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HCW - AMRN: Europe Can Present Second Wind for Vascepa, Despite Program’s Infancy (Buy PT 10)
European Vazkepa on verge of launch; approval expected April 2021. With domestic Vascepa’s European counterpart Vazkepa on the heels of a positive CHMP opinion, we note formal approval from the European Commission is expected in April 2021. Specifically informed by: (1) Amarin’s displayed domestic launch aptitude from Vascepa’s expanded label in cardiovascular (CV) risk reduction; (2) preliminary market access discussions in preparation for commercial launch and (3) the company’s actively growing European commercial team, we believe that pending approval, Vazkepa is well positioned to enter the European market comprised of upwards of millions of patients at high risk for CV events, despite potential statin therapy. While we believe education remains a top priority in terms of Vazkepa awareness and understanding of its CV risk reduction profile, we believe key strategic strengths of the prospective European launch are driven by: (1) Amarin conducting commercial launch without a strategic partner, with the potential to in turn reap the progressive country-by-country commercial benefits based on coverage market access negotiations; and (2) design of its intended label to focus on Vazkepa’s evidenced CV risk reduction benefit and not targeted to triglyceride (TG) reduction, which we note had presented the Achilles’ heel for the threat of generic entry within the U.S. market. A key point to appreciate about prospective European launch is that Vazkepa would be entering a CV market where there are no immediate competitors in the space and with established IP protection from generic entry. While we note Vascepa has continued to perform from a revenue standpoint domestically, reporting 43% year-over-year growth in net total revenue for 2020, we believe that the European presence of Vazkepa can directly drive both CV risk reduction awareness and top-line growth looking into the near-term horizon.
You thought that was it? China approval potentially near end of 2021. We emphasize opportunity for global expansion continues with strategic partner Edding (private) for the potential approval of Vascepa in China, further broadening the reach of its preventative CV risk benefits. We note approval is anticipated near the end of 2021, with: (1) the Chinese National Medical Products Administration (NMPA) reviewing icosapent ethyl for Mainland China approval; and (2) the Hong Kong Department of Health reviewing icosapent ethyl for approval in Hong Kong. Further informed from Edding’s positive topline from its pivotal Phase 3 trial, we believe that a potential approval in the region could be well received among high TG patients at risk for CV events. Lastly, as we turn our sights back to domestic positioning of Vascepa, we believe commercial progress continues to benefit specifically from: (1) Hikma Pharmaceuticals’ (HIK.L; not rated) launch of generic icosapent ethyl comprised of a skinny label targeted to treat severe hypertriglyceridemia (SHTG) patients, which Amarin notes is limited to approximately 7% of current Vascepa usage; (2) continued question of generic manufacturing capacity, product purity and stability; and (3) the prospect of Vascepa being able to potentially compete with regard to pricing informed from co-pays and rebates, as Amarin continues to determine the overall cadence of educational marketing.
4Q in numbers. The company recorded total revenues of $167.3M for 4Q20 compared to consensus of $164.4M, representing 17% YoY growth despite limitations posed by the ongoing pandemic. Total revenues of $614.1M were reported for full-year 2020, and represented 43% YoY growth. The company reported net income of $4.9M, or $0.01/share for 4Q20, and reported net loss of $18.0M, or $0.05/share for full-year 2020. Reported R&D expenses were $39.0M, and SG&A expenses were $463.3M for full-year 2020. As of December 31, 2020, the company reported $563.4M in cash and investments.
Valuation and risks. We reiterate our Buy rating and $10 price target. Our price target of $10 is based on equally weighted average of: (a) $9.23/ share, as a 30x multiple of taxed and diluted FY29 GAAP EPS of $0.95 discounted back to FY21 at 15%; and (b) an NPV of $10.16/share (discount rate 10%, growth rate 2%). Risks to our investment thesis include: (1) Vascepa commercial ramp-up and/or peak sales not meeting our projections; and (2) further competitive disruption of the omega-3 market by branded drugs or generics and/ or OTC supplements beyond our model.
Courtesy of ivil
Amarin to have strong execution year ahead, says Piper Sandler:
Piper Sandler analyst Yasmeen Rahimi is confident of Vascepa's path forward in the global market following Amarin's "successful" earnings call, and sees approval in the EU and China later this year, the analyst tells investors in a research note. The analyst also remains bullish on Vascepa's U.S. sales as Amarin makes headway into persistent CV risk patients and expects Phase 3 PREPARE-IT COVID-19 data from Argentina and YE21 for Phase 4 MITIGATE-IT readout from the U.S. in 2021. Rahimi made no change to her Overweight rating or $19 price target.
http://www.theflyonthewall.com/content_index.php?symbol=amrn&days_back=365&table=none
In case you are not getting enough of JT:
Tomorrow:
https://investor.amarincorp.com/events/event-details/10th-annual-svb-leerink-global-healthcare-conference
and
Next Monday:
https://investor.amarincorp.com/events/event-details/cowen-41st-annual-health-care-conference
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] And the first question is coming from Louise Chen. Louise, your line is live. Please announce your affiliation and pose your question.
Louise Chen
Hi, Louise Chen with Cantor. Thanks for taking my questions here. So I had a few questions. First question I had was how should we think about this first quarter 2021 sales for VASCEPA, given the pandemic headwinds that we have this year when compared to last year?
And then, second question I had was what gives you confidence that you can continue to grow faster than the market for generics, even if more generics can enter the market later this year? And then, last question I have is, how do you think about the peak end-market sales in China and what that means to you in revenue? Thank you.
John Thero
Louise, good morning. It's John. Thanks for the questions. With respect to Q1 sales, we're in the middle of quarter and can't comment too much on the middle of the quarter activities. But as we commented during the prepared remarks, there are a couple of headwinds that we face in the first quarter. One, of course, is COVID.
And that's been volatile. Certainly, there is some good news in the media recently about event rates going down. We've seen periods in the past, like we saw in sort of the September/October timeframe, whereas COVID pulled back the prescriptions in the United States of VASCEPA went up. I think it's early to be predicting that, but whether that's immediate or whether that's more of a Q2 phenomenon, we are hopeful and have confidence that that's going to happen.
Two is the impact of the generic supply, which appears to be relatively fixed here, varying week to week, but it is taking a slice that I think you'd see the numbers. It's quantified. It bounces up and - bounces up and down. And then, of course, there are those headwinds that we get seasonally every Q1, and particularly, in the January and February timeframe has impact.
And for those who aren't familiar with that, you can think about drug like VASCEPA, which somebody has insurance and copay card, they can get for $9 for a 30-day supply. But that copay card doesn't pick up every dollar from dollar one, if somebody doesn't have insurance.
So if a patient has a $3,000 deductible on their insurance, and these patients tend to be on multiple therapies that they are used to paying $9 here and $25 there and $30 there, and then maybe a monthly bill of $100 for their portfolio of therapies. And they've got a $3,000 deductible, they go in, in January to get their prescriptions filled, instead of being an aggregate tab for the 5 of them for $100, they come back for the charge and, say, $3,000, those patients end up billing their pain meds, but they need - many of them just can't afford to fill all their medications.
So they don't fill something as important as preventative cardiovascular care. Then historically, we've seen a sort of rebound in those scripts in March, and then particularly in April and May.
So we're counting on that type of thing happening here again in the first quarter. The promotion that we have been doing, because of COVID, we did pull back a bit in the - during the fourth quarter and have continued to be somewhat constrained here in the first quarter relative to promotion. You've seen as much television advertisement, for example.
We're preserving those resources with a view that as COVID pulls back further, we will ramp that up. So we're currently anticipating year-over-year growth in the first quarter versus last year, but we're not providing any quantified guidance on it at this point in time.
With respect to why we believe that we can grow faster than generics, that's a complex topic. And I would begin with the fact that this really is very much an atypical generic market. Atypical in the sense that, for the generic that's launched, greater than 93% of the use is off-label. As I discussed VASCEPA is not a mature market. Most people don't know about it. Yet, this is a multibillion dollar opportunity that we think we're [we zeroed on] [ph].
We've just launched and just 13 months ago we just began the launch. We're focusing on patients' education. And this is not an expensive product, so it's not like the generics coming in, they'd be rushing after the generic, because it's less expensive. To the contrary, we've seen managed care coverage continue to expand.
And then, the manufacturer of this product requires significant investment that Amarin has made and supported over multiple years to create efficiencies. But lead times here for product supply is long and then expensive. So probably contributes to why only one of the 3 approved generic have launched in this point in time. And the one that has launched has commented that their gross margins on that product is lower than what it is for other products, because of the relatively high cost for the production of this high-quality complex product to manufacture.
I remind you that Epadel, which is [nuclear] [ph] based product in Japan has been generic for over a decade and is still greater than 60% branded. So we think it is the right thing for patient care for us to continue to focus in on increased promotion in United States.
I know our sales team in the field is confident that we can grow. What we need to do is have patients go back to their doctors. And I think if patients were regularly going to the doctors for ordinary care, we will be growing at a rate that it would be convincing to many people that we should be in a world faster than generic. This is just a big, big market.
And, of course, and a topic in generic is U.S. only. And in Europe, for example, is 10 years that we're respecting regulatory exclusivity, and then patents that could take us out potentially as long as 2039.
What was your third question? Peak sales in China, right, right, right. So I think there we need to recognize it's a very large market in China. Unfortunately, cardiovascular disease is a global phenomenon.
We're working with a very good partner, with Eddingpharm. They've got a lot of experience in taking products through the reimbursement process, which in China will be important as it is in Europe. And we put together a very good team in Europe to handle this.
We first need to get the product approved in China and see what the label ends up being. And I don't want to step on the toes of Edding, they're responsible for the pricing there. We've got some say in it, but let's get these label first and then they will go province by province, aim towards the approval, but the rate of uptake of statin use has been high in China.
And, certainly the cardiovascular need is high in China. I would remind folks that the terms of our agreement with Edding is that, there are various milestone based payments, but also, we will be manufacturing the product for them and doing that on a cost-plus basis. And then there are tiered royalties on top of that, that are starting in double digits and sort of escalating up through that.
So it's a big, big potential opportunity for us. So let's get it approved first, see what the label is. And then, go through the provinces for reimbursement before we get in too much quantification there. So - and then, again, I don't want to step on Edding's toes. They're a perfect partner. Hopefully, those comments are helpful.
Louise Chen
Yeah, thank you.
Operator
Thank you. And the next question is coming from Ken Cacciatore. Ken, your line is live. Please announce your affiliation and pose your question.
Ken Cacciatore
Hi, it's Ken with Cowen. Thanks, John, for all the details. I appreciate them. Just wondering if you could give us a sense of what would be the best analog that you would like to point us to in Europe, in terms of pricing? Any recent cardiovascular product that you think would be best comparison, maybe a sense of where the kind of average branded statin pricing was? And any nuance around that would be wonderful.
And then, just thinking about the U.S. spending as you embark on the European opportunity, sounds like you're going to try to nuance a little bit, obviously, be as aggressive as you can in the U.S., but be thoughtful about how that balances against the investment in Europe. Just wanting a little bit more detail on how you're going to try to strike that relative balance. Thanks so much.
John Thero
Hey, Ken. Good morning. Thanks for the questions and giving free advertisement. We're looking forward to being at your conference next week, where I'm sure you'll have many other questions for me.
With regard to an analog in Europe, I think one of the things that I would emphasize and I think that's the positive is that really there is no good in analog. And, the way that reimbursement works for market access perspective, being a unique product in that perspective is probably a good thing. So I think what we can point to is that from a pharmacoeconomic perspective, that the cost of things like heart attacks and strokes are very expensive. And not only as a time of occurrence, but at something like a stroke you go on for - a [plaque] [ph] could go on for years.
So, those kinds of pharmacoeconomic arguments have been effective in the United States, there also were effective in Canada. Canada is also, of course, a single payer government to the system, are largely served. And we and our partner there were pleased that reimbursement came along faster than what we expected. And I think follow of the pharmacoeconomic arguments to provide a reasonable price number.
So as we go into Europe, they're really is no direct analog, but there is a very substantial market of patients with persistent cardiovascular risk for which there is no therapy today, a product in VAZKEPA, that has proven outcomes data, usually products aren't launching with outcomes data, which also sort of takes away in analogs for other products, and it's first market, and it already has recommendations from the 2 leading medical societies, the European Society of Cardiology, and the European Atherosclerosis Society.
So we're looking forward to a launch in Europe, that's considerably different than the launch we had in the United States, when we launched the United States, it was a step launch based off of initial biomarker change indication does lowering very high triglycerides, we didn't have outcomes data. There's lots of generic competition, and it was a niche market in Europe, we're going in with outcomes data, and no direct competition.
And, I think, we should in Europe like we've done in the United States, you'll focus on how can we get this reimbursed in a way that we can help as many people as we can in terms of at-risk patients in Europe market access, of course, is a country-by-country proposition in Europe, and we've talked about in the past that we'll be looking to prioritize that.
With regard to spending, the Amarin is increasingly becoming a multinational company. For years, we limited resources sort of start, but we're doing in the United States commercially, as we focus it on investments in R&D particularly for the REDUCE-IT study. And then, after the positive results of the REDUCE-IT study in late 2018, we began building our U.S. commercial infrastructure and expanded that further in late 2019. And, of course, doubled and coming into 2020, started the launch and then got slowed down here by COVID.
Throughout this past, really 2 years, the overall business on a cash flow basis has had generally operated pretty close to cash flow neutrality, we've had some quarters are slightly positive, some quarters are slightly negative. Our view is that will be variables from quarter to quarter, that we should be growing revenues in the United States. And, the spending may be somewhat variable, but we're looking forward to both increased revenues and increased positive contribution coming from our U.S. activities.
The European investment, we think it is important, it's the eighth of that investment as sort of the irony of the - faster the countries get market access, the fast that we would be potentially spending in Europe, of course, then translates into revenues coming in faster as well. So, in Europe right now, we've got a core team. And, of course, our corporate team in Dublin, the core sort of marketing team set up in Switzerland. And then a field team that we've started to put together for Germany on a non-branded basis working on market awareness. Once we get approval, which we're anticipating in the April timeframe, we'll be able to ramp up that sort of pre-launch promotion.
And then assumedly launch in Germany and potentially other countries subject to market access. So we've talked about the size of the sales - size of the team in Europe, increasing during this calendar year to approximately 200 people that assumes a certain level of market access, if the market access is faster than that we would increase our spending faster than that. If we're promoting, and say, Germany, and that's against the speed and get revenues, that begins to pay for itself, and then that is less of a burden, as we're going into other countries that were getting market access faster in other countries, maybe we're launching a little more simultaneous, the amount of spend will differ based upon that.
And in any of those cases, we believe that our current capital resources are sufficient to make the investment necessary to be successful in Europe. But first, we need to get the regulatory approval then we need to get started on a market access, we need to do some pre-launch education, and then we'll get out into launching each country. And as we do so we'll certainly have much more feedback relative to spending.
The European market focus for us should be a bit more concentrated than it is in the United States probably not need there for television advertisement, much more, maybe a digital focus. And, there's a bit more concentration of at-risk patients with cardiologists in Europe, which we think will help as well. So I know I haven't provided much quantification there, but at least that some background information that may be useful to you.
Ken Cacciatore
Okay. Thanks. Looking forward to the conversation next week. Thanks so much.
John Thero
Thanks, Ken.
Operator
Thank you. And the next question is coming from Michael Yee. Michael, your line is live. Please enter affiliation and pose your question.
Unidentified Analyst
Hi, this is [Dennis Sting] [ph] on for Michael Yee at Jefferies. Congratulations on the progress. I just have 2 questions, one on the U.S. and one for Europe. So in the U.S., generics have launched for about a quarter now? How often do you guys encounter generics on the ground? And what are physician prescribing patterns in areas, where you having to compete with them? Or this decision happened at the pharmacy? And how has that changed from Q4 to Q1?
And then my second question on Europe. Have you been engaging in conversations with potential partners and has there been a lot of interest, in what's their biggest area of pushback? Thanks so much.
John Thero
Thanks for the question. So, regarding generics in the United States, there's one launch generic at this point in time, it came out of the beginning of November. We're seeing it in various respects. We're seeing it from patients sometimes calling us to complain that the cost of that generic is higher than what they were paying for the branded product. We're seeing it from various managed care companies that have been interacting with us, recognizing that the generic is causing them more on a net basis. And that's driven in some cases to improve the managed care coverage. Most physicians are not highly aware of the generic that's out there.
And, as you see through our litigation, we have seen activity that we think is inappropriate by the generic company and at least by certain payers that we think create situation where they're trying to go beyond, they approved label for that product. Right now, they are self-described as being limited by supply. There have been outages various pharmacies were also closed, some complaints by patients where the patients are going to get their script billed, the pharmacists look other uses of generic here, tries to get it, can't get it, sends the patient away, I'll try to get it and then still can't get it, and that's frustrating to patients.
So, there's learning going on, and we're always trying to make sure that all parties involved, whether it be payers, physicians, patients, pharmacists are aware of, there's skinny label of the generic, in fact that the pricing of the random product is often less than a net basis than the generic product, and the risk of outages relative to the branded product, all while trying to introduce this event to the market as the awareness of the product is still pretty low just launched 13 months ago, and much of that launch was during a - it's been during the pandemic. So we see there's significant educational need and opportunity out there.
With regard to European partners, the - I guess, I'll approach your question in 2 ways, but I'm not sure when you're referring to partners, whether you mean, sort of the - what we've gone through in the past, or what we might be going through in the future. In terms of going through in the past, we did before deciding to go for a self-launch in Europe review partnering opportunities with larger companies in Europe, and we found interest from that.
But we also convinced ourselves as the enormity of the opportunity in Europe, justifies an investment on our own to create the required infrastructure in Europe, and that we know the product best And, we have a lot of experience with the product in the United States and Canada, for example. On reimbursement in that approaching with ourselves was - will provide greater upside value to our shareholders then partnering it off to some larger company. So we went through that previously, and describe that process previously. So perhaps you're referring to the fact that we've talked about Europe as being sort of 3 levels of countries, right. So there's large countries, there's mid-sized countries, and then there's smaller countries.
In smaller countries, it is true that it probably does not make as much sense for Amarin to create infrastructure there, where there are local companies that can do that potentially better than we can. We have been doing some planning and thinking in that areas, but the biggest markets are the EU-5 starting with Germany, and some most of our attention has been on getting ready for approval and preparing for market access reimbursement negotiations in the Big Five and in some of the sort of the medium size countries.
So, we'll have more to say relative to partnering in the smaller countries, and after we get approval and get on a little bit further, but first and foremost, we need to be successful in the larger country. So hopefully, those comments are helpful.
Unidentified Analyst
Yeah. Thank you very much.
Operator
Thank you. And the next question is coming from Jessica Fye. Jessica, your line is live. Please announce your affiliation and pose your question.
Jessica Fye
Hey, there, good morning. It's Jess Fye from JPMorgan. I was curious what you think of some good price analogs for China?
John Thero
Hi, good morning, Jess. I think, first, we see what the label is going to be in China. We are certainly pleased with the recommendation coming out of the medical society in China recommending the use of icosapent ethyl for addressing cardiovascular risk reduction. But let's see what China FDA has to do relative to the label first. And then, China is a complex market, the reimbursement that can be really different from province to province. And then there's cash sales and reimburse sales, it really is the domain for our partner adding in one of the reasons why we picked anything is that they're really good at this type of thing. So it's just I think early for us to be setting a price. And I don't want to step on the toes of Edding. This is their domain. This is why we selected them as a partner. So it's a bit premature for us to provide an analog at this point.
Jessica Fye
Okay, thank you.
Operator
Thank you. And the next question is coming from Joel Beatty. Joel, your line is live. Please announce your affiliation and pose your question.
Joel Beatty
Hi, this is Joel Beatty from Citi. Congrats on the progress. First question is, are there any examples of analogs in Europe in terms of trajectory of the launch? And how to think about drugs launching into large market indications there?
And then the second question is, for the U.S., could you characterize the current level of awareness of VASCEPA, and how changes in awareness can impact sales? Thanks.
John Thero
Joel, good morning. Relative to analogs for Europe, that's one that we have studied and studied and studied. And really there - I can't, we have not found any product that has launched with outcomes that have no direct competition for a patient population of this size.
There just isn't a good analog. We have seen products with lesser results do quite well in Europe, but I think we need to first get approval then get into the market - the market access side of things. And there, I think we're probably going to try to be thoughtful, not [piggish] [ph], with the aim to try to help as many people as possible. But I think it's premature for us to really predict an analog at this point.
So the - with regard to the United States and awareness, we've done some market survey work there. And, Aaron Berg, who runs that side of things is with us. And, Aaron, maybe you can cite some of our recent awareness survey and your sense of where the market is relative to - from an awareness perspective.
Aaron Berg
Sure. Overall, un-aimed awareness of VASCEPA is very low. We just launched the indication right before the pandemic. We had just expanded the sales force. We significantly expanded our target audience of HCPs, and then essentially shut down as most of the industry, so we never got that off the ground and - to have the ability to build that awareness.
And, of course, without awareness, you're not going to get understanding and prescriptions. And that's where it starts. We started to see recovery through the summer. As we're getting toward physician and sales force back out there, and starting to build more. But then again - and then, as you headed into Q4, there was a significant resurgence and it dampened the promotional efforts, as well.
So our awareness overall from an HCP perspective is low and even more so with consumers. In fact, even though we ran the campaign, the awareness stayed in the teams through the second half of 2020. So we've got a lot of opportunities, still very small brand. Overall, we hope as we head into the recovery here, as we're all optimistic about our promotional efforts, will take hold of patients, will return to physicians, and the cycle will begin. And, yeah, we'll see that growth as a result of them, but it does start with awareness.
John Thero
And just on the Europe piece, just one other comment. I remind people, because there's been some media articles recently that have maybe taken us out of context. We are not in Europe going after every single patient that has elevated triglycerides. Who we're going after are patients who despite cholesterol management, particularly statins, continue to have cardiovascular risks?
So we're not trying to replace statins and it is a substantial market, but it's not the 80 million patient market as shown up recently in some media articles. And we do provide some market statistics in our 10-K filing today that are consistent with what we've talked about in the past.
But I just wanted to - in light of some recent media pieces, emphasize that it's not every patient with elevated triglycerides that we're going after in Europe. So I appreciate the interest in questions. We've taken an hour here. I know everybody's got to get on to other things. So we're presenting tomorrow at the Leerink Conference, Cowen next week. I'm sure there'll be additional questions there. I thank you all for your support and interest, and look forward to providing updates here as we continue to progress.
Thanks everybody. Have a great day.
Michael Kalb
Thanks, John. We encourage investors to review our 2020 annual report on Form 10-K, now our corresponding press release as issued this morning. Both of these can be found on our website. They contain discussion of our fourth quarter and full year financial results including various details which go beyond the highlights I will cover in today's call. John noted our record levels of net revenue in both the full year and the fourth quarter of 2020. These increases were driven primarily by increased volume of VASCEPA sales to customers in the United States.
The net price in VASCEPA, while it increased modestly in 2020 has essentially remained flat for many years. It is not possible to quantify the impact of COVID-19 on our 2020 net revenue, although we are certain that such impact was significant. Additionally, while it is also not possible to quantify the impact of the generic product launched in November 2020 on our net revenue, we do not believe such had a material impact.
We do not breakout operating results by geography. However, the contribution to our business from commercial operations in the United States has been improving, while we have commenced making increased investment in Europe. As mentioned earlier this year, Amarin anticipates 2021 operating expenses of approximately $550 million to $600 million, which represents an increase of approximately 10% to 20%, compared with 2020 levels. Included in these anticipated expenses are increased costs associated with Amarin's commercial launch preparations, and initial launch in Europe, as well as continued U.S. promotional activities.
Also included in these anticipated expenses is an assumed sales force in the U.S. of approximately 750 to 800 professionals consisting primarily of sales representatives and their managers.
Due to the uncertainties regarding COVID-19 and potential generic supply, Amarin will continue to withhold 2021 revenue guidance for VASCEPA in the U.S., until there is greater clarity on the impact of these issues.
As of December 31, 2020, Amarin reported aggregate cash and investments of $563.4 million, consisting of cash and cash equivalents of $187 million, and liquid short-term and long-term investments of $314 million and $62.5 million respectively.
Furthermore, during the fourth quarter of 2020, we made our final royalty-like debt payment, which previously was 10% of net product revenue since VASCEPA was launched. We now have no debt. We reiterate that based on our current plans, we believe that our existing resources are sufficient 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?
John Thero
Thanks, Mike. Like all of you, we entered 2021 with great hope that the vaccines developed by our industry colleagues will stem the tide of the global COVID-19 pandemic, yet aware that there will continue to be a need for effective therapeutics as well.
Towards that end, we maintain our support of multiple investigator sponsored studies of icosapent ethyl to treat and prevent COVID-19. The first of these studies demonstrated encouraging results. After we see further study results, we will assess the potential role of VASCEPA related to COVID-19 and other infectious diseases where inflammation is an issue.
Amarin has a very dynamic year ahead. 2021 is a year of execution for Amarin. And we are working hard to attain our goals including: meaningful growth of branded VASCEPA revenue and contribution in the United States, the successful approval and launch of VAZKEPA in Europe, the successful approval of VASCEPA in China, and continued scientific advancement, leading to potential new market opportunities.
I'd like to take this opportunity to express my gratitude to the Amarin team, including our employees, our commercial partners, suppliers, and the scientists and physicians supporting VASCEPA's scientific, regulatory and/or commercial advancement.
And I thank our shareholders for your continued support and encouragement as we advance this new paradigm in cardiovascular risk management.
With that, operator, we are now ready to open the call to questions.
John Thero
Hello and thank you all for joining us this morning. Because we provided substantial comments last month on our expected 2020 results, and our annual report has filed today reflects confirmation and formalization of what has already been reported, we intend today to be relatively brief in our prepared comments.
2020 was a year of considerable progress for Amarin with important achievements across multiple areas, including launch in the United States of VASCEPA for the treatment of high-risk patients with persistent cardiovascular risk or PCVR, creating the foundation of our European commercial organization, progress by our international partners and important scientific advancement including demonstration of plaque regression through administration of VASCEPA in patients evaluated in the EVAPORATE study.
That said, 2020 was also a year we all face great challenges with the COVID-19 global pandemic. Amarin specifically faced both the difficulties posed by the pandemic and the loss of our patent litigation in the United States for VASCEPA's original triglyceride-lowering indication.
I am proud to say that the Amarin team rose above these obstacles with great determination and advanced the company across all areas of the business, including commercial, clinical and corporate.
Let me begin with our most visible achievement in 2020, our record level of revenue. We reported annual net total revenue of $614.1 million in 2020, an increase of 43% compared to 2019. Both our full year revenue and our fourth quarter 2020 net revenue, which was $167.3 million are record levels for Amarin.
Our revenue growth was led by increased prescription levels of VASCEPA in the United States. As you know, we launched the new PCVR indication for VASCEPA in January 2020. And in March 2020, consistent with most companies throughout the industry, we had to pull our sales team from the field due to the COVID-19 pandemic.
Still, our team was able to pivot to digital platforms and other forms of outreach in education. Currently, our field team in the United States is making face-to-face calls with accessible target healthcare professional were allowed.
Change remains fluid due to COVID-19, particularly in various geographies. Our commercial teams remains committed and continues to adjust as needed in this unprecedented environment. Nonetheless, while VASCEPA growth in 2020 was slower than initially expected due to COVID-19, VASCEPA growth in 2020 compares well with the growth of peer drugs and in fact outpaced most other drugs indicated for cardiovascular disease treatment.
In addition, we continue to make great headway with payers throughout 2020, which progress has continued into 2021. We have not yet solved the challenge of helping healthcare professionals diagnose and treat at-risk patients when patients avoid doctor visits and when patients avoid blood tests due to COVID-19 concerns.
We envision the opportunity for further growth as the impact of COVID-19 recedes and patients begin returning to their healthcare professionals for preventative care. There are millions of at-risk patients whose cardiovascular risk is untreated, who are candidates for the cardioprotective benefits of VASCEPA. We recognize that it was only 13 months ago that we launched VASCEPA for the PCVR indication.
We have much work remaining to effectively educate healthcare professionals and at-risk patients regarding this new treatment option.
This large market needs and limited market awareness of VASCEPA, combined with VASCEPA's already substantial growth are 3 reasons, we are confident in our ability to grow branded VASCEPA in the United States.
We are aware of generic competition. We take all competitions seriously. Nonetheless, we think that it would be a disservice to patient care in the United States and in responsible to our employees and investors, if we see branded product promotion in the face of generic competition in this atypical generic market.
Without further market education use of VASCEPA will be unnecessarily limited and patient care will suffer. If, for example, VASCEPA was a household name that had been promoted for a decade, or if VASCEPA was a high-priced product, our decision to continue promotion might be different. We believe that the upside potential from continued market expansion in the United States remains considerable.
From the start, we have priced VASCEPA to be affordable. Even price watchdog groups have commented that the pricing of VASCEPA is cost effective. We could make money through the launch of an authorized generic product in the United States. But doing so would not maximize the revenue and profit potential of the product and would result in many healthcare professionals and at-risk patients never learning about this important drug, and it's still very recent a P-CVR indication.
In addition to VASCEPA being an atypical market for generics, because of VASCEPA's affordable pricing, and because it is not a mature market. As expressed previously, based upon industry data, the skinny label for the launch of generic product covers no more than approximately 7% of VASCEPA's prescriptions, or approximately $40 million in revenues per year based upon 2020 a U.S. net product revenue.
We have patents covering VASCEPA promotion for cardiovascular risk reduction. Cardiovascular reduction is not in the label of the available generic product and was not contested in past and the litigation. Disappointing from a societal health perspective is that to our knowledge unlike Amarin generic companies are not investing in market education or other initiatives to expand VASCEPA usage to help more at-risk patients, and they are not investing in clinical study of VASCEPA for all their potential uses.
Also, to our knowledge, generic companies and their suppliers have not made the investment in capacity expansion which Amarin has made. Currently, there is only one launch generic in the market and there have been reports of 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 prescriptions filled with branded VASCEPA.
While capacity for generic competition may increase over time, based upon information available to us currently, we anticipate that capacity via their current suppliers will remain a fraction of the capacity of Amarin suppliers. Various insurance companies and patients have expressed to us that they have found the generic product to be more expensive than the branded product on a net price basis after factoring in applicable discounts.
Drug pricing can be tricky. The generic product can claim that its wholesale acquisition price is 12% below the price of the branded product. However, that reference is misleading, as it is before rebates, discounts and co-pay cards. The impact of which makes the net price of the branded product less expensive.
Clearly, various payers have not found the pricing of the generic product to be sufficiently compelling as managed care coverage for branded VASCEPA has continued to improve overall since the generic product was launched in November 2020.
Separate from these market dynamics, Amarin filed a cardiovascular risk reduction patent infringement lawsuit against Hikma and a healthcare insurance company based upon various facts. Including Hikma's promotion of its product in a manner targeted at cardiovascular risk reduction uses, and the health insurers coverage of the generic product for cardiovascular risk reduction, each of which we believe our part of a collection of activities that infringe our cardiovascular risk reduction patents. We today have no update to provide regarding that litigation. We refer people to the court filings for more details.
Overall, we remain confident that there was a large market need for VASCEPA, and we believe we can grow this market faster than generics can take share. We are motivated to succeed as doing so would be good for society, patient care and our shareholders. The first quarter of each year is historically a challenge for VASCEPA due to seasonal factors. In particular, in Q1 of each year some patients elect to not fill their prescriptions for branded prescription medicines such as VASCEPA due to beginning of the year deduction limits under their insurance plans.
Such deduction limits go into effect at the beginning of each calendar year under many insurance plans. Due to this seasonality we encourage investors to continue to review VASCEPA growth on a year-over-year basis. In addition to the prescription growth we expect to experience as we progress beyond the seasonal factors, we anticipate an acceleration in VASCEPA growth as the impact of COVID-19 recedes.
In recent months, you've likely read multiple accounts of increased rates of heart attacks and other cardiovascular events. These increases have been attributed to patients not seeking preventative cardiovascular care due to COVID-19. You likely also witnessed a resurgence of COVID-19 in the fourth quarter of 2020. As a result of that resurgence, we pull back on certain of our promotional initiatives, including television advertisement.
As patients get vaccinated and begin to return to their doctor's offices for non-urgent care. We anticipate VASCEPA increasingly becoming part of the prescribed treatment regimen for at-risk patients. When the impact of COVID-19 recedes, it is our intention to restore various of our promotional initiatives. Currently, we are planning for this to begin occurring in the second quarter of 2021.
Next, I will comment on the progress we're making towards approval and commercial launch in Europe. In late January, we were delighted to receive a positive CHMP opinion for icosapent ethyl under the brand name VAZKEPA for cardiovascular risk reduction. And we now expect a final approval decision from the European Commission in April.
Over the past 6 months, we have been accelerating building commercial infrastructure to support commercial launch in Europe. And we now have a dynamic team of more than 50 experienced professionals in place, which we expect to grow to approximately 200 people by year end 2021. The people we have hired thus far are very impressive, and we are making important progress in preparing for VAZKEPA's commercial launch in Europe.
As previously reported, we are planning for a staged launch on a country-by-country basis in Europe based upon reimbursement availability likely starting in Germany. We continue to engage in pre-label market access dialogues were permitted. We are preparing for more formal discussions with national agencies regarding product pricing, once VAZKEPA receives approval from the European Commission.
Further discussion of our approach to market access in Europe is outlined in one of our FAQs in the Investor Relations section of our website. While market access negotiations will vary from country to country, we believe that we are well positioned to achieve reasonable pricing based upon the high rate of cardiovascular events in Europe.
The lack of approved therapy for the indication for which VAZKEPA's positioned to address the demonstrated efficacy and safety profile of this unique drug and the history of reimbursement for this important drug, particularly in Canada, which is also a government run healthcare system, and in the United States, of course. The approval and launch of VAZKEPA in Europe represents an exciting opportunity for Amarin to make a difference in the lives of millions of patients who are at-risk for cardiovascular events.
Regarding the opportunity for VASCEPA in China, our partner Edding has made considerable progress. Last November, we shared positive data from Edding's Phase 3 clinical study of VASCEPA in China. In January, we were delighted to share that icosapent ethyl was added to the Chinese Society of Cardiology's treatment guidelines, increasing to 13 the number of medical societies which have included icosapent ethyl in their medical treatment guidelines, or otherwise recommended use of this important drug for cardiovascular risk reduction in at-risk patients.
Earlier this month, regulatory authorities in China, the Chinese NMPA accepted Edding's new drug application for review of VASCEPA, which is another milestone on the path to approval for Edding. Edding currently anticipates receiving approval of 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 adoption of statin therapy in China, there is a significant medical need and a meaningful market opportunity for Amarin and Edding.
Regarding the rest of the world, our commercial partners in Canada and the Middle East continue to make progress, and Amarin is eyeing other potential international opportunities for VASCEPA after we progress this important product through approval in market access in Europe. We do not want commercialization in these smaller markets to distract us from what needs to be accomplished in Europe.
With that update and review, let me turn the call over to Mike Kalb, our CFO for a more detailed discussion of our financials. Mike?
Let me explain better. PAND has S/O of 30M shares, so MRK deal is 30Mx$60=$1.8B, maximum MRK is willing to pay. Suppose PAND's CEO was spending money and reward himself like JT and as a result needed to dilute several times resulting in S/O of 40M. Then instead of getting $60/share, it received $45/share, hence a triple digit premium turn into a double digit premium. So the more shares outstanding, the more difficult to get a higher premium.
100% premium from $7.5=$15:
40M S/O,premium paid=$7.5*40=$300M;400M S/O,premium paid=400M*7.5=$3B
150% premium from $7.5 = $18.75:
40MS/O,premium paid=$11.25*40M=$450M;400MS/O,premium paid=$11.25*400M=$4.5B
$4.5B-$3B >> $450M - $400M, i.e., law of large number
Merck to acquire Pandion Therapeutics for $60 per share in cash, 140% premium.
https://www.businesswire.com/news/home/20210225005318/en/Merck-to-Acquire-Pandion-Therapeutics
Note PAND has only 30M shares outstanding, hence such a premium. BO of AMRN, if any, won't be at such a premium, due to over 400M shares outstanding for AMRN, thanks to JT and his bloated management tem.
Irish biotech Amarin gears up for drug launch in Europe:
https://www.irishtimes.com/business/health-pharma/irish-biotech-amarin-gears-up-for-drug-launch-in-europe-1.4493350
hay, why should there be a run up? JT had already preannounced in early January.
hay, you forgot the SHTG population has a potential US market of 3.8M patients. Hikma still has a long way to go to meet that potential demand. Your marble example won't fly.
ralphey, I thought Amarin has a stronger case Vs Hikma than GSK Vs Teva. Amarin's CVD indications >> SHTG indications while GSK CHF indications < Teva's other indications. Amarin might not be able to survive with Hikma's allerged induced infringement while GSK has no such issue with Teva's allerged induced infringement. So I don't see your point.
postes, "Hikma offered a fair settlement"? Can you elaborate on that "fair" settlement terms? TIA.
ralphey, please save this before Hikma attempts to erase it from history.
liz, I totally agree with you as I always lost to my wife in arguments.
HDG, are you saying the the origianl panel decided to re-hear the case before the court had a chance to consider accepting the en banc review request? TIA.
"Circuit Judge Kimberly Moore said that merely saying a copycat drug is interchangeable with a branded medicine doesn’t prove the generic-drug maker encouraged doctors to prescribe it for a new patented use" For posters who had listened to the hearing, did Judge Moore really said that? That's seems like an 180 degree turn from Judge Moore's orginal posture.
Thanks marjac, you and HK are the MVPosters. I guess I'll have to hold off on the Champagne.
GSK's attorney reminds me of Tom Brady while Joanthan Singer reminds me of Sam Darnold.
Thanks Raf, I know I can count on you.
"another en banc request "? I thought another poster said that's not allowed. Board attorney please verify?
So thank god for the re-hearing by the original panel as I have no doubt Teva would have won the case if under en banc review by the full panel judges.
Can Teva ask for en banc again after another negative opinion by majority Judges Newman and Moore?
Real, did Judge Prost ask any questions?
Markman on GSK Vs Teva worth a re-read in conjunction with the latest oral argument:
Just when you think the Amarin saga to keep out generic competition is over, something else happens. In the latest development, the Federal Circuit issued a precedential decision in an unrelated case (GlaxoSmithKline v. Teva) that suggests that a generic could potentially be liable for inducing infringement of a patented indication, even though that indication has been carved out of the generic’s label. Will this decision benefit Amarin?
How could GlaxoSmithKline v. Teva provide a benefit for Amarin?
In the GSK v. Teva case, Teva sold a generic version of GSK’s pharmaceutical drug, Coreg®. The active ingredient in Coreg® is carvedilol. GSK’s drug was approved for three indications: hypertension, congestive heart failure (CHF) and post-MI LVD. In 2007, Teva’s generic was initially approved for only two of these indications, and it expressly carved out the CHF indication. Thus, Teva’s label was initially a skinny label. Later on, in 2011, the FDA directed Teva to amend its label to include all three indications, after which its generic was sold with a full label.
The case itself turned upon GSK’s assertion of a patent that covered the CHF indication. This was the indication that Teva initially carved out of its generic label before, years later, being instructed by the FDA to add it back in. Despite this, the Federal Circuit reversed the lower court’s ruling, and held that substantial evidence existed for finding that both Teva’s skinny label, at first, and its full label, later on, induced infringement of GSK’s patent covering its CHF indication.
Taking the reasoning of this case, it is easy to see a clear pathway for how this might benefit Amarin. Indeed, it is hard to believe that either Hikma or Dr. Reddy’s has read the GSK opinion and not asked their attorneys to advise on how this decision could impact their potential liability from launching generic Vascepa. Both Hikma’s and Dr. Reddy’s generic drugs for Vascepa have been approved only for the severe hypertriglyceridemia indication, but not for the cardiovascular indication. That means, when they launch, they will do so with skinny labels that do not include the cardiovascular indication. Yet, if Amarin could sue, or threaten to sue, either generic for infringement of its cardiovascular patents, that could either stop the generics from launching altogether, or it could potentially lead to the coveted settlement between Amarin and the generics that so deftly eluded the parties during the Nevada litigation.
Any potential suit by Amarin against a generic would have to wait until after that generic launches. Unlike the earlier Nevada suit, this potential lawsuit would not be under the Hatch-Waxman Act because it would not be triggered by the filing of an ANDA by either generic. Rather, the theory of liability would be that Hikma’s or Dr. Reddy’s sales under its skinny label, which is limited only to the severe hypertriglyceridemia indication and which carves out the cardiovascular indication, nevertheless induces infringement of Amarin’s patents covering its cardiovascular indication. Amarin could theoretically seek an injunction against the generics’ continued sales, i.e., the same relief it sought in its unsuccessful lawsuit in Nevada. Alternatively, Amarin could also seek monetary damages in the form of lost profits or a reasonable royalty. (Amarin could not request monetary damages in the Nevada lawsuit because that suit occurred under the Hatch-Waxman Act, i.e., before either of the generics launched.)
If Amarin’s suit for infringement of the cardiovascular patents has any teeth, then that alone could potentially bring the parties back to the table to negotiate a settlement. Because the generics’ exposure would include compensating for Amarin’s lost profits, that could theoretically change the calculus for the generics about whether a settlement is warranted. This factor did not exist during settlement discussions occurring within the Nevada lawsuit (to the extent that Amarin and the generics ever engaged in any settlement discussions.)
Lost profits damages could be large enough to have a material impact on the business viability of either Hikma or Dr. Reddy’s. Obviously, the scope of those damages will depend upon Amarin’s success penetrating the market with its new cardiovascular indication. Exposure to lost profits damages is typically one of the reasons that hold back generics from launching at risk. This is because, in light of the steep price decreases occurring after generic entry, a generic’s potential profits are typically eclipsed by the brand’s lost profits. That means that companies such as Hikma and Dr. Reddy’s would have to seriously consider their exposure from entry to the extent that Amarin’s resulting lost profits could have a material negative impact on the bottom line of either generic company.
Another significant consideration from the GSK v. Teva decision is that the Court found Teva liable for all of GSK’s lost profits, even though Teva was only one of at least eight generic drugs for Coreg® that had entered the market. Yet, Teva was the only generic that was sued by GSK. What that means is, Amarin can threaten to sue either Hikma or Dr. Reddy’s alone for all of its lost profits, even if there are other generics on the market, which might also include Teva or Apotex. Indeed, to the extent Teva has the opportunity to enter the market any time soon, then coincidentally, Amarin could choose to sue Teva alone.
This is potentially a big threat than any individual generic must consider before entering the market. In other words, any potential generic for Vascepa could theoretically enter the market, sell alongside three other generics, capture less than 25% of the generic market, but still be liable for all of Amarin’s lost profits. That potential level of exposure did not exist during the prior lawsuit in Nevada, and it is a safe assumption any potential generic for Vascepa is currently reconsidering the landscape of its possible exposure in light of the GSK v. Teva decision.
What are the obstacles?
While the GSK v. Teva decision has, unexpectedly, handed back leverage to Amarin that appeared all but lost, the upside for Amarin is not yet guaranteed. There are a number of caveats and qualifications that must be borne in mind before either Amarin or the generics seriously consider taking action based upon the GSK decision.
First, the GSK v. Teva case may not stand up. Before the GSK v. Teva case, there was pretty clear caselaw that held that a generic cannot induce infringement for off-label sales. The GSK case is thus potentially an outlier. There are a few telltale signs within the opinion to suggest this. For one thing, Judge Prost issued a very strong and lengthy dissent. Lengthy, detailed dissents are typically a mechanism that Judges use to telegraph to the rest of the Court that the panel has gone astray and that en banc review may be warranted.
Another telltale sign may be that the majority opinion strangely fails to address the precedent that previously held that even when generics have knowledge of off-label sales, that is not enough to amount to induced infringement. While the majority cited numerous cases addressing induced infringement outside the of the pharmaceutical context, it failed to cite to and distinguish two of the leading cases on this issue within the pharmaceutical context. These cases include Takeda Pharmaceuticals U.S.A. v. West-Ward Pharmceutical Corp., 785 F.3d 625 (Fed. Cir. 2015) and Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348 (Fed. Cir. 2003). As expected, these opinions were discussed at length within Judge Prost’s dissent.
Given all of this, Teva is likely to petition for rehearing and en banc review. It is questionable whether Hikma or Dr. Reddy’s will cut any deals, enter any settlements or even come to the table until the full Court weighs in one way or another on whether the GSK v. Teva decision will be allowed to stand. That said, this decision alone may be enough to delay either Hikma’s or Dr. Reddy’s launch for a few more months (although that will be a business decision by either generic.)
The GSK v. Teva decision also represents a fairly monumental change in the law of induced infringement for off-label sales. Given that, it is likely to attract considerable amicus attention from brands, generics and trade organizations across the pharma industry. This decision has effectively upset the expected scope of liability for most generic launches with skinny labels. By doing so, it could potentially drastically increase a generic’s potential liability for launching with a skinny label. Indeed, this is one of the main thrusts of Judge Prost’s dissent. Namely, the GSK decision essentially undermines Congress’ directive that generics are permitted to carve-out indications from their generic labels without facing liability. All of this increases the odds of the full Federal Circuit considering a rehearing.
A second important reason why the GSK opinion may not yield any benefit for Amarin relates to the concrete reasons for why Teva was found liable. The court relied extensively upon Teva’s promotional activities outside of its drug label. Unlike the Nevada suit, which assessed inducement before any generic launch, this suit will happen after a generic launch. That means the question will turn on whether the generic has affirmatively encouraged and induced doctors to prescribe generic Vascepa for cardiovascular reasons. It will therefore not focus exclusively on the wording of the generic’s label, but will sweep in each generic’s actual marketing conduct.
The point here is that that Hikma and Dr. Reddy’s are also studying and scouring the GSK opinion. The decision is essentially a roadmap of what not to do. The generics will likely design any promotional materials, activities or references to their generic drug in a manner to avoid the pitfalls made by Teva.
For example, the Court in the GSK case relied specifically upon Teva’s press releases and Teva’s product catalogues in the course of finding Teva liable for induced infringement. Those materials stated that Teva’s carvedilol tablets were AB rated equivalents of the Coreg® tablets. The Court also relied upon other press releases announcing FDA approval of Teva’s generic version of GSK’s Coreg® drug. Importantly, the Court found that these promotional materials induced infringement of the GSK patent covering its CHF indication not because they actively and affirmatively encouraged doctors to prescribe Teva’s generic for the CHF indication (the indication that had been carved out of Teva’s label). Instead, the Court found that inducement existed simply because the promotional materials failed to expressly specify that Teva’s generic drug was not indicated for the CHF indication.
In light of this, there is potentially a clear pathway for the generics to place themselves outside of the net cast by the GSK opinion. Hikma and Dr. Reddy’s will likely modify any promotional materials, either press releases or product catalogues or communications to the doctors, to specify that any mention of their generic formulation for Vascepa is not indicated for, and not encouraged for treatment of, the cardiovascular indication. That type of simple modification within any promotional materials may be enough to avoid infringement of any of Amarin’s REDUCE-IT patents. And unfortunately for Amarin, it might also have a negligible impact on whether doctors actually prescribe generic Vascepa for cardiovascular reasons.
If so, then this might all be much ado about nothing. This should demonstrate that while the GSK case is a rather fortuitous bend in the law that could serendipitously benefit Amarin’s predicament, it is not a straight shot, and the decision itself may simultaneously provide a roadmap for how the generics can avoid it. Indeed, another major distinction is that Teva was selling with a full label for at least a portion of the damages period, and there is not currently any reason we are aware of to presume that Hikma or Dr. Reddy’s will be required to do that.
The next stages of this process will be to watch whether Teva files for en banc review, and if so, whether the Court requests any reply from GSK.
https://www.markmanadvisors.com/blog/2020/10/7/can-amarin-benefit-from-the-gsk-v-teva-decision-regarding-induced-infringement-for-off-label-sales
0% probability as it takes time to write a bullet proof opinion.
Anybody has the link for the oral argument this morning? TIA.
Teva Vs GSK argument tomorrow at 10am:
http://www.cafc.uscourts.gov/argument/upcoming-oral-arguments
NS, I think the answer to your question could be inside the brief that Fish & Richardson filed. It's hard for me to imagine Judges Newman and Moore could reverse their orginal ruling given how strongly they worded their opinion. Just listen to Judge Moore tone starting at 26:15 mark below:
http://www.cafc.uscourts.gov/oral-argument-recordings/search/audio.html?title=&field_case_number_value=18-1976&field_date_value2%5Bvalue%5D%5Bdate%5D=
Any cash prcoeeds received would need to be taxed and pay Uncle Sam, hence available cash to be distributed to shareholders would be much less. The cleanest shareholder value enhencing strategy would be BO by NVS. Why NVS? It can afford to pay the most due to Vascepa's synergy with it's PCSK9 drug, Inclisiran and its ownership of Sandoz, its generic subsidiary.
https://www.fiercepharma.com/pharma/amarin-for-20b-novartis-medco-deal-drives-fresh-buyout-rumors-for-fish-oil-derivative
https://www.streetinsider.com/Hot+M+and+A/Novartis+%28NVS%29+Rumored+to+Be+in+Talks+to+Acquire+Amarin+%28AMRN%29+-+Source/15168230.html
https://www.barrons.com/articles/novartis-stock-merger-the-medicines-company-for-9-7-billion-51574688968
Vascepa doubles statin efficacy, why wouldn't any sane doctors want that on their patients?
NS, the following might have the answer you are looking for:
https://www.jdsupra.com/legalnews/gsk-v-teva-and-induced-infringement-by-3241922/
Nature of the Case and Issue(s) Presented: U.S. Patent No. 4,503,067 (“the ’067 patent”) claimed carvedilol and expired in 2007. Carvedilol was initially approved for the treatment of hypertension. In May 1997, the FDA approved carvedilol for the additional treatment of congestive heart failure (“CHF”) and U.S. Patent No. 5,760,069 (“the ’069 patent”) was issued in June 1998 to cover the method of such a treatment. Teva filed its ANDA, which included a Paragraph III certification as against the ’067 patent and a Paragraph IV certification as against the ’069 patent, in 2002. Teva received FDA “tentative approval” for this ANDA in 2004, “for treatment of heart failure and hypertension,” to become effective on expiration of the ’067 patent, and issued a press release to this effect.
In November 2003, GSK filed an application to reissue the ‘069 patent, and the ’000 patent was issued in early 2008. The limitations added by reissue included: “wherein the administering comprises administering to said patient daily maintenance dosages for a maintenance period to decrease a risk of mortality caused by congestive heart failure, and said maintenance period is greater than six months.” When the ’067 patent expired, Teva launched its ANDA product. The indications listed in Teva’s ANDA product were: (i) “Left Ventricular Dysfunction following Myocardial Infarction . . .;” and (ii) “Hypertension … .” In 2011, the FDA required Teva to amend its carvedilol label to be identical to that of GSK’s Coreg labeling, and Teva made that change, adding the indication for treatment of heart failure
GSK sued Teva in July 2014 for induced infringement of the ’000 patent. Trial was to a jury. Teva argued that since it had omitted—via a section viii “carve out”—from its initial label the indication for treatment of congestive heart failure, it could not be found to induce prescribing physicians to infringe the ’000 patent, at least not before Teva amended its label. Teva also argued that to establish liability for induced infringement, GSK had to prove that Teva directly communicated with the direct infringers and “caused” them to directly infringe the method in the ’000 patent. The jury found that Teva willfully induced infringement and assessed damages in the amount of approximately $235 million, for both the pre- and post-amendment periods. Teva moved for judgment as a matter of law, arguing that “GSK failed to prove by a preponderance of the evidence that ‘Teva’s alleged inducement, as opposed to other factors, actually caused the physicians to directly infringe,’ by prescribing generic carvedilol and to do so for the treatment of mild to severe CHF.” The district court concluded that “substantial evidence does not support the jury’s finding on causation, and therefore does not support its verdict that Teva is liable for induced infringement, during both the skinny and full label periods.” GSK appealed, and the Federal Circuit vacated and remanded.
Why GSK Prevailed: In its 2004 press release, Teva acknowledged that its ANDA product was an AB-rated equivalent of GSK’s Coreg. Witnesses for both sides testified that cardiologists knew of carvedilol and the uses established for Coreg. GSK’s witness testified that an AB rating led doctors to believe that the generic was “therapeutically interchangeable” and that if a prescribing doctor were to write “Coreg” on a prescription, the patient would get the generic unless the doctor were to explicitly write “dispense as written” or “DAW.” Moreover, Teva’s expert admitted that the “carve out” strategy was a legal one, not a commercial one, and that Teva would still get sales where the doctor prescribed carvedilol for CHF. GSK’s regulatory expert also testified about what it meant to be AB rated: “if the generic drug is used in accordance with its label, you would expect it to have the same clinical effect” as the brand drug. Teva’s product catalog also explicitly compared Teva’s carvedilol with Coreg, thereby implying the use of the brand product.
The Federal Circuit dismissed Teva’s argument that its 2004 and 2007 press releases were not evidence of inducement because the ’000 patent had not issued until 2008, by relying on the fact that the 2007 press release, and other promotional material that predated the issuance of the ’000 patent, remained on Teva’s website throughout the life of the ’000 patent. The jury was correctly instructed that it could find inducement if Teva “continued to take an action that began before the ’000 patent issued, after the ’000 patent was issued on January 8, 2008, intending to cause the physicians to directly infringe by administering Teva’s carvedilol product.”
Therefore, the Federal Circuit found that the district court, in granting JMOL, applied an incorrect legal standard in determining that there was not legally sufficient evidence to support that Teva encouraged infringement. On the contrary, the Federal Circuit found that “there was ample record evidence of promotional materials, press releases, product catalogs, the FDA labels, and testimony of witnesses from both sides, to support the jury verdict of inducement to infringe the designated claims for the period of the ’000 reissue patent.” The majority opinion also noted that the dissenting opinion make new factual findings concerning the Teva press releases and product catalogs.
On the issue of damages, on appeal, Teva did not challenge the amount of damages awarded by the jury, but argued that, on correct instructions, Teva would have incurred no damages, or at most only a reasonable royalty. According to Teva, the jury should have been instructed that GSK must prove that, for every infringing sale made by Teva, the direct infringer would have purchased the prescribed carvedilol as GSK’s Coreg, and not from another generic producer. The district court declined to present that instruction. The Federal Circuit found that the jury instructions were in conformity to law and sustained the damaged verdict, which were not otherwise challenged by Teva.
Chief Judge Prost penned a substantive and lengthy dissent rooted in policy. She wrote that the majority opinion undermined the “critical balance” found in ANDA litigation “by allowing a drug marketed for unpatented uses to give rise to liability for inducement and by permitting an award of patent damages where causation has not been shown.” Teva’s “skinny label” approach, according to the dissenting opinion, was enacted by Congress for exactly the circumstances that existed in this case, namely, that the “lone method covered in the ’000 patent would not foreclose access to more affordable carvedilol.” Teva waited until the carvedilol compound expired before launching its ANDA product. By that time, GSK could not rely on Teva’s ANDA as an artificial act of infringement and had to prove induced infringement by showing “that Teva actually caused doctors to directly infringe the ’000 patent.” According to Chief Judge Prost, no communication from Teva encouraged doctors to use generic carvedilol to practice the patented method, and no evidence showed that doctors relied on Teva’s label. “This holding is no small matter: it nullifies Congress’s statutory provision for skinny labels—creating liability for inducement where there should be none. Contrary to Congress’s intent, the Majority thereby allows one patented method to discourage generics from marketing skinny labels—thus, slowing, rather than speeding, the introduction of low-cost generics.”
https://www.jdsupra.com/legalnews/glaxosmithkline-llc-v-teva-pharms-usa-6748436/
In 2020, the Federal Circuit issued an odd decision in this ANDA case. The patent on the drug at issue (carvedilol) has expired, but GSK holds a patent on using the drug for treatment of congestive heart failure. Teva began selling the drug for other approved uses, such as hypertension and ensured that congestive heart failure was not part of its product label. Of course, its generic product is still prescribed for that purpose. AND, in 2011 the FDA required Teva to list congestive heart failure as one of the drug treatments — since Teva’s approval was based on GSK’s original new drug application the FDA required a label that was identical-in-content. The result — $234 million in lost profit damages for inducing infringement. That damage award included pre-2011 acts even with the label carveout since Teva had (accurately) described its product as the generic equivalent of GSK’s product. On appeal, the Federal Circuit affirmed (split decision).
At that point Teva petitioned for rehearing, and the original merits panel of Chief Judge Prost and Judges Newman and Moore have agreed to rehear the appeal on the merits on the following question:
Whether there is substantial evidence to support the jury’s verdict of induced infringement during the time period from January 8, 2008 through April 30, 2011. We find all other issues to be sufficiently briefed.
Although there is no evidence that Teva really encouraged folks to buy and use its product for an infringing purpose, I can just imagine Teva’s confused CEO “where did this extra $200 million come from, I thought the non-infringing market wasn’t this big…”
The Court has not asked for new briefs and will be holding oral arguments later this month. The case has already generated substantial amici support.
October 2020 decision
GSK Rehearing – Petition by Teva
Update – I thought my $200m comment above was funny. But, the damage award here is not actually excess Teva revenue. Rather, it is GSK’s lost profits. Judge Prost wrote in her opinion that the Teva’s total revenue from its sales was $75 million — and the jury was told that 17.1% of the sales were for infringing uses. So, we’re talking here about $13 million in revenue to Teva.
https://patentlyo.com/patent/2021/02/carveouts-inducing-infringement.html
Dr. Bhatt also worked with Dr. Nissen at Cleveland Clinic during the earlier part of Dr. Bhatt' career.
hay, there won't be any news this weekend, next week may be. I doubt there is an offering, otherwise JT is much worse than what I already thought he is.
Fre, thanks for posting. I am curious about the following quote in the link:
"The February hearing will focus only on the period from Jan. 8, 2008, when the Glaxo patent was reissued, through April 30, 2011, when the Food and Drug Administration ordered Teva to amend its label. All other issues are “sufficiently briefed,” the court order said."
For those familiar with the Teva/GSK case, does the above quote telegraphs the potential outcome of the en banc hearing?