UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-21392
Amarin Corporation plc
(Exact name of registrant as specified in its charter)
England and Wales
(State or other jurisdiction of
incorporation or organization)
Not applicable
(I.R.S. Employer
Identification No.)
Iconic Offices, The Greenway, Block C Ardilaun Court,
112-114 St Stephens Green, Dublin 2, Ireland
(Address of principal executive offices)
+353 (0) 1 6699 020
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol
Name of each exchange on which registered
Title of each class
American Depositary Shares (ADS(s)), each ADS
representing the right to receive one (1) Ordinary Share of
Amarin Corporation plc
AMRN
NASDAQ Stock Market LLC
Securities registered pursuant to section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☑ NO ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐ NO ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES ☑ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). YES ☑ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
☐Accelerated filer
☐Smaller reporting company
☐
☑
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☑
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2023 was
approximately $484.7 million, based upon the closing price on the NASDAQ Global Market reported for such date.
410,671,800 shares were outstanding as of February 23, 2024, including 401,870,067 shares held as American Depositary Shares (ADSs), each
representing one Ordinary Share, 50 pence par value per share, and 8,801,733 Ordinary Shares.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required to be disclosed in Part III of this Annual Report on Form 10-K is incorporated by reference from the registrant’s
definitive proxy statement to be filed not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.
Table of Contents
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
PART I
Business..............................................................................................................................................................
Risk Factors........................................................................................................................................................
Unresolved Staff Comments ..............................................................................................................................
Properties............................................................................................................................................................
Legal Proceedings ..............................................................................................................................................
Mine Safety Disclosures.....................................................................................................................................
PART II
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities ............................................................................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of Operations ............................
Quantitative and Qualitative Disclosures about Market Risk ............................................................................
Financial Statements and Supplementary Data ..................................................................................................
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ............................
Controls and Procedures.....................................................................................................................................
Other Information...............................................................................................................................................
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ...............................................................
PART III
Directors, Executive Officers and Corporate Governance .................................................................................
Executive Compensation....................................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..........
Certain Relationships and Related Transactions, and Director Independence...................................................
Principal Accountant Fees and Services ............................................................................................................
PART IV
Exhibits and Financial Statement Schedules......................................................................................................
Form 10-K Summary..........................................................................................................................................
SIGNATURES...........................................................................................................................................................................
Page
2
26
58
59
59
59
60
69
81
82
82
82
84
84
85
85
85
85
85
86
90
91
PART I
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical fact
contained in this Annual Report on Form 10-K are forward-looking statements, including statements regarding the progress and timing
of our clinical programs, regulatory filings and commercialization activities, and the potential clinical benefits, safety and market
potential of our product candidates, as well as more general statements regarding our expectations for future financial and operational
performance, regulatory environment, and market trends. In some cases, you can identify forward-looking statements by terminology
such as “may,” “would,” “should,” “could,” “expects,” “aims,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,”
“potential,” or “continue”; the negative of these terms; or other comparable terminology. These statements include but are not limited
to statements regarding the commercial success of and benefits and market opportunity for VASCEPA (brand name VAZKEPA in
Europe but predominately referenced in this document by its brand name in the United States and other countries where it is approved,
VASCEPA or icosapent ethyl) and factors that can affect such success; plans to obtain regulatory approvals and favorable market
access and pricing in several jurisdictions, to expand promotion of VASCEPA and statements regarding cost and pricing of
VASCEPA and other treatments; interpretation of court decisions; plans with respect to litigation; expectation on determinations and
policy positions of the United States Food and Drug Administration, or U.S. FDA; the safety and efficacy of our product and product
candidates; expectation regarding the potential for VASCEPA to be partnered, developed and commercialized outside of the United
States; expectation on the scope and strength of our intellectual property protection and the likelihood of securing additional patent
protection; estimates of the potential markets for our product candidates; estimates of the capacity of manufacturing and other
facilities to support our products; our operating and growth strategies; our industry; our projected cash needs, liquidity and capital
resources; and our expected future revenues, operations and expenditures.
Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties, and other
factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different
from those anticipated by such statements. These factors include, among other things, those listed under “Risk Factors” in Item 1A of
Part I of this Annual Report on Form 10-K and elsewhere in this Annual Report on Form 10-K. These and other factors could cause
results to differ materially from those expressed in these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements contained in this Annual Report on Form
10-K are reasonable, we cannot guarantee future results, performance, or achievements. Except as required by law, we are under no
duty to update or revise any of such forward-looking statements, whether as a result of new information, future events or otherwise,
after the date of this Annual Report on Form 10-K.
Unless otherwise indicated, information contained in this Annual Report on Form 10-K concerning our product candidates, the
number of patients that may benefit from these product candidates and the potential commercial opportunity for our product
candidates, is based on information from independent industry analysts and third-party sources (including industry publications,
surveys, and forecasts), our internal research, and management estimates. Management estimates are derived from publicly available
information released by independent industry analysts and third-party sources, as well as data from our internal research, and based on
assumptions made by us based on such data and our knowledge of such industry, which we believe to be reasonable. None of the
sources cited in this Annual Report on Form 10-K has consented to the inclusion of any data from its reports, nor have we sought their
consent. Our internal research has not been verified by any independent source, and we have not independently verified any third-
party information. While we believe that such information included in this Annual Report on Form 10-K is generally reliable, such
information is inherently imprecise. In addition, projections, assumptions, and estimates of our future performance are necessarily
subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors” in Item 1A of
Part I of this Annual Report on Form 10-K and elsewhere in this Annual Report on Form 10-K. These and other factors could cause
results to differ materially from those expressed in the estimates made by the independent parties and by us.
1
Item 1. Business
References in this Annual Report on Form 10-K to “Amarin,” the “Company,” “we,” “our” and “us” refer to Amarin
Corporation plc and its subsidiaries, on a consolidated basis, unless otherwise indicated.
This Annual Report on Form 10-K, or Annual Report, includes the registered and unregistered trademarks and service marks of
other parties.
Amarin Corporation plc is a public limited company incorporated under the laws of England and Wales. Amarin Corporation
plc was originally incorporated in England as a private limited company on March 1, 1989 under the Companies Act 1985, and re-
registered in England as a public limited company on March 19, 1993.
Our principal office is located at Iconic Offices, The Greenway, Block C Ardilaun Court, 112-114 St Stephens Green, Dublin 2
Ireland. Our registered office is located at One New Change, London EC4M 9AF, England. Our primary office for our European
market access team is located at Überbauung Metalli, Gotthardstrasse 2, Zug CH-6300, Switzerland. Our primary office in the United
States is located at 440 Route 22, Bridgewater, NJ 08807, USA. Our telephone number at that location is (908) 719-1315.
For purposes of this Annual Report, our ordinary shares may also be referred to as “common shares” or “common stock.”
Overview
We are a pharmaceutical company focused on the commercialization and development of therapeutics to improve
cardiovascular, or CV, health and reduce CV risk. Our commercialized product, VASCEPA® (icosapent ethyl) was first approved by
the United States, or U.S., Food and Drug Administration, or U.S. FDA, for use as an adjunct to diet to reduce triglyceride, or TG,
levels in adult patients with severe (≥500 mg/dL) hypertriglyceridemia, or the MARINE indication and we commercially launched in
2013. On December 13, 2019, the U.S. FDA approved an indication and label expansion for VASCEPA based on the landmark results
of our cardiovascular outcomes trial, REDUCE-IT®, or Reduction of Cardiovascular Events with EPA – Intervention Trial.
VASCEPA is the first and only drug approved by the U.S. FDA as an adjunct to maximally tolerated statin therapy for reducing
persistent cardiovascular risk in select high risk-patients, or the REDUCE-IT indication. On March 26, 2021, the European
Commission, or EC, granted approval of the marketing authorization application in the European Union, or EU, for VAZKEPA®,
hereinafter along with the U.S. brand name VASCEPA, collectively referred to as VASCEPA, which is the first and only EC approved
therapy to reduce cardiovascular risk in high-risk statin-treated patients with elevated TG levels. On April 22, 2021, we announced
that we received marketing authorization from the Medicines and Healthcare Products Regulatory Agency, or MHRA, for VAZKEPA
in England, Wales and Scotland to reduce cardiovascular risk. On June 1, 2023, we announced that regulatory approval from the
National Medical Products Administration, or NMPA, for VASCEPA in Mainland China was received by our partner for the
MARINE indication.
VASCEPA is currently available by prescription in the U.S. and certain other countries throughout the world, as described
below. We are responsible for the supply of VASCEPA to all markets in which the branded product is sold, either to and through our
collaborations with third-party companies or by us. We are not responsible for providing any generic company with drug product.
Geographies outside the United States in which VASCEPA is sold and under regulatory review are not subject to the U.S. patent
litigation and judgment described below and no similar litigation is pending outside of the United States.
Organizational Restructuring Program
On July 18, 2023, we announced that we were implementing a new Organizational Restructuring Program, or the ORP, resulting
in the elimination and consolidation of certain roles across our organization, both in the U.S. and abroad, representing a reduction of
our total employee base by approximately 30%. The ORP was implemented following a review of our business and to better position
the organization for a new strategic focus. We expect the ORP will reduce operating costs by approximately $40.0 million annually.
Our refocused strategic priorities and restructuring plan focuses on three core areas:
•
•
Maximizing U.S. Cash Flow Through Streamlined Model: We have maintained VASCEPA as a cost-competitive option to
generics despite an elimination of all U.S. sales force positions and approximately 30% of non-sales positions. We
maintained our managed care and trade organization to support these efforts. We continue to explore innovative
approaches to drive revenue to maintain our leadership position in the icosapent ethyl, or IPE, market.
European Redesign: We redesigned our commercial infrastructure in Europe to better align with pricing and
reimbursement status, commercial potential and progress to date, as well as streamline certain cross-geographic functions
and better leverage learnings across countries. In addition, we will continue to advance our pricing and reimbursement
activities to drive access in remaining geographies, including those where progress has been delayed.
2
•
Expanding Upon International Partnerships: We continue to work on generating revenue from our partnerships in key
international markets, including Canada, Middle East and North Africa, or MENA, China, South Korea, Australia and
New Zealand and will continue to explore additional partnerships.
United States
VASCEPA is sold principally to a limited number of major wholesalers, as well as selected regional wholesalers and retail and
mail order pharmacy providers, or collectively, our distributors or our customers, most of whom in turn resell VASCEPA to retail
pharmacies for subsequent resale to patients. Since VASCEPA was made commercially available in 2013, approximately 25 million
estimated normalized total prescriptions of VASCEPA have been reported by Symphony Health. In 2020, following our unsuccessful
appeals of a court ruling in favor of two generic drug companies, Dr. Reddy’s Laboratories, Inc., or Dr. Reddy’s, and Hikma
Pharmaceuticals USA Inc., or Hikma, and certain of their affiliates, several of our patents covering the MARINE indication were
declared invalid. As a result, the following generic versions of VASCEPA have obtained U.S. FDA approval with labeling consistent
with the MARINE indication and have entered the U.S. market:
Company
Hikma Pharmaceuticals USA Inc.
Dr. Reddy’s Laboratories, Inc.
Teva Pharmaceuticals USA, Inc.
Apotex, Inc.
Zydus Lifesciences
Strides Pharma
Epic Pharma
Europe
FDA MARINE Indication
Approval
May 2020
August 2020
September 2020
June 2021
April 2023
September 2023
December 2023
1-gram Launch Date
November 2020
June 2021
January 2023
January 2022
N/A
N/A
N/A
0.5-gram Launch Date
March 2023
June 2023
September 2022
N/A
N/A
N/A
N/A
In 2021, we received marketing authorization and regulatory approval in the EU, England, Wales and Scotland.
Launch of VAZKEPA in individual countries depends on the timing of achieving product reimbursement on a country-by-
country basis. To date, we have filed 15 dossiers to gain market access in European countries, including all of the largest countries in
Europe. In most European countries, securing product reimbursement is a requisite to launching. In certain countries, such as
Denmark, individual patient reimbursement is allowed prior to national reimbursement. In countries where individual price
reimbursement is allowed prior to national reimbursement, product can be made available on a patient-by-patient basis, while the
national reimbursement negotiations are ongoing. In all countries, securing adequate reimbursement is a requisite for commercial
success of any therapeutic. The time required to secure reimbursement tends to vary from country to country and cannot be reliably
predicted. While we believe that we have strong arguments regarding the cost effectiveness of VAZKEPA, the success of such
reimbursement negotiations have a significant impact on the assessment of the commercial opportunity of VAZKEPA in Europe.
Through the date of this Annual Report, we have received and made VAZKEPA available under individual reimbursement or received
national reimbursement and launched commercial operations in the following countries, respectively.
Country
Sweden
Finland
England/Wales
Spain
Netherlands
Scotland
Austria
Denmark
Individual
Reimbursement
N/A
N/A
N/A
N/A
N/A
N/A
September 2022
June 2022
National
Reimbursement
March 2022
October 2022
July 2022
July 2023
August 2023
August 2023
N/A
N/A
Product Availability
March 2022
December 2022
October 2022
September 2023
September 2023
August 2023
September 2022
June 2022
Launch Date
March 2022
December 2022
October 2022
September 2023
September 2023
September 2023
N/A
N/A
We continue to advance our pricing and reimbursement activities to drive access in remaining geographies, including those
where progress has been delayed. We are leveraging third-party relationships for various support activities and are implementing an
impactful and cost-effective hybrid commercial model balancing optimally digital and face-to-face approach for more impact and cost
efficiency, which is or will be utilized throughout Europe as launches are rolled out.
Patients at high risk for cardiovascular disease tend to be treated more often by specialists, such as cardiologists, rather than by
general practitioners. Privacy laws and other factors impact the availability of data to inform European commercial operations at an
individual physician level. Generally, less data is available and at reduced frequencies than in the United States. However, this greater
concentration of at-risk patients being treated by specialists in Europe should allow for more efficient promotion than in the United
3
States. In Europe, VAZKEPA has the benefit of 10 years of market protection, and we have been issued a patent that expires in 2033,
with additional pending applications that could extend exclusivity into 2039.
Rest of World
As discussed above, one of the core areas of focus from our ORP is continuing to work on generating revenue from our
partnerships in key international markets, including Canada, MENA, China, Australia and New Zealand and we will continue to
explore additional partnerships.
China
In February 2015, we entered into an exclusive agreement with Eddingpharm (Asia) Macao Commercial Offshore Limited, or
Edding, to develop and commercialize VASCEPA capsules in what we refer to as the China Territory, consisting of the territories of
Mainland China, Hong Kong, Macau and Taiwan. Edding, with our support, conducted a clinical trial of VASCEPA in Mainland
China, which evaluated the effect of VASCEPA on patients with very high triglyceride levels (≥500 mg/dL). In November 2020, we
announced statistically significant topline positive results from this Phase 3 clinical trial of VASCEPA conducted by Edding. The
study, which investigated VASCEPA as a treatment for patients with very high triglycerides (≥500 mg/dL), met its primary efficacy
endpoint as defined in the clinical trial protocol and demonstrated a safety profile similar to placebo. There were no treatment-related
serious adverse events in this study. On February 9, 2021, we announced that the regulatory review processes in Mainland China and
Hong Kong had commenced. On February 23, 2022, the Hong Kong Department of Health completed their regulatory evaluation and
approved the use of VASCEPA under the REDUCE-IT indication. In Mainland China, the NMPA accepted for review the new drug
application for VASCEPA, submitted by Edding, based on the results from the Phase 3 clinical trial and the results from our prior
studies of VASCEPA. In China, on October 10, 2022, following the completion of product testing by the China National Institutes for
Food and Drug Control, or NIFDC, the final NMPA review of the VASCEPA NDA was initiated. The Company announced on June
1, 2023 that Edding received approval from NMPA for VASCEPA in Mainland China under the MARINE indication and launched
commercially in October 2023. In October 2023, Edding's submission of a regulatory filing to the NMPA for VASCEPA under the
REDUCE-IT indication was accepted.
Middle East and North Africa (MENA)
In March 2016, we entered into an agreement with Biologix FZCo, or Biologix, to register and commercialize VASCEPA in
several Middle Eastern and North African countries. Biologix obtained approval of VASCEPA under the MARINE and REDUCE-IT
indications, and subsequently launched commercially in the following countries:
Country
Lebanon
United Arab Emirates
Qatar
Bahrain
Kuwait
Saudi Arabia
MARINE
March 2018
July 2018
December 2019
April 2021
December 2021
March 2022
REDUCE-IT
August 2021
October 2021
April 2021
April 2022
March 2023
June 2023
Launch Date
June 2018
February 2019
N/A
N/A
September 2023
September 2023
VASCEPA is under registration in additional countries in the MENA region.
Canada
In September 2017, we entered into an agreement with HLS Therapeutics Inc., or HLS, to register, commercialize and distribute
VASCEPA in Canada. In December 2019, HLS received formal confirmation from Health Canada that the Canadian regulatory
authority granted approval for VASCEPA to reduce the risk of cardiovascular events (cardiovascular death, non-fatal myocardial
infarction, non-fatal stroke, coronary revascularization or hospitalization for unstable angina) in statin-treated patients with elevated
triglycerides, who are at high-risk of cardiovascular events due to established cardiovascular disease, or diabetes, and at least one other
cardiovascular risk factor. In January 2020, HLS obtained regulatory exclusivity designation and launched commercially in February
2020. In April 2022, HLS completed negotiations with Canada’s pan-Canadian Pharmaceutical Alliance for the terms and conditions
under which VASCEPA would qualify for public market reimbursement in Canada. HLS has obtained reimbursement from all major
private and public payors gaining access to a majority of eligible patients in Canada. Coverage of patients with established
cardiovascular disease represents a substantial portion of VASCEPA’s approved label in Canada. VASCEPA has the benefit of data
protection afforded through Health Canada until the end of 2027, in addition to separate patent protection with expiration dates that
could extend into 2039.
Other
We completed the second year of a three-year plan to submit and obtain regulatory approval in 20 or more additional countries
and regions in order to ensure that patients in the top 50 cardiometabolic markets worldwide can benefit from VASCEPA. Through
4
the date of this Annual Report, we have filed for regulatory review in 20 countries and regions and have received approval in 13
countries and regions outside of the United States, the European Medicines Agency, or EMA, and the MHRA regulatory approval
authority, including in Switzerland, Australia, New Zealand and Israel, under the REDUCE-IT indication. In addition, VAZKEPA has
been made available under individual pricing reimbursement in Switzerland.
In February 2023, the Company entered into an agreement with CSL Seqirus, or CSL, to secure pricing and reimbursement,
commercialize and distribute VAZKEPA in Australia and New Zealand. In July 2023, the Company entered into an agreement with
Lotus Pharmaceuticals to commercialize and distribute VAZKEPA in South Korea and nine countries in Southeast Asia. In August
2023, the Company entered into an agreement with Neopharm (Israel) 1996 Ltd., or Neopharm, to distribute VAZKEPA in Israel,
Gaza, West Bank, and the territories of the Palestinian Authority. The Company will be responsible for supplying finished product to
these partners. We continue to assess other potential partnership opportunities for VASCEPA with companies outside of the United
States and Europe with the intention of partnering in all other international markets where VASCEPA receives local regulatory
approval.
Clinical Trials
The REDUCE-IT Study (basis for expanded U.S. FDA approved indication and label expansion in December 2019; basis for
EU EC approved indication and label in March 2021))
The REDUCE-IT study was designed to evaluate the efficacy of VASCEPA in reducing major cardiovascular events in an at-
risk patient population also receiving statin therapy. REDUCE-IT was a multinational, prospective, randomized, double-blind,
placebo-controlled, parallel-group study to evaluate the effectiveness of VASCEPA, as an add-on to statin therapy, in reducing first
major cardiovascular events in an at-risk patient population compared to statin therapy alone. The control arm of the study was
comprised of patients on optimized statin therapy plus placebo. The active arm of the study was comprised of patients on optimized
statin therapy plus VASCEPA. All subjects enrolled in the study had elevated triglyceride levels and either established coronary heart
disease or risk factors for coronary heart disease.
It is believed that the effects of the omega-3 acid eicosapentaenoic acid, or EPA, are not due to a single mode of action, such as
triglyceride lowering, but rather to multiple mechanisms working together. Studies in the scientific literature explore potentially
beneficial effects of EPA on multiple atherosclerosis processes, including endothelial function, oxidative stress, foam cell formation,
inflammation/cytokines, plaque formation/progression, platelet aggregation, thrombus formation, and plaque rupture. With respect to
triglyceride levels, our scientific rationale for the REDUCE-IT study was supported by (i) epidemiological data that suggests elevated
triglyceride levels correlate with increased cardiovascular disease risk, (ii) genetic data that suggest triglyceride and/or triglyceride-
rich lipoproteins (as well as LDL-C, known as bad cholesterol) are independently in the causal pathway for cardiovascular disease and
(iii) clinical data that suggest substantial triglyceride reduction in patients with elevated baseline triglyceride levels correlates with
reduced cardiovascular risk. The REDUCE-IT study was designed to determine the clinical benefit, if any, of stable EPA therapy in
statin-treated patients with elevated triglyceride levels.
In 2016, we completed patient enrollment and randomization of 8,179 individual patients into the REDUCE-IT study. Our
personnel remained blinded to the efficacy and safety data from the REDUCE-IT study until after the study was completed and the
database was locked in 2018.
On November 10, 2018, we announced primary results from our REDUCE-IT study as late-breaking clinical results at the 2018
Scientific Sessions of the American Heart Association, or AHA, and the results were concurrently published in The New England
Journal of Medicine. REDUCE-IT met its primary endpoint demonstrating a 25% RRR, to a high degree of statistical significance
(p<0.001), in first occurrence of major adverse cardiovascular event, or MACE, in the intent-to-treat patient population with use of
VASCEPA 4 grams/day as compared to placebo. Patients qualified to enroll in REDUCE-IT had LDL-C between 41-100 mg/dL
(median baseline LDL-C 75 mg/dL) controlled by statin therapy and various cardiovascular risk factors including persistent elevated
TG between 135-499 mg/dL (median baseline 216 mg/dL) and either established cardiovascular disease (secondary prevention cohort)
or age 50 or more with diabetes mellitus and at least one other CV risk factor (primary prevention cohort). Approximately 59% of the
patients had diabetes at baseline, approximately 71% of the patients had established cardiovascular disease at time of enrollment and
approximately 29% were primary prevention subjects at high risk for cardiovascular disease. REDUCE-IT also showed a 26% RRR in
its key secondary composite endpoint of cardiovascular death, heart attacks and stroke (p<0.001). We expended more than $300.0
million to fund completion of the REDUCE-IT study.
VASCEPA in the REDUCE-IT study demonstrated a number needed to treat, or NNT, of 21 for the first occurrence of MACE
in the five-point primary composite endpoint. NNT is a statistical concept intended to provide a measurement of the impact of a
medicine or therapy by estimating the number of patients that need to be treated in order to have an impact on one person.
5
An additional seven secondary endpoints were achieved below the key secondary endpoint, in order of sequential statistical
testing within the prespecified hierarchy:
•
•
Cardiovascular death or nonfatal heart attack: 25% RRR (p<0.001)
Fatal or nonfatal heart attack: 31% RRR (p<0.001)
• Urgent or emergent revascularization: 35% RRR (p<0.001)
•
Cardiovascular death: 20% RRR (p=0.03)
• Hospitalization for unstable angina: 32% RRR (p=0.002)
•
•
Fatal or nonfatal stroke: 28% RRR (p=0.01)
Total mortality, nonfatal heart attack or nonfatal stroke: 23% RRR (p<0.001)
The next prespecified secondary endpoint in the hierarchy was the only such endpoint that did not achieve statistical
significance although it trended positively:
•
Total mortality, which includes mortality from non-cardiovascular and cardiovascular events: 13% RRR (p=0.09)
Positive REDUCE-IT results were consistent across various patient subgroups, including female/male, diabetic/non-diabetic and
secondary/primary prevention.
Overall adverse event rates in REDUCE-IT were similar across treatment groups and VASCEPA was well tolerated. VASCEPA
was associated with an increase (3% vs 2%) in the reported rate of atrial fibrillation or atrial flutter requiring hospitalization in a
double-blind, placebo-controlled trial. The incidence of atrial fibrillation was greater in patients with a previous history of atrial
fibrillation or atrial flutter. It is not known whether patients with allergies to fish and/or shellfish are at an increased risk of an allergic
reaction to VASCEPA. VASCEPA was associated with an increase (12% vs 10%) in the reported rate of bleeding in a double-blind,
placebo-controlled trial. The reported incidence of bleeding was greater in patients receiving concomitant antithrombotic medications,
such as aspirin, clopidogrel or warfarin.
Common adverse reactions in the cardiovascular outcomes trial (incidence ≥3% and ≥1% more frequent than placebo) were:
musculoskeletal pain (4% vs 3%), peripheral edema (7% vs 5%), constipation (5% vs 4%), gout (4% vs 3%), and atrial fibrillation
(5% vs 4%). Common adverse reactions in the hypertriglyceridemia trials (incidence >1% more frequent than placebo) were:
arthralgia (2% vs 1%) and oropharyngeal pain (1% vs 0.3%). Patients receiving VASCEPA and concomitant anticoagulants and/or
anti-platelet agents for bleeding are to be monitored. In the REDUCE-IT trial, cardiovascular benefits appeared not to be influenced
significantly by TG levels at baseline (above or below 150 mg/dL baseline range) or as achieved at one year, potentially suggesting
mechanisms at work with use of VASCEPA that are independent of baseline TG levels or therapy-driven reduction in TG levels.
Determining the mechanisms responsible for the benefit shown in REDUCE-IT was not the focus of REDUCE-IT. As summarized
from the primary results of REDUCE-IT in The New England Journal of Medicine, potential VASCEPA mechanisms of action at
work in REDUCE-IT may include TG reduction, anti-thrombotic effects, antiplatelet or anticoagulant effects, membrane-stabilizing
effects, effects on stabilization and/or regression of coronary plaque and inflammation reduction, each as supported by earlier stage
mechanistic studies.
On December 13, 2019, the U.S. FDA approved a new indication and label expansion for VASCEPA capsules. VASCEPA is
the first and only drug approved by the U.S. FDA as an adjunct to maximally tolerated statin therapy to reduce the risk of myocardial
infarction, stroke, coronary revascularization, and unstable angina requiring hospitalization in adult patients with elevated TG levels
(≥150 mg/dL) and either established cardiovascular disease or diabetes mellitus and two or more additional risk factors for
cardiovascular disease.
Based on REDUCE-IT results, as of the date of the filing of this Annual Report, more than 40 clinical treatment guidelines,
consensus statements or scientific statements from medical societies or journals have been updated recommending the use of icosapent
ethyl in appropriate at-risk patients, including those statements which we were informed of by our global partners in Canada, China
and the Middle East as well as guidelines which were newly received during the fourth quarter of 2023 as listed below:
•
In December 2023, the Hellenic Atherosclerosis Society published guidelines for the diagnosis and treatment of
dyslipidemia. The publication stated that clinical trials and meta-analyses have not shown that increasing consumption of
omega-3 PUFA decreases the risk of atherosclerotic cardiovascular disease, or ASCVD, except for IPE. Based on the
findings of REDUCE-IT, IPE (at a dose of 2 g twice daily) should be added in combination with a statin (and fenofibrate
if needed) for patients with type 2 diabetes and established ASCVD or with ≥1 major risk factor and TG >150 mg/dL.
6
•
The Cardiological Society of India released clinical practice guidelines for dyslipidemia management in December 2023.
The guidelines state that in patients with mild to moderate hypertriglyceridemia (TG 150–499 mg/dL), there is no role for
fibric acid derivatives. In those with diabetes (≥40 years of age) or ASCVD, IPE may be considered if TG remains high
after lifestyle changes and diabetes control have been achieved. In addition, the guidelines note that the REDUCE-IT
randomized controlled trial of highly purified IPE showed significant reduction of MACE.
During 2023, we announced the following data which added to our growing body of knowledge on VASCEPA as a result of our
continued analysis of the REDUCE-IT trial results:
•
•
•
In March 2023, a new prespecified and post hoc exploratory analysis of REDUCE-IT, presented at the American College
of Cardiology, found VASCEPA significantly reduced the risk of first cardiovascular death, strokes, heart attacks,
coronary revascularization or unstable angina in a subgroup of patients with recent (<12 months) acute coronary syndrome
by 37% (HR 0.63; 95% CI, 0.48-0.84, p=0.002).
In April 2023, the EVAPORATE- FFRCT study was published online in the European Heart Journal - Cardiovascular
Imaging. This subgroup analysis assessed the impact of VASCEPA on coronary physiology assessed by fractional flow
reserve derived from coronary CTA data sets, or FFRCT, using imaging data from EVAPORATE. FFRCT has been
associated with various clinical outcomes, such as the safe deferral of invasive coronary angiography, cardiovascular
death or myocardial infarction, and revascularization. This study is the first assessment of FFRCT to determine drug
effect, and there was significant improvement in the pre-specified primary endpoint of FFRCT value in the distal coronary
segment from baseline to follow-up in the most diseased vessel per patient using VASCEPA compared with placebo.
VASCEPA improved mean distal segment FFRCT at 9- and 18-months follow-up compared with placebo (P = 0.02, P =
0.03 respectively). The secondary endpoint, change in translesional FFRCT (change in FFRCT across the most severe
(minimum 30%) diameter stenosis) coronary lesion per vessel was improved with VASCEPA treatment compared with
placebo, although it was not statistically significant (P = 0.054).
In August 2023, we supported research that was presented at the ESC Congress, both onsite and online in Amsterdam.
This new research included, along with other topics, the REDUCE-IT mediation analysis report of the contribution of IPE
and other biomarkers to MACE reduction.
In total, Amarin and global medical and scientific collaborators supported close to 50 publications inclusive of accepted
abstracts, posters, and manuscripts.
The MARINE Trial (first U.S. FDA-approved label for VASCEPA approved in July 2012)
The MARINE trial was a Phase 3, multi-center, placebo-controlled, randomized, double-blind, 12-week study for patients with
very high triglycerides which was completed in 2010.
In November 2010, we reported topline data for the MARINE trial. In the trial, VASCEPA met its primary endpoint at doses of
4 grams and 2 grams per day with median placebo-adjusted reductions in triglyceride levels of 33% (p < 0.0001) compared to placebo
for 4 grams and 20% (p = 0.0051) compared to placebo for 2 grams. The median baseline triglyceride levels were 703 mg/dL, 680
mg/dL and 657 mg/dL for the patient groups treated with placebo, 4 grams of VASCEPA and 2 grams of VASCEPA, respectively.
VASCEPA was well tolerated in the MARINE trial, with a safety profile comparable to placebo and there were no treatment-related
serious adverse events observed.
Observed Clinical Safety of VASCEPA in MARINE, ANCHOR and Early Development
In the MARINE and ANCHOR trials, patients dosed with VASCEPA demonstrated a safety profile similar to placebo. There
were no treatment-related serious adverse events in the MARINE study or in the ANCHOR study. In the MARINE and ANCHOR
trials, the most commonly reported adverse reaction (incidence >2% and greater than placebo) in VASCEPA treated patients was
arthralgia (joint pain) (2.3% for VASCEPA vs. 1.0% for placebo). There was no reported adverse reaction > 3% and greater than
placebo.
Prior to commencing the REDUCE-IT, MARINE and ANCHOR trials, we conducted a pre-clinical program for VASCEPA,
including toxicology and pharmacology studies. In addition, we previously investigated VASCEPA in central nervous system
disorders in several double-blind, placebo-controlled studies, including Phase 3 trials in Huntington’s disease. Over 1,000 patients
were dosed with VASCEPA in these studies, with over 100 receiving continuous treatment for a year or more. In all studies performed
to date, VASCEPA has shown a favorable safety and tolerability profile.
In addition to the REDUCE-IT, MARINE and ANCHOR trials, we completed a 28-day pharmacokinetic study in healthy
volunteers, a 26-week study to evaluate the toxicity of VASCEPA in transgenic mice and multiple pharmacokinetic drug-drug
7
interaction studies in healthy subjects in which we evaluated the effect of VASCEPA on certain common prescription drugs. All
findings from these studies were consistent with our expectations and confirmed the overall safety profile of VASCEPA.
Clinical Study in China
Edding completed a Phase 3 study of VASCEPA in China, the design of which was similar to, but larger than, our MARINE
study. In November 2020, along with Edding, we announced statistically significant topline positive results. The study, which
investigated VASCEPA as a treatment for patients with very high triglycerides (≥500 mg/dL), met its primary efficacy endpoint as
defined in the clinical trial protocol and demonstrated a safety profile similar to placebo. There were no treatment-related serious
adverse events in this study. On February 23, 2022, the Hong Kong Department of Health completed their evaluation and approved
the use of VASCEPA under the REDUCE-IT indication. The Company announced on June 1, 2023 that Edding received approval
from NMPA for VASCEPA in Mainland China under the MARINE indication and launched commercially in October 2023. In
October 2023, Edding's submission of a regulatory filing to the NMPA for VASCEPA under the REDUCE-IT indication was
accepted.
Collaboration with Mochida
In Japan, ethyl-EPA is marketed under the product name of Epadel by Mochida Pharmaceutical Co., Ltd., or Mochida, and is
indicated for hyperlipidemia and peripheral vascular disease. In an outcomes study called the Japan EPA Lipid Intervention Study, or
JELIS study, which consisted of more than 18,000 patients followed over multiple years, Epadel, when used in conjunction with
statins, was shown to reduce cardiovascular events by 19% compared to the use of statins alone. In this study, cardiovascular events
decreased by approximately 53% compared to statins alone in the subset of primary prevention patients with triglyceride levels of
150 mg/dL (median of 272 mg/dL at entry) and HDL-C <40 mg/dL.
In June 2018, we entered into a multi-faceted collaboration with Mochida related to the development and commercialization of
drug products and indications based on the active pharmaceutical ingredient in VASCEPA, the omega-3 acid, EPA. Among other
terms in the agreement, we obtained an exclusive license to certain Mochida intellectual property to advance our interests in the
United States and certain other territories. In addition, the parties will collaborate to research and develop new products and
indications based on EPA for our commercialization in the United States and certain other territories. The potential new product and
indication opportunities contemplated under this agreement are currently in early stages of development. Upon closing of the
collaboration agreement, we made a non-refundable, non-creditable upfront payment of approximately $2.7 million. In addition, the
agreement provides for milestone payments from us upon the achievement of certain product development milestones and royalties on
net sales of future products arising from the collaboration, if any.
In November 2022, the data related to RESPECT-EPA was presented at the American Heart Association, or AHA, 2022
Scientific Sessions, A Randomized Trial for Evaluation in Secondary Prevention Efficacy of Combination Therapy - Statin and
Eicosapentaenoic Acid, or RESPECT-EPA. The RESPECT-EPA clinical trial is an independent study funded by the Japanese Heart
Foundation and is the third study to show CV benefit consistent with REDUCE-IT and JELIS. The study achieved a borderline
statistical significance with a 21.5% reduction in the primary composite endpoint measuring cardiovascular risk and achieved a
statistically significant 26.6% reduction in the secondary composite endpoint.
Fixed-Dose Combination
On January 10, 2022, we announced that we have initiated development of a fixed-dose combination product that has both
icosapent ethyl and a statin. During 2023, it became clear that the fixed-dose combination product would not drive short-term value
and has subsequently been deprioritized.
Potential Benefits and Market Opportunity for VASCEPA
VASCEPA, encapsulated in 1-gram capsules, is 1-gram of icosapent ethyl, or ethyl-EPA, and contains no docosahexaenoic acid,
or DHA. Icosapent ethyl is the only active ingredient. We believe that icosapent ethyl, in the stable form as it is presented in
VASCEPA, is more effective than if combined with other omega-3 molecules. In particular, based on clinical evidence, we believe
that the removal of DHA mitigates against the LDL-C raising effect observed in omega-3 compositions that include DHA. Based on
the results of the REDUCE-IT trial, VASCEPA was the first omega-3 based product, or any type of product, to demonstrate a
statistically significant reduction in cardiovascular risk beyond cholesterol lowering therapy in high-risk patients approved for
treatment. Prior to REDUCE-IT, based on the MARINE trial, VASCEPA was the first omega-3 based product to demonstrate
statistically significant triglyceride reduction without a statistically significant increase in LDL-C in this very high triglyceride
population.
Guidelines for the management of very high triglyceride levels (500 mg/dL) suggest that reducing triglyceride levels is the
primary treatment goal in these patients to reduce the risk of acute pancreatitis. Treating LDL-C remains an important secondary goal.
8
Other important parameters to consider in patients with very high triglycerides include levels of apolipoprotein B, or apo B, non-HDL-
C, and very low-density lipoprotein cholesterol, or VLDL-C. The effect of VASCEPA on the risk for pancreatitis in patients with
hypertriglyceridemia has not been determined.
We believe that the results of the REDUCE-IT, ANCHOR and MARINE clinical trials of VASCEPA and VASCEPA’s EPA
only/DHA-free composition position VASCEPA to achieve a global “best-in-class” prescription therapy in studied patient
populations. Potential mechanisms of action at work in the reduction of cardiovascular events seen in REDUCE-IT as discussed in The
New England Journal of Medicine publication of REDUCE-IT primary results include TG reduction, anti-thrombotic effects,
antiplatelet or anticoagulant effects, membrane-stabilizing effects, effects on stabilization and/or regression of coronary plaque and
inflammation reduction. Mechanisms responsible for the benefit shown in REDUCE-IT were not studied in REDUCE-IT as that was
not the purpose of an outcomes study. While the mechanisms of action of VASCEPA have been broadly studied and continue to be
studied, similar to other drugs with multifactorial mechanisms of action, such as aspirin, statins and metformin, we may never fully
determine to what extent, if any, each of these effects or others may be responsible for the CV risk reduction benefit demonstrated in
REDUCE-IT.
United States
Heart attacks, strokes and other cardiovascular events represent the leading cause of death and disability among men and women
in western societies. According to the Heart Disease and Stroke Statistics—2023 Update from the AHA, CVD is the underlying cause
of death in approximately one out of every three deaths – one death approximately every 34 seconds. Approximately 130 million
adults in the United States live with one or more types of cardiovascular disease with an estimated one million new or recurrent
coronary events and 795,000 new or recurrent strokes occurring each year. An estimated 25 million adults 20 years of age have high
total serum cholesterol levels (240 mg/dL), and an estimated 65 million adults 20 years of age have borderline high or high low-
density lipoprotein (“bad”) cholesterol, or LDL-C, levels (130 mg/dL). According to the Cardiovascular Disease: A Costly Burden
for America Projections Through 2035 from the AHA, 45% of the United States population is projected to have some form of CVD by
2035 and total costs of CVD are expected to reach $1.1 trillion in 2035.
It is estimated that more than 50 million adults in the United States have elevated triglyceride levels ≥150 mg/dL. Additionally,
approximately two to three million adults in the United States have very high triglyceride levels (500 mg/dL), the condition for
which VASCEPA received its initial drug approval from the U.S. FDA in 2012 based on the MARINE clinical trial. There are
approximately 5 to 15 million people in the United States that meet the specific REDUCE-IT inclusion criteria. Additionally, the U.S.
FDA-approved label for VASCEPA mentions maximally tolerated statin therapy in the indication statement. Since 1976, mean
triglyceride levels have increased, along with the growing epidemic of obesity, insulin resistance, and type 2 diabetes mellitus. In
contrast, mean LDL-C levels have decreased. Multiple primary and secondary prevention trials have shown a significant RRR of 25%
to 35% in the risk of cardiovascular events with statin therapy, leaving significant persistent residual CV risk despite the achievement
of target LDL-C levels.
Europe and Rest of World
Cardiovascular diseases remain the leading cause of disease burden in the world. There are more than 500 million people
reportedly living with cardiovascular diseases globally, with 290 million in China. In the European Union, there are approximately 60
million people reportedly living with cardiovascular disease, including approximately 38 million diagnosed with ischemic heart
disease, stroke or peripheral heart disease. The proportion of patients dying from cardiovascular disease is reportedly higher in Europe
than in the United States and there are more patients on statin therapy in Europe in aggregate compared to the United States. Caring
for cardiovascular disease in Europe is expensive with annual spending estimated to currently exceed €200 billion annually.
Manufacturing and Supply for VASCEPA
We manage the manufacturing and supply of VASCEPA and rely on contract manufacturers in each step of our commercial and
clinical product supply chain. These steps include active pharmaceutical ingredient, or API, manufacturing, encapsulation of the API,
product packaging and supply-related logistics. Our approach to product supply procurement is designed to mitigate risk of supply
interruption and maintain an environment of cost competition through diversification of contract manufacturers at each stage of the
supply chain and lack of reliance on any single supplier. We have multiple U.S. FDA-approved international API suppliers,
encapsulators and packagers to support the VASCEPA commercial franchise. We also have multiple international API suppliers,
encapsulators and packagers to support the commercialization of VASCEPA in geographies where the drug is approved outside the
United States. Not all of our suppliers approved by the U.S. FDA are approved in every other geography.
The regulatory process generally requires extensive details as part of the submission provided to a country or region in
connection with a company's request for regulatory approval. Suppliers must be specifically identified as part of the submission for
qualification and approval for commercialization in a country or region. As a result, only supply, as approved, may be used in finished
goods available for sale in a specific country or region. Similar to U.S. FDA, regulators in other countries in which we, or our
9
partners, sell or seek to sell VASCEPA, regulate manufacturer’s quality control and manufacturing procedures. For Europe, various
suppliers have been inspected and approved by European regulatory authorities and we do not anticipate supply availability limiting
our continued launch in Europe.
The API material that constitutes ethyl-EPA is a chemical modification of a naturally occurring substance that is derived from
specific fish sourced from qualified producers. The fishing from which the raw material for VASCEPA is derived is regulated by local
government agencies under policies designed to ensure sustainability of the marine life supply. We have worked with our suppliers to
build the required scale, quality and cost-efficiency needed to meet our current and anticipated future market requirements. Among the
conditions for U.S. FDA approval of a pharmaceutical product is the requirement that the manufacturer’s quality control and
manufacturing procedures are validated and conform to pharmaceutical current Good Manufacturing Practice, or cGMP, which, under
applicable regulations, must be followed at all times. The U.S. FDA typically inspects manufacturing facilities before regulatory
approval of a product candidate, such as VASCEPA, and on a periodic basis after the initial approval. Consistent with cGMP
regulations, pharmaceutical manufacturers must expend resources and time to ensure compliance with product specifications as well
as production, record keeping, quality control, reporting, and other regulatory requirements.
Production of VASCEPA, from sourcing of raw materials through stocking of finished goods inventory requires significant
coordination between companies and considerable lead-times. We are often making purchasing decisions for supply more than a year
in advance of anticipated product sales. Planning for capacity expansion also requires significant lead-times as, for example, creation
of new manufacturing facilities for API can require multiple years to construct, equip and qualify. The amount of supply we seek to
purchase in future periods will depend on the level of growth of VASCEPA revenues and minimum purchase commitments with
certain suppliers.
Beginning in 2022, we reviewed our contractual supplier purchase obligations and began taking steps to amend supplier
agreements to align supply arrangements with current and future market demand, while we decrease our current inventory levels
primarily related to North America approved inventory. As of December 31, 2023, we had inventory of $336.2 million, of which
approximately 80% is inventory approved for use in North America. We continue to negotiate with our contract suppliers to align our
supply arrangements with current and future global market demand.
Competition
General
The biotechnology and pharmaceutical industries are highly competitive. There are many pharmaceutical companies,
biotechnology companies, public and private universities and research organizations actively engaged in the research and development
of products that may be similar to our product. It is probable that the number of companies seeking to develop products and therapies
similar to our product or within the same therapeutic category will increase. Many of these and other existing or potential competitors
have substantially greater financial, technical and human resources than we do and may be better equipped to develop, manufacture
and market products. These companies may develop and introduce products and processes competitive with, more efficient than or
superior to ours. For example, agents with longer dosing intervals inhibiting proprotein convertase subtilisin/kexin type 9 (“PCSK9”)
have recently been approved. These agents include alirocumab (Praluent®), evolocumab (Repatha®), and inclisiran (Leqvio®). In
addition, other technologies or products may be developed that have an entirely different approach or means of accomplishing the
intended purposes of our products, which might render our technology and products noncompetitive or obsolete.
United States
Our competitors include large, well-established pharmaceutical and generic companies, specialty and generic pharmaceutical
companies, and specialized cardiovascular treatment companies.
In 2020, following our unsuccessful appeals of a court ruling in favor of the Defendants, several of the Company's patents
covering the MARINE indication were declared invalid. As a result, the following generic versions of VASCEPA have obtained U.S.
FDA approval with labeling consistent with the MARINE indication of VASCEPA, have entered the U.S. market and represent our
main competitors:
Company
Hikma Pharmaceuticals USA Inc.
Dr. Reddy’s Laboratories, Inc.
Teva Pharmaceuticals USA, Inc.
Apotex, Inc.
Zydus Lifesciences
Strides Pharma
Epic Pharma
FDA MARINE Indication
Approval
May 2020
August 2020
September 2020
June 2021
April 2023
September 2023
December 2023
10
1-gram Launch Date
November 2020
June 2021
January 2023
January 2022
N/A
N/A
N/A
0.5-gram Launch Date
March 2023
June 2023
September 2022
N/A
N/A
N/A
N/A
Woodward Pharma Services LLC currently sells Lovaza®, which it acquired from GlaxoSmithKline plc in the third quarter of
2021. Lovaza, a prescription-only omega-3 fatty acid indicated for patients with severe hypertriglyceridemia was approved by the U.S.
FDA in 2004 and has been on the market in the United States since 2005. Multiple generic versions of Lovaza are available in the
United States. Other large companies with competitive products include AbbVie, Inc., which currently sells Tricor® and Trilipix® for
the treatment of severe hypertriglyceridemia and Niaspan®, which is primarily used to raise high-density lipoprotein cholesterol, or
HDL-C, but is also used to lower triglycerides. Multiple generic versions of Tricor, Trilipix and Niaspan are also available in the
United States. We compete with these drugs, and in particular, multiple low-cost generic versions of these drugs, in our U.S. FDA-
approved indicated uses, even though such products do not have U.S. FDA approval to reduce CV risk on top of statin therapy.
AstraZeneca conducted a long-term outcomes study to assess Statin Residual Risk Reduction With EpaNova in HiGh
Cardiovascular Risk PatienTs With Hypertriglyceridemia, or STRENGTH. The study was a randomized, double-blind, placebo-
controlled (corn oil), parallel group design that is believed to have enrolled approximately 13,000 patients with hypertriglyceridemia
and low HDL and high risk for cardiovascular disease randomized 1:1 to either corn oil plus statin or Epanova plus statin, once daily.
On January 13, 2020, following the recommendation of an independent Data Monitoring Committee, AstraZeneca decided to close the
STRENGTH trial due to its low likelihood of demonstrating benefit to patients with mixed dyslipidemia who are at increased risk of
cardiovascular disease. Full data from the STRENGTH trial was presented at the AHA’s Scientific Sessions in November 2020
confirming that Epanova failed to meet the primary endpoint of CV risk reduction, and published in Journal of the American Medical
Association, or JAMA, in December 2020. In addition, in March 2017, Kowa Research Institute (a subsidiary of the Japanese
company Kowa Co., Ltd) initiated a Phase 3 cardiovascular outcomes trial titled PROMINENT examining the effect of pemafibrate
(experimental name K-877) in reducing cardiovascular events in Type II diabetic patients with hypertriglyceridemia. In April 2022,
Kowa Research Institute announced the decision to not continue the PROMINENT study as the primary endpoint was unlikely to be
met. Results of the PROMINENT trial were presented at the 2022 AHA Scientific Session in November 2022, confirming that
pemafibrate did not lower the incidence of cardiovascular events among the studied population.
We are also aware of other pharmaceutical companies that are developing products that, if successfully developed, approved and
marketed, would compete with VASCEPA.
VASCEPA also faces competition from dietary supplement manufacturers marketing omega-3 products as nutritional
supplements. Such products are classified as food, not as prescription drugs or as over-the-counter drugs, by the U.S. FDA in the
United States. Most regulatory authorities outside the United States are similar in this regard. Some of the promoters of such products
have greater resources than us and are not restricted to the same standards as are prescription drugs with respect to promotional claims
or manufacturing quality, consistency and subsequent product stability. We have taken successful legal action against supplement
manufacturers attempting to use the REDUCE-IT results to promote their products. Still, we cannot be sure physicians and
pharmacists will view the U.S. FDA-approved, prescription-only status, and EPA-only purity and stability of VASCEPA or the U.S.
FDA’s stringent regulatory oversight, as significant advantages versus omega-3 dietary supplements regardless of clinical study results
and other scientific data.
Europe and Rest of World
On March 26, 2021, the EC granted approval of the marketing authorization application in the EU for VAZKEPA as an
approved therapy to reduce cardiovascular risk in high-risk statin-treated patients with elevated TG levels, which is based on the
REDUCE-IT indication. There is currently no other drug that is approved for cardiovascular risk reduction in at-risk patients in
Europe. In addition, there is currently no other direct competition for Canada and the Middle East. However, consistent with the U.S.,
our competitors globally include large, well-established pharmaceutical companies, specialty and generic pharmaceutical companies,
marketing companies, and specialized cardiovascular treatment companies.
Recent CV outcomes trials and meta-analyses with low and high dose omega-3 fatty acid mixtures containing DHA have not
shown substantial benefit in patients receiving contemporary medical therapy, including statins. Due to failed low dose omega-3 CV
outcomes trials, the European regulatory authorities have concluded that omega-3 fatty acid medicines (specifically
Lovaza®/Omacor®) at a dose of 1-gram per day are not effective in preventing further events for patients who have had a heart attack.
The STRENGTH trial of an omega-3 mixture studied at 4-grams per day also failed to demonstrate cardiovascular benefit.
In addition, VASCEPA also faces competition from dietary supplement manufacturers marketing omega-3 productions as
nutritional supplements. In Europe, such products are classified as food, not as prescription drugs or as over-the-counter drugs.
Limitations of Current Therapies
HTG is a prevalent lipid disorder in approximately 25% of the U.S. adult population. Both epidemiological and genetic data
have shown associations between HTG and coronary heart disease. Many of those patients are taking statin therapy directed at
lowering the risk of CVD by lowering their LDL-C levels, primarily. Recently, real world administrative database analyses have
11
reported an increased CVD risk as well as direct healthcare costs associated with HTG despite statin therapy and controlled LDL-C
compared to those with TG<150 mg/dL.
Regulatory Matters
Government Regulation and Regulatory Matters
Any product development activities related to VASCEPA or products that we may develop or acquire in the future will be
subject to extensive regulation by various government authorities, including the U.S. FDA and comparable regulatory authorities in
other countries, which regulate the design, research, clinical and nonclinical development, testing, manufacturing, storage,
distribution, import, export, labeling, advertising and marketing of pharmaceutical products. Generally, before a new drug can be sold,
considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific to each regulatory
authority, submitted for review and approved by the regulatory authority. The data are generated in two distinct development stages:
preclinical and clinical. Drugs must be approved by regulatory authorities before they are first marketed for example, by the U.S. FDA
through the new drug application, or NDA, process in the United States or the marketing authorization application, or MAA, process
under the EMA in the EU. For new chemical entities, the preclinical development stage generally involves synthesizing the active
component, developing the formulation, determining the manufacturing process and controls, as well as carrying out non-human
toxicology, pharmacology and drug metabolism studies which support subsequent clinical testing.
The clinical stage of development can generally be divided into Phase 1, Phase 2 and Phase 3 clinical trials. In Phase 1,
generally, a small number of healthy volunteers are initially exposed to a single dose and then multiple doses of the product candidate.
The primary purpose of these studies is to assess the metabolism, pharmacologic action, side effect tolerability and safety of the drug.
Phase 2 trials typically involve studies in disease-affected patients to determine the dose required to produce the desired benefits. At
the same time, safety and further pharmacokinetic and pharmacodynamic information is collected. Phase 3 trials generally involve
large numbers of patients at multiple sites, in multiple countries and are designed to provide the pivotal data necessary to demonstrate
the effectiveness of the product for its intended use and its safety in use, provide an adequate basis for physician labeling and may
include comparisons with placebo and/or other comparator treatments. The duration of treatment is often extended to mimic the actual
use of a product during marketing.
United States Drug Development and Approval
In the United States, the process of obtaining regulatory approvals and the subsequent compliance with appropriate federal,
state, local, and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply
with the applicable United States requirements at any time during the product development process, approval process or after
approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include the U.S. FDA’s refusal to
approve pending applications, withdrawal of an approval, a clinical hold, warning or untitled letters, product recalls, product seizures,
total or partial suspension of production or distribution injunctions, fines, refusals of government contracts, restitution, disgorgement,
or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.
Prior to the start of human clinical studies for a new drug in the United States, preclinical laboratory and animal tests are often
performed under the U.S. FDA’s Good Laboratory Practices regulations, or GLP, and an IND is filed with the U.S. FDA. Similar
filings are required in other countries; however, data requirements and other information needed for a complete submission may differ
in other countries. The amount of data that must be supplied in the IND depends on the phase of the study. Phase 1 studies typically
require less data than larger Phase 3 studies. A clinical plan must be submitted to the U.S. FDA prior to commencement of a clinical
trial. If the U.S. FDA has concerns about the clinical plan or the safety of the proposed studies, it may suspend or terminate the study
at any time. Studies must be conducted in accordance with Good Clinical Practice, or GCP, including the requirement that subjects
provide their informed consent, and regular reporting of study progress and any adverse experiences is required. Studies are also
subject to review by independent institutional review boards, or IRBs, responsible for overseeing studies at particular sites and
protecting human research study subjects. An independent IRB may also suspend or terminate a study once initiated.
12
U.S. FDA Review Process
The results of nonclinical studies and clinical trials, together with other information, including manufacturing information and
information on the composition of the drug and proposed labeling, are submitted to the U.S. FDA in an NDA requesting approval to
market the drug for one or more specified indications. Each NDA is typically accompanied by a user fee and there is also an annual
prescription drug product program fee for human drugs. The U.S. FDA reviews an NDA to determine, among other things, whether a
drug is safe and effective for its intended use and whether the product is being manufactured in accordance with cGMP requirements
to assure and preserve the product’s identity, strength, quality and purity. The U.S. FDA will conduct a pre-approval inspection of the
manufacturing facilities for the new drug and may audit data from clinical trials to ensure compliance with GCP requirements.
Additionally, the U.S. FDA may refer applications for novel drug products or drug products which present difficult questions of safety
or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a
recommendation as to whether the application should be approved and under what conditions. The U.S. FDA is not bound by the
recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
After the U.S. FDA evaluates an NDA, it will issue an approval letter or a complete response letter. An approval letter
authorizes commercial marketing of the drug with specific prescribing information for specific indications. A complete response letter
indicates that the review cycle of the application is complete and the application will not be approved in its present form, and usually
describes all the specific deficiencies in the NDA identified by the U.S. FDA. The complete response letter may require additional
clinical data and/or additional clinical trial(s), and/or other information. If a complete response letter is issued, the applicant may either
resubmit the NDA, addressing all of the deficiencies identified in the letter, withdraw the application, or request a hearing. Even if
such data and information is submitted, the U.S. FDA may ultimately decide that the NDA does not satisfy the criteria for approval.
Following the approval process of any drug product, the U.S. FDA may require post-marketing testing and surveillance to
monitor the effects of approved products or it may place conditions on approvals including potential requirements or risk management
plans that could restrict the commercial promotion, distribution, prescription or dispensing of products. Product approvals may be
withdrawn for non-compliance with regulatory requirements or if problems occur following initial marketing.
Off-label Promotion in the United States
The Federal Food, Drug, and Cosmetic Act, or FDCA, has been interpreted by the U.S. FDA and the U.S. government to make
it illegal for pharmaceutical companies to promote their U.S. FDA-approved products for uses that have not been approved by the U.S.
FDA, or off-label promotion. Companies that market drugs for unapproved uses or indications have been subject to related costly
litigation, criminal penalties and civil liability under the FDCA and the False Claims Act. However, recent case law has called into
question the extent to which government in the United States, including the U.S. FDA, can, and is willing to seek to, prevent truthful
and non-misleading speech related to off-label uses of U.S. FDA-approved products such as VASCEPA.
If our promotional activities or other operations are found to be in violation of any law or governmental regulation through
existing or new interpretations, we may be subject to prolonged litigation, penalties, including civil and criminal penalties, damages,
fines and the curtailment or restructuring of our operations. Also, if governmental parties or our competitors view our claims as
misleading or false, we could also be subject to liability based on fair competition-based statutes, such as the Lanham Act. Any of
such negative circumstances could adversely affect our ability to operate our business and our results of operations.
Post-Marketing Requirements in the United States
Following approval of a new product, a pharmaceutical company generally must engage in numerous specific monitoring and
recordkeeping activities, such as routine safety surveillance, and must continue to submit periodic and other reports to the applicable
regulatory agencies, including any cases of adverse events and appropriate quality control records. Such reports submitted to the U.S.
FDA may result in changes to the label and/or other post-marketing requirements or actions, including product withdrawal.
Additionally, under the Food and Drug Omnibus Reform Act of 2022, or FDORA, sponsors of approved drugs must provide six
months’ notice to the FDA of any changes in marketing status, such as the withdrawal of a drug, and failure to do so could result in the
FDA placing the product on a list of discontinued products, which would revoke the product’s ability to be marketed. These are viable
risks once a product is on the market. Additionally, modifications or enhancements to the products or labeling or changes of site of
manufacture are often subject to the approval of the U.S. FDA and other regulators, which may or may not be received or may result
in a lengthy review process.
Prescription drug advertising is subject to federal, state and foreign regulations. In the United States, the U.S. FDA regulates
prescription drug promotion, including direct-to-consumer advertising. Prescription drug promotional materials must be submitted to
the U.S. FDA in conjunction with their first use. Any distribution of prescription drug products and pharmaceutical samples must
comply with the U.S. Prescription Drug Marketing Act, or the PDMA, a part of the FDCA.
13
In the United States, once a product is approved, its manufacture is subject to comprehensive and continuing regulation by the
U.S. FDA. U.S. FDA regulations require that products be manufactured in specific approved facilities and in accordance with
pharmaceutical cGMPs, and NDA holders must list their products and register their manufacturing establishments with the U.S. FDA
and certain state agencies. Third-party manufacturers and other entities involved in the manufacture and distribution of approved
drugs, and those supplying products, ingredients, and components of them, are also required to register their establishments with the
U.S. FDA and certain state agencies. These regulations also impose certain organizational, procedural and documentation
requirements with respect to manufacturing and quality assurance activities. NDA holders using contract manufacturers, laboratories
or packagers are responsible for the selection and monitoring of qualified firms, and, in certain circumstances, qualified suppliers to
these firms. These firms and, where applicable, their suppliers are subject to inspections by the U.S. FDA at any time, and the
discovery of violative conditions, including failure to conform to cGMPs, could result in enforcement actions that interrupt the
operation of any such facilities or the ability to distribute products manufactured, processed or tested by them. In addition,
manufacturers and other parties involved in the drug supply chain for prescription drug products must also comply with product
tracking and tracing requirements and for notifying the U.S. FDA of counterfeit, diverted, stolen and intentionally adulterated products
or products that are otherwise unfit for distribution in the United States.
U.S. FDA Marketing Exclusivity and Generic Competition
The FDCA, as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, as amended, or the Hatch-
Waxman Amendments, provides for market exclusivity provisions that can help protect the exclusivity of new drugs by delaying the
acceptance and final approval of certain competitive drug applications. New chemical entity, or NCE, marketing exclusivity precludes
approval during the five-year exclusivity period of certain 505(b)(2) applications and ANDAs submitted by another company for
another version of the drug. The timelines and conditions under the ANDA process that permit the start of patent litigation and allow
the U.S. FDA to approve generic versions of brand name drugs like VASCEPA differ based on whether a drug receives three-year, or
five-year, NCE marketing exclusivity.
NCE marketing exclusivity precludes approval during the five-year exclusivity period of certain 505(b)(2) applications and
ANDAs submitted by another company for another version of the drug. However, an application may be submitted after four years if
it contains a certification of patent invalidity or non-infringement. In such case, the pioneer drug company is afforded the benefit of a
30-month stay against the launch of such a competitive product that extends from the end of the five-year exclusivity period. A
pioneer company could also be afforded extensions to the stay under applicable regulations, including a six-month pediatric
exclusivity extension or a judicial extension if applicable requirements are met. In May 2016, after litigation, the U.S. FDA
determined that VASCEPA was entitled to NCE marketing exclusivity. The related 30-month stay expired on January 26, 2020,
seven-and-a-half years after U.S. FDA approval of VASCEPA.
A three-year period of exclusivity under the Hatch-Waxman Amendments is generally granted for a drug product that contains
an active moiety that has been previously approved, when the application contains reports of new clinical investigations (other than
bioavailability studies) conducted by the sponsor that were essential to approval of the application. Accordingly, we expect to receive
three-year exclusivity in connection with any future regulatory approvals of VASCEPA. We received such three-year regulatory
exclusivity in connection with the approval based on the REDUCE-IT outcomes study results. Such three-year exclusivity protection
precludes the U.S. FDA from approving a marketing application for an ANDA, a product candidate that the U.S. FDA views as having
the same conditions of approval as VASCEPA (for example, the same indication and/or other conditions of use), or a 505(b)(2) NDA
submitted to the U.S. FDA with VASCEPA as the reference product, for a period of three years from the date of U.S. FDA approval.
The U.S. FDA may accept and commence review of such applications during the three-year exclusivity period. Such three-year
exclusivity grant does not prevent a company from challenging the validity of patents at any time, subject to any prior four-year period
pending from a grant of five-year exclusivity. This three-year form of exclusivity may also not prevent the U.S. FDA from approving
an NDA that relies only on its own data to support the change or innovation.
Foreign Regulation of New Drug Compounds
In addition to regulations in the United States, we may be subject to a variety of regulations in other jurisdictions governing,
among other things, clinical trials and any commercial sales and distribution of our products.
Whether or not we obtain U.S. FDA approval for a product, we must obtain the requisite approvals from regulatory authorities
in all or most foreign countries prior to the commencement of clinical trials or marketing of the product in those countries. Certain
countries outside of the United States have a similar process that requires the submission of a clinical trial application, or CTA, much
like the IND prior to the commencement of human clinical trials. In Europe, for example, a CTA must be submitted to each country’s
national health authority and an independent ethics committee, much like the U.S. FDA and IRB, respectively. Once the CTA is
approved in accordance with a country’s requirements, clinical trial development may proceed. Similarly, clinical trials conducted in
countries such as Australia, Canada, and New Zealand, require review and approval of clinical trial proposals by an ethics committee,
14
which provides a combined ethical and scientific review process. Most countries in which clinical studies are conducted require the
approval of the clinical trial proposals by both the national regulatory body and an ethics committee.
The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from
country to country. In all cases, the clinical trials must be conducted in accordance with GCP, which have their origin in the World
Medical Association’s Declaration of Helsinki, the applicable regulatory requirements, and guidelines developed by the International
Conference on Harmonization, or ICH, for GCP practices in clinical trials.
European Union Drug Development and Approval
The below EU rules relating to drug development, approval and post-approval are generally applicable in the European
Economic Area, or EEA, which consists of the EU Member States, Norway, Liechtenstein and Iceland.
Clinical Trials Regulation
In April 2014, the EU adopted Clinical Trials Regulation (EU) No 536/2014, which replaced the Clinical Trials Directive
2001/20/EC on January 31, 2022 and overhauled the system of approvals for clinical trials. Specifically, the new Regulation, which is
directly applicable in all EU Member States, such that no national implementing legislation in each EU Member State is required,
aims to simplify and streamline the approval of clinical trials in the EU. For example, the Regulation provides for a streamlined
application procedure through a single entry point and strictly defined deadlines for the assessment of clinical trial applications.
Drug Review and Approval
Medicinal products can only be commercialized after obtaining a marketing authorization. To obtain regulatory approval of a
medicinal product in the EU, a company must submit a marketing authorization application, or MAA. Centralized marketing
authorizations are issued by the EC through the centralized procedure based on the opinion of the CHMP of the EMA and are valid
throughout the EU as well as Iceland, Norway and Lichtenstein. The centralized procedure is mandatory for certain types of products,
such as biotechnology medicinal products, orphan medicinal products, advanced-therapy medicinal products such as gene-therapy,
somatic cell-therapy or tissue-engineered medicines, and medicinal products containing a new active substance indicated for the
treatment of HIV, AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and other immune dysfunctions, and viral
diseases. The centralized procedure is optional for products containing a new active substance not yet authorized in the EU, or for
products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the
EU.
Under the centralized procedure, the maximum timeframe for the evaluation of an MAA by the EMA is 210 days, excluding
clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the
CHMP. Clock stops may extend the timeframe of evaluation of an MAA considerably beyond 210 days. Where the CHMP gives a
positive opinion, it provides the opinion together with supporting documentation to the EC, who makes the final decision to grant a
marketing authorization, which is issued within 67 days of receipt of the EMA's recommendation. Accelerated assessments may be
granted by the CHMP in exceptional cases, when a medicinal product is expected to be of major public health interest, particularly
from the point of view of therapeutic innovation. The timeframe for the evaluation of an MAA under the accelerated assessment
procedure is 150 days, excluding clock stops, but it is possible that the CHMP may revert to the standard time limit for the centralized
procedure if it determines that the application is no longer appropriate to conduct an accelerated assessment.
National marketing authorizations, which are issued by the competent authorities of the Member States of the EU and only
cover their respective territory, are available for products not falling within the mandatory scope of the centralized procedure. Where a
product has already been authorized for marketing in a Member State of the EU, this national marketing authorization can be
recognized in other EU Member States through the mutual recognition procedure. If the product has not received a national marketing
authorization in any EU Member State at the time of application, it can be approved simultaneously in various Member States through
the decentralized procedure.
Now that the UK, which comprises Great Britain and Northern Ireland, has left the EU, Great Britain is no longer covered by
centralized marketing authorizations, while under the Northern Ireland Protocol centralized marketing authorizations currently
continue to be recognized in Northern Ireland. A separate marketing authorization is therefore required to market products in Great
Britain. On January 1, 2024, a new international recognition framework was put in place by the MHRA under which the MHRA may
have regard to decisions on the approval of a marketing authorization made by the EMA and certain other regulators when considering
whether to grant a UK marketing authorization. The MHRA also has the power to have regard to marketing authorizations approved in
15
EU Member States through decentralized or mutual recognition procedures with a view to more quickly granting a marketing
authorization in the UK or Great Britain.
Periods of Authorization and Renewals
A marketing authorization in the EU is valid for five years, in principle, and it may be renewed after five years on the basis of a
re-evaluation of the risk benefit balance by the EMA for a centrally authorized product, or by the competent authority of the
authorizing Member State for a nationally authorized product. Once renewed, the marketing authorization is valid for an unlimited
period, unless the EC or the competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with one
additional five-year renewal period. Any authorization that is not followed by the placement of the product on the EU market, in the
case of the centralized procedure, or on the market of the authorizing Member State for a nationally authorized product, within three
years after authorization, or if the product is removed from the market for three consecutive years, ceases to be valid.
Data and Market Exclusivity
In the EU, upon receiving marketing authorization, innovative medicinal products generally receive eight years of data
exclusivity and an additional two years of market exclusivity. If granted, data exclusivity prevents generic or biosimilar applicants
from referencing the innovator's pre-clinical and clinical trial data contained in the dossier of the reference product when applying for
a generic or biosimilar marketing authorization in the EU, during a period of eight years from the date on which the reference product
was first authorized in the EU. During the additional two year period of market exclusivity, a generic or biosimilar marketing
authorization application can be submitted, and the innovator's data may be referenced, but no generic or biosimilar product can be
marketed until the expiration of the market exclusivity. The overall ten year period will be extended to a maximum of eleven years if,
during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new
therapeutic indications which, during the scientific evaluation prior to authorization, is held to bring a significant clinical benefit in
comparison to the existing therapies. There is no guarantee that a product will be considered by the EMA to be an innovative
medicinal product and products may not qualify for data exclusivity. Even if a product is considered to be an innovative medicinal
product so that the innovator gains the prescribed period of data exclusivity, another company may market another version of the
product if such company obtained a marketing authorization based on an MAA with a complete and independent data package of
pharmaceutical tests, preclinical tests and clinical trials. Following the expiry of regulatory exclusivity for a product (or if a product
does not qualify for regulatory exclusivity), a generic or biosimilar of the applicable product may be authorized and marketed in the
EU and we would therefore need to rely upon enforcement of any surviving European patents covering the applicable product to
protect against generic competition in the EU.
Regulatory Requirements after obtaining Marketing Authorization
Where a marketing authorization for a medicinal product in the EU is obtained, the holder of the marketing authorization is
required to comply with a range of requirements applicable to the manufacturing, marketing, promotion and sale of medicinal
products. These include:
•
•
•
Compliance with the EU's stringent pharmacovigilance or safety reporting rules must be ensured. These rules can impose
post-authorization studies and additional monitoring obligations.
The manufacturing of authorized medicinal products, for which a separate manufacturer's license is mandatory, must also
be conducted in strict compliance with the applicable EU laws, regulations and guidance, including Directive 2001/83/EC,
Directive (EU) 2017/1572, Regulation (EC) No 726/2004 and the European Commission Guidelines Manufacturing
Practice. These requirements include compliance with EU cGMP standards when manufacturing medicinal products and
active pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the EU with
the intention to import the active pharmaceutical ingredients into the EU.
The marketing and promotion of authorized medical products, including industry-sponsored continuing medical education
and advertising directed toward the prescribers of medical products and/or the general public, are strictly regulated in the
EU. Direct-to-consumer advertising of prescription medicines is prohibited across the EU.
The aforementioned European Union rules are generally applicable in the EEA.
Reform of the Regulatory Framework in the European Union
The EC introduced legislative proposals in April 2023 that, if implemented will replace the current regulatory framework in the
EU for all medicines (including those for rare diseases and for children). The EC has provided the legislative proposals to the
European Parliament and the European Council for their review and approval. In October 2023, the European Parliament published
16
draft reports proposing amendments to the legislative proposals, which will be debated by the European Parliament. Once the EC's
legislative proposals are approved (with or without amendment), they will be adopted into EU law.
Brexit and the Regulatory Framework in the United Kingdom
The UK formally left the EU on January 31, 2020, and the EU and the UK have concluded a trade and cooperation agreement,
or TCA, which was provisionally applicable since January 1, 2021 and has been formally applicable since May 1, 2021. The TCA
includes specific provisions concerning pharmaceuticals, which include the mutual recognition of GMP, inspections of manufacturing
facilities for medicinal products and GMP documents issued, but does not provide for wholesale mutual recognition of UK and EU
pharmaceutical regulations. At present, Great Britain has implemented EU legislation on the marketing, promotion and sale of
medicinal products through the Human Medicines Regulations 2012 (as amended) (under the Northern Ireland Protocol, the EU
regulatory framework currently continues to apply in Northern Ireland). Except in respect of the EU Clinical Trials Regulation, the
regulatory regime in Great Britain therefore currently largely aligns with EU regulations, however it is possible that these regimes will
diverge more significantly in future now that Great Britain’s regulatory system is independent from the EU and the TCA does not
provide for mutual recognition of UK and EU pharmaceutical legislation. However, notwithstanding that there is no wholesale
recognition of EU pharmaceutical legislation under the TCA, under a new international recognition procedure which was put in place
by the MHRA, on January 1, 2024, the MHRA may take into account decisions on the approval of a marketing authorization from the
EMA (and certain other regulators) when considering an application for a Great Britain marketing authorization.
On February 27, 2023, the UK government and the EC announced a political agreement in principle to replace the Northern
Ireland Protocol with a new set of arrangements, known as the “Windsor Framework”. This new framework fundamentally changes
the existing system under the Northern Ireland Protocol, including with respect to the regulation of medicinal products in the UK. In
particular, the MHRA will be responsible for approving all medicinal products destined for the UK market (i.e., Great Britain and
Northern Ireland), and the EMA will no longer have any role in approving medicinal products destined for Northern Ireland. A single
UK-wide marketing authorization will be granted by the MHRA for all medicinal products to be sold in the UK, enabling products to
be sold in a single pack and under a single authorization throughout the UK. The Windsor Framework was approved by the EU-UK
Joint Committee on March 24, 2023, so the UK government and the EU will enact legislative measures to bring it into law. On June 9,
2023, the MHRA announced that the medicines aspects of the Windsor Framework will apply from January 1, 2025.
Fraud and Abuse Laws and Data Regulation
In addition to U.S. FDA restrictions on marketing of pharmaceutical products, several other types of state and federal laws
restrict certain marketing practices in the biopharmaceutical industry. These laws include Anti-Kickback Statutes and false claims
statutes.
The federal Anti-Kickback Statute prohibits, among other things, any person or entity knowingly and willfully offering, paying,
soliciting, or receiving remuneration, directly or indirectly, in cash or in kind, to induce or in return for a referral or the purchasing,
leasing, ordering, or arranging for or recommending the purchase, lease, or order of any healthcare facility, item or service
reimbursable under Medicare, Medicaid, or other federal healthcare programs. This statute has been interpreted to apply to
arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, and formulary managers on the other.
Liability may be established without a person or entity having actual knowledge of the federal anti-kickback statute or specific intent
to violate it. In addition, the government may assert that a claim including items or services resulting from a violation of the federal
Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. Although there are a
number of statutory exemptions and regulatory safe harbors protecting certain activities from prosecution, the exemptions and safe
harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases, or recommendations
may be subject to scrutiny if they do not qualify for an exemption or safe harbor. Our practices may not in all cases meet all of the
criteria for safe harbor protection from anti-kickback liability. Moreover, there are no safe harbors for many common practices, such
as educational and research grants or patient or product support programs. On November 20, 2020, the United States Department of
Health and Human Services, or HHS, Office of Inspector General, or OIG, finalized further modifications to the federal Anti-
Kickback Statute. Under the final rules, OIG added safe harbor protections under the Anti-Kickback Statute for certain coordinated
care and value-based arrangements among clinicians, providers, and others. We continue to evaluate what effect, if any, these rules
will have on our business.
17
The federal civil and criminal false claim laws, including the civil monetary penalty laws and the civil False Claims Act
prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim
for payment of government funds, or knowingly making or using, or causing to be made or used, a false record or statement material
to an obligation to pay money to the government or knowingly concealing, or knowingly and improperly avoiding, decreasing, or
concealing an obligation to pay money or transmit properly to the federal government. Manufacturers can be held liable under the
False Claims Act even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of
false or fraudulent claims. The False Claims Act also permits a private individual acting as a “whistleblower” to bring actions on
behalf of the federal government alleging violations of the statute and to share in any monetary recovery. Recently, several
pharmaceutical and other healthcare companies have been investigated or faced enforcement actions under the federal civil False
Claims Act for a variety of alleged improper marketing activities, including allegations that they caused false claims to be submitted
because of the company’s marketing of the product for unapproved, and thus allegedly non-reimbursable, uses. Federal enforcement
agencies also have showed increased interest in pharmaceutical companies’ product and patient assistance programs, including
reimbursement and co-pay support services, and a number of investigations into these programs have resulted in significant civil and
criminal settlements. Pharmaceutical and other healthcare companies also are subject to other federal false claims laws, including,
among others, federal criminal healthcare fraud and false statement statutes that extend to non-government health benefit programs.
The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for
Economic and Clinical Health Act of 2009, or HITECH, including the Final Omnibus Rule published in January 2013, collectively
referred to herein as HIPAA, among other things, imposes criminal and civil liability for knowingly and willfully executing a scheme
to defraud any healthcare benefit program, including private third-party payor and knowingly and willfully falsifying, concealing or
covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or
payment for healthcare benefits, items or services. In addition, HITECH imposes certain requirements relating to the privacy, security
and transmission of individually identifiable health information. It requires certain covered healthcare providers, health plans, and
healthcare clearinghouses as well as their respective business associates that perform services for them that involve the use, or
disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable
health information. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties
directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or
injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal
civil actions. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or
specific intent to violate it in order to have committed a violation.
The federal Physician Payment Sunshine Act, implemented as the Open Payments Program, requires manufacturers of drugs,
devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance
Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services, or CMS, information related
to direct or indirect payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists
and chiropractors), certain other licensed healthcare practitioners and teaching hospitals, as well as ownership and investment interests
held in the company by physicians and their immediate family members.
The federal government price reporting laws require us to calculate and report complex pricing metrics in an accurate and timely
manner to government programs. Additionally, federal consumer protection and unfair competition laws broadly regulate marketplace
activities and activities that potentially harm consumers.
Many foreign countries and the majority of states also have statutes or regulations similar to the federal Anti-Kickback Statute
and False Claims Act, which may apply to sales or marketing arrangements and claims involving healthcare items or services
reimbursed by non-governmental third-party payors, including private insurers. Other states or localities may have laws that require
pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance
guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; restrict the
ability of manufacturers to offer co-pay support to patients for certain prescription drugs; require drug manufacturers to report
information related to clinical trials, or information related to payments and other transfers of value to physicians and other healthcare
providers or marketing expenditures; relate to insurance fraud in the case of claims involving private insurers; and/or require
identification or licensing of sales representatives.
18
Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance
guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring manufacturers to
report information related to payments to physicians and other healthcare providers, marketing expenditures, and drug pricing
information. Certain state and local laws require the registration of pharmaceutical sales representatives. State and foreign laws,
including for example the California Consumer Privacy Act, or CCPA, and the European Union General Data Protection Regulation,
or EU GDPR, and the UK equivalent of the same, or the UK GDPR, also govern the privacy and security of health information in
some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus
complicating compliance efforts.
The CCPA creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy
and security obligations on entities handling personal data of consumers or households. The CCPA will require covered companies to
provide certain disclosures to consumers about its data collection, use and sharing practices, and to provide affected California
residents with ways to opt-out of certain sales or transfers of personal information. The CCPA went into effect on January 1, 2020,
and the California Attorney General has commenced enforcement against violators as of July 1, 2020. While there is currently an
exception for protected health information that is subject to HIPAA and clinical trial regulations, as currently written, the CCPA may
impact our business activities.
With respect to Europe, the EU GDPR and UK GDPR (collectively referred to as the GDPR in this Annual Report on Form 10-
K), as well as other national data protection legislation in force in relevant EU and European Economic Area, or EEA member states
and the UK (including the UK Data Protection Act 2018 in the UK) govern the collection, use, storage, disclosure, transfer, or other
processing of personal data, including personal health data (i) regarding individuals in the EU, EEA and UK; and/or (ii) carried out in
the context of the activities of our establishment in any EU and EEA member state or the UK. Currently, the EU GDPR and UK
GDPR remain largely aligned. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process
personal data, including requirements relating to processing health and other sensitive data, legal basis for processing personal data
which may include obtaining consent of the individuals to whom the personal data relates, providing detailed information to
individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data,
providing notification of data breaches, ensuring certain accountability measures are in place and taking certain measures when
engaging third-party processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside the EU,
including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including
potential fines of up to €20 million (£17.5 million for the UK GDPR) or 4% of annual global revenues, whichever is greater. The
GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory
authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. Compliance with the
GDPR will be a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business
practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in
connection with our European activities. The GDPR and other applicable data protection laws, impose restrictions in relation to the
international transfer of personal data. For example, in order to transfer data outside of the EEA or the UK to a non-adequate country,
the GDPR requires us to enter into an appropriate transfer mechanism, and may require us to take additional steps to ensure an
essentially equivalent level of data protection, including carrying out transfer impact assessments. These transfer mechanisms are
subject to change, and implementing new or revised transfer mechanisms or ensuring an essentially equivalent protection may involve
additional expense and potentially increased compliance risk. In the event a legislator, government, regulator or court imposes
additional restrictions on international transfers, there may be operational interruption in the performance of services for customers
and internal processing of employee information. Such restrictions may also increase our obligations in relation to carrying out
international transfers of personal data, and incur additional expense and increased regulatory liabilities. On June 28, 2021, the EC
adopted an adequacy decision in respect of transfers of personal data to the UK for a four year period until June 27, 2025. Similarly,
the UK has determined that it considers all of the EEA to be adequate for the purposes of data protection. This ensures that data flows
between the UK and the EEA remain unaffected.
The EU GDPR and UK GDPR remain largely aligned. Currently, the most impactful point of divergence between the GDPR
and the UK GDPR relates to these transfer mechanisms as explained above. There may be further divergence in the future, including
with regard to administrative burdens. The UK has announced plans to reform the country’s data protection legal framework in its
Data Reform Bill, which will introduce significant changes from the EU GDPR. This may lead to additional compliance costs and
could increase our overall risk exposure as we may no longer be able to take a unified approach across the EEA and the UK, and we
will need to amend our processes and procedures to align with the new framework.
Because of the breadth of these laws and the narrowness of the exceptions or safe harbors, it is possible that some of our
business activities could be subject to challenge under one or more of such laws. Such a challenge could have a material adverse effect
on our business, financial condition and results of operations. These laws may impact, among other things, our proposed sales,
marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and
the states in which we conduct our business.
19
If our promotional activities or other operations are found to be in violation of any of the laws described above or any other
governmental regulations or guidance that apply to us through existing or new interpretations, we may be subject to prolonged
litigation, penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, the exclusion from
participation in federal and state healthcare programs, individual imprisonment, reputational harm and the curtailment or restructuring
of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or
other agreement to resolve allegations of non-compliance with these laws. Also, if governmental parties or our competitors view our
claims as misleading or false, we could also be subject to liability based on fair competition-based statutes, such as the Lanham Act.
Any of such negative circumstances could adversely affect our ability to operate our business and our results of operations.
In the U.S., to help patients afford our approved product, we may utilize programs to assist them, including patient assistance
programs, or PAPs and co-pay coupon programs for eligible patients. PAPs are regulated by and subject to guidance from HHS OIG.
In addition, at least one insurer has directed its network pharmacies to no longer accept co-pay coupons for certain specialty drugs
identified by the insurer. Our co-pay coupon programs could become the target of similar insurer actions. In addition, in November
2013, the CMS issued guidance to the issuers of qualified health plans sold through the ACA's, as defined herein, marketplaces
encouraging such plans to reject patient cost-sharing support from third parties and indicating that the CMS intends to monitor the
provision of such support and may take regulatory action to limit it in the future. The CMS subsequently issued a rule requiring
individual market qualified health plans to accept third-party premium and cost-sharing payments from certain government-related
entities. In September 2014, the OIG of the HHS issued a Special Advisory Bulletin warning manufacturers that they may be subject
to sanctions under the federal anti-kickback statute and/or civil monetary penalty laws if they do not take appropriate steps to exclude
Part D beneficiaries from using co-pay coupons. Accordingly, companies exclude these Part D beneficiaries from using co-pay
coupons.
United States Healthcare Reform and Legislation
In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare
system that could affect our future results of operations.
On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory
Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple
source drugs, beginning January 1, 2024. Due to the Statutory Pay-As-You-Go Act of 2010, estimated budget deficit increases
resulting from the American Rescue Plan Act of 2021, and subsequent legislation, Medicare payments to providers will be further
reduced starting in 2025 absent further legislation. These laws and regulations may result in additional reductions in Medicare and
other healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain
regulatory approval or the frequency with which any such product candidate is prescribed or used.
In August 2022, the Inflation Reduction Act of 2022, or the IRA, was signed into law. The IRA includes several provisions that
may impact our business, depending on how various aspects of the IRA are implemented. Provisions that may impact our business
include a $2,000 out-of-pocket cap for Medicare Part D beneficiaries, the imposition of new manufacturer financial liability on most
drugs in Medicare Part D, permitting the U.S. government to negotiate Medicare Part B and Part D pricing for certain high-cost drugs
and biologics without generic or biosimilar competition, requiring companies to pay rebates to Medicare for drug prices that increase
faster than inflation, and delay until January 1, 2032 the implementation of the HHS rebate rule that would have limited the fees that
pharmacy benefit managers can charge. The implementation of the IRA is currently subject to ongoing litigation challenging the
constitutionality of the IRA’s Medicare drug price negotiation program. The effects of the IRA on our business and the healthcare
industry in general is not yet known.
Political, economic and regulatory influences are subjecting the healthcare industry in the United States to fundamental changes.
There have been, and we expect there will continue to be, legislative and regulatory proposals to change the healthcare system in ways
that could impact our ability to sell our products profitably. We anticipate that the United States Congress, state legislatures and the
private sector will continue to consider and may adopt healthcare policies intended to curb rising healthcare costs. These cost
containment measures include: controls on government funded reimbursement for drugs; new or increased requirements to pay
prescription drug rebates to government healthcare programs; controls on healthcare providers; challenges to the pricing of drugs or
limits or prohibitions on reimbursement for specific products through other means; requirements to try less expensive products or
generics before a more expensive branded product; changes in drug importation laws; expansion of use of managed care systems in
which healthcare providers contract to provide comprehensive healthcare for a fixed cost per person; and public funding for cost
effectiveness research, which may be used by government and private third-party payors to make coverage and payment decisions.
Further, federal budgetary concerns could result in the implementation of significant federal spending cuts, including cuts in Medicare
and other health related spending in the near term.
20
Pharmaceutical Pricing and Reimbursement
In the United States and markets in other countries, patients who are prescribed treatments for their conditions and providers
performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Our
ability to successfully commercialize our product therefore depends significantly on the availability of adequate financial coverage
and reimbursement from third-party payors, including, in the United States, governmental payors such as Medicare and Medicaid, as
well as managed care organizations, private health insurers and other organizations. Third-party payors decide which drugs they will
pay for and establish reimbursement and copayment levels. Third-party payors are increasingly challenging the prices charged for
medicines and examining their cost effectiveness, in addition to their safety and efficacy. In the United States, the principal decisions
about reimbursement for new medicines are typically made by CMS, an agency within the HHS. CMS decides whether and to what
extent a new medicine will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree.
In the United States, no uniform policy of coverage and reimbursement for drug products exists among third-party payors.
Coverage and reimbursement for drug products can differ significantly from payor to payor. The process for determining whether a
third-party payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that
the payor will pay for the product once coverage is approved.
The containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of products
have been a focus in this effort. Governments have shown significant interest in implementing cost-containment programs, including
price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and
cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could
further limit a company’s revenue generated from the sale of any approved products. Coverage policies and third-party payor
reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more
products for which a company or its collaborators receive regulatory approval, less favorable coverage policies and reimbursement
rates may be implemented in the future.
Payors also are increasingly considering new metrics as the basis for reimbursement rates, such as average sales price, average
manufacturer price and actual acquisition cost. CMS surveys and publishes retail community pharmacy acquisition cost information in
the form of National Average Drug Acquisition Cost files to provide state Medicaid agencies with a basis of comparison for their own
reimbursement and pricing methodologies and rates. It is difficult to project the impact of these evolving reimbursement mechanics on
the willingness of payors to cover our products. We participate in the Medicaid Drug Rebate program, the 340B drug pricing program,
and the U.S. Department of Veterans Affairs, or VA, Federal Supply Schedule, or FSS, pricing program. Under the Medicaid Drug
Rebate program, we are required to pay a rebate to each state Medicaid program for our covered outpatient drugs that are dispensed to
Medicaid beneficiaries and paid for by a state Medicaid program as a condition of having federal funds being made available to the
states for our drugs under Medicaid and Part B of the Medicare program.
Federal law requires that any company that participates in the Medicaid Drug Rebate program also participate in the 340B drug
pricing program in order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare Part B. The
340B program requires participating manufacturers to agree to charge statutorily defined covered entities no more than the 340B
“ceiling price” for the manufacturer’s covered outpatient drugs. There have been several changes to the 340B drug pricing program.
On November 3, 2023, the U.S. District Court of South Carolina issued an opinion in Genesis Healthcare Inc. v. Becerra et al. that
may lead to an expansion of the scope of patients eligible to access prescriptions at 340B pricing. The outcome of this judicial
proceeding is uncertain. We continue to review developments impacting the 340B program. It is unclear how these developments
could affect covered hospitals who might purchase our future products and affect the rates we may charge such facilities for our
approved products in the future, if any.
In order to be eligible to have our products paid for with federal funds under the Medicaid and Medicare Part B programs and
purchased by certain federal agencies and grantees, we participate in the VA/FSS pricing program. Under this program, we are
obligated to make our products available for procurement on an FSS contract and charge a price to four federal agencies - the VA,
U.S. Department of Defense, Public Health Service and U.S. Coast Guard - that is no higher than the statutory Federal Ceiling Price,
or FCP. The FCP is based on the non-federal average manufacturer price, or Non-FAMP, which we calculate and report to the VA on
a quarterly and annual basis. We also participate in the Tricare Retail Pharmacy program, under which we pay quarterly rebates on
utilization of innovator products that are dispensed through the Tricare Retail Pharmacy network to Tricare beneficiaries. The rebates
are calculated as the difference between the annual Non-FAMP and FCP.
The Medicaid Drug Rebate program, 340B program, and VA/FSS pricing program, and the risks relating to price reporting and
other obligations under these programs, are further discussed under the heading “If we fail to comply with our reporting and payment
obligations under the Medicaid Drug Rebate program or other governmental pricing programs, we could be subject to additional
reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial
condition, results of operations and growth prospects” in Part I, Item 1A of this Annual Report on Form 10-K.
21
Outside the United States, ensuring coverage and adequate payment for a product also involves challenges. Pricing of
prescription pharmaceuticals is subject to government control in many countries. Pricing negotiations with government authorities can
extend well beyond the receipt of regulatory approval for a product and may require a clinical trial that compares the cost-
effectiveness of a product to other available therapies. The conduct of such a clinical trial could be expensive and result in delays in
commercialization.
In some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The
requirements governing drug pricing vary widely from country to country. For example, the European Union provides options for its
Member States to restrict the range of medicinal products for which their national health insurance systems provide reimbursement
and to control the prices of medicinal products for human use. To obtain reimbursement or pricing approval, some of these countries
may require the completion of clinical trials that compare the cost effectiveness of a particular product candidate to currently available
therapies. A Member State may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect
controls on the profitability of the company placing the medicinal product on the market. There can be no assurance that any country
that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing
arrangements for any of our product candidates. Historically, products launched in the European Union do not follow price structures
of the U.S. and generally prices, particularly when for the same product and the same indication as in the U.S., tend to be significantly
lower.
Price negotiations are conducted in the UK and each EU country for new medicines between the manufacturer and the national
government pricing committee, or the parties. In many cases, there is no specific timeline for negotiation conclusion and the dynamics
depends on the discussions between both parties. Analyzing a benchmark of innovative cardiovascular and metabolic products in
recent years, the average time to price negotiation from marketing authorization ranged from 12 months in England to 52 months in
countries like France. Recent macro-economic context has put additional pressure on EU authorities in their ability to allocate large
budgets for innovative medicines. After this negotiation phase concludes between the parties, a confidential agreement is signed for
usually 3 to 5 years with a specific public budget allocation and a price is published, or the list price. For retail products like
VAZKEPA in the UK, Sweden or Finland there are no confidential deals with authorities impacting net prices.
Other Regulatory Matters
Manufacturing, sales, promotion, importation, and other activities related to approved products are also subject to regulation by
numerous regulatory authorities, including, in the United States, the U.S. FDA, the Centers for Medicare & Medicaid Services, other
divisions of the Department of Health and Human Services, the Drug Enforcement Administration, the Consumer Product Safety
Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection
Agency, and state and local governments. Sales, marketing and scientific/educational programs must comply with the Food, Drug, and
Cosmetic Act, the Anti-Kickback Statute, and the False Claims Act and similar state laws. Pricing and rebate programs must comply
with the Medicaid rebate requirements of the U.S. Omnibus Budget Reconciliation Act of 1990. If products are made available to
authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply.
Products must meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act. The
distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping,
licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.
The failure to comply with regulatory requirements subjects firms to possible legal or regulatory action. Depending on the
circumstances, failure to meet applicable regulatory requirements can result in criminal prosecution, fines or other penalties,
injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of product approvals, or
refusal to allow a firm to enter into supply contracts, including government contracts. In addition, even if a firm complies with U.S.
FDA and other requirements, new information regarding the safety or effectiveness of a product could lead the U.S. FDA to modify or
withdraw a product approval. Prohibitions or restrictions on sales or withdrawal of future products marketed by us could materially
affect our business in an adverse way.
Changes in regulations or statutes or the interpretation of existing regulations could impact our business in the future by
requiring, for example: (i) changes to our manufacturing arrangements; (ii) additions or modifications to product labeling; (iii) the
recall or discontinuation of our products; or (iv) additional record-keeping requirements. If any such changes were to be imposed, they
could adversely affect the operation of our business.
Patents, Proprietary Technology, Trade Secrets
Our success depends in part on our ability to obtain and maintain intellectual property protection for our drug candidates,
technology and know-how, and to operate without infringing the proprietary rights of others. While certain key patents related to our
product based on the MARINE clinical study were determined to be invalid as obvious by a district court in the United States, it
22
remains the case that our ability to successfully implement our business plan and to protect our products with our intellectual property
will depend in large part on our ability to:
•
•
•
•
obtain, defend and maintain patent protection and market exclusivity for our current and future products;
preserve any trade secrets relating to our current and future products;
acquire patented or patentable products and technologies; and
operate without infringing the proprietary rights of third parties.
We have prosecuted, and are currently prosecuting, multiple patent applications to protect the intellectual property developed
during the VASCEPA development program. As of the date of this Annual Report on Form 10-K, we had more than 100 patent
applications in the United States that have been either issued or allowed, most of which are listed in the FDA publication entitled
Approved Drug Products with Therapeutic Equivalence Evaluations also known as the FDA Orange Book.
Currently-issued U.S. patents will expire between 2027 and 2033 and contain claims directed to the methods of using icosapent
ethyl to treat hypertriglyceridemia, severe hypertriglyceridemia and cardiovascular risk reduction. Our VASCEPA patent portfolio
also includes many granted patents in foreign jurisdictions including pending foreign and Patent Cooperation Treaty, or PCT patent
applications. Currently-granted European patents directed to the same subject matter as above will expire between 2027 and 2033,
and may be subject to a potential further extension of a patent right. Granted patents in other foreign jurisdictions will expire between
2030 and 2033 and may be subject to a potential further patent term extension, depending on the country. Pending applications
covering VASCEPA/VAZKEPA may, if granted, provide exclusivity for the drug until 2039.
Patents and applications described above are either owned by Amarin or exclusively licensed from others.
We have pending patent applications worldwide related to potential new uses of icosapent ethyl or other derivatives of EPA and
potential new formulations thereof. Patents maturing from such pending applications would expire between 2030 and 2043.
No assurance can be given that, if and when issued, our patents will prevent competitors from competing with VASCEPA. For
example, we may choose to not assert all issued patents in patent litigation and patents or claims within patents may be determined to
be invalid.
Geographies outside the United States in which VASCEPA is sold or under regulatory review are not subject to the U.S. patent
litigation and judgment. No litigation involving potential generic versions of VASCEPA is pending outside the United States. Outside
the United States, VASCEPA is currently available by prescription in certain European countries, China, Canada, Lebanon, the United
Arab Emirates, Kuwait and Saudi Arabia. In Canada, VASCEPA has the benefit of data protection afforded through Health Canada
until the end of 2027, in addition to separate patent protection with expiration dates that could extend into 2039. We are pursuing
additional regulatory approvals for VASCEPA in Europe, China and the Middle East. In China and the Middle East, we are pursuing
such regulatory approvals and subsequent commercialization of VASCEPA with commercial partners. The EC approval provides 10
years of market protection in the EU. Furthermore, patent protection in Europe includes: one granted patent related to the use of a
pharmaceutical composition comprised of 4g of 96% EPA ethyl ester to treat the REDUCE-IT population expiring 2033. In addition,
pending patent applications in Europe, if granted, may have the potential to extend exclusivity into 2039.
Human Capital Management
Diversity and Inclusion
We believe that a diverse and inclusive workforce helps us better connect our work with the needs of our patients, physicians,
partners and other stakeholders. In our hiring and recruiting of prospective candidates, we give priority to attitude, intelligence,
competency for the position and assessment of what they can contribute to our company. We promote employees based on merit with
emphasis on accomplishments over effort while supporting the benefits of diversity. While we acknowledge and support the benefits
of diversity and seek ways to continually improve in this area, individual hiring, promotion, compensation, retention and other
employment decisions are made irrespective of personal characteristics such as race, disability, gender, sexual orientation, religion, or
age.
Attracting, developing and retaining key scientific, technical, research, marketing, sales and other personnel is critical to our
ability to implement and execute our business plan and is key to our success. Our ability to recruit and retain such talent depends on a
number of factors, including compensation and benefits, talent development, career opportunities and work environment. As of
December 31, 2023, we had approximately 275 full-time employees located in fifteen countries, of which 25% are located in the
23
United States and 75% are located throughout Europe. For the 25% of our total employees located in the United States, our workforce
diversity representation for gender and race is 39% and 32%, respectively.
Employee Development & Engagement
We believe in a direct management-employee engagement model by which managers and employees maintain a regular
dialogue about working conditions, compensation, compliance, safety and advancement opportunities. We communicate frequently
and transparently with our employees through a variety of communication methods, including written and video communications and
quarterly town hall meetings. We believe these engagement efforts keep our employees informed about our strategy, purpose and
priorities, which is consistent with our core values of integrity, operational excellence, collaboration and commitment to quality and
we believe this engagement motivates our employees to do their best work. We also initiated a global employment engagement survey
during 2023, which will be an annual survey going forward, to obtained feedback from our employees on our employment
engagement and development practices, among other areas. The participation and results of this survey were positive and allows
management to continuously focus on improvements in this area. Our core values promote an empowering, supportive atmosphere
where we work together to put patients first and improve patient care through our actions and products. We encourage employees to
share ideas and learn from each other, while expecting high standards of quality and continuous improvement.
Compensation and Benefits
We are committed to rewarding, supporting, and developing our employees who make it possible to deliver on our strategy. To
that end, we offer a comprehensive rewards program aimed at the varying health and financial needs of our employees. Our program
includes market-competitive salaries and wages, bonuses and broad-based stock grants, healthcare benefits, retirement plans with
employer matching provisions, paid time off and family leave and a strong commitment to corporate wellness. In addition, we have
implemented a hybrid workplace model for our offices throughout the world. We utilize independent consultants to help us ensure that
our compensation and benefits are competitive with market practices and compliant with laws and regulations in the various
geographies in which we operate.
Organizational Structure
At February 29, 2024, we had the following subsidiaries:
Subsidiary Name
Amarin Pharmaceuticals Ireland Limited
Amarin Pharma, Inc.
Ester Neurosciences Limited
Amarin Switzerland GmbH
Amarin Germany GmbH
Amarin France SAS
Amarin UK Limited
Amarin Italy S.r.l.
Amarin Switzerland GmbH Sucursal Espana
Amarin Switzerland GmbH Austrian branch
Amarin Belgium, branch of Amarin Switzerland GmbH
Amarin Denmark, filial af Amarin Switzerland GmbH
Amarin Switzerland GmbH, Suomen sivuliike
Amarin Switzerland GmbH Greek branch
Amarin Switzerland GmbH Dutch branch
Amarin Switzerland GmbH Norwegian branch
Amarin Switzerland GmbH, Sucursal em Portugal
Amarin Switzerland GmbH Sweden filial
Country of
Incorporation
or Registration
Proportion of
Ownership Interest and
Voting Power Held
Ireland
United States
Israel
Switzerland
Germany
France
United Kingdom
Italy
Spain
Austria
Belgium
Denmark
Finland
Greece
Netherlands
Norway
Portugal
Sweden
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
As of the date of this Annual Report on Form 10-K, our principal operating activities were being conducted by Amarin
Corporation plc, together with Amarin Pharmaceuticals Ireland Limited and Amarin Pharma, Inc. Operating activity being conducted
by the European subsidiaries were in support of Amarin Pharmaceuticals Ireland Limited. Ester Neurosciences Limited had no
operating activities.
24
Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K (including exhibits), and
amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, are made available free of charge on or through our website at www.amarincorp.com as soon as reasonably practicable
after such reports are filed with, or furnished to, the Securities and Exchange Commission, or SEC. The SEC also maintains a website,
www.sec.gov, that contains reports and other information regarding issuers that file electronically with the SEC. We are not, however,
including the information contained on our website, or information that may be accessed through links on our website, as part of, or
incorporating such information by reference into, this Annual Report on Form 10-K.
Financial Information
The financial information required under this Item 1 is incorporated herein by reference to Item 8 of this Annual Report on
Form 10-K.
25
Item 1A. Risk Factors
This Annual Report on Form 10-K contains forward-looking information based on our current expectations. Because our actual
results may differ materially from any forward-looking statements that we make or that are made on our behalf, this section includes a
discussion of important factors that could affect our actual future results, including, but not limited to, our ability to successfully
commercialize VASCEPA and VAZKEPA, collectively referred to as VASCEPA, our capital resources, the progress and timing of our
clinical programs, the safety and efficacy of our product candidates, risks associated with regulatory filings, the potential clinical
benefits and market potential of our product candidates, commercial market estimates, future development efforts, patent protection,
effects of healthcare reform, reliance on third parties, effects of tax reform, and other risks set forth below.
Summary Risk Factors
Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. These risks
include, but are not limited to, the following:
•
•
•
•
•
•
•
•
•
•
•
•
We are substantially dependent upon VASCEPA® (icosapent ethyl), its commercialization in the United States and its
development, launch and commercialization in Europe and other major markets.
In the United States, we compete with, and may face increasing competition from, generic drug companies, and our
revenues and results could continue to be materially and adversely affected.
In Europe, we are seeking relevant pricing approvals in various countries; however, we may not be successful in obtaining
such approvals in a timely manner, or at all, and even if successfully obtained, we may not be successful in
commercializing VAZKEPA in Europe.
The commercial value of VASCEPA outside the United States may be smaller than we anticipate, particularly if we are
unable to secure favorable product pricing and reimbursement levels, which vary from country to country. If we are
unable to realize product reimbursement rates at reasonable price levels, or at all, patient access to VASCEPA may be
limited.
Factors outside of our control make it more difficult for VASCEPA to achieve a level of market acceptance by physicians,
patients, healthcare payors and others in the medical community at levels sufficient to achieve commercial success.
Our Organizational Restructuring Program, or ORP, effected in July 2023 and any similar efforts we may undertake in the
future, may not be successful in mitigating risks and challenges associated with our U.S. business and establishing a more
significant international footprint.
The manufacture, supply and commercialization, including promotional activities, of VASCEPA is subject to regulatory
scrutiny.
We may not be able to compete effectively against our competitors' pharmaceutical product, including generic products.
In addition, we face competition from omega-3 fatty acids that are marketed by other companies as non-prescription
dietary supplements, subjecting us to non-prescription competition and consumer substitution.
Our supply of product for the commercial market and clinical trials is dependent upon relationships with third-party
manufacturers and suppliers, including manufacturers and suppliers who may require us to comply with burdensome
minimum purchase commitments, which may be greater than our supply needs.
Our dependence on third parties in the distribution channel from our manufacturers to patients subject us to risks that limit
our profitability and could limit our ability to supply VASCEPA to large market segments.
We have limited experience commercializing VASCEPA outside the United States, and we may not be successful in
building an infrastructure, including a sales force, that can navigate the regulatory and other dynamics outside of the
United States. We are currently, and may continue to be, substantially dependent on third parties for our international
efforts, and we may not be successful in negotiating or establishing relationships with business partners to support and
maintain control over our international activities.
We are dependent on patents, proprietary rights and confidentiality obligations of our employees, agents, business partners
and third parties to protect the commercial value and potential of VASCEPA. Enforcing our patent rights is challenging
26
and costly and, even if we are able to successfully enforce our patent rights, our issued patents may not prevent
competitors from competing with VASCEPA.
•
•
•
We have pending patent applications relating to VASCEPA and its use. There can be no assurance that any of these
applications will issue patents, and even if patent protection is obtained, it may be insufficient to minimize competition or
support our commercialization efforts.
Our efforts to return capital to our shareholders and increase shareholder value, including our share repurchase program
(which is subject to shareholder and UK court approval), may not be implemented in a timely manner or at all, or may not
have the expected results.
If we are unable to meet the listing requirements of the NASDAQ Stock Market, our stock may be delisted.
The summary risk factors described above should be read together with the text of the full risk factors below and in the other
information set forth in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes, as
well as in other documents that we file with the SEC. If any such risks and uncertainties actually occur, our business, prospects,
financial condition and results of operations could be materially and adversely affected. The risks summarized above or described in
full below are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem
to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations.
Risks Related to the Commercialization and Development of VASCEPA
We are substantially dependent upon VASCEPA (icosapent ethyl), its commercialization in the United States and its
development, launch and commercialization in Europe and other major markets.
We currently derive substantially all of our revenue from sales of VASCEPA. We may be substantially dependent on sales of
VASCEPA for many years. Our financial condition and the success of our company will be materially adversely affected, we may
have to further restructure our current operations, and our business prospects will be limited, if we experience any negative
developments relating to VASCEPA. In the first quarter of 2020, the U.S. District Court for the District of Nevada issued a ruling in
favor of two generic drug companies, Dr. Reddy's Laboratories, Inc., or Dr. Reddy's, and Hikma Pharmaceuticals USA Inc., or Hikma,
and certain of their affiliates, that declared as invalid several patents of ours protecting the first U.S. FDA-approved use of our drug, to
reduce severely high triglyceride levels, or the MARINE indication, or the ANDA litigation. We were unsuccessful in our appeals and
our stock price was adversely and materially impacted by the ruling, the results of the appeals process and the introduction of generic
competition. If other proprietary rights protecting VASCEPA or its use are challenged, our stock price could further decline,
particularly if such challenges, which are costly to defend, are successful.
Although we are exploring ways to broaden our development and commercial pipeline, such efforts are likely to be time
consuming, costly and may utilize resources that could otherwise be focused on commercializing VASCEPA. It took over a decade of
preceding product development before we received marketing approval for VAZKEPA in March 2021 from the European
Commission, or the EC.
Likewise, if we seek to diversify our development programs or product offerings through licensing or acquisitions, such
transactions are also time consuming, may be dilutive to existing shareholdings, and may be initially disruptive to operations. These
transactions may not be available on favorable terms, or at all. These dynamics can restrict our ability to respond rapidly to adverse
business conditions for VASCEPA. If development of, or demand for, VASCEPA does not meet expectations, we may not have the
ability to effectively shift our resources to the development of alternative products, or do so in a timely manner, without suffering
material adverse effects on our business. As a result, the lack of alternative markets and products we develop could constrain our
ability to generate revenues and achieve profitability.
In the United States, we compete with, and may face increasing competition from, generic drug companies and our revenues
and results of operations could continue to be materially and adversely affected.
Following the ANDA litigation rulings against the Company, generic versions of VASCEPA began launching in the United
States in November 2020, and several generic versions are currently available, including for both the 0.5-gram and 1-gram capsules,
and we expect that VASCEPA could face more competition from generic companies in the United States. Increasing sales of generic
versions of VASCEPA could continue to have a material and adverse impact on our revenues and results of operations in the United
States.
Generally, once a generic version of a drug is available in the market, the generic version is typically used by pharmacies across
the U.S. to fill prescriptions for any use of the drug, subject to state substitution laws. Although, we intend to vigorously defend our
intellectual property rights related to VASCEPA, there can be no assurance that we will be successful in preventing use of generic
versions of VASCEPA in indications for which they have not been approved by the U.S. FDA, even if such use is determined to
infringe certain of our patent claims.
27
Given the changing dynamic in the U.S. market, in 2022 we initiated cost and organizational restructuring plans which reduced
our U.S. commercial team from approximately 300 sales representatives to approximately 75 sales representatives by the end of 2022,
and in July 2023 all remaining sales force positions in the U.S. were eliminated and our overall headcount was reduced by 30% as part
of our ORP. Although these initiatives are expected to result in an improved expense structure, such efforts could impact employee
morale and make hiring and retaining talented personnel more challenging, may not result in all of the cost savings or other benefits
we anticipate, and are costly to implement. Furthermore, such efforts may reduce our ability to expand use of VASCEPA.
In Europe, we are seeking relevant pricing approvals in various countries; however, we may not be successful in obtaining
such approvals in a timely manner or at all and even if successfully obtained, we may not be successful in commercializing
VAZKEPA in Europe.
We continue our development efforts to support commercialization of VASCEPA in major markets outside the United States,
particularly in light of the level of competition, including from generic products, in the United States, and as part of our ORP, we
redesigned our commercial infrastructure in Europe. This process is conducted on a country-by-country basis and is time consuming
and complex, and, even though the EC approved the marketing authorization for VAZKEPA in March 2021, and we have received
positive national pricing and reimbursement decisions in various countries, there is no guarantee that we will be able to negotiate and
obtain further reimbursement and pricing terms on favorable terms, or at all, in the other countries where we are pursuing
commercialization. Further, successful progress or pricing terms in one country may not be indicative of our outcomes in other
jurisdictions. For example, although the UK’s National Institute for Health and Care Excellence, or NICE, announced final guidance
for reimbursement for VAZKEPA® and use across the National Health Service, or NHS, in England and Wales, we decided to
discontinue business operations in Germany following the conclusion of negotiations with the National Association of Statutory
Health Insurance Funds during which a viable agreement on the reimbursement price of VAZKEPA could not be reached. The
Arbitration Board process concluded without an agreement in November 2022 and although we plan to resubmit a pricing and
reimbursement dossier with new data in Germany, we may be unable to resume commercial operations in Germany. We may not be
successful in obtaining additional approvals in a timely manner with acceptable terms, or in additional countries, and if we are unable
to do so, and continue to face increased competition in the United States, our financial position could be materially and adversely
impacted.
We have been developing VAZKEPA on our own in Europe, where we have limited experience. We are exploring possible
strategic collaborations in smaller markets within Europe and in other major markets, which will increase our reliance on third parties,
over whom we have limited control. We currently have multiple partners for the development and commercialization of VASCEPA in
select geographies and are assessing potential partners to commercialize VASCEPA in other parts of the world. We have strategic
collaborations for the development and commercialization of VASCEPA in Canada, the Middle East, Australia, New Zealand, Greater
China, South Korea and many markets in Southeast Asia, and Israel. However, we cannot make any guarantees as to the success of
these efforts or that our beliefs about the value potential are accurate, or that we will be able to rely upon these third parties; if
commercialization plans for VASCEPA do not meet expectations in major markets such as the United States and Europe, our business
and prospects could be materially and adversely affected.
The commercial value of VASCEPA outside the United States may be smaller than we anticipate, including if we are unable
to secure favorable product pricing and reimbursement levels, which vary from country to country. If we are unable to realize
product reimbursement rates at reasonable price levels, or at all, patient access to VASCEPA may be limited.
There can be no assurance as to the market for VASCEPA outside the United States, and we may face challenges in successfully
achieving market opportunities available to us. Despite having received EC approval to commercialize VAZKEPA in Europe and
approval elsewhere around the world, applicable regulatory agencies may impose restrictions on the product’s conditions for use,
distribution or marketing, and in some cases may impose ongoing requirements for post-market surveillance, post-approval studies or
clinical trials, any of which could limit the market opportunity, or our ability to capitalize on such opportunity, for VASCEPA.
Further, securing adequate reimbursement is critical for commercial success of any therapeutic, and pricing and reimbursement
levels of medications in markets outside the United States can be unpredictable and vary considerably on a country-by-country basis.
In some foreign countries, including major markets in Europe, the pricing of prescription pharmaceuticals is subject to governmental
control. In these countries, pricing negotiations with individual governmental authorities can take six to 12 months or longer after the
receipt of regulatory marketing approval for a product, and these negotiations are not always successful. After the conclusion of
negotiations with the National Association of Statutory Health Insurance Funds, a viable agreement on the reimbursement price of
VAZKEPA in Germany could not be reached. As a result of the negotiation outcome, we discontinued our German operations as of
September 1, 2022. In November 2022, the Arbitration Board process concluded without an agreement and although we plan to
resubmit a pricing and reimbursement dossier with new data in Germany, we may be unable to resume commercial operations in
Germany.
Further, in countries outside the U.S., securing product reimbursement is a requisite to commercial launch. To obtain
reimbursement or pricing approval in some countries, we may be required to conduct a pharmacoeconomic study that compares the
28
cost effectiveness of VASCEPA to other available therapies. Such pharmacoeconomic studies can be costly and the results uncertain.
The time required to secure reimbursement tends to vary from country to country and cannot be reliably predicted at this time. Our
business could be harmed if reimbursement of our products is unavailable, delayed or limited in scope or amount or if pricing is set at
unsatisfactory levels. If the pricing and reimbursement levels of VASCEPA are lower than we anticipate, then affordability of, and
market access to, VASCEPA may be adversely affected and thus market potential in these territories would suffer.
We, or our partners, may even choose to not proceed with marketing VASCEPA in a market, even after obtaining all necessary
regulatory approval, due to negative commercial dynamics. Further, with regard to any indications for which we may gain approval in
territories outside the United States, the number of actual patients with the condition included in such approved indication may be
smaller than we anticipate. In addition, we could face competition from products similar or deemed equivalent to VASCEPA in
various jurisdictions through regulatory pathways that are more lenient than in the United States or in jurisdictions in which we do not
have exclusivity from regulations or intellectual property. If any of these market dynamics exist, the commercial potential in these
territories for our product would suffer.
We have limited experience as a company in commercializing VASCEPA outside of the United States and may be
unsuccessful in developing sales internationally.
We may be unsuccessful in expanding our global footprint. We are launching VAZKEPA on our own in the most commercially
significant markets in Europe, and have redesigned our commercial infrastructure in Europe. The commercial launch of a new
pharmaceutical product is a complex and resource heavy undertaking for a company to manage and may be impacted by decisions by
and interactions with local regulators. We have no prior experience as a company operating a commercial-stage pharmaceutical
business in Europe. As noted above, a viable agreement on the reimbursement price of VAZKEPA in Germany could not be reached
with German regulators and we have discontinued our Germany business operations. Given the amount of time and resources,
including capital, needed to support regulatory and commercial efforts aimed at international expansion, if we are unsuccessful or
delayed in generating revenues overseas, our results of operations could be materially and adversely impacted.
Factors that could inhibit our efforts to successfully commercialize VASCEPA include:
•
•
•
•
•
•
•
•
•
•
the impact of the expiration of regulatory exclusivities and entry into the market of additional generic versions of
VASCEPA;
our inability to attract and retain adequate numbers of effective sales and marketing personnel and senior management,
particularly in light of our recent reductions in force, including our ORP announced in July 2023, and turnover on the
management team;
our inability to adequately train our sales and marketing personnel and our inability to adequately monitor compliance
with applicable regulatory and other legal requirements;
the inability to obtain access to or persuade adequate numbers of physicians to prescribe or patients to use VASCEPA;
overestimating the addressable market for VASCEPA;
regulators may impose restrictions on VASCEPA’s conditions for use, distribution or marketing, and may impose ongoing
requirements for post-market surveillance, post-approval studies or clinical trials, which may be costly or result in label or
other use restrictions;
complexities and challenges in connection with pricing and reimbursement, including our ability to secure adequate
reimbursement coverage, which in Europe is almost exclusively covered through public national funding, and not
individual private insurance companies;
the lack of complementary products to be offered may put us at a competitive disadvantage relative to companies with
more extensive product lines;
an inability by us or our partners to obtain regulatory and marketing approval or establish marketing channels in foreign
jurisdictions; and
unforeseen costs and expenses associated with operating a new independent sales and marketing organization outside of
the United States.
If we experience one or more of the setbacks described above, we may not be able to pursue international regulatory and
commercial efforts in a cost effective manner, or at all, which could cause our stock price to decline.
29
Our ability to generate meaningful revenues outside of the United States may be limited, including due to the strict price
controls and reimbursement limitations imposed by payors outside of the United States.
Our ability to generate meaningful revenues of VASCEPA outside of the United States is dependent on the availability and
extent of coverage and reimbursement from third-party payors. In many markets around the world, these payors, including
government health systems, private health insurers and other organizations, remain focused on reducing the cost of healthcare, and
their efforts have intensified as a result of rising healthcare costs and economic challenges. Drugs remain heavily scrutinized for cost
containment. As a result, payors are becoming more restrictive regarding the use of biopharmaceutical products and scrutinizing the
prices of these products while requiring a higher level of clinical evidence to support the benefits such products bring to patients and
the broader healthcare system. These pressures are intensified where our products are subject to competition, including from generics.
Refer to “Item 1. Business - Government Regulation – Pharmaceutical Pricing and Reimbursement” for further details.
In many countries outside the United States, government-sponsored healthcare systems are the primary payors for drugs. With
increasing budgetary constraints and differing views on or challenges in valuing medicines, governments and payors in many
countries are applying a variety of measures to exert downward price pressure. These measures can include mandatory price controls,
price referencing, therapeutic-reference pricing, increases in mandates, incentives for generic substitution and biosimilar usage and
government-mandated price cuts. In this regard, many countries have health technology assessment organizations that use formal
economic metrics such as cost effectiveness to determine prices, coverage and reimbursement of new therapies; and these
organizations are expanding in established and emerging markets. Many countries also limit coverage to populations narrower than the
regulatory agency approved product label or impose volume caps to limit utilization. We expect that countries will continue to take
aggressive actions to seek to reduce expenditures on drugs. Similarly, fiscal constraints may also affect the extent to which countries
are willing to approve new and innovative therapies and/or allow access to new technologies.
The dynamics and developments discussed above serve to create pressure on the pricing and potential usage of products
throughout the pharmaceutical industry, including VASCEPA. Given the diverse interests in play among payors, biopharmaceutical
manufacturers, policy makers, healthcare providers and independent organizations, if and whether the parties involved can achieve
alignment on the matters discussed above remains unclear and the outcome of any such alignment is difficult to predict. If
reimbursement of VASCEPA is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our ability to
successfully commercialize VASCEPA outside of the United States may be harmed, which could have a material and negative impact
on our overall business.
Government and commercial payor actions outside of the United States have affected and will continue to affect access to
and sales of our products
Outside of the United States, we expect countries will continue to take actions to reduce their drug expenditures. International
reference pricing, or IRP, has been widely used by many countries outside the United States to control costs based on an external
benchmark of a product’s price in other countries. IRP policies can change quickly and frequently and may not reflect differences in
the burden of disease, indications, market structures, or affordability differences across countries or regions. In addition, countries may
refuse to reimburse or may restrict the reimbursed population for a product when their national health technology assessments do not
consider a medicine to demonstrate sufficient clinical benefit beyond existing therapies or to meet certain cost effectiveness
thresholds. Some countries also allow additional rebates or discounts to be negotiated. The outcome of such negotiations can be
uncertain and could become publicly disclosed in the future. Some countries decide on reimbursement between potentially competing
products through national or regional tenders that often result in one product receiving most or all of the sales in that country or
region. Thus, there can be no certainty that we will negotiate satisfactory reimbursement or pricing rates in markets outside of the
United States in a timely manner, or at all, or even if we are successful in obtaining satisfactory coverage and reimbursement, we may
be unsuccessful in sustaining such coverage and reimbursement, or could face challenges as to the timeliness or certainty of payment
by payors to physicians and other providers, which would have a material and adverse impact on our commercialization efforts outside
of the United States. We as an organization have limited experience in navigating the pricing and reimbursement regimes outside of
the United States. The foreign regimes are varied and complex, and this might hinder our effectiveness in establishing satisfactory
pricing, coverage and reimbursement levels in a timely manner or at all.
Factors outside of our control may make it more difficult for VASCEPA to achieve market acceptance by physicians,
patients, healthcare payors and others in the medical community at levels sufficient to achieve commercial success.
We may be unable to increase or maintain market acceptance by physicians, patients, healthcare payors and others in the
medical community, especially in light of generic competition. If VASCEPA does not achieve an adequate level of acceptance, we
may not generate product revenues sufficient to become profitable, or, even if we do achieve profitability, we may not be able to
generate consistent profitability. The degree of market acceptance of VASCEPA for its approved indications and uses or otherwise
will depend on a number of factors, including:
30
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the impact of and outcome of adjudicated, settled and pending patent litigation;
the commercialization and pricing of any current or potential generic versions of VASCEPA;
the perceived efficacy and safety of VASCEPA by prescribing healthcare professionals and patients, as compared to no
treatment and as compared to alternative treatments in various at-risk patient populations;
the prevalence and severity of any side effects and warnings in VASCEPA's approved labeling internationally;
peer review of different elements of data supporting our REDUCE-IT indication over time;
continued review and analysis of the results of our clinical data supporting our REDUCE-IT indication by regulatory
authorities internationally;
our ability to offer VASCEPA for sale at competitive prices;
convenience and ease of administration compared to alternative treatments;
the willingness of the target patient population to try our therapies and of physicians to prescribe these therapies;
the scope, effectiveness and strength of product education, marketing and distribution support, including our sales and
marketing teams;
publicity concerning VASCEPA or competing products;
our ability to continually promote VASCEPA in the United States consistent with U.S. FDA-approved labeling and the
related perception thereof;
sufficient third-party coverage or reimbursement for VASCEPA and its prescribed uses, on-label and off-label;
natural disasters, pandemics, international conflicts and political unrest, all of which could negatively impact our supply
chain or inhibit our ability to promote VASCEPA regionally and which could negatively affect product demand by
creating obstacles for patients to seek treatment and fill prescriptions;
new policies or laws affecting VASCEPA sales, such as state and federal efforts to affect drug pricing and provide or
remove healthcare coverage that includes reimbursement for prescription drugs; and
the actual and perceived efficacy of the product and the prevalence and severity of any side effects and warnings in
VASCEPA’s approved labeling internationally.
Any one or more of the above factors could have a negative impact on our ability to successfully commercialize VASCEPA,
which would in turn have a negative impact on our financial condition.
Additional data or related interpretations that are generated or arise over time related to REDUCE-IT might not meet
expectations, and the perception of REDUCE-IT results and VASCEPA revenue potential may suffer and our stock price may
decline.
Additional data assessment by international regulatory authorities or otherwise could yield additional information to inform
greater understanding of study outcome, which information could impact the perception of VASCEPA. Such data or interpretations
may not be favorable for us. Generally, trial data assessment sufficient to convey a complete picture of trial outcome can take years to
complete and publish. When new data are assessed and released or presented it could exceed, match or may not meet investor
expectations.
In addition, the same set of data can sometimes be interpreted to reach different conclusions, as when Health Canada approved
an indication based on our REDUCE-IT trial data that was different in certain respects than that approved by U.S. FDA and by the EC
in Europe. It is possible the scope of subsequent regulatory approvals, if any, could likewise differ based on the same data. Conflicting
interpretations of data, or new data, could impact public and medical community perception of the totality of the efficacy and safety
data from REDUCE-IT.
Regulatory authorities and medical guideline committees outside of the United States and Europe may consider the following
additional factors, which could lead to evaluations of the totality of the efficacy and safety data from REDUCE-IT that differ from
those of the U.S. FDA or the EC:
•
•
the magnitude of the treatment benefit and related risks on the primary composite endpoint, its components, secondary
endpoints and the primary and secondary risk prevention cohorts;
consideration of which components of the composite or secondary endpoints have the most clinical significance;
31
•
•
•
•
•
•
the consistency of the primary and secondary outcomes;
the consistency of findings across cohorts and important subgroups;
safety considerations and risk/benefit considerations (such as those related to adverse events, including bleeding and atrial
fibrillation generally and in different sub-populations);
consideration of REDUCE-IT results in the context of other clinical studies;
consideration of the cumulative effect of VASCEPA in studied patients; and
study conduct and data quality, integrity and consistency, including aspects such as analyses regarding the placebo used in
REDUCE-IT and other studies of VASCEPA and its impact, if any, on the reliability of clinical data.
If regulatory authorities and medical guideline committees outside of the United States and Europe draw conclusions that differ
from those of the U.S. FDA or the EC, the U.S. FDA or the EC could reevaluate its conclusions as to the safety and efficacy of
VASCEPA. Likewise, if additional data or analyses released from time to time do not meet expectations, the perception of REDUCE-
IT results and the perceived and actual value of VASCEPA may suffer. In these instances our revenue and business could suffer and
our stock price could significantly decline.
Any new clinical data or analysis of existing data from clinical trials involving VASCEPA and similar moderate-to-high
doses of eicosapentaenoic acid or icosapent ethyl could adversely impact public perception of VASCEPA’s clinical profile and the
commercial and regulatory prospects of VASCEPA.
Analysis of data from trials of moderate-to-high doses of VASCEPA and icosapent ethyl, or a similar eicosapentaenoic acid
product, could render new or adverse information on the effects of VASCEPA and its commercial and regulatory prospects.
The Randomized Trial for Evaluation in Secondary Prevention Efficacy of Combination Therapy–Statin and EPA (RESPECT-
EPA; UMIN Clinical Trials Registry number, UMIN000012069) is a study examining Japanese patients with chronic coronary artery
disease receiving LDL-C lowering treatment by statin therapy. Results from this study were presented during the 2022 American
Heart Association Scientific Sessions in November 2022 and were consistent with the evidence from the REDUCE-IT study.
In November 2020, we announced statistically significant topline results from a Phase 3 clinical trial of VASCEPA, conducted
by our partner in China, Eddingpharm (Asia) Macao Commercial Offshore Limited, or Edding, which investigated VASCEPA as a
treatment for patients with very high triglycerides. China’s National Medical Products Administration, or NMPA, approved
VASCEPA as an adjunct to diet to reduce the levels of triglyceride in adult patients suffering from severe hypertriglyceridemia
(≥500mg/dL) and in October 2023 Edding submitted a regulatory filing to the NMPA which, if approved, would secure National
Reimbursement Drug Listing for VASCEPA in Mainland China under the REDUCE-IT indication. Even though such results from
these trials were positive, additional clinical development efforts may be necessary in these markets to demonstrate the effectiveness
of VASCEPA, which may be costly to pursue, or may not produce the desired or expected results.
If the outcomes of any new studies involving VASCEPA and icosapent ethyl, or further analysis of existing trial data, is
unfavorable, the perception of existing clinical results of VASCEPA, such as MARINE or REDUCE-IT, or the perceived clinical
profile and commercial value of VASCEPA and its regulatory status, or perceptions about the potential for VASCEPA, including as a
treatment for broader indications, may suffer. If this occurs our revenue and business could suffer and our stock price could
significantly decline.
Our ORP effected in July 2023 and any similar efforts we may undertake in the future, may not be successful in mitigating
risks and challenges associated with our U.S. business and establishing a more significant international footprint.
If we are not successful in our efforts to continue to market and sell VASCEPA in the United States, including following our
ORP announced in July 2023 which eliminated all remaining sales force positions in the United States, with the managed care and
trade organization remaining to support U.S. commercial efforts, and approximately 30% of non-sales positions, our anticipated
revenues or our expenses could be materially adversely affected, and we may not maintain profitability in the United States or obtain
profitability internationally. Further, we may need to cut back on research and development activities or we may need to implement
other cost-containment measures, or we may need to raise additional funding that could result in substantial dilution or impose
considerable restrictions on our business.
32
The manufacture, supply and commercialization, including promotional activities, of VASCEPA is subject to regulatory
scrutiny.
The Federal Food, Drug, and Cosmetic Act, or FDCA, has been interpreted by the U.S. FDA and the U.S. government to make
it illegal for pharmaceutical companies to promote their U.S. FDA-approved products for uses that have not been approved by the U.S.
FDA. Companies that market drugs for off-label uses or indications have been subject to related costly litigation, criminal penalties
and civil liability under the FDCA and the FCA. However, case law over the last several years has called into question the extent to
which the U.S. government, including the U.S. FDA, can, and is willing to seek to, prevent truthful and non-misleading speech related
to off-label uses of U.S. FDA-approved products such as VASCEPA.
As a result of a lawsuit that we and a group of independent physicians filed against the U.S. FDA in 2015, we were granted
preliminary relief through the court’s declaratory judgment that confirmed we may engage in truthful and non-misleading speech
promoting the off-label use of VASCEPA to healthcare professionals, i.e., to treat patients with persistently high triglycerides, and that
such speech may not form the basis of a misbranding action under the FDCA. The U.S. FDA did not appeal the court’s ruling and
ultimately settled this litigation under terms by which the U.S. FDA and the U.S. government agreed to be bound by the conclusions
from the federal court order that we may engage in truthful and non-misleading speech promoting the off-label use of VASCEPA and
that certain statements and disclosures that we proposed to make to healthcare professionals were truthful and non-misleading. As part
of the settlement, given, as expressed in the court’s opinion, that the dynamic nature of science and medicine is that knowledge is
ever-advancing and that a statement that is fair and balanced one day may become incomplete or otherwise misleading in the future as
new studies are done and new data is acquired, we agreed that we bear the responsibility to ensure that our communications regarding
off-label use of VASCEPA remain truthful and non-misleading, consistent with the federal court ruling.
While we believe we are now permitted under applicable law to more broadly promote VASCEPA, the U.S. FDA-approved
labeling for VASCEPA did not change as a result of this litigation and settlement, and neither government nor other third-party
coverage or reimbursement to pay for the off-label use of VASCEPA promoted under the court declaration was required.
Promotional activities in the biotechnology and pharmaceutical industries generally are subject to considerable regulatory
scrutiny. For example, we were recently the subject of two civil investigative demands, or CID, from the U.S. Federal Trade
commission and a subpoena from the New York Attorney General, or the Investigations. Although we are cooperating with the
government and completed document product in mid-2023, we cannot predict when these investigations will be resolved, the outcome
of the investigations or their potential impact on our business.
In addition, we may be subject to enhanced scrutiny to ensure that our promotion remains within the scope covered by the
settlement. Under the settlement, we remain responsible for ensuring our speech is truthful and non-misleading, which is subject to a
considerable amount of judgment. We, the U.S. FDA, the U.S. government, our competitors and other interested parties may not agree
on the truthfulness and non-misleading nature of our promotional materials. Federal and state governments or agencies may also seek
to find other means to prevent our promotion of unapproved truthful and non-misleading information about VASCEPA.
If our promotional activities or other operations are found to be in violation of any law or governmental regulation through
existing or new interpretations or as a result of the findings of the Investigations, we may be subject to prolonged litigation, penalties,
including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations. Also, if governmental
parties or our competitors view our claims as misleading or false, we could be subject to liability based on fair competition-based
statutes, such as the Lanham Act. Any allegations that our promotional activities are not truthful or misleading, even allegations
without merit, could cause reputational harm and adversely affect our ability to operate our business and our results of operations.
We may not be able to compete effectively against our competitors’ pharmaceutical product, including generic products. In
addition, we face competition from omega-3 fatty acids that are marketed by other companies as non-prescription dietary
supplements, subjecting us to non-prescription competition and consumer substitution.
The biotechnology and pharmaceutical industries are highly competitive. There are many pharmaceutical companies,
biotechnology companies, public and private universities and research organizations actively engaged in the research and development
of products that may be similar to our product. We expect that the number of companies seeking to develop products and therapies
similar to VASCEPA may increase. Many of these and other existing or potential competitors may have substantially greater financial,
technical and human resources than we do and may be better equipped to develop, manufacture and market products. These
companies may develop and introduce products and processes competitive with, more efficient than or superior to ours. In addition,
other technologies or products may be developed that have an entirely different approach or means of accomplishing the intended
purposes of our products, which might render our technology and products noncompetitive or obsolete.
Our competitors include large, well-established pharmaceutical and generic companies, specialty and generic pharmaceutical
sales and marketing companies, and specialized cardiovascular treatment companies. With generic versions of VASCEPA launched in
the U.S. by companies such as Hikma, Dr. Reddy's, Apotex and Teva, all of which have greater resources than us, and with the
potential for further generic versions being launched possibly in the near term, it may not be viable for us to continue to invest in
33
market education to grow the market and our ability to maintain current promotional efforts and attract favorable commercial terms in
several aspects of our business will likely be adversely affected as we face increased generic competition, or if we launch our own
generic version of VASCEPA.
We also face considerable competition in the United States from branded products and generic versions of competing branded
products and formulations, including Lovaza®, Tricor,® Trilipix® and Niaspan®, all of which have multiple generic competing
versions. We compete with these drugs in our U.S. FDA-approved indicated uses, even though such products do not have U.S. FDA
approval to reduce CV risk on top of statin therapy.
For a more detailed discussion of our competitors, and potential competing drugs in development, in the United States and the
rest of the world, see our discussion above in Item 1. Business - Competition.
Further, drugs in development that are expected to compete with VASCEPA if they are ultimately approved and
commercialized, and the perceived safety and efficacy of such commercialized drugs or drug products, could have a negative impact
on the perceived safety and efficacy of VASCEPA.
Based on prior communications from the U.S. FDA, including communications in connection with its review of the ANCHOR
indication for VASCEPA, it is our understanding that the U.S. FDA is not prepared to approve any therapy for treatment of CV risk
based on biomarker modification without cardiovascular outcomes study data, with the potential exception of therapies which lower
LDL-cholesterol, depending on the circumstances. In particular, it is our understanding that the U.S. FDA is not prepared to approve
any therapy based primarily on data demonstrating lowering of triglyceride levels. In our view, this position from the U.S. FDA did
not change based on the REDUCE-IT study particularly in light of significant independence of the positive benefit demonstrated in the
REDUCE-IT study from triglyceride levels and benefit from the REDUCE-IT study supporting that the positive effects of VASCEPA
are unique to VASCEPA and extend beyond triglyceride reduction. If the U.S. FDA were to change this position, it could potentially
have a negative impact on us by making it easier for other products to achieve a CV risk reduction indication without the need in
advance to conduct a long and expensive CV outcomes study.
VASCEPA also faces competition from dietary supplement manufacturers marketing omega-3 products as nutritional
supplements. Such products are classified as food, not as prescription drugs or over-the-counter drugs, by the U.S. FDA and other
regulators. Some of the promoters of such products have greater resources than us and are not restricted to the same standards as are
prescription drugs with respect to promotional claims or manufacturing quality, consistency and subsequent product stability.
Although we have taken successful legal action against supplement manufacturers attempting to use the REDUCE-IT results to
promote their products, we cannot be sure physicians and pharmacists will view the U.S. FDA-approved, prescription-only status, and
EPA-only purity and stability of VASCEPA or U.S. FDA’s stringent regulatory oversight, as significant advantages versus omega-3
dietary supplements regardless of clinical study results and other scientific data.
Consistent with the competitive landscape in the United States, our competitors outside of the United States include large, well-
established and experienced pharmaceutical companies, specialty and generic pharmaceutical companies, marketing companies, and
specialized cardiovascular treatment companies and we have limited experience as a company self-commercializing a product outside
of the United States.
Recent CV outcomes trials and meta-analyses with low and high dose omega-3 fatty acid mixtures containing DHA have not
shown substantial benefit in patients receiving contemporary medical therapy, including statins. Due to failed low dose omega-3 CV
outcomes trials, the European regulatory authorities have concluded that omega-3 fatty acid medicines (specifically
Lovaza®/Omacor®) at a dose of 1-gram per day are not effective in preventing further events for patients who have had a heart attack.
The STRENGTH trial of an omega-3 mixture studied at 4-grams per day also failed to demonstrate cardiovascular benefit.
As generic competitors seek to compete with VASCEPA in the United States and elsewhere we could face additional
challenges to our patents and additional patent litigation.
We could face patent litigation related to the patents filed in the Orange Book related to the REDUCE-IT study, particularly
given that the three-year period of exclusivity under the Hatch-Waxman Amendments expired on December 13, 2022, which
exclusivity would have precluded the U.S. FDA from approving a marketing application for an ANDA for a product candidate that the
U.S. FDA viewed as having the same conditions of approval as VASCEPA.
We may also face challenges to the validity of our patents through a procedure known as inter partes review. Inter partes review
is a trial proceeding conducted through the Patent Trial and Appeal Board of the USPTO. Such a proceeding could be introduced
against us within the statutory one-year window triggered by service of a complaint for infringement related to an ANDA filing or at
any time by an entity not served with a complaint. Such proceedings may review the patentability of one or more claims in a patent on
specified substantive grounds such as allegations that a claim is obvious on the basis of certain prior art.
34
We cannot predict the outcome of the pending lawsuits, any appeals, or any subsequently filed lawsuits or inter partes review.
Generic versions of VASCEPA made available in the market, even if based on a MARINE indication, are often used to fill a
prescription for any intended use of the drug. If any approved ANDA filers are able to supply the product in significant commercial
quantities, generic companies could introduce generic versions of VASCEPA in the market, as Hikma, Dr. Reddy's, Apotex and Teva
have done. Although any such introduction of a generic version of VASCEPA would also be subject to any litigation settlement terms
and patent infringement claims (including any new claims and those that may then be subject to an appeal), pursuing such litigation
may be prohibitively costly or could put a substantial constraint on our resources.
The generic market entries beginning in 2020 have limited our U.S. sales, and had an adverse impact on our business and results
of operations. In addition, generic market entry, whether limited to its approved indication or not, can create market disruption which
leads to an overall slowing of market growth regardless of whether the net price of the generic entry is higher or lower than the net
price of the branded drug. Such disruption includes potential stock shortages of the generic market entry at retail pharmacies and
wholesalers which can cause filling of prescriptions for patients to be delayed or abandoned. Sponsors of generic entries typically do
not fund market education initiatives to help healthcare professionals and at-risk patients learn about a new drug, which, particularly
for a recently launched drug, can potentially limit overall growth. And certain states impose restrictions on the promotion of branded
drugs, particularly if the generic market entry is less expensive than the branded drug. While some companies with generic
competition elect to launch an authorized generic form of the drug to counter the perception, real or imagined, that generics are less
expensive, if launched, an authorized generic is typically aligned with reduction or elimination of promotion of the associated branded
drug, thus limiting the extent of market growth and potentially contracting the overall size of the realized market penetration. While an
authorized generic could be profitable, the market opportunity for growth from an authorized generic is likely less than from
promotion of a branded drug, and as such we have not launched an authorized generic version of VASCEPA to date, but may elect to
do so in the future.
The active pharmaceutical ingredient in VASCEPA is difficult and time consuming to manufacture. It often requires
considerable advanced planning and long-term financial commitments to ensure sufficient capacity is available when needed.
Certain generic competitors filed lawsuits against us claiming we have engaged in anticompetitive practices related to our building
of adequate supply for our needs, and government agencies are investigating our business as it relates to the supply of the active
pharmaceutical ingredient in VASCEPA. Consumer lawsuits with similar allegations have also been filed. This dynamic and
resulting regulatory scrutiny could be costly for us and could negatively and materially interfere with our business plans.
The active pharmaceutical ingredient in VASCEPA is difficult and time consuming to manufacture, and often requires
considerable advanced planning and necessitates long-term financial commitments to ensure sufficient capacity is available when
needed. We have invested over a decade of resources and expenses to develop active pharmaceutical ingredient, or API, with our
third-party suppliers, and to otherwise build our supply chain, improve our technical knowhow, establish manufacturing processes and
obtain related regulatory approvals to help enable our suppliers to supply our clinical and commercial needs globally. Despite such
efforts, the stability of the supply chain is largely out of our control and is subject to market and supply volatility and the actions of
third parties. Any disruption to the supply chain, including the manufacturing processes and availability of API, would be disruptive to
our business and would have a negative impact on our results of operations.
In April 2021, Dr. Reddy’s filed a complaint against us in the United States District Court District of New Jersey (case no. 2:21-
cv-10309) alleging various antitrust violations stemming from alleged anticompetitive practices related to the supply of API of
VASCEPA. Damages sought include recovery for alleged economic harm to Dr. Reddy’s, payors, and consumers, treble damages and
other costs and fees. Injunctive relief against the alleged violative activities is also being sought by Dr. Reddy’s. Consumer group
lawsuits followed claiming similar violations and alleging that such alleged violations resulted in higher prices to consumers. In
addition, in February 2023, Hikma filed a complaint against us in the United States District Court District of New Jersey (case no.
3:23-cv-01016) making allegations consistent with the Dr. Reddy's complaint. Such litigation can be lengthy, costly and could
materially affect and disrupt our business.
VASCEPA is a prescription-only omega-3 fatty acid product. Omega-3 fatty acids are also marketed by other companies as
non-prescription dietary supplements. As a result, in the U.S., VASCEPA is subject to non-prescription competition and consumer
substitution.
Our only product, VASCEPA, is a prescription-only form of EPA, an omega-3 fatty acid in ethyl ester form. Mixtures of
omega-3 fatty acids in triglyceride form are naturally occurring substances contained in various foods, including fatty fish. Omega-3
fatty acids are marketed by others in a number of chemical forms as non-prescription dietary supplements. We cannot be sure
physicians and other providers will view the U.S. FDA approval, pharmaceutical grade purity and proven efficacy and safety of
VASCEPA as having a superior therapeutic profile to omega-3 fatty acid dietary supplements, which are subject to less stringent
regulatory oversight.
35
Also, for over a decade, subject to certain limitations, the U.S. FDA has expressly permitted dietary supplement manufacturers
that sell supplements containing the omega-3 fatty acids EPA and/or DHA to make the following qualified health claim directly to
consumers: Supportive but not conclusive research shows that consumption of EPA and DHA omega-3 fatty acids may reduce the risk
of coronary heart disease. Such companies are not, however, permitted, based on U.S. FDA enforcement activity, to make claims that
suggest or imply treatment of cardiovascular disease.
In addition, the net price of VASCEPA to patients even after insurance reimbursement and offered discounts could be
significantly higher than the prices of commercially available omega-3 fatty acids marketed by other companies as dietary
supplements (through the lack of coverage by insurers or otherwise). Physicians and pharmacists may recommend these dietary
supplement alternatives instead of writing or filling prescriptions for VASCEPA or patients may elect on their own to take
commercially available omega-3 fatty acids. Also, insurance plans may increasingly impose policies that directly or indirectly favor
supplement use over VASCEPA. VASCEPA pricing might not be sufficient for healthcare providers or patients to elect VASCEPA
over alternative treatments that may be perceived as less expense or more convenient to access. If healthcare providers or patients
favor dietary supplements over prescribing VASCEPA, we may be constrained in how we price VASCEPA or VASCEPA’s market
acceptance may be less than expected, which would have a negative impact on our revenues and results of operations.
Our products and marketing efforts are subject to extensive post-approval government regulation.
Once a product candidate receives U.S. FDA marketing approval, numerous post-approval requirements apply. Among other
things, the holder of an approved NDA is subject to periodic and other monitoring and reporting obligations enforced by the U.S. FDA
and other regulatory bodies, including obligations to monitor and report adverse events and instances of the failure of a product to
meet the specifications in the approved application. Application holders must also submit advertising and other promotional material
to regulatory authorities and report on ongoing clinical trials.
With respect to sales and marketing activities, advertising and promotional materials must comply with U.S. FDA rules in
addition to other applicable federal and local laws in the United States and in other countries. The result of our litigation and
settlement with the U.S. FDA, as discussed above, may cause the government to scrutinize our promotional efforts or otherwise
monitor our business more closely. Industry-sponsored scientific and educational activities also must comply with U.S. FDA and other
requirements. In the United States, the distribution of product samples to physicians must comply with the requirements of the U.S.
Prescription Drug Marketing Act. Manufacturing facilities remain subject to U.S. FDA inspection and must continue to adhere to the
U.S. FDA’s pharmaceutical current good manufacturing practice requirements, or cGMPs. Application holders must obtain U.S. FDA
approval for product and manufacturing changes, depending on the nature of the change. Drug manufacturers and other entities
involved in the manufacture and distribution of approved drugs are also subject to periodic unannounced inspections by the U.S. FDA
and state agencies for compliance with cGMP requirements. For certain commercial prescription drug products, manufacturers and
other parties involved in the supply chain must also meet chain of distribution requirements and build electronic, interoperable
systems for product tracking and tracing and for notifying the FDA of counterfeit, diverted, stolen and intentionally adulterated
products or other products that are otherwise unfit for distribution in the United States. In addition, under the Food and Drug Omnibus
Reform Act of 2022, or FDORA, sponsors of approved drugs and biologics must provide six months’ notice to the FDA of any
changes in marketing status, such as the withdrawal of a drug, and failure to do so could result in the FDA placing the product on a list
of discontinued products, which would revoke the product’s ability to be marketed.
We participate in the U.S. Medicaid Drug Rebate Program, the Federal Supply Schedule, or FSS, of the U.S. Department of
Veterans Affairs, or the VA, and other government drug programs, and, accordingly, are subject to complex laws and regulations
regarding reporting and payment obligations. We must also comply with requirements to collect and report adverse events and product
complaints associated with our products. Our activities are also subject to U.S. federal and state consumer protection and unfair
competition laws, non-compliance with which could subject us to significant liability. Similar requirements exist in many of these
areas in other countries.
Depending on the circumstances, failure to meet post-approval requirements can result in criminal prosecution, fines or other
penalties, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing
product approvals, or refusal to allow us to enter into supply contracts, including government contracts. We may also be held
responsible for the non-compliance of our partners, over whom we have limited or no control. Newly discovered or developed safety
or effectiveness data may require changes to a drug’s approved labeling and marketing, including the addition of new warnings and
contraindications, and also may require the implementation of other risk management measures. Adverse regulatory action, whether
pre- or post-approval, can potentially lead to product liability claims and increase our product liability exposure. We must also
compete against other products in qualifying for coverage and reimbursement under applicable third-party payment and insurance
programs.
In addition, all of the above factors may also apply to any regulatory approval for VASCEPA obtained in territories outside the
United States. In Europe, for example, restrictions regarding off-label promotion are in some ways more stringent than in the United
36
States, including restrictions covering certain communications with shareholders. Given our inexperience with marketing and
commercializing products outside the United States, in certain territories we may need to rely on third parties, such as our partners in
Canada, China and the Middle East, to assist us in dealing with any such issues and we will have limited or no control over such
partners.
The success of our product candidates, if approved, depends on the availability of coverage and adequate reimbursement
from third-party payors. We cannot be sure that coverage and reimbursement will be available for, or accurately estimate the
potential revenue from, our product candidates or assure that coverage and reimbursement will be available for any product that
we may develop.
Our ability to commercialize VASCEPA or any future products successfully, alone or with collaborators, will depend in part on
the extent to which coverage and reimbursement for the products will be available from government and health administration
authorities, private health insurers and other third-party payors. The continuing efforts of the U.S. and foreign governments, insurance
companies, managed care organizations and other payors of healthcare services to contain or reduce healthcare costs may adversely
affect our ability to set prices for our products which we believe are fair, and our ability to generate revenues and achieve and maintain
profitability. For example, the IRA recently was enacted in the United States in an effort to manage certain drug prices, which includes
provisions such as a $2,000 out-of-pocket cap for Medicare Part D beneficiaries, the imposition of new manufacturer financial liability
on most drugs in Medicare Part D, permitting the U.S. government to negotiate Medicare Part B and Part D pricing for certain high-
cost drugs and biologics without generic or biosimilar competition, requiring companies to pay rebates to Medicare for drug prices
that increase faster than inflation, and delay until January 1, 2032 the implementation of the HHS rebate rule that would have limited
the fees that pharmacy benefit managers can charge. This could have an adverse impact on our future revenues. Refer to Item 1.
Business - United States Healthcare Reform and Legislation and Item 1. Business - Pharmaceutical Pricing and Reimbursement for
further details.
In addition, it is time-consuming and expensive for us to go through the process of seeking coverage and reimbursement from
Medicare and private payors. Our products may not be considered cost effective, and government and third-party private health
insurance coverage and reimbursement may not be available to patients for any of our future products or sufficient to allow us to sell
our products on a competitive and profitable basis. Our results of operations could be adversely affected by ACA and by other
healthcare reforms that may be enacted or adopted in the future. In addition, increasing emphasis on managed care in the United States
will continue to put pressure on the pricing of pharmaceutical products. Proposals are being considered to expand the use of dietary
supplements in addition to or in place of drugs in government and private payor plans. In addition, cost control initiatives could
decrease the price that we or any potential collaborators could receive for any of our future products and could adversely affect our
profitability.
These and similar regulatory dynamics, including the entry of generic versions of VASCEPA into the market, and the potential
for additional generic versions in the near term, can affect our ability to commercialize VASCEPA on commercially reasonable terms
and limit the commercial value of VASCEPA.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or other
governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines,
which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
We participate in the Medicaid Drug Rebate program, the 340B drug pricing program, and the VA’s FSS pricing program.
Under the Medicaid Drug Rebate program, we are required to pay a rebate to each state Medicaid program for our covered outpatient
drugs that are dispensed to Medicaid beneficiaries and paid for by a state Medicaid program as a condition of having federal funds
being made available to the states for our drugs under Medicaid and Medicare Part D. Those rebates are based on pricing data reported
by us on a monthly and quarterly basis to CMS, the federal agency that administers the Medicaid Drug Rebate program. These data
include the average manufacturer price and, in the case of innovator products, the best price for each drug which, in general,
represents the lowest price available from the manufacturer to any commercial entity in the U.S. in any pricing structure, calculated to
include all sales and associated rebates, discounts and other price concessions. Our failure to comply with these price reporting and
rebate payment obligations could negatively impact our financial results.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or
collectively the ACA, made significant changes to the Medicaid Drug Rebate program. CMS issued a final regulation, which became
effective in 2016, to implement the changes to the Medicaid Drug Rebate program under the ACA. The issuance of the final
regulation has increased and will continue to increase our costs and the complexity of compliance, has been and will continue to be
time-consuming to implement, and could have a material adverse effect on our results of operations, particularly if CMS challenges
the approach we take in our implementation of the final regulation.
Federal law requires that any company that participates in the Medicaid Drug Rebate program also participate in the Public
Health Service’s 340B drug pricing program in order for federal funds to be available for the manufacturer’s drugs under Medicaid
37
and Medicare Part B. The 340B program requires participating manufacturers to agree to charge statutorily defined covered entities no
more than the 340B “ceiling price” for the manufacturer’s covered outpatient drugs. These 340B covered entities include a variety of
community health clinics and other entities that receive health services grants from the Public Health Service, as well as hospitals that
serve a disproportionate share of low-income patients. The 340B ceiling price is calculated using a statutory formula based on the
average manufacturer price and Medicaid rebate amount for the covered outpatient drug as calculated under the Medicaid Drug Rebate
program, and in general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price
calculation and discount requirement. Any additional future changes to the definition of average manufacturer price and the Medicaid
rebate amount under the ACA, other legislation, or in regulation could affect our 340B ceiling price calculations and negatively
impact our results of operations.
The Health Resources and Services Administration, or HRSA, which administers the 340B program, issued a final regulation
regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and
intentionally overcharge covered entities, which became effective on January 1, 2019. We also are required to report our 340B ceiling
prices to HRSA on a quarterly basis. Implementation of the civil monetary penalties regulation and the issuance of any other final
regulations and guidance could affect our obligations under the 340B program in ways we cannot anticipate. In addition, legislation
may be introduced that, if passed, would further expand the 340B program to additional covered entities or would require participating
manufacturers to agree to provide 340B discounted pricing on drugs used in the inpatient setting.
Pricing and rebate calculations vary across products and programs, are complex, and are often subject to interpretation by us,
governmental or regulatory agencies and the courts. In the case of our Medicaid pricing data, if we become aware that our reporting
for a prior quarter was incorrect, or has changed as a result of recalculation of the pricing data, we are obligated to resubmit the
corrected data for up to three years after those data originally were due. Such restatements and recalculations increase our costs for
complying with the laws and regulations governing the Medicaid Drug Rebate program and could result in an overage or underage in
our rebate liability for past quarters. Price recalculations also may affect the ceiling price at which we are required to offer our
products under the 340B program or could require us to issue refunds to 340B covered entities.
Significant civil monetary penalties can be applied if we are found to have knowingly submitted any false pricing information to
CMS, or if we fail to submit the required price data on a timely basis. Such conduct also could be grounds for CMS to terminate our
Medicaid drug rebate agreement, in which case federal payments may not be available under Medicaid or Medicare Part D for our
covered outpatient drugs. Significant civil monetary penalties also can be applied if we are found to have knowingly and intentionally
charged 340B covered entities more than the statutorily mandated ceiling price. We cannot assure you that our submissions will not be
found by CMS or HRSA to be incomplete or incorrect.
In order to be eligible to have our products paid for with federal funds under the Medicaid and Medicare Part D programs and
purchased by certain federal agencies and grantees, as noted above, we participate in the VA’s FSS pricing program. As part of this
program, we are obligated to make our products available for procurement on an FSS contract under which we must comply with
standard government terms and conditions and charge a price that is no higher than the statutory Federal Ceiling Price, or FCP, to four
federal agencies (the VA, U.S. Department of Defense, or DOD, Public Health Service, and the U.S. Coast Guard). The FCP is based
on the Non-Federal Average Manufacturer Price, or Non-FAMP, which we calculate and report to the VA on a quarterly and annual
basis. Pursuant to applicable law, knowing provision of false information in connection with a Non-FAMP filing can subject a
manufacturer to significant penalties for each item of false information. These obligations also contain extensive disclosure and
certification requirements.
We also participate in the Tricare Retail Pharmacy program, under which we pay quarterly rebates on utilization of innovator
products that are dispensed through the Tricare Retail Pharmacy network to Tricare beneficiaries. The rebates are calculated as the
difference between the annual Non-FAMP and FCP. We are required to list our covered products on a Tricare Agreement in order for
these products to be eligible for DOD formulary inclusion. If we overcharge the government in connection with our FSS contract or
Tricare Agreement, whether due to a misstated FCP or otherwise, we are required to refund the difference to the government. Failure
to make necessary disclosures and/or to identify contract overcharges can result in allegations against us under the FCA and other laws
and regulations. Unexpected refunds to the government, and responding to a government investigation or enforcement action, would
be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations
and growth prospects.
38
Changes in reimbursement procedures by government and other third-party payors may limit our ability to market and sell
our approved drugs. These changes could have a material adverse effect on our business and financial condition.
In the U.S., Europe and other regions globally, sales of pharmaceutical drugs are dependent, in part, on the availability of
reimbursement to the consumer from third-party payors, such as government and private insurance plans. Third-party payors decide
which products and services they will cover and the conditions for such coverage. Third-party payors also establish reimbursement
rates for those products and services. Increasingly, third-party payors are challenging the prices charged for medical products and
services. Some third-party payor benefit packages restrict reimbursement, charge copayments to patients, or do not provide coverage
for specific drugs, uses, or drug classes.
In addition, certain U.S.-based healthcare providers are moving toward a managed care system in which such providers contract
to provide comprehensive healthcare services, including prescription drugs, for a fixed cost per person. We are unable to predict the
reimbursement policies employed by third-party healthcare payors which may not be favorable to us.
We expect to experience pricing and reimbursement pressures in connection with the sale of our products due to the trend
toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative and executive
proposals, as well as the availability of generic versions of VASCEPA. In addition, we may confront limitations in, or exclusions
from, insurance coverage for our products, particularly as generic competition intensifies. If we fail to successfully secure and
maintain reimbursement coverage for our approved drugs or are significantly delayed in doing so, we may have difficulty achieving
market acceptance of our approved drugs and investigational drug candidates for which we obtain approval, and our business may be
harmed. Congress has enacted healthcare reform and may enact further reform, which could adversely affect the pharmaceutical
industry as a whole, and therefore could have a material adverse effect on our business.
Ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on our business and
results of operations.
In the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes
regarding the healthcare system that could, among other things, prevent or delay marketing approval of our product candidates, restrict
or regulate post-approval activities and affect our ability to profitably sell any products for which we obtain marketing approval.
Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for
example: (i) changes to our manufacturing arrangements; (ii) additions or modifications to product labeling; (iii) the recall or
discontinuation of our products; or (iv) additional record-keeping requirements. If any such changes were to be imposed, they could
adversely affect the operation of our business. Refer to Item 1. Business - Current and Future Legislation and Item 1. Business -
United States Healthcare Reform and Legislation.
There has been increasing legislative and enforcement interest in the United States with respect to drug pricing
practices. Specifically, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their
marketed products, which has resulted in several U.S. Congressional inquiries and proposed and enacted federal and state legislation
designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, and
review the relationship between pricing and manufacturer patient programs.
The continuing efforts of the government, insurance companies, managed care organizations and other payers of healthcare
services to contain or reduce costs of healthcare may adversely affect:
•
•
•
•
•
the demand for any of our product candidates, if approved;
the ability to set a price that we believe is fair for any of our product candidates, if approved;
our ability to generate revenues and achieve or maintain profitability;
the level of taxes that we are required to pay; and
the availability of capital.
There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels
directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. The enactment and
implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain
profitability, or commercialize our product. Such reforms could have an adverse effect on anticipated revenue from product candidates
that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and
ability to develop product candidates.
39
Failure to comply with health and data protection laws and regulations could lead to government enforcement actions
(which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect our
operating results and business.
We and any potential collaborators may be subject to federal, state, and foreign data protection laws and regulations (i.e., laws
and regulations that address privacy and data security). In the United States, numerous federal and state laws and regulations,
including federal health information privacy laws, state data breach notification laws, state health information privacy laws, and
federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), that govern the collection, use,
disclosure and protection of health-related and other personal information could apply to our operations or the operations of our
collaborators. In addition, we may obtain health information from third parties (including research institutions from which we obtain
clinical trial data) that are subject to privacy and security requirements under the federal Health Insurance Portability and
Accountability Act of 1996, or HIPAA. Although we are not directly subject to HIPAA – other than with respect to providing certain
employee benefits – we could potentially be subject to criminal penalties if we, our affiliates, or our agents knowingly obtain, use, or
disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or
permitted by HIPAA. In addition, state laws govern the privacy and security of health information in specified circumstances, many of
which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Compliance with U.S. and international data protection laws and regulations could require us to take on more onerous
obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in
certain jurisdictions. Failure to comply with these laws and regulations could result in government enforcement actions (which could
include civil, criminal and administrative penalties), private litigation, and/or adverse publicity and could negatively affect our
operating results and business. Moreover, clinical trial subjects, employees and other individuals about whom we or our potential
collaborators obtain personal information, as well as the providers who share this information with us, may limit our ability to collect,
use and disclose the information. Claims that we have violated individuals’ privacy rights, failed to comply with data protection laws,
or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could
result in adverse publicity that could harm our operating results and business.
European data collection is governed by restrictive regulations governing the use, processing and cross-border transfer of
personal information.
We are subject to European data protection regulations, where we collect and use personal data relating to Europe, including in
relation to our personnel in the European Economic Area, or the EEA, or in the United Kingdom, or the UK. This regulatory regime
includes the GDPR, as well as other national data protection legislation in force in relevant EU and EEA member states and the UK
(including the UK Data Protection Act 2018 in the UK), which govern the collection, use, storage, disclosure, transfer, or other
processing of personal data (including health data processed in the context of clinical trials): (i) regarding individuals in the EU, EEA
and UK; and/or (ii) carried out in the context of the activities of our establishment in any EU and EEA member state or the UK.
Currently, the EU GDPR and UK GDPR remain largely aligned. The GDPR imposes several requirements on companies that process
personal data, including requirements relating to the processing of health and other sensitive data, legal basis for processing personal
data which may include obtaining the consent of the individuals to whom the personal data relates, providing detailed information to
individuals about how their personal data is used, notification of personal data breaches to data protection authorities and individuals,
and implementing safeguards to protect the security and confidentiality of the personal data. The GDPR also imposes strict rules on
the transfer of personal data out of the EEA and UK to third countries, including the United States in certain circumstances, unless a
derogation exists or a valid GDPR transfer mechanism (e.g., the European Commission approved Standard Contractual Clauses, or
SCCs, and the UK International Data Transfer Agreement/Addendum, or UK IDTA) have been put in place. Where relying on the
SCCs /UK IDTA for data transfers, we may also be required to carry out transfer impact assessments to assess whether the recipient is
subject to local laws which allow public authority access to personal data. Any inability to transfer personal data from the EEA and
UK to the United States in compliance with data protection laws may impede our business operations and may adversely affect our
business and financial position.
The UK Government has introduced a Data Protection and Digital Information Bill, or Data Reform Bill, into the UK legislative
process to reform the UK’s data protection regime, and if passed, the final version of the Data Reform Bill may have the effect of
further altering the similarities between the UK and EEA data protection regimes and threaten the UK international transfers adequacy
decision from the European Commission, which may lead to additional compliance costs for us and could increase our overall risk. It
is unclear how UK data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from
the UK will be regulated in the long term.
Failure to comply with the requirements of the GDPR and related national data protection laws of the EEA Member States or
the UK may result in substantial fines of up to €20 million or 4% of a company’s global annual revenues for the preceding financial
year, whichever is higher. Moreover, the GDPR grants data subjects and consumer associations the right to claim material and non-
material damages resulting from infringement of the GDPR. The GDPR imposes additional responsibility and liability in relation to
personal data that we process, where such processing is subject to the GDPR and we may be required to put in place additional
40
mechanisms ensuring compliance with these and/or new data protection rules. This may be costly, onerous and adversely affect our
business, financial condition, prospects and results of operations. Although the EU GDPR and the UK GDPR currently impose
substantially similar obligations, it is possible that over time the UK GDPR could become less aligned with the EU GDPR. In
addition, EEA Member States have adopted national laws to supplement the EU GDPR, which may partially deviate from the EU
GDPR, and the competent authorities in the EEA Member States may interpret EU GDPR obligations slightly differently from country
to country, such that we do not expect to operate in a uniform legal landscape in the EEA and UK with respect to data protection
regulations. The potential of the respective provisions and enforcement of the EU GDPR and UK GDPR further diverging in the
future creates additional regulatory challenges and uncertainties for us. The lack of clarity on future UK laws and regulations and their
interaction with EU laws and regulations could add legal risk, uncertainty, complexity and compliance cost to the handling of
European personal data and our privacy and data security compliance programs could require us to amend our processes and
procedures to implement different compliance measures for the UK and the EEA.
The U.S. FDA, other regulatory agencies and industry organizations strictly regulate the promotional claims that may be
made about prescription products and promotional efforts such as speaker programs. If we or our partners are found to have
improperly promoted uses, efficacy or safety of VASCEPA or otherwise are found to have violated the law or applicable
regulations, we may become subject to significant fines and other liability. The government may seek to find means to prevent our
promotion of truthful and non-misleading information beyond the current court ruling and litigation settlement or seek to find
violations of other laws or regulations in connection with the promotional efforts we undertake on our own or through third
parties.
The U.S. FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription
products. In particular, in general, the U.S. government’s position has been that a product may not be promoted for uses that are not
approved by the U.S. FDA as reflected in the product’s approved labeling. The Federal government has levied large civil and criminal
fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion.
The U.S. FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified
promotional conduct is changed or curtailed. Even though we received U.S. FDA marketing approval for VASCEPA for the MARINE
indication and for the REDUCE-IT indication, and our settlement with the U.S. FDA affords us a degree of protection for other
promotional efforts, physicians may still prescribe VASCEPA to their patients for use in the treatment of conditions that are not
included as part of the indication statement in our U.S. FDA-approved VASCEPA label or our settlement. If we are found to have
promoted VASCEPA outside the terms of the litigation settlement or in violation of what federal or state government may determine
to be acceptable, we may become subject to significant government fines and other related liability, such as under the FDCA, the
FCA, or other theories of liability. Government may also seek to hold us responsible for the non-compliance of our former co-
promotion partner, Kowa America, or our commercialization partners outside the United States or other third-parties that we retain to
help us implement our business plan.
In addition, incentives exist under applicable laws that encourage competitors, employees and physicians to report violations of
rules governing promotional activities for pharmaceutical products. These incentives could lead to so-called “whistleblower lawsuits”
as part of which such persons seek to collect a portion of moneys allegedly overbilled to government agencies due to, for example,
promotion of pharmaceutical products beyond labeled claims. These incentives could also lead to suits that we have mischaracterized
a competitor’s product in the marketplace and we may, as a result, be sued for alleged damages to our competitors. Such lawsuits,
whether with or without merit, are typically time consuming and costly to defend. Such suits may also result in related shareholder
lawsuits, which are also costly to defend.
We may not be successful in developing and receiving regulatory approval for VASCEPA in other jurisdictions or marketing
future products if we cannot meet the extensive regulatory requirements of regulatory agencies such as for quality, safety, efficacy
and data privacy.
The success of our research and development efforts is dependent in part upon our ability, and the ability of our partners or
potential partners, to meet regulatory requirements in the jurisdictions where we or our partners or potential partners ultimately intend
to sell such products once approved. The development, manufacture and marketing of pharmaceutical products are subject to
extensive regulation by governmental authorities in the United States and elsewhere. In the United States, the U.S. FDA generally
requires preclinical testing and clinical trials of each drug to establish its safety and efficacy and extensive pharmaceutical
development to ensure its quality before its introduction into the market. Regulatory authorities in other jurisdictions impose similar
requirements. The process of obtaining regulatory approvals is lengthy and expensive and the issuance of such approvals is uncertain.
The commencement and rate of completion of clinical trials and the timing of obtaining marketing approval from regulatory
authorities may be delayed by many factors, including, among others:
•
•
the lack of efficacy during clinical trials;
the inability to manufacture sufficient quantities of qualified materials under cGMPs for use in clinical trials;
41
•
•
•
•
•
•
•
•
•
slower than expected rates of patient recruitment;
the inability to observe patients adequately after treatment;
changes in regulatory requirements for clinical trials or preclinical studies;
the emergence of unforeseen safety issues in clinical trials or preclinical studies;
delay, suspension, or termination of a trial by the institutional review board responsible for overseeing the study at a
particular study site;
unanticipated changes to the requirements imposed by regulatory authorities on the extent, nature or timing of studies to
be conducted on quality, safety and efficacy;
compliance with laws and regulations related to patient data privacy;
government or regulatory delays or “clinical holds” requiring suspension or termination of a trial; and
political instability or other social or government protocols affecting our clinical trial sites.
Even if we obtain positive results from our efforts to seek regulatory approvals, from early stage preclinical studies or clinical
trials, we may not achieve the same success in future efforts. Clinical trials that we or potential partners conduct may not provide
sufficient safety and efficacy data to obtain the requisite regulatory approvals for product candidates. The failure of clinical trials to
demonstrate safety and efficacy for our desired indications could harm the development of that product candidate as well as other
product candidates, and our business and results of operations would suffer.
In connection with U.S. FDA’s review of REDUCE-IT data and sNDA in 2019, the agency determined that an interaction
between mineral oil and statins leading to decreased absorption of statins cannot be excluded when the two are co-administered as
could have been the case in some patients in REDUCE-IT and that, in the agency’s view, indirect evidence suggested the presence of a
potential inhibitory effect on statin absorption by mineral oil. However, U.S. FDA’s exploratory analysis indicated that the effect of
LDL cholesterol values on the time to the primary endpoint was numerically small and unlikely to change the overall conclusion of
treatment benefit. U.S. FDA then relied on this assessment and all data available to it to approve a new indication statement and
labeling based on REDUCE-IT results. This matter illustrates that concerns such as this may arise in the future that could affect our
product development, regulatory reviews or the public perception of our products and our future prospects, including REDUCE-IT
results.
Any approvals that are obtained may be limited in scope, may require additional post-approval studies or may require the
addition of labeling statements, including boxed warnings, focusing on product safety that could affect the commercial potential for
our product candidates. Any of these or similar circumstances could adversely affect our ability to gain approval for new indications
and affect revenues from the sale of our products. Even in circumstances where products are approved by a regulatory body for
commercialization, the regulatory or legal requirements may change over time, or new safety or efficacy information may be
identified concerning a product, which may lead to the withdrawal of a product from the market or similar use restrictions. The
discovery of previously unknown problems with a clinical trial or product, or in connection with the manufacturer of products, may
result in regulatory issues that prevent proposed future approvals of a product and/or restrictions on that product or manufacturer,
including withdrawal of an indication or the product from the market, which would have a negative impact on our potential revenue
stream.
As we continue to scale our infrastructure for commercializing VASCEPA based on market dynamics for VASCEPA in the
United States and commercial initiatives and plans for VAZKEPA in Europe and other parts of the world, we may encounter
difficulties in managing the size and adaptability of our operations successfully.
The process of establishing, maintaining, expanding and streamlining a commercial infrastructure is difficult, expensive and
time consuming, particularly when such efforts need to adapt to changing market and business dynamics. In 2022 we implemented
cost and organizational restructuring plans, which included a reduction to our U.S. commercial team to approximately 75 sales
representatives by the end of 2022, and in July 2023 all remaining sales force positions in the U.S. were eliminated and our overall
headcount was reduced by 30% as part of our ORP. As a result, we do not have a sales team to promote VASCEPA to physicians and
other healthcare professionals in the United States, and will rely on only our managed care and trade organization to support sales of
VASCEPA in the United States.
In addition to the elimination of our sales force in the United States, we continue to work on our own and with our international
partners to support regulatory efforts outside the United States based on REDUCE-IT results. If we are successful in obtaining
sufficient approvals and adequate pricing and reimbursement levels in major markets in Europe and elsewhere, we will need to ensure
that our operations are adequate to support a commercial launch and continued promotion. We redesigned our commercial
infrastructure in Europe to better align with pricing and reimbursement status and commercial potential. We will be operating with
42
streamlined teams in Europe and elsewhere outside the United States; however, we will anticipate the need to expand internally and
expect that we will need to manage additional relationships with various collaborative partners, suppliers and other third parties as we
progress in Europe and outside the United States. Future growth and streamlining efforts will impose significant added
responsibilities on members of management, including the need to identify, recruit, maintain and integrate the right number of
employees. In Europe we have built out our team subsequent to EC approval of the marketing authorization acceptance in 2021, with
plans to continue to expand our European staff as deemed appropriate on a country-by-country basis. The time required to secure
reimbursement tends to vary from country to country and cannot be reliably predicted at this time. While we believe that we have
strong arguments regarding the cost effectiveness of VAZKEPA, the success of such reimbursement negotiations could have a
significant impact on our ability to hire and retain personnel and realize the commercial opportunity of VAZKEPA in Europe. Our
future financial performance and our ability to commercialize VASCEPA and to compete effectively will depend, in part, on our
ability to manage our future growth effectively. To that end, we must be able to manage our development efforts effectively, and hire,
train, integrate and retain an appropriate level of management, administrative and sales and marketing personnel and have limited
experience managing a commercial organization. We may not be able to accomplish these tasks, and our failure to accomplish any of
them could prevent us from successfully growing our company.
Our business is depending on successful life-cycle management efforts.
Our drug development efforts are subject to the risks and uncertainties inherent in any drug development program. Due to the
risks and uncertainties involved in progressing through development and bioequivalence or even potential additional trials (as may be
required by specific regulatory agencies), and the time and cost involved in obtaining regulatory approvals, we cannot reasonably
estimate the timing, completion dates and costs, or range of costs, of our drug development program, or of the successful development
of any particular derivative, combination or next generation product candidate. The potential success of any derivative, combination or
next generation product candidate will depend on a number of factors, including the scope of and our success with manufacturing,
obtaining regulatory approvals and achieving sufficient (or any) levels of market acceptance if approved.
Risks Related to Our Reliance on Third Parties
Our supply of product for the commercial market and clinical trials is dependent upon relationships with third-party
manufacturers and suppliers, including manufacturers and suppliers who may require us to comply with burdensome minimum
purchase commitments, which may be greater than our supply needs.
We have no in-house manufacturing capacity and rely entirely on contract manufacturers for our clinical and commercial
product supply. We cannot provide assurance that we will successfully manufacture any product we may develop, either
independently or under manufacturing arrangements, if any, with our third-party manufacturers. Moreover, if our manufacturers
should cease doing business with us or experience delays, shortages of supply or excessive demands on their capacity, or if they insist
on burdensome terms, such as excessive minimum supply commitments, we may not be able to obtain adequate quantities of product
in a timely manner, at cost efficient levels or at all. If we are not able to continue to operate our business relationships in a manner that
is sufficiently profitable for us and our suppliers, certain members of our supply chain could compete with us through supply to
competitors, such as generic drug companies, through breach of our agreements or otherwise.
Any manufacturing problem, natural or manmade disaster affecting manufacturing facilities, government action, or the loss of a
contract manufacturer could potentially be disruptive to our operations and result in lost sales. Any reliance on suppliers may involve
several risks, including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules,
reliability and quality. Any unanticipated disruption to future contract manufacture caused by problems at suppliers could delay
shipment of products, increase our cost of goods sold and/or result in lost sales. If our suppliers were unable to supply us with
adequate volumes of API (drug substance) or encapsulated bulk product (drug product), it would have a material adverse effect on our
ability to continue to commercialize VASCEPA.
We have contractual freedom to source the API for VASCEPA and to procure other services supporting our supply chain. We
have entered into supply agreements with multiple suppliers who also rely on other third-party suppliers to manufacture the API and
other elements necessary for the sale of VASCEPA. We continue to take steps to negotiate our contract supply agreements to align
supply arrangements with current and future global market demand.
Expanding manufacturing capacity and qualifying such capacity is complex and subject to numerous regulations and other
operational challenges. We require supply capacity to support our direct and indirect commercialization of VASCEPA. We are also
committed to providing supply to our commercial partners and distributors in Australia and New Zealand, Canada, China, the Middle
East and North Africa, South Korea and Southeast Asia, and Israel, and we anticipate potential additional supply requirements as we
pursue commercial opportunities in other countries. The resources of our suppliers vary and are limited; costs associated with
projected expansion and qualification can be significant, and lead-times for supply purchases and capacity expansion are long
requiring certain supply related decisions and commitment to be made in advance of commercial launch, including in China and
various European countries. Our aggregate capacity to produce API is dependent upon the continued qualification of our API suppliers
43
and, depending on the ability of existing suppliers to meet our supply demands, the ability to qualify any new suppliers. If no
additional API supplier is approved by the U.S. FDA as part of an sNDA, our API supply will be limited to the API we purchase from
previously approved suppliers. For example, the EMA has not yet approved use of each of our suppliers used for VASCEPA in the
United States for supply of VAZKEPA in the EU.
Further, there can be no guarantee that current suppliers and future suppliers with which we have contracted to encapsulate API
will be continually qualified to manufacture the product to our specifications or that current and any future suppliers will have the
manufacturing capacity to meet anticipated demand for VASCEPA.
If our third-party manufacturing capacity is not appropriately qualified and/or compliant with applicable regulatory
requirements, we may not be able to supply sufficient quantities of VASCEPA to meet anticipated demand.
We cannot guarantee that we can contract with any future manufacturer on acceptable terms or that any such alternative supplier
will not require capital investment from us in order for them to meet our requirements. Alternatively, our purchase of supply, or any
minimum purchase requirements, may exceed actual demand for VASCEPA.
Certain of our agreements with our suppliers include minimum purchase obligations and limited exclusivity provisions. These
purchases are generally made on the basis of rolling 12-month forecasts which in part are binding on us and the balance of which are
subject to adjustment by us subject to certain limitations. Certain of our agreements also include contractual minimum purchase
commitments regardless of the rolling 12-month forecasts. We may not purchase sufficient quantities of VASCEPA to meet actual
demand or we may be required to purchase more supply than needed to meet actual demand.
If our minimum purchase commitments exceed our supply needs for VASCEPA, we may have to renegotiate with partners in
our supply chain who may not be incentivized to renegotiate terms that are favorable to us, or at all. If we are unable to secure
adequate levels of supply to meet demand, our financial condition could be negatively and materially impacted.
Our dependence on third parties in the distribution channel from our manufacturers to patients subject us to risks that limit
our profitability and could limit our ability to supply VASCEPA to large market segments.
We sell VASCEPA principally to a limited number of major wholesalers, as well as selected regional wholesalers and mail
order pharmacy providers, or collectively, our distributors or our customers, that in turn resell VASCEPA to retail pharmacies for
subsequent resale to patients and healthcare providers. These parties exercise a substantial amount of bargaining power over us given
their control over large segments of the market for VASCEPA. This bargaining power has required us to bear increasingly higher
discounts in the sale of VASCEPA. In addition, payors have broad latitude to change individual products’ formulary position or to
implement other barriers that inhibit patients from receiving therapies prescribed by their healthcare professionals. These payor
barriers include requirements that patients try another drug before VASCEPA, known as step edits, and the requirement that prior
authorization be obtained by a healthcare provider after a prescription is written before a patient will be reimbursed by their health
plan for the cost of a VASCEPA prescription. Further, pharmacy benefit managers implement plans that act as disincentives for
VASCEPA use, such as increasingly higher deductibles. One practical impact of higher deductibles is that they may cause patients to
delay filling prescriptions for asymptomatic, chronic care medications such as hypertriglyceridemia earlier in the year, until patients
meet their deductible and the cost of VASCEPA is then borne more by their insurance carrier. Collectively, these dynamics adversely
affect our profitability for the sale of VASCEPA and could increase over time further impacting our operating results. Consolidation
among these industry participants could increase the pressure on us from these market dynamics.
The manufacture, packaging and distribution of pharmaceutical products such as VASCEPA are subject to U.S. FDA
regulations and those of similar foreign regulatory bodies. If we or our third-party manufacturers fail to satisfy these
requirements, our product development and commercialization efforts may be materially harmed.
The manufacture, packaging and distribution of pharmaceutical products, such as VASCEPA, are regulated by the U.S. FDA
and similar foreign regulatory bodies and must be conducted in accordance with the U.S. FDA’s cGMPs and comparable requirements
of foreign regulatory bodies. There are a limited number of manufacturers that operate under these cGMPs as well as the International
Council for Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use, or ICH, regulations and
guidelines, that are both capable of manufacturing VASCEPA and willing to do so. Failure by us or our third-party manufacturers to
comply with applicable regulations, requirements, or guidelines could result in sanctions being imposed on us, including fines,
injunctions, civil penalties, failure of regulatory authorities to grant marketing approval of our products, delays, suspension or
withdrawal of approvals, license revocation, seizures or voluntary recalls of product, operating restrictions and criminal prosecutions
and penalties, any of which could significantly and adversely affect our business. If we are not able to manufacture VASCEPA to
required specifications through our current and potential API suppliers, we may be delayed in successfully supplying the product to
meet anticipated demand and our anticipated future revenues and financial results may be materially adversely affected.
Changes in the manufacturing process or procedure, including a change in the location where the product is manufactured or a
change of a third-party manufacturer, may require prior U.S. FDA review and pre-approval of the manufacturing process and
44
procedures in accordance with the U.S. FDA’s cGMPs. Any new facility may be subject to a pre-approval inspection by the U.S. FDA
and would again require us to demonstrate product comparability to the U.S. FDA. If any third-party manufacturer with whom we
contract fails to perform its obligations, we may be forced to manufacture the materials ourselves, for which we may not have the
capabilities or resources, or enter into an agreement with a different third-party manufacturer, which we may not be able to do on
reasonable terms, if at all. In either scenario, our clinical trials or commercial distribution could be delayed significantly as we
establish alternative supply sources. In some cases, the technical skills required to manufacture our products or product candidates
may be unique or proprietary to the original third-party manufacturer and we may have difficulty, or there may be contractual
restrictions prohibiting us from, transferring such skills to a back-up or alternate supplier, or we may be unable to transfer such skills
at all. In addition, if we are required to change a third-party manufacturer for any reason, we will be required to verify that the new
third-party manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations.
We will also need to verify, such as through a manufacturing comparability study, that any new manufacturing process will produce
our product according to the specifications previously submitted to or approved by the U.S. FDA or another regulatory authority. The
delays associated with the verification of a new third-party manufacturer could negatively affect our ability to develop product
candidates or commercialize our products in a timely manner or within budget. Furthermore, a third-party manufacturer may possess
technology related to the manufacture of our product candidate that such third-party manufacturer owns independently. This would
increase our reliance on such third-party manufacturer or require us to obtain a license from such third-party manufacturer in order to
have another third-party manufacturer manufacture our products or product candidates. In addition, in the case of the third-party
manufacturers that supply our product candidates, changes in manufacturers often involve changes in manufacturing procedures and
processes, which could require that we conduct bridging studies between our prior clinical supply used in our clinical trials and that of
any new manufacturer. We may be unsuccessful in demonstrating the comparability of clinical supplies which could require the
conduct of additional clinical trials.
There are comparable foreign requirements under ICH guidelines.
Furthermore, the U.S. FDA and foreign regulatory agencies require that we be able to consistently produce the API and the
finished product in commercial quantities and of specified quality on a repeated basis, including demonstrated product stability, and
document our ability to do so. This requirement is referred to as process validation. Process validation includes stability testing,
measurement of impurities and testing of other product specifications by validated test methods. If the U.S. FDA does not consider the
result of the process validation or required testing to be satisfactory, the commercial supply of VASCEPA may be delayed, or we may
not be able to supply sufficient quantities of VASCEPA to meet anticipated demand.
The U.S. FDA and similar foreign regulatory bodies may also implement new requirements, or change their interpretation and
enforcement of existing requirements, for manufacture, packaging or testing of products at any time. If we or our approved suppliers
are unable to comply, we may be subject to regulatory, civil actions or penalties, or we may be prevented from manufacturing or
selling VASCEPA, all of which could significantly and adversely affect our business. Furthermore, reductions in government
operations due to pandemic mitigation efforts, or other factors, may delay timely regulatory review by U.S. FDA or similar foreign
regulatory bodies.
We have limited experience commercializing VASCEPA outside the United States, and we may not be successful in building
an infrastructure, including a sales force, that can navigate the regulatory and other dynamics outside of the United States. We are
currently, and may continue to be, substantially dependent on third parties for our international efforts, and we may not be
successful in negotiating or establishing relationships with business partners to support and maintain control over our
international activities.
We have expanded our VASCEPA commercialization activities outside of the United States through several contractual
arrangements in territories including China, the Middle East, North Africa, Canada and, most recently, Australia, New Zealand, South
Korea and Southeast Asia, and Israel. We continue to assess other opportunities to develop VASCEPA commercialization outside of
the United States through similar arrangements.
Edding is responsible for development and commercialization activities in the China Territory and associated expenses under
our development, commercialization and supply agreement with them. Additionally, Edding is required to conduct clinical trials in the
China Territory to secure regulatory approval in certain territories. Edding has successfully undertaken clinical trials and approval
initiatives under our arrangement with them, including the announcement of statistically significant positive topline results from
Edding’s Phase 3 clinical trial of VASCEPA and has obtained approval for VASCEPA in Hong Kong under the REDUCE-IT
indication and in Mainland China under the MARINE indication. In October 2023, Edding submitted for the approval of the
REDUCE-IT indication in Mainland China. However, Edding may be required to undertake pre- or post-approval clinical
development efforts in these markets, or Edding may face challenges or be unsuccessful in commercial launch. Further, any
development and regulatory efforts in the China Territory may be negatively impacted by the lingering effects of the coronavirus
pandemic. Any development and regulatory efforts in the China Territory may be negatively impacted by heightened political tension
between China and the United States, including issues expressed between the countries regarding trade practices, tariffs and honoring
45
intellectual property rights. If Edding is not able to effectively commercialize VASCEPA in the China Territory, we may not be able
to generate revenue from our agreement with Edding resulting from the sale of VASCEPA in the China Territory.
We are party to arrangements with Biologix FZCo, or Biologix, to register and commercialize VASCEPA in several Middle
Eastern and North African countries, with HLS Therapeutics Inc., or HLS, to register, commercialize and distribute VASCEPA in
Canada, with CSL Seqirus, or CSL, to commercialize and distribute VASCEPA in Australia and New Zealand, Lotus
Pharmaceuticals, or Lotus, to commercialize and distribute VASCEPA in several countries in Southeast Asia and Neopharm (Israel)
1996 Ltd., or Neopharm, to distribute VASCEPA in Israel. Although Biologix is currently actively commercializing VASCEPA in the
United Arab Emirates, Lebanon, Kuwait and Saudi Arabia, and HLS is currently commercializing VASCEPA in Canada, we are
completely reliant on these third parties to successfully commercialize the product in those markets, which markets can be complex
and challenging.
If Edding, Biologix, HLS, CSL, Lotus or Neopharm, or other third parties who we rely on for development and
commercialization of VASCEPA, do not successfully carry out their contractual obligations or meet expected deadlines, our recourse
and remedies against these parties is limited.
Our efforts to launch and support commercialization of VAZKEPA on our own in Europe is a complex undertaking for a
company that, other than the launch of VAZKEPA in certain countries in the last two years, has not launched or otherwise
commercialized a product in Europe and could be subject to significant risks of execution to our successful development and revenue
generation of VAZKEPA in Europe.
We have limited experience working with partners outside the United States to develop and market our products in non-U.S.
jurisdictions. In order for our partners to market and sell VASCEPA in any country outside of the United States for any indication, it
will be necessary to obtain regulatory approval from the appropriate regulatory authorities. The requirements and timing for regulatory
approval, which may include conducting clinical trials, vary widely from country to country and may in some cases be different than
or more rigorous than requirements in the United States. Any failure by us or our partners to obtain approval for VASCEPA in non-
U.S. jurisdictions in a timely manner may limit the commercial success of VASCEPA and our ability to grow our revenues.
Our relationships with healthcare providers and physicians and third-party payors are subject to applicable anti-kickback,
fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties,
contractual damages, reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and third-party payors in the United States and elsewhere play a primary role in the
recommendation and prescription of pharmaceutical products. Arrangements with third-party payors and customers can expose
pharmaceutical manufacturers to broadly applicable fraud and abuse and other healthcare laws and regulations, which may constrain
the business or financial arrangements and relationships through which such companies sell, market and distribute pharmaceutical
products. In particular, the promotion, sales and marketing of healthcare items and services, as well as a wide range of pricing,
discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business
arrangements, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws
and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s),
certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the
improper use of information obtained in the course of patient recruitment for clinical trials. Refer to “Item 1. Business - Government
Regulation - Fraud and Abuse Laws and Data Regulation" for further details.
The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-
keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products. In
addition, manufacturers and other parties involved in the drug supply chain for prescription drug products must also comply with
product tracking and tracing requirements and for notifying U.S. FDA of counterfeit, diverted, stolen and intentionally adulterated
products or products that are otherwise unfit for distribution in the United States.
The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of
healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies
continue to give regular and close scrutiny to interactions between healthcare companies and healthcare providers, and such scrutiny
often leads to investigations, prosecutions, convictions and settlements in the healthcare industry. Ensuring business arrangements
comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and
resource-consuming and can divert a company’s attention from the business, including the Investigation referenced above. Such
investigations can be lengthy, costly and could materially affect and disrupt our business. If the government determines that we have
violated the U.S. Anti-Kickback Statute, the FCA or antitrust regulations, we could be subject to significant civil and criminal fines
and penalties. The failure to comply with any of these laws or regulatory requirements subjects entities to possible legal or regulatory
action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in significant civil, criminal and
administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in federal and state
46
funded healthcare programs (such as Medicare and Medicaid), contractual damages and the curtailment or restructuring of our
operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other
agreement to resolve allegations of non-compliance with these laws. Any action for violation of these laws, even if successfully
defended, could cause a pharmaceutical manufacturer to incur significant legal expenses and divert management’s attention from the
operation of the business. If any of the physicians or other healthcare providers or entities with whom we expect to do business is
found not to be in compliance with applicable laws, that person or entity may be subject to criminal, civil or administrative sanctions,
including exclusions from government funded healthcare programs. Prohibitions or restrictions on sales or withdrawal of future
marketed products could materially affect business in an adverse way.
In the U.S., to help patients afford our approved product, we utilize programs to assist them, including patient assistance
programs and co-pay coupon programs for eligible patients. Government enforcement agencies have shown increased interest in
pharmaceutical companies’ product and patient assistance programs, including reimbursement support services, and a number of
investigations into these programs have resulted in significant civil and criminal settlements. It is possible that changes in insurer
policies regarding co-pay coupons and/or the introduction and enactment of new legislation or regulatory action could restrict or
otherwise negatively affect these patient support programs, which could result in fewer patients using affected products, and therefore
could have a material adverse effect on our sales, business, and financial condition.
It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent
inappropriate conduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from
governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.
In addition, with the approval and commercialization of any of our products outside the United States, we will also likely be
subject to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.
We rely on third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing
to meet established deadlines for the completion of such clinical trials.
Our reliance on third parties for clinical development activities reduces our control over these activities. However, if we sponsor
clinical trials, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the general
investigational plan and protocols for the trials. Moreover, the U.S. FDA requires us to comply with requirements, commonly referred
to as good clinical practices, for conducting, recording, and reporting the results of clinical trials to ensure that data and reported
results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Our reliance on
third parties does not relieve us of these responsibilities and requirements. Furthermore, these third parties may also have relationships
with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties
or meet expected deadlines, we may be delayed in obtaining regulatory approvals for our product candidates and may be delayed in
our efforts to successfully commercialize our product candidates for targeted diseases.
In addition, investigator initiated trials, or IITs, which are scientific research that is initiated, sponsored, and conducted by an
independent investigator(s) and/or institution(s) not affiliated with us, are being, and additional IITs, may be conducted involving
potential product candidates. The investigator, sponsor, and/or investigator/sponsor remains responsible for conception, design, data
analysis, publication, and compliance with applicable law. Investigator initiated trials can contribute towards enhancing the
understanding of products (such as mechanism of action) and sparking new ideas for further research; however, IITs are generally not
supported by pharmaceutical companies for the purposes of generating data that can lead to product labelling changes. Even if an IIT
has positive results, additional studies, along with regulatory agency guidance and approval, would be required to advance a
pharmaceutical product to the next stage of development and new potential labelling changes or indications. If we are unable to
confirm or replicate the results from an IIT or if negative results are obtained, we would likely be further delayed or prevented from
advancing further clinical development. Further, if the data proves to be inadequate compared to the firsthand knowledge we might
have gained had the IIT been sponsored and conducted by us, then our ability to design and conduct any future clinical trials ourselves
may be adversely affected. Negative results in IITs could have a material adverse effect on our efforts to obtain regulatory approval
for such product candidates and the public perception of such product candidates. In addition, third parties that are investigating
product candidates which have not been provided by us may seek and obtain regulatory approval of product candidates before we do,
which may adversely affect our development strategy and eligibility for certain exclusivities for which we may otherwise be eligible.
Risks Related to Our Intellectual Property
We are dependent on patents, proprietary rights and confidentiality obligations of our employees, agents, business partners
and third parties to protect the commercial value and potential of VASCEPA. Enforcing our patent rights is challenging and costly
47
and, even if we are able to successfully enforce our patent rights, our issued patents may not prevent competitors from competing
with VASCEPA.
Our success depends in part on our ability to obtain and maintain intellectual property protection for our drug candidates,
technology and know-how, and to operate without infringing the proprietary rights of others. Refer to “Item 1. Business - Patents,
Proprietary Technology, Trade Secrets for further details.
We plan to vigorously defend our rights under issued patents, however such defense activities can be costly to pursue and may
not have the desired results. On November 30, 2020, we filed a patent infringement lawsuit against Hikma for making, selling,
offering to sell and importing generic icosapent ethyl capsules in and into the United States in a manner that we allege has induced the
infringement of patents covering the use of VASCEPA to reduce specified CV risk. On January 25, 2021, we expanded the scope of
this patent infringement lawsuit to include a healthcare insurance provider, Health Net, LLC. On January 4, 2022, the district court
hearing the case granted Hikma's motion to dismiss. On October 13, 2022, the district court granted final judgement and the Company
is appealing (Fed. Cir. No. 23-1169 filed November 21, 2022) the decision of the district court but cannot predict the outcome or the
impact on its business. We entered into a settlement agreement with Health Net, LLC on December 26, 2022. The Company intends to
continue to vigorously enforce its intellectual property rights relating to VASCEPA, but cannot predict the outcome of these lawsuits
or any subsequently filed lawsuits.
Patent litigation is a time-consuming and costly process. There can be no assurance that we will be successful in enforcing any
patent or that it will not be successfully challenged and invalidated. Even if we are successful in enforcing this patent, the process
could take years to reach conclusion. Other drug companies may challenge the validity, enforceability, or both of our patents and seek
to design its products around our issued patent claims and gain marketing approval for generic versions of VASCEPA or branded
competitive products based on new clinical studies. The pharmaceutical industry is highly competitive and many of our competitors
have greater experience and resources than we have. Any such competition could undermine sales, marketing and collaboration efforts
for VASCEPA, and thus reduce, perhaps materially, the revenue potential for VASCEPA.
Even if we are successful in enforcing our issued patents, we may incur substantial costs and divert management’s time and
attention in pursuing these proceedings, which could have a material adverse effect on us. Patent litigation is costly and time
consuming, and we may not have sufficient resources to bring these actions to a successful conclusion.
We have pending patent applications relating to VASCEPA and its use. There can be no assurance that any of these
applications will issue patents, and even if patent protection is obtained, it may be insufficient to minimize competition or support
our commercialization efforts.
We have filed and are prosecuting numerous families of patent applications in the United States and internationally with claims
designed to protect the proprietary position of VASCEPA/VAZKEPA. For certain of these patent families, we have filed multiple
patent applications. Collectively, the patent applications include numerous independent claims and dependent claims. Several of our
patent applications contain claims that are based upon what we believe are unexpected and favorable findings from our clinical trials.
However, our pending patent applications may not be granted or, if they are granted, there is no certainty that they will prevent
competitors from competing with VASCEPA.
Securing patent protection for a product is a complex process involving many legal and factual questions. The patent
applications we have filed in the United States and internationally are at varying stages of examination, the timing of which is outside
our control. The process to getting a patent granted can be lengthy and claims initially submitted are often modified in order to satisfy
the requirements of the patent office. This process includes written and public communication with the patent office. The process can
also include direct discussions with the patent examiner. There can be no assurance that the patent office will accept our arguments
with respect to any patent application or with respect to any claim therein. We cannot predict the timing or results of any patent
application. In addition, we may elect to submit, or the patent office may require, additional evidence to support certain of the claims
we are pursuing. Furthermore, third parties may attempt to submit publications for consideration by the patent office during
examination of our patent applications. Providing such additional evidence and publications could prolong the patent office’s review
of our applications and result in us incurring additional costs. We cannot be certain what commercial value any granted patent in our
patent estate will provide to us.
Despite the use of confidentiality agreements and/or proprietary rights agreements, which themselves may be of limited
effectiveness, it may be difficult for us to protect our trade secrets.
In addition to our patent portfolio and strategy, we will also rely upon trade secrets and know-how to help protect our
competitive position. We rely on trade secrets to protect technology in cases when we believe patent protection is not appropriate or
obtainable. However, trade secrets are difficult to protect. While we require certain of our academic collaborators, contractors and
48
consultants to enter into confidentiality agreements, we may not be able to adequately protect our trade secrets or other proprietary
information.
Risks Related to Our Business
If the estimates we make, or the assumptions on which we rely, in preparing our projected guidance prove inaccurate, our
actual results may vary from those reflected in our projections and accruals.
In January 2024, we reiterated our belief that current cash and investments and other assets are adequate to support continued
operations, including the share repurchase program. This and similar statements are based on estimates, assumptions and the judgment
of management at such time. Because of the inherent nature of estimates, including during the uncertainty of our European launch and
the impact from U.S. generic competition, we have suspended providing net revenue guidance, as there could be significant
differences between our estimates and the actual amount of product demand. If we fail to realize or if we change or update any
element of our publicly disclosed financial guidance as we have done in the past or other expectations about our business and initiative
change, our stock price could decline in value.
The loss of key personnel could have an adverse effect on our business, particularly in light of recent senior management
changes.
We are highly dependent upon the efforts of our senior management. The loss of the services of one or more members of senior
management could have a material adverse effect on us. Given our rapidly expanding enterprise coupled with a streamlined
management structure and sales force and the changes to our Board and senior management team during 2023, the departure of any
key person could have a significant impact and would be potentially disruptive to our business until such time as a suitable
replacement is hired. Furthermore, because of the specialized nature of our business, as our business plan progresses, we will be
highly dependent upon our ability to attract and retain qualified scientific, technical and key management personnel. As we continue
to expand our commercialization efforts globally we may experience continued or increased turnover among members of our senior
management team. We may have difficulty identifying, attracting and integrating new executives to replace any such losses. As we
pursue commercialization efforts in Europe, we need to rapidly hire employees and ensure that they are well trained and working
cohesively with core values which are consistent with our existing operations and which, we believe, help improve our position for
success. In the United States, where we have recently eliminated all sales force positions, employees are increasingly being recruited
by other companies. The current and potential threat of generic competition and our recent reductions in force, including as part of our
Organizational Restructuring Program announced in July 2023, can create employee uncertainty which could lead to increased
employee turnover. There is intense competition for qualified personnel in the areas of our activities. In this environment, we may not
be able to attract or retain the personnel necessary for the development of our business, particularly if we do not achieve profitability.
The failure to recruit key scientific, technical and management personnel would be detrimental to our ability to implement our
business plan.
Our internal computer systems, or those of our third-party clinical research organizations or other contractors or
consultants, may fail or suffer security breaches, which could result in a material disruption of our commercial, research and
development and other programs.
Despite the implementation of security measures, our internal computer systems and those of our third-party clinical research
organizations and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural
disasters, terrorism, war, and telecommunication and electrical failures. Any such incident could cause interruptions in our operations
or a material disruption of our programs. To the extent that any disruption or security breach results in a loss of or damage to our data
or applications or other data or applications relating to our technology or products candidates, or inappropriate disclosure of
confidential or proprietary information, we could incur liabilities and our research and development program could be delayed.
We could be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release or
loss of information maintained in the information systems and networks of our company and our vendors, including personal
information of our employees and patients, and company and vendor confidential data. In addition, outside parties may attempt to
penetrate our systems or those of our vendors or fraudulently induce our personnel or the personnel of our vendors to disclose
sensitive information in order to gain access to our data and/or systems. We may experience threats to our data and systems, including
malicious codes and viruses, phishing and other cyber-attacks. The number and complexity of these threats continue to increase over
time. For example, in June 2019, a report published by security researchers claimed that a database belonging to one of our vendors
containing information about individuals who use or have expressed interest in VASCEPA was accessible to unauthorized users.
Although we were informed that such breach did not include social security numbers or credit card information, a more material
breach could occur in the future. If a material breach of our information technology systems or those of our vendors occurs, the market
perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged. We
could be required to expend significant amounts of money and other resources to repair or replace information systems or networks
and to repair reputational costs. In addition, we could be subject to regulatory actions and/or claims made by individuals and groups in
49
private litigation involving privacy issues related to data collection and use practices and other data privacy laws and regulations,
including claims for misuse or inappropriate disclosure of data, as well as unfair or deceptive practices. We may incur significant costs
or divert significant internal resources as a result of any regulatory actions or private litigation. Any of the foregoing consequences
may adversely affect our business and financial condition.
Although we develop and maintain systems and controls designed to prevent these events from occurring, and we have a process
to identify and mitigate threats, the development and maintenance of these systems, controls and processes is costly and requires
ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly
sophisticated. Moreover, despite our efforts, the possibility of these events occurring cannot be eliminated entirely. As we outsource
more of our information systems to vendors, engage in more electronic transactions with payors and patients, and rely more on cloud-
based information systems, the related security risks will increase and we will need to expend additional resources to protect our
technology and information systems. In addition, there can be no assurance that our internal information technology systems or those
of our third-party contractors, or our consultants’ efforts to implement adequate security and control measures, will be sufficient to
protect us against breakdowns, service disruption, data deterioration or loss in the event of a system malfunction, or prevent data from
being stolen or corrupted in the event of a cyberattack, security breach, industrial espionage attacks or insider threat attacks which
could result in financial, legal, business or reputational harm.
We are subject to potential product liability.
We are subject to the potential risk of product liability claims relating to the manufacturing and marketing of VASCEPA. Any
person who is injured as a result of using VASCEPA may have a product liability claim against us without having to prove that we
were at fault.
In addition, we could be subject to product liability claims by persons who took part in clinical trials involving our current or
former development stage products. A successful claim brought against us could have a material adverse effect on our business. We
cannot guarantee that a product liability claim will not be asserted against us in the future.
A change in our tax residence and/or tax laws could have a negative effect on our future profitability.
We expect that our tax jurisdiction will remain in Ireland. Under current UK legislation, a company incorporated in England and
Wales, or which is centrally managed and controlled in the UK, is regarded as resident in the UK for taxation purposes. Under current
Irish legislation, a company is regarded as resident for tax purposes in Ireland if it is centrally managed and controlled in Ireland, or, in
certain circumstances, if it is incorporated in Ireland. Up to December 31, 2019, where a company was treated as tax resident under
the domestic laws of both the UK and Ireland, then the provisions of article 4(3) of the Double Tax Agreement, or DTA, between the
UK and Ireland provided that such enterprise would be treated as resident only in the jurisdiction in which its place of effective
management is situated. We have at all times sought to conduct our affairs in such a way so as to be solely resident in Ireland for tax
purposes by virtue of having our place of effective management situated in Ireland.
These rules regarding determination of tax residence changed effective January 1, 2020, when a modified Ireland-UK DTA
came into effect pursuant to the OECD’s Multilateral Instrument, or MLI. Under the modified Ireland-UK DTA, from January 1,
2020, we would be solely tax resident in Ireland and not tax resident in the UK if we continued to be centrally managed and controlled
in Ireland and if it were mutually agreed between the Irish and UK tax authorities under the MLI “tie-breaker rule” that we are solely
tax resident in Ireland. Having made the relevant submission under the amended provisions, we received confirmation effective
January 1, 2020 of the mutual agreement of Irish and UK tax authorities that we are solely tax resident in Ireland for the purposes of
the modified DTA.
However, we cannot assure you that we are or will continue to be solely resident in Ireland for tax purposes. It is possible that in
the future, whether as a result of a change in law or the practice of any relevant tax authority or as a result of any change in the
conduct of our affairs, we could become, or be regarded as having become resident in a jurisdiction other than Ireland. Should we
cease to be an Irish tax resident, we may be subject to a charge to Irish capital gains tax on our assets and the basis on which our
income is taxed may also change. Similarly, if the tax residency of our Irish or UK subsidiaries were to change from their current
jurisdiction, they may be subject to a charge to local capital gains tax on their assets and the basis on which their income is taxed may
also change.
Our and our subsidiaries’ income tax returns are periodically examined by various tax authorities, including the Internal
Revenue Service, or the IRS, and state tax authorities. For example, the IRS began an examination of our 2018 U.S. income tax return
in the first quarter of 2020. Although the outcome of tax audits is always uncertain and could result in significant cash tax payments,
we do not believe the outcome of any ongoing or future audits will have a material adverse effect on our consolidated financial
position or results of operations.
50
We could be adversely affected by our exposure to customer concentration risk.
A significant portion of our sales are to wholesalers in the pharmaceutical industry. Three customers individually accounted for
10% or more of our U.S. gross product sales. Customers A, B, and C accounted for 36%, 28%, and 29%, respectively, of gross
product sales for the year ended December 31, 2023 and represented 36%, 18%, and 38%, respectively, of the gross accounts
receivable balance as of December 31, 2023. Customers A, B, and C accounted for 35%, 31%, and 27%, respectively, of gross product
sales for the year ended December 31, 2022 and represented 35%, 21%, and 39%, respectively, of the gross accounts receivable
balance as of December 31, 2022. We expect that we may have customer concentration risk as we enter additional countries. There
can be no guarantee that we will be able to sustain our accounts receivable or gross sales levels from our key customers. If, for any
reason, we were to lose, or experience a decrease in the amount of business with our largest customers, whether directly or through
our distributor relationships, our financial condition and results of operations could be negatively affected.
Risks Related to Our Financial Position and Capital Requirements
We have a history of operating losses and anticipate that we will incur continued losses for an indefinite period of time.
We have not yet reached sustained profitability. For the fiscal year ended December 31, 2023 and 2022, we reported net losses
of approximately $59.1 million and $105.8 million, respectively. For the fiscal year ended December 31, 2021, we reported net
income of approximately $7.7 million. We had an accumulated deficit as of December 31, 2023 of $1.6 billion. Substantially all of our
operating losses resulted from costs incurred in connection with our research and development programs, from general and
administrative costs associated with our operations, and costs related to the commercialization of VASCEPA. Additionally, as a result
of our significant expenses relating to commercialization and research and development, we expect to continue to incur significant
operating losses for an indefinite period. Because of the numerous risks and uncertainties associated with developing and
commercializing pharmaceutical products, we are unable to predict the magnitude of these future losses. Our historic losses, combined
with expected future losses, have had and will continue to have an adverse effect on our cash resources, shareholders’ deficit and
working capital.
We may never generate sufficient revenue to achieve a steady state of profitability.
Our ability to become profitable on a sustained basis depends upon our ability to generate revenue. We have been generating
product revenue from sales of VASCEPA since January 2013, but we may not be able to generate sufficient revenue to achieve a
steady state of profitability. Our ability to generate profits on sales of VASCEPA is subject to the market acceptance and commercial
success of VASCEPA and our ability to manufacture commercial quantities of VASCEPA through third parties at acceptable cost
levels, and may also depend upon our ability to effectively market and sell VASCEPA through our strategic collaborations.
Even though VASCEPA has been approved by the U.S. FDA for marketing in the United States for two important indications,
received marketing authorization in Europe and is approved in smaller jurisdictions, it may not gain enough market acceptance to
support consistent profitability. We anticipate continuing to incur significant costs associated with expanding the commercialization of
VASCEPA. We may not achieve profitability on a sustained basis in the near term due to high costs associated with, for example, our
commercialization efforts in the United States and Europe. If we are unable to consistently generate robust product revenues, we will
not become profitable on a sustained basis in the near term, if ever, and may be unable to continue operations without continued
funding.
Our operating results are unpredictable and may fluctuate. If our operating results are below the expectations of securities
analysts or investors, the trading price of our stock could decline.
Our operating results are difficult to predict and will likely fluctuate from quarter to quarter and year to year, and VASCEPA
prescription figures will likely fluctuate from month to month. VASCEPA sales are difficult to predict from period to period and as a
result, you should not rely on VASCEPA sales results in any period as being indicative of future performance. We believe that our
quarterly and annual results of operations may be affected by a variety of factors, including those risks and uncertainties described in
this Part II, Item 1A and the following:
•
•
•
•
the recent and future potential launches of additional generic versions of VASCEPA;
the timing and ability of efforts outside the United States, to develop, register and commercialize VASCEPA in Europe,
the China Territory, several Middle Eastern and North African countries, and Canada, including obtaining necessary
regulatory approvals, favorable pricing and establishing marketing channels;
the continuing evolution of the medical community’s and the public’s perception of the REDUCE-IT study results;
the level of demand for VASCEPA, due to changes in prescriber sentiment, quarterly changes in distributor purchases,
and other factors;
51
•
•
•
•
•
•
the extent to which coverage and reimbursement for VASCEPA is available from government and health administration
authorities, private health insurers, managed care programs and other third-party payors and the timing and extent to
which such coverage and reimbursement changes;
the timing, cost and level of investment in our sales and marketing efforts to support VASCEPA sales, and our cost and
reorganization efforts, including our ORP announced in July 2023, and the resulting effectiveness of those efforts;
disruptions or delays in our or our partners’ commercial or development activities, including as a result of political
instability, civil unrest, terrorism, pandemics or other natural disasters, such as the coronavirus pandemic;
additional developments regarding our intellectual property portfolio and regulatory exclusivity protections, if any;
outcomes of litigation and other legal proceedings; and
our ongoing regulatory dialogue.
We may require substantial additional resources to fund our operations. If we cannot find additional capital resources, we
will have difficulty in operating as a going concern and growing our business.
We currently operate with limited resources. We believe that our cash and cash equivalents balance of $199.3 million and short-
term investment balance of $121.4 million as of December 31, 2023, will be sufficient to fund our projected operations, including the
share repurchase program, for at least 12 months from the issuance date of consolidated financial statements included elsewhere in this
Annual Report on Form 10-K. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our
capital resources sooner than we expect or fail to achieve positive cash flow. Depending on the level of cash generated from
operations, and depending in part on the rate of prescription growth for VASCEPA, additional capital may be required to support
planned VASCEPA promotion and potential VASCEPA promotion beyond which we are currently executing and for
commercialization of VAZKEPA in Europe. If additional capital is required and we are unable to obtain additional capital on
satisfactory terms, or at all, we may be forced to delay, limit or eliminate certain promotional activities. We anticipate that quarterly
net cash outflows in future periods will be variable as a result of the timing of certain items, including our purchases of API and
VASCEPA promotional and educational activities, including launch activities in Europe, on our operations and those of our customers
and any current or potential generic competition.
In order to fully realize the market potential of VASCEPA, we may need to enter into a new strategic collaboration or raise
additional capital.
Our future capital requirements will depend on many factors, including:
•
•
•
•
•
•
the timing, amount and consistency of revenue generated from the commercial sale of VASCEPA;
the costs associated with commercializing VASCEPA in the United States, and for commercializing VAZKEPA in
Europe, including hiring experienced professionals, and for additional regulatory approvals internationally, if any, the cost
and timing of securing commercial supply of VASCEPA and the timing of entering into any new strategic collaboration
with others relating to the commercialization of VASCEPA, if at all, and the terms of any such collaboration;
continued costs associated with litigation and other legal proceedings and governmental inquiries;
the time and costs involved in obtaining additional regulatory approvals for VASCEPA based on REDUCE-IT results
internationally;
the extent to which we continue to develop internally, acquire or in-license new products, technologies or businesses; and
the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
If we require additional funds and adequate funds are not available to us in amounts or on terms acceptable to us or on a timely
basis, or at all, our commercialization efforts for VASCEPA, and our business generally, may suffer materially.
Changes in tax laws could have a material adverse effect on our business, financial condition and results of operations.
Tax law and policies in the United States and Ireland are unsettled and may be subject to significant change, including based on
adjustments in political perspectives and administration shifts. In the United States and internationally, how to tax entities with
international operations, like us, has been subject to significant re-evaluation. We believe we developed VASCEPA in and from
Ireland based on understanding of applicable requirements. In recent years, particularly since 2013 when commercial sale of
VASCEPA commenced in the United States, the majority of our consolidated operations have been in the United States. Ownership of
VASCEPA continues to reside with our wholly-owned Ireland-based subsidiary, Amarin Pharmaceuticals Ireland Ltd., and oversight
and operations of that entity are structured to be maintained in Ireland. In order to effectively utilize our accumulated net operating
loss carryforwards for tax purposes in Ireland, our operations, particularly for this subsidiary, need to be active in Ireland under
52
applicable requirements. In addition, utilization of these accumulated net operating loss carryforwards assumes that tax treaties
between Ireland and other countries, particularly the United States, do not change in a manner that limit our future ability to offset
earnings with these operating loss carryforwards for tax purposes.
Similarly, a change in our Irish tax residence could materially affect our ability to obtain and maintain profitability, if otherwise
achievable. Changes in tax law and tax rates, particularly in the United States and Ireland, could also impact our assessment of
deferred taxes. Any change in our assessment of the realizability or the timing for realizing deferred taxes could have a negative
impact our future profitability.
Changes in tax laws or tax rulings, or changes in interpretations of existing laws, could cause us to be subject to additional
income-based taxes and non-income taxes (such as payroll, sales, use, value-added, digital tax, net worth, property, and goods and
services taxes), which in turn could materially affect our financial position and results of operations. In particular, there have been a
number of significant changes to the U.S. federal income tax rules in recent years and additional tax reform proposed by the Biden
administration may be enacted. The effect of any such tax reform is uncertain. As we continue to expand internationally, we will be
subject to varied and complex tax regimes, and the tax laws of one jurisdiction may impact our expansion to or operations in other
jurisdictions. Additionally, new, changed, modified, or newly interpreted or applied tax laws could increase our partners’ and our
compliance, operating and other costs, as well as the costs of our products. As we expand the scale of our business activities, any
changes in the taxation of such activities may increase our effective tax rate and harm our business, financial condition, and results of
operations.
The IRA was enacted into law on August 16, 2022. Included in the IRA was a provision to implement a 15% corporate
alternative minimum tax on corporations whose average annual adjusted financial statement income during the most recently
completed three-year period exceeds $1.0 billion. This provision is effective for tax years beginning after December 31, 2022. We do
not expect the provisions of the IRA to have a material impact.
Risks Related to Ownership of our ADSs and Common Shares
Our efforts to return capital to our shareholders and increase shareholder value, including our share repurchase program
(which is subject to shareholder and UK court approval), may not be implemented in a timely manner or at all, or may not have the
expected results.
The implementation of our announced share repurchase agreement is conditional upon shareholder and UK court approval, as
required under UK company law. Although we intend to accelerate our annual general meeting of shareholders to April 2024 to seek
such shareholder approval, we will thereafter need to proceed with the requisite court process to undertake a reduction of capital in
order to create the necessary distributable profits for the funding of the repurchases, which process could be completed by the end of
the second quarter of 2024, with share repurchases commencing shortly thereafter; however, we cannot guarantee that the share
repurchase program will receive shareholder or court approval in a timely manner or at all. Further, the share repurchase program and
other efforts to return capital to shareholders may not have the anticipated effect or increase shareholder value in the long term.
If we are no longer able to meet the listing requirements of the NASDAQ Stock Market, our stock may be delisted.
The NASDAQ Stock Market, or NASDAQ, on which our ADSs are listed and traded, has listing requirements that include a
$1.00 minimum closing bid price requirement. NASDAQ will issue a deficiency notice if an issuer is in violation of a listing standard
for a period of 30 business consecutive days. Such deficiency letter does not result in the immediate delisting of an issuer as there is a
period of 180 calendar days from the deficiency notice to regain compliance with NASDAQ's minimum bid price requirement. If an
issuer is unable to comply with NASDAQ's minimum bid price requirement after this 180 day calendar period, NASDAQ may elect,
subject to any potential additional cure periods, to initiate a process that could delist the issuer from trading on the NASDAQ. We
received a deficiency letter from NASDAQ in October 2023, as our ADSs had traded below $1.00 for 30 consecutive business days.
In January 2024 we regained compliance with the NASDAQ listing requirements as our ADSs had traded above $1.00 for 10
consecutive business days.
Should such a delisting occur, it would adversely impact the liquidity and price of our ADSs and would impede our ability to
raise capital.
The price of our ADSs and common shares may be volatile.
The stock market has from time to time experienced significant price and volume fluctuations that may be unrelated to the
operating performance of particular companies. In addition, the market prices of the securities of many pharmaceutical and medical
technology companies have been especially volatile in the past, and this trend is expected to continue in the future.
As of February 23, 2024, we had 410,671,800 common shares outstanding including 401,870,067 shares held as ADSs and
8,801,733 held as ordinary shares (which are not held in the form of ADSs). There is a risk that there may not be sufficient liquidity in
the market to accommodate significant increases in selling activity or the sale of a large block of our securities. Our ADSs have
53
historically had limited trading volume, which may also result in volatility. Our planned share repurchase program, which is subject to
requisite shareholder and UK High Court approval under UK law, would, if implemented, reduce the number of shares outstanding
and could result in reduced trading volumes. If any of our large investors seek to sell substantial amounts of our ADSs, particularly if
these sales are in a rapid or disorderly manner, or other investors perceive that these sales could occur, the market price of our ADSs
could decrease significantly.
The market price of our ADSs and common shares may also be affected by factors such as:
•
•
•
•
•
•
•
developments or disputes concerning ongoing patent prosecution efforts and any future patent or proprietary rights;
litigation and regulatory developments in the United States affecting our VASCEPA promotional rights, and regulatory
developments in other countries;
actual or potential medical results relating to our products or our competitors’ products;
interim failures or setbacks in product development;
innovation by us or our competitors;
currency exchange rate fluctuations; and
period-to-period variations in our results of operations.
If we were to be characterized as a passive foreign investment company there could be adverse consequences to U.S.
investors.
A non-U.S. corporation will be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax
purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income
or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year produce or are held for
the production of passive income. Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the
sale or exchange of property producing such income and net foreign currency gains. In addition, a non-U.S. corporation will be treated
as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which it
owns, directly or indirectly, no more than 25% (by value) of the stock.
Based on certain estimates of our gross income and gross assets, the latter determined by reference to the expected value of our
ADSs and ordinary shares, we believe that we will not be classified as a PFIC for the taxable year ended December 31, 2023, and we
do not expect to be treated as a PFIC in any future taxable year for the foreseeable future. However, because PFIC status is based on
our income, assets and activities for the entire taxable year, which we expect may vary substantially over time, it is not possible to
determine whether we will be characterized as a PFIC for any taxable year until after the close of the taxable year. Moreover, we must
determine our PFIC status annually based on tests that are factual in nature, and our status in future years will depend on our income,
assets and activities in each of those years. There can be no assurance that we will not be considered a PFIC for any taxable year.
We do not intend to pay cash dividends on the ordinary shares in the foreseeable future.
We have never paid dividends on ordinary shares and do not anticipate paying any cash dividends on the ordinary shares in the
foreseeable future. Under English law, any payment of dividends would be subject to relevant legislation and our Articles of
Association, which requires that all dividends must be approved by our board of directors and, in some cases, our shareholders, and
may only be paid from our distributable profits available for the purpose, determined on an unconsolidated basis.
The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.
We are incorporated under English law. The rights of holders of ordinary shares and, therefore, certain of the rights of holders of
ADSs, are governed by English law, including the provisions of the Companies Act 2006, and by our Articles of Association. These
rights differ in certain respects from the rights of shareholders in typical U.S. corporations. The principal differences include the
following:
•
•
Under English law and our Articles of Association, each shareholder present at a meeting has only one vote unless
demand is made for a vote on a poll, in which case each holder gets one vote per share owned. Under U.S. law, each
shareholder typically is entitled to one vote per share at all meetings.
Under English law, it is only on a poll that the number of shares determines the number of votes a holder may cast. You
should be aware, however, that the voting rights of ADSs are also governed by the provisions of a deposit agreement with
our depositary bank.
54
•
•
•
•
•
Under English law, subject to certain exceptions and disapplications, each shareholder generally has preemptive rights to
subscribe on a proportionate basis to any issuance of ordinary shares or rights to subscribe for, or to convert securities
into, ordinary shares for cash. Under U.S. law, shareholders generally do not have preemptive rights unless specifically
granted in the certificate of incorporation or otherwise.
Under English law and our Articles of Association, certain matters require the approval of 75% of the shareholders who
vote (in person or by proxy) on the relevant resolution (or on a poll of shareholders representing 75% of the ordinary
shares voting (in person or by proxy)), including amendments to the Articles of Association. This may make it more
difficult for us to complete corporate transactions deemed advisable by our board of directors. Under U.S. law, generally
only majority shareholder approval is required to amend the certificate of incorporation or to approve other significant
transactions.
In the UK, takeovers may be structured as takeover offers or as schemes of arrangement. Under English law, a bidder
seeking to acquire us by means of a takeover offer would need to make an offer for all of our outstanding ordinary
shares/ADSs. If acceptances are not received for 90% or more of the ordinary shares/ADSs under the offer, under English
law, the bidder cannot complete a “squeeze out” to obtain 100% control of us. Accordingly, acceptances of 90% of our
outstanding ordinary shares/ADSs will likely be a condition in any takeover offer to acquire us, not 50% as is more
common in tender offers for corporations organized under Delaware law. By contrast, a scheme of arrangement, the
successful completion of which would result in a bidder obtaining 100% control of us, requires the approval of a majority
of shareholders voting at the meeting and representing 75% of the ordinary shares voting for approval.
Under English law and our Articles of Association, shareholders and other persons whom we know or have reasonable
cause to believe are, or have been, interested in our shares may be required to disclose information regarding their
interests in our shares upon our request, and the failure to provide the required information could result in the loss or
restriction of rights attaching to the shares, including prohibitions on certain transfers of the shares, withholding of
dividends and loss of voting rights. Comparable provisions generally do not exist under U.S. law.
The quorum requirement for a shareholders’ meeting is a minimum of two shareholders entitled to vote at the meeting and
present in person or by proxy or, in the case of a shareholder which is a corporation, represented by a duly authorized
officer (although the marketplace rules of the Nasdaq Stock Market require that shareholders holding at least one-third of
our outstanding shares of voting stock are present at the meeting or by proxy). Under U.S. law, a majority of the shares
eligible to vote must generally be present (in person or by proxy) at a shareholders’ meeting in order to constitute a
quorum. The minimum number of shares required for a quorum can be reduced pursuant to a provision in a company’s
certificate of incorporation or bylaws, but typically not below one-third of the shares entitled to vote at the meeting.
Shareholder protections found in provisions under the UK City Code on Takeovers and Mergers, or the Takeover Code, do
not apply to us.
We believe that our place of central management and control is not currently in the UK (or the Channel Islands or the Isle of
Man) for the purposes of the jurisdictional criteria of the Takeover Code. Accordingly, we believe that we are not currently subject to
the Takeover Code and, as a result, our shareholders are not currently entitled to the benefit of certain takeover offer protections
provided under the Takeover Code, including the rules regarding mandatory takeover bids.
In the event that this changes, or if the interpretation and application of the Takeover Code by the Panel on Takeovers and
Mergers, or Takeover Panel, changes (including changes to the way in which the Takeover Panel assesses the application of the
Takeover Code to English companies whose shares are listed outside of the UK), the Takeover Code may apply to us in the future.
The Takeover Code provides a framework within which takeovers of certain companies organized in the United Kingdom are
regulated and conducted. However, because our place of central management and control is currently outside of the United Kingdom,
we are not subject to the Takeover Code. As a result, our shareholders are not entitled to the benefit of certain takeover offer
protections provided under the Takeover Code. The following is a brief summary of some of the most important rules of the Takeover
Code which, as noted, does not apply to us:
•
•
In connection with a potential offer, if following an approach by or on behalf of a potential bidder, the company is “the
subject of rumor or speculation” or there is an “untoward movement” in the company’s share price, there is a requirement
for the potential bidder to make a public announcement about a potential offer for the company, or for the company to
make a public announcement about the potential offer.
When any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which
(taken together with shares already held by that person and an interest in shares held or acquired by persons acting in
concert with him or her) carry 30% or more of the voting rights of a company that is subject to the Takeover Code, that
person is generally required to make a mandatory offer to all the holders of any class of equity share capital or other class
of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company.
55
•
•
•
•
•
•
•
•
•
•
•
•
•
When any person who, together with persons acting in concert with him or her, is interested in shares representing not less
than 30% but does not hold more than 50% of the voting rights of a company that is subject to the Takeover Code, and
such person, or any person acting in concert with him or her, acquires an additional interest in shares which increases the
percentage of shares carrying voting rights in which he or she is interested, then such person is generally required to make
a mandatory offer to all the holders of any class of equity share capital or other class of transferable securities carrying
voting rights of that company to acquire the balance of their interests in the company.
A mandatory offer triggered in the circumstances described in the two paragraphs above must be in cash (or be
accompanied by a cash alternative) and at not less than the highest price paid within the preceding 12 months to acquire
any interest in shares in the company by the person required to make the offer or any person acting in concert with him or
her.
In relation to a voluntary offer (i.e., any offer which is not a mandatory offer), when interests in shares of any class
representing 10% of shares of that class have been acquired for cash by an offeror (i.e., a bidder) and any person acting in
concert with it during the offer period (i.e., broadly speaking, the period after the potential offer has been made public)
and within 12 months prior to commencement of the offer period, the offer must be in cash or be accompanied by a cash
alternative for all shareholders of that class at not less than the highest price paid for any interest in shares of that class by
the offeror in that period. Further, if an offeror acquires any interest in shares for cash during the offer period, the offer for
the shares must be in cash or accompanied by a cash alternative at a price at not less than the highest price paid for such
shares during the offer period.
If after an announcement is made, the offeror or any person acting in concert with them acquires an interest in shares in an
offeree company (i.e., a target) at a price higher than the value of the offer, the offer must be increased to not less than the
highest price paid for the interest in shares so acquired.
The offeree company must appoint a competent independent adviser whose advice on the financial terms of the offer must
be made known to all the shareholders, together with the opinion of the board of directors of the offeree company.
Special or favorable deals for selected shareholders are not permitted, except in certain circumstances where independent
shareholder approval is given and the arrangements are regarded as fair and reasonable in the opinion of the financial
adviser to the offeree.
All shareholders must be given the same information.
Each document published in connection with an offer by or on behalf of the offeror or offeree must state that the directors
of the offeror or the offeree, as the case may be, accept responsibility for the information contained therein.
Profit forecasts, quantified financial benefits statements and asset valuations must be made to specified standards and
must be reported on by professional advisers.
Misleading, inaccurate or unsubstantiated statements made in documents or to the media must be publicly corrected
immediately.
Actions during the course of an offer (or even before if the board of the offeree company is aware that an offer is
imminent) by the offeree company, which might frustrate the offer are generally prohibited unless shareholders approve
these plans (or the bidder consents to the proposed course of action). Frustrating actions would include, for example,
issuing new shares, lengthening the notice period for directors under their service contract or agreeing to sell off material
parts of the target group.
Stringent requirements are laid down for the disclosure of dealings in relevant securities during an offer, including the
prompt disclosure of positions and dealing in relevant securities by the parties to an offer and any person who is interested
(directly or indirectly) in 1% or more of any class of relevant securities.
Employees of both the offeror and the offeree company and the trustees of the offeree company’s pension scheme must be
informed about an offer. In addition, the offeree company’s employee representatives and pension scheme trustees have
the right to have a separate opinion on the effects of the offer on employment and pension schemes appended to the
offeree board of directors’ circular or published on a website.
U.S. shareholders may not be able to enforce civil liabilities against us.
We are incorporated under the laws of England and Wales, and our subsidiaries are incorporated in various jurisdictions,
including foreign jurisdictions. A number of the officers and directors of each of our subsidiaries are non-residents of the United
States, and all or a substantial portion of the assets of such persons are located outside the United States. As a result, it may not be
possible for investors to affect service of process within the United States upon such persons or to enforce against them judgments
obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States. We have been
56
advised by our English solicitors that there is doubt as to the enforceability in England in original actions, or in actions for
enforcement of judgments of U.S. courts, of civil liabilities to the extent predicated upon the federal securities laws of the United
States.
U.S. holders of the ADSs or ordinary shares may be subject to U.S. federal income taxation at ordinary income tax rates on
undistributed earnings and profits.
There is a risk that we will be classified as a controlled foreign corporation, or CFC, for U.S. federal income tax purposes. If we
are classified as a CFC, any ADS holder or shareholder that is a U.S. person that owns directly, indirectly or by attribution, 10% or
more of the voting power of our outstanding shares may be subject to U.S. income taxation at ordinary income tax rates on all or a
portion of our undistributed earnings and profits attributable to “subpart F income.” Such 10% holder may also be taxable at ordinary
income tax rates on any gain realized on a sale of ordinary shares or ADS, to the extent of our current and accumulated earnings and
profits attributable to such shares. The CFC rules are complex and U.S. holders of the ordinary shares or ADSs are urged to consult
their own tax advisors regarding the possible application of the CFC rules to them in their particular circumstances.
General Risk Factors
Potential technological changes in our field of business create considerable uncertainty.
The pharmaceutical industry in which we operate is characterized by extensive research efforts and rapid technological progress.
New developments in research are expected to continue at a rapid pace in both industry and academia. We cannot assure you that
research and discoveries by others will not render some or all of our programs or product candidates uncompetitive or obsolete. Our
business strategy is based in part upon new and unproven technologies to the development of therapeutics to improve cardiovascular
health. We cannot assure you that unforeseen problems will not develop with these technologies or applications or that any
commercially feasible products will ultimately be developed by us.
Negative economic conditions would likely have a negative effect on our ability to obtain financing on acceptable terms.
While we may seek additional funding through public or private financings, we may not be able to obtain financing on
acceptable terms, or at all. There can be no assurance that we will be able to access equity or credit markets in order to finance our
current operations or expand development programs for VASCEPA, or that there will not be deterioration in financial markets and
confidence in economies. We may also have to scale back or further restructure our operations. If we are unable to obtain additional
funding when needed, we may be required to curtail or terminate some or all of our research or development programs or our
commercialization strategies.
Raising additional capital may cause dilution to our existing shareholders, restrict our operations or require us to relinquish
rights.
We may seek additional capital through a combination of private and public equity offerings, debt financings and collaboration,
strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt
securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect
your rights as a shareholder.
Debt financing, if available, may involve agreements that include burdensome covenants limiting or restricting our ability to
take specific actions such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds
through collaboration, strategic alliance and licensing arrangements with third parties, we may have to relinquish valuable rights to our
technologies, VASCEPA or product candidates beyond the rights we have already relinquished, or grant licenses on terms that are not
favorable to us.
Potential business combinations or other strategic transactions may disrupt our business or divert management’s attention.
On a regular basis, we explore potential business combination transactions, including an acquisition of us by a third party,
exclusive licenses of VASCEPA or other strategic transactions or collaborations with third parties. The consummation and
performance of any such future transactions or collaborations will involve risks, such as:
•
•
•
•
•
diversion of managerial resources from day-to-day operations;
exposure to litigation from the counterparties to any such transaction, other third parties or our shareholders;
misjudgment with respect to the value;
higher than expected transaction costs; or
an inability to successfully consummate any such transaction or collaboration.
57
As a result of these risks, we may not be able to achieve the expected benefits of any such transaction or collaboration or deliver
the value thereof to our shareholders. If we are unsuccessful in consummating any such transaction or collaboration, we may be
required to re-evaluate our business only after we have incurred substantial expenses and devoted significant management time and
resources.
We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly
impacted by geopolitical instability, including in Europe, and record inflation. Our business, financial condition and results of
operations could be materially and adversely affected by any negative impact on the global economy and capital markets resulting
from these global economic conditions, particularly if such conditions are prolonged or worsen.
Economic uncertainty in various global markets, including the U.S., Europe and the Middle East, caused by political instability
and conflict, such as Russia's invasion of Ukraine and current armed conflict in Israel and the Gaza Strip, and economic challenges
caused by pandemics or other health crises, such as the recent COVID-19 pandemic, have led to market disruptions, including
significant volatility in commodity prices, credit and capital market instability and supply chain interruptions, which have caused
record inflation globally.
Although, to date, our business has not been materially impacted by these global economic and geopolitical conditions, it is
impossible to predict the extent to which our operations will be impacted in the short and long term, or the ways in which such
instability could impact our business and results of operations. The extent and duration of these market disruptions, whether as a result
of the military conflict between Russia and Ukraine, the current armed conflict in Israel and the Gaza Strip, geopolitical tensions,
record inflation or otherwise, are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of
other risks described in this report.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
We recognize the importance of safeguarding the security of our computer systems, software, networks, and other technology
assets. Our security efforts are aimed at preserving the confidentiality, integrity, and continued availability of information under our
ownership or care with the aim to continually improve security features in order to keep pace with the evolving cyber threat landscape.
Overview of Cybersecurity Risk Management and Strategy
Based on our business model, we rely on the outsourcing of certain key business functions, including laboratory work, clinical
research, and the manufacturing and distribution of our product. We utilize the vetted processes and procedures of these partners and
ensure proper cybersecurity and risk mitigation strategies are in place and functioning, which is accessed through our Vendor Risk
Assessment process prior to engaging with our partners. Our cybersecurity risk identification, assessment and management response
process is a critical part of our overall enterprise risk management, or ERM, program. Within our ERM framework, we adhere to our
Global Information Technology Policy, or IT Policy, among a host of other policies and procedures aimed at providing guidelines and
standards to ensure the security, integrity, reliability and recoverability of our systems and infrastructure.
We employ and manage various third party partnerships to help protect us from cybersecurity threats. These organizations
provide services such as penetration testing, security assessments, as well as twenty-four hours per day monitoring, alerting and
response, including incident responses, all of which adhere to our overall ERM framework. Our partners evaluate and rank our
cybersecurity maturity and coverage as part of their services and keep us informed of emerging global threats. Our digital
infrastructure undergoes both internal and external audits as part of our Sarbanes-Oxley audit process and is designed to address the
requirements of applicable information security standards and an evolving cyber landscape.
Board Oversight of Risks from Cybersecurity Threats
Our Board of Directors has delegated to the Audit Committee oversight of risks from cybersecurity threats. The management
team provides quarterly reports to the Audit Committee which cover cybersecurity and other information technology-related risks,
based on our ERM framework. These quarterly updates keep the Audit Committee apprised of our ongoing cybersecurity
enhancements and any emerging global threats. The Audit Committee keeps the remaining Board of Directors apprised of material
risks from cybersecurity threats.
Management’s Role in Assessing and Managing Material Risks from Cybersecurity Threats
Our Information Technology and Security team is responsible for the management, maintenance, monitoring and response of
our critical internal digital assets. This team is led by our Senior Director of Global Information Technology and Security, who has 25
58
years of cyber and Enterprise IT management experience. This position monitors current cyber risk trends, engages with 3rd party
cyber security experts, and meets with the Infrastructure and Security team regularly to stay apprised of internal cyber risks.
Our internal cybersecurity testing and reporting processes allow us to rank our overall risk on a periodic basis to ensure we
identify and respond to internal risk trends. We follow escalation procedures to ensure communication of cyber-related events. The
Board and management have made cybersecurity education and training a part of our overall corporate objectives, setting the tone for
the organization about the importance of cybersecurity.
As of the date of this report, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not
materially affected or are not reasonably likely to affect the Company, including our business strategy, results of operations or
financial condition. For information regarding cybersecurity risks, see our discussion above in Item 1A. Risk Factors - Risks Related to
Our Business - Our internal computer systems, or those of our third party clinical research organizations or other contractors or
consultants, may fail or suffer security breaches, which could result in a material disruption of our commercial, research and
development and other programs.
Item 2. Properties
The following table lists the location, use and ownership interest of our principal properties as of February 29, 2024:
Location
Dublin, Ireland
Bridgewater, New Jersey, USA
Zug, Switzerland
Use
Offices
Offices
Offices
Ownership
Leased
Leased
Leased
Size (sq. ft.)
2,674
67,747
4,511
On September 13, 2022, we entered into a license agreement for office space in Dublin, Ireland, effective October 1, 2022
which terminates on September 30, 2024, and can be extended automatically for successive two-year periods. On May 2, 2023, we
entered into an agreement to lease additional office space at our Dublin office, effective June 1, 2023 which terminates on September
30, 2024, and can be extended automatically for successive two year periods.
Effective February 5, 2019, we entered into a lease agreement for approximately 67,747 square feet of office space in
Bridgewater, New Jersey. The lease commenced on August 15, 2019, for an 11-year period, with two five-year renewal options. On
January 20, 2023, we entered into a sublease agreement to sublease 50,000 square feet of the leased 67,747 square feet of office space
in Bridgewater, New Jersey. The sublease commenced on February 1, 2023 and terminates as of the date of the head lease.
On October 10, 2021, we entered into a lease agreement for approximately 4,511 square feet of office space in Zug,
Switzerland. The lease commenced on February 1, 2022 for a five-year period, with one five-year renewal option.
We believe that our facilities are adequate for our current and anticipated near-term needs and that suitable additional or
substitute space would be available if needed.
Item 3. Legal Proceedings
In the ordinary course of business, we are from time to time involved in lawsuits, claims, investigations, proceedings, and
threats of litigation relating to intellectual property, commercial arrangements and other matters. Refer to Note—7 Commitments and
Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details on
our legal proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
59
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our ADSs are listed on The NASDAQ Global Market under the symbol “AMRN”. Each ADS represents one ordinary share.
The following table sets forth the high and low prices for our ADSs in each of the quarters over the past two fiscal years, as
quoted on The NASDAQ Global Market under the symbol “AMRN.”
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Shareholders
Common Stock Price
Fiscal 2023
Fiscal 2022
High
Low
High
Low
$
$
$
$
2.23
1.50
1.49
0.93
$
$
$
$
1.15
1.10
0.84
0.65
$
$
$
$
3.82
3.74
1.71
1.38
$
$
$
$
2.76
1.11
1.04
1.06
As of January 31, 2024, there were approximately 350 holders of record of our ordinary shares. Because many ordinary shares
are held by broker nominees, we are unable to estimate the total number of shareholders represented by these record holders. Our
depositary, Citibank, N.A., constitutes a single record holder of our ordinary shares.
Dividends
We have never paid dividends on our ordinary shares and do not anticipate paying any cash dividends on our ordinary shares in
the foreseeable future. Under English law, any payment of dividends would be subject to relevant legislation and our Articles of
Association, which requires that all dividends must be approved by our board of directors and, in some cases, our shareholders, and
may only be paid from our distributable profits available for the purpose, determined on an unconsolidated basis.
Share Repurchase Program
On January 10, 2024, we announced plans to initiate a share repurchase program to purchase up to $50.0 million of our ordinary
shares held in the form of ADSs. The implementation of the share repurchase program will require shareholder approval as well as UK
High Court approval, as required under UK company law.
Performance Graph—5 Year
The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the
SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities
Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
The following graph compares the cumulative five-year return provided to shareholders of our ADSs relative to the cumulative
total returns of the NASDAQ Composite Index and the NASDAQ Biotechnology Index. We believe these indices are the most
appropriate indices against which the total shareholder return of Amarin should be measured. The NASDAQ Biotechnology Index has
been selected because it is an index of U.S. quoted biotechnology and pharmaceutical companies. An investment of $100 (with
reinvestment of all dividends) is assumed to have been made in our ADSs and in each of the indices on December 31, 2018, and its
relative performance is tracked through December 31, 2023.
Included in this five-year time period is the substantial positive impact on the price of Amarin’s ADSs in 2018 following
presentation and publication of positive REDUCE-IT results and, in late 2019, following approval by the FDA of a new indication and
label expansion for VASCEPA to reduce cardiovascular risk. Also included during this five-year period is the substantial negative
impact on the price of Amarin’s ADSs in 2020 following the loss of the Company’s patent litigation and subsequent appeal.
60
Company/Market/Peer Company
Amarin Corporation PLC
NASDAQ Composite Index
NASDAQ Biotechnology Index
12/31/2019
163.26
133.65
118.20
$
$
$
12/31/2020
37.95
190.01
151.85
$
$
$
12/31/2021
25.53
232.16
146.49
$
$
$
12/31/2022
9.17
155.32
130.51
$
$
$
12/31/2023
6.59
222.76
135.39
$
$
$
Information about Our Equity Compensation Plans
Information regarding our equity compensation plans is incorporated by reference in Item 12 of Part III of this Annual Report on
Form 10-K.
Recent Sales of Unregistered Securities
None
Issuer Purchases of Equity Securities
Shares purchased in the fourth quarter of 2023 are as follows:
Period
October 1 – 31, 2023
November 1 – 30, 2023
December 1 – 31, 2023
Total
Total Number of
Shares Purchased (1)
20,290
35,343
161,456
217,089
$
$
Average Price
Paid per Share
0.87
0.74
0.86
0.84
(1) Represents shares withheld to satisfy tax withholding amounts due from employees related to the exercise or vesting of equity
awards.
Taxation
The following summary contains a description of material U.S., UK and Irish federal income tax consequences of the ownership
and disposition of our ordinary shares or ADSs. This summary should not be considered a comprehensive description of all the tax
considerations that may be relevant to beneficial owners of ordinary shares or ADSs.
Certain Material U.S. Tax Considerations
The following is a summary of certain U.S. federal income tax considerations with respect to the ownership and disposition of
ordinary shares or ADSs by a U.S. Holder (as defined below). This summary applies to you only if you hold ordinary shares or ADSs
as a capital asset. This summary is based upon the U.S. Internal Revenue Code of 1986, as amended, which is referred to herein as the
Code, regulations promulgated under the Code and administrative rulings and judicial decisions as in effect on the date of this Annual
Report on Form 10-K, all of which are subject to change and to differing interpretations, possibly with retroactive effect, which could
result in U.S. federal income tax considerations different from those summarized below.
61
This summary is general in nature and does not address the effects of any state or local taxes, the tax consequences in
jurisdictions other than the United States or any U.S. federal taxes other than income tax (such as estate or gift tax). In addition, it does
not address U.S. federal income tax consequences that may be relevant to you in your particular circumstances, including alternative
minimum tax consequences, nor does it apply to you if you are a holder with a special status, such as:
•
•
•
•
•
•
•
•
•
•
•
a person that owns, or is treated as owning under certain ownership attribution rules, 10% or more of the voting power or value of
the stock of Amarin;
a broker, dealer or trader in securities or currencies;
a bank, mutual fund, life insurance company or other financial institution;
a tax-exempt entity;
a qualified retirement plan or individual retirement account;
a person that holds ordinary shares or ADSs as part of a straddle, hedge, constructive sale or other integrated transaction for tax
purposes;
a partnership, S corporation or other pass-through entity;
an investor in a partnership, S corporation or other pass-through entity;
a person that is required to report income with respect to ordinary shares or ADSs no later than such income is reported on an
“applicable financial statement;”
a person who received ordinary shares or ADSs in connection with the performance of services; and
a person whose functional currency for U.S. federal income tax purposes is not the U.S. dollar.
If an entity treated as a partnership for U.S. federal income tax purposes holds ordinary shares or ADSs, the tax treatment of a
partner will generally depend upon the status of the partner and upon the activities of the partnership. A partner of a partnership that
owns or disposes of ADSs should consult the partner’s tax advisor regarding the specific tax consequences of the ownership and
disposition of ordinary shares or ADSs.
YOU SHOULD CONSULT YOUR OWN ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OWNERSHIP
AND DISPOSITION OF ORDINARY SHARES AND ADSS IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES.
U.S. holders
For purposes of this discussion, a U.S. Holder is any beneficial owner of an ordinary share or ADS that is, for U.S. federal
income tax purposes:
•
•
•
•
an individual who is a citizen or resident of the United States, any state thereof or the District of Columbia;
a corporation created or organized under the laws of the United States, any state thereof or the District of Columbia;
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or,
a trust (i) that validly elects to be treated as a U.S. person for U.S. federal income tax purposes, or (ii) the administration over
which a U.S. court can exercise primary supervision and all of the substantial decisions of which one or more U.S. persons have
the authority to control.
Distributions
Subject to the discussion under “—Passive Foreign Investment Company,” below, the gross amount of distributions, if any,
payable on ordinary shares and ADSs generally would be treated as dividend income to the extent paid out of current or accumulated
earnings and profits (as determined for U.S. federal income tax purposes). A U.S. Holder would be required to include the amount of
such distribution in gross income as a dividend (without reduction for any income tax withheld from such distribution). Because we do
not maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should
assume that any distribution by us with respect to the ordinary shares and ADSs will constitute ordinary dividend income.
Subject to the discussion under “—Passive Foreign Investment Company,” below, as long as our ordinary shares or ADSs (as
applicable) are treated as publicly traded on an established securities market, or we are eligible for the benefits of the U.S.-Irish Tax
Treaty, any distributions treated as dividends will generally be qualified dividend income in the hands of non-corporate U.S. Holders,
provided that certain significant holding period and other requirements are met. Any dividends that are qualified dividend income will
62
generally be taxed at preferential rates to a non-corporate U.S. Holder. Any dividends paid to a corporate holder will not be eligible
for the dividends received deduction.
U.S. Holders generally may claim the amount of Irish withholding tax withheld either as a deduction from gross income or as a
credit against U.S. federal income tax liability. However, the foreign tax credit is subject to numerous complex limitations that must
be determined and applied on an individual basis. Generally, the credit cannot exceed the proportionate share of a U.S. Holder’s U.S.
federal income tax liability that such U.S. Holder’s foreign source taxable income bears to such U.S. Holder’s worldwide taxable
income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as
either foreign source or U.S. source. In addition, this limitation is calculated separately with respect to specific categories of income.
The amount of a distribution with respect to the ordinary shares or ADSs that is treated as a dividend may be lower for U.S. federal
income tax purposes than it is for Irish income tax purposes, potentially resulting in a reduced foreign tax credit for the U.S. Holder.
Each U.S. Holder should consult its own tax advisors regarding the foreign tax credit rules.
The amount of a distribution paid to a U.S. Holder of ordinary shares or ADSs in foreign currency generally will be equal to the
U.S. dollar value of such distribution based on the exchange rate applicable on the date of receipt. A U.S. Holder that does not convert
foreign currency received as a distribution into U.S. dollars on the date of receipt generally will have a tax basis in such foreign
currency equal to the U.S. dollar value of such foreign currency on the date of receipt. Such a U.S. Holder generally will recognize
ordinary income or loss on the subsequent sale or other taxable disposition of such foreign currency (including an exchange for U.S.
dollars).
Sale or other disposition of ordinary shares or ADSs
Subject to the discussion under “—Passive Foreign Investment Company,” below, in general, if you sell or otherwise dispose of
ordinary shares or ADSs in a taxable disposition:
•
•
•
you will recognize gain or loss equal to the difference (if any) between the U.S. dollar value of the amount realized on such sale
or other taxable disposition and your adjusted tax basis in such ordinary shares or ADSs;
any gain or loss will be capital gain or loss and will be long-term capital gain or loss if your holding period for the ordinary shares
or ADSs sold or otherwise disposed of is more than one year at the time of such sale or other taxable disposition; and,
any gain or loss will generally be treated as U.S.-source income for U.S. foreign tax credit purposes, although special rules apply
to U.S. Holders who have a fixed place of business outside the United States to which this gain is attributable.
Under current law, long-term capital gains of non-corporate U.S. Holders are taxed at reduced rates. The deductibility of capital
losses is subject to limitations.
In certain circumstances, amounts received by a U.S. Holder upon the redemption of ordinary shares or ADSs may be treated as
a dividend with respect to such ordinary shares or ADSs, rather than as a payment in exchange for such ordinary shares or ADSs that
results in the recognition of capital gain or loss. In these circumstances, the redemption payment would be included in a U.S. Holder’s
gross income as a dividend to the extent such payment is made out of our earnings and profits (as described above). The determination
of whether redemption of ordinary shares or ADSs will be treated as a dividend, rather than as a payment in exchange for such
ordinary shares or ADSs, will depend, in part, on whether and to what extent the redemption reduces the U.S. Holder’s ownership in
us (including as a result of certain constructive ownership attribution rules). The rules applicable to redemptions are complex, and
each U.S. Holder should consult its own tax adviser to determine the consequences of any redemption.
Passive foreign investment company
PFIC Rules Generally. U.S. Holders of ordinary shares and ADSs should be aware that each of Amarin and certain of its
subsidiaries could constitute a PFIC for U.S. federal income tax purposes. The tests for determining PFIC status for a taxable year
depend upon the relative values of certain categories of assets and the relative amounts of certain kinds of income. The application of
these factors depends upon our financial results for the year, which are beyond our ability to predict or control, and the application of
the relevant rules is subject to legal and factual uncertainties. Based on certain estimates of our gross income and gross assets, the
latter determined by reference to the expected value of our ADSs and ordinary shares, we believe that we will not be classified as a
PFIC for the taxable year ended December 31, 2023, and we do not expect to be treated as a PFIC in any future taxable year for the
foreseeable future. However, there can be no assurance that we will not be classified as a PFIC for any taxable year.
In general terms, we will be a PFIC for any taxable year in which either (i) 75% or more of its our gross income is passive
income, or the income test, or (ii) the average percentage, by fair market value, of our assets that produce or are held for the
production of passive income is 50% or more, or the asset test. “Passive income” includes, for example, dividends, interest, certain
rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.
63
If we are a PFIC for any year, subject to the discussion of QEF (as defined herein) and mark-to-market elections below, a U.S.
taxpayer who disposes or is deemed to dispose of an ordinary share or ADS at a gain or who receives a distribution treated as an
“excess distribution” on an ordinary share or ADS generally would be required to allocate such gain and distribution ratably to each
day in the U.S. taxpayer’s holding period for the ordinary share or ADS in question.
The portion of any excess distributions including gains, which are treated for all purposes as excess distributions, allocated to
the current taxable year or to a year prior to the first year in which we were a PFIC would be includible as ordinary income in the
current taxable year. In contrast, the portion of any excess distributions allocated to the first year in the U.S. Holder’s holding period
in which we were a PFIC and any subsequent year or years (excluding the current year) would be taxed at the highest marginal rate
applicable to ordinary income for each year (regardless of the U.S. Holder’s actual marginal rate for that year and without reduction
by any losses or loss carryforwards) and would be subject to interest charges to reflect the value of the U.S. federal income tax
deferral.
In accordance with the rules above, if we are or were a PFIC at any time during the U.S. Holder’s holding period, none of the
gain recognized on the sale or other disposition of an ordinary share or ADS would be eligible for the preferential long-term capital
gains rate. In addition, dividends generally will not be qualified dividend income if in the year of payment or the preceding year we
are a PFIC.
Certain elections may sometimes be used to reduce the adverse impact of the PFIC rules on U.S. Holders qualifying electing
fund, or QEF, and mark-to-market elections, but these elections may accelerate the recognition of taxable income and may result in
the recognition of ordinary income.
QEF Election. The rules described above for excess distributions would not apply to a U.S. Holder if the U.S. Holder makes a
timely QEF election for the first taxable year of the U.S. Holder’s holding period for ordinary shares or ADSs during which we are a
PFIC and we comply with specified reporting requirements. A timely QEF election for a taxable year generally must be made on or
before the due date (as may be extended) for filing the taxpayer’s U.S. federal income tax return for the year. A U.S. Holder who
makes a QEF election generally must report and include in income on a current basis a pro rata share of our ordinary earnings and net
capital gain for any taxable year in which we are a PFIC, whether or not those earnings or gains are distributed. A U.S. Holder who
makes a QEF election must file a Form 8621 with its annual income tax return. For U.S. Holders who seek to make a QEF election,
with respect to our ordinary shares or ADSs, we will make available an information statement that will contain the necessary
information required for making a QEF election and permit such U.S. Holders access to certain information in the event of an audit by
the U.S. tax authorities.
If a U.S. Holder does not make a QEF election for the first taxable year of the U.S. Holder’s holding period for ordinary shares
or ADSs during which we are a PFIC, the QEF election will not be treated as timely and the adverse tax regime described above
would apply to dispositions of or excess distributions on the ordinary shares or ADSs. In such case, a U.S. Holder may make a deemed
sale election whereby the U.S. Holder would be treated as if the U.S. Holder had sold the ordinary shares or ADSs in a fully taxable
sale at fair market value on the first day of such taxable year in which the QEF election takes effect. Such U.S. Holder would be
required to recognize any gain on the deemed sale as an excess distribution and pay any tax and interest due on the excess distribution
when making the deemed sale election. The effect of such further election would be to restart the U.S. Holder’s holding period in the
ordinary shares or ADSs, subject to the QEF regime, and to purge the PFIC status of such ordinary shares or ADSs going forward.
Mark-to-Market Election. If we are or become a PFIC, a U.S. Holder of ordinary shares or ADSs may elect to recognize any
gain or loss on ordinary shares or ADSs on a mark-to-market basis at the end of each taxable year, so long as the ordinary shares and
ADSs, respectively, are regularly traded on a qualifying exchange. The mark-to-market election under the PFIC rules is an alternative
to the QEF election. A U.S. Holder who makes a mark-to-market election generally must recognize as ordinary income all
appreciation inherent in the U.S. Holder’s investment in ordinary shares or ADSs on a mark-to-market basis and may recognize losses
inherent in such ordinary shares or ADSs only to the extent of prior mark-to-market gain recognition. The income and deductions
entailed by the mark-to-market regime will increase and decrease the U.S. Holder’s adjusted basis in its ordinary shares or ADSs.
Upon a sale or other disposition of ordinary shares or ADSs that have been marked-to-market, any gain recognized will be treated as
ordinary income. The mark-to-market election must be made by the due date (as may be extended) for filing the U.S. Holder’s federal
income tax return for the first year in which the election is to take effect. If a mark-to-market election is made after the first taxable
year of a U.S. Holder’s holding period, any gain recognized in the year of the election will be treated like an excess distribution (as
described above). Whether or not the mark-to-market election is available will depend on whether the ordinary shares or ADSs are
regularly traded on a qualifying exchange and we cannot provide assurance that the ordinary shares or ADSs will be considered
regularly traded (which determination is based on the volume of trading of the ordinary shares or ADSs) for all years in which we may
be a PFIC.
Rules for Lower-Tier PFIC Subsidiaries. Special adverse rules apply to U.S. Holders of ordinary shares or ADSs for any year
in which we are a PFIC and have a non-U.S. subsidiary that is also a PFIC, or a lower-tier PFIC. If we are or become a PFIC and a
64
U.S. Holder does not make a QEF election (as described above) in respect of any lower-tier PFIC, the U.S. Holder could incur liability
for the deferred tax and interest charge described above if (i) we receive a distribution from, or disposes of all or part of our interest in,
the lower-tier PFIC or (ii) the U.S. Holder disposes of all or part of its ordinary shares or ADSs. A QEF election that is made for
ordinary shares or ADSs will not apply to a lower tier PFIC, although a separate QEF election may be made with respect to a lower-
tier PFIC. For U.S. Holders who seek to make a QEF election, with respect to our ordinary shares or ADSs, we will make available an
information statement that will contain the necessary information required for making a QEF election with respect to any lower-tier
PFIC and permit such U.S. Holders access to certain information in the event of an audit by the U.S. tax authorities. For U.S. Holders
that make a mark-to-market election for Amarin, if available, no such election may be made with respect to the stock of a lower-tier
PFIC that a U.S. Holder is treated as owning if such stock is not marketable. Hence, the mark-to-market election will not be effective
to eliminate a U.S. Holder’s liability for the deferred tax and interest charge described above with respect to deemed dispositions of
lower-tier PFIC stock or distributions from a lower-tier PFIC.
Taxpayer Reporting Obligations. A U.S. Holder’s ownership of ordinary shares or ADSs in a PFIC generally must be reported
by filing Form 8621 with the U.S. Holder’s annual U.S. federal income tax return. Every U.S. Holder who is a shareholder in a PFIC
must file an annual report containing the information required by the IRS.
The PFIC rules are extremely complex, and U.S. Holders are urged to consult their own tax advisers regarding the potential tax
consequences of Amarin being classified as a PFIC.
Medicare tax
Certain U.S. Holders that are individuals, estates or trusts are required to pay up to an additional 3.8% tax on the lesser of (i) the
U.S. person’s net investment income (or undistributed net investment income in the case of an estate or trust) for the relevant taxable
year and (ii) the excess of the U.S. person’s modified adjusted gross income (or adjusted gross income, in the case of an estate or trust)
for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on
the individual’s circumstances). A U.S. Holder’s net investment income will include dividends and capital gains on the U.S. Holder’s
ordinary shares and ADSs. U.S. Holders should consult their own tax advisors regarding the effect, if any, of the Medicare tax on the
ownership and disposition of ordinary shares or ADSs.
Taxpayer reporting obligations
Certain U.S. Holders that hold certain foreign financial assets are required to report information relating to such assets to the
IRS, subject to certain exceptions. U.S. Holders may also be required to make other tax filings with respect to their investments in our
ordinary shares and ADSs, including IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation). Failure to
provide such information could result in significant additional taxes and penalties. U.S. Holders should consult their own tax advisors
regarding potential reporting obligations.
U.S. Information reporting and backup withholding
U.S. Holders of ordinary shares and ADSs may be subject to information reporting and may be subject to backup withholding
on distributions on ordinary shares and ADSs or on the proceeds from a sale or other disposition of ordinary shares and ADSs paid
within the United States. Payments of distributions on, or the proceeds from the sale or other disposition of ordinary shares and ADSs
to or through a foreign office of a broker generally will not be subject to backup withholding, although information reporting may
apply to those payments in certain circumstances. Backup withholding will generally not apply, however, to a U.S. Holder who:
•
•
furnishes a correct taxpayer identification number and certifies that the U.S. Holder is not subject to backup withholding on IRS
Form W-9, Request for Taxpayer Identification Number and Certification (or substitute form); or
is otherwise exempt from backup withholding.
Backup withholding is not an additional tax. Any amounts withheld from a payment to a holder under the backup withholding
rules may be credited against the holder’s U.S. federal income tax liability, and a holder may obtain a refund of any excess amounts
withheld by filing the appropriate claim for refund with the IRS in a timely manner. U.S. Holders should consult their own tax
advisors regarding information reporting and potential back up withholdings.
Certain Material UK Tax Considerations
The following discussion is limited to an overview of the tax consequences of ownership and disposition of ordinary shares, or
such shares represented by ADSs (those ordinary shares or ADSs deriving over 75% of their value otherwise than from United
Kingdom land). Each shareholder should however seek individual tax advice as specific rules may apply in certain circumstances.
65
Capital gains
If you are not resident in the United Kingdom, or UK, for UK tax purposes, you will not be liable for UK tax on capital gains
realized or accrued on the sale or other disposition of ordinary shares or ADSs unless the ordinary shares or ADSs are held in
connection with your trade carried on in the UK through a branch or agency and the ordinary shares or ADSs are or have been used,
held or acquired for the purposes of such trade or such branch or agency.
An individual holder of ordinary shares or ADSs who ceases to be resident in the UK for UK tax purposes for a period of less
than five years and who disposes of ordinary shares or ADSs during that period may also be liable on returning to the UK for UK
capital gains tax despite the fact that the individual may not be resident in the UK at the time of the disposal.
Inheritance tax
If you are an individual domiciled in the United States and are not a national of the UK for the purposes of the Inheritance and
Gift Tax Treaty 1978 between the United States and the UK, any ordinary shares or ADS beneficially owned by you will not generally
be subject to UK inheritance tax on your death or on a gift made by you during your lifetime, provided that any applicable United
States federal gift or estate tax liability is paid, except where the ordinary share or ADS is part of the business property of your UK
permanent establishment. Where the ordinary shares or ADSs have been placed in trust by a settlor who, at the time of the settlement,
was domiciled in the United States and not a national of the UK, the ordinary shares or ADSs will not generally be subject to UK
inheritance tax.
Stamp duty and stamp duty reserve tax
Transfer of ADSs and ADRs representing ADSs
No UK stamp duty or stamp duty reserve tax will be payable on an instrument transferring an ADS or an American Depositary
Receipt, or ADR, representing an ADS or on a written agreement to transfer an ADS or an ADR representing an ADS whether made
in or outside the UK.
Issue and transfer of ordinary shares
The issue of ordinary shares by Amarin will not give rise to a charge to UK stamp duty or stamp duty reserve tax. Transfers of
ordinary shares, as opposed to ADSs or ADRs representing ADSs, will generally attract ad valorem stamp duty at the rate of 0.5% of
the amount or value of the consideration (or in some circumstances, the open market value of those ordinary shares, if higher). A
charge to stamp duty reserve tax, at the rate of 0.5% of the amount or value of the consideration (or in some circumstances, the open
market value of the ordinary shares, if higher), will generally arise on an agreement to transfer ordinary shares. The stamp duty reserve
tax is payable on the seventh day of the month following the month in which the charge arises. Where an instrument of transfer is
executed and duly stamped before the expiry of a period of six years beginning with the date of that agreement, any stamp duty
reserve tax that has not been paid ceases to be payable.
Taxation of dividends
Under UK law, there is no withholding tax on dividends paid on the ordinary shares or ADSs.
Certain Material Irish Tax Considerations
The summary only applies to U.S. Holders that legally and beneficially hold their ordinary shares, or such shares represented by
ADSs evidenced by ADRs as capital assets (i.e., investments) and does not address special classes of holders including, but not limited
to, dealers in securities, insurance companies, pension schemes, employee share ownership trusts, collective investment undertakings,
charities, tax-exempt organizations, financial institutions and close companies, each of which may be subject to special rules not
discussed below.
Solely for the purposes of this summary of Irish Tax Considerations, a U.S. Holder means a holder of shares or ADSs evidenced
by ADRs that (i) beneficially owns the shares or ADSs registered in their name, (ii) is resident in the United States for the purposes of
the Ireland-United States Double Taxation Convention, or the Treaty, (iii) in the case of an individual holder, is not also resident or
ordinarily resident in Ireland for Irish tax purposes, (iv) in the case of a corporate holder, is not a resident in Ireland for Irish tax
purposes and is not ultimately controlled by persons resident in Ireland, and (v) is not engaged in any trade or business and does not
perform independent personal services through a permanent establishment or fixed base in Ireland, and (vi) is a qualified person as
defined in Article 23 of the Treaty.
For Irish taxation purposes, and for the purposes of the Treaty, U.S. Holders of ADSs will be treated as the owners of the shares
represented by such ADSs.
66
The following discussion is limited to the tax consequences of ownership and disposition of shares or ADSs. Tax considerations
applicable to other types of securities will be described in the related prospectus supplement.
Taxation of dividends
We do not expect to pay dividends in the foreseeable future. Should we begin paying dividends, such dividends will generally
be subject to dividend withholding tax, or DWT, in Ireland at a rate of 25%. Where DWT applies, we will be responsible for
withholding such tax at source.
Dividends paid by us to U.S. Holders of shares or ADSs evidenced by ADRs will be exempt from DWT if, prior to the payment
of such dividends, the recipient U.S. Holder delivers to us a declaration in the form prescribed by the Irish Revenue Commissioners.
In addition, a certificate of residency in the form prescribed by the Irish Revenue Commissioners, will also be required if the U.S.
holder is an individual.
Where DWT is withheld from dividend payments to U.S. Holders of shares or ADSs evidenced by ADRs, such U.S. Holders
can apply to the Irish Revenue Commissioners claiming a full refund of DWT paid by filing a declaration in the form prescribed by
the Irish Revenue Commissioners. As above, a certificate of residency in the form prescribed by the Irish Revenue Commissioners,
will also be required if the U.S. holder is an individual.
The DWT rate applicable to U.S. Holders may be reduced under the terms of the Treaty, however, in the first instance, an
exemption should be in place under Irish domestic legislation.
Irish source income
U.S. Holders will not be liable to Irish income tax on dividends paid by us.
Capital gains on disposals of shares or ADSs
U.S. Holders will not be subject to Irish capital gains tax, or CGT, on the disposal of shares or ADSs provided that such shares
or ADSs are quoted on a stock exchange at the time of disposition such as Nasdaq. While it is our intention to continue the listing of
ADSs on Nasdaq, no assurances can be given in this regard.
If, for any reason, our ADSs cease to be listed on Nasdaq, U.S. Holders will not be subject to CGT on the disposal of their
shares or ADSs provided that the shares or ADSs do not, at the time of the disposal, derive the greater part of their value from land,
buildings, minerals, or mineral rights or exploration rights in Ireland.
Irish Capital Acquisitions Tax (CAT)
CAT comprises principally gift and inheritance tax. A gift or inheritance of shares or ADSs will come within the charge to CAT
if either:
(i) the disponer or the donee/successor in relation to the gift or inheritance is resident or ordinarily resident in Ireland (please
note that special rules with regard to residence apply where an individual is not domiciled in Ireland); or
(ii) the ordinary shares or ADSs are regarded as property situated in Ireland (e.g. shares would be regarded as Irish property if
the share register is maintained in Ireland. ADSs, if registered, will be regarded as Irish property if the register is maintained in
Ireland, or, if in bearer form, if the instrument of ownership is located in Ireland).
On the basis that the shares or ADSs (assuming they are registered) should not be regarded as property situated in Ireland (given
that the registers are not maintained in Ireland), a gift or inheritance of the shares or ADSs should only come within the charge to Irish
CAT if either the disponer or donee/successor is resident or ordinarily resident in Ireland at the date of the gift or inheritance.
The rate of CAT is currently 33% and is payable if the taxable value of the gift or inheritance exceeds certain tax-free
thresholds. The appropriate tax-free threshold depends on the relationship between the disponer and the donee/successor. A gift or
inheritance received from a spouse is exempt from CAT.
The person who receives the gift or inheritance is generally accountable for any CAT due.
Irish stamp duty
No Irish stamp duty should arise on the issue or transfer for cash of shares or ADSs on the basis that such a transfer does not
relate to stocks or marketable securities of an Irish registered company.
67
Item 6. [Reserved]
68
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Annual Report on Form 10-K contains forward-looking statements concerning future events and our performance. When
used in this Annual Report on Form 10-K, the words “may,” “would,” “should,” “could,” “expects,” “aims,” “plans,”
“anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” or “continue” or the negative of these terms or other
comparable terminology are included to identify forward-looking statements. These statements include but are not limited to
statements regarding the commercial success of VASCEPA and factors that can affect such success; interpretation of court decisions;
plans with respect to litigation; expectation on determinations and policy positions of the United States Food and Drug
Administration, or U.S. FDA; the safety and efficacy of our product and product candidates; expectation regarding the potential for
VASCEPA to be partnered, developed and commercialized outside of the United States; expectation on the scope and strength of our
intellectual property protection and the likelihood of securing additional patent protection; estimates of the potential markets for our
product candidates; estimates of the capacity of manufacturing and other facilities to support our products; our operating and growth
strategies; our industry; our projected cash needs, liquidity and capital resources; and our expected future revenues, operations and
expenditures. These forward-looking statements are based on our current expectations and assumptions and many factors could cause
our actual results to differ materially from those indicated in these forward-looking statements. You should review carefully the
factors identified in this Annual Report on Form 10-K in Item 1A, “Risk Factors”. We disclaim any intent to update or announce
revisions to any forward-looking statements to reflect actual events or developments, except as required by law. Except as otherwise
indicated herein, all dates referred to in this Annual Report on Form 10-K represent periods or dates fixed with reference to our fiscal
year ended December 31, 2023.
Overview
We are a pharmaceutical company focused on the commercialization and development of therapeutics to improve
cardiovascular, or CV, health and reduce CV risk. Our commercialized product, VASCEPA® (icosapent ethyl) was first approved by
the United States, or U.S., Food and Drug Administration, or U.S. FDA, for use as an adjunct to diet to reduce triglyceride, or TG,
levels in adult patients with severe (≥500 mg/dL) hypertriglyceridemia, or the MARINE indication and we commercially launched in
2013. On December 13, 2019, the U.S. FDA approved an indication and label expansion for VASCEPA based on the landmark results
of our cardiovascular outcomes trial, REDUCE-IT®, or Reduction of Cardiovascular Events with EPA – Intervention Trial.
VASCEPA is the first and only drug approved by the U.S. FDA as an adjunct to maximally tolerated statin therapy for reducing
persistent cardiovascular risk in select high risk-patients, or the REDUCE-IT indication. On March 26, 2021, the European
Commission, or EC, granted approval of the marketing authorization application in the European Union, or EU, for VAZKEPA®,
hereinafter along with the U.S. brand name VASCEPA, collectively referred to as VASCEPA, which is the first and only EC approved
therapy to reduce cardiovascular risk in high-risk statin-treated patients with elevated TG levels. On April 22, 2021, we announced
that we received marketing authorization from the Medicines and Healthcare Products Regulatory Agency, or MHRA, for VAZKEPA
in England, Wales and Scotland to reduce cardiovascular risk. On June 1, 2023, we announced that regulatory approval from the
National Medical Products Administration, or NMPA, for VASCEPA in Mainland China was received by our partner for the
MARINE indication.
VASCEPA is currently available by prescription in the U.S. and certain other countries throughout the world, as described
below. We are responsible for the supply of VASCEPA to all markets in which the branded product is sold, either to and through our
collaborations with third-party companies or by us. We are not responsible for providing any generic company with drug product.
Geographies outside the United States in which VASCEPA is sold and under regulatory review are not subject to the U.S. patent
litigation and judgment described below and no similar litigation is pending outside of the United States.
Organizational Restructuring Program
On July 18, 2023, we announced that we were implementing a new Organizational Restructuring Program, or the ORP, resulting
in the elimination and consolidation of certain roles across our organization, both in the U.S. and abroad, representing a reduction of
our total employee base by approximately 30%. The ORP was implemented following a review of our business and to better position
the organization for a new strategic focus. We expect the ORP will reduce operating costs by approximately $40.0 million annually.
Our refocused strategic priorities and restructuring plan focuses on three core areas:
•
•
Maximizing U.S. Cash Flow Through Streamlined Model: We have maintained VASCEPA as a cost-competitive option to
generics despite the elimination of all U.S. sales force positions and approximately 30% of non-sales positions. We
maintained our managed care and trade organization to support these efforts. We continue to explore innovative
approaches to driving revenue to maintain our leadership position in the icosapent ethyl, or IPE, market.
European Redesign: We redesigned our commercial infrastructure in Europe to better align with pricing and
reimbursement status, commercial progress to date, as well as streamline certain cross-geographic functions and better
leverage learnings across countries. In addition, we will continue to advance our pricing and reimbursement activities to
drive access in remaining geographies, including those where progress has been delayed.
69
•
Expanding Upon International Partnerships: We continue to work on generating revenue from our partnerships in key
international markets, including Canada, MENA, China, South Korea, Australia and New Zealand and will continue to
explore additional partnerships.
United States
VASCEPA is sold principally to a limited number of major wholesalers, as well as selected regional wholesalers and retail and
mail order pharmacy providers, or collectively, our distributors or our customers, most of whom in turn resell VASCEPA to retail
pharmacies for subsequent resale to patients. Since VASCEPA was made commercially available in 2013, approximately 25 million
estimated normalized total prescriptions of VASCEPA have been reported by Symphony Health. In 2020, following our unsuccessful
appeals of a court ruling in favor of two generic drug companies, Dr. Reddy’s Laboratories, Inc., or Dr. Reddy’s, and Hikma
Pharmaceuticals USA Inc., or Hikma, and certain of their affiliates, several of our patents covering the MARINE indication were
declared invalid. As a result, the following generic versions of VASCEPA have obtained U.S. FDA approval with labeling consistent
with the MARINE indication and have entered the U.S. market:
Company
Hikma Pharmaceuticals USA Inc.
Dr. Reddy’s Laboratories, Inc.
Teva Pharmaceuticals USA, Inc.
Apotex, Inc.
Zydus Lifesciences
Strides Pharma
Epic Pharma
FDA MARINE Indication
Approval
May 2020
August 2020
September 2020
June 2021
April 2023
September 2023
December 2023
1-gram Launch Date
November 2020
June 2021
January 2023
January 2022
N/A
N/A
N/A
0.5-gram Launch Date
March 2023
June 2023
September 2022
N/A
N/A
N/A
N/A
We obtain data from a third party, Symphony Health, which collects and reports estimates of weekly, monthly, quarterly and
annual prescription information. There is a limited amount of information available to determine the actual number of total
prescriptions for products like VASCEPA during such periods. The vendor's estimate utilizes a proprietary projection methodology
and is based on a combination of data received from pharmacies and other distributors, as well as historical data when actual data is
unavailable. Based on data from Symphony Health, the below chart represents the estimated number of normalized total VASCEPA
prescriptions.
Normalized total prescriptions represent the estimated total number of VASCEPA prescriptions dispensed to patients, calculated
on a normalized basis (i.e., one month’s supply, or total capsules dispensed multiplied by the number of grams per capsule divided by
120 grams). Inventory levels at wholesalers tend to fluctuate based on seasonal factors, prescription trends and other factors.
The previous calculations of prescription levels by this vendor can change between periods and can be significantly affected by
lags in data reporting from various sources or by changes in pharmacies and other distributors providing data. Such methods can from
70
time to time result in significant inaccuracies in information when ultimately compared with actual results. These inaccuracies have
historically been most prevalent and pronounced during periods of time of inflections upward or downward in rates of use. Further,
data for a single and limited period may not be representative of a trend or otherwise predictive of future results. We are not
responsible for the accuracy of this vendor's information and we do not receive prescription data directly from retail pharmacies.
Europe
In 2021, we received marketing authorization and regulatory approval in the EU, England, Wales and Scotland.
Launch of VAZKEPA in individual countries depends on the timing of achieving product reimbursement on a country-by-
country basis. To date we have filed 15 dossiers to gain market access in European countries, including in all of the largest countries
in Europe. In most European countries, securing product reimbursement is a requisite to launching. In certain countries, such as
Denmark, individual patient reimbursement is allowed prior to national reimbursement. In countries where individual price
reimbursement is allowed prior to national reimbursement, product can be made available on a patient by patient basis, while the
national reimbursements negotiations are ongoing. In all countries, securing adequate reimbursement is a requisite for commercial
success of any therapeutic. The time required to secure reimbursement tends to vary from country to country and cannot be reliably
predicted. While we believe that we have strong arguments regarding the cost effectiveness of VAZKEPA, the success of such
reimbursement negotiations have a significant impact on the assessment of the commercial opportunity of VAZKEPA in Europe.
Through the date of this Annual Report, we have received and made VAZKEPA available under individual reimbursement or received
national reimbursement and launched commercial operations in the following countries, respectively.
Country
Sweden
Finland
England/Wales
Spain
Netherlands
Scotland
Austria
Denmark
Individual
Reimbursement
N/A
N/A
N/A
N/A
N/A
N/A
September 2022
June 2022
National
Reimbursement
March 2022
October 2022
July 2022
July 2023
August 2023
August 2023
N/A
N/A
Product Availability
March 2022
December 2022
October 2022
September 2023
September 2023
August 2023
September 2022
June 2022
Launch Date
March 2022
December 2022
October 2022
September 2023
September 2023
September 2023
N/A
N/A
We continue to advance our pricing and reimbursement activities to drive access in remaining geographies, including those
where progress has been delayed. We are leveraging third-party relationships for various support activities and are implementing an
impactful and cost-effective hybrid commercial model balancing optimally digital and face-to-face approach for more impact and cost
efficiency, which is or will be utilized throughout Europe as launches are rolled out.
Patients at high-risk for cardiovascular disease tend to be treated more often by specialists, such as cardiologists rather than by
general practitioners. Privacy laws and other factors impact the availability of data to inform European commercial operations at an
individual physician level. Generally, less data is available and at reduced frequencies than in the United States. However, this greater
concentration of at-risk patients being treated by specialists in Europe should allow for more efficient promotion than in the United
States. In Europe, VAZKEPA has the benefit of 10 years of market protection, and we have been issued a patent that expires in 2033
with additional pending applications that could extend exclusivity into 2039.
Rest of World
As discussed above, one of the core areas of focus from our ORP is continuing to work on generating revenue from our
partnerships in key international markets, including Canada, MENA, China, Australia and New Zealand and we will continue to
explore additional partnerships.
China
In February 2015, we entered into an exclusive agreement with Eddingpharm (Asia) Macao Commercial Offshore Limited, or
Edding, to develop and commercialize VASCEPA capsules in what we refer to as the China Territory, consisting of the territories of
Mainland China, Hong Kong, Macau and Taiwan. Edding, with our support, conducted a clinical trial of VASCEPA in China, which
evaluated the effect of VASCEPA on patients with very high triglyceride levels (≥500 mg/dL). In November 2020, we announced
statistically significant topline positive results from this Phase 3 clinical trial of VASCEPA conducted by Edding. The study, which
investigated VASCEPA as a treatment for patients with very high triglycerides (≥500 mg/dL), met its primary efficacy endpoint as
defined in the clinical trial protocol and demonstrated a safety profile similar to placebo. There were no treatment-related serious
adverse events in this study. On February 9, 2021, we announced that the regulatory review processes in Mainland China and Hong
Kong had commenced. On February 23, 2022, the Hong Kong Department of Health completed their regulatory evaluation and
approved the use of VASCEPA under the REDUCE-IT indication. In Mainland China, the NMPA accepted for review the new drug
71
application for VASCEPA, submitted by Edding, based on the results from the Phase 3 clinical trial and the results from our prior
studies of VASCEPA. In China, on October 10, 2022, following the completion of product testing by the China National Institutes for
Food and Drug Control, or NIFDC, the final NMPA review of the VASCEPA NDA was initiated. The Company announced on June
1, 2023 that Edding received approval from NMPA for VASCEPA in Mainland China under the MARINE indication and launched
commercially in October 2023. In October 2023, Edding's submission of a regulatory filing to the NMPA for VASCEPA under the
REDUCE-IT indication was accepted.
Middle East and North Africa (MENA)
In March 2016, we entered into an agreement with Biologix FZCo, or Biologix, to register and commercialize VASCEPA in
several Middle Eastern and North African countries. Biologix obtained approval of VASCEPA under the MARINE and REDUCE-IT
indications, and subsequently launched commercially, in the following countries:
Country
Lebanon
United Arab Emirates
Qatar
Bahrain
Kuwait
Saudi Arabia
MARINE
March 2018
July 2018
December 2019
April 2021
December 2021
March 2022
REDUCE-IT
August 2021
October 2021
April 2021
April 2022
March 2023
June 2023
Launch Date
June 2018
February 2019
N/A
N/A
September 2023
September 2023
VASCEPA is under registration in additional countries in the MENA region.
Canada
In September 2017, we entered into an agreement with HLS Therapeutics Inc., or HLS, to register, commercialize and distribute
VASCEPA in Canada. In December 2019, HLS received formal confirmation from Health Canada that the Canadian regulatory
authority granted approval for VASCEPA to reduce the risk of cardiovascular events (cardiovascular death, non-fatal myocardial
infarction, non-fatal stroke, coronary revascularization or hospitalization for unstable angina) in statin-treated patients with elevated
triglycerides, who are at high-risk of cardiovascular events due to established cardiovascular disease, or diabetes, and at least one other
cardiovascular risk factor. In January 2020, HLS obtained regulatory exclusivity designation and launched commercially in February
2020. In April 2022, HLS completed negotiations with Canada’s pan-Canadian Pharmaceutical Alliance for the terms and conditions
under which VASCEPA would qualify for public market reimbursement in Canada. HLS has obtained reimbursement from all major
private and public payors gaining access to a majority of eligible patients in Canada. Coverage of patients with established
cardiovascular disease represents a substantial portion of VASCEPA’s approved label in Canada. VASCEPA has the benefit of data
protection afforded through Health Canada until the end of 2027, in addition to separate patent protection with expiration dates that
could extend into 2039.
Other
We completed the second year of a three-year plan to submit and obtain regulatory approval in 20 or more additional countries
and regions in order to ensure that patients in the top 50 cardiometabolic markets worldwide can benefit from VASCEPA. Through
the date of this Annual Report, we have filed for regulatory review in 20 countries and regions and have received approval in 13
countries and regions outside of the United States and European Medicines Agency, or EMA, regulatory approval authority, including
in Switzerland, Australia, New Zealand and Israel, under the REDUCE-IT indication. In addition, VAZKEPA has been made
available under individual pricing reimbursement in Switzerland.
In February 2023, the Company entered into an agreement with CSL Seqirus, or CSL, to secure pricing and reimbursement,
commercialize and distribute VAZKEPA in Australia and New Zealand. In July 2023, the Company entered into an agreement with
Lotus Pharmaceuticals to commercialize and distribute VAZKEPA in South Korea and nine countries in Southeast Asia. In August
2023, the Company entered into an agreement with Neopharm (Israel) 1996 Ltd., or Neopharm, to distribute VAZKEPA in Israel,
Gaza, West Bank, and the territories of the Palestinian Authority. The Company will be responsible for supplying finished product to
these partners. We continue to assess other potential partnership opportunities for VASCEPA with companies outside of the United
States and Europe with the intention of partnering in all other international markets where VASCEPA receives local regulatory
approval.
72
Research and Development
Since its inception in 2011, conduct of the REDUCE-IT cardiovascular outcomes study of VASCEPA has been the centerpiece
of our research and development. Most of our other research and development during this period also pertained to VASCEPA,
including study of the mechanism of action of the single active ingredient in VASCEPA, icosapent ethyl. Based on the final positive
results of REDUCE-IT, we sought additional indicated uses for VASCEPA in the United States and continue to pursue approval for
VASCEPA around the world. We also anticipate continuing to publish additional details of the REDUCE-IT study to address
scientific interest beyond the primary results of this study derived from the over 35,000 patient years of study experience which were
accumulated in the REDUCE-IT study.
Based on REDUCE-IT results, as of the date of the filing of this Annual Report on Form 10-K, more than 40 clinical treatment
guidelines, consensus statements or scientific statements from medical societies or journals have been updated recommending the use
of icosapent ethyl in appropriate at-risk patients, including those statements which we were informed of by our global partners in
Canada, China and the Middle East as well as guidelines which were newly received during the fourth quarter of 2023 as listed below:
•
•
In December 2023, the Hellenic Atherosclerosis Society published guidelines for the diagnosis and treatment of
dyslipidemia. The publication stated that clinical trials and meta-analyses have not shown that increasing consumption of
omega-3 PUFA decreases the risk of atherosclerotic cardiovascular disease, or ASCVD, except for IPE. Based on the
findings of REDUCE-IT, IPE (at a dose of 2 g twice daily) should be added in combination with a statin (and fenofibrate
if needed) for patients with type 2 diabetes and established ASCVD or with ≥1 major risk factor and TG >150 mg/dL.
The Cardiological Society of India released clinical practice guidelines for dyslipidemia management in December 2023.
The guidelines state that in patients with mild to moderate hypertriglyceridemia (TG 150–499 mg/dL), there is no role for
fibric acid derivatives. In those with diabetes (≥40 years of age) or ASCVD, IPE may be considered if TG remains high
after lifestyle changes and diabetes control have been achieved. In addition, the guidelines not that the REDUCE-IT
randomized controlled trial of highly purified IPE showed significant reduction of MACE.
During 2023, we announced the following data which added to our growing body of knowledge on VASCEPA as a result of our
continued analysis of the REDUCE-IT trial results:
•
•
•
In March 2023, a new prespecified and post hoc exploratory analysis of REDUCE-IT, presented at the American College
of Cardiology scientific session, found VASCEPA significantly reduced the risk of first cardiovascular death, strokes,
heart attacks, coronary revascularization or unstable angina in a subgroup of patients with recent (<12 months) acute
coronary syndrome by 37% (HR 0.63; 95% CI, 0.48-0.84, p=0.002).
In April 2023, the EVAPORATE- FFRCT study was published online in the European Heart Journal - Cardiovascular
Imaging. This subgroup analysis assessed the impact of VASCEPA on coronary physiology assessed by fractional flow
reserve derived from coronary CTA data sets, or FFRCT, using imaging data from EVAPORATE. FFRCT has been
associated with various clinical outcomes, such as the safe deferral of invasive coronary angiography, cardiovascular
death or myocardial infarction, and revascularization. This study is the first assessment of FFRCT to determine drug
effect, and there was significant improvement in the pre-specified primary endpoint of FFRCT value in the distal coronary
segment from baseline to follow-up in the most diseased vessel per patient using VASCEPA compared with placebo.
VASCEPA improved mean distal segment FFRCT at 9- and 18-months follow-up compared with placebo (P = 0.02, P =
0.03 respectively). The secondary endpoint, change in translesional FFRCT (change in FFRCT across the most severe
(minimum 30%) diameter stenosis) coronary lesion per vessel was improved with VASCEPA treatment compared with
placebo, although it was not statistically significant (P = 0.054).
In August 2023, we supported research that was presented at the ESC Congress, both onsite and online in Amsterdam.
This new research included, along with other topics, the REDUCE-IT mediation analysis report of the contribution of IPE
and other biomarkers to MACE reduction.
In total, Amarin and global medical and scientific collaborators supported close to 50 publications inclusive of accepted
abstracts, posters, and manuscripts.
Commercial and Clinical Supply
We manage the manufacturing and supply of VASCEPA and rely on contract manufacturers in each step of our commercial and
clinical product supply chain. These steps include active pharmaceutical ingredient, or API, manufacturing, encapsulation of the API,
product packaging and supply-related logistics. Our approach to product supply procurement is designed to mitigate risk of supply
interruption and maintain an environment of cost competition through diversification of contract manufacturers at each stage of the
supply chain and lack of reliance on any single supplier. We have multiple U.S. FDA-approved international API suppliers,
encapsulators and packagers to support the VASCEPA commercial franchise. We also have multiple international API suppliers,
encapsulators and packagers to support the commercialization of VASCEPA in geographies where the drug is approved outside the
73
United States. Not all of our suppliers approved by the U.S. FDA are approved in every other geography. The regulatory process
generally requires extensive details as part of the submission provided to a country or region in connection with a company's request
for regulatory approval. Suppliers must be specifically identified as part of the submission for qualification and approval for
commercialization in a country or region. As a result, only supply, as approved, may be used in finished goods available for sale in a
specific country or region. The amount of supply we seek to purchase in future periods will depend on the level of growth of
VASCEPA revenues and minimum purchase commitments with certain suppliers. Beginning in 2022, we reviewed our contractual
supplier purchase obligations and began taking steps to amend supplier agreements to align supply arrangements with current and
future market demand, while we decrease our current inventory levels primarily related to North America approved inventory. As of
December 31, 2023, we had inventory of $336.2 million, of which 80% is inventory approved for use in North America. We continue
to negotiate with our contract suppliers to align our supply arrangements with current and future global market demand.
Financial Operations Overview
Product revenue, net. All of our product revenue is derived from product sales of 1-gram and 0.5-gram size capsules of
VASCEPA, net of allowances, discounts, incentives, rebates, chargebacks and returns. In the United States, VASCEPA is sold to three
major wholesalers, as well as several regional wholesalers along with mail order pharmacy providers, or collectively, our distributors
or our customers. Most of these customers resell VASCEPA to retail pharmacies for purposes of dispensing VASCEPA to patients.
Revenues from VASCEPA sales are recognized upon delivery to the distributor or customer. Timing of shipments to wholesalers, as
used for revenue recognition, and timing of prescriptions as estimated by third-party sources such as Symphony Health may differ
from period to period. During the years ended December 31, 2023 and 2022, our product revenue, net included adjustment for co-pay
mitigation rebates provided by us to commercially insured patients in the United States.
Outside of the United States, currently the majority of our product revenue is derived from the sales of VASCEPA to our
commercial partners based on the net price for VASCEPA established in our contracts with such partners. These commercial partners
then resell the product in their agreed commercial territory. Revenues from sales to our international commercial partners are
recognized when the commercial partners obtain control of our product. The net price of VASCEPA sold by us to our customers
where we directly sell VASCEPA is generally significantly higher than the net price of VASCEPA that we sell to commercial partners
who then incur the cost of promoting and reselling the product in their territories. As a result, even when the net price of VASCEPA to
patients is similar in various parts of the world, our gross margin on sales is higher where we sell VASCEPA directly. We also derive
product revenue from sales of our product to a limited number of wholesalers in Europe, most of whom in turn resell the product to
pharmacies for purposes of their reselling the product to fill patient prescriptions.
Licensing and royalty revenue. Licensing and royalty revenue currently consists of revenue attributable to receipt of up-front,
non-refundable payments, milestone payments and sales-based payments related to license and distribution agreements for VASCEPA
outside the United States. We recognize revenue from licensing arrangements as we fulfill the performance obligations under each of
the agreements.
Cost of goods sold. Cost of goods sold includes the cost of API for VASCEPA on which revenue was recognized during the
period, as well as the associated costs for encapsulation, packaging, shipment, supply management, quality assurance, insurance, and
other indirect manufacturing, logistics and product support costs. The cost of the API included in cost of goods sold reflects the
average cost method of inventory valuation and relief. This average cost reflects the actual purchase price of VASCEPA API. Our cost
of goods sold is not materially impacted by whether we sell VASCEPA directly in a country or we sell VASCEPA to a commercial
partner for resale in a country. In the years ended December 31, 2023 and 2022, we incurred costs within Cost of goods sold -
restructuring inventory related to steps taken to amend supplier agreements to align supply arrangements with current and future
market demand.
Selling, general and administrative expense. Selling, general and administrative expense consists primarily of salaries and other
related costs, including stock-based compensation expense, for personnel in our sales, marketing, executive, business development,
finance and information technology functions. Other costs primarily include facility costs and professional fees for accounting,
consulting and legal services.
Research and development expense. Research and development expense consists primarily of fees paid to professional service
providers in conjunction with independent monitoring of our clinical trials and acquiring and evaluating data in conjunction with our
clinical trials, fees paid to independent researchers, costs of qualifying contract manufacturers, services expenses incurred in
developing and testing products and product candidates, salaries and related expenses for personnel, including stock-based
compensation expense, costs of materials, depreciation, rent, utilities and other facilities costs. In addition, research and development
expenses include the cost to support current development efforts, costs of product supply received from suppliers when such receipt by
us is prior to regulatory approval of the supplier, as well as license fees related to our strategic collaboration with Mochida. We
expense research and development costs as incurred.
74
Restructuring expense. Restructuring expense consists of restructuring costs incurred under our July 2023 ORP, June 2022 Cost
Reduction Plan, or CRP, and August 2022 discontinuation of German operations, which consists of severance pay, incentive
compensation, insurance benefits, stock-based compensation expense and other contract related costs.
Interest income, net and other income (expense), net. Interest income, net consists primarily of interest earned on our cash and
cash equivalents, as well as our short-term and long-term investments. Other income (expense), net, consists of the Employee
Retention Credit, or ERC, awarded as part of the Coronavirus Aid, Relief and Economic Stabilization Act, or CARES Act, and foreign
exchange losses and gains as well as sublease income.
Income tax provision. Income tax provision, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect
management’s best assessment of estimated future taxes to be paid. We are subject to income taxes in both the United States and
foreign jurisdictions. In applying guidance prescribed under ASC 740 and based on present evidence and conclusions around the
realizability of deferred tax assets, we determined that any tax benefit related to the pretax losses generated for the year-ended
December 31, 2023 and 2022, are not more likely than not to be realized.
Critical Accounting Policies and Significant Judgments and Estimates
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements
and notes, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The
preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenue and expenses. On an ongoing basis, estimates are assessed and adjusted based on historical experience and current
market-specific indicators, environment and assumptions. Actual results may differ from these estimates under different assumptions
or conditions. A summary of our critical accounting policies, significant judgments and estimates is presented in Note 2—Significant
Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We believe the
following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated
financial statements.
Revenue Recognition—In accordance with GAAP, under Accounting Standards Codification, or ASC, Topic 606, Revenue from
Contracts with Customers, which we adopted on a modified retrospective basis effective January 1, 2018, revenue is recognized when
product has been delivered to the wholesaler, in an amount that reflects the consideration which we expect to receive in exchange for
those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of Topic 606, we
perform the following five steps: (i) identify the contract(s) with a Distributor; (ii) identify the performance obligations in the contract;
(iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize
revenue when (or as) we satisfy a performance obligation. We apply the five-step model to contracts only when it is probable that we
will collect the consideration we are entitled to in exchange for the goods or services we transfer to the Distributor. At contract
inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each
contract, determine those that are performance obligations and assess whether each promised good or service is distinct. We then
recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the
performance obligation is satisfied. We recognized total revenue, net of $306.9 million and $369.2 million during the years ended
December 31, 2023 and 2022, respectively, of which $285.3 million and $366.5 million, respectively, was based on product revenue
sales. For a complete discussion of our accounting for net product revenue, licensing and royalty revenues, which make up Total
revenue, net, see Note 2—Significant Accounting Policies.
We have written contracts with our distributors, and transfer of control typically occurs upon delivery of our product to the
Distributor. We evaluate the creditworthiness of each of our distributors to determine whether revenues can be recognized upon
delivery, subject to satisfaction of the other requirements, or whether recognition is required to be delayed until receipt of payment.
We calculate gross product revenues based on the wholesale acquisition cost charged to our distributors for VASCEPA. We estimate
our Product revenue, net by deducting from our gross product revenues (a) trade allowances, such as invoice discounts for prompt
payment and distributor fees, (b) estimated government and private payor rebates, chargebacks and healthcare discounts, such as
Medicaid reimbursements, (c) expected product returns and (d) estimated costs of incentives offered to certain indirect customers,
including patients. The gross to net deductions are estimated based on available actual prescription data, historical industry trends, and
levels of inventory in the distribution channel. We rely on resale data provided by our distributors as well as prescription data provided
by Symphony Health and IQVIA in estimating the level of inventory held in the distribution channel. A hypothetical 5% change in
estimated aggregate bottles of channel inventory would result in a change of less than 1% in net product revenues reported during the
years ended December 31, 2023 and 2022.
When evaluating licensing arrangements, we perform the following steps: (i) identification of the promised goods or services in
the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are
distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv)
allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each
75
performance obligation. In determining performance obligations, we evaluate whether the license is distinct from the other
performance obligations with the collaborative partner based on the consideration of the relevant facts and circumstances for each
arrangement. Factors considered include the stage of development of the license delivered, research and development capabilities of
the partner and the ability of partners to develop and commercialize VASCEPA independent of us.
If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the
arrangement, we recognize revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the
Distributor and the Distributor is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize
judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is
satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing
revenue from non-refundable, up-front fees. We evaluate the measure of progress each reporting period and, if necessary, adjust the
measure of performance and related revenue recognition.
At the inception of each arrangement that includes development, regulatory and commercial milestone payments, we evaluate
whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using
the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is
included in the transaction price. Milestone payments that are not within our control or the control of the licensee, such as regulatory
approvals, are not considered probable of being achieved until those approvals are received. We evaluate factors such as the scientific,
clinical, regulatory, commercial and other risks that must be overcome to achieve the respective milestone as well as the level of effort
and investment required. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price
basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each
subsequent reporting period, we re-evaluate the probability of achievement of such development, regulatory and commercial
milestones and any related constraint, and if necessary, adjust its estimate of the overall transaction price. Any such adjustments are
recorded on a cumulative catch-up basis, which would affect licensing revenues and earnings in the period of adjustment.
We receive payments from our customers based on billing schedules established in each contract. Upfront payments and fees are
recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until we
perform our obligations under these arrangements. Amounts are recorded as accounts receivable when our right to consideration is
unconditional. We do not assess whether a contract has a significant financing component if the expectation at contract inception is
such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one
year or less.
Income Taxes—Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the
carrying amounts and tax bases of assets and liabilities and operating loss carryforwards and other attributes using enacted rates
expected to be in effect when those differences reverse. Valuation allowances are provided against deferred tax assets that are not
more likely than not to be realized.
We provide reserves for potential payments of tax to various tax authorities or do not recognize tax benefits related to uncertain
tax positions and other issues. Tax benefits for uncertain tax positions are based on a determination of whether a tax benefit taken by
us in our tax filings or positions is more likely than not to be realized, assuming that the matter in question will be decided based on its
technical merits. Our policy is to record interest and penalties in the provision for income taxes.
We assess our ability to realize deferred tax assets at each reporting period. The realization of deferred tax assets depends on
generating future taxable income during the periods in which the tax benefits are deductible or creditable. When making our
assessment about the realization of our deferred tax assets as of December 31, 2023, we considered all available evidence, placing
particular weight on evidence that could be objectively verified. The evidence considered included the (i) historical taxable
profitability of our U.S. operations, (ii) historical pre-tax book loss position, (iii) sources of future taxable income, giving weight to
sources according to the extent to which they can be objectively verified, (iv) the provisions of the Tax Cuts and Jobs Act enacted in
2017 and their impact on our future taxable income, and (v) the risks to our business related to the commercialization and
development of VASCEPA. Based on our assessment, we concluded that all of our net deferred tax assets are not more likely than not
to be realizable as of both December 31, 2023 and 2022. Changes in historical earnings performance, future earnings projections, and
changes in tax laws and tax rates, among other factors, may cause us to adjust our valuation allowance on deferred tax assets in the
future, which would impact our income tax expense in the period in which we determine that these factors have changed. We intend to
maintain the valuation allowance until sufficient positive evidence exists to conclude that it is more likely than not that our deferred
tax benefits will be realized. We will continue to monitor the need for valuation allowances in each jurisdiction and may adjust our
positions in the future.
Excess tax benefits and deficiencies that arise upon vesting or exercise of share-based payments are recognized as an income tax
benefit and expense, respectively, in the consolidated statement of operations.
76
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 2—Significant Accounting Policies in the accompanying Notes
to Consolidated Financial Statements in this Annual Report on Form 10-K.
Effects of Inflation
We believe the impact of inflation on operations has been minimal during the past three years.
Results of Operations
The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for fiscal years
2023 and 2022. For a comparison of our results of operations and financial condition for fiscal years 2022 and 2021, see “Item 7—
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Annual Report on Form 10-K,
filed with the SEC on March 1, 2023.
Comparison of Fiscal Years Ended December 31, 2023 and December 31, 2022
Total revenue, net. We recorded total revenue, net, of $306.9 million and $369.2 million during the years ended December 31,
2023 and 2022, respectively, a decrease of $62.3 million, or 17%. Total revenue, net consists primarily of revenue from the sale of
VASCEPA in the United States. In addition to the United States, we also sell VASCEPA by prescription in certain countries in Europe
as well as certain countries outside of the United States and Europe, such as China and Canada, through collaborations with third-party
companies. As further discussed below, the aforementioned decrease consists of an $86.0 million decrease in U.S. net product
revenue, offset by increases of $18.9 million in licensing and royalty revenue and $4.7 million in net product revenue from sales of
VASCEPA outside of the United States.
Product revenue, net. We recorded product revenue, net, of $285.3 million and $366.5 million during the years ended December
31, 2023 and 2022, respectively, a decrease of $81.2 million, or 22%. This decrease was due primarily to a 24% decrease in
VASCEPA sales in the United States.
We recorded U.S. product revenue, net, of $273.9 million and $359.9 million for the years ended December 31, 2023 and 2022,
respectively. This decrease was primarily due to a decline in net selling price as a result of the impact from an increase in generic
competition in the market, offset by an adjustment primarily related to Medicaid rebates of $15.1 million. During the year ended
December 31, 2023 there were four generics in the market. During the majority of the year ended December 31, 2022 there were three
generics in the market.
The overall icosapent ethyl market in the United States, based on prescription levels reported by Symphony Health, increased
for the year ended December 31, 2023 by 4% as compared to the year ended December 31, 2022. Our share of the icosapent ethyl
market has decreased to approximately 57% in the year ended December 31, 2023 from approximately 60% in the year ended
December 31, 2022. Additionally, based on prescription levels reported by Symphony Health, VASCEPA branded prescriptions
decreased by 8% in the year ended December 31, 2023 as compared to the year ended December 31, 2022.
In Europe, we recorded product revenue, net of $3.3 million and $2.6 million as of December 31, 2023 and 2022, respectively.
Revenue in 2023 was primarily related to sales in the U.K. and Spain, whereas 2022 was primarily related to sales in Germany, from
which we subsequently withdrew in the third quarter of 2022.
For the year ended December 31, 2023, we recorded $8.1 million of product revenue, net, to our collaboration partners
compared to $4.1 million during the year ended December 31, 2022.
Despite the generic competition in the U.S., we remain confident that the global patient need for VASCEPA is high. In 2024, we
will continue to focus on extending the lifecycle of VASCEPA in the U.S., obtaining pricing reimbursement and launching
commercial operations in all remaining European markets as well as supporting our partners to advance access and growing
commercial operations throughout the rest of the world.
Licensing and royalty revenue. Licensing and royalty revenue during the years ended December 31, 2023 and 2022 was $21.6
million and $2.7 million, respectively, an increase of $18.9 million, or 706%. The increase is primarily due to the recognition of
previously deferred milestone and upfront payments relating to Edding and HLS due to a change in the estimates in which we
previously recognized revenue as well as recognition of regulatory milestones achieved during the year. Licensing and royalty revenue
relates to the recognition of amounts received in connection with the following VASCEPA licensing agreements:
•
Edding – a $15.0 million upfront payment received in February 2015, a $1.0 million milestone payment achieved in
March 2016 following submission of the clinical trial application to the Chinese regulatory authority, a $5.0 million
milestone payment achieved in June 2023 following NMPA approval of VASCEPA under the MARINE indication,
77
and a $3.0 million milestone payment achieved in October 2023 following a regulatory submission to the NMPA for
VASCEPA under the REDUCE-IT indication.
• HLS – a $5.0 million upfront payment which was received upon closing of the agreement in September 2017, a $2.5
million milestone payment that was received following achievement of the REDUCE-IT trial primary endpoint in
September 2018, a $2.5 million milestone payment that was received following U.S. FDA approval of a new indication
and label expansion in December 2019, and a $3.8 million milestone payment that was received as a result of obtaining
a regulatory exclusivity designation in January 2020.
•
•
CSL – a $0.5 million upfront payment which was received upon closing of the agreement in January 2023.
Lotus – a $0.3 million upfront payment which was received upon closing of the agreement in August 2023.
The upfront and milestone payments from Edding and HLS are being recognized over the estimated period in which we are
required to provide regulatory and development support pursuant to the agreements. The upfront payment from CSL and Lotus are
recognized upon closing the agreement as no regulatory and development support is required pursuant to the agreement. The amount
of licensing and royalty revenue is expected to vary from period to period based on timing of milestones achieved and changes in
estimates of the timing and level of support required. During the second quarter of 2023, the performance period for Edding and HLS
was reevaluated and adjusted, resulting in the Company recognizing an additional $5.0 million and $5.3 million, respectively, in
license revenues related to this change in estimate for the year ended December 31, 2023. For additional information over the change
in estimate refer to Note 13 - Development, Commercialization and Supply Agreements.
As part of our licensing agreements with certain territories outside of the United States, we are entitled to a percentage of
revenue earned based on sales by our partners. The royalty payments are being recognized as earned based on revenue recognized by
our current partners.
Cost of goods sold. Cost of goods sold during the years ended December 31, 2023 and 2022 was $141.4 million and $126.7
million, respectively, an increase of $14.7 million, or 12%. Cost of goods sold includes the cost of API for VASCEPA on which
revenue was recognized during the period, as well as the associated costs for encapsulation, packaging, shipment, supply management,
insurance and quality assurance. The cost of the API included in cost of goods sold reflects the average cost of API included in
inventory. This average cost reflects the actual purchase price of VASCEPA API. During 2023 and 2022, we have taken steps to
amend supplier agreements to align supply arrangements with current and future demand resulting in charges of $39.2 million and
$18.1 million, respectively, which were recorded as cost of goods sold - restructuring inventory. During 2023, approximately $5.1
million of inventory was expensed through cost of goods sold due to both product dating and non-product dating unsellable inventory.
During 2022, approximately $9.6 million of inventory was expensed through cost of goods sold not due to product dating unsellable
inventory.
The API included in the calculation of the average cost of goods sold during the years ended December 31, 2023 and 2022 was
sourced from multiple API suppliers. These suppliers compete with each other based on cost, consistent quality, capacity, timely
delivery and other factors. In the future, we may see the average cost of supply change based on numerous potential factors including
increased volume purchases, continued improvement in manufacturing efficiency, the mix of purchases made among suppliers,
currency exchange rates and other factors. The average cost may be variable from period to period depending upon the timing and
quantity of API purchased from each supplier.
Our overall gross margin on product sales for the years ended December 31, 2023 and 2022 was 50% and 65%, respectively.
Excluding the restructuring inventory and inventory write-off charges, gross margin was 66% and 73% for the years ended
December 31, 2023 and 2022, respectively. The remaining decrease in gross margin is primarily as a result of a decrease in net selling
price.
Selling, general and administrative expense. Selling, general and administrative expense for the years ended December 31, 2023
and 2022 was $199.9 million and $304.4 million, respectively, a decrease of $104.5 million, or 34%. Selling, general and
administrative expenses for the years ended December 31, 2023 and 2022 are summarized in the table below:
In thousands
Selling expense (1)
General and administrative expenses (2)
Non-cash stock-based compensation expense (3)
Total selling, general and administrative expense
Year Ended December 31,
2022
2023
$
$
111,326
76,119
12,493
199,938
$
$
185,614
96,462
22,340
304,416
(1)
Selling expense for the years ended December 31, 2023 and 2022 was $111.3 million and $185.6 million, respectively, a
decrease of $74.3 million, or 40%. This decrease is primarily due to a reduction in costs from the elimination of our U.S. sales
78
force as part of our ORP and previous cost reduction plans which also led to a decrease in promotional initiatives and reduced
travel.
(2) General and administrative expense for the years ended December 31, 2023 and 2022 was $76.1 million and $96.5 million,
respectively, a decrease of $20.3 million, or 21%. This decrease is primarily due to a decrease in employee-related costs as a
result of the reduction in force from the ORP and previous cost reduction plans as well as a decrease in branded pharma fees as a
result of lower sales due to additional generic entrants in the market. The decrease in general and administrative expense was
offset by advisory fees related to the 2023 shareholder's special meeting.
(3) Non-cash stock-based compensation expense for the years ended December 31, 2023 and 2022 was $12.5 million and $22.3
million, respectively, a decrease of $9.8 million, or 44%. Non-cash stock-based compensation expense represents the estimated
costs associated with equity awards issued to internal personnel supporting our selling, general and administrative functions.
The decrease is due to the reversal of expense associated with the resignation of our former board members and our former
CEO, the ORP announced in July 2023, as well as certain performance-based awards as it was no longer deemed probable that
the performance criteria for vesting would be achieved within the required timeframe.
As part of our ORP announced in July 2023, we have redesigned our commercial infrastructure in Europe to better align with
pricing and reimbursement status, commercial progress to date, as well as streamline certain cross-geographic functions. In addition,
we are continuing to advance our pricing and reimbursement activities to drive access in remaining geographies, as well as advancing
regulatory filings internationally and focusing on maximizing U.S. cash flow through a streamlined model. We will continue to
evaluate all of our spending commitments and priorities based on our refocused strategic priorities and restructuring plan.
Research and development expense. Research and development expense for the years ended December 31, 2023 and 2022 was
$22.2 million and $30.4 million, respectively, a decrease of $8.2 million, or 27%. Research and development expenses for the years
ended December 31, 2023 and 2022 are summarized in the table below:
In thousands
REDUCE-IT study (1)
Fixed-dose combination (2)
Regulatory filing fees and expenses (3)
Internal staffing, overhead and other (4)
Research and development expense, excluding non-cash expense
Non-cash stock-based compensation expense (5)
Total research and development expense
Year Ended December 31,
2022
2023
1,020
1,395
966
14,651
18,032
4,187
22,219
$
$
1,724
5,777
1,959
16,486
25,946
4,465
30,411
$
$
(1)
(2)
(3)
(4)
The decrease in expenses for the REDUCE-IT study is primarily driven by incremental efficiencies applied to ongoing analyses
performed on the REDUCE-IT cardiovascular outcomes trial data, further leveraging existing internal resources compared to
outsourced support.
The decrease in fixed-dose combination expenses is primarily due to initial start-up and other costs beginning in 2022 associated
with planning and development of the fixed-dose combination of VASCEPA and a statin. The development of the fixed-dose
combination was deprioritized during 2023 after it became clear that it would not drive short-term value.
The decrease in regulatory filing fees is primarily related to higher spend in 2022 relating to the preparation, submission, and
review defense of regulatory filings for several countries. The Company has not prepared nor submitted as many regulatory
filings in 2023 as in the previous year.
Internal staffing, overhead and other research and development expenses primarily relate to the costs of our personnel employed
to manage research, development and regulatory affairs activities and related overhead costs including consulting and other
professional fees that are not allocated to specific projects, including costs associated with securing and maintaining regulatory
approvals for VAZKEPA in Europe as originally achieved in 2021, as well as regulatory expansion in other countries
throughout 2023. Also included are costs related to qualifying suppliers and costs associated with various other activities,
including other costs in collaboration with Mochida and pilot studies regarding VASCEPA.
(5) Non-cash stock-based compensation expense represents the estimated costs associated with equity awards issued to personnel
supporting our research and development and regulatory functions. The decrease is due to the reversal of expense associated
with certain performance-based awards as it was no longer deemed probable that the performance criteria for vesting would be
achieved within the required timeframe.
We continuously evaluate all of our spending commitments and priorities and we plan to adjust our level of research and
development activities based on various factors, including the impact of U.S. generic competition as well as timing of pricing
reimbursements throughout Europe.
79
Restructuring expense. Restructuring expense for the years ended December 31, 2023 and 2022 was $11.0 million and $13.5
million, respectively, a decrease of $2.6 million, or 19%. The charge in the current year is due to the implementation of the ORP
which was approved in the second quarter 2023 and announced on July 18, 2023, which resulted in a reduction of our entire U.S. sales
field force, with our managed care and trade organization continuing to support our U.S. commercial efforts, as well as a reduction of
approximately 30% of non-sales positions. The prior year charge was the result of the implementation of the CRP announced on June
6, 2022, which primarily related to the reduction of our U.S. field force from approximately 300 sales representatives to approximately
75 sales representatives, as well as the discontinuation of the German operations announced on August 19, 2022. Refer to Note 2
Significant Accounting Policies for additional information.
Interest income, net. Interest income, net for the years ended December 31, 2023 and 2022 was $11.9 million and $2.8 million,
respectively, an increase of $9.1 million, or 323%. Interest income, net, represents income earned on cash and investment balances.
The increase is primarily due to higher interest rates in the current year period compared to the prior year period.
Other income (expense), net. Other income (expense), net, for the year ended December 31, 2023 and 2022 was income of $2.1
million and expense of $0.7 million, respectively, an increase of $2.8 million or 379%. Other income (expense), net, primarily consists
of the ERC awarded as part of the CARES Act, gains and losses on foreign exchange transactions and sublease income related to our
Bridgewater, NJ facility.
Provision for income taxes. Provision for income taxes for the year ended December 31, 2023 and 2022 was $5.4 million and
$2.0 million, respectively. The increase in the provision for income taxes is due to a change in geographic mix of pre-tax income.
On August 16, 2022, the Inflation Reduction Act of 2022, or the Act, was signed into law by the Biden Administration, with tax
provisions effective January 1, 2023 primarily focused on implementing a 15% minimum tax on global adjusted financial statement
income (CAMT) and a 1% excise tax on share repurchases. We do not expect either of these provisions to have a material impact on
our financial results, including the impact from our share repurchase program announced in January 2024.
Liquidity and Capital Resources
As of December 31, 2023, our aggregate sources of liquidity include cash and cash equivalents and restricted cash of $199.8
million and short-term investments of $121.4 million. We have no indebtedness. Our cash and cash equivalents primarily include
checking accounts and money market funds with original maturities of less than 90 days. Our short-term investments consist of
securities that will be due in one year or less. We invest cash in excess of our immediate requirements, in accordance with our
investment policy, which limits the amounts we may invest in any one type of investment and requires all investments held by us to
maintain minimum ratings from Nationally Recognized Statistical Rating Organizations so as to primarily achieve our goals of
liquidity and capital preservation.
Our cash flows from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, are
summarized in the following table:
In millions
Cash provided by (used in):
Operating activities
Investing activities
Financing activities
(Decrease) increase in cash and cash equivalents and restricted cash
2023
Year Ended December 31,
2022
2021
$
$
$
6.9
(25.5)
0.2
(18.4) $
(180.1) $
175.3
(0.4)
(5.2) $
(66.5)
104.1
(5.1)
32.5
Net cash provided by operating activities increased during 2023 as compared to net cash used in operating activities during the
same period in 2022. This is primarily as a result of higher costs in 2022 associated with commercial and pre-launch operations in
Europe as well as higher inventory purchases in the first half of 2022, offset by a decrease in U.S. product revenue in 2023.
Net cash used in investing activities decreased during the year ended December 31, 2023 compared to net cash provided by
investing activities during the same period in 2022. This is primarily due to the purchase of investment grade interest bearing
instruments of $215.1 million partially offset by $190.1 million from proceeds from the maturity of investment grade interest bearing
instruments, as compared to the same period in 2022 where proceeds from the maturity of investment grade interest bearing
instruments was $257.5 million, partially offset by $81.6 million in purchases of investment grade interest bearing instruments.
Net cash provided by financing activities increased during the years ended December 31, 2023 compared to net cash used in
financing activities during the same period in 2022, primarily as a result of an increase in proceeds related to stock option exercises,
offset by taxes paid related to stock-based awards
80
As of December 31, 2023, we had net accounts receivable of $133.6 million, current inventory of $258.6 million and long-term
inventory of $77.6 million. We have incurred annual operating losses since our inception and, as a result, we had an accumulated
deficit of $1.6 billion as of December 31, 2023. We anticipate that quarterly net cash outflows in future periods will continue to be
variable as a result of the timing of certain items, including our purchases of API, the generic competition in the United States and
pricing and reimbursement of VAZKEPA in Europe.
In July 2023, we announced that we were implementing an ORP resulting in the elimination and consolidation of certain roles
across the organization, both in the United States and abroad, representing a reduction of our total employee base by approximately
30%. In the U.S., all sales force positions were eliminated, with the managed care and trade organization continuing to support U.S.
commercial efforts, and 30% of non-sales positions were eliminated. In Europe, we have redesigned our commercial infrastructure to
better align with pricing and reimbursement status, commercial progress to date, as well as streamlining certain cross-geographic
functions and better leveraging learnings across countries. We expect these actions will reduce operating costs by approximately $40.0
million annually.
On January 10, 2024, we announced plans to initiate a share repurchase program to purchase up to $50.0 million of the
Company's ordinary shares held in the form of American Depository Shares. The implementation of the share repurchase program will
require shareholder approval as well as UK High Court approval, as required under UK company law.
As of December 31, 2023, we had cash and cash equivalents of $199.3 million and short-term investments of $121.4 million. In
accordance with ASC 205-40, management is required to evaluate our ability to continue as a going concern for at least one year after
the date the financial statements are issued. We believe that our cash and cash equivalents and our short-term investments will be
sufficient to fund our projected operations, including the share repurchase program, for at least one year from the issuance date of our
audited consolidated financial statements included elsewhere in this Annual Report and is adequate to support continued operations
based on our current plans. We have based this estimate on assumptions that may prove to be wrong, including as a result of the risks
discussed under Part II, Item IA, “Risk Factors”, and we could use our capital resources sooner than we expect or fail to achieve
positive cash flow.
We do not have any special purpose entities or other off-balance sheet arrangements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risks, which include changes in interest rates. We do not use derivative financial instruments in our
investment portfolio, and we do not enter into foreign exchange contracts. Our investments meet high credit quality and diversification
standards, as specified in our investment policy.
Foreign Currency Exchange Risk. Our results of operations and cash flows are subject to fluctuations due to changes in the
Euro, Sterling, Swiss Franc and Yen. The majority of cash and cash equivalents, investments, and the majority of our vendor
relationships are denominated in U.S. dollars. We therefore believe that the risk of a significant impact on our operating income from
foreign currency fluctuations is not substantial. All of our investments are held in U.S. dollars. We maintain a small amount of our
cash and cash equivalents in Euro and from time to time, maintain a small amount of our cash and cash equivalents in other
currencies. We purchase a portion of our supply based on a U.S. dollar to Euro exchange rate and, as such, remain subject to currency
fluctuation risk for such purchases. Based on the size of our international operations and the amount of our expenses denominated in
foreign currencies, currency fluctuation would not have a material effect on our financial position or results of operations. We believe
the impact of inflation on operations has been minimal during the past three years.
Interest Rate Risk. We believe that we are not exposed to significant interest rate risk through market value fluctuations of
balance sheet items (i.e., price risk) or through changes in interest income or expenses (i.e., refinancing or reinvestment risk). Interest
rate risk mainly arises through interest bearing liabilities and assets. Our portfolio of investments as of December 31, 2023 was
composed primarily of U.S. Treasury securities and other government-related securities. At December 31, 2023 and 2022, we had
short-term investments and long-term investments of $121.4 million and $93.0 million, respectively. We invest funds to have a
continuous inflow of cash from diversified short-term and long-term investments, consisting primarily of investment grade securities.
A hypothetical 10 percent change in interest rates would not result in a material decrease or increase in the fair value of our securities
due to the balance and diversified investment portfolio.
Credit Risk. We monitor our investments with our investment managers with the objective of minimizing concentrations of
credit risks. Our short-term investments consist of securities that mature in one year or less. Our long-term investments consist of
securities that mature in more than one year. We invest cash in excess of our immediate requirements, in accordance with our
investment policy, which limits the amounts we may invest in any one type of investment and requires all investments held by us to
maintain minimum ratings from Nationally Recognized Statistical Rating Organizations so as to primarily achieve our goals of
liquidity and capital preservation. Additionally, our investment policy is to invest only in institutions that meet high credit quality and
diversification standards and established limits on the amount and time to maturity of investments.
81
Item 8. Financial Statements and Supplementary Data
Our consolidated financial statements are annexed to this Annual Report on Form 10-K beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods
specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive
officer and principal financial officer, to allow timely decisions regarding required disclosure.
As of December 31, 2023, our management, with the participation of our principal executive officer and principal financial
officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-
benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded
based upon the evaluation described above that, as of December 31, 2023, our disclosure controls and procedures were effective at the
reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our
company. Internal control over financial reporting is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act as a process
designed by, or under the supervision of, our principal executive officer and principal financial officer and effected by our board of
directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes
those policies and procedures that:
•
•
•
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition
of our assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles;
provide reasonable assurance that our receipts and expenditures are being made only in accordance with authorization of
our management and directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of
our assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of
any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in
conditions or that the degree of compliance with the policies or procedures may deteriorate.
Our management, including our principal executive officer and principal financial officer, has conducted an evaluation of the
effectiveness of our internal control over financial reporting as of December 31, 2023. In conducting this evaluation, we used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control-
Integrated Framework (2013).
Based upon this evaluation and those criteria, management has concluded that, as of December 31, 2023, our internal control
over financial reporting was effective.
Ernst & Young LLP (PCAOB ID 42), our independent registered public accounting firm, has audited our consolidated financial
statements and the effectiveness of our internal control over financial reporting as of December 31, 2023. This report appears below.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of 2023 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
82
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Amarin Corporation plc
Opinion on Internal Control over Financial Reporting
We have audited Amarin Corporation plc’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Amarin Corporation plc (the Company) maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of
operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related
notes and our report dated February 29, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Iselin, New Jersey
February 29, 2024
83
Item 9B. Other Information
Entry into Rule 10b5-1 Trading Plans
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
84
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item will be contained in our definitive proxy statement, which will be filed with the SEC in
connection with our 2024 Annual General Meeting of Shareholders. Such information is incorporated herein by reference.
Code of Ethics
Our board of directors has adopted a code of business conduct and ethical responsibility that applies to our directors, officers
and employees. There have been no material modifications to, or waivers from, the provisions of such code. This code is available on
the corporate governance section of our website (which is a subsection of the investor relations section of our website) at the following
address: www.amarincorp.com. You may also request a printed copy of the code, without charge, by writing to us at Amarin Pharma,
Inc., 440 Route 22, Bridgewater, NJ 08807, Attention: Investor Relations. In addition, should any changes be made to our code of
business conduct and ethical responsibility, we intend to disclose within four business days on our website (or in any other medium
required by law or the NASDAQ): (a) the date and nature of any amendment to our code of business conduct and ethical responsibility
that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons
performing similar functions and (b) the nature of any waiver, including an implicit waiver, from a provision of our code of business
conduct and ethical responsibility that is granted to one of these specified officers, the name of such person is granted the waiver, and
the date of the waiver.
Item 11. Executive Compensation
The information required by this item will be contained in our definitive proxy statement, which will be filed with the SEC in
connection with our 2024 Annual General Meeting of Shareholders. Such information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item will be contained in our definitive proxy statement, which will be filed with the SEC in
connection with our 2024 Annual General Meeting of Shareholders to be filed within 120 days after the fiscal year ended December
31, 2023 ("Definitive Proxy Statement"). Such information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be contained in our Definitive Proxy Statement, which will be filed with the SEC in
connection with our 2024 Annual General Meeting of Shareholders. Such information is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information required by this item will be contained in our Definitive Proxy Statement, which will be filed with the SEC in
connection with our 2024 Annual General Meeting of Shareholders. Such information is incorporated herein by reference.
85
Item 15. Exhibits and Financial Statement Schedules
PART IV
(a)(1) For a list of the financial statements included herein, see Index to Consolidated Financial Statements on page F-1 of
this Annual Report on Form 10-K.
(2) Financial statement schedules have been omitted because they are either not required or not applicable or the
information is included in the consolidated financial statements or the notes thereto.
(3) Exhibits
The exhibits required by Item 601 of Regulation S-K and Item 15(b) of this Annual Report on Form 10-K are listed in the
Exhibit Index below. The exhibits listed in the Exhibit Index are incorporated by reference herein.
(b) Exhibit Index
86
4.1
4.2
4.3
4.4
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
Exhibit
Number
Description
3.1
Articles of Association of the Company
Form of Amended and Restated Deposit
Agreement, dated as of November 4, 2011,
among the Company, Citibank, N.A., as
Depositary, and all holders from time to time
of American Depositary Receipts issued
thereunder
Form of Ordinary Share certificate
Incorporated by Reference Herein
Form
Date
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2013, as
Exhibit 3.1
August 8, 2013
Annual Report on Form 10-K for the year
ended December 31, 2011, as Exhibit 4.1
February 29, 2012
Annual Report on Form 20-F for the year
ended December 31, 2002, as Exhibit 2.4
April 24, 2003
Form of American Depositary Receipt
evidencing ADSs
Annual Report on Form 10-K for the year
ended December 31, 2011, as Exhibit 4.4
February 29, 2012
Description of Registrant’s Securities
Annual Report on Form 10-K for the year
ended December 31, 2019, as Exhibit 4.7
February 25, 2020
The Company 2011 Stock Option Plan*
Amendment No. 1 to 2011 Stock Option
Incentive Plan*
Amendment No. 2 to 2011 Stock Option
Incentive Plan*
Amendment No. 3 to 2011 Stock Option and
Incentive Plan*
Amendment No. 4 to 2011 Stock Option and
Incentive Plan*
Amendment No. 5 to 2011 Stock Option and
Incentive Plan*
Amendment No.6 to 2011 Stock Incentive
Plan*
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2011, as
Exhibit 10.4
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2012, as
Exhibit 10.1
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2012, as
Exhibit 10.2
Annual Report on Form 10-K for the year
ended December 31, 2012, as Exhibit 10.5
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2015, as
Exhibit 4.1
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2015, as
Exhibit 4.2
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2017, as
Exhibit 4.1
August 9, 2011
August 8, 2012
August 8, 2012
February 28, 2013
August 6, 2015
August 6, 2015
August 2, 2017
Form of Incentive Stock Option Award
Agreement*
Annual Report on Form 10-K for the year
ended December 31, 2011, as Exhibit 10.3
February 29, 2012
Form of Non-Qualified Stock Option Award
Agreement*
Annual Report on Form 10-K for the year
ended December 31, 2011, as Exhibit 10.4
February 29, 2012
10.10
Form of Restricted Stock Unit Award
Agreement*
Annual Report on Form 10-K for the year
ended December 31, 2011, as Exhibit 10.5
February 29, 2012
10.11
2017 Employee Stock Purchase Plan*
10.12
2020 Stock Incentive Plan*
10.13
Amendment No. 1 to 2020 Stock Incentive
Plan*
Annual Report on Form 10-K for the year
ended December 31, 2017, as Exhibit 10.64
February 27, 2018
Current Report on Form 8-K dated July 13,
2020, as Exhibit 10.1
Current Report on Form 8-K dated June 27,
2022, as Exhibit 10.2
July 14, 2020
June 30, 2022
87
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
Form of Incentive Stock Option Award
Agreement*
Form of Non-Qualified Stock Option Award
Agreements*
Form of Restricted Stock Unit Award
Agreement*
Form of Non-Qualified Stock Option for Non-
Employee Director Award Agreement*
Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2020, as
Exhibit 10.2
Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2020, as
Exhibit 10.3
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2022, as
Exhibit 10.3
November 5, 2020
November 5, 2020
August 3, 2022
Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2020, as
Exhibit 10.5
November 5, 2020
Form of Deferred Restricted Stock Unit Award
Agreement*
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2022, as
Exhibit 10.2
August 3, 2022
Amarin Corporation plc Executive Severance
and Change of Control Plan*
Current Report on Form 8-K dated January 28,
2021, as Exhibit 10.1
January 29, 2021
Contract of Employment between Karim
Mikhail and Amarin Switzerland GmbH,
Grafenauweg 8, 6300 Zug, dated April 12,
2021*
Letter Agreement with Steve Ketchum, dated
February 8, 2012*
Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2021, as
Exhibit 10.4
April 29, 2021
Registration Statement on Form F-1, as
Exhibit 10.1
February 28, 2012
August 6, 2015
March 16, 2012
May 1, 2019
August 3, 2022
Amendment, dated July 6, 2015, to Letter
Agreement with Steven Ketchum, dated
February 8, 2012*
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2015, as
Exhibit 10.2
2012 Long Term Incentive Award with Steven
Ketchum dated March 1, 2012*
Registration Statement on Form S-8, as
Exhibit 4.2
Employment Agreement, dated April 20, 2018,
by and between Amarin Corporation plc and
Aaron Berg*
Offer Letter with Thomas Reilly, dated May
26, 2022*
Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2019, as
Exhibit 10.1
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2022, as
Exhibit 10.4
API Commercial Supply Agreement, dated
May 25, 2011, between Amarin
Pharmaceuticals Ireland Ltd. and Chemport
Inc. **
Amendment to API Commercial Supply
Agreement by and between Amarin
Pharmaceuticals Ireland Ltd and Chemport
Inc., dated April 4, 2012 **
Second Amendment to API Commercial
Supply Agreement by and between Amarin
Pharmaceuticals Ireland Ltd. and Chemport
Inc., dated July 19, 2012 **
Development, Commercialization and Supply
Agreement dated February 26, 2015, by and
between Amarin Pharmaceuticals Ireland
Limited, Amarin Pharma, Inc. and
Eddingpharm (Asia) Macao Commercial
Offshore Limited††
Annual Report on Form 10-K for the year
ended December 31, 2021, as Exhibit 10.35
March 1, 2022
Annual Report on Form 10-K for the year
ended December 31, 2021, as Exhibit 10.36
March 1, 2022
Annual Report on Form 10-K for the year
ended December 31, 2021, as Exhibit 10.37
March 1, 2022
Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2015, as
Exhibit 10.1
May 8, 2015
88
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
Distribution Agreement, dated March 8, 2016,
by and among Biologix FZCo, Amarin
Pharmaceuticals Ireland Limited and Amarin
Pharma, Inc. ††
Development, Commercialization and Supply
Agreement, dated September 25, 2017, by and
among Amarin Pharmaceuticals Ireland
Limited, Amarin Pharma, Inc. and HLS
Therapeutics Inc. ††
Lease Agreement, dated February 5, 2019, by
and between 440 Route 22 LLC and Amarin
Pharma, Inc.
English Summary of German Language
Commercial Lease Agreement dated October
10, 2021, by and between Amarin Switzerland
GmbH and Zug Estates AG
Consent of Landlord to Sublease dated as of
January 20, 2023, among Amarin Pharma, Inc.
ST Shared Services LLC and Liberty Denver
Wood LLC
Guaranty dated January 20, 2023, issued by
MEH, Inc.
Sublease Agreement dated January 20, 2023,
by and between Amarin Pharma, Inc. and ST
Shared Services LLC
License Agreement dated September 13, 2022,
between Amarin Pharmaceuticals Ireland Ltd
and Weston Office Solutions Ltd
Annual Report on Form 10-K for the year
ended December 31, 2017, as Exhibit 10.67
February 27, 2018
Annual Report on Form 10-K for the year
ended December 31, 2017, as Exhibit 10.68
February 27, 2018
Annual Report on Form 10-K for the year
ended December 31, 2018, as Exhibit 10.69
February 27, 2019
Annual Report on Form 10-K for the year
ended December 31, 2021, as Exhibit 10.54
March 1, 2022
Annual Report on Form 10-K for the year
ended December 31, 2022, as Exhibit 10.44
March 1, 2023
Annual Report on Form 10-K for the year
ended December 31, 2022, as Exhibit 10.45
Annual Report on Form 10-K for the year
ended December 31, 2022, as Exhibit 10.46
March 1, 2023
March 1, 2023
Annual Report on Form 10-K for the year
ended December 31, 2022, as Exhibit 10.47
March 1, 2023
10.38
Non-Employee Director Compensation Policy Quarterly Report on Form 10-Q for the
August 2, 2023
quarterly period ended June 30, 2023, as
Exhibit 10.1
10.39
10.40
10.41
10.42
10.43
21.1
23.1
Employment Agreement between Aaron D.
Berg and Amarin Corporation, plc. dated April
13, 2023
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2023, as
Exhibit 10.2
August 2, 2023
CEO Employment Agreement between Patrick
Holt and Amarin Corporation, plc. dated July
18, 2023
Current Report on Form 8-K filed with the
Commission on July 20, 2023, as Exhibit 10.1
July 20, 2023
Option Award Agreement (attached to Exhibit
10.1)
Current Report on Form 8-K filed with the
Commission on July 20, 2023, as Exhibit 10.2
July 20, 2023
Amendment No. 2 to the Amarin Corporation
plc 2020 Stock Incentive Plan
Current Report on Form 8-K filed with the
Commission on July 25, 2023, as Exhibit 10.2
July 25, 2023
Offer Letter with Jonathan Provoost, dated
October 9, 2023*
List of Subsidiaries
Consent of Independent Registered Public
Accounting Firm
Filed herewith
Filed herewith
Filed herewith
24.1
Power of Attorney
Included on the signature page(s) hereto
89
31.1
31.2
32.1
97.1
101.INS
101.SCH
104
Certification of President and Chief Executive
Officer (Principal Executive Officer) pursuant
to Section 302 of Sarbanes-Oxley Act of 2002
Filed herewith
Certification of Executive Vice President and
Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)
pursuant to Section 302 of Sarbanes-Oxley Act
of 2002
Certification of President and Chief Executive
Officer (Principal Executive Officer) and
Executive Vice President and Chief Financial
Officer (Principal Financial Officer and
Principal Accounting Officer) pursuant to
Section 906 of Sarbanes-Oxley Act of 2002
Compensation Recovery Plan
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Schema
with Embedded Linkbases Document
Cover Page Interactive Data File (formatted as
inline XBRL with applicable taxonomy
extension information contained in Exhibit
101.)
Filed herewith
Furnished herewith
Filed herewith
Filed herewith
Filed herewith
†† Confidential treatment has been granted with respect to portions of this exhibit pursuant to an application requesting confidential
treatment under Rule 24b-2 of the Securities Exchange Act of 1934. A complete copy of this exhibit, including the redacted terms, has
been separately filed with the Securities and Exchange Commission.
** Certain confidential portions (indicated by brackets and asterisks) have been omitted from this exhibit.
* Management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
Not applicable.
90
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
AMARIN CORPORATION PLC
By:
/s/ Patrick Holt
Patrick Holt
President and Chief Executive Officer
(Principal Executive Officer)
Date: February 29, 2024
We, the undersigned officers and directors of the Registrant hereby severally constitute and appoint Patrick Holt and Tom
Reilly, and each of them singly, our true and lawful attorneys, with full power to them and each of them singly, to sign for us in our
names in the capacities indicated below, all amendments to this report, and generally to do all things in our names and on our behalf in
such capacities to enable the Registrant to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all
requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date indicated.
Signature
/s/ Patrick Holt
Patrick Holt
/s/ Tom Reilly
Tom Reilly
/s/ Patrice Bonfiglio
Patrice Bonfiglio
/s/ Paul Cohen, M.D.
Paul Cohen, M.D.
/s/ Mark DiPaolo
Mark DiPaolo
/s/ Keith L. Horn
Keith L. Horn
/s/ Odysseas Kostas, M.D.
Odysseas Kostas, M.D.
/s/ Louis Sterling III.
Louis Sterling III.
/s/ Diane E. Sullivan
Diane E. Sullivan
/s/ Oliver O'Connor
Oliver O'Connor
Title
Date
Director, President and Chief
Executive Officer (Principal
Executive Officer)
Executive Vice President and Chief
Financial Officer (Principal
Financial and Accounting Officer)
February 29, 2024
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
Director
February 29, 2024
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
91
AMARIN CORPORATION PLC
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Financial Statements:
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Financial Statement Schedules:
Page
F-2
F-4
F-5
F-6
F-7
F-8
Financial statement schedules have been omitted for the reason that the required information is presented in the consolidated financial
statements or notes thereto, the amounts involved are not significant or the schedules are not applicable.
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Amarin Corporation plc
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Amarin Corporation plc (the Company) as of December 31, 2023
and 2022, the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the
period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at
December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated February 29, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not,
by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or
disclosure to which it relates.
Product Return Reserve Estimate
Description of the
Matter
At December 31, 2023, the Company recorded a liability for product returns totaling $7.7 million. As
discussed in Note 12 of the financial statements, the Company sells its product to distributors that in turn
resell the product to retail pharmacies for subsequent sale to patients and healthcare providers. The Company
estimates variable consideration resulting from product returns based on quantitative and qualitative data
from various internal and external sources.
Auditing management’s estimate of product returns was complex and judgmental due to the significant
estimation required to determine inventory in the distribution channel that will not ultimately be sold to
patients and healthcare providers and will be returned. Sales into the distribution channel could exceed
market demand.
F-2
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls
over the Company’s estimation process for product returns including inventory in the distribution channel.
These procedures included controls over management’s review of the inputs used and assumptions applied in
the returns reserve calculation and channel inventory analysis.
To test the estimated product return reserve, we performed audit procedures that included, among others,
testing management’s historical return rate calculation and testing the completeness and accuracy of sales and
returns data used in the calculation. We also compared product expiration dates in the calculation to the
related quality control documentation. We assessed the historical accuracy of management’s estimate and
performed analytical procedures to assess the correlation of monthly sales to distributors and monthly patient
prescriptions. In addition, we assessed the Company’s quarterly analysis of inventory held at various stages
in the distribution channel. We confirmed prescription data directly with a third party, confirmed contract
terms directly with significant customers, and tested credit memos issued subsequent to year-end for
recording in the proper period. We read significant customer contracts and performed direct inquiries with
management including the sales, legal, and contracting departments to identify any terms or conditions not
included in customer contracts that could impact the estimate of product returns.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2014.
Iselin, New Jersey
February 29, 2024
F-3
AMARIN CORPORATION PLC
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
ASSETS
Current Assets:
Cash and cash equivalents
Restricted cash
Short-term investments
Accounts receivable, net
Inventory
Prepaid and other current assets
Total current assets
Property, plant and equipment, net
Long-term investments
Long-term inventory
Operating lease right-of-use asset
Other long-term assets
Intangible asset, net
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
Accrued expenses and other current liabilities
Current deferred revenue
Total current liabilities
Long-Term Liabilities:
Long-term deferred revenue
Long-term operating lease liability
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 7)
Stockholders’ Equity:
$
$
$
December 31,
2023
2022
$
$
$
199,252
525
121,407
133,563
258,616
11,618
724,981
114
—
77,615
8,310
1,360
19,304
831,684
52,762
204,174
2,341
259,277
2,509
8,737
9,064
279,587
217,666
523
91,695
130,990
228,732
19,492
689,098
874
1,275
163,620
9,074
458
21,780
886,179
64,602
192,678
2,199
259,479
13,147
10,015
8,205
290,846
Common stock, £0.50 par, unlimited authorized; 418,141,295 shares issued,
408,824,093 shares outstanding at December 31, 2023; 412,333,087 shares issued,
404,346,256 shares outstanding at December 31, 2022
Additional paid-in capital
Treasury stock; 9,317,202 shares at December 31, 2023; 7,986,831 shares at
December 31, 2022
Accumulated deficit
Total stockholders’ equity
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
302,756
1,899,456
(63,752)
(1,586,363)
552,097
831,684
$
299,002
1,885,352
(61,770)
(1,527,251)
595,333
886,179
See the notes to the consolidated financial statements.
F-4
AMARIN CORPORATION PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Product revenue, net
Licensing and royalty revenue
Total revenue, net
Less: Cost of goods sold
Less: Cost of goods sold - restructuring inventory
Gross margin
Operating expenses:
Selling, general and administrative
Research and development
Restructuring
Total operating expenses
Operating (loss) income
Interest income
Interest expense
Other income (expense), net
(Loss) income from operations before taxes
Provision for income taxes
Net (loss) income
(Loss) earnings per share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
2023
$
$
$
$
Year Ended December 31,
2022
$
$
$
$
285,299
21,612
306,911
102,142
39,228
165,541
199,938
22,219
10,972
233,129
(67,588)
11,863
(8)
2,063
(53,670)
(5,442)
(59,112)
(0.15)
(0.15)
407,655
407,655
366,511
2,682
369,193
108,631
18,078
242,484
304,416
30,411
13,526
348,353
(105,869)
2,819
(15)
(740)
(103,805)
(1,998)
(105,803)
(0.26)
(0.26)
401,155
401,155
2021
$
$
$
$
580,320
2,867
583,187
121,327
—
461,860
408,334
29,307
13,717
451,358
10,502
1,220
(129)
(302)
11,291
(3,562)
7,729
0.02
0.02
395,992
402,480
See the notes to the consolidated financial statements.
F-5
AMARIN CORPORATION PLC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
December 31, 2021
Issuance of common stock under employee stock
purchase plan
Issuance of common stock for milestone payment
Exercise of stock options
Vesting of restricted stock units
Stock-based compensation
Loss for the period
December 31, 2022
Issuance of common stock under employee stock
purchase plan
Exercise of stock options
Vesting of restricted stock units
Stock-based compensation
Loss for the period
December 31, 2023
Common
Shares
404,084,775
Treasury
Shares
(7,486,767)
Common
Stock
Additional
Paid-in
Capital
Treasury
Stock
$
294,027
$
1,855,246
$
(60,726)
Accumulated
Deficit
(1,421,448)
$
Total
$
667,099
456,696
5,817,942
33,303
1,940,371
—
—
412,333,087
319,610
1,239,763
4,248,835
—
—
418,141,295
—
—
—
(500,064)
—
—
(7,986,831)
—
—
(1,330,371)
—
—
(9,317,202)
$
$
283
3,461
21
1,210
—
—
299,002
200
750
2,804
—
—
302,756
$
$
322
4,742
39
(1,210)
26,213
—
1,885,352
130
1,132
(2,804)
15,646
—
1,899,456
$
$
—
—
—
(1,044)
—
—
(61,770)
—
—
(1,982)
—
—
(63,752)
$
$
—
—
—
—
—
(105,803)
(1,527,251)
—
—
—
—
(59,112)
(1,586,363)
$
$
605
8,203
60
(1,044)
26,213
(105,803)
595,333
330
1,882
(1,982)
15,646
(59,112)
552,097
See the notes to the consolidated financial statements.
F-6
AMARIN CORPORATION PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
2023
Year Ended December 31,
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income
Adjustments to reconcile net (loss) income to net cash used in operating activities:
$
(59,112)
$
(105,803)
$
Depreciation and amortization
(Accretion) amortization of investments
Stock-based compensation
Amortization of intangible asset
Changes in assets and liabilities:
Accounts receivable, net
Inventory
Prepaid and other current assets
Other long-term assets
Interest receivable
Deferred revenue
Accounts payable, accrued expenses and other current liabilities
Other long-term liabilities
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of securities
Purchases of securities
Investment in software and website development costs
(Purchases) disposal of furniture, fixtures and equipment
Net cash (used in) provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock under employee stock purchase plan
Proceeds from exercise of stock options
Taxes related to stock-based awards
Net cash provided by (used in) financing activities
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND
RESTRICTED CASH
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF
PERIOD
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
Supplemental disclosure of cash flow information:
Cash (paid) received during the year for:
Income taxes
Supplemental disclosure of non-cash transactions:
Laxdale milestone
Shares issued in settlement of Laxdale milestone payment
Initial recognition of operating lease right-of-use asset
Initial recognition of furniture, fixtures and equipment lease
160
(3,696)
15,646
2,805
(2,573)
56,121
7,874
(278)
248
(10,496)
(164)
345
6,880
190,108
(215,097)
(509)
(24)
(25,522)
330
1,882
(1,982)
230
(18,412)
551
473
26,213
2,545
32,663
(36,422)
2,860
(2)
341
(1,363)
(102,729)
581
(180,092)
257,520
(81,633)
(599)
—
175,288
605
60
(1,044)
(379)
(5,183)
$
$
$
$
$
$
218,189
199,777
$
223,372
218,189
$
(2,367)
$
(1,782)
$
— $
— $
$
607
$
624
8,203
2,041
— $
$
$
— $
See the notes to the consolidated financial statements.
7,729
587
1,929
36,938
2,270
(9,079)
(167,066)
8,595
(24)
738
(1,923)
51,516
1,253
(66,537)
394,294
(290,195)
—
4
104,103
1,650
2,921
(9,644)
(5,073)
32,493
190,879
223,372
3,656
12,000
—
—
—
F-7
AMARIN CORPORATION PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Nature of Business and Basis of Presentation
Nature of Business
Amarin Corporation plc, or Amarin, or the Company, is a pharmaceutical company focused on the commercialization and
development of therapeutics to improve cardiovascular, or CV, health and reduce CV risk. The Company is commercialized in the
United States, or the U.S, under the brand name VASCEPA® (icosapent ethyl). The Company has launched commercial operations in
certain European countries, such as the United Kingdom, or the UK, and Spain and continues pre-launch commercial activities
throughout the rest of Europe. The Company’s operations outside of the U.S. and Europe are in varying stages of development and
commercialization with reliance on third-party commercial partners in select geographies, including China and Canada.
The Company’s lead product, VASCEPA, was first approved by the U.S. Food and Drug Administration, or U.S. FDA, in July 2012
for use as an adjunct to diet to reduce triglyceride, or TG, levels in adult patients with severe (>500 mg/dL) hypertriglyceridemia, or
the MARINE indication. In January 2013, the Company launched 1-gram size VASCEPA in the U.S. and in October 2016, introduced
a 0.5-gram capsule size. On December 13, 2019, the U.S. FDA approved another indication and label expansion for VASCEPA based
on the results of the Company’s long-term cardiovascular outcomes trial, REDUCE-IT®, or Reduction of Cardiovascular Events with
EPA – Intervention Trial. VASCEPA is approved by the U.S. FDA as an adjunct to maximally tolerated statin therapy for reducing
persistent cardiovascular risk in select high risk patients, or the REDUCE-IT indication.
On March 30, 2020, following conclusion of a trial in late January 2020, the U.S. District Court for the District of Nevada, or the
Nevada Court, issued a ruling in favor of two generic drug companies, Dr. Reddy’s Laboratories, Inc., or Dr. Reddy’s, and Hikma
Pharmaceuticals USA Inc., or Hikma, and certain of their affiliates, or, collectively, the Defendants, that declared as invalid several of
the Company's patents covering the MARINE indication. The Company sought appeals of the Nevada Court judgment up to the
United States Supreme Court, but the Company was unsuccessful. As a result, the following generic versions of VASCEPA have
obtained U.S. FDA approval with labeling consistent with the MARINE indication of VASCEPA and have entered the U.S. market:
Company
Hikma Pharmaceuticals USA Inc.
Dr. Reddy’s Laboratories, Inc.
Teva Pharmaceuticals USA, Inc.
Apotex, Inc.
Zydus Lifesciences
Strides Pharma
Epic Pharma
FDA MARINE Indication
Approval
May 2020
August 2020
September 2020
June 2021
April 2023
September 2023
December 2023
1-gram Launch Date
November 2020
June 2021
January 2023
January 2022
N/A
N/A
N/A
0.5-gram Launch Date
March 2023
June 2023
September 2022
N/A
N/A
N/A
N/A
On March 26, 2021, the European Commission, or EC, approved the marketing authorization application for VAZKEPA, hereinafter
along with the U.S. brand name VASCEPA, collectively referred to as VASCEPA, in the European Union, or EU, to reduce the risk of
cardiovascular events in high risk, statin-treated adult patients who have elevated triglycerides (>150 mg/dL) and either established
cardiovascular disease or diabetes and at least one additional cardiovascular risk event. On April 22, 2021, the Company announced
that the Medicines and Healthcare Products Regulatory Agency, or MHRA, approved VAZKEPA in England, Scotland and Wales to
reduce cardiovascular risk. Collectively CHMP, EMA, EC and MHRA are referred to herein as the European Regulatory Authorities.
In November 2020, the Company announced topline results from the Phase 3 clinical trial of VASCEPA conducted by the Company’s
partner in China. On June 1, 2023, the Company announced the National Medical Products Administration, or NMPA, granted
approval for VASCEPA under the MARINE indication and launched commercially in October 2023. On February 23, 2022, the Hong
Kong Department of Health concluded their evaluation and approved the use of VASCEPA under the REDUCE-IT indication.
The Company currently has strategic collaborations to develop and commercialize VASCEPA in select territories outside the United
States and Europe. Amarin is responsible for supplying VASCEPA to all markets in which the product is sold, including the United
States, and Europe, as well as in countries where the drug is promoted and sold via collaboration with third-party companies that
compensate Amarin for such supply. Amarin is not responsible for providing any generic company with drug product. The Company
operates in one business segment.
Basis of Presentation
The consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles
generally accepted in the United States and pursuant to the rules and regulations of the Securities and Exchange Commission, or the
SEC.
F-8
The consolidated financial statements reflect all adjustments of a normal and recurring nature that, in the opinion of management, are
necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods indicated. The
preparation of the Company’s consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles, or
GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during
the reporting period. The results of operations for the years ended December 31, 2023, 2022 and 2021 are not necessarily indicative of
the results for any future period. Certain numbers presented throughout this document may not add precisely to the totals provided due
to rounding. Absolute and percentage changes are calculated using the underlying amounts in thousands. The consolidated financial
statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have
been eliminated in consolidation.
The accompanying consolidated financial statements of the Company and subsidiaries have been prepared on a basis which assumes
that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business.
At December 31, 2023, the Company had total assets of $831.7 million, of which $320.7 million consisted of cash and liquid short-
term investments. More specifically, the Company had current assets of $725.0 million, including cash and cash equivalents of
$199.3 million, short-term investments of $121.4 million, accounts receivable, net, of $133.6 million and current inventory of $258.6
million. In addition, at December 31, 2023, the Company had long-term inventory of $77.6 million. At December 31, 2023, the
Company had no debt outstanding.
(2)
Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany
accounts and transactions have been eliminated in consolidation.
Use of Estimates
Accounting estimates are based on historical experience and other factors that are considered reasonable under the circumstances.
Estimates and assumptions relied upon in preparing these consolidated financial statements relate to, but are not limited to, such items
as provisions for sales returns, rebates and incentives, chargebacks, and other sales allowances; depreciable/amortizable lives; asset
impairments; valuation allowance on deferred taxes; probabilities of achievement of performance conditions for certain equity awards;
amounts recorded for licensing revenue; contingencies and accruals. Because of the uncertainties inherent in such estimates, actual
results may differ from these estimates. Management periodically evaluates estimates used in the preparation of the consolidated
financial statements for continued reasonableness.
Use of Forecasted Financial Information in Accounting Estimates
The use of forecasted financial information is inherent in many of the Company’s accounting estimates including, but not limited to,
determining the estimated fair values of intangible assets, evaluating the need for valuation allowances for deferred tax assets, and
assessing the Company’s ability to continue as a going concern. Such forecasted financial information is comprised of numerous
assumptions regarding the Company’s future revenues, cash flows, and operational results. Management believes that its financial
forecasts are reasonable and appropriate based upon current facts and circumstances. Because of the inherent nature of forecasts,
however, actual results may differ from these forecasts. Management regularly reviews the information related to these forecasts and
adjusts the carrying amounts of the applicable assets prospectively, if and when actual results differ from previous estimates.
Revenue Recognition
In accordance with Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers, or Topic 606,
the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the
consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for
arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the
contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate
the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a
performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the
consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract
is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and
determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then
recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the
F-9
performance obligation is satisfied. For a complete discussion of accounting for net product revenue and licensing revenue, see Note
12—Revenue Recognition.
Distribution Costs
The Company records distribution costs related to shipping product to its customers, primarily through the use of common carriers or
external distribution services, in Cost of goods sold.
Cash and Cash Equivalents and Restricted Cash
Cash and cash equivalents consist of cash, deposits with banks and short-term highly liquid money market instruments with original
maturities at the date of purchase of 90 days or less. Restricted cash represents cash and cash equivalents pledged to guarantee
repayment of certain expenses which may be incurred for business travel under corporate credit cards held by employees.
Accounts Receivable, net
Accounts receivable, net, comprised of trade receivables, are generally due within 45 days and are stated at amounts due from
customers. The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable
losses net of any recoveries. The allowance is based primarily on assessment of specific identifiable customer accounts considered at
risk or uncollectible, as well as an analysis of current receivables aging and expected future write-offs. The expense associated with
the allowance for doubtful accounts is recognized as selling, general, and administrative expense. The Company has not historically
experienced any significant credit losses. All customer accounts are actively managed and no losses in excess of amounts reserved are
currently expected.
The following table summarizes the impact of accounts receivable reserves on the gross trade accounts receivable balances at
December 31, 2023 and 2022:
In thousands
Gross trade accounts receivable
Trade allowances
Chargebacks
Accounts receivable, net
Inventory
December 31, 2023
December 31, 2022
$
$
160,686
(18,834)
(8,289)
133,563
$
$
187,418
(44,626)
(11,802)
130,990
The Company states inventories at the lower of cost or net realizable value. Cost is determined based on actual cost using the average
cost method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of
completion, disposal, and transportation. The Company classifies inventory as long-term inventory when consumption of the
inventory is expected beyond the next 12 months. The Company classifies finished goods expected to be sold within the next 12
months and all of VASCEPA's active pharmaceutical ingredient, or API, as current inventory. An allowance is established when
management determines that certain inventories may not be saleable. If inventory cost exceeds expected net realizable value due to
obsolescence, damage or quantities in excess of expected demand, changes in price levels or other causes, the Company will reduce
the carrying value of such inventory to net realizable value and recognize the difference as a component of cost of goods sold in the
period in which it occurs. The Company capitalizes inventory purchases of saleable product from approved suppliers while inventory
purchases from suppliers prior to regulatory approval are included as a component of research and development expense. The
Company expenses inventory identified for use as marketing samples when they are packaged. The average cost reflects the actual
purchase price of VASCEPA API.
Long-Lived Asset Impairment
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted
net cash flows of the operation to which the assets relate to their carrying amount. If impairment is indicated, the assets are written
down to fair value. Fair value is determined based on discounted forecasted cash flows or appraised values, depending on the nature of
the assets.
Intangible Asset, net
Intangible asset, net consists of website development costs and milestone payments to the former shareholders of Laxdale Limited, or
Laxdale, related to the 2004 acquisition of the rights to VASCEPA, which is the result of VASCEPA receiving marketing approval in
the U.S. for the first indication in 2012, the expanded label in 2019 and marketing authorization in Europe in 2021. These assets are
F-10
amortized over its estimated useful life on a straight-line basis. See Note 7—Commitments and Contingencies for further information
regarding other obligations related to the acquisition of Laxdale.
Costs for Patent Litigation and Legal Proceedings
Costs for patent litigation or other legal proceedings are expensed as incurred and included in Selling, general and administrative
expense.
Research and Development Costs
The Company charges research and development costs to operations as incurred. Research and development expenses are comprised
of costs incurred by the Company in performing research and development activities, including: salary and benefits; stock-based
compensation expense; laboratory supplies and other direct expenses; contractual services, including clinical trial and pharmaceutical
development costs; commercial supply investment in its drug candidates; and infrastructure costs, including facilities costs and
depreciation expense. In addition, research and development costs include the costs of product supply received from suppliers when
such receipt by the Company is prior to regulatory approval of the supplier, as well as license fees related to the Company’s strategic
collaboration with Mochida Pharmaceutical Co., Ltd., or Mochida.
Selling, General and Administrative Costs
The Company charges selling, general and administrative costs to operations as incurred. Selling, general and administrative costs
include salaries and benefits, stock-based compensation expense, and infrastructure necessary for the general conduct of the
Company’s business, including those incurred as a result of the commercialization of VASCEPA in the United States and Europe.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts and tax
bases of assets and liabilities and operating loss carryforwards and other tax attributes using enacted rates expected to be in effect
when those differences reverse. Valuation allowances are provided against deferred tax assets that are not more likely than not to be
realized. Deferred tax assets and liabilities are classified as non-current in the consolidated balance sheet.
The Company provides reserves for potential payments of tax to various tax authorities and does not recognize tax benefits related to
uncertain tax positions and other issues. Tax benefits for uncertain tax positions are based on a determination of whether a tax benefit
taken by the Company in its tax filings or positions is more likely than not to be realized, assuming that the matter in question will be
decided based on its technical merits. The Company’s policy is to record interest and penalties in the provision for income taxes, as
applicable.
The Company regularly assesses its ability to realize deferred tax assets. Changes in historical earnings performance, future earnings
projections, and changes in tax laws, among other factors, may cause the Company to adjust its valuation allowance on deferred tax
assets, which would impact the Company’s income tax expense in the period in which it is determined that these factors have changed.
Excess tax benefits and deficiencies that arise upon vesting or exercise of stock-based payments are recognized as an income tax
benefit and expense, respectively, in the consolidated statement of operations. Excess income tax benefits are classified as cash flows
from operating activities and cash paid to taxing authorities arising from the withholding of shares from employees are classified as
cash flows from financing activities.
The Company’s and its subsidiaries’ income tax returns are periodically examined by various tax authorities, including the Internal
Revenue Service, or IRS, and state tax authorities. The Company is currently under audit by the IRS for its 2018 and 2019 U.S.
income tax returns. An audit by the New Jersey Department of Treasury for the years 2012 to 2015 was closed in April 2023.
Although the outcome of tax audits is always uncertain and could result in significant cash tax payments, the Company does not
believe the outcome of these audits will have a material adverse effect on its consolidated financial position or results of operations.
F-11
(Loss) Earnings per Share
Basic net (loss) earnings per share is determined by dividing net (loss) income by the weighted average shares of common stock
outstanding during the period. Diluted net (loss) earnings per share is determined by dividing net (loss) income by diluted weighted
average shares outstanding. Diluted weighted average shares reflects the dilutive effect, if any, of potentially dilutive common shares,
such as from the exercise of stock options and vesting of restricted stock units calculated using the treasury stock method. In periods
with reported net operating losses, all stock options and restricted stock units outstanding are deemed anti-dilutive such that basic and
diluted net loss per share are equal.
The calculation of net (loss) income and the number of shares used to compute basic and diluted net (loss) earnings per share for the
years ended December 31, 2023, 2022, and 2021 are as follows:
In thousands
Net (loss) income —basic and diluted
Weighted average shares outstanding—basic
Effect of dilutive securities:
Stock options
Restricted stock and restricted stock units
Weighted average shares outstanding—diluted
Net (loss) earnings per share—basic (1)
Net (loss) earnings per share—diluted (1)
2023
(59,112)
407,655
$
2022
(105,803)
401,155
—
—
407,655
(0.15)
(0.15)
$
$
—
—
401,155
(0.26)
(0.26)
2021
7,729
395,992
4,420
2,068
402,480
0.02
0.02
$
$
$
$
$
$
(1) Excluding the licensing revenue change in estimate and Medicaid change in estimate, both discussed in Note 12 –
Revenue Recognition, net loss per share basic and diluted for the year ended December 31, 2023 would have been
$(0.21).
For the years ended December 31, 2023, 2022 and 2021, the following potentially dilutive securities were not included in the
computation of net (loss) earnings per share because the effect would be anti-dilutive or because performance criteria were not yet met
for awards contingent upon such measures:
In thousands
Stock options
Restricted stock and restricted stock units
Laxdale milestone shares
2023
2022
2021
27,956
11,983
—
19,182
14,461
—
9,926
3,764
1,984
Stock options are anti-dilutive during periods of net earnings when the exercise price of the stock options exceeds the market price of
the underlying shares on the last day of the reporting period. Restricted stock and restricted stock units are anti-dilutive during periods
of net earnings when underlying performance-based vesting requirements were not achieved as of the last day of the reporting period.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation-Stock
Compensation, or ASC 718, and requires the fair value of all stock-based payments to employees and non-employees to be recognized
in the consolidated statement of operations over the requisite service period.
The fair value of the Company's restricted stock units is determined to be the market price on the date of the grant. The Company
estimates the fair value of stock option awards on the date of the grant using the Black-Scholes Model, which requires that the
Company makes certain assumptions regarding: (i) the expected volatility in the market price of its common stock; (ii) dividend yield;
(iii) risk-free interest rates; and (iv) the period of time employees are expected to hold the award prior to exercise, referred to as the
expected holding period. As a result, if the Company revises its assumptions and estimates, stock-based compensation expense could
change materially for future grants.
For awards with performance conditions, if the achievement of the performance conditions is deemed probable, the Company
recognizes compensation expense based on the grant date fair value of the award over the requisite service period. The Company
reassesses the probability of achievement of the performance conditions each reporting period. For awards with market conditions, the
Company recognizes compensation expense based on the grant date fair value of the award, using the Monte Carlo Model, over the
requisite service period.
The Company estimates the level of forfeitures expected to occur based on its historical data and records compensation cost only for
those awards that are ultimately expected to vest. See Note 9—Stock Incentive Plans and Stock-Based Compensation for further
discussion.
F-12
Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents, short-term and
long-term investments, and accounts receivable. The Company maintains substantially all of its cash and cash equivalents and short-
term and long-term investments, in financial institutions believed to be of high-credit quality.
A significant portion of the Company’s sales are to wholesalers in the pharmaceutical industry. The Company monitors the
creditworthiness of customers to whom it grants credit terms and has not experienced any credit losses. The Company does not require
collateral or any other security to support credit sales. Three customers individually accounted for 10% or more of the Company’s
gross product sales. Customers A, B, and C accounted for 36%, 28%, and 29%, respectively, of gross product sales for the year ended
December 31, 2023 and represented 36%, 18%, and 38%, respectively, of the gross accounts receivable balance as of December 31,
2023. Customers A, B, and C accounted for 35%, 31% and 27%, respectively, of gross product sales for the year ended December 31,
2022 and represented 35%, 21%, and 39%, respectively, of the gross accounts receivable balance as of December 31, 2022. The
Company has not experienced any significant write-offs of its accounts receivable. All customer accounts are actively managed and no
losses in excess of amounts reserved are currently expected.
Concentration of Suppliers
The Company has contractual freedom to source the API for VASCEPA and to procure other services supporting its supply chain and
has entered into supply agreements with multiple suppliers. The Company’s supply of product for commercial sale and clinical trials is
dependent upon relationships with third-party manufacturers and suppliers.
The Company cannot provide assurance that its efforts to procure uninterrupted supply of VASCEPA to meet market demand will
continue to be successful or that it will be able to renew current supply agreements on favorable terms or at all. Significant alteration
to or disruption or termination of the Company’s current supply chain, or the Company’s failure to enter into new and similar
agreements in a timely fashion, if needed, could have a material adverse effect on its business, condition (financial and other),
prospects or results of operations.
The Company currently has manufacturing agreements with multiple independent API manufacturers and several independent API
encapsulators and packagers for VASCEPA manufacturing. Each of these API manufacturers, encapsulators and packagers is U.S.
FDA-approved and certain of these API manufacturers, encapsulators and packagers are also approved by the European Regulatory
Authorities for manufacturing VAZKEPA in Europe. These suppliers are also used by the Company to source supply to meet the
clinical trial and commercial demands of its partners in other countries. Each of these suppliers has qualified and validated its
manufacturing processes. There can be no guarantee that these or other suppliers with which the Company may contract in the future
to manufacture VASCEPA or VASCEPA API will remain qualified to do so to its specifications or that these and any future suppliers
will have the manufacturing capacity to meet potential global demand for VASCEPA.
Foreign Currency
Monetary assets and liabilities denominated in a foreign currency are remeasured into U.S. dollars at period-end exchange rates. Gains
and losses from the remeasurement are included in Other income (expense), net in the consolidated statements of operations. For
transactions settled during the applicable period, gains and losses are included in Other income (expense), net in the consolidated
statements of operations. Certain amounts payable are denominated in currencies other than the U.S. dollar. The Company recorded a
foreign currency loss within the Other income (expense), net on the consolidated statement of operations of $2.6 million, $0.7 million
and $0.6 million for each of the years ended December 31, 2023, 2022, and 2021, respectively.
Fair Value of Financial Instruments
The Company provides disclosure of financial assets and financial liabilities that are carried at fair value based on the price that would
be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. Fair value measurements may be classified based on the amount of subjectivity associated with the inputs to fair
valuation of these assets and liabilities using the following three levels:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability
to access at the measurement date.
F-13
Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e.,
interest rates, yield curves) and inputs that are derived principally from or corroborated by observable market data by correlation or
other means (market corroborated inputs).
Level 3—Unobservable inputs that reflect the Company’s estimates of the assumptions that market participants would use in
pricing the asset or liability. The Company develops these inputs based on the best information available, including its own data.
The following tables present information about the estimated fair value of the Company’s assets and liabilities as of December 31,
2023 and 2022 and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:
In thousands
Asset:
U.S. Treasury Shares
Money Market Fund
Agency Securities
Repo Securities
Total
In thousands
Asset:
Money Market Fund
Commercial Paper
Corporate Bonds
Certificate of Deposit
Repo Securities
U.S. Treasury Shares
Agency Securities
Non-US Government
Asset Backed Securities
Total
Total
Level 1
Level 2
Level 3
December 31, 2023
$
$
$
$
123,992
99,226
8,912
3,250
235,380
Total
81,870
62,347
28,416
9,100
3,250
3,117
1,554
1,393
1,260
192,307
$
$
$
$
123,992
99,226
—
—
223,218
$
$
— $
—
8,912
3,250
12,162
$
December 31, 2022
Level 1
Level 2
Level 3
81,870
—
—
—
—
3,117
1,554
—
—
86,541
$
$
— $
62,347
28,416
9,100
3,250
—
—
1,393
1,260
105,766
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
The carrying amount of the Company’s cash and cash equivalents approximates fair value because of their short-term nature. The cash
and cash equivalents consist of cash, deposits with banks and short-term highly liquid money market instruments with remaining
maturities at the date of the purchase of 90 days or less.
The Company’s investments are stated at amortized cost, which approximates fair value. The Company does not intend to sell these
investment securities and the contractual maturities are not greater than 24 months. Those with original maturities greater than 90 days
and maturities less than 12 months are included in short-term investments on its consolidated balance sheet. Those with remaining
maturities in excess of 12 months are included in long-term investments on its consolidated balance sheet.
Unrealized gains or losses are not recognized until maturity, except other-than-temporary unrealized losses which are recognized in
earnings in the period incurred. The Company evaluates securities with unrealized losses to determine whether such losses are other
than temporary. The unrealized gain or loss for the years ended December 31, 2023 and December 31, 2022 was a gain of less than
$0.1 million and a loss of $0.4 million, respectively. Interest on investments is reported in interest income.
The carrying amounts of accounts payable and accrued liabilities approximate fair value because of their short-term nature.
Segment and Geographical Information
Operating segments are defined as components of an enterprise about which separate financial information is available that is
evaluated on a regular basis by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources to
an individual segment and in assessing performance of the segment. The Company currently operates in one business segment, which
is the development and commercialization of VASCEPA. A single management team that reports to the Company’s chief decision-
maker, who is the Chief Executive Officer, comprehensively manages the business. Accordingly, the Company does not have
separately reportable segments.
F-14
Restructuring
The Company identifies a restructuring event as a program that is planned and controlled by management, and materially changes
either the scope of the Company's business or the manner in which that business is conducted. The accounting for involuntary
termination benefits that are provided pursuant to a one-time benefit arrangement are accounted for under ASC 420 – Exit or Disposal
Cost Obligations whereas involuntary termination benefits that are part of an ongoing written or substantive plan are accounted for
under ASC 712 – Compensation – Nonretirement Postemployment Benefits. The Company accrues a liability for termination benefits
under ASC 712 when it is probable that a liability has been incurred and the amount can be reasonably estimated and under ASC 420
when the termination benefits are communicated.
In June 2023, the Company approved and subsequently announced on July 18, 2023, an Organizational Restructuring Plan, or ORP, to
right-size and strengthen the Company. As part of the plan, the Company completed the elimination of its entire U.S. sales field force,
as well as a reduction of approximately 30% of the non-sales positions. The Company maintained its managed care and trade
organization to support U.S. commercial efforts. During the year ended December 31, 2023, the Company recognized approximately
$11.0 million within restructuring expense on the consolidated statement of operations related to the reduction in force, substantially
all of which are cash expenditures.
The Company continued to assess its contractual supplier purchase obligations and has taken steps to amend supplier agreements to
align supply arrangements with current and future market demand. As a result of the ongoing assessment, the Company recognized
$39.2 million and $18.1 million during the years ended December 31, 2023 and 2022, respectively, within cost of goods sold -
restructuring inventory on the consolidated statement of operations. The Company continues to negotiate with other contract suppliers
to align its supply arrangements with current and future global demand which may result in additional costs to the Company.
On June 6, 2022, the Company announced a Comprehensive Cost Reduction Plan, or CRP, which included an organizational
restructuring plan to address the shifts within the Company’s U.S. business. As part of the plan, the Company completed a reduction
of its U.S. field force from approximately 300 sales representatives to approximately 75 sales representatives. During the year ended
December 31, 2022, the Company recognized approximately $9.4 million within restructuring expense on the consolidated statement
of operations related to the reduction in force, substantially all of which was cash expenditures.
On August 19, 2022, the Company announced that after the conclusion of the fourth and final round of negotiations in Germany with
the National Association of Statutory Health Insurance Funds, or GKV-SV, a viable agreement on the reimbursement price of
VAZKEPA in Germany could not be reached. As a result, the Company discontinued its German business operations effective
September 1, 2022. During the year ended December 31, 2022, the Company recognized approximately $4.2 million within
restructuring expense on the condensed consolidated statement of operations, substantially all of which was cash expenditures.
On September 22, 2021, the Company announced a Go-to-Market strategy for VASCEPA. As part of this strategy, the Company
completed a reduction of its U.S. field force to approximately 300 sales representatives, enhanced managed care access and optimized
VASCEPA prescriptions for cardiovascular risk reduction. During the year ended December 31, 2021, the Company recognized
approximately $13.7 million in charges related to the reduction in force, substantially all of which were cash expenditures for one-time
termination benefits and associated costs.
The following table sets forth the components of the Company's restructuring charges for the years ended December 31, 2023, 2022
and 2021:
In thousands
Employee restructuring separation charges
Vendor contract charges
Total restructuring expense
$
Restructuring inventory
Stock forfeitures
Total restructuring cash obligations incurred $
2023
For the Year Ended December 31,
2022
2021
10,383
589
10,972
39,228
1,034
51,234
$
$
9,310
4,216
13,526
18,078
591
32,195
$
$
13,717
—
13,717
—
—
13,717
The following table shows the change in restructuring liability which is included within accrued expenses and other current liabilities:
F-15
In thousands
Balance at December 31, 2022
Restructuring cash obligations incurred
Payments
Balance at December 31, 2023
Recent Accounting Pronouncements
$
$
Restructuring Liability
192
51,234
(37,837)
13,589
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, and are early
adopted by the Company or adopted as of the specified effective date.
The Company has evaluated all recently issued accounting pronouncements through the date of the financial statements and found that
no recently issued accounting pronouncements, when adopted, will have a material impact on the Company’s consolidated financial
position, results of operations, and cash flows, or do not apply to the Company’s operations.
(3)
Intangible Asset
Intangible asset consists of internal-use software, website development costs and milestone payments to the former shareholders of
Laxdale related to the 2004 acquisition of the rights to VASCEPA, which is the result of VASCEPA receiving marketing approval in
the U.S. for the first indication in 2012, the expanded label in 2019 and marketing approval in Europe in 2021. For the year ended
December 31, 2023, the Company capitalized $0.3 million of costs associated with the implementation of internal-use software. In
accordance with ASC 350, the Company evaluates the remaining useful life of the intangible asset at each reporting period to
determine if any events or circumstances warrant a revision to the remaining period of amortization. As of December 31, 2023, the
intangible assets have an estimated weighted-average remaining useful life of 7.0 years. The carrying value as of December 31, 2023
and 2022 is as follows:
In thousands
Technology rights
Accumulated amortization
Intangible asset, net
December 31, 2023
December 31, 2022
$
$
33,188
(13,884)
19,304
$
$
32,859
(11,079)
21,780
Amortization expense for the years ended December 31, 2023 and 2022 was $2.8 million and $2.5 million, respectively. Estimated
future amortization expense as of December 31, 2023 is as follows:
In thousands
Year Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total
(4)
Inventory
$
$
Amount
2,915
2,915
2,655
2,546
2,546
5,727
19,304
The Company capitalizes its purchases of saleable inventory of VASCEPA from suppliers that have been qualified by the U.S. FDA
and other global regulatory agencies. Inventories as of December 31, 2023 and 2022 consist of the following:
In thousands
Raw materials
Work in process
Finished goods
Inventory (1)
December 31, 2023
December 31, 2022
$
$
155,128
5,373
175,730
336,231
$
$
126,391
52,297
213,664
392,352
(1) Total inventory consists of both current inventory and long-term inventory. During the year ended December 31, 2023,
approximately $5.1 million of inventory was expensed through cost of goods sold for both product dating and non-product
dating unsellable inventory. During the year ended December 31, 2022 approximately $9.6 million of finished goods were
expensed through cost of goods sold related to unsellable inventory not related to product dating.
F-16
As of December 31, 2023 and 2022, the Company had $77.6 million and $163.6 million of long-term inventory, respectively, as
consumption is expected beyond the Company's operating cycle of 12 months.
(5)
Property, Plant and Equipment
Property, plant and equipment as of December 31, 2023 and 2022 consists of the following:
In thousands
Furniture and fixtures
Leasehold improvements
Software
Computer equipment
Property, plant and equipment
Accumulated depreciation and amortization
Property, plant and equipment, net
Useful Life (in years)
5
lesser of useful life or lease term
3 - 5
3 - 5
December 31, 2023
December 31, 2022
$
$
432
217
617
227
1,493
(1,379)
114
$
$
1,633
869
617
227
3,346
(2,472)
874
The Company provides for depreciation and amortization using the straight-line method by charges to operations in amounts that
depreciate the cost of the fixed asset over its estimated useful life. Depreciation expense for the year ended December 31, 2023 was
$0.2 million and for the years ended December 31 2022, and 2021 was $0.6 million, respectively. Upon retirement or sale of assets,
the cost of the assets disposed and the related accumulated depreciation are removed from the consolidated balance sheet and any
resulting gain or loss is credited or expensed to operations. Repairs and maintenance costs are expensed as incurred.
(6) Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following as of December 31, 2023 and 2022:
In thousands
Payroll and payroll-related expenses
Sales and marketing accruals
Accrued revenue allowances
Accrued restructuring
All other
Accrued expenses and other current liabilities
(7) Commitments and Contingencies
December 31, 2023
December 31, 2022
18,942
1,009
145,034
13,589
25,600
204,174
$
$
20,302
1,672
134,869
192
35,643
192,678
$
$
Amarin accrues a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and that it
can reasonably estimate the amount of the loss. Amarin reviews these accruals and adjusts them to reflect ongoing negotiations,
settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and Amarin’s
views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in Amarin’s
accrued liabilities would be recorded in the period in which such determination is made. For the matters referenced below, the amount
of liability is not probable nor can the amount be reasonably estimated; therefore, accruals have not been made. In addition, in
accordance with the relevant authoritative guidance, for matters in which the likelihood of material loss is at least reasonably possible,
Amarin provides disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, Amarin will
provide disclosure to that effect.
Litigation – U.S. ANDAs
On March 30, 2020, the Nevada Court, ruled in favor of two generics companies, Hikma and Dr. Reddy’s, in Amarin’s patent
litigation related to its ANDAs that sought U.S. FDA approval for sale of generic versions of VASCEPA for the original indication of
VASCEPA as an adjunct to diet to reduce TG levels in adult patients with severe (>500 mg/dL) hypertriglyceridemia. On September
3, 2020, the U.S. Court of Appeals for the Federal Circuit, or the Federal Circuit, upheld the March ruling by the Nevada Court in
favor of the two generics companies. On October 2, 2020, the Company filed a combined petition for panel rehearing or rehearing en
banc. On November 4, 2020, the Company’s rehearing and en banc petitions were denied. On February 11, 2021, Amarin filed a
petition for a writ of certiorari with the United States Supreme Court to ask the Court to hear the Company’s appeal in this litigation,
which was denied on June 18, 2021.
On May 22, 2020 and August 10, 2020, Hikma and Dr. Reddy’s, respectively, received U.S. FDA approval to market its generic
versions of VASCEPA. During the ANDA litigation, the Company reached agreements with Teva and Apotex, under which they
received royalty-free license agreements to promote a generic version of icosapent ethyl in the U.S. under certain circumstances, one
F-17
of which circumstances was achieved when the Federal Circuit upheld the ruling by the Nevada Court and Hikma launched its generic
version of icosapent ethyl. On September 11, 2020, and June 30, 2021, Teva and Apotex, respectively, received U.S. FDA approval to
market their respective generic versions of icosapent ethyl. In November 2020, Hikma announced the price and launched its generic
version of icosapent ethyl. In June 2021, Dr. Reddy’s announced the price and launched its generic version of icosapent ethyl. In
January 2022, Apotex announced the price and launched its generic version of icosapent ethyl. In September 2022, Teva announced
the price and launched its generic version of icosapent ethyl for the 0.5-gram capsule and the 1.0 gram capsule in January 2023. All
generic versions of icosapent ethyl as approved by the U.S. FDA pertains to the MARINE indication of VASCEPA, lowering of TG
levels in patients with very high TG (>500 mg/dL). Current generic competition, together with past and on-going litigation related to
such generic versions of icosapent ethyl are applicable to the U.S. only. The Company did not seek, nor is VAZKEPA approved in
Europe for lowering of TG levels in patients with very high TG (>500 mg/dL).
The active pharmaceutical ingredient in VASCEPA is difficult and time consuming to manufacture, often requires considerable
advanced planning and long-term financial commitment, including to manufacturing infrastructure such as dedicated facilities, to
ensure sufficient capacity is available when needed. The Company has invested over a decade of resources and expenses to develop
with individual members of its third-party, active pharmaceutical ingredient supply chain the technical knowhow, manufacturing
processes and related regulatory approvals that have helped enable the Company’s suppliers to supply the Company’s need for clinical
and commercial supply globally.
In November 2020, the Company filed a patent infringement lawsuit against Hikma in the United States District Court in Delaware.
The complaint alleged that Hikma induced the infringement of VASCEPA-related CV risk reduction U.S. Patent Nos. 9,700,537
(Composition for preventing the occurrence of cardiovascular event in multiple risk patient), 8,642,077 (Stable pharmaceutical
composition and methods of using same), and 10,568,861 (Methods of reducing the risk of a cardiovascular event in a subject at risk
for cardiovascular disease) by making, selling, offering to sell and importing generic icosapent ethyl capsules in or into the United
States.
In January 2021, the Company expanded the scope of the VASCEPA CV risk reduction patent infringement lawsuit against Hikma to
include a health care insurance provider in the United States, Health Net LLC, or Health Net. Through insurance coverage and
economic incentives the Company alleged that Health Net has actively induced pharmacies to dispense, and patients to use, Hikma
generic icosapent ethyl capsules in infringement of the related patents. In the complaint, the Company sought remedies including a
permanent injunction against the unlawful inducement by Hikma and Health Net of infringing uses of the Hikma generic product, i.e.,
uses to reduce cardiovascular risk as detailed in the patents, and monetary damages in an amount sufficient to compensate the
Company for such infringement. On January 4, 2022, the district court hearing the case granted Hikma's motion to dismiss. On
October 13, 2022, the district court granted final judgement on the aspect of the litigation relating to the Company and Hikma. The
Company has appealed the decision of the district court. On December 26, 2022, the Company entered into a settlement agreement
with Health Net that resolved the litigation relating to the Company and Health Net. The Company will continue to consider its legal
options against parties similarly situated to Health Net and Hikma and acting in concert with either by making or selling any drug
product or component thereof covered by the subject patents, or inducing others to do the same.
As has been a practice in the generic pharmaceutical industry, on April 27, 2021 and February 21, 2023, Dr. Reddy’s and Hikma,
respectively, filed complaints against the Company in the United States District Court for the District of New Jersey, Civil action No.
21-cv-10309 and No. 23-cv-01016, alleging various antitrust violations stemming from alleged anticompetitive practices related to the
supply of active pharmaceutical ingredient of VASCEPA. The DRL complaints also includes a related state law tortious interference
claim. Damages sought include recovery for alleged economic harm to Dr. Reddy’s and to Hikma respectively, treble damages, other
costs and fees and injunctive relief against the alleged violative activities. Amarin believes it has valid defenses and will vigorously
defend against the claims. Such litigation can be lengthy, costly and could materially affect and disrupt our business.
In March 2021, Amarin received a civil investigative demand, or CID, from the U.S. Federal Trade Commission and a subpoena from
the New York Attorney General with respect to information on the same antitrust topic covered in the Dr. Reddy's litigation.
Similarly, in June 2020, the Company received a CID from the U.S. Department of Justice, or the DOJ, informing Amarin that the
DOJ is investigating whether aspects of its promotional speaker programs and copayment waiver program during the period from
January 1, 2015 to the present violated the U.S. Anti-Kickback Statute and the U.S. Civil False Claims Act, in relation to the sale and
marketing of VASCEPA by the Company and its previous co-marketing partner, Kowa Pharmaceuticals America, Inc. Amarin is
cooperating with the government agencies regarding these two investigations, or the Investigations, and concluded document
production and interrogatory responses in mid-2023. We cannot predict when these investigations will be resolved, the outcome of the
investigations or their potential impact on the Company’s business.
Amarin is named as a defendant in six antitrust class action lawsuits in the District Court for the District of New Jersey, as displayed
in the table below. Each of the six antitrust class action lawsuits allege Amarin and its co-defendant suppliers violated state and federal
antitrust laws by monopolizing and engaging in a conspiracy to restrain trade in the icosapent ethyl drug and API markets.
F-18
Lawsuits
Uniformed Fire Officers Association Family Protection Plan Local 854
Uniformed Fire Officers Association for Retired Fire Officers Family Protection Plan
The International Union of Operating Engineers Locals 137, 137A, 137B, 137C, 137R
KPH Healthcare Services, Inc.
Local 464A United Food and Commercial Workers Union Welfare Service Benefit Fund
Teamsters Health & Welfare Fund of Philadelphia and Vicinity
Civil Action #
21-12061
21-12061
21-12416
21-12747
21-13009
21-13406
Direct/Indirect Purchasers
Indirect Purchaser
Indirect Purchaser
Indirect Purchaser
Direct Purchaser
Indirect Purchaser
Indirect Purchaser
Such antitrust litigation and antitrust investigations can be lengthy, costly and could materially affect and disrupt the Company’s
business. The Company cannot predict when these matters will be resolved, their outcome or their potential impact on the Company’s
business. If a government determines that Amarin has violated antitrust law, the Company could be subject to significant civil fines
and penalties.
The Company intends to vigorously enforce its intellectual property rights relating to VASCEPA, but cannot predict the outcome of
these lawsuits or any subsequently filed lawsuits.
Litigation – Other
On October 21, 2021, a purported investor in the Company's publicly traded securities filed a putative class action lawsuit against
Amarin Corporation plc, the former chief executive officer and the former chief financial officer in the U.S. District Court for the
District of New Jersey, Vincent Dang v. Amarin Corporation plc, John F. Thero and Michael W. Kalb, No. 1:21-cv-19212 (D.N.J.
Oct. 21, 2021). A subsequent case, Dorfman v. Amarin Corporation plc, et al., No. 3:21-cv-19911 (D.N.J. filed Nov. 10, 2021), was
filed in November 2021. In December 2021, several Amarin shareholders moved to consolidate the cases and appoint a lead plaintiff
and lead counsel pursuant to the Private Securities Litigation Reform Act. The complaints in these actions are nearly identical and
allege that the Company misled investors by allegedly downplaying the risk associated with the Company's ANDA litigation
described above and the risk that certain of the Company's patents related to the MARINE indication would be invalidated. Based on
these allegations, plaintiff alleges that he purchased securities at an inflated share price and brings claims under the Securities and
Exchange Act of 1934 seeking unspecified monetary damages and attorneys' fees and costs. In October 2022, the court consolidated
the cases and appointed a lead plaintiff for the putative class. On January 13, 2023, lead plaintiff filed an amended complaint that also
named the former general counsel, and again alleged that the Company made false statements regarding the ANDA Litigation as well
as about the REDUCE-IT indication and VASCEPA’s financial prospects resulting from REDUCE-IT. All Defendants have moved to
dismiss the amended complaint and the motion remains pending. The Company believes it has valid defenses and will vigorously
defend against the claims but cannot predict the outcome. The Company is unable to reasonably estimate the loss exposure, if any,
associated with these claims.
On March 29, 2023, purported investors in the Company’s publicly traded securities filed a derivative lawsuit, naming as defendants
the Company’s former general counsel, the Company’s trial counsel for the ANDA litigation, and the Company as nominal defendant,
in the Superior Court of New Jersey, Law Division, Monmouth County, captioned Anne Abramson, John Lissandrello, Georgette
Appiano, and Andrew Bondarowicz v. Amarin Corporation plc, Covington & Burling, LLP, Joseph T. Kennedy, and John Does A-Z,
No. MON-L-000984-23 (N.J. Super. Ct. Law Div. Mar. 29, 2023). The complaint alleged that the defendants failed to exercise
appropriate diligence and due care in their conduct of the ANDA litigation. Based on those allegations, the complaint alleged that the
defendants committed legal malpractice and sought monetary damages and attorneys’ fees and costs. On April 8, 2023, the plaintiffs
voluntarily dismissed this case without prejudice.
On March 31, 2023, the Company’s former chief executive officer, Karim Mikhail, filed a complaint against the Company and certain
of its affiliates in the Superior Court of New Jersey, Law Division – Somerset County, captioned Mikhail v. Amarin Corporation, plc
(Docket No. SOM-L-000366-23), concerning Mr. Mikhail’s alleged “constructive termination” from the Company. The complaint
seeks unspecified damages arising from claims for breaches of his employment agreement, Executive Severance and Change of
Control Plan, and the implied covenant of good faith and fair dealing. On April 3, 2023, the case moved to the United States District
Court for the District of New Jersey (Civ. No. 3:23-cv-01856). On June 30, 2023, all defendants moved to dismiss this case without
prejudice. The Company believes it has valid defenses and will vigorously defend against the claims but cannot predict the outcome.
The Company is unable to reasonably estimate the loss exposure, if any, associated with these claims.
In addition to the above, in the ordinary course of business, the Company is from time to time involved in lawsuits, claims,
investigations, proceedings, and threats of litigation relating to intellectual property, commercial arrangements and other matters.
Milestone and Supply Purchase Obligations
The Company currently has long-term supply agreements with multiple API suppliers and encapsulators. The Company is relying on
these suppliers to meet current and potential future global demand for VASCEPA. Certain supply agreements require annual minimum
volume commitments by the Company and certain volume shortfalls may require payments for such shortfalls.
F-19
These agreements include requirements for the suppliers to meet certain product specifications and qualify their materials and
facilities with applicable regulatory authorities including the U.S. FDA. The Company has incurred certain costs associated with the
qualification of product produced by these suppliers.
The Company continues to negotiate with contract suppliers to align its supply arrangements with current and future global demand
which may result in additional costs to the Company. As of the date of filing this Annual Report, the Company has a total of
approximately $37.0 million in future contractual purchase obligations without consideration to ongoing discussions with other
suppliers. In addition, the Company has total obligations of $186.5 million contingent on either certain suppliers obtaining regulatory
approval in Europe or pricing reimbursement in certain European countries not occurring by June 30, 2024.
During 2023, the Company determined that it was probable that the Company would not be able to obtain pricing reimbursement in
certain countries outlined within renegotiated supply agreements by June 30, 2024. The Company's reasonable estimate of the liability
is a range between $8.0 million and $15.8 million, with no amount within that range a better estimate than any other amount;
accordingly, an $8.0 million provision was recognized in cost of goods sold - restructuring inventory on the consolidated statement of
operations. The ultimate resolution of the matter could result in up to an additional $7.8 million of the amount accrued.
On March 26, 2021, the EC approved the marketing authorization application for VAZKEPA. Under the 2004 share repurchase
agreement with Laxdale upon receipt of pricing approval in Europe for the first indication for VASCEPA (or first indication of any
product containing intellectual property acquired from Laxdale in 2004), the Company was obligated to make an aggregate stock or
cash payment to the former shareholders of Laxdale (at the sole option of each of such former shareholders) of £7.5 million. On July
13, 2022 in connection with the United Kingdom's National Institute for Health and Care Excellence, or NICE's, final guidance for
reimbursement of VAZKEPA and use across the National Health Service, or NHS, in England and Wales, representing receipt of
marketing approval in Europe for the first indication for VAZKEPA, the Company became obligated to make the aggregate milestone
payment of £7.5 million to Laxdale’s former shareholders (in either stock or cash at the election of each shareholder). As of
December 31, 2023, the Company has settled the first European indication approval milestone through issuance of stock and cash
payments based on the respective shareholder's election.
Also under the Laxdale agreement, upon receipt of a marketing approval in Europe for a further indication of VASCEPA (or further
indication of any other product acquired from Laxdale in 2004), the Company must make an aggregate stock or cash payment (at the
sole option of each of such former shareholder) of £5.0 million (approximately $6.4 million as of December 31, 2023) for the potential
market approval.
The Company has no provision for any of these obligations, except the $8.0 million provision noted above, since the amounts are
either not paid or payable as of December 31, 2023.
(8) Equity
Common Stock
On January 10, 2024, the Company announced plans to initiate a share repurchase program to purchase up to $50.0 million of the
Company's ordinary shares held in the form of American Depository Shares. The implementation of the share repurchase program will
require shareholder approval as well as UK High Court approval, as required under UK company law.
On July 13, 2022, in connection with the United Kingdom's National Institute for Health and Care Excellence, or NICE's, final
guidance for reimbursement of VAZKEPA and use across the National Health Service, or NHS, in England and Wales, representing
receipt of marketing approval in Europe for the first indication for VAZKEPA, the Company became obligated to make an aggregate
milestone payment of £7.5 million to Laxdale's former shareholders (in either stock or cash at the election of each shareholder) under
the 2004 purchase agreement among the Company and such former shareholders. One of the shareholders elected to receive payment
in stock for its pro rata portion of the milestone payment, resulting in the issuance of 5,817,942 shares at a price of $1.41 per share in
July 2022.
During the years ended December 31, 2023 and 2022, other than as described elsewhere in this Annual Report on Form 10-K,
including in the Notes to Consolidated Financial Statements, the Company did not engage in any transactions involving its common
stock. Refer to Incentive Equity Awards below for discussion of ordinary shares issued as a result of stock option exercises and the
vesting of restricted stock units. Refer to Note 9—Stock Incentive Plans and Stock Based Compensation for discussion of shares issued
under the Company’s employee stock purchase plan.
Incentive Equity Awards
The Company issues incentive equity awards, including incentive and non-qualified stock options and restricted stock units, under the
Amarin Corporation plc 2020 Stock Incentive Plan, or the 2020 Plan, which is the successor to the Amarin Corporation plc 2011
Stock Incentive Plan, as amended, or the 2011 Plan, and the Amarin Corporation plc 2002 Stock Option Plan, as amended, or the 2002
F-20
Plan, and together with the 2020 Plan and 2011 Plan, the Plans. Refer to Note 9—Stock Incentive Plans and Stock Based
Compensation for further information regarding the Company’s incentive equity plans and awards.
The following table summarizes the aggregate number of stock options and restricted stock units, or RSUs, outstanding under the
2020 Plan as of December 31, 2023:
Outstanding stock options
% of outstanding shares on a fully diluted basis
Outstanding RSUs
% of outstanding shares on a fully diluted basis
December 31, 2023
27,956,138
6%
11,983,101
3%
The following table represents equity awards activity during the years ended December 31, 2023 and 2022:
Common shares issued for stock option exercises
Gross and net proceeds from stock option exercises
Common shares issued in settlement of vested RSUs
Shares retained for settlement of employee tax obligations ─ RSUs
Common shares issued in settlement of vested Performance-Based
RSUs (1)
Shares retained for settlement of employee tax obligations ─
Performance-Based RSUs
$
For the Year Ended December 31,
2023
2022
$
1,239,763
1,882,001
3,890,395
1,187,251
358,440
143,120
33,303
59,686
1,940,371
500,064
—
—
(1)
Performance-based RSUs vested in connection with the achievement of certain performance conditions. These
performance-based RSUs will primarily vest over a three-year period based on continuous service from the grant date.
During the years ended December 31, 2023 and 2022, the Company granted a total of 5,456,800 and 3,065,000 stock options,
respectively, and 8,227,800 and 9,069,500 RSUs, respectively, to employees under the Plans. The RSUs typically vest annually over a
three- or four-year period and the stock options typically vest quarterly over a four-year period. Also during 2023 and 2022, the
Company granted a total of 1,368,800 and 1,919,500 RSUs, respectively, to employees under the Plans that vest upon the achievement
of specified performance conditions.
In addition to the grants noted above, in connection with the implementation of a retention program in July 2023, the Company
granted a total of 3,978,300 stock options to employees under the 2020 Plan. The options vest 50% on both January 1, 2024 and
January 1, 2025, respectively. Also in July 2023, the Company granted 5,000,000 stock options to Patrick Holt in connection with his
appointment as President and Chief Executive Officer, which will vest upon achievement of specified stock price conditions for the
Company.
During the years ended December 31, 2023 and 2022, the Company granted a total of 3,853,025 and 1,973,124 stock options,
respectively, and 1,392,257 and 1,597,955 RSUs, respectively, to members of the Company’s Board of Directors under the Plans. The
RSUs vest in equal installments over a three-year period upon the earlier of the anniversary of the grant date or the Company’s annual
general meeting of shareholders in such anniversary year. The stock options vest in full upon the earlier of the one-year anniversary of
the grant date or the Company’s annual general meeting of shareholders in such anniversary year. Upon termination of service to the
Company or upon a change of control, each director shall be entitled to a payment equal to the fair market value of one share of
Amarin common stock per award vested or granted, respectively, which is required to be made in shares.
(9)
Stock Incentive Plans and Stock-Based Compensation
On March 16, 2020, the Company’s Board of Directors, upon the recommendation of the Remuneration Committee, adopted, subject
to shareholder approval, the 2020 Plan which was subsequently approved by the Company’s shareholders on July 13, 2020 at the
Annual General Meeting of Shareholders. The 2020 Plan is the successor to the Company’s 2011 Plan, which was set to expire on July
12, 2021, and the Company’s 2002 Plan, the Plans.
The 2020 Plan allows the Company to grant stock options, both incentive and non-qualified options, to employees and Directors,
restricted stock units to employees and unrestricted shares to Directors. The maximum number of the Company’s Ordinary Shares of
£0.50 each or any ADS’s, as to be issued under the 2020 Plan shall not exceed the sum of (i) 20,000,000 shares and (ii) the number of
Shares that remained available for grants under the Company’s 2011 Plan as of July 13, 2020. If any award granted and outstanding
under the Plans expires or is forfeited, surrendered, canceled or otherwise terminated, the shares may be made available for subsequent
F-21
grants under the 2020 Plan. The 2020 Plan is administered by the Remuneration Committee of the Company’s Board of Directors and
expires on July 13, 2030.
Stock Options
Under the terms of the Plans, stock options typically vest over a four-year period and expire after a 10-year term. The stock options
are granted at an exercise price equal to the closing price of the Company’s American Depositary Shares on the grant date. The
following table summarizes all stock option activity for the year ended December 31, 2023:
In thousands (except per share amounts and years)
Outstanding as of January 1, 2023
Granted
Forfeited
Expired
Exercised
Outstanding as of December 31, 2023
Exercisable as of December 31, 2023
Vested and expected to vest as of December 31, 2023
Available for future grant as of December 31, 2023
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Number of
Shares
$
19,182
18,363
(8,221)
(128)
(1,240)
27,956
12,333
27,114
22,984
5.80
1.27
4.85
7.54
1.50
3.21
5.72
3.35
7.3 years $
4.4 years $
6.6 years $
131
-
113
The weighted average grant date fair value of stock options granted during the years ended December 31, 2023, 2022, and 2021 was
$1.27, $2.56, and $5.12, respectively. The total grant date fair value of options vested during the years ended December 31, 2023,
2022, and 2021 was $8.2 million, $16.6 million, and $21.1 million, respectively. Included within the above table is the 5,000,000
market-based stock option award with a weighted average grant date fair value of $0.37.
During the years ended December 31, 2023, 2022 and 2021, the Company received proceeds from the exercise of options of $1.9
million, $0.1 million, and $2.9 million, respectively. The total intrinsic value of options exercised during the years ended December
31, 2023, 2022, and 2021 was $0.4 million, nominal and $4.9 million, respectively, calculated as the difference between the quoted
stock price of the Company’s common stock as of the reporting date and the exercise prices of the underlying awards.
As of December 31, 2023, options have $11.7 million of unrecognized stock-based compensation expense with such expense expected
to be recognized over a weighted-average period of approximately 2.8 years.
The fair value of stock options on the date of grant was estimated using the Black-Scholes option pricing model except for the market-
based option awards which used the Monte Carlo option pricing model. Use of a valuation model requires management to make
certain assumptions with respect to selected model inputs, which include:
•
•
•
•
Risk free rate: The risk-free interest rate is based on zero-coupon U.S. Treasury securities with a maturity term
approximating the expected life of the option at the date of grant.
Expected dividend yield: No dividend yield has been assumed as the Company does not currently pay dividends on its
common stock and does not anticipate doing so in the foreseeable future.
Expected option life: The expected life was determined using the simplified method based on the term and vesting period.
Expected volatility: Expected stock price volatility for the Black-Scholes model was calculated based on the historical
volatility of the Company’s common stock over the expected life of the option. For the Monte Carlo model, expected
stock price volatility was calculated based on the historical volatility of both the Company's common stock and
comparable company's common stock over the expected life of the option.
For 2023, 2022, and 2021, the Company used the following assumptions to estimate the fair value of share-based payment awards
under the Black-Scholes model:
Risk-free interest rate
Expected dividend yield
Expected option life (years)
Expected volatility
2023
3.59% - 4.72%
0.00%
6.25
101% - 104%
2022
1.64% - 4.35%
0.00%
6.25
96% - 101%
2021
0.53% - 1.36%
0.00%
6.25
96% - 99%
F-22
The Company used the following assumptions to estimate the fair value of share-based payment awards under the Monte Carlo model
in 2023:
Risk-free interest rate
Expected dividend yield
Expected option life (years)
Expected volatility
2023
4.06% - 4.09%
0.00%
9
42.5% - 43.00%
Employee stock options generally require future service and vest ratably over a four-year service period and are settled by the issuance
of new common shares. The grant date fair value of the stock options, net of an estimated forfeiture rate is amortized straight-line over
the awards’ vesting periods or respective requisite service periods and is adjusted for actual forfeitures over such period. The
Company recorded compensation expense in relation to stock options of $6.8 million, $14.8 million and $23.0 million for the years
ended December 31, 2023, 2022, and 2021, respectively.
Restricted Stock Units
The restricted stock units vest based upon either a time-based service condition, a performance condition, or both. The grant date fair
value of the restricted stock unites, net of the estimated forfeiture rate, is amortized straight-line over the vesting periods or requisite
service periods and is adjusted for actual forfeitures over such period. For any awards with a performance condition, the probability
that any performance criteria will be achieved is assessed by management and compensation expense for such awards is only recorded
to the extent that the attainment of the performance criteria is deemed to be probable.
The following table presents the restricted stock unit activity for the year ended December 31, 2023:
In thousands (except per share amounts)
Outstanding as of January 1, 2023
Granted
Vested
Forfeited
Expired
Outstanding as of December 31, 2023
Shares
Weighted Average
Grant Date Fair
Value
14,461
11,048
(4,249)
(9,057)
(220)
11,983
$
3.98
1.73
3.91
2.85
16.87
1.70
The Company recorded compensation expense in relation to restricted stock units of $9.8 million, $11.4 million and $13.9 million, for
the years ended December 31, 2023, 2022, and 2021, respectively. The total grant date fair value of restricted stock units vested during
the years ended December 31, 2023, 2022, and 2021 was $16.3 million, $14.3 million and $23.8 million, respectively. As of
December 31, 2023, restricted stock units have $14.9 million of unrecognized stock-based compensation expense with such expense to
be recognized over a weighted-average period of approximately 1.8 years.
The following table presents the stock-based compensation expense related to stock-based awards for the years ended December 31,
2023, 2022, and 2021:
In thousands
Research and development
Selling, general and administrative
Restructuring
Stock-based compensation expense
2023
2022
2021
$
$
4,187
12,493
(1,034)
15,646
$
$
4,465
22,339
(591)
26,213
$
$
4,327
32,305
306
36,938
F-23
Employee Stock Purchase Plan
On March 13, 2017, the Board adopted, subject to shareholder approval, the Amarin Corporation plc 2017 Employee Stock Purchase
Plan, or the ESPP, which was approved by the Company’s shareholders on May 15, 2017. The ESPP is intended to qualify as an
“employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. The maximum fair market value of
stock which can be purchased by a participant in a calendar year is $25,000.
Under the ESPP, an aggregate of 3,000,000 ordinary shares (each ordinary share to be represented by one ADS) are reserved and
available for issuance, which were registered with the SEC on August 2, 2017, for sale to eligible employees. Subject to certain
exclusions, any employee of the Company’s U.S. subsidiary, Amarin Pharma, Inc., who works at least 20 hours per week and has been
employed for at least six months as of the first day of the applicable offering period is eligible to participate in the ESPP. Eligible
employees may authorize payroll deductions of up to 15 percent of their base pay to be withheld to purchase ordinary shares, subject
to terms and limitations of the plan, at a price equal to 85 percent of the lower of the fair market values of the Company’s ordinary
shares as of the beginning or the end of six-month offering periods.
For the offering periods ended on the last business day on or before each of May 31, 2023 and November 30, 2023, the Company
issued 205,861 shares and 113,749 shares, respectively, at a purchase price of $1.01 per share and $0.66 per share, respectively.
For the offering periods ended on the last business day on or before each of May 31, 2022 and November 30, 2022, the Company
issued 265,214 shares and 191,482 shares, respectively, at a purchase price of $1.45 per share and $1.15 per share, respectively.
For the offering periods ended on the last business day on or before each of May 31, 2021 and November 30, 2021, the Company
issued 226,402 shares and 172,884 shares, respectively, at a purchase price of $3.86 per share and $3.06 per share, respectively.
As of December 31, 2023, 1,041,967 shares were reserved for future issuance under the ESPP.
(10)
Income Taxes
The Company recognizes interest and penalties related to uncertain tax positions within the provision for income taxes. The total
amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized is $8.9 million and $8.2 million
as of December 31, 2023 and 2022, respectively. The Company recognized interest related to uncertain tax positions of $0.7 million
and $0.5 million for the years ended December 31, 2023 and 2022, respectively. No penalties have been recognized in conjunction
with these positions.
The following is a reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2023, 2022 and
2021:
In thousands
Beginning uncertain tax benefits
Prior year—increases
Prior year—decreases
Current year—increases
Ending uncertain tax benefits
2023
2022
2021
18,715
—
(2,261)
2,204
18,658
$
$
22,040
—
(9,107)
5,782
18,715
$
$
24,034
16
(2,248)
238
22,040
$
$
The Company files income tax returns in the United States, Ireland and United Kingdom, or UK. The Company remains subject to tax
examinations in the following jurisdictions as of December 31, 2023:
Jurisdiction
United States—Federal
United States—State
Ireland
United Kingdom
Tax Years
2018-2023
2018-2023
2019-2023
2022-2023
The Company does not expect any gross liabilities to expire in 2024 based on statutory lapses or audits.
F-24
The components of (loss) income from operations before taxes were as follows for the years ended December 31, 2023, 2022 and
2021:
In thousands
United States
Ireland and United Kingdom
Other
Total (loss) / income before taxes
2023
2022
2021
$
$
15,881
(85,177)
15,626
(53,670)
$
$
5,358
(112,527)
3,364
(103,805)
$
$
10,222
(4,368)
5,437
11,291
The provision for income taxes shown in the accompanying consolidated statements of operations consists of the following for the
years ended December 31, 2023, 2022 and 2021:
In thousands
Current:
United States—Federal
United States—State
Foreign
Total current
Deferred:
United States—Federal
United States—State
Foreign
Change in valuation allowance
Total deferred
Provision for income taxes
2023
2022
2021
$
$
$
$
1,597
243
3,602
5,442
$
$
9,927
(934)
(15,408)
6,415
— $
$
5,442
562
573
863
1,998
$
$
(3,721)
284
(1,646)
5,083
— $
$
1,998
2,690
716
156
3,562
5,222
(3,057)
(1,619)
(546)
—
3,562
The provision for income taxes differs from the amount computed by applying the statutory income tax rate to income before taxes
due to the following for the years ended December 31, 2023, 2022 and 2021:
In thousands
Benefits from taxes at statutory rate
Rate differential
Change in valuation reserves
Nondeductible employee compensation
Stock option/RSU windfall
ISO disqualifying disposition windfall
Research and development credits
Tax return to provision adjustments
Foreign exchange
Permanent and other
Uncertain tax positions
Foreign-derived intangible income
Loss of tax attributes
Provision for income taxes
2023
2022
2021
$
$
(13,418)
8,042
6,415
31
4,500
—
(376)
4,187
(2,921)
141
780
(1,939)
—
5,442
$
$
(25,952)
9,141
5,083
2,344
3,569
—
(958)
424
7,859
(1,542)
(3,290)
(2,935)
8,255
1,998
$
$
2,823
(4,416)
(546)
5,249
81
(219)
(1,170)
(8,372)
4,109
863
5,160
—
—
3,562
The Company is subject to a corporate tax rate in Ireland of 25% for non-trading activities and 12.5% for trading activities. For the
years ended December 31, 2023, 2022, and 2021, the Company applied the statutory corporate tax rate of 25% for Amarin
Corporation plc, reflecting the non-trading tax rate in Ireland. However, for Amarin Pharmaceuticals Ireland Limited, a wholly-owned
subsidiary of Amarin Corporation plc, the Company applied the 12.5% Irish trading tax rate. In the table above, the Company used
Amarin Corporation plc’s 25% tax rate as the starting point for the reconciliation since it is the parent entity of the business.
In April 2016, the Company adopted ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Share-
Based Payment Accounting which changes the accounting for certain aspects of share-based payments to employees. One aspect of the
standard requires that excess tax benefits and deficiencies that arise upon vesting or exercise of share-based payments be recognized
as an income tax benefit and expense in the income statement. Previously, such amounts were recognized as an increase and decrease
in additional paid-in capital. This aspect of the standard was adopted prospectively, and accordingly the provisions for income taxes
for the years ended December 31, 2023, 2022 and 2021 includes nil, $0.6 million and $0.1 million of excess tax benefits, respectively,
arising from share-based payments during the period.
F-25
The income tax effect of each type of temporary difference comprising the net deferred tax asset as of December 31, 2023 and 2022 is
as follows:
In thousands
Deferred tax assets:
Net operating losses
Stock-based compensation
Tax credits
Capitalized R&D
Lease liability
Other reserves and accrued liabilities
Gross deferred tax assets
Less: valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Depreciation and amortization
Lease asset
Total deferred tax liabilities
Net deferred tax assets
December 31, 2023
December 31, 2022
$
$
$
154,086
9,929
2,409
—
1,971
7,916
176,311
(171,793)
4,518
(3,050)
(1,468)
(4,518)
— $
136,862
11,616
2,639
4,723
2,583
11,895
170,318
(165,378)
4,940
(3,337)
(1,603)
(4,940)
—
The Company assesses whether it is more-likely-than-not that the Company will realize its deferred tax assets. The Company
determined that it was more-likely-than-not that the Irish, U.S., Germany, and Israeli net operating losses and the related deferred tax
assets would not be realized in future periods and a full valuation allowance has been provided for all periods.
The following table reflects the activity in the valuation allowance for the years ended December 31, 2023 and 2022:
In thousands
Beginning valuation allowance
Increase as reflected in income tax expense
Foreign exchange
Ending valuation allowance
$
$
2023
2022
165,378
3,494
2,921
171,793
$
$
160,295
12,942
(7,859)
165,378
During 2023, the Company recorded adjustments to its deferred tax accounts related to the impact of foreign exchange rate changes
and to reconcile the financial statement accounts to the amounts expected to result in future income and deductions under local law,
primarily as it relates to Irish net operating losses and deferred taxes for stock compensation. These adjustments were fully offset with
valuation allowances based on the Company’s position with respect to the realizability of its recorded deferred tax assets.
The Company has combined U.S. and non-U.S. net operating loss carryforwards of $959.9 million, which do not expire. The total net
operating loss carryforwards increased by approximately $125.6 million from the prior year primarily as a result of current year loss
generated by the Company’s U.S. and non-U.S. subsidiaries, the impact of foreign exchange rate changes and adjustments to reconcile
to the amount reported on the filed 2021 foreign tax returns. In addition, the Company has U.S. Federal tax credit carryforwards of
$8.6 million and state tax credit carryforwards of $3.5 million. These amounts exclude the impact of any unrecognized tax benefits
and valuation allowances. These carryforwards, which will expire between 2025 and 2043, may be used to offset future taxable
income, if any.
As of December 31, 2023, there are no earnings that have been retained indefinitely for reinvestment by foreign subsidiary; therefore,
no provision has been made for income taxes that would be payable upon the distribution of such earnings or the recovery of the
Company’s investment in its subsidiaries as the amount of the related unrecognized deferred income tax liability is zero.
The Company's and its subsidiaries' income tax returns are periodically examined by various taxing authorities. The Company is
currently under audit by the IRS for the Company’s 2018 U.S. income tax return and by the New York Department of Finance for the
years 2018 and 2019. Although the outcome of tax audits is always uncertain and could result in significant cash tax payments, the
Company does not believe the outcome of these audits will have a material adverse effect on the Company's consolidated financial
position or results of operations.
(11) Defined Contribution Plan
The Company makes available a 401(k) plan for its U.S. employees. Under the 401(k) plan, employees may make contributions which
are eligible for a discretionary percentage match, in cash, as defined in the 401(k) plan and determined by the Board of Directors. The
F-26
Company recognized $2.7 million, $1.7 million and $1.9 million of related compensation expense for the years ended December 31,
2023, 2022 and 2021, respectively.
(12) Revenue Recognition
The Company sells VASCEPA principally to a limited number of major wholesalers, as well as selected regional wholesalers and
specialty pharmacy providers in the United States and Europe, or collectively, its distributors or its customers, most of whom in turn
resell VASCEPA to retail pharmacies for subsequent resale to patients and healthcare providers. Patients are required to have a
prescription in order to purchase VASCEPA. In addition to distribution agreements with distributors, the Company enters into
arrangements with health care providers and payors that provide for government-mandated and/or privately-negotiated rebates,
chargebacks and discounts with respect to the purchase of the Company’s product.
Revenues from product sales are recognized when the distributor obtains control of the Company’s product, which occurs at a point in
time, typically upon delivery to the distributor. Payments from distributors are generally received 45 days from the date of sale. The
Company evaluates the creditworthiness of each of its distributors to determine whether revenues can be recognized upon delivery,
subject to satisfaction of the other requirements, or whether recognition is required to be delayed until receipt of payment. The
Company calculates gross product revenues generally based on the wholesale acquisition cost or list price that the Company charges
its distributors for VASCEPA.
Reserves for Variable Consideration
Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration
for which reserves are established and which result from (a) trade allowances, such as invoice discounts for prompt pay and distributor
fees, (b) estimated government and private payor rebates and chargebacks and discounts, such as Medicaid reimbursements, (c)
reserves for expected product returns and (d) estimated costs of incentives that are offered within contracts between the Company and
its distributors, health care providers, payors and other indirect customers relating to the Company’s sales of its product. These
reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable
(if the amount is payable to the distributor) or as a current liability (if the amount is payable to a party other than a distributor). Where
appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors
such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends,
industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of
the amount of consideration to which it is entitled based on the terms of the contract. The amount of variable consideration which is
included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a
significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of
consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s
estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances
become known.
Trade Allowances: The Company generally provides invoice discounts on VASCEPA sales to its distributors for prompt payment and
fees for distribution services, such as fees for certain data that distributors provide to the Company. The payment terms for sales to
distributors in the U.S. and Europe generally include a 2-3% discount for prompt payment while the fees for distribution services are
based on contractual rates agreed with the respective distributors. Based on historical data, the Company expects its distributors to
earn these discounts and fees and deducts the full amount of these discounts and fees from its gross product revenues and accounts
receivable at the time such revenues are recognized.
Rebates, Chargebacks and Discounts: The Company contracts with Medicaid, Medicare, other government agencies and various
private organizations, or collectively, Third-party Payors, so that VASCEPA will be eligible for purchase by, or partial or full
reimbursement from, such Third-party Payors. The Company estimates the rebates, chargebacks and discounts it will provide to Third-
party Payors and deducts these estimated amounts from its gross product revenues at the time the revenues are recognized. The
Company estimates these reserves based upon a range of possible outcomes that are probability-weighted for the estimated payor mix.
These reserves are recorded in the same period the revenue is recognized, resulting in a reduction of product revenue and the
establishment of a current liability, which is included in accrued expenses and other current liabilities on the consolidated balance
sheets. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the
Company will owe an additional liability under the Medicare Part D program. The Company estimates the rebates, chargebacks and
discounts that it will provide to Third-party Payors based upon (i) the Company’s contracts with these Third-party Payors, (ii) the
government-mandated discounts applicable to government-funded programs, (iii) information obtained from the Company’s
distributors and (iv) information obtained from other third parties regarding the payor mix for VASCEPA. The Company’s liability for
these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet
been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been
F-27
recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period. For the year ended
December 31, 2023, the Company recognized $15.1 million related to a change in estimate primarily for the Medicaid rebate provision
as a result of a change in the percentage of business within the Medicaid segment, with a related reduction in net loss by $15.1 million
in the year ended December 31, 2023. Excluding this change in estimate, net loss per share basic and diluted for the year ended
December 31, 2023 would have been $(0.18).
Product Returns: The Company’s distributors have the right to return unopened unprescribed VASCEPA during the 18-month period
beginning six months prior to the labeled expiration date and ending 12 months after the labeled expiration date. The expiration date
for VASCEPA 1-gram and 0.5-gram size capsules is currently four years and three years, respectively, after being converted into
capsule form, which is the last step in the manufacturing process for VASCEPA and generally occurs within a few months before
VASCEPA is delivered to distributors. The Company estimates future product returns on sales of VASCEPA based on: (i) data
provided to the Company by its distributors (including weekly reporting of distributors’ sales and inventory held by distributors that
provided the Company with visibility into the distribution channel in order to determine what quantities were sold to retail pharmacies
and other providers), (ii) information provided to the Company from retail pharmacies, (iii) data provided to the Company by a third-
party data provider which collects and publishes prescription data, and other third parties, (iv) historical industry information
regarding return rates for similar pharmaceutical products, (v) the estimated remaining shelf life of VASCEPA previously shipped and
currently being shipped to distributors and (vi) contractual agreements intended to limit the amount of inventory maintained by the
Company’s distributors. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of
product revenue and the establishment of a current liability which is included in Accrued expenses and other current liabilities on the
consolidated balance sheets.
Other Incentives: Other incentives that the Company offers to indirect customers include co-pay mitigation rebates provided by the
Company to commercially insured patients who have coverage for VASCEPA and who reside in states that permit co-pay mitigation
programs. The Company’s co-pay mitigation program is intended to reduce each participating patient’s portion of the financial
responsibility for VASCEPA’s purchase price to a specified dollar amount. Based upon the terms of the program and information
regarding programs provided for similar specialty pharmaceutical products, the Company estimates the average co-pay mitigation
amounts and the percentage of patients that it expects to participate in the program in order to establish its accruals for co-pay
mitigation rebates. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product
revenue and the establishment of a current liability which is included in accrued expenses and other current liabilities on the
consolidated balance sheets. The Company adjusts its accruals for co-pay mitigation rebates based on actual redemption activity and
estimates regarding the portion of issued co-pay mitigation rebates that it estimates will be redeemed.
The following tables summarize activity in each of the net product revenue allowance and reserve categories described above for the
years ended December 31, 2023 and 2022:
In thousands
Balance as of January 1, 2022
Provision related to current period sales
Provision related to prior period sales
Credits/payments made for current period sales
Credits/payments made for prior period sales
Balance as of December 31, 2022
Provision related to current period sales
Provision related to prior period sales
Credits/payments made for current period sales
Credits/payments made for prior period sales
Balance as of December 31, 2023
Trade
Allowances
86,636
$
96,340
—
(54,952)
(83,398)
44,626
90,806
(897)
(71,972)
(43,729)
18,834
$
Rebates,
Chargebacks
and Discounts
184,756
$
676,816
592
(548,783)
(177,288)
136,093
726,119
(16,337)
(593,584)
(109,258)
143,033
$
$
$
Product
Returns
Other
Incentives
8,089
2,347
—
—
(1,690)
8,746
2,199
(250)
(1,744)
(1,219)
7,732
$
$
2,745
26,612
—
(24,671)
(2,630)
2,056
16,561
106
(14,658)
(2,163)
1,902
$
$
Total
282,226
802,115
592
(628,406)
(265,006)
191,521
835,685
(17,378)
(681,958)
(156,369)
171,501
Such net product revenue allowances and reserves are included within accrued expenses and other current liabilities within the
consolidated balance sheets, with the exception of trade allowances and chargebacks, which are included within accounts receivable,
net as discussed above.
Licensing Revenue
The Company enters into licensing agreements which are within the scope of Topic 606, under which it licenses certain rights to
VASCEPA for uses that are currently commercialized and under development by the Company. The terms of these arrangements
typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development,
regulatory and commercial milestone payments; payments for manufacturing supply services the Company provides through its
F-28
contract manufacturers; and royalties on net sales of licensed products. Each of these payments results in licensing and royalty
revenues.
In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the
Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of
whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;
(iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to
the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
In determining performance obligations, management evaluates whether the license is distinct from the other performance obligations
with the collaborative partner based on the consideration of the relevant facts and circumstances for each arrangement. Factors
considered in the determination include the stage of development of the license delivered, research and development capabilities of the
partner and the ability of partners to develop and commercialize VASCEPA independent of the Company.
Licenses of intellectual property: If the license to the Company’s intellectual property is determined to be distinct from the other
performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated
to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses
that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to
determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate
method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the
measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
During the three months ended June 30, 2023, the Company adjusted the measure of performance and recognized an additional
$5.0 million and $5.3 million of license revenue relating to Eddingpharm (Asia) Macao Commercial Offshore Limited, or Edding, and
HLS Therapeutics Inc., or HLS, respectively. Excluding this change in estimate, net loss per share basic and diluted for the year ended
December 31, 2023 would have been $(0.17). Refer to Note 8—Development, Commercialization and Supply Agreements for further
details.
Milestone Payments: At the inception of each arrangement that includes development, regulatory and commercial milestone
payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be
included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not
occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the
Company or licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.
The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to
achieve the respective milestone as well as the level of effort and investment required. The transaction price is then allocated to each
performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the
performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the
probability of achievement of such development, regulatory and commercial milestones and any related constraint, and if necessary,
adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would
affect licensing revenues and earnings in the period of adjustment.
The Company receives payments from its customers based on billing schedules established in each contract. Upfront payments and
fees are recorded as deferred revenue upon receipt or when due, and may require deferral of revenue recognition to a future period
until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the
Company’s right to consideration is unconditional. The Company does not assess whether a contract has a significant financing
component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the
promised goods or services to the customer will be one year or less.
(13) Development, Commercialization and Supply Agreements
In-licenses
Mochida Pharmaceutical Co., Ltd.
In June 2018, the Company entered into a collaboration with Mochida related to the development and commercialization of drug
products and indications based on the active pharmaceutical ingredient in VASCEPA, the omega-3 acid, EPA, or eicosapentaenoic
acid. Among other terms in the agreement, the Company obtained an exclusive license to certain Mochida intellectual property to
advance the Company’s interests in the U.S. and certain other territories and the parties will collaborate to research and develop new
products and indications based on EPA for the Company’s commercialization in the U.S. and certain other territories. The potential
new product and indication opportunities contemplated under this agreement are currently in early stages of development.
F-29
Upon closing of the collaboration agreement, the Company made a non-refundable, non-creditable up-front payment of approximately
$2.7 million. In addition, the agreement provides for the Company to pay milestone payments upon the achievement of certain product
development milestones and royalties on net sales of future products arising from the collaboration, if any.
In January 2023, 2022 and 2021, the Company exercised certain rights under the agreement, resulting in payments of $1.0 million, in
each of such periods, to Mochida, which was recorded as research and development expense in the consolidated statement of
operations.
Out-licenses
Eddingpharm (Asia) Macao Commercial Offshore Limited
In February 2015, the Company entered into a Development, Commercialization and Supply Agreement, or the DCS Agreement, with
Edding related to the development and commercialization of VASCEPA in Mainland China, Hong Kong, Macau and Taiwan, or
collectively, the China Territory. Under the terms of the DCS Agreement, the Company granted to Edding an exclusive (including as
to the Company) license with the right to sublicense development and commercialization of VASCEPA in the China Territory for uses
that are currently commercialized and under development by the Company based on the Company’s MARINE, ANCHOR and
REDUCE-IT clinical trials of VASCEPA.
Under the DCS Agreement, Edding is solely responsible for development and commercialization activities in the China Territory and
associated expenses. The Company provides development assistance and is responsible for supplying finished and later bulk drug
product at defined prices under negotiated terms. The Company retains all VASCEPA manufacturing rights. Edding agreed to certain
restrictions regarding the commercialization of competitive products globally and the Company agreed to certain restrictions regarding
the commercialization of competitive products in the China Territory.
The Company and Edding agreed to form a joint development committee to oversee regulatory and development activities for
VASCEPA in the China Territory in accordance with a negotiated development plan and formed a separate joint commercialization
committee in advance of expected approval in the China Territory to oversee VASCEPA planning and pre-launch commercialization
activities in the China Territory. Development costs are paid by Edding to the extent such costs are incurred in connection with the
negotiated development plan or otherwise incurred by Edding. Edding is responsible for preparing and filing regulatory applications in
all countries of the China Territory at Edding’s cost with the Company’s assistance. The DCS Agreement also contains customary
provisions regarding indemnification, supply, record keeping, audit rights, reporting obligations, and representations and warranties
that are customary for an arrangement of this type.
The term of the DCS Agreement expires, on a product-by-product basis, upon the later of (i) the date on which such product is no
longer covered by a valid claim under a licensed patent in the China Territory, or (ii) the 12th anniversary of the first commercial sale
of such product in Mainland China. The DCS Agreement may be terminated by either party in the event of a bankruptcy of the other
party and for material breach, subject to customary cure periods. In addition, at any time following the third anniversary of the first
commercial sale of a product in Mainland China, Edding has the right to terminate the DCS Agreement for convenience with 12
months’ prior notice. Neither party may assign or transfer the DCS Agreement without the prior consent of the other party, provided
that the Company may assign the DCS Agreement in the event of a change of control transaction.
Upon closing of the DCS Agreement, the Company received a non-refundable $15.0 million upfront payment. In March 2016, Edding
submitted its clinical trial application, or CTA, with respect to the MARINE indication for VASCEPA to the Chinese regulatory
authority. Following the CTA submission, the Company received a non-refundable $1.0 million milestone payment. In March 2017,
the CTA was approved by the Chinese regulatory authority, and, in December 2017, Edding commenced a pivotal clinical trial aimed
to support the regulatory approval of the first indication of VASCEPA in a patient population with severe hypertriglyceridemia in
Mainland China. In November 2020, the Company announced statistically significant topline results from the Phase 3 clinical trial of
VASCEPA conducted by Edding, which was used to seek regulatory approval in Mainland China. The Company received approval of
VASCEPA under the REDUCE-IT indication in Hong Kong in February 2022 and under the MARINE indication in Mainland China
in the second quarter of 2023. Following approval of VASCEPA in Mainland China under the MARINE indication, the Company
received a non-refundable $5.0 million milestone payment. In October 2023, Edding submitted its CTA with respect to the REDUCE-
IT indication for VASCEPA to the Chinese regulatory authority. Following the CTA submission, the Company recognized a non-
refundable $3.0 million milestone.
In addition to the non-refundable, upfront and regulatory milestone payments described above, the Company is entitled to receive
certain regulatory and sales-based milestone payments of up to an additional $145.0 million as well as tiered double-digit percentage
royalties on net sales of VASCEPA in the China Territory escalating to the high teens. The regulatory milestone events relate to the
submission and approval of certain applications to the applicable regulatory authority, such as a clinical trial application, clinical trial
exemption, or import drug license application. The amounts to be received upon achievement of the regulatory milestone events relate
to the submission and approval for three indications, and range from $2.0 million to $15.0 million for a total of $25.0 million. As of
F-30
December 31, 2023 the Company has recognized $9.0 million relating to milestone achievements. Achievement of regulatory
approval for a third indication is not probable. The achievement of sales-based milestone events occur when annual aggregate net sales
of VASCEPA in the territory equals or exceeds certain specified thresholds, and range from $5.0 million to $50.0 million for a total of
$120.0 million. Each such milestone payment shall be payable only once regardless of how many times the sales milestone event is
achieved. Each such milestone payment is non-refundable and non-creditable against any other milestone payments.
The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, Edding, is a
customer. The Company identified the following performance obligations at the inception of the DCS Agreement: (1) the exclusive
license to develop and commercialize VASCEPA in the China Territory for uses that are currently commercialized and under
development by the Company, (2) the obligation to participate in various steering committees, and (3) ongoing development and
regulatory assistance. Based on the analysis performed, the Company concluded that the identified performance obligations are not
distinct and therefore a combined performance obligation.
The transaction price includes the $15.0 million upfront consideration received, the $1.0 million milestone payment received related to
the successful submission of the CTA for the MARINE indication, the $5.0 million milestone payment received related to the
approval of VASCEPA under the MARINE indication and the $3.0 million milestone payment related to the submission of the CTA
for the REDUCE-IT indication. None of the other clinical or regulatory milestones has been included in the transaction price, as all
milestone amounts are fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors,
including that receipt of the milestones is outside the control of the Company and contingent upon success in future clinical trials and
the licensee’s efforts. Any consideration related to sales-based milestones including royalties, will be recognized when the related
sales occur and therefore have also been excluded from the transaction price. The Company will re-evaluate the transaction price in
each reporting period and as uncertain events are resolved or other changes in circumstances occur.
During the second quarter of 2023, Edding received regulatory approval in China under the MARINE indication and pursuit of
additional indications outside of the REDUCE-IT indication is not probable. As a result, the Company reevaluated the performance
period and determined that completion of the remaining performance obligations was estimated to be by the end of December 2025.
The effect of this change in estimate from the previously received upfront payment and prior year milestone payments was an increase
of $5.0 million in licensing revenue and a related reduction in net loss by $5.0 million for the year ended December 31, 2023. In
addition, the Company recognized $3.9 million related to the milestone payment received in the second quarter for the MARINE
indication approval and the remaining $1.1 million will be recognized over the remaining performance period through December
2025. The change in estimate resulted in the remaining performance period decreasing from 11 years to three years for recognizing the
remaining deferred revenue.
During the years ended December 31, 2023 and 2022, the Company recognized $12.9 million and $0.6 million, respectively, as
licensing revenue related to the upfront and milestone payments received in connection with the Edding agreement. From contract
inception through December 31, 2023 and 2022, the Company recognized $20.6 million and $7.7 million, respectively, as licensing
revenue under the DCS Agreement concurrent with the input measure of support hours provided by the Company to Edding in
achieving the combined development and regulatory performance obligation, which in the Company’s judgment is the best measure of
progress towards satisfying this performance obligation. The remaining transaction price of $4.4 million and $9.3 million is recorded
in deferred revenue as of December 31, 2023 and 2022, respectively, on the consolidated balance sheets and as of December 31, 2023
will be recognized as revenue over the remaining period of two years.
The Company recognized net product revenue of $1.8 million and $0.2 million for the years ended December 31, 2023 and 2022,
respectively, related to sales to Edding.
Biologix FZCo
In March 2016, the Company entered into an agreement with Biologix FZCo, or Biologix, a company incorporated under the laws of
the United Arab Emirates, to register and commercialize VASCEPA in several Middle Eastern and North African countries. Under the
terms of the distribution agreement, the Company granted to Biologix a non-exclusive license to use its trademarks in connection with
the importation, distribution, promotion, marketing and sale of VASCEPA in the Middle East and North Africa territory. Upon closing
of the agreement, the Company received a non-refundable upfront payment, which will be recognized as revenue over 10 years
commencing upon first marketing approval of VASCEPA in the territory. The Company is entitled to receive all payments based on
total product sales and pays Biologix a service fee in exchange for its services, whereby the service fee represents a percentage of
gross selling price which is subject to a minimum floor price.
F-31
The Company received approval of VASCEPA under the MARINE and REDUCE-IT indications in the following countries:
Country
Lebanon
United Arab Emirates
Qatar
Bahrain
Kuwait
Saudi Arabia
MARINE
March 2018
July 2018
December 2019
April 2021
December 2021
March 2022
REDUCE-IT
August 2021
October 2021
April 2021
April 2022
March 2023
June 2023
Launch Date
June 2018
February 2019
N/A
N/A
September 2023
September 2023
The Company recognized net product revenue of approximately $3.4 million and $1.0 million as of December 31, 2023 and 2022,
respectively, related to sales to Biologix.
HLS Therapeutics, Inc.
In September 2017, the Company entered into an agreement with HLS, a company incorporated under the laws of Canada, to register,
commercialize and distribute VASCEPA in Canada. Under the agreement, HLS is responsible for regulatory and commercialization
activities and associated costs. The Company is responsible for providing assistance towards local filings, supplying finished product
under negotiated supply terms, maintaining intellectual property, and continuing the development and funding of REDUCE-IT related
activities.
Upon closing of the agreement, the Company received one-half of a non-refundable $5.0 million upfront payment, and received the
remaining half on the six-month anniversary of the closing. Following achievement of the REDUCE-IT trial primary endpoint, which
was announced in September 2018, the Company received a non-refundable $2.5 million milestone payment. Following approval
from Health Canada in December 2019, the Company received a non-refundable milestone payment of $2.5 million in February 2020.
In addition, in January 2020, HLS obtained regulatory exclusivity from the Office of Patented Medicines and Liaison, or OPML, as a
result the Company received a non-refundable $3.8 million milestone payment. In addition to the non-refundable, upfront and
regulatory milestone payments just described, the Company is entitled to receive certain sales-based milestone payments of up to an
additional $50.0 million, as well as tiered double-digit royalties on net sales of VASCEPA in Canada.
The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, HLS, is a
customer. The Company identified the following performance obligations at the inception of the contract: (1) license to HLS to
develop, register, and commercialize VASCEPA in Canada; (2) support general development and regulatory activities; and (3)
participate in various steering committees. Based on the analysis performed, the Company concluded that the identified performance
obligations in the agreement are not distinct and therefore a combined performance obligation.
The transaction price includes the $5.0 million upfront consideration, the $2.5 million milestone related to the achievement of the
REDUCE-IT trial primary endpoint, the $2.5 million milestone related to obtaining approval from Health Canada and $3.8 million
milestone related to obtaining regulatory exclusivity from the OPML. Any consideration related to sales-based milestones (including
royalties) will be recognized when the related sales occur and therefore have also been excluded from the transaction price. The
Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in
circumstances occur.
During the second quarter of 2023, the Company concluded support for regulatory activities and pursuit of additional indications was
deemed to be not probable. As a result, the Company reevaluated the performance period and determined that all remaining
performance obligations were satisfied as of June 30, 2023, resulting in a decrease of the previous performance period of eight years.
The effect of this change in estimate was the remaining transaction price of $5.3 million being recognized in licensing revenue and a
related reduction in net loss by $5.3 million during the year ended December 31, 2023 from the previously received upfront payment
and prior year milestone payments.
During the years ended December 31, 2023 and 2022, the Company recognized $5.6 million and $0.7 million, respectively, as
licensing revenue related to upfront and milestone payments received in connection with the HLS agreement. From the contract’s
inception through December 31, 2023 and 2022, the Company has recognized $13.7 million and $8.2 million, respectively. Licensing
revenue is recognized under the agreement concurrent with the input measure of support hours provided by Amarin to HLS in
achieving this performance obligation, which in the Company’s judgment is the best measure of progress towards satisfying the
combined development and regulatory performance obligation. As of December 31, 2022 the remaining transaction price of $5.6
million is recorded in deferred revenue on the consolidated balance sheets. The Company fully recognized the transaction price as of
December 31, 2023.
The Company recognized net product revenue of $3.1 million and $2.9 million for the years ended December 31, 2023 and 2022,
respectively, related to sales to HLS.
F-32
CSL Seqirus
In February 2023, the Company entered into an agreement with CSL Seqirus, or CSL, to secure pricing and reimbursement,
commercialize and distribute VAZKEPA in Australia and New Zealand. The Company received an upfront payment of $0.5 million
which was fully recognized during the first quarter of 2023. In addition to the upfront payment, the Company will be eligible to
receive event-related milestone payments of approximately $8.0 million and additional product-related milestone payments of
approximately $4.0 million. The Company will be responsible for supplying finished product to CSL Seqirus at a price that is the
greater of (i) a fixed transfer price, or (ii) a fixed percentage of the net selling price, as defined in the CSL agreement.
The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, CSL, is a
customer. The Company identified the following distinct performance obligations at the inception of the contract: an exclusive license
to use its trademarks in connection with the importation, distribution, promotion, marketing and sale of VASCEPA in the Australia
and New Zealand territories.
The transaction price includes the $0.5 million upfront consideration. Any consideration related to event-based or product-based
milestones will be recognized when the related milestone events occur and therefore have also been excluded from the transaction
price. The Company will reevaluate the transaction price in each reporting period and as uncertain events are resolved or other
changes in circumstances occur.
During the year ended December 31, 2023, the Company recognized $0.5 million as licensing revenue related to the upfront payment
received in connection with the CSL agreement (none in 2022).
Lotus Pharmaceuticals
In July 2023, the Company entered into a distribution agreement with Lotus Pharmaceuticals, or Lotus, to commercialize and
distribute VAZKEPA in South Korea and nine countries in Southeast Asia. The Company received an up-front payment of $0.3
million and is eligible to receive event-related and product-related milestone payments. The Company will be responsible for
supplying finished product to Lotus at a pre-defined supply price.
The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, Lotus, is a
customer. The Company identified the following distinct performance obligations at the inception of the contract: an exclusive license
to use its trademarks in connection with the importation, distribution, promotion, marketing and sale of VASCEPA in the South Korea
and Southeast Asian territories.
The transaction price includes the $0.3 million upfront consideration. Any consideration related to event-based or product-based
milestones will be recognized when the related milestone events occur and therefore have also been excluded from the transaction
price. The Company will reevaluate the transaction price in each reporting period and as uncertain events are resolved or other
changes in circumstances occur.
During the year ended December 31, 2023, the Company recognized $0.3 million as licensing revenue related to the upfront payment
received in connection with the Lotus agreement (none in 2022).
The following table presents changes in the balances of the Company’s contract assets and liabilities for years ended December 31,
2023 and 2022:
In thousands
Year ended December 31, 2023:
Contract assets
Contract liabilities:
Deferred revenue
Year ended December 31, 2022:
Contract assets
Contract liabilities:
Deferred revenue
Balance at
Beginning of
Period
Additions
Deductions
Balance at
End of Period
— $
— $
— $
—
15,346
$
8,090
$
(18,586) $
4,850
— $
— $
— $
—
16,709
$
6
$
(1,369) $
15,346
$
$
$
$
F-33
During the years ended December 31, 2023 and 2022, the Company recognized the following revenues as a result of changes in the
contract asset and contract liability balances in the respective periods:
In thousands
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period
Performance obligations satisfied in previous periods
Twelve Months Ended December 31,
2023
2022
$
$
1,892
16,182
$
$
1,366
2
(15) Leases
Lessee
The Company leases office space under operating leases. The lease liability is initially measured at the present value of the lease
payments to be made over the lease term. Lease payments are comprised of the fixed and variable payments to be made by the
Company to the lessor during the lease term minus any incentives or rebates or abatements receivable by the Company from the lessor
or the owner. Payments for non-lease components do not form part of lease payments. The lease term includes renewal options only if
these options are specified in the lease agreement and if failure to exercise the renewal option imposes a significant economic penalty
for the Company. As there are no significant economic penalties, renewal cannot be reasonably assured and the lease terms for the
office space do not include any renewal options. The Company has not entered into any leases with related parties. The Company
accounts for short-term leases (i.e., lease term of 12 months or less) by making the short-term lease policy election and will not apply
the recognition and measurement requirements of ASC 842.
The Company has determined that the rate implicit in the lease is not determinable and the Company does not have borrowings with
similar terms and collateral. Therefore, the Company considered a variety of factors, including the Company’s credit rating,
observable debt yields from comparable companies with a similar credit profile and the volatility in the debt market for securities with
similar terms, in determining that 11.5% was reasonable to use as the incremental borrowing rate for purposes of the calculation of
lease liabilities and a change of 1% would not result in a material change to the Company’s consolidated financial statements.
On February 5, 2019, the Company entered into a lease agreement for new office space in Bridgewater, New Jersey, or the Lease. The
Lease commenced on August 15, 2019, or the Commencement Date, for an 11-year period, with two five-year renewal options.
Subject to the terms of the Lease, Amarin will have a one-time option to terminate the agreement effective on the first day of the 97th
month after the Commencement Date upon advance written notice and a termination payment specified in the Lease. Under the Lease,
the Company paid monthly rent of approximately $0.1 million for the first year following the Commencement Date, and such rent
increases by a nominal percentage every year following the first anniversary of the Commencement Date. In addition, Amarin receives
certain abatements subject to the limitations in the Lease.
On November 17, 2021, the Company entered into a lease agreement for new office space in Zug Switzerland, or the Zug Lease. The
Zug Lease commenced on February 1, 2022, or the Zug Commencement Date, for a five-year period, with one five-year renewal
option. Under the Zug Lease, the Company will pay annual rent of approximately $0.2 million for the first year following the Zug
Commencement Date, and such rent increases by a nominal percentage every year following the first anniversary of the Zug
Commencement Date.
On September 13, 2022, the Company entered into a lease agreement for new office space in Dublin, Ireland, or the Dublin Lease. The
Dublin Lease commenced on October 1, 2022, or the Dublin Commencement Date, for a two-year period. Under the Dublin Lease, the
Company will pay annual rent of approximately $0.4 million during the duration of the lease term.
In addition to the real estate leases, the Company continually enters into leases agreements for various vehicles with terms ranging
from month to month up to 36 months.
F-34
The operating lease liability is $10.6 million and $11.6 million and the operating lease right-of-use asset is $8.3 million and $9.1
million, as of December 31, 2023 and 2022, respectively.
The lease expense for the years ended December 31, 2023, 2022 and 2021 is approximately $3.2 million, $2.8 million and $2.2
million, respectively.
The table below depicts a maturity analysis of the Company’s undiscounted payments for its operating lease liabilities and their
reconciliation with the carrying amount of lease liability presented in the statement of financial position as of December 31, 2023:
2024
2025
2026
2027
2028
2029 and thereafter
Total undiscounted payments
Discount Adjustments
Current operating lease liability
Long-term operating lease liability
Lessor
Undiscounted
lease
payments
($000s)
2,967
2,292
2,181
1,964
1,978
3,273
14,655
(4,048)
1,870
8,737
$
$
$
$
The Company classifies contractual lease arrangements entered as a lessor as a sales-type, direct financing or operating lease as
described in ASC 842. For sales-type leases, the Company derecognizes the leased asset and recognizes the lease investment on the
balance sheet.
On January 20, 2023, the Company entered into a sublease agreement for 50,000-square feet of the 67,747-square foot New Jersey
Lease and included within the sublease are furniture, fixtures and equipment, collectively the Sublease. The Sublease commenced on
February 1, 2023, or the Sublease Commencement Date, for a 7.5-year period. Under the Sublease, the Company will be paid monthly
rent of approximately $0.1 million for the first year following the Sublease Commencement Date, and such rent increases by a
nominal percentage every year following the first anniversary of the Sublease Commencement Date. In addition, Amarin will provide
certain abatements subject to the limitations in the Lease.
The components of lease income are as follows:
Interest income from sales-type leases
Operating lease income
Loss recognized at commencement date of sales type lease
Total
$
$
Future minimum sales type lease and operating lease receivables as of December 31, 2023 are as follows:
61
912
(61)
912
For the Year Ended December 31,
2023
2024
2025
2026
2027
2028
2029 and thereafter
Total
Sales-Type Leases
Operating Leases
$
$
117
119
122
125
127
218
828
$
$
1,006
1,029
1,051
1,073
1,096
1,878
7,133
F-35
Exhibit 10.43
October 9, 2023
Jonathan Noah Provoost
***
Dear Jonathan,
On behalf of Amarin Corporation plc (the "Company"), I am pleased to confirm our offer to employ you as
Executive Vice President, Chief Legal and Compliance Officer. The initial terms and conditions of your employment,
should you accept this offer, are set forth below in this letter agreement (the "Agreement"),
Position: Executive Vice President, Chief Legal and Compliance Officer is a full-time position as an officer
1.
of the Company. You will report to the Company's Chief Executive Officer (the "CEO") and to the Company's Board
of Directors (the "Board”), having such powers and duties as may from time to time be prescribed by the CEO
and/or the Board. It is understood and agreed that, while you render services to the Company, you will not engage
in any other full or part-time employment activities, devoting your business time (except for permitted vacation
and reasonable periods of illness or other incapacity) and best efforts, business judgment, skill, and knowledge to
the advancement of the Company and interests of the Company. Notwithstanding the foregoing sentence to the
contrary, you shall be permitted to (i) serve on corporate, civic, or charitable boards or committees of non-profit
organizations, (to the extent there are no conflicts), (ii) lecture, speak, or attend industry-related or academic
conferences or events, and (iii) manage personal investments (including, without limitation, passive real estate
investments, unrelated business investments, and investments in publicly traded companies; provided, such
investments are that of a passive investor of less than 5% (five percent) of any class of securities of a publicly
traded entity), so long as such activities do not interfere with your duties as set forth in this Agreement (herein,
"Permitted Activities").
In addition to your role as Executive Vice President, Chief Legal and Compliance Officer of the Company, you
acknowledge and agree that you may be required, without additional compensation, to perform duties for certain
affiliated entities of the Company, including without limitation Amarin Pharma, Inc., the Company's wholly owned
subsidiary, and to accept any reasonable office or position with any such affiliate as the Company's Board of
Directors may require, including, but not limited to, service as an officer or director of any such affiliate. Amarin
Pharma, Inc. will maintain and distribute employment-related records. The duties of the Company set forth herein
may be discharged by Amarin Corporation plc or Amarin Pharma, Inc.
Work Location: Your principal place of employment will be the Company's U.S. offices, which are
2.
currently located in Bridgewater, New Jersey, subject to business travel requirements. Notwithstanding the
foregoing to the contrary, you may provide services from other locations as mutually agreed to by the CEO and
you; provided that, the performance of your duties from any remote location does not interfere with the diligent
exercise of your duties as set forth in this Agreement.
Start Date: Unless otherwise agreed, your first day of employment will be November 15, 2023, or such
3.
earlier date as may be mutually determined. The actual first day of your employment will be referred to herein as
the "Start Date."
Salary: The Company will pay you an initial base salary at the annual rate of $465,000, subject to periodic
4.
review and adjustment at the discretion of the Company, which shall be eligible for adjustment during the next
review period for 2025. Currently our policy is to make salary payments semi-monthly. Your base salary in effect at
any given time is referred to herein as the "Base Salary."
Annual Bonus:
5.
Commencing with respect to work performed in calendar year 2024, you will be eligible
to receive an annual performance bonus. The Company will target the bonus at up to 50% of your Base Salary for
the applicable year. The actual bonus is discretionary and will be subject to the Company's assessment of your
performance, as well as business conditions at the Company. The bonus also will be subject to your employment
for the full period covered by the bonus, approval by and adjustment at the discretion of the Company's Board of
Directors or an authorized committee thereof, and the terms of any applicable bonus plan. The Company may also
make adjustments in the targeted amount of your annual performance bonus. Any bonus awarded to you will be
paid by March 15 of the year following the bonus year to which such bonus relates.
6.
Special Bonus: In consideration of the forfeiture of your 2023 bonus by your former employer, you will
receive a one-time bonus totaling $100,000 (less appropriate taxes) to be paid on or about February 28, 2024 (and
in any event no later than March 15, 2024), provided that you remain employed by the Company on such date;
provided further that if you resign your employment other than for Good Reason or if the Company terminates
your employment for Cause (as “Good Reason” and “Cause” are defined in Severance Plan described in Section 10
below) prior to the one year anniversary date of your Start Date, you will be required to repay the Company the
full $100,000 within 10 days following the Date of Termination (as defined below).
Benefits: You and your dependents will be eligible to participate in the employee benefits and insurance
7.
programs generally made available to the Company's full-time U.S. employees, including health, life, disability, and
dental insurance. Other benefits, such as the 401K, Employee Stock Purchase Plan, LifeLock and Executive
Disability do have a waiting period component. You will be eligible for up to 18 days of paid time off or such other
amount determined by the Company, which shall accrue and in other respects be administered in accordance with
the Company's U.S. paid time off policy, as in effect from time to time. The Company reserves the right to modify,
amend or cancel any of its benefit plans or programs at any time. You will be reimbursed for all necessary and
reasonable business expenses you incur while carrying out your duties on behalf of the Company; provided such
reimbursement shall be conditioned on you following the Company's U.S. reimbursement policies and claims
procedure, including by providing reasonable documentation of such expenses. The Company shall reimburse you
for costs, fees, and expenses incurred by you to maintain your current licenses to practice law, as well as, but not
limited to dues for one (1) national and one (1) state bar association membership, costs for continuing legal
education credits, other costs associated with the states in which you are licensed, and pay for you to obtain any
in-house counsel registrations which may be required in the future; provided that, such costs, fees, and expenses
are incurred, reported, and substantiated in accordance with the Company's customary practices and policies for
reimbursement of business-related expenses and applicable federal tax laws.
8.
Equity Participation: Subject to the approval of the Company's Board of Directors, and subject to the
terms and conditions set forth in Amarin Corporation plc's 2020 Stock Incentive Plan and the applicable equity
award agreements (collectively, the "Equity Documents"), including, without limitation, with respect to vesting,
following the Start Date you will be awarded (i) an option to purchase 800,000 of the Company's ordinary shares,
which will have an exercise price equal to the closing market price on date of grant (the "Option") and be subject
to time-based vesting.
At-will Employment, Accrued Obligations: Your employment is "at will," meaning you or the Company
9.
may terminate it at any time for any or no reason, subject to the terms of the Severance Plan. Similarly, the terms
of employment outlined in this Agreement are subject to change at any time. The last date of your employment
with the Company is referred to herein as the "Date of Termination." In the event of the termination of your
employment for any reason, the Company shall pay you the "Accrued Obligations," defined as (i) your Base Salary
through the Date of Termination, (ii) an amount equal to the value of your accrued unused paid time off days, if
any, and (iii) the amount of any business expenses properly incurred by you on behalf of the Company prior to any
such termination and not yet reimbursed, if any.
10.
Severance Benefits: As an Executive Vice President, you are an "Eligible Executive" under the Company's
Executive Severance and Change in Control Plan, effective as of January 28, 2021 (as may be amended, suspended
or terminated in accordance with the terms therein, the "Severance Plan").
Taxes; Section 409A: All forms of compensation referred to in this Agreement are subject to reduction to
11.
reflect applicable withholdings and payroll taxes and other deductions required by law. You hereby acknowledge
that the Company does not have a duty to design its compensation policies in a manner that minimizes tax
liabilities. All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be
provided by the Company or incurred by you during the time periods set forth in this Agreement. All
reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be
paid after the last day of the taxable year following the taxable year in which the expense was incurred. The
amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-
kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to
reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. The parties intend
that this Agreement will be administered to comply with or satisfy an exemption from Section 409A of the Internal
Revenue Code of 1986, as amended from time to time (the “Code”). To the extent that any provision of this
Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a
manner so that all payments hereunder comply with Section 409A of the Code.
Nondisclosure, Developments and Noncompetition Agreement: As a condition of your employment, you
12.
are required to enter into the enclosed Nondisclosure, Developments and Noncompetition Agreement, the terms
of which are incorporated by reference into this Agreement; provided, however, and notwithstanding anything to
the contrary in the Nondisclosure, Developments and Noncompetition Agreement, it will not be enforced in a way
that would restrict your right to practice law.
Representation Regarding Other Obligations: This offer is conditioned on your representation that you
13.
are not subject to any confidentiality, noncompetition agreement or any other similar type of restriction that may
affect your ability to devote full time and attention to your work at the Company. If you have entered into any
agreement that may restrict your activities on behalf of the Company, please provide me with a copy of the
agreement as soon as possible. You agree that in your work for the Company, you will not disclose or make use of
any information in violation of any agreements with or rights of any such previous employer or other party, and
you will not bring to the premises of the Company any copies or other tangible embodiments of non-public
information belonging to or obtained from any such previous employment or other party.
Other Conditions: The Company's offer of employment is contingent on the completion of references
14.
checks and a background investigation that are satisfactory to the Company (as determined by the Company), your
submission of satisfactory proof of your identity and your legal authorization to work in the United States, and a
satisfactory Company- paid initial-employment drug screen, in each case to the extent not already completed and
as requested by the Company.
Entire Agreement, Amendment and Enforcement: This Agreement, together with the Nondisclosure,
15.
Developments and Noncompetition Agreement and the Equity Documents, constitutes the complete agreement
between you and the Company, contains all of the terms of your employment with the Company and supersedes
any prior agreements, representations or understandings (whether written, oral or implied) between you and the
Company. This Agreement may be amended or modified only by a written instrument signed by you and by a duly
authorized representative of the Company. Except as may be provided in the Equity Documents, the terms of this
Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement
or arising out of, related to, or in any way connected with, this Agreement, your employment with the Company or
any other relationship between you and the Company (the "Disputes") will be governed by the laws of the State of
New Jersey, excluding laws relating to conflicts or choice of law. You and the Company submit to the exclusive
personal jurisdiction of the federal and state courts located in the State of New Jersey in connection with any
Dispute or any claim related to any Dispute.
Assignment: Neither you nor the Company may make any assignment of this Agreement or any interest in
16.
it, by operation of law or otherwise, without the prior written consent of the other; provided, however, that the
Company may assign its rights and obligations under this Agreement without your consent to one of its affiliates or
to any person with whom the Company shall hereafter effect a reorganization, consolidate with, or merge into or
to whom it transfers all or substantially all of its properties or assets. This Agreement shall inure to the benefit of
and be binding upon you and the Company, and each of our respective successors, executors, administrators, heirs
and permitted assigns.
Severability. If any portion or provision of this Agreement shall to any extent be declared illegal or
17.
unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of
such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable,
shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to
the fullest extent permitted by law.
18.
Counterparts: This Agreement may be executed in separate counterparts. When both counterparts are
signed, they shall be treated together as one and the same document. PDF copies of signed counterparts shall be
equally effective as originals.
We are excited about the opportunity to work with you at Amarin. If you have any questions about this
information, please do not hesitate to call. Otherwise, please confirm your acceptance of this offer of employment
by signing this Agreement and the nondisclosure, Developments and Noncompetition Agreement and returning
both to me no later than October 16, 2023.
AMARIN CORPORATION PLC
For itself and on behalf of Amarin Pharma, Inc.
Signed: __/s/ Patrick Holt____________
Name:
Dated: __10/10/2023_______________
I accept the offer of employment under the terms and conditions stated above.
Signed: _/s/ Jonathan Provoost______
Name:
Dated: _____10/10/2023___________
Enclosures:
Attachment
Nondisclosure, Developments and Noncompetition Agreement
Subsidiaries of the Registrant as of December 31, 2023
EXHIBIT 21.1
Name
Amarin Pharmaceuticals Ireland Limited
Amarin Pharma, Inc.
Ester Neurosciences Limited
Amarin Switzerland GmbH
Amarin Germany GmbH
Amarin France SAS
Amarin UK Limited
Amarin Italy S.r.l
Amarin Switzerland GmbH Sucursal Espana
Amarin Switzerland GmbH Austrian branch
Amarin Belgium, branch of Amarin Switzerland GmbH
Amarin Denmark, filial af Amarin Switzerland GmbH
Amarin Switzerland GmbH, Suomen sivuliike
Amarin Switzerland GmbH Greek branch
Amarin Switzerland GmbH Dutch branch
Amarin Switzerland GmbH Norwegian branch
Amarin Switzerland GmbH, Sucursal em Portugal
Amarin Switzerland GmbH Sweden filial
Jurisdiction
Ireland
United States
Israel
Switzerland
Germany
France
United Kingdom
Italy
Spain
Austria
Belgium
Denmark
Finland
Greece
Netherlands
Norway
Portugal
Sweden
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement on Form F-1 No. 333-163704 of Amarin Corporation plc;
(2) Registration Statements on Form S-8 Nos. 333-146839, 333-143358, 333-132520, 333-110704, 333-101775, 333-168055,
333-168054, 333-176877, 333-183160, 333-205863, 333-219644, 333-180180, 333-84152, 333-240321, 333-266611 and
333-273592 of Amarin Corporation plc; and
(3) Registration Statement on Form S-3 No. 333-273591 of Amarin Corporation plc
of our reports dated February 29, 2024, with respect to the consolidated financial statements of Amarin Corporation plc, and the
effectiveness of internal control over financial reporting of Amarin Corporation plc, included in this Annual Report (Form 10-K) of
Amarin Corporation plc for the year ended December 31, 2023.
/s/ Ernst & Young LLP
Iselin, New Jersey
February 29, 2024
EXHIBIT 31.1
I, Patrick Holt, certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Amarin Corporation plc;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 29, 2024
/s/ Patrick Holt
Patrick Holt
President and Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 31.2
I, Tom Reilly, certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Amarin Corporation plc;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
b.
c.
d.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 29, 2024
/s/ Tom Reilly
Tom Reilly
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
STATEMENT PURSUANT TO 18 U.S.C. § 1350
EXHIBIT 32.1
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Patrick Holt, President and Chief Executive
Officer (Principal Executive Officer) of Amarin Corporation plc (the “Company”), and Tom Reilly, Executive Vice President and
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) of the Company, each hereby certifies that, to
the best of his knowledge:
(1)
(2)
The Company’s Annual Report on Form 10-K for the period ended December 31, 2023, to which this Certification is attached as
Exhibit 32.1 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of
operations of the Company at the end of such year.
Date: February 29, 2024
Date: February 29, 2024
/s/ Patrick Holt
Patrick Holt
President and Chief Executive Officer (Principal Executive
Officer)
/s/ Tom Reilly
Tom Reilly
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission
and is not incorporated by reference into any filing of Amarin Corporation plc under the Securities Exchange Act of 1934, as amended
(whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.
AMARIN CORPORATION PLC
COMPENSATION RECOVERY POLICY
EXHIBIT 97.1
Amarin Corporation plc, a public limited company incorporated under the laws of England and
Wales (the “Company”), has adopted a Compensation Recovery Policy (this “Policy”) as
described below.
1.
Overview
The Policy sets forth the circumstances and procedures under which the Company shall recover
Erroneously Awarded Compensation from Covered Persons (as defined below) in accordance
with rules issued by the United States Securities and Exchange Commission (the “SEC”) under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Nasdaq Stock
Market. Capitalized terms used and not otherwise defined herein shall have the meanings given
in Section 3 below.
2.
Compensation Recovery Requirement
In the event the Company is required to prepare a Financial Restatement, the Company shall
recover reasonably promptly all Erroneously Awarded Compensation with respect to such
Financial Restatement.
3.
Definitions
a. “Applicable Recovery Period” means the three completed fiscal years immediately
preceding the Restatement Date for a Financial Restatement. In addition, in the event
the Company has changed its fiscal year: (i) any transition period of less than nine
months occurring within or immediately following such three completed fiscal years
shall also be part of such Applicable Recovery Period and (ii) any transition period of
nine to 12 months will be deemed to be a completed fiscal year.
b. “Applicable Rules” means any rules or regulations adopted by the Exchange pursuant
to Rule 10D-1 under the Exchange Act and any applicable rules or regulations
adopted by the SEC pursuant to Section 10D of the Exchange Act.
c. “Board” means the Board of Directors of the Company.
d. “Committee” means the Remuneration Committee of the Board or, in the absence of
such committee, a majority of independent directors serving on the Board.
e. “Covered Person” means any Executive Officer. A person’s status as a Covered
Person with respect to Erroneously Awarded Compensation shall be determined as of
the time of receipt of such Erroneously Awarded Compensation regardless of the
person’s current role or status with the Company (e.g., if a person began service as an
Executive Officer after the beginning of an Applicable Recovery Period, that person
would not be considered a Covered Person with respect to Erroneously Awarded
Compensation received before the person began service as an Executive Officer, but
would be considered a Covered Person with respect to Erroneously Awarded
Compensation received after the person began service as an Executive Officer where
such person served as an Executive Officer at any time during the performance period
for such Erroneously Awarded Compensation).
f.
“Effective Date” means October 2, 2023.
g. “Erroneously Awarded Compensation” means the amount of any Incentive-Based
Compensation received by a Covered Person on or after the Effective Date and during
the Applicable Recovery Period that exceeds the amount that otherwise would have
been received by the Covered Person had such compensation been determined based
on the restated amounts in a Financial Restatement, computed without regard to any
taxes paid. Calculation of Erroneously Awarded Compensation with respect to
Incentive-Based Compensation based on stock price or total shareholder return,
where the amount of Erroneously Awarded Compensation is not subject to
mathematical recalculation directly from the information in a Financial Restatement,
shall be based on a reasonable estimate of the effect of the Financial Restatement on
the stock price or total shareholder return upon which the Incentive-Based
Compensation was based, and the Company shall maintain documentation of the
determination of such reasonable estimate and provide such documentation to the
Exchange in accordance with the Applicable Rules. Incentive-Based Compensation is
deemed received when the Financial Reporting Measure is attained, not when the
actual payment, grant or vesting occurs.
h. “Exchange” means the Nasdaq Stock Market LLC.
i.
“Executive Officer” means any person who served the Company in any of the
following roles at any time during the performance period applicable to Incentive-
Based Compensation and received Incentive-Based Compensation after beginning
service in any such role (regardless of whether such Incentive-Based Compensation
was received during or after such person’s service in such role): the president,
principal financial officer, principal accounting officer (or if there is no such
accounting officer the controller), any vice president in charge of a principal business
unit, division or function (such as sales, administration or finance), any other officer
who performs a policy making function or any other person who performs similar
policy making functions for the Company. Executive officers of parents or
subsidiaries of the Company may be deemed Executive Officers if they perform such
policy making functions for the Company.
j.
“Financial Reporting Measures” mean measures that are determined and presented in
accordance with the accounting principles used in preparing the Company’s financial
2
statements, any measures that are derived wholly or in part from such measures
(including, for example, a non-GAAP financial measure), and stock price and total
shareholder return.
k. “Financial Restatement” means a restatement of previously issued financial
statements of the Company due to the material noncompliance of the Company with
any financial reporting requirement under the securities laws, including any required
restatement to correct an error in previously-issued financial statements that is
material to the previously-issued financial statements or that would result in a
material misstatement if the error were corrected in the current period or left
uncorrected in the current period.
l.
“Incentive-Based Compensation” means any compensation provided, directly or
indirectly, by the Company or any of its subsidiaries that is granted, earned or vested
based, in whole or in part, upon the attainment of a Financial Reporting Measure,
including, for example, annual cash bonuses paid under the Company’s management
incentive plan that are granted, earned, or vested based, in whole or in part, upon the
attainment of a Financial Reporting Measure, any other special cash bonuses that are
granted, earned, or vested based, in whole or in part, upon the attainment of a
Financial Reporting Measure and annual, new hire, promotion-based, or special
performance-based equity awards that are granted, earned, or vested based, in whole
or in part, upon the attainment of a Financial Reporting Measure.
m. “Restatement Date” means, with respect to a Financial Restatement, the earlier to
occur of: (i) the date the Board concludes, or reasonably should have concluded, that
the Company is required to prepare the Financial Restatement or (ii) the date a court,
regulator or other legally authorized body directs the Company to prepare the
Financial Restatement.
4.
Exception to Compensation Recovery Requirement
The Company may elect not to recover Erroneously Awarded Compensation pursuant to this
Policy if the Committee determines that recovery would be impracticable, and one or more of the
following conditions, together with any further requirements set forth in the Applicable Rules,
are met: (i) the direct expense paid to a third party, including outside legal counsel, to assist in
enforcing this Policy would exceed the amount to be recovered, and the Company has made a
reasonable attempt to recover such Erroneously Awarded Compensation; (ii) recovery would
cause the Company to violate a law of England and Wales that was adopted prior to November
28, 2022, and the Company obtains an opinion of England and Wales counsel that recovery
would result in a violation of such country’s law and provides the opinion to the Exchange; or
(iii) recovery would likely cause an otherwise tax-qualified retirement plan to fail to be so
qualified under applicable regulations.
3
5.
Tax Considerations
The Company is entitled to recover the gross amount of any Erroneously Awarded
Compensation that is received by a Covered Person (i.e., the amount the Covered Person
received, or was entitled to receive, before any deductions for tax withholding or other
payments). For example, if a Covered Person was awarded a $100,000 cash bonus and received
$60,000 after 40% was withheld for taxes, and it was determined that the amount awarded
should only have been $80,000, the Covered Person would be required to return $20,000 to the
Company.
6.
Method of Compensation Recovery
The Committee shall determine, in its sole discretion, the method for recovering Erroneously
Awarded Compensation hereunder, which may include, without limitation, any one or more of
the following:
a.
requiring reimbursement of cash Incentive-Based Compensation previously paid;
b. seeking recovery of any gain realized on the vesting, exercise, settlement, sale,
transfer or other disposition of any equity-based awards;
c. cancelling or rescinding some or all outstanding vested or unvested equity-based
awards;
d. adjusting or withholding from unpaid compensation or other set-off;
e. cancelling or offsetting against planned future grants of equity-based awards;
and/or
f.
any other method permitted by applicable law or contract.
Notwithstanding the foregoing, a Covered Person will be deemed to have satisfied such person’s
obligation to return Erroneously Awarded Compensation to the Company if such Erroneously
Awarded Compensation is returned in the exact same form in which it was received; provided
that equity withheld to satisfy tax obligations will be deemed to have been received in cash in an
amount equal to the tax withholding payment made.
7.
Policy Interpretation
This Policy shall be interpreted in a manner that is consistent with the Applicable Rules and any
other applicable law. The Committee shall take into consideration any applicable interpretations
and guidance of the SEC in interpreting this Policy, including, for example, in determining
whether a financial restatement qualifies as a Financial Restatement hereunder. To the extent the
Applicable Rules require recovery of Incentive-Based Compensation in additional circumstances
4
besides those specified above, nothing in this Policy shall be deemed to limit or restrict the right
or obligation of the Company to recover Incentive-Based Compensation to the fullest extent
required by the Applicable Rules.
8.
Policy Administration
This Policy shall be administered by the Committee; provided, however, that the Board shall
have exclusive authority to authorize the Company to prepare a Financial Restatement. In doing
so, the Board may rely on a recommendation of the Audit Committee of the Board. The
Committee shall have such powers and authorities related to the administration of this Policy as
are consistent with the governing documents of the Company and applicable law. The
Committee shall have full power and authority to take, or direct the taking of, all actions and to
make all determinations required or provided for under this Policy and shall have full power and
authority to take, or direct the taking of, all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of this Policy that the
Committee deems to be necessary or appropriate to the administration of this Policy. The
interpretation and construction by the Committee of any provision of this Policy and all
determinations made by the Committee under this policy shall be final, binding and conclusive.
9.
Compensation Recovery Repayments not Subject to Indemnification
Notwithstanding anything to the contrary set forth in any agreement with, or the organizational
documents of, the Company or any of its subsidiaries, Covered Persons are not entitled to
indemnification for Erroneously Awarded Compensation or for any losses arising out of or in
any way related to Erroneously Awarded Compensation recovered under this Policy.
Adopted as of [October __,] 2023
5