amrnAmarin Corporation plc (ADR) (NASDAQ:AMRN) announced financial results for the three and nine months ended September 30, 2016, and provided an update on company operations.

Key Amarin achievements since June 30, 2016 include:

  • Revenue growth: Recognized $32.4 million in net product revenue from Vascepa® (icosapent ethyl) sales in Q3 2016 compared to $21.3 million in Q3 2015, an increase of 52%.
  • Prescription growth: Increased normalized prescriptions, based on data from Symphony Health Solutions and IMS Health, by 54% and 56%, respectively, compared to Q3 2015.
  • R&D progress: REDUCE-IT cardiovascular outcomes study continues to track towards achieving, before the end of 2017, the onset of the targeted 1,612 aggregate primary cardiovascular events for completion of the study. As expected, no modification to the study was recommended based on the first pre-specified interim efficacy analysis, the “60% review” as completed in September by the study’s independent data monitoring committee (DMC).
  • Vascepa franchise extension: Announced the introduction, beginning in October, of a smaller 0.5-gram capsule size for Vascepa that is now available in retail pharmacies nationwide. The smaller capsule is in addition to the original and currently available 1-gram size Vascepa capsule as an alternative for the subset of patients who prefer a smaller capsule.
  • Strengthened balance sheet: Through an equity financing of approximately $65 million in August 2016 followed by a mandatory exchange of $150 million in previously outstanding debt, Amarin strengthened its balance sheet to support completion of the REDUCE-IT trial while remaining on course to become cash flow positive in 2017 from commercial operations, excluding REDUCE-IT costs, interest and royalties.

“Q3 2016 was another quarter of considerable progress for Amarin. Prescription growth for Vascepa was again greater than 50% compared to the corresponding period of last year. REDUCE-IT continues to progress as expected and is now approximately one year from reaching the onset of 1,612 primary cardiovascular events which is the completion target for the study.  We are pleased that over 100,000 patients are currently using Vascepa each month to support their health,” stated John F. Thero, president and chief executive officer. “We are working to increase usage of Vascepa based on the drug’s already established positive efficacy, safety and tolerability profile while increasingly preparing for a market expanding opportunity for Vascepa upon achieving anticipated successful results in the REDUCE-IT study.”

Commercial Update

During the third quarter, Amarin continued to see substantial prescription growth and steady increases in prescription omega-3 and non-statin market share, particularly among detailed physicians. Vascepa growth continues to be driven by focused message delivery, compelling supportive data and improved managed care coverage.

Amarin recorded net product revenue of $32.4 million and $21.3 million during the three months ended September 30, 2016 and 2015, respectively, an increase of $11.1 million, or 52%. This increase in revenue was driven primarily by an increase in estimated normalized total Vascepa prescriptions. Based on data provided by Symphony Health Solutions and IMS Health, estimated normalized Vascepa prescriptions totaled approximately 260,000 and 274,000, respectively, for the three months endedSeptember 30, 2016. These prescription levels represent growth of approximately 54% and 56%, respectively, from prior year levels, and approximately 13% and 10%, respectively, compared to Q2 2016.

Inventory levels at wholesalers tend to fluctuate based on seasonal factors, prescription trends and other factors. The level of inventories held by Amarin’s distributors as of September 30, 2016 decreased as compared to inventories held at the beginning of the quarter calculated based on estimated days of Vascepa sales on hand. Amarin estimates that product revenues during the quarter ended September 30, 2016 were negatively impacted by approximately $0.5 million to $0.8 million due to a net overall decrease in distributor inventory levels during the quarter. The decrease in distributor inventory levels during the quarter endedSeptember 30, 2016 follows an estimated $2.9 million to $3.2 million increase in the quarter ended June 30, 2016.

REDUCE-IT Trial Progressing on Schedule

The REDUCE-IT cardiovascular outcomes trial continues to progress on schedule. Amarin expects the onset of the final primary cardiovascular event to occur in or about the fourth quarter of 2017 with the publication of results anticipated in 2018. The 8,175-patient outcomes study is evaluating whether treatment with Vascepa reduces cardiovascular events in patients who despite stabilized statin therapy have elevated triglyceride levels and other cardiovascular risk factors. The results of this important trial, if successful, could lead to improved medical care for tens of millions of patients.  The primary endpoint of this global, double-blind study is the time to the first occurrence of a composite of major adverse cardiovascular events (MACE) and results will be compared between the Vascepa and placebo groups.  The study is being conducted under a Special Protocol Assessment (SPA) agreement with the FDA.

The first interim efficacy and safety analysis by the DMC concluded in September 2016 after the occurrence of approximately 60% of targeted primary events. As expected, the DMC recommended that the trial continue as planned without modification. Preparations for the second planned interim efficacy analysis will be triggered by the onset of approximately 80% of the target aggregate number of primary cardiovascular events in the study. Based on historical event rates, Amarin anticipates that the onset of approximately 80% of events will occur in the first half of 2017, with the second pre-specified interim efficacy and safety analysis by the DMC expected in or about Q3 2017. As is typical of interim analyses, the statistical threshold for defining overwhelming efficacy on the primary endpoint that would call for stopping the study early in connection with such analysis is considerably higher than the threshold for defining statistical significance after the expected completion of the study. Accordingly, Amarin continues to expect that the 80% interim analysis will result in a recommendation by the DMC to continue the REDUCE-IT study as planned to completion of 100% planned events.

Amarin will remain blinded to results of the REDUCE-IT study until after the study is stopped and the database is locked at either the second interim analysis or at the final analysis.

Financial Update

Net product revenue for the three months ended September 30, 2016 and 2015 was $32.4 million and $21.3 million, respectively.  Net product revenue for the nine months ended September 30, 2016 and 2015 was $90.6 million and $54.6 million, respectively.  These increases in net product revenue were primarily attributable to increases both in new and recurring prescriptions of Vascepa driven by increased sales productivity.

In addition, Amarin recognized licensing revenue of $0.8 million and $0.5 million in the nine months ended September 30, 2016and 2015, respectively, related to agreements for the commercialization of Vascepa outside the United States. Amarin’s partners for China and for the Middle East and North Africa are working towards regulatory approval of Vascepa in their respective territories.

Cost of goods sold for the three months ended September 30, 2016 and 2015 was $8.5 million and $7.5 million, respectively.  Cost of goods sold for the nine months ended September 30, 2016 and 2015 was $24.2 million and $19.5 million, respectively.  Gross margin on product sales improved to 74% and 73% in the three and nine months ended September 30, 2016, respectively, as compared to 65% and 64% in the three and nine months ended September 30, 2015, respectively. The improvement in gross margin on product sales was primarily driven by lower active pharmaceutical ingredient cost.

Selling, general and administrative (SG&A) expenses in the nine months ended September 30, 2016 and 2015 were $80.1 millionand $77.5 million, respectively.  The increase in SG&A expenses primarily reflects an increase in co-promotion fees payable toKowa Pharmaceuticals America, Inc.

Research and development expenses in the nine months ended September 30, 2016 and 2015 were $39.8 million and $37.7 million, respectively. This increase in expenses was primarily driven by quarterly variability in costs related to the REDUCE-IT study.

Under GAAP, Amarin reported a net loss applicable to common shareholders of $15.8 million in the third quarter of 2016, or basic and diluted loss per share of $0.08.  This net loss included $3.4 million in non-cash stock-based compensation expense and a$3.6 million non-cash gain on the change in fair value of derivatives.  Amarin reported a net loss applicable to common shareholders of $32.3 million in the third quarter of 2015, or basic and diluted loss per share of $0.18.  This net loss included $3.9 million in non-cash stock-based compensation expense, a $0.2 million non-cash loss on the change in fair value of derivatives, and a $1.6 million charge for a non-cash deemed dividend for accounting purposes.

Under GAAP, Amarin reported a net loss applicable to common shareholders of $58.9 million in the nine months endedSeptember 30, 2016, or basic and diluted loss per share of $0.31.  This net loss included $10.4 million in non-cash stock-based compensation expense and an $8.2 million non-cash gain on the change in fair value of derivatives.  For the nine months endedSeptember 30, 2015, Amarin reported a net loss applicable to common shareholders of $127.2 million, or basic and diluted loss per share of $0.71.  This net loss included $10.2 million in non-cash stock-based compensation expense, a $0.4 million non-cash loss on the change in fair value of derivatives, and $33.9 million in charges for non-cash deemed dividends for accounting purposes.

Excluding non-cash gains or losses for stock-based compensation, change in fair value of derivatives, and the non-cash deemed dividend, non-GAAP adjusted net loss was $16.0 million for the third quarter of 2016, or non-GAAP adjusted basic and diluted loss per share of $0.08, compared to non-GAAP adjusted net loss of $26.5 million for the third quarter of 2015, or non-GAAP adjusted basic and diluted loss per share of $0.14.

Excluding non-cash gains or losses for stock-based compensation, warrant compensation, change in fair value of derivatives, and the non-cash deemed dividends, non-GAAP adjusted net loss was $56.7 million for the nine months ended September 30, 2016, or non-GAAP adjusted basic and diluted loss per share of $0.29, compared to non-GAAP adjusted net loss of $82.8 million for the nine months ended September 30, 2015, or non-GAAP adjusted basic and diluted loss per share of $0.46.

Amarin reported cash and cash equivalents of $117.6 million as of September 30, 2016. The cash balance includes an increase of $64.6 million in net proceeds from an equity financing completed in August. The primary purpose of that financing was to fund REDUCE-IT to completion. During the quarter ended September 30, 2016, net cash used in operating activities, including REDUCE-IT costs, was $18.7 million, or approximately $2.7 million excluding REDUCE-IT costs, interest and royalties. As ofSeptember 30, 2016, the company had $17.5 million in net accounts receivable ($22.5 million in gross accounts receivable before allowances and reserves) and $19.8 million in inventory.

As of September 30, 2016, Amarin had approximately 269.2 million American Depository Shares (ADSs) and ordinary shares outstanding, 32.8 million common share equivalents of Series A Convertible Preferred Shares outstanding and approximately 21.2 million equivalent shares underlying stock options at a weighted-average exercise price of $3.36, as well as 10.3 million equivalent shares underlying restricted or deferred stock units.(Original Source)

Shares of Amarin are currently trading at $2.94, down $0.16 or -5.16%. AMRN has a 1-year high of $3.65 and a 1-year low of $1.24. The stock’s 50-day moving average is $2.99 and its 200-day moving average is $2.47.

On the ratings front, Amarin has been the subject of a number of recent research reports. In a report issued on October 19, Citigroup analyst Joel Beatty initiated coverage with a Buy rating on AMRN and a price target of $5.00, which implies an upside of 61% from current levels. Separately, on October 4, Cantor’s Chiara Russo initiated coverage with a Buy rating on the stock and has a price target of $6.00.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Joel Beatty and Chiara Russo have a yearly average loss of 18.7% and 7.8% respectively. Beatty has a success rate of 28% and is ranked #3814 out of 4165 analysts, while Russo has a success rate of 39% and is ranked #3836.

Amarin Corp. Plc is a biopharmaceutical company, which engages in the commercialization and development of therapeutics for cardiovascular health. It has developed and markets Vascepa capsules through wholesale.