Amarin Corporation plc (AMRN) Earnings Call Transcript & Summary

Hey, good morning, everyone. My name is Jess Fye. I'm one of the biotech analysts at JPMorgan, and we're continuing the 2020 Healthcare Conference this morning with Amarin. We're going to host a Q&A session with the management team right after this. It's just across the hall in the Georgian room. But for the presentation, I'm going to turn it over to the company's CEO, John Thero.

Thank you, Jess, for the introduction. Thank you, everybody, for joining me here today. At this -- in the same room, last year around this time, was presenting to, broad acclaim, both the significant revenue growth we had in the prior year, but also the results of our landmark cardiovascular outcome study for our lead drug, Vascepa. This year, I'm presenting following even further growth in our revenues, but also after the first ever FDA approval of a drug for cardiovascular risk indication that's important, and we'll be talking about. And we're obviously very excited about the new year that we're entering. I will be making forward-looking statements in this presentation. There are risks associated with all such statements. Anybody considering investing in the company should review those risks before investing. One of our goals for this new year is to make Vascepa a new standard of care. We have studied Vascepa in patients who were treated with all contemporary therapy, well controlled for hypertension, diabetes and cholesterol. The drug works, the drug works well. And I'm referring, of course, to Vascepa or icosapent ethyl. There are 7 different medical guidelines that have already been updated to recommend the use of icosapent ethyl. And a variety of different leading physicians are referring to the 4S study, which was with statins; and the REDUCE-IT study, which was with our drug Vascepa, as being the 2 most important studies over the last 3 decades in preventative cardiovascular care. We look forward to building on that. For those of you who are less familiar with us, cardiovascular disease is the most damaging disease in the industrialized world. It is enormous in terms of the number of patients it affects, and it's growing. There is clearly an urgent need to help patients beyond existing therapy and particularly beyond cholesterol management. We're not trying to replace cholesterol management, we're trying to build beyond that. And a month ago, the FDA approved as the first ever drug for an indication for addressing patients with persistent cardiovascular risk beyond statin therapy, and that was based upon the landmark results of our cardiovascular outcome study, REDUCE-IT. And pursuant to that, we are doubling the size of our sales force. We have the potential to help millions of the patients here in the United States. This is a global opportunity. Before this indication expansion, Vascepa had already been used to treat over 8 million patients based upon our initial, more niche indication. And we think here launching with what is already good managed care coverage and sole share of voice and no immediate competition positions us to grow significantly and make this a multibillion-dollar product and household name. We recently provided, sort of in advance of this conference, some updated guidance relative to our most recent year and the coming year, and I'll just recap that guidance, I mean that is for 2019. We came in at the upper end of our revenue range with revenues a bit north of $400 million, representing a growth of about 85% over the prior year, and we ended the year with cash of over $600 million, which, we believe, is sufficient based upon Vascepa to get us to sustained cash flow positivity. For 2020, we believe that our revenues will continue to grow predominantly in the United States. I'll talk about the international side in a moment. This growth will be based upon the new label. It will be supported by the doubling of our sales force. It will also be supported by a bit of a surround sound relative to our promotion, including direct-to-consumer promotion, some of which has to go through OPDP approval, and you'll be seeing more of mid-year, but some of what you'll be seeing, probably starting next week here in the United States, we begin a unbranded consumer campaign focusing on disease awareness and limitations of prior therapies, our earlier generation therapies. The revenues will continue to have the seasonal variability that they've had in the past, but if people continue to look at them quarter-over-quarter, year-to-year, I think you'll see good growth. Internationally, in Canada, we just, through our partner there, received approval for the drug for cardiovascular risk reduction through Health Canada. In Europe, we submitted and had our submission accepted for review in December. Our anticipation is to have approval in Europe by the end of this year. At this conference, as you might expect, we've been approached by a number of companies who are interested in European rights for the product, consistent with what we've described to shareholders in the past. We continue to think it's still a bit premature to get too far along in those conversations as we think the value will increase as we progress through the regulatory process in Europe. We're well along in a clinical trial with our partner in China. We expect that, that trial should complete itself before the end of this year. And we have approval in select countries in the Middle East, and we're evaluating opportunities elsewhere in the world. As you may recognize, cholesterol management is wonderful. Statins, for example, lower cardiovascular risk by about 25% to 35%, which is fantastic. The flip side of that is that there's 65% to 75% risk remaining, and cardiovascular disease remains the #1 cause of death. In fact, there's a patient who has a heart attack or stroke or dies from cardiovascular disease approximately every 14 seconds. It's the most expensive area for treatment in the industrial world, likely to approach $1 trillion within the next 2 decades. Vascepa is a preventative therapy that has an opportunity to prevent the occurrence of those events and the costs associated with those events. This is a large patient population. I'll talk about the indication in a moment, but the indication includes both patients who are statin-treated and have suggestion of cardiovascular risk, whether that's through established cardiovascular disease or through -- or being diabetic. It's about 12 million patients who have elevated triglycerides and those risk factors, majority of having those risk factors; or patients who are statin-intolerant, which is also a very large opportunity, millions of patients. I mean this is a drug that we've been developing for over a decade, tremendous science involved with it. And as the guidelines have been stating, the results that we have with the study -- with the study of this drug should not be generalized to any other product. There's been a lot of products that have been tried and failed. At this point in time, only Vascepa has succeeded. The new indication for the drug as an adjunct to maximally tolerated statin therapy to reduce the risk of myocardial infarction, stroke, cardiovascular revascularization and unstable angina requiring hospitalization in adult patients with elevated triglycerides 150 mg per deciliter and established cardiovascular disease or diabetes mellitus and 2 more additional risk factors for cardiovascular disease. This is, of course, on top of our initial niche indication of treating patients with triglycerides that are very high of 500 and greater. Just for clarity, the FDA went out of its way to make this a indication statement that is usable by the medical community to treat patients that the medical community thinks needs help. So there -- it was their phrasing of maximally tolerated statins, recognizing that not all patients can tolerate statins. So they don't have a minimum level of statins that people need or a threshold for LDL. This is not an LDL drug, but discretion of the physician as to what maximally tolerated statins is. It's for established disease. What is established disease? Well, that can be a number of things. That can be someone who had a prior cardiovascular event. It can be someone with coronary artery disease, peripheral artery disease, cerebrovascular disease, carotid disease or for patients with diabetes mellitus, type 1 or type 2, with 2 additional risk factors. So most diabetic patients have at least 2 risk factors, whether that be hypertension or age or renal function or family history or smoking. There's a long list of potential risk factors. So a very broad indication. And a safety profile that shows that the overall adverse event rate for Vascepa was comparable to that of placebo. There were 2 areas where the label points out should be monitored. This isn't for discontinuation, but for monitoring. And given the nature of the at-risk nature of these patients, this makes sense. One was for atrial fibrillation or flutter where there was a slightly higher rate of event, 3.1% versus 2.1%, and particularly, this was in patients who had previously reported AFib or flutter. And the other is for bleeding, where there was about 12% versus 10%. I would point out that, in both cases, the overall effect of the drug was comparable. So you're still getting the reduction in stroke, in heart attack, and this is for monitoring. This is not for discontinuation. Bleeding, for example, that bleeding increase is less than what you see with statin therapy and really the downstream effects from AFib, whether that'd be sudden death, cardiac arrest, et cetera, overall reduce in the Vascepa treatment arm versus the placebo arm. So a very clean, well-tolerated safety profile. This is a history of the company's growth by quarter. You can see 2018, that green bar, the fourth quarter, that's when the results of our cardiovascular outcomes study came out. And you can see that the -- we have grown fairly significantly since that point in time. The red bars are Q1. There is some seasonal quarter -- seasonally quarterly variability that occurs in Q1 of each year. Prior to the last year, our sales and marketing efforts were really starved as we spent most of our money on research and development. We did up our sales force last year from about 150 sales reps to 400 sales reps, and this year, we're going from that 400 to 800. So previously, we were in the U.S., really focused on that niche indication of triglyceride lowering. Now we're getting into cardiovascular risk reduction. This is the opportunity that we set out to conquer when we started the decade -- a decade ago. Fortunately, we have already good managed care coverage with over 8 million prescriptions for Vascepa thus far in this past year, with a lot of the prescriptions being off label. The approval rate on managed care was over 80%, and that approval in the managed care coverage has improved even further coming into this year. The doubling of the sales force will be -- will also result in an increase in the number of targeted physicians that we're going after. So with this past year, we were targeting about 50,000 physicians, we'll be going to roughly 75,000 physicians. But it's not just the direct sales effort. You'll be seeing a lot more about Vascepa on television and magazines and digitally, et cetera. The building of a company isn't just through a sales force and a clinical trial. We're very proud of the relationships we have with key opinion leaders and industry groups. In the past year alone, we've had over scientific -- 50 scientific presentations and publications. We were very active in terms of medical education, other forms of promotion. Over 100 physicians took upon themselves to write to the FDA, urging approval of Vascepa, sort of speaks to the conviction behind the product. From a supplier's perspective, we work with top-notch suppliers throughout the world who continue to expand their capacity, and our aim is to be able to support. We're not there yet, but working to be able to support more than $5 billion in potential revenues from this product. Maybe we'll have reason to need to go beyond that, but that's what we're working towards capacity-wise currently, but we certainly have enough to support our current revenue guidance. From a pricing perspective, our drug is priced somewhat similar to where Lipitor was priced before it went generic, and we know that Lipitor had about $13 billion in revenue. So we think that, that's a good price, and this is much more a volume play than it is a pricing play. The managed care coverage has historically been good. And that's, I think, because this is a cost-effective product. Medical societies, starting last year with the American Diabetes Association and others, have joined in to talk about the cost effectiveness of the product. Third-party analysis, ISIR, which often isn't particularly friendly to pharmaceutical products, has talked about our drug being cost-effective against even their most stringent of criteria. And they've said that, that would still be true even if we had doubled the price. Other analysis talks about this being a drug which saves money for society, so that by lowering rates of heart attack and stroke and other cardiovascular events, it actually saves money, which we're proud of. Just to put this in perspective. Again, we're not trying to replace cardiovascular drug, but we have a number needed to treat with this drug of 21. Lipitor has 45. The PCSK9 is around 67. No head-to-head studies here, but this is just sort of putting into perspective. What we showed in our outcomes study is that over a 5-year period, there was 1 fewer major verge cardiovascular event on average for every 6 patients treated. I don't think you've seen that for any other therapy out there. And if you start going through the results of that study in more detail, 5-point MACE. So heart attack, cardiovascular death, stroke, revascularization, hospitalization for angina, 25% risk reduction. Just CV death, heart attack, stroke, 26%; death, 20%; heart attack, 31%; stroke, 28%. The principal investigators call this one of the most significant advancement in preventative care since the introduction of statin therapy, which was 30 years ago. For those of you who like this graphically, here's the Kaplan-Meier curve. Again, you see the 21 for number needed to treat. You see relative risk reduction of 25%, absolute risk reduction of about 5%. Note that the event rate in these patients -- and these were patients who were well treated for cholesterol and hypertension, diabetes, et cetera, over a 5-year period, so about 28%, north of 28%, these patients need more help. And the separation here that occurred began around the 1-year part -- mark and consistently divided from there forward. It gets better. So the drug doesn't own -- that data was all based upon the first occurrence of -- reducing the first occurrence of event the drug keeps on giving. So 25% reduction, the first occurrence of events. People often have second heart attacks or strokes, 32, 31, 48. This is where we get to one fewer MACE event, on average, for 6 patients treated. For people who like the Kaplan-Meier, the lighter-shaded lines are the first events, the darker-shaded lines are when you include total events from a patient perspective. I think total events is what really matters. And then just to sort of put the 25% relative risk reduction into historical perspective. Again, we're not competing with statins, but statins lower risk by 25% to 35%. Before going generic, they're about $20 billion. There are various drugs out there for cholesterol management beyond statins. Not competing with them either, but whether it be ezetimibe at 6% or PCSK9 at 15%, all terrific. Beyond that, there have been lots of failures. There's been CTAP inhibitors, the niacin, then fenofibrates. There's been lots of different omega-3s that have failed. But one that has worked is our drug at 25% and nothing compares to that. And there's a tremendous amount of science, of course, behind cardiovascular disease, but also a tremendous amount of science behind the multifactorial effects of Vascepa. This is a unique molecule. It's been deemed a new chemical entity by the FDA. It is -- it has multiple effects that have not been shown for any other molecule. And both the study that we've done to show those multiple effects and the science behind being able to isolate this molecule, which is a very fragile molecule, and to protect it so that it's stable and unoxidized from the point of manufacturing to administration and the patient involves tremendous science and further differentiates our product from any other product that's out in the marketplace. And I'm pleased obviously that, that's been recognized by these medical societies, which emphasize that our clinical results should not be generalized to any other product. From a data exclusivity perspective, in the United States, we've protected, via patents, 2 different indications. Our initial indication, which is for the trigs greater than 500, is currently subject to ANDA litigation. We did settle with Teva, and Teva could come into the market in August of 2029. Litigation continues and is active currently with Dr. Reddy's and Hikma. We believe we'll hear the results of that case somewhere near the end of March of this year. Obviously we're confident in the results, which is why we're expanding our commercial infrastructure. The new indication of cardiovascular risk reduction is supported by numerous patents, of which over 20 are now listed in the Orange Book. In Europe, we have -- pursuing approval there, but we, upon approval, should have regulatory exclusivity for 10 years. And we have multiple patents, the earliest of which expires in 2033. And then we have patents and regulatory exclusivity in various other geographies throughout the world. Financially, we're well positioned. We were cash flow positive for the second and third quarters of this year. As we expand our sales force, we'll burn some cash here for a little while, but we believe that our greater than $600 million in cash is sufficient to support that expanded commercialization that we should return to cash flow positivity relatively quickly. And we look forward to burning through those $800 million plus in loss carryforwards as well. And with that, I conclude my prepared remarks and welcome anybody who's interested to join me in the Georgian room for my attempt to answer questions that you might have. Thank you.