Amarin Corporation PLC (AMRN) 2014 Q3 法說會逐字稿

Greetings, and welcome to the Amarin Corporation Third Quarter 2014 Results Conference Call. (Operator instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mike Farrell. Mr. Farrell, 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 our commercial and financial performance including levels of Vascepa sales, revenues, and other commercial metrics; expenditures; supply-related activities and the adequacy of our financial resources; our current expectations regarding regulatory filings, government agency decisions, and potential label expansion, our current expectations regarding our cardiovascular outcome study such as enrollment and the potential implications of our regulatory process on such studies, our plans to protect the exclusivity and commercial potential of our product, and our current expectations regarding the effect of our co-promotion agreement on our business.

These statements are based on information available to us today, November 6, 2014. We may not actually achieve our goals, carry out our plans or intentions, or meet the expectations disclosed in our forward-looking statements. Actual results or events could differ materially, so you should not place undue reliance on these statements. We assume no obligation to update these statements if circumstances change.

Our forward-looking statements do not reflect the potential impact of significant transactions we may enter into such as mergers, acquisitions, dispositions, joint ventures, or any material agreement that we may enter into, amend or terminate.

For additional information concerning the factors that could cause actual results to differ materially, please see the forward-looking statements section in today's press release, and the risk factor section of our quarterly report on Form 10-Q for the three and nine months ended September 30, 2014.

These documents have been filed with the SEC, and are available through the Investor Relations section of our website at www.AmarinCorp.com. We encourage everyone to read these documents.

This call is intended for investors in Amarin, and is not intended to produce the use of Vascepa outside its approved indication.

Finally, an archive of this call will be posted to the Amarin website in the Investor Relations section.

In addition to myself on today's call from Amarin are John Thero, our President and Chief Executive Officer, Steve Ketchum, our President of R&D, Joe Kennedy, our Senior Vice President and General Counsel, and Aaron Berg, our Senior Vice President of Marketing and Sales.

I'll now turn the call over to John Thero, President and Chief Executive Officer of Amarin.

Good afternoon. Thank you for joining us today. On today's call we'll discuss Amarin's recent commercial, operational and financial performance, provide a regulatory update, and then take questions from analysts and investors. During our comments, we will touch on our priorities of improved patient care, increasing revenues, successfully completing REDUCE-IT, and doing all of the above in a cost-effective and opportunistic manner.

We continue to get encouraging feedback from physicians on the positive effects of Vascepa with respect to the treatment of their patients. These comments reflect positive experiences with the drug's tolerability, safety and efficacy, including reported improvements in a broad spectrum of the patients' lipid and inflammatory parameters after taking Vascepa.

Vascepa's revenues and prescription levels continued to grow in Q3. Net product revenues for the three months ended September 30, 2014 were $14.1 million, representing a 68% increase over net revenues of $8.4 million reported for the same period a year ago, and a 12% increase over net revenues of $12.6 million reported for the second quarter of this year.

Vascepa prescription levels in Q3 as reported by Symphony Health and IMS grew 20% to 22% over Q2. Timing of shipments to wholesalers, upon which revenues are recognized and prescription levels can vary between periods. Such timing differences contributed to greater prescription growth than revenue growth in Q3, 2014.

As Aaron will discuss in more detail, we are advancing a number of initiatives to create further prescription and revenue growth. Overall, the strategy that we have implemented earlier this year of relatively high-frequency detailing on the benefits of Vascepa to a select group of the highest potential target physicians is working. We want our strategic efforts to work faster. The distraction caused by the launch of generic Lovaza should be largely behind us, and we continue our work to convinced managed care that generic Lovaza will remain more expensive to them than Vascepa while more importantly, emphasizing the differentiated efficacy and safety profile of Vascepa.

Regarding REDUCE-IT as described in September, we recently completed a substantial scientific and business-focused analysis leading to the decision to complete the REDUCE-IT cardiovascular outcome study, independent of the regulatory review for the ANCHOR indication.

We believe that completion of this important study is in the best interest of patients and shareholders. While there can be no assurance that REDUCE-IT will read out positively, we belive that the REDUCE-IT study is positioned to succeed and that Vascepa is positioned to improve the lives of millions of patients, representing an opportunity for Amarin measured in the billions of dollars.

The FDA has yet to act on our sNDA for the ANCHOR indication. As we discussed in September, we have worked to engage FDA on the ANCHOR sNDA every available opportunity for over a year now. We have nothing new to report on the sNDA progress today.

In our FDA appeal, the FDA has repeatedly taken a position that it is no longer willing to grant regulatory approval for drugs focused on the cardiovascular risk reduction in the ANCHOR population, based solely on a showing of triglyceride lowering. Then the change in policy at the division level at FDA that resulted in rescission of our SPA agreement over a year ago, and it's a change in policy that we believe has now involved input from FDA officials at levels higher than those who have heard our appeal.

Taking the FDA's repeated position in its three reconsideration and still denials, and its internal [confrontation] with FDA officials at even higher levels, we informed the FDA that we do not intend to appeal the FDA decision further. We continue to believe that approval of an indication based upon the ANCHOR clinical trial results is in the best interest of patient care. We have presented FDA with a range of potential sNDA approval options based upon the ANCHOR clinical results that we believe would benefit clinicians and the patients. However, based upon FDA's reasoning for rescinding the SPA for the ANCHOR indication, it is unlikely that FDA will approve the ANCHOR indication.

The next step for FDA is to take action on the ANCHOR sNDA. When we receive that action letter, we will update investors.

Financially, we continue to make good progress with increasing productivity and preserving cash. Compared to 2013, our SG&A spending in 2014 has dropped nearly half, while our revenues have increased. Moreover, we ended September with $135 million in cash, with net cash burn decreasing from over $50 million per quarter in the middle of last year to $34 million in Q4 2013, to approximately $27 million, and then $14 million, and then most recently $15 million in each of Q1, Q2 and Q3 of this year, resulting in year-to-date 2014 net cash burn of $56 million compared to $156 million for the same nine-month period of 2013, excluding the July 2013 financing.

Over the last six months, we have increasingly leveraged the resources of our co-promotion partner, Kowa, and expanded our celebrity campaign to increase focus on the need for triglyceride management. We could look for both of these early-stage initiatives to contribute to our growth going forward. Recently, we increased our attention on potential partnering opportunities for Vascepa outside the United States. We will continue to aggressively look for opportunistic ways to add value, but our primary focus remains on that which we can most directly affect, which is growing revenues in the United States and [advancing reduced].

I understand from some investors that they've sold Amarin shares in recent weeks due to tax considerations. It's painful and disappointing to have Amarin's current share values below levels experienced before we had results from either the ANCHOR or MARINE studies. As a reminder, at that time, we had limited patent coverage, a single API supplier, no product approval, no managed care coverage, and an outcome study that we hadn't commenced. We have made considerable progress since that time, and I am hopeful that this progress together with the significant future potential for Amarin will soon again be recognized in our stock price. We are working hard to gain your confidence and support.

I now ask Aaron to comment further on our commercial performance. Aaron?

Thank you, John. John mentioned prescription growth in Q3. Let me quantify that growth before further discussing our progress.

Normalized prescriptions for the quarter ended September 30, 2014 as estimated by Symphony Health Solutions and IMS Health, totaled approximately 132,000 and 113,000 respectively, representing growth of approximately 20% and 22% respectively over prescriptions during the previous quarter this year, and representing growth of 78% as compared to the same period in 2013.

Such prescription growth continues to be primarily generated from higher decile physicians targeted by Amarin and Kowa sales representatives. For clarity, the term normalized prescriptions, refers to prescriptions of 120 capsules of Vascepa representing a one-month supply.

We believe that Vascepa can grow considerably further based on the currently-approved indication. Vascepa scripts reached 10% share of the prescription Omega-3 market in September, which is up from 8% in June despite the availability of multiple generic Lovaza products. Given the safety and efficacy profile of Vascepa, clearly there is room to grow the Omega-3 market share and of course even greater room to grow based on Vascepa's current indication in the overall non-statin lipid lowering market.

As has been true since we shifted the focus of our sales team earlier this year, overall prescription growth in Q3 was led by the group of target physicians who are in the highest deciles. In the most valuable group of the highest decile prescription Omega-3 prescribing physicians, those in deciles 8 to 10 as targeted by Amarin's direct sales force, new prescription share rose to 18.2% in September from 16.6% at the end of June.

Kowa has also significantly expanded our ability to reach additional physicians with Vascepa promotional messaging, many of whom have never been presented with a Vascepa detail. Q3 was the first full quarter that the Kowa sales force of 250 sales representatives were promoting Vascepa.

In Q3, we saw growth in prescriptions coming from all three of our pools of targeted physicians -- physicians called on only by Amarin representatives, physicians called only by Kowa sales representatives, and physicians called on jointly by Amarin and Kowa. While the greatest growth came from the physicians who have been called on the longest, it's encouraging to see a reversal in prescription trends for some of the lower decile physicians who Amarin didn't have the bandwidth to address prior to Kowa.

The Kowa sales team is working hard and very enthusiastically in their co-promotion of Vascepa. As previously described, their sales team's targeting more than twice the number of physicians targeted by Amarin sales representatives. Whereas the Amarin sales team earlier this year began intentionally taking the approach of calling on a narrow set of physicians with high frequency, the Kowa sales team is calling on a much broader set of physician targets with a lower frequency.

As of the end of Q3, Kowa's sales team had called on each of their Vascepa targets an average of approximately two times. By the end of this year, the aim is for the Kowa sales team to have called on approximately one-third of their target physicians five times to educate these physicians about Vascepa.

As previously stated, Amarin believes detailing efforts for new therapies that treat chronic asymptomatic conditions typically require five or more calls to significantly affect the physician prescribing habits, and that it typically takes six months or more for a co-promotion relationship to begin showing meaningful impact. Early signs indicate that Kowa is having a positive impact. We expected that their contribution will grow as they cumulatively invest more time in educating physicians about Vascepa and as they become more proficient with Vascepa.

However, we continue to rely on the Amarin sales team for the largest portion of our sales growth, as it is the Amarin sales reps who are targeting the highest potential target physicians with the greatest frequency. We are convinced that Vascepa is well-positioned for future revenue growth.

One market factor of interest to investors has been the approval of generic forms of Lovaza, which as the first approved prescription Omega-3 therapy is the market leader in this space. The concern was that generic Lovaza would negatively impact Vascepa sales. Lovaza has now been generic since April. While we saw some pockets of disruption, overall in Q3 we did not witness any major pattern of patients being switched away from Vascepa, and Vascepa prescriptions continue to grow despite generic Lovaza.

Physicians, payers and pharmacists are being reminded that Vascepa and Lovaza are not AB-rated and therefore not substitutable; Vascepa doesn't include DHA, and therefore doesn't increase LDL-C or bad cholesterol; and generic Lovaza is not a typical generic in that it's more expensive and periodically in short supply.

There are three companies approved to market generic Lovaza -- Par, Teva, and Apotex. We have spoken in the past about the important labeled clinical differentiation between Vascepa and Lovaza, including that Vascepa has demonstrated that it does not increase LDL-C in its approved indication, compared to placebo, while trials for Lovaza for this indication show median increases in LDL-C of 49% relative to placebo as per the FDA-approved label for Lovaza.

This difference showed up in the respective Phase 3 studies for the drugs, and we've also seen multiple reports of LDL-C improvement in patients that switch from Lovaza to Vascepa.

As discussed previously, generic Lovaza is priced in a manner which while at less expensive wholesale pricing than branded Lovaza, is as expensive or more expensive to manage care in the patients than Vascepa, particularly when adjusted for discounts available to managed care plans for coverage of Vascepa and co-pay card discounts available to patients.

Our $9 co-pay card makes Vascepa available to patients at a monthly cost which is approximately the same as, and in some cases less than, the monthly co-pay cost for generic Lovaza. As physicians, payers and pharmacists become more aware that pricing on Lovaza generics is not typical, or that Lovaza generics have periodic supply shortages, this could help Vascepa prescriptions.

Manufacture of highly-pure Omega-3 products is not easy or inexpensive. While Lovaza doesn't have the 96% EPA-only purity of Vascepa, its EPA plus DHA content is approximately 84% such that it would be difficult to profitably manufacture and sell it at discounted price levels typical of other classes of generic drugs.

For now, we don't seem to be losing any business to generic Lovaza.

As a reminder, it's the DHA component of Omega-3 products which has been correlated to increases in bad cholesterol. Vascepa is the only FDA-approved Omega-3 therapy which excludes DHA. Approximately half of patients treated for triglyceride-lowering therapy are also on statin therapy for cholesterol reduction. It's difficult for doctors to justify offsetting the value of LDL-C reduction from statin therapy by simultaneously using a drug or a dietary supplement that because it contains DHA, increases LDL-C. The differences in clinical effect of Omega-3 products containing DHA and excluding DHA are visible in the November publication within Postgraduate Medicine by Dr. Howard S. Weintraub entitled, Overview of Omega-3 Fatty Acid Products For Hypertriglyceridemia, that is currently available online ahead of the print version.

In September 2014, the National Lipid Association released new recommendations for patients that are in management of dyslipidemia. There are several elements of these new recommendations that align to the clinical benefits of Vascepa. In particular, the NLA recommendations emphasize that Omega-3 therapies that include DHA increase LDL-C, while those that contain EPA only do not increase LDL-C. Vascepa is the only Omega-3 therapy that has the single active ingredient, EPA, and no DHA, and we strongly believe that Vascepa has the best product profile for treating patients with very high triglycerides.

In Q3, we continued to complement our field sales efforts with non-personal tactics including our expanding digital presence, which delivers targeted content via WebMD and MedScape. Further, we continued our support of promotional medical education via our Speaker Meeting programs which now include support from our Kowa colleagues to drive attendance by high value targets, and to conduct additional programs across the country in the areas that Amarin does not have a direct sales presence.

Amarin also continued our broader celebrity campaign we announced in June, in which Amarin is partnering with Rick Harrison, star of the number one History Channel hit television Pawn Stars, to raise awareness of very high triglycerides and treating the condition with Vascepa. Rick is a very high triglyceride patient and speaks passionately about the importance of talking to your doctor, the need to avoid dietary supplement Omega-3 products to treat this disease, and why EPA-only Vascepa works for him.

We recently completed the next wave of this campaign with Rick being interviewed by numerous media outlets. We continue to see increases in consumer online engagement with our website, LowerMyTrigs.com, and we're planning further events with Rick in the months ahead and are using his image and story in some of our educational materials.

From a managed care perspective, we continue to gain additional Vascepa lives covered in Tier 2 in the third quarter of 2014. Vascepa is now available on formulary to over 200 million lives in the United States, including over 119 million lives in Tier 2 coverage. The continued conversion of lives to Tier 2 status has enabled Amarin to continue to grow Vascepa market share and accelerate new patient starts. And Vascepa Medicare Part D coverage remains strong, in spite of the generic competitor entrants with 70% of all Medicare Part D lives covered.

We've secured 95% of the existing Tier 2 coverage through 2015, and additional renewals are scheduled to review soon. While formulary coverage for Vascepa is good, there continue to be some healthcare plans that restrict access to Vascepa. In most cases, such plans restrict access to Lovaza as well. It's not uncommon for coverage to differ between health plans. Some health plans appear to focus more on cost than on optimal patient care. We're aware and thankful that many physicians have reached out to these outlier plans urging coverage for their patients.

In parallel, we continue to emphasize the clinical advantage of Vascepa with the hope that these outlier health plans will follow the path of the majority of health plans in the support of good patient health and move Vascepa to Tier 2 coverage.

I'll now turn the call over to Steve Ketchum, our President of Research and Development, for a regulatory update. Steve?

Thank you, Aaron. Regarding the sNDA for the anchor indication, the FDA assures us that they have resumed work on the sNDA review. When we have a definitive update we will share it publicly. We note that during today's call we are not going to comment further on the pending sNDA.

Our primary focus currently is on advancing the REDUCE-IT study through a timely and successful conclusion, as doing so is both consistent with recent urging from FDA and we believe in the best interest of patient care and Amarin shareholders.

Heart disease is the number one cause of death in the US and the world, resulting in one in every four deaths. Statin therapy reduces CV risk by approximately one-third. That's significant risk reduction, but there remains a significant unmet need for further risk reduction to improve patient care for the many millions of patients with cardiovascular disease.

REDUCE-IT represents a compelling opportunity for improving patient care and for Amarin. As previously described, the epidemiological genetic and clinical data success that triglycerides and the lipoproteins that carry them are within the causal pathway of cardiovascular disease, and that treating elevated triglycerides can result in reduced cardiovascular risk. REDUCE-IT is the first prospective outcome study of any drug in a population of patients who despite stable statin therapy have elevated triglyceride levels.

Before the REDUCE-IT study, no outcome study was designed to specifically address this triglyceride-lowering hypothesis. REDUCE-IT is also the first outcome study of a US prescription-level dose, 4 grams daily, of an Omega-3 drug.

Amarin's scientific rationale for the REDUCE-IT study is also supported by possible mechanisms of action of the EPA, when used on top of statin therapy that suggests cardio-protective effects independent of triglyceride lowering. These mechanisms of action have been explored and described in the scientific literature, but have not been fully elucidated.

For example, hardening of the arteries, or atherosclerosis, is the prmary underlying process of cardiovascular disease involving inflammation followed by plaque formation, progression and instability. Atherosclerotic plaques readily incorporate EPA, and higher EPA plaque content is associated with decreased inflammation and increased plaque stability.

Intervention with EPA-only therapy in combination with statin therapy may reduce markers of inflammation in plasma and in plaque, and may stabilize vulnerable plaques better than statin alone. Therefore, EPA therapy may have important beneficial effects on atherosclerotic processes and cardiovascular disease, beyond EPA's favorable effect on triglycerides and other lipid and lipoprotein levels.

Taken together, the efficacy and safety profile of Vascepa and the completed Phase 3 studies, the epidemiological, genetic and clinical data supporting the triglyceride-lowering hypothesis in cardiovascular risk reduction, and the potential EPA-specific mechanisms of action in cardiovascular disease, support Amarin's confidence in the science behind the ongoing REDUCE-IT study.

REDUCE-IT is an events-driven study, and the accrual of cardiovascular events is a function of a number of factors including the number of patients enrolled, the underlying risk of the patients enrolled, and the amount of time that those patients are followed.

Since commencement of the REDUCE-IT study at the end of 2011, we have enrolled over 7,100 patients representing approximately 90% of the targeted patient enrollment at 8,000. Amarin currently estimates that whole patient enrollment in this study will be completed in 2015. As previously disclosed, the baseline mean and median triglyceride levels for patients enrolled in the study, are above 200mg per deciliter.

Thus far, while early, the cool blinded event rate appears to be tracking to the following forecast expectations. The [three] specified interim analysis by the independent data monitoring committee at 60% of the targeted events is anticipated in 2016, with 100% of the targeted events currently anticipated to occur by the end of 2017, and with results expected to be available in 2018.

As is typical, the statistical threshold for defining overwhelming efficacy on the primary endpoint at the interim analysis is considerably higher than the threshold for defining statistical significance at the final analysis. The results of the REDUCE-IT study remain blinded to Amarin.

In our substantial scientific and business analysis earlier this year, which reinforced our conclusion that the REDUCE-IT study is positioned for success, we took another look back at results reported for various other studies including data from JELIS, ACCORD Lipid, and AIM HIGH. Of these studies, JELIS was the most informative, as it was the study of the effects of highly-pure EPA on top of statin therapy. As previously discussed, there are some key limitations of the JELIS study which led the FDA to require that we conduct the REDUCE-IT study. Notably, JELIS was conducted solely in a Japanese population.

There are of course other differences including EPA dose levels, patient diets, trial inclusion criteria, and statin dose levels. We have covered these items in the past, including the fact that most of the patients in JELIS were relatively low-risk patients compared to the patients being enrolled in REDUCE-IT whom all have elevated triglyceride levels.

Given the importance of the REDUCE-IT study, I want to provide some additional comment regarding why we are using the 4 gram daily dose of Vascepa in REDUCE-IT compared to the 1.8 grams per day of EPA administered to patients in JELIS. First, multiple studies have shown that low-dose Omega-3 use is not effective. We know that low-dose Omega-3s have limited effect on lipid, lipoprotein and inflammatory parameters. Second, we know that in JELIS, the level of EPA achieved in plasma with a 1.8 gram per day dose was relatively high. This is likely due in large part to the Japanese diet, which generally consists of greater fish consumption resulting in higher baseline levels of EPA.

In REDUCE-IT, 4 grams of EPA per day is intended to raise EPA concentrations in plasma to high levels that are similar to or slightly higher than those observed in JELIS, and to sustain these high plasma EPA concentrations throughout the study. With statin-treated daytime triglyceride levels of 200 to 499 mg per deciliter, the lipid profiles of ANCHOR patients most closely resemble REDUCE-IT patients. Patients in ANCHOR had baseline plasma EPA levels that were less than a third of baseline levels in JELIS, but Vascepa 4 grams per day raised plasma EPA levels in ANCHOR to comparable levels as observed in JELIS.

Vascepa 4 grams per day in MARINE raised plasma EPA levels even higher in patients with daytime triglycerides of 500 to 2,000 mg per deciliter. While there can be no assurance that REDUCE-IT will be successful, 4 grams per day dosing in REDUCE-IT is an intentional step towards positioning REDUCE-IT for success.

We look forward to updating you on the continued progress of REDUCE-IT. With that, I welcome Mike Farrell, Amarin's controller, to comment on Amarin's Third Quarter 2014 financial results. Mike?

Thank you, Steve. My comments will address our recent financial results. You will find a more detailed discussion of our results in our 10-Q and press release issued earlier today. In Q3 2014, we recognized $14.1 million in revenues representing an increase of 68% as compared to revenues of $8.4 million in Q3 of 2013, and an increase of 12% compared to $12.6 million in revenues in the second quarter of 2014.

The timing of shipments to wholesalers, upon which revenues are recognized, and prescription levels can vary between periods. As previously noted, such timing differences contributed to greater prescription growth than revenue growth in Q3 of 2014.

On a year-to-date basis, we recognized $37.7 million in revenues through September 30, 2014, as compared to $16.2 million in the same period in 2013, representing a year-to-date increase of 133%. Our average price per capsule sold in Q3 2014 approximated the average price from the first half of 2014.

Cash collections in the sale of Vascepa in the nine months ended September 30, 2014 were approximately $45.2 million, and all of our customers remain current in their payments.

Gross margin during the quarter ended September 30, 2014, were 62% as compared to 56% in Q3 2013. Gross margin for the nine months ended September 30, 2014 was 61% as compared to 52% for the same period in 2013.

While our gross margin may fluctuate from quarter to quarter, overall we expect our gross margin percentage to improve further beyond 2014 as we source lower-cost API.

Our SG&A expenses in Q3 2014 were $19.3 million, compared to $28.3 million in Q3 2013, reflecting an intentional reduction in expenditures. SG&A expenses in the nine months ended September 30, 2014 were $60.9 million, as compared to $101.5 million for the same period in 2013. The 40% decrease in SG&A expenses was primarily intentionally driven by previously-announced decisions to decrease sales force staffing, marketing program spend, and other costs associated with the commercialization of Vascepa following the Adcom surprise last Fall which led to the rescission of the SPA for the ANCHOR indication.

In addition, 2013 was the year in which we commenced selling Vascepa, and as such included certain launch year-related costs.

Included in Q3 2014 expenses was approximately $0.6 million earned by Kowa for its co-promotion of Vascepa. Other than anticipated growing costs for Kowa's co-promotion, which is scheduled to increase based on its contribution to increasing gross margin from Vascepa sales, our intention is to continue to see growing productivity from Amarin sales and marketing team by holding expenses generally consistent while growing revenues.

This is not to suggest that we won't have quarter-to-quarter variability, but intended to suggest that we are not planning significant increases in our spending until supported by considerably higher revenues.

Our prescription levels need to approximately double to cover Amarin's total current costs excluding R&D costs. It is our aim to get it there through increased revenues without significant aggregate increases in SG&A costs.

Our R&D expenses in Q3 2014 were $14.5 million, as compared to $16.8 million in Q3 3013, and were $37.9 million in the nine months ended September 30, 2014, as compared to $56.1 million for the same period in 2013. The decrease in R&D expenses compared to 2013 was primarily driven by supply purchases in 2013 which were expensed to R&D prior to FDA approval of the API suppliers, and to reduce staffing and overhead costs in 2014, following the decision discussed last year, to narrow Amarin's R&D efforts pursuant to the ANCHOR SPA being rescinded.

The decrease in expenses in the year-to-date period was also driven by a decrease in REDUCE-IT expenses reflecting both quarterly variability and some efficiency savings as the trial was fully operational in 2014 across all countries and clinical sites.

Under US GAAP, we reported a net loss of $26.1 million in the third quarter of 2014. Our basic and diluted loss per share are $0.15 and $0.17 respectively. This net loss included $1.9 million in non-cash, share-based compensation expense, $0.3 million in non-cash warrant compensation income, and a $4.5 million non-cash gain in the change of fair value derivatives. We reported a net loss of $36.7 million for the nine months ended September 30, 2014, for basic and diluted loss per share of $0.21 and $0.25, respectively. This net loss included $6.3 million in non-cash share-based compensation expense, $0.5 million in non-cash warrant compensation income, and $11.9 million non-cash gain on the change in fair value of derivatives, and a $38 million non-cash gain on extinguishment of debt.

We reported cash and cash equivalents of $135.4 million at September 30, 2014, representing a net decrease of $15.1 million from reported cash and cash equivalents, $150.5 million as of June 30, 2014, and a net decrease of $56.1 million from reported cash and cash equivalents of $191.5 million as of December 31, 2013.

The improvement in net cash outflows from operations to $19.9 million in Q3 2014 as compared to $44.8 million in Q3 2013, reflects our focus on maximizing our existing resources and cash preservation. It is anticipated that we will experience fluctuations in quarterly net cash outflows from operations.

As a result of the timing of certain items, including interest payments and the timing of supply purchase, our Q3 net cash outflows from operations were in excess of Q2 net cash outflows. We continue to estimate that during 2014, net cash outflows will be less than $80 million.

I will now turn the call back to John Thero. John?

Thank you, Mike. Amarin continues to make progress growing the Vascepa brand, advancing REDUCE-IT, and preserving cash. We are confident that we can continue to make progress and we are actively pursuing ways to accelerate this progress. We have an experienced and dedicated employee base and Vascepa, a product that works. We are optimistic about Amarin's future.

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

(Operator instructions) Our first question comes from John Boris with SunTrust Robinson Humphrey, please proceed.

Thanks for taking the questions. First question just relates to the Kowa co-promote. Can you maybe get a little more granularity on number of physicians and number of details, and how confident you are that once they hit that five to six call activity on their respective physicians that we'll begin to see potentially an acceleration after that six month period? And then second question just has to do with a competitor on the horizon, potentially, Epanova. Sounds like they've had some supply issues in being able to enter the market, however, it appears that AstraZeneca, if and when they'll launch, will launch on their diabetes sales force. Can you just talk about the sizing of your sales force relative to AZN when they enter the market in that competitive spread? Thanks.

John, this is John Thero, good to hear from you. I'm going to ask Aaron Berg, our head of Sales and Marketing, to respond to your questions. Aaron?

Sure. So, what we know is, if we're going with Kowa, your first question, is that physicians respond to the Vascepa message in particular when the number of calls to individual physicians exceed five or more. We've seen that data since launch with Vascepa, and that continues. This is similar to other prescription products that are launched. And as you know, it takes time to generate that frequency level of calls to affect their prescribing habits. And it's one of the reasons why, for co-promotion partnerships, it often takes six months or even more for that relationship to begin showing a meaningful impact.

So, Kowa's targeting more than twice the number of physicians than we are alone, in the Amarin sales force, and as of the end of Q3, Kowa sales team had called on each of their Vascepa targets an average of two times. So, by the end of this year, the aim is for the Kowa sales team to have called on approximately one-third of their target physicians five times, to educate them about Vascepa.

So, if they have time to build the frequency, we know the frequency with Vascepa, with the Vascepa message, does resonate with physicians and we know we expect behavior based on that. Now, with that said, it is very early and we'll repeat that, but the early signs indicate that Kowa is having a very early positive effect. The data show that there's greater prescription, new prescription growth in physicians called on by both Kowa and Amarin, versus those called on by Amarin alone.

So, early signs are good, internally. We'll continue to monitor it. Our focus with both sales forces is on execution, and we expect both sales forces to continue to execute, with a focus on quality of Vascepa calls, getting the frequency levels up as high as possible on the highest-value physicians, and we expect to see a return.

And regarding the second question which is about Epanova, we know that that product has been approved for a while. We're not sure of when it will be launched. We know that there's been, or at least we've heard, as you have, that it may be launched through that particular sales force, but they've got multiple products there competing for attention. You know, as we've talked about in the past, it's just many patients that have very high triglycerides that are not currently being treated, and any effort that increases awareness should be useful to all therapies relative to patient care. There's not been head to head studies between Vascepa and Epanova, but Epanova, like Lovaza, contains both EPA and DHA, and therefore it raises LDL. And as Aaron was pointing out earlier, we have many of these patients are also on statin therapy, so a drug that offsets the effect of statin therapy, when we talk to the doctors they become familiar with the LDL effect, will want to consider, and it also is a drug that has a very different safety and tolerability profile which may cause some concern for patients and clinicians. This as a note, in our MARINE study we had zero patients drop out of MARINE as a result of blood tolerability effects associated with Vascepa, whereas in their study which comparably, less than three months, 12 weeks, depending on dose they had 5% to 7% of patients drop out due to side effect profiles of the drug which you know, it's something that we'll have to see how that plays out in the marketplace.

There's other differences between the products, but we think that anything that increases awareness out there will overall be good for the marketplace. Since this is an underserved market, and we think physician education in this stage is important. Our marketing to these doctors is going to continue to focus in on the highest prescribers. We're going to be continuing to do that with our sales force, which is about 130 sales reps here in the United States. We'll do that with high frequency which appears to be working, and then we're of course supplementing that with the roughly 250 sales reps that Kowa has, which are calling on some of the same doctors we're calling on, but also calling on a much broader audience so that in the United States, we're calling on, with our sales force, a little over 20,000 physicians, of which 7,000 get the most attention. Kowa is closer to 60,000 docs that they're calling on, and we think that with the universe of doctors we're currently calling on and the frequency that we're calling on those docs, that we can continue to grow Vascepa with some of the initiatives that were talked about here, particularly by Aaron. We think we have an opportunity to grow it at a faster rate.

So, we don't -- again, don't know when those competitor products will be launched, if it will be launched, but if it does I think it could be helpful to us and in any case, we think we're well-differentiated into how our product with a proven record of safety, efficacy and tolerability both in clinical trials and in real world use, that will bode well for us.

Thanks.

Our next question comes from Jonathan Eckard with Citi, please proceed.

Hi, this is Joel Beatty on for Jon, thanks for taking the questions. My first question is on REDUCE-IT, could you provide more detail on when in 2015 enrollment is expected to complete, and then also, how do you anticipate the R&D costs will change after enrollment completes?

Joel, thanks for the questions. You know, this is a trial as we're getting into the late stages of enrollment that we're trying to bring in for the appropriate landing, if you will. We did make a change to the enrollment criteria not too long ago, to emphasize the need for any patients being enrolled going forward to only have triglyceride levels that are above 200 mgs per deciliter, and that was intentional to give us kind of balance of patients within the study that's consistent with the way the study was designed, and the statistics for how we have the study designed. As we get closer to the end of the study, we're trying to make sure that it is the right patient mix. In all likelihood, events in the study -- because it is an events-driven study -- will probably come from the 7,000-plus patients who are already enrolled, and so whether we finish one month or a different month probably won't have a huge impact on the timing of the trial being completed.

The costs within REDUCE-IT bounce around for a variety of different reasons. During the enrollment phase, we've talked about the overall costs on an annual basis being between $30 million and $40 million on an annual basis, and that's been holding up. There are some savings that occur after enrollment is completed, outreach and advertising efforts relative to patients, etc. But there are still significant costs going forward to ensure patient compliance and a robust study. We, I think were commended by many physicians relative to our conduct of both the MARINE and ANCHOR study, and how it was robustly conducted and we're trying to ensure that here is the first study in this phase that we're conducting it robustly as well.

So, while we do anticipate seeing some curtailment of costs in REDUCE-IT after enrollment is complete in 2015, it's not a halving of costs. But we haven't quantified beyond that, and the costs do tend to be variable enough from quarter to quarter that it's somewhat difficult to forecast or to articulate to you in terms of guidance.

Sure, thanks, that was helpful. And then one more question, I noticed in the 10-Q today it says that the data monitoring committee has been more frequently examining the safety data from REDUCE-IT. What could be the reason for that, and is there anything that could be read into that?

This is Steve Ketchum speaking, it's just good standard practice for a trial of this nature, for an independent data monitoring committee to meet quarterly to look at all available information. And so that was kind of the pre-specified plan from the outset of this study, and in each of those instances the DMC has come back to Amarin and recommended a continuation of the study as planned.

And then given the profile of Vascepa coming out of both the MARINE and ANCHOR studies, we weren't anticipating safety or tolerability issues, but now with a much broader accumulation of lives within the study and time on drug in the study, it's good to have that confirmed that -- not that we have seen the results, but an independent group is looking at it and continuing to give it the thumbs up moving forward. It's what we would have expected, but it's still confidence building, and we thought that we should be articulating to investors that which we know, which is we continue to get the thumbs up on the safety side. The efficacy side of course is blind to that committee and to ourselves, other than whatever they might interpret based upon the safety.

Great, thank you.

Thank you. Our next question comes from [Matt Parker] with Goldman Sachs, please proceed.

Hi, I'm just filling in for Gary today. Could you maybe elaborate a little bit more on the cash burn, and maybe a run rate, and if you'll need possible additional financing? And then for my second question, I know that you talked about like, keeping the expenses relatively constant for sales efforts, but looking forward do you see any possibility of maybe expanding it at all? Thanks.

Thanks, [Max], for the questions. I'll take the second one first, only because it parlays into answering the first one. So, for the MARINE indication, we're currently approved, we think that we're adequately sized today. If we were to get approval for a broader indication, or the ability to market a broader indication, that would be something we'd want to take another look at. But you know, for the current indication I think we're adequately choosy. The cash burn as we discussed a bit in the call, we have taken significant measures over the past year to increase productivity, reduce expenditures. I think our SG&A costs now are at a level that should be relatively consistent from period to period, until again we sort of hit a threshold moment of covering those costs.

Our R&D costs, the majority spending there is REDUCE-IT, which we've talked about that level of spending, really in response to an earlier question from Joel, which sort of leaves as a variable to that, revenue growth and related supply purchases for revenue growth. We ended Q3 with $135 million in cash, or this year as a whole we anticipate burning not more than $80 million, of which we've burned about $56 million of it so far, $14 million and $15 million respectively in each of the last two quarters. Our focus is to continue to grow revenues, to advance REDUCE-IT, and we're going to continue to look for ways to do this cost-effectively and opportunistically. And by opportunistically, I mean, bringing on -- we did Kowa, that was opportunistic. We do the celebrity program, that's opportunistic. If there's things that we can do without adding a heavy cost burden that we think will add to the upside, we're going to continue to look for those things that includes also looking outside the United States.

So, we haven't quantified beyond that, our cash burn levels. We may get into a bit more detail in conjunction with our 10-K in that regard, but right now we're tracking to the guidance that we provided this year, which is keeping the cash burn under $80 million for the year and our focus is, as I said, continuing to look for improvement based upon revenue growth [Hope those answers are helpful.]

Okay. Yes, they are, thank you.

I don't hear anything.

Hello?

Hello?

Yes, they're good, thank you.

There are no further questions at this time. I'd like to turn the floor back over to John Thero for closing comments.

Perfect. Thank you operator, and more importantly, thank you everybody who's been on this call listening. We appreciate your interest and support, and we look forward to providing regular updates as we move forward. Good evening.

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