Amarin Corporation PLC ADR (AMRN) is a fast growing company that continues to report positive earning for Q3 2019, after entering this territory for the very first time in Q2 2019. Amarin is a foreign bio-tech pharmaceutical company that is a public limited company incorporated under the laws of England and Wales, with its principal offices located in Dublin, Ireland.
COMPANY BUSINESS PROFILE
Amarin Corporation PLC is a rapidly growing, innovative pharmaceutical company focused on developing therapeutics to improve cardiovascular health. Amarin’s product development program leverages its extensive experience in lipid science and the potential therapeutic benefits of polyunsaturated fatty acids. Vascepa (icosapent ethyl) is Amarin’s first FDA-approved drug and is available by prescription.
The Company’s first drug, Vascepa (icosapent ethyl) is FDA-approved in the United States for treatment of patients with very high triglyceride levels (TG =500 mg/dL). The drug is also available by prescription in Lebanon and the United Arab Emirates. Amarin’s commercial partners are pursuing additional regulatory approvals for Vascepa in Canada, China and the Middle East and Amarin is evaluating potential commercial partnership arrangements for other countries while prioritizing promotion of Vascepa in the United States through Amarin’s sales team. In addition, the company has successfully completed a globally conducted, cardiovascular outcomes study with results which show that Vascepa lowers cardiovascular risk in patients with cardiovascular risk factors which cannot be addressed with cholesterol managing drugs alone. Amarin plans to seek expanded labeling for Vascepa to reflect the results of this outcomes study, called the REDUCE-IT study.
Vascepa (icosapent ethyl) capsules are a single-molecule prescription product consisting of the omega-3 acid commonly known as EPA in ethyl-ester form. Vascepa is not fish oil, but is derived from fish through a stringent and complex FDA-regulated manufacturing process designed to effectively eliminate impurities and isolate and protect the single molecule active ingredient from degradation. Vascepa, known in scientific literature as AMR101, has been designated a new chemical entity by the FDA. Amarin has been issued multiple patents internationally based on the unique clinical profile of Vascepa, including the drug’s ability to lower triglyceride levels in relevant patient populations without raising LDL-cholesterol levels.
Amarin Investor Presentation October 2019
Here’s an excellent overview about Amarin’s business.
AMARIN (AMRN) CORPORATE FINANCIALS
Third-Quarter 2019 Highlights
• Total revenue increased 103% YoY to a record high $112.4 million, primarily driven by increased volume of Vascepa sales.
This continues the rapidly increasing growth of net revenue Y-o-Y over the recent past 7 quarters, showing 27%, 16%, 17%, 44%, 67%, 91% and 103%.
• Number of Vascepa prescriptions grew 89% Y-o-Y to a record high 865,000 for Q3 ’19 from 458,000 for Q3 ‘18, based on data compiled by third party Symphony Health, and 72% Y-o-Y to 787,000 for Q3 ’19 from 457,000 for Q3 ‘18, according to another third party source IQVIA.
[It’s important to note here that Vascepa is affordably priced and is a favorably low-cost drug for a branded medication. The majority of patients covered by insurance who obtain prescriptions for Vascepa pay a monthly co-pay charge of $9.99 or less. A patient with commercial insurance can pay as little as $9.00 for a 90-day supply prescription of Vascepa.]
• For the second consecutive time, positive earnings of $4.5 million non-GAAP net income and $0.01 non-GAAP diluted EPS for Q3 ’19 [compared to non-GAAP adjusted net loss of $17.8 million for Q3 ’18, or non-GAAP adjusted basic and diluted loss per share of $0.06. ]
• Q3 ’19 gross margin of 77.36% continues a strong upward trend compared to 75.52% for Q3 ’18.
• Operating margin improved substantially to -4% for Q3 ’19 from -40% for Q3 ’18.
• More significantly, non-GAAP profit margin substantially increased to a positive 4% for Q3 ’19 compared to -32% for Q3 ’18.
• International regulatory activities on track: Amarin continues to target making its submission, before the end of 2019, seeking regulatory approval of Vascepa in Europe. Regulatory review of Vascepa in Canada continues to progress through Amarin’s commercial partner in Canada with approval anticipated near the end of 2019 (late 2019 or early 2020).
• Medical community support for using Vascepa to help patients: Following the American Diabetes Association (ADA) new medical guidelines issued in March 2019, leading cardiology, endocrinology and lipidology societies have updated their clinical guidelines or provided varying other forms of advisories that reflect the results of the REDUCE-IT study for patients who despite well-controlled LDL-cholesterol have elevated triglyceride levels (>135 mg/dL) and other cardiovascular risk factors. In Amarin’s view, it is extraordinary to witness this broad level of medical society support prior to FDA approval for this important medical indication. These societies include the National Lipid Association, American Heart Association, European Society of Cardiology and the European Atherosclerosis Society. Separately, an independent drug pricing watchdog group concluded that Vascepa is cost effective for cardiovascular risk reduction even under the most stringent standards of that group, which is rarely achieved in their analysis.
**AMARIN** **11/08/2019** GICS SECTOR Healthcare SUB-INDUSTRY Biotechnology MARKET CAP $ 6.274 B Employees 530 52-WK HIGH 23.91 PRICE/SHARE 17.48 52-WK LOW 11.78 Price Y-T-D change 28.4% Price 52-wk change (16.9%) EV/EBITDA (mrq) (102.7%) Non-GAAP P/E (ttm) N/A Forward P/E N/A EV/Revenue (ttm) 14.9 P/S (ttm) 15.9
EV/Revenue jumped from 6.41 for FY 2017 to 18.02 for FY 2018 and is now at 14.9, and P/S currently is at 15.9, all this resulting from the explosive spike in stock price back in September 2018. On Friday 9/21/18, Amarin stock price closed at $2.99. On Monday 9/24/2018, AMRN opened at 10.44, up 249% and closed at 12.40 for a one day whooping gain of 314%. Analysts estimated that Vascepa with approval of a broader label expansion in the U.S. could generate up to $2 billion in sales. This explosive spike in stock price, in turn, caused drastic substantial changes in market cap, EV/EBITDA, EV/Revenue and P/S among others.
As of 11/8/2019, while Amarin share price is down 17% over the recent 52-week period, it’s up 28% Y-T-D, causing Zacks, which believes that investors should always be looking for companies that are outperforming their peers, to compare this with the overall Medical sector (with 887 individual stocks) and, specifically, the Medical-Biomedical and Genetics industry (with 376 individual stocks) where Amarin belongs. Zacks found that Amarin’s 28% Y-T-D is performing better than both the Medical sector at 2.95% and the Medical - Biomedical & Genetics industry at 0.85%. Also, currently Amarin has a Zacks Rank of #1 (Strong Buy). The Zacks Rank emphasizes earnings estimates and estimate revisions to find stocks with improving earnings outlooks. Over the past three months, the Zacks Consensus Estimate for Amarin’s full-year earnings has moved 8.82% higher. This shows that analyst sentiment has improved and the company’s earnings outlook is stronger. I agree with the Zacks conclusion that Amarin will likely be looking to continue its solid performance, so investors interested in Medical stocks should continue to pay close attention to this company.
**Non-GAAP Non-GAAP GAAP GAAP** **MARKET Sequen- NET Diluted NET Diluted Closing** **AMARIN CAP REVENUE YoY tial INCOME EPS INCOME EPS Price** **FY/QTR ($ B) ($ M) Change Change ($ M) ($) ($ M) ($) ($)** **FY 19 est 380-420 66%-83%** **Q3 ’19 5.420 112.408 103.2% 11.5% 4.501 0.01 (3.462) (0.01) 15.16** Q2 '19 6.412 100.792 91.5% 37.5% 6.063 0.02 (1.820) (0.01) 19.39 Q1 '19 6.837 73.278 66.8% (5.2%) (17.547) (0.05) (24.431) (0.07) 20.76 **FY 2018 4.435 229.214 26.6% 26.6% (97.639) (0.33) (116.445) (0.39) 13.61** Q4 ‘18 4.435 77.330 43.6% 39.8% (28.895) (0.09) (33.670) (0.11) 13.61 Q3 ‘18 4.099 55.323 16.8% 5.1% (17.820) (0.06) (24.471) (0.08) 16.27 Q2 ‘18 0.807 52.643 16.4% 19.9% (30.592) (0.10) (34.210) (0.12) 3.09 Q1 ‘18 0.874 43.919 26.8% (18.5%) (20.333) (0.07) (24.095) (0.08) 3.01 **FY 2017 1.084 181.104 39.2% 39.2% (53.905) (0.20) (67.865) (0.25) 4.01** Q4 ‘17 1.084 53.866 39.2% 13.7% (18.976) (0.07) (22.465) (0.08) 4.01 Q3 ‘17 0.983 47.360 44.7% 4.7% (7.330) (0.03) (10.825) (0.04) 3.50 Q2 ‘17 0.950 45.241 36.6% 30.6% (10.009) (0.04) (13.634) (0.05) 4.03 Q1 ‘17 0.925 34.637 35.6% (10.5%) (17.590) (0.07) (20.941) (0.08) 3.20 **FY 2016 0.839 130.084 59.1% 59.1% NA NA (86.350) (0.41) 3.08** Q4 ‘16 0.839 38.696 NA NA (27.453) (0.10) 3.08 Q3 ‘16 0.602 32.734 NA NA (15.772) (0.08) 3.19 Q2 ‘16 0.390 33.111 NA NA (13.354) (0.07) 2.16 Q1 ‘16 0.276 25.543 NA NA (29.771) (0.16) 1.53 **FY 2015 0.345 81.756 50.8% NA NA (149.590) (0.83) 1.89** **FY 2014 0.174 54.202 NA NA (56.364) (0.36) 0.98**
The number of Vascepa prescriptions has increased substantially and rapidly year-over-year for the recent past 6 quarters, i.e.,
22%, 19%, 33%, 58%, 76% and 89%, according to Symphony Health, and
24%, 22%, 32%, 55%, 59% and 72%, according to IQVIA,
as shown in the following table.
**Vascepa Symphony Sequential Y-o-Y Sequential Y-o-Y** **PRESCRIPTIONS Health Change Change IQVIA Change Change** **Q3 ‘19 865,000 14.4% 88.9% 787,000 15.2% 72.2%** Q2 ‘19 756,000 22.3% 75.8% 683,000 23.5% 58.8% Q1 ‘19 618,000 14.7% 58.0% 553,000 2.8% 55.0% Q4 ‘18 539,000 17.7% 33.0% 538,000 17.7% 32.0% Q3 ‘18 458,000 6.5% 19.0% 457,000 6.3% 22.0% Q2 ‘18 430,000 22.0% 430,000 24.0%
[Normalized prescriptions for Vascepa represent a prescription of 120 grams of Vascepa for a one-month supply]
Symphony Health, owned by PRA Health Sciences, provides thorough data and powerful analytics to help professionals understand the full market lifecycle, from predictive market analysis to patient influence, physician prescribing, pharmacy fulfillment, payer reimbursement, and sales compensation.
IQVIA (formerly Quintiles and IMS Health, Inc.) is an American multination company serving the combined industries of health information technology and clinical research.
• Gross margins realized substantial upward improvements to 76.2% for FY 2018 from 65.9% for FY 2015. Q3 ’19 gross margin of 77.36% continues this upward trend compared to 75.52% for Q3 ’18.
• Operating margin for Q3 ’19 improved substantially to -4% from -40% for Q3 ’18.
• More significantly, Amarin realized a positive Non-GAAP profit margin of 4% for Q3 ’19 from -32% for Q3 ’18.
**Non-GAAP** **MARGINS GROSS OPERATING PROFIT** **Q3 ’19 77.365% (4.0%) 4.0%** vs. Q3 ’18 75.522% (40.2%) (32.2%) **GAAP** **MARGINS GROSS OPERATING PROFIT** Q3 ’19 77.36% (4.0%) (3.1%) Q2 ’19 77.41% (2.5%) (1.8%) Q1 '19 76.6% (31.0%) (33.3%) FY 2018 76.2% (47.2%) (50.8%) FY 2017 75.2% (25.2%) (37.5%) FY 2016 73.6% (50.5%) (66.4%) FY 2015 65.9% (120.1%) (140.9%)
FY SBC/Revenue ratios are acceptable as long as these remain less than 10%.
**AMARIN SBC Revenue SBC/Revenue** **($ M) ($ M)** **Q3 ’19 7.963 112.408 7.1%** Q2 ’19 7.883 100.792 7.8% Q1 '19 6.883 73.278 9.4% Q4 ‘18 4.770 77.330 6.2% Q3 ‘18 6.650 55.323 12.0% Q2 ‘18 3.620 52.643 6.9% Q1 ‘18 3.490 43.919 7.9% FY 2018 18.800 229.214 8.2% FY 2017 13.960 181.104 7.7% FY 2016 13.610 130.084 10.5% FY 2015 13.880 81.756 17.0%
Amarin has a solid capital structure in place for Q3 2019.
Cash & equivalents (mrq) $ 677.111 M Working Capital $ 618.398 M Current Ratio (mrq) 3.69 Long-Term Debt (mrq) $ 18.310 M Total Debt $ 69.476 M Stockholders’ Equity (mrq) $ 595.896 M LT Debt/Equity (mrq) 3.1% Total Debt/Equity (mrq) 11.6%
Michael W. Kalb, Senior Vice President and Chief Financial Officer, reported the following at the AMRN earnings call on 11/5/2019:
• As of September 30, 2019, we had cash and cash equivalents and restricted cash of $677.1 million, an increase of $426.4 million from December 31, 2018. As of September 30, 2019 we also had accounts receivable net of $103.6 million, all of which was current and the inventory of $54.6 million. The increase in our reported cash at September 30, 2019 includes both the results of our previously announced equity financing and cash flow positive operations for the quarter. Based on our current plans, we believe that our cash resources are sufficient to support the requirements for a successful launch of Vascepa without the need for additional funding.
• For the three months ended September 30, 2019, excluding cash inflow from financing, Amarin was cash flow positive reflecting growing revenue levels, expense management and the timing of inventory purchases. For the nine-month period ended September 30, 2019, further excluding cash flow associated with all forms of financing and R&D payments, most of which relate to the REDUCE-IT study and associated regulatory affairs activities, and excluding payments made in preparation for expansion upon positive REDUCE-IT results such as increasing Vascepa inventory levels. The Company was $27.6 million net cash flow positive.
• Amarin anticipates increasing its cash outflows in the fourth quarter of 2019 and in 2020 to prepare for and launch Vascepa in the US for the cardiovascular risk reduction indication we are seeking. Such added cash outflows will, in addition to expanding Amarin’s sales force size and promotional initiatives, also include spending for further medical education and investment in the growth of Vascepa inventory levels.
• At the start of 2019, Amarin projected that it could spend $50 million to $75 million more in 2019 for building inventory levels and testing the capacity of our suppliers, then would be needed to support our then current revenue forecast. While some of these increased purchases have been used to support higher then initially guided revenue levels, some of these incremental orders for inventory growth are anticipated to be delivered in late 2019 for payment either late this year or early next year such that cash flow from operations may be negative in Q4, 2019 despite anticipated higher revenue levels.
FY 2019 FINANCIAL OUTLOOK
Amarin guidance for 2019 total revenue remains unchanged. For 2019, Amarin anticipates reaching between $380 million and $420 million in total revenue.
The company does not intend to provide quantified guidance for 2020 until Vascepa’s label is known and its launch of Vascepa for cardiovascular risk reduction has commenced.
AMARIN Q3 2019 EARNINGS CALL ON 11/05/2019
John Thero, President and Chief Executive Officer, addressed the pending sNDA with the US Food and Drug Administration in which the company is seeking a cardiovascular risk reduction indication for Vascepa based upon the landmark results of the REDUCE-IT cardiovascular outcome study as presented in the Q3 2019 financial report:
• December 28, 2019 is the Prescription Drug User Fee Act (PDUFA) target date for action on Amarin’s supplemental New Drug Application (sNDA) seeking approval of Vascepa as the first drug approved for cardiovascular risk reduction in the patient population studied in REDUCE-IT. An FDA advisory committee meeting pertaining to the sNDA for Vascepa is scheduled to be held on November 14, 2019 at the FDA’s offices in White Oak, Maryland. The FDA makes information available regarding this advisory meeting at https://www.fda.gov/advisory-committees/november-14-2019-mee… . Holding an advisory committee meeting in conjunction with its evaluation of a new drug is not uncommon for the FDA, particularly when the indication being sought is first in class for a potentially large patient population as is true for the sNDA under review for Vascepa.
As is the usual protocol, briefing books will be used for preparation of advisory committee panel members with information related to Vascepa, the related science and questions that the advisory committee panel members will be asked to vote on at the meeting. The briefing books typically are made public two days before the commencement of the advisory committee meeting. We expect this process to be no different for the Vascepa-related advisory committee meeting on November 14, 2019. Advisory committee panel members may ask their own questions regardless of whether such questions are covered in the briefing books or not.
The results of the REDUCE-IT study have been published in The New England Journal of Medicine and the Journal of the American College of Cardiology. And, as noted above, leading medical societies and other groups support the use of Vascepa to cost effectively address cardiovascular risk in studied at risk patients beyond statin therapy. Based on data, if all patients in the United States who have risk profiles similar to what was studied in REDUCE-IT were to take Vascepa, this could lower the number of major adverse cardiovascular events in the United States by approximately 150,000 to 450,000 per year.
• The targeted Prescription Drug User Fee Act (PDUFA) date for FDA action on this sNDA is December 28th of this year.
• We intend to increase the size of Amarin’s US sales force from 400 to 800 sales representatives for the launch of Vascepa for cardiovascular risk reduction assuming FDA approval. In recent months, we received over 10,000 job applications for the sales positions we are seeking to hire. We are confident that we will be able to recruit and train qualified people to support our planned expansion for launch of Vascepa in early 2020 based upon the cardiovascular risk indication we are seeking in assumed approval of Vascepa on or before the December 28 PDUFA date.
CFO Michael W. Kalb reported the following key financial results:
• Third quarter total revenue was $112.4 million. This was a record high for Amarin and an increase of 103% over the same period in 2018.
• Increase in net product revenue was nearly all attributable to increases in new and recurring prescriptions of Vascepa. Such prescription levels reached record highs for Vascepa during the reported three and nine-month periods of 2019.
• The estimated number of normalized total Vascepa prescriptions based on data from Symphony Health and IQVIA, for the three months ended September 30, 2019 were approximately 865,000 and 787,000 respectively compared to 458,000 and 417,000 respectively in the three months ended September 30, 2018. These estimates reflect increases of 89% in the third quarter of 2019 over the same period of 2018.
• Gross margin on product sales for the nine months ended September 30, 2019 was 77%, up from 76% in the same period of 2018.
• Spending levels have also increased, but the growth rates, which are considerably slower than our revenue growth. Selling, general and administrative or SG&A expense for the nine months ended September 30, 2019 were $227.6 million, an increase of 55% over the same nine-month period in 2018. This increase is due primarily to increased commercial and other promotional spend for expansion following successful REDUCE-IT results, which were announced on September 24, 2018, including cost for expanding of the Amarin sales team to – sales representatives at the beginning of 2019 and some recent further expansion to support the assumed launch of Vascepa for a cardiovascular risk reduction indication after the December 28, 2019 PDUFA date. We anticipate that SG&A spending will increase further as we further prepare for and then assuming FDA approval, launch Vascepa for the cardiovascular risk reduction indication currently under review by the FDA.
• Research and development or R&D expense for the nine months ended September 30, 2019 was $23.3 million, a decrease of 47% compared to the same period in 2018. This decrease is primarily due to timing of completion of the REDUCE-IT cardiovascular outcome study and related costs.
• Excluding non-cash gains or losses for stock-based compensation, non-GAAP adjusted net income was $4.5 million for the third quarter of 2019 or non-GAAP adjusted basic and diluted earnings per share of $0.01, compared to non-GAAP adjusted net loss of $17.8 million for the third quarter of 2018 or non-GAAP adjusted adjusted basic and diluted loss per share of $0.06. [Under US GAAP, Amarin reported a net loss of $3.5 million in the third quarter of 2019 or basic and diluted loss per share of $0.01. This net loss included $8 million in non-cash stock-based compensation expense. Amarin reported a net loss of $24.5 million in the third quarter of 2018 or basic and diluted loss per share of $0.08. This net loss included $6.7 million in non-cash stock-based compensation expense.]
Amarin is a strong growth company, now operating in the black with top-notch corporate leadership, high-octane growth in quarterly revenue, strong upward improvements in all margins and a solid capital structure.
Amarin is another one of my diversified holdings and is a keeper in my family’s accounts.
My past Amarin posts at this board:
8/6/19 AMARIN Q2 revenue rockets up 91% YOY
5/5/19 Amarin Q1 reports 67% rev growth
3/6/19 AMARIN Q4/FY 18 RESULTS