Amarin Corporation plc (NASDAQ:AMRN) Q4 2022 Earnings Call Transcript

Amarin Corporation plc (NASDAQ:AMRN) Q4 2022 Earnings Call Transcript March 1, 2023

Operator: Welcome to Amarin Corporation's Conference Call to Discuss its Fourth Quarter and Full Year 2022 Financial Results and Operational Update. I would now like to turn the conference call over to Lisa DeFrancesco, Senior Vice President, Investor Relations and Corporate Affairs at Amarin.

Lisa DeFrancesco: Thank you, Holly. Good morning, everyone, and thank you for joining us. Please be aware that this conference call will contain forward-looking statements that are intended to be covered under the Safe Harbor provided by the Private Securities Litigation Reform Act. We may not achieve our goals, carryout our plans or intentions or meet the expectations disclosed in our forward-looking statements. Actual results or events could differ materially, so you should not place undue reliance on these statements. We assume no obligation to update these statements as circumstances change. Our forward-looking statements do not reflect the potential impact of significant transactions we may enter into, such as mergers, acquisitions, dispositions, joint ventures or any material agreements that we may enter into, amend or terminate.

For additional information concerning the risk factors that could cause actual results to differ materially, please see the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2022, which have been filed with the SEC and are now available through the Investor Relations section of our website at www.amarincorp.com. We encourage everyone to read these documents. This call is intended for investors in Amarin and is not intended to promote the use of VASCEPA/VAZKEPA. An archive of this call will be posted on Amarin's website in the Investor Relations section. Karim Mikhail, Amarin's President and Chief Executive Officer, will lead our discussion, and Tom Reilly, Amarin's new Chief Financial Officer, will provide a more detailed review of our fourth quarter 2022 financial results.

After prepared remarks, we will open the call to your questions. I will now turn the call over to Karim Mikhail, President and Chief Executive Officer of Amarin. Karim?

Karim Mikhail: Thank you, Lisa. Good morning. And thank you all for joining us today. While 2022 was a challenging year for Amarin, it was also a year filled with significant accomplishments that we believe have created the foundation for our future and gives us confidence that 2023 will be a year of tremendous evolution for the company. We are only beginning to see the results of the actions we took in 2022, and already in 2023. Throughout the remainder of this year, as each piece falls into place, we will be able to see more clearly a successful turnaround and the growing business that we have been building International. Amarin is in a unique position as we are building value for a product outside of the U.S. while facing increasing genetic competition in the U.S. market.

Our company is made up of people who come to work every day because they believe in our bold vision to stop cardiovascular disease from being a leading cause of death. This vision is what drives us. I'm proud of this team and what we have been able to accomplish together, and I'm excited for what we are able of accomplishing in the future as we continue to execute on our strategy. Today, I will briefly summarize the actions that we took in 2022 in the spirit of operational excellence to create value over the long term and bring the VASCEPA, VAZKEPA to as many eligible patients as possible across the globe. I will also provide an update on our launch in the UK and where we stand with our plans for global expansion. I will provide an update on our results in the U.S. where the team's efforts to stabilize this business is providing the support for our global commercialization efforts.

I will then briefly discuss Amarin's presence at the upcoming ACC meeting. Tom, will then discuss our financial results for the fourth quarter and our guidance for 2023, and I will conclude with a look ahead at the remainder of 2023. In 2022, we focused on three main areas, global commercialization, preserving our cash and ensuring that we have the right talent to execute on our new global strategy. We began the year 2022 negotiating pricing in one market in Europe and ended the year with our product available in five European markets. Since the beginning of 2023, we have added a sixth country with Switzerland where we have received individual reimbursement in February. We also have an additional five European markets in advanced stages of pricing and reimbursement negotiations.

Our objective is to conclude the vast majority by the end of 2023 as we focus on building a diverse and sustainable revenue stream in Europe. In Spain, we remain active in the reimbursement process and are confident in our ability to secure pricing in this market, we have gone through two rounds of review and made solid progress. We anticipate a potential third round of review imminently. In the Netherlands and Italy, we are in advanced changes of our price negotiations and are optimistic a decision could come around mid-year for these markets. We're also making good progress in France, which typically can take slightly longer than the other markets based on historical benchmarks. Other markets such as Norway, Portugal, Israel, and others are also progressing with potential decisions expected this year.

We focused on preserving our cash. In the first quarter of 2022, we saw almost a $100 million in cash burn with new members on our management team. We took Swift action to renegotiate supply purchase arrangements. We also implemented a comprehensive cost saving plan in June, and today, we are excited to announce that we are on track to exceed our $100 million cost saving target. Thanks to our continued fiscal discipline and cost cutting efforts, which Tom will discuss in more details later in the call. These actions resulted in a cash flow positive fourth quarter in a year end cash balance of more than $300 million. And lastly, we also built a strong European commercial organization with expertise in medical affairs, product launches, and with extensive cardiovascular product knowledge.

Many of our team members come from companies where they successfully commercialized blockbuster drugs and have significant contacts, expertise, and knowledge of their respective markets. These professionals came to Amarin because of our leading product, our unmatched data, and our entrepreneurial culture, and they are utilizing their background and leveraging their experience to build the Amarin business and brand in Europe. This European team also benefited from the valuable experience that our US colleagues had building the brand successfully over several years in the US market. I'd like now to focus on providing an update on the UK. First, I think it's useful to provide a reminder of the key highlights. We completed our NICE application in July of 2021, spend the year focusing on securing final NICE approval, which came in July of 2022.

90 days later, in October of 2022, the NHS funding was made available to begin adding VASCEPA to formularies, and in November of 2022, the national guidelines were published and they included VASCEPA place in therapy for UK patients. All of these steps and achievements were critical to help us establish a strong position for launch in this market. When we look at the pricing of VASCEPA compared to other oral analogs in the UK, we are extremely well positioned. Thanks, and large art to the effort of our local team. Given the volume of data available for VASCEPA and the efforts of our local team in conveying the value this product brings to patients are pricing from a daily treatment price perspective, far exceeds oral analogs across the Cardiometabolic spectrum of products in the UK.

When we look at the market access picture of VASCEPA in the UK, initial market access is trending ahead of other recent comparable launches in the market. Our team has unlocked 19 out of the first 20 priority accounts, which collectively represents 50% of the eligible patient population for VAZKEPA in the UK. As a reminder, the UK is a market that as a historically slower growing initially in terms of revenue. Based on these trends and the price achieved, we believe there is a viable strong and long-term business opportunity for VAZKEPA in the UK. Moving now to our progress on global expansion outside of Europe. As a reminder, we set out to achieve more than 20 regulatory approvals between 2022, 2024 in international markets. We achieved our 2022 objective of getting approvals in six markets, and already in 2023, we received an additional regulatory approval in New Zealand.

And yesterday, following this important approval, we announced an exclusive license and distribution agreement with CSL Seqirus in Australia and New Zealand. We are excited to announce this agreement with CSL Seqirus, a world class pharmaceutical licensing and distribution partner. CSL Seqirus brings highly experienced market access and commercialization teams in Australia and New Zealand that are well positioned to support pricing and reimbursement efforts for VAZKEPA, particularly with their strong record in successfully supporting pharmaceutical benefits listings, and eventual marketing and promotion to help us to deliver this important medicine to patients in these countries. Importantly, both Australia and New Zealand contributed significant number of patients to reduce it, so it is gratifying to know that we are moving in the direction of giving patients and physicians access to the product there.

We expect the next wave of approvals to include China through our partner Eddingpharm. Regarding China, our partner Eddingpharm is in charge of the regulatory review process. In their latest update, Edding indicated they expect an approval by mid-year as a result of delays related to the shutdown of the regulatory process in China for a period of time due to COVID-19 restrictions. We are working very closely with Edding to ensure we have the latest update from our partner. As of today, we have not received any indication that there are any open questions or concerns regarding the regulatory filing for our product. In Canada, HLS Therapeutics has a pain reimbursement from all major private and public payers, gaining access to a majority of eligible patients in Canada.

HLS continues to be in the launch phase in the public sector and they are seeing stronger growth with the product in provinces, where public access was secured. We are also actively negotiating potential agreements in the Asia Pacific and Central Eastern European regions, which would enable us to get this important product into the hands of clinicians and patients, and ensure we can extract value from these important markets. I'm pleased with the progress we have made our advancing international expansion plans. We remain focused on our core future objective, which is global growth and expansion for VASCEPA/VAZKEPA in Europe and internationally, as we believe expansion is the key to creating value for shareholders. We remain confident in the multi-billion-dollar market community for VASCEPA/VAZKEPA in Europe and international.

Moving to our U.S. business and our plans for ECC 2023, in the fourth quarter of 2022, we recorded $90.2 million in total net revenue including $88 million in U.S. product sales. Inline with last quarter despite the continued pressure from generic competition. This is the fourth quarter of four consecutive quarters of revenue stabilization in the U.S. in 2022. This unique achievement was only possible through the relentless dedication and efforts of our highly experienced U.S. team on the field and with the managed care organizations. We are continuing to maintain our share in the IPE market. Our trends in January and February support continued stabilization of the business. In the first quarter, we're experiencing typical pharma seasonal trends that branded products like VASCEPA can expect in the U.S. from fourth quarter to first quarter, driven by co-pays and deductibles resetting for patients and their healthcare plans with a new calendar year.

We also expect to see some continued price erosion this year, as we continue to experience generic competition. Tom will talk in more details about what we can expect shortly. One compelling fact is that, our U.S. team has generated more than $1 billion in sales, since generic launched in 2020. And we continue to have multiple levers we can consider to maintain our profitability. As I mentioned earlier, our cost savings are ahead of plan and we have the ability to launch either a brand generic or an authorized generic as needed and at the right time. While we are planning carefully for all potential scenarios, it is clear today that, the strong and nimble infrastructure we retained in the U.S. provides us with the right team to continue to support business stabilization in the near term.

Lastly, we continue to benefit from the strong data that we have generated with reduce four abstracts were accepted and will be presented at the American College of Cardiology, meeting taking place later this week in New Orleans. We are excited to share new findings from the reducer trial that add to the wealth of data that has consistently validated the utility of VASCEPA and treating patients' populations at high risk of cardiovascular disease. This important information coupled with the analyses comparing the antioxidant effects of EPA, DHA, mineral oil, and corn oil should help advance the medical community's understanding of the role and value of VASCEPA and EPA to reduce cardiovascular events in an at-risk patients globally. We remain committed to investing in our data and our medical presence with a global focus to support the medical education efforts for the launches of VASCEPA, VAZKEPA around the world.

With that, I'll turn it over to Tom to talk more about our progress and strong results this quarter. Tom?

Pharmacy, Medicines, Health

Photo by Myriam Zilles on Unsplash

Tom Reilly: Thank you, Karim. Good morning, everyone. I'm pleased to report additional details on our financial performance for the fourth quarter and full year 2022 following our pre-announcement in January. Let me begin by discussing our revenue performance, for the fourth quarter of 2022. We reported total net revenue of $90.2 million, including net product revenue of $89.5 million, a decrease of 38% compared to the fourth quarter of 2021. U.S. product revenue was $88 million in line with a third quarter of 2022, reflecting relatively stable trend in volume. We remain pleased the stable trends in spite of multiple competing generics on the market. The U.S. business continues to generate a positive contribution margin and provides necessary financial support for expansion in Europe and other geographies around the world.

The results included international product revenue of $1.5 million, which includes European product revenue of $0.3 million, beginning to reflect very early revenues from the UK. Cost of goods sold for the three months ended December 31st, 2022 was $26.6 million compared to $30.6 million in the corresponding period of 2021. Gross margin was 70.3% for the three months ended December 31st, 2022, compared to 78.7% in Q4 2021, as a result of lower U.S. net selling price. Now moving on to operating expenses. During the fourth quarter of 2022, we reported the expenses of $73.2 million compared to $97.7 million in the fourth quarter of 2021. It decreased at $24.5 million or 25%. The decrease compared to last year includes the impact of the cost saving initiative announced in June of 2022.

These savings were partially offset by our investments in growth and expansion in Europe. Under U.S. GAAP Amarin reported net income of $0.9 million for the fourth quarter 2022 for basic and diluted loss per share of zero. As of December 31st, 2022. Amarin reported aggregate cash and investments of $310.6 million in demonstrating the cash positive for quarter of 2022. We continue to experience relatively stable trends in our US business. Currently, we are not seeing any significant impact from Teva's listing on a one-gram generic version of the CFA. We do expect our US revenues for the first quarter 2023 to reflect the impact of typical brand branded seasonality resulting in first quarter revenues slightly lower than the fourth quarter. We do expect the year to reflect continued pressure on both prescriptions and also price as we work the retain key customers to the brand.

We've continued to make progress against our cost reduction program announced in June of 2022, and we are on track to exceed the $100 million cost savings target we announced in mid-2022. For the full year of 2023, we now expect the operating expenses to be between $290 million to $305 million compared with approximately the $350 million originally anticipated at the time of our June 2022 cost savings announcement. The lower than anticipating expenses are result of additional initiatives taken across the organization to reduce costs, along with the timing of our European investments, where we committed to invest carefully in Europe ahead of reimbursement decisions. Since the cost savings announcements in June, we have taken significant steps this year to strengthen and streamline the company operationally.

In addition, we have made significant progress amending our supply agreements and those negotiations are still ongoing. With these initiatives and relatively stable trends in the US, we believe our current available cash and resources, including US profitability are adequate to support continued operations, including European launch activities. Now, with that, I will turn the call back to Karim for closing remarks. Karim?

Karim Mikhail : Thank you, Tom, for that financial overview and our results during the fourth quarter. We exited 2022 with a strong foundation to support our future growth plans as we focus on becoming global diversified cardiometabolic layer, and we are off to a strong start in 2023. We have a very clear set of priorities. Our first and main objective is to conclude reimbursement discussion successfully in the remaining European markets and launch. We will do this while remaining laser focused on our cash preservation efforts. We're just beginning to see the results of our efforts over the last 18 months. Gaining pricing and reimbursement in Europe remains critical for a strong sustainable future and shareholder value creation.

We would also like to take a moment to address Amarin's General Meeting that was held yesterday, the results of which were disclosed after market closed. On behalf of the Amarin board and management team, we would like to thank all of our shareholders for their engagement and feedback throughout this process. Continuing to enhance our shareholder engagement program across our broad investor base remains a key priority as we move through this year and beyond. 2023 is a critical year for Amarin as we continue pricing and reimbursement negotiations. We are in the process of transitioning to F15 member board, including the onboarding of all new members to ensure that the company remains focused on progressing against our strategic objectives to deliver enhanced value for shareholders.

I would like to take this opportunity to thank for his leadership, dedication, and counsel during his role as Chairman of the Emirates Board. The board expects to appoint a new Chairman in due course. I would also like to commend our employees across the organization for their steadfast hard work, focus and commitment to Amarin. Finally, I hope we provided our shareholders with clear details of our fourth quarter and full year earnings results. And with that, operator, we are ready to take questions.

See also 11 High Growth UK Stocks to Buy and 12 High Growth SaaS Stocks that are Profitable.

To continue reading the Q&A session, please click here.