Amarin Corporation PLC (AMRN) 2005 Q1 法說會逐字稿

Good morning. My name is Pamela (ph) and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Amarin Corporation first-quarter 2005 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer period. (OPERATOR INSTRUCTIONS) Mr. Stewart, you may begin your conference.

Good morning. This is Rick Stewart, Chief Executive Officer of Amarin. I'd like to welcome you to our first-quarter 2005 earnings conference call. I am joined today by Alan Cooke, Amarin's Chief Financial Officer. As a reminder, this call may contain forward-looking statements that are subject to inherent risk and uncertainty. For more information I refer you to the Safe Harbor statement on our website and to Amarin's 2004 20-F on file with the SEC.

The first quarter of 2005 has been notable for its many achievements which have followed on from the successes of 2004. In summary, Amarin is now debt free, has cash in the bank with which to commence the Miraxion Phase III clinical trials in Huntington's disease as a very encouraging treatment for unresponsive or difficult to treat depression, which has already completed four Phase IIa trials, and a rich pipeline of early stage compounds, which are showing promise including tardive dyskinesia, Lou Gehrig's and Parkinson's disease.

We intend to maintain this ongoing momentum with the upcoming commencement of the Phase III clinical trials in Huntington's disease, further progress with unresponsive or difficult to treat depression by Phase II planning and out-licensing activity, plus additional out-licensing activities related to non-core development programs. We will focus, in this call, on the achievement of our recent key objectives, which were the planning and preparation for the Huntington's disease Phase III clinical trials; the continuing analysis of encouraging data from four Phase IIa clinical trials and unresponsive or difficult to treat depression; the planning and execution of the $17.8 million financing completed this week to fund the clinical trials, which Allen will talk about in more detail; finally, the continuing integration process of what are now known as Amarin Neuroscience.

Firstly, to bring investors up-to-date, the Huntington's disease clinical trials are in an advanced state of preparation and planning. As a reminder, two Phase III trials are planned; one in the U.S. with 300 patients and the other in Europe with 240 patients. An enormous amount of energy and resource have been applied in the setup of these trials. In the U.S., 43 clinical trial sites have now been selected and there will be up to 28 in Europe. Investigators have been recruited in the U.S. and an investigators meeting will take place on the 8th and 9th of June. The U.S. trial will be conducted on Amarin's behalf by the Huntington Study Group, which is an organization of the leading Huntington's disease clinicians and other healthcare providers in the U.S. and Canada.

In Europe, the trials will be conducted in collaboration with EURO-HD and a leading contract research organization. We greatly appreciate that two such respected organizations are collaborating with Amarin on these important trials. The trials will last six months and the U.S. trial will have a further six-month extension period. The regulatory submission for marketing approval will use data at the six-month time period. We're expecting that full recruitment of the trials will take approximately six to nine months and we expect that the last patient completion in the trial will be late in the third quarter of 2006. Regulatory submission for marketing approval will take place soon thereafter.

A European trial timeline is approximately eight weeks behind that of the U.S. Miraxion has alternate drug status in the U.S. and Europe giving it seven years of marketing exclusivity in the U.S. and up to 10 years in Europe. In addition, Miraxion has fast-track designation from the FDA. Discussions with the FDA on the clinical trial protocols have been productive and the revised protocols incorporating FDA comments have been resubmitted for final approval of this special protocol assessment, which is a binding agreement between Amarin and FDA.

We have incorporated the critical lessons learned from the earlier clinical trials into the new protocols and trial design. Importantly, we identified the specific subgroup of Huntington's disease patients representing approximately 70% of all patients. We showed clinical benefit using Miraxion. On average, in the earlier trial, we showed an improvement in quality of life of approximately three years in these patients. This permitted a significant improvement in their activities of daily living and reduction in their reliance on assisted care.

The new trials focus on this responsive subgroup of Huntington's disease patients. We learned to bring in the experts in the field. Clinical development is a collaborative venture and these trials, with a total of 540 patients, require significant expertise, experience, and resources. That why we're grateful to HSG, EURO-HD, and other interested parties for their energy and enthusiasm in moving ahead.

We're very excited to have reached this pivotal point in the Huntington's disease program and look forward to updating you as the final steps are made toward trial commencement.

Turning briefly to unresponsive or difficult to treat depression. Frankly, the consistent data analysis in full Phase IIa trials is very encouraging. We have positive data from Miraxion when used both as adjunct therapy to existing standard depression treatment or when used standalone as monotherapy. What is compelling is that patients which did not respond to standard treatment actually responded when used in combination with Miraxion.

In addition, there was no sexual dysfunction side effect, which is often prevalent with selective serotonin reuptake inhibitors, or SSRIs. Our analysis identified that the more severely ill depression patients, sometimes referred to as having melancholy features who are frequently hospitalized, show the most significant benefit from taking Miraxion. In the two published trials in unresponsive depression patients with major depression, Miraxion in combination with standard therapy has shown significant clinical benefits in patients.

In addition, the monotherapy trial showed a particular promising response in those severely ill patients with melancholic features. Amarin has now completed its data review and is in the process of compiling the due diligence package for potential licensing partners which have already approached us.

Allen will now talk you through the first-quarter results and the successful $17.8 million financing completed this week.

Thank you, Rick. I will now address the key highlights of our financial results for Q1, which are set out in more detail in today's press release. For the first quarter, Amarin reported a net loss of $3.4 million compared to the net loss, before exceptional items, of $2.3 million in the first quarter of last year. In the comparative quarter of last year, Amarin had exceptional items amounting to an after-tax net gain of $15.1 (ph) million.

We have analyzed the results into two categories, continuing and discontinued activities. The results for this quarter entirely represent continuing activities. The operating loss for this quarter increased to 3.3 million from 1.6 million for continuing activities in the first quarter of last year. The increase is primarily due to the inclusion of Amarin Neuroscience's R&D expenses of $1 million and SG&A expenses of $0.4 million following its acquisition in October of last year.

Amarin Neuroscience's operating expenses primarily reflect the cost of research and development activities and the cost of maintaining and renewing Amarin's portfolio of intellectual property. Amarin's results for this quarter have no amounts for discontinued activities. With respect to the comparative first quarter of last year for discontinued activities, Amarin reported a profit, before interest and tax, of $22.9 million reflecting primarily the result of and loss on the disposal of Amarin's former U.S. operations in February last year and the exceptional gain on the settlement of debt obligation to Elan.

Before passing back to Rick, let me address Amarin's financing strategy and capitalization. At the end of the first quarter, Amarin had cash of $6 million. Earlier this week, Amarin raised gross proceeds of $17.8 million to the completion of a registered offering of 13.7 million shares. After offering fees, expenses, and the redemption of the remaining $2 million of loan notes, the net proceeds to Amarin were approximately $14.7 million. Simultaneous with this registered offering, the $2 million of loan notes on the balance sheet at the end of the first quarter were effectively converted into equity by Amarin's Chairman, Mr. Thomas Lynch, pursuant to an existing agreement with the Company.

As a result of this transaction, Amarin now has no debt other than working capital liabilities. Amarin's future financing strategy will depend on the timing of clinical trial expenditure and on the level of revenue generated from our licensing of partnering activities. As previously mentioned, Amarin is seeking to partner the rights to its development pipeline for all indications, including depression, outside of neurology and for geographic markets outside the U.S.

With respect to our capitalization, Amarin has no debt and we currently have 51.4 million shares in issue. This includes the 13.7 million shares issued in this week's financing. Let me now pass you back to Rick.

Thank you, Allen. Turning now to that final key objective for the first quarter, the continuing integration of Amarin Neurosciences. Our activities have clearly been focused on progressing the clinical trials in Huntington's disease and the data analysis in unresponsive depression. In addition, considerable energy has been applied to examining and exploiting the substantial intellectual property portfolio, which extends beyond neuroscience into such areas as cardiovascular, oncology, anti-inflammatory, and diabetes.

The evaluation of the IP portfolio is now nearing completion and we intend to prioritize core IP for Amarin in neuroscience and to exploit non-core via licensing activities. In addition, a considerable number of pilot clinical trials have been historically completed in areas such as tardive dyskinesia, anorexia, and attention deficit hyperactivity disorder. We are carefully analyzing these results and non-core programs will be partnered allowing Amarin to retain significant economic benefit in the future.

In summary, Amarin's development programs are moving ahead rapidly with three core areas of priority. Firstly, Huntington's disease Phase III trials to start in mid-year. Secondly, depression out-licensing, which will take place on completion of the due diligence data pack and negotiation with partners. And finally, completion of the data evaluation from the historic pilot clinical trials and to determine the appropriate future action.

Just to reiterate, Amarin is now debt free, has cash in the bank to proceed with the Huntington's disease Phase III trials, has a promising Phase II compound in treatment to unresponsive depression, which is a significant opportunity in an enormous market, and has a rich pipeline of earlier stage compounds, which could be exploited or out-licensed.

We look forward to updating you with progress throughout the second quarter. We will now take questions. Pamela (ph)?

(OPERATOR INSTRUCTIONS). Joan Ank (ph) with DGI (ph).

I have a couple of questions and they all relate to Miraxion. I guess my first question is what exactly is Miraxion? Is this a fish oil? How safe is it? How does it work? Does it stop the disease? And in context with this Rick, maybe you can just give me an idea of what the symptoms of Huntington's disease are and when do they typically appear?

Okay. Joan, let me just write these down. Miraxion, what is it?

How safe is it?

Fish oil, safety, and how does it work. Okay. What is it? Miraxion itself is a ultra-pure semisynthetic compound called eicosapentaenoic acid, eicosapentaenoic acid. It is highly purified and manufactured in an FDA approved facility in Japan. The comparison to fish oil is one that we often come up against. Whilst fish oil is a raw material ingredient, the kind of analogy that I like to use is quite simply that by the time the chemical processes have been completed in terms of refining and purifying, the ethyl EPA element of fish oil, the resemblance to fish oil is nonexistent. There are a number of drugs which are currently on the market which have a derivative from a naturally occurring substance. The most commonly known is aspirin. Aspirin was originally discovered and derived from willow bark. So the comparison of aspirin to willow bark is virtually nonexistent.

Bringing us up-to-date, perhaps Taxol is a better example. Taxol is used for the treatment of cancer. It is actually derived from the yew tree. So by the time Taxol has gone from the yew tree to being Taxol, the resemblance is virtually nonexistent. The key here is that in the semisynthetic process that Miraxion actually goes through in terms of becoming ultra-pure, 97% pure ethyl eicosapentaenoic acid, is the absolute purity that is critical in achieving the response in motor dysfunction that we have seen in Huntington's patients.

Really, coming onto the second part of the question, how does it work? What we believe is that the Miraxion acts as a mitochondrial cell membrane stabilizer. Effectively what it is doing is too slow the cell death process that actually takes place as a result of the onset of Huntington's disease. And in so doing, what we're able to do is to improve the motor function of Huntington's disease patients quite significantly. As I said in the call, our initial study showed an improvement of approximately three years in the quality of life of these patients.

As far as safety is concerned. A similar ultra-pure version of ethyl EPA has actually been on the market in Japan now for ten years for use in cardiovascular disease. That compound has had no safety issues over the last ten years and indeed the originator of that drug has recently completed an 18,000 patient five-year study. So this is a very very safe drug. I think it is particularly important in the environment that we're operating in today that safety comes first. Did I answer all your questions?

Yes. You know, one other -- I know this is a point that might seem a fine point but when do the symptoms of Huntington's disease typically appear? I'm trying to get an idea of -- if you're saying that Miraxion kind of stalls the progress for a couple of years, what kind of life span are we talking about for the typical patient?

Typically what we see is that Huntington's disease is caused by a genetic defect in what is called the Huntington gene. It is caused by what are called triplet repeats. You might have heard in the past me talking -- referring to the CAG repeats. Typically, you will see that with a CAG repeats score of 36 and above you would be clinically diagnosed with Huntington's disease. Effectively, the higher of the CAG score, typically you will find the earlier the onset of the symptoms.

For the mild to moderate patients that we've been targeting or we are targeting in the new clinical trials you would typically see an onset of symptoms age around about 35 to 40. It will again take you somewhere around about 15 to 25 years to die. For the majority of the disease progression, you will have mild to moderate symptoms until really the last years of life at which point you'll typically have increasingly severe symptoms, which initially will be characterized by severe movement disorder. It is not just the Huntington's chorea, which is often associated with Huntington's, but also very severe muscle spasms, facial tics, and a general inability to control the upper extremities of the body. That then progresses into psychosis, depression, and ultimately dementia. But until you see the onset of symptoms at age 35 to 40, 15 to 25 years 'til death.

Thank you for the (indiscernible) Rick.

(OPERATOR INSTRUCTIONS). At this time, there are no further questions. Mr. Stewart, are there any closing remarks?

I would just like to thank you for listing to Amarin's first-quarter 2005 earnings conference call. We look forward to updating you as we progress going forward. Thank you very much.

This concludes today's Amarin Corporation first-quarter 2005 earnings conference call. You may now disconnect.