Regarding your numbers .....agree that we have about $100m cash left starting Jan 15 ...we also have fixed costs of $30m for Reduce It and $40m owed Pharmakon ( for the year ) ...so we will be down to $30m at best, left by year end 2015 and going into 1st Qt 2016 owing Pharmakon $15m alone that qt
With the current sales force ..you have $11m in revenue 1st Qt 2014 and expenses and almost $14m in sales and marketing related expenses ...so that situation is costing us $3m a qt.....
Assuming Kowa comes in and reverses that even gets the sales team generating money for the company ..IMHO theres no way we are profitable in Q3-15 ( and if we are your first bottle of Vascepa is on me !)
This company is being sunk by many things , the FDA's rejection of Anchor and the deal JZ made with Pharmakon , JZ hiring his own sales force ...( was a marketing deal with Kowa even considered back then ) , JZ not raising cash in 2012 to ensure Reduce It was paid for no matter what ( well I guess he was to busy sell his own stock to bother with that ) and so on
All of which is really unfortunate since I believe EPA ( Vasecpa ) will reduce CV events and I expect Reduce It to show clinical benefits by early 2016.....I just don't think there will be much left of the company by then ...however I'll be quite happy if you prove me wrong
Correction on my math ...starting July 1st 2014 ...they owe $56m to Pharmakon by yr end 15 , plus $45 m spent on Reduce it ..so they can probably make it into 2016 1st qt ...but it will still be close ...definitely want Reduce it halted end of 2015 or we face forced dilution or default by early 2016 ..just my back of the envelop calc's
Thanks ..interesting post
I will just pass on Biwatchs update
Based on 90% power ( ie if you ran the trial again you have a 90% chance of getting the same result )
Vascepa 25% better then placebo ..DMC halts trial Nov 14
Vascepa 20% better then placebo DMC halts trial Nov 15 .... my pick
Vascepa 15% better then placebo DMC halts trial Dec 17
Its just a question of whether cash flow will last to Nov 15th.... They will have about $150 m left mid year with $80m owed /paid in payments to Pharmakon by year end 15 and about $45 m laid out running Reduce It to year end 15.....so unless we get a big boast from Kowa's sales force ...we will be cutting things very close.
Hi Alexandria - Cairo ( AC )
Some numbers for you to ponder ....back of the envelope laymans calc's
Co lost $27.5 m in first Qt ...a 17% reduction from 4th Qt 2013 . Being generous the same rate of reduction in 2 qt 2014 so the loss 2nd Qt is around $22.5 m
So of the companies expected loss of only $80 m for the entire yr ...they will have lost $50 m of that in the first 6 months. Now Kowa's team is expected to ride to the rescue and cut our $50m first half loss to a $30m loss ...in the second half ...a 40% reduction in cash burn !!
So how to ramp up Marine sales since the no vote at Adcom and the recent New England J of Med by some of the Adcom panel members has apparently stalled off label scripts ?
Remember the main risks of TG's over 500 , especially at 1,000 is pancreatitis ...less about CV risk. Lovaza is considered more effective and easier to prescribe.... because its already on many hospital formularies such as the hospital my wife works at.
The risk of LDL elevation is countered by the use of Statins ( which many patients may be on already ) since the strongest Statins will cut you LDL by at least 40 % and most people have LDL below 180 to begin with .. so getting LDL down to 100 is doable
So the market ...those who can't or wont take Statins and still need their TG's down
Those such as hetero FH patients who despite max dose Statins can not get their LDL to 100 and still have very high TG's
Bottom line ...its a limited slice of the Marine market
Company is out of funds late 2015 /early 2016 IMHO and whether the bond comes due 2017 or 2019 won't matter..... but at least the mgt looks like they are doing something !
JMO ... the only thing that matters is getting positive early results for Reduce It before the cash runs out and this deal does nothing from what I can see , to achieve that.
Kowa reps don't start working for us until sometime in June ...so its a little early to expect any effect ;-).
Mgt says give them to end of year ...note my comment to AC following
From the perspective of someone that has run a sub chapt S Corporation...ie ex CEO
At the current cash burn rate ( about $8m a month ) this deal apparently does nothing to enable Amarin to reduce cash burn until hopefully early Reduce it results
Whether the bond holders can make claim in 2017 or 2019 is irrelevant if Amarin runs out of cash before Reduce It results .
If you are thinking ...oh this is fine ..no worries until the end of the trial ( 2017 ? ) you do not understand clinical trials .
Reduce It must be stopped for efficacy by late 2015 or early 2016 to have any relevance IMHO
Few are interested in CV trials that run the full length ...if the drug is great the DMC ( data monitoring committee ) will stop it and switch everyone onto the drug
The Jupiter Trial using Crestor ( a Statin ) was stopped after 2 1/2 yrs ...because it reduced CV events .
That kind of result is what we need from Reduce It
What we need are deals that conserve cash while we run Reduce It ...and if we don't get early positive results from Reduce It this current deal is worth less then the paper its written on
By the way ...I take Vascepa and expect an early ( late2015 / early 2016 ) positive Reduce it results ...I just want to make sure we have the cash to get there.
Nofan ...quick follow up on doctors prescribing . My wife prescribed Vascepa for a patient . Patients insurance refused to cover ..so patient didn't get med .
Reduce It is not that expensive to run now ...about $7m a qt ......if all else fails a drastic year end option is to have Kowa handle all sales and sales / supply expenses and have AMRN use their remaining cash to maintain debt payments and complete Reduce it
At $1.50 a share we basically own an option on early and positive Reduce It results
Nofan. Well now that you have cheered us all up :) ....May I pt out that although the fat lady may be starting to warm up ...she's not singing yet. ( apologies to any large ladies reading this ) .
I'm willing to give Kowa's team to the end of the year to show some results
If you read the CC I believe it shows how they are focusing their strategy on those with high LDL despite Statin therapy who also need TGs lowered. As well as those that don't want Statins thus can not use them to counter the LDL raising effect of Lovaza ( generic or not )
There's also a growing awareness of the role of inflammation in heart disease and we may find more MD's willing to prescribe on that basis
So I expect them to identify and target niches in the market where Vascepa has a clear advantage.
The day that Reduce It is cancelled ...which I hope never happens ...is the day this stock is worthless IMHO ...until then , remember your offer to sell your stock for $2 a share ....if Reduce It comes in early with great results I'll be taking you up on that offer
Benny and Shortfish
My wife has prescribed both Vascepa and Lovaza ...she is a PA in dialysis and the benefits of "fish oils " for their patients is well accepted especially in reducing sudden cardiac death for those starting dialysis.
I have made the case to my wife on the benefits of EPA vs EPA/DHA fish oils for their patients .
She has presented the studies I cited to her supervising MD.
The MD's response ..."its easier to get our patients on dietary supplement versions then to hassle with insurance companies for coverage "
The push back they get from the insurance companies they deal with , is that they will only provide coverage if the patients TG's are over 500
So to increase sales you need 2 things
MD's to prescribe and insurance co's willing to offer generous copays.
Shortfish ...IMHO this company is dead without early and positive Reduce It results. Sorry , just trying to offer my honest opinion...... however on the bright side ...I expect early and positive Reduce it results
Re your comment ...all studies so far etc . Well thats why we are having the Reduce It Trial and why AZN is starting their trial with Omethera.....to determine if lowering high TG's in a population of high risk patients on optimal Statin dose reduces CV events
By the way , there are several trials that show statistically significant benefit using EPA
Atherosclerosis dec 13 " Association between ratio of serum eicsapentaenoic acid to arachidonic acid .etc " for instance .
If you really want to do a deep dive ( due diligence ) try " The EPA/AA ratio as a biomarker of CVD "..Journal of Atheroscelerosis and Thrombosis 2013
My own view is that for a person with no history of heart disease or diabetes lowering high TG's is probably of limited benefit.
However for those with diabetes , history of CV events etc ( Reduce it participants ) , 4gms of EPA with optimal Statin use will reduce CV events ...by multiple factors ...reducing inflammation and improving the EPA/AA ratio being the main factors providing benefit
Unfortunately the reality is that this is a business . This business needs to make a profit ...or perceived to be capable of making a profit ...at some pt in the near future.
The reality is that AMRN is loosing about $8m a month . This is eating into their cash reserve such that they will run out of cash around the end of 2015 . In addition they have , from memory , about $260m in debt..
No matter how safe and effective Vascepa is ( I take it , think it's the most patient friendly CV drug I've ever taken ) ...it must sell in large enough volumes with enough profit built in to make Amarin a profit generating company.
So how do we get from where we are now to potentially break even or profit generating before we run out of cash
1) With Kowa's help ...ramping up sales .
We may get more MD's to prescribe but we also need generous insurance co pays to prevent competition from lower quality dietary supplement versions of Vascepa
2) Some flexibility by the FDA to expand 'on label ' prescriptions . Many with CV concerns are denied a script for Vascepa because they don't have TG's over 500
3) Early positive results from Reduce It ....
We need at least one of the 3 above within the next 12 months or so IMHO to avoid as you wrote ...disappearing into the sunset
I'm long AMRN and take Vascepa .
However on investments I always argue the " what can wrong here "
So with AMRN ....what can go wrong
1) to avoid running out of $ they will try and raise $ early 2015 ..,stock will tank but hopefully stay above $1
2) Insurance co's will resist covering Vascepa forcing patients onto dietary supplement alternatives...
For me it's not a question of whether EPA reduces CV event risk ....I'm convinced it does .
The question is whether current AMRN longs will ever benefit from that.
You seem I like a very informed guy James . I would just suggest you argue against your own position ...it's good investment discipline
I believe the sales force has been cut in half since Dec so I would say that those that remain have done ok.
With Kowa's team starting in June they will more then double the sales force so I suggest give the Co to year end to show results .
The debt payments are spread out over several yrs ...largest pyt due in 2016.
If they haven't reduced cash burn by year end thru improved sales ,then yes they will face some hard choices.
If Kowa's CHERRY study with 1.8 gms of EPA shows benefit ( results due around year end ) ,I would expect a closer working relationship , even partnering with AMRN to insure completion of Reduce It
re your comment " Wonder why all studies show no benefit to reducing TG;s after optimized statin " ...well thats likely because the studies testing Niacin and Fibrates did NOT show a reduction in inflammation , improve the EPA/AA ratio or provide any evidence of plaque stabilization.
We know Fibrates and Niacin have little or no benefit added to optimal Statin . We do not know the benefits ( or lack of ) using EPA until we get Reduce it data , however Jelis and numerous other studies indicate likely clinical benefit.
HDGabor in Ihub figures we need 24,000 scripts per week to breakeven ( includes payments to Kowa )
Re the other post on Statins and TG's
The studies out there show that EPA reduces coronary plaque volume even under strong statin administration ..AHA journals ....stabilizes vulnerable plaques better then Statin alone ( LDL down to 70 on Rosuvastatin ) Atherosclerosis 2014.
TG's are simply the marker they are using ...likely benefit IMHO is thru reducing inflammation by more then just the Statin alone , improving the EPA/AA ratio and by stabilizing / reducing coronary plaque.
Follow up for PK and Amber
PK ..the biggest chunk of their debt comes due in 2016 . If Reduce It has not been stopped for efficacy by then ...then its over for us longs IMHO
Amber... As per the note to PK ...if the trial isn't stopped for efficacy by at least early 2016 then IMHO its over and no I won't be jumping out any windows.
I would just ask you the following
IF Reduce It is halted because of efficacy BEFORE they run out of $ ...where do you expect the stock to be after they make that announcement ?
Interesting discussion everyone .
For the record ...I am not advising anyone to do anything ...buy , hold or sell . I am not selling my shares ( my average cost tho is under $4 ) , I'm more interested in when or if I should buy more .....Note that Goldman Sachs is on the call ...does anyone really think they would bother if there was no potential for $ there some where. ?
What will I be watching besides script data ....the CHERRY trial using only 1800mg's of EPA ..results due in 6-8 months
To some of your pts
Hi James , yes your pts are well taken . I would just pt out the following with Jelis ....most were on a moderate Statin ( simavastatin ? ) and most of the benefit was seen in "soft data pts" like Angina . Will we see the same benefits with max dose of a Statin like Crestor. I think about 40% in Reduce It are diabetics
Benny , For me its always been about cardiovascular benefits ...thus all about Anchor and Reduce It . I would never own AMRN solely on the Marine market . If CHERRY shows clinical benefit I would expect closer collaboration between AMRN and Kowa ..possibly even a deal to see Reduce It thru
Swalchie ..good to hear from you ...we exchanged posts in 2012 when I explained why I was reducing my position as I did not think a sale was eminent ( CEO had sold a chunk and stock price keep going down despite his BS talk about the next 90 days will be exciting " .
Lesson there...follow what they do ..not what they say.
Thanks for the exchange of views everyone