Amarin Q4 2023 Earnings Call Transcript

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February 29, 2024

There are 8 speakers on the call.

Operator

Good morning, everyone, and thank you for joining us. Turning to our forward looking statements. 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.

Operator

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 ks for the year ended December 31, 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. An archive of this call will be posted on Amarin's website in the Investor Relations section.

Operator

Turning to today's agenda. Patrick Holt, Amarin's President and Chief Executive Officer, will provide a brief overview of 2023 highlights and 2024 priorities and Tom Reilly, Ameren's Chief Financial Officer, will provide a review of our Q4 and full year 2023 financial results. Following prepared remarks, we will open the call to your questions. I will now turn the call over to Patrick Holt, President and Chief Executive Officer of Ammert. Pat?

Speaker 1

Thank you, Mark. Good morning, everyone, and thank you for joining us today. Before we review our 2023 highlights and our 2024 priorities, I want to take a moment to reflect on our strategy at Amarin. Every day our team is focused on driving operational momentum to maximize patient uptake of Vascepa vasgappa. To enhance the value of Amarin and deliver shareholder value, we must drive operational momentum across our 3 key regions.

Speaker 1

In Europe, where we have a potential IP runway after 2,039, we are focusing efforts and investment to accelerate prescription growth and revenue, as well as secure pricing reimbursement in those key markets. In the U. S, we're maintaining and extending our IP market leadership and in the rest of world we're enabling our partners to get our product into the hands of as many patients as possible. We firmly believe this focus on operator momentum is the best path forward for Amarin and will more strongly position us for potential future options. Turning to slide 6, while we believe this strategy is the best way to deliver shareholder value today, the only way to gain shareholder confidence is to deliver against it.

Speaker 1

We have made meaningful progress in 2023 and we have clear priorities in place for 2024. For Europe in 2023 with new leadership and a more focused strategy in place, our teams made launch progress and have advanced pricing reimbursement goals. In Spain, our team is focusing on healthcare practitioners who are early adopters of cardiovascular products. We are continuing to deliver strong launch progress such that we now have approximately 2,500 patients on therapy. In the United Kingdom, we have a more focused strategy in place including driving uptake in key accounts.

Speaker 1

Currently, we have at least 1500 patients on therapy. Turning to pricing and reimbursement, we've secured pricing reimbursement across 9 countries in Europe. As I have shared previously, we have strengthened our focus to advance our opportunities in key EU5 markets. I'm pleased to share in Italy we have now resubmitted our dossier and will advance this process with the authorities to potentially achieve market access for VASCEPA by the end of 2024. In France and Germany, we are sharpening our scientific arguments and have strategies and plans in place to advance submissions for Vascepa in these markets.

Speaker 1

We do not expect these processes to conclude in 2024. We'll continue to communicate progress on France and Germany as additional steps are achieved. Importantly, we are also aiming to successfully conclude pricing reimbursement decision in at least 5 additional markets in 2024. We remain confident in our path forward in Europe. We have patents and applications that have the potential to extend our IP up to 2,039.

Speaker 1

As a testament of this progress, we successfully defended our 2,030 3 patent from opposition. We expect to share more on this topic in the coming months. Turning to the United States, in 2023 we continue to extend IP market leadership closing the year with a 57% market share. We achieved this through focused investment in managed care, trade and medical capabilities to extend Vascepa's lifecycle despite the elimination of our sales force and reduced marketing spend in July. As we turn to 2024, we have begun the year in a slightly improved position compared to last year.

Speaker 1

Based on what we currently know with our exclusive accounts, these represent at least 50% of the total IP market volume. While we are encouraged to start the year in a solid managed care position, the market remains highly dynamic and we continue to monitor this closely. We do expect Q1, 2024 results to be impacted by typical 1st quarter payor dynamics. We continue to stand ready to execute aggressive approaches including the potential future launch of an authorized generic bolstered by our strong supply position to retain market leadership within the IP market. In the rest of world in 2023, we made progress on regulatory market access and commercial fronts as well as new partnerships.

Speaker 1

In China, the 2nd largest cardiovascular market globally, Amarin's partner Edding launched Vascepa in October for the very high triglyceride indication. Additionally, the NMPA has accepted the regulatory filing for the cardiovascular risk reduction indication which opens up the potential for future national reimbursement and drug listing. In 2023, Amarin also entered into 3 new partnerships across 15 countries. In 2024, our focus for rest of world shifts toward enabling our partners to obtain market access and commercial uptake across key markets. Finally, in research and development and medical, our teams delivered important progress with data publications and medical education supporting our brand globally to build confidence in our science.

Speaker 1

In 2024, we will continue to build on this momentum including additional data on REDUCE IT and EPA. Indeed, we have 7 abstracts of the upcoming American College of Cardiology meeting in April. We'll be showing more on this in coming weeks. This important operational progress has supported our financial position with $321,000,000 in cash and no debt. As you're aware, due to our recent progress in our financial position, we announced plans for a share repurchase program of up to $50,000,000 I'm pleased to share that we are on track to complete the necessary shareholder and UK High Court approvals.

Speaker 1

We continue to anticipate completing these steps in the Q2 of 2024 and that share repurchases would commence shortly thereafter. In summary, 2023 was a meaningful year for operational momentum and we are well positioned to continue to build on this in 2024. Now, I'd like to hand over the call to Tom Riley to review our Q4 year end 2023 financial performance. Tom?

Speaker 2

Thank you, Pat. Good morning, everyone. I'm pleased to report details on our financial performance for the Q4 of 2023. In the Q4 of 2023, Amarin reported total net revenue of $74,700,000 including net product revenue of $70,600,000 versus $66,100,000 in the Q3 of 2023 and $4,200,000 in licensing and royalty revenue. U.

Speaker 2

S. Product revenue was $64,900,000 with stable performance in the U. S. Despite multiple competing generics on the market. The U.

Speaker 2

S. Business continues to provide profits supporting our expansion into Europe. The revenue results include Europe PM product revenue of $1,500,000 a 65% increase versus the Q3 of 2023, reflecting early revenues from European markets, including Spain and the United Kingdom. We recognized $8,400,000 in the rest of the world revenue in the Q4 of 2023, including product revenue of $4,200,000 related to commercial sales to our partners in Canada, China and the Middle East and licensing and royalty revenue of $4,200,000 resulting primarily from the achievement of the Edding CVRR milestones. Cost of goods sold in the Q4 of 2023 were $29,600,000 compared to $23,600,000 excluding restructuring in the Q3 in 2023.

Speaker 2

Amarin's overall gross margin on net product revenue in the 4th quarter was 58% compared with 64% in the Q3 of 2023. This was primarily due to an increase in 1 supply sales to our partner Edding. Moving on to operating expenses. Operating expenses were $49,700,000 in the 4th quarter, comprised of $43,900,000 in selling, general and administrative expenses and $5,800,000 in research and development expenses. In the second half of twenty twenty three, Ameren reported operating expenses of $101,200,000 This represents a $21,000,000 reduction in operating expenses versus the first half of twenty twenty three.

Speaker 2

We are on track to deliver the previously announced $40,000,000 reduction in operating expenses by July 2024. Ameren reported a net loss of $5,800,000 for the Q4 of 2023 or basic and diluted loss per share of $0.01 Let me now turn to our efforts and results in controlling costs and effectively managing our cash. As of December 31, 2023, Ameren reported aggregate cash and investments of $321,000,000 Importantly, this is the 6th consecutive quarter of positive or neutral cash flow generation for Amarin and our cash balance is now $10,000,000 higher when compared to December 31, 2022. In 2023, we made progress in controlling our costs and managing our cash position through our cost reduction programs and renegotiating supply agreements. In 2024, we will continue to focus on cash preservation, prudently invest in right opportunities, particularly in Europe based on pricing reimbursement decisions, and pending shareholder and UK High Court approvals will initiate our shareholder repurchase program.

Speaker 2

With that, I will now turn the call back over to Pat for closing remarks and to begin the Q and A portion of our call. Pat? Thank you, Tom for

Speaker 1

the financial overview of our results. Our team is focused on operational momentum to maximize shareholder value across all three areas of our business. We believe we have the right plan, focused on operational momentum to drive shareholder value. We have a strong future because of our fundamentals. Best in class science supporting Vascepa veskeva, a large global opportunity to impact cardiovascular patients, a team that is dedicated to delivering results and a strong balance sheet.

Speaker 1

Finally, thank you to our colleagues for their commitment and dedication. I look forward to driving shareholder value together. And with that, Mark, let's begin the Q and A portion of the call.

Operator

Thank you, Pat. As we announced last year to enhance engagement with the company's shareholder base and facilitate connections with its investors, Ameren is partnering with SAIT Technologies to allow retail and institutional shareholders to submit and upvote questions, a selection of which will be answered by Ameren management during today's earnings call. Let's begin the Q and A. So Pat, we've received a number of questions on the company's long term strategy and ways that we plan to maximize shareholder value. What would you say to these investors?

Speaker 1

Thanks for the question. I get this question a lot. It's really important question and we believe the best path forward for us to both increase our value and put us in the best possible place for future strategic options is today to focus on our current efforts around operational momentum, whether that be in Europe, in the U. S. Or in the rest of world.

Speaker 1

As we shared earlier in the call, we really are making progress on all three fronts which provides us greater optimism and optionality for the future.

Operator

Great. Thanks, Pat. Our second set of questions focuses on China and Asia Pacific. What can you tell us on progress around the commercial launch in China? And what is the status of the cardiovascular risk reduction regulatory following China?

Operator

Also more broadly in Asia Pacific, can you share any updates on efforts with our partners?

Speaker 1

There's a lot in that and for some of you who know, I know this region pretty well. So let me break that down into some parts. Firstly, the China launch. So Amarin's partner, Edding, is really making important progress in China, which I'll remind everybody is 2nd largest cardiovascular market globally. Edding have launched Vascepa for very high triglycerides in Q4 2023.

Speaker 1

To give you a flavor, the adding sales force is covering 200 hospitals, which includes around 500 key opinion leaders, the majority of which are cardiologists in the 3 largest cities of Beijing, Shanghai and Guangzhou. So in summary, the launch is progressing well and the structure of the agreement provides immediate profitability to Amarin. So let's move from today and also think about the future in China as we reflect upon the cardiovascular risk reduction indication. The MMPA has accepted the regulatory filing for cardiovascular risk reduction which opens up the potential for national reimbursement drug listing. The submission was accepted with a clinical trial waiver meaning a separate clinical trial will not be required in order to be reviewed for approval.

Speaker 1

The teams are now focused on advancing that submission together with the authorities and we expect the regulatory review process to conclude in 2025. Asia Pacific is a large region, so let me just touch on some other areas within the region. As you know, last year we entered into partnerships in Australia and New Zealand with CSL Sokerus and also 11 Asian markets including South Korea with Lotus Pharmaceuticals. I'm pleased to share that CSL is advancing pricing reimbursement processes in Australia with the authorities and in other markets our partner Lotus is advancing regulatory discussions and filings with the various authorities across the region.

Operator

Great. Thanks Pat for that information on China and Asia Pacific. Now turning to the U. S, is there a path toward growth in the market? Could we essentially take market share from other products or classes?

Operator

Great question.

Speaker 1

And naturally, our U. S. Revenues and cash flows are incredibly important to our business. When we take a step back and we think about the U. S.

Speaker 1

Market and where it stands today, it's important to remember that the IP market in the U. S. Is highly genericized at this point. Our focus has been and continues to be to maintain IP market leadership and as a result of that not focused on growing the market. We really have achieved a highly atypical performance 3 years post LOE to end 2023 with a market leading share of 57%.

Speaker 1

We've been able to secure market leadership and continue that success through our exclusive contracts led by our capabilities in payor, managed care and medical areas. Again as we mentioned, we started 2024 in a strong position in terms of our exclusive contracts. But to remind everybody, it's a dynamic market and we do watch it very closely and continue to assess our optionality for our branded product and beyond that should we consider other strategic alternatives. In terms of taking share from other products or class is given those generic dynamics we do not view this as an optimal strategy.

Operator

Thank you. Turning to supply, if we see demand increase from Europe or our rest of world partners, are you confident that we can meet those supply demands?

Speaker 1

It's a very important question and we do have strong relationships with our key supply partners. Over the last several years we've made really important progress renegotiating our supply agreements to ensure that we can both meet our demands as well as reduce key supply commitments. We feel really confident that we can meet those supply demands moving forward.

Operator

Now one last question on the R and D side from the state technologies questions. Is Aaron working on advancing any additional indications for Vascepa VASCEPA?

Speaker 1

I was really pleased this question came up. And it's such an important question when you think about the core strengths that Amarin has in terms of our R and D team and our IP capabilities and leadership. This is the team that has developed and advanced the molecule from day 1 and delivered the REDUCE IT data that really has a global impact that we see today. With our team in place, we do continue to look at opportunities for new indications and we will update investors based on potential future progress of that work. So before we take additional questions, I'd like to thank those shareholders who submitted questions via the SAi Technologies platform.

Speaker 1

We are committed to continuing open and transparent dialogue with all of our shareholders and the SAi Technologies platform is one way that we are trying to increase engagement in two way dialogue with you. We look forward to continuing to hear from you and answering your questions on this platform as well as other opportunities moving forward.

Operator

Thank you for those updates, Pat. We'll now open the Q and A up for additional questions.

Speaker 3

Certainly. At this time, we will be conducting a question and answer session. Your first question for today is from Roanna Ruiz with Leerink Partners.

Speaker 4

Hi, good morning everyone. So could you talk a bit more about the ongoing generic competition in the U. S? Like what trends are you seeing in the field? And what do you expect in terms of possible pressure on Vascepa net price in the next couple of years?

Speaker 1

Hi, Joanna. Good morning. Thanks so much for the question. Great to hear from you. As you probably have followed, there are more generics that have got regulatory approval.

Speaker 1

There are more generics that have also got prices. And with that said, what we see in terms of the market dynamics in the market so far, they remain fairly stable. So as we mentioned, we closed the year and we started the year with a strong position with our exclusive contracts that represents greater than 50% of the IP volume. So as we end the year and start the year, we are feeling really good about that position. But as I'm sure you've noted, there is more dynamics and there are more entrants in the market.

Speaker 1

So we continue to monitor it very closely. But I would say so far, and we haven't seen any dynamic changes from what we have seen historically. But obviously, we track it closely. And as you know, we have optionality in the short term as well as the long term to maximize economics for us in the U. S.

Speaker 4

Yes, makes sense. And a quick follow-up on Rest of World. I noticed it's gaining some traction. So could you talk about what regions you expect might contribute the most momentum to future 2024

Speaker 1

and beyond? Yes, it's a great question. As I mentioned, we're really it's pleasing to see the progress in 2023. As you think, we signed up some new countries in 2023. If you take a step back in 20 23, the main revenue sources until China came on board was really coming from Canada and then parts of Middle East, North Africa.

Speaker 1

So I do expect that China will have more progress in 2024. And then there is the opportunity, I think, as some of these partnerships start to go from signing through regulatory process such as Lotus, market access, reimbursement and pricing such as CSL Sakerus in Australia and New Zealand. So you're starting to see a shift from entering partnerships to really more driving through those pre commercial and commercial output. So we're pleased that we're progressing through that lifecycle of and revenue generation and internally that means we're beefing up our capabilities and leadership to support that growth.

Speaker 4

Got it. Thanks.

Speaker 1

And that's to add that, it's really it is a key part of our goals and our strategy that rest of world business and it provides immediate

Speaker 3

Your next question for today is from Jessica Fye with JPMorgan.

Speaker 5

Hi, guys. Good morning. This is Na san on for Jessica Fye. I have a question on your progress in launching VASCEPA there. Can you just talk a little bit about how to accelerate the growth in U.

Speaker 5

K? And then for Germany, have you come up with a plan to reenter the market there? And then for Italy as well? Thank you.

Speaker 1

Thanks, Nasan, great to hear from you. Look, Europe is obviously critical for us. It's a key focus of our investments and a key focus of the whole organization as we move forward. So as we break that down, we think about those key launch markets. And as we previously mentioned, the UK is quite an individual market and the uptake in the UK is typically slower.

Speaker 1

We are making progress with a more focused strategy on those key accounts. And as I signaled earlier, we now believe we estimate we have at least 1500 patients on therapy. Building on that, we did say from that moment of launch last September that we did expect Spain to be a faster uptake market, and that is proving true. So we're pleased with the progress and the uptake we're seeing in Spain on a national base. And today, we see we estimate we have around 2,600 patients on therapy, which is important progress for us.

Speaker 1

So, there are 2 key launch market for us. As we move into some of the reimbursement markets, we've resubmit in Italy building on our previous strong scientific assessment, and we do expect Italy pricing reimbursement to conclude in 2024. And then if we think about Germany to your next question, you know our history in Germany. So that's a topic where we've taken a step back and we are redeveloping a potential new strategy to enter the market. We're working with the authority to assess different ways to consider patient populations that can be relevant for the German market, and we're working with the authorities on those plans, and we continue to advance that through 2024.

Speaker 1

But as I mentioned, I don't expect that those processes will conclude in 2024. Thanks very much for the question.

Speaker 3

Your next question for today is from Louise Chen with Cantor Fitzgerald.

Speaker 6

Hi, team. This is Wayne on for Louise, and thanks for taking our questions. So first, you have reiterated that you're on track to deliver the $40,000,000 annual savings. And so how should we think about the operating expense for 2024? Because compared to Q2, you saved about $7,000,000 in the 3rd quarter and $8,000,000 this quarter.

Speaker 6

So should we expect a similar number going forward? And then the gross margin has dropped to 58%. So how should we think about this going forward? Thank you.

Speaker 2

Yes, great. This is Tom. Thanks for the question. Related to the operating expense in the 40,000,000 dollars which we're on track to deliver and our expectation for expenses. As mentioned before, we reduced expenses from the second half to the first half of $23,000,000 by $21,000,000 Our cost basis is approximately $50,000,000 per quarter.

Speaker 2

Our expectation is to stay within that range depending on pricing reimbursement decisions, we will invest in those opportunities, but we will find other ways to reduce costs. So, our overall expectations is to stay within that 50,000,000 dollars operating expense basis. Related to your question on gross margin, very good question. Thanks for picking it up. What you've seen versus Q3 is a deterioration of gross margin.

Speaker 2

But that's primarily due to launch supply that we provided for our partners in particular in China. So, as the China market is moving forward, we're providing product for revenue there. It's about a 2.5 to 3 point reduction in margin impact this quarter versus the previous quarter. And then, the question on how to expect for margins moving forward, I think it all depends on the uptake in China and how much product supply we'll be providing. But we'll give updates and on the progress of the China market.

Operator

Thank you very much.

Speaker 3

Your next question is from Paul Choi with Goldman Sachs.

Speaker 7

Hi, everyone. Good morning. This is Kahlil calling in for Paul. Thank you so much for taking our question. I guess, our question is about the exclusive contracts that you've mentioned in the past.

Speaker 7

As those are renegotiated, have you seen any additional pushback as more generics enter the market? And have you or will you set a threshold for those for deterioration in those, at which point the company would pivot to their your own generic? Thank you.

Speaker 1

Khalil, thanks very much for the question. Look, obviously, we track those contracts very carefully. We do see, I would say on an annual basis to renegotiate exclusive contracts, we do see annual impact to those pricings in the sort of low double digit range typically. And that's been something that we are seeing consistently. We don't see necessarily significant changes to that, but that's the sort of range that we see.

Speaker 1

What's really pleasing is we have had a strong end to the year and a strong start to the year in terms of how we're landing our negotiations. So the net net of that means that we are participating in greater than 50% of the IP market volume. That has enabled us with our great managed care and trade and medical capabilities to pull through as we close 2023 at 57% market share and retain market leadership. To your second part of your question, of course, we track the economics and the overall profitability incredibly closely. We have specific plans in place to react based on how those dynamics change, should they change.

Speaker 1

But as it stands right now, our focus is to extend our branded lifecycle as long as we can. Our organization, our U. S. Team from my perspective has delivered a highly atypical performance for over 3 years since LOE, which provides incredibly important profits for the business, particularly for our growth in Europe. So, we couldn't be happier in terms of how we finish the year and how we start the year, but as you well know, it's highly dynamic.

Speaker 1

We monitor it very closely.

Speaker 7

Got it. Thank you so much.

Speaker 3

We have reached the end of the question and answer session. And I will now turn the call over to Patrick for closing remarks.

Speaker 1

Well, thank you all for your attention and thanks for all the Q and A. We really appreciate the interest and we look forward to having additional conversations on these important results in the coming days ahead. So thank you again for your time and wish you a great day ahead. Thank you.

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