Amarin Corporation PLC (AMRN) 2005 Q3 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 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 session.

[OPERATOR INSTRUCTIONS]. Thank you, 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 to you to our third quarter 2005 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 risk and uncertainty. For more information I refer you to the Safe Harbor statements on our website and to Amarin's 20-F on file with the SEC.

To recap I would like to briefly review Amarin's current pipeline and recent achievements. Amarin is developing Miraxion which is in Phase III for the treatment of Huntington's Disease and has fast track status with FDA and orphan drug designation in the US and EU.

There are approximately 70,000 diagnosed Huntington's Disease patients in the U.S. and EU with a further 200,000 individuals who are genetically disposed to the disease in the U.S. alone. Amarin estimates the global market size is approximately $500 million. Amarin is also developing Miraxion for the treatment of melancholic depression which is perhaps the most severe form of melancholic depression, which is perhaps the most severe form of depression, with patients often being hospitalized.

There are few, if any, treatment options for these melancholic depression patients. It's estimated that there are approximately 1 million such patients with a further potential 1.25 million patients with major depression who might benefit from such a treatment.

Having carefully analyzed and evaluated the results of six Phase II-A clinical trials in various depressive disorders, those patients with melancholic depression showed a beneficial response to Miraxion. This form of depression is estimated to represent a total market size of between $2 to $3 billion. Amarin is in discussions to outlicense this indication to a partner with expertise in depression and with the financial strength to fund future clinical trials.

Examining the third quarter achievements Amarin's key targets were accomplished with firstly, receipt of the special protocol assessment from the FDA for the U.S. and EU Huntington's disease Phase III clinical trials, and secondly the commencement of dosing in the U.S. Phase III clinical trial. Additionally we were able to expand the management team with the recruitment of several important personnel which will support the achievement of our objectives in future.

Turning to the clinical trials themselves, Amarin announced on the 23rd of September that enrollment has commenced in the 300 patient US Phase III trial which is being conducted by the Huntington's Study Group on Amarin's behalf. A total of 300 patients will be enrolled at 43 sites throughout the U.S. At the present time, 28 out of the 43 sites are now actively recruiting patients and good progress is being made.

We estimate that it will take up to 9 months to enroll patients for the U.S. trial so the first patient in should complete the trial in the first quarter of 2006. With the last patient enrolled in the second quarter of 2006 completing at the end of 2006. Data from the trial should be available in the first quarter of 2007.

The EU trial setup is advancing well although regulatory approval to start the trial is more complex than in the U.S., requiring multi-national approvals plus regional and site specific. Having said that, continuing good progress is being made and we remained on target subject to the receipt of final approvals to commence recruitment in the EU trial in early December.

Working in collaboration with EURO-HD and Icon RCRO, we will recruit 240 patients at up to 33 clinical trial sites. A very productive EU investigative meeting was held recently to review the data from the initial Phase III trial to review the protocol and examine inclusion criteria for the trial. The EU investigators are now preparing to commence recruitment. Amarin will not make specific reference to ongoing recruitment or enrollment progress but will announce full recruitment for each trial.

The knowledge acquired from the initial Phase III has been invaluable in enhancing the probability of success in the new trials. Key experiences in the protocol group from the initial trial include: Firstly, target the genetic subgroup of Huntington's Disease patients which showed benefit from Miraxion. These per-protocol patients had a CAG score of less than 45, showing a positive 28% difference in their motor function as measured by the TMS4 rating scale versus the placebo group.

Secondly compliance was a key determinant of success or failure in the earlier trial. 28% of the original 135 patients in the trial were protocol violators. In the new U.S. trial alone we now have 43 sites versus the original six with centers having fewer patients to monitor more frequently. There will be approximately 10 patients per center versus 20 to 25 patients in the earlier trial.

Finally, the collaboration and communication with the Huntington's study group, Euro HD, FDA and EMEA has been fundamental in the design of the new trials. Each has clearly brought a different perspective and input to the process but the combination has allowed Amarin to benefit from a broader knowledge base.

I'll now hand to you over to Alan who will review the numbers .

Thank you, Rick. I'll now address the key highlights of our financial results for Q3, which are set out in more detail in today's press release.

For the third quarter, Amarin reported a net loss of $4. 6 million compared to the net loss of $1.2 million in the second quarter of last year. Although the results of comparative prior periods reflect continuing and discontinued activity the results for Q3 this year entirely represent continuing activity. For that reason my comments to you will now focus on continuing activity.

The operating loss Q3 increased to $4.6 million from $1.4 million for continuing activity in the third quarter of last year. The increase is primarily due to the significant investment in research and development activities and intellectual property. The key driver of our research and development costs during this quarter was the significant costs of two Phase III trials in Huntington's disease. These costs are in line with our expectations for the quarter.

Turning to the year-to-date numbers, for the 9-month period ended September 30th, 2005, the operating loss was $13.6 million. Compared with a operating loss of $4.6 million in continuing activities for the same period in 2004. As for the third quarter, the increase is primarily due to the significant investment in research and development activities and intellectual property.

Finally let me briefly address Amarin's capitalizations. On September 30th Amarin had cash of $13.7 million and had no debt. Amarin currently has 51.4 million shares in issue. I'll pass you back to Rick.

Thank you, Alan.

As you may remember, Amarin has a very active and ongoing outlicensing program with five specific opportunities. Firstly, Miraxion for depressive disorders which we've talked about. Secondly Huntington's disease rights in certain EU territories such as Scandinavia and Italy. Thirdly, LAX-201 for women's depression, fourthly LAX-202 for Multiple Sclerosis pain and fatigue, and then finally, a range of other IP in various CNS indications. All of these discussions are ongoing and moving along in parallel and we're pleased with progress to date.

The objectives of this outlicensing activity are twofold -- to generate revenue to support the ongoing Huntington's disease clinical trials and also to allow Amarin to focus its development resources on major programs where Amarin can commercialize the product itself.

On the in licensing front Amarin has been very active in evaluating a number of exciting compounds to strengthen our development pipeline and reduce the reliance on the success of Miraxion. We're optimistic that these discussions will bear fruit in the next three to nine months. We'll now take questions. Thank you, Jody.

Thank you, sir. [OPERATOR INSTRUCTIONS].

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

Hi, Rick. Don Gher. With the $13 million plus on the balance sheet and no debt now, could you just kind of give us a time line on cash burn and looking out towards ultimate approval maybe in 2007 or so, and really not getting on the market until possibly later -- late that year? How that shakes out with your intent to also be buying other drugs that could be available?

Don, I'll hand that over one to Alan.

Don, with the $13.7 we had at the end of the third quarter that (indiscernible) company for the best parts (ph), for the best products (ph) we make (ph) next year. The – that does not include any licensing activity we might close out between now and then.

We would expect our outlicensing activity on the programs that Rick had gone through would generate some revenue which is brought (ph) us beyond that point. In turns of any future financing (indiscernible) will depend upon our level of R&D expenditure at the time and (indiscernible) and also level of license fees and revenue that we do earn from our partnering program.

I think Don you were also talking about how we're going to fund our inlicensing program if I'm correct? Is that right?

That's correct, yes.

I think the way we typically would structure an inlicensing opportunity, and it clearly depends on the state of progress of the development but typically what we'd look for is a relatively modest up front initial payment with subsequent milestones, success milestones being subsequent payments.

So I think what we would look to is a relatively modest, almost co-development arrangement. But if we were to come across something that was very specific we'd have to consider what the financing options were for it. But at the moment the ones we're discussing have got relatively modest up front payments and then we're working with the – we have potential partners in terms of funding that development.

And how far down the line are you looking for products that you might license? Are you looking for ones that are in Phase I, Phase II, earlier?

I think our preference frankly would be in Phase II. We'd ideally like to have proof of concept. But I have to say there have been a couple of opportunities that we've seen in the relatively recent past which were at an earlier stage.

And again, we'd have to think very carefully about the resources that Amarin has to move that forward and indeed the overall level of expense and risk associated with it. But I think it would be fair to say that our preference would be in the -- having finished Phase I moving into Phase II and going forward.

And just a final question. Sounds like to me that the key to this is going to be the partnering of the Huntington's product as we move forward. What are your hot buttons to say it's time to really move forward with discussions?

Well, I think actually the key driver, really at the moment, is the depression outlicensing discussions. From our point of view that is a major market opportunity, and we've been very careful in the analysis of the data from those six Phase II-A trials. I think it would be fair to say that the consistency of the data is particularly appealing when you're analyzing this melancholic depression opportunity.

I think people somewhat underestimate what melancholic depression really is. And I would be hold my hand up as being equally guilty because when I first heard about melancholic depression I thought it was a more mild form of depression. It's quite -- quite the opposite. And these patients are often hospitalized, they are severely ill. Today there are relatively few treatment options for them. And typically the standard SSRIs just don't work. So the cost of care for these patients is very significant.

And to the best of our knowledge, Miraxion for melancholic depression is the only product opportunity which would have a label for melancholic depression. So you can see that given the size of this potential market there is quite a lot of interest in this opportunity. So we're putting an awful lot of time and effort into those discussions. The Huntington's outlicensing is solely for the remaining territories in Europe, which would be Scandinavia, Italy and the new entrants from Eastern Europe to the European community.

And again, those are going quite well, specific market opportunities there we're looking at both on a country by country basis and also talking to a number of companies about taking the totality of the remaining territories. But in terms of cash generation for the outlicensing activities I would look to depression as being the near term driver.

Thank you.

[OPERATOR INSTRUCTIONS]. Mr. Stewart, there are no further questions at this time. Do you have any closing remarks?

Well, I'd just like to thank you for joining us on Amarin's third quarter earnings conference call. And we look forward to updating you on the year-end and Q4 results in the early part of next year. Thank you very much.

Thank you. This concludes today's conference call. You may now disconnect.