Amarin Corporation plc (AMRN)
13th Annual Jefferies London Healthcare Conference 2022
November 16, 2022 9:40 a.m. ET
Company Participants
Karim Mikhail - President and Chief Executive Officer
Tom Reilly - Chief Financial Officer
Conference Call Participants
Michael Yee - Jefferies
Presentation
Michael Yee
We'll get stared. Hey, it's Michael Yee here, Senior Biotechnology Analyst, at Jefferies. Very happy to have the team from Amarin up here with us to give a brief presentation, we have the CEO, Karim Mikhail here with us, as well as the CFO, Tom Reilly.
And now, Karim would love to give a brief presentation. And then we'll have some time at the end for Q&A. So, without further ado, won't you come on up, Karim.
Karim Mikhail
So, thank you, Michael. We're delighted to be here at Jefferies, in London. And just as a reminder, this is our first large big-five market launch. We have the product available in the U.K., reimbursed at $2,000 a year. The launch started formally on October 15, so this is really a major event for us at Amarin, but happy to be here with you today. So, I'll start my presentation. As you know, I have forward-looking statements, and for a full list of risk factors, do consult our SEC filing.
Now, if you've been following the Amarin story, you know that this is sort of the third chapter of this story. Chapter 1, going after a very high triglyceride indication, facing a number of challenges, taking the dollar -- the stock from like $1.00 to $6.00 or $7.00, but dropping again when you don't get an approval for cardiovascular risk reduction. Chapter 2, you come in and develop the REDUCE-IT clinical study, you get positive results. Then you go from the $1.00 to $2.00 to the $26. But then you face an IP litigation in the U.S., you fall back again to where we are, and you start the third chapter. So, I'm here to tell you more about that third chapter and how we can bring back the company to the value that initially had.
So, remember, the launch in the U.S. was based on a value of $3 billion to $5 billion, maybe $8 billion revenue. So, if you believe that a cardiometabolic product revenue will be split 50-50 between U.S. and ex-U.S., you should also believe that you can generate revenue, ex U.S., for this product that delivered 30% relative risk reduction on top of a statin in the range of, let's say, $3 billion outside of U.S. So, that's why we are here, myself, Tom, my team; we're here because we believe we can recreate that value outside of the U.S. Now, to get there we have this three-pronged strategy by which, number one, our top priority is maximize the value of VASCEPA.
How? One, stabilize the U.S. business because that's our bridge to Europe, okay. Launch successfully in Europe, which you know we have started to do and we'll give you all more details on that, but also expanding internationally. Yesterday, we had a press release on our Australian regulatory approval. So, a year ago, a lot of that was not on the table, right. We were in the U.S., maybe hoping for Europe. Now, we're even taking very solid steps on the international front. So, that's maximizing VASCEPA horizontally from a geographic expansion perspective. But we also have the chance to grow vertically in terms of diversification.
First step is maximize lifecycle management in terms of the fixed-dose development. We believe that this has significant market potential. Up to now, we did not disclose much about it. We hope that in the first quarter or the second quarter of 2023 we're going to share more because we believe this will have an impact on our lifecycle. But also, we continue to be open for business development opportunities that will give short-term revenue for the U.S., that's our top priority because we have an excellent team in the U.S. And we believe we can capitalize on this infrastructure that we have. But also, we have to evolve the way we operate. We were only in the U.S., now we're operating almost in 20 markets, so that is very different.
Even from a supply chain perspective we are evolving our supplies. So, the way we're working as a company has to evolve along with the strategy. Now, first note on the U.S. and stabilizing the U.S. business, what you have on this slide is a very, very unique picture of how a market, an asset that today has three, maybe four generics on the market, where you see a stabilization of the share of the brand that's 60%. In your typical generic launch, you would actually probably lose 90% to 95% literally in two months. That just shows that we have a bit of a special case here. And if you look at the total generic curve, in gray, you'll see that if you don't look at the individual launches you cannot tell if they are one generic, two, or three, until they stabilize.
So, this is to say we're making every possible effort in the U.S. to stabilize the business. This is the prescription viewer for the last three, four months. We continue to keep 60% of the market. Yes, we have new launches in this space, so we'll have to see how well this is going to impact the dynamic. But for the moment, we are delivering pretty much on our plans in the U.S. What did this produce in terms of revenue, as you can see for the last three quarters; we have stable revenue in the U.S. in the range of $85 million-$87 million, right. I don't believe that that was the expectation when we had the drop in Q1.
Everybody thought that, with the third generic, we're going to go from 140 to 100, maybe to 60, maybe to 20, and by year-end, there would be no brand left. But as you can see, third quarter is almost the same level as first quarter because there is demand for this product, and we are able to channel that to the brand because we have a small core team that's making sure that it is the brand that is -- has the evidence of the cardiovascular risk reduction. Now, the most important element on this one is that while doing this, stabilizing the revenue, we were able also to turn around our cash positions because, beginning of the year, we had a pretty significant cash burn of around $99 million. And you can see, Q2, we brought this down to $65 million.
And Q3, we're actually plus $6 million excluding restructuring charges. So, there was a lot of effort put into maintaining our cash. A lot of this is driven by the restructuring that we announced, that we commit to reduce our operational expenses by $100 million between mid of 2022 and mid-2023. So far this quarter, we've delivered $28 million of savings, right. So, we believe we're on track, if not earlier and ahead. And this makes us feel a lot more comfortable about our cash runway, right. So, early in the year, with the huge drop in revenue and with the cash position, it was maybe difficult to say we feel good about that.
Today, with the cash position and the stabilization of the U.S. revenue, we feel we can continue to operate effectively without the need of finance until we breakeven in Europe. So, that's a very important message that we have today. Now, the future is about Europe, right. The opportunity in Europe is very significant. As a reminder, Europe has the same number of statin-treated patients as the U.S., right. We're talking about more than 45 million patients. And if you say a third of these have high triglyceride, you go down to a 50 million. How many of these have established CVD? You're still in the millions, right. The number that we know is that when the U.K. approved and reimbursed VASCEPA, the minister of health tweeted that day his excitement that there is a new non-LDL, right, treatment option in the U.K. market that is approved.
And he mentioned the population. He mentioned 480,000, so half-a-million U.K. patients. So, you can understand that the potential is significant. And with the price that we have achieved in the U.K., in Sweden, and now in Finland, which is all very close to the range between $150 and $170 dollars monthly, so ranges very close between the markets, and it's a net price visible for every other country. We're in negotiation with other Europeans, it really helps that your price is known and is visible so that there are no hidden discounts, and countries can really guess how much value they can drive off it. But overall, we're making very good progress in Europe. We launched in the U.K., we launched in Sweden, we're going to be launching in Finland. We're expecting additional countries to come to the reimbursement club very soon.
So, we are in negotiations in Spain. We are in price negotiations now in Italy, we moved from scientific assessment to price negotiation. We are in price negotiation in France, and we also are in price negotiation in the Netherlands which is also a significant market for us in Europe. So, overall, things are progressing. We're also advancing new dossiers, so we're submitting now in Switzerland, we're submitting in Portugal, we're submitting in additional markets which we believe also have the opportunity. The value of going with all these markets' negotiations at the same time is that you're really able to sequence the approval based on the price you achieve.
You've seen that, for example, we've had a challenge in Germany. Germany, for those who have not followed lipid-lowering in Germany, 15 years ago Crestor came to Germany. They wanted to launch, but at that point in time simvastatin was generic. So they were told, "Sure, you're welcome to come to the market, we'll pay you $0.06 a day, right. We'll pay you the generic price." And Crestor never launched in Germany, and Crestor became a mega blockbuster without Germany, right. So, it is not uncommon that Germany says, "Look, I'm going to offer you a very low price, take it or leave it." In our case we said, "Sorry, we leave it, okay." Because if you accept a price reduction for a large market that is more than 15%, that's going to impact your overall European price.
So, you may gain that country, but you're going to lose the same value on the other countries, so why are we doing it. And so far, and I want to be very clear, we still commit that the potential is above $1 billion, right, without Germany, okay. So, moving forward now, Germany arbitration is complete, so we're turning that page. We're still going to fight in many other ways. But our focus today is to drive many of these arrows that you see on the slide to the finish line. And as early as possible because once we get them to the finish line this is when we can drive revenue. Today, in the U.K. our focus is on formulary listing. We believe we are ahead of many of the analogues in terms of formulary listing, because that's what you track at the beginning.
You cannot really depend on revenue in the early months; you depend on how many listings you really have because it says, who is voicing demand, raising their hand to say, "I need the product for my practice." And moving forward, we believe many will join that team in 2023. 2023 is going to be the launch year for VASCEPA in Europe.
Moving on to the international opportunity, more than a year ago, we announced that we want to bring VASCEPA to the top 50 cardiometabolic markets in the world. We were already in the U.S., Canada, a few minor regions, we're applying with -- for China with Edding, our partner, but there were so many other markets that are very significant. For example, yesterday, we announced in the press release Australia; Australia, it comes in terms of market size really after the big five in Europe. So, it's a significant market, it's an important market. There are other markets that are also significant in Asia, like Korea, right. But there are also markets in Latin America, like Mexico, like Brazil, and others, where we are seeking all these approvals.
And we're making sure that that asset becomes more valuable, right, because one thing is that you have the study, and another one is to have a long list of countries where you are regulatory-approved and you're ready to generate business. And in all these markets we do not plan to be there ourselves. We do not plan to build infrastructure. And we are in very active negotiations, at times nationally, at times regionally, at times globally for one partner to pick up all these markets, right. So, that's really the exercise we're going through at this point in time. And honestly, the more we have countries approved the better the negotiation because it shows that the product is there, the product is available.
And with the price we are getting in Europe, we're able to create confidence that, for these markets, they can also achieve, with our support and our knowledge of the dossier, the right pricing in those markets. We continue to develop the scientific engagement. As you know, one of the challenges we have faced had to do with the evidence behind the product and how significant is that. This year, we've had very significant scientific engagement at every level. This was the strongest, most robust presence we've had at European Society of Cardiology, if you visited us, Amarin was just next to Bayer, next to Novartis, next to everybody. So, we're really going heavyweight in terms of scientific engagement.
I remind people, most of our medical directors in Europe are cardiologists by profession. We did pick the best of the best of Big Pharma, right; within the cardiometabolic space to ensure we are going to succeed. So, we've been at ESC, we've been at other congress. But even more importantly, we've just been at AHA. And at AHA, there were two pieces of evidence presented that are very important. Number one was the PROMINENT study, which was really the last fibrate study ongoing to try to demonstrate that by reducing triglyceride you can achieve cardiovascular risk. And that study failed, which means that for those patients today who are dyslipidemic, who have cardiovascular risk with an elevated triglyceride, their only option on the market -- their only option on the market is to use VASCEPA, right.
Until 10 days ago, with AHA, people still thought they can use fibrate. Today, nobody can use fibrate anymore. We believe this is an opportunity for Europe, but even for the U.S. because you have all these patients today who are on fibrates who are going to be shifted to something. What is that something, right? And the only option is really VASCEPA. But another study that was presented at AHA that is very critical is the study, RESPECT-EPA. RESPECT-EPA is not funded by Amarin nor by any other pharmaceutical company. This is the Japanese Heart Foundation, so, okay? And you see from the name, RESPECT-EPA, that what they were targeting was to say, maybe EPA IPE is not as respected in terms of evidence significance as need be.
So, we're going to do a study to truly demonstrate does this product have respect or not. And the reality is, this study, which was a far smaller study than the REDUCE-IT, right, you're talking about 3,000-4,000 patients. So, small group; yes, was not placebo-controlled, but showed, in the primary endpoint, results that are very close to statistical significance, so 0.05-something, but on the secondary a very positive statistical significance. And when you adjust the primary for your EPA levels, meaning if the patient -- I remind you, this study was only with the 1.8 gram, not the 4, not every patient could get to the level of EPA that is needed, right, to achieve significance.
If you adjust for that, you have a very significant result of 27%. What does it remind you of? Of the 30% in REDUCE-IT, so the results, in terms of directionally, they are very close to one another. This is helping us in the negotiations in Europe. This is helping us address many of the challenges that we get on the scientific level from many of the leadership. And we feel confident that now, with three studies on EPA, we feel very strongly that we can really push forward for the launch in Europe and the expansion internationally.
So, just as a summary, what have we achieved so far? Number one, the stabilization of the U.S. revenue, and the trends that, so far, are stable. So, absent additional events, we're able to keep that in place. We have a significant turnaround of our cash burn, making sure that we curb this clearly and to have enough cash to launch successfully in Europe. European reimbursement and European launch progressing as planned, along with the international plans. And again, we continue our focus on scientific engagement and supporting the product with the evidence that is needed.
So, what to expect from the upcoming drivers for success? The first one is really continue to focus on making sure we drive the revenue that we need to drive in the U.S., and to keep the cash preservation at the level that needs to be. And again, we already delivered the $28 million savings, and we will continue to drive that quarter-by-quarter, until mid 2023. From an expansion perspective, the focus is really to demonstrate true commercial success in the U.K. And we hope that, in the next two to three quarters, we'll be able to share revenue form the U.K. compared to benchmarks, right, because early on just, you have to see how it compares, and then, from then on the reimbursement of other markets, but also the international markets.
And again, finally, continue to focus on driving the evidence. And we are submitting, until today, believe it or not, years after REDUCE-IT abstracts at ECC. You know, we did make a few submissions there. So, we continue to drive the evidence and to support the product because we believe strongly that this is really the one and only non-LDL product that demonstrated a benefit. Remember, there are many players within the LDL space, all of them at different price ranges. Nobody beyond LDL proved anything, and this product proved an established CVD 30% relative risk reduction, right. So, you have to be able to compete with that to "take our place."
So, with this, we believe we continue to deliver on our bold ambitions. And then, we're very happy to take your questions. Thank you.
Question-and-Answer Session
Q - Michael Yee
Start with a couple questions, we have a few minutes. If you have a question, raise your hand. Maybe taken in two parts; one is U.S., and then second part is o-U.S. In U.S., investors fear that, hey, more generics could come in, price could still go down. How do you give people comfort even though the last three quarters have been fairly stable, that come the first quarter of 2023, either a new generic comes in or they just cut it -- price another 15%.
Karim Mikhail
Look, we've dealt with this; we have four generics already or three generics already. So, it's not like the first time a generic is going to come to the market, right. We -- if Teva is coming, now they are number four, right. And if you look overall at the trajectory, whether they were one, two, three, or four, there was the same level of erosion, which now, even with the third, has stabilized. Now, we cannot say, "Oh, we know we're going to keep this at 60% for the next 10 years," because this would be illogical, having said that, we are ready for multiple scenarios. Today, we have a very significant contribution margin from the U.S. business.
And I always say there is a big difference between breakeven, meaningful revenue, significant contribution margin. I'm saying, in the U.S., we have a significant contribution margin. And if we get a hit, we can always shift to authorized generic or any other plan that will allow us to continue to drive that same contribution margin.
Michael Yee
U.S. is currently a profitable P&L?
Karim Mikhail
Yes.
Michael Yee
And if the developments continue to go with an additional generic or further price cut, you could launch an authorized generic at some price, and then take share from there?
Karim Mikhail
Yes, exactly. And --
Tom Reilly
Yes, I mean, that yes, and we've got the scenarios as well.
Michael Yee
What would need to happen to launch an authorized generic?
Karim Mikhail
So, today, we are at a point where we have 60% of the market.
Michael Yee
Yes.
Karim Mikhail
So, if you ask anybody today, even on the generic side, is it the right moment for us to launch the authorized generic? They say, "Why would you launch that if you have 60% of the market, right?" Now, if we see ourselves losing more share, losing more position, at that point in time we get to an authorized generic. But let's face it, for us to do this, we could do it ourselves, we could do it through a third party. And in both ends, we had processes running, and we're sort of ready to go with it anyway, so.
Michael Yee
Okay. The reason I ask, of course, is because the balance sheet and the profitability is still in a pretty good position right now, certainly not after the expense reductions, but because you have a lot of U.S. cash revenues coming in providing cash every quarter.
Karim Mikhail
Exactly.
Michael Yee
So, that's to take another 20%-30% hit or whatever, it would be a concern. So, you're watching that, but it's currently profitable?
Karim Mikhail
Yes.
Michael Yee
In o-U.S., I would believe that sales in U.K. are obviously important to show Wall Street your sales and numbers every quarter.
Karim Mikhail
Yes.
Michael Yee
But you're saying it will take some time, in the following few quarters, to launch. And what is the benchmark we would track then to show as a precedent?
Karim Mikhail
So, we are going to try to show a number of different benchmarks. There is no specific analogue that we can say is exactly how you need to compare because -- or used on top of a statin. The only other product that was used on top of a statin is either ezetimibe or, today, PCSK9s, and both of them are not very good proxies. So, we're still going to put the two to compare, but we're going to then add with other products that have cardiovascular risk reductions, Entresto, for example, right. So, just to show how would we compare with these products, because we owe this, honestly, to the investor community just to see is it in line, not in like, are we progressing or not.
And from our end, that's how we're tracking our work anyway. And this is how we planned the launch uptake.
Michael Yee
From an expectation standpoint there, the PCSK9s were fairly modest is what you're saying.
Karim Mikhail
Yes.
Michael Yee
So, it's not -- that's not a shocker.
Karim Mikhail
And ezetimibe was a crazy aggressive, you know, there you're talking about $1 billion was achieved in year-five, something like that.
Michael Yee
Okay, different time, world --
Karim Mikhail
Different time zone.
Michael Yee
So, what's the difference though then?
Karim Mikhail
Far lower price.
Michael Yee
Far lower price.
Karim Mikhail
Far lower.
Michael Yee
And it did $1 billion?
Karim Mikhail
Yes, it did. It did $1.2 billion, actually, you Europe, ezetimibe.
Michael Yee
In Europe, right, okay.
Karim Mikhail
Yes.
Michael Yee
And then Entresto, we can go look at that. And that's just a different price point, I guess.
Karim Mikhail
Yes, was also a different price point. So, you have to balance the patient population along with the price. What we're trying to say is, look, there are products that were reimbursed almost at a third of the price that we have achieved because of the evidence that have that got to $1 billion, right.
Michael Yee
Yes.
Karim Mikhail
We have room in the price to allow for even a lower penetration.
Michael Yee
Okay.
Karim Mikhail
But that's not an excuse if you see what I mean. We're just trying to say that the potential exists compared to other cardiometabolic assays, the potential exists, okay. And we've been there; we've launched these products before. So, we sort of have a clear view of how to get there.
Michael Yee
So, let's put that together. So, U.S. continues on, we'll watch that, see -- but you're telling us it's actually pretty stable, that's really important.
Karim Mikhail
Yes.
Michael Yee
Okay. Perception of generics out there seems scary, but actually it's pretty stable; that's a positive. O-U.S., you're continuing to get reimbursement in different regions, you've launched in U.K., and it will take some time, but you're progressing, in 2023, on that.
Recently, and this is all public, Sarissa had come out with some comments, I'm not sure if the comments are all public. Can you comment on what shareholders or activist-type investors want, and what do you -- where do you see creating the most value, getting reimbursements in other regions, doing the hard work there so that a bigger pharma company can do it? Because I will tell you, most people believe a smaller biotech cannot do this by themselves.
Karim Mikhail
Look, the reality is, creating shareholder value for this company is all about now achieving pricing and reimbursement, and demonstrating success in commercializing the product, that's what this is all about. And I think there is full alignment on that. Now, are there different views of different shareholders about what we need to do? We're always open to listen. We were asked many times, "Are you open to sell the company?" Who is not, at the right price? But you need to basically do the work, because who is going to step in today and want to go carry that negotiation in France, right? No one would want to do this. You want to finish this, right? Now, whether that becomes a good point to sell the company or not, that depends on the buyer really, not on the seller.
But at the end of the day, we are doing everything to create the shareholder value. And I believe we gathered a group of experts that know how to get that path at least to the finish line. I don't believe we have disagreements with any shareholders on what needs to be done. Now, some of them want to be more involved than others; that's completely different. But again, this is very governance and nomination-focused, not very much management, so.
Michael Yee
Okay, all right, very good. We're at the top of the time, so thank you very much, I appreciate it.
Karim Mikhail
Thank you.
Michael Yee
And we'll look forward to keeping up with your updates.
Karim Mikhail
Thank you.
Tom Reilly
Thanks, Mike.
Michael Yee
Thank you.
Karim Mikhail
Thank you.
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Amarin Corporation plc (AMRN) Presents at 13th Annual Jefferies London Healthcare Conference 2022 (Transcript)