Amarin Corporation PLC (AMRN) 2006 Q3 法說會逐字稿

Good morning. My name is Ashanta, and I will be your conference operator today. At this time I would like to welcome everyone to the third quarter earnings conference call. (OPERATOR INSTRUCTIONS). Ms. Fields, you may begin your conference.

Good morning. 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 will open up the call to questions.

Earlier today Amarin announced financial results for the third 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 Portia.

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, November 9, 2006. Amarin undertakes no obligation to do 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, and redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Amarin is strictly prohibited. With that said, I would like to turn the call over to Rick Stewart.

Good morning and thank you for joining us today for this third quarter conference call. I'm going to briefly review the highlights of the quarter, followed by an update on the status of the ongoing Phase III clinical trials in Huntington's disease. My final comments, after Allen's financial review, will focus on Amarin's development pipeline and the three Phase II studies which will commence early next year, plus some further definition of the pre-clinical activities of the Company.

Turning to the third quarter where we have witnessed significant progress on a number of fronts. The key highlights are firstly, Amarin successfully completed enrollment of in excess of 300 Huntington's disease patients in the U.S. Phase III trial being conducted on our behalf by The Huntington Study Group. Simultaneously, EURO-HD and ICON, our CRO completed enrollment of more than 240 patients in the EU Huntington's disease trial. This is a major achievement, as combined these two trials represent the largest therapeutics program ever conducted in Huntington's disease.

Secondly, Amarin was granted a U.S. patent covering the use of Miraxion in treating Huntington's disease. This patent runs until 2021. Finally, and although not strictly in the third quarter, in October we raised $18.7 million of gross proceeds by our registered direct offering, in which approximately $9 million ordering shares were sold to both new and existing institutional investors. This fund-raising provides the Company with the additional resources to accelerate certain of our development programs, which I will elaborate on later. And it allows us to negotiate in-licensing agreements from a position of strength.

The successful conclusion about Amarin's ongoing Huntington's disease Phase III trial, followed by regulatory filings in the U.S. and the EU, plus ultimate approval for marketing continue to be our priority and focus. In addition to the ongoing monitoring and assessment of the patients in the trial, a significant amount of work is taking place preparing the regulatory filings for the FDA and for EMEA.

Recruitment to both trials has been highly satisfactory, and the support provided by The Huntington Study Group, EURO-HD, key opinion leaders, the patient advocacy group, and patients themselves has been very encouraging. Whilst enrollment completion is always a key event, it is worthwhile highlighting that as of the first week in November approximately 270 patients in the U.S. and the EU trials have already completed the six month clinical child period, and have either switched on to the further six months extension phase in the U.S. or in the EU should switch on to open label in the near future.

The primary endpoint of the trials is change in Total Motor Score-4, or TMS-4, which is the most sensitive measure of motor dysfunction in Huntington's disease patients. We're looking for a statistically significant differences of 3.2 on a TMS-4 scale between Miraxion and placebo in the U.S. trial and 3.5 in the EU trial. This degree of difference is clinically relevant, allowing patients an improved quality of life between 12 and 18 months.

The trials have been specifically designed to target or enrich the patient population of the genetic subgroup patients, primarily with CAG scores of less than or equal to 44, and who are less severely ill.

Of the response of the less than or equal to 44 CAG per protocol group in the earlier trial was a 6.5 difference in TMS score between Miraxion and placebo groups, equating to a 28.4% difference.

The Miraxion group showed a 22.7% improvement in TMS-4 versus a deterioration of 5.7% in the placebo group. In this group of patients the improvement in quality of life equated to in excess of three years.

There are few interesting facts relating to the subsequent twelve-month open label study resulting from that earlier Phase III trial. Firstly, only one patient out of the 121 eligible decided not to participate. Today almost 3.5 years later we still have over 83 patients taking Miraxion on a named patient basis..

Secondly, those patients who are on placebo in the trial itself and who switched to active on the open label study, showed an improvement in TMS-4 as expected. Thirdly, the improvement in symptoms seen in those patients taking Miraxion in the trial period was maintained in the subsequent twelve-month open label period.

In environment safety is the first priority, and in this respect Miraxion has an excellent safety profile. Firstly, in excess of 700 Huntington's disease patients have now received Miraxion with no safety concerns. Furthermore, Miraxion has been taken by up to a further 400 patients in the other indications, such as depressive disorders, with a similar benign safety profile.

Finally, an identical ultra-pure ethyl-EPA product for the treatment of cardiovascular disease has been prescribed to over 2 million patients in Japan over the last 15 years without any safety issues.

As I have said, we expect to announce topline data from the two Huntington's disease trials in the second quarter of next year, with a more detailed presentation of the full data at a relevant scientific meeting later in the year.

We intend to submit our regulatory filings for marketing approval in the U.S. and EU in mid 2007. As we have Fast Track designation the FDA, we can ask for priority review, which if obtained will give us an FDA response by late 2007, early 2008, with a potential product launch in the first half of 2008.

As the completion of these Phase III trials approaches, we are commencing planning for U.S. commercialization. We expect that this will be a niche commercial infrastructure using a focused salesforce to support the neurology community prescribing the product. We intend to mount a medical marketing campaign aimed at educating the marketplace about the potential of this new therapeutic for Huntington's disease, with a variety of activities aimed at physicians and patients. We will also conduct continuing medical education courses and be present at the major neurology medical meetings.

In terms of the overall market opportunity for Miraxion in Huntington's disease we estimate that the market in the U.S. and the EU to be approximately $500 million plus based on the diagnosed patient population of 70,000 patients. There three potential upsides to this market estimate. Firstly, we have estimated there are 70,000 diagnosed patients in the U.S. and Europe, it is also estimated that there are an additional 400,000 people who, although not yet diagnosed with Huntington's disease, are at risk of developing the disease due to their genetic predispositions. In arriving at our market estimate of $500 million, we do not assume any use by these potential 400 at risk patients.

Secondly, we have pre-clinical or clinical evidence that Miraxion potential he has an effect in diseases such as Parkinson's and depression. We have assumed no use in these indications. Thirdly, depending on the strength of the efficacy data from our Phase III trials, there may be potential for upsides to our pricing assumptions for the drug.

For these reasons it is easy to see how the potential market for Miraxion, following approval for the treatment of Huntington's disease, could be much greater than $500 million.

I will discuss the progress we have made on -- on the other important developments in our pipeline after Alan's financial review. I will now turn the call over to Alan Cooke, our CFO, to discuss our financial results and positioning.

The net loss for the quarter was $7.3 million or $0.09 per share compared to $5 million or $0.10 per share in the third quarter of last year. The main driver for the increase is the significant increase in our investment in research and development from $2 million in the third quarter of '05 to $4.7 million this quarter. This reflects the cost of the two ongoing Phase II trials in Huntington's disease and the development cost of our novel oral formulation of apomorphine.

Selling, general and administrative costs of $2.9 million include, in addition to general corporate overhead, our substantial investment in intellectual property, and the business and corporate development cost pursuing our growth strategies, including a significant level of professional fees, and the cost of evaluating acquisitions and in-licensing opportunities.

The net loss includes a non-cash charge with respect to share-based compensation, i.e., employee options. The non-cash charge for the third quarter was $0.6 million, compared to $0.4 million for the same period in 2005.

Finally, let me address Amarin's capitalization and our cash position. As previously announced in October, Amarin completed a direct placement of registered shares raising $18.7 million in gross proceeds. Amarin has a strong shareholder base. Approximately 27% of the Company is now held by Directors and Officers who have invested over $16 million in Amarin in the past two years. Approximately 50% of Amarin is held by institutions and investment funds predominately in the U.S., with the remainder held by retail investors in the U.S. and Europe.

At September 30, 2006 Amarin had cash of approximately $23 million and no debt. Including the net proceeds from our financing last month, but subsequent to quarter end, provides Amarin with a pro pharma cash position at quarter end of approximately $40 million.

Amarin is now in a very strong financial position. In addition to completing the two ongoing Phase III trials in Huntington's disease, the recent funding enabled the Company to initiate the commencement of three Phase II programs in the next few months.

Firstly, two separate Phase II studies with Miraxion in melancholic depression and in Parkinson’s disease, and also a Phase II study in Parkinson's patients with our novel oral formulation of apomorphine. The completion of the recent funding also better positions Amarin to execute its strategy to supplement its internal development pipeline through the acquisition and in-licensing of other exciting new clinical stage programs in neurology.

Let me now pass it back to Rick.

Most of the attention to date has been on Miraxion in Huntington's disease, but we have been making quiet but significant progress with the rest of the pipeline over the last few months. We now expect to begin three Phase II trials in early 2007. Firstly, a Phase IIb study with Miraxion to treat melancholic depression patients. Secondly, a Phase IIa neuro-imaging study with Miraxion in Parkinson’s disease. And thirdly, a Phase II clinical trial using our novel sublingual formulation of apomorphine.

Taking these Phase II trials in sequence, six Phase IIa studies in a variety of depressive disorders have been completed. Post hoc analysis demonstrated a positive response in patients suffering from a severe form of major depression called melancholic depression. These patients, although readily diagnosable using DSM4, have limited treatment options, as they typically fail to respond to standard of care in depression.

In extreme cases patients undergo electro-compulsive shock therapy. The results from these trials have been evaluated by key opinion leaders who have positive response seen in patients.

Additionally, in order to further validate the findings from these relatively small trials, Amarin has conducted a meta analysis, converting the measures used, such as the Hamilton Rating Scale, Montgomery-Asberg, and Beck Depression Inventory, into a common currency called effect size. The results validated the significant response seen in melancholic depression patients.

We are near to completing the Phase IIb trial design. This trial will consist of approximately 240 to 260 patients, and while take 15 to 18 months to complete. The extended time period is due to the very strict entry criteria to the trial. Melancholic and psychotic depression patients are notoriously variable in their response, which we intend to minimize by specificity in entry criteria. While we're continuing our discussions with several potential partners, and continue to receive new expressions of interest for this program, it is likely that we will choose not to partner Miraxion for depression until we have data from this Phase IIb.

It is our belief that the increase in shareholder value from Amarin conducting the trial itself is significantly greater than the $3 million to $5 million cost of the trial. We estimate that the potential market opportunity could be in the region of $2 billion to $4 billion. We're very pleased with this program and its potential. I look forward to reporting the initiation of this Phase IIb study in early 2007.

Turning to our Parkinson’s disease neuro-imaging study. The results of Amarin's pre-clinical program in Parkinson’s disease which demonstrated the same mechanism of action as the Huntington's disease, i.e. stabilization of mitochondrial cell membrane stability and slowing up apoptosis process. This also showed increases in BDNF. Amarin is currently seeking ethics committee approval for a 40 patient neuro-imaging study in Parkinson’s disease patients. This study will use functional MRI, specifically a technique called quantitative tractography, to look at both function and activity of the nerve track level.

In effect, this technique will allow us to evaluate activity in the [nigostriartal] pathway, which is where the devastating effects of Parkinson's are prevalent. We plan to initiate this 40 patient study in the first quarter of 2007, and should have topline data by year-end 2007.

Finally, Amarin's novel sublingual formulation of apomorphine for the treatment of off episodes in advanced Parkinson's patients potentially offers to significantly increase the overall utility of apomorphine what has been restricted to date by the route of administration which involves multiple frequent and painful subcutaneous injections. We are on target for the delivery of optimized formulations of sublingual apomorphine by the end of this month, and expect to complete a short pharmacokinetics study early in the new year. The pharmacokinetic data will govern the regulatory pathway and will determine whether we pursue a bioequivalency study or a more comprehensive Phase II/III study in 2007.

Apomorphine is the most potent dopamine agonist, and is used for the treatment of off or frozen periods of semi-paralysis in advanced Parkinson's patients, representing approximately one-third of the entire Parkinson's patient population. These off episodes, which can occur between three and five times a day, and as frequently as ten times a day in severe cases, are often considered more debilitating than other symptoms of the disease due to the inability to move in any way, whilst cognition remains intact.

We believe that the market potential for this subluminal formulation of apomorphine is underestimated, because the current route of administration is disliked by patients, but who have few options to rescue them from off episodes.

The high acidity of injectable apomorphine at ph 3 also leads to the formation of granulomas, which are unsightly and painful swellings on the body. Key opinion leaders in Parkinson’s disease have indicated that a sublingual formulation with similar or better advocacy for the injectable will be an attractive alternative.

We continue to hold our conservative estimate that in all apomorphine has the market potential of between $50 million and $100 million for Parkinson’s disease in the U.S. alone. As a result of the improved utility of oral apomorphine, the number of patients using it could potentially exceed our estimates. It is therefore easy to see how the market could surpass $100 million.

Looking at our pre-clinical programs, we now have three combinatorial lipid programs compounds in pre-clinical studies. Two of which conjugates with existing Parkinson’s disease drugs with complex chemical linkages to therapeutically active lipids. Such compounds constitute new chemical entities, potentially with composition of [matter patents]. I should stress that we're not using lipids as a drug delivery mechanism, but are developing entirely new drugs which combine the therapeutic benefit from each of its components.

The resulting new drugs could substantially improve blood brain barrier penetration, improve bioavailability and potentially reduce side effects. We hope to report further progress from our combinatorial lipid program during 2007.

Looking at our growth strategy moving forward. In addition to the activities just outlined, we continue to build our development pipeline by three strategies. Firstly, continue to build on the progress from our internal development pipeline as compounds proceed from pre-clinical and early clinical to late stage clinical development.

Secondly, in-licensing or forming collaborative partnerships to further develop later stage compounds. And thirdly, very selectively and very cautiously we will consider synergistic company acquisitions where it would broaden our product offering and accelerate development timelines.

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

(OPERATOR INSTRUCTIONS). Ian Hunter.

You had given us a very clear breakdown of what is happening in the pipeline, so most of our questions are answered. But in your remarks you were talking about the commercialization of Miraxion for Huntington's disease, and I was just wondering if you can give us any more detail on that -- for your thoughts on the U.S. and the EU, whether you're going down to the direct route in the U.S., given the number of neurologists you would like to target, or whether you're going to go through an indirect method? And what you think the costing is going to be that over the next year or so?

I will take out one. Our preliminary thoughts around this are that the commercial infrastructure will be relatively modest in scale. I think one of the major benefits of The Huntington Study Group actually conducting the trial on our behalf is quite simply that they would be predominately the very same physicians who would be writing the prescriptions for the drug.

Our initial thoughts are that it is likely to be about a 20 to 25 person sales force, specifically supplying the neurologists with additional data. We are in the process at the moment of looking at what kind of Phase IV marketing studies we would -- we intend to move forward with.

Relatively speaking, we intend to minimize incremental infrastructure. We would outsource distribution, for example, and other key elements. But if we really focus in on the size of the sales force it is going to be roundabout the 20 to 25 person size. Clearly as we add additional products to the sales reps' bag, we're going to expand that sales force. But right now we're looking at that kind of scale.

In Europe we inherited a number of licenses from the original developer of the drug. We have already got partners in Germany, Spain, and the UK. We are in preliminary discussions with them also in terms of scaling up the commercial efforts behind the drug.

In terms of costing for the U.S. infrastructure, frankly it is to really to call. We will be able to give you a better indication of that next year.

Just maybe a quick follow-up on housekeeping. Do you feel that your R&D numbers there that popped up this quarter, is this the kind of level you would expect them to be running from now on, or can you see that going up or coming off a bit?

I will take that. The $4.7 million for the third quarter was up on last quarter. I think it will be in and around that region for the fourth quarter. But I expect it to come down quite precipitously in the first half of 2008. If you look at our total spend in the quarter in R&D, 75% it relates to the Huntington's disease trial. You can see it makes sense this should fall off early next year.

Thanks very much.

I will just mention also though of course we have got the patients enrolling into open label studies as they come off these lines of phase of the (indiscernible) trials. And we estimate the study will run for some time. And they are not nearly as expensive as the blinded phase, but 75% did not disappear, so the R&D line will come down.

If I could add something to that as well. Those open label studies are critically important. We've got in excess of 600 patients combined in the two studies. Quite honestly, the cost of actually recruiting these kinds of patients into the study is reasonably high, unless you've got them, it is very, very important to maintain them in the open label phase as long as possible. What we're doing in that open label phase is to continue the assessments by the investigators, perhaps not with the frequency that we saw during the trial period, but it is very important for us to maintain that data as almost long-term data once we've got the patients.

Jack Gorman, Davy Stockbrokers.

I've got a couple of questions, if that is okay. Two on Miraxion please. Firstly, Rick, you mentioned you will be reporting topline data. I am just wondering if you can just give us a sense of what we should actually expect in that topline data, what level of detail will you be able to provide. And then I suppose when you'll be reporting the full data?

The second question on Miraxion is the conversion to open label. Does the trial, or do you assume in your trial protocol that there is 100% conversion to the open label after the six months are over?

And then a more broad question just in terms of licensing. And I note that you highlight the fact that you are still actively looking for opportunities. Could you describe the environment for us in terms of license and overall? Has it changed much over the last 12 months? Any kind of features that you would note -- maybe just give us a bit more color on that please.

Let's start with the first one in terms of what data are we going to be announcing. I will start with the rough timetable. We're going to be announcing the data in Q2 of next year. Our expectation really will depend on frankly what that date looks like. But I think headline data we will be looking at the statistical significance in the primary endpoint, but also potentially looking at some of the responses that we saw in the secondary endpoint, which revolve around behavior and cognition skills as well. I would dearly love to be able to give you what the absolute numbers are going to be, but we will have to wait until Q2 next year.

In terms of the conversion to open label, no, we don't necessarily expect that there is going to be 100% conversion. It is a little bit complicated. Let's take the U.S. study first. In the U.S. study at the end of the six-month clinical trial period, patients automatically go on to a further six month extension period. So we will get 100% conversion from the trial to the extension period by definition within the protocol.

In that swap over all patients on placebo will go on to active. At the end of an effective 12 month period, we will then commence a true open label study where we will have a number of assessments, but not as frequently as we had before.

In the EU trial at the end of the initial six-month total trial period all patients will go on to open label. I think if we replicate what we saw in the initial Phase III where we had 120 of 121 eligible patients, that was clearly a positive in terms of the long-term data collection. But we're not actually automatically assuming that they're all going to switchover.

in terms of the in-licensing environment, I think it is easy -- it is safe to categorize it this way. In the U.S. the value expectations for some of the opportunities that we have been evaluating have been significant. And necessarily depending on where they are in the development cycle, would not be where the kind of value that we would be prepared to get involved in.

I witnessed, for example, I think it was Biogen Idec, with you UCB, I think it was, who paid $75 million for a Phase I program. We're not in that game. What we are more in the game of doing is working as a collaborative partner to codevelop exciting compounds where potentially the partner is a smaller European company who is very familiar with the European regulatory environment and less so with the U.S. FDA environment, where we can provide substantial resources and capability in that field.

I think -- we have had a number of discussions which are ongoing, which are in that kind of mold. I see there is value there. But that is not to say that on a selective basis we won't attempt to look at compounds in the U.S. market where there is real validity in the results.

As a follow-up to that, in your own experience in those sort of negotiations and kind of investigations, is there a requirement to have a marketing or sales infrastructure in place already, or do you find the potential partners are happy with the plans rather than the actual.

Certainly the discussions we have ongoing right now, the attraction of Amarin to these partners is expertise, our regulatory expertise in the U.S. And the fact that we have plans for the U.S. market for our own commercial understructure in the U.S. is a bonus, frankly.

Having had the experience of a commercial infrastructure in the U.S. in the past, and having maintained the reputation with the neurology community in the U.S., I think we're pretty well placed.

But I think the attraction in the short-term to these European partners on codevelopment is our capability with the FDA and actually conducting clinical trials in the U.S..

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

Yes. If I could summarize, we will have results from the two Phase III Huntington's disease clinical trials in Q3 2007. We will commence the Phase IIa neuro-imaging study in Parkinson’s disease, and announce topline data by year-end 2007. We will commence either a final stage bioequivalency study or a Phase II/III trial with our novel sublingual formulation of apomorphine, and potentially report data as early as year-end 2007. And we will commence the Phase IIb melancholic depression trial in 2007.

We also expect to expand our development pipeline by in-licensing additional promising clinical stage neurodegenerative disease compounds in the same time period. And finally, we are in a very strong financial position and have an experienced management team with which to execute our growth strategy. Thank you again and good day.

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