Amarin Corporation PLC (AMRN) 2004 Q4 法說會逐字稿

Good morning, my name is April and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Fourth Quarter and Full-year 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. (OPERATOR INSTRUCTIONS).

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 Fourth Quarter and Full-Year 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 to Amarin’s Form 20F on file with the SEC.

Before Alan reviews the financial results of the quarter and the full year, I would like to highlight the significant progress made by Amarin through 2004.

2004 was a year of transformation for Amarin. The contrast from the beginning of the year to year-end is marked. We started the year as a heavily-indebted sales and marketing Company, and ended as a high-focus neuroscience R&D Company with a late-stage development pipeline, a clean balance sheet, and cash in the bank. The transformation came about through a series of transactions through the year.

Firstly, the sale of our U.S. operations in February 2004, which generated $38 million, and subsequent settlement of debt obligations allowed Amarin to substantially improve and simplify its balance sheet.

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 percent of Amarin.

Thirdly, we completed the acquisition of Laxdale, Amarin’s research and development partner in Huntington’s Disease. This transaction consolidates Amarin’s position in neuroscience product development. The immediate benefits include the acquisition of the rights to Miraxion for Huntington’s Disease, treatment of unresponsive depression, and a range of other compounds at earlier stages of development in the U.S., EU, and Japan.

Additionally, ownership of our own F&D capability allows substantial flexibility and time saving in the development process. Furthermore, we could substantially reduce the effective royalty Amarin would otherwise have paid from approximately 40 percent to 5 percent. And finally, Amarin has taken control of the development process, including Phase III trials.

Fourthly, a private placement of equity rating gross proceeds of $12.7 million was completed with a group of new and existing investors plus management.

Finally, we settled our dispute with Valeant whereby $6 million of the $8 million in future contingent milestone payments due to Amarin from Valeant were waived. The remaining $2 million became non-contingent and was paid by Valeant to Amarin on December 1 last year.

Our number 1 priority is the commencement of the Phase III clinical trials in Huntington’s Disease. As a reminder, 2 300-patient Phase III trials of 6-month duration are planned to commence in June of this year and will take place in the U.S. and EU. We are expecting the patient recruitment will take around 6 to 9 months with the last patient out of the trial in the third quarter of 2006, with our regulatory submission to follow shortly thereafter. Miraxion has been granted fast-track status by the FDA; thus assuming the trials are successful, we expect a 6-month approval timeframe.

The protocol for the U.S. trials has been completed, and discussions will commence with the FDA in the near future to approve the protocol. As these studies are so significant in both size and importance, Amarin will use a CRO to supplement its internal resources. Timing of the actual commencement of the trials is obviously subject to the timing of approval of various Ethics Committees of the trial centers. Trial center selection has commenced in the U.S. and discussions are already underway in EU.

A significant amount of work has been completed since the acquisition of Laxdale, which is now being renamed Amarin Neuroscience, both in the understanding of how Miraxion actually works, i.e., the mechanism of action, and then utilizing that knowledge for the upcoming Phase III studies.

Miraxion is a pharmaceutical grade highly-purified derivative of eicosapentaenoate acid, otherwise known as EPA, which is manufactured at an FDA-approved pharmaceutical facility in Japan using a process that is patented. The 97 percent highly-purified level for which Amarin has a wide patented state, Miraxion acts on the mitochondrial cell membranes in Huntington’s Disease.

The purity of Miraxion is critical to the mechanism of action by what is known as the cascade of mitochondrial dysfunction. Progressive mitochondrial dysfunction is a characteristic of Huntington’s Disease, leading to what are know as suffering neurons, which cause early chemical clinical symptoms. Ultimately, as the disease progresses, suffering neurons die, leading to late clinical manifestation of symptoms. Miraxion acts to slow the progression of suffering neurons to cell death leading to a functional improvement in neurons and symptom stabilization or improvement. Miraxion effectively stabilizes mitochondrial cell membranes in the neuron, improving patient motor function symptoms.

Miraxion has been through a pre-clinical program and continues to go through its clinical testing phase in order to meet the strict criteria for approval by the FDA and other regulatory authorities. The mechanism of action in Huntington’s Disease is different from that in depression where we understand that the compound acts on cell membrane composition altering chemical imbalances in the brain.

Data analysis of 3 Phase II-A treatment-unresponsive depression trials was released in January. These consisted of 2 trials which used standard depression treatment, SSRIs in combination with Miraxion, plus 1 mono-therapy trial using Miraxion alone. The data were particularly interesting as they were consistent across all 3 clinical trials, and identified patients with melancholy depression as the optimum responders. Melancholy depression is a severe form of depression affecting approximately 20 to 25 percent of all depression patients.

That data analysis was statistically significant across all depression scales and showed clinical benefit in terms of depression, anxiety, sleep, weight loss, and suicidality. Importantly, there was no sexual dysfunction effect of an experience with standard therapy. Amarin is being conservative about these results because false-positive results are frequent in relatively small patient population clinical trials. However, the consistency of response in melancholy depression patients across these trials give us cause for optimism. Additional analysis is being performed on a further 3 completed Phase II-A trials to further verify the consistency of results.

Amarin is currently in the initial planning stages of a larger Phase II trial in treatment of unresponsive depression consisting of around 200 to 300 patients. Finalization of the trial will require input from our development and marketing partner. As mentioned previously, initial discussions are taking place with potential partners, and we will update you on progress at the appropriate time.

I will now hand you over to Alan who will review the financial results for the fourth quarter and full year 2004.

Thank you Rick. I will now address the key highlights of our financial results for Q4 and full year ’04 which are set out in more detail in today’s press release.

For the fourth quarter, Amarin reported a net loss, including discontinued activities, of $4.8 million compared with a net loss of $2.8 million in the fourth quarter of 2003. For the full year, Amarin reported net income, including discontinued activity of $4.7 million compared to the net loss of $19.3 million in ’03.

We have analyzed the results into 2 categories, continuing and discontinued activities. For continuing activities, the operating loss for the fourth quarter increased to $5 million from $0.9 million in the fourth quarter of ’03. Similarly, the operating loss from continuing activity for the full year ’04 increased to $9.6 million from $6.2 million in 2003. The increase for both periods in primarily due to the inclusion of Laxdale’s operating expenses in Q4 of $2.2 million for the first time; the inclusion of the previously-announced non-recurring payment of $0.9 million to Scarista Limited; and the high level of professional fees we incurred due to the Scarista Limited corporate activity during the 2004 period.

With respect to our discontinued activities, Amarin incurred a loss of $0.7 million in Q4 of ’04, representing primarily the year-end finalization of the loss on disposal of our U.S. operation. For the full year 2004, Amarin earned a process before interest and tax of $21.1 million on its discontinued activities compared to the net loss of $19.5 million in ’03. The 2004 results for discontinued activities were flat.

The results of Amarin’s former U.S. operation prior to its disposal in February ’04, the exceptional loss of $3 million on the disposal of those U.S. operations, and exception gain of $25 million on the settlement of debt obligation to Elan, the previously-announced estimate of the dispute with Valeant, and the costs incurred by Amarin in relation to the completion of safety studies on Zelapar. This obligation to Valeant in relation to Zelapar has been fulfilled, and Amarin will not incur any more development costs on Zelapar.

The 2004 results also include a non-cash deferred tax accounting charge of $7.5 million on the exceptional gain on the settlement of debt obligations to Elan. This non-cash tax charge offsets an equivalence non-cash tax credit income statement in the fourth quarter of ’03.

Finally, the Q4 results include the relief of an accrual of $0.6 million for a dividend on previously outstanding preference shares. Amarin now has no preference shares outstanding. They were all converted to ordinary shares over 2 years ago. On conversion, the preferential shareholders gave up their preferential rights, including any rights to an accrued dividend in exchange for the new ordinary shares allotted.

Following the settlement of our debt obligation from 2004, there is no longer a need to maintain the accrual for a preference dividend. Our result has been written back to the income statement.

Before passing back to Rick, let me briefly address Amarin’s financial strategy and capitalization. At December 31, 2004 Amarin had cash of $11 million. Amarin is forecast to have sufficient cash to fund the group’s operating activities, including the planned Phase III trials for Miraxion in Huntington’s Disease through the end of 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 partnering activities.

A previously described, Amarin is seeking to partner the rights to its development platform for all indications, including depression, neurology and for geographic markets outside the U.S.

With respect to our capitalization, Amarin now has a total debt of $2 million that may converted into equity at the option of the holder of the offering price of any future equity financing. If not converted, it has a cash maturity in 2009. Amarin currently has 37.5 million shares in issue.

With that, I’ll pass it back to Rick.

We have focused extensively on Amarin’s late-stage development pipeline during this call. Additional compounds in women’s depression and Multiple Sclerosis fatigue are in early stages of development and show promise. Our evaluation of these compounds and compounds for further clinical trials is continuing. Additionally, a pre-clinical program is ongoing utilizing our Combinatorial Lipid technology to develop potential next-generation product opportunities.

Amarin’s overall strategy has 3 key component; firstly, to develop and directly market neurology products for the U.S. market; secondly to partner Amarin’s neuroscience pipeline for indications outside neurology, and for geographic markets outside the U.S.; and thirdly, to end-license novel technology compounds for the U.S. market.

As for Amarin’s short-term objectives for 2005, these are clear; commence the Huntington’s Disease Phase III clinical trials by mid-2005; and treatment of unresponsive depression, we will complete the further analysis of results for the completed trials, and aim to form a strategic collaboration for the developing and marketing partner; and finally, we will aim to commence an additional clinical program either from our existing pipeline of from end-licensing.

We will now take questions.

(OPERATING INSTRUCTIONS). At this time there are no questions.

(OPERATOR INSTRUCTIONS). At this time there are no questions.

Okay April, thank you for that. Well, I’d like to thank you for joining our Q4 2004 and full-year earnings conference, and we look forward to updating you later in the year. Thank you.

This concludes today’s conference call. You may now disconnect.