Amarin Corporation PLC (AMRN) 2012 Q1 法說會逐字稿

Welcome to Amarin Corporation's Conference Call to discuss its first quarter 2012 financial and operating results. This conference is being recorded today, May 8th, 2012. I'd like to now turn the conference over to Stephen Schultz, Senior Director of Investor Relations and Communications for Amarin.

Welcome and thank you for joining us today. Please be aware that this conference call will contain forward looking statements that are intended to be covered under the safe harbor provided by the private securities litigation reform act. Examples of such statements include, but are not limited to our current expectations regarding regulatory filings, regulatory approvals, potential indications and commercial success of our product candidates if approved. Our current expectations regarding regulatory filings, regulatory approvals, potential indications and commercial success of our product candidates, if approved. Our current expectations regarding the cardiovascular outcome study and the potential implications of any such study on our regulatory process, plans to protect the commercial potential of our product candidates by obtaining patents and regulatory exclusivity, maintaining trade secrets and taking advantage of manufacturing barriers to entry. Our current expectations regarding potential strategic collaborations, manufacturing efforts and preparation for commercialization of our product candidates, our expectations for future publication and presentation of our study data and our future expenses and the adequacy of our financial resources.

These statements are based on information available to us today, May 8th, 2012. We may not actually achieve our goals, carry out our plans or intentions or meet the expectations disclosed in our forward looking statements and you should not place undue reliance on these statements. Actual results or events could differ materially. We assume no obligation to update these statements as circumstances change. Our forward looking statements do not reflect the potential impact of significant transactions that we may enter into such as mergers, acquisitions, dispositions, joint ventures or any material agreement that we may enter into or terminate. For additional information concerning the factors that could cause actual results to differ materially, please see the forward looking statement section in today's press release and the risk factor section of our most recent form 10K, each of which were filed previously with the SEC and are available on our website, AmarinCorp.com. We encourage everyone to read these documents.

In addition, please note that these remarks will contain non GAAP financial measures as defined by SEC regulation G. The GAAP financial measure most directly comparable to each non GAAP financial measure used or discussed and a reconciliation of the differences between each non GAAP financial measure and the comparable GAAP financial measure can be found within our first quarter financial results press release.

Finally, an archive of this call will be posted to the Amarin website in the investor relations section.

I'll now turn the call to Joe Zakrzewski, Chairman and Chief Executive Officer of Amarin.

Thank you, Steve, and welcome to everyone who's joining us for this call. On the call today in New Jersey, I am joined by John Thero, Amarin's President, Paul Huff, our Chief Commercial Officer, Joe Kennedy, our General Counsel and Fred Ahlhoim, our VP of Finance. Additionally, Steve Ketchum and Paresh Soni, part of our R&D team are on the call, but traveling overseas with an eight to 12 hour time difference, so special thanks to both of them.

Let me begin this call with a quick review of the first quarter's highlights. I will then ask Fred to provide a financial results update and we will then take a few questions.

Q1 was another positive quarter for Amarin, highlighted by the award of a notice of allowance for the 598 patent application, known as the EPA without DHE in the capsule application.

Amarin also appointed industry veteran Steve Ketchum as President of Research and Development. I have previously had the opportunity to work with Steve in the successful development and launch of Lavasa while at Reliant Pharmaceuticals. Steve has a significant record of achievement in the life sciences industry and strengthens an already strong R&D and regulatory team. Relative to financials, Amarin's balance sheet was significantly strengthened in Q1 through the $150 million January placement of senior convertible notes, ending the quarter with a cash balance of $245.8 million. Based on our current plans, the net proceeds from this financing provide Amarin with the funding needed to get well into the launch of AMR101 as previously reported.

Amarin also received confirmation from the FDA that no advisory committee will be scheduled in conjunction with the review of the ARM101 NDA for the MARINE indication. This is in regarding the PDUFA date for July 26, 2012.

While we do not plan to comment any further on our interactions with the FDA regarding ongoing matters, we can confirm that the FDA is active in its review of AMR101 and that we remain confident that AMR101 is well positioned for approval.

Our REDUCE-IT cardiovascular outcome study anticipated to last up to six years is making good progress. In late 2011 we activated the initial clinical site and enrolled and dosed the first patients in the study. Amarin has been conducting investigator training sessions throughout the world to insure that our clinical site activation occurs rapidly with the expectation of having the trial substantially underway by the end of 2012.

To go into a little more detail on regulatory status, our expectations are that AMR101 approval should come sometime in the second half of this year. Once approved for the very high triglyceride indication studied in the MARINE phase three trial, current plans are for Amarin to prepare to file a supplemental NDA -- sNDA for the high triglyceride mixed dyslipidemic indication studied in the ANCHOR phase three's trial.

The FNDA can then be filed with Amarin's cardiovascular outcome study, REDUCE-IT is substantially underway.

As we move closer to the PDUFA date, commercialization plans for AMR101 come into more focus. We continue to consider three potential paths for the marketing and sale of AMR101, an acquisition of Amarin, a strategic collaboration or self commercialization which could include third party support. Under such -- until such time that we potentially enter into such a strategic transaction, we plan to continue to execute on our plans to launch, market and sell ARM101 on our own.

Actions that we can take now to prepare for the commercialization include conducting market research, working closely with key industry opinion leaders to understand market dynamics, working with managed care to understand the most effective way to bring AMR101 to market and securing sufficient commercial supply of AMR101 for launch.

From a timing standpoint, assuming timely FDA approval, we are targeting a first quarter 2013 launch as we've stated previously. We would expect to begin hiring the majority of the required sales force in the fourth quarter and believe that an effective sales force of 200 to 300 reps can be hired and trained, whether alone or in concert with a third party in that period. We are confident that AMR101's demonstrated ability in clinical trials to reduce triglycerides and work well as an add on to statin therapy positions the drug to not only compete for current patients, but to potentially address the unmet needs of the many patients with elevated triglycerides who are not currently receiving triglyceride lowering therapy, potentially expanding the market well beyond current levels.

Looking at the AMR101 intellectual property position, Amarin's strategy with respect to protecting the exclusivity of AMR101 consists of establishing robust patent protection, obtaining regulatory exclusivity, taking advantage of manufacturing barriers to entry and maintaining trade secrets. We believe that our strategy positions us to potentially benefit from ARM101 being exclusive to 2030 and beyond.

Amarin currently has greater than 16 US patent applications and we expect additional progress on the patent prosecution efforts over the course of 2012. For many of these applications, we're using the USPTO's new track one accelerated review process, which is designated to reach final determination on a patent application within about a year after filing.

I want to reiterate that the majority of these patent applications are based on what we believe to be novel findings from our MARINE and ANCHOR results, which came out in late 2010 and early 2011 respectively.

With respect to new chemical entity, NCE regulatory exclusivity, in the US we are seeking five year marketing exclusivity under the provisions of the Hatch Waxman amendments. While we cannot assure you that AMR101 will be granted five year exclusivity, we believe our arguments are strong. If we are not granted five year NCE exclusivity, we expect we would be granted three year exclusivity. Either way, we will have several years to further strengthen the AMR101 patent position.

With regard to the timing of a decision on NCE status, typically a determination on NCE status is posted in the FDA's orange book toward the end of the month, following the month of an NDA approval.

In any event, when we have a final determination we will be sure to communicate that decision to investors as soon as we possibly can. We are confident that AMR101 continues to be viewed as a unique and differentiated product when compared to current potential future competition. AMR101 has demonstrated success in clinical trials includes significant reduction in triglycerides, no increase in LDLC over the study period, significant reductions in non HDLC, significant reductions in [aple B], LPPLA2 and other important biomarkers and a safety profile comparable to placebo. All combined in what we believe will AMR the leader in next generation lipid modification.

Finally, regarding news flow, we expect 2012 and beyond to be important for Amarin as we work to execute on Amarin's business plan and achieve key milestones with a goal of maximizing value. Expected news flows and potential other progress to be monitored includes NDA approval for the MARINE indication, which we estimate to occur in Q3 or Q4 of this year. In addition, we expect NCE status determination during that time period as well.

One or more granted patents that could expand AMR101's proprietary position to 2030 and beyond.

An sNDA submission with the high triglyceride indication studied in the ANCHOR trial, also mixed dyslipidemia. The sNDA submissions for additional suppliers. Expected publications of AMR101 data, a poster presentations at upcoming conferences, including the National Lipid Association and the American Diabetes Association. The ANCHOR trial data publication and additional MARINE data publication on lipoprotein practical concentration and size, both in peer review journals that were presented last year at the American Heart Association meeting.

We also expect to have the reduced cardiovascular outcome studies substantially underway, the announcement of a fourth API supplier and potential commencement of a study with the combination of comprising AMR101 and a leading statin product.

I now ask Fred Ahlhoim, Amarin's Vice President of Finance to comment on Amarin's first quarter 2012 financial results.

Thank you, Joe. As noted, earlier today Amarin filed its quarterly report on form 10Q for the three month ended March 31st 2012 with the SEC. While I'll provide some comments here regarding our financial results, you'll find a more detailed discussion of our results in the10Q. Amarin reported cash and cash equivalent of approximately $245.8 million at March 31st, an increase of $129.2 million from our reported $116.6 million in cash and cash equivalents at December 31st, 2011.

During the three months ended in March 31st, 2012 cash outflows for operating activities were approximately $15.9 million, compared to $8.8 million in the same period of the prior year. These outflows reflect various operating activities split somewhat between R&D activities and marketing general and administrative activities. The spending included approximately 4.7 million, paid in connection with Amarin's REDUCE-IT clinical activities for AMR101.

Our March 31st cash balance was augmented in January 2012 by $144.3 million in net proceeds from the completion of a private placement of $150 million in aggregate principal amount of our 3.5% exchangeable senior notes due 2032.

We believe that we have sufficient financial resources to fund our projected operations well into the commercial launch of AMR101 on each of the three potential paths we are considering for commercialization, subject to timely regulatory approval.

As of March 31st, 2012, Amarin had outstanding approximately 136.4 million ordinary shares and share equivalents. The majority of which were in the form of ADSs. In addition, on the same date we had warrants, stock options and restricted stock units outstanding for the purchase of approximately 21.2 million, 12.8 million and 0.6 million ADSs, respectively. At average exercise prices of $1.48, $5.91 and $8.86, respectively.

In our press release regarding our operating results, we presented both GAAP and non GAAP adjusted results. The non GAAP adjusted results are provided as a complement to our reported GAAP results. We believe that these, as adjusted results, which exclude non cash items help to clarify underlying trends in the company's ongoing operations. The non cash items that we have excluded in our non GAAP adjusted results are share based compensation, warrant compensation and change in value of the derivative liability.

On a GAAP basis, we reported net loss for Q1 2012 of 88.3 million for basic and diluted loss of $0.65 per share. These results included $3.9 million in share based compensation expense, $2.4 million in warrant compensation expense and a $66.2 million loss on a change in the fair value of the warrant derivative liability. For the same period in 2011, GAAP net income was $18.3 million, or basic income per share of $0.15 and dilutive income per share of $0.12. Including, $1.5 million in share based compensation expense, $0.7 million in warrant compensation income and a $25.3 million gain on the change in the fair value of the warrant derivative liability.

On a non GAAP adjusted basis, excluding non cash gains or losses for share based compensation, warrant compensation and change in fair value of derivative we reported an adjusted net loss of $15.8 million in Q1 2012 or non GAAP basis and diluted loss of $0.12 per share as compared to an adjusted net loss of $6.2 million in Q1 2011 or non GAAP basic and diluted loss of $0.05 per share. A reconciliation between our non GAAP adjusted results and reported GAAP results for the three months ended March 31th 2012 and 2011 has been included in our Q1 2012 results press release issued recently and available on our website.

As a reminder, our balance sheet and operating statement, as reported under US GAAP reflect a warrant derivative liability and corresponding gain or loss on the change in the fair value of the warrant derivative. Both are non cash items. This warrant derivative liability relates to accounting for warrants issued by the company October 2009. The number of shares that can be issued under the warrants is not changed by this derivative liability and the derivative liability does not represent a cash obligation of the company. Upon the exercise of the underlying warrants, the fair value of the warrants exercised is reclassified from liabilities to equity.

As of March 31st 2012, the fair value of this warrant derivative liability was $191.4 million, a net increase of $16.6 million from March 31st, 2011. Based on warrant exercises and changes in the market value of our ADSs, the fair value of the derivative liability can fluctuate significantly from quarter to quarter. Excluding the warrant derivative, the company's liabilities as of March 31st, 2012 totaled approximately $133.9 million, which includes $124.2 million for the carrying value of the exchangeable debt.

Our research and development expenses for Q1 were approximately $4 million, excluding non cash costs associated with soft based compensation compared to $4.1 million for the same period of 2011. Our marketing and generation administrative expenses for Q1 were approximately $8.6 million excluding non cash costs associated with stock and warrant based compensation compared to $2.2 million for the same period of 2011. We anticipate that costs for both R&D and G&A will increase during 2012, as cause for the REDUCE-IT cardiovascular outcome study will continue to increase as Amarin ramps up enrollment.

We also anticipate increases in research and development costs during 2012 related to the purchase of supply of AMR101, which supply we intend to include as a component of research and development expense for accounting purposes prior to NDA approval. The amount of expense we incur for AMR101 to fly during 2012 depends upon the timing of receipt of API from our suppliers and the timing of an NDA approval.

With respect to general and administrative costs which include marketing spending, we expect overall costs to increase as we prepare for the commercialization of AMR101, including costs for market research, sales force preparation and development of management information systems. The extent of such increases will depend in large part on the timing of NDA approval for AMR101 and whether we launch AMR101 on our own or with a strategic collaborator.

That concludes my prepared comments, I will now turn the call back to Joe. Joe?

Thanks, Fred. Our achievements in 2011 and early 2012 have positioned Amarin for an exciting and important year in 2012, underscored by a potential approval for AMR101 in the second half of the year. As described earlier, 2012 was a year that we believe will be full of important milestones as we prepare AMR101 for a potential commercial launch in Q1, 2013. We look forward to updating you on our progress as appropriate and thank you for your support and interest in Amarin. I will now open the call for a few questions. Operator?

Thank you. (Operator instructions). Our first question is from the line of Chris Schott with JP Morgan. Please, go ahead.

Great, thanks very much and thanks for taking the questions. First question was just, can you talk a little bit about the recent top line data on a potential competitor at [Benova] and your view on the position of that product relative to AMR101.

Yes, I mean, Chris, this is Joe. Thanks for the question and just to sort of summarize where we saw it, and again, there's only limited information we saw in the press release. But there are five things that we were measuring or looking to see in that release, we believe that when you looked at their data and looking at trig lowering, at best it's near ours, but likely worse than ours. If you think about it, they didn't talk about what the placebo data was and we think there's an issue in terms of how they measure that.

Also, in that whole trig lowering, you'll note that we saw significant synergies with a statin, and we announced that at our press release when we put out the document, originally when we announced the MARINE data, so we saw a -- I think it was a -- at the four gram dose a 33% reduction and then it went to 65% reduction with statin. And when you adjust it for the baseline, which you'll recall our baseline was I think about 140 points less than Lavasa, so when you looked at the higher group, the 750 mg group to correlate for that, we saw, I think it was a 45% reduction in trigs and an 88% reduction in trigs, although it's a very small group when you looked at patients on a statin. So we think overall our drug reduced trigs much better than theirs did, in addition when you look at the statin reduction. And again, it's hard to tell because what did they release, what didn't they release.

They said nothing about LDL, our drug was, as you'll recall was, let's call it statistically flat, but I believe in our four gram group we were minus 2%. On non HDL, I think we were at minus 18%, I think they were at 8%. On side effects we had little non -- almost no drop outs, they specifically, if I recall correctly guys, they had 5 to 7% drop outs on GI issues alone, which tells us that the side effects must be much higher and they said nothing about (inaudible), LPPE, LA [280] or the key biomarkers which we think are an important part of the future, and again, this is information that we presented as part of our top line. So again, until they present at a conference and until we have the ability to see what they have, I think what we would say is that we still believe that AMR101 is a superior product in all five of those categories, plus the additional ones that I brought up.

Great, I appreciate those comments. The second question I had was just -- when you talked about the three paths in the past, with one allowable patent now kind of in place, how important is further progress on your IP portfolio to either choosing, or maybe more approximately maximizing the value of this asset and kind of deciding on one of those paths? (Inaudible) obviously had their legal teams, they can do their work, but based on the feedback you're getting do you need more reliable patents here before a partners really willing to give you the appropriate value for 101?

Yes, Chris, I didn't get the first part of your question. (Inaudible).

Sure, I'm sorry. So basically -- it was basically a question when you're trying to decide on these three paths to go, you've got one patent in place here, basically how important is further progress in the IP portfolio to actually making a choice here. I guess at the heart of it is, do you think a partner will give you value doing their own work on the IP or do you actually need to get these things allowed before a partner is willing to give you value and just what feedback you've been getting?

I got it, Chris. Yes, I mean on the three paths, I mean if you think about where we are now, we've gotten the patent of the notice of allowance, again expecting the issuance anytime now. We have over 16 other patents that are in process. We've got the whole regulatory exclusivity piece, the manufacturing barriers to entry or the leveraging thereof as well as the trade secrets. So people look at -- if you think about building the exclusivity around the asset, people are looking at that very, very broadly. And again, based on the previous company I was with with an omega three, I've always said we've always had more, and even at this point, we have much, much more than I ever had when I was at Reliant. So, I think people get that and take that into account and if you look at how the stock perform and perception of where we've been since that patent or notice of allowance, that was I think a great relief to many folks on the street.

But if you get back to what path we're going to select, we're still down that process, I think that a lot of folks are still -- you've got a PDUFA date coming up here in less than three months. Are people willing to make the -- do a deal before then? Do people want to wait? There's so many variables out there that go into these things and I've been doing deals now for over 20 years, buying and selling and spinning companies out, I think the lesson here is its just -- a deal happens when its time has come and its time has come when its announced and when its signed and beyond that it's really hard to say it's this, it's that, it's this, it's that. So I think what I can comment to people is the activity is still there. As the patents been issued, as other news flow has come out it increases and it continues to increase and we're going to do the right thing by this asset and by shareholders and really, don't know which one of those options it's going to be at this point in time. But I don't know that there's really much else to say other than that.

Okay, great. Appreciate those comments and it seems like an exciting few months ahead. So, I'll hop back in the queue here. But thanks for the questions.

Thanks, Chris.

Thank you. Our next question is from the line of John Boris with Citi. Please, go ahead.

Thanks for taking the questions. First question just on commercialization or commercialization strategy have you -- I know you've indicated that you're obviously put some money aside to do some market research, an important part of that would be with managed care and with formularies and testing the product concept against managed care and formularies. Have you don't that yet? And any sense as to formulary acceptance of the product and then if you look at Lavasa, it obviously has the discount within that channel, how you're thinking about when to do price, discounting and rebating that may be associated with the product also once you secure approval. Then I just had one follow up question.

Sure, again John, thanks. Yes, doing a lot of market research. Met with just about all the key managed care folks and again I'll comment but between Paul and [Joe Jaluli] and their teams, these were the folks that built the Reliant managed care group, etc. And really got several hundred -- I think it was over 200 million lives ultimately covered and we're very delighted in what we're seeing so far.

The other things that we're doing right now is we're also building our MSL group, Medical Science Liaisons, those folks that are the initial interaction or the technical interaction between the company and the docs, not the sales force, but the key folks that are out there seeding the market, building the market, working with the key opinion leaders. So we're doing those. These are not big in costs.

In terms of where we're thinking about and how we're going to penetrate this market, really this is about two things, right? This is about converting folks from other products to our product. Again, our product we believe is superior. But it's also about expanding the market, not just ultimately within the MARINE indication, which is very lowly penetrated, maybe 15, 20% at most, and also as we head into the ANCHOR indication which technically hasn't been penetrated at all. So we see this as both the opportunity to shift share and expand the market. And for us, what we believe the best managed care strategy, the best marketing selling strategy is how do you set this product up in the best light to do that.

And while we've made no definitive decisions around price, for example, you want to hit that market aggressively, you want to capture tier two and that's where our heads are right now. So without saying we picked this price, we did this, we're heading in this direction, this is going to be about share shifting, market expansion and we think the best way to do that is to make this a tier two product as quickly as you can. And that's where our heads are. And again, I think we're got the best team on board to do that.

That's great color, Joe, appreciate that much. Just a question on the regulatory front with the PDUFA date coming up here in July 26 and it would seem as though that you're certainly indicating that the FDA at least one would think would have to do an inspection of your manufacturing facility. I'm just wondering if they've done that and give you clearance on your CMC section and another part to that is how is the dialogue been with the FDA? Are there anything's that you have to button down, should we be baking in a receiving of that when the PDUFA comes that you secure approval or that there might be a three month extension to that time period going forward, here. Thanks.

Yes, yes thanks, John, it's always hard to speculate on these things and again, you can imagine why, I have to be careful what I say. What I can tell you is that we've been very pleased with the interaction with the FDA so far and as I stated in the notes I -- the comments I made earlier, we feel good about the progress that's occurred and I need to be careful in saying anything more than that and again, for all the right reasons, we want to protect the confidentiality of the discussions, but I've said before, this is going along the guidelines and along the plans that we would hope, but until you have an approval, you don't have an approval. So feel good. I think directionally things are correct, but until you have that letter -- that piece of paper, you don't have it. So, we are working very diligently, we've got a very [extreme scene] and we've done this time and time again and we're anxiously awaiting July 26th.

Joe, can you just confirm whether they'd inspected your API supplier? Yes or no?

I will just say that all the inspections have occurred that you would have expected to happen by this point in time, two and a half months out.

Good, that's great color. Thanks so much, Joe.

Sure.

Thank you. Our next question is from the line of Joseph Schwartz from Leerink Swann. Please, go ahead.

Thank you. I was wondering, Lavasa prescriptions have been weaker lately I was -- and then you've commented that you don't think that Lavasa has penetrated the mixed dyslipidemia market meaningfully. Is this not due to some sort of an increased compliance program from the FDA finally catching up with the use of label or what is your understanding given your market mapping and activities now looking at the market?

It's hard, even when it's your own drug to figure out which market segment they're going into. There are a lot of things that you hear. I hear from different folks in different organizations, again, nothing is confirmed but the first one is that managed care -- and again, I have no confirmation of this, but managed care is saying to folks now show us that your trigs are over 500 mgs per deciliter before we allow you to go on Lavasa, that's what I've heard from third parties. And that's been their way of getting sort of toward this off label issue. Again, real, not real, don't know. But we're in the fortunate position of having is A not -- we've got the 500 mg per deciliter indication but the 200 to 499, the one they're theoretically going after, this is hopefully opening the market and protecting the market for us, because we hopefully will go at it with the approved indication.

But other than anecdotal information, Joe, we're hearing out on the street, it's hard to predict what's going on there. Paul, I don't know if you have anything -- Paul our chief commercial officer, you want to add to that at all?

It does seem like that they've backed off direct promotion. You still see a continued effort in the direct to consumer, but our data shows that they've backed off direct promotion quite a bit over the last year or two.

And you mean --

Sales force promotion and things directed directly from the sales force. So this is a promotionally sensitive market and we feel if you put the right effort behind it that you can really drive prescriptions. So that could be one of the reasons.

All right. Thanks, that's helpful. Thanks. And then, in their core market of hypertriglycerademia, we might hear -- or we should hear very soon the judge's opinion in the patent case any day now and I'm wondering how do you think about pricing AMR101 in different scenarios if Lavasa is generic, yet that's a relatively small market compared to the mixed dyslipidemia market, which they might not be able to go after.

Yes, I think the way we set ourselves up, or mentally, its again we look at this product as being well differentiated from Lavasa, on the LDL side, we actually lower non HDL by about 2X of what they do, we don't -- we have a much better side effect profile, [apleb, lbpa, la2] etc. So, we think there's a real argument here for a differentiated product in terms of what it does as well as price. Having said that, we're very cognizant of the marketplace that we're in today, both from a managed care perspective, potential generic perspective and again, if you think about our focus on expanding the market and shifting share, part of that is also what happens if and when there ever is a Lavasa generic.

That's all part of it and that's why when I talk about tier two target for pricing, and tier two, where we want to be, without saying what the price is, Joe, I think that tells you how competitively we look at these market because not everybody gets to tier two. And having said that, we do a lot of better things, again, at the end of the day Lavasa generic, no Lavasa generic, we think the product is just incredibly differentiated and the rest will take care of itself, as long as we price it appropriately but we haven't gone much further than that at this point in time.

Thanks a lot.

Thanks, Joe.

Thank you. Our next question is from the line of Ritu Baral with Cannacord Adams. Please go ahead.

Hi guys. Thanks for taking the question. Can you comment on your manufacturing capacity right now and do you plan on keeping that steady I guess during the rest of the review process? Or do you plan on working on expansion now versus after potential approval?

Yes, thanks Ritu. So, as everyone knows, we'll launch with the one supplier, we'll get the one form the FDA in Japan. We believe we will file three additional sNDAs this year that should put us on the market with other product in the first half of next year again, assuming everything goes according to plan.

So, when you say bringing them online, we are actively bringing all of them online as we speak. There is -- in terms of getting them ready for regulatory approval, getting them ready for whatever inspections there might be. So again, when I say we're going to submit three sNDAs, let's call it in the fourth quarter. There's an incredible amount of effort going on right now. We believe, in terms of volume and capacity, we haven't commented on that, we're trying to protect all the dollars and make sure we have the right volume, etc. But I will tell you, as I stated before, as we launch with one we should have the ability to have three or four online next year and very quickly have quickly defined at normal uptake curves 1000 or multiple thousand metric tons of product available.

Again, this is going to be something where you're building and you're watching the market etc. But it won't be an issue in terms of what we believe are the folks that we have coming online, the capacity and where they are. And again, I'll remind everyone that 1000 metric tons, at least if you assume today's pricing is about a billion two to a billion three per thousand metric tons of sale, so just to put that in perspective, we -- again, we haven't commented on what our pricing is going to be, we haven't really said anything about volume we'll launch with, except that that's where we're heading as we get to what those -- what reasonable parties believe are those peak years that they start to come in.

And as you're gauging adequacy of supply, are you sort of pegging that against the high -- very high triglyceride market? Or the mixed dyslipidemia market, even from 2013?

Yes, I mean clearly this is like anything else, it's a ramp up to drugs usually starting to pit, peak in three, four, five, six years. Again, I think the most conservative view for us is we have an approval on our drug in the MARINE population, the very high trig case this year, we launch it in Q1 as we've stated many times. We submit the sNDA, once we get the substantial enrollment of the outcome study and then let's assume there's roughly a 10 month cycle time to get ANCHOR approved. Again, I think that's the statutory sNDA period for a drug. You could see again this drug then getting ANCHOR approval in the second part of next year and that what you've got are two upward lifting curves happening simultaneously, one built on top of the other.

Again, remember that there's 4 million people -- 4 or 5 members in a MARINE group. There's also 40 million or 35 million to 40 million in the ANCHOR group, so all of a sudden, you've got this one group that's the higher trig group -- the higher trig folks at 500 and above that's launched the year ahead of time and then you're bringing on board this other group about a year later, but that groups 10 times bigger and then what's the reimbursement, what's the uptake, there's a lot of complicating factors, but we think -- we think we've got that well under control and to bring you on board some real world class leaders in terms of supply, I spent a lot of my time as the chief operating officer of Reliant doing this and we think we're going to be in pretty good shape, but -- and you head for it and you take your chances and you go for it. But again, we spent a lot of time on supply and we'll continue to spend a lot of time on supply, both now as we launch and well into the future.'

Got it. And one follow up question. We have seen SG&A pick up even on just a cash basis this quarter and you mentioned that you've got market research expenses and MSL's which you commented weren't that expensive. What else are you ramping on now versus Q3 and Q4?

Well, we'll continue to bring them on board key positions as we head into this quote decision point of what we're going to do at the end of Q3 in terms of are you selling the company, is there some partnership, are you doing it alone, with or without help. And we'll continue to do that and what I said is the nice thing about getting to the end of Q3 and doing that is everything we're doing now, whether it be from market research, whether it be bringing on board MSLs, whether its other key hires throughout the company, whether its managed care, they're all the same, almost identical as we get to that period of time. I think what part of the burn that you saw here was that -- you always see some periodic expenses moving from one quarter to the other.

The other thing we're seeing is the outcome study is increasing in costs and enrollment, and that's moving on. So al that just comes together. And if you look at -- I think we spent, Fred, $16 million plus or minus in the quarter, and again, without giving any guidance, I think that's what you'd expect for a company whether you're -- just in your preparatory mode and as you're wrapping up and getting the outcome study done and getting ready to launch. So we are -- we manage every last nickel like it's our own.

And the other thing I'd be remiss if I didn't say, is we're spending quite a bit on patents, you'll recall, we just got the 598 patent approved and we have greater than 16 on file, and that's just in the US alone. We're looking at these thing globally. So, we're building an organization here and trying to do it as cost effectively as we can.

All right, thanks for taking the question, guys.

Thanks, Ritu.

Thank you, we have time for one final question. It comes from the line of [Tommy Win] with Jefferies. Please, go ahead.

Thanks, guys, for squeezing me in. I really appreciate it. I'm here for Thomas. So to follow up on maybe some of the earlier questions in a different way, the first one is on NCE, would you remind us what the timeline is for requesting this and then how important do you think this is specifically to potential partners and investors to get at the time of approval?

Yes, on NCE, guys, again just to remind people we expect that we'll get an approval and then you'll also expect in the orange book that's issued in the following month it's when you find out if you've got NCE or not. I would just say, commenting that getting the patent issue, the 598 patent I think has taken a lot of pressure off the NCE. Of course, while we feel very strong in our position to get the five years, as well as the benefits of the drug, a lot of I would say the angst of NCE and we still want to build the, if you will, the mote around the castle, the electrified fence as we build exclusivity around the product. I think a lot of the pressure is off there. I think you -- while the FDA would always give you zero, three or five years, we think we should get five. We think worst case, again you can never guarantee, is probably three. And however you structure that, however that works out, it gives you plenty of time to continue leveraging other patents and it gives you plenty of time to continue leveraging other trade secrets and other manufacturing barriers to entry. So we feel pretty good.

I think in a simpler way, maybe Tommy, what I'm saying is the pressure is not the same as what it was. Okay? I think a lot of what was out there on us, and clearly watching what's happened to the stock price what the street was probably feeling was great, they've got the one patent, hopefully there are others coming. I think the getting, guaranteeing the five years and the NCE becomes less of an issue. Although we are doing everything we can proactively with the agency here, and again, I can't comment too much on there, but we've got a great team led by Joe Kennedy, our general counsel in working with outside folks, just doing everything we can possible. Again, this is about protecting the overall exclusivity of the asset.

Thanks, that's really helpful. So, and then on the 889 application again, can you just tell us your goals for this upcoming examiner interview and the context of your strategy -- your strategy there. And just to play devil's advocate, why not appeal yet? And when would you -- when would you consider doing that?

Well, great question. Our -- you said what is our goal with the 889, I'd like to get the patent issued. Okay? That and every other patent we've got filed. We're still in the process of working very closely with our counsel after the interview that took place a week or two ago and how we're going to respond, again, we think we continue to make progress, etc. In terms of would you appeal, would you not appeal, we have a lot of options out there still and I don't -- we haven't made that final decision, but I will tell you that we take this very, very seriously in terms of what we should do, shouldn't do and what's the right cadence that we approach it. And it's not an easy answer. There's a lot of folks out there that say why not appeal and without me commenting on it, what I can tell you is we are constant -- in constant consideration of all the options. But at this point, we feel pretty good about where we're going and clearly the ball -- the ball I think is now in our court, Joe. And that -- and I think that's about all we can say, Tommy.

That's really helpful too. I'm sorry for the IP[ratifier is my last one. This little one on the 994 patent, there was an action with regarding restriction, what -- can you just remind us what this means for you? What option is better and where this falls in the strategy?

Yes, well first of all, 994 I believe is an [atorba] statin metabolite patent that's tied in combination to some other things based on some bench stop work we had done. I would tell you that the comment that people saw in the patent office were really semantics. Very normal in the patent process. In fact, one could interpret it as a good way where the patent office said, hey, you've got two pieces of invention here, pick one here and then file the other one for a division or a continuation. So that's really all that was about.

Okay, thanks.

Thank you.

We've run out of time for questions. I would like to turn the call back over to management for closing remarks.

Well, thanks to everyone who was on the call today and thanks for your continued commitment. We're delighted with the level of interest in our company and very excited about what the next few months hold for us and just thank you for your continued support. Have a good evening.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.