Welcome to Amarin Corporation's Conference Call to Discuss its Third Quarter 2022 Financial Results and Operational Update. This conference call is being recorded, October 27, 2022. I would now like to turn the conference call over to Lisa DeFrancesco, Senior Vice President, Investor Relations and Corporate Affairs at Amarin.

Good morning, everyone, and thank you for joining us. Please be aware that this conference call will contain forward-looking statements that are intended to be covered under the Safe Harbor provided by the Private Securities Litigation Reform Act. We may not achieve our goals, carryout our plans or intentions or meet the expectations disclosed in our forward-looking statements. Actual results or events could differ materially, so you should not place undue reliance on these statements. 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 agreements that we may enter into, amend or terminate. For additional information concerning the risk factors that could cause actual results to differ materially, please see the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2021 and our Form 10-Q for the quarter ended September 30, 2022, which have been filed with the SEC and are now available through the Investor Relations section of our website at www.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 VASCEPA. An archive of this call will be posted on Amarin's website in the Investor Relations section. Karim Mikhail, Amarin's President and Chief Executive Officer, will lead our discussion, and Tom Reilly, Amarin's new Chief Financial Officer, will provide a more detailed review of our third quarter 2022 financial results. After prepared remarks, we will open the call to your questions. I remind you that multiple audiences typically listen to calls of this nature, including existing investors, potential new investors, employees, current and potential collaborators and current and potential competitors. As always, in this call, we will attempt to provide constructive information without compromising our competitive and strategic positioning. I will now turn the call over to Karim Mikhail, President and Chief Executive Officer of Amarin. Karim?

Thank you, Lisa. Good morning. And thank you all for joining us today. We began this year embarking on a bold strategy to grow and expand globally. We focused our three dimensional growth strategy, breadth or geographic expansion, heights representing diversification and depth or core operational evolution. Now, with 2022 nearing a close and despite the significant headwinds and challenges faced early in the year, we are pleased to report that we made significant progress across our key priorities, and we continue to achieve what we committed to. Most importantly, we have turned around our cash burn levels as we strengthened our foundation through operational excellence, strengthened our leadership team and laid the groundwork for a true transformation of Amarin in 2023. I'm going to begin today by discussing the results of our cash preservation initiatives because I believe this progress is significant and critical to support our future growth and expansion plans. There are two key initiatives that were central to our effort and the progress delivered. First in June, we took swift action announcing an extensive cost savings plan to reduce our operating expenses by $100 million over 12 months. This initiative was comprehensive and involved cost reductions across the entire organization. And we are beginning to realize the savings this quarter exactly as planned. Second, beginning last quarter, and as part of our companywide focus on operational excellence, we took steps to evolve our supply chain strategy and amend our supplier agreements to align supply arrangements with current and future demand within our US business. These initiatives, which Tom will discuss in more detail shortly, have resulted in significantly lower cash burn quarter-over-quarter. In fact, this quarter we are cash positive, excluding restructuring charges. Also contributing to the improvement of our cash runway is the consistent stabilization…

Thank you, Karim. Good morning, everyone. I am pleased to report our financial performance for the third quarter of 2022. I'm glad to note when excluding the $25 million Q2 restructuring payments made in Q3, we were cash positive in the third quarter of 2022. Let me begin with our revenue performance. For the third quarter of 2022, we reported total net revenue of $89.9 million, including net product revenue of $89.2 million, a decrease of 37% compared to the third quarter of 2021. US product revenue was $87.9 million, a decline of only $2.8 million versus the second quarter of 2022, reflecting relatively stable trends in both volume and price. Beginning last quarter, we are not investing to grow the IPE molecule in the US market, but are investing in sustaining and supporting with a separate brand and prescriber base we have today in the US. While we are pleased with a relatively stable trend, we expect volumes and price will continue to experience some pressure throughout this year and into next year. The results included international product revenue of $1.3 million, which includes European product revenue of $0.7 million. Cost of goods sold for the three months ended September 30, 2022 was $27 million compared to $30.2 million in the corresponding period of 2021. During the three months ended September 30, 2022, Amarin continued the initiative which began last quarter to take steps to amend supplier agreement, to align supply arrangements with current and future market demand, resulting in a charge of $3.1 million this quarter. The renegotiation of these agreements is a very important step in our cash preservation strategy and lowering our future inventory purchases. Excluding the impact of this item, gross margin was 73% for the three months ended September 30, 2022 compared to 79%…

Thank you, Tom, for that financial overview and our results during the third quarter. I'm pleased with the results this quarter and thus far this year. We have made a great deal of progress despite the many challenges. As we look to the remainder of 2022 and into the early part of 2023, we will continue to ensure we remain operationally strong from a cash perspective, dedicated to driving our global expansion plans, with the launch materializing in Europe and continuing to build evidence globally to support diversity VASCEPA/VAZKEPA. And we remain focused on our bold vision to stop cardiovascular disease from being a leading cause of death worldwide. And with that, operator, we are ready to take questions.

[Operator Instructions]. Your first question for today is coming from Michael Yee.

It's Mike Yee from Jefferies. We had two questions. First, congrats on the US. It looks to be quite stable, which is great. Do you guys expect continued generics to come in at some point as supply opens up or do you also have exclusive contracts and preferred contracts, which is also helping. Can you remind me how that dynamic works in the US? That was give us some visibility there. And then secondly is on Europe. I know that you're working on some regions and they're coming on. Can you just describe how you expect the cadence and, importantly, the investment for the spend to grow there as you get through 2023?

We'll start with the first question with regards to generic. Just to remind, this was a very unusual generic launch sequence. We've had one in October of 2021, then we've had one six months later, then the third one came in Q1 2022. Apotex launched in February, and we have also seen Teva launch the 500 milligram just two weeks of this last quarter. So we still see new generic entrants. Now, so far, Teva only came with a 500 milligram, which is really 2% of the market. We'll have to wait and see when they come, if they come, with the 1 gram. I think what we can share is that even with three on the market, we've seen a stabilization of our prescription and our revenue in the first, second and third quarter of this year. So, we keep tracking this. The situation is dynamic. But having said that, we feel confident that where we stand today, we did stabilize the revenue. We are losing in low-single digit in prescription and things are progressing as we plan them. Now, of course, we have to be ready for any possible scenario, right? We could have different events coming up. And for that, we have multiple sorts of scenarios ready. We are ready to go for an authorized generic and press on the button, and immediately switch if we need be, and even other plans that that we could implement in that case. But that's for the US. We feel confident the situation is so far stable, and we continue our efforts with our core efficient team in the US. Moving on to Europe, as you've seen, we have had consistent pricing reimbursement, positive decisions in Europe, right? We started with Sweden at the price of $180 per month, almost $2,000 annually. Then we've had the UK, which is far more sophisticated, more complex system, that also agreed to the same price. This quarter, we announced a third country, which is Finland announcing also approval for this price. And just to give even more color and detail, Finland initially rejected the file completely, and we had to resubmit from scratch, and we still got the price we asked for from Finland aligned with the other markets. So things are progressing well. You've just heard also that we received a positive scientific assessment from the Netherlands, we received the positive assessment from Italy, and we are in final price negotiation in Spain. So, I don't want to say we're accelerating, but things are progressing in the right direction with regards to pricing reimbursement. At the same time, we are starting now commercial launches, right? We're starting commercial launches in the UK and in Sweden and things are progressing as planned and we believe we will be able to share some UK metrics in the next quarters to ensure that all investors and shareholders are updated with our performance in Europe.

Your next question is coming from Georgi Yordanov.

This is Georgi Yordanov from Cowen and Company. Maybe just to follow up on the previous question. Just on the generics, do you have any idea or thoughts around like why their share has plateaued around that 10% to 15%? And your renegotiated supply agreement that you mentioned, does that kind of maybe provide additional capacity for those generics? And then I just have one follow-up.

I don't know which company you really quoted as to flat in terms of generic share. Some of them are at 15%, some are at less. The reality is this is now an open market. And every generic is going after its business. So, we do not know why their share is where it is. We know what we are doing, right? What we are doing is we're fully focused on brand promotion. We're not investing a dollar to grow the molecule, which ends up going to generic business, right? So, that's what we're focusing on. We're making sure we have an appealing offer to our plans, so that they continue to work with us because we have a sustained supply with efficient cost of goods. So that's what we are doing. And so far, as you can see, it is working, right? We are stabilizing the erosion from a share perspective. On quarterly basis, we are at 60%, which is great. Now what can happen tomorrow, look, for the moment, our strategy is working. We continue to monitor. Is there enough supply for the generics? You bet, there is enough supply? Right? So, if there is an estimate or an assumption that generics are not selling because they don't have enough supply, I can tell you it takes 18 months to have enough supply. So we've been beyond the 18 months. With generics on the market, there is enough supply beyond what anybody probably needs. So it's not a question of supply. Now, with our renegotiated arrangements, this was necessary from a cash burn perspective, right? And we you see the result and the very positive impact on our cash burn because that's an initiative that's here to stay. So, this is not something that you do that, in a way, you eliminate cash burn for a quarter and then it's going to come back. In reality, this is going to be a stable situation. We have enough inventory for the US. And we don't believe that the extra supply that's going to anybody else can really change the story because there was already enough supply on the market even before that. So that's not changing really the situation.

My follow-up was, just as we think about the positive decision and the upcoming launch in the UK, do you – kind of like as we try to understand the size of that specific market, in particular, do you have any kind of like data on usually what percentage of pharmaceutical sales in Europe come from the UK? And how should we be thinking about the ramp up there in terms of the launch?

The UK is definitely one of the top five, right? You're talking about a population of close to 70 million. It's a big market. In general, it will usually be number three, number four, depending on the uptake because it's a highly scientific market, by the way. Prescribers tend to be skeptical. And that's an advantage for us because we have evidence. So we believe it's a market that we can do well early on. So far, we can see that we are tracking better than analogs in terms of formulary inclusion. That's the most important proxy that tells you how much uptake you're going to get because your product has to be listed and has to be funded on the local formulary. So far, we're ahead of analogs. So, it is a significant market. We are confident that this is going to be an important launch. And again, we continue to prepare and we will update over the next quarter with the results.

Congrats on the progress.

Your next question for today is coming from Roanna Ruiz.

Roanna Ruiz from SVB Securities. I wanted to check in a little bit about Germany and arbitration decision. [indiscernible] if you still expect to be on track for a mid-November update there?

On Germany, the timing of the arbitration is mid to end November. As you've seen from prior disclosures, we already took all the actions needed basically to eliminate cash burn in Germany waiting for a decision. In general, arbitrations usually do not lead to a positive decision. Let's be very real. That's usually a low probability of success. And if you succeed, usually there is risk in lowering the price, which will have impact on other markets. The decision we took, which is to say, look, we're going to suspend operations in Germany, was to protect the price in the UK and Sweden and Finland, the price we're negotiating in Spain, as you can imagine, and other prices because the value of Germany as a country – let's assume that a large market is 15% of total Europe, right? So, if that country is going to give you a price 15% less than your average European, you are at a loss, right? So, we are not going to accept a price less than 15% because so far we have a very consistent approval pricing level at the European level, right? If you look at our Finland price, it looks today maybe just like lower than the UK. In fact, it's only because of exchange. In reality, it's higher based on earlier calculations. So that's really for Germany and arbitration.

That makes sense. I also want to check in on your fixed dose combination work for VASCEPA with a statin. Any updates on how that's progressing? And could we expect any data or program updates later this year or into 2023?

We're working very hard on this initiative. And you've seen that we're making a lot of effort to keep our disclosures to a minimum because there is a lot going on that we need to keep sort of confidential until the right moment. Once we will be ready to communicate, we will and it is over the next quarter or two that we are going to come out with an update. So there's a lot going on. It's just that it's not the right time to disclose it at this stage, but the program continues and progresses successfully.

Your next question for today is coming from Louise Chen.

This is Carvey on for Louise from Cantor. First question is, what do you expect to be the biggest catalyst in the next 12 to 18 months? Second question is on the $100 million cost savings through mid-2023, can you speak more about the pace of saving realization? Should we expect more savings to be realized early on, say, later of this year or more so the beginning of next year? And our last question is, you just guided the commercial launch in Hong Kong for some time this year, which is a separate track from China? Is there any updates here?

I'll take the first question about the most important catalyst. I believe the most critical one is for us to achieve pricing reimbursement in another large market. This is really what's going to drive shareholder value. The price that we have in the UK is very positive. But I think the key question is, with the situation in Germany and the challenges we face, can we actually achieve the same pricing and reimbursement level in other larger markets. And that's a very critical one. And we are working to deliver on this over the next few months, in the very near term, because we are in very active pricing negotiation with the Spanish government. So to me, that's one of the most critical key milestones. Another one would be that we come out with an update on our fixed dose combination. I think there's very little known about this at this stage. And when we will go public with this, many of the shareholders will understand the value that this fixed dose combination really brings short and long term for the business. So, that's really at a high level. Now for the question on cost savings and sequence, I'll leave Tom sort of give more detail on that.

We committed to $100 million of cost savings through mid of 2023. And you'll see, for this quarter, we realized just about approximately $25 million. So the way to think about this on a moving forward basis over the next three quarters is within that range on quarterly basis. So, we'll deliver the $100 million. I think the other thing just to keep in mind, related to how we stabilize our cash burn and our operating expenses, we've been really timely with our investments in Europe as we're getting reimbursement. So as reimbursement comes in, obviously, the spend will adjust. And if it doesn't come in on the time we're expecting then, we'll adjust accordingly as well. So we're being very prudent on that, as we continue with our cash preservation.

And finally, on Hong Kong and China, as you know, Asia is still by the way severely impacted by COVID. And things sort of start, restart in multiple – and we are in discussions to see what is the best sort of moment to go ahead with a launch. Hong Kong is a small market. Honestly, we're focusing more on the larger ones that will make a big difference in creating shareholder value. And as you've seen from our disclosures, we put in a lot of information about updates on filing in other Asian markets because we believe it's so critical when we are active in Asia that we're active in multiple territories because they do synergize our effort at the end of the day.

Your next question for today is coming from Daniel Wolle.

This Daniel from J.P. Morgan. Karim, you highlighted a potential peak opportunity of $1 billion for Europe. Does that assume launch in Germany as well? And within Germany, you sort of mentioned that Finland, you got rejected, but then you still managed to get an approval. You have outlined a process by which you're trying to submit a dossier [indiscernible] restart again. So maybe can you give us a little bit detail on what the process is involved? And what type of new clinical evidence can you provide to support the therapeutic benefit of VAZKEPA. And I have one follow-up question.

With regards to Germany, yes, we confirm based on the pricing and reimbursement levels that we are getting in Europe today that we believe that the peak is upwards of $1 billion, right, even without Germany, right? Now, the way it's going to work is the following. We currently today in an arbitration. We'll have to wait to see how the arbitration decision goes. There has been one precedent on the German market where a product that received a negative decision that went back and applied. In that case, they actually used real world evidence, data to support the clinical benefit. I'm not saying this is exactly what we're going to do. But I'm just mentioning that there is a path. There is a very specific path to resubmitting a file in Germany. Having said that, the most important part today is to focus on the other larger markets, making sure that we get pricing reimbursement in Spain, making sure we get pricing reimbursement in Italy and France because that's really what's going to drive the value overall.

In terms of generics in the US, beyond supply issues, we've heard that pricing of APIs have become more competitive for the generic manufacturers. Do you believe there's any impact from that on the stability of VASCEPA?

There was a period where pricing was stable. Then there was a period that pricing was unstable beginning of this year. So it's difficult to predict at what price and whether there will be. But, look, it would be unreasonable not to think that there will be future price competition. If you have more generics, theoretically, you're going to have more price competition. And we have taken that into account in the way we look at the business and the way we sized our footprint. I remind people that, a year ago, our footprint was 780 people. Today, our footprint is 75. So we are at a 10% footprint. So that's why we believe we are still driving significant contribution margin from the US no matter what the price impacts are or volume impacts are. And if we need to, we have an authorized generic plan ready with a lot of supply that's just ready to go to the market. And that's why you've seen us confident in coming out and saying we're extending our cash runway because we believe in whatever scenario we're going to be. We will be able to get to revenue from Europe with our investments and with the contribution margin we're getting from the US.

And last question from me. Understanding that you haven't disclosed much about the fixed dose combo, do you believe it can provide any new patent profile to VASCEPA by any chance in the US?

There is a question of patents. But there is also a question of other protection. And today, let's face it, this opportunity is going to be very, very critical for Europe, right? Because this is where we're talking about the $1 billion opportunity. This is where we're creating shareholder value. So most of our efforts are really making sure that that's going to add additional opportunity to Europe, which I believe everybody's seeing moving in the right direction. What will it provide to the US will depend very much on where the generic market is going to be when we come out with a fixed dose combination, which is going to be a couple of years or more from now. So this is really going to be focused mainly on Europe and international markets. And we're going to talk more about it when we are ready to disclose more details.

[Operator Instructions]. Your next question for today is coming from Paul Choi.

Paul Choi with Goldman Sachs. A quick financial question for Tom, just one point of clarification with regard to the $100 million in savings that you're targeting through mid-23. How much of that is incremental savings from the current run rate versus the discontinuation of operations from Germany? Can you quantify that for us?

The way we've previously disclosed and we're committed to – the way we look at this is we looked at the full year of 2021 as our base, which was approximately $450 million of operating expenses. So we've committed the $100 million of savings that we anticipate through mid of 2023 will be based off that $450 million benchmark.

I'm just trying to understand how much is like from just your discontinuation of operations in Germany versus your 2021 base of that $100 million target?

It's baked in. It's baked in. It's part of the overall net investments related to Europe.

A follow up for Karim. You talked about some additional partners for geographies where you're not going to necessarily be directly commercializing yourself in ex-US markets. Can you maybe just give us a sense as to when those partnerships or agreements might potentially be finalized? And then how you're thinking about the incremental launch timing in those external markets relative to the US?

We are trying to align the dates of these partnerships with the dates of regulatory approvals because that's really when it becomes critical. And for the moment, we did discuss and engage with local partner in some of the larger markets internationally. We did engage with regional partners in other regions, like Asia or Latin America, but we're also engaging with global partners that can take multiple territories at an international level and we're working very hard to align those approvals. We're going to have some approvals by end of this year, some next year and some 2024. So that continues to be a top priority because we believe that that's just going to open another revenue stream with no basically cost – no burden on our side. So, it's definitely a priority. And hopefully, we will be announcing something by early 2023.

That is all the time we have for questions today. I would like to turn the floor back over to the Amarin management team for closing remarks.

I just want to thank everyone. This has been a very solid quarter coming up from Q1 and Q2, with US revenue stabilization, the fact that we are cash positive excluding restructuring charges and we continue to make strides in pricing reimbursement in Europe and now launching effectively in one of the largest countries. So, we thank you. And we look forward to speak in the next quarter and to update you on our results. Thank you all.

Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.