Amarin Corporation plc (AMRN) Earnings Call Transcript & Summary

Okay. We'll continue with our next session. I'm Paul Choi, and I cover the small and mid-cap biotechnology sector here at Goldman Sachs. Our next session is with Amarin and we're joined by 2 members of the management team. To my immediate left is the CEO, Aaron Berg, and to my follow-up, CFO, Tom Reilly. What we'll do is Q&A as we have in prior sessions. If there are questions along the way from the audience, please feel free to raise your hand and we can get a mic to you. Alternatively, if you want to ask a question anonymously, please feel free to send me an e-mail and I'll read the question out loud over the Internet for anybody who may have questions online.

So maybe with that, I'll start with you, Aaron and then maybe you've been in the seat for a few weeks now and maybe high-level impressions as you've been in the job here and just kind of like how you're thinking about your priorities and we'll start with that.

First of all, I think we are all agree, the management team, board, we are not where we want to be and start with share price. We need to focus on building value and we need to do it pretty quickly. So, we're focused on a few things. First and foremost we're focused on the U.S. business. We started building quite a brand prior to COVID and then lost our patent. And generics entered about 2.5 years ago. They're now 4 on the market. There's another one approved. But we have done -- the team has done just an outstanding job protecting that business. That's our focus, doing it profitably, focused on driving the brand. We've still got 60% of the branded market since the first generic entered. So, you can see it's a very atypical market. We're able to compete very profitably on net cost with generics. And we've generated over $1 billion since the product went generic. And we're confident we can continue going. There'll be more pressure going forward, but we need to do that as our -- that's our first priority. Secondly, it's really focused on Rest of the World in Europe. Europe, in particular, that is where we absolutely need to get going. And what I mean by that is there are kind of 2 groups of countries. They're countries like U.K. and Nordics where we have already launched. It's a heavy lift for launch. It's a heavy lift when you have no prior established organization and foundation in terms of awareness and getting out there. But speaking to the U.K., that's the biggest market where we've launched. We've only been out there a few months, but I think there's a strong team there. There's a good plan in place. They're working hard to get that local reimbursement and pathways in place with the local institutions and we look forward to accelerating that. But we need to drive revenue in those countries where we've already launched in Europe and also in a number of regions, countries where we have partnerships. For example, we have in Canada, we have in the Middle East. We recently announced a partnership in Australia and New Zealand. And we're very pleased to announce a partnership, well, approval in China. And that was just in the last 2 weeks. And obviously, a big market, over 300 million patients with cardiovascular disease. The initial indication is for very high triglycerides. There are about 60 million people in China with high triglycerides, probably about 10% of that with very high triglycerides. And now our partner, Edding will pursue the cardiovascular risk indication. So, we'll work with all of those partners to get more revenue out of those countries as well. And then we need to bring some of these pricing and reimbursement negotiations in Europe across the finish line. We have a number, we're well into the process in Spain, in Italy, in France. That one takes quite a bit longer, Netherlands. And hopefully, we have some things to announce here in the coming months, but they're challenging negotiations, but we have to bring those across the finish line and we have to be able to launch and launch effectively. And we've got to do all this while we very carefully manage our cash. We're fortunate with the cash we have, but we have to be very judicious about how we spend, where we spend, when we spend, not spending too early ahead of pricing reimbursement decisions and launch. Of course, there's a back-end challenge to that because that means we can't pave the way for a more rapid uptake, but that's given how difficult pricing negotiations are in Europe in some of these countries, that's a chance we'll have to take, but we have to manage our cash everywhere, including the U.S. very carefully. So, those are our priorities, I think to go forward. I mean, Tom, I don't know if you want to add anything to that.

Yes. So thanks, Aaron. Paul, thanks for having us. On the cash preservation component, I think one of the things we've been able to demonstrate over the last year, we've actually went through an operation initiative where we saved over $100 million of cash, our expenses, which is a 30% of our cash base. So, this is a team that's very [ alert ] of managing P&L, managing our supply arrangements to preserve cash. Last year, we burned almost $100 million in Q1. To say, we've been stable. We're stable over the last couple of quarters on our cash management. So, it's a continued focus to support the business.

So, there's a lot to dig into there and maybe Aaron continuing with you and starting with the U.S. side. You spoke about obviously generic entrants into the EPA market. And maybe can you talk about what you're hearing from the field with regards to that impact and just how -- what patient levels are like, I guess, maybe currently, a lot of companies like yourself were impacted by COVID, but can you maybe just speak about what the environment is like now, now that we're a little bit past the pandemic?

So, we launched right when COVID hit. I mean it was just -- we had just ramped up. We got the cardiovascular risk indication in December of 2019, expanded our sales force, had a launch plan, we launched in January. And then, of course, we all know what happened after that. IQVIA did a very good job tracking exactly what was going on with patient visits and they did it in great detail down to different types of patients disease as well as different specialty groups. Now, it's -- I don't know if there's -- if the word normal works anymore, but now everything from our field, including the latest benchmarks from IQVIA is that patients are back to -- patient visits are back to where they were pre-COVID levels. So hopefully, that's a good sign in terms of access for the -- there was also an impact on the sales force, getting access to physicians' practices and institutions because of the safeguards put in place. But at least where we are as a much smaller organization than we were focused on our top prescribers, typically, where we have the best relationships, access overall is pretty good. So, the patients are coming back, access for the sales force is there. And I think we're able to manage that part of it pretty -- and we're down to 75 sales reps and we're targeting 12,000 physicians. So, I think in our small, focused, very efficient approach, we have no problems with access and they're seeing patients.

Could you also maybe comment a little bit on what you hear from physicians as well as your sales force on how they perceive some of the generic entrants? And is there a view that even though these companies didn't necessarily run a CV study, are these drugs viewed as equivalent in your mind? Or is it just a pricing consideration? Maybe can you elaborate a little bit on that?

So, physicians write the brand. They -- at least at this stage, no one is writing and we check for this. They still prescribe the brand, they're not writing [indiscernible].

They're prescribing as-written.

Right. There are a lot of physicians that are writing, dispenses written and that's typically where we have some programs going on. The sales force does that. We have relationships. And part of it though, is in the way we're able to compete is because it's on managed care access. So, I'll touch with the clinical question you had and that was do physicians believe that the generics are different because they're not labeled for cardiovascular risk. Unfortunately, the generic ecosystem doesn't work that way. Once they're introduced into the system and we did a lot of work on this and that's one reason why we maintained as much as we have at 60%. But nevertheless, when it comes to -- are the products differentiated in this ecosystem, once a prescription is filled and goes to the pharmacy and a patient picks it up. Are they differentiated based on indication? No. And that certainly is something that even though we have the IP on the cardiovascular risk, it's the way the system plays out, it didn't work that way. But where we won and why we've maintained our business is really not only because of the sales force efforts, but it's because we've competed with net cost with managed care access. And we've been able to work with the payers and show there's a very atypical market. Most of the time, generic enters, they -- and then multiple generics enter, the price erodes, but within the first year, the brand is down to, at best, 20% left, sometimes 10% left. This is a very different situation because of a lot of complexities in sourcing and manufacturing.

That's an important point. The supply chain is very different versus other small molecules.

Very different. You can't just plug it into -- the generic companies can't just plug it into an existing line. And that's -- that's part of the challenge. And we've been able to compete and we've maintained quite a bit of exclusive coverage with key managed care accounts and actually progressed our managed care. And that's why we've been able to compete and do well. So, that's where we won, but it's really not differentiated on the indications. It's because we're competing on that cost. And we're doing it very profitably, very efficient structure. We're able to work with them and they see that it's, again, atypical and generics are not necessarily more cost-effective.

Maybe just to dig in a little bit and elaborate on what you just said there a minute ago. In terms of the stickiness for either you or for Tom, you talked about your managed care access, how would you characterize the stickiness there? And what have you sort of had to maybe give versus to maintain the relationships?

Yes, I'll start. It's -- we have a managed care team with tremendous relationships with these payers. And we've worked very closely with them but it still comes down to our ability to really rebate for VASCEPA in a way that is still, again, net cost is in a better position than generics for many of these plans. And that's why we've been able to contract it. Now, if the generics -- if they decide to, in a sense, really get aggressive with cutting their net price to the trade, then there maybe a situation where we use the exclusives and that's always a possibility. I mean, what we're doing to manage our business, there is that inherent risk, but the signals we're getting now are positive and we're confident we can continue going. I don't know if you want to...

I'll just reiterate 2 things you said. One is that 2 years after a generic event, we still maintain 57% market share. Fantastic to the coverage we have and optimally effectively been able to manage the gross to net structure through the rebates to compete. So, a very efficient strategy to date.

Maybe as a second part to that, in terms of patient access broadly to your drug relative to the CV risk population that the scripts are only obviously a fraction of the opportunity. Could you maybe speak to what patient access as you've been working on it, has been, how has that changed over time? Is it improving? What are sort of the barriers for patients still getting onto drug here?

We know well managed care access and where that is. Our managed care access, not only have we maintained over the last 12 to 18 months, but last year, we actually have improved our coverage. Last year in Q2, a large national commercial PBM put VASCEPA in the exclusive position. And then again, in this year, very recently, a large national Part D plan put VASCEPA in the preferred position versus generics. So, what that does is, the co-pay went from, say, $125 to $150 down to about $45, but the generic is still over $100. So, that's one of the reasons why we've maintained here and if you look at the prescription trends recently, we've maintained that share and maintain the volume where we are. So we're, again, hats off to our managed care team and frankly, to our sales team for pulling it through. But hopefully, that can continue.

Okay. Maybe continuing on that threat. How do you think about -- what's your perception of awareness of VASCEPA here in the U.S.? How familiar are patients with this as a potential CV risk reduction option in terms of the treatment landscape? And what are you doing to perhaps drive awareness of that as an option for patients who are at risk here?

So, just as I mentioned earlier and for background for people that don't know the full history, we obtained the cardiovascular risk indication in December of 2019 and launched in Q1 of 2020. We had a -- we fully expected this to be a household brand. I mean this was the potential significant -- we had a full DTC plan. And then at the very same time, we lost the patent in March, and that's when everything shut down. So, we had to rethink our planning and, of course, our spending where we were. Now that being said, a year into the launch, the last time we invested in market research to measure awareness, we had 70% unaided awareness, which was on par with drugs like Repatha and [ Fosi ] back at that time. And our aided awareness was over 90%. So, what that means is if you prompt the doctors. And so the awareness was very high. Where we are today though is a different -- we're in a different part of our life cycle. And we've had 2 significant restructurings as we've basically managed our business down over the last couple of years, we actually managed in the U.S. the profitability, and that's what we focused on. We did 2 major restructurings. And the one we did a year ago where we went from 300 sales reps down to 75, our strategy changed from building awareness and looking at to build a broad base, whereas at launch, we were focusing on -- we knew would be a big brand. This was protecting the brand. And we changed our strategy. So, broad awareness is not the strategy now. It's protecting branded prescriptions. It's a very focused as opposed to the 75,000 doctors we targeted when we launched. We're down to about 12,000 doctors. And again, very efficient spend. It's working, very profitable and we'll continue to drive the business that way.

Maybe turning to Europe, you made some comments earlier at the beginning, areas where you have launched and have secured some reimbursement or continue to work on reimbursement. And then you have other markets where you're continuing to work or have run into challenges. So, can you maybe in terms of the markets you have launched and can you maybe comment on the reception of VAZKEPA there and just sort of how it's been integrated into treatment in those countries?

Well, first of all, it's our own. But overall, whether it's -- so the scientific community has received it very well. I mean, the data is very robust. It's not easy. It's not a typical one that with the world and it's an LDL world and lowering LDL, we know reduces events. This is not just a biomarker-focused product. So, the science is a little more complex. But overall, it's about reducing events. And when you talk about a 25% relative risk reduction in these patients and what you can do for patients, what you can do for health care systems, they received that very, very well. It's a lot of work. The questions we get when we're in pricing negotiations or whether we're working with other scientific bodies, we're able to have very good dialogue and support our position and answer those questions that we have. So, I think we -- it's well received. And I think the 2 biggest points of proof of that, if you will, one, the approvals and what we're able to do with the regulatory authorities in getting the drugs approved in the first place. And then the number of guidelines that have been updated, starting in 2019, I mean, the data -- the top line data for REDUCE-IT read out in late 2018, by 2019, guidelines globally starting to be updated, including the European Society of Cardiology and European Atherosclerosis Society guidelines in 2019, and there are other statements that put out in Europe since then. So, it's been well received and the science is very helpful. One of the challenges is because [Technical Difficulty] and that becomes a challenge. But with that said, we have to work with them to get on the market. And I think some of it is identifying that sweet spot of patients to get going to higher-risk patients, secondary prevention patients maybe even focusing on heart and stroke patients because they're so costly and try and meet those reimbursement authorities somewhere where it works for all of us. And that's really what we're working towards now. I don't know if there's anything I missed on that or...

Yes, I would just say that we have been able to secure good pricing in a few markets, in particular in the U.K. and Nordics. And we're just -- and we're continuing our negotiations, we're in the budgetary side.

You also are working on partnered in other geographies. As you mentioned Edding in China and so forth, where you're initially approved on the hypertriglyceridemia indication and then your partner will work on developing the CV risk indication there. And so I guess, as you think about pricing maybe longer term and you think about price stability there, what can you comment on that perhaps for either you or Tom?

Yes, I'll start off and then Tom, what I've learned in the few weeks on the job, especially focusing more ex-U.S. is how different every country is and how many variables are involved in not only within the countries themselves and their economic pressures and how they're looking at things and whether they're looking at it at the same time as looking at other branded drugs that are focused on residual risk in a somewhat similar patient population. There are a lot of again, a lot of differences and a lot of variables. And then, of course, you look at the U.S. where it's a generic market. So, it's hard to generalize pricing and where it's going. I think when we have more of these pricing -- when we get more of these pricing negotiations across the finish line, we'll certainly have a better view as we go forward. And I think it will also help to have some clarity around the patient population tied to that price. So, we know where we are because if we start with a narrow patient population, it's what happens overall when you try to expand that patient population. So, it will be very dynamic. I don't know, Tom, if you have anything...

Yes, I would just say that we often get asked a lot about the U.S. pricing and compared to Rest of World pricing, and it's a completely different environment, generic environment in the U.S. What we've learned over the last year -- I think several and weeks with Aaron in the role is each country is different, whether it's pricing -- the population or the economic challenges. So, it's hard to put one number on it. But overall, just each country is unique in its own on the pricing reimbursement.

What we know is this drug brings tremendous value. You look at the clinical data, you look at the population, the cost of care, the cost of events for heart attack, stroke it goes on and on, and we can benefit those patients. And hopefully, we can get the reimbursing authorities globally to recognize that and we all win.

Maybe turning a little bit to the clinical side. You've been working on further elucidating the mechanism of action of VASCEPA here and you've done some post-approval studies as well as some investigator studies have continued to clarify the science here. And I guess, what have you learned here? And to that degree, I guess, what -- how does that help you in your reimbursement discussions going forward here, possibly?

We get that question a lot, primarily because the world is a biomarker-focused world, right? It's very easy for physicians to do the labs, check the score, prescribe a drug, check the score next time, and hopefully, they improve the score, whatever that may be, whether it's -- typically it's just lowering LDL or lowering triglycerides. And what we're doing is a little bit counterintuitive, right? We're saying -- the reason that you change a biomarker is reduced cardiovascular events. And that's what VASCEPA can do and VAZKEPA can do, and the data proves that. But it's not about lowering triglycerides. It was about lowering triglycerides alone, so that's part of the mechanism. It lowers triglycerides, but that's only a fraction of why it improves events. And we know that -- we know that overall from work and I'll get into some of the things we know about the mechanism of action. But when you look at the older triglyceride-lowering agents, in the statin era, they continue to run these large cardiovascular outcome trials, [ 5 rates ], Omega-3 mixtures that contain EPA and DHA versus what VASCEPA is, which is EPA alone, they continue to fail to meet the primary endpoint to demonstrate that they can reduce cardiovascular events, yet they reduce triglycerides very effectively. So, that shows you that just lowering triglycerides alone is not enough. The reason that VASCEPA can improve the events is because EPA is very unique. And we knew that going back a decade, we actually had a deliberate strategy going back to 2013-2014 to start elucidating the mechanism of action through a lot of these smaller studies in particular with a [indiscernible]. And he had started to build a cumulative body of evidence of these unique properties of EPA alone. And what we know is, and then since then, even since REDUCE-IT, there's been a lot more work to, the scientific community is curious. How does he do it? And there's [ Tropic ] effects. There's effect on plaque volume, plaque progression, stabilization, anti-inflammatory effects, improved endothelial function, antioxidant effects. I mean it's -- antithrombotic effects. There are a number of things that we know that EPA does. Now, what we don't -- what we're not able to say is, this is why it reduces the event. This one thing. What we know is it's multifactorial. And what we hope the scientific community does is they say, we're all curious and we will continue to look for and work with investigators and invest in studies to better understand how the molecule works. But in the meantime, use it to reduce events because ultimately, that's what really matters. Statins for a long time, aside from LDL reduction, for a long time and even today, you have some scientific experts, exactly how statins work and a lot of them say, we don't fully know how they work to reduce events. We know LDL is a component. There's, of course, focus on hs-CRP and inflammation. But ask overall and they'll say they're not 100% clear, yet they know they reduce events. That should be the focus of using these drugs in these patient populations. That's where you get the benefit. We will continue to work to understand the [indiscernible] as we go forward because it is a -- it's a very unique complicated special molecule.

We're coming up on time here, so I just want to see if there are any questions in the audience before I continue. Okay. Maybe just staying a little bit on the clinical side. One of the interesting things you guys are doing in terms of life cycle management is looking at a potential VASCEPA statin combination. And just it's something you've talked about but not said a lot on. Can you maybe just provide us a quick update on how that's going and how you're thinking about prioritizing that?

Well, we have some work to do. We're getting some feedback from regulatory bodies. We -- hopefully, we'll get some feedback and then better assess where we're going with that and have some more to report as time goes on. But that's still something that we're working on.

I want to maybe ask on the business development front here, you years ago, made the decision to go it alone in Europe, but you are partnered with Edding in China and some other partners in different markets. As you think about business development and you and the board have these sort of strategic discussions, how do you sort of prioritize current operational needs, like, again, maintaining your U.S. franchise, getting the EU launch up and underway versus other business development?

So I'll start off, Tom and I talk about this all the time. And obviously, it's an important topic for us because I think we can -- our focus right now is building value by getting -- we need to get going in Europe. We need to get going and be honest about what we can accomplish quickly and do it and tap into as much value as we can. And that may mean that we're starting off with a focus, as we're doing in the U.S., a very focused group of physicians get going with specialists, get going with institutions with the top prescribers in whatever country it is, depending on what patient criteria we have. So, I think we know we can get going with that. Now this is a product that really can help a lot of people. And that speaks to getting down the pyramid of prescribers and down the pyramid of patients and wider, broader -- and whether we can do that on our own, we need to be open to any opportunities as we go forward. But our focus right now is getting going, get off the ground in Europe. We'll continue to look for other opportunities in Rest of the World and we know there are some markets where there's an opportunity, there's still other markets in Asia. There's -- whether we do anything in Latin America. Those are some things that we've looked at overall. I don't know if I missed anything here.

Yes. No, I would just start -- I would just say where you started. We're not happy where our valuation is, right? So, we're striving to look at our core strategy for now. We're looking at BD opportunities if they're there to increase valuation. But again, for us to drive value, continue to have the profitability in the U.S., protect that profitability, get reimbursement, pricing reimbursement and commercial uptake in Europe. With that, that would increase valuation, would give us more opportunities down the road. So, that's where our core focus is.

We're almost up on time here. So maybe, Aaron, I'll give you the last word in terms of like as you speak to investors and maybe just think about the opportunity set or maybe what is most misunderstood about Amarin here and what you and the management team and the board are planning to do here? What would you highlight maybe top 2 or top 3 here?

Beyond what we've...

Been talking about.

I think we've covered quite a bit of ground. But I think that we've learned. We have to take the learnings from -- as Tom and I both said, we're not where we need to be. We've learned a lot. We're doing well in the U.S., but we -- the team in Europe has learned quite a bit as well on taking those learnings and applying those learnings to get going. And I think also be very realistic about where we are as a company and focused on what we can accomplish because we can build a heck of a business getting going focused on a higher risk patient population and with an efficient structure and more of a specialty focus, we need to get going that way. After that, we'll be open to those -- the question, as you said, is we'll look at what's best to build value going forward. And we recognize the position we're in. We recognize that we don't like the position we're in and we've got work to do and we'll do it.

We'll end on that note. My thanks to Aaron and Tom for joining us from Amarin and we'll end the session there. Thank you.

Thank you.