254852 AMRYT AR 0cover 2018.qxp 10/06/2019 15:47 Page 1
Amryt Pharma plc
Registered Office:
Dept 920A
196 High Road
Wood Green
London N22 8HH
United Kingdom
Dublin Office:
90 Harcourt Street
Dublin 2
Ireland
www.amrytpharma.com
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Amryt Pharma plc
Annual Report 2018
The Rare and
Orphan Diseases Specialist
254852 AMRYT AR 0cover 2018.qxp 10/06/2019 15:47 Page 85
Amryt is a biopharmaceutical company focused
on developing and delivering innovative new
treatments to help improve the lives of patients
with rare or orphan diseases.
Orphan / Rare Disease focused business with strong and
experienced management team in place
Delivering on strategy to acquire, develop and
commercialise products as evidenced by our recent
planned acquisition announcement
The planned acquisition of Aegerion Pharmaceuticals will
put Amryt on the path of creating a rare and orphan
disease company with a diversified offering of multiple
commercial and development stage assets
Robust pipeline of drug candidates with excellent
progress made on AP101 and AP103
Pivotal phase 3 trial, “EASE” Study, to examine AP101’s
efficacy as a new treatment for EB is progressing with
positive unblinded interim efficacy result received in H1
2019. Study top line data expected to be available in H1
2020
Driving growth of our multiple commercial products will
be a key focus for us in 2019
Planned NASDAQ listing will drive liquidity and investor
reach
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
85
Company Information
Registered Office
Dept 920A
196 High Road
Wood Green
London N22 8HH
United Kingdom
Company Number
05316808
Directors
Harry Stratford – Non-executive Chairman
Joe Wiley – CEO
Rory Nealon – CFO/COO
James Culverwell – Non-executive Director
Ray Stafford – Non-executive Director
Markus Ziener – Non-executive Director
Company Secretary
Rory Nealon
Company Website
www.amrytpharma.com
AIM Nominated Adviser
Shore Capital and Corporate Limited
Bond Street House
14 Clifford Street
London, W1S 4JU
United Kingdom
Joint Broker
Shore Capital Stockbrokers Limited
Bond Street House
14 Clifford Street
London, W1S 4JU
United Kingdom
Joint Broker
Stifel Nicolaus Europe Limited
150 Cheapside
London, EC2V 6ET
United Kingdom
Euronext Growth Adviser and Joint Broker
J & E Davy
Davy House
49 Dawson Street
Dublin 2
Ireland
Auditors
Grant Thornton
13-18 City Quay
Dublin 2
Ireland
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Kent, BR3 4TU
United Kingdom
Amryt Pharma plc
Annual Report for the year ended 31 December 2018
Perivan Financial Print 254852
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01
Contents
STRATEGIC REPORT
• Our Business 02
• Performance Highlights 03
• Our Products 08
• Drug Development Pipeline 10
• Chairman & CEO’s Statement and Business Review 11
• Vision & Strategy 16
• Financial Review 17
• Key Performance Indicators 21
• Risks & Uncertainties 22
CORPORATE GOVERNANCE
• Board of Directors 27
• Chairman’s Introduction to Governance 29
• Chairman’s Governance Overview 30
• Directors’ Report 34
FINANCIAL STATEMENTS
• Independent Auditor’s Report 38
• Consolidated Statement of Comprehensive Income 44
• Consolidated Statement of Financial Position 45
• Consolidated Statement of Cash Flows 46
• Consolidated Statement of Changes in Equity 47
• Company Statement of Financial Position 48
• Company Statement of Cash Flows 49
• Company Statement of Changes in Equity 50
• Notes to the Financial Statements 51
• Company Information 85
We are pleased to present the annual report and consolidated financial
statements of Amryt Pharma plc for the year ended 31 December 2018.
As used herein, references to “we”, “us”, “Amryt” or the “Group”
in this annual report shall mean Amryt Pharma plc and its world-wide
subsidiaries, collectively. References to the “Company” in this annual
report shall mean Amryt Pharma plc.
Annual Report for the year ended 31 December 2018
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02
STRATEGIC REPORT:
Our Business
Amryt is a biopharmaceutical company focused on developing and delivering innovative new treatments to help improve the
lives of patients with rare or orphan diseases. Through acquiring, developing and commercialising products, the Company’s
ambition is to become a global leader in the orphan disease market. The Group has built a diverse portfolio of commercial and
development stage assets and its strategy is focused on three pillars:
• Expand our commercial business - driving further revenue growth of our lead commercial asset, Lojuxta® in existing and new
territories
• Acquisition and in-licence opportunities - actively seeking to expand the Group’s commercial product portfolio by acquiring
further commercial or near commercial assets to leverage our successful Lojuxta business
• Epidermolysis Bullosa (“EB”) franchise - developing our lead development asset, AP101, which is currently in Phase 3 as a
potential treatment for EB as well as progressing our gene therapy platform, AP103, into the clinic.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
03
STRATEGIC REPORT:
Performance Highlights
2018 was another very strong year for Amryt, marked by solid financial, operational and strategic progress with our lead
commercial product Lojuxta (lomitapide), which treats HoFH, a rare, genetic, life-threatening disorder that causes abnormally
high levels of “bad” cholesterol and the continued progress of our lead development asset AP101 for the treatment of EB, a rare
life limiting genetic skin condition. Amryt remains well positioned to build on the positive momentum achieved in 2018 through
2019 and beyond.
With a relentless focus on continuous product development, revenue expansion and cash management, we believe 2019 will be
a year of continued progress and further growth for the Group. A significant development to date in 2019 has been the
announcement of the planned acquisition of Aegerion Pharmaceuticals (Aegerion), a subsidiary of Novelion Therapeutics Inc.
(NASDAQ:NVLN), (Novelion). This transformational acquisition is in line with Amryt’s strategy to expand its product portfolio to
enhance shareholder value. The combination of Aegerion and Amryt will significantly advance Amryt’s ambition to create a
global leader in rare and orphan diseases with a diversified offering of multiple commercial and development stage assets and
will provide Amryt with the scale to support further growth.
Some financial and operational highlights of the Group’s performance in 2018 and in 2019 to date are as follows:
2018 Financial Highlights
Total Revenues Up 13%
Gross Margin - 63%
€12.78
€14.45
57.9%
63.3%
m
’
€
2017
2018
2017
2018
• Revenue growth of 13.3% to €14.5m (2017: €12.8m)
• Revenues from Lojuxta (lomitapide), increased to €13.6m, which represents a growth rate of 14.2% year-on-year
• Gross profit margin increased to 63% (2017: 58%)
• Cash balance at 31 December 2018 of €9.8m (2017: €20.5m)
2018 Operational Highlights
Lead Commercial Asset - Lojuxta
• Eight new distribution agreements signed in 2018, now covering 23 countries in total
• Reimbursement approval received in the UK and France resulting in first orders from the UK in late 2018
• Initial orders received for patients in Saudi Arabia in Q4
• Continued expansion of the licenced territories for Lojuxta, including Russia, the Commonwealth of Independent States
(“CIS”), and the non-EU Balkan states
Lead Development Asset - AP101
• Significant continued progress made in the development of AP101, a potential treatment for EB, a rare life limiting genetic
skin condition
• Investigational New Drug (“IND”) approval obtained from the U.S. Food and Drug Administration (“FDA”), permitting the
Group to open clinical trial sites in the US, which is expected to help enrolment into the EASE Phase 3 study in EB
Annual Report for the year ended 31 December 2018
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STRATEGIC REPORT:
Performance Highlights continued
• Paediatric Rare Disease designation was granted by FDA meaning that if a New Drug Application (“NDA”) for AP101 is
approved, Amryt will be eligible to receive a Priority Review Voucher that can be used, sold or transferred. Publicly disclosed
sale prices for such vouchers have ranged from US$67.5m to US$350m
• Early access programme in EB initiated in Colombia with first AP101 shipments in response to unsolicited requests for named
patient access in Q4 2018
Gene Therapy Platform - AP103
• Exclusive in-licence agreement signed in March 2018 with University College Dublin (“UCD”) for a novel non-viral gene
therapy platform technology, which offers a potential treatment for patients with EB and beyond
• Significant grant funding totalling €8.4m awarded by the Irish Government to develop the AP103 gene therapy platform, to
be received over the next three years
Post Period-End Events and Q1 Highlights
Recommended Acquisition of Aegerion Pharmaceuticals
On 21 May 2019, Amryt announced that it had reached agreement to acquire Aegerion Pharmaceuticals (“Aegerion”), a subsidi-
ary of Novelion Therapeutics (NASDAQ:NVLN). The transaction has been unanimously approved and recommended by the Boards
of Amryt, Aegerion and Novelion.
Transaction Rationale
The Company has already built a diversified portfolio of drugs to treat patients with rare and orphan diseases through the
acquisition of its AP101 and AP103 product lines and through the in-licensing of the Lojuxta product line. The acquisition of
Aegerion is in line with Amryt’s strategy to expand its product portfolio to enhance shareholder value.
The transaction will put Amryt on the path to creating a rare and orphan disease company with a diversified offering of multiple
commercial and development stage assets and will provide it with scale to support further growth. The transaction will give
Amryt an expanded commercial footprint to market two US and EU approved products, lomitapide (Juxtapid® (US/ROW) / Lojuxta
(EU)) and metreleptin (Myalept® (US) / Myalepta® (EU)). Amryt’s leadership team already has a deep knowledge of both these
products and since December 2016 has successfully commercialized Lojuxta across Europe and the Middle East.
Dr. Joe Wiley, Chief Executive Officer of Amryt, commented:
“The planned acquisition of Aegerion accelerates our ambition to become a global leader in treating
rare conditions to help improve the lives of patients where there is a high unmet medical need. By
delivering two substantial revenue-generating products and an enhanced pipeline of promising
development opportunities, this will significantly strengthen our growth in highly attractive markets
globally. Amryt has a unique insight into both Aegerion and its products, through our commercial
success with Lojuxta and given that many of our senior management team previously worked at
Aegerion. With this transaction we can continue the strong growth trajectory already underway with
Lojuxta in Europe on a global scale. It also delivers metreleptin, another highly compelling commercial
rare disease product alongside an established commercial footprint in the US and internationally. This
transformational deal provides Amryt with the financial flexibility to fully execute our medium-term
growth plans and is expected to deliver significant shareholder returns.”
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
05
Transaction Highlights
• Amryt has agreed to acquire Aegerion in a share for share transaction
• The combined group had 2018 pro-forma combined revenues of $136.5m
• Pre-money implied transaction equity valuations: Amryt $120m and Aegerion $190.7m
• Contingent Value Rights (“CVRs”) will be issued to Amryt stakeholders that could result in the payment of up to $85m
(settled in cash or stock) based on certain AP101 milestones being achieved
• Amryt plans to raise $60m in equity concurrent with closing of the transaction and certain Aegerion bondholders have agreed
to backstop this equity raise
• This equity raise will be placed at a 20% discount to the implied transaction equity value
• Aegerion’s balance sheet is to be restructured through a US Chapter 11 process prior to Amryt acquiring Aegerion - Aegerion
will continue to operate as usual during the Chapter 11 process
• New loan facilities for the combined group will be put in place, and the key terms of such facilities have been agreed - Amryt’s
existing European Investment Bank facility is to be repaid
• The combined group’s global HQ will be in Dublin, Ireland with its US HQ in Boston, Massachusetts
• Enlarged group to be re-admitted to the Alternative Investment Market (“AIM”) and Euronext Growth on closing with a
planned dual-listing on NASDAQ
• Transaction already endorsed by 34.3% of Amryt shareholders and in excess of 67% of Aegerion’s bondholders
Rich Commercial Portfolio & Development Pipeline with a Global Footprint
• Amryt will have a differentiated, diverse, global offering of multiple commercial and development stage rare disease assets,
including:
• Two high-value commercial assets with multiple development opportunities in complementary global markets
o Lomitapide (Juxtapid (US)/Lojuxta (EU)) for the treatment of HoFH
o Metreleptin (Myalept (US) / Myalepta (EU)), a leptin hormone replacement therapy, approved in the US for Generalised
Lipodystrophy (GL), and recently in Europe for GL and Partial Lipodystrophy (PL)
• Additional near-term potential commercial opportunities for a broadened Amryt portfolio of products
o Metreleptin as a potential treatment for PL in the US
o Lomitapide (Juxtapid/Lojuxta) as a potential treatment for familial chylomicronemia syndrome (FCS)
o A lead development asset (AP101) for Epidermolysis Bullosa (“EB”), a >$1bn market opportunity in a pivotal Phase 3 trial,
which recently reported positive unblinded interim efficacy analysis results and is anticipated will be fully enrolled by end of
H2 2019
o Novel gene therapy platform (AP103) which offers a potential treatment for patients with EB and other topical indications
Annual Report for the year ended 31 December 2018
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06
STRATEGIC REPORT:
Performance Highlights continued
Value Creation
• Enhanced scale of combined group expected to drive revenue growth and future profitability
• Expected to deliver meaningful operational synergies over the medium term - the Directors believe, on the work undertaken
to date, that the enlarged group can deliver operational synergies of between $25m and $40m in 2020, rising further in 2021
• Amryt’s deep knowledge of Aegerion products is key to driving growth
• Reunification of lomitapide brands provides potential to replicate success of Lojuxta in Europe with Juxtapid in the US
• Opportunity to grow Myalepta revenues with broader reach across EU to accelerate recent launch
• Delivers a ready-made commercial US infrastructure in advance of anticipated launch of AP101
• Recapitalized business well-positioned to drive pipeline value
• Planned NASDAQ listing to drive liquidity and investor reach
• Opportunity for corporate restructuring to drive additional value
Board & Management
• Team led by Dr. Joe Wiley, CEO of Amryt
• Strong international management with significant industry experience
• Revised Board composition, on closing of the transaction, consisting of CEO and six Non-Executive Directors
• New Board to be appointed on closing
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Amryt Pharma plc
254852 AMRYT AR 01pp-10pp.qxp 10/06/2019 15:15 Page 07
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
07
Current Amryt Assets Post Period End & Q1 Update
Lead Commercial Asset - Lojuxta
• Lojuxta unaudited revenues for Q1 2019 of €3.9m, which represents an increase of 28.1% on the same period in 2018,
continuing the momentum generated in 2018
• Significant expansion in patient numbers in the UK in Q1 2019 following the launch in this new market in Q4 2018
• First patient order received from France in Q1 2019
• Sales to Saudi Arabia in Q1 2019 increased by 118% compared to Q4 2018
Lead Development Asset - AP101
• Following an assessment of the results of an unblinded interim efficacy analysis of its pivotal Phase 3 Efficacy and Safety in EB
(“EASE”) trial for AP101 as a potential treatment for EB, the Independent Data Monitoring Committee (“IDMC”)
recommended that the trial should continue with an increase of 48 patients in the study to a total of 230 evaluable patients,
in order to maintain 80% statistical power
• Following an assessment in February by the EASE trial’s IDMC of pharmacokinetic (“PK”) data received from patients already
enrolled in the trial (aged four years and older), Amryt can now enrol infants and children with EB between the ages of
21 days to 4 years of age into the trial
• Expected that the final patient will be enrolled into the trial in H2 2019
Gene Therapy Platform - AP103
• Two pre-clinical studies showed that topical application of AP103 restored production of collagen VII in pre-clinical models of
EB to levels exceeding those produced by healthy human keratinocytes and to levels similar to those observed following
delivery with a viral vector
• In addition, AP103 exhibited no evidence of cellular toxicity after repeated administration
Annual Report for the year ended 31 December 2018
254852 AMRYT AR 01pp-10pp.qxp 10/06/2019 15:15 Page 08
08
STRATEGIC REPORT:
Our Products
Commercial Assets
What is Lojuxta?
• Lojuxta is an approved treatment for adult patients with the rare cholesterol disorder - Homozygous Familial
Hypercholesterolaemia (“HoFH”)
• HoFH impairs the body’s ability to remove low density lipoprotein (“LDL”) cholesterol (“bad” cholesterol) from the blood,
leading to excessively high blood LDL cholesterol levels in the body from before birth - often reaching ten times more than
people unaffected by the condition - and subsequent aggressive and premature narrowing and blocking of blood vessels
• Imlan is a range of derma-cosmetic products that Amryt acquired with the acquisition of Birken AG (now Amryt AG)
• Imlan is marketed solely in Germany as a treatment for sensitive, allergy-prone and dry skin.
What is Imlan?
Development Pipeline – EB Franchise
What is AP101?
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Amryt Pharma plc
254852 AMRYT AR 01pp-10pp.qxp 10/06/2019 15:15 Page 09
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
09
• AP101 is being developed as a prescription medicine for EB
• EB is a distressing and painful genetic skin condition that causes the skin layers and internal body linings to separate. There are
currently no treatments available
• The prevalence of EB is estimated between 25,000 – 35,000 in the U.S (Source: Stanford School of Medicine, “Epidermolysis
Bullosa Clinic”) and estimated between 30,000 – 41,000 in the EU (Source: The Dystrophic Epidermolysis Bullosa Research
Association (“DEBRA”)
• Amryt is currently progressing the largest ever pivotal, global Phase 3 clinical trial of EB - “EASE” - with AP101
What is AP103 (Gene Therapy in EB)?
• Amryt has exclusively in-licenced a novel polymer platform technology for the delivery of gene therapies with potential
applicability across a range of genetic disorders. This technology has been exclusively in-licenced from University College
Dublin (“UCD”) and involves the use of Highly Branched Poly (β-Amino Ester) (“HPAE”) polymers as the delivery vehicle for
gene therapy
• The initial focus of the development work has been in the area of EB
• Patients with EB have mutations in the genes that code for structural proteins in the skin. These genetic mutations cause
impaired or absent function of the proteins that normally give the skin its mechanical strength. Mutations in the gene that
codes for type VII collagen cause a sub-type of EB called dystrophic EB (“DEB”)
• When this disease is inherited it can be passed on as a recessive form in which both parents are carriers of the disease but
don’t have symptoms. This is referred to as Recessive Dystrophic Epidermolysis Bullosa (“RDEB”). RDEB is a severely debilitating
condition that often causes widespread skin wounds that cause substantial pain, itching, infections, and predisposes patients
to develop an aggressive form of skin cancer. The multiple complications of this disease also result in a dramatically shortened
life expectancy
Annual Report for the year ended 31 December 2018
254852 AMRYT AR 01pp-10pp.qxp 10/06/2019 15:15 Page 10
10
STRATEGIC REPORT:
Drug Development Pipeline
Amryt has a rich pipeline with multiple development opportunities:
• Our lead commercial asset, Lojuxta, is growing year on year with revenues increasing by 14.2% in 2018 compared to 2017
and a 28.1% increase in revenues (unaudited) in Q1 2019 versus Q1 2018
• Potential for Lojuxta to be used in other indications - Amryt is currently supporting an ongoing proof of concept study to
consider efficacy and safety of Lojuxta in the treatment of Familial Chylomicronaemia (“FCS”)
• Following on from the positive unblinded interim efficacy analysis result, we now expect to complete recruitment in our EASE
study, the largest ever Phase 3 clinical trial in EB, in H2 2019
• Following an assessment in February by the EASE trial’s IDMC of PK data received from patients already enrolled in the trial
(aged four years and older), Amryt can now enrol infants and children with EB between the ages of 21 days to 4 years of age
into the trial
• Our earlier stage pipeline product, AP103, which we believe has the potential to be transformative in the treatment of EB and
other indications
• Our planned acquisition of Aegerion augments our existing pipeline and delivers significant growth opportunities.
A significant addition to our development pipeline would be the potential expansion of the Myalept label in the US to include
partial lipodystrophy (“PL”), which has already been approved in Europe
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Amryt Pharma plc
254852 AMRYT AR 11pp-26pp.qxp 10/06/2019 15:15 Page 11
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
11
STRATEGIC REPORT:
Chairman & CEO’s Statement and Business Review
Dear Shareholder
We are delighted to report another
strong year of progress for Amryt
Pharma plc. During the year, Amryt
continued to deliver against our key
milestones, culminating in the positive
results achieved in the unblinded interim
efficacy analysis for our lead
development asset, AP101, and positive
revenue momentum experienced with
our lead commercial asset, Lojuxta.
2019 promises to be a transformational
year for Amryt following the recent
announcement (21 May 2019) of our
planned acquisition of Aegerion, a
subsidiary of Novelion Therapeutics, a
NASDAQ-listed biopharmaceutical
company dedicated to developing and
commercialising therapies for individuals
living with rare diseases. We believe that
the combination of Amryt and Aegerion
will transform Amryt and significantly
accelerate our ambition to create a
global player in the rare and orphan
disease market, with a diversified
offering of multiple commercial and
development stage assets and the scale
to support further growth. We believe
Aegerion is a perfect fit for Amryt and
we look forward to updating
shareholders further as the deal
progresses.
2018 Operational Highlights
Lead Commercial Asset – Lojuxta
With the completion of the Lojuxta
in-licencing deal in December 2016,
Amryt became a commercial
pharmaceutical company, generating
sales across Europe, the Middle East and
other licenced territories. Our Lojuxta
business has grown significantly over
the course of the last two and a half
years, with sales for FY 2018 growing to
€13.6m (2017: €11.9m). Our focus on
adoption of, and access to, Lojuxta in
new and existing territories delivered a
significant revenue contribution in late
2018 and this positive momentum has
continued into 2019 to date with
Lojuxta revenues (unaudited) growing
28.1% in Q1 2019 versus the same
period in 2018.
In 2018, Amryt agreed eight new
distribution partnerships and we are
now covering 23 countries across our
territories. National reimbursement
negotiations concluded successfully in
the UK and France in the second half of
2018, resulting in the first UK orders
being received in 2018 and our first
French orders in Q1 2019. The Group
continues to actively negotiate the
initiation of reimbursement in a number
of other countries and we are optimistic
that some of these discussions will
conclude successfully in 2019.
In May 2018, Amryt signed a licence
extension with Novelion to significantly
expand its exclusive licence agreement
for Lojuxta into Russia and CIS, as well as
the non-EU Balkan states. As part of this
agreement, Amryt also formally became
the Marketing Authorisation holder for
Lojuxta in Europe which has marginally
increased the level of royalties payable to
Novelion. Amryt estimates there may be
up to 450 additional patients who could
benefit from treatment with Lojuxta
across the countries covered by the
extended agreement, representing an
increase of approximately 25% in the
total number of addressable patients in
the Amryt territories. The Group believes
the total addressable market opportunity
for Lojuxta in its licensed territories to be
in excess of €125 million.
Annual Report for the year ended 31 December 2018
254852 AMRYT AR 11pp-26pp.qxp 10/06/2019 15:15 Page 12
12
STRATEGIC REPORT:
Chairman & CEO’s Statement and Business Review
continued
Patent term extensions for Lojuxta were granted in multiple markets within our territories including France, Germany, Italy and
Spain during 2018. The Group expects that these extensions will prolong our product patent in these territories through 2028.
Amryt has also received enquiries from physicians to study Lojuxta in an indication called FCS, a rare, often severe, genetic
disease characterised by the build-up of chylomicrons (chylomicronemia), the largest protein lipoprotein particle, which are
responsible for transporting dietary fat and cholesterol. These patients suffer severe morbidity and mortality risk from repeated
hospitalisation for acute pancreatitis. In response to this interest, Amryt has supported an investigator-initiated study (“IIS”) in
Italy to look at the efficacy and safety of Lojuxta in treating patients with FCS. This study is underway and data is planned to be
available in H2 2019. This study is supported by data from two patients who received treatment under the compassionate use
programme, both who have shown improvements in lowering of serum triglyceride levels and reduction in episodes of
abdominal pain.
In line with European Medicines Agency (“EMA”) commitments, Amryt also plan to initiate a study in paediatric HoFH in 2019
which is expected to lead to label extension and an expanded growth opportunity in the mid-term.
Future sales growth will be driven by existing markets and from new territories. This anticipated growth is underpinned by:
• Positive momentum following the recent reimbursement decisions in the UK and France for Lojuxta which has already resulted
in the first orders being received;
• An increase in individual named patients, who access funding for treatment on a named patient basis in those countries
where there is no national reimbursement agreement, and
• Amryt’s strategy to appoint local distribution partners for new territories which is proving to be successful as evidenced by the
first orders being received for patients in Saudi Arabia and Qatar in the second half of 2018.
These market-access decisions will allow Amryt to provide access for a cohort of HoFH patients in these territories, which should
result in accelerated growth for the business.
Lead Development Asset – AP101
The Group has continued to make strong progress with its lead development asset, AP101, as a new potential treatment for EB.
In February 2017, Amryt was granted a patent in Japan for AP101. This followed key patents grants for AP101 in Europe and the
US in 2016. In March 2017, Amryt commenced the pivotal Phase 3 clinical trial, EASE (Efficacy And Safety Of AP101 In Patients
With EB), to examine AP101’s efficacy for EB patients. The first patient was enrolled to EASE in April 2017.
Product Pipeline for EB
Amryt Pharma plc
254852 AMRYT AR 11pp-26pp.qxp 10/06/2019 15:15 Page 13
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
13
Clinical Trials Update
Adult and paediatric patients with EB
are currently being enrolled into a
randomised double-blind
placebo-controlled trial. The proportion
of patients with completely healed
target wounds within 45 days will be
evaluated as the primary endpoint.
Secondary endpoints include the time to
achieve wound healing, total wound
burden and changes in infection risk,
pain and pruritus (itch) and
improvements in quality of life.
In January 2019, Amryt received the
result of the pre-planned unblinded
interim efficacy analysis. The unblinded
interim efficacy analysis was conducted
by an Independent Data Monitoring
Committee (“IDMC”). The IDMC
recommended that the trial should
continue with an increase of 48 patients
in the study to a total of 230 evaluable
patients, in order to achieve 80%
statistical power. The analysis was
conducted using unblinded efficacy data
received by the IDMC for the primary
endpoint from the first half of the study.
Following this announcement, Amryt has
already begun the recruitment process
for the additional patients required and
now expects to complete enrolment in
the EASE study in H2 2019. The IDMC’s
recommendation allows us to continue
the trial with only a modest increase in
the size of the study. This brings us
closer to potentially delivering a
treatment for patients with EB.
Following the interim efficacy analysis, in
February 2019, the IDMC also
recommended that Amryt be allowed to
expand the eligibility criteria for the study
to be able to enrol infants and children
with EB between the ages of 21 days
and 4 years of age into the EASE trial.
Extending the age eligibility criteria for
this trial is positive news and work has
already begun in order to be able to start
the recruitment process for this new
cohort of patients. This development
represents another milestone for Amryt
as we build on our vision of becoming a
global leader in rare and orphan diseases.
trial data when seeking drug
approval. Only patients who are not
eligible for EASE are eligible for
consideration for early access
Throughout 2018, various non-clinical
studies, requested by the FDA as part of
an Investigational New Drug (“IND”)
filing to open clinical trial sites in the US,
have been successfully completed. No
safety signals or concerns were noted
from the preliminary data and IND
approval has recently been received
from the FDA. This will enable us to
open clinical trial sites in the US, thereby
accelerating enrolment of patients into
the EASE study. Amryt also recently
received Paediatric Rare Disease
designation from the FDA for AP101,
which, pending successful approval of
AP101 in EB, will allow the Group to
apply for a Priority Review Voucher that
can be used, sold or transferred. The
Group also intends to apply to the FDA
for breakthrough designation following
the opening of the IND in the USA.
Breakthrough designation would
expedite the review process for AP101,
conducted by the FDA, upon
completion of the Phase 3 clinical trial.
In November 2018, the first patients
were enrolled in our Early Access
programme (“EAP”) for AP101 in Latin
America, resulting in our first EAP sales
for AP101 in November 2018. Total EAP
revenues for 2018 amounted to
€50,000 (2017: €nil). This program
allows us to provide our pre-approval
product, AP101, to patients in need
around the world and the program runs
alongside the EASE clinical trial. Our
early access programme offers several
benefits to Amryt:
• It allows us to collect real-world data
from patients enrolled in the
programs in Latin America, which
can be used to generate real world
evidence and to supplement clinical
• It allows us to help patients in an
ethical and regulatory-controlled
manner and enables us to provide
drug to these patients that do not
have access to the clinical trial and
have no other treatment options
available to them
• It enables real world, hands on
experience of the product for
physicians and healthcare providers
before it becomes commercially
available
The Group intends to extend the
availability of the early access program
in Brazil, Columbia, Argentina and in
countries in Europe, such as France and
Italy, throughout 2019 where interest
has been expressed.
Future Indications for AP101
Amryt has received interest from
physicians to study AP101 in various
PTW indications where there is high
unmet medical need. In response to this
interest, the Group is evaluating new life
cycle opportunities for AP101.
Dermatological conditions currently
under consideration include:
• Toxic Epidermal Necrolysis Syndrome
(TENS), including Stevens-Johnson
Syndrome (SJS)
• Grade III/IV radiotherapy and
chemotherapy induced dermatitis
The scope of the current EMA approval
for AP101 may offer the opportunity to
launch AP101 in some of these
indications in Europe.
Management intends to file applications
for orphan designation for some of these
new potential orphan indications in the
Annual Report for the year ended 31 December 2018
254852 AMRYT AR 11pp-26pp.qxp 10/06/2019 15:15 Page 14
14
STRATEGIC REPORT:
Chairman & CEO’s Statement and Business Review
continued
USA, Europe and Japan and believes that
there is significant scope to maximise the
value of this existing asset through either
a global multi-orphan strategy or via the
current EMA marketing approval to
secure long term growth.
Gene Therapy Platform – AP103
In March 2018, Amryt concluded an
exclusive in-licencing of a novel polymer
platform technology for delivery of gene
therapy with potential applicability
across a range of genetic disorders. This
technology has been exclusively
in-licenced from University College
Dublin (“UCD”) and involves the use of
Highly Branched Poly (β-Amino Ester)
(“HPAE”) polymers as the delivery
vehicle for gene therapy.
The initial focus of the development work
has been in the area of EB. Patients with
EB have mutations (changes) in the genes
that code for structural proteins in the
skin. These genetic mutations cause
impaired or absent function of the
proteins that normally give the skin its
mechanical strength. Mutations in the
gene that codes for type VII collagen
cause a sub-type of EB called dystrophic
EB (“DEB”). When this disease is inherited
it can be passed on as a recessive form in
which both parents are carriers of the
disease but don’t have symptoms, it is
referred to as Recessive Dystrophic
Epidermolysis bullosa (“RDEB”). RDEB
causes a severely debilitating condition
that often causes widespread skin
wounds that cause substantial pain, itch,
infections, and predispose the patients to
develop an aggressive form of skin
cancer. The multiple complications of this
disease also result in a dramatically
shortened life expectancy.
Restoration of production of normal type
VII collagen by gene therapy could be
transformative for these patients.
Preliminary pre-clinical data generated
from a human RDEB skin graft model
Amryt Pharma plc
(“xenograft model”) has repeatedly
shown significant levels of type VII
collagen restored to the skin post-therapy.
Potential competitors working in the area
of gene therapy for EB are mostly
working with viral vectors for gene
delivery. The patented technology which
Amryt has licenced from UCD involves
the use of a novel non-viral gene delivery
platform technology, specifically using the
family of HPAE polymers. If successful,
this could eliminate the requirement for
viruses as delivery vectors and provide a
safer, easier to manufacture and more
convenient treatment for patients.
The Group completed two pre-clinical
studies in 2018, and in January 2019,
Amryt announced positive results from
these studies which support the
development of its non-viral gene
therapy, AP103, as a potentially
disease-modifying therapy for patients
with RDEB.
Data from the pre-clinical studies
demonstrated that:
• A single application of AP103
restored type VII collagen production
to levels exceeding those normally
produced by healthy human
keratinocytes using RDEB
keratinocytes grown in cell culture
• Topical application of AP103 onto a
3-D matrix of human RDEB skin
restored collagen VII along the
basement membrane to levels similar
to those observed post-delivery using
a viral vector
• AP103 exhibited no evidence of
cellular toxicity in vitro or in vivo after
repeated administration
The Group will now continue the
pre-clinical testing of AP103. Further in
vivo testing for efficacy is underway. A
pre-clinical toxicology program is also in
development for the safety assessment
of the HPAE polymer on its own and
formulated as AP103. The suppliers for
the materials for production of the
components of AP103 and the final
AP103 product under good
manufacturing practice (“GMP”)
conditions are currently under
evaluation for selection.
In December 2018, an Amryt led
consortium was awarded grant funding
totalling €8.4m over three years from the
Disruptive Technologies Innovation Fund
(“DTIF”), part of the Irish Government’s
Department of Business, Enterprise and
Innovation, to develop the Company’s
AP103 gene therapy platform. The grant
has been awarded to a consortium
comprised of Amryt, University College
Dublin (“UCD”), Curran Scientific Limited
and DEBRA Ireland. The grant funding will
be matched by the consortium partners at
various funding levels over the three-year
term of the project. The grant will fund
further development of Amryt’s AP103
non-viral gene therapy platform from
pre-clinical testing to proof of concept in
humans. The initial funds will be used for
R&D and staff costs associated with the
project and, if pre-clinical work is
successful, to fund the initial phases of a
clinical trial for AP103. In addition to the
primary work on AP103, the funds will
also support research into the
development of the Highly Branched Poly
(β-Amino Ester) (“HPAE”) polymer
technology for the potential treatment of
other genetic disorders.
Financial Position
We are pleased with the total revenue
growth of 13.3% compared to 2017,
resulting in total revenues for the year
of €14.5m. Already in 2019, Q1
revenues for Lojuxta are already 28.1%
higher than the same period last year.
We ended the year with a cash balance
of €9.8m and we completed the final
draw down of €5m from our existing
European Investment Bank (“EIB”)
facility in Q1 2019.
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
15
Corporate Governance
As of 28 September 2018, companies
quoted on AIM are required to formally
adopt a corporate governance code as
well as disclose details of their
compliance with that code and, where
they depart from the code, provide an
explanation of the reasons for doing so.
The Board adopted the Quoted
Companies Alliance Code (“the QCA
Code”) on 25 September 2018. The
Board of Directors, including myself as
Non-Executive Chairman, acknowledge
the importance of the ten principles set
out in the QCA Code and details of our
compliance with the code can be found
in the Corporate Governance section of
this Annual Report as well as on our
website – amrytpharma.com.
Our People
Amryt is led by an experienced senior
management team which has been
enhanced further in 2018 by the
appointment of a number of new Senior
Managers. Amryt now has in place an
exceptionally strong leadership team,
and also has the necessary commercial,
regulatory and medical infrastructure in
place across Europe. Our strategy is to
leverage this capacity to seek to in-
license more commercial and late stage
assets, which we are actively pursuing,
as evidenced by the recently announced
planned acquisition of Aegerion.
We could not have achieved what we
have without the continued support of
the entire Amryt team throughout our
sites in Europe, and also those partners
involved in our wider collaborations.
I would like to thank them all for their
contribution to the progress we have
made in 2018.
Outlook
The Group continued to grow and
execute on its strategy and achieved
significant milestones in 2018. We
remain confident of continuing our
significant progress in 2019 and beyond.
We are very positive about the growth
prospects for our Lojuxta business.
Lojuxta revenues in 2018 increased by
14.2% in 2018 and we were particularly
pleased to get approval in the UK and
France and we believe that there
remains a significant opportunity to
further grow revenues especially with
material, latent opportunities in our
licenced territories. Capitalising on these
opportunities will be a major focus for
us in 2019.
Over the next 12 months, we expect to
see further significant progress in AP101,
with the last patient due to be enrolled
in the Phase 3 clinical trial, EASE, in H2
2019. This will bring us closer to
potentially delivering a treatment for
patients with EB. We expect a top-line
data readout in Q1 2020, which will
represent a significant milestone for
Amryt and our shareholders. We are also
encouraged about the interest from
physicians to study AP101 in various
other partial thickness wound indications
with high unmet medical need and also
FCS as another potential opportunity for
Lojuxta. The Group will continue to
evaluate these opportunities in 2019.
Our in-licencing agreement for AP103 is
an attractive opportunity for Amryt to
be involved in the area of gene therapy,
which is one of the most exciting and
potentially transformative areas of
medicine today. If successful, this
platform has the potential to be broadly
applicable in other dermatological
conditions and possibly beyond.
The planned acquisition of Aegerion will
be transformational for Amryt. The
transaction will create a global player in
the orphan disease market with a
diversified offering of multiple
commercial and development stage
assets and provides scale to support
further growth. We hope to finalise the
transaction and start the integration
process in H2 2019 and update our
outlook accordingly. In the meantime,
our aim is to complete recruitment for
AP101 EASE trial in H2 2019 ahead of
the topline readout in early 2020 and
continue to grow our existing Lojuxta
business.
Following the recent announcement of
the acquisition of Aegerion, the key
focus for the Company over the coming
months will be to prepare for the
integration of the Aegerion commercial
and development assets into our existing
business. Our executive management
team has the depth of experience to
commercialise Aegerion’s marketed
products, as demonstrated by our ability
to grow sales of Lojuxta in Europe. The
acquisition gives us an expanded
commercial footprint to market two US
and EU approved products, lomitapide
(Juxtapid (US/ROW) / Lojuxta (EU)) and
metreleptin (Myalept (US) / Myalepta
(EU)). The reunification of lomitapide
brands provides the potential to replicate
success of Lojuxta in Europe with
Juxtapid in the US, while there is also an
opportunity to grow Myalepta revenues
with broader reach across the EU to
accelerate the recent launch.
We look forward to sharing further
updates with you on our progress and
thank you for your support. We look to
the future with optimism and fully
believe Amryt is now even better
positioned to progress its ambition of
becoming a global leader in rare and
orphan diseases.
Harry Stratford OBE
Non-Executive Chairman
10 June 2019
Dr. Joe Wiley
Chief Executive Officer
10 June 2019
Annual Report for the year ended 31 December 2018
254852 AMRYT AR 11pp-26pp.qxp 10/06/2019 15:15 Page 16
16
Our Strengths
o Building a franchise in EB:
• A management team with consider-
- Complete our Phase 3 clinical
study, EASE
- Continue our work in poten-
tial new indications for
AP101
- Complete pre-clinical work in
our gene therapy asset,
AP103 and, if successful,
proceeding into the clinic
with this asset
o Continuing our product portfolio
expansion and diversification
through acquisitions and in-
licensing, as evidenced through
our recently announced planned
acquisition of Aegerion
able expertise in the rare and orphan
disease space
• Existing patents provide robust in-
market protection for Lojuxta in our
licensed territories
• Amryt’s lead commercial asset,
Lojuxta, and our late stage
development asset, AP101, are
underpinned by novel early-stage
development (AP103)
• Our ambition to become a world
leader in rare and orphan diseases
accelerated through our recently
announced acquisition of Aegerion,
which will deliver two substantial
revenue-generating products and an
enhanced pipeline of promising
development opportunities
Our Strategy
• Our ambition is to become a global
leader in treating rare conditions to
help improve the lives of patients
where there is a high unmet medical
need.
• We will achieve this by:
o Maximising revenues in our
licensed territories for Lojuxta
through organic growth and re-
imbursement opportunities
STRATEGIC REPORT:
Vision & Strategy
The Board’s vision and strategy is to
build a world leader in rare and orphan
diseases by acquiring, developing and
commercialising products that help
improve the lives of patients where
there is a high unmet medical need.
Amryt creates shareholder value by
participating in a diverse portfolio of
development and commercial projects.
Strategic Pillars
• Drive revenue growth in existing and
new territories with our existing com-
mercial asset, Lojuxta
• Build a franchise in Epidermolysis Bul-
losa (“EB”) through our lead devel-
opment asset, AP101, and our gene
therapy platform, AP103. New po-
tential indications for AP101 repre-
sent significant additional
opportunities
• Pursue acquisition and in-licensing
opportunities to replicate the success
of Lojuxta such as the recently an-
nounced planned acquisition of
Aegerion
The Group has assembled significant
commercial and development expertise
to drive sustained pipeline growth. With
both a pipeline of development and
commercial assets, we believe our strat-
egy can deliver shareholder value over
the medium to the long term.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
17
STRATEGIC REPORT:
Financial Review
Revenues
Amryt primarily generates revenues from sales of Lojuxta, which is used to treat a rare and life-threatening disease called HoFH.
In 2018, the Group generated its first revenues from the early access program in place for AP101. This program allows us to
provide our pre-approval product, AP101, to patients in need around the world and the program runs alongside the EASE clinical
trial. Amryt also has a range of in-house dermo cosmetic products, which are sold under the Imlan brand in Germany.
The following table outlines the breakdown of revenues in 2018 compared to 2017:
Lojuxta
Imlan
Other
Total
31 December
2018
€’000
31 December
2017
€’000
13,621
784
49
14,454
11,924
830
24
12,778
% change
14%
(6%)
104%
13%
The growth in Lojuxta revenues in 2018 can be attributed to strong demand from existing markets and revenues from new
markets within Amryt’s licenced territories. In 2018, the Group experienced significant positive momentum in the reimbursement
position in certain countries which resulted in reimbursement being granted in the UK and France in late 2018. The first UK and
French orders were received in Q4 2018 and Q1 2019, respectively. The Group had its first sales in Saudi Arabia and Central
Eastern Europe (“CEE”) in 2018 and experienced an increase in total individual ‘named patients’ who continue to access funding
for treatment in other countries.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A”) increased from €11,048,000 for the year ended 31 December 2017 to
€15,357,000 for the year ended 31 December 2018, an increase of €4,309,000.
The following table outlines the breakdown of SG&A expenses in 2018 compared to 2017:
SG&A expenses
Share based payments
Total
31 December
2018
€’000
31 December
2017
€’000
14,663
694
15,357
10,483
565
11,048
% change
40%
23%
39%
SG&A expenses, excluding share-based payments, increased from €10,483,000 in 2017 to €14,663,000 in 2018, an increase of
40%. This increase is mainly attributable to the ongoing growth in the Lojuxta business and the expansion of the Group’s sales
and marketing infrastructure in anticipation of recent market access successes such as those in the UK and France.
Share based payments represents the fair value of share options granted to Directors and employees which is charged to the
Consolidated Statement of Comprehensive Income over the vesting period of the underlying options. The Group has used a
Black Scholes valuation model for the purposes of valuing these share options with the key inputs to the model being the
expected volatility over the life of the options, the expected life of the option, the option price, the dividend yield and the
risk-free rate. The Group recorded a total share-based payment charge of €694,000 for the year ended 31 December 2018
(2017: €565,000). The increase of €129,000 is due to the full year impact of options granted to Directors and key employees in
2017. No new options were granted in 2018. For further details, see note 4 to the consolidated financial statements.
Annual Report for the year ended 31 December 2018
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18
STRATEGIC REPORT:
Financial Review continued
Research and Development Expenses
Research and development expenses for the year ended 31 December 2018 amount to €9,049,000, compared to €10,564,000
for the year ended 31 December 2017. The decrease of €1,515,000 is primarily due to higher costs incurred in 2017 resulting
from higher once off set up costs incurred as part of the roll-out of our global clinical trial sites following the start of the Phase 3
clinical trial in April 2017 and also due non-clinical studies completed in 2017 relating to the Group’s development assets, AP101
and AP102. The decrease in these non-clinical expenses have been partially offset by the initial costs incurred in relation to our
new development asset for gene therapy, AP103.
Operating Loss
The operating loss before finance expense for the year ended 31 December 2018 amounted to €15,250,000, which included
depreciation and amortisation of €310,000 and share based payments of €694,000. This compares to an operating loss before
finance expense for the year ended 31 December 2017 of €14,207,000, which included depreciation and amortisation of
€259,000 and share based payments of €565,000. Excluding depreciation, amortisation and share based payments, the
operating loss before finance costs for the year ended 31 December 2018 would have been €14,246,000 (2017: €13,383,000).
The increase in the operating loss in 2018 is largely due to the costs associated with the rollout of the Phase 3 EASE study and
our continued investment in the commercial and regulatory infrastructure necessary to continue to grow and expand our Lojuxta
business.
The loss on ordinary activities before taxation of €25,777,000 includes €8,934,000 relating to a current non-cash movement on
contingent consideration that arose as part of the acquisition of Amryt AG in 2016. The fair value of this contingent
consideration was initially determined by discounting the contingent amounts payable to their present value at the date of
acquisition. The discount component is being unwound as a current non-cash financing charge in the Statement of
Comprehensive Income over the life of the obligation. This non-cash financing charge of €8,934,000 reflects the impact of the
revised financial forecasts and the discount component being unwound to the Statement of Comprehensive Income in 2018.
Cash Management
As at 31 December 2018, the Group had cash and cash equivalents of €9,811,000. This compares to cash and cash equivalents
of €20,512,000 at 31 December 2017. Included in cash and cash equivalents at 31 December 2018 is cash at bank available on
demand of €8,620,000 and restricted cash of €1,191,000. Restricted cash is cash held by our third-party distribution partner at
year-end which was transferred to Amryt in January 2019. The total cash and cash equivalents at 31 December 2017 of
€20,512,000 relates to €19,975,000 cash at bank available on demand and restricted cash of €537,000.
In October 2017, the Company completed an equity fundraising resulting in gross proceeds of €15,083,000 (net proceeds:
€14,393,000). There was no equity fundraising in 2018.
Trade and Other Receivables
As at 31 December 2018, the Group had trade and other receivables of €5,179,000. This compares to trade and other
receivables of €4,729,000 at 31 December 2017.
Amryt Pharma plc
254852 AMRYT AR 11pp-26pp.qxp 10/06/2019 15:15 Page 19
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
19
The following table outlines the breakdown of trade and other receivables at 31 December 2018 compared to 31 December
2017:
Trade receivables
Other receivables
Total
31 December
2018
€’000
31 December
2017
€’000
3,121
2,058
5,179
2,929
1,800
4,729
% change
7%
14%
10%
Trade debtors at 31 December 2018 is consistent with the position at 31 December 2017, the marginal increase due to growth in
Lojuxta business in 2018.
Included in other receivables at 31 December 2018 is €1,351,000 (2017: €1,306,000) in relation to prepaid Phase 3 clinical trial
costs.
Trade and Other Payables
As at 31 December 2018, the Group had trade and other payables of €10,525,000. This compares to trade and other payables
of €9,799,000 at 31 December 2017.
The following table outlines the breakdown of trade and other payables at 31 December 2018 compared to 31 December 2017:
Trade payables
Other payables
Total
31 December
2018
€’000
31 December
2017
€’000
4,666
5,859
10,525
4,698
5,101
9,799
% change
–
15%
7%
Trade payables at 31 December 2018 are consistent with the position at 31 December 2017. The increase in the other payables
arises primarily from the increased supplier costs arising from the growth of the commercial business and the advancement of
the Phase 3 clinical trial throughout 2018. The increase was partially offset by the first milestone payment arising from the
acquisition of Amryt AG being included in accruals at 31 December 2017. This amounted to €2,000,000 and was payable
24 months after receipt of EMA approval for PTW. This amount was paid in January 2018.
Contingent Consideration
Contingent consideration at 31 December 2018 amounted to €41,351,000 compared to €32,418,000 at 31 December 2017. At
the date of acquisition, the fair value of the royalty payments was determined using probability weighted revenue forecasts and
the fair value of the milestones payments was determined using probability adjusted present values. At each reporting date it is
necessary to review the fair value of the contingent consideration. The increase in the contingent consideration in 2018 arises as
a result of (i) part of the probability adjusted fair values being unwound to the Consolidated Statement of Comprehensive
Income during 2018 as financing expenses and (ii) a revision of the estimates used in the revenue forecast resulting from the
revisions to the AP101 launch timelines.
Annual Report for the year ended 31 December 2018
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20
STRATEGIC REPORT:
Financial Review continued
Debt Financing
In December 2016, Amryt DAC entered into a €20,000,000 debt facility agreement with the EIB. The facility is significant
because it provides non-dilutive funding that secures the Group's near and mid-term funding needs for its lead development
asset, AP101.
The facility is split into three tranches, with €10,000,000 available immediately and two further tranches of €5,000,000 each
available upon the achievement of certain milestones. In April 2017, the Group drew down the first tranche of €10m. In October
2017, the terms of the second tranche of €5m were amended by the EIB to give the Group the option to draw this amount
down at any time. The Group proceeded to draw down this second tranche of €5m in September 2018. In December 2018, the
terms of the third tranche were amended by the EIB to give the Group the option to draw down this final tranche if the interim
efficacy analysis for AP101 was successful. Following the IDMC’s recommendation in January 2019 that the EASE Phase 3 trial
should continue with only a modest increase in patients, the Group drew down the final tranche of €5m in February 2019. The
facility is secured over the intellectual property assets of the Group and there is also a negative pledge whereby Amryt cannot
permit any security to be granted over any of its assets over the course of the loan period.
The facility has a five-year term from drawdown of each tranche. The facility has an interest rate of 3% to be paid on an annual
basis, the first instalment of which related to the €10m drawn down in 2017 was paid in April 2018. The second interest
instalment on the €10m tranche is due for payment in April 2019, the first instalment of the 3% interest on the second tranche
of €5m is due in September 2019 and the first instalment of the 3% interest on the third tranche of €5m is due in February
2020. A further annual fixed rate of 10% is payable together with the outstanding principal amount on expiry of the facility. At
31 December 2018, the Group has a short-term accrual for €279,000 which is repayable during 2019 and a long-term accrual of
€1,614,000 which represents the discounted present value of the long-term interest accrued but not payable until each tranche
matures.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
21
STRATEGIC REPORT:
Key Performance Indicators
Control of cash balances is a priority of
the Group and these are budgeted and
monitored closely to ensure that the
Group has access to sufficient funds to
finance the Phase 3 clinical trial of
AP101 (the EASE Study). Operational
progress in relation to AP101 and
AP103 are reviewed by the Board on a
regular basis and actual costs are
compared to Board approved budgets.
Revenue growth in our lead commercial
asset, Lojuxta, is a key measure for the
Group. This business has been
contributing cash since we in-licensed
the product in December 2016,
culminating in annual revenues of
€13.6m in 2018, which represents an
increase of 14.2% compared to 2017
annual revenues of €11.9m.
As we are currently in the pre-revenue
stage for our lead development asset,
AP101, a core focus of our business is
on progression of this drug candidate
through the clinic into an approved
product for the treatment of EB. The
rate of enrolment into this study was a
key performance measure in 2018 and
will this will continue into 2019 as we
aim to complete enrolment in our Phase
3 study, EASE, in H2 2019.
Identifying, acquiring and developing
new drug candidates to build
shareholder value is key to our goal of
becoming a global leader in rare and
orphan diseases. In 2018, the Group in-
licenced our first gene therapy
candidate, AP103. This patented
technology which Amryt in-licensed
from UCD involves the use of a novel
gene therapy delivery mechanism using
HPAE polymer technology. If successful,
this could eliminate the requirement for
viruses as delivery vectors and therefore
provides a potential competitive
advantage to Amryt.
Annual Report for the year ended 31 December 2018
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22
STRATEGIC REPORT:
Risks and Uncertainties
The management of risk is a key
responsibility of the Board of Directors.
The Board ensures that all key risks are
understood and appropriately managed
considering the Group’s strategy and
objective, and that an effective risk
management process, including
appropriate internal controls, is in place
to identify, quantify and manage
important risks.
Operational Risk Management
To effectively manage the operational
risk, the Group regularly reviews
progress in key activities as follows:
• The Board of Directors meets
regularly and reviews operational
progress against the Group’s strategy
and key objectives
• The senior management meets at
least twice a month to review
operational progress and, during
these meetings, they identify and
discuss areas of risk. If appropriate,
these risks will be communicated to
the Board for further discussion
• Commercial and Clinical teams meet
on a regular basis to review progress
of all key projects. As part of these
discussions, any key issues identified
will be elevated for discussion with
Senior Management team.
Principal Risk Factors
The Group is subject to risk factors
relating to the business and operations
of the Group in the healthcare industry.
The success of the Group depends on its
ability to engage in appropriate product
selection and to attract sufficient
funding to successfully develop these
products. The following summarises the
principal risks and uncertainties of the
Group:
Amryt Pharma plc
The Group has incurred losses
since its inception and
anticipates that it may continue
to incur losses for the
foreseeable future
To date, the Group has no positive
operating cash flow and its ultimate
success will depend on, inter alia, the
Board’s ability to implement the Group’s
strategy, generate cash flow and access
equity markets. Whilst the Board is
optimistic about the Group’s prospects,
there is no certainty that anticipated
outcomes and sustainable revenues, or
profits can be achieved. In the
meantime, the Group will continue to
expend its cash reserves. There can be
no assurance that the Group’s
operations will be profitable or produce
a reasonable return, if any, on
investment.
The Group may not be successful
in its efforts to build a further
pipeline of product candidates
and develop marketable
products
The Group operates in the
biopharmaceutical development sector
and has a number of drug candidates in
various stages of clinical development.
In addition, the Group may continue to
exploit other opportunities within the
sector in order to expand its present
development pipeline. Industry
experience indicates that there may be a
very high incidence of delay or failure to
produce valuable scientific results in
relation to the present development
pipeline. Further to this, the Group may
not be successful in developing new
products based on the scientific
discoveries developed by the Group. The
ability of the Group to develop new
products relies on, inter alia, the
recruitment of sufficiently qualified
research and development partners with
expertise in the biopharmaceutical
sector. The Group may not be able to
develop its relationships and/or recruit
research partners of a sufficient calibre
to satisfy its growth rate and develop its
future pipeline.
Additionally, product development
timelines are at risk of delay as the
timing of regulatory approvals is
uncertain and it is not always possible to
predict the rate of patient recruitment
into clinical trials. There is therefore a
risk that product development could
take longer than presently expected by
the Group.
Furthermore, there can be no guarantee
that the Group will be able to, or that it
will be commercially advantageous for
the Group to, develop its intellectual
property through entering into licensing
deals with emerging, midsize and large
pharmaceutical companies.
Clinical trials are expensive, time
consuming and difficult to
design and implement and
involve uncertain outcomes.
Furthermore, results of earlier
pre-clinical studies and clinical
trials may not be predictive of
results of future pre-clinical
studies or clinical trials
To obtain the requisite regulatory
approvals to market and sell any of the
Group’s product candidates, it must
demonstrate, through extensive pre-
clinical studies and clinical trials, that its
product candidates are safe and
effective in humans. Clinical testing is
expensive and can take many years to
complete and its outcome is inherently
uncertain. Failure can occur at any time
during the clinical trial process and in
addition regulatory authorities may
require further studies at additional cost.
Furthermore, regulatory authorities such
as the FDA and EMA may not agree on
the same trial design for pivotal studies.
The results of pre-clinical studies and
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23
earlier clinical trials may not be
predictive of the results of later-stage
clinical trials. For example, the results
generated to date in pre-clinical studies
or Phase I or Phase II clinical trials for the
Group’s product candidates do not
ensure that later clinical trials will
demonstrate similar results. Product
candidates in later stages of clinical trials
may fail to show the desired safety and
efficacy traits despite having progressed
through pre-clinical studies and initial
clinical trials. The Group may suffer
setbacks in advanced clinical trials due
to lack of efficacy or adverse safety
profiles, notwithstanding promising
results in earlier clinical trials. In
addition, the Group may experience
delays in its on-going or future pre-
clinical studies or clinical trials and it
does not know whether future pre-
clinical studies or clinical trials will begin
on time, need to be redesigned, enrol
an adequate number of subjects or
patients on time or be completed on
schedule, if at all.
The regulatory approval
processes of the EMA, FDA and
other comparable regulatory
agencies may be lengthy, time-
consuming and the outcome is
unpredictable
The Group’s future success is dependent
upon its ability to develop successfully,
obtain regulatory approval for and then
successfully commercialise one or more
of its product candidates. There can be
no assurance that any of the Group’s
development drug candidates will be
successful in clinical trials or receive
regulatory approval. Applications for any
of the Group’s product candidates could
fail to receive regulatory approval for
many reasons, including, but not limited
to, the following:
• the EMA, FDA or any other
comparable regulatory agency may
disagree with the design or
implementation of the Group’s
clinical trials or the Group’s
interpretation of data from
nonclinical trials or clinical trials;
product revenue by delaying or
terminating the potential
commercialisation of the Group’s
product candidates.
• the population studied in the clinical
programme may not be sufficiently
broad or representative to ensure
that the clinical data can be relied on
safely in the full population for which
the Group is seeking approval;
• the data collected from clinical trials
of the Group’s product candidates
may not be sufficient to support a
finding that has statistical
significance or clinical
meaningfulness or support the
submission of a new drug application
or other submission, or to obtain
regulatory approval in relevant
jurisdictions, such as Europe and the
US;
• the Group may be unable to
demonstrate to the EMA, FDA or any
other comparable regulatory agency
that a product candidate’s risk-
benefit ratio for its proposed
indication is acceptable;
• the EMA, FDA or any other
comparable regulatory agency may
fail to approve the manufacturing
processes, test procedures and
specifications or facilities of third-
party manufacturers with which the
Group contracts for clinical and
commercial supplies; or
• the approval policies or regulations of
the EMA, FDA or any other
comparable regulatory agency may
significantly change in a manner
rendering the Group’s clinical data
insufficient for approval.
Any of the Group’s current or future
product candidates could take a
significantly longer time to gain
regulatory approval than expected or
may never gain regulatory approval. This
could delay or eliminate any potential
The Group intends to seek regulatory
approvals to commercialise its product
candidates in Europe and the United
States. To obtain regulatory approval in
other countries, the Group must comply
with numerous and varying regulatory
requirements of such other jurisdictions,
which may include (without limitation)
safety, efficacy, chemistry,
manufacturing and controls, clinical
trials, commercial sales, pricing and
distribution of its product candidates.
Even if the Group is successful in
obtaining approval in one jurisdiction,
there can be no guarantee that it will
obtain approval in other jurisdictions.
Failure to obtain marketing
authorisations for its product candidates
will result in the Group being unable to
market and sell such products. If the
Group fails to obtain approval in any
jurisdiction, the geographic market for
its product candidates could be limited.
Similarly, regulatory agencies may not
approve the labelling claims that are
necessary or desirable for the successful
commercialisation of the Group’s
product candidates.
The Group’s products may not
gain market acceptance, in
which case the Group may not
be able to generate product
revenues
Even if the EMA, FDA or any other
comparable regulatory agency approves
the marketing of any product
candidates that the Group develops
and/or in the case of existing marketed
products, physicians, healthcare
providers, patients or the medical
community may not accept or use them.
Efforts to educate the medical
community and third-party payors on
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24
STRATEGIC REPORT:
Risks and Uncertainties continued
the benefits of the Group’s product
candidates may require significant
resources and may not be successful. If
any product candidate that the Group
develops, in each case if approved, do
not achieve an adequate level of
acceptance, the Group may not
generate significant product revenues or
any profits from operations. The degree
of market acceptance will depend on a
variety of factors, including, but not
limited to:
• whether clinicians and potential
patients perceive the Group’s product
candidates to have a better efficacy,
safety and tolerability profile, ease of
use, compared with the products
marketed by the Group’s competitors
and the prevailing standard of care;
• the timing of market introduction;
• the number of competing products;
• the Group’s ability to provide
acceptable evidence of safety and
efficacy;
• the frequency and severity and causal
relationships of any side effects and a
continued acceptable safety profile
following approval;
• relative convenience and ease of
administration;
• cost effectiveness;
• patient diagnostics and screening
infrastructure in each market;
• marketing and distribution support;
• the availability of healthcare
coverage, reimbursement and
adequate payment from health
maintenance organisations and other
third-party payors, both public and
private; and
• competition from other therapies.
In addition, the potential market
opportunity for the product candidates
that the Group may develop is difficult
to estimate precisely, particularly given
Amryt Pharma plc
that the orphan drug markets which the
Group is targeting are, by their nature,
relatively unknown. The Group’s
estimates of the potential market
opportunity for each of these product
candidates are predicated on several key
assumptions, such as industry
knowledge and publications, third party
research reports and other surveys.
Although the Board believes that the
Group’s internal assumptions are
reasonable, these assumptions may
prove to be inaccurate. If any of the
assumptions proves to be inaccurate,
then the actual market for Lojuxta,
AP101 and AP102 or the Group’s other
product candidates from time to time,
could be smaller than the Group’s
estimates of the potential market
opportunity. If that turns out to be the
case, the Group’s product revenue may
be limited, and it may be unable to
achieve or maintain profitability.
The Group faces significant
competition from other
biotechnology and
pharmaceutical companies
The biotechnology and pharmaceutical
industries are very competitive. The
Group’s competitors include major
multinational pharmaceutical
companies, biotechnology companies
and research institutions. Many of its
competitors have substantially greater
financial, technical and other resources,
such as larger research and
development staff. The Group’s
competitors may succeed in developing,
acquiring or licensing drug product
candidates that are earlier to market,
more effective or less costly than any
product candidate which the Group is
currently developing or which it may
develop, and this may have a material
adverse impact on the Group.
The Group’s license partners may
not be successful in their efforts
to develop marketable products
Revenue from any licensing and
collaboration deals entered into is
dependent on future progression of
programs through development of and
into the market. If these programs
transfer to a partner for progression,
there is a risk that a licensing deal may
not deliver all the indicated milestones
and terms due to product failure or a
partner deprioritising a product.
Protection of Intellectual
Property
The Group’s success and ability to
compete effectively are in large part
dependent upon exploitation of
proprietary technologies and candidates
that the Group has developed internally
or has in-licensed, the Group’s ability to
protect and enforce its intellectual
property rights so as to preserve its
exclusive rights in respect of its
technologies and candidates, and its
ability to preserve the confidentiality of
its know-how. The Group relies primarily
on exclusivity granted by a combination
of orphan drug approval, data
exclusivity, patent laws and trade
secrets/confidentiality to protect its
intellectual property rights. There can be
no assurance that patents pending or
future patent applications will be issued,
nor that the lack of any such patents
will not have a material adverse effect
on the Group’s ability to develop and
market its proposed candidates, or that,
if issued, the Group would have the
resources to protect any such issued
patent from infringement. Also, no
assurance can be given that the Group
will develop technologies or candidates
which are patentable or that patents will
be sufficient in their scope to provide
protection for the Group’s intellectual
property rights against third parties. Nor
can there be any assurance as to the
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25
ownership, validity or scope of any
patents which have been, or may in the
future be, issued to the Group or that
claims with respect thereto would not
be asserted by other parties.
Furthermore, there are some areas of
technology that are important for the
Group’s business which cannot be
patented due to the existence of prior
disclosures or rights. In addition, there
can be no assurance that the Group will
be able to obtain and/or maintain its
orphan drug designation or orphan
drug approval for its product
candidates.
To date, the Group has also relied on
copyright, trademark and trade secret
laws, as well as confidentiality
procedures, non-compete and/or work
for hire invention assignment
agreements and licensing arrangements
with its employees, consultants,
contractors, customers and vendors, to
establish and protect its rights to its
technology and other developments
and, to the best extent possible, control
the access to and distribution of its
technology, software, documentation
and proprietary information. Despite
these precautions, it may be possible for
a third party to copy or otherwise obtain
and use its technology without
authorisation. Once granted, a patent
can be challenged both in the patent
office and in the courts by third parties.
Third parties can bring material and
arguments which the patent office
granting the patent may not have been
aware of. Therefore, issued patents may
be found by a court of law or by the
patent office to be invalid or
unenforceable or in need of further
restriction.
Orphan Drug Designation
In the European Union, orphan drug
designation under Regulation (EC) No.
141/2000 by the EMA’s Committee for
Orphan Medicinal Products provides
regulatory and financial incentives for
companies to develop, promote and
market products that are intended for
the diagnosis, prevention, or treatment
of a life-threatening or chronically
debilitating condition affecting not more
than five in 10,000 persons in the
European Union and for which no
satisfactory treatment is available or
where such treatment is already
available, the new treatment must be of
significant benefit to those affected by
the condition. Additionally, designation
is granted for products intended for the
diagnosis, prevention or treatment of a
life-threatening, seriously debilitating or
serious and chronic condition when,
without incentives, it is unlikely that
sales of the drug in the European Union
would be sufficient to justify the
necessary investment in developing the
drug or biological product or where
there is no satisfactory method of
diagnosis, prevention or treatment, or, if
such a method exists, the medicine
must be of significant benefit to those
affected by the condition. In Europe, the
first product candidate to obtain
approval for a given indication would
benefit from a 10-year period of market
exclusivity from the date of approval.
Subsequent candidates for the same
condition may also be granted orphan
drug designation where the underlying
molecule used in the treatment is
different, where the method of action is
different or where the new treatment
shows clinical superiority over the
existing treatment. The 10-year
exclusivity period referred to above may
be reduced to six years if the orphan
drug designation criteria are no longer
met, including where it is shown that
the product is sufficiently profitable not
to justify maintenance of market
exclusivity.
In the United States, under the Orphan
Drug Act of 1983, the FDA may
designate a product as an orphan drug
if it is intended to treat an orphan
disease or condition, defined as a
patient population of fewer than
200,000 in the United States, or a
patient population greater than 200,000
in the United States where there is no
reasonable expectation that the cost of
developing the drug will be recovered
from sales in the United States within
7 years following FDA approval.
In the United States, orphan drug
designation entitles a party to financial
incentives, such as opportunities for
grant funding towards clinical trial costs,
tax advantages and user fee waivers. In
addition, if a product receives the first
FDA approval for the indication for
which it has orphan drug designation,
the product is entitled to orphan drug
exclusivity, which means the FDA may
not approve any other application to
market the same drug for the same
indication for a period of seven years,
except in limited circumstances, such as
a showing of clinical superiority over the
product with orphan exclusivity or
where the manufacturer is unable to
assure sufficient product quantity.
However, whilst the Group has obtained
orphan drug designation for certain of
its product candidates (and may do so
for others in the future), there are limits
on the extent of protection provided.
For example, in the EU, a new product
cannot be designated if it is
undifferentiated from an orphan drug
which has already been approved.
Similarity in this context is defined as
having a similar active substance
(identical or having an active substance
with the same or similar principal
molecular structural features) and which
acts via the same mechanism.
Additionally, orphan drug exclusivity will
not apply if there is a second medicinal
product that is safer, more effective or
otherwise clinically superior.
Annual Report for the year ended 31 December 2018
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26
Exit of UK from the European
Union
The UK has voted in an advisory
referendum to leave the European
Union (commonly referred to as
“Brexit”). The impact of the referendum
and consequent triggering of Article 50
of the Lisbon Treaty is not yet clear, but
it may significantly affect the fiscal,
monetary and regulatory landscape in
the United Kingdom, and could have a
material impact on its economy and the
future growth of its various industries,
including the pharmaceutical and
biotechnology industries. Depending on
the exit terms negotiated between EU
Member States and the UK following
Brexit, the UK could lose access to the
single European Union market and the
global trade deals negotiated by the
European Union on behalf of its
members. Such a change in trade terms
could affect the attractiveness of the UK
as an investment centre and, as a result,
could have a detrimental effect on UK
companies. This may impact the Group’s
ability to access funding in the future,
and its prospects. Although it is not
possible at this point in time to predict
fully the effects of an exit of the UK
from the European Union, it could have
a material effect on the Group’s
business, financial condition and results
of operations.
STRATEGIC REPORT:
Risks and Uncertainties continued
Furthermore, it is important to note that
there can be multiple orphan drug
designations for each indication and
more than one entity can receive orphan
drug designation for the same product
candidate for the same use. However,
the exclusivity period is granted to the
first entity (with orphan drug
designation for the relevant product
candidate) who has obtained marketing
approval. As such, only the first product
candidate to be approved for a given
indication will enjoy the exclusivity
benefits of orphan drug approval. It is
therefore possible that the Group may
not obtain market exclusivity because
another product for the same indication
was approved earlier, even if the Group
ultimately obtains marketing approval
for its product candidates.
Moreover, orphan drug designation
rarely shortens the development time
nor the regulatory review time of a drug
nor does it give the drug any formal
advantage in the regulatory review or
approval process.
Future Funding Requirements
The Group will likely need to raise
additional funding to undertake future
development work and marketing of
any successful drug. If additional funds
are raised through the issuance of new
equity or equity linked securities of the
Group other than on a pro rata basis to
existing Shareholders, the percentage
ownership of the existing Shareholders
may be reduced. Shareholders may also
experience subsequent dilution and/or
such securities may have preferred
rights, options and pre-emption rights
senior to the Ordinary Shares.
The Company may also issue Ordinary
Shares as consideration shares on
acquisitions or investments that would
also dilute Shareholders’ respective
shareholdings.
Amryt Pharma plc
There is also no certainty that any future
fund raising will be possible at all or on
acceptable terms. If the Group is unable
to obtain additional financing as
required, it may be required to reduce
the scope of its operations or
anticipated expansion.
The Group has a €20 million debt facility
with the European Investment Bank and
may seek further debt financing in
future. Such debt financing may have
adverse consequences for the Group
including placing restrictions on the
Group’s financial and operating activities
as a consequence of the covenants to
which the Group is subject and
requiring it to dedicate a portion of its
cash flows to repay the debt and to pay
interest due, which may materially
reduce funds available for planned
development activities and will expose
the Group to interest rate fluctuations
to the extent that the borrowings are
subject to variable interest rates. Debt
financing may also require assets of the
Group to be secured in favour of the
lender, which security may be enforced
if the Group were unable to comply
with the terms of the relevant debt
facility agreement.
Inability to scale up
manufacturing capability and/or
outsourcing
The Group is investing in new
biopharmaceutical manufacturing
equipment which will require significant
investment, installation and calibration
activities to be undertaken. The
Directors may underestimate the cost or
time of installing such manufacturing
equipment. There is also a risk that the
new equipment may not function as
expected once installed. The Group may
outsource manufacturing but may be
unable to find sufficient demand for its
new manufacturing capabilities. Scaling-
up production may be negatively
impacted as a result of these factors.
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27
CORPORATE GOVERNANCE:
Board of Directors
Harry Stratford OBE – Non-Executive Chairman
Skills, Competence and Experience
Harry Stratford, has over 40 years’ experience in the pharmaceutical industry and
has built two successful publicly listed pharmaceutical companies. Harry founded
Shire Plc in 1986 and was CEO for almost a decade. Shire Plc grew from humble
beginnings to be one of the world’s largest specialty pharmaceutical companies
and was a constituent of the FTSE100 until its takeover by Takeda Pharmaceuticals
in 2018. Harry was also founder, CEO and Executive Chairman of Prostrakan Plc,
another international specialty pharmaceutical company, which was subsequently
acquired by Kyowa Hakko Kirin of Japan in 2011.
Harry holds a BSc. in Chemistry from the University of London and was awarded
an OBE in the 2007 New Year’s Honours list for his contribution to the Scottish Life
Sciences Industry.
Harry is responsible for ensuring the quality and sound approach to high standards
of corporate governance and the effectiveness of the Board as a working group.
Committee Membership
Remuneration Committee (Chair)
Appointment Date
21 December 2015
Joe Wiley – Chief Executive Officer
Skills, Competence and Experience
Joe Wiley, founded Amryt in 2016. Joe has over 20 years of experience in the
pharmaceutical, medical and venture capital industries. Joe opened and led
Sofinnova Ventures’ European office. He was previously a medical director at
Astellas Pharma. Prior to joining Astellas, he held investment roles at Spirit Capital,
Inventages Venture Capital and Aberdeen Asset Managers (UK).
Joe trained in general medicine at Trinity College Dublin, specialising in neurology.
He is also a Member of the Royal College of Physicians in Ireland and also has an
MBA from INSEAD.
Appointment Date
19 April 2016
Rory Nealon – Chief Financial Officer/ Chief Operations Officer
Skills, Competence and Experience
Rory Nealon, was previously a Board member of Trinity Biotech plc joining as Chief
Financial Officer in January 2003. He was subsequently appointed Chief
Operations Officer in November 2007. Rory left Trinity Biotech plc in 2014. Prior to
joining Trinity Biotech plc, he was Chief Financial Officer of Conduit plc, an Irish
directory services provider with operations in Ireland, the UK, Austria and
Switzerland. Prior to joining Conduit plc he was an Associate Director in AIB
Capital Markets, a subsidiary of AIB Group plc, the Irish banking group.
Rory holds a Bachelor of Commerce degree from University College Dublin, is a
Fellow of the Institute of Chartered Accountants in Ireland, a member of the
Institute of Taxation in Ireland and a member of the Institute of Corporate
Treasurers in the UK.
Annual Report for the year ended 31 December 2018
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28
CORPORATE GOVERNANCE:
Board of Directors continued
James Culverwell – Senior Independent Non-Executive Director
Skills, Competence and Experience
James Culverwell, has over 30 years’ experience in analysing and valuing
pharmaceutical companies. James joined Hoare Govett in 1982, and then moved
to Merrill Lynch in 1995, where he became global head of pharmaceutical equity
research. In 2004, James set up Sudbrook Associates, a healthcare corporate
adviser. James currently sits on the Board of two other companies in the drug
development and diagnostic fields, including HOX Therapeutics where he is
the Chairman.
James has an MSc from the University of Aberdeen.
Committee Membership
Remuneration Committee (Member)
Audit Committee (Chair)
Appointment Date
19 April 2016
Ray Stafford – Non-Executive Director
Skills, Competence and Experience
Ray Stafford, has worked in the pharmaceutical industry for thirty years. Ray was
Chairman, CEO and majority shareholder of the Tosara Group who owned,
manufactured and marketed the successful international brand Sudocrem.
Following the integration of Tosara Group into the U.S. based NYSE listed
company Forest Laboratories in 1988, Ray held numerous senior positions within
that corporation including CEO Forest UK & Ireland, CEO Forest Europe and since
1999 through his retiring from the business in 2014, Ray was Executive Vice
President Global Marketing. Separately Ray was founder of what is today one of
Ireland’s leading multi-channel sales, marketing and distribution service providers
approved by the Irish Medicines Board to service the wholesale and retail trade.
Committee Membership
Remuneration Committee (Member)
Audit Committee (Member)
Appointment Date
19 April 2016
Markus Ziener – Non-Executive Director
Skills, Competence and Experience
Markus Ziener joined Software AG Stiftung in 2013 as a Director of Asset
Management before becoming Chief Financial Officer in August 2014. Prior to
joining Software AG Stiftung, a 22.3% shareholder in Amryt at 31 December
2017, Markus worked in a number of senior roles across a broad range of
industries including as Managing Director of Handelskontor Willmann für
Naturprodukte. Markus was previously a supervisory Board member of Birken AG
before it was acquired by Amryt and is also a supervisory Board member of
Software AG Stiftung.
Appointment Date
27 June 2016
Amryt Pharma plc
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29
CORPORATE GOVERNANCE:
Chairman’s Introduction to Governance
I am delighted to present this Corporate Governance Report which reinforces the Board’s continued commitment to strong
corporate governance and the highest ethical standards.
The Board of Amryt Pharma remains committed to high standards of governance across the Group, in line with our core values
of excellence and integrity. As of 28 September 2018, companies quoted on AIM are required to formally adopt a corporate
governance code as well as disclose details of their compliance with that code and, where they depart from the code, provide an
explanation of the reasons for doing so. The Board adopted the Quoted Companies Alliance Code (“the QCA Code”) on
25 September 2018. The Board of Directors, including myself as Non-Executive Chairman, acknowledges the importance of the
ten principles set out in the QCA Code and details of our compliance with the code can be found in the Corporate Governance
section of this Annual Report as well as on our website www.amrytpharma.com.
QCA Code
I am pleased to report that the process of implementing the QCA Code has not proven to be a radical change to our existing
practices. Rather, it has proven to be more a case of organising and further articulating our existing practices. We are in total
agreement with the underlying philosophy and objectives of the QCA Code as we believe that we are developing a collaborative
culture amongst the personnel within Amryt and with our critical stakeholders (i.e. shareholders, physicians, patients, service
providers, employees, regulatory authorities and payors) which makes very much aligned to this central core principle of the
QCA Code.
The QCA Code charges me, as Non-Executive Chairman, with the responsibilities of:
• articulating my role and demonstrating my responsibility for corporate governance;
• explaining how the QCA Code is applied to Amryt and how that application supports the medium to long term success of our
Group;
• explaining any areas in which Amryt departs from the expectations of the QCA Code; and
• identifying any key governance related matters that have occurred during the period under review.
I accept these responsibilities and aim to discharge them in this first full report on Corporate Governance under the QCA Code
and on a continuous basis going forward.
Strategy
I am committed to fostering a well governed and effective Board to support the delivery of the Group’s strategic priorities. The
Board is very clear on our responsibility to ensure the Group is capable of delivering on its strategic objectives. We operate with
due regard to the interests of all our stakeholders and are aware of the potential impact of our decisions upon them. Having a
clearly defined strategy, a robust governance structure and a culture to guide our values and behaviours remains a priority for the
Board and in the following pages we explain our approach to governance and how we fulfil our responsibility to ensure that
robust governance practices are embedded across the Group.
Shareholder Engagement
The Board welcomes continuous, open and meaningful discussion with all of our shareholder’s and I look forward to meeting
shareholders at our 2019 Annual General Meeting (“AGM”), which will be held on 10 June 2019 at 11.00 am in the Holiday Inn,
Mayfair, London UK. I also welcome direct contact and questions from shareholders via our website.
Finally, I would like to thank my colleagues on the Board and all the Amryt team for their continued support, commitment,
challenge and passion for our business.
Harry Stratford
Non-Executive Chairman
10 June 2019
Annual Report for the year ended 31 December 2018
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CORPORATE GOVERNANCE:
Chairman’s Governance Overview
The Board
The Board is responsible for the overall governance of the Group. The Board comprises of two executive directors and four
non-executive directors, including the Non-Executive Chairman, as detailed on pages 27 - 28. The Board believe the current split
of Non-Executive and Executive Directors is appropriate for the requirements of the Group. The Board considers that Harry
Stratford, James Culverwell and Ray Stafford are independent in character and judgement. James Culverwell was appointed as
the Senior Non-Executive director on 29 March 2017.
As the business develops, the composition of the Board will remain under review to ensure that it remains appropriate to the
managerial requirements of the Group. All new Directors appointed since the previous AGM are required to seek election at the
next AGM and one third of the other Directors retire annually in rotation in accordance with the Amryt’s articles of association.
This enables the shareholders to decide on the election of the Group’s Board. The Directors required to seek re-election at the
next AGM are Harry Stratford and Ray Stafford by rotation.
The Board has a formal schedule of matters reserved for its consideration. It is responsible for:
• setting the overall Group strategy and providing leadership to implement the strategy and supervising the management of the
business;
• the acquisition or disposal of material corporate entities or assets;
• public announcements (including statutory financial statements); approving or making significant changes in accounting
policy, the capital structure and dividend policy of the Group; Group remuneration policy; and
• Board structure, composition and succession.
The Board delegates to management, through the executive directors, the overall performance of the Group, which is conducted
principally through the setting of clear objectives and monitoring of performance against those objectives. The Board is
structured so that no one individual or group dominates the decision-making process.
Board Responsibilities
To ensure that the Board operates efficiently and effectively, the Directors and Group Secretary have certain responsibilities in line
with their roles which are set out in more detail in the table below:
Harry Stratford, Non-Executive Chairman
• Leads the Board and promotes a culture of open discussion between Executive and Non-Executive Directors
• Sets the highest standards of corporate governance
• Ensures effective communications with all our stakeholders
James Culverwell, Senior Independent Director
• Provides a sounding board to the Non-Executive Chairman
• Internal performance appraisal of the Non-Executive Chairman
• Acts as an intermediary for other Directors, if needed
Executive Directors
• Develop and execute the Group’s strategy in line with the policies and objectives agreed by the Board
• Manage operational effectiveness and profitability of the Group
• Promotes the purpose, vision and values of the organisation, both internally and externally
• Monitor compliance with the Group’s legal, regulatory, corporate governance, social and ethical responsibilities
Amryt Pharma plc
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31
Non-Executive Directors
• Provide independent insight based on relevant experience
• Contribute to the overall development of the Group’s strategy
• Monitor and challenge the business performance and the execution of strategy
Rory Nealon, Company Secretary
• Ensures that the correct Board procedures are followed
• Ensures that Directors receive timely and clear information so that Directors are equipped for informed decision making and
open debates
• Advises the Board on policy, procedure, governance and ethics
• If necessary, coordinates access to independent professional advice for Directors
Meetings and Attendance
Board meetings are scheduled and held at least four times a year and at other times as required to address requirements arising
between these scheduled meetings. During the year, eight Board meetings were held. The directors attended as follows:
Meetings held during the year
Directors’ Attendance:
Harry Stratford
Joe Wiley
Rory Nealon
James Culverwell
Ray Stafford
Markus Ziener
Board Committees
Full Board
Audit
Committee
Remuneration
Committee
8
8/8
8/8
8/8
8/8
7/8
7/8
2
–
–
–
2/2
2/2
–
2
2/2
–
–
2/2
2/2
–
The Company has an Audit Committee and a Remuneration Committee with formally delegated duties and responsibilities. The
composition of these committees may change over time as the composition of the Board changes.
• Remuneration Committee – Chairman, Harry Stratford
• Audit Committee – Chairman, James Culverwell
The Board has not established a Nominations Committee, instead the whole Board considers matters of nomination and
succession. The Board follows a robust process for the appointment of new Board members to identify the skills, experience,
personal qualities and capabilities required for the next stage of the Company’s development. The Board also monitors succession
plans and possible internal candidates for future Board roles.
Remuneration Committee
The Remuneration Committee has responsibility for the determination of specific remuneration packages for each of the
executive directors, including pension rights and any compensation payments, and recommending and monitoring the level and
structure of remuneration for senior management, the implementation of the employee share option plan and other
performance related schemes. It meets at least twice a year.
Annual Report for the year ended 31 December 2018
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CORPORATE GOVERNANCE:
Chairman’s Governance Overview continued
The Remuneration Committee comprises three members, who are all Non-Executive directors: Harry Stratford, Ray Stafford and
James Culverwell. The Remuneration Committee is chaired by Harry Stratford.
Policy on Executive Directors and Senior Management Remuneration
When determining the Board policy for remuneration, the Committee considers all factors which it deems necessary including
relevant legal and regulatory requirements and the provisions and recommendations of relevant guidance. The objective of this
policy is to help attract, retain and motivate the Executive and Senior Management of the Group without paying more than
necessary. The remuneration policy bears in mind the Group’s appetite for risk and is aligned to the Group’s long-term strategic
goals. A significant proportion of remuneration is structured to link rewards to corporate and individual performance and is
designed to promote the long-term success of the Group.
Audit Committee
The Audit Committee has responsibility for, among other things, the monitoring of the financial integrity of the Financial
Statements of the Group and the involvement of the Group’s auditors in that process. It focuses, in particular, on compliance
with accounting policies and ensuring that an effective system of internal and external audit and financial control is maintained,
including considering the scope of the annual audit and the extent of the non-audit work undertaken by external auditors and
advising on the appointment of external auditors.
The Audit Committee meets at least twice a year at the appropriate times in the financial reporting and audit cycle. The Audit
Committee comprises of two members, who are both non-executive Directors: James Culverwell and Ray Stafford. On 28 March
2017, Cathal Friel resigned as a member of the Board and was replaced as a member of the Audit Committee by Ray Stafford on
29 March 2017. The Audit Committee is chaired by James Culverwell.
Internal Controls and Financial Risk Management
The Directors are responsible for the Group’s system of internal controls, the setting of appropriate policies on these controls, and
regular assurance that the system is functioning effectively and that it is effective in managing business risk. Principal risk and
uncertainties are discussed in the Strategic Report and financial risk management objectives and policies are detailed in note 22
of the Notes to the Financial Statements.
The Audit Committee monitors the Group’s internal control procedures, reviews the internal control process and risk
management procedures and reports its conclusions and recommendations to the Board.
Risk Management and Treasury policy
The Board considers risk assessment to be important in achieving its strategic objectives, with the Board regularly reviewing its
projects and activities in this regard. The Group finances its operations through equity, EIB funding and holds its cash as a liquid
resource to fund the obligations of the Group. Decisions regarding the management of these assets are approved by the Board.
Securities Trading
The Board has adopted a Share Dealing Code that applies to Directors, Senior Management and any Employee who is in
possession of “inside information”. All such persons are prohibited from trading in the Group’s securities if they are in possession
of “inside information”. Subject to this condition and trading prohibitions applying to certain periods, trading can occur provided
the relevant individual has received the appropriate prescribed clearance.
The QCA Corporate Governance Code 2018 - Principles
The QCA Code sets out 10 broad principles and requires the Company to consider how each should be applied. This Report is a
summary of the position with the Company’s Corporate Governance processes and practices or otherwise “signposts” where
other disclosures are made in this document or on the Company’s website www.amrytpharma.com, particularly the Company’s
Corporate Governance Statement: www.amrytpharma.com.com/corporate-governance.
Amryt Pharma plc
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33
The Board address the ten principles underpinning the QCA case as follows:
Deliver Growth
1. Establish a strategy and business model which promote long-term value for shareholder
Our business model and strategy are explained in the Overview section of the Strategic Report on page 16 of this Annual
Report.
2. Seek to understand and meet shareholder needs and expectations
See Corporate Governance Section of our website, www.amrytpharma.com
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
See Corporate Governance Section of our website, www.amrytpharma.com
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
See “Principal Risks and uncertainties” on page 22
Maintain a dynamic management framework
5. Maintain the board as a well-functioning, balanced team led by the chair
See this section
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
See this section and “Board of Directors” on page 27
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
See this section
8. Promote a corporate culture that is based on ethical values and behaviours
See this section and “Corporate Governance” section on our website, amarytpharma.com
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the
board
See “Corporate Governance” section on our website, amarytpharma.com
Build Trust
10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders
and other relevant stakeholders
See this section and “Corporate Governance” section on our website, amarytpharma.com
Annual Report for the year ended 31 December 2018
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CORPORATE GOVERNANCE:
Director’s Report For the year ended 31 December 2018
The Directors of Amryt Pharma plc (the “Company”) present their report and the Financial Statements of the Company and its
subsidiary undertakings (together the “Group” or “Amryt”) for the year to 31 December 2018.
Directors
The Directors who served on the Board during the year and to the date of this report are as follows:
Harry Stratford (Non-Executive Chairman)
Joe Wiley (Chief Operating Officer)
James Culverwell (Senior Independent Non-Executive Director)
Rory Nealon (Chief Financial Officer & Company Secretary)
Ray Stafford (Non-Executive Director)
Markus Ziener (Non-Executive Director)
Base Salaries Review
In 2018 and 2017, the Remuneration Committee appointed Radford, part of the AON Group, to perform a review of executive
and non-executive remuneration. Radford have no connection with the Group.
The Remuneration Committee developed its 2017 and 2018 remuneration proposals based on the recommendations of this
report and what the Remuneration Committee believe to be appropriate remuneration levels for the Group at its current stage of
development. The Group has set target remuneration for both executive management and non-executive directors at the 50th
percentile for European companies as outlined in the report.
Bonus Payments
All executive directors and senior management are eligible for a discretionary annual bonus. Annual cash bonuses are paid on
the achievement of pre-set strategic objectives. The Committee in conjunction with the Board reviews and sets these objectives
at the start of each calendar year.
Long-Term Incentives
The Company has adopted an Employee Share Option Plan (the “Plan”) with all Directors, Senior Management and Consultants
to the Group eligible to receive awards. Details of share options issued under the plan in 2017 are included in note 4. No new
share options were granted to Directors in 2018. A total of 2,885,582 share options were issued to executive directors in 2017.
2,061,130 share options were granted to Joe Wiley on 29th November 2017 at a strike price of 20.12 pence. 824,452 share
options were granted to Rory Nealon on 29th November 2017 at a strike price of 20.12 pence. All share options granted to
executive directors in 2017 contain a 3-year vesting period. In accordance with UK best practice on corporate governance, it is
the Company’s current policy not to award share options to non-executive directors.
Directors’ Remuneration – Current Year
The remuneration of Directors for the year ended 31 December 2018 was as follows:
Pension Share Based
Base Salary Contri- Payment Other 2018
and Fees Bonuses butions Expense Benefits Total
€’000 €’000 €’000 €’000 €’000 €’000
Harry Stratford 80 – – – – 80
Joe Wiley 355 213 36 106 25 735
Rory Nealon 283 142 28 42 16 511
James Culverwell 57 – – – – 57
Ray Stafford 44 – – – – 44
Markus Ziener 44 – – – – 44
Cathal Friel – – – – – –
2017
Total
€’000
80
567
459
57
44
44
11
TOTAL 863 355 64 148 41 1,471
1,262
Amryt Pharma plc
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STRATEGIC REPORT
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35
Directors and their Interests
Interest in ordinary shares of 1p
The Directors of the Company held the following interest in the ordinary shares of Amryt Pharma plc:
31 December
2018
Director Number
31 December
2018
%
31 December
2017
Number
31 December
2017
%
Joe Wiley 20,994,487
Rory Nealon 9,664,623
Ray Stafford 2,296,369
Markus Ziener 232,955
James Culverwell 221,592
Harry Stafford 150,000
a Markus Ziener represents Software AG-Stiftung’s 22.3% shareholding in the Company.
Share Options and Warrants
7.64
3.52
0.84
0.08
0.08
0.05
20,994,487
9,664,623
2,296,369
232,955
221,592
150,000
7.64
3.52
0.84
0.08
0.08
0.05
The Directors of the Company held the following warrants of Amryt Pharma plc which were issued to them along with other
investors in the reverse takeover (“RTO”) on 18 April 2016:
31 December
2018 Exercise Expiry
Director Number price Date
31 December
2017
Number
Joe Wiley 165,208 24p 31/12/18
Rory Nealon 656,250 24p 31/12/18
Ray Stafford 826,041 24p 31/12/18
165,208
656,250
826,041
Exercise
price
24p
24p
24p
Expiry
Date
31/12/18
31/12/18
31/12/18
The Directors did not exercise their right to converts these warrants to Ordinary shares in the Company prior to the expiry date.
These warrants expired on 10 January 2019.
The Directors of the Company held the following share options of Amryt Pharma plc which were issued to them in November
2017:
31 December
2018 Exercise Expiry
Director Number price Date
31 December
2017
Number
Joe Wiley 2,061,130 20.12p 28/11/24
Rory Nealon 824,452 20.12p 28/11/24
2,061,130
824,452
Exercise
price
20.12p
20.12p
Expiry
Date
28/11/24
28/11/24
Dividends
The Directors do not recommend payment of a dividend (2017: nil).
Share Capital Structure
The Company’s ordinary shares of 1p are listed on the AIM Market of the London Stock Exchange (ticker: AMYT.L) and the
Euronext Market of the Irish Stock Exchange (ticker: AYP). At the date of this report, 274,817,283 ordinary shares of 1p each
were in issue. Details of share issues and changes to the capital structure during the year are set out in note 17.
Annual Report for the year ended 31 December 2018
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CORPORATE GOVERNANCE:
Director’s Report For the year ended 31 December 2018
Substantial Shareholdings
The Company is aware that the following had an interest of 3% or more in the issued ordinary share capital of the Company:
31 December
2018
Rank Investor Number
31 December
2018
%
31 December
2017
Number
31 December
2017
%
1 Software AG-Stiftung A 61,272,920
2 Axa SA 26,940,370
3 Raglan Road Capital B 24,697,347
4 Joe Wiley 20,994,487
5 Legal & General 14,250,000
6 Amati Global Partners 13,205,882
7 Rory Nealon 9,664,623
8 Hargreaves Lansdown plc 9,260,296
9 Alan Harris 8,869,090
22.30
9.80
8.99
7.64
5.19
4.81
3.52
3.37
3.23
61,272,920
20,940,370
33,077,347
20,994,487
14,250,000
8,500,000
9,664,623
8,813,564
8,869,090
22.30
9.80
12.04
7.64
5.19
3.09
3.52
2.48
3.23
A Markus Ziener represents Software AG-Stiftung’s 22.3% shareholding in the Company.
B Raglan Road Capital Limited is a company owned by Cathal Friel and his wife, Pamela Tyer. Cathal Friel resigned as a Non-Executive Director of Amryt Pharma in
March 2017.
There were no notified changes in these holdings in the period after year end to the date of signing the Financial Statements.
Qualifying Indemnity Provision
The Group has in place insurance protection, including a Directors and Officers liability policy, to cover the risk of loss when
management deems it appropriate and cost effective; however in some cases risks cannot be effectively covered by insurance
and the cover in place may not be sufficient to cover the extent of potential liabilities.
Going Concern
The business activities of the Group are outlined on pages 2 - 10 and the factors which may affect the Group future
development and performance are outlined on pages 22 - 26. The financial review on page 17 discusses the Group’s financial
and liquidity position and borrowing facilities. In addition, notes 22 to the Consolidated Financial Statements include the Group’s
objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial
instruments and its exposure to credit, currency and liquidity risks.
After making appropriate enquires, the Directors consider that the Company and the Group has adequate resources to continue
in business for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Financial
Statements. As part of their enquiries the Directors reviewed budgets, projected cash flows, and other relevant information for
12 months from the date of approval of the Consolidated Financial Statements for the year ended 31 December 2018.
A key consideration for the Directors is the impact on going concern of the recently announced acquisition with Aegerion. This
acquisition represents a significant step forward for Amryt and is expected to create value for Amryt with immediate effect post-
deal close through enhanced scale of the combined group which will drive revenues and deliver operational synergies through a
combination of medical, commercial, clinical, development and regulatory infrastructure. A planned $60 million fundraising as
part of the acquisition of Aegerion which has been backstopped by the current Aegerion bondholders together with a planned
listing on NASDAQ will drive liquidity and investor reach.
The Directors reviewed budgets and projected cashflows of the new combined entities of Amryt and Aegerion and they have
concluded that the Company and the Group has adequate resources to continue in business for the foreseeable future.
Amryt Pharma plc
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37
Events after the Reporting Period
Events after the reporting period are set out in note 26 to the consolidated financial statements. Likely future developments in
the business are discussed in the Strategic section.
Auditors
In 2018, Amryt changed its auditors, BDO LLP, and replaced them with Grant Thornton. The Board are recommending Grant
Thornton for re-appointment as auditor of the Group. Grant Thornton have expressed their willingness to accept this
appointment and a resolution re-appointing them will be submitted to the forthcoming AGM.
Disclosure of Information to the Auditors
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information
needed by the Group’s auditors for the purposes of their audit and to establish that the auditors are aware of that information.
The Directors are not aware of any relevant audit information of which the auditors are unaware.
Directors’ Responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the Financial Statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have
elected to prepare the Group and Company Financial Statements in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. Under company law the Directors must not approve the Financial Statements unless
they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of
the Group for that period. The Directors are also required to prepare Financial Statements in accordance with the Rules of the
London Stock Exchange for companies trading securities on the Alternative Investment Market and the Euronext exchange of the
Irish Stock Exchange.
In preparing these Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material
departures disclosed and explained in the Financial Statements;
• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that
the Financial Statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the
assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website Publication
The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website.
Financial Statements are published on Amryt’s website in accordance with legislation in the United Kingdom governing the
preparation and dissemination of Financial Statements, which may vary from legislation in other jurisdictions. The maintenance
and integrity of Amryt’s website is the responsibility of the Directors.
This report was approved by the Board on 10 June 2019 and signed on its behalf by:
Rory Nealon
Chief Financial Officer & Company Secretary
Annual Report for the year ended 31 December 2018
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38
Independent auditor’s report to the members of
Amryt Pharma plc
For the year ended 31 December 2018
Opinion
We have audited the financial statements of Amryt Pharma plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the
year ended 31 December 2018, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity,
the Company Statement of Financial Position, the Company Statement of Cash Flows, the Company Statement of Changes in
Equity, and the related notes to the financial statements, including the summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group and company financial statements is
International Financial Reporting Standards (IFRS) as adopted by the European Union.
In our opinion:
• the group financial statements give a true and fair view in accordance with IFRS as adopted by the European Union of the
financial position of the group as at 31 December 2018 and of the group’s financial performance and cash flows for the year
then ended;
• the parent company financial statements give a true and fair view in accordance with IFRS as adopted by the European Union
of the financial position of the company as at 31 December 2018 and of its cash flows for the year then ended; and
• the financial statements have been properly prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs UK’) and applicable law. Our
responsibilities under those standards are further described in the ‘responsibilities of the auditor for the audit of the financial
statements’ section of our report. We are independent of the group and company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, namely FRC’s Ethical Standard concerning the integrity,
objectivity and independence of the auditor. We have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs UK require us to report to you where:
• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the group or the parent company’s ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the financial statements are authorised for issue.
Other matter
The consolidated and parent company financial statements for the year ended 31 December 2017 were audited by a predecessor
auditor who expressed an unmodified opinion on those financial statements on 16 April 2018.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in
the audit, and the directing of efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and therefore we do not provide a separate opinion on
these matters.
Amryt Pharma plc
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Overall audit strategy
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In
particular, we looked at where the directors made subjective judgements. We also addressed the risk of management override of
internal controls, including evaluating whether there was any evidence of potential bias that could result in a risk of material
misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit taking into account the areas where the risk of misstatement was considered material to the
group, taking into account the nature of the group’s business and the industry in which it operates.
In establishing the overall approach to our audit, we assessed the risk of material misstatement at a group level, taking into
account the nature, likelihood and potential magnitude of any misstatement. As part of our risk assessment, we considered the
control environment in place at Amryt Pharma plc.
Materiality and audit approach
The scope of our audit is influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the group as follows: 5% of loss before taxes for the
financial year ended 31 December 2018. We have applied this benchmark because the main objective of the company is to
continue investing in R&D expenditure in order to commercialise its development assets and thus create shareholder value. To
date none of this R&D expenditure has been capitalised and net losses correlate to R&D expenses incurred.
We agreed with the board of directors that we would report to them misstatements identified during our audit above 5% of
materiality as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Significant risks identified
The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort,
are set out below as significant risks together with an explanation of how we tailored our audit to address these specific areas in
order to provide an opinion on the financial statements as a whole. This is not a complete list of all risks identified by our audit.
Valuation of intangible assets
As a result of the acquisition of Amryt AG and Som Therapeutics Corp. in 2016, the group recognised in-process research and
development (IPR&D) costs of €53 million as an intangible asset. The products that the IPR&D relate to are the AP101 and AP102
development assets, which are not yet ready for use. International Accounting Standard (IAS) 36, Impairment of Assets, requires
that irrespective of whether there is an indication of impairment, an entity shall test an intangible asset, not yet available for use,
for impairment annually by comparing its carrying value with its recoverable amount.
We considered this as a key audit matter because of the significant judgement required by management in assessing the
recoverable amount of the asset, which is based on forecasting and discounting future cash flows, which are complex and are
heavily reliant on assumptions which could be affected by future market or economic developments.
Refer to note 11 of the Consolidated Financial Statements for further details.
Annual Report for the year ended 31 December 2018
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Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2018
Our response
To address this risk, our audit procedures included the following:
• We reviewed the group’s assessment of whether there were any indicators of impairment and ensured this was consistent
with our understanding of the business and its activities;
• We evaluated and challenged management’s assumptions and judgements used in the calculation of the future cash flows,
which include but are not limited to revenue projections, discount rates and probability of clinical development success;
• We performed integrity checks on the forecasting model used to estimate recoverable amount;
• We interviewed research and development personnel employed by management in order to obtain a more detailed
understanding of stage of development of the associated IPR&D and its future opportunities;
• We performed sensitivity analysis to determine reasonableness of the input and output variables used in the model; and
• We corroborated results with our understanding of the group’s operations to date.
Valuation of contingent consideration
Part of the consideration in relation to the acquisition of Amryt AG and Som Therapeuticas Corp. in 2016 comprised of milestone
payments and royalties on future Episalvan sales. This contingent consideration is recognised at fair value and is based on the
same forecasting model used to assess the recoverable amount of the intangible asset noted above thus requires the same
significant judgements from management.
At 31 December 2018, the group recorded a contingent consideration liability of €41.3 million (2017: €32.4 million) with the
change in fair value of €8.9 million recorded in the Statement of Comprehensive Income. We consider there to be a significant
risk around the completeness, accuracy and valuation of the contingent consideration liability at the balance sheet date.
Refer to note 5 to the Consolidated Financial Statements for further details.
Our response
To address this risk, our audit procedures included the following:
• We reviewed the underlying purchase agreements of Amryt AG and Som Therapeutics Corp.;
• We evaluated and challenged management’s assumptions and judgements used in the calculation of the future cash flows,
which include but are not limited to revenue projections, discount rates and probability of clinical development success;
• We performed sensitivity analysis to determine reasonableness of the input variables used in the model;
• We performed integrity checks on the model used to ensure accuracy of the contingent consideration liability recorded at year
end; and
• We corroborated results with our understanding of the group’s operations to date.
Other information
Other information comprises information included in the annual report, other than the financial statements and our auditor’s
report thereon, including the Directors’ Report and the Strategic Report. The directors are responsible for the other information.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
Amryt Pharma plc
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In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies in the financial statements, we
are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept for our audit; or returns adequate for our audit have not been received from
branches not visited by us; or
• the financial statements are not in agreement with the accounting records; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of the management and those charged with governance for the financial statements
Management is responsible for the preparation of the financial statements which give a true and fair view in accordance with
IFRS as adopted by the European Union, and for such internal control as directors determine necessary to enable the preparation
of financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the group and company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the group and company or to cease operations, or has no realistic alternative but
to do so.
Those charged with governance are responsible for overseeing the group and company’s financial reporting process.
Responsibilities of the auditor for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Annual Report for the year ended 31 December 2018
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42
Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2018
As part of an audit in accordance with ISAs (UK), the auditor will exercise professional judgment and maintain professional
scepticism throughout the audit. They will also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for their opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group and company’s internal
control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
group and company’s ability to continue as a going concern. If they conclude that a material uncertainty exists, they are
required to draw attention in the auditor’s report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify their opinion. Their conclusions are based on the audit evidence obtained up to the date of the
auditor’s report. However, future events or conditions may cause the group or company to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a matter that achieves a true and fair view.
The auditor shall communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that may be identified
during the audit.
Where the auditor is reporting on the audit of a group, the auditor’s responsibilities are to obtain sufficient appropriate audit
evidence regarding the financial information of the entities or business activities within the group to express an opinion on the
group financial statements. The auditor is responsible for the direction, supervision and performance of the audit, and the
auditor remains solely responsible for the auditor’s opinion.
The auditor also provides those charged with governance with a statement that they have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on their independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, the auditor determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. These matters
are described in the auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, the auditor determines that a matter should not be communicated in the report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Corporate governance statement
In our opinion, based on the work undertaken in the course of our audit of the financial statements, the description of the main
features of the internal control and risk management systems in relation to the financial reporting process included in the
Corporate Governance Statement, is consistent with the financial statements and has been prepared in accordance with
applicable law.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
43
Based on our knowledge and understanding of the company and its environment obtained in the course of our audit of the
financial statements, we have not identified material misstatements in the description of the main features of the internal control
and risk management systems in relation to the financial reporting process included in the Corporate Governance Statement.
In our opinion, based on the work undertaken during the course of our audit of the financial statements, the information
prepared in accordance with applicable legal requirements and rules 7.2.2, 7.2.3 and 7.2.7 in the Disclosure Rules and
Transparency Rules sourcebook made by the Financial Conduct Authority is contained in the Corporate Governance Statement.
We have nothing to report having performed our review.
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the company’s members, as a body, in accordance with chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Stephen Murray
(Senior Statutory Auditor)
For and on behalf of
Grant Thornton
Chartered Accountants & Statutory Auditor
Dublin 2
10 June 2019
Annual Report for the year ended 31 December 2018
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44
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2018
Revenue
Cost of sales
Gross profit
Administrative, selling and marketing expenses
Share based payment expenses
Total administrative, selling and marketing expenses
Research and development expenses
Operating loss before finance expense
Non-cash change in fair value of contingent consideration
Finance expense
Loss on ordinary activities before taxation
Tax on loss on ordinary activities
Loss for the year attributable to the equity holders of the Company
Exchange translation differences which may be reclassified through the profit or loss
Total other comprehensive (loss)/ profit
Total comprehensive loss for the year attributable to the equity holders
of the Company
Note
3
4
6
5
8
9
31 December
2018
31 December
2017
€’000
14,454
(5,298)
9,156
(14,663)
(694)
(15,357)
(9,049)
(15,250)
(8,934)
(1,557)
(25,741)
(36)
(25,777)
(34)
(34)
€’000
12,778
(5,373)
7,405
(10,483)
(565)
(11,048)
(10,564)
(14,207)
(11,104)
(825)
(26,136)
–
(26,136)
27
27
(25,811)
(26,109)
Loss per share:
Loss per share – basic and diluted, attributable to ordinary equity holders
of the parent (cent)
10
(9.38)
(11.72)
Amryt Pharma plc
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STRATEGIC REPORT
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FINANCIAL STATEMENTS
45
Consolidated Statement of Financial Position
As at 31 December 2018
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Other non-current assets
Total non-current assets
Current assets
Trade and other receivables
Inventories
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity attributable to owners of the parent
Share capital
Share premium
Other reserves
Accumulated deficit
Total equity
Non-current liabilities
Contingent consideration
Deferred tax liability
Long term loan
Total non-current liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
31 December
2018
31 December
2017
Note
€’000
€’000
11
12
14
15
16
17
17
5
18
19
20
52,695
960
130
53,785
5,179
1,868
9,811
16,858
52,606
1,160
–
53,766
4,729
1,083
20,512
26,324
70,643
80,090
21,173
57,334
(20,858)
(60,880)
(3,231)
41,351
5,384
16,614
63,349
10,525
10,525
73,874
21,173
57,334
(21,512)
(35,109)
21,886
32,418
5,384
10,603
48,405
9,799
9,799
58,204
70,643
80,090
The Financial Statements set out on pages 44 to 84 were approved and authorised for issue by the Directors on 10 June 2019.
They are signed on the Board’s behalf by:
Rory Nealon Company Number
Director 05316808
Annual Report for the year ended 31 December 2018
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46
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
31 December
2018
€’000
31 December
2017
€’000
(25,777)
1,557
310
694
8,934
(450)
2,580
–
(785)
(130)
(26,136)
825
259
565
11,104
(2,189)
6,022
(2,000)
(313)
–
(13,067)
(11,863)
(68)
(131)
–
(18)
5
(212)
–
5,000
(221)
(2,000)
–
2,779
(243)
(87)
9
–
5
(316)
14,393
10,000
–
–
(47)
24,346
(201)
74
(10,701)
20,512
1,191
8,620
9,811
12,241
8,271
537
19,975
20,512
Note
8
11, 12
4
5
14
5
15
12
11
12
17
19
16
16
16
Cash flows from operating activities
Loss on ordinary activities after taxation
Finance expense
Depreciation and amortisation
Share based payment expenses
Non-cash change in fair value of contingent consideration
Movements in working capital and other adjustments:
Change in trade and other receivables
Change in trade and other payables
Change in contingent consideration
Change in inventories
Change in non-current assets
Net cash flow used in operating activities
Cash flow from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Cash inflow on sale of property, plant and equipment
Bank interest and fees paid
Deposit interest received
Net cash flow used in investing activities
Cash flow from financing activities
Proceeds from issue of equity instruments - net of expenses
Increase in long term debt
Interest paid on long term debt
Payment of deferred consideration
Repayment of short-term loans
Net cash flow from financing activities
Exchange and other movements
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Restricted cash at end of year
Cash at bank available on demand at end of year
Total cash and cash equivalents at end of year
Amryt Pharma plc
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FINANCIAL STATEMENTS
47
Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
Share based Reverse Exchange
Share Share payment Merger acquisition translation Accumulated
capital premium reserve reserve reserve reserve deficit Total
Note €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000
Balance at
1 January 2017 20,419 43,695 4,215 35,818 (62,107) (5) (8,998) 33,037
Loss for the year – – – – – – (26,136) (26,136)
Foreign exchange
translation reserve – – – – – 27 – 27
Total comprehensive loss – – – – – 27 (26,136) (26,109)
Transactions
with owners
Issue of placing shares –
Gross 17 754 14,329 – – – – – 15,083
Issue of placing shares –
Expenses 17 – (690) – – – – – (690)
Share based payment expense 4 – – 565 – – – – 565
Share based payment expense –
Lapsed – – (25) – – – 25 –
Total transactions
with owners 754 13,639 540 – – – 25 14,958
Balance at
31 December 2017 21,173 57,334 4,755 35,818 (62,107) 22 (35,109) 21,886
Balance at 1 January 2018 21,173 57,334 4,755 35,818 (62,107) 22 (35,109) 21,886
Loss for the year – – – – – – (25,777) (25,777)
Foreign exchange
translation reserve – – – – – (34) – (34)
Total comprehensive loss – – – – – (34) (25,777) (25,811)
Transaction
with owners
Share based payments 4 – – 694 – – – – 694
Share based payments -
lapsed – – (6) – – – 6 –
Total transaction
with owners – – 688 – – – 6 694
Balance at
31 December 2018 21,173 57,334 5,443 35,818 (62,107) (12) (60,880) (3,231)
Share capital represents the cumulative par value arising upon issue of ordinary shares of 1p each and deferred shares of 29.4p each.
Share premium represents the consideration that has been received in excess of the nominal value on issue of share capital.
Share based payment reserve relates to the charge for share based payments in accordance with International Financial Reporting Standard 2.
The merger reserve was created on the acquisition of Amryt DAC. Consideration on the acquisition included the issuance of shares. Under
section 612 of the Companies Act 2006, the premium on these shares has been included in a merger reserve.
The reverse acquisition reserve arose during the period ended 31 December 2016 in respect of the reverse acquisition of Amryt Pharma plc by
Amryt Pharmaceuticals DAC (“Amryt DAC”). Since the shareholders of Amryt DAC became the majority shareholders of the enlarged group the
acquisition is accounted for as though there is a continuation of Amryt DAC’s Financial Statements. The reverse acquisition reserve is created to
maintain the equity structure of Amryt Pharma plc in compliance with UK company law.
The exchange translation reserve was created on the retranslation of non-Euro denominated foreign subsidiaries.
Accumulated deficit represents losses accumulated in previous periods and the current year.
Annual Report for the year ended 31 December 2018
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48
Company Statement of Financial Position
As at 31 December 2018
Assets
Non-current assets
Intangible assets
Investment in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity attributable to owners of the company
Share capital
Share premium
Other reserves
Accumulated deficit
Total equity
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
31 December
2018
31 December
2017
Note
€’000
€’000
13
14
16
17
17
20
58
73,304
73,362
40
79
119
87
58,832
58,919
90
14,441
14,531
73,481
73,450
21,173
57,334
41,261
(46,646)
73,122
359
359
359
21,173
57,334
40,573
(46,070)
73,010
440
440
440
73,481
73,450
The Financial Statements set out on pages 44 to 84 were approved and authorised for issue by the Directors on 10 June 2019.
They are signed on the Board’s behalf by:
Rory Nealon Company Number
Director 05316808
Amryt Pharma plc
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FINANCIAL STATEMENTS
49
Company Statement of Cash Flows
For the year ended 31 December 2018
Cash flows from operating activities
Loss for the year
Finance Expense
Depreciation and amortisation
Share based payment expense
Movements in working capital and other adjustments:
Change in trade and other receivables
Change in trade and other payables
Net cash flow used in operating activities
Cash flow from investing activities
Bank interest received
Expenditure on development of website
Funds received from/ (advanced to) subsidiary companies
Net cash flow (used in)/ from investing activities
Cash flow from financing activities
Proceeds from issue of equity instruments net of expenses
Net cash flow from financing activities
Exchange and other movements
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
31 December
2018
€’000
31 December
2017
€’000
Note
24
4
14
20
11
13
17
16
(582)
(100)
29
694
50
(81)
10
5
–
(14,472)
(14,467)
–
–
95
(14,362)
14,441
79
(1,361)
(2)
–
565
5
253
(540)
1
(87)
622
536
14,393
14,393
1
14,390
51
14,441
Annual Report for the year ended 31 December 2018
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50
Company Statement of Changes in Equity
For the year ended 31 December 2018
Share
based
Share Share payment Merger Accumulated
capital premium reserve reserve deficit Total
Note €’000 €’000 €’000 €’000 €’000 €’000
Balance at 1 January 2017 20,419 43,695 4,215 35,818 (44,734) 59,413
Total comprehensive loss for the year 24 – – – – (1,361) (1,361)
Total comprehensive loss for the year – – – – (1,361) (1,361)
Transactions with owners
Issue of placing shares – Gross 17 754 14,329 – – – 15,083
Issue of placing shares – Expenses 17 – (690) – – – (690)
Share based payment expenses 4 – – 565 – – 565
Share based payment expenses – Lapsed – – (25) – 25 –
Total transactions with owners 754 13,639 540 – 25 14,958
Balance at 31 December 2017 21,173 57,334 4,755 35,818 (46,070) 73,010
Balance at 1 January 2018 21,173 57,334 4,755 35,818 (46,070) 73,010
Total comprehensive loss for the year 24 – – – – (582) (582)
Total comprehensive loss for the year – – – – (582) (582)
Transaction with owners
Share based payments 4 – – 694 – – 694
Share based payments - lapsed – – (6) – 6 –
Transaction with owners – – 688 – 6 694
Balance at 31 December 2018 21,173 57,334 5,443 35,818 (46,646) 73,122
Share capital represents the cumulative par value arising upon issue of ordinary shares of 1p each and deferred shares of 29.4p each.
Share premium represents the consideration that has been received in excess of the nominal value on issue of share capital.
Share based payment reserve relates to the charge for share based payments in accordance with International Financial Reporting Standard 2.
The merger reserve was created on the acquisition of Amryt DAC. Consideration on the acquisition included the issuance of shares. Under
section 612 of the Companies Act 2006, the premium on these shares has been included in a merger reserve.
Accumulated deficit represents losses accumulated in previous periods and the current year.
Amryt Pharma plc
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FINANCIAL STATEMENTS
51
Notes to the Financial Statements
1. General information
Amryt Pharma plc (the “Company”) is a company incorporated in England and Wales. Details of the registered office, the officers
and advisers to the Company are presented on the Company Information page at the end of this report. The Company is listed
on the AIM market of the London Stock Exchange (ticker: AMYT.L) and the Euronext market of the Irish Stock Exchange
(ticker: AYP).
Amryt is a development and commercial stage pharmaceutical Company focused on acquiring, developing and delivering
innovative new treatments to help improve the lives of patients with rare and orphan diseases.
Following on from its acquisition by the Group in 2016, Birken AG was renamed Amryt AG in 2017. All references in the notes
to the accounts to Amryt AG relate to the entity that was formerly called Birken AG.
2. Accounting policies
Basis of preparation
The consolidated financial statements of the Group and the individual Financial Statements of the Company have been prepared
in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared
on a historical cost basis, except for contingent consideration that have been measured at fair value.
Basis of going concern
Having considered the Group’s current financial position and cashflow projections, the directors believe that the Group will be
able to continue in operational existence for at least the next 12 months from the date of approval of these consolidated
financial statements and that it is appropriate to continue to prepare the consolidated financial statements on a going concern
basis.
As part of their enquiries the Directors reviewed budgets, projected cash flows, and other relevant information for 12 months
from the date of approval of the consolidated financial statements for the year ended 31 December 2018.
A key consideration for the Directors is the impact on going concern of the recently announced acquisition with Aegerion. This
acquisition represents a significant step forward for Amryt and is expected to create value for Amryt with immediate effect post
deal close through enhanced scale of the combined group which will drive revenues and deliver operational synergies through a
combination of medical, commercial, clinical, development and regulatory infrastructure. A planned $60 million fundraising as
part of the acquisition of Aegerion which has been backstopped by the current Aegerion bondholders together with a planned
listing on NASDAQ will drive liquidity and investor reach.
Basis of consolidation
The consolidated financial statements comprise the Financial Statements of the Company and its subsidiaries for the year ended
31 December 2018. Subsidiaries are entities controlled by the Company. Where the Company has control over an investee, it is
classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over an
investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable
returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of
control. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Intergroup balances and any unrealised gains or losses or income or expenses arising from intergroup transactions are eliminated
in preparing the consolidated financial statements.
Merger reserve
The merger reserve was created on the acquisition of Amryt DAC by Amryt Pharma plc in April 2016. Ordinary shares in Amryt
Pharma plc were issued to acquire the entire issued share capital of Amryt DAC. Under section 612 of the Companies Act 2006,
the premium on these shares has been included in a merger reserve.
Annual Report for the year ended 31 December 2018
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52
Notes to the Financial Statements continued
For the year ended 31 December 2018
Presentation of Balances
The Financial Statements are presented in Euro (”€”) which is the functional and presentational currency of the Group. Balances
in the Financial Statements are rounded to the nearest thousand (€’000) except where otherwise indicated.
The following table discloses the major exchange rates of those currencies utilised by the Group:
Foreign currency units to 1 €
Average period to 31 December 2018
At 31 December 2018
Average period to 31 December 2017
At 31 December 2017
US$
1.1827
1.1357
1.1259
1.1901
£
0.8853
0.8896
CHF
1.1544
1.1330
SEK
NOK
DKK
10.2639
10.3184
9.6141
9.7277
7.4506
7.4616
0.8715
0.8813
1.1082
1.1678
9.6085
9.8719
9.2979
9.9537
7.4411
7.4412
(US$ = US Dollars; £ = Pounds Sterling, CHF = Swiss Franc, SEK = Swedish Kroner, NOK = Norwegian Kroner, DKK = Danish Kroner)
Changes in accounting policies and disclosures
The accounting policies adopted are consistent with those of the previous financial period. New standards and amendments to
IFRS effective as of 1 January 2018 have been reviewed by the Group. These standards and amendments are described in more
detail below.
Adoption of new standards issued and effective as of 1 January 2018
The following new standards and standard amendments became effective for the Group as of 1 January 2018:
• IFRS 9 Financial Instruments
• IFRS 15 Revenue from Contracts with Customers
• Amendments to IFRS 2 Share-based Payment
While the new standards, interpretations and standard amendments did not result in a material impact on the Group’s results,
the nature and effect of changes required by IFRS 9 and IFRS 15 are described below.
IFRS 9 Financial Instruments
IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement. It addresses the classification, measurement and
derecognition of financial assets and financial liabilities, introduces a new impairment model for financial assets and new rules
for hedge accounting. The Group has applied IFRS 9 retrospectively but elected not to restate comparative information. The
Group has assessed the business models and contractual cash flows which apply to its financial assets and classified the assets
into the appropriate IFRS 9 categories accordingly.
Under IAS 39, financial assets (cash and cash equivalents, trade receivables and other receivables) were classified at fair value
(initial recognition) followed by amortised cost (subsequent measurement). Under IFRS 9, financial assets are classified at fair
value (initial recognition) followed by amortised cost net of impairments (subsequent measurement).
The Group’s financial assets measured at amortised cost, the most significant of which are trade receivables and amounts receivable
in respect of upfront payments for clinical trial costs, are subject to IFRS 9’s new expected credit loss model. The Group’s impairment
methodology has been revised in line with the requirements of IFRS 9. The simplified approach to providing for expected credit
losses has been applied to trade receivables, which requires the use of a lifetime expected loss provision. As part of the IFRS 9
transition project, the Group assessed its existing trade and other receivables for impairment to determine the credit risk of the
receivables at the date on which they were initially recognised and compared that to the credit risk as at 1 January 2018. This
assessment has not resulted in a material adjustment to trade and other receivables.
Amryt Pharma plc
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FINANCIAL STATEMENTS
53
IFRS 15 Revenue from Contracts with Customers
IFRS 15 replaced IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. The Group adopted IFRS 15
following an assessment of our two commercial assets, Lojuxta and Imlan, and whether certain revenue might be more
appropriately recorded on an agency or net basis, rather than on a gross basis in accordance with the principal of control. There
was no material impact on the Group’s revenue recognition as a result of transitioning to IFRS 15 and all revenues continue to be
recognised on a gross basis.
In accordance with the requirements of IFRS 15, disclosures outlining the disaggregation of revenue by primary geographic
markets and principal activities and products are included in note 3 to the consolidated financial statements.
IFRS 2 Classification and Measurement of Share-based Payment Transactions
The Group has adopted IFRS 2, Share-based Payments for its 2018 financial year. The amended standard had no impact on the
consolidated financial statements.
Standards issued but not yet effective
There were a number of standards and interpretations which were in issue at 31 December 2018 but were not effective at
31 December 2018 and have not been adopted for these Financial Statements.
IFRS 16 Leases
IFRS 16 will replace IAS 17 Leases and related interpretations. The Group will adopt IFRS 16 from 1 January 2019 by applying the
modified retrospective approach. The Group will apply the recognition exemption for both short-term leases and leases of low
value assets.
Under IFRS 16, at the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e. the lease
liability) and an asset representing the right to use the underlying asset during the lease term (i.e. the right-of-use asset). Lessees will
be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Under IFRS 16 lessees will also be required to remeasure the lease liability upon the occurrence of certain events (e.g. a change in
lease term or a change in future lease payments resulting from a change in an index or rate used to determine those payments). The
lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
The Group has entered into operating leases for a relatively small number of assets, principally relating to two properties in
Ireland and Germany. The adoption of IFRS16 on the Group’s financial statements is expected to be as follows:
Income Statement
Operating expenses (excluding depreciation) will decrease, as the Group currently recognises operating lease expenses in
operating costs in the income statement. The Group’s operating lease expense for 2018 was €254,000 (2017: €281,000) and is
disclosed in note 6 to these consolidated financial statements. Payments for leases which meet the recognition exemption criteria
and certain other lease payments which do not meet the criteria for capitalisation will continue to be recorded as an expense
within operating expenses (excluding depreciation). Depreciation and finance costs as currently reported in the Group’s
consolidated income statement will increase, as under the new standard a right-of-use asset will be capitalised and depreciated
over the term of the lease with an associated finance cost applied annually to the lease liability.
Balance Sheet
At transition date, the Group will determine the minimum lease payments outstanding at that date (along with payments for
renewal options which are reasonably certain to be exercised) and apply the appropriate discount rate to calculate the present
value of the lease liability and right-of-use asset to be recognised on the Group’s consolidated balance sheet. The discount rates
applied were arrived at using a methodology to calculate incremental borrowing rates across the Group. The Group’s outstanding
commitment in respect of all operating leases as at 31 December 2018 is €425,000 (2017: €664,000 (see note 23 to these
consolidated financial statements).
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
IAS 19 Employee Benefits
In February 2018, the IASB issued a narrow scope amendment to IAS 19. The amendment will be applied prospectively for plan
amendments, curtailments or settlements occurring on or after 1 January 2019. These amendments are not expected to have an
impact on the Group on the effective date but will impact how the Group determines current service cost and net interest in the
event of any plan amendments, curtailments or settlements which arise thereafter.
IFRS 3 Business Combinations
In October 2018, the IASB issued amendments to IFRS 3, regarding the definition of a business. The amendments clarify that the
process required to meet the definition of a business (together with inputs to create outputs) must be substantive; and, that the
inputs and process must together significantly contribute to creating outputs. The definition of outputs has been narrowed to
focus on goods and services provided to customers and other income from ordinary activities. In addition, the amendments
indicate that an acquisition of primarily a single asset or group of similar assets is unlikely to meet the definition of a business.
The amendments will be applied prospectively for acquisitions occurring on or after 1 January 2020. The Group is currently
evaluating the impact of this amendment on future periods.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and amounts reported in the Financial Statements and accompanying notes.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
The critical accounting policies which involve significant estimates, assumptions or judgements, the actual outcome of which
could have a material impact on the Group’s results and financial position outlined below, are as follows:
Impairment of intangible assets
The impairment testing process for intangible assets requires management to make significant judgements and estimates to
determine the fair value of the assets. Management periodically evaluates and updates the estimates based on the conditions
which influence these variables. A detailed discussion of the impairment methodology applied and key assumptions used by the
Group in the context of long-lived assets and goodwill is provided in note 11 to the consolidated financial statements. The
assumptions and conditions for determining impairment of intangible assets reflect management’s best assumptions and
estimates, but these items involve inherent uncertainties described above, many of which are not under management’s control.
As a result, the accounting for such items could result in different estimates or amounts if management used different
assumptions or if different conditions occur in future accounting periods.
Contingent consideration
Contingent consideration arising as a result of business combinations is initially recognised at fair value using a probability adjusted
present value model. The fair value of the contingent consideration is updated at each reporting date. The key judgements and
estimates applied by management in the determination of the fair value of the contingent consideration relate to the
determination of an appropriate discount rate, the assessment of market size and opportunity and probability assessments based
on market data for the chance of success of the commercialisation of an orphan drug. A detailed discussion of the methodology
applied and key input assumptions used by the Group is provided in note 5 to the consolidated financial statements. The fair value
of the contingent consideration uses management’s best estimates and judgements and sensitivities have been assessed by
management by considering movements in the discount rate applied and movements in revenue forecasts. The chance of success
of product development is based on published market data. See note 22 for quantification of these sensitivities.
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Research and development expenses
Development costs are capitalised as an intangible asset if all of the following criteria are met:
1. The technical feasibility of completing the asset so that it will be available for use or sale;
2. The intention to complete the asset and use or sell it;
3. The ability to use or sell the asset;
4. The asset will generate probable future economic benefits and demonstrate the existence of a market or the usefulness of the
asset if it is to be used internally;
5. The availability of adequate technical, financial and other resources to complete the development and to use or sell it; and
6. The ability to measure reliably the expenditure attributable to the intangible asset.
In process R&D acquired as part of a business combination is capitalised at the date of acquisition.
Research costs are expensed when they are incurred.
Factors which impact our judgement to capitalise certain research and development expenditure include the degree of regulatory
approval for products and the results of any market research to determine the likely future commercial success of products being
developed. We review these factors each year to determine whether our previous estimates as to feasibility, viability and recovery
should be changed.
The assessment whether development costs can be capitalized requires management to make significant judgements.
Management has reviewed the facts and circumstances of each project in relation to the above criteria and in management’s
opinion, the criteria prescribed for capitalising development costs as assets have not yet been met by the Group in relation to
AP101, AP102 or AP103. Accordingly, all of the Group’s costs related to research and development projects are recognised as
expenses in the consolidated statement of comprehensive income in the period in which they are incurred. Management expects
that the above criteria will be met on filing of a submission to the regulatory authority for final drug approval or potentially in
advance of that on the receipt of information that strongly indicates that the development will be successful.
Business combination
The Group acquisition of Amryt AG was completed on 18 April 2016 with Amryt DAC acquiring the entire issued share capital of
Amryt AG as at this date. In accounting for this transaction, the Directors considered the date of when control of Amryt AG
passed to the Group, the fair value of the consideration settled and the fair value of the assets and liabilities acquired. The
Group engaged third party advisers to assist in the determination of the fair value of the consideration and the fair value of the
assets and liabilities acquired. See note 5 for further information.
Recognition of deferred tax assets
Deferred tax assets are determined using enacted tax rates for the effects of net operating losses and temporary differences
between the book and tax bases of assets and liabilities. In assessing the realisability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax assets will not be realised. The ultimate realisation of
deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. While management considers the scheduled reversal of deferred tax liabilities, and projected future
taxable income in making this assessment, there can be no assurance that these deferred tax assets may be realisable. As at
31 December 2018, the Group did not recognise a deferred tax asset in respect of unused tax losses as described in note 9.
Principal accounting policies
The principal accounting policies are summarised below. They have been consistently applied throughout the period covered by
the Financial Statements.
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
Revenue recognition
Revenue arises from the sale of Lojuxta and Imlan. The Group sells direct to customers and also uses third parties in the
distribution of the product to customers.
To determine whether to recognise revenue, the Group follows a 5-step process, as required by IFRS 15:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Group expects to be entitled to in exchange for those goods. The Group
recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these
amounts as liabilities in the statement of financial position. Similarly, if the Group satisfies a performance obligation before it
receives the consideration, the Group recognises either a contract asset or a receivable in its statement of financial position,
depending on whether something other than the passage of time is required before the consideration is due.
Revenue from sale of goods
Imlan revenue is generally recognised at a point in time when control of the inventory is transferred, generally the date of
shipment, consistent with typical ex-works shipment terms.
Lojuxta revenue is generally recognised at a point in time when control of the inventory is transferred to the end customer,
generally on delivery of the goods.
Principal versus agent considerations
The Group enters into certain contracts for the sale of its Lojuxta product. This includes agreement with a third party to provide
logistics, customer and commercial services i.e. supply chain function and agreements with distributors. The Group determined
that it has control over the goods before they are transferred to the customers and has the ability to direct the use or obtain
benefits hence is the principal on the contracts due to the following factors:
• The Group is primarily responsible for fulfilling the promise to provide the promised goods
• The Group bears the inventory risk before or after the goods have been ordered by the customer, during shipping or on return
• The Group has the discretion in establishing the selling price of the goods to customers. The distributors consideration in these
contracts are either the margin fee or commission
• The Group is exposed to the credit risk for the amounts receivable from the customers.
Based on the above criteria, the Group recognises revenue on a gross basis. The costs associated with the delivery of such goods
to customers i.e. the costs associated with the services provided by the distributors to import and deliver the goods are
recognised in the cost of sales.
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Financial instruments
Recognition and derecognition
Financial instruments are classified on initial recognition as financial assets, financial liabilities or equity instruments in accordance
with the substance of the contractual arrangement. Financial instruments are initially recognised when the Group becomes party
to the contractual provisions of the instrument. Financial assets are de-recognised when the contractual rights to the cash flows
from the financial asset expire or when the contractual rights to those assets are transferred. Financial liabilities are de-recognised
when the obligation specified in the contract is discharged, cancelled or expired.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction
price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs, if any.
Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:
• Amortised cost
• Fair value through profit or loss (FVTPL)
• Fair value through other comprehensive income (FVOCI)
The Group does not have any financial assets categorised as FVTPL and FVOCI as at 31 December 2018 and 2017.
The classification is determined by both:
• The Group’s business model for managing the financial asset
• The contractual cash flow characteristic of the financial asset
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the
principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Group’s cash and cash equivalents and trade receivables fall into this category of
financial instruments.
Cash and cash equivalents
Cash comprises cash on hand and bank balances. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and have a maturity of three
months or less at the date of acquisition.
Restricted cash
Restricted cash comprises current cash and cash equivalents that are restricted as to withdrawal or usage. Cash held by the
Group’s distribution partner for Lojuxta on behalf of the Group is treated as restricted cash in the Financial Statements.
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
Trade and other receivables
Trade and other receivables represent the Group’s right to an amount of consideration that is unconditional (i.e., only the
passage of time is required before payment of the consideration is due).
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at FVTPL. ECLs are based
on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group
expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include
cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes
in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group assesses ECL
based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment.
Financial liabilities
Financial liabilities are categorised as ‘fair value through profit or loss’ or ‘other financial liabilities measured at amortised costs
using the effective interest method’.
Trade and other payables
Trade and other payables are initially measured at their fair value and are subsequently measured at their amortised cost using
the effective interest rate method except for short-term payables when the recognition of interest would be immaterial.
Interest bearing loans and borrowings
Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs. Loans and
borrowings are subsequently carried at amortised cost using the effective interest method.
Contingent consideration
Contingent consideration arising as a result of business combinations is initially recognised at fair value using a probability
adjusted present value model. Key inputs in the model include the probability of success and the expected timing of potential
revenues. The fair value of the contingent consideration will be updated at each reporting date. Adjustments to contingent
consideration are recognised in the consolidated statement of comprehensive income.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a
currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize
the asset and settle the liability simultaneously.
Inventories
Inventories are valued at the lower of cost or net realisable value. The costs are calculated according to the first in first out
method (FIFO). Cost includes materials, direct labour and an attributable proportion of manufacturing overheads based on
normal levels of activity. Work in progress valuation is based on the stage of quality checks successfully performed during the
production process. An inventory valuation adjustment is made if the net realisable value is lower than the book value. Net
realisable value is determined as estimated selling prices less all costs of completion and costs incurred in selling and distribution.
Inventories held by third party supply chain partners are included in inventory totals when control has deemed to be transferred
to the Group under the contract terms of the distribution agreement. The cost to acquire the inventory held by the supply chain
partners is recognised as a liability of the Group.
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Leases
The group has a number of operating leases, with the Group as lessee. The ongoing lease payments are stated as expenses when
incurred. There are no material lease incentives in place.
Foreign currency translation
The Group translates foreign currency transactions into its presentational currency, €, at the rate of exchange prevailing at the
transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into the presentational currency
at the rate of exchange prevailing at the Statement of Financial Position date. Exchange differences arising are taken to the
Statement of Comprehensive Income.
Group entities with a functional currency other than € are translated into € at average exchange rates for income and expenses;
and reporting date exchange rates for assets and liabilities. Exchange differences arising on consolidation are recognised in other
comprehensive income.
Property, plant and equipment
Property, plant and equipment comprise of property and office equipment. Items of property, plant and equipment are stated at
cost less any accumulated depreciation and any impairment losses. It is not Group policy to revalue any items of property, plant
and equipment.
Depreciation is charged to the Statement of Comprehensive Income on a straight-line basis to write-off the cost of the assets
over their expected useful lives as follows:
• Property, plant and machinery
• Office equipment
Business combinations
5 to 15 years
3 to 10 years
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate
of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the
acquiree. Fair values are attributed to the identifiable assets and liabilities unless the fair value cannot be measured reliably, in
which case the value is subsumed into goodwill. In the consolidated financial statements, acquisition costs incurred are expensed
and included in general and administrative expenses.
To the extent that settlement of all or any part of the consideration for a business combination is deferred, the fair value of the
deferred component is determined through discounting the amounts payable to their present value at the date of the exchange.
The discount component is unwound as an interest charge in the consolidated statement of comprehensive income over the life
of the obligation. Any contingent consideration is recognised at fair value at the acquisition date and included in the cost of the
acquisition. The fair value of contingent consideration at acquisition date is arrived at through discounting the expected payment
(based on scenario modelling) to present value. In general, in order for contingent consideration to become payable, pre-defined
revenues and/or milestones dates must be exceeded. Subsequent changes to the fair value of the contingent consideration will
be recognised in profit or loss unless the contingent consideration is classified as equity, in which case it is not remeasured and
settlement is accounted for within equity.
When the initial accounting for a business combination is determined provisionally, any adjustments to the provisional values
allocated to the consideration, identifiable assets or liabilities (and contingent liabilities, if relevant) are made within the
measurement period, a period of no more than one year from the acquisition date.
Frequently, the acquisition of pharmaceutical patents and licences is effected through a non-operating corporate structure. As
these structures do not represent a business, it is considered that the transactions do not meet the definition of a business
combination. Accordingly, the transactions are accounted for as the acquisition of an asset. The net assets acquired are
recognised at cost.
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
Acquired intangible assets
Acquired intangible assets outside business combinations are stated at the lower of cost less provision for amortisation and
impairment or the recoverable amount. Acquired intangibles assets are amortised over their expected useful economic life on a
straight-line basis. In determining the useful economic life each acquisition is reviewed separately and consideration given to the
period over which the Group expects to derive economic benefit.
The useful life of acquired intangible assets is as follows:
• Software
• Website Development
5-10 years
5-10 years
Intangible assets acquired in 2016 as part of the acquisitions of Amryt AG and SomPharmaceuticals are currently not being
amortised as the assets are still under development.
Factors which impact our judgement to capitalise certain research and development expenditure include the degree of regulatory
approval for products and the results of any market research to determine the likely future commercial success of products being
developed. We review these factors each year to determine whether our previous estimates as to feasibility, viability and recovery
should be changed.
Investment in subsidiaries
Investments in subsidiaries are stated at cost less impairment.
Impairment of non-financial assets
At each reporting date, the Group reviews the carrying amounts of its investments and acquired intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss. Any impairment loss arising from the
review is charged to the Statement of Comprehensive Income.
The Group assesses each asset or cash-generating unit annually to determine whether any indication of impairment exists. Where
an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of
the carrying value and value in use. These assessments require the use of estimates and assumptions such as discount rates,
future capital requirements, general risks affecting the pharmaceutical industry and other risks specific to the individual asset. Fair
value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between
knowledgeable and willing parties. Fair value is generally determined as the present value of estimated future cash flows arising
from the continued use of the asset, using assumptions that an independent market participant may take into account. Cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. Assets are grouped into the smallest group that generate cash inflows which
are independent of other assets.
Taxes
Tax comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax
rates enacted or substantively enacted at the reporting date and taking into account any adjustments stemming from prior years.
Deferred tax assets or liabilities are recognised where the carrying value of an asset or liability in the Statement of Financial
Position differs to its tax base and is accounted for using the statement of financial position liability method. Recognition of
deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the
difference can be utilised.
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61
Share based payments
The Group issues share options as an incentive to certain senior management and staff. The fair value of options granted is
recognised as an expense with a corresponding credit to the share-based payment reserve. The fair value is measured at grant
date and spread over the period during which the awards vest.
For equity-settled share-based payment transactions, the goods or services received and the corresponding increase in equity are
measured directly at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If it is not
possible to estimate reliably the fair value of the goods or services received, the fair value of the equity instruments granted as
calculated using the Black-Scholes model is used as a proxy.
The Group may issue warrants to key consultants, advisers and suppliers in payment or part payment for services or supplies
provided to the Group. The fair value of warrants granted is recognised as an expense. The corresponding credits are charged to
the share-based payment reserve. The fair value is measured at grant date and spread over the period during which the warrants
vest. The fair value is measured using the Black-Scholes model if the fair value of the services received cannot be measured
reliably.
The estimate of the fair value of services received is measured based on Black Scholes model using input assumptions, including
weighted average share price, expected volatility, weighted average expected life and expected yield. The expected life of the
options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility is
based on the historic volatility (calculated based on the expected life of the options). The Group has considered how future
experience may affect historical volatility.
Employee Benefits
Defined contribution plans
The Group operates defined contribution schemes in various locations where employees are based. Contributions to the defined
contribution schemes are recognised in the Statement of Comprehensive Income in the period in which the related services are
received from the employee. Under these schemes, the Group has no obligation, either legal or constructive, to pay further
contributions in the event that the fund does not hold sufficient assets to meet its benefit commitments.
3. Segmental information
The two identified operating segments are as follows:
1) Commercial - This operating segment includes the financial results of the Group’s two current commercial product lines, Imlan
and Lojuxta.
2) Research and Development (”R&D”) - This operating segment includes the financial results of the Group’s research and
development assets, AP101, AP102 and AP103.
The analysis by operating segment includes both items directly attributable to a segment and those, including central overheads,
which are allocated on a reasonable basis when presenting information to the Chief operational decision maker (“CODM”).
Inter-segmental revenue is not material and thus not subject to separate disclosure.
The commercial segment derives its revenues primarily from one source, being the pharmaceutical sector with high unmet
medical need. The R&D segment has no revenue stream and incurs costs relating to R&D in the rare and orphan disease sector.
Segment performance is predominantly evaluated based on revenue (commercial segment only) and operating profit/loss. Total
revenues, cost of sales and selling and marketing costs with the exception of some market research costs allocated to AP101 are
allocated entirely to the commercial operating segment. Research and development costs are allocated entirely to the R&D
sector. General and Administration (“G&A”) costs are split 50:50 between the commercial and R&D operating segments. Given
that financing costs, share based payment expenses, reverse takeover costs and acquisition related costs are managed on a
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
centralised basis, these items are not allocated between operating segments for the purposes of the information presented to
the CODM and are accordingly shown as a separate line item in the segmental analysis below.
The following presents revenue and profit/loss information and certain asset and liability information regarding the Group’s
commercial and R&D operating segments.
Revenue by type – Commercial segment
Lojuxta
Other
Total revenue
31 December
2018
€’000
31 December
2017
€’000
13,621
833
14,454
11,924
854
12,778
Lojuxta is sold through a third party to a number of different countries in the European Economic Area (“EEA”), the Middle East
and Central Eastern Europe.
Revenue geographical information – Commercial segment
EEA
Other
Total revenue
31 December
2018
€’000
31 December
2017
€’000
13,579
875
14,454
12,394
384
12,778
For the year ended 31 December 2018, the Group generated over 76% of its Lojuxta revenue in Italy, the Netherlands and
Greece. In 2017, 77% of Lojuxta revenues was sold in Italy, the Netherlands and Greece. The largest customer in 2018 was a
hospital in Greece and the largest customer in 2017 was a distributor in Italy.
Loss for the year by segment
31 December 2018
Commercial
€’000
Revenue 14,454
Cost of sales (5,298)
Gross profit 9,156
R&D expenses –
Sales and marketing expenses (7,799)
General and administrative expenses (3,285)
Other expenses –
R&D
€’000
–
–
–
(9,049)
–
(3,285)
–
Loss for the year (1,928)
(12,334)
Centralised
Costs
€’000
–
–
–
–
–
–
(11,515)
(11,515)
Total
€’000
14,454
(5,298)
9,156
(9,049)
(7,799)
(6,570)
(11,515)
(25,777)
Included in sales and marketing expenses in 2018 are certain salaries and expenses that relate to work being done in preparation
for the launch of AP101 if top-line data is positive and following that, approval is received from the EMA and FDA.
In 2018 and 2017, other expenses include net finance costs, depreciation, foreign exchange gains and losses and share based
payments and are classified as central office costs. G&A costs are all allocated 50:50 between the commercial and R&D operating
segments.
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Loss for the year by segment
Commercial
€’000
Revenue 12,778
Cost of sale (5,373)
Gross Profit 7,405
R&D expenses –
Sales and marketing (3,527)
General and administrative expenses (3,276)
Other expenses –
Loss for the year 602
Total assets by segment
31 December 2017
R&D
€’000
–
–
–
(10,564)
(162)
(3,276)
–
(14,002)
Centralised
Costs
€’000
–
–
–
–
–
–
(12,736)
(12,736)
Total
€’000
12,778
(5,373)
7,405
(10,564)
(3,689)
(6,552)
(12,736)
(26,136)
Commercial
R&D
Centralised assets - cash and cash equivalents
Total assets
Total liabilities by segment
Commercial
R&D
Centralised liabilities – long term loan, contingent consideration and tax
Total liabilities
31 December
2018
€’000
31 December
2017
€’000
5,150
55,682
9,811
70,643
4,595
54,983
20,512
80,090
31 December
2018
€’000
31 December
2017
€’000
7,025
3,500
63,349
73,874
7,650
2,150
48,404
58,204
4. Share based payments
Under the terms of the Company’s Employee Share Option Plan, options to purchase 19,505,131 shares were outstanding at
31 December 2018. Under the terms of this plan, Options were granted to officers, consultants and employees of the Group at
the discretion of the Remuneration Committee. There were no new share options granted during the year ended 31 December
2018.
The Company has issued warrants to key consultants, advisers and suppliers in payment or part payment for services or supplies
provided to the Group. There were no warrants granted during the year ended 31 December 2018 or the year ended
31 December 2017.
Each share option and warrant convert into one ordinary share of Amryt Pharma plc on exercise and are accounted for as equity-
settled share-based payments. The options and warrants may be exercised at any time from the date of vesting to the date of
their expiry. The equity instruments granted carry neither rights to dividends nor voting rights.
Annual Report for the year ended 31 December 2018
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64
Notes to the Financial Statements continued
For the year ended 31 December 2018
The terms and conditions of the grants are as follows, whereby all options are settled by physical delivery of shares:
Vesting conditions
The options vest following a period of service by the officer or employee. The required period of service is determined by the
Remuneration Committee at the date of grant of the options (usually the date of approval by the Remuneration Committee) and
it is generally over a three to four-year period. There are no market conditions associated with the share option vesting periods.
Contractual life
The term of an option is determined by the Remuneration Committee provided that the term may not exceed a period of seven
to ten years from the date of grant. All options will terminate 90 days after termination of the option holder’s employment,
service or consultancy with the Group except where a longer period is approved by the Board of Directors. Under certain
circumstances involving a change in control of the Group, the Remuneration Committee may accelerate the exercisability and
termination of options.
The number and weighted average exercise price of share options and warrants per ordinary share is as follows:
Share Options Warrants
Units
Balance at 1 January 2017 15,795,314
Granted 8,894,460
Lapsed (4,993,188)
Outstanding at 31 December 2017 19,696,586
Exercisable at 31 December 2017 3,281,961
Balance at 1 January 2018 19,696,586
Granted –
Lapsed (191,455)
Outstanding at 31 December 2018 19,505,131
Exercisable at 31 December 2018 7,964,434
Weighted
average
exercise price
19.80p
20.22p
22.98p
19.16p
20.61p
19.16p
–
23.75p
19.20p
19.47p
Weighted
average
exercise price
25.40p
–
88.00p
24.74p
24.74p
24.74p
–
112.00p
24.00p
24.00p
Units
23,307,269
–
(203,788)
23,103,481
23,103,481
23,103,481
–
(193,530)
22,909,951
22,909,951
The fair value is estimated at the date of grant using the Black-Scholes pricing model, taking into account the terms and
conditions attached to the grant. The following are the inputs to the model for the equity instruments granted during the year:
Days to Expiry
Volatility
Risk free interest rate
Share price at grant
2018 Options
Inputs
2018 Warrant
Inputs
2017 Options
Inputs
2017 Warrant
Inputs
–
–
–
–
–
–
–
–
2,555
44% - 48%
0.42% - 0.77%
18.18p - 25.88p
–
–
–
–
There were no new share options granted in 2018. In 2017, a total of 8,894,460 share options exercisable at a weighted average
price of £0.202 were granted. The fair value of share options granted in 2017 was £1,799,000/ €2,038,000.
The share options outstanding as at 31 December 2018 have a weighted remaining contractual life of 4.94 years with exercise
prices ranging from £0.155 to £0.48. The share options outstanding as at 31 December 2017 had a weighted remaining
contractual life of 5.95 years with exercise prices ranging from £0.155 to £0.48.
Amryt Pharma plc
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65
22,909,951 warrants were outstanding and exercisable at 31 December 2018, of which, 20,836,696 were due to expire on
31 December 2018. At the time of the Company's IPO in 2016, investors were granted warrants to subscribe for an aggregate of
20,836,696 New Ordinary Shares at an exercise price of 24p sterling with an exercise date of 31 December 2018 to enable
investors to benefit from the results of the EASE study. The Independent Monitoring Committee was scheduled to meeting on
21 December to review the EASE unblinded interim efficacy analysis results. The Group received the readout from this interim
efficacy analysis on 4 January 2019. In order to reflect the revised timeline for the interim readout, the Group extended the
exercise date of warrants issued to 11 January 2019. All other terms and conditions of the warrants, including the exercise price,
remained unchanged. The total amount of these warrants amounting to 20,836,696 expired unexercised on 11 January 2019.
The value of share options charged to the Statement of Comprehensive Income during the year is as follows:
Share option expense
Total
5. Business Combinations and Asset Acquisitions
Acquisition of Amryt AG (previously “Birken”)
31 December
2018
€’000
31 December
2017
€’000
694
694
565
565
Amryt DAC signed a conditional share purchase agreement to acquire Amryt AG on 16 October 2015 (“Amryt AG SPA”).
The Amryt AG SPA was completed on 18 April 2016 with Amryt DAC acquiring the entire issued share capital of Amryt AG.
The consideration comprises:
• Initial cash consideration of €1,000,000 (paid by Amryt DAC prior to its acquisition by the Company);
• Milestone payments of:
o €10,000,000 on receipt of first marketing approval by the EMA of Episalvan, paid on the completion date (18 April 2016);
o Either (i) €5,000,000 once net ex-factory sales of Episalvan have been at least €100,000 or (ii) if no commercial sales are
made within 24 months of EMA first marketing approval (being 14 January 2016), €2,000,000 24 months after receipt of
such approval which was paid in January 2018 and €3,000,000 following the first commercial sale;
o €10,000,000 on receipt of marketing approval by the EMA or FDA of a pharmaceutical product containing Betulin as its
API for the treatment of Epidermolysis Bullosa (EB);
o €10,000,000 once net ex-factory sales/net revenue in any calendar year exceed €50,000,000;
o €15,000,000 once net ex-factory sales/ net revenue in any calendar year exceed €100,000,000;
• Cash consideration of €150,000, due and paid on the completion date (18 April 2016);
• Royalties of 9% on sales of Episalvan products for 10 years from first commercial sale; and
• Shares in Amryt DAC that equated to a 30% equity shareholding prior to the acquisition of Amryt DAC by the Company. The
Amryt AG sellers received 37,048,622 in Consideration Shares (valued at €11.2 million) for their shareholding in Amryt DAC.
Fair Value Measurement of Contingent Consideration
Contingent consideration comprises the milestone payments and sales royalties, the amounts and timing of these are outlined
above. As at the acquisition date, the fair value of the contingent consideration was estimated to be €23,314,000. The fair value
of the royalty payments was determined using probability weighted revenue forecasts and the fair value of the milestones
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
payments was determined using probability adjusted present values (see note 22 for fair value hierarchy applied and impact of
key unobservable impact data). The probability adjusted present values took into account published orphan drug research data
and statistics which were adjusted by management to reflect the specific circumstances applicable to the type of product
acquired in the Amryt AG transaction. A discount rate of 28.5% was used in the calculation of the fair value of the contingent
consideration. As noted earlier in the report the size of the market for the products under development provides a real
opportunity to the Group to meet its forecast revenue targets and therefore the milestone targets which underpin the contingent
consideration payments. At that time management anticipated that AP101 for EB would be ready to launch in 2019. However,
management noted that due to issues outside their control (i.e. regulatory requirements and the commercial success of the
product) the timing of when such revenue targets may occur may change. Such changes may have a material impact on the
assessment of the fair value of the contingent consideration.
Amryt reviews the contingent consideration on a regular basis as the probability adjusted fair values are being unwound as
financing expenses in the Statement of Comprehensive Income over the life of the obligation. Contingent consideration is
reviewed on a bi-annual basis and is disclosed in the published interim results for the 6-month period to 30 June and the year
end results to 31 December. The total non-cash finance charge recognised in the Statement of Comprehensive Income Statement
for the year ended 31 December 2018 is €8,934,000 (2017: €11,104,000).
The Group is currently in the process of amending the protocol for the EASE study. In January 2019, the Group received the
results of unblinded interim efficacy analysis. This analysis was conducted by an independent data safety monitoring committee
and recommended that the trial should continue with an increase of 48 patients in the study to a total of 230 evaluable patients
in order to be able to achieve 80% statistical power. The increase in the number of patients in the trial will result in a slight delay
of the readout of top-line date, the Group now expects to complete recruitment for top-line data to be completed in H2 2019.
Consequently, the launch date for EB has now been delayed to H1 2021. Coupled with this, management has completed its
annual forecast and revenues and costs have been amended to reflect current expectations. These factors have resulted in a
change to the probability weighted revenue forecasts and the probability of the adjusted present values which are used in the
calculation of the contingent consideration balance and impact the amount being unwound to the consolidated statement of
comprehensive income.
6. Operating loss for the year
31 December
2018
€’000
31 December
2017
€’000
90
–
–
1,485
9,049
694
493
268
42
254
190
85
2
–
1,086
10,564
565
331
257
2
281
(13)
Operating loss for the year is stated after charging/(crediting):
Fees payable to the Group’s auditor and its associates:
Audit fees
Tax fees
Other non audit fees
Changes in inventory expensed
Research and development expenses
Share based payments
Pension costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating lease rentals
Foreign exchange losses/ (gains)
Amryt Pharma plc
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67
7. Employees
Including the Directors, the Group’s average number of employees during the year was 61 (2017: 41).
Aggregate remuneration comprised:
Wages and salaries
Social security costs
Pension costs – employees
Directors’ remuneration
Share based payments – directors
Share based payments – employees/consultants
Total employee costs
31 December
2018
€’000
31 December
2017
€’000
6,129
850
429
1,323
148
546
9,425
3,733
655
270
1,252
10
555
6,475
The Directors of the Group and Company held the following share options over shares of Amryt Pharma plc which were issued to
them in November 2017:
Director
Joe Wiley
Rory Nealon
31 December
2018
Number
Exercise price
Expiry Date
2,061,130
824,452
20.12p
20.12p
28/11/24
28/11/24
No share options were granted to any of the Directors in 2018.
Further information on the compensation of key management personnel is included in note 21 of these financial statements.
8. Net finance expense
Interest on loans
Interest and fees paid
Deposit interest received
Foreign exchange losses/ (gains)
Total
31 December
2018
€’000
31 December
2017
€’000
1,355
17
(5)
190
1,557
830
13
(5)
(13)
825
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
9. Tax on ordinary activities
A corporation tax charge of €36,000 arises in the year ended 31 December 2018 (31 December 2017: €nil). A reconciliation of
the expected tax benefit computed by applying the tax rate applicable in the primary jurisdiction, the Republic of Ireland, to the
loss before tax to the actual tax credit is as follows:
Loss before tax
Tax credit at Irish corporation tax rate of 12.5%
Effect of:
Losses unutilised
Other timing differences
Differences in overseas taxation rates
Total tax charge on loss on ordinary activities
31 December
2018
€’000
31 December
2017
€’000
(25,741)
(3,218)
(26,136)
(3,267)
3,536
(36)
(318)
(36)
3,659
–
(392)
–
At 31 December 2018, the Group had unutilised net operating losses in the following jurisdictions as follows:
Ireland
Germany
UK
ROW
Total
31 December
2018
€’000
31 December
2017
€’000
30,801
23,029
6,605
266
60,701
15,281
22,418
6,230
226
44,155
Due to the fundamental change in the Company’s business following the exit of the oil and gas industry in 2016, UK tax losses
carried forward of €4,454,000 may not be fully available for use against the future profits of the Group.
The deferred tax asset on tax losses of €12,675,000 (31 December 2017: €5,519,000), which was calculated at corporation tax
rates ranging from 12.5% to 32%, has not been recognised due to the uncertainty of the recovery.
All current and deferred tax related charges are recognised in the statement of profit or loss.
Amryt Pharma plc
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69
10. Loss per share – basic and diluted
The weighted average number of shares in the Loss Per Share (“LPS”) calculation, reflects the weighted average total actual
shares of Amryt Pharma plc in issue at 31 December 2018.
Issued share capital – ordinary shares of £0.01 each
1 January 2017
Number of
shares
Weighted
average shares
208,339,632
163,336,437
11 October 2017 – Issue of shares by Amryt Pharma plc – share placing
66,477,651
31 December 2017
31 December 2018
The calculation of loss per share is based on the following:
Loss after tax attributable to equity holders of the Company (€’000)
Weighted average number of ordinary shares in issue
Fully diluted average number of ordinary shares in issue
Basic and diluted loss per share (cent)
274,817,283
223,075,123
274,817,283
274,817,283
31 December
2018
(25,777)
274,817,283
274,817,283
31 December
2017
(26,136)
223,075,123
223,075,123
(9.38)
(11.72)
Where a loss has occurred, basic and diluted LPS are the same because the outstanding share options and warrants are
anti-dilutive. Accordingly, diluted LPS equals the basic LPS. The share options and warrants outstanding as at 31 December 2018
totalled 42,415,082 (31 December 2017: 42,800,067) and are potentially dilutive.
Annual Report for the year ended 31 December 2018
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70
Notes to the Financial Statements continued
For the year ended 31 December 2018
11. Intangible Assets
In process
R&D
€’000
Website
Software
€’000
development
€’000
Cost
At 1 January 2017 52,515
Additions –
At 31 December 2017 52,515
At 1 January 2018 52,515
Additions –
Disposals –
At 31 December 2018 52,515
Accumulated amortisation
At 1 January 2017 –
Amortisation charge 2017 –
At 31 December 2017 –
At 1 January 2018 –
Amortisation charge 2018 –
Amortisation charge on disposals –
At 31 December 2018 –
Net book value
Net book value at 31 December 2016 52,515
Net book value at 31 December 2017 52,515
Net book value at 31 December 2018 52,515
8
–
8
8
–
(1)
7
2
2
4
4
1
(1)
4
6
4
3
–
87
87
87
131
–
218
–
–
–
–
41
–
41
–
87
177
Total
€’000
52,523
87
52,610
52,610
131
(1)
52,740
2
2
4
4
42
(1)
45
52,521
52,606
52,695
In process R&D and software intangible assets are part of the R&D operating segment. Website costs can be attributed equally
across both operating segments, commercial and R&D.
The Group reviews the carrying amounts of its intangible assets on an annual basis to determine whether there are any
indications that those assets have suffered an impairment loss. If any such indications exist, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment loss. Impairment indications include events causing significant
changes in any of the underlying assumptions used in the income approach utilised in valuing in process R&D.
These key assumptions are: the probability of success; the discount factor; the timing of future revenue flows; market
penetration and peak sales assumptions; and expenditures required to complete development.
These cashflows are projected forward for a further 10 years to 2032 using projected revenue and cost growth to determine the
basis for an annuity-based terminal values. 10 years is used as it represents the period of exclusivity for Lojuxta in the Group’s
territories. The terminal values are used in the value in use calculation. The value in use represents the present value of the future
cash flows, including the terminal value, discounted at a rate appropriate to each cash generating unit (“CGU”). Amryt have
identified one CGU, being the AP101 development assay which is anticipated to be launched to market in 2020. The key
assumptions employed in arriving at the estimates of future cash flows are subjective and include projected EBITDA, an orphan
drug market-based probability chance of success, net cash flows, discount rates and the duration of the discounted cash flow
model. The assumptions and estimates used were derived from a combination of internal and external factors based on historical
Amryt Pharma plc
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FINANCIAL STATEMENTS
71
experience. The pre-tax discount rate used was 28.5% (2017: 28.5%). The market-based probability chance of success is based
on market benchmarks for orphan drugs (approximately 72%). The probability applied is higher than the prior year of 65% -
67%. The increased probability of success stems from the nature of our clinical trial which was designed so that the results were
blinded to the Group until (i) its interim analysis (half way review of the data which will provide limited efficacy data to the
Group) and (ii) the results of its top-line data. In 2018, the Group completed its unblinded interim efficacy analysis, with the
results of this unblinded interim efficacy analysis being announced on 4 January 2019. The analysis was conducted by an
Independent Data Monitoring Committee ("IDMC"). The IDMC recommended that the trial should continue with an increase of
48 patients in the study to a total of 230 evaluable patients, in order to achieve 80% statistical power. The positive results of the
interim efficacy analysis prove that our product, AP101 is displaying treatment effect and brings the Group closer to delivering a
treatment for patients with EB. As a result, The Group have increased the probability for success to 72%.
The value-in-use calculation is subject to significant estimation, uncertainty and accounting judgements and key sensitivities arise
in the following areas;
• In the event that there was a variation of 10% in the assumed level of future growth in revenues, which would, in
management’s view, represent a reasonably likely range of outcomes, this variation would not result in an impairment loss at
31 December 2018.
• In the event there was a 10% increase in the discount rate used in the value in use model which would in management’s view
represent a reasonably likely range of outcomes, this variation would not result in an impairment loss at 31 December 2018.
During the year the Group did not identify any potential changes in the assumptions used in the assessment of the carrying value
of the assets.
Annual Report for the year ended 31 December 2018
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72
Notes to the Financial Statements continued
For the year ended 31 December 2018
12. Property, plant and equipment
Property
€’000
Cost
At 1 January 2017 337
Additions –
Disposals –
At 31 December 2017 337
At 1 January 2018 337
Additions –
Disposals –
At 31 December 2018 337
Accumulated depreciation
At 1 January 2017 61
Depreciation charge 87
Depreciation charge on disposals –
At 31 December 2017 148
At 1 January 2018 148
Depreciation charge 87
Depreciation charge on disposals –
At 31 December 2018 235
Net book value
Net book value at 31 December 2016 276
Net book value at 31 December 2017 189
Net book value at 31 December 2018 102
Plant and
Machinery
€’000
Office
Equipment
€’000
801
147
(43)
905
905
9
(6)
908
88
116
(35)
169
169
116
(6)
279
713
736
629
237
96
(6)
327
327
59
(18)
368
43
54
(5)
92
92
65
(18)
139
194
235
229
Total
€’000
1,375
243
(49)
1,569
1,569
68
(24)
1,613
192
257
(40)
409
409
268
(24)
653
1,183
1,160
960
Amryt Pharma plc
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FINANCIAL STATEMENTS
73
13. Investment in subsidiaries – Company
Cost
At 1 January 2017
Repayment
At 31 December 2017
At 1 January 2018
Advancement of loan
Repayment of loan
Interest charged on loan
At 31 December 2018
Impairment
At 1 January 2017
Impairment charge
At 31 December 2017 and 31 December 2018
Equity in
subsidiary
companies
€’000
Subsidiary
loans
€’000
37,376
–
37,376
37,376
–
–
–
37,376
–
–
–
22,078
(622)
21,456
21,456
13,523
(463)
1,412
35,928
–
–
–
Total
€’000
59,454
(622)
58,832
58,832
13,523
(463)
1,412
73,304
–
–
–
Net book value
Net book value at 31 December 2016
Net book value at 31 December 2017
Net book value at 31 December 2018
37,376
37,376
37,376
22,078
21,456
35,928
59,454
58,832
73,304
Equity in subsidiary companies relates to the issue price of ordinary shares on the acquisition of Amryt Pharmaceuticals DAC in
2016.
Subsidiary loans relate to day to day funding that Amryt Pharma plc provides to other Group companies. Interest is charged on
these funds advanced from Amryt Pharma plc to these companies at a rate of 2.65%. The additional loan in 2018 of
€13,523,000 relates to the advancement of loans to Amryt Pharmaceuticals DAC and its underlying subsidiary companies to
fund the operations of those companies including the R&D costs of AP101. Under the terms of the agreement in place, the
parent provides funding to Amryt Pharmaceuticals DAC and its underlying subsidiary companies as required in order to fund the
development and commercial activities of the Group. The repayment of loan of €463,000 relates to Euro and USD denominated
invoices paid by Amryt Pharmaceuticals DAC on behalf of Amryt plc. In 2018, interest was charged on these loans amounting to
€1,412,000. The decrease in funding in 2017 primarily relates to Euro and USD denominated invoices paid by Amryt
Pharmaceuticals DAC on behalf of Amryt plc.
Recoverability of the loans and the carrying value of the investments is directly linked to Amryt Pharmaceuticals DAC’s operations
including the success or failure of the development of AP101, AP102 and AP103. The carrying value of these investments are
held at cost and will be reviewed at each reporting date for signs of impairment. No impairment was identified by Management.
Annual Report for the year ended 31 December 2018
254852 AMRYT AR 51pp-85pp.qxp 10/06/2019 15:13 Page 74
74
Notes to the Financial Statements continued
For the year ended 31 December 2018
List of subsidiary companies:
Company 2018 % 2017 %
Subsidiary Ownership Activities Number Incorporation Holding Holding
Amryt Pharmaceuticals DAC Direct Holding company and
management services 566448 Ireland 100
Amryt Research Limited Indirect Pharmaceuticals R&D 571411 Ireland 100
Amryt Endocrinology Limited Indirect Pharmaceuticals R&D 572984
Amryt Lipidology Limited Indirect Licensee for Lojuxta 593833 Ireland 100
Amryt Genetics Limited Indirect Pharmaceutical R&D 622577 Ireland 100
Amryt Pharma (UK) Limited Indirect Management services 10463152 UK 100
Amryt Pharma France Indirect Dormant 824 418 156 00017 France 100
Amryt Pharma Italy SRL Indirect Management services 2109476 Italy 100
Amryt Pharma Spain SL Indirect Management services B67130567 Spain 100
Amryt AG (previously Birken AG) Indirect Product Sales and
Pharmaceuticals R&D HRB 711487 Germany 100
SomPharmaceuticals SA Indirect Pharmaceuticals R&D
and management
services CHE-435.396.568 Switzerland 100
SomTherapeutics, Corp Indirect Licence holder P14000071235 USA 100
100
100
100
100
100
100
100
100
100
100
100
List of registered offices:
Company Registered Office Address
Amryt Pharmaceuticals DAC 90 Harcourt Street, Dublin 2
Amryt Research Limited 90 Harcourt Street, Dublin 2
Amryt Endocrinology Limited 90 Harcourt Street, Dublin 2
Amryt Lipidology Limited 90 Harcourt Street, Dublin 2
Amryt Genetics Limited 90 Harcourt Street, Dublin 2
Amryt Pharma (UK) Limited 3rd Floor 1 Ashley Road, Altrincham, Cheshire, United Kingdom, WA14 2DT
Amryt Pharma France 17 Avenue George V, 75008 Paris
Amryt Pharma Italy SRL Milano (MI)-Via Dell'Annunciata 23/4
Amryt Spain SL Barcelona, calle Diputacio, number 260
Amryt AG (previously Birken AG) Streiflingsweg 11, 75223 Niefern-Öschelbronn
SomPharmaceuticals SA Bahnofstrasse 21, 6300 Zug
SomTherapeutics, Corp 3795 Coventry Lane, Boca Raton, FL 33496
Amryt Pharma plc
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FINANCIAL STATEMENTS
75
14. Trade and other receivables
Group Company
31 December
2018
€’000
31 December
2017
€’000
31 December
2018
€’000
31 December
2017
€’000
Trade receivables 3,121
Prepayments and accrued income 2,033
VAT recoverable 25
Trade and other receivables 5,179
2,929
1,643
157
4,729
–
37
3
40
–
60
30
90
Trade receivables at 31 December 2018 includes €620,000 (2017: €503,000) which is due greater than 60 days. No impairment
is considered necessary.
The 31 December 2018 prepayments and accrued income balance includes €1,351,000 (2017: €1,306,000) in relation to prepaid
Phase 3 clinical trial costs.
15. Inventories – Group
Raw materials
Work in progress
Finished goods
Inventories
31 December
2018
€’000
31 December
2017
€’000
266
683
919
1,868
332
429
322
1,083
In 2018, a total of €1,485,000 of inventories was included in the profit or loss as an expense. There was no write down of
inventories during the year. Inventory was reviewed at year end and no impairment was deemed necessary.
16. Cash and cash equivalents
31 December
2018
€’000
31 December
2017
€’000
31 December
2018
€’000
31 December
2017
€’000
Cash at bank available on demand 8,620
Restricted cash 1,191
Total cash and cash equivalents 9,811
19,975
537
20,512
79
–
79
14,441
–
14,441
Group Company
Cash and cash equivalents include cash at bank available on demand and restricted cash.
Restricted cash is cash held by a third-party distributor at year end. These funds were transferred to Amryt in January 2019.
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
17. Share capital and reserves – Company
Details of ordinary shares of 1p each issued are in the table below:
Number of
Date ordinary shares
Number of
deferred shares
At 1 January 2017 208,339,632
43,171,134
11 October 2017 – Issue of ordinary shares at £0.20 66,477,651
–
At 31 December 2017 274,817,283
43,171,134
At 31 December 2018 274,817,283
43,171,134
Total Share
Capital
€’000
20,419
754
21,173
21,173
Total Share
Premium
€’000
43,695
13,639
57,334
57,334
On 11 October 2017, 66,477,651 ordinary shares of with a nominal value of £0.01 each were issued as part of a €15,083,000
(before expenses) fund raising. Share issue costs amounted to €690,000. Net proceeds amounted to €14,329,000.
Share Capital
Share capital represents the cumulative par value arising upon issue of ordinary shares of 1p each and deferred shares of 29.4p
each.
The ordinary shares have the right to receive notice of, attend and vote and general meetings and participate in the profits of the
Company.
The deferred shares were issued as part of the reverse takeover in 2016 because the nominal value of the existing shares was
above the trading price. As a result, a resolution was passed by the shareholders to reduce the nominal value of the existing
ordinary shares substantially below their market value in order to provide the Company with the ability to make future share
issues. Consequently, a share reorganisation was implemented such that each holding of every 8 or more existing shares were
consolidated into one new ordinary share and one deferred share. The deferred shares have no right to receive notice of general
meetings nor any right to attend or vote at general meetings and no right to participate in the profits of the Company.
Share Premium
Share premium represents the consideration that has been received in excess of the nominal value on issue of share capital.
Share based payment reserve
Share based payment reserve relates to the charge for share based payments in accordance with International Financial Reporting
Standard 2.
Merger reserve
The merger reserve was created on the acquisition of Amryt DAC by Amryt Pharma plc in April 2016. Ordinary shares in Amryt
Pharma plc were issued to acquire the entire issued share capital of Amryt DAC. Under section 612 of the Companies Act 2006,
the premium on these shares has been included in a merger reserve.
18. Deferred tax liability – Group
At 1 January 2017 and 1 January 2018
Movement during the year
At 31 December 2017 and 31 December 2018
Amryt Pharma plc
Total
€’000
5,384
–
5,384
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77
The deferred tax liability arose in 2016 on the acquisition of Amryt AG (see note 5). An intangible asset was recognised in
relation to in process R&D. As the intangible asset only arises on consolidation and there may not be tax deductions available on
sale, its tax base is nil.
When the intangible asset is amortised the tax difference will reduce and the movement in the deferred tax liability will be
recognised in profit or loss. The in-process R&D is currently not being amortised.
The Company intends to continue to hold the acquired asset but does not expect it to generate taxable profits in the acquired
subsidiary. The Company expects to incur any taxable benefits in relation to the asset in Ireland. This is the jurisdiction of the
acquirer of Amryt AG and the location where the majority of future R&D work in relation to the asset will be incurred. Ireland’s
tax rate of 12.5% has been used in calculation of the deferred tax liability.
19. Long Term Loan – Group
Long term loan
Long term loan interest
Long term loan and interest
31 December
2018
€’000
31 December
2017
€’000
15,000
1,614
16,614
10,000
603
10,603
In December 2016, Amryt DAC entered into a €20m facility agreement (“facility”) with the EIB on attractive terms for the Group.
The facility is significant because it provides non-dilutive funding that secures the Group's near and mid-term funding needs for
its lead product, AP101.
The facility is split into three tranches, with €10 million available immediately and two further tranches of €5 million available
upon the achievement of certain milestones. In April 2017, the Group drew down the first tranche of €10 million. In October
2017, the terms of the second tranche of €5 million were amended by the EIB resulting in the Group being given option to draw
this amount down on demand. The Group drew down this second tranche of €5 million in September 2018. In December 2018,
the terms of the third tranche were amended by the EIB to give the Group the option to draw down this final tranche on
demand on the condition that the EASE Phase 3 trial interim efficacy results were positive. In January 2019, the Group received
the results of this unblinded interim efficacy analysis. The Independent Monitoring Committee recommended that the trial
should continue with a modest increase in patients. Following this positive result, the original conditions of the final tranche were
waived and the final tranche of €5 million was drawn down in February 2019. The facility is secured over the Intellectual Property
assets of the Group and there is also a negative pledge whereby Amryt cannot permit any security to be granted over any of its
assets over the course of the loan period.
The facility has a five-year term from the date of drawdown for each tranche. The facility has an interest rate of 3% to be paid
on an annual basis, the first instalment of short-term interest on the €10 million tranche 1 was paid in April 2018. A further
annual fixed rate of 10% is payable together with the outstanding principal amount on expiry of the facility. At 31 December
2018, the Group has short term interest payable accrued amounting to €279,000 (2017: €227,000) which is repayable in April
2019 and long-term interest payable of €1,614,000 (2017: €603,000) which represents the present value of the long-term
interest accrued but not payable until each tranche matures. Tranche 1 matures in April 2022 and tranche 2 matures in
September 2023.
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
20. Trade and other payables
Group Company
31 December
2018
€’000
31 December
2017
€’000
31 December
2018
€’000
31 December
2017
€’000
Trade payables 4,666
Accrued expenses 5,422
Social security costs and other taxes 437
Trade and other payables 10,525
4,698
4,866
235
9,799
187
166
6
359
305
129
6
440
Trade payables and accruals are consistent with the amounts owing at 31 December 2017 and primarily relates to services
provided as part of the distribution of Lojuxta and research activities relating to AP101.
21. Related party transactions
Compensation of key management personnel of the Group
At 31 December 2018 and 2017 the key management personnel of the Group were made up of two key personnel. These key
personnel are the two executive directors, Joe Wiley and Rory Nealon.
Compensation for the year ended 31 December 2018 of these personnel is detailed below:
Short-term employee benefits
Performance related bonus
Post-employment benefits
Share-based compensation benefits
31 December
2018
€’000
31 December
2017
€’000
679
355
64
148
620
310
61
10
1,246
1,001
Shares purchased by Directors
The Directors of the Company did not purchase any shares in the Company in 2018.
As part of an October 2017 share placing (see note 17), the Directors of the Company purchased ordinary shares of £0.01 each
for a consideration of £0.20 each as follows:
Director
Joe Wiley
Rory Nealon
Harry Stratford
James Culverwell
Markus Ziener
Total
Markus Ziener also purchased 100,000 shares on the open market in 2017.
Number
221,592
221,592
150,000
221,592
132,955
947,731
Amryt Pharma plc
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FINANCIAL STATEMENTS
79
22. Financial risk management
Categories of Group and Company financial instruments
31 December
2018
€’000
31 December
2017
€’000
31 December
2018
€’000
31 December
2017
€’000
Group Company
Financial assets (all at amortised cost):
Cash and cash equivalents 9,811
Trade receivables 3,121
Total financial assets 12,932
Financial liabilities:
At amortised cost
Trade payables and accrued expenses 10,088
Long term loan 16,614
At fair value
Contingent consideration 41,351
Total financial liabilities 68,053
Net (55,121)
20,512
2,929
23,441
9,564
10,603
32,418
52,585
(29,144)
79
–
79
347
–
–
347
(268)
14,441
–
14,441
434
–
–
434
14,007
Financial instruments evaluated at fair value can be classified according to the following valuation hierarchy, which reflects the
extent to which the fair value is observable:
• Level 1: fair value evaluations using prices listed on active markets (not adjusted) of identical assets or liabilities.
• Level 2: fair value evaluations using input data for the asset or liability that are either directly observable (as prices) or indirectly
observable (derived from prices), but which do not constitute listed prices pursuant to Level 1.
• Level 3: fair value evaluations using input data for the asset or liability that are not based on observable market data
(unobservable input data).
The initial contingent consideration has been valued using level 3. The contingent consideration relates to the acquisition of
Amryt AG (see note 5). The €41,351,000 fair value comprises royalty payments and milestone payments at 31 December 2018.
The fair value of the royalty payments was determined using probability weighted revenue forecasts and the fair value of the
milestones payments was determined using probability adjusted present values. It also included a revision to revenue forecasts
since management initial forecasts completed at the time of the acquisition in 2016.
Impact of key unobservable input data
• An increase of 10% in estimated revenue forecasts would result in an increase to the fair value of €2,982,000. A decrease
would have the opposite effect.
• A 5% increase in the discount factor used would result in a decrease to the fair value of €8,221,000. A decrease of 5% would
result in an increase to the fair value of €11,291,000.
• A 6-month delay in the launch date for EB would result in a decrease to the fair value of €3,346,000.
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
Policies and Objectives
The Group’s operations expose it to some financial risks arising from its use of financial instruments, the most significant ones
being liquidity, market risk and credit risk. The Board of Directors is responsible for the Group and Company’s risk management
policies and whilst retaining responsibility for them it has delegated the authority for designing and operating processes that
ensure the effective implementation of the objectives and policies to the Group’s finance function. The main policies for
managing these risks are as follows:
Liquidity risk
The Group is not subject to any externally imposed capital requirement, accordingly the Group’s objectives are to safeguard the
ability to continue as a going concern in order to provide returns for shareholders and benefits to other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital. Working capital forecasts are prepared to ensure the Group
has sufficient funds to complete contracted work commitments.
The following table shows the maturity profile of current liabilities of the Group:
31 December 2018 Less than 1
month
€’000
Between 1
and 3 months
€’000s
Between 3
and 6 months
€’000
Current liabilities 9,094
124
870
31 December 2017 Less than 1
month
€’000
Between 1
and 3 months
€’000
Between 3
and 6 months
€’000
Current liabilities 8,607
182
775
The following table shows the maturity profile of current liabilities of the Company:
31 December 2018 Less than 1
month
€’000
Between 1
and 3 months
€’000
Between 3
and 6 months
€’000
Current liabilities 308
36
3
31 December 2017 Less than 1
month
€’000
Between 1
and 3 months
€’000
Between 3
and 6 months
€’000
Current liabilities 348
–
86
The following table shows the maturity profile of long-term loan of the Group:
31 December 2018 Less than 1 Between 1
year and 3 years
€’000 €’000
Between 3
and 5 years
€’000
Long term loan – –
16,917
31 December 2017 Less than 1 Between 1
year and 3 years
€’000 €’000
Between 3
and 5 years
€’000
Long term loan – –
10,750
Greater than
5 years
€’000
–
Greater than
5 years
€’000
–
Total
€’000
10,088
Total
€’000
9,564
Total
€’000
347
Total
€’000
434
Total
€’000
16,917
Total
€’000
10,750
Amryt Pharma plc
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FINANCIAL STATEMENTS
81
The following table shows the maturity profile of contingent consideration of the Group:
31 December 2018 Less than 1 Between 1
year and 3 years
€’000 €’000
Between 3
and 5 years
€’000
Contingent consideration – 13,000
25,000
31 December 2017 Less than 1 Between 1
year and 3 years
€’000 €’000
Between 3
and 5 years
€’000
Contingent consideration – 13,000
25,000
Greater than
5 years
€’000
–
Greater than
5 years
€’000
–
Total
€’000
38,000
Total
€’000
38,000
Capital management
The Group considers its capital to be its ordinary share capital, share premium, other reserves and accumulated deficit. The Group
manages its capital to ensure that entities within the Group will be able to continue individually as going concerns, while
maximising the return to shareholders through the optimisation of debt and equity balances. The Group manages its capital
structure and makes adjustments to it, in the light of changes in economic conditions. To maintain or adjust its capital structure,
the Group may adjust or issue new shares or raise debt. On a regular basis, management receives financial and operational
performance reports that enable continuous management of assets, liabilities and liquidity. No changes were made in the
objectives, policies or processes during the year ended 31 December 2018 and 31 December 2017.
Market risk
Market risk arises from the use of interest-bearing financial instruments and represents the risk that future cash flows of a
financial instrument will fluctuate as a result of changes in interest rates. It is the Group’s policy to ensure that significant
contracts are entered into in its functional currency whenever possible and to maintain the majority of cash balances in the
functional currency of the Company. The Group considers this policy minimises any unnecessary foreign exchange exposure. In
order to monitor the continuing effectiveness of this policy the Board reviews the currency profile of cash balances and
managements accounts.
During the year, the Group earned interest on its interest-bearing financial assets at rates between 0% and 0.1%. The effect of a
1% change in interest rates obtainable during the year on cash and on short-term deposits would be to increase or decrease the
Group loss before tax by €54,000.
In addition to cash balances maintained in €, the Group had balances in £ and US$ at year-end. A theoretical 10% adverse
movement in the year end €:£ exchange rate would lead to an increase in the Group loss before tax by €14,000 with a
corresponding reduction in the Group loss before tax with a 10% favourable movement. A theoretical 10% adverse movement
in €:US$ exchange rates would lead to an increase in the Group loss before tax by €7,000 with a corresponding reduction in the
group loss before tax with a 10% favourable movement.
Credit risk
The Group and Company has no significant concentrations of credit risk. Exposure to credit risk is monitored on an ongoing
basis. If necessary, the Group maintains specific provisions for potential credit losses. To date there has been no requirement for
such provisions. The Group and Company maintains cash and cash equivalents with various financial institutions. The Group and
Company performs regular and detailed evaluations of these financial institutions to assess their relative credit standing. The
carrying amount reported in the balance sheet for cash and cash equivalents approximate their fair value. Credit risk is the risk
that the counterparty will default on its contractual obligations resulting in financial loss. Credit risk arises from cash and cash
equivalents and from exposure via deposits with the Group and Company’s bankers. For cash and cash equivalents, the Group
and Company only uses recognised banks with high credit ratings.
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
23. Capital commitments and contingencies – Group
Contingent liabilities
Amryt AG Share Purchase Agreement
See note 5 in relation to contingent consideration as a result of the acquisition of Amryt AG.
Aegerion Pharmaceuticals Inc. ("Aegerion") Lojuxta Licence Agreement
Under the terms of the Lojuxta licence agreement Amryt has the exclusive right to sell Lojuxta across the licenced territories. As
part of the agreement, Amryt will make royalty payments to Aegerion of 20%-22% of net sales and will pay one-off milestones
payments of US$1,000,000 and US$1,500,000 if calendar year net sales targets of US$20,000,000 and US$30,000,000
respectively are achieved. The Group expects to reach these net sales targets over the next 5 years.
Operating lease commitments – Group
Future minimum obligations under operating lease contracts (in €’000):
At 31 December 2018 Less than 1
year
1 year to
5 years
Greater than
5 years
Leases for business premises 210
Leases Other 35
Total 245
130
32
162
–
18
18
At 31 December 2017 Less than 1
year
1 year to
5 years
Greater than
5 years
Leases for business premises 207
Leases Other 15
Total 222
409
33
442
–
–
–
The Group had no finance lease commitments in 2018 and 2017.
Total
340
85
425
Total
616
48
664
24. Statement of Comprehensive Income – Company
In accordance with the provisions under section 408 of the Companies Act 2006, the Company has not presented a Statement
of Comprehensive Income. The Company’s loss for the year was €582,000 (2017: €1,361,000).
25. Notes supporting Statement of Cash Flows
Reconciliation of net cash flow to movement in net debt:
Net debt at beginning of year
Cashflows – new debt
Cashflows – repayment of debt
Non-cash flows
Long term interest repayable with long term debt
Short term interest included in trade creditors and accruals
Net debt at end of year
Amryt Pharma plc
31 December
2018
€’000
31 December
2017
€’000
(10,830)
(5,000)
227
(1,614)
(278)
(17,495)
(47)
(10,000)
47
(603)
(227)
(10,830)
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FINANCIAL STATEMENTS
83
26. Events after the reporting period
EASE Phase 3 trial interim efficacy results
In January 2019, Amryt announced the results of an unblinded interim efficacy analysis on its pivotal Phase 3 EASE trial for
AP101 as a potential treatment for EB. The analysis was conducted by the IDMC. The IDMC recommended that the trial should
continue with an increase of 48 patients in the study to a total of 230 evaluable patients, in order to achieve 80% statistical
power. The analysis was conducted using unblinded efficacy data received by the IDMC for the primary endpoint from the first
half of the study. Amryt will begin the recruitment process for the additional patients required and now expects recruitment of
patients for top-line data to be completed in H2 2019.
THE IDMC also recommended that the EASE study can now enrol infants and children with EB between the ages of 21 days to
4 years of age in to the trial. The IDMC's analysis was conducted using pharmacokinetic ("PK") data received from patients
already enrolled in the trial (aged four years and older).
Positive results for novel non-viral gene therapy AP103
In January 2019, Amryt announced positive results from two pre-clinical studies which support the development of its novel
non-viral gene therapy, AP103, as a potentially disease-modifying therapy for patients with Recessive Dystrophic Epidermolysis
Bullosa ("RDEB"), a subset of EB. RDEB is a particularly severe form of EB and is caused by mutations in a single gene, COL7A1,
which codes for the production of collagen VII, a structural protein vital for the elastic and structural integrity of the skin. Restoring
production of collagen VII in skin cells could be transformative for these patients, potentially making their skin less fragile and
more resistant to damage and blistering. As a result, the quality of life for patients with RDEB could be dramatically improved.
Pre-clinical studies sought to investigate the potential of AP103 as a topical gene therapy intervention to restore expression of
the COL7A1 gene.
• In vitro tests on RDEB keratinocytes, the main cell type in the top layer of skin, showed that a single delivery of the human
collagen VII gene, by AP103, restored collagen VII production to levels exceeding those produced by healthy human
keratinocytes
• Topical application of AP103 onto a 3-D matrix of human RDEB skin restored collagen VII along the basement membrane to
levels similar to those observed post-delivery using a viral vector
• AP103 exhibited no evidence of cellular toxicity after repeated administration
AP103 is based on a new gene therapy delivery platform, in-licensed by Amryt in March 2018, that utilises a non-viral delivery
vector, HPAE (Highly Branched Poly β-Amino Ester), designed to deliver the correct collagen VII gene into skin cells. It is topically
applied to the skin.
Planned Acquisition of Aegerion
On 21 May 2019, Amryt announced the recommended acquisition of Aegerion Pharmaceuticals (“Aegerion”). The acquisition
will create a leading global rare and orphan disease company with a diversified offering of multiple commercial and development
stage assets and provides scale to support further growth. The transaction gives Amryt an expanded commercial footprint to
market two US and EMEA approved products, lomitapide (Juxtapid (US/ROW)/Lojuxta (EU)) and metreleptin (Myalept
(US/ROW)/Myalepta (EU)).
The planned acquisition of Aegerion accelerates Amryt’s ambition to become a global leader in treating rare conditions to help
improve the lives of patients where there is a high unmet medical need. By delivering two substantial revenue-generating
products and an enhanced pipeline of promising development opportunities, this will significantly strengthen our growth in
highly attractive markets globally. Amryt has a unique insight into both Aegerion and its products, through our commercial
success with Lojuxta and given that many of Amryt’s senior management team previously worked at Aegerion.
Annual Report for the year ended 31 December 2018
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Notes to the Financial Statements continued
For the year ended 31 December 2018
With this transaction Amryt can continue the strong growth trajectory already underway with Lojuxta in Europe on a global
scale. It also delivers metreleptin, another highly compelling commercial rare disease product alongside an established
commercial footprint in the US and internationally. This transformational deal provides Amryt with the financial flexibility to fully
execute our medium-term growth plans and is expected to deliver significant shareholder returns. The transaction highlights are
included on page 5 of this annual report.
Amryt Pharma plc
254852 AMRYT AR 0cover 2018.qxp 10/06/2019 15:47 Page 85
Amryt is a biopharmaceutical company focused
on developing and delivering innovative new
treatments to help improve the lives of patients
with rare or orphan diseases.
Orphan / Rare Disease focused business with strong and
experienced management team in place
Delivering on strategy to acquire, develop and
commercialise products as evidenced by our recent
planned acquisition announcement
The planned acquisition of Aegerion Pharmaceuticals will
put Amryt on the path of creating a rare and orphan
disease company with a diversified offering of multiple
commercial and development stage assets
Robust pipeline of drug candidates with excellent
progress made on AP101 and AP103
Pivotal phase 3 trial, “EASE” Study, to examine AP101’s
efficacy as a new treatment for EB is progressing with
positive unblinded interim efficacy result received in H1
2019. Study top line data expected to be available in H1
2020
Driving growth of our multiple commercial products will
be a key focus for us in 2019
Planned NASDAQ listing will drive liquidity and investor
reach
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
85
Company Information
Registered Office
Dept 920A
196 High Road
Wood Green
London N22 8HH
United Kingdom
Company Number
05316808
Directors
Harry Stratford – Non-executive Chairman
Joe Wiley – CEO
Rory Nealon – CFO/COO
James Culverwell – Non-executive Director
Ray Stafford – Non-executive Director
Markus Ziener – Non-executive Director
Company Secretary
Rory Nealon
Company Website
www.amrytpharma.com
AIM Nominated Adviser
Shore Capital and Corporate Limited
Bond Street House
14 Clifford Street
London, W1S 4JU
United Kingdom
Joint Broker
Shore Capital Stockbrokers Limited
Bond Street House
14 Clifford Street
London, W1S 4JU
United Kingdom
Joint Broker
Stifel Nicolaus Europe Limited
150 Cheapside
London, EC2V 6ET
United Kingdom
Euronext Growth Adviser and Joint Broker
J & E Davy
Davy House
49 Dawson Street
Dublin 2
Ireland
Auditors
Grant Thornton
13-18 City Quay
Dublin 2
Ireland
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Kent, BR3 4TU
United Kingdom
Amryt Pharma plc
Annual Report for the year ended 31 December 2018
Perivan Financial Print 254852
254852 AMRYT AR 0cover 2018.qxp 10/06/2019 15:47 Page 1
Amryt Pharma plc
Registered Office:
Dept 920A
196 High Road
Wood Green
London N22 8HH
United Kingdom
Dublin Office:
90 Harcourt Street
Dublin 2
Ireland
www.amrytpharma.com
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Amryt Pharma plc
Annual Report 2018
The Rare and
Orphan Diseases Specialist