Q1 2022 Amarin Corporation PLC Earnings Call
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Operator: Welcome to Amarin Corporation's conference call to discuss its first quarter 2022 financial results and operational updates. This conference call is being recorded today, May 4th, 2022.
Welcome to Amarin Corporation's conference call to discuss its first quarter 2022 financial results and operational updates.
This conference call is being recorded today may 4th 2022.
Lisa DeFrancisco: I would like to turn the conference call over to Lisa DeFrancisco, Senior Vice President, Investor Relations and Corporate Affairs at Amarin.
I would like to turn the conference call over to Lisa de Francisco Senior Vice President Investor Relations and corporate affairs at Amarin.
Lisa DeFrancisco: Good morning everyone and thank you for joining us.
Good morning, everyone and thank you for joining US 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.
Lisa DeFrancisco: 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.
Lisa DeFrancisco: We may not 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 under-reliance on these statements. We assume no obligation to update these statements as circumstances change.
May not 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.
Lisa DeFrancisco: 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.
Her 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 our actual results to differ materially. Please see the risk factors section of our annual report on Form 10-K for the year ended December 31st two.
Lisa DeFrancisco: For additional information concerning the factors that could cause our actual results, to differ materially, please see the risk factors section of our annual report on Form 10-K for the year ended December 31st, 2021, and our Form 10-Q for the quarter ended March, 31st, 2022, which have been filed with the SEC and are now available through the Investor
<unk> thousand 21, and our Form 10-Q for the quarter ended March 31, 2022, which had been filed with the SEC and are now available through the Investor Relations section of our website at Www Dot Ameren Corp Dot com.
Lisa DeFrancisco: Relations section of our website at www.amarincorp.com.
Lisa DeFrancisco: We encourage everyone to read these documents.
We encourage everyone to read these documents.
Lisa DeFrancisco: This call is intended for investors in AMRIN and is not intended to promote the use of, the SEPA. An archive of this call will be posted on AMRIN's website in the Investor
Call is intended for investors in Amarin and is not intended to promote the use of Vascepa. An archive of this call will be posted on <unk> website in the Investor Relations section.
Lisa DeFrancisco: Relations section.
Karim Macau, Amiens, President and Chief Executive Officer will lead our discussion Doctor, Steve Ketchum, President of R&D, and Chief Scientific Officer will provide an update on our F. T. C program as well as recent clinical data and publications and Mike Kalb image Chief Financial Officer will provide a more detailed review of our first quarter 'twenty.
Two financial results.
After prepared remarks, we will open the call to your questions I remind you that multiple audiences typically listen to calls of this nature, including existing advisors investors potential new investors employees current and potential collaborators and current and potential competitors.
As always in this call we will attempt to provide constructive information without compromising our competitive and strategic positioning.
Now I'll turn the call over to cream, Mchale, President and Chief Executive Officer of Amarin.
Lisa DeFrancisco: Kareem Mikhail, AMRIN's President and Chief
Thank you Lisa good morning, and thank you all for joining US today, we enter 2022 noting that this is a year of execution for amarin and to date, we have accomplished important milestones and are on track to achieve the goals we have set for the year.
Lisa DeFrancisco: Executive Officer, will lead our discussion.
2022 thus far for Amarin is marked by progress across all three pillars of our growth strategy.
Breath or geographic expansion heights, representing diversification and depths or operational evolution.
Lisa DeFrancisco: Dr. Steve Ketchum, President of R&D and Chief
Before I discuss the considerable progress we are making in Europe and across our business I want to touch on our results this quarter and the dynamics, we are facing within our U S business.
Lisa DeFrancisco: Scientific Officer, will provide an update on our FTC program, as well as recent clinical
Lisa DeFrancisco: data and publications.
We recorded $94 $6 million in total net revenue, including 93 5 million dollar and U S product sales during the first quarter of 2022.
Lisa DeFrancisco: And Mike Kalb, AMRIN's Chief Financial Officer, will provide a more detailed review of our first quarter 2022 financial results.
Lisa DeFrancisco: After prepared remarks, we will open the call to your questions. I remind you that multiple, audiences typically listen to calls of this nature, including existing investors, potential new investors, employees, current and potential collaborators, and current and potential competitors.
Lisa DeFrancisco: As always, in this call we will attempt to provide constructive information without compromising
A decline from both the same period in the prior year as well as the prior quarter. The results were impacted by the launch of a third genetic entrance, which disrupted the market considerably at the wholesaler level and resulted in lower volume as well as lower average net selling price as we for.
Lisa DeFrancisco: our competitive and strategic positioning.
Our efforts on securing exclusive business in the face of this additional generic competition.
The decrease in volume for Vascepa sales was predominantly due to amarin customers in the United States, who have not availed themselves of competitive pricing programs and exclusivity. In addition to the genetic market disruption the decreasing revenue was exacerbated by the first quarter seasonality.
We typically experience with beginning of the year deductibles under patient insurance plans.
Lisa DeFrancisco: I'll now turn the call over to Kareem Mikhail, President and Chief Executive Officer of AMRIN.
Mike will discuss these dynamics in more detail shortly.
While our U S revenue was currently supporting our growth strategy. We are very aware of the challenges we face with additional generic competition. We continue to Vigilantly monitor key performance indicators in this market to support our strategy moving forward, including genetic penetration rates more.
Kareem Mikhail: Thank you, Lisa.
It gets supply and Iqos event film market growth among other metrics importantly, as we are closely monitoring the market dynamics in the U S, including prescription trends, we have not seen an acceleration of total genetic penetration with the third entrant on the market.
Kareem Mikhail: Good morning, and thank you, all for joining us today.
Our goal is to offset to these challenges with a focus on operational excellence, where do we have identified and began implementing an approximately $30 million reduction in annual marketing expenses.
With these initial savings and future potential efficiencies. It is our objective to maintain our positive contribution margin defined as U S. Gross profit less U S sales and marketing related expenses.
Kareem Mikhail: We enter 2022 noting that this is a year of execution for AMRIN, and to date we have accomplished important milestones and are on track to achieve the goals we have set for the year. 2022 thus far for AMRIN is marked by progress across all three pillars of our growth strategy, breadth or geographic expansion, height representing diversification, and depth or operational evolution.
Kareem Mikhail: Before I discuss the considerable progress we are making in Europe and across our business, I want to touch on our results this quarter and the dynamics we are facing within our U.S. business. We recorded $94.6 million in total net revenue. Including $93.5 million in U.S. product sales during the first quarter of 2022, a decline, from both the same period in the prior year as well as the prior quarter. The results were impacted by the launch of a third generic entrant, which disrupted the, market considerably at the wholesaler level and resulted in lower volume as well as lower average net selling price as we focused our efforts on securing exclusive business in the face of this additional generic competition.
Kareem Mikhail: The decrease in volume for Vasipa sales was predominantly due to Amarin customers in the United States who have not availed themselves of competitive pricing programs and exclusivity.
In the U S. This year, while we focus on gaining pricing and reimbursement to set the right Foundation for sales in Europe , and four expanding our international business over time, noting that our global growth strategy in its initial stage.
We believe we are making headway in the U S with our go to market strategy and we continue to focus on stabilizing of Vascepa revenue with this focused approach, which includes expanded provider engagement optimized fulfillment of vascepa prescriptions for CV risk reduction and enhanced managed care.
Kareem Mikhail: In addition to the generic market disruption, the decrease in revenue was exacerbated by the first quarter seasonality we typically experience with beginning of the year deductibles under patient insurance plans. Mike will discuss these dynamics in more detail shortly.
Axis.
As of March 31st 2022 through our offerings designed to be competitive with the current market landscape.
Kareem Mikhail: While our U.S. revenue is currently supporting our growth strategy, we are very aware of the challenges we face with additional generic competition. We continue to vigilantly monitor key performance indicators in this market to support our strategy moving forward, including generic penetration rates, market supply, and Icosapent ethyl market growth, among other metrics.
We expanded coverage to approximately 45% of the total commercial and Medicare part D lives on a weighted average basis with vascepa as the exclusive IP product, we believe that although these arrangements do have an adverse impact on the average net selling price.
They may support greater volume stabilization of the business over the medium and longer term, which is one of our key objectives.
Our ongoing efforts to expand provider engagements have been progressing we are seeing the benefits of our digital omnichannel efforts, which are giving us great insight into the prescribers and how best to reach and influence them. We are using these tools to reach our target audience.
Physicians, who treat prior M I patients and the Doctor, who currently prescribe fibroids for their patient at risk for CV event.
In addition, our prescription fulfillment optimization strategy is progressing with our Blink Rx partnership which has provided early wins as we begin to implement this program.
Would also encouraging the use of dispense as written or DSW through in person and digital initiatives to ensure patients receive branded vascepa when prescribed for CV risk reduction indications.
Lastly, we have had some recent and significant development that I would like to highlight.
As you know we are optimizing fulfillment of vascepa prescription for CV risk reduction with a new campaign focused on prior myocardial infarction patients at the heightened risk of a subsequent event supporting this campaign is the compelling data from reduce it that shows vascepa reduced.
CV events by 35% and prior MRI patient.
The benefits of Vascepa in these patients who have experienced a heart attack and are at risk for another cardiovascular events are particularly important given these patients are at elevated risk of recurrent CVD problems.
These results further strengthened the case, we are making to physicians who care for these high risk patients for pure EPA in the form of prescription <unk> ethyl as a key intervention beyond statin for a meaningful risk reduction.
Another area for continuous focus comes very recently following the announcement of discontinuation by another pharmaceutical company of their study prominent which looked at a new five rate for CV risk reduction.
As many of you know as a result of previous field cardiovascular outcome trials. The FDA revoked the approval of Pheno for grades to manage CV risk back in 2015 after concluding that they should not be used in combination with stephens because the risks outweighed the benefits.
This latest study discontinuation is further evidence that the fibroid drug class does not provide proven CV risk reduction important to note that 2 million patients in the U S are prescribed fibroids for CV risk with 60% also receiving a status it is clear.
Not well known within the physician medical community that these patients remain at risk we see this as an opportunity to ensure that patients with high CD risk Con Stephens auto wear and should consider the switched to vascepa.
In summary, we will continue to closely monitor the market dynamics in the U S, where we again have not seen an acceleration of total generic penetration with the third entrant on the market.
Kareem Mikhail: Importantly, as we are closely monitoring the market dynamics in the U.S., including prescription trends, we have not seen an acceleration of total generic penetration with the third entrant on the market.
Kareem Mikhail: Our goal is to offset these challenges with a focus on operational excellence, where we have identified and began implementing an approximately $30 million reduction in annual marketing expenses. With these initial savings and future potential efficiencies, it is our objective to maintain our positive contribution margin, defined as U.S. gross profit, less U.S. sales and marketing-related expenses.
Kareem Mikhail: In the U.S. this year, while we focus on gaining pricing and reimbursement to set the right, foundation for sales in Europe and for expanding our international business over time, noting that our global growth strategy in its initial stages.
Kareem Mikhail: We believe we are making headway in the U.S. with our go-to-market strategy, and we continue to focus on stabilizing the SEPA revenue with this focused approach, which includes expanded provider engagement, optimized fulfillment of the SEPA prescriptions for CV risk reduction, and enhanced managed care access.
Kareem Mikhail: As of March 31, 2022, through our offerings designed to be competitive with the current market landscape, we expanded coverage to approximately 45% of the total commercial and Medicare Part D lives on a weighted average basis, with the SEPA as the exclusive IPE product.
Now moving to Europe , where we have made considerable progress on our strategy.
Kareem Mikhail: We believe that although these arrangements
Kareem Mikhail: Our ongoing efforts to expand provider engagements have been progressing. We are seeing the benefits of our digital omnichannel efforts, which are giving us great, insight into the prescribers and how best to reach and influence them.
Kareem Mikhail: We are using these tools to reach our target audience of physicians who treat prior MI, patients and the doctor who currently prescribes Fibrate for their patient at risk for CV event.
Kareem Mikhail: In addition, our prescription fulfillment optimization strategy is progressing with, our BlinkRx partnership, which has provided early wins as we begin to implement this program.
Kareem Mikhail: We are also encouraging the use of Dispense as Written, or DAW, through in-person and, digital initiatives to ensure patients receive branded Visepa when prescribed for CV risk reduction indications.
We were delighted to announce our first national reimbursement in Sweden as it kicked off the next stage of our European growth strategy.
Kareem Mikhail: Lastly, we have had some recent and significant developments that I would like to highlight.
Kareem Mikhail: As you know, we are optimizing fulfillment of Visepa prescription for CV risk reduction, with a new campaign focused on prior myocardial infarction patients at the heightened risk of a subsequent event. Supporting this campaign is the compelling data from ReduceIT that shows Visepa reduced, CV events by 35% in prior MI patients. The benefits of Visepa in these patients who have experienced a heart attack and are, at risk for another cardiovascular event are particularly important given these patients are at elevated risk of recurrent CV problems.
Kareem Mikhail: These results further strengthen the case we are making to physicians who care for these, high-risk patients for pure EPA in the form of prescription icosapent ethyl as a key intervention beyond statin for meaningful risk reduction.
Kareem Mikhail: Another area for continued focus comes very recently following the announcement of discontinuation, by another pharmaceutical company of their study, Prominent, which looked at a new fibrate for CV risk reduction.
Kareem Mikhail: As many of you know, as a result of previous failed cardiovascular outcome trials, the, FDA revoked the approval of phenofibrates to manage CV risk back in 2015 after concluding that they should not be used in combination with statins because the risks outweighed the benefits.
Kareem Mikhail: This latest study discontinuation is further evidence that the fibrate drug class does, not provide proven CV risk reduction.
We were particularly pleased to have Sweden as our first reimbursement as it is known to be at the forefront in the prevention and treatment of cardiovascular disease and with a disclosed price of approximately 160 euros per month or around 180 U S dollars.
It should also be noted that this pricing in Sweden is essentially an net price with only distribution related fees the duct.
As a reminder, net prices in Europe , especially for chronic treatments tend to be much lower than U S prices.
This achievement acknowledges the value of our skipper and our ability to demonstrate this value to payers in Europe .
We also have clinical and health technology assessment processes and reimbursement discussions progressing across all of the target markets in Europe , where we submitted market access dossiers, including the United Kingdom, Germany, Norway, Finland, France, Italy, Spain.
In Denmark, and the Netherlands.
Turning to the UK.
We are having ongoing active work underway with the National Institute for Health and care Excellence Nice and recently received a second appraisal consult patient document or DCD.
Our second ACD means that the committee was still not able to reach a final recommendation and will require further consultation with stakeholders receipt of a second E. C. D is not uncommon for innovative treatments seeking reimbursement from the national health system in the U K, we continue to conduct.
Duct constructive scientifically substantive discussions with nice and are actively collaborating with all stakeholders involved in this process.
Toward that end, we are receiving positive feedback with strong support from the scientific community who wants to ensure that Vascepa is made available to all relevant patients who are at risk of having a cardiovascular event.
Kareem Mikhail: Important to note that 2 million patients in the U.S. are prescribed fibrates for CV, risk with 60% also receiving a statin.
Kareem Mikhail: It is clearly not well-known within the physician medical community that these patients remain, at high risk for CV risk reduction.
Kareem Mikhail: For more information, please visit www.cdc.gov, risk.
It is important to note that based on our information we understand that nice received in this round of consolidation alone a significant number of formal positive recommendations from experts from across the U K. We expect a final decision later this year and we'll update you on our progress in this important.
Kareem Mikhail: We see this as an opportunity to ensure that patients with high CV risk on statins are aware and should consider the switch to Vaseva.
Kareem Mikhail: In summary, we will continue to closely monitor the market dynamics in the U.S. where we again have not seen an acceleration of total genetic penetration with the third entrant on the market.
Kareem Mikhail: Now moving to Europe where we have made considerable progress on our strategy.
Market.
Kareem Mikhail: We were delighted to announce our first national reimbursement in Sweden as it kicked off the next stage of our European growth strategy. We were particularly pleased to have Sweden as our first reimbursement as it is known to be at, the forefront in the prevention and treatment of cardiovascular disease and with a disclosed price of approximately 160 euros per month or around 180 U.S. dollars.
Move on to our progress in Germany.
Kareem Mikhail: It should also be noted that this pricing in Sweden is essentially a net price with only, distribution related fees deducted.
We are on the market with temporary reimbursement.
Kareem Mikhail: As a reminder, net prices in Europe, especially for chronic treatments, tend to be much lower than U.S. prices.
Kareem Mikhail: This achievement acknowledges the value of Vaskepa and our ability to demonstrate this value to payers in Europe.
We have started and are in early stages of affordable price negotiations in Germany, which entails four to five rounds of negotiations.
Kareem Mikhail: We also have clinical and health technology assessment processes and reimbursement, discussions progressing across all of the target markets in Europe where we submitted market access dossiers including the United Kingdom, Germany, Norway, Finland, France, Italy, Spain, Denmark, and the Netherlands.
Kareem Mikhail: Turning to the U.K., we are having ongoing active work underway with the National Institute for Health and Care Excellence, NICE, and recently received a second appraisal consultation document or ACD. A second ACD means that the committee was still not able to reach a final recommendation and will require further consultation with stakeholders.
Kareem Mikhail: Receipt of a second ACD is not uncommon for innovative treatments seeking reimbursement, from the national health system in the U.K. We continue to conduct constructive, scientifically substantive discussions with NICE and are actively collaborating with all stakeholders involved in this process.
During this early proceedings corrections were requested from GBA due to their scientific and data misinterpretations and misrepresentation and we are in parallel discussions on how to resolve these.
We plan to continue with these corrective efforts and negotiations and oral endless and defending the strength of the long term outcome data from reduce it with significant support from the major medical societies in the medical community.
Our initial sales in Germany continue to be impacted by local market conditions predominantly the ongoing impact from COVID-19, which had a second peak during the quarter, which experienced a 320% increase in new cases for a total of 19 million cases that.
<unk> at 25% of the German population and resulted in significant disruption of the activity of the practices and hospitals.
Local market conditions in Germany are also affected by newly proposed healthcare austerity measures, which are being implemented as a result of the challenging political situation in Europe , which has impacted our initial sales during this launch period.
And beyond Germany, we have important progress to announce in France, where we received a positive reimbursement assessment from French National Authority for health or H, a S in France and that we have started the process of price negotiation.
France is a very significant cardio metabolic market, where no omega three product has ever been assessed positively by HHS, but due to the strength of reduce it data. The team was able to achieve this very important milestone.
Finally discussions in central and eastern Europe have been impacted by the local political conditions. However, our partnership discussions in Greece, which is a key market in the region are advancing with.
Reimbursement discussions are in various stages of progress in the other markets, where we have submitted market ex associates, we remain on track to receive pricing decisions and up to eight countries with plans to launch of escape and up to six European countries. This year, we expect to have updates on at least two.
Two major markets by our next earnings call.
In Europe , it's important to note that we are taking a regional approach to growth and expansion. What our goal is to build a strong sustainable diverse revenue stream based on multiple markets and this has driven our market access strategy to submit our doses in 10 countries in pattern.
Sure.
Also remember that the achieved price anchor in Sweden is very positive and is allowing us to evolve our price negotiations in multiple European countries with this regional strategy and diversity of product launch times and penetration curves. We are confident that we are laying the right foundation to achieve.
Revenue potential in Europe of over $1 billion.
Beyond Europe , and the U S. At the end of last year, we introduced a bold plan to unlock the potential of Vascepa internationally.
The plan calls for three waves of regulatory submissions for approval of Vascepa in 20 additional countries in order to ensure that patients in the top 50, cardio metabolic markets worldwide can benefit from vascepa toward that end, we continue to make meaningful progress in the first wave.
Kareem Mikhail: Toward that end, we are receiving positive feedback with strong support from the scientific community who wants to ensure that Vaskepa is made available to all relevant patients who are at risk of having a cardiovascular event.
Kareem Mikhail: It is important to note that based on our information, we understand that NICE received in this round of consultation alone a significant number of formal positive recommendations from experts from across the U.K. We expect a final decision later this year and will update you on our progress in this important market.
Kareem Mikhail: Let me move on to our progress in Germany, where we are on the market with temporary reimbursement.
Kareem Mikhail: We have started and are in early stages of formal price negotiations in Germany, which entails four to five rounds of negotiations. During these early proceedings, corrections were requested from GBA due to their scientific, and data misinterpretations and misrepresentations, and we are in parallel discussions on how to resolve these.
Kareem Mikhail: We plan to continue with these corrective efforts and negotiations and are relentless, in defending the strength of the long-term outcome data from Reduce-It, with significant support from the major medical societies and the medical community.
Kareem Mikhail: Our initial sales in Germany continue to be impacted by local market conditions, predominantly, the ongoing impact from COVID-19, which had a second peak during the quarter, which experienced a 320% increase in new cases for a total of 19 million cases that affected 25% of the German population and resulted in significant disruption of the activity of the practices, and hospitals. Local market conditions in Germany are also affected by newly proposed healthcare austerity, measures which are being implemented as a result of the challenging political situation in Europe, which has impacted our initial sales during this launch period.
Kareem Mikhail: And beyond Germany, we have important progress to announce in France, where we received a, positive reimbursement assessment from French National Authority for Health, or HAS, in, France, and that we have started the process of price negotiation.
These efforts.
Kareem Mikhail: France is a very significant cardiometabolic market where no omega-3 product has ever been, assessed positively by HAS, but due to the strength of Reduce-It data, the team was able to achieve this very important milestone.
Kareem Mikhail: Reimbursement discussions are in various stages of progress in the other markets where we, have submitted market access dossiers.
Kareem Mikhail: Finally, discussions in Central and Eastern Europe have been impacted by the local political, conditions.
Following the acceptances for regulatory review of Vascepa in Australia, and New Zealand. The doses have now entered a full assessment by the respective national regulatory authorities in these countries in Israel Vascepa was accepted for regulatory review by the relevant authority and our submission is adverse.
Kareem Mikhail: However, our partnership discussions in Greece, which is a key market in the region, are advancing, well.
Kareem Mikhail: We remain on track to receive pricing decisions in up to eight countries with plan to launch, VASCEPA in up to six European countries this year.
Kareem Mikhail: We expect to have updates on at least two major markets by our next earnings goal.
Kareem Mikhail: In Europe, it's important to note that we are taking a regional approach to growth and, expansion, where our goal is to build a strong, sustainable, diverse revenue stream based on multiple markets, and this has driven our market access strategy to submit our dossiers in 10 countries in parallel.
Kareem Mikhail: Also remember that the achieved price anchor in Sweden is very positive and is allowing, us to evolve our price negotiations in multiple European countries.
<unk> as their local processes, we would also successful and submitting our reimbursement file at the same time to ensure market access for Vascepa in Israel as soon as possible.
Biologics our partner in the Middle East and North Africa Mena.
We received the official registration certificate for the Kingdom of Saudi Arabia KSA.
Regulatory authority for Vascepa for the treatment of city at hyper through I guess it email on March eight.
This first approval in PSC enables the preparation and submission of a variation to seek review and approval for the cardiovascular risk reduction indication.
This brings the total of number of countries approved in the Mena region to six being Saudi Arabia, United Arab Emirates, Lebanon, Kuwait, Bahrain and Qatar.
In Canada, our partner H L. S completed negotiation with candidates Pan Canadian pharmaceutical alliance for the terms and conditions under which Vascepa will qualify for public markets reimbursement in Canada.
Following these negotiations HOS signed the letter of intent.
Allowing them to work with all participating provincial jurisdiction to secure coverage from publicly funded truck plants across Canada and for Vascepa to potentially be added to their respective plans. We look forward to an update on their progress in the coming months.
Public markets reimbursement for Vascepa and a large single payer country like Canada is a validation of the CV risk reduction benefit of the product and underscoring its far microeconomic value. As a reminder, we have agreed to a partnership of HOS with Pfizer <unk>.
H L. S will promote to specialists and Pfizer will promote to the largest primary care physician group.
This signed letter of intent with BCP will further maximize the value of this partnership with Vascepa being accessible to patients and the public sector in Canada.
Lastly, our current partnership approval for Vascepa in Hong Kong for the CV risk reduction indication has been recently received and a commercial launch is planned for Hong Kong later in the year.
The new drug application for Vascepa in mainland China remains under review by the Chinese National Medical product Administration. MD&A includes the previously announced successful results of phase III studies, including reduce it we believe that a decision can still be expected by the end of this.
Year.
Moving forward, we remain confident in the multibillion dollar global market opportunity for Vascepa of escape, but in Europe and internationally and are beginning to see this opportunity come to fruition.
Kareem Mikhail: With this regional strategy and diversity of product launch times and penetration curves, we are confident that we are laying the right foundation to achieve revenue potential in, Europe of over $1 billion.
Before I turn the call over to Dr. Steve Ketchum, Hamilton's EVP President of R&D, and Chief Scientific officer to discuss portions of the height or diversification pillar of our core growth strategy, including our fixed dose combination and the recent advancements in our data.
I wanted to note that we continue to search for opportunities for business development in the cardio metabolic space, while continuing to advance our internal development of a fixed dose combination portfolio for vascepa.
We also continue to strengthen our leadership team what I would like to welcome two new members I am pleased to welcome David Keenan as senior Vice President of technical operations, who will be joining us in mid may and will be based in our Dublin offices.
And Doctor at an ideal EBIT year, Senior Vice President and Chief Medical Officer, who joined US last week and will be based in our offices into Switzerland to build a global cross functional medical organization as we build support for Vascepa of escape out globally.
Kareem Mikhail: Beyond Europe and the U.S., at the end of last year, we introduced a bold plan to unlock, the potential of VASCEPA internationally.
Now I will turn it over to Dr. Steve Ketchum, Steve.
Kareem Mikhail: The plan calls for three waves of regulatory submissions for approval of VASIPA in 20, additional countries in order to ensure that patients in the top 50 cardiometabolic markets worldwide can benefit from VASIPA. Toward that end, we continue to make meaningful progress in the first wave of these efforts. Following the acceptances for regulatory review of VASIPA in Australia and New Zealand, the, dossiers have now entered full assessment by the respective national regulatory authorities in these countries.
Thank you Karim first I would like to begin by providing an update regarding data recently presented at ACC that is relevant to our fixed dose combination of iqos ethanol on a statin I'll then discuss some recent sub analysis data from reduce it that we are excited about as well as some other <unk>.
Recent important developments in cardiovascular data.
Kareem Mikhail: In Israel, VASIPA was accepted for regulatory review by the relevant authority and our submission, is advancing as per local processes. We were also successful in submitting our reimbursement file at the same time to ensure, market access for VASIPA in Israel as soon as possible.
First our fixed dose combination or FTC development remains in the early stages and we were encouraged by the in vitro data recently presented at the American College of Cardiology annual meeting or ACC.
Kareem Mikhail: Biologics, our partner in the Middle East and North Africa, MENA, received the official, registration certificate for the Kingdom of Saudi Arabia, KSA, regulatory authority for, VASIPA for the treatment of severe hypertriglycemia on March 8th. This first approval in KSA enables the preparation and submission of a variation to seek review, and approval for the cardiovascular risk reduction indication. This brings the total of number of countries approved in the MENA region to six, being, Saudi Arabia, United Arab Emirates, Lebanon, Kuwait, Bahrain, and Qatar.
Kareem Mikhail: In Canada, our partner HLS completed negotiation with Canada's Pan-Canadian Pharmaceutical, Alliance for the terms and conditions under which VASIPA would qualify for public market reimbursement in Canada. During these negotiations, HLS signed a letter of intent allowing them to work with all participating, provincial jurisdictions to secure coverage from publicly funded drug plants across Canada and for VASIPA to potentially be added to their respective plants.
Kareem Mikhail: We look forward to an update on their progress in the coming months.
Kareem Mikhail: Public market reimbursement for VASIPA in a large, single-payer country like Canada, is a validation of the severe risk reduction benefit of the product and underscoring its pharmacoeconomic value.
Kareem Mikhail: As a reminder, we have agreed to a partnership of HLS with Pfizer by which HLS will promote, to specialists and Pfizer will promote to the large primary care physician group.
Kareem Mikhail: Lastly, our current partnership approval for VASIPA in Hong Kong for a CV risk reduction, indication has been recently received and a commercial launch is planned for Hong Kong later in the year.
Kareem Mikhail: This signed letter of intent with PCPA will further maximize the value of this partnership, with VASIPA being accessible to patients in the public sectors in Canada.
The data showed that while status and EPA can work independently to reduce lipid oxidation, which can contribute to CD risk they might work even better together.
These findings are another compelling piece of evidence that support our belief regarding the potential for increased benefit to appropriate high risk patients from vascepa in combination with statin, which is consistent with the results from the reduce it trial.
Kareem Mikhail: The new drug application for VASIPA in mainland China remains under review by the Chinese, National Medical Product Administration and the NDA includes the previously announced successful results of Phase 3 studies including Reduce-It.
Kareem Mikhail: We believe that a decision can still be expected by the NDA, of this year.
If successful the combination therapy would be a game changer for patients since it will carry the most significant cardiovascular risk outcome benefit label and would hopefully provide additional market exclusivity within a potential multibillion dollar market opportunity.
Kareem Mikhail: Moving forward, we remain confident in the multi-billion dollar global market opportunity for VASIPA, VASKEPA in Europe and internationally and are beginning to see this opportunity come to fruition.
Kareem Mikhail: Before I turn the call over to Dr. Steve Ketchum,
Kareem Mikhail: Amerin's EVP, President of R&D and Chief Scientific Officer, to discuss portions of the height or diversification pillar of our core goals strategy, including our fixed-dose combination and recent advancements in our data, I wanted to note that we continue to search for opportunities for business development in the cardiometabolic space while continuing to advance our internal development of a fixed-dose combination portfolio for VASIPA.
Kareem Mikhail: We also continue to strengthen our leadership team, where I would like to welcome two new members.
Kareem Mikhail: I'm pleased to welcome David Keenan as Senior Vice President of Technical Operations, who will be joining us in mid-May, and will be based in our Dublin offices.
Kareem Mikhail: And Dr. Nabil Abadir, Senior Vice President and Chief Medical Officer, who joined us last week and will be based in our offices in Zug, Switzerland, to, build a global, cross-functional medical organization as we build support for VASIPA, VASCEPA globally.
Kareem Mikhail: Now I will turn it over to Dr. Steve Ketchum.
Second we continued to benefit from the strength size and long term duration of the reduce it trial, which is producing ongoing datasets that add to the growing body of clinical evidence in support of the CV risk reduction benefits of Vascepa vascepa in high risk patients.
Steve Ketchum: Steve?
Steve Ketchum: Thank you, Karim.
We continue to support ongoing research and clinical work that further characterize and validates the mechanisms through which iqos <unk> ethyl exerts its biological activities and ongoing data analysis of reduce it to further explore the efficacy and safety profile and additional subgroups of patients to further distinguish vasu.
<unk> is one of the most significant products to reduce CV risk since the introduction of status.
Steve Ketchum: First, I would like to begin by providing an update regarding data recently presented at ACC that is relevant to our fixed-dose combination of icosapent, ethyl, and astatin.
This work has included recent presentations at ACC as well as recently published sub analysis from the reduce it trial, including the very compelling results from reduce it PCI and prior EMI analysis.
Steve Ketchum: I'll then discuss some recent sub-analysis data from REDUCE-IT that we are excited about, as well as some other recent important developments in cardiovascular data.
Steve Ketchum: First, our fixed-dose combination, or FDC, development remains in the early stages, and we were encouraged by the in vitro data recently presented at the American College of Cardiology Annual Meeting, or ACC. The data show that while statins and EPA can work independently to reduce lipid oxidation, which can contribute to CV risk, they might work even better together.
Steve Ketchum: These findings are another compelling piece of evidence that support our belief regarding the potential for increased benefit to appropriate high-risk patients from VASIPA in combination with statins, which is consistent with the results from the REDUCE-IT, trial.
Steve Ketchum: If successful, the combination therapy would be a game-changer for patients, since it will carry the most significant cardiovascular risk outcome benefit label, and would hopefully provide additional market exclusivity within a potential multibillion-dollar market opportunity.
In reduce it PCI post hoc exploratory analysis showed that for the primary composite endpoint of five point mace.
To first event was significantly reduced with vascepa versus placebo by 34% and total first and subsequent events were also significantly reduced by 39%.
For the key secondary composite endpoint of three point Mace time to first event was significantly reduced by 34%.
In this subgroup of patients with the prior PCI.
In the prior MRI data just published in Jack pre specified and post hoc exploratory analysis showed that for the primary composite endpoint of five point Mace time to first event was significantly reduced with vascepa versus placebo by 26% equating to an absolute risk reduction of five.
<unk>, 9% and total events were significantly reduced by 35% in the subgroup of patients with prior <unk>, who are at high risk of another major event.
Both collectively and independently these data underscore the real clinical benefits of Vascepa vis capa and various at risk patient populations and help support our value proposition for Vascepa Scapa.
Steve Ketchum: Second, we continue to benefit from the strength, size, and long-term duration of the REDUCE-IT, trial, which is producing ongoing data sets that add to the growing body of clinical evidence in support of the CV risk reduction benefits of VASIPA-VASKEPA in high-risk patients.
In summary, I believe we will continue to benefit from the strength size and long term duration of the reduce it trial and we plan to continue to support ongoing research and clinical work on mechanistic aspects for Iqos, <unk>, Apple and to support additional data and analysis of patient subgroups.
Steve Ketchum: We continue to support ongoing research and clinical work that further characterizes and, validates the mechanisms through which icosapent ethyl exerts its biological activities, and ongoing data analysis of REDUCE-IT that further explores the efficacy and safety profile in additional subgroups of patients to further distinguish VASIPA-VASKEPA as one of the most significant products to reduce CV risk since the introduction of staph. This work has included recent presentations at ACC, as well as recently published sub-analyses, from the REDUCE-IT trial, including the very compelling results from REDUCE-IT PCI and prior MI analyses.
Steve Ketchum: In REDUCE-IT PCI, post-hoc exploratory analyses showed that, for the primary composite endpoint, of 5-point MACE, time-to-first event was significantly reduced with Visepa versus placebo by 34%, and total first and subsequent events were also significantly reduced by 39%. For the key secondary composite endpoint of 3-point MACE, time-to-first event was significantly, reduced by 34% in the subgroup of patients with the prior PCI. In the prior MI data just published in JAK, pre-specified and post-hoc exploratory analyses, showed that, for the primary composite endpoint of 5-point MACE, time-to-first event was significantly reduced with Visepa versus placebo by 26%, equating to an absolute risk reduction of 5.9%, and total events were significantly reduced by 35% in the subgroup of patients, with prior MI who are at high risk of another major event.
Steve Ketchum: Both collectively and independently, these data underscore the real clinical benefits, of Visepa-Vaskepa in various at-risk patient populations and help support our value proposition for Visepa-Vaskepa.
Steve Ketchum: In summary, I believe we will continue to benefit from the strength, size, and long-term, duration of the REDUCE-IT trial, and we plan to continue to support ongoing research and clinical work on mechanistic aspects for icospin ethyl and to support additional data analyses of patient subgroups.
I will now turn the call over to Michael Kalb, our CFO to discuss Q1 'twenty two performance in further detail Mike.
Steve Ketchum: I will now turn the call over to Michael Kalb, our CFO, to discuss Q1-22 performance in further detail.
Mike Kalb: Mike?
Mike Kalb: Thanks, Steve.
Mike Kalb: For the first quarter of 2022, we reported net total revenue of $94.6 million, including, net product revenue of $94 million, a decrease of 33% and 34%, respectively, compared to the first quarter of 2021. We saw a number of compounding factors impact our product sales in the U.S. during the first, quarter. Approximately half of the decrease in net product revenue was driven by a decline in, volume, with the remainder of the decrease resulting from price erosion.
Thanks, Steve for the first quarter of 2022, we reported net total revenue of $94 6 million.
Including net product revenue of $94 million, a decrease of 33%, 34%, respectively compared to the first quarter of 2021.
We saw a number of compounding factors impact our product sales in the U S. During the first quarter.
Approximately half of the decrease in net product revenue was driven by a decline in volume with the remainder of the decrease resulting from price erosion.
Mike Kalb: We had a new generic entrant in January, which we believe had a major disruptive impact, in the market. With the launch of this additional generic entrant in January, there are currently three, generics in the market.
We had a new generic entrant in January which we believe had a major disruptive impact in the market with the launch of this additional generic entrants in January there are currently three generics in the market.
Mike Kalb: As a reminder, during the three months ended March 31, 2021, there was only one generic, in the market. The increase in generic competition, including the impact of the initial launch of the third, generic, adversely impacted the volume as well as the net pricing of branded Visepa in the three months ended March 31, 2022.
As a reminder, during the three months ended March 31, 2021, there was only one generic in the market.
The increase in generic competition, including the impact of the initial launch of the third generic adversely impacted the volume as well as the net pricing of branded Vascepa and the three months ended March 31 2022.
Mike Kalb: We made concerted efforts to focus on retaining exclusive business. In addition, compared with other quarters of the year, beginning of the year deductibles, under certain patient insurance plans, which are not unique to Visepa and not new this year, tend to cause some patients to not fill prescriptions, particularly for asymptomatic medical conditions.
We made concerted efforts to focus on retaining exclusive business and addition, compared with other quarters of the year beginning of the year deductibles under certain patient insurance plans, which are not unique to vascepa and not new this year tend to cause some patients to not fill prescriptions, particularly for <unk>.
Mike Kalb: Further, and potentially as an impact of the third generic entrant, while still remaining, within normal industry ranges, the wholesalers decreased their branded Visepa inventory levels as of March 31, 2022, by approximately 40% in terms of bottles from the beginning of the quarter.
Symptomatic medical conditions.
Further and potentially has an impact of the third generic entrant, while still remaining within normal industry ranges. So wholesalers decreased their branded vascepa inventory levels as of March 31, 2022 by approximately 40% in terms of bottles from the beginning of the quarter.
Mike Kalb: By comparison, wholesaler inventory balance has decreased by 10% during the first quarter, of 2021.
By comparison, our wholesaler inventory balances decreased by 10% during the first quarter of 2021.
Mike Kalb: The inventory balances for the first quarter of 2022, as calculated based on days of sales, on hand, were near the high end of the range at the beginning of the quarter, and reduced to the lower end of the range at the end of the first quarter of 2022.
The inventory balances for the first quarter of 2022 as calculated based on days of sales on hand were near the high end of the range at the beginning of the quarter and reduced the lower end of the range at the end of the first quarter of 2022.
Mike Kalb: This compared to a slight increase in days of sales on hand at the end of the first quarter, of 2021, compared to the beginning of the first quarter of 2021.
This compared to a slight increase in days of sales on hand at the end of the first quarter of 2021.
Compared to the beginning of the first quarter of 2021.
Mike Kalb: We continue to focus on our performance in the market, and are evaluating the potential, positive impact a COVID recovery may have on our business in the coming quarters.
We continue to focus on our performance in the market and are evaluating the potential positive impact of the Covid recovery may have on our business in the coming quarters.
Mike Kalb: The patient need for Visepa in the U.S. remains solid, as we have seen from the prescription, data, and our U.S. go-to-market strategy may result in IPE market expansion and support a stabilization of the business.
The patient need for Vascepa in the U S remains solid as we have seen from the prescription data and our U S. Go to market strategy May result, in an IP market expansion and supporting stabilization of the business.
Mike Kalb: We will know more in the coming weeks.
We will know more in the coming weeks.
Mike Kalb: The U.S. business continued to be profitable from a contribution margin perspective, which, is gross profit less sales and marketing related expenses, and continues to provide support for the expansion into Europe and other geographies around the world.
<unk> business continued to be profitable from a contribution margin perspective, which is gross profit less sales and marketing related expenses and continues to provide support for the expansion into Europe and other geographies around the world.
Mike Kalb: During the first quarter of 2022, we reported operating expenses of $100.7 million, a decrease, of 13% compared to the first quarter of 2021. The decrease is related to the implementation of our go-to-market strategy in the U.S., including reducing our sales force footprint and increasing our reach through digital platforms. As we have discussed previously, as part of our go-to-market strategy, we have increased, the variability of certain of our U.S. marketing expenses, which are tied to sales volume.
During the first quarter of 2022, we reported operating expenses of $107 million.
A decrease of 13% compared to the first quarter of 2021.
The decrease is related to the implementation of our go to market strategy in the U S, including reducing our sales force footprint and increasing our reach through digital platforms.
As we have discussed previously as part of our go to market strategy. We have increased the variability of certain of our U S marketing expenses, which are tied to sales volume.
Mike Kalb: These savings were partially offset by our investments in growth and expansion in Europe, and other markets outside of the U.S.
These savings were partially offset by our investments in growth and expansion in Europe and other markets outside of the U S.
Mike Kalb: We are focused on maintaining our operational efficiencies going forward.
We are focused on maintaining our operational efficiencies going forward.
Mike Kalb: Under US GAAP, Ameren reported net loss of $31.6 million for the first quarter of 2022, or basic and diluted loss per share of $0.08.
Under U S. GAAP Amarin reported net loss of $31 6 million for the first quarter of 2022 or basic and diluted loss per share of <unk>.
Mike Kalb: We continue to monitor the ongoing global supply chain issues, which are resulting in, inventory supply shortages for numerous companies and products.
We continue to monitor the ongoing global supply chain issues, which are resulting in inventory supply shortages for numerous companies and products.
Mike Kalb: We believe we have and are maintaining adequate supply to meet the expected global demand, including our global expansion plans and pipeline advancements.
We believe we have and are maintaining adequate supply to meet the expected global demand, including our global expansion plans and pipeline advancements.
Mike Kalb: As of March 31, 2022, Ameren reported aggregate cash and investments of $389.3 million, consisting, of cash and cash equivalents of $219.2 million and liquid short-term and long-term investments of $143.4 million and $26.7 million, respectively.
As of March 31, 2020 to Ameren reported aggregate cash and investments of $389 $3 million.
<unk> of cash and cash equivalents of $219 $2 million and liquid short term and long term investments of $143 $4 million and $26 $7 million respectively.
Mike Kalb: As a reminder, cash burn has historically been higher in the first quarter of the year, as a result of timing of payments of certain rebates and other items.
As a reminder, cash burn has historically been higher in the first quarter of the year as a result of timing of payments of certain rebates and other items we.
Mike Kalb: We will continue to manage our cash prudently relative to business performance and believe, our current available cash and resources, including U.S. profitability, are adequate to support continued operations, including European launch activities, for at least the next 12 months.
We will continue to manage our cash prudently relative to business performance and believe our current available cash and resources, including U S profitability are adequate to support continued operations, including European launch activities for at least the next 12 months.
Mike Kalb: With that financial overview, I will now turn the call back to Karim for closing remarks.
With that financial overview, I'll now turn the call back to cream for closing remarks Karim.
Kareem Mikhail: Karim?
Kareem Mikhail: Thank you, Mike, for that financial overview.
Thank you Mike for that financial overview, we have a busy year ahead of us as we work to achieve the ambitious goals. We set for 2022, we remain focused on executing our global growth strategy. We just reviewed with you confident that we can continue to build a multibillion dollar glue.
Kareem Mikhail: We have a busy year ahead of us. As we work to achieve the ambitious goals we set for 2022, we remain focused on executing, the global growth strategy we just reviewed with you, confident that we can continue to build a multibillion-dollar global franchise.
Franchise.
Kareem Mikhail: And more importantly, we can achieve our bold vision to stop cardiovascular disease from, being a leading cause of death worldwide.
And more importantly, we can achieve our bold vision to stop cardiovascular disease from being a leading cause of death worldwide and with that operator, we are ready to take questions.
Kareem Mikhail: And with that, operator, we are ready to take questions.
Operator: Certainly.
Operator: Ladies and gentlemen, the floor is now open for questions.
Certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time we.
Operator: If you have any questions or comments, please press star 1 on your phone at this time.
Operator: We do ask that while posing your question, please pick up your handset if you're listening, on speakerphone to provide optimum sound quality.
We do ask that while posing your question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.
Operator: Once again, if you have any questions or comments, please press star 1 on your phone.
Once again, if you have any questions or comments. Please press star one on your phone. Please hold while we poll for questions.
Operator: Please hold while we poll for questions.
Operator: Your first question is coming from Michael Yee from Jeffries.
Your first question is coming from Michael Yee from Jefferies. Your line is live.
Operator: Your line is live.
Jiajun Wen: Hi.
Jiajun Wen: Good morning.
Jiajun Wen: This is Jiajun Wen on the line for Mike Yee.
Hi, Good morning. This is charging went on the LIFO Mike. Thanks for taking my questions. Maybe a few for me of course one is.
Jiajun Wen: Thanks for taking my questions.
Jiajun Wen: Maybe a few for me.
Jiajun Wen: First one is, how do you think about sales trajectory in US and EU going forward?
How do you think about sales trajectory in U S and EU going forward I think you mentioned in your press release that the sales decline was due to a 50 50 volume and net pricing in the U S.
Jiajun Wen: I think you mentioned in your press release that the sales decline was due to 50-50 volume, and net price in the US.
Jiajun Wen: Could you remind us how much net price has fallen and what's your current level of G2NS?
Could you remind us how much net price has fallen and what your current level of GTO and <unk> and do you see any opportunities to improve <unk> and in the U S.
Jiajun Wen: And do you see any opportunities to improve G2NS in the US?
Jiajun Wen: And maybe a related one, how do you define success for your go-to-market strategy in, US?
And maybe a related one.
Do you define success for your go to market strategy in U S.
Jiajun Wen: And maybe also briefly comment on what be the opportunities you are looking at right, now and if there is a timeline to enlicense.
And <unk>.
Maybe also briefly comment on what BD opportunities you are looking at right now.
What's the timeline.
Two in lifestyle.
Jiajun Wen: And maybe lastly, do you foresee any supply issues for your current sales and combination, retail in development?
And maybe lastly, do you foresee any supply issues for your color sales in combat.
Competition pale in development. Thank you.
Jiajun Wen: Thank you.
Kareem Mikhail: Thank you for the compounded question.
Thank you for the compounded question I think we'll be able to cover a lot of ground with that so well, let's start about U S sales in EU revenue.
Kareem Mikhail: I think we'll be able to cover a lot of ground with that.
Kareem Mikhail: So let's start about US sales and EU revenue. So to analyze again for you the situation with regards to US revenue, we basically have, four different variables impacting our performance this quarter.
No.
To analyze again for you the situation with regards to U S revenue, we basically half or different variables impacting our performance. This quarter. The first one is prescription.
Kareem Mikhail: The first one is prescription.
Kareem Mikhail: We have a prescription decline of 11-12%.
Prescription declines.
11%, 12%.
Kareem Mikhail: Then we have a channel impact from a wholesaler level and we have a price impact and all of, this is exacerbated by the fact that this is the first quarter of the year and we have the whole deductible thing.
We have a channel impact from a wholesaler level and we have a price impact and all of this is exacerbated by the fact that this is the first quarter of the year and we have the whole deductible things that's really.
Kareem Mikhail: So that's really just to sum up what has happened on the US level.
Just to sum up what has happened.
Kareem Mikhail: Now if we try to take these variables and project ourselves in the future just to see, what to expect and as you know the market is very dynamic so it's not possible to speculate.
Now if we try to take these variables and project ourselves in the future just to see what to expect as you know the market is very dynamic so it's.
Kareem Mikhail: But if you look at prescription, I think for many of us we were looking at the prescription, trends seeing that even with the third generic entrant there is no acceleration for the total generic class.
Possible to speculate, but if you look at prescription I think for many of US we were looking at the prescription trends seeing that even with the third generic entrant. There is no acceleration for the total generic.
Kareem Mikhail: So that is definitely a signal that says nothing unusual is happening there.
Glass so that is definitely.
A signal that says.
Nothing unusual that's happening there it continues to grow but nothing unusual.
Kareem Mikhail: It continues to grow but nothing unusual.
Kareem Mikhail: Now the channel is an unexpected impact and we have to see whether this is going to be, sustained over time or not.
Panel is an unexpected impact and we have to see whether this is going to be sustained over time or not right.
Kareem Mikhail: We are at the lowest level of days on hand so we'll see if this is going to evolve over, time.
The lowest level of days on hand, so we'll see if this is going to evolve over time.
Kareem Mikhail: If it evolves it will evolve more positively not negatively because we are at, as you heard, from Mike, we are at the bottom of the range.
Evolves it will evolve positively negatively because we are at as you heard from Mike We are at the bottom of the range right now if we go to price.
Kareem Mikhail: Now if we go to price this is a decision that we took to be competitive from a price perspective, when we have a third entrant on the market and there is a group of customers that have decided to take advantage of the price that we are offering and some others who did not.
This is a decision that we took to be competitive from a price perspective, when we haven't entered the market.
There is a group of customers that have decided to take advantage of.
The price that we are offering and some others, who did not now in the segment where customers agreed to our offer we had actually stabilizing volume. So we cannot see that from the overall prescription trends, but within that segment. We actually don't have a decline we are securing the volume.
Kareem Mikhail: Now in the segment where customers agreed to our offer we are actually stabilizing volume.
Kareem Mikhail: So you cannot see that from the overall prescription trends but within that segment we actually, don't have a decline. We are securing the volume albeit at a lower margin but we are securing the volume.
Be it at a lower margin, but with securing the volume.
Kareem Mikhail: In the other part of the market where customers decided, even with a competitive price, not, to avail themselves of that offer, we're losing volume there.
And the other part of the market, where customers decided even waves of competitive price not reveal themselves of that offer.
Volume there.
Kareem Mikhail: Now that dynamic will play over the next weeks, maybe months, but it will have to stabilize, at a certain point in time, sometime this year, right?
That dynamic will play over the next weeks maybe months.
Have to stabilize at a certain point in time sometime this year right. So this is really just analyzing U S revenue and what we expect out of that.
Kareem Mikhail: So this is really just analyzing U.S. revenue and what to expect out of that.
Kareem Mikhail: EU revenue at this stage, I mean, the only source of revenue is Germany.
Revenue at this stage I mean, the only source of revenue is Germany I'm sure you've heard our comments on the situation in Germany. The market is significant.
Kareem Mikhail: I'm sure you heard all our comments on the situation in Germany.
Kareem Mikhail: The market is severely disrupted at this point in time for us and for everybody else.
Disrupt it at this point in time for us and for everybody else. So at this point in time, we're just.
Kareem Mikhail: So at this point in time, we're just focusing in Europe on getting the best price and reimbursement, because that's the right foundation.
Focusing in Europe on getting the best price and reimbursement because thats, the right Foundation and as a reminder.
Kareem Mikhail: And as a reminder, pricing and reimbursement in Europe will in the future go down, not, up.
Pricing and reimbursement in Europe .
And the future go down not up so the higher you start the better this is and that's the focus we have on their inventory levels. So that was first question.
Kareem Mikhail: So the higher you start, the better this is, and that's the focus we have on the European, level.
Kareem Mikhail: So that was first question.
Kareem Mikhail: Defining success in the U.S., I will just go back to what I just discussed, right?
Finding success in the U S. I will just go back to what I just discussed right. So if we are able to stabilize the volume aimed.
Kareem Mikhail: So if we are able to stabilize the volume in the exclusive sector of the market and, after stabilization, maybe grow that with the opportunities that we have on the market today, as you've seen, we mentioned too.
AMD exclusive sector of the market.
After stabilization maybe grow that with the opportunities that we have on the market today and as you've seen we mentioned too we.
Kareem Mikhail: We mentioned the new data from the post-MI and PCI data, but we also mentioned the opportunity, of the discontinuation of Prominent where we have 2 million patients on Fibrate with a third piece of evidence that says they don't provide, you know, benefits.
Mentioned, the new data from the post MRI and PCI data, but we also mentioned the opportunity of the discontinuation of permanent where we have 2 million patients from five rate with a third piece of evidence that says they don't provide benefit so thats I don't want Q&A for us after stabilization to grow with them.
Kareem Mikhail: So that's an opportunity for us after stabilization to grow within that exclusive segment.
That exclusive segment.
Kareem Mikhail: Busy timelines are very difficult to predict, right?
Timelines are very difficult to predict right. I mean, we we are staying very close to that space and we are considering every opportunity having said that this is not about rushing to do something this is about creating shareholder value. So if there is any yield.
Kareem Mikhail: I mean, we are staying very close to that space, and we are considering every opportunity.
Kareem Mikhail: Having said that, this is not about rushing to do something, this is about creating shareholder, value.
Kareem Mikhail: So if there is a deal that will bring value, we will act on it, but we are not going to, act on something that we believe is not going to add shareholder value.
That will bring value, we would act on it but.
We are not going to act on something that we believe is not going to add shareholder value. Finally supply. We believe we have sufficient supply there is significant disruption.
Kareem Mikhail: And finally, supply.
Kareem Mikhail: We believe we have sufficient supply. There is significant disruption in supply, not just for us, but in the whole industry.
Supply not just for us, but in the whole industry.
Kareem Mikhail: So we stay very close, but for the moment, we've sufficiently supplied ourselves for, the U.S. and for Europe and internationally.
So we stay very close but for the moment, we're sufficiently supplied ourselves.
For the U S and for Europe and internationally. Thank you for the question.
Kareem Mikhail: Thank you for the question.
Jiajun Wen: Thank you so much.
Jiajun Wen: Very helpful.
Thank you so much very helpful. Thank you.
Jiajun Wen: Thank you.
Thank you. Your next question is coming from lowest Chen from Cantor.
Operator: Our next question is coming from Lois Chin from Cantor.
Operator: Your line is live.
Lois Chin: Hi.
Your line is live.
Lois Chin: Thank you for taking my questions.
Lois Chin: So I had a few here.
Hi, Thank you for taking my questions. So I had a few here first one I had for you was on the U S. Sales do you think they will return to growth. If you expand the market or is it really going to be a source of funds for global expansion and then second question I had for you is what other innovative areas interest you.
Lois Chin: The first one I had for you was on the U.S. sales, do you think they will return to growth, if you expand the market, or is it really going to be a source of funds for global expansion?
Lois Chin: And then the second question I had for you is, what other innovative areas interest you, and are you looking to add on development stage or commercial assets?
And are you looking to add on development stage or commercial assets and the last question is just what are the pushes and pulls on your cash balance and runway.
Lois Chin: And the last question is just, what are the pushes and pulls in your cash balance and, runway?
Lois Chin: Thank you.
Kareem Mikhail: Thank you, Lois.
Kareem Mikhail: So with the U.S. sales that I just, you know, spoke about, you know, our number one objective, is to stabilize, to start with, right?
Thanks Louise.
So within your web sales.
Just.
<unk> spoke about.
Our number one objective is to stabilize stocked with brands you can now go back to growth unless you're stabilized for the moment the market. This year, it's far more dynamic than last year today, we have three generics.
Kareem Mikhail: You cannot go back to growth unless you stabilize.
Kareem Mikhail: For the moment, the market this year is far more dynamic than last year.
Kareem Mikhail: Today, we have three generics, not one.
Kareem Mikhail: But interestingly, there is a lot of displacement between generics.
One, but interestingly there is a lot of displacement.
Between generics.
Kareem Mikhail: So it's not like everybody's coming in and just adding patients, you know, between the, last entrant and the first entrant, there seems to be a clear switch on patients.
Everybody is coming in and just adding patients.
Between the last entrant in the first entrant this seems to be.
Which on patients so that is encouraging us that there is no acceleration.
Kareem Mikhail: So that is, you know, encouraging us that there is no acceleration in the generic, you, know, penetration.
The genetic penetration once we stabilize the exclusive segment, which by the way.
Kareem Mikhail: Once we stabilize the exclusive segment, which, by the way, we did stabilize, and maybe we, can share this data from a prescription perspective in the future, we may be able to go back to growth based on the opportunities that we have on the market, right?
The lies and maybe we can share this data from a prescription perspective in the future.
You may be able to go back to growth based on the opportunities that we have on the market right.
Kareem Mikhail: However, there are multiple variables here.
However, there are multiple variables here.
Kareem Mikhail: How far will the, you know, price erode?
How far more.
Kareem Mikhail: What's going to happen competitively between the different generics?
So what's going to happen competitively between the different generic.
Kareem Mikhail: Will there be more supply to generics?
The more supply to genetics will there be a fourth entrant that on a number of questions which today.
Kareem Mikhail: Will there be a fourth entrant?
Kareem Mikhail: There are a number of questions, which today, you know, it is not clear where we will be.
It is not clear when we will be but as a reminder, our focus on the U S is to deliver.
Kareem Mikhail: But as a reminder, our focus on the U.S. is to deliver a targeted contribution margin, that is needed for us to continue investment in Europe.
Contribution margin that is needed for us to <unk>.
The new investment.
Kareem Mikhail: That's our focus.
Kareem Mikhail: Our focus is to make sure that that contribution margin is delivered on a quarterly basis.
It's our focus our focus is to make sure that that contribution margin.
Great.
On a daily basis and IP.
Kareem Mikhail: And, you know, IP growth can go back if we truly focus on that.
IP growth can go back if we truly focus on that but again as I said, it's really contribution margin is that just driving us.
Kareem Mikhail: But again, as I said, it's really contribution margin that is driving us.
Kareem Mikhail: In terms of BD, we're looking at a number of opportunities.
In terms of.
We're looking at a number of opportunities the main.
Kareem Mikhail: The main theme is what synergies can we drive out of, you know, a potential asset?
Yes.
What synergies can we drive out of.
Dan Shull Patrick.
Kareem Mikhail: Because we have an infrastructure in the U.S., which we did reduce the footprint significantly, as a reminder, in October.
Because we have an infrastructure in the U S, which we did reduce that footprint significantly as a reminder.
Kareem Mikhail: But we still have a presence.
But we still have a presence so how can we drive synergies with that.
Kareem Mikhail: So how can we drive synergies with that, you know, infrastructure that we have?
Infrastructure that we have but also we are building in Europe , and we have an infrastructure there and we could also handle more than one product so, but that's really our focus it's mostly where we stand today.
Kareem Mikhail: But also, we are building in Europe, and we have an infrastructure there.
Kareem Mikhail: And we could also, you know, handle more than one product.
Kareem Mikhail: But that's really our focus.
Kareem Mikhail: It's mostly where we stand today, more on the commercial stage, or close to commercial, rather than anything else.
Emotional.
<unk> or close to commercial rather than anything else.
Kareem Mikhail: Now, if other opportunities come up, and they are attractive, and they will create shareholder value, we will definitely consider them.
Other opportunities come up and they are attractive and they will create shareholder value. We will definitely we will definitely consider them.
Kareem Mikhail: Yeah.
Yes.
Cash balance.
If you if you compare I would expenses Q1 2022 versus Q1 2021.
Kareem Mikhail: Now, on the cash balance, it's, you know, if you compare our expenses of Q1 2022, versus Q1 2021, there is a decline in expenses, which, let's face it, you know, you would assume that our expenses should grow way higher, because the first quarter of 2021, we were hardly in Europe.
There is a decline.
And expenses, which let's face it.
I would assume that expenses should grow way higher because the first quarter of 2021, we would hardly in Europe .
Kareem Mikhail: We were just initiating things.
Kareem Mikhail: And that's a clear, you know, evidence that we are being very, very cash conscious. We are very cash conscious.
Just initiating things and that set is clear.
Evidence that we are being very very cash conscious very cash conscious and we're not waiting for certain events to happen for us to be efficient. So we already added.
Kareem Mikhail: And we are not waiting for certain events to happen for us to be efficient.
Kareem Mikhail: So we already added additional efficiencies on the U.S. marketing side to ensure that we have our contribution margin.
Additional efficiencies.
Marketing side to ensure that we have our contribution margin and as we said we already reported you ensure potential.
Kareem Mikhail: And as we said, we are ready for future potential efficiencies in case need be to ensure that we keep the cash that is needed for us to invest moving forward.
Efficiencies in case need be to ensure that we keep the cash that is needed.
Us to invest moving forward.
Kareem Mikhail: Thank you.
Thank you.
Lois Chin: Thank you.
Thank you.
Operator: Your next question is coming from Roanna Ruiz from SVB Securities.
Thank you. Your next question is coming from Roanna Ruiz from SBB Securities. Your line is live.
Operator: Your line is live.
Great. Thanks, and good morning, So a couple of questions for me I think I might follow up on some of the U S focused questions. I was curious is this rebate strategy something you intend to leverage even more now versus prior quarters and could you just help give us a sense of what that strategy might look like going forward.
For the remainder of the year.
So as you've seen this strategy, we started implementing from the last quarter of 2021 as a reminder, and we started to communicate by saying we have 40% of our lives exclusive.
This quarter, we said, we now have 45% of the lives on exclusive basis. So what does this mean it means that in those plans.
Vascepa is really.
The only product that will be the space, but will be dispensed with a lower margin and up to now what we have seen is that those plans are taking full advantage of that offer meaning we're seeing.
Most of their patients in volume coming on Vascepa brand from a volume perspective, no. We are not restating additional numbers.
We know where we need to go to be competitive today, and we are not eroding further the price can be very clear on that one we have a set plan we have a century.
Don't make it as an and.
There could be more plans just want to take advantage of it but I think we're sort of pretty close to half of the market.
We're almost there so we don't anticipate significant changes on that and what it is.
Clearly working to stabilize the volume right.
Decline in the Nonexclusive 18, 19%.
Exclusive or not declining at all right, what's keeping the volume that's what the picture is looking like so yes, there will be a shift in the market, but over the next weeks quarters. It will stabilize at a certain point in time.
Okay, Great. That's helpful and just a quick check on your comment earlier on the wholesaler inventory levels.
Is this it sounds like this might be a one time thing for first quarter. I was curious if you could just give a little more detail like could this happen again in subsequent quarters and how should we think about that.
Well.
No I mean, we asked ourselves.
What they expect when a third entrant, that's coming to the market and and clearly how the wholesalers reacted was.
Now that we have three genetics from the market and not one.
I also need to be a little cautious with my days on hand, because I don't know how things are going to progress.
Now is it going to be repeated will there be any sale I believe this will all be driven by the prescription trends.
What's going to drive that the prescription trends are going to drive. It. So we are stabilizing volume index segment, we're losing against the non exclusive overall there is a 10%.
12% volume decline at this point in time, so that's really where we're where we stand.
So so.
That's really summarize it.
Yes understood.
My last question for Europe .
Congrats on your positive assessment from the French National Authority.
I was just wanted to understand what does this do in terms of helping set you up for a favorable reimbursement decision later on can you just kinslow color on that.
Sure. So so as we as we shared in the prior quarter, the pricing and reimbursement process in Europe is a five step process.
Step number three a scientific assessment that's step number four is the pricing the pricing negotiation.
In France, you actually get to have a decision on are you wanting them very simple or not.
Okay. This is what we achieved with chase we are reimbursed and by the way. This is the really tough gate for France, because most products are excluded.
By being non reimbursed and we basically said that.
All of other Omega threes with when they went through that discussion.
Basically not not reimburse so so this is seth.
Sets us.
Sure.
Our collaborative type of negotiation with.
The pricing can make in France, it actually means that.
Their friendship he says I see value in this product. So pleased pricing committee trying to negotiate with Amazon to what Ive tool at reasonable price. This is where we said the fact that we have a Swedish price anchor.
160 euros, which is the visible to every country today that basically says here's a country, that's very HDA driven that maintenance part of microeconomic evaluation and found that at 160, <unk>, we bring value to European patients that the French may be more efficient.
On the health care system. They have many many more millions of patients. So they will try to get a better price, but this definitely sets the negotiation on a more positive trend than not having.
Yes.
Thank you.
Got it thanks.
Thank you. Your next question is coming from Jessica Fye from J P. Morgan Your line is live.
Roanna Ruiz: Great, thanks, and good morning.
Hey, guys good morning.
First question I appreciate your comment that European pricing only goes lower not higher but can you elaborate specifically on how the German healthcare austerity measures affecting yourselves this quarter and kind of what that means going forward and then I have a follow up.
Roanna Ruiz: So a couple of questions for me.
Sure I mean, one of the measures was directly basically higher rebates that have to be paid so.
Roanna Ruiz: I think I might follow up on some of the U.S.-focused questions.
That impacts you directly if I'm not mistaken that was almost like 7% by itself. So that was 7% that was just gone.
Roanna Ruiz: And was curious, is this rebate strategy something you intend to leverage even more now versus prior quarters?
That's one measure, but on top of that and because of the healthcare budget deficit.
Basically there was no new product that was reimbursed in Germany.
And the last GBA assessment, not so it's changing the dynamic of the negotiation that we're conscious of that and we're working very hard to defend the value that we have.
Roanna Ruiz: And could you just help give us a sense of what that strategy might look like going forward for the remainder of the year?
Kareem Mikhail: So as you've seen, this strategy we started implementing from the last quarter of 2021, as a reminder.
Kareem Mikhail: And we started to communicate by saying we have 40% of the lives exclusive.
Kareem Mikhail: This quarter we said we now have 45% of the lives on exclusive basis.
Kareem Mikhail: So what does this mean?
Kareem Mikhail: It means that in those plans, the SIPA is really the only product that will be dispensed, but will be dispensed with a lower margin.
Kareem Mikhail: And up to now, what we have seen is that those plans are taking full advantage of that offer, meaning we're seeing basically most of their patients in volume coming on the SIPA branded from a volume perspective.
At the product, but it definitely has a lot of impact on determine market profitable now.
Hope it also impact in Germany, It was not only.
The healthcare.
Austerity measures, but it was just a very tough quarter with 25% of German population infected. So that was also very significant in terms of impact on German performance.
Okay, and then I guess recognizing that it seems like 2022 is a lot about building.
Uncovered cannot access in Europe .
What year do you think vascepa sales in Europe will contribute materially to the overall franchise revenue.
Sure. So so from prior communication.
We basically estimate that we're going to have up to eight.
Eight countries reimbursed in six countries launched in 2022.
And that's what we're working forward to and so far we are on track.
That means that in 2023, you are not going to have one.
Three but hopefully six countries contributing for 12 months now.
Yes.
Other market conditions that are going to be okay.
Got hit with the two variants we heard the good thing in New York today.
That should be a year, where we start to see multiple countries contributing to the revenue.
In Europe , so definitely that would be the beginning of showing.
Meaningful revenue for you.
Great. Thank you.
Yes.
Thank you. Your next question is coming from Paul Choi from Goldman Sachs. Your line is live.
Thank you good morning team just a couple from US place just with regard to the to the rate of investment in the in the U S business.
Yes. My question share is how quickly adaptable is that in terms of your operational flexibility.
In terms of managing the margin contribution here, particularly if the market dynamics continue at.
In terms of that current rates on trends with regard to volumes and pricing.
Kareem Mikhail: Now, we are not rebating additional numbers, meaning we know where we need to go to be competitive today, and we are not eroding further the price.
Pricing declines.
Good morning, Paul and thanks for the question so on the U S. You have seen that.
Quickly.
October we took very significant action on the field force perspective, right. So we already have precedents, where we took action and we took action swiftly now if we look at the situation today. We already we are communicating that we took action on our marketing budgets to ensure that we preserve.
Our contribution margin. So you didn't even wait for the quarter and for us.
Kareem Mikhail: Just to be very clear on that one, we have a set plan, we have a set rebate mechanism, and there could be more plans that want to take advantage of it.
Action on that.
Kareem Mikhail: But I think we're sort of pretty close to half of the market, and we're almost there.
But we have a plan for every quarter right. So it's a question of what revenue are we going to get and if.
If we need to adapt our cost structure, we will do it and we will be flexible enough because we have a clear focus on delivering the contribution margin that is needed to get us to.
2023.
And definitely the growth.
Specific to Europe at that point in time.
Kareem Mikhail: So we don't anticipate significant changes on that end.
So thats really where we stand.
Kareem Mikhail: But it's clearly working to stabilize the volume, right?
Okay.
Then I guess in terms of your your rate of investment.
In terms of the <unk>.
Margin contribution for the U S business.
Kareem Mikhail: Our decline in the non-exclusive is 18%, 19%, and in the exclusive, we're not declining at all, right? We're keeping the volume.
Kareem Mikhail: That's what the picture is looking like.
And then your build out of your European opportunity.
Roanna Ruiz: So yes, there will be a shift in the market, but over the next week's quarters, it will stabilize at a certain point in time.
Do you have a view or something you wish to communicate that to the analysts here are your investments here as to when when you start to suspect you could see a positive.
Roanna Ruiz: Okay, great.
A positive ROI on any sort of rough rough rough timeframe.
Roanna Ruiz: That's helpful.
Not necessarily an expectation that it will be near term, but just any sort of rough framework as to when this becomes.
Roy positive for your investors.
Roanna Ruiz: And just a quick check on your comment earlier on the wholesaler inventory levels.
Yes.
Roanna Ruiz: It sounds like this might be a one-time thing for first quarter, but I was curious if you could just give a little more detail.
So on the.
On that point.
As you know last quarter, we actually had a positive income quarter and we've had a few quarters, where we've had positive income.
Roanna Ruiz: Could this happen again in subsequent quarters, and how should we think about that?
Kareem Mikhail: Well, I mean, we asked ourselves what to expect when a third entrant is coming to the market, and clearly how the wholesalers reacted was, Now that we have three generics on the market, and not one, I, Old Failure, need to be a little cautious with my, you know, days on hand, because I don't know how things are going to progress.
Thank you for the question. It's about when are we going to see sustained positive operating income overtime.
Kareem Mikhail: Now, is it going to be repeated?
This year is a unit.
<unk> reimbursement for Europe . So the revenue that is generated.
<unk> is not going to be significant enough and we have to continue driving contribution margin and the U S for 2022 to get US there. Once we have what we are targeting in terms of revenue stream in Europe in 2023, and I believe by then the situation in the U S would have stumbled.
And be clear that we can really look at sustained positive income from then on but it's very dynamic Paul as you can imagine and by the way I mean, we have estimates on when each country is going to come in Europe at what price with what penetration rate up to now the price in Sweden is very positive.
Compared to prior benchmark, so we feel positive.
Moving in the right direction now we need to make sure that others come.
On time, as we planned them to ensure that we deliver that.
Okay. Thank you for taking our questions.
Sure.
Thank you Paul.
Thank you that concludes our Q&A session I will now hand, the conference back to Amarin management for closing remarks. Please go ahead.
Kareem Mikhail: Will there be a refill?
Kareem Mikhail: I believe this will all be driven by the prescription trends.
Thank you all for joining US today, we look forward to following up with you on that.
Kareem Mikhail: That's what's going to drive that.
Kareem Mikhail: We look forward to following up.
Kareem Mikhail: The prescription trends are going to drive it.
Kareem Mikhail: So, we are stabilizing volume in the exclusive segment.
Kareem Mikhail: We're losing in the non-exclusive.
Kareem Mikhail: Overall, there is a 10%, you know, 10-12% volume decline at this point in time.
Have a good day.
Kareem Mikhail: So, that's really where we stand.
Roanna Ruiz: So, you know, that's really summarized, Roanna.
Roanna Ruiz: Yep.
Roanna Ruiz: Understood.
Roanna Ruiz: And my last question for Europe, congrats on your positive assessment from the French National Authority.
Roanna Ruiz: I was just wanting to understand, what does this do in terms of helping set you up for a favorable reimbursement decision later on?
Kareem Mikhail: Could you just give us a little color on that?
Kareem Mikhail: Sure.
Kareem Mikhail: So, as we shared in the prior quarter, the pricing and reimbursement process in Europe is a five-step process.
Kareem Mikhail: And, you know, step number three is scientific assessment, and step number four is the pricing, the pricing negotiation.
Kareem Mikhail: In France, you actually get to have a decision on, are you reimbursable or not?
Kareem Mikhail: Okay?
Kareem Mikhail: This is what we achieved, which is, we are reimbursable.
Kareem Mikhail: And, by the way, this is the really tough gate for France, because most products that are excluded are excluded by being non-reimbursed, and we basically said that, you know, all of other Omega 3s, when they went for that discussion, they were basically not reimbursed.
Kareem Mikhail: So, this sets us for, you know, a collaborative type of negotiation with, you know, the pricing committee in France.
Kareem Mikhail: It actually means that, you know, their French FDA says, I see value in this product, so please, pricing committee, try to negotiate with Ameren to arrive to a reasonable price.
Kareem Mikhail: Now, the French may be more efficient in their own healthcare system, and they have many, many more millions of patients, so they will try to get a better price, but this definitely sets the negotiation on a more positive trend than not having, you know, a positive assessment.
Roanna Ruiz: Thank you.
Roanna Ruiz: Got it.
Roanna Ruiz: Thanks.
Operator: Thank you.
Operator: Your next question is coming from Jessica Fy from J.P. Morgan.
Operator: Your line is live.
Jessica Fye: Hey, guys.
Jessica Fye: Good morning.
Jessica Fye: First question, I appreciate your comment that European pricing only goes lower, not higher, but can you elaborate specifically on how the German healthcare austerity measures affected your sales this quarter and kind of what that means going forward?
Jessica Fye: And then I have a follow-up question.
Kareem Mikhail: Sure, I mean, one of the measures was directly basically higher rebates that have to be paid.
Kareem Mikhail: So you know, that impacts you directly, if I'm not mistaken, that was almost like 7% by itself.
Kareem Mikhail: So there was 7% that was just gone, because of that one measure.
Kareem Mikhail: But on top of that, and because of the healthcare budget deficit, basically, there was no new product that was reimbursed in Germany, in the last, you know, GBA assessment, none.
Kareem Mikhail: So it's changing the dynamic of the negotiation.
Kareem Mikhail: And we're conscious of that.
Kareem Mikhail: And we're working very hard to defend the value that we have as a product.
Kareem Mikhail: But it definitely has a lot of impact on the German market overall.
Kareem Mikhail: Now, COVID also impacted Germany, it was not only the, you know, the healthcare, austerity measures, but it's it was just a very tough quarter with, you know, 25% of German population infected.
Kareem Mikhail: So that that was also very significant in terms of impact on German performance.
Jessica Fye: Okay, and then I guess, recognizing that it seems like 2022 is a lot about building, you, know, building out coverage and access in Europe.
Jessica Fye: What year do you think Vizcapa sales in Europe will contribute materially to the overall franchise revenue?
Kareem Mikhail: Sure.
Kareem Mikhail: So, so from prior communication, we basically estimate that we're going to have, up to eight countries reimbursed and six countries launched in 2022.
Kareem Mikhail: That's the plan.
Kareem Mikhail: And that's what we're working forward to.
Kareem Mikhail: And so far, we are on track.
Kareem Mikhail: That means that in 2023, we're not going to have one, not two, not three, but hopefully six countries contributing for 12 months of sales.
Kareem Mikhail: Now, if, you know, other market conditions that are going to be okay, meaning we're not hit with the two variants we heard of that are hitting New York today, and that should be a year where we start to see multiple countries contributing, to the revenue in Europe.
Jessica Fye: So definitely, that would be the beginning of, you know, showing meaningful revenue for Europe.
Jessica Fye: Great.
Jessica Fye: Thank you.
Jessica Fye: Thank you.
Operator: Your next question is coming from Paul Choi from Goldman Sachs.
Operator: Your line is
Operator: live.
Paul Choi: Thank you.
Paul Choi: Good morning, team.
Paul Choi: Just a couple from us, please.
Paul Choi: Just with regard to the rate, of investment in the U.S. business, I guess my question here is how quickly adaptable is that, you know, in terms of your operational flexibility, in terms of managing the margin contribution here, particularly if the market dynamics continue in terms of the current rates and trends with regard to volumes and or net pricing declines?
Kareem Mikhail: Good morning, Paul, and thanks for the question.
Kareem Mikhail: So on the U.S., you've seen that very quickly, last October, we took very significant action on the field force perspective, right?
Kareem Mikhail: So we already have precedents where we took action and we took action swiftly.
Kareem Mikhail: Now, if we look at the situation today, we already, we are communicating that we took action on our marketing budgets to ensure that we preserve our contribution margin.
Kareem Mikhail: So we didn't even wait for the quarter to end for us to take action.
Kareem Mikhail: We have a plan for every quarter, so it's a question of what revenue are we going to get.
Kareem Mikhail: If we need to adapt our cost structure, we will do it.
Kareem Mikhail: We will be flexible enough because we have a clear focus on delivering the contribution margin that is needed, to get us to 2023 and definitely the growth that is anticipated in Europe at that point in time.
Kareem Mikhail: So that's really where we stand.
Paul Choi: Okay, great.
Paul Choi: Then I guess in terms of your rate of investment, in terms of the margin contribution for the U.S. business, and then your build-out of your European opportunity, do you have a view or something you wish to communicate to the analysts here or your investors here as to when you start to suspect you could see a positive ROI on this or any sort of rough timeframe?
Paul Choi: Not necessarily an expectation that it will be near-term, but just any sort of rough framework as to when this becomes ROI positive for your investors.
Kareem Mikhail: Yeah, so on that point, as you know, last quarter we actually had a positive income quarter, and we've had a few quarters where we've had positive income.
Kareem Mikhail: I think your question is about when are we going to see sustained positive operating income over time.
Kareem Mikhail: This year is a year of pricing reimbursement for Europe, so the revenue that is generated is not going to be significant enough, and we have to continue driving contribution margin in the U.S. for 2022 to get us there.
Kareem Mikhail: Once we have what we are targeting in terms of revenue stream in Europe in 2023, and I believe by then the situation in the U.S. would have stabilized and be clear, then we can really look at sustained positive income from then on.
Kareem Mikhail: But it's very dynamic, Paul, as you can imagine.
Kareem Mikhail: And by the way, I mean, we have estimates on when each country is going to come in Europe, at what price, with what penetration rate.
Kareem Mikhail: Up to now, you know, the price in Sweden is very positive compared to prior benchmarks, so we feel positive that that's moving in the right direction.
Kareem Mikhail: Now we need to make sure that others come on time as we plan them to ensure we deliver that.
Paul Choi: Okay.
Paul Choi: Thank you for taking our questions.
Paul Choi: Thank you, Paul.
Operator: Thank you.
Operator: That concludes our Q&A session.
Kareem Mikhail: I will now hand the conference back to Ameren Management for closing remarks.
Kareem Mikhail: Please go ahead.
Kareem Mikhail: Thank you all for joining us today.