Q1 2017 Earnings Call Transcript

Published: 3 May 2017

[Operator:]

Welcome to Amarin Corporation’s Conference Call to discuss its financial and operating results for the first quarter of 2017. This conference call is being recorded today May 3, 2017. I would now like to turn the conference 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 the timing of interim analysis, study completion, regulatory review and likelihood of success, our plans and preparation for expanded promotion of Vascepa, and related market positioning potential. Our plan to purchase additional supply of Vascepa, our goals regarding the timing and scope of international expansion and our current expectations regarding the effect of our co-promotion agreement on our business. These statements are based on information available to us today, May 3, 2017. 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 forward-looking statement section in today's press release and the risk factors section of our Quarterly Report and Form 10-Q for the three months ended March 31, 2017. These documents will be filed with the SEC and will be available through the Investor Relations section of our website at www.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 www.amarincorp.com in the Investor Relations section under the sub category of Events and Presentation, 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'll now turn the call over to John Thero, President and Chief Executive Officer of Amarin.

[John Thero:]

Thank you Elizabeth and good morning everyone. I recently met with an investor who ended our discussion with a comment that Amarin keeps on positively executing in a manner which in his words, is sometimes boring but is clearly creating value, he urged that we keep it up. I reminded this investor that we won't be quiet for long as completion of our landmark clinical outcomes study is drawing near. We've had a tremendous series of scientific publications based upon our phase 3 study and image even broader publication based upon reduce it assuming that the results are consistent with our expectations. He assured me that he will be sustained until that time by our growing existing commercial business which he believes alone supports our current valuation with little if any value given for the tremendous potential upside of reducing. While my conversation with that investor ended at that point, I want you to be assured that why we are giving priority to positive execution. We are also preparing for greater visibility. This preparation is occurring on a number of levels, for example, our medical affairs team is actively engaging key opinion leaders regarding the position of the reduced study. This is evidenced by the recently published design paper entitled Rationale and Design of reducing reduction of cardiovascular events with icosapent ethyl intervention trial. This paper was published on March 15 in clinical cardiology, a copy is available on the Amarin’s corporate website. The lead author on this paper is Dr. Deepak Bhatt, the principal investigator for this study. The dedication of Dr. Bhatt and other authors to this paper is reflected in the fact that was published within nine months of our SPA amendment for the REDUCE-IT trial. This SPA amendment which was previously described as a second interim look in multiple pre-specified secondary and tertiary endpoints of study, all of which is incorporated in the design paper. Another example of this increased visibility for REDUCE-IT is the increasing share of voice that the importance of triglyceride lowering is getting in the wake of a series of failed HDLC modification studies. Genetic studies and studies with EPA in Japan point to the value of triglycerides lowering in the potential broad benefits associated with EPA. Clearly the residual risk of cardiovascular events remains too high despite the standard of care of existing therapy. This is true even in patients with well controlled LDL cholesterol. On the LDL front, KOLs are debating the cost effective value of PCSK9. In these debates seemingly everyone agrees that lower is better for LDL but question the costs and risks for achieving these results. While Vascepa does not compete directly against LDL lowering therapies, these discussions emphasize the need for therapy such as Vascepa. Vascepa is orally administered affordably priced, has no known drug-drug interactions and provides a broad range of improvement to levels of triglycerides and other lipids, lipoproteins and inflammation parameters as well as other markers associated with increased cardiovascular risk. A successful result will REDUCE-IT, would be a game changer and disrupt current treatment practices to reduce cardiovascular risk, the leading cause of death in the United States. In addition to the scientific community increasingly focusing on reducing. Our commercial team is preparing for expansion following successful REDUCE-IT results. Our existing commercial team is inspired by the progress being made today around the increasing number of patients on the Vascepa therapy. This enthusiastic team which includes a 139 sales representatives has a scientific death and passion to be the foundation for Amarin’s continued commercial growth. We are also planning the infrastructure needs for rapid and effective expansion to approximate 400 to 500 sales reps following successful REDUCE-IT results. Furthermore we recently hired a head of consumer marketing, to-date most of our promotion has been direct to healthcare providers, Vascepa should become a consumer story and we are increasingly preparing to make itself particularly following REDUCE-IT results. The availability of REDUCE-IT results is growing near. We anticipate such results being available to us and publicly reported in Q2 two or Q3 of next year. With over five years of this landmark study completed, the end is in sight and the opportunity continues to look large. Our ability to capitalize on such results will be aided by the fact that the Vascepa already has a strong commercial history with a positive safety record, strong managed care reimbursement and consistently high quality supply. 2017 is off to a good start. Q1 has historically been our most difficult quarter, due to industry challenges associated with beginning of the calendar year insurance deductibles for patients. These market dynamics cause patients at the beginning of the year not to fill prescriptions particularly for therapies treating asymptomatic chronic conditions like elevated triglyceride levels. We are excited that Q1 2017 marks a 13th consecutive quarter of generating greater than 50% growth in normalized prescriptions year-over-year as reported by independent companies such as Symphony Health Solutions and IMS. As the denominator gets larger achieving this level of growth without expanding our sales teams becomes more of an accomplishment, but also more of a challenge. It is a credit to our team that it was again achieved in Q1. Driven by prescription volume growth, product revenues also increased in Q1. Despite net product pricing increasing slightly in Q1 2017 compared to Q1 of last year, product revenues grew slower than prescription growth. This delta appears to be due to timing of Vascepa purchases by independent wholesalers. Mike Kalb will describe this timing effect in more detail later in this call. You may recall that the timing of wholesaler purchases varied throughout 2016 such that in some quarters purchases were below prescription levels and other quarters they were above. Ultimately the variability tends to balance out as it did for the full year in 2016. Despite the lowering of on-hand inventories in aggregate by independent wholesalers, our reported product revenues in Q1 2017 increased 36% from Q1 2016. Gross margins increased to 76% in Q1 2017 and there were no major variations in expenses. This supported our lowering net cash outflows from operations excluding R&D cost and financing related costs in Q1 2017 to 1.4 million compared to 7.6 million a year ago. This net cash flow in Q1 2017 excludes net proceeds of 13.7 million from our previously announced debt redemption financing in January as well as interest and royalty. Overall, we believe that our Q1 results reflect positive execution. We reiterate that we anticipate achieving 2017 product revenues of between $155 million and $165 million. Outside the United States we received some positive news during the quarter from China. Regulatory authorities approved the clinical trial application for Vascepa made by our partner Eddingpharm. We understand that other companies with the Omega-3 investigational products have applied previously but encountered difficulties with approval in China. They were hindered by manufacturing quality and control or experience delays in initiating their clinical trials. It is a tribute to the quality of Vascepa and the ability of the teams at Eddingpharm, Amarin and our suppliers that this approval with achieved. With this approval our partner will move forward with planned clinical study of Vascepa in China, initially studying a patient population similar to the MARINE study in the United States. We will try to provide more information of the size and timing of the study after its commenced. We believe that the Omega-3 opportunity in China is large based upon the prevalence of hypertriglyceridemia, which is estimated to affect approximately 11.9% of adults in China. Our Mid-East applications for clearance to market Vascepa are progressing. We will release more information on this timing when it's available. Earlier I mentioned that news flow from Amarin is likely to increase as we progress towards the completion of the REDUCE-IT cardiovascular outcome study. We estimate that in mid-March 2017 we reached the onset of approximately 80% of the target aggregate number of primary cardiovascular events in the REDUCE-IT study. Accordingly, we have triggered the 80% interim look process. While the timing of reaching 80% of the events was generally consistent with our expectations, it was slightly later than expected. When I say slightly, I mean weeks not months, being this close in our projection is not bad for a trial of this large size in duration. This trend suggests that the final target event in the study may occur in early 2018, but we still anticipate that it will occur near the end of 2017. Again, this is not a big time shift given the overall size and duration of the study and it does not change our expectation of having the results reported in mid-2018. But I mentioned it here for completeness. The 80% interim look procedure has three primary steps. The first is that our REDUCE-IT sites collect information on each patient in the study and enter it into a database. This is a large task because it involves efforts to meet with all 8,175 patients in the study or more specifically all of those were still alive. Our study population is relatively sick and some patients have died. How many of those deaths are on the placebo arm versus the Vascepa arm of the study is not known to us, but deaths in the study were expected as these are high risk patients. Collecting vital data on these patients requires a couple of months. The second step in the interim look process is that our study site coordination companies scrubs and compiles the information for release to the independent Data Monitoring Committee or DMC. This is all done in a matter that is consistent with good clinical trial management and Amarin remains blinded to the [indiscernible]. The third step is that the DMC evaluates the interim data and makes a recommendation on whether to continue or end the study. Once we receive this recommendation we will make it known publicly. We anticipate that the DMC will communicate its recommendation to us in Q3 2017 with regard to the interim look. After which we will promptly communicate the recommendation publicly. As we've communicated in the past, we anticipate that the DMC will recommend that the study continue to completion. Our expectations are based upon the history of most cardiovascular outcome studies. The design of this study and the practical consideration that the DMC’s interim look will be within approximately six months of the onset of the final target event. Given the high importance of this study, the large size of the population with elevated triglycerides in the multiple high threshold for stopping the study early for overwhelming efficacy. We expect the study will run to completion. As discussed previously, this 80% interim look has several helpful purposes. One is that it forces all data entry into the study database and for all the data base data to be scrubbed. It also helps us to maintain contact between clinical sites and patients as this is particularly important in long-term studies. Thirdly, it test processes and allows efficiencies to be refined to help ensure that at the end of the study the trial is wrapped up efficiently. I'm surrounded today by various members of Amarin’s team, you haven't heard recently from Steve Ketchum, our Chief Scientific Officer. I will now ask Steve to say a few words about our preparation for the completion of the REDUCE-IT study, outlook for success and market observations. Steve?

[Steve Ketchum:]

Thank you, John. As we prepare for the end of the REDUCE-IT study, the 80% interim look should be a good forcing function to ensure that systems are working. It will also ensure that the DMC members have all the information they need to rapidly and effectively evaluate the interim data from this large study. The interim look is progressing and I'm convinced that the efficacy and safety data will be ready for DMC review and recommendation before the end of Q3. Consistent with the views expressed by John, I believe that the trial will run to completion with results available to report in mid 2018. We and the clinical research organization and dentist health are continuing to be diligent and vigilant in every aspect of the study to keep it on track to demonstrate the successful result we expect. The study is being conducted in 11 countries at approximately 450 clinical sites such that the magnitude of this effort is immense, with many complexities associated with a long duration multinational study. Our team has completed scores of site visits to maximize the likelihood of a robust clinical result. These site visits help ensure that common long-term study challenges such as adherence to the study protocol, participant attrition and data collection quality meet our high expectations. For avoidance of doubt, REDUCE-IT study team representatives do not meet with patients during site visits and do not know which patients are on placebo versus Vascepa to maintain the blind. The 80% interim look also serves as an additional contact point for clinical sites with their patients. We are nearing the end of the study and we need to be vigilant in encouraging participation and compliance throughout the study for all patients. I mentioned this process here to give us a sense of our current focus. After REDUCE-IT is complete, assuming the results of the study is successful, we will pursue steps to facilitate promotion of the results as promptly as possible. The FDA is interested in the result of this study. As the first study of any therapy in the population being studied in REDUCE-IT, we anticipate that the FDA will have an advisory committee meeting to review results that we submit. The timelines and details for submissions by Amarin and for FDA review will be more clearly defined after we have reduced the results. Currently, we anticipate that this will be a standard review under PDUFA by the FDA. In the past, I have described the broad epidemiological, genetic and clinical data which gives us confidence that REDUCE-IT is a well designed study with a high likelihood of succeeding. The science of Omega-3 and lipid management is complex. We have a strong scientific team that together with our collaborators are regularly assessing relevant scientific factors. We are exceedingly proud that we have published or supported the publication of over 100 papers and presentations over the past five years and are continuing to prepare and publish others. Some people ask us what we have learned from the FOURIER trial of PCSK9 therapy. One thing we have learned is that of all outcome studies conducted to-date of add-ons to statin therapy, the results of EPA study in JELIS continue to have the greatest reported relative risk reduction at 19%. This is particularly noteworthy as the population studied in JELIS was a relatively lower risk population. Further, FOURIER confirmed that there are risks associated with potentially conducting an outcome study over too short a span of time. Just as the method in which lipids are modified is important. The timeframe over which a study is conducted is also important, as for example, it typically takes longer to accumulate more cardiovascular events in the study. While we can appreciate why FOURIER was conducted over a shorter timeframe than REDUCE-IT, we believe that the duration of REDUCE-IT is more appropriate and will support a robust result. Furthermore we believe that the study results for FOURIER confirmed both that lower is better for the LDL-C levels and that controlling LDL-C alone is not enough to completely mitigate cardiovascular risk. It is notable that after two decades of strong focus on LDL-C control that the total number of deaths from cardiovascular disease is again rising. The American Heart Association estimates that the cost of treating heart disease will exceed a $1 trillion in the US alone within two decades. We believe that Vascepa can help to lower the total number of deaths and lower the cost of care by lowering the rate of adverse cardiovascular events in patients with high triglycerides levels. We look forward to demonstrating this in REDUCE-IT and we are excited that we are nearing the end of this important study. I hope that these comments are helpful. I now turn things over to our CFO to discuss our financial results. Mike?

[Mike Kalb:]

Thank you, Steve. The first quarter of 2017 resulted in strong growth over the corresponding quarter of the prior year. During the first quarter of 2017, Amarin’s net product revenue was $34.3 million representing an increase of 36% over the first quarter of 2016. The core driver of our Q1 ‘17 over Q1 ’16 increase in net product revenue was continued growth in new and recurrent Vascepa prescriptions. As John mentioned, prescriptions have grown by greater than 50% based on Symphony Health Solutions and IMS Health data. This growth was supported by managed care coverage which was brought in 2016 and expanded slightly at the start of 2017. Most of the increase in revenues was volume driven although net product pricing increased slightly over corresponding net product pricing in Q1 2016. During the first quarter of 2017, wholesaler inventory levels decreased from year-end 2016 levels calculated based on estimated days of Vascepa cells on hand. We estimate that this decrease in inventory levels adversely impacted net products revenue by approximately 2.8 million to 3.1 million for the first quarter of 2017 compared to adversely impacting Q1 2016 by approximately $1.2 million to $1.5 million. We believe that changes in channel inventory at these independent wholesalers and retail pharmacies are common and are impact by numerous factors including holiday timing and recent order trends. We also believe based on information available to us that the channel inventory levels at the end of the first quarters of 2017 and 2016 are within ordinary ranges. In addition to product revenue, we recognized licensing revenue of $300,000 in Q1, 2017. Such licensing revenues relate to agreements for the commercialization of Vascepa outside the United States. Most of this licensing revenue came from amortization of the initial $15 million we received upon entering into our agreement with Eddingpharm for China. Gross margin from product revenues improved to 76% in the first quarter of 2017. This compares favorably to the 73% for the first quarter of 2016. This improvement was driven primarily by lower costs, particularly lower costs for producing our active pharmaceutical ingredients. Selling, general and administrative or SG&A expenses for Q1, 2017 and 2016 were $34.2 million and $28 million respectively. The increase in SG&A expenses primarily reflects an increase in sales and marketing expenses, legal costs and co-promotion fees accrued under contract with Kowa Pharmaceuticals America, Inc. The co-promotion fee is calculated based on gross margin on Vascepa product sales. The increase in co-promotion fees primarily reflects an increase during Q1, 2017 compared to Q1, 2016 in gross margin on product sales. Research and development expenses for Q1, 2017 and 2016 were $10.8 million and $13.7 million respectively. This decrease was primarily driven by timing of REDUCE-IT expenses. Amarin reported cash and cash equivalents of $96.1 million as of March 31, 2017. As of March 31, 2017, the company also had $29.5 million in net accounts receivable, which is $34.5 million in gross accounts receivable before allowances and reserves, and $23.9 million in inventory. Our net cash flow continues to be variable from quarter-to-quarter, but on track towards our guidance of achieving cash flow positive commercial operations for 2017. Taken as a whole, excluding research and development as well as interest royalty and other finance related costs. In Q1, 2017, calculated on this basis, our net cash outflow was $1.4 million. During the quarter, we had approximately $10.4 million in net cash outflows from research and development. We separate this amount because this level of spending should significantly decline after completion of the REDUCE-IT study. Also in the quarter, we paid an aggregate of approximately $4.1 million in royalties and interest, offset by $13.7 million in net proceeds from the debt transactions we announced in January. Overall, from a year ago to today, the face amount of our outstanding exchangeable debt has declined from $165 million to $30 million with all of the remaining debt classified as long term as the first put date on such debt is approximately five years away. As of March 31, 2017, Amarin had approximately 270.7 million American Depository shares or ADSs and ordinary shares outstanding, 32.8 million share equivalents of Series A Convertible Preferred Shares outstanding and approximately 23.5 million equivalent shares underlying stock options at a weighted-average exercise price of $3.25, as well as 9.8 million equivalent shares underlying restricted or deferred stock units. I will now turn the call over to John Thero for closing remarks.

[John Thero:]

Thank you, Mike. Before closing, I want to thank our employees and collaborators for your contributions. I also want to thank our shareholders for your support. If you’re a current shareholder in Amarin, please note that we recently issued our proxy statement for our upcoming annual general meeting, which proxy statement should have been delivered to you by whatever means or methods you’ve elected with your brokerage firm. Thus far, the voting has been overwhelmingly positive. For those of you who have already voted, thank you for your support. For those of you who have not yet voted, I hope that I can count on you for your support for these resolutions proposed in the proxy statement. These proposals as described more fully in the proxy statement, are intended to ensure that Amarin is competitively positioned for the future. As noted in that proxy statement, Amarin’s progress in 2016 was considerable. This progress continued in Q1 of 2017. I look forward to updating you on Amarin’s further progress this year. 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 Chiara Russo with Cantor Fitzgerald. Please proceed with your question.

[Chiara Russo:]

Yeah. Hey, guys. Thank you for taking my questions. I think the first question that I have is actually in regards to some of those script trends. I went ahead and pulled some data off of Symphony and they showed sort of a nice spike in the month of March towards the end of the quarter. Do you happen to know if that sort of trend has continued into April? And what was sort of driving that?

[John Thero:]

Chiara, good morning. It’s John. So we're going to refrain from discussion of Q2 results at this point in time. We are bullish on the year overall, but wanted to focus on them, let’s get Q1 behind is which is the for the purpose of this call. As we've talked about in the past, Q1 has historically been a challenging quarter for us and that's particularly due to insurance deductibles. This is not unique to us. Insurance companies, some of them have $1000, $2000, sometimes, $3000 deductibles and patients need to work through that and we have seen in the past that that particularly affects prescriptions in January and February and a little bit less so in March. I think one could sort of think them through as to all sellers ordering systems which tend to be program based upon what they've seen most recently, so they see sort of January and February being slow and they continue to order sort of lightly into March. So we saw last year, we saw the year before, low January and picking up a little bit in February and stronger March, that sort of happened this year as well. Last year, we ended up seeing that trend from the first quarter, translating into the second quarter, both in terms of the strong scripts, but also in terms of the wholesalers sort of making up for their shortfall in the first quarter. We cannot predict wholesaler patterns. In general, over a longer period of time, wholesalers balance out. Last year, they were -- they under purchased in the first quarter, over purchased in the second quarter, got a little closer in the third quarter and by the end of the year, they sort of came fairly close and balanced with the prescriptions. So without getting too specifically about April numbers, I am hoping that that context may be of value to you.

[Chiara Russo:]

Yeah. That was helpful in terms of historical context as well. And I’m sorry did you say that you guys did take a slight price increase at the beginning of the year?

[John Thero:]

We continue to view this as being a volume growth business. So our growth has been focusing on and it is all prescription based. Lots of things happened at the beginning of the year. We expanded managed care coverage. It was already pretty good last year, but we expanded managed care coverage, including in some places, some plans that put us on exclusively and removed the generic Lovaza. We're at a point now where our approval rates on Vascepa are very close to that of generic, the generic earlier generation product that's out there. Most plans have us on parity pricing with or parity coverage rather with Lovaza. There are some plans that have now put us on priority over of Lovaza. There's still some that disadvantage us for the most part, it’s the same, but that expanded coverage eats a little bit into the gross and that we're continuing to see more co-pay cards used. We have expanded our co-pay card program so that it's not just $9 for a month, but a lot of people are getting three months supplies all at once from retailers who have gone to a card that also provides for $9 co-pay for the three month period subject to certain limitations. All this is a long way of saying that on a net basis, our pricing is somewhat comparable, maybe slightly up, but really somewhat comparable despite the fact that we did take a 9% price increase towards the end of last year.

[Chiara Russo:]

Okay. That makes sense. So, but the volume is still good. And then just kind of a quick question. The SG&A expense is a little bit higher than I had anticipated. What sort of levels do you see that’s sort of for basically the rest of the year? Is it going to be a continuous or do you see it increasing?

[John Thero:]

Let me ask Mike Kalb to jump in on that one.

[Mike Kalb:]

So I think as we've communicated in our guidance release earlier this year, we expect that the SG&A will increase by about, by less than 10% for the year. So I do think it is going to be some timing in there, but I still think we will be in line with that guidance.

[Chiara Russo:]

Okay. And I’m assuming that’s sustained for the R&D expense, I know you guided to that as well and that has not changed either?

[Mike Kalb:]

No, no change to that either and we still sit with that guidance. Yes.

[John Thero:]

There continues to be quarterly variability in all these numbers, I mean, particularly in the SG&A side of things, there are -- we’ve expanded our medical affairs team. Some of that’s to support our current business, some of that’s to expand our outreach to key opinion leaders. We’ve gone through in the first quarter and redone our promotional campaigns. It's good to sort of put a fresh look to that. We've added a new agency and I think a number of our messages have been fine tuned in that. Some of those are one-time expenses that hopefully will provide longer term feedback. We're continuing to do a lot of programs where third-party speakers are out talking to groups of physicians, attendance at those continues to be high. The sampling costs and there's also some cost in there for year-over-year related to legal and the related costs are not particularly high at this point in time. We're fairly early on in that as you know with the NCE protection and 30-months day, we should have protection for regulatory exclusivity purposes into 2020. So patent litigation tends to fill all available time. Those expenses will escalate a bit, but more likely more so in the later 2018, 2019 period. The biggest piece of the SG&A increase is due to the co-promotion agreement with Kowa and there, hey guys, we talked about in our opening remarks, that’s a co-promotion fee, which is based upon gross margin. It increased year-over-year in two ways. One is the percentage is up slightly to 20% of gross margin for this year. But the biggest piece of that relates to the fact we had more gross margin, [indiscernible] gross margin percentage increase, but moreover that our revenues increased 36%. So that’s sort of the biggest driver of the increase in aggregate dollars of SG&A. So hopefully additional color is helpful, but I think you're leading into another question, before I talked on this.

[Chiara Russo:]

Yeah. Just the last question sort of in relation to strategy around the REDUCE-IT read out. Obviously, everybody wants to have the primary endpoint be successful and hit that statistical significance. But my question is, moreover what happens to your strategy if for instance the primary does not hit, but you see good efficacy within individual subpopulations, for instance, like a diabetic population or something like that. How does that sort of change your commercial and your regulatory strategy?

[John Thero:]

This is a large and diverse population we're studying. As you know, elevated triglycerides in fact, roughly one in four people in the United States, there are different elevations of risk within the population that we're talking about. So people with diabetics or diabetics are believed to be at higher risk than people who aren’t diabetic. People who have had prior events are believed to be at higher risk than people who haven't had prior events. People who have higher triglyceride baselines are believed to be at higher risk. So if for some reason, the primary endpoint on the study isn’t hit and I think there's tremendous amounts of data and information suggesting that this is a well-designed study and we believe we're going to be successful. If that doesn't hit, we will look at the underlying data to see what might or might not be useful to the medical community based upon that data, but that’s hypothetical at this point in time. There is no proven therapy in this space. So we continue to see, for example, fibrates use would be tremendously high despite the fact that it had failed outcome studies. And then lastly of course, our current education isn't being studied in the REDUCE-IT study, because it's unethical to study patients, have half a patients on placebo, given a high risk of pancreatitis in patients who have very high triglyceride level. So I think our base case is where we're putting our primary focus. We think the trial is going to be successful and we're spending a lot of time getting ready for expanded promotion beyond the study. I think the medical community is increasingly focusing in on triglycerides and they see that as the frontier that holds the answers -- holds promise towards addressing this significant residual risk that remains beyond the ability of LDL cholesterol, management therapy. So we're pretty bullish about the overall study. You're right in pointing out that you never know that’s why you run the studies, but we're pretty bullish on the results. So thanks for your questions, I know that we're, the market is open and not too long a period of time and I think probably there is at least another couple of people in the queue that have hung in there. So we should probably move on to others. So I appreciate your questions.

[Operator:]

Thank you. Our next question comes from the line of Joel Beatty with Citi. Please proceed with your question.

[Joel Beatty:]

Hi. Good morning and thanks for taking the questions. So it's been about four years since Vascepa launched, and as you mentioned earlier in the call, the script growth is still greater than 60% year-over-year. Even though from what I’ve seen, many other drugs can have more of a leveling off after several years. So could you share any thoughts on why Vascepa continues to maintain its steady script growth after all these years?

[John Thero:]

No, I think there's a complement build in there. So thank you for that. We are and continue to talk it a very limited number of physicians in the US. I mean, there are close to 700,000 physicians who write statin therapy. Our sales reps call in about 20,000 of them and we haven't had any significant change in our targeting or in the size of our sales force now during that period of time. What we have had is physicians seeing the effect of Vascepa on their patients. We’ve seen how physicians seeing that the product is reimbursed. We've had a lot of literature out there about the mechanistic effects of EPA and its differentiation and we've been able to continue to advance our messaging with regard to Vascepa. In fact, it was really so much information that can be communicated about our trial results and the active ingredient that we have in many ways restrained our team sort of the, don't take the fire hose approach, don't try to tell physicians everything about the product as exciting as it may be because it's just too much for people to digest at any one point in time. So we're regularly limiting and then introducing different pieces of the story to feed into information that physicians are looking for. So within our targets, there are different ranges of penetration, but we're continuing to particularly see new patient starts go on to Vascepa. We have been seeing increased levels of switching from prior therapies as well. So while our market share on a new prescription basis overall in the Omega-3 space is coming up on 30% and then the broad non-statin lipid modifying market is coming up on 5% and the good news there, both of those numbers suggest significant opportunities for further growth. If we looked within our targets, those numbers are higher, but also continue to have significant headroom. So the products works, I think physicians are increasingly confident that if that works and our sales team is doing a good job. A lot of different factors involved.

[Joel Beatty:]

And then my last question is a follow-up on that, you mentioned the marketing message is very focused, even though there's a lot you can talk about, especially given your first amendment decision. Could you tell us a little bit about the main messages that you’re having the sales force focus on?

[John Thero:]

Sure. For that, I'm going to ask our Head of Marketing and Sales, Senior Vice President, Aaron Berg to jump in. Aaron?

[Aaron Berg:]

Sure. Hi, Joel. Overall, our core message has been that Vascepa effectively produced the triglycerides without adversely affecting LDL. That's going to hit the heart of everything we've done and that resonates well. Physicians are still LDL centric, so knowing they have a product, that will reduce the triglycerides without increasing what their primary target therapy is, which is LDL is actually a real bonus. And then of course on top of that, we have a lot of other very, very good data that complement that, in particular the [indiscernible] as we paved the way for reducing. So overall, we've had that core message since we launched. And as John said, we've had very focused strategies, focused messaging, focused on same target audience and I think the prescription growth you're seeing this many years out is a result of very good execution on that.

[Operator:]

Thank you. Mr. Thero, there are no further questions. I’ll turn the floor back to you for final remarks.

[John Thero:]

Thank you, everybody. Appreciate you joining us and appreciate your support. I know a number of folks were apprehensive about our Q1, because of the fact that it's been a slow quarter in the past. I'm pleased that I think we had a good quarter. I think it positions us well for continued growth for the balance of the year and look forward to continuing to update you on our progress commercially as well as our progress towards the completion of the landmark REDUCE-IT study Thanks so much.

[Operator:]

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