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Amarin Plc (NASDAQ: AMRN)
Q3 2024 Earnings Call
Oct 30, 2024, 5:00 p.m. ET
Amarin Plc Discusses Q3 2024 Results: Focus on Cardiovascular Health and Global Expansion
Table of Contents
- Opening Remarks
- Q&A Session
- Participants in the Call
Opening Remarks:
Operator
Welcome to Amarin Corporation’s call for their third quarter 2024 business update and financial results. I’ll now hand the call over to Mark Marmur, Vice President of Corporate Communications and Investor Relations at Amarin.
Mark Marmur — Vice President, Corporate Communications and Investor Relations
Good afternoon, everyone, and thank you for joining us. Let’s begin with some forward-looking statements. Please note that this conference call will include statements that may not necessarily reflect our actual results. As we go on, keep in mind that unforeseen changes may occur, impacting our goals and plans.
Actual results can differ significantly, and we do not take responsibility for updating these forward-looking statements. Additionally, the potential impact of significant transactions such as mergers or material agreements is not reflected in our current projections. For further details regarding risks, refer to the Risk Factors section in our annual report (Form 10-K) for the year ended December 31, 2023, and quarterly report (Form 10-Q) for the quarter ended September 30, 2024), both of which are filed with the SEC and can be found in the Investor Relations section of our website at www.amarincorp.com.
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We encourage you all to review these documents. An archive of this call will be available on Amarin’s website in the Investor Relations section. Moving on to Slide 3 of today’s agenda, Aaron Berg, Amarin’s President and CEO, will share insights on the state of Amarin. Then, Pete Fishman, Vice President and Global Controller, will provide a review of our financial results for Q3 2024.
At the conclusion of the presentation, we will open the floor for questions. Now, I will turn the call over to Aaron Berg, President and CEO of Amarin. Aaron?
Aaron D. Berg — President and Chief Executive Officer
Thanks, Mark. Good afternoon to everyone on the call, and I appreciate your presence today. In my first complete quarter as President and CEO, I have engaged with teams across the U.S. and Europe, alongside discussions with many of our partners and scientific advisors globally.
My primary focus has been to clarify the best strategies for increasing access to VASCEPA/VAZKEPA for millions of patients at risk worldwide. The insights I’ve gathered reinforce a significant opportunity for global expansion that is still largely untapped.
The urgency to address cardiovascular disease is immense. Despite centuries of advancements, it continues to be the leading cause of death globally. In 2021, approximately 20 million deaths were attributed to cardiovascular disease—marking a 22% rise over the previous decade. This statistic highlights the pressing need for effective treatment solutions.
Healthcare providers and patients alike emphasize the need to reduce cardiovascular risks. While traditional therapies focus on lowering LDL cholesterol, there is a much broader array of treatments that could help mitigate these risks—particularly VASCEPA and VAZKEPA. Within Europe alone, over six million at-risk patients qualify for VAZKEPA based on approved guidelines. Many patients globally rely on triglyceride-lowering fibrates and Omega-3 mixtures, yet these alternatives have proven ineffective in reducing cardiovascular events.
It is crucial that these patients access treatments that have been scientifically validated to lower cardiac risks, and this includes utilizing VAZKEPA as part of their therapy.
Our observations align with established scientific data supporting VASCEPA and VAZKEPA as effective treatment options, and we remain committed to ensuring patients receive the care they need.
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VASCEPA and VAZKEPA: A Growing Opportunity in Cardiovascular Risk Reduction
The past decade has seen over 300 scientific publications highlight the values of VASCEPA and VAZKEPA, primarily driven by groundbreaking research such as the REDUCE-IT trial. These studies show that using VASCEPA or VAZKEPA alongside statins can greatly enhance cardiovascular event risk reduction for patients around the globe. The findings have garnered support from more than 50 leading medical societies across 20 countries, establishing icosapent ethyl as a valuable therapeutic option for addressing cardiovascular risks.
This broad acknowledgment from the medical community includes thousands of healthcare leaders, prescribers, and various payers, all of whom recognize the product’s effectiveness. Continuous research is being carried out to examine its use in different at-risk groups, alongside ongoing investigations into how it functions in the body. Notably, VAZKEPA has considerable growth potential in Europe, particularly since its intellectual property has been extended until 2039, which boosts confidence in its future performance.
Since the FDA approved VASCEPA for cardiovascular risk reduction in the U.S., the market response has been overwhelmingly positive. Following the release of the REDUCE-IT trial results, demand skyrocketed, leading to significant growth in both prescriptions and revenue. Specifically, there was a 50% increase in prescribers, totaling 200,000 in the U.S., and more than an 80% rise in new prescriptions during the first year after the REDUCE-IT publication. Historical trends suggest that given time and effective promotion, healthcare providers will increasingly recognize VASCEPA as a beneficial treatment option for their patients.
As our focus shifts to Europe, we are in the early stages of expanding VAZKEPA’s influence. Currently, we’ve launched in eight European countries, but that represents only half the potential market access available. There’s room for growth and our teams are just beginning the educational process for these markets, aiming to enhance pricing and reimbursement routes to facilitate wider access for at-risk patients.
The same is true for our global markets where we have partnered with nine collaborators, actively working on reimbursement and market launches. Meanwhile, U.S. sales remain strong, providing a vital cash flow to support our overall operations. The combination of significant unmet needs for patients, solid backing from the scientific community, and the potential for expansion in Europe sustains our optimism for VASCEPA and VAZKEPA’s growth. We are committed to maximizing their reach to benefit countless patients, healthcare providers, payers, and shareholders alike.
Looking at our operational updates for the third quarter, we are more convinced of the recognition and validity surrounding VASCEPA and VAZKEPA. We are working on accelerating revenue in key European launch markets while addressing pricing and reimbursement processes. Earlier this year, we advanced our intellectual property in Europe, extending the security of our product through 2039, which will aid in realizing the product’s value for patients.
Our revenue continues to improve, particularly driven by market growth in the U.K., Spain, and Central and Eastern Europe. We’ve secured pricing and reimbursement deals in Greece and Portugal, and we are in discussions with authorities in Italy—hoping to share updates soon. In the U.S., VASCEPA has maintained a leadership role in the icosapent ethyl market, holding over 50% market share despite the challenges of generic competition. This strong market presence since the generic shift in 2020 demonstrates the unique advantages of VASCEPA.
Our global strategy is to expand access to VASCEPA/VAZKEPA through strong partnerships. For instance, in Australia, our partner CSL Seqirus achieved a price listing in the pharmaceutical benefits scheme, paving the way for public access to VAZKEPA starting in 2025. In China, our partner Eddingpharm received regulatory approval for VASCEPA for cardiovascular risk reduction, which marks a significant milestone, given the high demand for cardiovascular solutions in that market. Edding is actively working on achieving national reimbursement listing, which is crucial for market access.
These commercialization efforts are backed by our dedicated medical affairs, R&D, and regulatory teams who work tirelessly to promote the pivotal findings supporting VASCEPA and VAZKEPA. As we move forward, our focus remains on maximizing these opportunities to enhance patient access and improve outcomes on a global scale.
Amarin Reports Third Quarter Results Amid Challenges and Opportunities
The company focuses on expanding access to VASCEPA and VAZKEPA while navigating market pressures.
As we continue examining cardiovascular risk reduction in the U.S., Amarin and its collaborators are providing valuable data that enhances the medical community’s comprehension of VASCEPA/VAZKEPA’s role as a supplement to statin therapy. This is aimed at benefiting patients further.
This year, Amarin’s teams, in partnership with key opinion leaders (KOLs), have presented over 25 publications and abstracts. These contributions, both individually and combined, advance understanding of the science behind IPE and EPA. Notable instances include presentations at the European Society of Cardiology meeting in August and the European Association for the Study of Diabetes conference in September. Recent research has shed light on EPA’s influence on elevated lipoprotein(a) levels, recognized as a significant contributor to cardiovascular risk and mortality for vulnerable populations. Looking ahead, our team will also support three abstracts at the forthcoming American Heart Association meeting in November.
Our commitment remains to enhance the evidence supporting VASCEPA, VAZKEPA, and IPE’s utility. Progress has also occurred in regulatory approval for our products aimed at cardiovascular risk reduction in South Africa and China. In summary, our obligation is to make VASCEPA and VAZKEPA accessible to a broad patient base globally. Despite navigating challenging market conditions, as stakeholders increasingly recognize the strength of VAZKEPA’s clinical data, our confidence in its global potential grows.
Now, I will hand it over to Pete Fishman, who will discuss our financial results for the third quarter of 2024. Pete?
Pete Fishman — Vice President and Global Controller
Thank you, Aaron. Moving to Slide 8, I’d like to introduce myself as the new Principal Financial and Accounting Officer of the company. Since October 2022, I’ve been the Global Controller and have been a part of Amarin’s finance team since 2019.
With almost 20 years of experience in finance, including areas like accounting and financial reporting, I’m excited to step into this new role while collaborating with our outstanding global finance team. Now, let’s look at our numbers. In the third quarter of 2024, Amarin reported total net revenue of $42.3 million, which includes net product revenue of $41.9 million and $400,000 from licensing and royalties. This reflects a decrease from $66.1 million in total net revenue reported for the same quarter in 2023.
U.S. product revenue amounted to $30.6 million in the third quarter, down from $62.4 million a year earlier. This decline is attributed to lower net selling prices due to generic competition and reduced volume because CVS has switched from an exclusive contract. Still, the U.S. business remains a significant source of cash. European net product revenue reached $4.3 million, marking a $3.5 million increase from the prior year, mainly driven by growth in Spain and the U.K. The cost of goods sold for the third quarter was $26 million, compared to $36.2 million a year prior. Our gross margin decreased to 38% from 64%, due to the lower selling prices in the U.S.
Operating expenses for this quarter totaled $41.4 million, with $36.9 million in selling, general and administrative expenses, and $4.5 million in research and development costs. This shows a reduction of about $10 million compared to the previous year, helped by ongoing cost optimization efforts. Our GAAP net loss for third-quarter 2024 was $25.1 million, compared to a loss of $19.3 million in the prior year, reflecting pressures from the U.S. generic market.
Now, transitioning to Slide 9, I will touch on our cost control efforts and cash management. As of September 30, 2024, Amarin reported cash and investments totalling $306 million, which included a $15 million EDDING CVRR milestone payment this quarter, and we have no debt. Despite ongoing challenges in U.S. product revenues, we have consistently maintained a stable cash position over the last nine quarters.
Success can be attributed to our commitment to cash preservation, cost management, and pursuing ways to expand product revenue. Now, I’ll return the call to Aaron for concluding remarks before the Q&A session. Aaron?
Aaron D. Berg — President and Chief Executive Officer
Thank you, Pete. Moving to Slide 11, we want to underline the long-term potential of VASCEPA and VAZKEPA. This has been validated through what Amarin has accomplished and the recognition received from the medical community regarding our product’s scientific merit and patient impact.
Our future focus is straightforward: to leverage the proven advantages of our product to broaden patient access. We will emphasize the strengths and opportunities available. Over a decade, we have gathered significant scientific evidence, including over 300 publications and support from 50 global medical societies. The ongoing need to reduce cardiovascular risk is crucial, as cardiovascular disease continues to be the leading cause of death worldwide.
There are numerous unexplored markets in Europe and beyond where access can be expanded. We aim to accelerate usage in our key launch markets while ensuring we maximize VASCEPA and VAZKEPA’s value potential more rapidly. We remain committed to maintaining our public listing, which is vital for our company and shareholders. In addition to managing the business, we are evaluating options to regain compliance with NASDAQ regulations.
While we are making progress on our core objectives, we recognize that much work lies ahead. Accelerating performance is essential to unlocking the potential of VAZKEPA and VASCEPA—this is a dedication I share with the entire Amarin team. Before we transition to the Q&A, I want to express gratitude to our Amarin colleagues and partners globally for their commitment. Your hard work is invaluable to patients worldwide. Thank you.
Now, operator, we can begin the Q&A session.
Questions & Answers:
Operator
We will now open the floor for questions. [Operator instructions]. Our first question comes from Roanna Ruiz with RBS. Please proceed.
Unknown speaker — Leerink Partners — Analyst
Hi. This is Ali Mohammed at Leerink Partners, speaking on behalf of Roanna Ruiz. I have two questions. First, given the increasing rebates in 2024 for VASCEPA, what are your expectations for net pricing pressure in the short term? Additionally, are there any new trials or data points you anticipate?“`html
Amarin’s Strategy Amidst Generic Competition and Global Reimbursement Challenges
Aaron D. Berg — President and Chief Executive Officer
Thank you for the questions. We appreciate your interest tonight. Let’s address the current situation regarding rebates and pressure in the U.S. market.
Since November 2020, when we entered a more generic-centric landscape, we’ve managed to keep a 50% share of our volume. This achievement highlights our team’s dedication and the distinctiveness of our product. Nonetheless, competition has intensified.
As of now, eight generic companies are actively marketing in the U.S. We anticipate that the need for rebates will continue to rise. However, maintaining our exclusives has been beneficial in preserving our volume. We remain optimistic about our ability to compete profitably in the U.S. for the foreseeable future.
The reality is that as time progresses, pressures from generic competition will increase. Despite these challenges, we consistently manage to uphold our 50% share each year. We remain hopeful this trend will continue.
Now, let’s discuss strategies for enhancing reimbursement in Europe. Joining me is Dr. Steve Ketchum, our executive vice president and chief scientific officer. Steve, would you like to elaborate?
Steven B. Ketchum — Chief Scientific Officer and President of Research and Development
Absolutely. To support our brand globally, including in Europe, we are conducting various subgroup analyses in high-risk patient populations. This research not only interests the clinical community but can also inform pricing and reimbursement discussions, particularly for patients at high cardiovascular risk.
Over time, we’ve collected additional data points from research groups that reinforce the effectiveness of highly purified EPA. We will continue to integrate this information into our overall narrative.
Aaron D. Berg — President and Chief Executive Officer
I’d like to expand on that. If we were to discover a significant marker or data point that could enhance our platform and speed up the reimbursement process, we would certainly pursue it. Fortunately, we are well-prepared with substantial clinical data.
Challenges in reimbursement aren’t unique to Amarin; even leading pharmaceutical companies face difficulties in Europe. We feel well-prepared, managing the process as effectively as possible while always seeking improvement.
Our recent focus has shifted to acute coronary syndrome patients, who represent a higher-risk, more identifiable group. This strategy is not only aiding reimbursement efforts but is also enhancing uptake during the product launch.
We believe in our team’s execution and look forward to ongoing advancements. As previously mentioned, we anticipate more news about our progress in Italy soon. We are enthusiastic about what lies ahead.
Unknown speaker — Leerink Partners — Analyst
Great. Thank you for the update.
Operator
The next question will come from Jessica Fye at JPMorgan. Please go ahead.
Jessica Fye — Analyst
Hi. Can you hear me?
Aaron D. Berg — President and Chief Executive Officer
Yes, we can. Please proceed.
Jessica Fye — Analyst
I’ve noticed some positive revenue trends outside the U.S. Can you share what is driving this momentum? Additionally, could you discuss the growth dynamics in Europe? Lastly, regarding the net price for VAZKEPA in the U.S., do you foresee stability or further erosion?
Aaron D. Berg — President and Chief Executive Officer
Regarding the revenue momentum internationally, we’re still in the early phases of launching in several countries with new partners. Our U.S. experience shows that physician education and promotion typically yield positive responses. It may take time, but progress does happen. Currently, we have nine partnerships globally, and some regions have started to show results.
As for the growth in Europe, we are encouraged by developments in the U.K. and Spain, albeit for different reasons. We launched in the U.K. nearly two years ago, and after restructuring our strategy last year, we are witnessing notable growth. Spain has also welcomed our product positively from launch, and with reimbursement in Portugal, we are optimistic about continued success.
Our expectations for Italy are also high, alongside the potential for growth in partnerships elsewhere. We believe the foundation for our product’s performance is strengthening.
Regarding net pricing, I’ll invite Pete to provide insights on that for the U.S. market.
Pete Fishman — Vice President and Global Controller
Thanks, Aaron. As we move forward in this generic landscape, we face pressure on our pricing. The shift towards Medicare Part D from commercial channels, following CVS’s coverage changes, has led us to encounter higher discount rates within Medicare. Consequently, we anticipate continued pricing pressure in the market.
Aaron D. Berg — President and Chief Executive Officer
Thank you, Pete. Does that clarify your concerns?
Jessica Fye — Analyst
Yes, it does. Thank you very much.
Aaron D. Berg — President and Chief Executive Officer
Thank you.
Operator
Next, we have Paul Choi from Goldman Sachs. Paul, your line is now live.
Paul Choi — Analyst
Good afternoon. Thank you for the update…
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Amarin Discusses Capital Prioritization and Business Development Outlook
Your cash position has held relatively steady for several quarters now. But I think you’ve also discussed a share repurchase program. I just wanted to ask on the status of that. And secondly, as you think about business development opportunities and looking for potential pipeline assets, can you maybe just comment on how you’re seeing the landscape and your capacity there? Thank you.
Aaron D. Berg — President and Chief Executive Officer
Sure. Thanks, Paul. Thanks for joining us. So, prioritization of capital and on the repurchase.
Pete, do you want to address both of those?
Pete Fishman — Vice President and Global Controller
Sure. So, in terms of the repurchase, as you know, we did get approval to initiate a repurchase program. We have that ability to initiate it for 10 years. And similar to what we said last quarter, we’re continuing to monitor the business and market dynamics to determine whether we will commence that program.
At this point, we have not purchased any shares. Regarding our cash prioritization, we remain vigilant about our cash balance. For nine consecutive quarters, we’ve been neutral to cash-positive. This quarter, we received a $15 million milestone payment related to EDDING CVRR.
While we don’t anticipate any additional significant milestone payments next quarter, we continue to monitor cash flow closely and ensure that our investments are judicious, aiming for cost optimization.
Aaron D. Berg — President and Chief Executive Officer
As for the landscape for business development, our primary focus is on maximizing the potential of VAZKEPA and VASCEPA. We are seeing positive momentum after significant effort to grow these products. Gaining a strong market foothold is crucial for our growth trajectory.
Historically, we’ve been very intentional about managing our cash and operational costs. We’ve undergone several restructurings, including one last year focused specifically on expanding VAZKEPA in Europe, which presents an enormous opportunity. We now have a runway until 2039 thanks to significantly improved intellectual property protections in key markets, where we’ve only begun to explore our potential.
We’re fully committed to getting our products into the hands of more patients. While we remain focused on our current portfolio, we might consider additional products in the future. For now, our efforts are tightly aligned with our existing offerings.
Paul Choi — Analyst
OK. Great. Thank you.
Operator
This concludes the Q&A portion of the call. I would now like to turn the floor back to management for any closing remarks.
Aaron D. Berg — President and Chief Executive Officer
Thank you, John, and thanks to everyone for participating this evening. Just a reminder, on November 14th, we’ll host a virtual analyst and investor event focused on the VASCEPA and VAZKEPA franchise, especially key geographical markets that will drive our growth, with particular emphasis on Europe. You can register for this via Amarin’s corporate website. Thank you once again for joining us. Have a good evening. Bye now.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Mark Marmur — Vice President, Corporate Communications and Investor Relations
Aaron D. Berg — President and Chief Executive Officer
Pete Fishman — Vice President and Global Controller
Aaron Berg — President and Chief Executive Officer
Unknown speaker — Leerink Partners — Analyst
Steven B. Ketchum — Chief Scientific Officer and President of Research and Development
Jessica Fye — Analyst
Paul Choi — Analyst
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