Amarin Corporation plc (AMRN) Earnings Call Transcript & Summary

All right. Everyone, thanks again for joining us for our 2020 Stifel Healthcare Conference. We're on to our second fireside discussion of the day. Joining me for this panel -- this discussion is John Thero, CEO of Amarin Corporation. John, thanks for joining us.

Derek, thanks for having me, and welcome everybody else who's on the line here. Appreciate your interest. I probably should just get this out of the way. I anticipate, Derek, you're going to ask me some questions that may involve forward-looking statements. And anybody considering investing in Amarin should acknowledge that there are risks and uncertainties associated with forward-looking statements, and review our SEC filings for discussions of those risks. So -- but, hi, everybody.

Maybe to start, John, if you want to just kind of give us a brief background of where you guys are at and what you're doing before we start diving into the Q&A.

Sure. So that's pretty broad question. This weekend has been a very busy weekend. We've had a number of different presentations at the annual scientific sessions of the American Heart Association. And as a company, AHA doesn't allow sort of outside discussion of that, but we will on Wednesday night be having a number of doctors together to discuss the 8 different presentations that we've had there. Outside of that, sort of thinking about what we're doing in the, I guess, 4 different buckets. One is what are we doing to grow the United States, one of which is what we're doing to get approval and prepared in Europe; then what are we doing on rest of the world; and then what are we doing for other products beyond VASCEPA, particularly after we get past the European approval. And each of those are fairly substantial topics. And while I could just keep ad-libbing on each of them here, I suspect, Derek, you may have more specific questions that you want to ask on any one of those 3. But we are busy and active and I think making progress.

Excellent. Yes. That's a great segue. And maybe just starting with VASCEPA in the U.S., and you guys have kind of communicated your strategy to continue to invest in sales and marketing there to grow basically VASCEPA faster in the face of generic launches. So I guess maybe give us a little bit more color there. But what would kind of define success in 2021 from a growth perspective? Obviously, you're not going to give guidance. But maybe if you can just kind of share with us your kind of thoughts what would define success in terms of 2021 VASCEPA growth?

Yes. So as a company, over the last couple of years, we've been operating at pretty close to net cash flow neutral basis. Some quarters a little positive, some quarters a little bit negative. Now we ended our most recent quarter with over $600 million in cash and no debt. We will be making some investment going forward for Europe, which we'll talk about. We'll continue to build supply, intending to get ready for that Europe launch and for China and other potential opportunities. But our view is that while there are generics, either in the market or coming, that this is not a typical generic market that we can grow faster than the generics can supply the market. And I think were it not for COVID, nobody would be questioning that. I think we would be growing right now at such a clip that, that wouldn't be questioned. I appreciate that this isn't necessarily a traditional approach, but it's not traditional for a generic to be coming in less than a year after the multibillion-dollar opportunity indication gets approved where most doctors don't yet know about the drug for that use. It's also not common that the drug being launched needs, essentially, dedicated manufacturing facility. And it's difficult and long lead times and high cost of getting there. So we'll continue to monitor what is happening on the generics supply. Remind people that the generic labels for what's been launched is for our initial indication, which is for treatment of patients with very high triglycerides, defined as greater than 500 mg per deciliter, not for cardiovascular risk reduction. Less than 10% of our prescriptions are for that indication, having drug prescribed off-label against -- this would not only be against our patents for that other indication, but also would be against the regulations for Medicare, for example. So we think we can work to grow the market. But moreover, we think that the indication for the leading generics are quite limited here. And our expectation would be that we will, even net of generics, grow. That doesn't mean generics won't take some market share. But this is a, we believe, a multibillion-dollar opportunity. And while they may take market share that's meaningful to them, I think we can also take growth that is very meaningful to us in the United States while in parallel, launching in Europe and advancing the drug elsewhere in the world.

Got it. Just a couple of questions on some of those comments. So first, I guess, ballparking it. What sort of like growth do you think you lost due to the COVID pandemic? I mean is there any way to kind of quantify that, where you could have been? And I think the other question that I have is around -- you guys talk about educating the market, educating physicians on the VASCEPA data. So I guess you -- the REDUCE-IT has been out for quite a bit. You've hit all the major conferences a couple of times. That data is out there. So I guess at what point do you feel like you've made enough kind of commercial and marketing investments and where education is going to be -- again, the data is pretty well known, I guess, in the community.

So relative to our growth, what it might have been, that's really hard to assess. In the first quarter of this year, before COVID, when we were still building our sales force and hadn't started some of our promotional venture, we had greater than 100% growth year-over-year. That dropped off, particularly in the second quarter. We know from data in the second quarter that patients visiting their doctors were down over 70%. Very hard to prescribe to patients who aren't going into their doctors and aren't going in for blood tests. That got better in the third quarter. But I think were it not for COVID, we'd be seeing results much more consistent with what we saw in Q1 or potentially building on that. The cardiovascular space is -- it's interesting. The good news is there hadn't been a major advance in preventative cardiovascular care outside of LDL lowering in about 30 years, meaning statins, or doubling down on that with PCSK9s, et cetera. But VASCEPA represents a major advance in preventative care, lowering -- on top of patients already treated with statins, lowering cardiovascular events by -- first events by 25% and essentially 1 fewer major adverse event for every 6 patients treated, on average, over a 5-year period, which is just really just tremendous data. But I mean if this were oncology, where there's innovation all the time, doctors are looking for that next innovation. Where there hasn't been innovation for a while, doctors may recognize the need for but they're not necessarily out looking for it, and they're somewhat a little more fixed in their patterns. The good news is once you change them, they should keep doing that. But recent surveys that we did suggested that despite the promotion we've been doing on an unaided basis, if docs were asked about cardiovascular drug, only about 1/3 of them were referencing VASCEPA and less than 1% of at-risk patients were referencing VASCEPA. I don't think that's surprising given that VASCEPA's only been approved for this indication for less than a year and our promotion has really just started. We started doing TV ads late this summer for cardiovascular risk reduction. So I think there's a long ways to go. We have seen despite COVID that the growth in prescriptions for VASCEPA has grown faster than the majority of drugs that have had cardiovascular outcome studies in the last 4 years. So not -- none of those are directly competitive with us. Some of them have much larger sales forces than we do. But in terms of performing during difficult times, I think we all would like the growth to be faster. But I think we're getting there. But right now, we're out talking to doctors. But 50% of doctors won't allow face-to-face calls by sales reps. That's not just us. That's sales reps in general. So I think getting to 50% of the doctors is a good thing. But that still means 50% aren't accepting those calls. So still a lot of work to do, but I view that as opportunity.

Okay. And I just want to kind of touch again on -- so the strategy is continuing to spend on the marketing. I know you've talked about this is also an evolving strategy. Obviously, if things change, you can either pull back or modify that strategy. So I guess what are the thresholds or the decision points? Like how do you -- is it market share, as you alluded to, for the generics? Is it price erosion? Like what gets you to basically start modifying that strategy if needed? Like what do those decision points look like?

We're looking at a lot of things. So there's the macro stuff, like how long is COVID going to be around, right? So we believe that the society will -- it will be volatile, but the society is going to continue to open up, that it was better in Q3 than it was in Q2. There's some resurgence here of COVID in the fourth quarter. But particularly with vaccines coming, that as we get into 2021, that things will continue to get back towards normal. And therefore, that, to us, suggests that we should continue to make investments and -- investments in growth. We will also -- we'll monitor our growth. We'll monitor the rate at which the generics end up finding supply into the marketplace. How they price right now to payers, they're more expensive than the branded product, the way that it's priced. And we'll look at all of those factors. But I think we're -- we have to keep looking at it from a -- at least an intermediate to long-term perspective. There's probably some bolus of supply that generics have built up this year. We'll let that get out now and see what they actually can produce along the way. And let's see if regulations will, in fact, hold them to their on-label promotion-only, which I think it should, but that's a lot to be worked out there. The best thing we can do is just keep growing. If we can grow fast, I think that, that takes sort of that question off the table.

Got it. And then, yes, I was going to ask, like are there any good examples that you can think of or analogs we should look at in terms of a limited generic competitive market where the brand continues to have meaning residual value? And as you kind of alluded to before, again, you think this is a multibillion-dollar market. So how does your view change in a scenario where maybe the generics do take a lot of share or in a positive scenario where you can grow that market faster than the generics can take share? I guess like what...

There's somewhat of an analogous drug to VASCEPA in Japan called Epadel, right? So it's an EPA-based drug. It's been generic now for over a decade, and greater than 60% of the market share is still with that branded product. It's similarly difficult to manufacturer it, which then gets people now, "Are they going to make those kinds of investments to get the economies of scale necessary to support that kind of a product and to build the right margins around that product?" That's very analogous because it's very similar active ingredient to what is in VASCEPA.

Okay. And then just on -- in terms of like where you think peak sales could be in the U.S. depending on the 2 scenarios, so again, where you can grow faster or where generics take a good chunk of the share, I mean, do you have like -- again, thinking about your scenario analysis, what are the 2 kind of opportunities there depending on which scenario plays out?

Yes. Two is a funny word. I think we have over 2 dozen different scenarios in our planning. The ones I like are the ones that get revenues into the multiple billions of dollars. And I continue to believe that, that is the opportunity for this drug. The flip side is if nothing works, meaning nothing we're doing in the legal side, the regulatory side and therefore in the supply side, we could compete with the generic, and the fact that we have capacity and I think the lowest -- most efficient capacity to compete in that regard. But that's not where we're going today. Where we're going today is we strongly believe there's a lot more value under the curve here by growing revenues in the United States and doing that faster than what generics can, combination of supply the market and be allowed to sell based upon their label.

Got it. And then maybe just to talk about the IP side of things and what you guys are doing. Maybe just give us an update on what you're doing in the U.S. And we get a lot of questions about the GSK, Teva lawsuit. I'm sure you guys do as well, and in terms of how that could read through to the VASCEPA kind of IP litigation in the case there.

So I'll first make reference to the fact that the litigation we've had in the United States pertains only to the United States. We've got regulatory exclusivity and other patents in Europe and other places in the world. And it pertains only to indication of treating patients with triglycerides greater than 500, not to the cardiovascular risk reduction indication. We are continuing to pursue legal channels in the United States. We are certainly aware of -- I mean, our counsel was involved in representing GSK in the litigation that you've just referenced. I think that there is -- that bears continuing to watch. I think also some of the regulations by things like Medicare also deserve to be watched relative to what is legal and illegal prescriptions of drugs within approved labels. We have to see how the behavior is of the generics.