Amarin Corporation(AMRN) - 2023 Q1 - Quarterly Report

PART I Financial Statements Q1 2023 revenue declined to $86.0 million due to U.S. generic competition, but net loss improved to $16.5 million from reduced operating expenses, with $304.9 million in cash and investments Condensed Consolidated Balance Sheets Total assets decreased slightly to $860.2 million, driven by reduced cash, while liabilities and equity also saw minor reductions Balance Sheet Summary (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $191,412 | $217,666 | | Total current assets | $683,821 | $689,098 | | Total Assets | $860,188 | $886,179 | | Liabilities & Equity | | | | Total current liabilities | $244,242 | $259,479 | | Total Liabilities | $275,395 | $290,846 | | Total stockholders' equity | $584,793 | $595,333 | Condensed Consolidated Statements of Operations Q1 2023 total revenue decreased to $86.0 million, but net loss significantly improved to $16.5 million due to substantial operating expense reductions Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Total revenue, net | $85,975 | $94,630 | | Gross margin | $47,927 | $72,391 | | Total operating expenses | $65,268 | $100,698 | | Operating loss | $(17,341) | $(28,307) | | Net loss | $(16,460) | $(31,563) | | Diluted loss per share | $(0.04) | $(0.08) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly improved to $7.0 million in Q1 2023, with overall cash and equivalents decreasing by $26.3 million Cash Flow Summary (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,008) | $(98,847) | | Net cash (used in) provided by investing activities | $(19,610) | $99,049 | | Net cash provided by (used in) financing activities | $364 | $(505) | | Net Decrease in Cash | $(26,254) | $(303) | Notes to Condensed Consolidated Financial Statements Notes detail VASCEPA's market challenges, U.S. generic impact, European expansion, and a $12.3 million restructuring charge related to supplier agreements - The company's lead product is VASCEPA® (icosapent ethyl), with generic versions entering the U.S. market following a patent litigation loss, impacting U.S. operations[17] - A Comprehensive Cost Reduction Plan initiated in June 2022 resulted in a $12.3 million charge in Q1 2023 within cost of goods sold, related to amending supplier agreements to align with market demand[41] - The company is a defendant in several antitrust class action lawsuits and complaints from generic manufacturers alleging anticompetitive practices related to VASCEPA's active pharmaceutical ingredient supply[52][53] Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2023 revenue declined 9% to $86.0 million due to U.S. generic competition, but net loss narrowed to $16.5 million from significant SG&A and R&D expense reductions, with $304.9 million in liquidity Overview Amarin focuses on VASCEPA commercialization, facing U.S. generic pressure, leading to a cost reduction plan and active international expansion in Europe and Asia - In June 2022, the company initiated a cost reduction plan, including reducing its U.S. field force from approximately 300 to 75 sales representatives to address shifts from generic competition[90] - The company has launched VAZKEPA in several European countries, including Sweden, Finland, and the United Kingdom (Wales), and is pursuing reimbursement in other major European markets[94] - Partner Edding expects approval for VASCEPA in Mainland China by mid-2023, following delays due to COVID-19 resurgence in late 2022[95] Comparison of Three Months Ended March 31, 2023 and March 31, 2022 Total net revenue decreased 9% to $86.0 million due to U.S. generic competition, while operating expenses significantly reduced through cost-saving initiatives Financial Performance Comparison (Q1 2023 vs Q1 2022, in millions) | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue, Net | $86.0 | $94.6 | -9% | | U.S. Product Revenue, Net | $82.3 | $93.5 | -12% | | Cost of Goods Sold | $38.0 | $22.2 | +71% | | SG&A Expense | $59.6 | $90.6 | -34% | | R&D Expense | $5.7 | $10.1 | -43% | - Cost of goods sold in Q1 2023 included a $12.3 million charge for restructuring inventory related to amending supplier agreements[116] - The decrease in SG&A expense was primarily due to reduced promotional activities and a smaller U.S. sales force as part of the cost reduction plan[118] Liquidity and Capital Resources Amarin holds $304.9 million in total liquidity with no debt, deemed sufficient to fund operations for at least one year, with improved operating cash flow Liquidity Position as of March 31, 2023 (in millions) | Component | Amount | | :--- | :--- | | Cash, cash equivalents, and restricted cash | $191.9 | | Short-term investments | $113.0 | | Long-term investments | $0.5 | | Total Liquidity | $305.4 | - Management concluded that the company's cash and investments are sufficient to fund operations for at least one year from the financial statement issuance date[125] Quantitative and Qualitative Disclosures about Market Risk No material changes occurred in the company's market risk profile during the quarter - There were no material changes in the company's market risk profile during the quarter[127] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control over financial reporting - The interim principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[128] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[129] PART II Legal Proceedings The company is involved in various legal proceedings concerning intellectual property and commercial arrangements, with details in Note 5 - The company is involved in various legal proceedings related to intellectual property and commercial matters, with further details provided in Note 5 of the financial statements[130] Risk Factors Significant risks include substantial dependence on VASCEPA, increasing U.S. generic competition, European reimbursement challenges, and reliance on third-party manufacturers - The company is substantially dependent on its single product, VASCEPA, and faces increasing competition from generic versions in the U.S., which could continue to materially and adversely affect revenues[132][133] - Commercialization in Europe is contingent on securing favorable pricing and reimbursement, which is not guaranteed and has already failed in Germany, leading to a discontinuation of business operations there[133][138] - The company relies entirely on third-party manufacturers for its product supply, exposing it to risks of manufacturing problems, supply interruptions, and potentially burdensome minimum purchase commitments[133][183] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 827,523 shares at an average of $1.82 per share in Q1 2023 to satisfy employee tax withholding obligations Issuer Purchases of Equity Securities (Q1 2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2023 | 485,433 | $1.81 | | February 2023 | 218,374 | $1.82 | | March 2023 | 123,716 | $1.87 | | Total | 827,523 | $1.82 | - The shares were withheld to satisfy tax withholding obligations related to employee equity awards[231] Other Information No other information was reported for this item - No other information was disclosed under this item[232] Exhibits This section lists filed exhibits, including sublease agreements, SOX certifications, and XBRL taxonomy documents - Exhibits filed include sublease agreements, Sarbanes-Oxley certifications by the Interim CEO and CFO, and XBRL data files[233]