Amarin (AMRN) Q1 2022 Earnings Call Transcript

Amarin (AMRN -0.96%)
Q1 2022 Earnings Call
May 04, 2022, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to Amarin Corporation's conference call to discuss its first quarter 2022 financial results and operational updates. This conference call is being recorded today, May 4, 2022. I would like to turn the conference call over to Lisa DeFrancesco, senior vice president, investor relations and corporate affairs at Amarin.

Lisa DeFrancesco -- Senior Vice President, Investor Relations and Corporate Affairs

Good morning, everyone, and thank you for joining us. 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. We may not 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, acquisitions, dispositions, joint ventures, or any material agreements that we may enter into, amend, or terminate. For additional information concerning the factors that could cause our actual results to differ materially, please see the risk factors section of our annual report on Form 10-K for the year ended December 31, 2021, and our Form 10-Q for the quarter ended March 31, 2022, which have been filed with the SEC and are now available through the investor relations section of our website at www.amarincorp.com. We encourage everyone to read these documents.

This call is intended for investors in Amarin and is not intended to promote the use of VASCEPA. An archive of this call will be posted on Amarin's website in the investor relations section. Karim Mikhail, Amarin's president and chief executive officer, will lead our discussion; Dr. Steve Ketchum, president of R&D and chief scientific officer, will provide an update on our FTC program as well as recent clinical data and publications; and Mike Kalb, Amarin's chief financial officer, will provide a more detailed review of our first quarter 2022 financial results.

After prepared remarks, we will open the call to your questions. I remind you that multiple audiences typically listen to calls of this nature, including existing investors, potential new investors, employees, current and potential collaborators, and current and potential competitors. As always, in this call we will attempt to provide constructive information without compromising our competitive and strategic positioning. I'll now turn the call over to Karim Mikhail, president and chief executive officer of Amarin.

Karim Mikhail -- President and Chief Executive Officer

Thank you, Lisa. Good morning and thank you all for joining us today. We entered 2022 noting that this is a year of execution for Amarin and, to date, we have accomplished important milestones and are on track to achieve the goals we have set for the year. 2022 thus far for Amarin is marked by progress across all three pillars of our growth strategy: breadth or geographic expansion; height, representing diversification; and depth or operational evolution.

Before I discuss the considerable progress we are making in Europe and across our business, I want to touch on our results this quarter and the dynamics we are facing within our U.S. business. We recorded $94.6 million in total net revenue, including $93.5 million in U.S. product sales, during the first quarter of 2022, a decline from both the same period in the prior year as well as the prior quarter.

The results were impacted by the launch of a third generic entrant, which disrupted the market considerably at the wholesaler level and resulted in lower volume as well as lower average net selling price as we focused our efforts on securing exclusive business in the face of this additional generic competition. The decrease in volume for VASCEPA sales was predominantly due to Amarin customers in the United States who have not availed themselves of competitive pricing programs and exclusivity. In addition to the generic market disruption, the decrease in revenue was exacerbated by the first quarter seasonality we typically experience with beginning-of-the-year deductibles under patient insurance plans. Mike will discuss these dynamics in more detail shortly.

While our U.S. revenue is currently supporting our growth strategy, we are very aware of the challenges we face with additional generic competition. We continue to vigilantly monitor key performance indicators in this market to support our strategy moving forward, including generic penetration rates, market supply, and icosapent ethyl market growth, among other metrics. Importantly, as we are closely monitoring the market dynamics in the U.S., including prescription trends, we have not seen an acceleration of total generic penetration with the third entrant on the market.

Our goal is to offset these challenges with a focus on operational excellence, where we have identified and began implementing an approximately $30 million reduction in annual marketing expenses. With these initial savings and future potential efficiencies, it is our objective to maintain our positive contribution margin, defined as U.S. gross profit less U.S. sales and marketing-related expenses, in the U.S.

this year, while we focus on gaining pricing and reimbursement to set the right foundation for sales in Europe and for expanding our international business over time, noting that our global growth strategy in its initial stages. We believe we are making headway in the U.S. with our go-to-market strategy, and we continue to focus on stabilizing VASCEPA revenue with this focused approach, which includes expanded provider engagement, optimized fulfillment of VASCEPA prescriptions for CV risk reduction, and enhanced managed care access. As of March 31, 2022, through our offerings designed to be competitive with the current market landscape, we expanded coverage to approximately 45% of the total commercial and Medicare Part D lives on a weighted average basis, with VASCEPA as the exclusive IP product.

We believe that, although these arrangements do have an adverse impact on the average net selling price, they may support greater volume stabilization of the business over the medium and longer term, which is one of our key objectives. Our ongoing efforts to expand provider engagements have been progressing. We are seeing the benefits of our digital omnichannel efforts, which are giving us great insight into the prescribers and how best to reach and influence them. We are using these tools to reach our target audience of physicians who treat prior MI patients and the doctor who currently prescribe fibrates for their patient at risk for CV event.

In addition, our prescription fulfillment optimization strategy is progressing with our BlinkRx partnership, which has provided early wins as we begin to implement this program. We're also encouraging the use of 'dispense as written', or DAW, through in-person and digital initiatives to ensure patients receive branded VASCEPA when prescribed for CV risk reduction indication. Lastly, we have had some recent and significant developments that I would like to highlight. As you know, we are optimizing fulfillment of VASCEPA prescription for CV risk reduction with a new campaign focused on prior myocardial infarction patients at a heightened risk of a subsequent event.

Supporting this campaign is the compelling data from REDUCE-IT that shows VASCEPA reduced CV events by 35% in prior MI patient. The benefits of VASCEPA in these patients who have experienced a heart attack and are at risk for another cardiovascular event are particularly important given these patients are at elevated risk of recurrency problems. These results further strengthen the case we are making to physicians who care for these high-risk patients for pure EPA in the form of prescription icosapent ethyl as a key intervention beyond statin for meaningful risk reduction. Another area for continued focus comes very recently following the announcement of discontinuation by another pharmaceutical company of their study PROMINENT, which looked at a new fibrate for CV risk reduction.

As many of you know, as a result of previous failed cardiovascular outcome trials, the FDA revoked the approval of fenofibrates to manage CV risk back in 2015, after concluding that they should not be used in combination with statins because the risks outweighed the benefits. This latest study discontinuation is further evidence that the fibrate drug class does not provide proven CV risk reduction. Important to note that 2 million patients in the U.S. are prescribed fibrates for CV risk, with 60% also receiving a statin.

It is clearly not well known within the physician medical community that these patients remain at risk. We see this as an opportunity to ensure that patients with high CV risk on statins are aware and should consider the switch to VASCEPA. In summary, we will continue to closely monitor the market dynamics in the U.S. where we, again, have not seen an acceleration of total generic penetration with the third entrant on the market.

Now moving to Europe, where we have made considerable progress on our strategy. We were delighted to announce our first national reimbursement in Sweden as it kicked off the next stage of our European growth strategy. We were particularly pleased to have Sweden as our first reimbursement, as it is known to be at the forefront in the prevention and treatment of cardiovascular disease, and with a disclosed price of approximately 160 euros per month or around $180. It should also be noted that this pricing in Sweden is essentially a net price, with only distribution-related fees deducted.

As a reminder, net prices in Europe, especially for chronic treatments, tend to be much lower than U.S. prices. This achievement acknowledges the value of VASCEPA and our ability to demonstrate this value to payers in Europe. We also have clinical and health technology assessment processes and reimbursement discussions progressing across all of the target markets in Europe where we submitted market access dossiers, including the United Kingdom, Germany, Norway, Finland, France, Italy, Spain, Denmark, and the Netherlands.

Turning to the U.K, we are having ongoing active work underway with the National Institute for Health and Care Excellence, NICE, and recently received a second appraisal consultation document, or ACD. A second ACD means that the committee was still not able to reach a final recommendation and will require further consultation with stakeholders. Receipt of a second ACD is not uncommon for innovative treatments seeking reimbursement from the National Health System in the U.K. We continue to conduct constructive, scientifically substantive discussions with NICE and are actively collaborating with all stakeholders involved in this process.

Towards that end, we are receiving positive feedback with strong support from the scientific community who wants to ensure that VASCEPA is made available to all relevant patients who are at risk of having a cardiovascular event. It is important to note that, based on our information, we understand that NICE received, in this round of consultation alone, a significant number of formal positive recommendations from experts from across the U.K. We expect the final decision later this year, and we'll update you on our progress in this important market. Let me move on to our progress in Germany, where we are on the market with temporary reimbursement.

We have started and are in early stages of formal price negotiations in Germany, which entails four to five rounds of negotiations. During these early proceedings, corrections were requested from GBA due to the scientific and data misinterpretations and misrepresentations, and we are in parallel discussions on how to resolve these. We plan to continue with these corrective efforts and negotiations and are relentless in defending the strength of the long-term outcome data from REDUCE-IT, with significant support from the major medical societies and the medical community. Our initial sales in Germany continue to be impacted by local market conditions, predominantly the ongoing impact from COVID-19, which had a second peak during the quarter which experienced a 320% increase in new cases for a total of 19 million cases that affected 25% of the German population and resulted in significant disruption of the activity of the practices and hospitals.

Local market conditions in Germany are also affected by newly proposed healthcare austerity measures, which are being implemented as a result of the challenging political situation in Europe, which has impacted our initial sales during this launch period. And beyond Germany, we have important progress to announce in France, where we received a positive reimbursement assessment from French National Authority for Health, or HAS, in France, and that we have started the process of price negotiations. France is a very significant cardiometabolic market, where no omega-3 product has ever been assessed positively by HAS, but, due to the strength of REDUCE-IT data, the team was able to achieve this very important milestone. Finally, discussions in central and eastern Europe have been impacted by the local political conditions.

However, our partnership discussions in Greece, which is a key market in the region, are advancing well. Reimbursement discussions are in various stages of progress in the other markets where we have submitted market access dossiers. We remain on track to receive pricing decisions in up to eight countries, with plan to launch VASCEPA in up to six European countries this year. we expect to have updates on at least two major markets by our next earnings call.

In Europe, it's important to note that we are taking a regional approach to growth and expansion, where our goal is to build a strong, sustainable, diverse revenue stream based on multiple markets, and this has driven our market access strategy to submit our dossiers in 10 countries in parallel. Also remember that the achieved price anchor in Sweden is very positive and is allowing us to evolve our price negotiations in multiple European countries. With this regional strategy and diversity of product launch times and penetration curves, we are confident that we are laying the right foundation to achieve revenue potential in Europe of over $1 billion. Beyond Europe and the U.S., at the end of last year we introduced a bold plan to unlock the potential of VASCEPA internationally.

The plan calls for three waves of regulatory submissions for approval of VASCEPA in 20 additional countries in order to ensure that patients in the top 50 cardiometabolic markets worldwide can benefit from VASCEPA. Toward that end, we continue to make meaningful progress in the first wave of these efforts. Following the acceptances for regulatory review of VASCEPA in Australia and New Zealand, the dossiers have now entered full assessment by the respective national regulatory authorities in these countries. In Israel, VASCEPA was accepted for regulatory review by the relevant authority, and our submission is advancing as per local processes.

We were also successful in submitting our reimbursement file at the same time to ensure market access for VASCEPA in Israel as soon as possible. Biologics, our partner in the Middle East and North Africa, MENA, received the official registration certificate for the Kingdom of Saudi Arabia, KSA, regulatory authority for VASCEPA for the treatment of severe hypertriglyceridemia on March 8. This first approval in KSA enables the preparation and submission of a variation to seek review and approval for the cardiovascular risk reduction indication. This brings the total of number of countries approved in the MENA region to six, being Saudi Arabia, United Arab Emirates, Lebanon, Kuwait, Bahrain, and Qatar.

In Canada, our partner, HLS, completed negotiation with Canada's Pan-Canadian Pharmaceutical Alliance for the terms and conditions under which VASCEPA would qualify for public market reimbursement in Canada. Following these negotiations, HLS signed the letter of intent, allowing them to work with all participating provincial jurisdiction to secure coverage from publicly funded drug plans across Canada and for VASCEPA to potentially be added to their respective plans. We look forward to an update on their progress in the coming months. Public market reimbursement for VASCEPA in a large single-payer country like Canada is a validation of the CV risk reduction benefit of the product and underscoring its pharmacoeconomic value.

As a reminder, we have agreed to a partnership of HLS with Pfizer, by which HLS will promote to specialists and Pfizer will promote to the large primary care physician group. This signed letter of intent with PCPA will further maximize the value of this partnership, with VASCEPA being accessible to patients in the public sectors in Canada. Lastly, our current partnership approval for VASCEPA in Hong Kong for the CV risk reduction indication has been recently received, and a commercial launch is planned for Hong Kong later in the year. The new drug application for VASCEPA in mainland China remains under review by the Chinese National Medical Product Administration, and the NDA includes the previously announced successful results of phase 3 studies, including REDUCE-IT.

We believe that a decision can still be expected by the end of this year. Moving forward, we remain confident in the multibillion-dollar global market opportunity for VASCEPA/VAZKEPA in Europe and internationally and are beginning to see this opportunity come to fruition. Before I turn the call over to Dr. Steve Ketchum, Amarin's EVP, president of R&D and chief scientific officer, to discuss portions of the height or diversification pillar of our core growth strategy, including our fixed dose combination and recent advancements in our data, I wanted to note that we continue to search for opportunities for business development in the cardiometabolic space, while continuing to advance our internal development of a fixed-dose combination portfolio for VASCEPA.

We also continue to strengthen our leadership team, where I would like to welcome two new members. I'm pleased to welcome David Keenan as senior vice president of technical operations, who will be joining us in mid-May and will be based in our Dublin offices; and Dr. Nabil Abadir, senior vice president and chief medical officer, who joined us last week and will be based in our offices in Zug, Switzerland to build a global cross-functional medical organization as we build support for VASCEPA/VAZKEPA globally. Now I will turn it over to Dr.

Steve Ketchum. Steve? 

Steve Ketchum -- President of R&D and Chief Scientific Officer

Thank you, Karim. First, I would like to begin by providing an update regarding data recently presented at ACC that is relevant to our fixed-dose combination of icosapent ethyl and a statin. I'll then discuss some recent sub-analysis data from REDUCE-IT that we are excited about, as well as some other recent important developments in cardiovascular data. First, our fixed-dose combination or FDC development remains in the early stages, and we were encouraged by the in vitro data recently presented at the American College of Cardiology annual meeting, or ACC.

The data showed that, while statins and EPA can work independently to reduce lipid oxidation, which can contribute to CV risk, they might work even better together. These findings are another compelling piece of evidence that support our belief regarding the potential for increased benefit to appropriate high-risk patients from VASCEPA in combination with statins, which is consistent with the results from the REDUCE-IT trial. If successful, the combination therapy would be a game changer for patients, since it will carry the most significant cardiovascular risk outcome benefit label and would hopefully provide additional market exclusivity within a potential multibillion-dollar market opportunity. Second, we continue to benefit from the strength, size and long-term duration of the REDUCE-IT trial, which is producing ongoing data sets that add to the growing body of clinical evidence in support of the CV risk reduction benefits of VASCEPA/VAZKEPA in high-risk patients.

We continue to support ongoing research and clinical work that further characterizes and validates the mechanisms through which icosapent ethyl exerts its biological activities and ongoing data analysis of REDUCE-IT that further explores the efficacy and safety profile in additional subgroups of patients to further distinguish VASCEPA/VAZKEPA as one of the most significant products to reduce CV risk since the introduction of statins. This work has included recent presentations at ACC as well as recently published sub-analyses from the REDUCE-IT trial, including the very compelling results from REDUCE-IT PCI and prior MI analysis. In REDUCE-IT PCI, post hoc exploratory analysis showed that, for the primary composite endpoint of five-point MACE, time to first event was significantly reduced with VASCEPA versus placebo by 34%, and total first and subsequent events were also significantly reduced by 39%. For the key secondary composite endpoint of three-point MACE, time to first event was significantly reduced by 34% in the subgroup of patients with the prior PCI.

In the prior MI data just published in JACC, prespecified and post hoc exploratory analysis showed that, for the primary composite endpoint of five-point MACE, time to first event was significantly reduced with VASCEPA versus placebo by 26%, equating to an absolute risk reduction of 5.9%, and total events were significantly reduced by 35% in the subgroup of patients with prior MI who are at high risk of another major event. Both collectively and independently, these data underscore the real clinical benefits of VASCEPA/VAZKEPA in various at-risk patient populations and help support our value proposition for VASCEPA/VAZKEPA. In summary, I believe we will continue to benefit from the strength, size and long-term duration of the REDUCE-IT trial, and we plan to continue to support ongoing research and clinical work on mechanistic aspects for icosapent ethyl and to support additional data analyses of patient subgroups. I will now turn the call over to Michael Kalb, our CFO, to discuss Q1 '22 performance in further detail.

Mike? 

Mike Kalb -- Chief Financial Officer

Thanks, Steve. For the first quarter of 2022, we reported net total revenue of $94.6 million, including net product revenue of $94 million, a decrease of 33% and 34% respectively compared to the first quarter of 2021. We saw a number of compounding factors impact our product sales in the U.S. during the first quarter.

Approximately half of the decrease in net product revenue was driven by a decline in volume, with the remainder of the decrease resulting from price erosion. We had a new generic entrant in January, which we believe had a major disruptive impact in the market. With the launch of this additional generic entrant in January, there are currently three generics in the market. As a reminder, during the three months ended March 31, 2021, there was only one generic in the market.

The increase in generic competition, including the impact of the initial launch of the third generic, adversely impacted the volume as well as the net pricing of branded VASCEPA in the three months ended March 31, 2022. We made concerted efforts to focus on retaining exclusive business. In addition, compared with other quarters of the year, beginning-of-the-year deductibles under certain patient insurance plans, which are not unique to VASCEPA and not new this year, tend to cause some patients to not fill prescriptions, particularly for asymptomatic medical conditions. Further, and potentially as an impact of the third generic entrant, while still remaining within normal industry ranges, the wholesalers decreased their branded VASCEPA inventory levels as of March 31, 2022, by approximately 40% in terms of bottles from the beginning of the quarter.

By comparison, wholesaler inventory balances decreased by 10% during the first quarter of 2021. The inventory balances for the first quarter of 2022, as calculated based on days of sales on hand, were near the high end of the range at the beginning of the quarter and reduced to the lower end of the range at the end of the first quarter of 2022. This compares to a slight increase in days of sales on hand at the end of the first quarter of 2021 compared to the beginning of the first quarter of 2021. We continue to focus on our performance in the market and are evaluating the potential positive impact that COVID recovery may have on our business in the coming quarters.

The patient need for VASCEPA in the U.S. remains solid, as we have seen from the prescription data, and our U.S. go-to-market strategy may result in IPE market expansion and supported stabilization of the business. We will know more in the coming weeks.

The U.S. business continued to be profitable from a contribution margin perspective, which is gross profit less sales and marketing-related expenses and continues to provide support for the expansion into Europe and other geographies around the world. During the first quarter of 2022, we reported operating expenses of $100.7 million, a decrease of 13% compared to the first quarter of 2021. The decrease is related to the implementation of our go-to-market strategy in the U.S., including reducing our sales force footprint and increasing our reach through digital platforms.

As we have discussed previously, as part of our go-to-market strategy, we have increased the variability of certain of our U.S. marketing expenses which are tied to sales volume. These savings were partially offset by our investments in growth and expansion in Europe and other markets outside of the U.S. We are focused on maintaining our operational efficiencies going forward.

Under U.S. GAAP, Amarin reported a net loss of $31.6 million for the first quarter of 2022, or basic and diluted loss per share of $0.08. We continue to monitor the ongoing global supply chain issues, which are resulting in inventory supply shortages for numerous companies and products. We believe we have and are maintaining adequate supply to meet the expected global demand, including our global expansion plans and pipeline advancements.

As of March 31, 2022, Amarin reported aggregate cash and investments of $389.3 million, consisting of cash and cash equivalents of $219.2 million and liquid short-term and long-term investments of $143.4 million and $26.7 million respectively. As a reminder, cash burn has historically been higher in the first quarter of the year as a result of timing of payments of certain rebates and other items. We will continue to manage our cash prudently relative to business performance and believe our current available cash and resources, including U.S. profitability, are adequate to support continued operations, including European launch activities, for at least the next 12 months.

With that financial overview, I will now turn the call back to Karim for closing remarks. Karim? 

Karim Mikhail -- President and Chief Executive Officer

Thank you, Mike, for that financial overview. We have a busy year ahead of us as we work to achieve the ambitious goals we set for 2022. We remain focused on executing the global growth strategy we just reviewed with you, confident that we can continue to build a multibillion-dollar global franchise and, more importantly, we can achieve our bold vision to stop cardiovascular disease from being a leading cause of death worldwide. And with that, operator, we are ready to take questions.

Questions & Answers:

Operator

Certainly. [Operator instructions]. Your first question is coming from Michael Yee from Jefferies. Your line is live.

Unknown speaker

Hi. Good morning. This is [Inaudible] on the line for Mike Yee. Thanks for taking my questions.

Maybe a few for me. First one is, how do you think about sales trajectory in U.S. and EU going forward? I think you mentioned in your press release that the sales decline was due to 50-50 volume and net price in the U.S. And could you remind us how much net price has fallen and what's your current level of [Inaudible]? And do you see any opportunities to improve [Inaudible] in the U.S.? And maybe a related one: how do you define success for your go-to-market strategy in U.S.? And maybe also briefly comment on what be the opportunities you are looking at right now and if there is the timeline to [Inaudible]? And maybe lastly, do you foresee any supply issues for your current sales combination pill in development? Thank you.

Karim Mikhail -- President and Chief Executive Officer

Thank you for the compounded question. I think we'll be able to cover a lot of ground with that. So – well, let's start about U.S. sales and E.U.

revenue. So, to analyze again for you the situation with regards to U.S. revenue, we basically have four different variables impacting our performance this quarter. The first one is prescription, right? We have a prescription decline of 11%, 12%.

Then we have a channel impact from a wholesaler level, then we have a price impact, and all of this is exacerbated by the fact that this is the first quarter of the year, and we have the whole deductible thing. So that's really just to sum up what has happened on the U.S. level. Now, if we try to take these variables and project ourselves in the future, just to see what to expect -- and, as you know, the market is very dynamic, so it's not possible to speculate, but, if you look at prescription, I think for many of us we were looking at the prescription trends, seeing that, even with the third generic entrant, there is no acceleration for the total generic class.

So that is definitely a signal that says nothing unusual is happening there. It continues to grow, but nothing unusual. Now, the channel is an unexpected impact, and we have to see whether this is going to be something over time or not, right? We are at the lowest level of days on hand, so we'll see if this is going to evolve over time. If it evolves, it will evolve more positively, not negatively, because we are at -- as you heard from Mike, we are at the bottom of the range, right? Now, if we go to price, this is a decision that we took to be competitive from a price perspective when we have a third entrant on the market.

And there is a group of customers that have decided to take advantage of the price that we are offering, and some others who did not. Now, in the segment where customers agreed to our offer, we're actually stabilizing volume. So we cannot see that from the overall prescription trends, but within that segment we actually don't have a decline. We are securing the volume, albeit at a lower margin, but we're securing the volume.

In the other part of the market, where customers decided, even with a competitive price, not to avail themselves of that offer, we're losing volume there. Now, that dynamic will play over the next weeks, maybe months, but it will have to stabilize at a certain point in time, sometime this year, right? So this is really just analyzing U.S. revenue and what to expect out of that. E.U.

revenue, at this stage, the only source of revenue is Germany. I'm sure you heard all our comments on the situation in Germany. The market is severely disrupted at this point in time for us and for everybody else, so, at this point in time, we're just focusing in Europe on getting the best price and reimbursement, because that's the right foundation. And as a reminder, pricing and reimbursement in Europe will, in the future, go down, not up.

So the higher you start, the better this is, and that's the focus we have on [Inaudible]. So that was first question. Defining success in the U.S. – I will just go back to what I just discussed, right? So if we are able to stabilize the volume in the exclusive sector of the market and, after stabilization, maybe grow that with the opportunities that we have on the market today – and, as you've seen, we mentioned two.

We mentioned the new data from the post-MI and PCI data, but we also mentioned the opportunity of the discontinuation of PROMINENT, where we have 2 million patients on fibrates with a third piece of evidence that says they don't provide benefits. So that's an opportunity for us, after stabilization, to grow within that exclusive segment. BD timelines are very difficult to predict, right? We are staying very close to that space, and we are considering every opportunity. Having said that, this is not about rushing to do something.

This is about creating shareholder value. So if there is a deal that will bring value, we will act on it, but we are not going to act on something that we believe is not going to add shareholder value. Finally, supply. We believe we have sufficient supply.

There is significant disruption in supply, not just for us but in the whole industry, so we stay very close, but for the moment we sufficiently supplied ourselves for the U.S. and for Europe and internationally.  Thank you for the question.

Unknown speaker

Thank you so much. Very helpful. Thank you.

Operator

Thank you. Your next question is coming from Louise Chen from Cantor. Your line is live.

Louise Chen -- Cantor Fitzgerald -- Analyst

Hi. Thank you for taking my question. So I had a few here. First one I had for you was on the U.S.

sales. Do you think they will return to growth if you expand the market, or is it really going to be a source of funds for global expansion? And then second question I had for you is, what other innovative areas interest you, and are you looking to add on development stage or commercial assets? And the last question is just what are the pushes and pulls on your cash balance and runway? Thank you.

Karim Mikhail -- President and Chief Executive Officer

So with the U.S. sales that I just spoke about, our number-one objective is to stabilize, to start with, right? You cannot go back to growth unless you stabilize. For the moment, the market this year is far more dynamic than last year. Today, we have three generics, not one.

But, interestingly, there is a lot of displacement between generics. So it's not like everybody's coming in and just adding patients. Between the last entrant and the first entrant, there seems to be a clear switch on patients. So that is encouraging us that there is no acceleration in the generic penetration.

Once we stabilize the exclusive segment, which, by the way, we did stabilize, and maybe we can share this data from a prescription perspective in the future, we may be able to go back to growth, based on the opportunities that we have on the market, right? However, there are multiple variables here, right? How far will the price erode? What's going to happen competitively between the different generics? Will there be more supply to generics? Will there be a fourth entrant? There are a number of questions which today it is not clear where we will be. But, as a reminder, our focus on the U.S. is to deliver a targeted contribution margin that is needed for us to continue investment in Europe. That's our focus.

Our focus is to make sure that that contribution margin is delivered on a quarterly basis, and IP growth can go back if we truly focus on that. But again, as I said, it's really contribution margin that is driving us. In terms of BD, we're looking at a number of opportunities. The main thing is, what synergies can we drive out of a potential asset? Because we have an infrastructure in the U.S.

which we did reduce the footprint significantly, as a reminder, in October, but we still have a presence, so how can we drive synergies with that infrastructure that we have? But also we are building in Europe, and we have an infrastructure there, and we could also handle more than one product. So -- but that's really our focus. It's mostly where we stand today, more on the commercial stage, or close to commercial, rather than anything else. Now, if other opportunities come up and they are attractive and they will create shareholder value, we will definitely consider them.

Now, on the cash balance, it's -- if you compare our expenses of Q1 2022 versus Q1 2021, there is a decline in expenses, which -- let's face it, you would assume that our expenses should go way higher because, the first quarter of 2021, we were hardly in Europe. We were just initiating things. And that's a clear evidence that we are being very, very cash conscious -- very cash conscious. And we're not waiting for certain events to happen for us to be efficient.

So we already added additional efficiencies on the U.S. marketing side to ensure that we have our contribution margin. And, as we said, we are ready for future potential efficiencies in case need be to ensure that we keep the cash that is needed for us to invest moving forward. 

Louise Chen -- Cantor Fitzgerald -- Analyst

Thank you.

Operator

Thank you. Your next question is coming from Roanna Ruiz from SVB Securities. Your line is live.

Roanna Ruiz -- SVB Securities -- Analyst

Thanks. Good morning. So a couple of questions from me. I think I might follow up on some of the U.S.-focused questions and was curious, is this rebate strategy something you intend to leverage even more now versus prior quarters? And could you just help give us a sense of what that strategy might look like going forward for the remainder of the year?

Karim Mikhail -- President and Chief Executive Officer

Yes. So, as you've seen, this strategy we started implementing from the last quarter of 2021, as a reminder. And we started to communicate by saying we have 40% of the lives exclusive. This quarter, we said we now have 45% of the lives on exclusive basis.

So what does this mean? It means that, in those plans, VASCEPA is really the only product that will be dispensed but will be dispensed with a lower margin. And, up to now, what we have seen is that those plans are taking full advantage of that offer, meaning we're seeing basically most of the patients in volume coming on VASCEPA branded from a volume perspective. Now, we are not rebating additional numbers, meaning we know where we need to go to be competitive today, and we are not eroding further the price, just to be very clear on that one. We have a set plan.

We have a set rebate mechanism. And there could be more plans that want to take advantage of it, but I think we're sort of pretty close to half of the market, and we're almost there. So we don't anticipate significant changes on that end, but it's clearly working to stabilize the volume, right? Our decline in the non-exclusive is 18, 19%, and in the exclusive we're not declining at all, right? We're keeping the volume. That's what the picture is looking like.

So yes, there will be a shift in the market, but over the next weeks, quarters, it will stabilize at a certain point in time. 

Roanna Ruiz -- SVB Securities -- Analyst

OK. Great. That's helpful. And just a quick check on your comment earlier on the wholesaler inventory levels.

Is this -- it sounds like this might be a one-time thing for first quarter, but I was curious if you could just give a little more detail? Could this happen again in subsequent quarters, and how should we think about that?

Karim Mikhail -- President and Chief Executive Officer

Well, we asked ourselves what to expect when a third entrant is coming to the market. And clearly, how the wholesalers reacted was, 'Now that we have three generics on the market and not one, I, wholesaler, need to be a little cautious with my days on hand, because I don't know how things are going to progress.' Now, is it going to be repeated? Will there be any fill? I believe this will all be driven by the prescription trends. That's what's going to drive that. The prescription trends are going to drive it.

So we are stabilizing volume in the exclusive segment. We're losing in the non-exclusive. Overall, there is a 10, 12% volume decline at this point in time. So that's really where we stand.

So that's really summarize it, Roanna.

Roanna Ruiz -- SVB Securities -- Analyst

Yes, understood. And my last question's for Europe. Congrats on your positive assessment from the French National Authority. I was just -- wanted to understand what does this do in terms of helping set you up for a favorable reimbursement decision later on? Can you just give us a little color on that?

Karim Mikhail -- President and Chief Executive Officer

Sure. So, as we shared in the prior quarter, the pricing and reimbursement process in Europe is a five-step process. And step number three is scientific assessment, and step number four is the pricing negotiation. In France, you actually get to have a decision on are you reimbursable or not, OK? This is what we achieved, which is we are reimbursable.

And, by the way, this is the really tough gate for France, because most products that are excluded are excluded by being non-reimbursed, and we've basically said that -- all of other omega-3s, when they went through that discussion, they were basically not reimbursed. So this is -- sets us for a collaborative type of negotiation with the pricing committee in France. It actually means that their French FDA says, 'I see value in this product, so please, pricing committee, try to negotiate with Amarin to arrive to a reasonable price.' This is where we said the fact that we have a Swedish price anchor of 160 euros, which is visible to every country today. That basically says, 'Here is a country that's very HTA driven, that needed pharmacoeconomic evaluation and found that, at 160 euro, we bring value to European patients.

Now, the French may be more efficient in their own healthcare system, and they have many, many more millions of patients, so they will try to get a better price, but this definitely sets the negotiation on a more positive trend than not having a positive assessment. 

Roanna Ruiz -- SVB Securities -- Analyst

Got it. Thanks.

Operator

Thank you. Your next question is coming from Jessica Fye from J.P. Morgan. Your line is live.

Jessica Fye -- J.P. Morgan -- Analyst

Hey, guys. Good morning. First question, I appreciate your comment that European pricing only goes lower, not higher, but can you elaborate specifically on how the German healthcare austerity measures affected your sales this quarter and what that means going forward? And then I have a follow-up.

Karim Mikhail -- President and Chief Executive Officer

Sure. One of the measures was directly, basically, higher rebates that have to be paid. So that impacts you directly. If I'm not mistaken, that was almost 7% by itself.

So there was 7% that was just gone because of that one measure. But on top of that, and because of the healthcare budget deficit, basically there was no new product that was reimbursed in Germany in the last GBA assessment. None. So it's changing the dynamic of the negotiation, and we're conscious of that, and we're working very hard to defend the value that we have as a product, but it definitely has a lot of impact on the German market overall.

Now, COVID also impacted Germany. It was not only the healthcare austerity measures, but it was just a very tough quarter, with 25% of German population infected, so that was also very significant in terms of impact on German performance.

Jessica Fye -- J.P. Morgan -- Analyst

OK. And then, I guess, recognizing that it seems like 2022 is a lot about building out coverage and access in Europe, what year do you think VAZKEPA sales in Europe will contribute materially to the overall franchise revenue?

Karim Mikhail -- President and Chief Executive Officer

Sure. So, from prior communication, we basically estimate that we're going to have up to eight countries reimbursed and six countries launched in 2022. That's the plan, and that's what we're working forward to, and so far we are on track. That means that, in 2023, we're not going to have one, not two, not three, but hopefully six countries contributing for 12 months of sales.

Now, if other market conditions are going to be OK, meaning we're not hit with the two variants we heard of that are hitting New York today, and that should be a year where we start to see multiple countries contributing to the revenue in Europe. So definitely that would be the beginning of showing meaningful revenue for Europe.

Jessica Fye -- J.P. Morgan -- Analyst

Great. Thank you.

Operator

Thank you. Your next question is coming from Paul Choi from Goldman Sachs. Your line is live.

Paul Choi -- Goldman Sachs -- Analyst

Thank you. Good morning, team. Just a couple from us, please. Just with regard to the rate of investment in the U.S.

business. I guess my question here is how quickly adaptable is that in terms of your operational flexibility in terms of managing the margin contribution here, particularly if the market dynamics continue in terms of the current rates and trends with regard to volumes and/or net pricing declines?

Karim Mikhail -- President and Chief Executive Officer

Good morning, Paul, and thanks for the question. So, on the U.S., you've seen that, very quickly last October, we took very significant action on the field force perspective, right? So we already have precedents where we took action, and we took action swiftly. Now, if we look at the situation today, we already -- we are communicating that we took action on our marketing budgets to ensure that we preserve our contribution margin, so we didn't even wait for the quarter to end for us to take action on that. But we have a plan for every quarter, right? So it's a question of what revenue are we going to get, and, if we need to adapt our cost structure, we will do it, and we will be flexible enough, because we have a clear focus on delivering the contribution margin that is needed to get us to 2023 and definitely the growth that is anticipated in Europe at that point in time.

So that's really where we stand.

Paul Choi -- Goldman Sachs -- Analyst

OK. Great. Then I guess, in terms of your rate of investment in terms of the margin contribution for the U.S. business, and then your build-out of your European opportunity,  do you have a view or something you wish to communicate to the analysts here or your investors here as to when you start to suspect you could see a positive ROI on this, or any sort of rough time frame, not necessarily an expectation that it will be near term, but just any sort of rough framework as to when this becomes ROI positive for your investors?

Karim Mikhail -- President and Chief Executive Officer

Yes. So, on that point, as you know, last quarter, we actually had a positive income quarter, and we've had a few quarters where we've had positive income. I think your question is about when are we going to see sustained positive operating income over time. This year is a year of pricing reimbursement for Europe, so the revenue that is generated is not going to be significant enough, and we have to continue driving contribution margin in the U.S.

for 2022 to get us there. Once we have what we are targeting in terms of revenue stream in Europe in 2023, and I believe by then the situation in the U.S. would have stabilized and be clear, then we can really look at sustained positive income from then on. But it's very dynamic, Paul, as you can imagine.

And by the way, we have estimates on when each country is going to come in Europe, at what price, with what penetration rate. Up to now, the price in Sweden is very positive compared to prior benchmarks, so we feel positive that that's moving in the right direction. Now we need to make sure that others come on time as we plan them to ensure we deliver that.

Paul Choi -- Goldman Sachs -- Analyst

OK. Thank you for taking my questions.

Karim Mikhail -- President and Chief Executive Officer

Thank you, Paul.

Operator

That concludes our Q&A session. I will now hand the conference back to Amarin management for closing remarks. Please go ahead.

Lisa DeFrancesco -- Senior Vice President, Investor Relations and Corporate Affairs

Thank you all for joining us today. We look forward to following up with you in the coming days and weeks. Have a good day.

Duration: 57 minutes

Call participants:

Lisa DeFrancesco -- Senior Vice President, Investor Relations and Corporate Affairs

Karim Mikhail -- President and Chief Executive Officer

Steve Ketchum -- President of R&D and Chief Scientific Officer

Mike Kalb -- Chief Financial Officer

Unknown speaker

Louise Chen -- Cantor Fitzgerald -- Analyst

Roanna Ruiz -- SVB Securities -- Analyst

Jessica Fye -- J.P. Morgan -- Analyst

Paul Choi -- Goldman Sachs -- Analyst

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