Amarin Corporation PLC (AMRN) 2012 Q4 法說會逐字稿

Welcome to Amarin Corporation's conference call to discuss its fourth quarter and year end 2012 financial and operating results. This conference is being recorded today, February 28, 2013.

I would now like to turn the conference over to Joe Bruno, 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; government agency decisions; potential indications and commercial success for our product candidates and approved product; our current expectations regarding our cardiovascular outcome study and the potential implications of such study on our regulatory process; plans to protect the commercial potential of our product candidates and approved product through patents, regulatory exclusivity, trade secrets and manufacturing barriers to entry; our current expectations regarding potential strategic collaborations; manufacturing efforts and preparations for commercialization for our approved product and 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, February 28, 2013. 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 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 Statements section in today's press release and the Risk Factors section of our most recent Form 10-K, each of which were filed today with the SEC and are available on our website, amarincorp.com. We encourage everyone to read these documents. This call is intended for investors in Amarin and is not intended to promote the use of Amarin's Vascepa outside its approved indication.

In addition, please note 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 year-end 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 over to Joe Zakrzewski, Chairman and Chief Executive Officer of Amarin.

Thank you, Joe, and welcome to everyone who is joining us today. During this call we will briefly review our recent accomplishments, update you on Amarin's operational and financial performance in the fourth quarter and the full year 2012 and answer a few questions from those on the call. I am joined on today's call by John Thero, Amarin's President; Steve Ketchum, our President of R&D; Fred Ahlholm, our VP of Finance; and then Joe and Steve Schultz, from Investor Relations.

Since our last quarter we've advanced key objectives in a number of areas, including the launching of Vascepa in the US for the initial MARINE indication, and we began calling on clinicians on January 28, 2013, our formal initial launch. We hired and trained our sales team, including 275 sales reps, all of whom have had extensive selling experience and relationships with healthcare providers targeted for Vascepa. We've stocked Vascepa at wholesalers and leading pharmacies as part of the initial launch. We've achieved greater than 160 million lives covered by managed care and other payers, submitted a supplemental sNDA seeking approval in the US for Vascepa's second indication, the treatment of high triglycerides, levels between 200 and 499 mg/dL for adult patients on statin therapy, also known as the ANCHOR indication. We expect a PDUFA action date by the end of 2013.

We submitted two sNDAs for additional active pharmaceutical ingredients, BASF and Chemport, in addition to Nisshin. We strengthened our supply chain by entering into an exclusive agreement with a consortium of companies led by Slanmhor Pharmaceuticals that includes Novasep and DSM to be our fourth supplier. We increased patents issued or allowed to 18 in the United States, with a majority of the patent terms extending to 2030 and beyond. We're still prosecuting over 30 additional US patent applications.

Completed dosing in a PK study for a fixed-dose combination of Vascepa and a leading statin. We published additional MARINE and ANCHOR Phase 3 trial results in The American Journal of Cardiovascular Drugs and strengthened our balance sheet through successful completion of a $100 million non-dilutive hybrid debt financing, resulting in a year-end cash balance of approximately $260 million.

Before I continue my remarks I want to make a point of saying that launching Vascepa is the culmination of many years of hard work and commitment by our dedicated team of professionals at Amarin, input from key opinion leaders and significant investment by our shareholders. We are very optimistic about the future of Vascepa and want to thank everyone who's helped us get to this stage.

With its launch on January 28, 2013, Vascepa became the first available FDA-approved prescription medication for the treatment of very high triglycerides to have demonstrated in published, controlled clinical trials significant reductions in triglycerides without significant increases in LDL-C and with a tolerability and safety profile similar to placebo. LDL-C is commonly referred to as bad cholesterol, and it's a primary cardiovascular risk factor. Vascepa also significantly improved many other important lipid parameters including apo B, non-HDL-C, total cholesterol and VLDL-C. We estimate that one in 50, or approximately 4 million US adult Americans, have very high triglycerides.

We launched Vascepa with a highly experienced sales team that has strong relationships with many of the physicians whom we are targeting to introduce to Vascepa. This sales team has now been in the field for several weeks meeting with clinicians. While it is too early in the process to reach any conclusions about our initial launch, we are pleased to date with the progress that our sales representatives are making out in the field. We expect that our label for Vascepa will position us well in the marketplace, both with patients that have not been on triglyceride therapies previously as well as those that have been on triglyceride-lowering therapies that unfortunately increase LDL-C or have negative side effects.

Our sales team is highly energized to introduce Vascepa to physicians. This dynamic is augmented by numerous clinicians and physicians who expressed interest in helping educate their peers about Vascepa. We are confident in the Vascepa sales potential and are already beginning to see script data being reported through the standard channels. Amarin has not provided specific guidance regarding Vascepa sales targets, as it's too early to make accurate assessments on the sales trend of the product. However, script data will continue to be available for all to see.

Amarin's sales organization has the full support of our marketing and medical liaison teams that are implementing numerous initiatives in support of the launch. These initiatives are focused on clinical education about Vascepa's clinical trials and results. These results allow clinicians to assess the differentiation of Vascepa to other triglyceride-lowering drugs for the treatment of very high triglycerides. Vascepa provides a spectrum of benefits, including lowering triglycerides without increasing LDL-C, or bad cholesterol, and its proven reductions in other important lipid targets such as apo B and non-HDL-C, with a safety profile similar to placebo.

Through efforts of our managed care team we've established relationships with managed care and government payers that we estimate cover Vascepa on Tier 3 for over 160 million lives. While Vascepa begins its commercial life with Tier 3 unrestricted coverage at the majority of managed care plans, our goal is to migrate the drug to Tier 2 on many of those plans as quickly as possible. That migration has already begun.

In the meantime, as we work to achieve this migration, we don't want consumers to face the decision of paying more for Vascepa when the drug is the right choice for them, especially if increasing LDL-C is a concern for these consumers and their physicians. Accordingly, we implemented a copay reduction program that offers Vascepa to patients for a copay cost equivalent to Lovaza. Cards for patients to receive this copay reduction are available through their physicians, at the pharmacy and through the Vascepa website, at www.vascepa.com.

In parallel with the commercial launch of Vascepa, Amarin is highly focused on ensuring that our supply chain is ready to meet future demand for Vascepa. Amarin currently utilizes two approved encapsulators and one active pharmaceutical ingredient supplier, Nisshin, to produce Vascepa. At the end of 2012 Amarin submitted sNDAs for BASF and Chemport seeking FDA approval of these companies as additional qualified suppliers of API for Vascepa. We anticipate FDA responses on these sNDAs in the second half of 2013.

In addition, in late 2012 we announced that we entered into an exclusive agreement with a fourth API supplier for Vascepa. This agreement is with a consortium of companies led by Slanmhor Pharmaceuticals for which we plan to seek -- to submit an sNDA during the first half of 2013. While we've been working to qualify these additional suppliers, Nisshin has been steadily producing Vascepa to meet our anticipated 2013 demand.

In addition to the commercial launch of Vascepa, we are also progressing our efforts to expand the commercial indication, both with respect to submission of an sNDA seeking approval of the indication studied in the ANCHOR trial and advancing the REDUCE-IT cardiovascular outcome study, the results of which could lead to an even broader indication for Vascepa.

Regarding ANCHOR, two days ago we announced that we submitted the sNDA to the FDA seeking approval to market and sell Vascepa for the treatment of patients on statin therapy with multiple lipid disorders, including triglyceride levels of at least 200 mg/dL, the ANCHOR indication. The indication studied in the ANCHOR trial represents a significantly larger opportunity than the initial indication for MARINE, launched last month, as approximately 40 million Americans, or one in five adults, have triglyceride levels of at least 200 mg/dL. This group of patients represents a broader primary care target market.

In addition, as we submitted this, it was under a special protocol assessment agreement with the FDA, as was our original MARINE indication. The ANCHOR sNDA submission is based on the results of the ANCHOR clinical study, in which, as previously announced, we achieved all the primary and secondary endpoints, including a reduction of LDL-C by a significant 6.2%. The safety information from the ANCHOR trial, which was similar to placebo, is already referenced in the existing approved label for Vascepa.

In accordance with our special protocol assessment that I mentioned earlier, we announced the sNDA for ANCHOR two days ago, once the REDUCE-IT outcome study was substantially underway. To remind everyone, this was the last requirement under the SPA that needed to be met prior to the approval of the ANCHOR indication, which we expect a PDUFA date by the end of 2013. The end-of-year PDUFA date for the ANCHOR sNDA is anticipated, assuming the FDA assigns a standard 10-month review cycle. If interested, the results of the ANCHOR trial were published and are available for viewing on the Publications section of our corporate website.

Regarding intellectual property, Amarin's strategy to protect the commercial potential of Vascepa has progressed significantly, with a total of 18 US patents issued or allowed. Included in these patents are claims covering both the MARINE and ANCHOR indications. With our current coverage from patents with terms that expire in 2030 and expanded additional claims now in prosecution, we continue to see our expanded patent protection as the most significant factor in protecting the Vascepa franchise in the long term. Importantly, we also remind you of the protection afforded by our trade secrets and the significant manufacturing barriers to entry that we're able to leverage.

At this time, we do not have any further indication from the FDA as to when they will make a determination on Vascepa's regulatory exclusivity protection. Given the strengthening of our patent portfolio, as I said before, we see the NCE determination as much less important for the protection of Vascepa than it has been historically.

I now ask Fred Ahlholm, Amarin's Vice President of Finance, to comment on Amarin's fourth quarter and year end 2012 financial results.

Thank you, Joe.

As noted, earlier today Amarin filed its Annual Report on Form 10-K with the SEC for the year ended December 31, 2012. While I will provide some commentary regarding our financial results, you will find a more detailed discussion of our results in the 10-K and in our press release issued earlier today.

Amarin reported cash and cash equivalents of approximately $260.2 million at December 31, an increase of $45.1 million from our reported $215.1 million in cash and cash equivalents at September 30, 2012. The increase in cash and cash equivalents in Q4 2012 reflects the proceeds of a $100 million hybrid debt financing transaction through Pharmakon Advisors. For a more detailed description of this transaction, please refer to our Form 10-K.

This $100 million increase was offset by cash outflows of approximately $55.4 million in Q4 2012, including a $12.1 million milestone payment paid to the shareholders of Laxdale related to the NDA approval of Vascepa and $16 million paid to suppliers in conjunction with the buildup of Vascepa's inventory levels in advance of its commercial launch. Net of these amounts, Q4 2012 cash outflows were approximately $27.3 million, including $6.1 million paid to a clinical research organization in connection with the REDUCE-IT cardiovascular outcomes study. Also included in Q4 cash outflows were costs associated with recruiting our sales team and costs associated with preparing for the commercial launch of Vascepa.

We believe that our cash and cash equivalents of $260.2 million at December 31, 2012, are sufficient to fund our projected operations for at least the next 12 months, including commercialization of Vascepa for the MARINE indication, advancement of the REDUCE-IT cardiovascular outcomes study and general corporate purposes.

As of December 31, 2012, we capitalized as inventory approximately $21.3 million in APA -- API purchases from our approved supplier. This amount excludes $7.1 million for API that we purchased prior to our NDA approval on July 26, 2012, and $5.8 million from other suppliers not yet approved, all of which have been included as a component of research and development expense.

The Company's liabilities as of December 31, 2012, excluding the fair value of the noncash warrant derivative liability, totaled approximately $260 million, which includes $134.3 million for the carrying value of the exchangeable debt and $85.2 million for the carrying value of the hybrid debt financing that was entered into in December 2012.

Our press release and Form 10-K describe our 2012 expenditures as compared to our 2011 expenditures. I don't plan to repeat that discussion here. However, in our Form 10-K we provide some comments regarding our anticipated operations for 2013, which I will touch upon here in the hope that it's useful to you.

First, we do not believe that we can provide a reasonably accurate forecast of Vascepa revenues at this time, and, accordingly, as is consistent with the disclosures of most companies launching their first product, we provide no quantified guidance at this time with respect to anticipated 2013 revenue levels for Vascepa. Because the level of Vascepa revenues could vary significantly in 2013, we plan to continue to aggressively purchase Vascepa supply during 2013. We received $31.5 million of Vascepa API during 2012 to prepare for the launch of Vascepa. The majority of these supply purchases were received in the second half of 2012. On an annualized basis, we anticipate continuing to spend for supply throughout 2013 at levels which are similar or potentially higher than the levels we spent in the second half of 2012.

Each time over the past two years that we have added an API supplier the negotiated cost of API has gone down. In addition, certain of our API contracts have us paying more for supply at lower purchase volumes than at higher purchase volumes. The result of these factors is that as we move through 2013 we anticipate supply volume to increase even if the actual dollars spent on a quarterly basis remain somewhat consistent. In addition, in order to help ensure that wholesalers and select pharmacies were adequately stocked with Vascepa prior to our commercial launch, we offered these wholesalers and select pharmacies special stocking discounts, and, as discussed earlier, we are offering cards to patients that reduce their copay amounts to $25 per refill during 2013 as we work to move payer coverage from Tier 3 to Tier 2. For these reasons we anticipate that our gross margin for Vascepa sales will be significantly lower in 2013 than in subsequent years, assuming that sales volumes increase.

With respect to R&D expenses in 2013, the largest component is likely to be the REDUCE-IT study costs. We anticipate that REDUCE-IT costs will continue to increase in 2013 as we seek to continue to enroll patients in the study while continuing to monitor patients who have previously enrolled in the study. In 2013 we anticipate incurring expenses of $30 million to $40 million through our CRO related to the REDUCE-IT study. Similar to 2012, when certain of our supply purchases were charged to research and development because they were received by us prior to NDA approval, in 2013 we plan to purchase supplies from BASF, Chemport and the consortium led by Slanmhor. To the extent that these purchases are received by us prior to approval of the sNDAs for these suppliers the purchases will be charged to research and development expense. The amount of such charges cannot be reasonably estimated at this time, as it depends on the timing of supply deliveries and the timing of related sNDA approvals.

We anticipate sales, marketing and G&A expenses to increase in 2013. We believe that the market opportunity for Vascepa is large, and we plan to address it accordingly. In late 2012 and early 2013 we hired our sales team, including 275 sales representatives, to launch Vascepa for the MARINE indication. We intend to augment the efforts of the sales team with expanded medical education programs, various forms of promotion, continued market research and further infrastructure and business development.

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

Thanks, Fred.

As you can tell, we remain very excited by Vascepa's potential in the marketplace for the MARINE indication, while also looking forward to the even greater opportunity presented by the ANCHOR indication. We continue to hear great things about Vascepa's profile from physicians and clinicians, particularly its non-LDL-C-raising effect, the benefits of biomarkers, the lack of side effect profiles and any other label constraints.

I've been asked many times what will make a successful year for Amarin in 2013 and where do we go from here. My answer is simple. If we do the following five things the rest will take care of itself, okay? First, good initial sales data on Vascepa and the initial launch; two, managed care, continued migration from Tier 3 to Tier 2; number three, which we've already accomplished somewhat, the ANCHOR patents; number four, the ANCHOR submission, which, again, we announced two days ago; and number five, continuing to excel and deliver on our supply chain commitment.

Thank you for your interest in Amarin. I would now like to open the call for a few questions.

Operator?

Thank you.

(Operator Instructions)

Our first question comes from Dewey Steadman, of JP Morgan. Caller, please proceed with your question.

Thanks, guys, for taking my question, and congratulations on the end of a great year. Can you compare the early days for the launch of Vascepa to the early days that you all had at Reliant for Lovaza, and what lessons from the Lovaza launch are you applying to the Vascepa launch? And also can you comment on the absolute level of sampling and the potential time frame for these samples to convert to paying scripts? And what would you consider to be a successful conversion rate for sampling in this first year? Thanks.

Hi, Dewey. Thanks. It's Joe. Look, comparing this to Lovaza, I think we've got the one thing on the benefit side coming out that we're going out with a much more superior product, so that goes in our favor. I think on the other side you've got Lovaza had the benefit when we launched it of being the first omega-3 to go out on the market. Again, I think it's too early to really characterize and compare them beyond that. But we're pretty encouraged.

Again, we've been out for several weeks. The anecdotal data, which, again, doesn't convert to scripts or to revenue, is very positive, and we're going to need to see the scripts and the revenues. And, again, I would encourage us, for those of us who've done this before, the weeklies are always interesting. Sometimes they go in your favor, sometimes they don't. It's really the monthlies, because IMS and Symphony go back and correct all the data and really do an [updated thing]. So I think if we get through the second quarter, into the second quarter, at the end of the first quarter, I think we'll get a real better handle there.

The lessons, there's plenty. For competitive reasons I can't comment on those, because there are others out there who are following us and ahead of us, and so I want to make sure we're protecting that.

And then in terms of sampling, we've done a lot. There's a lot of sampling out there. We're spending a lot of time with docs and patients in getting them introduced to the product. It's always hard to figure out what the conversion rate is, but we expect it to be pretty high. The other thing I'll say about sampling, beyond sampling, is don't forget, a lot of times patients have to have the docs give them the scripts when they come into the office, and patients, particularly in this day and age, they want to not only take the sample but they also probably are finishing up their old drug, too. Again, just sort of the business we're in.

But for the most part, again, early indications, anecdotal, feel pretty good, but it's going to be a while before we know. And at the end of the day, anecdotes don't deliver. It's we've got to see TRxes and sales.

Great. Thank you.

Our next question is from Thomas Wei, of Jefferies. Caller, please proceed with your question.

Hi, thanks. I wanted to follow up a little bit on the sampling commentary. The early script numbers so far, it's very early days, but it looks relatively modest, and I definitely wanted to understand to what degree do you think the actual underlying demand for Vascepa may be obscured by sampling, and can you describe the sampling program a little bit? Is it -- are you giving these one-month-long samples to your high-prescribing cardiologists, and what do the samples look like for other doctors, and should we think of this as being a very heavily sampled product initially, where the script trends could be misleading?

Yes, hi, Tom, and thank you. Always good to hear from you. I've got to be careful what I say about the sampling, the sizes, the pieces, etc., for competitive reasons. But, look, and again, I think if you look at the IMS data and you compare the weeklies you'll see that Vascepa, at least for now, is ahead of where Lovaza was initially, in the first three weeks -- not that that means anything. Again, it's got to be the months. Okay?

I'll also tell you that I think when we look at where we see the samples -- I'm sorry, the samples -- the scripts, we're also feeling pretty good that they're on track with what we'd have expected at this time. It's hard -- again, this is where I'm going back and forth between the anecdotal data, which, again, when I talk to some of my sales team who have launched 10, 20 products, and some of these have launched products with me before, they're telling me that they've never seen the feedback from the physician group that they're seeing. So you try not to come to too many early sort of this means that, this means this, etc., but, again, it all feels about right.

We've got different types of samples out there. We've got different types of programs out there, and, again, it feels right. Again, I think when we're having this discussion I guess it'll be at the end of probably May-ish for the first quarter, where again we'll have a month and a half or two months of sales -- again, I want to remind everybody the first quarter will be those first two months -- I think we'll have a better picture. Even then I think you're going to need to actually continue to see where the sales trajectory goes.

And I don't know, Tom, if there was something else in there that I missed.

No, that's helpful. I also had a separate, unrelated question about NCE exclusivity. In the past you had talked about its importance to prospective pharma companies maybe from an acquisition standpoint. I guess I wanted to just understand if you think that that is still true. Have things changed with patents coming through? And should we think of it as being a different scenario when they're considering something like an acquisition versus something like a licensing deal or a profit-sharing partnership?

Yes, I think, Tommy, on the NCE, I think just simply put it's a heck of a lot less important than it was a year ago. We were having discussions with people, and people wanted to know when we were going to get the first patent. Now we're sitting on 18 with several others, even more broad than the ones that we have now coming. So, and I think, rightly or wrongly, I think what I said about NCE in the past is that it was an uncertainty. It wasn't so much I've got to have a yes or no. It was an uncertainty. I think those times are going away. (a) We've already made the decision to hire the sales force. We've now launched the product. And, again, where we're at with the patents.

So I don't really -- as we continue those discussions with people, it's really less and less about NCE than it's ever been. Don't get me wrong. Would I love to have NCE in addition to all the patents and the trade secrets and everything else we have? Yes. But it's just we're now heading into spring again. I'm going to be dyeing Easter eggs with my kids. And when we got the NDA approval I was in flip-flops and a bathing suit. So it's just -- I think people get what it is. There have also been other people that are in the same NCE sort of conundrum that we are. And I think people are getting more and more comfortable that it's about the patents, and that's really going to drive where this goes ultimately.

And, as I said earlier in the prepared script, people say are you still in the process? What are you doing? Are you doing this or that? And my answer is, look, once we hired the sales force and we began to launch the drug, we got together and said, look, let's focus on what matters in this business, these five things, and the rest takes care of itself. And those are basically have a good initial launch, drive managed care Tier 2, get the ANCHOR patent, get the ANCHOR indication submitted, which we've now done, and get it approved, and then finally nail supply. And if we can do those five things well everything else will take care of itself. It won't matter what path we go down.

Great. Thanks.

Our next question comes from Joseph Schwartz, of Leerink Swann. Caller, please proceed with your question.

Great, thank you. I was wondering if you could give us any insight into the mix of Tier 2 and 3 coverage at present and how you see that evolving over time and what will that do via your expectations for the -- for helping revenue trajectory. Thanks.

Hi, Joe. Yes, I think Tier 2 is probably the most important thing we're going to see coming up here on the trajectory. Even though we've got this great coupon program out there and we've got a lot of folks utilizing it, once you flip a switch in a major firm, whether that be an Express Scripts or a CVS Caremark or Aetna or anyone else, or WellPoint or United, it's a totally different beast, right? It's not the coupons you're getting off the Internet, at the pharmacy, at the doctor's office, etc. It's in the system and in the switch. So I think that's really, really important to us.

As I stated in my prepared comments, we've already begun the migration. I would tell you that we're still -- it's still almost all Tier 3. But there are a couple of major ones that are in what I'll call the signing phase, and if they go through the way we expect very, very shortly we'll be there. So this isn't something, by the way, that we're going to be announcing in press releases or updates. We'll give you updates on the quarterly calls. But I would tell you that our shifting to Tier 2 is happening at a more rapid rate than we originally expected. But, again, right now it's safest just to -- it's where we've been at the beginning. We're starting to see the migration, but I would hope on the Q1 conference call I'll be able to give a more substantive update with the Tier 2 percentages.

Okay, great. Thanks. And how should we think about your relative spending on the various components of SG&A? I think we can sort of figure out what selling expense should be, but you mentioned that this is a big opportunity for you to promote and do that meaningfully, as well. So what are your thoughts on how we might model that?

Yes, Joe, no real guidance, but I'm going to let John Thero give you a couple of comments. I think some of these that Fred mentioned already, but --

Hey, Joe. So, right now our focus is on introducing this product to the clinician, so it's a lot of very directed program. To the extent that we were to do something more broadly, in particular start looking at consumers, that would be much more towards the second part of the year. So I think you could think of spending programs as being first half of the year a lot of it's about sales force, a lot of it's about [speaker] programs, a lot of it's -- there is sampling involved. But the bigger spend would be the second half of the year.

Okay, great. Thank you.

Our next question comes from Jonathan Eckard, of Citigroup. Caller, please proceed.

Thank you for taking my question. Just regarding the coupon program, are there any limitations regarding income or anything regarding who's eligible for the coupons?

Hi, Chris. Good to hear from you. No, there's no limitation to anyone. What we've tried to set it up is that, pretty broadly, that hopefully you can get them from your pharmacy, you can get them from your physician, you can get them off the website. And we tried to be pretty fair. I think if there's any limitation there are certain patients that are gone to a Tier 2. This happens, right? So if you're already gone to a Tier 2 you're not going to get it. I would tell you that from time to time I've been told that on some of these programs there -- different managed care organizations look at the coupons differently, different pharmacies do. But that's just part of the beast that we deal with and everyone deals with. But there's no income limitations, and we're pretty set.

I think we're also in the process of working through what I call an indigent patient program, for those folks who can't afford drug period. Okay? So just like any other biotech, specialty or pharma company, we're trying to help those folks out that need the drug but frankly either don't have insurance or can't even afford their copays. So that maybe is going to a different level of where you're at. But right now the coupons are open to everybody (inaudible).

Yes, that's great. The reason why I asked was because you made the comment earlier that you have a lot of people on the coupon program, and I'm just wondering how effective that is a tracking mechanism to the actual scripts that you guys are getting.

Well, it's an interesting mechanism. The folks internally tell me that the coupon program can have significantly differing multiples, from let's say you have X in sales, or X in coupons, the coupons can go anywhere from a multiple of three to 10X, so the TRxes can be three to 10X anything your coupons are, and they move rapidly week to week. And I'm told they're not a perfect predictor, although we're looking at them, and we've been looking at them for the past -- for the three weeks of data that we have and we'll continue to. But the folks that have been doing this a lot longer than I have say that it's not a great predictor because of the variability.

Okay. And then last question I have is regarding this prelaunch stocking. Could you just describe how that's going to be accounted for next quarter? Is that going to -- would that be something that will show up in the top line, or is it at a level that probably would pass through and maybe kind of work its way out throughout the remainder of the quarter?

Well, I think it'll -- first of all, we had a good stock in, and we think it'll tie pretty well to how we sold, etc., what we're going to sell. As you know, this is a big, big topic with auditors and with the pharma companies these days. So what we'll do is we'll look at what we shipped, we'll look at the trend of sales, and we'll continue to look at that trend of sales even beyond the first quarter of what's moving and what's not moving. And then we'll make, for lack of a better word I'm going to call it a reserve decision or a crediting decision to say, all right, here were your scripts, here was your revenue, what's the [reasonable] run rate and what can you really count as real sales that people would've booked in advance versus what people were just -- to avoid anybody being -- perceiving there's anything like stuffing the channel. So we're working closely from an accounting perspective on that. I think it's going to end up [just sort of] being pretty straightforward, but when you go through this for the first or second quarter after launch you've got to be very sensitive. John or Fred, do you want to add anything (multiple speakers)?

So the first quarter, by that time -- by the end -- by the time in May you might be able to have some idea about where that stands, like when you actually --

Well, you can sort of go beyond the first quarter, I think, and even say, well, what's your script rate? And you're sort of sitting there with your auditors making sure that you're not -- the key here is to be conservative, not to be overly aggressive, right, and so to really -- and to take adjustments or to let things go as appropriate. But I think the most important thing is when we report Q1 we'll be pretty straightforward with how we got to where we got to and why it is.

Very good. Thank you very much.

Ladies and gentlemen, we have reached the end of our question-and-answer session. I would now like to turn the floor back to our management for closing comments.

Well, everyone, thank you for your attention, and we're delighted to have everyone on the phone today. I think we're well over 300 or so attendees. And I know I'll be talking to a number of folks over the coming weeks.

Look, I think everything's going according to plan. I think the team's doing a great job. We ultimately believe that Vascepa is a paradigm-shifting therapy, and we're just going to keep plugging away, and we'll look forward to the updates we all get from various public sources and updating you on our other progress throughout the year regarding other IP, other potential opportunities we've got regarding the sNDA, our data we're going to have coming out I think on the combo product before the end of the first half, additional sNDAs for the suppliers being approved. So we'll just continue to plug away here, and, again, we appreciate everyone's support, and we'll look forward to future discussions.

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