Amarin Corporation plc — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Unaudited consolidated results, compared with the three months ended March 31, 2023. Amarin is a pharmaceutical company focused on VASCEPA/VAZKEPA, with U.S. sales and commercialization in Europe and through international partners.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Total revenue, net | $56.5 million | $86.0 million |
| Product revenue, net | $55.2 million | $84.7 million |
| Gross profit | $31.9 million | $47.9 million |
| Operating expenses | $45.5 million | $65.3 million |
| Operating loss | $13.6 million | $17.3 million |
| Net loss | $10.0 million | $16.5 million |
| Basic and diluted loss per share | $0.02 | $0.04 |
| Net cash used in operating activities | $12.6 million | $7.0 million |
- U.S. product revenue was $48.1 million, down from $82.3 million. Management attributed the decline primarily to lower net selling prices amid generic competition and changes in business mix. U.S. icosapent ethyl prescriptions declined 4% year over year; Amarin’s reported market share was approximately 56%, versus 57% a year earlier.
- Product revenue outside the U.S. was $7.1 million: $1.9 million in Europe and $5.2 million from partners outside the U.S. and Europe. These amounts compare with $2.3 million outside the U.S. in Q1 2023.
- Gross profit was $31.9 million on revenue of $56.5 million. Management reported product gross margin of 55% in both periods; Q1 2023 included a $12.3 million restructuring-related inventory charge, and management reported a 70% margin excluding that charge.
- SG&A fell 33% to $39.9 million, primarily reflecting the 2023 restructuring, including lower promotional costs and elimination of the U.S. sales force. R&D was broadly unchanged at $5.6 million.
- Interest income increased to $3.4 million from $2.2 million, mainly due to higher interest rates. Other income was $1.5 million, compared with $0.6 million.
- At March 31, 2024, cash and cash equivalents were $213.9 million, restricted cash $0.5 million, and short-term investments $94.2 million. The filing describes cash and short-term investments of approximately $308.2 million; including restricted cash, these balances total approximately $308.7 million. The company reported no debt.
- Total inventory was $329.5 million, including $255.3 million current and $74.2 million long-term inventory. Accumulated deficit was $1.6 billion. Current liabilities were $224.4 million and total liabilities were $244.1 million.
Material changes and management commentary
- Revenue declined 34% year over year, primarily from a 41% decline in U.S. product revenue. U.S. generic competition remains a central pressure on price and sales.
- The July 2023 Organizational Restructuring Program eliminated the entire U.S. sales field force and reduced non-sales positions. Management expects approximately $40 million of annual operating-cost savings; the filing does not establish how much of that expected savings had been realized by Q1 2024.
- Management said it had suspended net revenue guidance because demand estimates are uncertain, including in light of U.S. generic competition and the developing European launch. It expects quarterly net cash outflows to vary with inventory purchases, U.S. competition and European reimbursement timing.
- Management believes available cash and short-term investments will fund projected operations for at least one year after issuance of the financial statements, including the proposed share repurchase program. This assessment depends on assumptions that may not prove accurate.
- In January 2024, Amarin announced a plan to repurchase up to $50 million of ADSs. Shareholders approved the plan in April; UK High Court approval remained necessary, and repurchases had not yet been described as commenced in the filing.
- Amarin reported that disclosure controls and procedures were effective at the reasonable-assurance level as of March 31, 2024, with no material changes to internal control over financial reporting during the quarter.
Risks, contingencies and unusual items
- Supply commitments and inventory: The filing reports approximately $29.0 million of future contractual purchase obligations, excluding ongoing supplier discussions, and $186.5 million of obligations contingent on specified European regulatory or reimbursement outcomes by June 30, 2024. Amarin had an $8.0 million provision related to expected failure to obtain reimbursement in certain countries; resolution could require up to an additional $7.8 million. Supplier negotiations to align commitments with demand may result in further costs.
- Litigation: Teva filed an antitrust complaint on March 28, 2024 alleging claims similar to those brought by other generic manufacturers; Amarin moved to dismiss in April, and the motion remained pending. The company also disclosed other antitrust and securities litigation. It said it could not predict outcomes and had not accrued liabilities for the described matters because losses were not considered probable or reasonably estimable.
- Commercial risks: The business is substantially dependent on VASCEPA. Generic competition, net-price pressure, customer concentration, and reliance on third-party manufacturers and distributors could affect revenue and supply. Three customers accounted for 92% of gross product sales in Q1 2024.
- Europe and international markets: Growth depends on country-level pricing and reimbursement, launches and partner execution. Management reported ongoing efforts to secure access in remaining European markets. It also noted a European patent issued in April 2024 extending exclusivity to 2039.
- Restructuring and prior-period comparison: Q1 2023 included $12.3 million of restructuring-related inventory cost of goods sold; no such charge was recorded in Q1 2024. The restructuring liability was $10.7 million at March 31, 2024, after $2.9 million of payments in the quarter.
Important facts for investors to verify
- Whether U.S. net sales, realized pricing, prescriptions and market share stabilize as additional generic products enter the market.
- Whether international sales growth and European pricing and reimbursement progress can offset U.S. declines.
- How much of the $329.5 million inventory is saleable and needed, and the eventual cost of supplier minimum commitments and contingent obligations.
- Actual operating cash use and liquidity relative to management’s stated at-least-one-year funding expectation.
- Whether UK High Court approval is obtained and the timing and amount of any share repurchases.
- Developments and potential financial effects of the antitrust, securities and other legal matters, and of the U.S. tax audit disclosed in the filing.