Q3 2023 Amarin Corp PLC Earnings Call
Welcome to Amarin Corporation's conference call to discuss its third quarter 2023 financial results and business updates.
I would now like to turn the conference call over to Jordan's weak senior Vice President business development and Investor Relations at Amarin.
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.
Actual results or events could differ materially so you should not place undue reliance on these statements.
We assume no obligation to update these statements as circumstances change our forward looking statements do not reflect the potential impact of significant transactions, we may enter into.
Such as mergers acquisitions dispositions joint ventures, or any material agreements that we may enter into amend or terminate.
For additional information concerning the risk factors that could cause actual results to differ materially. Please see the risk factors section of our annual report on Form 10-K for the year ended December 31, 2022, and our quarterly report on Form 10-Q for the quarter ended September 30.
2023, which has been filed with the SEC and is available through the Investor Relations section of our website at Www Dot Ameren Corp. Dot com, we encourage everyone to read these documents.
At FERC, but this call will be posted on <unk> website in the Investor Relations section.
Turning to today's agenda.
Patrick <unk>, President and Chief Executive Officer will lead our discussion and Tom Reilly <unk>, Chief Financial Officer, who will provide a detailed review of our third quarter 2023 financial results.
Following prepared remarks, we will open the call to your questions.
I will now turn the call over to Patrick <unk>, President and Chief Executive Officer of Amarin.
Thank you Jordan good morning, and thank you everyone for joining us today.
During my three months with Amarin I've been focused on ways to drive shareholder value.
What I have learned is clear first we have a company and a product in vascepa vascepa with significant global potential.
Backed by tremendous scientific data.
<unk> at 25% relative risk reduction on top of statin and is therefore, a medicine that can have profound impact on cardiovascular patients globally.
In addition, the company has a strong balance sheet.
With $321 million in cash delivering five quarters is cash flow positive results and no debt.
I also know that delivering and showing results is what will drive shareholder value at amarin.
Whether it's commercial market access operational or R&D, what matters moving forward is that we demonstrate results.
As we look to our path forward.
It's important to acknowledge the meaningful and important results we are delivering.
Following the third quarter, we have now reported five consecutive quarters of positive cash flow.
This has been achieved through tough but net.
It's to reduce head count and operational expense.
As well as ongoing discussions with supply partners to renegotiate supply agreements today, we have $320 million in cash on hand, an increase of $15 million versus Q3, 2022 and no debt.
Whilst our European business has not delivered what we have expected to date and we know we need to do more.
We are encouraged by the focus and impact of our new latest ship and team is demonstrating.
And by early progress from initial launches in key countries.
Fundamentally we are confident in our European opportunity, given our IP position with the potential to have protection up to 2039.
We will discuss this in more detail later Nicole.
November marks three years since the first generic entrants in the U S.
Despite this challenge our team has extended the lifecycle and market latest ship of a safer maintaining 57% market share.
The durability of this business has been extended by sustained investments in managed care and trade capabilities. Despite the elimination of the U S sales force.
In the rest of world overall weird early stages of expansion via partnerships.
Whilst we have revenue from partners in Canada, and the Middle East.
We have tremendous opportunity in key markets, such as China, as well as Australia New Zealand.
Notably China launched the very high triglyceride indication in September.
And submitted its filing for cardiovascular risk reduction last week.
Recently, we discuss the progress to date and path forward with our board of directors.
In those discussions it was clear that the best path forward for Amarin today is to remain focused on accelerating operational momentum.
In Europe, our teams will continue to be focusing on key launches, including the U K, Netherlands and Spain.
While also continuing to advance pricing and reimbursement efforts in a number of markets, particularly Italy.
And Germany.
In the U S. We will continue to support our business through targeted efforts.
<unk> managed care and trade initiatives to secure exclusive contracts.
And in the rest of the World, We will continue to support our partners.
Get our product into the hands of as many patients as possible.
We believe this focus on operational momentum will maximize shareholder value and position us for future strategic options.
Moving to Europe, our teams continued to work to deliver both pricing and reimbursement as well as the commercial progress in a region, which is challenging for the entire industry.
Yes.
From a commercial perspective was it remains early in the commercial launch first setting key countries. We are beginning to see initial signs that our local country strategies are working.
In the United Kingdom first it's important to note that this is traditionally a slower uptake market.
This is driven by number of factors, but mainly the complex health care system in the market.
Whilst the team faces the challenge they have successfully unlocked all formularies within the first few months post launch in England and Wales.
We now have a more focused strategy in place, including driving uptake in key accounts that is delivering now more than 30% quarter over quarter pharmacy sales growth.
In Scotland. Following recent reimbursement approval the team is progressing access to formularies.
In Spain, our commercial team is focused on ACP, who are early adopters of cardiovascular products and we are seeing promising yet early sales across all regions.
We now estimate 500 patients on therapy, one month post launch.
And then the Netherlands, our team is executing on our focused strategy based on identified key accounts to drive adoption. This is backed by extensive local market research. We now estimate more than 100 patients on therapy, one month post launch.
On the pricing and reimbursement front, we have now secured pricing and reimbursement across nine countries in Europe, including Spain, The Netherlands, and Scotland in the third quarter.
This continued pricing and reimbursement progress strengthened the foundations for basketball in additional markets, where we are taking pricing and reimbursement decisions.
In Italy.
Amarin has finalized a new path forward to pursue market access for <unk> by the end of 2024 in France, we are progressing a new access strategy for <unk> with the National authorities, we do not expect this process to conclude in 2024.
And in Germany, we are continuing to evaluate potential options to secure pricing and reimbursement for German patients, we will share more on Germany in the coming quarters.
In terms of other markets, where we have ongoing pricing and reimbursement processes underway, we do not expect to receive additional decisions in 2023.
We remain confident in our path forward in Europe, particularly given our intellectual property in the region.
We have regulatory data protection in Europe until 2031, and we also have patents and applications that have the potential to extend our IP well into the decade, indeed potentially up to 2039.
Turning to our U S business November marks three years since the launch of the first generic IP into the market.
As we all know most generic markets quickly eroded the brand in the United States.
As we sit here today branded Vascepa continues to hold market latest ship with 57% market share and 43% of all part D lives covered in the U S.
This market latest ship and the work done by our U S team to extend the lifecycle of the product has continued to deliver the revenues needed to sustain our business and bolster our financial position.
In the third quarter, we had net product revenue of $62 $4 million, which is stable versus the second quarter of 2023.
We have achieved this by being very efficient with our U S operations sustaining our investments in managed care and trade efforts to support our exclusive contracts, which continues to represent approximately 75% of the U S business.
Our focus in the U S is on continuing to maintain and extend the lifecycle of the Vascepa branded business.
With that said aligned to our strong supply position and as we have stated previously.
We stand ready to execute different aggressive scenarios, including the potential future launch of an authorized generic in order to retain market latest ship of the IP market.
These scenarios are centered around preserving our profitability and of course, our cash.
Turning to the rest of world. Our approach is focused and clear that is to expand via partnerships to bring the unique value of our products to maximize the number of patients globally on therapy.
We have continued to make progress in our strategy by supporting the efforts of existing partners to deliver market access.
And by securing agreements with new partners.
Beyond pilot markets. We are in the second year of a three year plan to submit and obtain regulatory approval in 'twenty or more additional countries and regions to ensure that patients in the top 50, cardio metabolic markets worldwide can benefit from our product.
From a commercial perspective, our partners are continuing to make significant yet early progress as well in China. The second largest cardiovascular market globally, I'm Maroons partners, adding farm launch Vascepa in October for the very high triglyceride indication.
And he has also submitted its regulatory filing for a potential indication for.
Cardiovascular risk reduction.
It is important to note that this filing has been submitted with a clinic a waiver meaning that an additional regulatory study will not be required to review the new indication.
The company is now awaiting the agency's acceptance of that filings.
From a partnering perspective in the third quarter, we signed an exclusive agreement with Lotus pharmaceuticals to commercialize by scatter across 10 countries in Southeast Asia South Korea.
We also signed an exclusive commercialization agreement with near fund for Vascepa in Israel.
In each of these markets as well as Australia, New Zealand with our partner CSL secures <unk>.
Regulatory market access and prelaunch activities are well underway.
In summary, we are making progress in our efforts to get our product in the hands of as many patients as possible around the world.
<unk> is doing this with a core focus on operational momentum and with a tremendous sense of urgency to accelerate that progress.
We believe this is what will create shareholder value we are listening to and we appreciate the input from our important retail and institutional shareholders.
Now I'd like to hand, the call over to Tom Reilly.
To review, our third quarter 2023 financial performance Tom.
Thank you Pat good morning, everyone.
I am pleased to report details on our financial performance for the third quarter of 2023.
Let me begin by discussing our revenue performance.
In the third quarter of 2023, Ameren reported total net revenue of $66 1 million include.
Including net product revenue.
Of $64 9 million.
Versus $65 2 million in the second quarter of 2023.
And $1 2 million in licensing and royalty revenue.
U S product revenue was $62 4 million, which includes a $6 5 million onetime adjustment primarily due to Medicaid rebates.
This is a decline of $2 2 million versus the second quarter of 2023.
Reflecting lower net pricing in the U S.
We remain pleased with the stable performance in the U S. Despite multiple competing generics on the market.
The U S business continues to provide profit supporting our expansion into Europe.
The revenue results include Europe European product revenue of 800000 compared to 600000 in the second quarter of 2023.
Reflecting early revenues from European markets, including the U K, Spain, and the Netherlands.
Unknown Executive: Welcome to Amarin Corporation's conference call to discuss its third quarter 2023 financial results and business updates.
We recognized $1 2 million in license and royalty revenue in the third quarter of 2023.
Jordan Zwick: I would now like to turn a conference call over to Jordan Zwick, Senior Vice President, Business Development, and Investor Relations at Amarin. 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 Arbor provided under federal securities law. We may not achieve our goals, carry out our plans, our intentions, or meet the expectations disclosed in our forward-looking statements.
Including from Vascepa related commercial sales from our partners in Canada.
China and the Middle East.
As well as an upfront licensing fee from our partner in South Korea and Asia.
Jordan Zwick: Actual results or events could differ materially, so you should not place undue reliance on these statements. We assume no obligation to update these statements as circumstances change. Our forward-looking statements do not reflect the potential impact of significant transactions we may enter into, such as murders, acquisitions, dispositions, joint ventures, or any material agreements that we may enter into amend or terminate. For additional information concerning the risk factors, it could cause actual results to differ materially.
Cost of goods sold for the three months ended September 32023 was $36 2 million.
Which includes a $12 7 million of inventory settlement charges.
Gross margin on net product revenue was 64% for the three months ended September 32023.
When you exclude the impact of supply settlements in the quarter.
Moving onto operating expenses during the third quarter of 2023, excluding restructuring expenses.
Operating expenses were $50 5 million versus $64 5 million in the same period of 2022.
Selling general and administrative expenses in the third quarter of 2023.
Jordan Zwick: We see the risk factors section of our annual report on form 10K for the year ended December 31, 2022 in our quarterly report on form 10Q for the quarter ended September 30, 2023, which has been filed with the SEC and is available through the Investor Relations section of our website at www.amarincorp.com. We encourage everyone to read these documents. In far cry of this call will be posted on Amarin's website in the Investor Relations section.
Were $45 5 million.
<unk> to $58 $7 million in the corresponding period of the prior year.
The decrease was primarily due to the implementation of our July 2023 announced cost reduction plan.
As well as other cost savings initiatives throughout the year.
Research and development expenses in the third quarter, 2023, or $5 1 million.
From $5 8 million in the corresponding prior year period with.
With the decrease being driven by the implementation of our previously announced cost reduction plan.
Jordan Zwick: Turning to today's agenda, Patrick Holt, Amarin's president and chief executive officer will lead our discussion, and Tom Riley, Amarin's chief financial officer will provide a detailed review of our third quarter 2023 financial results. Following prepared remarks, we will open the call to your questions.
Under U S. GAAP Amarin reported net loss of $19 3 million for the third quarter for.
Our basic and diluted loss per share.
Of <unk>.
Yes.
Let me now turn.
Our efforts and results in controlling costs and effectively managing our cash.
Patrick Holt: I will now turn the call route of Patrick Holt, president and chief executive officer of Amarin. Pat. Thank you, Jordan.
As of September 32023, Ameren reported aggregate cash and investments of 321 million delivering a cash positive quarter of $8 million.
Patrick Holt: Good morning, and thank you everyone for joining us today. During my three months with Amarin, I've been focused on ways to drive shareholder value. What I have learned is clear. First, we have a company and a product in the sympathy for the scamper with significant global potential backed by tremendous scientific data, including a 25% relative risk reduction on top of statin. And is therefore a medicine that can have profound impact on cardiovascular patients globally.
Accordingly, this is the fifth consecutive quarter of positive cash flow generation for amarin.
And our cash balance is now $15 million higher when compared to the third quarter of 2022.
We have continued to make progress against our cost reduction program and managing our cash position.
We are on track to deliver $40 million of annualized savings from the reduction in force announced in July of 2023.
Patrick Holt: In addition, the company has a strong balance sheet with $321 million in cash, delivering five quarters of cash flow positive results and no debt. I also know that delivering and showing results is what will drive shareholder value at Amarin, whether it's commercial market access, operational or R&D, what matters moving forward is that we demonstrate results. As we look to our path forward, it's important to acknowledge the meaningful and important results we are delivering.
We will continue to focus on cash preservation.
Find additional ways to reduce costs.
And prudently invest in the right opportunities which are value added.
We have also continued to take steps to strengthen and streamline the company operationally.
Clearly, making strides and renegotiating supply agreements to lower our future commitments.
With these initiatives and the relatively stable trends in the U S.
We believe our current available cash and resources, including the U S profitability are adequate to support continued operations, including European launch activities.
Patrick Holt: Following the third quarter, we have now reported five consecutive quarters of positive cash flow. This has been achieved through tough but now decisions to reduce headcount and operational expense as well as ongoing discussions with supply partners to renegotiate supply agreements. Today, we have 320 million dollars in cash on hand and increase of 15 million versus Q3 2022 and no debt. Whilst our European business has not delivered what we have expected today and we know we need to do more, we are encouraged by the focus and impact of our new leadership and team is demonstrating.
In closing, we will remain focused and vigilant in controlling costs and effectively managing our cash position.
With that I will now turn the call back over to Pat for closing remarks Pat.
Thank you Tom for the financial overview of our results during the third quarter.
Yes.
As we look forward to the remainder of 2023 and into 2020 for our team is focused on operating momentum to maximize shareholder value that.
That focus cuts across all three of our regions Europe, the U S and rest of world.
Patrick Holt: And by early progress from initial launches in key countries. Fundamentally, we are confident in our European opportunity given our IP position with the potential to have protection up to 2039. We will discuss this in more detail later in the call. November marks three years since the first generic entrance in the US. Despite this challenge, our team has extended the life cycle and market leadership of a steeper, maintaining 57% market share. The durability of this business has been extended by sustained investments in managed care and trade capabilities, despite the elimination of the US sales force.
We firmly believe this focus on operational momentum is the best path forward for MRI and when more strongly position us for future strategic options controlling costs and preserving cash are essential.
That said, we can only enhance the value of ameren and therefore deliver shareholder value by delivering results in a.
Three core areas focused investments in Europe to accelerate prescription growth and revenues as well as securing pricing and reimbursement in key markets supported by our runway out to potentially 2039.
Extending vascepa branded revenue and profits in the U S and enabling our partners to get our product into the hands of as many patients as possible around the world.
Patrick Holt: In the rest of world, overall, we are at early stages of expansion by partnerships. Whilst we have revenue from partners in Canada and the Middle East, we have tremendous opportunity in key markets such as China as well as Australia and New Zealand. Notably, China launched the very high triglyceride indication in September and submitted its filing for cardiovascular risk reduction last week. Recently, we discussed the progress to date and path forward with our board of directors.
Before I close I'd like to make a comment about an important topic on all of our mines, our current stock price and performance.
Like all of our shareholders none of us are satisfied with the Companys stock performance, we fundamentally do not believe our current valuation reflects true value of amarin all the opportunities that lie ahead for the company and both the safer scaffold.
The company has a strong future because of our fundamentals that reinforce its value a best in class size with a global opportunity and impactful cardiovascular patients.
Patrick Holt: In those discussions, it was clear that the best path forward for Amerin today is to remain focused on accelerating operational momentum. In Europe, our teams will continue to be focusing on key launches, including the UK, Netherlands and Spain. While also continuing to advance pricing and reimbursement efforts in a number of markets, particularly Italy, France and Germany. In the US, we will continue to support our business through targeted efforts, including managed care and trade initiatives to secure exclusive contracts.
Team that is dedicated and delivering results and our strong balance sheet.
That is why we believe at Ameren and we fundamentally believe the stock performance is disconnected from these facts.
We believe we have the right plan based on operational momentum to drive shareholder value.
Finally, I would like to thank our colleagues for their unwavering commitment and dedication I look forward to delivering results and driving shareholder value together.
And with that Jordan, let's please begin the Q&A portion of today's call.
Thank you Pat.
Patrick Holt: And in the rest of the world, we will continue to support our partners to get our product into the hands of as many patients as possible. We believe this focus on operational momentum will maximise shareholder value and position us for future strategic options. Moving to Europe, our teams continue to work to deliver both pricing and reimbursement as well as commercial progress in a region which is challenging for the entire industry. From a commercial perspective, whilst it remains early in the commercial launch process in key countries, we are beginning to see initial signs that our local country strategies are working.
As we announced earlier in October to enhance engagement with the company shareholder base and facility connections with its investors Amarin is partnering with C technologies to our retail and institutional shareholders to submit an up boot questions. The selection of which will be answered by Ameren management during today's.
Earnings call.
We will begin today's Q&A by addressing select questions on the <unk> platform.
Our first question is regarding the fixed dose combination and any update the company can provide on that program.
Thanks, very much for the question and naturally innovation is really important to the company.
Look whilst we're unable to disclose specific details on the program at this point.
Evaluating our priorities against resources, it's become clear that the fixed dose combination is not a priority that will drive near term value for the company. Therefore, the program is being de prioritized.
Patrick Holt: We've got all formalities within the first few months post launch in England and Wales. We now have a more focused strategy in place, including driving uptake in key accounts, that is delivering now more than 30% quarter over quarter pharmacy sales growth. In Scotland, following recent reimbursement approval, the team is progressing access to formalities. In Spain, our commercial team is focused on HTTP to our early adopters of cardiovascular products, and we are seeing promising yet early sales across all regions.
A very important R&D group continues to focus on global regulatory support market access as well as a scientific publication strategy to support our product globally.
Thank you Pat our second question is on M&A.
Are there any plans of selling the company to someone who can get vascepa, the skipper effectively launched into the market.
Yes, thanks very much for this question also naturally I received this question quite a lot since I joined the company.
The management and the board.
Patrick Holt: We now estimate 500 patients are on therapy one month post launch. And in the Netherlands, our team is executing on a focus strategy based on identified key accounts to drive adoption. This is backed by extensive local market research. We now estimate more than 100 patients are on therapy one month post launch. On the pricing and reimbursement front, we have now secured pricing and reimbursement across nine countries in Europe, including Spain, the Netherlands, and Scotland in the third quarter.
We are really committed and we're very focused on the fact that our company today is significantly undervalued.
And we're therefore collectively focused on maximizing shareholder value. We're focused on the operational momentum that we can deliver and the value that can create for the company and therefore for shareholders.
This is the best path forward for us at this time.
Patrick Holt: This continued pricing and reimbursement progress strengthens the foundations for Veskefa in additional markets, where we are speaking pricing and reimbursement decisions. In Italy, Amarin has finalized the new path forward to pursue market access for Veskefa by the end of 2024. In France, we are progressing a new access strategy for Veskefa with the national authorities. We do not expect this process to conclude in 2024. And in Germany, we are continuing to evaluate potential options to secure pricing and reimbursement for German patients.
And as a result strengthens our position for future strategic options.
Her third question is on the stock price and potential delisting from NASDAQ can you comment on this.
Look it's top of mind for all of US, it's a very important topic.
Given that we've been trading under $1 for 30 consecutive trading days, we have received official notice of a potential delisting from Nasdaq.
It's important to note that that full process could take up to 360 days, if we trade below a dollar and there are a number of opportunities for us to regain compliance with NASDAQ rules.
To state the obvious our public listing is really important to investors. So the whole management team and to our employees.
And the most important thing I want to share with you is that fundamentally we are focused on enhancing operating momentum alongside our cash preservation approach that we believe will drive the stock price forward. We're confident that we can achieve this.
Patrick Holt: We will share more on Germany in the coming quarters. In terms of other markets, where we have ongoing pricing and reimbursement processes underway, we do not expect to receive additional decisions in 2023. We remain confident in our path forward in Europe, particularly given our intellectual property in the region. We have regulatory data protection in Europe until 2031, and we also have patents and applications that have the potential to extend our IP well into the decade, indeed potentially up to 2039.
Before we take additional questions I'd like to thank those shareholders, who submitted questions via the Sei technologies platform this quarter.
We are committed to continuing open and transparent dialogue with our shareholders and assay technologies platform is one way that we are trying to increase engagement and two way dialogue with you.
We look forward to continuing to hear from our shareholders and answering questions on this platform moving forward.
Thank you Paul we will now open the Q&A up for additional questions.
Patrick Holt: Turning to our US business, November marks three years since the launch of the first generic IP into the market. As we all know, most generic markets quickly erode the brand in the United States. As we sit here today, branded Veskefa continues to hold market leadership with 57% market share and 43% of all part D lives covered in the US. This market leadership and the work done by a US team to extend the life cycle of the product has continued to deliver the revenues needed to sustain our business and bolster our financial position.
Certainly at this time, we will be conducting a question and answer session.
You would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue you.
You May press Star two if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Your first question is coming from beliefs Chen at Cantor.
Hi, Thanks for taking my question I wanted to ask you. If your 2023 Opex guidance still holds.
Because it seems like your cost reduction was greater than we would have anticipated in the third quarter. So just curious how to think about fourth quarter. If we don't kind of plugged into that guidance.
Patrick Holt: Our investments in managed care and trade efforts to support our exclusive contracts, which continue to represent approximately 75% of the US business. Our focus in the US is on continuing to maintain and extend the life cycle of the Viseper branded business. With that said, a line to our strong supply position and as we have stated previously, we stand ready to execute different aggressive scenarios, including the potential future launch of an authorized generic in order to retain market leadership at the IP market.
Then what would trigger you to launch an authorized generic and the last question is when do you think well see a pick up in EES sales. Thank you.
Thanks, Louise Thanks, very much for your question, so, possibly I can take the USDA question first and then Tom if you want to take the lead on the Opex and the AG question got work so.
Thanks again for your question. So in terms of the eight years as I mentioned, it's early days with <unk>.
Patrick Holt: These scenarios are centered around preserving our profitability and of course our cash. Turning to the rest of the world, our approach is focused and clear, that is to expand via partnerships to bring the unique value of our products to maximize the number of patients globally on therapy. We have continued to make progress in our strategy by supporting the efforts of existing partners to deliver market access and by securing agreements with new partners.
Plays with some progress, particularly given.
The new latest ship, we have in place and the teams in Europe as I mentioned.
<unk> to say that we're unlocking growth in the UK with 30% quarter on quarter pharmacy sales in Spain, one month into the launch.
500 active patients on therapy, and in Netherlands, where they're really focused strategy.
Top 30 accounts that represent about 55% of prescriptions thats around 100 patients such topics as you understand the way that it's early days. So the way we're thinking about when we'll start to see really.
Patrick Holt: Beyond partnered markets, we are in the second year of a three-year plan to submit and obtain regulatory approval in 20 or more additional countries and regions to ensure that patients in the top 50 cardiometabolic markets worldwide can benefit from our product. From a commercial perspective, our partners are continuing to make significant yet early progress as well. In China, the second largest cardiovascular market globally, Amarun's partner Edding Farm launched the FIFA in October for the very high triglycerate indication.
Really meaningful revenue in Europe, we think about it being towards the end of 2024, that's really where we're tracking toward <unk>.
Each market is different as you well understand and we're focused on really launching very successfully in those key markets.
UK, Spain, and Netherlands, and continuing to advance reimbursement in those key markets such as Italy that we're focused on concluding by 2024, as well as France, and Germany over time.
Tom would you like to address your other questions sure. Thanks for the question Louise related to Opex and guidance for the year.
Patrick Holt: Edding has also submitted its regulatory filing for a potential indication for cardiovascular risk reduction. It is important to note that this filing has been submitted with a clinic for waiver, meaning that an additional regulatory study will not be required to review the new indication. The company is now awaiting the agency's acceptance of their filings. From a partnering perspective in the third quarter, we signed an exclusive agreement with Lotus Pharmaceuticals to commercialize biskepper across 10 countries in Southeast Asian and South Korea.
So as you pointed out earlier.
We did announce a restructuring in Q2 of 2023, our Opex run rate for the first year first half of the year was approximately $60 million and this quarter, we reported $51 million.
So we were able to achieve approximately $7 million of Opex of the $40 million. We said, we're going to get on an annual basis and simply because the announcement really kicked in or the operating expenses really kicked in beginning in August so expectations for the remainder of the year is that our opex would stay in.
Patrick Holt: We also signed an exclusive commercialization agreement with NeoFound for biskepper in Israel. In each of these markets, as well as Australian New Zealand with our partner CSL Shakiris, regulatory, market access and pre-launch activities are well underway.
The range of four in Q4 of where we are currently as in Q3.
And then as we mentioned earlier.
For 2024, we haven't given any specific guidance, but we do expect cash preservation focus on rate opportunities in Europe, if they avail, but keeping the operation expenses overall pretty stable.
Patrick Holt: In summary, we are making progress in our efforts to get our product in the hands of as many patients as possible around the world. Our team is doing this with a core focus on operational momentum and with a tremendous sense of urgency to accelerate that progress. We believe this is what will create shareholder value. We are listening to and we appreciate the input from our important retail and institutional shareholders.
Okay, and then related to your question on the author authorized generic.
And the opportunity there.
As Youll see that we reported branded prescription sales in the quarter our market share was 57%. So we're maintaining really good market share still the market leader, we will see how the market dynamics play out we are prepared to run an authorized generic if needed but at this point in time, given our performance on the branded side.
Thomas Reilly: Now I'd like to hand the call over to Tom Reilly to review our third quarter 2023 financial performance. Tom? Thank you Pat.
Thomas Reilly: Good morning everyone. I am pleased to report details on our financial performance for the third quarter of 2023. Let me begin by discussing our revenue performance. In the third quarter of 2023, Amarin reported total net revenue of 66.1 million, including net product revenue of 64.9 million versus 65.2 million in the second quarter of 2023. And 1.2 million in licensing and royalty revenue. US product revenue was 62.4 million, which includes a 6.5 million one-time adjustment primarily due to Medicaid rebates.
And given overall, our net sales in the U S. We don't see that at this.
At this point in time.
Thank you very much.
Your next question for today is coming from Michael <unk> at Jefferies.
Hi, This is strategy will inform on the LIFO Michael Thanks for taking my question I guess I'll ask two questions first.
First of all on U S.
How secure are the contracts that you mentioned are exclusive and how much are they I guess, how much of them are subject to contract renewal in 2024 or 2025, I guess second on the Es side, maybe a follow up to <unk> question as well.
Thomas Reilly: This is a decline of 2.2 million versus the second quarter of 2023 reflecting lower net pricing in the US. We remain pleased with the stable performance in the US despite multiple competing generics on the market. The US business continues to provide profit supporting our expansion into Europe. The revenue results include European product revenue of 800,000 compared to 600,000 in the second quarter of 2023. Reflecting early revenues from European markets, including the UK, Spain, and the Netherlands.
It seems like.
There are you have added less than 100 patients on treatment in the UK over the last quarter.
Our calculation.
Would you characterize the growth in the UK and then.
What would it take to drive the uptake in that region. Thanks.
Thanks very much for your question really appreciate that.
Firstly to the question around exclusives typically they are annual contracts.
And it's really in January that we have absolute clarity on those contracts being renewed.
Right now they represent about 75% of our business.
It's continued to be stable for a significant period of time as we sit here.
Thomas Reilly: We recognize 1.2 million in licensing royalty revenue in the third quarter of 2023, including from the super-related commercial sales from our partners in Canada, China, and the Middle East, as well as an upfront licensing fee from our partner in South Korea and Asian. Cost a good soul for the three months ended September 30, 2023 was 36.2 million, which includes a 12.7 million of inventory settlement charges. Gross margin on net product revenue was 64 percent for the three months ended September 30, 2023 when you exclude the impact of supply settlements in the quarter.
And as we sit here in October.
Sorry about we are feeling that we have good progress as we're entering 2024.
I'm very comfortable we certainly have seen some signals around this time of the year that really give us competencies. We're entering 2024 with that said, we get absolute line of sight on our exclusive contracts in January and but that's it that's been a really stable and important part of the business that continues to pay the Uber focus.
The U S focus that we can use as we continue to invest in trade and managed care capabilities.
Sure the U K question.
And I think it possibly.
My you May have misheard me I think it's a 1000 patients that we have so far on therapy in the 8-K that we estimate and as I mentioned.
Thomas Reilly: Moving on to operating expenses. During the third quarter of 2023, excluding restructuring expenses, operating expenses were 50.5 million versus 64.5 million in the same period of 2022. Selling general and administrative expenses in the third quarter of 2023 were 45.5 million compared to 58.7 million in the corresponding period of the prior year. The decrease was primarily due to the implementation of our July 2023 announced cost-reduction. Plan, as well as other cost-saving initiatives throughout the year.
We've demonstrated 30% quarter over quarter pharmacy sales, which.
Let's be honest, it's still not where we need to be in the U K, but I think as a result of the latest changes that we've seen and we're starting to see some.
Focus.
With really a focus on key accounts.
Yeah.
Okay. Thanks.
Your next question is coming from Atlanta Ruiz at Leerink.
Hey morning, everyone. So on the Medicaid rebate adjustment of about $6 5 million I was curious could that occur in future quarters to the same degree and what's driving that adjustment and second question is regarding your amended supplier agreements. How close are you to completing this.
Thomas Reilly: Research and development expenses in the third quarter, 2023, or 5.1 million, from 5.8 million in the corresponding prior year period, with the decrease being driven by the implementation of our previously announced cost reduction plan. Under US Gap, Amarin reported net loss of 19.3 million for the third quarter, or basic and diluted loss per share of 5 cents. Let me now turn our efforts and results in control and cost, effectively managing our cash.
And could you just explain why amending these agreements had a bit of a higher charge this year relative to last year.
Sure. It's Tom I can take both those questions. So the first question relates to the Medicaid adjustment component so in the quarter correct.
Thomas Reilly: As of September 30 of 2023, Amarin reported aggregate cash and investments of 321 million, delivering a cash-positive quarter of 8 million. Importantly, this is the fifth consecutive quarter of positive cash-low generation for Amarin, and our cash balance is now $15 million higher when compared to the third quarter of 2022. We have continued to make progress against our cost reduction program and managing our cash position. We are in track to deliver 40 million of annualized savings from the reduction in force announced in July 2023.
They recognized the $6 5 million onetime Medicaid adjustments. So it is one times, we don't expect that moving forward. The reason for the adjustment is we had we provided an estimate of how many patients were coming through the Medicaid channel revenue.
And.
Actual big patients were lower so this quarter, we did recognize that true, but it is a one time component.
So the second question related to.
Supply agreements and line of sight on the supplier supply agreement.
Overall.
The position here as we have a really good relationship with our suppliers.
Thomas Reilly: We will continue to focus on cash preservation by additional ways to reduce costs and provenly invest in the right opportunities which are evaluated. We have also continued to take steps to strengthen and streamline the company operationally, including making strides and renegotiating supply agreements to lower our future commitments. With these initiatives and the relatively stable trends in the U.S., we believe our current available cash and resources, including the U.S, profitability, are adequate to support continued operations, including European launch activities.
And we're making progress in balancing our supply commitments.
With future demands that would that we need so overall.
It's hard to determine when we expect these restructuring charges to end.
We're balancing our commitments with the suppliers versus the commercial sales pick up.
And it is complicated because as part of our supply negotiations, we need to make supply purchases.
In order to ensure we are future supply to meet the potential demand for the EU in house and outside of the U S. So overall, we're making good progress we're balancing it with the suppliers.
But we really need to see EU sales to pick up to see when the overall.
Thomas Reilly: In closing, we will remain focused and vigilant in control and cost and effectively managing our cash position.
Charges will stop.
Okay got it thanks.
Patrick Holt: With that, I will now turn the clock back over to Pat for closing remarks. Pat, thank you, Tom, for the financial overview of our results during the third quarter. As we look forward to the remainder of 2023 and into 2024, our team is focused on operating momentum to maximize shareholder value. That focus cuts across all three of our regions, Europe, the U.S., and rest of world. We firmly believe this focus and operational momentum is the best path forward for AMERA and will more strongly position us for future strategic options.
Your next question is coming from Paul Choi with Goldman Sachs.
Hi, This is <unk>, calling in for Paul.
For taking our questions I suppose I'll ask a question about ex U S. So thanks for giving the color on the Netherlands, and Spain launches I was wondering where those were good proxies for what you expect to see in China or whether the recent launches in Kuwait and Saudi Arabia would be a more easy lateral for that.
Yes. Thanks for thanks very much for your question.
It is important to note.
We're really trying to be much more transparent in what we're sharing with you all its feedback we've received from investors. So we take that onboard.
Patrick Holt: Controlling costs and preserving cash are essential. With that said, we can only enhance the value of AMERA and therefore deliver shareholder value by delivering results in our three core areas. Focused investments in Europe to accelerate prescription growth and revenues as well as securing pricing and reimbursement in key markets supported by a runway out to potentially 2039, extending the super branded revenue and profits in the US and enabling our partners to get our product into the hands of as many patients as possible around the world.
In regards to the different markets.
Each market in Europe is quite different and then China is different again.
We're in a unique position now as we launch.
That we do are able to say that we have a patient that patient numbers, so far in Spain, and Netherlands being what we have described.
When we think of China, its quite a different base. So.
It's the second largest market globally, it's very significant opportunity for us.
Patrick Holt: Before I close, I'd like to make a comment about an important topic on all of our minds, our current stock price and performance. Like all of our shareholders, none of us are satisfied with the company's stock performance. We fundamentally do not believe our current valuation reflects true value of Amarin, all the opportunities that lie ahead for the company and will for CEPA for SKEPA. The company has a strong future because of our fundamentals that reinforce its value, our best in class science with a global opportunity and impact for cardiovascular patients.
Is actually unique also in the sense that they're launching now with a very high triglyceride indication.
As I mentioned, they've just submitted for the cardiovascular risk reduction indication.
With a clinical trial waiver, which is very important also that opens up the potential for national drug and reimbursement listing in the future for for the cardiovascular risk reduction indication.
So we feel that China is a very significant opportunity over time. So I'm trying to is really I would say China is a unique opportunity in regards to the middle East.
Patrick Holt: Our team that is dedicated and delivering results and our strong balance sheet. That is why we believe in Amarin and we fundamentally believe the stock performance is disconnected from these facts. We believe we have the right plan, piston operational momentum to drive shareholder value. Finally, I would like to thank our colleagues for their unwavering commitment and dedication.
Those markets are.
The one thing you mentioned is still in early stages of development, we are going through market access and prelaunch.
If we think of rest of world and what's quite interesting in what is quite exciting for US is we have revenues right now in markets, such as Canada, and some parts of the middle East and as we just mentioned with the very high triglyceride indication in China just from the very end of September.
Patrick Holt: I look forward to delivering results and driving shareholder value together.
Jordan Zwick: And with that, Jordan, let's please begin the Q&A portion of today's call. Thank you, Pat.
So we have a lot of runway for many of the rest of the world markets to continue to launch over time many is still in.
Jordan Zwick: As we announced earlier in October, to enhance engagement with the company shareholder base and facility connections with its investors, Amarin is partnering with state technologies to allow retail and institutional shareholders to submit and upvote questions, a selection of which will be answered by Amarin management during today's earnings call. We will begin today's Q&A by addressing select questions on the state platform.
The regulatory market access and pray launch stages, so theres a lot of opportunity for us over time to grow the business via partnerships.
Okay. Thank you and then a quick follow up on China do you can you offer any more color on our patents as well.
Some payment from adding given I'm, assuming in an M. P. A approval for the risk reduction in CV.
Yeah, I would just say that our agreement with adding is a typical licensing agreements there are payments associated with different milestones as both revenue as well as specific milestones on.
Patrick Holt: Our first question is regarding the fixed dose combination and any update the company can provide on that program. Thanks very much for the question and naturally innovation is really important to the company. Look, while we're unable to disclose specific details on the program, at this point, evaluating our priorities against resources, it's become clear that the fixed dose combination is not a priority that will drive near term value for the company.
On a regulatory.
Elements and we have stated some of that in our <unk>.
In our filings.
Just a more specific way.
Yeah.
Just to add to that we have up to a range of five to five 9% to $50 million in.
Patrick Holt: Therefore, the program is being deprioritized. Our very important R&D group continues to focus on global regulatory support market access, as well as scientific publication strategy to support our product globally.
Our $50 million in total.
Sales milestones that could be R&D.
Okay. Thank you.
Okay.
We have reached the end of the question and answer session and I will now turn the call over to Patrick Holt for closing remarks.
Patrick Holt: Thank you, Pat.
Patrick Holt: Our second question is on M&A.
Patrick Holt: Are there any plans of selling the company to someone who can get the CEPA, the SKEVA, effectively launched into the market? Thanks so much for this question also. Naturally, I received this question quite a lot since I joined the company. Look, management and the board, naturally, we're really committed and we're very focused on the fact that our company today is significantly under the value. And we're therefore collectively focused on maximizing shareholder value.
Well. Thank you everyone for your attendance today and we really appreciate your questions. Your engagement with the company as you've heard from US we are incredibly focused on driving operational momentum that we truly believe will therefore drive and maximize shareholder value. We appreciate your engagement and we look forward to.
Good talking to you more as the quarter continues and please reach out to us with any questions you have and thank you again for your attendance.
Patrick Holt: We're focused on the operational momentum that we can deliver and the value that can create for the company and therefore for shareholders. This is the best path forward for us at this time. And as a result, strengthens our position for future strategic options.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
Okay.
Patrick Holt: Her third question is on the stock price. In potential dewyst thing from NASDAQ, can you comment on this? I mean, to state the obvious, our public listing is really important to investors, to the whole management team and to our employees.
Patrick Holt: And the most important thing I want to share with you is that fundamentally we're focused on enhancing operational momentum alongside our cash preservation approach that we believe will drive the stock price forward. We're confident that we can achieve this.
Patrick Holt: Before we take additional questions, I'd like to thank those shareholders who submitted questions via the State Technologies platform this quarter. We are committed to continuing open and transparent dialogue with our shareholders and the State Technologies platform is one way that we are trying to increase engagement and two-way dialogue with you. We look forward to continuing to hear from our shareholders and answering questions on this platform moving forward.
Patrick Holt: Thank you, Pat.
Unknown Executive: We will now open the Q&A up for additional questions. Certainly.
Unknown Executive: At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions.
Patrick Holt: Your first question is coming from Belize Chen at Canter. Hi. Thanks for taking my questions here. I wanted to ask you, if you're 2023 OPEX guidance still holds, because it seems like your cost reduction was greater than we would anticipated in the third quarter. So just curious how to think about fourth quarter if we still plugged into that guidance. And then what would trigger you to launch an authorized generic? And the last question is, when do you think we'll see a pickup in EU sales? Thank you. Thanks, Louise. Thanks very much for your questions.
Patrick Holt: So possibly I can take the EU question first and then Tom, if you want to take the lead on the OPEX and the AG questions that works. So thanks again for your questions. So in terms of the EU, as I mentioned, it's early days, and we're pleased with some progress, particularly given the new leadership we have in place in the team. In Europe, as I mentioned, encouraging to see that we're unlocking broken UK with 30% quarter of quarter pharmacy sales in Spain, one month into the launch.
Patrick Holt: 500 active patients on therapy and in Netherlands with a really focused strategy, and with the top 30 accounts that represent about 55% of prescription, that's around 100 patients so far. But as you understand, Louise, it's early days. So, you know, the way we're thinking about, you know, when we'll start to see, you know, really meaningful revenue in Europe, we think about it being toward the end of 2024. That's really where we're tracking toward it.
Patrick Holt: Each market is different as you well understand, and we're focused on really launching grace, et cetera, in those key markets in the UK, Spain and Netherlands, and continuing to advance reimbursement in those key other markets, such as Italy that we're focused on concluding by 2024, as well as France and Germany over time.
Thomas Reilly: Tom, would you like to address your other questions? Sure, thanks for the question, Louise. Relate to OPEX and guidance for the year. So, as you pointed out earlier, we did announce restructuring in Q2 of 2023. Our OPEX runway for the first half of the year was approximately 60 million. And this quarter we reported 51 million. So, we were able to achieve approximately 7 million dollars of our OPEX of the 40 million.
Thomas Reilly: We said we were going to get on an annual basis. And simply, that's because the announcement really kicked in or the operating expenses really kicked in beginning in August. So, expectations for the remainder of the year is that our OPEX would stay in the range of in Q4 of where we are currently as in Q3. And then as we mentioned earlier, for 2024, we haven't given any specific guidance, but we do expect cash preservation. Focus on right opportunities in Europe if they avail, but keep in the operation expenses overall pretty stable.
Thomas Reilly: Okay, and then related to your question on the author, authorize generic. And the opportunity there. As you'll see that we reported brand of prescription sales in the quarter, our market share was 57%. So, we're maintaining really good market share still the market leader. We'll see how the market dynamics play out. We are prepared to run an authorize generic if needed, but at this point in time, given our performance on the brand inside. And given overall our net sales in the US, we don't see that at this point in time. Thank you very much.
Unknown Executive: Your next question for today is coming from Michael Yee at Jeffries. Hi, this is Jarge and we're on the Nigel Michael E. Thanks for taking that question.
Patrick Holt: I guess that's two questions. First of all, on you as I guess how secure are the contracts that you mentioned are exclusive and how much are they? I guess how much of them are subject to your contract of renewal in 2024 or 2025?
Patrick Holt: I guess second on the EU side, maybe a follow up to Louis question as well. It seems like there are you have added less than 100 patients on treatment in the UK over the last quarter, based on our calculation. How would you characterize the growth in the UK and then what would it take to drive the uptake in that region? Thanks. Thanks very much for your question. Really appreciate that. So firstly, so the question around exclusive typically they are annual contracts.
Patrick Holt: And it's really in January that we have absolute clarity on those contracts being renewed. Right now they represent about 75% of our business and that's continued to be stable for a significant period of time. As we sit here, as we sit here in October, we're feeling that we have good progress as we're entering 2024 feeling very comfortable. We certainly have seen some signals around this time of the year that really give us confidence as we're entering 2024. With that said, we get absolute line of start on our exclusive contracts in January.
Patrick Holt: But that's been a really stable and important part of the business that continues to be the over focus of the US focus as we continue to invest in trade and manage capabilities to the UK question. I think it possibly, my, you may have misheard me, I think it's a thousand patients that we have so far on therapy in the UK that we estimate. And as I mentioned, we've demonstrated 30% quarter of a quarter pharmacy sales, which let's be honest, it's still not what we need to be in the UK, but I think as a result, the leadership changes that we've seen, and we're starting to see some, some, some, focus, with really a focus on key accounts. Okay, thanks.
Roanna Ruiz: Your next question is coming from Roanna Ruiz at Learink. Hey, morning everyone.
Thomas Reilly: So on the Medicaid rebate adjustment of about 6.5 million, I was curious, could that occur in future quarters to the same degree and what's driving that adjustment? And second question is regarding your amended supplier agreements, how close are you to completing this process? And could you just explain why amending these agreements had a bit of a higher charge this year relative to last year?
Thomas Reilly: Sure, Roanna, it's time I can take both those questions. So the first question relates to the Medicaid adjustment component. So in the quarter correct, we did recognize the 6.5 million one time Medicaid adjustment. So it is one time, we don't expect that moving forward. The reason for the adjustment is we had to, we provided an estimate of how many patients were coming through the Medicaid channel as revenue. And actually, the patients were lower. So we, this quarter, we did recognize that true, but it is a one time component.
Thomas Reilly: So the second question, Roanna, related to supply agreements and line of sight on the supplier, supply agreements that go over all the position here is we have a really good relationship with our suppliers. And we, we're making progress and balancing our supply commitments with future demands that we need. So overall, it's hard to determine when we expect these restructuring charges to end. We're balancing our commitments with the suppliers versus the commercial sales pickup.
Thomas Reilly: And it is complicated because as part of our supply negotiations, we need to make supply purchases. And in order to ensure we have future supply to meet the potential demand for the EU and outside of the US. So overall, we're making good progress. We're balancing it with the suppliers. But we really need to see EU sales to pick up to see when the overall charges will stop.
Unknown Executive: Okay, got it. Thanks.
Paul Choi: Your next question is coming from Paul Choi with Goldman Sachs. Hi, this is Khalil calling in for Paul. Thanks for taking our questions.
Patrick Holt: I suppose I'll ask a question about XUS. So thanks for giving me the color on the Netherlands and the Spain launches. I was wondering where those were good proxies for what you expect to see in China or whether your recent launches in Kuwait and Saudi Arabia would be a more easy lateral for that. Yeah, thanks very much for your question. Look, it's important to know, you know, we're really trying to be much more transparent in what we're sharing with you all.
Patrick Holt: It's a feedback we've received from investors, so we take that on board in regards to the different markets, you know, each market in Europe is quite different and then China is different again. We're in a unique position now as we launch that we do we're able to see that we have patient, the patient numbers so far in Spain and Netherlands being what we have described. But when we think of China, it's quite a different beast.
Patrick Holt: So it's the second largest market globally. It's very significant opportunity for us. It's actually unique also in the sense that they're launching now with a very high triglyceride indication. As I mentioned, they've just submitted for the cardiovascular risk reduction indication with a clinical trial waiver, which is very important also that opens up the potential for national drug and reimbursement listing in the future for for the cardiovascular risk reduction indication. So we feel that China is a very significant opportunity over time.
Patrick Holt: So I'm trying to really, I would say China is a unique opportunity in regards to the Middle East. Those markets are the ones you mentioned are still in early stages of development. We're going through market access and pre launch. And if we think of rest of world and what's quite interesting and what is quite exciting for us is we have revenues right now in markets such as Canada, some parts of the Middle East.
Patrick Holt: And as you we just mentioned with the very high triglyceride indication in China, just from the very end of September. So we have a lot of runway for many of the rest of the world markets to continue to launch over time. Many are still in the regulatory market access and pre launch stages. So there's a lot of opportunity for us over time to grow the business fire partnerships.
Patrick Holt: Okay, thank you.
Patrick Holt: And then a quick follow up on China. Do you can you offer any more color on a potential milestone payment from adding give assuming an NPA approval for the risk reduction in TV. Yeah, I would just say that our agreement with adding is a typical licensing agreement. So there are payments associated with different milestones as both revenue as well as specific milestones on. On a regulatory elements and and we have stated some of that in our in our filings.
Patrick Holt: Yeah, just in more specific. We have just to add to that, we have up to a range of five to five million to 50 million total or 50 million in total. I'll say those milestones that could be earned. Okay, thank you.
Patrick Holt: We have reached the end of the question and answer session and I will now turn a call over to Patrick Holt for closing remarks. Well, thank you everyone for your attendance today. We really appreciate that your questions your engagement with the company as you've heard from us. We are incredibly focused on driving. Operating operational momentum that we truly believe will therefore drive and maximize shareholder value. We appreciate your engagement and we look forward to talking to you more as the quarter continues and please reach out to us for any questions you haven't. Thank you again for your attendance.
Unknown Executive: This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.