Q1 2018 Earnings Call Transcript

Published: 2 May 2018

[Operator:]

Welcome to Amarin Corporation's Conference Call to discuss its Financial and Operating Results for the First Quarter of 2018. This conference call is being recorded today, May 2, 2018. I would like to turn the conference call over to Elisabeth Schwartz of Amarin.

[Elisabeth Schwartz:]

Thank you all for joining us today. 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 and wholesaler inventories, Vascepa product and licensing revenues, costs and other commercial metrics, gross margin, expenditures and the adequacy of our financial resources, our current expectations regarding our cardiovascular outcome study such as study completion, regulatory review and likelihood of success, our plans and preparation for extended promotion of Vascepa and related market positioning and potential and our goals regarding the timing and scope of international expansion. These statements are based on information available to us today, May 2, 2018. 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 other 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 Forward-Looking Statement section in today's press release and the Risk Factors section of our Quarterly Report on Form 10-Q for the three months ended March 31, 2018. These documents had been filed with the SEC and 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. Please note that we are also providing slides to accompany this morning's call. These slides, which can be found on our website amarincorp.com, in the Investor Relations section under the overview section. Summarize some of key updates discussed on today's call. Finally, an archive of this call will be posted on the Amarin website, again, in the Investor Relations section. I will now turn the call over to John Thero, President and Chief Executive Officer of Amarin.

[John Thero:]

Good morning, everyone. This is a very busy and exciting time in Amarin. Last week I participated in Amarin's Annual Meeting of our sales team. The members of this team are full of confidence and passion for the work they're doing to help healthcare professional improve patient care with Vascepa. This is a very dedicated group of professional people. The majority of whom have been with us for multiple years. I go to such meetings hoping to inspire them only to find that they inspire me. Moreover, I regularly participate in meetings between Amarin's R&D team and key representatives from our CRO regarding the REDUCE-IT study. The results of this important study are near. We remain on track to achieve our estimated timeline of having results from this landmark study publicly announced before the end of Q3 of this year. For those of you who are counting, this means that we anticipate knowing the results of this important study less than five months from today. Mike Kalb, our CFO will focus on Q1 financial results in his comments. On this call I'll primarily discuss the status of the REDUCE-IT study. I will also comment on broader market dynamics which I view is favorable, but which at first glance may appear otherwise to some of you. Regarding REDUCE-IT as we recently announced based upon pool blinded data available to us and the industry standard projection methods. We estimate that the study has reached the onset of the targeted 1,612 primary Major Adverse Cardiovascular Events or MACE specified in the study design. Some people ask why Amarin didn't wait for final adjudication of all events in the study before having patients commence their final site visits. One of the reasons is that, according to the study protocol, some of the cardiovascular events cannot be finally adjudicated until data is available from diagnostic testing conducted as part of the patients final [indiscernible]. Another reason is it often takes month to appropriately identify and complete final adjudication of events. If we waited for 1,612 primary events to be positive adjudicated there would be more events which would occur during the intervening period that would need to be included this would add unnecessary cost and slow down the results of the study as we pursue adjudication of these additional events. The method we've employed determined when to commence the final patient visits is industry standard. We're anxious to announce the results of this important study. We believe that, we can reasonably estimate the number of primary major reverse cardiovascular events based upon industry standard methods of projecting future events based upon event grades experienced during this study's multi-year history and collective knowledge gain from several other previously executed successful cardiovascular studies. Also as reminder, the REDUCE-IT study does not need to hit the exact number of events around which the study's power was designed, which is 1,612 primary events. The powering of the study results will not be significantly impacted by a final primary event number which is slightly more or slightly less than the 1,612 planned events. If we missed on the 1,612 primary events count target. We believe that we're unlikely to miss by an amount which would have a meaningful impact on study results. Based upon events that have already been adjudicated in on estimated adjudication rates for events that have already been identified. We already have greater than 97% of the targeted 1,612 primary events. Based on the trial's multi-year history we anticipate that additional primary events have occurred. These additional primary events are pending formal adjudication by clinical sites consistent with the lag time in event identification experience by clinical sites to route this conducted study. We continue to anticipate that the final result of the study will benefit from the robust study design envisioned at the onset of the study and our refinement of the study design and protocol to our special protocol assessment agreement with the FDA, which we've amended as announced in August, 2016. The clinical path for completion of the REDUCE-IT study and announcement of results involves multiple operational steps. Many of these operational steps occur simultaneously. For example, it is anticipated that final adjudication of all primary events will be completed as operational steps needed for study completion are conducted. Other remaining key operational steps include one; all active patients in the study need to complete their final site visit. After patient's complete their final site visits, they're finished with respect to the study. Two; all inactive patient in the study must either be confirmed, as dead or alive. It's common in large multi-year clinical studies for some patients to move residents or for other reasons drop out of study. The powering REDUCE-IT like other studies is based on a number of patients who experience major adverse cardiovascular events during the term of the study. However, if an inactive patient died or otherwise incurred a major cardiovascular events. We still seek to know their vital status for purposes of data completeness. In particular, we want to be sure to capture all deaths which have occurred even if the patient moved or was otherwise inactive in the study. Third, all data from these steps in all data from are now more than 35,000 patient years of study in the trial need to be rolled up into a database scrubbed and cleaned in the context of clinical trial. Meaning that the data will be reviewed for completeness and consistency. Missing data if any will be soft and added to the database. We at Amarin - blinded to the above steps until they are completed in the database locked. We do manage study progress in a pool blinded manner. We know that considerable progress has invade against each of these steps. For example, over 97% of active patients have completed their final site visits or scheduled to do so very soon. As it's typical for clinical trials, tremendous effort is ongoing to ensure that we gather all necessary from all patients in this study. Our progress regarding these operational steps needed to complete the study is within our expectations for study completion. We recognize that getting the final few percent of patient final data is often the most difficult in clinical trials. We, our CRO and clinical sites are working together to get that data from these outliers as soon as possible. We're very thankful to the patients who have participated in the study to the clinical sites involved in the study, to our CRO and its staff for their considerable efforts and experience into our advisors and of course to our own employees who have worked tirelessly for many years on this important study. We believe that these study's results will be worth the effort of course we're all very excited to see announce the study results. After these three operational steps are complete. Meaning after the database is complete, clean and final. It will be locked. After the database is locked, a special electronic key will be added which sorts patients between those who have been on statin plus placebo. From those who've been statin plus Vascepa. Throughout the conduct of the study, the capsules that contained placebo and the capsules that contained Vascepa have been identical in appearance. Distribution of these capsules by patients has been randomly sorted by a computer program. No person at Amarin, our CRO or the clinical sites knows which patients receive placebo versus Vascepa and the patients themselves do not know. After this special electronic key is removed from its secure location and added to sort the final lock database. A small number of representatives from Amarin and its advisors will conduct the efficacy and safety analysis of the results. Including analysis of the trial's primary endpoint of primary MACE events in the study. As soon as this initial group of representative conclude that the top line results of the study are understood, they will let me know. Promptly thereafter we intend to inform the world, through a press release. At this time, we cannot provide a more refined estimate of the timing of the announcement of top line results from REDUCE-IT. It's not possible to precisely determine how much time it will take to get the database locked. That timeframe will primarily be a function of having patients complete their final site visits, determining how much data is missing and then gathering and then putting the missing data. We want to get the data as quickly as possible, we also want to ensure that final result is clean and robust. To repeat, Amarin is intentionally blinded to the results of the study and will remain blinded until such results until after the study is completed and the database is locked. There are many reasons why we believe that the study is positioned for success, none of those reasons derive from Amarin having any glimpse at the results of the study, nor have our advisors or clinical sites seen the unblinded data. Unfortunately for patient care, cardiovascular disease is on the rise. Cost related to managing cardiovascular disease are soaring and the number of deaths from cardiovascular disease is again increasing. Clearly, a new solution is needed. Assuming REDUCE-IT is successful. Given its profile as a pragmatic therapy meaning it is effective, safe, well tolerated, easy to administer and affordable. We believe that Vascepa holds the potential to cost effectively help tens of millions of patients. As a reminder, the demonstrated clinical effects of Vascepa are broad. Vascepa improved the spectrum of lipid and atherogenic biomarkers. As well as factors associated with atherosclerosis such as inflammation. One of these biomarkers is triglyceride. We're using triglyceride as a standard recognizable means to identify patients with elevated cardiovascular risks after statin therapy and then seeking to treat the risk with a broad effects of Vascepa. Some physicians may use other markers of risks such as apoB or hsCRP to help them decide to treat patients with pragmatic Vascepa. However triglyceride levels are a convenient identifier risk as triglyceride is measured on all lipid lab tests. In part, we pre-specified triglyceride as a marker risk because consistent with typical assessments of cardiovascular risk in medical practice, when doctors call for report on LDL cholesterol levels that report typically also includes triglyceride levels. Despite most lipid panel showing whether a patients triglyceride level is elevated or normal. Historically treatment for triglyceride's have been limited due to multiple factors including that earlier generation triglyceride lowering agents have various side effects including raising LDL or bad cholesterol or problems with tolerability particularly one combined with statin therapy. Moreover, these earlier generation therapies never conducted an outcome study of patients with that pre-specified elevated triglyceride as an entry criteria. Amarin through a product Vascepa which is differentiated from this earlier generation therapies in multiple ways including that it doesn't raise LDL cholesterol is well tolerated both when used alone with the statin, will soon provide the medical community the outcome data it craves. This outcomes data will be Vascepa specific reflecting the broad effect of Vascepa on major adverse cardiovascular events not just the effects of lowering triglyceride levels. Over the past decade, there have been various reports regarding the prevalence of adults with elevated triglyceride levels. These reports generally show that greater than one in four adults in the United States have elevated triglyceride levels. High triglyceride levels are not limited to the United States. Which is part of the reason, why we do such - is being conducted in 11 countries. At last week's National Lipid Associations Annual Scientific Sessions Dr. Nathan Wong using NHANES data presented an analysis that showed that, well more than one fourth of American adults have elevated triglyceride levels. The percentage of adults on statin's with elevated triglyceride is even higher. There are approximately 38 million patients in the United States on statin therapy and many more who should be on statin therapy. Helping these millions of patients lower their cardiovascular risk has identified primarily by their triglyceride levels will be our top priority assuming, REDUCE-IT succeeds. During the six plus year conduct of the REDUCE-IT cardiovascular outcome study. Data has grown suggesting that REDUCE-IT should succeed. I'm not going to go through all that data on this call, as it's massive. References to key publications are included on our corporate website at www.amarincorp.com under the Publications heading. This supporting data includes vast epidemiological, clinical and genetics data. Such data is further - by recent real world evidence studies. We recognize that all those data while suggestive is not conclusive. Which is the reason we're prospectively conducting REDUCE-IT as a double-blinded cardiovascular outcome study? Nonetheless, this currently available data continues to give us considerable confidence going into the REDUCE-IT results, that REDUCE-IT is positioned to be successful and because of the reasonable cost of Vascepa and the safety profile of Vascepa that this provides an opportunity to usher in a new era in the preventative treatment of cardiovascular risk after statin therapy in appropriate patients. Please note the key premises regarding the REDUCE-IT study and it's differentiation versus prior studies are that first elevated triglyceride levels are potentially effective identifier of modifiable cardiovascular risk and enrolment and treatment of patients with higher risk is more likely to result in observable relative risk reduction. Second, the mechanisms of action of Eicosapentaenoic acid or EPA, the active ingredient in pure Vascepa are broad, going beyond triglyceride lowering alone and different than other add-ons to statin that have been tested in the past. And third, assuming REDUCE-IT success, the tolerability profile of Vascepa and its affordable cost make Vascepa a pragmatic therapy for clinical study and rapid uptake in clinical use. Underlying these premises in contrast to other Omega-3 studies key points of differentiation are that, the drug used matters. Vascepa is unique. It provides a broad spectrum of benefit including lowering triglyceride without raising LDL cholesterol which is different from other Omega-3 products available in United States. Two, the dose level administered matters. It is important to get sufficient EPA into the bloodstream to broadly enter endothelial cells into otherwise have broad effect. In the ANCHOR study, four grams of Vascepa per day in a western population was shown to achieve EPA levels in plasma at a similar level as was achieved with EPA dosing in the successful JELIS outcome study in Japan. EPA as a drug is not some form of enzyme inhibitor where a low dose might be sufficient. Rather we seek to get enough EPA into the bloodstream that it interfaces with particles in the blood and the surface of arteries throughout the body. Dose levels are important. Higher doses and higher serum levels of EPA in the Anchor study were shown to have more biological activity against the range of lipid in other biomarkers. In the ANCHOR study, the effects of two grams per day of Vascepa is potentially helpful. But we observed that the effects on lipid and other biomarkers from dosing at four grams per day of Vascepa is considerably stronger. Third, the patient population study matters. REDUCE-IT is intentionally studying population of patients at high risk where the impact of therapy should be recognizable over a period of years not decades. Had we design REDUCE-IT to study all primary prevention patients without other factors suggesting high cardiovascular risk. One would expect that many more patients would have been needed to be enrolled or much longer study time would be needed to accumulate 1,612 patients with primary major adverse cardiovascular events. We believe that the importance of these three factors right drug, right dose and right population is evidenced in the meta-analysis on fish oil studies published in JAMA in Q1 of this year. It is consistent with our hypothesis that these studies the majority of which used Omega-3 mixtures that included DHA with the mixtures being at only one gram per day did not show us statistically significant interruption in cardiovascular events. In addition to studying a less pure drug formulation in Vascepa and studying such mixtures at relatively low daily dose levels, most of the studies were conducted in relatively low risk patient populations. It is not surprising to us that such studies failed. The published meta-analysis shows one exception the JELIS study. Notably, JELIS which has a positive result is the only pure EPA study in the analysis. I want to make clear that the results of the JAMA article are consistent with our hypothesis that low dose Omega-3 mixtures with DHA have limited or no effect. Low dose dietary supplements are not intended to treat serious medical conditions. Furthermore, assuming REDUCE-IT is successful we believe such meta-analysis will be valuable and helping to make clear that Vascepa is unique and performed as differently than dietary supplements or Omega-3 drug that contained DHA and increase LDL cholesterol. There are results of coming from two outcome studies both of which study one gram per day Lovaza. I'm referring to the vital and sense [ph] studies. These studies are evaluating outcome effects of one gram per day Lovaza or generic Lovaza plus either Vitamin D or [indiscernible] respectively. On cancer and cardiovascular disease and primary prevention patient populations. It is most likely that these studies will not succeed because they're using Omega-3 mixture rather than pure EPA because the dose levels that they're using are relatively low and because the patient populations they're studying are relatively low risk. We appreciate that these studies are being conducted. If they do not achieve their endpoints such failure will help solidify multiple prior conclusions that low doses of Omega-3 mixtures don't work effectively to lower cardiovascular disease risk and further distance the clinical effects of high dose, pure EPA Vascepa from low dose Omega-3 mixtures. If the study succeed while we believe this will be somewhat of a surprise, it could lead us to believe that the impact of Vascepa and reduces maybe even more pronounced than we currently anticipate. In either scenario we look forward to the results. Based upon available information, we anticipate the results in the first of these studies in and around June of this year. Also note that these studies rely on patients to self-report information which is considered to be a lower standard of study rigor. In addition, unlike REDUCE-IT these studies are not being conducted under special protocol assessment agreement with the FDA. In the lipid space, over the past year we've seen a series of clinical trial reports. There is [indiscernible] which demonstrated lowering information can lower cardiovascular risk. This data is encouraging for REDUCE-IT because Vascepa also lower certain markers of information. There's also been two PCSK9 studies for [indiscernible] both of which demonstrated that lower is better regarding LDL cholesterol. These studies also suggest that significant residual cardiovascular risk remains after well controlled LDL cholesterol. Even when LDL cholesterol is nearly fully eliminated. We do not believe that it's possible to draw any conclusions regarding the likely results of the REDUCE-IT study from this PCSK9 studies for three primary reasons. First; the mechanism of action of PCSK9 and Vascepa are very different. And it is not possible based upon my understanding to draw scientific conclusions based upon the effective one drug as compared to another drug with the similar mechanisms of action. Second; while lowering LDL cholesterol is valuable. Statin treated patients in high dose statin's seem to drive limited remaining benefit because LDL cholesterol has already been driven down significantly by statin therapy. In contrast, we know from multiple studies that approximately 60% to 75% of the residual cardiovascular risk remains even when LDL cholesterols well controlled. Accordingly, there is considerably more opportunity for an effect from therapy which addresses risk factors beyond LDL cholesterol. And third, look at the fatality of the epidemiological, clinical and genetic associated with triglyceride and proven to factors leading to arthrosclerosis as it impacted by Vascepa. These effects are broad and we believe support our hypothesis that significant cardiovascular risk reduction can be achieved via administration of four grams per day of pure EPA Vascepa. In any case, we will know the result soon. While I see an important place for PCSK9 I see their relative risk reduction and the positive reception that they're getting from clinicians despite their high cost to be positive leading into the REDUCE-IT results. I also see the potential for Vascepa to help millions of patients. Vascepa is not seeking to compete with cholesterol lowering therapies. Rather Vascepa is looking to address the significant risk which remains in patients beyond the benefit of cholesterol therapy. Death from cardiovascular disease are increasing. Cost of cardiovascular care is increasing. We believe Vascepa can help. A successful result would reduce it, could greatly impact current treatment practices to reduce cardiovascular risk the leading cause of death in the United States. Our commercial team is continuing to prepare for expansion following REDUCE-IT results. some of you may have seen the pilot TV advertisement focused on our current indication of triglyceride levels of greater than equal to 500 migs per deciliter that we started running in April on a limited basis national and regional [ph] level. We've received encouraging feedback from viewers. As a reminder, the purpose of this pilot program is to increase Vascepa awareness into better understand what messaging works in advance of a potentially broader promotional campaign after REDUCE-IT results. In order to broadly affect patient behaviour, we recognize that we would need to run the commercial much more frequently and surveys for most advertisement show that typically requires six or more viewings for people to take actions based upon the commercial. However, creating general awareness can be achieved with a lower number of viewings and we're hoping that such aided awareness regarding Vascepa prior to REDUCE-IT results will help us after REDUCE-IT results have been communicated. Regarding increased Vascepa awareness, we're also continuing to be active at medical meetings. Assuming REDUCE-IT is successful. We anticipate significantly increasing our sales force before the end of this year. I'll now turn the call over the call over Mike Kalb, our Chief Financial Officer to update us on our financial results. Mike?

[Mike Kalb:]

Thanks John. The first quarter of 2018 showed continued growth of our commercial footprint despite challenging headwinds from seasonal factors. Amarin's net product revenue for Q1, 2018 was $43.8 million an increase of 27% over the same quarter of 2017. The core driver of this year-over-year increase in our Q1, 2018 net product revenue was continue growth in new and recurrent Vascepa prescriptions. Symphony and IQVIA data for Q1 showed estimated normalized total Vascepa prescriptions of approximately $381,000 and $392,000 representing respective increases of 25% and 27% over the same period of the prior year. Net product revenue in related prescription levels in the first quarter of each of the past several years appeared to have been held back certain seasonal factors. We have mentioned these factors previously including public reminders that the start of Q1 of this year, the most significant seasonal headwinds comes from beginning of the year medical deductible under patients insurance plans. There's been a growing trend in annual insurance coverage for patients to begin the year with patient deductible amounts of $1,000, $2,000 or sometimes much more than $2,000. Such deductible amounts cause many patients under such insurance plans to experience significant challenges. At the start of the year rather than paying the co-payment amounts they were accustomed to paying at the end of the prior year. When they go to fill the same prescriptions in the New Year they're faced with paying significantly more due to the high beginning of the year deductible under their insurance policy. Most Vascepa patients are on multiple therapies. Accordingly for example, a patient might go to fill five prescriptions and being accustomed to paying the co-payment amount of $20 for each prescription or $100 in the aggregate. Instead due to their high beginning of the year insurance deductibles, the patients goes to fill the same five prescriptions in the New Year and [indiscernible] several hundreds of even thousands of dollars for the drugs because they've not satisfied their New Year deductible. While some patients elect to pay for all five drugs and get through their deductible quickly the cost goes too much for many patients. As a result, such patients typically fill the prescriptions for their pain medication and other drugs without which they will have an acute response and often forego filling drugs for asymptomatic chronic conditions. Every year this is an issue for Vascepa and various other therapies. In 2018, this phenomenon appears to be more widespread than we expected. As a result, well our net product revenue in the first quarter grew 27%. This growth was slower than we expected at the start of the quarter. Insurance coverage from Vascepa remains broad. The high beginning of the year insurance deductibles for patients are not Vascepa specific. Our sales team is upbeat and confident that physicians will continue to write Vascepa prescriptions for new patients, while in parallel efforts are made to get patients who cease throwing Vascepa prescriptions in the first quarter due to insurance deductibles presume throwing their Vascepa prescriptions. New prescriptions of Vascepa have recently hit record levels. Some patients are still working through their insurance deductible amount for the year. However, we're optimistic based on prior year results that many of them will return to Vascepa. We continue to believe that Vascepa net product revenue for 2018 will reach $230 million with such guidance to be adjusted when we learn REDUCE-IT results. Compounding the seasonal effect in Q1 caused by insurance deductibles during the first quarter of 2018 customer inventory levels decreased from year end 2017 levels by approximately $3 million which is comparable to the decrease experienced in Q1, 2017. We believe that changes in channel inventory at these independent wholesalers and retail pharmacies are common and are impacted by numerous factors including recent order trends. We also believe based on information available to us that channel inventory levels at the end of first quarters of 2018 and 2017 are within ordinary ranges. In addition to net product revenue, we recognized licensing revenue of $0.1 million and $0.3 million in the three months ended March 31, 2018 and 2017 respectively related to agreements for the commercialization of Vascepa outside of the United States. Internationally the clinical trial of Vascepa in China as sponsored by our partner Eddingpharm continues to progress and in March 2018 we received the first international approval of Vascepa. This first approval is from Lebanon, our partner in the Middle East, Biologics is actively working towards approval of Vascepa in additional countries. We anticipate modest sale of Vascepa in Lebanon beginning later this year. Gross margin for product revenue was 76% in the first quarter of 2018. Selling, general and administrative or SG&A expenses for Q1, 2018 and 2017 were $43.4 million and $34.2 million respectively. The increase in SG&A expense is primarily reflects an increase of sales and marketing expenses which include expenditures for anticipated expansion following successful REDUCE-IT results and an increased co-promotion fee. The increased co-promotion fees reflect both higher Q1, 2018 gross margin compared to Q1, 2017 upon which the base co-promotion fee is calculated and an incremental accrual of approximately of 55% on top of the base co-promotion fee to be paid in future years as tail payment under the terms of our contract with our co-promotion partner Kowa. Research and development expenses for Q1, 2018 and 2017 were $11.8 million and $10.8 million respectively. This decrease was primarily driven by timing of REDUCE-IT expenses and related costs. Amarin reported cash and cash equivalence of $129 million as of March 31, 2018 which includes approximately $70 million of net proceeds from the equity offer and completed in 2018. As of March 31, 2018 the company also had $39.2 million in net accounts receivable $57.6 million in gross accounts receivables before allowance and reserves and $35.1 million in inventory. Our net cash flow continues to variable from quarter-to-quarter. excluding proceeds from the equity financing completed in the first quarter and excluding other financing related amounts interest and royalty and without the company's high level of research and development payments most of which relates to advancing REDUCE-IT study to completion this year. Net cash outflow in the quarter ended March 31, 2018 was approximately breakeven. Research and development spending should significantly decline after completion of the REDUCE-IT study and initial publication of its results. Cash outflows relating to research and development in Q1, 2018 totaled approximately $11.3 million and cash paid for interest and royalties aggregate was approximately $5.9 million. As of March 31, 2018 Amarin had approximately $293.6 million American Depository Shares or ADSs and ordinary shares outstanding. 32.8 million share equivalence Series A convertible preferred shares outstanding and approximately 25.7 million equivalent shares underlying stock options at a weighted average - price of $3.35 as well as 12.4 million equivalent shares underlying restricted or deferred stock units. I'll now turn the call back over to John for closing remarks.

[John Thero:]

Thank you, Mike. Before closing. I want to express my sincere appreciation for everybody listening today. Our employees, our stockholders, our partners and our REDUCE-IT patients in clinical sites. We look forward to updating you on our progress. With that, we conclude our prepared comments and would like to open the line for some questions. Operator?

[Operator:]

[Operator Instructions] our first question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed with your question.

[Louise Chen:]

So first question just regarding the Vascepa sale on a quarterly basis. I know you addressed it at length in your prepared comments, but how should we think about the quarterly progression. Is there a specific quarter of catch up given the results in the first quarter? and second question I had is, what actions are you taking now to drive the commercial uptick of the Vascepa prior to REDUCE-IT, is there anything going on there? And then last question, we get a lot is, how quickly you think the REDUCE-IT results supposing they're positive will drive the uptick of Vascepa. Thank you.

[John Thero:]

Louise thanks for the three questions. Regarding revenues and how to look at them from a quarterly basis. I think we've always encouraged probably the best by look on revenues is year-over-year due to the seasonal factors. Embedded in your question maybe - Q1 was a decent quarter up little under 30%, Mike made the comments about record levels of Anarex and so it's Anarex growing in this case, achieving [indiscernible] which is tends to be good sign for the future, we've got a record number of physicians prescribing Vascepa also positive. That being said, when patients don't fill scripts as they didn't - medications in the first quarter. Our aim is to bring those patients back and somewhat difficult to predict when we come back, so they come back on their own and they wait and see, go back to their doctor. So we come into Q2 with little bit more of a deficit to start off with in terms of run rate than what we expected. We reiterated on this call. We think we'll get to $230 million for the full year, but I think as you sort of look at it, there were some headwinds here at the beginning of the year, our team is very motivated. As I said Anarex's up, number of prescribers are up, lot of positive signs but there is still a lot of work to do. Which sort of leads into your second question, what are we doing relative to commercial uptick now? I'll take one of those things off the board. The advertise we're doing on television could have some impact down the line, we did just start that in Q2, but that really isn't being run with enough frequency to significantly drive short-term demand, we do think that's going drive awareness that will be beneficial to us, later in the year particularly after the REDUCE-IT results. So we're not counting on that limited advertisement to have dramatic short-term impact. Our sales force continues to be a somewhat of a speciality sales model and it's only addressing a limited number of physicians and a limited number of states and a limited number of geographies in those states. We have continue to see that within the physicians that we target that there is additional room for growth, we've grown on that basis in past years and we've essentially kept that footprint, that work force in the past. It's always refinement of messaging that can be done and we're building on what we've done in the past. While on parallel, preparing for the REDUCE-IT results across a range of scenarios and those range of scenarios include different levels of relative risk reduction in the study. As well as how much information can be communicated in the initial press release as well as publication, timing thereof and what sort of obligation do we have to ensure that our promotion is updated to be truthful anonymous leading based upon the scientific information that is presented by the REDUCE-IT study. In terms of around the timing of REDUCE-IT what can be said really will depend upon those results as I said, feels though we've got enough obligation to update what we're promoting to ensure that it is, factual and non-misleading as a first ever study in this important population. Our - background inquires by media, based upon background inquires by leading medical professional organization. We think these results will get a lot of attention but we need to see those results before we can really fully define what our promotion will, the timing of that promotion and the contents of that promotion after the REDUCE-IT results. Hope those comments are helpful.

[Louise Chen:]

Yes, thank you.

[Operator:]

[Operator Instructions] thank you. Our next question comes from the line of Joel Beatty with Citi. Please proceed with your question.

[Joel Beatty:]

What new FX you need to show as the minimum results for REDUCE-IT in order to maintain the current level sales?

[John Thero:]

I'm trying to make sure I fully understand the question because currently we're selling off of biomarkers. If we've got positive statistically significant results on an outcome study that's a world of difference versus what we're selling on today. So our trial design around 15% relative risk reduction we're seeing tremendous excitement on PCSK9, at least by the cardiologist community in particular. And they're expensive and we've got a profile that's affordable, well tolerated, placebo like safety profile. Our marketing surveys was suggested that of physicians that anything from sort of 7% to 8% up, would be viewed as being a well-received result. We're aiming for higher than that, I think the data suggest that will be higher than that. What we saw when the initial results, the improvement study came out for [indiscernible] there was a lot of excitement, different population different drug, gaming out [indiscernible] of those drugs. But there was a lot of excitement and around 7% and we've got I believe a safer more pragmatic, more an affordable health profile that fits well there. So outcomes data was [indiscernible] but 96% of patients with elevated triglyceride received no therapy at all because there is no outcomes data. If there is a positive significant result from the REDUCE-IT study. I think that's a significant game changer. Obviously we love it be 15% or greater. Greater will be terrific but it's somewhat of a non-comparison really the idea of going off a biomarker is to going off of outcomes. The outcomes are positive. We're in a new game.

[Joel Beatty:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from the line of John Boris with Suntrust Robinson Humphrey. Please proceed with your question.

[John Boris:]

First question just has to do with the primary endpoint and the secondary endpoint analysis, more specifically on the secondary analysis. Obviously you have an opportunity as agreed to with the FDA in the paper that you published on a clinical trial design that is a vast number of secondary endpoints, diabetic obviously is very big group but what are the important secondary endpoints that are important for market segmentation that you believe are important that you need to hit on. And then on the second question on the commercial pilot program, do you have any metrics in place to measure the return that you're getting on the $15 million to $20 million that you're investing in that commercial pilot program. in other words if you're doing the TV ad are you measuring the number of hits that are coming into the Vascepa website as an indication of patients looking for therapy and intent to see a physician.

[John Thero:]

John thanks for the question and comments. Let me start with the second one, first. Relative to the pilot promotion program. We are doing that with one of the leading advertising firms in the world and they have all those kinds of metrics set up. So we're clearly measuring hits to a website and those kinds of things. Which have been pretty robust here to start with? What we're predominantly doing is, we took a measurement an unaided and awareness at the beginning of the study and we're going to be sort of running commercials for a bit and will pause for a little bit, take another unaided awareness measure and then we'll start up for a little bit and we'll pick another unaided awareness measure and the unaided awareness measure looking both at positions and consumers. To me right now I think that the position pieces is as important more important than the consumer piece because we know that the majority of the positions who could potentially write Vascepa start up in very low awareness of the product, largely because we still call on them. So going into REDUCE-IT results when those results come out, we'd like to those physicians to have some identity as to what Vascepa is. So we're definitely measuring it, it's still early. We're only been running the commercial for a month and we've been running it with considerably lower frequency then you would run it. If you're really trying to use it drive short-term demand but for the reasons I described earlier that's not where we're starting and that would be a considerably more expensive program. But I do think that this will position us and we're measuring along the way, pilot positions us for preparing for our REDUCE-IT results. So I hope those questions are useful. I've got both Craig Granowitz, our Chief Medical Officer and Steve Ketchum, who's running the REDUCE-IT study here with me. Craig maybe to jump in on secondary endpoints which ones you see from a physician's perspective to be most intriguing.

[Craig Granowitz:]

John, thank you for your question. It's a very important one. And it's one that is it's always looked at very carefully in these large cardiovascular outcome stages, where they are very - a large number of important endpoints and important points for clinical practice beyond those that are specified by the health authorities. As you know the primary endpoint is a 5. MACE of cardiac death, non-fatal MI, non-fatal stroke, coronary vasculation and unstable angina requiring hospitalization for more than 24 hours. The secondary endpoints is a subset of those as well as each of the individual components of those. But I think above and beyond the primary and secondary endpoints from a clinical practice perspective. These patients sub groups are also extremely important and the ones that we hear most often from our steering committee and other scientific experts are the large sub groups of patients with diabetes and the secondary prevention group and just to decline secondary prevention. These are patients that entered the study having already experienced at least one primary cardiac events either unstable angina or vasculation procedure, non-fatal MI. So those groups from a clinical standpoint are extremely important and I think as we've communicated on prior calls and in the design paper which is published, is that these groups are significantly sized and stratified in the REDUCE-IT study. Roughly 70% of patients enrolled are secondary prevention and there is a significant fraction of patients with diabetes that are enrolled in the study. All of the primary prevention patients as you know have presence of diabetes as well as other coronary risk factor. So when you think that there is a significant fraction of those, with secondary prevention that has diabetes plus 100% of the primary prevention group have diabetes, so there is a significant number of overall patients in study. What we hear from most of the thought leaders are those are two very large and important groups that are particular risk and particular need for care beyond just LDL [indiscernible].

[Elisabeth Schwartz:]

[Technical difficult] we'll move to last question.

[Operator:]

Yes. Our last question for today will be from Matthew Andrews with Jefferies. Please proceed with your question.

[Matthew Andrews:]

As it relates to REDUCE-IT, assuming a positive outcome. Can you talk about your thoughts on how formulary placement with insurance plans could potentially change with the potentially first and only Omega-3 product to improve cardiovascular outcomes? Could it become the de facto first line drug of choice for mixed dyslipidemia and severe high triglyceride for insurance plans? What are your general thoughts and around how formula placement can change and impact on potential scripts and use there? Thank you.

[John Thero:]

Matt, good morning. Thanks for the question. So I'll start this off, I'll start the response off sort of contrasting us to something like PCSK9. So PCSK9 comes into the market with very little or really no managed care coverage as of fairly short time ago. Positive results, but a price of $14,000 per year and docs like the drug it provide roughly 15% relative risk reduction. But indeed it's run into a managed care headwind. Managed care in many places, although that's - they're succeeding in breaking down that wall and hopefully more and more patients who need that therapy will receive that therapy. In contrast, the coverage for Vascepa today is with few exceptions pretty strong. I think more than the managed care challenge it's really convincing physicians that this is a patient population that should be appropriately treated and in the cardiovascular space - the preponderance of physicians are schooled [ph] or believe that outcomes data is how they should make their decision. So we have positive outcomes data. I think that's going to be really have a strong effect on the prescribing habits of physicians and could very well lead this to be a standard care or first line of therapy beyond LDL, cholesterol management in mixed dyslipidemia patients particularly given our cost and safety profile. Are there some insurance plans and or some individual plans under coverage, where we have coverage that where the coverage could improve. Absolutely. And outcomes data will some positive should help there as well because those plans will look at the data today and say it's encouraging but they're not wrong in saying it's not conclusive, the purpose of the outcome study is to make it conclusive. So I think there is an opportunity for us to increase insurance coverage, improve insurance coverage after a REDUCE-IT result. But I think the bigger opportunity is with physicians and I just wanted to remind everybody that this really is a very different paradigm than - PCSK9 were introduced and had get reimbursement from the beginning because our reimbursement that's out there today which is predominantly tier 2, - you have to have triglyceride of X or Y, the coverage is out there. It's strong and it docks right this after REDUCE-IT the coverage should be there, with few exceptions and we will as you suggest work on those exceptions, with outcomes data should help. Hopefully those comments are useful.

[Matthew Andrews:]

Yes, they are. Thank you.

[John Thero:]

As the operator suggested. I think ran out of time. [indiscernible] one hour. I appreciate that number of people sent it suggested topics for questions in advance of this. Hopefully, we were able to address those in our prepared comments. So we thank you for that. we thank you for your interest and we're going to continue to work on growing our business. based upon what we're doing today. We obviously look very much forward to the REDUCE-IT results and to keep you apprised of our progress along the way. So thank you for your interest and support. Have a wonderful day. Bye.

[Operator:]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. thank you for participation.