Amarin Corporation plc (ADR) (NASDAQ:AMRN), a biopharmaceutical company focused on the commercialization and development of therapeutics to improve cardiovascular health, today announced financial results for the quarter and year ended December 31, 2015, and provided an update on company operations.
Key Amarin operating achievements since September 30, 2015, include:
- Revenue growth: Recognized $26.4 million in net product revenue from Vascepa sales and $26.6 million in total revenue in Q4 2015, reflecting a 24% increase over Q3 2015 net product sales and 60% increase over Q4 2014 net product sales, and leading to full-year net product revenue of $81.0 million and full year total revenue of $81.8 million, increases of 49% and 51%, respectively, over 2014;
- Prescription growth: Increased normalized prescriptions, based on data from Symphony Health Solutions and IMS Health, by 14% and 15%, respectively, compared to Q3 2015, representing an increase of approximately 52% and 55%, respectively, compared to Q4 2014;
- Gross margins: Achieved gross margin on product sales of 68% during Q4 2015, the highest to date in any quarterly period, and full-year gross margin of 66% driven by ongoing improvements in product costs;
- R&D progress: Exceeded 99% enrollment in REDUCE-IT cardiovascular outcomes study with the cumulative primary cardiovascular event rate tracking to expectation and independent research further increasing the company’s confidence in the success of this important study; and
- Strengthened management team: Appointed Craig Granowitz, M.D., Ph.D., former senior vice president and head of global medical affairs, global human health at Merck, to newly created position of chief medical officer; and hired a new head of managed care team to support expanded commercial growth and further prepare for REDUCE-IT success.
“Throughout 2015, Amarin remained focused on strengthening its commercial operations and driving revenue growth while investing in research critical to improving care for patients with persistently high triglycerides and increased cardiovascular risk,” commented John F. Thero, president and chief executive officer of Amarin. “We believe strongly in the current and future value of Vascepa. During the course of this past year, we significantly advanced our REDUCE-IT cardiovascular outcomes study and took unprecedented steps to secure our right to expand promotion of Vascepa. Our focus and achievements resulted not only in significant revenue growth for 2015, but position us for continued growth in 2016 and the years that follow.”
Amarin’s strong revenue growth in both the fourth quarter and year ended December 31, 2015 resulted from greater demand as prescriptions and resulting shipment volumes of Vascepa to wholesalers in support of reorders and new orders of Vascepa all increased.
Normalized prescriptions (estimated) for the fourth quarter of 2015, based on prescription data from Symphony Health Solutionsand IMS Health, totaled approximately 192,000 and 203,000, respectively. These prescription levels represent growth of approximately 14% and 15%, respectively, compared to the quarter ended September 30, 2015, and an increase of approximately 52% and 55%, respectively, compared to the same quarter in 2014.
Introducing healthcare professionals to additional information regarding Vascepa and its unique single active ingredient ethyl-eicosapentaenoic acid (EPA) favorably impacted Vascepa prescriptions in the fourth quarter of 2015. In particular, in August 2015, Amarin began to educate healthcare professionals on the successful results of the phase 3 ANCHOR study of Vascepa. This expanded promotion followed a previously announced United States District Court declaration which confirmed that Amarin may engage in truthful and non-misleading speech promoting Vascepa to healthcare professionals beyond the use approved by the FDA, with specific reference to patients studied in Amarin’s successful ANCHOR study of Vascepa, i.e., patients with persistently high triglycerides after statin therapy.
The increase in Vascepa revenues during 2015 also reflects the efficiency, high level of engagement, low turnover and increased productivity of Amarin’s sales force supported by expanded managed care coverage and reports of positive patient experience when treated with the therapy. Sales and marketing of Vascepa by Amarin’s co-promotion partner, Kowa Pharmaceuticals America, Inc., also contributed to this growth.
REDUCE-IT Nearing Enrollment Completion and on Target for 60% of Primary Events
The REDUCE-IT cardiovascular outcomes trial continues to track to prior estimates, supporting onset of the predefined target (1,612th) cumulative event in 2017 and publication of results in 2018. The results of this important trial could lead to new treatment options and improved medical care for tens of millions of patients. While cholesterol management with statins has been shown to significantly reduce cardiovascular risk, significant residual cardiovascular risk remains. REDUCE-IT is designed to test the hypothesis that Vascepa, when added to statin therapy, significantly reduces cardiovascular risk compared to statins alone in high-risk patients with above normal triglyceride levels.
Thus far, over 99% of the approximately 8,000 patients targeted for enrollment in the event-driven REDUCE-IT study have been enrolled and Amarin has pre-notified all clinical trial sites in the REDUCE-IT study of its intention to cease further patient accrual. Approximately 20,000 patient years of study experience have been accumulated in REDUCE-IT since enrollment commenced in 2011.
Based on historical event rates in the study, Amarin expects to attain 60% of the target aggregate number of primary cardiovascular events during the first half of 2016, triggering a pre-specified interim review by the independent data monitoring committee (DMC) of the trial’s efficacy and safety results. After the 60% target has been achieved, additional time is required by the contract research organizations to finish collecting and preparing data for transfer to and analysis by the DMC. As is typical for large-scale, multi-national studies, this data preparation and transfer process is expected to take several months, independent of the robustness of the underlying safety and efficacy data.
Given the high thresholds of overwhelming efficacy and safety required prior to an independent DMC recommending an early stop to a cardiovascular outcomes trial like REDUCE-IT, management continues to expect that the DMC’s interim analysis will result in a recommendation to continue the REDUCE-IT study as planned.
While clinical, epidemiological, and genetic data has historically supported the hypothesis of Amarin’s on-going REDUCE-IT study, the body of research exploring the potential benefits of EPA continues to grow, adding to Amarin’s excitement regarding the potential for REDUCE-IT success. Research in 2015, both sponsored by Amarin and independently by the international scientific community, continues to explore unique attributes of pure EPA that could play important roles in support of cardiovascular health. This research has generated increased interest in Vascepa in the scientific community.
“With the residual risk of cardiovascular disease in excess of 60% despite statin therapy, tens of millions of statin-treated patients with persistently high triglycerides remain in need of additional therapeutic options to further reduce that risk and improve their cardiovascular health,” continued Mr. Thero. “As the body of research grows supporting the potential benefits of pure EPA, the active pharmaceutical ingredient in Vascepa, our confidence increases that REDUCE-IT may be the first prospective study to generate data supporting the cardiovascular benefit of additional drug treatment to statin-treated patients. We believe Vascepa is uniquely positioned in the REDUCE-IT study to show benefit in a high-risk patient population not previously studied in a prospectively designed blinded randomized outcomes trial.”
Financial Results and 2016 Guidance
Net product revenue for the three months ended December 31, 2015 and 2014 was $26.4 million and $16.5 million, respectively. Net product revenue for the years ended December 31, 2015 and 2014 was $81.0 million and $54.2 million, respectively. These increases in product revenue were primarily attributable to increases both in new and recurring prescriptions of Vascepa. In addition, Amarin recognized licensing revenue of $0.8 million in the year ended December 31, 2015 related to theEddingpharm development and commercialization agreement executed in February 2015, for which development continues to track forward consistent with our expectations. Based on current estimates, Amarin anticipates approximately $0.9 million in licensing revenue to be recognized from the Eddingpharm agreement during 2016.
Amarin anticipates that its expanded ability to promote Vascepa will continue to drive increases in Vascepa revenues in 2016. Based on 2015 growth and anticipated trends, the company reiterates its guidance estimate of total 2016 net product revenue of between $105 million and $120 million. Revenue within this range is expected to position Amarin to enter 2017 cash flow positive from commercial operations, excluding REDUCE-IT and other R&D expenses not required to sustain current commercial operations.
Cost of goods sold for the three months ended December 31, 2015 and 2014 was $8.4 million and $5.8 million, respectively. Cost of goods sold for the years ended December 31, 2015 and 2014 was $27.9 million and $20.5 million, respectively. Gross margin on product sales improved to 68% and 66% in the quarter and year ended December 31, 2015, respectively, as compared to 65% and 62% in the quarter and year ended December 31, 2014, respectively. The improvement in gross margin on product sales in 2015 was primarily driven by lower unit cost active pharmaceutical ingredient (API) purchases. Amarin received initial batches of API from its newest supplier in Q3 2015 and, based on competitive pricing from this and other suppliers, generated its highest quarterly gross margin since Vascepa was launched in 2013. Amarin anticipates gross margin as a percentage of product sales to continue to improve in 2016.
Selling, general and administrative (SG&A) expenses for the three months ended December 31, 2015 and 2014 were $23.5 million and $18.4 million, respectively. SG&A expenses in the years ended December 31, 2015 and 2014 were $101.0 million and$79.3 million, respectively. This increase was primarily driven by higher co-promotion fees payable to Kowa Pharmaceuticals America, Inc. reflecting both a full year of co-promotion and higher net product revenues in 2015. The increase in SG&A expenses was further driven by higher sales and marketing costs primarily associated with the federal court decision that expanded our right to promote Vascepa, an increase in non-cash stock-based compensation expense, and higher legal fees. Amarin currently anticipates that prior to REDUCE-IT data, with the exception of increases in the co-promotion fees expected to be earned by Kowa Pharmaceuticals America, Inc. and non-cash costs, its SG&A costs will be relatively flat during 2016 as compared to 2015.
Research and development expenses for the three months ended December 31, 2015 and 2014 were $13.3 million and $12.4 million, respectively. Research and development expenses for the years ended December 31, 2015 and 2014 were $51.1 millionand $50.3 million, respectively. This modest increase was primarily driven by increased internal staffing and overhead costs and non-cash stock-based compensation partially offset primarily by quarterly variability in costs related to the REDUCE-IT study. In 2016, research and development costs, excluding non-cash costs, are expected to vary from quarter to quarter due to the timing of REDUCE-IT costs.
Under GAAP, Amarin reported a net loss of $21.9 million for the fourth quarter of 2015, or basic and diluted loss per share of$0.12. This net loss included $3.7 million in non-cash share-based compensation expense, a $0.7 million non-cash loss on the change in fair value of derivatives, and a $1.3 million non-cash gain on extinguishment of debt. Amarin reported a net loss of$19.7 million for the fourth quarter of 2014, or basic and diluted loss per share of $0.11. This net loss included $2.7 million in non-cash share-based compensation expense and a $1.6 million non-cash gain on the change in fair value of derivatives.
Under GAAP, Amarin reported a net loss of $149.1 million for the year ended December 31, 2015, or basic and diluted loss per share of $0.83. This net loss included $13.9 million in non-cash share-based compensation expense, a $1.1 million non-cash loss on the change in fair value of derivatives, a $1.3 million non-cash gain on extinguishment of debt, and $33.9 million in charges for non-cash deemed dividends for accounting purposes. For the year ended December 31, 2014, Amarin reported a net loss of$56.4 million, or basic and diluted loss per share of $0.32 and $0.36, respectively. This net loss included $9.0 million in non-cash share-based compensation expense, $0.5 million in non-cash warrant compensation income, a $13.5 million non-cash gain on the change in fair value of derivatives, and a $38.0 million non-cash gain on extinguishment of debt.
Excluding non-cash gains or losses for share-based compensation, change in fair value of derivatives, and gain on extinguishment of debt, non-GAAP adjusted net loss was $18.8 million for the fourth quarter of 2015, or non-GAAP adjusted basic and diluted loss per share of $0.10, compared to non-GAAP adjusted net loss of $18.5 million for the fourth quarter of 2014, or non-GAAP adjusted basic and diluted loss per share of $0.11.
Excluding non-cash gains or losses for share-based compensation, warrant compensation, change in fair value of derivatives, gain on extinguishment of debt, and the non-cash deemed dividends, non-GAAP adjusted net loss was $101.5 million for the year ended December 31, 2015, or non-GAAP adjusted basic and diluted loss per share of $0.56, compared to non-GAAP adjusted net loss of $99.4 million for the year ended December 31, 2014, or non-GAAP adjusted basic and diluted loss per share of $0.57.
Amarin reported cash and cash equivalents of $107.0 million at December 31, 2015, representing a net decrease of $12.0 millionfrom reported cash and cash equivalents of $119.0 million at September 30, 2015 and a net decrease of $12.5 million from reported cash and cash equivalents of $119.5 million at December 31, 2014. The change in cash balance during 2015 reflects the receipt of a $15.0 million up-front licensing fee, net proceeds from preferred stock issuances of $57.7 million, and net proceeds of $11.0 million from the issuance and extinguishment of debt, offset by cash used in operating activities. Net cash used in operating activities during the year ended December 31, 2015 included approximately $56.6 million in sales and marketing related expenses and approximately $38.2 million of costs incurred through our contracted clinical research organization and for clinical trial materials in support of the REDUCE-IT cardiovascular outcomes study. Cash used for operating activities during the year ended December 31, 2015, included approximately $20.0 million more for supply purchases than spent during the corresponding period of 2014 as Amarin began 2014 with significantly higher inventory levels.
As previously reported, in November 2015 the company issued $31.3 million in aggregate principal amount of new 3.5%November 2015 exchangeable senior notes due 2032, with a put option in January 2019, after anticipated completion of REDUCE-IT, for $27.5 million, of which $15.9 million of such proceeds were used to repurchase $16.2 million in aggregate principal amount of the company’s 2012 Notes inclusive of accrued but unpaid interest thereon, which had a put option in January 2017. Approximately $0.6 million of the proceeds were used to pay transaction costs. The remaining $11.0 million is intended to be used for working capital and general corporate purposes.
As of December 31, 2015, Amarin had approximately 183.4 million American Depository Shares (ADSs) and ordinary shares outstanding, 32.8 million common share equivalents of Series A Convertible Preference Shares outstanding, and approximately 17.8 million equivalent shares underlying stock options at a weighted average exercise price of $3.76, as well as 10.9 million equivalent shares underlying restricted or deferred stock units. (Original Source)
Shares of Amarin closed yesterday at $1.43. AMRN has a 1-year high of $3.33 and a 1-year low of $1.24. The stock’s 50-day moving average is $1.45 and its 200-day moving average is $1.91.
On the ratings front, Oppenheimer analyst Akiva Felt assigned a Hold rating on AMRN, in a report issued on December 9. According to TipRanks.com, Felt has a total average return of -2.1%, a 32.0% success rate, and is ranked #3051 out of 3666 analysts.
Amarin Corp PLC is a biopharmaceutical company with expertise in lipid science. The Company is engaged in commercialization and development of therapeutics to improve cardiovascular health.