Amarin Corp Plcuk Q3 FY2020 Earnings Call

Welcome to Amarin Corporation Conference Call to discuss its Third Quarter 2020 Financial Results and Operational Updates. This conference call is being recorded today, November 5, 2020. I would now like to turn the conference over to Elisabeth Schwartz, Senior Director of Investor Relations for Amarin. Please proceed.

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. Examples of such statements include, but are not limited to, our current expectations regarding our commercial and financial performance, including levels of VASCEPA prescriptions; VASCEPA product and licensing revenues, cost, gross margin and other commercial metrics; our current plans and expectations regarding spending, including expenditures for promotion of VASCEPA and for purchases of additional supply of VASCEPA; our current expectations regarding the adequacy of our financial resources; our current plans and expectations for product revenue growth, sales force productivity and product promotion in light of COVID-19 and the potential for added attention to cardiovascular risk reduction drugs like VASCEPA as a result of COVID-19; our current plans and expectations related to patent litigation and expectations related to the potential loss of generic versions of VASCEPA by generic companies and by ourselves; our current expectations for regulatory reviews outside the United States regarding VASCEPA approval; our goals regarding the timing, scope and success of international expansion, including expectations regarding our ability to launch VASCEPA in Europe and our expectations in China for clinical trial results and potential to bridge REDUCE-IT results in labeling and promotion of VASCEPA through our partner in China; our current plans and expectations regarding VASCEPA exclusivity outside of the United States, including Europe and China; our current plans for commercial expansion in the United States, with and without entry of potential generic competition; and our current plans and expectations regarding the clinical study of VASCEPA related to COVID-19. These statements are based on information available to us today, November 5, 2020. We may not actually achieve our goals, carry out 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 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, 2019, and the Form 10-Q filed for the quarter ended September 30, 2020. These documents have been filed with the SEC and are available through the Investor Relations section of our website at 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 outside its approved indication. An archive of this call will be posted on the Amarin website, also in the Investor Relations section. Making prepared remarks on today's call will be John Thero, President and Chief Executive Officer; Craig Granowitz, Chief Medical Officer; and Michael Kalb, Chief Financial Officer. After prepared remarks, we'll respond to questions. Some of you submitted questions in advance and where practical we have tried to cover responses in our prepared comments. I remind you that typically listening to calls of this nature are multiple audiences, including existing investors, potential new investors, employees, regulatory authorities, 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 John Thero, President and Chief Executive Officer of Amarin. John?

Good morning, and thank you for joining us. As we announced in our press release earlier this morning, Amarin reported record revenue in the third quarter. Since our last investor conference call, we made progress across a number of areas key to our growth strategy, including advancing our plans for the commercial launch of VASCEPA in Europe, increasing promotion of VASCEPA in the United States, and the publication and presentation of several robust data sets in support of VASCEPA's demonstrated cardiovascular risk reduction in multifactorial mechanisms of action. Turning to our revenue, we achieved a year-over-year total net revenue increase of 39% in the third quarter and 56% for the first nine months of 2020. The 39% growth in the third quarter represents significant growth from the second quarter, but remains below the greater than 100% year-over-year growth reported in the first quarter of 2020 prior to the broad effects of COVID-19 that slowed patient visits to their doctors. These positive results reflect the effectiveness of VASCEPA in lowering cardiovascular risk in high-risk patients and further improved payer coverage. Moreover, this growth is a testament to the drive and dedication of our talented team of employees at Amarin, who continue to persevere despite the challenging headwinds we've all faced with the COVID-19 pandemic. Based upon TRx data from Symphony Health, VASCEPA growth during the third quarter and year to date continued to outpace the growth rate for more established drugs with positive cardiovascular outcomes data such as statins. Moreover, VASCEPA's growth in these periods also outpaced the growth of nearly all branded drugs for which positive cardiovascular outcome results were reported within the past four years. While VASCEPA does not compete against these other drugs, we are proud that in these challenging COVID-19 times and despite commercial spending to promote VASCEPA being lower than spending for many such drugs, VASCEPA's growth exceeded that of such peer drugs. After the impact of COVID-19 becomes less pronounced, we expect that VASCEPA prescription growth will accelerate. In July, we initiated our first direct-to-consumer promotion of VASCEPA for cardiovascular risk reduction in the United States. The goal of this promotion is to increase awareness of VASCEPA and to encourage at-risk patients and healthcare professionals to inquire further about VASCEPA. While the impact of any such promotion is typically not immediate, we believe it is important and it will help because recent survey data suggests that just 32% of physicians and less than 1% of at-risk patients were aware of VASCEPA as a proven therapy for cardiovascular risk reduction. This is not surprising as VASCEPA was only launched for this new indication in January 2020, and various of our promotion and education initiatives have been hindered by COVID-19. We believe the potential for even greater growth justifies our continued investments in expanded promotion for VASCEPA despite expectations for future generic competition, which leads me to comments regarding potential competition from generics companies. As you know, we are very disappointed that the Federal Circuit upheld the District Court's earlier patent decision. On November 4, 2020, our rehearing and en banc petitions were denied. We plan within 90 days of such denial to ask the US Supreme Court to hear our appeal. We believe the Courts were wrong in their decisions and we will continue to pursue this matter, although we cannot provide any guarantee of success in this pursuit. Unfortunately, the decisions were not only wrong for the reasons we articulated in our litigation, but they also have the effect of harming patient care in the United States as fewer patients may ultimately benefit from VASCEPA. As a reminder, the patent loss for VASCEPA is only in the United States and relates only to the niche VASCEPA indication approved in 2012, triglyceride lowering in patients with severely high triglyceride levels, which is defined by the FDA approved label and by medical guidelines as triglyceride levels greater than or equal to 500 milligrams per deciliter. Importantly, such patents are not related to VASCEPA's more recently approved indication for cardiovascular risk reduction, for which over 90% of VASCEPA prescriptions in the United States are written. Typically, even when generics companies have skinny labels, meaning labels that in one way or another communicate less than a brand's full label, brand companies typically experience a more complete loss of sales. We thank the many investors who sent us constructive suggestions on our legal options. You know that we have been tracking the GSK versus Teva case for some time. The legal team representing GSK at trial and on appeal substantially overlaps with the legal team that represented Amarin before the Federal Circuit. And the attorneys that submitted a brief for pharma on appeal in GSK versus Teva represented us at trial and on appeal. We do not intend during this call to get into further detail regarding our legal strategy or interpretations of case law in this area. Doing so could be counterproductive to our interests. As in the past, we refer you to our current and future disclosures in our 10-Q to court filings and into the Frequently Asked Questions section of our corporate website, which we plan to continue to update periodically as events develop at Amarin. Typically, generic products enter markets where branded products have been promoted for a decade or longer, and such products are well understood by the applicable medical and patient communities. The cardiovascular risk reduction indication for VASCEPA was launched in January 2020. We have only begun educational and promotional initiatives for VASCEPA with respect to this broader and very important indication. Undoubtedly, Amarin ceasing initiatives to educate and promote VASCEPA for cardiovascular risk reduction is not in the best interest of patient care as generics companies are not anticipated to replace such initiatives with broad public education or promotion. Without significant public educational and promotional initiatives, many healthcare professionals and at-risk patients who should learn about VASCEPA's proven effectiveness may never do so. In such a scenario, the significant reduction in heart attacks, strokes, and cardiovascular death achieved in the REDUCE-IT study may never be realized by the large number of patients at-risk of such events. We believe that increased promotion and education on the cardiovascular risk reduction indication will build market share for branded VASCEPA even with generics in the market for the narrower label of triglyceride lowering. While Amarin's continued educational and promotional initiatives in the United States are clearly best for patient care, we also believe that such initiatives are best for Amarin shareholders. Together with our advisors, we have conducted extensive analysis of the potential value to Amarin of continuing initiatives to expand the use of VASCEPA in the United States compared to launching our own generic version of VASCEPA. The results of this analysis overwhelmingly favor continuing our educational and promotional initiatives of VASCEPA to grow the market. Unless our assumptions change significantly, we intend to continue with all such forms of initiatives, including direct sales and direct-to-consumer promotion. We are aware that we will likely lose some portion of VASCEPA prescriptions in the United States to generic versions of VASCEPA, but we are confident that with continued promotion we can build the market. The need for VASCEPA in the United States is large and we aim to grow the market faster than generic companies can take meaningful market share due to anticipated generic manufacturing capacity limitations and associated time and cost for them to supply the market. As we continue to grow the VASCEPA brands in the United States, we are also advancing this important product in countries around the world, where we see a myriad of opportunities to benefit at-risk patients while building the VASCEPA franchise. In Europe, regulatory review by the European Medicines Agency continues to progress. We look forward to VASCEPA becoming the first and only cardiovascular risk reduction therapy for patients with persistent cardiovascular risk. We continue to expect approval of VASCEPA in Europe in early 2021. There is a large and growing opportunity for Amarin to bring this potentially lifesaving therapy to millions of patients throughout Europe at high-risk for cardiovascular events. 3.9 million Europeans die annually of cardiovascular disease, representing approximately 45% of all deaths and over 49 million Europeans have cardiovascular disease. A recent survey showed that about 25% of a representative sample of more than 7,800 patients in 27 European countries with coronary heart disease and controlled LDL cholesterol levels, had elevated triglyceride levels greater than 150 milligrams per deciliter, illustrating the potential pervasiveness of high-risk cardiovascular disease in Europe beyond currently available therapies. For purposes of context, there are 44 million patients on statin therapy in the European Union, including 32 million statin-treated patients within the five largest markets of the European Union. This compares to approximately 38 million statin-treated patients in the United States. As we have pointed out in the past, not every statin-treated patient is indicated for VASCEPA. However, these statin patient numbers suggest that the size of the opportunity for VASCEPA in Europe is comparable to the size of the opportunity in the United States. This represents a multi-billion dollar market opportunity for VASCEPA in Europe. As described previously, our analysis reflects that self-launching in Europe rather than licensing a substantial portion of the upside to a third-party company allows us to create the greatest value for Amarin. In doing so, we will be leveraging our in-depth knowledge of the science and clinical data without incurring royalty costs for third-party support in most countries. Towards that end, we are making great strides in building our team and finalizing our go-to-market strategies. In July, we were delighted to welcome Karim Mikhail to the Amarin team to lead our commercial efforts in Europe. Karim is making tremendous progress building off the work we have done over the past year to prepare for commercial launch in Europe. He is actively recruiting an exceptional cross-border team and preparing for medical access negotiations, which we plan to more formally begin on a country-by-country basis after VASCEPA is approved in Europe. As you are aware, there has been a resurgence in COVID-19 in Europe. At this time, we do not anticipate COVID-19 to significantly delay the regulatory approval of VASCEPA in Europe, while we are experiencing some headwinds from COVID-19 in our commercial planning, hiring and execution regarding the commercialization of VASCEPA in Europe, considerable progress is being accomplished. Our commercial planning assumes that the impact of COVID-19 subsides significantly by the time that we get through the reimbursement processes in many countries. We are assuming that digital promotion will need to be an important part of our promotional and educational initiatives for VASCEPA in Europe. Launching of VASCEPA in Europe compared to launch in the United States, where VASCEPA was launched for treating very high triglyceride levels, will be for a much larger indication, the cardiovascular risk reduction indication, with demonstrated outcomes, trial results and no direct competition. In addition, launch in Europe will be aided by the fact that VASCEPA is already indicated in the medical treatment guidelines of the European Society of Cardiology, ESC, and the European Atherosclerosis Society, EAS. Notably in September 2020, the ESC expanded their guidelines to also include patients with acute coronary syndrome. As we launch VASCEPA in each country in Europe, while we intend to do this in a staged manner gated by the timing of payer access, we intend to do so robustly. Our primary emphasis will be on educating specialists, particularly cardiologists about VASCEPA, although we also intend to target other specialists, like endocrinologists and select general practitioners. In Europe, compared to the United States, a greater proportion of statin-treated patients see cardiologists, which should create some relative efficiency in our promotion, both because of the greater concentration of at-risk patients and because cardiologists tend to be more data-driven. For example, in the United States, cardiologists have been the fastest group of physicians to increase VASCEPA prescriptions following the positive results of the REDUCE-IT cardiovascular outcome study. I do not want to suggest that with approval of VASCEPA in Europe that growth will be immediate. As you are likely aware, payer access in Europe needs to be negotiated on a country-by-country basis and this requires time. Amarin currently is taking preliminary steps to prepare for such access negotiations. Until such access is secured, in most countries of Europe, it would be futile to launch. However, unlike in the United States, where when VASCEPA was launched, reimbursement needed to be built on a payer-by-payer basis. In most countries of Europe, once the reimbursement is established, physicians do not have to worry about managed care surprises, which in the United States make some physicians reluctant to prescribe new drugs. We will comment further on our plans for VASCEPA in Europe after the drug is approved and we have further advanced our market access initiatives. In parallel to our efforts to prepare for commercialization of VASCEPA in Europe, our medical affairs and research and development teams continued to present compelling data, which is gaining attention of thought leaders throughout the world. To discuss more of our progress in these areas, I now turn the discussion over to Dr. Craig Granowitz, our Chief Medical Officer.

Thank you, John. As we prepare for the commercial launch in Europe, we are assembling a team of experienced medical affairs professionals and establishing connections with key opinion leaders and medical experts knowledgeable about reimbursement agencies in major European markets. As John mentioned, VASCEPA was recently included in the EAS and ESC recommendations for treating high-risk patients. Importantly, in September 2020, the ESC broadened their guidelines to encompass patients with acute coronary syndrome. Additionally, in late October, the Endocrine Society in the United States, the largest professional organization addressing endocrinology issues, included VASCEPA in their guidelines, recommending it for first-line therapy in individuals with elevated triglycerides who also have atherosclerotic cardiovascular disease or type 2 diabetes along with two other risk factors. Their recommendation highlighted that the cardiovascular benefits observed with VASCEPA in the successful REDUCE-IT study are not applicable to other omega-3 fatty acids, including those combining EPA and DHA. The guidelines from the ESC and the Endocrine Society have now brought the total number of medical societies worldwide endorsing the significant clinical benefits of icosapent ethyl VASCEPA to double digits. In anticipation of our planned EU launch, leading global cardiovascular experts have presented persuasive data at recent ESC and EAS Annual Scientific Sessions. The full narrative surrounding VASCEPA is evolving as we deepen our understanding of how eicosapentaenoic acid functions at the cellular level. In late August, during the ESC Annual Scientific Sessions, results from the EVAPORATE study were shared, indicating that VASCEPA achieved a substantial 17% reduction in low attenuation plaque volume, as determined by multidetector computed tomography, compared to placebo over 18 months. VASCEPA is the first and only treatment studied alongside statins that has shown coronary plaque regression in patients with hypertriglyceridemia. The final results of the EVAPORATE study confirmed a marked reduction in the primary endpoint, with icosapent ethyl lowering LAP volume by 17% from baseline at the 18-month scans, whereas the placebo group experienced an increase in LAP volume. This study should be viewed in conjunction with earlier trials that support the mechanism of action potentially linked to reducing cardiovascular risk. Over the year, we have also had opportunities at various scientific meetings to delve deeper into and present REDUCE-IT data, showcasing the effects of VASCEPA in at-risk patients. For instance, the REDUCE-IT REVASC findings were shared at the Society for Cardiovascular Angiography and Interventions meeting, highlighting a 34% and 36% reduction in first and total coronary revascularization events, respectively. At the American Society for Preventive Cardiology, additional analyses indicated an early benefit in coronary revascularization with statistical significance noticed as early as 11 months post-treatment initiation in the VASCEPA group in comparison to placebo in the REDUCE-IT study. In October, during the Transcatheter Cardiovascular Therapeutics Connect 2020 meeting, we proudly presented the REDUCE-IT PCI results, which showed that VASCEPA significantly decreased ischemic events in patients with prior percutaneous coronary intervention, or PCI. VASCEPA led to a significant reduction in first and total major adverse cardiovascular events, or MACE, by 34% and 39%, respectively, compared with placebo. Furthermore, the key secondary endpoint was met with a 34% reduction. At the upcoming American Heart Association virtual scientific session, we will present the REDUCE-IT CABG analyses, which will provide additional insights on how VASCEPA could help patients avert subsequent events that may have severe health and financial implications. These findings in the PCI setting are particularly significant for payers due to the substantial costs associated with revascularization events. According to a 2014 American Heart Association report, PCI events in the US had a median inpatient hospital cost averaging $84,813. In October, we also presented the REDUCE-IT RENAL data at the American Society of Nephrology's Kidney Week meeting, demonstrating the consistent benefits and safety of VASCEPA across diverse at-risk populations, including individuals with varying degrees of kidney dysfunction. Additionally, at the ACN meeting, real-world evidence was introduced from a US veterans database, indicating that veterans with diminished renal function and elevated triglycerides face a higher risk of major adverse cardiovascular events, emphasizing the necessity of considering elevated triglycerides as an independent cardiovascular risk marker, especially in high-risk individuals like those analyzed in the study. Looking ahead, we are eager for the upcoming American Heart Association's annual meeting sessions next week, where we will present eight clinical findings that underscore the cardiovascular risk reduction advantages of VASCEPA and explore its underlying action mechanisms. This event represents an excellent opportunity to enhance the understanding of cardiovascular specialists regarding VASCEPA's clinical benefits and serves as a platform for advancing the clinical and fundamental scientific knowledge surrounding icosapent ethyl VASCEPA in a well-respected medical and scientific forum. Now, I’ll briefly discuss the work we are supporting in relation to COVID-19 with VASCEPA. When the pandemic began, it was proposed that VASCEPA might influence inflammation triggered by the COVID-19 virus as it attacks the endothelium, which is the cell layer lining blood vessels and heart chambers. It was also suggested that some of VASCEPA's additional mechanisms of action could have therapeutic potential against COVID-19. There is a scientific basis for considering VASCEPA as beneficial in lowering infection rates or severity in individuals at high risk but not yet infected. To evaluate this hypothesis, Amarin is backing investigator-led studies in two distinct high-risk groups: those with a history of cardiovascular disease and frontline responders and healthcare workers vulnerable to COVID exposure. Additionally, there is optimism that VASCEPA may lessen the severity of illness for those with active COVID infections. We are also considering VASCEPA as a treatment option for individuals showing myocardial damage from prior COVID infections. Leveraging our expertise and insights, we are facilitating several pilot investigator-sponsored studies focusing on COVID-19, involving VASCEPA. These ongoing studies are based in the United States, Canada, and Argentina. Some of these pilot studies involve over 1,000 patients each and are randomized, blinded, or include matched control groups. The objective of these studies is to gather data on the efficacy of VASCEPA regarding the progression and treatment of COVID infection. Enrollment for each study is progressing well, suggesting that the steady enrollment, with relatively few patients choosing not to try VASCEPA, reflects its recognized safety and tolerability. It's crucial to note that we do not yet have results from any of these studies, but we anticipate that findings in 2021 will support the hypothesis regarding VASCEPA's potential impact on this serious virus and its clinical implications. With that overview, I will return the discussion to John.

Thank you, Craig. In addition to advancing our plans for VASCEPA in Europe, we continue to make headway advancing our strategy to bring VASCEPA to a number of key geographies around the world. By year-end, we anticipate the topline clinical results from the triglyceride reduction study of VASCEPA conducted by Eddingpharm, our partner in China. Assuming positive results, we intend to support our partner in rapidly pursuing approval of VASCEPA in China. In Canada, our partner HLS Therapeutics launched VASCEPA in February. In July, they announced early success in achieving the Canadian Agency for Drugs and Technologies in Health recommendation for reimbursement of VASCEPA by participating public drug plans for statin-treated patients with established cardiovascular disease and elevated triglycerides. In addition, the introductory price submission by HLS did not trigger in excess of pricing investigation. Importantly, based upon these achievements, HLS highlighted their belief in the long-term sales potential of VASCEPA in Canada and reaffirmed their peak sales forecast of, and based in Canadian dollars, CAD200 million to CAD300 million, noting that there could be potential upside to those figures. We continue to work closely with HLS and are looking forward to continued progress with their ongoing launch in Canada. Hopefully, by building on the strong clinical efficacy demonstrated by VASCEPA, we will have similar market access success in Europe, China and other parts of the world. With that overview of the business, let me turn the call over to Mike Kalb, our CFO, for a more detailed discussion of our financials. Mike?

Thanks, John. For the first nine months of 2020, Amarin achieved significant growth in total net revenue despite the continued global impact created by the COVID-19 pandemic. We reached total revenue of $156.5 million and $446.8 million for the three and nine months ended September 30, 2020, respectively, representing 39% and 56% increases compared to corresponding periods in 2019. During the third quarter of 2020, we reported net product revenue of $155.2 million, a 38% increase compared with the third quarter of 2019, and we achieved $441.1 million in net product revenue for the first nine months of 2020, representing a 55% increase compared with the same period of 2019. These increases were largely driven by increased US VASCEPA sales, which include a modest increase in VASCEPA's US net selling price. For emphasis, the net selling price impact in the third quarter of 2020 over the same period of 2019 was small and due to annual donut hole issues with certain payer coverage and, as has been the pattern in prior years, the net price of VASCEPA in the third quarter of 2020 was modestly below its net price in the first two quarters of 2020. As a reminder, Amarin recognizes product revenue in the United States based on sales to wholesalers and specialty pharmacy providers in the US or collectively its distributors or its customers in accordance with Generally Accepted Accounting Principles and not based on prescription levels reported by Symphony Health or IQVIA. Amarin's gross margin on net product revenue was approximately 78% for the first nine months of the year. This slight increase compared to the same period in 2019 is driven by gross margin on US product sales of 79%, which was partially offset by the gross margin on product sales to Amarin's partners outside the US, where the majority of the revenue is recorded by the partners. Although Amarin has continued to make improvements in our gross margin, as discussed in the past, VASCEPA gross margins are lower than many other branded drugs due to its affordable pricing and the high manufacturing cost of VASCEPA to the complexity of manufacturing the active pharmaceutical ingredient, or EPA, at the high-quality standards we and FDA have set for VASCEPA. Amarin is approaching its goal of eliminating all of its debt by the end of 2020. Amarin has a $9.5 million liability under its royalty-bearing instrument, which will be fully paid during the fourth quarter of 2020. And once the final payment is made, the Company will have no debt obligations. As of September 30, 2020, Amarin had cash and liquid investments in excess of $600 million, accounts receivable net of $147.3 million, and an inventory of $148.5 million. We believe we have adequate supply to support our likely scenarios for near-term sales demand and we continue our commitments to purchase supply to support our anticipated VASCEPA growth in the United States and globally. We believe our current resources are sufficient to fund our projected operations, including our planned commercial launch of VASCEPA in Europe. With that financial overview, I will now turn the call back to John for closing remarks. John?

As we look to the balance of 2020 and beyond, we continue to believe that even with generic entry in the United States market, there remains potential for us to build on our success in expanding branded VASCEPA in the United States for this important drug's new indication of cardiovascular risk reduction. And we continue to believe that there are significant opportunities to build the VASCEPA franchise in a number of key international markets, both on our own and through partners. 2020 has been a difficult year for everyone and while Amarin has had its share of challenges, I continue to be inspired by the hard work, dedication and unflappable enthusiasm of the Amarin team. I am proud to work with this team of accomplished professionals and to share a common goal of bringing VASCEPA to patients around the world in order to reduce cardiovascular risk. With that, operator, we are ready to open the call to questions.

Thank you. Our first question comes from Ami Fadia with SVB Leerink. Please proceed with your question.

Hi. Good morning. This is Ethan on for Ami. Thanks for taking our questions. Maybe two, if I can. Yes. So first, I think, Hikma indicated today they're launching their generic, so I wanted to get your thoughts more broadly on cash management as – and sort of your thoughts on that as generics enter market, and maybe what degree of generic impact could result in a change in your promotional strategy? And maybe any sort of building up of this, we see that Hikma's generic came in at, I think, it's about 9% WAC discount. Obviously, we know that your net price is lower than this. But just curious how you think about ability and willingness to maintain meaningful market share in the US? Should we think of this more as limited generic supply or from Amarin's sort of willingness to compete with generics on price? Thank you.

Hey, Ethan. This is John. Thanks for the question. Yes, Hikma has released their WAC price for their generic product, which is about 8.9% lower than ours. This will likely translate to a higher cost for many payers compared to the net price of VASCEPA. However, it's important to note that the decision on which drug to dispense is usually made at the retail pharmacy level, not by the payer. Given that pricing, I do not expect generics to receive preferential treatment from payers. We understand from public comments made by generic companies that they have limited supply. Additionally, we believe the market opportunity for VASCEPA in the United States is significant. As mentioned in our earlier comments, many patients and physicians are still unaware of VASCEPA. The introduction of a generic at this stage seems premature. We believe that due to the substantial growth potential and the considerable investment in building supply capacity that we've been focused on for over a decade, we can grow our revenues in the U.S. faster than the generics can supply the market. We are committed to doing that. If we find ourselves mistaken in this outlook, we can quickly adapt and compete with our own generic. However, we currently believe that prioritizing revenue growth and capturing a significant share of that growth offers more value than competing on price or as an authorized generic. Our strategy, as outlined in this call, anticipates the launch of generics. There may be more such launches in the U.S., specifically for the initial indication of VASCEPA for lowering triglycerides in patients with very high triglyceride levels. We will continue to pursue market growth aggressively while considering any available legal options. I hope these comments are helpful.

Great. Thank you.

Our next question comes from Louise Chen with Cantor Fitzgerald. Please proceed.

Hi. Thanks for taking my questions. So, first question I had was, how should we think about, broadly topline basis, 2021 sales growth and OpEx in light of several moving parts, the pandemic, potential generic competition, EU expansion, and expansion into other geographies? And the second question I had for you is that, is there any update you can give on the China opportunity market size? Where your economics are there? How should we think about that versus US and EU opportunities? Thank you.

Good morning, Louise. It's challenging to make predictions for 2021 due to uncertainties around COVID-19 and the vaccine's effectiveness. We've noticed an improvement in physicians reopening their offices to our sales representatives in the third quarter compared to the second quarter, although about half of the doctors still do not permit face-to-face sales calls. There are also fewer patients visiting doctors for preventive care than before COVID-19, though this has improved from the second to the third quarter. It's uncertain how a potential second wave of COVID-19 might affect things or when it might dissipate, along with vaccine effectiveness. We believe that by mid-next year, access for patients to physicians and our sales team's access will be somewhat closer to normal, although it may not be exactly the same. This is speculative territory, but we anticipate ongoing improvements despite some volatility. In the meantime, we continue our promotional activities through our sales force and various advertising means to raise awareness about VASCEPA. Currently, there is low awareness of VASCEPA for cardiovascular risk reduction, presenting a significant opportunity, although I cannot provide specific revenue projections at this time. I also cannot quantify the exact amount of generic supply that will be available. Based on our information, we believe that while the available supply will be significant, it will also be limited, and we expect to outpace that supply, but we will keep monitoring the situation. Regarding Europe, we will share more details after we receive label approval, which we expect early next year. The launch in Europe will be gradual, proceeding as we secure reimbursement country by country for a more robust rollout in each location. China represents a substantial opportunity for us. Our website has a Frequently Asked Questions section, and our 10-Q and 10-K documents discuss our economic partnership there. Once we receive approval to sell the product, we will sell it to our partner on a cost-plus model, likely receiving double-digit royalties. Our partner conducted a trial in China focused on patients with high triglyceride levels, akin to our MARINE study but with a larger sample size. Before starting that trial, our partner consulted with China's FDA about bridging the data for VASCEPA with other international trials, such as REDUCE-IT. After we obtain the trial results and engage with China's FDA, we are optimistic about securing a broader label in China beyond triglyceride reduction, possibly referencing cardiovascular risk reduction. Over ten traditional medical societies in China now recommend using icosapent ethyl VASCEPA for cardiovascular risk reduction, and we hope to see this trend continue. However, until we have the trial data and discussions with China's FDA about the labeling are complete, it is too early to provide specific market size details, although cardiovascular disease is on the rise in China, and our partner is quite enthusiastic about the potential. I wish I had more details to share, but this is the current status.

Thank you.

Our next question comes from Yasmeen Rahimi with Piper Sandler. Please proceed with your question.

Hi, team. Congratulations on your continued progress in these challenging times. I have two quick questions for you. First, can you provide information on the number of high-quality suppliers globally? What percentage have you secured, and how long is your supply chain secure for? Second, regarding the ongoing COVID studies, which involve a significant number of patients, can you discuss what you aim to discover from these studies and the next steps for utilizing that data? Thank you for addressing my questions.

Thank you for your comments, Yasmeen. Regarding supply, when we entered this field more than a decade ago, many companies believed they could produce VASCEPA API to the required quality standards. We collaborated with several of these companies and helped them develop their manufacturing capabilities over the years. Initially, some of them were producing dietary supplements, and we needed to assist them in qualifying as manufacturers of pharmaceutical-grade API. This process required significant support and investment from Amarin, and we have continued to expand our supply chain. Currently, we are relying on our suppliers and purchasing all the products they can provide. As we prepare for entry into European and Chinese markets, we anticipate needing more supply than we currently receive from these suppliers. We're discussing potential growth opportunities with them and hope they recognize the market potential we present. We expect generic companies are aware of numerous suppliers producing API or omega-3 products and are likely facing similar decisions as we did over the past decade about which companies to invest in, whether to help dietary supplement producers qualify for pharmaceutical-grade API, or to adapt existing pharmaceutical-grade manufacturers for our specific needs. This is a costly endeavor, with lead times for established facilities taking around six months and for new plants potentially taking two years or more. We have witnessed many suppliers, including experienced ones, struggle during the qualification of new production lines. We take pride in our supply chain, supported by our technical expertise and financial commitment, and we will continue to nurture this chain. However, replicating our success requires significant investment, time, and meticulous attention to quality. We'll monitor the situation regarding potential generic suppliers. Some API suppliers are hesitant to engage with generic companies due to concerns over pricing stability and demand as well as their tendency not to expand markets. These are considerations for suppliers to weigh. Concerning the COVID studies, they are significant. Our actions with the data will depend on the study results. We observe other companies in the COVID field gaining attention without complete data sets. We believe it's prudent to wait for solid data before making announcements. Once we have the results, we will assess potential pathways, whether that involves preventing COVID in patients, mitigating its effects for those already infected, or addressing the long-term consequences of COVID. We anticipate having a clearer understanding of this in 2021. Just to clarify, we currently do not have access to the study results.

Thank you, John.

Thanks, Yasmeen.

Our next question comes from Michael Yee with Jefferies. Please proceed with your question.

Thank you, John. Good morning and I appreciate all the work during these times. I have a two-part question for you. First, there are many questions about the dynamics of the generic market, and it seems challenging for investors to understand what the next year or two will look like. Could you help clarify this? Do you believe it's possible for you to grow in 2021 compared to 2020, or at least maintain a significant amount? Yes, the answer is yes.

Yes.

And, John, year-over-year.

And beyond. That's what we're betting on. There is, obviously, risk to that. But based upon our view of the market opportunity, which is substantial, and based upon our experience with supply and knowledge and public comments from some of the generic companies, we believe that we can grow the market in the United States faster than what they can do in terms of supply in the market, probably good for everybody.

Wow. Okay. And then, secondly for, I guess, those who are not confident.

There may be some variability, right, Michael? I don't have precise details on how much supply Hikma has built up, but I don't think it's significant. However, whenever a product enters the pipeline, wholesalers will likely purchase whatever is available, which may lead to a temporary increase in our sales to wholesalers. Ultimately, we expect to reach a steady state where we believe we can grow the market more quickly. COVID is an unpredictable factor in this scenario. As you saw in the first quarter before COVID, we achieved results even before our full sales team and advertising were in place. We believe that if we can move past COVID, there are many patients who would benefit. We now have strong medical support, and reimbursement has significantly improved as we've progressed through 2020 and into 2021. All these factors lead us to believe we can increase prescriptions faster than generics can supply. If we are mistaken, we can adjust. But for now, that is our perspective.

Okay. Perfect. Thank you. I appreciate it.

Thank you. At this time, there are no further questions in queue. And we would like to thank you for joining the conference today. You may disconnect your lines at this time, and thank you for your participation.

Thanks, everyone.

Thank you. All right. I'm going to hang up the phone.