Roanna Ruiz
Great. Welcome back, everyone. I'm Roanna Ruiz, Senior Biotech Analyst here at SVB Securities, and it's my pleasure to introduce members of the Amarin management team, specifically, Karim Mikhail, President and CEO and Tom Reilly, CFO. So welcome. Thanks for joining us. And I'll pass it to Karim now to kick off the presentation about the company.
Karim Mikhail
Hi, everyone. And thank you so much for joining us today. And thank you, Roanna and SVB Leerink for the invite. My presentation contains forward-looking statements, so for a full risk of -- list of risk factors, please do consult our SEC filing.
I want to start with 2022 and the achievements of 2022. This has been a challenging year for Amarin. We started the year with the introduction of a third generic to the market, where we've had an impact on revenue and impact on cash. But we have delivered this year on every objective that we've had in a consistent way. So successful execution of the global commercialization where we have achieved five country reimbursement where we launched in five of those markets. Internationally, we had six additional regulatory approvals and where we've made very good strides on building the team in Europe where largely in those five markets and regionally, we have really invested in the teams that we need for the launch and we're sort of getting ready for the next phase of country launches.
In terms of progress on cash preservation, which is top priority for 2022, but continues to be a top priority in 2023. We delivered an actual saving of $50 million in the second half of 2022 on track to achieve a $100 million, maybe above by mid-2023. Our renegotiation of supply agreements continue to make progress resulting in significant production of our inventory purchases. All of this has been achieved via a true energetic, new leadership team, but also, a truly refresh board where we've had, again, 70% of new board member in the year 2022.
Our strategy to recreate the value that was basically lost post US IP litigation is very clear. We are set out to create that value of us get by ex U.S. in Europe and international. So the number one priority is really geographic expansion. It’s Europe, international and you've seen that in 2022, we have had significant progress on pricing reimbursement in Europe, but also regulatory approvals in additional markets. We made a lot of effort and continued to advance on our operational evolution objectives, which is really how can we save costs from all our non-revenue generating expense, right? We are very conscious that some of our expense base are revenue generating expenses. So we do cut them, but we're very sensitive as to what we cut and when we cut them because it's important to maintain them to keep the revenue in the U.S. But also advancing on the portfolio diversification with the FDC pipeline will give a bit of update on where we are in terms of getting EMEA guidance on how it's proceeding there.
So let's first start with the U.S. where two years after generic launches, you would expect that we have lost by now more than 90%. Actually, you would expect that we would have lost 90% of the value maybe six weeks after the introduction. We still maintain 60% of market share with four generics on the market. And again, we have delivered that while we reduced cost of the U.S, field structures starting October of 2021 when we cut half of the field force in the U.S., then 75 of the remaining where we are today, only 10% of the field force that with their big, big testimony of the drive of these teams. I mean, they are doing a great job on the field. And with the managed care group, securing the exclusive, making sure we are where we are in terms of delivering performance on the U.S. level.
Having said that, it's been very dynamic, we've had a number of scenarios moving forward because this is a very dynamic space. So, where do we stand today and as we start thinking, look, there is a full generic, we will have to see what can happen. The first quarter of the year for a branded product tends to be soft in any way because of out of pocket deductibles versus generic. Having said that, our objective is to maximize profitability and we can still do that even with a Teva on the market unless there is significant erosion on the price. But if there are unforeseen events, we have a plan for further operating expense reduction, obviously. But we are also ready to enter into a branded generic mode, but also an authorized genetic mode and other strategic ideas that would still allow us to be profitable in the U.S. and to generate the cash that is needed for us to invest in Europe and complete the launches across.
If you look at the performance in Europe, we started the year 2022 with only one country where we are negotiating pricing and reimbursement and it was a tough year where governments are getting out of COVID and old public budget deficit that they were dealing with. And we finished the year with five countries where we have achieved pricing and reimbursement and where we are launching successfully. And the most important proxy of the success that is achieved in Europe and maybe it's the first time we share this type of data. So clearly, as now -- you can see now the difference in our daily treatment price that we have achieved in the UK compared to other cardiometabolic products that basically operate in the same therapy area, competing over a similar patient population where we have demonstrated to the UK government and NICE that EUR5 euro plus is the price that the UK government needs to pay for the value provided by the [indiscernible]. So, the UK would not allow -- would not be ready to pay EUR5, while they're paying EUR1.5 and EUR2.5 and EUR3.5 to other products unless they believed that what was presented to them as evidence for VASCEPA actually saves them budget. This is really what the team delivered in the UK is demonstrating to the authorities that this is a product that's coming with very serious evidence that it will save budget for NHS. And by demonstrating this budget saving, they could allow us to have this price, which is, by the way, compared to any others is not discounted. So unlike many other products, this is the tool visible list/net product in the UK, and we believe that that's the most important proxy for success in the UK and in other markets.
Having said that, I just want to summarize a little bit where we are in the UK, because it's really the -- the top five market where we're launching today. Believe it or not, the journey is not five years old. Right? We got approval in April 8, 2021. We completed the file and submitted the data for the UK, for NICE in July of 2021. And we got that approval basically 12 months, after four nights review. So from a timeline perspective and despite the fact that we had three rounds of negotiations, it's been quite relatively quick process where we have achieved very important price levels. You can see that we did not hire our key account manager team except one month before we got. The approval is exactly the same what we promised. We're not going to burn cash too early. We're going to wait until the last round when we see we're very close to getting a price that we do not burn cash unnecessarily. And we launched very early on in October and in November, VASCEPA was listed on the national lipid guidelines which included VASCEPA and triglyceride testing as a necessity now for patients in that space.
And if you look at -- and this is the first time we present this data. If you look at some of our early launch metrics, you can see on the left side, this is the formulary listing uptake in the key accounts of the UK. So once you have approval, you need to go and get listed on the formularies of all the key accounts at the UK. There are in total 142. And we have achieved up to now 83 listing. Now if you compare that to the latest two launches, Right? So Bempedoic acid by Daiichi Sankyo and Inclisiran by Novartis, which is originally the medicine company. We are ahead of both of them. Interestingly, also ahead of Inclisiran where there is a population health agreement. Right? Where theoretically, NHS is making a very big effort to make this product available for a very significant discount that Novartis is offering, which we are not offering, so they full are priced and we are at the same level as not higher our formulary listing in the UK.
Now if you look on to the right hand side of the slide, you'll see the availability index by account, which basically tells you who can prescribe. So it's the level of prescription freedom for specialist NGP's. And you can see, and this is ranked by order of importance of priority, 100 means that anybody can prescribe VASCEPA to their patients, whether it's a specialist GP, whether it's a new or a repeat prescription is basically full access and you can see that there is very significant progress there in terms of accessing the GP. So we're very early in the launch phase, but we feel very encouraged by the early metrics. If you add this to the positive price that we just shared, we believe that that's going to maximize shareholder value in the UK and in Europe.
If we move to the international regulatory approval, we already have the first wave complete of seven countries, up to now six of them achieved in 2022. Most importantly, in Australia, New Zealand, and -- we will have more countries obviously to add to the list in 2023, 2024, 15 of them, including China where the latest information we have from our partner, adding that the approval is expected in the first quarter. There has been a delay due to the zero tolerance policy of the Chinese FDA, and they had to close down for a month. But now there's sort of back to operation and we wait to hear from them where we stand in terms of approval. And we are actively negotiating in many of these international markets like Australia and New Zealand, like Asia, like Central Eastern Europe, which by the way if you remember, we have regulatory approval in Central Eastern Europe, and we said we are not going to go ourselves and build any infrastructure, we're going to partner. In these markets, we're making very good progress and all of these partnerships we are taking very much into account that flexibility in the future is priority number one in case there is change of control of the company, then that would not prohibit any [indiscernible]. So that's an important area where we're also making progress.
Now I want to remind people that the chapter that we are in now, which is the chapter of new Amarin. When we started in 2021 after losing the IP litigation in the US, where the objective -- my objective, and the objective of my team member when I became CEO in August of 2021 and my team, most of them, joined in 2022. Actually, the large majority joined in the second half of 2002. Our mission is to recreate that value for Amarin outside of the US. This was a company that was expected to deliver the $3 billion to $5 billion in the U.S. We believe there is potential in Europe, potential in international markets to deliver $1 billion plus in Europe and $1 billion in international. So recreate that value and that's a journey that takes time. The last time ever faced such a challenging 2012, 2013 after the anchor data it took many years to get the REDUCE-IT study and go back to the level of market cap that was expected for the company, but we haven't worked on this journey. And we have dealt with this with urgency from day one.
In the U.S. one might think that the easiest thing was just withdraw all efforts and just pull out all expenses. But if you face a 90% erosion of your revenue, there will not be any cash left to invest in Europe at that point in time. So we had to negotiate exclusive agreements very early on and before anything. We started this in July of 2021. We actually started this before I became officially CEO, and we started the reductions in different phases. All of them timed and sequenced. They're being learning with how their revenue is declining so that we don't walk faster. Well, we don't dance faster than the music. We have to the tune in sync while also renegotiating the supply agreements. So huge effort done there, Tom and the finance team did a lot of effort in renegotiating all expenses that were not revenue generating from the corporate headquarter, at least to many of the non-revenue generating expenses to ensure that we focus all our investments on revenue generating investments.
And as you can see, 2022, we already sort of pre announced that we're going to have a fourth quarter that's going to be in the range of $88 million to $90 million, which basically means that despite all of these challenges, we've had four quarter of consecutive stabilization of the revenue. Despite generic activity, despite very significant cost cutting measures but because they were done strategically and at the right pace, we were able to stabilize the business and refer it from prior slides, if we face additional challenges we are ready to take further actions to ensure that we maintain this level of profitability. And I think the best closing of 2022 is when we've had that very consistent turnaround of the cash burn from $100 million cash burn in first quarter of 2020 to $65 in 2020 -- in the second quarter 2020 and the third quarter and then ending with a cash flow positive in Q4. Now obviously, you know, we will have quarters where that number will evolve. We hope that we will be investing more in Europe because it means more reimbursement. But it means we're on the right track to create value outside of the U.S. and take the company back to where it needs to be. So overall, very solid performance and very successful turnaround in the year 2022.
Strategically speaking, we still conserved the budgets and the investments needed for a fixed dose combination. The process is underway to seek scientific advice from EMEA in Europe because we believe that these fixed dose combination can bring in enormous value in Europe. Simply because they allow you to continue your penetration rate growth consistently throughout the life cycle. And we have data from private launches, and I was involved myself in the [indiscernible] launches in Europe where you can demonstrate that by introducing additional fixed dose combination every two to three years. You just keep your penetration rates up and growing with no slowing down throughout the life cycle of the product. So that's definitely something that we're working very hard to deliver. I know we got questions on. So what are we doing for the US for a fixed dose combination, we will have the opportunity to also bring it to the U.S. I think it will all depend on where the price of VASCEPA monotherapy will be if the price is still at the appropriate level, we believe we can bring this product to the U.S. But for the moment, we believe there is just significant value in Europe.
And only with the value created in Europe, it is definitely worth the investments for fixed dose companies' standards. Our priorities in 2023 are very clear. Right? We continue to make progress on all reimbursements, moving well in Spain, in Italy and the Netherlands and France and other countries. We maintain a full focus on profitability in the U.S. it's all about generating net cash that is necessary for the launch in Europe. The only way of doing this is to focus on operational excellence and to continue all the regulatory approvals outside, get new partners for the international markets and advance the fixed dose combination, which will allow us to bring additional products to the market.
So, yes, it is it is actually in a number of bold ambitions for the company. A challenging turnaround, but where the team -- the executive team, but also the board have demonstrated that they have a clear strategy, a clear vision of where we want to go that we are executing on the strategy and demonstrating success both in the U.S. and in Europe and on the international level. And again, we look forward to sharing more progress in 2023. 2023 is going to be another critical year where we hope we're going to be able to communicate positive milestones that will enhance the company value and will get us closer to achieve -- achieving our objectives.
So with that, I want to thank you all, and Tom and I are open for questions.
Question-and-Answer Session
Q - Roanna Ruiz
Great. Thanks, Karim. So I'll start it off. There is a common investor question that I've been getting recently. So if you could talk a bit about the outlook for Q1? And what do you expect in terms of the U.S. revenues for VASCEPA?
Karim Mikhail
Yes. So you've seen that we've had stabilization of revenue throughout 2022. Big part of this was the effort that was done to stabilize the decline on the volume. So from a volume perspective, currently, we're basically in the 2% to 3% quarter over quarter. We don't anticipate that this will change dramatically. We'll have to see what Teva will do. Teva is not yet on the market. So we suspect that they're obviously going to be more maybe volume erosion when they come to the market, they will take volume from other genetics, but potentially also from us. And there is the price erosion that would be expected from year to year. The very good news that until today or mid-February, our exclusive position is still strong. We have a lot of inventory. We are ready to be as competitive as we need to be to ensure women. Having said that, Q1 is a soft quarter usually. So we expect to see a bit of softness in Q1. But for the moment, we continue to strive for positive profitability moving forward.
Tom, do you want to comment anything on expense maybe? Because it's also important on the same lines.
Tom Reilly
Yeah. Just two components. One on the revenue piece just to add one additional point. Historically, trade inventory patterns in Q1 related to the wholesalers also brings some softness. And that's not just our product, but overall, products of similarity as well. So just keep that in mind. And two, I think it was -- Karim mentioned it a few times during his presentation. Our operating expenses based off the announcement we did in Q2, we are ahead of those -- our expectation. So we're achieving above $50 million we reiterated that we were going to exceed. We were going to achieve a $100 million of savings. So our operating expenses are ahead of that. And when the upcoming earnings come forward, we'll be readdressing that as well.
Roanna Ruiz
Great. Super helpful. And I actually thought your chart of the initial market access performance in the UK was very interesting. So maybe could you elaborate a little bit on what are the drivers behind that growth? And when do you think you could reach more majority favorable access and coverage in the UK?
Karim Mikhail
So the main driver for that is really the effort of our key account manager team at the local level. So NHS provided, basically, open access. They're allowing us to go account by account and negotiate the listing. We have very strong evidence and because we took the time to build a patient level for macroeconomic dossier for the UK, we are able to demonstrate to all of the authorities what value can we bring to them. Which you can see basically resulted in a significant uptake on the listings. Our Medical Affairs team is doing an amazing job educating all the key stakeholders. We are now listed since November on the national guidance. That's a very important effort. So I would say from all aspects, there's just huge progress made at a local level. Everybody is working with one very clear goal is to make sure that this is a true success. And again, as I said, we hope we could also share more of the data, especially, in revenue. The challenges compared to many of these products where we showed the prices, they have a lot of confidential discounts. So the comparisons are not going to be fair because for us, we're giving no discounts. So what you see is what Amarin gets in their pocket at the end of the year, while for all of them, no exception, there is a significant discount made especially for the injectable biologics, like Inclisiran and others, discounts can go up to 80% or 90%.
Roanna Ruiz
Got it. And I got a question from the audience that tags onto this pretty well. So I'm curious if you have any updates on the NHS budget allocations? And is this starting to benefit VASCEPA over time?
Karim Mikhail
Now remember, we negotiated with NICE full open access to our patient population. And the Ministry of Health in the UK [indiscernible] the day of our approval and our reimbursement that almost half a million patients will benefit from this drug. As a reminder, I believe that other products that had a population based agreement with NHS had lower number of patients that was published. So, here's a case where, look, we -- it was more difficult, right? It took one more round of negotiation, but the team in the UK delivered and we believe that that's going to maximize the value of the product, not just as the UK for the UK. Because I can tell you now that Spain, Europe, France, Italy, and other markets see clearly the price in the UK. That sets where the negotiation starts, tight? The negotiations start from five point something euro, it doesn't start from an over level. That's why it was so critical in those early markets. That we go for the highest level possible, highest also without going too high so that it prohibits penetration, right? You don't want to give this perception that the product is too expensive. I don't want to use it, although it's covered by the government, but still. So I think we stroke this right balance between a premium price, but open access for everybody.
Roanna Ruiz
Yep. That's fair. And actually, that's a good segue. I did want to check-in with you. Any updates on where things stand with Italy, Spain, some of the other larger European markets?
Karim Mikhail
Yeah. In Spain, we completed the round two, and I remember when we were completing round two in the UK and getting all the questions from investors because NICE publishes in English everything so you can’t really read all the minutes of our discussions with them. In Spain, we come completed round two, and we are initiating round three. We got the price in the UK from round three. I don't want to say that we're going to get it in Spain in the round three also. But we are making very good progress in the negotiation there. Those markets there are other variables that get hit to the negotiation. So it's not only your pharmacoeconomic evaluation. They have a larger patient population. So they care a lot about budget impact, what's going to be the total stand for them? How much can you save truly for them maybe for other product usage and other and other elements? So it's a more complex negotiation, but we believe we're making very good progress in Spain, but also in Italy. Italy, I thought that Italian agency has just announced a restructure a month ago. So far, the information we have that that's not going to have a significant impact on our priority on the list of the price negotiation. We already had a number of rounds, or price negotiations, all of them are confidential. So unlike Spain you do not know how many rounds there are. And the same progress is made with France and the Netherlands. These are the key countries where we're focusing on. Progress is made in others, but these are the top priorities where we stand today.
Roanna Ruiz
Yep. Understood. And I think maybe a bigger picture question just to give you a chance to update us a little bit. Maybe Tom, if you could talk a little bit about cash runway expectations. I know you alluded to some of the savings that you expect, but what are things going to look like in 2023? 2024, etcetera? As best you can explain.
Tom Reilly
Sure. Thanks Roanna for the question. So overall cash position, we announced earlier in January we have $310 million at the beginning of this year. Our expectation is that we have enough cash on hand to support our launch activities through Europe. So overall, enough cash to support the ongoing activities for the business.
Roanna Ruiz
Great. And in our final couple of minutes, I'll shift gears a little bit back to the US market as well. So maybe what's your level of confidence that your exclusive contracts will hold in terms of this year? And can you talk a little bit about -- are there any push pulls that you're considering?
Karim Mikhail
Yeah. Look, this is an open competition market. There is no -- we've been competing for the last one year and a half when we started the year in 2022, half of our business was coming from exclusive PBMs. Now a large majority of our business is coming from those plans. So we worked very hard to maintain them. But by the way, we also worked very hard to defend the nonexclusive because both are important. It’s not like we let go of the others, this is a marketplace and you need to be competitive in every segment. And that's why, by the way, we keep 75 reps. Because it allows us to also continue to fight in non-exclusion where we have also high profitability. So both matters for the moment. We are confident if something happens, we have the plan ready. We would press some of the button we need be. But for the moment, we continue to strive to deliver the performance first quarter may be a little soft, but we continue to push forward.
Roanna Ruiz
Okay. Great. Sounds good. So I think we're about at time. So just want to thank you, Karim and Tom for hopping on and walking us through the key points of Amarin. I appreciate the insights, and I hope everybody has a great rest of the conference.
Karim Mikhail
Thank you, Roanna.
Tom Reilly
Thanks, Roanna.
