Earnings Call Transcript - AMRN Q1 2021

Operator, Operator

Welcome to Amarin Corporation's conference call to discuss its first quarter 2021 financial results and operational updates. This conference call is being recorded today, April 29, 2021. I would like to turn the conference call over to Alina Doubrovna, Associate Manager of Investor Relations at Amarin.

Alina Doubrovna, Associate Manager of Investor Relations

Thank you, operator, and thank you to everyone for joining our first quarter 2021 results. Before we begin, let me turn to our forward-looking statements. 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, costs, gross margin and other commercial metrics; our current plans and expectations regarding spending, including expenditures for the promotion of VASCEPA and for the purchase 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 supply and launch of generic versions of VASCEPA by generic companies and by ourselves; our current expectations on the substance and timing of VASCEPA regulatory reviews outside the United States; our current plans and expectations regarding the timing, scope and success of international expansion, including expectations regarding our ability to launch VAZKEPA in Europe and our expectation in China for clinical trial results and potential to bridge reduce the results and labeling and promotion of VASCEPA through our partner in China; our current plans and expectations regarding VASCEPA exclusivity outside the United States, including Europe and China; our current plans for commercial expansion in the United States with the entry of current and potential future generic competition; and our current plans and expectations regarding clinical study of VASCEPA related to COVID-19. These statements are based on information available to us today, April 29, 2021. We may not actually achieve our goals, carry out our plans or intentions, or meet the expectations disclosed in our forward 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 agreement 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 quarter ended March 31, 2021, and our annual report on Form 10-K for the year ended December 31, 2020, which have been filed with the SEC and are available through the Investor Relations section of our website at www.amarincorp.com. We encourage everyone to read these documents. This call is intended for investors in Amarin, and it is not intended to promote the use of VASCEPA outside its approved indications. An archive of this call will be posted on Amarin's website within the Investor Relations section. Making prepared remarks on today's call will be John Thero, President and Chief Executive Officer; Karim Mikhail, Senior Vice President and Head of Commercial for Europe and planned future President and Chief Executive Officer; and Michael Kalb, Chief Financial Officer. After prepared remarks, we will open the call to your questions. I remind you that multiple audiences typically listen to calls of this nature, including existing investors, potential new investors, employees, current and potential collaborators, and current and potential competitors. As always, in this call, we will attempt to provide constructive information without compromising our competitive and strategic positioning. I now turn the call over to John Thero, President and Chief Executive Officer of Amarin.

John Thero, President and Chief Executive Officer

Good morning, and thank you all for joining us. As you know, we recently announced my plans to retire this year. And for our Senior Vice President and Head of Commercial for Europe, Karim Mikhail, to take over as President and CEO. Karim and I have spoken with a number of you over the past couple of weeks. And while announcing my retirement is a bittersweet moment for me, I have every confidence in Amarin and its outstanding employees who are dedicated to the patients and shareholders we serve. Separately today, we announced that Joe Kennedy, our General Counsel, has informed Amarin of his intention to retire from Amarin. Joe has played a pivotal role in the development of the company over the last decade, including in various past successful legal initiatives, which have enduring value for Amarin and for the pharmaceutical industry. He is one of the small number of employees who joined Amarin prior to us gaining approval from the FDA for the initial indication of VASCEPA in 2012 and at the start of the REDUCE-IT study. Joe remains focused on Amarin's success and dedicated to working to ensure a smooth transition to a new general counsel and plans to continue to support the company in certain legacy legal matters as part of his planned transition. Karim, with the support of Joe and others at Amarin, including me, has commenced a search for a replacement general counsel for Amarin. The primary office location for the new general counsel is likely to be our New Jersey office. For context, of the more than 1,000 people currently working for Amarin, more than 80% joined our team in the past three years. Most of these people were added for commercialization of VASCEPA in the United States or more recently for commercialization of VAZKEPA in Europe or for managing our R&D initiatives, including the REDUCE-IT study, which initiatives expanded after VASCEPA was initially launched in 2013. Aside from Joe and me, only 14 of our employees were with Amarin prior to the initial approval of VASCEPA. Recall that we had a small team of people prior to commercialization. In recent years, Amarin has had relatively little turnover and particularly little turnover among senior management. Accordingly, while it may seem odd that both Joe and I are retiring from the company in a similar time frame, we do not expect this to be a broadly recurring theme. Among our long-tenured executive officers are Steve Ketchum and Aaron Berg. They and various others have expressed their intentions to not retire at this time and to work with Karim to build a bigger and better Amarin. Towards that end, the Amarin team continued to make significant progress throughout the first quarter of 2021, highlighted by a number of achievements that support our international strategy to rethink cardiovascular risk. Most notably, we received market authorization from the European Commission for our unique drug, icosapent ethyl, under the brand name VAZKEPA for cardiovascular risk reduction. The brand name will remain VASCEPA in the United States. The European marketing authorization is a major milestone for Amarin as it allows us to commence our commercial initiatives in Europe with the aim over time of helping millions of at-risk patients, which represents a multibillion-dollar opportunity for Amarin. Just last week, the marketing authorization for VAZKEPA in Europe was expanded to cover England, Scotland, and Wales. These regulatory approvals reflect the robust results of our clinical studies, the hard and thoughtful work of our employees, and the support of various leading physicians and other advisers. We are optimistic about our opportunities in Europe, and our next major step is market access. We also remain excited about our opportunities in the United States and the rest of the world. Throughout the first quarter, we continued our work to build the VASCEPA brand in the U.S. amidst the continued headwinds of the COVID-19 pandemic as well as other events that impacted patients visiting their health care providers in certain areas of the country. We were not alone in facing these headwinds. For example, COVID appears to have slowed the growth in the use of statins and other lipid therapies. Because of these headwinds and, to a lesser extent, because of the entry of limited generic competition, we elected to spend less on product promotion in the first quarter of 2021 compared to the first quarter of 2020. As a result of operational cost savings, our bottom line results improved in the first quarter of 2021, despite a modest and hopefully temporary decline in reported revenue. In the United States, our net product revenue for the three months ended March 31, 2021, and 2020 were $140.8 million and $145.5 million, respectively, a decrease of 3%. This decrease was driven primarily by the effects of: one, COVID-19; two, severe weather and related power outages in various parts of the United States; three, generic competition; and four, effectively one fewer week of shipments in the first quarter of 2021 as compared to the first quarter of 2020, which, as reported in 2020, added approximately $10.8 million to net product revenue in the first quarter of 2020. This anomaly, as expected, was not repeated in 2021. Net product revenue in the first quarter of 2021 was also impacted by our decision to reduce our level of promotional activities. Mike Kalb, our CFO, will speak in more detail regarding these factors later in this call. We also know that the first quarter of each year is historically a challenge due to seasonal factors that are not VASCEPA-specific but rather impact many medications. In particular, in Q1 of each year, some patients elected not to fill their prescriptions due to beginning of the year deductible limits under their insurance plans. Such deductible limits go into effect at the beginning of each calendar year under many insurance plans, creating added financial burden for patients. Drugs used for asymptomatic conditions, including VASCEPA, tend to be the most impacted. As Mike will also discuss later in this call, our VASCEPA franchise in the United States was profitable in the first quarter of 2021, and, along with our strong balance sheet, continues to support our global expansion plans. We remain optimistic regarding the opportunity for U.S. VASCEPA growth in the future. There continue to be millions of at-risk patients who are candidates for the cardioprotective benefit of VASCEPA. Awareness of VASCEPA remains low. This low awareness is evident both in opinion surveys and by broad use of competing products that have failed outcome studies. The data supporting the effectiveness of VASCEPA is compelling. The compelling nature of this data is reflected both by regulatory approvals for the drug by the U.S. FDA, Health Canada, and now the European Commission and the U.K. regulatory body. The importance of this data is broadly published in peer-reviewed journals, and 15 medical societies globally now recommend use of icosapent ethyl for cardiovascular risk reduction. While key opinion leaders and medical societies know VASCEPA's effectiveness, most health care professionals and at-risk patients remain unaware of the drug or lack details. As a result, for example, approximately 2 million people take fenofibrates, despite the fact that these products have failed outcome studies, have various side effects, and the FDA revoked the indication of these products with regard to cardiovascular risk reduction in combination with a statin, as the benefit does not outweigh the risk. Yet still today, roughly three times as many patients take fenofibrates with their failed outcome study than take VASCEPA with its proven effective results. And for persistent cardiovascular risk, there are even more people taking other products such as dietary supplement fish oil preparations despite their failed results in lowering cardiovascular risk beyond statin therapy. Clearly, there is significant opportunity to educate physicians and patients about the merits of VASCEPA as opposed to failed and unproven products. More can be done to benefit patients with proven approved therapy. As you know, we launched VASCEPA for the treatment of persistent cardiovascular risk shortly over a year ago. But as with other branded agents, during most of that time frame, our commercial efforts have been slowed by COVID-19 as health care professionals and patients were focused on preventing and treating COVID-19 versus preventative care for other medical concerns. Public reports from IQVIA showed patient visits to doctors on average during the first quarter of 2021 were down to approximately 78% of pre-COVID levels experienced during the first quarter of 2020. The decline in patient visits was most significant in various geographies in the United States, where, prior to the pandemic, VASCEPA volumes and growth were the most robust. While the effects of COVID-19 were a significant part of our decision to pull back on VASCEPA promotional efforts in the first quarter of 2021, that pullback is expected to be temporary. As vaccinations take hold in the United States and the effects of COVID-19 recede, we expect to enhance our promotional efforts in the U.S. with branded and unbranded educational efforts that include digital and nonpersonal channels as well as peer-to-peer initiatives such as promotional medical educational programs and product theaters that further increase the VASCEPA brand awareness and clarify VASCEPA's unique clinical profile. Some of our non-branded initiatives, such as podcasts and satellite media tours with key opinion leaders will highlight the need for at-risk patients to get back to their doctors' offices and to promote testing for cardiovascular risk. As mentioned in today's press release, we see some early signs of the effects of COVID-19 potentially receding. For example, while only roughly half of the physicians we target are now open to office visits from sales representatives, that level is roughly 8% higher now than it was roughly 6 months ago. We recognize that trying to grow a brand in the face of generic competition is atypical. However, the generic launch with a skinny label and limited supply is atypical. Based on what is known to us currently, assuming that the effects of COVID-19 recede, facilitating market growth, we remain convinced that there is greater value to shareholders and undoubtedly to patient care for us to continue to work to increase education, grow market penetration, and seek to grow usage of branded VASCEPA faster than generic competition. We understand generic companies and their suppliers have not made the investment in capacity expansion that Amarin has made. Currently, there is only one launched generic in the market. And there have been reports of inconsistent levels of supply in different areas of the United States and periodic stock outages for that product, creating week-to-week fluctuations in the level of prescriptions filled by retail pharmacies with the generic product. These fluctuations in the generic product availability impact the level of VASCEPA branded prescriptions filled. While capacity for generic competition may increase over time, based upon information available to us currently, we anticipate that capacity through their current suppliers will remain a fraction of the capacity of Amarin suppliers. We continue to hear complaints from patients who have found the generic drug more expensive than branded VASCEPA, and various managed care companies have witnessed that the generic product on a net price basis is more expensive to them than branded VASCEPA. Since the generic product has been launched, overall managed care coverage for branded VASCEPA has continued to improve. In Q1 2021, based upon data from Symphony Health, total prescriptions of icosapent ethyl, consisting of branded and unbranded product increased by approximately 11% over Q1 2020. Of these reported prescription estimates, approximately 9% were for the generic version of icosapent ethyl. As discussed previously, Amarin filed a cardiovascular risk reduction patent infringement lawsuit against the generic manufacturer and a health care insurance company based upon a collection of activities by them, which we believe infringe our cardiovascular risk reduction patents for VASCEPA. We have no update to provide today regarding that litigation. We refer people to our court filings for more details. Turning now to progress with our global expansion plan. It is my pleasure to turn the call over to Karim. For those of you who don't know Karim, he is a global commercial leader with considerable experience, successfully launching cardiovascular drugs in Europe and around the world. Karim was with Merck for 22 years, where he served in leading commercial roles in 7 countries across 3 continents and where he led Merck's multibillion-dollar lipid franchise among other leadership roles. The Board and I have every confidence that Karim is the right leader at the right time, and we are working closely to facilitate a smooth transition over the coming months. As a reminder, he has a track record of helping grow business lines in the United States, Europe, and in the rest of the world. He joined Amarin in the middle of last year to be the Head of our European commercial launch efforts. He joined us on the heels of an extensive process in which we evaluated whether it was best for Amarin's shareholders for us to self-launch VAZKEPA in Europe or to license such opportunity to another company. As expressed at that time, the process concluded that the greatest value was for Amarin to retain such rights in self-launch. Most investors with whom I have spoken support that decision. While I and others at Amarin were impressed with Karim before he joined us, his work at Amarin has demonstrated that he is capable of much more. He has proven that he can work in Amarin's fast-paced environment. He developed a passion for our product. He has recruited an outstanding team of people. And he has led an effort in a very short period of time, which positions us well for market access negotiations. He has helped expand Amarin's relationships in Europe. He has built good working relationships with all functions of Amarin, and he has established thoughtful plans for Amarin in Europe while increasingly contributing to other aspects of Amarin's business. As you get to know him, I am sure that you will be impressed with him as well. He is in the process of recruiting a new Head for Europe, and until that is complete, he will continue to fill that role while getting ready for the CEO transition scheduled for August. With that, let me turn the call to Karim to discuss our international plans.

Karim Mikhail, Senior Vice President and Head of Commercial for Europe, Future CEO

Thank you for those kind words, John, and good morning, everyone. Before I update on Amarin's progress in Europe, please note that I'm excited about Amarin's opportunities in the United States, Europe, and throughout the world. Before John and the Board asked me to become CEO, the opportunity for which I am humbled, optimistic, and excited, I was thrilled by the progress we have been making in preparing to launch VAZKEPA in Europe. Amarin's R&D team, medical affairs team, and supply team, including quality and CMC, are amazing. The label we received for VAZKEPA in Europe is broad, clear, and articulate. With this label, which is very representative of our reduced patient population, we should be able to help many patients. In my comments today, I intend to focus on our commercialization plans, particularly in Europe where our commercial success is a high priority for the immediate future. There are multiple potential product opportunities, which our R&D and medical teams are evaluating. As more progress is made regarding those potential opportunities, and as I get further involved in these areas, we will circle back in the future with further comments. I have no doubt that the Amarin team can handle more than one product regardless of the large size of the opportunities for VASCEPA in different markets. Regarding Europe, it is rare to be launching a new drug that already has outcomes, which has no proven competitive therapy and for which the consequences of not taking the therapy include unnecessarily high risks of stroke, heart attacks, and cardiovascular death. However, cardiovascular disease is often asymptomatic. And even with the good clinical results and the recommendations of leading medical societies, change can be slow. And of course, no drug will be prescribed without a thoughtful and intense educational and commercialization plan. The two most significant challenges before us are market access and product awareness. We believe our growing team of highly seasoned European pharmaceutical executives, most of whom have years of experience working with big pharmaceutical companies in Europe, are very much prepared to meet these challenges head-on and side-by-side with the deeply experienced existing Amarin team. Market access, which involves establishing approved pricing, is the key to success of any drug in Europe. It must be realized on a country-by-country basis, unlike in the United States where many payers. For the most part, in Europe, each country has a single payer, government-run health care system. In most countries of Europe, a drug cannot be launched successfully until a price is proposed, negotiated, and agreed. The process of getting market access varies by country and can be time-consuming. The degree to which this market access process is visible varies from country to country, both while trying to gain market access and after market access is secured. Because these will be ongoing negotiations, and because it is generally counterproductive to engage in public negotiations, there may be limited information available to you along the way. Many of you will have experienced watching and waiting for other companies to progress confidentially through such negotiations with their drugs. We're on that same path. Because we are the first drug for our indication, we expect that we will get attention. But it's too early to predict the end timing of such negotiations. The process, while not externally visible on a daily basis, provides the right environment for a smooth and trustworthy negotiation with the authorities in each country. As information is disclosed from the market access processes in various countries, please note that ultimately, the net price that gets agreed in each country is what matters the most. List prices get introduced, but list prices are often not the final price. As in the U.S., the WAC price differs from the net price. For example, in Germany, where a price can be declared and used for the first year, the price for the second year needs to be negotiated and will vary from the price used in the first year. Also, different countries will end up having similar list prices but potentially slightly different net prices as each country has a different markup structure. Throughout the past several months, our team with the support of various advisers has been diligently working to prepare reimbursement dossiers. There were limitations to how much of this could be accomplished prior to marketing authorization and labeling. We plan to file market access dossiers in 10 countries in the coming months, including in some of Europe's largest countries. These dossiers include the data demonstrating the uniqueness of VAZKEPA from a scientific perspective, various country-specific demographic data sets to define the eligible patient population based on the label, and proposed pricing. Our pricing strategy for VAZKEPA in Europe will be to pursue a value-based price. We believe that the reimbursed price we are seeking is well justified based on the demonstrated effectiveness of VAZKEPA in reducing cardiovascular events, the high economic burden and the societal cost of heart attacks, strokes, and other cardiovascular events that VAZKEPA can help avoid, as well as the reduction of payments suffering for at-risk patients and their families. After the first 10 country submissions for market access, we plan to pursue a second wave of reimbursement filings in other European countries. Regarding market awareness, despite the two leading cardiovascular medical societies in Europe recommending the use of icosapent ethyl, overall awareness of VAZKEPA in Europe is low. This is as expected. VAZKEPA was only approved a month ago. And prior to regulatory approval, we could not engage in branded activities. Because Germany is the largest market in Europe and because Germany allows market access for one year, based on a declared price rather than a negotiated one, much of our initial market access initiatives are starting by focusing on Germany. Our current plan calls for a build-out of our current staff in Europe to approximately 300 people by the end of 2021. Towards that end, we started training sales reps in Germany to advance prelaunch disease and brand awareness initiatives. And in May, we expect to deploy approximately 150 sales representatives. They, combined with various other initiatives, including various digital initiatives, will emphasize disease and product awareness. It is common for new drugs in Europe to have a period in which awareness is promoted before the drug can launch. And in Germany, the one-year period with a declared price does not commence until the drug is launched. We aim to begin to sell VAZKEPA in Germany before the end of Q3 this year. Currently, the effects of COVID-19 are significant in Germany. We are hoping that these effects will subside during the summer months as the rollout of vaccinations in Germany becomes more widespread. Our European market authorization was timely as it allowed us to debut VAZKEPA at two premier cardiovascular medical meetings held virtually this month, the European Society of Cardiology Prevention, or ESCP, and the German Society of Cardiology or DGK. The combination of these two medical meetings created an ideal opportunity to amplify our messages before audiences of leading cardiologists in our target markets with compelling clinical data in support of the use of VAZKEPA to reduce cardiovascular risk. We plan to continue to take advantage of these venues with the help and support of some of the world's leading cardiovascular key opinion leaders, and will do similarly in additional countries' cardiovascular congresses. I am confident that the clinical need for VAZKEPA in Europe is large. The clinical data is impressive. I'm also quite confident that the team we have in place now in Europe, for example, the specialty sales force in Germany, which has 10 years of cardiometabolic launch experience, together with the expertise that the Amarin team in the United States has, are ideally suited to succeed with the tasks ahead. We are working rapidly and with confidence with prioritization of market access and heightening awareness. This is an exciting opportunity for Amarin to make a difference in the lives of the many millions of patients throughout Europe who are at risk of a cardiovascular event. In addition to these advances, preparing Europe for commercialization, Amarin has also made progress in other areas around the world. During the first quarter, we are pleased to have the Canadian Cardiovascular Society and the Egyptian Cardiovascular Society recommend icosapent ethyl in their medical treatment guidelines for cardiovascular risk reduction. Now 15 medical societies have recommended the use of icosapent ethyl for cardiovascular risk reduction in at-risk patients. In China, our partner Edding has made considerable progress. Last November, we shared the positive data from Edding's Phase III clinical study in China. In January, we were delighted to share that icosapent ethyl was added to the Chinese Society of Cardiology treatment guidelines. Earlier this month, regulatory authorities in China, the Chinese National Medical Products Administration, accepted Edding's new drug application for review of VASCEPA, which is another milestone on the path to approval for adding. Edding currently anticipates receiving approval for VASCEPA in Mainland China near the end of 2021, and also anticipates approval of VASCEPA in Hong Kong near the end of 2021. With approximately 180.4 million hypertriglyceridemia patients in China in 2019, and a history of rapid and large statin therapy usage in China, there is a significant medical need and a meaningful market opportunity for Amarin and Edding. Regarding the rest of the world, as you know, we have commercial partners in Canada and the Middle East, and we expect further positive contributions from these partners, particularly after the effects of COVID-19 subside. We will give greater priority to other international markets after we progress further in Europe. Amarin has a history of focus and a history of overcoming great challenges. Currently, our greatest priorities are growth in the United States, successful commercialization in Europe, and supporting product approval in China. For now, these are large opportunities upon which I agree with John that we must seize. In the future, we will undoubtedly also focus on additional product development and diversification. Over the next few months, as I prepare to transition to the CEO position, I expect to spend a lot of my time listening, asking, and learning. I hope you will be generous with your constructive thoughts, insights, suggestions, and honest feedback. I remain impressed by what Amarin has accomplished, particularly as a small company. I look forward to continuing to work with the Amarin team to build upon our successes, as we are, I believe, destined to become a much bigger company. We have a unique and effective product. We have highly capable people, and we have a culture that emphasizes rapid decision-making with a focused can-do approach. With this team and this approach, I'm confident that we have considerable opportunity to expand further in the U.S. and similarly, large opportunities to expand internationally. While I believe the opportunity in the U.S. will always be an important foundation for Amarin, now is a transformative period for Amarin with our European commercial launch and our broader global expansion plans well underway. I feel privileged to be inheriting such a strong and experienced commercial team in the U.S. headed by Aaron Berg, and we have started to build a similarly impressive team in Europe. This is an incredibly exciting time at Amarin, and I'm energized by the opportunities ahead and confident that we will make valuable progress, particularly as the impact of COVID-19 recedes. There is nothing more important that we can do today than succeed in our commercial plans. Yes, we have opportunities to diversify. And yes, I see value and diversification, and I'm confident that our team can handle multiple products. However, first and foremost, we must execute on the large opportunities we have with our current products. Doing so will create further opportunities. As I get more involved with Amarin's operations beyond Europe, working with others at Amarin, I look forward to reviewing such diversification opportunities. For now, execution on commercial growth in the U.S., Europe, and globally remains our top priority. With that update and review, let me turn the call over to Mike Kalb, our CFO for a more detailed discussion of our financials.

Michael Kalb, Chief Financial Officer

Thanks, Karim. Net total revenue in the first quarter of 2021 was $142.2 million. This amount consisted of $140.8 million in net product revenue from the United States, $500,000 in net product revenue from outside the United States, and $800,000 in licensing and royalty revenue. The first quarter of 2021 was significantly impacted by COVID-19 and severe winter weather, especially in states like California, Texas, and New York, which are states that have significant VASCEPA Rx volumes. In addition, in the first quarter of 2021, we lost approximately 9% of prescriptions to generic competition, and this 9% excludes the broader market disruption caused by generic competition. Moreover, as reported in conjunction with first quarter 2020 results, net product revenue in the first quarter of 2020 included $10.8 million from the timing of customer orders and related receipts, which effectively provided an added week of revenue shipments. This phenomenon did not reoccur in the first quarter of 2021. Further contributing to the decrease was a decline in net product revenue due to the timing of orders from outside of the United States. We recognized net product revenue of $500,000 during the three months ended March 31, 2021, as compared to $6.7 million during the three months ended March 31, 2020. The results in 2020 included an initial order to ensure availability of adequate product supply for the launch of VASCEPA in Canada. VASCEPA promotion and use outside of the United States has also been limited by the impact of the COVID-19 pandemic. Amarin, like many other companies, had limited access to physicians and patients due to the ongoing headwinds from the COVID-19 pandemic. Therefore, we did not invest in the kinds of promotions and marketing efforts that we ordinarily would have to increase education and awareness of VASCEPA. As a result, operating expenses were reduced by $29 million, primarily as a result of lower sales and marketing expenditures incurred as the company worked to efficiently manage expenses in light of COVID-19-related limitations impacting physicians, patients, and the level of our promotions. Included in our operating spending is continued support for previously described studies of VASCEPA for potential use in COVID-19 prevention and symptom mitigation. Those ongoing studies are blinded, and we have no new data regarding those studies to report at this time. Due to the uncertainties regarding the effects of the COVID-19 pandemic and potential levels of generic supply, we are not providing quantified 2021 revenue guidance at this time. As of March 31, 2021, Amarin reported aggregate cash and investments of $538.7 million, consisting of cash and cash equivalents of $291 million and liquid short-term and long-term investments of $223.7 million and $24 million, respectively. We reiterate that based on our current plans, we believe that our existing resources are sufficient in the U.S. to fund VAZKEPA's launch in Europe and to get us to cash flow positive on a consolidated basis. With that financial overview, I will now turn the call back to John for closing remarks.

John Thero, President and Chief Executive Officer

Thanks, Mike. Over the past few years, I have frequently discussed our growth strategy, in which the next phases include Amarin expanding globally and further diversifying. I believe that Amarin has the product, people, plans, and resources to be successful. In many respects, 2021 is the year of execution for Amarin. Before year-end, we anticipate commercial launch in Germany and approval in China. And as COVID-19 begins to recede in the United States, we look to reaccelerate the growth of VASCEPA usage, revenues, and profits. It has been and continues to be my privilege to serve as steward for your company over the past 12 years. I will continue to work full-time until August 1 in support of Amarin's growth, and I am committed to providing help, if needed, beyond August 1. As I prepare to pass the baton to Karim, I know that I leave Amarin and you, our loyal shareholders, in strong hands. I express this confidence, both from my experience working with the Amarin team and also as a fellow shareholder, of which my equity in Amarin is my largest asset. With that, operator, we are ready to open the call to questions.

Operator, Operator

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

Yasmeen Rahimi, Analyst

And it's been a privilege working with you, John. You'll be greatly missed. And first question for you is just, can you give us some color on the timeline on when do you hope that all 10 dossiers would be completed and pricing negotiations would be completed? What is the time frame or maybe the order of the countries that we could maybe expedite the process? That would be great.

John Thero, President and Chief Executive Officer

Yasmeen, this is John. Thank you for the nice comments. With regard to timing in Europe, since I'm sitting next to Karim and others and Karim is intimately involved with Europe, let me turn things over to him and maybe he can talk a little bit about the European process and in general, not just for us, but for other countries, but a bit more about our plans.

Karim Mikhail, Senior Vice President and Head of Commercial for Europe, Future CEO

Sure. So as we shared before, we have been working on 10 dossiers for 10 countries to submit over the next weeks and months. And obviously, we realized that this work has started, I would say, even before I joined, right, for us to be ready at this point in time. So significant effort has been invested into that. Obviously, the sequence of the submissions really depends very much on two elements. One, what is the requirement of the country? So each country has different requirements, certain files will end up being far more significant than others. I have seen in some of the retail questions that people are asking what are in those dossiers? So there are three main components. The first one is really a summary of the scientific evidence that we have from the REDUCE-IT study. The second part is really the eligible patient population in that country. And third, proposed pricing along with a budget impact. So we're working very, very closely with our advisers in these countries to submit those first 10. Those first 10 will include the largest five countries in Europe. So they will be Germany, France, the U.K., Spain, and Italy, right? So no question there. Other than these countries, it's really a question of their own timeline. And for us, the fastest we will be able to submit, we will definitely be doing that.

John Thero, President and Chief Executive Officer

Karim, maybe just as a follow-on there because it's probably on people's minds. So why launch in Germany not now but later this year and why are we launching in every country this year?

Karim Mikhail, Senior Vice President and Head of Commercial for Europe, Future CEO

So first of all, Germany is very unique because it allows access very early on. And in reality, we will not be able to access any other country until we negotiate the price in full. However, in Germany, we can declare a price and start promotion. The reason why we decided to wait for a number of months before end Q3 as the launch date we declared is, number one, as you know, we have not had the chance to promote the brand until very recently, we did not get approval except a month ago. So currently, the awareness rates for VAZKEPA are definitely low and no surprise there. So if we rush to launch, we put the product on the market, and we actually lose some of the opportunity of the one-year of free declared pricing because for the moment, the access to physicians is still very limited also because of COVID. If you look at Germany, it's currently facing a second peak today, they are 80% of their highest peak. So we're also conscious that we will need a bit more time to ensure that we engage with prescribers in Germany before we are ready for a launch.

John Thero, President and Chief Executive Officer

Thanks, Karim.

Operator, Operator

And the next question is coming from Louise Chen from Cantor.

Louise Chen, Analyst

John, I will echo Yasmeen's thought. We are going to miss you greatly and really enjoyed working with you through all these years. So first question I had for you is, what type of candidate are you looking for in a new Head of the EU? What kind of people have you been speaking to? And then secondly, can you give more color on your thoughts on how to expand your product portfolio beyond VASCEPA and VAZKEPA? Are you looking at approved products, R&D type opportunities and the timing behind this? And then maybe one last question here, just people have asked this a lot is how do you think about generic competition in 2021 and beyond as it pertains to additional entrants in the market, supply, and anything else we're thinking about?

John Thero, President and Chief Executive Officer

Thanks for your comments, Louise. I’ll address your points in reverse order, starting with Karim discussing the European Head, followed by any additional remarks he may have. Regarding generic competition, we currently have one generic available in the market, which they report has limited supply. Patients and payers have noted that they often find the branded product to be cheaper than the generic, and they frequently experience shortages or stock-outs of the generic product. As we've mentioned before, the atypical launch of VASCEPA occurred last year for its primary indication, and awareness remains relatively low. We recognize the significant market potential for VASCEPA in the United States, but we need to boost awareness, which has been hindered by COVID. We are seeing progress, as managed care coverage continues to improve overall in the U.S. Access remains relatively low, and we've noted that about 50% of our target physicians now allow access for us or other sales representatives. That’s an improvement, though it’s not yet at 100%. However, we still see that patient return levels and lab tests are below expectations. A key factor for growth in the United States is for COVID to subside, particularly with vaccinations for high-risk patients. We are optimistic that we can expand the market faster than the generics can supply it. There have been two other standards approved in the U.S., but neither has launched yet. The current generic may eventually have more supply, according to their comments, but it’s worth noting that the indication for which that product is labeled is narrow, focusing on patients with very high triglycerides of 500 mg/dL or greater. Reports show that this represents about 7% of our prescriptions based on third-party data, but they appear to be selling more than that, around 9%. Additionally, we have ongoing litigation to ensure they operate within their label, making this a dynamic situation. It’s still early in this process, but given VASCEPA’s effectiveness and our dedicated team promoting it, we believe if COVID eases, we can resume accelerated growth. As Kalb mentioned, we reduced our promotional spending in the first quarter, but we’re beginning to see early signs of new brand engagement and increased physician access, indicating that COVID may be letting up. We plan to gradually resume our commercial spending in the U.S. and aim to return to our launch strategy. Regarding diversification, as Karim mentioned, being successful with our commercial launch is currently our top priority. We have a capable U.S. field team that maintains strong relationships with healthcare professionals through scientific-based selling, and we are establishing similar efforts in Europe. Our strong R&D team is frequently approached by companies seeking co-promotion or in-licensing opportunities, which we regularly consider. Our strategy has always been to start with a niche market, expand into cardiovascular risk reduction, then move internationally, and finally diversify. With recent approvals in the U.S., Canada, and Europe, our R&D team will continue to support market access efforts in China and elsewhere while increasingly focusing on potential additional R&D initiatives. As for the European launch, Karim will be closely involved and has already assembled an excellent team. Karim, would you like to add anything?

Karim Mikhail, Senior Vice President and Head of Commercial for Europe, Future CEO

Sure. And again, obviously, as the launch is so important for Amarin, hence the importance of selecting the right leader for the organization and the people we're already interacting with because we did start the process, basically have three main criteria. The first one is the significant cardiometabolic launch experience. This is a unique market. And if you haven't operated in it, it will take time for that person to build pace and speed. So experience with cardiometabolic launch is very critical. The second one is obviously an operational P&L experience in Europe and beyond that's going to be critical to ensure that we drive the results. And finally, and I would say more importantly, is the attitude, the drive for results, the fact that we are going at the pace of very close to German speed on the autobahn for no speed limit. We're trying to go as fast as we can. For many companies, it actually takes more than two to three years to establish themselves in Europe where up to now, we are actually less than 12 months from our August announcement, and we already have a German subsidiary with 150 people. So we look forward to identifying very soon the leader who will take my place and continue the successful launch in Europe.

John Thero, President and Chief Executive Officer

Thanks, Louise, for those questions. Before we take additional questions, operator, we have received some inquiries from retail investors, and I wanted to address a few of them. The first question relates to our digital strategy in Europe. There was mention of the Writers European health care conference last week where Karim discussed the significance of digital strategy. Karim, could you explain what digital strategy entails, its importance, and how it differs from the industry's approach just a short time ago?

Karim Mikhail, Senior Vice President and Head of Commercial for Europe, Future CEO

Sure. So as you know, for many years, face-to-face interaction, whether through field force or even in congresses was really the standard for many years. But over the last decade, I would say, there has been a very significant shift in the sources of information and education that prescribers and different stakeholders have. And it's moving really from face-to-face to more virtual engagement. So as Amarin is establishing itself in Europe, we want to make sure that we take advantage of that shift in market. And in fact, hopefully, lead it. So we are building our launch strategy, really depending on the market artifacts. There are European countries where you have what we call the blended model, meaning you still have a lot of traditional versus nontraditional ways of engaging with the customers. While some markets like the Nordics, you could actually engage fully digitally because these are countries where 90% of prescribers get their information online really. So in our digital strategy, we prioritize the channel by which we can engage with the prescribers to ensure we have an effective and efficient model as we are launching in Europe.

John Thero, President and Chief Executive Officer

Thank you, Karim. I understand your team includes individuals with experience in both the pharmaceutical and consumer product sectors. Before we return to the online questions, I wanted to address the strategy in regions such as Latin America, Mexico, Africa, India, and Russia. These represent significant market opportunities. As mentioned, it's crucial for us to make progress in Europe and establish market access there before we expand into those and other potential countries worldwide. However, it's important to recognize that cardiovascular risk is a global issue. While we care about these markets, we have a strategic sequence to follow. We are planning and considering these opportunities, but our priority is to complete the European aspect before moving on to the others. Now, let's go back to the operator to see who else is in the queue for the next question.

Operator, Operator

The next question is coming from Michael Yee from Jefferies.

Michael Yee, Analyst

Appreciate all the work. John, yes, we will definitely miss you. And I appreciate the retail questions in front of me. But my question actually is around European pricing. Karim, could you maybe just comment around how to think about the bookends of pricing for VAZKEPA. I know there's a lot of different prices for PCSK9 around Europe, and there's a big price delta from U.S. Maybe you could just comment about how to think about, for modeling perspectives, the pricing in Europe and the parameters for that versus U.S. pricing?

Karim Mikhail, Senior Vice President and Head of Commercial for Europe, Future CEO

Thank you. So actually, you're raising a very important point, which is the disparity that exists in price. And that shows that every country really has its own way of looking at things. And what we decided to do is to really deliver on a value-based pricing approach because if we're trying to be consistent across the different European countries, the only way of doing that is to build out a price based on the value we provide, meaning the cost that we reduce for many of these reimbursement agents. So that is the most straightforward way that would allow them, by the way, to compare and contrast our value compared to many of the products on the market, which are not compatible. Because, as a reminder, we do not believe that we have a comparative product today. We are with an indication that is not shared by any other molecule on the European market. So technically speaking, there is no one to compare us against. But still, they will compare the value we provide based on the events we reduce in terms of strong myocardial infarction and so on. So that's really what we are pursuing. And we are building our pharmacoeconomic model, country by country, even in the countries where we're not requested by the process to submit. We are building them to demonstrate the value for each and every country.

Michael Yee, Analyst

So shouldn't you have a pricing higher than PCSK9 then? Is that fair?

Karim Mikhail, Senior Vice President and Head of Commercial for Europe, Future CEO

Clearly, you're trying to share the evidence that we offer a competitive advantage. However, we must consider the eligible patient population for PCSK9s. This is an important balance we need to maintain. With the evidence we have, we provide significant value. However, many reimbursement agencies will factor in the price relative to the eligible population, leading to a considerable annual budget impact. If we set a price too high, we risk limiting the patient population that could benefit from the product. Therefore, the negotiations in the coming month will focus on presenting the scientific evidence, demonstrating the number of patients who will benefit, and agreeing on a price that maximizes patient access while still making sense for bringing the product to market. That is the essential task at hand.

Operator, Operator

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

Paul Choi, Analyst

John, it's been a pleasure as well working with you over the years. My question is on the U.S. side with regard to pricing here as you think about generic rollouts. I think some patients and provider payers are commenting on how net pricing for VASCEPA is actually currently lower than the generic. So I was wondering if you could maybe just speak to how do you think about discounting and/or gross net adjustments to help maintain the moat around your VASCEPA franchise here in the U.S.? And then with that, can you maybe just speak to what access has been like? I think you've spoken in the past that still a decent amount of payers reject VASCEPA here despite the on-label usage, particularly given your potential change in gross to net dynamics and discounting?

John Thero, President and Chief Executive Officer

Paul, thank you for your comment. Regarding generics and pricing, I’ll share a few insights before handing it over to Aaron Berg, who will update us on our managed care coverage, which is steadily improving. Pricing remains consistent, although it might not be as familiar to everyone. We have branded pricing where we sell to wholesalers, and prescriptions are reimbursed by managed care. We also provide copay cards to help lower costs for patients and offer rebates to managed care companies to ultimately achieve a favorable net price, similar to what Karim mentioned. The wholesale acquisition cost for the branded product is approximately $344 per month, while the generic is around $302. However, after rebates, the net price for most payers is often lower than the branded price. Since many payers have not placed the generic on Tier 1 due to its relatively high cost, they have assigned it to Tier 2 or excluded it altogether. As a result, patients may find the generic to be more expensive, and they cannot use copay cards with it. Aaron, you have more insight on this, so please feel free to add your thoughts. I’m not fully updated on our managed care coverage since we received label approval and launched it over a year ago for cardiovascular risk reduction, but it has continued to improve over the last six months. Could you elaborate on that?

Aaron Berg, Associate Vice President

Sure. Paul, managed care is a common question we receive. The perception often outweighs the reality. To provide clarity, our access is quite good. The business is divided evenly between commercial and Medicare Part D, and on a weighted basis, 75% of those lives are unrestricted. Additionally, 96% of all Part D lives are unrestricted. Approximately 44% of commercial lives require prior authorization for indications such as a patient on a statin with triglycerides above 150, along with an attestation regarding established cardiovascular disease or diabetes, which may include multiple risk factors. Many patients qualify under these criteria. The prior authorization process allows plans to manage the wide label and the many patients needing VASCEPA. We support those patients requiring prior authorization by collaborating closely with their office staff and utilizing tools like CoverMyMeds to facilitate the process. Many perceive that prior authorizations are increasing and coverage is poor, which isn't entirely accurate; we effectively manage this specific segment. Since obtaining the label in early 2020, we've made significant progress, enhancing access for 55 million lives. We've reduced the percentage of commercial lives without coverage from 15% to 5% and increased those with preferred coverage from 68% to 80%, leading to an average copay around $33. This is before considering our co-pay program, which has been in place for years to lower out-of-pocket expenses for patients. Moreover, we've significantly raised the number of Part D lives in the preferred tier from 19% to 40%, which has decreased the copay to approximately $40 to $45. Overall, while managed care has its challenges, our situation is quite favorable, and where issues arise, we strive to manage them effectively.

John Thero, President and Chief Executive Officer

Yes, prior authorizations are quite common for many medications these days. The numbers that Aaron mentioned refer to managed care levels. At the start of each year, various companies and unions provide these plans to their employees, which can sometimes cause confusion, but this isn't exclusive to VASCEPA. Overall, the coverage has improved significantly. At the beginning of the year, people often encounter insurance deductibles that are not specific to VASCEPA; many plans have deductibles ranging from $1,000 to $10,000 at the start of the year. Therefore, when they go to the pharmacy to fill their VASCEPA prescription, it may appear to be much more expensive due to the deductible kicking in, rather than a change in reimbursement for VASCEPA. The introduction of the generic has also caused some confusion at various pharmacies, as pharmacists may assume the generic is always cheaper. They are gradually realizing that this is not always the case, and we are working on providing them with more information. Recently, I've heard anecdotal reports about patients attempting to fill VASCEPA prescriptions only to find it unavailable at their pharmacy. The educational efforts are making an impact, but compared to other brands, our managed care coverage is strong. Additionally, the rate of prescriptions being filled is quite high. I hope these remarks are helpful.

Operator, Operator

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

Daniel Wolle, Analyst

This is Daniel filling in for Jessica. First, we want to extend our congratulations to John for a successful career. You mentioned aligning your spending efforts in the U.S. with demand and the opportunities presented by the COVID situation for the upcoming quarters. Should we anticipate you managing the U.S. to achieve an essentially breakeven business from this point? If that’s not the case, what would that scenario look like?

John Thero, President and Chief Executive Officer

Thank you for the kind remarks and the questions. Since the onset of COVID, we have been focused on managing our expenses effectively while navigating the uncertainties surrounding the pandemic. Last year, we had to withdraw our sales team from the field and reduce our consumer initiatives. Around September, it appeared that COVID was subsiding, so we started to ramp things back up. However, another wave of COVID emerged in the fourth quarter, leading us to scale back once more. Our goal is to make the U.S. business profitable, but some of our expenses, such as staffing, have become long-term commitments. Although turnover hasn’t been excessive, we have experienced some delays in filling open positions due to COVID. As the pandemic eases, we plan to proceed with hiring. Additionally, our consumer promotions often require advance order placement, and we anticipate gradually reintroducing these initiatives later in the second quarter, contingent upon continued positive trends, although not as aggressively as we would under more certain conditions. We aim to align our spending with these trends, although not all expenditures can be adjusted immediately. Our objective remains to grow revenues and profits in the United States through careful expense management. Thus, I can't provide much more specific information at this moment. I know that Aaron's commercial team here in the U.S. is eager to engage in the field, seeking broader access. We’re pleased with our spending and have received overwhelmingly positive feedback about our product from doctors. That said, we need more patients visiting doctors’ offices for us to justify increasing our spending. I hope these comments clarify our position.

Operator, Operator

And that is all the time we had for questions today. I would now like to hand the call back to John Thero for some closing remarks.

John Thero, President and Chief Executive Officer

Thank you, everybody, for your interest. I know we went a long way today. I appreciate the questions. Hopefully, our comments were useful. This is, as Karim expressed, a time of execution for the company, growing in the United States, launching in Europe, looking for international expansion, diversification beyond that. But great people, a great product, and the resources feed, and I look forward to continuing to support and watch the growth of Amarin as it moves forward. So thanks, everybody.

Operator, Operator

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