Amarin Corporation plc — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023; unaudited. Amarin is a pharmaceutical company focused primarily on VASCEPA (icosapent ethyl), marketed in the U.S. and through European operations and international partners. Figures below are in millions of U.S. dollars except per-share amounts.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Total revenue | $66.1 | $89.9 | $232.2 | $278.9 |
| Product revenue, net | $64.9 | $89.2 | $214.7 | $277.0 |
| Licensing and royalty revenue | $1.2 | $0.7 | $17.5 | $1.9 |
| Gross margin dollars, as reported | $29.8 | $62.9 | $120.4 | $178.9 |
| Operating loss | $(21.5) | $(5.1) | $(62.8) | $(96.3) |
| Net loss | $(19.3) | $(5.1) | $(53.3) | $(106.7) |
| Basic and diluted loss per share | $(0.05) | $(0.01) | $(0.13) | $(0.27) |
- Revenue fell 27% in Q3 and 17% year to date. U.S. net product revenue was $62.4 million in Q3 and $209.0 million year to date, down 29% and 23%, respectively. Amarin attributed the declines mainly to lower net selling prices amid generic competition.
- U.S. icosapent ethyl market prescriptions grew 5% in Q3 and 4% year to date, according to the third-party data cited by Amarin. Amarin’s estimated market share declined to 58% in Q3 from 62%, and to 57% year to date from 66%; branded VASCEPA prescriptions fell 4% and 10%, respectively.
- Reported product gross margin was 44% in Q3 versus 70% and 48% year to date versus 64%. Excluding restructuring-inventory charges—and, for the year-to-date comparison, inventory write-offs—Amarin reported margins of 64% versus 73% and 66% versus 74%, respectively. Lower net selling prices also pressured margins.
- Q3 operating expenses were $51.3 million versus $68.0 million; year-to-date expenses were $183.2 million versus $275.2 million. Lower selling, general and administrative costs and research and development spending contributed to the year-to-date reduction.
- Year-to-date licensing revenue included $5.0 million from an Edding contract estimate change, $5.3 million from an HLS estimate change, and a $5.0 million China regulatory milestone. Revenue also benefited from Medicaid rebate estimate changes of $6.5 million in Q3 and $15.1 million year to date. These estimate changes materially affected reported results.
- Net cash from operating activities was $7.5 million year to date, compared with cash used of $181.6 million in 2022. Amarin cited, among other factors, lower inventory purchases than in the prior-year period. Investing activities provided $45.5 million; financing activities provided $0.1 million. Cash and restricted cash increased $53.1 million.
- At September 30, 2023, cash and cash equivalents were $270.8 million, restricted cash $0.5 million, and short-term investments $49.8 million. Current assets were $717.5 million and current liabilities $266.7 million. The company reported no debt outstanding. Inventory totaled $346.3 million, including $91.8 million classified as long term.
Material changes, outlook and risks
- Restructuring: The July 2023 Organizational Restructuring Program eliminated the entire U.S. sales field force and approximately 30% of non-sales positions, while retaining managed-care and trade support. Amarin expects approximately $40 million in annual operating-cost reductions. It recorded $10.7 million of restructuring expense year to date and $39.2 million of restructuring-inventory charges.
- Outlook: Amarin said it had suspended net revenue guidance because U.S. generic competition and uncertainty around product demand and European launches make estimates difficult. Management believes cash and short-term investments are sufficient to fund projected operations for at least one year from issuance of the financial statements, but cautioned that assumptions may prove inaccurate and cash could be used sooner than expected.
- Commercial developments: VASCEPA received China approval for the MARINE indication, with commercial launch by Edding in October 2023; Edding submitted a filing for the REDUCE-IT indication in October. Amarin also entered agreements covering Australia and New Zealand and South Korea and Southeast Asia. European performance remains dependent on country-level pricing and reimbursement; Germany operations had previously been discontinued after reimbursement negotiations failed.
- Supply obligations: Future contractual purchase obligations were approximately $59.0 million, with an additional $42.5 million contingent on specified supplier and European reimbursement conditions. Amarin recorded an $8.0 million provision after determining that failure to obtain certain reimbursement by June 30, 2024 was probable; the ultimate amount could require up to another $7.8 million.
- Legal and regulatory matters: The filing describes antitrust lawsuits, including claims by generic manufacturers and class actions, a securities class action, and government investigations. Amarin says it intends to defend the claims; it has not accrued liabilities for matters for which loss was not considered probable and estimable. The outcomes and potential effects are uncertain.
- Other investor risks: Generic competition, loss of U.S. patents covering the MARINE indication, reliance on third-party suppliers and wholesalers, and uncertain international reimbursement remain significant risks. Amarin also disclosed an October 2023 Nasdaq minimum-bid-price deficiency notice, providing a 180-day compliance period.
Important facts for investors to verify
- Whether U.S. net price, VASCEPA market share and branded prescription trends stabilize as generic competition continues.
- How much of reported licensing revenue and lower net loss reflects estimate changes and milestones rather than recurring product sales.
- Whether the restructuring delivers the expected annual savings without further impairing U.S. demand or international execution.
- Actual inventory utilization, future supplier commitments and any additional charges or cash payments tied to supply agreements.
- Developments in the disclosed litigation and government investigations, and the potential exposure from the contingent supplier obligations.
- Progress on international launches, reimbursement and partner sales, alongside liquidity and Nasdaq listing compliance.