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How Amarin’s Expenses Are Evolving in Fiscal 2019

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Expenses in fiscal 2018

In fiscal 2018, Amarin (AMRN) reported SG&A expenses of $227.0 million, a year-over-year rise of 69%. According to Amarin’s fourth-quarter earnings press release, this rise is partly due to preparations for the announcement of REDUCE-IT trial results and promoting these results to healthcare professionals and consumers. The company also reported an increase in co-promotion payments to Kowa Pharmaceuticals in fiscal 2018, due to a rise in net product revenues for Vascepa.

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According to the company’s fourth-quarter earnings conference call, while Amarin’s co-promotion agreement for Vascepa ended on December 31, Kowa is eligible for co-promotion tail payments worth $17.8 million from fiscal 2019 to fiscal 2021, which translates to a present value of $16.6 million. In fiscal 2019, Amarin is to pay $7.3 million to Kowa Pharmaceuticals, and the payable amount is to gradually reduce in subsequent years.

In fiscal 2018, Amarin reported R&D expenses of $55.9 million, a year-over-year rise of 18%. According to Amarin’s fourth-quarter earnings press release, this rise is due to increased expenses associated with the REDUCE-IT trial as well as a $2.7 million payment to Mochida Pharmaceutical.

Projections for future years

Analysts expect Amarin’s SG&A expenses to increase 37% year-over-year to $75.60 million in the first quarter, 26% to $286.23 million in fiscal 2019, 11% to $316.33 million in fiscal 2020, and 6.91% to $338.20 million in fiscal 2021.

Analysts expect Amarin’s R&D expenses to increase 45% year-over-year to $12.30 million in the first quarter and then drop 26% to $41.53 million in fiscal 2019, 33% to $27.97 million in fiscal 2020, and then again increase 23% to $34.43 million in fiscal 2021.

According to Amarin’s fourth-quarter earnings investor presentation, the company expects to report a year-over-year rise in operating expenses of $25 million–$50 million in fiscal 2019. The company expects expenses to be even higher if its supplemental new drug application for Vascepa gets FDA approval before the standard ten-month review period. Amarin hasn’t included the $46.8 million payable to Kowa Pharmaceuticals in this estimate since these payments were already expensed in fiscal 2018.

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