Amarin Corporation PLC (AMRN) 2005 Q2 法說會逐字稿

Good morning. My name is Jody and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Amarin Corporation's second quarter earnings results conference call.

[Operator Instructions]

Mr. Stewart, you may begin your conference.

Thank you, Jody. Good morning. This is Rick Stewart, Chief Executive Officer of Amarin. I would like to welcome you to our second quarter 2005 earnings call. I am joined 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 the Amarin's 2004 20-F on file with the SEC.

The first half of 2005 has been remarkable for the significant progress made in achieving Amarin's short and medium-term corporate goals. Before we review the second quarter in detail, I think it worthwhile recapping what Amarin currently looks like. We are a focused neuroscience company with a simple strategy of developing and commercializing neurology products in the US, while out licensing products in non-neurology indications in territories outside the U.S. We have a valuable pipeline of late and earlier stage products with our lead compound, Miraxion, having commenced a 300 patient US phase III clinical trial in Huntington's disease, with a 240-patient European clinical trial to commence in the third quarter.

In addition, a total of six phase IIA clinical trials have now been conducted in approximately 400 depression patients, specifically for those patients with melancholic depression, a chronic, difficult to treat form of major depression. This is a sizable market opportunity, with approximately 2 million treatable patients with few, if any, treatment options. Our earlier stage pipeline consists of programs which have already shown clinical benefit in patients with tardive dyskinesia, Lou Gehrig's, and Parkinson's disease.

Turning now to the second quarter, the achievement of the four key corporate objectives in this quarter has been critical in ensuring the continued rapid progress in the growth of Amarin. Those key objectives were, firstly, the successful $17.8 million financing, which closed in May. This permitted Amarin to proceed with the phase III clinical trials in Huntington's disease. This financing was particularly notable achievement in extremely difficult market conditions, and we also succeeded in significantly increasing the visibility of the company in the investment community. The cash raised allowed us to commit to the expense of these clinical trials. The financing also brought in some blue chip US and European investors. Alan will talk in more detail about the financing and our position at the end of the second quarter.

The second key objective was to successfully complete the Huntington's study group investigator's meeting in Philadelphia. This allowed Amarin and the Huntington's study group to announce the commencement of recruitment to this important Huntington's disease trial. We will be recruiting a total of 300 Huntington's disease patients for the US trial and the protocols have very strict entry criteria in order to maximize the probability of successfully repeating the positive response in mild-to-moderate Huntington's disease patients, which we saw in the earlier phase III trial.

Needless to say, the announcement of patient recruitment in the U.S. was a significant milestone for Amarin. We have received comments on the protocols from both F.D.A. and from the investigators at the meeting, and minor amendments have been made. These have now been incorporated into the protocols and resubmitted to the F.D.A. for review under the S.B.A. We're waiting for final comments or agreement from the F.D.A.

The third objective was to insure that the rapid progress in the European Huntington's disease trial was maintained. The planning and preparation for the 240-patient European trial is on track, approximately eight weeks behind the U.S. trial. As there are fewer patients in the European trial, we expect that the two trials will conclude almost simultaneously, late in the third quarter of 2006. The European trial will be conducted in conjunction with Euro-HD. and with Icon acting as our C.R.O. Icon are very experienced in conducting clinical trials in neurodegenerative diseases. The European trial will take place at up to 28 sites, and final site selection is currently ongoing.

The final objective was to ensure that out licensing activities gained momentum during the quarter, with attention primarily focused on finding a development in commercialization for depression. A considerable effort has been expended on completing the depression information memorandum for development in commercialization partners.

We have positively completed an independent expert's review by a leading psychiatrist of these clinical trial results, and a detailed market analysis of the melancholic depression opportunity has also been undertaken. As I mentioned, there are approximately two million treatable patients in the U.S. alone who could ultimately benefit from this drug. The six phase IIA clinical trials indicate that Miraxion for melancholic depression could either be an alternative to existing depression therapy, or indeed an adjunct to it. Our analysis shows that certain patients who had not responded to selective serotonin reuptake inhibitors actually did when taken in combination with Miraxion, which also reduced the sexual dysfunction side effect which is often found with SSRI's.

Our understanding of how the drug works has also increased during the quarter. It appears to address the fundamental biochemical imbalances in the brain, allowing SSRI's to work better or indeed as a mono therapy, by the underlying biochemical change. We have now actively commenced partnering discussions. Alan will now talk you through the second quarter results.

Thanks, Rick. (Inaudible) detail in today press release for the second quarter Amarin reported a net loss of $5.5 million, compared with a net loss of $3.2 million in the second quarter of last year. Although the results of the comparative period reflect continuing and discontinued activities, the results for Q2 of this year entirely represent continuing activities. For this reason, my commentary now will focus on continuing activities.

The operating loss for this quarter increased to $5.7 million, from $1.6 million for continuing activities in the second quarter of last year. The increase is primarily due to the inclusion of Amarin Neurosciences expenses of $3.4 million following its acquisition in October 2004. Amarin Neurosciences expenses primarily reflect the cost of research and development activities and the cost of maintaining and renewing Amarin's portfolio of intellectual property.

The key driver of R&D costs during this quarter was a significant set of costs associated with commencing the two phase III trials in Huntington's disease with Miraxion. For example, payments to the Huntington's study group and Icon, the organizations that are running our US trial and EU trial respectively, amounted to $1.9 million. These costs are in line with our trial costs budget and expectations for the quarter.

Turning to the year to date numbers for the six-month period ended June 30, 2005, the operating loss was $9 million, compared to an operating loss of $3.3 million from continuing activities for the same period last year. As for the second quarter, the increase is primarily due to the inclusion of Amarin Neurosciences expenses, which amounted to $4.8 million.

Before passing back to Rick, let me briefly address Amarin's recent financing and capitalization. On June 30, Amarin had cash of $16.4 million. In May, Amarin raised gross proceeds of $17.8 million through 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 were $14.8 million. Simultaneous with the registered offering, the $2 million of loan notes, outstanding of March 31, 2005, were redeemed and the cash used by Amarin's Chairman, Mr. Thomas Lynch, to subscribe for shares in the financing. As a result of the transaction, Amarin now has no debt other than working capital liabilities.

Directors and executive officers of Amarin invested approximately $4.5 million in the offering, for the purchase of an aggregate of 3.5 million shares, inclusive of our Chairman's $2 million subscription just described. Finally, with respect to our capitalization, Amarin has no debt and we currently have approximately 51 million shares outstanding. Let me now pass you back to Rick.

Thank you, Alan. Significant progress has been made over the last two quarters in getting the Huntington's disease clinical trial started. We are pleased that the announcement of recruitment in the US has generated such a positive response and we look forward to dosing patients in both the US and European trials.

Looking forward, continuing focus on the successful conduct of these trials is an ongoing priority, as is the partnering of treatment of unresponsive depression. We also intend to continue the analysis of pre-clinical and clinical programs such as Parkinson's disease, prioritizing resources in order to move them further through clinical trials. We are also seeking to selectively in-license promising compounds, most probably at an earlier stage of development, which will assist in our objective of becoming a leader in the field of neurology. We look forward to updating you with progress. We'll now take questions. Jody?

[Operator Instructions]

Your first question comes from the line of Don Gher with Coldstream Capital.

Hey, Rick. Just a question about the cash burn from this point onward. What do you see it as we move into the next few quarters? And is there a spike at some point on the spending side, where you might have to go out and get another round of financing?

Hi, Don. I'll let Alan answer that one, if you don't mind.

Our second quarter EBITDA number was $5.5 million and that is probably a reasonable approximation of where our quarterly burn will be for the next few quarters. It, of course, will vary from quarter to quarter and will really be driven by the progress on the clinical trials in terms of recruitment. And in terms of where we are with our current cash, we do have sufficient cash to get through to the best part of mid-next year and that is assuming that we earn no license fees from any of our partnering activities. However, we do expect that between now and then that we will earn some fees from our partner activities and the biggest program that we are looking at obviously partnering is our depression program with Miraxion.

Thanks.

Okay.

[Operator Instructions]

Your next question comes from the line of Steve Handley with Dutton Associates.

Good morning. I wanted to ask if you might elaborate on your melancholic depression partnership effort, the effort to obtain the partnership. Would you envision first off, that you would have someone for the US and maybe someone in other parts of the world? Or it is this likely to be a worldwide agreement? And also, could you give us a sense as to those meetings that you held down in Philadelphia, has that really served to spark further interest by corporate development people or are they looking for further clinical progress before they sort of get serious?

Okay. Thanks, Steve. I think if we look at melancholic depression first, we have spent a lot of time and effort ensuring that the data analysis has been conducted on these phase II trials has been very carefully analyzed. And we thought it was a useful exercise to have an independent expert actually review that data and we were, needless to say, pleased that we got a positive evaluation from that.

We also thought it was important that in order to put the opportunity for Amarin into context that we conducted a market analysis because to the broader market, melancholic depression is probably not something they're terribly familiar with. As a subset of major depression, which represents somewhere in the order of up to 30% of all depression patients, these are patients who are pretty well ill served and they are typically unresponsive. So having conducted that exercise and gone through it in a lot of detail, we concluded that with a treatable patient population of up to two million patients in the US alone, this is a substantial opportunity. So our preference, I would say, would be categorized in three areas.

If a big pharmaceutical company was interested in this compound, one would assume that they would be looking for global rights. And I think from a simplicity point of view, that would be very attractive to us. However, there is a case, which might say that a mid-cap company with experience in depression, perhaps US based, would also show an interest and I think we would have to evaluate it in terms of the economic value that we would see. But I think simplicity is always better, but having said that, we might be able to get better economic terms from a mid-cap.

In terms of the third part of the question, the investigator's meeting in Philadelphia was for Huntington's disease and the benefit of that really was, as you'd expect in terms of the set-up of these clinical trials, it was a two-day session, 103 investigators and coordinators. We went through the protocol in great detail and the objectives were two-fold. Firstly, it was to familiarize those investigators with the detail of the protocols, which we believe will ensure compliance in the patients going forward. And also secondly, to identify any input that the investigators might have into the protocols. And indeed, we did get some relatively minor amendments, primarily focused around making it easier for the physicians to go through the rating scale process and the screening process. Does that answer your question, Steve?

Yeah, I'm sorry. I got that two questions kind of mixed up there. I know - it's still very early here. Before 10 o'clock I don't wake up too much. Sorry about that. I was interested in the response, nevertheless, of the people down in Philadelphia and so I appreciate that.

I was greatly encouraged, I have to say because it's always interesting when you have effectively third-parties, the Huntington's study group, presenting the background and the detail on Miraxion in Huntington's disease patients. And I think there was a great degree of excitement there. We certainly came away with the sense that there is a huge amount of enthusiasm to support this trial.

I think with 43 clinical trial sites, it's important for us, because one of the lessons we learned from the initial phase III was that monitoring of these patients is critically important. And whereas in that initial phase III, individual sites had somewhere between 20 and 25 patients per site and you can see why in some degree, the compliance wasn't as good as it might have been because of the sheer number of patients. In this trial, no site will have more than 10 patients. So you're able to get a much closer monitoring of the patients and we believe that is a very strong safeguard to ensure compliance.

Okay. Thank you.

[Operator Instructions]

At this time, sir, there are no further questions. Are there any closing remarks?

I would just like to thank you for joining Amarin's second quarter earnings conference call and we look forward to updating you in the future. Thank you very much.

Thank you. This concludes today's Amarin Corporation's second quarter earnings results conference call. You may now disconnect.