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Karim Mikhail
Thank you, Lisa. Good morning and thank you all for joining us today.
As we enter the second half of this pivotal year for Amarin, we continue to focus on our three dimensional growth strategy, breadth or geographic expansion; height, representing diversification; and depth or core operation evolution. Recently, I surpassed my one year anniversary as President and CEO of Amarin and have had the chance to reflect on the significant transformation of the Company over the past year.
In the U.S. we face continued pressure from additional generic competition. We focused on maintaining profitability, and through our commercial efforts, we were able to retain a level of market share even to this day that is unprecedented in any generic market, and more importantly, continue to deliver significant positive contribution margin, allowing Amarin to self-fund the expansion to Europe and internationally.
During this past year, we made the difficult decisions to implement two major restructurings. The first was fully focused on the U.S. commercial structure and the second impacted our company more broadly, in order to manage our costs throughout the period and to address the evolving and challenging U.S. market dynamics. We did this while undertaking a BOLD strategy for global expansion, which was highlighted by more than 10 market access filings in Europe and multiple regulatory filings in other geographies. With recent achievements, including three country reimbursement wins in Europe and a number of international product approvals for VASCEPA, we are beginning to see the BOLD strategy take shape.
In addition, we completely reshaped our leadership team with over 70% of our executive team joining Amarin in the past year, many in the last six months. These accomplishments provide us an even greater confidence that our long-term objectives for Amarin are ambitious, but also achievable.
Now to touch on the second quarter, beginning with comments on Europe, where we have made considerable progress, executing our strategy, and because it is the source of future growth, expansion and value creation for Amarin and shareholders, 2022 has been about laying the foundation for our future across Europe.
Midway through the year, we have made considerable progress in key markets with more to come in the second half of 2022. It’s important to note that we have taken a regional approach to growth and expansion in Europe where our success does not rely on any single market, but rather on building strong sustainable diverse revenue streams in individual markets across the continent. And we were delighted to have achieved final positive reimbursement from NICE with reimbursement secured for patients in England and Wales at a strong net price of approximately US$176. This was a big milestone as it marks our first positive, final reimbursement decision from a large EU5 market.
Note that net prices in Europe, especially for chronic treatments, tend to be much lower than U.S. prices. This achievement and specifically this level of reimbursed net price acknowledges the value of VASCEPA, and our ability to demonstrate this value to payers in Europe.
In the UK, we are in the process of establishing formulary access and launch preparations are underway with a formal launch plan for October. We were encouraged by the excitement and enthusiasm in the market regarding the final reimbursement decision by the local authorities including NHS, as they look to combat cardiovascular health as a key national health priority. We’re focused on educating the market on the benefits of VASCEPA and establishing VASCEPA as a new standard of care to reduce the risk of CV events beyond LDL management.
Our objective is to drive this education through medical and scientific engagement, implementing formulary guidelines and building awareness and adoption through multiple commercial channels. This follows the first national reimbursement decision for VASCEPA in Sweden, where the work to obtain formulary status and launch is well underway. We also achieved individual patient reimbursement in Denmark, are in the process of filing for national reimbursement as a next step in that country.
With these achievements, we have truly transitioned to the next phase of our global expansion strategy. And I’m pleased to share that we have also made progress in a second major EU5 market, Spain, where we have begun pricing discussions with Spain Ministry of Health, earlier than anticipated. This gives us strong confidence for a possible pricing and reimbursement decision in Spain before year-end. I also want to provide an update on Germany where we are on the market with temporary reimbursement.
Germany continues to be impacted by unprecedented local market conditions, including healthcare austerity measures, which are being implemented as a result of the challenging political and economic situation in Europe, which has impacted our sales during this launch period. At this time, we remain in constant dialogue with the German health authorities and expect the process to complete in November, and we may use our full timeline for these negotiations.
Based on the status of the negotiations and current market conditions, we have suspended our contracted primary care field force to avoid having these resources becoming permanent, which was contractually scheduled to occur. We are committed to our presence in Germany, pending the outcome of current negotiations with the payer, which remain actively underway. This decision reflects our disciplined financial management and is in keeping with how we have been actively managing our investments to remain prudent and flexible.
Across Europe, we continue to advance our reimbursement discussions with national health authorities in Norway, Finland, France, Italy, Israel, and the Netherlands. We have also added to the list, Portugal, Austria, and Switzerland, where we have recently submitted and are now on file for reimbursement discussions. This brings the total number of submitted dossiers to 14 countries in Europe.
In addition, partnership discussions in Central and Eastern Europe are advancing well. With our reimbursement and pricing success thus far, we remain on track to receive reimbursement decisions in up to eight countries and to launch VASCEPA in up to six European countries this year. Our achievements in Europe in just under one year give us further confidence that the opportunity in Europe remains a $1 billion plus opportunity. We believe 2023 will be an exciting year where we expect a pivot to the revenue generation stage of our BOLD global expansion strategy.
Now moving to our results in the quarter and the U.S. business. In the second quarter of 2022, we recorded $94.4 million in total net revenue, including $90.6 million in U.S. product sales, reflecting the anticipated continued pressure from generic competition in the market.
The results reflect the full impact of the third generic entrant compared with one generic in the market the previous year’s quarter The pressure was offset by a normalization of some of the trade patterns and inventory destocking we saw in the first quarter, which Tom will discuss in greater detail with you shortly.
Overall, while the U.S. market remains challenging, I’m pleased that the revenue this quarter was consistent relative to the first quarter, which speaks to the efforts of the team to retain and support the business.
As part of our company-wide focus on operational excellence, we remain committed to maintaining a strong contribution margin for our U.S. business. To that end, we took the difficult but necessary step to announce a comprehensive cost reduction plan to address expenses and market dynamics within the U.S. business, which will result in a $100 million in savings through the middle of next year. Tom will talk more about this plan shortly.
The goal of our cost containment initiative is to continue to offset the challenges we are experiencing in the market with the focus on operational excellence that allows us to maintain the U.S. business positive contribution margin. While the cost containment initiative in June was comprehensive and involved cost reduction across the entire organization, the largest portion of the savings was related to a reduction in the U.S. commercial organization, creating a core focus team. The strategy allows for the core sales force to support branded VASCEPA sales by fully targeting around 14,000 of our most loyal prescribers as we continue to focus on secondary prevention in key CV risk indication, such as prior MI and stroke.
Moving forward, our efforts are focused on sustaining and supporting the VASCEPA brand and prescriber base we have today in the U.S. Supporting these efforts is the compelling data from REDUCE-IT that shows VASCEPA reduced CV events by 35% in prior MI patients. The benefits of VASCEPA in these patients who have experienced a heart attack and are at risk for another cardiovascular event are particularly important given these patients are at an elevated risk for recurrent CV problems. These results further strengthen the case we are making to the physicians who care for these high-risk patients for pure EPA in the form of prescription icosapent ethyl as a key intervention beyond statins for meaningful risk reduction.
Our efforts to secure exclusive business is working so far. The exclusive business has not experienced any major changes since the end of last quarter, as a result of these efforts. The exclusive business is continuing to grow as a percentage of the total Amarin business. That said, we expect volumes will continue to experience some pressure throughout this year. And as we look ahead to the third quarter in particular, we anticipate continued pressure from generics, as well as lower revenue due to the seasonality typically seen within the third quarter for this market. We will continue to closely monitor the market dynamics in the U.S. and adjust as necessary, whatever possible.
Beyond Europe and the U.S., we continue to make progress on our BOLD plan to unlock the potential of VASCEPA internationally. First, let me cover our partner three geographies. Our Canadian partner, HLS Therapeutics continues to make good progress, working with all participating provincial jurisdiction to secure coverage from publicly-funded drug plans across Canada. They have secured public market access reimbursement for VASCEPA in Ontario, Quebec, New Brunswick, Saskatchewan and with other public payers. We look forward to their continued progress in the coming months.
Public market reimbursement for VASCEPA in a large single payer country, like Canada is a validation of the CV risk reduction benefits of the product that underscores its pharmacoeconomic value. As a reminder, last year, we agreed to HLS partnership with Pfizer, by which HLS will promote to specialists and Pfizer will promote to the large primary care physician groups. We have been closely watching the progress of this strategy as it may be a model that can be replicated elsewhere internationally.
Biologix, our partner in the Middle East and North Africa, MENA region continues to pursue the review and approval for the cardiovascular risk reduction indication in the Kingdom of Saudi Arabia and Kuwait. As a reminder, VASCEPA is currently approved in a total of 6 countries in demeanor region, including KSA and Kuwait for the VHD-G [ph] indication and in the United Arab Emirates, Lebanon, Bahrain and Qatar for both, the VHD-G [ph] and cardiovascular risk indications.
Lastly, our partner in China, Edding received the approval for VASCEPA in Hong Kong for the CV reduction indication and a commercial launch is being planned for Hong Kong later in the year. The new drug application for VASCEPA in Mainland China remains under review by the Chinese National Medical Product Administration. And the NDA includes the previously announced successful results of Phase 3 studies, including REDUCE-IT. According to Edding, they anticipate that a decision can still be expected by the end of this year.
Now, let me cover our expansion efforts beyond these three mentioned geographies. The plan calls for three waves of regulatory submissions for approval of VASCEPA in 20 additional countries, in order to ensure that patients in the top 50 cardiometabolic markets worldwide can benefit from VASCEPA. Toward that end, we continue to make meaningful progress in the first wave of these efforts. Dossiers remain in full assessment by the respective national regulatory authorities in Australia and New Zealand. In Israel and Switzerland, dossiers are under regulatory review and along with Austria are in reimbursement discussions. These markets will be managed and discussed within our Europe business.
Moving forward, we remain confident in the multi-billion dollar global market opportunity for VASCEPA/VAZKEPA in Europe and internationally and are pleased with our recent achievements. We are beginning to turn this opportunity into a reality opportunity into a reality with future launches anticipated later this year and next.
In addition, we took steps to ensure our continued investments in our clinical data and pipeline, including maintaining a strong presence at important medical meetings and implementing a step wise approach to the development of our fixed dose combination, which ensures our ongoing progress with this important program that combines VASCEPA with a statin.
To talk more about these efforts, I will now turn the call over to Dr. Steve Ketchum, Amarin, EVP, President of R&D, and Chief Scientific Officer, to discuss recent advancements with our data, plans for presentation at this year’s European Society of Cardiology annual meeting later this month, and progress with our fixed dose combination. Steve?
Dr. Steve Ketchum
Thank you, Karim.
Today, I would like to begin with some remarks in response to the recent media coverage and headlines regarding biomarker analyses of REDUCE-IT data as published in circulation. It is important that investors, medical professionals, patients, our employees and other stakeholders understand that we stand firmly behind the science of our product. Recently, there has been considerable discussion and debate around exploratory post hoc biomarker analyses published in circulation and what those exploratory data might mean in the overall story behind the science of the REDUCE-IT trial. Additional scientific facts are missing from this discussion and provide a more scientifically based perspective.
First, it is important to note that these exploratory biomarker analyses published in circulation were not conducted to provide additional evidence demonstrating effectiveness in reducing cardiovascular risk, but instead to preliminarily explore a subset of potential pathways via which icosapent ethyl might exert some level of effect in this trial.
Second, the circulation paper highlights relative percentage increases rather than the absolute increases across the set of biomarkers studied in this analysis. When analyzing these results from an absolute increase perspective, they are small and they do not correlate to any meaningful changes in outcomes seen in the REDUCE-IT trial. Importantly, all of these biomarkers are exploratory and none has been sufficiently validated or correlated with CBD risk and in across clinical trials to enable them to be relied upon to draw meaningful conclusions. In other words, any speculation on the potential impact of these biomarkers is purely theoretical, which has largely been ignored in the discussion to date. In addition, the authors submitted a number of additional analyses as part of the iterative manuscript review process, which provide a more balanced perspective on the exploratory biomarker data. However, the journal’s reviewers and editors elected not to include those analyses in the final published paper. We believe strongly that had the journal included these analyses and the accompanying data discussions within the published paper, that the conclusions of this sub-analysis would be much clearer and this paper, which ended up being more abbreviated than intended would not be leading to the current level of confusion within the cardiovascular community today.
While there can be no guarantee of future acceptance, we will be working with the authors to discuss how best to pursue publication of this data in the future to ensure fair and balanced data in the public domain. While we welcome scientific exploration and debate, it is important that all of the scientifically based docs are known and considered versus theoretical speculation.
Based on the above points, we continue to stand behind the results of REDUCE-IT, the definitive large long-term outcome study of icosapent ethyl with gold standard cardiovascular clinical endpoints.
Our confidence in VASCEPA/VAZKEPA comes from the wealth of REDUCE-IT data we have generated all of which continues to reinforce its CV risk reducing benefits. We continue to support ongoing research and data analysis of REDUCE-IT as this work further explores the efficacy and safety profile and additional subgroups of patients and further distinguishes VASCEPA/VAZKEPA as one of the most significant products to reduce CV risks since the introduction of statins.
We are very pleased to report that additional data on VASCEPA/VAZKEPA will be featured at ESC 2022 in Barcelona. At the end of this month, these data will focus on specific patient subpopulations at increased risk of a cardiovascular or CD event from the landmark REDUCE-IT cardiovascular outcomes trial.
The accepted abstracts include a late-breaking science presentation on the significant reduction of ST-Elevation Myocardial Infarction, or STEMI with VASCEPA in the REDUCE-IT trial. These and other new findings will be presented by a variety of international academic collaborators based on researcher analyses supported by Amarin. We look forward to the presentation of these supportive data at the meeting.
Turning now to our ongoing development efforts. The confidence we have from REDUCE-IT in other clinical studies has allowed us to invest further in the future of icosapent ethyl, which is why we are supporting the development of a fixed dose combination portfolio centered on icosapent ethyl in combination with a statin. As part of our recent cost savings initiatives, we are taking a more stepwise approach to development in this program, which means that rather than pursue an entire portfolio of potential combinations, we have selected one to move into proof of concept manufacturing and testing. Based on the results of those pharmaceutical development activities across the next several quarters, we will evaluate the next steps for the development program.
The fixed dose combination or FDC product is in the early stages of development. If successful, the combination therapy would be a game-changer for patients since it will carry the most significant cardiovascular risk outcome benefit label and would hopefully provide additional market exclusivity.
With that overview, let me turn the call back to Karim.
Karim Mikhail
Thanks Steve, for that detailed overview. As I mentioned earlier, in addition to revamping our BOLD strategy across our clinical and commercial organization, we continue to take steps to expand our team globally to better serve Amarin’s strategic focus and objectives. One important appointment was the addition of our new CFO, Tom Reilly. Tom brings significant financial leadership experience across large global pharma and biotechnology companies, as well as a proven track record, leading financial planning and analysis within international and commercial operations. He has already become an integral part of our leadership team and is a great asset, as we expand around the world.
With that brief intro, let me turn the call over to Tom to discuss our second quarter 2022 financial performance in further detail. Tom?
Tom Reilly
Thank you, Karim for the introduction. Good morning, everyone. I’m pleased to be addressing you today for the first time as Amarin CFO and to report on our financial performance for the second quarter of 2022. Let me begin by discussing our results for the quarter.
For the second quarter of 2022, we reported total net revenue of $94.4 million, including net product revenue of $93.8 million, a decrease of 39% compared to the second quarter of 2021.
U.S. product revenue was $90.6 million, a decline of $2.9 million versus the first quarter of 2022. The results represent continued generic pressure in the U.S. including the first full quarter with three generics on the market.
As a reminder, during the three months ended June 30, 2021, there was only one generic in the market. During the second quarter, we saw normalization in the trade channel. When compared to the prior quarter, we continued to experience pressure on both volume and price. We’ve continued our focus on retaining exclusive business and that business has remained stable.
Moving forward, we are not investing to grow the molecule in the U.S. market, but we are investing in sustaining and supporting the VASCEPA brand and prescriber base we have today in the U.S. We expect volumes and price will continue to experience pressure throughout this year, and also anticipate the seasonality typically seen within the third quarter for the market. The results also included international product revenue of $3.1 million, including $2.3 million in commercial supply shipments to HLS in Canada, as they began receiving reimbursements in the individual provinces and $0.7 million in European product revenue.
Cost of goods sold for the three months ended June 30, 2022 was $50.8 million, compared to $32.2 million in the corresponding period of 2021. During the three months ended June 30, 2022 Amarin has taken steps to amend supplier agreements to align supply arrangements with current and future market demand, resulting in a charge of $15 million. Also Amarin recorded a charge of $9.6 million related to unsellable inventory, which is not related to product dating.
Excluding the impact of these two items, gross margin was 72% for the three months ended June 30, 2022. The product has a long lead time in terms of manufacturing and the market end demand for VASCEPA has been difficult to predict related to the volatility of the U.S. generic market. Significant steps were taken to renegotiate future price commitments of inventory in Q2. Renegotiation of these agreements is a very important step forward in lowering future cash burn, related to building new inventory. Efforts are ongoing and inventory purchases are expected to be significantly lower in the second half of 2022.
Moving to operating expenses. During the second quarter of 2022, we reported expenses of $106.5 million, which includes a $10.2 million restructuring expense. This is a decrease of 6% compared to the second quarter of 2021. The decrease is primarily related to the implementation timing of the initial cost savings that were announced in October of 2021. These savings were partially offset by our investments in growth and expansion in Europe and other markets outside of the U.S.
As Karim mentioned earlier, in June, we announced an additional comprehensive cost savings plan that will result in $100 million in savings to the middle of next year. The cost reduction plan included savings related to U.S. workforce reduction which reduced the total company employee base by over 40% from current levels. The plan also included streamlined operational expenditures, including reductions, reallocations and overall selling, general and administrative expenses as well as savings related to refining the company R&D strategy to a more focused step-wise approach for its FDC program.
As a result of these cost savings efforts, the Company incurred $10.2 million in restructuring charges in the second quarter. We will begin to see the benefit of the cost reduction in the third quarter of 2022, and we will be focused on maintaining our operational efficiencies going forward. The U.S. basis continues to be profitable from a contribution margin perspective and provides support for the expansion into Europe and other geographies around the world. Under U.S. GAAP, Amarin reported net loss of $70 million for the second quarter 2022 or basic and diluted loss per share of $0.18.
As of June 30, 2022, Amarin reported aggregate cash and investments of $324.6 million. We have taken significant steps this quarter to reduce our cash burn moving forward. We plan to continue to manage our cash prudently relative to business performance and believe our current available cash and resources, including U.S. profitability are adequate to support continued operations, including European launch activities for at least the next 12 months.
Now, I will turn the call back to Karim for closing remarks. Karim?
Karim Mikhail
Thank you, Tom, for that financial overview. We have made a great deal of progress, despite this year’s challenges for both, Amarin and for the industry. This progress provides us with a renewed sense of energy and focus on our bold vision to stop cardiovascular disease from being a leading cause of death worldwide. Our continued ability to adapt and evolve with changing dynamics over the last 12 months, as well as the recent important and significant reimbursement achievements in Europe provide me with even more confidence in our objective to build a multi-billion dollar global franchise and ensure patients globally can benefit from VASCEPA/VAZKEPA.
And with that, operator, we are ready to take questions.
Question-and-Answer Session
Operator
Thank you very much. [Operator Instructions] Your first question is coming from Michael Yee of Jefferies.
Unidentified Analyst
This is Joachin Wenn [ph] on the line for Michael Yee. Thanks for taking my questions. I guess a couple for me. First, can you comment on the U.S. sales trajectory going forward and how you expect EU sales to pick up? Appreciating that you are getting reimbursement decisions right now in that region for 2022, so, maybe a comment on how we should think about 2023. And secondly, I might have missed that part, but could you elaborate on the supplier agreement amendment and the unsellable inventory, and also do you expect this to happen again in the future?
And maybe, lastly, appreciating your focus on the development of a fixed dose combination, but in the parallel could you comment on your BD efforts as well? Since I recall that you have plans to in-license some assets in the metabolic area. Thank you.
Karim Mikhail
Well, thank you. We’ll try to take them one by one. Let’s just start with the U.S. trajectory. First of all, we’re pleased that this quarter we’ve seen our revenues to be in line with what we’ve had in Q1. If you really analyze this performance, you’ll see that from a volume perspective, we are declining in the 7%, 8% prescription versus the Q1 of 2022, which is what is expected. So, this is really in line with expectation. At the same time, we also continue to have price impact because we’re losing volume in the non-exclusive segment where we have lower rebates, but this is more or less getting to stabilization because now most of our business is really coming from the exclusive business.
So, over time, yes, we anticipate obviously a Q3 decline because it’s seasonal and because we have a volume, but we see the price erosion over time, over the next two to three quarters stabilizing in a certain way. So, we’re pleased with this quarter, we continue to monitor the situation very closely and we’ll see how things are going to evolve.
In terms of Europe, I’m going to try to address like two, three questions in one, further moment. 2022 is the year for reimbursement in Europe, that’s not our revenue generation here. The focus today is to get as many countries, but more importantly at the right price. And you’ve seen the team delivering very strongly on that promise with a final net price in the UK of around $176 is significantly higher than our net price in the U.S., even prior to any price erosion, right, totally in line with what we committed to at the beginning of our European journey. The UK is known to be a challenging market from a pricing reimbursement perspective. So, the fact that they came out and they came out as our second country, gives us confidence that that’s really -- that’s the trend that that’s what we are going to be delivering over time. It takes a little bit more time obviously to get to that level of net price, but we are engaged with all of the payers and negotiations continue.
2023 is going to be the revenue generation year. This is the year where we’re going to have at least six markets launching by year end 2022, so the remaining will launch in 2023. So, this is when we switch from pricing reimbursement to true revenue generation in probably 10 of the markets at that point in time.
On questions regarding supplier contract amendments, I’ll start, but also let Tom share more detail. We had a choice between after we’ve seen the Q1 results and the significant shift in the U.S. business. Either to take a year to 18 months to adjust inventory level, because this is a very long lead manufacturing process. And if we took down that out, we would burn a lot of cash by the time we fix it. So, we decided to renegotiate with our suppliers so that we can find arrangements. So, Tom?
Tom Reilly
Yes, Karim, just to follow up. So, it’s multiple -- we have multiple arrangements, long lead time on the product. We see this as a good first step to stabilizing our working capital related to inventory. And we’ll continue to work with our suppliers moving forward, to make sure that we stabilize the supply purchases to reflect existing demand.
And I think the second question was related to the inventory charge of approximately $10 million, which we had incurred this quarter. So just to give a little background, this charge was a result of inventory that was damaged by one of our third party suppliers and caused the inventory not to be our quality standards. So, we have worked diligent with this supplier to ensure that the proper procedures are in place to mitigate this in the future. So, that’s the situation.
Karim Mikhail
Thank you, Tom. On the fixed dose combination, we continue, as you’ve seen, despite the fact that we streamlined investments in terms of development, to ensure that we keep the project active and ongoing, because we believe there is significant opportunity of having a fixed dose combination on the market. But we decided to focus only on one statin. We made progress. We are in the -- we’re in the phase of prototype manufacturing and getting ready for next steps. And our BD position remains as such we continue looking for assets that will provide U.S. revenue and U.S. asset for us and for the great team we have in the U.S. to focus on, on top of VASCEPA. But we are also open to other opportunities. So, we will see how that is going to evolve overtime. But thank you for the question.
Operator
Thank you so much. The next question is coming from Louise Chen of Cantor. Louise, please ask you a question.
Louise Chen
Hi. Good morning. Congratulations on all the progress this quarter, and thanks for taking my questions. So, I wanted to ask you about your SG&A in the third and fourth quarter, given your cost reduction program. How should we think about it relative to second quarter, if you can’t give exact numbers? And then, secondly, just on the sales, the nuance in the third and fourth quarter, because just, I guess during the first half of year, we got a lot of questions on how to think about sales and if they are going to be up or down quarter-over-quarter. So, any color you could give or any thoughts and the cadence or nuances would be very helpful.
And then, last question I had was just Tom, as the new CFO, what do you want to bring to Amarin and how will you do things differently at the organization going forward? Thank you.
Karim Mikhail
Thank you, Louise. So, we can start with the SG&A and then basically from there, I can give it to Tom to continue. So, if you remember, we implemented our restructuring really in June. So, most of the benefits in terms of cost reductions are really going to start to be seen from Q3, Q4 and the first half of next year.
And the split may be in the range of $50 million this year, $50 million next year. But that’s really at a high-level. Tom, you want to add to that?
Tom Reilly
Related to the savings? So, as we mentioned earlier in the call, now the results [Technical Difficulty] savings are reflected in the Q2 results. So, we expect overall that we’ll have over $100 million of savings related to these cost reductions over the next 12 months. And they’ll be spread over the next 12 months.
Okay. And then Louise, I think you had a question related to me being the new CFO. Overall, very excited to be at Amarin, like every other CFO looking for to drive the function, to be best-in-class. So that’s number one focus or A focus. I think overall what we see is to stabilize U.S. continue contribution margin in the U.S. so that we can support overall the European investments and really grow the Company through a European and an international base. And that gets me very excited. I’m glad to join Amarin to deliver on that.
Karim Mikhail
Thank you, Tom. Just to go back, because I think there was also a question on the cadence on the U.S. revenue and what to expect over the next quarter. So, as we said, we have seen within the exclusive segment, which is now the large majority of our business stabilization in volume if not a sort of a single digit growth in volume. So, we feel fairly confident that we are keeping track on that one. We continue to see price erosion, and then on exclusive, we continue to lose volume, obviously there, but this impact is slowing over time, obviously Q3, there is a seasonality. So, overall, we continue to focus on contribution margin. This is the number one driver of our efforts in the U.S. The U.S. is delivering a very significant contribution margin that is supporting the organization drive European business and our investments in the regulatory approvals globally. So, for the moment, from a contribution margin, we continue to deliver on target and will keep the effort.
Operator
Your next question is coming from Roanna Ruiz of SVB Securities.
Roanna Ruiz
So, maybe focusing on the Europe front, two questions for me. I noticed you mentioned suspending the primary care field force in Germany, and I’m curious, how might that impact or benefit your overall spend and how long do you plan to keep the suspension in place? And also, what’s focusing on Sweden in the UK as newer countries coming on line. I was curious, when additional investments do you plan there and how do you see the outlook and spend for those countries as well?
Karim Mikhail
Sure. So, in Germany, we chose very early on, because we came very, very early to the German market, to basically have a contractual agreement with the third party to have our primary care field force hired through them, by them, because labor laws in Europe are complex. And if you have to change course or make any changes can be very, very difficult from a process, but also with cost implications. So, based on that agreement, that field force contract would end now. So, we just decided since we’re still in negotiation, not to extend and not to continue, but to suspend at this point in time, because it will get us to save a good six months of investments in that field force, looking at the German situation.
Now, we’ll have to see how the negotiations are going to evolve. Are we going to be successful, and come back to the primary care field force? And that allows us to do whatever we want, right? With flexibility or the situation would remain very, very difficult, and then we would consider everything from exiting to the market or having minimal presence, depending on what agreements we reach with the Germans. So, we took advantage of the moment. As a reminder, at the same time, we hired every -- our full team in the UK, I would say a bit ahead of time. So, in a way that balances our investments. So, we knew we could save in Germany and we knew that we could invest earlier in the UK. By taking those two actions together, we are in a way normalizing this so that it doesn’t have the additional UK investments don’t hit us that hard since we’re saving in Germany.
Having said that, investing more in Europe is good news, because it means we have more reimbursements. So, we look forward to invest more. But for the moment, that is the wisest thing to do in the time being until we see how the German negotiations will take place. Finishing up on Sweden and the UK. Sweden and the UK are in launch mode. In those two countries, once you have national reimbursement, you basically have a phase where you have to get formulary inclusion. So, you have to make sure that on the regional and local formularies, the product is listed, so NHS, because they were very excited about the product, committed to have the product listed on NHS formularies within three months, which puts the official launch date for the UK for October. So, we’re very pleased with this and we’re making every effort to ensure that the product will be on the formulary, but also there is budget allocated to it, which is the third most important step.
As a reminder, when a product gets approved midyear or toward year-end, it’s not that fast that they can allocate budget because of financing cycles. So, you tend to have a bit of a slow uptake during the first few months in one year, but in the new year, then there is a budget allocated for you so that physicians know that they can freely prescribe. We’re very excited about the launch in the UK and Sweden. We now have a full team in the UK, incredibly talented with very significant cardiometabolic experiences at every level. So, we’re very encouraged and we look forward to share more progress on the launch over the next few quarters.
Operator
Your next question is coming from Daniel Wolle of JP Morgan.
Daniel Wolle
Couple of questions here. First, in the U.S., can you quantify for us the benefit for this quarter that potentially derived from the normalization and trade destocking scene in 1Q? And I can follow-up with the rest.
Karim Mikhail
So, we cannot really articulate it in the second quarter as a benefit. In reality, there was a destocking in Q1 and a hit, which was normalized this quarter, right? So, this is really how it is analyzed. It’s not like there is an artificial benefit this quarter. In fact, this is the first quarter where we see prescriptions and bottles really align. So, we feel confident that we’re balanced where we are today and the hit that we’ve seen in the Q1 has been basically normalized where we stand.
Moving forward, we hope that we’re not going to see any of these disturbances in the trade. You can never speculate. I think, the market overreacted to a third generic and we’re not surprised, right? Usually in a generic market, you have all the generics coming in together on the first month. So, you rarely see situations where you have six months with one generic, then another six months with the second generic, then a third generic coming in literally after a year and three months. So, yes, the wholesalers reacted. We understand that. But, I think now they see that the erosion or the volume progression of the generics in general is linear, no matter how many they are on the market, and we continue, as a reminder, to retain 60% of the market despite a year and a half of generic presence, which I believe the U.S. team is very proud of.
Daniel Wolle
And then, focusing on the Europe side, on Germany, can you provide us with a bit more color on the ongoing discussion with the health authorities there? What the process entails and what exactly are the possible outcomes that are expected when the process comes to completion in November? And then, switching to UK, while there might be a slow uptake in 2022, as you might, as you have discussed due to budgeting not being allocated, how should we expect the launch to look like in 2023? And what are some of the dynamics at play that would shape the launch trajectory?
Karim Mikhail
Sure. So, on Germany, we are now in, I would say, the final stages of the negotiation with GKV with the payer. If those negotiations come -- we come to an agreement, then that would end maybe in a month or so. And if that doesn’t, then there is an additional opportunity for an arbitration that would take you until end of November. That’s why we decided since things are still ongoing and we clearly see based on the market dynamics, the situation in Germany, not for us, but for everybody is incredibly challenging in terms of healthcare. I mean, there are unprecedented decisions on controlling healthcare budgets and so on. So, we thought that the wisest thing is to just save money, right, save money. This is conserve cash, make sure we save this money waiting for a final decision.
Now, if by November or by end of this month, we see a positive decision, then we will very easily rebuild because we have the contacts of our teams and we can reinitiate that. But if not, then we would have in a way restructured and saved the money with very, very minimal cost/labor law impact.
So, all the scenarios on the table. We can’t speculate at this point in time. I have disclosed before that in the UK, which was a very successful negotiation at the end, we went through a third round of negotiation, which is very, very uncommon in the UK, and it has given a positive result. We can speculate or say that that’s going to be the same in Germany, but the message is, we continue fighting and we continue negotiating until the last minute we have in the process.
For the UK, if you remember, we decided not to invest in any country ahead of reimbursement to ensure we don’t burn cash too prematurely. Now in the UK, we have a final decision. We have a full team onboard. Those -- this team is on the field where we are today and working very hard for us to have a strong launch. 2023 is going to be a full year for them. We have huge efforts in scientific engagement to build the awareness and the adoption. We believe the UK launch will be a good proxy of what we can deliver, at a European level, because there is significant adoption. We have actually seen tweets by NHS, by the Ministry of Health, by others saying, they are excited to reimburse the product for their patients in the UK, which is unheard of. So, we feel encouraged and we are doing everything possible to drive that moving forward.
Operator
Thank you. Our final question is coming from Kade Cruz [ph] of Goldman Sachs.
Unidentified Analyst
Hi. Thank you for taking our questions. This is Kade on for Paul. We have two. We wanted to know how you were thinking about planning for potentially recessionary environment, both in the U.S. and the EU in addition to the restructuring, if there is any steps you’re going to take. And then, number two was, how do you think about the margins for the U.S. business going forward post restructuring? Thank you so much.
Karim Mikhail
Thank you. So, I think, the environment is very challenging. Now overall, it was tough for us as a company for the last year in any case. And again, as a reminder, we did implement two restructurings already. So, we had one in October of 2021, then we had the second one in June of 2022. So we’ve been very proactive so far to be on top of our cost structure. And I can tell you, we are going quarter by quarter looking at our contribution margin, because that’s for us the most important KPI we look at. The key actions we’ve taken, we are proactive to ensure we will be able to deliver future contribution margin that is needed for us to self fund.
At the same time, we keep our finger on the pause. If we see that the market conditions, you’ve seen us sticking action in Germany, right, we are ready to take further actions if need be. For the moment, we don’t see that happening because I believe we’ve done a pretty significant effort in the last restructuring with almost 40% of headcount impacted in the company, right, ahead of all those headwinds. But you never know how the market is going to shape, so we continue to be vigilant and we will react, if need be.
The last question was on margins. In the U.S., I mean, look, we’ve had a 1 time impact on our margins this quarter. We don’t see this being repeated. We’ll have to see how things evolve, but if there are any additional 1 time effects, it is possible, but we don’t see that as a trend. Tom, do you want to add anything?
Tom Reilly
Yes. I would just say, with that, we are contribution margin positive again in the quarter, and we continue to do so in order to invest into the European and the rest of the world market.
Operator
Okay. We don’t have any further questions in the queue. I’ll now hand back over to Karim, if he has any final comments.
Karim Mikhail
Well, I just wanted to thank everyone for the call today. We believe we’ve had a strong quarter with significant success in the UK, in Sweden. Our U.S. performance is on track and is delivering the contribution margin that we expect. So, we continue to move forward, and we look forward to share more progress and update with you in the next quarter. Thank you all for being on the call. Thank you.
zip, "super statin" would generate bigger sales.
i, what price are you short at with the second 50K short?
I disdain penny scalper. Apply your skill, if any, to a bigger fish.
Are you talking to yourself? You are the only poster this morning spewing "gloom and doom". STFU!
Not so fast,
" I expect $95M Q2 2022 revenue."
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=169445914
Thanks HDG. I hope your "I assume" is correct.
Thanks Liz!
TTE, there's also a long-term inventory of $142M at the end of Q12022 that you didn't count. I still don't know the minimum IPE raw material purchase requirement for the rest of 2022. If it's as large as Q1, that would be a concern. HDG, do you know the minimum IPE raw material purchase requirement for the rest of 2022?
Does the inclusion of peripheral artery disease in the NICE Vazkepa a reporting error or fact?
"The just-published final technology appraisal document recommends that Vazkepa (icosapent ethyl) can be prescribed to people in England and Wales for adult patients with high-risk cardiovascular disease and elevated levels of triglycerides (1.7 mmol/litre or above) in their blood who are already taking statins.
That includes people who have suffered a prior stroke or heart attack, or who have other conditions like unstable angina or peripheral artery disease."
https://pharmaphorum.com/news/nice-unlocks-use-of-amarins-vazkepa-in-425k-nhs-patients/
HDG, do you have an estimate of Amarin's annual cash outlay required to meet the minimum purchase agreement for IPE from suppliers based on the latest information you read? TIA.
Dew, I don't understand why the stock is up 90% pre-market with such a trial result.
i, the question is why are you still posting here without anything insightful to contribute. Do you have a sadistic personality? You should take your trading "talent" to other stocks instead of scalping pennies in AMRN.
HDG, thanks for the estimate. Last year, sales increased from $142.2M to $154.5M from Q1 2021 to Q2 2021, a seasonal 9% increase. So with a decrease in wholesales price per 120 Vascepa caps coupled with a decrease in scripts # for Q2 2022, I expect $95M Q2 2022 revenue. I hope your forecast proves more accurate than mine, though.
north, below is the transcript:
Vas Narasimhan
Thank you, Samir, and thanks, everyone, for joining today's conference call. We're pleased to go over the results. I have with me today, Harry Kirsch, our CFO; and Karen Hale, our Chief Legal Officer.
Moving to slide 4. As you saw in the release earlier today, we delivered a solid quarter two across each of our key value drivers, 5% growth across the entire company as well as an Innovative Medicines and Sandoz, continuing our productivity agenda with solid core operating income growth across the business as well as continued margin expansion in constant currencies as well as an upgrade to our expected savings from our transformation program to now $1.5 billion. Some innovation milestones, notably, we continue to garner approval for Scemblix, our new medicine for CML, including a positive CHMP opinion. And then, lastly, three milestones within our ESG efforts. First, a $250 million R&D commitment as part of the Kigali declaration for neglected tropical diseases. We've increased our commitment to clinical trial diversity over the next 10 years through our Beacon of Hope project. We also had an upgrade from MSCI to now a AA rating top quartile within the industry, and we continue to work to further improve our overall ESG profile.
Moving to the next slide. When you look at Innovative Medicines sales, we grew consistently across the U.S. and in our ex U.S. markets, primarily driven by our key growth drivers. We had 6% sales in the U.S., 5% sales ex U.S. And you now see on the right-hand side of the chart, 59% of our sales come from our key growth drivers, and those key growth drivers are now growing at 21%.
And moving to the next slide and zooming in a little closer on the quarter. You saw pretty consistent performance across our key medicines, and we'll go through this in a bit more detail. Two products I wanted to particularly call out. Kesimpta had a very strong quarter, I think, demonstrating its overall profile as a multiple sclerosis therapy of choice. And Kisqali as well is now gaining momentum in breast cancer -- in metastatic breast cancer patients, and we'll talk a little bit more about that throughout the call.
Now moving to the next slide. We've really focused attention as a company on six key growth drivers, we believe, which will enable us to deliver the growth profile we've outlined, both in the next five years and also beyond. Notably Cosentyx and Entresto continued their outstanding performance towards their respective peak sales goal. We'll talk more about Zolgensma, which continues its global expansion. Kisqali and Cosentyx, I've already mentioned. And Leqvio, we are building a strong base with which we believe will enable this medicine to reach a significant sales potential over time. Taken together, these six brands now constitute 32% of Innovative Medicines sales. And they're growing at 31%, I think giving confidence in the growth outlook that we've outlined.
Now moving to slide 8 and going through each of these key brands, starting with Cosentyx. Cosentyx delivered 12% sales growth on the quarter. When you look at the outlook for Cosentyx, we continue to guide to a double-digit growth, driven by steady volume growth in the key geographies, U.S., Europe and China. We're very confident in the overall clinical profile now that we've treated over 700,000 patients across five of the indications indicated for Cosentyx. And we continue to get important guideline recommendations, including the GRAPPA psoriatic arthritis guidelines, which highlight Cosentyx' unique benefit versus alternative therapies, including the IL-12/23 in its ability to tackle axial manifestations of this disease. Overall, we're confident in the $7 billion-plus peak sales potential. This will be driven by global expansion of the product as well as life-cycle management where we had some good progress in the quarter, including approvals in pediatrics in Europe. We've submitted hidradenitis suppurativa in EU, and we expect to submit in the U.S. in the second half. We have positive data on an IV study, looking at Cosentyx use in axial spondyloarthritis. And lastly, we do anticipate an IV submission in the U.S. as well in psoriatic arthritis, for proof points of our ongoing efforts on life-cycle management for Cosentyx.
Then moving to the next slide, slide 9. When you look at Entresto, Entresto is continuing its really dynamic growth globally and in the U.S. You can see we delivered 33% growth with Entresto. Our weekly NBRx continues its strong progression with continued strong growth. We've now treated over 7 million patients globally and over 1 million patients in the U.S., growing in hospitals, cardiology and primary care, so really strong growth across geographies. We're confident in the future growth and delivering the $5 billion-plus peak sales potential for this brand. There's only one-third of the addressable population that's been treated. We see a strong profile consistently regardless of the setting the medicine is used in. And lastly, with the approval of Entresto in hypertension in Japan and China where there's a high unmet need, it gives another opportunity for future growth.
Then moving to slide 10 with Zolgensma. Zolgensma is continuing to demonstrate the power of a onetime gene therapy to treat really in a dramatic way to treat terrible disease like SMA, 26% growth driven by global expansion, 2,300 patients now treated. We had recent reimbursement decisions, positive reimbursement decisions in Australia, Switzerland and Greece. And we recently received approval for our North Carolina new manufacturing facility, which further expands the capacity of our gene therapy network and really brings on line the state-of-the-art facility, continuing our leadership in the gene -- the AAV gene therapy space. Now future growth drivers for Zolgensma are going to be that continued global expansion, 43 countries to date and growing. We also want to enable stronger newborn screening programs outside of the United States. 97% of newborns are screened in the U.S., but only 30% in Europe, and those numbers are similar or lower in many other geographies. As we can get more newborn screened, then we believe Zolgensma is the treatment of choice for these babies, allows for normalization of their overall development. And we saw that in a Nature publication that recently summarized the data from one of our earlier studies with 14 out of 15 patients walking alone and 11 of them in the normal development window when treated early with Zolgensma.
I also want to note that both, our STEER studies and STRENGTH studies are progressing well, and we continue to outlook a submission in intrathecal for Zolgensma for 2- to 18-year olds in 2025.
Then moving to the next slide with Kisqali. We continue to deliver double-digit growth, you see 43% growth. And we see this as a brand that given its recent data releases is really coming into a strong profile and a strong growth profile. We're seeing increased traction based on the clinical data. I'll talk more about that a little bit later in the presentation. And we saw that at ASCO, once again, we were able to highlight some of the data sets, particularly around OS in the first-line setting, which demonstrates the strong profile of Kisqali.
The NATALEE adjuvant study, primary analysis is expected in 2023 and continues to progress on track. And I'll talk more about that in the pipeline section.
Now moving to Kesimpta on the next slide, slide 12. The launch is continuing to -- and really continuing on a strong trajectory. We see an acceleration of the brand in the U.S., and we continue to work towards providing the medicine globally in our key markets. We have U.S. demand of 18% growth quarter-over-quarter. We have 3,200 adopters, physician adopters since launch. You can see the NBRx up now 42%. It's really a dynamic growth for this medicine. And we're working to continue to strengthen the profile and differentiation. We have new extension data, which demonstrated 8 out of 10 patients treated continuously with Kesimpta, had no evidence of disease activity. From an operational standpoint, we continue to work to drive fast initiation. Patients are now getting on therapy within 6 days, 80% of patients achieving that goal. And 77% of patients remain on therapy at 12 months, which I think, again, demonstrates the medicine's impact as well as its ease of use for patients. So, very excited about the outlook for Kesimpta.
Now, moving to the next slide, on slide 13. With Leqvio, we're laying the foundation as we've outlined in 2022 for the ramp we expect over the coming years. And we continue to expect the remainder of 2022 for a steady ramp-up of Leqvio. But I think there's important proof point that we're beginning to lay that groundwork successfully. First, with respect to access. And as a reminder, Leqvio is under the medical benefit. We have 65% of -- 65% of patients now covered with -- aligned to our label or near our label. And that's within 6 months of launch. This is higher than relevant competitor brands, both from PCSK monoclonal antibodies and/or other recently launched anti-cholesterol therapeutics, and those brands have been in the market for many years. So I think it demonstrates we've been able to drive fast access. And the J-code now is in place as of July 1. So, I think from an access perspective, we're progressing well, progressing on or ahead of our plan, and I think that sets us up well for the future.
Secondly, on affordability, we can now confirm the two-thirds of patients have zero co-pay for Leqvio, including Medicare Part B patients with supplemental insurance. This, again, we believe, will enable a strong uptake and strong adherence to this medicine so patients can get the benefit that they need from lower cholesterol.
And lastly, we're making progress working through logistics and administration for this medicine in cardiologist offices as well as in relevant hospitals and medical centers. We've increased the number of unique locations ordering Leqvio to over 700. We're expanding the depth now with 55% of our customers already having placed repeat orders. And we're seeing growing usage now with 2,100 HCPs and now 3,900 patients in the service center. So, all of this taken together, I think, points to a strong future for the brand. And we'll continue to work through the second half of this year to build out this base to enable long-term growth.
Then moving to the next slide, slide 14, with Pluvicto. And moving to our two recently launched medicines in oncology, Pluvicto and Scemblix. The Pluvicto’s launch is really progressing in a strong manner, and it's either at or above our own expectations. We've seen our manufacturing issues remediated and we've cleared our backlog. Commercial and clinical supply resumed in June. We have a permanent A code that was granted in July, and that will be effective in October. Over 50% of insured lives now are covered. We have over 100 RLT sites now operational, 40 sites have completed orders. So, a strong trajectory from the start, and we're hoping to maintain that over the coming months.
We're preparing for further expansion with this medicine given the clinical profile we've seen to date. Both the Phase 3 studies are on track, both in the pre-taxane setting and the hormone-sensitive setting with a readout for the pre-taxane study still slated for the -- before the end of this year. The manufacturing scale-up is ongoing. We have a new facility in Indianapolis that we plan to bring on line in the second half of next year, and we have capacity and our expansions ongoing in our Italy and New Jersey sites. And we're making significant investments to ensure logistics can support access as the patient population that can be reached by radioligand therapies continue to expand across Pluvicto, Lutathera and our pipeline.
So moving to the next slide, slide 15. Scemblix as well is off to a very strong U.S. launch. And then, we achieved the, as I noted earlier, important regulatory milestones in the EU, $31 million of sales, primarily driven in that third-line setting, 44% share in the third line, which I think is a good marker, given how recently we launched the medicine, and 16% NBRx share regardless of CML line of treatment. In terms of future growth for Scemblix, it's going to be driven by the first-line study, which is enrolling ahead of plan. Just as a reminder, it’s versus investigator choice of TKI and the CHMP positive opinion in the ex U.S. markets where we continue to work to get a global rollout of the medicine.
So, moving to the next slide and turning to Sandoz. As you saw, Sandoz had a really solid quarter in quarter two. And we raised the full year guidance for Sandoz, and Harry will talk a little bit more about that. When you look at the drivers for Sandoz sales performance, it's primarily in Europe, where we are a leader, the leading generics company with 4% growth, driven by both, launches as well as recovery of the health care systems. We had double-digit growth in the rest of world markets, Japan and other emerging markets. And we've seen a stabilization in the U.S. business, setting us up with future biosimilars launches, small molecules launches to drive growth in the U.S. over the years to come. You can see our retail sales growth in the quarter was 4%, biopharma was up 11%.
So, we've raised the guidance as mentioned. And when you look longer term, we believe this creates a solid base of growth -- for growth 2023 and beyond. And a lot of that will be driven by the biosimilars portfolio. The portfolio of biosimilars and Sandoz targets $80 billion of originator sales, over 15 assets in the portfolio and some recent progress, including the acceptance of the adalimumab high concentration formulation as well as natalizumab in the EU.
We're also continuing to pursue small molecule opportunities to bolster the small molecule portfolio. Overall, the strategic review for Sandoz is continuing to progress on track, and we expect an update at the latest by the end of this year.
So, moving to the next slide on slide 17. Our broad pipeline of novel medicines progressed in quarter two, but we've also worked to focus our efforts, as you saw, in both our earnings release as well as with some of our pipeline decisions, five core therapeutic areas while being opportunistic in other therapeutic areas. And we're trying to make consequential decisions to really ensure we're focused and getting scale in those five core therapeutic areas.
On this slide, a few things to highlight. We had important designations and milestones, Scemblix, as mentioned. Pelacarsen completed enrollment for the Phase 3 HORIZON study, so on track on its journey to become the first medicine to treat Lp(a)-driven cardiovascular outcomes; JDQ443, our G12C inhibitor for solid tumors; the Phase 3 study in second, third-line non-small cell lung cancer was initiated, and we continue to also progress combination studies for that medicine.
Cosentyx was filed -- had a filing for hidradenitis suppurativa in Europe, and we continue to work towards the U.S. filing. And then lastly, we continue to streamline the portfolio. We had a number of projects that we made the decision to either partner our self. And notably, we're exiting our efforts, development efforts in COPD and general asthma with the decision to partner two assets in that portfolio. And we'll continue to look to streamline the medicine -- portfolio in our pipeline, so that we can focus on the medicines that matter most in our core therapeutic areas.
So, moving to slide 18, I did want to say another word on Kisqali. Given the OS benefit now we've seen across all three of the Phase 3 trials in the metastatic setting we've conducted to date, on the left-hand side, you can see the results that we've generated in the first-line metastatic setting. You can see impressive risk reduction and importantly, median OS that's been achieved consistently across these three studies, the longest median OS ever published. And we've seen that same OS benefit regardless of situation. We also maintain that benefit even after prior CDK4/6 use. So, we think this data set is part of the reason we're seeing the real growth acceleration behind Kisqali.
Now, in the middle frame, you see the reason for this clinically, we believe, is that Kisqali is unique in its ability to hit the CDK4 target. And we hit it 8 times harder than we hit CDK6. And that's relevant because we believe CDK4 is the key driver of the benefits you're seeing for this medicine. And you can see our relative performance versus -- in preclinical studies versus our competition.
Now, when you look at the adjuvant study, it's fully enrolled as we've already noted. We've already cleared the first futility analysis. The primary analysis is planned at 500 IDFS events, and we expect that by the end of 2023. The two interim analyses are to be conducted at 350 and 425 event. We have not yet reached the first of those interim analyses. We expect that in the coming quarters. We do guide for the study to really complete at the end of next year when we reach a full number of events. But we'll, of course, keep the market updated as we progress through these interim analyses.
Then moving to the next slide on slide 19. We're on track largely against our key 2022 events. Just three things to note: three submission-enabling readouts coming up in the second half of this year, CANOPY A, iptacopan and PNH, and as already mentioned, Pluvicto in the pre-taxane setting. So, we'll look forward to those study readouts and updating all of you as we get that data in-house.
So, with that, I will hand it over to Harry.
Harry Kirsch
Yes. Thank you very much, Vas. Good morning and good afternoon, everybody.
I'm now going to walk you through some of the financials for the second quarter and the first half. And as always, my comments refer to growth rates in constant currencies unless otherwise noted.
So on the next slide, yes, we show our quarter two and half one financial results summary. As you can see, quarter two sales and core operating income both grew 5% in constant currencies with sales benefiting from the continued strong performance of our key growth brands and core operating income growth driven mainly by the higher sales. However, operating income and net income declined significantly in the quarter. This was mainly due to prior year divestment gains from tail end products and higher impairments and higher restructuring costs this quarter, mainly for the transformation for growth program.
Core EPS grew 1%. However, if you exclude the impact of the prior year Roche income, core EPS would have grown 10%. Overall, we delivered solid sales and core operating income growth for the quarter, resulting also in a strong operational half one performance, with sales growing 5% and core operating income 7%. Core EPS in half one grew 11%, excluding the Roche stake impact.
On the next slide, I would like to drill down a bit into the performance by division. So, for quarter two, you can see that Innovative Medicines top line grew 5% and the bottom line, 6%, resulting in an improvement in the core margin of 15 basis points to 37.2%. Sandoz net sales also grew 5% although core operating income decreased 4%, mainly due to increased M&S investments and higher other expenses. This was reflected in the core margin, which decreased to 20.4%. Overall, for the first half, we saw a strong performance for Innovative Medicines and Sandoz, Innovative Medicines sales growing 5% and core operating income 6% in half one.
Sandoz grew 6% on the top line and 10% on the bottom line in half one, driven by a very strong quarter one. And as a reminder, as we discussed in April, Sandoz benefited from a return towards normal business dynamics compared to a lower prior year base.
Our half one core margin improved by 30 basis points for Innovative Medicines, 70 basis points for Sandoz and 60 basis points for the total group.
Turning now to our guidance on slide 23. So, within the divisions, we expect Innovative Medicines sales growing mid-single digit and core operating income growing mid- to high-single digit ahead of sales. The expected IM core margin increase will be driven by expected continued good top line momentum and continuation of our productivity programs, of course, including the new organizational structure, giving us some benefits in the second half already.
For Sandoz, the performance year-to-date allows us to upgrade sales guidance to grow low single digit, which is a one-notch upgrade, and core operating income guidance is upgraded by 2 notches to now be broadly in line with the prior year. For the group, we confirm our overall full year guidance. We continue to expect both, top and bottom line to grow mid-single-digit in 2022.
The key assumption for this guidance is that we see a continuing return to normal global healthcare systems, including prescription dynamics and that no Gilenya and no Sandostatin LAR generics would enter in the U.S. in 2022.
As many of you know, in June of this year, the U.S. appeals court held the Gilenya U.S. dosing regimen patent invalid. We plan to petition the appeals court for further review to uphold validity of this patent. And as a reminder, there's no generic competition in the U.S. at this point in time for Gilenya. And in quarter two, U.S. sales were $332 million for Gilenya. It is worth noting that U.S. Gilenya sales have been steadily declining due to competitive pressures and, of course, our key focus [ph] being on Kesimpta.
Next slide, please? I would like to provide some further details on the expectations for the second half dynamics on top and bottom line. We expect sales to continue to grow mid-single digits, bringing us to our guidance for the full year. For half two core operating income, we expect to grow slightly slower compared to half one at low- to mid-single digits. This is mainly due to the higher prior year base for Sandoz in half two. As you know, half one core operating income growth benefited partly from a very low prior year base at Sandoz. We will, of course, continue to monitor the impacts of inflation and utility costs, particularly on the Sandoz product portfolio as well as the situation around COVID-related lockdowns in China given that we are seeing improving signs as of June, which we will continue to monitor in half two.
On the next slide, I would like to provide an update on our new simplified organization model and the financial impacts of the restructuring. As Vas discussed earlier, we have increased our estimate of SG&A savings to approximately $1.5 billion. We anticipate the savings to be fully embedded by 2024. This year, we also expect some savings, but the overall impact will be minimal as we will be offsetting higher energy cost and inflationary pressures. Part of the $1.5 billion savings we expect to be reinvested into our pipeline and a significant part will contribute to achieve our mid- to long-term low-40s Innovative Medicines' core margin guidance. With regards to the onetime restructuring costs, we could narrow this range a bit, and we estimate this now to be 1 time to 1.2 times of the annual structural savings of $1.5 billion.
On slide 26, I want to provide an update on expected currency impact if currencies stay at the current levels. Obviously, currency impacts are significant this year given the strengthening U.S. dollar against many currencies. So, if currencies stay as they are now, for the full year, we estimate the impact on top line to be negative 6% to 7% points and on the bottom line, negative 7% to 8% points. And given it's volatile, we wanted to give you also a bit of an outlook for 2023. So, for the full year in 2023, we would expect sales to be impacted by negative 2% and core operating income negative 2% to 3% in 2023 versus 2022. As a reminder, we update these currency impacts on our website monthly. And I think especially in these times, it's quite important to watch that.
Finally, on page number 27. Thank you. Finally, a reminder about our capital allocation priorities where we remain disciplined and shareholder-focused, of course. We aim to balance investing in the business with returning capital to shareholders via our dividend and share buybacks. In the first half, our investment in the organic business was $4.5 billion in R&D and $0.5 billion in CapEx. We also had bolt-on M&A, which was around $0.9 billion, mainly for the Gyroscope acquisition. Alongside this, as you can see, in terms of returning capital to shareholders, we paid our annual dividend of $7.5 billion earlier this year and have $9.4 billion still to be executed of our ongoing $15 billion share buyback program, of which we have completed $5.6 billion by the end of June.
And with that, I hand it back to Vas.
Vas Narasimhan
Thank you, Harry. So, if we move to the last slide, slide 29. We continue to progress against our top 2022 priorities as we've outlined, successful launches, particularly ensuring the foundation is laid for Leqvio but driving the dynamic performance of Kesimpta, Pluvicto and Scemblix, which, as you've seen, are continuing at pace; maintaining the growth momentum across our six key in-line growth drivers; progressing the pipeline, where we have 20-plus assets where we expect significant sales potential with approval potential by 2026 and the pipeline is on track. We're tracking well on our Sandoz review and a bit a solid quarter from Sandoz in quarter two. And we'll keep you updated as we move towards an update before the end of 2022 at the latest. And we remain disciplined in our business development, looking for important opportunities to build out our pipeline but remaining disciplined with how we allocate our capital. Continuing to deliver our returns, and you've seen that with our productivity initiatives, our increase to $1.5 billion of SG&A savings with our new organizational model. And we continue to reinforce the foundations we believe that in the long run will drive Novartis' performance around culture, data science and as I noted earlier, ESG.
So with that, we look forward to taking your questions. If the questioners could please limit themselves to one question, we will be able to get through hopefully the list and allow people to ask multiple rounds over the course of the call. So, operator, we can open the line for questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] We will now take our first question from Matthew Weston from Credit Suisse. Please go ahead. Your line is open.
Matthew Weston
Thank you very much. A question on Kisqali please, Vas. And you very clearly set out the interim analysis timelines and the final analysis timeline. One question that we've received a lot in recent weeks is how you would communicate when you go past an interim. Would you consider that a material event, which you have to press release to the market? Obviously, if it's positive, it would be positive and would see a release. But if you simply pass an interim and move forward, would you see that as requiring a press release, or would we simply learn that at the next quarter where you would update the timelines? Many thanks indeed.
Vas Narasimhan
Yes. Thanks, Matthew. So, I think as you outlined, clearly, if at any time in the study that we either get a definitive positive result as determined by the DSMB or a negative result, we would update the market. Otherwise, our plan would be at the quarterly call to provide updates on where we stand on the study. We don't believe passing an interim analysis warrants any sort of further update. Thank you very much, Matthew. Next question, operator?
Operator
Thank you. Your next question comes from the line of Tim Anderson from Wolfe Research. Please go ahead. Your line is open.
Tim Anderson
Hi. Just a high-level question on healthcare reform, and just talk of reconciliation pushing ahead. It seems like it's finally going to happen to us, at least, your thoughts on the likelihood of this happening and what it could mean to industry financials and to Novartis specifically over time and if you have certain products that you think would be impacted the most.
Vas Narasimhan
Yes. Thanks, Tim. I think as everyone is reading in the press, there is renewed momentum behind a reconciliation package, which would consist of a drug pricing reform and supporting ACA subsidies. Of course, our overall view remains that there are good and bad elements to the package. Clearly, Part D reform is needed. Capping out of patient -- patient of pockets will be, I think, a positive step, enable patients to fill their prescriptions and also enable from our sector demand to be supported. But of course, there are onerous elements as well, which we think go too far and don't support long-term innovation, will have detrimental effects to the long-term outlook for the industry, particularly the negotiation elements.
Now for Novartis specifically, we view these as not significant impact in the near to midterm. We've analyzed this quite in a detailed manner. I mean, I think as is well known, we're the number one company, pharmaceutical company in Europe and a leader in many emerging markets. Our business in the U.S. is one we plan to grow significantly over time. But our relative exposure to the peer set in terms of both, government programs and overall U.S. sales is at the low end of the peer set. So, we would expect to have a far lower effect than our -- impact on us relative to our peers. And so, I would say in the near to midterm not a significant impact, overall net of the positives we get from the Part D reform and, of course, the impact from inflation caps as well as negotiations. So, that's how we see it at the moment. But of course, we'll continue to analyze as the final bill text is available. Next question, operator?
Operator
Thank you. Your next question comes from the line of Richard Vosser from JP Morgan. Please go ahead. Your line is open. Hello Richard, your line is open. Are you on mute?
Richard Vosser
Hello. Sorry, apologies, completely my fault. Just on Kisqali, if you can hear me now. Just wanted to go back to the growth potential in the first-line opportunity and how much of the Ibrance market you think you can take with the OS benefit? Obviously, we can see Verzenio benefiting as well, but just your thoughts there. Thanks very much.
Vas Narasimhan
Yes. Thanks, Richard. With Kisqali, we're starting to see a positive trend on NBRx in the first half of the year versus the competition in the metastatic setting. And that comes primarily from Ibrance. And I think that's reflective of the data set that we have in OS as I've outlined. It's important to note as well in many European and ex U.S. markets, we are either number one or close to number one, depending on the market. And we can, we believe, drive additional momentum in those ex U.S. markets as well. So, I think it's positive signs. We want to see that trend continue for hopefully a couple more quarters, particularly given that now the dynamic market within breast cancer is starting to recover. I would know that it's just recently on our data coming back to where it was pre-COVID, which again is an opportunity for us to gain share as there's an opportunity to get either new patients or switching patients onto Kisqali. So, I think it's all positive directions and we'll see how the trend goes in the coming months. Thank you, Richard. Next question, operator?
Operator
Thank you. Your next question comes from the line of Emmanuel Papadakis from Deutsche Bank. Please go ahead. Your line is open.
Emmanuel Papadakis
Perhaps I'll take one on Sandoz, please. As you called out, biosimilars clearly the key to returning to reasonable levels of growth in the midterm. You recently filed the biosimilar Humira Hyrimoz high dose in Europe. Could you just give us an update on where you are with respect to the U.S. for that opportunity, i.e., both as regard to high-dose filing and potential interchangeability? And how significant an opportunity you think that may be for the business and indeed whether that would have any influence on your considerations on strategic options? Thank you.
Vas Narasimhan
Yes. Thanks, Emmanuel. So, we're on track overall to be launching Humira -- the adalimumab biosimilar ad market formation in the U.S., and it's our intention to have the high concentration formulation available. I think as soon as we have a file accepted by FDA, would, of course, put out a release and update the market. So I would say, overall, we're on track with respect to that.
I think, clearly, the number of entrants when the adalimumab market formation happens will mean that it will be a highly competitive market set. But nonetheless, given the size of the opportunity, it will help meaningfully drive growth for the brand. I would also note that natalizumab where we are one of the early entrants is a significant opportunity for Sandoz. And I think natalizumab both in the U.S. and Europe is one we're excited about as an opportunity to drive growth within the next few years. And the other upcoming opportunity for us is denosumab where, again, I think we would be one of the earlier entrants amongst biosimilars players. But those would be the three key upcoming biosimilar launches for Sandoz and particularly in the U.S. Next question, operator?
Operator
Thank you. Your next question comes from the line of Graham Parry from Bank of America. Please go ahead. Your line is open.
Graham Parry
So, I think at the Q1, as you said you were at 300 events. So I wonder if you could give us an update on how many events you're at in the trial. And is that the sort of event rate as it sits that you still have a couple of months delay before the DMC report to you what the outcome of those interims are? And in the event you were to get positive data, to what extent can you put subgroup analysis, et cetera, in the press release, so whether you've hit across all subgroups, high-risk, low-risk, et cetera. Just what would be in the press release would just be quite interesting to know. Thank you.
Vas Narasimhan
Yes. Thanks, Graham. On Kisqali, obviously, I don't want to get into what exactly the number of events are. I would say the event rate that we've seen and as we noted previously, we had a slower event rate than we had originally projected and that event rate has continued. So, there's no change in the overall event rate. I would also note that you are correct that from the point of a lock, it does take a few months to get the readout with the DMC and particularly because we work with one of the large CROs in the U.S. as part of the study. So, that's, I think, important to note from a time line standpoint.
In terms of what's in the release, I mean, I think we typically would only comment on the primary endpoint. And in this case, that's the IDFS across both, the medium- and high-risk patient populations. We wouldn’t, of course, get into subgroups. I would also note that the DMC's primary basis for stopping the study would be IDFS. We would hopefully see in the OS trend, but I think that's an important note as well. I would expect that as would be the case normally in such an oncology study, OS takes more time to mature. And of course, we'll have to see how it all unfolds over the coming quarters. Next question, operator?
Operator
Your next question comes from the line of Yoki Izawa from Cowen. Please go ahead. Your line is open.
Steve Scala
Hi. Can you hear me?
Vas Narasimhan
Yes.
Steve Scala
Hi. This is Steve Scala. On remibrutinib, is there any sign of liver tox similar to Sanofi's tolebrutinib? And is there any reason to believe that liver tox is a class effect?
Vas Narasimhan
Yes. Thanks, Steve. We've been watching this space very closely. I mean, when you look overall at BTK inhibitors in cancer, historically, liver has not been a signal, at least to our knowledge, that's been a significant concern. And also BTK is not differentially expressed within liver. So, in our view, this is related to the drug itself, either metabolites or off-target toxicities in the liver. To date with remibrutinib, we haven't seen any liver signals. We've taken it forward into chronic spontaneous urticaria as its first lead indication where there are two pivotal Phase 3s ongoing. And then similarly, now are progressing in our MS studies and also evaluating taking the medicine into other areas of rheumatology, dermatology, et cetera. Our hope and expectation is that the profile of remibrutinib continues to be clean relative to the peer set, particularly with respect to liver signals. We believe that in the MS market, but also in the dermatology market, it's going to be critical to have a medicine that has a safe profile with -- especially with respect to more complex side effects like liver. So, that's where we stand, and we remain optimistic on that unique profile of remibrutinib based on its chemical design and the lack of any off-target toxicity seen to date. Next question, operator?
Operator
Thank you. Your next question comes from Florent Cespedes from Société Générale. Please go ahead. Your line is open.
Florent Cespedes
A quick one on Kesimpta. Could you elaborate a bit on how do you see the dynamic on the ex U.S. sales? They are still quite small for the time being, but are ramping up nicely. Could you give us what should boost the sales here? Thank you.
Vas Narasimhan
Yes. Thank you, Florent. With respect to Kesimpta, already, we covered the U.S. land. I mean we're starting to now move through, as you know, the longer reimbursement processes that were required in Europe, Canada and other global markets. So, we would expect to see in the second half and then moving into next year more significant sales contributions from our ex U.S. markets. Of course, the big markets in Europe, but I was also recently in Canada, where there's a lot of excitement as well about the medicine. And then to a lesser extent, in Asia, Japan, et cetera, where MS rates are lower, but the market sizes are significant. I mean, I think it's important to note in those markets a monthly subcu patient administered drug is very attractive because of those markets, they're not the same incentive structures around infused medicines as well as the ability to deload the hospital system by having at-home administration. So, we feel optimistic about the opportunity now for Kesimpta as its next wave of growth to really be about a global expansion of the medicine. Next question, operator?
Operator
Thank you. Your next question comes from the line of Emily Field from Barclays. Please go ahead. Your line is open.
Emily Field
I just want to ask a question on the development plans for ligelizumab. I believe kind of the slides just mentioned food allergy. But on clinicaltrials.gov, the PEARL-PROVOKE study in CINDU still looks to be recruiting. So, just any update on the other indications.
Vas Narasimhan
Yes. With ligelizumab, as you know, we made the decision not to take it forward in CSU, but we continue to the development program in seafood allergy. We'll complete the program as well in CINDU. And we continue to believe the medicine has potential in some of these indications where IgE inhibition has demonstrated the ability to impact symptomatic disease as well as disease progression. So, we still think the medicine has potential, particularly in food allergy, where if we could find the right setting for its use and get a relatively broad label from the regulators, it would have a significant potential. So, those development programs continue on track, and we would expect the readouts as we note in our documentation. Next question, operator?
Operator
Thank you. Your next question comes from the line of Simon Baker from Redburn. Please go ahead. Your line is open.
Simon Baker
A quick two-parter question, if I may, please. Firstly, on Zolgensma. As you talked about the strong ex U.S. growth, but actually, the growth in the U.S. was pretty impressive this quarter. I just wondered if there's anything to add behind that. And secondly, on Leqvio, I wonder if you could update us on the U.S. performance, particularly the UK.
Vas Narasimhan
Yes. With respect to Zolgensma, we were pleased as well to see the performance in the U.S. That's primarily driven by expansion in newborn screening where you'll remember when we launched the medicine, we were down at 60%, 70%, and now we're moving into the mid- to high-90s. And as we get that newborn screening rate up, it tends to be the case that patients who are identified in newborn screening ultimately receive Zolgensma. And so, I think that will continue as we move up the newborn screening, but then, of course, we would expect to be back to a steady state. As with all gene therapies, eventually, you get to the steady state of the ability to identify the diseases at birth in so-called incident population.
When you look at the specifics on Leqvio ex U.S., I'd say in the UK as well, we've been systematically building up towards what we hope will be a trend break. I think the UK NHS had to, of course, deal with COVID for much of the first part of this year. In the last few months, we've now successfully upgraded and enabled NHS EHR, so identify patients who would be able to use Leqvio. We have now I think over 70% of primary healthcare units with Leqvio available on their formularies. We've launched a large-scale education campaign in the UK. So, I would expect to see as well, hopefully, a trend break in Leqvio the UK in the first part of next year as we continue to build that foundation in the second half and as the NHS works through the backlog it has from other -- from other diseases because of the COVID pandemic.
Beyond that, we see a very strong uptake in Germany with Leqvio on a per population basis, the uptake is very good. We've assigned successfully large-scale agreements with certain Middle East governments to roll out Leqvio at scale in those markets. And then, we also continue to work to bring Leqvio forward in the large markets of Japan and also are finalizing the plan for a filing in China as well. But all of that is going -- of course, again, as always, with cardiovascular launches, it takes time. But on this one, I mean, absolutely, our goal is to ramp this medicine faster than we were able to in Entresto. And obviously, with a runway that goes to the late 2030s, at the very least, the significant opportunity to make this a really, really significant medicine. Next question, operator?
Operator
Thank you. Your next question comes from the line of Kerry Holford from Berenberg. Please go ahead. Your line is open.
Kerry Holford
Focusing on radioligand therapies and the recent manufacturing delays, can you now confirm that you outsourced suppliers [ph] on running an inventory building for both Lutathera and Pluvicto? I wonder if you can also elaborate on your plans for expansion of RLT manufacturing supply going forward and how you work around what you've learned through those recent delays. And is there any risk to recent manufacturing cap result and delay to the ongoing Phase 3 PSMAfore study, which I think is due by year-end. Thank you.
Vas Narasimhan
Yes. Thanks, Kerry. So, a couple of points on radioligand therapy manufacturing, which is a challenge, but also, I think, points to why if we can get it right creates a long-term competitive advantage. This is a medicine where you cannot build inventory. We make the medicine and depending on, whether it's Lutathera or Pluvicto, we have between 3 and 5 days to get it to its relevant site. And so, because of that, you have to be world-class with respect to the supply chain. And it's not something easy, I think, for anyone to build from scratch. What we've learned is to increase capacity with redundant lines and different manufacturing sites to enable us to ensure we have a steady supply, if we were to have a disruption at any one of our sites, and within those sites to segregate the line so that the one line having an issue doesn't affect any of the other lines. And we've been able to do that now at the relevant sites, particularly in our Italian site and in our U.S. site.
So with all of that being said, we've cleared the backlog. We are now shipping to order successfully. We're also with large centers moving to a model where we provide Pluvicto doses ahead. Even if they don't have patients ready yet, their supply is there. And, of course, that enables them to book additional patients with confidence. And then to further expand the supply, we'll be bringing on a third large-scale manufacturing facility in Indianapolis. That will actually have automated lines moving away from more manual lines, which just further increased capacity. So, we would expect by mid to second half of next year to have three separate U.S. manufacturing facilities to support the U.S. for both, Lutathera and Pluvicto, giving us the redundancy large-scale capacity and, of course, the ability then to fulfill what we hope if the data supports it a potential multibillion-dollar opportunity for Pluvicto across lines of prostate cancer.
And I'd also take the opportunity to say that the feedback, both from the nuclear radiology community as well as the urology community, which is an important customer base for this medicine has been very positive to date.
With respect to the Phase 3 studies, we've been able to fully reopen enrollment and we currently forecast is no change in time line, either for the pre-taxane study, which is slated to read out before the end of this year or the hormone-sensitive study, which is slated to read out in 2024. So, both of those studies now are on track and, if anything, are enrolling slightly ahead of schedule. Next question, operator?
Operator
Thank you. Your next question comes from the line of Seamus Fernandez from Guggenheim Securities. Please go ahead. Your line is open.
Seamus Fernandez
Just one quick question on iptacopan. Vas, just wanted to get your thoughts on relative positioning in PNH and aHUS versus the well-established C5 inhibitors. Just wanted to get your sense of the ability to compete in the treatment-naïve setting as well as the sort of patients that are struggling as we look at this first data set and then I think the treatment-naïve data set will come in the first half of next year. Thanks.
Vas Narasimhan
Yes. Thanks, Seamus. We've done a lot of work with the U.S. team here and really to understand the physician expectations and the dynamics. And overall, we believe that hematologists would be highly interested in iptacopan, both in the first-line setting and for patients who are not receiving -- achieving an adequate response to the anti-C5 monoclonal.
I think, unlike some of the other areas where a Part B-infused medicine can create a barrier, this is a low enough volume situation where we believe that patient ease of use to avoid having to come in and out of the hospital, also a very safe drug that can be used across lines of therapy would be highly attractive for physicians.
So, you're correct, the first data set will be focused, both on add-on therapy as well as switch. And then, we'll have a second data set, the PNH applied study, which would then be in the frontline setting. And those two data sets together will support the overall filing. So, we remain optimistic on that PNH. And that, of course, would translate as well into atypical hemolytic uremic syndrome in that setting. I'd also note that the opportunity for -- hopefully, everyone on the call is aware for iptacopan is not only in that hematology setting, but we also prepare in the renal setting, where this could be the first medicine approved for C3G glomerular nephropathies as well as an opportunity to treat patients on the severe end of the spectrum with IgA nephropathy. And then we continue to expand across a range of other Factor B-driven diseases. And the unique profile here is a twice-a-day oral with a very, very safe safety profile, which I think for these rare diseases will hopefully make a lot of sense. Next question, operator?
Operator
Thank you. Your next question comes from the line of Andrew Baum from Citi. Please go ahead. Your line is open.
Andrew Baum
A question on your BeiGene collaboration, a couple of parts. So first, I'm curious whether you could provide some color on the FDA's guidance not to file in a monotherapy. I assume that they have Western data. I think they do. So, I'm just curious as to why, is it because they feel the market is well served, site inspections or some other? And then second, you have an option on the BeiGene ticket. It sounds like Roche is now not going to be presenting the interim data at ESMO. When do you have to exercise that option? And can you give us any guidance on what you will do given the available data?
Vas Narasimhan
Yes. Thanks, Andrew. On the first question on monotherapy, I think the FDA's assessment of our overall data set was that it didn't adequately reflect the U.S. population in terms of the number of patients and the standard of care that was used in that BeiGene-driven first-line study. So, our focus right now is to finish the filing in the second-line small cell lung cancer -- sorry, esophageal cancer. And then we had very good data in the first-line setting as well. As we announced, that's been pushed back as we await the ability for FDA to inspect the facilities in China. And then hopefully, we'd be able to have both, first and second line in esophageal. We'd have been hopefully second line in non-small cell lung cancer, and we would expand from there. I do think that the FDA is making it very clear now that they expect a -- any studies to be filed that they're global in nature, they have an appropriate amount of U.S. patients and that the standard of care used reflects standard of care in the U.S.
With respect to the anti-TIGIT, we haven't changed -- no change from our option agreement. The option agreement is driven off of the data from ociperlimab, the BeiGene anti-TIGIT molecule. And so that option would be based on when their data set becomes available. And we'll continue to wait for that -- their data to mature, which we would expect, I think, if I'm not mistaken, but we can verify in the second half of the -- first or second half of next year.
Now, in terms of the Roche data set, I mean, it doesn't change anything for us. We'll continue to wait and watch as the field evolves and then make an appropriate decision. I think it's important that we -- everyone would like to understand where is the appropriate use of this medicine and in which PD-1 subgroup, all comers and if there is a place, which place would it actually be. But for us, there's no change to plan at this point in time. Next question, operator?
Operator
Thank you. Your next question comes from the line of Laura Sutcliffe from UBS. Please go ahead. Your line is open.
Laura Sutcliffe
Could you help us understand who the typical U.S. prescriber of Leqvio is, who's already prescribing to multiple patients or who is already a repeat prescriber? Thanks.
Vas Narasimhan
Yes. Thanks, Laura. I spent -- it's a great question. I spent three days now in the field here in the U.S. meeting clinicians, visiting hospital centers, visiting larger cardiology centers. I'd say right now, where we see the strongest uptake are in group cardiology practices where they already have the ability to run, buy and bill, they make their own decisions on how they want to approach treating for cholesterol and how, I think, the infrastructure largely set up and also the scale. So, I'd say group cardiology, mid- to large-sized group cardiology practices have been really, I think, a key area so far for the medicine. Combined with, I would say, large volume cardiologists and smaller practices who are leveraging alternative injection centers where we continue to see solid uptake. And that's a solid base for us to grow from. Now, the goal is to move into larger centers where you, of course, have to work through the pharmacy and the various P&T committees to get everything set up. There now the J code being in place and the overall clinical experience increasing is helping, and then also moving towards smaller cardiology offices where there is the need to set up buy-and-bill capabilities, which historically have not been in place for those cardiology offices.
What I would say, though, is what I consistently hear regardless and I think our team’s here on the ground is a lot of enthusiasm for a twice-a-year physician-administered medicine that can modify the single most important risk factor in cardiologists' mind for preventing repeat cardiology events -- cardiovascular events. And I think seeing that and hearing that again and again gives us confidence, gives me confidence that we will work through the logistical hurdles, which seems to be the primary topic and then get this medicine into wide-scale use. I think, we often hear from practitioners, especially when they put the patient on the medicine and then at the next visit, they see a significant drop in the LDL levels. That's a very winning proposition after a single dose. And then I think those practitioners get really excited about getting more patients on therapy. So again, laying all the foundations, but I think all the right steps are being taken to get us to where we need to be. Next question, operator?
Operator
Thank you. Your next question comes from the line of Keyur Parekh from GS. Please go ahead. Your line is open.
Keyur Parekh
Vas, a big picture kind of capital allocation question for you. If you look at slide 27, kind of first half, obviously, it's only first half, which shows that you kind of returned somewhere about $13 billion kind of to shareholders versus investing kind of about $6 billion in businesses and your kind of organic and bolt-on transactions. As we look forward to the next kind of 12 to 18 months, do you expect that balance to be somewhat similar to what we have seen in the first half? Do you expect that to be more counterbalanced by greater investments, either from an R&D or an M&A perspective for Novartis? And then, just kind of more specifically, you are telling us that you'll provide us an update on Sandoz by the end of the year. What is that update expected to be? Are we going to get a decision on what you would do? Is it going to be, if you plan to separate it, we will we get details on structuring of separation, et cetera? So just any color you might be able to provide on what that detail or what the update might involve? Thank you.
Vas Narasimhan
Yes. Thanks, Keyur. So I'll let Harry start and then I can add on. Harry?
Harry Kirsch
Yes. Thank you. Hi, Keyur. So on the capital allocation, of course, the whole thing is a bit skewed by our dividend being an annual dividend, right, $7.5 billion. So, if you want to do it mathematically, you almost have to half that and put it on two sides, but it's the annual dividend. Overall, of course, all of these elements, R&D, we expect to continue to grow in line with sales at least. And so, there will be continued growth on R&D investments. And we don't expect margin leverage from the R&D line as we go forward, more from the SG&A line where also our transformation for growth program is targeted at and where we have some gap to benchmarks and we can -- we have found some structural opportunities, which is great.
And then, in terms of how much it goes to bolt-on M&As, that obviously depends on the opportunities we find. And given our very attractive net debt position and strong cash flows and balance sheet, of course, we have quite significant bolt-on M&A firepower, if you will. And if we don't find the right opportunities, of course, share buybacks will always continue to be part of the mix.
In terms of Sandoz, I think you said it all. We make very good progress in line with our plans on the carve-out financials and looking at all different options. So, would be, of course, happy to give a preliminary decision by end of year. But this is, of course, subject to Board approval and from that -- and the progress overall on our whole planning. But end of year should be quite -- giving you some good hints to what direction it goes, given that we take appropriate time for all the homework we are doing on the carve-out financial, separation costs, tax situations and all of that. So it would be -- think end of year later, we should be in a good position to inform you about the next steps here. Vas?
Vas Narasimhan
No. That's perfect. I think, Harry said it all. Thank you, Keyur. Thank you, Harry. Next question, operator?
Operator
Thank you. Your next question comes from the line of Naresh Chouhan from Intron Health. Please go ahead. Your line is open.
Naresh Chouhan
Some of the work we've done suggests that people costs are around 40% to 50% of the total cost of the industry. And so, my question is, how we should think about the timing on the -- of the inflationary impact on salaries? Is it fair to assume that the whole 2022 salaries and, therefore, your guidance has factored in only last year's inflation and that really, we have to wait until next year's salary rounds before we start to see this year's inflation baked into your cost base on the salary side? Thank you.
Vas Narasimhan
Thanks, Naresh. Harry, do you want to take that?
Harry Kirsch
Yes. You're absolutely right. I mean, the current inflationary effects, mainly on energy, utilities, freight costs and so on, those cost categories as we speak; on wages and salaries, not much yet, if anything. So, that needs to be closely monitored. And I would expect this to come more in annual cycles. If there is something short term, it's probably depending on certain countries. Of course, we always monitor the markets to be very competitive. And we have, of course, quite a big, if you will, workforce in Switzerland where inflation and wage increases are below, I would say, developed market average. So, from that standpoint, our home base gives us also here a bit of a competitive advantage. But we have to watch it, right? As you say, the wage and salaries are a large portion of the P&L of any pharma company given its innovation-driven and people-intensive business. And we have to watch that and we'll monitor this, of course. I would say, we believe it is manageable for us, but we have to monitor how the situation develops.
Operator
Thank you. Your next question comes from the line of Sarita Kapila from Morgan Stanley. Please go ahead. Your line is open.
Sarita Kapila
Please, could you discuss where you stand on the development of the diabetes and obesity franchise? So, you have the MBL949 in Phase 2. I don't believe the mechanism has been disclosed, but it appears to be dosed every two weeks. And you also have an existing cardiovascular and metabolic commercial platform. And there are a number of assets focused on diabesity in Phase 1/2, which remain unpartnered. So, it looks like from today's update, respiratory is less of a focus, but it's not necessarily clear where you stand on diabesity and adding assets around Entresto, Leqvio and TQJ. Thank you.
Vas Narasimhan
Yes. Thanks for the question and noted the Morgan Stanley report as well on obesity. Yes, I mean, I think we, of course, are observing the significant unmet need for better obesity medicines. And because we do have a dedicated cardiovascular research unit in-house led by Shaun Coughlin really, I think, a global leader in the thinking on developing world-class cardiometabolic drugs, we do have assets in our portfolio. We have not disclosed NBL, but we are awaiting our Phase 2 data on weight loss with NBL. If that's positive, that would be an exciting opportunity to hopefully address with a unique mechanism of action obesity on a large scale. And I think based on that readout, we would determine if we advance other earlier stage opportunities and combination partners we would have for NBL as well as potential external opportunities. So I think more to come. Certainly observing the need for better obesity drugs and hopefully, alternative mechanisms to those already out there, it's something we're looking at, and we'll keep the market up to date as we learn more. Next question, operator?
Operator
Your next question comes from Peter Welford from Jefferies. Please go ahead. Your line is open.
Peter Welford
A question on Cosentyx, please. You've talked a little bit about the aim for this year, wondering if you could just talk a little bit about next year. And in particular, you've also talked a lot about Humira biosimilars in your plan there in the U.S. Can you just talk a little bit about how you see coverage negotiations for Cosentyx next year? And perhaps you could just talk about the impact of HS, which I guess is unlikely to be approved for the negotiating cycle this time around. But IV, on the other hand, also available and how you think that fits into the potential patient access dynamics for Cosentyx going into next year? Thank you.
Vas Narasimhan
Yes. Thanks, Peter. I mean I think right now, our assessment is that with the introduction of adalimumab biosimilars that it's a manageable situation. I mean we already have significant gross to nets on Cosentyx in some accounts. In other accounts, we have very strong overall positioning and as a first-line therapy. And of course, we'll have to see as the upcoming year unfolds, and also how some of the upcoming legislation that potentially might be passed by Congress will impact the gross to net environment, given that there would be if the law passed as currently designed, less ability to offset increased rebates of price increases. I think there is a possibility we see a rethink on rebating at least on the industry side on how the whole structure of the market works. It's all to be determined and to be seen.
I mean, I think for us strategically on Cosentyx in the U.S., the goal is within rheumatology and dermatology to grow with the market and you see healthy market growth in both of those categories. And as you point out, expand both in terms of indications, we would hope to get hidradenitis approved over the course of next year, which then means in 2024, it would be an additional labeled indication for us in a unique labeled indication for Cosentyx, but also to expand into -- with IV into other payment settings and to have IV approved, hopefully, across both axial SpA as well as psoriatic arthritis would enable providers to also provide Cosentyx in those reimbursement settings. And hopefully, that also helps us manage the overall payer environment. It’s probably the best answer I can give at this point in time. But I think as we learn more in the second half of the year, as we enter towards the January negotiations in Q4, we'll keep you posted. Next question, please?
Operator
Your next question is from the line of Matthew Weston from Credit Suisse. Please go ahead. Your line is open.
Matthew Weston
Just a couple of follow-on housekeeping items, please. Harry, the quarter we saw a significantly lower finance charges and also significantly lower corporate costs than consensus was anticipating. I know there was a hyperinflationary write-back in the finance charge. Can you give us any help with what we should anticipate for both those lines for the full year? And then, if I can cheat and ask another question, Vas, you obviously deemphasized COPD within development, does that mean that we can n anticipate that you may consider divesting your legacy respiratory assets or that's something where you're going to maintain an existing commercial franchise? Thank you.
Vas Narasimhan
Harry?
Harry Kirsch
Yes. Matthew, welcome to the second round. So on the corporate cost, we guided so far to $600 million to $650 million this year. Our new guidance now would be a notch down, $550 million to $600 million. Now, the biggest piece of that is actually currency because, as you can imagine, given our headquarters in Switzerland, most of our corporate costs are in Swiss francs. And the Swiss franc also weakened versus the dollar. So the corporate dollars, if you will, will be a little bit less and will be a bit lower. If you take in constant currencies, it's probably hard for you to model on corporate costs, right? This year's quarter two costs were only $5 million lower than last year's quarter two cost. And of course, we do also work on corporate cost efficiencies. So, I think that is just the corporate part.
In terms of the core cost on net financial results, we, of course, do have some income, right? We have some hedging gains, which is the other side of the currency impact. So, that should also be a little bit lower. But, of course, both of this is the -- corporate costs are part of our core operating income guidance in constant currencies, and then, a bit of gains on the on the net financial results also versus prior year, but not so significant.
Vas Narasimhan
Thanks, Harry. And then, Matthew, on the respiratory side of things, I think as you rightfully point out, we do have a business in inhaled respiratory LABA, LAMA ICS outside of the U.S., primarily in Europe and, to some extent, in emerging markets. And as well as we have the Xolair business outside of the United States in severe asthma as well as the co-promote in the U.S. all those businesses remain intact. And of course, we will continue to continue to drive them. We always do evaluate what is the right mix in the markets. And I think with our recent -- the transformation announcement where we moved to a single Innovative Medicines unit in every country that we operate in, we are going through an exercise to ask what is the right portfolio, not necessarily specific to respiratory, but what is the right portfolio of medicines for us to really focus our resources on and where can we optimize or deprioritize so that we drive the most growth out of the business and really have the most impact that we can from the portfolio. So, as we get to better clarity on those decisions and if anything changes, we'll, of course, let you know.
Matthew Weston
I don't know if my mic is on. I don't know whether a follow-up is appropriate. But could we see those spun out with Sandoz given that they'd fit with that kind of long life cycle ex U.S. footprint that Sandoz has?
Vas Narasimhan
So, I'm getting in trouble with all of my IR colleagues for taking your follow-on, Matthew, but I will answer it since we know each other for so long. Right now, our intention is not to move any of our Innovative Medicines business with any consideration with Sandoz. We'll keep Sandoz in pure-play, small molecule generics and biosimilars business. Next question, operator?
Operator
Thank you. Your next question comes from the line of Wimal Kapadia from Bernstein. Please go ahead. Your line is open.
Wimal Kapadia
So just firstly, with Kisqali, you previously suggested that adjuvant is a $6 billion opportunity. But I'm just curious how we should think about it. Because when you look at the epidemiology, it would suggest a much larger opportunity in intermediate pension pool. So, I'm just curious what assumptions you're making in terms of which -- actually receive the drug in this population because really, if you see a decent penetration, the market potential should be significantly larger. And then just to be tricky because we've done one round. Just on sabatolimab, given the delay in filing due to needing Phase 3 OS data and the high hopes that physicians seem to have for VENCLEXTA and MDS in the VERONA trial, I'm just curious how you're thinking about the potential for the product in MDS at this point. Does it now become somewhat of a lower priority, or do you still believe that greater than $1 billion opportunity you discussed previously in MDS is still feasible? Thank you.
Vas Narasimhan
Yes. Thanks, Wimal. On Kisqali in the adjuvant setting, we do believe that with the possibility of adding intermediate risk on top of high risk, that is a significant expansion in the patient population, probably 3x to 4x what we see in the high-risk patient population. We previously guided to, I think, $6 billion based on what we saw in kind of consensus outlooks in various market projections. But I mean I would agree that if we are successful in demonstrating a meaningful benefit across that entire intermediate risk range, there could be a larger opportunity for the medicine. And we're certainly doing that work now as we move towards the final readout of the study. So I agree, it is a significant opportunity and to be a fundamental inflection point for the Company if Kisqali is successful and most importantly, for all of those women with breast cancer who need better therapeutics so that their cancers don't recur. But I think it's a good push, and we'll try to come back with better numbers.
On sabatolimab, I think the data that we have suggests that we need to wait for the OS data in Phase 3. The opportunity for this medicine is both, across AML and MDS. We do know that there is a rapidly changing treatment landscape in MDS. Nonetheless, we think that if the medicine has a unique mechanism of action with targeting TIM-3 and could be used in combination with other agents and if the safety profile would reasonably hold up, we do think it has that $1 billion potential in each of the indications. But I would know, if we need to wait now for the full Phase 3 studies, and it wouldn't be prudent to put too much more on to it until we see that data readout. Next question, operator? And we'll try to do as many as we can in the last 5 minutes.
Operator
Thank you. Your next question comes from the line of Richard Parkes from BNP Paribas. Please go ahead. Your line is open.
Richard Parkes
Just a follow-up on Leqvio in the U.S. Feedback we've received recently from U.S. physicians is that they're still seeing difficulties accessing injection centers and the reimbursement is still challenging. So, I just wondered whether that's just an issue of experience and lack of infrastructure or whether there are the barriers that payers are putting into place in order to manage utilization such as requirements for specific injection centers or anything we haven't expected? And then can I just ask a clarification because I think I heard you say that the final NATALEE readout was the end of next year, but I might have missed that. So, could I just clarify that timeline? Thank you.
Vas Narasimhan
Yes, absolutely. So first on NATALEE, it would be in the second half of next year, which I think is what we guided to previously, not end. I didn't mean to give a new time line. Time line is exactly as we've said previously, so no change in time line.
On Leqvio, I think there is an element of experience and also understanding the Part B and the payer dynamic. There is 30% to 40% of patients who are in Medicare Part D fee-for-service that don't have any relevant blocks and can access the medicines. They assess patients where there is a prior authorization and then there's a set of patients that do have a step at it. And I think physicians are just getting experienced seeing how different patients actually have to move through the system. I think as they get smarter about that and understand those dynamics, as offices get better and as we get better in supporting offices, we should be able to overcome those. And as I noted, we have a very high percentage of patients covered now to the full Leqvio label.
To my knowledge, there's no restrictions on which alternative injection centers or other administration centers that can be used that would really be impacting that perception. I think it's just if you happen to put a certain -- a patient on certain insurance as the first patient through the system, you do have to work through the reimbursement hurdles and get that all set up in the office. Normal things for a U.S. healthcare launch in cardiovascular, things that we’re well adept at managing having successfully launched Entresto and things we're working very hard to resolve as quickly as possible. Next question, operator?
Operator
Thank you. Your next question comes from the line of Richard Vosser from JP Morgan. Please go ahead. Your line is open.
Richard Vosser
Just one on the LOEs that we should expect in '23. I think Promacta is slated, but there are some formulation and use patents that might actually push that out. And maybe similarly, just anything else like Lucentis that we should be thinking about? Thanks very much.
Vas Narasimhan
Yes. Thanks, Richard. Yes, on Promacta, we're continuing to work to really support all the full range of patents we have on the medicine. I think in appropriate time, if we're successful, we'll provide an update on Promacta. But it is something we're very focused on. And then, on Lucentis, we do expect the biosimilar -- a few biosimilar entries in Europe. I think it's important to note that with the broad scale availability of Avastin for now many, many years that we believe the biosimilars market has -- in effect, already happened in Europe. So, we would expect a moderate decline on the launch of the biosimilars, but maybe not what you would see with other biologics when biosimilar entry occurs. So, that's how we're forecasting Lucentis now for the coming years. And one last question, operator?
Operator
Thank you. Your final question comes from the line of Graham Parry from Bank of America. Please go ahead. Your line is open.
Graham Parry
So just one on Gilenya. So, obviously, you've had the overturning the decision from the appeal court and you said you're going to petition. So just help us understand time frame for the petition? Does that prevent a launch happening in the intervening time frame, so your level of confidence that we won't see a launch this year, or is the guidance just a guidance assumption but that could change depending on what happens with the court? And then, just one last one, Kisqali growth was just well above prescription growth, although, obviously, we are seeing resurgence there. Is that reflective of real volume growth, or could it be just a sort of prescription retail versus other channels that we're seeing and actually the reported growth is much more in line with the real volume growth? Thank you.
Vas Narasimhan
Yes. On Gilenya, right now, no generics can enter the market. We are petitioning the court. And we would expect to get a response from the court in the coming months. If granted, then it would be another set of months before the hearing and then the hearing will take another set of months. As a reminder, we guided to generics entering in 2024. So really, what we look at here is between now and that time line when exactly the entry might happen. So, we'll know more, I think, as the court gives us feedback once we -- we have -- yes, we are in the process of submitting the petition. The petition would then need to be reviewed. We’d either be rejected at that point or the petition would be granted and then we would then move forward from there.
So, that's kind of the scenarios right now on Gilenya. But to remind again, the longstop date was any way in '24. So from a midterm growth standpoint, this is not having a significant bearing. Also in Europe, where we were granted the patent by the European patent office, we expect that patent to be issued later this year, and we'll continue to defend Gilenya across Europe. So, a lot of things, puts and takes, I think, on Gilenya at the moment.
And I think on your question on Kisqali, I don't know the answer, so we'll just have to follow-up with you. But we'll get back to you on that to make sure you're clear on the volume price dynamics. But I would say that what we see in our numbers is a strong growth in underlying demand for Kisqali that we'd like to sustain.
So, thanks, everyone, for joining the call. Apologies we didn't get to every single question. But I really appreciate everyone taking the time, and we'll look forward to catching up soon. Bye, bye.
"CFO Harry Kirsch hinted that there may be more excitement for Novartis soon, as the company has “quite significant bolt-on M&A firepower.”
“That obviously depends on the opportunities we find,” he clarified on the Q2 call."
https://endpts.com/novartis-scraps-key-pd-1-submission-while-touting-significant-bolt-on-ma-firepower/
liz, Mr. Zwick was hired to replace Mr. Wills who was on the job for six months.
https://www.linkedin.com/in/alan-wills-86b41312/
Broken calculator?
Teva calls on SCOTUS to take up battle over 'skinny' generic drug labels:
https://endpts.com/teva-calls-on-scotus-to-take-up-battle-over-skinny-generic-drug-labels/
Liam, kicking someone when they are down only reflects badly on yourself.
Martin, please don't post if you have nothing to contribute. HDG is the MOST respected poster on this board.
HDG, thanks for your continued contribution to this board. Can you provide an estimate of the Q2 cash flow range: e.g., -$30M to $0M, etc. TIA!
Kiwi, thanks for posting. I love Dr. Bhatt's suggestion:
"another trial ... "Maybe a different population would be good — such as primary prevention, patients without elevated triglycerides"
It should be funded by the NIH since Vascepa is available in generic form in the US.
KM's career at Merck overlapped with Per Wold-Olsen who joined Merck & Co. (MSD) in 1974. He became Managing Director of the Norwegian subsidiary in 1976 and Regional Director and Vice President of the Scandinavian region in 1986. In 1991, Per Wold-Olsen was appointed Senior Vice President for Worldwide Human Health Marketing of Merck & Co. Inc. in the US, and in 1994, he was appointed President of Human Health Europe of Merck & Co., Inc. In 1997, his region increased to include Eastern Europe, the Middle East and Africa, as well as Worldwide Human Health Marketing. In 2005, he was appointed President of the Human Health Intercontinental Region, Merck & Co. Inc. From 1994 to 2006, he was also a member of Merck’s Management Committee.
https://www.novoholdings.dk/people/per-wold-olsen/
HDG was right. PWO joined AMRN due to his relationship with KM, not Ekman.
Bourla called and Coric answered: Pfizer's offer for Biohaven slid $10.50 per share in under 30 days:
https://endpts.com/bourla-called-and-coric-answered-pfizers-offer-for-biohaven-slid-10-50-per-share-in-under-30-days/
Pfizer and Ionis announce discontinuation of vupanorsen clinical development program:
https://finance.yahoo.com/news/pfizer-ionis-announce-discontinuation-vupanorsen-120500359.html
z, " believe the number of shares that actually registered a vote is less than 25% of all outstanding shares"? Great point!. Does anybody have last year's proxy vote tabulation as a comparison? I expect this year's ABSTAIN vote count to be at least 80M shares.
J, why KM needs to go thru HLS to market V in US? HLS has no US presence. I am sure HLS would love to do it by earning additional fees from Amarin. Amarin would have to pay more to HLS for US marketing than HLS has to pay Amarin for Canadian marketing. That JT fellow sure was a genius.
Thanks raf!. Total weekly V+GV+L scripts of 170K.
So any cardiovascular-focused BPs in Europe should know they could do at least $1.6B/year (170K * $180 * 52) in Europe.
3 times sales, i.e., $1.6B * 3 / .43B shares outstanding = $11/share in EU alone.
Dan Gilbert should be the spokesperson for Vascepa:
https://www.deadlinedetroit.com/articles/29052/video_28_months_after_his_stroke_dan_gilbert_is_getting_better_every_day
Thank Liz! I am going to vote for all my shares ABSTAIN by following Denner's instructions. Glad to see Barton came on board. Too bad BVF is gone.
Regarding NICE, did it mention only about 425K patients meet the Vazkepa label criteria hence eligible to be prescribed V? Or the real-world prescribing situation is not as stringent that Amarin could sell to a potentially larger population?
Michael Yee
Thank you. Well, good afternoon, everyone, and thank you for joining us at another great session here at the 2022 Jefferies In-Person Healthcare Conference. It's great to see everybody. We have Amarin with us here on the fireside panel, and I'd love to introduce Karim Mikhail, President and CEO. Thank you for being here with us. I would love for you to maybe just start off with sort of a high level perspective about 2022. I know you reported earnings or some challenges with that, but you guys are obviously executing in Europe as well. [Indiscernible] maybe just make a couple of comments about what you're focused for 2022?
Karim Mikhail
Sure. Happy to be here. And again, you know, the true growth and, you know, value creation for Amarin is really going to come from European growth, European launches, and international expansion. So, everything we do on quarterly, weekly, monthly basis is to make sure that we get ourselves positioned for success for these launches in Europe and big part of that was really depending on the U.S. market and U.S. market performance to ensure that we can internally fund the investments that we need for that European launch.
So, 2021 we've had one and two generics, and by the beginning of 2022 we've seen significant shift in market dynamics in the U.S. with the third of genetic entrant, which has impacted our first quarter revenue. This was – some of it was anticipated. I think the volume impact that we've seen in the first quarter not unusual, but what we've seen in terms of channel disruption, what we've seen in terms of price erosion was higher than was anticipated.
That's why we reevaluated our plans and we announced two days ago an important restructure to make sure that we are very focused on cash conservation and making sure that we are continuing to be well-positioned for financing our investments and launches in Europe successfully.
Michael Yee
So, we going into that a little bit, that announcement was made obviously very recently. What was the announcement? What are the changes? What spurred the changes? Why all of a sudden, the middle of, you know, end of May, you know, beginning of June, what now?
Karim Mikhail
Sure. So, first of all, this was a true reevaluation of where we stand in terms of our cost. structure. When we did the first reduction of outfield force in the U.S. in October. We already highlighted that this was a first step and if there is a change or a shift in market dynamics that we will act again if need be. So, we did that today because we have had at least the third genetic from February until today.
We see a number of variables and how things are shifting in terms of competition within the generic space, competition within the exclusive versus non-exclusive segments where the price levels are, and that's why we wanted not to wait for Q2, Q3, Q4, but to act ahead of time to conserve the contribution margin that's delivered by the U.S. market.
Michael Yee
I mean, that's a great point. So, on one hand, you said there was an earlier cost structure adjustment late last year that you would be cognizant and watch things. And so therefore, you made another adjustment and just to be clear, I believe it's a $100 million annualized savings that will start to go into a factual 100 million annualized and that was as the market evolves. So, was there something other than a generic that launched in February that changes the pricing changing, actually I think it is possible, but is that actually a signal that the U.S. is starting to pick-up the pace the wrong way? Because I look at the [scripts] [ph] are basically slowing. I mean, I don't see any big changes. [Is that going] [ph] to happen?
Karim Mikhail
Yeah. Look, if you look at our erosion overtime whether we have one, two, or three generics, you cannot really tell how many number – what is the number of generics? We've been on steady erosion ever since. However, that just shows volume. It doesn't show the evolution of the price. I think the biggest impact that the third entrant created was an impact mostly on price, not just on volume, right?
It's making the space more competitive price wise, and for us, we set a level upon which we believe it's where we need to compete and where we're not going to go beyond because this is also not a product where you would want to just compete in price. And that's especially at the time when you're negotiating prices in Europe, right.
Michael Yee
That's a good point. So, to close out on that, on your Q1 earnings call, was the price of that generic already known? Have you commented on that or that you continue to see evolving price [indiscernible] after going June, so investors should be aware of that, that you're seeing it go the wrong way, and that's why we're kicking the strict action?
Karim Mikhail
No, we've seen, you know, the initial steps of price competition, especially between generics. I'm sure you've seen that there was a big shift between the three players where one displaced almost two-thirds of the volume of the other. This is just the perspective of us and how we did. There was a huge shift in volumes between the generics and that was driven by price and that's driving more price competition in the space.
Michael Yee
So that was the third [indiscernible]?
Karim Mikhail
Yes, exactly.
Michael Yee
Okay. Alright. So, then to close out on U.S., what have you guided to or what are you telling investors to expect then for Q2, Q3, Q4?
Karim Mikhail
Look, we expected continues intense, you know, generic competition. You know, this is going – the second quarter is going to be the first full quarter of the second for the third generic coming into the market. So definitely, we don't anticipate that the competition is going to get less, right?
So, it is intense, and as I said, that's why we took action to basically preserve cash, manage our contribution margin. We did communicate before that we've had positive contribution margin from the U.S. and the actions we took 48 hours ago, two days ago, have as an objective to sustain as much as possible of the significant positive contribution margin from the U.S. business.
Michael Yee
Okay. I need to do some math on that, but it was – U.S. was positive, profit contribution.
Karim Mikhail
Exactly.
Michael Yee
The fact that you have got a 100 million annualized is a reflection of still trying to make sure that it's profitable. Just wanted to do some math on that, but one should expect a full large impact for Q2 after seeing Q1. So, Q2 will be done again, obviously.
Karim Mikhail
Potentially.
Michael Yee
Let's shift gears. I think most people know that there's challenges in the U.S. Based on our model, the $100 million annualized cost savings actually reflects, according to our model we’re actually somewhat in the [low consensus] [ph], a net profit that is actually flat to breakeven, but one in which you're not burning a lot of cash. Do you think that that is an accurate reflection and talk about how Europe needs to pick up?
Karim Mikhail
Sure. So first of all, the 100 million that we are talking about is net of additional investments in Europe. So, while we're doing this exercise of sitting in the U.S. we're taking into account that we will need additional investments in Europe. So, we're not sort of saying, oh, this a 100 million of savings in the U.S., but actually we're going to probably spend more than that in Europe and the net is nothing. This is actually net of additional European investments that we are making.
So that's just on that part. Going back to cash burn, there are specific events that can impact multiple quarters, but our key priority is cash conservation at this point in time. So, we are doing everything possible in terms of cash burn to ensure that we either hold completely some of the elements that deal with that or to lay them or sequence them, including by the way re-evaluating our European investments and the sequence of our European investments.
So, we have already said that we are very thoughtful in how we sequence investments in Europe based on pricing reimbursement. We said that we’re not going to higher significant headcount unless we are very close to pricing reimbursement. We want to reaffirm that we are going to be even more disciplined with that, but we do expect, as we disclosed before, a number of positive pricing reimbursement decisions this year, right.
Michael Yee
So, going to that bit. So, obviously, in Germany, you're launching, it's underway, there's, as we all know, [indiscernible] price there, ultimately, you're still negotiating. Have you announced prices in other countries? Can you talk about where you feel price will come out in some of these countries this year? And what is the expectation of price relative to, you know, [obviously] [ph] originally U.S. pricing, but, you know, what is the expectation for European pricing?
Karim Mikhail
So, we already have one first European country in the Nordics. So, Sweden has already approved a reimbursed price at the level of EUR160 monthly, so $180. So, this is, you know, in-line with what we communicated before to be at the same level or higher than U.S. net price.
Michael Yee
EUR180 per month?
Karim Mikhail
Per month. EUR160, a $180.
Michael Yee
It's almost one to one, you know that's okay. But yeah – okay, so [US$200 times 12, 2,400] [ph]. Okay.
Karim Mikhail
Exactly. And again, this is the first country that has pricing and reimbursement. If you look at the average reimbursed cardiometabolic price for patient, for products, for such huge patient population, so products that are not for the hundreds of thousands of eligible patients in the millions of patients. You usually are in the range of between EUR2, maybe EUR3 a day net, while what we are getting here with Sweden is somewhere in the EUR5 plus. So, we're very satisfied, confident with that level of price, because we've had a very important value-based strategy to basically say, we're not pricing it based on a profit you want to make, we are pricing it based on the value we bring to you, the Swedish government. And we're doing the same with the UK. We're doing the same with other markets.
And the next key milestones is hopefully other markets, basically approving that type of price. We have advanced significantly in the UK negotiation. The UK is the most sophisticated complex health, you know, assessment technology body in Europe. And we have had three rounds of negotiation and we expect an opinion imminently. So, this is going to be over the next few weeks. That's really the time frame. And that's going to be an important catalyst if, obviously, the UK comes back and says, I am willing to reimburse. I am willing to reimburse in that patient population, which is so far, is really our established CVD patient population, which is a very significant population at a price that is not too far at least that's what we are targeting, not too far from what the Swedish price is. So, that's what…
Michael Yee
That would be about positive announcement. Okay. You feel good about the negotiations through rounds. Obviously, from a practicality standpoint, can't be a huge difference from the good, healthy, Swedish price, and that will be announced. And you would press release that or if you could…?
Karim Mikhail
Yeah. Usually, companies would always press release a nice assessment. And usually, there is a confirmation of that final opinion. Six-weeks later, usually company also press release that.
Michael Yee
But, yeah, we wouldn't put [indiscernible] pricing. You would agree that you came to an reimbursement agreement, that's the press release.
Karim Mikhail
Yes.
Michael Yee
An analyst would come up with their own views about [what that is] [ph]?
Karim Mikhail
Exactly.
Michael Yee
Okay. Okay. But I heard when you said about being reasonable and some parity on price [indiscernible]. Okay. And what about other countries?
Karim Mikhail
Yeah. So, you know, there are countries where the process is pretty public, so you can really follow it up. UK is the example. You can actually go and read all the scripts of every meeting with all the discussions, you know, I have done. An analyst [Multiple Speakers] So, but, you know, other countries that make their reports public is France, for example, so we currently have a positive reimbursement opinion that is public, so you can actually read that.
We also have a beginning of a price negotiation in France, having said that, negotiations in France are usually very tough and will take longer time. They usually like to wait less because they have the largest patient population in most European countries, but we're making very good advances in Italy. We're making very good advances in Spain. We're also making good advances in other Nordics countries and in the Netherlands.
So, you know, we have 10 dossiers submitted, so you have ongoing negotiations in most of these countries. And in our next earnings call, we're going to also disclose the additional countries that we are submitting in Western Europe. So we said that there is a wave two and the wave two is being submitted.
Michael Yee
So, you're making progress across Europe. You believe that the price that have already come out from one region and then soon perhaps the UK that that's all going along the right trajectory. So, price is looking good. Volume is also the other side of the equation, and people believe that in a improving COVID situation, that that will be better, but European launches take time, adoption takes time. I don't have a strong view about how the Europeans will adopt versus U.S., U.S. having a pretty strong [option] [ph] with [indiscernible] patent situation. And so, what are the expectations? Do you feel that that would be a better launch, but on the other side, people do not have the trade experience before such a brand new drug? I don't know if there's views about how people view, obviously, appear to be molecule. So, how do you – what is your expectation?
Karim Mikhail
Well, there are multiple variables. Yes. In the U.S., you had almost five years of premarketing, or four years of pre-marketing where 100 to 400 people were visiting physicians talking about triglyceride lowering and potentially cardiovascular risk reduction. So that impacts a launch uptick. I don't think it impacts peak per se. It impacts the uptick. So, in Europe, we don't have that luxury of – we're actually very, very measured of how much pre-marketing we do, not to burn cash too early without clarity on pricing and reimbursement.
Having said that, in European countries, just having a positive pricing reimbursement is a very significant step to establish your value for a physician, right. Because they not only understand that you went through the EMEA approval, but you actually went through, take the example of the UK. You actually went through a very complex machine, right or nice assessing every statement you made, every claim you made.
So that gives you a bit of a, you know, [indiscernible] validation going into the market. But you still have to go through the awareness, adoption, trial usage. [Indiscernible] switch takes a bit of time, and products differ. You've seen a product like CRESTOR took a lot of time to pick up, but ended up still with a very significant deal. Some have a faster penetration, but the good thing about most cardiometabolic products in Europe is that you can see that year-after-year there is significant growth that keeps coming back.
Could be slow at the beginning, could be faster at the beginning, but you rarely see a product that actually stops growing in the cardiometabolic space in Europe just because the eligible patient populations are huge.
Michael Yee
How – so talking about prices continue to dig into volumes, so how is the perception, and, again, the planned adoption of a unique fish oil product perceived there versus say the U.S. where, again, it had already been on the market for a long period of time? Greater education, greater awareness, I might even do some surveys, greater utilization of the generic fish oils, etcetera, versus U.S., I actually don't know that, but is there anything on the margin that you like? And then are there any challenges there?
Karim Mikhail
So, the most significant effort we're doing in Europe today is medical education, through our medical affairs team, right. We have a very, you know, robust team. All our medical directors on in the markets are mostly cardiologists, bringing in expertise and the product is not positioned as the [fish oil] [ph] is actually positioned as icosapent ethyl, which is a very unique entity that's, you know, the status that we have by the EMEA, which basically says, we’re different from anything else.
As a reminder, EMEA did withdraw all cardiovascular claims for all Omega-3 mixtures in Europe. So, we are coming in where there was a bit of clean up from a regulatory perspective done before us because nobody had evidence. Having said that…
Michael Yee
Let me be clear. I mean, they pulled all other Omega-3 mixtures to the [EMEA] [ph], but proved yours, they pulled all cardiovascular claims?
Karim Mikhail
They are all on the country, on the market, but they cannot make cardiovascular claims because they never demonstrated.
Michael Yee
[Indiscernible]. Okay. And so then they improved yours. And then you're actually getting reimbursement for these, which again goes through the validation that the regulatory bodies agree.
Karim Mikhail
Exactly.
Michael Yee
And pay for that news.
Karim Mikhail
Now, let's not also forget that this is a completely new paradigm. This product is coming after 30 years of LDL reduction and many of us on the team, we're involved with the LDL paradigm, you know, I personally launched both statins, ezetimibe and other products in that space. So, it definitely takes time to make that shift. However, as a reminder, both European Society of Cardiology and EAS, European Atherosclerosis Society, both had [the skipper] [ph] on the guideline before we got regulatory approval.
So, from a top scientific leadership endorsement in Europe is, definitely needs support. What we need to do is, take the time to work with this scientific leadership to cascade this education to top scientific leadership country by country, and that's work that we started to do even prior to...
Michael Yee
So, is VASCEPA listed in like the top tier rating for the treatment guidelines in Europe?
Karim Mikhail
Yes. So, the way European guidelines work is you work by level of evidence. So, if you have one study, it's not like two, it's not like three. So, obviously, we have one study, so we're rated accordingly, but based on that, we actually have the best position we could get with one cardiovascular outcome study.
Michael Yee
Okay. I mean, I had to pull it up, but like for high triglycerides, what does it say?
Karim Mikhail
Oh, well, it uses high triglyceride as a patient profile, but in reality, it is positioned as a cardiovascular risk agent. It is not just listed for triglyceride lowering.
Michael Yee
Okay. Alright. So, you're executing on the pricing negotiations that's proceeding well on volume, there's education and you're working through that and you feel like guidance, treatment guidelines and all these others and obviously in validation by reimbursement would support why uptick and volume should grow, but it takes time? Two questions, one is, people worry about the branded life period for in Europe, do you believe that it is a 10-year base case, because you were granted 10-year EMEA protection for a new chemical entity, molecular entity. That's very important. We saw that with [indiscernible]. So, is that your base case or are you telling people no, it’s going beyond 10-years because you have are cardiovascular patents? I don’t know if they are [a real issue] [ph]. So, we feel very confident it won’t be [10 years] [ph]?
Karim Mikhail
Look, we have cardiovascular patents that go beyond the [10.31] [ph], which are the 10 years, but we are currently just, you know, in Europe, data exclusivity is very, very strong, right, because it, you know, a patent you know, can be challenged. You can enter into different negotiations. So, regulatory exclusivity is the most critical one. We believe that with the fixed dose combination, we can get additional data exclusivity of at least one year. So, we know that the 2031 could be 2032 for sure with data exclusivity.
We have patents that go one or two years more than that, and we will do everything to extend the life cycle in Europe because if that product, you know, reaches its peak and we said it's going to be more than a billion dollar. One year is a billion, right? So…
Michael Yee
But 10 years is a base case. Data exclusivity protection in Europe is strong, because that’s like [Tecfidera] [ph] is still branded in Europe, and the U.S. has gone generic for Biogen. And we believe that cardiovascular patents for the [CVOT] [ph] have been filed or issued, and so we believe that even if someone were to come and try beyond the 10 years that they would be violating the cardiovascular [indiscernible] I'm trying to figure out, how long the cash flow is going for? [Technical Difficulty] So that leads us a minimum 10 years. So that leads us to some additional questions in the last two minutes, which was a, people believe you remain an important strategic, a wholly-owned European asset in U.S. that you're on a primary care setting. These takes huge expenses and infrastructure as you rightly know. So, why do you believe that there is a strategic optionality for your asset, do you believe it's in the right interest of shareholders to consider those types of things and simultaneously with that, obviously, it's out there that the number one [older in stock] [ph] is [indiscernible], they haven't said anything, but, you know, that that raises eyebrows for people about your ability and priority to maximize shareholder value beyond just [Technical Difficulty].
Karim Mikhail
Yeah. So look, this is what the job is about. The job is about, right, maximizing shareholder value. As we see it today, everything we're really focusing on is what will create shareholder value. For example, every price we get in Europe is what's going to create value. Right? And remember, we're not there yet. You know, we're still starting with the first country. Hopefully, a second big one will come soon. And that will move us a lot closer to creating that value.
Having said that, while we're working on all of this, we are very open and very engaged with all our Top 10, I would say, even 15, and some of them are in the room. So, you know, and all of them have been incredibly supportive, but also challenging to us, to, you know, the right way. And we have very stimulating, engaging discussion. and it's a dialogue on how to do better overtime for all shareholders.
There is no dogma about a certain position or a certain opinion. We were asked for example, why aren't you open? And I think you did ask the question before, Michael, about partnering or not. And today, our partner HLS in Canada has Pfizer, promoting for primary care. That just shows that we allowed it, if it makes sense, if you're going to get the right support. So, look, there is not, you know, an opinion or a view or a position that is out of the table. Everything is on the table.
If it's going to create better shareholder value, we're going to explore it. We're going to make sure to, you know, decide what is right at the end.
Michael Yee
Alright. So, look, you're continuing to remain open and engage with that wisely cut the operating expenses to reflect the U.S. situation shifting over to Europe to invest in that, but being really right minded about investing until you've got pricing and so you're being smart about that. And meanwhile, continue to have dialogue and open to anything that’s on [indiscernible].
Karim Mikhail
Yeah. Great.
Michael Yee
Good. Very good. Thank you very much for the time. Appreciate it. Looking forward to progress.
Karim Mikhail
Thank you.
Michael Yee
Thank you.
Does anybody on this board who had caught covid that developed cough symptoms? Just wondering what's the best way to treat the cough while recovering. There's no fever or other symptoms. I am asking for a double-vaccinated 17-year-old teenager who attended a high school gathering of 400 people in a small auditorium last week.
Yes, unfortunately, the market is also crashing as we speak.
Kiwi, good found. However, IMO, MITIGATE results would only provide insight on covid but not so much on CVD if event curves don't separate as patients are not monitored for statin compliance and other issues.
Kiwi, Dr. Bhatt tweet today has nothing to do with MITIGATE, so I don't see any "wink wink nod nod" from him.
Kiwi, did the JELIS secondary prevention curve separate within 1 year? I don't think so. You are just extrapolating the potential MITIGATE curve without knowing every detail of the MITIGATE trial design, patient population, etc.
What gives? There were aggressive early sellers within the first hour after the market opened pushing down AMRN stock price. After the sellers were gone, AMRN stock price pretty much tracked the IBB.