Amarin Corporation PLC (AMRN) 2010 Q1 法說會逐字稿

Greetings and welcome to the Amarin Corporation plc first-quarter fiscal 2010 conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Thero, CFO for Amarin Corporation plc. Thank you. Mr. Thero, you may begin.

Thank you, operator. I would like to welcome all of you to Amarin Corporation's first-quarter 2010 conference call.

With me today is Dr. Declan Doogan, Interim Chief Executive Officer. In a moment, I will turn the call over to Declan for a recap of our recent progress, including an update on the status of AMR101, our lead product, which entered two Phase 3 trials near the beginning of the year. After that, I will discuss our first-quarter 2010 financial results and then we will open the call for questions.

First, I would like to remind everyone that today's call will include statements that are not historical and may be characterized as forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding the timing and results of our clinical trials and the adequacy of our financial resources.

Forward-looking statements may often be identified with words such as we expect, we anticipate, upcoming, or similar indications of future expectations. These statements involve various risks and uncertainties that could cause our actual results to differ materially from those expressed in these forward-looking statements. And these include risks and uncertainties under the heading "Risk Factors" in our most recent annual report on Form 20-F and other periodic filings that we have made with the SEC. These reports are available on our website at www.AmarinCorp.com. They're also available on the SEC's website.

These forward-looking statements are based on our current expectations. Such statements are only predictions and actual results may vary materially from those projected. Investors are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements we make in today's call are based upon our beliefs and expectations as of today, May 13, 2010 only, and we do not undertake an obligation to revise or update such forward-looking statements.

With that said, I now turn the call over to Declan.

Thank you. John, and thank you all for joining us today.

As you likely read in our press release from earlier today, Amarin has made significant progress in both of our pivotal Phase 3 trials for our lead product candidate, AMR101.

We now believe that we will report overall results of these trials in 2011, ahead of previously publicly stated guidance of preliminary data reported in 2012. I'll come back to a discussion of our clinical trial programs later.

First, please note that we intend to host calls of this nature on a quarterly basis. However, because this is Amarin's first quarterly results call subsequent to the strategic realignment and financing of the Company, which took place in late 2009, I want to take the opportunity to briefly recap the changes and progress we have made over the past six months and to outline our strategy for 2010 and beyond.

During 2009, Amarin repositioned its business entirely towards developing new improved treatments for cardiovascular disease. The Company was effectively recapitalized in a $70 million equity financing in October in order to advance the AMR101, our lead product, through late stage development to NDA filing.

Amarin's strengthened its management team and Board of Directors. Notably, we added Joe Zakrzewski as Executive Chairman and John Thero, my colleague, as Chief Financial Officer. Both these individuals bring significant operational and business experience to Amarin and complement our R&D strengths.

In particular, Joe Zakrzewski was previously COO of Reliant Pharmaceuticals. This is a company that introduced the [narrow] blockbuster, omega-3 Lovaza, known as Omacor in Europe, now marketed by GlaxoSmithKline to the market.

In addition, we have centralized all of our R&D operations and many of our business functions in Mystic, Connecticut. We have exited our prior CNS business and our team is working well together with intense focus on executing our cardiovascular focused strategy.

I'm often asked what prompted Amarin's move to become a cardiovascular focused company. And in hindsight, the decision seems obvious. The market potential is large. We build upon success demonstrated by others with the same active ingredient in Japan. And we believe AMR101 is positioned to have potentially best-in-class advantages. It took some new thinking to make this happen and I credit our experienced team with coming up with these new insights into the product.

As an example, our evaluation of clinical data suggests that DHA can drive an increase in LDL cholesterol. This may confer a potential significant competitive advantage over the prescription omega-3 product since AMR101 contains no DHA.

The absence of DHA-induced LDL effect may enable it to be used effectively as add-on therapy with statins.

We have also benefited from changes in market conditions. For example, we believe the recent concerns regarding the long-term clinical benefit of fibrates further enhance the market position of prescription-grade omega-3's.

AMR101 is a prescription-grade semisynthetic form of icosapentate acid, ethyl EPA, an omega-3 compound that have been developed so it can be positioned as a best-in-class prescription medicine for treating patients with elevated triglycerides levels. It is a single active ingredient formulation with an excellent safety profile ad strong scientific clinical evidence supporting its efficacy and lowering triglyceride levels.

Because of AMR101's clinical profile, we believe that it potentially can target indications not addressed by any existing drug in the prescription-grade omega-3 drug class; offer improved efficacy, safety and dosing over all drugs currently marketed in the prescription-grade omega-3 drug class; and be used potentially in combination therapies for example with statins.

We believe that AMR101 is well positioned to address multi-billion-dollar market opportunities. Increasingly, elevated triglyceride levels are being recognized as a significant risk factor for cardiovascular disease alongside LDL-cholesterol.

Based on current medical guidelines in the US, we think the addressable market can be divided into three groups. One, individuals with very high triglyceride levels are both above 500 milligrams per deciliter, hypertriglyceridemia.

Two, individuals with high triglycerides between 200 and 500 milligrams per deciliter with coexisting cholesterol being separately managed -- elevated cholesterol being separately managed mixed with lipidemia.

And three, individuals with mildly elevated triglyceride or 150 to 200 milligrams per deciliter, but whose underlying metabolic condition such as diabetes or obesity may exacerbate their cardiovascular risk profile.

It is estimated that in the US, the first group comprises approximately 2% of the adult population over 20 years of age, or about 3.8 million. The second group comprises approximately 16% or 36 million. And the third group comprises approximately 15% or an additional 34 million.

The omega-3-based prescription drug class is at the front of new treatments to reduce elevated triglyceride and is led by GSK's Lovaza, separately marketed as Omacor outside the US, as I said previously and has established blockbuster sales of over $1 billion in 2009.

Lovaza, however, is approved only to treat individuals with very high triglycerides, i.e. addressing only those in the smallest group with triglyceride levels above 500 milligrams per deciliter. No omega-3 is approved in the US for use in patients with mixed dyslipidemia currently receiving treatment to reduce LDL cholesterol levels, e.g. statins, niacin, or fibrates.

We believe that because AMR101 does not contain ethyl DHA, which has been shown in multiple studies to increase LDL levels, that our product is well-suited for use as add-on to statins.

Ethyl EPA through multiple clinical studies was effective in reducing triglyceride levels. Moreover, ethyl EPA is the only drug which has been shown that when used in conjunction with statins has a statistically and clinically significant effect of reducing cardiac events compared with statins alone.

The JELIS study, which is the Japanese EPA Lipid Intervention study, which was conducted in Japan and reported in The Lancet in 2007, was a study in over 18,000 patients in background statins.

In this study, the group receiving ethyl EPA and statins together was found to reduce the incidence of major coronary events by 19% over statins alone and by 53% for the subgroup of patients in the study who had elevated triglyceride and low HDL levels.

Our Phase 3 clinical program comprises two pivotal studies. One, the MARINE study is a 240-patient global multicenter placebo-controlled, randomized, double-blind 12-week study designed to evaluate the efficacy and safety of two doses of AMR101 versus placebo in patients with very high triglycerides, i.e. over 500 milligrams per deciliter. Essentially, this trial seeks a similar label to Lovaza with potential advantages of lower pill burden, no LDL effect and no fishy smell or aftertaste.

The ANCHOR study is a 650-patient US multicenter placebo-controlled, randomized, double-blind 12-week study to evaluate the safety and efficacy of two doses of AMR101 in patients with mixed dyslipidemia, i.e. high triglyceride levels between 200 and 500 milligrams per deciliter who are on statin therapy. This study is designed to address the patient population for which no omega-3 is approved in the US today, a market we believe is potentially 10 times larger than the market for which Lovaza is approved.

In both of these trials, all patients undergo a six- to eight-week washout stabilization period. Upon completing this period, patients who qualify for treatment are randomized to the 12-week double-blind treatment period.

Harold Bays, Medical Director, Louisville Metabolic and Atherosclerosis Research Center, Kentucky, and Christie Ballantyne, Methodist DeBakey Heart and Vascular Center, Houston, Texas, are the principal investigators for these trials.

As you will have read from this morning's statement, both trials have progressed well since beginning and the Company is pleased to update guidance positively on when we can expect to present preliminary clinical data from these trials.

Amarin, as previously stated, expects to complete enrollment of the MARINE and ANCHOR trials during 2011. As stated, we now expect to be in a position to report overall results of these trials in 2011, ahead of previously publicly stated guidance of preliminary data reported in 2012.

Since the clinical trials commenced, nearly all of the clinical sites for ANCHOR, the ANCHOR trial, 80 clinical sites all in the US, have been activated. And over 150 of the target 650 patients for the trial have been randomized to the study.

Additionally, over 75% of the targeted clinical sites for our MARINE trial, approximately 50 clinical sites located in India, Finland, the Netherlands, Russia, South Africa and the US, have been activated. And over 100 of the 240 patients targeted for the trial have been randomized to the study.

A key priority for Amarin is to complete patient recruitment into these trials and keep them on schedule so that we can file an NDA within the expected time frame.

In summary, we are making significant progress. This is an execution story, and we believe that we are well positioned to succeed with the right people in place, with the clinical trials well underway and a lead product that has been demonstrated effective in Japan and with SPA, Special Protocol Assessment, agreements with the FDA. And we look forward to providing you with regular updates on our progress.

With that, I will now pass the call back to John to provide an update on the Company's financial position coming out of the first quarter of 2010.

Thank you, Declan. All the amounts I'm about to speak of are in US dollars. Amarin's cash balance as of March 31, 2010, was approximately $44 million. The Company reiterated its guidance that its current financial resources are sufficient to finance its planned operations through the completion of the ongoing ANCHOR and MARINE Phase 3 clinical trials through the reporting of results from these trials and of course assuming clinical success through the filing of an NDA.

During the three months ended March 31, 2010, net cash outflows were approximately $8 million, including approximately $5 million paid in connection with the ramp-up and support of the Company's two Phase 3 clinical trials, as well as for general operations.

The ramp-up and support of the clinical trials included costs for clinical site training and the commencement of patient enrollment for these trials, which occurred near the start of 2010.

First-quarter net cash outflows also included approximately $3 million in costs associated with scaling down Amarin's operations in Europe, which action is consistent with the previously announced decision to consolidate Amarin's R&D headquarters in the United States. Also it included a payment of a UK stamp tax and registration costs associated with financing that was completed in 2009.

As a foreign filer for SEC purposes, we currently report our financial results in accordance with International Financial Reporting Standards, and as such, we are not required to file a quarterly report with the SEC on Form 10-Q. However, during 2010, we plan to transition to US Generally Accepted Accounting Principles, and, in doing so, provide more extensive financial reporting in future periods.

With that said, I now hand the call back to Declan for a summary and for questions.

Thank you, John. I hope that investors appreciate there will another cardiovascular focused company with a lead product intended to address an important yet underdeveloped market opportunity. We're very pleased with the progress that we're making with the two pivotal trials we are conducting with AMR101, which we believe has the potential to be a best-in-class prescription of omega-3 drug for treating patients with high or very high triglycerides.

I'm impressed by the progress we have made since we were funded last October, and I hope that you too are pleased. We at Amarin are looking forward to the remainder of 2010 with great confidence.

Thank you for your attention today, and now I would like to open the call to questions. Operator?

(Operator Instructions). Joseph Schwartz, Leerink Swann.

Good morning and congratulations on all the progress. I was wondering if you could give us an update on your efforts to identify additional supply for the API of AMR101.

John?

Sure. Hello, Joe. Thanks for joining us today. With respect to supply, as you know and hopefully others as well, we have been working with a supplier for our API for about a decade. It's a supplier that's a division of a very large Japanese company. They have a DMF on file in both the EU and the US. And they have plans that they have proposed to us for continued scale-up of supply to us and would like to remain our lead supplier for our API.

However, we think that it would be advantageous for us to not be reliant on just a single supplier, albeit a very credible company. And unlike -- and I know this topic sometimes comes up because of the situation that GSK is in with Lovaza, where they are reliant on a single source of supply. Unlike that situation, where the manufacturer has sort of an IP right that restricts them to working with a single supplier, the intellectual property here for AMR101 is intellectual property is that we hold. So as a result, we have the ability to speak with multiple suppliers.

And we are, at this point in time, in conversation with a handful of suppliers that we believe, with our help, capable of producing API for AMR101. And we're in discussions with them about being potential additional suppliers to augment the supply that we get from our current supplier.

Those discussions are ongoing. We think that we have made enough progress to be comfortable that they have the technical -- the companies that we're speaking with have the technical ability with our help to produce the product. And we are working on competitive financial terms. Because it's an ongoing negotiation, I probably shouldn't get that negotiation going out here in public. So I will stop my comments at this point.

That's very helpful. Thanks for the color.

If I could just follow up there a little bit, is it your goal to be able to supply about as much as what is currently provided by Lovaza? Can you help us think about the magnitude and how it might compare?

So in terms of our overall goal, what we see with our product is that we have a very significant competitive differentiation against Lovaza product. And part of that differentiation allows us to potentially significantly expand the market opportunity. As you know, the Lovaza product is approved for the patient populations that are essentially the patient population being studied by our MARINE trial.

By having no DHA in our product, which should, we believe, based upon data, eliminate the effect on the LDL associated with DHA, we see ourselves having the potential to get into a much broader patient indication which could be 10 times the size in terms of the opportunity to which Lovaza is able to market today. So our long-term plans call for us to be presenting to a market that could be significantly larger than the market being addressed by Lovaza.

Having said that, we don't anticipate launching and having revenues greater than Lovaza. In year one, we do have very aggressive plans for manufacturing expansion. And those plans involve multiple scale-ups of which the turnaround times for a fairly significant expansion, about a 12-month period. So we don't need to have all of it at launch, but there are plans being presented and developed that would allow us to continue to expand capacity before launch and after launch. And our expectations are that we really are working towards a large number, a number that could potentially be significantly larger than what Lovaza is addressing today.

Thank you for the explanation. I'll get back in the queue.

Ram Selvaraju, Hapoalim Securities.

First question is with respect to the extensive enrollment that's been reached in the ANCHOR and MARINE studies, and maybe if you could give us a little bit more color on the sequentialness of reporting of top-line results.

So I noticed in the press release that you had indicated that over 100 of the 240 patients targeted for the MARINE study have already been randomized. Given that this is a 12-week study as I understand it, what is your view that MARINE top-line data could potentially come by the end of this year? Or if not, when in 2011 would you expect to see data from the MARINE study? And then if you could comment on maybe giving us a little bit more specification on when you would expect to see top line from ANCHOR?

Thank you for that question. What I would like to point out is that we are providing guidance as openly and as rapidly to investors as possible. But, this study is still in its startup phase. We only started at the beginning of the year and we've just completed April. And I'm very hesitant to provide a greater degree of specificity than we have done just now in terms of the completion date for the study.

The reason for that is that I have -- in all my years of drug experience, which unfortunately is quite long now, I have seen trials go through various phases. They can go through a very rapid recruitment phase and then things tail off. And then various factors can emerge.

At this point in time, we are delighted with the rapid recruitment that we have observed to date, but I think it would be unwise to say absolutely that this will be maintained proportionately for the rest of the recruiting period. Because if you didn't say that way, then we would be reporting extremely rapidly. I'm not willing to commit to that because it would be unwise.

I think what is fair to say is that we are working with Medpace, our CRO. We are in close contact with all of the sites. And indeed, our personnel here in Amarin are indeed visiting the sites to understand how the trial is working at the individual sites, speaking with investigators, and understanding the opportunities and the complexities of these trials, which are actually the tough studies to do.

And so I want to caution you that although that we've had a very rapid uptick, it would be unwise to provide any additional guidance on respect of when the top-line reports will be available. Having said that, should, as the time progresses throughout this year, should it emerge that we can actually have an additional guidance in respect to completion, rest assured, we will be telling you about it.

Okay. And then with respect to some more clarity on the financials, John, could you give us an idea of what the projected quarterly R&D associated burn rate is likely to be associated with the ANCHOR and MARINE sort of ongoing clinical trials running activity?

We will likely provide a little more insight to this when we come out with our annual report later this quarter. I can tell you a few things; probably won't get into quite the level of detail that you just asked for, but a few things that may be helpful.

First, from an overall perspective, what we've indicated today is that we believe that our current financial resources are sufficient to get us through the NDA filing. And that was a point of emphasis during the financing that was done last fall to ensure that as monies were coming into the Company, that the Company was suitably financed to be able to not only execute on the trials, but to be able to get through the NDA filing.

As I indicated in my comments today or tried to indicate in my comments today, the spending in the first quarter of this year included on a cash basis about $3 million of nonrecurring type of activity, activity related to scaling down of Europe and registration statement and some taxes related to the financing of last year.

That leaves the cash spend in the quarter of about $5 million. The clinical trial costs are somewhat front-end loaded, not entirely front-end loaded, certainly, but somewhat front-end loaded in the sense that there are costs that are fairly substantial for the initial startup of the clinical sites for example in their training.

So, as we move through the clinical trials, we'd expect to see that some of those costs moderate a bit, and then, begin to get offset -- the moderations are going to get offset a little bit here by the fact that enrollment is fairly active.

And throughout the enrollment period, we will continue to see a fairly heavy dose of spend related to the clinical trials, and then the spending tails off after the trial enrollment is complete. So there are other costs at that point in time relative to preparation of the NDA.

We have not quantified those costs, so I tried to give a little bit of color here relative to trending. But we have not quantified a cash burn. And at this point in time, we're trying to do everything we can to move the trials forward effectively. And in doing so, costs will tend to bounce around and vary from quarter to quarter. But the overview is that we believe that our financial resources are sufficient to get us through the NDA filing.

Okay. And then with respect to the timing with which you would expect to transition to US GAAP, could you give us a bit more of an idea as to how -- what sort of format that is going to take? And if, in the future and as part of that transition, you would be filing quarterly financial statements, and what sort of timing should we expect for that? Like, for example, would you file a 10-Q for the second quarter or not?

Yes, that's a good question. So, to be able to do this, we need to have our prior-year financial statements. To be able to file in domestic US format of 10-Qs and 10-K's, we need to have our financial statements presented under US GAAP for not just the past year, but for the past several years. And we are going through a process of transitioning those statements, converting those statements from IFRS to US GAAP and having them audited. That's an active process that's going on right now.

As we look towards 2011, no doubt, we're going to be having a 10-K and quarterly financial statements on 10-Q. The aim is to have more robust quarterly reporting before that. It's a somewhat nontraditional path with the SEC to be voluntarily going to 10-Q's during the middle of a fiscal year. So we're still working out with the SEC how we would report those as to whether it's a 10-Q-type format file through an 8-K or whether it's an actual 10-Q. But the aim is to have more robust financial data and hopefully to have that robust financial data coming out of the second quarter, so a filing that would be sometime over the summer.

But as I say, this is a somewhat nontraditional path of trying to move to a US format during a year in a period where we are not required to do so, but are doing so on a voluntary basis. So the actual form remains to be determined, but it is, again, our intention to try to provide more robust disclosure on a quarterly basis with an aim to doing that coming out of Q2.

Okay, and then very quickly, two strategic questions for Declan. Firstly, are there any remaining legacy assets in Amarin's portfolio? And if so, what are Amarin's plans to dispose of those assets, if any?

And secondly, if one of the two concomitantly running Phase 3 trials were to report positive data in advance of the other, would Amarin elect to enter into partnership discussions at that point or in advance of that? Or would you wait until both Phase 3 trials have reported out data? Can you give us some color on your thinking there?

Sure. With regard to the remaining assets, we very clearly stated we are a cardiovascular company. And any other assets which were in the CNS world are actually being divested. And so, we want to have a very clean slate. And we are working with our Head of Business Development, [Stewart Sedline], to reach out to potential acquirers of such entities.

In regard of the timing of partnering, what I would say is that already, we have seen substantial interest expressed by potential partners. And we are in the active mode of discussing with them just now. We have multiple confidentiality agreements in place, to which permits are these [pap] partners access to due diligence and so on.

With regard to timing of partnering, we take a very sort of open-minded view that if the right offer comes along, of course, we are going to entertain it. As for timing of this in respect of clinical trials, clearly, the more evidence and data that's available, the more confidence that one has in the potential for the asset. And when the data become available, these are material events and we will be posting that information extremely rapidly.

And so therefore, whatever that elicits in terms of responses from potential partners, we will obviously be able to accommodate. So no specific guidance on yes or no, but obviously we will be flexible to the way the study reports in March.

Thank you very much.

Ritu Baral, Canaccord.

Congratulations on the enrollment rate. I'm going to -- I have some questions on details of the two trials actually. Can you talk about the powering of the two trials and how that compares with the final data from some of the historical trials, Declan, that you mentioned with this drug class? And also, if you could walk us through some of the secondary endpoints, both in the blinded and the extension phase? And I guess which of those are most important to clinicians, and possibly payors as well?

Good morning. Thank you for your questions. So, the first thing I would say is in terms of the power of the study. These trials, as I said, are subject to SPA agreements. And so the actual powering has actually been discussed and negotiated so we [could agree] with them.

In terms of the ANCHOR study, we are talking about 90% power, a 1% significance level, looking for 30% decrease in triglycerides.

In terms of the ANCHOR study, ANCHOR has the two endpoints. One is triglyceride lowering. And the other is a noninferiority over placebo for LDL effect. Now these are necessarily powered differently. And in the ANCHOR study, we're looking at an alpha of 0.05 for triglycerides and 0.025 for LDLC. And obviously in this study we seek to show a triglyceride effect, but also absence of LDL.

In terms of comparison with other studies and the powering of those, I think it's fair to say that it's not exactly apples to apples. And what we would say is that based on the selection criteria of these two studies, and we believe that the FDA have called that, if we achieve it, robust evidence of efficacy, and that's why one pivotal trial for each indication has been agreed with the FDA.

So I wouldn't actually like to compare the statistical power of this study with the other study because frankly I don't have those data to hand. But what I would say is that by the time these studies are reported, they will be two of the most impressive triglyceride efficacy studies ever reported. Does that answer your question on power?

Ms. Baral, your line is live.

I'm sorry. Is that -- Ritu, have you finished?

I'm sorry. Not sure what happened there. Ian Hunter, Goodbody Stockbrokers.

Good afternoon, gentlemen. I was going to have a question, but as Ram went down my list, I thought well at least I'll get the legacy range of chemicals one in, but he covered that as well. So I'm satisfied [overall]. Thanks very much.

Mark Monane, Needham & Company.

Good afternoon from New York City. Thanks for reviewing your progress with us. I've had the chance to hear the presentation, and I'm fascinated by your identification, which I think is true, about the shifting paradigm in interest in HDL and triglycerides from HDL and LDL before. Do you think this paradigm shift is due to new clinical evidence, or is it due to potentially the presence of drugs that could potentially affect triglycerides?

Good morning, Mark. I think what I would say is this. We are in a pretty dynamic environment, and I describe this as the post-statin era. And by that I mean the majority of statins have gone generic. And therefore, additional ways of extending franchises are being looked at by the industry.

What I will say is that if you have a safe platform for use in a wide population, that is a very important asset. And in terms of omega-3's, I think it's generally accepted that the omega-3 platform is safe.

And if you can come up with compelling clinical data which show the requisite biochemical effect alongside -- i.e., the benefit -- alongside the acknowledged safety margins, I think these products are going to have -- they're going to adopt a place in the pharmacopeia.

I think it's also fair to say that as new data emerges, which are principally driven by pharma investment, the underpinning of triglycerides as a risk factor will increase. I think there may be phase shifted by 20 years with respect to LDL cholesterol, which, as you know, because of the massive investment by pharma, and the very successful product portfolios, you can actually see that there's been a tremendous amount of clinical data, epidemiological outcomes data, showing the impact of these compounds.

I think triglycerides are emerging as a very important cardiovascular risk factor, although they have been known for many years as contributing to cardiovascular risk.

I think if you look at, for example, the JELIS study that I referred to, in 19,000 patients nearly, you see what can happen when omega-3's are applied in that setting.

So I would say that there are still many, many questions to be addressed. But I think it's a very exciting, dynamic area. I think there's some great science being brought to bear. And I think with pharma investment, I think you will see some tremendous new insights.

Mr. Thero, we've come to the end of our time for question and answers. I would like to turn the floor back over to you for any closing comments.

Thank you, everyone, for joining us today for this discussion of Amarin's progress. We very much appreciate your interest. Have a great day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.