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Amarin Corporation (NASDAQ:AMRN)

Q1 2013 Earnings Conference Call

May 9, 2013 16:30 ET

Executives

Joe Bruno - IR

Joe Zakrzewski - Chairman & CEO

John Thero - President

Fred Ahlholm - VP, Finance and Administration

Steven Ketchum - President of R&D, SVP

Analysts

Ritu Baral - Canaccord

Joseph Schwartz - Leerink Swann

Thomas Wei - Jefferies

Jonathan Eckard – Citi

Operator

Welcome to Amarin Corporations Conference Call to discuss its first quarter 2013 financial and operating results. This conference is being recorded to May 9th, 2013. I would now like to turn the conference over to Mr. Joe Bruno, Director of Investor Relations and Communications for Amarin.

Joe Bruno

Thank you for joining us today. Please be aware that this conference call will contain forward-looking statements that are intended to be covered under the Safe Harbor provided the Private Securities Litigation Reform Act. The example of such statements include but are not limited to our current expectations regarding financial performance and plan for commercialization of our approved products and product candidates including supply related activities and level of expenditures and revenues and the adequacy of our financial resources. Our current expectations regarding regulatory filings, government agency decisions, potential indications and commercial success for our product and product candidates. Our current expectations regarding our cardiovascular outcome study and the potential implications of such studies on our regulatory process plan to protect the commercial potential of our product candidate and approved products through patents, regulatory exclusivity, trade secrets and manufacturing barriers to entry. Our current expectations regarding potential strategic collaborations and our expectations for future publication and presentation of our study data.

These statements are based on information available to us today, May 9, 2013. We may not actually achieve our goals, carry out our plans or intentions or meet the expectations disclosed in our forward-looking statements. So you should not place undue reliance on these statements. Actual results or events could differ materially. 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 agreement that we may enter into or terminate.

For additional information concerning the factors that could cause actual results to differ materially, please see the forward-looking statements section in today’s press release and the risk factors section of our most recent Form 10-K, each of which were filed today with the SEC and are available on our website 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 Amarin's Vascepa outside of its approved indication. In addition, please note these remarks will contain non-GAAP financial measures, as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found within our Q1 financial results press release. Finally, an archive of this call will be posted to the Amarin website in the Investor Relations section.

I'll now turn the call over to Joe Zakrzewski, Chairman and Chief Executive Officer of Amarin.

Joe Zakrzewski

Thank you Joe and welcome to all those who are available to be with us today. During this call we will review our recently accomplishments and milestones, update you on the (inaudible) and other operational activities and speak to Amarin’s financial performance in the first quarter of 2013. We will also take few questions from those on the call. I’m joined on today’s call by John Thero, Amarin’s President; Steve Ketchum, our President of R&D; Joe Kennedy our General Counsel, Fred Ahlholm, our VP of Finance; and Joe Bruno our Director of Investor Relations.

As our 2012 year end call we have advanced key objectives in a number of areas including recognized Q1 revenue from Vascepa sales of 2.34 million and this is part of the 5.2 million in sales for wholesales. The (inaudible) access for Vascepa was over 190 million lives and are now covered by payors including earlier than expected Tier-2 preference for 40 million of these lives to getting in April and May of this year. To see FDA acceptance for review of our supplemental NDA seeking approval for the marketing and sale of Vascepa capsules for the larger ANCHOR indication for use as an adjunct to diet and the treatment of adult patients with high triglyceride with Mixed Dyslipidemia. This is the group of 200 to 499 triglyceride (inaudible).

We seek FDA approval for two additional active pharmaceutical ingredient manufacturers or API compilers both Chemport and BSF that increases to the number of three are now qualified API suppliers. We believe that leads the future API cost reductions of upto 50% or more. Increased patents issued or allowed are 22 in the United States, having added 11 since the end of 2012 including three since our last press release on this topic. All the two of these patent terms that go into 2030 and beyond. We also have an additional 30 patent applications currently being prosecuted in the U.S.

Reported statistically significant reductions of apolipoprotein C-III from our MARINE and ANCHOR Phase 3 clinical trials. As you know for two months of Q1, 2013 we implemented direct selling efforts of Vascepa in the U.S. for our 275 pertinent sales force. We are early in the launch and Q1 results reflect on the two months of commercial launch activities, we are pleased that access to clinicians have been very good. In addition at the macro level we’re pleased that we have yet to hear any significant negative reactions, we have to see our safety profile of Vascepa.

That may sound obvious given the strong efficacy and safety profile of Vascepa, however there are surprises when products began to be sold and a lack of any meaningful negative reactions reassuring that we haven’t missed anything. We have also heard considerably favorable comments from the field and currently have had over 4000 clinicians for a written prescription for Vascepa. Many of them have provided us with positive feedback regarding the response of their patients to Vascepa including multiple accounts of patients who have been on alternative therapies witness their LDL-C levels drop after discontinuing those therapies and starting in Vascepa.

Our sales professionals are targeting the limited groups of clinicians who are the highest prescribers of other lipid therapies. The universe consist of slight more than 30,000 clinicians, this (inaudible) group of clinicians include certain lipidologist and cardiologist as well as certain general practitioners who have a history of regularly prescribing other lipid therapies. During the early month of selling Vascepa most of the clinicians in this group have been seen by Amarin representatives at least once with a majority of them having them seen three or four times.

For a new drug launch particularly for drugs which have prevented a fair piece for chronic ailment, day sales suggest that approximately 5 to 10 businesses are needed to change practice patterns. We are witnessing that for those clinicians who have been visited more than five times with the levels of script writing is the highest. We are marketing Vascepa for uses and adjunct to diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia trigged over 500. This is the approval for initial indication for the products which we refer to as the MARINE indication.

We believe that Vascepa is well differentiated in this market based on it's safety profile with similar to placebo and expect from a demonstrated lipid benefits including statistically significant reductions in triglycerides, Apo B, non-HDL-C and VLDL-C with no increase in LDL-C also known as bad cholesterol.

We’re finding that many patients on other therapies intend to lower triglyceride are off on (inaudible) our cholesterol management would also have the effect of slightly reducing triglycerides levels as well. Prior to our MARINES trial it was expected based on the experience of clinicians that having a triglyceride lowering therapy on top of the statin did result in less of a triglyceride lowering effect than in the population not on statin therapy because the statin had already lowered the triglyceride baseline. The Vascepa in the MARINE trial we experienced the striking result of triglyceride reduction on top of statin getting stronger than the overall cohort of patients but the triglyceride in this group of patients decreased 65% beyond the level of triglyceride reductions provided by the statin priority and placebo.

This type of favorable but unexpected results of Vascepa as an add on to statin therapy is an example of type of subject matter that we have found clinicians appreciate it on Vascepa. Despite all taught in medical school clinicians also now appreciate that it is possible as was demonstrated in the MARINE trial, the triglyceride can be lowered in patients with very high triglyceride levels without increasing LDL-C. With the growth that has a safety profile similar to placebo. This series is further supported by the data that shows statistically significant reduction in LDL particle concentration seen with Vascepa in those same patients.

Many clinicians have put a few patients on Vascepa to witness the results for themselves. Some clinicians have put themselves on Vascepa, from these clinicians we have gotten the earliest and the strongest positive feedback; at the time of launch it was the key opinion leader in the country that represented the bulk of physicians who were intimately familiar with Vascepa and the clinical profile. Now we have 100s of clinicians who want to be speakers on Vascepa to help educate their peers about the safety and efficacy of the product. The education of clinicians is supported by continuing medical education grants and by our marketing programs including speaker programs plus activities such as participation and industries trade shows.

Our marketing activities are relatively limited and targeted at this time in particular we are not doing any extensive advertising or consumer outrage which is very expensive and can be wasteful until the clinicians are better educated on the merits and use of Vascepa. Our valuable co-pay card program eliminates patients first month co-payment in full upto $75 and then (inaudible) co-payments for script rebuilds to $25 throughout 2013. In essence this co-pay card is becoming part of our sample program. However co-pay product by law is not allowed to be used in conjunction with government regulated programs such as Medicare Part B.

This leads me to the discussion of a very important topic in managed care having specific not enough to get script written we need to get scripts filled. On the managed care product side, at the time of launch we had no Tier-2 coverage. This is typical for any new drug this is why we instituted the co-pay card program that will offset the differential between Tier-2 and Tier-3 co-payments for patients. We have made co-pay card widely available to patients via clinicians, pharmacists and the internet. Nonetheless the preferred path for clinicians and patients is get to Vascepa on the favorable covers of major managed healthcare plans. Our progress this quarter with managed care has exceeded our expectations. It is not typical to get Tier-2 convergence within the first three months of launch, but we have been able to do so. We have succeeded in migrating over 40 million lives from Tier-3 to Tier-3. Our status throughout April and the 1st of May and we anticipate this progress to continue. It’s important to realize however that results from these managed care victory can take time to be pull-through. So, it may take as much as two to three months, it’s even favorable, our coverage reflected in the increased script data.

We have approached managed care plans with messages around the safety and efficacy of that data. Once the performance of that, it was made clear including no increases in LDL-C and consistent performance in diabetic and non-diabetic populations. Many payors have been quick to move to coverage. Getting payor approvals requires many steps. Typically, you begin to see a tray and migrate ultimately to Tier-2. As we shared earlier, we have a total coverage universe of 190 million lives including the 40 million lives that are now in Tier-2.

We lost our witness to number of plans putting prior authorizations because of the heavy off label use of our competition. We believe that those prior authorizations that now impact us and our competition will go away assuming we get the approved ANCHOR indication at the end of this year, which we believe will be a huge competitive advantage for us. Based upon data that we have seen thus far and feedback from clinicians who have patients in Vascepa, we believe that initial Vascepa used is predominantly unavailable and we are being careful to market it as such.

Our highest priority for (indiscernible) for Tier-2 has been with Medicare Part D plans. While we had no Tier-2 coverage upon launching Vascepa as we stated earlier, through May 1 we have two-thirds of the Medicare Part D lives covered. These include wins at CVS Caremark and Express Scripts. We anticipate continuing these projects and thereby making it more convenient and less expensive for more patients to get Vascepa. You should also add to the components of clinicians that is a right script for Vascepa that it will be felt. During Q1, we witnessed a high level of scripts being rejected and many of them were from Medicare Part D. Based on the preliminary Q2 reports, these Tier-2 wins appear to already be helping significantly with that hurdle. We are working to ensure that pharmacist and clinicians are aware of these Tier-2 conversions.

We are also progressing with Tier-2 wins with commercial payors. Express Scripts, for example, recently converted the Tier-2 and we are pulling through to the next level of their plans and progressing towards Tier-2 conversions with other plans as well. We are making these gains about staying within our overall pricing targets and leveraging the safety and efficacy profile of Vascepa to secure our increasingly well-received position in the market. On the sale of results front, the start of our commercial launch of Vascepa, I was asked on our year end results call about how long it will take where script data is meaningful? I commented that based on other launches, it would likely take a couple of full quarters before script data is reasonably accurate. That assessment still holds through as we are still seeing significant differences between the various script estimating sources that are out there.

Accordingly, well I am about to make some comments about script results, I remind everyone that it is very early in the launch still for Vascepa. I believe and we believe we are making good progress with respect to the sales of Vascepa for the current indication and then we are also awareness of Vascepa and establishing reimbursement of Vascepa which should serve us well when the ANCHOR indications can be marketed. The best available public indicator in monitoring Vascepa’s performance, are normalized TRXs or normalized total prescriptions. These normalized prescriptions basically adjust each prescriptions of 120 capsules or one-month supply.

So, even monthly IMS and Symphony data is generally understood to provide incomplete estimates and have historically underestimated the actual scripts for new product launches, including we believe ours, this is the more accurate assessment than we see on scripts. For other drug launches, weekly data has underreported significantly as I previously heard to. On the Vascepa sales side, in the three months since launch, February and March which were part of the first quarter and April part of the second quarter which we can report today, we recorded 3200, 7200, 11,800 prescriptions normalized TRXs approximately. This brings the total number of prescriptions to well over 22,000. Week to week growth continues to look strong and since the launch of our 4000 clinicians to prescribe Vascepa. Looking at this early trajectory the Vascepa launch has shown nice strength, comparable to some recent big pharma cardiovascular launches that is (inaudible) and some would argue would outperform some of these examples. At part of the script data we have also begun to see retails of Vascepa which they funnel our results of here would be tracking to expect the repo rates. Our TRx to NRx ratio or expansion ratio sit around 1.25 again in-line with what we would expect. That this numbers have close to 1.1 the reflection of our successful NRx growth (ph) in the launch period. What you want to see for as long as possible in launching a new agent and what we are seeing about depot is that NRX (ph) growth is outpacing TRX growth. A larger TRx to NRx ratio would mean that we have slowed or stopped growing NRx and we are happy to report this is not the case. We look forward to this trend continuing as we begin to see additional script data for Q2 and beyond.

Our shipments of Vascepa the wholesale as in Q1 exceeded the reported script estimates, all of our major wholesalers have paid us in full and on schedule for our initial Vascepa shipments to them. In addition we have begun to ship weekly order to wholesales. We monitor the number of Vascepa bottles would ship from the wholesalers to retail pharmacies on a daily basis which numbers thus far consistently and significantly exceeded the number of scripts reported by IMS and Symphony.

This is important because early in the launch many pharmacies do not stop product but we can use as a proxy of shipment from the wholesalers to retail pharmacies as a very good sign. On the revenue front as Fred will discuss in a moment regarding our financial results we recognize 2.34 million in revenues for Q1. The accounting for revenue recognition is quite complex for an early stage launch. We also have been very, very conservative with our estimates. The amount of revenue we recognize does not reflect revenue for all the products we ship to the wholesalers in Q1 but rather the resale of Vascepa by those wholesalers.

More of the amount is intended to directly tie to script estimated by third party sources. We do believe this revenue amount reasonably reflect the economics of our Q1 results in a manner which is consist with revenue recognition policy as described in our 10Q during the quarter ended 3/31 the net dollar of Vascepa sold to wholesalers was $5.2 million therefore the company recorded deferred product revenue of 2.9 million in Q1 under gain in addition to the 3.34 million in revenue recognized under GAAP.

We are witnessing many positive signs in the market and we are encouraged by the progress our sales professionals are making out in the field. Amarin has not provided specific guidance regarding Vascepa sales targets as it's still too early to make accurate estimates on the sales trends of the product. But we are now prepared to provide guidance at this time. However, script data will continue to be available for all of us to see and we are not restricting access script data from IMS or Symphony Health. With regard to cash warrant (ph) we expect Q1 will prove to have been our most challenging quarter of 2013 and our cash earn per quarter is certainly expected to go down from here. Project education and awareness combined with continued reimbursement progress are key to our success as we in parallel prepare for greater opportunity with the ANCHOR indication. On the ANCHOR indication front in Q1 we received notification of allowance of three patents regarding the planned indication for ANCHOR further strengthening the IP position for Vascepa. We hope these imposed on many on ANCHOR and since our last conference call with investors we submitted and had access to sNDA for the ANCHOR indication.

The FDA has signed a PDUFA date of Saturday December 21, 2013 so our PDUFA date is effectively Friday, December 20. As previously announced in the ANCHOR study, Vascepa demonstrated statistically significant reductions in a broad spectrum of lipid and inflammatory markers on top of optimized statin therapies including significant reductions in LDL-C. As earlier discussed it is important to note that these results are incremental and on-top of the benefit provided by optimized statin therapy alone. The ANCHOR indication upon approval which is the seven short months from now would enable Amarin to market and sell Vascepa for use in adjunctive diet in the treatment of adult patients with high triglyceride that have mixed dyslipidemia, the patient population that has 200 to 499 scripts. Approximately 40 million adult Americans or one in five had triglyceride levels of at least 200. So, it’s 10 times more than the patient population in the MARINE. As seen in ANCHOR, a daily Vascepa dose of 4 grams, all the primary and secondary efficacy endpoints of the ANCHOR trial were achieved. In addition, the safety results from the ANCHOR’s trial are already included in the current label of Vascepa. As a result of these things, Amarin is optimistic that the FDA will approve Vascepa for this indication.

Let me also note at this point in time, that no other Omega-3 therapy is approved for the ANCHOR indication. The REDUCE-IT trial has an update through our cardiovascular outcome study that is substantially underway. Our enrollment continues to progress well and we have exceeded well over 4,000 patients and we currently have more than 400 sites in 11 countries enrolling patients in the study and continue acceptance to enroll to its full completion of approximately 8,000. As we previously stated, the results of the study will not be available until specified number of cardiovascular event has been observed, the timing of which is not expected in the near term. The current level of enrollment for REDUCE-IT has exceeded the requirement as outlined in our special protocol assessment agreement with the FDA for the ANCHOR indications who have been accepted, which as you know happened last month. This is yet another reason why Amarin is optimistic that the FDA will approve Vascepa from the ANCHOR indications.

On the combo product front, Amarin is in the late stages of evaluating the results of the pharmacokinetic study, Phase 1 study that we completed on the fixed dose combination of Vascepa and a leading statin. I have previously mentioned in the MARINE trial, the triglyceride reduction seen with Vascepa on top of the statin was stronger than that in the overall cohort of patients. In fact, Vascepa reduced triglyceride levels in the statin-treated group above and beyond statin alone of 65%. While we have not finalized next steps in development of this combination product or series of combination products, we are happy to say that we see progress in confirming the feasibility of special combination products and look forward to providing additional update in this topic by the end of the second quarter.

On the status of Vascepa supply, in the fourth quarter of 2012, Amarin submitted two initial sNDAs, one for BASF and one for Chemport for active pharmaceutical ingredient, API. Both of these sNDA filings were approved in April of 2013. Qualification of these suppliers is part of the Amarin’s strategy to expand our supply chain to provide greater capacity that need anticipated demand, enable supply diversification and flexibility, and enter this competition among quality suppliers that will lead to a reduction in supply cost of greater than 50%. With the approval of these suppliers, Amarin now has three qualified API suppliers for Vascepa with plan for the submission later in 2013. In time, we expect the addition of these multiple suppliers, gross margin was a steady state that falls in the high 70% to low 80% range. And while we have been working to qualify these additional suppliers, mission has been steadily producing Vascepa to meet our anticipated 2013 demand.

Regarding intellectual property, Amarin continues to make significant progress in its efforts to expand patent protection for Vascepa and now has 22 patents issued or allowed with over 30 additional patent applications being processed here in the United States. This is inclusive of three additional allowances into our last press release regarding patents and brings the number of patents issued in the first quarter alone to 11. The three most recent allowances each cover incrementally expensive methods of use regarding the MARINE indication. Our aggregate patent portfolio includes claims covering key elements of Vascepa’s pharmaceutical composition and methods of use for the MARINE indication, ANCHOR indication, and other potential uses of Vascepa.

Amarin is also pursuing patent applications related to Vascepa in multiple jurisdictions outside the United States. All of the patents we have issued to-date have actually for 2013 and beyond with the exception of two. Patent protection for Vascepa is augmented by protection provided by trade secrets, manufacturing barriers to entry, and three or five years of regulatory exclusivity. As we are all well aware and FDA termination on NCA status is still currently pending. At this time we do not have any further indications from the FDA as to when they will make a determination on Vascepa regulatory exclusivity protection. If Vascepa is not granted five year exclusivity it would be granted three year exclusivity because the MARINE studies well in a new clinical investigation of a new drug product. As I have said in the past given the strengthening of our patent portfolio with 11 new patent issued just this quarter each with terms of goal in 2013 and beyond and a total of 22 in total combined with our manufacturing barriers to entry and our trade secrets NCE is clearly becoming less and less important. I have now Fred Ahlholm, Amarin’s Vice President of Finance to comment on Amarin’s first quarter 2013 financial results.

Fred Ahlholm

Thank you Joe. I will provide some commentary regarding our financial results and you will find a more detailed discussion of our results and our 10Q and press release issued earlier today. Amarin began recognizing revenue from the sale of Vascepa in the U.S. in January 2013. Though detailing of the product do not begin until Vascepa’s commercial launch on January 28, 2013. We reported net product revenues for the quarter ended March 31, 2013 of 2.34 million in accordance with U.S. generally accepted accounting principle or U.S. GAAP.

We certainly have more operating history with the commercialization of Vascepa we are recognizing revenue not on our sales to wholesalers but on the resale of Vascepa by the wholesalers. During Q1 the net value of Vascepa sold to wholesalers was 5.2 million and as a result in addition to the 2.34 million in recognized revenue we reported deferred revenue of 2.9 million at March 31, 2013.

Cash collections from the sales of Vascepa in the period ended March 31, 2013 were approximately 2.9 million with an additional 2.2 million related to the net Q1 sales collected from wholesalers in April 2013. Consistent with industry practice the net prices of Vascepa in Q1, 2013 reflected a deduction of a onetime discount made to wholesalers to stop Vascepa in advance of Vascepa’s launch in January 2013 as well as the cost of our co-payment rebate card program in customer payor rebates and allowances.

Cost of goods sold during the quarter ended March 31, 2013 was 1.3 million. All of the Vascepa capsules (ph) sold during the first quarter of 2013 included API source from a single API supplier. Amarin’s purchases of API from the supplier in 2012 and early 2013 are at a higher cost for retail and expected for future purchases from the supplier. The unusually high cost of goods as a percentage of revenue is attributable to another things including start-up costs, geography, discount to wholesalers, exchange rate exposures, lower volume and less favorable economic terms than those with other manufacturers. We expect steady gross margins to approach the high 70s to low 80s as a percentage of revenue. We also anticipate purchasing API from BASF and Chemport to which sNDAs were approved in Aril 2013.

The API cost for BASF and Chemport are significantly lower than the cost previously incurred for purchases of API from our initial supplier. Under U.S. GAAP we reported a net loss of 62.2 million in the first quarter of 2013, our basic and diluted loss per share of $0.41.

This net loss included 4.9 million in non-cash share based compensation expense, 0.5 million in non-cash compensation income and a $3.6 million gain on a change in the fair value of derivatives. In the first quarter of 2012 GAAP net loss was 88.3 million or basic and diluted loss per share of $0.65 and included 3.9 million in non-cash share based compensation expense, 2.4 million in non-cash warrant compensation expense and a $56.2 million loss on the change in the fair value of derivatives.

Excluding non-cash gains and losses from share based compensation warrant compensation and change in value of derivatives non-GAAP adjusted net loss was 61.4 million for the first quarter of 2013 or non-GAAP adjusted basic and diluted loss per share of $0.41. As compared to non-GAAP adjusted net loss of $15.8 million or non-GAAP adjusted basic and diluted loss per share of $0.12 for the same period in 2012. Amarin reported cash and cash equivalents of approximately $201.8 million at March 31, a net decrease of $58.4 million from our reported $260.2 million in cash and cash equivalents at December 31, 2012.

Net cash outflows in Q1, 2013 included approximately $32 million paid for sales and marketing related expenses in conjunction with the initial commercial launch of Vascepa, approximately 13 million patents supported the REDUCE-IT cardiovascular outcome study and approximately 11.8 million for Vascepa API purchased in conjunction with the buildup of our commercial supply for clinical trial material.

We believe that our cash and cash equivalents balance of $201.8 million at March 31, 2013 is sufficient to fund our operations for at least the next 12 months, including the initial commercialization of Vascepa and the advancement of the REDUCE-IT cardiovascular outcome study. During the three months ended March 31, 2013, we acquired approximately $11.8 million of Vascepa API, of which $8.8 million was capitalized into inventory at March 31, 2013, and the balance of which was included as component of research and development expense, because it was received from suppliers prior to their April qualification by the FDA.

The company’s liabilities as of March 31, 2013, excluding the fair value of the non-cash warrant derivative liability totaled approximately $282.4 million, which includes $137.7 million for the carrying value of our exchangeable debt, and $85.9 million for the carrying value of the hybrid debt financing that we entered into in December 2012. That concludes my prepared comments. And I will now turn the call back to Joe. Joe?

Joe Zakrzewski

Thanks, Fred. As an organization, we are excited to report our accomplishments to-date regarding our launch of the MARINE indications and our operational activities. We are also excitedly looking forward to even greater opportunities, we move closer to December 20 and the PDUFA date for the ANCHOR indication. 2013 will continue to be a year of execution. We believe that we continue to reach our milestones as they relate to our operational priorities we will bring significant value to shareholders. These operational priorities includes increasing revenues from Vascepa through daily execution by experienced sales force as they continue along the path of success that they have crowded from February through today. In signaling the earlier than anticipated managed care migration from Tier-3 to Tier-2 coverage allowing more patients cost effective access to Vascepa. Gaining approval of the ANCHOR indication, it is sNDA PDUFA data is scheduled for December 20, 2013 about seven short months away from now.

Our pending additional patent awards on the U.S. PTO further securing our IP position for Vascepa. And finally, continuing to excel and deliver on our current supply chain commitment, including the anticipated sNDA submission for our (indiscernible) high supplier all of which drive our cost of goods down significantly. Thank you for your time today and for your interest in Amarin. I would now like to open the call for a few questions. Operator?

Question-and-Answer Session

Operator

Thank you. We would now be conducting a question-and-answer session. (Operator Instructions) Our first question is from Ritu Baral of Canaccord. Please go ahead.

Ritu Baral - Canaccord

Thanks guys for taking the question. Joe, some detail on the promotional efforts do you guys have underway, have you guys determined an average number of details required for prescription for your reps and you had mentioned that sort of threshold is being detailed five times, do you have an estimate of the percentage of your target docs that have been detailed five times to-date?

Joe Zakrzewski

Yeah, well, Ritu yeah hi. Good to hear from you as always. I would tell you we are getting a lot of scripts written after the first, after the second, and after the third, but we see this inflection when we get about five or six. I would say to you we are probably depending on the data and how you look at it, because again don’t forget that we see this data a week or two behind. We are probably there with a week or two behind, we are probably there with the third to half of the folks and we continue to see this trend picking up and the whole awareness thing it's out there. So I would say about third to half we are there on. Okay?

Ritu Baral - Canaccord

And would you expect that all of the target (inaudible) and detailed five plus times five the next earnings call?

Joe Zakrzewski

I would expect about 70% to 90% depending on where we end up and the reason I caveat that is and we had great receptivity from the doctor’s right? So they all want to see our folks but there is always a couple of them that may say you got to cancel or I have got this going or that going on or they might be in for example Wisconsin or Minnesota which is a little bit trickier to get to see them but I think we should see clearly significant gain as we get to the next conference call in the first or second week in August.

Ritu Baral - Canaccord

Got it and last question relating to interims coverage and prior auth.? Are there prior authorization requirements that any of your Tier-2 coverage is right now and what are the prior authorization requirements that you’re seeing either in these?

Joe Zakrzewski

Yes most of them are not there at the Tier-2 side, if there are there might be somebody that says well because there is all the off-label stuff going on for your competition, we’re going to put in it at 500 for you and by the way we’re going to go back and grind further into them. It's a little trickier for us because clearly we are new in launching but what really happens for us assuming that that’s case and again it's limited on Tier-2 but when we get to ANCHOR if you think about it right now the catch is we are approved for the same indication as our competition, when we get to ANCHOR the answers we are the only one to prove for this we would see our prior auths dropping and all the prior auths for the competition staying in fact being added across the board. So what we’re really doing right now beyond getting our brand out there and getting to know all the doctors better and better, is we are building awareness and that’s a big thing, building that awareness because we know a 1000, 2000 docs before we launched pretty well the 30,000, 35,000, 40,000 will take a while to build the brand and we’re really starting to see that. On the other nice thing we are seeing is a lot of doctor testing themselves or their patients so we have one doc who not does LDL down almost in half when he switched from Lovaza to our product.

We have other doctor with same trigs (ph) go down another 100 or 200 mgs (inaudible) on our products for their patients and try the LDL. We have seen other docs that see saying about the same but still driving LDL down and the more these doctors see that the more the doctors are sort of embracing our product and so between that the awareness and all the other stuff, we didn’t see this all coming to ahead as we launched ANCHOR.

Operator

Thank you. Our next question is from Joseph Schwartz of Leerink Swann. Please go ahead.

Joseph Schwartz - Leerink Swann

I wanted to get your thoughts on why you think you might be ahead of plan on the Tier-3 to 2 conversions and what are your goals for the rest of the year?

Joe Zakrzewski

Yeah we setup Tier-3 to Tier-2 conversions originally that were based probably on what let’s call what we did with Lovaza plus a little more aggressive, okay? The reason we think we are so far ahead at this point is that A, the managed care plan get it. They get the benefit of the trig lowering with a no-LDL increase the no-(inaudible) label all the other benefits that we provide side effect wise and the inflammation markers. I will also tell you that sometimes the big pharma companies can be a little bit painful to deal with let’s say at these companies for managed care and I think we have been through this, we have tried to be nimble we have tried to be effective and I think they respect that they are not dealing with the behemoth, they are dealing with somebody that works with them. So I think and I also will tell you that I think you know at least in the lab (ph) basis our price is lower I think as you see people going into a launch of a new product and people start raising their, the competition, it rubs people the wrong way. So great products, great working relationship in terms of where we are going to end up now I would tell you we’re about three to six months ahead of where we expected and I expect that we continue to accelerate beyond that. I’m not prepared to give any other answers at this point. I would tell you that even once you get these lives, it still takes you two to three months to really pull them all through, because it’s just a more complicated market than it was previously, but we are really happy with where we are right now on the Tier 2.

Joseph Schwartz - Leerink Swann

Alright, great. That’s helpful. Thanks. And then you mentioned that you are not having to get big discounts, can you give us some insight into what the gross to net is?

Joe Zakrzewski

I would tell you that the best thing I can say right now is the first quarter is an anomaly. What I said to people historically is our rack price, I think it’s roughly its $184 plus or minus a month which forecast to be above 50 uphill. I think we said to folks that roughly we expect to have the same net sales as our competition per pill was about up $25. We were a little below that in the quarter, a lot of that due to the coupon programming, different things of that nature. We had the biggest impact on that. It drives your net sales down, but I am not overly worried about what managed care is going to do it, because we are right on target with everything that we are doing, but without going into the first numbers, it should get better as we get out in the rest of the year.

Joseph Schwartz - Leerink Swann

Great, keep up. Great work. Thanks.

Joe Zakrzewski

Thanks Joe.

Operator

Thank you. The next question comes from Thomas Wei of Jefferies. Please go ahead.

Thomas Wei - Jefferies

Thanks. I wanted to get a little bit more of an update on your thoughts and the progress you’ve made towards determining the commercialization strategy for the ANCHOR indication?

Joe Zakrzewski

Yeah, I mean, Thomas, we are heavily into that as I always – as I have been saying lately, we focus on those five key things driving sales, driving managed care, driving ANCHOR patents, driving ANCHOR approval and supply everything else would take care of itself. We still are in what I will consider, sure, if guys as always dialogue, I don’t want to say too much else. I think what I would continue to say though is we don’t see ourselves hiring a primary care sales force. They have a lot of unique ways you can do this, and we are aggressively looking at all of them, but I think the (indiscernible) right now would probably be premature and presumptive.

Thomas Wei - Jefferies

Can I just clarify when you say not hiring a primary care sales force, does that include or basically does that also preclude the option of a contract sales organization to market ANCHORs that you are really looking towards the partnership crew?

Joe Zakrzewski

Yeah, no, it doesn’t preclude that. What I would say to you is as I think you have said before is that from a partnership perspective, you are really trying to do something you want to tie the assets up, you don’t want to sell the company by another means, long-term licensing deal. What you might do is co-promotion deal, for example, where you could access a thousand reps, for example, that are out there for a few years, just as an example, okay. And whether you do that will take form or contract sales, who knows, I am not big on contract sales organizations, yet you have to have the people to have accountability to somebody, and not that the contract sales organizations don’t serve a purpose, but those folks really don’t work for anybody. So, I think the people really need to work for us or they need to work for somebody else. I think the (indiscernible) you should be thinking about when I talk about primary care is primary care is 500 or 1000 additional reps. That’s not something that we intend to do, right, that’s just people shouldn’t expect to wakeup tomorrow and we are announcing hey, look at this we are hiring all these people, that’s not what we are going to do, it’s about being efficient and leveraging. And then of course, there are other options out there where other creative structures could come into play.

Thomas Wei - Jefferies

Thanks. That’s actually very helpful. And then just one last one, I am trying to use like you said about cash burn to get a better sense of how to model out the R&D and the SG&A lines, especially I guess the SG&A lines for the rest of quarter, is any other help that you can give us on how to think about SG&A relative to the first quarter?

Joe Zakrzewski

Well, I don’t expect SG&A to grow significantly from here, okay or at all. In fact it might actually come down a bit. And what I really expect to see happen are the sales to continue to grow and if sales continue to grow and SG&A, let’s call it, flat who knows where it went up exactly. That’s my comment on why I expect cash to continue to drop as we go by. Again, I am sort of looking into a crystal ball here, Tom, as you know, because there is a lot of things that we don’t know yet. We are seeing great script trends so far. We think for the last few weeks last few weeks we were close to 3000 on TRx’s over 3000 if you use normalized TRx’s last week and we like what we are seeing, we like to response from some of the doctors, the managed care, we like the shipping patterns, the buying patterns, we are seeing both from the wholesalers and then shipments to retailers, it feels right for us.

Operator

Thank you. Our next question is coming from the line of Jonathan Eckard of Citi. Please go ahead.

Jonathan Eckard – Citi

I was wondering if you’re able to provide any kind of relative details about the negative sampling program versus the amount of scripts you have in the first quarter and if there is any feedback on the conversion rates of patient getting samples that convert to scripts and what the potential impact of this could be in the next few months as you do see patients convert.

Joe Zakrzewski

That’s only too much on the sample side, we have done quite a bit of it, we have had two different samples out there, we have had what I call two to four day sample packs out there and then we have got the initial program we had with the one month sample packs out there that were trying to get our high prescribers going. Those were pretty on everyone’s hands and I think we expect to see those sort of going away. What we’re trying to do is set this up where doc is reaching to his closet grab a handful of samples, given them to a patient, potential patient and maybe that upto a week of supply or four to seven day supply and then they get the script written. So I think the samples are always been an important part for us but when you’re dealing with the four gram per day drug and one that’s frankly doesn’t have cost of goods approaching zero then you got to be careful how you manage that, I expect we will continue to see very robust returns from our samples, to-date it's been very, very positive with those doctors who are using samples and accessing samples.

Given out any more information in that probably a little tricky, John I think just to be clear the sample numbers are in our marketing expense

John Thero

They are.

Joe Zakrzewski

They are so they are not, sometimes people say oh are they in your cost of goods? But they are in our marketing expense and I think we would probably expect the sample not the big bottles going forward that was a onetime program but I think the small sample packaging grab them to give to the patient and get them started is really what we are going to be about going forward.

Jonathan Eckard – Citi

Okay and if I can just ask a quick question, if I take your normalized script numbers that you have in the press release and compare that to the sales number, equates to 223 per script. I’m just wondering is that difference because the normalized script numbers are maybe a little off or how you accounted for?

Joe Zakrzewski

Yes I have a feeling well I don’t think those are comparative Jonathan because what’s happening is we know there are more shipments being made we worked very closely with our accounting firm to figure out what the net sales were and so it's not an apples to apples comparison, John you want?

John Thero

That’s right thing and our revenue is on the data and we provide that data more on the scripts, this is what’s available on the (inaudible) and we do think it's representative of the month to month trend as we Fred stated in his comments we believe those numbers are understated and take one data that’s available to us we recognize revenue based on what we believe the actual level of activity was out there. So the number of scripts in which generally recognize higher than the number that you’re referring to.

Operator

Thank you. (Operator Instructions). That is all the time we have for question, I would like to turn the call back over to management for any additional remarks.

Joe Zakrzewski

Look everyone it's great to have everyone on board on the call. This was our first quarter of launch, a partial quarter two months, we look forward to chatting with everyone our first full quarter in August but all the signs we’re seeing right now, we feel very good about from the sales side, the managed care side the R&D side, the legal side, across the board things look very positive. I did want to make one other comment that based on a number of call that have gotten today on the New England Journals, medicine article that some of you not may have seen I guess that’s call on article it's probably more of a compliment than it should have but again as we see these things come out we see these as been the wrong drug and a supplement, I think along those lines that the patient protected was neither the marine nor the anchor group totally different, trig lowering people are commenting that they said that they had significant trig lowering results. They lowered trigs 2% to 3% significantly. No data on biomarkers, but you know that the study has been going on since ‘04 and has several significant challenges to it. I think it depends on the day for us, it’s about JELIS. That’s the best comparator for our study, for our drug. And JELIS is the study that in Japan saw a 19% reduction in mortality with our (indiscernible) and when they looked at patients at higher trig levels, they saw 53%. That’s the one we should be thinking about, and that supplements not poorly designed old studies. And I guess the simplest way to put it at the end of the day is that we took that drug that 1 gram drug that by the way was prepared to be half EPA, half EHA, and 20% other stuff, we ran that in the ANCHOR trial or the MARINE trial, it would have failed. So, why would an outcome study, so Steve do you want to say anything, tell us about that study at all that I get it?

Steven Ketchum

No, this has been literally lower dose, different patient population and totally different product with a mixture of Omega-3.

Joe Zakrzewski

Again, I wanted to comment on that, I thought I would get some questions on it. I am glad I didn’t, but during the calls we have done I wanted to make sure before we covered it. John, you have?

John Thero

If I could just add one clarifying comment to something that was stated earlier just to make sure it only misinterpreted it. It was why we are talking about the managed care and just how the castle price that was referenced was formally discounted it was not over discounting the managed care which includes stage of wholesalers for their role through returns, allowance, and co-pay cards, this is a rolling number, so I don’t want to be, I think that that’s the level that we are discounting to payors.

Joe Zakrzewski

Very good. So, just again scrap price is a $1.50 a fill, net sale we think ends up about the standard competition per fill was up 25, but that’s all in all discounts. It was lower than that this quarter again in early launch in May. So, with that, I want to thank everybody. I know we will be talking to folks over the next couple of days, and we very much appreciate it. Take care. Good evening.

Operator

Thank you. Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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