Amarin Corporation PLC (AMRN) 2007 Q3 法說會逐字稿

Good morning. My name is April and I will be your conference operator today. At this time, I would like to welcome ever to the Amarin Corporation third-quarter financial 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).

I would now like to turn the call over to Miss Fields with Lippert/Heilshorn. Please go ahead.

Thank you. Good morning. This is Anne Marie Fields with Lippert/Heilshorn and Associates. Thank you all for participating in today's call. Joining me from Amarin are Rick Stewart, Chief Executive Officer; Alan Cooke, President and Chief Financial Officer; and Declan Doogan, President-Research and Development.

Earlier this morning, Amarin announced its financial results for the third quarter ended September 30, 2007. 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 [Cheryl Palazzo].

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 past and future filings with the SEC, including without limitation the Company's Form 20 F. and 6-K which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Furthermore, the content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast, November 20, 2007. Amarin undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

With that said, I would like to turn the call over to Rick Stewart. Rick?

Thank you, Anne Marie.

Before we review the third quarter, I'd firstly like to highlight some of Amarin's key value drivers and how substantial progress is being made in creating shareholder value. Clearly, yesterday's announcement of the Huntington's Disease comprehensive data review and the FDA dialogue now becomes a significant element of that value creation, as does the cardiovascular strategy announced on the 10 of October. Amarin has a highly valuable drug development pipeline with [five] Phase II programs planned to commence within the next 12 months.

Until recently, Amarin's therapeutic focus was entirely in neuroscience, where we have two drugs in development for Parkinson's disease with, firstly, a novel sublingual formulation of ethylmorphine, which is a rescue treatment for patients experiencing off or frozen periods of semi-paralysis, and secondly, a targeted lipid transport form of levodopa, which utilizes Amarin's proprietary combinatory (technical difficulty) lipid platform. Both of these products have the potential to transform Parkinson's patients' quality-of-life.

In age-associated memory impairment, we are using Miraxion, where a substantial preclinical data has shown evidence of improving memory function.

Finally, in epilepsy seizures, we are developing a convenient outpatient nasal formulation of lorazepam, which is regarded as the treatment of choice in the emergency room setting. We expect to commence Phase II trials with Miraxion for age-associated memory impairment imminently and with sublingual apomorphine in Parkinson's disease within the next 12 months. Nasal lorazepam should proceed into human pharmacokinetic studies in 2008 also. The combined market opportunity for these neuroscience drugs is in excess of $1 billion.

In addition to the substantial neuroscience pipeline, as I mentioned, on the 10 of October, we announced Amarin's cardiovascular strategy, which is focus in the areas of (technical difficulty) and metabolic syndrome. Both of these categories are substantial and offer significant revenue potential as the statin market for cholesterol management matures. The cardiovascular program exploits the known therapeutic benefits of our lead compound, ultrapure EPA, in triglyceride lowering. This is evidenced by the Japanese experience of over 2 million patients being prescribed this drug over 15 years. Additionally, an EPA-based drug has been approved for triglyceride lowering in the U.S. and is doing extremely well. We will discuss the substantial value of the cardiovascular programs in more detail later, but let me emphasize that we intend to progress these programs to proof of concept before we find a cardiovascular partner to advance these programs into Phase III trials. In our cardiovascular strategy, Amarin is planning three Phase II trials within the next 12 months.

In order to bring all these programs to fruition, we have assembled a first-class and highly experienced management team. In addition to Amarin employees, we have the ability to call on a substantial scientific knowledge network of experts in their field, which further increases our ability to both deliver and manage the risk associated with drug development.

Turning to the third quarter, it was an exceptionally busy and rewarding quarter, as we continued with our comprehensive review of the clinical data from our two large-scale Phase III trials of Miraxion to treat Huntington's Disease. In tandem with this, we conducted an in-depth review of our entire preclinical and clinical development pipeline, assessing the risks and potential value of our scientific and clinical assets. We also developed additional product concepts that could serve a number of unmet medical needs.

In order to achieve our objective of critically assessing the pipeline, the extensive knowledge network of key advisors mentioned a moment ago has been especially valuable in contributing to our decision-making processes. These advisors have been able to give the Amarin team an objective judgment of product opportunities, risk assessment and mitigation strategies, the competitive landscape, and the clinical and commercial potential of our compounds and programs.

In addition, as announced yesterday, we had a very encouraging meeting and dialogue with the FDA regarding the comprehensive analysis of the longer-term data from the Phase III Huntington's Disease trials. As a result, the FDA indicated the one additional Phase III trial demonstrating robust results in conjunction with the confirmatory evidence from the existing clinical data may be sufficient to support a New Drug Application. This is particularly important as the additional analysis supports our earlier clinical findings and suggests that a longer treatment period with Miraxion provides clinical benefit to Huntington's patients. Our comprehensive review incorporated all clinical data from Amarin's Huntington's clinical trials.

As previously announced in April, at a six-month time point, there was no statistically significant difference in efficacy between the Miraxion group and the placebo group. However, analysis of the 12-month data showed a statistically significant difference in which was the primary and period, between a long-term Miraxion treatment group and those patients who had switched to Miraxion at six months. Treatment codes were not broken at the switching point to investigate this in patients who remain blinded to receiving Miraxion or placebo in the initial six-month period. These results suggest that there is a benefit from a longer treatment period with Miraxion and are consistent with a 24-month open-label data from the earlier 135-patient trial completed in 2003.

A longitudinal analysis combining all data points was applied to the results of the recent U.S. trial, and a statistically significant difference between Miraxion and placebo groups was identified. Applied to the earlier 135-patient trial, the longitudinal analysis also showed a statistically significant difference between Miraxion and placebo in the third protocol patient groups, and additionally a greater degree of statistical significance in the intend-to-treat genetic subgroup of patients with a CAD score less (inaudible) to 44 then in the previous analysis.

An analysis was also conducted on the 24-month open-label data from that 135-patient trial in which patients initially randomized the treatment with placebo have been switched to Miraxion and treated for 12 months. After switching to Miraxion, these patients demonstrated an effect of similar magnitude to patients randomized for treatment with Miraxion at baseline. We are now in discussions with the Huntington Study Group to determine the optimal design of the required single Phase III trial. We are also considering whether Amarin will conduct this study itself, or if we will seek a collaborative partner to develop Miraxion in Huntington's Disease.

Before I delve into a more detailed review of our neuroscience and cardiovascular development programs, I'd like to turn the call over to Alan Cooke, Amarin's Chief Financial Officer, to give a review of our third-quarter financials. Alan?

Thank you, Rick. The net loss for the third quarter was $5.9 million or $0.06 per share. This compared to $6.6 million or $0.08 per share in the third quarter of last year. The decrease is primarily due to the completion of the Phase III trials of Miraxion earlier this year.

Research and development expenditures decreased by $2.1 million to $2.2 million, mainly due to the completion of these trials. R&D costs for the third quarter primarily represent expenditures on Amarin's two Parkinson's disease programs, its epilepsy and memory programs and some expenditure on initiation of its new cardiovascular program.

Selling, general and administrative costs of $3.1 million were $0.5 million up on last year, primarily due to higher personnel and business development costs. Significant components of SG&A costs are the costs associated with pursuing our growth strategy, including costs of evaluating acquisition of in-licensing opportunities, especially professional fees and due diligence costs. Third-quarter SG&A costs of $3.1 million decreased from $4 million and $3.8 million in the first and second quarters of this year, effectively.

Turning to our balance sheet, Amarin had approximately $21 million in cash at the end of the quarter. Directors and officers of Amarin have already invested over $23 million in the Company in recent years and own approximately 27% of the Company. This is a strong testament to both the Board and management's commitment to believing the Company has future potential.

Amarin has no debt, other than working capital liabilities, and our forecast is having sufficient cash to fund its operations into September, 2008, excluding any additional funding or possible revenues from partnering its development pipelines. It also excludes any expenditure on Phase III trials for Huntington's Disease.

Finally, at September 30, Amarin had 97.8 million ordinary shares in issue and options and warrants (inaudible) to purchase 22 million shares.

With that, I will turn you back to Rick.

Thank you, Alan. One of the key objectives over the past quarter has been to de-risk Amarin's development portfolio. We've used the knowledge network mentioned before extensively to evaluate the specific development risks with each program and have attempted to mitigate those risks. The portfolio currently consists of both precedented drugs, where we are addressing the limitations of existing drugs, and new chemical entities.

I will now give a brief update on the key programs in the neuroscience and cardiovascular development pipeline. A comprehensive update is included in our press release, so I will now jut hit the highlights.

Firstly, sublingual apomorphine, which is an example of a precedented drug, a final pharmacokinetic study in volunteers is planned to commence as soon as the necessary regulatory approvals have been obtained. A Phase II study in Parkinson's patients will follow later in 2008.

Secondly, our targeted lipid transport, levodopa, which uses Amarin's proprietary combinatory lipid platform -- initial preclinical results support this concept and are very encouraging. Results show substantially increased brain levels of dopamine compared to control in preclinical models. Additional preclinical studies are now ongoing. Phase I human safety trials are required because of the potential for increased levodopa levels in the brain, and are planned to commence next year.

Thirdly, our novel nasal formulation of lorazepam for epilepsy seizures -- Amarin is currently evaluating the results of a recently completed preclinical pharmacokinetic study. Subsequent refinement of the nasal formulation for use in human trials is expected to begin shortly. Clinical trials are planned to commence next year.

Our final neuroscience development program is for memory and cognition. Amarin intends to commence a double-blind placebo-controlled proof-of-concept study with ultrapure EPA in age-associated memory impairment in patient volunteers by year-end. Data generated by the Institute of Neuroscience (inaudible) College in Dublin strongly supports the use of essential fatty acids in preclinical models of memory and cognition and have shown substantial improvement in long-term potentiation, which is a surrogate marker for memory.

Our recently announced cardiovascular disease strategy will build on the extensive cardiovascular experience of EPA to develop drugs for the treatment of dyslipidemia, which is the name for the overall treatment of cholesterol imbalances, and potentially Metabolic Syndrome, where it is estimated that up to 50 million Americans are afflicted with this condition. Amarin plans to utilize its extensive know-how and experience in lipid science to develop a series of drugs targeting the vascular system, endothelial dysfunction, vascular remodeling and resulting diseases such as metabolic syndrome. Amarin is building on an extensive knowledge base in cardiovascular disease and plans to leverage this expertise to great new therapies from its existing family of compounds.

The first cardiovascular trials are planned to start by the end of this year in dyslipidemia, subject to regulatory approvals and overall timing. We also intend to commence investigation of new compounds from our existing development portfolio for the treatment of Metabolic Syndrome and dyslipidemia.

Finally, we will look at the targeted lipid transport platform, which in the longer-term offers substantial opportunities to improve the bioavailability of a range of drugs. The targeted transport of levodopa to treat Parkinson's patients discussed earlier is the prototype for this platform. In addition, Amarin has several targeted transport projects under evaluation in a range of indications. As these programs progress, further details will be disclosed.

So, in closing, Amarin is focusing its activities in two therapeutic categories with multi-billion dollar opportunities. Those are neuroscience and cardiovascular disease. Importantly, Amarin has a strong, experienced and committed management team with the expertise to successfully drive these programs, both scientifically and through the clinic, onto commercialization.

So with that, I will turn the call back to April for your questions. Thank you, April.

Thank you. (OPERATOR INSTRUCTIONS). Ian Hunter, Goodbody Stockbrokers.

Good afternoon, gentlemen. Rick, I just have to get back to the Miraxion trial there for Huntington's Disease and the potential for another one to come through the pipeline in the next year or so. I'm just wondering if you can give us some more details maybe on potential timeline when things could start, patient numbers and maybe more importantly, the position of the costing of it, if you've had any chance to look at that yet.

Thanks, Ian. I have to say it's too premature to be perfectly blunt. Frankly, we only met with the FDA last Thursday, so we haven't yet had the opportunity to put any detailed plans in place, or indeed to really put any flesh behind the bones of what that trial might look like that. But I would suggest that, as soon as we've got some substance behind it, we should probably be on the fourth-quarter call, we will be able to give you some more details on it.

Okay, I know. I appreciate it's in early stage as well. But you did mention the idea of maybe partnering. Do you have any kind of thoughts on what type of partner you'll be looking for?

Yes. Interestingly, we have been approached in the past by a number of interested parties on the Huntington's program, and I think, at that stage, our view was that we would wait until we have data. But I think, given the substantial amount of clinical data we've got from these two Phase III trials, it would be probably appropriate to start -- to evaluate those kind of discussions.

I'm certainly not saying that we're going to go down that route, but I think that one of the key elements here is going to be that we need to, first of all, look at what a trial design might actually look like, look at what the cost would be, and then look at what the real potential from a partner, other than cash, would actually bring to us.

Clearly, as you may already know or may remember, we have certain EU rights which are currently available for the drug. It might well be that the partner is not necessarily a U.S. partner per se; it could be a European partner as well.

Great. Thanks very much.

[Kenneth Poole], Wachovia Securities.

Yes, good morning, gentlemen. I have basically two areas that I want to cover. One is that the announcement yesterday on your Amarin -- why make an announcement? It's really no revenues for the foreseeable future. You have other drugs that are coming along. Why not expend your time and effort on those and let Amarin take care of itself? That's the one question.

The second question is a physical question. To get into your site, it's like getting into the IRS. You have to go through all kinds of maneuvers to get to your e-mails and your -- not your e-mails but your announcements, your news announcement. Why not -- why do we have to, you know, why all this business about three pages of denials? Why don't you just say this information could be and could not be true, and leave at that? That's all I have to say.

[Penn], it's Alan here. On the second question, I think it's standard practice now in the U.S. to have a disclaimer notice on Web sites, on business Web sites, and we're just doing what is practiced these today. It is cumbersome to go through the Investor Relations section. You do have to read the disclaimer, but this is the (inaudible) we have and what is the norm now in the U.S. So, Rick, do you want to address the first question?

Yes, [Ken] let me go for the first question. I think the fact that we have a positive result out of the 12 -month data from the comprehensive evaluation, I don't think -- I know it was a material event as far as our requirement to disclose it. But I think what, more importantly, what is intended to say is that clearly the 12-month data plus the longitudinal analysis reinforce that patients were benefiting from a longer treatment period for Miraxion.

Just to address a subtheme in your question, I will emphasize this very clearly, that this announcement on Huntington's Disease in no way detracts from our focus or attention on the underlying neuroscience development pipeline. We're very proud of the fact we've got four compounds in that pipeline which have real value and potential. But the way I would like you to look at this is that this asset in Huntington's Disease, which has substantial value, if we're able to deliver a robust result in an additional Phase III, it will add substantially to shareholder value.

Elemer Piros, Rodman & Renshaw.

Good morning, gentlemen. Rick, what I'd like to ask if you could walk through just some numbers on the Phase III Huntington's study. How many patients did start the study and how well balanced the treatment and placebo groups were? What was this number at 6 months and 12 months, please, if you can remember? Or maybe just a rough approximation if you can't remember precisely.

I think (inaudible) in my memory. Dec, do you have those numbers per-hand?

Well, in aggregate, your two Phase III studies in a total of more than 600 patients -- I don't have the detailed (inaudible) of the actual analytic cohort at 6 and 12 months. But what's interesting is that the compliance is extremely good. This is a very motivated population, and they have been very loyal to the studies. So therefore, we have reasonable cohorts of patients at each of the 6 and 12-month time points. So therefore, we feel as though that, in future study designs, we know how to design the studies such that the requisite number of patients would be present at the evaluation periods and we would make sure that future study designs were optimized to enhance the signal.

As for the previous Phase III studies, the studies were designed principally at a six-month analytic time point with the U.S. study having built in a second time point of 12 months where patients were all on placebo -- all on active drug at that point. So, we have several hundred patients in that cohort, but I don't believe that, on reanalysis of the study where we said, first of all, the primary end point missed. I think that, on reanalysis, using different analytic techniques, we feel as though there's enough of an efficacy signal there at those time points to warrant further evaluation of the product.

Do you remember whether the final number was 50%, 75% of the original number? I.e., what was the dropout rate at the 12 months time point roughly (multiple speakers)?

I don't have the numbers on my -- I have the numbers on my computer, which has just died on me, unfortunately, but I can give you those towards the end of the call when I've got some more electricity.

Thank you very much.

Elmer, we can get back to you specifically with exactly those numbers.

Thank you. Maybe a somewhat related question -- would you explain what is the difference between the original analysis and the so-called longitudinal analysis please?

Declan, could you answer that one, please?

Sure. So, the original analysis was (inaudible) conventional analysis of a time point whereby you take whatever the primary variable is at the given time point of 3, 6, 9 or 12 months, and do a comparison. Then also you do a final observation carried forward where the last evaluation on treatment is compared irrespective of duration of treatment. That's an intent to treat (inaudible). Now, that actually failed to show the requisite levels of statistically significant difference between active and placebo. At that point, we were basically concerned that indeed all our views of the product had been exhausted. So therefore, another analysis was undertaken and it is the method of longitudinal analysis published by we and (inaudible) and Johnson. This is, in effect, if you can imagine an area under the curve, which you do in the pharmacokinetics, it's the same approach for efficacy measures. To a certain extent, what it does is it's agnostic to time. It takes the whole area that a drug benefit shows over a time period and compares that with the area over the placebo curve. If the two curves are overlapping, then you'll note they're significant. If there is a difference in the shape of those curves, then what you get is a statistically significant difference. This is what was emerging using the different analyses, using the different variables, using the way (inaudible) Johnson longitudinal method.

Have you discussed with the FDA what would they think about a potential longitudinal analysis of a future Phase III study?

Well, what I consider is that the method of [we and Johnson] is published; it is validated approach, and that it has already been, for other agents, been presented to the FDA.

Now, this subsidiary analysis was presented to the FDA this time, and whilst the FDA is not going to formally accept or reject, what we consider in discussions is that it contributes meaningful data, and so therefore it is a legitimate method of analyzing these data. Now, whether or not it features in the second study analysis plan I can't comment at this point. Nevertheless, I think it's an intriguing way forward.

The last question related to this study -- the P value at the end of 12 months, what was it? Or again, a ballpark number in the original landmark analysis, please?

So the original analysis -- I'm just trying to call it out now -- we're in the process of writing this study up. I think you have to be aware that we don't want to steal the author's thunder and so (inaudible) publication embargo. But what I will say is that the level of statistical significance using the (technical difficulty) (inaudible) was improved.

Okay. Coming back to you, Rick, I understand that it's difficult to guesstimate how extensive the second or the third Phase III would be, but maybe if we could look at how expensive the current Phase III was, we could use that as a base case and build on that.

I will let Alan answer that one.

Elemer, the totality of the cost of the two Phase IIIs that we did was about $18 million.

8-0?

No, no, 18, 1-8.

18, 1-8, okay.

Yes. That's give or take $1 million, so I don't have it especially in front of me. It was a round-off number. Now, when you break that down, there was a cost for the U.S. study, there was a cost for the European study, and then there was a cost for the overall over (inaudible) statistical daily announcement for both studies.

So I think our strategy (inaudible) investments at this stage is too premature to be throwing out numbers, but in terms of one single study in the U.S. and depending on that, you're talking somewhere in the region of $8 million to $10 million.

Yes, yes, that's what I figured. Thanks very much for answering all of my questions.

Alan, Elemer, could I just add, you wanted some data around how many patients were in the six-month cohort, so we're talking about a total of about 150 patients in each group in the (inaudible).

Okay, okay. How about at 12 months? Did you get the 12-month number by chance?

The 12-month number is just coming up. It's in the -- no, I will get back to (multiple speakers).

Okay, that's fine. Thank you.

Jack Gorman, Davy.

Thank you. Guys, I have two questions please, just as maybe some additional follow-up ones on the [HD newsflow]. You mentioned that using the analysis of the 12-month data, that there was a statistically significant difference in TMS scores. Can you give us a sense or any indication of whether that was more marked in the subgroup of patients that had their genetic score or [CAG] score of (inaudible) 44?

Declan, I don't know whether you have those numbers to hand, but I do.

Well, carry on. I've got them, too, but you carry on, Rick.

Okay. I mean, just looking at the data here, Jack, it looks like they're actually in the -- between the -- on the time point analysis and for the CAG also (inaudible) CAG less (inaudible) 44, they were about the same, actually.

That's under both the 12-month analysis and the longitudinal analysis?

No, in the longitudinal analysis for the -- well, in both categories, the longitudinal analysis was better.

Okay, okay. Presumably, Rick, just a quick follow-up on that, it doesn't change your overall thinking as regards the focus on the subset of patients?

Well, remember, Jack, the trial or both of the trials were designed very specifically to cover all -- to have all [comers] in the study, based on the algorithm for recruitment to the study. So, we had co-primaries. One was for all comers, regardless of CAG score, and the second one was for the (inaudible) 44 group. So it hasn't changed our thinking around that kind of differentiation.

Okay, that's perfect. Maybe a second question, again on HD -- can you just remind us, in terms of your approach in terms of the EU regulatory authorities, whether you've submitted or presented to those authorities (inaudible)?

That's a good question, Jack. We have not actually met with the European authorities yet. We intend to do so in the coming weeks or months, as soon as we can get a meeting set.

Perfect. Maybe as a final, more general question, Rick, you mentioned, in many parts during the call, partnering and the desire and the potential to partner. What's your overall sense of the partnering environment out there, and has it changed much over the course of 2007?

I will answer in reverse order. I believe that the partnering environment has changed pretty substantially. There are much more aggressive approaches in terms of finding late-stage or indeed frankly (inaudible) some other compounds that are coming through even at an earlier stage. So yes, we are seeing that both European, U.S. and medium-sized companies are looking to add to their existing development portfolios very aggressively.

So essentially demand has increased as far as (inaudible)?

Demand has increased. I think the [Coli] transaction with Pfizer, which I think was announced yesterday or Friday perhaps, is a very interesting kind of situation. So yes, I think the demand has increased fairly substantially.

Okay, that's great. Thanks, guys.

(OPERATOR INSTRUCTIONS). [William Rosemund], Maxim Group.

Good morning, gentlemen. Could somebody please discuss how long a new trial would take, and if you went to the loan, do you have enough cash on hand to do it yourselves? Also a second question, could you discuss your current status with the NASDAQ as far as your listing and when that moratorium of the under $1 ends? Thank you.

I will answer the first bit. As I said at the beginning, it's really premature to be talking about overall trial design, but clearly what we have been seeing the from the results of the data analysis and the longitudinal analysis is that the patients are showing a benefit in response over the longer period, be it up to and beyond 12 months. So without prejudicing the overall trial design, I would suggest that we would evaluate a trial in excess of maybe up to 12 months and beyond.

As far as the remainder of the question, I will handle that over to Alan.

So the second part of your question was (inaudible) and we haven't determined yet; we've only had the meeting with the FDA last week but we made up the raising funds ourselves from the study where we made up the funding (inaudible) with the -- in a collaboration with a partner.

But that other question you had was in relation to our NASDAQ listing. We are currently corresponding with NASDAQ regarding our listing. Right now, we're confident that we have a plan to regain and sustain our compliances (inaudible) rules and avoid any delisting.

At this time, there are no further questions.

If I could summarize, April, I'd just like to look at the overall pipeline that we have. I mean, historically, our focus on Huntington's Disease and the Phase III trials has tended to eclipse the underlying value of the remainder of the neuroscience pipeline. Over the last six months or so, we've invested significant efforts in bringing forward the value of that neuroscience pipeline.

So just to summarize, firstly, we have built a very valuable neuroscience and cardiovascular development pipeline, which is risk-adjusted by including improved-outcome versions of existing drugs and new chemical entities. Secondly, the cardiovascular initiative is an opportunity to exploit the existing end-market and clinical experience of EPA. Thirdly, the news from the FDA on Miraxion and Huntington's Disease gives us a roadmap to design a trial which should deliver robust results. It also adds a late-stage program to our development portfolio. Finally, we've assembled a first-class team to execute on the development programs and have the benefit of the knowledge network of experts to aid the risk assessment and the execution of the pipeline.

We look forward to updating you with the fourth quarter and full-the results, by which time we expect to have commenced two Phase II trials. Thank you and good day.

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