Q1 2020 Earnings Call Transcript

Published: 30 Apr 2020

[Operator:]

Welcome to Amarin Corporation’s Conference Call to discuss its Preliminary First Quarter Financial Results and Operational Update. This conference call is being recorded today, April 30, 2020.I would now like to turn the conference over to Elisabeth Schwartz, Senior Director of Investor Relations of Amarin.

[Elisabeth Schwartz:]

Please be aware that this conference call will contain forward-looking statements that are intended to be covered under the Safe Harbor provided by the Private Securities Litigation Reform Act. Examples of such statements include, but are not limited to, our current expectations regarding our commercial and financial performance, including levels of VASCEPA prescriptions, VASCEPA product and licensing revenues, costs and other commercial metrics and gross margin; our current plans and expectations regarding spending, including expenditures for the purchase of additional supply of VASCEPA; our current expectations regarding the adequacy of our financial resources ; our current plans and expectations for product revenue growth and product promotion in light of COVID-19 and any potential for added cardiovascular risk attention to VASCEPA as a result of COVID-19; our current plans and expectations regarding appealing the District Court VASCEPA related patent litigation decision to the Federal Circuit; and our current plans and expectations for a potential launch of generic versions of VASCEPA by generic companies and by ourselves, including expectations regarding ANDA approval by the FDA, generic cost effective supply availability, timing, potential levels of damages and ability to recover VASCEPA growth if the appeal succeeded; our current expectations for regulatory reviews outside the United States regarding VASCEPA approval and regulatory reviews inside the United States regarding consumer promotion and related timing thereof; our expectations regarding sales force productivity; our goals regarding the timing, scope, and success of international expansion including expectations regarding our ability to launch VASCEPA in Europe directly or through a potential partner; and our expectations for clinical trial results in China; and our current plans for commercial expansion in the United States, with and without entry of potential generic competition.These statements are based on information available to us today, April 30, 2020. We may not actually achieve our goals, carry out our plans or intentions or meet the expectations disclosed in our forward-looking statements. Actual results or events could differ materially. So you should not place undue reliance on these statements. We assume no obligation to update these statements as circumstances change. Our forward-looking statements do not reflect the potential impact of significant transactions we may enter into such as mergers, acquisitions, dispositions, joint ventures or any material agreements that we may enter into, amend or terminate.For additional information concerning the factors that could cause actual results to differ materially, please see the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2019 and the Form 10-Q filed for the quarter ended March 31, 2020. These documents have been filed with the SEC or are available through the Investor Relations section of our website at amarincorp.com. We encourage everyone to read these documents.This call is intended for investors in Amarin and is not intended to promote the use of VASCEPA outside its approved indication. An archive of this call will be posted on the Amarin website, also in the Investor Relations section.I'll now turn the call over to John Thero, President and Chief Executive Officer of Amarin.

[John Thero:]

Hello, everyone, and thank you for joining us today. During this call, we will cover the following

[Mike Kalb:]

Good morning. Our net total revenue reached a record high of $155.0 million in Q1 2020 as compared to $73.3 million in Q1 2019, an increase of approximately 112%. Of our net total revenue, net product revenue for the three months ended March 31, 2020 and 2019 was approximately $152.2 million and $72.7 million respectively. This $79.5 million increase in net product revenue was driven primarily by increased volume of sales for VASCEPA in the United States.As previously described, in accordance with U.S. GAAP and the terms of our customer agreements, we recognized revenue upon our customers’ receipt of product that they ordered from us and we delivered to them. In most weeks, the largest orders from our wholesaler customers occur at the start of the week. The timing of the calendar in 2020 was such that with March 30th falling on a Monday and shipments from that Monday being received by customers on March 31st, there was effectively an additional week of these beginning of the week shipments in Q1 2020 compared to Q1 2019.Conversely, there'll be one fewer week of these beginning of the week shipments in Q2 2020. The additional week of these beginning of the week shipments in Q1 2020 added approximately $10.8 million in net product revenue, building on an already strong month of shipments to customers in March.In addition to increased volume of VASCEPA sold in Q1 2020, U.S. net product revenue was augmented by a modest increase in VASCEPA’s net selling price, reflecting multiple factors including improved managed care coverage. Our reported increase in net product revenue also included VASCEPA sales outside of the United States of approximately $6.7 million during Q1 2020 as compared to $300,000 in Q1 2019. These international sales were primarily to ensure adequate product supply for our commercial partner’s launch of VASCEPA in Canada. Revenue is recognized upon shipment by Amarin to that partner. Timing of their revenue recognition from their resale of VASCEPA is likely to differ from period-to-period.Until their launch is further along we expect their purchase from us to be variable, and for example, not to include a repeat of launch quantity purchases in the near future. As John mentioned, they commenced their launch of VASCEPA in mid Q1 2020.Based on monthly compilations of U.S. data provided by third parties, Symphony Health and IQVIA, the estimated number of normalized total VASCEPA prescriptions for the three months ended March 31, 2020 and 2019 increased 72% and 74% respectively. Normalized total prescriptions represent the estimated total number of VASCEPA prescriptions dispensed to patients, calculated on a normalized basis. That is one-month supply or total capsules dispensed multiplied by the number of grams per capsule divided by 120 grams.Inventory levels at wholesalers tend to fluctuate based on seasonal factors, prescription trends and other factors. However, such inventory levels remain within normal industry range.In Q1 2020, we saw prescription growth lag in January and February compared to trends in Q4 2019. We believe that such lag similar to prior years was due to a high beginning of the year insurance deductibles as are increasingly prevalent in managed care coverage. Such deductibles are not product specific but do, as previously reported, impact whether patients can afford to fill prescriptions for all drugs at the beginning of the year. Historically, these high beginning of the year insurance deductibles have caused prescriptions of drugs for asymptomatic chronic conditions such as cardiovascular disease not being filled because patients can't afford the uninsured cost of multiple drugs. Historically late in Q1 or in Q2 patients begin to move beyond the beginning of the year insurance deductible and prescriptions of VASCEPA have grown.Throughout March 2020 prescription levels and related shipments of product increased over levels experienced in the first two months of Q1 2020 likely reflecting that some patients had overcome their insurance deductibles and that healthcare professionals were writing more prescriptions for VASCEPA and urging their high risk patients to fill their VASCEPA prescriptions.Additionally, Amarin recognized licensing and royalty revenue of approximately $2.8 million and $500,000 for the first quarter of 2020 and 2019 respectively, under agreements for the commercialization of VASCEPA outside the United States. Amarin’s overall gross margin on net product revenue was 77% and 36% for the three months ended March 31, 2020 and 2019 respectively. This increasing gross margin on product sales is driven by gross margin on U.S. product sales of 80% partially offset by the gross margin on product sales to our partners outside of the U.S as per contractual arrangements.Net product revenue to our partners does not include licensing and royalty revenue, despite improvements in our gross margin to see if it continues to have a lower gross margin than many other drugs due to the high quality standards and the difficulty of extracting and encapsulating EPA, which is a sensitive product.We had an increase in selling, general and administrative expenses primarily resulting from increased personnel costs related to the hiring and training of the additional 400 sales representatives in late 2019 and the first quarter of 2020. We also increased our promotional activities and direct-to-consumer promotion following the launch of VASCEPA in early 2020 for the new indication and expanded label approved by the FDA in late 2019. All of our newly hired sales professionals have completed training and are interacting with healthcare providers. As previously announced, we suspended face-to-face interactions in mid-March and these interactions currently consisted other forms of interaction consistent with good social distancing practices amidst the COVID-19 pandemic.Research and development expenses during the three months ended March 31, 2020 and 2019 were $10.3 million and $7.2 million respectively. The increase was primarily driven by costs beyond the conduct of the REDUCE-IT study to further analyze samples collected from REDUCE-IT patients as well as costs associated with the achievement of certain milestones under our strategic collaboration agreement with Mochida.As of March 31, 2020, we reported aggregate cash and investments of $623.7 million consisting of cash and cash equivalents of $329.0 million and liquid short-term investments and long-term investments of $213.2 million and $81.5 million respectively. Net cash flow from operations was positive in Q1 2020 of approximately $4.1 million despite increases as expected in net accounts receivable reflecting revenue growth and inventory in preparation for anticipated future growth. As of March 31, 2020, we reported $158.3 million in net accounts receivable, all of which was incurred, which represents $189.6 million in gross accounts receivable before allowances and reserves and $92.1 million in inventory.Based on our current plans and expectations, we believe that our current capital resources are sufficient to achieve sustained positive cash flows from VASCEPA. Although results are anticipated to vary significantly on a quarterly basis, including some potential negative net cash flow periods, as we work to launch VASCEPA based on its new cardiovascular risk reduction indication, and adjust the impacts of COVID-19 and any potential launch of generic versions of VASCEPA in the United States.Before I turn the discussion back to John, let me provide a bit more background color that may be useful to you. We kicked off the launch of VASCEPA for its new indication in mid January 2020, following the training of our field teams. Our VASCEPA prescription growth in Q1 2020 came both from higher prescribers of VASCEPA and new prescribers of VASCEPA.As part of this growth, we witnessed prescription growth in areas of the country where previously Amarin had little or no sales representation. Last year, nearly all of the sales representatives we added at the start of the year were paying for themselves by Q3. That is a faster pace of contribution than seen for many therapies. And this reflects the higher quality people we recruit and train, as well as the unprecedented results of VASCEPA’s clinical trials.Early signs from this year suggest that our new hires were getting off to similar good starts. While COVID-19 may slow their contributions, we are convinced that the opportunity is large, and that these new sales representatives will add value. Managed Care coverage improved the various managed care plans in Q1. In particular, it improved the Blue Cross Blue Shield plans in three states.At the start of Q2 Managed Care coverage further improved with preferred coverage for VASCEPA adopted via Anthem for Blue Cross Blue Shield plans in 14 states, including California, as well as insurance plans managed by CVS and certain other insurance. Due to uncertainties associated with COVID-19 and through our patent litigation, we are not at this time prepared to provide new revenue guidance, having previously withdrawn our 2020 revenue guidance in our last call.The number of prescription levels were growing rapidly in Q1 with the rate of growth potentially accelerate going into March. In late March after we suspended in-person sales calls due to COVID-19, we witnessed overall prescription levels remain much higher than prior year prescriptions as patients renewed their prescriptions. However, as has been reported for many drug therapies, we witnessed a decline in the rate of new prescriptions. This dynamic of significantly higher overall prescriptions than a year ago but a downward slope in new prescriptions has continued in April.The decline in new prescriptions is not in our view the reflection of REDUCE-IT for VASCEPA but rather a reflection of patients are not going to their doctors for routine visits. Our sales and marketing teams are maintaining communications with many VASCEPA prescribers and we are utilizing new means of seeking to educate healthcare professionals who are less knowledgeable about VASCEPA. In parallel, we are preparing plans to reinitiate direct sales outreach likely on a phased basis once we are able to do so. We believe that we were responsible and appropriate during March, when we were one of the first companies to announce that we were suspending direct sales interaction with customers. We similarly intend to move thoughtfully and quickly to resume direct sales interactions where it is responsible to do so.Historically, Q2 each year has been one of our strongest quarters in terms of consecutive quarter growth. While we cannot at this time accurately estimate future net revenue, if such revenue in Q2 2020 were to be flat with Q1 2020, this would still represent an increase of 54% over the same quarter of 2019. Whether our net revenue results in Q2 2020 are higher, lower or the same as in Q1 2020, cannot be predicted at this time.In our report dated April 17th regarding the impact of COVID-19 on patient visits, physicians showed that overall ACP and patient interactions were down 70% and the ACP office interactions for chronic asymptomatic conditions are down about 75%. These declines in healthcare provider interactions with patients are impacting the growth in prescription numbers of many drugs, including VASCEPA. While we do not have visibility into patient visit levels at each doctor who prescribes VASCEPA, this data of reduced patient visits is consistent with what our sales representatives are hearing from many such doctors.The doctors are preparing to be potentially very busy when COVID-19 concerns are mitigated, and patients can return to address other health related matters. As explained in today's press release, COVID-19 presents unique challenges for the launch of VASCEPA, particularly in many areas of United States were reports of COVID-19 infection are most pronounced, for example, metropolitan areas. These are areas which we're relying on for sales growth in 2020.Our direct sales team has been finding new ways to interact with healthcare professionals and we continue to receive positive feedback from physicians regarding VASCEPA. While this environment may slow VASCEPA sales growth, we anticipate that most patients who currently take VASCEPA will continue to fill their prescriptions. With respect to spending as John described on our April 13th investor call, we are prioritizing our spending to emphasize the follow

[John Thero:]

Thanks, Mike. I thank our investors for your continued support and I hope that everyone is staying safe and healthy during these unprecedented times. With that, we conclude our prepared comments and we’d like to open the line to some questions. Operator?

[Operator:]

[Operator Instruction]. Our first question comes from the line of Jessica Fye with JP Morgan. Please proceed with your question.

[Jessica Fye:]

Two from me. First, is the Federal Circuit currently holding hearings in light of the COVID-19 pandemic? And if not, is there a reason to expect your backlog in cases to be heard when they resume? Basically asking, are those issues reflected in the estimates you provided for hearing in the first week of September or October?Second question, as you embark on the assessment of whether to strike a European partnership, is clarity on the U.S. appeal relevant to that process or is it independent? I ask because it sounds like you intend to decide in the third quarter prior to an appellate decision and potentially even before you have a hearing. So can you just elaborate on how you view that decision as either linked or not linked to the U.S. IP situation? Thank you.

[John Thero:]

Jess, good morning. Thanks for the questions. With regard to the Federal Circuit, it's our understanding that they are proceeding and that they remain active and our estimates of timing are based upon our current expectations for the court and involve inputs from our counsels who are active with the Federal Circuit on other matters.It's always possible something to change due to COVID-19 but Federal Circuit seems to be making considerable progress in other matters. And we're anticipating, given the importance of this matter and the timing of our motion that, that will support the timing of a hearing in the first week of September or first week of October as previously described. Obviously, we do not control the court schedule, but that's our best estimate at this point in time.With respect to the EU decision, our aim is to maximize shareholder value. There are lots of different considerations that go into how to maximize shareholder value. And some of those are, what do we think that we can do with that -- this drug in Europe on our own, some of that is, what terms would be available to us via a partner. That also reflects optionality both for additional products, global value, global flexibility. The anticipation that we have is that the EMA will recommend VASCEPA for approval in Europe near the end of this year and could be promptly approved by the European Community thereafter with a regulatory exclusivity period, which suggests that we want to get off and get off to a good start in Europe. But this is an important product, and we want to make sure that we are positioned to maximize that value before shareholders.The U.S. litigation doesn't directly affect the approval in Europe, doesn't directly affect the market opportunity in Europe, doesn't affect the reimbursement directly in Europe. But it does reflect that holistic view of corporate value and optionality and all of those considerations will be put forward. At this point in time, we're continuing to develop relationships with key opinion leaders in Europe and appreciating the support there as evidenced by the two medical studies that have already included us and VASCEPA in their guidelines but continuing to advance scale for growth, doing some pharmacoeconomic analysis for reimbursement in Europe. And all of those inputs will also factor into our decision making. So, it is a holistic perspective. Hopefully those comments are helpful.

[Operator:]

Thank you. Our next question comes from line of Yasmeen Rahimi with ROTH Capital Partners. Please proceed with your question.

[Yasmeen Rahimi:]

Hi team. Thank you for your thoughtful prepared remarks. Two questions for you. The first one is, can you share with us, you mentioned that metropolitan areas were areas where Amarin expected sales growth. Can you maybe call out how many total number of doctors are in this epicenter of COVID that you were planning to follow on. And maybe what are innovative ways that the sales team is approaching in those regions? And then the second question is what is the total -- what is the percentage of total supply of global VASCEPA that you have secured through your supply chain? And then give us details, how much that has grown over the last few months and how long these supplies are locked in for?

[John Thero:]

Yasmeen, thanks for that question. So COVID-19 has had a global effect as you know, certainly prominent in the United States, but particularly prominent in areas like New York City and certain other metropolitan areas. Amarin over the first seven years of the commercialization of VASCEPA had, you may recall, early we had to make this choice, that we spend most of our dollars on research and development, that we spend most of our dollars on commercialization. We chose the continued research and development and funded expenses but important REDUCE-IT cardiovascular outcome study. During those years with 135 sales reps, we covered only select parts of the United States and those select parts included New York City, New Jersey, California, Texas, Florida. It’s intended to be in areas of fairly dense population. As we've expanded now to 800 sales reps, we've added additional sales reps in some of those areas, but trying to get broader coverage across the country.So as we talked about the impact on metropolitan areas, what we're reflecting there is, reality A is there's a lot of people there but B is some of our most experienced sales representatives and some of our longest term physician relationships are in those areas. I don't think we're unique in that regard. Areas like New York City or populous are targets for lots of drugs, the fact that those areas are where our concentration is for a long period of time, perhaps has a greater impact.At the same time, we know that patients who are presenting for COVID-19 tend to have more serious effect of COVID-19 if they have cardiovascular risk, or pulmonary risk. And from that perspective, we think that the importance of VASCEPA and addressing cardiovascular risk is even potentially heightened which is why in parallel there's a number of different physicians and medical institutions that we're exploring some potential investigatory work with regard to VASCEPA on that topic. But I think that doctors, probably -- not probably, but doctors are being reminded of the cardiovascular risks here fairly broadly in this COVID-19 era.In terms of our innovative ways to reaching out to physicians, it's webcast and phone calls, and digital means and peer-to-peer interaction and an irony here is that without patients coming into physicians’ offices that some physicians have quite a bit more time. So in some cases we're getting to spend more time with physicians, albeit not face-to-face, but that educational opportunity will potentially provide value over the longer period of time. We've got a perfect product and rep people and they are finding every week new ways to have constructive interactions with healthcare professionals.With respect to supply, as you know, we have been working on a supply plan to get ourselves to have capacity to support over $5 billion in revenues. Right now we work through a complex multi-company supply network and all of the companies that we've been buying APIs through since we’re buying all that they've been produced. At the beginning of last year, I think we talked about having capacity to support about a 1 billion revenues that had increased considerably. Since that point in time for strategic reasons, we've not quantified the amount to which it’s increased and beyond those increases that have -- or -- there are activities going on at various suppliers to increase capacity further as we think will be important for our international growth and for the U.S. opportunity as well. Sorry, if those comments are useful.

[Operator:]

Thank you. And next question comes from the line of Ken Cacciatore of Cowen and Company. Please proceed with your question.

[Ken Cacciatore:]

Hi John and team, my continued good luck on the appeal and I know you have a lot of decisions coming up so good luck on all of those. Just wanted to clarify one of your comments during the prepared remarks about what your shareholders are communicating to you. You said some of them are telling you they'd rather be retained and not partner. I don't want to put words in your mouth, maybe just have you -- can you dig a little bit more deeper into that? I was wondering, one of the things you didn't mention is that the shareholders are pushing more for a sale as you come up to the decision on the European rights. And I asked that because, if you do license out Europe and we have an unfortunate decision in the U.S that goes against us, we may become a royalty company, which would be difficult to extract the kind of complete value out of the company. So I was wondering as part of this process, appeal consideration, how would you handle maybe the value of the appeal, if that was the case as you go into the European discussions? And my second question is, I know it's very early in terms of discussions with European partners, but do you get a sense that they share the same type of thoughts on what the product can be in Europe as you entered into kind of the initial conversations? Is there much disagreement? Or are we pretty much in union with what they believe the Europe opportunity is as they talk about -- as they look at the product as well? Thank you.

[John Thero:]

Ken, thanks. So on the shareholder feedback, I’ve heard enough -- from frequency with investors that I've spoken of late to recognize that, that topic of European partnering was on the minds of many and the opinions vary. But amongst a number of folks, there was a perspective of there's greater value in keeping rights and in partnering right. The -- and because the number of people who were saying, I thought rather than just responding to it and then just avoid the doubt. My responses to everybody has been consistent with what we've said in the past, which is that we're taking a parallel process. But rather than just having on people's minds, I wanted to acknowledge on today’s call, so that if other people are thinking that we let people know that we have -- we've heard that comment, we do think that it makes sense for us to get all the facts or as many facts as are available to us, including proposal from partners, so before making that decision, as I was trying to reference in response to the earlier question, a decision with regarding partnering in Europe will be a holistic decision, including many factors. And some of what you've described as considerations I would put under that holistic view of optionality and flexibility, but it's all this is in terms of creation of long-term value and we need to pull that together and see what makes the most sense for our shareholders by the time that we're making that decision. We will have seen -- our motions will have been filed and they feel will be in the response to that from the other side in the sense that there's anything there that needs to be considered, we will continue to consider inputs that are available. At the same time we will be progressing the approval process in Europe and don't want to lose the significant opportunity to launch in a prompt and robust way in Europe.I think it's both from a physician's perspective who have been educated regard to European opportunity. And from a potential partner perspective regarding Europe. The opportunity is large. Cardiovascular disease globally is almost in every country one of the largest -- if not the largest area of spending but number one cause of death and we've got unprecedented results. We’ve reduced it in the first and class products. And I think that the clinical results speak for themselves. And there's been great claim there. As the new economic terms will -- we will see where those come out and we will make those comparisons. But I don't want to I -- it is an ongoing process at this point in time. The partnering process kicked off in the March timeframe, with the day 120 letter. So it is active and early but as referenced we've also been considering direct sales actively and for a while as well. The aim is to put ourselves in a position to be able to make the right decision for our shareholders based upon a number of different factors in a holistic manner for shareholder value. And I don't have -- until we make that decision I don't have a specific answer for you as to what the most significant variables are. But we are considering, what you've described what I've described, what was a variety of other different inputs and we'll continue to listen to shareholders’ perspectives along the way.

[Operator:]

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

[Louise Chen:]

Hi. Thanks for taking my questions here. So my first question here is how do we think about the OpEx in 2020, the decline relative to your previous guidance? And the quarterly progression in light of some of your promotional activity? And then secondly, when will you know if your appeal has been granted and if it will be expedited? Thank you.

[John Thero:]

So I'll pick the second one first and then we're all sitting in different locations at the time. I'll turn it over to Mike on the OpEx question. With regards to the appeal it would surprise us at this point if the schedule that we've put forward in front of the Federal Circuit is not accepted. And I'm not sure exactly when we'll hear that, but it's based upon our understanding of the court -- as both sides aren't contesting the schedule. The schedule for expedited motions should be accepted. In terms of one we'll hear about whether the court hiring is in September or October, that wouldn't likely occur until after the motion has been all filed. So I'm guessing that’s probably -- we'll probably hear in about the July timeframe on that. But, again, we don't control the timing of the court. So that's the rough estimate. The -- relative to OpEx Mike, do you want to comment on that?

[Mike Kalb:]

Sure. Thanks, John. Thanks, Louise for the question. Look in light of the ANDA litigation and COVID-19, as we said, we're reducing spending levels out. We have not quantified, but we do anticipate savings on DTC, which was planned related to this year as we stated. Qualitatively, we have said that we will be prioritizing activities which advance U.S growth, international and the ANDA appeal. As we noted new sales reps during ‘19, it become productive very quickly, look forward to them getting back in the field when responsible for them to be back in the field. So historically, we've focused on R&D, our focus now is obviously on sales marketing and we'll provide updates as we get clarity.

[John Thero:]

The DTC, as you may remember, Louise, was not intended to be an extensive -- and those avoid the DTC spending had been in the prior guidance that we had given for OpEx, the DTC could have been in the sort of $70 million, $80 million in annualized basis, obviously wasn't going to be spent for the full year, but it was a really good chunk of money that comes out if we're not doing DTC spending for the second half of the year as had been planning, and there's some other expenses that we will be reducing, as well. But matters are fairly fluid and some of this also is impacted by the timing of COVID. Our field force getting out more actively and where we're spending our money and whether how much is digital versus in person versus speaker programs. And there's a lot of fluidity at the moment, but we are looking for ways to -- while the variable for the quarter, we're looking for ways to be constructive on our cash flow side of things. And last year we were essentially net neutral on cash flow as Mike was talking about. We are going to spend this year investing heavily for long-term growth, expect and we’ve burnt quite a bit of cash for the year. But now with the revised circumstances we'll be spending less than trying to get cash flow positivity faster than we might have otherwise.

[Operator:]

Thank you. Our next question comes from one of Michael Yee with Jefferies. Please proceed with your question.

[Michael Yee:]

Wanted to follow-up on your commentary on the European process. If I go back, maybe a year or so ago, when all the U.S. FDA filing and the review was going on, you said you had a lot of European interest and I thought you said, maybe it was a dozen books or so. But maybe just remind us about the type of interest that is out there in Europe, because I get the sense that a lot of big companies these days are maybe less interested in cardiovascular and much more just oncology. So maybe just frame how much interest is there by big pharma and frame what happens in the third quarter? If you look at these things and you accept one of them or you are going to announce in the third quarter that you're hiring your own sales force and if it's the latter is expenses for launching the sales force in Europe in the guidance? Thanks so much.

[John Thero:]

So with regard to interest in VASCEPA by big pharma, there is interest in VASCEPA by big pharma globally and right now we're focusing on Europe, Europe certainly no exception to that. We've had multiple companies doing diligence and I'm not going to get into numbers of companies and it really talks about terms, but this is a multi-billion dollar opportunity for a differentiated product. And there's companies that might say they're not into cardiovascular, but they're into metabolic or they're into diabetes, and generally they're into growth. And so we're seeing interest as to whether those companies will put forth terms that we feel would be appropriate, given the size of the opportunity and the stage of where its act of simply de-risk from a clinical perspective and largely de-risk from a regulatory perspective, we will see. The decision that you're asking me about in Q3, yes, framing in Q3, so hopefully we’d be in a position to decide are we going direct or are we partnering and if partnering hopefully to announce the terms of that are, and if we're going direct of way to outline some guidance as to what that means in terms of what would undoubtedly be update of a bit of a sequenced launch with emphasis on some of the larger countries first, in mid to small countries later and whether we would do some of those smaller countries directly or potentially with partners -- would be potentially flushed out at that point in time. And at this juncture, while we’ve withdrawn on our overall guidance for the year, including our previous quantification of operating expenses and talked about our -- the prior spending guidance volumes being too high relative to expenses is a pull back on the U.S. DTC, for example, that earlier your spending guidance, included some money for Europe, but did not include money for a significant launch in Europe.That being said with approval for Europe, that would likely be somewhere near the end of this year. The launch in Europe would most likely be for a next year event rather than a year event. So possible for this year, but you get too close to the holidays and things and it's often just better to wait further for the New Year, that would all be -- hopefully be built out when we make a decision. Again, at this point in time, we're just trying to let shareholders and all the parties know that we're evaluating and our aim is to do what is in the best interest of shareholders on a long-term basis from a holistic perspective.

[Operator:]

Thank you. Ladies and gentlemen, that was the time we had no questions. I'll now turn the floor back to Mr. Thero for any final comments.

[John Thero:]

Well, thanks. I apologize for what may be difficult sound quality here today, as I do this off of a mobile phone, but appreciate your interest, appreciate your support. We are making progress in numerous areas and we look forward to continuing to provide updates along the way. Talk to you soon. Thanks.

[Operator:]

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