SunTrust 2Q16 Preview – REDUCE-IT Interim is the Focal Point as Vascepa Revenue Ramps
Vascepa+53% YoY / +14% QoQ TRx growth; REDUCE-IT Interim analysis in Sep/Oct‘16
What's Incremental To Our View
We maintained 2Q16E sales at $30.2M vs. Street’s $29.3M & LPS at(-$0.11)
vs. Street’s(-$0.13). Our 2Q Vascepa sales are $29.7M(+68% YoY; +53%
TRx’s+6% price) as ANCHOR/JELIS promotions ramp. Vascepa had 5 fewer
wholesaler days in 1Q16, implying +$1.6M upside to our 2Q est. Our FY16E
sales/LPS is $121.6M/(-$0.34) vs. AMRN’s $105M-$120M range & Street’s
$121.5M/(-$0.53). REDUCE-IT results needed to expand Vascepa market
oppy, with the event rate tracking to plan & triggering a pre-specified interimanalysis
in Sep/Oct’16 by its Data Monitoring Committee. Reiterate Buy/$6PT,
supported by DCF.
2Q16E sales above at $30.2M & LPS (-$0.11) vs. Street’s $29.3M/(-$0.13)
We maintained our 2Q16E sales at $30.2M vs. the Street’s $29.3M based on
Vascepa’s quarterly total prescription trends (TRx growth +53% YoY [+14%
QoQ] & +6% price increase over the last 12 months). We model gross profit
at 73.0% vs. the Street’s 75.3%. We model a lower operating loss of -$14.5M
vs. the Street’s -$19.0M, yielding an LPS of -$0.11 vs. Street’s -$0.13. AMRN
indicated on its 1Q16 call (click here for note) that Vascepa had five fewer
days of wholesaler access in 1Q16, which implies +$1.6M potential upside to
our Vascepa sales estimate. AMRN had also indicated that in April, the FDA
removed the label of all fenofibrates & prescription niacin drugs (and associated
combo drugs) used in combination with statins for reducing triglycerides due to
a failed outcomes study (click here). Vascepa currently represents only ~20%
of the prescription omega-3 market, suggesting potential for further upside.
Vascepa’s managed care access improved with >140M patients covered at
Tier II (low copay) formulary status [total of 200M lives under coverage]. Our
model assumes 2016 Vascepa sales ramp sequentially given AMRN & Kowa
Pharma(private) sales forces rolled out their respective JELIS promotional
efforts in 4Q15 (Dec) & 1Q16 (Feb). The addition of the ANCHOR & JELIS
data in the promotional cycle is helping to drive robust TRx growth in 2016, with
Vascepa sales ramping throughout 2016. We model $119.6M (+48% YoY) in
2016 Vascepa sales, compared to Street’s $116.0M.
REDUCE-IT pre-specified interim efficacy analysis in Sept/Oct 2016
The next most important catalyst for AMRN is the outcome of AMRN’s
REDUCE-IT trial. REDUCE-IT has the potential to be a game-changer in the
Vascepa life cycle, since it could lead to a meaningful expansion of Vascepa’s
label and commercial opportunity in patients with high triglycerides who are on
