Amarin Corporation PLC (AMRN) 2018 Q3 法說會逐字稿

Welcome to Amarin Corporation's conference call to discuss its third quarter 2018 financial and operating results. This conference is being recorded today, November 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 for scientific presentations, publications, regulatory reviews and related timing thereof are expectations that reduce the results that lead to a new treatment paradigm and the patient population studied. Our plans and preparation for extended promotion of Vascepa, and related market positioning and potential, including the potential for future 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 effective co-promotion agreement on our business, our current plans for sales force and other commercial expansion. These statements are based on information available to us today, November 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 into, amend or terminate. For additional information concerning the factors that could cause actual results to differ materially, please see the forward-looking statements section in today's press release and the risk factor section of our quarterly report on Form 10-Q for the quarter ended September 30, 2018. These documents have been filed with the SEC, and are available through 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 of 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'll now turn the call over to John Thero, President and Chief Executive Officer of Amarin.

Good morning. It's an exciting busy time in Amarin as we take steps towards expanded promotion of Vascepa and prepare for presentation details of the REDUCE-IT study on November 10, at the 2018 scientific sessions of the American Heart Association. We appreciate that many healthcare professionals and investors have inquired about more detailed results of the REDUCE-IT study. We have promised AHA, which is American Heart Association, that we will save reporting of further details regarding these landmark results for presentation at their Medical Congress on November 10. Following our announcement of top line results on September 24, we have repeatedly stated that we look forward to presentation of additional details at the AHA scientific sessions. That remains true. We will not be announcing further results of the REDUCE-IT study on this call today. The presentation at AHA is scheduled for 2:18 p.m. Central Time on Saturday, November 10. Dr. Deepak Bhatt of Brigham and Women's Hospital, the principal investigator for REDUCE-IT plans to present REDUCE-IT results in more detail as part of the AHA's lineup of late-breaking clinical trial results. We will follow the AHA presentation with the press release and an investor conference call. In a press release we issued last Friday, we provided information regarding REDUCE-IT related presentation- at and around AHA including timing and access information for Amarin's conference call scheduled for Saturday, November 10.

During that call, we intend to review REDUCE-IT results as presented at AHA earlier that day. We hope that investors and analysts will join that call. If you miss it, a tape-recording will be made available via Amarin's website. The presentation of REDUCE-IT results at AHA is schedule to immediately follow presentation of the results of the VITAL study. VITAL as you may recall, is another cardiovascular outcome studies of the earlier generation prescription Omega-3 Mixture Lovaza. In August, the results of the ASCEND study and outcome study of Lovaza in the Omacor in Europe were announced. Lovaza in the ASCEND study failed to achieve its primary endpoint. The failed ASCEND study stands in contrast to results with Vascepa and the REDUCE-IT study and add to the established body of evidence that shows that the clinical effects of Vascepa are distinct from the many mixtures of omega-3 products and are in fact, unique to Vascepa. We remind you that AHA accepts presentation of late-breaking clinical trials prior to knowing the results of those trials. The presentation of VITAL study results will occur regardless of whether the trial results are negative or positive.

Amarin has not seen the results of the VITAL study. However, we anticipate that results of the VITAL study will further support differentiation between Vascepa and omega-3 mixtures. Even if Lovaza and VITAL surprises the medical community and in contrast to the body of evidence from other failed outcome studies of omega-3 mixtures, shows some level of cardioprotective benefit. It will be very surprising if the results approach anywhere near the approximate 25% risk reduction we reported for Vascepa top line REDUCE-IT cardiovascular outcome results. We say this with confidence because no other drug has demonstrated the ability to lower cardiovascular event by 25% on top of statin therapy. While there is already considerable published data regarding the unique effects of the active ingredient in Vascepa, hopefully contrasting REDUCE-IT results against VITAL results, though in different study populations, will help people appreciate the different clinical effects, if they don't want to take the time to delve into the mechanistic and other data to understand all of the underlying science.

Our recap of the top line results we reported for the REDUCE-IT study is as follows: Primary endpoint achieved with approximate 25% relative risk reduction in the composite of first occurrence of major averse cardiovascular events known as MACE. That 25% is on top of LDL cholesterol controlled by statin therapy in REDUCE-IT patients. LDL cholesterol controlled by statin therapy is generally understood to lower cardiovascular risk by 25% to 35%. Our REDUCE-IT result add approximately 25% cardiovascular risk reduction on top of controlled LDL-C. The top line risk reduction of approximately 25%, was achieved to a high degree of statistical significance, P less than 0.001. This primary endpoint top line result was supported by robust demonstrations of efficacy across multiple secondary endpoints. We will not be providing more information regarding the secondary endpoints results until the presentation at AHA.

On the safety side, Vascepa was well tolerated with a safety profile consistent with omega-3 study fatty acids and current FDA approved labeling. Achieving 25% risk reduction on top of statin therapy is more than has been shown for any other therapy, for example, PCSK9s lower cardiovascular risk by 15%. Note that the risk reduction of the most widely used statin, LIPITOR or atorvastatin is approximately 25% and Vascepa 25% risk reduction is incremental to the benefit of statin therapy. Moreover, the REDUCE-IT results positions Vascepa to lead a new paradigm in patient care beyond cholesterol management. They also position Vascepa to be first-to-market in addressing a large unmet medical need. Cholesterol management lowers cardiovascular risk from 25% to 35%, leaving 65% to 75% residual cardiovascular risk. It is the substantial residual risk we seek to address with Vascepa. We believe that these clinical results position Vascepa to provide a new layer of cardioprotective benefit, which may potentially help millions of patients in United States and internationally.

As a reminder, REDUCE-IT was not a lipid focused study, it was a cardiovascular outcome study. Baseline LDL cholesterol levels at 75 mg per deciliter were well controlled from the start of the study. And baseline triglyceride levels at a median of 216 mg per deciliter were not excessively high. Recall that in the JELIS study, the 19% risk reduction was achieved with only a 5% lowering of triglyceride levels. While elevated triglyceride levels are associated with higher levels of cardiovascular risks, it is not been established that lowering triglyceride levels alone significantly reduces cardiovascular risk. Publications in recent years have shown that the clinical effects of the active ingredient in Vascepa are unique. In addition to improving levels of various lipid and lipoprotein biomarkers, data suggest that this active ingredient may have beneficial effect on multiple atherosclerosis processes, including endothelial function, oxidative stress, foam cell formation, inflammation, cytokines, plaque formation, progression, platelet aggregation, thrombus formation and plaque rupture, all independent of triglyceride modification. We continue to reinforce that REDUCE-IT results are unique to Vascepa it cannot be generalized any prior generation add-on to statin, such as fenofibrates and that the REDUCE-IT results cannot be generalized to common fish oil or omega-3 mixture products, particularly those that contain the omega-3 acid, DHA.

In a short while, Mike Kalb, our CFO, will review Amarin's Q3 financial results such financial results were achieve prior to the paradigm changing REDUCE-IT results. I will first discuss our actions to expand Vascepa promotion following our recent REDUCE-IT success. As you know, Amarin has been spending approximately $50 million per year or more on research and development. The majority of the spending has been associated with REDUCE-IT study. This study was a major undertaking for a company of any size and a particularly large undertaking for a small company like Amarin. We pursued it because we believed in the significant science behind Vascepa. And we follow scientific data. With respect to the science, in recent years, we have supported over 20 scientific publications for scientific posters per year. We are proud to be a company, which is guided by science and driven to improve patient care. It is flattering but not surprising to hear the accolades that outside advisors involved with REDUCE-IT trial are repeatedly expressing regarding the high quality and ability of Amarin scientific team. We are also proud of Amarin's commercial team.

They've accomplished a lot on limited resources, because of Amarin's large investment in R&D, our commercial spending in the years prior to REDUCE-IT results, has by necessity been limited. Nonetheless, the commercial team has been very productive. We have achieved broad managed care coverage for Vascepa with prescription approval rates of above 75%, which is comparable to the approval rates for generic Lovaza. For those who do not follow drug approval rates closely, achieving 75% approvals is considered very good. Moreover, Vascepa revenues have been growing by approximately $15 million per year despite our marketing Vascepa for a niche biomarker-based indication and despite Amarin, not significantly increasing the size of sales force until recently. Our commercial team believes in Vascepa and they have created good relationships with healthcare professionals who are passionate about improving patient care. Having outcome study data should help in further promotion as should our planned expansion of the size and scope of our commercial team and their activities.

Bullishly, during 2018, before we knew the results of the REDUCE-IT study we began to build levels of Vascepa inventory, expand supply capacity, recruit added sales personnel and evaluate the effectiveness of consumer promotions. After REDUCE-IT results, we plan to further build on these actions and experiences. On the topic of supply, we remain on track to expand capacity to support $1 billion in potential revenue in 2019. This reference should not be confused with revenue guidance. While we do believe that REDUCE-IT results will help transform Vascepa into becoming a multibillion-dollar brand, we intend to wait until healthcare professionals better appreciate the results for the REDUCE-IT study and better appreciate the existing managed care coverage in affordable pricing of Vascepa before we provide revenue guidance. Rather this reference is made to express that the bullish steps we took prior to REDUCE-IT results help position us for continued commercial success. Following REDUCE-IT success, we have been in an active dialogue with companies in our supply chain as well as with certain companies that might be added to our supply chain. To ensure that we can further increase our supply capacity.

As you might expect, these companies are eager to pursue this opportunity and competing with each other to do so. We have confidence in our supply teams experience and execution skills and we believe that we will be able to meet growing Vascepa demand. Our expanded promotion of Vascepa will occur in phases. Currently, our small specialty focus sales team continues to promote Vascepa. Their targets have been recently realigned and broadened with new sales territories created to expand our education of select clinicians. This education will remind clinicians of the significant unmet cardiovascular risk beyond cholesterol management. The ability of our sales team to promote Vascepa will be expanded when REDUCE-IT results are published which we anticipate before the end of 2018. And when the Vascepa label is expanded to reflect REDUCE-IT results, which we anticipate before the end of 2019. One of our top current priorities is expanding our U.S. sales force to approximately 400 sales representative to start 2019. Nearly all of our new sales management positions are now filled. Sales representatives are being hired with start dates throughout Q4. These new hires are being slotted for training courses to be completed before year-end.

While we believe that the physicians we have been calling on prior to REDUCE-IT results have many patients who could benefit from Vascepa. The broadened sales team will target more than 50,000 physicians, representing a doubling of our historical target levels. They will be supported in doing so by multiple promotional in market education programs. We are already hearing requests from physicians for publication of the REDUCE-IT results. Our sales team is highly innovated to help physicians, help their patients with Vascepa. Similarly, our medical affairs team is receiving questions from key opinion leaders, which questions they look forward to helping address after results of the REDUCE-IT study are presented at AHA. At this time, intentionally only a small number of people know the REDUCE-IT results, such that even key opinion leader request for REDUCE-IT results, cannot be fulfilled until the results are presented on November 10, at AHA.

We provided unrestricted grants to 2 independently managed medical education programs at AHA. The curriculum for such education programs is managed independently at Amarin although, we anticipate that they will focus on REDUCE-IT as this is a priority topic for medical education. We anticipate supporting various additional medical education programs in Q4 and beyond. We remain optimistic that the REDUCE-IT results will offer in a new treatment paradigm to address the large, unmet need of combating the residual risks of 65% to 75% that remain after statin treatment. The market is potentially large, it's tens of millions of adults are at cardiovascular risk that cannot be addressed by cholesterol management alone.

As previously stated, we believe that the opportunity with Vascepa is much more of a volume than a pricing opportunity. We believe that we are today with Vascepa where statin therapy was 30 years ago, in creating a new treatment option for improved patients care. We believe that with Vascepa proven results, its affordable price and existing broad managed care coverage, its KOL support in our strong scientific foundation that we're well positioned to significantly grow Vascepa and help millions of patients.

Mike, please review Amarin's Q3 financial results.

Thanks, John. As John mentioned earlier in the call, our financial results for the third quarter of 2018 reflected period of operations that did not benefit from REDUCE-IT results or the expansion of our commercial efforts following such results. Nonetheless, we reported continued product revenue and script growth in Q3 2018 over the corresponding quarter in 2017. Our Q3 2018 net product revenue of $55 million was $7.9 million or 17% above the amount we reported in Q3 2017. Our net product revenue for the nine months ended September 30, 2018, was $151.3 million, an increase of $24.9 million or 20% above the amount we reported for the same period of last year. Our rise in Q3 net product revenue was driven primarily by an increase in normalized, meaning 30 days supply, total Vascepa prescriptions led by continued productivity improvements by our commercial team.

Based on data provided by Symphony Health Solutions and IQVIA, estimated normalized total Vascepa prescriptions during Q3 2018 increased by approximately 74,000 and 83,000, respectively, to 458,000 and 457,000, respectively, as provided by both Symphony and IQVIA over the 3 months ended September 30, 2017. This calculates to associated growth of approximately 19% and 22%, respectively, over Q3 or 2017 and 7% and 6%, respectively, over the second quarter of this year. As stated previously, Amarin at this time is not providing any quantify guidance regarding product revenues for the balance of 2018 or beyond. While we are optimistic that the demand for Vascepa will meaningfully increase once results of the REDUCE-IT study are understood.

Before we can provide reliable guidance we need feedback from physicians after REDUCE-IT results are presented published and understood. As John stated, we are increasing the size of our sales team. We expect this expanded team to be trained and fully in the field at the start of 2019. We anticipate that by then the results of the REDUCE-IT study will be published and we will be able to share the publication with clinicians. While Q4 has historically been a good quarter for Vascepa sales, we are not anticipating REDUCE-IT results to have a significant upward impact until our sales force is expanded and the results are presented at AHA and published. Licensing revenues recognized by the company were $0.6 million in the 9 months ended September 30, 2018. Such revenues relate to the timing of milestones and other factors impacting revenue recognition for licensing fees under agreements for the commercialization of Vascepa outside the United States.

Commercialization of Vascepa outside of the U.S. is in its early stages with approval from Vascepa received this year in the United Arab Emirates and Lebanon with pursuit of other international expansion ongoing, including a clinical trial for Vascepa commenced in China funded by our partner Eddingpharm and further work being performed in Canada by our partner HLS therapeutics. We will continue to evaluate other global market opportunities for Vascepa. Our gross margin on product sales for the 9 months ended, September 30, 2018, and 2017, were 76% and 75% respectively. Selling, general and administrative expense for the 9 months ended September 30, 2018, and 2017, were $147.3 million and $98.9 million, respectively, an increase of $48.4 million or 49%. This increase is due primarily to increased promotional activities, including commercial spend for anticipated expansion following successful REDUCE-IT results, including a pilot consumer promotion program and increased co-promotion fees calculated on increased gross profit resulting from higher net product revenue, including an accrual of $10.7 million for co-promotion tail payments. The tail co-promotion fees which are calculated as a percentage of the 2018 co-promotion fee are being fully accrued in 2018 and payable in 2019 through 2021. Total net co-promotion expense for the first 9 months of 2018 including the accrual for tail payments, was $30.5 million.

This co-promotion arrangement, which commenced in 2014 is by agreement as intended by Amarin, schedule to end on December 31 of this year, freeing up funding to support Amarin sales force. This co-promotional relationship has been in means of having Vascepa presented to healthcare profession beyond the reach of Amarin's historically small sales force albeit mostly in a second sales position and generally on a low-frequency basis. While Amarin will always consider cost-effective ways to increase sales productivity, currently, Amarin has not extended this co-promotion agreement.

Research and development expense for the 9 months ended September 30, 2018, and 2017 were $44 million and $35.2 million, respectively, an increase of $8.8 million or 25%. This increase is mainly due to timing of REDUCE-IT related costs and $2.7 million of cost 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 soon decline pursuance to completion of REDUCE-IT study close at activities and initial publication of results from this important study.

As of September 30, 2018, Amarin reported cash and cash equivalents of $81.9 million, net accounts receivable at $47.6 million and $25.7 million in other receivables, primarily from financial institutions resulting from the timing of stock option exercises in late September which amounts were collected in early October. Net cash flows for the nine months ended September 30, 2018, excluding the 7 -- excluding $70 million in net proceeds from the equity offering completed in the first quarter was negative $61.8 million.

Net cash flows for the same period this year was positive $20.9 million excluding cash outflows associated with financing and REDUCE-IT. More specifically net cash flow was positive for the first 9 months of 2018, excluding finance related proceeds and expenses, which is interest and royalty, excluding research and development payouts, payments most of which relates to the REDUCE-IT study, excluding the payments made in preparation for expansion upon positive REDUCE-IT results. And excluding the onetime payment made related to our previously announced settlement agreement with Teva Pharmaceuticals USA, Inc. Payments made in preparation for expansion with positive REDUCE-IT results, include cost related to increased levels of Vascepa inventory, market awareness initiatives and various other costs intended to support rapid expansion and preparation for positive REDUCE-IT results. While we understand the importance of getting Amarin's cash flow positive in aggregate, we point out our history of positive cash flow excluding financing and REDUCE-IT for purposes of perspectives.

As of September 30, 2018, we had accounts payable and accrued expenses of $121.1 million, which increased from $84.1 million at December 31, 2017, primarily due to the timing of rebates co-promotion fees and supplier payments. Pursuant to the debt exchange announced on October 19, 2018, the company effective tomorrow November 2, will no longer have any debt obligations with a fixed maturity date nor the $1 million in annual interest obligation associated with that debt. The company's royalty like obligation remains to be paid at a rate of 10% of Vascepa revenues until the aggregate remaining obligation of $94.1 million is satisfied.

As of September 30, 2018, Amarin had approximately $304.1 million American Depository Shares, or ADSs and ordinary shares outstanding, which does not include the approximate 7.7 million ADSs issued in exchange for the $30 million of notes. $28.9 million, common share equivalents of Series A Convertible Preferred Shares outstanding and approximately 21 million equivalent shares underlying stock options at a weighted-average exercise price of $3.36 as well as 9.6 million equivalent shares underlying restricted or deferred stock units. Excluding noncash gains or losses for stock-based compensation, non-GAAP adjusted net loss was $17.8 million for the third quarter of 2018, or non-GAAP adjusted basic and diluted loss per share of $0.06, compared to non-GAAP adjusted net loss of $7.3 million for the third quarter of 2017, or non-GAAP adjusted basic and diluted loss per share of $0.03.

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

Thank you, Mike. For all of you who are on this call, we appreciate your interest in Amarin. We look forward to speaking with you again on November 10, with respect to the reporting of REDUCE-IT results at AHA. In parallel, please be assured that we are taking broad steps towards building on our strong scientific and commercial foundation to educate healthcare professionals about Vascepa and to help more patients. As touched on my opening comments, we eagerly look forward to the presentation of results from REDUCE-IT at AHA. However, we will not respond in substance to any questions or seek additional insights on REDUCE-IT data beyond that, which we provided in our press release on September 24. With that, we conclude our prepared comments.

We would like to open the line for some questions. Operator?

(Operator Instructions) And our first question comes from the line of Louise Chen with Cantor Fitzgerald.

So first question I had was, could you give us more color on the size of the OUS opportunity for Vascepa, how it compares to the U.S. and the timing of when you might expand? I know you give some color already, earlier on the call. And second question I had is, we get a lot of questions on the IP for Vascepa and if you could let us know what the next steps are with respect to trials and anything else that you are pursuing there, that will be great.

Louise, Good morning, it's John. I'll take on the first one and then Joe Kennedy, our general counsel, I'll let him talk about the IP side of thing and some recent activity we've had there. So the heart disease, the cardiovascular diseases is, unfortunately, a worldwide phenomena. And we have large potential opportunities throughout the world, we've got terrific partners in China, where we are -- they're funding and conducting a clinical trial for Vascepa. We've got a partner in the Middle East, where we've gotten approvals already in 2 countries. And we not-long-ago signed up for a good partner for Canada, we had talked about previously waiting until we had REDUCE-IT results to consider opportunities in other markets, so we've had expressions of interest from our other markets and we will be pursuing those potential opportunities. The Europe, for example, is an area where earlier generation therapy of Lovaza which is marketed there as Omacor was introduced in each country by a different company. And as a result, in Europe, it has different labeling, different dosing, different reimbursements, and we felt as though, waiting and having an opportunity to go for a Pan-European approval based on what outcomes data would provide the greatest opportunity for Vascepa in Europe and that's something that we are pursuing, of course, giving priority to the U.S. opportunity. I will mention, as on the side, that following the failed ASCEND study, for Lovaza, it's our understanding that in Europe, there is some questioning going on by regulatory authorities as to whether Omacor should continue to be approved in Europe giving that failed study, which was funded by the British Heart Institute. So there is a bit of a dynamic landscape going on there. But it's a large global opportunity. That being said, the largest market is the U.S. market it's where we have a direct presence, internationally we are relying on third parties, credit partners so far and we will be looking forward to adding additional partners. Right now at the top priority is getting the results presented at AHA published and then you're getting NRx -- NDA submitted in the early part of 2019 to get approval here in the states. So hope those comments are helpful. Joe Kennedy with regard to the IP related questions?

Sure, thanks Louise, for the question. But just as a big piece of reminder our patents go out to 2030, we do have settle agreements with Teva which allows them to enter in second half of 2029, the end of litigation goes on with two additional litigations, and we're in that is at in August of this year we just did -- I've got a claim construction ruling that is the Markman ruling, where the definition of the claims are determined by the judge after advocacy on both sides and that went very favorably for us. We won all the terms with the exception of one, which we think has no significance. Reminded that the claims that we have in the patents covered method of use for treating really high triglycerides with the surprising and expected results of lowering traits without raising LDL, and with those who have been in touch with us for a while, remember well back in 2012 the constitutions of those patents when they were dubbed at the most watched patent prosecutions on Wall Street, and there was a lot of back-and-forth with the patent office and they were reviewed not only by the examiner but by the examiner supervisor, by quality assurance specialist, by quality assurance specialist's supervisors, and were part of what was then a special application warning system, which was an elite group of reviewers at the patent office that reviewed less than 0.04% of applications because of the high-profile nature of the applications. And that was mostly focused on the inventive nature of the subject matter at the patents. And we emerged from that, of course, with the patents there that are issued in the litigation. And so as we look forward to in this litigation, we expect the trial in the second half of 2019 and where we are right now, is that we haven't even finished the fact discovery cutoff. So at the point with generic is still going through learning about invention -- at the invention and all that. So we're somewhat relatively in the early stages having had -- again that favorable Markman ruling. So we feel pretty good about that. And there's really nothing significant fill up we've seen from -- on the outside just wait until really the second half of next year.

Our next question comes from the line of Joel Beatty with Citi.

I believe that Amarin is in a unique position of being able to share some information of the off-label uses of Vascepa with physicians. So could you discuss some feedbacks from physicians on their initial thoughts of your marketing team sharing information about them with the top line results of REDUCE-IT. And then, also, what information are physicians looking forward to from the more detailed REDUCE-IT data presentation?

Joel, thanks for the question. So most physicians are not yet familiar with the REDUCE-IT result. As a reminder, we have a relatively small size sales force. We're rapidly expanding that, but relatively small sized sales force. And while we can have some communication of REDUCE-IT results, the data isn't yet presented or published. So there is limited details out there that we can share at this point of time. We are hearing from physicians who are familiar with these top line results, that they've expressed a high degree of interests, they want to learn more of the details. And for many physicians, Vascepa is new to them, and they seem surprised to learn that the product is affordably priced as it is and covered broadly by insurance. And has been prescribed over 4 million times. So I think it's an encouraging feedback, so far, they like us and probably you look forward to hearing more and AHA presentation is not that far away at this point.

Great. And then, as a follow-up question, could you discuss the availability of EPA over the counter from other providers and what you can do to help support the use of Vascepa?

So if you're referring to -- what you're saying over the counter -- I think you probably mean dietary supplements, which is -- cause they're really no over the counter with -- to note something that was previously a drug, an [actical] drug and then it was given over the counter status. Relative to dietary supplements, first and foremost, we think that the results of the REDUCE-IT study when they become known to people, particularly in light of in all of the studies, dietary supplements and other mixtures including Lovaza will help highlight the divide between the effectiveness of Vascepa and the failed results of these other products. And I am going to remind folks that is not just the EPA content but it's also a -- it's a very fragile molecule, it's how it's prepared, it's how it stabilized, it's how you prevent oxidation or other -- degradation there is a lot of science between -- behind the product. Beyond that, we are taking action in various ways through the ITC matter but also through some lease -- recent litigation that I'll let Joe Kennedy, our General Counsel comment on.

Sure. As you might have noticed on Monday, we announced that we sued 2 relatively small dietary supplement companies based on Lanham Act which is a federal law, another state statute that protect us against false and misleading advertising from dietary supplement. It was actually a frequently asked questions entry on the IR section of our website that provides a brief summary of those lawsuits and a link to the complaints. Those supplement companies as we said, foresaw, tried to use marketing claims based upon REDUCE-IT to help sell their omega-3 dietary supplements products and while it's a big industry in the U.S. and most of its from big players, the big players know well that they can't cross the line under FDA regulations to compare themselves to drugs, or promote it as substitute for drugs. It's actually FDA regulations on that, for example, 101.93(g)(2)(vi), which prevents comparison to drugs as substitutes. It's also flat out false and misleading to do that. To compare an omega-3 supplement to Vascepa for the reasons that are detailed on that FAQ entry on the -- on our IR website. So we're not really concerned, for example, that the dietary supplement entry going through in Nass try to use, REDUCE-IT or compare themselves to Vascepa because they know they be subject to, not only FDA liability but the Lanham Act liability of the sort that's in that lawsuit. In fact, since our lawsuits on Monday, the dietary supplement industry lobby's CEO was quoted in the press, reminding his industry of that fact that you can't compare dietary supplementary to drugs, and so what we have here is really just less informed, smaller players, with they call in -- I know chancers who basically took a chance that they would be able to get away with it. So we expected this, we essentially had these complaints ready to go, waiting for critical mass of misleading advertising and we filed suits and we're looking forward to pursuing those and going forward if we see other claims like that we will sue more suits and we hope that folks got the message not only from us and those lawsuits but also from the dietary supplement industry trade with precedent. That is, don't compare your dietary supplements to drugs. So I think that, that covers your question.

Okay. All right, I'll just add on a reminder, that dietary supplements are not intended to treat medical conditions, the patients that were seeking to treat with Vascepa, are sick patients. They got to be under medical care. Food products, which is what dietary supplements are terrific for what they do, I mean, I eat my oatmeal or toasted oats, they may or may not be good for heart health but they say that they are. And foods governed by a different regulatory standard -- then is drugs and claims they make about may be helping or had a very different standard, we in turn, have demonstrated in a well-controlled, broad, rigorous outcome studies that are in fact, does work where studies so far dietary supplement have shown that they in fact don't work. And we are hoping that the scientific differentiation becomes clear because for patients who have serious medical conditions, we wouldn't would want them to be fooled by thinking that just the food alone is going to be sufficient to address their medical conditions. This is a -- with the REDUCE-IT results an opportunity to provide medical therapy that is a new paradigm in treatment, that should really be thought of as very different than the market that dietary supplements are going after and if dietary supplements try to crossover we'll take all actions appropriate both educate and thwart those efforts.

Our next question comes from the line of John Boris with SunTrust Robinson Humphrey.

First question John, just has to do with current book of business, obviously, your sales force and the CALA sales force called on different types of physicians. What percent of the current book of business is with specialist, cardiovascular, endocrinologist versus primary care? And you certainly mentioned earlier that on top of statin, which give LIPITOR, I guess, 25% relative risk reduction, 25% now from Vascepa. Did you have an opportunity to conduct any product concept testing to -- with high decile physicians both specialists and in primary care to assess intent to prescribe? And then second question will just have to do with the supply.

John, thanks for the questions. So with regard to our historical targets with our sales force that's been marketing against biomarkers, which for the last 4.5 years, with 135 reps in the U.S. We did increase that slightly this year to 150 and of course, now we're changing that to over 400. About 85% of their targets have been GPs', GPs' are sort of the first line of treatment for patients with cardiovascular risk. And we were targeting a niche group of those physicians, roughly 20,000 in number who were the higher prescribers of the earlier generation therapy. Beyond that 85% to our GPs, we targeted up 7% cards and 5% endos and the balance sort of a mixture. As we look to the business going forward, we will be targeting over 50,000 physicians and be increasing our focus on GPs', hand cards, endos but in somewhat similar proportion, with emphasis on high statin writers, people who care about preventative care. And we think that with the coverage that we'll have, that we'll cover with initially 400, about half or slightly more than half of the writers of in terms of a volume of statin therapy. With respect to market research, we did do extensive market research over the years. The REDUCE-IT study was 7 years in conduct and the couple of years we did beforehand of planning that out, we did quite a bit of research during the course of the study. We have not done comprehensive research after the results yet because the results aren't broadly known or wait towards the results are presented and published and understood otherwise, we are not going to get useful information off of that research but in the research we conducted, prior to results, we conducted that research on a basis of overall, cardiovascular risk reduction based upon MACE as we studied as the primary endpoint in the study. And what we found is that if you had 7% or higher risk reduction, that was considered to be clinically meaningful. We see that with ezetimibe or Zetia for example, where they had a 6% reduction different market and it's a LDL market, not us, but 6% reduction is all about $1 billion per year, [if you would act]. At 15% reduction what we saw was a very significant interest, I mean, that's the level where you see with PCSK9s and again, those are cholesterol management therapies. They are terrific for what they do. But we're opening up an entirely new market here where we're first in 15% on top of cholesterol management would seem to be very meaningful. And then, anything above 15% was reviewed to be sort of in the extraordinary category. So we are looking forward to presenting the results in detail at the American Heart Association. And we think that those details will be helpful to physicians. In the end, I think that people, hopefully, will remember it, it's 25% reduction, but people seeing the results will give them confidence in the meaning of that 25%. So hopefully those were comments are helpful. You said, you had one other question?

Yes. Just on supply. You obviously indicated that 2019, you'll have enough supply for $1 billion in sales. How many suppliers do you currently have? And then, how many suppliers, at least going forward because we can obviously, back into the number of kilos relative to the billion. But if we obviously look at demand going forward are you anticipating -- how are you anticipating your supply chain to ramp from the current base of suppliers to additional suppliers either through Scandinavia or in Asia?

So manufacturing of Vascepa is difficult. Not many people -- not many companies in the world can do it. Those who can do it, we have good relationships with. The -- we should take a step back, the supply chain is actually pretty complexed, you get the sourcing of the fee stock for it, you've got the processing inside the API, you got the encapsulation of that, you got the packaging of that, there are uniquenesses in quality controls and FDA related regulations but also our standard to mature in some ways higher throughout that. And to do that with an agent, which is as fragile and avoid damage and provided shelf life for product that's for years is -- a really it requires a very significant talent. So the constraining piece to that is the API production and there we've been using free suppliers. They've been working with us for a while. They're proven and they're each interested in continuing to work with us going forward. As you might imagine, with our REDUCE-IT results, we have fielded thoughts from them as to how they can expand. We've also had dialogue with potential other suppliers that we could add on top of them. And there's -- I don't want to get into specifics of negotiations with suppliers, but we are looking to ensure that we're working with the best companies to ensure quality. To ensure capacity expansion and we think we've got choices. And we're looking forward to expanding our supply in a manner that shifts -- meets market demand.

So again, if you look at the current kilos that you have to meet the $1 billion, how quickly can you ramp that, John? To meet demand, as it is complexed.

Very complex question. It depends upon what size you are trying to ramp it to -- if you're starting with a brownfield, it takes about 12 to 14 months to expand, but we're not starting in all cases with brownfield. They're also -- we got a facility already existing and you're adding new equipment to it, it's less than that. So there's a lot of different dynamics involved. And we've got to figure out which supplier we're doing it with and what we are willing to pay them for the prize of its size. It's not as simple answer to that question at all levels of supply. But it is -- expanding is very doable it's the matter of doing it. And historically, it’s been -- our suppliers have been very interested in doing this. And funding it. But with money, I think that, capacity is ultimately, at least in the spectrum that we're talking about. Somewhat -- someone on limited matter make this decision and we got to pick which suppliers we're going to do that, do that with.

Is it possible you could be capacity constrained?

I think I just commented that with resources, we are not capacity constrained.

(Operator Instructions) Our next question comes from the line of Roger Song with Jefferies.

I have 2 questions. The first one is on, what kind of -- just before to prepare the sNDA submission, so what kind of activity need to be performed specifically, what kind of secondary endpoint to be released at AHA and the publication going to impact this sNDA in your view?

Thanks for question Roger. The -- so I think the sNDA filing isn't so much of function of our presentation at AHA. It's more of a function of our bandwidth. So we've given priority to the presentation at AHA and to publication, both of which involve peer review and that process we think, positions us best for getting to the sNDA. And the primary endpoint for REDUCE-IT, let me remind you that this is a study that was conducted under a Special Protocol Assessment agreement with the FDA pulling together and sNDA for trial this magnitude is not a small undertaking. But it requires a lot of work and while we're doing some preparations in those regards, right now, we are most highly focused on getting the presentation done at AHA. And getting the results published. With respect to content at AHA, we start talking about specifics of what we might present at AHA with sort of potentially violating what we promised AHA that we wouldn't do -- I mean, I think it's reasonable to assume that you'll see data in relative to the underlying pieces of the primary endpoint. But I really can't comment beyond that as doing so might would be inconsistent with what we have promised the AHA in that regard.

Yes. Sure. Understood. So my next question would be on Vascepa ,REDUCE-IT. So any color on the R&D end like the activity with Mochida and I noticed we have EVAPORATE in the plaque regression. So just any color on the additional R&D kind of end.

So right now, our primary emphasis is on getting the results presented of the REDUCE-IT study. We -- as we talked about this summer, we're very pleased to have enter into agreement with Mochida, they're a wonderful company, and this combines the scientific powers of the 2 most advanced companies in this field. We are evaluating a number of different potential opportunities with them. They are in early stages at this point in time. But we do look forward to progressing that with them. The EVAPORATE study that you referred to, is sort of building on the results that we're drawing on a study in Japan, call the CHERRY study and in the CHERRY study, it showed that the addition of eicosapentaenoic acid which is our active ingredient to -- statin therapy essentially doubled the prevalence of plaque regression compared to statin alone. The EVAPORATE study is one that was initiated by a number of clinicians who are familiar with Vascepa, and we are looking forward to the results of that study. It's still as we talked about from a milestone perspective, it’s still a ways -- a year potentially even more than a year away. It's part of a broad amount of work we have done in recent years to more fully describe the mechanistic effects as it relate to how Vascepa works as a unique single small molecule drug. And that includes its effect on endothelial cell function and formation, foam cell formation and plaque regression. So the EVAPORATE study is looking to further quantify or confirm the effects of Vascepa in that area. We do have a very prolific and capable R&D team. In recent years they've come to me with various ideas, let's consider X, Y, and Z and as historically reminded them, that there is almost by definition a greater opportunity that we could be working on then Vascepa in the REDUCE-IT study. And that study in our view had such a high likelihood of success that diluting our efforts to work on other things didn't make sense, focus, focus, focus works. We will be using the talents of those groups to -- that group to evaluate other opportunities that we could be working on. But we still have to get through the -- we've got to get through the presentation of REDUCE-IT results and in the early publication of those results. I -- just before we conclude, there were some questions that came in from the outside. And going through a list of them, and here I see many of them have already been answered. One was, why only 400 sales reps given that REDUCE-IT results exceeded expectations. I remind that we -- in coming to that number, we did our own analysis, we had 2 separate very experienced groups look at the number of rep. We also triangulated around 400 being the right number. We're trying to do is maximize value here for shareholders and it could be argued that if we added more sales reps you potentially have higher revenues. But what we are looking to do is to have sales reps and territories that become profitable relatively quickly. And it's always easier to add more sales reps in the future than they potentially overshoot and have to shrink. So we think that 400 is a large number. It's going to allow us to get top targets. And we're going to combine that with electronic communications and a new market education. And lot of promotion that is going to around -- around those feet on the street. Supplies has been asked about. How can the investors be assured of the FDA will approve and expanded label for Vascepa. I just remind folks that the REDUCE-IT study was conducted under special protocols as per agreement with the FDA that the terms of that agreement were affirmed by the FDA in 2016, the FDA wants outcomes results, REDUCE-IT delivered outcomes results. And we think that this study is very helpful to patients and, we're looking forward to submitting the sNDA. And I'm sure given these results, the FDA will treat it appropriately. With that, I think, we're actually over time beyond what we had planned here for our one hour call. I want to thank everybody who has joined us today. We hope you're back again with us either in person or listening to us around our presentation at AHA on November 10. And we look forward to continuing to update you as we make progress. So thank you all.

Thank you. That concludes today's conference. You may disconnect your lines.