Q1 2023 Amarin Corporation plc Earnings Call

Speaker 1: I.

Speaker 2: Order 2023 Financial Results and Operational Updates.

Speaker 2: I would now like to turn the conference call over to Lisa DiFancesco, Senior Vice President of Investor Relations and Corporate Affairs at Amarin.

Speaker 3: 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 under federal securities law. We may not achieve our goals, carry out our plans or intentions, or meet the expectations disclosed in our forward-looking statements.

Speaker 3: Actual results or events could differ materially. You should not place under reliance on these statements. We assume no obligation to update these statements as circumstances change. Our forward-looking statements do not reflect the potential impact of significant transactions we may enter into, such as mergers, acquisitions, dispositions, joint ventures.

Speaker 3: or any material agreements that we may enter into amend or terminate.

Speaker 3: Traditional information concerning the risk factors that could cause actual results to differ materially. Please see the risk factor section of our annual report on form 10K for the year ended December 31, 2022, and our quarterly report on form 10Q for the quarter ended March 31, 2023, which has been filed with the SEC and is available through the investigation.

Speaker 3: Aaron's interim president and chief executive officer will lead our discussion and Tom Riley, Aaron's chief financial officer, will provide a detailed overview of our first quarter of 2023 financial results. Following prepared remarks, we will open the call to your question.

Speaker 3: Steve Ketchum, president of R&D in Chief Scientific Officer, will also be available for Q&A. I will now turn the call over to Aaron Burr, interim president and chief executive officer of Amin. Aaron?

Speaker 4: Thank you, Lisa. Good morning and thank you everyone for joining us today. I want to start by saying I'm truly honored to lead Ameren during a time of significant transition. Turning Ameren back into a growth story as quickly as possible is what I'm focused on and what I believe will create shareholder value.

Speaker 4: I'm working with a tremendous sense of urgency and the entire team is focused on driving tangible results.

Speaker 4: I made the choice to step forward with the support of our new board to serve in this role for a number of reasons.

Speaker 4: First, my history with this company. I've been with Amarin for more than 10 years now, serving predominantly in my role as head of the US business. Together with my talented, resilient colleagues here at Amarin, I have experienced many ups and downs, and I've come to care deeply for the company, its people, and the patients we serve collectively.

Speaker 4: and I remain committed to continuing this journey.

Speaker 4: I believe in our product and our data. We have a tremendous asset in Vesepa and Veskepa supported by a wealth of data, particularly the Reducit trial.

Speaker 4: Third, I truly believe in our mission to help stop cardiovascular disease from being the leading cause of death globally.

Speaker 4: And lastly, I believe in the significant value of the opportunity that we have to introduce as many patients as possible to Vesipa and Veskepa around the world, where they remain significant unmet need in cardiovascular disease.

Speaker 4: There are millions of patients who can benefit from our product and we have a real opportunity to make a difference in their lives.

Speaker 4: The focus on cardiovascular disease prevention is a priority for healthcare providers, patients, and the investment community because even today it remains a leading cause of death in many markets around the world.

Speaker 4: While I've been a member of the leadership team for many years, my focus has been predominantly on the US commercial side.

Speaker 4: And I'm proud of how we are maneuvering while faced with a very difficult situation in the US, and we'll summarize where we are at the moment there.

Speaker 4: My focus now is on deepening my understanding of the area of business where I have not had any involvement, which is our European efforts.

Speaker 4: In my view, our near-term strategies are simple. We need to continue to efficiently generate substantial profit in the U.S. In Europe , we're not where we need to be and must immediately work with the team to find ways to accelerate our activities. This means looking at ways to accelerate our revenue growth, where we've launched, and finding a way to accelerate our pricing and reimbursement access, where we still earn negotiations. And we have to do all of this while maximizing cash. This means scrutinizing our spending and implementing additional opportunities to save as we aggressively drive our business.

Speaker 4: Europe is a difficult macro environment right now with many of our target markets experiencing economic challenges that impact reimbursement for innovative medications like Vesquepa. With consideration given to these conditions, the strong European team agrees we are still not where we hope to be. And I can say together, we are determined to rapidly identify positive adjustments and execute any additional actions possible to accelerate the pace of progress there.

Speaker 4: We have a talented team in Europe with strong expertise. Together with my background and experience with Vesipa and reduce it over a number of years with the opportunities and challenges our team has faced in the U.S., I believe we'll be able to introduce new perspectives and perpetuate some new thinking and fresh ideas. I'll continue to focus on operational excellence in partnership with Tom and the rest of the team as we drive positive progress while scrutinizing investments and preserving cash. Now moving to our business update for first quarter of this year.

Speaker 4: We saw volumes decline modestly as expected, but our exclusive contracts with many of our major customers remain intact, and we were even able to improve favorable access at a major plan, which attests to the strong work of our talented team. While Tava, the fourth generic available, has listed both the half-gram and the one-gram for a number of weeks. We have not yet experienced any significant impact from their launch. We have also seen the approval of a potential fifth generic, which has not yet launched.

Speaker 4: While our U.S. team remains determined to continue to drive revenue by maintaining branded volume, we stand ready to execute a number of different aggressive scenarios moving forward at the right time which would ensure we retain our leadership in the IPE market.

Speaker 4: These scenarios are centered around preserving our profitability and of course our cash.

Speaker 4: Moving to Europe , the teams are continuing to work smart and hard in a challenging environment.

Speaker 4: We reported $400,000 in net revenues this quarter. Reflecting very early revenues from the UK. In the UK as a reminder, we received final nice guidance in July of 2022.

Speaker 4: funding allocation in October , which allows you to begin the process of gaining access to regional formularies, and an update to the National LIPID guidelines, including Vaskepa, was published in November of 2022, which has been a significant achievement of the local team so quickly after NICE guidance.

Speaker 4: And the team is making solid progress with access to the market in England and Wales, and that will continue throughout the year.

Speaker 4: Once you have achieved a good portion of that full access, growth in this market tends to accelerate in a more meaningful way.

Speaker 4: and minutes from a recent round of negotiations in order to determine the best next steps. France is difficult and we don't expect a decision this year. The meantime, we're managing the process diligently as we continue to build scientific support. Within the UK and Scotland, we expect to receive feedback shortly with some anticipated additional work needed over the coming weeks to finalize the process there. Overall, what I've learned in recent weeks is that these processes are not easy, that they are complex and do not have consistent structure nor timelines.

Speaker 4: In addition, the macroeconomic context is unprecedented in Europe , and many companies and assets are facing similar challenges.

Speaker 4: Regardless of these challenges, we're here in accountable to drive and deliver tangible results.

Speaker 4: Our path to get there in Europe is to look at ways to do things differently and urgently in both our pricing and reimbursement efforts and our launch efforts.

Speaker 4: We're looking at everything through a fresh lens across the business to drive results and deliver value. Our team in Europe has recorded important reimbursement successes and dates, but there's a long way to go.

Speaker 4: The teams on the ground in these markets are working tirelessly and they are not afraid to utilize learnings to take different approaches that can resonate with the pricing and reimbursement authorities.

Speaker 4: I support and I'm working closely with them to help accelerate our progress immediately.

Speaker 4: In our markets outside of Europe , we received the Proovels, Discolder and New Zealand and Israel.

Speaker 4: The recent approval of New Zealand follows the earlier approval in Australia in November of 2022, and we recently announced a partnership agreement with CSL Securists who are well-positioned to support the pricing and reimbursement efforts in this market, particularly with their strong record and successfully supporting pharmaceutical benefits listings.

Speaker 4: an eventual marketing and promotion for Vescapha and help us deliver this important medicine to patients in these countries.

Speaker 4: And we're pursuing other partnership discussions in Southeast Asia to expand access to Bacepa and Veskepa in this region.

Speaker 4: In summary, I'm working closely with the board and with a tremendous sense of urgency as we focus on turning Amherst back into a growth story because I believe that that is what will create Shareholder value. We know that this value will come from generating revenue and doing so with tremendous urgency. Thank you, importantly for this

Speaker 4: That's our focus. We're listening to and we appreciate the input from our Port and Retail and Institutional Shareholders. I'm committed to keeping the market informed as we evolve through this transition period. With that, I'll turn it over to Tom to talk more about our progress and strong results this quarter. Tom. Thank you.

Speaker 2: Thank you, Aaron. Good morning, everyone. I am pleased to report additional details on our financial performance for the first quarter of 2023.

Speaker 2: Let me begin by discussing our revenue performance. For the first quarter of 2023, we reported net revenue of $86 million, including net product revenue of $84.7 million, a decrease of 10% compared to the first quarter of 2022.

Speaker 2: Compared to Q4 2022, US revenue is down by 7% primarily due to lower TRX volume. We remain pleased with the performance in the US in spite of multiple competing generics on the market. The US business continues to provide profit in supporting our expansion into Europe and other geographies around the world. The revenue results included your PIM product revenue of 0.4 million compared to 0.3 million in Q4 2022, reflecting very early revenues from the UK.

Speaker 2: We recognize 1.3 million in license and royalty revenue in Q1, 2023, including 0.5 million related to the one-time payment associated with the CSL's sequeris license agreement for Australia and New Zealand.

Speaker 2: Cost of goods sold for the three months ended March 31, 2023, with $38 million, which includes a 12 million one-time supply settlement expense.

Speaker 2: This compares to $22,000,000 in this corresponding period of 2022.

Speaker 2: Gross margin was 70% for the three months and in March 31, 2023, when you exclude the impact of the supply settlement this quarter.

Speaker 2: This compares to 76% in Q1 of 2022 as a result of lower U.S. net selling price and sales mixed related to partner revenue in the quarter.

Speaker 2: Gross margin was stable when compared to the fourth quarter of 2022 when excluding the settlement charge.

Speaker 2: Moving on to operating expenses. During the first quarter of 2023, we reported expenses of $65.3 million compared to $100.7 million in the first quarter of 2022.

Speaker 2: I decrease of 35.4 million or 44 percent when excluding stock compensation and one-time charges.

Speaker 2: The decrease compared to last year is primarily due to the cost savings initiative announced in June of 2022.

Speaker 2: Under USGAP, Amrin reported net losses of 16.5 million for the first quarter of 2023 or basic and diluted loss per share of four cents. As of March 31, 2023, Amrin reported aggregate cash and investments of 305 million and excluding the supply restructuring payment reported a cash positive first quarter of 2023.

Speaker 2: Absent any additional market disruption, we expect prescription levels to modestly decline for the remainder of the year and beginning in Q2 a decrease in our net selling price as we work to obtain key customers to the brand. We have continued to make progress against our cost reduction program. We are on track to exceed 100 million cost savings target. We announced in mid 2022 and are currently evaluating additional potential savings.

Speaker 2: For the full year 2023, we now expect operating expenses to be between 270 to 285 million compared with the previous guidance of 290 to 305 million.

Speaker 2: The lower than the anticipated expenses.

Speaker 2: are as a result of additional initiatives taken across the organization to reduce costs along with the time of our European investment.

Speaker 2: We have taken steps to strengthen and streamline the company operation and cost reduction efforts are ongoing. We announce another renegotiated supply agreement this quarter, making significant progress in lowering our future commitments. With these initiatives and a relatively stable trends in the U.S., we believe our current available cash and resources, including U.S. profitability, are adequate to support our continued operations, including European launch activities.

Speaker 4: With that, I will now turn the call back to Aaron for closing remarks. Aaron, thank you, Tom, for that financial overview and our results during the first quarter. As we look forward to the remainder of the year, our priorities are focused on a single goal, turning Amarin back into a growth story to create shareholder value.

While cost savings and cash preservation are essential, we can only deliver shareholder value by accelerating prescription growth in Europe , generating revenues, and securing reimbursement in major markets. And that's our urgent focus right now.

I'm energized by my new role at Amarin. We have a strong team and we have a great product that has the potential to benefit so many more patients around the world. I'd like to thank our employees for their commitment and for their support and look forward to making progress and delivering results together.

And with that operator, we're ready to take questions. Thank you. At this time, we will be conducting a question and answer session.

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We need to drive prescription volume, continue to execute very well and get the ramp up as rapidly as we can to reach patients and drive revenue.

And then of course we need to advance the pricing and reimbursement discussions. We need to secure more commitments in more markets going forward. And then we need to do all this and be very, very attentive to our cash. We've got to spend judiciously. We've got to spend at the right time. And that's a balance, right? That's a balance in Europe because we need to prepare the market, but yet we

can't invest too early relative to when we get these pricing reimbursement, the access to those countries. And the issue is, of course, we want to have the pre-market support when we launch for faster ramp up, but we don't control the timing of the pricing and reimbursement decisions. We control so much of that. We have to give them a reason to say yes, but the timing is not fully up to us. So that affects when we spend, but we're very attentive to that. It's a key priority. So it's...

drive profits in the US, it's drive Europe , and it's maximize our cash. Without Tom, you would address the off-ex question. Sure. So the off-ex question was related to the change in the guidance and the lower of the guidance, which we're very pleased with. It's really twofold. First and foremost.

As Aaron mentioned, just to reiterate, we're very focused on our cash preservation and trying to balance that with the focus on growth. So the change in the OPEX guidance, the first component of it is we've really driven more cost reductions versus what we originally planned. So if you recall last year...

In June of 2022, we had said we were going to have 100 million worth of savings. We're exceeding that target. We found additional cost synergies or cost savings within our sales and marketing organizations within GNA. Just one example, we renegotiated our administrative offices here.

and we will find a subtly partner. So really focusing on the optimization of the cost structure, which we're going to continue to look at as we're looking to preserve cash.

The second component of that is related to pricing and reimbursement. So our guidance was based on timing of pricing and reimbursement in specific countries. We always said we would be very judicial in our investments and waiting until we saw the pricing reimbursement coming through. And with that, we would do the investments at that particular time. So.

So, component of our change of the guidance is a little bit of our internal delays on the timing of pricing reimbursement, and that's what's changing our guidance. Thank you. Could you be more specific about what countries are you looking at when?

you plan your budget in terms of more cost saving. Sure, Tom, do you want to cover that too, on the cost saving end of it? Yeah, so again, it comes down to what we're, our timing for Europe , for the big countries.

We're still focused on the reimbursement of the big countries, including Spain, Italy, and Netherlands, and some of the other countries in 2023. We have alluded that for 2024, we expect it.

France to be during that timeline. So the majority of the countries excluding France were expecting a decision pricing reimbursement within 2023

Does that answer your question? Thank you. Yeah, thanks for the.

Thank you. Our next question is coming from Louise Chen with Kantor. You may proceed.

Hi, thank you for taking my questions here. So I wanted to ask you something that you mentioned earlier in the call you talked about turning Amoram back to growth. And I'm curious how long you think that will take or when do you expect to see that. And is that globally or in all the markets that you participate in?

The second question I had for you is on the international markets outside of Europe , which ones are you most excited about and how do you size those opportunities? And then last question here is I didn't see you mention a lot about expanding your product fully. I know historically the other management he might talk about that. So curious where you stand with those initiatives. Thank you.

Thanks for the questions, Louise. So I'll address the first ones and then turn it over to both Tom and to Steve, Ketchum, who's here with us to address the third question. So in terms of turning our back to the grocery story, we're really focused on primarily Europe . The US will drive our profit, but you know we're in a unique situation here with generic competition. And the team has done an outstanding job. We still maintain 57% of the IPE market. And you see the revenue number here for Q1, which is us.

a solid number given the fact that it's two and a half years after generic subnature do so while the u.s. continues to be in the engine our growth and our our biggest opportunity really is progress in in your

In terms of timing, that's very difficult to predict as I commented on in the prepared remarks.

The pricing reimbursement timing is a significant rate limiting factor and then of course launching into those markets and what the ramp up will look like. Excuse me, we'll know more when we get going.

In terms of the pricing reimbursement as well, remember one of the variables in the pricing reimbursement is which patient population we agree upon with those pricing and reimbursement authorities. And that will also help us value once we have commitments. That'll help us value exactly how big the markets will be. So while they're better.

view as we secure more access in Europe . And then, obviously globally too, we have, and we'll just turn to Tom's talking about beyond the EU, some of the markets we have, some of the partnerships we have, and where we see some of that opportunity.

Great. Hillary, thanks for the question. And so outside of the US and Europe , I guess about markets and what we're excited about. So obviously you see that we signed an agreement for Australia and New Zealand with CSL sequers this quarter, which we're very excited about working with our partner there.

We're also excited about the opportunity with China and China. As you know, we have a partner there, any farmer who's leading the regulatory review process.

We're expecting based on the communication from adding that we should be hearing about regulatory approval expected by the mid-year of this year. So those are two markets we're very excited about. Also other markets in Asia, we're excited about as well.

As you know, our strategy outside of the Europe and the US is to look for a partner where we're not looking to put an infrastructure in place related to outside of those, or in those geographies, I should say. So with that related to the portfolio, Steve, do you mind answering a little bit about the portfolio? Sure, yes.

But firstly, just continuing on the international regulatory front, obviously, cardiovascular disease is a major pillar of patients in all countries. So we continue to leverage our strong regulatory dossier that's been approved now in more than 30 countries globally. And we will continue to do that in a manner that is cost efficient. In terms of our other portfolio, we continue to explore and conduct focused research activities and follow on products and follow on indications. But again, in a manner...

That maintains our focus on the strategy and goals that Aaron and Tom have shared in terms of making sure that also from an R&D perspective, we support U.S. efforts getting accelerated traction in the EU supporting pricing and reimbursement activities as needed.

and again, contributing to this company-wide effort to scrutinize our spending and implement additional opportunities to save as we aggressively drive our business.

Thanks Steve. And then Louise, just a comment on M&A, that's not our focus right now. Our focus, our key priorities, as we said, are driving the SEPA globally. As we comment on, we have significant opportunity. That's where we believe we will generate the most value and that will continue to be our focus.

Next, Steve. And then Louise, just the comment on M&A. That's not our focus right now. Our focus, our key priorities, as we said, are driving the SEPA Vescapa globally. We, as we comment on, we have significant opportunity. That's where we believe we will generate the most value, and that'll continue to be our focus. Thank you.

Thank you. Our next question is coming from Rwanna Ruiz with SVB Securities. You may proceed.

Great morning, everyone. So a couple of questions from me. Wanted to check in on latest updates with your progress on the local formulary negotiations in the UK and how that might impact the skeptic sales going forward. And then also secondly, wanted to ask about the renegotiations and supply agreements. I noticed you mentioned there's a 12 million charge, curious if we could see? You can go from 20.ek

But learning fast, and I believe we have over 90% coverage now. So we would expect to start to see some accelerated prescription growth. The rate of that we'll look forward to. As you know, we're very early in the launch there, very early in getting that access. But we'll look forward to prescription growth here coming up in the near term and it should accelerate. Tom, do you want to address the supply question? Sure, Ron. Thanks for the question.

we have over 90% coverage now. So we would expect to start to see some accelerated prescription growth. The rate of that we'll look forward to. As you know, we're very early in the launch there, very early in getting that access, but we'll look forward to prescription growth here coming up in the near term and it should accelerate. Tom, you wanna address the supply question? Sure, Ron. Thanks for the question. So.

We have very good relationships with our partners. And so we need to look at these, we'll be looking at these arrangements with the partners related to timing of charges. A lot of it depends on negotiations or actually discussions related to pricing of reimbursement in Europe . So depending on how that goes based off of some commitments, we'll determine the extent or if there are any other supply agreements necessary for a reduction perspective.

entrant of generic, how do you think that might impact pricing and what do you understand to be their capacity? And then secondly I think Ameren has talked about the peak opportunity in Europe being a billion dollars. Do you hold to that target and can you remind us you know what what do you think it's going to take to get to that 1 billion dollar target? Thank you.

Thank you. Good morning. In terms of the fifth entrant, that's a company called Zidus. And we don't have information on capacity, but we've seen this before where some of these generic companies list what they get approved. And there can be a very long time before they launch. We saw that with Teva.

And extended period, we also saw that with other, one of the other generic manufacturers, I think it took 10 or 11 months. I forgot what it was, DRL or April Text, one of them also took an extended period of time. So there were recently approved.

This is a very complicated product to source and manufacture. So we monitor it very, very carefully, but in terms of the timing and the impact on pricing, we don't know yet, but we haven't seen the impact overall. And as I mentioned, have a listed and launched several months ago, and they have prescriptions just enough.

hundreds per week, which is in a market of 100,000 or so prescriptions a week. So with that being said, it's 2.5 years since the generic were introduced.

We continue to maintain 57% of the IPE market. We maintain our exclusives. We actually even improved one of the major part D plans improved the access for the CEPA here at the end of Q1. So we feel pretty good right now that our ability to maintain the business, but that being said, we monitor the generics very, very carefully.

Goldman Sachs, you may proceed. Hi, this is Kate Cruz on for Paul Troye. Thanks for taking our question. Thinking about the US business, we wanted to know if you could put numbers around the positive contribution margins for the US business and how margins there have trended over the last 12 months, and then also where you expect those to settle out.

on a more long-term view. Thanks so much. Tom, do you want to comment on the contribution margin?

Sure. So overall, we don't give guidance or we don't disclose obviously contribution margin by region. What I can say is that it is driving significant profits to support the overall business. In addition, it's generating significant cash.

including working capital managers to support our overall business. It's obviously an important market for us to continue with our presence and even in an generic environment. As Aaron mentioned before, we've developed multiple scenarios. And it's related if there is an impact.

Thank you. We have reached the end of our question and answer session, so I'll now turn the call back over to management for closing remarks.

So thanks again for joining us this morning. Thanks to everyone. And as I said earlier, I'm energized by the new role. We have a fantastic team here. I'm excited to work with them. I look forward to following up and meeting, hopefully meeting many of you soon. Have a good day.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.