Amarin Corporation PLC

NASDAQ:AMRN

Earnings Call Transcript 2023-Q1

[Operator]

Greetings and welcome to Amarin Corporation's Conference Call to Discuss its First Quarter 2023 Financial Results and Operational Update.

I would now like to turn the conference call over to Lisa DeFrancesco, Senior Vice President, Investor Relations and Corporate Affairs at Amarin.

[Lisa DeFrancesco]

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 under federal securities law. 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 Factor section of our annual report on Form 10-K for the year ended December 31, 2022, and our quarterly report on Form 10-Q for the quarter ended March 31, 2023, which has been filed with the SEC and is available through the Investor Relations section of our website at www.amarincorp.com. We encourage everyone to read these documents. An archive of this call will be posted on Amarin's website in the Investor Relations section.

Now turning to today's agenda, Aaron Berg, Amarin's Interim President & Chief Executive Officer will lead our discussion, and Tom Reilly, Amarin's Chief Financial Officer, will provide a detailed review of our first quarter 2023 financial results. Following prepared remarks, we will open the call to your questions. Steve Ketchum, President R&D and Chief Scientific Officer will also be available for Q&A

I will now turn the call over to Aaron Berg, Interim President and Chief Executive Officer of Amarin. Aaron?

[Aaron Berg, Interim President & Chief Executive Officer]

Thank you, Lisa. Good morning. And thank you everyone for joining us today. Thank you, Lisa. Good morning, and thank you, everyone, for joining us today. I want to start by saying I'm truly honored to lead Amarin during a time of significant transition.

Turning Amarin back into a growth story as quickly as possible is what I'm focused on and what I believe will create shareholder value and working with a tremendous sense of urgency and the entire team is focused on driving tangible results.

I made the choice to step forward with the support of our new Board to serve in this role for a number of reasons. First, my history with this company. I've been with Amarin for more than 10 years now, serving predominantly in my role as Head of the U.S. business. Together with my talented resilient colleagues here at Amarin, I have experienced many ups and downs, and I've come to care deeply for the company, its people and the patients we serve collectively, and I remain committed to continuing this journey.

I believe in our product and our data. We have a tremendous asset in VASCEPA and VAZKEPA, supported by a wealth of data, particularly the REDUCE-IT trial. Third, I truly believe in our mission to help stop cardiovascular disease from being the leading cause of death globally. And lastly, I believe in the significant value of the opportunity that we have to introduce as many patients as possible to VASCEPA and VAZKEPA around the world, where there remains significant unmet need in cardiovascular disease.

There are millions of patients who can benefit from our product, and we have a real opportunity to make a difference in their lives. The focus on cardiovascular disease prevention is a priority for health care providers, patients and the investment community because even today, it remains a leading cause of death in many markets around the world.

While I've been a member of the leadership team for many years, my focus has been predominantly on the U.S. commercial side. And I'm proud of how we are maneuvering while faced with a very difficult situation in the U.S. and we'll summarize where we are at the moment there.

My focus now is on deepening my understanding of the area of business where I have not had any involvement, which is our European efforts. And since my appointment two short weeks ago, I immediately go right in and spent time with our teams in both Dublin and Switzerland to better understand and evaluate our progress. I look forward to working with the teams cross-functionally to share our many learnings and best practices across the organization.

2023 for Amarin so far has been marked by unprecedented change and evolution. This was driven by a number of factors, including the addition of an entire set of new Board members and the appointment of myself as Interim President and Chief Executive Officer. The new Board and leadership team of Amarin have been working together collaboratively on a regular basis as we rapidly evaluate the path forward for the company.

In my view, our near-term strategies are simple. We need to continue to efficiently generate substantial profit in the U.S.. In Europe, we're not where we need to be and must immediately work with the team to find ways to accelerate our activities. This means looking at ways to accelerate our revenue growth, where we've launched and finding a way to accelerate our pricing and reimbursement access where we still are in negotiations. And we have to do all of this while maximizing cash. This means scrutinizing our spending and implementing additional opportunities to save as we aggressively drive our business.

Europe is a difficult macro environment right now with many of our target markets experiencing economic challenges that impact reimbursement for innovative medications like VASCEPA. With consideration given to these conditions, the strong European team agrees, we are still not where we hope to be. And I can say, together, we are determined to rapidly identify positive adjustments and execute any additional actions possible to accelerate the pace of progress there.

We're doing this with a sense of urgency while also scrutinizing very heavily every dollar that we spend. We have a talented team in Europe with strong expertise. Together with my background and experience with VASCEPA and REDUCE-IT over a number of years, with the opportunities and challenges our team has faced in the U.S., I believe we'll be able to introduce new perspectives and perpetuate some new thinking and fresh ideas. I'll continue to focus on operational excellence in partnership with Tom and the rest of the team as we drive positive progress while scrutinizing investments and preserving cash.

Now moving to our business update for first quarter of this year. We reported a solid quarter of stable revenue and lower expenses. This was driven by our business in the U.S., which continues to remain stable. We did experience typical brand dynamics that occur between the fourth quarter and first quarter.

We saw volumes decline modestly as expected, but our exclusive contracts with many of our major customers remain intact, and we were even able to improve favorable access at a major plan, which attests to the strong work of our talented team.

While Teva, the fourth generic available has listed both the 0.5 gram and the 1 gram for a number of weeks, we have not yet experienced any significant impact from their launch. We've also seen the approval of a potential fifth generic, which has not yet launched.

While our U.S. team remains determined to continue to drive revenue by maintaining brand and volume, we stand ready to execute a number of different aggressive scenarios moving forward at the right time, which would ensure we retain our leadership in the IPE market. These scenarios are centered around preserving our profitability and, of course, our cash.

Moving to Europe. The teams are continuing to work smart and hard in a challenging environment. We reported $100,000 in net revenues this quarter, reflecting very early revenues from the U.K. In the U.K., as a reminder, we received final NICE guidance in July of 2022, funding allocation in October, which allows you to begin the process of gaining access to regional formularies and an update to the national lipid guidelines, including VASCEPA, was published in November of 2022, which has been a significant achievement of the local team so quickly after NICE guidance.

And the team is making solid progress with access to the market in England and Wales, and that will continue throughout the year. Once you have achieved a good portion of that full access, growth in this market tends to accelerate in a more meaningful way.

As we look to the rest of Europe, in Sweden, we're evaluating opportunities to accelerate performance, and we now have Finland with national reimbursement, which could help us drive prescription growth in this region.

Our pricing and reimbursement processes in other markets where we filed or remain underway. The objective of our commentary is to provide you with an update based on where we are today as these processes are often difficult to predict. The team continues to navigate through the unique pricing and reimbursement processes in Spain, Italy and France.

In Spain, we've completed a third round of negotiations, which is not uncommon in this market, and the process is ongoing. The next step is another round of negotiations expected in the near term.

In Italy, the team is anticipating additional feedback and minutes from a recent round of negotiations in order to determine the best next steps. The process in France is difficult, and we don't expect a decision this year. In the meantime, we're managing the process diligently as we continue to build scientific support. Within the U.K. in Scotland, we expect to receive feedback shortly with some anticipated additional work needed over the coming weeks to finalize the process there.

Overall, what I've learned in recent weeks is that these processes are not easy that they are complex and do not have consistent structure nor time lines. In addition, the macroeconomic context is unprecedented in Europe and many companies and assets are facing similar challenges.

Regardless of these challenges, we're here and accountable to drive and deliver tangible results. Our path to get there in Europe is to look at ways to do things differently and urgently in both our pricing and reimbursement efforts and our launch efforts. We're looking at everything through a fresh lens across the business to drive results and deliver value.

Our team in Europe has recorded important reimbursement successes to date, but there's a long way to go. The teams on the ground in these markets are working tirelessly, and they are not afraid to utilize learnings to take different approaches that can resonate with the pricing and reimbursement authorities. I support and I'm working closely with them to help accelerate our progress immediately.

In our markets outside of Europe, we received approvals this quarter in New Zealand and Israel. The recent approval in New Zealand follows the earlier approval in Australia in November of 2022, and we recently announced a partnership agreement with CSL Seqirus, who are well positioned to support the pricing and reimbursement efforts in this market, particularly with their strong record and successfully supporting pharmaceutical benefits listings and eventual marketing and promotion for VAZKEPA and help us deliver this important medicine to patients in these countries. And we're pursuing other partnership discussions in Southeast Asia to expand access to VASCEPA and VAZKEPA in this region.

In summary, I'm working closely with the Board and with a tremendous sense of urgency as we focus on turning Amarin back into a growth story because I believe that, that is what will create shareholder value. We know that this value will come from generating revenue and doing so with tremendous urgency. That's our focus. We're listening to and we appreciate the input from our important [ph] retail and institutional shareholders. I'm committed to keeping the market informed as we evolve through this transition period.

With that, I'll turn it over to Tom to talk more about our progress and strong results this quarter. Tom?

[Tom Reilly, Chief Financial Officer]

Thank you, Aaron. Good morning, everyone. I am pleased to report additional details on our financial performance for the first quarter of 2023. Let me begin by discussing our revenue performance.

For the first quarter of 2023, we reported net revenue of $86 million, including net product revenue of $84.7 million, a decrease of 10% compared to the first quarter of 2022. U.S. product revenue was $82.3 million, reflecting lower TRx volume and net price with a benefit in channel trade inventory, which normalized after Q1 2022 when the third generic entered the market. Compared to Q4 2022, U.S. revenue was down by 7%, primarily due to lower TRx volume.

We remain pleased with the performance in the U.S. despite of multiple competing generics on the market. The U.S. business continues to provide profit in supporting our expansion into Europe and other geographies around the world.

The revenue results included European product revenue of $0.4 million compared to $0.3 million in Q4 2022, reflecting very early revenues from the U.K. We recognized $1.3 million in license and royalty revenue in Q1 2023, including $0.5 million related to the onetime payment associated with the CSL Seqirus license agreement for Australia and New Zealand.

Cost of goods sold for the 3 months ended March 31, 2023, was $38 million, which includes a $12 million onetime supply settlement expense. This compares to $22 million in this corresponding period of 2022.

Gross margin was 70% for the 3 months ended March 31, 2023, when you exclude the impact of the supply settlement this quarter. This compares to 76% in Q1 of 2022 as a result of lower U.S. net selling price and sales mix related to partner revenue in the quarter. Gross margin was stable when compared to the fourth quarter of 2022 when excluding the settlement charge.

Moving on to operating expenses. During the first quarter of 2023, we reported expenses of $65.3 million compared to $100.7 million in the first quarter of 2022, a decrease of $35.4 million or 44% when excluding stock compensation and onetime charges.

The decrease compared to last year is primarily due to the cost savings initiatives announced in June of 2022 and lower expenses in Europe due to the commercial withdrawal in Germany. Under U.S. GAAP, Amarin reported net losses of $16.5 million for the first quarter of 2023 or basic and diluted loss per share of $0.04.

As of March 31, 2023, Amarin reported aggregate cash and investments of $305 million. And excluding the supply restructuring payment, reported a cash positive first quarter of 2023. As of today, we are not seeing any significant impact from Teva's listing of a 1-gram generic version of VASCEPA. There has also been an additional approval of another generic sites [ph] at the end of April.

Absent any additional market disruption, we expect prescription levels to modestly decline for the remainder of the year and beginning in Q2, a decrease in our net selling price as we work to retain key customers to the brand.

We have continued to make progress against our cost reduction program. We are on track to exceed $100 million cost savings target we announced in mid-2022 and are currently evaluating additional potential savings.

For the full year 2023, we now expect operating expenses to be between $270 million to $285 million compared with the previous guidance of $290 million to $305 million. The lower-than-anticipated expenses are as a result of additional initiatives taken across the organization to reduce costs, along with the timing of our European investment where we committed to invest carefully in Europe, linked with the timing of reimbursement decisions.

We have taken steps to strengthen and streamline the company operationally and cost reduction efforts are ongoing. We announced another renegotiated supply agreement this quarter, making significant progress in lowering our future commitments. With these initiatives and the relatively stable trends in the U.S., we believe our current available cash and resources, including U.S. profitability are adequate to support our continued operations, including European launch activities.

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

[Aaron Berg, Interim President & Chief Executive Officer]

Thank you, Tom, for that financial overview and our results during the first quarter. As we look forward to the remainder of the year, our priorities are focused on a single goal, turning Amarin back into a growth story to create shareholder value.

While cost savings and cash preservation are essential, we can only deliver shareholder value by accelerating prescription growth in Europe, generating revenues and securing reimbursement in major markets, and that's our urgent focus right now.

I'm energized by my new role at Amarin. We have a strong team, and we have a great product that has the potential to benefit so many more patients around the world. I'd like to thank our employees for their commitment and for their support and look forward to making progress and delivering results together.

And with that, operator, we're ready to take questions.

[Operator]

Thank you. [Operator Instructions] Thank you. Our first question is coming from Michael Yee with Jefferies. You may proceed.

[Unidentified Analyst]

Hi, good morning. This is George Weah [ph] for Michael Yee. Maybe two questions for me. First one is what are the priorities of the company right now? And do you see M&A more likely seen support [ph] change? That's my first question.

And second one is, so you lowered your OpEx guidance further. And could you help us understand what the reduced spending is from and if they have anything to do with any delays or interruptions in the timing of reimbursement or approval for some countries because it sounds like there are some challenges in Spain, Italy and France?

[Aaron Berg, Interim President & Chief Executive Officer]

Sure. First of all, thanks for the questions. And good morning. So I'll answer the first question, and I'll turn it over to Tom to address the question regarding lower OpEx. The priorities we're focused on are: one, we need to continue to efficiently generate substantial profit in the U.S. That's a primary focus, excuse me - the engine of the company, and it's helping us drive our results and activities in Europe.

In Europe, the priorities are, one, where we launched to drive revenue growth. We need to drive prescription volume, continue to execute very well and get the ramp up as rapidly as we can to reach patients and drive revenue. And then, of course, we need to advance the pricing and reimbursement discussions. We need to secure more commitments in more markets going forward.

And then we need to do all this and be very, very attentive to our cash. We've got to spend judiciously. We've got to spend at the right time, and that's a balance, right? That's a balance in Europe because we need to prepare the market, but yet we can't invest too early relative to when we get these pricing reimbursement, the access in those countries.

And the issue is, of course, we want to have the pre-market support when we launch for a faster ramp-up, but we don't control the timing of the pricing and reimbursement decisions. We control so much of that. We have to give them a reason to say yes, but the timing is not fully up to us. So that affects when we spend, but we're very attentive to that. It's a key priority. So it's - drive profits in the U.S., it's drive Europe and it's maximized our cash.

With that, Tom, do you want to address the OpEx question.

[Tom Reilly, Chief Financial Officer]

Sure. So the OpEx question was related to the change in the guidance and the lower of the guidance, which we're very pleased with. It's really twofold. First and foremost, as Aaron mentioned, just to reiterate, we're very focused on our cash preservation and trying to balance that with the focus on growth.

So the change in the OpEx guidance, the first component of it is we've really driven more cost reductions versus what we originally planned. So if you recall last year, in June of 2022, we had said we're going to have $100 million worth of savings. We're exceeding that target. We found additional cost synergies or cost savings within our sales and marketing organizations within G&A. Just one example, we renegotiated our administrative offices here. We're able to find a sublease partner. So really focusing on the optimization of the cost structure, which we're going to continue to look at as we're looking to preserve cash.

The second component of that is related to pricing and reimbursement. So our guidance was based on timing of pricing and reimbursement in specific countries. We always said we would be very judicial in our investments and waiting until we saw the pricing reimbursement coming through. And with that, we would do the investments at that particular time. So a component of our change in the guidance is a little bit of our internal delays on the timing of pricing and reimbursement, and that's what's changing our guidance.

[Unidentified Analyst]

Thank you. Could you be more specific about what countries are you looking at when you plan your budget in terms of more and more cost savings?

[Aaron Berg, Interim President & Chief Executive Officer]

Sure. Tom, do you want to cover on the cost saving in it?

[Tom Reilly, Chief Financial Officer]

Yes. So again, it comes down to what we're - our timing for Europe. For the big countries, we're still focused on the reimbursement of the big countries, including Spain, Italy and Netherlands and some of the other countries for - in 2023. We have alluded that for 2024, we expect France to be during that time line. So the majority of the countries, excluding France, we're expecting a decision on pricing reimbursement within 2023. Does that answer your question?

[Unidentified Analyst]

Thank you. Yes.

[Operator]

Thank you. Our next question is coming from Louise Chen with Cantor. You may proceed.

[Louise Chen, Cantor]

Hi, thank you for taking my questions here. So I wanted to ask you something that you had mentioned earlier in the call, you talked about turning Amarin back to growth. And I'm curious how long you think that will take? Or when do you expect to see that? And is that globally or in all the markets that you participate in?

The second question I had for you is on the international markets outside of Europe. Which ones are you most excited about? And how do you size those opportunities? And then last question here is I didn't see you mentioned a lot about expanding your product portfolio. I know historically, the other management team had talked about that, so curious on where you stand with those initiatives? Thank you.

[Aaron Berg, Interim President & Chief Executive Officer]

Thanks for the question, Louise. So I'll address the first ones and then turn it over to - both to Tom and to Steve Ketchum, who's here with us to address the third question. So in terms of turning Amarin back to the growth story, we're really focused on primarily Europe. The U.S. will drive our profit, but you know we're in a unique situation here with generic competition. And the team has done an outstanding job. We still maintain 57% of the IPE market. And you see the revenue number here for Q1, which is a solid number given the fact that it's 2.5 years after generics have been introduced. So while the U.S. continues to be the engine, our growth and our biggest opportunity really is progress in Europe.

In terms of timing, that's very difficult to bridge [ph] As I commented on in the prepared remarks, the pricing reimbursement timing is a significant rate limiting factor and then, of course, launching into those markets and what the ramp-up will look like – excuse me, will know more when we get going.

In terms of the pricing reimbursement as well, remember, one of the big variables in the pricing reimbursement is which patient population we agree upon with those pricing and reimbursement authorities. And that will also help us value once we have commitments that will help us value exactly how big the market will be. So we'll have a better view as we secure more access in Europe.

And then - and obviously, globally, too, we have - and we'll just turn to Tom to talk about beyond the EU, some of the markets we have, some of the partnerships we have and where we see some of that opportunity.

[Tom Reilly, Chief Financial Officer]

Great. Hey, Louise, thanks for the question. So outside the U.S. and Europe, you asked [ph] about markets and what we're excited about. So obviously, you see that we signed an agreement for Australia and New Zealand with CSL Seqirus this quarter, which we're very excited about working with our partner there.

We're also excited about the opportunity with China. In China, as you know, we have a partner there, Eddingpharma, who is leading the regulatory review process. We're expecting based on the communication from Edding that we should be hearing about regulatory approval expected by the midyear of this year.

So those are two markets we're very excited about. Also other markets in Asia, we're excited about it as well. As you know, our strategy outside of Europe and the U.S. is to look for a partner. We're not looking to put an infrastructure in place related to outside of those - or in those geographies, I should say. So with that, related to the portfolio, Steve, do you mind just answering a little bit about the portfolio?

[Steve Ketchum, President R&D and Chief Scientific Officer]

Sure. Yes. So firstly, just continuing on the international regulatory front, obviously, cardiovascular disease is a major pillar of patients in all countries. So we continue to leverage our strong regulatory dossier that's been approved now in more than 30 countries globally, and we will continue to do that in a manner that is cost efficient.

In terms of our other portfolio, we continue to explore and conduct focused research activities and follow-on products and follow-on indications, but again, in a manner that maintains our focus on the strategy and goals that Aaron and Tom have shared in terms of making sure that also from an R&D perspective, we support U.S. efforts, getting accelerated traction in the EU supporting pricing and reimbursement activities as needed. And again, contributing to this company-wide effort to scrutinize our spending and implement additional opportunities to save as we aggressively drive our business.

[Aaron Berg, Interim President & Chief Executive Officer]

Thanks, Steve. And then Louise, just to comment on M&A. That's not our focus right now. Our focus, our key priorities, as we said, are driving VASCEPA/VAZKEPA globally. We - as we commented on, we have significant opportunity, that's where we believe we will generate the most value, and that will continue to be our focus.

[Louise Chen, Cantor]

Thank you.

[Operator]

Thank you. Our next question is coming from Roanna Ruiz with SVB Securities. You may proceed.

[Roanna Ruiz, SVB Securities]

Great. Morning, everyone. So a couple of questions from me. I wanted to check in on latest updates with your progress on the local formulary negotiations in the U.K. and how that might impact VASCEPA sales going forward?

And then also, secondly, I wanted to ask about the renegotiation of supply agreements. I noticed you mentioned there's a $12 million charge. Curious if we could see additional charges into 2023?

[Aaron Berg, Interim President & Chief Executive Officer]

Thanks, Roanna and good morning. So I'll address the first question and turn the supply agreement question over to Tom. In terms of local formulary negotiations in the U.K., making tremendous progress, I believe we have now say, I've been in the job two weeks but learning fast, and I believe we have over 90% coverage now.

So we would expect to start to see some accelerated prescription growth. The rate of that, we'll look forward to - as you know, we're very early in the launch there, very early in getting that access, but we'll look forward to prescription growth here coming up in the near term, and it should accelerate. Tom, do you want to address the supply question?

[Tom Reilly, Chief Financial Officer]

Sure, Roanna. Thanks for the question. So related to the supply agreements, this initiative started back in Q2 of 2022 when we saw the generic - the third generic impact related to the U.S. market. So overall, I would tell you these conversations are not easy conversations with our suppliers. These are very difficult to discussions we have with them.

We've made strong – good progress, significant progress. We have very good relationships with our partners. And so we need to look at the - we'll be looking at these arrangements with the partners. Related to timing of charges, a lot of it depends on negotiations or actually discussions related to pricing and reimbursement in Europe. So depending on how that goes based off of some commitments will determine the extent or if there are any other supply agreements necessary just from a restructuring perspective.

[Roanna Ruiz, SVB Securities]

Great. Thanks.

[Operator]

Thank you. Our next question is coming from Jessica Fye with JPMorgan. You may proceed.

[Unidentified Analyst]

Good morning, guys. This is Nathan on for Jessica Fye. A couple of questions from me. In terms of your expectation for the fifth entrant of generic, how do you think that might impact pricing? And what do you understand to be their capacity?

And then secondly, I think Amarin has talked about the peak opportunity in Europe being $1 billion. Do you hold to that target? And can you remind us what do you think it's going to take to get to that $1 billion target? Thank you.

[Aaron Berg, Interim President & Chief Executive Officer]

Thank you. Good morning. In terms of the fifth entrant that's a company called Zydus. And we don't have information on capacity, but we've seen this before where some of these generic companies list when they get approved, and there can be a very long time before they launched. We saw that with Teva and extended period. We also saw that with other - one of the other generic manufacturers, I think it took 10 or 11 months. I forgot whether it was [indiscernible] one of them also took an extended period of time.

So they were recently approved. This is a very complicated product to source and manufacture. So we monitor it very, very carefully. But in terms of the timing and the impact on pricing, we don't know yet, but we haven't seen an impact overall.

And we've got - and as I mentioned, Teva listed and launched several months ago and they have prescriptions just in the hundreds per week, which is in a market of 100,000 or so prescriptions a week.

So with that being said, it's 2.5 years since the generics were introduced. We continue to maintain 57% of the IPE market. We've maintained our exclusives. We actually even improved one of the major Part D plans, improved the access for VASCEPA here at the end of Q1. So we feel pretty good right now about our ability to maintain the business. But that being said, we monitor the generics very, very carefully, and we're prepared to react when we see a significant impact, we have other scenarios, including launching AG. So we're prepared with other scenarios. We can maintain profitability as much as we can in the U.S. for an extended period, whether it's in branded or through launching an authorized generic.

Regarding the $1 billion - regarding the peak sales in Europe of $1 billion, right now, our focus is on executing walk, you know, walk before we run. We are looking at every market at what happens with pricing and reimbursement, what happens with prescription uptake, what that looks like. In the pricing and reimbursement, as I said, it depends on the patient criteria and the size of the market that we have access to in each of these markets. And I think once we get going, we'll have a better read on the $1 billion.

So my preference, again, two weeks here in this role. I'd like to see - learn more. I'd like to see us make more progress. We know there's a significant opportunity in Europe that we know. And there may very well be scenarios to get us to north of that $1 billion. But we've got some work to do first, and I'd prefer to see how our progress is as we go to the end of 2023. Hopefully, that answers your question.

[Operator]

Thank you. Our next question is coming from Paul Choi with Goldman Sachs. You may proceed.

[Unidentified Analyst]

Hi. This is Kate Cruise on for Paul Choi. Thanks for taking our question. Thinking about the U.S. business, we wanted to know if you could put numbers around the positive contribution margins for the U.S. business and how margins there have trended over the last 12 months? And then also where you expect those to settle out on a more long-term view? Thanks so much.

[Aaron Berg, Interim President & Chief Executive Officer]

Sure. Tom, do you want to comment on the contribution margin?

[Tom Reilly, Chief Financial Officer]

Sure. So overall, we don't give guidance or we don't disclose, obviously, contribution margin by region. What I can say is that it is driving significant profits to support the overall business. In addition, it's generating significant cash, including working capital manages to support our overall business.

It's obviously an important market for us to continue with our presence in even - in a generic environment. As Aaron mentioned before, we've developed multiple scenarios, right? And it's related - if there is - if there is an impact, and our focus is to continue to drive this profitability of cash in order to support the overall business.

[Unidentified Analyst]

Got it. Thanks so much.

[Operator]

Thank you. We have reached the end of our question-and-answer session. So I'll now turn the call back over to management for closing remarks.

[Aaron Berg, Interim President & Chief Executive Officer]

So thanks again for joining us this morning. Thanks to everyone. And as I said earlier, I'm energized by a new role. We have a fantastic team here. I'm excited to work with them, and I look forward to following up and meeting - hopefully meeting many of you soon. Have a good day.

[Operator]

Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.