Amarin (AMRN) Q2 2022 Earnings Call Transcript

Amarin (AMRN -1.43%)
Q2 2022 Earnings Call
Aug 03, 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 second quarter 2022 financial results and operational update. [Operator instructions] 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

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, carryout 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 risk factors that could cause 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 June 30, 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 recent clinical data and publications. And Tom Reilly, Amarin's new chief financial officer, will provide a more detailed review of our second 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 will 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. As we enter the second half of this pivotal year for Amarin, we continue to focus on our three-dimensional growth strategy, breadth or geographic expansion; height representing diversification; and depth or core operation evolution. Recently, I surpassed my one-year anniversary as president and CEO of Amarin, and have had the chance to reflect on the significant transformation of the company over the past year.

In the U.S. we face continued pressure from additional generic competition. We focused on maintaining profitability, and through our commercial efforts, we were able to retain a level of market share even to this day that is unprecedented in any generic market; and more importantly, continue to deliver significant positive contribution margin, allowing Amarin to self-fund the expansion to Europe and internationally. During this past year, we made the difficult decision to implement two major restructurings.

The first was fully focused on the U.S. commercial structure and the second impacted our company more broadly in order to manage our costs throughout the period and to address the evolving and challenging U.S. market dynamics. We did this while undertaking the BOLD strategy for global expansion, which was highlighted by more than 10 market access filings in Europe and multiple regulatory filings in other geographies.

With recent achievements, including three country reimbursement wins in Europe and a number of international product approvals for VASCEPA, we are beginning to see the BOLD strategy take shape. In addition, we completely reshaped our leadership team with over 70% of our executive team joining Amarin in the past year, many in the last six months. These accomplishments provide us an even greater confidence that our long-term objectives for Amarin are ambitious but also achievable. Now to touch on the second quarter, beginning with comments on Europe, where we have made considerable progress, executing our strategy, and because it is the source of future growth, expansion and value creation for Amarin and shareholders.

2022 has been about laying the foundation for our future across Europe. Midway through the year, we have made considerable progress in key markets with more to come in the second half of 2022. It's important to note that we have taken a regional approach to growth and expansion in Europe where our success does not rely on any single market, but rather on building strong sustainable diverse revenue streams in individual markets across the continent. And we were delighted to have achieved final positive reimbursement from NICE with reimbursement secured for patients in England and Wales at a strong net price of approximately $176.

This was a big milestone as it marks our first positive, final reimbursement decision from a large EU5 market. Note that net prices in Europe, especially for chronic treatments, tend to be much lower than U.S. prices. This achievement and specifically this level of reimbursed net price acknowledges the value of VASCEPA/VAZKEPA and our ability to demonstrate this value to payers in Europe.

In the U.K., we are in the process of establishing formulary access and launch preparations are underway with a formal launch plan for October. We were encouraged by the excitement and enthusiasm in the market regarding the final reimbursement decision by the local authorities, including NHS, as they look to combat cardiovascular health as a key national health priority. We're focused on educating the market on the benefits of VASCEPA and establishing VASCEPA as a new standard of care to reduce the risk of CV events beyond LDL management. Our objective is to drive this education through medical and scientific engagement, implementing formulary guidelines and building awareness and adoption through multiple commercial channels.

This follows the first national reimbursement decision for VASCEPA in Sweden, where the work to obtain formulary status and launch is well underway. We also achieved individual patient reimbursement in Denmark, are in the process of filing for national reimbursement as a next step in that country. With these achievements, we have truly transitioned to the next phase of our global expansion strategy. And I'm pleased to share that we have also made progress in a second major EU5 market, Spain, where we have begun pricing discussions with Spain Ministry of Health earlier than anticipated.

This gives us strong confidence for a possible pricing and reimbursement decision in Spain before year-end. I also want to provide an update on Germany where we are on the market with temporary reimbursement. Germany continues to be impacted by unprecedented local market conditions, including healthcare austerity measures, which are being implemented as a result of the challenging political and economic situation in Europe, which has impacted our sales during this launch period. At this time, we remain in constant dialogue with the German health authorities and expect the process to complete in November, and we may use our full timeline for these negotiations.

Based on the status of the negotiations and current market conditions, we have suspended our contracted primary care field force to avoid having these resources becoming permanent, which was contractually scheduled to occur. We are committed to our presence in Germany, pending the outcome of current negotiations with the payer, which remain actively underway. This decision reflects our disciplined financial management and is in keeping with how we have been actively managing our investments to remain prudent and flexible. Across Europe, we continue to advance our reimbursement discussions with national health authorities in Norway, Finland, France, Italy, Israel, and the Netherlands.

We have also added to the list, Portugal, Austria, and Switzerland, where we have recently submitted and are now on file for reimbursement discussions. This brings the total number of submitted dossiers to 14 countries in Europe. In addition, partnership discussions in Central and Eastern Europe are advancing well. With our reimbursement and pricing success thus far, we remain on track to receive reimbursement decisions in up to eight countries and to launch VASCEPA in up to six European countries this year.

Our achievements in Europe in just under one year give us further confidence that the opportunity in Europe remains a $1 billion-plus opportunity. We believe 2023 will be an exciting year where we expect a pivot to the revenue generation stage of our BOLD global expansion strategy. Now, moving to our results in the quarter and the U.S. business.

In the second quarter of 2022, we recorded $94.4 million in total net revenue, including $90.6 million in U.S. product sales, reflecting the anticipated continued pressure from generic competition in the market. The results reflect the full impact of the third generic entrant compared with one generic in the market the previous year's quarter. The pressure was offset by a normalization of some of the trade patterns and inventory destocking we saw in the first quarter, which Tom will discuss in greater detail with you shortly.

Overall, while the U.S. market remains challenging, I'm pleased that the revenue this quarter was consistent relative to the first quarter, which speaks to the efforts of the team to retain and support the business. As part of our companywide focus on operational excellence, we remain committed to maintaining a strong contribution margin for our U.S. business.

To that end, we took the difficult but necessary step to announce a comprehensive cost reduction plan to address expenses and market dynamics within the U.S. business, which will result in a $100 million in savings through the middle of next year. Tom will talk more about this plan shortly. The goal of our cost containment initiative is to continue to offset the challenges we are experiencing in the market with the focus on operational excellence that allows us to maintain the U.S.

business' positive contribution margin. While the cost containment initiative in June was comprehensive and involved cost reduction across the entire organization, the largest portion of the savings was related to a reduction in the U.S. commercial organization, creating a core focus team. The strategy allows for the core salesforce to support branded VASCEPA sales by fully targeting around 14,000 of our most loyal prescribers as we continue to focus on secondary prevention in key CV risk indication, such as prior MI and stroke.

Moving forward, our efforts are focused on sustaining and supporting the VASCEPA brand and prescriber base we have today in the U.S. Supporting these efforts is the compelling data from REDUCE-IT that shows VASCEPA reduced CV events by 35% in prior MI patients. 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 an elevated risk for recurrent CV problems. These results further strengthen the case we are making to the physicians who care for these high-risk patients for pure EPA in the form of prescription icosapent ethyl as a key intervention beyond statins for meaningful risk reduction.

Our efforts to secure exclusive business is working so far. The exclusive business has not experienced any major changes since the end of last quarter, as a result of these efforts. The exclusive business is continuing to grow as a percentage of the total Amarin business. That said, we expect volumes will continue to experience some pressure throughout this year.

And as we look ahead to the third quarter in particular, we anticipate continued pressure from generics, as well as lower revenue due to the seasonality typically seen within the third quarter for this market. We will continue to closely monitor the market dynamics in the U.S. and adjust as necessary, whatever possible. Beyond Europe and the U.S., we continue to make progress on our BOLD plan to unlock the potential of VASCEPA internationally.

First, let me cover our partner three geographies. Our Canadian partner, HLS Therapeutics continues to make good progress, working with all participating provincial jurisdiction to secure coverage from publicly funded drug plans across Canada. They have secured public market access reimbursement for VASCEPA in Ontario, Quebec, New Brunswick, Saskatchewan, and with other public payers. We look forward to their continued 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 benefits of the product that underscores its pharmacoeconomic value. As a reminder, last year, we agreed to HLS partnership with Pfizer, by which HLS will promote to specialists and Pfizer will promote to the large primary care physician groups. We have been closely watching the progress of this strategy as it may be a model that can be replicated elsewhere internationally. Biologix, our partner in the Middle East and North Africa, MENA region continues to pursue the review and approval for the cardiovascular risk reduction indication in the Kingdom of Saudi Arabia and Kuwait.

As a reminder, VASCEPA is currently approved in a total of six countries in the MENA region, including KSA and Kuwait for the VHTG indication and in the United Arab Emirates, Lebanon, Bahrain and Qatar for both the VHTG and cardiovascular risk indication. Lastly, our partner in China, received the approval for VASCEPA in Hong Kong for the CV reduction indication. And a commercial launch is being 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. According to Edding, they anticipate that a decision can still be expected by the end of this year. Now, let me cover our expansion efforts beyond these three mentioned geographies. 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. Dossiers remain in full assessment by the respective national regulatory authorities in Australia and New Zealand. In Israel and Switzerland, dossiers are under regulatory review and along with Austria are in reimbursement discussions. These markets will be managed and discussed within our Europe business.

Moving forward, we remain confident in the multi-billion-dollar global market opportunity for VASCEPA in Europe and internationally and are pleased with our recent achievements. We are beginning to turn this opportunity into a reality opportunity into a reality with future launches anticipated later this year and next. In addition, we took steps to ensure our continued investments in our clinical data and pipeline, including maintaining a strong presence at important medical meetings and implementing a step-wise approach to the development of our fixed-dose combination, which ensures our ongoing progress with this important program that combines VASCEPA with a statin. To talk more about these efforts, I will now turn the call over to Dr.

Steve Ketchum, Amarin EVP, president of R&D, and chief scientific officer, to discuss recent advancements with our data, plans for presentation at this year's European Society of Cardiology annual meeting later this month, and progress with our fixed-dose combination. Steve?

Steve Ketchum

Thank you, Karim. Today, I would like to begin with some remarks in response to the recent media coverage and headlines regarding biomarker analyses of REDUCE-IT data as published in circulation. It is important that investors, medical professionals, patients, our employees, and other stakeholders understand that we stand firmly behind the science of our product. Recently, there has been considerable discussion and debate around exploratory post-hoc biomarker analyses published in circulation and what those exploratory data might mean in the overall story behind the science of the REDUCE-IT trial.

Additional scientific facts are missing from this discussion and provide a more scientifically based perspective. First, it is important to note that these exploratory biomarker analyses published in circulation were not conducted to provide additional evidence demonstrating effectiveness in reducing cardiovascular risk, but instead to preliminarily explore a subset of potential pathways via which icosapent ethyl might exert some level of effect in this trial. Second, the circulation paper highlights relative percentage increases rather than the absolute increases across the set of biomarkers studied in this analysis. When analyzing these results from an absolute increase perspective, they are small, and they do not correlate to any meaningful changes in outcomes seen in the REDUCE-IT trial.

Importantly, all of these biomarkers are exploratory. And none has been sufficiently validated or correlated with CBD risk and in across clinical trials to enable them to be relied upon to draw meaningful conclusions. In other words, any speculation on the potential impact of these biomarkers is purely theoretical, which has largely been ignored in the discussion to date. In addition, the authors submitted a number of additional analyses as part of the iterative manuscript review process, which provide a more balanced perspective on the exploratory biomarker data.

However, the journal's reviewers and editors elected not to include those analyses in the final published paper. We believe strongly that had the journal included these analyses and the accompanying data discussions within the published paper, that the conclusions of this sub-analysis would be much clearer. And this paper, which ended up being more abbreviated than intended, would not be leading to the current level of confusion within the cardiovascular community today. While there can be no guarantee of future acceptance, we will be working with the authors to discuss how best to pursue publication of this data in the future to ensure fair and balanced data in the public domain.

While we welcome scientific exploration and debate, it is important that all of the scientifically based docs are known and considered versus theoretical speculation. Based on the above points, we continue to stand behind the results of REDUCE-IT, the definitive large long-term outcome study of icosapent ethyl with gold standard cardiovascular clinical endpoints. Our confidence in VASCEPA/VAZKEPA comes from the wealth of REDUCE-IT data we have generated all of which continues to reinforce its CV risk reducing benefits. We continue to support ongoing research and data analysis of REDUCE-IT as this work further explores the efficacy and safety profile and additional subgroups of patients and further distinguishes VASCEPA/VAZKEPA as one of the most significant products to reduce CV risks since the introduction of statins.

We are very pleased to report that additional data on VASCEPA/VAZKEPA will be featured at ESC 2022 in Barcelona. At the end of this month, these data will focus on specific patient subpopulations at increased risk of a cardiovascular or CD event from the landmark REDUCE-IT cardiovascular outcomes trial. The accepted abstracts include a late-breaking science presentation on the significant reduction of ST-elevation myocardial infarction, or STEMI with VASCEPA in the REDUCE-IT trial. These and other new findings will be presented by a variety of international academic collaborators based on researcher analyses supported by Amarin.

We look forward to the presentation of these supportive data at the meeting. Turning now to our ongoing development efforts. The confidence we have from REDUCE-IT in other clinical studies has allowed us to invest further in the future of icosapent ethyl, which is why we are supporting the development of a fixed-dose combination portfolio centered on icosapent ethyl in combination with a statin. As part of our recent cost savings initiatives, we are taking a more step-wise approach to development in this program, which means that rather than pursue an entire portfolio of potential combinations, we have selected one to move into proof of concept manufacturing and testing.

Based on the results of those pharmaceutical development activities across the next several quarters, we will evaluate the next steps for the development program. The fixed-dose combination, or FDC, product is in the early stages of development. 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. With that overview, let me turn the call back to Karim.

Karim Mikhail -- President and Chief Executive Officer

Thanks, Steve, for that detailed overview. As I mentioned earlier, in addition to revamping our BOLD strategy across our clinical and commercial organization, we continue to take steps to expand our team globally to better serve Amarin's strategic focus and objectives. One important appointment was the addition of our new CFO, Tom Reilly. Tom brings significant financial leadership experience across large global pharma and biotechnology companies, as well as a proven track record, leading financial planning and analysis within international and commercial operations.

He has already become an integral part of our leadership team and is a great asset, as we expand around the world. With that brief intro, let me turn the call over to Tom to discuss our second quarter 2022 financial performance in further detail. Tom?

Tom Reilly -- Chief Financial Officer

Thank you, Karim, for the introduction. Good morning, everyone. I'm pleased to be addressing you today for the first time as Amarin CFO and to report on our financial performance for the second quarter of 2022. Let me begin by discussing our results for the quarter.

For the second quarter of 2022, we reported total net revenue of $94.4 million, including net product revenue of 93.8 million, a decrease of 39% compared to the second quarter of 2021. U.S. product revenue was 90.6 million, a decline of 2.9 million versus the first quarter of 2022. The results represent continued generic pressure in the U.S.

including the first full quarter with three generics on the market. As a reminder, during the three months ended June 30, 2021, there was only one generic in the market. During the second quarter, we saw normalization in the trade channel. When compared to the prior quarter, we continued to experience pressure on both volume and price.

We've continued our focus on retaining exclusive business, and that business has remained stable. Moving forward, we are now investing to grow the molecule in the U.S. market, but we are investing in sustaining and supporting the VASCEPA brand and prescriber base we have today in the U.S. We expect volumes and price will continue to experience pressure throughout this year and also anticipate the seasonality typically seen within the third quarter for the market.

The results also included international product revenue of 3.1 million, including 2.3 million in commercial supply shipments to HLS in Canada, as they began receiving reimbursements in the individual provinces and 0.7 million in European product revenue. Cost of goods sold for the three months ended June 30, 2022 was 50.8 million, compared to 32.2 million in the corresponding period of 2021. During the three months ended June 30, 2022 Amarin has taken steps to amend supplier agreements to align supply arrangements with current and future market demand, resulting in a charge of 15 million. Also, Amarin recorded a charge of 9.6 million related to unsellable inventory, which is not related to product dating.

Excluding the impact of these two items, gross margin was 72% for the three months ended June 30, 2022. The product has a long lead time in terms of manufacturing and the market end demand for VASCEPA has been difficult to predict related to the volatility of the U.S. generic market. Significant steps were taken to renegotiate future price commitments of inventory in Q2.

Renegotiation of these agreements is a very important step forward in lowering future cash burn, related to building new inventory. Efforts are ongoing and inventory purchases are expected to be significantly lower in the second half of 2022. Moving to operating expenses. During the second quarter of 2022, we reported expenses of $106.5 million, which includes a $10.2 million restructuring expense.

This is a decrease of 6% compared to the second quarter of 2021. The decrease is primarily related to the implementation timing of the initial cost savings that were announced in October of 2021. These savings were partially offset by our investments in growth and expansion in Europe and other markets outside of the U.S. As Karim mentioned earlier, in June, we announced an additional comprehensive cost savings plan that will result in 100 million in savings to the middle of next year.

The cost reduction plan included savings related to U.S. workforce reduction, which reduced the total company employee base by over 40% from current levels. The plan also included streamlined operational expenditures, including reductions, reallocations and overall selling, general and administrative expenses, as well as savings related to refining the company R&D strategy to a more focused step-wise approach for its FDC program. As a result of these cost savings efforts, the company incurred $10.2 million in restructuring charges in the second quarter.

We will begin to see the benefit of the cost reduction in the third quarter of 2022, and we will be focused on maintaining our operational efficiencies going forward. The U.S. basis continues to be profitable from a contribution margin perspective and provides support for the expansion into Europe and other geographies around the world. Under U.S.

GAAP, Amarin reported net loss of 70 million for the second quarter 2022 or basic and diluted loss per share of $0.18. As of June 30, 2022, Amarin reported aggregate cash and investments of 324.6 million. We have taken significant steps this quarter to reduce our cash burn moving forward. We plan to 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. Now, I will turn the call back to Karim for closing remarks. Karim?

Karim Mikhail -- President and Chief Executive Officer

Thank you, Tom, for that financial overview. We have made a great deal of progress, despite this year's challenges for both Amarin and for the industry. This progress provides us with a renewed sense of energy and focus on our BOLD vision to stop cardiovascular disease from being a leading cause of death worldwide. Our continued ability to adapt and evolve with changing dynamics over the last 12 months, as well as the recent important and significant reimbursement achievements in Europe provide me with even more confidence in our objective to build a multi-billion-dollar global franchise and ensure patients globally can benefit from VASCEPA/VAZKEPA.

And with that, operator, we are ready to take questions.

Questions & Answers:

Operator

[Operator instructions] Your first question is coming from Michael Yee of Jefferies. Michael, please ask your question.

Unknown speaker

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

I guess a couple for me. First, can you comment on the U.S. sales trajectory going forward and how you expect EU sales to pick up? Appreciating that you are getting reimbursement decisions right now in that region for 2022, so, maybe a comment on how we should think about 2023. And secondly, I might have missed that part, but could you elaborate on the supplier agreement -- amendment and the unsellable inventory.

And also, do you expect this to happen again in the future? And maybe, lastly, appreciating your focus on the development of a fixed dose combination, but in the parallel could you comment on your BD efforts as well? Since I recall that you have plans to in-license some assets in the metabolic area. Thank you.

Karim Mikhail -- President and Chief Executive Officer

Well, thank you. We'll try to take them one by one. Let's just start with the U.S. trajectory.

First of all, we're pleased that this quarter we've seen, you know, our revenues to be in line with what we've had in Q1. If you really analyze this performance, you'll see that from a volume perspective, we are declining in the 7%, 8% prescription versus the Q1 of 2022, which is what is expected. So, this is really in line with expectation. At the same time, we also, you know, continue to have price impact because we're losing volume in the non-exclusive segment where we have lower rebates, but this is more or less getting to stabilization because now most of our business is really coming from the exclusive business.

So, over time, yes, we anticipate, obviously, a Q3 decline because it's seasonal and because we have a volume, but we see the price erosion over time, over the next two to three quarters stabilizing in a certain way. So, we're pleased with this quarter, we continue to monitor the situation very closely, and we'll see how things are going to evolve. In terms of, you know, Europe, I'm going to try to address like two, three questions in one, you know, further moment. 2022 is the year for reimbursement in Europe, that's not our revenue generation here.

The focus today is to get as many countries, but more importantly, at the right price. And you've seen the team delivering very strongly on that promise with a final net price in the U.K. of around $176 is significantly higher than our net price in the U.S., even prior to any price erosion, right, totally in line with what we committed to, you know, at the beginning of our European journey. The U.K.

is known to be a challenging market from a pricing reimbursement perspective. So, the fact that they came out and they came out as our second country, gives us confidence that that's really -- that's the trend. That's -- you know, we're going to be delivering over time. It takes a little bit more time obviously to get to that level of net price, but we are engaged with all of the payers and negotiations continue.

2023 is going to be the revenue-generation year. This is the year where we're going to have, you know, at least six markets launching by year end 2022, so the remaining will launch in 2023. So, this is when we switch from pricing reimbursement to true revenue generation in probably, you know, 10 of the markets at that point in time. On questions regarding, you know, supplier contract amendments, I'll start, but also let Tom, you know, share more detail.

We had a choice between after we've seen the Q1 results and the significant shift in the U.S. business. Either to take, you know, a year to 18 months to adjust inventory level because this is a very long lead manufacturing process. And if we took down that out, we would burn a lot of cash by the time we fix it.

So, we decided to renegotiate with our suppliers so that we can find arrangements. So, Tom?

Tom Reilly -- Chief Financial Officer

Yeah, Karim, just to follow up. So, it's multiple -- we have multiple arrangements, long lead time on the product. We see this as a good first step to stabilizing our working capital related to inventory. And we'll continue to work with our suppliers moving forward, to make sure that we stabilize the supply purchases to reflect existing demand.

And I think the second question was related to the inventory charge of approximately $10 million, which we had incurred this quarter. So, just to give a little background, this charge was a result of inventory that was damaged by one of our third-party suppliers and caused the inventory not to be our quality standards. So, we have worked diligent with this supplier to ensure that the proper procedures are in place to mitigate this in the future. So, that's the situation.

Karim Mikhail -- President and Chief Executive Officer

Thank you, Tom. On the fixed-dose combination, you know, we continue, as you've seen, despite the fact that we streamlined investments in terms of development, to ensure that we keep the project active and ongoing, because we believe there is significant opportunity of having a fixed-dose combination on the market. But we decided to focus only on one statin. We made progress.

We are in the -- we're in the phase of, you know, prototype manufacturing and getting ready, you know, for next steps. And, you know, our BD position remains as such we continue looking for, you know, assets that will provide U.S. revenue and U.S. asset for us and for the great team we have in the U.S.

to focus on, on top of VASCEPA. But we are also open to other opportunities. So, we will see how that is going to evolve over time. But thank you for the question.

Unknown speaker

Thank you. Very helpful. Thank you.

Operator

Thank you so much. The next question is coming from Louise Chen of Cantor. Louise, please ask you a question.

Louise Chen -- Cantor Fitzgerald -- Analyst

Hi. Good morning. Congratulations on all the progress this quarter, and thanks for taking my questions. So, I wanted to ask you about your SG&A in the third and fourth quarter, given your cost reduction program.

How should we think about it relative to second quarter, if you can't give exact numbers? And then, secondly, just on the sales, the nuance in the third and fourth quarter, because just, I guess during the first half of year, we got a lot of questions on how to think about sales and if they are going to be up or down quarter-over-quarter. So, any color you could give, or any thoughts and the cadence or nuances would be very helpful. And then, last question I had was just, Tom, as the new CFO, what do you want to bring to Amarin? And how will you do things differently at the organization going forward? Thank you.

Karim Mikhail -- President and Chief Executive Officer

Thank you, Louise. So, we can start with the SG&A and then basically from there, I can give it to Tom to continue. So, if you remember, we implemented our restructuring really in June. So, most of the benefits in terms of, you know, cost reductions are really going to start to be seen from Q3, Q4 and the first half of next year.

And the split may be in the range of 50 million this year, 50 million next year. But that's really at a high level. Tom, you want to add to that?

Tom Reilly -- Chief Financial Officer

Related to the savings?

Karim Mikhail -- President and Chief Executive Officer

Yeah. Yes.

Tom Reilly -- Chief Financial Officer

So, as we mentioned earlier in the call, now the results [Audio gap] savings are reflected in the Q2 results. So, we expect overall that we'll have over $100 million of savings related to these cost reductions over the next 12 months. And they'll be spread over the next 12 months. OK.

And then, Louise, I think you had a question related to me being the new CFO. Overall, very excited to be at Amarin, like every other CFO looking forward to drive the function, to be best-in-class. So, that's No. 1 focus, or A focus.

I think overall what we see is to stabilize U.S. continue contribution margin in the U.S. So, that we can support overall the European investments and really grow the Company through a European and an international base. And that gets me very excited.

I'm glad to join Amarin to deliver on that.

Karim Mikhail -- President and Chief Executive Officer

Thank you, Tom. Just to go back, because I think there was also a question on the cadence on the U.S. revenue and what to expect over the next quarter. So, as we said, we have seen within the exclusive segment, which is now the large majority of our business, stabilization in volume if not a sort of a single-digit growth in volume.

So, we feel fairly confident that we are keeping track on that one. We continue to see price erosion. And then nonexclusive, we continue to lose volume. Obviously, there, but this impact is slowing over time, obviously, Q3, there is a seasonality.

So, overall, we continue to focus on contribution margin. This is the No. 1 driver of our efforts in the U.S. The U.S.

is delivering a very significant contribution margin that is supporting the organization drive, European business, and, you know, our investments in the regulatory approvals globally. So, for the moment, from a contribution margin, we continue to deliver on target and will keep the effort. Thank you, Louise.

Louise Chen -- Cantor Fitzgerald -- Analyst

Thank you.

Operator

Your next question is coming from Roanna Ruiz of SVB Securities.

Roanna Ruiz -- SVB Leerink -- Analyst

Great, thanks. So, maybe focusing on the Europe front, two questions for me. I noticed you mentioned suspending the primary care field force in Germany, and I'm curious, how might that impact or benefit your overall spend and how long do you plan to keep the suspension in place? And also, what's focusing on Sweden in the U.K. as newer countries coming on line.

I was curious, when additional investments do you plan there and how do you see the outlook and spend for those countries as well?

Karim Mikhail -- President and Chief Executive Officer

Sure. So, in Germany, we chose very early on, because we came very, very early to the German market, to basically have a contractual agreement with the third party to have our primary care field force hired through them, by them, because labor laws in Europe are complex. And if you have to change course or make any changes can be very, very difficult from a process, but also with cost implications. So, based on that agreement, that field force contract would end now.

So, we just decided, since we're still in negotiation, not to extend and not to continue, but to suspend at this point in time, because it will get us to save a good six months of investments in that field force, looking at the German situation. Now, we'll have to see how the negotiations are going to evolve. Are we, you know, going to be successful, and, you know, come back to the primary care field force? And that allows us to do whatever we want, right? With flexibility or the situation would remain very, very difficult, and then we would consider everything from exiting to the market or having minimal presence, depending on what agreements we reach with the Germans. So, we took advantage of the moment.

As a reminder, at the same time, we hired every -- you know, our full team in the U.K., I would say, a bit ahead of time. So, in a way that balances our investments. So, we knew we could save in Germany, and we knew that we could invest earlier in the U.K. By taking those two actions together, we are in a way normalizing this so that it doesn't have, you know, the additional U.K.

investments don't hit us that hard since we're saving in Germany. Having said that, investing more in Europe is good news, because it means we have more reimbursements. So, we look forward to invest more. But for the moment, that is the wisest thing to do in the time being until we see how the German negotiations will take place.

Finishing up on Sweden and the U.K. Sweden and the U.K. are in launch mode. In those two countries, once you have national reimbursement, you basically have a phase where you have to get formulary inclusion.

So, you have to make sure that on the regional and local formularies, the product is listed. So, NHS, because they were very excited about the product, committed to have the product listed on NHS formularies within three months, which puts the official launch date for the U.K. for October. So, we're very pleased with this.

And we're making every effort to ensure that the product will be on the formulary, but also there is budget allocated to it, which is the third most important step. As a reminder, when a product gets approved midyear or toward year-end, it's not that fast that they can allocate budget because of financing cycles. So, you tend to have a bit of a slow uptake during the first few months in one year, but in the new year, then there is a budget allocated for you so that physicians know that they can freely prescribe. We're very excited about the launch in the U.K.

and Sweden. We now have a full team in the U.K., incredibly talented with very significant cardiometabolic experiences at every level. So, we're very encouraged, and we look forward to share more progress on the launch over the next few quarters. Thank you, Roanna.

Roanna Ruiz -- SVB Leerink -- Analyst

Great. Thanks.

Operator

Your next question is coming from Daniel Wolle of J.P. Morgan. Daniel, over to you.

Daniel Wolle -- J.P. Morgan -- Analyst

Couple of questions here. First, in the U.S., can you quantify for us the benefit for this quarter that potentially derived from the normalization and trade destocking scene in 1Q? And I can follow up with the rest.

Karim Mikhail -- President and Chief Executive Officer

Sure. Thank you and welcome. So, you know, we cannot really articulate it in the second quarter as a benefit. In reality, there was a destocking in Q1 and a hit, which was normalized this quarter, right? So, this is really how it is analyzed.

It's not like there is an artificial benefit this quarter. In fact, this is the first quarter where we see prescriptions and bottles really align. So, we feel confident that we're balanced where we are today and the hit that we've seen in the Q1 has been basically normalized where we stand. Moving forward, we hope that we're not going to see any of these disturbances in the trade.

You can never speculate. I think, the market overreacted to a third generic, and we're not surprised, right? Usually in a generic market, you have all the generics coming in together on the first month. So, you rarely see situations where you have six months with one generic, then another six months with the second generic, then a third generic coming in literally after a year and three months. So, yes, the wholesalers reacted.

We understand that. But I think now they see that the erosion or the volume progression of the generics in general is linear, no matter how many they are on the market. And we continue, as a reminder, to retain 60% of the market despite a year and a half of generic presence, which I believe, you know, the U.S. team is very proud of.

Daniel Wolle -- J.P. Morgan -- Analyst

Got it. Thank you. And then, focusing on the Europe side, on Germany, can you provide us with a bit more color on the ongoing discussion with the health authorities there? What the process entails and what exactly are the possible outcomes that are expected when the process comes to completion in November? And then, switching to U.K., while there might be a slow uptake in 2022, as you might, as you have discussed due to budgeting not being allocated, how should we expect the launch to look like in 2023? And what are some of the dynamics at play that would shape the launch trajectory?

Karim Mikhail -- President and Chief Executive Officer

Sure. So, on Germany, we are now in, I would say, the final stages of the negotiation with GKV with the payer. If those negotiations come -- we come to an agreement, then that would end maybe in a month or so. And if that doesn't, then there is an additional opportunity for an arbitration that would take you until end of November.

That's why we decided since things are still ongoing. And we clearly see, based on the market dynamics, the situation in Germany, not for us, but for everybody is incredibly challenging in terms of healthcare, I mean, there are unprecedented decisions on controlling healthcare budgets and so on. So, we thought that the wisest thing is to just save money, right, save money. This is conserve cash, make sure we save this money waiting for a final decision.

Now, if by November or by end of this month, we see, you know, a positive decision, then we will very easily rebuild because we have the contacts of our teams and we can reinitiate that. But if not, then we would have in a way restructured and saved the money with very, very minimal cost/labor law impact. So, all the scenarios on the table. We can't speculate at this point in time.

You know, I have disclosed before that in the U.K., which was a very successful negotiation at the end, we went through a third round of negotiation, which is very, very uncommon in the U.K., and it has given a positive result. We can speculate or say that that's going to be the same in Germany, but, you know, the message is, we continue fighting and we continue negotiating until the last minute we have in the process. For the U.K., if you remember, we decided not to invest in any country ahead of reimbursement to ensure we don't burn cash too prematurely. Now in the U.K., we have a final decision.

We have a full team onboard. Those -- you know, this team is on the field where we are today and working very hard for us to have a strong launch. 2023 is going to be a full year for them. We have huge efforts in scientific engagement to build the awareness and the adoption.

We believe, you. know, the U.K. launch will be a good proxy of what we can deliver, you know, at a European level, because there is significant adoption. We have actually seen tweets by NHS, by the Ministry of Health, by others saying, they are excited to reimburse the product for their patients in the U.K., which is, you know, unheard of.

So, we feel encouraged and we are doing everything possible to drive that moving forward.

Daniel Wolle -- J.P. Morgan -- Analyst

Got it. Helpful. Thank you very much.

Operator

Thank you. Our final question is coming from [Inaudible] of Goldman Sachs. Kate, over to you.

Unknown speaker

Hi. Thank you for taking our questions. This is [Inaudible] on for Paul. We have two.

We wanted to know how you were thinking about planning for potentially recessionary environment, both in the U.S. and the EU in addition to the restructuring, if there is any steps you're going to take. And then, number two was, how do you think about the margins for the U.S. business going forward post restructuring? Thank you so much.

Karim Mikhail -- President and Chief Executive Officer

Thank you. So, you know I think, the environment is very challenging. Now, overall, it was tough for us as a company for the last year in any case. And again, as a reminder, we did implement two restructurings already.

So, we had one in October of 2021, then we had the second one in June of 2022. So, we've been very proactive so far to be on top of our cost structure. And I can tell you, we are going quarter by quarter looking at our contribution margin, because that's, for us, the most important KPI we look at. The key actions we've taken, we are proactive to ensure we will be able to deliver future contribution margin that is needed for us to self fund.

At the same time, we keep our finger on the pause. If we see that the market conditions, you've seen us sticking action in Germany, right? We are ready to take further actions if need be. For the moment, we don't see that happening because I believe we've done a pretty significant effort in the last restructuring with almost 40% of, you know, headcount impacted in the company, right, ahead of all those headwinds. But you never know how the market is going to shape, so we continue to be vigilant and we will react, if need be.

The last question was on margins. In the U.S., I mean, look, we've had a one-time impact on --

Lisa DeFrancesco -- Senior Vice President, Investor Relations

Margins?

Karim Mikhail -- President and Chief Executive Officer

Our margins this quarter. We don't see this being repeated. We'll have to see how things evolve. But if there are any additional one-time effects, it is possible, but we don't see that as a trend.

Tom, do you want to add anything?

Tom Reilly -- Chief Financial Officer

Yes. I would just say, with that, we are contribution margin positive again in the quarter, and we continue to do so in order to invest into the European and the rest of the world market.

Unknown speaker

Great. Thanks.

Karim Mikhail -- President and Chief Executive Officer

Thanks, Tom. Any further question -- OK.

Operator

OK. We don't have any further questions in the queue. I'll now hand back over to Karim, if he has any final comments.

Karim Mikhail -- President and Chief Executive Officer

Well, I just wanted to thank everyone for the call today. We believe we've had, you know, a strong quarter with significant success in the U.K., in Sweden. Our U.S. performance is on track and is delivering the contribution margin that we expect.

So, we continue to move forward, and we look forward to share more progress and update with you in the next quarter. Thank you, all, for being on the call. Thank you.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Lisa DeFrancesco -- Senior Vice President, Investor Relations

Karim Mikhail -- President and Chief Executive Officer

Steve Ketchum

Tom Reilly -- Chief Financial Officer

Unknown speaker

Louise Chen -- Cantor Fitzgerald -- Analyst

Roanna Ruiz -- SVB Leerink -- Analyst

Daniel Wolle -- J.P. Morgan -- Analyst

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