Amarin Corporation PLC (AMRN) 2018 Q2 法說會逐字稿

Welcome to Amarin Corporation's conference call to discuss its second quarter 2018 financial and operating results. This conference is being recorded today, August 1, 2018. I would now like to turn the conference over to Elisabeth Schwartz, Senior Director of Investor Relations for Amarin.

Thank you all 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 prescriptions; Vascepa product and licensing revenues; costs and other commercial metrics; gross margin expenditures; and the adequacy of our financial resources; our current expectations regarding our cardiovascular outcome study; timing of reporting study results, regulatory review and likelihood of success; our plans and preparation of expanded proportions at Vascepa, and related market positioning and potential, including the potential for further development and collaboration with Mochida; our plans to purchase additional supply of Vascepa; our goals regarding the timing and scope of international expansion; our current expectations regarding the effect of our co-promotion agreement on our business.

These statements are based on information available to us today, August 1, 2018. 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 agreements that we may enter in to, amend or terminate.

For additional information concerning the factors that could cause actual results to differ materially, please see the Forward-Looking Statement section in today's press release and the Risk Factors section of our quarterly report on Form 10-Q for the quarter ended June 30, 2018. These documents have been filed with the SEC, and are available to the Investor Relations section of our website at 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 its approved indication. Please note that we are also providing slides to accompany this morning's call. These slides, which can be found on our website, amarincorp.com, in the Investor Relations section under the subcategory Events and Presentations, summarize some of the key updates discussed on today's call. Finally, an archive of this call will be posted on the Amarin website, also in the Investor Relations section.

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

Good morning. Today is likely the last time that Amarin will share prepared remarks with you prior to our communicating to you the results of the REDUCE-IT cardiovascular outcome study. We very much look forward to learning the results of the REDUCE-IT study and sharing these results with you. For avoidance of doubt, I emphasize that Amarin remains blinded to the results of the REDUCE-IT study. In fact, the electronic data key that will enable us and our experts to identify patients as being in the Vascepa arm of the study, or the placebo arm of the study, remains locked up. Accordingly, nobody has yet seen the final REDUCE-IT results.

Some investors have theorized that someone must know the results. No, nobody yet knows the results. As a reminder, patients and clinical sites do not know whether each patient is administered placebo or Vascepa. The capsules are not marked and indistinguishable. And lab tests for the study are performed at a centralized facility and not reported back to the clinical sites. Such lab also doesn't know which patients are on Vascepa, and which patients are on placebo. The sorting of capsules between patients is done by a computer algorithm, blindly to the patients and clinical sites, and blindly to Amarin and the CRO that is helping us manage the study.

I recognize that there is speculation that at this late stage someone must know the trial results. Those involved with running the study and our statisticians assure me that until the data is sorted between patients on the placebo arm of the study and patients on Vascepa arm of the study, it is not possible to know the results of the study. The blind for the study will not be broken until the database is locked.

The need for improved preventative cardiovascular care is large and growing. In the United States, a person dies every 38 seconds from cardiovascular disease. And the rate of cardiovascular deaths, which is already higher than all cancers combined, is increasing. Cholesterol management is helpful, but not enough. We believe that Vascepa presents a potentially unique solution, both due to its broad spectrum of effect in lowering levels of potentially atherogenic particles -- as measured by triglycerides, apo B, non-HDL-C and other biomarkers -- and due to the positive impact of Vascepa and its unique active ingredient on other key factors contributing to the formation of atherosclerosis.

We will soon know the overall impact on lowering major adverse cardiovascular events based upon the potential cumulative, protective impact of these broad effects of Vascepa. Importantly, in contrast to earlier generation therapies such as fibrates and omega-3 mixtures, in our successfully completed Phase III clinical studies, we showed that these effects are achieved with Vascepa without raising LDL cholesterol or bad cholesterol. We are very excited to be in the final stage of completing the REDUCE-IT study, and we are preparing for success.

We appreciate that you have joined us for this call. As in the past, we will start with prepared remarks regarding Amarin's recent operational, commercial and financial performance and then open the line for some questions and respond to some questions that have been sent to us by investors in advance. In addition to now being an exciting busy time at Amarin, it's also a busy time for other omega-3 clinical trials.

After decades of no large outcome study being conducted of the earlier generation omega-3 mixture of ethyl esters, Lovaza, as an add-on to statin therapy, 2 outcome studies of low-dose Lovaza will soon be reporting results. I'm referring to the ASCEND and VITAL studies. These 2 studies, the first of Lovaza plus aspirin, and the other of Lovaza plus vitamin D, are anticipated to have results reported this year, with the ASCEND study scheduled to report results later this month, August. I mention these studies here because if the studies do not succeed, which is quite possible based upon the drug and dose they're using, some people may interpret this as negative with regard to the potential results of the REDUCE-IT study.

It would be good for society if the ASCEND and VITAL studies succeed. If they do succeed, it will further increase our optimism for the REDUCE-IT results from the perspective that if 1 gram per day of an omega-3 mixture provides benefit, then imagine what might be achieved with 4 grams per day of pure Vascepa. But if ASCEND and/or VITAL do not succeed, I urge investors not to be surprised or to read into this data any conclusion regarding the REDUCE-IT study. We expect the ASCEND and VITAL studies to not meet their prespecified primary endpoints. Failed results in those studies are consistent with Amarin's thesis of needing the right drug at the right dose, studied in the right patient population to succeed.

If these third-party-sponsored studies do not succeed, we will look at such failed results in those studies as further clearing the path for Vascepa to become a well-differentiated standard of care following REDUCE-IT results. Assuming the unique effects of Vascepa lead to REDUCE-IT's success, Vascepa will have positive outcome studies results, while earlier generation therapies, including Lovaza, fenofibrates and niacin, will all have had negative outcome studies. The same logics, which is supported by various scientific data, applies to interpretation of recent meta-analysis, which suggest that omega-3 mixtures such as Lovaza, are not effective in lowering the rate of cardiovascular events.

Again, some investors might interpret this meta-analysis as negative for Vascepa. In fact, some investors have told me that they interpret such analysis as lowering the likelihood of REDUCE-IT success. Inversely, Amarin sees this meta-analysis as opportunity for Vascepa. For years, we have stated that we believe that to be effective in treating cardiovascular risk beyond cholesterol management, you need the right drug, administered at a meaningful dose in an at-risk patient population, and studied rigorously over an adequate period of time.

Witnessing less pure omega-3 mixtures fail when administered at 1 to 2 grams per day, is not a surprise to us, and in our view, not new. Such meta-analysis has existed for years. This year, it has become considerably more visible via the media. A notable exception to the meta-analysis of omega-3 products is the study of EPA alone, as opposed to the study of omega-3 mixtures. I'm referring, of course, to the JELIS study, the large cardiovascular outcome study conducted in Japan, which is distinct from the other studies, both with respect to the composition of the product studied, EPA only in JELIS, and the relatively high-dose levels achieved in the study. EPA and DHA are different in effect. In EPA-only products, such as Vascepa and the drug studies in JELIS, are even more different than the omega-3 mixtures represented by Lovaza and other omega-3 mixtures included in the meta-analysis of past omega-3 outcome studies, which products include omega-6s and other ingredients not shown to provide added health benefit.

EPA is unique. The FDA recognized the uniqueness of EPA as the active ingredient in Vascepa, when in 2016 it designated our product to be a new chemical entity. Moreover, EPA is distinct in the scientific literature. EPA is a small molecule, the composition of which is shorter than DHA, and thus more capable of entering cell membranes, resulting in experimental studies showing improvement in cell function and lowering of inflammation with EPA. And of course, EPA is not associated with increased LDL or bad cholesterol levels, as is associated with DHA. And in Phase III studies, pure EPA Vascepa demonstrated improvement to biomarkers such as apo B, a measure of atherogenic particles; and hsCRP, a measure of inflammation, not shown in the studies of omega-3 mixtures, such as Lovaza.

Regarding Amarin's outcome study REDUCE-IT, we remain on track to report top line results by the end of September. Given the enormity of burden of heart disease in terms of death and costs, a successful result in REDUCE-IT will be good for society, good for patient care, and we believe, excellent for Amarin and its shareholders. As a reminder, we have positioned Vascepa to be an affordable and widely available therapy. Managed care reimbursement for Vascepa is already broad. For these reasons, along with Vascepa's good safety and tolerability profile, if REDUCE-IT results are positive, we anticipate the affordability and ease of use from Vascepa leading to faster prescription growth than experienced by other recently introduced cardiovascular therapies, such as PCSK9.

Amarin seeks to have Vascepa be the first proven therapy in addressing the substantial residual cardiovascular risk which exists beyond cholesterol management. Given the current safety and tolerability and affordable pricing of Vascepa, if REDUCE-IT is successful, as we anticipate, we will work to make Vascepa the standard of care, as the first treatment option beyond statin therapy for cost effectively lowering cardiovascular risk. For avoidance of doubt, my reference to PCSK9 is in regard to managed care coverage and the related potential adoption rate for drug therapies following successful outcomes results.

We do not believe that Vascepa will compete with cholesterol-lowering therapies. Rather, Vascepa seeks to address the residual cardiovascular risk in studied patients that is not addressed by cholesterol-lowering therapy. Amarin is a small, science-driven company doing big things. Some people doubted that we could manage a clinical trial of this magnitude and importance of REDUCE-IT to completion. I am proud that we are continuing to prove doubters wrong.

At the end of June, with respect to REDUCE-IT, we reported that final patient study visits are complete. Today, we reported that we have final VITAL status confirmed for over 99.5% of the patients in the REDUCE-IT study. Consistent with late-stage activities for large outcomes studies, efforts remain ongoing to adjudicate reported events. As a reminder, some of these major adverse cardiovascular events, or MACE, could not be adjudicated until after the last patient visits occurred. While blinded adjudication of events by the independent review committee is in the late stages of completion, some work remains.

Efforts are also underway to complete the blinded review of data for consistency and completeness across the more than 35,000 patient years in the trial, with emphasis on resolving remaining data queries to contribute to a robust and accurate database. Some clinical sites may feel as though we are badgering them to finalize reporting of data. The process is working. The number of open data queries has been diminished rapidly with the goal for the team to complete the data-cleaning process before or near the end of August.

Amarin is very appreciative to all the patients, clinical sites and other professionals who have helped us advance this landmark outcome study. Most clinical sites have responded fully to resolve data queries. For those clinical sites with data queries remaining, we look forward to your responses soon. Given the enormous commitment which patients and clinical sites had made to this important study, we urge you to address these queries promptly to facilitate robust and timely reporting of the overall trial results.

I re-emphasize that Amarin remains intentionally blinded to the results of the study. We will continue to be blinded to such results until after the study is completed and the database is locked. I also want to re-emphasize that the timing of completion of the late-stage activities in REDUCE-IT, such as final event adjudication and data cleaning, are customary for outcome studies. We are not aware of any correlation between the pace at which these activities are progressing and the potential for REDUCE-IT to achieve its primary endpoints with statistical significance. Yes, if, for example, we had only 80% of final VITAL data for patients, that would be an issue. But we have over 99.5% of final VITAL data, which is consistent with a robust result. The series of steps being followed to complete the REDUCE-IT study are intended to support a robust understanding and reporting of results from this potentially landmark study. Amarin is highly motivated to announce the REDUCE-IT top line results as soon as is practical.

In parallel, the company is continuing its preparations for commercial expansion on the assumption of positive study results. Once the REDUCE-IT database is locked, consistent with other outcome studies, the company and a team of experts plan to confidentially review and analyze the data leading to prompt public announcement of top line results. Consistent with other large outcome studies, the time between database lock and the reporting of top line results is intended to be as brief as possible to support both timely and accurate reporting of these results. Broader reporting of results is targeted for a scientific conference in Q4 2018, with publication of results targeted in the same time frame.

We continue to prepare for REDUCE-IT's success. As described in our press release, we have increased promotional activities, including commercial spend for anticipated expansion following successful REDUCE-IT results. We are starting to post job openings to our website for sales and other new positions at the company. You are likely to see many more postings in the coming weeks. The vast majority of these postings are for positions to be filled only following positive REDUCE-IT results. As previously described, assuming REDUCE-IT is successful, we envision increasing the number of sales reps promoting Vascepa in the first position to over 400 in the United States. This will give us greater concentration of coverage in currently called on areas and fill in much of the white space in the country where we currently have no sales reps. Assuming REDUCE-IT's success, we believe that Vascepa could be used to help millions of patients at risk for cardiovascular disease. We will work to make these REDUCE-IT results known, while in parallel, seeking label expansion via the sNDA process.

In addition to sales force expansion, as previously described, we are increasing our inventory levels and conducting further analysis to support clear and prompt communication of trial results. We continue to work to ensure that interested members of the media are educated regarding this important study. Scientific literature continues to be expanded regarding matters such as the need for preventative cardiovascular care beyond cholesterol management, and the correlation between elevated triglyceride levels and cardiovascular diseases. We include references to many of these publications on our website at www.amarincorp.com. One publication in particular, which may be worth reviewing, was recently published in the American Journal of Cardiology, entitled Unmet Need for Adjunctive Dyslipidemia Therapy in Hypertriglyceridemia Management.

The lead author is Dr. Ganda. Dr. Bhatt, who is the principal investigator for the REDUCE-IT study, is a coauthor on the publication, as are other key opinion leaders such as Drs. Miller and Boden. Other recent publications include data from the real world evidence studies we discussed on an earlier quarterly investor call. These real world studies, conducted with the data from large managed care plans, show that in statin-treated patients elevated triglycerides are associated with a greater than 30% increase in the prevalence of heart attacks, and of course, much higher cost of care. These studies look at cardiovascular event rates over a period of time similar to the REDUCE-IT study.

In a moment, Mike Kalb, our CFO, will review Amarin's Q2 financial results. Earlier this year, we discussed that the trend in third-party medical insurance plans to increase insurance deductibles, which deductibles impacted patients' ability to afford medication at the beginning of the year, led some patients to not fill their Vascepa prescriptions in Q1. This is, in our view, a negative trend for insurance plans, which is not constructive to patient health.

As predicted, patients lost in Q1 need to return to their physicians before they are encouraged to resume Vascepa therapy and/or before they have an active prescription, as the lapse in filling the prescription may have resulted in termination when they failed to fill it in Q1. Nonetheless, Vascepa product revenues in Q2 2018 grew 17% over the corresponding period a year earlier. Prescriptions for Vascepa reached record levels in Q2 2018, and more physicians are now prescribing Vascepa than ever before. Overall, managed care insurance coverage of Vascepa remains broad, and we are looking forward to continued Vascepa growth.

With respect to patients who dropped Vascepa therapy in Q1 due to insurance issues, as you likely know, this phenomenon was not unique to Vascepa. Getting these patients back on Vascepa therapy often takes time. We do not have direct contact with these patients. Accordingly, we cannot reach out to them directly and remind them of the benefits of resuming Vascepa therapy. In fact, in many cases, their physicians will not know that the patients discontinued Vascepa use until the patients return for their next scheduled visit. Based upon feedback that we have received from physicians and patients, they continue to believe in Vascepa, as evidenced by the increasing prescription rates and increasing number of prescribers.

Regarding international activity, as you likely recall, we have entered strategic collaborations in select territories outside of the United States for commercialization of Vascepa, and we will consider additional collaboration opportunities in other territories following the REDUCE-IT study, assuming that the study results are positive. We currently have collaboration agreements with highly capable companies, covering Canada, China and the Middle East and North Africa.

In China, our partner, Eddingpharm, continues to advance the clinical trial for Vascepa. In the Middle East, we announced recently that the United Arab Emirates Ministry of Health and Prevention approved Vascepa as a prescription medication for use as an adjunct to diet to reduce triglyceride levels in adults with severe hypertriglyceridemia. The United Arab Emirates' approval represents a second of what we anticipate to be a series of approvals outside the United States to market and sell Vascepa. This approval occurred earlier than we had anticipated. We thank our partner, Biologic, for their positive initial execution on its plans to advance Vascepa in the EMEA region.

It is difficult to predict the timing of approval of Vascepa in other countries, given the varied regulatory processes in each country. Amarin continues to anticipate that the revenue potential for Vascepa outside the United States will be relatively modest in 2018.

Since our last investor call, we also announced a collaboration agreement with Mochida Pharmaceuticals. You may recall that Mochida is the fully integrated Japanese company which conducted the successful JELIS outcome study. They have also conducted many other successful studies of EPA in Japan and have successfully commercialized Epadel, an EPA-based product in Japan for many years for treating lipid disorders and atherosclerotic conditions.

On June 12, we announced a multifaceted collaboration with Mochida. The collaboration is focused on development and commercialization of early-stage drug products and indications based upon the unique effects of EPA. This agreement brings together Amarin and Mochida, the 2 world leaders as innovation-driven companies committed to research and development of EPA-based drug products. We will have more to report regarding this collaboration after our collaboration progresses further.

At this point, I would like to turn this call over to Mike Kalb, our Senior Vice President and Chief Financial Officer. Mike?

Thanks, John. As John mentioned earlier in the call, the second quarter of 2018 showed net product revenue in prescription growth over the corresponding quarter in 2017. Our Q2 net product revenue of $52.5 million was $7.6 million, or 17% above the $44.9 million reported for the 3 months ended June 30, 2017. We recorded net product revenue of $96.3 million and $79.3 million during the 6 months ended June 30, 2018 and 2017, respectively, an increase of $17 million, or 21%.

Our rise in Q2 net product revenue was driven primarily by an increase in normalized total Vascepa prescriptions, led by continued productivity improvements by our commercial team. These positive factors were partially offset by patients who did not resume refilling their Vascepa prescriptions because of beginning of the year insurance deductibles that were higher than last year under some health insurance plans.

Based on data provided by Symphony Health Solutions and IQVIA, estimated normalized total Vascepa prescriptions during Q2 2018 increased by approximately 77,000 and 84,000, respectively, to 430,000 as provided by both Symphony and IQVIA, over the 3 months ended June 30, 2017. This calculates to associated growth of approximately 22% and 24%, respectively, over Q2 2017, and 10% over the first quarter of this year.

Licensing revenues recognized by the company were $0.2 million and $0.6 million in the 6 months ended June 30, 2018 and 2017, respectively, related to timing of milestones and other factors impacting revenue recognition for licensing fees under agreements for the commercialization of Vascepa outside the United States.

Gross margin from net product revenue was 76% in the second quarter of 2018 as compared to 75% for the second quarter of 2017. This improvement was driven primarily by lower costs, especially reduced costs for our API.

Selling, general and administrative expense for the 6 months ended June 30, 2018 and 2017, were $97.4 million and $65.7 million, respectively, an increase of $31.6 million or 48%. This increase is due primarily to increased promotional activities, including commercial spend for anticipated expansion following successful REDUCE-IT results and increased co-promotion fees calculated on increased gross profit, resulting from higher net product revenue, including an accrual of $6.8 million for co-promotion tele payments. The telco promotion fees, which are calculated as a percentage of the 2018 co-promotion fee, are payable in 2019 through 2021.

Research and development, or R&D expense for the 6 months ended June 30, 2018 and 2017, was $29.9 million and $24.5 million, respectively, an increase of $5.4 million or 22%. This increase was mainly due to timing of REDUCE-IT-related costs and $2.7 million of costs incurred as an upfront payment related to the company's previously announced strategic collaboration with Mochida Pharmaceutical Company Limited. We continue to anticipate that our level of spending on R&D will decline after completion of the REDUCE-IT study and initial publication of results from this important study.

Amarin reported cash and cash equivalents of $102.3 million as of June 30, 2018. Net cash flows for the 6 months ended June 30, 2018, excluding the $70 million in net proceeds from the equity offering completed in the first quarter, was negative $41.4 million. Net cash flows from the same period was positive $9.3 million, excluding cash outflows associated with financing and REDUCE-IT. More specifically, net cash flow was positive for the first 6 months of 2018, excluding finance-related proceeds and expenses or interest in royalty, excluding research and development payments, most of which relates to the REDUCE-IT study, excluding payments made in preparation for expansion upon positive REDUCE-IT results, and excluding the onetime payment made related to our previously announced a settlement agreement with Teva Pharmaceuticals USA, Inc. Payments made in preparation for expansion upon REDUCE-IT results include costs related to increased levels of Vascepa inventory, market awareness initiatives and various other costs intended to support rapid expansion, assuming REDUCE-IT results are positive.

As of June 30, 2018, we have $50.3 million in net accounts receivables which are current and $40.1 million in inventory. As of quarter-end, we had accounts payables and accrued expenses of $108.2, which increased from $84.1 million at December 31, 2017, primarily due to the timing of rebates, co-promotion fees and supplier payments.

As of June 30, 2018, Amarin had approximately 293.9 million American Depository Shares, or ADSs, in ordinary shares outstanding. 32.8 million share equivalents, Series A Convertible Preferred Shares outstanding and approximately 25.3 million equivalent shares underlying stock options at a weighted average exercise price of $3.35, as well as 12.2 million equivalent shares underlying restricted or deferred stock units.

Excluding noncash gains or losses for stock-based compensation, non-GAAP adjusted net loss was $30.6 million for the second quarter of 2018, or non-GAAP adjusted basic and diluted loss per share of $0.10 compared to non-GAAP adjusted net loss of $10 million for the second quarter of 2017, or non-GAAP adjusted basic and diluted loss per share of $0.04.

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

Thank you, Mike. We look forward to reporting the REDUCE-IT top line results before the end of September. We are working very hard at Amarin to prepare for these results, both with respect to the final steps in completing the REDUCE-IT study and preparing for rapid expansion, assuming positive study results. While we remain blinded to the REDUCE-IT results, we continue to believe that there is substantial epidemiological, genetic and clinical data supporting positioning of Vascepa dosed at 4 grams per day to be successful in lowering the rate of cardiovascular events in patients who, despite LDL cholesterol control, have established cardiovascular risk factors. We will know the results soon. In the interim, I urge investors not to mistake the results of the ASCEND study or the results of meta-analysis of omega-3 mixtures for the results of the REDUCE-IT study.

With that, we conclude our prepared remarks. We would like to open the line to some questions. Operator?

(Operator Instructions) Our first question is coming from the line of Louise Chen with Cantor.

I had a few. So my first question here is, we often get asked by investors if there is any read-through from the PCSK9 trials to the REDUCE-IT study? Maybe you could answer that first, and I'll ask you the other questions that I have.

Good morning, Louise. Appreciate the question. I don't believe so, but I've got Steve Ketchum and Craig Granowitz here with me, our Chief Officers in the area of thought science and medical, and I'll ask them if there's anything that they would like to comment on that topic.

Yes, thanks, Louise, for the comment, It's Craig Granowitz, Chief Medical Officer at Amarin. We believe that the PCSK9 trials really is a separate swim lane. Cholesterol is different from the risk profile of patients with elevated triglycerides. And as you know well, the PCSK9 trials, even lowering LDL down to essentially undetectable levels or what are considered safe levels in the case of ODYSSEY, about 85% of the residual risk remains. So as we've continually focused, that LDL get to part of the way there, we consider it a cornerstone of therapy, but we believe that the high triglyceride patient still has significant remaining residual risks. And then that risk needs to be managed with the therapy like Vascepa, which has a number of effects, which may reduce cardiovascular risk beyond the lowering of triglycerides. The impact, as John mentioned in his opening comments, on apo B, APO C-III, lowering CRP and not affecting LDL, we believe are unique to EPA and EPA only, and those should, on a scientific basis, validate the hypothesis of the REDUCE-IT study.

Okay. And then my second question is, if you could talk about the alpha spend in the interim looks for your REDUCE-IT study?

Sure. For a background to folks, we -- in conducting the REDUCE-IT study, the first enrollment of patients of which was in December of 2011. We had 2 interim looks in the study, one of which was at roughly cumulative 60% of the events in the study. And the other one, as you know, which was around 76% of the events in the study. Amarin did not see any data in conjunction with these interim looks. And I guess I should say, they were also roughly every 3 months throughout the study, interim safety looks conducted as well. All of these looks were reported to us by the independent data committee, which is essentially a sheet of paper with a check mark on it, which said, continue as planned without change to the study.

In the study work there had not been any interim looks. The p-value that would need to be achieved relative to the primary endpoint in the study would be p less than 0.05. As a result of the third party reviews that I've just referred to, that p-value for achieving of the primary endpoint is p less than 0.0436. So the difference between the 0.05 and the 0.0436 is essentially the "alpha spend". We think that, that trade-off of fairly modest alpha spend for the operational objectives that we were seeking to achieve by having the interim looks. And again, this is a study over a long period of time, having added contact with patients, having roll ups of data to be able to test whether those roll ups are working. The force function of trying to get events adjudicated and trying to get fall-off on missing data, et cetera, we think is important to not wait just to the end of a study. Had we waited to the end of the study, the time between the first patient last visits and the final data reporting would be considerably longer.

We've talked in the past about how -- and I think made reference here to you today, how larger companies conducting outcome studies, which also had interim looks, require about 5 to 7 months from first patient, last visit to reporting of top line results. We're pleased to be tracking to that, and having done the interim looks helps support us in achievement of that result. Our principal investigator for the study, Deepak Bhatt, just remind people that he has, throughout the study, spoken about the importance of the study. It's the first ever study of therapy testing hypothesis of cardiovascular risk reduction beyond cholesterol management with a therapy such as Vascepa. And as the first ever study in this phase, that's important to have a robust result both as it relates to the primary endpoint, but also to the scientific learnings that may occur as a result of the numerous prespecified secondary and tertiary endpoint, the strengths of which all improve based upon the increased sample size numbers. So there's a strong emphasis for the trial to go to completion. That was the intention from the beginning, and we'll soon know the results. So that may be a bit more than what you asked, but I wanted to provide broader context for those who aren't following it quite as closely as you are, Louise.

Okay. And then just last question, if I could squeeze one in quickly. In terms of the top line results that you will report by the end of September, what metrics are you going to put into that release, and will you host a conference call?

We will likely hold a conference call. We need to see the results before we can make final determination on what the results reported will be. As our objective is to be truthful and not misleading, so we want to make sure that we are thoughtful in those results. In conjunction with our Phase III studies, the MARINE and ANCHOR studies, we ended up reporting a bit more than does maybe a larger pharmaceutical company, as a result of the prominence of the study to -- the importance of it to Amarin and its shareholders. So the focus will be on the primary endpoint, relative risk reduction, statistical significance. But beyond that, I wouldn't expect us, for example, to be describing in the top line results related to all of the 30-plus prespecified secondary and tertiary endpoints. But we think, we will be fulsome and provide valuable information, while also not jeopardizing our ability to get the data published in a top-tier journal.

While questions are queued up for others here by the operator, I -- we did promise investors if they sent in questions that we would address some of those. So let me ask one of those here, and then, unfortunately during our script, or our prepared comments, we ended up addressing many of them. But I'll throw one out here, just to make sure we're getting to move forward.

So a question comes in. TRxs are higher in Q2 2018 than Q4 2017, but revenues were lower. Why did this occur? Has the net price of Vascepa dropped? Let me ask Mike Kalb, our CFO, to address that question.

Sure, thanks, John. Yes, we are pleased to see record prescription levels, as reported by Symphony Health and IQVIA. However, we need to remember that such reports are estimates, and these estimates are not always precise. The net price of Vascepa is relatively unchanged, and channel inventory levels remain in the ordinary range. The estimates of TRxs tend to become more accurate over longer durations of time.

So one other question that was asked. A small company called [Matinis] claims that their omega-3 mixture has better bio-availability than Vascepa. Should we be worried?

I have not followed Matinis for a while, let me answer that. In any large market opportunity, there's going to be competition. In many respects, competition can be good. We believe the Vascepa will compete well with all of our known potential competitors. Aside from the earlier generation products in the market, our closest competitor is AstraZeneca. They are conducting an outcome study of their therapy, which they indicate could be completed in quote "2019 plus". Matinis is in a much earlier stage. If they get funding and decide to commence an outcome study to compete with Vascepa, they're going need approximately $300 million or more and probably 7 years or more to do so. We are flattered that they recognize Vascepa as the market leader and that they are attempting to make comparisons to Vascepa. However, as evidenced by other companies, making comparisons based upon PK studies can be misleading. And if and when they have more substantial clinical results, we'll have further comment. Currently, they are a long way from being a major threat.

Operator, was there other questions that -- I'll come back to some of these questions from others. But is there other questions from people who have dialed in?

Yes, we do have a question coming from the line of Roger Song with Jefferies.

So this is Roger for Matt. So I have a couple of questions. The first one is, if REDUCE-IT is positive considering how safe Vascepa is, why might FDA convene an ADCOM? And if so, what would they discuss, something like clinical meaning for MACE reduction?

So Roger, thanks for the question. As the first ever study in this space and in a population which is potentially millions, if not tens of millions of patients, I know the FDA is interested, and it wouldn't surprise me if they had an advisory committee. But let me ask Steve Ketchum, our Chief Scientific Officer, who also receives tremendous experience in the regulatory affairs area, to comment further.

So John, I think you touched on the most likely reason that FDA might ultimately decide to convene an ADCOM, given that it's the first trial design of its kind in terms of prospectively enrolling patients with elevated triglycerides and other CD risk factors, and looking at this type of an agent as an add-on to statin therapy. FDA does not make these determinations until after an application is received and after its preliminary review. But we would not be surprised given the aspects that we just mentioned.

In prior communications that we had with FDA around our ADCOM following our ANCHOR study, and dialogue with FDA afterwards, there is tremendous emphasis by FDA on each drug in this space having different effects and challenges, making crossover comparisons between drugs and lack of confidence in biomarkers. So if there is an outcomes -- if there is an ADCOM, I think it's actually probably a good thing from the perspective of -- it will give an opportunity for to record to be further established that this is not class effects, that the effect of Vascepa is unique, such that other therapies looking at the results of what Vascepa is achieving in REDUCE-IT can't claim that they are the same, because the effects of Vascepa are broad and unique. And I think that, that's a point that would likely be emphasized during an ADCOM, that these results are specific to Vascepa. And that other therapies would need their own outcome studies to show results rather than just claiming that they had some of the lipid effects of Vascepa and then were successful. So I think there's some potential advantages to there being ADCOM from that perspective.

All right. Yes, that's very helpful. So my second question is, since you already -- you have settled with Teva about the ANDA application, so can you give us some update on other ongoing ANDA litigation?

So our General Counsel, Joe Kennedy, is here. Joe's front and center on those kinds of things. I'll let Joe comment.

Roger, thanks for the question. Yes, we did settle with Teva, allowing them to come in just a few months before the expiration of our patent in 2030. That litigation does continue with Hikma, formerly West-Ward and DRL. But it's at the relatively early stages. We just went through a claim construction hearing in April. We haven't heard a judgment out of that, so we don't have too much to report. And of course, with ongoing litigation, we don't usually get into the details of that at any stage anyway. But we do have some time before that reads out; we're at the very early stages.

Okay, got it. So my last question is about the commercial. So you started the pilot to increase the awareness of Vascepa in Q1 and that continue in Q2. Just curious, can you provide some quantitative and qualitative feedback? And how do you kind of envision you will continue the promotion until the REDUCE-IT results?

Sorry, I -- for benefit of others, I believe what you're referring to is the television advertisements that we've been sprinkling out since, I think, the first one appeared on March 28 or thereabout. As a reminder, we view this as being a pilot program, the purpose of which is to increase awareness of Vascepa, but also to improve our understanding of messaging that's working and not working, so that when we seek to do broader promotions following REDUCE-IT results, we are not testing the waters for the first time at that point. As a pilot program, we think we are conducting it with enough frequency to create some awareness. We've heard that we are. And -- but the spend for this program, which -- including design work and running it is somewhere between the $15 million and $20 million, prior to knowing REDUCE-IT results. After REDUCE-IT, results may increase. The -- which is a fairly modest spend and not -- we're not running these commercials at a rate that is consistent with the level of spend and frequency that would be needed to significantly increase, or change behavior patterns.

So our hope is that with the -- our belief is that with the level of frequency that we are doing it, that when REDUCE-IT results are reported out, that there will be a general familiarity with what Vascepa is, much more broadly than the roughly 20,000 physicians that -- Amarin sales force, for example, calls upon. And it's early, but the awareness sampling that we are doing suggests that we are making good progress in that regard. And we are also getting survey feedback on what is remembered and not remembered from those commercials so that we have an opportunity to tweak, if appropriate, that messaging moving forward when we would continue -- when we would consider spending at a rate that would be more akin to moving the needle on prescription levels. So all that would be considered post-REDUCE-IT results. Hope that's helpful.

We have time for one additional question, which is coming from the line of John Boris with SunTrust Robinson Humphrey.

Congratulations on nearing the completion of a very -- obviously very important landmark study. Just first question for Steve Ketchum, just on ANCHOR and MARINE. From -- granted that both of those studies are materially smaller than REDUCE-IT from the point that you had data lock on those studies, how long did it take to release the top line results?

John, thanks for your question. I think, what's relevant in this context is not only our firsthand experience and in closing out those 12-week lipid lipoprotein inflammatory marker studies, but also taking a broad survey of recent relevant cardiovascular outcomes trials. I'm speaking, of course, of trials like EMPA-REG, IMPROVE-IT, CANTOS, FOURIER, LEADER. And when you look at those trials and you look at aspects like first patient, last visit to data lock or last patient, last visit to publication, the information is not always consistent or publicly knowable, beyond the sponsor itself, but our time lines are very much consistent with the wind down timing of those other large international cardiovascular outcomes trials. And so I hope that addresses your comment, John.

John, just as a point of reference. If you think about the ODYSSEY trial, it still has not yet been published, even though it was presented. So again, I think, these are very complex issues. And we want to be sure, and we're working very hard under Steve's guidance and together with the study PI and the steering committee that we are looking to have a concurrent publication in a top-tier journal and a presentation at major medical meeting. We believe that's what a study, as you brand it, produce it being a landmark trial deserves and the medical community deserves for a first-in-class study of a very large patient group.

And this is a investigative study with not only primary endpoints, but multiple secondary, tertiary endpoints, we want to get right. And sick patients. I mean, some of these patients have not only had a primary event, but they've had second and third and fourth events, so we're trying to capture all that information. I mean, the number of data points in the study of 35,000 patient years is enormous. And the complexity of these patients, where they've had elevated cholesterol, many of them are hypertensive, we've got diabetic patients, we've got patients with prior cardiovascular events. Making sure we get this right is important, and we think that the steps we are doing here to get a robust database is supportive of that.

Once we know -- once that database is locked and we can see that data, it will be rolled up, and we've got templates as to what we think we will see reported. And hopefully, we can follow those templates very quickly to disclosing of the results. But of course, we'll want to spend whatever reasonable time as needed to make sure we understand those results before reporting them, because we certainly wouldn't want to be reporting something and then saying, "Oops, we overlooked something in reporting." So we are highly motivated to get those results as quickly as possible, but also motivated in trial that's taken this amount of time and cost this amount of money and is this important to society to make sure we get it right. So we will know the results soon. And just to re-emphasize, today we are blinded to the results, as is everybody else.

So within the press release, will you have any mention of some of the secondary important endpoints, like you mentioned during your last quarterly call, such as in diabetic secondary prevention?

We will look to see whether there's any major inconsistencies in subgroups. And if there is anything that we feel as though is required to be communicated to make the results of the primary endpoint not misleading, those are the kind of things that we would talk about. In terms of statistical quantification of all those various subgroups, of which there are many, it's impossible for us -- or it's unlikely that we would cover them all in a top line results, and if we were to do so, we would be jeopardizing publication. But our objective will be to provide information which we think is useful and non-misleading. But we need to see the results before we can conclude as to what level of communication is necessary to achieve that standard.

And then just on the commercial side, with the potential sales force ramp, do you have an agreement in place with Kowa that expires? Can you maybe just remind us when that expires, and what your intention is with your partner, Kowa?

So Kowa has worked with us for the last several years in terms of addressing some of the target physicians that we don't have bandwidth to reach out to. There is also some overlap with our sales force. When we entered into the agreement with Kowa, we specifically and intentionally structured it so that it would be terminating here at the end of 2018, as the agreement economics were not built upon a REDUCE-IT result. We're funding REDUCE-IT, and if there's a significant upside, which we would dissipate based upon a successful REDUCE-IT result, we wouldn't want to be paying under agreement at a rate that didn't have that result in there. After we have REDUCE-IT results, we will be evaluating what the best way is to reach customers in a cost-effective manner. That includes sales force, that includes digital media, it includes some of the other promotion that we were talking about earlier.

We certainly anticipate increasing the number of Amarin sales reps. Somewhere here in the next 2 weeks, you'll probably see at least a couple hundred job postings going on, on our website for open sales positions to be filled after successful REDUCE-IT results. And we will be having dialogue with Kowa, as to whether it makes sense to continue that relationship or not. And if it were to continue, under what terms? But until we see results, our level of effort and our distribution of efforts between those various buckets remains to be finalized. So it's too early for us to conclude on that. Our understanding is that they would be interested in continuing, but I really can't speak for them in that regard. And until we have results and have specifics that we might want to consider, it's premature. Thanks for those questions. Sounded like, John, that was your last.

In respect to investors who have sent in questions, which we appreciate, I think we've covered most of them. But one that we didn't get to in either our prepared remarks here or the Q&A is -- it's a fairly long question, but I'll try to take it on here. It's about valuation. So question, Amarin is an integrated company with an approved product and established infrastructure, including a record of proven revenue growth, managed care reimbursements and supply chain. And Amarin is approaching the completion of an outcomes study, which if successful, would make Amarin leaders in a new class of therapy with large demand. Yet companies like Esperion Therapeutics and The Medicines Companies are less established, are fighting for small pieces of a crowded LDL cholesterol-lowering market, yet the market valuations of these companies are much higher than Amarin's valuation. Why?

So I appreciate the question. So we look forward to learning the results of clinical studies being conducted by Esperion and The Medicines Companies into observing how they elect to commercialize their products if the trials -- if their trials are successful. Amarin does not compete with these companies, and we certainly wish them well. I interpret this question to be more about why Amarin's valuation seems to be so low rather than disparaging the valuations of these other companies. Hopefully, a year from now, most investors will look back on the REDUCE-IT study and conclude that they should have seen a positive result coming, based upon a review of the science.

However, today, investors seem to accept that LDL cholesterol-lowering drugs will work and find niche markets. The upside for Amarin may be much larger, but many investors want to see the REDUCE-IT results first. For those who have dug into the science and believe in our thesis, thank you for your support. We believe that we're following the data, and that this data will lead us to success. In any case, we will know soon. So those were, I think, questions coming in from the outside. I appreciate the question we had here. We are beyond an hour at this point in time.

I thank you for your interest, and we look forward to continue to update, and in particular, as I started with, I think, our next primary update will be a report of the results of the REDUCE-IT study. We're very much looking forward to that and should have those to report to you before the end of September. Thank you, everybody.

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