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Amarin Corporation PLC (NASDAQ:AMRN)
Q4 2018 Earnings Conference Call
February 27, 2019, 7:30 a.m. ET

Contents:

Prepared Remarks:

Operator

Welcome to Amarin Corporation's conference call to discuss its financial and operating results for the fourth quarter and full year of 2018. This conference call is being recorded today, February 27th, 2019. I would like to turn the conference over to Elisabeth Schwartz, Senior Director of Investor Relations of Amarin.

Elisabeth Schwartz -- Senior Director of Investor Relations

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 included, but are not limited to, our current expectations regarding our commercial and financial performance, including levels of Vascepa prescriptions, Vascepa product and licensing revenues, costs and other commercial metrics, gross margin expenditures, and the adequacy of our financial resources. Our current expectations for scientific presentations publications regulatory reviews and related timing thereof, our expectations that reducing results could lead to a new treatment paradigm in the patient population studied, our plans and preparation for expanded promotion of Vascepa and related market positioning and potential, including the potential for further development and collaboration with Mochida, our plans to purchase additional supply of Vascepa, our goals regarding the timing and scope of international expansion, our current expectations regarding the effective co-promotion agreement on our business, our current plan for sales force and other commercial expansion.

These statements are based on information available to us today, February 27, 2019. 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, acquisition, disposition, 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 Statements section in today's press release in the Risk Factor section of our annual report on Form 10-K for the year ended December 31st, 2018.

These documents have been filed with the SEC and are available through the Investor Relations of our website at www.amarincorp.com. We encourage everyone to read these documents. This call is intended for investors in Amarin. It 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 call. These slides, which can be found on our website, amarincorp.com, in the Investor Relations section under the subcategory Events and Presentations, summarize some of the key updates discussed on today's call.

Finally, an archive of this call will be posted on the Amarin website, also in the Investor Relations section. I'll now turn the call over to John Thero, President and Chief Executive Officer of Amarin.

John Thero -- President and Chief Executive Officer

Good morning, everyone. Thank you for joining us today. Before discussing our 2018 results, I would like to make some comments regarding our outlook for 2019 and beyond. While we are proud of our 2018 results, and they are the subject of today's reporting, 2018 seems like a long time ago. And we commented on our preliminary 2018 results at the start of January.

Regarding US commercialization, we currently think about it in four phases. The first phase, which ended in 2018, was prior to REDUCE-IT results when we promoted Vascepa with a relatively small specialty-focused sales team supported by a co-promotion partner. During this first phase, Vascepa was promoted predominantly with biomarker data and competed against various products with their respective biomarker data. Such promotion emphasized lowering triglyceride levels.

We recently transitioned into the second phase of our commercial evolution. For this new phase, we more than doubled the size of our US sales force. At the beginning of 2019, we had approximately 400 sales reps, plus their managers, compared to approximately 150 sales reps, plus their managers, in 2018, prior to REDUCE-IT results. We also approximately doubled the number of physicians we are targeting with our sales reps to approximately 54,000 physicians. And we expanded various other forms of physician-focused promotion, while we also expanded our medical affairs team and other support groups.

Our sales force expansion, most of which occurred late in 2018 or at the start of 2019, aided Amarin sales reps to many parts of the United States where we didn't previously have sales reps, while also increasing the concentration of Amarin sales reps in select geographies where we already had productive sales reps.

In parallel, as anticipated, for 2019 and beyond, we did not renew the co-promotion agreement we had in place during the first phase of our commercialization. We believe that having our own sales reps focused first and foremost on Vascepa promotion will be the most productive way to grow Vascepa awareness and prescription levels. In the second phase, we are communicating outcomes data to healthcare professionals, in addition to communicating the earlier biomarker results. Communication of outcome study results is accompanied by communication of various qualifying language, including disclaimers that the FDA has not reviewed or approved REDUCE-IT results.

As part of our current promotion to healthcare professionals, we are distributing copies of the New England Journal of Medicine's publication of the primary results of the REDUCE-IT study, which became available in print form in early January of this year. During the second phase, we anticipate little increase in direct-to-consumer promotion, as we prioritize educating healthcare professionals. We plan to begin the third phase of our commercialization in the United States after the anticipated FDA approval of an expanded label for Vascepa that includes a new indication based upon REDUCE-IT results.

We're on track to submitting an sNDA to the FDA before the end of March to seek the expanded label based upon results of the REDUCE-IT study. In contrast to our current label, which refers to lowering a biomarker, triglycerides, the indication we are seeking is for a much larger population and based on outcomes data. We will seek an indication referencing the use of Vascepa to reduce major adverse cardiovascular events in at-risk patients.

As discussed previously, we won't know until after the FDA has had an opportunity to review our submission, whether its review will proceed on a standard 10-month review clock or whether a six-month priority review is achievable. Until we know otherwise, we are assuming the full, standard review clock.

In this third phase, it is our intention to further expand promotion of Vascepa. In particular, we intend, in this third phase, to significantly expand direct-to-consumer promotion of Vascepa with emphasis on improved cardiovascular outcomes. We also intend to further expand other key aspects of our Vascepa sales, marketing, and medical affairs support.

Our current sales force size, which was sized and positioned with the guidance of external consultants, prioritized geographies and targets in which we believe our sales reps can become quickly productive and cover the costs relatively soon. Such assessment was made with an understanding that the current label for Vascepa is relatively narrow, in that our consumer promotion is limited to our current label.

Our current level of sales and marketing activities for Vascepa is significant. We believe that such level is appropriate for our current commercialization phase, in which we don't yet have an approved label for cardiovascular risk prevention. The extent to which we expand our sales force and other promotional efforts in the third phase, after label expansion, will be further informed by the experience in the second phase as well as by further market research. We anticipate such research to evolve as healthcare professionals become better informed without the unprecedented results of the REDUCE-IT study, as more data is presented about REDUCE-IT, including additional REDUCE-IT data scheduled for presentation in March at the Annual Scientific Session of the American College of Cardiology or ACC as well as pharmacoeconomic analysis, which we anticipate seeing later this year.

While we anticipate significant prescription and revenue growth from Vascepa based upon our current level of promotion, we believe that an expanded label for Vascepa combined with expanded promotion of Vascepa, including consumer promotion, will further accelerate Vascepa use and related revenue growth. As we have discussed in the past, there is no ideal analog for Vascepa. We are seeking to address a market for which there is no proven therapy. In doing so, we've demonstrated outcome results for efficacy and safety if you're unprecedented.

We're also doing so with a product which is priced affordably and, for which since launched, there have already been more than 5 million prescriptions. If we look at therapies for diabetes, such as Jardiance, we observe that they grew in usage significantly following their outcome study results. And their usage accelerated following label expansion, aided by direct-to-consumer advertising. Why we are not directly comparing our product with Jardiance, we believe that growth in Vascepa usage will be pronounced in our current phase of commercialization and then accelerate further following label expansion and increased promotion.

The fourth phase of our anticipated US commercialization is in recognition in the value created in the first three phases regarding physician relationships, managed care coverage, and overall breadth and depth of a highly productive, primary care-focused commercial team. We will seek opportunities to diversify based upon further internal development and or through licensing or acquiring other products which could enhance shareholder value.

As discussed in the part, while we always seek to be opportunistic in reviewing multiple forms of potential strategic transactions, with respect to licensing or acquiring other products, we are currently in a nice to have and not a need to have phase. That being said, there are arguments in support of diversification and leveraging our core competencies. And these arguments will likely grow as Amarin grows.

As I hope we've made clear from our remarks, we are continually focused toward execution at Amarin, to maximize the value of the REDUCE-IT outcome. Our objective is to grow shareholder value. Regarding questions you may have with respect to M&A rumors, as stated in the past, Amarin has a general policy to not comment on rumors, or speculation, stock price movement related to such rumors or speculation. And no-comment response from Amarin is neither confirmation nor denial of any given rumor or speculation. It simply relays that Amarin has no comment on the matter. Accordingly, we will not be addressing this topic today.

I emphasize that Amarin is confident in our ability to significantly grow our business. Vascepa clinical results are unprecedented. We have strong relationships with key opinion leaders, and we already have broad managed care coverage for Vascepa. We have been interacting with many managed care plans, and they appear to appreciate the value of the Vascepa data. As a result of this interaction, we are now anticipating some modest, further expansion of managed care coverage for Vascepa in 2019, although a majority of our focus regarding managed care coverage is shifting to contracts for 2020.

Internationally, we continue to work with our existing commercial partners in Canada, China, and the Middle East to advance Vascepa. While our plans for a regulatory submission in New York are not yet finalized, we currently aim to submit in Europe during 2019. Such submission will leverage the data package we are preparing for the US sNDA. We continue to see what happens in Europe regarding the regulatory status of the prescription drug Omacor, known in the US as Lovaza, which failed in two outcome studies during 2018 to demonstrate cardiovascular benefit. And regulatory authorities in Europe appear to be questioning the appropriateness of the existing outcome's related language in its label for use after a heart attack. Regardless of whether or not that indicated use is removed from the label of such earlier generation product, we envision a significant potential for Vascepa in Europe and intend to pursue regulatory approval for Vascepa with a submission this year.

Our expanded sales team has been in the field now for coming up on two months. This team is very enthusiastic and motivated by the potential to improve patient care with Vascepa and by the early feedback from physicians, which continues to be quite favorable regarding REDUCE-IT results. Physicians who have been presented the REDUCE-IT results are impressed and increasingly prescribing it for their patients. We are witnessing increased prescriptions for Vascepa written by physicians who are general practitioners as well as physicians with specialties in ARAs such as internal medicine cardiology and endocrinology. We are seeing many physicians who never previously prescribed Vascepa prescribing Vascepa now. And, moreover, we are witnessing increased rates of Vascepa prescriptions by prior prescribers.

As a reminder, not unique to Vascepa, we historically have experienced headwinds regarding prescription growth for Vascepa in the first quarter of each year. As some patients elect to not fill prescriptions due to financial hardship caused by beginning of the year deductible levels under their insurance plans. Also, many of our sales reps have only been in the field for a short period of time. Nonetheless, based upon data reported to us from third parties, such as Symphony Health, it appears that prescription levels in the earlier 2019 have been approximately 50% higher than in the same period of last year. And new prescription levels have been even stronger.

We are early in phase two of our US commercialization of Vascepa. By the end of Q1, we hope to have called on approximately 75% of our target positions two or more times, but likely less than 50% of these targets more than three times regarding Vascepa, with access to the results published in the New England Journal of Medicine.

We know based on launches of other products that it typically takes a much larger number of sales calls to significantly change physicians' behavior. We anticipate that some physicians will wait for the FDA to approve an expanded label for Vascepa before altering their prescribing behavior. We anticipate that other physicians will elect to study the REDUCE-IT data further, before altering their prescribing behavior. Nonetheless, we are confident that as physicians and other healthcare professional dig deeper into the data for Vascepa, and as they reflect on the high risk of their patients and the limitations of earlier generation therapy, they will conclude that Vascepa should be used to help more patients.

The data, which has been published regarding REDUCE-IT results in the New England Journal of Medicine is, in our view, very compelling. We appreciate that the REDUCE-IT study was selected as the top story of 2018 in the New England Journal of Medicine Journal "Watch Cardiology" section. Similarly, we appreciate that the American College of Cardiology, or ACC, included REDUCE-IT results in its top 10 list for 2018. The ACC's list was presented alphabetically, so we don't know where within that top 10 we ranked.

What we do know about ACC is that they have designated additional data regarding REDUCE-IT to be presented on March 18th, at their annual scientific sessions, to qualify for late-breaker presentation status. At ACC, Dr. Bhatt, the study's principal investigator, plans to present this late-breaking, new data from REDUCE-IT. Amarin remains committed to scientific presentation and publication. And there will be five other presentations of data at ACC, which we support. We supported 40 scientific presentation and papers in 2018. And we were off to a good start with presentations and publications in 2019.

For background, based upon ACC guidelines, late-breaking presentations should highlight novel and practice changing studies. And few presentations are selected with this designation. We are honored that the presentation entitled "REDUCE-IT, reduction in total ischemic events with icosapent ethyl. And REDUCE-IT was selected at the prestigious ACC conference as a late breaker.

At this time, we are limited as to what details we can provide around this presentation and the others at ACC. But look forward to sharing more information with you. We plan to host a webinar on the evening or March 18th, with several leading physicians in the cardiovascular field. Details on this webinar will be released in the coming weeks. We hope you will find the time to listen to this event.

With respect to pharmacoeconomic analysis of Vascepa, we anticipate presentation of such data by potentially multiple groups in 2019. We look forward to such analysis. If such analysis is prepared in a manner which is consistent with analysis in recent years for other cardiovascular therapies, we anticipate that such analysis for Vascepa will support that Vascepa is affordably priced, given the unprecedented results of the REDUCE-IT study and our pricing of Vascepa. We are proud that Vascepa is affordably priced, and we anticipate that. Similar to statin therapy, the affordable pricing of a Vascepa makes it suitable for potentially helping millions of patients.

With respect to 2018, the highlight was, of course, the unprecedented results of the REDUCE-IT cardiovascular study. We also achieved record revenues in 2018 with a relatively small productive sales team. And we strengthened our balance sheet and made other financial progress, which Mike Kalb, our CFO, will discuss shortly.

The REDUCE-IT study demonstrated that Vascepa significantly lowers cardiovascular events, including cardiovascular death in patients, who despite well-controlled cholesterol and treatment with statin therapy have remaining cardiovascular risk. The results of the primary endpoint of the study, a 25% relative risk reduction in major adverse cardiovascular events, exceeds what has been shown for any other therapy studied as an add to statin therapy in any patient population. The 20% relative risk reduction in cardiovascular death is nearly unheard of in cardiovascular outcome studies. As of the number needed to treat of 21 to avoid one primary endpoint event. And all of this was achieved with the safety and tolerability profile, which was comparable to placebo and consistent with clinical experience associated with Omega-3 fatty acids and the current FDA-approved labeling.

The positive results of the seven-year $300 million study will hopefully lead to improved standard of care for tens of millions of people at risk for cardiovascular events. Assuming as we expect that we submit the sNDA before the end of March 2019. The submission timeline of approximately six months from top-line results, will be consistent with the timeline for submission of sNDAs for various other outcome studies, most of which were submitted by companies much larger than Amarin. We are periodically asked why an sNDA submission requires approximately six months to prepare. So, I will spend a little time explaining the compilation process.

REDUCE-IT was a multi-year study conducted in multiple countries. The database includes millions of data points from more than 35,000 patient years of study. The study contained multi-blend points and multiple subgroups. The results encompass more than 200,000 pages of data. Each page undergoes extensive medical, statistical, and quality review. The resulting documents need to be compiled and linked electronically to match the required regulatory format. Given the enormity of the file, the electronic compilation linking process, the final steps of which are commenced after all the data has completed quality review, requires weeks to complete by an outside vendor which specializes in electronic submissions.

We have a very capable team working on the submission. Having spent over seven years to reach this stage, we want to make sure that we get the filing right. Assuming that the FDA approves our sNDA, Vascepa will be the first therapy approved for use in dyslipidemic patients to address the tremendous residual cardiovascular risk, which remains beyond management of LDL-cholesterol. We do not envision that we will compete with therapies for managing LDL-cholesterol. Rather, Vascepa presents a new opportunity for healthcare professionals to help patients reduce their cardiovascular risk.

In the United States, approximately one in four patients have elevated triglycerides, a cardiovascular risk factor independent of LDL-cholesterol, including more than 12 million patients in the United States on statin therapy. It is difficult for us to not be enthusiastic when presented with such an opportunity to improve patient care. I now turn the discussion over to Mike Kalb. Mike.

Michael Kalb -- Senior Vice President and Chief Financial Officer

Thanks, John. As mentioned at the start if this call, both our 2018 annual report on Form 10-K and today's press release can be found on our website. They contain discussion of our fourth quarter and full year financial results, including some details which go beyond the highlights I will cover in this morning's call.

Our final net total revenue in 2018 was $229.2 million, which is slightly higher than we guided to earlier. The majority of our revenues in 2018 were derived from product sales of Vascepa in the United States. Our 2018 net product revenue was $228.4 million, an increase over 2017 of 27%. This result was supported by record prescription levels for Vascepa. Now, pricing for Vascepa in 2018 remained consistent with 2017 levels, with some quarterly variability.

While reported results for all four quarters of 2018 showed growth over the corresponding quarters of the prior year, our fourth quarter 2018 total revenues of $77.3 million was a record quarterly high for us. This result represented a 44% increase from the fourth quarter of 2017. This growth in the fourth quarter of 2018 was primarily driven by record quarterly prescription level, while the growth in revenues and prescriptions during the first three quarters of 2018 did not reflect REDUCE-IT results. The results of this landmark study likely had some impact on fourth quarter results. We cannot accurately determine the amount of increase attributable to reduce a result, as prescription levels going into the fourth quarter were already growing. And historically, fourth quarter of each year tends to be our strongest result.

However, we did in fact witness some increase in prescription levels following the announcement of reduce the top-line results at the end of September, particularly from the physicians called upon by our sales team. We witnessed additional increases in prescription levels following presentation of REDUCE-IT results as the 2018 Scientific Session of the American Heart Association on November 10th, 2018. Inventory levels at wholesalers ended 2018 at levels which were consistent with industry norms. We do not believe that our 2018 revenues were significantly impacted by shifts in wholesale or inventory levels.

Our net product revenue in Q4 was slightly higher than what may have been calculated by review of prescription data from independent sources such as Symphony Health and IQVIA. As described previously, these sources use various sampling techniques to estimate prescription levels. They are only estimates as demonstrated by the different results reported by different sources. The techniques they use appear to be more effective periods of time compared to short periods. It is our speculation that our prescription levels for Vascepa in the fourth quarter may have increased faster than what was reported by these sources.

Predicting revenue growth for 2019 remains difficult, as we are early. And what John described as the second phase of our commercial evolution. That is the post-REDUCE-IT data, pre-FDA approval phase. At the beginning of 2019, we provided guidance that our net revenue in 2019 will be approximately $350,000. Today, we reiterated that guidance without modification. This guidance assumes that the timing of potential label expansion for Vascepa is such that it does not have a material impact on revenue levels in 2019. With respect to this revenue guidance, we continued to anticipate quarter-to-quarter variability, including the impact of seasonal effects.

We continue to believe the measurement of Vascepa growth compared to corresponding periods of the prior year is a better measure of our progress than evaluating consecutive quarter growth. This is particularly true with respect to the first quarter of each year, due to the beginning of the year issue with insurance deductibles that John referenced earlier, which is unique Vascepa.

Gross margin on product sales was 77% and 76% in the quarter and year ended December 31, 2018, as compared to 75% in the quarter and year ended December 31, 2017, respectively. This improvement was primarily driven by lower unit and cost API purchases. Well, when they see some slight improvement in gross margin in 2019, for the most art we anticipate our gross margin from net product revenue to remain little changed until sales volumes get much higher, at which point gross margins could approach 80%.

Selling, general, and administrative, or SG&A expenses for Q4 2018 were$79.7 million, an increase of $44 million over Q4 2017. SG&A expenses for full year 2018 were $227 million, an increase of $92.4 million over 2017. These expense levels include $4 million and $15.9 million of noncash compensation expenses in Q4 2018 and for the full year of 2018, respectively. Excluding these noncash costs, SG&A expenses increased $43 million and $88.4 million in Q4 2018 and for the full year 2018 compared to the corresponding periods of 2017. This increase in SG&A expense is due primarily to increased promotional activities, including commercial spend and preparation for and following successful REDUCE-IT results. Overall our SG&A costs remain subject to quarterly variability.

As previously stated, in 2019 we increased our sales force from approximately $150 sales reps, which we had in place for most of 2018 to approximately 400 sales reps. As of December 31st, 2018, Kowa is no longer co-promoting Vascepa. Amarin and Kowa intentionally designed the co-promotion agreement to naturally end as of December 31st, 2018, and mutually agreed not to renew the agreement. In accordance with the terms of our agreement with Kowa, Kowa is eligible to receive $17.8 million in co-promotion payout payments. The present value of which is $16.6 million and was fully accrued as of December 31st, 2018. The accrued payout payments will be paid over three years with declining amounts each year, beginning with $7.3 million to be paid in 2019. Research and development expenses for Q4 2018 were $11.9 million, which is flat as compared to Q4 2017. Research and development expenses for full year 2018 were $55.9 million, an increase of $8.7 million compared to 2017.

These R&D costs include $0.7 million and $2.9 million of noncash compensation expenses in Q42018 and for the full year 2018, respectively. Excluding these noncash costs. R&D expenses were flat in Q4 2018 and increased $8 million for the full year 2018 compared to the corresponding periods of 2017. Most of these R&D expenses pertain to the REDUCE-IT study with variability and spending levels based on timing of REDUCE-IT-related activities.

In our press release dated January 4th, 2019, we disclosed that we anticipated operating expenses for 2019 to increase $25 to $50 million over 2018 levels. Net of the $46.8 million we expensed in 2018 related to our prior co-promotion partner. Included in these amounts is increased costs associated with Vascepa promotion, partially offset by modestly lower R&D expenses as the REDUCE-IT trial is complete. R&D expenses, while lower than 2018, are anticipated to remain relatively high to support the sNDA submission, to support multiple potential additional publications of REDUCE-IT results, to support partners with respect to international submission for Vascepa, and to evaluate future product opportunities on Amarin's own and in collaboration with its developer partner, Mochida.

Total R&D expenses for 2019 are anticipated to be approximately $40 million and likely highest in the first half of 2019. These expense estimates assume that Vascepa label expansion is approved following an anticipated 10-month FDA review cycle. In the event that the label's extended earlier than expected, or product revenue grows faster than expected, SG&A expenses may be higher than reflected in this operating expense guidance. Today, we reiterated that expense guidance without modification.

As of December 31st, 2018, Amarin reported cash and cash equivalents of $249.2 million. This balance was augmented by approximately $195 million in net proceeds from an equity fund and some transaction completed in November 2018. As of December 31, 2018, the company also had $66.5 million in net accounts receivable, or $86.1 million in gross accounts receivable before allowances and reserves, and $57.8 million in inventory. We ended 2018 with no debt, except for the remaining balance due on our royalty-like instrument.

I will now turn the call back over to John for closing remarks. John.

John Thero -- President and Chief Financial Officer

Thank you, Mike. I want to take this opportunity to thank our shareholders for your support. We will be participating in two upcoming investor conferences. The first is tomorrow, the Leerink Conference in New York City. The second is the Cowen Conference in Boston on March 13th. With that, we conclude our prepared comments and would like to open the line to some questions. Operator.

Questions and Answers:

Operator

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press *1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For those using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Thank you. The first question is coming from the line of Louise Chen with Cantor. Please proceed with your questions.

Louise Chen -- Cantor Fitzgerald -- Analyst

Hi, thank you for taking my questions. I had a few here. My first question is on your EU partnership. Just curious if you could provide more color where you are with that and any timing that you could provide? Secondly, will there be an ADCOM for the REDUCE-IT label expansion? Third question I have was just on SG&A, what the run rate would be if the fourth quarter is a good run rate as we look into 2019. And just one more question here. What percentage of physicians do you think will wait for you label expansion in order to alter their prescribing habits for Vascepa?

John Thero -- President and Chief Executive Officer

Hey, Louise. Thanks for the smorgasbord of questions. With regarding a EU partner, we are continuing to evaluate whether the right strategy there is to partner and go forward and go through the regulatory process with a partner or to de-risk the regulatory process and to partner after that process is de-risked. There are pros and cons to each approach. And we've not decided nor have we had to decide. Our primary focus right now is on getting the sNDA submitted for the US filing. And until we've done that, we've been hesitant to allow potential partners to get into the database or ask questions of our regulatory and clinical group as we don't have those folks distracted from getting the sNDA filed, which we think is the most important path to creating value. So, after the sNDA is submitted, we will turn more attention the prioritization, Europe.

Key there is that the data that will be submitted to the FDA with slightly different format should be the basis for the filing for Europe. But in terms of partnering, while we've had some expressions of interest, until we're further along and have filed the sNDA in the US -- we're holding some of the interest at bay from a prioritization perspective. We try to make those answers. With respect to an ADCOM, we won't know that answer until after the sNDA is submitted and the FDA has had an opportunity to look at the data. This is an enormous filing. It is a first-ever indication in a space, which potentially represents one in four adults in the United States. I could make arguments that FDA would potentially want an ADCOM as this is a precedent-setting filing. They might want an ADCOM to use this as an opportunity to emphasize that this is not about triglycerides.

They may want to have an ADCOM to evaluate where this falls in sort of the dietary supplement world out there. And t you this is an opportunity to emphasize differences between prescription therapy and dietary supplements. There's a lot of potential reasons that they could want an ADCOM. If we were to guess a timing, probably the day 74 letter would be when we might get a signal as to whether they'd want an ADCOM or not. We don't think that is if there is an ADCOM that's necessarily a bad thing. But we really don't know. We will be preparing for one. Just as easily there could potentially not be an ADCOM. We just don't know, nor do I believe the FDA knows at this point in time that they've not received a submission or had an opportunity to review it.

With respect to SG&A and run rate, I'll turn things over to Mike Kalb.

Michael Kalb -- Senior Vice President and Chief Financial Officer

All right. Thanks, John. So, morning, Louise. Thanks for the question. When you look at what we had guided on January 4th and reiterated this morning, if you take 2018 and then add to that about $25-$50 million, your model, you'll do what you believe is appropriate. But that gets you to somewhere between kinda $252 and $277. If you take 24 and annualize that, you're at just over 300. If you back out the stock comp, you're a little under 300 -- right around 300, rather. So, somewhere in there. Whatever you do is appropriate -- is, I think, reasonable. But, again, our guidance has not changed this morning.

John Thero -- President and Chief Executive Officer

And it'd be Aaron Berg who runs [inaudible]. You can take on the comment about positions.

Aaron Berg -- Senior Vice President and Chief Commercial Officer

Right. Hi, Louse. So, the question around how many physicians do we think will wait until we get the label. It's hard to know for sure. We're very early in promotion. Anecdotal feedback says it could be as much 10% to 20%. But, again, it's very early. And we've got some time until that label to educate those physicians. I will see what their actual response is.

John Thero -- President and Chief Executive Officer

And even position to -- aren't waiting. This is a new population that hasn't been treated before. They're likely to start with the highest risk patients. Use Vascepa for them. Get experience with it. And then, add more patients as time passes, and they get the experience. That's not unique to Vascepa. That's the experience that statin has for example and a variety of other therapies. So, we think this is an evolution process.

Louise Chen -- Cantor Fitzgerald -- Analyst

All right. Thank you.

Operator

Our next question is from the line of Joel Beatty with Citi. Please proceed with your question.

Joel Beatty -- Citi -- Analyst

Hi, good morning and congratulations on the quarter. The first question is related to revenue and script trends. It looks like revenue was up about 44% in the 4th quarter compared to the 4th quarter one year ago, while scripts were up about 32% to 33% in this quarter compared to the fourth one year ago. Could you discuss the difference between those two, such as any differences in stacking by wholesalers?

John Thero -- President and Chief Executive Officer

Mike, why don't you take that one on?

Michael Kalb -- Senior Vice President and Chief Financial Officer

Sure. Thanks, John. Good morning, Joel. Thanks for the question. So, if you look at our MD&A or the year -- and I think this is consistent with what we have said. For the year our revenue is up 27%. IQVIA and Symphony reported increased scripts of 25% and 27% respectively. I think as we've discussed previously, given the sampling techniques, given the IQVIA and Symphony, they didn't have a whole -- they're a little slower at point of inflection to capture those trends up or down. And that's why we've said over longer periods of time that's a little bit more consistent.

John Thero -- President and Chief Executive Officer

And sure, we did have growth in the fourth quarter. I think they were a little slow on recognizing that growth and some of their tier X numbers. But we do not believe that our revenue results in the fourth quarter had any significant impact by wholesaler inventory levels.

Michael Kalb -- Senior Vice President and Chief Financial Officer

That's correct. Still within the normal ranges.

Joel Beatty -- Citi -- Analyst

Great. Got it. And then, I guess, another question is what patient population do you see REDUCE-IT results as supporting use and for potentially consideration by FDA? For example, do you expect it will be triglyceride level cutoff? And if so, what level could a cutoff be at?

John Thero -- President and Chief Executive Officer

Why don't I ask Craig Granowitz, our Chief Medical Officer, to take that one on?

Craig Granowitz -- Chief Medical Officer

Yeah. Hi, Joel. An important question to ask, it's a question that's coming from many different sides, from payers, from providers. We believe that the data supports broad utilization, really looking at residual CVD risk beyond LDL management. We think the data supports that. There is increased risk as safe-line  triglyceride levels grow. We have a similar magnitude of benefits, regardless of the starting triglyceride level in the study down to 135. We have a similar magnitude of benefit regardless of what the triglyceride level is after a year of treatment, whether above or below $150. So, we believe there is a significant risk.

As you know, the placebo patients in this study -- and these are well-managed patients with baseline LDLs in 74 and similar management of other modifiable, cardiovascular risk criteria. Regardless of that, over 28% of those patients develop one of the composite endpoints in the control group over 4.9 years. And these are significant drivers of cost and morbidity. So, we certainly believe that we will go to the FDA with this a strong case to made of, managing residual risk in appropriate patients beyond LDL.

Joel Beatty -- Citi -- Analyst

Great. And maybe one last question on payer coverage. How do you anticipate payer coverage of Vascepa to change from maybe phase one, before the REDUCE-IT results, to the current phase now to looking ahead to around 2020 or so after -- any potential little change of any of those times do you see the most difference to changes in payer coverage? And what could that look like?

John Thero -- President and Chief Executive Officer

So, our payer coverage today, just for perspective, the approval rates for our payer coverage, just about 77%, which is sort of neck and neck with generic Lovaza and good reversals in that. It gets almost to 90%, like around 88% was the approval last saw. Yeah, that's a pretty good approval rate. So, most prescriptions going in are getting covered. That being said, there are certain plans that tend to be the outlier in coverage and a lot of places that don't yet provide coverage. Some of those health plans buy policy don't coverage until a label. We envision, like I commented earlier, that there will be pharmacoeconomic analysis done during 2019, potentially by more than one group. And we think that that analysis, given 25% relative risk reduction, given the high cost of the treatment to these patients will show a result which certainly supports our current pricing for Vascepa.

So, we have been reaching out through our managed care team and our medical affairs team to various health plans. And I think they get it, that this is a new freaking opportunity for improved patient care and they're trying to estimate how fast this is gonna grow. Based on their comments, it doesn't seem to be a question of is it going to grow or do they need to prepare for it. It's a question of how fast. How much should they be budgeting for going forward? And we'll continue to remind them that they shouldn't look at this in the vacuum of just drug costs. They should look at this in the overall spectrum of patient treatment, where you'll be saving significant dollars on cost of heart attacks, and strokes, [inaudible], and new in depths that are done at the hospital. It is very expansive.

So, we're contracted through 2019 with plans. And we have, actually to my surprise, had a couple of plans here come forward and want to do something with us in 2019 beyond what they already had. That's good. Tend to be more the exception than the rule. But most of our focus at this point in time is on getting ready for coverage for 2020. But I think our coverage is pretty good. Our pricing is affordable. Patients, myself included, seem to be able to get coverage readily for the product. So, we'll always look to make it better. But I think that's more perception than reality, other than in a few geographies where it's a little trickier, more perception than reality. But I appreciate the question.

Joel Beatty -- Citi -- Analyst

Great. Thank you.

Operator

The next question is from the line of Michael Yee with Jeffries. Please Proceed with your questions.

Michael Yee -- Jefferies -- Analyst

Thanks. Good morning. Couple questions on my side. First was I'm thinking about the first quarter of the year as you're coming up here. Do you believe that revenue recognition or demand is reflective of third-party data? Or do you think it's under-capturing or over-capturing? Just want to understand and set some expectations for the first quarter given that we are seeing growth sequentially in the first quarter despite seasonality. Second question is regarding capacity build-out and whether you have any update there on how to think about capacity, and manufacturing, and lead times. And third comment, as I appreciate no comments that you made on rumors and speculation. But, for clarification, do you fall under Irish takeover provisions? Or do you not fall under those provisions? Thanks so much.

John Thero -- President and Chief Executive Officer

Regarding Q1 of 2019, we've not provided any quarterly guidance, specifically, in terms of quantification. And we only have detailed data, at least at the physician level into, I think, the week of February 8th at this point and time. So, early on, it seems to be tracking fairly closely this quarter. But, historically, they have overstated scripts in the first quarter. We're looking for whether that would repeat itself here in this quarter or not. So far, that doesn't seem to be the case. But having only the January data and essentially one week of February data, it's very early to be commenting on that.

With respect to capacity on the manufacturing side, our guidance for this year in terms of revenues is $350 million. We have talked out we will be purchasing supply at a rate which would support revenues of more than 20-set numbers, so supporting and purchasing inventory to support revenues that could be over $700 million. Hey, we could be wrong on our guidance. Our guidance doesn't assume any earlier approval from the FDA. And they had their mind to our product as four-year dating. Dating, one of the things we spent a lot of time in the development of this product was the stability of it and preventing oxidation, etc. So, it's got a long shelf life. So, they figure that that's the right investment to be made. We have a supplier network that consists of over 20 independent companies. The API piece of that -- we have multiple suppliers on. They're competing with one another. And they're interested in expanding capacity. We're interested in having them expand capacity. And we're in active discussion with them about steps to expand that capacity.

At this point in time, we're not prepared to quantify where we might be. Say at the end of this year on additional capacity. But we're active in those discussions. And there is considerable interest from our suppliers in making that happen.

With respect to M&A -- and, again, we're not talking about rumors in M&A. But you were asking about a specific legal provision. We have our General Counsel, Joe Kennedy, in the room. And, Joe, I don't know if we would comment on that or not.

Joseph Kennedy -- Executive Vice President, General Counsel and Strategic Initiatives

Yeah. Hi, Michael. Thanks for the question. Your question was whether we're subject to the Irish takeover code. We're actually a UK corporation. We're not subject to the Irish takeover code. We're also not subject to the UK takeover code. There's a full description of what we are subject to in the recently filed 10-K. You can find that on page 61 to 63. But, essentially, we're subject to the UK's Company Act. And neither the Irish nor the UK takeover code is in there. But, again, the full description's on 61, 63 of the 10-K.

Michael Yee -- Jefferies -- Analyst

Okay. Thanks

Michael Kalb -- Senior Vice President and Chief Financial Officer

We're tax domiciled in Ireland. So, just don't want to throw the UK piece of it off.

Michael Yee -- Jefferies -- Analyst

Got it. Thank you, guys.

John Thero -- President and Chief Executive Officer

There were some questions that investors had sent in, some of which have already been answered. But let me go through a couple of others here. One question is about whether the benefits shown in REDUCE-IT was due to the reductions in triglyceride. And I think our answer there is partially. We believe that eicosapentaenoic acid, which is a active ingredient in Vascepa, has a multi-factorial effect. Some of that effect is on improving lipid and lipid proteins. But the effects go well beyond that. They go into the anticoagulant effect, anti-oxidant effect, improving the endothelial cell function, the reduction and inflammation that appears if there's a reduction in plaque formation and associated with it.

And it's really that multifactorial effect which we think provides the benefit. And this is consistent with what was seen in the JELIS study, where there was a fairly modest reduction in triglycerides, and the 19% relative risk reduction, and of course REDUCE-IT. Well, we saw benefit that was -- it's such an independent of triglyceride levels. We had strong benefits up and down the spectrum from 135 mg per deciliter on upward on the triglyceride side. So, I think triglyceride may factor, but it's certainly not the entire story.

We continue to have publications out on mechanisms of action for Vascepa. There was a publication earlier this year, which I hope is on our website, from Dr. Preston. Mason regarding a mechanistic effect and publications on the effect of Vascepa and atherosclerotic processes by folks like Dr. Borough and Dr. Dudoff from prior years. And a lot of this information is available on our website.

There was a question about additional publications coming out of REDUCE-IT and timing of EVAPORATE study. In the slides that we provided in conjunction with this call, we provided a variety of different sort of updates on timing. One is under EVAPORATE, our top bet that is, an investigator-initiated study, which we support. But evaluating plaque aggression with Vascepa, that study, my understanding is we have results from late this year or the early part of next year. With respect to REDUCE-IT, we were having publications on our phase three studies MARINE and ANCHOR will be the results presented at the American College of Cardiology here in mid-March.

With that, we're coming up on an hour. I think we need to wrap it up. So, I thank everybody for your interest and attention today. I'm sure I'll see some of you tomorrow at the Leerink Conference. And we look forward to providing you additional updates of our progress. Thanks much. Have a great day.

Operator

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

Duration: 60 minutes

Call participants:

Elisabeth Schwartz -- Senior Director of Investor Relations

John Thero -- President and Chief Executive Officer

Michael Kalb -- Senior Vice President and Chief Financial Officer

Louise Chen -- Cantor Fitzgerald -- Analyst

Aaron Berg -- Senior Vice President and Chief Commercial Officer

Joel Beatty -- Citi -- Analyst

Craig Granowitz -- Chief Medical Officer

Michael Yee -- Jefferies -- Analyst

Joseph Kennedy -- Executive Vice President, General Counsel and Strategic Initiatives

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