Amarin Corporation PLC (AMRN) 2013 Q3 法說會逐字稿

Greetings and welcome to the Amarin Corporation's Third Quarter 2013 Results Conference Call. At this time all participants are in 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, Mr. 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, including supply-related activities and level of expenditures and revenues, and the adequacy of our financial resources; our current expectations regarding regulatory filings, our upcoming PDUFA date, government agency decisions and potential indications; our current expectations regarding our cardiovascular outcomes study and the potential implications of such study of 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, November 7th, 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 of 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. 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; Mike Farrell, our Controller; and Joe Bruno, our director Of Investor Relations.

Most of our comments on this call will pertain to our commercial growth, financial results, and efforts to expand the Vascepa label to cover the ANCHOR indication. Given recent events, I will begin with an overview and update on regulatory matters with the FDA regarding the ANCHOR indication, then provide you with a commercial update including our Q3 results.

Steve Ketchum and Joe Kennedy will then expand on our regulatory position with the FDA regarding the ANCHOR sNDA. John Thero will then speak to our recent reorganization and our efforts to grow and expand our sales efforts. Mike Farrell will review Amarin's financial performance in the 3-months and 9-months ended September 30th. And lastly, I will provide some closing comments before fielding questions from analysts and investors as time permits.

Before I go into our commercial update, I wanted to spend some time talking our FDA interactions. I want to be clear that our intent is to collaborate with the FDA regarding the sNDA for ANCHOR. As you will hear, we have taken action to advance our interest to seek this expansion of the Vascepa label and have every intention of vigorously pursuing this goal as we feel we were in the right. If we are unable to convince the FDA of this and these efforts fall short, we will not be hesitant to pursue alternative measures and to fight for what we believe is in the best interest of the Company and shareholders. Joe Kennedy will go into those alternatives in more detail.

Today Amarin filed a formal request to appeal the October 29th rescission of the ANCHOR SPA. The appeal documents filed with the FDA detail why we believe the science and legal matters support approval of the ANCHOR indication and why we believe it was wrong for the FDA to rescind our SPA. The appeal process has the potential to involve multiple meetings with the FDA at increasingly higher levels. We believe we are in the right, that we've done everything the FDA has asked us to do, and that there is no new or valid evidence worthy of negating our SPA agreement.

As you'll recall from the AdCom meeting, even panelists voiced that Amarin had done everything that was asked of them by the FDA under the SPA agreement that we believe should still be in place. The FDA has changed their stance based on outcomes trials conducted with other drugs, yet there was no specific or pertinent mention of this change at any point leading up to the AdCom, including the sNDA acceptance letter for ANCHOR, also known as the Day-74 Letter, or in any of the various communications and interactions between Amarin and the FDA over the last year, even though the majority of this outcomes data was available for some time.

During this time, the FDA proceeded to enter into the SPA for the REDUCE-IT trial with Amarin, amended the SPA for ANCHOR, and we believe entered into an SPA with another company developing an omega-3 for an ANCHOR-like trial, all in the wake of and after ACCORD and AIM-HIGH results being released. In fact, when agreeing upon the REDUCE-IT SPA, the results of ACCORD and AIM-HIGH were taken into consideration in order to collaboratively design REDUCE-IT to meet their specifications.

Those other outcomes trials involve different classes of drugs in patients with lower or normal triglyceride levels, holding Amarin accountable for results of other agents studied in the wrong patient group. In fact, the FDA stated that triglyceride lowering in normal patients didn't have a cardiovascular outcomes effect. That's correct, and no one should expect that to have an outcome benefit. But we should not be held accountable for no change in normal patients.

None of those outcomes studies prospectively enrolled patients who had elevated triglycerides in spite of statin control of LDL cholesterol. And this is exactly the type of thing the FDA has historically frowned upon, trying to compare totally different agents or classes of agents across groups or drugs. Unfortunately that's exactly what they've done here, comparing inappropriate groups and drugs to our clinical data for Vascepa.

And in reality, little if anything has changed since our original ANCHOR SPA was put in place in 2009 as there is no new news regarding the triglyceride-lowering hypothesis. The medical community still needs answers to prove CV risk reduction. ACCORD and AIM-HIGH proved nothing other than triglyceride lowering as a neutral outcome effect on people with normal baseline triglyceride levels. In other words, we don't have any more scientific questions now pertaining to the patient population addressed by the ANCHOR study than we did prior to the results of these outcome trials being released.

Again, we plan to pursue this appeal with great vigor, and our goal is to collaborate in dialogue with the FDA to gain a reasonable expansion of the Vascepa label based on the ANCHOR data.

Shifting to our investors. We've had a tremendous amount of outreach over the last several weeks. I want our investors to know how much we appreciate all the suggestions and support that's been sent our way. It's been heartfelt to know how much support Amarin has amongst our investor base, and we want you to realize that it has not gone unnoticed. Some of the feedback has been very positive and constructive while other comments have been more on the negative or critical side.

We know that you going through this with us as part of the Amarin team. Please understand while we cannot respond to every email and phone call, we are taking our input into consideration as we move forward in this process. Based on some of the feedback we've received, I know some investors would like to hear from us more frequently during this period and would like us to inform everyone of each and every step along the way. I hope those who feel this way will understand that we simply cannot make public our full set of arguments or strategy as that could undermine our efforts before the FDA, which is not in anyone's best interest.

Please know, however, our silence does not reflect complacency. In fact, nothing could be farther from the truth. There are many here in Amarin working around the clock to take the necessary steps to give the Company the best chances of success. That's been the case since the AdCom and before the AdCom. It's obviously worth noting that the FDA's opinion differs from ours on whether ANCHOR is worthy of approval. That is FDA's opinion that we have to change at this point and that we face a significant challenge in turning things around, but we've come this far and have no intention of giving up now.

Another popular topic with investors has been the REDUCE-IT trial. While I'll let Steve discuss this in detail, please know that Amarin remains scientifically committed to REDUCE-IT and would like to see the trial through to its completion. That being said, without the ANCHOR indication, the Company will need to look long and hard to determine if keeping REDUCE-IT going is in the best interest of Amarin and its shareholders. It will be difficult to fund that study without the indication.

I would be remiss in not mentioning that we've also received encouragement from many clinicians who urge us to fight for the ANCHOR indication as they believe that clear labeling for Vascepa is in the best interest of their patients.

Moving to the commercial side. I'll focus this portion of our conversation on the third quarter success of Vascepa in the MARINE indication. As you know, in Q1 Vascepa was promoted during the month of February/March and generated approximately 10,500 normalized TRx's. Q2 normalized TRx's for Vascepa rose to approximately 47,300. In Q3, our second full quarter of sales, we are pleased to report normalized TRx's of over 74,500. Awareness, knowledge, and utilization of Vascepa continue to expand our core customer base and the number of clinicians who prescribe Vascepa has now exceeded 13,000.

We've witnessed the continued growth of both of our prescribing base and our overall utilization of the product within the MARINE indication for triglyceride levels over 500 mgs/dL. As previously mentioned, with our newly focused sales structure we anticipate that this growth will continue.

We will also continue to cultivate Vascepa awareness with the balance of our targeted doctors and expect to expand the Vascepa prescriber base even more over time. Historically we know from other pharmaceutical launches that there are different types of prescribers that adopt new therapies at different times along the launch curve. In fact, the opposite of the early adopters could be considered those prescribers who like to wait for therapies to be put out a year before being willing to begin using them in their practice. We fully anticipate being able to convert new types of prescribers, adding to the current base and expanding the breadth of the Vascepa user base.

While we were surprised to hear the FDA's stance at the AdCom regarding potential ANCHOR approval, we remain extremely confident and optimistic in Vascepa in the MARINE indication. Vascepa is a highly differentiated product that has a unique clinical profile for the MARINE patient population. It significantly lowers triglyceride levels as compared to placebo but does not have the significant up to 45% mean increase in the LDL cholesterol as seen with the competitors in this patient population, specifically Lovaza and fenofibrate.

Regardless of what happens with ANCHOR, we know that we have a valuable opportunity with the MARINE indication in a multi-billion dollar triglyceride-lowering market where the other available therapies fail short due to less than optimal safety profiles and/or their increase of bad cholesterol. This opportunity remains unchanged regardless of the FDA's decision on ANCHOR.

Now let's discuss our managed care update. Efforts on the managed care front continue and as reported the last 2 quarters, we remain ahead of expectations. As expected, our managed care team is continuing their efforts and as of November 1st has increased our totalized coverage to $200 million as well as driven our Tier 2 lies to over $92 million. These recent Tier 2 conversions include such plans as Aetna, Optum, and others, and an aggregate open new doors for Vascepa prescriptions and allow new groups to targeted physicians across the country access to Vascepa as the cheapest possible branded copay for their patients in those plans.

We know that Tier 2 coverage is a gateway to the continued growth of our customer base on overall sales growth of Vascepa. We commend our managed care team on their success but know that there's still much work to be done, as there are always opportunities to increase our Tier 2 coverage across the country.

With regard to revenue, we recognized $8.4 million in revenues for the third quarter and $16.2 million year-to-date. As previously described, accounting for revenue recognition is quite complex for most early-stage drug launches. As was true in Q1 and Q2, the amount of revenue we recognized in Q3 does not reflect revenue for all the products we shipped 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 revenues reasonably reflect the economics of our Q3 and year-to-date results in a matter that is consistent with our revenue recognition policies described in our 10-K and 10-Q.

However, having said that, year-to-date through September 30th, the net value of Vascepa sold to wholesalers was $17.8 million. Therefore, the Company recorded deferred product revenue of $1.6 million as of September 30th under GAAP in addition to the $16.2 million in revenue recognized year-to-date under GAAP.

Net cash flow from operations was $44.9 million in Q3 compared to $52.8 million in Q2. We've mentioned on previous calls that we anticipate our cash burn to reduce over time due to start-up and launch-related costs incurred early in the launch process. We continue to expect this to be the case and our burn will also be positively affected by our reduction in headcount performed last month. And as Mike will elaborate later on the call, we estimate that during 2014 our operating activities will result in a net case use of less than $80 million. With over $225 million in cash as of September 30, 2013, our plan is to not have to come back to the markets for additional funding.

As I discussed in prior quarters, our gross to net price adjustments include certain launch-year-related factors which result in lower net price per capsule than the approximately $1.25 net price per capsule that we anticipate achieving over time. Such net pricing factors in a number of customary and launch-related adjustments including added discounts to wholesalers to stock Vascepa prior to launch and higher levels of utilization of copay cards as we work to migrate coverage to Tier 2.

Now I would like to turn the call over to Steve Ketchum, Amarin's Head of R&D, and Joe Kennedy, Amarin's General Counsel, to expand on our regulatory situation regarding ANCHOR. Steve?

As Joe mentioned, we clearly have a fundamental different of opinion with the FDA's views conveyed at the Advisory Committee meeting and confirmed in their October 29th letter rescinding our SPA for the ANCHOR trial.

The AdCom and panel were convened by FDA and the flow of the meeting was directed and controlled by FDA for its review purposes. We believe that the focus of the AdCom should have been on Vascepa's modification of triglycerides and other lipids in patients who, despite optimized statin therapy, have triglycerides of 200 to 500 mg/dL as demonstrated in the ANCHOR trial.

Instead, the FDA, at its discretion, directed the Advisory Committee to evaluate whether Vascepa results in ANCHOR were likely to translate to a reduction in the risk of cardiovascular events in statin-treated patients with mixed dyslipidemia. Amarin did not seek an indication for CV risk reduction in the sNDA for ANCHOR. It was never the intent of the ANCHOR trial to address the question posed to the panel, nor do we believe it was fair to ask the panel to try to extrapolate such a CV risk reduction conclusion from the ANCHOR results.

Based upon how the question was phrased, the panel essentially had no choice but to vote no in advance of the completion of the REDUCE-IT cardiovascular outcome study. FDA expressed that results from the ACCORD lipid and AIM-HIGH trials, as well as the publically presented results from the HPS2-THRIVE trial failed to support the hypothesis that a triglyceride-lowering drug significantly reduces the risk for cardiovascular events among statin-treated patients.

We do not believe this is a completely accurate view of these data. In particular, we do not believe that the 3 cited studies provide substantially new scientific information with respect to the treatment of patients in the at-risk high-triglyceride population addressed in the ANCHOR study and, if anything, these studies support that patients with high triglyceride levels need and respond differently to therapy than patients with more normal triglyceride levels.

It is also clear that the FDA does not give the same weight that we do to the fact that these trials were conducted with different classes of agents within patient populations that differ from those in ANCHOR or even REDUCE-IT. In essence, FDA has reached a broad conclusion with respect to TG-lowering therapies based on the outcome trials cited and has applied that conclusion to Vascepa despite (technical difficulty) position in an effort to appeal its rescission of the SPA. This process could potentially cause an extension of the previously scheduled PDUFA date.

As background, the ACCORD study was a study of fenofibrate. The AIM-HIGH and HPS2-THRIVE studies were studies involving extended-release niacin. Fibrates and niacin have different mechanisms of action than Vascepa and each of those 3 outcome studies were in patient populations in which the majority of patients studied had triglyceride levels below the risk threshold of 200 mg/dL targeted by Vascepa in the ANCHOR indication.

Based on the October 16th AdCom, because those other outcome studies failed to achieve their primary endpoints, it would appear that the FDA won't approve any new drugs without a successful outcome study but will need the existing drugs to prove for use.

Let's be clear that this stance is one being taken as a result of trials conducted with other drugs in different patient populations.

Amarin believes, as was confirmed and voiced by members of the panel on October 16th, that it has already done all that was requested by the FDA, including getting an outcome study substantially underway which is a higher threshold requirement than applied to these prior therapies. One panelist voiced, as Joe mentioned earlier, the sponsor appears to have done all that you've asked of them.

Furthermore, Amarin believes the subset data from AIM-HIGH and ACCORD in patients with high triglyceride levels despite statin therapy support that treating these at-risk patients leads to improved benefits and that such results are further supported by the [jealous] primary data and high triglyceride subgroup data of EPA conducted in Japan.

The FDA's position as a result of those 3 outcome studies form the basis for looking differently at approval of the ANCHOR indication is a surprise to us, particularly because the results of ACCORD and AIM-HIGH were available prior to our entering into a special protocol assessment agreement for the REDUCE-IT study because the results of all 3 of these studies were available to the FDA when they agreed to amend the SPA for the REDUCE-IT study and because these concerns were not raised to Amarin in connection with the FDA's acceptance for review of the sNDA for ANCHOR.

With respect to the population studied in the ANCHOR trial, the FDA also appears to have entered into an SPA with another company for their drug after the ACCORD and AIM-HIGH data were publically presented suggesting that these study results were not viewed by the FDA as substantially new scientific information at that time, and we are not aware of any subsequent data which should have changed this perspective.

Moreover, the results of those outcome studies were consistent with results from trials such as FIELD that were concluded and published in prior years.

Similarly, there is nothing publically available from the more recent HPS2-THRIVE study or that the FDA has described to us to alter this view.

At the AdCom multiple committee members went out of their way to express that while they needed to vote no to the question of whether Vascepa has been proven to show positive outcomes on cardiovascular events, Vascepa clearly lower triglycerides in this at-risk patient population of patients who despite optimized statin therapy had triglycerides above 200 mg/dL. And due to residual CV risk, clinical guidelines continue to recommend that such patients be treated with triglyceride-lowering agents despite LDLC control with statins.

We believe that it is in the best interest of patients to have an indication statement for Vascepa that reflects the ANCHOR data. In the absence of an indication statement, patients are likely either not to be treated or to be treated with therapy that has not been studied or approved or has risks or other limitations not associated with Vascepa.

Based on the subgroup data of [jealous] ACCORD and AIM-HIGH in patients with high triglyceride levels despite LDLC control with statins, we believe that REDUCE-IT will have a positive result. However, in addition to seeking clarity from FDA regarding the ANCHOR indication, we also need added clarity regarding whether they have any reservations about the SPA for REDUCE-IT. The REDUCE-IT study is a major undertaking. We care about the patients in this study and we care about the clinical sites conducting the study. We want to do what is right.

However, given the AdCom results and related surprises, we need assurances from the FDA the consensus to continue REDUCE-IT. We have enrolled over 6,000 patients in REDUCE-IT. This study is active in 11 countries and approximately 450 clinical sites. It is an events-driven trial. The trial results are blinded to us. Based on our current estimates, we anticipate completing this study in 2017.

It is important to note that we remain scientifically committed to the REDUCE-IT trial. That said, if we do not get approval for the ANCHOR indication, we will need to make a serious determination as to whether funding the continuation of the REDUCE-IT trial is feasible as it relates to our balance sheet and our stakeholders.

I'll now pass things to Joe Kennedy to discuss our strategy and potential options with regard to our position with the FDA. Joe?

Thank you, Steve. As Joe mentioned earlier, we believe the FDA did not have a valid basis to rescind the ANCHOR's file. We note that the very reason Congress enacted this file provision and the FDA Modernization Act of '97 was to eliminate what was known as the moving target syndrome, or repeated changes in FDA's advice about studies needed to obtain FDA approval.

We of course do recognize the FDA's authority, its degree of discretion on scientific matters, and its current position. However, the question of whether Vascepa is efficacious in reducing CV risk in REDUCE-IT existed at the time the Division and Amarin entered into the ANCHOR SPA in July 2009. At that time FDA's decision was based on a package that included data specific to Vascepa. The question of whether Vascepa will have a meaningful CV risk reduction benefit on patients remains in our view substantially unaffected by recent data.

For a highly purified EPA product like Vascepa, that question can only be answered by the REDUCE-IT trial. With the support of a nationally recognized and experienced team of outside legal and regulatory advisors, we have formally appealed FDA's decision to rescind the ANCHOR SPA. We are pursuing this effort vigorously. We plan to continue to pursue this effort until it is clear to us that we have exhausted all reasonable paths forward.

The appeal process can be lengthy and involves bringing before FDA a sequential and increasing levels of authority our case for reconsideration. We have requested a meeting at a high level within FDA, and if that meeting request is not granted, we will adjust our plans accordingly.

And according to new FDA guidelines, the documents we filed today include written arguments detailing why we believe FDA was wrong to rescind our SPA. Our goal is to convince FDA that the SPA should be reinstated, that granting Vascepa the ANCHOR indication is in the best interest for patients.

We do realize that this an uphill battle. We also believe that there are reasonable paths forward. For example, it is clear that FDA can and has allowed TG-lowering claims in the ANCHOR population with appropriate disclaimers that would mitigate any implied CV risk reduction with an appropriate limitation of use in other drugs. For example, a TG-lowering claim in our case, together with a limitation of use stating that the effect of Vascepa on reducing cardiovascular risk has not been determined.

We believe we are entitled to a straightforward approval, but there are also paths forward that involve a commitment to complete REDUCE-IT. If we are not successful in having the SPA reinstated and the ANCHOR indication is not approved, there are still other options for consideration. One of those less desirable options would be to have the ANCHOR data included in the clinical study section of the Vascepa package insert, if it not become a formal indication for Vascepa.

Another option is to pursue judicial relief to support our efforts, such as our rights to use the ANCHOR data in promotional materials based on free commercial speech principles under the First Amendment that protect our ability to communicate truthful information such as clinical trial results.

Keep in mind our backup options don't represent our desired primary goal or our discussions with the FDA. Clearly our preferred outcome is for the Company to obtain approval of the ANCHOR indication, and that remains the top area of focus and priority for Amarin.

We will continue to leverage the expertise of our advisors and be prepared for these scenarios as they play out. As events progress in the appeal process with the FDA and we learn more about our options, we will be able to continue to put things in motion that advance our position and share them with you as appropriate.

One final note, we note (inaudible) drop in our stock price related to the Advisory Committee meeting. We plead that we have valid defenses and will vigorously defend against claims asserted. We will have no further comment on those actions on this call.

Now I'll turn the call over to John Thero who will provide you with comments on our recent reorganization as well as on efforts to maximize our revenue growth going forward. John?

Thank you, Joe. In response to the recommendation of the FDA's Advisory Committee in a challenging pathway for approval of the ANCHOR indication expressed by the FDA in connection with that meeting, we announced on October 22nd that Amarin would reduce staffing worldwide by approximately half. This has been done.

The reduction in force affected all functions of the Company and resulted in the immediate elimination of approximately 200 employees. This decision was not an easy one and came at much sorrow amongst the Amarin family, as we had to say goodbye to many good people. While this is not the direction we had hoped to take, post AdCom at the end of the day, we felt it was the wisest decision for the Company and its shareholders.

Nobody should interpret the reduction in force that we announced in October as suggesting in any way that we are not actively and aggressively pursuing approval of the ANCHOR indication.

While leaner than a month ago, we retained 4 times the staff level of a year ago. We believe that we are adequately staffed to support Vascepa in the commercialization of the MARINE indication while pursing an expanded indication for Vascepa.

In the event that the ANCHOR indication is approved this year or any time in the future, as challenging as that now appears, we would look forward to welcoming many of these employees back into the Amarin team.

Amongst this reduction in staffing were about half of those supporting the sales effort for Vascepa in the field, leaving us with a field team of about 150 sales professionals including slightly more than 130 sales representatives plus sales management. In determining what the ideal sales force size is moving forward, we've put much consideration into what we've learned over the past 9 months from the MARINE launch.

(Inaudible) lobbyist, and it's probably true in the majority of product launches, is that there are certain areas of the country where uptake happens much more slowly than others. Examples include geographies where physician access is limited due to healthcare regulations, where favorable managed care access is more difficult to obtain, and where physicians are not as concentrated as other areas of the country.

In keeping our highest performing sales professionals, before even [tweaking] territory boundaries and target lists, we retained coverage of 75% to 80% of Vascepa sales volumes and sales growth year-to-date. Once adjusting those territories to include other neighboring high-volume prescribers, we covered greater than 90% of Vascepa sales volume and year-to-date growth with a select sales team.

Given the quality of our sales professionals that remain, we believe that we can not only maintain but continue to grow Vascepa sales over time among our core customer base, even in only the MARINE indication.

That said, as with any field force reduction of this nature, we may experience a brief drift from our current prescription growth as our sales team adjusts to its new structure. However, we expect that any such adjustment period to be best measured in weeks, not months.

In hindsight, the current structure of the sales team may be closer what the ideal direct sales force size for Amarin should have been for the MARINE launch if ANCHOR had never been on the horizon.

Vascepa is a safe and effective drug that is well differentiated for its current indication. Regardless of what happens with ANCHOR indication, we are driving for continue RX growth and growth in market share, particularly prescribing omega-3 market share. We now have greater than 13,000 prescribers. Among this group we've already achieved a 30% NRX omega-3 share. We feel that we cannot only expand that market share, but we can continue to grow the prescriber base for Vascepa.

Steps that we are taking include driving sales rep call frequency to a greater extent with the highest docile physicians and intensifying focus on the highest prescribers of Lovaza. We are targeting close to 25,000 physicians of which the top 7,000 represent over $300 million in Lovaza revenues. Given the differentiation between Vascepa and Lovaza, many of these physicians have begun to write Vascepa scripts.

As these patients come back to the clinicians' office for followup, which by the nature of these patients is typically once or twice a year, we [pick] to build on these results to gain further conversion of patients to Vascepa as well as to gain additional new patient starts.

Research indicates that our share of voice to target physicians continues to increase. We attribute this increase to our promotional efforts, the reduction in promotional efforts of Lovaza, which have declined in recent years, and the lag of promotion behind fenofibrate as generic utilization of the fenos has captured most of their market share. This should help close the gap with respect with name and clinical profile recognition between Vascepa and drugs that have been on the market for many years.

Based on recent market research, the LDLC differentiation between these products as well as other clinical differences are meaningful to clinicians who are educated on Vascepa. Repeated visits to clinicians help in this education. We've also planned to have our largest presence to date at the annual meeting of the American Heart Association being held later this month. This presence combined with educational sessions at that meeting should further help Vascepa's efficacy and safety profile reach many potential prescribing physicians.

Speaker programs, which involve clinicians who are experienced in prescribing Vascepa speaking to other medical professionals are a large and continuing piece of our educational efforts. When we get managed care wins we reach out to target physicians and pharmacies in a manner to ensure that they are aware of these changes as such coverage wins provide greater access to patients and reduce administrative burdens to physicians' offices. These Tier 2 wins should be major contributors to driving growth. In addition to building on our considerable successes in Tier 2 wins, we plan to continue our targeted sampling program and to continue our copay coverage program in 2014.

We are documenting case studies of patient successes with Vascepa, of which there are many. We are just 10 months into launch of Vascepa. Through experience we are today smarter and better positioned than we were at the launch of Vascepa. Moreover we have a dedicated team of sales professionals who are working hard to ensure our continued growth.

Over the past couple of weeks we have repeatedly witnessed sales reps step up where needed to ensure that even with a smaller team of people, all key outreach efforts get continued. On top of the clinical differentiation of Vascepa, it is the dedication and ability of this team that gives us great confidence in Amarin's future.

While we are confident that we can continue to grow based upon our current sales force size, we will also review co-promotion opportunities. Our mentioning of this is not intended to set expectations of an imminent deal. Rather, it is intended to express that Amarin continues to look for ways to increase shareholder value. If there's an opportunity with a third-party to build on the value of what our direct sales team can contribute, we are receptive to such opportunity. In all likelihood, further clarity on the ANCHOR indication is needed before such potential opportunities can be reasonably assessed.

I know ask Mike Farrell, Amarin's Controller, to comment on Amarin's third quarter 2013 financial results.

Thank you, John. I will now provide some commentary regarding our financial results. You'll find a more detailed discussion of our results in our 10-Q and press release issued earlier today.

We reported net product revenues for the quarter ended September 30, 2013, of $8.4 million, and net year-to-date product revenues for the 9 months ended September 30th of $16.2 million. Past collections from the sales of Vascepa in the quarter ended September 30th were approximately $9.1 million for a total of $18.5 million collected from wholesalers since the launch of Vascepa.

Costs of goods sold during the quarter ended September 30, 2013, was $3.7 million. Gross margin as a percentage of net revenues improved to 56% in Q3 of 2013 as compared to 48% in Q2 and 45% in Q1.

The majority of the Vascepa capsules including costs of goods sold for the 9 months ended September 30th included API that was sourced from a single API supplier. Amarin's purchases of API from this supplier in 2012 and 2013 are at a higher cost per kilogram level than expected future purchases form 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 of 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. We also expect gross margin into the 60s based on scheduled API cost savings and loans and also anticipate further growth with increased purchased volumes.

Under US GAAP we reported a net loss of $48.9 million in the third quarter of 2013, or basic and diluted loss per share of $0.29. This net loss included $4.3 million in non-cash share-based compensation expense, $0.3 million in non-cash warrant compensation expense, and a $1.4 million loss on the change in fair value derivatives.

Amarin reported cash and cash equivalents of $225.9 million at September 30, 2013, a net decrease of $34.3 million from our reported cash and cash equivalents of $260.2 million as of December 31, 2012. Net cash outflows in the 9 months ended September 30, 2013, included approximately $71.3 million in sales and marketing expenses incurred in conjunction with the initial commercial launch of Vascepa. Net cash outflows also included approximately $34.2 million of expenses incurred in support of the REDUCE-IT cardiovascular outcome study as well as approximately $20.4 million for Vascepa API purchased in conjunction with the build up of our commercial supply and for clinical trial materials.

In aggregate our net cash outflow from operations was $44.9 million in Q3. That's compared to $52.8 million in Q2. As a result of the headcount reductions in October 2013, and additional anticipated reductions in spend, we anticipate that we will experience continued reductions in quarterly net cash outflows from operations with future quarterly cash outflows below the results of the third quarter. We also estimate that during 2014 our operating activities will result in net use of cash of less than $80 million.

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

Thanks, Mike. To expand briefly on our financial situation, we feel good about where we currently stand with regards to cash and cash burn.

While raising capital in July of this year was not ideal, one thing we made certain to do was to raise an amount of cash that would set us up for success in almost every possible scenario. With the $226 million in cash we had as of September 30th and the recent reductions in staffing and expenditures, we believe we are in a position where in most scenarios it is possible that we can get to a cash flow positive position without every having to raise additional funds.

So what's next? We will continue to drive sales of Vascepa in the MARINE indication. We will continue to expand our managed care access converting Tier 3 lies to Tier 2 status. We will continue to explore areas where we can continue to reduce expenditures. We will continue the REDUCE-IT trial as we await the FDA decision on ANCHOR, at which point we will evaluate and determine the best course of action.

As we discussed, we won't be in a position to share every detail of our activities to vigorously pursue the ANCHOR indication and we can't guarantee success, but we are doing all we can. We have tried in our comments to be as transparent as possible regarding our plans to vigorously pursue approval of the ANCHOR indication. While I expect that you may have additional questions, I remind you that this is an ongoing process and we do not want public communication of our arguments or strategy to undermine our efforts before the FDA, and accordingly, we will be limited at this time in providing much additional detail.

Once again, the level of support we have received from clinicians and investors in this regard has been extensive and is much appreciated. We will continue in our discussion with the FDA regarding ANCHOR as we move toward a planned Type A meeting and the PDUFA date of December 20th. Our goals are to successfully appeal the FDA rescission of the SPA and to be granted approval for the ANCHOR indication.

We will continue to fight for what we believe is right. We believe in our product and we believe in our people. We won't let the results of the AdCom stunt the growth of Vascepa in the MARINE indication, and should we not get ANCHOR this year or at any time, in our new structure we are positioned well for the future and will continue in our efforts to positively impact the lives of patients with elevated triglycerides.

With that, I would like to open the line to some questions. Operator?

(Operator Instructions.) Our first question comes from Jonathan Eckard of Citi. Please go ahead.

Thank you very much. I just have a couple questions. First one is I believe there's some new treatment guidelines expected to be released at AHA later this month. Are you aware of any items in these guidelines that could actually help support your position that you're going with with the FDA?

And then the second question is regard the increase in the prescribers. So if I look at what you had at the end of last quarter and what you have at the end of this quarter, you are increasing prescribers significantly. I think it was up about 45%. But the actual scripts per prescriber seems to be fairly steady. It looks like almost 7 scripts per prescriber per quarter. Is there something that could accelerate the per subscriber usage of Vascepa going forward? Thank you very much.

Jon, this is Joe. Let me answer the second question first and then I'll turn it over to Steve to answer the question about the treatment guidelines.

I think what you're seeing is natural and normal. As you hit the high prescriber audience earlier, you're getting those docs that write more and more scripts. As you continue to grow, you expand your base as we're doing on a physician basis, but you may see a, quote, more constant number amongst physicians.

Having said that, we think that the reorganization we put in place and the refocus on what I'll call the high docile prescribers gives us an opportunity to shift that upwards, okay? So I think for the most part that's pretty -- not unexpected. John, do you want to add anything to that?

I guess I would add a couple things. One is that we tend to be getting a lot of new patient starts these days and part of this is that we are a new drug, clinicians want to make sure it's reimbursed, and they want to have experience with it. And that sort of leads into the second point, which is that as they get experience and are getting continued feedback which is positive, we think that that experience is going to translate into increased prescriptions, not only of the new starts but increasingly of conversions from existing therapies as well. So that's all I wanted to add.

Okay. Steve, you want to take the first question?

Yes. Certainly. So Jonathan, we will be in attendance at the upcoming AHA sessions in Dallas. We've obviously seen the notification regarding the updates on the guidelines. At present we're not currently aware of anything specifically that may help our case beyond what we've already folded into our appeal document to the FDA.

Okay. Thank you very much.

Thank you. The next question is from Bert Hazlett of Roth. Please go ahead.

Hi. It's Bert Hazlett. Thanks for taking the questions. I know it's early days. Have you had any change in trajectory or any dialogue with managed care regarding additional Tier 2 progress post the discussion with FDA?

And then just to check in, with regard to gross margins, I know you've given the target of high 70s to low 80s. Again, does that still hold given the consequences of the past several weeks? Thanks.

Bert, hi. It's Joe. So on the Tier 2 progress, I think the safest way to put it is it continues on the same trajectory. We haven't seen the trajectory change, so we're very delighted and pleased about that in what we've seen. Again, it's only been 3 weeks, 4 weeks I think, 3 weeks. Seems like an eternity, but 3 weeks.

And the second point on the margin, we still expect to get there. Clearly with the ANCHOR indication you get there much faster. We're not prepared to give guidance at this time except to say you still get there. Because if you think about our other 3 suppliers, they are all operating, manufacturing, providing product that gets us close to that 79% to 80% margin. It's the one supplier in Japan that has the higher cost of goods, so as we work that product through the system and bring the other suppliers online, we should still get there, albeit maybe not as fast of a rate as we'd like.

Okay. Thanks for the color.

Thank you. The next question is from Thomas Wei of Jefferies. Please go ahead.

Thanks. I was wondering if you could be any more granular on some of the breakdown of expenses, in particular on the SG&A line? Can you give us a sense of how much your base G&A expenses are versus the marketing spend for Vascepa outside of the sales force?

And then a separate question, one strategy that's come up and has been debated among the investment community has been whether or not you could suspend enrollment in REDUCE-IT temporarily. Is that a possibility that that would somehow preserve the ultimate integrity of the trial? And I guess I wanted to understand from you would that actually save very much money since the bulk of patients would still have to be in continuing followup? Thanks.

Let's take these in reverse order again. Let me make a quick comment, Thomas, this is Joe, on the REDUCE-IT and then I'll ask Steve to comment on that. And then on the SG&A I'll turn it over to John.

We've looked at that. We think the suspension is a problem on a couple of fronts. One is what is suspending a trial? Once you start to suspend, you've lost all of your loyalty, okay? We also think suspending the study would put us in a very difficult situation going into the negotiations we're about to have with FDA. So from a high business level, my thoughts. Steve?

They're consistent with my views that we've expended a lot of time, energy, and effort getting the existing universe up and running and building momentum, and obviously we have certain powering and other considerations for the trial that we don't want to negatively impact unnecessarily.

This is John Thero. Regarding your question on SG&A, if you were to look at our trajectory through the 9 months reported, it would show a trajectory for this year of about $130 million if we hadn't made any reductions here in the fourth quarter.

I think if you were to -- given the nature of what was done in terms of reduction, which has been across the board on the staffing side, I think it's reasonable to assume that a level of expense reduction would be somewhat proportionate to the reduction in staff. In terms of sort of a breakdown of our [co-op] between sales, G&A, and marketing, it's roughly a third, a third, a third against that lower baseline with our [medical] activities involved in there as well. So hope those comments are helpful.

Thanks. That's actually very helpful.

Thank you. That does conclude the question and answer session. I would like to turn the call back over to management for any closing remarks.

Yes. Again, I just wanted to reach out to everyone and thank everyone for their support under the current circumstances. I'm sure we'll be talking to a number of folks in the coming days. And we will be vigilant here in bringing this to what we hope is a very positive conclusion. Again, can't make any guarantees, but we think we've got the right team in place and at the end of the day, right is on our side.

So thank you and have a good evening.

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