Amarin Corporation plc (AMRN) Earnings Call Transcript & Summary

[Audio Gap] a $23 price target. Our legal consultants believe you're going to defend the patents, and our consultants tell us you're going to sell a lot of drug. So we believe both those 2 things. Let me turn it over to John Thero and Elisabeth. Thanks for helping set this up. So I'll turn it over to John.

Ken, thanks for that introduction. Thanks for the coverage. We look forward to trying to make you a hero while making money for investors along the way. I am here to talk about Amarin. Amarin, if you don't know us, we're leading a new paradigm in cardiovascular health. I think you probably -- if you do know us, you've seen accolades for our science. You're probably also aware that we're the fastest-growing cardiovascular drug in the market these days. And if you're not looking at us from an investment perspective, the American Heart Association predicts that in about a decade, over 40% of the U.S. population will have symptoms of cardiovascular disease. So you may want to consider this for yourself as well. I will be making forward-looking statements in this presentation. There are risks involved. Anybody considering investing in the stock should read our risk disclosures in our SEC filings before investing. We have ambitious goals. I think it's supported by science of creating a new pillar as a standard of care in preventative cardiovascular care with VASCEPA. We're not trying to take on the role of hypertensive medicines. We're not trying to take on the role of diabetes medicine. We're not trying to take on the role of cholesterol management. But there's a significant risk that exists beyond the current standard of care. And with the clinical results we've shown, we think that VASCEPA is addressing that risk. Really globally, cardiovascular risk is both the most expensive and the most pervasive health care need that's out there. It is just getting worse. There really is an urgent need to lower this risk beyond the therapies that exist today. We think that our drug, VASCEPA, having completed a robust study globally, I call it the REDUCE-IT cardiovascular outcome study, has shown that it lowers cardiovascular events significantly beyond existing therapies. We just received FDA approval for this in December. And we are nearly complete with the doubling of our sales force to 800 sales reps here in the United States. I'll talk about our global expansion during this presentation as well. Our aim here is to help millions, hopefully, tens of millions of patients with this drug. We have the positioning of already being in the market and already having good managed care coverage as a starting point. And with -- what was anticipated to be our closest competitor in AstraZeneca's product, having failed or having stopped its clinical trial, we think that we have this market to ourselves for quite a while. Just a quick update on where -- our 2019 results. So again, the FDA approved our new indication on December 13. We had about a -- about 87% increase in revenues last year to $429 million. We ended the year with over $600 million in cash. We do believe that that cash, despite our now increases in sales expenditures and expenditures anticipated for later this year in DTC, is sufficient to get us to cash flow positivity off of the REDUCE-IT -- off of VASCEPA commercialization. Based upon our current plans, we have given guidance for increased revenues for 2020, which should -- would increase revenues by about $220 million to $280 million over last year to get to revenues of between $650 million and $700 million. That's predominantly driven by U.S. sales. The international opportunity will evolve on top of that. That being said, we did just, through our partner, launch in Canada here in February. We have been accepted for a review by the EMA in Europe and expect approval there before the end of the year. We have a clinical trial going on through a partner in China. We expect that trial to be done by the end of the year, and we are exploring opportunities elsewhere, including in the Middle East, where we have approval now in a couple of countries. For those who may have the misconception that current cardiovascular therapy is the end-all, reminder, statins, wonderful drugs, we're not trying to replace statin therapy, but statin therapy reduces cardiovascular risk about 25% to 35%, which is great. Again, people with that risk should use it. But that, of course, leaves 65% to 75% of that risk remaining. Cardiovascular disease is the most expensive area in health care. There is a person who has a stroke, a heart attack or dies from cardiovascular disease every 14 seconds. And this is just getting larger. We have now the first and only FDA-approved indication for addressing this persistent residual cardiovascular risk beyond statin therapy. And for that, there are millions of patients that are really coming in 2 categories. One are statin-treated patients who have cardiovascular risk, of which there are about 12 million who have high triglycerides, majority of which have other risk factors; and patients who aren't tolerant to statin therapy, of which there are millions as well who potentially could benefit from this drug. VASCEPA has successfully completed 3 Phase III studies. It is -- it demonstrated cardiovascular risk reduction and a robust cardiovascular outcome study with multiple medical societies and the science suggesting that the results of that study cannot be generalized to any other product. The label -- since this is new, I'll just read it to you. The label for VASCEPA has been expanded to be an adjunct to maximally tolerated statins to reduce the risk of myocardial infarction, stroke, cardiovascular revascularization and unstable angina requiring hospitalization in adult patients with elevated triglyceride levels of 150 or greater, and with established cardiovascular disease or with diabetes and additional risk factors. So patients who are diabetic and almost always have additional risk factors, established cardiovascular disease could mean somebody who had a prior cardiovascular event. It could mean that somebody who had carotid disease, peripheral disease, vascular -- there's lots of ways to define established cardiovascular disease. Doctors know it's a medical term. It gives doctors a lot of discretion who this drug can be prescribed to. And the trig levels of 150 and above does not describe whether that needs to be fasting or nonfasting trig levels. So very broad label. From a safety perspective, the -- in this 5-year study of high-risk patients, the overall event rate between the VASCEPA arm and the placebo arm were similar. The overall serious adverse event rate was similar to the extent that there were imbalances that were relatively modest. It's about a 1% excess over that 5-year period in atrial fibrillation, predominantly in patients who had previously reported AFib. The overall event reduction continued to show in those patients and had all the downstream effect to what would be cardiac arrest, sudden death, stroke, heart attack, all declining by 28% or more. I think there's a theory that suggests that VASCEPA may not have actually been increasing AFib, but rather in the placebo arm, those patients went on to have more serious events, whereas the patients in the VASCEPA arm didn't have those more serious events. There's about a 2% excess in bleeding, 12% versus 10%. Most of that was bruising. It wasn't -- and then if you look at the aspirin studies, I think what we're seeing here is less than what you see in aspirin studies. So things for patients to be monitored but not in the contrast of saving heart attack and strokes and death, we think, a fair balance as do the FDA in their labeling. This is a chart showing our growth. All this growth is really before we had our expanded label and before we had our expanded sales force. We are -- today, I believe we are transforming preventative cardiovascular care. We're also transforming what we are as a company. We're moving from a niche sales force with an indication based upon a changing a biomarker to a company with a large preventative care, primary care sales force focusing in on cardiovascular risk reduction. And we think we're going to help many patients, hopefully, millions of patients. Our managed care coverage is already good. Our managed care approval rate last year was about 80% of prescriptions written, including many of those off-label. From a formulary perspective, VASCEPA's covered about 95% of Medicare Part D plans and over 80% of commercial plans. Our sales force expansion is nearly done. We have over 700 of these sales reps now in the field, and the balance of them are finishing up training to be in the field here before the end of March. We also intend to have a robust direct-to-consumer promotion, although that's a bit of a misnomer because the direct-to-consumer also includes trying to reach pharmacists and doctors and other health care professionals who might not be called upon by our expanded sales force, and we are waiting for that to get through the OPDP process, review process for launch sometime in the middle of this year. We continue to build on strong relationships. We had over 50 publications last year alone. Supply chain's a topic for lots of different pharmaceutical drugs. We have no manufacturing in China. We have over 30 weeks of inventory here in the United States. Most of our manufacturing, our highest-capacity manufacturing is coming out of Europe these days. And I've already commented on managed care coverage. We are getting broad third-party support. There's 8 different medical societies now that have added VASCEPA to its medical guidelines or otherwise encouraged the use of VASCEPA. Top on the list here is National Lipid Association. They had their regional meeting this weekend, and VASCEPA has really dominated that meeting in terms of discussion of the REDUCE-IT trial results and the appropriate place for VASCEPA in treating patients. The European Society of Cardiology and European Atherosclerosis Society have added us to the guidelines even before us being approved in Europe. And there's been 2 pharmacoeconomic analysis done: one by ICER, which is here out of Boston, which shows that even against their most stringent standards that VASCEPA is cost-effective; and then a more comprehensive analysis was presented at AHA in November that shows not only is VASCEPA cost-effective, but in most scenarios, it is cost dominant, meaning it saves money for a society, which is something that you rarely see for a drug and something that we're proud of. And VASCEPA and these results have won a lot of accolades 2 years in a row: top 10 list from AHA and ACC, New England Journal of Medicine's Cardiology Watch #1 story; and it's published in leading medical journals. For a perspective, and I'll get into clinical results here in a moment, VASCEPA has a number needed to treat based upon first occurrence of events of 21. If you look at atorvastatin, Lipitor, there is this 45. We're not trying to replace nor are we competing against, I'm just providing perspective here. Or Repatha, PCSK9, it's 67. If you look at our results overall, there was 1 fewer major adverse cardiovascular event, on average, for 6 patients treated over a 5-year period. And these are the primary results for the study. This was the primary end point. We had a 25% reduction. Lots of zeros to the right of the decimal point in the p-value. This is 5-point MACE, which is heart attack, stroke, death, revascularization, hospitalization for angina. For people like the harder end point of death, stroke, heart attack, that's 26%. And then you can see statistically significant in death, you don't usually see that; heart attack, 31%; stroke, 28%. And I should say that the principal investigator for that study, who is here in Boston, Dr. Deepak Bhatt, has referred to the REDUCE-IT results as the most significant and advance since the advent of statin therapy, and I've heard a lot of doctors now referring to the REDUCE-IT study and the 4S study, which was a study that really put statins firmly on the map as the 2 most important clinical studies in preventative cardiovascular care. So it's great to be talked about in those circles. For those who like to see results graphically, this is the Kaplan-Meier. You can see the divide occurs at about 1-year point, and it's pretty consistent beyond that and absolute risk reduction of about 5%. That was first of occurrence of events and also 25% first occurrence. The drug keeps on giving. So second occurrence, 32% reduction; 31% for third; 48% beyond that. So overall, a 38% -- excuse me, a 30% risk reduction. Again, Kaplan-Meier, the lighter shaded lines here are the 25% Kaplan-Meier shown earlier. The darker shaded lines are the total events analysis. So you can see it again, the divide early and consistent, which is what one likes to see in such presentations. And then this is not a field that's been lightly studied. There's been a lot of failures before Amarin has been successful here. There's the CETP inhibitors or niacin, fenofibrates, Lovaza, and more recently, the AstraZeneca study, which was stopped. Where does that leave us? There's statins, which are terrific, but in terms of on top of statins, there's the LDL-lowering therapies, which PCSK9 is about 15%; acetamide, about 6%. But beyond that, outside of cholesterol management, VASCEPA is tops at 25% relative risk reduction. And this is not by chance. There's a tremendous amount of science. We have dozens of different publications on the most multifactorial effects of VASCEPA that someone's interested in digging into in more detail, they can see in the publications portion of our website. But essentially, this is a unique small molecule, able to get into endothelial cells with unique effects on each of the 8 major factors in the formation of atherosclerosis, something that's not been shown for any other product. And it's not only just getting to this molecule, but it's a very fragile molecule. Getting -- isolating it and keeping it stable for you, which we have done a good job in over multiple years. The exclusivity side of things, there is ANDA litigation going on at the moment, focus for many shareholders. I think we went into the court proceedings there, with understanding that we had persuasive legal arguments. I think we came out of that court without any real negative surprises and an increase in confidence. So relative to our arguments, there's risk involved with any ANDA litigation, but we think that we are in a good position based upon our intellectual property. And certainly, we are positioning ourselves for success here and expansion. In Europe, we will have 10 years of regulatory exclusivity and then patents that go beyond that. And then we have additional patents really throughout the world. This is a global play. Financially, we ended last year with over $600 million in cash. We were, I think, cash positive in 2 quarters, slightly negative in 2 quarters. We will be spending some money here to get this launch done right now that we have the new indication. But we do believe that that cash is sufficient to get us to cash flow positivity. And we've got a lot of loss carryforwards, nearly a little over $900 million, which I look forward to eating through and hopefully soon. With that, I conclude my prepared comments. So I thank you for your interest, and I was told that if I finished early, that somebody in the audience might have a question or 2. So I'll open things up to questions.

Maybe I'll start. When you think about the global opportunities, can you talk about how you try to view the build-out potentially in Europe? Can you talk about the pricing? And what do you expect using maybe other branded products that are working in similar positions? Do you think [indiscernible]? What do you think in terms of pricing of the product? And what would it take to launch in those markets in terms of maybe spending [indiscernible]?

So the question is broadly on the Europe opportunity. First, cardiovascular disease is global. And in Europe, there's over $200 billion spent on cardiovascular disease each year. I think there's over 80 million people in Europe who have cardiovascular disease, and that number is growing every year. We have been, I think, very successful at Amarin in our execution by trying to remain focused. So we were coming through the development stage of Amarin. We try not to do too much. We focused on doing -- getting the outcome study done right. A lot of science involved, but focus mattered. Now we've got the launch that we're working on in the U.S. We need to make sure that that is done right. For Europe, it's a big opportunity. We want to make sure that that's done right as well. In order to get the Europe -- to ensure we get the U.S. done right, we've held off a little bit on Europe. By doing so we think we're increasing the value of the asset for Europe as well. We have the EMA filing as a centralized filing that's been accepted. We should get day 120 questions from EMA here near the end of March. We have the 2 medical societies, European Society -- European Society of Cardiology, European Atherosclerosis Society that's supporting what we're continuing to build. Additional KOL support there and doing pharmacoeconomic analysis. In terms of our path forward in Europe, we are taking a parallel path where we could launch ourselves. And if we were to launch ourselves, it would be in a hybrid manner of our -- of launching in the largest countries on our own and then partnering with companies in some of the smaller opportunity countries in Europe. That's a strategy that's worked for a lot of different companies. Or we could partner pan-European. We have had significant interest from various companies in a pan-European licensing of VASCEPA. We've intentionally held off on advancing those conversations until after we hear back from the EMA. Again, we think that by waiting, we are continuing to strengthen our hand. And we will, from there, weigh what's the best opportunity for our shareholders. Is it to partner pan-European? Or is it to do some form of a hybrid promotion in Europe? The VASCEPA pricing in the United States is not particularly high to begin with. Our pricing is -- some of the new diabetes agents that have been launched are priced about 2.5x where VASCEPA is, for example. Other cardiovascular agents are also priced significantly higher than where VASCEPA is. And with the high cost of heart attacks, strokes and other cardiovascular events, we believe, as we have seen here in the United States, that the cost-effectiveness of VASCEPA will be well justified in Europe. We're going through additional work right now to better establish that. And that's being done, both on a Europe-wide basis but really needs to be considered on a country-by-country basis. And we, with some experience in-house, but also working with some consultants are working through, making sure we're well positioned for reimbursement in Europe. But we think that the cost-effectiveness of the drug will support strong reimbursement. And again, we're not coming at it the way that some drugs are, a really high U.S. price and then some form of compromise in Europe. We'd be looking for pricing in Europe, which is similar to, on a net basis, if not higher, than what we have in the U.S. as in the U.S., we've been competing against generics on a lipid-modifying indication for a long period of time. So part of that is why we're holding off some of the finalization of what we're doing for partnering in Europe because we're continuing to build on that pharmacoeconomic story. But Europe -- got to get the U.S. right. We're getting close to doing the Europe. It is a big opportunity and we want to do that right. Hopefully, that's helpful. Yes?

John, maybe in the series of variables, you've got the label. You're adding to the sales force. You're going back and talking to payers about those that are left don't have it modernized, the reimbursement for the new indication. And then you've got DTC, both unbranded and branded, coming. Can you help us understand how you're thinking about kind of how we're likely to see the script dynamic behave as you work through those different items as we move through the year?

So the question is really about adoption rate and how payers and other factors might -- I'm trying to repeat the question here because people are listening online -- how different factors might weigh into that. I think our growth will come from 3 primary factors, and all of this is about execution. One is I think we're already seeing more prescribers and more physicians prescribing and more new patient starts as a result of our expanded label. Two is I think the sales force, which I guess is a little over 700 in the field and trained now and by the end of this month will be at 800. That growth will help as well. Last year, we went from 150 sales reps to 400 sales reps. And by August -- and we've added most of those in the first quarter. And by August, over 90% of those new sales reps are paying for themselves. If that rate of productivity continues for this year, then our guidance for this year is understated. So there's an upside potential there. And then I think the third piece of what will kick in, in terms of prudential inflection, will be when the DTC kicks in. And that's, we're assuming, midyear. There's a possibility that that could be earlier, but right now, we're assuming mid-year on that. Our largest opportunity for growth, we believe, is through execution. Most physicians don't know about VASCEPA. Most patients don't know about VASCEPA. If they do know, they don't know enough about it. So this is really an execution story. That being said, there are opportunities to continue to improve on the managed care side of things, but I don't think that managed care should be viewed as an excuse to limit our growth. There are opportunities to enhance our growth. And what do I mean by that? Last year, our approval rate for VASCEPA was about 80% of prescriptions that were presented were approved. Most drugs would be very happy with 80% the prescription rate. But managed care is complicated. And right now, we have over 95% of Medicare Part D lives on formulary. We have over 80% of commercial lives on formulary. In the Medicare Part D side, there's about 5% of those restrictions predominantly to our prior label. On the commercial side, there's still about 1/3 of them that have some restrictions. But even on Medicare Part D, where they don't have restrictions, there's also what level of rebate or what level of copayment our patients making is. So we've -- it's not enough just to be on formulary. For us, we want to not just be on formulary, we want to not just be on formulary on Tier 2 unrestricted, we want to be on formulary on Tier 2 unrestricted preferred, which would bring a rebate down to a lower level. And we think that this drug deserves that. And if we were to be able to achieve that that could be a significant uptake. Fortunately, right now, within Medicare Part D, we're getting more prescriptions for the LIS, the low-income subsidy patients, because their co-pays are lower than the other side of Medicare Part D. And we don't think that that's right. So there is some upside there if we can get that to change, and that's really a plan-by-plan endeavor. On the commercial side, there are about 1/3 of the plans that still have restrictions. We were pleased in the February time frame to learn of multiple plans that were renewing those restrictions. For example, 3 of the Blue Cross Blue Shield plans, they are separately done. 1 in Michigan, North Carolina and another in Arkansas removed their restrictions. And this is great, I think a reflection of the efficacy of the drug and the reflection of the cost-effectiveness of the drug, probably a reflection of doctors calling and insisting that their patients be covered on the drug. But also somewhat unusual is a lot of times, they don't change their decisions on these things more than once a year. So seeing these plans do this off-cycle is encouraging, and we're aware of various other plans that are meeting and considering potentially moving off-cycle towards removing restrictions on VASCEPA. If that happens, that is upside to what we've guided. But again, I don't think we need that to happen for us to hit the guidance that we have set forth for this year. Our biggest opportunity and challenge for this year is through execution and getting doctors from the point where they look at this data as they are and saying, "Wow, this is great. Wow, I should be using this for my patients," to actually using it. Changing behaviors takes time. And we've got a lot of good prescribers. We've got a lot of growing prescribers, but this ought to be a medicine that, as a patient is walking into a physician's office, and if they need statins, they should be immediately thinking does this patient need VASCEPA as well. And that's the opportunity and the challenge.

Great. We'll go to the breakout session.

Thanks for the interest, everybody.