Amarin Corporation PLC (AMRN) 2008 Q2 法說會逐字稿

Good morning. My name is Brian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amarin second quarter 2008 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).

Mr. Cunningham, you may begin the conference.

Thank you, Brian. Good morning. This is Darren Cunningham, EVP of Strategic Development and Investor Relations at Amarin. Thank you all for participating in today's call. Joining me on this call from Amarin are Tom Lynch, Chairman and Chief Executive Officer, Alan Cooke, President and Chief Operating Officer, and Dr. Declan Doogan, Head of Research and Development. Earlier this morning Amarin announced that the second quarter 2008 results, and the Company also announced their strategic business and pipeline update.

If you have not received this news release, or if you would like to be added to the Company's distribution list, please contact Amarin Investor Relations in Dublin at 3531-6699-020, or by e-mail at investor.relations at AmarinCorp.com.

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 read the Company's past and future filings with the Securities and Exchange Commission, including without limitation, the Company's Form 20-F, 20-FA 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 this live broadcast, September 25, 2008. 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 Tom Lynch. Tom?

Thanks, Darren. You are all very welcome to our call today. Good morning, and good afternoon. Amarin has now emerged from an extended period of planning and transition, to present what we believe to be the new opportunity for Amarin shareholders. We have successfully recapitalized the Company, and we strategically repositioned our Research & Development pipeline.

Amarin is not focused as a principle research and development program on cardiovascular disease, specifically AMR101, Amarin's ultra-pure EPA product for Hypertriglyceridemia. This is a near-term, low-risk high value development opportunity, where safety has been established, and efficacy of EPA best products, proven in multiple studies around the world.

In this quarter, we met with the United States Food and Drug Administration, and reviewed our development plans with the Agency. We are now preparing to enter Phase III clinical trials next year. Following this period of intense and effective planning, we are moving into a period of execution.

We are building a purpose-built senior research and clinical development management team in place in our new location in Connecticut, United States of America, to take the product forward into Phase III. We are building a team of highly experienced drug development personnel, to ensure that we properly capitalize on this opportunity. On completion of the announced $60 million funding, we will have approximately two years cash available to us, so I am very pleased to report that Amarin has been successfully repositioned to take advantage of this very exciting and low risk opportunity in cardiovascular disease.

I would like Alan perhaps to discuss the quarter, and the market opportunity in Hypertriglyceridemia.

Thanks, Tom. Starting with a brief comment on the Q2 results, and details of which are available in the press release we issued earlier today. Operating expenditure for the second quarter of 2008 was $5.8 million. This excluded noncash share-based compensation. Of the $5.8 million, SG&A accounted for $3.8 million, R&D was $2 million.

The SG&A has decreased from last quarter and this trend will continue in the coming quarters as a benefit of cost saving measures executed earlier this year take effect. We expect R&D expenditures to increase from these levels, especially when we commence our Phase III program in cardiovascular disease. There was net income in the quarter of $0.3 million. This is driven by a noncash finance credit of $6.3 million, related to the options we granted to investors in our May financing, and this is explained in detail in our press release.

Turning to our balance sheet, Amarin has approximately $26.3 million of cash at the end of the quarter, and shares, we have 27 million ordinary shares in issue, and options and warrants outstanding for purchase of approximately 4.8 million shares. So turning to our new strategic direction, we announced this morning that we have repositioned the Company to capitalize on our expertise in the field of lipid science, and on the known therapeutic benefits of essential fatty acids in cardiovascular disease.

Specifically, we have prioritized the development of AMR101 for hypertriglyceridemia and related cardiovascular applications, including mixed dyslipidemia. Over 100 million people in the US have dyslipidemia, with over 10 million of those diagnosed with hypertriglyceridemia. Amarin's AMR101 is an ultra-pure ethyl-EPA prescription grade Omega-3. Global annual sales of prescription grade Omega-3 products now exceed $1 billion, and are expected to grow into a multi-billion dollar market in the coming years. Growth has been driven by a combination of strong safety and tolerability, combined with established efficacy in treating cardiovascular disease.

At this time, there is only one FDA-approved prescription Omega-3 in the US known as Lovaza. This product is currently on an annualized global sales run rate of $700 million, and is currently growing at over 60% year-over-year in the US. GSK acquired this product late last year when it bought Reliant Pharmaceuticals for $1.6 billion in cash. Lovaza is Reliant's top selling drug. The drug is also available in Europe under the brand Omacor. Analysts estimate the peak global sales for the Lovaza/Omacor franchise could exceed $3 billion.

Given the size of the opportunity for AMR101 in hypertriglyceridemia and related indications, and the large prescriber population for these cardiovascular indications, we plan to ultimately secure a partner to commercialize this opportunity globally. With the prioritization of the cardiovascular programs, and the corresponding allocation of our personnel and financial resources to those programs, we will now seek to partner our CNS pipeline. This CNS pipeline contains a number of innovative and exciting development prospects, including product candidates in Huntington's disease, myasthenia gravis, Parkinson's disease, and epilepsy.

With that, I will hand you over to Declan.

Thank you, Alan. I would like to comment further on two specific areas on the call today. One, our cardiovascular programs, and two, our R&D operations. Our cardiovascular programs comprise AMR101, which is entering Phase III for hypertriglyceridemia, plus additional related indications and planning, and a preclinical program for new lipid compounds.

Firstly, to AMR101 for hypertriglyceridemia, this is a condition in which patients have high blood levels of triglycerides, a component of dyslipidemia. As the treatment of dyslipidemia evolves, medical experts now advocate that attention be focused on triglyceride levels, as they are an independent risk factor for cardiovascular disease. Hypertriglyceridemia does not usually occur in isolation, and often together with elevated cholesterol.

These mixed lipidemic states require combination therapy with other products, such as statins. The priority of our cardiovascular program particularly AMR101 for hypertriglyceridemia is premised on a number of important considerations. It utilizes our internal lipid science expertise, leverages some of the investment we have made to date on AMR101 in preclinical and clinical studies.

AMR101 has been shown to have an excellent safety and tolerability profile in these studies, and it also takes advantage of the established efficacy of the Omega-3 fatty acid platform, particularly EPA in reducing triglyceride levels in producing benefits for cardiovascular disease, as demonstrated in multiple epidemiological studies and clinical trials around the world. Finally, it provides us with a near-term, low-risk Phase III candidate to target $1 billion markets.

Regarding the status of the Hypertriglyceridemia program, we announced that we previously met with the FDA to discuss the development requirements. This meeting was very productive, and paved the way for the Phase III program which will commence next year. It is envisioned that future development of the AMR101 in conjunction with a potential partner, will target additional indications in cardiovascular disease.

Finally, our cardiovascular program also comprises an early preclinical component of new lipid compounds, which were created using our internal know-how and expertise. These compounds are designed to be multiple times more potent than natural Omega-3s, and we expect to commence preclinical testing of the lead candidates in the coming months.

Turning now to our R&D operations and capabilities, we have already established and assembled a panel of experts, comprising of internal and external members, focusing on progression of these cardiovascular programs. Key external members are Dr. Ian Osterloh and Dr. Pierre Wicker. Both were senior clinical development executives at Pfizer, with relevant experience to Amarin's cardiovascular program.

Last week we announced the appointment of Dr. Paresh Soni as Head VP and Head of Development. He will report to me. Dr. Soni, who joins us from Pfizer, brings with him many years of leadership and drug development in a variety of therapeutic areas. His experience in progressing late stage programs through NDA filing will be an invaluable addition to our team.

Dr. Soni will be based in the new R&D headquarters in Connecticut. The selection of Connecticut as our headquarters allows Amarin to attract a large range of talented personnel, required to assure success for our development activities. These are indeed exciting times for Amarin. We are looking forward to a very productive time, which will see our Phase III program in hypertriglyceridemia up and running, our US R&D office well established, and starting to see results from preclinical studies of our next generation lipid compounds.

With that, I will turn the call back over to Tom Lynch.

Thank you, Declan. Before summarizing, I will now turn the call over to the operator for your questions.

Thank you sir. (OPERATOR INSTRUCTIONS). Our first question comes from the line of Stephen Handley with JM Dutton and associates.

Good morning or afternoon. Let me ask you whether, with the new management and new investors now on the Board as well, have there been any important shifts in these development priorities? I mean I hear what you are doing, but have any shifts in these development priorities, are they going to impact the short-term cash flow significantly in one way or another, from what you might have seen six months or so ago, anticipated six months ago? And secondly, could you give us some preliminary thinking about next year on a financial or cash flow, cash burn basis? Thank you.

Stephen, thank you. As we have said in our earlier comments, we have approximately two years cash flow available to us. And as a result of the financing, and it is very clear from our perspective that we want to put the Company in a position where we have the clinical trials substantially under way, and we are going to try and work such that we can get to the point where we will not be selling any additional shares in the marketplace hopefully before we have data.

So that is one of our key objectives. And in raising the 60 million in the spring, we were focused very much on being able to execute fully on our programs. Now the strategic shift really arose from these decisions. In the second half of 2007, Declan was evaluating where the best opportunities were likely to be, and we came to the conclusion towards the end of last year, that cardiovascular presented the greatest near-term opportunity in terms of low risk/high reward.

Almost around the time that decision was made, it seemed to us to be endorsed by Glaxo's decision to buy Reliant to acquire Lovaza, Lovaza is a combination of EPA plus DHA, and indeed the growth in that product this year has been almost exponential, if one looks at the script trajectory, so that seemed to endorse commercially our decision.

With bringing on sophisticated new investors, I think they were very interested, and particularly focused on the cardiovascular opportunity. But we see that as essentially the near-term driver for the Company for it's growth, for it's financial success, and in terms of delivering shareholder value, it is the most effective means of doing that.

Now in terms of next year, I would say what will be critical next year is we will start to ramp up research and development expenditures significantly next year, because we will be starting the clinical trial program, so we are not going to be able to give precise guidance as to the level of cash burn, because as you can understand, we are in detailed discussions with a variety of clinical research organizations, over the cost, extent, and duration of the trials. But we do see that we are funded for the next two years, based on conservative assumptions of trial costs, and we think we are in a very good position as to where we stand today.

Okay. But the degree of quarterly ramp-up in terms of R&D specifically, it is kind of hard to quantify at this point, or is there a range of increase that you might expect?

Well, I think we sort of work off ballpark numbers. If it seemed that the registration trials required for hypertriglyceridemia should come in around 15 to $20 million over the next three years, and obviously that burn will start next year, and extend over a period thereafter, depending on the time and pace of enrollment of volunteers, that is all somewhat difficult to quantify at this point as we are in detailed planning.

Obviously we will be building the Connecticut team as we wind down the infrastructure in Oxford, and we are bringing in essentially experienced clinical and regulatory personnel, because this is a very big opportunity, as one we definitely are committed to getting right the first time.

I would just ask sort of a follow-on. What is the size of the Connecticut team once everything is in place? Over the near-term?

We are still planning it, but I think it's going to be 8 to 12 personnel based in Connecticut, depending on how much we decide to deal with, and obviously we will be focused very much on that opportunity in that location.

But also we will have some resource dedicated to the follow-on compounds as well, which in our view offers some very long-term opportunity in this field, if we are successful in their development.

Okay. Thank you.

Thanks, Stephen.

Our next question comes from the line of [Vishal Dath with IMSL].

Good morning. I had a question regarding the partner opportunities. I wasn't clear, are you looking for partners with future cardiovascular indications with AMR101, or the current hypertriglyceridemia indication?

Let me deal with that question. Clearly to successfully market and introduce a cardiovascular drug, you require large sales and marketing infrastructure, and we will want to work with a partner, with standing and reputation in the cardiovascular space, and it will be very important to work with our partner to develop a Phase IIIb, Phase IV program to build out the indication.

So that is something in terms of our partnering decisions, we would expect to commence next year with view to having a partner on board over the next, probably the earliest would be the second half of next year, or the first half of 2010.

At that time the Phase IIIb study will start once the partner is secure?

Well, we may consider developing what we would do in Phase IIIb, Phase IV, but it is critical for the partner to be part of that decision-making process, because introducing compounds in this particular indication, this particular space, requires significant investment, and we would much prefer the partner to plan the Phase III program with us, and obviously fund it.

And one last question, the Phase III study that you have had discussions with the FDA, starting next year do you anticipate, as far as what type of duration that is, or when it might be complete?

Well, as I said in the earlier answer to Stephen, we are still pretty much working on that with the CRO, and we may be able to give guidance next year, but as of right now, we are very much focused on getting these trials performed efficiently, effectively, and getting it right first time. So we are going to make conservative assumptions, but I can't really say more than that at this stage. But you can expect further guidance from us probably next year.

Thank you.

(OPERATOR INSTRUCTIONS). At this time, there are no further questions.

Well let me summarize very briefly. Firstly, thank you all for listening today. I know it has been frustrating for some of you who have been investors in the Company, that we have been in this extended quiet period, but I think you will now see is what we have done today is the culmination of work over the last 12 months. We are now focused on cardiovascular disease, specifically in AMR101 for hypertriglyceridemia, we see this as a near-term, low-risk, high value development opportunity where safety has been established, and efficacy is well recognized in multiple studies around the world.

So I see the path is now clear as we move into execution mode, with an expanded research and development infrastructure, with an experienced management team, to execute on this opportunity, and to take advantage of what analysts now see as a multi-billion dollar market opportunity. We will provide further updates to you over the next six to nine months, and thank you again for listening. Have a good day. Thank you.

Ladies and gentlemen, this concludes Amarin's second quarter 2008 conference call. You may now disconnect.