Greetings and welcome to the Amarin Second Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Elisabeth Schwartz with Investor Relations.

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 promotion of VASCEPA and for purchases of additional supply of VASCEPA; our current expectations regarding the adequacy of our financial resources; our current plans and expectations for product revenue growth, sales force productivity and product promotion in light of COVID-19 and the potential for added attention to cardiovascular risk reduction drug like VASCEPA as a result of COVID-19; our current plans and expectations regarding our appeal of the District Court VASCEPA related patent litigation decision to the Federal Circuit; and our current plans and expectations related to the potential launch of generic versions of VASCEPA by generic companies and by ourselves, including expectations regarding ANDA approval by the FDA, generic cost effective supply availability, timing, potential levels of damages and ability to recover VASCEPA growth if the appeal succeeds; our current expectations for regulatory reviews outside the United States regarding VASCEPA approval; our goals regarding the timing, scope, and success of international expansion including expectations regarding our ability to launch VASCEPA in Europe and our expectations in China for clinical trial results and potential to bridge REDUCE-IT results in labeling and promotion of VASCEPA to our partner in China; and 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 and without entry of potential generic competition; and…

Hello, everyone, and thank you for joining us today. During this call, we’ll cover many topics including, Q2 2020 operating and financial results, past and potential future impact of COVID-19 on our revenue growth and operations, commercial priorities in the United States including our recently launched promotion of VASCEPA via television commercials and related forms of communication, commercialization plans for VASCEPA in Europe, upcoming milestones including presentation of results of the VASCEPA clinical trial in China and results of the EVAPORATE study, and patent litigation status in the United States. We will start with this last topic first, as patent litigation is typically the first topic of enquiry from investors. As a reminder, this patent litigation is in the United States only and pertains to the rights to market and sell VASCEPA for its first FDA approved indication. The indication for lowering triglyceride levels in patients with very high triglyceride levels defined by FDA approved label and by medical guidelines, as triglyceride levels greater than or equal to 500 milligrams per deciliter. In Canada for example, we and our commercial partner did not seek that triglyceride lowering indication for VASCEPA. Similarly in Europe, we are not seeking that triglyceride lowering indication. Rather, our priority in such international labeling has been on cardiovascular risk reduction based up on the landmark results of the REDUCE-IT cardiovascular outcome study. Accordingly, the U.S. litigation does not directly impact a significant VASCEPA potential in those geographies, due both to new regulatory exclusivity and different patent protection. Or in most other areas of the world where we are pursuing or we may in the future pursue a cardiovascular risk reduction indication for VASCEPA. Our ongoing appeal to the Federal Circuit in U.S. patent litigation is in response to the decision in March of this year from…

Good morning. John was absolutely right. While it’s good we grew VASCEPA in the second quarter despite the impact from the COVID-19 shutdown. We’re seeing some early signs of market recovery and confident that we can achieve more in the future. And we are inspired that we need to do more to improve patient care. Specifically, in light of the COVID-19 pandemic and the demonstration of patients with underlying cardiovascular disease or risk factors, including diabetes are more vulnerable to the virus, the need has never been greater for VASCEPA. As we discussed on Amarin’s last quarterly investor call. In Q1, we launched the new cardiovascular risk indication for VASCEPA, which included a newly expanded U.S. sales team to approximately 800 field sales representatives plus their managers to reach a broader base of irrelevant healthcare prescribers. These efforts helped VASCEPA show strong accelerating prescription and revenue growth in February and March. However, when the industry encountered the sudden and dramatic impact of the COVID-19 pandemic, the growth slowed as is the case with many branded pharmaceuticals. April was a particularly challenging month. However, recently, we’ve been witnessing signs of recovery in various aspects of the market and our business specifically. And while recognizing that COVID-19 will continue to present significant headwinds for the foreseeable future, cardiovascular disease remains the number one killer of Americans affecting millions of lives, and we intend to seize every opportunity to help these patients and reaccelerate our growth. During the height of the lockdown, reports from IQVIA indicated that patient visits to medical offices were down approximately 70% nationally. Similarly, they reported a significant drop in the number of routine laboratory tests, including blood tests being conducted. For a drug like VASCEPA to be prescribed for its cardiovascular risk reduction indication, often, physicians examine these…

Thank you, Aaron, for those helpful comments and perspectives. I too, I’m confident that we will succeed in reaccelerating VASCEPA growth in the United States. Echoing your comments about people at high risk for adverse cardiovascular events not getting much needed medical care, resulting in unnecessary medical issues including unnecessary deaths. An analysis published in July by the Washington Post suggested that in 5 hard hit states in New York City there were 8,300 more deaths from heart problems than would have been typical in March, April and May, an increase of roughly 27% over historical averages. While several experts said some of the excess deaths in the analysis were almost certainly unrecognized fatalities from COVID-19, the review suggests that many patients suffering from serious conditions died as a result of delaying or not seeking care as the outbreak progressed and swamped some hospitals. The data further highlights the need for preventative cardiovascular care and proven effective therapies. We are hopeful that people will start to more aggressively seek out care for their cardiovascular issues. In light of the COVID pandemic and the demonstration that patients with persistent cardiovascular risks are more vulnerable to the virus and the great costs to patients and society from strokes, heart attacks, other major adverse cardiovascular events, as VASCEPA has been demonstrated to reduce, the need has never been greater for VASCEPA. Outside the United States, there is also significant opportunity for VASCEPA. In Canada in February, VASCEPA was launched by our commercial partner HLS Therapeutics. In China, before the end of this year, we anticipate results to become public of the VASCEPA clinical trial being conducted there by our partner. In Europe, we are giving priority to getting VASCEPA approved, which approval will be followed by plans for seeking reimbursement and commercial growth.…

Thanks, John. I’m encouraged by our financial performance during the first half of 2020, as we recorded total revenue of $290.3 million, a 67% increase compared with the first 6 months in 2019. And we were able to achieve this growth despite the headwinds from the COVID-19 pandemic. As a reminder, Amarin recognizes product revenue in the United States based on sales to wholesalers and specialty pharmacy providers in the U.S., or collectively, its distributors or its customers, in accordance with Generally Accepted Accounting Principles, and not based on prescription levels reported by Symphony Health and IQVIA. During the second quarter of 2020, we reported net product revenue of $133.7 million, a 33% increase compared with the second quarter of 2019. And we achieved $285.9 million in net product revenue for the first 6 months of 2020, representing a 65% increase, compared with the same period in 2019. These increases were largely driven by increased U.S. VASCEPA sales, as well as a modest increase in VASCEPA’s net selling price in the United States, which reflects some of the managed care coverage improvements that Aaron spoke about earlier. Amarin continues to maintain strong gross margins with overall gross margin on net product revenue of approximately 78% for the first half of the year. This slight increase compared to the same period in 2019 is driven by gross margin on U.S. product sales of approximately 80%, which is partially offset by the gross margin on ex-U.S. product sales to our global partners as per contractual arrangements. Although we’ve continued to make improvements in our gross margin, VASCEPA continues to have a lower gross margin than many other branded drugs, due to its affordable pricing and the cost incurred due to the complexity of manufacturing, the active pharmaceutical ingredient or API, at the…

Thanks, Mike. I thank our investors for your continued support, including your votes in passing all the resolutions put forth in our proxy statement as part of our recent annual shareholders meeting. I also thank our employees for their dedication, professionalism and flexibility. With such a talented group of people, I am confident that we will continue to make important progress, particularly if we remain consistent with our core values, including working collaboratively and focusing on improving patient care. As is hopefully evident from our comments today, Amarin has some very exciting activities and milestones, which we are looking forward to in the months ahead. We look forward to sharing our continued progress with you. With that, we conclude our prepared comments and would like to open the line for some questions. Operator?

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Your first question comes from line of Ami Fadia with SVB Leerink. Please proceed with your question.

Good morning. Thanks for taking my question. I had some follow-ups on your comments and thank you for the detailed comments. That was very clear. Just with regards to the U.S. patent litigation and the potential risk of generic entry, can you talk to the cost of goods that you had at the initial launch time period, so we get a sense of what cost of goods could be for generics should they launch? And could a settlement be possible after the hearing on September 2? And then, I have a second question on Europe.

Ami, thanks for the questions, good morning. Regarding cost of goods sold, I’m going to put this in the context of gross margin. But remember, our net selling prices have been roughly flat for a long period of time, so the change that has occurred is just as a result of lowering product cost. So when we initially launched, our gross margins were in the low-50%s, I believe, and took a lot of work to get them into the 60%s, and then we’ve been migrating through the 70%s to now to the point where we’re high 70%s, and last quarter, we hit 80%. And that is a result of a lot of work by Amarin, by our suppliers, and efficiencies and knowhow and capacity and scale. So it’s not been easy, a lot of mistakes, a lot of learning along the way. But we’re proud of what’s been accomplished there. In terms of settlement, as I attempted to express, to settle is tricky. We got to settle both with the 2 – both Hikma and Dr. Reddy’s are 2 litigants, but also have the court decision essentially reversed. If the court decision were to remain in effect, such that the patents on the first indication for our product were deemed to be obvious, our settlement with those 2 players would then allow other players to fill that void and come in, because there would in effect be no patent coverage. So we think our arguments are good. We’re looking forward to the oral arguments. We’re hoping that the legal system will appreciate these arguments and do what we think is right, but at this point in time we’re not relying on a settlement. Anything’s possible, but we’re not relying on or predicting settlement.

Okay, great. With regards to the decision to launch yourself in Europe, can you elaborate on kind of how you thought about the value creation for shareholders that you can have by going it alone versus partnering right in Europe, kind of to a large pharma company? And how do we think about the use of cash? As you continue to market the product in U.S., at least, in the foreseeable future, and ramp up in Europe, can you talk to some of the investments that will be required in Europe over the course of the next maybe 12 to 18 months, in terms of the number of people on the field, et cetera? Thank you.

Yeah. So, thanks for the questions. Regarding Europe, we started with a review of the opportunity to make sure that we understood normally and weren’t drinking our own bathwater on that. And all of our analysis that we did, including interaction with doctors, but also use of various consultants came back to confirm to us that this is a very large market opportunity. And, we see key opinion leaders over there, urging the drug get approved and asking us how this drug is going to be introduced and very much interested in the drug. I think the 2 leading medical societies jumping out as quickly as they did last year to add to guidelines as an example, but not the only example of that visible need. And then, we spend a lot of time looking at could we do this, and also, what would be available to us from a partnering perspective, and what we think to be on a risk adjusted basis, the value creation for our shareholders on Path A versus Path B. And all told, we saw a high need. We saw a lot of very experienced people, who could help us with it. We’re thrilled to have Karim Mikhail join us to lead the commercial efforts. I think that’s an example of the high-quality people that are available to us. And while working towards the regulatory approval, working to make sure we have supply in place, we’re working to make sure that we have – when I say supply in place, it’s all the logistics. It’s the same product, but making sure it can get into the countries. We decided that it was in our best interest to retain the rights to the product. We think that that provides more value under the curve for our…

Okay. Thank you so much.

Your next question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed with your question.

Hi, thanks for taking my questions here. Maybe just to follow-up on a couple of things that Ami asked here. So how much of your potential or how many of your potential EU partners would have wanted a more global type of collaboration, just trying to understand how much the U.S. appeal decision impacted their valuation and thoughts? And would you reconsider an EU or more global type of collaboration once there’s more clarity on the U.S. appeal? And then second question is, as it pertains to generic competition, how long did it take for Amarin to expand your gross margins to where they are today and develop the kind of manufacturing efficiencies and value chain that you have? And would generics have to go through that same process or could they get around that? And the last question is, I know, you said that you can’t give a lot of color on growth in the second half of the year, but just qualitatively, how should we think about sales progression in the third and fourth quarter? Thank you.

Good morning, Louise, lots of questions there. Regarding the international process, our proposals from various companies are confidential in that process. And, we’ve made our decision to move forward with going direct in Europe. I think that that is the right decision, there was considerable interest. VASCEPA is an important product. It’s a growth opportunity. And, we’re always out to look to do what’s best for our shareholders. But I’m not going to speculate on anything that we haven’t made decisions on right now. We’re very excited about the European opportunity and we’re going to focus in on the execution that’s needed to continue to create value through getting the product approved in Europe getting reimbursement in Europe and growing it and then using that to springboard potential additional opportunities in the rest of the world. We’re obviously also looking forward to the results of the trial in China becoming available later this year. And from that, you’re working with our partner there on what the right regulatory strategy is for China. With respect to gross margins, we – when I joined, Amarin in 11 years ago, we were already working with suppliers at that point in time on building supply. And it’s been over a decade to get to the stage where we’re at. Just in the last year we took steps to increase the lot sizes that were being produced and the type of containers that are being used, and other process efficiencies. So we’re continuing to look for ways to iterate and improve and diversify, because we don’t want to be relying on any one supplier. We’re fortunate to have very good suppliers competing with each other on a basis of ensuring a high-quality product at efficient costs. So it certainly didn’t happen overnight. Those early years…

Thank you.

Your next question comes from the line of Michael Yee with Jefferies. Please proceed with your question.

Hey, good morning, John. Thanks for all the details. 2 straightforward questions. One on the ongoing patent situation, can you just right size for investors. If you win, I think there’s no big change goes back to normal. If it is an adverse outcome, is the thinking in short that there would be limited players at the outset? If not, actually, I think only 1 is approved. And that pricing and capacity is fairly limited. I think that’s the summary of your opening comments. And then the second question is just on Europe, in short, is your comments meant to support a pretty small European infrastructure? I mean, you’re talking about Ireland and whatnot. So, is that the takeaway on Europe that it’s a relatively small infrastructure until – well, until we get to 2021? Thank you.

Hey, Michael. Good morning. Thanks for the questions and just looking at the clock. These, unfortunately, have to be the last questions that we take today as people want to get on with their investment days. With regarding the patent size, clearly, we think that the right answer here should be that we win and we then have the exclusivity until generics could come into the market in 2029. I think that is the right answer. In the event that we were to lose, it’s our view, based upon information available to us that supply for generic companies would be limited. If supply is limited, there’s really not a lot of motivation for them to try to get into a pricing war, and particularly, because we would undoubtedly have better cost efficiencies on the manufacturing side. But if you’ve got limited supply, and it’s difficult to manufacture, why would you sell that limited supply inexpensively. In that scenario, which – provided that there is limited supply we will evaluate our best course when the information becomes available to us, but we would envision that branded VASCEPA would remain substantial for a substantial period of time and we’ll adjust our promotion at that point in time to see whether it should be further increased, maintained or contracted. But I think this is not a typical generic launch. This is not where they can use their existing facilities and plug this product in and have a generic replacement. So we would envision branded VASCEPA being a player for a substantial period of time. With respect to Europe, the product is not yet approved. So we will be building a core team and that core team might be this year, roughly a couple of dozen people over and above the current infrastructure that…

Perfect. Thanks.

Thank you for those questions. Thanks, everybody. I know it’s a long call. We’re not really doing traditional investor meetings these days. So the opportunity to be in front of you is not as frequent as it has been in the non-COVID era. So, given it was mid-year, we thought we’d be relatively comprehensive here today. Hopefully, the comments were helpful to you. We got a lot going on, lot of milestones coming up. We’re optimistic. Just got the right people and the right product to execute. We look forward to providing you updates as we move forward. So thanks again.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.