Amarin Corporation PLC (AMRN) 2012 Q2 法說會逐字稿

Greetings and welcome to the Amarin Corp's second-quarter 2012 financial and operating results 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, Steve Schultz, Senior Director of Investor Relations, for Amarin Corp. Thank you, Mr. Schultz. You may begin.

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 and approved product; 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 and approved product by obtaining patents and regulatory exclusivity maintaining trade secrets and taking advantage of manufacturing barriers to entry; our current expectations regarding a potential strategic collaboration; manufacturing efforts and preparation for commercialization of our product candidates and approved products; and 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, August 8, 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 regarding the factors that could cause actual results to differ materially, please see the Forward-Looking Statements section in today's press release and the Risk Factors section of our most recent form 10-Q, each of which were filed today with the SEC and are available on our website, www.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 second-quarter financial results press release. Finally, an archive of this call will be posted to the Amarin website, in the Investor Relations section.

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

Thank you, Steve, and welcome to everyone. I'm joined on this call today by Fred Ahlholm, our VP of Finance; Joe Kennedy, our General Counsel; and Steve Ketchum, Amarin's President of R&D. On July 26, Amarin had a conference call regarding approval by FDA of our NDA for Vascepa. I hope that each of you had the opportunity to listen to that call. Because that call was so recent and included comments on a variety of topics beyond the NDA approval, I will keep today's comments brief. Fred will then provide a financial results update and we will then take a few questions.

There have been numerous highlights for Amarin since our last quarterly report. Most significantly, the recent approval of Vascepa as an adjunct to diet for the treatment of patients with severe hypertriglyceridemia. In addition, Amarin has made significant progress towards supporting the commercial exclusivity of Vascepa with seven patents in play, either issued, allowed or in progressed states of prosecution with the USPTO. This, in addition to the 25 patent applications that are currently on file with the USPTO. We received an Intention to Grant letter for the MARINE method of use patent application in Europe as well.

We continue to communicate the exciting Phase 3 clinical data from MARINE and ANCHOR trials to the scientific community and this past quarter, presented at the National Lipid Association, the American Diabetes Association scientific sessions and had the ANCHOR trial data published in the American Journal of Cardiology. And through effective cash management in Q2 and prior quarters ended June 30, 2012, with $250 million cash on hand.

Looking ahead, now that Vascepa is approved for the initial indication, Amarin is preparing to file a supplementary NDA, an sNDA for the high triglycerides/mixed dyslipidemia indications studied in the ANCHOR Phase 3 trial. The sNDA can be filed on Amarin's Cardiovascular outcome study, REDUCE-IT, is substantially underway which as previously stated, we expect to achieve in 2012. Amarin continues to consider three potential paths for the marketing and sales of Vascepa -- an acquisition of Amarin, a strategic collaboration, or self-commercialization, the latter of which could include third-party support. Until we enter into potential strategic transaction, Vascepa commercialization plans will continue to evolve.

We believe that each of these paths can lead to success. We plan to continue evaluating the relative rewards and risks of these paths on a basis of what we believe creates the best value for our shareholders. As we have previously stated, Amarin plans for commercial launch of Vascepa early in the first quarter of 2013. There are various preparatory steps Amarin needs to take as we evaluate our future launch options and we are taking these steps. For example, now that Vascepa is approved and our lead supplier have passed regulatory inspection, we are building up inventory of Vascepa prior to launch.

Based upon feedback from key opinion leaders and other research, we are confident that Vascepa will be viewed as a unique and differentiated product when compared to current and potential future competition. Key elements of the Vascepa label includes -- significant triglyceride lowering, [LDL-C] neutrality, favorable safety profile and significant reductions in other lipid biomarkers such as Apo-B and non-HDL-C. We believe that this profile will make Vascepa an important new treatment option for caregivers and patients with severe hypertriglyceridemia and a leading product in lipid [management].

Looking at Vascepa exclusivity, Amarin's strategy consists of patents, seeking regulatory exclusivity, maintaining trade secrets and taking advantage of manufacturing barriers to entry with the goal of Vascepa exclusivity to 2030 and beyond. As I mentioned earlier, Amarin has made significant progress on the patent front with seven patents now in play, including the issuance of one patent, notice of allowance for one application and five reasons for allowance published with the USPTO.

With respect to new chemical entity, NCE regulatory exclusivity, Amarin is still on active dialogue with FDA. Since approval, Amarin has had continued discussions with FDA regarding NCE. We are hopeful for a decision and time for inclusion in the Orange Book supplement in August. However, due to the uniqueness of this situation, it is also possible the decision may go longer. At this time, FDA has not advised Amarin of a delay or a decision. In the meantime, given the active dialogue, we will not be making further additional comments on NCE, nor taking questions on it.

Finally, regarding near-term potential news flow over the next 12 months, [support] from any news from partnering discussions, [activities] which may be publicly visible in upcoming weeks or months includes -- NCE status determination; the addition of a fourth supplier; a REDUCE-IT cardiovascular outcome study substantially underway; Vascepa sNDA submission for high triglyceride indication that includes mixed dyslipidemia studied in the ANCHOR trial; sNDA submission for our extended supply chain, additional move on patents; continued publication of Vascepa data, including presentation of MARINE data at the upcoming ESC Conference in Munich, Germany; commencement of a combination product comprised of Vascepa and a leading statin and of course, the Vascepa commercial launch by a third party for ourselves.

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

Thank you, Joe. As noted, earlier today, Amarin filed its quarterly report on Form 10-Q with the SEC for the three and six months ended June 30, 2012. While I will provide some commentary regarding our financial results, you will find a more detailed discussion of our results in the 10-Q. Amarin reported cash and cash equivalents of approximately $250.3 million at June 30, an increase of $4.5 million from our reported $245.8 million in cash and cash equivalents at March 31, 2012.

This increase was due primarily to the exercise of warrants and stock options during the three months ended June 30, 2012, offset by cash outflows for operating activities of approximately $18.6 million as compared to $10.8 million in the same period of the prior year. This increase in cash outflows reflects increased activities related to our commercial preparations for the launch of Vascepa, including costs associated with the qualification and extension of suppliers, as well as costs associated with our REDUCE-IT cardiovascular outcome study which commenced at the end of 2011 and has been accelerating in 2012.

The Company's liabilities as of June 30, 2012, excluding the value of the non-cash financial derivative, totaled approximately $145.6 million, which includes $127.4 million for the carrying value of the exchangeable debt. Our research and development expenses for Q2 were approximately $12.9 million, excluding non-cash costs associated with stock and warrant-based compensation compared to $5 million for the same period of 2011. Our marketing, and general and administrative expenses for Q2 were approximately $8.1 million, excluding non-cash costs associated with stock and warrant-based compensation, as compared to $3.4 million for the same period in 2011.

Prior to NDA approval, costs associated with the qualification of our suppliers and supply purchases were expensed as part of our R&D costs. After NDA approval, supply purchases will be capitalized as inventory. In preparation for the commercial launch of Vascepa, we anticipate spending approximately $25 million to $35 million to build up our inventory level.

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

Thanks, Fred. Our achievements in the first half of 2012 have positioned Amarin for an exciting remainder of the year and early 2013, underscored by the Vascepa commercial launch in early Q1. 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?

We will now be conducting a question-and-answer session.

(Operator Instructions)

Dewey Steadman, JPMorgan Chase.

Good afternoon gentlemen and congratulations again on the NDA approval a couple weeks ago. I guess my first question would be since we are in a public forum, Joe, can you just opine a little bit on the recent stock sales that came through post-approval? And were they part of a previously announced sale plan? Was it possible to back out of the plan prior to execution? And how much exposure does senior management have to the stock post-sale?

Dewey, I assume you're talking -- I heard you say stock sales but I think you said stock sales from the management team and the Board members?

Yes, sir.

They were all part of 10b5-1 plans and as you know, those are things that are put in place during open windows. They represent a very small position of what everyone holds in the Company. So for example, the ones that you saw that were mine, I think are 5% of my holdings, and et cetera. And this is just fiscal to do sharing management. But a very small piece and again, we are all very highly levered and tethered to the strong success of the Company.

I'm not going to go into NCE, but in terms of building launch supplies, between the expense that was capitalized in R&D this quarter and then the $25 million to $35 million that you expect to spend, how much of a supply do you think that will be?

We have not commented what we expect to do in the norm with once we determine which strategic option we'll go with. Again, whether we sell the Company, partner or go it alone with help, we are not prepared to give guidance on that or those numbers or revenues at this time. And [implied] giving those numbers out would be doing that. So we need to refrain from answering that right now.

Ritu Baral, Canaccord Genuity.

Joe, can you tell us where you are on the hiring of your commercial organization? You have regional managers in place. Are you currently interviewing reps and the general timeline you are looking at for additional hires?

Hi, Ritu. Thank you. We're in the process, as we said, on last week's or two weeks ago call because the industry is contracted from 110,000 down to 65,000; there are great people everywhere. I would tell you that where we are really at right now is focusing on doing those things that you do under all three of those scenarios. And a lot of that is primarily the marketing side of things.

That is the managed care piece that you are forecasting on, things of that nature. It is really the sales piece in general really cranks up, I would call in October. If and when we get to that point. So right now it is really more a lot of cerebral work [on the line] in terms of understanding who might be available for what positions in what area.

Will you have any CME activities at American Heart Association later this fall?

Yes. We will continue to be supporting CME efforts. Not just around AHA but at other National Lipid Association and other forums.

Can you give us an update on the manufacturing sNDAs for your other suppliers that you have targeted for later this year?

Sure, where we are right now, Ritu, is we expect to have one, hopefully two filed before the end of the year and the other sNDAs. And then the third one following the first quarter of next year. I think as we mentioned in the pre-scripted notes, we expect to be announcing the fourth supplier very shortly.

Great. Last question and I'll jump back into queue. Your combination product, have you picked a final formulation for the combination product? And can you confirm there's only one statin at a time that you're going to be moving forward with?

What I can confirm is this. We have a final formulation. We have a statin or statins picked out. We have ability to do many things and we still expect to start that study by the end of the year.

Any color on the formulation that you picked? Whether it is a spray-coated capsule like you previously said?

[Tentative] reasons, I'd probably need to lay low on that, Ritu.

(Operator Instructions)

Tommy Wei, Jefferies.

Maybe just a general question on business development discussion that you might answer. Can you characterize at all whether there is some particular value creation events like the issuance of IP or filing for a second indication that a potential partners that you're still looking for? Or is more the situation that all of the key elements are in place now that you have an approval and it is more a negotiation? I'm just trying to figure out how active the partnering negotiations are and whether there's anything that can be done to expedite them? Thanks.

What I will tell you, Things are proactive. They continue to increase in activity. Beyond having said that, I don't think it would be appropriate for me to comment on any specific things that are out there.

And then if I just ask a second one. On the timing of filing the sNDA for ANCHOR, can you clarify how clear in understanding you have of the requirement to enroll in the outcome study before filing? And again, I'm just trying to understand that there's some risk to delay and perhaps an incomplete understanding of the requirement?

I don't think that's there, Tommy. What we said and I think what we will stick by is that we believe we will have the approval in the second half of next year. And if you back that out to the maximum filing of a 10-month sNDA, that means we have to file no later than February 28, 29, if it's a leap year. And I think we're well on track to do that and feel very comfortable continuing with that guidance.

That is very helpful. There is a little curiosity, I guess, I noticed you are listed on the FDA's List of 40 or so cardiovascular medicines. I thought it was intriguing since Lovaza is not on that list. Should we read anything at all into this?

Steve, do you want to comment on that?

No, Tommy, obviously we were making the same observation ourselves. I think it is a reflection of the FDA's enhanced ability, technology-wise, to get that type of information up onto their websites in real time relative to five or so years ago. But no, we don't read anything into it in particular.

Ram Selvaraju, Aegis Capital.

First of all, with respect to the supply situation, can you comment on or give us any color on any discussions you may have had with BASF following their acquisition of Equatec? And what the current status is of your relationship with BASF and their commitment to large-scale manufacturing of omega-3 fatty acids-based products?

Sure. We saw the BASF thing as a real positive. Equatec is a great company but clearly having the wherewithal, BASF and its infrastructure and supply chain is a real plus for us. We had a lot of discussions with them on our supply team, their supply team and recently from the senior levels. And we're just pleased to have BASF and Equatec working together with us.

Okay and can you give us an idea as to what the overall context is right now, as you go through the REDUCE-IT outcome study, are other clinical studies that are outcomes-based looking at the relative benefit of triglyceride lowering? What are those other studies that are currently running and what their relative timing is currently expected to be? Whatever that is currently in the public domain, relative to REDUCE-IT?

I'm probably not the right person to comment on other people's studies, [we're more at] one or two. But more peripheral than that, again, we feel very good with where we are at with the study, very good with the countries enrolled and with the patients enrolled. And it is moving along as we expected but in terms of other folks, most of what we are tuned into is once the data is presented, like as we talked about before, AIM-HIGH AND ACCORD. But what is going on simultaneously is a little trickier to figure out.

Okay. And then last question is, given the fact that the drug is currently approved, can you give us any color on what Amarin's plans are in the future on testing higher doses of Vascepa than were tested in the ANCHOR and MARINE studies? Because I think it is clear to all of us that you did not get anywhere close to a maximum effective dose so what are your plans there?

Yes, we're still kicking a lot of that around, And clearly, we get towards the back end of the year, we'll update folks on that, coming under the same umbrella as the combo study. There's a lot of reasons we could or should do it. And again, the whole benefit being you don't see LDL. On the other hand, if you think about the way the market is set up, the doctor has the freedom already to dose it whatever the doctor chooses to dose at. So that is what we are going back and forth on now as we look at that. But we're spending a lot of time thinking through that as we speak.

Okay. Can you comment at all on pricing relative to what you think might be the situation with the PCSK9 inhibitors given the fact that they're injectables? And then I will jump back into queue.

Sticking to our pricing without getting into other people's, I think what we said is that we are -- number one, looking to shift share; number two, expand the market; and number three, be in a tier in the event that as things evolve over the years, we are in a very preferential state. Our goal is to get to Tier 2 as quickly as possible. Beyond that, we have not commented on what our pricing would be.

Thank you very much and congratulations again on the approval.

Thank you. There are no further questions at this time. I would like to turn the floor back over to management for closing comments.

Thank you everyone and really appreciate all of the support. I think as we continue to go forward here, we've got a lot of exciting times ahead over the next 60 to 90 days. So please, if anyone has questions, as always, contact Steve Schultz and we will arrange a call. But again, thanks for joining us this afternoon and take care.

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