Amarin Corporation PLC (AMRN) 2015 Q4 法說會逐字稿

Welcome to Amarin Corporation's Conference Call to discuss its financial and operating results for the fourth quarter of 2015. This conference is being recorded today, February 25, 2016. I would now like to turn the conference over to Kate McNeil, Executive Director, Investor Relations for Amarin.

Welcome and thank you for joining us today. Please be aware that this conference call will contain forward-looking statements that are intended to be covered under the Safe Harbor provided by the Private Securities Litigation Reform Act.

Examples of such statements include but are not limited to our current expectations regarding our commercial and financial performance, including levels of Vascepa revenues, costs, and other commercial metrics, gross margins, expenditures and the adequacy of our financial resources, our current expectations regarding litigation, regulatory reviews, government agency decisions, and the potential for label expansion, our current expectations regarding our cardiovascular outcome study such as time, compensation, and likelihood of success, our plans to protect the exclusivity and commercial potential of Vascepa, our goals regarding international expansion and other business development opportunities 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, February 25, 2016. 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 as circumstances change. Our forward-looking statements do not reflect the potential impact of significant transactions we may enter into, such as mergers, acquisitions, dispositions, joint ventures, or any material agreement that we may enter into, amend, or terminate. For additional information concerning the factors that could cause actual results to differ materially, please see the forward-looking statement section in today's press release and the risk factors of our annual report on Form 10-K for the year ended December 31, 2015.

These documents have been filed with the SEC and are available through the Investor Relations section of our Web site at www.AmarinCorp.com. We encourage everyone to read these documents. This call is intended for investors in Amarin and is not intended to promote the use of Vascepa outside of its approved indication. Finally, an archive of this call will be posted to the Amarin Web site in the Investor Relations section.

In addition to myself, on today's call from Amarin are John Thero, our President and Chief Executive Officer, Joe Kennedy, our Executive Vice President, General Counsel, and Strategic Executive, Steve Ketchum, our Vice President of Research & Development and Chief Scientific Officer, Craig Granowitz, our newly appointed Chief Medical Officer, Aaron Berg, our Senior Vice President of Marketing and Sales, and Mike Farrell, our Vice President of Finance.

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

Good morning and thank you for joining us. Amarin finished 2015 strong and we're very update about 2016. During this call we will review our 2015 results and outline our expectations for Amarin's continued growth.

Looking back, 2015 was the year of strong operational execution and significant progress. Through aggressive and nimble action, Amarin is today much stronger and better position than we were a year ago. Our revenue growth has accelerated, we can promote Vascepa with expanded claims and REDUCE-IT is on track and approaching completion.

Further strengthening our commercial operations was a key focus of 2015. Our progress here is evidenced by our prescription revenue growth. During the fourth quarter of 2015 we saw an increase in normalized prescriptions based upon prescription data from Symphony Health Systems and IMS Health of approximately 52% and 55% respectively compared to the same quarter of 2014. This growth translates to $26.4 million in net product revenue from Vascepa sales representing a 60% increase over Q4 2014.

For the full year we achieved net profit and use of $81 million in full year total revenue of $81.8 million, increases of 49% and 51% respectively over 2014. Broader managed care coverage, dedicated sales and marketing personnel, more than 25 scientific publications and presentations together with expanded Vascepa messaging and promotion all contributed to our strong Vascepa revenue growth in 2015.

Our expanded promotional messaging which started in August and focused on the ANCHOR lipid study results was made possible by our conviction that expanding the flow of accurate information to healthcare professionals regarding Vascepa is in the best interest of patient care. As you know, we pursued the right to such promotions through the federal court system and in August we were granted the authority we sought through a federal court declaration.

Since August we've used this authority to further educate physicians and other healthcare professionals about Vascepa and we plan to continue this effort throughout 2016 and after. Every function of the company has been involved in ensuring that we effectively expand our promotional messaging for Vascepa in a compliant fashion. This has been a first of a kind implementation in our industry and we're proud of the skill, efficiency, and sensitivity with which the new data has been introduced to the medical community.

While we're confident that we can continue to grow Amarin into a profitable company based upon the current promotion of Vascepa, the potential game changer is REDUCE-IT. Assuming that REDUCE-IT is successful, it should result in a dramatic change in how patients are treated. The REDUCE-IT study remains on track both for its pre-specified interim analysis scheduled for later this year and more importantly the onset of the final targeted event in the study by the end of next year.

As a reminder the opportunity to improve patient care presented by REDUCE-IT eclipses the opportunity presented by the successful ANCHOR study as tens of millions of patients have above normal triglyceride levels after statin therapy. The number of people with high triglyceride levels is comparable to the number of people with high cholesterol.

Statin therapy has demonstrated an ability in patients with high cholesterol levels to reduce cardiovascular risk by approximately one-third. This leaves millions of patients currently on statin therapy at a greater than 60% residual risk for cardiovascular disease. We envision Vascepa is an ideal and add-on therapy to statins, especially with its favorable safety profile and believe that it is an opportunity that should be measured in the billions of dollars.

On this call we reiterate that we anticipate 2015 revenue of between $ 105 million and $120 million. We believe that our revenue growth together with our continued commitment to controlling expenses will result in our commercial operations entering 2017 cash flow positive excluding R&D costs which are mostly related to REDUCE-IT. During 2015 we demonstrated that no challenge is too large for the Amarin team. We intend to continue this aggressive approach in 2016.

I now ask Joe Kennedy, our General Counsel, to provide a brief update on our First Amendment matter, leading to an update by Aaron Berg on Amarin's commercial progress.

Thank you, John. Our legal victories in 2015 have helped build a strong foundation for Amarin's continued commercial growth in 2016 in the years that follow. Of these the most transformative for Amarin, healthcare professionals, and most importantly patients, was federal court declaration confirming our right to promote to healthcare professionals the ANCHOR clinical trial data and to discuss the current state of scientific research on the potential of Vascepa to reduce the risk of cardiovascular disease.

The court order provides us with a specific set of truthful and non-misleading speech to detail the ANCHOR data inconsistent with prior case law firms that peer-reviewed publications like those outlined in the JELIS results are truthful.

As the US Supreme Court observed in the Sorrell case, the important First Amendment precedent securing First Amendment rights is in the public interest and that is especially true in fields of medical and public health where information can save lives. It only furthers the public interest to ensure that decisions about the use of prescription drugs including off label usage are intelligent and well informed.

A physician quoted by the Supreme Court in that case put it this way. We have a saying in medicine, information is power and the more you know or anyone knows, the better decisions can be made. These sentiments have served as a daily call to arms at Amarin as we work to educate the medical community on the ANCHOR data and supportive but not conclusive data relevant to the potential of Vascepa to address the significant residual risk in ANCHOR patients.

As Aaron Berg will comment in a moment, physicians have expressed to us appreciation for the expanded data we are presenting to them and for the thoughtful and balanced manner in which it is presented. Most physicians were not familiar with this data prior to Amarin's promotion of the ANCHOR results.

On court order was a preliminary ruling. The government decided not to appeal and their period for appeal expired in October. This leaves the preliminary ruling in place until final disposition of the case. The preliminary ruling was based in part on the judge's favorable view of our likelihood of success and the merits in the underlying case were to proceed to litigate the same issue through a longer process.

As Judge Engelmayer, the judge in our case, put it the balance of equities and the public interest both overwhelmingly favor granting us the relief we sought in this litigation. Rather than having the underlying case proceed, and shortly after the issuance of our preliminary order, we agreed to let the government stay or halt the case's progression and to work with the government to finalize the lawsuit through settlement terms.

We believe strongly our First Amendment rights promote truthful and non-misleading information regarding Vascepa. As we stated in November our goal has been to make the preliminary order we want final and to continue on our path promoting Vascepa under the First Amendment. We'd remind you that our suit did not seek to change FDA approved labeling for Vascepa. As previously discussed, based upon past communications with the FDA, we continue to expect a positive result from the REDUCE-IT outcomes trial and the submission of a supplemental new drug application will be required for expansion of Vascepa's labeling.

Because of the nature of settlement discussions, including the need to continue to foster an open dialogue with the FDA, we are not at liberty to disclose any information about our negotiations. That includes no discussion today of the pointed issue in our negotiations or the reasons for the lengthy process or expectations of when we might reach final settlement terms. As we announced last week, a joint request was submitted asking that court proceedings continue to be stayed until March 18. At or before this date we will update the core ten investors.

There are however four important takeaways that we'd like you to understand about the case at this point.

First, it enables Amarin to promote Vascepa with significantly expanded claims in the context of balance disclosures. Second, our court authority for expanded promotion continues through settlement discussions as a preliminary ruling remains in effect until final disposition of the case. Third, Amarin's goal to make the preliminary order final and to continue on our current promotional path. Fourth, if for some unexpected reason we do not come to settlement terms with the government and we continue the underlying lawsuit, the current court order allowing Vascepa to be promoted under the First Amendment will be continued through the final disposition of the underlying case.

So, taken together, we want you to understand that the length of settlement discussion period has had no negative bearing on our ongoing operations. We look forward to providing you with updates on this matter as events progress.

I will now turn the call over to Aaron Berg, our Senior Vice President of Marketing & Sales to provide a commercial update. Aaron?

Thank you, Joe.

As Joe mentioned, the strong Vascepa prescription and revenue growth in Q4, the Q4 revenue of $ 26.4 million which is an increase of 24 % quarter over quarter and 60 % year over year was driven primarily by an increase in prescription volume. Our year over year quarterly growth was strong throughout 2015, starting with 42 % in Q1, 40 % in Q2, increasing 51 % in Q3 and finally to 60 % in Q4 of 2015. The prescription numbers from Symphony Health Solutions and IMS Health represent growth of approximately 14 % and 15 % respectively compared to the quarter ended September 31, 2015 and increases of approximately 52 % and 55 % respectively compared to the same quarter in 2014.

We believe the acceleration in prescription growth in Q4 resulted from a number of factors, some of which we're building throughout 2015. These include expanded managed care coverage, positive reports of Vascepa patient experiences, high levels of customer engagement, low turnover, and expanded education of our sales team as well as our Vascepa co promotion partner, Kowa Pharmaceuticals America.

On top of this growing momentum, our growth in Q4 was expanded by beginning to introduce targeted healthcare professionals to the results of the ANCHOR trial and related reporting data as allowed by the August 2015 First Amendment court ruling that Joe discussed. As we detailed in our last quarterly call, there's a wealth of meaningful data that we can now share with physicians. In rolling this information out, we've been mindful and strategic in our thinking about how best to introduce this information for impact and sustained retention while also ensuring that the data we promote is practical, truthful, and non-misleading.

The Amarin and Kowa sales forces began by first educating select healthcare professionals on the result of the phase three ANCHOR trial in which Vascepa compared with placebo improved triglyceride levels and various other lipid and lipoprotein biomarkers without increasing LDL cholesterol in statin treated patients with persistently high triglyceride levels. This education includes promotion of published data from the ANCHOR study together with the disclosures called for by the court declaration.

For most physicians this practical information is completely new and preliminary feedback from these physicians suggest that many are appreciative of this new data as the data speaks to a large percentage of their patients. They comment that the information is constructive and relevant and should help them make better informed decisions regarding patient care. Many physicians are providing our representatives with additional time for more complete discussions.

As we roll out this new information, Amarin's sales force remains focused on the approximately 20,000 highest prescribers of prescription omega-3 products, representing almost 60 % of omega-3 prescriptions. Gaining mindshare of this critical prescriber base continues to be a key driver of future growth. We're still early in the launch of this data and look bullishly to 2016 for more meaningful effects of continued promotion.

As we look to see how this early interest and engagement has impacted prescription trends, we look closely at those physicians that have been presented ANCHOR data through Q4. In this group, productivity per writer increase while Vascepa new prescription share of the prescription omega-3 market exceeded 25 %. Nationally we saw a 35 % increase in the number of Vascepa prescribers in Q4 of this year compared to 2014. While our percentage penetration of the overall market for non-statin lipid lowering therapies which includes millions of patients on widely used products such as fenofibrics is obviously much lower than that of the prescription omega-3 sector which is growing with considerable remaining upside opportunity.

As part of our promotion of the ANCHOR results, we're able to educate physicians that fenofibric are no longer FDA approved for use on top of statin therapy. As you know, fenofibrics, like DHA-containing omega-3 products increase LDL cholesterol whereas Vascepa has been demonstrated to not increase LDL. With substantial data supporting that lower is better regarding LDL, we look forward to more physicians becoming familiar with the effect of these competitive therapies on bad cholesterol in the context of appropriate balanced disclosures.

In conjunction with the communication efforts involving ANCHOR, in mid-Q4 we began to educate select physicians on additional relevant supporting data. Physicians have consistently been most interested in seeing outcome data related to the impact of lipid agents on cardiovascular events to assist them in making more informed treatment decisions. To address this need and in the context of disclaimers that take into account FDA's view in an express and regulatory dialogue, the Amarin sales force began educating select physicians on the results of the JELIS study.

The JELIS trial was a probe designed cardiovascular outcomes trial and was conducted in Japanese adults only. This study randomized over 18,000 patients to one of two arms -- statin monotherapy or statin plus 1.8 grams of prescription EPA daily. While the product used was not Vascepa, it was a prescription EPA only product and confirmed by the FDA during our regulatory dialogue with them to be highly similar to Vascepa. The overall study achieved its primary endpoint, statin plus prescription EPA therapy demonstrated a significant relative risk reduction of 19 % in major coronary events compared to statin monotherapy.

Interestingly, the Japanese consume more than five times the amount of fish that have base blood omega-3 levels significantly higher than Americans. Yet the addition of 1.8 grams of prescription EPA only omega-3 with statin still further reduced cardiovascular risk versus statin alone in the JELIS study. Analysis of these data support our belief that EPA levels in the blood in a western population should ideally reach levels of those in the JELIS study after EPA administration. That would require daily prescription dosing of 4 grams of Vascepa which was the dose studied in our MARINE and ANCHOR trials and the dose being studied in REDUCE-IT.

Further, in a sub-analysis of patients in JELIS, similar to the ANCHOR patient population, those with high triglycerides and low HDL, the statin plus prescription EPA in JELIS demonstrated a 53 % relative risk reduction in major coronary events versus statin monotherapy. This patient profile is very similar to the patients our target physicians treat every day with triglyceride lowering add-on therapies.

In discussing the JELIS trial results, we emphasize that the study was conducted in Japan and provide other balanced disclosures that communicate that more study, specifically the REDUCE-IT study is needed to determine the true benefit of EPA if any in a high risk patient population in the US, including qualifying reasons for why outcome results could vary in the US. We also informed them that no outcome study has been performed in a western population of high dose prescription omega-3s or of the effect of treating patients with high triglycerides. As part of the discussion we note of course that Amarin is conducting such a study in REDUCE-IT.

While promotion of the ANCHOR and JELIS trial results is expected to continue to favorably impact prescription growth, it's far too early to know the full impact of these additional data sets. We anticipate that some physicians, despite learning the positive ANCHOR results will be hesitant to prescribe Vascepa due to perceived and with some payers real reimbursement issues associated with off-label drug use. Amarin is authorized to promote such use and physicians are able to prescribe it.

With that in mind, managed care coverage for Vascepa through Q4 was very strong with 140 million lives covered in tier two and continued enhancements as we head into 2016. In addition, over 95 % of all Medicare Part D UIs have unrestricted access to Vascepa. Pharmacy approvals for Vascepa confirmed this access with 78 % approvals across commercial and Medicare Part D payers in December 2015. This increased coverage is further augmented by our $ 9 copay card program to assist patients in minimizing out-of-pocket costs for Vascepa, thus further ensuring that patients get the benefit of Vascepa therapy once prescribed.

As we prepare for further growth and get ready for REDUCE-IT success, we recently hired a new Head of Managed Care. Under his experienced leadership we envision the ability to continue to expand managed care coverage for Vascepa while also considering the most appropriate pricing and reimbursement strategy for Vascepa upon REDUCE-IT's success. In the unexpected case that we're positively surprised by early stoppage for overwhelming success, we can move quickly to capitalize on the REDUCE-IT results.

Overall we're very confident in our ability to continue to drive Vascepa prescriptions. This is a market with significant unmet need as there remain millions of statin treated patients with consistently high triglycerides and these patients need additional therapy. Our sales team is very enthusiastic. They correctly believe that what they're doing will lead to improved patient care and it's refreshing for many of them to be able to present a drug on its scientific merits.

The science is on our side. The more physicians gain a better understanding that pure EPA Vascepa is biologically unique and the deeper the appreciate the outstanding patients risk-benefit ratio, the more inclined they'll be to prescribe it. Of course the favorable safety profile of Vascepa is part of that science.

I'll now turn the call over to Steve Ketchum, our President of R&D and Chief Scientific Officer, to provide an R&D update. Steve?

Thank you, Aaron.

As you can tell from the discussion thus far, the continued timely progression of REDUCE-IT is a key priority for Amarin in 2016. So, we're pleased to once again be able to report that REDUCE-IT remains on schedule to our anticipated onset of the predetermined target, 1,612 at primary end point event in 2017 and publication of results in 2018. It has been more than six years since REDUCE-IT planning commenced and more than four years since we began enrolling patients in this important study.

Throughout the conduct of this large study, we and our advisors have continued to challenge our trial assumptions. We are reassured that our core assumptions continue to hold up with event rates tracking in line with earlier predictions. This suggests to us that not only is REDUCE-IT well run and well designed, but more importantly that we are targeting the right high risk patient population, patients who continue to have a residual risk for cardiovascular disease in excess of 60 % despite statin therapy and for whom add-on therapy remains a critical need.

As you will recall, the REDUCE-IT study is designed with a composite nascent where major adverse cardiovascular event end point comprised of cardiovascular death, non-fatal myocardial infarction, non-fatal stroke, coronary revascularization, or hospitalization for unstable angina caused by myocardial ischemia. The study is 90 % powered to detect 15 % relative risk reduction, assuming a placebo event rate of 5.2 % per year. This doesn't mean that the study won't show a greater than 15 % decrease in relative risk reduction or that the trial couldn't detect relative risk reduction of less than 15 %.

But it does mean that REDUCE-IT is well powered to detect the level of relative risk reduction which clinicians view to be clinically meaningful. If the REDUCE-IT study is successfully as we believe it will be, Vascepa will be the first and only non-statin therapy to have demonstrated a clinically meaningful cardiovascular risk reduction. Doing so in a broad based real world patient population as is being evaluated in REDUCE-IT could result in a truly landmark change in medical care for tens of millions of patients in the US and internationally. As additional data and research findings become available, we find ourselves not only more confident in achieving a successful result on our primary composite endpoint, but also on multiple secondary endpoints and in subgroup populations.

Recent research findings continue to support the potential benefits of EPA, the active pharmaceutical ingredient in Vascepa. For example, at the American Heart Association scientific session on Orlando, Florida on November 8, 2015, new early data from the CHERRY study conducted in Japan was presented by Dr. Kaoru Ando. He and his investigator colleagues concluded from their study that compared to statin therapy alone, additional administration of EPA significantly reduced coronary plaque volume and suggested from their study results that EPA therapy may reduce the residual risk that remains in secondary prevention patients being treated with statin therapy. We look forward to publication of complete results from the CHERRY study to more fully assess the strengths and limitations of the study and the resulting data.

Building on the results of prior retrospective case studies, data from two additional retrospective switch studies were presented in November 2015 at the combined annual meeting of the Obesity Society and the American Society for Metabolic and Bariatric Surgery and at the World Congress on Insulin Resistance, Diabetes, and Cardiovascular Disease. These studies investigated the real world effects of switching from either fenofibric therapy or from EPA plus DHA therapy to EPA only omega-3 therapy on multiple lipid parameters. The results from those presentations demonstrated a reduction in both triglyceride levels and in low density lipoprotein cholesterol or LDLC levels in most of these high risk statin treated patients.

These two presentations add to the growing literature on the effects of EPA treatment on high risk patients with dyslipidemia and continue to underscore our confidence in the potential benefits of Vascepa in general and in the outcomes of our REDUCE-IT study specifically. In addition to the extensive data that I just highlighted, our scientific rationale for the REDUCE-IT study is also supported by mechanistic research on the effects of EPA, the active ingredient in Vascepa, that have not been demonstrated with other TG lowering agents or with the omega-3 fatty acid DHA.

For the benefit of those who are closely tracking our progress towards the preplanned interim efficacy and safety analysis in the REDUCE-IT study, I would like to take just a moment to provide an overview of how events are tracked and update you on our progress. Throughout the course of the study, all potential cardiovascular events are monitored, recorded, and ultimately verified or as we refer to it, adjudicated by a blinded review committee through a multiple step process to determine whether such potential events meet the study's pre-specified criteria and are formally considered primary events for the purpose of interim and final analysis.

What this means is that over any given period we may have 100 or so potential primary events that are working their way through the funnel of being formally adjudicated and confirmed by the blinded clinical event committee of CEC. As you would expect, this process of verifying events is time consuming with adjudication of events often taking multiple months and only a portion of potential events confirmed as primary events. Of course, this far into the study we have a fairly good sense for approximately what percentage of potential events eventually get confirmed and believe we can estimate fairly accurately how many events have accrued.

Based on historical data our current estimate suggests we will have accrued approximately 60 % or approximately 967 of the target aggregate number of primary cardiovascular events in the first half of 2016. However, we will not have confirmation by way of official adjudication of this event until well after the event has occurred. After that target event has been achieved and adjudicated, additional time is required by the contract research organization to finish collecting and preparing data for transfer to and analysis by the independent data monitoring committee or DMC.

As is typical for large scale multinational studies, this process is expected to take several months but should allow for the pre-specified interim efficacy and safety look by the DMC to occur later this year. By doing all the preparatory work in support of the DMC's interim look that is expected later in 2016, we are making the wrap up of the study and completion more efficient as approximately 60 % of the key efficacy endpoint data and available safety data will have been validated and entered into the study database.

Also as it typical for outcome studies and based on the design of REDUCE-IT, given the high thresholds of overwhelming efficacy and safety and the robustness and consistency typically required to be achieved across key secondary endpoints and patient subgroups prior to and independent DMC recommending an early stop to a cardiovascular outcomes trial, we continue to believe that it is most likely that the REDUCE-IT study will run to its completion.

We want the results of the study to be clearly overwhelming before it its stopped. This is the first outcome study ever conducted in this population and we don't want to achieve the primary endpoint, stop the study early, and later learn that some key secondary endpoint that was trending positively but didn't reach the high statistical standard for success that is associated with an interim look but that might have proven successful had the trial continued an extra year or so to completion.

In the REDUCE-IT study, the independent DMC has met in closed session to look at and discuss unblinded safety data on an approximately quarterly basis since study initiation in 2011 and we have now accumulated approximately 20,000 patient years of experience on REDUCE-IT. After each such safety review meeting to date, the DMC has recommended that the study be continued as planned. Amarin will remain blinded to the interim and ongoing results throughout the REDUCE-IT study. When later this year the independent DMC performs the pre-specified interim analysis of efficacy and safety data, we anticipate a similar recommendation from the DMC to continue the study as planned.

As enrollment of patients in REDUCE-IT is nearly complete, we have provided formal advanced notification of the impending closure of further patient screening to all of the more than 400 clinical study sites across the 11 countries participating in REDUCE-IT. We are working to wind down enrollment on a country by country basis.

I will now turn the call over to Mike Farrell, our Vice President of Finance, to comment on the Amarin fourth quarter 2015 financial results. Mike?

Thank you, Steve. (inaudible) Amarin's recent financial results, you will find a more detailed discussion of these results in our 10-K and press release issued earlier today. In Q4 2015 we recognized $ 26.4 million in net product revenues, representing an increase of 60 % as compared to net product revenues of $ 15.5 million in Q4 2014. As previously described, the timing of shipments to wholesalers may vary from period to period. Wholesaler inventory levels remained flat during Q4 of 2015 as compared to a previously described slight increase in wholesaler inventory levels during Q4 2014.

On a year to date basis through December 31, 2015, we recognized $ 81 million in net product revenues as compared to $ 54.2 million in 2014, an increase of 49 %. While levels of inventory held by our wholesale customers as of December 31, 2015 was slightly lowered as compared to inventories held as of December 31, 2014 based on days of sales on hand.

In addition to Vascepa product revenue, we recognized licensing revenue of approximately $ 800,000 in the year ended December 31, 2015, related to the Eddingpharm development and commercialization agreement executed in February 2015. The development process in China through Eddingpharm continues to progress consistent with our expectations. Based on data currently available we estimate that we will recognize net product revenues of $ 105 million to $ 120 million in 2016. This estimate is based on available historical data and trends and any significant changes in such trends could result in net product revenues that are lower or higher than our estimates and may be variable from quarter to quarter.

Our revenue guidance range for 2016 is somewhat broad as we have less than five months of experience in 2015 promoting Vascepa after the August court declaration allowed us to commence promotion of results of the ANCHOR study and it is difficult with such limited experience to predict the degree of impact it will have on future Vascepa prescription levels and resulting revenues. Also, recall that in each of the past two years prescription levels for Vascepa and competitive drugs have experienced seasonal volatility particularly in the first quarter. We are not at this time quantifying guidance on Q1 revenues.

Our average net price for capital sold in Q4 2015 was slightly higher than the average net price in Q3 2015, primarily as a result of lower than anticipated net rebates incurred and the effect of a 6 % price increase implemented in mid-2015. Net product pricing in 2016 is expected to approximate the net selling price experienced in the second half of 2015. Fast collections from the sale of Vascepa in the year ended December 31, 2015 were approximately $ 114.7 million and all of our customers remain current in their payments.

Gross margin on product sales during the quarter ended December 31, 2015 was 68 % as compared to 65 % in Q4 2014. Gross margin on net product sales for the year ended December 31, 2015 was 66 % as compared to 62 % for the same period in 2014. While our gross margin may fluctuate from quarter to quarter overall we continue to expect our gross margin percentage to improve in 2016 and beyond. This anticipated improvement in gross margin reflects our ability to increasingly source lower cost API and increase purchase volumes.

In Q3 2015 we received initial batches of API from our newest supplier and based on competitive pricing from that supplier as well as our other suppliers, in Q4 we generated our highest gross margin to date in any quarterly period since we introduced Vascepa.

From a cash flow perspective during the year ended December 31, 2015, we paid approximately $ 20 million more for supplier related purchases compared to the prior year. As a reminder, we began 2014 with an excess of 12 months of inventory on hand such that a portion was identified as long-term inventory on our balance sheet creating a need for minimal supply refresh in 2014. Similar to the end of 2014, we believe that our inventory levels at the end of 2015 are right sized to support our anticipated 2016 product revenues.

Our SG&A expense in Q4 2015 was $ 23.5 million as compared to $ 18.4 million in Q4 2014 and was $ 101 million in the year ended December 31, 2015 as compared to $ 79.3 million in 2014. The increase in SG&A expenses was primarily driven by an increase in co promotion expense related to our partnership with Kowa. Higher sales and marketing costs primarily associated with the August First Amendment litigation decision permitting the company to promote to healthcare professionals truthful and non-misleading information in regards to our ANCHOR clinical trial results, an increase in non-cash stock-based compensation expense, and higher legal expenses primarily associated with our new chemical entities and First Amendment litigation. Excluding non-cash costs and excluding co promotion costs, our SG&A expenses were $ 82.5 million in 2015 and $ 71.9 million in 2014 with the increase primarily reflecting our expanded promotion of Vascepa.

In 2016, excluding non-cash items and co promotion fees payable to Kowa associated with increased levels of sales, we anticipate total SG&A expenses to be held relatively flat with 2015 expense levels. Our R&D expenses in Q4 2015 were $ 13.3 million as compared to $ 12.4 million in Q4 2014 and were $ 51.1 million in the year ended December 31, 2015 as compared to $ 50.3 million for the same period in 2014. These expenses were largely consistent year over year but historically have varied from quarter to quarter. The variance in R&D expenses in each period is primarily due to the timing of costs incurred in support of progressing the REDUCE-IT trial, including purchases of clinical trial materials. In 2016 we intend to manage our R&D expense, excluding non-cash amounts, to a level which is relatively consistent with 2015.

Under US GAAP, we reported a net loss of $ 21.9 million in the fourth quarter of 2015. Our basic and diluted loss per share in the fourth quarter of 2015 was $ 0.12. This net loss included $ 3.7 million of non-cash share-based compensation expense, a $ 700,000 non-cash loss in the change in fair value derivatives and a $ 1.3 million non-cash gain on extinguishment of debt. For the year ended December 31, 2015, we reported a net loss of $ 149.1 million, and a basic and dilutive loss per share of $ 0.83. This net loss included $ 13.9 million in non-cash share-based compensation expense, $ 1.1 million non-cash loss on a change in fair value derivatives, a $ 1.3 million non-cash gain on extinguishment of debt, and $ 33.9 million in charges for non-cash gain dividend for accounting purposes.

We reported cash and cash equivalents of $ 107 million at December 31, 2015, representing a net decrease of $ 12.5 million from reported cash and cash equivalents of $ 119.5 million as of December 31, 2014. The net change in cash reflected a $ 15 million up front payment received in March upon execution of our initial ex-US licensing agreements for Vascepa as well as net proceeds from convertible preferred stock issuances of $ 57.7 million offset by cash use and operating activities.

The cash balance also reflects net proceeds of $ 27.5 million from the issue of exchangeable senior notes in November 2015, partially offset by the concurrent repayment of $ 16.2 million in existing exchangeable senior notes and related transaction fees resulting in net proceeds of $ 11 million. The notes that were repaid could have become due in January 2017 and were repaid at a discount to the original purchase price. The earliest that the new notes can be put to the company is in January 2019 after expected completion and publication of REDUCE-IT results.

Net cash outflows from operations for the year ended December 31, 2015 were $ 84.8 million as compared to $ 72.3 million in 2014. The $ 12.5 million increase in net cash outflow was primarily related to the previously described approximately $ 20 million in added supply purchased in 2015 as compared to 2014. The cash outflows for 2015 and 2014 include approximately $ 41.5 million and $ 33.4 million respectively for R&D expenditures associated with clinical programs, including REDUCE-IT and other R&D costs that do not support our existing commercial business.

It is anticipated that the company will enter 2017 cash flow positive from commercial operations, excluding the R&D costs previously discussed that do not support our current commercial operations. As a result of the timing of certain items, including interest payments, supply purchases, legal costs, and REDUCE-IT expenses, we expect continued quarterly variability in cash outflows from operations.

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

Thank you, Mike. As I hope is clear by our discussion this morning, all of us remain focused on the success of Vascepa and in turn Amarin. We have been aggressive and opportunistic in seeking the means by which to grow the company and advance the science of lipid management and cardiovascular health. This diligence was the cornerstone of our success in 2015 and will continue to guide us in 2016.

We believe there is a significant opportunity in our existing indication that the full effect of our expanded marketing has yet to be realized and that would be an ever increasing body of scientific literature supporting the benefits of pure EPA. The commercial opportunity for Vascepa in 2016 looks promising. We believe that the relentless pursuit of these opportunities will be critical drivers of our commercial business and contribute to our goal of entering 2017 cash flow positive from commercial operations excluding REDUCE-IT expenses.

While this is not a small exclusion, the return on our investment in REDUCE-IT clearly has the potential to be transformative. This study is progressing well and we are excited by the prospect of becoming the first and only non-statin therapy to have demonstrated clinically meaningful cardiovascular risk reduction.

While our guidance continues to be the data from REDUCE-IT will not be available until 2018, we are taking several steps now to ensure that we not only continue to be successful in our pre-REDUCE-IT efforts but that we're also prepared to hit the ground running once the study concludes.

To that end, we have made several key hires in the last several months and have another in the works. Most notably among these is the addition of Dr. Craig Granowitz as our new Chief Medical Officer. As is evidenced by his successful tenure at Merck, Craig brings extensive experience managing a multinational medical affairs organization for a portfolio of leading products.

Prior to joining Amarin, Craig was Senior Vice President and Head of Global Medical Affairs, Global Human Health at Merck. Not only will Craig's extensive experience supporting and building a successful cardiovascular franchise be a tremendous asset to Amarin, it will also free Steve up to focus on the significant clinical and regulatory work that lays ahead for REDUCE-IT.

We've also recently hired a new Head of Managed Care who we believe can help identify new opportunities and provide critical support for our growing commercial business. In addition, as most of you already know, we recently brought Kate in full time to lead an expanded Investor Relations effort for the company.

Separately, we recently initiated a search for a Chief Financial Officer. While it is expected that this individual will fill many needs for the company, one of these will be filling the shoes of our current Vice President of Finance, Mike Farrell, who will be moving on to a new position outside the pharmaceutical industry. Mike has recently identified a unique opportunity that will allow him to apply his talents well beyond the world of public company corporate finance. While Mike isn't leaving immediately, we wish him the best in this new endeavor and thank him for his years of dedicated service to Amarin.

All of our discussion on the call thus far seems to have focused on the tremendous US opportunity for Vascepa. As a reminder, in 2015 we started on a path to sell Vascepa in Greater China for a strategic collaboration with a leading local pharmaceutical company. Our partner, Eddingpharm, is working through the regulatory process in China while we assess partnering opportunities in other world markets and whether it is best to commence relationships there promptly or wait for potentially stronger economic terms after REDUCE-IT results.

Now, before we open the call to questions, I would like to thank our investors for your support. We recognize biopharma has gotten off to a difficult start this year on Wall Street and Amarin has not been immune to this pressure. In the face of this market weakness we continue to be active in our outreach to current and potential investors to highlight the opportunities we see ahead in 2016 and beyond. As the turbulence in the market persists we believe that Amarin is an attractive opportunity for investors seeking the value of a healthy and growing commercial business combined with a significant upside potential typically associated with development stage companies.

At this time we'd like to take questions from analysts and investors. Operator?

(Operator Instructions)

While we wait for our first question to be queued up from the Operator, let's take a question that was submitted via email. Our first question relates to the First Amendment settlement discussion and is as follows.

Why is it taking so long to settle the First Amendment free speech case? Please discuss any relationships or issues pertaining to reduced interim results and other cases or updates on other problems in dealing with the FDA.

We did cover some of that in our opening remarks. Let me turn it over to Joe Kennedy for a little bit of further comment.

Thanks, John. As we mentioned in our prepared remarks, we get into any detail on the scope and the content of our settlement discussions with respect to the First Amendment other than to reiterate that our goal is to make the preliminary order final. I can confirm however that the settlement discussions are about the issues that we raised in the First Amendment lawsuit itself and not about other regulatory matters. For example, it's not about a way to look at interim data on REDUCE-IT. We are committed to REDUCE-IT separately because we think it's the right drug in the right patient population in the right study.

The First Amendment settlement is not about a label change. We'll need REDUCE-IT for that. It's in our past dialogue with FDA. And First Amendment is not about NCE which has diminished in importance over time particularly in light of our patents and also because we essentially enjoy a lot of the benefits from NCE in light of some progress separately made with the FDA and through the court system such as the recent dismissal of our ANL litigation. But I'll remind you and make sure that you've got the message there that we are continually able to promote under the First Amendment during and through the settlement investigation. Thanks.

Operator, do we have any questions that have queued up?

(Operator Instructions) John Boris, SunTrust Robinson Humphrey.

Thanks for taking the questions and congratulations on the results. First question for you, John, and Aaron. If you look at new patient starts and switches that occurred through 2015 could you maybe just help quantify the number of new patient starts and how many of those were switches from fenofibrics? A couple P&L related questions. On the gross margin, you indicated it would be up but if we look sequentially at the pattern, it's certainly improved. You have a new supplier coming in with more favorable economics. Could you help maybe guide us towards where you think gross margins may come out? Also on tax, what are the occurring NOLs that you have? And then I have just one more question for Joe Kennedy.

Thanks, John. For the questions. Let me start in the middle on the gross margin one and then we'll move on from there. You're right. Our gross margin has been improving and subsequent quarters this year we started to -- we started low remember, in the 40s. Last year we started around 60. In 2014 we started around 60, we moved to about 64 at the beginning of 2015, we ended the last quarter around 68. We believe we will get into the 70s depending on revenues. Hopefully it's in the mid-70s during 2016. A lot of that depends upon revenues. It depends upon exchange rates as well but the dominant factor relative to the improvement in gross margins is the competition amongst our suppliers and adding on additional supplier, all of our -- the cost from all of our suppliers has been decreasing.

With respect to NOLs, our NOLs are about $ 565 million at the end of December 2015, so clearly a significant number there which we look forward to becoming profitable and be able to utilize.

With regards to your first question, I'm going to go over to Aaron in a moment for some comments but throughout 2015, we saw strong NRx growth and we're continuing to see strong NRx growth. We believe that a lot of this is new patient starts. The data isn't always clear because patients who may have not had therapy for awhile, then dropped off of therapy can sometimes show up as a new patient start. We're also aware of a variety of doctors who are switching doctors from existing therapy to Vascepa. Record keeping in this area isn't exact relative to the data we see. Some of it's anecdotal. Some of it's database. But most important to us is that we're seeing the NRx. Aaron, I don't know if you have anything to add to that?

Overall around 15 % from the switches, they're switches in chronic asymptomatic disease is a little slower. So, we're getting a lot of new patient starts. And in the new patient starts we're getting a lot of add-ons. So the data is a little convoluted in this area but we get a lot of add-ons to statins and even add-ons to other lipid agents. So, I think John characterized it pretty well and we're all there.

Just a follow up for Joe Kennedy related to the March 18 deadline. So, you've been down this path with Judge Engelmayer four times and when I read his last study that he published and put out there on Pacer, he clearly indicated this is going to be the last time. You kind of soft-pedaled around saying that your promotion of JELIS was a select promotion on JELIS. It seems like you're soft-pedaling on that promotion. It seems like it potentially could be a point of contention with the FDA since it's a study conducted in Japanese patients. Can you maybe give some clarity as to whether that's the point of contention that you're trying to work through with the FDA? And what would you anticipate procedurally would happen should you not resolve this with the FDA? What would happen with Judge Engelmayer?

On JELIS promotion, I'll refer back to the opinion itself. The opinion itself was based upon the press on Caronia and what Judge Engelmayer observed in his opinioned reasoning is that Caronia permitted off label promotion of any FDA approved drug for any use. There was no restrictions in Caronia. That was the reasoning he used in order to get to what was a broad ruling in the final order of that case. When we look at that and we look at the ruling itself and the focus of our litigation which was focused on promoting to ANCHOR patients, we do use JELIS in promotion now to act as part of the supportive but not conclusive data that shows the connection of Vascepa to cardiovascular risk reduction.

We're not, for example, promoting JELIS in the United States with respect to Japanese patients or people who have a Japanese type diet and are on Japanese level meds. So, that's the context in which we've used JELIS. Again, I'm not going to get into the back and forth pieces of the negotiation but I hope that addresses any ambiguity that was left in the air with respect to our promotion in JELIS. We are promoting JELIS in a truthful, non-misleading way. And with respect to the process as to whether we continue, I think the question, if I recall correctly, and you'll correct me if I didn't, is what happens with regards to process if we do continue the litigation.

It's really up to the parties. We could remove to -- not take additional discovery and agree with the government on that and just move forward in litigation based upon what you typically see in the summary judgment. We all agree, with respect to law, is it within our rights under the First Amendment to continue the truthful and non-misleading promotion of Vascepa, the same question that was addressed in the preliminary order. The preliminary order was a result of expedited proceedings which is essentially a system within the court where you get down to the nitty-gritty in short order.

The underlying case is a system where you could end up in discovery, the FDA could take discovery with respect to matters at hand relative to the suit. We could take discovery of the FDA with respect to matters at hand relative to the suit. So, when shortly after the preliminary order was issued, the parties got together and thought the rational thing to do here is to move to discuss settlement terms. I think we have to take a step back and recognize that this is a pretty important case for the FDA and they want to do things right and obviously it's an important case for Amarin. We want to do things right. And without getting into detail, that has taken time.

If I may just add on, because I know John you're interested in the data. In our comments we talked a lot about how we've taken a very thoughtful approach ensuring that the data we're presenting is truthful and non-misleading. We do believe that the JELIS data is supportive to the ANCHOR results. It's that population. But just for context, at the end of the year, end of 2015, our sales force had our top targets -- 25 % of them -- some of them two times -- but we were relatively early in the communication of that information to our target.

I wanted to make sure that they understood the ANCHOR information first before we're adding the JELIS information on to that. Our co promotion partner Kowa, as you recall, they have a broader reach, lower frequency than we have. So, time was required to get some of the ANCHOR data out. Their sales team was fairly trained here in late January relative to the JELIS data. So, they're just beginning to launch that data in compliment to the ANCHOR data here recently. So, fairly early in the education of healthcare professionals with regards to that data.

That's great color. Just one last question and I'll hop back in the queue. On intent to prescribed in your primary market research that you've done with high prescribing physicians, when you lay out the product concept of 19 % relative risk reduction and up to 52 % relative risk reduction in the population, what is coming out with regards to intent to prescribe from those physicians? Is it high, medium, low? Just some --

Very high.

Very high?

Yes.

Okay. Thank you.

Anything in double digits is very attractive to the clinicians that we've had research from. John Thero^

(Operator Instructions)

Let's turn back to some email questions for a moment while we see if there are any more questions but I know we're running tight on time here. We received a few questions via our Investor Relations webpage related to the 957 event in our REDUCE-IT study, specifically has this event already been achieved? And will the company announced when the event has been achieved?

I know that comment came in. I gave four comments here in the script. We anticipate the onset of the 957 event does occur somewhere here in the first half of 2016. As Steve described, there can be a significant time separation between the time which the event occurs and the time at which it's formally adjudicated. As we have done on this call, we intend to provide regular updates on our REDUCE-IT progress. However, there is variability in the adjudication process timing and the time that it takes to validate all the independent data for the independent data monitoring committee to evaluate it. And due to this variability what we're comfortable saying at this time is that the event will occur in 2016 but the time variable is a little bit too broad at this point for us to be more precise in that regard.

For those of you who were following Amarin back at the time we were conducting our phase three MARINE and ANCHOR studies, you'll remember there were questions being asked about the timing of the data announcement there and you'll recall once we had the data, we got it out quickly and we described it robustly. We certainly know that the REDUCE-IT data is important to you. It's important to us and we intend to get this data out and communicate it as quickly as possible but relative to specific timing, there's still a lot of variables at play and once we have a clear picture we'll try to communicate that to you as well.

Okay. We're going to try to get to two more of these before we wrap up. Next up we've got a question related to our Eddingpharm agreement, specifically asking for an update on the requirements and procedure for bringing a product to market China, where we are in this progress, and should we expect a milestone payment in 2016 or 2017?

Predicting timing in China can be a bit tricky. Our partner with a lot of experience there is consulting with China FDA regarding the degree to which clinical trials are required in China. The timeline in those requirements can vary. When we have clarity from China FDA we'll let you know what's required and have a clearer visibility into the timeline to talk about at that point.

While there's some milestones that may be achieved in 2016 and 2017 under the agreements, prior to clarity on what the regulatory payoff is in China, it's hard to provide more specifics on that. The milestones that are before the conclusion of the regulatory path are more modest in dollar amounts certainly than what we had when we initiated the contract. As you may be aware, China is working to shorten its backlog of responses, response time at this time is very tricky to estimate. I would say parallel to the Eddingpharm deal we are active in talking with potential partners in a variety of different geographies.

As I had commented a bit earlier, there are pros and cons as to whether you do something before REDUCE-IT results or after REDUCE-IT results. I'll take Europe for example. In Europe when Omacor, which is the name of Lovaza over there, was launched it was launched by different companies in different countries and therefore it had a different label, different reimbursement, different dosing, and some of the folks we're talking with would argue, let's piggyback what's already done there and let's get it to market quicker based on the labels that already exist despite the lower reimbursement.

Others would argue there's much better economics for waiting and going pan-European, potentially higher reimbursement rates with outcome study results. We are evaluating both approaches and intend to do what we think is in the best interest of overall shareholder value. Some other geographies aren't as complicated as Europe in terms of that history of existing products in the marketplace but we are actively pursuing it and there is interest. It's a matter of finding the right terms for the product and we believe this product has a huge opportunity and we don't want to just do a deal just to get a deal done. We want to do the right deal.

Okay. Finally we had two questions seeking comment around our NCE status and associated ANL litigation. So, perhaps, Joe, you could give everybody a brief update on this?

Sure. On the exclusivity what we need to keep in mind of course is our patents and not regulatory exclusivity that we see as the most important mean to maintain then exclusivity of Vascepa. Those patents expire in 2030 and we feel very good about uploading them. Some may recall we reached a point in our recently dismissed ANL litigation awhile back where generic filers had to turn over their alleged prior auths.

And then we announced around then that there were no issues in that which had not come up in the review by the patent office in the patent prosecution. And for those that recall going through that with us, those prosecutions went up to the highest level to the now defunct special application warning system program that was reserved for I think 0.4 % of patent applications because there was high profile public interest in that. And we were reviewed by 9 multiple examiners, quality assurance specialists there. And we only need one claim for one patent to get to 2030. So, that's where we look to our prior exclusivity.

We are still waiting for FDA to make a NCE determination consistent with our May 2015 win in court but the significance of that determination has diminished because it relates to progress we made with FDA and the courts have already provided us with a lot of key benefits from NCE even with the absence of a NCE determination from FDA. Specifically after our court win in May and some regulatory dialogue with FDA, FDA took the unprecedented action of un-accepting the ANLs that were submitted and accepted back in 2014. That's due to the then lack of exclusivity determination after the NCE denial was set aside by the courts.

The FDA then stopped reviewing those ANLs. And then after that the generics agreed to stay the ANL litigation and FDA rescinding their exclusivity determination and un-accepting the ANLs. That provided us with the legal basis to go back into court and ultimately win dismissal of the ANL litigation. So, that dismissal happened last month. There is one notice of appeal among the filers that was filed before the deadline there. And the net result right now is there is no pending ANL litigation, it's all been dismissed. And though there were some challenges by generics along the way, and there continue to be, there will continue to be, such as they can intervene in the NCE matter, we did defeat that effort alongside FDA arguing with us in two separate courts.

The big picture is that now with the ANL litigation dismissed and no more ANL reviews, generics will need to resubmit those ANLs after this July which is four years after our MARINE proof back in 2012. Essentially they need to start over again. And we see those resubmissions triggering a new 30 month stay that would expire in January 2020, all consistent with the NCE determination and that is whether we have an actual determination from FDA or not. So, we're now enjoying the benefits of NCE without a NCE determination which when that is made could itself be challenged by the generics and we're prepared for that as well.

So, it's proven to be all complex new ground because no one's ever set aside a NCE denial in court before. So, as we work through this we're being diligent. We are of course disappointed that FDA didn't make the call for NCE in the very beginning and the delays that resulted after that and the delays we're experiencing now after the May court order. But since then we have been successful in overcoming obstacles as they're presented and we'll continue to be diligent. We started to outline these developments in our 34 filings as they've occurred over time and we will continue to do that. And there's some degree of what I just went over today in our 10-K as there has been in the past in our 10-Q.

Again, we don't see a NCE determination as important as it once was due to the progress described and more importantly it's really about those 2030 timings. Some inquiries I know in email with respect to timing from FDA whether -- when they will make a new exclusivity determination. We don't have clarity from FDA on that. We've assessed but we don't think it's productive to go back into court to try to compel FDA to act. Judiciaries as we saw in the First Amendment litigation has actually imposed things like injunctions or orders from a separate branch of government and we think that would be potentially expensive and time consuming because we enjoy the benefits now.

We don't see great benefit from openly pursuing that. The FDA could ultimately notify us of their determination by letter or notifying that in the orange book. But we can't even be sure what path they'll take there because their guidance in the past on this issue has been unreliable. But we'll let you know when it happens. In the interim, the ANL case was saved and then dismissed and the associated of ANL reviews at FDA have enabled us to basically to enjoy the benefits of NCE without an NCE determination.

With that said I know we're running a little bit long here and you guys have to get ready for the market open. So, I'll wrap this call up by saying thanks for joining us today. Your support is appreciated and we look forward to updating you on our continued progress. Good day.

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