Amarin Corporation PLC (AMRN) 2004 Q3 法說會逐字稿

Good morning, my name is Tamara and I'll be your conference facilitator today. At this time, I would like to welcome every to the Amarin Corporation Third Quarter Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Mr. Stewart, you may begin your conference.

Good morning, this is Rick Stewart, Chief Executive Officer of Amarin. I would like to welcome you to our Third Quarter 2004 Earnings Conference Call. I'm joined by Alan Cooke, Amarin's Chief Financial Officer. As a reminder, this call may contain forward-looking statements, that are subject to inherent risks and uncertainty. For more information I refer you to the Safe Harbor statement on our website, and Amarin's form 20F on file with the SEC.

Before Alan reviews the financial results of the quarter, I would like to highlight the significant progress made by Amarin in recent months. The third quarter was busy, as you'll have seen from the announcements. In September and early October, Amarin completed a series of transactions that removed a substantial level of uncertainty for our investors and employees, restoring confidence about our future strategy and direction. Amarin is now well positioned to take advantage of the significant opportunity presented by our development pipeline in Huntington's Disease, treatment unresponsive depression, and potentially other neurological indications. We can now embark on the implementation of our clearly defined strategy, we will see Amarin emerge as a leader in the selected therapeutic area of neuroscience.

The key transactions include, firstly, a private placement of equity raising gross proceeds of $12.75 million was completed with a group of new, and existing investors plus management. Secondly, Tom Lynch, Amarin's Non-Executive Chairman, acquired the entire debt and equity interest held in Amarin by Elan. Tom now owns approximately 20% of Amarin. This transaction removed a significant overhang from the equity market, as Elan had said publicly it intended to liquidating its portfolio of equity investments in specialty and biotech companies like Amarin. $3 million of the outstanding $5 million loan note was converted to equity, leaving total indebtedness of just $2 million, with a cash maturity in 2009. Thirdly, we completed the acquisition of Laxdale, Amarin's research and development partner. This transaction consolidates Amarin's possession in neuroscience product development. It represents an important step in the implementation of our strategy to emerge as a leader in the development and commercialization of novel drugs for treatment of neurological disorders.

In addition, the acquisition broadens Amarin's development pipeline to include rights to Miraxion for all central nervous system disorders, including Huntington's Disease, and treatment unresponsive to depression. These right now include the U.S., EU, and Japan, together with existing licensee relationships for the major European markets and Japan. Ownership of our own neuroscience R&D capability significantly strengthens opposition when negotiating with potential strategic collaborators and allows control over the development process for Miraxion.

Finally, we settled our dispute with Valeant, whereby $6 million of $8 million in future contingent milestones due to Amarin from Valeant were waived. The remained $2 million due is now no longer contingent and is payable to Valeant on the 30th of November on 2004.

The collective impact of these transactions is to remove a substantial degree of uncertainty for our investors and employees, and to enable the company to focus on the significant opportunities at hand, namely bringing our development pipeline to the collective market. I'll now hand over to Alan who will review the financial results for the quarter.

Thank you. I'll now address the key highlights of our financial results for the third quarter, which are set out in more detailed in today's press release.

The net loss for the quarter, including discontinued activity, was $1.2 million or 6 cents per share, compared to the net loss of $5.8 million, or 32 cents per share in the third quarter of 2003. We've analysed the result into two categories, continuing and discontinued activities. The operating loss from continuing activities for the third quarter of this year $1.4 million, compared to 1.5 million in the third quarter of '03. The operating loss represents head office operating expenses, business and corporate development costs and Miraxion's product rights amortization With respect to Amarin's discontinuing activities, Amarin earned a profit of $300,000 compared to loss of $4.1 million in the third quarter of '03.

The results for the discontinued activities for the quarter reflect four key items. Firstly, the final costs incurred by Amarin relating to the completion of safety studies on Zelapar. This obligation has now been fulfilled and Amarin will not incur any development costs on Zelapar. Secondly, the settlement of the outstanding suit with Valeant described by Rick earlier. Thirdly, final $1 billion payment to Elan, and finally, the receipt of $400,000 from Watson representing the final installment of the proceeds of sale of Amarin's Swedish drug delivery business, in October, 2003. The results of the discontinued activities for the comparative quarter, and the comparative nine month period, reflects the results of Amarin U.S. business and the results of Amarin's Swedish drug delivery business, that were filled in February '04 and October of '03 respectfully.

Before we passing back to Rick, let me briefly address Amarin's financing strategy and capitalization. At September 30, 2004, Amarin had cash of $2.8 million. This together with the $12.75 million raised last month provides Amarin with sufficient cash to fund the group's operating activities, including the planned Phase Three trials for Miraxian in Huntington's disease through the summer of 2005. Amarin's financing strategy will depend on the timing of clinical trial expenditure and on the level of revenue generated from its licensing and partner activities. Previously described Amarin is seeking to partner the rights to its development pipeline for all indications including depression, outside of neurology and for few graphic markets outside the United States. Amarin plans to directly commercialize its pipeline in neurology in the U.S. market.

With respect to our capitalization, Amarin now has total debt of $2 million that may be converted to equity at the option of the holder, at the offering price of any equity financing. It's not converted, it has a cash maturity in 2009. Amarin currently has 37.6 million shares in issue, this includes the product placement of 13.5 million shares, the conversion of $3 million of the outstanding loan notes into 2.7 million shares, and the issuance of 3.5 million shares on the acquisition of Laxdale.

Let me now toss you to Rick.

Before moving to questions and answers, I would like to reiterate Amarin's strategy and objectives. Amarin's lead product, Miraxion is in Phase III for Huntington's and Phase II for depression. Our immediate focus is on finalizing Miraxion's Phase III protocol and commencing trials in Huntington's disease in the first half of next year. We also plan to progress Miraxion depression program, which is now in the Phase II stage, by seeking a [partner] for that indication. Ultimately, we intend to leverage our development capabilities by supplementing our internal development pipeline to acquiring and/or in-licensing late stage compounds of the neuroscience diseases where Amarin has direct capabilities.

With respect to our commercial plans, Amarin will directly commercialize it's neurology product in the U.S. where it already has a reputation and experience. As Miraxion gets closer to market, we will build a close U.S. sales force to target the special neurology market. We plan to out license or partner our neurology pipeline for the EU and Japan, and globally for indications outside neurology such as depression. While Amarin's medium term objectives include seeking a partner for Miraxion in depression, and in-licensing additional neurological, our immediate and unwavering focus will be on commencing the Phase III trials with Miraxion in Huntington's Disease in the first half of next year.

We will now take questions. If you would like to open up the line, Tamara.

At this time I'd like to remind everyone, in order to ask a question, press star, for the number one on your telephone keypad. We'll pause a moment to compose the Q&A roster. Your first question comes from Don Gher with Goldstream Capital.

Hi, Rick. Question on the debt. I assume that the 2 million you are discussing is all that's left at this point? And so, what are the terms on that?

The $2 million of debt is the only debts we have, and the terms are that it's an 8% and it's due in January 2009, however, the holder has the option, which is our Chairman, Tom Lynch, the option to convert that $2 million into equity at any time we do a further equity financing. And it could converted as part of that financing.

From a cash flow standpoint, are you actually paying the interest out on a semi-annual or annual basis?

Semi-annual.

Okay. And then second question, in terms of the pipeline at this point, still just the Laxdale product is the only product in the pipeline, or have you identified others that you are going after or already have secured?

That's a good question. I think the two aspects to it, the first one is we frankly closed the Laxdale transaction just a little bit over a month ago. Our focus was primarily on Miraxion for Huntington's disease, and to some degree, clearly, the treatment to unresponsive depression indication. What we're doing at the moment is two things. One is further exploring the pipeline at Laxdale to identify exactly the state of the development of the individual programs and also investigate further some of the earlier stage science. So that program is an -- is ongoing right now. Additionally, over the last couple of years or so, we have identified a number of compounds which are attractive to Amarin, and a number of discussions have been held, but quite frankly, right now, our immediate focus is really on getting the Huntington's Disease protocol agreed and the Phase III started at the same time exploring the pipeline. As opportunities occur to in-license and acquire other products they will be taken up.

Just a final question on the Miraxion. Where are the Huntington disease trials being conducted?

Again, very good question. The initial program right now is very much focused on, in the U.S.. As you may remember, there are two Phase III studies which will be conducted. One of those is certainly going to take place in the U.S., the current time, the second Phase III, I would think predominantly will take place in the U.S. but will somewhat dependent on patient recruitment. And we will actually look to expand that into Canada and potentially into Europe as well. Thanks.

Your next question come from David Olson with Security Research.

It's Ted Gamaal, could you explain where things stand with the EU filing for Miraxion for Huntington's Disease?

The filing was made in July of 2003 and has been through a review process with the European authorities. The process of evaluation is somewhat different from the U.S., but to summarize, we have had --received a number of responses from the European authorities, and we are expecting, we responded to all of questions that have been raised, and we are expecting to have a further review with the European authorities early in 2005. I think that as I said in the past, the European filing was made on the basis of the initial Phase III data, and I would say that some of the responses that we've received from EMEA reflect some of the issues around that initial data. However, having said that, the additional piece of data that was included in the European filing was the impact of the gene subvariant of Huntington Disease patients who had identified DNA, a further data analysis of the initial Phase III. So what we have at the moment is a further review of the European filing early in the new year, next year, and thereafter will determine that the next source of action.

A follow up question if I may. When will you expect to have a Phase III protocol established for unresponsive depression?

Where we are with unresponsive depression right now, Ted, is five Phase II studies have been done, and we have identified a response in the majority of those studies. What we are doing at the moment is further data analysis on those Phase III studies and to determine whether a larger Phase II study is required or indeed, whether it is appropriate now to go forward with a Phase III study. The reason for that decision is quite simply that the five Phase II studies have been completed have been pretty small. The largest of which was a 70 patient dose ranging study which could identify a response. So as a result of the data, evaluation that is currently underway, we will make a determination whether we to a further, bigger Phase II with a partner, or whether we proceed to Phase III study. It could well be a hybrid, to be honest, it could be a Phase II-B, Phase III. But that is yet to be determined. I would expect that we will be in a position to make that determination probably late in the first quarter of next year, but that timing is somewhat dependent on the contribution from a partner if we have one at that time. Our expectation, by the way, is it will be our determination, we're not expected to sign up with a partner until late next year, so I think what we'll do is look at the two alternatives in isolation, a bigger Phase II and also do some Phase III planning as well.

Good.

What we don't want to do is devote time, effort, and more importantly expense, to designing a study which our future partner then says they want to do it differently.

Again, to ask a question, please press star then the number one on your telephone keypad. Your next question comes from Michael Richmond, private investor.

My question for you is is there any relationship continuing with Elan Corporation?

Let me -- The only relationship that continues will cease as of 30th of November as far as on receipt of $2 million, 2 million-dollar payment from Valeant on the third of November. We have an obligation to pay Elan 1 million of that 2 million. Thereafter, there is no equity investments by Elan, no debt relationship, so at that point, the relationship is ceased.

Is there any relationship with product contribution to what Elan is doing?

None.

Thank you.

At this time, there are no if you are questions. Are there any closing remarks?

I would like to thank you for joining the third quarter conference call, and we look forward to talking to you again with more progress with a fourth quarter results and full year. Thank you very much.

This concludes the Amarin corporation Third Quarter Earnings Results Conference Call. You may now disconnect.