Amarin Corp Plcuk Q3 FY2021 Earnings Call

Welcome to Amarin Corporation's conference call to discuss its third quarter and 9 months 2021 financial results and operational updates. This conference call is being recorded today, November 3, 2021. I would like to turn the conference call over to Michael Kalb, Chief Financial Officer at Amarin.

Good morning, everyone, and thank you for joining us. Please note that this conference call will include forward-looking statements that are meant to be protected under the safe harbor provisions of the Private Securities Litigation Reform Act. These statements are based on information available to us today, November 3, 2021. Our goals, plans, or intentions may not be realized, and we may not meet the expectations described in our forward-looking statements. Actual results or events may vary significantly, so you should not place too much reliance on these statements. We do not assume any obligation to update these statements as circumstances change. Our forward-looking statements do not consider the potential impact of important transactions we may undertake, including mergers, acquisitions, dispositions, joint ventures, or any significant agreements we may enter into, modify, or terminate. For more information about factors that could cause actual results to differ significantly, please refer to the Risk Factors section of our quarterly report on Form 10-Q for the quarter ending September 30, 2021, and our annual report on Form 10-K for the year ending December 31, 2020, which have been filed with the SEC and are accessible through the Investor Relations section of our website at www.amarincorp.com. We encourage everyone to read these documents. This call is designed for investors in Amarin and is not intended to promote the use of VASCEPA. An archive of this call will be available on Amarin's website in the Investor Relations section. Karim Mikhail, Amarin's President and Chief Executive Officer, will lead our discussion, and I will provide a detailed review of our financial results. Following our prepared remarks, we will open the floor to your questions. I would like to remind you that our audience typically includes existing investors, potential new investors, employees, current and potential collaborators, and current and potential competitors. As always, we will aim to provide informative insights while safeguarding our competitive and strategic positioning. I will now hand the call over to Karim Mikhail for a review of the business.

Good morning, and thank you all for joining us this morning. The third quarter of 2021 was a critical quarter for Amarin, as we continue to make important strides toward our goal to bring VASCEPA/VAZKEPA and its CV risk reduction benefits to at-risk patients around the world. These advances were led by the meaningful progress we made commercializing VAZKEPA in Europe, as highlighted by our successful product launch in Germany in mid-September. This was followed by the announcement of our transformative go-to-market strategy in the U.S., which underscores our commitment to the U.S. market and is designed to enhance awareness and drive demand for branded VASCEPA in the cardiovascular risk reduction indication. Last quarter, when I had just taken over the CEO position, I shared with you the vision for our 3-dimensional growth strategy: breadth, geographic expansion; height, representing diversification; and depth or operational evolution. Today, I'm happy to report on the progress we've made executing the strategy, including a number of milestone achievements demonstrating that we are well on our way to becoming the global cardiometabolic commercial player we envision. Let me begin with a brief review of our results for the third quarter. Starting with our revenue: As you saw in our press release this morning, we reported net total revenue for the third quarter of 2021 of $142 million compared with $156.5 million in the same period in 2020. We reported net total revenue year-to-date of $438.7 million compared with $446.8 million for the first 9 months of 2020. The bulk of this revenue is from U.S. product sales of VASCEPA. Importantly, and as Mike will discuss later in the call, our U.S. VASCEPA franchise remains profitable, and along with our strong balance sheet, continues to support our growth and expansion plans. Now for a deeper dive into the U.S. market. This has been a particularly challenging quarter, as a number of market and competitive dynamics impeded the potential for growth in the U.S. First, the impact of the research and COVID-19 Delta variant caused patient visits and lab visits to drop by 6% and 7%, respectively, compared with the prior quarter. Additionally, the lipid market flattened for the first 8 weeks of the quarter. Finally, for the first time, there were two generics available on the market for an entire quarter. These dynamics created both the need and the opportunity to reevaluate our strategy, so let me walk you through our thinking. We needed to better understand the key gating factors to building more significant adoption of VASCEPA for its cardiovascular risk reduction indication and to develop a plan to tackle them. Perhaps the biggest driver for growth is improving physician access and engagement. Long before the COVID-19 pandemic hit, access to physicians was on the decline. For example, according to ZS' Access Monitor, access to physicians in 2007 was approximately 80% or 4 out of 5. By the end of 2019, that access had fallen to about 50%. During the early days of the quarantine in 2020, those levels were at near 7%, and they currently stand at only 29%. In other words, less than 1 out of 3 physicians on average is accessible for visits by the field force. Our new strategy employs a digital omnichannel approach to enhancing our reach to healthcare professionals, allowing us to target a far greater number of the almost 700,000 statin prescribers through high-frequency, customized, and impactful messaging regarding the significant benefits of VASCEPA for CV risk reduction. Simply, this creates a model of engagement with prescribers in the ways they want. We intend to significantly increase the use of these robust digital platforms and integrate them with in-person visits by our sales force to enhance our reach and customer engagement and improve efficiencies optimizing our educational and promotional efforts to drive healthcare provider and patient use of branded VASCEPA in the U.S. These digital platforms include a variety of offerings such as virtual detailing, email campaigns, websites and medical portals, digital CMEs, social media, and more. Our next area of focus is managed care. While several large commercial and Medicare Part D payers currently cover VASCEPA as the exclusive icosapent ethyl product, we are intensifying efforts to remove remaining barriers to VASCEPA prescription to improve access to patients with real medical need. We are confident in our ability to drive further volume growth by continuing to focus on enhancing payer access. Finally, our last, equally important area of focus is to clarify the difference in approved indications between VASCEPA and the generics. Generics are not FDA approved for cardiovascular risk reduction. We are taking a variety of steps to eliminate confusion created by the limited indication of the generics and educate the market regarding the substitution of VASCEPA with generics for non-indicated uses, particularly at the pharmacy level. Our goal is to continue to correct factual inaccuracies within the total prescribing ecosystem from the reference compendia to retail pharmacy systems, to e-prescribing platforms used by physicians to reduce substitution for non-indicated uses and minimize any disruption in patient care. Correcting these systems is a complex process. And it will take some time, but we are making progress. And we expect that we can make a significant difference in keeping generics usage within their narrow approved label for all the above. At the end of September, we announced what we believe will be our transformative go-to-market strategy, which underscores our commitment to the U.S. market and addresses three key areas for improvement: expanding physician engagement and access, enhancing managed care access, and optimizing VASCEPA prescription for CV risk reduction. Our goal is to deliver a simple streamlined platform to manage the end-to-end flow of prescriptions and to ensure an optimized patient and prescriber user experience. While these new go-to-market initiatives are in the early days, we will be driving their implementation with a focused sense of purpose while tracking and reevaluating our decisions. We have three measurements for success: execution—did we successfully and urgently implement these initiatives? Strategic impact—did they deliver their expected impact? Revenue—did these initiatives produce greater patient and provider usage, resulting in prescription and revenue increases? We are confident that this new go-to-market strategy will be successful by all measurements and look forward to reporting more on this front as it unfolds. We also continue to consider and entertain numerous strategic initiatives which, if feasible and successful, could allow us to further differentiate against the generics. While in early stages, we believe that such efforts aimed at truly differentiating ourselves versus generics would have a significant impact on the future potential of VASCEPA in the U.S. Turning now to our progress in Europe. During the third quarter, Amarin demonstrated its commitment to becoming a global commercial player with its launch of VAZKEPA in Germany. As a reminder, when Amarin announced in August 2020 that it would self-launch in Europe, we had no legal entities in Europe beyond Ireland, no infrastructure and no commercial presence. We did not even have regulatory approval for VAZKEPA. Today, just a little over a year since that announcement, we have an EMA-approved label that is totally consistent with the broad patient population of REDUCE-IT. We have 15 legal entities and branches, including a commercial hub in Zug, Switzerland; 300 employees; and have executed our initial commercial launch in Germany. We are especially pleased that our teams were able to launch in Germany on such an expedited schedule. The launch debuted with a successful scientific conference that was led by 11 internationally renowned cardiovascular specialists and was attended in person by more than 200 healthcare professionals from Germany, with a live stream to many more physicians across the continent. The medical and commercial teams have made great strides introducing the cardioprotective benefits of VAZKEPA to the German market with 60 events hosted to date and more than 50 events approved and ready to execute before year-end. This is a very proactive plan. And our team is making every effort to reach our target audience both physically and virtually, as access to physicians and hospitals in Germany is still limited due to COVID. In these early days and for the next couple of quarters, we believe the best proxy for a successful launch will be illustrated by the scientific endorsement from the key thought leaders and top societies; and our ability to engage, educate and promote VAZKEPA to our targeted audience. We are pleased to report that VAZKEPA has been included in Germany's electronic prescribing system, which is updated quarterly effective October 1. This is an important step in making VASCEPA more readily accessible, as paper prescriptions represent a very small portion of total prescriptions today. We were honored to be one of three finalists for the Galenus Von Pergamon Prize or Prix Galien in Germany, a prestigious scientific prize awarded for a particularly innovative medicinal product that has been approved in Germany at the time of submission. This year's prize went to BioNTech, Pfizer, for their COVID-19 vaccine, so we are truly honored to have achieved second place, and we have been widely recognized for this achievement in the German press. Now on a European regional level. We previously communicated that our goal is to file 10 market access dossiers by year-end, and I'm proud to report that we have already submitted all 10. This really allows Amarin to initiate the negotiation process with the reimbursement agencies of the largest 10 markets in Europe. Those markets are Germany, U.K., Italy, France, Spain, Denmark, Sweden, Finland, Norway, and the Netherlands. We have already engaged extensively with several of these countries, and in our next earnings calls, we will provide an update on our exchanges and expected timelines for reimbursement approvals. I can also confirm that all 10 submissions included data demonstrating the uniqueness of VAZKEPA from a scientific perspective, various country-specific demographic data to define the eligible patient population based on the label, and the same targeted list pricing of approximately EUR 200 or $240 monthly. The next wave of country submissions is being initiated now and will include 5 additional countries in Europe. We have also initiated the first steps to identify the partner or partners we plan to collaborate with in the Central Eastern Europe countries, starting with Greece. Over the past year, we have been prudent yet agile, fast and at the same time measured in how we have built investments in infrastructure in Europe. We are prioritizing and structuring our markets organization in a focused way, driven by our belief that a tremendous opportunity exists to change the treatment paradigm in preventative cardiovascular care across Europe. Beyond Germany, in the vast majority of our targeted markets, we are in the important three-launch phase, which means that we are establishing relationships with health care professionals, providing education on the cardioprotective benefits of VAZKEPA, and negotiating market access. Our digital-first strategy and the capabilities we've developed implementing it allow us to quickly navigate and access our customers differently while complementing all of our field force efforts. We recognize that not all markets are the same, and our approach to each must be tailored and bespoke. The technology behind our customer engagement ecosystem allows us to have an aligned commercial model that can be easily adapted to the specificities of the individual market and enables us to successfully integrate our digital and face-to-face channels in one single cross-functional plan. We are very excited about the opportunity for VAZKEPA in Europe as CVD is an increasingly common health problem that causes 3.9 million deaths per year in Europe and costs the European Union EUR 210 billion every year. Our mission to rethink the treatment of residual cardiovascular risk across Europe is no small feat, but we're up for the challenge. We are committed to improving the lives of high-risk cardiovascular patients across Europe by establishing a new treatment for CVD. Setting a new standard in cardioprotective care won't happen overnight. However, we have a high level of confidence that we've got the drive, the scientific evidence, the strategy, and the people to make it happen. Beyond the significant multibillion-dollar market potential in Europe, let me turn to the other international opportunities we are pursuing. Last quarter, we announced our ambition to bring the cardioprotective benefits of VASCEPA/VAZKEPA to the top 50 cardiometabolic markets worldwide. We currently have access to approximately 30 of these markets and have now mapped our strategy to obtain access in the other 20. Our plan will take place in three ways. The first will begin in 2022 when we plan to submit regulatory filings and obtain product approval in up to 6 countries, including Australia, New Zealand, and Israel. The second wave will come in 2023 when we will seek approvals in up to 9 countries. The third wave follows in 2024 when we will be seeking approvals in the remaining 5 countries we have targeted. These filings will all be supported by long-term cardiovascular outcome data from the REDUCE-IT study and the FDA and EMA approvals of VASCEPA/VAZKEPA for the cardiovascular risk reduction indication. We will be specifically seeking our EMA broad label language in all of these countries. In most of these markets, we will potentially opt for an agency distributorship partnership. Such collaborations have the advantage of giving us control over the marketing authorization of our product and providing optionality as we grow the business globally. We believe expanding Amarin's reach to these additional 20 markets has the potential to benefit millions of patients at risk of a CV event and represents a market opportunity of around $1 billion. Moving on to other international markets where we already have partners. In China, our partner, Edding, continues to expect to receive approval of VASCEPA in Mainland China and Hong Kong near the end of 2021. With these approvals, Edding has plans to launch in these territories in 2022. As in the U.S. and Europe, VASCEPA will launch with the support of the two key Chinese cardiology societies. With the burden of CV disease in China and with two branded statins collectively selling more than $1 billion, there is both a significant medical need and a meaningful market opportunity for VASCEPA in China. In August 2021, our partner in Canada, HLS Therapeutics, announced a promotional agreement with Pfizer expanding promotion of VASCEPA to primary care physicians in Canada. HLS' existing sales force of approximately 30 field personnel and support staff will remain primarily focused on the specialist physician audience. We believe this new agreement should bode well for VASCEPA in Canada, as the primary care physician market is a good gateway to patients at risk for CVD and the Pfizer name is well-respected and known for excellence in the pharmaceutical industry. Finally, let me share some perspective on our thoughts around diversification, the height dimension. We continue our systematic review of all potential assets in the cardiometabolic and obesity space. We are not limiting ourselves to those that lend themselves to primary care and large populations alone. We're also considering unique assets, including in the specialty and rare disease spaces, where there remains tremendous unmet need. We are prioritizing two types of assets, assets with near-term commercial potential and development stage assets that have the potential of significantly enhancing and transforming our portfolio. As you can appreciate and due to our primary focus on the cardiometabolic space, this process requires time and scientific, commercial, and financial diligence. We are dedicating the needed resources and continue to believe that this is an important leverage for future growth. With this overview of our business, let me turn the call over to Mike Kalb, our CFO, for a more detailed discussion of our financials. Mike?

Thanks, Karim. During the third quarter of 2021, we reported net total revenue of $142 million, a decrease of 9% compared to the third quarter of 2020; and $438.7 million for the 9 months of 2021, a decrease of 2% over the same period of 2020. During the third quarter of 2021, we reported net product revenue of $141.4 million, a decrease of 9% compared to the third quarter of 2020, which was largely driven by decreased U.S. VASCEPA sales as a result of the impact of generic products for VASCEPA's initial indication and the ongoing impact of the COVID-19 pandemic. For the first 9 months of 2021, we achieved $436.6 million, a decrease of 1% over the same period in 2020, which was largely driven by a decrease in sales to our partner in Canada of $8.5 million, which included an initial order in 2020 for the launch of VASCEPA in Canada, partially offset by an increase in U.S. VASCEPA sales of approximately $2.9 million. However, as Karim noted, despite this decrease, the U.S. business has continued to be profitable in the third quarter as a result of our continued expense management. Despite the generic competition in the U.S., we believe that the patient need for VASCEPA in the U.S. is high and that our new U.S. go-to-market strategy will accelerate revenue growth in this market. The profitability of our U.S. operations continues to support the expansion into Europe and other geographies around the world. However, due to the variability of spend related to these initiatives, our overall profitability in the short term may fluctuate. Additionally, absent the one-time charge of $14.1 million related to the transformation of our go-to-market strategy for the U.S., we would have achieved net income in both the 3 and 9 months ended September 30, 2021, which further shows that we have positioned ourselves for growth both in the U.S. and throughout Europe. Additionally, we continue to monitor the ongoing global supply chain issues that are resulting in inventory supply shortages for numerous companies and products. While we are not currently impacted by these shortages, we continue to focus on maintaining adequate supply to meet the expected global demand. As of September 30, 2021, Amarin reported aggregate cash and investments of $517.9 million consisting of cash and cash equivalents of $222.9 million and liquid short-term and long-term investments of $256.3 million and $38.8 million, respectively. We believe our current resources and the U.S. profitability are sufficient to continue to support launching VAZKEPA successfully throughout Europe and in other international countries throughout the world. With that financial overview, I will now turn the call back to Karim for closing remarks. Karim?

Thanks, Mike, for the financial overview. Now that we have shared our roadmap for the future, our goal is to keep our eyes on the road ahead as we execute our strategy to reinvigorate growth in the U.S., successfully launch VAZKEPA in multiple countries in Europe, and obtain regulatory approvals in a number of new countries in 2022. We believe the realization of these ambitions for Amarin will be our collective success, as I'm confident that achieving these goals will build value for the company and enhance shareholder value over time. With that, operator, we're ready to open the call for questions.

And the first question is coming from Yasmeen Rahimi from Piper Sandler.

Congratulations on filing the 10 dossiers ahead of schedule. Karim, I would like to understand more about the timing of these 10 dossiers, when they will be implemented, and how we should approach this. Can we expect that all of these dossiers could potentially be approved in the next 6 months, allowing you to start developing a market strategy in these countries? Please provide some insights on the timing of the 10 dossiers. That would be very helpful. Additionally, as you are now launching in Germany, do you still feel confident about launching independently, or is there a potential shift towards considering a partnership?

Thank you, Yasmeen. So on the 10 dossiers, it is great that we were able, speaking of cadence, to already submit the 10, right? The amount of work that is required in specific analyses that those agencies require, it's huge. Maybe people don't imagine the magnitude, but some of these files are 1 gigabyte and they include up to 300 analyses of our patient population in REDUCE-IT. So already the fact that we have submitted, we believe, is a great milestone. Now with regards to the next steps, I'm going to generalize because these are 10 countries and all of them have a very different time line and a very different process and even attitude towards dealing with the files. You have a group of them that actually have a clock, meaning they're tied to coming back to us at a certain point in time with a preliminary reaction. Example of these countries are the Nordics. Usually, most of them have a clock, and they have to come back to us usually in 90 to 180 days with a response. Some of these preliminary responses are going to be a no because that's part of their strategy. And then we immediately answer their questions and we move to step two. So this is with regards to those that have a clock. A number of countries don't have a clock. Italy doesn't have a clock, right? France doesn't really have a clock. It can take longer or shorter time, but we are in direct engagement on a weekly basis with these agencies. We did receive from all of them all their questions. And in many, we have already responded. That's why you saw that in our earnings script just a few minutes ago we said that by next earnings call, we will be able to provide detailed feedback and a timeline because, by next earnings call, we would have received a reaction to where is this going, how long it's going to take us. But we are talking about approvals of those 10 dossiers in 2022. Some might come early. Some might come later, and it will all depend on the negotiation. I will remind everybody that if we go and concede on the price and say, 'Oh, we're willing to discount X percent,' we may have a faster reimbursement, but I'm not sure that this is going to build shareholder value in the long term. So that needs to be taken into account. So that's on the 10 dossiers' cadence and what we expect over the next few months. Now in terms of launch in Germany, we have already planned and invested for a self-launch in Germany. If you compare the investments we put, the size of the field force, the infrastructure we built, I think it's as robust and as big as many of the key players in the biopharma. Now, do we answer phone calls and do we talk to partners when they give us? On an ongoing basis, right? And we will always challenge ourselves whether we're doing the right thing, yes or no. There's no dogma around this. This is business. We're launching. At this point in time in Germany, it's still pretty restricted because of COVID. We have not reached out to everybody in our target audience until today despite the fact that we've been on the market for a few months. So it will take us or anybody else some time to engage in the German market. That's why we're saying that the best proxy we can look at, at this point in time, is really the support and the endorsement that we're getting from the societies, from the scientific leaders. And we believe that the ramp-up will happen slowly but surely.

The next question is coming from Roanna Ruiz from SVB Leerink.

A quick question on Germany. I was curious if you could elaborate on the number of physician targets you're possibly focusing on. And what types of practitioners appear to be early prescribers of VAZKEPA? I'm specifically wondering if they're more high-volume prescribers of statins. Are they more specialists or generalists, et cetera? Whatever color you can provide.

Thank you, Roanna. To provide more detail on the German launch, we targeted every specialist involved in cardiometabolic and cardiovascular risk management. We have essentially reached full coverage with hospital and private cardiologists. For GP practices, we cover the portion that allows us to reach 80% of the market, which amounts to tens of thousands of practitioners, creating a substantial target audience. Due to restrictions, we had to prioritize our targeting, focusing on physicians with high potential who are also inclined to innovate and prescribe new products rather than sticking to traditional options for their patients. This focused approach led us to concentrate on specific groups, allowing us to engage more effectively, as delivering prescriptions requires multiple visits to physicians. Before the product launch, we struggled to reach even a few of those necessary interactions. We communicated the number of meetings we have held as part of our strategy to connect with physicians through one-on-one engagements and a speaker tour. After our launch event, we made considerable efforts in Germany with a speaker tour where speakers traveled from region to region to reach physicians who might prefer smaller groups rather than larger gatherings. The 60 meetings we mentioned so far include these types of events. Regarding early adopters, they currently make up a small percentage of our target audience in Germany. While the uptake has been gradual, we believe that with ongoing efforts, we will see improved prescription rates and revenue in the coming quarters. Thank you, Roanna.

Okay, great. That's really helpful. And then maybe a quick switching gears to the U.S. I was curious. What metrics are you internally tracking to understand how the new U.S. go-to-market strategy is gaining traction? And how might that inform your push and pulls on how you adapt your strategy in the next quarters?

We are concentrating on metrics that are essential at this stage. It's challenging to drive growth without a broad and deep engagement with our target audience. Although we have a large field force, access limitations at the physician level have hindered our ability to engage them effectively. We've redefined some territories to ensure our representatives and sales managers are not wasting time on closed doors. A key metric for us is the level of engagement we can achieve, allowing our team to meet, discuss, and make progress. We're also focused on the breadth and depth of our reach, as evidenced by the fact that 50% of VASCEPA prescriptions are written by just 6,000 prescribers in the U.S. We believe there is an opportunity to enhance both the quantity and quality of our engagements to increase the number of prescriptions. Additionally, we are monitoring the situation with generics. Many patients who would benefit from cardiovascular risk indications—an area where generics are not approved—are still receiving those generics. While there are some actions we can take as Amarin, other factors are outside our control. If the generics continue to supply the market beyond what is necessary—which only accounts for 7% to 8% of the market—payers will continue to prefer them, creating challenges for us. What we can control is the fulfillment of our own prescriptions. Therefore, our focus is on the fulfillment rate: the number of rejections we face and whether we are successfully fulfilling every prescription written by physicians. We have initiatives in place to significantly improve this fulfillment rate, and those are the key metrics we are tracking. I hope this clarifies your question.

The next question is coming from Michael Yee from Jefferies.

I have two quick questions. First, you mentioned previously that there were some lawsuits against pharmacies aimed at enforcing on-label prescription dispensing. Can you remind me where those stand and if there are any updates on the proceedings? I believe this could be an important development moving forward. Secondly, I found your slide on business development very interesting, especially regarding cardiometabolic obesity and specialty rare diseases. I have some awareness of those products. Could you comment on how urgent or imminent these developments might be? I think leveraging your sales force for this could be quite impactful, so any insights you have would be appreciated.

Thank you, Mike. To clarify on the lawsuits, we do not have any legal action against any pharmacy or pharmacy chain. We are currently pursuing a case against a generic supplier and a payer. At one point, both parties requested to dismiss the case, but a magistrate denied their request, leading to a hearing requested by the district judge that took place a little over two weeks ago. We anticipate a decision from the judge regarding the dismissal request in the coming weeks. If the request is granted, we plan to appeal, as we are confident in our position on this matter. If it is denied, we will also proceed, as we believe we have a strong case.

Yes, very helpful on that part. Great.

Yes. Regarding the second question on diversification, we wanted to provide more insight during this earnings call to clarify our efforts and targets. Our intention was not to convey timelines or urgency, despite receiving frequent inquiries about our focus areas. We want to emphasize that we believe we are creating significant value in the cardiometabolic obesity sector. We are collaborating with leading experts and building credibility in this field. Our goal is not to dilute our efforts by branching out into other therapy areas while we are focused on the launch of VASCEPA and VAZKEPA. I mention the launch of VASCEPA specifically because we are still in the launch phase in the U.S. Our focus remains on cardiometabolic conditions. However, we can't limit ourselves to only large-population assets in primary care, as that would significantly restrict our opportunities. We believe that whether it involves primary care, specialty, or rare diseases, the key elements of thought leadership and scientific collaboration remain consistent. This will help us adapt our go-to-market strategy, and we are flexible enough to embrace different asset types because we are confident in our talent and experience in this field. I hope this answers your question adequately, Mike.

The next question is coming from Louise Chen from Cantor.

So first question I had for you is you do talk about sort of a stabilization in U.S. sales here. Maybe just a little bit more color on what gives you confidence. I know that you talked about how you plan to get there. And then the timing, if there's anything that you could give us, elaborate a little bit more on when you think you might see that. And then how should we think about the operating expenses in the fourth quarter '21? I know you talked about a little bit of lumpiness. So maybe if you could help us there or just give us some broad strokes, that would be great. And then just last thing here is as you look at the global opportunity. Outside of that $1 billion, you also have China and Hong Kong and other areas of the world, so when you look at the global opportunity, where do you think peak sales could get to?

Thank you, Louise. Regarding our sales in the U.S., our recent announcement about shifting our go-to-market strategy was a response to the challenges we have been facing. We acknowledge that we are currently not achieving the growth we aim for, which is why we have implemented these changes. However, any change can cause some temporary disruption. The 300 field team members we have are highly qualified, and we are confident they are the right people to drive our next phase of growth. Many of them will encounter a significant change in their target audience, as they will be meeting new contacts over the next month and need to establish new working relationships. They must also assess where these physicians stand in their prescribing habits. We are entering a foundational phase where we will establish a new direction and team, and it will take a few quarters for us to fully adapt and make our new go-to-market strategy effective. Simultaneously, we are aggressively pursuing our digital omnichannel strategy, launching initiatives from week one as part of our overall strategy. We are making every effort to promote aspects of this go-to-market approach, knowing that some results may take time, but we hope to see some earlier outcomes. We will monitor and reassess our progress in the coming quarters. We understand that we don't have all the answers for what will accelerate our growth trajectory, but we recognize the necessity of these changes to confront market realities. Regarding operating expenses, we have been careful in managing costs due to our long-term investment approach and dedication to revenue generation. In the last quarter, we ramped up our activities significantly compared to Q3, so we anticipate higher operating expenses. Nonetheless, we remain well-financed with sufficient cash to support our growth and product launches in Europe in the upcoming quarters. Mike, would you like to add anything?

I'm just going to say U.S. continues to be profitable and that it funds further growth.

Yes, the global opportunity and the size of the business are significant. In those 20 additional markets, we see potential of up to $1 billion, and we are not including China, Canada, and the Middle East and Africa region in that figure. Among these, China represents the most important opportunity. Currently, if we examine the sales of the two statins in China, we see that they exceed $1 billion. This clearly indicates a substantial opportunity. We are actively collaborating with Edding to navigate the regulatory process. While we are not ready to quantify this potential just yet, we need to obtain the regulatory approvals first. As is common with Chinese regulatory authorities, there is typically a period of silence, followed by numerous questions to address at the last moment. We are currently in close interaction with them and will see how this develops over time. Thank you, Louise.

And the next question is coming from Paul Choi from Goldman Sachs.

I want to maybe just ask about gross to net and pricing dynamics here as you see growing market share and the impact from the generics here. Can you maybe just comment on what the sequential trend has been in terms of realized net price here and just how you think about that potentially being impacted in 2022?

Yes, thank you, Paul. Regarding the gross to net, we have indicated a couple of times that we will be strategic with specific plans to eliminate any obstacles to prescriptions. This applies to generics as well as other products. It’s an initiative we are pursuing. So far, we have observed that our overall average net price on a national level has been affected, but only by less than 1% over several quarters. We do not anticipate any significant changes in this trend. There may be a slight decrease in net price, but it should be seen as typical for a product facing competition in the market. We do not plan to take unusual steps at this stage because we believe it is unnecessary. Our focus continues to be on discussions and negotiations to address these trends and ensure any barriers are removed.

Okay. That's very helpful color, Karim. And then maybe as a follow-up here, just with regard to the countries in which you filed the dossiers and you could be in a position to have near-term distribution arrangement, can you maybe just update us on where you are on the status of identifying and contracting with a potential partner for those geographies? And when do you think that would potentially be finalized?

Thank you, Paul. Regarding partnerships, we have begun the process for Central Eastern Europe and have started engaging with several countries. This is a time-consuming process, as we need to receive requests, conduct due diligence, and evaluate which types of partners we will work with. We are assessing whether requests are coming in on a country-by-country basis or regionally, and determining which approach is more advantageous. We need to wait for all requests to come in before we can compare them. As for the 20 additional countries we are targeting internationally, we have not yet started that process. We have begun the regulatory submission process to obtain approval but do not anticipate delays, as we believe we can achieve regulatory approval in 2022 for six countries we discussed. Therefore, we will need to have partners ready in these countries and plan to start this process early in 2022.

And the next question is coming from Jessica Fye from JPMorgan.

Can you specify what the European revenues were in the third quarter?

We reported very little revenue in the third quarter, approximately $200,000. To clarify how this works in various countries, contracts with wholesalers cannot be signed until the price is public, which happened on September 1. Thus, September was a crucial month for signing wholesale contracts to ensure pharmacies could receive supplies. The product was not listed on the electronic prescribing system until October 1. This timing was not a delay on our part, as the German system updates every quarter, and we had to submit our request one month in advance. We submitted on the day the price was published to ensure listing in the electronic prescribing system by October 1. However, even after being listed, we're still relatively unknown to many physicians, and wholesalers will not begin to fill orders until they see demand from pharmacists. This process takes time, especially since this is our first country. In Germany, we had the shortest prelaunch period, while in other countries we're currently in prelaunch mode with medical teams providing education and outreach. Unfortunately, we did not have the same opportunity in Germany, and we are now working to catch up due to the limited time. This provides context for our revenue and expectations based on the initial data from the German launch.

Thank you. There were no other questions in queue at this time. I would like to hand the call back to the Amarin management team for any closing remarks.

Great. So thank you all so much. We're happy that we were able to address all questions. Thank you for your participation, your contribution. And we look forward to connecting with you again at the next earnings call in 2022. Thank you.

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