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Amryt Pharma plc
Annual Report 2019
259162 0 Amyrt Cover Spread.qxp 26/06/2020 16:35 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
259162 0 Amyrt Cover Spread.qxp 26/06/2020 16:35 Page 118
Amryt is a global, commercial-stage
biopharmaceutical company dedicated to
developing and commercializing novel
therapeutics to treat patients suffering from
serious and life-threatening rare disease
Amryt Pharma plc
Perivan 259162
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01
Contents
STRATEGIC REPORT
(cid:129) General Information 2
(cid:129) Our Business 3
(cid:129) Chairman & Chief Executive’s Statement and Business Review 4
(cid:129) Performance Highlights 8
(cid:129) Our Products & Development Pipeline 11
(cid:129) Mission & Strategy 14
(cid:129) Our Strengths 15
(cid:129) Financial Review 16
(cid:129) Key Performance Indicators 22
(cid:129) Risks & Uncertainties 23
CORPORATE GOVERNANCE
(cid:129) Board of Directors 36
(cid:129) Corporate Governance 40
(cid:129) Directors’ Report 47
FINANCIAL STATEMENTS
(cid:129) Independent Auditor’s Report 53
(cid:129) Consolidated Statement of Financial Position 62
(cid:129) Consolidated Statement of Comprehensive Income 63
(cid:129) Consolidated Statement of Cash Flows 64
(cid:129) Consolidated Statement of Changes in Equity 65
(cid:129) Company Statement of Financial Position 66
(cid:129) Company Statement of Cash Flows 67
(cid:129) Company Statement of Changes in Equity 68
(cid:129) Notes to the Financial Statements 69
(cid:129) Company Information 118
Annual Report for the year ended 31 December 2019
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02
STRATEGIC REPORT:
General Information
We are pleased to present the annual report and consolidated financial statements of Amryt Pharma plc for the year ended 31
December 2019. 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.
Amryt Pharma plc (‘‘Company’’) is a company incorporated in England and Wales. The Company is listed on the AIM market of
the London Stock Exchange (ticker: AMYT) and the Euronext Growth Market of Euronext Dublin (ticker: AYP). In June 2020, the
Company publicly filed a registration statement on Form F-1 to the U.S. Securities Exchange Commission (“SEC”) relating to the
listing of American Depositary Shares (“ADSs”) representing Amryt ordinary shares on the Nasdaq stock market (“Nasdaq”).
We were incorporated under the Companies Act 2006 (“Companies Act”) on 17 July 2019 as a private company limited by
shares under the name Amryt Pharma Holdings Limited, with company number 12107859. We were re-registered as a public
limited company on 13 September 2019 under the name Amryt Pharma Holdings Limited. On 24 September 2019, Amryt
Pharma Holdings plc became the new parent company of Amryt Pharma plc pursuant to a scheme of arrangement between
Amryt Pharma plc and its shareholders under Part 26 of the Companies Act 2006. Amryt Pharma Holdings changed its name to
Amryt Pharma plc.
The consolidated accounts comprise the financial statements for the Group for the years ended 31 December 2019 and 2018.
The 2019 financial statements incorporate the results of Aegerion Pharmaceuticals, Inc. (“Aegerion”) from the date of
acquisition, 24 September 2019 to 31 December 2019.
Aegerion, a former subsidiary of Novelion Therapeutics Inc., is a rare and orphan disease company with a diversified offering of
multiple commercial and development stage assets. Following the acquisition of Aegerion by Amryt in September 2019, the
acquisition has given Amryt an expanded commercial footprint to market two US and EU approved products, lomitapide
(JUXTAPID®/(US) / 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.
On 10 July 2019, the shareholders of the Company approved a resolution to give authority to the Company to undertake a
consolidation of the existing ordinary shares in the capital of the Company under which every 6 existing ordinary shares were
consolidated into one ordinary share.
The functional currency of the Company is U.S. dollars. Beginning 1 January 2018 (the earliest period presented) the Company
has changed its reporting currency from Euro (‘‘€’’) to U.S. dollar (‘‘$’’) to align with the new functional currency of the Company,
subsequent to the Aegerion acquisition in September 2019, and therefore to provide greater clarity to users of these
consolidated financial statements.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
03
STRATEGIC REPORT:
Our Business
Amryt Pharma is a global, commercial-stage biopharmaceutical company dedicated to commercialising and developing novel
therapeutics to treat patients suffering from serious and life-threatening rare diseases.
Our diversified portfolio is comprised of two substantial revenue-generating products, an international commercial business in
the US, Europe, the Middle East and Latin America, and a strong pipeline of development and life-cycle opportunities in areas of
significant high unmet medical need.
Amryt’s commercial business comprises two orphan disease products.
JUXTAPID®/ LOJUXTA® (lomitapide) is approved as an adjunct to a low-fat diet and other lipid-lowering medicinal products for
adults with the rare cholesterol disorder, Homozygous Familial Hypercholesterolaemia ("HoFH") in the US, Canada, Columbia,
Argentina and Japan (under the trade name JUXTAPID®) and in the EU (under the trade name LOJUXTA®). HoFH is a rare
genetic disorder which impairs the body's ability to remove low density lipoprotein ("LDL") cholesterol ("bad" cholesterol) from
the blood, typically leading to abnormally high blood LDL cholesterol levels in the body from before birth - often ten times more
than people without HoFH - and subsequent aggressive and premature cardiovascular disease.
MYALEPT® / MYALEPTA® (metreleptin) is approved in the US (under the trade name MYALEPT®) as an adjunct to diet as
replacement therapy to treat the complications of leptin deficiency in patients with congenital or acquired generalized
lipodystrophy (GL) and in the EU (under the trade name MYALEPTA®) for the treatment of leptin deficiency in patients with
congenital or acquired GL in adults and children two years of age and above and familial or acquired partial lipodystrophy (PL) in
adults and children 12 years of age and above for whom standard treatments have failed to achieve adequate metabolic control.
Metreleptin is also approved for lipodystrophy in Japan. Generalised and partial lipodystrophy are rare disorders characterised by
loss or lack of adipose tissue resulting in the deficiency of the hormone leptin, produced by fat cells and are associated with
severe metabolic abnormalities including severe insulin resistance, diabetes, hypertriglyceridemia and fatty liver disease.
Amryt's lead development candidate, FILSUVEZ® (AP101) is a potential treatment for the cutaneous manifestations of
Epidermolysis Bullosa ("EB"), a rare and distressing genetic skin disorder affecting young children and adults for which there is
currently no approved treatment. FILSUVEZ® has been granted Rare Pediatric Disease Designation and has also received a Fast
Track Designation from the FDA. In April 2020 the Company closed the Phase 3 study to further enrolment and is expecting top-
line data in late Q3 / early Q4 2020. The European and US market opportunity for EB is estimated by the Company to be in
excess of $1.0 billion.
In March 2018, Amryt in-licenced a pre-clinical gene-therapy platform technology, AP103, which offers a potential treatment for
patients with Recessive Dystrophic Epidermolysis Bullosa, a subset of EB, and is also potentially relevant to other genetic
disorders.
We have a proven track record of obtaining rare disease assets, either through acquisition or in-license, and we intend to
continue building our portfolio of rare disease programs with the goal of bringing effective treatments to patients in need.
Annual Report for the year ended 31 December 2019
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04
STRATEGIC REPORT:
Chairman & Chief Executive's Statement and
Business Review
We are pleased to report on a truly transformational year for Amryt. We have continued to execute on strategy with the
acquisition of Aegerion, thereby strengthening our commercial offering and global capabilities. In financial terms, we have
delivered strong growth in revenues and our cash position at the end of year has exceeded expectations.
Acquisition and progress against strategic objectives
2019 was another year of strong delivery across a range of strategic and operational initiatives. We continued to reshape our
portfolio through the acquisition of Aegerion, which we completed in September 2019. The transaction has 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. Amryt now has a differentiated, diverse, global offering of
multiple commercial and development stage rare disease assets, including:
(cid:129) Two high-value commercial assets with multiple development opportunities in complementary global markets
o
o
Lomitapide (JUXTAPID®(US)/LOJUXTA®(EU)) for the treatment of HoFH
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)
(cid:129) Additional near-term potential commercial opportunities for a broadened Amryt portfolio of products
o
o
o
Metreleptin as a potential treatment for PL in the US
Lomitapide (JUXTAPID®/LOJUXTA®) as a potential treatment for Familial Chylomicronemia Syndrome (FCS)
A lead development asset (FILSUVEZ®) for Epidermolysis Bullosa (“EB”), a greater than $1bn market opportunity as
estimated by the Company in a pivotal Phase 3 trial, which reported positive unblinded interim efficacy analysis results
in H1 2019 and we anticipate top-line read out in H2 2020
o
Novel gene therapy platform (AP103) which offers a potential treatment for patients with EB and other topical indications
We are pleased to report that the integration of Aegerion was completed successfully in Q1 2020 ahead of schedule.
Financial Position
In August 2019, Amryt raised gross proceeds of $8.0M by way of an interim equity placing. These proceeds were used to meet
the Amryt legal, financial and other costs associated with the Aegerion acquisition which were payable at deal close. On
completion of the acquisition in September 2019, Amryt raised an additional $57.0M net of fees by way of an equity placing.
This compares to the year-end unrestricted cash balance of $65.2M which was significantly ahead of expectations and reflects
the strong performance of the business in the period since the acquisition of Aegerion.
In conjunction with the acquisition, Amryt re-structured the existing Amryt and Aegerion debt facilities. This resulted in Amryt
repaying the EIB debt facility and putting in place a new five-year term loan of $81.0M and a new five and a half year convertible
facility of $125.0M. Amryt's debt maturity profile offers significant flexibility. No principal repayments are due on the term loan
until September 2024 and on the convertible facility until April 2025.
Operational Performance
The positive momentum we experienced during 2018 continued into 2019. Our performance far exceeded expectations during
the year, driven by the Aegerion acquisition and underlying growth in our existing business. The acquisition of Aegerion has
created an ideal platform to expand our existing footprint in US, Europe, the Middle East and Latin America.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
05
STRATEGIC REPORT:
Chairman & Chief Executive's Statement and
Business Review continued
Post the Aegerion acquisition, we now have two substantial revenue-generating commercial assets. This is supplemented by a
strong pipeline of development and life-cycle opportunities in areas of significant high unmet medical need, and the financial
flexibility to execute on our growth plans. Amryt is now very well positioned to execute on our strategy of becoming a global
leader in rare and orphan diseases and most importantly, delivering therapies to patients with unmet needs. Both commercial
assets are performing well in the market. We are actively deploying our proven strategy for LOJUXTA in Europe to rejuvenate the
JUXTAPID business in the US and results have been positive to date. MYALEPT has continued to grow in the US where the
product is approved for Generalized Lipodystrophy, and we are now in the active launch-phase of MYALEPTA in EMEA, where
this product is approved for both Generalized and Partial Lipodystrophy. MYALEPTA is indicated for treatment of patients with
confirmed familial partial LD or acquired partial LD in adults and children 12 years of age and above for whom standard
treatments have failed to achieve adequate metabolic control.
FILSUVEZ® Update
The Group has continued to make strong progress with its lead development asset, FILSUVEZ®, as a new potential treatment for
EB. In March 2017 Amryt commenced EASE, a Phase 3 prospective double-blind randomised placebo controlled efficacy and
safety study of FILSUVEZ® in patients with EB. EASE is the largest ever global Phase 3 study conducted in patients with EB,
operating across 55 sites in 27 countries globally. 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 continued to recruit both adults and pediatric candidates throughout the
remainder of 2019.
In October 2019, the FDA designated the investigation of FILSUVEZ® for the treatment of Epidermolysis Bullosa (EB) as a Fast
Track development program. The FDA has recognised that EB is a serious disease and that there are no FDA-approved treatments
for this condition. Additionally, the FDA has noted that Amryt has generated preliminary clinical data from an ongoing Phase 3
trial, which supports continued study. The Fast Track programme is designed to accelerate the development and review of
products such as FILSUVEZ®, which are intended to treat serious diseases and for which there is an unmet medical need. Fast
Track designation enables more frequent communication with the FDA and may allow for further benefit from FDA accelerated
programmes such as priority review and/or rolling review.
The COVID 19 pandemic has had a material impact on clinical trials globally, including patient recruitment. Given that the EASE
study was already close to full enrolment, Amryt has taken advice from an independent expert and concluded that the statistical
impact of further patient recruitment would most likely be negligible. In April 2020, we decided to close the EASE study to
further enrolment. Shortly after the last patient completes the end of the double-blind treatment period (Day 90), the study data
will be cleaned and the database locked. Statistical analyses will then be performed and the Company now anticipates top line
data read out in late Q3 / early Q4 2020.
Board Renewal
This year, we saw a number of changes to our Board of Directors with four new Non-Executive Directors appointed to the Board
– George Hampton, Donald Stern, Alain Munoz and Steven Wills. We welcome them to the Board and look forward to working
with them to execute on our strategy of becoming a global leader in rare and orphan diseases and most importantly, delivering
therapies to patients with unmet needs. Harry Stafford, James Culverwell and Markus Ziener resigned from their positions as
Non-Executive Directors on the Board in September 2019. We thank them for the service and wish them well in all their future
endeavours. Rory Nealon also resigned from his position as an Executive Director of the Board but will continue in his roles as
Chief Financial Officer (CFO) and Chief Operating Officer (COO).
Annual Report for the year ended 31 December 2019
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STRATEGIC REPORT:
Chairman & Chief Executive's Statement and
Business Review continued
Corporate Governance
As an AIM quoted company, we are required to formally adopt a corporate governance code as well as disclose details of our
compliance with that code and, where we depart from the code, provide an explanation of the reasons for doing so.
The Amryt 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 – www.amrytpharma.com.
Our People
Amryt is led by an experienced senior management team which has been enhanced further in 2019 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 the US and Europe. Our strategy is to leverage this capacity to
seek to in-license more commercial and late stage assets, which we are actively pursuing.
All of our success to date has been achieved through the collective effort of our team across the US and Europe. I would like to
take this opportunity to sincerely thank them all for their dedication, support and efforts.
Outlook
Over the past 4 years, Amryt has forged a strategy and business model that we believe is flexible and adaptable over time and
can fulfil our ambition of becoming a global player in rare and orphan diseases with a diversified offering of multiple commercial
and development stage assets that provides scale to support further growth.
We are very positive about the growth prospects for our lomitapide and metreleptin commercial businesses. Lomitapide
performed well both in the US and Europe, Middle East and Africa (“EMEA”) territories. Metreleptin revenues continue to
increase each year and we believe that there remains a significant opportunity to further grow revenues especially with material,
latent opportunities in EMEA and Latin America. Capitalising on these opportunities will be a major focus for us in 2020. We also
intend to continue our evaluation of additional opportunities for both commercial products in 2020, in particular FCS for
lomitapide and US PL for metreleptin.
We look forward to the top-line data readout from our EASE study in late Q3 / early Q4 2020, which will represent a significant
milestone for Amryt and our stakeholders. We are also encouraged by the interest expressed by physicians to study FILSUVEZ® in
various other partial thickness wound indications with a high unmet medical need and will continue to evaluate these
opportunities in 2020.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
07
COVID-19 update
Amryt provides therapeutic products to HoFH and lipodystrophy patients globally on a recurring basis. Once lomitapide (for the
treatment of HoFH) or metreleptin (for the treatment of lipodystrophy) are prescribed by physicians, patients are typically on
treatment over a long period of time with repeat prescriptions for each patient, which has limited the impact of the COVID-19
pandemic on Amryt’s existing patient revenues.
Amryt has in excess of 12 months of labelled or unlabelled finished products on hand for both lomitapide and metreleptin and
we are taking additional steps to further strengthen our inventory levels of both metreleptin and lomitapide. To date, we have
not experienced any significant logistical difficulties in delivering product to patients.
Whilst the COVID-19 pandemic is still very much present at the time of writing, we are pleased to be able to report that the
impact of COVID-19 to date on Amryt’s business has been minimized. This is a result of deploying contingency plans already in
place for a variety of scenarios and challenges which may occur. We continue to monitor the situation on a daily basis and our
primary focus remains ensuring the safety of our colleagues, their families and our patients at this time.
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 very well positioned to progress its vision of becoming a global leader in rare and
orphan diseases.
Ray Stafford
Non-Executive Chairman
24 June 2020
Dr Joe Wiley
Chief Executive Officer
Annual Report for the year ended 31 December 2019
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08
STRATEGIC REPORT:
Performance Highlights
2019 was a truly transformational year of performance and growth for Amryt. The Aegerion integration was completed
successfully and ahead of schedule and the business is performing ahead of expectations. In a single year, Amryt has evolved
from a company with a single commercial asset on the market in the EMEA region to become a global biopharmaceutical
company with two orphan disease products on the market and a commercial infrastructure across North America, EMEA and
LATAM. The acquisition has expanded our capabilities, diversified our global customer base, added important US infrastructure,
and creates an ideal platform to expand the existing global footprint through a combination of organic and acquisition growth in
conjunction with the advancement of our existing development pipeline products.
Some financial and operational highlights of the Group’s performance in 2019 and 2020 to date are as follows:
2019 Financial Highlights
The 2019 audited financial results reflect the acquisition of Aegerion from 24 September 2019 and are not reflective of the
performance of the combined businesses for a full year. Total reported revenues of $58.1 million reflect sales of the legacy Amryt
business for the full financial year, plus sales of the acquired Aegerion business with effect from 24 September 2019.
To aid comparison, we also report unaudited combined revenues1 that reflect the combined businesses, had they been integrated
for a full financial year. On this basis, the unaudited combined revenues for 2019 would have been $154.1 million representing a
growth rate of 13.1% on 2018 unaudited combined revenues of $136.3 million.
(cid:129) MYALEPT® / MYALEPTA® (metreleptin) generated revenues of $85.4 million (2018: $71.4 million) representing an increase
of 19.6%
(cid:129) JUXTAPID®/LOJUXTA® (lomitapide) generated revenues of $68.0 million (2018: $64.0 million), representing a growth rate
of 6.3%
(cid:129) The significant growth in metreleptin revenues was driven by the ongoing rollout of MYALEPTA® in Europe following the
approval of the product by the European Medicines Agency in Q3 2018
1 Unaudited combined revenues for 2018 and 2019 represent the combined unaudited revenues of the Company assuming the acquisition by Amryt of Aegerion
occurred on 1 January 2018. It also (i) excludes revenues from sales to end-users in Japan following the out-licencing of JUXTAPID to Recordati in February 2019,
(ii) excludes up-front payments from Recordati in 2019, and (iii) includes a 22.5% royalty on Japanese sales of JUXTAPID from 1 January 2018 as if the Recordati
agreement was in place from that date.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
09
Statutory and adjusted 2019 results
US$ (Million) 2018 2019
Revenue 17.1 58.1
Gross profit 10.8 16.1
R&D (10.7) (15.8)
SG&A (17.3) (35.5)
Restructuring & acquisition costs – (13.1)
Share based compensation expenses (0.8) (0.8)
Impairment charge – (4.7)
Operating loss before finance expense (18.0) (53.8)
Unrestricted cash & cash equiv. 9.9 65.2
Restructuring /
Deal Costs
Adjs2
Non-cash
Items3
2019 Non-
GAAP
Adjusted
–
2.5
–
–
13.1
–
–
15.6
–
–
22.2
–
0.8
–
0.8
4.7
28.5
–
58.1
40.8
(15.8)
(34.7)
–
–
–
(9.7)
65.2
2 Restructuring / deal cost adjustments includes the Amryt acquisition and deal related costs associated with the Aegerion acquisition, the subsequent restructuring
costs during the period post the completion of the acquisition associated with the relocation of a number of functions from Boston and EMEA to Dublin, Ireland,
and the removal of royalties paid by Amryt to Aegerion in the period prior to completion of the acquisition which become an intercompany payment post
completion of the acquisition.
3 Non-cash items include amortisation of the acquired metreleptin and lomitapide intangible assets, amortisation of the inventory fair value step-up that was
acquired at the acquisition date, depreciation and other amortisation, share based compensation expenses and the impairment of our AP102 asset.
As outlined in the table above, the operating loss for 2019 of $53.8 million (2018: $18.0 million) includes the significant impact
of restructuring and deal costs associated with the Aegerion acquisition and non-cash items including amortisation, impairment,
depreciation and the impact of share based compensation expenses. Operating losses before non-cash items and restructuring &
deal costs in 2019 were $9.7 million (operating loss before non-cash items for 2018: $16.8 million).
2019 Business Highlights
(cid:129) Amryt acquired Aegerion on 24 September 2019 creating a global commercial rare disease business with two approved
products, which delivered $154.1 million in unaudited combined revenues1 in 2019
(cid:129) The Company’s lead development candidate, FILSUVEZ®, is currently completing a pivotal Phase 3 prospective double-blind
randomised placebo controlled study (“EASE”) in patients with dystrophic and junctional EB. EASE is the largest ever global
Phase 3 study conducted in patients with EB, operating across 55 sites in 27 countries globally. In January 2019, Amryt
reported the outcome of an unblinded interim efficacy analysis, at which point an Independent Data Monitoring Committee
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. Given the impact the COVID-19 pandemic has had on clinical trials globally, including
patient recruitment, and given that the EASE study was already close to full enrolment, Amryt has taken advice from an
independent expert and concluded that the statistical impact of further patient recruitment would most likely be negligible.
Amryt therefore decided to close the EASE study to further enrolment in April 2020
(cid:129) FILSUVEZ® received Fast-Track Designation from the U.S. Food and Drug Administration (“FDA”) in September 2019 having
previously received a Rare Paediatric Disease Designation. These designations from the FDA are designed to accelerate the
development and review of products such as FILSUVEZ® and Amryt will be eligible to receive a Priority Review Voucher
(“PRV”) that can be used, sold or transferred if FILSUVEZ® is ultimately approved by the FDA.
Annual Report for the year ended 31 December 2019
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STRATEGIC REPORT:
Performance Highlights continued
(cid:129) AP103, is currently in pre-clinical development for the treatment of patients with Recessive Dystrophic EB, a subset of EB.
AP103 is the first gene therapy product candidate based on our novel polymer-based topical gene therapy delivery platform,
which also has potential use for the treatment of other rare genetic diseases. On 7 January 2019 Amryt announced that 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
(cid:129) Board Renewal – In September 2019 post completion of the Aegerion acquisition, Harry Stratford, Rory Nealon, James
Culverwell and Markus Ziener stood down from the Board. George Hampton, Dr Alain Munoz, Donald Stern, Dr Patrick Vink
and Stephen Wills all joined the Board as Non-Executive Directors with Ray Stafford becoming Non-Executive Chairman
Post-Period End Highlights
(cid:129) Aegerion integration completed successfully and ahead of schedule
(cid:129) Q1 2020 revenues (unaudited) of $44.6 million representing a 30% increase on unaudited proforma combined revenues in
Q1 2019 of $34.3 million. EBITDA (unaudited) of $4.6 million delivered in Q1 2020
(cid:129) In February 2020, we announced that we had confidentially submitted a draft registration statement on Form F-1 to the SEC
relating to the proposed listing of American ADSs representing Amryt ordinary shares on Nasdaq. In June 2020, we filed a
public registration statement on Form F-1
(cid:129) Enrolment concluded in EASE, a global pivotal Phase 3 trial in patients with dystrophic and junctional EB. Top-line data from
this study is expected in late Q3 / early Q4 2020
(cid:129) In May 2020, FILSUVEZ® was confirmed as the global brand name for AP101. Establishing the brand name for AP101 is
another important step forward in ensuring readiness for the global launch of FILSUVEZ®
COVID-19 Update
The primary concern of all the Amryt team is to ensure the safety of our colleagues, their families and our patients and partners
at this time. Global healthcare systems are operating at or close to full capacity and the focus within systems now is to treat
those patients in need of acute care. Amryt’s business lends itself to remote working and in recent weeks, we have successfully
transitioned appropriate functions to remote platforms exclusively without incident. The impact of COVID-19 to date on Amryt’s
business has been minimized and this is a result of deploying contingency plans already in place for a variety of scenarios and
challenges which may occur.
Amryt provides therapeutic products to Homozygous Familial Hypercholesterolaemia (“HoFH”) and lipodystrophy patients
globally on a recurring basis. Once lomitapide (for the treatment of HoFH) or metreleptin (for the treatment of lipodystrophy) are
prescribed by physicians, patients are typically on treatment over a long period of time with repeat prescriptions for each patient.
As such, the majority of our revenues are recurring in nature. During the pandemic our sales teams’ deployment in the field is
restricted and we continue to evaluate remote and virtual physician access as a means to identify new patients that may be
suitable for treatment with our products.
Amryt has in excess of 12 months of labelled and unlabelled finished products on hand for both lomitapide and metreleptin. Our
supply chain is robust and we are confident that we can continue to supply patients for the foreseeable future. We are taking
additional steps to further strengthen our inventory levels of both metreleptin and lomitapide. To date, we have not experienced
any significant logistical difficulties in delivering product to patients. In major markets such as the USA, the UK and Germany,
product has historically been delivered direct to patients’ homes. In other markets, product has typically been delivered to local
hospitals/distributors and we are continuing to explore opportunities to expand direct to home delivery in these markets.
Amryt Pharma plc
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STRATEGIC REPORT:
Our Products & Development Pipeline
Commercial Assets
Lomitapide is an oral therapy approved as an adjunct to a low-fat diet and other lipid-lowering treatments for adults with HoFH,
in the United States under the trade name JUXTAPID and in the European Union under the trade name LOJUXTA. HoFH is a rare
and serious genetic condition that leads to aggressive and premature heart disease, heart attacks and strokes in patients as
young as teenagers. HoFH patients are at a high risk of experiencing life-threatening cardiovascular events as a result of
extremely elevated cholesterol levels in the blood and have a substantially reduced life expectancy. HoFH impairs the liver’s ability
to remove low density lipoprotein (“LDL”) cholesterol, or ‘‘bad’’ cholesterol, from the blood, which if left untreated can cause
aggressive narrowing and blocking of the blood vessels. According to a 2013 European Heart Journal article, the prevalence of
HoFH is one person per million. However, according to a 2016 article published in Atherosclerosis, the number may be as high as
6.25 persons per million. Lomitapide is a small molecule microsomal triglyceride transfer protein (‘‘MTP’’) inhibitor. MTP exists in
both the liver and intestines where it plays a role in the formation of cholesterol-carrying lipoproteins. As a result, inhibition of
MTP is an effective cholesterol-lowering therapy in HoFH patients with limited or non-functional LDL receptors.
Metreleptin for injection is approved in the United States under the trade name MYALEPT as an adjunct to diet as replacement
therapy to treat the complications of leptin deficiency in patients with congenital or acquired GL. It is approved in the European
Union under the trade name MYALEPTA for the treatment of leptin deficiency in patients with congenital or acquired GL and
familial or acquired PL for whom standard treatments have failed to achieve adequate metabolic control. GL and PL are rare
diseases characterized by loss or lack of adipose tissues (fat cells), resulting in the deficiency of the hormone leptin. GL and PL
patients experience severe metabolic abnormalities including severe insulin resistance, diabetes, hypertriglyceridemia and fatty
liver disease. We estimate that the prevalence of GL is approximately one person per million and of PL is approximately three
persons per million. Metreleptin is a recombinant human leptin analog that binds to and activates the human leptin receptor.
Metreleptin acts to stimulate fatty acid oxidation throughout the body and lower plasma, hepatic and myocellular triglyceride
levels.
Development Pipeline
FILSUVEZ®
Our lead development candidate, FILSUVEZ®, is being developed as a potential treatment for the cutaneous manifestations of
severe EB, a rare and devastating genetic skin disease affecting young children and adults for which there is currently no
approved treatment. EB is a group of diseases of the skin, mucous membranes and internal epithelial linings characterized by
extreme skin fragility that blisters and tears from minor friction or trauma. Patients with severe forms of EB, including Dystrophic
EB (‘‘DEB’’) and Junctional EB (‘‘JEB’’), suffer from severe and chronic blistering, scarring, mutilating scarring of the hands and
feet, joint contractures, strictures of the oesophagus and mucous membranes, a high risk of developing aggressive squamous cell
carcinomas, infections and risk of premature death. According to a 2013 article in the Journal of Investigative Dermatology, it is
estimated that the incidence of EB is approximately one in 20,000, which implies that there are as many as 30,000 affected
individuals in the United States and over 500,000 worldwide.
Our pivotal Phase 3 clinical trial of FILSUVEZ®, EASE, in severe EB, including DEB and JEB commenced in March 2017, with the
first patient enrolled in April 2017.
In July 2018, FILSUVEZ® was granted Rare Pediatric Disease designation by the U.S. Food and Drug Administration ("FDA"). This
means that if a New Drug Application ("NDA") for FILSUVEZ® is approved, the Directors expect Amryt to be eligible to receive a
Rare Pediatric Disease Priority Review Voucher ("PRV") that can be used, sold or transferred.
In January 2019, we reported that the independent Data and Safety Monitoring Committee (‘‘IDMC’’) performed a pre-specified
unblinded interim efficacy analysis, which supported the continuation of the study with an increase in sample size from 182 to
230 evaluable patients to maintain 80% statistical power.
FILSUVEZ® was granted Fast Track designation by the FDA in September 2019. The Fast Track programme is designed to
accelerate the development and review of products such as FILSUVEZ®, which are intended to treat serious diseases and for
which there is an unmet medical need. Fast Track designation enables more frequent communication with the FDA.
Annual Report for the year ended 31 December 2019
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STRATEGIC REPORT:
Our Products & Development Pipeline continued
Amryt intends to request and submit a rolling-NDA in the coming months to the FDA and will request a priority review in the US.
Amryt also intends to pursue an accelerated assessment in the EU.
In April 2020, Amryt announced that we have decided to close the EASE study without further enrolment. The COVID-19
pandemic has had a material impact on clinical trials globally, including patient recruitment. Given that the EASE study was
already close to full enrolment, Amryt has taken advice from an independent expert and concluded that the statistical impact of
further patient recruitment would most likely be negligible and therefore we have decided to close enrolment with immediate
effect. Shortly after the last patient completes the end of the double-blind treatment period (Day 90), the study data will be
cleaned and the database locked. Statistical analyses will then be performed and the Company now anticipates top line data
read out in late Q3 / early Q4 2020.
We continue to evaluate new life cycle opportunities for FILSUVEZ®. Dermatological conditions currently under consideration
include:
(cid:129) Toxic Epidermal Necrolysis Syndrome (TENS), including Stevens-Johnson Syndrome (SJS)
(cid:129) Grade III / IV radiotherapy and chemotherapy induced
We intend to file applications for orphan designation for some of these new potential orphan indications in the USA, Europe and
Japan and believe that, with its intellectual property estate and regulatory protections, there is significant scope to maximise the
value of FILSUVEZ® beyond EB through a global multi-orphan strategy.
AP103
In March 2018, Amryt concluded an exclusive in-licencing of AP103 – 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 ( -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 (“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.
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13
Data from the pre-clinical studies demonstrated that:
(cid:129) 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
(cid:129) 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
(cid:129) AP103 exhibited no evidence of cellular toxicity in vitro or in vivo after repeated administration.
We continue the pre-clinical testing of AP103. A pre-clinical toxicology program is 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”) and Curran Scientific Limited. The grant funded activities started in December 2019 and 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 ( -Amino Ester) (“HPAE”) polymer technology for the potential treatment of other
genetic disorders.
Lomitapide and Metreleptin
We continue to evaluate additional expansion opportunities for our two commercial products. We are conducting a Phase 3
pediatric study in the EMEA for the use of lomitapide in children and adolescents with HoFH. In 2019, pre-study activities
commenced, the protocol was finalised in August and 17 study sites were selected across multiple countries. An intensive
feasibility was also conducted to identify potential patients within the specific age categories required for the trial. We expect to
report data in the first half of 2022.
We are also exploring the potential use of lomitapide to treat patients with Familial Chylomicronemia Syndrome (‘‘FCS’’), which is
a severe, rare genetic lipid disease characterized by extremely elevated levels of triglycerides, or hypertriglyceridemia. An
investigator-led open-label Phase 2 trial studying lomitapide in patients with FCS is ongoing and we expect to report data in the
second half of 2020. Upon successful completion of this Phase 2 study, we intend to discuss these results with the FDA and EMA
in the context of agreeing the design of a potential pivotal trial in FCS.
We also intend to discuss with the FDA in the third quarter of 2020 the potential for label expansion of metreleptin in the United
States to include the treatment of PL. We expect this will require a pivotal Phase 3 study in PL patients, either as a post-approval
commitment or prior to potential approval.
Annual Report for the year ended 31 December 2019
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STRATEGIC REPORT:
Our Mission and Strategy
Our mission is to become a global leader in the treatment of rare diseases through developing, commercializing and acquiring
novel therapeutics. To achieve this mission, we are pursuing the following strategies:
(cid:129) Drive revenue growth for our existing commercial products. We intend to continue to focus on growing the sales of
lomitapide and metreleptin in the markets and indications we currently sell them. We also intend to expand the market
opportunity by seeking approval for the use of lomitapide to treat pediatric HoFH and for the treatment of FCS and for the
use of metreleptin to treat PL in the United States
(cid:129) Complete development and commercialize our lead product candidate, FILSUVEZ®, for the treatment of severe EB. FILSUVEZ®
is currently in a pivotal Phase 3 trial for the treatment of cutaneous manifestations of severe EB, enrolment is now complete
and we expect to report data in late Q3 / early Q4 2020. If the trial is successful, we intend to apply for approval of
FILSUVEZ® and commercialize it in the United States and the European Union. If approved by the FDA, we are eligible to
receive a PRV that we can use, sell or transfer
(cid:129) Leverage our global commercial and medical infrastructure. We intend to leverage our existing global infrastructure and
expertise to commercialize our development-stage pipeline, including our lead product candidate, FILSUVEZ®, if approved,
and any rare disease assets we may acquire or in-license in the future
(cid:129) Continue developing our gene therapy product candidate, AP103, for the treatment of RDEB. AP103 is currently in preclinical
development for the treatment of RDEB. We intend to initiate clinical development in the second half of 2021, and:
(cid:129) Continue evaluating opportunities to expand our rare disease product portfolio and pipeline. We believe we are well
positioned to continue to opportunistically acquire or in-license rare disease assets that we believe we can efficiently sell
through our existing commercial infrastructure.
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STRATEGIC REPORT:
Our Strengths
We believe our key competitive strengths include the following:
Revenue-generating commercial products. We currently generate revenue, including royalties, from global sales of lomitapide
and metreleptin. This revenue stream provides us with financial flexibility to fund the continued development and potential
commercialization of our existing development candidates as well as the potential acquisition or in-license of additional rare
disease products and late-stage product candidates. We have retained worldwide development and commercial rights to all of
our programs, excluding Japan for lomitapide, where we receive royalties, and Japan, South Korea and Taiwan for metreleptin.
Late-stage clinical program in severe EB. We are conducting a global pivotal Phase 3 trial of FILSUVEZ® for the treatment of
cutaneous manifestations of severe EB and we expect to report data in late Q3 / early Q4 2020. This Phase 3 trial is the largest EB
study conducted to date. Based on our conversations with the FDA and EMA, we believe that positive results from this trial
would allow us to apply for marketing approval for FILSUVEZ® in both the United States and Europe.
Existing, scalable global commercial and medical infrastructure. We sell lomitapide and metreleptin in the Americas,
Europe and the Middle East through our existing rare disease commercial infrastructure. Our commercial expertise includes
market access, marketing, sales managers and sales representatives and is supported by our experienced medical affairs team
with medical science liaisons, patient advocacy and dieticians in the field. We also leverage our network of third-party distributors
in other key markets throughout the world. We believe we will be able to leverage our existing global infrastructure and
expertise to efficiently and expeditiously commercialize additional products we may acquire or develop, including our lead
product candidate, FILSUVEZ®, if approved.
Proven track record of building a diversified rare disease product portfolio. We acquired FILSUVEZ® through the
acquisition of Birken AG in 2016, in-licensed LOJUXTA in December 2016, in-licensed our gene therapy platform, including
AP103, in March 2018 and acquired metreleptin and the remaining rights to lomitapide through the Acquisition in September
2019.
Strong patent protection and regulatory exclusivity. We believe our intellectual property portfolio as well as protection
afforded by regulatory exclusivity provide us with a substantial competitive advantage in marketing our current products and also
protect our development programs. Our lomitapide patent portfolio includes patents that provide protection into 2027 in the
United States and into 2025 in the European Union, with supplementary protection granted to extend patent protection in major
EU countries into 2028. The metreleptin patent portfolio includes patents that provide protection into 2027 in the United States
and into 2022 in the European Union and orphan exclusivity in the European Union into 2028. The FILSUVEZ® patent portfolio
includes patents that provide protection in both the United States and the European Union into 2030 and a non-provisional
application covering future FILSUVEZ® indications which, if granted, would provide worldwide protection into 2039. We have
also submitted additional patent applications to further strengthen our intellectual property portfolio.
Experienced management team comprised of industry leaders in rare diseases. Our management team has extensive
expertise in the acquisition, development and commercialization of rare disease assets. We believe that the breadth of experience
and successful track record of our management team and our Board, combined with our broad network of established
relationships with leaders in the industry and medical community, provide us with strong drug development and
commercialization capabilities.
Annual Report for the year ended 31 December 2019
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STRATEGIC REPORT:
Financial Review
Revenues
The revenues for each of our significant products were as follows
Year ended 31 December
2018
$’000
2019
$’000
Metreleptin
Lomitapide
Other
Total revenues
25,088
32,260
776
58,124
–
16,110
985
17,095
Increase / (Decrease)
$’000
25,088
16,150
(209)
41,029
% change
100%
100.2%
(21.2%)
240.0%
Total product sales were $58.1 million for the year ended 31 December 2019, compared to $17.1 million for the year ended
31 December 2018. Sales of metreleptin and lomitapide comprise product sales and royalties on sales, respectively, made by our
licensees.
Metreleptin
We generated revenues from product sales of metreleptin of $25.1 million for the period from the date of Acquisition on
24 September 2019 to 31 December 2019. 59.6% of product sales for metreleptin were in the United States, with the remaining
40.4% in the European Union and other international markets.
Lomitapide
We generated revenues from product sales of lomitapide of $31.6 million and royalties of $0.7 million from Recordati for the
year ended 31 December 2019. This includes revenues from product sales of LOJUXTA in the EMEA region for the full year
together with revenues from product sales and royalties of JUXTAPID in other jurisdictions from the date of Acquisition on
24 September 2019.
This compares to $16.1 million of LOJUXTA product sales (all in the EMEA region) for the year ended 31 December 2018.
Other
Other revenues relate to sales from our in-house derma-cosmetic range of products, Imlan, and our early access program for
FILSUVEZ®. Imlan is marketed solely in Germany as a treatment for sensitive, allergy-prone skin. The decrease in revenues in
2019 was due to a decrease in customers following a reduction in product offerings in 2019.
Cost of Sales
Year ended 31 December
2018
$’000
2019
$’000
Cost of product sales
Amortization of acquired intangibles
Amortization of inventory fair value step-up
Royalty expenses
Total revenues
11,384
11,831
10,367
8,419
42,001
3,588
–
–
2,678
6,266
Increase / (Decrease)
$’000
7,796
11,831
10,367
5,741
35,735
% change
217.3%
100%
100%
214.4%
570.3%
Total cost of sales was $42.0 million for the year ended 31 December 2019, representing the cost, including royalties, of selling
metreleptin and lomitapide, non-cash intangible amortization and non-cash inventory fair value step-up expenses. Total cost of
sales was $6.3 million for the year ended 31 December 2018, which represented the cost, including royalties, from sales of
LOJUXTA, Imlan and our Early Access Program for FILSUVEZ®.
Amryt Pharma plc
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17
STRATEGIC REPORT:
Financial Review continued
The cost of product sales in the year ended 31 December 2019 increased by $7.8 million, and royalty expenses increased by
$5.7 million in 2019 compared to the year ended 31 December 2018. The acquisition of lomitapide for markets outside the
EMEA and metreleptin for all markets largely drove this increase in costs. Following the Acquisition, we are now selling two
commercial products on a global basis, which results in a higher cost of producing our commercial products, higher royalties on
sales, and higher costs of delivery of goods sold to customers, including the costs associated with the services provided by our
distributors to import and deliver the goods.
Amortization of acquired intangible assets was $11.8 million in 2019 and relates to the amortization charge, for the post
Acquisition period, on the two commercial assets purchased as part of the Acquisition.
The non-cash inventory step-up was $10.4 million in 2019. This relates to the difference between the estimated fair value and
the book value of inventory acquired from Aegerion which is being amortized over the estimated period that we expect to sell
this inventory.
Research and Development Expenses
Research and development expenses consist primarily of costs related to clinical studies and outside services, post-approval
commitment studies, personnel expenses and other research and development costs. Study costs and outside services costs relate
primarily to services performed by clinical research organizations, materials and supplies, and other third-party fees. Research and
development expenses for the year ended 31 December 2019 were $15.8 million, representing 23% of our total operating
expenses, compared to $10.7 million, or 37% of total operating expenses, for the year ended 31 December 2018. Research and
development expenses in both years were primarily driven by the clinical advancement of FILSUVEZ® as we continued our global
clinical trial sites. Research expenses in 2019 comprised $4.8 million in employee compensation, $7.7 million of amounts paid to
clinical research organizations, and $3.3 million of other outsourced services. Research expenses in 2018 comprised $2.6 million
in employee compensation, $4.4 million of amounts paid to clinical research organizations, and $3.7 million of other outsourced
services.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $35.5 million for the year ended 31 December 2019, representing 51% of our
total operating expenses, compared to $17.3 million for the year ended 31 December 2018, representing 60% of our total
operating expenses. The increase in selling, general and administrative expenses was primarily due to an increase in
compensation-related expenses, primarily driven by higher headcount following the Acquisition, and an increase in other
expenses related to the expansion and support of our business.
Restructuring and Acquisition Costs
Restructuring and acquisition costs arising from the Acquisition were $13.0 million for the year ended 31 December 2019. These
costs primarily relate to professional fees associated with the Acquisition. The expenses also include severance costs associated
with the relocation of a number of roles from the Boston office of Aegerion to our head office in Dublin, Ireland following the
completion of the Acquisition.
Share Based Payment Expenses
Non-cash share-based payment expenses for the year ended 31 December 2019 were $0.8 million, unchanged from the same
amount in the year ended 31 December 2018. We issue share options as an incentive to senior management and employees.
The fair value is measured at the grant date using the Black-Scholes model and amortized over the period during which the
awards vest.
Annual Report for the year ended 31 December 2019
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STRATEGIC REPORT:
Financial Review continued
Impairment charge
In 2019, an impairment charge of $4.7 million was recorded to write off the remaining carrying value of an in process intangible
asset, AP102, an early stage drug asset which represents a novel, next generation somatostatin analogue (‘‘SSA’’) peptide
medicine for patients with rare neuroendocrine diseases, where there is a high unmet medical need, including acromegaly.
Acromegaly is a rare endocrine disorder in which the body produces excessive growth hormone, leading to abnormal growth
throughout the body over time. Following the Acquisition, we made the decision to concentrate resources on those development
pipeline activities that will better complement our existing commercial assets, lomitapide and metreleptin. We may look to
partner AP102 in the long-term future but in the short to medium term, we will continue to concentrate our efforts on
FILSUVEZ®, AP103 and expansion opportunities for the existing commercial assets.
Non-Cash Change in Fair Value of Contingent Consideration
We compute the fair value of the contingent consideration arising from the acquisition of Birken AG (now Amryt GmbH). The
Amryt GmbH consideration relates to milestone payments of up to $35 million and royalty payments that are payable to the
previous owners of Amryt GmbH, which are triggered by future regulatory approvals of AP101 for the treatment of EB from both
the FDA and EMA, as well as future sales-driven milestones.
Non-Cash Contingent Value Rights (“CVR”) Finance Expense
The $1.5 million non-cash CVR finance expense for the year ended 31 December 2019 represents the effective interest rate
unwind on amortized cost between the carrying value of the CVRs from the initial recognition date to the reporting date of 31
December 2019.
We issued CVRs pursuant to which up to $85 million may become payable to Amryt shareholders and option holders who were
shareholders prior to completion of the Acquisition, if certain regulatory approval and revenue milestones are met in relation to
AP101.
Net Finance Expense – Other
Other net finance expense was $4.8 million for the year ended 31 December 2019. Other net finance expense relates to interest
on loans of $8.5 million, partially offset by foreign exchange gains of $3.8 million. The foreign exchange gain primarily relates to
the translation of euro- and sterling-denominated net monetary amounts held by subsidiaries with a non U.S. dollar functional
currency.
Other net finance expense was $1.8 million for the year ended 31 December 2018, which primarily related to interest on our EIB
Facility with the EIB. This loan facility was repaid in 2019.
Operating Loss and Total Comprehensive Loss
The operating loss before finance expense for the year ended 31 December 2019 amounted to $53.8 million (2018: $18.0 million).
In addition to analysing our operating results on an IFRS basis, management also reviews our results on an ‘‘Adjusted EBITDA’’
basis. Adjusted EBITDA is defined as net loss before income taxes, non-cash change in fair value of contingent consideration,
non-cash contingent value rights finance expense, net finance expense – other, amortization expense, depreciation expense,
share-based payments, impairment charges, and restructuring and acquisition costs related to the acquisition of Aegerion.
Amryt Pharma plc
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FINANCIAL STATEMENTS
19
The following table reconciles adjusted EBITDA to total comprehensive loss for the period attributable to the equity holders of
the Company:
Loss for the year attributable to equity holders of the Company
Income taxes
Non-cash change in fair value of contingent consideration
Non-cash contingent value rights finance expense
Net finance expense – other
Amortisation of inventory fair value step-up
Amortisation expense – other
Depreciation expense
Share-based payments
Impairment charge
Restructuring and acquisition costs
Adjusted EBITDA
Liquidity and Capital Resources
31 December
2019
$’000
31 December
2018
$’000
(65,535)
(1,226)
6,740
1,511
4,759
10,367
11,957
698
841
4,670
13,038
(12,180)
(30,487)
43
10,566
–
1,841
–
50
317
821
–
–
(16,849)
We had unrestricted cash and cash equivalents of $65.2 million as at 31 December 2019, compared to $9.9 million as at
31 December 2018. We have financed our operations to date primarily through sales of our commercial products and sales of
our ordinary shares and debt financing. We expect to incur significant expenses for the foreseeable future as we continue
commercializing our approved products and advancing the clinical development of our product candidates. We expect that our
R&D and SG&A costs will increase in connection with conducting clinical trials for our product candidates and any new product
candidates we acquire or develop and due to the costs of seeking marketing approval for our product candidates in Europe, the
United States and other jurisdictions.
Cash Flows
The table below provides selected cash flow information for the periods indicated:
Net cash flow used in operating activities
Net cash flow from / (used in) investing activities
Net cash flow from financing activities
Exchange and other movements
Net change in cash and cash equivalents
Net Cash Flow Used in Operating Activities
31 December
2019
$’000
31 December
2018
$’000
(37,497)
24,425
65,942
3,133
56,003
(15,454)
(229)
3,265
(767)
(13,185)
Net cash used in operating activities was $37.5 million for the year ended 31 December 2019, compared to $15.5 million for the
year ended 31 December 2018. The increase of $22.0 million was primarily related to restructuring and acquisition costs of
$13.0 million and working capital fluctuations.
Annual Report for the year ended 31 December 2019
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STRATEGIC REPORT:
Financial Review continued
Net Cash Flow From / (Used in) Investing Activities
Net cash from investing activities was $24.4 million for the year ended 31 December 2019 and primarily related to the Aegerion
cash balance of $25.0 million, which we acquired in the Acquisition. A significant proportion of this cash balance was restricted
and held in escrow to meet costs associated with the Aegerion bankruptcy process.
Net cash used in investing activities was $0.2 million for the year ended 31 December 2018 and primarily related to the fees paid
for the extension of our license agreement with Aegerion to cover the addition of certain territories, and payments for property,
plant and equipment.
Net Cash Flow From Financing Activities
Net cash flow from financing activities was $65.9 million for the year ended 31 December 2019 and primarily related to net
proceeds from the issuance of shares of $63.0 million and the issuance of new debt of $31.2 million. These cash inflows were
partially offset by the repayment of our EIB Facility of $22.0 million and interest paid to EIB and on our Secured Credit Facility of
$6.3 million.
Net cash flow from financing activities was $3.3 million for the year ended 31 December 2018, primarily due to the drawdown
of the final tranche of our EIB Facility of $5.9 million, partially offset by a milestone payment of $2.4 million relating to our
acquisition of Amryt GmbH in 2016.
Debt Financing
In December 2016, we entered into the EIB Facility, a €20 million credit facility split into three tranches: €10 million available
immediately, and two further tranches of €5 million available upon the achievement of certain milestones. In February 2019,
after we reported the outcome of an unblinded interim efficacy analysis of the EASE trial, we drew down the final tranche of
€5 million. The EIB Facility was repaid in full on 24 September 2019 in connection with the closing of the Acquisition.
In connection with the Acquisition we entered into the $81 million Secured Credit Facility and issued $125 million of Convertible
Notes. The Secured Credit Facility has a five-year term from date of draw down and matures in 2024. Interest will be payable at
our option at the rate of 11% per annum paid in cash on a quarterly basis or at a rate of 6.5% paid in cash plus 6.5% paid in
kind that will be paid when the principal is repaid, which rolls up and is included in the principal balance outstanding, on a
quarterly basis. The Convertible Notes bear interest at a rate of 5.0% per year, payable semi-annually in arrears on 1 April and
1 October of each year, beginning on 1 April 2020. The Convertible Notes will mature on 1 April 2025, unless earlier repurchased
or converted. For further detail on our principal debt, see Note 19 and Note 20 of our Consolidated Financial Statements.
Contractual Obligations
The following summarizes our contractual obligations as of 31 December 2019:
Payments due by Period
Less than
1 year
1 to 3
years
3 to 4
years
More than
5 years
Principal debt obligations 11,957
Operating leases obligations 969
Contingent consideration and
contingent value rights —
Other liabilities 15,722
24,796
916
99,559
3,928
Total 28,648
129,199
136,927
143
27,998
—
165,068
128,125
20
—
—
128,145
Amryt Pharma plc
Total
301,805
2,048
127,557
19,650
451,060
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STRATEGIC REPORT
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21
The principal debt obligations relate to our $81 million Secured Credit Facility and our Convertible Notes with an aggregate
principal amount of $125 million and the interest associated with these facilities. The Secured Credit Facility has a five-year term
from date of draw down and matures in 2024. Interest will be payable at our option at the rate of 11% per annum paid in cash
on a quarterly basis or at a rate of 6.5% paid in cash plus 6.5% paid in kind that will be paid when the principal is repaid, which
rolls up and is included in the principal balance outstanding, on a quarterly basis. For the purposes of the contractual obligations
table above, we assume that we choose to pay interest at a rate of 6.5% paid in cash plus 6.5% paid in kind that will be paid
when the principal is repaid. The Convertible Notes bear interest at a rate of 5.0% per year, payable semi-annually in arrears on
1 April and 1 October of each year, beginning on 1 April 2020. The Convertible Notes will mature on 1 April 2025, unless earlier
repurchased or converted. For the purposes of the contractual obligations table above, we assume that there is no conversion
and that the Convertible Notes are repaid in full on 1 April 2025. For further detail on our principal debt, see Note 19 and Note
20 of our Consolidated Financial Statements.
We have operating leases commitments for offices in the United States, European Union and Latin America, a production facility
in Germany and office equipment leases.
Contingent consideration and contingent value rights arose as part of (i) the acquisition of Amryt GmbH in 2016, through which
we acquired AP101, and (ii) the issuance of CVRs to Amryt shareholders and option holders prior to the Acquisition of Aegerion.
The contingent consideration and contingent value rights arising on these transactions are payable on achieving various
milestones. For further detail, see Note 6 of our Consolidated Financial Statements.
Other liabilities relate to our obligations, inclusive of interest, under Aegerion’s settlement agreements with the SEC and DOJ. For
further detail, see Note 25 of our Consolidated Financial Statements.
Annual Report for the year ended 31 December 2019
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22
STRATEGIC REPORT:
Key Performance Indicators
Revenue growth is a key measure for the Group. We currently generate revenue, both product and royalty revenues, from global
sales of lomitapide and metreleptin. A key focus for us is to drive revenue growth in the markets and indications that we
currently sell them. We also intend to expand the market opportunity for both these products – seeking approval for the use of
lomitapide to treat pediatric HoFH patients and for the treatment of FCS and for the use of metreleptin to treat PL in the US.
Adjusted EBITDA growth is an important financial performance indicator for the Group. The positive momentum we experienced
during 2019 has continued into Q1 2020. Our performance so far is exceeding expectations in 2020 as our business performs
and grows across a host of metrics. Most importantly, we have experienced strong revenue growth and the business is
significantly adjusted EBITDA positive a quarter ahead of schedule. We will continue to focus on this key metric, our goal being
significant adjusted EBITDA growth in the coming years.
Our ability to leverage our global commercial and medical infrastructure is a key performance indicator to ensure we achieve
significant synergies arising from the acquisition of Aegerion. This has been a key focus for the Group in Q4 2019 and will
continue into 2020 as we complete the transition phase of the acquisition.
As we are currently in the pre-revenue stage for our lead development asset, FILSUVEZ®, 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. Our goal in 2020 is to
readout top-line data and, if the results are positive, we intend to start working on EMA and FDA approval.
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. In 2019, the Group completed the acquisition of Aegerion which was a transformational deal
for Amryt. We now have a diversified portfolio comprised of two commercial rare disease products as well as a development-
stage pipeline focused on rare skin diseases. We continue to evaluate opportunities to expand our rare disease portfolio and
pipeline.
Amryt Pharma plc
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23
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:
(cid:129) The Board of Directors meets
regularly and reviews operational
progress against the Group’s strategy
and key objectives;
(cid:129) 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; and
(cid:129) 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
the 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:
Risks Related to our Business,
Financial Condition and Capital
Requirements
The Group has incurred losses since
its inception and anticipates that it
may continue to incur losses for the
foreseeable future
To date, we have financed our
operations primarily through a
combination of revenues from sales of
our commercialized products and the
sale of our equity securities and
convertible notes. We have incurred net
losses in each year since our inception,
including net losses of $30.6 million and
$64.8 million for the years ended
31 December 2018 and 2019. We have
devoted most of our financial resources
to the acquisition of attractive
commercial and near-commercial rare
disease assets and research and
development. We anticipate that we will
continue to incur significant costs
associated with the continued
commercialization of lomitapide and
metreleptin, and in connection with
ongoing clinical development efforts
and post-marketing commitments for
these products as well as the continued
development of our product candidates.
The amount of our future net losses will
depend, in part, on the rate of our
future expenditures, our ability to
continue generating adequate revenues
from sales of lomitapide and metreleptin
and our ability to obtain funding
through equity or debt offerings, grant
funding, collaborations, strategic
partnerships and/or licensing
arrangements. If we do become
profitable, we may not be able to
sustain or increase our profitability on a
quarterly or annual basis.
We are dependent primarily on two
products, lomitapide and
metreleptin, to generate revenue
and these products may not be
successful and may not generate
sales at anticipated levels
Our ability to meet expectations with
respect to sales of lomitapide and
metreleptin, and to generate revenues
from such sales, and attain and maintain
positive cash flow from operations, in
the time periods anticipated, or at all,
will depend on a number of factors,
including, among others:
(cid:129) the ability to continue to maintain
and grow market acceptance for
lomitapide and metreleptin among
healthcare professionals and patients
in the United States, European Union
and other key markets for the
treatment of approved indications;
(cid:129) continuing market demand and
medical need for these products;
(cid:129) maintaining regulatory approvals
without onerous restrictions or
limitations in key markets and
securing regulatory approvals in
additional markets on a timely basis
and with commercially feasible labels,
and pricing and reimbursement
approvals at adequate levels, where
required, on a timely basis;
(cid:129) side effects or other safety issues
associated with the use of lomitapide
and metreleptin could require us or
our collaborators to modify or halt
commercialization of these products
or expose us to product liability
lawsuits which will harm our
business;
(cid:129) we may be required by regulatory
agencies to conduct additional
studies regarding the safety and
efficacy of lomitapide and
Annual Report for the year ended 31 December 2019
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24
STRATEGIC REPORT:
Risks and Uncertainties continued
metreleptin, which we have not
planned or anticipated;
(cid:129) generating revenues in markets that
allow for sales of pharmaceutical
products without regulatory approval
based solely on the approvals of such
products in the United States or
European Union, and in which no
promotion or commercialization
activities are permitted; and
(cid:129) adequately investing in the
manufacturing, sales, marketing,
market access, medical affairs and
other functions that are supportive of
our commercialization efforts.
If we are unable to continue to generate
revenue from our current commercial
products, our business, financial
condition, results of operations and
prospects will be adversely affected.
We may not be successful in our
efforts to build a pipeline of product
candidates and develop additional
marketable products
We operate in the biopharmaceutical
sector and have product candidates in
various stages of clinical and preclinical
development. In addition, we may
continue to explore other opportunities
within the sector in order to expand our
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 our present development
pipeline. In addition, disruptions caused
by the COVID-19 pandemic may
increase the likelihood that we
encounter such difficulties or delays in
initiating, enrolling, conducting or
completing our planned and ongoing
clinical trials. We may not be successful
in developing new products based on
our scientific discoveries. We will also
face the risk that in developing new
products we may spend substantial
Amryt Pharma plc
sums of money and the new products
developed may not effectively meet the
perceived need or may not be
successfully commercialized. Our ability
to develop new products relies on,
among other things, the recruitment of
sufficiently qualified research and
development partners with expertise in
the biopharmaceutical sector. We may
not be able to develop relationships or
recruit research partners of a sufficient
calibre to satisfy the rate of growth and
develop our future pipeline.
Our future success depends on our
ability to hire and retain key
executives and to attract, retain and
motivate qualified personnel
Our future success depends on our
ability to attract and retain key
management personnel, scientific and
technical personnel, particularly in the
biopharmaceutical industry. Our ability
to continue our operations and
implement our strategy depends upon
retaining, recruiting and motivating
employees, especially with respect to
our management team and research
personnel. Experienced employees in
the biopharmaceutical and
biotechnology industries are in high
demand and competition for their
talents can be intense, especially in
Germany, Ireland, and Boston,
Massachusetts, where we maintain our
principal operations. The loss of any
executive or key employee, or an
inability to recruit desirable candidates
or find adequate third parties to
perform such services on reasonable
terms and on a timely basis, could have
a material adverse effect on our
business, financial condition, results of
operations and prospects.
We expect that certain U.S. federal
income tax rules regarding
‘‘inversion transactions’’ will apply to
us, which could result in adverse
U.S. federal income tax
consequences
We believe that we are a ‘‘surrogate
foreign corporation’’ and that Aegerion
is an ‘‘expatriated entity,’’ within the
meaning of Section 7874 of the U.S.
Internal Revenue Code of 1986, as
amended (‘‘Code’’), as a result of the
Acquisition. We are a surrogate foreign
corporation with respect to Aegerion if
(1) pursuant to a plan, we complete the
direct or indirect acquisition of
substantially all of the properties held,
directly or indirectly, by Aegerion,
(2) after the acquisition at least 60% of
our stock (by vote or value) is held by
former shareholders and certain
creditors of Aegerion by reason of their
holding Aegerion stock or debt
obligations (such percentage held by
such persons being the ‘‘Section 7874
Percentage’’), and (3) after the
Acquisition, the expanded affiliated
group that includes Amryt, Aegerion
and their respective more-than-50%
controlled subsidiaries (‘‘Enlarged Amryt
Group’’) does not have substantial
business activities in the United
Kingdom relative to the group’s
worldwide business activities.
If the Section 7874 Percentage is at least
60% but less than 80% and we are a
surrogate foreign corporation with
respect to Aegerion, several limitations
apply to Aegerion, including, but not
limited to, the prohibition, for a period
of ten years, of the use of net operating
losses, foreign tax credits and other tax
attributes to offset the income or gain
recognized by reason of transfer of any
property to a foreign related person or
to offset any income received or accrued
during such period by reason of our
license of any property to a foreign
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STRATEGIC REPORT
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FINANCIAL STATEMENTS
25
related person and an additional
minimum tax under Section 59A of the
Code on certain ‘‘base eroding’’
payments to members of the Enlarged
Amryt Group that are foreign
corporations. In addition, under section
4985 of the Code and the rules related
thereto, an excise tax at a rate of
currently 20% is imposed on the value
of certain share compensation held
directly or indirectly by certain
‘‘disqualified individuals’’ (including
certain of our officers and directors).
If the Section 7874 Percentage is at least
80% and we are a surrogate foreign
corporation with respect to Aegerion,
we will be treated as a U.S. domestic
corporation, regardless of the fact that
we are also incorporated in England and
Wales, and managed and controlled in
the United Kingdom, and therefore
generally classified as a UK corporation
for UK tax purposes. If we were treated
as a U.S. domestic corporation, our
entire net income would be subject to
U.S. federal income tax on a net income
basis and would be determined under
U.S. federal income tax principles.
While we expect to be treated as a
surrogate foreign corporation for U.S.
federal income tax purposes, we believe
that the Section 7874 Percentage with
respect to Aegerion is less than 80%.
We therefore do not expect to be
treated as a U.S. domestic corporation
for U.S. federal income tax purposes.
Determining the Section 7874
Percentage, however, is complex and
subject to factual and legal
uncertainties. As a result, there can be
no assurance that the Internal Revenue
Service (‘‘IRS’’) will agree with our
conclusions regarding the Section 7874
Percentage. Holders are urged to
consult their own tax advisors regarding
the potential application of section
7874 of the Code and its potential tax
consequences. A determination by the
IRS that we are a U.S. domestic
corporation for the purposes of Section
7874 of the Code may have material
adverse effects on the business, financial
condition, results of operations and
prospects of the Enlarged Amryt Group.
Fluctuations in currency exchange
rates and increased inflation could
materially adversely affect our
financial condition and results of
operations
We have operations in Ireland, the
United Kingdom, the United States,
Germany, Switzerland, Brazil, France,
Italy, Spain and other select markets
throughout the world. As a result of the
international scope of our operations,
fluctuations in exchange rates,
particularly between the U.S. dollar, our
reporting currency, and the Euro, may
adversely affect us. In the year ended
31 December 2019, 3.9% of our sales
were denominated in pound sterling (£),
57.2% of our sales were denominated
in U.S. dollars, 35.5% were
denominated in Euros and the balance
was denominated in other currencies.
As a result, strengthening of the Euro or
pound sterling relative to the U.S. dollar
presents the most significant risk to us.
Any significant fluctuations in currency
exchange rates may have a material
impact on our business.
In addition, economies in Central
European and Latin American countries
have periodically experienced high rates
of inflation. Periods of higher inflation
may slow economic growth in those
countries. As a substantial portion of
our expenses (excluding currency losses
and changes in deferred tax) is
denominated in U.S. dollars or Euros,
the relative movement of inflation
significantly affects our results of
operations. Inflation also is likely to
increase some of our costs and
expenses, including wages, rents, leases
and employee benefit payments, which
we may not be able to pass on to our
customers and, as a result, may reduce
our profitability. To the extent inflation
causes these costs to increase, such
inflation may materially adversely affect
our business. Inflationary pressures
could also affect our ability to access
financial markets and lead to counter-
inflationary measures that may harm our
financial condition, or results of
operations or materially adversely affect
the market price of our securities.
The outbreak of COVID-19 could
adversely impact our business,
including our preclinical studies and
clinical trials
Since a novel strain of coronavirus,
SARS-CoV-2, causing a disease referred
to as COVID-19, was first reported in
December 2019, the disease has spread
across the world, including countries in
which we have planned or active clinical
trial sites. The outbreak and government
measures taken in response have also
had a significant impact, both direct and
indirect, on businesses and commerce,
as worker shortages have occurred;
supply chains have been disrupted;
facilities and production have been
suspended; and demand for certain
goods and services, such as medical
services and supplies, has spiked, while
demand for other goods and services,
such as travel, has fallen. In response to
the spread of COVID-19, we have closed
our executive offices with our
administrative employees continuing
their work outside of our offices and
limited the number of staff in any given
manufacturing facility. As COVID-19
continues to spread around the globe,
we may experience disruptions that
could affect our business, preclinical
studies and clinical trials, including:
Annual Report for the year ended 31 December 2019
259162 1 Amyrt 001pp-035pp.qxp 26/06/2020 16:06 Page 26
26
STRATEGIC REPORT:
Risks and Uncertainties continued
(cid:129) unsuccessful and/or untimely
completion of preclinical and clinical
development of our product
candidates and any other future
candidates, as well as the associated
costs, including any unforeseen costs
we may incur as a result of preclinical
study or clinical trial delays;
(cid:129) delays or difficulties in initiating,
enrolling, conducting or completing
our planned and ongoing clinical
trials;
(cid:129) risk that participants enrolled in our
clinical trials will acquire COVID-19
while the clinical trial is ongoing,
which could impact the results of the
clinical trial, including by increasing
the number of observed adverse
events;
(cid:129) existing patients with serious diseases
included in our clinical trials may die
as a result of contracting COVID-19
or suffer other adverse medical
events for reasons that may not be
related to our products or
candidates;
(cid:129) delays or difficulties in clinical site
initiation, including difficulties in
recruiting clinical site investigators
and clinical site staff;
(cid:129) healthcare budgets may be adversely
affected and as a result, funding may
not be available to pay for our
products;
(cid:129) diversion of healthcare resources
away from the conduct of clinical
trials, including the diversion of
hospitals serving as our clinical trial
sites and hospital staff supporting the
conduct of our clinical trials;
(cid:129) interruption of key clinical trial
activities, such as clinical trial site
monitoring, due to limitations on
travel imposed or recommended by
federal, state or local governments,
Amryt Pharma plc
employers and others or interruption
of clinical trial subject visits and study
procedures (such as pre-planned
clinical trial assessments), which may
impact the integrity of subject data
and clinical study endpoints;
(cid:129) limitations in employee resources
that would otherwise be focused on
the conduct of our preclinical studies
and clinical trials, including because
of sickness of employees or their
families or the desire of employees to
avoid contact with large groups of
people;
(cid:129) interruption or delays in the
operations of the FDA or other
regulatory authorities, which may
impact review and approval
timelines;
(cid:129) delays in receiving approval from
local regulatory authorities to initiate
our planned clinical trials;
(cid:129) delays in clinical sites receiving the
supplies and materials needed to
conduct our clinical trials due to
staffing shortages, production
slowdowns or stoppages and
disruptions in delivery systems;
(cid:129) suspension or termination of a
clinical trial by us, by the Institutional
Review Boards (‘‘IRBs’’) of the
institutions in which such trial is
being conducted, by a DSMB for
such trial or by the FDA, the EMA or
comparable foreign regulatory
authorities due to a number of
factors, including failure to conduct
the clinical trial in accordance with
regulatory requirements or our
clinical protocols, inspection of the
clinical trial operations or trial site by
the FDA, the EMA or comparable
foreign regulatory authorities
resulting in the imposition of a
clinical hold, unforeseen safety issues
or adverse side effects;
(cid:129) refusal of the FDA to accept data
from clinical trials in affected
geographies outside the United
States;
(cid:129) changes in local regulations as part
of a response to the COVID-19
pandemic which may require us to
change the ways in which our clinical
trials are conducted, which may
result in unexpected costs, or to
discontinue the clinical trials
altogether;
(cid:129) delays in necessary interactions with
local regulators, ethics committees
and other important agencies and
contractors due to limitations in
employee resources or forced
furlough of government employees;
(cid:129) impairment of our operations,
including among others, employee
mobility and productivity, availability
of facilities, conduct of clinical trials,
manufacturing and supply capacity,
disruption of our supply chain,
availability of shipping and
distribution channels, restrictions on
import and export regulations and
the availability and productivity of
third party service suppliers;
(cid:129) incurrence of delays in the delivery of
our products or our inability to
deliver products to our patients;
(cid:129) interruption in global shipping that
may affect the transport of clinical
trial materials, such as investigational
drug product used in our clinical
trials; and
(cid:129) disruption and volatility in the global
capital markets, which increases the
cost of capital and adversely impacts
access to capital should we have
specific strategic considerations
which require it.
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27
The global pandemic of COVID-19
continues to evolve rapidly. The ultimate
impact of the COVID-19 pandemic or a
similar health epidemic is highly
uncertain and subject to change. We do
not yet know the full extent of potential
delays or impacts on our business,
preclinical studies, clinical trials,
healthcare systems or the global
economy as a whole. However, these
effects could have a material impact on
our operations, and we will continue to
monitor the COVID-19 situation closely.
Legal, political and economic
uncertainty surrounding the exit of
the United Kingdom from the
European Union may be a source of
instability in international markets
and create significant currency
fluctuations, and could materially
and adversely affect our business,
financial condition and prospects
In June 2016, the United Kingdom
voted in an advisory referendum to
leave the European Union (commonly
referred to as ‘‘Brexit’’). On 29 March
2017 the United Kingdom formally
notified the Council of the European
Union of its intention to leave the
European Union. Following negotiations
on the terms of the United Kingdom’s
exit from the European Union, the UK
parliament, the European Council,
the European Commission (‘‘EC’’)
and the UK Prime Minister signed the
Withdrawal Agreement on
24 January 2020. The Withdrawal
Agreement was approved by the
European parliament and ratified by the
United Kingdom on 29 January 2020
and concluded by the Council of the
European Union on 30 January 2020.
Under the Withdrawal Agreement, the
United Kingdom left the European
Union at 11:00 p.m. GMT on
31 January 2020. Thereafter, the United
Kingdom will remain within the
European Union single market and
customs union for a transitional period
through December 2020, by virtue of
transitional arrangements included in
the Withdrawal Agreement. These
arrangements may be extended beyond
2020 if both the United Kingdom and
the European Union agree to an
extension before the end of June 2020.
These developments or the perception
that any of them could occur may have
a significant adverse effect on global
economic conditions and the stability of
global financial markets, and could
significantly reduce global market
liquidity and limit the ability of key
market participants to operate in certain
financial markets. In particular, it could
also lead to a period of considerable
uncertainty in relation to the UK
financial and banking markets, as well
as on the regulatory process in Europe.
Asset valuations, currency exchange
rates may also be subject to increased
market volatility.
If the United Kingdom and the
European Union are unable to negotiate
an acceptable long-term trade
agreement, barrier-free access between
the United Kingdom and other member
states of the European Union (‘‘EU
Member States’’) or among the
European Economic Area, overall could
be diminished or eliminated. The long-
term effects of Brexit will depend on any
agreements (or lack thereof) between
the United Kingdom and the European
Union and, in particular, any
arrangements for the United Kingdom
to retain access to European Union
markets after 2020.
The ultimate impact of Brexit on our
business operations could vary
depending on the details of the
separation agreement and, while
negotiations are still underway, Brexit
could 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. Further, Brexit
could lead to legal uncertainty and
potentially divergent national laws and
regulations as the United Kingdom
determines which EU laws to replace or
replicate. Given the lack of comparable
precedent, it is unclear what financial,
trade, regulatory and legal implications
the withdrawal of the United Kingdom
from the European Union would have
and how such withdrawal would affect
us. Any of the effects of Brexit could
have a material adverse effect on our
business, financial condition, results of
operations and prospects.
Risks Related to the
Commercialization of our
Products
Our products may not gain market
acceptance, in which case we may
not be able to generate product
revenues
Physicians, healthcare providers,
patients, payers or the medical
community may not accept or use our
approved products. Efforts to educate
the medical community and third-party
payers on the benefits of the products
may require significant resources and
may not be successful. Notwithstanding
the level of revenues historically
generated from the sale of lomitapide
and metreleptin, if any of our existing
marketed products or product
candidates do not achieve an adequate
level of acceptance, we may struggle to
continue to generate significant product
revenues and may not in the future
generate any profits from operations.
The degree of market acceptance will
depend on a variety of factors,
including, but not limited to:
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STRATEGIC REPORT:
Risks and Uncertainties continued
of our products in response to
competitor pricing or lose patients who
choose lower-priced products. Many of
our competitors are larger, have greater
financial resources and a lower cost
structure. As a result, our competitors
may be better equipped to withstand
changes in economic and industry
conditions. These competitors currently
engage in, have engaged in or may in
the future engage in the development,
manufacturing, marketing and
commercialization of new
pharmaceuticals, some of which may
compete with our products.
Competition may also arise from,
among other things, other drug
development technologies, methods of
preventing or reducing the incidence of
disease, including vaccines and new
small molecule or other classes of
therapeutic agents. Smaller or early
stage companies may also be significant
competitors, particularly through
collaborative arrangements with large,
established companies.
Other competitors may succeed in
developing, acquiring or licensing
additional pharmaceutical products that
are introduced into the market and that
are more effective, have a more
favourable safety profile, or are less
costly than our products. If we do not
compete successfully, our operating
margins, financial condition and cash
flows could be adversely affected.
The successful commercialization of
our product candidates will depend
in part on the extent to which
governmental authorities and health
insurers establish adequate
coverage, reimbursement levels and
pricing policies. Failure to obtain or
maintain coverage and adequate
reimbursement for our product
candidates, if approved, could limit
our ability to market those products
and decrease revenue generating
ability
The availability and adequacy of
coverage and reimbursement by
governmental healthcare programs such
as Medicare and Medicaid, private
health insurers and other third-party
payers is essential for many patients to
be able to afford prescription
medications such as our products and
potential product candidates, assuming
regulatory approval is obtained. Our
ability to achieve acceptable levels of
coverage and reimbursement for
products by governmental authorities,
private health insurers and other
organizations will affect the success of
our approved products and product
candidates. Assuming we obtain
coverage for our product candidates by
third-party payers, the resulting
reimbursement payment rates may not
be adequate or may require co-
payments that patients find
unacceptably high. We cannot be sure
that coverage and reimbursement in the
United States, the EU Member States, or
elsewhere will be available for the
product candidates or any product that
we may develop, and any
reimbursement that may become
available may be decreased or
eliminated in the future.
(cid:129) whether clinicians and potential
patients perceive product candidates
to have better efficacy, safety,
tolerability profile and ease of use,
when compared with the products
marketed by our competitors and the
prevailing standard of care (‘‘SOC’’);
(cid:129) the timing and location of market
introduction of any approved
products;
(cid:129) our ability to provide acceptable
evidence of safety and efficacy;
(cid:129) the frequency and severity and causal
relationships of any side effects and a
continued acceptable safety profile
following approval;
(cid:129) relative convenience and ease of
administration;
(cid:129) cost effectiveness;
(cid:129) patient diagnostics and screening
infrastructure in each market;
(cid:129) marketing and distribution support;
(cid:129) the availability of healthcare
coverage, reimbursement and
adequate payment from health
maintenance organizations and other
third-party payers, both public and
private; and
(cid:129) competition from other therapies.
We face significant competition
from other biotechnology and
pharmaceutical companies
The specific markets in which we
operate are highly competitive and this
competition could harm our results of
operations, cash flows and financial
condition. Our competitors include
major international pharmaceutical
companies as well as smaller or regional
specialty pharmaceutical and
biotechnology companies. We may be
forced to either lower the selling prices
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29
Further, it is possible that a third-party
payer may consider our product
candidates as substitutes and only offer
to reimburse patients for a less
expensive product. Even if we show
improved efficiency or convenience of
administration with our product
candidates compared to products
marketed by our competitors and the
prevailing SOC, the pricing of existing
therapies may still limit the amount we
could charge. Third-party payers may
deny or revoke the reimbursement
status of any given product or establish
new prices for existing marketed
products that inhibits us from realizing
an appropriate return on our investment
in the product candidates. If
reimbursement is not available or is
available only at limited levels, we may
not be able to successfully
commercialize our product candidates,
and may not be able to obtain a
satisfactory financial return on them.
Outside the United States, the
success of our products and
operations is subject to extensive
governmental price controls and
other market regulations which may
materially and adversely affect our
ability to generate commercially
reasonable revenue and profits
Our operations are subject to extensive
governmental price controls and other
market regulations in the United
Kingdom and other countries outside of
the United States. The increasing
emphasis on cost-containment initiatives
in the various EU Member States and
other countries can put pressure on the
pricing and usage of currently marketed
products and product candidates in the
future. In many countries, the prices of
medical products are subject to varying
price control mechanisms as part of
national health systems. Other countries
allow companies to fix their own prices
for medical products, but monitor and
control company profits. Additional
foreign price controls or other changes
in pricing regulation could restrict the
amount that we are able to charge for
our product candidates.
We rely on named patient sales of
our products in certain territories, but
there are no assurances that named
patient sales of our products will
continue at current levels, or at all
In Brazil, Turkey and a limited number of
other countries where permitted based
on U.S. or EU approval, metreleptin and
lomitapide are available on a named
patient sales or similar basis. Named
patient basis means physician-requested
treatment for patients in territories
where marketing authorization has not
yet occurred. There is no assurance that
named patient sales will continue to be
authorized in any particular country.
Even if they are authorized, we will likely
not be permitted to promote, market or
otherwise engage in proactive selling
activities for products sold on a named
patient basis, which makes named
patient sales much less predictable, and
susceptible to unexpected decreases. If
violations of any laws or governmental
regulations are found to have occurred
in connection with our products
significant criminal or civil lawsuits may
be filed, or investigations may be
commenced. Further, in October 2017,
a new set of regulatory requirements
governing use of product candidates
was published in Brazil which has added
complexity to the process for the
purchase, on a named patient basis, of
drugs which have not received
regulatory and/or pricing and
reimbursement approval in Brazil, such
as metreleptin and lomitapide, which
has, along with the ongoing court
proceeding, resulted in delays in the
receipt of orders from Brazil for existing
metreleptin and lomitapide patients. We
believe that this has led certain patients
to discontinue therapy with metreleptin
and lomitapide. Aegerion filed in Brazil
for regulatory approval for JUXTAPID in
August 2018. However, the approval
process can be lengthy, even with the
new regulation that aims at expediting
the review process of new drugs for the
treatment of rare diseases, there is no
guarantee that we will be able to obtain
such approval. As a result, we may have
to rely on our ability to generate named
patient sales for a considerable amount
of time, or indefinitely. These factors
could significantly negatively affect
product revenues from named patient
sales of products in Brazil.
We do not know the full extent of the
impact that the approval of PCSK9
inhibitor products in the United States,
or the approval of a PCSK9 inhibitor
product, will have on the named patient
sales of lomitapide in Brazil or other
countries. We also do not know
whether we will be permitted to sell
metreleptin or lomitapide on a named
patient basis in any additional countries.
In certain countries, we may decide not
to pursue named patient sales even if
permitted. Even if named patient sales
(or equivalent sales) are permitted in a
certain country, and we elect to make
metreleptin or lomitapide available on
such basis, there is no guarantee that
physicians in such country will prescribe
the product, which they can only do if
they proactively reach out to us or our
distributors and also undertake the
effort, time and cost of following the
stringent local requirements to get their
patient on therapy on a named patient
basis, and that patients will be willing to
start and adhere to therapy, or that the
country will pay for the product at all, or
at a level that is acceptable to us,
without delay or imposing other hurdles
on payment. These risks may be
heightened in Brazil for the reasons
outlined above and also in light of the
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STRATEGIC REPORT:
Risks and Uncertainties continued
2016 approval of a PCSK9 inhibitor
product in Brazil.
Further, there are countries where we
choose to make our products available
under an expanded access program at
no cost prior to approval in such
countries. There is no assurance that we
will be able to obtain marketing
approval or reimbursement at all or at
acceptable levels or to maintain
reimbursement for our products in any
country where we have expanded
access programs or that patients on
such programs will convert to
commercial product even if we do
obtain requisite approvals. In certain
countries where we seek reimbursement
for the product during the pre-approval
phase, we are able to establish the price
for the product, while in other countries
we need to negotiate the price. Such
negotiations may not result in a price
acceptable to us, in which case we may
elect not to distribute the products in
such country prior to approval or it may
curtail distribution. Our expanded access
program may result in significant
expenses and may not result in expected
future sales at desired levels or at all,
and could negatively impact our
financial results.
Risks Related to Clinical
Development
If we are unable to complete clinical
development of FILSUVEZ®, or
experience significant delays in
doing so, our business could be
materially harmed
evaluable patients to maintain adequate
statistical power. We expect to report
topline results from the EASE trial in late
Q3 / early Q4 2020.
The EASE trial requires the investment of
substantial expense and time, and it
may be subject to significant delays
relating to various causes, including
difficulties in identifying and enrolling
additional patients who meet trial
eligibility criteria, failure of patients to
complete the clinical trial, unexpected
adverse events and failure to achieve
specified endpoints. If we are unable to
complete the EASE trial and any
required additional testing of FILSUVEZ®
in a timely manner or at all, it will be
difficult or impossible for us to receive
regulatory approval and we will be
unable to commercialize FILSUVEZ®.
Moreover, the continuation of the EASE
trial does not guarantee that we will
successfully further develop,
commercialize or receive regulatory
approval for FILSUVEZ®. Our inability to
obtain approval for and commercialize
FILSUVEZ® would materially adversely
affect our business, results of operations
and prospects.
Clinical trials are expensive, time
consuming and difficult to design
and implement and involve
uncertain outcomes and,
furthermore, results of earlier
preclinical studies and clinical trials
may not be predictive of results of
future preclinical studies or clinical
trials
Our lead product candidate, FILSUVEZ®,
is currently in a pivotal Phase 3 trial
(EASE) to assess its efficacy and safety in
treating patients with severe EB. In
January 2019, we reported the outcome
of an unblinded interim efficacy analysis,
at which point the DSMB recommended
continuing the EASE trial and increasing
enrolment from 182 patients to 230
To obtain the requisite regulatory
approvals to market and sell any of our
product candidates, or to obtain
regulatory approvals to market and sell
any of our commercial products for new
indications, we must demonstrate,
through extensive preclinical studies and
clinical trials, that our product
candidates are safe and effective in
Amryt Pharma plc
humans. Clinical testing is expensive
and can take many years to complete
and has inherently uncertain outcomes.
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 may
not agree on the same trial design for
pivotal studies. The results of preclinical
studies and earlier clinical trials, or the
results from earlier stages of preclinical
studies or clinical trials, may not be
predictive of the results of later-stage
clinical trials. Product candidates in later
stages of clinical trials may fail to show
the desired safety and efficacy outcomes
despite having progressed through
preclinical studies and initial clinical
trials. We may suffer setbacks in
advanced clinical trials due to lack of
efficacy or adverse safety profiles,
notwithstanding any promising results in
earlier clinical trials. We may experience
delays in ongoing or future preclinical
studies or clinical trials and we have no
certainty as to whether future preclinical
studies or clinical trials will begin on
time, will need to be redesigned, will
enrol an adequate number of subjects
or patients on time, if at all, or will be
completed on schedule, if at all. Such
factors may have a material adverse
effect on our business, financial
condition, results of operations and
prospects.
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31
Our product candidates may not
work as intended, may cause
undesirable side effects or may have
other properties that could delay or
prevent their regulatory approval,
limit the commercial profile of an
approved label, or result in
significant negative consequences
following marketing approval, if any
Use of our product candidates could be
associated with side effects or adverse
events which can vary in severity from
minor reactions to serious and/or severe
adverse events, and in frequency from
infrequent to prevalent. For example, an
unexpected life-threatening
hypersensitivity reaction. Undesirable
side effects or unacceptable toxicities
caused by our product candidates could
cause us or regulatory authorities to
interrupt, delay or halt clinical trials and
could result in a more restrictive label or
the delay or denial of regulatory
approval by the FDA, the EMA or
comparable regulatory authorities.
Results of our trials could reveal a high
and unacceptable severity and
prevalence of side effects.
If unacceptable side effects arise in the
development of our product candidates,
we, the FDA, competent authorities of
EU Member States, ethics committees,
the institutional review boards, at the
institutions in which our studies are
conducted, or the DSMB, could suspend
or terminate our clinical trials. The FDA
or comparable regulatory authorities
could also order us to cease clinical trials
or deny approval of our product
candidates for any or all targeted
indications. Treatment-related side
effects could also affect patient
recruitment or the ability of enrolled
patients to complete any of our clinical
trials or result in potential product
liability claims. In addition, these side
effects may not be appropriately
recognized or managed by the treating
medical staff. We expect to have to train
medical personnel using our product
candidates to understand the side effect
profiles of our product candidates in our
clinical trials and upon any
commercialization of any of our product
candidates. Inadequate training in
recognizing or managing the potential
side effects of our product candidates
could result in patient injury or death.
Any of these occurrences may harm our
business, financial condition, results of
operations and prospects significantly.
The regulatory approval processes of
the EMA, FDA and other
comparable regulatory agencies
may be lengthy and time-
consuming, and the outcome is
unpredictable
Our future success is partly dependent
upon our ability to successfully develop,
obtain regulatory approval for, and
commercialize one or more of our
product candidates. There can be no
assurance that any development
product candidates will be successful in
clinical trials or receive regulatory
approval. We cannot predict with
certainty if or when we might submit
for regulatory approval of any of our
product candidates currently under
development. Any approvals we may
obtain may not cover all of the clinical
indications for which we are seeking
approval. Also, an approval might
contain significant limitations in the
form of narrow indications, warnings,
precautions, or contra-indications with
respect to conditions of use.
Applications for any of our product
candidates could fail to receive
regulatory approval for many reasons,
including, but not limited to, the
following:
(cid:129) the EMA, FDA or any other
comparable regulatory agency may
disagree with the design or
implementation of clinical trials or
interpretation of data from non-
clinical trials or clinical trials;
(cid:129) the population studied in the clinical
program may not be sufficiently
broad or representative to ensure
that the clinical data can be relied on
safely in the full population for which
we are seeking approval;
(cid:129) the data collected from clinical trials
of our product candidates may not
be sufficient to support a finding that
has statistically significant clinical
meaningfulness or support the
submission of a new drug application
or other submission, or to obtain
regulatory approval in relevant
jurisdictions, such as the European
Union and the United States;
(cid:129) we 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;
(cid:129) 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 we
contract for clinical and commercial
supplies; and
(cid:129) the approval policies or regulations of
the EMA, FDA or any other
comparable regulatory agency may
significantly change in a manner
rendering clinical data insufficient for
approval.
Any of our 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 product revenue
by delaying or terminating the potential
commercialization of product
candidates. For example, any centralized
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STRATEGIC REPORT:
Risks and Uncertainties continued
investigation and ultimately resulted in
three separate settlements (Corporate
Integrity Agreement, Consent Decree
and Deferred Prosecution Agreement)
with multiple government agencies
(Office of Inspector General (‘‘OIG’’),
FDA, DOJ) and aggregate penalties of
approximately US$40.1 million payable
over three years, which include
restitution and civil penalties. Aegerion
had been making the required payments
and following the Acquisition we have
assumed responsibility for payment.
Pursuant to the settlement, we are also
required to maintain various remedial
and compliance measures, which were
implemented as required by the
settlement. We may be unsuccessful in
implementing and complying with all of
the elements of the settlement in a
timely or satisfactory manner, or at all.
Failure to comply with any provisions of
these settlements could result in the
imposition of additional fines, penalties
and obligations by the applicable
government agency, and could subject
us to prosecution.
Furthermore, the investigation by the
Brazilian authorities of Aegerion’s
activities could result in the
commencement of formal proceedings,
and if the investigation finds any
violation of any laws or governmental
regulations, then our Brazilian subsidiary
may be subject to civil lawsuits and
administrative penalties and other
potential damages and fines. Under
certain circumstances, the Brazilian
subsidiary and our company could be
barred from further sales to federal or
state governments in Brazil, including
sales of JUXTAPID or MYALEPTA, due to
penalties imposed by Brazilian
regulatory authorities or through civil
actions initiated by federal or state
public prosecutors.
We are subject to extensive legal
and compliance obligations as a
pharmaceutical company that
commercializes products, as well as
under Aegerion’s settlements with
the DOJ, OIG, FDA, SEC and other
federal and state government
agencies
As a pharmaceutical company that
develops and commercializes
pharmaceutical products, we are subject
to an extensive array of broad and
complex laws and regulations. These
include, without limitation, regulations
and laws in the United States and
outside the United States related to
manufacturing, clinical, quality, drug
safety, commercialization, payments to
and interactions with healthcare
professionals and healthcare
organizations, anti-kickbacks, fraud and
abuse, the requirement to report
payments and other transfers of value
to healthcare professionals and
healthcare organizations, data
protection and privacy, pricing,
reimbursement, price reporting, anti-
corruption and anti-bribery, and a
myriad of other areas and levels of
regulation. Any failure by us or our key
vendors, contractors, distributors,
licensors or other key third-party
vendors or service providers to comply
with such laws and regulations could
have a material adverse effect on our
results of operations and financial
condition, could result in product
approvals being suspended, withdrawn,
delayed or denied, could result in
litigation or investigations which could
be costly and be a significant distraction
to executive management and other
employees, and could result in damages
or prosecution or exclusion from federal
healthcare programs in the United
States.
marketing authorization application
made to the EMA involving ‘Advanced
Therapy Medicinal Products’ (such as
AP103) will be subject to scientific
evaluation by the Committee for
Advanced Therapies, in addition to the
Committee for Medicinal Products for
Human Use (‘‘CHMP’’).
We intend to seek regulatory approvals
to commercialize the product candidates
in the United States and the European
Union. Even if we are successful in
obtaining approval in one jurisdiction,
there can be no guarantee that it will
obtain approval in other jurisdictions.
Failure to obtain any marketing
authorizations for the product
candidates will result in us being unable
to market and sell such products. If we
fail to obtain approval in any
jurisdiction, the geographic market for
the product candidates could be limited.
Similarly, regulatory agencies may not
approve the labelling claims that are
necessary or desirable for the successful
commercialization of the product
candidates.
Risks Related to Government
Regulation and Compliance
The laws and regulations in the
areas of sales and marketing of
pharmaceutical products, and
interacting with healthcare
professionals and patients, are very
complex and onerous, and require a
robust compliance program. Failure
to comply with these laws and
regulations could have a material
adverse effect on our business,
financial condition and results of
operations
Failure to comply with certain laws and
regulations could lead to governmental
investigations and result in financial
penalties and remedial and compliance
measures. For example, compliance
failures by Aegerion led to a DOJ
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Our relationships with customers
and payers in the United States are
subject to applicable anti-kickback,
fraud and abuse and other
healthcare laws and regulations, any
breaches of which could expose us
to criminal sanctions, civil penalties,
contractual damages and
reputational harm, could diminish
future earnings and could prevent
us from achieving our expected
financial results
Our arrangements with third-party
payers and customers in the United
States expose us to broadly applicable
fraud and abuse and other healthcare
laws and regulations, including the
federal healthcare Anti-Kickback
Statute, the False Claims Act, HIPAA and
the Physician Payment Sunshine Act,
and similar state and foreign laws and
regulations that may regulate the
business or financial arrangements and
relationships through which we market,
sell and distribute our products. The
number and complexity of both federal
and state laws continue to increase, and
additional governmental resources are
being used to enforce these laws and to
prosecute companies and individuals
who are believed to be violating them.
While the evolving nature of the
regulatory framework makes it difficult
to predict what effect the framework
and any recent or future changes will
have on our business, we anticipate that
government scrutiny of pharmaceutical
sales and marketing practices will
continue for the foreseeable future, and
the risk of government investigations
and enforcement actions will continue.
Responding to a government
investigation or enforcement action
would be expensive and time-
consuming, and could have a material
adverse effect on our reputation,
business, financial condition, results of
operations and prospects.
Anti-bribery rules in many jurisdictions
also prohibit the offer of kick-backs and
other inappropriate inducements to
prescribe.
We are subject to the UK Bribery
Act, the U.S. Foreign Corrupt
Practices Act, and other anti-
corruption laws, export control
laws, import and customs laws,
trade and economic sanctions laws
and other laws which govern our
operations
Our operations are subject to anti-
corruption laws, including the UK
Bribery Act, the U.S. Foreign Corrupt
Practices Act of 1977 (‘‘FCPA’’), the U.S.
domestic bribery statute, the U.S. Travel
Act, and other anti-corruption laws that
apply in countries where we conduct
business. The UK Bribery Act, the FCPA
and these other laws generally prohibit
us and our employees and
intermediaries from authorizing,
promising, offering or providing, directly
or indirectly, improper or prohibited
payments, or anything else of value, to
government officials or other persons to
obtain or retain business or gain some
other business advantage. Under the UK
Bribery Act, we may also be liable for
failing to prevent a person associated
with us from committing a bribery
offense. We and our commercial
partners operate in a number of
jurisdictions that pose a high risk of
potential UK Bribery Act or FCPA
violations, and we also participate in
collaborations and relationships with
third parties whose corrupt or illegal
activities could potentially subject them
to liability under the UK Bribery Act,
FCPA or local anti-corruption laws, even
if we did not explicitly authorize or have
actual knowledge of such activities. In
addition, we cannot predict the nature,
scope or effect of future regulatory
requirements on its international
operations or the manner in which
existing laws might be administered or
interpreted.
We are also subject to other laws and
regulations governing our international
operations, including regulations
administered by the governments of the
United Kingdom and the United States,
and authorities in the European Union,
including applicable export control
regulations, economic sanctions and
embargoes on certain countries and
persons, anti-money laundering laws,
import and customs requirements and
currency exchange regulations
(collectively, ‘‘Trade Control Laws’’).
There is no assurance that we will be
completely effective in ensuring
compliance with all applicable anti-
corruption laws, including the UK
Bribery Act, the FCPA or other legal
requirements, including Trade Control
Laws. If we are not in compliance with
the UK Bribery Act, the FCPA and other
anti-corruption laws or Trade Control
Laws, we may be subject to criminal and
civil penalties, disgorgement and other
sanctions and remedial measures, and
legal expenses, which could have an
adverse effect on our business, financial
condition, results of operations and
liquidity. Likewise, any investigation of
any potential violations of the UK
Bribery Act, the FCPA, other anti-
corruption laws or Trade Control Laws
by the United Kingdom, United States,
or other authorities could also have an
adverse impact on our reputation,
business, financial condition, results of
operations and prospects.
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Risks and Uncertainties continued
Risks Related to our Reliance on
Third Parties
We rely on third parties to conduct
clinical trials and registry studies and
perform related services, and those
third parties may not perform
satisfactorily, including by failing to
meet established deadlines for the
completion of such clinical trials and
compliance with post-marketing
requirements
We do not have the resources to
independently conduct clinical trials or
registry studies, or perform
pharmacovigilance and REMS program
and other risk management plan
monitoring and reporting, and we rely
on third parties, such as contract
research organizations, medical
institutions, academic institutions,
clinical investigators, specialty
pharmacies and other third-party service
providers, to perform these functions.
Reliance on third parties for these
functions reduces our control over such
functions. However, if we sponsor
clinical trials, we are responsible for
ensuring that each of the sponsored
clinical trials is conducted in accordance
with the general investigational plan
and protocols for the trial. Our reliance
on third parties does not relieve us of
these responsibilities and requirements.
Furthermore, these third parties may
have relationships with other entities,
some of which may be their
competitors.
If the third parties we rely upon fail to
successfully carry out their contractual
duties or meet expected deadlines, if
they need to be replaced or if the
quality or accuracy of the data they
provide is compromised or delayed due
to the failure to adhere to regulatory
requirements or clinical trial protocols,
or for other reasons, our current
marketing authorizations may be
Amryt Pharma plc
revoked, suspended, or revised to be
more stringent. Further, our
development programs, including any
potential clinical studies, may be
extended, delayed or terminated.
Additional marketing approvals for
metreleptin or lomitapide may be
delayed or denied in the targeted
indication or jurisdiction, and efforts to
successfully commercialize FILSUVEZ®,
metreleptin, lomitapide, or any other
product for targeted indications or in
the targeted jurisdiction may be delayed
or unsuccessful. Should this occur, any
existing approvals could be negatively
impacted, which could materially and
adversely affect our commercialization
efforts.
We depend on third-party
manufacturers to produce the drug
substance and the drug product for
lomitapide and metreleptin sold
globally, as well as the drug product
for commercial supply and clinical
trials. Even though we have reserve
stock, interruption in supply could
materially and adversely affect sales
We have limited internal manufacturing
facilities for the production of the active
pharmaceutical ingredient in
FILSUVEZ®. We employ a small number
of personnel with manufacturing
experience but we are currently
dependent upon contract manufacturers
to produce the drug substance for
metreleptin and lomitapide and the
drug product for commercial supplies
and clinical trials, including for
FILSUVEZ®, if it is approved.
If we are unable to maintain
arrangements for third-party
manufacturing for lomitapide and
metreleptin, are unable to do so on
commercially reasonable terms, or are
unable to obtain timely regulatory
approvals in connection with contract
manufacturers, we may not be able to
complete development of our product
candidates or successfully commercialize
our products. We may incur significant
added costs and substantial delays in
identifying and qualifying any
replacement manufacturers, and in
obtaining regulatory approval to use
such replacement manufacturer in the
manufacture of the products. Any such
delays could result in significant delay in
the supply of drug product for an
ongoing clinical trial due to the need to
replace a third-party manufacturer and
could delay completion of the trial. If for
any reason we are unable to obtain
adequate supplies of lomitapide or
metreleptin, or the drug substances
used to manufacture them, it will be
more difficult or impossible for us to
compete effectively, generate revenues,
meet expectations for financial
performance and further develop our
products. In addition, if we are unable
to assure a sufficient quantity of the
drug for patients with rare diseases or
conditions, we may lose any Orphan
Drug exclusivity to which our product
otherwise would be entitled.
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STRATEGIC REPORT
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35
the future be, issued to us or that claims
with respect thereto would not be
asserted by third parties. Furthermore,
there are some areas of technology that
are important for our businesses which
cannot be patented due to the existence
of prior disclosures or rights. AP103
currently has no granted patent
protection in the European Union. We
intend to rely on patent protection once
it is approved and also on exclusivity
from a possible future Orphan Drug
approval. LOJUXTA did not receive
Orphan Drug approval in Europe and
relies on data exclusivity and patent
protection. This may make our
reimbursement discussions more
difficult. In addition, there can be no
assurance that we will be able to obtain
and/or maintain Orphan Drug
Designation or Orphan Drug approval
for our product candidates. If we lose
the competitive advantage provided by
our intellectual property and other
protections, we will not be able to
generate sustainable revenues or profits
from our product portfolio. If we do not
adequately protect and enforce our
intellectual property, competitors may
erode or negate any competitive
advantage we may have, which could
materially harm our business and ability
to achieve expected financial results.
The loss of patent protection could also
have a material adverse effect on our
business, financial condition, results of
operations and prospects.
Risks Related to our Intellectual
Property
It may be challenging or costly for
us to obtain, maintain, enforce and
defend our intellectual property
rights. Failure to obtain or protect
these rights could adversely affect
our business and our ability to
compete and our existing patent
protections will expire and
protection for these rights may not
be extended
Our success and ability to compete
effectively is in large part dependent
upon exploitation of proprietary
technologies and product candidates
that have been developed internally or
have been acquired or in-licensed, our
ability to protect and enforce our
intellectual property rights so as to
preserve our exclusive rights in respect
of our technologies and product
candidates, and our ability to preserve
the confidentiality of our know-how.
We rely primarily on exclusivity granted
by a combination of Orphan Drug
approval, data exclusivity, patent laws
and trade secrets / confidentiality to
protect our 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 our ability to develop
and market its proposed candidates, or
that, if issued, we would have the
resources to protect or enforce any such
issued patent from infringement. Also,
no assurance can be given that we will
develop technologies or candidates
which are patentable or that patents will
be sufficient in their scope to provide
protection for our products or
intellectual property rights against third
parties. Nor can there be any assurance
as to the ownership, validity,
patentability, enforceability or scope of
any patents which have been, or may in
Annual Report for the year ended 31 December 2019
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36
CORPORATE GOVERNANCE:
Board of Directors
Ray Stafford – Non-Executive Chairman
Skills, Competence and Experience
Mr. Stafford has been a director of Amryt since 2016. He has worked in the pharmaceutical industry for more than 30 years. He
has served as Chairman, Chief Executive Officer and majority shareholder of the Tosara Group which owned, manufactured and
marketed the successful international brand Sudocrem and was ultimately integrated into the US based, NYSE listed company -
Forest Laboratories, Inc. in 1988. Mr. Stafford held numerous senior positions within such corporations, including Chief Executive
Officer of Forest UK and Ireland as well as Chief Executive Officer of Forest Laboratories Europe since 1999. Mr. Stafford retired in
2014 following the sale of Forest Laboratories, Inc. to Actavis plc (now Allergan plc) in a US$28 billion transaction where Mr.
Stafford was Executive Vice President of Global Marketing. Separately, Mr. Stafford also founded one of Ireland’s leading multi-
channel sales, marketing and distribution service providers approved by the Irish Medicines Board (now the Health Products
Regulatory Authority) to service the wholesale and retail trade.
Committee Membership
Audit Committee (Member)
Appointment Date
Appointed as Non-Executive Chairman on 24 September 2019
Dr. Joe Wiley – Chief Executive Officer
Skills, Competence and Experience
Joe Wiley founded Amryt and has served as Chief Executive Officer since 2015. He has over 20 years of experience in the
pharmaceutical, medical and venture capital industries. Prior to Amryt, Dr. Wiley opened and led the European office of
Sofinnova Ventures Inc. He was previously a medical director at Astellas Pharma Limited. Prior to joining Astellas, he held
investment roles at Spirit Capital SA, Inventages Venture Capital Investment Inc. and Aberdeen Asset Managers Private Equity
Limited. Dr. Wiley trained in general medicine at Trinity College Dublin, specializing in neurology. He holds a Masters of Business
Administration from INSEAD and is also a Member of the Royal College of Physicians in Ireland.
Appointment Date
24 September 2019
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37
George P. Hampton Jr – Non-Executive Director
Skills, Competence and Experience
Mr. Hampton joined Currax Pharmaceuticals in April of 2019 as Chief Executive Officer and serves on its board of directors. Prior
to joining Currax, Mr. Hampton served as Executive Vice President, in the primary care business unit of Horizon Pharmaceuticals
(HZNP), a publicly listed biopharmaceutical company. In this role, he was tasked with leading the company’s forward-looking
strategy, as well as establishing operational goals for the business. Previously, Mr. Hampton served as Executive Vice President,
global orphan business unit and international operations for Horizon Pharmaceuticals. He has more than 25 years of experience
as a successful executive in the pharmaceutical and biotechnology field on both a national and international scale including
specific expertise in rare disease (ACTIMMUNE, RAVICTI, PROCYSBI), autoimmune (HUMIRA), primary care, orthopaedic
(CELEBREX), diabetes (BYETTA), anti-infectives and cardiovascular spaces. This includes roles of increasing responsibility in sales,
marketing and operations at G.D. Searle, Abbott (now AbbVie), Amylin and Horizon Pharmaceuticals. Mr. Hampton earned his
Bachelor of Science from Miami University in Oxford, Ohio. He serves on the board of IMAC (Nasdaq: IMAC) regeneration
medical centers.
Committee Membership
Remuneration Committee (Chairman)
Appointment Date
24 September 2019
Dr. Alain H. Munoz – Non-Executive Director
Skills, Competence and Experience
Dr. Munoz is an entrepreneur and independent management consultant in the pharmaceutical and biotechnology industry and
has over 30 years of experience in the industry at the executive level. Dr. Munoz worked with the Fournier Group as Research
and Development Director and thereafter as Senior Vice President of the Pharmaceutical Division. Prior to serving at Fournier, he
served at Sanofi Group, first as Director in the cardiovascular and anti-thrombotic products department, and thereafter as Vice
President of international development. Dr. Munoz qualified in cardiology and anesthesiology from the University Hospital of
Montpellier, France where he was head of the clinical cardiology department. He has been a member of the Scientific Committee
of the French Drug Agency, is advisor to Kurma Partners, and serves on the scientific advisory board of Valneva SA. In addition,
he is an independent board member of Oxthera AB, Auris Medical Holding AG (Nasdaq: EARS) and Zealand Pharma A/S (Nasdaq:
ZEAL). Mr. Munoz received an undergraduate degree from the International Institute for Management Development, a doctorate
from the University of Montpellier and a graduate degree from the Centre Hospitalier Universitaire Pitie-Salpetriere.
Committee Membership
Remuneration Committee (Member)
Appointment Date
24 September 2019
Annual Report for the year ended 31 December 2019
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38
CORPORATE GOVERNANCE:
Board of Directors continued
Donald K. Stern – Non-Executive Director
Skills, Competence and Experience
Mr. Stern was previously a director of Novelion, Aegerion’s former parent company, and
was a member of Aegerion’s board of directors from September 2015 to October 2016.
Mr. Stern serves as Managing Director of Corporate Monitoring & Consulting Services at
Affiliated Monitors, Inc., a consulting firm providing independent integrity monitoring
services and compliance services across a wide range of regulated industries and
professions. He is also Counsel to the Boston law firm of Yurko, Salvesen & Remz. He has
had a diverse and distinguished legal career, evenly split between private practice and
public service. Prior to joining Affiliated Monitors, Inc., Mr. Stern was a partner at three
major law firms: Cooley LLP, Bingham McCutchen LLP and Hale & Dorr LLP (now Wilmer
Cutler Pickering Hale and Dorr LLP). Mr. Stern also served as the United States Attorney
for the District of Massachusetts, the Chief Legal Counsel to Governor Michael S. Dukakis
and the Chief of the Government Bureau in the Massachusetts Attorney General’s office.
Mr. Stern holds a Masters in Laws from University of Pennsylvania Law School, a Juris
Doctor degree from Georgetown University Law Center and a Bachelor of Arts from
Hobart College.
Committee Membership
Compliance Committee (Chair)
Audit Committee (Member)
Appointment Date
24 September 2019
Dr. Patrick V.J.J. Vink – Non-Executive Director
Skills, Competence and Experience
Dr. Vink has significant experience as a senior executive, having worked in the
pharmaceutical industry for more than 30 years. Dr. Vink serves as Chairman at Acacia
Pharma Group plc and Targovax ASA, both publicly listed biopharma companies based in
the UK and Norway. Dr. Vink also serves as Chairman of venture capital-backed NMD
Pharma, a neurology biopharmaceutical company in Denmark and F2G Ltd, a rare fungal
disease UK and Austria based company. In addition, Dr. Vink is a board member at
Santhera AG and Spero Therapeutics, Inc. and in 2019 began working with Athyrium as a
Senior Advisor. While serving in these capacities, Dr. Vink has been involved in initial public
offerings and geographic expansions and has contributed to the achievement of significant
development and commercial milestones. Earlier in his career he held several leadership
positions across the industry, including Head of Global Biopharmaceuticals for the Sandoz
division of the Novartis Group, Vice President International Business for Biogen Inc., and
Head of Worldwide Marketing, Cardiovascular and Thrombosis at Sanofi-Synthelabo Ltd.
Dr. Vink also served as a member of the Executive Committee of the European Federation
of Pharmaceutical Industries and Associations from 2013 to 2015. Dr. Vink graduated as a
medical doctor from the University of Leiden, Netherlands in 1988 and obtained his Master
of Business Administration in 1992 from the University of Rochester.
Committee Membership
Remuneration Committee (Member)
Compliance Committee (Member)
Appointment Date
24 September 2019
Amryt Pharma plc
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39
Stephen T. Wills – Non-Executive Director
Skills, Competence and Experience
Mr. Wills currently serves as the Chief Financial Officer (since 1997), and Chief Operating
Officer (since 2011) of Palatin Technologies, Inc. (NYSE: PTN), a biopharmaceutical
company developing targeted, receptor-specific peptide therapeutics for the treatment of
diseases with significant unmet medical need and commercial potential. Mr. Wills serves on
the boards of directors of MediWound Ltd. (Nasdaq: MDWD), a biopharmaceutical
company focused on treatment in the fields of severe burns, chronic and other hard to
heal wounds, since April 2017, and as Chairman since January 2018, and of Gamida Cell
Ltd. (Nasdaq: GMDA), a leading cellular and immune therapeutics company, since March
2019 (audit and finance committee member). Mr. Wills also has served on the board of
trustees and executive committee of The Hun School of Princeton, a college preparatory
day and boarding school, since 2013, and its Chairman since June 2018. Mr. Wills served
on the board of directors of Caliper Corporation, a psychological assessment and talent
development company, since March 2016, and as Chairman from December 2016 to
December 2019, when Caliper was acquired by PSI. Mr. Wills served as Executive Chairman
and Interim Principal Executive Officer of Derma Sciences, Inc., a provider of advanced
wound care products, from December 2015 to February 2017, when Derma Sciences was
acquired by Integra Lifesciences (Nasdaq: IART). Previously, Mr. Wills served on the board of
directors of Derma Sciences as the lead director and chairman of the audit committee from
June 2000 to December 2015. Mr. Wills served as the Chief Financial Officer of Derma
Sciences from 1997 to 2000. Mr. Wills served as the President and Chief Operating Officer
of Wills, Owens & Baker, P.C., a public accounting firm, from 1991 to 2000. Mr. Wills, a
certified public accountant, earned his Bachelor of Science in accounting from West
Chester University, and a Master of Science in taxation from Temple University.
Committee Membership
Audit Committee (Chair)
Compliance Committee (Member)
Appointment Date
24 September 2019
Annual Report for the year ended 31 December 2019
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40
CORPORATE GOVERNANCE:
Chairman’s Introduction to Governance
I am pleased to present the Amryt Pharma plc Corporate Governance Report for the year ended 31 December 2019.
The Corporate Governance report contains details of Amryt’s governance structures and highlights areas of focus for the Board
and its Committees during 2019. Your Board remains committed to high standards of governance across the Group, in line with
our core values of excellence and integrity in all that we do.
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.
This is my first year as Non-Executive Chairman of Amryt and I am aware that the QCA Code charges me with the responsibilities
of:
(cid:129) articulating my role and demonstrating my responsibility for corporate governance;
(cid:129) explaining how the QCA Code is applied to Amryt and how that application supports the medium to long term success of our
Group;
(cid:129) explaining any areas in which Amryt departs from the expectations of the QCA Code; and
(cid:129) identifying any key governance related matters that have occurred during the period under review.
I accept these responsibilities and aim to discharge them diligently.
Culture & Strategy
The Board sets the tone and shared values for the way in which the Group operates. Our culture is underpinned by a robust risk
management framework consisting of policies, procedures and tasks, including a Code of Conduct which defines business
conduct standards for anyone working for, or on behalf of, the Group. Given the importance of culture to the success of our
business model, the Board will continue to assess and monitor the Group’s culture to ensure that it is aligned with our strategy
and values and is adequately embedded across Amryt’s global team.
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 its 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 in every aspect of our business.
Board Composition
On an ongoing basis, I seek to ensure we have the right balance of skills, knowledge and experience on the Board, taking into
account our business model, the specific sector in which we operate, the growth in scale of the Group and our geographic
expansion.
During the year, the Board appointed a new Chairman and five new independent Non-Executive Directors. Our CEO, Dr. Joe
Wiley, is the only executive director on the Board. The biographies of all the directors are outlined in page 36 - 39 of this annual
report. Harry Stratford, James Culverwell and Markus Zeiner resigned as Non-Executive Directors in September 2019. Rory
Nealon, stepped down from his role as an Executive Director in September 2019 but he continues to hold the position of CFO
and COO and is the Company Secretary.
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41
The Board now consists of seven members and is weighted towards non- executive representation, as part of its preparation for a
follow-on listing on NASDAQ, and to ensure the appropriate level of independent review, scrutiny and challenge of the
management of the enlarged company following the acquisition of Aegerion and the executive function.
Following the acquisition of Aegerion in September 2019, the size and complexity of Amryt has significantly changed in recent
months. With this new Board, I am confident that we have the appropriate balance of sector, financial and public market skills
and experience as a well as balance of personal qualities and capabilities. I recognise the need for continuous improvement in
order to best serve our stakeholders and intend to constantly review the mix of skills and experience we possess in order to
deliver the Company’s strategic goals.
Board Committees
In 2019, we established a Compliance Committee which will have responsibility for overseeing the Group’s compliance with
laws, regulations, internal procedures, and industry standards. Our other existing Board Committees have continued to perform
effectively throughout 2019. You will find, on pages 43 to 45, individual reports, giving details of their activities during the year.
Stakeholder Engagement
In order to operate effectively companies must understand those resources and relationships that matter most to their success.
The Group’s stakeholders include shareholders, employees, customers, healthcare providers, clinicians, patients, suppliers and the
community in which it operates. In line with the requirements of the QCA Code, the Board will seek to ensure effective
engagement with all stakeholders.
The Board welcomes continuous, open and meaningful discussion with our shareholder’s and I welcome direct contact and
questions from shareholders either in writing or via our website. This year, due to the COVID 19 pandemic, the format of our
Annual General Meeting will be different given we will not all be together in person due to the requirement to follow social-
distancing guidelines. In these unprecedented times, we will hold our first “virtual AGM” in the interests of the health and safety
of our shareholders. However, I look forward to brighter times ahead and seeing you all in person in as soon as possible.
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.
Ray Stafford
Non-Executive Chairman
24 June 2020
Annual Report for the year ended 31 December 2019
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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 one executive director and six non-
executive directors, including the Chairman, as detailed on pages 36 - 39. The Board believe the current split of Non-Executive
and Executive Directors is appropriate for the requirements of the Group. The Company acknowledges that the Board is
weighted towards independent Non-Executive representation. This is to ensure that there is appropriate independent review,
scrutiny, and challenge of the management of the Company and the executive function.
As the business develops, the composition of the Board will remain under review to ensure that it remains appropriate to the
requirements of the Group. The current Board is subject to compulsory retirement and will be put up for re-election at our first
annual general meeting to be held at least 24 months after the closing of the Acquisition. For so long as each of the Athyrium
Parties or the Highbridge Parties (or their respective affiliates) respectively hold at least 10% of our issued share capital, the
Athyrium Parties and the Highbridge Parties (as applicable) are each entitled to nominate a replacement of the non-independent
director (as applicable) selected by them on his or her resignation or retirement. Any such director shall serve on the Board until
our next annual general meeting, where such director’s appointment will be subject to approval by an ordinary resolution of our
shareholders.
The Board has a formal schedule of matters reserved for its consideration. It is responsible for:
(cid:129) setting the overall Group strategy and providing leadership to implement the strategy and supervising the management of the
business;
(cid:129) the acquisition or disposal of material corporate entities or assets;
(cid:129) public announcements (including statutory financial statements); approving or making significant changes in accounting
policy, the capital structure and dividend policy of the Group;
(cid:129) Group remuneration policy; and
(cid:129) Board structure, composition and succession.
The Board delegates to management, through the executive director, 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:
Non-Executive Chairman
(cid:129) Leads the Board and promotes a culture of open discussion between Executive and Non-Executive Directors;
(cid:129) Sets the highest standards of corporate governance; and
(cid:129) Ensures effective communications with all our stakeholders.
Executive Director
(cid:129) Develop and execute the Group’s strategy in line with the policies and objectives agreed by the Board;
(cid:129) Manage operational effectiveness and profitability of the Group;
(cid:129) Promotes the purpose, vision and values of the organisation, both internally and externally; and,
(cid:129) Monitor compliance with the Group’s legal, regulatory, corporate governance, social and ethical responsibilities.
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Non-Executive Directors
(cid:129) Contribute to the overall development of Amryt’s strategy;
(cid:129) Provide independent insight based on relevant experience; and,
(cid:129) Monitor and challenge the business performance and the execution of strategy.
Company Secretary
(cid:129) Ensures correct Board procedures are followed;
(cid:129) Ensures Directors receive timely and clear information so that Directors are equipped for informed decision making and open
debate;
(cid:129) Advises the Board on policy, procedure, governance and ethics; and
(cid:129) 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, fourteen Board meetings were held. The directors attended as follows:
Total Meetings held during the year
Directors’ Attendance:
Ray Stafford (resigned from remuneration committee on 24 September 2019)
Joe Wiley
George Hampton (appointed 24 September 2019)
Alain Munoz (appointed 24 September 2019)
Don Stern (appointed 24 September 2019)
Patrick Vink (appointed 24 September 2019)
Stephen Wills (appointed 24 September 2019)
Harry Stratford (resigned 24 September 2019)
Rory Nealon (resigned 24 September 2019)
James Culverwell (resigned 24 September 2019)
Markus Ziener (resigned 24 September 19)
Board Committees
Full Board
14
10/14
12/14
3/14
1/14
2/14
1/14
3/14
10/14
10/14
10/14
7/14
Audit
Committee
Remuneration
Committee
4
4/4
–
–
–
–
–
1/4
–
–
4/4
–
4
2/4
–
2/4
2/4
–
–
–
2/4
–
2/4
–
The Company has an Audit Committee, Remuneration Committee and Compliance Committee with formally delegated duties
and responsibilities. The composition of these committees may change over time as the composition of the Board changes.
(cid:129) Remuneration Committee: Chairman – George Hampton
(cid:129) Audit Committee: Chairman – Steven Wills
(cid:129) Compliance Committee: Chairman – Donald Stern
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.
Annual Report for the year ended 31 December 2019
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CORPORATE GOVERNANCE:
Chairman’s Governance Overview continued
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.
The responsibilities of the remuneration committee covered in its terms of reference include the following: determining and
monitoring policy on and setting levels of remuneration, termination, performance related pay, pension arrangements, reporting
and disclosure, share incentive plans and appointing remuneration consultants. The terms of reference also set out the reporting
responsibilities and the authority of the committee to carry out its responsibilities.
The Remuneration Committee comprises three members, who are all Non-Executive directors: George Hampton, Dr. Alain
Munoz and Patrick Vink. The Remuneration Committee is chaired by George Hampton. All 3 members of Remuneration
Committee were appointed on 24 September 2019. Prior to this date, the Remuneration Committee comprised of Harry
Stratford, Ray Stafford and James Culverwell, all of whom resigned on 24 September 2019.
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 of the Company has responsibility for, among other things, the monitoring of the financial integrity of the
financial statements of the Amryt Group and the involvement of the Amryt Group’s auditors in that process. It focuses in
particular on compliance with accounting policies and ensuring that an effective system of internal audit, 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 ultimate responsibility for reviewing
and approving the annual report and accounts and the half yearly reports remains with the Board. The audit committee will meet
at least two times a year at the appropriate times in the financial reporting and audit cycle.
The terms of reference of the audit committee cover such issues as membership and the frequency of meetings, as mentioned
above, together with requirements of any quorum for and the right to attend meetings. The responsibilities of the audit
committee covered in its terms of reference include the following: external audit, financial reporting, internal controls and risk
management. The terms of reference also set out the authority of the committee to carry out its responsibilities.
The Audit Committee comprises of three members, who are all non-executive Directors: Stephen Wills, Donald Stern and Ray
Stafford. On 24 September 2019, James Culverwell resigned as a member of the Board and was replaced as a member of the
Audit Committee by Stephen Wills and Donald Stern. The Audit Committee is chaired by Stephen Wills.
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 24 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.
Amryt Pharma plc
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Compliance Committee
Amryt Established a Compliance Committee in 2019. This Committee has responsibility for overseeing the Group’s compliance
with laws, regulations, internal procedures and industry standards that may cause significant business, regulatory, or reputational
damage to the Group, as well as legal and business trends and public policy issues. The primary function of the Compliance
Committee is to oversee the development and implementation of compliance and ethics policies and practices at the Group. The
Compliance Committee comprises three members, Donald Stern, Patrick Vink and Stephen Wills all of whom are be Non-
Executive Directors, and the committee will be chaired by Donald Stern.
Risk Management & 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, debt funding and holds its cash as a liquid
resource to fund the obligations of the Group. Decisions regarding the management of these assets are considered and 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: https://www.amrytpharma.com/investors/corporate-governance/
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 3 and page 14 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 23
Annual Report for the year ended 31 December 2019
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CORPORATE GOVERNANCE:
Chairman’s Governance Overview continued
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 36
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, www.amarytpharma.com
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the
board
See this section and “Corporate Governance” section on our website, www.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, www.amarytpharma.com
Amryt Pharma plc
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CORPORATE GOVERNANCE:
Director’s Report For the year ended 31 December 2019
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 ended 31 December 2019.
Amryt Pharma plc was incorporated under the Companies Act 2006 on July 17, 2019 as a private company limited by shares
under the name Amryt Pharma Holdings Limited. Following a re-registration as a public company, in September 2019 in
connection with the scheme of arrangement under which we acquired Aegerion, we became the parent company of our legacy
businesses and changed our name to Amryt Pharma plc.
Directors
The Directors who served on the Board of Amryt Pharma plc during the year to the date of this report are as follows:
Ray Stafford (Non-Executive Chairman) – appointed as Chairman 24 September 2019
Dr. Joe A. Wiley (Chief Executive Officer) – appointed 24 September 2019
George P. Hampton Jr. (Non-Executive Director) – appointed 24 September 2019
Dr. Alain H. Munoz (Non-Executive Director) – appointed 24 September 2019
Donald K. Stern (Non-Executive Director) – appointed 24 September 2019
Dr. Patrick V.J.J. Vink (Non-Executive Director) – appointed 24 September 2019
Stephen T. Wills (Non-Executive Director) – appointed 24 September 2019
Rory Nealon (Chief Financial Officer, Chief Operations Officer & Company Secretary) – resigned 24 September 2019
John McEvoy (appointed on an interim basis) – resigned 24 September 2019
The Directors who served on the Board of Amryt Pharma plc prior to the scheme of arrangement are as follows:
Harry Stratford (Non-Executive Chairman) – resigned 24 September 2019
Dr. Joe A. Wiley (Chief Executive Officer)
Ray Stafford (Non-Executive Director)
James Culverwell (Senior Independent Non-Executive Director) – resigned 24 September 2019
Markus Ziener (Non-Executive Director) – resigned 24 September 2019
Rory Nealon (Chief Financial Officer, Chief Operations Officer & Company Secretary)
Base Salaries Review
In 2019 and 2018, 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 2018 and 2019 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 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 2019 are included in note 5 of the
Notes to the Financial Statements.
Annual Report for the year ended 31 December 2019
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CORPORATE GOVERNANCE:
Director’s Report For the year ended 31 December 2019
On 10 July 2019, the shareholders of the Company approved a resolution to give authority to the Company to undertake a
consolidation of the existing ordinary shares in the capital of the Company under which every 6 existing ordinary shares were
consolidated into one ordinary share. On 24 September 2019, all share options and warrants granted prior to this date were
exchanged to reflect the 6 for 1 share consolidation.
On 28 April 2020 the Board increased the maximum number of shares over which options may be in issue at any one time under
the Plan from 10% to 15% of the issued share capital including any zero cost warrants which may be in issue from time to time
(the “Option Limit”). On 1 January in each calendar year, the then Option Limit will automatically increase by 5% of the
Company’s issued share capital from time to time. The Option Limit from time to time shall decrease by the number of our
ordinary shares in relation to which options are exercised.
All references to share options and warrants in this Director’s report are stated the reflect the number of share options and
warrants after the 6:1 share consolidation.
In 2019, a total of 6,093,939 share options were issued to the executive director, Joe Wiley. 316,039 share options were granted
to Joe Wiley on 21 May 2019 at a strike price of £0.7584. A further 5,777,900 share options were granted to Joe Wiley on
5 November 2019 at a strike price of £1.215. Rory Nealon was a director of the company until his resignation on 24 September
2019. He continues to act in his role as CFO/ COO and Company Secretary. While a director of the company in 2019, a total of
251,915 share options were granted to Rory Nealon on 21 May 2019 at a strike price of £0.7584.
All share options granted in 2019 have a 3-year vesting period. No new share options were granted to Directors in 2018.
Directors’ Remuneration – Current Year
The remuneration of Directors for the year ended 31 December 2019 was as follows:
Pension Share Based
Base Salary Contri- Payment Other 2019
and Fees Bonuses butions Expense Benefits Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
2018
Total
US$’000
Ray Stafford 61 – – – – 61
Joe Wiley 588 703 50 304 31 1,676
George Hampton1 17 – – – – 17
Alain Munoz1 15 – – – – 15
Donald Stern1 21 – – – – 21
Patrick Vink1 16 – – – – 16
Stephen Wills1 23 – – – – 23
Rory Nealon2 288 515 27 32 13 875
Harry Stratford2 82 – – – – 82
James Culverwell2 58 – – – – 58
Markus Ziener2 47 – – – – 47
52
869
–
–
–
–
–
604
95
67
52
TOTAL 1,216 1,218 77 336 44 2,891
1,739
1 George, Hampton, Alain Munoz, Donald Stern, Patrick Vink and Stephen Wills were all appointed to the Board on 24 September 2019 and their salaries reflect the
period from the appointment date, 31 December 2019.
2 Rory Nealon, Harry Stratford, James Culverwell and Markus Ziener resigned from the Board on 24 September 2019 and their salaries reflect their salaries from
1 January 2019 to 24 September 2019
Amryt Pharma plc
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Directors and their Interests
Interest in ordinary shares of 1p
The Directors of the Company at 31 December 2019 held the following interest in the ordinary shares of Amryt Pharma plc:
31 December
2019
Director Number
31 December
2019
31 December
2018
% Number*
31 December
2018
%
Joe Wiley 3,499,081
2.30
3,499,081
7.64
*For presentational purposes, the number of shares held by Joe Wiley at 31 December 2018 have been restated to reflect the 6:1 consolidation exercise that was
completed in 2019.
Share Options and Warrants
The Directors of the Company at 31 December 2019 held the following warrants of Amryt Pharma plc which were issued to
them along with other investors in the reverse takeover (“RTO”) on April 18, 2016:
31 December
2019 Exercise Expiry
Director Number price Date
31 December
2018
Number*
Exercise
price
Expiry
Date
Joe Wiley – – –
Ray Stafford – – –
27,535
137,674
144p
144p
31/12/18
31/12/18
*For presentational purposes, the number of shares held by the Directors at 31 December 2018 have been restated to reflect the 6:1 consolidation exercise that was
completed in 2019.
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.
At 31 December 2019, Joe Wiley was the only director to hold share options of Amryt Pharma plc as follows:
31 December
2019 Exercise Expiry
Director Number price Date
31 December
2018
Number
Joe Wiley 343,521 £1.21 28/11/24
Joe Wiley 316,039 £0.76 20/05/26
Joe Wiley 5,777,900 £1.22 4/11/26
343,522
–
–
Exercise
price
£1.21
–
–
Expiry
Date
28/11/24
–
–
Dividends
The Directors do not recommend payment of a dividend (2018: nil).
Share Capital Structure
The Company’s ordinary shares of 1p are listed on the AIM Market of the London Stock Exchange (AMYT) and the Euronext
Growth Market of the Irish Stock Exchange (AYP). At the date of this report, 159,363,543 ordinary shares of 1p each were in
issue of which 4,864,656 are treasury shares. Details of share issues and changes to the capital structure during the year are set
out in note 17 of the Notes to the Financial Statements.
Annual Report for the year ended 31 December 2019
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CORPORATE GOVERNANCE:
Director’s Report For the year ended 31 December 2019
Substantial Shareholdings
The Company is aware that the following shareholders had an interest of 3% or more in the issued ordinary share capital of the
Company:
31 December
2019
Rank Investor Number
31 December
2019
%
31 December
2018
Number1
31 December
2018
%
1 Athyrium Capital Mgt 42,883,097
2 Novelion Therapeutics Inc 14,040,250
3 Edgepoint Investment Mgt 12,126,650
4 Highbridge Capital Mgt 11,073,825
5 Software AG-Stiftung 10,212,153
6 UBS Group AG 8,816,367
7 Axa SA 6,494,164
27.8%
8.1%
7.8%
7.2%
6.6%
5.7%
4.2%
–
–
–
–
10,212,153
–
4,490,062
–
–
–
–
22.3%
–
9.8%
1 For presentational purposes, the number of shares held at 31 December 2018 have been restated to reflect the 6:1 consolidation exercise that was completed
in 2019.
There was a number of notified changes in these holdings in the period after year end to the date of signing the Financial
Statements. At 24 June 2020, the Company is aware that the following shareholders had an interest of 3% or more in the issued
ordinary share capital of the Company:
Rank Investor
1 Athyrium Capital Mgt
2 Novelion Therapeutics Inc
3 Edgepoint Investment Mgt
4 Highbridge Capital Mgt
5 Software AG-Stiftung
6 Axa SA
7 UBS Group AG
Qualifying Indemnity Provision
24 June
2020
Number
43,286,346
12,490,250
12,126,650
10,954,293
10,212,153
6,494,164
6,309,224
24 June
2020
%
28.0%
8.1%
7.8%
7.1%
6.6%
4.2%
4.1%
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.
Section 172 Statement
From the perspective of the Directors, the matters for consideration under Section 172 of the Companies Act 2006 (“s172”)
have been considered to an appropriate extent by the Group. Such consideration is included in the statements set out below,
noting the Directors’ duty under s172 to act in good faith to promote the success of the Group and Company for the benefit of
its shareholders but having regard amongst other matters to the following:
(cid:129) the likely consequences of any decision in the long term;
(cid:129) the interests of the Group’s and Company’s employees;
(cid:129) the need to foster the Group’s and Company’s business relationships with customers and other stakeholders;
Amryt Pharma plc
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51
(cid:129) the impact of the Group’s and Company’s operations on the community and the environment;
(cid:129) the desirability of the Group and Company maintaining a reputation for high standards of business and conduct; and
(cid:129) the need to act fairly as between members of the Group and Company.
For the Group, compliance is one of the cornerstone values and forms the basis of all decisions and activities. It is the key to
integrity in conducting business and as a global business. The Directors are committed to ensuring that all business is carried out
in full accordance with the law as well as internal rules and principles.
Going Concern
The business activities of the Group are outlined on page 3 and the factors which may affect the Group future development and
performance are outlined on pages 23 - 35. The financial review on page 16 discusses the Group’s financial and liquidity position
and borrowing facilities. In addition, notes 24 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.
A key consideration for the Directors was the impact on going concern of the acquisition of Aegerion and a US$60 million
fundraise, both completed in September 2019. This acquisition represents a significant step forward for Amryt and is already
creating value for Amryt 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. It is anticipated that
our dual listing on Nasdaq, which is expected to be completed in July 2020, may 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.
Events after the Reporting Period
Events after the reporting period are set out in note 28 to the consolidated financial statements. Likely future developments in
the business are discussed in the Strategic section.
Auditors
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.
Annual Report for the year ended 31 December 2019
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CORPORATE GOVERNANCE:
Director’s Report For the year ended 31 December 2019
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 Growth Market
of the Irish Stock Exchange.
In preparing these Financial Statements, the Directors are required to:
(cid:129) select suitable accounting policies and then apply them consistently;
(cid:129) make judgements and accounting estimates that are reasonable and prudent;
(cid:129) 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;
(cid:129) 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 24 June 2020 and signed on its behalf by:
Joe Wiley
Chief Executive Officer
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Independent auditor’s report to the members of
Amryt Pharma plc
For the year ended 31 December 2019
Opinion
We have audited the financial statements of Amryt Pharma plc (the ‘parent company’) and its subsidiaries (together the ‘group’)
for the year ended 31 December 2019, which comprise the Consolidated Statement of Financial Position, the Consolidated
Statement of Comprehensive Income, 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 parent company financial
statements is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union.
In our opinion, Amryt Pharma plc’s financial statements:
(cid:129) give a true and fair view in accordance with IFRS as adopted by the European Union of the financial position of the parent
company as at 31 December 2019 and of its cash flows for the year then ended;
(cid:129) 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 2019 and of the group’s financial performance and cash flows for the year then ended; and
(cid:129) 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 parent 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:
(cid:129) the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
(cid:129) 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 12 months from the date when the financial statements are authorised for issue.
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) that 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.
Annual Report for the year ended 31 December 2019
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Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2019
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.
In assessing the risk of material misstatement to the group financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the financial statements, we selected seven components out of the 31 reporting components
of the group. The seven components cover entities across Europe and the Americas, which represent the principal business units
with the group.
Of the seven components selected, we performed an audit of the complete financial information of the four components (“full
scope components”) which were selected based on their size or risk characteristics. For the remaining three components, we
performed audit procedures on specific accounts within that component that we considered had the potential for the greatest
impact on the significant accounts in the financial statements either because of the size of these accounts or their risk profile.
The components where we performed full or specific audit procedures accounted for 98% of the group’s total assets, 93% of
the total revenue and 93% of the total loss before taxes.
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: 1% of total assets for the financial
year ended 31 December 2019. The current year benchmark for materiality calculation was changed to total assets due to
acquisition of Aegerion. The acquired assets mainly comprise intangible assets with initial valuation of $308 million as of 24
September 2019, the date of acquisition. We believe the users of the financial statements will focus on the group’s assets as
these will drive future revenues and net income for the group.
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.
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Significant matters 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 matters 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.
Key observations communicated to the
Audit Committee
We completed our planned audit
procedures with no exceptions.
Description of significant matters
Our response to significant matters
Accounting for business acquisition and
the recognition and subsequent
measurement of goodwill and purchased
intangible assets
On 24 September 2019, Amryt
completed the acquisition of Aegerion by
issuing shares for a value of $153
million. The assets acquired includes
significant intangible assets valued at
date of acquisition of $308 million and
goodwill of $31 million was recognised
as a result of the business combination.
We have determined the valuation of
these intangible assets to be a key audit
matter due to the size of the purchased
intangible assets, and also because the
valuation of the intangible assets and
goodwill involve significant judgment.
The following significant judgments and
estimates used in the valuation models
and management’s impairment
assessment could be selected
inappropriately resulting in material
misstatement:
– Selection of appropriate discount
rates
– Revenue growth and cash flow
forecasts
As a consequence, there is greater risk of
fraud or error due to management
override of controls.
This matter is new in 2019 as the
acquisition occurred only in the current
year.
We reviewed the acquisition related
agreements to obtain an understanding
of the transaction and key terms and
determined whether the acquisition
transaction was properly accounted for
in accordance with IFRS as adopted by
European Union.
We reviewed the purchase price
allocation (PPA) and related fair value
adjustments. In reviewing the PPA
adjustments, we evaluated the valuation
methodology, reviewed reasonableness
of discount rates applied for which we
involved our valuation specialists within
the engagement team, and assessed and
challenged certain key inputs and
assumptions applied such as discount
rates, revenue growth and cash flow
forecasts.
We assessed the competence,
independence and integrity of the third
party valuation experts used by the
group.
We validated all significant accounting
entries relating to the fair value impacts
on assets acquired and liabilities assumed
resulting from the purchase price
allocation. We also performed testing of
the opening balances of Aegerion as of
the acquisition date.
We reviewed the group’s assessment of
whether there were any indicators of
impairment for goodwill and purchased
intangible assets. Where a full
impairment assessment had been carried
out, we evaluated and challenged
Annual Report for the year ended 31 December 2019
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Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2019
Description of significant matters
Our response to significant matters
Key observations communicated to the
Audit Committee
We completed our planned audit
procedures with no exceptions.
management’s assumptions and
judgements used in the calculation of
the future cash flows, which include but
are not limited to revenue projections
and discount rates.
We performed integrity and
mathematical accuracy checks on the
forecasting model used to estimate
recoverable amounts. We performed
sensitivity analysis to determine the
reasonableness of the input and output
variables used in the model.
We assessed the adequacy of the group’s
financial statements disclosures in
respect of these transactions.
We have obtained an understanding on
management’s accounting process and
controls on the valuation of CVRs.
We reviewed and analysed the CVR
related agreements and verified whether
the conditions are correctly reflected in
the valuation of CVR.
We evaluated the group’s assumptions
and judgments applied in the assessment
of the valuation of the CVRs through
review of the reasonableness of the
inputs and assumptions used in the
model which included but not limited to
cash flows, budgeted revenue growth,
discount rates and probability factors.
We involved our valuation specialists
within the engagement team to assist in
the review of the appropriateness of the
discount rates applied in the valuation
model.
We performed integrity and
mathematical accuracy checks on the
model as well as performing sensitivity
analysis to determine the reasonableness
Refer to notes 6 and 12 of the
consolidated financial statements for
further details.
Accounting for Contingent Value Rights
(CVRs)
On 23 September 2019 (prior to, but in
conjunction with, the acquisition of
Aegerion on 24 September 2019), Amryt
issued CVRs amounting to $85 million to
existing shareholders and option holders
of Amryt. The contingent value rights
arising on these transactions are payable
on achieving certain regulatory and
revenue milestones. As at 31 December
2019, the CVR liability in the
Consolidated and Company Statement of
Financial Position was valued at $49
million and the $2 million non-cash
finance charge included the Consolidated
Statement of Comprehensive Loss,
represents the effective interest rate
unwind on amortised cost between the
carrying value of CVR from initial
recognition date of 23 September 2019
to 31 December 2019.
Amryt’s management engaged an
external valuation specialist to estimate
the expected cash flows to arise based on
certain assumptions. The key
Amryt Pharma plc
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STRATEGIC REPORT
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FINANCIAL STATEMENTS
57
Description of significant matters
Our response to significant matters
Key observations communicated to the
Audit Committee
assumptions include payment amounts,
expected timing of achievement of the
regulatory approvals, probability of
payments, forecasted revenue and
applicable discount rates.
The valuation method and the
assumptions used involved a degree of
complexity and further involved
significant judgment and estimates. The
existence of significant estimation
uncertainty warrants significant audit
attention.
This matter is new in 2019 as the event
occurred only in the current year.
Refer to note 6 of the consolidated
financial statements for further details.
Valuation of in-process research and
development (IPR&D) and contingent
consideration
As a result of the acquisition of Amryt AG
and Som Therapeutics Corp. in 2016, the
group recognised IPR&D costs as
intangible assets with corresponding
credit to contingent consideration liability.
The carrying value of IPR&D as at 31
December 2019 was $54 million. The
contingent consideration is recognised at
fair value and is based on the same
forecasting model used to assess the
recoverable amount of IPR&D intangible
assets. At 31 December 2019, the group
recorded a contingent consideration
liability of $53 million with the change in
fair value of $7 million (recorded in the
Statement of Comprehensive Income).
The products that the IPR&D relate to are
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
of the input and output variables in the
model.
We assessed the adequacy of the group’s
financial statements disclosures in
respect of this transaction.
We have obtained an understanding on
management’s accounting process and
controls on the valuation of IPR&D and
contingent consideration.
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 interviewed research and
development personnel employed by the
group in order to obtain a more detailed
understanding of the stage of
development of the associated IPR&D
assets and their future opportunities.
We completed our planned audit
procedures with no exceptions.
Annual Report for the year ended 31 December 2019
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58
Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2019
Description of significant matters
Our response to significant matters
Key observations communicated to the
Audit Committee
We corroborated results with our
understanding of the group’s operations
to date.
We performed integrity and
mathematical accuracy checks on the
forecasting model used to estimate
recoverable/fair value amount.
We obtained and tested management’s
sensitivity analysis around the key
assumptions, to ascertain that selected
adverse changes to key assumptions,
both individually and in aggregate,
would not cause the carrying amount of
IPR&D and contingent consideration.
We have obtained an understanding on
management’s rebates recognition and
calculation process.
We reviewed the basis of rebate accrual
calculation and recalculated the expected
amount of rebates by utilising third party
information and market conditions in the
U.S. We compared our recalculation to
management’s estimate and assessed its
reasonableness.
We performed a review of the historical
trend of actual rebate claims paid against
the estimated accruals.
We selected samples to test rebate
claims processed, including evaluating
those claims for consistency with the
contractual and mandated terms of the
rebate arrangements and traced
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 the valuation of IPR&D
and contingent considerations as a key
audit matter because of the significant
judgement required by management in
assessing the recoverable amount of the
asset and fair value of the contingent
consideration liability at year-end.
The valuation of both IPR&D and fair
value determination of the contingent
consideration involve forecasting and
discounting of 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 12 of the consolidated
financial statements for further details.
Revenue recognition – U.S.
pharmaceutical rebate reserves
As described in note 2, the Group
recognises revenue when the control of
the goods or services were transferred to
the customer at an amount that reflects
the consideration to which the Group
expects to be entitled in exchange for
those goods. Rebates are accounted for
as a variable consideration and recorded
as reduction in sales. The liability for such
rebates is recognised within accrued
rebates on the Consolidated Statement
of Financial Position. The rebates relate to
sale of pharmaceutical goods of the
group within the U.S. (i.e. Medicaid
programs).
The group is required to pay rebate for
each unit of product sold to customers
covered by the program. As of
31 December 2019, the rebate expense
Amryt Pharma plc
We completed our planned audit
procedures with no exceptions.
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FINANCIAL STATEMENTS
59
Description of significant matters
Our response to significant matters
Key observations communicated to the
Audit Committee
deducted against sales amounted to
$8 million and remaining accrual of
$16 million.
payments made to different U.S.
government states to the bank
statements.
We considered this as a key audit matter
because management applied significant
judgment which involve significant
measurement uncertainty in developing
these reserves. This in turn led to a high
degree of auditor judgment and
subjectivity and audit effort in applying
procedures for the assumptions related to
contractual terms with customers,
historical experience and projected
market conditions in the U.S.
pharmaceutical market.
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.
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:
(cid:129) 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
(cid:129) the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
Annual Report for the year ended 31 December 2019
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60
Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2019
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and parent company and its environment obtained in the course
of the audit, we have not identified any material misstatements in the Strategic Report and the Directors’ Report. 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:
(cid:129) 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
(cid:129) the financial statements are not in agreement with the accounting records; or
(cid:129) certain disclosures of directors’ remuneration specified by law are not made; or
(cid:129) we have not received all the information and explanations we require for our audit.
Responsibilities of management and those charged with governance for the financial statements
As explained more fully in the Directors’ responsibilities section of the Directors’ report, 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 parent 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 parent 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.
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:
(cid:129) 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.
(cid:129) 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 parent company’s
internal control.
(cid:129) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Amryt Pharma plc
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STRATEGIC REPORT
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FINANCIAL STATEMENTS
61
(cid:129) 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 parent 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 parent company to cease to continue as
a going concern.
(cid:129) 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 communicates 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.
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the parent 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 parent company and the parent 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
24 June 2020
Annual Report for the year ended 31 December 2019
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62
Consolidated Statement of Financial Position
As at 31 December 2019
Assets
Non-current assets
Goodwill
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, including restricted cash
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 and contingent value rights
Deferred tax liability
Long term loan
Convertible notes
Provisions and other liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Provisions and other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
As at
31 December
2019
As at
31 December
2018
Note
US$’000
US$’000
12
12
13
14
15
16
17
17
17
6
18
19
20
22
21
22
30,813
350,953
3,036
2,306
387,108
36,387
43,623
67,229
147,239
534,347
11,918
2,422
248,656
(133,674)
129,322
102,461
18,921
81,610
96,856
4,963
304,811
76,596
23,618
100,214
405,025
534,347
–
60,297
1,098
149
61,544
5,927
2,137
11,226
19,290
80,834
25,198
68,233
(24,865)
(72,263)
(3,697)
47,316
6,161
19,011
–
–
72,488
12,043
–
12,043
84,531
80,834
The Financial Statements set out on pages 62 to 117 were approved and authorised for issue by the Directors on 24 June 2020.
They are signed on the Board’s behalf by:
Joe Wiley Company Number
Director 12107859
Amryt Pharma plc
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FINANCIAL STATEMENTS
63
Consolidated Statement of Comprehensive Loss
Year ended 31 December 2019
Revenue
Cost of sales
Gross profit
Research and development expenses
Selling, general and administrative expenses
Restructuring and acquisition costs
Share based payment expenses
Impairment charge
Operating loss before finance expense
Non-cash change in fair value of contingent consideration
Non-cash contingent value rights finance expense
Net finance expense – other
Loss on ordinary activities before taxation
Tax credit/(charge) on loss on ordinary activities
Loss for the year attributable to the equity holders of the Company
Exchange translation differences which may be reclassified through profit or loss
Total other comprehensive income/(loss)
Total comprehensive loss for the year attributable to the equity holders of the
Company
Loss per share
Loss per share – basic and diluted, attributable to ordinary equity holders of the
parent (US$)
Note
3
4
6
5
12
7
6
6
9
10
Year ended
31 December
2019
Year ended
31 December
2018
US$’000
58,124
(42,001)
16,123
(15,827)
(35,498)
(13,038)
(841)
(4,670)
(53,751)
(6,740)
(1,511)
(4,759)
(66,761)
1,226
(65,535)
781
781
US$’000
17,095
(6,266)
10,829
(10,703)
(17,342)
–
(821)
–
(18,037)
(10,566)
–
(1,841)
(30,444)
(43)
(30,487)
(77)
(77)
(64,754)
(30,564)
11
(0.86)
(0.67)
Annual Report for the year ended 31 December 2019
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64
Consolidated Statement of Cash Flows
For the year ended 31 December 2019
Year ended
31 December
2019
Year ended
31 December
2018
Note
US$’000
US$’000
9
12, 13
4, 7
5
6
6
12
14
21
22
15
6
13
12
17
19
19
19
16
16
16
(65,535)
4,759
12,655
10,367
43
841
6,740
1,511
4,670
(1,665)
(4,732)
(6,356)
4,922
(5,894)
177
(30,487)
1,841
367
–
–
821
10,566
–
–
–
(532)
3,051
–
(928)
(153)
(37,497)
(15,454)
24,985
(578)
(74)
92
24,425
63,009
31,176
(21,990)
(6,253)
–
65,942
3,133
56,003
11,226
2,032
65,197
67,229
–
(80)
(155)
6
(229)
–
5,914
–
(283)
(2,366)
3,265
(767)
(13,185)
24,411
1,362
9,864
11,226
Cash flows from operating activities
Loss on ordinary activities after taxation
Net finance expense – other
Depreciation and amortisation
Amortisation of inventory fair value step-up
Loss on disposal of fixed assets
Share based payment expenses
Non-cash change in fair value of contingent consideration
Non-cash contingent value rights finance expense
Impairment of intangible asset
Deferred taxation credit
Movements in working capital and other adjustments:
Change in trade and other receivables
Change in trade and other payables
Change in provision and other liabilities
Change in inventories
Change in non-current assets
Net cash flow used in operating activities
Cash flow from investing activities
Net cash received on acquisition of subsidiary
Payments for property, plant and equipment
Payments for intangible assets
Deposit interest received
Net cash flow from (used in) investing activities
Cash flow from financing activities
Proceeds from issue of equity instruments – net of expenses
Proceeds from long term borrowings net of debt issue costs
Repayment of long term debt
Interest paid
Payment of deferred consideration
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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STRATEGIC REPORT
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FINANCIAL STATEMENTS
65
Consolidated Statement of Changes in Equity
For the year ended 31 December 2019
Equity
Share component
based Reverse of Other Currency
Share Share Warrant Treasury payment Merger acquisition convertible distributable translation Accumulated
capital premium reserve shares reserve reserve reserve notes reserves reserve deficit Total
Note US’000 US’000 US’000 US’000 US’000 US’000 US’000 US’000 US’000 US’000 US’000 US’000
Balance at 1 January 2018 25,198 68,233 – – 5,659 42,627 (73,914) – – 26 (41,783) 26,046
Loss for the year – – – – – – – – – – (30,487) (30,487)
Foreign exchange translation reserve – – – – – – – – – (77) – (77)
Total comprehensive loss – – – – – – – – – (77) (30,487) (30,564)
Transactions with owners
Share based payment expense 5 – – – – 821 – – – – – – 821
Share based payment expense –
Lapsed – – – – (7) – – – – – 7 –
Total transactions with owners – – – – 814 – – – – – 7 821
Balance at 31 December 2018 25,198 68,233 – – 6,473 42,627 (73,914) – – (51) (72,263) (3,697)
Balance at 1 January 2019 25,198 68,233 – – 6,473 42,627 (73,914) – – (51) (72,263) (3,697)
Loss for the year – – – – – – – – – – (65,535) (65,535)
Foreign exchange translation reserve – – – – – – – – – 781 – 781
Total comprehensive loss – – – – – – – – – 781 (65,535) (64,754)
Transactions with owners
Share consolidation 17 (21,262) 21,262 – – – – – – – – – –
Issue of shares in August 2019
equity fund raise 17 533 7,467 – – – – – – – – – 8,000
Issue costs associated with
August 2019 equity fund raise 17 – (1,886) – – – – – – – – – (1,886)
Acquisition of subsidiary without
a change of control 17 (495) (3,726) – – – – – – (2,969) 7,190 – –
Issue of shares and warrants in
consideration of Aegerion
Acquisition 17 5,759 132,392 14,464 – – – – – – – – 152,615
Issue of shares and warrants in
equity fund raise 17 2,059 47,338 10,603 – – – – – – – – 60,000
Issue costs associated with
September 2019 equity fund raise 17 – (2,575) (530) – – – – – – – – (3,105)
Issue of convertible notes 20 – – – – – – – 29,210 – – – 29,210
Issue of contingent value rights 6 – – – – – – – – (47,902) – – (47,902)
Transfer to distributable reserves 17 – (268,505) – – – – – – 268,505 – – –
Treasury shares acquired in
consideration for additional
warrants 17 – – 7,534 (7,534) – – – – – – – –
Issue of shares in exchange for
warrants in December 2019 17 126 2,422 (2,548) – – – – – – – – –
Share based payment expense 5 – – – – 841 – – – – – – 841
Share based payment expense
– Lapsed – – – – (4,124) – – – – – 4,124 –
Total transactions with owners (13,280) (65,811) 29,523 (7,534) (3,283) – – 29,210 217,634 7,190 4,124 197,773
Balance at 31 December 2019 11,918 2,422 29,523 (7,534) 3,190 42,627 (73,914) 29,210 217,634 7,920 (133,674) 129,322
Annual Report for the year ended 31 December 2019
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66
Company Statement of Financial Position
As at 31 December 2019
Assets
Non-current assets
Investments in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
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 and contingent value rights
Total non-current liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
31 December
2019
Note
US$’000
26
14
17
17
17
6
21
280,962
280,962
58,613
58,613
339,575
11,918
2,422
274,992
(1,231)
288,101
49,413
49,413
2,061
2,061
51,474
339,575
The Financial Statements set out on pages 62 to 117 were approved and authorised for issue by the Directors on 24 June 2020.
They are signed on the Board’s behalf by:
Joe Wiley Company Number
Director 12107859
Amryt Pharma plc
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FINANCIAL STATEMENTS
67
Company Statement of Cash Flows
For the period ended 31 December 2019
Cash flows from operating activities
Loss on ordinary activities after taxation
Share based payment expenses
Non-cash contingent value rights finance expense
Movements in working capital and other adjustments:
Change in trade and other receivables
Change in trade and other payables
Net cash flow used in operating activities
Cash flow from financing activities
Proceeds from issue of equity instruments – net of expenses
Net cash flow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Restricted cash at end of period
Cash at bank available on demand at end of period
Total cash and cash equivalents at end of period
Period ended
31 December
2019
Note
US$’000
5
6
14
21
17
(1,232)
428
1,511
(59,663)
2,061
(56,895)
56,895
56,895
–
–
–
–
–
Annual Report for the year ended 31 December 2019
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68
Company Statement of Changes in Equity
For the period ended 31 December 2019
Equity
component
Share based of Other
Share Share Warrant Treasury payment convertible distributable Accumulated
capital premium reserve shares reserve notes reserves deficit Total
Note US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Balance at date of incorporation – – – – – – – – –
Loss for the period – – – – – – – (1,232) (1,232)
Total comprehensive loss – – – – – – – (1,232) (1,232)
Transactions with owners
Issue of shares in consideration of
acquisition of Amryt Pharma
Holdings Limited 17 3,974 91,350 – – – – – – 95,324
Issue of shares and warrants in
consideration of Aegerion
Acquisition 17 5,759 132,392 14,464 – – – – – 152,615
Issue of shares and warrants in
equity fund raise 17 2,059 47,338 10,603 – – – – – 60,000
Issue costs associated with
September 2019 equity fund raise 17 – (2,575) (530) – – – – – (3,105)
Transfer to distributable reserves 17 – (268,505) – – – – 268,505 – –
Treasury shares acquired in
consideration for additional warrants 17 – – 7,534 (7,534) – – – – –
Issue of shares in exchange for
warrants in December 2019 17 126 2,422 (2,548) – – – – – –
Issue of convertible notes 20 – – – – – 29,210 – – 29,210
Issue of contingent value rights 6 – – – – – – (47,902) – (47,902)
Share based payment reserve
acquired pursuant to scheme of
arrangement 5 – – – – 2,763 – – – 2,763
Share based payment expense 5 – – – – 428 – – – 428
Share based payment expense
– Lapsed – – – – (1) – – 1 –
Total transactions with owners 11,918 2,422 29,523 (7,534) 3,190 29,210 220,603 1 289,333
Balance at 31 December 2019 11,918 2,422 29,523 (7,534) 3,190 29,210 220,603 (1,231) 288,101
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Notes to the Financial Statements
1. General information
We are a global, commercial-stage biopharmaceutical company dedicated to commercializing and developing novel therapeutics
to treat patients suffering from serious and life-threatening rare diseases.
As used herein, references to “we”, “us”, “Amryt” or the “Group” in these consolidated financial statements shall mean Amryt
Pharma plc and its global subsidiaries, collectively. References to the “Company” in these consolidated financial statements shall
mean Amryt Pharma plc.
Amryt Pharma plc (formerly named Amryt Pharma Holdings Limited) was incorporated on 17 July 2019 and is a company
incorporated in England and Wales. The Company is listed on the AIM market of the London Stock Exchange (ticker: AMYT) and
the Euronext Growth Exchange of the Irish Stock Exchange (ticker: AYP).
The Company accounts present the financial statements for the period from the date of incorporation of 17 July 2019 to the
financial period ended 31 December 2019, as a result, there is no comparative financial information.
On 24 September 2019, the Company became the new parent company of Amryt Pharma Holdings Limited (formerly named
Amryt Pharma plc) pursuant to a scheme of arragement between Amryt Pharma plc and its shareholders under Part 26 of the
Companies Act 2006.
Aegerion Pharmaceuticals, Inc. (“Aegerion”), a former subsidiary of Novelion Therapeutics Inc., is a rare and orphan disease
company with a diversified offering of multiple commercial and development stage assets. The acquisition of Aegerion by Amryt
in September 2019 has given Amryt an expanded commercial footprint to market two U.S. and EU approved products,
lomitapide (JUXTAPID (U.S.) / LOJUXTA (EU)) and metreleptin (MYALEPT (U.S.) / MYALEPTA (EU)).
On 10 July 2019, the shareholders of the Company approved a resolution to give authority to the Company to undertake a
consolidation of the existing ordinary shares in the capital of the Company under which every six existing ordinary shares were
consolidated into one ordinary share. The number of shares in issue at 31 December 2018 has been adjusted to reflect this share
consolidation on 10 July 2019 for the purposes of the loss per share calculation. The number of share options outstanding at
1 January 2018 and the share options granted and lapsing during the year ended 31 December 2018 have been restated to
reflect the 2019 share consolidation.
On 20 September 2019, Amryt registered FILSUVEZ as the trademark name for the Group’s lead development asset, AP101, in
the European Union. On 18 February 2020, Amryt also registered this trademark name in the United States and is in the process
of registering the FILSUVEZ trademark in other key jurisdictions.
2. Accounting policies
Basis of preparation
The consolidated financial statements of the Company and its subsidiaries (“Group”) and the individual financial statements of
the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the
European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. Except for the
new accounting standards to IFRS that have been adopted by the Group, effective 1 January 2019, the financial statements have
been prepared using the same accounting policies as 2018.
The financial statements were authorized for issue by the Company’s Board of Directors on 24 June 2020.
Basis of going concern
Having considered the Group’s current financial position and cash flow projections, the Board of Directors believes 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.
Annual Report for the year ended 31 December 2019
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Notes to the Financial Statements continued
For the year ended 31 December 2019
As part of their inquiries, the Board of 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 2019.
A key consideration for the impact on going concern is the acquisition of Aegerion, which was completed in September 2019.
This acquisition represents a significant step forward for Amryt and has created value for Amryt with immediate effect post-deal
close through enhanced scale of the combined Group, which has the potential to drive revenues and deliver operational
synergies through a combination of medical, commercial, clinical, development and regulatory infrastructure. Additionally, Amryt
completed a US$60,000,000 fundraising as part of the acquisition of Aegerion.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group for the years ended 31 December 2019
and 2018. Subsidiaries are entities controlled by the Company. Where the Company has control over an investee, it is classified
as a subsidiary. The Company controls an investee if all three of the following elements are present: power over an investee,
exposure or rights to variable returns from its involvement with the investee and the ability to use its power to affect those
variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these
elements of control.
Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Intergroup
balances and any unrealized gains or losses, income or expenses arising from intergroup transactions are eliminated in preparing
the consolidated financial statements.
Merger reserve
The merger reserve was created on the acquisition of Amryt Pharmaceuticals DAC (“Amryt DAC”) by Amryt Pharma Holdings
Limited (formerly named Amryt Pharma plc) in April 2016. Ordinary shares in Amryt Pharma Holdings Limited were issued to
acquire the entire issued share capital of Amryt DAC. Under section 612 of the Companies Act 2006, the premium on these
shares has been included in a merger reserve.
Presentation of balances
Beginning 1 January 2018 (the earliest period presented), the Group changed its reporting currency from Euros (“€”) to U.S.
dollars (“US$”) to align with the new functional currency of the Company, subsequent to the Aegerion acquisition in September
2019, and to provide greater clarity to users of these consolidated financial statements. The change in reporting currency was
applied retrospectively beginning 1 January 2018 using the following procedures:
(cid:129) assets and liabilities were translated from their Euro functional currency to U.S. dollars using the exchange rate in effect at the
balance sheet date;
(cid:129) income and expenditure was translated at the average rate of exchange prevailing for the relevant period; and
(cid:129) opening shareholders’ equity at 1 January 2018 was translated at the historic rate on that date and any other movements in
shareholders’ equity during the year have been translated using the rates prevailing on the date of the transaction.
Any differences which arose due to the change in reporting currency have been posted to the currency translation reserve.
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The following table discloses the major exchange rates of those currencies other than the functional currency of US$ that are
utilized by the Group:
Foreign currency units to 1 US$
Average period to 31 December 2019
At 31 December 2019
Foreign currency units to 1 US$
Average period to 31 December 2018
At 31 December 2018
€
0.8932
0.8929
€
0.8455
0.8739
£
0.7836
0.7624
£
0.7485
0.7833
CHF
0.9938
0.971
CHF
0.9763
0.9976
SEK
NOK
DKK
9.4533
9.3282
8.7976
8.8046
6.6690
6.6698
SEK
NOK
DKK
8.6784
9.0855
8.1289
8.5654
6.2997
6.5700
(€ = Euro; £ = Pounds Sterling, CHF = Swiss Franc, SEK = Swedish Kroner, NOK = Norwegian Kroner, DKK = Danish Kroner)
Changes in accounting policies and disclosures
New standards and amendments to IFRS effective as of 1 January 2019 that are relevant to the Group 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 2019
Impact of initial application of IFRS 16 Leases
IFRS 16 replaced IAS 17, Leases, and the related interpretations. The Group adopted IFRS 16 effective 1 January 2019 by applying
the modified retrospective approach. The Group also elected various practical expedients, including the election to not separate
lease and non-lease components, the election for leases of low value assets, and the election to not record leases with an initial
term of 12 months or less on the statement of financial position. As a result of these elections, each lease component and any
associated non-lease components are accounted for as a single lease, and leases with a total maximum term of 12 months and
leases for underlying assets of low value will be exempt from balance sheet recognition.
Under IFRS 16, at the commencement date of a lease, a lessee will recognize 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 recognize 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 recognize the amount of the re-measurement of the lease liability as an
adjustment to the right-of-use asset.
Upon the initial application of IFRS 16 as of 1 January 2019, the Group recognized right-of-use asset and lease liabilities of
US$874,000. The lease liabilities were discounted using the discount rates, which were arrived at using a methodology to
calculate incremental borrowing rates across the Group as of 1 January 2019. The weighted average discount rate was 6.64%.
Additionally, as a result of the adoption of IFRS 16, total amount of depreciation recognized related to the right-of-use assets was
US$382,000 during the year ended 31 December 2019; total amount of interest expense recognized on the lease liability was
US$36,000 during the year ended 31 December 2019.
The impact on the opening Retained earnings is considered immaterial, hence no adjustments were made to the Retained
earnings as a result of adoption of IFRS 16.
Annual Report for the year ended 31 December 2019
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Notes to the Financial Statements continued
For the year ended 31 December 2019
In the current year, the Group has applied a number of amendments to IFRS and Interpretations that are effective for annual
period begins on or after 1 January 2019. These amendments and interpretations do not have significant impact on the
disclosures or the amounts reported in these consolidated financial statements.
(cid:129) IAS 19 Employee Benefits (Amendment on Employee Benefits Plan, Amendment, Curtailment or Settlement)
(cid:129) IFRIC 23 Uncertainty over Income Tax Payments
(cid:129) IFRS 9 Prepayment Features with Negative Compensation (Amendment to IFRS 9)
(cid:129) IAS 28 Long-term Interests in Associates and Joint Ventures (Amendment to IAS 28)
(cid:129) Annual improvements to IFRS 2015-2017 Cycle
Standards issued but not yet effective
There were a number of standards and interpretations which were in issue at 31 December 2019 but were not effective at
31 December 2019 and have not been adopted for these financial statements.
(cid:129) Definition of Business (Amendment to IFRS 3 Business Combination)
(cid:129) IFRS 17 Insurance Contracts
(cid:129) Definition of Material (Amendments to IAS 1 and 8)
(cid:129) Conceptual Framework for Financial Reporting
These amendments are not expected to have significant impact on disclosures or amounts reported in the consolidated financial
statements in the period of initial application.
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 recognized 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:
Valuation of convertible notes
In conjunction with the accounting for financial instruments, the Group recorded compound financial instruments related to the
convertible notes that were issued on 24 September 2019. In determining the classification of the convertible notes, the Group
assessed the fixed-for-fixed criteria and considered that this was met and the number of shares that can be converted by holders
of the notes is fixed. The compound financial instrument consists of a liability component and an equity component. The liability
component is valued using an estimated discounted cash flow calculation based on the future contractual cash flows in the
contract which are discounted at a rate of interest an identical financial instrument without a conversion feature would be
subject to. Factors that are considered in estimating the prevailing market rate of interest include or are not limited to:
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(cid:129) loan term and maturity;
(cid:129) repayment profile during the loan term other than interest;
(cid:129) level of loan security; and
(cid:129) principal amount of the loan.
Valuation of acquired assets
In conjunction with the accounting for business combinations, the Group recorded intangible assets such as in connection with
the Aegerion acquisition, primarily related to developed technology on the commercially marketed products, and inventories
which include raw materials and finished goods. The identifiable intangible assets and inventories are measured at their
respective fair values as of the acquisition date. When significant identifiable intangible assets and inventories are acquired, the
Group determines the fair values of these assets as of the acquisition date. The models used in valuing these intangible assets
and inventories require the use of significant estimates and assumptions including but not limited to:
Intangible assets
(cid:129) estimates of revenues and operating profits related to the products or product candidates;
(cid:129) the probability of success for unapproved product candidates considering their stages of development;
(cid:129) the time and resources needed to complete the development and approval of product candidates;
(cid:129) projecting regulatory approvals;
(cid:129) developing appropriate discount rates and probability rates by project; and
(cid:129) tax implications, including the forecasted effective tax rate.
Inventories
(cid:129) estimates of saleable inventory and non-saleable inventory, which was determined by a sales forecast and production timeline;
and
(cid:129) expected selling price and estimated costs of disposal.
The Group believes the fair values used to record intangible assets and inventories acquired in connection with a business
combination are based upon reasonable estimates and assumptions given the facts and circumstances as of the acquisition date.
Valuation of contingent value rights (“CVRs”)
The Group issued CVRs for payments to its shareholders based on the occurrence of two milestones related to AP101, its pipeline
product. The CVRs have pre-determined payouts, based on the occurrence of a future event. If the event does not occur, the
CVR expires as worthless. The fair value of the CVRs is estimated as of 24 September 2019, based on the following key
assumptions:
(cid:129) expected timing of achievement of the two milestones (U.S. Food and Drug Administration (“FDA”) approval and European
Medicines Agency approval) related to AP101;
(cid:129) probabilities of achievements;
(cid:129) revenue forecast related to AP101; and
(cid:129) the appropriate discount rate selected to measure the risks inherent in the future cash flows.
Annual Report for the year ended 31 December 2019
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Notes to the Financial Statements continued
For the year ended 31 December 2019
The Group believes the fair value of the CVRs is based upon reasonable estimates and assumptions given the facts and
circumstances as of the valuation date.
Impairment of intangible assets and goodwill
The impairment assessment 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 is provided in Note 12, Intangible assets and goodwill, 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.
Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net
assets acquired in a business combination. Goodwill is not amortized, but instead is reviewed for impairment on an annual basis
or when an event becomes known that could trigger an impairment. To perform the annual impairment test of goodwill, the
Group has identified the Group as a whole as a single cash generating unit (“CGU”). CGUs reflect the lowest level at which
goodwill is monitored for internal management purposes. At least once a year, the Group compares the recoverable amount of
the Group’s CGU to the CGU’s carrying amount. The recoverable amount (value in use) of a CGU is determined using a
discounted cash flow approach based upon the cash flow expected to be generated by the CGU. In case that the value in use of
the CGU is less than its carrying amount, the difference is at first recorded as an impairment of the carrying amount of the
goodwill. The assumptions utilized in the impairment test are dependent on management’s estimates, in particular in relation to
the forecasting of future cash flows, the discount rates applied to those cash flows, the expected long-term growth rate of the
applicable businesses and terminal values. 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 recognized 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 6, Business combinations and asset
acquisitions, 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 24, Fair value measurement and financial risk management, for quantification of these sensitivities.
Research and development expenses
Development costs are capitalized as an intangible asset if all of the following criteria are met:
(cid:129) completing the asset is technically feasible so that the asset will be available for use or sale;
(cid:129) there is an intention to complete the asset and use or sell it;
(cid:129) there is an ability to use or sell the asset;
(cid:129) 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;
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(cid:129) adequate technical, financial and other resources are available to complete the development of the asset and to use or sell it;
and
(cid:129) there is an ability to measure reliably the expenditure attributable to the intangible asset.
In process R&D acquired as part of a business combination is capitalized at the date of acquisition. Research costs are expensed
when they are incurred.
Factors which impact our judgement to capitalize certain research and development expenditures 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. Management reviews these factors each year to determine whether 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 capitalizing development costs as assets have not yet been met by the Group in relation to
AP101 or AP103. Refer to Note 12, Intangible assets and goodwill, for further discussion on the impairment of AP102.
Accordingly, all of the Group’s costs related to research and development projects are recognized as expenses in the Consolidated
Statement of Comprehensive Loss 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
On 24 September 2019, the Group acquired Aegerion. In accounting for this transaction, the Board of Directors considered the
date of when control of Aegerion passed to the Group, the fair value of the consideration settled and the fair value of the assets
and liabilities acquired. See Note 6, Business combinations and asset acquisitions, for further information on the determination of
the fair value of the assets acquired.
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 realizability 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 realized. 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
realizable. As at 31 December 2019, the Group did not recognize a deferred tax asset in respect of unused tax losses as
described in Note 10, Tax on ordinary activities.
Principal accounting policies
Principal accounting policies are summarized below. They have been consistently applied throughout the period covered by the
financial statements.
Revenue recognition
Revenue arises from the sale of metreleptin, lomitapide and Imlan. The Group sells directly to customers and also uses third
parties in the distribution of products to customers.
To determine whether to recognize revenue, the Group follows a five-step process, as required by IFRS 15:
(cid:129) identifying the contract with a customer;
Annual Report for the year ended 31 December 2019
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Notes to the Financial Statements continued
For the year ended 31 December 2019
(cid:129) identifying the performance obligations;
(cid:129) determining the transaction price;
(cid:129) allocating the transaction price to the performance obligations; and
(cid:129) recognizing revenue when/as performance obligation(s) are satisfied.
Revenue from contracts with customers is recognized 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
recognizes contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these
amounts as liabilities in the Consolidated Statement of Financial Position. Similarly, if the Group satisfies a performance obligation
before it receives the consideration, the Group recognizes either a contract asset or a receivable in its Consolidated 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 recognized at a point in time when control of the inventory is transferred, generally the date of
shipment, consistent with typical ex-works shipment terms.
Revenue is generally recognized 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 products. This includes agreements with third parties 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 the Group is the principal on the contracts due to the following factors:
(cid:129) the Group is primarily responsible for fulfilling the promise to provide the promised goods;
(cid:129) the Group bears the inventory risk before or after the goods have been ordered by the customer, during shipping or on return;
(cid:129) the Group has the discretion in establishing the selling price of the goods to customers. The distributors’ consideration in
these contracts is either the margin fee or commission; and
(cid:129) the Group is exposed to the credit risk for the amounts receivable from the customers.
Where the above criteria are met, the Group recognizes 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
recognized in the cost of sales.
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 recognized when the Group becomes party
to the contractual provisions of the instrument. Financial assets are de-recognized 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-recognized
when the obligation specified in the contract is discharged, cancelled or expired.
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Classification and initial measurement of financial assets
Trade receivables are measured at the transaction price in accordance with IFRS 15. All financial assets are initially measured at
fair value adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:
(cid:129) amortized cost;
(cid:129) fair value through profit or loss (“FVTPL”); and
(cid:129) fair value through other comprehensive income (“FVOCI”).
The Group did not have any financial assets categorized as FVTPL or FVOCI as at 31 December 2019 and 2018. The classification
is determined by both:
(cid:129) the Group’s business model for managing the financial asset; and
(cid:129) the contractual cash flow characteristic of the financial asset.
Subsequent measurement of financial assets
Financial assets at amortized cost
Financial assets are measured at amortized cost if the assets meet the following conditions (and are not designated as FVTPL):
(cid:129) they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and
(cid:129) 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 amortized 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 and most other 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.
Aegerion also has restricted cash in an escrow account set-up in accordance with Aegerion’s bankruptcy plan as approved by the
U.S. Bankruptcy Court.
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 recognizes 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
Annual Report for the year ended 31 December 2019
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Notes to the Financial Statements continued
For the year ended 31 December 2019
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 recognizes 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. No impairment is considered necessary.
Financial liabilities
Financial liabilities are categorized as “fair value through profit or loss” or “other financial liabilities measured at amortized 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 amortized cost using
the effective interest rate method except for short-term payables when the recognition of interest would be immaterial.
Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the
reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using
the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the
effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a
receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable
can be measured reliably.
Interest bearing loans and borrowings
Interest-bearing loans and borrowings are recognized initially at fair value less attributable transaction costs. Loans and
borrowings are subsequently carried at amortized cost using the effective interest method. Interest is charged to the
Consolidated Statement of Comprehensive Loss.
Convertible notes
Convertible notes are first assessed to determine classification as a financial liability or equity instrument for the financial
instrument as a whole and components thereof. The initial carrying amount of a compound financial instrument is allocated to
its equity and liability components.
The two components are evaluated first by measuring the fair value of the liability component. The fair value of the liability
component is assessed using a discounted cash flow calculation based on the future contractual cash flows in the contract which
are discounted at an estimated market prevailing rate of interest an identical financial instrument without a conversion feature
would be subject to. The equity component is measured by determining the residual of the fair value of the instrument less the
estimated fair value of the liability component.
The liability component is carried at amortized cost. Interest is calculated by applying the estimated prevailing market interest rate
at the time of issue. The equity component is recognized in equity and is not subsequently remeasured.
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Contingent consideration
Contingent consideration arising as a result of business combinations is initially recognized 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 recognized in the Consolidated Statement of Comprehensive Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Consolidated 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 realizable value. The costs are calculated according to the first in-first out
method (“FIFO”). Cost includes materials, direct labor and an attributable proportion of manufacturing overhead 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 realizable value is lower than the book value. Net
realizable 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 recognized as a liability of the Group.
Leases
Accounting policy applicable from 1 January 2019
A lease is defined as a contract that conveys the right to use an underlying asset for a period of time in exchange for
consideration. A contract is or contains a lease if:
(cid:129) the underlying asset is identified in the contract; and
(cid:129) the customer has both the right to direct the identified asset’s use and to obtain substantially all the economic benefits from
that use.
Under IFRS 16, the Group is required to recognize a right-of-use asset representing its right to use the underlying asset and a
lease liability representing its obligation to make lease payments for almost all leases.
Lease liabilities
Lease liabilities are initially recognized at the present value of the following payments, when applicable:
(cid:129) fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
(cid:129) variable lease payments (linked to an index or interest rate);
(cid:129) expected payments under residual value guarantees;
(cid:129) the exercise price of purchase options, where exercise is reasonably certain;
(cid:129) lease payments in optional renewal periods, where exercise of extension options is reasonably certain; and
(cid:129) penalty payments for the termination of a lease, if the lease term reflects the exercise of the respective termination option.
Annual Report for the year ended 31 December 2019
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Notes to the Financial Statements continued
For the year ended 31 December 2019
Lease payments are discounted using the implicit interest rate underlying the lease if this rate can be readily determined.
Otherwise, the incremental borrowing rate is used as the discount rate.
Lease liabilities are subsequently measured at amortized cost using the effective interest method. Furthermore, lease liabilities
may be remeasured due to lease modifications or reassessments of the lease. A lease modification is any change in lease terms
that was not part of the initial terms and conditions of the lease, including increases of the scope of the lease by adding the right
to use one or more underlying assets or extending the contractual lease term, decreases of the scope of the lease by removing
the right to use one or more underlying assets or shortening the contractual lease term or changes in the consideration.
Reassessments are changes in estimates or changes triggered by a clause that was part of the initial lease contract, including
changes in future lease payments arising from a change in an index or rate, change in the Group’s estimate of the amount
expected to be payable under residual value guarantees or change in the Group’s assessment of whether it will exercise purchase,
extension or termination options.
Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the respective lease. Right-of-use assets are stated at
cost less accumulated depreciation. Upon initial recognition, cost comprises:
(cid:129) the initial lease liability amount;
(cid:129) initial direct costs incurred when entering into the lease;
(cid:129) (lease) payments before commencement date of the respective lease;
(cid:129) an estimate of costs to dismantle and remove the underlying asset; and
(cid:129) less any lease incentives received.
Right-of-use assets are depreciated over the shorter of the lease term or the useful life of the underlying asset using the straight-
line method. In addition, right-of-use assets are reduced by impairment losses, if any, and adjusted for certain remeasurements.
Accounting policy applicable before 1 January 2019
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
Presentation currency
The Group translates foreign currency transactions into its presentational currency, US$, as described in “Presentation of
balances” above.
Functional currency
The Company’s functional currency is US$.
Transactions in currencies other than the functional currency of the Group entities are recorded at the exchange rates prevailing
at the dates of the related transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, as
well as from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are
recognized in the Consolidated Statement of Comprehensive Loss. At each balance sheet date, monetary assets and liabilities
that are denominated in foreign currencies are translated to the respective functional currencies of the Group’s entities at the
rates prevailing on the relevant balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using exchange rates at the dates of the initial transactions.
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The financial statements of the Group’s foreign subsidiaries, where the local currency is the functional currency, are translated
using exchange rates in effect at the end of the year for assets and liabilities and average exchange rates during the year for
results of operations. The resulting foreign currency translation adjustment is recognized in other comprehensive income.
Property, plant and 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 Consolidated Statement of Comprehensive Loss on a straight-line basis to write-off the cost of the
assets over their expected useful lives as follows:
(cid:129) Property, plant and machinery 5 to 15 years
(cid:129) Office equipment 3 to 10 years
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Business combinations
Business combinations, including the Aegerion acquisition, 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 recognized 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 milestone dates must be exceeded. Subsequent changes to the fair value of the contingent consideration will be
recognized 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 licenses 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
recognized at cost.
Common control transactions
The assets and liabilities of the combining entities are reflected in the consolidated financial statements at their carrying amounts.
No adjustments are made to reflect fair values, or recognise any new assets or liabilities, at the date of the combination that
otherwise would have been done under the acquisition method. The only adjustments that are made are those adjustments to
harmonise accounting policies.
No ‘new’ goodwill is recognised as a result of the combination. The only goodwill that is recognised is any existing goodwill
relating to either of the combining entities. Any difference between the consideration paid or transferred and the equity
‘acquired’ is reflected within equity.
Annual Report for the year ended 31 December 2019
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Notes to the Financial Statements continued
For the year ended 31 December 2019
The consolidated income statement reflects the results of the combining entities for the full year, irrespective of when the
combination took place.
Comparatives are presented as if the entities had always been combined.
Intangible assets
Intangible assets primarily relate to developed technology on the Company’s commercially marketed products and IPR&D.
Intangible assets are recorded at fair value at the time of their acquisition and are stated in the Consolidated Statement of
Financial Position, net of accumulated amortisation and impairments, if applicable.
Acquired intangible assets outside business combinations are stated at the lower of cost less provision for amortisation and
impairment or the recoverable amount. Acquired intangible assets are amortized over their expected useful economic life on a
straight-line basis. In determining the useful economic life, each acquisition is reviewed separately and consideration is given to
the period over which the Group expects to derive economic benefit.
In connection with the acquisition of Aegerion, the Group acquired developed technology on metreleptin and lomitapide, which
are amortized over the remaining patent lives through February 2026 and August 2027, respectively.
The useful life of other acquired intangible assets is as follows:
(cid:129) Software and hardware 3-10 years
(cid:129) Website development 5-10 years
Intangible assets acquired in 2016 as part of the acquisitions of Amryt AG and SomPharmaceuticals are currently not being
amortized as the assets are still under development.
Factors which impact our judgement to capitalize certain research and development expenditures 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. Management reviews these factors each year to determine whether previous estimates as to
feasibility, viability and recovery should be changed.
Investments 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 property, plant and equipment, acquired intangible assets
and investment in subsidiaries 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 Consolidated Statement of Comprehensive Loss. Assets are
grouped into the smallest group that generates cash inflows which are independent of other assets.
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 fair value less cost to sell 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.
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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 recognized where the carrying value of an asset or liability in the Consolidated 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 utilized.
In connection with business combinations, deferred tax balances are recognized if related to temporary differences and loss
carry-forwards at the acquisition date or if they arise as a result of the acquisition and are measured in accordance with IAS 12
Income Taxes.
Share-based payments
The Group issues share options as an incentive to certain senior management and staff. The fair value of options granted is
recognized 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 recognized 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 the 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 historical 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 recognized in the Consolidated Statement of Comprehensive Loss 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.
Annual Report for the year ended 31 December 2019
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Notes to the Financial Statements continued
For the year ended 31 December 2019
3. Segment information
The Group is a global, commercial-stage biopharmaceutical company dedicated to commercializing and developing novel
therapeutics to treat patients suffering from serious and life-threatening rare diseases.
In 2018, the Group reported two operating segments: commercial and research and development. As a result of an internal
reorganisation, the Group now identifies one business segment. Corresponding items of the earliest period presented have been
restated to reflect this change.
The Group currently operates as one business segment, pharmaceuticals, and is focused on the development and
commercialisation of two commercial products and two development products. The Group derives its revenues primarily from
one source, being the pharmaceutical sector with high unmet medical need.
The Group’s Chief Executive Officer, Joe Wiley, is currently the Company’s chief operating decision maker (“CODM”). The Group
does not operate any separate lines of business or separate business entities with respect to its products. Accordingly, the Group
does not accumulate discrete financial information with respect to separate service lines and does not have separate reportable
segments.
The following table summarizes total revenues from external customers by product and by geographic region, based on the
location of the customer. Revenues represent the revenue from the Group for the full year (which includes revenue from
Aegerion, with acquired products and additional regions, from 24 September 2019 onward).
U.S.
US$’000
Metreleptin 14,944
Lomitapide 10,616
Other –
Total revenue 25,560
EMEA
US$’000
8,048
18,985
671
27,704
Other
US$’000
2,096
2,659
105
4,860
31 December 2019
U.S.
US$’000
Metreleptin –
Lomitapide –
Other –
Total revenue –
31 December 2018
EMEA
US$’000
–
15,132
928
16,060
Other
US$’000
–
978
57
1,035
Total
US$’000
25,088
32,260
776
58,124
Total
US$’000
–
16,110
985
17,095
Major Customers
For the year ended 31 December 2019, one customer accounted for 44% of the Group’s net revenues and accounted for 44%
of the Group’s 31 December 2019 trade receivable balance. For the year ended 31 December 2018, the Group generated over
76% of its lomitapide revenue in Italy, the Netherlands and Greece. The largest customer in 2018 was a hospital in Greece.
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4. Cost of sales
Cost of product sales
Amortisation of acquired intangibles (see Note 12)
Amortisation of inventory fair value step-up (see Note 15)
Royalty expenses
Total cost of sales
31 December
2019
US$’000
31 December
2018
US$’000
11,384
11,831
10,367
8,419
42,001
3,588
–
–
2,678
6,266
As a result of the acquisition of Aegerion in September 2019, the Group acquired certain inventories, which were measured at
fair value on the acquisition date. Refer to Note 2, Accounting policies, for further discussion on the key assumptions utilized to
estimate the fair value. The difference between the estimated fair value and the book value of the acquired inventory was
amortized, using the straight-line method, over the estimated period that the Group intends to sell this inventory.
5. Share based payments
On 10 July 2019, the shareholders of the Company approved a resolution to give authority to the Company to undertake a
consolidation of the existing ordinary shares in the capital of the Company under which every 6 existing ordinary shares were
consolidated into one ordinary share.
In the table below, for presentational purposes, the number of share options and warrants outstanding at 1 January 2019 and
2018 and the share options and warrants granted and lapsing during the years ended 31 December 2019 and 2018 have been
restated to reflect the 2019 6-for-1 share consolidation.
Under the terms of the Company’s Employee Share Option Plan, options to purchase 14,481,720 shares were outstanding at
31 December 2019. Under the terms of this plan, options are granted to officers, consultants and employees of the Group at the
discretion of the Remuneration Committee. A total of 11,330,641 share options were granted to directors and employees in
2019. There were no new share options granted during the year ended 31 December 2018.
The Company has issued warrants pre-2018 to key consultants, advisers and suppliers in payment or part payment for services or
supplies provided to the Group.
There were no similar warrants granted during either of the years ended 31 December 2019 and 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 employee share 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-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, each option will automatically accelerate and become exercisable in
full as of a date specified by the Board of Directors.
Annual Report for the year ended 31 December 2019
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Notes to the Financial Statements continued
For the year ended 31 December 2019
The number and weighted average exercise price (in Sterling pence) of share options and warrants per ordinary share is as
follows:
Share Options Warrants
Units
Balance at 1 January 2018 (pre share consolidation) 19,696,586
Balance at 1 January 2018 (restated for 6:1 share
consolidation) 3,282,764
Lapsed (31,909)
Outstanding at 31 December 2018 3,250,855
Exercisable at 31 December 2018 1,327,406
Balance at 1 January 2019 (pre share consolidation) 3,250,855
Granted 11,330,641
Lapsed (99,776)
Exercised –
Outstanding at 31 December 2019 14,481,720
Exercisable at 31 December 2019 2,468,310
Weighted
average
exercise price
(Sterling pence)
Weighted
average
exercise price
(Sterling pence)
Units
19.16p
23,103,481
24.74p
114.96p
142.50p
115.20p
116.83p
115.20p
117.01p
197.66p
–
116.00p
109.08p
3,850,580
(32,255)
3,818,325
3,818,325
3,818,325
18,841,378
(3,472,783)
(1,645,105)
17,541,815
17,541,815
148.44p
672.00p
144.00p
144.00p
144.00p
–
144.00p
–
0.03p
0.03p
The 18,841,378 warrants granted during the year ended 31 December 2019 consist of 8,065,000 zero cost warrants issued to
acquire Aegerion, 5,911,722 warrants issued to investors in connection with the US$60,000,000 equity raise and 4,864,656
warrants that were issued in connection with the repurchase of ordinary shares from certain shareholders. Refer to Note 17,
Share capital and reserves for further details on the warrants exercised during the year ended 31 December 2019.
Outstanding warrants at 31 December 2019 consisted of 17,196,273 zero cost warrants with no expiration date that were
issued to Aegerion creditors in connection with the acquisition of Aegerion (see Note 6, Business combinations and asset
acquisitions) and investors in connection with the US$60,000,000 equity raise (see Note 17, Share capital and reserves). The
remaining warrants consisting of 345,542 warrants were issued in connection with the admission to the AIM in 2016 and any
subsequent reference to warrants in this note relate to the warrants issued in 2016.
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 Expiration
Volatility
Risk free interest rate
Share price at grant
2019 Options
Inputs
2019 Warrant
Inputs
2018 Options
Inputs
2018 Warrant
Inputs
2,555
27% – 48%
0.38% – 0.83%
75.84p – 121.5p
–
–
–
–
–
–
–
–
–
–
–
–
In 2019, a total of 11,330,641 share options exercisable at a weighted average price of £1.17 were granted. The fair value of
share options granted in 2019 was £13,258,000/US$16,919,000. There were no new share options granted in 2018.
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The share options outstanding as at 31 December 2019 have a weighted remaining contractual life of 6.19 years with exercise
prices ranging from £0.76 to £1.50. The share options outstanding as at 31 December 2018 had a weighted remaining
contractual life of 4.94 years with exercise prices ranging from £0.93 to £2.88.
The warrants outstanding as at 31 December 2019 have a weighted remaining contractual life of 1.3 years with an exercise price
of £1.44. The remaining warrants outstanding as at 31 December 2018 had a weighted remaining contractual life of 0.25 years
with an exercise price of £1.44.
The value of share options charged to the Consolidated Statement of Comprehensive Loss during the year is as follows:
Share option expense
Total share option expense
31 December
2019
US$’000
31 December
2018
US$’000
841
841
821
821
The share option scheme was in place prior to the incorporation of the Company and the shares that will be issued upon share
options being exercised will be issued by Amrty Pharma plc. As a result, the Company-only recognise the full share based
payment reserve from the initial grant date with a corresponing increase in investment in subsidiaries.
6. Business combinations and asset acquisitions
Acquisition of Aegerion Pharmaceuticals
On 20 May 2019, Amryt entered into a Restructuring Support Agreement (as subsequently amended on 12 June 2019) and Plan
Funding Agreement pursuant to which, among other matters, Amryt agreed to the acquisition of Aegerion Pharmaceuticals, Inc.
(“Aegerion”), a former wholly-owned subsidiary of Novelion Therapeutics Inc. (“Novelion”). On 20 May 2019, Aegerion and its
U.S. subsidiary, Aegerion Pharmaceuticals Holdings, Inc., filed voluntary petitions under Chapter 11 of Title 11 of the U.S. Code
in the Bankruptcy Court. On 24 September 2019, Amryt completed the acquisition of Aegerion. Amryt acquired Aegerion upon
its emergence from bankruptcy in an exchange for ordinary shares and zero cost warrants in Amryt. Amryt issued 85,092,423
effective shares at US$1.793 per share, which is made up of 77,027,423 ordinary shares and 8,065,000 zero cost warrants, to
acquire Aegerion for a value of US$152,615,000.
The Company believes that the acquisition of Aegerion will enable the Group to advance the Group’s ambition to create a global
leader in rare and orphan diseases with a diversified offering of multiple development-stage and commercial assets and provides
it with scale to support further growth.
As part of the acquisition of Aegerion, it was agreed, for certain Aegerion creditors who wished to restrict their percentage share
interest in Amryt’s issued share capital, to issue to the relevant Aegerion creditor, as an alternative to Amryt’s ordinary shares, an
equivalent number of new zero cost warrants to subscribe for Amryt’s ordinary shares to be constituted on the terms of the zero
cost warrant. Refer to Note 23, Related party transactions, for further discussion.
Relevant Aegerion creditors are entitled at any time to exercise the zero cost warrants, at which point in time, the Company
would issue to that Aegerion creditor the relevant number of fully paid ordinary shares in return for the exercise of the zero cost
warrants. Each zero cost warrant entitles the holder thereof to subscribe for one ordinary share. The zero cost warrants
constitute the Company’s direct and unsecured obligations and rank pari passu and without any preference among themselves
(save for any obligations to be preferred by law) at least equally with the Company’s other present and future unsecured and
unsubordinated obligations. The zero cost warrants are not transferable except with the Company’s prior written consent.
On 14 November 2019, the Company repurchased a combined 4,864,656 ordinary shares from Highbridge Tactical Master Fund
L.P., Highbridge SCF Special Situations SPV, L.P. and Nineteen77 Global Multi Strategy Alpha Master Limited. In exchange for the
ordinary shares, these institutions were issued an equivalent number of zero cost warrants.
Annual Report for the year ended 31 December 2019
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Notes to the Financial Statements continued
For the year ended 31 December 2019
The table below reflects the fair value of the identifiable net assets acquired in respect of the acquisition completed during the
year. Any amendments to fair values will be made within the twelve-month period from the date of acquisition, as permitted by
IFRS 3 Business Combinations.
Assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible Assets
Other assets
Total non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventory
Prepaid expenses and other assets
Total current assets
Total assets
Current liabilities
Accounts payable
Accrued liabilities
Lease liabilities – current
Provision for legal settlements – current
Total current liabilities
Non-current liabilities
Lease liabilities – long term
Long term debt
Convertible notes debt and equity components – long term
Provision for legal settlements – long term
Deferred tax liability
Total non-current liabilities
Total liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Consideration
Consideration
Issue of fully paid up ordinary shares and zero cost warrants
Total consideration
Amryt Pharma plc
Provisional Fair
Value at date
of acquisition
US$’000
276
924
308,374
2,334
311,908
24,985
23,259
45,959
2,469
96,672
408,580
5,137
64,088
384
14,916
84,525
538
54,469
125,000
7,821
14,425
202,253
286,778
121,802
30,813
152,615
152,615
152,615
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89
The acquired goodwill is attributable principally to the profit generating potential of the businesses, the assembled workforce
and benefits arising from embedded infrastructure, that are expected to be achieved from integrating the acquired businesses
into the Group’s existing business. No amount of goodwill is expected to be deductible for tax purposes.
In the post-acquisition period to 31 December 2019, the business acquired during the current year contributed revenue of
US$38,392,000 and a trading loss of US$17,239,000 to the Group’s results.
The full year unaudited revenue and trading loss had the acquisitions taken place at the start of the year, would have been
US$185,260,000 and US$53,057,000 respectively. In February 2019, the Aegerion Group out licensed the rights to JUXTAPID for
distribution in Japan to Recordati Rare Diseases Inc. (“Recordati”). Included in the full year revenue total for 2019 is $28,495,000
relating to an upfront payment for the license and the transfer of the JUXTAPID marketing authorisation to Recordati. The 2019
revenue total also includes a mix of product revenues to Japan from January 2019 until the end of the transition period in May
2019 and then royalty income from Recordati to Aegerion at a rate of 22.5% on net sales of JUXTAPID in Japan for the
remaining part of the year.
The gross contractual value of trade and other receivables as at the dates of acquisition amounted to US$23,259,000, which
approximated the fair value of these accounts as the amount not expected to be collected was insignificant.
The Group incurred acquisition and restructuring related costs of US$13,038,000 relating to external legal fees, advisory fees,
due diligence costs and severance costs. These costs have been included in operating costs in the Consolidated Statement of
Comprehensive Income.
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis due to the
relative size of the acquisition and the timing of the transaction. Any amendments to these fair values within the twelve-month
timeframe from the date of acquisition will be disclosed in the 2020 consolidated financial statements, as stipulated by IFRS3.
Contingent Value Rights
Related to the transaction, Amryt issued Contingent Value Rights (“CVRs”) pursuant to which up to US$85,000,000 may
become payable to Amryt’s shareholders and option holders, who were on the register prior to the completion of the acquisition
on 20 September 2019, if certain approval and revenue milestones are met in relation AP101, Amryt’s lead product candidate.
If any such milestone is achieved, Amryt may elect to pay the holders of CVRs by the issue of Amryt shares or loan notes. If
Amryt elects to issue Loan Notes to holders of CVRs, it will settle such loan notes in cash 120 days after their issue. If none of the
milestones are achieved, scheme shareholders and option holders will not receive any additional consideration under the terms of
the CVRs. In these circumstances, the value of each CVR would be zero.
The terms of the CVRs are as follows:
(cid:129) The total CVR payable is up to US$85,000,000
(cid:129) This is divided into three milestones which are related to the success of AP101 (the Group’s lead development asset, currently
in Phase 3 clinical trials)
(cid:129) FDA approval
o US$35,000,000 upon FDA approval
o 100% of the amount due if approval is obtained before 31 December 2021, with a sliding scale on a linear basis to zero if
before 1 July 2022
Annual Report for the year ended 31 December 2019
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90
Notes to the Financial Statements continued
For the year ended 31 December 2019
(cid:129) EMA approval
o US$15,000,000 upon EMA approval
o 100% of the amount due if approval is obtained before 31 December 2021, with a sliding scale on a linear basis to zero if
before 1 July 2022
(cid:129) Revenue targets
o US$35,000,000 upon AP101 revenues exceeding US$75,000,000 in any 12-month period prior to 30 June 2024
(cid:129) Payment can at the Board’s discretion be in the form of either:
o 120-day loan notes (effectively cash), or
o Shares valued using the 30 day / 45-day VWAP.
The CVRs were contingent on the successful completion of the acquisition and, accordingly, have been based on fair value as at
24 September 2019. In the Company-only accounts, the CVRs have been classified as a financial liability in the Consolidated
Statement of Financial Position and debited to equity as a deemed distribution. On consolidation, given that CVRs were issued to
legacy Amryt shareholders in their capacity as owners of the identified acquirer as opposed to the seller in the transaction,
management concluded that the most appropriate classification would be to recognize the CVR as a distribution on
consolidation instead of goodwill.
Measurement of CVRs
As at 31 December 2019, the carrying value of the CVRs was US$49,413,000. The value of the potential payout was calculated
using the probability-weighted expected returns method. Using this method, the potential payment amounts were multiplied by
the probability of achievement and discounted to present value. 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 GmbH transaction. Discount rates of 10% and 16.5%, as applicable,
were used in the calculation of the present value of the estimated contractual cash flows for the year ended 31 December 2019.
Management was required to make certain estimates and assumptions in relation to revenue forecasts, timing of revenues and
probability of achievement of commercialisation of AP101. However, management notes 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 expected cash flows of the CVRs.
Amryt reviews the expected cash flows on a regular basis as the discount on initial recognition is being unwound as financing
expenses in the Consolidated Statement of Comprehensive Loss over the life of the obligation. It is reviewed on a quarterly basis
and the appropriate finance charge is booked in the consolidated statement of income on a quarterly basis. The Group expects
to read out top-line data from the Phase 3 trial of AP101 in Epidermolysis Bullosa (“EB”) in the second half of 2020, followed by
applications for approval from the FDA and the EMA, if top-line data is positive. Coupled with this, management has completed
its annual forecast and revenues and costs reflect these current expectations.
The total non-cash finance charge recognized in the Consolidated Statement of Comprehensive Loss for the year ended
31 December 2019 is US$1,511,000.
Acquisition of Amryt AG (previously “Birken”)
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 GmbH. The
consideration included contingent consideration comprising milestone payments and sales royalties as follows:
Amryt Pharma plc
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91
(cid:129) 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 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;
(cid:129) Cash consideration of €150,000, due and paid on the completion date (18 April 2016); and
(cid:129) Royalties of 9% on sales of Episalvan products for 10 years from first commercial sale;
Fair Value Measurement of Contingent Consideration
As of 31 December 2019, the fair value of the contingent consideration was estimated to be US$53,048,000 (2018:
US$47,316,000). The fair value of the royalty payments was determined using probability weighted revenue forecasts and the
fair value of the milestone payments was determined using probability adjusted present values (see Note 24, Fair value
measurement and financial risk management, 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 GmbH transaction.
A discount rate of 24.4% (2018: 28.5%) was used in the calculation of the fair value of the contingent consideration for the
year ended 31 December 2019. 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, 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 Consolidated Statement of Comprehensive Loss over the life of the obligation. The finance charge is
being unwound as a financing expense in the Consolidated Statement of Comprehensive Loss on a quarterly basis.
The total non-cash finance charge recognized in the Consolidated Statement of Comprehensive Income for the year ended
31 December 2019 is US$6,740,000 (2018: US$10,566,000).
In January 2019, the Group received the results of an unblinded interim efficacy analysis for the Phase 3 trial of AP101 in EB. 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% conditional
statistical power. The Group expects to read out top-line data from this trial in the second half of 2020, followed by applications
for approval from the FDA and the EMA, if top-line data is positive. 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.
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 92
92
Notes to the Financial Statements continued
For the year ended 31 December 2019
Acquisition of Amryt Pharma Holdings Limited (formerly named Amryt Pharma plc)
On 24 September 2019, the Company became the new parent company of Amryt Pharma Holdings Limited (formerly named
Amryt Pharma plc) pursuant to a scheme of arragement between Amryt Pharma plc and its shareholders under Part 26 of the
Companies Act 2006. This was accounted for as a common control transaction and, therefore, there were no adjustments to
reflect fair values, or recognise any new assets and liabilities at the date of the acquisition that otherwise would have been done
under the acquisition method.
7. Operating loss for the year
Operating loss for the year is stated after charging (crediting):
Fees payable to the Group’s auditor and their associates
Changes in inventory expensed (excluding fair value step-up)
Amortisation of inventory fair value step-up
Research and development expenses
Share based payments
Pension costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating lease rentals
Foreign exchange (gains) losses
31 December
2019
US$’000
31 December
2018
US$’000
611
11,335
10,367
15,827
841
769
698
11,957
170
(3,750)
106
1,700
–
10,703
821
583
317
50
300
223
8. Employees
Including the directors, the Group’s average number of employees during the year was 99 (2018: 61).
Aggregate remuneration comprised:
31 December
2019
US$’000
31 December
2018
US$’000
17,268
2,037
769
2,555
510
331
23,470
7,249
1,005
583
1,565
175
646
11,223
Wages and salaries
Social security costs
Pension costs – employees
Directors’ remuneration
Shared based payments – directors
Shared based payments – employees/consultants
Total employee costs
Amryt Pharma plc
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 93
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FINANCIAL STATEMENTS
93
The directors of the Company held the following share options over shares of Amryt Pharma plc at 31 December 2019:
31 December 2019
Director
Joe Wiley
Number
Exercise price
(Sterling Pence)
6,437,460
0.76p – 121.50p
Expiration Date
27 November 2024 –
4 November 2026
Rory Nealon was a director of the Company throughout 2018 and resigned as a director of the Company on 24 September
2019.
The options held by the directors of the Company at 31 December 2018 have been restated to reflect the 6:1 share consolidation
in 2019.
31 December 2018
Director
Joe Wiley
Rory Nealon
Number
343,521
137,409
Exercise price
(Sterling Pence)
120.72p
120.72p
Expiration Date
27 November 2024
27 November 2024
No share options were granted to any of the directors in 2018.
Further information on the compensation of key management personnel is included in Note 23, Related party transactions, of
these financial statements.
9. Net finance expense – other
Interest on loans
Charges and fees paid
Interest received
Foreign exchange losses (gains)
Total
31 December
2019
US$’000
31 December
2018
US$’000
8,481
120
(92)
(3,750)
4,759
1,603
20
(5)
223
1,841
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 94
94
Notes to the Financial Statements continued
For the year ended 31 December 2019
10. Tax on ordinary activities
A corporation tax credit of US$1,226,000 arises in the year ended 31 December 2019 (2018: charge of US$43,000). A
reconciliation of the expected tax benefit computed by applying the tax rate applicable in the primary jurisdiction, the Republic of
Ireland, to the loss before tax to the actual tax credit is as follows:
Loss before tax
Tax credit at Irish corporation tax rate of 12.5%
Effect of:
Movement in unrecognized deferred tax assets
Permanent differences
Differences in overseas taxation rates
Total tax (credit)/charge on loss on ordinary activities
31 December
2019
US$’000
31 December
2018
US$’000
(66,760)
(8,345)
3,508
6,474
(2,863)
(1,226)
(30,444)
(3,806)
4,182
43
(376)
43
At 31 December 2019 and 2018, the Group had unutilized net operating losses in the following jurisdictions as follows:
Ireland
United States
Germany
United Kingdom
ROW
Total
31 December
2019
US$’000
31 December
2018
US$’000
53,266
36,334
26,228
16,828
–
132,656
36,428
–
27,236
7,812
315
71,791
The deferred tax asset on tax losses of US$25,858,892 (2018: US$14,503,000), which was calculated at corporation tax rates
ranging from 12.5% to 32%, has not been recognized due to the uncertainty of the recovery. Tax losses in Ireland, Germany and
the UK can be carried forward indefinitely. U.S. losses related to tax periods prior to 2018 can be carried forward for 20 years
while losses from 2018 onwards can be carried forward indefinitely.
Due to historical changes in ownership of the U.S. business, the U.S. tax losses carried forward are restricted in how they can be
used against future profits of the Group.
All current and deferred tax related charges are recognized in the Consolidated Statement of Comprehensive Loss.
Amryt Pharma plc
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95
11. Loss per share – basic and diluted
The weighted average number of shares in the loss per share (‘‘LPS’’) calculation, reflects the weighted average total actual shares
of Amryt Pharma plc in issue at 31 December 2019, as adjusted (see below).
Issued share capital - ordinary shares of £0.06 each
31 December 2019
31 December 2018
31 December 2018, as adjusted
Number of
shares
Weighted
average shares
154,498,887
75,871,562
274,817,283
274,817,283
45,802,880
45,802,880
The number of shares in issue at 31 December 2018 has been adjusted to reflect the share consolidation on 10 July 2019,
whereby each ordinary shareholder received one ordinary share for every six shares held at that date.
The calculation of loss per share is based on the following:
Loss after tax attributable to equity holders of the Company (US$’000)
Weighted average number of ordinary shares in issue
Fully diluted average number of ordinary shares in issue
Basic and diluted loss per share (US$)
31 December
2019
31 December
2018
(65,535)
75,871,562
75,871,562
(30,487)
45,802,880
45,802,880
(0.86)
(0.67)
The basic and diluted loss per share for 2019 of US$0.86 (2018: US$0.67) was calculated using the post consolidation number of
ordinary shares in issue.
Where a loss has occurred, basic and diluted LPS are the same because the outstanding share options and warrants are anti-
dilutive. Accordingly, diluted LPS equals the basic LPS. The share options and warrants outstanding as at 31 December 2019
totaled 32,023,535 (2018: 7,069,180 as restated) and are potentially dilutive.
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 96
96
Notes to the Financial Statements continued
For the year ended 31 December 2019
12. Intangible assets and goodwill
Developed
technology -
metreleptin
US$’000
Developed
technology -
lomitapide
US$’000
In process
R&D
US$’000
Other
intangible
assets
US$’000
Total
intangible
assets
US$’000
Goodwill
US$’000
Cost
At 1 January 2018 –
Additions –
Disposals –
Foreign exchange movement –
At 31 December 2018 –
Additions –
Acquired assets 185,000
Impairment charge –
Foreign exchange movement –
At 31 December 2019 185,000
Accumulated amortisation
At 1 January 2018 –
Amortisation charge –
Amortisation charge on disposals –
Foreign exchange movement –
At 31 December 2018 –
–
–
–
–
–
–
123,000
–
–
23,000
–
–
–
–
–
Amortisation charge 7,688
At 31 December 2019 7,688
4,143
4,143
62,498
–
–
(2,407)
60,091
–
–
(4,670)
(1,160)
54,261
–
–
–
–
–
–
–
Net book value
At 31 December 2018 –
–
At 31 December 2019 177,312
118,857
60,091
54,261
Developed technology on commercially marketed products
114
155
(1)
(10)
258
74
374
–
(5)
701
5
50
(1)
(2)
52
126
178
206
523
62,612
155
(1)
(2,417)
60,349
74
308,374
(4,670)
(1,165)
362,962
5
50
(1)
(2)
52
11,957
12,009
–
–
–
–
–
–
30,813
–
–
30,813
–
–
–
–
–
–
–
60,297
–
350,953
30,813
In connection with the acquisition of Aegerion in September 2019, the Group acquired developed technology, metreleptin and
lomitapide. Refer to Note 2, Accounting policies - critical accounting judgements and key sources of estimation uncertainty, for
further discussion on the valuation related to the developed technology, including the key assumptions utilized. These intangible
assets are amortized over their estimated useful lives and the remaining useful lives for metreleptin and lomitapide are
approximately 6.2 and 7.7 years, respectively, as of 31 December 2019. At the reporting date, the Group reviews its intangible
assets for impairment when events or changes in circumstances indicate that their carrying value may not be recoverable.
At 31 December 2019, there were no events or changes in circumstances that indicated the carrying value of metreleptin and
lomitapide may not be recoverable, as such there was no impairment charge recorded during the year ended 31 December 2019.
Amryt Pharma plc
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97
The amortisation associated with metreleptin and lomitapide is recorded as part of cost of sales. As of 31 December 2019, the
estimated amortisation expense related to these intangibles for future periods is as follows:
Years Ending 31 December
2020
2021
2022
2023
2024
Thereafter
Metreleptin
US$’000
Lomitapide
US$’000
28,831
28,831
28,831
28,831
28,831
33,157
15,537
15,537
15,537
15,537
15,537
41,172
Total intangible assets subject to amortisation
177,312
118,857
In-process R&D
As a result of the acquisition of Amryt GmbH, in 2016, the Group recognized in-process R&D costs of US$54,268,000 which is
related to the Group’s lead development asset, AP101. The Group reviews the carrying amount of AP101 on an annual basis to
determine whether there are any indications that the asset has 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 utilized 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 cash flows 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. 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 that is considered
appropriate for the Group’s size and structure.
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 experience. The pre-tax discount rate used in 2019 and 2018 was 24.4% and 28.5%, respectively. The market-based
probability chance of success is based on market benchmarks for orphan drugs, which is approximately 72% (same as 2018).
The value-in-use calculation is subject to significant estimation, uncertainty and accounting judgements and key sensitivities arise
in the following areas:
(cid:129) 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 2019.
(cid:129) 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 2019.
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 98
98
Notes to the Financial Statements continued
For the year ended 31 December 2019
The Group made changes in the assumptions used in the assessment of these carrying value of the AP101 asset in 2019. In
January 2019, the Group received the results of an unblinded interim efficacy analysis from the Phase 3 trial of AP101 in EB. 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 Group expects to read out top-line data in the second half of 2020, followed by applications for approval from the
FDA and the EMA, if top-line data is positive. Coupled with this, management has completed its annual forecast and revenues
and costs have been amended to reflect current expectations. The Group also adjusted the discount rate used in the discounted
cash flow model, reducing the rate from 28.5% in 2018 to 24.4%. The acquisition of Aegerion in 2019 has significantly
increased the size of the Group and also changed the debt and equity structure of the Group. As a result, management believed
it was appropriate to update the discount rate to reflect the new structure of the Group. These factors have resulted in a change
to the probability weighted revenue forecasts and the probability of the adjusted present values used in 2019.
Additionally, as a result of the acquisition of Som Therapeutics Corp., in 2016, the Group recognized in-process R&D costs of
US$4,522,000 as an intangible. This is related to the Group’s development project AP102, which is an early stage drug asset.
AP102 may represent a novel, next generation somatostatin analogue (‘‘SSA’’) peptide medicine for patients with rare
neuroendocrine diseases, where there is a high unmet medical need, including acromegaly. Acromegaly is a rare endocrine
disorder in which the body produces excessive growth hormone, leading to abnormal growth throughout the body over time.
The Group also reviews the carrying amounts of AP102 on an annual basis to determine whether there are any indications that
those assets have suffered an impairment loss.
In 2019, following the acquisition of Aegerion by the Group, a decision was made not to pursue the development of AP102 and
therefore, the Group has written off this asset, resulting in an impairment charge of US$4,670,000 recognized as other expense
during the year ended 31 December 2019. The decision to impair this intangible asset is primarily based on the grounds that the
acquisition of Aegerion has been transformational for the Group, as it has now become a global, commercial-stage
biopharmaceutical company dedicated to commercializing and developing novel therapeutics to treat patients suffering from
serious and life-threatening rare diseases. The Group’s diversified portfolio is comprised of two commercial rare disease products,
as well as a development-stage pipeline focused on rare skin diseases. Since the commercial products, lomitapide for the
treatment of homozygous familial hypercholesterolemia (‘‘HoFH’’), and metreleptin for the treatment of generalized lipodystrophy
(‘‘GL’’) and partial lipodystrophy (‘‘PL’’), have each been sold globally through the Group’s commercial infrastructure for over six
years, management believes it is in the best interest of the Group to concentrate resources on these new development pipeline
activities which will better complement the existing commercial products. The Group may look to partner AP102 in the long-term
future but in the short and medium term, the Group will continue to concentrate on AP101, AP103 and expansion opportunities
for the existing commercial products.
Other intangible assets
Other intangible assets include website costs and the Group’s computer software and hardware. The amortisation associated
with computer software, hardware and website costs is recorded in both SG&A and R&D expenses. These assets are stated at
cost and amortized using straight-line method based on the estimated economic lives, ranging from 3 - 10 years.
Goodwill
During 2019, the Group completed the acquisition of Aegerion, which resulted in aggregate goodwill of US$30,813,000. Refer
to Note 6, Business combinations and asset acquisitions, for further details. The Group believes that the business, as a whole,
represents a single CGU, as it is the smallest identifiable group of assets that generates cash inflows that are largely independent
of the cash inflows from other assets or groups of assets. Additionally, the Group only operates in one business segment and
does not operate any separate lines of business or separate business entities with respect to its products. Accordingly, the Group
does not accumulate discrete financial information with respect to separate service lines and does not have separate reportable
segments.
Amryt Pharma plc
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99
Goodwill is subject to impairment testing on an annual basis. The recoverable amount of the Group’s CGU is determined based
on a value-in-use computation. The Group’s value-in-use calculations included the cash flow projections based on the 2020
budget which has been approved by the Board of Directors and the Group’s strategic plan for a further three years using
projected revenue and cost growth rates of between 0% and 9%. At the end of the four-year forecast period, the terminal
value, based on a long-term growth rate of 2%, was used in the value-in-use calculations. The value-in-use represents the
present value of the future cash flows, including the terminal value, discounted at a rate appropriate to the Group. The key
assumptions employed in arriving at the estimates of future cash flows are subjective and include projected EBITDA, net cash
flows, discount rates and the duration of the discounted cash flow model. The Group have used a discount rate of 16.5% which
is a conservative estimate for the Group as well as the Group’s risk profile.
The 2019 annual goodwill impairment testing process resulted in no impairment for the year ended 31 December 2019.
13. Property, plant and equipment
Plant and
Property Machinery
US$’000 US$’000
Office
Equipment
US$’000
Right-of-use
Asset
US$’000
Total
US$’000
Cost
At 1 January 2018 401 1,077
Additions – 11
Disposals – (7)
Foreign exchange movement (15) (42)
At 31 December 2018 386 1,039
Additions 6 253
Impact of IFRS 16 adoption – –
Acquired assets – 276
Disposals – (114)
Foreign exchange movement (9) (22)
At 31 December 2019 383 1,432
Accumulated
At 1 January 2018 176 201
Depreciation charge 103 137
Depreciation charged on disposals – (7)
Foreign exchange movement (10) (12)
At 31 December 2018 269 319
Depreciation charge 90 162
Depreciation charged on disposals – (71)
Foreign exchange movement (6) (6)
At 31 December 2019 353 404
Net book value
At 31 December 2018 117 720
At 31 December 2019 30 1,028
389
69
(21)
(16)
421
167
–
–
(32)
(9)
547
109
77
(21)
(5)
160
64
(32)
(5)
187
261
360
–
–
–
–
–
152
874
924
–
50
2,000
–
–
–
–
–
382
–
–
382
–
1,618
1,867
80
(28)
(73)
1,846
578
874
1,200
(146)
10
4,362
486
317
(28)
(27)
748
698
(103)
(17)
1,326
1,098
3,036
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 100
100
Notes to the Financial Statements continued
For the year ended 31 December 2019
14. Trade and other receivables
31 December
2019
US$’000
Trade receivables 28,607
Accrued income and other debtors 5,934
VAT recoverable 1,846
Intercompany receivables –
Trade and other receivables 36,387
Group Company
31 December
2019
US$’000
31 December
2018
US$’000
3,572
2,326
29
–
5,927
–
221
171
58,221
58,613
Trade receivables at 31 December 2019 includes US$752,000 (2018: US$338,000) which is due greater than 120 days. No
impairment is considered necessary.
The 31 December 2019 accrued income and other debtors balance includes US$857,000 (2018: US$1,546,000) in relation to
prepaid Phase 3 clinical trial costs.
Intercompany receivables mainly relate to cash proceeds received on the issuance of new shares of the Company less issuance
costs. Refer to Note 17, Share capital and reserves, for more details on new shares and the equity issuances during the period.
The proceeds were received by subsidiary companies, Amryt Pharmaceuticals DAC and Amryt Pharma Holdings Limited, on
behalf of the Company until a Company bank account is set up, at which point the funds will be transferred.
15. Inventories
Raw materials
Work in progress
Finished goods
Inventories
31 December
2019
US$’000
31 December
2018
US$’000
17,689
2,488
23,446
43,623
303
782
1,052
2,137
In 2019, a total of US$11,335,000 (2018: US$1,700,000) of inventories was included in the profit or loss as an expense
(excluding the fair value step-up).
The fair value of net inventory acquired as part of the acquisition of Aegerion on 24 September 2019 amounted to
US$45,959,000, net of US$61,842,000 of non-saleable inventory acquired in connection with the acquisition of Aegerion. The
non-saleable inventories were determined based on the expiration dates and future manufacturing commitments which could
result in inventory levels in excess of forecast demand. Under IFRS 3, the finished goods inventory on hand at the date of
acquisition was valued at the expected selling price less the sum of (a) remaining costs of disposal and (b) a reasonable profit
margin for the selling effort of the acquiring entity based on the EBITDA margin as a percentage of sales. The costs to dispose
were calculated based on the average costs as a percentage of revenue through the period in which the current finished goods
inventory is expected to be sold. This resulted in a non-cash step up at the valuation of finished goods inventory at 24 September
2019 of US$28,068,000. The non-cash step up in inventory is being unwound to the Consolidated Statement of Comprehensive
Loss over the period in which this saleable inventory is expected to be sold which is less than one year. At 31 December 2019,
US$17,701,000 of this non-cash inventory step up is included in finished good inventory.
All inventory was reviewed at year end and no impairment was deemed necessary.
Amryt Pharma plc
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101
16. Cash and cash equivalents
Cash at bank available on demand
Restricted cash
Total cash and cash equivalents
31 December
2019
US$’000
31 December
2018
US$’000
65,197
2,032
67,229
9,864
1,362
11,226
Cash and cash equivalents include cash at bank available on demand and restricted cash.
Of the US$2,032,000 held in restricted cash, US$1,219,000 was held in an escrow account set-up in accordance with Aegerion’s
bankruptcy plan as approved by the U.S. Bankruptcy Court to meet the costs associated with the bankruptcy process.
Additionally, US$813,000 is cash held by a third-party distributor at year end; the funds from the third-party distributor were
transferred to Amryt in January 2020.
17. Share capital and reserves
Details of issued ordinary shares with a nominal value of Sterling 6 pence (2018: 1 pence) each are in thetable below. The
ordinary shares and share price in 2018 were adjusted for the share consolidation completed in 2019.
Number of
Date ordinary shares
Number of
deferred shares
At 31 December 2019 159,363,543
–
At 31 December 2018 274,817,283
43,171,134
Total Share
Capital
US$’000
11,918
25,198
Total Share
Premium
US$’000
2,422
68,233
The number of ordinary shares issued at 31 December 2019 includes treasury shares of 4,864,656 (2018: nil).
The Company repurchased all of the 43,171,134 deferred ordinary shares in July 2019 for an aggregate consideration of £0.01
and the Deferred Shares were immediately cancelled. Simultaneously the Company allotted four additional ordinary shares of par
value £0.01 each in the capital of the Company, in connection with a 6 to 1 consolidation of the Company’s share capital.
In an US$8,000,000 equity raise, the company issued 7,346,189 ordinary shares, 4,580,288 shares in August 2019 and
2,765,901 shares in September 2019.
On 24 September 2019, the following equity issuances were conducted:
(cid:129) 77,027,423 ordinary shares and 8,065,000 warrants for a consideration of US$152,615,000 were issued as part of the
Aegerion acquisition whereby the company acquired the entire share capital of Aegerion.
(cid:129) 27,541,944 ordinary shares and 5,911,722 warrants were issued as part of a US$60,000,000 fund raising.
On 19 December 2019, the Company issued 1,645,105 shares to certain shareholders in consideration of warrants.
Share Capital
Share capital represents the cumulative par value arising upon issue of ordinary shares of Sterling 6 pence each.
The ordinary shares have the right to receive notice of, attend and vote at general meetings and participate in the profits of the
Company.
Annual Report for the year ended 31 December 2019
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102
Notes to the Financial Statements continued
For the year ended 31 December 2019
Share Premium
Share premium represents the consideration that has been received in excess of the nominal value on issue of share capital net of
issue costs and transfers to distributable reserves. By special resolution of the Company duly passed on 23 September 2019, in
accordance with section 283 of the UK Companies Act 2006, it was resolved that the entire amount outstanding to the credit of
the share premium account and capital redemption reserve of the Company be cancelled. The reduction in capital, amounting to
US$268,505,000, representing the entire amount of share premium at that time, was approved by the High Court of Justice of
England and Wales on 5 November 2019.
Warrant reserve
The warrant reserve represents zero cost warrants issued as part of the equity raise on 24 September 2019 net of issue costs
apportioned to warrants issued and additional warrants issued to certain shareholders on 14 November 2019. Each warrant
entitles the holder to subscribe for one ordinary share at zero cost. On 19 December 2019, the company issued 1,645,105
ordinary shares in consideration for certain warrants.
Treasury Shares
On 14 November 2019, the Company repurchased a combined 4,864,656 ordinary shares from certain shareholders. In
exchange for the ordinary shares, these shareholders were issued an equivalent number of zero cost warrants. These ordinary
shares are now held as treasury shares.
Share based payment reserve
Share based payment reserve relates to the charge for share based payments in accordance with IFRS 2.
Merger reserve
The merger reserve was created on the acquisition of Amryt DAC by Amryt Pharma Holdings Limited (formerly named Amryt
Pharma plc) in April 2016. Ordinary shares in Amryt Pharma Holdings Limited were issued to acquire the entire issued share
capital of Amryt DAC. Under section 612 of the UK Companies Act 2006, the premium on these shares has been included in a
merger reserve.
Reverse acquisition reserve
The reverse acquisition reserve arose during the period ended 31 December 2016 in respect of the reverse acquisition of Amryt
Pharma Holdings Limited by 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 Holdings Limited in compliance with UK company
law.
Equity component of convertible notes
The equity component of convertible notes represents the equity component of the US$125,000,000 convertible debt and is
measured by determining the residual of the fair value of the instrument less the estimated fair value of the liability component.
The equity component is recognized in equity and is not subsequently remeasured.
Other distributable reserves
Other distributable reserves of the Company comprise the following:
(cid:129) Distribution of the share premium amount on 6 November 2019 of US$268,505,000.
(cid:129) A deemed distribution of US$47,902,000 arising from the issuance of CVRs.
Amryt Pharma plc
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FINANCIAL STATEMENTS
103
Also included in the Group’s other distributable reserves is the following:
(cid:129) A deemed distribution of US$2,969,000 arising from the scheme of arrangement in September 2019 whereby Amryt Pharma
plc, which was incorporated in July 2019, became a 100% shareholder of Amryt Pharma Holdings Limited (formerly named
Amryt Pharma plc) (the ‘‘Acquisition of subsidiary without a change of control’’).
Currency translation reserve
The currency translation reserve arises on the retranslation of non-U.S, dollar denominated foreign subsidiaries.
Accumulated deficit
Accumulated deficit represents losses accumulated in previous periods and the current year.
18. Deferred tax liability
At 1 January 2018
Movement during the year
At 31 December 2018
Net movement during the year
At 31 December 2019
Total
US$’000
6,161
–
6,161
12,760
18,921
A deferred tax liability arose in 2016 on the acquisition of Amryt GmbH. An intangible asset was recognized 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 amortized the tax difference will be reduced and the movement in the deferred tax liability will be
recognized in profit or loss. The in-process R&D is currently not being amortized and as a result the deferred tax liability in
relation to the Birken acquisition continues to be in place.
A deferred tax liability, in the amount of US$14,425,000, also arose in 2019 in connection with the acquisition of Aegerion
Pharmaceuticals, Inc. (see Note 6, Business combinations and asset acquisitions). The intangible assets have been recognized at
their fair value. As the transaction was completed as a share acquisition, the intangible assets were not re-based to fair value
from a tax perspective with a deferred tax liability being recognized on acquisition. These intangibles are being amortized and the
resulting reduction in the deferred tax liability will be recognized in profit or loss.
19. Long Term Loan
Long term loan
Long term loan interest
Long term loan and interest
31 December
2019
US$’000
31 December
2018
US$’000
81,610
–
81,610
17,164
1,847
19,011
In December 2016, Amryt DAC entered into a euro denominated €20,000,000 facility agreement (‘‘facility’’) with the European
Investment Bank (‘‘EIB’’) on attractive terms for the Group. The facility was significant because it provided non-dilutive funding
that secured the Group’s near and mid-term funding needs for its lead development candidate, AP101.
Annual Report for the year ended 31 December 2019
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104
Notes to the Financial Statements continued
For the year ended 31 December 2019
The facility was split into three tranches, with €10,000,000 available immediately and two further tranches of €5,000,000
available upon the achievement of certain milestones. In April 2017, the Group drew down the first tranche of €10,000,000. In
October 2017, the terms of the second tranche of €5,000,000 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 €5,000,000 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 an increase in patients. Following this positive result, the original conditions of the final
tranche were waived and the final tranche of €5,000,000 was drawn down in February 2019. The facility was secured over the
Intellectual Property assets of the Group and there was 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 had a five-year term from the date of drawdown for each tranche. The facility had an interest rate of 3% to be paid
on an annual basis, the first instalment of short-term interest on the €10,000,000 tranche 1 was paid in April 2018. A further
annual fixed rate of 10% was payable together with the outstanding principal amount on expiry of the facility. At 31 December
2018, the Group had short term interest payable accrued amounting US$319,000 which was repayable in April 2019 and long-
term interest payable of US$1,847,000 which represents the present value of the long-term interest accrued but not payable
until each tranche matured.
On 24 September 2019, the EIB loan was repaid in full.
As part of the acquisition of Aegerion on 24 September 2019, Aegerion entered into a new U.S. dollar denominated
US$81,021,000 secured term loan debt facility (‘‘Term Loan’’) with various lenders. The Term Loan is made up of a
US$54,469,000 loan that was in place prior to the acquisition which was refinanced as part of the acquisition and a
US$26,552,000 additional loan that was drawn down on 24 September 2019 and was used to repay the EIB secured loan facility.
The Term Loan has a five-year term from the date of the draw down, 24 September 2019 and matures on 24 September 2024.
Under the Term Loan, interest will be payable at the option of the Group at the rate of 11% per annum paid in cash on a
quarterly basis or at a rate of 6.5% paid in cash plus 6.5% paid in kind that will be paid when the principal is repaid, which rolls
up and is included in the principal balance outstanding, on a quarterly basis. The Term Loan may be prepaid, in whole or in part,
by Aegerion at any time subject to payment of an exit fee, which depending on the stage of the loan term, ranges from 5.00%
to 0.00% of the principal then outstanding on the Term Loan.
In connection with the Term Loan, the Group incurred approximately US$870,000 of debt issuance costs, which primarily
consisted of underwriting, legal and other professional fees. These costs are being amortized over the expected life of the loan
using the effective interest method.
The Term Loan is guaranteed by Amryt and certain subsidiaries of the Group. In connection with the loan agreement, fixed and
floating charges have been placed on property and undertakings of Amryt and certain subsidiaries of the Group.
The Term Loan agreement includes affirmative and negative covenants, including prohibitions on the incurrence of additional
indebtedness, granting of liens, certain asset dispositions, investments and restricted payments, in each case, subject to certain
exceptions set forth in the Loan Agreement. The Term Loan agreement also includes customary events of default for a
transaction of this type, and includes (i) a cross-default to the occurrence of any event of default under material indebtedness of
Aegerion and certain subsidiaries of the Group and Amryt, including the convertible notes, and (ii) Amryt or any of its subsidiaries
being subject to bankruptcy or other insolvency proceedings. Upon the occurrence of an event of default, the lenders may
declare all of the outstanding Term Loan and other obligations under the Term Loan agreement to be immediately due and
payable and exercise all rights and remedies available to the lenders under the Term Loan agreement and related documentation.
There have been no events of default or breaches of the covenants occurring for the year ended 31 December 2019.
Amryt Pharma plc
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105
Changes in long term loans from financing activities:
At 1 January 2019
Cash-flows
Proceeds from loans and borrowings
Repayment of loans and borrowings
Liability related
Effect of changes in foreign exchange rates
Acquired loans and borrowings
Interest accrual
At 31 December 2019
20. Convertible notes
Issuance of convertible notes
Amount classified as equity
Accreted interest
Total convertible notes
Total
US$’000
19,011
31,176
(21,990)
797
54,469
(1,853)
81,610
31 December
2019
US$’000
125,000
(29,210)
1,066
96,856
As part of the acquisition, Aegerion issued convertible notes with an aggregate principal amount of US$125,000,000 to
Aegerion creditors. Refer to Note 23, Related party transactions, for further details.
The convertible notes are senior unsecured obligations and bear interest at a rate of 5.0% per year, payable semi-annually in
arrears on 1 April and 1 October of each year, beginning on 1 April 2020. The convertible notes will mature on 1 April 2025,
unless earlier repurchased or converted.
The convertible notes are convertible into Amryt’s ordinary shares at a conversion rate of 386.75 ordinary shares per US$1,000
principal amount of the convertible notes. If the holders elect to convert the convertible notes, Aegerion can settle the
conversion of the convertible notes through payment or delivery of cash, common shares, or a combination of cash and common
shares, at its discretion. As a result of the conversion feature in the convertible notes, the convertible notes were assessed to have
both a debt and an equity component. The two components were assessed separately and classified as a financial liability and
equity instrument. The financial liability component was measured at fair value based on the discounted cash flows expected
over the expected term of the notes using a discount rate based on a market interest rate that a similar debt instrument without
a conversion feature would be subject to. Refer to Note 17, Share capital and reserves, for further details on the equity
component of the convertible notes.
From 24 September 2019 until the close of business on the second scheduled trading day immediately preceding the maturity
date, holders may convert all or any portion of their convertible notes, in multiples of US$1,000 principal amount, at the option
of the holder.
The indenture does not contain any financial covenants or restrict the Group’s ability to repurchase securities, pay dividends or
make restricted payments in the event of a transaction that substantially increases the Group’s level of indebtedness in certain
circumstances.
Annual Report for the year ended 31 December 2019
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106
Notes to the Financial Statements continued
For the year ended 31 December 2019
The indenture contains customary terms and covenants and events of default. If an event of default (other than certain events of
bankruptcy, insolvency or reorganisation involving Aegerion, Amryt and certain subsidiaries of the Group) occurs and is
continuing, the trustee by notice to Aegerion, or the holders of at least 25% in principal amount of the outstanding convertible
notes by written notice to Aegerion and the trustee, may declare 100% of the principal of and accrued and unpaid interest, if
any, on all of the convertible notes to be due and payable. Upon such a declaration of acceleration, such principal and accrued
and unpaid interest, if any, will be due and payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency
or reorganisation involving Aegerion, 100% of the principal and accrued and unpaid interest, if any, on the convertible notes will
become due and payable automatically. Notwithstanding the foregoing, the indenture provides that, upon Aegerion’s election,
and for up to 180 days, the sole remedy for an event of default relating to certain failures by Aegerion to comply with certain
reporting covenants in the indenture consists exclusively of the right to receive additional interest on the convertible notes. There
have been no events of default or breaches of the covenants occurring for the year ended 31 December 2019.
21. Trade and other payables
31 December
2019
US$’000
31 December
2018
US$’000
Group
Company
31 December
2019
US$’000
Trade payables 23,418
Accrued expenses 52,382
Social security costs and other taxes 796
Intercompany payables –
5,339 789
6,204 592
500 –
– 680
Trade and other payables 76,596
12,043 2,061
The accruals mainly consist of costs related to government revenue rebates, convertible note interest, royalty expenses,
restructuring costs, clinical and R&D activities.
22. Provisions and other liabilities
Non-current liabilities
Provisions and other liabilities
Leases due greater than 1 year
Current liabilities
Provisions and other liabilities
Leases due less than 1 year
Total provisions and other liabilities
Refer to Note 25, Commitments and contingencies for further details on provisions.
31 December
2019
US$’000
31 December
2018
US$’000
3,910
1,053
4,963
23,047
571
23,618
28,581
–
–
–
–
–
–
–
Amryt Pharma plc
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FINANCIAL STATEMENTS
107
23. Related party transactions
Compensation of key management personnel of the Group
At 31 December 2019 the key management personnel of the Group were made up of two key personnel, the executive director,
Joe Wiley and the Chief Financial Officer and Chief Operating Officer, Rory Nealon. Rory Nealon was an executive director of the
Company in 2018 and resigned from this position on 24 September 2019.
Compensation for the year ended 31 December 2019 of these personnel is detailed below:
Short-term employee benefits
Performance related bonus
Post-employment benefits
Share-based compensation benefits
Total compensation
Shares purchased by Directors
31 December
2019
US$’000
31 December
2018
US$’000
1,049
1,286
86
510
2,931
803
420
76
175
1,474
The directors of the Company did not purchase any shares in the Company in 2018.
The Chairman, Ray Stafford, purchased 918,273 Amryt ordinary shares as part of the interim fundraise in August 2019. The
executive director, Joe Wiley purchased 7,999 shares on the open market in January 2020.
Agreements with principal shareholders
Long term loan
On 24 September 2019, the Group entered into a long term loan. Proceeds from the long term loan were used to refinance
Aegerion’s existing secured bridge loan in the principal amount of approximately US$50,000,000 (in principal) held by certain
funds managed by Athyrium Capital Management, LP and Highbridge Capital Management, LLC, respectively, and Amryt’s
existing €20,000,000 (in principal) secured loan facility with EIB. Further information on the terms of the long term loan is
included in Note 19, Long term loan, of these financial statements.
Convertible notes
On 24 September 2019, the Company issued US$125,000,000 aggregate principal amount of convertible notes due 2025 to
certain creditors of Aegerion. The convertible notes bear interest at a rate of 5% per annum, payable in cash semi-annually. The
convertible notes will mature approximately five and a half years after issuance, unless earlier repurchased, redeemed or
converted. Further information on the terms of the convertible notes is included in Note 20, Convertible notes, of these financial
statements.
Zero Cost Warrants
The Company agreed, for certain Aegerion creditors who wished to restrict their percentage share interest in Amryt’s issued share
capital, to issue to the relevant Aegerion creditor, as an alternative to Amryt ordinary shares, an equivalent number of new zero
cost warrants to subscribe for Amryt ordinary shares to be constituted on the terms of the zero cost warrant. The relevant
Aegerion creditors are entitled at any time to exercise the zero cost warrants, at which point in time the Company would issue to
that Aegerion creditor the relevant number of fully paid ordinary shares in return for the exercise of the zero cost warrants.
On 24 September 2019, certain of Aegerion’s creditors elected to receive 8,065,000 zero cost warrants to subscribe for Amryt
ordinary shares as consideration for the acquisition. Separately 5,911,722 warrants were issued to investors in connection with
the US$60,000,000 equity raise.
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 108
108
Notes to the Financial Statements continued
For the year ended 31 December 2019
On 14 November 2019, the Company repurchased a combined 4,864,656 ordinary shares from Highbridge Tactical Master Fund
L.P., Highbridge SCF Special Situations SPV, L.P. and Nineteen77 Global Multi Strategy Alpha Master Limited. In exchange for the
ordinary shares, these institutions were issued an equivalent number of zero cost warrants. Each warrant entitles the holder to
subscribe for one ordinary share at zero cost. These ordinary shares are now held as treasury shares. On 19 December 2019,
Highbridge MSF International Ltd exercised 1,645,105 zero cost warrants in exchange for 1,645,105 ordinary shares.
24. Fair value measurement and financial risk management
Categories of financial instruments
31 December
2019
US$’000
31 December
2018
US$’000
Group
Company
31 December
2019
US$’000
Financial assets (all at amortized cost):
Cash and cash equivalents 67,229
Trade receivables 28,607
Intercompany receivables –
Total financial assets 95,836
Financial liabilities:
At amortized cost
Trade payables and accrued expenses 75,800
Intercompany payables –
Lease liabilities 1,624
Other liabilities 19,457
Convertible notes 96,856
Long term loan 81,610
Contingent value rights 49,413
At fair value
Contingent consideration 53,048
Total financial liabilities 377,808
11,226
3,572
–
14,798
11,543
–
–
–
–
19,011
–
47,316
77,870
Net (281,972)
(63,072)
–
–
58,221
58,221
1,381
680
–
–
–
–
49,413
–
51,474
6,747
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:
(cid:129) Level 1: fair value evaluations using prices listed on active markets (not adjusted) of identical assets or liabilities.
(cid:129) 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.
(cid:129) Level 3: fair value evaluations using input data for the asset or liability that are not based on observable market data
(unobservable input data).
Amryt Pharma plc
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FINANCIAL STATEMENTS
109
The contingent consideration has been valued using Level 3. The contingent consideration comprises:
(cid:129) Contingent consideration relating to the acquisition of Amryt GmbH (see Note 6, Business combinations and asset
acquisitions) that was measured at US$53,048,000 as at 31 December 2019 (2018: US$47,316,000). The fair value comprises
royalty payments which was determined using probability weighted revenue forecasts and the fair value of the milestones
payments which was determined using probability adjusted present values. It also included a revision to the discount rate
used, and revenue and costs forecasts have been amended to reflect management’s current expectations.
Impact of key unobservable input data
(cid:129) An increase of 10% in estimated revenue forecasts would result in an increase to the fair value of US$3,710,000. A decrease
would have the opposite effect.
(cid:129) A 5% increase in the discount factor used would result in a decrease to the fair value of US$9,761,000. A decrease of 5%
would result in an increase to the fair value of US$13,312,000.
(cid:129) A six-month delay in the launch date for AP101 for EB would result in a decrease to the fair value of US$4,313,000.
Policies and Objectives
The Group’s operations expose it to some financial risks arising from its use of financial instruments, the most significant ones
being liquidity, market risk and credit risk. The Board of Directors is responsible for the Group and Company’s risk management
policies and whilst retaining responsibility for them it has delegated the authority for designing and operating processes that
ensure the effective implementation of the objectives and policies to the Group’s finance function. The main policies for
managing these risks are as follows:
Liquidity risk
The Group is not subject to any externally imposed capital requirement. Accordingly, the Group’s objectives are to safeguard the
ability to continue as a going concern in order to provide returns for shareholders and benefits to other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital. Working capital forecasts are prepared to ensure the Group
has sufficient funds to complete contracted work commitments.
The following table shows the maturity profile of trade payables of the Group:
31 December 2019 Less than 1
month
US$’000
Between 1
and 3 months
US$’000s
Between 3
and 6 months
US$’000
Trade payables 17,995
3,272
2,151
31 December 2018 Less than 1
month
US$’000
Between 1
and 3 months
US$’000
Between 3
and 6 months
US$’000
Trade payables 4,344
–
995
Total
US$’000
23,418
Total
US$’000
5,339
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 110
110
Notes to the Financial Statements continued
For the year ended 31 December 2019
The following table shows the maturity profile of trade payables of the Company:
31 December 2019 Less than 1
month
US$’000
Between 1
and 3 months
US$’000
Between 3
and 6 months
US$’000
Trade payables 789
–
–
The following table shows the maturity profile of lease liabilities and other liabilities of the Group:
31 December 2019 Less than 1 Between 1
year and 3 years
US$’000 US$’000
Between 3
and 5 years
US$’000
Greater than
5 years
US$’000
Lease liabilities 969 916
Other liabilities 15,722 3,928
16,691 4,844
143
–
143
20
–
20
Total
US$’000
789
Total
US$’000
2,048
19,650
21,698
The following table shows the undiscounted maturity profile of long-term loans of the Group, including principal and interest:
31 December 2019 Less than 1 Between 1
year and 3 years
US$’000 US$’000
Long term loan 5,585 12,296
Convertible notes 6,372 12,500
11,957 24,796
31 December 2018 Less than 1 Between 1
year and 3 years
US$’000 US$’000
Between 3
and 5 years
US$’000
124,427
12,500
136,927
Between 3
and 5 years
US$’000
Long term loan – –
19,358
Greater than
5 years
US$’000
–
128,125
128,125
Greater than
5 years
US$’000
–
Total
US$’000
142,308
159,497
301,805
Total
US$’000
19,358
The following table shows the undiscounted maturity profile of the contingent consideration and contingent value rights of the
Group:
31 December 2019 Less than 1 Between 1
year and 3 years
US$’000 US$’000
Between 3
and 5 years
US$’000
Greater than
5 years
US$’000
Total
US$’000
Contingent consideration and
contingent value rights – 99,559
27,998
–
127,557
31 December 2018 Less than 1 Between 1
year and 3 years
US$’000 US$’000
Between 3
and 5 years
US$’000
Greater than
5 years
US$’000
Total
US$’000
Contingent consideration and
contingent value rights – 14,875
28,607
–
43,482
Amryt Pharma plc
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 111
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
111
The following table shows the undiscounted maturity profile of the contingent consideration and contingent value rights of the
Company:
31 December 2019 Less than 1 Between 1
year and 3 years
US$’000 US$’000
Between 3
and 5 years
US$’000
Contingent value rights – 85,000
–
Greater than
5 years
US$’000
–
Total
US$’000
85,000
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
maximizing 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 years ended 31 December 2019 and 31 December 2018.
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 minimizes any unnecessary foreign exchange exposure. In
order to monitor the continuing effectiveness of this policy, the Board of Directors reviews the currency profile of cash balances
and managements accounts.
It is the Group’s policy to enter into long term borrowings at fixed rates of interest where possible to reduce the Group’s exposure
to cash flow interest rate risk. During the years ended 31 December 2019 and 31 December 2018, the long term borrowings of
the Group were subject to fixed rates of interest.
During the year 2019, the Group earned interest on its interest-bearing financial assets at rates between 0% and 2%. 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 US$71,000 (2018: US$64,000).
In addition to cash balances maintained in US$, the Group had balances in £ and € amongst others at year-end. A theoretical
10% adverse movement in the year end €:US$ exchange rate would lead to an increase in the Group loss before tax by
US$573,000 with a corresponding reduction in the Group loss before tax with a 10% favorable movement. A theoretical 10%
adverse movement in £:US$ exchange rates would lead to an increase in the Group loss before tax by US$438,000 with a
corresponding reduction in the Group loss before tax with a 10% favorable movement.
Credit risk
The Group 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 maintains cash and cash equivalents with various financial institutions. The Group 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’s bankers. For cash and cash equivalents, the Group only uses recognized banks with high credit ratings.
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 112
112
Notes to the Financial Statements continued
For the year ended 31 December 2019
Credit risk related to customers is managed through risk assessment procedures, through assessment of credit quality, taking into
account the financial position of the customer, past experience and other factors. The compliance with credit terms is monitored
on a regular basis by management. Credit terms may vary from one month to several months depending on the region and
customer. The major customers contribute to 58% of the total trade receivables of the group outstanding as at 31 December
2019 (2018: 92%).
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes
in credit risk, but instead recognizes 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.
25. Commitments and contingencies
Contingent consideration and contingent value rights
See Note 6, Business combinations and asset acquisitions, in relation to contingent consideration and contingent value rights as a
result of the acquisition of Amryt GmbH and Aegerion.
License Agreements
In connection with metreleptin, the Group has license agreements for the exclusive license and patents for the use of metreleptin
to develop, manufacture and commercialize a preparation containing metreleptin. Under the license agreements the Group is
required to make royalty payments on net sales on a country-by-country basis. During the year ended 31 December 2019,
following the Aegerion acquisition on 24 September 2019, the Group made aggregate royalty payments of US$5,104,000
(2018: US$nil).
The Group holds a license agreement for the exclusive, worldwide license of certain know-how and a range of patent rights
applicable to lomitapide. The Group is obligated to use commercially reasonable efforts to develop, commercialize, market and
sell at least one product covered by the licensed patent right, such as lomitapide. Additionally, the Group is required to make
royalty payments on net sales of products. During the year ended 31 December 2019, following the Aegerion acquisition on
24 September 2019, the Group recorded aggregate royalty expenses to third parties of US$803,000 (2018: US$nil).
Prior to the Aegerion acquisition, Amryt had the exclusive right to sell LOJUXTA across the licensed territories pursuant to a
license agreement with Aegerion. During the year ended 31 December 2019, Amryt recorded aggregate royalty expenses to
Aegerion of US$2,512,000 (2018: US$2,678,000).
The Group entered into a license agreement for the exclusive, worldwide license to the patent rights for a novel polymer-based
topical gene therapy delivery platform for potential use in the treatment of rare genetic diseases. The first product candidate
utilizing this platform, AP103, is currently in preclinical development for the treatment of recessive dystrophic EB, a subset of
severe EB. Under the license agreement Amryt is required to pay milestone payments and, upon the sale of product, royalty
payments on net sales of products.
The Group entered into a license agreement for the non-exclusive, worldwide license to the patent rights for the design and
development of gene coded therapy vectors and methods for making such vectors, in order for Amryt to develop and
commercialize its genetic encoded therapies relating to AP103. Under this agreement Amryt is required to make milestone
payments and royalty payments on net sales of products.
Legal matters
Prior to the acquisition of Aegerion by Amryt, Aegerion entered into settlement agreements with governmental entities including
the Department of Justice (‘‘DOJ’’) and the FDA in connection with JUXTAPID investigations. The settlement agreements require
Aegerion to pay specified fines and engage in regulatory compliance efforts. Subsequent to the acquisition, Aegerion made
US$3,387,000 of settlement payments, including interest, and the total amount of the settlements that remains due as a current
liability and a non-current liability is $15,547,000 and $3,910,000, respectively, as of 31 December 2019.
Amryt Pharma plc
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 113
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
113
Other legal matters
The Group recognizes a liability for legal contingencies when it believes that it is both probable that a liability has been incurred
and that it can reasonably estimate the amount of the loss. The Group reviews these accruals and adjusts them to reflect
ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information
is obtained and the Group’s views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings
change, changes in the Group’s liability accrual would be recorded in the period in which such determination is made.
At 31 December 2019 the Group had recognized liabilities of US$7,500,000 in relation to ongoing legal matters.
Lease commitments
The Group had no finance lease commitments in 2019 (2018: nil). In February 2020, the Group entered an 8-year term lease for
its U.S. operational office, located in Boston, Massachusetts. The lease will commence in April 2020, and the aggregate lease
payment amounts over the lease term is approximately US$2,400,000.
26. Investments in subsidiaries
Cost
At date of incorporation
Additions
At 31 December 2019
Impairment
At date of incorporation
Impairment charge
At 31 December 2019
Net book value
At date of incorporation
At 31 December 2019
Total
US$’000
–
280,962
280,962
–
–
–
–
280,962
Investments in subsidiary companies relates to the issue price of ordinary shares on the acquisition of Amryt Pharma Holdings
Limited (formerly named Amryt Pharma plc) on 24 September 2019. In addition to this, the Company invested in subsidiary
companies in a manner that it may settle some or all of the obligations of these subsidiary companies relaring to the share
options and convertible notes. Refer to Note 5, Share based payments, Note 6, Business combinations and asset acquisitions, and
Note 20, Convertible notes, for further details on the share options and the equity component of the convertible notes,
respectively.
The carrying value of the investment is directly linked to the subsidiaries of Amryt Pharma Holdings Limited including the
portfolio owned by Aegerion Pharmaceuticals Inc. and Amryt Pharmaceuticals DAC. The carrying value of these investments are
held at cost and will be reviewed at each reporting date for indicators of impairment. No impairment was identified by
management during the period.
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 114
114
Notes to the Financial Statements continued
For the year ended 31 December 2019
List of subsidiary companies:
Subsidiary Ownership Activities
Amryt Pharma Direct
Holdings Limited
Amryt Pharmaceuticals Indirect
DAC
Holding company
and management
services
Holding company
and management
services
Company
Number
5316808
Incorporation
UK
2019 % 2018 %
Holding Holding
100
100
566448
Ireland
100
100
Amryt Research Limited Indirect
Pharmaceuticals R&D
Amryt Endocrinology Indirect
Limited
Pharmaceuticals R&D
Amryt Lipidology Limited Indirect
Licensee for Lojuxta
Amryt Genetics Limited Indirect
Pharmaceutical R&D
571411
572984
593833
622577
Amryt Pharma (UK) Indirect
Limited
Management services
10463152
Amryt Pharma France Indirect
Dormant
824 418
156 00017
Amryt Pharma Italy SRL Indirect
Management services
2109476
Amryt Pharma Spain SL Indirect
Management services
B67130567
Ireland
Ireland
Ireland
Ireland
UK
France
Italy
Spain
Amryt GmbH Indirect
(previously Amryt AG)
Product Sales and
Pharmaceuticals R&D
HRB 711487
Germany
SomPharmaceuticals SA Indirect
Pharmaceuticals R&D
and management services
CHE-435.
396.568
Switzerland
SomTherapeutics, Corp Indirect
License holder
P14000071235
Aegerion Indirect
Pharmaceuticals, Inc.
Holding company and
management services
3922075
USA
USA
Aegerion Indirect
International Ltd.
Aegerion Securities Indirect
Corporation
Aegerion Indirect
Pharmaceuticals
Holdings, Inc.
Aegerion Indirect
Argentina S.R.L.
Aegerion Indirect
Pharmaceuticals
(Canada) Ltd.
Aegerion Colombia Indirect
S.A.S.
Management services
52048
Bermuda
Management services
464215084
USA
Management services
5213687
USA
Management services
901-709682-0
Argentina
Management services 85134 5132 RT0001
Canada
Management services
R048196625
Colombia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Not
applicable
Not
applicable
Not
applicable
Not
applicable
100
100
Not
applicable
Not
applicable
100
Not
applicable
Amryt Pharma plc
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 115
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
115
Subsidiary Ownership Activities
Company
Number
Incorporation
2019 % 2018 %
Holding Holding
Aegerion Indirect
Pharmaceuticals K.K.
Aegerion Brasil Indirect
Comercio E
Importacao De
Medicamentos LTDA
Aegerion Indirect
Pharmaceuticals Ltd.
Aegerion Indirect
Pharmaceuticals Limited
Aegerion Indirect
Pharmaceuticals, SAS
Aegerion Indirect
Pharmaceuticals S.r.l.
Aegerion Indirect
Pharmaceuticals GmbH
Aegerion İlaç Ticaret Indirect
Limited Şirketi
Aegerion Indirect
Pharmaceuticals SARL
Aegerion Indirect
Pharmaceuticals B.V.
Aegerion Indirect
Pharmaceuticals
Spain, S.L.
Management services
0104-01-107816
Japan
Management services
3522602510-1
Brazil
Management services
46134
Bermuda
Management services
8114919
UK
Management services 534 195 59900012
France
Management services
1166250
Italy
Management services
HRB 95895
Germany
Management services
907292
Turkey
Management services CHE-497.494.599
Switzerland
Management services
69859647
Netherlands
Management services
B88019161
Spain
100
100
Not
applicable
Not
applicable
100
100
100
100
100
100
100
100
100
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 116
116
Notes to the Financial Statements continued
For the year ended 31 December 2019
List of registered offices:
Company
Amryt Pharma Holdings Limited
Amryt Pharmaceuticals DAC
Amryt Research Limited
Amryt Endocrinology Limited
Amryt Lipidology Limited
Amryt Genetics Limited
Amryt Pharma (UK) Limited
Amryt Pharma France
Amryt Pharma Italy SRL
Amryt Spain SL
Registered Office Address
Dept 920a 196 High Road, Wood Green, London,
United Kingdom, N22 8HH
90 Harcourt Street, Dublin 2
90 Harcourt Street, Dublin 2
90 Harcourt Street, Dublin 2
90 Harcourt Street, Dublin 2
90 Harcourt Street, Dublin 2
3rd Floor 1 Ashley Road, Altrincham, Cheshire,
United Kingdom, WA14 2DT
17 Avenue George V, 75008 Paris
Milano (MI)-Via Dell'Annunciata 23/4
Barcelona, calle Diputacio, number 260
Amryt GmbH (previously Amryt AG)
Streiflingsweg 11, 75223 Niefern-Öschelbronn
SomPharmaceuticals SA
SomTherapeutics, Corp
Aegerion Pharmaceuticals Inc.
Aegerion International Ltd.
Bahnofstrasse 21, 6300 Zug
3795 Coventry Lane, Boca Raton, FL 33496
245 First Street, Riverview II, 18th Floor, Cambridge, MA 02142
Clarendon House, 2 Church Street, Hamilton, HM11
Aegerion Securities Corporation
245 First Street, Riverview II, 18th Floor, Cambridge, MA 02142
Aegerion Pharmaceuticals Holdings, Inc.
245 First Street, Riverview II, 18th Floor, Cambridge, MA 02142
Aegerion Argentina S.R.L.
Avda. Camacua 421, Suite 102, Olivos, Vicente Lopez, 1636
Aegerion Pharmaceuticals Canada (Ltd).
5300 Commerce Court West, 199 Bay Street, Toronto, ON M5L 1B9
Aegerion Colombia S.A.S.
CR 12 89 33 P 5, Bogota DC, Bogota 110111
Aegerion Pharmaceuticals K.K.
12F, Ark Mori Building, 1-12-32 Akasaka, Minato-ku, Tokyo
Aegerion Brazil Comercio E Importacao
De Medicamentos. LTDA
Rua Joseefina, 200-Guarulhos City, Sao Paulo
Aegerion Pharmaceuticals Ltd.
Clarendon House, 2 Church Street, Hamilton, HM11
Aegerion Pharmaceuticals Limited
Royal Albert House, Sheet Street, Windsor, UK SL4 1BE
Amryt Pharmaceuticals, SAS
235, Avenue Le Jour se Leve, Boulogne-Billancourt, 92 100
Aegerion Pharmaceuticals, S.r.l.
Viale Abruzzi n. 94, Milano, 20131
Aegerion Pharmaceuticals GmbH
Maximilianstrasse 35A, Munich, Germany, 80539
Aegerion ILac Ticaret Limited Sirketi
Orjin Maslak, Eski Buyukdere Caddesi No: 27 K:11, Maslak, Istanbul, 34485
Aegerion Pharmaceuticals SARL
Aegerion Pharmaceuticals B.V.
Rue de Rive 5, Nyon, Switzerland 1260
Atrium Building, 8th Floor, Strawinskylaan 3127, 8e verdieping, Amsterdam
Aegerion Pharmaceuticals Spain, S.L.
Calle Josep Coroleu, 83 2-2, Vilanova I la Geltru, Barcelona 08800
27. 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 period was US$1,232,000.
Amryt Pharma plc
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
117
28. Events after the reporting period
SEC Filing
On 18 February 2020, Amryt confidentially submitted a draft registration statement on Form F-1 to the U.S. Securities and
Exchange Commission (‘‘SEC’’) relating to the American Depositary Shares (‘‘ADSs’’), each representing five Amryt ordinary
shares, proposed listing of the ADSs on the Nasdaq Global Select Market (‘‘Nasdaq’’).
COVID-19
Since a novel strain of coronavirus (SARS-CoV-2) causing a disease referred to as COVID-19 was first reported in December 2019,
the disease has spread across the world, including countries in which we have patients and in which we have planned or active
clinical trial sites. The outbreak and government measures taken in response have had a significant impact, both direct and
indirect, on all businesses and commerce as supply chains have been disrupted, facilities and production have been suspended
and demand for certain goods and services has spiked while demand for other goods and services has fallen. As COVID-19
continues to spread around the globe, Amryt may experience disruptions that could affect its business, preclinical studies and
clinical trials.
In response to the spread of COVID-19, Amryt has closed its executive offices with its administrative employees continuing their
work outside of our offices and limited the number of staff in Amryt’s manufacturing facility in Germany. Amryt provides
therapeutic products to HoFH and lipodystrophy patients globally on a recurring basis. Once lomitapide (for the treatment of
HoFH) or metreleptin (for the treatment of lipodystrophy) is prescribed by physicians, patients are typically on treatment over a
long period of time with repeat prescriptions for each patient.
Other
In May 2020, the Group entered into a 20-year term lease for its European operational office, located in Dublin, Ireland. The
lease will commence in 2020 and contains an option to terminate after 12 years.
Annual Report for the year ended 31 December 2019
259162 5 Amyrt 069pp-117pp.qxp 26/06/2020 16:10 Page 118
118
Company Information
Registered Office
Dept 920A
196 High Road
Wood Green
London N22 8HH
United Kingdom
Company Number
12107859
Directors
Ray Stafford (Non-Executive Chairman)
Dr. Joe A. Wiley (Chief Executive Officer)
George P. Hampton Jr. (Non-Executive Director)
Dr. Alain H. Munoz (Non-Executive Director)
Donald K. Stern (Non-Executive Director)
Dr. Patrick V.J.J. Vink (Non-Executive Director)
Stephen T. Wills (Non-Executive Director)
Company Secretary
Rory Nealon
Company Website
www.amrytpharma.com
Amryt Pharma plc
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
259162 0 Amyrt Cover Spread.qxp 26/06/2020 16:35 Page 118
Amryt is a global, commercial-stage
biopharmaceutical company dedicated to
developing and commercializing novel
therapeutics to treat patients suffering from
serious and life-threatening rare disease
Amryt Pharma plc
Perivan 259162
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Amryt Pharma plc
Annual Report 2019
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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