Amarin Corporation plc (NASDAQ:AMRN) Q4 2023 Earnings Call Transcript
Amarin Corporation plc (NASDAQ:AMRN) Q4 2023 Earnings Call Transcript February 29, 2024
Amarin Corporation plc beats earnings expectations. Reported EPS is $-0.01, expectations were $-0.04. AMRN isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Welcome to Amarin Corporation's Conference Call to discuss its Fourth Quarter and Full Year 2023 Financial Results and Business Updates. I would now like to turn the conference call over to Mark Marmur, Vice President, Corporate Communications at Amarin.
Mark Marmur: Good morning, everyone, and thank you for joining us. Turning to our forward-looking statements. Please be aware that this conference call will contain forward-looking statements that are intended to be covered under the Safe Harbor provided under federal securities law. We may not achieve our goals, carry out 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 31st, 2023, which has been filed with the SEC, and is available through the Investor Relations section of our website at www.amarincorp.com. We encourage everyone to read these documents. An archive of this call will be posted on Amarin's website in the Investor Relations section. Turning to today's agenda. Patrick Holt, Amarin's President and Chief Executive Officer, will provide a brief overview of 2023 highlights and 2024 priorities; and Tom Reilly, Amarin's Chief Financial Officer, will provide a review of our fourth quarter and full year 2023 financial results.
Following prepared remarks, we will open the call to your questions. I will now turn the call over to Patrick Holt, President and Chief Executive Officer of Amarin. Pat?
Patrick Holt: Thank you, Mark. Good morning, everyone, and thank you for joining us today. Before we review our 2023 highlights and our 2024 priorities, I want to take a moment to reflect on our strategy at Amarin. Every day, our team is focused on driving operational momentum to maximize the patient uptake of VASCEPA/VAZKEPA. To enhance the value of Amarin and deliver shareholder value, we must drive operational momentum across our three key regions. In Europe, where we have a potential IP runway out to 2039, we are focusing efforts and investment to accelerate prescription growth and revenue as well as secure pricing and reimbursement in those key markets. In the US, we're maintaining and extending our IP market leadership.
And in the Rest of World, we're enabling our partners to get our product into the hands of as many patients as possible. We firmly believe this focus on operational momentum is the best path forward for Amarin and will more strongly position us or potential future options. Turning to Slide 6. While we believe this strategy is the best way to deliver shareholder value today, the only way to gain shareholder confidence is to deliver against it. We have made meaningful progress in 2023, and we have clear priorities in place for 2024. For Europe, in 2023, with new leadership and a more focused strategy in place, our teams made launch progress and have advanced pricing and reimbursement goals. In Spain, our team is focusing on health care practitioners who are early adopters of cardiovascular products.
We are continuing to deliver strong launch progress such that we now have approximately 2,500 patients on therapy. In the United Kingdom, we have a more focused strategy in place, including driving uptake in key accounts. Currently, we have at least 1,500 patients on therapy. Turning to pricing and reimbursement. We've secured pricing reimbursement across nine countries in Europe. As I have shared previously, we have strengthened our focus to advance our opportunities in key EU five markets. I'm pleased to share in Italy, we have now resubmitted our dossier and will advance this process with the authorities to potentially achieve market access for VASCEPA by the end of 2024. In France and Germany, we are sharpening our scientific arguments and have strategies and plans in place to advance submissions for VASCEPA in these markets.
We do not expect these processes to conclude in 2024. We will continue to communicate progress on France and Germany as additional steps are achieved. Importantly, we are also aiming to successfully conclude pricing reimbursement decision in at least five additional markets in 2024. We remain confident in our path forward in Europe. We have patents and applications that have the potential to extend our IP up to 2039. As a testament of this progress, we successfully defended our 2033 patent from opposition. We expect to share more on this topic in the coming months. Turning to the United States. In 2023, we continue to extend IP market leadership, closing the year with a 57% market share. We achieved this through focused investment in managed care, trade and medical capabilities to extend VASCEPA's life cycle despite the elimination of our sales force and reduced marketing spend in July.
As we turn to 2024, we have begun the year in a slightly improved position compared to last year. Based on what we currently know with our exclusive accounts, these represent at least 50% of the total IP market volume. While we are encouraged to start the year in a solid managed care position, the market remains highly dynamic, and we continue to monitor this closely. We do expect Q1 2024 results to be impacted by typical first quarter payor dynamics. We continue to stand ready to execute aggressive approaches, including the potential future launch of an authorized generic bolstered by our strong supply position to retain market leadership within the IP market. In the Rest of World, in 2023, we made progress on regulatory market access and commercial fronts as well as new partnerships.
In China, the second largest cardiovascular market globally, Amarin's partner, Edding, launched VASCEPA in October for the very high triglycerides indication. Additionally, that NMPA has accepted the regulatory filing for the cardiovascular risk reduction indication, which opens up the potential for future national reimbursement and drug listing. In 2023, Amarin also entered into three new partnerships across 15 countries. In 2024, our focus for Rest of World shifts toward enabling our partners to obtain market access and commercial uptake across key markets. Finally, in Research and Development and Medical, our teams delivered important progress with data publications and medical education, supporting our brand globally to build confidence in our science.
In 2024, we will continue to build on this momentum, including additional data on REDUCE-IT and EPA. Indeed, we have seven abstracts at the upcoming American College of Cardiology meeting in April. We'll be showing more on this in coming weeks. This important operational progress has supported our financial position, with $321 million in cash and no debt. As you're aware, due to our recent progress in our financial position, we announced plans for a share repurchase program of up to $50 million. I'm pleased to share that we are on track to complete the necessary shareholder and UK High Court approvals. We continue to anticipate completing these steps in the second quarter of 2024, and that share repurchases would commence shortly thereafter.
In summary, 2023 was a meaningful year for operational momentum, and we are well positioned to continue to build on this in 2024. Now, I'd like to hand over the call to Tom Reilly to review our fourth quarter and year-end 2023 financial performance. Tom?
Tom Reilly: Thank you, Pat. Good morning, everyone. I'm pleased to report details on our financial performance for the fourth quarter of 2023. In the fourth quarter of 2023, Amarin reported total net revenue of $74.7 million, including net product revenue of $70.6 million versus $66.1 million in the third quarter of 2023 and $4.2 million in licensing and royalty revenue. US product revenue was $64.9 million, with stable performance in the US despite multiple competing generics on the market. The US business continues to provide profit supporting our expansion into Europe. The revenue results include European product revenue of $1.5 million, a 65% increase versus the third quarter of 2023, reflecting early revenues from European markets, including Spain and the United Kingdom.
We recognized $8.4 million in the Rest of World revenue in the fourth quarter of 2023, including product revenue of $4.2 million related to commercial sales to our partners in Canada, China and the Middle East, and licensing and royalty revenue of $4.2 million, resulting primarily from the achievement of the Edding CVRR milestones. Cost of goods sold in the fourth quarter of 2023 were $29.6 million compared to $23.6 million, excluding restructuring in the third quarter in 2023. Amarin's overall gross margin on net product revenue in the fourth quarter was 58% compared with 64% in the third quarter of 2023. This was primarily due to an increase in one supply sales to our partner, Edding. Moving on to operating expenses. Operating expenses were $49.7 million in the fourth quarter, comprised of $43.9 million in selling and general and administrative expenses, and $5.8 million in research and development expenses.
In the second half of 2023, Amarin reported operating expenses of $101.2 million. This represents a $21 million reduction in operating expenses versus the first half of 2023. We are on track to deliver the previously announced $40 million reduction in operating expenses by July 2024. Amarin reported a net loss of $5.8 million for the fourth quarter of 2023 or basic and diluted loss per share of $0.01. Let me now turn to our efforts and results in controlling costs and effectively managing our cash. As of December 31st, 2023, Amarin reported aggregate cash and investments of $321 million. Importantly, this is the sixth consecutive quarter of positive or neutral cash flow generation for Amarin, and our cash balance is now $10 million higher when compared to December 31st, 2022.
In 2023, we made progress in controlling our costs and managing our cash position through our cost reduction programs and renegotiating supply agreements. In 2024, we will continue to focus on cash preservation, prudently invest in right opportunities, particularly in Europe, based on pricing reimbursement decisions and pending shareholder and UK High Court approvals will initiate our shareholder repurchase program. With that, I will now turn the call back over to Pat for closing remarks and to begin the Q&A portion of our call. Pat?
Patrick Holt: Thank you, Tom, for the financial overview of our results. Our team is focused on operational momentum to maximize shareholder value across all three areas of our business. We believe we have the right plan, focus on operational momentum to drive shareholder value. We have a strong future because of our fundamentals, best-in-class science supporting VASCEPA/VAZKEPA, a large global opportunity to impact cardiovascular patients, a team that is dedicated to delivering results, and a strong balance sheet. Finally, thank you to our colleagues for their commitment and dedication. I look forward to driving shareholder value together. And with that, Mark, let's begin the Q&A portion of the call.
Mark Marmur: Thank you, Pat. As we announced last year, to enhance engagement with the company's shareholder base and facilitate connections with its investors, Amarin is partnering with Say Technologies to allow retail and institutional shareholders submit and upvote questions, a selection of which will be answered by Amarin Management during today's earnings call. Let's begin the Q&A. So Pat, we received a number of questions on the company's long-term strategy and ways that we plan to maximize shareholder value. What would you say to these investors?
Patrick Holt: Thanks for the question. I get this question a lot. It's a really an important question. And we believe, the best path forward for us to both increase our value and put us in the best possible place for future strategic options is today to focus on our current efforts around operational momentum, whether that be in Europe, in the US or in the Rest of World. As we shared earlier in the call, we really are making progress on all three fronts, which provides us greater optimism and optionality for the future.
Mark Marmur: Great. Thanks, Pat. Our second set of questions focuses on China and Asia Pacific. What can you tell us on progress around the commercial launch in China? And what is the status of the cardiovascular risk reduction regulatory following China? Also, more broadly in Asia Pacific, can you share any updates on efforts with our partners?
Patrick Holt: Well, there's a lot in that. And as for the, some of you know, I know this region pretty well. So let me break that down in some parts. Firstly, to the China launch. So Amarin's partner, Edding, is really making important progress in China, which I'll remind everybody, is the second-largest cardiovascular market globally. Edding have launched VASCEPA for very high triglycerides in Q4 2023. To give you a flavor, the Edding sales force is covering 200 hospitals, which includes around 500 key opinion leaders, the majority of which are cardiologists in the three largest cities of Beijing, Shanghai and Guangzhou. So in summary, the launch is progressing well, and the structure of the agreement provides immediate profitability to Amarin.
So let's move from today and also think about the future in China as we reflect upon the cardiovascular risk reduction indication. The NMPA has accepted the regulatory filing for cardiovascular risk reduction, which opens up the potential for national reimbursement drug listing. The submission was accepted with a clinical trial waiver, meaning a separate clinical trial will not be required in order to be reviewed for approval. The teams are now focused on advancing that submission together with the authorities and we expect the regulatory review process to conclude in 2025. Asia Pacific is a large region, so let me just touch on some other areas within the region. As you know, last year, we entered into partnerships in Australia and New Zealand, with CSL Seqirus, and also 11 Asian markets, including South Korea with Lotus Pharmaceuticals.
I'm pleased to share that CSL is advancing pricing and reimbursement processes in Australia with the authorities. And in other markets, our partner, Lotus, is advancing regulatory discussions and filings with the various authorities across the region.
Mark Marmur: Great. Thanks, Pat, for that information on China and Asia Pacific. Now turning to the US. Is there a path toward growth in the market? Could we potentially take market share from other products or classes?
Patrick Holt: Great question. And naturally, our US revenues and cash flows are incredibly important to our business. When we take a step back and we think about the US market and where it stands today, it's important to remember that the IP market in the US is highly genericized at this point. Our focus has been and continues to be to maintain IP market leadership. And as a result of that, not focused on growing the market. We really have achieved a highly atypical performance three years post LOA to end 2023 with a market-leading share of 57%. We've been able to secure market leadership and continue that success through our exclusive contracts, led by our capabilities in payor, managed care and medical areas. Again, as we mentioned, we've started 2024 in a strong position in terms of our exclusive contracts.
But to remind everybody, it's a dynamic market, and we do watch it very closely and continue to assess our optionality for our branded product and beyond that should we consider other strategic alternatives. In terms of taking share from other products or classes, given those generic dynamics, we do not view this as an optimal strategy.
Mark Marmur: Thank you. Turning to supply. If we see demand increase from Europe or Rest of World partners, are you confident that we can meet those supply demands?
Patrick Holt: It's a very important question. And we do have strong relationships with our key supply partners. Over the last several years, we've made really important progress, renegotiating our supply agreements to ensure that we can both meet our demands as well as reduce key supply commitments. We feel really confident that we can meet those supply demands moving forward.
Mark Marmur: Now, one last question on the R&D side from the Say Technologies questions. Is Amarin working on advancing any additional indications for VASCEPA/VAZKEPA?
Patrick Holt: I was really pleased this question came up. And it's such an important question when you think about the core strength that Amarin has in terms of our R&D team and our IP capabilities and leadership. This is the team that has developed and advance the molecule from day one, and deliver the REDUCE-IT data that really has a global impact that we see today. With our team in place, we do continue to look at opportunities for new indications and we will update investors based on potential future progress of that work. So before we take additional questions, I'd like to thank those shareholders who submitted questions via the Say Technologies platform. We are committed to continuing open and transparent dialogue with all of our shareholders, and the Say Technologies platform is one way that we are trying to increase engagement and two-way dialogue with you.
We look forward to continuing to hear from you and answering your questions on this platform as well as other opportunities moving forward.
Mark Marmur: Thank you for those updates, Pat. We'll now open the Q&A up for additional questions.
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