statements of Operations for the Three Months Ended March 3 1 , 202 3 and 2 0 2 2

Consolidated Statements of Comprehensive Loss for the Three Months Ended March 3 1, 202 3 and 20 2 2

Consolidated Statements of Changes in Stockholders' Equity for the Three Months Ended March 3 1 , 202 3 and 202 2

Consolidated Statements of Cash Flows for the Three Months Ended March 3 1 , 202 3 and 20 2 2

Notes to Consolidated Financial Statements

Item 2.

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

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

SIGNATURES

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks, uncertainties, and assumptions. Forward-looking statements are all statements, other than statements of historical facts, that 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. These statements may be preceded by, followed by or include the words "aim," "anticipate," "believe," "can," "could," "estimate," "expect," "forecast," "intend," "likely," "may," "might," "outlook," "plan," "potential," "predict," "project," "seek," "should," "will," "would," the negatives or plurals thereof, and other words and terms of similar meaning, although not all forward-looking statements contain these identifying words.

We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection 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 outcomes to differ materially from those expressed or implied in our forward-looking statements:

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

•the cost of manufacturing drug supply for our commercial, clinical and preclinical studies, including the cost of manufacturing Pompe Enzyme Replacement Therapy ("ERT" or "ATB200" or "cipaglucosidase alfa");

•the future results of preclinical research and subsequent clinical trials for 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, including AT-GAA;

•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;

•the estimates regarding the potential market opportunity for our product and product candidates, including AT-GAA;

•our ability to successfully commercialize Galafold® (also referred to as "migalastat HCl") and, if our regulatory applications are approved, AT-GAA;

•our ability to manufacture or supply sufficient clinical or commercial products, including Galafold® and AT-GAA;

•our ability to obtain reimbursement for Galafold® and, if our regulatory applications are approved, AT-GAA;

•our ability to satisfy post-marketing commitments or requirements for continued regulatory approval of Galafold®, and, if approved and applicable, AT-GAA;

•our ability to obtain market acceptance of Galafold® and, if our regulatory applications are approved, AT-GAA;

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

•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, including Hatch-Waxman litigation;

•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, or successfully divest or license existing products and technologies from 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 licensing agreements, collaborations, partnerships or other similar arrangements and to obtain milestone, royalty, or other payments from any such collaborators;

•the extent to which our business could be adversely impacted by the effects of the novel coronavirus ("COVID-19") outbreak, including actions by us, governments, our customers, our suppliers, or other third parties to control the spread of COVID-19, or by other health epidemics or pandemics;

•the costs associated with, and our ability to comply with, emerging environmental, social and governance standards;

•our ability to accurately forecast revenue, operating expenditures, or other metrics impacting profitability;

•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 for the fiscal year ended December 31, 2022, 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 herein 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 collaborations, alliances, business combinations, partnerships, strategic out-licensing of certain assets, the acquisition of preclinical-stage, clinical-stage, marketed products or platform technologies or other 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 Report on Form 10-Q in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (including the documents incorporated by reference therein) completely and with the understanding that our actual future results may be materially different from what we expect. These forward-looking statements speak only as of the date of this report. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking 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.

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES (UNAUDITED)

Amicus Therapeutics, Inc.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)


	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	160,602	$	148,813
Investments in marketable securities	106,507		144,782
Accounts receivable	68,178		66,196
Inventories	27,004		23,816
Prepaid expenses and other current assets	37,406		40,209
Total current assets	399,697		423,816
Operating lease right-of-use assets, net	28,483		29,534
Property and equipment, less accumulated depreciation of $22,901 and $22,281 at March 31, 2023 and December 31, 2022, respectively	31,406		30,778
Intangible assets, less accumulated amortization of $36 and $0 at March 31, 2023 and December 31, 2022, respectively	22,964		23,000
Goodwill	197,797		197,797
Other non-current assets	20,172		19,242
Total Assets	$	700,519	$	724,167
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	24,965	$	15,413
Accrued expenses and other current liabilities	92,747		93,636
Contingent consideration payable	12,668		21,417
Operating lease liabilities	8,005		8,552
Total current liabilities	138,385		139,018
Long-term debt	392,658		391,990
Operating lease liabilities	51,349		51,578
Deferred reimbursements	5,906		4,656
Deferred income taxes	—		4,939
Other non-current liabilities	9,648		8,939
Total liabilities	597,946		601,120
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 283,300,585 and 281,108,273 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	2,820		2,815
Additional paid-in capital	2,691,836		2,664,744
Accumulated other comprehensive loss:
Foreign currency translation adjustment	(6,543)		(11,989)
Unrealized loss on available-for-sale securities	(201)		(116)
Warrants	83		83
Accumulated deficit	(2,585,422)		(2,532,490)
Total stockholders’ equity	102,573		123,047
Total Liabilities and Stockholders’ Equity	$	700,519	$	724,167

See accompanying Notes to Consolidated Financial Statements

Amicus Therapeutics, Inc.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended March 31,
	2023		2022
Net product sales	$	86,270	$	78,715
Cost of goods sold	6,942		7,582
Gross profit	79,328		71,133
Operating expenses:
Research and development	41,499		81,517
Selling, general, and administrative	73,957		58,116
Changes in fair value of contingent consideration payable	251		(1,188)
Loss on impairment of assets	—		6,616
Depreciation and amortization	1,257		1,411
Total operating expenses	116,964		146,472
Loss from operations	(37,636)		(75,339)
Other (expense) income:
Interest income	2,199		133
Interest expense	(11,844)		(8,147)
Other (expense) income	(5,938)		1,902
Loss before income tax	(53,219)		(81,451)
Income tax benefit (expense)	287		(3,809)
Net loss attributable to common stockholders	$	(52,932)	$	(85,260)
Net loss attributable to common stockholders per common share — basic and diluted	$	(0.18)	$	(0.30)
Weighted-average common shares outstanding — basic and diluted	291,336,750		288,481,741

See accompanying Notes to Consolidated Financial Statements

Amicus Therapeutics, Inc.

Consolidated Statements of Comprehensive Loss

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2023		2022
Net loss	$	(52,932)	$	(85,260)
Other comprehensive gain (loss):
Foreign currency translation adjustment gain (loss)	5,446		(5,671)
Unrealized loss on available-for-sale securities	(85)		(338)
Other comprehensive gain (loss)	5,361		(6,009)
Comprehensive loss	$	(47,571)	$	(91,269)

See accompanying Notes to Consolidated Financial Statements

Amicus Therapeutics, Inc.

Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

(in thousands, except share amounts)


Three Months Ended March 31, 2023

	Common Stock			Additional Paid-In Capital		Warrants		Other Comprehensive Gain (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at December 31, 2022	281,108,273	$	2,815	$	2,664,744	$	83	$	(12,105)	$	(2,532,490)	$	123,047
Stock options exercised, net	384,108	3		2,652		—		—		—		2,655
Vesting of restricted stock units, net of taxes	1,612,975	—		(12,806)		—		—		—		(12,806)
Stock-based compensation	—	—		34,894		—		—		—		34,894
Issuance of shares in connection with at-the-market offering, net of issuance costs	195,229	2		2,352		—		—		—		2,354
Unrealized loss on available-for-sale securities	—	—		—		—		(85)		—		(85)
Foreign currency translation adjustment	—	—		—		—		5,446		—		5,446
Net loss	—	—		—		—		—		(52,932)		(52,932)
Balance at March 31, 2023	283,300,585	$	2,820	$	2,691,836	$	83	$	(6,744)	$	(2,585,422)	$	102,573


Three Months Ended March 31, 2022

	Common Stock			Additional Paid-In Capital		Warrants		Other Comprehensive Gain (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at December 31, 2021	278,912,800	$	2,808	$	2,595,419	$	83	$	4,981	$	(2,295,922)	$	307,369
Stock options exercised, net	145,449	1		858		—		—		—		859
Vesting of restricted stock units, net of taxes	1,075,607	—		(8,993)		—		—		—		(8,993)
Stock-based compensation	—	—		30,651		—		—		—		30,651
Unrealized loss on available-for-sale securities	—	—		—		—		(338)		—		(338)
Foreign currency translation adjustment	—	—		—		—		(5,671)		—		(5,671)
Net loss	—	—		—		—		—		(85,260)		(85,260)
Balance at March 31, 2022	280,133,856	$	2,809	$	2,617,935	$	83	$	(1,028)	$	(2,381,182)	$	238,617

See accompanying Notes to Consolidated Financial Statements

Amicus Therapeutics, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2023		2022
Operating activities
Net loss	$	(52,932)	$	(85,260)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount and deferred financing	667		637
Depreciation and amortization	1,257		1,411
Stock-based compensation	34,894		30,651
Non-cash changes in the fair value of contingent consideration payable	251		(1,188)
Foreign currency remeasurement loss	5,885		673
Deferred taxes	(4,939)		—
Asset impairment charges and other asset write-offs	—		6,616
Changes in operating assets and liabilities:
Accounts receivable	(1,367)		(1,000)
Inventories	(3,158)		1,812
Prepaid expenses and other current assets	1,839		3,332
Accounts payable, accrued expenses, and other current liabilities	(72)		(14,563)
Other non-current assets and liabilities	(394)		(1,436)
Net cash used in operating activities	$	(18,069)	$	(58,315)
Investing activities
Sale and redemption of marketable securities	54,944		108,328
Purchases of marketable securities	(16,747)		(49,244)
Capital expenditures	(1,942)		(871)
Net cash provided by investing activities	$	36,255	$	58,213
Financing activities
Payment of finance leases	(28)		(20)
Purchase of vested restricted stock units, net of taxes	(12,806)		(8,993)
Proceeds from stock options exercised, net	2,655		859
Proceeds from the issuance of shares in connection with at-the-market offering, net of issuance costs	2,354		—
Net cash used in financing activities	$	(7,825)	$	(8,154)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	$	1,507	$	(3,377)
Net increase (decrease) in cash, cash equivalents, and restricted cash at the end of the period	11,868		(11,633)
Cash, cash equivalents, and restricted cash at the beginning of period	153,115		249,456
Cash, cash equivalents, and restricted cash at the end of period	$	164,983	$	237,823
Supplemental disclosures of cash flow information
Cash paid during the period for interest	$	11,361	$	7,509
Cash paid for taxes	$	178	$	456
Capital expenditures unpaid at the end of period	$	1,260	$	72

See accompanying Notes to Consolidated Financial Statements

Amicus Therapeutics, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

1. Description of Business

Amicus Therapeutics, Inc. (the "Company") is a global, patient-dedicated biotechnology company focused on discovering, developing, and delivering novel medicines for rare diseases. The Company has a portfolio including the first, oral monotherapy for Fabry disease that has achieved widespread global approval and a differentiated biologic for Pompe disease, that is under regulatory review. The Company is committed to discovering and developing next generation therapies in Fabry and Pompe diseases.

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 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. AT-GAA is currently under review with regulatory authorities. In October 2022, the U.S. Food and Drug Administration ("FDA") deferred action on the BLA for cipaglucosidase alfa, citing the inability to complete the manufacturing site inspection prior to the PDUFA action date. In the second quarter of 2023, the FDA completed the required pre-approval inspection of the manufacturing site. The Company believes the comments and observations received at the close of the FDA inspection are all addressable. In March 2023, the European Commission ("EC") granted approval for Pombiliti™ (cipaglucosidase alfa) to be used in combination with miglustat for adults with late-onset Pompe disease ("LOPD"). In April 2023, the Committee for Medicinal Products for Human Use of the European Medicines Agency adopted a positive opinion on Opfolda™ (miglustat), the enzyme stabilizer component of AT-GAA. The regulatory submission process for AT-GAA in the U.K. was initiated in December 2022.

The Company continues to monitor the novel coronavirus (“COVID-19”) pandemic. The Company's commercial operations have not been significantly impacted by the COVID-19 pandemic and the Company gradually continues to see an improvement in patient identification and Galafold® initiation. The Company has maintained operations in all geographies, secured its global supply chain for its commercial and clinical products, as well as maintained the operational integrity of its clinical trials, with minimum disruptions. The Company has been able to continue to meet required commercial demand for Galafold® as well as supply its ongoing Pompe disease clinical studies and access programs including the Early Access to Medicines Scheme ("EAMS") without interruption. In regard to the Company's regulatory operations, the FDA deferred action on the pending BLA for cipaglucosidase alfa, as a site inspection was necessary, however, could not be completed by the PDUFA action date due to COVID-19 pandemic related travel restrictions. In the second quarter of 2023, the FDA completed the required pre-approval inspection of the manufacturing site. Per FDA guidance related to pre-approval inspections during the COVID-19 pandemic, receipt of a deferral action indicates no deficiencies have been identified and the application otherwise satisfies the requirements for approval.

The Company had an accumulated deficit of $2.6 billion as of March 31, 2023 and anticipates incurring losses through the fiscal year ending December 31, 2023. The Company has historically funded its operations through stock offerings, Galafold® revenues, debt issuances, collaborations, and other financing arrangements.

Based on its current operating model, the Company believes that the current cash position, which includes expected revenues, is sufficient to fund the Company's operations and ongoing research programs for at least the next 12 months. Potential impacts of the COVID-19 pandemic, business development collaborations, pipeline expansion, and investment in manufacturing capabilities could impact the Company's future capital requirements.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company has prepared the accompanying unaudited Consolidated Financial Statements in accordance with the U.S. generally accepted accounting principles ("U.S. 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 Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's interim financial information.

The accompanying unaudited Consolidated Financial Statements and related notes should be read in conjunction with the Company's financial statements and related notes as contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. For a complete description of the Company's accounting policies, please refer to the Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Consolidation

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions are eliminated in consolidation.

Foreign Currency Transactions

The functional currency for most of the Company'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'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' equity.

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 the COVID-19 pandemic had on its operations and financial results as of March 31, 2023 and through the issuance of these financial statements. 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 other comprehensive loss in the Company's Consolidated 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.

Concentration of Credit Risk

The Company's financial instruments that are exposed to concentration of credit risk consist primarily of cash, 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, cash equivalents, or marketable securities.

The Company is subject to credit risk from its accounts receivable related to its product sales of Galafold®. The Company's accounts receivable at March 31, 2023 have arisen from product sales primarily in Europe, the U.S., and Japan. 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. As of March 31, 2023, the Company's allowance for doubtful accounts was $0.1 million.

Revenue Recognition

The Company's net product sales consist primarily of sales of Galafold® for the treatment of Fabry disease. Galafold® sales for the three months ended March 31, 2023 and 2022 were $86.1 million and $78.7 million, respectively. 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 distributors and pharmacies, with the ultimate payor often a government authority.

The Company recognizes 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 estimates for variable consideration, which are third party discounts and rebates. The identified variable consideration is recorded as a reduction of revenue at the time revenue from the 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 estimates may differ from actual consideration received. The Company evaluates these estimates each reporting period to reflect known changes.

The following table summarizes the Company's net product sales disaggregated by geographic area:


	Three Months Ended March 31,
(in thousands)	2023		2022
U.S.	$	28,831	$	24,178
Ex-U.S.	57,439		54,537
Total net product sales	$	86,270	$	78,715

Inventories and Cost of Goods Sold

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 goods sold in the Company's Consolidated Statements of 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.

Intangible Assets and Goodwill

The Company records goodwill in a business combination when the total consideration exceeds the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is assessed annually for impairment on October 1 and whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. The Company first assesses the qualitative factors to determine if a quantitative test is necessary. If required, or if the Company elects to bypass the qualitative assessment, a quantitative goodwill impairment test is conducted. If it is determined the Company's single reporting unit's carrying value, including goodwill, exceeds its fair value, an impairment loss is recorded for the difference.

Finite-lived intangible assets are recorded at cost, net of accumulated amortization, and, if applicable, impairment charges. Amortization of finite-lived intangible assets is recorded over the assets’ estimated useful lives on a straight-line basis or based on the pattern in which economic benefits are consumed, if reliably determinable. The Company reviews finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment is determined, the Company writes down the asset to its estimated fair value and records an impairment loss equal to the excess of the carrying value of the asset over its estimated fair value in the period at which such a determination is made.

No indicators of impairment were noted during the three months ended March 31, 2023.

Recent Accounting Developments

The Company has evaluated recent accounting pronouncements and believes that none of them will have a material effect on the Company's Consolidated Financial Statements or related disclosures.

3. Intangible Assets

As of March 31, 2023, the Company's intangible assets consisted of lead enzyme replacement therapy assets acquired with the Callidus Biopharma, Inc. acquisition in 2013, previously accounted for as in-process research and development. In March 2023, as a result of the EC's approval of Pombiliti™, the Company began amortizing the assets over the initial regulatory exclusivity period of 7 years. The Company completed an impairment assessment before changing the classification to definite-lived intangible asset noting no impairment. Amortization expense for the three months ended March 31, 2023 was nominal. Total estimated amortization for the finite-lived intangible assets is estimated to be $2.5 million for the year ended December 31, 2023 and $3.3 million for the next four years thereafter.

4. Cash, Cash Equivalents, Marketable Securities, and Restricted Cash

As of March 31, 2023, the Company held $160.6 million in cash and cash equivalents and $106.5 million of marketable securities which are reported at fair value on the Company's Consolidated Balance Sheets. Unrealized holding gains and losses are generally reported within other comprehensive gain (loss) in the Company's Consolidated Statements of Comprehensive Loss. If a decline in the fair value of a marketable security below the Company's cost basis is determined to be other-than-temporary or if an available-for-sale debt security’s fair value is determined to be less than 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 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. 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 and money market funds, as well as fixed income investments 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, in accordance with Company policy, securities are of high credit rating. Investments that have original maturities greater than three months but less than one year are classified as current.

Cash, cash equivalents and marketable securities are classified as current unless mentioned otherwise below and consisted of the following:


	As of March 31, 2023
(in thousands)	Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Cash and cash equivalents	$	160,602	$	—	$	—	$	160,602
Commercial paper	106,109		14		(17)		106,106
Money market	350		—		—		350
Certificates of deposit	51		—		—		51
	$	267,112	$	14	$	(17)	$	267,109
Included in cash and cash equivalents	$	160,602	$	—	$	—	$	160,602
Included in marketable securities	106,510		14		(17)		106,507
Total cash, cash equivalents, and marketable securities	$	267,112	$	14	$	(17)	$	267,109


	As of December 31, 2022
(in thousands)	Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Cash and cash equivalents	$	148,813	$	—	$	—	$	148,813
Commercial paper	144,299		82		—		144,381
Money market	350		—		—		350
Certificate of deposit	51		—		—		51
	$	293,513	$	82	$	—	$	293,595
Included in cash and cash equivalents	$	148,813	$	—	$	—	$	148,813
Included in marketable securities	144,700		82		—		144,782
Total cash, cash equivalents, and marketable securities	$	293,513	$	82	$	—	$	293,595

For both the three months ended March 31, 2023 and the fiscal year ended December 31, 2022, there were no realized gains or losses. The cost of securities sold is based on the specific identification method.

Unrealized loss positions in the marketable securities as of March 31, 2023 reflect temporary impairments and are not a result of credit loss. Additionally, as these positions have been in a loss position for less than twelve months and the Company does not intend to sell these securities before recovery, the losses are recognized in other comprehensive gain (loss). The fair value of these marketable securities in unrealized loss positions was $37.6 million as of March 31, 2023. The Company had no securities in an unrealized loss position as of December 31, 2022.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company's Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Company's Consolidated Statements of Cash Flows.


	As of March 31,
(in thousands)	2023		2022
Cash and cash equivalents	$	160,602	$	233,317
Restricted cash	4,381		4,506
Cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows	$	164,983	$	237,823

5. Inventories

Inventories as of March 31, 2023 and December 31, 2022 consisted of the following:


(in thousands)	March 31, 2023		December 31, 2022
Raw materials	$	13,597	$	10,054
Work-in-process	5,823		9,615
Finished goods	7,584		4,147
Total inventories	$	27,004	$	23,816

The Company's reserve for inventory was $0.4 million as of both March 31, 2023 and December 31, 2022.

6. Debt

The Company's debt consists of the following:


(in thousands)	March 31, 2023		December 31, 2022
Senior Secured Term Loan due 2026:
Principal	$	400,000	$	400,000
Less: debt discount (1)	(4,190)		(4,571)
Less: deferred financing (1)	(3,152)		(3,439)
Net carrying value of Long-term debt	$	392,658	$	391,990

______________________________

(1) Included in the Company's Consolidated Balance Sheets within long-term debt and amortized to interest expense over the remaining life of the Senior Secured Term Loan using the effective interest rate method.

Interest Expense

The following table sets forth interest expense recognized related to the Company's debt for the three months ended March 31, 2023 and 2022, respectively:


	Three Months Ended March 31,
(in thousands)	2023		2022
Contractual interest expense	$	11,230	$	7,500
Amortization of debt discount	$	381	$	364
Amortization of deferred financing	$	286	$	273

7. Stockholder's Equity

During the three months ended March 31, 2023, the Company issued and sold an aggregate of 195,229 shares through its at-the-market equity program ("ATM program") at a weighted-average public offering price of $12.71 per share and received aggregate net proceeds of $2.4 million. As of March 31, 2023, an aggregate of $247.5 million worth of shares remain available to be issued and sold under the ATM program.

8. Stock-Based Compensation

The Company's Amended and Restated 2007 Equity Incentive 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 Board of 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's business. 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.

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 March 31,
	2023			2022
Expected stock price volatility	59.3		%	62.3		%
Risk free interest rate	3.9		%	1.5		%
Expected life of options (years)	5.5			5.3
Expected annual dividend per share	$	—		$	—

A summary of the Company's stock options for the three months ended March 31, 2023 were as follows:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Years	Aggregate Intrinsic Value
	(in thousands)				(in millions)
Options outstanding, December 31, 2022	19,064	$	11.31
Granted	4,854	$	11.94
Exercised	(384)	$	6.91
Forfeited	(81)	$	10.97
Expired	(16)	$	15.51
Options outstanding, March 31, 2023	23,437	$	11.51	7.0	$	22.8
Vested and unvested expected to vest, March 31, 2023	21,395	$	11.45	6.9	$	22.1
Exercisable at March 31, 2023	12,395	$	10.94	5.3	$	19.4

As of March 31, 2023, the total unrecognized compensation cost related to non-vested stock options granted was $47.1 million and is expected to be recognized over a weighted average period of three years.

Restricted Stock Units 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'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 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 three months ended March 31, 2023 is as follows:


	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, 2022	9,717	$	13.07
Granted	2,762	$	11.94
Vested	(2,532)	$	12.20
Forfeited	(517)	$	9.68
Non-vested units as of March 31, 2023	9,430	$	13.16	2.4	$	104.6

As of March 31, 2023, there was $63.8 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 two years.

Compensation Expense Related to Equity Awards

The following table summarizes information related to compensation expense recognized in the Company's Consolidated Statements of Operations related to the equity awards:


	Three Months Ended March 31,
(in thousands)	2023		2022
Research and development expense	$	8,490	$	9,365
Selling, general, and administrative expense	26,404		21,286
Total equity compensation expense	$	34,894	$	30,651

9. Assets and Liabilities Measured at Fair Value

The Company'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's recurring assets and liabilities aggregated by the level in the fair value hierarchy within which those measurements fall as of March 31, 2023 are identified in the following tables:


(in thousands)	Level 2		Total
Assets:
Commercial paper	$	106,106	$	106,106
Money market	6,631		6,631
	$	112,737	$	112,737


(in thousands)	Level 2		Level 3		Total
Liabilities:
Contingent consideration payable	$	—	$	12,668	$	12,668
Deferred compensation plan liability	6,281		—		6,281
	$	6,281	$	12,668	$	18,949

A summary of the fair value of the Company's recurring assets and liabilities aggregated by the level in the fair value hierarchy within which those measurements fall as of December 31, 2022 are identified in the following tables:


(in thousands)	Level 2		Total
Assets:
Commercial paper	$	144,381	$	144,381
Money market	5,808		5,808
	$	150,189	$	150,189


(in thousands)	Level 2		Level 3		Total
Liabilities:
Contingent consideration payable	$	—	$	21,417	$	21,417
Deferred compensation plan liability	5,458		—		5,458
	$	5,458	$	21,417	$	26,875

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 March 31, 2023 or December 31, 2022.

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-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.

Contingent Consideration Payable

The contingent consideration payable resulted from the acquisition of Callidus Biopharma, Inc. ("Callidus") in November 2013. The most recent valuation was determined using a probability weighted discounted cash flow valuation approach. Gains and losses are included in the Company's Consolidated Statements of 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 following significant unobservable inputs were used in the valuation of the contingent consideration payable of Callidus for the ATB200 Pompe disease program:

Contingent Consideration

Liability

Fair Value as of March 31, 2023

Valuation Technique

Unobservable Input

Range

(in thousands)

Discount rate

11.2%

Clinical and regulatory milestones

12,668

Probability weighted discounted cash flow

Probability of achievement of milestones

88%

Projected year of payments

2023

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 March 2023 associated with the EC granting approval for Pombiliti™, related to the contingent consideration of Callidus for the ATB200 Pompe disease program. The satisfaction of this milestone resulted in the milestone payment of $9.0 million being due, which is payable in cash and recorded as a component of accounts payable on the Company's Consolidated Balance Sheets as of March 31, 2023.

The following table shows the change in the balance of contingent consideration payable for the three months ended March 31, 2023 and 2022, respectively:


	Three Months Ended March 31,
(in thousands)	2023		2022
Balance, beginning of the period	$	21,417	$	20,339
Changes in fair value during the period, included in the Consolidated Statements of Operations	251		(1,188)
Milestone payment payable in cash	(9,000)		—
Balance, end of the period (1)	$	12,668	$	19,151

______________________________

(1) As certain milestones are expected to be reached within the next twelve months, the March 31, 2023 balance was recorded as a current liability in the Company's Consolidated Balance Sheets.

10. 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:


	Three Months Ended March 31,
(in thousands, except per share amounts)	2023		2022
Numerator:
Net loss attributable to common stockholders	$	(52,932)	$	(85,260)
Denominator:
Weighted average common shares outstanding — basic and diluted	291,336,750		288,481,741

Dilutive common stock equivalents would include the dilutive effect of outstanding common stock options and unvested RSUs. Potentially dilutive common 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 stock that were excluded from the computation as they were anti-dilutive using the treasury stock method:


	As of March 31,
(in thousands)	2023	2022
Options to purchase common stock	23,437	19,304
Unvested restricted stock units	9,430	10,351
Total number of potentially issuable shares	32,867	29,655

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

The following discussion should be read in conjunction with the unaudited Consolidated Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Some of the statements we make in this section are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Quarterly Report on Form 10-Q entitled “Special Note Regarding Forward-Looking Statements”. Certain risk factors may cause actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see the section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 entitled “Risk Factors”.

Overview

We are a global, patient-dedicated biotechnology company focused on discovering, developing, and delivering novel medicines for rare diseases. We have a portfolio including the first oral monotherapy for Fabry disease that has achieved widespread global approval and a differentiated biologic for Pompe disease that is under regulatory review. We are committed to discovering and developing next generation therapies in Fabry and Pompe diseases.

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 United 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. AT-GAA is currently under regulatory review. In October 2022, the U.S. Food and Drug Administration ("FDA") deferred action on the BLA for cipaglucosidase alfa, citing the inability to complete the manufacturing site inspection prior to the PDUFA action date. In the second quarter of 2023, the FDA completed the required pre-approval inspection of the manufacturing site. We believe the comments and observations received at the close of the FDA inspection are all addressable. In March 2023, the European Commission ("EC") granted approval for Pombiliti™ (cipaglucosidase alfa) to be used in combination with miglustat for adults with late-onset Pompe disease ("LOPD"). In April 2023, the Committee for Medicinal Products for Human Use ("CHMP") of the European Medicines Agency ("EMA") adopted a positive opinion on Opfolda™ (miglustat), the enzyme stabilizer component of AT-GAA. The regulatory submission process for AT-GAA in the U.K. was initiated in December 2022.

Our Strategy

Our strategy is to create, manufacture, test, and deliver the highest quality medicines for people living with rare 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. We are leveraging our global capabilities to develop and broaden our lead franchises in Fabry and Pompe disease, with focused discovery work on next generation therapies and novel platform technologies.

We continue to monitor the novel coronavirus ("COVID-19") pandemic. Our commercial operations have not been significantly impacted by the COVID-19 pandemic and we gradually continue to see an improvement in patient identification and Galafold® initiation. We have been able to continue to meet required commercial demand for Galafold® as well as supply our ongoing Pompe disease clinical studies and access programs including the Early Access to Medicines Scheme ("EAMS") without interruption. In regard to our regulatory operations, the FDA deferred action on the pending BLA for cipaglucosidase alfa, as a site inspection was necessary, however, could not be completed by the PDUFA action date due to COVID-19 related travel restrictions. In the second quarter of 2023, the FDA completed the required pre-approval inspection of the manufacturing site. Per FDA guidance relating to pre-approval inspections during the COVID-19 pandemic, receipt of a deferral action indicates no deficiencies have been identified and the application otherwise satisfies the requirements for approval.

Highlights of our progress include:

•Commercial and regulatory success in Fabry disease. For the three months ended March 31, 2023, Galafold® revenue was $86.1 million of consolidated revenue, which represented an increase of $7.4 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® as compared to treatment experienced patients. 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.

•Pompe disease program milestones. AT-GAA is under regulatory reviews. In March 2023, the EC granted approval for Pombiliti™ (cipaglucosidase alfa), a long-term enzyme replacement therapy ("ERT") used in combination with miglustat for adults with LOPD. In April 2023, the CHMP adopted a positive opinion on Opfolda™ (miglustat), the enzyme stabilizer component of AT-GAA. Additionally, multiple expanded access mechanisms are in place around the globe, including in the U.S., U.K., Germany, France, Japan, and others.

•Pipeline advancement and growth. We are leveraging our global capabilities to develop and broaden our lead franchises in Fabry and Pompe disease, with focused discovery work on next generation therapies and novel platform technologies.

•Financial strength. Total cash, cash equivalents, and marketable securities as of March 31, 2023 was $267.1 million. Based on the current operating model, we believe that the current cash position, which includes expected revenues, is sufficient to fund our operations and ongoing research programs for at least the next 12 months. Potential impacts of the COVID-19 pandemic, business development collaborations, pipeline expansion, and investment in manufacturing capabilities could impact our future capital requirements.

Our Commercial Product and Product Candidates

Galafold® (migalastat HCl) for Fabry Disease

Our oral precision medicine Galafold® was granted accelerated approval by the FDA in August 2018 under the brand name 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 has approved Galafold® for 350 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 (variant). The approved E.U. and U.K. labels include 1,384 mutations amenable to Galafold® treatment, which represent up to half of all patients with Fabry disease. In countries where mutations are provided only on the amenability website, these 1,384 amenable mutations are now available. Marketing authorization approvals as well as approvals for adolescents aged 12 years and older weighing 45 kg or more have been granted in over 40 countries around the world, including 4 new approvals in 2023. We plan to continue to launch Galafold® in additional countries during 2023, including for adolescents aged 12 years and older.

As an orally administered monotherapy, Galafold® is designed to bind to and stabilize an endogenous alpha-galactosidase A ("alpha-Gal A") enzyme in those patients with genetic variants identified as amenable in a Good Laboratory Practice ("GLP") cell-based amenability assay. Galafold® is an oral precision medicine intended to treat Fabry disease in patients who have amenable genetic variants, and at this time, it is not intended for concomitant use with ERT.

The Galafold® U.S. patent portfolio encompasses 49 Orange Book listed patents, including 8 composition-of-matter patents, of which 33 provide protection through at least 2038.

Next Generation for Fabry Disease

We are committed to continued innovation for all people living with Fabry disease. As part of our long-term commitment, we have an academic research collaboration agreement to explore next generation pharmacological chaperones for Fabry disease.

Novel ERT for Pompe Disease

We are leveraging our biologics capabilities to develop AT-GAA, a novel treatment paradigm for Pompe disease. AT-GAA consists of a uniquely engineered rhGAA enzyme, ATB200, or cipaglucosidase alfa, with an optimized carbohydrate structure to enhance lysosomal uptake, administered in combination with AT2221, or miglustat, that functions as an enzyme stabilizer. Miglustat binds to and stabilizes ATB200 preventing inactivation of rhGAA in circulation to improve the uptake of active enzyme in key disease-relevant tissues, resulting in increased clearance of accumulated substrate, ("glycogen"). Miglustat is not an active ingredient that contributes directly to glycogen reduction.

In February 2021, we reported topline results from the Phase 3 PROPEL study. Of the Pompe disease patients enrolled, 77% were being treated with alglucosidase alfa (n=95) immediately prior to enrollment (“Switch”) and 23% had never been treated with any ERT (n=28) (“Naïve”). Nearly all patients from the PROPEL study continue to be treated with AT-GAA in the extension clinical study. The clinical data from the PROPEL study, the extension study as well as the Phase 1/2 study were included in the AT-GAA submissions to the FDA and the EMA.

In October 2022 and February 2023, we reported positive long-term data from our ongoing phase 1/2 clinical study and Phase 3 open-label extension study, respectively. Phase 1/2 and 3 study participants treated with AT-GAA for up to 48 months and up to 2 years, respectively, demonstrated persistent and durable effects on six-minute walk test distance and measures of motor function and muscle strength, stability, or increase in forced vital capacity, and reductions in biomarkers of muscle damage and disease substrate.

In March 2023, the EC granted approval for Pombiliti™ (cipaglucosidase alfa) to be used in combination with miglustat for adults with LOPD. In April 2023, the CHMP adopted a positive opinion on Opfolda™ (miglustat), the enzyme stabilizer component of AT-GAA. The regulatory submission process for AT-GAA in the U.K. was initiated in December 2022.

In addition, we are conducting ongoing clinical studies in pediatric patients for both LOPD and infantile-onset Pompe disease ("IOPD") populations.

Next Generation for Pompe Disease

We are committed to continued innovation for all people living with Pompe disease. As part of our long-term commitment, we are also continuing discovery for next-generation genetic medicines for Pompe disease.

Additional Development and Next Generation Programs

We are researching potential therapies for CDKL5 deficiency disorder ("CDD"). We are collaborating with the LouLou Foundation to assess the natural history of the disease to identify endpoints for potential use in future studies. We also have a number of additional gene therapies in clinical and preclinical development, including potential gene therapies in multiple forms of Batten disease.

Strategic Alliances and Arrangements

We will continue to evaluate business development opportunities as appropriate to build stockholder value and provide us with access to the financial, technical, clinical, and commercial resources necessary to develop and market technologies or 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 strategic out-licensing of certain assets, or the acquisition of preclinical-stage, clinical-stage, or marketed products or platform technologies consistent with our strategic plan to develop and provide therapies to patients living with rare and orphan diseases.

Consolidated Results of Operations

Three Months Ended March 31, 2023 compared to March 31, 2022

The following table provides selected financial information for the Company:


	Three Months Ended March 31,
(in thousands)	2023			2022			Change
Net product sales	$	86,270		$	78,715		$	7,555
Cost of goods sold	6,942			7,582			(640)
Cost of goods sold as a percentage of net product sales	8.0		%	9.6		%	(1.6)		%
Operating expenses:
Research and development	41,499			81,517			(40,018)
Selling, general, and administrative	73,957			58,116			15,841
Changes in fair value of contingent consideration payable	251			(1,188)			1,439
Loss on impairment of assets	—			6,616			(6,616)
Depreciation and amortization	1,257			1,411			(154)
Other (expense) income:
Interest income	2,199			133			2,066
Interest expense	(11,844)			(8,147)			(3,697)
Other (expense) income	(5,938)			1,902			(7,840)
Income tax benefit (expense)	287			(3,809)			4,096
Net loss attributable to common stockholders	$	(52,932)		$	(85,260)		$	32,328

Net Product Sales. Net product sales increased $7.6 million during the three months ended March 31, 2023 compared to the same period in the prior year. The increase was primarily due to continued growth in the U.S., Europe and Japan markets, partially offset by the $3.8 million unfavorable impact of foreign currency exchange.

Cost of goods sold. Cost of goods sold includes manufacturing costs as well as royalties associated with net product sales. Cost of goods sold as a percentage of net product sales decreased 1.6% primarily due to the increased proportion of sales in countries not subject to royalties.

Research and Development Expense. The following table summarizes our principal development programs and the out-of-pocket, third-party expenses incurred:


(in thousands)	Three Months Ended March 31,
Projects	2023		2022
Third party direct project expenses
Galafold® (Fabry Disease)	$	2,644	$	3,620
AT-GAA (Pompe Disease)	15,776		26,978
Gene therapy programs	235		17,692
Pre-clinical and other programs	365		93
Total third-party direct project expenses	19,020		48,383
Other project costs
Personnel costs	18,252		25,675
Other costs	4,227		7,459
Total other project costs	22,479		33,134
Total research and development costs	$	41,499	$	81,517

The $40.0 million decrease in research and development costs was primarily driven by a decrease in gene therapy programs primarily due to contract exit costs in the prior year related to the strategic prioritization of our gene therapy portfolio and a decrease in Pompe disease program spend associated with timing of manufacturing costs. Personnel costs decreased in connection with the reallocation of resources to support our anticipated AT-GAA commercial launch and continued growth of Galafold®.

Selling, General, and Administrative Expense. Selling, general, and administrative expense increased $15.8 million, primarily driven by personnel costs in connection with the reallocation of resources to support our anticipated AT-GAA commercial launch and third-party professional fees.

Loss on Impairment of Assets. In connection with the strategic prioritization of our gene therapy portfolio in the prior year, the Company recognized a $6.6 million loss on impairment of assets for the three months ended March 31, 2022.

Interest Expense. The $3.7 million variance was due to a higher variable interest rate on debt period over period.

Other (Expense) Income. The $7.8 million variance was primarily related to foreign exchange losses caused by remeasurement of foreign-denominated balances.

Income Tax Benefit. We are subject to income taxes in various jurisdictions. The income tax benefit was primarily due to the recognition of a $4.9 million tax benefit in connection with a partial release of a valuation allowance on deferred tax assets resulting from the reclassification of in-process research and development to a definite-lived intangible asset.

Liquidity and Capital Resources

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 through stock offerings, Galafold® revenues, debt issuance, collaborations, and other financing arrangements.

Sources of Liquidity

In November 2022, we entered into a Sales Agreement with The Goldman Sachs & Co. LLC to create an at-the-market equity program ("ATM program") , pursuant to which we may offer to sell shares of our common stock having an aggregate offering gross proceeds of up to $250.0 million. During the three months ended March 31, 2023, we issued and sold an aggregate of 195,229 shares through our ATM program at a weighted-average public offering price of $12.71 per share and received net proceeds of $2.4 million. As of March 31, 2023, an aggregate of $247.5 million of shares remain available to be issued and sold under the ATM program.

Cash Flow Discussion

As of March 31, 2023, we had cash, cash equivalents, and marketable securities of $267.1 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 4. Cash, Cash Equivalents, Marketable Securities, and Restricted Cash," in our Notes to Consolidated Financial Statements.

Net Cash Used in Operating Activities

Net cash used in operations for the three months ended March 31, 2023 was $18.1 million. The components of net cash used in operations included the net loss for the three months ended March 31, 2023 of $52.9 million offset by $34.9 million of stock compensation, $3.1 million of other non-cash adjustments, and a net increase in changes in operating assets and liabilities of $3.2 million. The changes in operating assets and liabilities were primarily due to an increase in inventory of $3.2 million.

Net cash used in operations for the three months ended March 31, 2022 was $58.3 million. The components of net cash used in operations included the net loss for the three months ended March 31, 2022 of $85.3 million and an overall decrease in cash from changes in operating assets and liabilities of $11.9 million. The changes in operating assets and liabilities were primarily related to the payment of contract manufacturing and annual performance bonus. This was partially offset by $30.7 million of stock compensation and $8.1 million of other non-cash adjustments.

Net Cash Provided by Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2023 was $36.3 million. Our investing activities have consisted primarily of purchases, sales, and maturities of investments and capital expenditures. Net cash provided by investing activities reflects $54.9 million for the sale and redemption of marketable securities, partially offset by $16.7 million for the purchase of marketable securities and $1.9 million for capital expenditures.

Net cash provided by investing activities for the three months ended March 31, 2022 was $58.2 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 $108.3 million for the sale and redemption of marketable securities, partially offset by $49.2 million for the purchase of marketable securities and $0.9 million for capital expenditures.

Net Cash Used in Financing Activities

Net cash used in financing activities for the three months ended March 31, 2023 was $7.8 million. Net cash used in financing activities primarily reflects the purchase of vested restricted stock units of $12.8 million, partially offset by $2.7 million of proceeds from the exercise of stock options and $2.4 million of proceeds from the issuance of shares in connection with the ATM program offering, net of issuance costs.

Net cash used in financing activities for the three months ended March 31, 2022 was $8.2 million. Net cash used in financing activities primarily reflects the purchase of vested restricted stock units of $9.0 million, partially offset by $0.9 million of proceeds from the exercise of stock options.

Funding Requirements

We expect to continue to incur significant costs in 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: