Amarin Corporation PLC (AMRN) 2013 Q1 法說會逐字稿

Welcome to Amarin Corporation's conference call to discuss its first quarter 2013 financial and operating results. This conference is being recorded today, May 9, 2013.

I would now like to turn the conference over to Mr. 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 financial performance and plans for commercialization of our approved product and product candidate, including supply-related activities and levels of expenditures and revenues and the adequacy of our financial resources; our current expectations regarding regulatory filing, government agency decisions, potential indications and commercial success for our product and product candidate; 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 candidate and approved product through patents, regulatory exclusivity, trade secrets and manufacturing barriers to entry; our current expectations regarding potential strategic collaboration; and our expectations for future publication and presentation of our study data

These statements are based on information available to us today, May 9, 2013. We may not actually achieve our goals, carry out our plans or intentions or meet the expectations disclosed in our forward-looking statements, so 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, amend 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 factors section of our most recent Form 10-Q, 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 Q1 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 all of those who are able to be with us today.

During this call we will review our recent accomplishments and milestones, update you on the launch of Vascepa and other operational activities, and speak to Amarin's financial performance in the first quarter of 2013. We will also field 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; Joe Kennedy, our General Counsel; Fred Ahlholm, our VP of Finance; and Joe Bruno, our Director of Investor Relations.

Since our 2012 year-end call we've advanced key objectives in a number of areas, including recognized Q1 revenue from Vascepa sales of $2.34 million, and this is part of the $5.2 million in sales to wholesalers.

Secured additional formulary access for Vascepa with over 190 million lives now covered by payors, including earlier-than-expected tier 2 coverage for 40 million of these lives beginning in April and May of this year.

Received FDA acceptance for a review of our supplemental NDA seeking approval for the marketing and sale of Vascepa capsules for the larger ANCHOR indication or use as an adjunct to diet and the treatment of adult patients with high triglycerides mixed dyslipidemia. This is the group of 200 to 499 mg/dL [traits].

Received FDA approval for 2 additional active pharmaceutical ingredient manufacturers or API compliers, both Chemport and BFF, which increases to the number of three our now qualified API suppliers. We believe that this leads to future API cost reductions of up to 50% or more.

Increased patents issued or allowed to 22 in the United States, having added 11 since the end of 2012, including 3 since our last press release on this topic. All but 2 of these have patent terms that go into 2030 and beyond. We also have an additional 30 patent applications currently being prosecuted in the US.

Reported statistically significant reductions of apolipoprotein C3 from our MARINE and ANCHOR phase 3 clinical trials of Vascepa.

As you know, for two months of Q1 2013 we implemented direct selling efforts of Vascepa in the US through our 275-person salesforce. We are early in the launch and Q1 results reflect only two months of commercial launch activities. We are pleased that access to clinicians has been very good.

In addition, at the macro level, we are pleased that we have yet to hear any significant negative reactions to the efficacy or safety profile of Vascepa. That may sound obvious given the strong efficacy and safety profile of Vascepa. However, sometimes there are surprises when products begin to be sold and the lack of any meaningful negative reaction is reassuring that we haven't missed anything.

We have also heard considerably favorable comments from the field and currently have had over 4,000 clinicians who have written scripts for Vascepa. Many of them have provided us with positive feedback regarding the response of their patients to Vascepa, including multiple accounts of patients who have been on alternative therapies witnessing their LDL-C levels drop after discontinuing those therapies and starting on Vascepa.

Our sales professionals are targeting the limited groups of clinicians who are the highest prescribers of other lipid therapies. The universe consists of slightly more than 30,000 clinicians. This target group of clinicians includes certain lipidologists and cardiologists, as well as certain general practitioners who have a history of regularly prescribing other lipid therapies.

During the early months of selling Vascepa, most of the clinicians in this group have been seen by Amarin's representatives at least once, with a majority of them having been seen 2 to 4 times. For a new drug launch, particularly for drugs which are preventative therapies for chronic ailments, sales data suggest that approximately 5 to 10 visits are needed to change practice patterns. We are witnessing that for those clinicians who have been visited more than 5 times that the levels of script writing is the highest.

We are marketing Vascepa for use as an adjunctive diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia traits over 500. This is the approved initial indication for the products which we referred to with the MARINE indication. We believe that Vascepa is well differentiated in this market based on its safety profile, which is similar to placebo and its spectrum of demonstrated lipid benefits, including statistically significant reductions in triglycerides, Apo-B, non-HDL-C and VLDL-C, with no increase in LDLC, also known as bad cholesterol.

We are finding that many patients on other therapies intended for lowering triglycerides are also on statins. Statins are intended for cholesterol management, but also have the effect of slightly reducing triglyceride levels as well. Prior to our MARINE trial, it was expected, based on the experience of clinicians, that having a triglyceride-lowering therapy on top of a statin would result in less of a triglyceride-lowering effect than in a population not on statin therapy because the statin had already lowered the triglyceride baseline.

With Vascepa in the MARINE trial we experienced the surprising result of a triglyceride reduction on top of a statin getting stronger than the overall cohort of patients such the triglycerides in this group of patients decreased 65% beyond the level of triglyceride reduction provided by the statin therapy and placebo. This type of favorable but unexpected result of Vascepa as an add-on to statin therapy is an example of the type of subject matter that we have found clinicians appreciate about Vascepa.

Despite what was taught to them in medical school, clinicians also now appreciate that it is possible, as was demonstrated in the MARINE trial, that triglycerides can be lowered in patients with very high triglyceride levels without increasing LDL-C with a drug that has a safety profile similar to placebo. This theory is further supported by data that shows the statistically significant reduction in LDL particle concentration seen with Vascepa in those same patients.

Many clinicians have put a few patients on Vascepa to witness the results for themselves. Come clinicians have put themselves on Vascepa. From these clinicians we have gotten the earliest and strongest positive feedback.

At the time of launch, it was the key top opinion leaders in the country that represented the bulk of physicians who were intimately familiar with Vascepa and the clinical profile. Now, we have hundreds of clinicians who want to be speakers on Vascepa to help educate their peers about the safety and efficacy of the product.

The education of clinicians is supported by continuing medical education grants and by our marketing programs, including speaker programs plus activities such as participation and industry trade shows. Our marketing activities are relatively limited and targeted at this time. In particular, we are not doing any extensive advertising or consumer outreach, which is very expensive and can be wasteful until the clinicians are better educated on the merits and use of Vascepa.

Our valuable co-pay card program eliminates patient's first month co-payment in full up to $75 and then limits co-payments for script refills to $25 throughout 2013. In essence, this co-pay card is becoming part of our sample program. However, co-pay cards by law are not allowed to be used in conjunction with government regulated programs such as Medicare Part D. That leads me to the discussion of a very important topic in managed care as it is not enough to get script written; we need to get scripts filled.

On the managed cares progress side, at the time of launch we had no tier 2 coverage. This is typical for any new drug, which is why we instituted the co-pay card program, to help offset the differential between tier 2 and tier 3 co-payments for patients. We have made co-pay cards widely available to patients via clinicians, pharmacists and the internet. Nonetheless, the preferred path for clinicians and patients is to get Vascepa onto favorable coverage with major managed healthcare plans.

Our progress thus far with managed care has exceeded our expectations. It is not typical to get tier 2 conversions within the first 3 months of launch, but we've been able to do so. We have succeeded in migrating over 40 million lives from tier 3 to tier 2 status throughout April and the first of May and we anticipate this progress to continue. It's important to realize, however, that results from these managed care victories can take time to be pulled through, so it may take as much as 2 to 3 months to see the more favorable coverage reflected in the increased script data.

We have approach managed care plans with messages around the safety and efficacy of Vascepa. Once the performance of Vascepa was made clear, including no increases in LDL-C and consistent performance in diabetic and non-diabetic populations, many payors have been quick to move to coverage. Getting payor approval requires many steps. Typically, you begin at tier 3 and migrate ultimately to tier 2. As we shared earlier, we have a total coverage universe of over 190 million lives, including the 40 million lives that are now on tier 2.

We've also witnessed a number of plans putting prior authorizations because of the heavy off-label use of our competition. We believe that those prior authorizations that now impact us and our competition will go away, assuming we get the approved ANCHOR indication at the end of this year, which we believe will be a huge competitive advantage for us. Based upon data that we have seen thus far and feedback from clinicians who have patients on Vascepa, we believe that initial Vascepa use is predominantly on label and we are being careful to market it as such.

Our highest priority for [string] wins for tier 2 have been with Medicare Part D plans. While we had no tier 2 coverage upon launching Vascepa, as I stated earlier, through May the 1st we have two-thirds of the Medicare Part D lives covered. This include wins at CVS Caremark and Express Scripts. We anticipate continuing this progress and thereby making it more convenient and less expensive for more patients to get Vascepa. It should also add to the confidence of clinicians that if they for write a script for Vascepa that it will be filled.

During Q1 we witnessed a high level of scripts being rejected and many of them were from Medicare Part D. Based on the preliminary Q2 reports, these tier 2 wins appear to already be helping significantly with that hurdle. We are working to ensure that pharmacists and clinicians are aware of these tier 2 conversions.

We are also progressing with tier 2 wins with commercial payors. Express Scripts, for example, recently converted to tier 2 and we are pulling through to the next level of their plan and progressing towards tier 2 conversions with other plans as well. We are making these gains while staying within our overall pricing targets and leveraging the safety and efficacy profile of Vascepa to secure our increasingly well received position in the market.

On the sales results front, near the start of our commercial launch of Vascepa, I was asked on our year-end results call about how long it would take before script data is meaningful. I commented that, based on other launches, it would likely take a couple of full quarters before script data is reasonably accurate. That assessment still holds true as we are still seeing significant differences between the various script estimating sources that are out there.

Accordingly, while I am about to make some comments about script results, I remind everyone that it is very early in the launch still for Vascepa. I believe, and we believe, we are making good progress with respect to the sales of Vascepa for the current indication and that we are also heightening awareness of Vascepa and establishing reimbursement for Vascepa, which should serve us well when the ANCHOR indication can be marketed.

The best available public indicator in monitoring Vascepa's performance are normalized TRx's, or normalized total prescriptions. These normalized prescriptions basically adjust each prescription to 120 capsules or a 1-month supply. Though even monthly IMS and Symphony data is generally understood to provide incomplete estimates, and has historically underestimated the actual scripts for new product launches, including we believe ours, this is a more accurate assessment than weekly scripts. For other drug launches, weekly data has underreported significantly, as I previously referred to.

On the Vascepa sales side, in the 3 months since launch, February and March, which were part of the first quarter, and April, part of the second quarter which we can report today, we recorded 3,200, 7,200, and 11,800 prescriptions normalized TRxs approximately. This brings the total number of prescriptions to well over 22,000. Week-to-week growth continues to look strong and, since launch, over 4,000 clinicians have prescribed Vascepa.

Looking at this early trajectory, the Vascepa launch has shown nice trends, comparable to some recent Big Pharma cardiovascular launches, such as Eliquis, [Verlance] and Xarelto, and some would argue we've outperformed some of these examples.

As part of the script data, we have also begun to see refills of Vascepa which, based on all the results, appear to be tracking to expected refill rates. Our TRx/NRx ratio, or expansion ratio, sits around 1.25; again, in line with what we would expect. That this number sits close to 1.1 is a reflection of our successful NRx slope during this launch period and that you want to see for as long as possible when launching a new agent. And what we are seeing with Vascepa is that NRx growth is outpacing TRx growth. A larger TRx to NRx ratio would mean that we slowed or stopped growing NRx's and we are happy to report this is not the case. We look forward to this trend continuing as we begin to see additional script data for Q2 and beyond.

Our shipments of Vascepa to wholesalers in Q1 exceeded the reported script estimates. All of our major wholesalers have paid us in full and are on schedule for our initial Vascepa shipments to them. In addition, we have begun to ship weekly reorders to wholesalers. We monitor the number of Vascepa bottles which ship from the wholesalers to retail pharmacies on a daily basis, which numbers thus far have consistently and significantly exceeded the number of scripts reported by IMS and Symphony. This is important because early in a launch many pharmacies do not stop product. So, we can use as a proxy the shipment from the wholesalers for retail pharmacies as a very good sign.

On the revenue front, as Fred will discuss in a moment regarding our financial results, we cognized $2.34 million in revenues for Q1. The accounting for revenue recognition is quite complex for an early-stage launch. We also have been very, very conservative with our estimates.

The amount of revenue we recognize does not reflect revenue for all the product we shipped to wholesales in Q1, but rather the resale of Vascepa by those wholesalers. Nor is the amount intended to directly to scripts estimated by third-party sources. We do believe this revenue amount reasonably reflects the economics of our Q1 results in a manner which is consistent with revenue recognition policy as described in our 10-Q. During the quarter ended 3-31 the net value of Vascepa sold to wholesalers was $5.2 million. Therefore, the Company recorded deferred product revenue of $2.9 million in Q1 under GAAP, in addition to the $2.34 million in revenue recognized under GAAP.

We are witnessing many positive signs in the market and we are encouraged by the progress our sales professionals are making out in the field. Amarin has not provided specific guidance regarding Vascepa sales targets as it's still too early to make accurate assessments on the sales trends of the product. So, we are not prepared to provide guidance at this time. However, script data will continue to be available for all of us to see and we are not restricting access to such script data from IMS or Symphony Health.

With regard to cash burn, we expect Q1 will prove to have been our most challenging quarter of 2013 and our cash burn per quarter is certainly expected to go down from here.

Product education and awareness, combined with continued reimbursement progress, are keys to our success as we in parallel prepare for a greater opportunity with the ANCHOR indication.

On the ANCHOR indication front, in Q1 we received notification of allowance for 3 patents regarding the planned indication for ANCHOR, further strengthening the IP position for Vascepa. We hope these are the first of many on ANCHOR. And since our last conference call with investors we submitted and had accepted the sNDA for the ANCHOR indication. The FDA assigned a PDUFA date of Saturday, December 21, 2013, so our PDUFA date is effective Friday, December the 20th.

As previously announced in the ANCHOR study, Vascepa demonstrated statistically significant reductions in a broad spectrum of lipid and bromatory markers on top of optimized statin therapy, including significant reductions in LDL-C. As earlier discussed, it is important to note that these results are incremental and on top of the benefit provided by optimum statin therapy alone.

The ANCHOR indication, upon approval, which is just 7 short months from now, would enable Amarin to market and sell Vascepa for use as an adjunct to diet in the treatment of adult patients with high triglycerides that mixed dyslipidemia, the patient population that has 200 to 499 straits. Approximately 40 million adults Americans, or 1 in 5, have triglyceride levels of at least 200, which is 10 times more than the patient population in MARINE.

As seen in ANCHOR, a daily Vascepa dose of 4 grams all the primary and secondary efficacy endpoints of the ANCHOR trial were achieved. In addition, the safety results from the ANCHOR trial are already included in the current label for Vascepa. As a result of these things, Amarin is optimistic that the FDA will approve Vascepa for this indication. Let me also note at this point in time that no other omega-3 therapy is approved for the ANCHOR indication.

The REDUCE-IT trial, as an update to our cardiovascular outcome study, it is substantially underway. Enrollment continues to progress well and we've exceeded well over 4,000 patients. We currently have more than 400 sites in 11 countries enrolling patients in the study and continue to expect this to enroll to its full completion of approximately 8,000. As we previously stated, results of the study will not be available until a specified number of cardiovascular events has been observed, the timing of which is not expected in the near term.

The current level of enrollment for REDUCE-IT has exceeded the requirement as outlined in our special protocol assessment agreement with the FDA for the ANCHOR indication to have been accepted; which, as you know, happened last month. This is yet another reason why Amarin is optimistic that the FDA will approve Vascepa for the ANCHOR indication.

On the combo product front, Amarin is in the late stages of evaluating the results of the pharmacokinetic study, phase I study, that we completed on the fixed-dose combination of Vascepa and a leading statin. As previously mentioned, in the MARINE trial the triglyceride reduction seen with Vascepa on top of a statin was stronger than that in the overall cohort of patients. In fact, Vascepa reduced triglyceride levels in the statin-treated group above and beyond a statin alone of 65%. While we have not finalized next steps in the development of this combination product or a series of combination products, we are happy to say that we see progress in confirming the feasibility of such a combination product and look forward to providing additional update on this topic by the end of the second quarter.

So, on the status of Vascepa supply, in the fourth quarter of 2012 Amarin submitted 2 additional sNDAs, one for BASF and one for Chemport for active pharmaceutical ingredient, API. Both of these sNDA filings were approved in April of 2013. The qualification of these suppliers is part of Amarin's strategy to expand our supply chain to provide greater capacity to meet anticipated demand, enable supply diversification and flexibility, and introduce competition among quality suppliers that will lead to a reduction in supply costs of greater than 50%.

With the approval of these suppliers, Amarin now has 3 qualified API suppliers for Vascepa, with plans for the submission of a fourth later in 2013. In time we expect the addition of these multiple suppliers to lead to a gross margin with a steady state that falls in the high 70% to low 80% range. And while we have been working to qualify these additional suppliers, Nisshin has been steadily producing Vascepa to meet our anticipated 2013 demand.

Regarding intellectual property, Amarin continues to make significant progress in its effort to expand patent protection for Vascepa and now has 22 patents issued or allowed, with over 30 additional patent applications being prosecuted in the United States. This is inclusive of 3 additional allowances since our last press release regarding patents and brings the number of patents issued in the first quarter alone to 11. The 3 most recent allowances each cover incrementally expansive methods of use regarding the MARINE indication.

Our aggregate patent portfolio includes claims covering key elements of Vascepa's pharmaceutical composition and methods of use for the MARINE indication, ANCHOR indication, and other potential uses of Vascepa. Amarin is also pursuing patent applications related to Vascepa in multiple jurisdictions outside the United States. All of the patents we have issued to date have expiries until 2030 and beyond, with the exception of 2. Patent protection for Vascepa is augmented by protection provided by trade secrets, manufacturing barriers to entry and 3 or 5 years of regulatory exclusivity.

As we are all well aware, an FDA determination on NCE status is still currently pending. 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. If Vascepa is not granted 5-year exclusivity, it would be granted 3-year exclusivity because the MARINE study was a new clinical investigation of a new drug product.

As I've said in the past, given the strengthening of our patent portfolio with 11 new patents issued just this quarter, each with terms that go to 2030 and beyond and a total of 22 in total, combined with our manufacturing barriers to entry and our trade secrets, NCE is clearly becoming less and less important.

I now ask Fred Ahlholm, Amarin's Vice President of Finance, to comment on Amarin's first quarter 2013 financial results.

Thank you, Joe.

I will provide some comments here regarding our financial results. You'll find a more detailed discussion of our results in our 10-Q and press release issued earlier today.

Amarin began recognizing revenue from the sale of Vascepa in the US in January 2013, so detailing of the product did not begin until Vascepa's commercial launch on January 28, 2013.

We reported net product revenues for the quarter ended March 31, 2013 of $2.34 million in accordance with US Generally Accepted Accounting Principles, or US GAAP. Until we have more operating history with the commercialization of Vascepa, we are recognizing revenue not on our sales to wholesalers, but on the resale of historical by these wholesalers. During Q1 the net value of Vascepa sold to wholesalers was $5.2 million and, as a result, the addition to the $2.34 million in recognized revenue, we recorded deferred revenue of $2.9 million at March 31, 2013.

Cash collections from the sales of Vascepa in the period ended March 31, 2013 were approximately $2.9 million, with an additional $2.2 million related to the net Q1 sales collected from wholesalers in April 2013.

Consistent with industry practice, the net price of Vascepa in Q1 2013 reflects the deduction of a one-time discount paid to wholesalers to stock Vascepa in advance of Vascepa's launch in January of 2013, as well as the cost of our co-payment rebate card program and customer payer rebates and allowances.

The cost of goods sold during the quarter ended March 31, 2013 was $1.3 million. All of the Vascepa capsules sold during the first quarter of 2013 included API sourced from a single API supplier. Amarin's purchases of API from the supplier in 2012 and early 2013 are at a higher cost per kilogram than expected future purchases from this supplier. The unusually high cost of goods as a percentage of revenue is attributable to a number of things, including start-up costs, geography, discounts to wholesalers, exchange rate exposures, lower volume, and less favorable economic terms than those of other manufacturers.

We expect steady-state gross margins to approach the high 70% to low 80% as a percentage of revenue. We also anticipate purchasing API from BASF and Chemport, for which sNDAs were approved in April 2013. The API costs for BASF and Chemport are significantly lower than the costs previously incurred for purchases of API from our initial supplier.

Under US GAAP we reported a net loss of $62.2 million in the first quarter of 2013, or basic and diluted loss per share of $0.41. This net loss included $4.9 million in non-cash share-based compensation expense; $0.5 million in non-cash warrant compensation income; and a $3.6 million gain on a change in the fair value of derivatives.

In the first quarter of 2012 GAAP net loss was $88.3 million, or a basic and diluted loss per share of $0.65, and included $3.9 million in non-cash share-based compensation expense, $2.4 million in non-cash warrant compensation expenses, and a $66.2 million loss on the change in the fair value of derivatives.

Excluding non-cash gains or losses from share-based compensation, warrant compensation and change in value of derivatives, non-GAAP adjusted net loss was $61.4 million for the first quarter of 2013, or a non-GAAP adjusted basic and diluted loss per share of $0.41, as compared to non-GAAP adjusted net loss of $15.8 million or a non-GAAP adjusted basic and diluted loss per share of $0.12 for the same period in 2012.

Amarin reported cash and cash equivalents of approximately $201.8 million at March 31st, a net decrease of $58.4 million from our reported $260.2 million in cash and cash equivalents at December 31, 2012.

Net cash outflows in Q1 2013 included approximately $32 million paid for sales and marketing related expenses in conjunction with the initial commercial launch of Vascepa, approximately $13 million paid in support of the REDUCE-IT cardiovascular outcome study, and approximately $11.8 million for historical API purchased in conjunction with the buildup of our commercial supply and for clinical trial material.

We believe that our cash and cash equivalents balance of $201.8 million at March 31, 2013 is sufficient to fund our operations for at least the next 12 months, including the initial commercialization of Vascepa and the advancement of the REDUCE-IT cardiovascular outcomes study.

During the 3 months ended March 31, 2013 we acquired approximately $11.8 million of Vascepa API, of which $8.8 million was capitalized as inventory at March 31, 2013 and the balance of which was included as a component of research and development expense because it was received from suppliers prior to their April qualification by the FDA.

The Company's liabilities as of March 31, 2013, excluding the fair value of the non-cash warrant derivative liability, totaled approximately $282.4 million, which includes $137.7 million for the carrying value of our exchangeable debt and $85.9 million for the carrying value of the hybrid debt financing that we entered into in December of 2012.

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

Thanks, Fred.

As an organization we are excited to report our accomplishments to date regarding our launch of the MARINE indication and our operational activity. We are also excitedly looking forward to even greater opportunity as we move closer to December 20th and the PDUFA date for the ANCHOR indication.

2013 will continue to be a year of execution. We believe that as we continue to reach our milestones as they relate to our operational priorities, we will bring significant value to shareholders. These operational priorities include increasing revenues from Vascepa through daily execution by our (inaudible) salesforce as they continue along the path of success that they have traveled from February through today; continuing the earlier than anticipated managed care migration from tier 3 to tier 2 coverage, allowing more patients cost effective access to historical; gaining approval of the ANCHOR indication; the sNDA PDUFA date scheduled for September 20th, 2013, about 7 short months away from now; obtaining additional patent awards on the US PTO, further securing our IP position for Vascepa; and finally, continuing to sell and deliver on our current supply chain commitments, including the anticipated sNDA submission for a fourth API supplier, all of which drive our cost of goods down significantly.

Thank you for your time today and 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 is from Ritu Baral of Canaccord. Please go ahead.

Thanks, guys, for taking the question.

Joe, some detail on the promotional effort you guys have underway. Have you guys determined an average number of details required to first prescription for your reps? And you had mentioned that sort of threshold of being detailed five times. Do you have an estimate of the percentage of your target docs that have been detailed five times to date?

Yes. Yes. Well -- hey, Ritu, yes, hi. It's good hear from you as always. I would tell you we're getting a lot of scripts written after the first, after the second, after the third, but we see this inflection when we hit about five or six.

I would say to you we're probably, depending on the data and how you look at it, because again, don't forget that we see this data a week or two behind, we're probably there with a third to a half of the folks and we continue to see this trend picking up. And again, the whole awareness thing that's out there. So, I would say about a third to half we're there on, okay?

And would you expect that all of the target docs will have been detailed five plus times by the next earnings call?

I would expect about 70% to 90%, depending on where we end up. And the reason I caveat that is -- and we've had great receptivity from the doctors, right? So, they all want to see our folks. But, there's always a couple of them that may say I've got to cancel or I've got this going on or that going on. Or they might be in, for example, Wisconsin or Minnesota, which is a little bit trickier to get to see them. But, I think we should see clearly significant gain as we get to the next conference call in the first or second week in August.

Got it. And a last question relating to insurance coverage and prior auth. Are there prior authorization requirements at any of your tier 2 coverages right now? And what are the prior authorization requirements that you are seeing either in tier 3 or--?

Yes, most of them are not there at the tier 2 side. If there are, there might be somebody that says, well, because there's all the off-label stuff going on through your competition, we're going to put it in at 500 for you. And by the way, we're going to go back and grandfather in through them. It's a little trickier for us because, clearly, we're new and launching.

But, what really happens for us, assuming that that's the case, and again, it's limited on tier 2. But, when we get to ANCHOR, if you think about it, right now the pitch is we're approved for the same indication as our competition. When we get to ANCHOR, the answer is we're the only ones approved for this. We would see our prior auths dropping and all the prior auths for the competition staying; in fact, being added across the board.

So, what we're really doing right now, beyond getting our brand out there, getting to know all the doctors better and better, is we're building awareness. And that's a big thing, building that awareness, because we know 1,000 to 2,000 docs before we launch pretty well, but 30,000, 35,000, 40,000 of them it takes a while to build the brand and we're really starting to see that.

And the other nice thing we're seeing is a lot of these docs are testing themselves or their patients. We have one doc who knocked his LDL down almost in half when he switched from Lovaza to our product. We have other docs that have seen trigs go down another 100 or 200 mg/dL on our product for their patients and drive LDL down. We've seen other docs that see trigs staying about the same but still driving LDL down. And the more these doctors see that, the more the doctors are sort of embracing our product. And so between that, the awareness and all the other stuff, we just see this all coming to a head as we launch ANCHOR.

Great. Thanks for taking the question.

Thanks, Ritu.

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

Great job, guys. I wanted to get your thoughts on why you think you might be ahead of plan on the tier 3 to 2 conversions and what are your goals for the rest of the year?

Yes. We set up tier 3 to tier -- hi, Joe. We set up tier 3 to tier 2 convergence originally that were based probably on -- well, let's call what we did with Lovaza plus a little more aggressive, okay?

The reason we think we're so far ahead at this point is that, A, the managed care plans get it. They get the benefits of the trig lowering with the no LDL increase, the no a-fib label, all the other benefits that we provide side effect wise and the inflammation markers.

I will also tell you that sometimes Big Pharma companies can be a little bit painful to deal with, let's say, at these companies for managed care. And I think we've been through this. We try to be nimble. We try to be effective. And I think they respect that they're not dealing with a behemoth, they're dealing with somebody that works with them.

So, I think -- and I also would tell you that I think, at least on a WAC basis our price is lower. I think that as you see people going into the launch of a new product and people start raising theirs, as our competition did, it just rubs people the wrong way. So, great products, great working relationship.

In terms of where we're going to end up now, I would tell you we're about three to six months ahead of where we expected and I expect that we continue to accelerate beyond that. I'm not prepared to give any other answers at this point. I would tell you that even once you get these lives, it still takes you two to three months to really pull them all through because it's just a more complicated market than it was previously, but we're really happy with where we are right now on the managed -- on the tier 2.

Great. That's helpful, thanks. And then on the -- you mentioned that you're not having to give big discounts. Can you give us some insight into what the gross to net is?

I would tell you that -- the best thing I can say right now is the first quarter is an anomaly. What I've said to people historically is our WAC price I think is roughly -- it's 184 plus or minus a month, which works out to be $1.50 a pill. I think we said to folks that roughly we expect to have the same net sales as our competition per pill of about $1.25.

We were a little below that in the quarter, a lot of that due to the coupon programming, things of that nature, which has the biggest impact on that. It drives your net sales down. But, I'm not overly worried about what managed care is going to do to it because we're right on target with everything that we're doing. But, I -- without going into the first quarter numbers, it should get better as we get out in the rest of the year.

Great. Keep up the great work. Thanks.

Thanks, Joe.

Thank you. The next question comes from Thomas Wei from Jeffries. Please go ahead.

Thanks. I wanted to get a little bit more of an update on your thoughts and the progress you've made towards determining the commercialization strategies for the ANCHOR indication.

Yes. I think, Thomas, we're heavily into that. As I always -- as I've been saying lately, we focus more on those five key things; driving sales, driving managed care, driving ANCHOR patents, driving ANCHOR approval and supply. Everything else will take care of itself. We still are in what I'll consider -- and share with you guys as always, dialogue. I don't want to say too much else.

I think what I would continue to say, though, is we don't see ourselves hiring a primary care salesforce. There's a lot of unique ways you can do this and we're aggressively looking at all of them. But, I think to say anything else right now would probably be premature and presumptuous.

Can I just clarify when you say not hiring of primary care salesforce, does that include -- or basically does that also preclude the option of a contract sales organization to market ANCHOR, so you're really looking towards a partnership group?

Yes. No, it doesn't preclude that. What I would say to you is, as I think I said before, is that from a partnership perspective you're really trying -- if you do something, you don't want to tie the assets up, you don't want to sell the Company by another means, a long-term licensing deal. What you might do is a co-promotion deal, for example, where you could access a thousand reps, for example, that are out there for a years. Just as an example, okay? And when you do that with Big Pharma or contract sales, who knows. I'm not big on contract sales organizations. You have to have the people have accountability to somebody. And not that the contract sales organizations don't serve a purpose, but those folks really don't work for anybody. So, I think the people really either work for us or they need to work for somebody else.

I think the (inaudible) you should be thinking about when I talk about primary care is primary care is 500, 1,000 additional reps. That's not something that we intend to do, alright? That's just -- people shouldn't expect to wake up tomorrow and we're announcing, hey, look at this, we're hiring all these people. That's not what we're going to do. It's about being efficient and leveraging. And then, of course, there are other options out there where other creative structures can come into play.

Thanks. That's actually very helpful. And then just one last one. I'm trying to use what you said about cash burn to get a better sense of how to model out the R&D and the SG&A lines, especially, I guess, the SG&A line for the rest of the quarters. Any other help that you can give us on how to think about SG&A relative to the first quarter?

Well, I don't expect SG&A to grow significantly from here, okay, or at all. In fact, it might actually come down a bit. And what I really expect to see happen are the sales to continue to grow. And if sales continue to grow and SG&A -- let's call it flat, who knows where it will end up exactly, that's my comment on why I expect cash to continue to drop as we go by.

I'm sort of looking into a crystal ball here, Tom, as you know, because there's a lot of things that we don't know yet. We've seen great script trends so far we think for the last few weeks. We were close to 3,000 on TRx', over 3,000 if you use normalized TRx's last week. And we like what we're seeing. We like the responses from the doctors, the managed care. We like the shipping patterns, the buying patterns we're seeing both from the wholesalers and then shipments to retailers. It feels right to us.

Thanks.

Thank you. Our next question is coming from the line of Jonathan Eckard of Citi. Please go ahead.

Thank you for taking the question. I was wondering if you were able to provide any kind of relative details about the magnitude of the sampling program versus the amount of scripts that you had in the first quarter and if there's any feedback on the conversion rates of patients getting examples that convert to scripts and what the potential impact of this could be in the next few months as you do see patients convert?

Well, thanks, Jonathan. Without going into too much on the sample side, we've done quite a bit of it. We've had two different samples out there. We've had what I'll call two to four-day sample packs out there and then we've got the initial program we had with the one-month sample packs out there that we're trying to get our high prescribers going. Those were pretty much all in everyone's hands and I think we expect to see those sort of going away.

What we're trying to do is set this up where a doc can reach into his closet, grab a handful of samples, give them to a patient, potential patient, and maybe that's up to a week supply or a four to seven-day supply and then they get the script written. So, I think that the samples are always going to be an important part for us, but when you're dealing with a 4-gram-per-day drug, and one that, frankly, doesn't have cost of goods approaching zero, then you've got to be careful how you manage that.

I expect we'll continue to see very robust returns from our samples. To date it's been very, very positive with those doctors who are using samples and accessing samples. Giving out any more information than that is probably a little tricky.

John, I think, just to be clear, the sample numbers are in our marketing expense.

They are.

They are. So, they're not -- sometimes people will say, oh, are they in your cost of goods? But, they are in our marketing expense. And I think we would probably expect to sample not the big bottles going forward, that was a one-time program, but I think you -- the small sample backs where you can grab them and give them to the patient and get them started is really what we're going to be about going forward.

Okay. And if I could just ask a quick question. I take your normalized script numbers that you have the press release --.

Sure.

And you compare that to the sales number, it equates to like $2.23 per script. And I'm just wondering, is that difference because the normalized script numbers may be a little off or how you accounted -- what you accounted for this time?

Yes, I have a feeling -- well, I don't think those are comparative, Jonathan, because what's happening is we know there are more shipments being made. We work very closely with our accounting firm to figure out what the net sales were. And so, it's not an apples-to-apples comparison.

John, you want to--?

That's an exactly right statement. Our revenue will not be on the data. We provided that data more -- in terms of scripts, more as just what's available on the (inaudible) and we do think it's representative of the month-to-month trends. But, we -- as Joe had stated in his comments, we believe that those numbers are understated. And based on data that was available to us, we recognize revenue based on what we believe is the actual level of activity was out there in that. So, the number of scripts in which the revenue is recognized is higher than the number that you're referring to.

Okay. Thanks very much.

Thank you. Ladies and gentlemen, that is all the time we have for questions. I would like to turn the floor back over to Management for any additional remarks.

Yes. Look, everyone, it's great to have everyone onboard on the call. This was our first quarter of launch, a partial quarter, two months. We look forward to chatting with everyone in our first full quarter in August. But, all the signs we're seeing right now we feel very good about from the sales side, the managed care side, the R&D side, the legal side. Across the board things look very positive.

I did want to make one other comment based on the number of calls I've gotten today on the New England Journal of Medicine article that some of you may have seen. I guess if I call it an article that's probably more of a compliment than it should have. But again, as we see these things come out, we see these as being the wrong drug and a supplement. I think along those lines the patient group tested with neither the MARINE nor the ANCHOR group; totally different.

Trig lowering. People are commenting that they said that they had significant trig lowering results. They lowered trigs 2% to 3% significantly.

No data on biomarkers. We know that this study's been going on since '04 and has several significant challenges to it. I think at the end of the day for us, it's about JELIS. That's the best comparator for our study, for our drug. And JELIS is a study that in Japan saw a 19% reduction in mortality with our sister drug Epadel. And when they looked at patients at higher trig levels, they saw a 53%. That's the one we should be thinking about; not supplements, not poorly designed old studies.

And I guess the simplest way to put it at the end of the day is, if we took that drug, that 1-gram drug that, by the way, was -- appeared to be half EPA, half DHA and 20% other stuff, and we ran that in the ANCHOR trial or the MARINE trial, it would have failed. So, why would an outcome study succeed?

So, Steve, do you want to say anything else about that study at all that I didn't?

No, it's just a considerably lower dose, different patient population. And as you said, a different -- totally different product with a mixture of omega-3.

Again, I wanted to comment on that. I thought I'd get some questions on it. I'm glad I didn't. But, given the calls we've gotten, I wanted to make sure we covered it.

John, do you have--?

If I can just add one clarifying comment to something that was stated earlier, just to make sure no one misinterpreted it. When we were talking about managed care and just how the per-capsule price that was referenced was it all-in discount, this is not what we're discounting to managed care. This includes amount paid to wholesalers for their role--.

Rebate allowance.

Rebate returns allowed, the co-pay card. This is an all-in number. So, I don't want anybody to think that that's the level that we're discounting to the payors.

Very good. So, just again, last price is $1.50 a pill. Net sales we think ends up about the same as our competition per pill, about $1.25, but that's all-in, all discounts. It was lower than that this quarter; again, in an early launch scenario.

So with that, I want to thank everybody. I know we'll be talking to folks over the next couple of days and I very much appreciate it. Take care. Good evening.

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

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