Amarin Corporation PLC (AMRN) 2013 Q2 法說會逐字稿

Greetings, and welcome to the Amarin second quarter 2013 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, Joe Bruno, Director of Investor Relations for Amarin. Thank you, Mr. Bruno. 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 financial performance and plans for commercialization of our approved product and product candidate, including supply-related activities and level of expenditures and revenues, and the adequacy of our financial resources; our current expectations regarding regulatory filings, topics, and responses to be covered in our upcoming FDA advisory committee meeting; preparation for this meeting; government agency decisions; potential indications and commercial success of our product and product candidates; our current expectations regarding our cardiovascular outcomes study and the potential implications of such study on our regulatory process; plans to protect the commercial potential of our product candidate and approved products through patents, regulatory exclusivity, trade secrets, and existing 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, August 8th, 2013. We may not actually achieve our goals, carry out or 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 agreements 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 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, 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.

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.

Thanks, Joe, and thank you to everyone on the line for joining us today.

During this call, we will begin with an overview of our recent accomplishments, including an update on the launch of Vascepa as well as other operational activities.

This will be followed by some comments regarding our pending FDA advisory committee meeting and PDUFA date for the ANCHOR indication, followed by discussion of Amarin's financial performance in the three and six months ended June 30th, 2013. We will also field questions from analysts and investors as time permits.

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 Q1 results call in early May of this year, we've advanced key objectives in a number of areas including recognized GAAP future revenue of $5.5 million for the first complete quarter of Vascepa sales. In addition to this, there is a $1.8 million deferrance that's above and beyond the $5.5 million.

Secured additional formulary access for Vascepa, with over 190 million lives now covered by payers without restrictions, including earlier-than-expected Q2 coverage that now totals over 72 million lives.

Advanced our planning and preparation for the launch of Vascepa for the ANCHOR indication for patients on statin therapy with mixed dyslipidemia and triglycerides between 200 and 499, as we progress toward anticipated FDA approval with a PDUFA date of December 20th.

Continued to enroll patients in the REDUCE-IT cardiovascular outcomes study in which the mean and median baselines where triglyceride levels for patients in the study to date are greater than 200 mg/dL, which is consistent with our target and higher than studied in recent outcomes studies of other lipid-lowering therapies.

Presented data at the Annual Scientific Sessions of the National Lipid Association, showing that Vascepa, similar to the effect shown in the MARINE study, resulted in a reduction in lipoprotein particle concentration in Vascepa-treated subjects in the ANCHOR study.

We had previously released data showing that Vascepa in the ANCHOR study had the effect, compared to placebo, of further reducing LDL-C on top of optimized statin therapy. This newly-presented data also showed that particle concentration in Vascepa-treated subjects was lowered in the ANCHOR study as well.

Increased patents issued or allowed to 27 in the United States, having added 16 since the beginning of 2013. All but two of these have patent terms that extend into 2030 and beyond. We also have greater than 30 patent applications currently being prosecuted in the United States. We also received our first European patent in the past 30 days.

Afforded positive results from our Phase 1 pharmacokinetic study of a fixed-dose combination of Vascepa and a leading statin, confirming the feasibility of such a combination.

With respect to the commercial launch of Vascepa compared to other recent launches of cardiovascular drugs, Vascepa prescription levels are doing quite well, particularly when factoring in that many of these other launches involve sales forces multiple times larger than Amarin's and that Vascepa is only being marketed for a patient population much smaller than that of the anticipated ANCHOR indication. Nonetheless, we are not satisfied and are working hard to accelerate our progress.

Q2, the quarter that ended June 30th, marked the end of the first full quarter and end of the first five months of selling Vascepa with our US sales force of approximately 275 sales professionals.

For those of you who are new to the story, Vascepa is currently approved as an adjunct to diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia, or triglycerides over 500 mg/dL.

Our sales professionals are targeting a select group of clinicians who are the highest prescribers of other lipid-modifying therapies. This universe consists of slightly more than 30,000 prescribers, some of whom are lipidologists and cardiologists, and many of whom are high prescribers of lipid-modifying therapies in the primary care environment.

We are happy to report that the awareness, knowledge, and utilization of Vascepa among our target customers, continues to strengthen and expand, and the number of clinicians who prescribe Vascepa has more than doubled since the end of Q1 to over 9,000 today.

Access to physicians continues to be strong, and feedback regarding the efficacy and safety profile of Vascepa remains quite positive.

Our managed care efforts continue to be well ahead of expectations; but, as is typical for a newly-launched drug, managed care access and clinicians' perceptions of potential challenges to managed care access for a new drug, continue to be drags on script levels, as we do not yet have the same level of managed care coverage as our primary competitors.

Again, these are typical challenges for a new drug launch. It is rare for drugs to get much, if any, Tier 2 access in the first six months of launch, and we now have over 72 million lives covered on Tier 2.

In addition to continuing to advance managed care coverage, the two most important steps we can take to increase Vascepa script levels are to continue to educate clinicians on the benefits of Vascepa in the MARINE indication, and get approval for Vascepa in the ANCHOR indication.

For that indication, we believe Vascepa is well-positioned based on its efficacy and safety profile, including significant reduction in triglycerides and a host of other lipid markers, without increasing LDL-C -- a claim that can't be made by our competition, whether it be Lovaza or fenofibrates. We are winning new patient starts and conversions from existing therapies based on this profile.

We are seeking to educate physicians in multiple ways on the benefits of Vascepa. Our proven approach is through direct Vascepa detailing efforts with healthcare professionals via our sales force.

For a chronic condition such as very high triglycerides, clinicians tend to see such patients once or twice a year, and each such visit presents an opportunity for Vascepa to be prescribed either as a new drug treatment for a patient, or as a switch from Lovaza or a fenofibrate. As a result, the earliest prescribers of Vascepa are just starting to see their first Vascepa patients back in their offices to review their results.

Positive anecdotes from these physicians continue to roll in, including multiple accounts of patients who had previously been on alternative therapies, witnessing their LDL-C levels drop after discontinuing those therapies and starting on Vascepa.

Other anecdotes confirm the belief that Vascepa is well-differentiated in the marketplace based on its safety profile, which is similar to placebo, and its spectrum of demonstrated lipid benefits including not only a statistically significant reduction in triglycerides and a lack of an increase in LDL-C, but reductions in Apo B, non-HDL-C, and VLDL-C as well.

We are also seeing anecdotally a number of patients doing quite well on the concomitant use of Vascepa and a statin. Again, this is where the clinical data excelled over our competition.

Our valuable co-pay card program continues to be available to patients to eliminate their first month co-payment in full, up to $75. It then limits co-payments for scrip refills to $25 throughout 2013.

While the number of patients successfully converted from Tier 3 to Tier 2 has risen dramatically due to the tireless efforts of our managed care team, this program provides Vascepa to patients with Tier 3 coverage and out-of-pocket costs equivalent to those on a Tier 2 plan.

Which leads me to our Q2 managed care update. We had no Tier 2 coverage when we launched, which is typical for a new pharmaceutical agent. Tier 2 coverage represents the lowest patient co-pay level for a branded drug.

Tier 1 is reserved exclusively for generic agents. Depending on state regulations and policies of payers, new branded drugs typically start out as uncovered, and then migrate to Tier 3. Then, after a deliberate process, some of the payers convert coverage from Tier 3 to Tier 2.

The patient co-pay cost for Tier 3 is typically considerably higher than that for Tier 2, resulting in higher out-of-pocket co-pays for patients. This in turn can result in physicians being unwilling to write prescriptions for such drugs, so as to not have their patients incur higher costs; or so as not to end up with patients that are unwilling to fill prescriptions at Tier 3 due to this higher cost.

For those patient lives still on Tier 3, our co-pay card program seeks to bridge the Tier 3 to Tier 2 cost differential.

In early May, we commented that we were well ahead of schedule in converting covered lives from Tier 3 to Tier 2, with 40 million converting to Tier 2 through May of this year alone.

Currently, just six months post-launch of Vascepa, I am able to report that, out of the over 190 million lives for whom Vascepa is covered, we now have greater than 72 million lives in Tier 2 status, enabling a great deal of patients access to Vascepa for the cheapest branded co-pay available.

Much of this increase in Tier 2 coverage was recently achieved, and we realize that it does take time, sometimes two to three months, to be able to effectively pull through these managed care victories and see the advancements in coverage reflected in the prescription data.

Importantly, many of these Tier 2 lives are under Medicare Part D plans. Medicare Part D plans, by law, do not permit co-pay card use. So, we were witnessing a significant number of Vascepa scripts being written to Medicare Part D patients, but not getting filled. Our Tier 2 progress in Med D plans helped to mitigate these previously locked prescriptions. In fact, we now have 67% coverage in Medicare Part D.

With this background in mind, we hope you can see why we're so pleased with our early progress with respect to managed care wins for Vascepa. Much of this credit goes to the fact that Vascepa not only lowers triglycerides, but also causes no LDL-C increase and showed consistent performance in diabetic and non-diabetic populations in the MARINE study. Many of these payers have been quicker than expected to move to cover Vascepa. We look to continue this product on a payer-by-payer basis.

Before I move on to sales results and comment on our prescription growth, I remind everyone that it is still early in the launch of Vascepa. We continue to see strong progress in our efforts to sell Vascepa in its current indication; and as mentioned previously, we're also solidifying our managed care position, and driving brand awareness, which sets us up for success as we move closer to the ANCHOR indication in December of this year.

As our scrip levels grow, as predicted, we believe that third party sources of script information are becoming more accurate. To best evaluate such data on a period-by-period basis, we look at monthly normalized TRxs, or normalized total prescriptions, which conforms to the definition of prescriptions to 120 capsules, or a one-month supply of Vascepa. This helps correct for situations such as when prescriptions are filled by mail order for quantities of greater than one month's supply.

As for Vascepa results for Q2, as previously reported in Q1, Vascepa was promoted during the months of February and March and generated 10,500 normalized TRxs, approximately.

As we announce today, for Q2, normalized TRxs for Vascepa rose to approximately 47,300. Our prescription trendline continues to track with or ahead of levels for other recent [CV] launches by Big Pharma, including such examples as Brilinta, Xarelto, and Eliquis. Vascepa scripts are growing based on both NRxs as well as refills. Refills for Vascepa have been strong and consistent with rates for other drug launches.

With regard to revenue, as Fred will discuss, we've recognized $5.5 million in revenues for Q2 and $7.8 million year-to-date. As previously discussed, accounting for revenue recognition is quite complex for most early-stage drug launches.

As was true in Q1, the amount of revenue we recognize in Q2 does not reflect revenue for all the product we ship to wholesalers, but rather the amount of this product that we can substantiate was used for filling prescriptions. Nor is the amount intended to directly tie to scripts estimated by third party sources.

We believe our reported revenue reasonably and conservatively reflects the economics of our Q2 and year-to-date results in a manner that is consistent with our revenue recognition policy as described in our 10-K and 10-Q.

However, having said that, year-to-date through June 30th, the net value of Vascepa sold to wholesalers was approaching $10 million. Therefore, the Company recorded deferred product revenue of $1.8 million as of June 30th under GAAP, in addition to the $7.8 million in revenue recognized year-to-date under GAAP.

As I discussed in Q1, our gross-to-net price adjustments include certain launch-year-related factors which result in a lower net price per capsule, (inaudible) approximately a $1.25 net price for capsule that we anticipate achieving over time. Such net pricing factors and a number of customary and launch-related adjustments, including discounts to wholesalers to stock Vascepa prior to launch, and high levels of utilization of co-pay cards as we work to migrate coverage to Tier 2.

On the topic of the ANCHOR indication, I will now turn the discussion over to Steve Ketchum, who runs our R&D, clinical, medical, and regulatory affairs teams. Steve?

Thank you, Joe. As you know, the FDA assigned Friday, December 20th as the PDUFA date for our ANCHOR indication sNDA. In addition, as previously announced, the FDA has scheduled on Wednesday, October 16th, an advisory committee meeting pertaining to our sNDA for the ANCHOR indication. We will be well prepared for the advisory committee meeting and we remain confident regarding the approval of Vascepa for the ANCHOR indication.

Some investors have asked us why we are having an advisory committee meeting. I remind you that Amarin had prepared for an advisory committee meeting for the MARINE indication before it was informed that such a meeting would not be conducted.

For the MARINE indication, Vascepa was the second drug in its class to be approved, Lovaza being the first, and it is understandable why an advisory committee meeting was not held for the severe hypertriglyceridemia indication.

For the ANCHOR indication, we sought approval for Vascepa to be the first drug in its class to be approved for an indication in mixed dyslipidemia patients with triglyceride levels greater than or equal to 200 mg/dL and less than 500 mg/dL, on top of optimized statin therapy.

Approximately 40 million adult Americans, or one in five, have triglyceride levels of at least 200 mg/dL. Given that first-of-a-kind approval being sought, and the size and scope of this population, it is understandable why the FDA would recommend an AdComm meeting. Having an AdComm meeting is also consistent with trends that have influenced the FDA to seek greater input and allow greater visibility into its regulatory decision-making.

Our preparations include obtaining feedback and guidance from leading clinicians in the field, and we have already conducted mock AdComms in an effort to prepare to answer a broad range of questions that could be asked during this meeting.

As is typical, the FDA has not yet informed us of the numbers of the AdComm panel, or the questions that they will ask. This has not hindered our ability to prepare. We and our advisors believe that we have appropriate and acceptable responds to a wide range of potential questions.

These responses are aided by the favorable efficacy and safety profile of Vascepa. In the ANCHOR study, Vascepa demonstrated statistically significant reductions in a broad spectrum of lipid and inflammatory markers, on top of optimized statin therapy, including significant reduction in LDL-C compared to placebo.

As a reminder, the ANCHOR study was conducted under a special protocol assessment agreement with the FDA. This is an extra step that we took with the FDA before commencing the ANCHOR study, to ensure that we had a written understanding with the FDA as to what they required for approval of the ANCHOR indication. We believe that we have achieved all that is required. More specifically, we achieved all of the primary and secondary clinical endpoints of the study.

Furthermore, the FDA had the results of the ANCHOR study when they reviewed and approved Vascepa for the MARINE indication, and the safety profile of Vascepa from the ANCHOR study is reflected in our existing approved label.

We had various discussions with the FDA leading up to our submission of the sNDA for the ANCHOR indication. Most of these discussions focused on whether or not we were substantially underway with the REDUCE-IT cardiovascular outcomes study.

Through our SPA and related regulatory discussions with the FDA, it was clear that until we were substantially underway with this outcome study, the FDA would not accept the ANCHOR sNDA for review. For clarity, the SPA and corresponding regulatory discussions in no way require us to have the outcome study completed for the sNDA, to be accepted for review, or for the ANCHOR indication to be approved.

We announced in Q1 that over 4,000 patients were enrolled in the REDUCE-IT study and that we submitted the sNDA for the ANCHOR indication.

In Q2, the FDA accepted the sNDA for review. As is typical, the FDA provided Amarin with a letter that notified us of this acceptance. This day 74 letter, sent to the sponsor within 14 days of the initial 60-day review period of the application, is commonly used by the Agency to preliminarily flag any early and potentially important review issues.

The day 74 letter for the ANCHOR sNDA included no such surprises. In particular, the letter did not in any way suggest that the Agency plans to reset its requirements for approval of the ANCHOR indication.

Some investors have interpreted the AdComm as implying that the Agency intends to change the rules for Amarin with respect to the status of the REDUCE-IT outcome study. We have not seen evidence of such a change. We had considerable discussion with the Agency over what constituted substantially underway for the outcome study, and during these discussions, never did they suggest changing their requirements.

Rather, we believe that they appreciate the broad undertaking that we are pursuing with REDUCE-IT, and the scientific seriousness with which we are conducting the study.

At this point, FDA has accepted our sNDA for review, which reflects to us that they agree that the outcome study is substantially underway.

While we believe we do not need the REDUCE-IT study to be completed for approval of the ANCHOR indication, we do believe that this study is positioned for success. Highly pure EPA in the JELIS study, albeit in a Japanese population, demonstrated significant reduction in cardiovascular events over statin therapy alone.

Some investors have argued that because the AIM-HIGH study with niacin failed, that the FDA will change its view on Vascepa. As a reminder, niacin is an HDL-raising drug, not a triglyceride-lowering drug; and niacin remains approved and on the market. Some also argue that fenofibrates failed outcome studies, and that this will have a bearing on getting the FDA to reassess its requirements for Vascepa.

Fenofibrates were not directly studied in a patient population with elevated triglycerides in an outcome setting. In fact, in the ACCORD study of fenofibrates, the subgroup of patients who had elevated baseline triglycerides showed improved outcomes. This has not been widely publicized because this was not the pre-specified primary endpoint of the study, and the study was not powered for this purpose; but it is supportive of the value of lowering triglyceride levels in patients with high triglycerides.

In addition, Vascepa not only lowers triglycerides but lowers the spectrum of other lipid parameters including, compared to placebo, LDL-C, a well-established marker of outcomes; and Vascepa also lowered various other inflammatory biomarkers. Vascepa does this with a safety profile which is comparable to placebo.

Today, patients with elevated triglycerides are being treated on-label or off-label with a variety of drugs which increase LDL or have various other side effects. We find it difficult to believe that, given this environment and the safety and efficacy profile of Vascepa, that Vascepa won't be approved for this expanded indication.

It is, of course, important to note that we do not yet know the focus of FDA and the AdComm panel. Our comments today reflect our reasoned assessment as to the issues that will be presented, and our view of our planned responses and readiness to address anticipated lines of inquiry. We will continue to assess potential topics and plan accordingly as we continue to prepare for and look forward to the AdComm on October 16.

Switching gears to the REDUCE-IT trial, enrollment continues to progress in REDUCE-IT at our more than 400 clinical sites in 11 countries around the world.

In addition to the precedent of the JELIS study as a reason to believe in the potential for success of the REDUCE-IT study, we believe that REDUCE-IT subjects will benefit from the following study design aspects. The 4 gram per day dosing, which is higher than the approximately 1.8 gram per day JELIS dosing in the Japanese population.

Also, from the REDUCE-IT median and mean baseline triglyceride levels in patients participating in the study to date, which are greater than 200 mg/dL, which is higher than studied in recent outcome studies of other lipid-modifying therapies. And from the added benefits that Vascepa has been shown to provide with respect to anti-inflammatory markers such as Lp-PLA2 and hs-CRP.

As we previously stated, results of the REDUCE-IT study will not be available until a specified number of cardiovascular events have been observed, the timing of which is not expected until at least 2016.

On the topic of omega-3 studies, our medical team continues to assess various presentations and news articles on a range of topics, including papers which recently drew negative headlines regarding omega-3s.

One such paper correlated high amounts of omega-3, and DHA in particular, for patients with prostate cancer. While on the one hand it is convenient for us to be able to say that Vascepa uniquely does not contain DHA, it is difficult to take that overall paper too seriously, as it was not a prospective study, did not have any way of assessing whether or not the prostate cancer patient experiencing increased levels of omega-3s were taking an omega-3 product, either dietary supplement or prescription, and it is contrary to a series of other studies which suggest that omega-3s are potentially beneficial to such patients.

Another paper earlier this year summarized meta-analysis data based on various omega-3 outcome studies and concluded that omega-3s in low doses don't work. This is part of the thesis for Vascepa -- that low-dose omega-3s provide very little benefit. Vascepa delivers more than four times the omega-3 as was reviewed in the majority of the cited studies.

It is unfortunate that the authors of that meta-analysis did not identify that the one study which was successful was the JELIS study of our sister drug Epadel, in which highly pure EPA was effective in improving cardiac outcomes on top of statin therapy in a Japanese patient population.

Overall, we have seen nothing presented anywhere that has diminished our overall confidence in the clinical opportunity provided by Vascepa. Our advisors and thought leaders agree, and urge that we focus on more relevant topics such as reduced LDL particle concentration from Vascepa, the anti-inflammatory response of Vascepa, and incremental efficacy of Vascepa on top of increased potency of statin therapy.

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

Thank you, Steve. I will provide some comments here regarding our financial results. You will 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 (inaudible) did not begin until Vascepa's commercial launch on January 28th, 2013.

We reported net product revenues for the quarter ended June 30th, 2013 of $5.5 million, as compared to revenue of $2.3 million for the quarter ended March 31st, 2013.

In accordance with US generally accepted accounting principles -- 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 retail of Vascepa for the purpose of filling prescriptions.

Through June 30th, the net value Vascepa sold to wholesalers was $9.6 million, and, as a result, in addition to $7.8 million in recognized revenue, we recorded deferred revenue of $1.8 million at June 30th, 2013. Cash collections from the sale of Vascepa in the quarter ended June 30th, 2013 were approximately $6.6 million for a total of $9.4 million collected from wholesalers since the launch of Vascepa.

Consistent with industry practice, the net price of Vascepa for the six months ended June 30th, 2013 reflects the deduction of one-time discounts paid to wholesalers to stock Vascepa in advance of Vascepa's launch in January 2013, as well as the cost of our co-payment rebate card program and customary payer rebates and allowances. The net price also includes adjustments for other customary amounts.

Cost of goods sold during the quarter ended June 30th, 2013 was $2.8 million as compared to $1.3 million for the quarter ended March 31st, 2013.

Gross margin as a percentage of net revenues improved from 45% to 48% in the second quarter, as compared to the first quarter.

The majority of the Vascepa capsules sold during the six months ended June 30th, 2013 included API sourced from a single API supplier. Amarin's purchases of API from this supplier in 2012 and early 2013, are at a higher cost per kilogram level 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 the geographic location of our suppliers, exchange rate exposures, and lower volume and less favorable economic terms than those with other manufacturers.

We expect our steady state gross margin percentage to approach the high 70s to low 80s as we increase purchase volumes and source lower-cost API.

SNDAs were approved in April 2013 for two API suppliers, BASF and Chemport. The API cost for BASF and Chemport are significantly lower than the cost previously incurred for purchases of API from our initial supplier.

Under US GAAP we reported a net loss of $39.8 million in the second quarter of 2013, or basic and diluted loss per share of $0.26. This net loss included $5.1 million in non-cash, share-based compensation expense, $1 million in non-cash, warrant compensation income, and a $18.8 million gain on the change in the fair value of derivatives.

Amaryl reported cash and cash equivalents of approximately $149.4 million at June 30th, 2013, a net decrease of $110.8 million from our reported $250.2 million in cash and cash equivalents at December 31st, 2012.

Net cash outflows in the six months ended June 30th, 2013 included approximately $48.2 million paid for sales and marketing-related expenses in conjunction with the initial commercial launch of Vascepa; approximately $16.7 million paid in support of the REDUCE-IT cardiovascular outcomes study; and approximately $16.3 million for Vascepa API, purchased in conjunction with the buildup of our commercial supply and for clinical trial material.

In aggregate, net cash outflows from operations were $52.8 million in Q2 compared to $59.6 million in Q1. As stated previously, we anticipate Q1 to be our highest quarter for net cash outflows from operations, with Q3 and Q4 net cash outflows slightly below the level of both Q1 and Q2.

During the six months ended June 30th, 2013, we acquired approximately $16.3 million of Vascepa API, of which $13.3 million was capitalized as inventory at June 30th, 2013; and the balance of which was included as a component of research and development expense.

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

Thanks, Fred. Before we take questions, I want to make some comments regarding our July financing and our current stock price.

With respect to the financing, there's never a good time to raise money, and raising money through the sale of equities is expensive. Prior to financing, many investors were increasingly communicating to us that they expected that Amarin would need to do a financing, and expressed that they hesitated investing in front of such a transaction.

As a result, while we didn't like raising money at the price we did, we decided to get the financing behind us. Moreover, we decided to raise enough money -- $121 million in net proceeds -- rather than a lesser amount because we wanted to make it clear that we were financing the needs of the Company to a level which, under most scenarios, prevents us from having to come back for additional support.

Hopefully, with this financing overhang removed, our stock price will begin to rebuilt itself to reflect our operational progress, including growing prescription levels and anticipated approval of the ANCHOR indication.

With respect to our stock price, it's trading at a price that does not, in our opinion, reflect that over the past year we've gotten approval for the MARINE indication; launched Vascepa, and have begun to see meaningful script growth; secured a nearly-unprecedented 72 million lives on Tier 2 coverage of managed care; received 27 patents that go into at least 2030 and beyond; and continued to diversify and lower our cost of supply.

We've now demonstrated the feasibility of a Vascepa/statin combo. Our outcomes study is substantially underway, and our sNDA for the ANCHOR indication is accepted and about two months away from an AdComm and about four months away from its approval.

As Steve described, we believe that we are well-positioned for approval of the ANCHOR indication. While we appreciate that investors question risks associated with approval of this indication, we believe that our likelihood of success is much, much higher than we appear to be given credit for by the Street.

We are proud of successes we've had during the first half of 2013, and we believe that sticking to the five points of light, if you will, that we've been talking about, everything else will take care of itself. Number one, get the launch right. Number two, get managed care, which we've done quite well on. Number three, get the ANCHOR sNDA accepted and get the indication approved. Number four, drive IP, particularly ANCHOR. And number five, supply chain.

We are also eager for the tremendous opportunity that exists in the ANCHOR indication. I look forward to the positive catalysts that we believe will be the advisory committee and the PDUFA date.

We look forward to the launch of Vascepa for the ANCHOR indication. When we do so, compared to the MARINE launch, we will be doing so with the advantage of significant managed care coverage and significant brand recognition amongst the highest-prescribing physicians of other lipid-lowering therapies. We will also have a first-in-class label with a very strong safety and efficacy profile.

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.

(Operator Instructions). Chris Schott, JPMorgan.

I'm just going to put them all here upfront. First, you saw obviously a nice uptick in access for Vascepa. Can you just elaborate a little bit more on the typical lag you'd anticipate between these formulary wins and when we should see this in prescriptions? I'm just trying to understand when you're expecting that you'll see scrip growth that properly reflects this coverage expansion. Is that something that's happening this quarter, or something we should think about later in the year?

The second question, similarly, on access. Will the majority of these 72 million Tier 2 lives and 100 million -- 190 million overall lives, also be covered for the ANCHOR indication, assuming a label expansion, or is that going to be a separate negotiation process?

And then a third question was just, any thoughts you might have on Astra's acquisition of Omthera, what that means for the space, and competitively what that means for Amarin? Thanks very much.

Yes. Hi, Chris. This is Joe. Thanks for the questions, and thanks for your support. Regarding the now 72 million lives we have covered on Tier 2, I think -- you know, I'm advised by my folks that it usually takes two to three months before you start to see real traction.

I'd like to see it faster, but that's the reality of the business we're in. And a lot of that is, you're going after the doctors, they're not seeing the patients all the time -- it just takes a lot of good build-up. But two to three months is what we estimate.

On ANCHOR, I think all the managed care that we have will translate over. In fact, we're being told by a number of the managed care plans that once we get the approval there'll be in many cases restrictions placed on our competition. Because we'll be the only ones with this indication.

And by the way, any restriction we might have, which says it's only a 500 and above, will go away, and all restrictions will go to the competition. So, we expect that to be quite a landslide, if you will, in our favor.

And regarding Astra and Omthera -- yes -- AstraZeneca -- you'd have to ask those two folks what happened. What we saw was really about a very small, $260 million enterprise value acquisition that was most likely really geared towards Crestor protection rather than triglyceride lowering. But, again, I'm -- that's just speculation on our part. But thanks for the question, Chris.

Okay. Thanks.

Ritu Baral, Canaccord.

This is Kevin for Ritu. Thanks for taking the question. I actually have a follow-up on Chris's question. I was wondering if you can talk a little bit about the breakdown between specialists -- say, cardiologists, lipid, and PCPs -- and how does that break down?

And also, what are you thinking about ownerships or other [BD] activities as PDUFA date comes around?

Yes. I missed the -- I wasn't sure I got the first question.

Oh, sure. It's, what -- is there any trends you see in the prescribing behavior of specialists -- say, cardiologists versus lipidologists, or just PCPs?

Okay. Got it. No -- I mean, we're seeing access growth and capture across the lipid folks -- the endocrinologists -- just everyone that's out there. Cardiologists, PCPs -- it's not really one group or the other. What I can tell you is that, as we look at decile 7 to 10, which we're accessing over 30,000 patients, we think we've got the right reach and we've got the right frequency. And it's also important to note that that's the very same group that you're going to for ANCHOR as well.

In terms of partnership/no partnership, what we might or might not do, we're still evaluating that as a group.

I would also tell you that our position is that if we continue to focus on the five things I've talked about, that's what's really going to drive our success. Right? It's going to be the -- make it happen with the initial launch; drive managed care; drive ANCHOR to approval; drive a patent, especially in ANCHOR; and then drive the supply chain. Everything else will take care of itself, whether we partner or we don't partner. But those are things we continue to look at as we approach the launch.

Just for clarity on that answer, I think Joe said 30,000 patients. I think he meant 30,000 target physicians that we were going after.

Yes. Yes I did. Thank you.

Got it. And a follow-up on REDUCE-IT. I was wondering if you can tell us where you are in terms of enrollment.

I'm sorry. Can you say that again please?

For -- on REDUCE-IT, and where are you guys in enrollment?

We are well beyond 4,000. And, again, we're not prepared to update further at this time for competitive reasons. But, well, well beyond 4,000.

Got it. All right. Thanks so much.

Thomas Wei, Jefferies.

I guess I wanted to ask about -- if for some reason the FDA or the panel did want to see something on cardiovascular safety -- so, this particular branch of the FDA has looked at diabetes, obesity drugs; they sometimes have required a cardiovascular safety analysis to be done, looking at MACE hazard ratios in the upper bound to the 95% confidence interval.

So, if the FDA for some reason wanted you to look at that, could you revise the REDUCE-IT protocol to include an interim analysis for cardiovascular safety? And do you know when you might actually have enough data from the trial to rule out a 1.8 or a 2.0 upper bound?

Thomas, this is Joe. I'm going to let Steve Ketchum, our President of R&D, take that.

But I want to just take a minute to make sure everybody knows about Steve's background. You know, Steve has very intimate experiences with the endocrine and metabolism division we're going into. He's had several NDAs approved and has worked with this group closely. So -- and frankly, Steve is -- in most of his career, has always been a regulatory expert. So, we feel blessed to have Steve on our team and driving that.

So, again, the -- above and beyond all the great data, when you've got someone who's dealt with the very group and the very people for so many years, that really goes to our favor. So, Steve, you want to take Thomas's question?

Sure. Yes. Briefly, Thomas -- obviously, the Amarin team was in dialog on the REDUCE-IT study design across multiple years, through IND dialog leading into the SPA.

And these other therapeutic areas that you were mentioning, or -- you know, in terms of diabetes and obesity, where you're obviously aware of the evolution of the requirements over the time -- and that did overlap some of these other regulatory conversations, so at no point in time did that factor into our SPA or other regulatory conversation, so that's not an expectation.

And maybe just a second question. I'm sorry. I think I have been hopping back and forth between calls here. I missed a little bit of what you said on -- in terms of partnership for ANCHOR. Have you more shifted now towards thinking that you've got the right -- you know, that you could do it yourself? How should we think about the different possibilities in where things stand?

I think the possibilities are all the same. So, Thomas, we haven't -- I mean, I think as we continue to get to know this market pretty darn well, we're seeing that we've got the right reach and penetration, as well as the decile 7 to 10 [where we're at], reach and frequency.

I think -- you know, we've not made any decisions. We continue to have dialog, and we're spending a lot of time, both as a management team and as a Board, thinking about these. We've got time. We're trying to do the right thing. What we don't want to do is get into something that doesn't provide the right value, if we do that. For example, there are companies out there that are getting a small fraction of what the economics are. This has got to be the right thing for us and any potential partner.

And I think, other than that, I go back to, we're still working those five things. And if we do those right, everything else will take care of itself, including whether we end up with a partner or not.

But we're still sort of thinking about that and working through it. And if and when there's a change, we'll make sure that everyone on this call is the first to know.

Thanks.

Ladies and gentlemen, we are nearing the end of our monitored question-and-answer session for today, and we have time one more question. [Joel Viti], Citi.

Hello. This is Joel Viti calling in for Jon Eckard. Thanks for taking my question.

My first question is, what are the physician metrics that we should focus on the most and would be the most telling for the commercial impact? Is it total number of prescribers, or patient growth curve position, or refill rate, or something else?

And then my second question is, what are the thresholds for improvements to the gross margins? And if the ramp is slower than expected, would this impact the timing for improvements to these versions?

Hi. Thanks. I think all those metrics that you mentioned are ones that we look at regularly -- number of physicians, repeats, NRxs, TRxs, refills, normalized TRxs. What are we doing in terms of target physicians writing versus non-targets; supertargets? So, it's really hard to pinpoint one or two things. You're really looking at all of them.

I think what we like out of it the most is, we continue to see the growth. We continue to see readily -- ready access to the physicians' offices. There's not a physician out there that's turning us away.

We like the anecdotal things -- the data things we're seeing from the physicians, where there -- I mean, I've got one physician who put himself on the drug. He was on Lovaza. He couldn't get his trigs below 300. Then he went on our drug and his trigs were below 150. They're -- time and time, there are data sets like that, that are out there, and we continue to build momentum.

But there's -- hard to say it's one specific thing you want to measure or look at. I think it's the enthusiasm of our sales professional teams, which are doing a great job. And just really driving into the marketplace.

We also look at how we're doing -- we said on the call, relative to Eliquis -- how you're doing relative to Xarelto and Brilinta. And again, we're there or ahead of those. So, for that part we feel pretty good.

On the thresholds for the cost of goods, as we start bringing online the other two to three manufacturers, we'll see an instantaneous shift in cost of goods, once we get through the inventory of the high-cost first supplier. In some way it's volume-driven, because we have certain inventory. But once you get beyond that inventory, you're automatically talking about these higher-margin products. Now -- higher-margin producers.

Now, once we get to higher and higher volumes, we'll continue to drive even further into sufficiencies. And one could argue that some of our margin projections that we shared, in the high 70s to low 80s, could actually end up being conservative depending on where we hit on volume.

So, again, I'm not going to give any forecasts of what we're going to hit and what our margin's going to be next quarter or the quarter after. But I think the important thing is, we now have two very low-cost suppliers approved in addition to the first one; and we just submitted last week the fourth supplier. This is the Novacep/Slanmhor/ONC/DSM consortium. So, you know, we're pretty excited about that one. And we think the -- our higher-margin days are ahead of us.

Okay. Thanks very much.

Thank you. I'll now turn the floor back to management for any closing or further comments.

Well, look, everybody, it's been great to have everyone on the call today. We are grateful for the commitment, and for people sticking with us. And I know I'll be talking to a number of you over the next couple of days -- in fact, several of you starting this evening. And we're excited, and ecstatic. And hopefully, the next time we're on a call we'll be talking about a very, very positive AdComm study. Thank you, and good evening.

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