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Amarin Reports Second Quarter 2019 Financial Results and Operational Update
GlobeNewswire•July 31, 2019
Record Total Revenue of $100.8 Million Achieved in Q2 2019
Commercial Expansion Plans on Track in Anticipation of September 28, 2019 PDUFA Date for Vascepa\u00ae
If Approved, Vascepa to Become First Prescription Therapy to Treat Patients with Underlying Cardiovascular Risk Beyond Cholesterol Management as Demonstrated in the REDUCE-IT\u2122 Cardiovascular Outcomes Study
Millions of Patients in the U.S. Have Underlying Cardiovascular Risk Beyond Cholesterol Management
Increased Cash Balance to More Than $600 Million on a Proforma Basis to Ensure Robust Promotion and Education for Vascepa
Management to Host Conference Call Today at 7:30 a.m. ET
BEDMINSTER, N.J., and DUBLIN, Ireland, July 31, 2019 (GLOBE NEWSWIRE) -- Amarin Corporation plc (AMRN), a pharmaceutical company focused on the commercialization and development of therapeutics to improve cardiovascular health, today announced financial results for the three and six months ended June 30, 2019, and provided an update on company operations.
Key Amarin achievements since its last quarterly report include:
U.S. regulatory review progressing: The Priority Review of Amarin’s supplemental new drug application (sNDA) seeking to expand the indication for Vascepa\u00ae (icosapent ethyl) appears to be progressing in an orderly and timely manner toward the September 28, 2019 PDUFA goal date.
Second quarter net product revenue growth increased by 91%: Recognized $100.8 million in total revenue and $100.4 million in net product revenue from Vascepa sales in Q2 2019 compared to $52.5 million in Q2 2018, an increase of 91%. The total revenue result is at the upper end of the company’s previously estimated revenue of between $97 and $101 million announced on July 2, 2019.
U.S. prescriptions grew by more than 70%: Increased normalized prescriptions for Vascepa by 76% and 73% compared to Q2 2018 based on data from Symphony Health Solutions and IQVIA, respectively.
Commercial expansion preparation under way: Actively hiring additional sales managers and sales representatives to double the size of Amarin’s U.S. sales force to approximately 800 sales representatives by October 2019, while also executing on other plans to effectively educate healthcare professionals and consumers regarding the cardiovascular risk reduction profile of Vascepa and the significant unmet need for this disease, following an anticipated label expansion in late September.
International plans on track: Progressing through Amarin’s licensee, HLS Therapeutics Inc. (HLS.TO), towards anticipated approval of Vascepa in Canada in the fourth quarter of 2019. As previously disclosed, the application for Vascepa was granted a priority review designation by Health Canada. Other international progress is continuing, including Amarin’s plans to submit an application seeking approval for Vascepa in Europe before the end of 2019.
Increased cash balance to ensure robust launch of Vascepa: As of June 30, 2019, Amarin had a cash balance of $221.8 million. In July 2019, Amarin completed a $460.0 million equity offering resulting in an increase in Amarin’s cash balance to more than $600 million on a pro forma basis.
“Amarin made tremendous progress in the first half of 2019, including achieving $100 million in quarterly revenue which is a record for Vascepa sales,” stated John F. Thero, president and chief executive officer, Amarin. “We believe this is just the start of realizing the significant commercial opportunity for Vascepa, which will be driven by our passion to potentially help millions of at-risk patients and our ability to broadly communicate to healthcare professionals and patients the cost-effective value of Vascepa based on the FDA-approved expanded indication we’re anticipating in September. Our focus right now is ensuring we are prepared to robustly launch Vascepa based on that expanded indication.”
As previously announced, Amarin submitted an sNDA to the FDA on March 28, 2019, seeking to expand the indication for Vascepa. The sNDA was based on the positive results of the landmark REDUCE-IT\u2122 cardiovascular outcomes study. If approved, the expanded label is anticipated to allow for considerably broader promotion of Vascepa in the United States. As announced in May 2019, the FDA accepted the sNDA for filing and granted Priority Review designation with an assigned PDUFA goal date of September 28, 2019.
To date, the FDA has not informed Amarin as to whether it plans to convene an Advisory Committee (AdCom) to review the sNDA. The FDA is not required to inform sponsor companies that it does not intend to hold an AdCom. While it remains possible that the FDA may elect to convene an AdCom, with less than two months remaining prior to the PDUFA date Amarin is now assuming that an AdCom is unlikely. If Amarin is informed definitively that there will or will not be an AdCom, the company plans to update investors accordingly.
Label negotiations in the sNDA process could commence as early as one month prior to the PDUFA date under FDA’s typical processes. As such, a final version of the updated Vascepa label is not available at this time. It would therefore be unproductive for Amarin to speculate on the wording of such a label before a final determination by the FDA except to express that Amarin is seeking a cardiovascular risk reduction label for Vascepa which is consistent with the results of the REDUCE-IT study.
Vascepa prescription growth in Q2 2019 stemmed from both prior prescribers and new prescribers. Normalized prescriptions for Vascepa (prescription of 120 grams of Vascepa representing a one-month supply) increased by approximately 76% and 73% in Q2 2019 compared to Q2 2018 based on data from Symphony Health and IQVIA, respectively. Estimated normalized Vascepa prescriptions, based on data from Symphony Health and IQVIA, totaled approximately 756,000 and 683,000 in the second quarter of 2019.
As there has been a trend of an increasing number of 90-day prescriptions (or scripts) vs. 30-day prescriptions, reporting from Symphony and IQVIA on prescription counts may not reflect the true demand for the product. Script counts from these services do not account for whether a script is for 90 days or 30 days as both are counted as one script. Accordingly, Amarin believes that pill counts reported as extended units by Symphony and IQVIA show a more accurate reflection of the demand for Vascepa. Normalized prescriptions, as referenced above, take this into account by using the extended unit number and dividing by the pill count in the bottle. Nonetheless, even when normalized, estimates from these independent sources for Vascepa and other drugs have historically been most accurate over longer periods of time, such as annually, while directionally informative over shorter periods of time.
As described more fully in Amarin’s Quarterly Report on Form 10-Q, Amarin recognizes product revenue when its customers, consisting mostly of independent commercial distributors, take possession of the product they order and Amarin ships to them. Amarin revenue is not recognized when individual patients fill prescriptions.
Upon FDA approval of an expanded indication for Vascepa, Amarin’s goal is to be ready to launch a robust educational and promotional campaign aimed at healthcare professionals and consumers on the efficacy and safety profile of Vascepa as well as on the significant unmet need to help patients with underlying cardiovascular risks beyond cholesterol management.
When physicians become knowledgeable about the results of the REDUCE-IT study, it has been Amarin’s experience that they appreciate the importance of Vascepa and how it can be used to help the health of their patients. However, the vast majority of healthcare professionals have little knowledge of Vascepa. Amarin views this as an opportunity to be improved through expanded Vascepa promotion supported by an expanded label.
With the benefit of funds from recent financing, the company plans to create “surround sound” in its promotion of Vascepa. This surround sound will include more sales representatives, various forms of digital outreach, medical education, scientific presentations at industry meetings, direct-to-consumer advertising and other means of effective and responsible communications.
Most of the sales representatives hired at the start of 2019 are performing well and showing promise for greater contribution in the future. Their progress, together with the anticipated value of the expanded label for Vascepa, gives Amarin the confidence to double the size of its sales force.
To date, Amarin has hired most of the additional sales managers required for this expansion and is confident that it will have approximately 400 new sales representatives hired, trained and in the field promoting Vascepa by early October.
While the expanded sales team will reach a larger number of healthcare professionals, it is equally important to achieve more frequent interactions with targeted healthcare professionals. The current sales team calls on approximately 50,000 healthcare professionals. With the doubling of the sales force, Amarin expects to reach approximately 70,000 to 80,000 healthcare professionals. As of the end of June 2019, consistent with previously communicated projections, Amarin sales representatives called on approximately half of its current target physicians five or more times with the published results of the REDUCE-IT study.
Direct-to-consumer (DTC) promotion is likely to be a phased process. Upon label expansion, Amarin plans to increase promotion through more placement of Vascepa advertisement in platforms currently used. In parallel, new messaging for branded promotion based on the anticipated expanded label for Vascepa will be submitted to the FDA for review. Such submission for promotional review cannot be made until after the label is expanded. Subject to FDA review, Amarin anticipates launching that DTC campaign in the second quarter of 2020.
Managed care coverage for Vascepa continues to be favorable overall. Amarin anticipates marginal further improvement to such coverage in Q3 2019, prior to label expansion, and plans to pursue even broader managed care coverage following assumed label expansion.
The Institute for Clinical and Economic Review (ICER), an independent non-profit organization, released its draft evidence report regarding clinical effectiveness and economic impacts of Vascepa on July 24, 2019. ICER’s draft report concluded that Vascepa is cost effectiveness across all the non-profit organization’s analyses, based on its quality-adjusted life year (QALY) metrics Despite the draft report’s positive conclusion regarding cost effectiveness, Amarin believes that ICER understates the value of Vascepa. For example, the ICER base-case analyses reflect only the costs of heart attack, stroke and cardiovascular death and appear to exclude high costs associated with other cardiovascular events that were demonstrated to be lowered by Vascepa in the REDUCE-IT cardiovascular outcomes study (e.g., revascularization procedures and hospitalizations for unstable angina). Amarin believes this draft report, while not perfect in its value assessment, provides additional support for why medical insurance should broadly cover Vascepa for the population of patients studied in REDUCE-IT. While many payors already broadly cover Vascepa, upon anticipated label expansion, Amarin plans to use the results of the REDUCE-IT study, pharmaco-economic analysis, such as presented by ICER, and other medical information and data in negotiations with payers seeking expanded Vascepa insurance coverage.
Total revenue for the three months ended June 30, 2019 and 2018 was $100.8 million and $52.6 million, respectively. Net product revenue for the three months ended June 30, 2019 and 2018 was $100.4 million and $52.5 million, respectively. Total revenue for the six months ended June 30, 2019 and 2018, was $174.1 million and $96.6 million, respectively. Net product revenue for the six months ended June 30, 2019 and 2018 was $173.1 million and $96.3 million, respectively. The increase in net product revenue was primarily attributable to increases in new and recurring prescriptions of Vascepa as net selling price remained relatively unchanged for the six months ended June 30, 2019 as compared to the same period in 2018.
During the second quarter, based on data from Symphony Health Solutions and IQVIA, Amarin experienced continued prescription growth and an increase in Vascepa market share, particularly among physicians called on by Amarin’s sales professionals. Symphony Health Solutions and IQVIA reported estimated normalized total Vascepa prescriptions of approximately 756,000 and 683,000, respectfully, for the three months ended June 30, 2019, representing growth of approximately 76% and 73%, respectively, over levels estimated by these sources for the same three months of the prior year.
Licensing revenues recognized by the company were $1.0 million and $0.2 million in the six months ended June 30, 2019 and 2018, respectively, related to timing of milestones and other factors impacting revenue recognition for licensing fees under agreements for the commercialization of Vascepa outside the United States.
Cost of goods sold for the three months ended June 30, 2019 and 2018 was $22.8 million and $12.8 million, respectively. Cost of goods sold for the six months ended June 30, 2019 and 2018 was $39.9 million and $23.5 million, respectively. Gross margin on net product revenue for the three and six months ended June 30, 2019 and 2018 was 77% and 76%, respectively.
Selling, general and administrative (SG&A) expenses in the six months ended June 30, 2019 and 2018 were $145.0 and $97.4 million, respectively, an increase of 49%. This increase is due primarily to increased promotional activities, including commercial spend for expansion following successful REDUCE-IT results, as well as costs for sales force expansion, partially offset by elimination of expenses associated with the company’s prior co-promotion partner. As previously disclosed, the level of anticipated SG&A spending will increase as Amarin doubles the size of its sales force and increases its promotional and educational spending for Vascepa in conjunction with the anticipated label expansion.
Research and development (R&D) expenses in the six months ended June 30, 2019 and 2018 were $14.4 and $29.9 million, respectively, a decrease of 52%. This decrease in expense is primarily driven by a decline in REDUCE-IT related costs. Following the completion of the REDUCE-IT trial, costs consisted primarily of the clinical study’s wrap-up activities, regulatory support and publications. As previously disclosed, Amarin anticipates the level of spending on R&D will continue to decline as it has completed the REDUCE-IT study and initial publication of results from this important study.
Under U.S. GAAP, Amarin reported a net loss of $1.8 million in the three months ended June 30, 2019, or basic and diluted loss per share of $0.01. This net loss included $7.9 million in non-cash stock-based compensation expense. Amarin reported a net loss of $34.2 million in the second quarter of 2018, or basic and diluted loss per share of $0.12. This net loss included $3.6 million in non-cash stock-based compensation expense.
Under GAAP, Amarin reported a net loss of $26.3 million in the six months ended June 30, 2019, or basic and diluted loss per share of $0.08. This net loss included $14.8 million in non-cash stock-based compensation expense. For the six months ended June 30, 2018, Amarin reported a net loss of $58.3 million, or basic and diluted loss per share of $0.20. This net loss included $7.4 million in non-cash stock-based compensation expense.
Excluding non-cash gains or losses for stock-based compensation, non-GAAP adjusted net income was $6.1 million for the second quarter of 2019, or non-GAAP adjusted basic and diluted earnings per share of $0.02, compared to non-GAAP adjusted net loss of $30.6 million for the second quarter of 2018, or non-GAAP adjusted basic and diluted loss per share of $0.10.
Excluding non-cash gains or losses for stock-based compensation, non-GAAP adjusted net loss was $11.5 million for the six months ended June 30, 2019, or non-GAAP adjusted basic and diluted loss per share of $0.03, compared to non-GAAP adjusted net loss of $50.9 million for the six months ended June 30, 2018, or non-GAAP adjusted basic and diluted loss per share of $0.18.
As of June 30, 2019, Amarin reported cash and cash equivalents of $221.8 million, $95.4 million in net accounts receivable ($116.3 million in gross accounts receivable before allowances and reserves) and $46.3 million in inventory. As noted above, the company completed an equity offering in July 2019 for gross proceeds of approximately $460.0 million and issued approximately 25.5 million ADSs, including the full exercise of the underwriters’ 30-day over-allotment option to purchase up to an additional 15% of the ADSs issued in the offering. Net proceeds after fees and expenses from this financing were approximately $439.5 million. While Amarin was net cash flow positive in the three months ended June 30, 2019, the company expects net cash flow to be negative in the second half of 2019 reflecting planning increased spending for Vascepa promotion and anticipated increased purchases of Vascepa inventory.
As of June 30, 2019, prior to the above described financing, Amarin had approximately 331.3 million American Depository Shares (ADSs) and ordinary shares outstanding, 28.9 million common share equivalents of Series A Convertible Preferred Shares outstanding and approximately 16.6 million equivalent shares underlying stock options at a weighted-average exercise price of $5.86, as well as 9.3 million equivalent shares underlying restricted or deferred stock units.
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