Amarin Corporation plc (NASDAQ:AMRN) Cowen 41st Annual Health Care Conference March 1, 2021 10:20 AM ET
Ken Cacciatore - Amarin
John Thero - President and CEO
Conference Call Participants
Great. I wanted to thank John for joining us on our Fireside Chat Discussion. We're thrilled to have you. I'm joined with Georgi from my team and Stacy. And obviously, I think you all know how to ask questions on the -- to submit questions, and we're going to be trying to search for them and try to get them in.
But John, thanks so much for joining us here. I just wanted to say off the bat, I know I write fairly directly and sometimes give opinions that are kind of my own, even though I've only worked at Cowen for 24 years, I've never been in the seat like yours where you're responsible for really tons of employees and the decisions you make have such huge ramifications.
I want you to know how empathetic I am to that. And when we write what we write, we're really well aware of kind of the stresses and strains that you're under. So I want you to know we're appreciative of you joining us. We appreciate you're such a good gentleman and a good support for the commentary that we give you. So I just wanted to tell you upfront that even though I write how I write, I truly understand the kind of the position that you're in.
So kicking it off though with the first question. We do talk about this delicate balance of investing in the U.S. with a lot of different push and pulls that are coming to you with the genericization potentially and to what degree they may get there versus investing in Europe, which looks like a really wonderful opportunity.
So the question I wanted to kick it off with is just if you could help us discuss that balance and to the degree in which you're willing to be flexible in moving and allocating resources as necessary.
A - John Thero
So first, Ken, thanks for the invitation to be part of your conference, and appreciate the interaction here with your team and obviously, appreciative of investors on. We like smart people, and you guys are clearly independent and asking good questions. So I'm never going to be offended by people who are doing their jobs.
I will be, during this presentation, be making forward-looking statements. There are risks associated with any such forward-looking statements. Anybody considering investing in Amarin should review our risk factors in our SEC filings before investing. As we think about our spending going forward, fortunately, we're well capitalized. We paid off all our debt last year. We ended the year with over $550 million in cash and liquid investments. We're looking at opportunities in the U.S., in Europe and rest of the world. And while we do need to look at cash resources overall, we believe that we have adequate resources to get us to cash flow positivity, including the investments that we need to make for Europe, for example.
So as we think about investments in the United States, that's increasingly about not just growing revenues, but growing contribution. We've been adjusting our spending in the United States based upon COVID, which creates some sort of quarter-to-quarter variability. We're certainly very hopeful that with vaccinations coming on, patients will get back to their doctors. And with that, we can get on with the launch that was really truncated as a result of COVID last year.
Remember, we just launched at the end of January last year, about two months into the launch, we had to pull our field force out. And with that, our spending last Q2 was fairly low, then we built it back up when we saw the COVID sort of pulling back a little bit in September, October. And then COVID became more pronounced in November, December, and we pulled back on our spending. So in the U.S. really managing our spending based upon what we can see to be the return in a very promotion-sensitive market, but one which is large and where awareness of VASCEPA remains still relatively limited. So big opportunity there through increased investment.
In Europe, we've gone for pan-European regulatory approval, and we're very pleased that, through the EMA review, there was a positive opinion of the CHMP that came out in end of January that should lead to a approval of a label for Europe that's very similar to, in some ways, slightly better than the U.S. label being approved in the early part of April. And then that frees us up to begin the market access discussions in Europe. So in Europe, we anticipate our spending really being gauged on a country-by-country basis by the level of market access. So if we're not -- if we're approved, but don't yet have reimbursement, it doesn't make sense for us to be spending a lot in that particular country.
So right now because Germany has a somewhat unique situation where they allow you to declare a price for its first year of commercialization, while you're negotiating the second year of pricing, we have begun to build commercial staffing in Germany. We began this year with about 40 people. We talked about ending the year with roughly 200 people. But in other countries, say, France or the U.K., we've got a team that's much more limited. In those other countries that are important to us, we have started whatever pre approval communications we can relative to market access, but the formal market access discussions can't start until after the label is approved.
And as a result, we've got some sort of country heads in place. We've got some market access people in place. We've got some medical people in place. But the real staffing and the real spending in Europe won't start in each country until after we have the reimbursement. So a likely scenario is that Germany and maybe some other countries get started up early. And then as we're growing revenues in Germany, other countries will come on board, and our spending will be somewhat gated by the time of the market access.
The biggest spending possible would be if all the countries provided market access right from the get-go. That's unlikely. It's actually a good situation. I'd love to have that situation take place. But it's -- there's not a whole lot of precedence for France and Italy moving that quickly, for example.
So it's going to be a year of execution in Europe heavily focused on market access, and we think our arguments there are good.
Okay. And so just going back to the U.S., someone like me who, fortunately or unfortunately, can stay a little bit -- I would say, a little bit kind of higher level, although you're always operating at a high level than the micro level, but at a high level, in my career, we've heard many, many times that, listen, the generics are going to take time. They're going to be difficult. Going back now in my plus -- 20-plus years of doing this, there is -- this never will happen or this never will happen, it never seems to always happen. And it's hard to tell when.
But as someone like me sits here and looks at two years out potentially, not maybe in the near-term and try to think about the level of investment you're putting into a franchise that two years out may encounter a different generic scenario than we're encountering now, you clearly have much more perfect information than we can ever have about, obviously, the investments that you've made and what you're hearing in the trade in terms of investments maybe generics are making or the raw material.
So could you talk about, obviously, without you sharing everything you know versus what we know, a little bit about kind of informing us to why you want to continue to invest in the heavy level that you were. I think we'd all agree if there was full 100% genericization possible immediately, investing through that would be probably a different decision.
So can you help us understand a little bit about what you know that's helping you decide that -- making such high level -- such kind of high amounts of U.S. investments still?
So first, we try to operate in a thoughtful way with lots of different scenario planning. We could -- if we thought it was the right path, we could launch an authorized generic, probably have it in the market this week if we were to so choose. Based upon our analysis, we don't think that, that is the right move for our shareholders. We certainly don't think that, that is the right move for patient care because in a generic scenario that would bring on of cutting costs, not doing promotion, clearly, the generic companies aren't spending money on promotion or on R&D. The awareness of this life-saving drug will never reach its fulfillment. And this drug just launched in January of last year. And as we look at this, we still believe that this is potentially a multibillion-dollar opportunity in the United States with millions of at-risk patients and awareness of VASCEPA amongst doctors because we really hit up against COVID in the launch, doctor awareness is very low, at-risk patient awareness is even lower. So this is a very atypical generic situation where the generic is launching into certainly not a mature market, also launching into a market where, by third-party analysis, the cost of VASCEPA is not high.
So something like an ICER has said we can double our prices and still be cost-effective against their most stringent analyses. And the generic that's in the market, to both payers and to many patients, is higher than the price of the branded product. So right now, there are three approved ANDAs, one that has launched, the other two were approved last year and haven't launched. A typical or the ideal world for a generics company is to have a product that's generic and they can manufacture in their own facilities, and it's very cost-effective for them. This is not that scenario. Amarin has spent huge sums of money over the past decade, helping work with companies to be able to expand capacity. It's not clear to us that the generic companies have made similar investments at this point in time. With the supply that's in the marketplace, the generic supply will likely be used, whether we were having an authorized generic or a branded product. And you can go from a branded product to an authorized generic relatively quickly, it's not very easy to go from an authorized generic back to a branded product.
So giving up on the upside before we see whether the generics companies will invest in expanded supply and before we see outcomes relative to some of the litigation that's going on currently for the existing launched generic, which is intended to keep them within their label indication, which is less than 7% of the overall prescriptions for the drug, I think, it would be premature for us to make that switch at this stage. Just too much value potential remaining under the curve by continuing to promote -- expand the market and helping patients by doing so.
So you mentioned -- well, two questions. One, I would imagine there is an ability on your end to be rapid in your decision making and scaling up or down as necessary. But also, you touched upon ongoing litigation. So maybe it would be interesting to just highlight GSK versus Teva versus -- and as opposed to your litigation. I don't know if it's easier for you to talk about that decision and maybe the ramifications and vis-à-vis your filing which seem to really mirror that decision. Is it -- do you want to shed any light on that?
Well, every court case is different. The case that you're referring to GSK/Teva is a case where GSK prevailed in court and arguments that Teva were taking actions, which violated GSK's patents by Teva, I guess, not limiting itself to the indication for which it was approved and should have been marketing that drug. That court matter was recently remanded back to the original court and which it was heard. There were oral hearings on that about a week ago. It seemed as though the panel of judges were sort of tightening up the case more and more towards the skinny label case and seem to be consistent overall in their leanings to their initial judgment, which was in the favor of GSK. But that rehearing decision hasn't come out yet.
Again, all legal matters are separate, but that is a precedent case that shows that a generic product isn't allowed to just market for any potential purpose. It does need to limit itself to where it has authority to act. And in that case, it was trampling on GSK's patents elsewhere.
In our matter, the generic that's in the market has a label that's clearly a skinny label. It's for our original indication, which is a biomarker-based indication of lowering triglycerides in a patient population with very high triglycerides. That's an indication associated with pancreatitis. It's an important niche indication. Lot of products in that indication represents about $40 million of our over $600 million in revenues last year. And that's what they're approved for. They are not approved for cardiovascular risk reduction, which is an indication that we pioneered for over a decade, spent a lot of money on, just got approved and launched last year. And it is our intention to ensure that our rights are protected by not having a product that's approved for something else, be marketed for cardiovascular risk reduction in violation of our patent rights.
So it's early. That product just launched four months ago. Our court case is in the formative stages. But we think it's appropriate for us to -- and common for us to enforce our intellectual property rights, and what we're attempting to do.
And interestingly, the amount of supply that they have seems to be not terribly far off that original indication. I was wondering, any insights into, are they trying to, early on, maybe stay within the boundaries of the lawsuit that you filed? Or do you think they just literally have limited supply? Or are you as in the dark as we are?
Based upon their public comments, they have limited supply.
Okay. Why don't we turn to Europe? Real exciting opportunity and one that folks are trying to get their arms around, including us, although we've done a lot of different analysis trying to figure it out. I think before we get into it, though, you did go through a process, I believe it was around this time last year, probably a little bit later, deeper into the spring of last year, that you were going through a process of potentially getting a partner in Europe.
So I was wondering if there's any commentary you can give us as you are upping infrastructure in Europe, are you reengaging in a simultaneous process just to, once again, understand all the option sets, or have we closed down any external communications and we're literally just pursuing the pathway that we're pursuing now?
So the opportunity for this drug, which is going to be named VAZKEPA as opposed to VASCEPA in Europe for appropriate translation on a country-by-country basis, is large. There's more patients on statin therapy in Europe than there are in the United States. For example, the rate of death from cardiovascular disease is higher in Europe than it is in the United States. This is a multibillion-dollar opportunity in Europe.
For smaller products, it might be difficult to justify creating a launch infrastructure in Europe. But this product clearly has the size to potentially cover those kinds of costs. We were flattered to have had proposals from companies last year. Interested in European rights to the drug. But in our analysis, we would be giving up too much upside, both for Europe as well as potentially restricting the optionality for the company overall, were we to have partnered away European rights to one of those companies.
So we've hired some terrific people, fortunately, with a very good product. When you start hiring good people, then other people want to join it. We're regularly being contacted by lots of people who want to join what we're doing in Europe. And we think we're well on our way.
And I think by having terrific scientific data, we now have 13 medical societies around the world, including the two leading medical societies in Europe who recommended use of this product for treating cardiovascular risk reduction. We're going into Europe with outcomes data, most drugs don't go into Europe with outcomes data. We've got a very low number needed to treat. And I think today, more than ever, we think that the decision of not partnering and going direct with the self launch in Europe made then, and makes today, the most sense.
Now that it doesn't mean that in some smaller countries in Europe, we won't elect to regionally partner. There are big markets like Germany and France and Spain and Italy and the U.K. which make -- which clearly justify making an investment in self launch. But then there are some smaller countries where relying on local companies, we think, would probably be a better use of our resources. But the big-opportunity countries, we'll be self-launching into.
Of course, I was trying to back door into trying to figure out if there's any folks that are still speaking to you to take the whole organization, but you always see where I'm going and steer away from that.
So wanted to maybe drill down a little bit more on Europe in general in terms of as we as unfortunately, U.S.-centric analyst, I admit to all my -- our European friends that we deal with all the time, we're unfortunately U.S. centric as we do our analysis. Can you help us understand, as we've looked at similar analogs, we've looked at the statins and how the statins did in the U.S. vis-à-vis how they did in Europe. We can understand the size of those products. Can you help us in terms of relative comparison in terms of pricing in the U.S. that you have and we understand. What expectations should be pricing in Europe? Are there any analogues you can give us or comparison to provide some level of comfort that you'll be able to have a level of pricing success? And then maybe as we all try to do the simple math of here's how some of the cardiovascular drugs did in the U.S., here's how they did in Europe. Is there any analog you could help us look to that you're particularly fascinated by, interested in? Maybe give us a road map to understand the success you could have there?
So as we get ready for, and we have been getting ready for, the market access discussions, one of the things that many of the countries look to is, is there a comparator from a pricing perspective. And we do not believe that there is a comparator from a pricing perspective. And not being tied to a comparator, I think, is the best in the sense that it brings you back to pharmacoeconomic analysis and cost of heart attacks and strokes, not just at the time for in the hospital, but all the, often, many years of support afterwards, it's very high. And we think that, that is really the right comparisons to be made from a pricing perspective.
The U.S. pricing was done for VASCEPA at a time where we had only the original indication of lowering triglycerides in a very high triglyceride patient population. It was done without outcomes, and it was done in a market that we were competing against a bunch of different generic products. In Europe, we're not going with that indication, we're going for cardiovascular risk reduction, where we have outcomes data, most drugs going into Europe don't have outcomes data. We're going in as the first and only drug in a class. And we're going in to treat patients where it's pretty well documented that there are high rates of heart attacks and strokes and other cardiovascular events, where we have the opportunity to create savings.
The most recent sort of new class of drug that was approved in Europe were the PCSK9s. And they took an approach in Europe that's somewhat analogous to the approach that they took in the United States, but sought a pretty high price. And in the United States, that slowed down their market access. And in Europe, that also slowed down their market access.
Now that price is more than 2 times the price where VASCEPA is on a net pricing basis in the United States. Their relative risk reduction, although these aren't head-to-head studies, different time durations, et cetera, their relative risk reduction is what, 15% number needed to treat 67, ours is just 25% relative risk reduction with the number needed to treat 21. Even when you annualize it, we're still sort of favorable there.
So I could argue that we should charge more than PCSK9, but that's inconsistent with our overall culture. There's many more patients who could potentially be helped with VASCEPA, and it is our aim to be able to help those patients. So I think provided we're not greedy, provided we use pharmacoeconomic analysis, we should be well positioned for a price in Europe that's at least as good as that here in the United States. And then that will position us to help a lot of patients and to make a lot of money for our shareholders.
Good. Why don't we talk about the duration of the products in Europe. Can you talk about the exclusivity you have and maybe the IP, how that may be the same or different as we approach Europe?
Yes. So in Europe, with approval should come 10 years of regulatory exclusivity, the possibility, if we were to expand the indication to add an 11 year to that, something to be considered down the line. In addition, there's patent protection, right? So the regulatory exclusivity essentially insulates the patents for a while. We have a patent granted for 2033, and we have patents that we're prosecuting with the aim of taking that protection out to 2039. So a pretty long runway remaining for the opportunity in Europe. Again, first piece based upon regulatory exclusivity and then the patent protection beyond that.
Okay. Great. I think as we get close to wrapping up the conversation, I'm just wondering, John, as you interact with shareholders, obviously, some disappointments over the last 12 months, but opportunities may be not fully appreciated. Can you just talk about what seems to be the biggest investor concern? Is it small company launching in Europe, building that infrastructure? Is it the ongoing investments in the U.S.? If you were to frame maybe the biggest concern you hear from your shareholders. And then I know we just had a whole discussion about all these issues, but just maybe reinforcing an aspect that you think is just not being fully appreciated.
Well, on the latter piece, I think the China and rest of the world stuff, which we're sort of taking order, we anticipate getting approvals via our partner in China near the end of this year, Hong Kong as well. And then cardiovascular disease is a global phenomenon. We think we should have pricing done in Europe before we start going to some of the smaller market countries, but this is a very large global opportunity, which I think is sometimes forgotten.
On the investor side of things, I think lots of investors from lots of different backgrounds. I would say that the investors who are value investors seem to be fairly active in VASCEPA -- or excuse me, in Amarin right now. I think they're looking at the sum of the pieces and concluding that this is good value. I think the growth investors are starting to revisit as emphasized by the full slate of investors we're talking with at your conference here.
The market opportunities here are large. This is a year of execution. Some people are expressing they need to do more work now. Others are saying, "Oh, let's give it a little more time and get a bit more clarity on approval in Europe and/or pricing in Europe. And/or, let's see what happens with generics a little bit further here in the U.S.". But this is execution this year and then accelerated growth next year, assumably as additional countries come online in Europe and hopefully COVID is behind us, I do think that if it weren't for COVID, we would be growing at a rate right now that few people will be questioning our ability to outpace generic supply. And hopefully, that's behind us here soon.
Well, great. Well, John, thank you. As always, we really value the relationship. You're always a gentleman, always kind to us, and we appreciate you taking the time. And thanks for joining. And with that, we'll wrap it up a minute or so early.
Pleasure. Thank you. Enjoyed it.