Amarin Corporation plc (NASDAQ:AMRN) Goldman Sachs 40th Annual Global Healthcare Conference Call June 12, 2019 4:20 PM ET
John Thero - President and Chief Executive Officer
Conference Call Participants
Hello, everybody. Thank you for joining me today. My name is John Thero, I’m President and CEO of Amarin. As we go through this presentation, I hope you will get a sense for we are changing paradigms in preventative cardiovascular care. Before I get into how we do that, we will be making forward-looking statements in this presentation. There are risks associated with all such forward-looking statements. Anybody considering investing in the company should review our risks as described in our SEC filings.
As an overview, cardiovascular disease, probably doesn’t get as much attention as it deserves. I think some of that’s because there hasn’t been a whole lot of innovation. It’s difficult. But it is an enormous and growing health burden, really the most expensive area in healthcare and the cause of the most deaths of more than all cancers combined. There is an urgent need to do more than what’s out there. When I say what’s out there, I’m talking about beyond hypertension drugs beyond cholesterol management, and we’ll get into that in more detail.
Fortunately, after numbers of companies and numbers of efforts have been made over the last 30 years to address this risk, we through our lead product Vascepa and a 7-plus year outcome study has demonstrated that we provide with this drug very significant cardiovascular risk reduction beyond the current standard of care. This result was presented initially at The American Heart Association in November of last year.
And it’s really been amazing to me to watch the transformation amongst at least the KOL community of – at that point in time digesting the results to now more recently talking about how we best incorporate this into our clinical practices and more of that will continue certainly as we move forward towards approval of this product.
We have submitted for approval. We have received priority review designation by the FDA with the PDUFA date of September 28 of this year and with that we think that we can transition this product from our current niche indication, which is important with niche at treating patients with triglycerides greater than 500 to moving into an indication for cardiovascular risk prevention, which is a multibillion-dollar opportunity in the U.S. and globally.
In terms of recent highlights, about two weeks ago, our sNDA was both accepted and we were giving priority review. Number of folks here, since that point in time have been asking will they have an ADCOM? Will FDA have an ADCOM? Will the FDA have an ADCOM? Don't have any answer to that. They have told us nothing, essentially on that particular topic. So, they will have one. They have not said that they won’t have one.
We’re still in a timeframe where that mitigation is not unusual to not have had that. At this point in time, we are planning for an ADCOM having already been reviewed by the New England Journal of Medicine and Journal of American College of Cardiology. I think we’re in good stead to answer questions that might be raised, but in a population that’s potentially one in three adults in the U.S. it’s certainly possible that they would want to have an ADCOM.
Again, we’ve heard neither yay nor nay on that topic that will silence at this point at this point time and again that’s not surprising. We are preparing for commercial expansion. Our U.S. sales team grew at the beginning of this year from what was 150 sales reps at this point in time last year combined with the copromotion partner that effectively gave us 300 full-time equivalents to now at about 400 reps we are evaluating how to best expand that salesforce to get better frequency, as well as broader reach, and we could see what could be a potential doubling one-step or two-steps of that salesforce ideally before the end of this year and soon after approval as possible.
Last year, we grew little under 30% for the year. This year in the first quarter, we were up 67%. Lot of that news I think is coming from physicians who will become knowledgeable of the reduced results. We look forward to greater growth and it’s terrific of course to see a group like the American Diabetes Association here even before the label has been expanded to be recommending the use of Vascepa and treatment of patients with triglycerides greater than or equal to 135 mg/dL.
Just for perspective, so to get to standard of care therapy out there and you bring your cholesterol down, it’s terrific, but it would be statin plus ezetimibe or statin plus PCSK9 so lowering cholesterol lowers your cardiovascular risk about 25% to 35%. All of which is great. We’re not trying to replace that, but of course that still leaves 65% to 75% residual risk and still leaves cardiovascular disease is the number one cause of death, which – with cost that are within 20 years of likely to exceed $1 trillion.
So, in the world of trying to lower health care cost preventative medicine is an important innovation, it is important and we’re very pleased to be introducing an opportunity both save lives, but also to lower health care costs. There is no therapy in the market to address what we are addressing with this therapy and there are potentially tens of millions of patients who could potentially benefit.
There’s about 90 million people in the United States alone who have triglycerides of 135 mg/dL greater, about 15 million of those patients are already on statin therapy and still have those elevated trigs in other risk factors. Just talking about triglycerides, and I’m going to refer to triglycerides because I think it’s a convenient identifier risk.
As we go through this presentation further, you will see that, with Vascepa, we're actually addressing some of the underlying causes of elevated triglyceride. But triglycerides are on the blood panels and you can see that from this chart that cardiovascular risk begins to increase well below 100 mg/dL. There are genetic studies that show that the elevations in triglyceride are equally as predictive or more protective than LDL cholesterol in terms of predicting cardiovascular disease.
So, we can use triglyceride as an identifier of risk. Two, using that as an identifier risk, we conducted a very robust cardiovascular outcome study called the REDUCE-IT, it’s a study that looked at 8,179 patients. All of these patients were on current standard of care. So, they are diabetic. They are being managed by diabetes meds. If they were hypertensive, they were being managed by hypertension meds. They were all on statins to control their LDL. In fact, their medium baseline LDL was 75, which is pretty well controlled.
We then randomized these patients one-for-one leaving them on their standard of care meds and half of them going to Vascepa, half of them going to placebo. This is a study that was conducted under a special protocol assessment agreement with the FDA, and we accumulated 35,000 patient years of study.
So, a very robust study. And the results of this have now been published both in The New England Journal of Medicine where it was called the number one story of last year, and the Journal of American College of Cardiology this year. Some of those results, I’ll go through in a minute.
Let me go to the primary results. This got a standing ovation at the American Heart Association in November. 25% risk reduction in 5-poimt MACE. And 5-point MACE is a composite of cardiovascular death, stroke, heart attack, revascularization, which is like bypassing stents or hospitalization for angina, you can see the p-values to the right there.
If you wanted to just go death, stroke, heart attack 26%. Death itself 20%, call it even statins, not trying to replace statins, but even statins don’t show a statistically significant reduction in death, heart attack 31%, stroke 28%. The principal investigator for this is, Dean, Professor and practitioner of medicine Deepak Bhatt, has called this the most significant advancement in preventative cardiovascular care since statin therapies, which is about 25-year period. I don't disagree with that statement.
For those of you who would like to look at this graphically, you can see the divide between the control arm in red and Vascepa starts pretty early, you know it is around one year or less with a number needed to treat a 21, like almost zeros after the p-value still. That was the first occurrence of event, sometimes patients who have a stroke or heart attack or revascularization, you have more events. This was published in JACC, it shows that the power of Vascepa just keeps on giving.
So, while it reduced the primary endpoint by 25%, it went on to reduce second occurrences of events by 32%, third occurrences by 31%, and so on for an overall composite of total event reduction of 30%, which results in, one, fewer major reverse cardiovascular event for every six patients treated on average over a five-year period, which is just tremendous. I don't know of any other therapy that had that level of result and again graphically the lighter lines here below with the primary first occurrence of event. The bolder lines are the current events. You can see that the divide began early and consistently continued, which is important.
Looking at the results a little bit deeper, they were robust consistent between men and women. Consistent between diabetics, nondiabetics. Consistent with those who had previously confirmed disease, and those are not. Just to put the number needed to treat in perspective, it was 21 from this study. We’re not competing with Lipitor or the PCSK9, but those are 45 and 67, respectively, and again include total events were down, not from just 21, but down six in terms of number of patients where we get one fewer event per – on average six patients treated. So, just phenomenal numbers in that regard.
I told you at the beginning here that we’re studying patients based upon elevated triglycerides, but really getting to an effect that is resulting from effects largely other than triglyceride reduction, and we saw that while in the patients really, irrespective of triglyceride levels, the result was essentially the same. The consistency of this is, may be surprising. We did go into the study not expecting the benefit would be dry from the triglyceride reduction.
We had seen in the study in Japan, that same active ingredient that you could get significant cardiovascular benefit without triglyceride reduction, but the consistency of the effect regardless of triglyceride levels was I guess reassuring, and of course scientifically interesting. I think it really speaks to the multifactorial effect of the therapy from antithrombotic effects to antioxidant effects, to anti-platelet, anticoagulant effects to membrane stabilization or the effects on plaque build-up, plaque regression, and inflammation and then really probably a cascade of those as they relate to one another.
From a safety perspective, Vascepa has been characterized by some as having a placebo like safety profile. The really only imbalance in safety was regarding the MACE itself, which heavily favored Vascepa. The overall event rate on the Vascepa arm was comparable to the placebo arm. There were no major adverse events with Vascepa that were serious adverse events rather SAEs that were greater than placebo and greater than 2%.
You know when there’s nothing at those levels you keep digging lower and in The New England Journal it was pointed out that while low there was a slight increase in bleeding, which deem low, but probably in other studies look at aspirin, lower than aspirin and now increase in hemorrhagic bleeds or other GI type of bleeds.
There was a little bit of increase in constipation, but that’s probably because of the placebo that was used, which was a little less than a teaspoon of mineral oil, but we know that mineral oil has some effect on constipation. There was a little bit of an increase in peripheral edema, but downstream effect of peripheral edema is usually – has to do with heart failure, we did not see that increase, and there was a higher rate of AFib below.
From the data, it looks like, we're taking patients who may have been prone to more serious events and limited them to only AFib. I would say that because your downstream consequence of AFib tend to be heart attacks, cardiac arrest, and sudden death, and we had relative risk reductions of 31%, 48%, and 31% in those respectively.
So, I think while AFib is higher, I think that’s really more a consequence of more serious events being lower on the Vascepa side of the study. Just for context, again people have been trying for decades with C-type inhibitors and fetal fibrates and niacins and [fish oil] omega-3 mixtures to find a solution. All those have done outcome studies. All of those have failed.
Here are is a summary of what has been shown to work statins. Two of our statins for example has 25% risk reduction. Rosuvastatin is a little bit stronger, but you can get into the LDL therapies beyond statin. Not that we compete with them, but just for perspective, the ezetimibe is about 6% decrease. The PCSK9 is about 15% decrease.
There was an interesting study and the CANTOS study drug probably will not be commercialized for information reduction because its cost is too high, but showed that by lowering inflammation you lowered risk by 15%, by the way Vascepa provides a very significant decrease in hsCRP and some other measures of information. The Lovaza, which is an omega-3 mixture was about a billion dollars here in the U.S. before it went generic has stalled down multiple outcome study that of course raises LDL.
And then there is the two successful studies of eicosapentaenoic acid, one in Japan, which was a 19,645 patients study called the JELIS study, which in a lower risk population than what we studied and reduce it provided a 19% relative risk reduction and now reduce it, which was done in a global population and most of western and provided the 25% risk reduction in a population of patients who had LDL well-controlled, but had other risk factors, including elevated triglycerides.
The science behind Vascepa as a unique omega-3 that has been deemed to be a new chemical entity by the FDA, and cholesterol management is all very involved. The molecule Vascepa is unique. It has – because it is a shorter molecule and say its sister, DHA, it has ability to get into things like endothelial cells in order to improve endothelial cell function and signaling.
And that in turn seems to result in a smoothing of the endothelial cell, endothelial cells where blood comes into contact throughout the cell walls and making more difficult, it appears, for plaque to adhere to that, but also resulting in less inflammation in contrast of DHA which doesn’t fit into the endothelial cell quite as well seems to be a bit more disruptive LDL ends up going up with DHA and you don't get the reductions in information.
EPA, eicosapentaenoic acid that we use, our single active ingredient, our drug is a very fragile molecule. So, there is a lot of science in both how it works, but also in isolating it from its source without damaging it because if it’s damaged, we’re allowed to oxidize and oxidizes very easily, it doesn't work the same.
We’ve got, I think on our website, maybe three dozen different papers on the mechanisms of action of how Vascepa works. Some of those beginning with endothelial functions. Some of those to augment information. Some of those talking about plaque and really, it’s – this active ingredient is the only ingredient that has been identified to have a positive step on each of the eight steps and key steps in the formation of atherosclerosis in that sense. Not only is physically or chemically different than any other molecule, but it affects our unique and not been shown by any other molecule.
Commercially, our primary focus has been the U.S. market and as I spoke to earlier, we are looking to move from what has been a niche market to a broad primary care market. We have, to start this year we began to increase our sales force and began to increase the number of positions that we’re targeting with that salesforce. We were talking about 20,000 docs last year, we’re talking about 50,000 docs this year, with an expanded salesforce that we anticipate after we get our label expansion assuming approval on the PDUFA date of September 28.
We were looking to have greater frequency. It’s currently going to take us about three quarters of this year to get our current targets, roughly 7 times, and that’s not fast enough and there’s many additional doctors out there who we think we should be calling on, but for those we are calling on and getting to know Vascepa, I think many of them are starting to increase their prescription habits, particularly the cardiologists and endocrinologist who tend to be the most data driven.
As a new drug, we are starting off with the already having pretty good managed-care coverage, considerable portion of our prescriptions currently are off label and the approval rate for managed-care is just a shade under 80%, little over 90% of adult lives on Medicare Part D covered by insurance predominantly tier 2, predominantly unrestricted, and about 80% of lives on commercial insurance covered by insurance.
So, again predominantly tier 2, predominantly unrestricted. There will be opportunities to expand that further upon the label of certain insurance plans won't cover something until the label is there, but we’re off to a good start there. Part of that is because we’ve chosen to price the product in an affordable way, the pricing of Vascepa is similar to what statin has replaced that before they went generic if you were to adjust for inflation. We think that drugs like Lipitor did quite well at that pricing.
So, we think that this is really a volume play, an opportunity to get billions of dollars by treating millions of patients. We are – we do a lot of publication work. Last year, we had over 50 publications. Excuse me, over 40 publications. We’ll probably exceed that number this year. The fact that the ADA is already recommended this in their guidelines, I think is a reflection of the relationships that we’re creating with various KOLs.
We’ve been manufacturing this product now for six years. We came into this year with capacity that would support about 1 billion in revenue. That was in our revenue guidance, but that was our manufacturing capacity and we're continuing to expand upon that capacity, and relying on those manufacturers to compete with one another to continue to add affordable capacity for us.
We have now over 100 patents internationally, predominantly in the United States, most with expiries in 2030. And internationally we have priority review in Canada with the hope of having it approved there in the fourth quarter of this year, in the Middle East through our partner, we have application into multiple countries and already have approval in Lebanon, in the United Arab Emirates.
In China, we have a clinical trial going on through our partner there. And it is our aim to submit in Europe sometime around the end of this year. This is a global epidemic and this is as we have global rights to the product and we feel like we’re just getting started. When we talk about just getting started, our view for the world is that roughly 25 years ago cholesterol management was being addressed by residents, which weren’t particularly effective or particularly in meaning to patients.
Since then, we’ve seen statins and ezetimibe and PCSK9s, all come in to help lower the LDL, you know LDL’s management as part of the current standard of care, but that risk beyond cholesterol management has remained, many people try to address at those therapies that have been being used. Most patients aren't treated with anything, but there hasn't been an effective therapy, but there are millions of patients who have been treated with fibrates and niacin or omega-3 mixtures despite the fact that the have failed outcome studies largely because docs want to do something more for these patients.
Until now, there hasn't been something more to offer them with the reductive study in Vascepa there now is a cost-effective proven solution to lower your cardiovascular risk by 25% on top of the risk provided by statin therapy and we look forward to this becoming the standard of care for patients.
Financially, we ended our last quarter with about 211 million in cash. Over the last 2-plus years, our commercial business, and I would define our commercial business for this purpose is as stripping out R&D costs and stripping out building a supply has roughly run on a cash neutral basis. We anticipate that after the sNDA is approved that our R&D cost, which have been fairly enormous for a small company in the [$50 million to $60 million] per year range will come down further.
We will be expanding our sales force and then after we get OPDP approval of TV ads, this really should become very much a consumer story as potentially one and three adults could potentially – that have cardiovascular risk factors and being able to talk to them and educate them that their risk does exist beyond cholesterol management and that there is a therapy out there that provides that significant risk in effective safe affordable way. I think we will be valuable to people.
We have no traditional debt. We do have a financial obligation to pay a 10% royalty over the next 810 million in revenue. So, $81 million in liability there. There is no compounding of interest on that. No acceleration of that maturity date. We do have $800 million in loss carryforwards, and I look forward to us eating through, I mean, we are tax domiciled in Ireland.
And with that, I conclude my prepared comments and thank you again for your interest. I guess I have seven minutes left, if anybody wants questions, I can do questions. We’re not currently covered by an analyst that – at Goldman, so there is no moderator here, but if anybody has questions, I know, I have met with some of you separately, so maybe your questions are exhausted, but if anybody has a question let me know.
A - John Thero
So, the question is, when would we expect notice of an ADCOM?
FDA guidelines would suggest that we’re in that window of time right now where they should be making that decision. With a September 28 PDUFA that would mean if they are going to have an ADCOM or most likely be in August. So, they should be beginning to form that committee here. Relatively soon. So, it would surprise me if we didn’t hear one way or the other. You know, before the end of June, we are proceeding on the assumption that we’re going to have one just due to the enormity of this new indication, but I can't predict exactly when.
John, could you comment on, there’s been some talk about generic competition or challenging your pattent, could you talk about your strategy there? And also, the production of Vascepa and what type of limits there are out there for you and for others?
Yes. So, the question pertains to ANDA filers. This is out in the public record. There were four ANDA filers. One of those, Apotex removed themselves from the process and one of those is Teva. We did reach a mutual agreeable settlement with Teva that they could enter into the market in the second half of 2029, which is a little lower 10 years from now. There are two remaining filers that we have gone beyond the Markman hearings, which I think went largely, almost entirely in our favor. This is the claims construction hearings. More recently, we have been, the court has allowed us to introduce the results of the REDUCE-IT study and as which we believe are supportive of the uniqueness of Vascepa.
There is a court date scheduled date scheduled for opening hearings on January 13. If it goes to court, probably have a decision 2 to 3 months. After that we’ve asserted 14 of our Orange Book listed patents. They all have expiries in 2030. They all have multiple claims, and we intend to defend those patterns vigorously. This is a unique feel. This is not a drug that’s easily manufactured.
There is Lovaza out there, which is GSK's drug, which I think some of the generics on there probably have lost money because it's been difficult to manufacture and they’ve had some shortages over time with that drug. Our suppliers have spent tens of millions of dollars and with their expansions, I'm sure it will get up over to the multiple hundreds of millions of dollars investing in supply capacity and efficiency. You know the belief that we’re going to grow Vascepa in a multiple billion-dollar opportunity and of course Vascepa is more difficult to manufacture then is Lovaza.
So, we’ll see what happens relative to the end of litigation. I can't make any predictions there, other than stating that we intend to defend our patents vigorously, and we like our IP.
John, my question is sort of leading though, even if somebody does, you don't have some patent success, which seems unlikely. My question is, would they be able to produce them? Because it seems like you’ve locked up supply out there?
It’s a very difficult product to manufacture. Again, it’s easier to manufacture than this product. People have had difficulty manufacturing that. The suppliers that are working with us are working with us on an exclusive basis. It’s not clear to us where others would get supply from or if they would be wanting to spend or who would want to be spending that level of investment to grow that level of manufacturing given a revenue base that right now is about 350 million is our target for this year.
We are investing with our suppliers into manufacturing expansion with the idea that we will continue to grow the market and often when something goes to generic doesn't grow, with the idea, it is going to be multiple billions in revenues, but whether somebody else would put that level of investment in or not, I can't speculate. That would be up to them, but it would not be an easy or an expensive path.
I think my clock is a run out. I thank you for your interest.