Amarin Corporation PLC (AMRN) 2006 Q1 法說會逐字稿

Good morning. My name is Angela, and I will be your conference operator today. At this time I would like to welcome everyone to the Amarin First Quarter 2006 Earnings Conference Call. (OPERATOR INSTRUCTIONS) Thank you. At this time I'd like to turn the call over to Ms. Anne Marie Fields of Lippert/Heilshorn. Ms. Fields, you may begin your conference.

Thank you. This is Anne Marie Fields with Lippert/Heilshorn & Associates. Thank you all for participating in today's call. Joining me this morning from Amarin are Rick Stewart, Chief Executive Officer, and Alan Cooke, Chief Financial Officer.

This call will follow the standard format, beginning with prepared remarks by management and then we'll open up the call for questions. Earlier today, Amarin announced financial results for the first quarter of fiscal 2006. If you have not received this news release or if you would like to be added to the Company's distribution list, please call Lippert/Heilshorn in New York at 212-838-3777 and speak with [Lydia Portea].

Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Amarin. I encourage you to review the Company's filings with the Securities and Exchange Commission including, without limitation, the Company's annual report on Form 20-F.

The content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, May 11, 2006. Amarin undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. This call is the property of Amarin Corp. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Amarin is strictly prohibited. With that said, I would like to turn the call over to Rick Stewart. Rick?

Thanks, Anne Marie. Welcome, everyone, and thank you for joining us today. Following on from a strong 2005, we entered 2006 with real momentum and have built on that impetus throughout the first quarter. We've made substantial accomplishments so far this year providing a foundation for continued success in the coming quarters.

During the first quarter, we made considerable progress in a number of important areas. We announced the successful out-licensing of our MS fatigue drug to Multicell. We made significant progress in the U.S. and European Phase III clinical trials in Huntington's disease, which have continued to rapidly enroll patients.

We presented and published pre-clinical data demonstrating that Miraxion improved learning and memory and multiple neuroprotective effects by improved cell viability, thereby restoring the neuronal cell debt which is often associated with a number of neurodegenerative disorders, such as Huntington's, Parkinson's, and Alzheimer's diseases. This data was highlighted in two separate poster presentations at the recent American Academy of Neurology.

We also reported important Miraxion mechanism of action data that relates to melancholic depression and shows Miraxion's ability to enhance the transporter stress hormones, such as cortisol, through the blood brain barrier.

Finally, we strengthened the Board further with the appointment of Dr. John Climax, Founder and Executive Chairman of Icon Clinical Research to our Board of Directors. Additionally, we further strengthened our balance sheet to equity issuances generating gross proceeds of $6.3 million. I will elaborate on each of these later, but for now, I'd like to turn the call over to Alan Cooke, our CFO, to discuss our financial results and positioning. Alan.

Thank you, Rick. The net loss of first quarter was $6.4 million, or $0.08 per share, compared 3.7 million, or $0.10 per share in the first quarter of last year. The main driver for the increase in our net loss is a significant increase in our investment and research and development from less than $1 million in the first quarter of 2005 to $2.9 million this quarter, reflecting the cost of two ongoing Phase III trials in Huntington's disease that started in mid-2005.

Selling, General and Administrative costs of $2.8 million include, in addition to general corporate overhead, our substantial investment in intellectual property, and the business and corporate development costs of pursuing our growth strategy, including the cost of evaluating acquisition and in licensing opportunities.

Total operating cash flows are running in line with our expectations. The net loss also includes a restructuring charge of $5 million and a non-cash charge of $0.3 million with respect to share-based compensation by employee option.

The group restructuring costs of $5 million represents specific costs associates with relocation of our UK activity from Stirling, Scotland and Curzon Street, London, to Oxford, just outside London. This relocation activity, in addition to generating cost savings, also provides substantial operating benefit efficiencies for the group.

With respect to the charge for share-based compensation, this quarter sees the first adoption of financial reporting standards, or FRS20, which took effect on January 1 of this year. This new UK GAAP accounting standard is similar to FAS 123 of U.S. GAAP. The non-cash charge for the first quarter was [$0.3 million], compared to [$0.3 million] for the same period 2005.

Previously reported results prior to 2006 did not include a share-based compensation expense. A comparative number in this quarter's press release has been adjusted to reflect the adoption of FRS 20.

Finally, let me briefly address Amarin capitalization. In the past 12 months, we have raised gross proceeds of approximately $50 million, including $9 million invested by directors and officers of Amarin, and adding several large U.S. institutional investors to our shareholder base. This provides Amarin with sufficient funding to complete the two ongoing Phase III trials of Huntington's disease, to file Miraxion for [inaudible] approval in the U.S. and Europe, and to progress the rest of our development pipeline. Amarin now forecasts having sufficient cash to fund operations into the fourth quarter of 2007, and with possible revenue from partnering activities potentially beyond.

At March 31, 2006, Amarin had cash of approximately $33 million and no debt. Amarin currently has approximately 81 million shares in issue, and approximately 15 million warrants and options outstanding. I'll now turn it back to Rick.

Thank you, Alan. As I mentioned, during the first quarter we made considerable progress in all key areas, furthering our corporate ambition of becoming a leader in neurology. First I'll review progress in clinical development and research, and then I'll discuss the achievement of our corporate goals.

Our key priority is a successful conclusion of the Phase III trial of the Miraxion in Huntington's disease, where we've made significant progress in both the U.S. and European clinical trials. Two thousand and five was all about the preparation and initiation of the clinical trials, obtaining orphan drug and fast-track designation, and working with the FDA to agree to a special protocol session. Two thousand and six has largely been about execution. We're now well positioned to complete enrollment of the 300 patients in the U.S. trial by the end of next month. That's complete enrollment of the 240 patients in the European trials by late summer.

The first patients entering the U.S. trial in September 2005 have now completed the trial and switched to the six-month extension period. The last patient in the U.S. Phase III trial, who will be enrolled next month, is expected to complete in late 2006. We expect to have data in early 2007, depending on final collation and analysis of the data. Our expectation, therefore, is that if the data is positive, the NDA will be filed in the second quarter of 2007. As Miraxion has fast-track designation from the FDA, we would expect a response within six months of NDA filing.

The importance of the Huntington study group and EURO-HD to the success of these trials cannot be under-estimated. These organizations consist of the leading neurologists in the field of Huntington's disease, and our involvement and counsel have been instrumental in the progress made not only with the FDA, but with the efficient enrollment and management of the trial.

The second key activity during the quarter has been to expand our understanding of Miraxion's mechanism of action. Determining how Miraxion functions in the brain and establishing Miraxion's neuroprotective effects is fundamental to our understanding of this mechanism of action and neurodegenerative diseases and depressive disorders. Amarin currently has three Centers of Research Excellence, which have been involved in this pre-clinical research activity focusing primarily on Parkinson's, Alzheimer's, and the aging brain. We intend to add another Center of Excellence in the U.S. by year-end to expand this range of activity.

The results of this research in the quarter were important advances in furthering our understanding of Miraxion's mechanism of action in a variety of neurodegenerative diseases. During this first quarter, impressive data was published and presented from two separate pre-clinical programs, increasing our understanding of Miraxion's neuroprotective effects and encouraging us to pursue further clinical studies of Miraxion and these neurodegenerative diseases with large market opportunities.

The preliminary results of the Parkinson disease pre-clinical work at the University of Prince Edward Island in Canada conducted by Professor Cai Song are important as they identify neuro-anti-inflammatory and neuroprotective effects in Parkinson disease models.

In summary, the data showed that Miraxion demonstrated neuroprotective effects by interacting with a substance in the brain called brain-derived neurotrophic factor, which is responsible for dopamine production. In turn, this leads to improved cell viability and the slowing of neuronal cell death associated with symptoms of Parkinson's disease. The second study was similarly related to the impact of Miraxion in pre-clinical models and positively evaluated the data showing Miraxion modulated cellular function in pre-clinical models. Professor Song subsequently presented more detailed findings at the American Academy of Neurology meeting in San Diego.

Looking at progress in depression, we are extremely pleased with the pre-clinical data from the University of Valencia in Spain. These pre-clinical data demonstrate that Miraxion may improve the stress hormone, such as cortisol, transport through the blood brain barrier is highly supportive of the clinical data collected from six Phase IIa clinical trials in depressive patients.

Increased plasma levels of stress hormones, and particularly cortisol, plus over-activity of the HPA access are considered to be a cause of melancholic depression. Improved blood brain barrier transport of cortisol as evidenced by the Valencia findings may lead to a normalization of cortisol levels on a HPA access activity resulting in an alleviation of the symptoms of melancholic depression.

Effectively, Miraxion enhances the transport of cortisol through the blood brain barrier permitting the brain to send messages normalizing cortisol production. It's also interesting to note that there have been a number of related articles published recently that complement the findings from Valencia. Published studies from the University of Edinburgh in Scotland and from the Harvard Medical School support our findings about the role of stress hormones, including cortisol, in depressive disorders.

As we've already stated, Amarin intends to partner the melancholic depression indication from Miraxion, as we need to focus our resources on progressing Miraxion in neurodegenerative diseases. Discussions with potential partners remain on track and are progressing satisfactorily. As you are aware, the negotiation of such collaboration agreements contain many forms and can be time consuming, and a successful outcome is not always guaranteed. On a positive note, the level of interest in melancholic depression, which could be a global market opportunity of $2 to $4 billion, is high, given the lack of alternative treatments, the unique mechanism of action of Miraxion, and the strong safety profile. We will keep you updated as the discussions progress.

Internal research focus has been applied during the quarter to Amarin's combinatorial lipid platform. We believe the combining new or existing drugs with these technologies could substantially improve blood brain barrier penetration, improve bio availability, and potentially reduce side effects. Combinatorial lipid chemistry offers a novel approach to improving the therapeutic effects and delivery characteristics of both known and novel compounds. We've learned how to use different types of chemical linkage to attach a range of bioactive lipids either to other lipids or other drugs. The results show novel single chemical entities with predictable properties potentially offering substantial and clinically relevant advantages over either compound alone. As previously stated, you can expect to see Amarin select candidates for the combinatorial lipid program in the coming months.

The potential revenue opportunity for Amarin from all of these indications is substantial. We publicly stated that the estimated global market for Miraxion in Huntington's disease exceeds $500 million. If we're able to demonstrate similar clinical efficacy in Parkinson disease, this number could be significantly higher, and as you expand Miraxion into other neurodegenerative diseases, the market potential increases. Adding in the global opportunity in melancholic depression, the overall market potential is considerable.

Looking at our growth strategy moving forward, first and foremost we are committed to the successful completion of our Phase III trials of Miraxion to treat Huntington's disease. Our discussions with partners in melancholic depression are progressing satisfactorily, and we hope to conclude a collaboration later in the year. We continue to build pre-clinical data that further validates Miraxion's neuroprotective effects. We expect to move forward in the clinical with our Parkinson disease program for Miraxion, as we believe it holds great promise in this debilitating disease. In addition, we're actively reviewing a number of potential end-licensing opportunities with products and companies that are synergistic with our core market in neurology. In the coming months, we expect to choose the first two candidates from our combinatorial lipid program to begin pre-clinical development.

Considerable effort is currently being applied to expanding the development pipeline at Amarin by end-licensing compounds to add to the portfolio. The evaluation process of candidates is prolonged balancing development risk against market opportunity. We will report on progress as soon as successful end-licensing discussions are complete.

As I mentioned, the revenue and profit opportunity for Miraxion in Huntington's, Parkinson's, other neurodegenerative diseases, plus depression, is very substantial.

That ends our formal remarks. Angela, we are now ready to take questions.

Thank you. (OPERATOR INSTRUCTIONS) Your first question comes from the line of Patrick Power of Goodbody.

Good afternoon, gentlemen. Ian Hunter here. Patrick is with me, but I managed to get back in time to hear the conference call. Thanks for that. I'm just wondering, Rick, you've covered most of my questions there on the pipeline, it was a very comprehensive thing, but would you give us a bit more detail on what you're planning on the combinatorial lipid program and how you see that developing over the next two to three years? I mean, you say you're looking to identify candidates now, and just get kind of a feel for that.

Absolutely. What we're doing at the moment is doing some preliminary work to examine the combination of existing active drugs which have got pretty severe side effect profiles that in some degree limit the utility in Parkinson's, for example. Our belief is that if you were to combine an existing active with a combinatorial lipid platform, we may well be able to improve the blood brain barrier penetration and thereby improve the bioavailability, and could potentially reduce the dosage, the supply, and therefore reduce the side effects. So, at the moment, what we've been doing over the last -- well, really over the quarter and even before that is looking at the pharmacokinetics of some of these compounds in combination with the combinatorial lipid program. That is making good progress, so I would suggest that what we're going to be doing is to move these forward, each one individually will have new combinatorial composition of matter patterns associated with them. I can't say exactly what we've been evaluating, but suffice it to say there are existing drugs which are well known, but they are somewhat limited by their side-effect profile. And our initial view of some of these is that we can overcome those.

Okay, thanks. I'll have to look up and see if I can work out what those drugs are.

Well, we're going to be rolling out a whole series of them. What we do is, we screen them very, very carefully, but also quite quickly. So, we can identify internally effectively the pharmacodynamics of existing drugs and how they will interact with the combinatorial lipid program. So, we have a range not only in Parkinson's, but in other neurology indications.

Okay. Thanks very much.

(OPERATOR INSTRUCTIONS) Your next question comes from the line of Jack Gorman of Davy Stockbrokers.

Thanks very much. I have three quick questions, if I may. Firstly, more of a housekeeping question, Alan. Just if you can give us a sense of the cash impact of the restructuring costs. My second question, Rick, is on depression indication for Miraxion. I know you gave us kind of a brief outline there in terms of licensing opportunities. I'm just wondering if you can give us a little bit more flavor, if there have been any kind of developments or we should see any developments in the next quarter or two. My final question is just a broader one on the Huntington's disease base overall, if you could perhaps just give us an update on the activity of competitors on that space at the moment, please?

Well, Jack, let me get the easy question, short question out of the way first, which is the cash impact of the restructuring costs. Approximately 50% of the restructuring charge is related to fixed asset impairment at our Stirling facility and our Curzon Street office. So, half the researching charge has a cash impact. Rick?

Okay. On depression, as you know, Jack, these kind of processes take a considerable amount of time. We've done a very broad sweep of potential candidates and we narrowed that down to approximately five candidates within the group, of which three are leading contenders, put it that way. What has been taking a considerable amount of time is not just the due diligence process, but it is the agreement on effectively the transaction structure. I mean, each one of them has got somewhat different motivations and financial conditions associated with them. So, what we're doing at the moment is really balancing those off against each other. I don't want to go any further in terms of prejudicing some of those discussions, but suffice it to say, we have a significant level of interest in the compound, and I think that is clearly aided by the succession of pre-clinical data that's been coming out.

I think when you see other academic institutions, such as University of Edinburgh and Harvard Medical School, identifying similar kind of effects to what we've already seen in the clinic and also in our own pre-clinical program, it certainly adds the motivation to some of the potential partners to put a deal together.

Timewise, I always hate to make time expectations, but I would expect that, as I said in the call itself, certainly by year-end we will have some visibility on this one, but I think that, as I said, it's going very well, satisfactorily, and we're moving along.

In terms of the competitive landscape, I think the one that I think you're probably eluding to us a drug called tetrabenazine, which has been on the market here on Europe for about 10 years or so, and that is for treatment of the choreic symptoms of Huntington's disease. It's being developed in the U.S. by Prestwick Laboratories, who have received an approvable letter for it. As far as we're concerned, it really is to treat the choreic symptoms of Huntington's disease. Miraxion itself has a broader therapeutic profile than tetrabenazine. I can't comment on the contents of the approvable letter, because I'm obviously not privy to that, but I think as far as we're concerned, it has a complimentary position in the armory of the treatment of chorea, but certainly what we've seen already is that Miraxion goes beyond those choreic symptoms into a much broader therapeutic benefit.

There are a couple of others out there which we've been monitoring. There's a company called Avesina in California, who have got a Phase II Huntington's disease program. And then the other one that we've been monitoring is a company called Sirna in, I think they're in Colorado, who are working on RNA eye technology, which is some way off. But that's how we see the competitive landscape.

But essentially, Rick, the near-term potential competition is a much more limited indication it seems than your own indication from Miraxion.

That's correct. In one regard, I don't actually see them as competitors, per se, because I think they could actually complement each other. So, tetrabenazine, as you well know, has very limited revenue in Europe primarily associated with its side-effect profile. So, our view is because of the broader utility of Miraxion, that the revenue potential for Miraxion is substantially greater.

Great, thanks.

There are no further questions at this time. Do you have any further comments?

To reiterate what I said earlier, that we've got the ongoing Phase III trial in Huntington's disease, which should have data as a relatively near-term event of the disease with no approved treatment options. The opportunity is clear with a global market opportunity of in excess of $500 million. The Phase II data supporting Miraxion in melancholic depression, which is an untreated but very severe form of the disease, again has a very large market potential of $2 to $4 billion globally. The pre-clinical data that we described earlier showing the mechanism of action further validates what we've already demonstrated clinically.

The strong pre-clinical data supporting Miraxion in Parkinson's disease and potentially other neurodegenerative diseases again offer conditions where there are opportunities for new treatments. We have a very strong balance sheet with $53 million in cash with no debt, a strategy to reinforce the development pipeline by selective end-licensing of other attractive neurologic compounds, and finally a seasoned management team to execute the strategy. So, we're building on the momentum established in the first quarter of 2006, and we look forward to reporting equally exciting results for the second quarter. Thank you very much.

Ladies and gentlemen, this concludes today's Amarin Corporation First Quarter Earnings Conference Call. You may now disconnect.