Amryt Pharma plc
Annual Report 2020
Contact:
45 Mespil Road, Dublin
D04 W2F1, Ireland
+353 1 518 0200
IR@amrytpharma.com
https://www.amrytpharma.com/
https://www.linkedin.com/company/amryt-pharma-plc/
www.amrytpharma.com
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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) Our Vision & Strategy 13
(cid:129) Our Strengths 14
(cid:129) Financial Review 15
(cid:129) Key Performance Indicators 21
(cid:129) Risks & Uncertainties 22
CORPORATE GOVERNANCE
(cid:129) Board of Directors 36
(cid:129) Chairman’s Introduction to Governance 40
(cid:129) Chairman’s Governance Overview 42
(cid:129) Directors’ Remuneration Report 47
(cid:129) Directors’ Remuneration Policy 48
(cid:129) Annual Remuneration Report 53
(cid:129) Directors’ Report 60
FINANCIAL STATEMENTS
(cid:129) Independent Auditor’s Report 65
(cid:129) Consolidated Statement of Comprehensive Loss 75
(cid:129) Consolidated Statement of Financial Position 76
(cid:129) Consolidated Statement of Cash Flows 77
(cid:129) Consolidated Statement of Changes in Equity 78
(cid:129) Company Statement of Comprehensive Loss 79
(cid:129) Company Statement of Financial Position 80
(cid:129) Company Statement of Cash Flows 81
(cid:129) Company Statement of Changes in Equity 82
(cid:129) Notes to the Financial Statements 83
(cid:129) Company Information 137
Annual Report for the 12 months ended 31 December 2020
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STRATEGIC REPORT:
General Information
We are pleased to present the annual report and financial statements of Amryt Pharma plc for the 12 months ended
31 December 2020. 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’s American Depositary Shares
(“ADSs”) have been listed on the NASDAQ Global Select Market (“NASDAQ”) since 8 July 2020 and its shares are also quoted
on the Alternative Investment Market (“AIM”), a sub-market of the London Stock Exchange (ticker: AMYT). In September 2020,
Amryt cancelled the admission of the Company’s Ordinary Shares to trading on the Euronext Growth Market in Dublin. The last
day of trading in Ordinary Shares on the Euronext Growth Market was 8 September 2020.
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. Amryt Pharma Holdings Limited changed
its name to Amryt Pharma plc.
The consolidated accounts comprise the financial statements for the Group for the 12 months ended 31 December 2020 and
2019. The 2019 financial statements incorporate the results of Aegerion Pharmaceuticals, Inc. (“Aegerion”) from the date of
acquisition, 24 September 2019 to 31 December 2019. The 2019 financial statements for the Company relate to the period from
the date of incorporation in July 2019 to 31 December 2019, these are not statutory accounts for the Company which have been
prepared separately for the period ended 31 July 2020.
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 gave Amryt an expanded commercial footprint to market two US and EU approved products, lomitapide
(Juxtapid® (US) / Lojuxta® (EU)) and metreleptin (Myalept® (US) / Myalepta® (EU)).
The functional currency of the Group and Company is US dollars.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
03
STRATEGIC REPORT:
Our Business
Amryt is a global commercial-stage biopharmaceutical company focused on acquiring, developing and commercialising novel
treatments to help improve the lives of patients with rare and orphan diseases. Amryt comprises a strong and growing portfolio
of commercial and development assets. Amryt’s commercial business comprises two orphan disease products – metreleptin
(Myalept®/ Myalepta®) and lomitapide (Juxtapid®/ Lojuxta®).
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 generalised lipodystrophy (“GL”)
and in the EU (under the trade name Myalepta®) as an adjunct to diet 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.
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, Colombia,
Argentina and Japan (under the trade name Juxtapid®) and in the EU, Israel and Brazil (under the trade name Lojuxta®).
Amryt’s lead development candidate, Oleogel-S10 (Filsuvez®) is a potential treatment for the cutaneous manifestations of
Junctional and Dystrophic (“JEB” and “DEB”) Epidermolysis Bullosa, a rare and distressing genetic skin disorder affecting young
children and adults for which there is currently no approved treatment. In September 2020, Amryt received positive results from
its EASE pivotal Phase 3 trial in EB. EASE was the largest ever global Phase 3 study conducted in patients with EB and is the
first Phase 3 trial ever to demonstrate positive results in this devastating condition. Amryt is currently progressing regulatory
submissions for Oleogel-S10 with the relevant authorities in both the US and Europe and preparing for launch, if approved.
Filsuvez® has been selected as the brand name for Oleogel-S10. The product does not currently have regulatory approval
to treat EB.
Amryt’s pre-clinical gene therapy platform, AP103, offers a potential treatment for patients with DEB, 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 delivering effective treatments to patients in need. For
more information on Amryt, including products, please visit www.amrytpharma.com.
Annual Report for the 12 months ended 31 December 2020
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STRATEGIC REPORT:
Chairman & Chief Executive’s Statement and
Business Review
Since Amryt was formed in 2015, we have undergone a transformational period of growth characterised by consistent execution
as we have successfully grown both our commercial products and development pipeline assets. Having acquired Aegerion in
September 2019, we are pleased to report that the integration was successfully completed ahead of schedule, with the
combined business turning EBITDA positive and cash generative in Q1 2020.
2020 was another year of strong performance and growth for our business. In financial terms, our revenues were $182.6M for
the 12 months ended 31 December 2020. Both our commercial products (metreleptin and lomitapide) delivered significant
market expansion in existing and new territories and this positive momentum was complemented by some very significant
progress for our lead development candidate, Oleogel-S10.
Our pivotal global Phase 3 study (“EASE”) investigating Oleogel-S10 in EB was the largest ever Phase 3 study in EB and in
September 2020, became the first ever study to demonstrate positive results in this devastating condition. We are actively
progressing our submissions to the regulatory authorities in the US and Europe and are preparing for launch of Oleogel-S10,
if approved. We have the management team, systems and infrastructure in place to continue to grow our existing commercial
products and we will be able to leverage these capabilities to launch Oleogel-S10, if approved.
COVID-19
Despite the challenges presented by COVID-19, our team and our business model proved resilient and capable of overcoming
these challenges. Our core focus throughout the period has been to ensure the safety and welfare of our people and all the
stakeholders we engage with. We are very encouraged and humbled by the collective efforts of all our team and partners, that
have helped us not only operate, but succeed, through such an exceptional period for everyone. To date, the operational and
financial impact of COVID-19 on our business has not been significant and we are encouraged by the vaccine program roll-out
across our markets and are optimistic regarding the positive impact this will have on many of our stakeholders and partners in
the coming year.
Strategy Update
During 2020, we continued to execute on our strategy to acquire, develop and commercialise novel treatments for rare and
orphan diseases. Amryt has a global portfolio of commercial and development-stage rare disease assets, including two high-value
commercial assets and multiple development opportunities in complementary global markets. We have a demonstrable track
record of execution, integration, delivering synergies and driving growth from acquired businesses and our global infrastructure is
primed and ready to acquire more assets. We believe we have the expertise and capacity to help acquired assets reach their full
potential within the Amryt framework. We are encouraged by our business development pipeline and we believe we will
continue to find and add complementary products to Amryt’s pipeline that will enable us to grow revenues, EBITDA and cash
generation into the future.
Operational Performance
Our two commercial products, metreleptin and lomitapide, performed strongly in 2020 and delivered growth across a host of
metrics including revenue and EBITDA growth, cash generation and market expansion. During the year, we continued to advance
national reimbursement discussions for our commercial products in key markets. In December 2020, we received Ministry of
Health reimbursement approval for lomitapide in Saudi Arabia and also in December 2020, we received Marketing Authorisation
Approval for lomitapide in Brazil.
In October 2020, we signed a distribution agreement for lomitapide with Swixx BioPharma AG (“Swixx”) across seventeen
jurisdictions in CEE. This follows on from Amryt’s appointment in June 2020 of Swixx as exclusive distributor of metreleptin
across the CEE territories.
We have also made significant progress evaluating additional potential development opportunities for both our commercial
products in 2020, in particular in Familial Chylomicronemia Syndrome (“FCS”) for lomitapide and in a PL indication for
metreleptin in the US.
Amryt Pharma plc
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
05
Oleogel-S10
A key milestone in Amryt’s history was reached in September 2020, when we received positive results from our EASE pivotal
Phase 3 trial in EB. EASE was the largest ever global Phase 3 study conducted in patients with EB and is the first Phase 3 trial ever
to demonstrate positive results in this devastating condition. Below is a summary of the trial results:
(cid:129) The primary endpoint of the trial was achieved and demonstrated a statistically significant acceleration of target wound
healing by day 45 in patients treated with Oleogel-S10 versus control gel (p-value = 0.013) representing a 44% increase in
target wound closure with Oleogel-S10 as compared to the control gel.
(cid:129) The Recessive Dystrophic EB (“RDEB”) sub-group experienced a greater benefit when treated with Oleogel-S10 than the
overall population (nominal p-value = 0.008) representing a 72% increase in target wound closure with Oleogel-S10 versus
the control gel. Favourable trends were evident among secondary endpoints including change in procedural pain, total body
wound burden based on EBDASI score and affected body surface area percentage. Oleogel-S10 had an acceptable safety
profile and was well tolerated when compared with the control gel.
(cid:129) EASE trial data were presented as a late-breaking abstract at the 29th EADV (European Association of Dermatology and
Venereology) Virtual Congress 2020.
We are currently progressing regulatory submissions for Oleogel-S10 with the relevant authorities in both the US and Europe and
are preparing for launch, if approved.
AP103
During 2020, we also progressed our pre-clinical gene therapy (“AP103”) which offers a potential treatment for patients with
DEB and this novel gene therapy delivery platform is also potentially relevant to other genetic disorders. AP103 is currently in
preclinical development. We intend to initiate clinical development in the second half of 2022. In September 2020, the European
Medicines Agency (“EMA”) Committee for Orphan Medicinal Products (“COMP”) adopted a positive opinion for orphan
designation for the use of AP103 in EB. In December 2020, the US Food and Drug Administration (“FDA”) granted Orphan Drug
Designation for AP103 in the treatment of DEB.
NASDAQ Listing
Amryt listed on NASDAQ on 8 July 2020. The NASDAQ listing has given Amryt the opportunity to target a wider investor
audience and increase our analyst coverage in a core market for Amryt. With nearly 75% of our shareholders based in North
America, listing on NASDAQ is an important part of our shareholder engagement and development plans. Since listing on
NASDAQ, there has been a marked increase in US based institutional investor interest in Amryt and this led to a number of new
institutional shareholders joining our register. We also had a number of US based investment banks initiate research coverage of
Amryt including SVB Leerink, Canaccord Genuity and Cantor Fitzgerald. This in turn has led to the Amryt investment case
reaching a wider investor audience in the US. We believe our NASDAQ listing will significantly assist our efforts to drive value for
all our stakeholders in the future.
Financial Position
Cash generated from operating activities in 2020 was $26.9M. In December 2020, Amryt raised gross proceeds of $40M by way
of a private placement with a mix of new and existing institutional investors. Amryt’s year-end unrestricted cash balance of
$118.6M compares to $65.2M at 31 December 2019. This represents the strong performance of our business during 2020.
Amryt’s debt facilities comprise a term loan of $87.3M and a 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.
Annual Report for the 12 months ended 31 December 2020
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STRATEGIC REPORT:
Chairman & Chief Executive’s Statement and
Business Review continued
Corporate Governance
Amryt has a clear corporate governance framework and our goal is to operate with integrity and excellence in all that we do.
This framework and a summary of the work of the board is contained in the Corporate Governance section of this report on
pages 36 to 64. 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 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 for the 12 months ended 31 December 2020 as
well as on our website – www.amrytpharma.com.
Our People
We continued to augment the senior management team through 2020 to ensure we are adequately resourced as we grow our
business both organically and through acquisition and to ensure we have all the resources in place for the launch of Oleogel-S10,
if approved. We now have in place an exceptionally strong leadership team and also have the necessary commercial, regulatory
and medical infrastructure in place across the US, EMEA and LATAM to execute our growth plans.
All of our success to date has been achieved through the collective effort of our team across the US, EMEA and LATAM. We
would like to, once again, take this opportunity to sincerely thank the wonderful Amryt team for all of their dedication, support
and efforts during 2020.
Section 172 Statement
From the perspective of the Directors, the matters for consideration under Section 172 of the Companies Act (“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;
(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.
Outlook
Since 2015, Amryt has pursued a strategy and created a business model that we believe is flexible and adaptable over time.
We are very positive about the growth prospects for lomitapide and metreleptin and during 2020 have continued to focus on
ensuring we can expand the reach of both products by market and geography. Our confidence in our development pipeline is
significantly bolstered by the positive results from the EASE trial and we are preparing for the launch of Oleogel-S10, if approved.
We also continue to pursue and are encouraged by other potential opportunities within our development pipeline. The strong
momentum in our business gives us confidence as we continue to seek opportunities where Amryt’s skills and infrastructure can
be best deployed to bring innovative therapies to patients in need.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
07
Post Balance Sheet Events
Proposed Acquisition of Chiasma, Inc
On 5 May 2021, we announced that we have signed a definitive agreement to acquire Chiasma, Inc. (NASDAQ: CHMA) in an
all-stock combination. The combined company will be a global leader in rare and orphan diseases with three on-market
commercial products, a global commercial and operational footprint and a significant development pipeline of therapies with the
financial flexibility to execute its growth plans. The transaction is expected to pave a path to a combined potential $1BN peak
revenue for Amryt and is expected to deliver estimated annual cost synergies of approximately $50M and be revenue and EBITDA
accretive and cash generative in the first full calendar year of combined operations and substantially accretive thereafter. This
transaction brings together two teams that have a strong track record of execution and passion for developing therapies that can
help improve the lives of patients in need.
The addition of Chiasma’s Mycapssa®, which was recently launched in the US, to Amryt’s commercial product portfolio
represents a strong strategic, operational and commercial fit given the significant call-point overlap that exists across our
portfolio. We believe there is significant revenue growth opportunities for Mycapssa® in acromegaly and are also very excited to
further develop the potential for Mycapssa® in patients with carcinoid symptoms stemming from neuroendocrine tumors
(“NET”), where we believe the commercial opportunity is significant. With the addition of NET, our combined pipeline will have
four product candidates in late clinical stages as well as our exciting pre-clinical gene therapy asset, AP103 in DEB. Chiasma
employs a Transient Permeability Enhancer (“TPE”) technology platform which seeks to develop oral medications that are
currently only available as injections and we are excited by the potential to leverage TPE for other products.
With this transaction, we believe that we can continue the strong growth trajectory already underway at Amryt and have the
financial strength to execute our future growth plans.
We will be providing you with further updates on Amryt’s progress throughout 2021.
Oleogel-S10 Update
On 2 June 2021, the FDA accepted for filing Amryt’s New Drug Application (“NDA”) for Oleogel-S10 for the treatment of EB.
On 3 June 2021, the FDA granted Priority Review for Amryt’s NDA for Oleogel-S10. Priority Review is granted by the FDA to
applications for medicines that, if approved, would provide significant improvements in the effectiveness or safety of the
treatment, diagnosis, or prevention of serious conditions when compared to standard applications. In general, the FDA’s Priority
Review designation accelerates the review time from ten months to a goal of six months from the date of acceptance of the
filing. The FDA has set a Prescription Drug User Fee Act (“PDUFA”) target action date for the Oleogel-S10 NDA of
November 30, 2021. Oleogel-S10 previously received Fast Track Designation and Rare Pediatric Disease Designation from the
FDA. If the NDA for Oleogel-S10 is approved, the Company will apply for a priority review voucher.
Lastly, we would like to take this opportunity to thank you, our shareholders, for your support during the past 12 months and we
look forward to hopefully seeing you in person again as soon as possible.
Ray Stafford
Non-Executive Chairman
23 June 2021
Dr Joe Wiley
Chief Executive Officer
Annual Report for the 12 months ended 31 December 2020
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STRATEGIC REPORT:
Performance Highlights
2020 was an exceptional year of performance and record growth for Amryt. Our two commercial products, metreleptin and
lomitapide continue to deliver growth across a host of metrics including revenue and EBITDA growth, cash generation and
market expansion. Our EASE study investigating Oleogel-S10 in EB was the first ever Phase 3 study to demonstrate positive
results in this devastating disease and we are currently progressing regulatory submissions with the relevant authorities in both
the US and Europe and preparing for launch, if approved. 2020 was a challenging year for us all as a result of the global
pandemic but our business model proved resilient and capable of overcoming the challenges the pandemic presented.
With a strong focus on continuous product development, revenue expansion and cash generation, we believe 2021 will be a year
of continued performance and further growth for the Group.
Some financial and operational highlights of the Group’s performance in 2020 and 2021 to date are as follows:
2020 Financial Highlights
The 2020 audited financial results reflect the first full year of the combined Amryt and Aegerion business. 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 $58.1M 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 in 2019.
(cid:129) 2020 Revenues increased by 18.5% for the year ended 31 December 2020 to $182.6M (2019: $154.1M1)
(cid:129) Metreleptin generated revenues of $106.9M (2019: $85.4M1) representing an increase of 25.2%
(cid:129) Lomitapide generated revenues of $74.7M (2019: $68.0M1), representing a growth rate of 10.0%
(cid:129) The significant growth in metreleptin revenues was driven by the ongoing rollout of MYALEPTA® in Europe following the
approval of the product by the EMA in Q3 2018
1 Unaudited combined revenues for 2019 represent the combined unaudited revenues of the Company assuming the acquisition by Amryt of Aegerion happened
on 1 January 2019. It also (i) excludes revenues from sales to end-users in Japan following the out-licencing of Juxtapid to Recordati in February 2019, (ii) excludes
up-front payments from Recordati in 2019, and (iii) includes a 22.5% royalty on Japanese sales of Juxtapid from 1 January 2019 as if the Recordati agreement was
in place from that date.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
09
Non-GAAP adjusted 2020 results
2019
US$ (Million) (restated) *
Revenue 58.1
Gross profit 19.4
R&D expenses (15.8)
SG&A expenses (35.5)
Restructuring & acquisition costs (13.1)
Share based compensation expenses (0.8)
Impairment charge (4.7)
Operating (loss) / profit before finance expense (50.5)
Unrestricted cash & cash equiv. 65.2
* see Note 27 of the financial statements
Non-cash
Items3
2020
Non-GAAP
Adjusted2
–
70.6
–
1.5
–
4.7
–
76.8
–
182.6
134.2
(27.6)
(75.2)
(1.0)
–
–
30.4
118.6
2020
182.6
63.6
(27.6)
(76.7)
(1.0)
(4.7)
–
(46.4)
118.6
The 2020 operating loss of $46.4M includes the impact of non-cash items including amortisation, depreciation and the impact of
share-based compensation expenses. Adjusting for these non-cash items, the Company delivered $30.4M of EBITDA2 in FY 2020.
2
EBITDA is earnings before interest, tax, depreciation, amortisation and share based compensation expenses. To supplement Amryt’s financial results presented in
accordance with IFRS generally accepted accounting principles, the Company uses EBITDA as a key measure of company performance as the Company believes
that this measure is most reflective of the operational profitability or loss of the Company and provides management and investors with useful supplementary
information which can enhance their ability to evaluate the operating performance of the business. EBITDA, as measured by the Company, is not meant to be
considered in isolation or as a substitute to operating profit / loss attributable to Amryt and should be read in conjunction with the Company’s condensed
consolidated financial statements prepared in accordance with IFRS.
3 Non-cash items include amortisation of the acquired metreleptin and lomitapide intangible assets ($43.0M), amortisation of the inventory fair value step-up that
was acquired at the acquisition date ($27.6M), depreciation and amortisation ($1.5M) and share based compensation expenses ($4.7M).
2020 Business Highlights
(cid:129) In September 2020, Amryt announced positive results from its pivotal Phase 3 EASE trial in EB. EASE is the largest Phase 3 trial
ever conducted in EB.
The primary endpoint of the trial was achieved and demonstrated a statistically significant acceleration of target wound
healing by day 45 in patients treated with Oleogel-S10 versus control gel (p-value = 0.013) representing a 44% increase in
target wound closure with Oleogel-S10 versus the control gel.
The RDEB sub-group experienced a greater benefit when treated with Oleogel-S10 than the overall population (nominal
p-value = 0.008) representing a 72% increase in target wound closure with Oleogel-S10 vs the control gel. Favourable trends
were evident among secondary endpoints including change in procedural pain, total body wound burden based on EBDASI
score and affected body surface area percentage. Oleogel-S10 had an acceptable safety profile and was well tolerated when
compared with control gel.
EASE trial data were presented as a late-breaking abstract at the 29th EADV (European Association of Dermatology and
Venereology) Virtual Congress 2020
(cid:129) Amryt listed on the NASDAQ in July 2020.
(cid:129) In September 2020, the EMA COMP adopted a positive opinion for orphan designation for the use of AP103 in EB. In
December 2020, the FDA granted Orphan Drug Designation for AP103 in the treatment of DEB.
(cid:129) In October 2020, Amryt signed a distribution agreement for lomitapide with Swixx across 17 jurisdictions in CEE. This follows
on from Amryt’s appointment in June 2020 of Swixx as exclusive distributor of metreleptin across the CEE territories.
(cid:129) In December 2020, Amryt received Marketing Authorisation Approval for lomitapide in Brazil.
(cid:129) In December 2020, Amryt received Ministry of Health reimbursement approval for lomitapide in Saudi Arabia.
Annual Report for the 12 months ended 31 December 2020
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STRATEGIC REPORT:
Performance Highlights continued
Post-Period End Highlights
(cid:129) Announced proposed acquisition of Chiasma, Inc. (NASDAQ: CHMA). The transaction has been approved and recommended
by the Boards of both Amryt and Chiasma.
(cid:129) Q1 2021 revenues (unaudited) of $48.4M representing an 8.7% increase on Q1 2020 revenues of $44.6 million. EBITDA
(unaudited) of $9.9M was delivered in Q1 2021. 16.5% YoY underlying revenue growth excluding the impact of a LATAM
periodic order in Q1 2020.
(cid:129) Submitted a New Drug Application to the FDA for Oleogel S-10 and on 3 June 2021, the FDA granted Priority Review for
Amryt’s NDA with a PDUFA date of 30 November 2021.
(cid:129) Marketing Authorisation Application accepted by the EMA for Oleogel S-10.
(cid:129) Reimbursement approval from for metreleptin in England, Wales and France.
(cid:129) Positive feedback from the FDA on the path forward for a metreleptin indication in PL – Phase 3 planned for Q4 2021.
(cid:129) Positive results reported from an investigator sponsored study of lomitapide in FCS.
(cid:129) Multi-regional distribution and product agreements signed with Medison Pharma in Canada and Israel.
(cid:129) Legacy US Department of Justice (“DoJ”) fines levied on Aegerion were fully discharged in Q1 2021.
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 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 minimised 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 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 but we continue through remote
and virtual physician access as a means to identify new patients that may be suitable for treatment with our products.
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 US, 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.
Amryt Pharma plc
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STRATEGIC REPORT:
Our Products and Development Pipeline
Commercial Assets
Metreleptin
Metreleptin is a recombinant analog of human leptin. It is marketed as Myalept® in the US as an adjunct to diet as a
replacement therapy to treat the complications of leptin deficiency in patients with congenital or acquired GL. It is marketed as
Myalepta® in the EU as an adjunct to diet as a replacement therapy to treat the complications of leptin deficiency in adults and
children two years of age and above with congenital or acquired GL. Myalepta® is also approved in the EU for adults and
children 12 years of age and above with familial or acquired PL for whom standard treatments have failed to achieve adequate
metabolic control with congenital or acquired GL and also congenital or acquired PL. Leptin, which is deficient in patients with
GL, is the key hormone responsible for regulating appetite and also has an important regulatory effect on energy expenditure.
Leptin is a naturally occurring hormone derived from fat cells and an important regulator of energy, fat and glucose metabolism,
reproductive capacity and other physiological functions. The predominant cause of metabolic complications in GL is excess
triglyceride accumulation in the liver and skeletal muscle due to the inability to store triglycerides in fat cells. As a result of the
deficiency of leptin associated with GL, patients experience significant fatigue as well as hyperphagia, or unregulated appetite.
The loss of fat tissue caused by this disease often leads to severe metabolic abnormalities that contribute to increased morbidity
and mortality.
Lomitapide
Lomitapide, which is marketed as Juxtapid® in the US and as Lojuxta® in EMEA, is an oral, once-a-day treatment for adult
patients with HoFH, as an adjunct to a low-fat diet and other lipid-lowering medicinal products, with or without LDL apheresis.
HoFH is a rare genetic disease, which impairs the body’s ability to remove LDL cholesterol, or “bad” cholesterol, typically leading
to abnormally high LDL cholesterol levels in the blood. HoFH patients are at a high risk of experiencing life-threatening
cardiovascular events at an early age as a result of extremely elevated cholesterol levels in the blood and have a substantially
reduced life expectancy relative to unaffected individuals. According to a 2013 European Health Journal article, the prevalence of
HoFH is one person per million. Aggressive treatment, including dietary modifications plus combination therapy with currently
approved lipid lowering drugs at maximum tolerated doses, often fails to reduce LDL cholesterol levels to their recommended
targets in these patients. Lomitapide is a small molecule MTP inhibitor with the potential to provide significant reductions in LDL
cholesterol levels in this high-risk patient population.
Development Pipeline
Oleogel S-10
Our lead development candidate, Oleogel-S10, 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 characterised by
extreme skin fragility that blisters and tears from minor friction or trauma. Patients with severe forms of EB, including DEB and
JEB, suffer from severe and chronic blistering, ulceration, scarring, mutilating scarring of the hands and feet, joint contractures,
strictures of the esophagus and mucous membranes, a high risk of developing aggressive squamous cell carcinomas, infections
and risk of premature death. Market research indicates an incidence among live births of one in 20,000, and, when accounting
for life expectancy per EB sub-type, there are an estimated 30 patients per million (total EB prevalence in the general population),
of which approximately 31% are DEB & JEB patients.
In September 2020, Amryt announced positive results from its pivotal Phase 3 EASE trial in EB. EASE is the largest Phase 3 trial
ever conducted in EB.
The primary endpoint of the trial was achieved and demonstrated a statistically significant acceleration of target wound healing
by day 45 in patients treated with Oleogel-S10 versus control gel (p-value = 0.013) representing a 44% increase in target wound
closure with Oleogel-S10 versus the control gel.
Annual Report for the 12 months ended 31 December 2020
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STRATEGIC REPORT:
Our Products and Development Pipeline continued
The RDEB sub-group experienced a greater benefit when treated with Oleogel-S10 than the overall population (nominal p-value
= 0.008) representing a 72% increase in target wound closure with Oleogel-S10 vs the control gel. Favourable trends were
evident among secondary endpoints including change in procedural pain, total body wound burden based on EBDASI score and
affected body surface area percentage. Oleogel-S10 had an acceptable safety profile and was well tolerated when compared
with control gel.
Oleogel-S10 has been granted Pediatric Rare Disease Designation by the FDA. If the NDA is granted a priority review and
subsequently results in an approval from the FDA, we are eligible to apply for a Priority Review Voucher (“PRV”) that we can use,
sell or transfer. Amryt is currently progressing regulatory submissions for Oleogel-S10 with the relevant authorities in both the
US and Europe, alongside preparing for launch, if approved.
Additional Opportunity for Oleogel-S10
We are also supporting an investigator-led Phase 2 study of Oleogel-S10 for the treatment of severe radiation-induced dermatitis.
This trial is expected to commence in July 2021, with data expected in 2022.
AP103 for the treatment of DEB
In March 2018, we acquired the rights to a novel polymer-based topical gene therapy delivery platform for potential use in the
treatment of rare genetic diseases. The technology involves the use of highly branched poly β-amino ester (“HPAE”) polymers as
the topical delivery vehicle for gene therapy. Our first product candidate utilising this platform, AP103, is currently in preclinical
development for the treatment of patients with DEB. Patients with DEB have a defect in the COL7A1 gene resulting in the
inability to produce collagen VII, which plays an important role in anchoring the dermal and epidermal layers of the skin. AP103
is the combination of this polymer technology and the COL7A1 gene. If successful, we believe this could eliminate the
requirement for viruses as topical delivery vectors.
In preclinical studies in a human mouse xenograph model of EB, we observed that topical application of AP103 restored
production of collagen VII. In separate preclinical studies, AP103 was observed to restore collagen VII to levels exceeding those
produced by healthy human keratinocytes (cells that regenerate the outer layer of the skin). In addition, we did not observe
evidence of cellular toxicity after repeated administration in these studies. Our preclinical development of AP103 is ongoing.
We intend to initiate clinical development of AP103 in 2022. In September 2020, the EMA’s COMP adopted a positive opinion
for orphan designation for the use of AP103 in EB and in December 2020, the FDA granted orphan designation for AP103 in the
treatment of DEB.
Amryt Pharma plc
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FINANCIAL STATEMENTS
13
STRATEGIC REPORT:
Our Vision and Strategy
Our vision is to become a leading global rare disease company by acquiring, developing and commercialising medicines that
transform the lives of patients & their families around the world. To achieve this vision, 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 use of metreleptin to treat a
PL indication in the US.
(cid:129) Complete regulatory filings with the FDA and EMA and commercialise our lead development candidate, Oleogel-S10, for the
treatment of severe EB. The pivotal EASE Phase 3 trial for Oleogel-S10 for the treatment of cutaneous manifestations of severe
EB, is now complete and we have made submissions for marketing authorisation with the FDA and EMA. If approved, we
intend to commercialise Oleogel-S10 in the US and the EU and evaluate go-to-market strategies for other key markets
globally. Amryt will seek a PRV as part of the Oleogel-S10 NDA submission which if granted, we can sell, transfer or use to
accelerate the approval of a future Amryt NDA. However, to be eligible for a PRV, Oleogel-S10 must have a Pediatric Rare
Disease Designation from the FDA, be granted a priority review by FDA, and ultimately the NDA must be approved by the
FDA. Amryt was granted a Pediatric Rare Disease Designation by the FDA in August 2018. On 2 June 2021, the NDA was
accepted by the FDA and on 3 June 2021, a priority review for the NDA was granted by the FDA.
(cid:129) Leverage our global commercial, medical affairs, market access and patient advocacy infrastructure. We intend to leverage this
infrastructure and expertise to commercialise our development-stage pipeline, including our lead development candidate,
Oleogel-S10, if approved, and any rare disease assets we may acquire or in-license in the future. We also intend to evaluate
life-cycle opportunities for Oleogel-S10 in other severe, orphan dermatology conditions where there is high unmet medical
need to seek to maximise its value over its period of exclusivity.
(cid:129) Continue to develop our gene therapy platform with an initial focus on AP103, the first product candidate derived from the
platform technology, for the treatment of DEB. AP103 is currently in preclinical development for the treatment of DEB.
We intend to initiate clinical development in the second half of 2022.
(cid:129) Continue to evaluate opportunities to expand our rare disease product portfolio and pipeline. We believe we are well
positioned to continue to acquire or in-license rare disease assets that we believe we can efficiently develop and commercialise
through our global infrastructure.
Annual Report for the 12 months ended 31 December 2020
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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
commercialisation of our existing development candidates as well as the potential acquisition or in-license of additional rare
disease products and late-stage product candidates.
Oleogel-S10 as a potential treatment for EB. We have completed the largest ever pivotal Phase 3 trial of Oleogel-S10 for the
treatment of cutaneous manifestations of severe EB and the primary end point read out positive. We have made submissions for
marketing authorisation to the FDA and EMA and are advancing our launch plans for Oleogel-S10, if approved.
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 commercialise additional products we may acquire or develop, including our lead
product candidate, Oleogel-S10, if approved.
Proven track record of building a diversified rare disease product portfolio. We acquired Oleogel-S10 through the
acquisition of Birken AG in 2016, in-licensed lomitapide 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 of Aegerion Inc.
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
protects our development programs. Our lomitapide patent portfolio includes patents that provide protection into 2027 in the
US and into 2025 in the EU, 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 US and into 2022 in the EU and
orphan exclusivity in the EU into 2028 with an additional 2 years of exclusivity to 2030 for completion of a paediatric
investigation plan (“PIP”). The Oleogel-S10 patent portfolio includes patents that provide protection in both the US and the
EU into 2030 and a non-provisional application covering future Oleogel-S10 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 commercialisation 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
commercialisation capabilities.
Amryt Pharma plc
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FINANCIAL STATEMENTS
15
STRATEGIC REPORT:
Financial Review
Revenues
The revenues for each of our significant products were as follows:
Year ended 31 December
2019
$’000
2020
$’000
Metreleptin
Lomitapide
Other
Total revenues
106,872
74,750
985
182,607
25,088
32,260
776
58,124
Increase / (Decrease)
$’000
81,784
42,490
209
124,483
%
326.0%
131.7%
26.9%
214.2%
Total product sales were $182.6 million for the year ended 31 December 2020, compared to $58.1 million for the year ended
31 December 2019. The increase in revenues was due to our acquisition of Aegerion in September 2019. 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 $106.9 million for the year ended 31 December 2020 compared to
$25.1 million for the year ended 31 December 2019. The increase of $81.8m is primarily due to the effect of full year revenues
from global product sales and royalties of metreleptin following the Acquisition that closed on 24 September 2019. 56.7% of
product sales for metreleptin were in the US, with the remaining 43.3% in the EU and other international markets.
Lomitapide
We generated revenues from product sales of lomitapide of $71.8 million and royalties of $3.0 million from Recordati for the
year ended 31 December 2020 compared to $31.6 million and $0.7 million for the year ended 31 December 2019, respectively.
The increase is primarily due to the effect of full year revenues from product sales and royalties of Juxtapid following the
Acquisition that closed on 24 September 2019. In 2019, revenues were generated 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.
Other
Other revenues relate to sales from our in-house derma-cosmetic range of products, Imlan, and our early access program for
Oleogel-S10. Imlan is marketed solely in Germany as a treatment for sensitive, allergy-prone skin. The increase in revenues in the
year ended 31 December 2020 was mainly due to higher sales from our early access program product, Oleogel-S10. We intend
to market Oleogel-S10 under the brand name of Filsuvez if it is approved for the treatment of EB.
Cost of Sales
Year ended 31 December
2019
$’000
2020
$’000
Cost of product sales
Amortisation of acquired intangibles
Amortisation of inventory fair value step-up
Royalty expenses
Total cost of sales
25,854
42,966
27,617
22,592
119,029
11,384
11,457
7,473
8,419
38,733
Increase / (Decrease)
$’000
14,470
31,509
20,144
14,173
80,296
%
127.1%
275.0%
269.6%
168.4%
207.3%
Annual Report for the 12 months ended 31 December 2020
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STRATEGIC REPORT:
Financial Review continued
Total cost of sales was $119.0 million for the year ended 31 December 2020, representing the cost, including royalties, of selling
metreleptin and lomitapide, the cost of delivery of goods sold to customers, including the costs associated with the services
provided by the distributors to import and deliver the goods, the non-cash intangible amortisation and the non-cash inventory
fair value step-up expenses. Total cost of sales was $38.7 million for the year ended 31 December 2019. The increase is driven by
additional costs related to the cost, including royalties, of selling metreleptin and lomitapide, non-cash intangible amortisation
and non-cash inventory fair value step-up expenses following the Acquisition date in addition to the pre-Acquisition period
activity which represented the cost, including royalties, from sales of Lojuxta, Imlan and our Early Access Program for
Oleogel-S10.
The cost of product sales in the year ended 31 December 2020 increased by $14.5 million, and royalty expenses increased by
$14.2 million in 2020 compared to the year ended 31 December 2019. 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.
Amortisation of acquired intangible assets was $43.0 million in 2020 compared to $11.5 million in 2019. This relates to the
amortisation charge, for the post-Acquisition period, on the two commercial assets purchased as part of the Acquisition. The
increase is driven by the full year’s amortisation included in 2020 compared to amortisation in 2019 that related to the period
from the date of Acquisition on 24 September 2019 to 31 December 2019.
The non-cash inventory step-up expense was $27.6 million in 2019, compared to $7.5 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 amortised
over the estimated period that we expect to sell this inventory. The increase is driven by the post-Acquisition period activity.
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 organisations, materials and supplies, and other third-party fees. Research and
development expenses for the year ended 31 December 2020 were $27.6 million, representing 25.1% of our total operating
expenses, compared to $15.8 million, or 22.7% of total operating expenses, for the year ended 31 December 2019. Research
and development expenses in both years were primarily driven by the clinical advancement of Oleogel-S10 as we continued our
global clinical trial sites. Research expenses in 2020 comprised $11.7 million in employee compensation, $11.3 million of
amounts paid to clinical research organisations, and $4.6 million of other outsourced services. Research expenses in 2019
comprised $4.8 million in employee compensation, $7.7 million of amounts paid to clinical research organisations, and
$3.3 million of other outsourced services.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $76.7 million for the year ended 31 December 2020, representing 69.7% of
our total operating expenses, compared to $35.5 million for the year ended 31 December 2019, representing 50.8% 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 for the year ended 31 December 2020 were $1.0 million compared to $13.0 million for the
year ended 31 December 2019. These costs primarily relate to professional fees associated with the Acquisition, which was
predominantly completed during 2019. 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.
Amryt Pharma plc
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FINANCIAL STATEMENTS
17
Share-Based Payment Expenses
Non-cash share-based payment expenses for the year ended 31 December 2020 were $4.7 million, compared to $0.8 million in
the year ended 31 December 2019. We issue share options and restricted share units as an incentive to senior management and
employees. The fair value is measured at the grant date using the Black-Scholes model and amortised over the period during
which the awards vest.
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. In 2020 there was no
impairment charge recorded.
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 Oleogel-S10 for the treatment of EB from
both the FDA and EMA, as well as future sales-driven milestones. The finance expense for the year ended 31 December 2020
was $27.8 million compared to $6.7 million for the year ended 31 December 2019. The increase in 2020 is driven by an increase
in the probabilities and discount rates used in calculating the fair value of the contingent consideration. The market-based
probability chance of success, based on market benchmarks for orphan drugs, was increased in 2020 following the positive
results from our Phase 3 EASE trial of Oleogel-S10 earlier in the year. Additionally, the discount rate used in the calculation of the
fair value of the contingent consideration was decreased, which was due to the significant change in the Group over the last
12 months where the Group has significantly de-risked with growth in commercial revenues, positive top-line data on the Phase
3 EASE trial of Oleogel-S10, increasing cash balances during the year, increasing share price and an additional equity fund raise
during the year.
Non-Cash Contingent Value Rights Finance Expense
The $12.0 million non-cash CVR finance expense for the year ended 31 December 2020 represents the effective interest rate
unwind on amortised cost between the carrying value of the CVRs from the initial recognition date to the reporting date of
31 December 2019. The non-cash CVR finance expense for the year ended 31 December 2019 was $1.5 million. The increase in
the 2020 finance expense is mainly driven by the market-based probability chance of success, based on market benchmarks for
orphan drugs, which was increased in 2020 following the positive results from our Phase 3 EASE trial of Oleogel-S10 earlier in
the year.
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
Oleogel-S10.
Net Finance Expense - Other
Other net finance expense was $19.6 million for the year ended 31 December 2020 compared to $4.8 million for the year ended
31 December 2019. Other net finance expense mainly relates to interest on loans that is partially offset by foreign exchange
gains, which amounted to $22.0 million and $2.7 million, respectively, for the year ended 31 December 2020. Interest on loans
was $8.5 million for the year ended 31 December 2019. The increase in 2020 is due to a full year of interest in 2020 incurred on
the Convertible Notes and Secured Credit Facility following the Acquisition. In 2019, the foreign exchange gain amounted to
$3.8 million and in both years the foreign exchange gain primarily relates to the translation of euro and sterling-denominated net
monetary amounts held by subsidiaries with a non-US dollar functional currency.
Annual Report for the 12 months ended 31 December 2020
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STRATEGIC REPORT:
Financial Review continued
Operating Loss and Total Comprehensive Loss
The operating loss before finance expense for the year ended 31 December 2020 amounted to $46.5 million (2019:
$50.5 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, amortisation expense, depreciation expense,
share-based payments, and impairment charges.
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
Adjusted EBITDA
Liquidity and Capital Resources
Year ended 31 December
2019
$’000
2020
$’000
(104,527)
(1,332)
27,827
12,004
19,569
27,617
43,168
1,297
4,729
–
30,352
(62,998)
(495)
6,740
1,511
4,759
7,473
11,583
698
841
4,670
(25,218)
We had unrestricted cash and cash equivalents of $118.6 million and $65.2 million as at 31 December 2020 and
31 December 2019, respectively. We have financed our operations primarily through sales of our commercial products, sales of
our ordinary shares and debt financing. We expect to incur significant expenses for the foreseeable future as we continue
commercialising 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
US and other jurisdictions.
Cash Flows
The table below provides selected cash flow information for the periods indicated (in thousands):
Net cash flow from / (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
Amryt Pharma plc
Year ended 31 December
2019
$’000
2020
$’000
26,891
(2,379)
26,028
1,029
51,569
(37,472)
24,425
65,942
3,108
56,003
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FINANCIAL STATEMENTS
19
Net Cash Flow From / (Used in) Operating Activities
Net cash from operating activities was $26.9 million for the year ended 31 December 2020, compared to net cash used in
operating activities of $37.5 million for the year ended 31 December 2019. The increase of $64.4 million was primarily driven by
the increased scale of our business and working capital fluctuations.
Net Cash Flow From / (Used in) Investing Activities
Net cash used in investing activities was $2.4 million for the year ended 31 December 2020 and primarily related to payments for
property, plant and equipment and payments for intangible assets.
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 Flow From Financing Activities
Net cash flow from financing activities was $26.0 million for the year ended 31 December 2020. On 8 December 2020, we
entered into a securities purchase agreement with several institutional accredited investors for the private placement of
3,200,000 ADSs, at a purchase price of $12.50 per ADS, yielding gross proceeds of $40 million and net proceeds of
$37.9 million. The private placement included new and existing investors including Stonepine Capital, LP, Aquilo Capital
Management, LLC, Amati Global Investors, Athyrium Capital Management, LP and Highbridge Capital Management, among
others. These cash inflows were partially offset by interest paid on our Secured Credit Facility of $4.1 million and on the
Convertible Notes of $6.4 million.
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 the EIB and on our Secured Credit Facility
of $6.3 million.
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 April 2017,
we drew down the first tranche of €10 million. In September 2018, we drew down the second tranche of €5 million. In
December 2018 the terms of the third tranche were amended to give us the option to draw down this final tranche on the
condition that the EASE Phase 3 trial interim efficacy results were positive. 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
secured by our intellectual property assets. It also contained a negative covenant restricting our ability to grant security interests
over any of our assets over the course of the loan period.
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.
Annual Report for the 12 months ended 31 December 2020
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20
STRATEGIC REPORT:
Financial Review continued
Contractual Obligations
The following summarises our contractual obligations as of 31 December 2020:
Payments Due by Period
Less than
1 year
1 to 3
years
3 to 5
years
More than
5 years
Principal debt obligations 12,197
Operating leases obligations 1,050
Contingent consideration and
contingent value rights 62,283
Other liabilities 3,993
Total 79,523
25,627
2,046
35,000
21,382
84,055
252,024
1,726
30,708
–
284,458
–
3,998
–
–
3,998
Total
289,848
8,820
127,991
25,375
452,034
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.
We have operating leases commitments for offices in the US, EU 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 Oleogel-S10, 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 and sales royalties.
Other liabilities relate to our obligations, inclusive of interest, under Aegerion’s settlement agreements with the SEC and DOJ.
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
21
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 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 through 2020. Most importantly, we have experienced strong revenue growth and the business
significantly, turned adjusted EBITDA positive a quarter ahead of schedule in Q1 2020.
Our ability to leverage our global commercial and medical infrastructure is a key performance indicator to ensure we achieve
significant synergies arising from acquisitions. This has been a key focus for the Group.
As we are currently in the pre-revenue stage for our lead development asset, Oleogel-S10, a core focus of our business is on
progression of this drug candidate through the clinic and regulatory approval into an approved product for the treatment of EB.
Following the positive date readout from our EASE trial, we are currently progressing regulatory submissions for Oleogel-S10 with
the relevant authorities in both the US and Europe and preparing for launch, if approved.
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 University College Dublin (“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 diseases. We continue to evaluate opportunities to expand our rare
disease portfolio and pipeline.
Annual Report for the 12 months ended 31 December 2020
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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 three times 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, clinical and other 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 however further risk factors
affecting the Group can be found in the
Risk Factors section of our 20-F at
Amryt Pharma plc
https://www.amrytpharma.com/investors/
reports/:
We have incurred operating losses
since our inception and we may not
achieve or maintain profitability in
the future.
To date, we have financed our
operations primarily through a
combination of revenues from sales of
our commercialised products, term loans
and the sale of our equity securities and
convertible bonds. We have incurred net
losses since our inception, including net
losses of $30.6 million, $62.2 million
and $106.7 million for the years ended
31 December 2018, 2019 and 2020,
respectively. 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 commercialisation 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 from sales of
Oleogel-S10 if approved, 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.
Our future performance depends, in
part, on our ability to successfully
implement our strategy.
Our future success will depend on our
ability to implement our strategy to
develop and expand our existing
portfolio of drugs to treat patients with
rare diseases and to create a rare
disease company with a diversified
offering of multiple development stage
and commercial assets that can provide
us with scale to support future growth.
Implementing our strategy requires
substantial time and resources from our
management team. Our Board and
management may not be able to
successfully implement our strategy or
other strategies to be developed by
management, and implementing these
strategies may not sustain or improve,
and could even harm, our business,
financial condition, results of operations
and prospects.
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 US, EU and other key markets
for the treatment of approved
indications;
(cid:129) continuing market demand and
medical need for these products;
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FINANCIAL STATEMENTS
23
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
sums of money and the new products
developed may not effectively meet the
perceived need or may not be
successfully commercialised. 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.
Adverse events involving any of our
products and product candidates
may lead the US Food & Drug
Administration (“FDA”), the
European Medicines Agency
(“EMA”) or other regulatory
authorities to delay or deny
clearance for our products or result
in product recalls that could harm
our reputation, business and
financial results.
The FDA and the EMA, as well as similar
governmental authorities in other
jurisdictions, have the authority to
require the recall of certain
commercialised products in the event of
adverse side effects, material
deficiencies or defects in design or
manufacture. Manufacturers may, under
their own initiative, recall a product if
any material deficiency in a product is
found. A government-mandated recall
or voluntary recall by us or one of our
distributors could occur as a result of
adverse side effects, impurities or other
product contamination, manufacturing
errors, design or labelling defects or
other deficiencies and issues. Recalls of
any of our products or product
candidates would divert managerial and
financial resources and have an adverse
effect on our financial condition and
results of operations. A recall
announcement could harm our
reputation with customers and
negatively affect our sales, if any.
(cid:129) the development, acquisition, licensing
or introduction of competitive
products that are more effective, have
a more favorable safety profile or are
less costly than our 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
commercialisation 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
metreleptin, which we have not
planned or anticipated;
(cid:129) generating revenues in markets that
allow for supply of pharmaceutical
products without regulatory approval
based solely on the approvals of such
products in the US or EU, and in
which no promotion or
commercialisation 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 commercialisation 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.
Annual Report for the 12 months ended 31 December 2020
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24
STRATEGIC REPORT:
Risks and Uncertainties continued
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
Ireland and Boston, Massachusetts,
where we maintain our principal
operations. We have entered into
employment agreements with executive
officers and other key employees, but
any employee may terminate his or her
employment at any time or may be
unable to continue in his or her role.
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. If we are
not able to attract, retain and motivate
necessary personnel to accomplish our
business objectives, we may experience
constraints that could significantly
impede our ability to achieve our
development and commercial objectives,
our ability to raise additional capital and
our ability to implement our business
strategy.
Amryt Pharma plc
For U.S. federal income tax
purposes, Amryt is treated as a
surrogate foreign corporation, and
there is a risk that Amryt may be
treated as a U.S. corporation under
certain circumstances, including as a
result of proposed U.S. federal tax
legislation.
Section 7874 of the Code and the
Treasury regulations promulgated
thereunder contain two alternative sets
of rules under which a U.S. target
corporation may be subjected to certain
additional U.S. federal income taxes or a
non-U.S. acquiring corporation (such as
Amryt) may be treated as a
U.S. corporation for U.S. federal income
tax purposes as a result of the
acquisition. Which set of rules applies
depends on what percentage of the
non-U.S. acquiring corporation’s stock
the historic stockholders of the
U.S. target corporation own or are
treated as owning, under certain
counting conventions, by reason of
holding shares of the U.S. target
corporation following the transaction
(which we refer to as the “Section 7874
Percentage”). One set of rules imposes a
tax on certain gain and income of the
U.S. target corporation, and potentially
certain other taxes, if (in addition to
other requirements) the Section 7874
Percentage is at least 60 percent
(by vote or value). The other set of rules
under Section 7874 of the Code treats
the non-U.S. acquiring corporation as a
U.S. corporation for U.S. federal income
tax purposes if (in addition to other
requirements) the Section 7874
Percentage is at least 80 percent (by
vote or value). If the Section 7874
Percentage is at least 60 percent (by
vote or value), the non-U.S. acquiring
corporation is considered a “surrogate
foreign corporation,” and the
U.S. target corporation is considered an
“expatriated entity” with respect to the
non-U.S. acquiring corporation.
Amryt believes that, as a result of
Amryt’s acquisition of Aegerion in 2019
(which we refer to as the “Prior
Acquisition”), Amryt is treated as a
surrogate foreign corporation (the
60 percent test), but not as a
U.S. corporation (the 80 percent test).
Please see the discussion under the
heading “Risk Factors—Risks Related to
our Business, Financial Condition and
Capital Requirements—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” in Amryt’s registration
statement on Form F-1 originally filed
with the SEC on January 8, 2021. As a
result of Amryt’s status as a surrogate
foreign corporation, dividends paid in
respect of the Amryt ADSs are not
expected to be eligible to be taxed at
favourable rates that otherwise are
applicable to “qualified dividend
income” received by non-corporate
U.S. holders if certain additional
conditions are satisfied.
It is possible that a future change in law
could expand the scope of Section 7874
of the Code on a retroactive basis. In
this regard, on April 29, 2021, a bill
(entitled the “Stop Corporate Inversions
Act of 2021”) was introduced in
Congress which proposes, among other
things, to change Section 7874 of the
Code in such a way so as to treat as a
U.S. corporation for U.S. federal income
tax purposes a non-U.S. acquiring
corporation that acquires a U.S. target
corporation on or after May 8, 2014 in
a transaction in which the Section 7874
Percentage is at least 50 percent
(if certain other requirements are met).
This proposed change in law is similar to
legislative changes previously introduced
in both houses of Congress by certain
Democratic members. In addition, on
May 28, 2021, the U.S. Treasury
Department released the “General
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STRATEGIC REPORT
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FINANCIAL STATEMENTS
25
Explanations of the Administration’s
Fiscal Year 2022 Revenue Proposals,”
which announced President Biden’s
proposal to similar effect, but proposed
that the changes would be effective for
transactions that are completed after
the date of enactment. President Biden’s
proposal does not specify whether
transactions, such as the merger, that
are subject to a written binding
agreement in effect prior to the date of
enactment would be exempted from the
proposed changes. Under the counting
conventions referred to above, it is
possible that the Section 7874
Percentage resulting from the merger
could be at least 50 percent. The merger
agreement contains a provision in
Section 7.05(e) thereof that requires the
parties to undertake their respective
reasonable best efforts to restructure
the transactions governed by the
merger agreement to prevent Amryt
from being treated as a U.S. corporation
in certain circumstances.
If Amryt were treated as a US
corporation, its entire net income would
be subject to US federal income tax on a
net income basis and would be
determined under US federal income tax
principles. Further, Amryt’s treatment as
a U.S. corporation may have material
adverse effects on the business, financial
condition, results of operations and
prospects of the Amryt and its
subsidiaries.
We expect that, as a result of Amryts
merger with Chiasma, Inc. Amryt will be
a surrogate foreign corporation with
respect to Chiasma, because Chiasma
will be “related” to Aegerion under
Section 7874 of the Code. Assuming
that Chiasma will be treated as an
expatriated entity, several limitations will
apply to Chiasma, including, but not
limited to, the prohibition, for a period
of ten years from the closing date of the
Prior Acquisition, 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 Amryt’s license of any property to a
foreign related person. Moreover, in
such case, an additional minimum tax
under Section 59A of the Code on
certain “base eroding” payments to
certain affiliates that are foreign
corporations may be imposed on
Chiasma as a result of its status as an
expatriated entity.
The application of Section 7874 of the
Code is complex, subject to detailed
regulations (the application of which is
uncertain in various respects and could
be impacted by changes in US Treasury
regulations with possible retroactive
effect) and subject to certain factual
uncertainties, some of which must be
finally determined after the completion
of the merger. Furthermore, it is possible
that a future change in law could
expand the scope of Section 7874 of
the Code on a retroactive basis.
Accordingly, there can be no assurance
that the IRS will not challenge the status
of Amryt as a non-US corporation for
U.S. federal income tax purposes under
Section 7874 of the Code or that such
challenge would not be sustained by a
court. If the IRS were to successfully
challenge Amryt’s status as a non-US
corporation for US federal income tax
purposes under Section 7874 of the
Code. Amryt and certain Amryt
shareholders may be subject to
significant adverse tax consequences,
including a higher effective corporate
income tax rate on Amryt and future
withholding taxes on certain Amryt
shareholders, depending on the
application of any applicable income tax
treaty that may apply to reduce such
withholding taxes.
Our global operations subject us to
significant tax risks.
We are subject to tax rules in the
jurisdictions in which we operate.
Changes in tax rates, tax relief and tax
laws, changes in practice or
interpretation of the law by the relevant
tax authorities, increasing challenges by
relevant tax authorities or any failure to
manage tax risks adequately could result
in increased charges, financial loss,
penalties and reputational damage. Tax
authorities may actively pursue
additional taxes based on retroactive
changes to tax laws which could result
in a material restatement to our tax
position. Any of these factors could
have a negative impact on our business,
financial condition, results of operations
and prospects.
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
Annual Report for the 12 months ended 31 December 2020
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26
STRATEGIC REPORT:
Risks and Uncertainties continued
continues to spread around the globe,
we may experience disruptions that
could affect our business, preclinical
studies and clinical trials, including:
(cid:129) healthcare budgets may be adversely
affected and as a result, funding may
not be available to pay for our
products;
(cid:129) interruption or delays in the
operations of the FDA, EMA or other
regulatory authorities, which may
impact review and approval timelines
of our products, including review and
approval timelines for Oleogel-S10
which may be impacted by the need
to undertake pre-approval
inspections of our facilities before
approval is granted;
(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, or
our sales representatives may
continue to be unable to meet in
person with physicians and hospitals
to identify new patients for our
products;
Amryt Pharma plc
(cid:129) disruptions that could affect our
o interruption of key clinical trial
business, specifically the
development, manufacture and
labelling of our products;
(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
o delays or difficulties in initiating,
enrolling, conducting or
completing our planned and
ongoing clinical trials;
o risk that participants enrolled in
our clinical trials will acquire
COVID-19 while the clinical trial is
ongoing, which could result in
patients dropping out of the
clinical trial or impact the results
of the clinical trial, including by
increasing the number of
observed adverse events;
o 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;
o 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;
o 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;
activities, such as clinical trial site
monitoring, due to limitations on
travel imposed or recommended
by federal, state or local
governments, 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;
o refusal of the FDA to accept data
from clinical trials in affected
geographies outside the US;
o 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;
o 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 Data and Safety
Monitoring Board (“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; and
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27
(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.
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.
Any future acquisitions we make
may expose us, to risks that could
adversely affect our business, and
we may not achieve the anticipated
benefits of acquisitions of
businesses or technologies.
As a part of our growth strategy, we
may make additional acquisitions of
complementary businesses. Any future
acquisition will involve numerous risks
and operational, financial and
managerial challenges, any of which
could adversely affect our business,
financial condition or results of
operations. There can be no assurance
that any of the acquisitions we may
make will be successful or will be, or will
remain, profitable. Our failure to
successfully address the foregoing risks
may prevent us from achieving the
anticipated benefits from any acquisition
in a reasonable time frame, or at all.
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.
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
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
commercialisation 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. Key competitive
factors affecting the commercial success
of our products and any other products
that we develop or acquire are likely to
be safety, efficacy, tolerability profile,
reliability, convenience of dosing, price
and reimbursement. We may also face
future competition from companies
selling generic alternatives to our
products in countries where we do not
have patent coverage, Orphan Drug
status or another form of data or
marketing exclusivity or where patent
coverage or data or marketing
exclusivity has expired, is not enforced,
or may, in the future, be challenged.
A significant competitor to our
lomitapide product is a class of drugs
known as PCSK9 inhibitors. Two main
brands dominate the marketplace –
Praluent and Repatha which are both
approved in the EU and the US. Sales of
PCSK9 inhibitors compete with sales of
lomitapide and we expect that this
product will continue to compete with
lomitapide. In addition, one of our
competitors, Regeneron Pharmaceuticals
Inc., is developing evinacumab, a
human monoclonal antibody directed
against the activity of angiopoietin-like
3 (“ANGPTL3”) for the treatment of
HoFH. In August 2019, Regeneron
announced positive topline data from its
ongoing Phase 3 trial in HoFH; the FDA
approved evinacumab on 11 February
2021 for adults and pediatric patients
12 years and older for treatment of
HoFH. In June 2020, Regeneron stated
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28
STRATEGIC REPORT:
Risks and Uncertainties continued
that the EMA recommended an
accelerated assessment for
evinacumab’s review. Regeneron
launched evinacumab in the US in
March 2021. The EU is expected to
grant marketing authorization by
Q3 2021. Although administered
through intravenous infusion, physicians
may now consider this product for HoFH
patients as an alternative to lomitapide.
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
favorable safety profile or are less costly
than our products.
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
favorable 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 commercialisation 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
Amryt Pharma plc
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
organisations 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
US, 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.
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 standard of care (“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 inhibit
us from realising 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 commercialise our product
candidates, and may not be able to
obtain a satisfactory financial return on
them.
Outside the US, 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 UK and other
countries outside of the US. 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. Some EU Member States have
established free-pricing systems, but
regulate the pricing for drugs, inter alia,
through profit control schemes. However,
the UK, which has implemented the
most vigorous scheme, has officially left
the EU on 31 January 2020. Additional
foreign price controls or other changes in
pricing regulation could restrict the
amount that we are able to charge for
our product candidates. Accordingly, in
markets outside the US, the
reimbursement for our currently
marketed products and our product
candidates in the future may be reduced
and may be insufficient to generate
sufficient revenues and profits. Moreover,
increasing efforts by governmental and
third-party payers in the US and abroad
to control healthcare costs may cause
such organisations to limit both coverage
and the level of reimbursement for newly
approved products and, as a result, they
may not cover or provide adequate
payment for our products, or any other
product candidates we may develop in
the future.
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29
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. We also depend on third-party
manufacturers to produce the drug
product for Oleogel-S10. 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
Oleogel-S10. We employ a small number
of personnel with manufacturing
experience and we are currently
dependent upon contract manufacturers
to produce metreleptin and lomitapide
and the drug product for commercial
supplies and clinical trials, including for
Oleogel-S10, if it is approved.
If we are unable to maintain
arrangements for third-party
manufacturing, 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 commercialise
our products. We may also 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.
Enacted and future legislation and
related regulations may increase the
difficulty and cost for us to
commercialise metreleptin,
lomitapide or Oleogel-S10 and
other development candidates and
may affect the prices we are able to
obtain for our products, if and
where approved.
In the US, there have been a number of
legislative and regulatory changes and
proposed changes regarding the
healthcare system that restrict or
regulate post-approval activities, which
may affect our ability to profitably sell
our products. Legislative and regulatory
proposals have been made to expand
post-approval requirements and restrict
sales and promotional activities for
pharmaceutical products. We cannot
predict whether additional legislative
changes will be enacted, or whether the
FDA regulations, guidance or
interpretations will be changed, or what
the impact of such changes for the
products may be. In addition, increased
scrutiny by Congress of the FDA’s
approval process may subject us to more
stringent product labelling,
post-marketing testing and other
requirements. Any significant spending
reductions affecting Medicare, Medicaid
or other publicly funded or subsidised
health programs that may be
implemented and/or any significant
taxes or fees that may be imposed, as
part of any broader deficit reduction
effort or legislative replacement to
current laws or regulations, could have
an adverse impact on our results of
operations. In addition, countries
outside the US may make changes to
their healthcare systems, which may in
the future affect the revenue generated
from sales of lomitapide, metreleptin
and Oleogel-S10, if approved, or any of
our future commercial products.
Recent legislation and proposed
federal regulations and guidance
may permit reimportation of drugs
from foreign countries into the US
where the drugs are sold at lower
prices and this may adversely affect
our operating results and overall
financial condition.
The US Medicare Prescription Drug,
Improvement, and Modernisation Act of
2003 (“MMA”) contains provisions that
may change importation laws and
expand pharmacists’ and wholesalers’
abilities to import lower-priced versions
of an approved drug and competing
products from Canada, where there are
government price controls. These
changes to US importation laws will only
take effect if the Secretary of Health and
Human Services certifies that the
changes will pose no additional risk to
the public’s health and safety. We do not
know the timing and likelihood of this
certification. In October 2020, the
US Department of Health and Human
Services and the FDA issued a final rule
and guidance concerning two new
pathways for importing lower-cost drugs
into the US. The final rule allows certain
prescription drugs to be imported from
Canada, but would not permit the
import of biologics. The FDA guidance
describes procedures for drug
manufacturers to facilitate the
importation of FDA approved drugs and
biologics manufactured abroad and
originally intended for sale in a foreign
country in the US. If distributors or other
purchasers of Myalept or Juxtapid in the
US are able to import lower-priced
products from countries outside the US
that place price controls on
pharmaceutical products, this may result
in a negative impact on the revenues of
our products. In addition, some state
governments have implemented
importation schemes for their citizens
and, in the absence of federal action to
curtail such activities, other state
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30
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. As product
candidates are developed from
preclinical through early to late stage
clinical trials towards approval and
commercialisation, it is customary that
various aspects of the development
program, such as manufacturing and
methods of administration, are altered
along the way in an effort to optimise
processes and results. While these types
of changes are common and are
intended to optimise the product
candidates for late stage clinical trials,
approval and commercialisation, such
changes carry the risk that they will not
achieve these intended objectives. In
addition, 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 enroll 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.
STRATEGIC REPORT:
Risks and Uncertainties continued
governments may launch importation
efforts. The reimportation of metreleptin
or lomitapide into the US market from a
foreign market may negatively impact
our revenues and anticipated financial
results. Although the EU does not permit
the re-importation of medicinal products
from outside the EU, parallel trade
between EU Member States is possible
and can result in third party imports
from EU Member States offering lower
prices for a product into those
reimbursing products at higher costs.
If we are unable to commercialise or
receive regulatory approval for
Oleogel-S10, or experience
significant delays in doing so, or are
not granted a Priority Review
Voucher, our business could be
materially harmed.
Our Phase 3 EASE randomised
double-blind placebo control study
achieved its primary endpoint and forms
the basis of application for regulatory
approval. However, this positive data for
Oleogel-S10 does not guarantee that
we will successfully receive regulatory
approval for Oleogel-S10. An NDA was
submitted to FDA on 30 March 2021
and a Marketing Authorisation
Application was submitted to the EMA
on 8 March 2021 with a procedure start
date of 25 March 2021. Our inability to
obtain approval for and commercialise
Oleogel-S10 would materially adversely
affect our business, results of operations
and prospects.
Amryt will seek a PRV as part of the
Oleogel-S10 NDA submission which if
granted, we can sell, transfer or use to
accelerate the approval of a future
Amryt NDA. However, to be eligible for
a PRV, Oleogel-S10 must have a
Pediatric Rare Disease Designation from
the FDA, be granted a priority review by
FDA, and ultimately the NDA must be
approved by the FDA. Amryt was
granted a Pediatric Rare Disease
Designation by the FDA in August 2018.
On 2 June 2021, the NDA was accepted
by the FDA and on 3 June 2021, a
priority review for the NDA was granted
by the FDA.
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.
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
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. For example, the results
generated to date in preclinical studies
or Phase 1 or Phase 2 clinical trials for
product candidates do not ensure that
later clinical trials will demonstrate
similar results. Product candidates in
later stages of clinical trials may fail to
Amryt Pharma plc
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31
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 IRBs, 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
recognised 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
commercialisation of any of our product
candidates. Inadequate training in
recognising 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.
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 Risk Evaluation
and Mitigation Strategy (“REMS”)
program and other risk management
plan monitoring and reporting, and we
rely on third parties, such as contract
research organisations, 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 our 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 authorisations may be
revoked, suspended, or revised to be
more stringent. Further, our
development programs, including any
potential clinical studies, may be
extended, delayed or terminated. If we
were to experience an unexpected loss
of supply of any of our product
candidates or any of our future product
candidates for any reason, whether as a
result of manufacturing, supply or
storage issues or otherwise, we could
experience delays, disruptions,
suspensions or terminations of, or be
required to restart or repeat, any
pending or ongoing clinical trials.
Additional marketing approvals for
metreleptin or lomitapide may be
delayed or denied in the targeted
indication or jurisdiction, and efforts to
successfully commercialise Oleogel-S10
if approved, 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
commercialisation efforts.
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. 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
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32
STRATEGIC REPORT:
Risks and Uncertainties continued
The regulatory approval processes of
the EMA, the 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
commercialise 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.
We are subject to extensive legal
and compliance obligations as a
pharmaceutical company that
commercialises 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 commercialises
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 US and outside the US
related to manufacturing, clinical, quality,
drug safety, commercialisation, payments
to and interactions with healthcare
professionals and healthcare
organisations, anti-kickbacks, fraud and
abuse, the requirement to report
payments and other transfers of value to
Amryt Pharma plc
healthcare professionals and healthcare
organisations, 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.
For example, compliance failures by
Aegerion led to a DOJ 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”), the FDA and
DOJ) and aggregate penalties of
approximately $40.1 million which have
been fully satisfied in the first quarter of
2021. 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, or if we became
subject to new allegations or
whistleblower complaints, could result
in the imposition of additional fines,
penalties and obligations by the
applicable government agency, and
could subject us to prosecution.
Furthermore, investigations by 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.
If we fail to comply with UK, EU or
US privacy and data security laws
and regulations, we may be subject
to civil and criminal penalties and
other liability.
We are subject to laws and regulations
covering data privacy and the protection
of health-related and other personal
information. The legislative and
regulatory landscape for privacy and data
protection continues to evolve, and there
has been an increasing focus on privacy
and data protection issues which may
affect our business, including recently
enacted laws in many jurisdictions where
we operate. The collection and use of
personal health data in the EU and UK is
governed by the provisions of the
General Data Protection Regulation (EU)
2016/679 (“GDPR”), the Data Protection
Act 2018 in the UK and the Health
Insurance Portability and Accountability
Act of 1996 (“HIPAA”) in the US. Failure
to comply with healthcare laws and laws
and regulations covering data privacy
and the protection of health-related and
other personal information could result in
government enforcement actions, which
could include civil or criminal penalties,
private litigation and adverse publicity
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We are also subject to other laws and
regulations governing our international
operations, including regulations
administered by the governments of the
UK and the US, and authorities in the
EU, 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 and 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 UK, US, or other authorities
could also have an adverse impact on
our reputation, business, financial
condition, results of operations and
prospects.
and could negatively affect our business,
financial condition, results of operations
and prospects.
rules in many jurisdictions also prohibit
the offer of kick-backs and other
inappropriate inducements to prescribe.
Our relationships with customers
and payers in the US 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 US 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
We are subject to the UK Bribery
Act, the US 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 US Foreign Corrupt
Practices Act of 1977 (“FCPA”), the
US domestic bribery statute, the US
Travel Act, and other anti-corruption
laws that apply in countries where we
conduct business. The UK Bribery Act,
the FCPA and other anti-corruption laws
generally prohibit us and our employees
and intermediaries from authorising,
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 us to
liability under the UK Bribery Act, FCPA
or local anti-corruption laws, even if we
did not explicitly authorise or have
actual knowledge of such activities.
In addition, we cannot predict the
nature, scope or effect of future
regulatory requirements on our
international operations or the manner
in which existing laws might be
administered or interpreted.
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STRATEGIC REPORT:
Risks and Uncertainties continued
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.
Our success and ability to compete
effectively are 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.
The patent positions of biotechnology
and pharmaceutical companies involve
complex legal and factual questions
and, therefore, validity and
enforceability cannot be predicted with
certainty. Patents granted in certain
countries may be subjected to
opposition, revocation, or the like
before various authorities. These
proceedings could result in either loss of
a patent or denial of the patent
application or loss or reduction in the
scope of one or more of the claims of
the patent or patent application. In
addition, such interference, derivation,
re-examination, post-grant review, IPR,
supplemental examination, opposition
or revocation proceedings may be costly.
We will be able to protect our
proprietary rights against third parties
only to the extent that our proprietary
technologies are protected by valid and
enforceable patents or are effectively
maintained as trade secrets.
We rely primarily on exclusivity provided
by a combination of Orphan Drug
approval, data exclusivity, patent rights,
trade secrets and confidentiality to
protect our intellectual property rights.
There can be no assurance that patents
pending or future patent applications
will be issued, or that the lack of any
such patents will not have a material
adverse effect on our ability to develop
and market our proposed candidates, or
that, if issued, we would have the
resources to protect or enforce any such
issued patent. Also, no assurance can be
given that we will develop technologies
or candidates that 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 that have been, or may in
the future be, issued to us or that claims
with respect thereto will not be asserted
by third parties. Furthermore, we may
develop technology important to our
businesses that we cannot successfully
patent due to the existence of prior art.
If we lose the competitive advantage
provided by these 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.
We may infringe or be alleged to
infringe the intellectual property
rights of others, which may prevent
or delay product development and
commercialisation efforts, requiring
us to expend resources on litigation
or other resolutions, which may
materially and adversely affect our
business.
Our success will depend in part on our
ability to operate without infringing the
intellectual property and other
proprietary rights of third parties.
Identification of third-party patent rights
that may be relevant to our products
and proprietary technology is difficult
due to differences in terminology
among patents, incomplete databases
and the difficulty and uncertainty in
assessing the meaning of patent claims.
There could be issued patents of which
we are or were not aware that our
products infringe. There also could be
patents that we believe our products do
not infringe, but that our products may
ultimately be found to infringe.
Moreover, a patent application may be
maintained in secrecy until a patent on
the application is issued. The publication
of discoveries in the scientific or patent
literature frequently occurs later, often
substantially later, than the date on
which the underlying discoveries were
made and patent applications were
filed. Because patents can take many
years to issue, there may be currently
pending applications of which we are
unaware that may later result in issued
patents that our products will be found
to infringe. For example, there may exist
pending applications that provide
support or can be amended to recite a
claim that is granted and which our
products are later found to infringe.
Amryt Pharma plc
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35
continued market volatility as a result of
Brexit and other factors, including those
relating to the COVID-19 pandemic.
The ultimate impact of Brexit on our
business operations could vary
depending on the details of further
agreement(s) and Brexit could
significantly affect the financial, trade,
regulatory and legal 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
regulatory divergence between the
United Kingdom and the European
Union. 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 will have and
how such withdrawal will affect us. Any
of the foregoing could have a material
adverse effect on our business, financial
condition, results of operations and
prospects.
Legal, political and economic
uncertainty surrounding the exit of
the United Kingdom from the
European Union may be a
continued source of instability in
international markets and currency
exchange rate volatility, and could
materially and adversely affect our
business, financial condition, results
of operations and prospects.
Since the United Kingdom (“UK”) has
formally left the European Union on
31 January 2020 (“Brexit”) and the
transition period, during which EU laws
continued to apply to the United
Kingdom, has expired on 31 December
2020, EU laws now only apply to the
United Kingdom in respect of Northern
Ireland as laid out in the Northern Ireland
Protocol. The European Union and the
United Kingdom concluded a trade and
cooperation agreement (“TCA”), which
was ratified by the UK Parliament on
30 December 2020. The TCA was
approved by the European Parliament
and took effect from 1 May 2021.
The TCA includes provisions affecting the
life sciences sector (including on customs
and tariffs) but areas for further
discussion between the European Union
and UK remain. In addition, there are
some specific provisions concerning
pharmaceuticals. These include the
mutual recognition of Good
Manufacturing Practice (“GMP”),
inspections of manufacturing facilities for
medicinal products and GMP documents
issued. The TCA does not, however,
contain wholesale mutual recognition of
UK and EU pharmaceutical regulations
and product standards.
Since 1 January 2021, the EU laws
which have been transposed into
UK law through secondary legislation
continue to be applicable as “retained
EU law”. As there is no general power
to amend these regulations, the
UK government has adopted the
Medicines and Medical Devices Act
2021 which seeks to address this
regulatory gap through introducing
regulation-making, delegated powers
covering the fields of human medicines,
clinical trials of human medicines,
veterinary medicines and medical
devices. The purpose of the act is to
enable the existing regulatory
frameworks to be updated, with the
powers granted under it only exercisable
in relation to four pieces of legislation:
The Human Medicines Regulations
2012, the Medicines for Human Use
(Clinical Trials) Regulations 2004, the
Medicines (Products for Human Use)
Regulations 2016 and limited parts of
the Medicines Act 1968 (specifically
those parts which make provision
related to pharmacies). It is then further
restricted to amending or updating only
those provisions stated in the act, which
include clinical trials.
Specified provisions of the Medicines
and Medical Devices Act 2021 entered
into force on 11 February 2021 when
the legislation formally became law. The
remaining provisions came into effect
within two months of 11 February 2021
or will come into effect otherwise as
stipulated in subsequent statutory
instruments.
These developments may have a
significant adverse effect on global
economic conditions and continue to be
a source of instability in the 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 United Kingdom financial and
banking markets, as well as on the
regulatory process in the United
Kingdom. Asset valuations and currency
exchange rates may also be subject to
Annual Report for the 12 months ended 31 December 2020
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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, specialising 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
Amryt Pharma plc
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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 12 months ended 31 December 2020
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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
Compliance Committee (Member)
Appointment Date
24 September 2019
Amryt Pharma plc
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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)
Remuneration Committee (Member)
Appointment Date
24 September 2019
Annual Report for the 12 months ended 31 December 2020
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CORPORATE GOVERNANCE:
Chairman’s Introduction to Governance
Dear Shareholder,
I am pleased to present the Amryt Pharma plc Corporate Governance Report for the year ended 31 December 2020.
The Corporate Governance report contains details of Amryt’s governance structures and highlights areas of focus for the Board
and its Committees during 2020. 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 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 for the 12 months ended 31 December 2020 as well as on our
website, www.amrytpharma.com.
This is my second 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.
Our CEO, Dr. Joe Wiley, is the only executive director on the Board. The biographies of all the directors are outlined in
pages 36-39 of this annual report for the 12 months ended 31 December 2020. The Board consists of seven members and is
weighted towards non-executive representation to ensure the appropriate level of independent review, scrutiny and challenge of
the management and the executive function.
Amryt Pharma plc
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I am confident that we have the appropriate balance of sector, financial and public market skills and experience and the
appropriate balance of personal qualities and capabilities to execute our duties as a board effectively. 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 has 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 2020. You will find, on pages 42 to 45, individual reports giving details of their activities during the year.
ESG Responsibility
The Board recognises the importance of environmental, social and governance matters and aims to consider the differing
interests of the Group’s stakeholders, including its investors, employees, suppliers and business partners, when operating its
business.
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 shareholders 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
shareholders 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 a virtual shareholders general meeting 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 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
23 June 2021
Annual Report for the 12 months ended 31 December 2020
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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 by rotation
at our first annual general meeting to be held at least 24 months after the closing of the acquisition of Aegerion in September
2019. 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. No director has been nominated by Highbridge since the acquisition of
Aegerion in September 2019.
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 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:
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.
Amryt Pharma plc
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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 and governance; and,
(cid:129) If necessary, coordinates access to independent professional advice for Directors.
Performance Evaluation
The Board recognises the need to regularly review the effectiveness of its performance as well as that of its committees and
individual directors. The Board continues to monitor the skills and experience of each Director as well as the overall performance
of the Board.
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:
Audit Compliance
Full Board Committee Committee
Remuneration
Committee
Total Meetings held during the year 14 8 3
Directors’ Attendance:
Ray Stafford 14/14 7/8 –
Joe Wiley 13/14 – –
George Hampton 13/14 – –
Alain Munoz 13/14 – –
Don Stern 11/14 8/8 3/3
Patrick Vink 14/14 – 3/3
Stephen Wills 14/14 8/8 3/3
2
–
–
2/2
2/2
–
–
2/2
Board Committees
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
Given the significant number of non-executive directors on the Board with only a single executive director, 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 12 months ended 31 December 2020
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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 Stephen Wills. The Remuneration Committee is chaired by George Hampton.
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 audit committee will meet at least
four 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. 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.
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
Amryt Pharma plc
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45
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 Non-Executive
Directors and the committee is chaired by Donald Stern.
Employees
The Group’s future success depends on the ability to recruit and retain key employees. Our employee base includes key people in
strategic areas including in commercial and medical affairs as we continue to grow our commercial business as well as in clinical
and regulatory as we move our development candidates forward.
To date, we have been fortunate to attract and retain highly experienced individuals in sales and marketing, medical affairs,
clinical development, clinical operations, regulatory, finance, legal, supply chain, pharmacovigilance and quality assurance,
supporting them with exceptional leadership at the executive and Board level.
At 31 December 2020, we had 180 full time employees, 1 Executive Director and 6 Non-Executive Directors, spread across
Ireland, US and multiple locations in EMEA and LATAM.
The Board recognises its legal responsibility to ensure the well-being, safety and welfare of the Group’s employees and maintain
a safe and healthy working environment for them and for our visitors. The Group is fully committed to ensuring that there is no
unfair discrimination and stresses the importance in the value that a diverse workforce brings to the organisation. The Group
aims not to discriminate because of age, disability, sex or sexual orientation, race, religion or belief. This is captured in our
Employee Handbook, which all employees are encouraged to read on an annual basis. All employees also have access to a
dedicated whistleblowing hotline. The Group continues to monitor policies to ensure that they promote a healthy corporate
culture.
A breakdown of employees by gender as at 31 December 2020 is as follows:
Gender
Position Female Male Neutral
Director and Non-Executive Directors – 7 –
Executive leadership/ Senior leadership 15 10 –
Employees 91 61 3
Total 106 78 3
Total
7
25
155
187
The executive leadership/ senior leadership management consist of those in senior leadership roles with responsibility for the
strategic planning, direction and management of the day to day activities of the Group.
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.
Annual Report for the 12 months ended 31 December 2020
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CORPORATE GOVERNANCE:
Chairman’s Governance Overview continued
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 shareholders
Our business model and strategy are explained in the Overview section of the Strategic Report on page 3 and page 13 of
this Annual Report for the 12 months ended 31 December 2020.
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 “Risks and uncertainties” on page 22
Maintain a dynamic management framework
5. Maintain the board as a well-functioning, balanced team led by the chair
See this section
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
See this section and “Board of Directors” on page 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:
Directors’ Remuneration Report
Dear Shareholders,
On behalf of the Remuneration Committee, I am pleased to present our Directors’ Remuneration Report for the year ended 31
December 2020. We are required to prepare a Directors’ Remuneration Report following the Company’s listing on the NASDAQ
Global Market in 2020 and given our UK incorporation. The Directors Remuneration Report included in this Annual Report on
page 53 is outside the scope of the audit report.
The Committee always seeks to ensure that the remuneration of our Executive Director reflects the underlying performance of
the business. When approving outcomes, we therefore considered performance against our financial and strategic targets along
with wider business and individual performance.
Remuneration Review for the year ended 31 December 2020
Our Executive Director, Joe Wiley, received an increase in base salary of 3% to $710,185 on 1 January 2020.
Details of the fees paid to members of the Non-Executive Board are set out on page 53.
Annual Bonus Plan
The amount of annual bonus paid to the Executive Director was considered in the context of financial, strategic and personal
performance for the year ended 31 December 2020. The Committee recommended to the Board the level of bonuses to be paid
to the Executive Director and employees, following a review of performance against bonus objectives. This included a stretch
bonus as the Company’s performance exceeded certain pre-established corporate targets. The level of pay out achieved is the
result of strong performance against the short-term objectives, which were considered, reviewed and approved by the
Committee. The Board accepted this recommendation and such amounts have been included within this annual report for the
12 months ended 31 December 2020.
Long Term Incentive Plan (LTIP)
The Committee want to ensure that all LTIP metrics and targets remain suitable and aligned with our growth strategy and
appropriately incentivise participants. The Committee has been working with its external compensation consultant, Radford (part
of Aon plc) over the course of 2020 to prepare an equity strategy which is deemed suitable for the NASDAQ listed company.
Radford has recommended participation rates for Amryt based on market data and observed international practices. It was
agreed that participation levels would vary by employee location and level within the Company. In 2020, the Committee based
its decisions on the Radford’s equity strategy advice for all equity grants in 2020. Radford, a highly reputable external third-party
advisor, was appointed by the Remuneration Committee to ensure that any advice received in terms of remuneration was
objective and independent.
Conclusion
The Committee remains committed to a responsible approach to Executive remuneration, as I trust this Directors’ Remuneration
Report demonstrates. We continue to believe that the Policy provides a remuneration philosophy that encourages both Executive
and Non-Executive Directors to serve in the best interests of the Company and to support the delivery of value to shareholders in
the future.
As always, I am happy to meet or speak with shareholders if there are any questions or feedback on our approach to executive
remuneration.
Yours sincerely,
George Hampton
Chair of the Remuneration Committee
Annual Report for the 12 months ended 31 December 2020
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Directors’ Remuneration Policy
This part of the Directors’ Remuneration Report sets out the Directors’ Remuneration Policy for the Company.
The Directors’ Remuneration Policy applies to the Executive Director and the Non-Executive Directors appointed to the Board of
Directors. Currently, our Chief Executive Officer, Joe Wiley, is the only Executive Director on the Board. All other Board Directors
are Non-Executive Directors.
Considerations when determining remuneration policy
The Remuneration Committee has put a Remuneration policy in place with the aim of ensuring that the policy primarily:
(cid:129) Supports the long-term development, growth and success of the Company;
(cid:129) Aligns executive remuneration with company’s purpose, culture, values and long-term strategy;
(cid:129) Provides competitive (but not excessive) packages when compared with other companies of a similar size and complexity, in
order to attract, retain and motivate high calibre individuals who have the expertise and drive to support the growth of the
Company and who can substantially contribute to our success;
(cid:129) Balances both short-term and long-term incentives to motivate these individuals to achieve our corporate objectives;
(cid:129) Respects the expectations of shareholders and other stakeholders and conforms to our high standards of corporate
governance.
Remuneration Policy – Executive Director
The following section of this report describes the formal remuneration policy applying to the Company’s Executive Director. The
total remuneration package for the executive Director is made up of the following elements:
(cid:129) Base salary
(cid:129) Annual bonus (short term incentive)
(cid:129) Pension
(cid:129) Benefits
(cid:129) Equity incentives (long term incentive)
Base Salary
The Remuneration Committee strives to set this base salary at a level which will attract and retain executive leaders with the
relevant qualifications, skills and expertise to drive the Company’s growth and development, with the ultimate aim of becoming a
world leader in rare and orphan diseases. The Committee has set no maximum salary limit for this position. The Committee
works with external compensation consultants (Radford) to determine the appropriate level of salary, in line with other
companies of our size and complexity. Radford reviews levels of pay in peer groups on an annual basis and it has been agreed by
the Board to use Radford’s proposal of the 50th percentile for Executive salary. The level of salary is typically reviewed on an
annual basis, with increases normally taking effect from 1 January. The Committee retain discretion to retrospectively increase
salaries. When determining the level of increase each year, an assessment of the Executive Directors performance against the
corporate objectives is considered as part of the annual review.
Amryt Pharma plc
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Annual Bonus
The annual bonus is included in the compensation package for the Executive Director to encourage the achievement of the
Company’s short term corporate objectives and strategic goals. The annual bonus for the current Executive Director is set at 65%
of base salary. Following advice from our external compensation consultants, there is also a stretch bonus element to the annual
bonus. The Committee determines an appropriate stretch bonus percentage each year. Both the base bonus and stretch bonus
(if performance exceeds certain targets) are normally paid out in the first Quarter following the end of the financial year and is
based on annual performance against targets and objectives set by the Committee. Short-term corporate objectives and targets
are set annually and approved by the Committee. In any given year they typically include targets relating to financial milestones,
commercial, clinical and corporate development. These various financial and business development targets are chosen each year
to ensure they align with the short term corporate objectives of the Company each year. These annual corporate objectives can
be revised during the performance period but this requires approval by the Committee. In accordance with the regulations, any
changes would be disclosed in the relevant year’s report and accounts. At the end of each financial year, the corporate objectives
approved at the start of the year are reviewed and their achievement is evaluated by the Committee. Once the evaluation is
complete, an overall proposal of bonus is approved by the Committee. The minimum potential level of bonus paid in any year is
nil with the maximum being the annual bonus of 65% of base salary plus the stretch bonus percentage which has been
approved for that year.
Pension
The Company operates a defined contribution pension plan. The Executive Director is eligible to receive employer payments of
10% of basic salary each month on the condition that the employee also contributes an additional 5% of basic salary each
month. Only base salary is pensionable.
Benefits
There is no formal maximum limit on contributions made by the company relating to other benefits in favour of the Executive
Director. Other employment benefits may be provided from time to time.
Equity Incentives
The Company grants equity awards to the Executive Director under the terms of the Company’s share option plan. The plan
allows for the grant of non-qualified stock options, restricted stock units or incentive stock options. By granting equity awards to
the Executive Director, the Company aims to align the interests of the participant with those of the Company and encourages
employee retention as the options normally vest over a 3-year period and have a seven-year term.
The Committee generally offers equity awards in line with advice given by the external compensation consultants. Stock awards
granted under the Stock Option Plan are granted as A ordinary shares and there is a facility in place for participants to convert
their A ordinary shares to ADSs on exercise of any equity awards that have vested if they wish to do so. Awards vest in
accordance with the vesting schedule which is determined by the Remuneration Committee at the time of the equity award
grant.
All equity awards granted to the Executive Director accelerate in a change of control scenario.
Remuneration Policy – Non- Executive Directors
The following section of this report describes the formal remuneration policy applying to the Company’s Non-Executive Directors.
The total remuneration for the Non-Executive Directors is made up of the following elements:
(cid:129) Fees
(cid:129) Equity incentives
Annual Report for the 12 months ended 31 December 2020
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Directors’ Remuneration Policy continued
Fees
The Non-Executive Directors receive a base fee, paid monthly, for the performance of their duties. Fees may be higher for some
Non-Executives if they have additional responsibilities. Fees are subject to periodic review at Board level. All reasonable business
expenses incurred as part of their role in the Company are reimbursed.
Equity Incentives
The Company grants equity awards to the Non-Executive Directors under the terms of the Company’s share option plan. The
plan allows for the grant of non-qualified stock options, restricted stock units or incentive stock options. By granting equity
awards to the Non-Executive Directors, the Company aims to align the interests of the Non-Executive Directors with those of the
Company and encourages retention as the options normally vest over a 3-year period and a seven-year term.
The Committee generally offers equity awards in line with advice given by the external compensation consultants. Awards vest in
accordance with the vesting schedule which is determined by the Remuneration Committee at the time of the equity award
grant.
All equity awards are granted at the share price at the time of grant. All equity awards granted to the Non-Executive Directors
accelerate in a change of control scenario.
Service Agreements
The Executive Director has a rolling service contract with a notice period of 12 months. A copy of the Executive Directors contract
can be viewed at the company’s head office or requested from the Company Secretary.
The Non-Executive Directors are employed by way of a letter of appointment. The letters of appointments can be viewed at the
company’s head office or requested from the Company Secretary.
Consideration of shareholder views
The Committee welcomes the views of shareholders and will consider shareholder feedback received as it develops the
Company’s remuneration policy going forward.
Consideration of employment conditions elsewhere in the Company
The Committee is aware of the remuneration packages by level/ title across the organisation and ensure that the remuneration
policy for the Directors has been prepared with this in mind.
Policy on payment for loss of office
The Company is entitled lawfully to terminate the employment of the current Executive Director at any time and with immediate
effect by written notification and pay a payment in lieu of notice. In the event of a breach of service agreement, no such
payments will be made. Generally, in the event of termination, the service contract may provide for payment of basic salary and
contractual benefits over the notice period. The Company may elect to make a payment in lieu of notice equivalent in value to
basic salary and contractual benefits for the period of notice period. The Committee’s approach to payments in the event that
employment is terminated is to take account of the individual circumstances, including the reason for termination, individual
performance, contractual obligations and the terms of any remaining or outstanding equity awards. The treatment of
outstanding incentive awards on termination of employment is described in the Company’s share option plan rules, but the
Committee retains the discretion to adopt any treatment that it determines fair and appropriate given the circumstances
applicable to individual leavers.
In a change of control scenario, if the Executive Director is terminated other than for cause or if the Executive Director resigns in
certain circumstances, e.g. diminution of duties, the Executive Director will be entitled to 24 months’ salary, his target bonus of
65% of salary and any unpaid benefits, vacation expenses and expense reimbursements.
Amryt Pharma plc
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New Executive Director/ Non- Executive Director – remuneration
The remuneration package for a new Executive Director will be determined by the Remuneration Committee in accordance with
the terms of the policy at the time of his/her appointment. The remuneration package includes salary, bonus, pension, benefits
and equity awards. The Committee recognises the need to recruit experienced, talented, highly motivated individuals to this
position and as a result, the policy needs to be flexible in relation to recruitment of new personnel to this position in the
company. When finalising the remuneration package for a new Executive Director, the Committee will consider the calibre,
industry experience and the market rates at the time of the appointment. The need for benefits to be flexible is important. For
example, it may be necessary to offer relocation expenses if the candidate is coming from overseas.
The fees for a new Non-Executive Director will be set by reviewing the experience and calibre of the individual and the expected
responsibilities that this candidate will take on in the business.
Policy on external appointments
The Executive Director and the Non-Executive Directors may accept external Non-Executive Director positions as long as this
additional work does not interfere with the individual’s ability to carry out their duties in the Company.
Illustration of application of the policy
The chart below shows, for illustrative purposes only, what the annual remuneration the Executive Director can expect to receive
in 2021 in the event that (1) performance is below expectation (minimum), (2) performance is in line with expectation (target)
and (3) exceed targets (maximum) for 2021.
The assumptions used in the calculation are as follows:
(cid:129) Minimum remuneration comprises annual salary for 2021, employer pension contributions of 10% of base salary and an
estimate for taxable benefits for the year ended 31 December 2021;
(cid:129) Target remuneration reflects minimum remuneration above plus annual bonus at target level (65% of annual base salary);
(cid:129) Maximum reflects minimum remuneration plus annual bonus plus additional stretch bonus for exceeding targets. For
illustrative purposes, we have included the stretch bonus approved by the Committee for 2021 of 175%;
(cid:129) Maximum Plus as outlined above plus 50% share price growth scenario. There is no minimum or maximum level of equity
incentive awards issuable to the Executive officer in any year as per the remuneration policy. No equity awards were granted
to the Executive Director in 2020. For the purpose of this illustration, the equity awards granted in 2021 at the date of this
annual report have been included. The options vest over 4 years – 25% after 12 months, 25% after 24 months and 50%
after 36 months, subject to continued services. Assuming a 50% share price growth scenario, the value of the equity awards
in the table below represents the value to the Executive Director that would materialise over the 3 vesting periods from 2022
to 2024.
Annual Report for the 12 months ended 31 December 2020
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Directors’ Remuneration Policy continued
The minimum, target and maximum scenarios in the chart do not include any values for equity-based award remuneration. We
do not believe it is possible to reasonably quantify the value that might result from awards of market value options in these
scenarios.
Amryt Pharma plc
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CORPORATE GOVERNANCE:
Annual Remuneration Report
Directors’ Remuneration
The Directors received the following remuneration for the years ended 31 December 2020:
Salary/ Employer Equity Other 2020 Fixed
Variable
Fees Bonus Pension awards3 Benefits Total remuneration remuneration
$’000
$’000 $’000 $’000 $’000 $’000 $’000 $’000
Ray Stafford 88 – – 110 – 198 88
Joe Wiley 727 739 71 – 182 1,719 798
George Hampton 65 – – 110 – 175 65
Alain Munoz 58 – – 110 – 168 58
Donald Stern 80 – – 110 – 190 80
Patrick Vink 60 – – 110 – 170 60
Stephen Wills 88 – – 110 – 198 88
110
921
110
110
110
110
110
TOTAL 1,166 739 71 660 182 2,818 1,652
1,581
Fixed remuneration consists of salary/ fees and employer pension. Variable remuneration consists of bonus, equity awards and
other benefits.
The remuneration of Directors for the year ended 31 December 2019 was as follows:
Salary/ Employer Equity Other 2019 Fixed
Variable
Fees Bonus Pension awards3 Benefits Total remuneration remuneration
$’000
$’000 $’000 $’000 $’000 $’000 $’000 $’000
Ray Stafford 61 – – – – 61 61
Joe Wiley 588 703 50 3,412 31 4,784 638
George Hampton1 17 – – – – 17 17
Alain Munoz1 15 – – – – 15 15
Donald Stern1 21 – – – – 21 21
Patrick Vink1 16 – – – – 16 16
Stephen Wills1 23 – – – – 23 23
Rory Nealon2 288 515 27 70 13 913 315
Harry Stratford2 82 – – – – 82 82
James Culverwell2 58 – – – – 58 58
Markus Ziener2 47 – – – – 47 47
TOTAL 1,216 1,218 77 3,482 44 6,037 1,293
–
4,146
–
–
–
–
–
598
–
–
–
4,744
Fixed remuneration consists of salary/ fees and employer pension. Variable remuneration consists of bonus, equity awards and
other benefits.
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 to 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.
3 The equity awards granted to the Executive Directors in 2019 and Non-Executive Directors in 2020 is the grant date fair value as computed in accordance with
IFRS 2 (Share Based Payments) using a Black-Scholes option pricing model. No equity awards were granted to the Executive Director in 2020. No equity awards
were granted to the Non- Executive Directors in 2019.
Annual Report for the 12 months ended 31 December 2020
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Annual Remuneration Report continued
Annual performance bonus
The Company has a bonus plan in place for the Executive Director and all employees. Bonus amounts are set as a percentage of
base salary based on performance-based measures against personal and Company-wide target objectives. Bonus payments for
the Executive Director are a percentage of base salary, based on performance-based measures against Company-wide target
objectives. Following advice from external remuneration consultants, Radford, the Committee introduced a stretch bonus in 2020
which is an additional bonus on top of each individuals agreed percentage of base salary bonus target. The stretch bonus is only
paid if the Company exceeded the Company wide target objectives for the year.
For the 2020 performance period the agreed Company-wide target objectives were exceeded, meaning the bonus pay-out for
the 2020 performance period is 130% of the base salary for the Executive Director.
Specific details of the actual Company-wide target objectives are considered commercially sensitive and therefore not disclosed in
detail. However, the principal factors leading to the payment of the stretch bonus included the following:
(cid:129) 18.5% growth in revenues for the year ended 31 December 2020 of $182.6M
(cid:129) Adjusted EBITDA of $30.4M for the year
(cid:129) Strong cash generation during 2020 with $26.9M of cash generated from operating activities and cash balance at 31
December 2020 of $118.8M
(cid:129) Positive results from EASE pivotal Phase 3 trial in epidermolysis bullosa ("EB")
(cid:129) Successful fundraise of $40M
(cid:129) Completion of Aegerion integration ahead of schedule
In addition, the Committee took into consideration the following achievements which were not incorporated into the Corporate
objectives:
(cid:129) Successful listing on NASDAQ Global Select Market
(cid:129) Reimbursement approval for Lojuxta in Saudi Arabia
(cid:129) Marketing Authorisation Approval for Lojuxta in Brazil
(cid:129) Orphan designation for the use of AP103 in EB from both EMA and FDA
(cid:129) Appointment of new senior management team members
Long term incentive awards during the financial year
Directors may be granted long-term incentive awards at the discretion of the Committee. In accordance with the Remuneration
Policy, the vesting of awards was set by the Remuneration Committee with the objective of aligning long-term employee
interests with those of shareholders and providing a competitive remuneration structure that attracts, incentivises and retains all
employees in the key markets in which the Company operates.
During the year ended 31 December 2020:
(cid:129) Having received an equity grant in 2019, the Committee decided that it was not necessary to grant any additional equity
awards in 2020 and therefore, the Executive Director was not awarded any equity awards under the Company’s 2020 Equity
Incentive Plan
(cid:129) Upon listing on NASDAQ, all Non-Executive Directors were awarded options under the Company’s 2020 Equity Incentive Plan
over a three-year vesting period. The awards vest 25% after 12 months, 25% after 24 months and the remaining 50%
vesting after 36 months, subject to continued service. The options awarded under the Company Equity Incentive Plan were in
respect of these Ordinary Shares and do not have performance conditions.
Amryt Pharma plc
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All awards granted under the Equity Incentive Plan during the year ended 31 December 2020 are subject to a service condition
and may be exercised at any time between the relevant vesting date and the seventh anniversary of the date of grant. Awards
which are not exercised by the end of the seven-year anniversary from the grant date will lapse permanently. The exercise price of
all options granted during the year was the market value of the shares upon closing on the day before the grant. Neither the
Executive Director or any of the Non- Executive Directors exercised any options in 2020 and no awards lapsed during the year to
31 December 2020.
The options granted to the Non-Executive Directors in 2020 were as follows:
Number
of Options
Director Grant Date (A Shares)1
Ray Stafford 9 July 2020 220,000
George Hampton 9 July 2020 220,000
Alain Munoz 9 July 2020 220,000
Donald Stern 9 July 2020 220,000
Patrick Vink 9 July 2020 220,000
Stephen Wills 9 July 2020 220,000
Exercise
Price
(A Shares)1 Face Value
$
$
Expiration
Date
2.25
2.25
2.25
2.25
2.25
2.25
495,000 9 July 2027
495,000 9 July 2027
495,000 9 July 2027
495,000 9 July 2027
495,000 9 July 2027
495,000 9 July 2027
1 All options in the table are granted as options over “A” Ordinary shares which are listed on AIM. The strike price is the market price of the shares listed on AIM
upon closing on the day before the grant, translated to US$ on the same date. Amryt shares trade as ADSs on NASDAQ, each ADS representing five Amryt ordinary
shares. Similarly, the ADS strike price is five times the A Ordinary strike price.
Payments to past Directors
There were no payments made to past Directors during the year ended 31 December 2020.
Payments for loss of office
There were no payments made to Directors for loss of office during the year ended 31 December 2020.
Directors’ service contracts and letters of appointment
The dates of appointment of each of the Non-Executive Directors serving at 31 December 2020, are summarised in the table
below:
Non- Executive Director
Ray Stafford1
George Hampton
Alain Munoz
Donald Stern
Patrick Vink
Stephen Wills
Date of
appointment
24 September 2019
24 September 2019
24 September 2019
24 September 2019
24 September 2019
24 September 2019
1 Ray Stafford was appointed Non-Executive Chairman of Amryt Pharma plc (Company number: 12107859) on 24 September 2019. Prior to this date, Ray was a
Non-Executive Director of Amryt Pharma Holdings Limited (Company numbers: 05316808 and previously named Amryt Pharma plc until 24 September 2019) since
April 2016.
Annual Report for the 12 months ended 31 December 2020
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Annual Remuneration Report continued
Statement of directors’ shareholdings and share interests
The table below sets out, as at 31 December 2020, the beneficial interest in the Company’s shares of the Directors (together with
interests held by his or her connected persons). In addition, the table below also sets out the total number of options held by
Directors which are vested but not yet exercised and the total number of options held by Directors which are unvested.
Number
Number
of options
of options
Beneficially vested not yet
owned A exercised
unvested
Director ordinary shares (A Shares)1 (A shares)1
Executive
Joe Wiley 3,507,080 1,867,006
Non-Executive
Ray Stafford 1,363,501 –
George Hampton – –
Alain Munoz – –
Donald Stern – –
Patrick Vink – –
Stephen Wills – –
4,570,454
220,000
220,000
220,000
220,000
220,000
220,000
1 All options in the table are granted as options over “A” Ordinary shares which are listed on AIM. The strike price is the market price of the shares listed on AIM
upon closing on the day before the grant, translated to US$ on the same date. Amryt shares trade as ADSs on NASDAQ, each ADS representing five Amryt ordinary
shares. Similarly, the ADS strike price is five times the A ordinary share strike price.
The Company does not have a formal policy on Executive or Non-Executive Director shareholdings.
As at 31 December 2020, no unvested equity incentive awards are subject to performance conditions. The table below shows
the interests of the Directors in the Company’s share options as at 31 December 2020:
Number of
options granted Exercise
Director (A Shares)1 Price1 Grant Date
Expiry Date
Joe Wiley 343,521 £1.21 28 November 2017 28 November 2024
21 May 2026
Joe Wiley 316,039 £0.76 21 May 2019
5 November 2026
Joe Wiley 5,777,900 £1.22 5 November 2019
9 July 2027
Ray Stafford 220,000 US$2.25 9 July 2020
9 July 2027
George Hampton 220,000 US$2.25 9 July 2020
9 July 2027
Alain Munoz 220,000 US$2.25 9 July 2020
9 July 2027
Donald Stern 220,000 US$2.25 9 July 2020
9 July 2027
Patrick Vink 220,000 US$2.25 9 July 2020
9 July 2027
Stephen Wills 220,000 US$2.25 9 July 2020
1 All options in the table are granted as options over “A” Ordinary shares which are listed on AIM. The strike price is the market price of the shares listed on AIM
upon closing on the day before the grant, translated to US$ on the same date. Amryt shares trade as ADSs on NASDAQ, each ADS representing five Amryt ordinary
shares. Similarly, the ADS strike price is five times the A ordinary share strike price.
Amryt Pharma plc
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Under the terms of the Company’s Equity Incentive Plan, we have granted market value options to our Executive Director and
Non-Executive Directors. Options were granted to the Executive Director in 2017 and 2019. Options were granted to the Non-
Executive directors in 2020. These market value options vest over 3 years with 25% vesting 12 months after the grant date, a
further 25% vesting 24 months after the grant date and the final 50% vesting 36 months after the grant date. There are no
performance conditions attached to these share options.
No options were exercised by the Executive Director or the Non-Executives Directors in 2020 or 2019.
Performance graph
The graph below shows the Company’s performance, measured by total shareholder return, relative to the NASDAQ
Biotechnology Index. The NASDAQ Biotechnology Index has been selected for this comparison because the Company has been
trading on this exchange since July 2020 and is therefore considered to be the most suitable comparator index.
The graph shows the value, by 31 December 2020, of $100 invested in the Company on 8 July 2020, compared with the value
of $100 invested in the NASDAQ Biotechnology Index on the same date.
Executive Directors total remuneration history
The Executive Directors remuneration for 2020 is set out below. This will eventually build up to cover a rolling ten-year
remuneration history.
Total Executive Director remuneration1
Executive Director bonus (as a % of base salary)
Executive Director LTIP vesting (as a % of maximum available)2
2020
$
1,719,000
130%
100%
1 Total remuneration above consists of base salary, bonus, employer pension contribution and other benefits for 2020
2 No share options were granted to the Executive Director in 2020. Options previously granted in 2017 and 2019 vested in 2020. As these options are not subject to
performance conditions, the vesting percentage has been recorded at 100%
Annual Report for the 12 months ended 31 December 2020
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Annual Remuneration Report continued
Percentage change of Executive Directors total remuneration
The table below shows the percentage change in remuneration of the Executive Director and the Group’s employees as a whole
as set out below between the year ended 31 December 2019 and the year ended 31 December 2020:
Base Salary
Annual Bonus
Taxable Benefits
Executive
Director
Average
Employee
23%
5%
487%
(6%)
79%
(23%)
Following the acquisition of Aegerion in September 2019, based on the advice of Radford, the Executive Director received a pay
increase given the significant increase in the size of the combined company. As part of the Aegerion integration process, a
number of roles were moved from Boston, US to Dublin, in late 2019 and early 2020, resulting in a lower average base salary
and associated taxable benefits per role.
Relative importance of spend on pay
The Remuneration Committee considers the Company’s total revenues relative to salary expenditure for all employees, to be the
most appropriate metric for assessing overall spend on pay due to the nature and stage of the Company’s business. Dividend
distribution and share buy-back comparators have not been included because the Company has no history of such transactions.
The table below illustrates the gross pay to all employees for 2020 as compared to total operating expenditure and illustrates the
year-on-year change.
Gross Pay to all employees
Total Revenues
Membership of the remuneration committee and its advisors
2020
($’000)
44,219
182,607
2019
($’000)
23,470
58,124
% Change
188.4%
214.2%
The Remuneration Committee comprises three members, who are all Non-Executive Directors: George Hampton, Dr. Alain
Munoz and Stephen Wills. The Remuneration Committee is chaired by George Hampton. The Executive Director and Head of HR,
as well as others, are invited to attend Remuneration Committee meetings as required to provide advice and assistance.
During the year, the Committee was assisted in its work by Radford. Radford was appointed to provide advice in relation to
Directors’ remuneration policy and general remuneration matters. Fees paid to Radford in relation to advice provided to the
Committee during the year to 31 December 2020 were $172,000, charged on a time/cost basis. The Committee is satisfied that
the advice they received from Radford was objective and independent.
The Committee met 2 times during the year and addressed the following main topics:
(cid:129) Review of annual bonus payments to the Executive Director, the annual bonus plan for all other employees for 2020 and
implementing a stretch bonus target for 2020
(cid:129) Review of equity incentive awards in light of the Company’s NASDAQ listing in July 2020
(cid:129) Implementation of a peer Group for use as public named peers based on industry focus and financial profile
Amryt Pharma plc
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Statement of implementation of remuneration policy for the 12 months ended 31 December 2021
Annual salary
In January 2020 the Executive Director received a 3% increase in annual salary in-line with the other employees. The Executive
Director’s annual salary increased by 3% on 1 January 2021, in line with the other employees.
Bonus
In line with our Policy, the Executive Director will be eligible for an annual bonus of 65% of basic salary for achievement of target
level or 130% of basic salary for achievement of stretch goals for the 2021 financial year. The bonus will be subject to the
achievement of short-term corporate objectives which have been set by the Committee with respect to the FY2021 performance
period. The short-term objectives cover key objectives that relate to the achievement of the Group’s wider strategic goals
including, for 2021, measures relating to financial milestones, clinical and corporate development. The amount of bonus payable
is at the discretion of the Committee subject to review of performance against the short-term corporate objectives at the end of
the financial year. The Committee has chosen not to disclose, in advance, the detailed performance targets for the forthcoming
year as these include matters which the Committee considers commercially sensitive. Retrospective disclosure of the performance
against the corporate objectives will be made in next year’s Annual Report on Remuneration to the extent any such disclosure is
considered not to be commercially sensitive at that time.
Benefits and pension
The Executive Director will continue to be eligible to receive pension contributions from the Company to the value of 10% of
basic salary. No significant changes are expected to the provision of other benefits.
Long-term incentive plan
In line with the Policy, the Committee has issued market value options to the Executive Director during 2021.
On March 8, 2021, equity incentive awards were granted to the Executive Director under the 2020 Equity Incentive Plan. These
equity incentive awards were market value options over A Ordinary shares and the vesting period is three years; 25% of the
award vesting 12 months after the grant date, 25% of the award after 24 months from the date of grant and the balance of
50% of the award vesting 36 months after the date of grant. No performance conditions were attached to the awards.
Number of
options granted
Director (A Shares)1
Exercise
Price1 Grant Date
Expiry Date
Joe Wiley 2,031,350
$2.80
8 March 2021
8 March 2028
1 All options in the table are granted as options over “A” Ordinary shares which are listed on AIM. The strike price is the market price of the shares listed on AIM
upon closing on the day before the grant, translated to US$ on the same date. Amryt shares trade as ADSs on NASDAQ, each ADS representing five Amryt ordinary
shares. Similarly, the ADS strike price is five times the A ordinary share strike price.
Non- Executive Directors’ fees
The Committee did increase Non-Executive Directors fees in 2021 to date. No new equity awards were granted to the Non-
Executive Directors in 2021 to date.
This directors’ remuneration report has been approved by the Board and signed on behalf of the Board.
Joe Wiley
Director
23 June 2021
Annual Report for the 12 months ended 31 December 2020
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Directors’ Report
The Directors of the Company present their report and the Financial Statements of the Company and its subsidiary undertakings
(together the “Group” or “Amryt”) for the 12 months ended 31 December 2020.
Amryt Pharma plc was incorporated under the UK Companies Act 2006 on 17 July 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 period to the date of this report are as follows:
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)
Principal activities
The Strategic Report on pages 2 to 35 describes the Group’s principal development activities, strategy and future developments.
Amryt is a global commercial-stage biopharmaceutical company focused on acquiring, developing and commercialising novel
treatments to help improve the lives of patients with rare and orphan diseases.
Results and Dividends
The Group recorded a total loss for the 12 months attributable to equity holders of the parent of $104.5 million
(2019: $63.0 million). The Directors do not recommend payment of a dividend (2019: nil).
Research and Development
For the 12 months ended 31 December 2020, we spent $27.6 million (2019: $15.8 million) on research and development
activity. Research and development spend primarily reflects the underlying activity on clinical trials for our products as well as the
manufacturing of drug product together with the internal costs, including payroll directly attributable to these activities. Further
details of our product programs and research and development spend can be found within the Strategic Report.
Share Capital Structure
The Company’s ordinary shares of £0.01 are listed on the NASDAQ (AMYT) and the AIM Market of the London Stock Exchange
(AMYT). At the date of this report, 183,593,296 ordinary shares of £0.01 each were in issue of which 4,208,314 are treasury
shares. Details of share issues and changes to the capital structure during the 12 months ended 31 December 2020 are set out in
note 17 of the Notes to the Financial Statements.
Amryt Pharma plc
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61
Substantial Shareholdings
To the Company’s knowledge, the following shareholders had an interest of 3% or more in the issued ordinary share capital of
the Company:
31 December
2020
Rank Investor Number
31 December
2020
%
31 December
2019
Number
31 December
2019
%
1 Athyrium Capital Mgt 44,286,346
2 Highbridge Capital Mgt. 15,732,313
3 Novelion Therapeutics Inc 12,490,250
4 Edgepoint Investment Mgt 12,126,650
5 Stonepine 11,082,415
6 Software AG-Stiftung 10,212,153
7 UBS Group AG 9,950,000
8 Amati 6,860,513
9 Axa SA 6,494,164
Qualifying Indemnity Provision
24.8%
8.8%
7.0%
6.8%
6.2%
5.7%
5.6%
3.8%
3.6%
42,883,097
11,073,825
14,040,250
12,126,650
1,465,000
10,212,153
8,816,367
2,439,513
6,494,164
27.8%
7.2%
8.1%
7.8%
0.0%
6.6%
5.7%
1.6%
4.2%
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.
Financial Risk Management Objectives and Policies
Refer to Note 24 of the financial statements for further details on our financial risk management objectives and policies,
including information on exposure to price risk, credit risk, liquidity risk and cash flow risk.
Information on Environmental Matters
The Company is required to measure and report greenhouse gas emissions. 2020 is reported as the baseline year against which
future performance will be measured.
Energy and Carbon Reporting
Quantification and reporting methodology
This report was compiled by Management. The 2019 UK Government Environmental Reporting Guidelines and the GHG Protocol
Corporate Accounting and Reporting Standard (revised edition) were followed to ensure the Streamlined Energy and Carbon
Reporting (“SECR”) requirements were met.
The energy data was collated using existing reporting mechanisms. These methodologies provided continuous record of
electricity use. The energy data was converted to carbon emissions using the 2020 UK Government GHG Conversion Factors for
Company Reporting. The associated emissions are divided into the combustion of fuels and the operation of facilities (scope 1),
purchased electricity, heating and cooling (scope 2) and in-direct emissions that occur as a consequence of company activities
(scope 3). During the 12 months ended 31 December 2020, the Group only had emissions relating to Scope 1 and Scope 2.
Annual Report for the 12 months ended 31 December 2020
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Directors’ Report continued
Estimations
The total consumption for energy supplies are as follows:
Consumption by the company (in KWH)
Emissions associated with the reported energy use (tCO2E)
Intensity Ratio
The chosen intensity ratio is the total gross emissions in metric tonnes CO2e (mandatory emissions) per employee.
Tonnes of CO2e per employee
2020
1,639,966
441.38
2020
2.71
Energy Efficiency Action for the 12 months ended 31 December 2020
Energy efficiency is an important issue for the Group and the following actions related to reducing energy use were implemented
with the current reporting period.
The Group has three principal office locations – the Group HQ in Dublin, Ireland, the US HQ in Boston, USA and a manufacturing
facility in Niefern, Germany. The Group significantly reduced its energy consumption in the Irish and US offices as both locations
temporarily shut down their offices in March 2021 as a result of the COVID-19 pandemic. Going forward, the Group intends to
operate a hybrid model, reducing the number of employees in the office and therefore reducing energy consumption.
As a result of the COVID-19 restrictions, we have significantly reduced travel and pivoted to increased use of video conferencing
for external and board meetings. While we expect the level of travel to increase post pandemic, we do not expect to revert back
to levels of travel pre-pandemic as we continue to make use of video conferences as a means of communication.
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 22 – 35. The financial review on page 15 discusses the Group’s financial and liquidity position
and borrowing facilities. In addition, note 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.
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 Report 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 shareholders
general meeting.
Amryt Pharma plc
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Disclosure of Information to the Auditors
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information
needed by the Group’s auditors for the purposes of their audit and to establish that the auditors are aware of that information.
The Directors are not aware of any relevant audit information of which the auditors are unaware.
Directors’ Responsibilities
The Directors are responsible for preparing the annual reports and the financial statements in accordance with the Rules of the
London Stock Exchange for companies trading securities on the Alternative Investment Market.
As required by the AIM Rules of the London Stock Exchange we are required to prepare the Group financial statements in
accordance with IFRSs as adopted by the EU and have elected to prepare the Company financial statements on the same basis
for the 12 months ended 31 December 2020. 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 and
Company for that period.
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 EU, 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 and
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and
Company transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company. 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.
AIM Rule Compliance Report
Amryt Pharma plc is traded on AIM and as a result the Group and Company has complied with AIM Rule 31 which requires the
following:
(cid:129) sufficient procedures, resources and controls to enable its compliance with the AIM Rules;
(cid:129) the Company to seek advice from Nominated Adviser (“Nomad”) regarding its compliance with the Rules whenever
appropriate and take that advice into account;
(cid:129) the Company to provide the Nomad with any information it reasonably requests in order for the Nomad to carry out its
responsibilities under the AIM Rules and the AIM Rules for Nominated Advisers, including any proposed changes to the Board
and provision of draft notifications in advance;
(cid:129) the Company to ensure that each of the directors accepts full responsibility, collectively and individually, for compliance with
the AIM Rules; and
(cid:129) the Company to ensure that each director discloses without delay all information which the Group needs in order to comply
with AIM Rule 17 (Disclosure of Miscellaneous Information) insofar as that information is known to the director or could with
reasonable diligence be ascertained by the director.
Annual Report for the 12 months ended 31 December 2020
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Directors’ Report continued
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 UK 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 23 June 2021 and signed on its behalf by:
Joe Wiley
Director
Amryt Pharma plc
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Independent auditor’s report to the members of
Amryt Pharma plc
For the year ended 31 December 2020
Opinion
We have audited the financial statements of Amryt Pharma plc (the ‘Company’) and its subsidiaries (together the ‘Group’), which
comprise the Consolidated statement of comprehensive loss, the Consolidated statement of financial position, and the
Consolidated statement of cash flows, the Consolidated statement of changes in equity, the Company statement of financial
position, the Company statement of comprehensive loss, the Company statement of cash flows, the Company statement of
changes in equity for the year ended 31 December 2020, 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 financial statements is 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 Group and
Company as at 31 December 2020 and of the Group’s and Company’s financial performance and cash flows for the year then
ended; and
(cid:129) have been properly prepared in accordance with the terms as set out in the basis of preparation note disclosed in Note 2.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs UK’). Our responsibilities under those
standards are further described in the ‘Responsibilities of the auditor for the audit of the financial statements’ section of our
report. We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the United Kingdom, namely FRC’s Ethical Standard and the ethical pronouncements
established by Chartered Accountants Ireland, applied as determined to be appropriate in the circumstances for the Group and
Company. 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
In auditing the financial statements, we have concluded that the directors’ use of going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and Company’s
ability to continue as a going concern basis of accounting included:
(cid:129) Evaluating management’s future cash flow forecasts, the process by which they were prepared, and assessed the calculations
are mathematically accurate;
(cid:129) Challenging the underlying key assumptions incorporated into the Group and Company’s cash flow forecasts;
(cid:129) Regarding revenue projections, challenging the estimates made by management by assessing whether the estimates regarding
sales forecasts and sales prices are in line with historical revenues to date and current contracts in place;
(cid:129) Challenging the sensitivities and stress testing that management performed on the cash flow forecasts; and
(cid:129) Assessing the adequacy of the disclosures with respect to the going concern assertion.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and Company’s ability to continue as a going concern for a
period of at least twelve months from the date when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this report.
Annual Report for the 12 months ended 31 December 2020
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Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2020
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.
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.
Based on our considerations as set out below, our areas of focus included:
(cid:129) Impairment of goodwill and intangible assets (Group)
(cid:129) Accounting for Contingent Value Rights (CVRs) (Group and Company)
(cid:129) Valuation of in-process research and development (IPR&D) and contingent consideration (Group)
(cid:129) Revenue recognition – U.S. pharmaceutical rebate reserves (Group)
How we tailored the audit scope
The Group is a global commercial-stage biopharmaceutical company focused on acquiring, developing and commercialising
innovative treatments to help improve the lives of patients with rare and orphan diseases. The Company is incorporated in
England and Wales and is listed on National Association of Securities Dealers Automated Quotations (NASDAQ) Global Select
Market under the symbol AMYT and is also trading on the Alternative Investment Market (AIM) of the London Stock Exchange.
We tailored the scope of our audit taking into account the areas where the risk of misstatement was considered material to the
Group and Company, the nature and structure of the Group and Company’s business and the industry in which they operate.
In establishing the overall approach to our audit, we assessed the risk of material misstatement at Group and Company 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.
Amryt Pharma plc
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67
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 approximately accounted for 98% of the Group’s total
assets, 99% of the total revenue and 94% of the total loss before taxes. We performed an audit of the complete financial
information of the Company.
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, such as our understanding of the Group and Company and their environment, the
history of misstatements, the complexity of the Group and Company and the reliability of the control environment, 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:
(cid:129) Group: 1.5% of total revenue for the year ended 31 December 2020. Revenue was chosen as benchmark because revenue
growth is the focus of the users of the financial statements and one of the key financial metrics of the Group. Further, 2020 is
the first full year where revenue for the revenue generating assets, Metreleptin and Lomitapide has been reported since
Aegerion acquisition in 2019.
(cid:129) Company: 1% of total equity/net assets. The Company holds the Group’s investments and is not in itself profit-oriented. The
strength of the statement of financial position is the key measure of financial health that is important to shareholders.
We set performance materiality at a lower level than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial statements. Performance materiality was set at 65% of each of
the Group and Company materiality for the 2020 audit.
In determining performance materiality, we have considered our risk assessment, including our assessment of the Group’s overall
control environment.
We agreed with the audit committee that we would report to them misstatements identified during our audit above 5% of
materiality, for the Group and Company, as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
Annual Report for the 12 months ended 31 December 2020
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Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2020
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 responses to significant matters
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
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
financial statements disclosures in
respect of these transactions.
Impairment of goodwill and intangible
assets (Group)
As at 31 December 2020, the Group’s
intangible assets had net book value of
$305 million and goodwill of
$19 million. The intangible assets include
the net book value of acquired
developed technology from Aegerion
acquisition in 2019, namely, Metreletin
and Lomitapide.
We have determined the valuation of
these intangible assets and goodwill 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
judgement.
The following significant judgements and
estimates used in the 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.
Refer to note 12 of the financial
statements for further details.
Amryt Pharma plc
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69
Key observations communicated to the
Audit Committee
We completed our planned audit
procedures with no exceptions.
Description of significant matters
Our responses to significant matters
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 and
Company’s assumptions and judgements
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
of the input and output variables in the
model.
We assessed the adequacy of the
financial statements disclosures in
respect of this transaction.
Accounting for CVRs (Group and
Company)
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
2020, the CVR liability in the
Consolidated and Company Statement of
Financial Position was valued at
$61 million and the $12 million non-cash
finance charge included the Consolidated
and Company Statement of
Comprehensive Loss, to reflect the
amortised cost of CVR liability as at
31 December 2020. The amortised cost
of CVR liability represents the present
value of the re-estimated future
contractual cash flows as at
31 December 2020.
Amryt’s management engaged an
external valuation specialist to estimate
the expected cash flows to arise based on
certain assumptions. The key
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 judgement and estimates. The
existence of significant estimation
uncertainty warrants significant audit
attention.
Refer to note 6 of the financial
statements for further details.
Annual Report for the 12 months ended 31 December 2020
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70
Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2020
Key observations communicated to the
Audit Committee
We completed our planned audit
procedures with no exceptions.
Description of significant matters
Our responses to significant matters
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 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 to
be materially misstated.
Valuation of IPR&D and contingent
consideration (Group)
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
2020 was $60 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 2020, the Group recorded a
contingent consideration liability of
$87 million with the change in fair value of
$28 million (recorded in the Consolidated
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
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 financial
statements for further details.
Amryt Pharma plc
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FINANCIAL STATEMENTS
71
Key observations communicated to the
Audit Committee
We completed our planned audit
procedures with no exceptions.
Description of significant matters
Our responses to significant matters
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
payments made to different
U.S. government states to the bank
statements.
Revenue recognition – U.S.
pharmaceutical rebate reserves (Group)
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. Majority of the
Group 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 2020, Medicaid rebate
expense deducted against sales
amounted to $34 million and remaining
accrual of $19 million.
We considered this as a key audit matter
because management applied significant
judgement which involve significant
measurement uncertainty in developing
these reserves. This in turn led to a high
degree of auditor judgement 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.
Annual Report for the 12 months ended 31 December 2020
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72
Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2020
Other information
Other information comprises information included in the annual report, other than the financial statements and our auditor’s
report thereon. 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.
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 Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the group and company or to cease operations, or has no realistic alternative but
to do so.
Those charged with governance are responsible for overseeing the Group and Company’s financial reporting process.
Responsibilities of the auditor for the audit of the financial statements
The objectives of an auditor 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 their 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.
A further description of an auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Owing to the
inherent limitations of an audit, there is an unavoidable risk that material misstatement in the financial statements may not be
detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
Based on our understanding of the Group and the Company’s industry, we identified that the principal risks of non-compliance
with laws and regulations related to compliance with NASDAQ and AIM Rules, Data Privacy law, Employment Law,
Environmental Regulations, Health & Safety, Sales and Marketing of Pharmaceutical Products and Other Laws affecting the
Group and the Company in the United States, and we considered the extent to which non-compliance might have a material
Amryt Pharma plc
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FINANCIAL STATEMENTS
73
effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of
the financial statements such as applicable tax legislation.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the
risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to
manipulate financial performance and management bias through judgements and assumptions in significant accounting
estimates, in particular in relation to significant one-off or unusual transactions. We apply professional scepticism through the
audit to consider potential deliberate omission or concealment of significant transactions, or incomplete/inaccurate disclosures in
the financial statements.
In response to these principal risks, our audit procedures included but were not limited to:
(cid:129) enquiries of board, internal audit, risk and compliance and legal functions and audit committee on the policies and procedures
in place regarding compliance with laws and regulations, including consideration of known or suspected instances of non-
compliance and whether they have knowledge of any actual, suspected or alleged fraud;
(cid:129) inspection of the Group’s and Company’s regulatory and legal correspondence and review of minutes of board of directors’
meetings during the year to corroborate inquiries made;
(cid:129) gaining an understanding of the internal controls established to mitigate risk related to fraud;
(cid:129) discussion amongst the engagement team in relation to the identified laws and regulations and regarding the risk of fraud,
and remaining alert to any indications of non-compliance or opportunities for fraudulent manipulation of financial statements
throughout the audit;
(cid:129) identifying and testing journal entries to address the risk of inappropriate journals and management override of controls;
(cid:129) designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing;
(cid:129) challenging assumptions and judgements made by management in their significant accounting estimates, including
impairment assessment of intangible assets and goodwill, valuation of contingent considerations and contingent value rights;
(cid:129) review of the financial statements disclosures to underlying supporting documentation and inquiries of management;
(cid:129) we assessed the appropriateness of the collective competence and capabilities of the engagement team included
consideration of the engagement team’s: (i) understanding of, and practical experience with audit engagements of a similar
nature and complexity through appropriate training and participation (ii) knowledge of the industry in which the client
operates (iii) understanding of the legal and regulatory requirements specific to the Group and Company.
The primary responsibility for the prevention and detection of irregularities including fraud rests with those charged with
governance and management. As with any audit, there remains a risk of non-detection or irregularities, as these may involve
collusion, forgery, intentional omissions, misrepresentations or override of internal controls.
Annual Report for the 12 months ended 31 December 2020
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74
Independent auditor’s report to the members of
Amryt Pharma plc continued
For the year ended 31 December 2020
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with the agreed scope of our engagement. 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 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 & Registered Auditors
Dublin 2
Ireland
Date: 23 June 2021
Amryt Pharma plc
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
75
Consolidated Statement of Comprehensive Loss
Year ended 31 December 2020
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 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 (loss)/income
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$)
* see Note 27
Note
3
4
6
5
12
7
6
6
9
10
Year ended
31 December
2020
Year ended
31 December
2019
restated*
US$’000
182,607
(119,029)
63,578
(27,618)
(76,673)
(1,017)
(4,729)
–
(46,459)
(27,827)
(12,004)
(19,569)
(105,859)
1,332
(104,527)
(2,164)
(2,164)
US$’000
58,124
(38,733)
19,391
(15,827)
(35,498)
(13,038)
(841)
(4,670)
(50,483)
(6,740)
(1,511)
(4,759)
(63,493)
495
(62,998)
755
755
(106,691)
(62,243)
11
(0.66)
(0.83)
Annual Report for the 12 months ended 31 December 2020
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76
Consolidated Statement of Financial Position
Year ended 31 December 2020
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
* see Note 27
As at
31 December
2020
As at
31 December
2019
restated*
Note
US$’000
US$’000
12
12
13
14
15
16
17
17
17
6
18
19
20
22
21
22
19,131
305,369
7,574
1,542
333,616
43,185
40,992
118,798
202,975
536,591
13,851
51,408
236,488
(235,605)
66,142
148,323
6,612
87,302
101,086
25,951
369,274
90,236
10,939
101,175
470,449
536,591
19,131
342,327
3,036
1,873
366,367
35,500
58,000
67,229
160,729
527,096
11,918
2,422
248,630
(131,137)
131,833
102,461
7,147
81,610
96,856
4,963
293,037
78,351
23,875
102,226
395,263
527,096
The Financial Statements set out on pages 75 to 136 were approved and authorised for issue by the Directors on 23 June 2021.
They are signed on the Board’s behalf by:
Joe Wiley Company Number:
Director 12107859
Amryt Pharma plc
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FINANCIAL STATEMENTS
77
Consolidated Statement of Cash Flows
Year ended 31 December 2020
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 from (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 (used in) from investing activities
Cash flow from financing activities
Proceeds from issue of equity instruments, net of expenses
Proceeds from long term debt borrowings, net of debt issue costs
Repayment of long term debt
Interest paid
Payment of leases
Net cash flow from financing activities
Exchange and other movements
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Restricted cash at end of the year
Cash at bank available on demand at end of the year
Total cash and cash equivalents at end of the year
* see Note 27
Year ended
31 December
2020
Year ended
31 December
2019
restated*
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
22
16
16
16
(104,527)
19,569
44,465
27,617
133
4,729
27,827
12,004
–
(535)
(7,685)
8,909
4,663
(10,609)
331
26,891
–
(1,503)
(963)
87
(2,379)
37,927
–
–
(10,780)
(1,119)
26,028
1,029
51,569
67,229
223
118,575
118,798
(62,998)
4,759
12,281
7,473
43
841
6,740
1,511
4,670
(934)
(4,732)
(6,337)
4,928
(5,894)
177
(37,472)
24,985
(578)
(74)
92
24,425
63,009
31,176
(21,990)
(6,253)
–
65,942
3,108
56,003
11,226
2,032
65,197
67,229
Annual Report for the 12 months ended 31 December 2020
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78
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
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 2019 25,198 68,233 – – 6,473 42,627 (73,914) – – (51) (72,263) (3,697)
Loss for the year, as restated* – – – – – – – – – – (62,998) (62,998)
Foreign exchange translation
reserve, as restated* – – – – – – – – – 755 – 755
Total comprehensive loss, as restated* – – – – – – – – – 755 (62,998) (62,243)
Transactions with owners
Share consolidation 17 (21,262) 21,262 – – – – – – – – – –
Issue of shares in equity
fund raise 17 533 7,467 – – – – – – – – – 8,000
Issue costs associated
with 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
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 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,
as restated* 11,918 2,422 29,523 (7,534) 3,190 42,627 (73,914) 29,210 217,634 7,894 (131,137) 131,833
Balance at 1 January 2020 11,918 2,422 29,523 (7,534) 3,190 42,627 (73,914) 29,210 217,634 7,894 (131,137) 131,833
Loss for the year – – – – – – – – – – (104,527) (104,527)
Foreign exchange translation reserve – – – – – – – – – (2,164) – (2,164)
Total comprehensive loss – – – – – – – – – (2,164) (104,527) (106,691)
Transactions with owners
Issue of shares in exchange
for warrants 17 630 14,131 (14,761) – – – – – – – – –
Issue of shares in equity
fund raise 17 1,303 38,697 – – – – – – – – – 40,000
Issue costs associated with
equity fund raise 17 – (3,848) – – – – – – – – – (3,848)
Issue of treasury shares for
share options exercised 17 – 6 – 113 – – – – – – – 119
Share based payment
expense 5 – – – – 4,729 – – – – – – 4,729
Share based payment
expense – lapsed – – – – (59) – – – – – 59 –
Total transactions with
owners 1,933 48,986 (14,761) 113 4,670 – – – – – 59 41,000
Balance at 31 December 2020 13,851 51,408 14,762 (7,421) 7,860 42,627 (73,914) 29,210 217,634 5,730 (235,605) 66,142
* see Note 27
Amryt Pharma plc
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FINANCIAL STATEMENTS
79
Company Statement of Comprehensive Loss
For the year ended 31 December 2020
Revenue
Selling, general and administrative expenses
Restructuring and acquisition costs
Share based payment expenses
Operating loss before finance expense
Non-cash contingent value rights finance expense
Loss on ordinary activities before taxation
Tax charge on loss on ordinary activities
Loss for the period attributable to the equity holders of the Company
Total other comprehensive income
Total comprehensive loss for the period attributable to the equity holders of
the Company
Note
3
6
5
7
6
10
Year ended
31 December
2020
Period ended
31 December
2019
US$’000
3,046
(8,850)
(34)
245
(5,593)
(12,004)
(17,597)
–
(17,597)
–
US$’000
9,911
(1,426)
(7,778)
(428)
279
(1,511)
(1,232)
–
(1,232)
–
(17,597)
(1,232)
Annual Report for the 12 months ended 31 December 2020
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80
Company Statement of Financial Position
Year ended 31 December 2020
Assets
Non-current assets
Investment in subsidiaries
Total non-current assets
Current assets
Other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity attributable to owners of the parent
Share capital
Share premium
Other reserves
Accumulated deficit
Total equity
Non-current liabilities
Contingent value rights
Total non-current liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
As at
31 December
2020
As at
31 December
2019
Note
US$’000
US$’000
26
14
16
17
17
17
6
21
341,935
341,935
11,135
38,364
49,499
280,962
280,962
58,613
–
58,613
391,434
339,575
13,851
51,408
265,014
(18,829)
311,444
61,417
61,417
18,573
18,573
79,990
391,434
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 75 to 136 were approved and authorised for issue by the Directors on 23 June 2021.
They are signed on the Board’s behalf by:
Joe Wiley Company Number:
Director 12107859
Amryt Pharma plc
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FINANCIAL STATEMENTS
81
Company Statement of Cash Flows
Year ended 31 December 2020
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 other receivables
Change in trade and other payables
Net cash flow from (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 the year
Restricted cash at end of the year
Cash at bank available on demand at end of the year
Total cash and cash equivalents at end of the year
Year ended
31 December
2020
Period ended
31 December
2019
Note
US$’000
US$’000
5
6
14
21
17
16
16
16
(17,597)
245
12,004
(8,581)
14,856
437
37,927
37,927
38,364
–
–
38,364
38,364
(1,232)
428
1,511
(59,663)
(2,061)
(56,895)
56,895
56,895
–
–
–
–
–
Annual Report for the 12 months ended 31 December 2020
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Company Statement of Changes in Equity
For the year ended 31 December 2020
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 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 17 126 2,422 (2,548) – – – – – –
Share based payment reserve
acquired pursuant to scheme
of arrangement 5 – – – – 2,763 – – – 2,763
Share based payment 5 – – – – 428 – – – 841
Share based payment – 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
Balance at 1 January 2020 11,918 2,422 29,523 (7,534) 3,190 29,210 220,603 (1,231) 288,101
Loss for the year – – – – – – – (17,597) (17,597)
Total comprehensive loss – – – – – – – (17,597) (17,597)
Transactions with owners
Issue of shares in exchange for
warrants 17 630 14,131 (14,761) – – – – – –
Issue of shares in equity fund raise 17 1,303 38,697 – – – – – – 40,000
Issue costs associated with equity
fund raise 17 – (3,848) – – – – – – (3,848)
Issue of treasury shares for share
options exercised 17 – 6 – 113 – – – – 119
Share based payment 5 – – – – 4,729 – – – 4,729
Share based payment – lapsed – – – – (59) – – (1) (60)
Total transactions with owners 1,933 48,986 (14,761) 113 4,670 – – – 40,940
Balance at 31 December 2020 13,851 51,408 14,762 (7,421) 7,860 29,210 220,603 (18,829) 311,444
Amryt Pharma plc
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83
Notes to the Financial Statements
For the year ended 31 December 2020
1. General information
Amryt is a global commercial-stage biopharmaceutical company focused on acquiring, developing and commercialising
innovative treatments to help improve the lives of patients with rare and orphan diseases. Amryt comprises a strong and growing
portfolio of commercial and development assets.
As used herein, references to “we,” “us,” “Amryt” or the “Group” in these financial statements shall mean Amryt Pharma plc
and its global subsidiaries, collectively. References to the “Company” in these financial statements shall mean Amryt Pharma plc.
Amryt Pharma plc (formerly named Amryt Pharma Holdings Limited) was incorporated, under the Companies Act 2006, on
17 July 2019 and is a public company limited by shares with company number 12107859. The Company is listed on National
Association of Securities Dealers Automated Quotations (“NASDAQ”) (ticker: AMYT) and the Alternative Investment Market
(“AIM”) market of the London Stock Exchange (ticker: AMYT).
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)).
Amryt's lead development asset, Filsuvez®/Oleogel-S10, is a potential treatment for Epidermolysis Bullosa ("EB"), a rare and
distressing genetic skin disorder for which there is currently no treatment. Oleogel-S10 is currently an investigational product
and has not received regulatory approval by the FDA or EMA. Filsuvez® has been selected as the brand name for the product.
On 20 September 2019, Amryt registered Filsuvez® as the trademark name for Oleogel-S10 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
Oleogel-S10 trademark in other key jurisdictions.
On 8 July 2020, Amryt listed on the NASDAQ Global Select Market under the symbol AMYT. The Company has not issued any
new securities in connection with this filing. The Ordinary Shares will continue to trade on the AIM market of the London Stock
Exchange.
On 11 August 2020, Amryt announced that the Company gave Euronext Dublin (“Euronext”) notice of its intention to cancel the
admission of the Company’s Ordinary Shares (‘Ordinary Shares”) to trading on the Euronext Growth Market ("Cancellation").
The last day of trading in Ordinary Shares on the Euronext Growth Market was 8 September 2020. The Cancellation applies only
to the Euronext Growth Market and will have no effect on the Company’s American Depositary Shares (“ADSs”) which trade on
the NASDAQ Global Select Market under the symbol AMYT or on Amryt’s Ordinary Shares trading on the AIM market of the
London Stock Exchange.
The financial statements were authorised for issue by the Company’s Board of Directors on 23 June 2021.
2. Accounting policies
Basis of preparation
(i) Compliance with International Financial Reporting Standards ("IFRS")
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 IFRS and interpretations issued by the IFRS Interpretations Committee
(“IFRS IC”) applicable to companies reporting under IFRS. The financial statements comply with IFRS as adopted by the European
Union and are for the years ended 31 December 2020 and 31 December 2019, these are not the statutory accounts for the
Company which have been prepared separately for the period ended 31 July 2020.
Annual Report for the 12 months ended 31 December 2020
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Notes to the Financial Statements continued
For the year ended 31 December 2020
(ii) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for certain financial instruments that are measured
at fair values at the end of each reporting period, as explained in the accounting policies below.
(iii) New and amended standards adopted by the Group and Company
In the current year, a number of amendments to IFRS and Interpretations issued that are effective for annual period beginning on
or after 1 January 2020 have been applied. These amendments and interpretations do not have significant impact on the
disclosures or the amounts reported in these financial statements.
(cid:129) Definition of Business (Amendment to IFRS 3 Business Combination)
(cid:129) Definition of Material (Amendments to IAS 1 and 8)
(cid:129) Revised Conceptual Framework for Financial Reporting
(cid:129) Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform
(cid:129) COVID-19-Related Rent Concessions (Amendment to IFRS 16), effective 1 June 2020
(iv) New standards and interpretations not yet adopted
There were a number of standards and interpretations which were in issue but were not effective at 1 January 2020 and have
not been adopted for these financial statements.
(cid:129) Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS16), effective
1 January 20210
(cid:129) Onerous contracts – cost of fulfilling a contract (Amendments to IAS 37), effective 1 January 2022*
(cid:129) Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16), effective 1 January 2022*
(cid:129) Reference to Conceptual Framework (Amendments to IFRS 3), effective 1 January 2022*
(cid:129) Annual Improvements to IFRS Standards 2018–2020, effective 1 January 2022*
(cid:129) Classification of Liabilities as Current or Non-current (Amendments to IAS 1), effective 1 January 2023*
(cid:129) IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts, effective 1 January 2023*
* these standards and interpretations are not yet endorsed by the European Union
These amendments are not expected to have significant impact on disclosures or amounts reported in the financial statements in
the period of initial application.
Basis of going concern
Having considered the Group and Company’s current financial position and cash flow projections, the Board of Directors believes
that the Group and Company will be able to continue in operational existence for at least the next 12 months from the date of
approval of these financial statements and that it is appropriate to continue to prepare the financial statements on a going
concern basis.
As part of their inquiries, the Board of Directors reviewed budgets, projected cash flows, and other relevant information for a
period not less than 12 months from the date of approval of the financial statements for the year ended 31 December 2020.
Amryt Pharma plc
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FINANCIAL STATEMENTS
85
A key consideration for the Directors in assessing the going concern assumption is the continuing impact of 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 and Company.
The integration of Aegerion into the Amryt Group has been successful as demonstrated by growth in revenues and cost
reductions. This success demonstrates the potential to continue to drive revenues and deliver operational synergies through a
combination of medical, commercial, clinical, development and regulatory infrastructure. Additionally, Amryt completed a private
placement of 3,200,000 American Depositary Shares (“ADSs”) yielding gross proceeds of US$40,000,000. In the prior year
Amryt also completed a US$60,000,000 fundraising as part of the acquisition of Aegerion.
Basis of consolidation
The financial statements comprise the financial statements of the Group for the years ended 31 December 2020 and 2019.
Subsidiaries are entities controlled by the Company. Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the following elements are present: power over an investee,
exposure or rights to variable returns from its involvement with the investee and the ability to use its power to affect those
variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these
elements of control.
Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Intergroup
balances and any unrealised gains or losses, income or expenses arising from intergroup transactions are eliminated in preparing
the consolidated financial statements.
Presentation of balances
The financial statements are presented in U.S. dollars (“US$”), rounded to the nearest thousand, which is the functional currency
of the Company and presentation currency of the Group. Any differences which arose due to the change in reporting currency
have been posted to the currency translation reserve.
The following table discloses the major exchange rates of those currencies other than the functional currency of US$ that are
utilised by the Group:
Foreign currency units to 1 US$
Average period to 31 December 2020
At 31 December 2020
Foreign currency units to 1 US$
Average period to 31 December 2019
At 31 December 2019
€
0.8777
0.8141
€
0.8932
0.8929
£
0.7799
0.7365
£
0.7836
0.7624
CHF
0.9391
0.8829
CHF
0.9938
0.971
SEK
NOK
DKK
9.2135
8.1885
9.4206
8.5671
6.5432
6.0570
SEK
NOK
DKK
9.4533
9.3282
8.7976
8.8046
6.6690
6.6698
(€ = Euro; £ = Pounds Sterling, CHF = Swiss Franc, SEK = Swedish Kroner, NOK = Norwegian Kroner, DKK = Danish Kroner)
Critical accounting judgements and key sources of estimation uncertainty
In preparing these financial statements in conformity with IFRS, management is required to make judgements, estimates and
assumptions that affect the application of policies and amounts reported in the financial statements and accompanying notes.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
Annual Report for the 12 months ended 31 December 2020
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Notes to the Financial Statements continued
For the year ended 31 December 2020
The critical accounting policies which involve significant estimates, assumptions or judgements, the actual outcome of which
could have a material impact on the Group and Company’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:
(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.
Refer to Note 20, Convertible notes, for further details.
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.
During 2020, the Group finalised the fair values used to record intangible assets and inventories acquired in connection with a
business combination in 2019. Refer to Note 15, Inventories, for further details.
Amryt Pharma plc
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87
Valuation of contingent value rights (“CVRs”)
The Company issued CVRs for payments to its shareholders based on the occurrence of two milestones related to Oleogel-S10,
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 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 Oleogel-S10;
(cid:129) probabilities of successful launch of Oleogel-S10;
(cid:129) revenue forecast related to Oleogel-S10; and
(cid:129) the appropriate discount rate selected to measure the risks inherent in the future cash flows.
The Company believes the fair value of the CVRs is based upon reasonable estimates and assumptions given the facts and
circumstances as of the valuation date. A detailed discussion of the methodology applied and key input assumptions used by the
Company is provided in Note 6, Business combinations and asset acquisitions, to the financial statements.
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 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 amortised, 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 utilised 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.
Valuation of contingent consideration
Contingent consideration arising as a result of business combinations is initially recognised at fair value using a probability
adjusted present value model. The fair value of the contingent consideration is updated at each reporting date. The key
judgements and estimates applied by management in the determination of the fair value of the contingent consideration relate
to the determination of an appropriate discount rate, the assessment of market size and opportunity and probability assessments
based on market data for the chance of success of the commercialisation of an orphan drug. A detailed discussion of the
methodology applied and key input assumptions used by the Group is provided in Note 6, Business combinations and asset
acquisitions, to the financial statements. The fair value of the contingent consideration uses management’s best estimates and
Annual Report for the 12 months ended 31 December 2020
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Notes to the Financial Statements continued
For the year ended 31 December 2020
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 (“R&D”) expenses
Development costs are capitalised 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;
(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 capitalised at the date of acquisition. Research costs are expensed
when they are incurred.
Factors which impact our judgement to capitalise certain research and development 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 capitalised requires management to make significant judgements.
Management has reviewed the facts and circumstances of each project in relation to the above criteria and in management’s
opinion, the criteria prescribed for capitalising development costs as assets have not yet been met by the Group in relation to
Oleogel-S10 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 recognised 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 realisability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realised. The ultimate
realisation of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those
temporary differences become deductible. While management considers the scheduled reversal of deferred tax liabilities, and
projected future taxable income in making this assessment, there can be no assurance that these deferred tax assets may be
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realisable. As at 31 December 2020, the Group did not recognise a deferred tax asset in respect of unused tax losses as described
in Note 10, Tax credit on loss on ordinary activities.
Impairment of investments in subsidiaries
At each reporting date, the Company reviews the carrying amounts of its investment in subsidiaries. If any such indication exists,
the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to
the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed. The assessment
involves a number of estimates and assumptions such as discount rates and risks affecting the pharmaceutical industry and other
risks specific to the Company and subsidiaries. Refer to Note 26, Investments in subsidiaries, for further details.
Principal accounting policies
Principal accounting policies are summarised 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 recognise revenue, the Group follows a five-step process, as required by IFRS 15:
(cid:129) identifying the contract with a customer;
(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) recognising revenue when/as performance obligation(s) are satisfied.
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an
amount that reflects the consideration to which the Group expects to be entitled to in exchange for those goods. The Group
recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these
amounts as liabilities in the Consolidated Statement of Financial Position. Similarly, if the Group satisfies a performance obligation
before it receives the consideration, the Group recognises either a contract asset or a receivable in its 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 - Group
Imlan revenue is generally recognised at a point in time when control of the inventory is transferred, generally the date of
shipment, consistent with typical ex-works shipment terms.
Other revenue is generally recognised at a point in time when control of the inventory is transferred to the end customer,
generally on delivery of the goods.
Revenue from provision of services - Company
The Company provides management services to group subsidiaries, revenue is recognised at a point in time when the Company
satisfies performance obligations by providing services to group subsidiaries.
Annual Report for the 12 months ended 31 December 2020
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Notes to the Financial Statements continued
For the year ended 31 December 2020
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 recognises revenue on a gross basis. The costs associated with the delivery of such
goods to customers i.e. the costs associated with the services provided by the distributors to import and deliver the goods are
recognised in the cost of sales.
Financial instruments
Recognition and derecognition
Financial instruments are classified on initial recognition as financial assets, financial liabilities or equity instruments in accordance
with the substance of the contractual arrangement. Financial instruments are initially recognised when the Group or Company
becomes party to the contractual provisions of the instrument. Financial assets are de-recognised when the contractual rights to
the cash flows from the financial asset expire or when the contractual rights to those assets are transferred. Financial liabilities
are de-recognised when the obligation specified in the contract is discharged, cancelled or expired.
Classification and initial measurement of financial assets
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, if any.
Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:
(cid:129) amortised cost;
(cid:129) fair value through profit or loss (“FVTPL”); and
(cid:129) fair value through other comprehensive income (“FVOCI”).
The Group and Company did not have any financial assets categorised as FVTPL or FVOCI as at 31 December 2020 and 2019.
The classification is determined by both:
(cid:129) the Group and Company’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 amortised cost
Financial assets are measured at amortised 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
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(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 amortised cost using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Group and Company’s cash and cash equivalents and trade receivables fall into this
category of financial instruments.
Cash and cash equivalents
Cash comprises cash on hand and bank balances. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and have a maturity of three
months or less at the date of acquisition.
Restricted cash
Restricted cash comprises current cash and cash equivalents that are restricted as to withdrawal or usage. Cash held by the
Group’s distribution partner for Lojuxta on behalf of the Group is treated as restricted cash in the financial statements. The Group
also has restricted cash in relation to a deposit on a company credit card facility.
Trade and other receivables
Trade and other receivables represent the Group and Company’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 and Company recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at FVTPL.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows
will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
For trade and other receivables, the Group and Company applies a simplified approach in calculating ECLs. Therefore, the Group
and Company do not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each
reporting date when applicable. The Group and Company assess ECL based on its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment.
Financial liabilities
Financial liabilities are categorised as “fair value through profit or loss” or “other financial liabilities measured at amortised cost
using the effective interest method.”
Trade and other payables
Trade and other payables are initially measured at their fair value and are subsequently measured at their amortised cost using
the effective interest rate method except for short-term payables when the recognition of interest would be immaterial.
Provisions
Provisions are recognised 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 recognised 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).
Annual Report for the 12 months ended 31 December 2020
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Notes to the Financial Statements continued
For the year ended 31 December 2020
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 recognised 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 recognised initially at fair value less attributable transaction costs. Loans and
borrowings are subsequently carried at amortised 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 amortised cost. Interest is calculated by applying the estimated prevailing market interest rate
at the time of issue. The equity component is recognised in equity and is not subsequently remeasured.
Contingent consideration
Contingent consideration arising as a result of business combinations is initially recognised at fair value using a probability
adjusted present value model. Key inputs in the model include the probability of a successful launch of Oleogel-S10 and the
expected timing of potential revenues. The fair value of the contingent consideration will be updated at each reporting date.
Adjustments to contingent consideration are recognised in the Consolidated Statement of Comprehensive Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Consolidated and Company Statement of
Financial Position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle
on a net basis, or to realise the asset and settle the liability simultaneously.
Inventories
Inventories are valued at the lower of cost or net realisable value. Amryt uses standard cost to value its inventory which is made
up of raw materials, work in progress (‘WIP’) and finished goods. It accounts for the inventory using the first-in, first-out (“FIFO”)
method. Standard costs take into account normal levels of materials and supplies, labour, efficiency and capacity utilisation with
our vendors. Work in progress valuation is based on the stage of quality checks successfully performed during the production
process. An inventory valuation adjustment is made if the net realisable value is lower than the book value. Net realisable value is
determined as estimated selling prices less all costs of completion and costs incurred in selling and distribution.
Inventories held by third-party supply chain partners are included in inventory totals when control has deemed to be transferred
to the Group under the contract terms of the distribution agreement. The cost to acquire the inventory held by the supply chain
partners is recognised as a liability of the Group.
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Leases
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 recognise 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 recognised 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.
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 amortised 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 recognises 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.
Annual Report for the 12 months ended 31 December 2020
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Notes to the Financial Statements continued
For the year ended 31 December 2020
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.
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
recognised 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.
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 recognised in other comprehensive income.
Property, plant and equipment
Property, plant and equipment is comprised of property and office equipment. Items of property, plant and equipment are stated
at cost less any accumulated depreciation and any impairment losses. It is not Group policy to revalue any items of property,
plant and equipment.
Depreciation is charged to the 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
Government grants
Grants are recognised when there is reasonable assurance that the Group will comply with the relevant conditions and the grant
will be received. Grants that compensate the Group for expenses incurred such as research and development, employment and
training are offset against the related expenditure in the Consolidated Statement of Comprehensive Loss on a systematic basis as
the Group recognises as expenses the costs that the grants are intended to compensate. Grants that compensate the Group for
the cost of an asset are deducted from the cost of the asset.
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.
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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 Loss over the life of
the obligation. Any contingent consideration is recognised at fair value at the acquisition date and included in the cost of the
acquisition. The fair value of contingent consideration at acquisition date is arrived at through discounting the expected payment
(based on scenario modelling) to present value. In general, in order for contingent consideration to become payable, pre-defined
revenues and/or milestone dates must be exceeded. Subsequent changes to the fair value of the contingent consideration will be
recognised in profit or loss unless the contingent consideration is classified as equity, in which case it is not remeasured and
settlement is accounted for within equity.
When the initial accounting for a business combination is determined provisionally, any adjustments to the provisional values
allocated to the consideration, identifiable assets or liabilities (and contingent liabilities, if relevant) are made within the
measurement period, a period of no more than one year from the acquisition date.
Frequently, the acquisition of pharmaceutical patents and 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
recognised at cost.
Intangible assets
Acquired intangible assets
Intangible assets primarily relate to developed technology on the Group’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.
In connection with the acquisition of Aegerion, the Group acquired developed technology on metreleptin and lomitapide, which
are amortised over the remaining patent lives through February 2026 and August 2027, respectively.
Intangible assets acquired in 2016 as part of the acquisitions of Amryt GmbH are currently not being amortised as the assets are
still under development.
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 amortised over their expected useful economic life on a
straight-line basis. In determining the useful economic life, each acquisition is reviewed separately and consideration is given to
the period over which the Group expects to derive economic benefit.
The useful life of other acquired intangible assets is as follows:
(cid:129) Software and hardware 3 to 10 years
(cid:129) Website development 5 to 10 years
Factors which impact our judgement to capitalise 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.
Goodwill
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 amortised, but instead is reviewed for impairment on an annual basis
or when an event becomes known that could trigger an impairment.
Annual Report for the 12 months ended 31 December 2020
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Notes to the Financial Statements continued
For the year ended 31 December 2020
Investments in subsidiaries
Investments in subsidiaries are stated at cost less impairment.
Impairment of non-financial assets
At each reporting date, the Group and Company reviews the carrying amounts of its non-financial assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the impairment loss. Any impairment loss arising from the review is
charged to the Consolidated and Company Statement of Comprehensive Loss.
The Group and Company assesses each asset or cash-generating unit annually to determine whether any indication of
impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is
considered to be the higher of the carrying value and value in use. These assessments require the use of estimates and
assumptions such as discount rates, future capital requirements, general risks affecting the pharmaceutical industry and other
risks specific to the individual asset. Fair value is determined as the amount that would be obtained from the sale of the asset in
an arm’s length transaction between knowledgeable and willing parties. Fair value is generally determined as the present value of
estimated future cash flows arising from the continued use of the asset, using assumptions that an independent market
participant may take into account. Cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. Assets are grouped into the smallest
group that generates cash inflows which are independent of other assets.
Taxes
Tax comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax
rates enacted or substantively enacted at the reporting date and taking into account any adjustments stemming from prior years.
Deferred tax assets or liabilities are recognised where the carrying value of an asset or liability in the 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 utilised.
In connection with business combinations, deferred tax balances are recognised 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 Company issues equity-settled awards as an incentive to certain senior management, employees and consultants. These
equity-settled awards include employee share options and restricted share units (“RSUs”).
In the consolidated financial statements, the fair value of equity-settled awards granted is recognised as an expense with a
corresponding credit to the share-based payment reserve. In the Company financial statements, the fair value of the equity-
settled awards granted by the Company is recognised as an expense, for those that relate to awards granted to employees of the
Company, and as an investment in subsidiary, for those awards granted that relate to employees of the Company’s subsidiaries.
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. Share-based compensation for RSUs awarded to employees and
directors is calculated based on the market value of the Company's shares on the date of award of the RSUs and the value of
awards expected to vest is recognised as an expense over the requisite service periods. Forfeitures are estimated on the date of
grant and revised if actual or expected forfeiture activity differs materially from original estimates.
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The Company may issue warrants to key consultants, advisers and suppliers in payment or part payment for services or supplies
provided to the Group and Company. The fair value of warrants granted is recognised as an expense. The corresponding credits
are charged to the share-based payment reserve. The fair value is measured at grant date and spread over the period during
which the warrants vest. The fair value is measured using the Black-Scholes model if the fair value of the services received cannot
be measured reliably.
The estimate of the fair value of services received is measured based on 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 recognised 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.
Loss per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
(cid:129) the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares
(cid:129) by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
(cid:129) the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
(cid:129) the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
Annual Report for the 12 months ended 31 December 2020
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Notes to the Financial Statements continued
For the year ended 31 December 2020
3. Segment information
The Group 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.
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, Joseph 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 summarises 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 (the prior year revenues include
revenue from Aegerion, with acquired products and additional regions, from 24 September 2019 onward).
U.S.
US$’000
Metreleptin 60,568
Lomitapide 37,317
Other –
Total revenue 97,885
U.S.
US$’000
Metreleptin 14,944
Lomitapide 10,616
Other –
Total revenue 25,560
31 December 2020
EMEA
US$’000
32,494
26,144
763
59,401
Other
US$’000
13,810
11,289
222
25,321
31 December 2019
EMEA
US$’000
8,048
18,985
671
27,704
Other
US$’000
2,096
2,659
105
4,860
Total
US$’000
106,872
74,750
985
182,607
Total
US$’000
25,088
32,260
776
58,124
Major Customers
For the year ended 31 December 2020, one customer accounted for 54% of the Group’s net revenues (2019: 44%) and
accounted for 42% of the Group’s 31 December 2020 trade receivable balance (2019: 44%).
Company
The Company provides management services to group companies which are charged on an arms’ length basis based on costs
incurred by the Company with a mark-up applied of 5%.
Revenue
Total revenue
Amryt Pharma plc
31 December
2020
US$’000
31 December
2019
US$’000
3,046
3,046
9,911
9,911
261072 5 Amyrt 083pp-109pp.qxp 25/06/2021 14:24 Page 99
STRATEGIC REPORT
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FINANCIAL STATEMENTS
99
The Company’s revenue disaggregated by geographical regions is as follows:
U.S.
EMEA
Total revenue
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
* see note 27
31 December
2020
US$’000
31 December
2019
US$’000
1,371
1,675
3,046
6,660
3,251
9,911
31 December
2020
US$’000
31 December
2019 restated*
US$’000
25,854
42,966
27,617
22,592
119,029
11,384
11,457
7,473
8,419
38,733
As a result of the acquisition of Aegerion in September 2019, the Group acquired certain inventory, which were measured at fair
value on the acquisition date. Refer to Note 2, Accounting policies, for further discussion on the key assumptions utilised to
estimate the fair value. The difference between the estimated fair value and the book value of the acquired inventory was
amortised, 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 six 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
the share options and warrants granted and lapsing during the years ended 31 December 2019 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 18,753,648 shares were outstanding at
31 December 2020. 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 4,432,000 share options were granted to non-executive directors and
employees in the year ended 31 December 2020. For the year ended 31 December 2019, a total of 11,330,641 share options
were granted to directors and employees.
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.
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 083pp-109pp.qxp 25/06/2021 14:24 Page 100
100
Notes to the Financial Statements continued
For the year ended 31 December 2020
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.
Outstanding warrants at 31 December 2020 consisted of 8,966,520 zero cost warrants (31 December 2019: 17,196,273) with
no expiration date that were issued to Aegerion creditors in connection with the acquisition of Aegerion. The remaining warrants
consisting of 345,542 warrants (31 December 2019: 345,542) were issued in connection with the admission to the AIM in 2016
(“the 2016 Warrants”).
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 2019 (pre share consolidation) 19,505,130
Balance at 1 January 2019 (restated for 6:1 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
Balance at 1 January 2020 14,481,720
Granted 4,432,000
Lapsed (87,119)
Exercised (72,953)
Outstanding at 31 December 2020 18,753,648
Exercisable at 31 December 2020 5,866,152
Weighted
average
exercise price
(Sterling pence)
Weighted
average
exercise price
(Sterling pence)
Units
19.20p
22,909,950
24.00p
115.20p
117.01p
197.66p
–
116.00p
109.08p
116.00p
144.76p
113.42p
120.72p
122.79p
114.24p
3,818,325
18,841,378
(3,472,783)
(1,645,105)
17,541,815
17,541,815
17,541,815
–
–
(8,229,753)
9,312,062
9,312,062
144.00p
–
144.00p
–
0.03p
0.03p
0.03p
–
–
–
0.05p
0.05p
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:
31 December
2020 Options
Inputs
31 December
2020 Warrant
Inputs
31 December
2019 Options
Inputs
31 December
2019 Warrant
Inputs
2,555
33% – 37%
0.39% – 0.46%
123.5p – 178.9p
–
–
–
–
2,555
27% – 48%
0.38% – 0.83%
75.84p – 121.5p
–
–
–
–
Days to Expiration
Volatility
Risk free interest rate
Share price at grant
Amryt Pharma plc
261072 5 Amyrt 083pp-109pp.qxp 25/06/2021 14:24 Page 101
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FINANCIAL STATEMENTS
101
In the year ended 31 December 2020, a total of 4,432,000 share options exercisable at a weighted average price of £1.4476
were granted. The fair value of share options granted in the year ended 31 December 2020 was £6,416,000/US$8,230,000. 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 were £13,258,000/US$16,919,000.
The share options outstanding as at December 2020 have a weighted remaining contractual life of 5.45 years with exercise
prices ranging from £0.76 to £1.79. The share options outstanding as at 31 December 2019 had a weighted remaining
contractual life of 6.19 years with exercise prices ranging from £0.76 to £1.50.
The 2016 Warrants outstanding as at 31 December 2020 have a weighted remaining contractual life of 0.3 years with an
exercise price of £1.44. The 2016 Warrants outstanding as at 31 December 2019 had a weighted remaining contractual life of
1.3 years with an exercise price of £1.44.
Restricted Share Units
Under the terms of the Company’s Employee Share Option Plan, restricted share units (“RSUs”) to purchase 1,556,960 shares
were outstanding at 31 December 2020. Under the terms of this plan, RSUs are granted to officers, consultants and employees
of the Group at the discretion of the Remuneration Committee. For the year ended 31 December 2020, a total of
1,556,960 RSUs were granted to employees of the company. For the years ended 31 December 2019, no RSUs were granted to
employees. The fair value of the RSUs is based on the share price at the date of grant, with the expense spread over the vesting
period. The fair value of RSUs granted in the year ended 31 December 2020 was US$2,609,000 and have a weighted remaining
contractual life of 2.59 years. The following table summarises the RSU activity for the year:
Balance at 1 January 2020
Granted
Lapsed
Exercised
Outstanding at 31 December 2020
RSUs
Weighted
average
fair value (US$)
–
$2.34
$2.32
–
$2.34
Unit
–
1,556,960
(7,050)
–
1,549,910
The Company grants rights to its shares under the share-based payment arrangements with directors of the Company and
employees of the Group. For the share options of the directors of the Company the share-based payment is recognised in equity
with a corresponding expense recognised in the Company Statement of Comprehensive loss. For the share options and RSUs of
employees that are not employed by the Company, the Company recognises the share-based payment in equity with a
corresponding increase in the investment in subsidiary in the Company Statement of Financial Position. The Company Statement
of Comprehensive Loss for the year ended 31 December 2020 includes a re-allocation to the subsidiaries of the Group of the
2019 expense.
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 083pp-109pp.qxp 25/06/2021 14:24 Page 102
102
Notes to the Financial Statements continued
For the year ended 31 December 2020
The value of share options and RSU’s charged to the Consolidated and Company Statement of Comprehensive Loss during the
year is detailed below.
Group Company
31 December 31 December
2020
US$’000
2020
US$’000
2019
US$’000
2019
US$’000
Share option expense 4,134
RSU expense 595
Total share option expense 4,729
841
–
841
(245)
–
(245)
428
–
428
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.
During the year, the Group incurred acquisition and restructuring related costs of US$1,017,000 (2019: US$13,038,000) relating
to external legal fees, advisory fees, due diligence costs and severance costs. These costs have been included in operating costs in
the Consolidated Statement of Comprehensive loss.
IFRS 3 Business combinations requires the assignment of fair values to identifiable assets and liabilities acquired to be completed
within 12 months of the acquisition date. The initial assignment of fair values was performed on a provisional basis and included
in the consolidated financial statement for the year ended 31 December 2019 and subsequent consolidated interim financial
statements due to the relative size of the acquisition and the timing of the transaction. The Group finalised the fair values of the
assets and liabilities of Aegerion in 2020. The adjustments made in finalising fair values primarily relate to the measurement of
Amryt Pharma plc
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FINANCIAL STATEMENTS
103
intangible assets separately from goodwill, valuation of inventory and associated deferred tax liabilities. The acquired goodwill is
attributable principally to the profit generating potential of the businesses, the assembled workforce and benefits arising from
embedded infrastructure that are expected to be achieved from integrating the acquired businesses into the Group’s existing
business. No amount of goodwill is expected to be deductible for tax purposes.
As at 24 September 2019
As previously reported in
31 December 2019
financial statements
US$’000
Adjustments*
US$’000
Fair value,
as restated
US$’000
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
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
–
–
(9,000)
(433)
(9,433)
–
–
11,482
(881)
10,601
1,168
(1,186)
2,922
–
257
1,993
–
–
–
–
(12,507)
(12,507)
(10,514)
11,682
(11,682)
–
–
–
276
924
299,374
1,901
302,475
24,985
23,259
57,441
1,588
107,273
409,748
3,951
67,010
384
15,173
86,518
538
54,469
125,000
7,821
1,918
189,746
276,264
133,484
19,131
152,615
152,615
152,615
* Adjustments relate to finalisation of fair values following completion of the fair value assignment to identifiable assets and liabilities acquired. See Note 27,
Restatement of prior year comparatives, for more details on the adjustments.
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 083pp-109pp.qxp 25/06/2021 14:24 Page 104
104
Notes to the Financial Statements continued
For the year ended 31 December 2020
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 optionholders, 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 Oleogel-S10, 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 optionholders 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 Oleogel-S10 (the Group’s lead development asset)
(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
(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 Oleogel-S10 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. The CVRs have been classified as a financial liability in the Consolidated Statement of Financial Position.
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 recognise the CVR as a
distribution on consolidation instead of goodwill. In the Company-only accounts, the CVRs have been classified as a financial
liability and debited to cost of investment in subsidiary.
Measurement of CVRs
As at 31 December 2020, the carrying value of the CVRs was US$61,417,000 (2019: 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. The market-based probability
Amryt Pharma plc
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105
chance of success is based on market benchmarks for orphan drugs, was increased to 89% in 2020 (2019: 72%) following the
positive results from our Phase 3 EASE trial of Oleogel-S10 earlier in the year. 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 2020
(2019: 10% and 16.5%). Management was required to make certain estimates and assumptions in relation to revenue forecasts,
timing of revenues and probability of achievement of commercialisation of Oleogel-S10. 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 Comprehensive Loss on a quarterly basis. The
Group received positive top-line data from the Phase 3 EASE trial of Oleogel-S10 in September 2020. The Group expects this to
be followed by applications for approval from the FDA and the EMA.
The total non-cash finance charge recognised in the Consolidated Statement of Comprehensive Loss for the year ended 31
December 2020 is US$12,004,000 (2019: US$1,511,000).
Acquisition of Amryt GmbH (previously “Birken”)
Amryt DAC signed a conditional share purchase agreement to acquire Amryt GmbH on 16 October 2015 (“Amryt GmbH SPA”).
The Amryt GmbH 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:
(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 of Episalvan;
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 of Oleogel-S10 first exceed €50,000,000 in any calendar year;
o €15,000,000 once net ex-factory sales/net revenue of Oleogel-S10 first exceed €100,000,000 in any calendar year;
(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 Oleogel-S10 products for 10 years from first commercial sale.
Fair Value Measurement of Contingent Consideration
As at 31 December 2020, the fair value of the contingent consideration was estimated to be US$86,906,000 (2019:
US$53,048,000). 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. The
market-based probability chance of success is based on market benchmarks for orphan drugs, was increased to 89% in 2020
(2019: 72%) following the positive results from our Phase 3 EASE trial of Oleogel-S10 earlier in the year. A discount rate of
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 083pp-109pp.qxp 25/06/2021 14:24 Page 106
106
Notes to the Financial Statements continued
For the year ended 31 December 2020
14.4% (2019: 24.4%) was used in the calculation of the fair value of the contingent consideration for the year ended
31 December 2020. The decrease in the discount rate is mainly driven by the significant change in Group over the last 12 months
where the Group has significantly de-risked with growth in commercial revenues, positive top-line data on the Phase 3 EASE trial
of Oleogel-S10, increasing cash balances during the year, increasing share price and additional equity fund raises during the year.
The Group received positive top line results from the Phase 3 EASE trial of Oleogel-S10 in September 2020, and the Group
expects this to be followed by applications for approval from the FDA and the EMA. 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
Loss. 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 recognised in the Consolidated Statement of Comprehensive Loss for the year ended
31 December 2020 is US$27,827,000 (2019: US$6,740,000).
7. Operating loss for the year
Operating loss for the year is stated after charging (crediting):
Group Company
31 December 31 December
2020
US$’000
2020
US$’000
2019
US$’000
2019
US$’000
Fees payable to the Group’s auditor and their associates for
the audit of parent and consolidated financial statements 814
Fees payable to the Group’s auditor and their associates for
audit related services 44
Changes in inventory expensed (excluding fair value step-up)
(see Note 15) 25,854
Amortisation of inventory fair value step-up, as restated*
(see Note 15) 27,617
Research and development expenses 27,618
Share based payments (see Note 5) 4,729
Pension costs 1,284
Depreciation of property, plant and equipment (see Note 13) 1,297
Amortisation of intangible assets, as restated* (see Note 12) 43,168
Operating lease rentals 623
Foreign exchange gains (see Note 9) (2,699)
* see note 27
443
168
11,384
7,473
15,827
841
769
698
11,583
170
(3,750)
814
44
–
–
–
(245)
–
–
–
–
145
443
168
–
–
–
428
–
–
–
–
45
Amryt Pharma plc
261072 5 Amyrt 083pp-109pp.qxp 25/06/2021 14:24 Page 107
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FINANCIAL STATEMENTS
107
8. Employees
Including the directors, the Group and Company’s average number of employees during the year was 174 (2019: 99) and
6 (2019: 5), respectively. Further details on remuneration of the Group’s directors and Company’s employees are included in the
Annual Remuneration Report on page 53.
The directors consider the workforce as a whole and therefore the average number of employees by different categories is not
considered relevant the Group or Company.
Aggregate remuneration comprised:
Wages and salaries
Social security costs
Pension costs – employees
Directors' remuneration
Shared based payments (see note 5)
Total employee costs
31 December
2020
US$’000
31 December
2019
US$’000
32,688
3,431
1,213
2,158
4,729
44,219
17,268
2,037
769
2,555
841
23,470
Aggregate remuneration attributable to the highest-paid director amounted to US$1,719,000 (2019: US$1,372,000). The
directors of the Company held the following share options over shares of Amryt Pharma plc at 31 December 2020:
31 December 2020
Director
Exercise price
Number
Joseph Wiley
6,437,460
£0.76 – £121.50p
Raymond T. Stafford
George P. Hampton, Jr.
Dr. Alain H. Munoz
Donald K. Stern
Dr. Patrick V.J.J. Vink
Stephen T. Wills
220,000
220,000
220,000
220,000
220,000
220,000
$2.25
$2.25
$2.25
$2.25
$2.25
$2.25
31 December 2019
Director
Exercise price
Number
Joseph Wiley
6,437,460
£0.76 – £121.50p
Expiration Date
28 November 2024 –
4 November 2026
9 July 2027
9 July 2027
9 July 2027
9 July 2027
9 July 2027
9 July 2027
Expiration Date
28 November 2024 –
4 November 2026
During the year ended 31 December 2020, a total of 1,320,000 share options were granted to directors of the Company.
A total of 220,000 share options were granted to each of Raymond T. Stafford, George P. Hampton, Jr., Dr. Alain H. Munoz,
Donald K. Stern, Dr. Patrick V.J.J. Vink and Stephen T. Wills.
Further information on the compensation of key management personnel is included in Note 23, Related party transactions, of
these financial statements.
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 083pp-109pp.qxp 25/06/2021 14:24 Page 108
108
Notes to the Financial Statements continued
For the year ended 31 December 2020
9. Net finance expense – other
Interest on loans
Interest on lease liabilities
Charges and fees paid
Interest received
Foreign exchange gains
Total
31 December
2020
US$’000
31 December
2019
US$’000
22,003
335
17
(87)
(2,699)
19,569
8,464
17
120
(92)
(3,750)
4,759
10. Tax credit on loss on ordinary activities
Group
A corporation tax credit of US$1,332,000 arises in the year ended 31 December 2020 (2019: credit of US$495,000, as
restated*). A reconciliation of the expected tax benefit computed by applying the tax rate applicable in the primary jurisdiction,
the Republic of Ireland, to the loss before tax to the actual tax credit is as follows:
Loss before tax
Tax credit at Irish corporation tax rate of 12.5%
Effect of:
Movement in unrecognised deferred tax assets
Permanent differences
Differences in overseas taxation rates
Total tax (credit)/charge on loss on ordinary activities
* see note 27
31 December
2020
US$’000
31 December
2019 restated*
US$’000
(105,859)
(13,232)
(63,493)
(7,937)
3,624
11,260
(2,984)
(1,332)
3,831
6,474
(2,863)
(495)
At 31 December 2020, the Group had unutilised net operating losses in the following jurisdictions as follows:
Ireland
United States
Germany
United Kingdom
Total
31 December
2020
US$’000
31 December
2019
US$’000
108,677
35,043
28,288
42,893
214,901
53,266
36,334
26,228
16,828
132,656
The deferred tax asset on tax losses of US$38,244,152 (2019: US$25,858,892), which was calculated at corporation tax rates
ranging from 12.5% to 32%, has not been recognised due to the uncertainty of the recovery. Tax losses in Ireland, Germany and
the UK can be carried forward indefinitely.
Amryt Pharma plc
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109
Due to historical changes in ownership of the U.S. business, the U.S. tax losses carried forward are restricted in how they can be
used against future profits of the Group. U.S. losses related to tax periods prior to 2018 can be carried forward for 20 years while
losses from 2018 onwards can be carried forward indefinitely.
All current and deferred tax related charges are recognised in the Consolidated Statement of Comprehensive Loss.
Company
No tax charge has been included for the financial period as no taxable profits arise. A reconciliation of the loss before tax
multiplied by the standard rate of corporation tax in the UK of 19% is provided below:
Loss before tax
Tax corporation tax rate of 19%
Effect of:
Losses unutilised
Total tax charge on loss on ordinary activities
31 July
2020
US$’000
(17,597)
(3,343)
3,343
–
31 July
2019
US$’000
(1,232)
(234)
234
–
11. Loss per share – basic and diluted
The weighted average number of shares in the loss per share (“LPS”) calculation, reflects the weighted average total actual
shares of Amryt Pharma plc in issue at 31 December 2020.
Issued share capital – ordinary shares of £0.06 each
31 December 2020
31 December 2019
The calculation of loss per share is based on the following:
Loss after tax attributable to equity holders of the Company (US$’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$)
* see note 27
Number of
shares
Weighted
average shares
178,801,593
158,591,356
154,498,887
75,871,562
31 December
2020
31 December
2019 restated*
(104,527)
158,591,356
158,591,356
(62,998)
75,871,562
75,871,562
(0.66)
(0.83)
Where a loss has occurred, basic and diluted LPS are the same because the outstanding share options and warrants are anti-
dilutive. Accordingly, diluted LPS equals the basic LPS. The share options and warrants outstanding as at 31 December 2020
totalled 28,065,710 (2019: 32,023,535) and are potentially dilutive.
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 110
110
Notes to the Financial Statements continued
For the year ended 31 December 2020
12. Intangible assets and goodwill
The following table summarises the Group’s intangible assets and goodwill:
Developed
technology -
metreleptin
US$’000
Developed
technology -
lomitapide
US$’000
In-process
R&D
US$’000
Other
intangible
assets
US$’000
Total
intangible
assets
US$’000
Cost
At 1 January 2019 –
Additions –
Acquired assets, as restated* 176,000
Impairment charge –
Foreign exchange movement –
At 31 December 2019, as restated* 176,000
Additions –
Acquired assets –
Disposals –
Foreign exchange movement –
–
–
123,000
–
–
123,000
–
–
–
–
60,091
–
–
(4,670)
(1,160)
54,261
–
591
–
5,276
At 31 December 2020 176,000
123,000
60,128
Accumulated amortisation
At 1 January 2019 –
Amortisation charge, as restated* 7,314
At 31 December 2019, as restated* 7,314
Amortisation charge 27,429
Accumulated amortisation on disposals –
Foreign exchange movement –
At 31 December 2020 34,743
Net book value
At 31 December 2019, as restated* 168,686
At 31 December 2020 141,257
* see note 27
–
4,143
4,143
15,537
–
–
19,680
–
–
–
–
–
–
–
Goodwill
US$’000
–
–
19,131
–
–
19,131
–
–
–
–
60,349
74
299,374
(4,670)
(1,165)
353,962
372
591
(246)
5,315
359,994
19,131
52
11,583
11,635
43,168
(246)
68
54,625
–
–
–
–
–
–
–
258
74
374
–
(5)
701
372
–
(246)
39
866
52
126
178
202
(246)
68
202
118,857
103,320
54,261
60,128
523
664
342,327
305,369
19,131
19,131
Developed technology on commercially marketed products
In connection with the acquisition of Aegerion in September 2019, the Group acquired developed technology, metreleptin and
lomitapide. Refer to Note 2, Accounting policies - critical accounting judgements and key sources of estimation uncertainty, for
further discussion on the valuation related to the developed technology, including the key assumptions utilised. These intangible
assets are amortised over their estimated useful lives and the remaining useful lives for metreleptin and lomitapide are
approximately 5.2 and 6.7 years, respectively, as of 31 December 2020 (2019: 6.2 and 7.7 years, respectively).
Amryt Pharma plc
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111
The amortisation associated with metreleptin and lomitapide is recorded as part of cost of sales. As of 31 December 2020, the
estimated amortisation expense related to these intangibles for future periods is as follows:
Years Ending 31 December
2021
2022
2023
2024
2025
Thereafter
In-process R&D
Metreleptin
US$’000
Lomitapide
US$’000
27,429
27,429
27,429
27,429
27,429
4,112
15,537
15,537
15,537
15,537
15,537
25,635
141,257
103,320
On 12 October 2020, Amryt acquired Cala Medical Limited (“Cala Medical”) for a consideration of US$723,000. As a result of
the acquisition of Cala Medical the Group recognised in-process R&D costs of US$591,000 as an intangible asset. This is related
to the Group’s development project AP104, which is an early-stage drug asset. Cala Medical is focused on the development of a
therapeutic enzyme (ScpA) targeting a molecule in the complement pathway, C5a, that mediates immune responses and
inflammation. Initial research efforts focused on the use of a modified form of ScpA as part of a medical device used to remove
C5a from the circulation of patients suffering from sepsis. Amryt has redirected efforts towards the development of a
pharmaceutical agent that may be administered locally or systemically to address multiple other disease areas of interest that may
be favourably impacted by inhibition of C5a activity.
As a result of the acquisition of Amryt GmbH, in 2016, the Group recognised in-process R&D costs of US$54,268,000 which is
related to the Group’s lead development asset, Oleogel-S10.
As a result of the acquisition of Som Therapeutics Corp., in 2016, the Group recognised 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.
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 wrote off this asset, resulting in an impairment charge of US$4,670,000 recognised 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 commercialising 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 generalised
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 Oleogel-
S10, 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 amortised using the straight-line method based on the estimated economic lives, ranging from 3 - 10 years.
Annual Report for the 12 months ended 31 December 2020
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112
Notes to the Financial Statements continued
For the year ended 31 December 2020
Goodwill
During 2019, the Group completed the acquisition of Aegerion, which resulted in aggregate goodwill of US$19,131,000, as
restated (See Note 27, Restatement of prior year comparatives). 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.
Impairment
The Group reviews the carrying amount of intangible assets on an annual basis or when there is a triggering event that may be
an indication of possible impairment. The Group conducts an impairment review by determining recoverable amounts from value
in use calculations. The recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.
Impairment indications include events causing significant changes in any of the underlying assumptions used in the income
approach utilised in valuing intangible assets. The 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 to the year 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 2020 and 2019 was 14.4% and 16.5%, respectively.
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 2020.
(cid:129) In the event there was a 5% 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 2020.
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 2021
budget which has been approved by the Board of Directors and the Group’s strategic plan for a further three years using
projected revenue growth rates of between 10% - 33% and cost growth rates of between -4% and 38%. 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 14.4% (2019: 16.5%) which we believe is a realistic estimate for the Group as well as the Group’s risk
profile.
The 2020 annual impairment testing process resulted in no impairment for the year ended 31 December 2020 (2019: nil).
Amryt Pharma plc
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FINANCIAL STATEMENTS
113
13. Property, plant and equipment
The following table summarises the Group’s property, plant and equipment:
Plant and
Property Machinery
US$’000 US$’000
Office
Equipment
US$’000
Right-of-use
assets
US$’000
Total
US$’000
Cost
At 1 January 2019 386 1,039
Additions 6 253
Impact of IFRS 16 – –
Acquired assets – 276
Disposals – (114)
Foreign exchange movement (9) (22)
At 31 December 2019 383 1,432
Additions 38 527
Disposals – –
Foreign exchange movement 38 93
421
167
–
–
(32)
(9)
547
938
(372)
165
At 31 December 2020 459 2,052
1,278
Accumulated amortisation
At 1 January 2019 269 319
Depreciation charge 90 162
Depreciation charge on disposals – (71)
Foreign exchange movement (6) (6)
At 31 December 2019 353 404
Depreciation charge 15 134
Depreciation charge on disposals – –
Foreign exchange movement 35 37
At 31 December 2020 403 575
Net book value
At 31 December 2019 30 1,028
At 31 December 2020 56 1,477
160
64
(32)
(5)
187
209
(239)
11
168
360
1,110
–
152
874
924
–
50
2,000
4,420
(378)
140
6,182
–
382
–
–
382
939
(129)
59
1,251
1,618
4,931
1,846
578
874
1,200
(146)
10
4,362
5,923
(750)
436
9,971
748
698
(103)
(17)
1,326
1,297
(368)
142
2,397
3,036
7,574
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 114
114
Notes to the Financial Statements continued
For the year ended 31 December 2020
14. Trade and other receivables
31 December
2020
US$’000
Trade receivables 33,057
Accrued income and other debtors 8,423
VAT recoverable 1,705
Intercompany receivables –
Group Company
31 December
2019 31 December
restated* 2020
US$’000 US$’000
31 December
2019
US$’000
28,607 –
5,493 2,289
1,400 75
– 8,771
–
221
171
58,221
58,613
Trade and other receivables 43,185
35,500 11,135
* see note 27
The amount of ECL to recognised against trade and other receivables is based on historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment. For the year ended 31 December 2020 the ECL
was calculated as nil and therefore no impairment is considered necessary.
The 31 December 2020 accrued income and other debtors balance for the Group includes US$287,000 (2019: US$857,000) in
relation to prepaid Phase 3 clinical trial costs.
Intercompany receivables mainly relate to recharges of expenses incurred by the Company in providing management services to
the wider Group. These intercompany receivables are interest free basis and repayable on demand. During the year ended 31
December 2020, no impairment charge was recognised (2019: nil).
15. Inventories
Raw materials
Work in progress
Finished goods
Inventories
* see note 27
31 December
2020
US$’000
25,462
3,903
11,627
40,992
31 December
2019
restated*
US$’000
20,043
2,489
35,468
58,000
In 2020, a total of US$25,854,000 (2019: US$11,384,000) of inventories was included in the consolidated statement of
comprehensive 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$57,441,000,
as restated (See Note 27, Restatement of prior year comparatives). This is net of non-saleable inventory acquired in connection with
the acquisition of Aegerion which amounted to US$53,440,000, as restated (See Note 27, Restatement of prior year comparatives).
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
Amryt Pharma plc
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115
US$36,294,000, as restated (See Note 27, Restatement of prior year comparatives). 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 as of 31 December 2020. At 31 December 2020, US$1,204,000 (2019: US$28,821,000, as
restated, see Note 27, Restatement of prior year comparatives) of this non-cash inventory step up is included in finished good
inventory.
All inventory was reviewed at year end and no impairment was deemed necessary.
16. Cash and cash equivalents
31 December
2020
US$’000
31 December 31 December
2019 2020
US$’000 US$’000
31 December
2019
US$’000
Cash at bank available on demand 118,575
Restricted cash 223
65,197 38,364
2,032 –
Total cash and cash equivalents 118,798
67,229 38,364
–
–
–
Group Company
Cash and cash equivalents include cash at bank available on demand and restricted cash.
At 31 December 2020 and 31 December 2019, there was US$223,000 and US$2,032,000 of restricted cash, respectively. The
balance at 31 December 2020 includes a deposit on a company credit card facility for an amount of US$150,000
(31 December 2019: US$150,000). Of the US$2,032,000 held in restricted cash at 31 December 2019, $1,069,000 was in an
escrow account, which was set-up in accordance with Aegerion’s bankruptcy plan as approved by the U.S. Bankruptcy Court,
and it was fully utilised to pay the costs associated with the bankruptcy process. Additionally, there was US$73,000 held by a
third-party distributor at 31 December 2020 (31 December 2019: US$813,000).
17. Share capital and reserves
Details of the number of issued ordinary shares with a nominal value of Sterling 6 pence (2019: 6 pence) each are in the table
below.
Ordinary shares Treasury shares Deferred shares
2019
2020
2020
2019
2020
2019
At 1 January 154,498,887
Share consolidation in 2019 –
Issue of shares in exchange
for warrants 8,229,753
Issue of shares in equity
fund raises 16,000,000
Issue of shares in
consideration
of Aegerion Acquisition –
Issue of treasury shares for
share options exercised 72,953
Treasury shares acquired in
consideration for additional
warrants –
274,817,283
(229,014,401)
4,864,656
–
1,645,105
34,888,133
77,027,423
–
–
–
–
(72,953)
–
–
–
–
–
–
(4,864,656)
–
4,864,656
At December 31 178,801,593
154,498,887
4,791,703
4,864,656
–
–
–
–
–
–
–
–
43,171,134
(43,171,134)
–
–
–
–
–
–
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 116
116
Notes to the Financial Statements continued
For the year ended 31 December 2020
The components of equity are detailed in the Consolidated and Company Statement of Changes in Equity and described in more
detail below.
The total number of ordinary shares issued at 31 December 2020 of 183,593,296 (2019: 159,363,543), includes treasury shares
of 4,791,703 (2019: 4,864,656).
In December 2020, the Company issued 3,200,000 American Deposit Shares (“ADSs”), each representing five ordinary shares, as
part of a US$40,000,000 private placement equity raise to existing and new shareholders.
The Company issued 4,000,000 and 4,229,753 ordinary shares on 15 July 2020 and 22 September 2020, respectively, in
exchange for certain warrants.
On 27 December 2019, the Company issued 1,645,105 shares to certain shareholders in consideration of warrants.
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.
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.
In July 2019, the Company repurchased all of the 43,171,134 Deferred Ordinary Shares 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.
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.
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.
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. The Company issued 4,000,000 and 4,229,753 ordinary
shares on 15 July 2020 and 22 September 2020, respectively, in exchange for certain warrants. On 27 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. In October 2020, the Company issued 72,953 ordinary shares from treasury shares
following the exercise of share options.
Amryt Pharma plc
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117
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 plc in April 2016. Ordinary shares in Amryt
Pharma plc were issued to acquire the entire issued share capital of Amryt DAC. 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 plc 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 plc 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 recognised in equity and is not subsequently remeasured.
Other distributable reserves
Other distributable reserves comprise the following:
(cid:129) Distribution of the share premium amount on 6 November 2019 of US$268,505,000. By special resolution of the Company
duly passed on 23 September 2019, 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.
(cid:129) A deemed distribution of US$47,902,000 arising from the issuance of CVRs.
(cid:129) A deemed distribution of US$2,969,000 arising from the scheme of arrangement in September 2019 whereby Amryt Pharma
plc, which was incorporated in July 2019, became a 100% shareholder of Amryt Pharma Holdings Limited (formerly named
Amryt Pharma plc) (the “Acquisition of subsidiary without a change of control”).
Currency translation reserve
The currency translation reserve arises on the retranslation of non-U.S. dollar denominated foreign subsidiaries.
Accumulated deficit
Accumulated deficit represents losses accumulated in previous periods and the current year.
Annual Report for the 12 months ended 31 December 2020
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118
Notes to the Financial Statements continued
For the year ended 31 December 2020
18. Deferred tax liability
At 1 January 2019
Net movement during the year, as restated*
At 31 December 2019, as restated*
Net movement during the year
At 31 December 2020
* see note 27
Total
US$’000
6,161
986
7,147
(535)
6,612
A deferred tax liability arose in 2016 on the acquisition of Amryt GmbH. An intangible asset was recognised in relation to in
process R&D. As the intangible asset only arises on consolidation and there may not be tax deductions available on sale, its tax
base is nil.
When the intangible asset is amortised the tax difference will be reduced and the movement in the deferred tax liability will be
recognised in profit or loss. The in-process R&D is currently not being amortised and as a result the deferred tax liability in relation
to the Birken acquisition continues to be in place. As a Euro denominated liability, FX movements resulted in the deferred tax
liability increasing by US$583,000 in the year.
Separately, a deferred tax liability was recognised in 2019 in connection with the acquisition of Aegerion Pharmaceuticals, Inc.
(see Note 6, Business combinations and asset acquisitions). The intangible assets have been recognised 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 recognised on acquisition. These intangibles are being amortised and the resulting reduction in
the deferred tax liability will be recognised in profit or loss. There was a reduction in the liability of US$1,118,000 during the year.
19. Long term loan
Long term loan principal
Unamortised debt issuance costs
Long term loan
31 December
2020
US$’000
31 December
2019
US$’000
88,037
(735)
87,302
82,456
(846)
81,610
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. 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. Unpaid accrued interest of US$1,439,000 as at 31 December 2020 is recognised in current
liabilities with trade and other payables (2019: US$nil). 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 amortised over the expected life of the loan
using the effective interest method.
Amryt Pharma plc
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119
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 2020 (2019: no
events).
Changes in long term loans from financing activities:
At January 1
Cash-flows
Proceeds from loans and borrowings
Repayment of loans and borrowings
Liability related
Paid in kind interest
Amortisation of debt costs
Accrued interest
At December 31
20. Convertible notes
At 1 January 2019
Issuance of convertible notes
Amount classified as equity
Accreted interest
At 31 December 2019
Accreted interest
At 31 December 2020
2020
US$’000
81,610
–
–
5,585
107
1,439
88,741
2019
US$’000
19,011
31,176
(21,990)
797
54,469
(1,853)
81,610
Total
US$’000
–
125,000
(29,210)
1,066
96,856
4,230
101,086
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.
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 120
120
Notes to the Financial Statements continued
For the year ended 31 December 2020
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$1,000 principal amount, at the option
of the holder.
The indenture does not contain any financial covenants or restrict the Group’s ability to repurchase securities, pay dividends or
make restricted payments in the event of a transaction that substantially increases the Group’s level of indebtedness in certain
circumstances.
The indenture contains customary terms and covenants and events of default. If an event of default (other than certain events of
bankruptcy, insolvency or reorganisation involving Aegerion, Amryt and certain subsidiaries of the Group) occurs and is
continuing, the trustee by notice to Aegerion, or the holders of at least 25% in principal amount of the outstanding convertible
notes by written notice to Aegerion and the trustee, may declare 100% of the principal of and accrued and unpaid interest, if
any, on all of the convertible notes to be due and payable. Upon such a declaration of acceleration, such principal and accrued
and unpaid interest, if any, will be due and payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency
or reorganisation involving Aegerion, 100% of the principal and accrued and unpaid interest, if any, on the convertible notes will
become due and payable automatically. Notwithstanding the foregoing, the indenture provides that, upon Aegerion’s election,
and for up to 180 days, the sole remedy for an event of default relating to certain failures by Aegerion to comply with certain
reporting covenants in the indenture consists exclusively of the right to receive additional interest on the convertible notes. There
have been no events of default or breaches of the covenants occurring for the year ended 31 December 2020 (2019: no events).
21. Trade and other payables
31 December
2020
US$’000
Trade payables 23,595
Accrued expenses 65,705
Social security costs and other taxes 936
Intercompany payables –
Group Company
31 December
2019 31 December
restated* 2020
US$’000 US$’000
31 December
2019
US$’000
22,489 528
55,066 3,108
796 –
– 14,937
789
592
–
680
Trade and other payables 90,236
78,351 18,573
2,061
* see note 27
The accruals for the Group mainly consist of costs related to government revenue rebates due within one year, convertible note
interest, term loan interest, royalty expenses, restructuring costs, clinical and R&D activities. The accruals for the Company mainly
relate to equity raising costs and fees on investor relations, audit, tax and other professional services. Intercompany payables
relate to advances from subsidiaries to fund operations of the Company due to be settled in 2021.
Amryt Pharma plc
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FINANCIAL STATEMENTS
121
22. Provisions and other liabilities
Non-current liabilities
Provisions and other liabilities
Leases due greater than 1 year
Current liabilities
Provisions and other liabilities
Leases due less than 1 year
Total provisions and other liabilities
* see note 27
31 December
2020
US$’000
31 December
2019
restated*
US$’000
21,382
4,569
25,951
9,976
963
10,939
36,890
3,910
1,053
4,963
23,304
571
23,875
28,838
Refer to Note 25, Commitments and contingencies for further details on provisions.
The Group leases various offices, equipment, vehicles and a production facility.
During the year ended 31 December 2020 there were two new office leases entered into in the Group, the details of which are
outlined below.
In February 2020, the Group entered an 8-year term lease for its U.S. operational office, located in Boston, Massachusetts (the
“Boston lease”). The lease commenced in June 2020 and the aggregate lease payment over the lease term is approximately
US$2,100,000. On initial recognition, the right-of-use asset associated with the Boston lease was US$1,381,000, which was
recorded in property, plant and equipment and the corresponding lease liabilities of the same amount were recorded in current
provisions and other liabilities and non-current provisions and other liabilities, being US$148,000 and US$1,233,000, respectively.
In June 2020, the Group entered a 20-year term lease for its headquarters, located in Dublin, Ireland (the “Dublin lease”). The
lease commenced in June 2020 and the aggregate lease payments over the non-cancellable lease term is approximately
US$5,420,000. On initial recognition, the right-of-use asset associated with the Dublin lease was US$2,965,000, which was
recorded in property, plant and equipment and the corresponding lease liabilities of the same amount were recorded in current
provisions and other liabilities and non-current provisions and other liabilities, being US$110,000 and US$2,855,000, respectively.
The right-of-use assets associated with the Dublin and Boston leases represent the Group’s right to use the underlying assets
during the respective lease term and the related lease liabilities represent the Group’s obligation to make lease payments arising
from the leases. Both the right-of-use assets and the corresponding liabilities are recognised at the commencement date of the
leases based upon the present value of lease payments over the lease term. As the Group’s leases do not provide an implicit rate,
when determining the lease liabilities, the Group estimated the incremental borrowing rate with reference to the interest rate
from the Term Loan entered in September 2019.
The Dublin and Boston leases do not contain purchase options. The Boston lease contains renewal options that can be exercised
at the discretion of the Group, and the Group only includes renewal option in the lease term when it is reasonably certain to
exercise such option. The Dublin lease includes a termination option that can be exercised at the discretion of the Group on the
12th anniversary of the lease commencement date. The lease term includes the period up to the termination option date where
it is reasonably certain that the option will not be taken.
Annual Report for the 12 months ended 31 December 2020
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122
Notes to the Financial Statements continued
For the year ended 31 December 2020
Changes in lease liabilities from financing activities:
At January 1
Adoption of IFRS 16
Cash-flows
Payment of leases
Non-cash
Acquired lease assets
New leases
Interest expense
Foreign exchange movement
At December 31
23. Related party transactions
Compensation of key management personnel
2020
US$’000
2019
US$’000
1,624 –
– 874
(1,119) (393)
– 924
4,420 152
335 17
272 50
5,532 1,624
At 31 December 2020 the key management personnel of the Group and Company were made up of two key personnel, the
executive director, Joe Wiley and the Chief Financial Officer and Chief Operating Officer, Rory Nealon. Rory Nealon was an
executive director of the Company in 2018 and resigned from this position on 24 September 2019, he was appointed as
company secretary on 24 September 2019.
Compensation for the years ended 31 December 2020 and 31 December 2019 of these personnel is detailed below:
Short-term employee benefits
Performance related bonus
Post-employment benefits
Share-based compensation benefits
Total compensation
31 December
2020
US$’000
31 December
2019
US$’000
1,409
1,122
119
2,895
5,545
1,049
1,286
86
510
2,931
Shares purchased by directors of the Company
The Chairman, Ray Stafford, purchased 918,273 and 300,100 Amryt ordinary shares as part of the interim fundraise in August
2019 and in March 2021, respectively. The executive director, Joe Wiley purchased 7,999 shares on the open market in January
2020.
Amryt Pharma plc
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FINANCIAL STATEMENTS
123
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. 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$60,000,000 equity raise.
On 14 November 2019, the Company repurchased a combined 4,864,656 ordinary shares from Highbridge Tactical Master Fund
L.P., Highbridge SCF Special Situations SPV, L.P. and Nineteen77 Global Multi Strategy Alpha Master Limited. In exchange for the
ordinary shares, these institutions were issued an equivalent number of zero cost warrants. Each warrant entitles the holder to
subscribe for one ordinary share at zero cost. These ordinary shares are now held as treasury shares. On 19 December 2019,
Highbridge MSF International Ltd exercised 1,645,105 zero cost warrants in exchange for 1,645,105 ordinary shares.
In July 2020, Highbridge Tactical Master Fund L.P. exercised 4,000,000 zero cost warrants in exchange for 4,000,000 ordinary
shares. In September 2020, Nineteen77 Global Multi Strategy Alpha Master Limited exercised 4,229,753 zero cost warrants in
exchange for 4,229,753 ordinary shares.
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 124
124
Notes to the Financial Statements continued
For the year ended 31 December 2020
24. Fair value measurement and financial risk management
Categories of financial instruments
31 December
2020
US$’000
Financial assets (all at amortised cost):
Cash and cash equivalents 118,798
Trade receivables 33,057
Intercompany receivables –
Group Company
31 December
2019 31 December
restated* 2020
US$’000 US$’000
31 December
2019
US$’000
67,229 38,364
28,607 –
– 8,771
Total financial assets 151,855
95,836 47,135
Financial liabilities:
At amortised cost
Trade payables and accrued expenses 89,300
Intercompany payables –
Lease liabilities 5,532
Other liabilities 25,358
Convertible notes 101,086
Long term loan 87,302
Contingent value rights 61,417
At fair value
Contingent consideration 86,906
77,555 3,636
– 14,937
1,624 –
19,457 –
96,856 –
81,610 –
49,413 61,417
53,048 –
Total financial liabilities 456,901
379,563 79,990
Net (305,046)
(283,727) (32,855)
* see note 27
–
–
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).
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$86,906,000 as at 31 December 2020 (2019: US$53,048,000). 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.
Amryt Pharma plc
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FINANCIAL STATEMENTS
125
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$6,079,000. 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$15,656,000. A decrease of 5%
would result in an increase to the fair value of US$20,965,000.
(cid:129) A six-month delay in the launch date for Oleogel-S10 would result in a decrease to the fair value of US$8,667,000.
There were no transfers between Level 1, Level 2 and Level 3 during the years ended 31 December 2020 and 2019.
Policies and Objectives
The Group and Company’s operations expose it to some financial risks arising from its use of financial instruments, the most
significant ones being liquidity, market risk and credit risk. The Board of Directors is responsible for the Group and Company’s risk
management policies and whilst retaining responsibility for them it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group and Company’s finance function.
The main policies for managing these risks are as follows:
Liquidity risk
The Group and Company are not subject to any externally imposed capital requirement. Accordingly, the Group and Company’s
objectives are to safeguard the ability to continue as a going concern in order to provide returns for shareholders and benefits to
other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Working capital forecasts are
prepared to ensure the Group and Company has sufficient funds to complete contracted work commitments.
The following table shows the maturity profile of financial liabilities of the Group:
31 December 2020
Carrying Contractual 6 months 6 months -
12 months
amount cash flows or less
US$’000
US$’000 US$’000 US$’000
1-2 years
US$’000
2-5 years
US$’000
> 5 years
US$’000
Total
US$’000
Trade payables
and accrued
expenses 89,300 89,300 89,300
Lease liabilities 5,532 8,820 525
Other liabilities 25,358 25,375 3,993
Long term loan 87,302 136,723 2,901
Convertible notes 101,086 153,125 3,125
Contingent
consideration and
contingent value
rights** 148,323 127,991 –
456,901 541,334 99,844
–
525
–
3,046
3,125
–
1,096
21,382
6,349
6,250
–
2,676
–
124,427
140,625
–
3,998
–
–
–
89,300
8,820
25,375
136,723
153,125
62,283
68,979
–
65,708
–
127,991
35,077
333,436
3,998
541,334
** Contingent consideration contractual cash flows do not include royalty payments due to be paid by Amryt, which are dependent on sales of Oleogel-S10 products.
The carrying amount of contingent consideration is recorded at fair value, which incorporates the estimated royalty payments on sales of Oleogel-S10 products.
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 126
126
Notes to the Financial Statements continued
For the year ended 31 December 2020
31 December 2019
Carrying Contractual 6 months 6 months -
12 months
amount cash flows or less
US$’000
US$’000 US$’000 US$’000
1-2 years
US$’000
2-5 years
US$’000
> 5 years
US$’000
Total
US$’000
Trade payables
and accrued
expenses, as
restated* 77,555 77,555 77,555
Lease liabilities 1,624 2,048 484
Other liabilities,
as restated* 19,457 19,650 7,584
Long term loan 81,610 142,308 2,732
Convertible notes 96,856 159,497 3,247
Contingent
consideration and
contingent value
rights** 102,461 127,557 –
–
485
8,138
2,853
3,125
–
379,563 528,615 91,602
14,601
* see note 27
–
601
3,928
5,947
6,250
–
458
–
20
77,555
2,048
–
130,776
18,750
–
–
128,125
19,650
142,308
159,497
50,000
66,726
49,559
27,998
127,557
199,543
156,143
528,615
** Contingent consideration contractual cash flows do not include royalty payments due to be paid by Amryt, which are dependent on sales of Oleogel-S10
products. The carrying amount of contingent consideration is recorded at fair value, which incorporates the estimated royalty payments on sales of Oleogel-S10
products.
The following table shows the maturity profile of financial liabilities of the Company:
31 December 2020
Carrying Contractual 6 months 6 months -
12 months
amount cash flows or less
US$’000
US$’000 US$’000 US$’000
1-2 years
US$’000
2-5 years
US$’000
> 5 years
US$’000
Total
US$’000
Trade payables
and accrued
expenses 3,636 3,636 3,636
Intercompany
payables 14,937 14,937 14,937
Contingent value
rights 61,417 85,000 –
79,990 103,573 18,573
–
–
50,000
50,000
–
–
–
–
–
–
35,000
35,000
–
–
–
–
3,636
14,937
85,000
103,573
Amryt Pharma plc
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FINANCIAL STATEMENTS
127
31 December 2019
Carrying Contractual 6 months 6 months -
12 months
amount cash flows or less
US$’000
US$’000 US$’000 US$’000
1-2 years
US$’000
2-5 years
US$’000
> 5 years
US$’000
Total
US$’000
Trade payables
and accrued
expenses 1,381 1,381 1,381
Intercompany
payables 680 680 680
Contingent value
rights 49,413 85,000 –
51,474 87,061 2,061
Capital management
–
–
–
–
–
–
–
–
50,000
50,000
35,000
35,000
–
–
–
–
1,381
680
85,000
87,061
The Group and Company considers its capital to be its ordinary share capital, share premium, other reserves and accumulated
deficit. The Group and Company manages its capital to ensure that entities within the Group will be able to continue individually
as going concerns, while maximising the return to shareholders through the optimisation of debt and equity balances. The Group
and Company 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 and Company 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 2020 and 31
December 2019.
Market risk
Market risk arises from the use of interest-bearing financial instruments and represents the risk that future cash flows of a
financial instrument will fluctuate as a result of changes in interest rates. It is the Group’s policy to ensure that significant
contracts are entered into in its functional currency whenever possible and to maintain the majority of cash balances in the
functional currency of the Company. The Group considers this policy minimises any unnecessary foreign exchange exposure. In
order to monitor the continuing effectiveness of this policy, the Board 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 2020 and 31 December 2019, the long term borrowings of
the Group were subject to fixed rates of interest.
During the year 2020, the Group earned interest on its interest-bearing financial assets at rates between 0% and 1%. The effect
of a 1% change in interest rates obtainable during the year on cash and on short-term deposits would be to increase or decrease
the Group loss before tax by US$174,000 (2019: US$71,000).
In addition to cash balances maintained in US$, 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$2,228,000 with a corresponding reduction in the Group loss before tax with a 10% favourable movement. A theoretical
10% adverse movement in £:US$ exchange rates would lead to an increase in the Group loss before tax by US$120,000 with a
corresponding reduction in the Group loss before tax with a 10% favourable movement.
Credit risk
The Group and Company have 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
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 128
128
Notes to the Financial Statements continued
For the year ended 31 December 2020
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 recognised banks with high credit ratings.
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 42% of the total trade receivables of the group outstanding as at 31 December
2020 (2019: 44%).
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes
in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group assesses ECL
based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment.
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 commercialise 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 2020,
following the Aegerion acquisition on 24 September 2019, the Group recorded aggregate royalty expenses to third parties of
US$20,492,000 (2019: US$5,104,000).
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, commercialise, 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 2020, following the Aegerion acquisition on 24
September 2019, the Group recorded aggregate royalty expenses to third parties of US$2,026,000 (2019: US$803,000).
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
utilising 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
commercialise
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.
The Group is party to a license agreement for the exclusive license of certain know-how and a range of patent rights in order for
Amryt to develop and commercialise its genetic encoded therapies relating to AP104. Under this agreement Amryt is required to
make royalty payments on net sales of products.
Amryt Pharma plc
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 129
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FINANCIAL STATEMENTS
129
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$19,108,000 of settlement payments, including interest. The settlements remaining to be paid are due for payment in Q1
2021 and the amount totalling US$3,976,000 is recognised in Other liabilities as a current liability (2019: US$15,547,000). There
is no non-current liability at 31 December 2020 (2019: US$3,910,000).
Other matters
The Group recognises 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 2020 the Group had recognised liabilities of US$6,000,000 in relation to ongoing legal matters (2019 US$7,757,000,
as restated, see Note 27, Restatement of prior year comparatives).
The Group has a liability for revenue rebates due on Myalepta sales in a country in the EMEA region from agreeing a
reimbursement price with the government authorities resulting in a one-off payment related to sales to date. The Group has
recognised a liability of US$21,382,000 as at 31 December 2020, and the final payment is due to be paid to the authorities in
July 2022.
Lease commitments
The Group and Company had no finance lease commitments in 2020 (2019: nil). See Note 24, Fair value measurement and
financial risk management for details on operating lease commitments.
26. Investment in subsidiaries
Cost
At date of incorporation
Additions
At 31 December 2019
Additions
At 31 December 2020
Impairment
At date of incorporation
Impairment charge
At 31 December 2019
Impairment charge
At 31 December 2020
Net book value
At 31 December 2019
At 31 December 2020
Total
US$’000
–
280,962
280,962
60,973
341,935
–
–
–
–
–
280,962
341,935
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 130
130
Notes to the Financial Statements continued
For the year ended 31 December 2020
During the year ended 31 December 2020, the Company provided a capital contribution of US$56,059,000 to its immediate
subsidiary Amryt Pharma Holdings Limited. Additions also include the value of share options relating to employees of
subsidiaries, the cost of which recognised in investments in subsidiaries, see Note 5, Share based payments, for more details.
The carrying value of the investments are 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 year (2019: nil).
Company
number
5316808
Incorporation
UK
2020 % 2019 %
holding
holding
100
100
List of subsidiary companies:
Subsidiary Ownership Activities
Amryt Pharma Direct
Holdings Limited
Holding company
and management
services
Amryt Pharmaceuticals Indirect
DAC
Product Sales and
management services
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
566448
Ireland
571411
572984
593833
622577
Ireland
Ireland
Ireland
Ireland
UK
Italy
Spain
Amryt Pharma (UK) Indirect
Limited
Management services
10463152
Amryt Pharma Italy SRL Indirect
Management services
2109476
Amryt Pharma Spain SL Indirect
Management services
B67130567
Amryt GmbH Indirect
(formerly 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
Cala Medical Limited Indirect
Pharmaceuticals R&D
Amryt Distribution Limited Indirect
Dormant
Amryt Pharmaceuticals Indirect
Inc.
Holding company and
management services
Aegerion International Ltd. Indirect
Management services
Aegerion Pharmaceuticals Indirect
Holdings, Inc.
Product Sales
Management services
598486
667507
3922075
52048
5213687
USA
Ireland
Ireland
USA
Bermuda
USA
Aegerion Argentina S.R.L. Indirect
Management services
901-709682-0
Argentina
Management services 85134 5132 RT0001
Canada
Management services
R048196625
Colombia
Aegerion Pharmaceuticals Indirect
(Canada) Limited
Amryt Colombia S.A.S. Indirect
(formerly Aegerion
Colombia S.A.S)
Amryt Pharma plc
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
100
100
100
100
NA
100
100
100
100
100
100
100
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 131
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
131
Subsidiary Ownership Activities
Company
number
Incorporation
2020 % 2019 %
holding
holding
Aegerion Pharmaceuticals Indirect
K.K. (Recently liquidated)
Aegerion Brasil Comercio Indirect
E Importacao De
Medicamentos LTDA
Aegerion Pharmaceuticals Indirect
Ltd.
Aegerion Pharmaceuticals Indirect
Limited
Amryt Pharmaceuticals Indirect
SAS (formerly Aegerion
Pharmaceuticals, SAS)*
Aegerion Pharmaceuticals Indirect
S.r.l.
Amryt Pharma GmbH Indirect
(formerly Aegerion
Pharmaceuticals GmbH)
Aegerion İlaç Ticaret Indirect
Limited Şirketi
Aegerion Pharmaceuticals Indirect
SARL
Aegerion Pharmaceuticals Indirect
B.V.
Aegerion Pharmaceuticals Indirect
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
* Amryt Pharma France, a dormant group subsidiary merged with Amryt Pharmaceuticals SAS (formerly Aegerion Pharmaceuticals, SAS) during the year.
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
Registered Office Address
Dept 920a 196 High Road, Wood Green, London,
United Kingdom, N22 8HH
45 Mespil road, Dublin 4
45 Mespil road, Dublin 4
45 Mespil road, Dublin 4
45 Mespil road, Dublin 4
45 Mespil road, Dublin 4
3rd Floor 1 Ashley Road, Altrincham, Cheshire,
United Kingdom, WA14 2DT
Amryt Pharma Italy SRL
Milano (MI)-Via Dell'Annunciata 23/4
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 132
132
Notes to the Financial Statements continued
For the year ended 31 December 2020
Company
Amryt Pharma Spain SL
Registered Office Address
Barcelona, calle Diputacio, number 260
Amryt GmbH (formerly Amryt AG)
Streiflingsweg 11, 75223 Niefern-Öschelbronn
SomPharmaceuticals SA
SomTherapeutics, Corp
Cala Medical Limited
Amryt Distribution Limited
Amryt Pharmaceuticals Inc.
Aegerion International Ltd.
Bahnofstrasse 21, 6300 Zug
3795 Coventry Lane, Boca Raton, FL 33496
45 Mespil road, Dublin 4
45 Mespil road, Dublin 4
245 First Street, Riverview II, 18th Floor, Cambridge, MA 02142
Clarendon House, 2 Church Street, Hamilton, HM11
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) Limited
5300 Commerce Court West, 199 Bay Street, Toronto, ON M5L 1B9
Amryt Colombia S.A.S.
(formerly Aegerion Colombia S.A.S)
Aegerion Pharmaceuticals K.K.
(Recently liquidated)
Aegerion Brasil Comercio E Importacao
De Medicamentos LTDA
CR 12 89 33 P 5, Bogota DC, Bogota 110111
12F, Ark Mori Building, 1-12-32 Akasaka, Minato-ku, Tokyo
Rua Joseefina, 200-Guarulhos City, Sao Paulo
Aegerion Pharmaceuticals Ltd.
Clarendon House, 2 Church Street, Hamilton, HM11
Aegerion Pharmaceuticals Limited
Floor, London, United Kingdom, E14 5HU
Amryt Pharmaceuticals SAS
(formerly Aegerion Pharmaceuticals, SAS)
C/O Corporation Service Company (Uk) Limited 5 Churchill Place, 10th
235, Avenue Le Jour se Leve, Boulogne-Billancourt, 92 100
Aegerion Pharmaceuticals S.r.l.
Viale Abruzzi n. 94, Milano, 20131
Amryt Pharma GmbH
(formerly Aegerion Pharmaceuticals GmbH)
Aegerion İlaç Ticaret Limited Şirketi
Aegerion Pharmaceuticals SARL
Aegerion Pharmaceuticals B.V.
Streiflingsweg 4, 75223 NiefernÖschelbronn, Germany.
Orjin Maslak, Eski Buyukdere Caddesi No: 27 K:11,
Maslak, Istanbul, 34485
Rue de Pontets 6, Lavigny, Switzerland 1175
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
Amryt Pharma plc
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FINANCIAL STATEMENTS
133
27. Restatement of prior year comparatives
As described in Note 6, Business combinations and asset acquisitions, IFRS 3 requires fair value adjustments to be recorded with
effect from the date of acquisition and consequently result in the restatement of previously reported financial results. The impact
on the Consolidated Statement of Financial Position as at 31 December 2019 is shown below:
As
previously
reported
US$’000
Assets
Non-current assets
Goodwill 30,813
Intangible assets 350,953
Property, plant and equipment 3,036
Other non-current assets 2,306
Adjustments Note
US$’000
As restated
US$’000
(11,682) 27a
(8,626) 27b
–
(433) 27c
Total non-current assets 387,108
(20,741)
Current assets
Trade and other receivables 36,387
Inventories 43,623
Cash and cash equivalents, including restricted cash 67,229
(887) 27c
14,377 27d
–
Total current assets 147,239
13,490
Total assets 534,347
Equity and liabilities
Equity attributable to owners of the parent
Share capital 11,918
Share premium 2,422
Other reserves 248,656
Accumulated deficit (133,674)
(7,251)
–
–
(26)
2,537
Total equity 129,322
2,511
Non-current liabilities
Contingent consideration and contingent value rights 102,461
Deferred tax liability 18,921
Long term loan 81,610
Convertible notes 96,856
Provisions and other liabilities 4,963
–
(11,774) 27e
–
–
–
Total non-current liabilities 304,811
(11,774)
Current liabilities
Trade and other payables 76,596
Provisions and other liabilities 23,618
1,755 27c
257 27c
Total current liabilities 100,214
2,012
Total liabilities 405,025
(9,762)
Total equity and liabilities 534,347
(7,251)
19,131
342,327
3,036
1,873
366,367
35,500
58,000
67,229
160,729
527,096
11,918
2,422
248,630
(131,137)
131,833
102,461
7,147
81,610
96,856
4,963
293,037
78,351
23,875
102,226
395,263
527,096
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 134
134
Notes to the Financial Statements continued
For the year ended 31 December 2020
The above adjustments to the consolidated statement of financial position relate to the completion of the fair value assignment to identifiable assets and liabilities
acquired as part of the Aegerion acquisition, the following adjustments have been reflected in the consolidated financial statements:
a) The adjustments to goodwill are a consequence of the fair value adjustments described in more detail below, which primarily relate to the measurement of
intangible assets, valuation of inventory and associated deferred tax liabilities.
b) The fair value of intangible assets acquired, consisting of developed technology for metreleptin and lomitapide, was adjusted as a consequence of the detailed
review and update to the expected future usage of inventory, the valuation of which was a factor in determining the fair value of acquired developed technology.
See more detail on the update to the inventory valuation below.
c) Accruals, provisions, and prepayments as at the acquisition date were reviewed during the twelve months following the acquisition and the fair values as at the
acquisition date were updated based on the results of a review of the conditions that existed at this date.
d) Fair value of inventory recognised at the date of acquisition was updated to reflect the results of detailed reviews of both raw material and finished good acquired.
This involved a review the expected timing of transition from usage of acquired finished goods to usage of new inventory, including the review of expected timing
of manufacture runs and the review of expected inventory usage. Additionally, a review was conducted on the demand and production that would be saleable in
the future. The review resulted in a change in the assumptions and estimates regarding the usage of acquired inventory, leading to an increase in the estimated
usage of acquired inventory and consequently resulting in an increase in the fair value of acquired inventory.
e) Deferred tax was updated to reflect the above changes to the fair value of the inventory and of intangible assets. In addition, deferred tax was updated to reflect
the results of a review of the historic tax basis of U.S. intangible assets included in the Aegerion acquisition. This review identified that the tax basis of the asset in
question was understated at the time of the acquisition. The closing deferred tax liability as of 31 December 2019 was adjusted for the correct tax basis.
As noted above, IFRS 3 requires fair value adjustments to be recorded as if the accounting for the business combination had been completed at the acquisition date.
Consequently, the comparative information for prior periods presented in financial statements were revised, including changes in inventory fair value step-up
amortisation, intangible amortisation and deferred tax effects recognised in completing the acquisition accounting.
Amryt Pharma plc
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FINANCIAL STATEMENTS
135
The impact on the Consolidated Statement of Comprehensive Loss of the fair value adjustments for the year ended 31 December
2019 is shown below:
58,124
(38,733)
19,391
(15,827)
(35,498)
(13,038)
(841)
(4,670)
(50,483)
(6,740)
(1,511)
(4,759)
(63,493)
495
As
previously
reported
US$’000
Revenue 58,124
Cost of sales (42,001)
Gross profit 16,123
Research and development expenses (15,827)
Selling, general and administrative expenses (35,498)
Restructuring and acquisition costs (13,038)
Share based payment expenses (841)
Impairment charge (4,670)
–
3,268 27f
3,268
–
–
–
–
–
Adjustments Note
US$’000
As restated
US$’000
Operating loss before finance expense (53,751)
3,268
Non-cash change in fair value of contingent consideration (6,740)
Non-cash contingent value rights finance expense (1,511)
Net finance expense - other (4,759)
–
–
–
Loss on ordinary activities before taxation (66,761)
3,268
Tax credit on loss on ordinary activities 1,226
(731) 27g
Loss for the year attributable to the equity holders
of the Company (65,535)
2,537
(62,998)
Exchange translation differences which may be
reclassified through profit or loss 781
Total other comprehensive income 781
Total comprehensive loss for the year attributable to the
equity holders of the Company (64,754)
Loss per share
Loss per share - basic and diluted, attributable to
ordinary equity holders of the parent (US$) (0.86)
(26)
(26)
755
755
2,511
(62,243)
(0.83)
The above adjustments relate to the impact on the consolidated statement of comprehensive loss as result of the fair value
adjustments following the completion of the fair value assignment to identifiable assets and liabilities acquired as part of the
Aegerion acquisition.
Non-cash adjustments to the statement of comprehensive loss:
f) Cost of sales has been adjusted for the impact on the non-cash amortisation of inventory fair value step-up and acquired intangibles, for the period from the date
of acquisition to the year end, as a result of the update to acquired inventory and intangible fair values following the finalisation of acquisition accounting for the
Aegerion acquisition. See Note 27b and 27d, above, for further detail on the fair value adjustments to acquired inventory and intangible.
g) As a result of a change in the measurement of the deferred tax liability at the acquisition date, there was a non-cash adjustment to the tax charge for the period
from the date of acquisition to the year end.
Annual Report for the 12 months ended 31 December 2020
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136
Notes to the Financial Statements continued
For the year ended 31 December 2020
28. Events after the reporting period
Mergers and acquisitions
On 5 May 2021, Amryt announced that it had signed a definitive agreement to acquire Chiasma, Inc. (“Chiasma”) in an all-stock
combination. The combined company will be a global leader in rare and orphan diseases with three on-market commercial
products, a global commercial and operational footprint and a significant development pipeline of therapies with the financial
flexibility to execute its growth plans. The transaction has been approved and recommended by the Boards of both Amryt and
Chiasma.
Under the terms of the transaction, each share of Chiasma common stock issued and outstanding prior to the consummation of
the transaction will be exchanged for 0.396 Amryt ADSs, each representing five Amryt ordinary shares. As of the close of trading
on 4 May 2021 Amryt’s ordinary shares on AIM were £2.00 ($2.78) per share and Amryt’s ADS’s on NASDAQ were $12.95
(£9.31) per ADS.
Development Pipeline
Amryt will seek a Priority Review Voucher (“PRV”) as part of the Oleogel-S10 NDA submission which if granted, we can sell,
transfer or use to accelerate the approval of a future Amryt NDA. However, to be eligible for a PRV, Oleogel-S10 must have a
Pediatric Rare Disease Designation from the FDA, be granted a priority review by FDA, and ultimately the NDA must be approved
by the FDA. Amryt was granted a Pediatric Rare Disease Designation by the FDA in August 2018. On 2 June 2021, the NDA was
accepted by the FDA and on 3 June 2021, a priority review for the NDA was granted by the FDA.
There were no other significant events since the end of the reporting period.
Amryt Pharma plc
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FINANCIAL STATEMENTS
137
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
AIM Nominated Adviser
Shore Capital and Corporate Limited
Cassini House
57 St. James’s Street
London, SW1A 1LD
United Kingdom
Joint Broker
Shore Capital Stockbrokers Limited
Cassini House
57 St. James’s Street
London, SW1A 1LD
United Kingdom
Joint Broker
Stifel Nicolaus Europe Limited
150 Cheapside
London, EC2V 6ET
United Kingdom
Auditors
Grant Thornton
13-18 City Quay
Dublin 2
Ireland
Registrars
Link Asset Services
Central Square
29 Wellington Street
Leeds, LS1 4DL
United Kingdom
Annual Report for the 12 months ended 31 December 2020
261072 5 Amyrt 110pp-138pp.qxp 25/06/2021 14:31 Page 138
Perivan 261072
Amryt Pharma plc
Annual Report 2020
Contact:
45 Mespil Road, Dublin
D04 W2F1, Ireland
+353 1 518 0200
IR@amrytpharma.com
https://www.amrytpharma.com/
https://www.linkedin.com/company/amryt-pharma-plc/
www.amrytpharma.com