References in this report to Amarin, the Company, we, our and us refer to
Amarin Corporation plc and its subsidiaries, on a consolidated basis, unless otherwise indicated.
This Annual Report on
Form 10-K includes the registered and unregistered trademarks and service marks of other parties.
Amarin Corporation plc
(formerly Ethical Holdings plc) is a public limited company incorporated under the laws of England and Wales. Amarin Corporation plc was originally incorporated in England as a private limited company on March 1, 1989 under the Companies Act
1985, and re-registered in England as a public limited company on March 19, 1993.
Our registered office is located at
One New Change, London EC4M 9AF, England. Our principal offices are located at 2 Pembroke House, Upper Pembroke Street 28-32, Dublin 2 Ireland. Our primary office in the United States is located at 1430 Route 206, Bedminster, NJ 07921, USA. Our
telephone number at that location is (908) 719-1315.
For purposes of this Annual Report on Form 10-K, our ordinary
shares may also be referred to as common shares or common stock.
Overview
We are a biopharmaceutical company with expertise in lipid science focused on the commercialization and development of therapeutics to
improve cardiovascular health.
Our lead product,
Vascepa
®
(icosapent ethyl) capsules, is approved by the U.S. Food and Drug Administration, or FDA, for use as an
adjunct to diet to reduce triglyceride levels in adult patients with severe (TG
>
500mg/dL) hypertriglyceridemia. We refer to this approved indication for Vascepa as the MARINE indication. We began marketing and selling Vascepa in the
United States in January 2013. Vascepa is available in the United States by prescription only. We market Vascepa through our sales force of approximately 150 sales professionals, including sales representatives and their managers.
Triglycerides are fats in the blood. Hypertriglyceridemia refers to a condition in which patients have high levels of triglycerides in
the bloodstream. It is estimated that over 40 million adults in the United States have elevated triglyceride levels (TG
>
200mg/dL) and approximately 4.0 million people in the United States have severely high triglyceride levels
(TG
>
500mg/dL), commonly known as very high triglyceride levels. According to
The American Heart Association Scientific Statement on Triglycerides and Cardiovascular Disease
(2011), triglycerides also provide important
information as a marker associated with the risk for heart disease and stroke, especially when an individual also has low high-density lipoprotein cholesterol, or HDL-C (often referred to as good cholesterol), and elevated levels of
LDL-C (often referred to as bad cholesterol). Guidelines for the management of very high triglyceride levels suggest that reducing triglyceride levels is the primary goal in patients to reduce the risk of acute pancreatitis. The effect
of Vascepa on cardiovascular mortality and morbidity, or the risk for pancreatitis, in patients with hypertriglyceridemia has not been determined.
The potential efficacy and safety of Vascepa (known in its development stage as AMR 101) was studied in two Phase 3 clinical trials, the MARINE trial and the ANCHOR trial. At a daily dose of 4 grams of
Vascepa, the dose at which Vascepa is FDA approved, these trials showed favorable clinical results in their respective patient populations in reducing triglyceride levels without increasing LDL-C levels in the MARINE trial and with a statistically
significant decrease in LDL-C levels in the ANCHOR trial, in each case, relative to placebo. These trials also showed favorable results, particularly with the 4-gram dose of Vascepa, in other important lipid and inflammation biomarkers, including
apolipoprotein B (apo B), non-high-density lipoprotein cholesterol (non-HDL-C), total-cholesterol (TC), very low-density lipoprotein cholesterol (VLDL-C), lipoprotein-associated
2
phospholipase A2 (Lp-PLA2), and high sensitivity C-reactive protein (hs-CRP). In these trials, the most commonly reported adverse reaction (incidence >2% and greater than placebo) in
Vascepa-treated patients was arthralgia (joint pain) (2.3% for Vascepa vs. 1.0% for placebo).
We are also developing Vascepa
for the treatment of patients with high (TG
³
200 mg/dL and <500 mg/dL) triglyceride levels who are also on statin therapy for elevated low-density lipoprotein cholesterol, or LDL-C, levels which we
refer to as mixed dyslipidemia. We refer to this second proposed indication for Vascepa as the ANCHOR indication. The FDA views the proposed ANCHOR indication as ostensibly and impliedly an indication to reduce cardiovascular risk. In addition, in
December 2011, we announced commencement of patient dosing in our cardiovascular outcomes study of Vascepa, titled REDUCE-IT (Reduction of Cardiovascular Events with EPAIntervention Trial). The REDUCE-IT study is designed to evaluate the
efficacy of Vascepa in reducing major cardiovascular events in a high risk patient population on statin therapy.
We have a
pending supplemental new drug application, or sNDA, with the FDA that seeks marketing approval of Vascepa for use in the ANCHOR indication. On October 16, 2013, the FDA convened an advisory committee to review our sNDA. This advisory committee
was not asked by the FDA to evaluate whether Vascepa is effective in lowering triglycerides in the studied population, the ANCHOR indication as specified in the sNDA. Rather, the advisory panel was asked whether Vascepa has been demonstrated to
improve cardiovascular outcomes or whether approval of the ANCHOR indication should wait for successful completion of the REDUCE-IT study, the first prospective study of cardiovascular outcomes in patients who have high triglyceride levels despite
statin therapy. The advisory committee voted 9 to 2 against recommending approval of the ANCHOR indication based on information presented at the meeting. The FDA considers the recommendation of advisory committees, but final decisions on the
approval of new drug applications are made by the FDA.
The ANCHOR trial clinical study was conducted under a special protocol
assessment, or SPA, agreement with the FDA. The law governing SPA agreements requires that if the results of the trial conducted under the SPA substantiate the hypothesis of the protocol covered by the SPA, the FDA must use the data from the
protocol as part of the primary basis for approval of the product. A SPA agreement is not a guarantee of FDA approval of the related new drug application. A SPA agreement is generally binding upon the FDA except in limited circumstances, such as if
the FDA identifies a substantial scientific issue essential to determining safety or efficacy of the drug after the study begins that rises to the level of a public health concern, or if the study sponsor fails to follow the protocol that was agreed
upon with the FDA. On October 29, 2013, the FDA rescinded the ANCHOR study SPA agreement because the FDA determined that a substantial scientific issue essential to determining the effectiveness of Vascepa in the studied population was
identified after testing began. As a basis for this determination, the FDA communicated that it determined that the cumulative results from outcome studies of other triglyceride-lowering drugs failed to support the hypothesis that a
triglyceride-lowering drug significantly reduces the risk for cardiovascular events among the population studied in the ANCHOR trial. Thus, the FDA stated that while information we submitted supports testing the hypothesis that Vascepa 4 grams/day
versus placebo reduces major adverse cardiovascular events in statin-treated subjects with residually high triglyceride levels, as is being studied in the Vascepa REDUCE-IT cardiovascular outcomes study, the FDA no longer considers a change in serum
triglyceride levels as sufficient to establish the effectiveness of a drug intended to reduce cardiovascular risk in subjects with serum triglyceride levels below 500 mg/dL. In November 2013, we submitted to the FDA a request for reconsideration of
its decision to rescind the ANCHOR SPA agreement. On January 17, 2014, we were notified by the FDA that it does not intend to reinstate the ANCHOR SPA agreement. Our plan is to continue appealing the rescission decision to successively higher
administrative levels within the FDA in accordance with FDA dispute resolution guidance.
The FDA did not take action on the
ANCHOR sNDA by the Prescription Drug User Fee Act, or PDUFA, goal date for completion of FDAs review, December 20, 2013. Instead, the FDA notified us on December 19, 2013 that it would first consider our appeal of the ANCHOR SPA
agreement rescission. No new PDUFA goal date for the ANCHOR sNDA was established. Based on information available to us, we do not expect a determination on the ANCHOR sNDA while our appeal of the January 17, 2014 FDA decision to uphold the
3
ANCHOR SPA rescission is in process. We are also continuing our efforts toward a positive determination on the pending ANCHOR sNDA. There also can be no assurance that the FDA will not
communicate the results of its review of the ANCHOR sNDA prior to the timing expected.
Based on our communications with the
FDA, we currently expect that final positive results from the REDUCE-IT outcomes study will be required for FDA approval of Vascepa for the ANCHOR indication. There can be no assurance that we will be successful in our effort to reinstate the ANCHOR
SPA agreement or obtain a label expansion reflecting the ANCHOR clinical trial. Such label expansion could include FDA approval of the addition of an ANCHOR indication statement and/or the addition of the ANCHOR clinical trial data to our currently
approved labeling.
On October 22, 2013, in an effort to reduce operating expenses following the recommendation of the
advisory committee to the FDA against approval of the ANCHOR indication, we implemented a worldwide reduction in force of approximately 50% of our staff positions. The majority of affected staff members were sales professionals who supported the
initial commercial launch of Vascepa. We incurred approximately $2.8 million in charges related to the reduction in force, all of which includes cash expenditures for one-time termination benefits and associated costs. The charges were recorded in
the fourth quarter of 2013 and the related payments will be made by the first half of 2014. As part of the reduction in force, we retained approximately 130 sales representatives, excluding sales management, in the United States in sales territories
that we believe have demonstrated the greatest potential for Vascepa sales growth. We plan to have this team cover the target base of physicians responsible for the majority of Vascepa prescription volume and growth since its launch in early
2013. With these changes and resulting target base coverage, we anticipate continued Vascepa revenue growth over time. We also anticipate that such sales growth may be inconsistent from period to period.
We have over 6,500 patients enrolled in the REDUCE-IT study. We currently estimate that we will complete patient enrollment in this study
in the first half of 2015. However, if we do not receive an expansion of Vascepa labeling for the ANCHOR indication, we plan to re-evaluate continuation of the REDUCE-IT study in its present form and re-evaluate whether it is advisable to continue
the study. If continued, the REDUCE-IT study will be completed after reaching an aggregate number of cardiovascular events. Based on event rates in other outcomes studies, we estimate completing the REDUCE-IT study in or about 2017 with results
expected to be available in 2018. Based on the results of REDUCE-IT, we may seek additional indications for Vascepa beyond the indications studied in the ANCHOR or MARINE trials.
In August 2013, we completed dosing of AMR102, a fixed dose combination of Vascepa and a leading statin product. The study is a
randomized, open-label, single-dose, 4-way cross-over study to continue testing of the relative bioavailability of AMR102 capsules, Vascepa capsules with the selected statin taken concomitantly, Vascepa taken alone and the selected statin taken
alone. The results of this study support the feasibility of AMR102. We have suspended additional development of AMR102 pending resolution of the ANCHOR sNDA with the FDA. If we do not receive FDA approval for the ANCHOR indication, we may
discontinue development of AMR102.
Commercialization of Vascepa
Vascepa became commercially available in the United States by prescription in early 2013, when we commenced sales and shipments to our
network of U.S.-based wholesalers. On January 28, 2013, we commenced our full commercial launch of Vascepa in the United States for use in the MARINE indication. In preparation for our commercial launch, we hired and trained a direct sales
force of approximately 275 sales representatives. In October 2013, we reduced our number of sales representatives to approximately 130, excluding sales management, in the United States to focus on the sales territories that we believe have
demonstrated the greatest potential for Vascepa sales growth. We now market Vascepa in the United States through our sales force of approximately 150 sales professionals and their managers. We also employ various marketing and medical affairs
personnel to support our commercialization of Vascepa. Our clinical and commercial supply is provided to us under agreements with various third-party suppliers. As of February 1, 2014, over 16,000 clinicians had written prescriptions for
Vascepa.
4
In December 2013, we completed our eleventh full calendar month of marketing and selling
Vascepa. Based on monthly compilations of data provided by a third party, Symphony Health Solutions, the estimated number of normalized total Vascepa prescriptions for the year ended December 31, 2013 was approximately 225,000. According to
data from another third party, IMS Health, the estimated number of normalized total Vascepa prescriptions was approximately 195,000 for that same period. Normalized total prescriptions represent the estimated total number of Vascepa prescriptions
shipped to patients, calculated on a normalized basis (i.e., total capsules shipped divided by 120 capsules, or one months supply). The data reported above is based on information made available to us from third party resources and may be
subject to adjustment and may overstate or understate actual prescriptions. We recorded revenue of $26.4 million during the year ended December 31, 2013, all from sales of Vascepa in the U.S.
Although we believe these third-party-provided data are prepared on a period-to-period basis in a manner that is generally consistent and
that such results are generally indicative of current prescription trends, these data are based on estimates and should not be relied upon as definitive. In addition, because of our limited selling history, during the year ended December 31,
2013, we only recognized revenue on product that was resold for purposes of filling prescriptions. Those prescription data may differ from data reported by other third parties.
Prior to commencing our U.S. commercial launch of Vascepa in January 2013, we had no revenue from Vascepa. Because of our limited selling
history, changes in the size of our sales force and uncertainty regarding resolution of the ANCHOR sNDA with the FDA, we do not believe that we can provide a reasonably accurate forecast of Vascepa prescriptions or revenues. While we expect to be
able to grow Vascepa revenues, we provide no quantified guidance regarding anticipated levels of Vascepa prescriptions or revenues and no such guidance should be inferred from the operating metrics described above. We believe that investors should
view the above-referenced operating metrics with caution, as data for this limited period may not be representative of a trend consistent with the results presented or otherwise predictive of future results. Seasonal fluctuations in pharmaceutical
sales, for example, may affect future prescription trends of Vascepa, as could changes in prescriber sentiment and other factors. We believe investors should consider our results over several quarters, or longer, before making an assessment about
potential future performance.
The commercial launch of a new pharmaceutical product is a complex undertaking, and our ability
to effectively and profitably launch Vascepa will depend in part on our ability to generate market demand for Vascepa through education, marketing and sales activities, our ability to achieve market acceptance of Vascepa, our ability to generate
product revenue and our ability to receive adequate levels of reimbursement from third-party payers. See
Risk FactorsRisks Related to the Commercialization and Development of Vascepa
.
We believe that our sales and marketing teams are well positioned to support the commercialization of Vascepa for the MARINE indication.
We also believe that a larger sales effort will be required to best support the commercialization of Vascepa for the ANCHOR indication, if the FDA approves such indication. To support the continued commercialization of Vascepa, we intend to consider
strategic opportunities with larger pharmaceutical companies. From time to time we have held discussions with larger pharmaceutical companies on potential collaborations and other strategic opportunities, and we intend to continue having discussions
regarding such opportunities in the future. These strategic opportunities may include licensing or similar transactions, joint ventures, partnerships, strategic alliances, business associations, or a sale of the company. However, we cannot estimate
the timing of any such potential strategic transaction, and no assurance can be given that we will enter into any such strategic transaction. Until such time when we enter into such a strategic transaction, if ever, we plan to continue to execute on
our plans to market and sell Vascepa on our own.
The U.S. market is currently our primary focus for Vascepa. Opportunities to
seek regulatory approval and to market and sell Vascepa outside of the United States are also under evaluation.
Financial
Position
We believe that our cash balance of $191.5 million at December 31, 2013 is sufficient to fund our projected
operations for at least the next twelve months, including continued commercialization of Vascepa in the United
5
States for the MARINE indication, preparations for commercialization of Vascepa in the United States for the ANCHOR indication, if approved, and the advancement of the REDUCE-IT cardiovascular
outcomes study.
Lipid Disorders and Cardiovascular Disease
Heart attacks, strokes and other cardiovascular events represent the leading cause of death and disability among men and women in western societies. According to the Heart Disease and Stroke
Statistics2014 Update from the American Heart Association, more than 1 out of every 3 adults in the U.S. (approximately 84 million) currently lives with one or more types of cardiovascular disease; an estimated 915,000 heart attacks and
795,000 strokes occur each year; an estimated 32 million adults
³
20 years of age have high total serum cholesterol levels (
³
240 mg/dL), and an estimated
71 million adults
³
20 years of age have borderline high or high low-density lipoprotein (bad) cholesterol, or LDL-C, levels (
³
130 mg/dL).
In addition to cholesterol, lipoproteins such as LDL carry fats in the form of triglycerides. Hypertriglyceridemia refers to
a condition in which patients have high levels of triglycerides in the bloodstream and has been recognized as an independent risk factor for cardiovascular disease. Triglyceride levels provide important information as a marker associated with the
risk for heart disease and stroke, especially when an individual also has low high density lipoprotein cholesterol (HDL-C; often called good cholesterol) and elevated levels of LDL-C. The effect of Vascepa on cardiovascular mortality and
morbidity in patients with hypertriglyceridemia has not been determined.
Guidelines for the management of very high
triglyceride levels (
³
500 mg/dL) suggest that reducing triglyceride levels is the primary treatment goal in these patients to reduce the risk of acute pancreatitis. Treating LDL-C remains an important
secondary goal. Other important parameters to consider in patients with very high triglycerides include levels of apolipoprotein B (apo B), non-HDL-C, very low density lipoprotein cholesterol (VLDL-C), and HDL-C. The effect of Vascepa on the risk
for pancreatitis in patients with hypertriglyceridemia has not been determined.
It is estimated that over 40 million
adults in the United States have elevated triglyceride levels >200mg/dL and approximately 3 to 4 million people in the United States have very high triglyceride levels (
³
500 mg/dL).
Since 1976, mean triglyceride levels have increased, in concert with the growing epidemic of obesity, insulin resistance, and type 2 diabetes mellitus. In contrast, mean LDL-C levels have decreased.
Mixed dyslipidemia refers to a condition in which patients have a combination of two or more lipid abnormalities including elevated
triglycerides, low HDL-C, and/or elevated LDL-C. Both hypertriglyceridemia and mixed dyslipidemia are components of a range of lipid disorders collectively referred to as dyslipidemia. Dyslipidemia has been linked to atherosclerosis, commonly
referred to as hardening of the arteries.
Limitations of Current Therapies
It is estimated that approximately 4% or less of U.S. adults with triglyceride levels
³
200
mg/dL are currently receiving prescription medication for lowering triglycerides. Many of these patients are taking statin therapy directed primarily at lowering their LDL-C levels.
The leading treatments to lower triglyceride levels are fibrates (fenofibrate and gemfibrozil), statins and a
prescription only omega-3 fatty acid, known as Lovaza
®
in the United States, and as Omacor
®
in Europe. The use of fenofibrates can lead to abnormal liver function tests (an increase in ALT (alanine
transaminase) or AST (aspartate transaminase), which are liver enzymes, and are commonly measured clinically as a part of a diagnostic liver function test to determine liver health), especially when used with statins. The use of gemfibrozil can lead
to rhabdomyolysis (severe breakdown of muscles), especially when used with a statin. Lovaza is comprised of omega-3 ethyl esters, which the FDA has described as a complex mixture of eicosapentanoic acid, or EPA, docosahexaenoic acid, or DHA, and
other fatty acids. We believe that DHA may increase LDL-C levels
6
and thereby partially offset one of the typically desired benefits of lipid-lowering therapies, which is lowering LDL-C. Also, in 2012, the FDA required an update to Lovaza product labeling to
reflect the risk that Lovaza may increase the frequency of a heart rhythm problem known as atrial fibrillation, or heart flutter.
Potential Benefits and Market Opportunity for Vascepa
Vascepa is comprised of not less than 96% pure icosapent ethyl, or ethyl-EPA, and contains no DHA. We believe that the removal of DHA mitigates against the LDL-C raising effect observed in omega-3
compositions that include DHA, as well as removing the fishy taste and smell that is sometimes associated with DHA. Based on the results of the MARINE trial, Vascepa was the first omega-3 based product to demonstrate statistically significant
triglyceride reduction without a statistically significant increase in LDL-C in this very high triglyceride population.
We
believe that the results of the MARINE trial and Vascepas EPA only/DHA-free composition suggest that Vascepa has the potential to become a best-in-class triglyceride-lowering agent in the United States and the European Union. In
addition, currently no omega-3 based product is approved in the United States for lowering high triglycerides in patients with mixed dyslipidemia. If approved in that indication, Vascepa has the potential to become first-in-class in the
prescription-only omega-3 market for lowering triglycerides in patients with mixed dyslipidemia.
We believe the potential
market for Vascepa is large and growing. We estimate that drug treatment for hypercholesterolemia patients exceeds $59 billion per year in the United States, with sales dominated by statin therapies. U.S. sales of fibrates as a class of products
were approximately $3.8 billion in 2013 with generic fenofibrate and gemfibrozil leading the class. U.S. gross sales of Lovaza in 2013 were over $1.4 billion.
Clinical Trials
The MARINE Trial (basis for currently FDA approved
label for Vascepa)
The MARINE trial, the largest study ever conducted with the omega-3 fatty acid ethyl EPA in
treating patients with very high triglycerides (
³
500 mg/dL), was a Phase 3, multi-center, placebo-controlled, randomized, double-blind, 12-week study. Patients were randomized into three treatment arms
for treatment with Vascepa 4 gram/day, 2 gram/day or placebo. Patient enrollment in this trial began in December 2009, and enrollment and randomization was completed in August 2010 at 229 patients. The primary endpoint in the trial was the
percentage change in triglyceride level from baseline compared to placebo after 12 weeks of treatment. The MARINE study was required to meet a stringent level of statistical significance of 1% (p < 0.01) in our Special Protocol Assessment, or
SPA, agreement with the FDA.
In November 2010, we reported top-line data for the MARINE trial. In the trial, Vascepa met
its primary endpoint at doses of 4 grams and 2 grams per day with median placebo-adjusted reductions in triglyceride levels of 33% (p < 0.0001) compared to placebo for 4 grams and 20% (p = 0.0051) compared to placebo for 2 grams. The median
baseline triglyceride levels were 703 mg/dL, 680 mg/dL and 657 mg/dL for the patient groups treated with placebo, 4 grams of Vascepa and 2 grams of Vascepa, respectively.
In a pre-specified secondary analysis in the subgroup of patients with baseline triglyceride > 750 mg/dL, representing 39% of all patients, the effect of Vascepa in reducing triglyceride levels
compared to placebo was 45% for 4 grams and 33% for 2 grams, both statistically significant (p = 0.0001 for 4 grams and p= 0.0016 for 2 grams, respectively). The median baseline triglyceride levels in this subgroup were 1052 mg/dL, 902
mg/dL and 948 mg/dL for placebo, 4-gram and 2-gram groups, respectively. Twenty-five percent of patients in this trial were also on background statin therapy. These patients had greater median reduction in triglyceride levels, which was also
statistically significant.
7
Importantly, the significant reduction in triglycerides was not associated with a
statistically significant increase in median LDL-C compared to placebo at either dose (-2.3% for the 4-gram group and +5.2% for the
2-gram
group [both p=NS]). In addition, there was a statistically
significant decrease in median non-HDL-C (total cholesterol less so-called good cholesterol) compared to placebo with both of the Vascepa treated groups (-18% for the 4-gram group [p < 0.001] and -8% for the 2-gram group
[p < 0.05]).
The MARINE trial results also included statistically significant reductions compared to placebo in
several important lipid and inflammatory biomarkers, including apo B (apolipoprotein B) (8.5%), Lp-PLA2 (lipoprotein-phospholipase A2) (13.6%), VLDL-C (very low-density lipoprotein cholesterol) (28.6%), Total Cholesterol (16.3%), and hsCRP
(high-sensitivity C-reactive protein) (36.0%) at the 4-gram dose. For these achieved endpoints, p-values were <0.01 for most and <0.05 for all. Apo B (apolipoprotein B) is believed to be a sensitive biomarker of cardiovascular risk and
may be a better predictor of cardiovascular risk than LDL-C. Lp-PLA2 is an enzyme found in blood and atherosclerotic plaque; high levels have been implicated in the development and progression of atherosclerosis.
In the MARINE trial, patients treated with 4 grams per day of Vascepa experienced a significant reduction in median placebo-adjusted
lipoprotein particle concentrations of total LDL and small LDL. When looking at lipoprotein particle concentrations and sizes as measured with nuclear magnetic resonance spectroscopy, Vascepa 4 grams per day, compared with placebo, significantly
reduced median total LDL particle count by 16.3% (p=0.0006), which is an important factor in atherogenesis. LDL particle count and apo B are important risk markers for the prediction of cardiovascular events. Small LDL particle count, which is a
common risk factor for cardiovascular events in patients with diabetes, was reduced by 25.6% (p<0.0001) compared with placebo. Vascepa 2 grams per day, compared with placebo, significantly reduced median small LDL particle count by 12.8% (p
<0.05) and reduced median total LDL particle count by 1.1% (NS). LDL particle size did not change significantly for the 2 or 4 grams doses.
Vascepa was well tolerated in the MARINE trial, with a safety profile comparable to placebo and there were no treatment-related serious adverse events observed. No significant changes in fasting blood
glucose, hemoglobin A1C, vital signs, electrocardiograms, or liver or kidney function were observed with either Vascepa dose.
Patients enrolled in the MARINE trial were given the option to be treated with Vascepa for a period of up to 40 weeks after their last
dose in the double-blind portion of the trial. Once participants completed the randomized, double blind, placebo-controlled 12-week MARINE registration trial, patients in all three randomized groups (4 grams, 2 grams and placebo) were offered the
opportunity to participate in the open label extension, or OLE, phase. Patients in the OLE phase received 4 grams per day of Vascepa for a period of up to an additional 40 weeks. As is typical of such extension phases, the OLE phase was
not a controlled trial, as differentiated from the randomized, double blind, placebo-controlled 12-week MARINE registration trial. In the OLE phase, participants were not randomized at entry, Vascepa administration was open-label (and thus not
blinded), and no placebo group was maintained. Also, once patients entered in the OLE phase, investigators were free to add or modify other lipid-altering nutritional, lifestyle and drug treatment regimens. Given the lack of randomization, the
open-label design, the addition of various other lipid-altering drugs and changes to doses of existing lipid-altering drugs, as well as the lack of placebo control, neither we nor our independent advisors were able to draw efficacy conclusions from
the data. However, we have concluded that the MARINE OLE phase revealed no new safety signals after an additional 40 weeks of exposure to Vascepa, whether used alone or in combination with other lipid-altering regimens.
The ANCHOR Trial (basis for sNDA submitted to FDA seeking expanded indication for Vascepa)
The ANCHOR trial was a multi-center, placebo-controlled, randomized, double-blind, 12-week pivotal study in patients with high
triglycerides (
³
200 and <500 mg/dL) who were also receiving optimized statin therapy. Patients were randomized into three arms for treatment with Vascepa 4 gram/day, 2 gram/day or
8
placebo. Patient enrollment in this trial began in January 2010, and enrollment and randomization was completed in February 2011 at 702 patients. The primary endpoint in the trial was the
percentage change in triglyceride level from baseline compared to placebo after 12 weeks of treatment.
In April 2011, we
reported top-line results from the ANCHOR trial. The ANCHOR trial met its primary endpoint at doses of 4 grams and 2 grams per day with median placebo-adjusted reductions in triglyceride levels of 21.5% (p<0.0001 value) for 4 grams and 10.1%
(p=0.0005) for 2 grams. The median baseline triglyceride levels were 259 mg/dL, 265 mg/dL and 254 mg/dL for the patient groups treated with placebo, 4 grams and 2 grams of Vascepa per day, respectively. The analysis of subgroups by baseline
triglyceride tertiles showed that higher baseline triglycerides resulted in greater triglyceride reductions.
One of the
trials secondary endpoints was to demonstrate a lack of elevation in LDL-C, the primary target of cholesterol lowering therapy. The trials non-inferiority criterion for LDL-C was met at both Vascepa doses. The upper confidence boundaries
for both doses were below the pre-specified +6% LDL-C threshold limit. At the 4-gram dose the upper confidence boundary was below zero (-1.7%) and at the 2-gram dose the upper confidence boundary was close to zero (0.5%). For the 4 grams per day
group, LDL-C decreased significantly by 6.2% from baseline versus placebo, demonstrating superiority over placebo (p=0.0067). For the 2-gram group, LDL-C decreased by 3.6% from baseline versus placebo (p=0.0867), which is not a statistically
significant decrease.
Other secondary efficacy endpoints included the median placebo-adjusted percent change in
non-high-density lipoprotein cholesterol (non-HDL-C), apolipoprotein B (apo B), and lipoprotein-associated phospholipase A2 (Lp-PLA2). The 4-gram dose was associated with statistically significant reductions in non-HDL-C (13.6%, p<0.0001), apo B
(9.3%, p<0.0001), Lp-PLA2 (19%, p<0.0001) and high-sensitivity C-reactive protein (hsCRP) (22%, p<0.001), at week 12 compared to placebo. In addition to the previously reported favorable lipid effects of Vascepa on hypertriglyceridemic
patients in the MARINE and ANCHOR studies, a recently published analysis of these studies showed that the Vascepa 4-gram daily dose also significantly decreased levels of the inflammatory marker oxidized low-density lipoprotein relative to placebo.
Vascepa was well tolerated in the ANCHOR trial with a safety profile comparable to placebo and there were no
treatment-related serious adverse events observed. No significant changes in fasting blood glucose, hemoglobin A1C, vital signs, electrocardiograms, or liver or kidney function were observed with either Vascepa dose.
We have a pending sNDA with the FDA that seeks marketing approval of Vascepa for use in the ANCHOR indication. On October 16, 2013,
the FDA convened an advisory committee to review our sNDA. This advisory committee was not asked by the FDA to evaluate whether Vascepa is effective in lowering triglycerides in the studied population, the ANCHOR indication as specified in the sNDA.
Rather, the advisory panel was asked whether Vascepa has been demonstrated to improve cardiovascular outcomes or whether approval of the ANCHOR indication should wait for successful completion of the REDUCE-IT study, the first prospective study of
cardiovascular outcomes in patients who have high triglyceride levels despite statin therapy. The advisory committee voted 9 to 2 against recommending approval of the ANCHOR indication based on information presented at the meeting. The FDA considers
the recommendation of advisory committees, but final decisions on the approval of new drug applications are made by the FDA.
The ANCHOR trial clinical study was conducted under an SPA agreement with the FDA. The law governing SPA agreements requires that if the
results of the trial conducted under the SPA substantiate the hypothesis of the protocol covered by the SPA, the FDA must use the data from the protocol as part of the primary basis for approval of the product. A SPA agreement is not a guarantee of
FDA approval of the related new drug application. A SPA agreement is generally binding upon the FDA except in limited circumstances, such as if the FDA identifies a substantial scientific issue essential to determining safety or efficacy of the drug
after the study begins that rises to the level of a public health concern, or if the study sponsor fails to follow the protocol that was agreed upon with the FDA. On October 29, 2013, the FDA rescinded the ANCHOR study SPA
9
agreement because the FDA determined that a substantial scientific issue essential to determining the effectiveness of Vascepa in the studied population was identified after testing began. As a
basis for this determination, the FDA communicated that it determined that the cumulative results from outcome studies of other triglyceride-lowering drugs failed to support the hypothesis that a triglyceride-lowering drug significantly reduces the
risk for cardiovascular events among the population studied in the ANCHOR trial. Thus, the FDA stated that while information we submitted supports testing the hypothesis that Vascepa 4 grams/day versus placebo reduces major adverse cardiovascular
events in statin-treated subjects with residually high triglyceride levels, as is being studied in the Vascepa REDUCE-IT cardiovascular outcomes study, the FDA no longer considers a change in serum triglyceride levels as sufficient to establish the
effectiveness of a drug intended to reduce cardiovascular risk in subjects with serum triglyceride levels below 500 mg/dL. In November 2013, we submitted to the FDA a request for reconsideration of its decision to rescind the ANCHOR SPA agreement.
On January 17, 2014, we were notified by the FDA that it does not intend to reinstate the ANCHOR SPA agreement. Our plan is to continue appealing the rescission decision to successively higher administrative levels within the FDA in accordance
with FDA dispute resolution guidance.
Observed Efficacy of Ethyl-EPA
In Japan, ethyl-EPA is marketed under the product name of Epadel by Mochida Pharmaceutical Co. and is indicated for hyperlipidemia and
peripheral vascular disease. Clinical data from Japan suggests that Epadel is effective in reducing triglycerides. In addition, in an outcomes study called the Japan EPA Lipid Intervention Study, or JELIS study, which consisted of more than 18,000
patients followed over multiple years, Epadel, when used in conjunction with statins, was shown to reduce cardiovascular events by 19% compared to the use of statins alone. In this study, cardiovascular events decreased by approximately 53% compared
to statins alone in the subset of patients with triglyceride levels of
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150 mg/dL (average 269 mg/dL at entry) and HDL-C <40 mg/dL. Epadel has been approved and available by prescription in
Japan for over a decade. In 2013, the Japan Ministry of Health approved Epadel for over-the-counter sales.
Observed
Clinical Safety of Vascepa
Prior to commencing the MARINE and ANCHOR trials, we conducted a pre-clinical program for
Vascepa, including toxicology and pharmacology studies. In addition, we previously investigated Vascepa in central nervous system disorders in several double-blind, placebo-controlled studies, including Phase 3 trials in Huntingtons disease.
Over 1,000 patients have been dosed with Vascepa in these studies, with over 100 receiving continuous treatment for a year or more. In all studies performed to date, Vascepa has shown a favorable safety and tolerability profile. In both the MARINE
and ANCHOR trials, patients dosed with Vascepa demonstrated a safety profile similar to placebo. There were no treatment-related serious adverse events in the MARINE study or in the ANCHOR study. In the MARINE and ANCHOR trials, the most commonly
reported adverse reaction (incidence >2% and greater than placebo) in Vascepa treated patients was arthralgia (joint pain) (2.3% for Vascepa vs. 1.0% for placebo).
In addition to the MARINE and ANCHOR trials, we completed a 28-day pharmacokinetic study in healthy volunteers, a 26-week study to evaluate the toxicity of Vascepa in transgenic mice and multiple
pharmacokinetic drug-drug interaction studies in healthy subjects in which we evaluated the effect of Vascepa on certain common prescription drugs. All findings from these studies were consistent with our expectations and confirmed the overall
safety profile of Vascepa.
The REDUCE-IT Study (currently ongoing cardiovascular outcomes study)
In August 2011, we reached agreement with the FDA on an SPA for the design of the REDUCE-IT (Reduction of Cardiovascular Events with
EPAIntervention Trial) cardiovascular outcomes study. In May 2013, we amended the patient enrollment criteria within the SPA agreement with the FDA. An SPA is an evaluation by the FDA of a protocol with the goal of reaching an agreement that
the Phase 3 trial protocol design,
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clinical endpoints, and statistical analyses are acceptable to support regulatory approval. The FDA agreed that, based on the information we submitted to the agency, the design and planned
analysis of the REDUCE-IT study adequately addressed the objectives necessary to support a regulatory submission. An SPA is generally binding upon the FDA unless a substantial scientific issue essential to determining safety or efficacy of the drug
is identified after the testing begins. Moreover, any change to a study protocol can invalidate an SPA.
In September 2011, we
engaged a clinical research organization, or CRO, and began initial trial and clinical site preparation for REDUCE-IT. In December 2011, we announced that the first patient was dosed in the study. The study duration is dependent on the rate of
clinical events in the study which rate may be affected by the number of patients enrolled in the study and the epidemiology of the patients enrolled in the study. Based on preliminary assumptions for patient enrollment rates and the clinical
profile of these patients, it is assumed that fewer than 10,000 patients will be required to complete the study with an optimized target in which the study is completed in approximately six years of 8,000 patients.
The REDUCE-IT study is designed to evaluate the efficacy of Vascepa in reducing major cardiovascular events in an at-risk patient
population also receiving statin therapy. REDUCE-IT is a multi-center, prospective, randomized, double-blind, placebo-controlled, parallel-group study to evaluate the effectiveness of Vascepa, as an add-on to statin therapy, in reducing first major
cardiovascular events in an at-risk patient population compared to statin therapy alone. The control arm of the study is comprised of patients on optimized statin therapy plus placebo. The active arm of the study is comprised of patients on
optimized statin therapy plus Vascepa. All subjects enrolled in the study will have elevated triglyceride levels and either coronary heart disease or risk factors for coronary heart disease. This study is being conducted internationally.
We currently expect that final positive results of the REDUCE-IT study will be required for FDA approval of Vascepa for the ANCHOR
indication based on communications from the FDA. Based on the results of REDUCE-IT, we may seek additional indications for Vascepa beyond the indication studied in the ANCHOR and MARINE trials such as a potential indication for prevention of
cardiovascular events, although there can be no assurance as to whether the results of the study will support any such indication.
New Lipid Compounds and other Preclinical Programs
We are also
considering development of other next generation compounds based on our internal lipid science expertise, including potential combination and derivative therapies.
In August 2013, we completed dosing of AMR102, a fixed dose combination of Vascepa and a leading statin product. The study is a randomized, open-label, single-dose, 4-way cross-over study to continue
testing of the relative bioavailability of AMR102 capsules, Vascepa capsules with the selected statin taken concomitantly, Vascepa taken alone and the selected statin taken alone. The results of this study support the feasibility of AMR102. We
have suspended additional development of AMR102 pending resolution of the ANCHOR sNDA with the FDA. If we do not receive FDA approval for the ANCHOR indication, we may discontinue development of AMR102.
We believe that Vascepa and other lipid-based compositions may have an impact on a number of biological factors in the body such as
anti-inflammatory mechanisms, cell membrane composition and plasticity, triglyceride levels and regulation of glucose metabolism. Currently all other clinic developments are in formulative or pre-clinical stages.
Manufacturing and Supply for Vascepa
We currently use third party manufacturers and suppliers to manufacture clinical and commercial quantities of ethyl-EPA, which constitutes the only active pharmaceutical ingredient, or API, within
Vascepa, to encapsulate, bottle and package Vascepa and to maintain inventory of Vascepa. The FDA approval of Vascepa in
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July 2012 included the approval of one API manufacturer, Nisshin Pharma, Inc., or Nisshin, and one API encapsulator, Patheon, Inc., or Patheon (formerly Banner Pharmacaps Europe BV). Nisshin and
Patheon are the API manufacturer and API encapsulator, respectively, with which we have had the longest working relationships. Their facilities were inspected by regulatory authorities as part of the process that led to the FDAs July 2012
approval of Vascepa, and we believe that the facilities are qualified to continue to support our commercialization of Vascepa.
We currently rely exclusively on Patheon for the encapsulation of Vascepa. We have encapsulation agreements with two other commercial API
encapsulators. These companies are working to qualify their processes and to prove that the Vascepa capsules they produce meet the same quality standards as the capsules produced by Patheon.
In addition to purchasing API from Nisshin, we have also purchased API from Chemport, Inc., or Chemport. In December 2012, we announced
our submissions of two sNDAs to the FDA seeking approval for Chemport and BASF (formerly Equateq Limited) as additional Vascepa API suppliers. In April 2013, the FDA approved our sNDAs covering Chemport and BASF as additional Vascepa API suppliers.
BASF is working to complete validation of their facility for the manufacture of Vascepa. On December 30, 2013, we issued a notice of termination of our API agreement to BASF as a result of BASFs non-compliance with the terms of such
agreement. BASF is entitled to a 60-day cure period. In December 2012, we announced an agreement with an exclusive consortium of companies led by Slanmhor Pharmaceutical, Inc., or Slanmhor. Slanmhor was spun-out from Ocean Nutrition Canada, or ONC,
prior to the May 2012 acquisition of ONC by Royal DSM N.V. We are working with Slanmhor to pursue FDA approval for this supplier to manufacture Vascepa API and we submitted a sNDA in August 2013. Slanmhor is working to complete construction and
validation of their facility for the manufacture of Vascepa. The regulatory approval and facility validation of Slanmhor as an API supplier would give us an additional qualified worldwide supplier of API for Vascepa to utilize in supporting the
global commercialization of Vascepa.
The API material that constitutes ethyl-EPA is a naturally occurring substance which is
sourced from qualified producers of fish oil. A limited number of other manufacturers have the ability, know-how and suitable facilities to produce ethyl-EPA to a similar level of purity. Among the conditions for FDA approval of a pharmaceutical
product is the requirement that the manufacturers quality control and manufacturing procedures conform to current Good Manufacturing Practice, or cGMP, which must be followed at all times. The FDA typically inspects manufacturing facilities
before regulatory approval of a product candidate, such as Vascepa, and on an ongoing basis. In complying with cGMP regulations, pharmaceutical manufacturers must expend resources and time to ensure compliance with product specifications as well as
production, record keeping, quality control, reporting, and other requirements.
Our agreements with our API suppliers include
minimum purchase commitments. During 2013 we fully met the aggregate minimum purchase requirements for metric tons of API contained in our supply agreements with Nisshin and Chemport. We may purchase more than the minimum requirements. We have not
purchased any commercial supply from BASF as they have not completed the validation of their manufacturing process. If the manufacturing process is validated, there will be annual minimum purchase commitments under that supply agreement. If the sNDA
for Slanhmor is approved and their manufacturing facility is validated, there will be annual minimum purchase commitments under that supply agreement. Certain of these agreements also contain provisions under which the cost of supply to us decreases
as we purchase increased product volume and provisions under which the cost of supply to us changes based on increases or decreases in certain production costs. Certain of these agreements also contemplate phased capacity expansion aimed at creating
sufficient capacity to meet anticipated demand for API material for Vascepa. Accordingly, certain of these suppliers are currently working to expand their production capabilities to manufacture the API for Vascepa. These API suppliers are
self-funding these expansion and qualification plans with contributions from Amarin. There can be no assurance that additional suppliers will fully fund the capital costs of our engagement or that these additional suppliers will successfully qualify
with the FDA. These contracts contain provisions for making lesser payments to these suppliers in lieu of purchasing the full minimum purchase requirements.
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Our Marketing Plans
In January 2013, we commenced our full commercial launch of Vascepa in the United States for use in the MARINE indication. In preparation for our commercial launch, we hired and trained a direct sales
force of approximately 275 sales representatives. In October 2013, we reduced our number of sales representatives to approximately 130, excluding sales management, in the United States to focus on the sales territories that we believe have
demonstrated the greatest potential for Vascepa sales growth. We now market Vascepa in the United States through our sales force of approximately 150 sales professionals and managers. We also employ various marketing and medical affairs personnel to
support our commercialization of Vascepa. We currently target clinicians who are top prescribers of lipid regulating therapies. Our current sales team covers clinicians responsible for greater than 90% of Vascepa prescriptions fulfilled in 2013.
Historical Product Development Programs
Prior to October 2009, the majority of Amarins product development activities were focused on central nervous system and other non-cardiovascular disorders. In October 2009, we completed a
private placement resulting in gross proceeds of $70.0 million. These proceeds were used primarily to fund the MARINE and ANCHOR studies for Vascepa. In connection with this private placement, our board of directors and executive
management changed significantly, and our research and development activities, as well as certain executive functions, were consolidated from multiple offices to our research and development headquarters in the United States. In connection with
these changes, we re-focused our efforts on developing improved treatments for cardiovascular disease and ceased development of all product candidates outside of our cardiovascular disease focus. In particular, this decision resulted in our ceasing
all direct development of product candidates on central nervous system disorders, which included product candidates for the treatment of Huntingtons disease, Myasthenia gravis and Parkinsons disease.
Competition
The
biotechnology and pharmaceutical industries are highly competitive. There are many pharmaceutical companies, biotechnology companies, public and private universities and research organizations actively engaged in the research and development of
products that may be similar to our products. It is probable that the number of companies seeking to develop products and therapies similar to our products will increase. Many of these and other existing or potential competitors have substantially
greater financial, technical and human resources than we do and may be better equipped to develop, manufacture and market products. These companies may develop and introduce products and processes competitive with or superior to ours. In addition,
other technologies or products may be developed that have an entirely different approach or means of accomplishing the intended purposes of our products, which might render our technology and products noncompetitive or obsolete.
Our potential competitors both in the United States and Europe include large, well-established pharmaceutical companies, specialty
pharmaceutical sales and marketing companies, and specialized cardiovascular treatment companies. These companies include GlaxoSmithKline plc, which currently markets Lovaza, a prescription-only omega-3 fatty acid indicated for patients with severe
hypertriglyceridemia, and AbbVie, Inc., which currently markets Tricor and Trilipix for the treatment of severe hypertriglyceridemia and mixed dyslipidemia and Niaspan, which is primarily used to raise HDL-C, but is also used to lower triglycerides.
In March 2011, Pronova BioPharma Norge AS, now owned by BASF, which owns the patents for Lovaza, entered into an agreement with Apotex Corp. and Apotex Inc., or Apotex, to settle their patent litigation in the United States related to Lovaza.
Pursuant to the terms of the settlement agreement, Pronova/BASF granted Apotex a license to enter the United States market with a generic version of Lovaza in the first quarter of 2015, or earlier depending on circumstances. In addition, Pronova
/BASF recently lost an appeal in its patent infringement lawsuit against Teva Pharmaceuticals USA Inc., or Teva, and Par Pharmaceutical Inc., or Par, which would have prevented Teva and Par from launching generic versions of Lovaza. Apotex, Teva,
and Par must obtain FDA approval of generic versions of Lovaza before they are permitted to sell such products in the
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United States. Other companies are also seeking to introduce generic versions of Lovaza. Each of these competitors has greater resources than we do, including financial, product development,
marketing, personnel and other resources.
In addition, we are aware of other pharmaceutical companies
that are developing products that, if approved and marketed, would compete with Vascepa. These include a free fatty acid form of omega-3 (comprised of 55% EPA and 20% DHA) developed by Omthera Pharmaceuticals, now owned by AstraZeneca PLC. In
July 2013, an NDA was submitted to the FDA seeking approval of this drug candidate for the treatment of severe hypertriglyceridemia. AstraZeneca has announced that the scheduled goal date for FDA approval of its product is May 5, 2014. We
expect AstraZeneca will utilize its substantial commercial resources to market Omthera Pharmaceuticals product, if approved. We also understand that another company, Trygg Pharma AS, has completed a Phase 3 study of an omega-3 based drug
candidate for severe hypertriglyceridemia, but we do not believe Trygg has announced results from that study. It is possible that Trygg Pharma has filed for FDA approval of its product candidate. In addition, Acasti Pharma, a subsidiary of Neptune
Technologies & Bioresources Inc., announced in late 2012 that it intends to conduct a Phase 3 clinical program to assess the safety and efficacy of its omega-3 prescription drug candidate derived from krill oil for the treatment of
hypertriglyceridemia. We believe Catabasis Pharmaceuticals, or Catabasis, Resolvyx Pharmaceuticals, or Resolvyx, and Sancilio & Company, or Sancilio, are also developing potential treatments for hypertriglyceridemia based on omega-3 fatty
acids and, to our knowledge, Catabasis initiated a Phase 2 clinical trial of its product in December 2013; Resolvyxs compound remains in Phase 1 clinical testing; and Sancilio has recently filed an Investigational New Drug Application (IND)
and is preparing to commence Phase 3 clinical trials. In addition, we are aware that Matinas BioPharma, Inc. is developing an omega-3-based therapeutic for the treatment of severe hypertriglyceridemia and mixed dyslipidemia. Matinas BioPharma, Inc.
has reported that it is preparing to file an IND with the FDA and to conduct a human study in the first half of 2014. Isis Pharmaceuticals announced favorable Phase 2 results of ISIS-APOCIII
Rx
a drug candidate administered through weekly subcutaneous injections, in patients with high triglycerides and type 2
diabetes and in patients with moderate to severe high triglycerides. Finally, Madrigal Pharmaceuticals has completed Phase 1 clinical testing of MGL-3196 for the treatment of high triglycerides and various lipid parameters in patients.
Vascepa also faces competition from dietary supplement companies marketing omega-3 products as nutritional supplements. We cannot be sure
physicians and pharmacists will view the FDA-approved prescription-only status, EPA-only purity of Vascepa and stringent regulatory oversight as significant advantages versus omega-3 supplements.
In addition, we expect that generic drug companies will seek to challenge the validity and enforceability of our patents and work toward
FDA approval for generic versions of Vascepa.
Regulatory Matters
Government Regulation and Regulatory Matters
Any product development activities related to Vascepa or products that we may develop or acquire in the future will be subject to extensive regulation by various government authorities, including the FDA
and comparable regulatory authorities in other countries, which regulate the design, research, clinical and non-clinical development, testing, manufacturing, storage, distribution, import, export, labeling, advertising and marketing of
pharmaceutical products and devices. Generally, before a new drug can be sold, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific to each regulatory authority, submitted for review and
approved by the regulatory authority. The data is generated in two distinct development stages: pre-clinical and clinical. Our drugs must be approved by the FDA through the NDA process before they may be legally marketed in the United States. For
new chemical entities, the pre-clinical development stage generally involves synthesizing the active component, developing the formulation and determining the manufacturing process, as well as carrying out non-human toxicology, pharmacology and drug
metabolism studies which support subsequent clinical testing.
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The clinical stage of development can generally be divided into Phase 1, Phase 2 and Phase 3
clinical trials. In Phase 1, generally, a small number of healthy volunteers are initially exposed to a single dose and then multiple doses of the product candidate. The primary purpose of these studies is to assess the metabolism, pharmacologic
action, side effect tolerability and safety of the drug. Phase 2 trials typically involve studies in disease-affected patients to determine the dose required to produce the desired benefits. At the same time, safety and further pharmacokinetic and
pharmacodynamic information is collected. Phase 3 trials generally involve large numbers of patients at multiple sites, in multiple countries and are designed to provide the pivotal data necessary to demonstrate the effectiveness of the product for
its intended use, its safety in use, and may include comparisons with placebo and/or other comparator treatments. The duration of treatment is often extended to mimic the actual use of a product during marketing.
United States Drug Development
In the United States, the process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local, and foreign statutes and regulations require the expenditure of
substantial time and financial resources. Failure to comply with the applicable United States requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial
sanctions. These sanctions could include the FDAs refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls, product seizures, total or partial suspension of production or
distribution injunctions, fines, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.
Prior to the start of human clinical studies for a new drug in the United States, preclinical laboratory and animal tests are often
performed under the FDAs Good Laboratory Practices regulations, or GLP, and an investigational new drug application, or IND, is filed with the FDA. Similar filings are required in other countries; however, data requirements and other
information needed for a complete submission may differ in other countries. The amount of data that must be supplied in the IND depends on the phase of the study. Phase 1 studies typically require less data than larger Phase 3 studies. A
clinical plan must be submitted to the FDA prior to commencement of a clinical trial. If the FDA has concerns about the clinical plan or the safety of the proposed studies, they may suspend or terminate the study at any time. Studies must be
conducted in accordance with good clinical practice and regular reporting of study progress and any adverse experiences is required. Studies are also subject to review by independent institutional review boards, or IRBs, responsible for overseeing
studies at particular sites and protecting human research study subjects. An independent IRB may also suspend or terminate a study once initiated.
NDA and FDA Review Process
Following trial completion, trial data
is analyzed to determine safety and efficacy. Data is then filed with the FDA in an NDA along with proposed labeling for the product and information about the manufacturing and testing processes and facilities that will be used to ensure product
quality. The NDA must contain proof of safety, purity, potency and efficacy, which entails extensive pre-clinical and clinical testing. FDA approval of an NDA must be obtained before marketing a drug in the United States.
The FDA will likely re-analyze the clinical trial data, which could result in extensive discussions between the FDA and us during the
review process. The review and evaluation of applications by the FDA is extensive and time consuming and may take longer than originally planned to complete. The FDA may conduct a pre-approval inspection of the manufacturing facilities for the new
product to determine whether they comply with current good manufacturing practice requirements and may also audit data from clinical and pre-clinical trials.
There is no assurance that the FDA will ultimately approve a drug product for marketing in the United States. Even if future indications for Vascepa are approved, the FDAs review will be
lengthy and we may encounter significant difficulties or costs during the review process. After approving any drug product, the
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FDA may require post-marketing testing and surveillance to monitor the effects of approved products or it may place conditions on approvals including potential requirements or risk management
plans that could restrict the commercial promotion, distribution, prescription or dispensing of products. Product approvals may be withdrawn for non-compliance with regulatory standards or if problems occur following initial marketing.
European Union Drug Development
In the European Union, or E.U., our future products may also be subject to extensive regulatory requirements. As in the United States, the marketing of medicinal products has been subject to the granting
of marketing authorizations by regulatory agencies. Particular emphasis is also being placed on more sophisticated and faster procedures for reporting of adverse events to the competent authorities.
Similar to the United States, the various phases of pre-clinical and clinical research in the E.U. are subject to significant regulatory
controls. Although the regulatory controls on clinical research are currently undergoing a harmonization process following the adoption of the Clinical Trials Directive 2001/20/EC, there are currently significant variations in the member state
regimes. However, all member states currently require independent institutional review board approval of interventional clinical trials. With the exception of U.K. Phase 1 studies in healthy volunteers, all clinical trials require either prior
governmental notification or approval. Most regulators also require the submission of adverse event reports during a study and a copy of the final study report.
European Union Drug Review and Approval
In the E.U., approval of
new medicinal products can be obtained through one of three processes: the mutual recognition procedure, the centralized procedure and the decentralized procedure.
Mutual Recognition Procedure
An applicant submits an application in one
E.U. member state, known as the reference member state. Once the reference member state has granted the marketing authorization, the applicant may choose to submit applications in other concerned member states, requesting them to mutually recognize
the marketing authorizations already granted. Under this mutual recognition process, authorities in other concerned member states have 55 days to raise objections, which must then be resolved by discussions among the concerned member states, the
reference member state and the applicant within 90 days of the commencement of the mutual recognition procedure. If any disagreement remains, all considerations by authorities in the concerned member states are suspended and the disagreement is
resolved through an arbitration process. The mutual recognition procedure results in separate national marketing authorizations in the reference member state and each concerned member state.
Centralized Procedure
This procedure is currently mandatory for products developed by means of a biotechnological process and optional for new active substances and other innovative medicinal products with novel
characteristics. Under this procedure, an application is submitted to the European Agency for the Evaluation of Medical Products. Two European Union member states are appointed to conduct an initial evaluation of each application. These
countries each prepare an assessment report that is then used as the basis of a scientific opinion of the Committee on Proprietary Medical Products. If this opinion is favorable, it is sent to the European Commission, which drafts a decision. After
consulting with the member states, the European Commission adopts a decision and grants a marketing authorization, which is valid throughout the European Union and confers the same rights and obligations in each of the member states as a marketing
authorization granted by that member state.
Decentralized Procedure
The most recently introduced of the three processes for obtaining approval of new medicinal processes in the E.U., the decentralized
procedure is similar to the mutual recognition procedure described above, but with
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differences in the timing that key documents are provided to concerned member states by the reference member state, the overall timing of the procedure and the possibility of clock
stops during the procedure, among others.
Post-Marketing Requirements
Following approval of a new product, a pharmaceutical company generally must engage in numerous specific monitoring and recordkeeping
activities and continue to submit periodic and other reports to the applicable regulatory agencies, including any cases of adverse events and appropriate quality control records. Modifications or enhancements to the products or labeling or changes
of site of manufacture are often subject to the approval of the FDA and other regulators, which may or may not be received or may result in a lengthy review process.
Prescription drug advertising is subject to federal, state and foreign regulations. In the United States, the FDA regulates prescription drug promotion, including direct-to-consumer advertising.
Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use. Any distribution of prescription drug products and pharmaceutical samples must comply with the U.S. Prescription Drug Marketing Act, or the
PDMA, a part of the U.S. Federal Food, Drug, and Cosmetic Act.
In the United States, once a product is approved, its
manufacture is subject to comprehensive and continuing regulation by the FDA. The FDA regulations require that products be manufactured in specific approved facilities and in accordance with current good manufacturing practices, or cGMPs, and NDA
holders must list their products and register their manufacturing establishments with the FDA. These regulations also impose certain organizational, procedural and documentation requirements with respect to manufacturing and quality assurance
activities. NDA holders using contract manufacturers, laboratories or packagers are responsible for the selection and monitoring of qualified firms, and, in certain circumstances, qualified suppliers to these firms. These firms and, where
applicable, their suppliers are subject to inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMPs, could result in enforcement actions that interrupt the operation of any such facilities
or the ability to distribute products manufactured, processed or tested by them.
Federal and State Fraud and Abuse Laws
In addition to FDA restrictions on marketing of pharmaceutical products, several other types of state and federal laws
restrict certain marketing practices in the biopharmaceutical industry. These laws include anti-kickback statutes and false claims statutes.
The federal anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or in return for a referral or the purchasing,
leasing, ordering, or arranging for or recommending the purchase, lease, or order of any healthcare facility, item or service reimbursable under Medicare, Medicaid, or other federal healthcare programs. This statute has been interpreted to apply to
arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, and formulary managers on the other. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain activities from
prosecution, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exemption or safe harbor.
Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability.
Federal
false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making or using, or causing to be made or used, a false statement to get a false claim
paid. Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other
companies have been prosecuted for causing false
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claims to be submitted because of the companys marketing of the product for unapproved, and thus non-reimbursable, uses. The majority of states also have statutes or regulations similar to
the federal anti-kickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer. Sanctions under these federal and state laws may include
civil monetary penalties, exclusion of a manufacturers products from reimbursement under government programs, criminal fines, and imprisonment.
Because of the breadth of these laws and the narrowness of the safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of such laws. Such a
challenge could have a material adverse effect on our business, financial condition and results of operations. As a company marketing an FDA-approved product in the United States, our operations may be directly, or indirectly through our customers,
subject to various federal and state fraud and abuse laws, including, without limitation, the federal anti-kickback statute. These laws may impact, among other things, our proposed sales, marketing and education programs. In addition, we may be
subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:
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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing
a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, which imposes
certain requirements relating to the privacy, security and transmission of individually identifiable health information; and
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state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by
any third-party payer, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus
complicating compliance efforts.
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If our operations are found to be in violation of any of the laws
described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations, any of which could adversely
affect our ability to operate our business and our results of operations.
In the United States and foreign jurisdictions,
there have been a number of legislative and regulatory changes to the healthcare system that could affect our future results of operations. In particular, there have been and continue to be a number of initiatives at the United States federal and
state levels that seek to reduce healthcare costs. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, imposed new requirements for the distribution and pricing of prescription drugs for Medicare beneficiaries.
Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities which will provide coverage of outpatient prescription drugs. Part D plans include both stand-alone prescription drug benefit plans and
prescription drug coverage as a supplement to Medicare Advantage plans. Unlike Medicare Part A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each
drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs,
though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription
drugs may increase demand for our products for which we receive marketing approval. However, any negotiated prices for our products covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain. Moreover,
while the MMA applies only to drug benefits for Medicare beneficiaries, private payers often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in
a similar reduction in payments from non-governmental payers.
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The American Recovery and Reinvestment Act of 2009 provides funding for the federal
government to compare the effectiveness of different treatments for the same illness. A plan for the research will be developed by the Department of Health and Human Services, the Agency for Healthcare Research and Quality and the National
Institutes for Health, and periodic reports on the status of the research and related expenditures will be made to Congress. Although the results of the comparative effectiveness studies are not intended to mandate coverage policies for public or
private payers, it is not clear what effect, if any, the research will have on the sales of any product, if any such product or the condition that it is intended to treat is the subject of a study. It is also possible that comparative effectiveness
research demonstrating benefits in a competitors product could adversely affect the sales of our product candidates. If third-party payers do not consider our products to be cost-effective compared to other available therapies, they may not
cover our products as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.
Most recently, in March 2010 the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the PPACA, was enacted, which includes measures
to significantly change the way healthcare is financed by both governmental and private insurers. Among the provisions of the PPACA of greatest importance to the pharmaceutical and biotechnology industry are the following:
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an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic products, apportioned among
these entities according to their market share in certain government healthcare programs, that began in 2011;
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new requirements to report certain financial arrangements with physicians and others, including reporting any transfer of value made or
distributed to prescribers and other healthcare providers and reporting any investment interests held by physicians and their immediate family members;
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a licensure framework for follow-on biologic products;
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a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along
with funding for such research;
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creation of the Independent Payment Advisory Board which, beginning in 2014, will have authority to recommend certain changes to the Medicare program
that could result in reduced payments for prescription drugs and those recommendations could have the effect of law even if Congress does not act on the recommendations; and
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establishment of a Center for Medicare and Medicaid Innovation at the Centers for Medicare & Medicaid Services to test innovative payment and
service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending that began on January 1, 2011.
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Many of the details regarding the implementation of the PPACA are yet to be determined, and at this time, it remains unclear the full effect that the PPACA would have on our business.
Other Regulatory Matters
Manufacturing, sales, promotion, and other activities following product approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including, in the United States,
the Centers for Medicare & Medicaid Services, other divisions of the Department of Health and Human Services, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational
Safety & Health Administration, the Environmental Protection Agency, and state and local governments. Sales, marketing and scientific/educational programs must also comply with the U.S. Medicare-Medicaid Anti-Fraud and Abuse Act and
similar state laws. Pricing and rebate programs must comply with the Medicaid rebate requirements of the U.S. Omnibus Budget Reconciliation Act of 1990. If products are made available to authorized users of the Federal Supply Schedule of the General
Services Administration, additional laws and requirements apply. The handling of any controlled substances must comply with the U.S. Controlled
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Substances Act and Controlled Substances Import and Export Act. Products must meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act. Manufacturing,
sales, promotion and other activities are also potentially subject to federal and state consumer protection and unfair competition laws.
The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the
unauthorized sale of pharmaceutical products.
The failure to comply with regulatory requirements subjects firms to possible
legal or regulatory action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in criminal prosecution, fines or other penalties, injunctions, recall or seizure of products, total or partial suspension of
production, denial or withdrawal of product approvals, or refusal to allow a firm to enter into supply contracts, including government contracts. In addition, even if a firm complies with FDA and other requirements, new information regarding the
safety or effectiveness of a product could lead the FDA to modify or withdraw a product approval. Prohibitions or restrictions on sales or withdrawal of future products marketed by us could materially affect our business in an adverse way.
Changes in regulations or statutes or the interpretation of existing regulations could impact our business in the future by
requiring, for example: (i) changes to our manufacturing arrangements; (ii) additions or modifications to product labeling; (iii) the recall or discontinuation of our products; or (iv) additional record-keeping requirements. If
any such changes were to be imposed, they could adversely affect the operation of our business.
FDA Marketing
Exclusivity
The Food Drug and Cosmetic Act, or FDCA, as amended by the Drug Price Competition and Patent Term
Restoration Act of 1984, as amended, or the Hatch-Waxman Amendments, provides for market exclusivity provisions that can help protect the exclusivity of new drugs by delaying the acceptance and final approval of certain competitive drug
applications. The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity, or NCE. A drug is an NCE if the FDA has not previously
approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application, or
ANDA, or a 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four
years if it contains a certification of patent invalidity or non-infringement.
The FDCA also provides three years of
marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the
approval of the application (for example, for new indications, dosages, or strengths of an existing drug). Such three-year exclusivity protection would preclude the FDA from approving a marketing application for a duplicate of a pioneer drug, a
product candidate that the FDA views as having the same conditions of approval as the pioneer drug (for example, the same indication and/or other conditions of use), or a 505(b)(2) NDA submitted to the FDA with the pioneer drug as the reference
product, for a period of three years from the date of FDA approval, although the FDA may accept and commence review of such applications during the exclusivity period. This three-year exclusivity covers only the conditions associated with the new
clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the original active agent. Such three-year exclusivity grant would also not prevent a company from challenging the validity of patents covering the
pioneer drug at any time. In this case, the pioneer drug company may be afforded the benefit of a 30-month stay against the launch of such a competitive product that would extend from the period that it responds to a pending patent challenge, and
may also be afforded other extensions under applicable regulations, including a six-month pediatric exclusivity
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extension or a judicial extension if applicable requirements are met. This three-year form of exclusivity may also not prevent the FDA from approving an NDA that relies only on its own data to
support the change or innovation.
Five-year and three-year exclusivity will not delay the submission or tentative approval of
a full NDA; however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.
The FDA typically makes a determination on marketing exclusivity in connection with, or soon after, an NDA approval
of a drug for a new indication. We applied to the FDA for five-year, NCE marketing exclusivity for Vascepa in connection with the NDA for our MARINE indication, which NDA was approved by the FDA on July 26, 2012. On February 21, 2014, in
connection with the July 26, 2012 approval of the MARINE indication, the FDA denied a grant of NCE marketing exclusivity to Vascepa and granted three-year marketing exclusivity. Such three-year exclusivity extends through July 25, 2015 and
can be supplemented by a 30-month stay triggered after patent infringement litigation initiated by Amarin following a valid notice to Amarin of the filing of an application to the FDA seeking approval of a generic version of Vascepa.
FDA marketing exclusivity is separate from, and in addition to, patent protection, trade secrets and manufacturing barriers to entry
which also help protect Vascepa against generic competition.
We also plan to seek regulatory exclusivity for Vascepa in
Europe. There can be no assurance that we will be successful in securing marketing approval or regulatory exclusivity in the United States or in Europe.
Patents, Proprietary Technology, Trade Secrets
Our success depends in part
on our ability to obtain and maintain intellectual property protection for our drug candidates, technology and know-how, and to operate without infringing the proprietary rights of others.
Our ability to successfully implement our business plan and to protect our products with our intellectual property will depend in large
part on our ability to:
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obtain, defend and maintain patent protection and market exclusivity for our current and future products;
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preserve any trade secrets relating to our current and future products;
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acquire patented or patentable products and technologies; and
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operate without infringing the proprietary rights of third parties.
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Amarin has prosecuted, and is currently prosecuting, multiple patent applications to protect the intellectual property developed during
the Vascepa cardiovascular program. As of the date of this Annual Report, we had 40 patent applications in the United States that have been either issued or allowed and more than 30 additional patent applications are pending in the United States. Of
such 40 allowed and issued applications, we currently have:
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2 issued U.S. patents directed to a pharmaceutical composition of Vascepa in a capsule that have terms that expire in 2020 and 2030, respectively,
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1 issued U.S. patent covering a composition containing highly pure EPA that expires in 2021,
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29 U.S. patents covering the use of Vascepa in either the MARINE or anticipated ANCHOR indication that have terms that expire in 2030,
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6 additional patent applications for which the United States Patent and Trademark Office, or USPTO, has issued a Notice of Allowance each of which with
terms that expire in 2030 and are related to the use of Vascepa in either the MARINE or anticipated ANCHOR indication,
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1 additional patent related to the use of a pharmaceutical composition comprised of free fatty acids to treat the ANCHOR patient population that
expires in 2030, and
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1 additional patent application for which the United States Patent and Trademark Office, or USPTO, has issued a Notice of Allowance with a term that
expires in 2030 and is related to the use of a pharmaceutical composition comprised of free fatty acids to treat the MARINE patient population.
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A Notice of Allowance is issued after the USPTO makes a determination that a patent can be granted from an application. A Notice of Allowance does not afford patent protection until the underlying patent
is issued by the USPTO. No assurance can be given that applications with issued notices of allowance will be issued as patents or that any of our pending patent applications will issue as patents. No assurance can be given that, if and when
issued, our patents will prevent competitors from competing with Vascepa. We are also pursuing patent applications related to Vascepa in multiple jurisdictions outside the United States. We may be dependent in some cases upon third party
licensors to pursue filing, prosecution and maintenance of patent rights or applications owned or controlled by those parties. It is possible that third parties will obtain patents or other proprietary rights that might be necessary or useful to us.
In cases where third parties are first to invent a particular product or technology, or first to file after various provisions of the America Invents Act of 2011 went into effect on March 16, 2013, it is possible that those parties will obtain
patents that will be sufficiently broad so as to prevent us from utilizing such technology or commercializing our current and future products.
Although we intend to make reasonable efforts to protect our current and future intellectual property rights and to ensure that any proprietary technology we acquire or develop does not infringe the
rights of other parties, we may not be able to ascertain the existence of all potentially conflicting claims. Therefore, there is a risk that third parties may make claims of infringement against our current or future products or technologies. In
addition, third parties may be able to obtain patents that prevent the sale of our current or future products or require us to obtain a license and pay significant fees or royalties in order to continue selling such products.
We may in the future discover the existence of products that infringe patents that we own or that have been licensed to us. If we were to
initiate legal proceedings against a third party to stop such an infringement, such proceedings could be costly and time consuming, regardless of the outcome. No assurances can be given that we would prevail, and it is possible that, during such a
proceeding, our patent rights could be held to be invalid, unenforceable or both. Although we intend to protect our trade secrets and proprietary know-how through confidentiality agreements with our manufacturers, employees and consultants, we may
not be able to prevent parties subject to such confidentiality agreements from breaching these agreements or third parties from independently developing or learning of our trade secrets.
We anticipate that competitors may from time to time oppose our efforts to obtain patent protection for new technologies or to submit
patented technologies for regulatory approvals. Competitors may seek to oppose our patent applications to delay the approval process or to challenge our granted patents, for example, by requesting a reexamination of our patent at the USPTO, or by
filing an opposition in a foreign patent office, even if the opposition or challenge has little or no merit. Such proceedings are generally highly technical, expensive, and time consuming, and there can be no assurance that such a challenge would
not result in the narrowing or complete revocation of any patent of ours that was so challenged.
Employees
At February 20, 2014 we had 185 full-time employees employed in sales, marketing, general and administrative and research and
development functions. We believe our relations with our employees are good.
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Organizational Structure
At February 20, 2014, we had the following subsidiaries:
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Subsidiary Name
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Country of
Incorporation
or Registration
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Proportion of
Ownership Interest and
Voting Power Held
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Amarin Pharmaceuticals Ireland Limited
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Ireland
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100
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%
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Amarin Pharma Inc.
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United States
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100
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%
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Amarin Neuroscience Limited
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Scotland
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100
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%
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Corsicanto Ltd
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Ireland
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100
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%
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Ester Neurosciences Limited
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Israel
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100
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%
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Our registered office is located at One New Change, London EC4M 9AF, England. Our principal offices are
located at 2 Pembroke House, Upper Pembroke Street 28-32, Dublin 2 Ireland. Our primary offices in the United States are located at 1430 Route 206, Bedminster, NJ 07921, USA. Our telephone number at that location is (908) 719-1315. Our
website address is
www.amarincorp.com .
No information contained on, or accessible through, our website is incorporated by reference into this Annual Report on Form 10-K.
As of the date of this Annual Report on Form 10-K, our principal operating activities were being conducted by Amarin Corporation plc,
together with Amarin Pharmaceuticals Ireland Limited and Amarin Pharma, Inc., with little to no operating activity being conducted by Amarin Neuroscience Limited, Corsicanto Ltd, or Ester Neurosciences Limited.
On January 9, 2012, Amarin, through its wholly-owned subsidiary Corsicanto Limited, a private limited company incorporated under the
laws of Ireland, completed a private placement of $150.0 million in aggregate principal amount of its 3.5% exchangeable senior notes due 2032. The notes are the senior unsecured obligations of Corsicanto and are guaranteed by Amarin Corporation plc.
Corsicanto was formed in November 2011 and was subsequently acquired by Amarin in January 2012 for the sole purpose of facilitating this financing transaction.
Financial Information
The financial information required under this
Item 1 is incorporated herein by reference to Item 8 of this Annual Report on Form 10-K.
Where You Can Find More
Information
You are advised to read this Annual Report on Form 10-K in conjunction with other reports and documents
that we file from time to time with the Securities and Exchange Commission, or SEC. You may obtain copies of these reports after the date of this annual report directly from us or from the SEC at the SECs Public Reference Room at
100 F Street, N.E. Washington, D.C. 20549. In addition, the SEC maintains information for electronic filers (including Amarin) at its website at www.sec.gov. The public may obtain information regarding the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. We make our periodic and current reports, as well as any amendments to such reports, available on our internet website, free of charge, as soon as reasonably practicable after such material is
electronically filed with, or furnished to, the SEC.
This
Annual Report on Form 10-K contains forward-looking information based on our current expectations. Because our actual results may differ materially from any forward-looking statements that we make or that are made on our behalf, this section
includes a discussion of important factors that could affect our actual future results, including, but not limited to, our capital resources, our ability to successfully commercially launch Vascepa, the progress and timing of our clinical programs,
the safety and efficacy of our product candidates, risks associated with regulatory filings, the potential clinical benefits and market potential of our product
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candidates, commercial market estimates, future development efforts, patent protection, effects of healthcare reform, reliance on third parties, and other risks set forth below.
Risks Related to the Commercialization and Development of Vascepa
Our ability to generate increased revenue over the next few years depends, in part, on FDA approval for the use of Vascepa in the ANCHOR indication in the United States and we may be delayed in
obtaining, or never obtain, such approval. In October 2013 an advisory committee convened by the FDA voted 9 to 2 against recommending approval of Vascepa in the ANCHOR indication and the FDA has rescinded our ANCHOR clinical trial Special Protocol
Assessment Agreement, as a result of which there is a significant risk that FDA will not approve Vascepa for this indication.
While we are currently marketing Vascepa for use in the MARINE indication in the United States, our ability to commercialize Vascepa in the ANCHOR indication in the United States or market Vascepa for
either indication outside of the United States is dependent upon receiving additional regulatory approvals. In April 2013, the FDA accepted our Supplemental New Drug Application, or sNDA, which seeks approval for the use of Vascepa in patients with
high triglyceride levels (TG
>
200 mg/dL and <500 mg/dL) who are also on statin therapy for elevated LDL-C levels, which we refer to as the ANCHOR indication. The FDA originally assigned the sNDA a Prescription Drug User Fee Act, or
PDUFA, date of December 20, 2013 for the completion of its review. The PDUFA date is the goal date for the FDA to complete its review of the sNDA. On December 19, 2013, the FDA notified us it did not expect to take action on our sNDA on
December 20, 2013 because our request to re-instate the ANCHOR special protocol assessment, or SPA, agreement remained under consideration with the FDA. Our request to reinstate the ANCHOR SPA was denied and we are in the process of
appealing that decision. No new PDUFA date has been established.
On October 16, 2013 the FDA convened an advisory
committee meeting to review the sNDA for the ANCHOR indication. At the meeting, the advisory committee voted 9 to 2 against recommending approval of Vascepa, based on the following question:
Taking into account the described efficacy and safety data for Vascepa, do you believe that its effects on the described lipid/lipoprotein
parameters are sufficient to grant approval for co-administration with statin therapy for the treatment of patients with mixed dyslipidemia and CHD or CHD risk equivalent prior to the completion of REDUCE-IT?
During the advisory committee meeting, based in part on the briefing materials prepared by the FDA for the meeting, the advisory
committee reviewed the safety and efficacy data observed in the ANCHOR trial. This included a discussion regarding observed nominally statistically significant changes from baseline in an adverse direction, while on background statin therapy, in
certain lipid parameters, including TGs, in the placebo group, raising the possibility that the mineral oil placebo used in the ANCHOR trial (and in the REDUCE-IT trial) was not biologically inert and might be viewed as artificially exaggerating the
clinical effect of Vascepa when measured against placebo in the ANCHOR trial. Because no strong evidence for biological activity of mineral oil was identified by the FDA in the MARINE trial, ultimately it was concluded that the between-group
differences likely provided the most appropriate descriptions of the treatment effect of Vascepa and that whatever factor(s) led to the within-group changes over time in the placebo group were likely randomly distributed to all treatment groups.
Thus, the FDA approved Vascepa for use in the MARINE indication in July 2012. Following this discussion at the advisory committee meeting, while no formal vote was taken related to the inert nature of the placebo, we believe that the consensus of
the advisory committee, although not unanimous, and the FDA was that, based on the information made available to the advisory committee and FDA at the meeting, Vascepa appeared to be safe and effective for the reduction of TGs in patients with mixed
dyslipidemia on statin therapy.
However, there was also extensive discussion during the advisory committee meeting regarding
the expected clinical benefit of a reduction in TGs in this patient population. That is, whether the clinical data derived from the ANCHOR trial was a sufficient basis for approval. In particular, the advisory committee and
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FDA noted the lack of prospective, controlled clinical trial data demonstrating that pharmacological reduction of TGs in patients with mixed dyslipidemia on statin therapy significantly reduces
residual cardiovascular risk in these patients. The FDA noted that prior clinical outcomes studies conducted by others, albeit in different patient populations, evaluating different drugs with different mechanisms of action, failed to demonstrate a
statistically significant reduction in cardiovascular events following concomitant use of drug therapy in patients on statin therapy. We believe that the negative vote of the advisory committee was principally due to the lack of recent conclusive
data in these clinical outcomes studies in favor of the hypothesis that TG reduction will result in reduced cardiovascular risk. The FDA is not bound by the recommendations of the advisory board, but it generally follows such recommendations.
A Special Protocol Assessment, or SPA, agreement is an agreement with the FDA that Phase 3 trial protocol design, clinical
endpoints, and planned statistical analyses are acceptable to support regulatory approval. A SPA is generally binding upon the FDA except in limited circumstances, such as if the FDA identifies a substantial scientific issue essential to determining
safety or efficacy after the study begins, or if the study sponsor fails to follow the protocol that was agreed upon with the FDA. On October 29, 2013, the FDA notified us that it rescinded the SPA agreement we entered into for the ANCHOR trial
protocol because the FDA determined that a substantial scientific issue essential to determining the effectiveness of Vascepa in the studied population was identified after testing began. As a basis for this determination, the FDA communicated that,
consistent with discussion at the advisory committee meeting, it determined that results from outcome studies of other triglyceride-lowering drugs failed to support the hypothesis that a triglyceride-lowering drug significantly reduces the risk for
cardiovascular events among the population studied in the ANCHOR trial. Thus, the FDA stated that it no longer considers a change in serum triglyceride levels as sufficient to establish the effectiveness of a drug intended to reduce cardiovascular
risk in subjects with serum triglyceride levels below 500 mg/dL. On November 7, 2013, we submitted to the FDA a formal appeal of its decision to rescind the SPA including documents outlining why we believe the SPA was wrongfully rescinded.
On November 21, 2013, we received notification from the dispute resolution group of the Office of New Drugs at the FDA
that it had not accepted for review, on procedural grounds, our appeal regarding the rescission of the SPA. We were also notified by the FDA that our request for a meeting at a high level within the FDA regarding the appeal was not granted and that
we would first need to address the matter at the division level within the FDA. On December 19, 2013, the FDA notified us it did not expect to take action on our sNDA on December 20, 2013 because our request to re-instate the ANCHOR SPA
agreement remained under consideration with the FDA. The FDA also communicated to us that, as of December 19, 2013, it viewed our appeal of the ANCHOR SPA agreement rescission and the ANCHOR sNDA as separate administrative decisions worthy
of separate consideration and that it FDA planned to complete its review of our request to re-instate the ANCHOR SPA agreement. The FDA provided no additional information on when it expects to complete its review of the ANCHOR sNDA. On
January 17, 2014, the Division of Metabolism and Endocrinology Products, or DMEP, within the FDA notified Amarin in connection with Amarins request for reconsideration of the October 2013 decision to rescind the ANCHOR SPA agreement that
the DMEP does not plan to re-instate the ANCHOR SPA agreement. Our plan is to continue appealing the rescission decision to successively higher administrative levels within the FDA in accordance with FDA dispute resolution guidance.
Neither the DMEP nor FDA provided additional information on when it expects to complete its review of the ANCHOR sNDA. There can be no assurance that we will be successful in the reinstatement of the ANCHOR SPA agreement or in approval of the ANCHOR
indication sNDA.
Based on our communications with the FDA, we currently expect that final positive results from the REDUCE-IT
outcomes study will be required for FDA approval of Vascepa for the ANCHOR indication. If we do not receive FDA approval of the ANCHOR indication, we plan to re-evaluate the REDUCE-IT study, including the likelihood of REDUCE-IT providing clinically
and commercially useful results, the likelihood of FDA approval for an expanded indication for Vascepa based on these results and whether it is best to continue or discontinue the study. We anticipate that in any such re-evaluation we will seek
further feedback from the FDA. The aggregate cost to complete REDUCE-IT, excluding amounts previously expensed, is estimated to
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exceed $100 million, which is a significant financial burden given our current financial position. To the extent the FDA conditions approval of Vascepa for the ANCHOR indication on its review of
the data from the REDUCE-IT trial, Vascepa may never be approved for this indication. Any delay in obtaining, or an inability to obtain, marketing approval in this indication would prevent us from growing revenue and could have a material adverse
effect on our operations and financial condition, including our ability to reach profitability.
Even if we obtain additional
regulatory approvals for Vascepa, the timing or scope of any approvals may prohibit or reduce our ability to commercialize the product successfully. For example, if the approval process for the ANCHOR indication takes too long, we may miss market
opportunities and give other companies the ability to develop competing products or establish market dominance. Additionally, the terms of any approvals, including the approval received from the FDA in July 2012 for the MARINE indication, may prove
to not have the scope or breadth needed for us to successfully commercialize Vascepa or become profitable.
Our SPA
agreement for ANCHOR has been rescinded and our SPA agreement for REDUCE-IT is not a guarantee of FDA approval of Vascepa for the proposed REDUCE-IT indication.
A SPA is an evaluation by the FDA of a protocol with the goal of reaching an agreement that the Phase 3 trial protocol design, clinical endpoints, and statistical analyses are acceptable to support
regulatory approval of the drug product candidate with respect to effectiveness for the indication studied. The ANCHOR trial was, and the REDUCE-IT trial is, being conducted under an SPA agreement with the FDA. In each case, the FDA agreed that,
based on the information we submitted to the agency, the design and planned analysis of the trial is adequate to support use of the conducted study as the primary basis for approval with respect to effectiveness. A SPA agreement is generally binding
upon the FDA except in limited circumstances, such as if the FDA identifies a substantial scientific issue essential to determining safety or efficacy after the study begins, or if the study sponsor fails to follow the protocol that was agreed upon
with the FDA.
On October 29, 2013, the FDA notified us that it rescinded the ANCHOR study SPA agreement because the FDA
determined that a substantial scientific issue essential to determining the effectiveness of Vascepa in the studied population was identified after testing began. Specifically, consistent with discussion at the advisory committee meeting, the FDA
determined that results from outcome studies of other triglyceride-lowering drugs failed to support the hypothesis that a triglyceride-lowering drug significantly reduces the risk for cardiovascular events among the population studied in the ANCHOR
trial. In response to our appeal of the decision to rescind the ANCHOR SPA agreement, on January 17, 2014, the DMEP within the FDA notified Amarin in connection with Amarins request for reconsideration of the October 2013 decision to
rescind the ANCHOR SPA agreement that the DMEP does not plan to re-instate the ANCHOR SPA agreement. Thus, the DMEP stated that it no longer considers a change in serum triglyceride levels as sufficient to establish the effectiveness of
a drug intended to reduce cardiovascular risk in subjects with serum triglyceride levels below 500 mg/dL. We are in the process of appealing this decision.
Thus, even though we have received regulatory approval of Vascepa for the MARINE indication under an SPA agreement, our ANCHOR SPA agreement was rescinded and there is no assurance that the FDA will not
rescind our REDUCE-IT SPA agreement. Any delay in obtaining, or an inability to obtain, marketing approval in either the ANCHOR or REDUCE-IT indications would prevent us from growing revenue and could have a material adverse effect on our operations
and financial condition, including our ability to reach profitability.
If we do not obtain FDA approval of the ANCHOR
indication, we may choose to discontinue our ongoing REDUCE-IT outcome study of Vascepa, which is designed to determine whether Vascepa is effective in reducing major cardiovascular events in a high risk patient population on statin therapy and our
development of AMR102, a fixed dose combination of Vascepa and a leading statin product.
Our ongoing REDUCE-IT
cardiovascular outcome study was designed to determine whether Vascepa, when added to statin therapy, would reduce the risk of major cardiovascular events in an at-risk patient population. We
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expect the ongoing incremental cost of the REDUCE-IT study to us over the next several years will exceed $100 million as the study currently involves over 400 clinical trial sites in eleven
countries. The timing of completion of the REDUCE-IT study is based on the rate of cardiovascular events for patients in the study. If it takes longer for such events to accrue than we expect, the trial could take longer to complete and cost more
than we currently expect. AMR102, a fixed dose combination of Vascepa and a leading statin product, is in early stage development with relatively minimal current expenses associated with ongoing development, but significant expense associated with
development over the next several years. We have not been profitable in any of the last five fiscal years. Our cash and cash equivalents at December 31, 2013 was $191.5 million. For the fiscal year ended December 31, 2013, we reported a
loss of $166.2 million and we had an accumulated deficit of $913.9 million. For the twelve months ended December 31, 2013, net revenue from the sale of Vascepa based on the MARINE indication was $26.4 million. Given the substantial ongoing cost
of the REDUCE-IT cardiovascular outcome study, our current capital resources and the current sales of Vascepa resulting from FDA approval of Vascepa for use in the MARINE indication, we may not be able to continue the study with our current
financial resources and anticipated revenues from Vascepa without the additional revenues that may be available to us from the sale of Vascepa following an FDA approval of the ANCHOR indication. If we do not receive FDA approval of the ANCHOR
indication, we plan to re-evaluate the REDUCE-IT study, including the likelihood of REDUCE-IT providing clinically and commercially useful results, the likelihood of FDA approval for an expanded indication for Vascepa based on these results and
whether it is advisable to continue or discontinue the study. We anticipate that in any such re-evaluation we will seek further feedback from the FDA. If we do not receive FDA approval of the ANCHOR indication and do not continue the
ongoing REDUCE-IT trial or our development of AMR102, our ability to generate revenue now and over the next several years will be substantially dependent on sales of Vascepa resulting from FDA approval of Vascepa for use in the MARINE indication.
Accordingly, our prospects for substantially increasing future revenue from sales of Vascepa beyond what might be expected from the MARINE indication labeling alone will be substantially diminished.
We are dependent upon the success of Vascepa, which we launched commercially in the MARINE indication in early 2013.
As a result of our reliance on a single product and our primary focus on the U.S. market in the near-term, much of our
near-term results and value as a company depends on our ability to execute our commercial strategy for Vascepa in the United States, which we launched in January 2013. If commercialization efforts for Vascepa in the MARINE indication or, if
approved, the ANCHOR indication, are not successful, our business will be materially and adversely affected. Even if we are able to develop additional products from our research and development efforts, the development time cycle for products
typically takes several years. This restricts our ability to respond to adverse business conditions for Vascepa. If we are not successful in developing any future product or products, or if there is not adequate demand for Vascepa or the market for
such product develops less rapidly than we anticipate, we may not have the ability to effectively shift our resources to the development of alternative products or do so in a timely manner without suffering material adverse effects on our business.
As a result, the lack of alternative products we develop could constrain our ability to generate revenues and achieve profitability.
We launched Vascepa in the MARINE indication in the United States in January 2013 with our own, newly established sales and marketing teams and distribution channels and we may not be successful.
Historical results may not be consistent with or predictive of future results.
In January 2013, we began selling and
marketing Vascepa in the United States through our own, newly established sales and marketing teams and through a newly established third-party commercial distribution infrastructure. We hired key personnel in these areas over the last several years
and hired and trained a professional sales force in early January 2013. In October 2013, following an FDA advisory committee recommendation against approval for the ANCHOR indication, we implemented a plan to reduce our workforce and our team
of sales professionals in half. The commercial launch of a new pharmaceutical product is a complex undertaking for a company to manage, and we have very limited experience as a company operating in this area.
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Factors related to building and managing our own sales and marketing organization that can inhibit our efforts to successfully commercialize Vascepa on our own include:
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our inability to attract and retain adequate numbers of effective sales and marketing personnel;
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our inability to adequately train our sales and marketing personnel, in particular as it relates to various healthcare regulatory requirements
applicable to the marketing and sale of pharmaceutical products, and our inability to adequately monitor compliance with these requirements;
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the inability of our new sales personnel, working for us as a new market entrant, to obtain access to or persuade adequate numbers of physicians to
prescribe Vascepa;
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the effect of our recent reduction in force and regulatory events on our ability to contact potential purchasers of Vascepa in an efficient manner;
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the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more
extensive product lines; and
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unforeseen costs and expenses associated with operating a new independent sales and marketing organization.
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In addition, we believe that investors should view with caution both the results for the twelve months ended December 31, 2013, as
data for this limited period may not be representative of a trend consistent with the results presented or otherwise predictive of future results, especially in light of the recent negative advisory committee vote and the approximately 50% reduction
in our sales force. We commenced our commercial launch of Vascepa on January 28, 2013. Accordingly, there is a very limited amount of information available at this time to determine the actual number of total prescriptions for Vascepa. We
believe investors should consider our results for the twelve months ended December 31, 2013 together with results over several future quarters, or longer, before making an assessment about potential future performance.
In addition to the factors identified above, seasonal fluctuations in pharmaceutical sales, for example, may affect future prescription
trends of Vascepa. Moreover, in accordance with our revenue recognition policy and accounting principles generally accepted in the U.S., or GAAP, until we have more experience with the commercialization of Vascepa and can reasonably estimate any
product returns, we plan to recognize revenue based on the resale of Vascepa for the purposes of filling prescriptions, and not based on sales from us to such distributors. Accordingly, because of our limited selling history, during the twelve
months ended December 31, 2013, we only recognized revenue on product that we could substantiate being resold by retailers, such as pharmacies, for purposes of filling prescriptions. These prescription data may differ from the data reported by
third parties. The value of product shipped to distributors but not resold by the distributors to retailers has been deferred until we have evidence that the product was resold by retailers or until we gain sufficient history with our customers to
be able to estimate product returns. This is the case even where invoices for such shipments have been collected in full. From launch through December 31, 2013, the Company had experienced a de minimus quantity of product returns.
We have to compete with other pharmaceutical and life sciences companies to recruit, hire, train and retain sales and marketing
personnel, and turnover in our sales force and marketing personnel following our recent approximately 50% worldwide reduction in force could negatively affect sales of Vascepa. If we are not successful in our efforts to market and sell Vascepa on
our own, market acceptance of Vascepa may be harmed, our anticipated revenues will be materially and negatively affected, and we may need additional funding or seek a strategic licensing or co-promotion transaction as a means of raising additional
funds.
Vascepa may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and
others in the medical community necessary for commercial success.
We began marketing and selling Vascepa for use in
the MARINE indication in January 2013. Vascepa may fail to gain sufficient market acceptance by physicians, patients, healthcare payors and others in the medical
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community. If Vascepa does not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable. The degree of market acceptance of
Vascepa for the MARINE indication and any future approved indications will depend on a number of factors, including:
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the perceived efficacy, safety and potential advantages of Vascepa, as compared to alternative treatments;
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our ability to offer Vascepa for sale at competitive prices;
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convenience and ease of administration compared to alternative treatments;
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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
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the scope, effectiveness and strength of product education, marketing and distribution support, including our sales and marketing team (which was
affected by our recent reduction in force);
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publicity concerning Vascepa or competing products;
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perception that we will continue to market and sell Vascepa in the MARINE indications and any future approved indications;
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sufficient third-party coverage or reimbursement; and
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the actual efficacy of the product and the prevalence and severity of any side effects, including any limitations or warnings contained in
Vascepas approved labeling.
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We may not be able to compete effectively against our
competitors pharmaceutical products.
The biotechnology and pharmaceutical industries are highly competitive.
There are many pharmaceutical companies, biotechnology companies, public and private universities and research organizations actively engaged in the research and development of products that may be similar to our products. It is probable that the
number of companies seeking to develop products and therapies similar to our products will increase. Many of these and other existing or potential competitors have substantially greater financial, technical and human resources than we do and may be
better equipped to develop, manufacture and market products. These companies may develop and introduce products and processes competitive with or superior to ours. In addition, other technologies or products may be developed that have an entirely
different approach or means of accomplishing the intended purposes of our products, which might render our technology and products noncompetitive or obsolete.
Our potential competitors both in the United States and Europe include large, well-established pharmaceutical companies, specialty pharmaceutical sales and marketing companies, and specialized
cardiovascular treatment companies. These companies include GlaxoSmithKline plc, which currently markets Lovaza, a prescription-only omega-3 fatty acid indicated for patients with severe hypertriglyceridemia, and AbbVie, Inc., which currently
markets Tricor and Trilipix for the treatment of severe hypertriglyceridemia and mixed dyslipidemia and Niaspan, which is primarily used to raise HDL-C, but is also used to lower triglycerides. In March 2011, Pronova BioPharma Norge AS, now owned by
BASF, which owns the patents for Lovaza, entered into an agreement with Apotex Corp. and Apotex Inc., or Apotex, to settle their patent litigation in the United States related to Lovaza. Pursuant to the terms of the settlement agreement,
Pronova/BASF granted Apotex a license to enter the United States market with a generic version of Lovaza in the first quarter of 2015, or earlier depending on circumstances. In addition, Pronova /BASF recently lost an appeal in its patent
infringement lawsuit against Teva Pharmaceuticals USA Inc., or Teva, and Par Pharmaceutical Inc., or Par, which would have prevented Teva and Par from launching generic versions of Lovaza. Apotex, Teva, and Par must obtain FDA approval of generic
versions of Lovaza before they are permitted to sell such products in the United States. Other companies are also seeking to introduce generic versions of Lovaza. Each of these competitors has greater resources than we do, including financial,
product development, marketing, personnel and other resources.
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In addition, we are aware of other pharmaceutical companies that are
developing products that, if approved and marketed, would compete with Vascepa. These include a free fatty acid form of omega-3 (comprised of 55% EPA and 20% DHA) developed by Omthera Pharmaceuticals, now owned by AstraZeneca PLC. In July 2013,
an NDA was submitted to the FDA seeking approval of this drug candidate for the treatment of severe hypertriglyceridemia. AstraZeneca has announced that the scheduled goal date for FDA approval of its product is May 5, 2014. We expect
AstraZeneca will utilize its substantial commercial resources to market Omthera Pharmaceuticals product, if approved. We also understand that another company, Trygg Pharma AS, has completed a Phase 3 study of an omega-3 based drug candidate
for severe hypertriglyceridemia, but we do not believe Trygg has announced results from that study. It is possible that Trygg Pharma has filed for FDA approval of its product candidate. In addition, Acasti Pharma, a subsidiary of Neptune
Technologies & Bioresources Inc., announced in late 2012 that it intends to conduct a Phase 3 clinical program to assess the safety and efficacy of its omega-3 prescription drug candidate derived from krill oil for the treatment of
hypertriglyceridemia. We believe Catabasis Pharmaceuticals, or Catabasis, Resolvyx Pharmaceuticals, or Resolvyx, and Sancilio & Company are also developing potential treatments for hypertriglyceridemia based on omega-3 fatty acids and, to
our knowledge, Catabasis initiated a Phase 2 clinical trial of its product in December 2013; Resolvyxs compound remains in Phase 1 clinical testing; and Sancilio is preparing to commence Phase 3 clinical testing. In addition, we are aware that
Matinas BioPharma, Inc. is developing an omega-3-based therapeutic for the treatment of severe hypertriglyceridemia and mixed dyslipidemia. Matinas BioPharma, Inc. has reported that it is preparing to file an Investigational New Drug Application
with the FDA and to conduct a human study in the first half of 2014. Isis Pharmaceuticals announced favorable Phase 2 results of ISIS-APOCIII
Rx
a drug candidate administered through weekly subcutaneous injections, in patients with high triglycerides and type 2
diabetes and in patients with moderate to severe high triglycerides. Finally, Madrigal Pharmaceuticals has completed Phase 1 clinical testing of MGL-3196 for the treatment of high triglycerides and various lipid parameters in patients.
We were granted three-year FDA marketing exclusivity and competitors may now seek approval of generic versions of Vascepa.
The Hatch-Waxman Amendments permit the FDA to approve abbreviated new drug applications, or ANDAs, for generic
versions of brand name drugs like Vascepa. We refer to the process of generic drug applications as the ANDA process. The timelines and conditions that govern the ANDA process differ based on whether a drug receives three-year, or new
chemical entity (NCE), marketing exclusivity. The ANDA process permits competitor companies to obtain marketing approval for a drug product with the same active ingredient, dosage form, strength, route of administration, and labeling as the approved
brand name drug, but without having to conduct and submit clinical studies to establish the safety and efficacy of the proposed generic product. In place of such clinical studies, an ANDA applicant needs to submit data demonstrating that its product
is bioequivalent to the brand name product, usually based on pharmacokinetic studies.
The Hatch-Waxman Amendments require an
applicant for a drug product that relies, in whole or in part, on the FDAs prior approval of Vascepa, to notify us of its application, a paragraph IV notice, if the applicant is seeking to market its product prior to the expiration of the
patents that claim Vascepa. A bona fide paragraph IV notice may not be given under the Hatch-Waxman Amendments until after the generic company receives from the FDA an acknowledgement letter stating that its ANDA is sufficiently complete to permit a
substantive review.
The paragraph IV notice is required to contain a detailed factual and legal statement explaining the
basis for the applicants opinion that the proposed product does not infringe our patents, that our patents are invalid, or both. After receipt of a valid notice, we would have the option of bringing a patent infringement suit in federal
district court against any generic company seeking approval for its product within 45 days from the date of receipt of each notice. If such a suit is commenced within this 45 day period, we will be entitled to receive a 30 month stay on FDAs
ability to give final approval to any of the proposed products that reference Vascepa. The stay may be shortened or lengthened if either party fails to cooperate in the litigation and it may be terminated if
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the court decides the case in less than 30 months. If the litigation is resolved in favor of the applicant before the expiration of the 30 month period, the stay will be immediately lifted and
the FDAs review of the application may be completed. Such litigation is often time-consuming and costly, and may result in generic competition if such patents are not upheld or if the generic competitor is found not to infringe such patents.
The FDA typically makes a determination on marketing exclusivity in connection with, or soon after, an NDA approval of a drug
for a new indication. We applied to the FDA for five-year, NCE marketing exclusivity for Vascepa in connection with the NDA for our MARINE indication, which NDA was approved by the FDA on July 26, 2012. On February 21, 2014, in connection
with the July 26, 2012 approval of the MARINE indication, the FDA denied a grant of NCE marketing exclusivity to Vascepa and granted three-year marketing exclusivity. Such three-year exclusivity extends through July 25, 2015 and can be
supplemented by a 30-month stay triggered after patent infringement litigation initiated by Amarin following a valid notice to Amarin of the filing of an ANDA with the FDA seeking approval of a generic version of Vascepa.
On February 27, 2014, we filed a lawsuit against the FDA that challenges FDAs denial of our request for five-year exclusivity for
Vascepa based on our reading of the relevant statute and inconsistency with FDAs past actions. Our complaint requests that the court vacate FDAs decision, declare that Vascepa is entitled to the benefits of five-year statutory
exclusivity, bar the FDA from accepting any ANDA or similar application for which Vascepa is the reference-listed drug until after the statutory exclusivity period expires, and if necessary, set aside FDAs premature acceptance of any such
application.
FDA marketing exclusivity is separate from, and in addition to, patent protection, trade secrets and
manufacturing barriers to entry which also help protect Vascepa against generic competition.
Based on communications with the
FDA, we believe the FDA does not accept submitted ANDAs for review until after the FDA makes a determination on the exclusivity status of the pioneer drug. In February 2014, prior to the FDAs three-year exclusivity determination for Vascepa,
we received a purported paragraph IV notice from a generic drug company with respect to an ANDA to Vascepa. The FDA confirmed with us after we received the notice and before the exclusivity determination was made that the FDA had not accepted for
review any ANDA to Vascepa. The FDA has repeatedly taken the position that paragraph IV notices delivered to pioneer companies such as Amarin prior to the acceptance by the FDA for review of a submitted ANDA are not effective under the Hatch-Waxman
Amendments. The generic company may challenge the FDAs position on whether the notice is valid in court in connection with patent litigation. Generic companies are thought to send such premature notices to seek to avail themselves of the
180-day generic exclusivity period for an approved product under an ANDA based on the generics view that it would then have first-to-file status and to seek an early end to related patent litigation with the branded drug company and the
associated 30-month stay. Because we and the FDA do not believe the purported paragraph IV notice is an effective notice under the Hatch-Waxman Amendments we do not plan to initiate patent litigation against the generic company that submitted the
ANDA until within the 45-day period after we receive a valid paragraph IV notice.
The FDA may now accept for review a
submitted ANDA to Vascepa under the Hatch-Waxman Amendments. After receipt of a valid paragraph IV notice, we are likely to engage in costly litigation with the applicant to protect our patent rights. If the generic filer is ultimately successful in
patent litigation against us, meets the requirements for a generic version of Vascepa to the satisfaction of the FDA under its ANDA (after any applicable regulatory exclusivity period and, typically, the litigation-related 30-month stay period
expires), and is able to supply the product in significant commercial quantities, the generic company could, with the market introduction of a generic version of Vascepa, limit our U.S. sales, which would have an adverse impact on our business and
results of operations. In addition, even if a competitors effort to introduce a generic product is ultimately unsuccessful, the perception that such development is in progress and/or news related to such progress could materially affect the
perceived value of our company and our stock price.
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Vascepa is a prescription-only omega-3 fatty acid. Omega-3 fatty acids are also
marketed by other companies as non-prescription dietary supplements. As a result, Vascepa would be subject to non-prescription competition and consumer substitution.
Our only current product, Vascepa, is a prescription-only omega-3 fatty acid. Mixtures of omega-3 fatty acids are naturally occurring substances contained in various foods, including fatty fish. Omega-3
fatty acids are also marketed by others as non-prescription dietary supplements. We cannot be sure physicians will view the pharmaceutical grade purity of Vascepa as having a superior therapeutic profile to naturally occurring omega-3 fatty acids
and dietary supplements. To the extent the price of Vascepa is significantly higher than the prices of commercially available omega-3 fatty acids marketed by other companies as dietary supplements (through that lack of coverage by insurers or
otherwise), physicians may recommend these commercial alternatives instead of writing prescriptions for Vascepa or patients may elect on their own to take commercially available omega-3 fatty acids. Either of these outcomes may adversely impact our
results of operations by limiting how we price our product and limiting the revenue we receive from the sale of Vascepa due to reduced market acceptance.
If we are not successful marketing and selling Vascepa on our own, we may need to find collaborative partners to help market and sell the product.
If we are not successful marketing and selling Vascepa on our own, we may need to find collaborative partners to help market and sell the
product or otherwise outsource these functions to third parties. Until such time as we choose to, and actually do, complete a strategic transaction with a third party to market and sell Vascepa, if ever, we will continue to market and sell Vascepa
on our own. We are actively exploring collaboration opportunities for the continued marketing and sale of Vascepa as we approach the potential approval of Vascepa in the ANCHOR indication, assuming its regulatory approval.
We may choose not to enter into a collaboration to help market and sell Vascepa or, if we determine such a collaborative partner is
necessary we may not be successful in finding a collaborative partner, or may be delayed in doing so. We face significant competition in seeking appropriate collaborators, and these collaborations are complex and time-consuming to negotiate and
document. We may not be able to negotiate collaborations on acceptable terms, or at all. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our
products effectively. If that were to occur, depending on Vascepa revenues, we may have to curtail the continued development of Vascepa for approval for additional indications or increase our planned expenditures and undertake additional development
or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, depending on Vascepas revenues, we may need to obtain additional capital, which may
not be available to us on acceptable terms, or at all, or which may not be possible due to our other financing arrangements, including our Purchase and Sale Agreement with BioPharma Secured Debt Fund II Holdings Cayman, L.P., or BioPharma. If we do
not generate sufficient funds from the sale of Vascepa or, to the extent needed to supplement funds generated from product revenue, cannot raise sufficient funds, we may not be able to devote resources sufficient to market and sell Vascepa on our
own in a manner required to realize the full market potential of Vascepa.
The commercial value to us of the MARINE and
ANCHOR indications may be smaller than we anticipate.
There can be no assurance as to the adequacy for commercial
success of the scope and breadth of the MARINE indication or, if approved, the ANCHOR indication. Even if we obtain marketing approval for additional indications, the FDA may impose restrictions on the products conditions for use, distribution
or marketing and in some cases may impose ongoing requirements for post-market surveillance, post-approval studies or clinical trials. Also, with regard to the MARINE indication and any other indications for which we may gain approval, the number of
actual patients with the condition included in such approved indication may be smaller than we anticipate. If any such approved indication is narrower than we anticipate, the market potential for our product would suffer.
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Our products will be subject to extensive post-approval government regulation.
Once a product candidate receives FDA marketing approval, numerous post-approval requirements apply. Among other
things, the holder of an approved NDA is subject to periodic and other monitoring and reporting obligations enforced by the FDA and other regulatory bodies, including obligations to monitor and report adverse events and instances of the failure of a
product to meet the specifications in the approved application. Application holders must also submit advertising and other promotional material to regulatory authorities and report on ongoing clinical trials.
With respect to sales and marketing activities including direct-to-consumer advertising and promotional activities involving the
Internet, advertising and promotional materials must comply with FDA rules in addition to other applicable federal and local laws in the United States and in other countries. Industry-sponsored scientific and educational activities also must comply
with FDA and other requirements. In the United States, the distribution of product samples to physicians must comply with the requirements of the U.S. Prescription Drug Marketing Act. Manufacturing facilities remain subject to FDA inspection and
must continue to adhere to the FDAs current good manufacturing practice requirements, or cGMPs. Application holders must obtain FDA approval for product and manufacturing changes, depending on the nature of the change. We also are subject to
the new federal transparency requirements under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, which require manufacturers of certain drugs, devices, biologics, and medical supplies to
report to the Centers for Medicare & Medicaid Services, or CMS, information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests. We may also be subject,
directly or indirectly through our customers and partners, to various fraud and abuse laws, including, without limitation, the U.S. Anti-Kickback Statute, U.S. False Claims Act, and similar state laws, which impact, among other things, our proposed
sales, marketing, and scientific/educational grant programs. If we participate in the U.S. Medicaid Drug Rebate Program, the Federal Supply Schedule of the U.S. Department of Veterans Affairs, or other government drug programs, we will be subject to
complex laws and regulations regarding reporting and payment obligations. All of these activities are also potentially subject to U.S. federal and state consumer protection and unfair competition laws. Similar requirements exist in many of these
areas in other countries.
Depending on the circumstances, failure to meet these post-approval requirements can result in
criminal prosecution, fines or other penalties, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, or refusal to allow us to enter into supply contracts,
including government contracts. In addition, even if we or our potential partners comply with FDA and other requirements, new information regarding the safety or effectiveness of a product could lead the FDA to modify or withdraw a product approval.
Adverse regulatory action, whether pre- or post-approval, can potentially lead to product liability claims and increase our product liability exposure. We or our potential partners must also compete against other products in qualifying for coverage
and reimbursement under applicable third party payment and insurance programs.
The commercial value of Vascepa may be
negatively affected by the advisory committee recommendation against approval of Vascepa in the ANCHOR indication, the rescission of the ANCHOR SPA agreement or any subsequent rejection of the pending FDA application with the FDA for the use of
Vascepa in the ANCHOR indication.
Though we are restricted from promoting Vascepa under applicable regulations for any
indication other than the FDA-approved MARINE indication, healthcare professionals are not restricted from prescribing Vascepa for such so-called off-labeled uses. A significant amount of the sales of Vascepa may, in fact, be attributable to
so-called off-labeled uses of the drug. We expect that among the off-labeled uses of Vascepa are uses that would fall into, or be closely related to, the proposed ANCHOR indication. The recent negative recommendation of the advisory committee
meeting against approval of Vascepa in the ANCHOR indication, the recent rescission by the FDA of the ANCHOR SPA, and/or a subsequent decision by the FDA to not approve Vascepa in the ANCHOR
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indication may negatively and materially affect the perception of the utility of Vascepa for use in the ANCHOR indication or for other purposes and thus negatively and materially affect sales of
Vascepa.
The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about
prescription products. If we are found to have improperly promoted off-label uses, we may become subject to significant fines and other liability.
The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products. In particular, a product may not be promoted for uses that are not approved by
the FDA or such other regulatory agencies as reflected in the products approved labeling. Even though we received FDA marketing approval for Vascepa for the MARINE indication, physicians may still prescribe Vascepa to their patients for use in
the treatment of conditions that are not included as part of the indication statement in our FDA-approved Vascepa label. If we are found to have promoted such off-label uses, we may become subject to significant government fines and other related
liability. For example, the Federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that
companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.
In addition, incentives exist under applicable laws that encourage competitors, employees and physicians to report violations of rules governing promotional activities for pharmaceutical products. These
incentives could lead to so-called whistleblower lawsuits as part of which such persons seek to collect a portion of moneys allegedly overbilled to government agencies due to, for example, promotion of pharmaceutical products beyond labeled claims.
These incentives could also lead to suits that we have mischaracterized a competitors product in the marketplace and may, as a result, be sued for alleged damages to our competitors. Such lawsuits, whether with or without merit, are typically
time-consuming and costly to defend. Such suits may also result in related shareholder lawsuits, which are also costly to defend.
The REDUCE-IT cardiovascular outcomes trial may fail to show that Vascepa can reduce major cardiovascular events in an at-risk patient population on statin therapy, and the long-term clinical
results of Vascepa may not be consistent with the clinical results we observed in our Phase 3 clinical trial, in which case our sales of Vascepa may then suffer.
In accordance with the SPA for our MARINE and ANCHOR trials, efficacy was evaluated in these trials compared to placebo at twelve weeks. No placebo-controlled studies have been conducted regarding the
long-term effect of Vascepa on lipids, and no outcomes study has been conducted evaluating Vascepa. The REDUCE-IT study is designed to evaluate the efficacy of Vascepa in reducing major cardiovascular events in an at-risk patient population on
statin therapy.
Outcomes studies of certain other lipid-modifying therapies have failed to achieve the endpoints of such
studies. For example, in 2010, the results of the ACCORD-Lipid trial were published. This trial studied the effect of adding fenofibrate onto open-label simvastatin therapy on cardiovascular outcomes. The addition of fenofibrate did not show any
treatment benefit on cardiovascular outcomes over simvastatin monotherapy in this study. In 2011, the results of the AIM-HIGH trial were published. This trial studied the effect of adding a second lipid-altering agent, extended-release niacin, to
simvastatin therapy on cardiovascular outcomes in people at high risk for cardiovascular events. No significant incremental treatment benefit with extended-release niacin was observed. In addition, in September 2012, researchers published in the
Journal of the American Medical Association,
or
JAMA,
the results of a retrospective meta-analysis of twenty previously conducted studies regarding the use of omega-3 supplements across various patient populations. This meta-analysis
suggested that the use of such supplements was not associated with a lower risk of all-cause death, cardiac death, sudden death, heart attack, or stroke. We believe the results of these studies may not be directly applicable to the use of Vascepa
over time. For instance, the outcomes studies for fenofibrates and niacin were conducted in patient populations in which the majority of patients studied had triglycerides below 200 mg/dL and fenofibrates and
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niacin are believed to work differently than Vascepa in the body and do not have as favorable a side-effect profile, and nineteen of the twenty studies included in the JAMA meta-analysis involved
the use of omega-3 supplements containing a mixture of EPA and DHA, and most were evaluated at relatively lower doses. In addition, in May 2013,
The New England Journal of Medicine
published the results of an outcome study of 1 gram per
day of an omega-3 acid ethyl ester composition. In that study, the composition failed to show a benefit in reducing the rate of death from cardiovascular causes or hospitalization for cardiovascular causes when administered to patients with
cardiovascular risk factors under different study conditions than in the REDUCE-IT study. Vascepa is comprised of highly-pure ethyl-EPA, and has been approved by the FDA for use in patients with severe hypertriglyceridemia at a dose of 4 grams per
day.
The only other outcomes study involving the use of a highly-pure formulation of ethyl-EPA, called the Japan EPA Lipid
Intervention Study (JELIS), suggested that use of a highly-pure formulation of ethyl-EPA in Japan, when used in conjunction with statins, reduced cardiovascular events by 19% compared to the use of statins alone. However, there are several
limitations to the JELIS study. First, the patient population was exclusively Japanese, the majority of the participants were women, and at baseline patients had a much higher LDL, limiting its generalizability to the intended target population.
Second, a low dose of statins was used. It is unknown whether the positive treatment effects would have persisted if these patients had been optimally treated with statins using contemporary LDL targets in the United States. Third, JELIS was an
open-label trial, which could influence patient and physician behavior and reporting of symptoms, decisions regarding hospitalization, and referral of events for adjudication. This may be particularly relevant since hospitalizations for unstable
angina was a primary contributor of the overall positive result, and is considered a softer endpoint than fatal cardiovascular events.
Although we believe the results of the JAMA meta-analysis and other studies are not directly applicable to the potential long-term clinical experience with Vascepa, there can be no assurance that the
endpoints of the REDUCE-IT cardiovascular outcomes study will be achieved or that the lipid-modifying effects of Vascepa in REDUCE-IT or any other study of Vascepa will not be subject to variation beyond twelve weeks. If the REDUCE-IT trial fails to
achieve its clinical endpoints or if the results of these long-term studies are not consistent with the 12-week clinical results, it could prevent us from expanding the label of any approved product or even call into question the efficacy of any
approved product.
We may not be successful in developing or marketing future products if we cannot meet the extensive
regulatory requirements of the FDA and other regulatory agencies for quality, safety and efficacy.
The success of our
research and development efforts is dependent in part upon our ability, and the ability of our partners or potential partners, to meet regulatory requirements in the jurisdictions where we or our partners or potential partners ultimately intend to
sell such products once approved. The development, manufacture and marketing of pharmaceutical products are subject to extensive regulation by governmental authorities in the United States, the European Union, Japan and elsewhere. In the United
States, the FDA generally requires pre-clinical testing and clinical trials of each drug to establish its safety and efficacy and extensive pharmaceutical development to ensure its quality before its introduction into the market. Regulatory
authorities in other jurisdictions impose similar requirements. The process of obtaining regulatory approvals is lengthy and expensive and the issuance of such approvals is uncertain. The commencement and rate of completion of clinical trials and
the timing of obtaining marketing approval from regulatory authorities may be delayed by many factors, including:
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the lack of efficacy during clinical trials;
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the inability to manufacture sufficient quantities of qualified materials under cGMPs for use in clinical trials;
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slower than expected rates of patient recruitment;
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the inability to observe patients adequately after treatment;
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changes in regulatory requirements for clinical or preclinical studies;
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the emergence of unforeseen safety issues in clinical or preclinical studies;
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delay, suspension, or termination of a trial by the institutional review board responsible for overseeing the study at a particular study site;
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unanticipated changes to the requirements imposed by regulatory authorities on the extent, nature or timing of studies to be conducted on quality,
safety and efficacy; and
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government or regulatory delays or clinical holds requiring suspension or termination of a trial.
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Even if we obtain positive results from early stage pre-clinical or clinical trials, we may not achieve the same success in future
trials. Clinical trials that we or potential partners conduct may not provide sufficient safety and efficacy data to obtain the requisite regulatory approvals for product candidates. The failure of clinical trials to demonstrate safety and efficacy
for our desired indications could harm the development of that product candidate as well as other product candidates, and our business and results of operations would suffer. For example, the efficacy results of our Vascepa Phase 3 clinical trials
for the treatment of Huntingtons disease were negative. As a result, we stopped development of that product candidate, revised our clinical strategy and shifted our focus to develop Vascepa for use in the treatment of cardiovascular disease.
Any approvals that are obtained may be limited in scope, may require additional post-approval studies or may require the
addition of labeling statements focusing on product safety that could affect the commercial potential for our product candidates. Any of these or similar circumstances could adversely affect our ability to earn revenues from the sale of such
products. Even in circumstances where products are approved by a regulatory body for sale, the regulatory or legal requirements may change over time, or new safety or efficacy information may be identified concerning a product, which may lead to the
withdrawal of a product from the market or similar use restrictions. The discovery of previously unknown problems with a product or in connection with the manufacturer of products may result in restrictions on that product or manufacturer, including
withdrawal of the product from the market, which would have a negative impact on our potential revenue stream.
Legislative or regulatory reform of the health care system in the United States and foreign jurisdictions may affect our ability to
profitably sell Vascepa.
Our ability to commercialize our future products successfully, alone or with collaborators,
will depend in part on the extent to which coverage and reimbursement for the products will be available from government and health administration authorities, private health insurers and other third-party payors. The continuing efforts of the U.S.
and foreign governments, insurance companies, managed care organizations and other payors of health care services to contain or reduce health care costs may adversely affect our ability to set prices for our products which we believe are fair, and
our ability to generate revenues and achieve and maintain profitability.
Specifically, in both the United States and some
foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the health care system in ways that could affect our ability to sell our products profitably. For example, the Patient Protection and Affordable Care
Act, as amended by the Health Care and Education Reconciliation Act, or collectively the PPACA, enacted in March 2010, substantially changes the way healthcare is financed by both governmental and private insurers. Among other cost-containment
measures, PPACA establishes:
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An annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents;
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A new Medicare Part D coverage gap discount program, in which pharmaceutical manufacturers who wish to have their drugs covered under Part D must offer
discounts to eligible beneficiaries during their coverage gap period; and
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A new formula that increases the rebates a manufacturer must pay under the Medicaid Drug Rebate Program.
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We expect further federal and state proposals and health care reforms to continue to be
proposed by legislators, which could limit the prices that can be charged for the products we develop and may limit our commercial opportunity.
The continuing efforts of government and other third-party payors to contain or reduce the costs of health care through various means may limit our commercial opportunity. It will be time consuming and
expensive for us to go through the process of seeking coverage and reimbursement from Medicare and private payors. Our products may not be considered cost effective, and government and third-party private health insurance coverage and reimbursement
may not be available to patients for any of our future products or sufficient to allow us to sell our products on a competitive and profitable basis. Our results of operations could be adversely affected by PPACA and by other health care reforms
that may be enacted or adopted in the future. In addition, increasing emphasis on managed care in the United States will continue to put pressure on the pricing of pharmaceutical products. Cost control initiatives could decrease the price that we or
any potential collaborators could receive for any of our future products and could adversely affect our profitability.
In
some foreign countries, including major markets in the European Union and Japan, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take 6 to 12
months or longer after the receipt of regulatory marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a pharmacoeconomic study that compares the cost-effectiveness of Vascepa
to other available therapies. Such pharmacoeconomic studies can be costly and the results uncertain. Our business could be harmed if reimbursement of our products is unavailable or limited in scope or amount or if pricing is set at unsatisfactory
levels.
As we evolve from a company primarily involved in research and development to a company also focused on
establishing an infrastructure for commercializing Vascepa, we may encounter difficulties in managing our growth and expanding our operations successfully.
We hired and trained a professional sales force of approximately 275 sales representatives and commenced our commercial launch of Vascepa in the MARINE indication in the United States in early January
2013. The process of establishing a commercial infrastructure is difficult, expensive and time-consuming. Our October 2013 worldwide reduction in force, which included the termination of approximately 50% of the then-staffed sales force, has made
this process more difficult. As our operations expand with the anticipated growth of our produce sales, we expect that we will need to manage additional relationships with various collaborative partners, suppliers and other third parties. Future
growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees. Our future financial performance and our ability to commercialize Vascepa and to
compete effectively will depend, in part, on our ability to manage our future growth effectively. To that end, we must be able to manage our development efforts effectively, and hire, train, integrate and retain additional management, administrative
and sales and marketing personnel. We may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successfully growing our company.
Risks Related to our Reliance on Third Parties
If we do not realize
the expected benefits from recent worldwide reductions in our workforce and from future cost savings initiatives that we may implement, the value of our company and our assets and the market price of our ADSs could materially decline.
In October 2013, we implemented a plan that reduced our worldwide workforce by approximately 50%. We cannot
guarantee that we will be able to realize the cost savings and other anticipated benefits from our recent worldwide reductions in force. If we experience excessive unanticipated inefficiencies or incremental costs in connection with restructuring
activities, such as unanticipated inefficiencies caused by reducing headcount, we may be unable to meaningfully realize cost savings and we may incur expenses in excess of what we anticipate. Either of these outcomes could prevent us from meeting
our strategic objectives and could adversely affect our results of operations and financial condition.
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Our supply of product for commercial supply and clinical trials is dependent upon
relationships with third party manufacturers and key suppliers.
We have no in-house manufacturing capacity and rely on
contract manufacturers for our clinical and commercial product supply. We cannot assure you that we will successfully manufacture any product we may develop, either independently or under manufacturing arrangements, if any, with our third party
manufacturers. Moreover, if any manufacturer should cease doing business with us or experience delays, shortages of supply or excessive demands on their capacity, we may not be able to obtain adequate quantities of product in a timely manner, or at
all.
Any manufacturing problem, natural disaster affecting manufacturing facilities, or the loss of a contract manufacturer
could be disruptive to our operations and result in lost sales. Additionally, we will be reliant on third parties to supply the raw materials needed to manufacture our potential products. Any reliance on suppliers may involve several risks,
including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules, reliability and quality. Any unanticipated disruption to future contract manufacture caused by problems at suppliers could
delay shipment of products, increase our cost of goods sold and result in lost sales. If our suppliers were unable to supply us with adequate volumes of ethyl-EPA it would have a material adverse effect on our ability to continue to commercialize
Vascepa.
We initially purchased all of our supply of the bulk compound (ethyl-EPA), which constitutes the only active
pharmaceutical ingredient, or API, of Vascepa, from a single supplier, Nisshin Pharma, or Nisshin, located in Japan. Nisshin was approved by the FDA as a Vascepa API supplier as part of our FDA marketing approval for the MARINE indication in July
2012. In April 2013, we announced the approval by the FDA of Chemport, Inc. and BASF (formerly Equateq Limited) as additional Vascepa API suppliers. We have commenced purchasing and utilizing commercial supply from Chemport in addition to Nisshin.
BASF is working to complete validation of its facility for the manufacture of Vascepa. Each of the API manufacturers obtains supply of the key raw material to manufacture API from other third party sources of supply.
While we have contractual freedom to source the API for Vascepa and have entered into supply agreements with multiple suppliers who also
rely on other third party suppliers of the key raw material to manufacture the API for Vascepa, Nisshin and Chemport currently supply all of our API for Vascepa. Our strategy in adding API suppliers beyond Nisshin has been to expand manufacturing
capacity and to partially mitigate the risk of reliance on one supplier.
Also, in December 2012 we announced the addition of
an exclusive consortium of companies led by Slanmhor Pharmaceutical, Inc., or Slanmhor, to our planned API global supply chain for Vascepa. Slanmhor was spun-out from Ocean Nutrition Canada, or ONC, prior to the May 2012 acquisition of ONC by Royal
DSM N.V., a global leader in life sciences and materials sciences. Amarin now has a total of three suppliers for Vascepa API to utilize in supporting the global commercialization of Vascepa, subject to appropriate regulatory approval of Slanmhor,
for which we submitted a sNDA in August 2013. Slanmhor is working to complete construction and validation of its facility for the manufacture of Vascepa.
Expanding manufacturing capacity and qualifying such capacity is difficult and subject to numerous regulations and other operational challenges. The resources of our suppliers vary and are limited; costs
associated with projected expansion and qualification can be significant. For example, Chemport, which was approved as one of our API suppliers in April 2013, is a privately-held company and their commitment to Vascepa supply has required them to
seek additional resources. There can be no assurance that the expansion plans of any of our suppliers will be successful. Our aggregate capacity to produce API is dependent upon the qualification of our API suppliers. Each of our API suppliers has
outlined plans for potential further capacity expansion. If no additional API supplier is approved by the FDA, our API supply will be limited to the API we purchase from Nisshin and Chemport. If our third party manufacturing capacity is not expanded
and compliant with application regulatory requirements, we may not be able to supply sufficient quantities of Vascepa to meet anticipated
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demand. We cannot assure you that we can contract with any future manufacturer on acceptable terms or that any such alternative supplier will not require capital investment from us in order for
them to meet our requirements. Alternatively, our purchase of supply may exceed actual demand for Vascepa.
We currently rely
exclusively on Patheon for the encapsulation of Vascepa. We have encapsulation agreements with two other commercial API encapsulators. These companies are working to qualify their processes and to prove that the Vascepa capsules they produce meet
the same quality standards as the capsules produced by Patheon. There can be no guarantee that additional other suppliers with which we have contracted to encapsulate API will be qualified to manufacture the product to our specifications or that
these and any future suppliers will have the manufacturing capacity to meeting anticipated demand for Vascepa. We cannot assure you that we can contract with any future manufacturer on acceptable terms or that any such alternative supplier will not
require capital investment from us in order for them to meet our requirements.
We may not be able to maintain our
exclusivity with our third-party Vascepa suppliers if we do not meet minimum purchase obligations due to lower than anticipated sales of Vascepa.
Certain of our agreements with our suppliers include minimum purchase obligations and limited exclusivity provisions based on such minimum purchase obligations. If we do not meet the respective minimum
purchase obligations in our supply agreements, our suppliers will be free to sell the active pharmaceutical ingredient of Vascepa to potential competitors of Vascepa. Similarly if we terminate certain of our supply agreements, such suppliers may be
free to sell the active pharmaceutical ingredient of Vascepa to potential competitors of Vascepa. On December 30, 2013, we issued a notice of termination in connection with our active pharmaceutical ingredient supply agreement with BASF as a
result of BASFs non-compliance with the terms of such agreement. If BASF does not cure its non-compliance within a 60-day cure period and the agreement is terminated, BASF may be free to sell Vascepa active pharmaceutical ingredient to our
competitors. While we anticipate that intellectual property barriers and FDA regulatory exclusivity will be the primary means to protect the commercial potential of Vascepa, the availability of Vascepa active pharmaceutical ingredient from our
suppliers to our potential competitors would make our competitors entry into the market easier and more attractive.
We have limited experience with the commercial sale of Vascepa, and such inexperience may cause us to purchase too much or not
enough supply to satisfy actual demand, which could have a material adverse effect on our financial results and financial condition.
Certain of our agreements with our suppliers include minimum purchase obligations and limited exclusivity provisions. These purchases are generally made on the basis of rolling twelve-month forecasts
which in part are binding on us and the balance of which are subject to adjustment by us subject to certain limitations. Certain of our agreements also include contractual minimum purchase commitments regardless of the rolling twelve-month
forecasts. We have limited experience with the commercial sale of Vascepa, and as such expectations regarding expected demand may be wrong. We may not purchase sufficient quantities of Vascepa to meet actual demand or our purchase of supply may
exceed actual demand. In either case, such event could have a material adverse effect on our financial results and financial condition.
The manufacture and packaging of pharmaceutical products such as Vascepa are subject to FDA requirements and those of similar foreign regulatory bodies. If we or our third party manufacturers fail
to satisfy these requirements, our product development and commercialization efforts may be materially harmed.
The
manufacture and packaging of pharmaceutical products, such as Vascepa, are regulated by the FDA and similar foreign regulatory bodies and must be conducted in accordance with the FDAs current good manufacturing practices, or cGMPs, and
comparable requirements of foreign regulatory bodies. There are a limited number of manufacturers that operate under these cGMPs regulations who are both capable of manufacturing Vascepa and willing to do so. Failure by us or our third party
manufacturers to comply with
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applicable regulations, requirements, or guidelines could result in sanctions being imposed on us, including fines, injunctions, civil penalties, failure of regulatory authorities to grant
marketing approval of our products, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect our
business. For example, Nisshin plans to expand its capacity to supply API to us by further expanding their current facility. If we are not able to manufacture Vascepa to required specifications through Nisshin, Chemport and BASF, or other potential
API suppliers, we may be delayed in successfully supplying the product to meet anticipated demand and our anticipated future revenues and financial results may be materially adversely affected.
Changes in the manufacturing process or procedure, including a change in the location where the product is manufactured or a change of a
third party manufacturer, may require prior FDA review and approval of the manufacturing process and procedures in accordance with the FDAs cGMPs. Any new facility may be subject to a pre-approval inspection by the FDA and would again require
us to demonstrate product comparability to the FDA. There are comparable foreign requirements. This review may be costly and time consuming and could delay or prevent the launch of a product. For example, we have filed a supplemental NDA to add
Slanmhor as an additional API supplier for Vascepa. If Slanmhor cannot establish, to the satisfaction of the FDA, that it is in substantial compliance with cGMPs, and that the product manufactured at its site meets FDA requirements, we may not be
able to manufacture API from that site, our supply of API for Vascepa may be delayed, and our anticipated future revenues and financial results may be materially adversely affected if such supply cannot be satisfied by our other three API suppliers.
Furthermore, the FDA and foreign regulatory agencies require that we be able to consistently produce the API and the finished
product in commercial quantities and of specified quality on a repeated basis, including proven product stability, and document our ability to do so. This requirement is referred to as process validation. This includes stability testing, measurement
of impurities and testing of other product specifications by validated test methods. If the FDA does not consider the result of the process validation or required testing to be satisfactory, the commercial supply of Vascepa may be delayed, or we may
not be able to supply sufficient quantities of Vascepa to meet anticipated demand.
The FDA and similar foreign regulatory
bodies may also implement new standards, or change their interpretation and enforcement of existing standards and requirements, for manufacture, packaging or testing of products at any time. If we are unable to comply, we may be subject to
regulatory, civil actions or penalties which could significantly and adversely affect our business.
We rely on third
parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing to meet established deadlines for the completion of such clinical trials.
Our reliance on third parties for clinical development activities reduces our control over these activities. However, if we sponsor
clinical trials, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trials. Moreover, the FDA requires us to comply with standards, commonly
referred to as good clinical practices, for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial
participants are protected. Our reliance on third parties does not relieve us of these responsibilities and requirements. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If
these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be delayed in obtaining regulatory approvals for our product candidates and may be delayed in our efforts to successfully commercialize our
product candidates for targeted diseases.
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Risks Related to our Intellectual Property
We are dependent on patents, proprietary rights and confidentiality to protect the commercial potential of Vascepa.
Our success depends in part on our ability to obtain and maintain intellectual property protection for our drug
candidates, technology and know-how, and to operate without infringing the proprietary rights of others. Our ability to successfully implement our business plan and to protect our products with our intellectual property will depend in large part on
our ability to:
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obtain, defend and maintain patent protection and market exclusivity for our current and future products;
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preserve any trade secrets relating to our current and future products;
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acquire patented or patentable products and technologies; and
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operate without infringing the proprietary rights of third parties.
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Amarin has prosecuted, and is currently prosecuting, multiple patent applications to protect the intellectual property developed during
the Vascepa cardiovascular program. As of the date of this Annual Report, we had 40 patent applications in the United States that have been either issued or allowed and more than 30 additional patent applications are pending in the United
States. Of such 40 allowed and issued applications, we currently have:
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2 issued U.S. patents directed to a pharmaceutical composition of Vascepa in a capsule that have terms that expire in 2020 and 2030, respectively,
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1 issued U.S. patent covering a composition containing highly pure EPA that expires in 2021,
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29 U.S. patents covering the use of Vascepa in either the MARINE or anticipated ANCHOR indication that have terms that expire in 2030,
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6 additional patent applications for which the United States Patent and Trademark Office, or USPTO, has issued a Notice of Allowance each of which with
terms that expire in 2030 and are related to the use of Vascepa in either the MARINE or anticipated ANCHOR indication,
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1 additional patent related to the use of a pharmaceutical composition comprised of free fatty acids to treat the ANCHOR patient population that
expires in 2030, and
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1 additional patent application for which the United States Patent and Trademark Office, or USPTO, has issued a Notice of Allowance with a term that
expires in 2030 and is related to the use of a pharmaceutical composition comprised of free fatty acids to treat the MARINE patient population.
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A Notice of Allowance is issued after the USPTO makes a determination that a patent can be granted from an application. A Notice of Allowance does not afford patent protection until the underlying patent
is issued by the USPTO. No assurance can be given that applications with issued notices of allowance will be issued as patents or that any of our pending patent applications will issue as patents. No assurance can be given that, if and when
issued, our patents will prevent competitors from competing with Vascepa. We are also pursuing patent applications related to Vascepa in multiple jurisdictions outside the United States. We may be dependent in some cases upon third party
licensors to pursue filing, prosecution and maintenance of patent rights or applications owned or controlled by those parties. It is possible that third parties will obtain patents or other proprietary rights that might be necessary or useful to us.
In cases where third parties are first to invent a particular product or technology, or first to file after various provisions of the America Invents Act of 2011 went into effect on March 16, 2013, it is possible that those parties will obtain
patents that will be sufficiently broad so as to prevent us from utilizing such technology or commercializing our current and future products.
Although we intend to make reasonable efforts to protect our current and future intellectual property rights and to ensure that any proprietary technology we acquire or develop does not infringe the
rights of other parties,
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we may not be able to ascertain the existence of all potentially conflicting claims. Therefore, there is a risk that third parties may make claims of infringement against our current or future
products or technologies. In addition, third parties may be able to obtain patents that prevent the sale of our current or future products or require us to obtain a license and pay significant fees or royalties in order to continue selling such
products.
We may in the future discover the existence of products that infringe patents that we own or that have been
licensed to us. If we were to initiate legal proceedings against a third party to stop such an infringement, such proceedings could be costly and time consuming, regardless of the outcome. No assurances can be given that we would prevail, and it is
possible that, during such a proceeding, our patent rights could be held to be invalid, unenforceable or both. Although we intend to protect our trade secrets and proprietary know-how through confidentiality agreements with our manufacturers,
employees and consultants, we may not be able to prevent parties subject to such confidentiality agreements from breaching these agreements or third parties from independently developing or learning of our trade secrets.
We anticipate that competitors may from time to time oppose our efforts to obtain patent protection for new technologies or to submit
patented technologies for regulatory approvals. Competitors may seek to oppose our patent applications to delay the approval process or to challenge our granted patents, for example, by requesting a reexamination of our patent at the USPTO, or by
filing an opposition in a foreign patent office, even if the opposition or challenge has little or no merit. Such proceedings are generally highly technical, expensive, and time consuming, and there can be no assurance that such a challenge would
not result in the narrowing or complete revocation of any patent of ours that was so challenged.
Our issued patents and
our pending patents, if and when issued, may not prevent competitors from competing with Vascepa.
We plan to
vigorously defend our rights under issued patents. Other drug companies may challenge the validity, enforceability, or both of our patents and seek to design its products around our issued patent claims and gain marketing approval for generic
versions of Vascepa or branded competitive products based on new clinical studies. The pharmaceutical industry is highly competitive and many of our competitors have greater experience and resources than we have. Any such competition could
undermine sales, marketing and collaboration efforts for Vascepa, and thus reduce, perhaps materially, the revenue potential for Vascepa.
Even if we are successful in enforcing our issued patents, we may incur substantial costs and divert managements time and attention in pursuing these proceedings, which could have a material adverse
effect on us. Patent litigation is costly and time consuming, and we may not have sufficient resources to bring these actions to a successful conclusion.
There can be no assurance that any of our pending patent applications relating to Vascepa or its use will issue as patents.
We have filed and are prosecuting numerous families of patent applications in the United States and internationally with claims designed
to protect the proprietary position of Vascepa. For certain of these patent families, we have filed multiple patent applications. Collectively the patent applications include numerous independent claims and dependent claims. Several of our patent
applications contain claims that are based upon what we believe are unexpected and favorable findings from the MARINE and ANCHOR trials. If granted, many of the resulting granted patents would expire in 2030 or beyond. However, no assurance can be
given that any of our pending patent applications will be granted or, if they grant, that they will prevent competitors from competing with Vascepa.
Securing patent protection for a product is a complex process involving many legal and factual questions. The patent applications we have filed in the United States and internationally are at varying
stages of examination, the timing of which is outside our control. The process to getting a patent granted can be lengthy
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and claims initially submitted are often modified in order to satisfy the requirements of the patent office. This process includes written and public communication with the patent office. The
process can also include direct discussions with the patent examiner. There can be no assurance that the patent office will accept our arguments with respect to any patent application or with respect to any claim therein. The timing of the patent
review process is independent of and has no effect on the timing of the FDAs review of our NDA or sNDA submissions. We cannot predict the timing or results of any patent application. In addition, we may elect to submit, or the patent office
may require, additional evidence to support certain of the claims we are pursuing. Furthermore, third parties may attempt to submit publications for consideration by the patent office during examination of our patent applications. Providing such
additional evidence and publications could prolong the patent offices review of our applications and result in us incurring additional costs. We cannot be certain what commercial value any granted patent in our patent estate will provide to
us.
Despite the use of confidentiality agreements and/or proprietary rights agreements, which themselves may be of
limited effectiveness, it may be difficult for us to protect our trade secrets.
We will also rely upon trade secrets
and know-how to help protect our competitive position. We rely on trade secrets to protect technology in cases when we believe patent protection is not appropriate or obtainable. However, trade secrets are difficult to protect. While we require
certain of our academic collaborators, contractors and consultants to enter into confidentiality agreements, we may not be able to adequately protect our trade secrets or other proprietary information.
Risks Related to our Business
We and certain of our current and former executive officers have been named as defendants in four lawsuits that could result in substantial costs and divert managements attention.
The market price of our ADSs declined significantly after the October 2013 decision by the FDA Advisory Committee to
recommend against approval of Vascepa in the ANCHOR indication. We, and certain of our current and former executive officers, have been named as defendants in four purported class action lawsuits initiated earlier this year that generally allege
that we and certain of our current and former officers violated Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements or material omissions
concerning the ANCHOR sNDA and related FDA regulatory approval process in an effort to lead investors to believe that Vascepa would receive approval from the FDA in the ANCHOR indication. The complaints seek unspecified damages, interest,
attorneys fees, and other costs.
We intend to engage in a vigorous defense of the lawsuits, and we believe that we have
meritorious defenses to these claims. However, we are unable to predict the outcome of these matters at this time. Moreover, any conclusion of these matters in a manner adverse to us could have a material adverse effect on our financial condition
and business. For example, we could incur substantial costs not covered by our directors and officers liability insurance, suffer a significant adverse impact on our reputation and divert managements attention and resources from
other priorities, including the execution of business plans and strategies that are important to our ability to grow our business, any of which could have a material adverse effect on our business. In addition, any of these matters could require
payments that are not covered by, or exceed the limits of, our available directors and officers liability insurance, which could have a material adverse effect on our operating results or financial condition.
Potential technological changes in our field of business create considerable uncertainty.
We are engaged in the biopharmaceutical field, which is characterized by extensive research efforts and rapid technological progress. New
developments in research are expected to continue at a rapid pace in both industry and academia. We cannot assure you that research and discoveries by others will not render some or all
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of our programs or product candidates uncompetitive or obsolete. Our business strategy is based in part upon new and unproven technologies to the development of therapeutics to improve
cardiovascular health. We cannot assure you that unforeseen problems will not develop with these technologies or applications or that any commercially feasible products will ultimately be developed by us.
We are subject to potential product liability.
Following the commercial launch of Vascepa, we will be subject to the potential risk of product liability claims relating to the manufacturing and marketing of Vascepa. Any person who is injured as a
result of using Vascepa may have a product liability claim against us without having to prove that we were at fault.
In
addition, we could be subject to product liability claims by persons who took part in clinical trials involving our current or former development stage products. A successful claim brought against us could have a material adverse effect on our
business. We cannot guarantee that a product liability claim will not be asserted against us in the future.
We may
become subject to liability in connection with the wind-down of our EN101 program.
In 2007, we purchased Ester
Neurosciences Limited, an Israeli pharmaceutical company, and its lead product candidate, EN101, an AChE-R mRNA inhibitor for the treatment of myasthenia gravis, or MG, a debilitating neuromuscular disease. In connection with the acquisition, we
assumed a license to certain intellectual property assets related to EN101 from the Yissum Research Development Company of The Hebrew University of Jerusalem.
In June 2009, in keeping with our decision to re-focus our efforts on developing improved treatments for cardiovascular disease and cease development of all product candidates outside of our
cardiovascular disease focus, we amended the terms of our acquisition agreement with the original shareholders of Ester. Under the terms of this amendment, Amarin was released from all research and development diligence obligations contained in the
original agreement and was authorized to seek a partner for EN101. The amendment agreement also provided that any future payment obligations payable by us to the former shareholders of Ester would be made only out of income received from potential
partners. In connection with this amendment agreement, in August 2009 we issued 1,315,789 ordinary shares to the former Ester shareholders. Under the terms of this amendment agreement, the former Ester shareholders have the option of reacquiring the
original share capital of Ester if we are unable to successfully partner EN101.
Following our decision to cease development
of EN101, Yissum terminated its license agreement with us. In June 2011, Yissum announced that it had entered into a license agreement with BiolineRX Ltd for the development of EN101 in a different indication, inflammatory bowel disease.
We have received several communications on behalf of the former shareholders of Ester asserting that we are in breach of its amended
agreement due to the fact that Yissum terminated its license and we failed to return shares of Ester, and assets relating to EN101, to the shareholders, as was required under certain circumstances under the amended agreement. We do not believe these
circumstances constitute a breach of the amended agreement, but there can be no assurance as to the outcome of this dispute.
A change in our tax residence could have a negative effect on our future profitability.
Under current UK legislation, a company incorporated in England and Wales, or which is centrally managed and controlled in the UK, is
regarded as resident in the UK for taxation purposes. Under current Irish legislation, a company is regarded as resident for tax purposes in Ireland if it is centrally managed and controlled in Ireland, or, in certain circumstances, if it is
incorporated in Ireland. Where a company is treated as tax resident under the domestic laws of both the UK and Ireland then the provisions of article 4(3) of the Double Tax Convention between the UK
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and Ireland provides that such enterprise shall be treated as resident only in the jurisdiction in which its place of effective management is situated. We have sought to conduct our affairs in
such a way so as to be resident only in Ireland for tax purposes by virtue of having our place of effective management situated in Ireland. Trading income of an Irish company is generally taxable at the Irish corporation tax rate of 12.5%.
Non-trading income of an Irish company (e.g., interest income, rental income or other passive income), is taxable at a rate of 25%.
However, we cannot assure you that we are or will continue to be resident only in Ireland for tax purposes. It is possible that in the future, whether as a result of a change in law or the practice of any
relevant tax authority or as a result of any change in the conduct of our affairs, we could become, or be regarded as having become resident in a jurisdiction other than Ireland. Should we cease to be an Irish tax resident, we may be subject to a
charge to Irish capital gains tax on our assets. Similarly, if the tax residency of any of our subsidiaries were to change from their current jurisdiction for any of the reasons listed above, we may be subject to a charge to local capital gains tax
charge on the assets.
The loss of key personnel could have an adverse effect on our business.
We are highly dependent upon the efforts of our senior management. The loss of the services of one or more members of senior management
could have a material adverse effect on us. As a small company with a streamlined management structure, the departure of any key person could have a significant impact and would be potentially disruptive to our business until such time as a suitable
replacement is hired. Furthermore, because of the specialized nature of our business, as our business plan progresses we will be highly dependent upon our ability to attract and retain qualified scientific, technical and key management personnel. As
we evolve from a development stage company to a commercial stage company we may experience turnover among members of our senior management team. We may have difficulty identifying and integrating new executives to replace any such losses. There is
intense competition for qualified personnel in the areas of our activities. In this environment, we may not be able to attract and retain the personnel necessary for the development of our business, particularly if we do not achieve profitability.
Furthermore, the lessened probability that we will obtain FDA approval for the ANCHOR indication could have an adverse impact on our ability to retain and recruit qualified personnel. In addition, on October 22, 2013, we eliminated
approximately fifty percent of our staff positions worldwide as part of a restructuring following the FDA advisory committees recommendation against the potential Vascepa label expansion. Even though all employees were offered severance pay in
exchange for signing a comprehensive release of claims, this restructuring could lead to claims by former employees related to their termination. The restructuring could also have an adverse impact on our ability to retain and recruit qualified
personnel. The failure to recruit key scientific, technical and management personnel would be detrimental to our ability to implement our business plan.
Risks Related to our Financial Position and Capital Requirements
We
have a history of operating losses and anticipate that we will incur continued losses for an indefinite period of time.
We have not been profitable in any of the last five fiscal years. For the fiscal years ended December 31, 2013, 2012, and 2011, we
reported losses of approximately $166.2 million, $179.2 million, and $69.1 million, respectively, and we had an accumulated deficit at December 31, 2013 of $913.9 million. Substantially all of our operating losses resulted from costs incurred
in connection with our research and development programs, from general and administrative costs associated with our operations, costs related to the commercialization of Vascepa, and from non-cash losses on changes in the fair value of warrant
derivative liabilities. Additionally, as a result of our significant expenses relating to research and development and to commercialization, we expect to continue to incur significant operating losses for an indefinite period. Because of the
numerous risks and uncertainties associated with developing and commercializing pharmaceutical products, we are unable to predict the magnitude of these future losses. Our historic losses, combined with expected future losses, have had and will
continue to have an adverse effect on our cash resources, shareholders deficit and working capital.
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Although we began generating revenue from Vascepa in January 2013, we may never be
profitable.
Our ability to become profitable depends upon our ability to generate revenue. In January 2013, we began
to generate revenue from the marketing of Vascepa for use in the MARINE indication, but we may not be able to generate sufficient revenue to attain profitability. Our ability to generate profits on sales of Vascepa is subject to the market
acceptance and commercial success of Vascepa and our ability to manufacture commercial quantities of Vascepa through third parties at acceptable cost levels, and may also depend upon our ability to enter into one or more strategic collaborations to
effectively market and sell Vascepa.
Even though Vascepa has been approved by the FDA for marketing in the United States in
the MARINE indication, it may not gain market acceptance or achieve commercial success and it may never be approved for the ANCHOR indication or any other indication. In addition, we anticipate continuing to incur significant costs associated with
commercializing Vascepa. We may not achieve profitability soon after generating product sales, if ever. If we are unable to generate sufficient product revenues, we will not become profitable and may be unable to continue operations without
continued funding.
Our historical financial results do not form an accurate basis for assessing our current business.
As a consequence of the many years developing Vascepa for commercialization and the recent commercial launch of
Vascepa in the MARINE indication in the United States, our historical financial results do not form an accurate basis upon which investors should base their assessment of our business and prospects. In addition, we expect that our costs will
increase substantially as we continue to commercialize Vascepa in the MARINE indication and seek to obtain additional regulatory approval of Vascepa in the ANCHOR indication, including the continuation of the REDUCE-IT cardiovascular outcomes study.
Accordingly, our historical financial results reflect a substantially different business from that currently being conducted and from that expected in the future. In addition, we have a limited history of obtaining regulatory approval for, and no
demonstrated ability to successfully commercialize, a product candidate. Consequently, any predictions about our future performance may not be as accurate as they could be if we had a history of successfully developing and commercializing
pharmaceutical products.
Our operating results are unpredictable and may fluctuate. If our operating results are below
the expectations of securities analysts or investors, the trading price of our stock could decline.
Our operating
results are difficult to predict and will likely fluctuate from quarter to quarter and year to year, and Vascepa prescription figures will likely fluctuate from month to month. Due to the recent approval by the FDA of Vascepa and the lack of
historical sales data, Vascepa sales will be difficult to predict from period to period and as a result, you should not rely on Vascepa sales results in any period as being indicative of future performance, and sales of Vascepa may be below the
expectation of securities analysts or investors in the future. We believe that our quarterly and annual results of operations may be affected by a variety of factors, including:
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the level of demand for Vascepa;
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the extent to which coverage and reimbursement for Vascepa is available from government and health administration authorities, private health insurers,
managed care programs and other third-party payers;
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the timing, cost and level of investment in our sales and marketing efforts to support Vascepa sales and the resulting effectiveness of those efforts;
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additional developments regarding our intellectual property portfolio and regulatory exclusivity protections, if any;
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the results of our sNDA application for the ANCHOR indication and the results of the REDUCE-IT study or post-approval studies for Vascepa;
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outcomes of litigation and other legal proceedings, including recently initiated shareholder litigation, regulatory matters and tax matters;
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whether we continue the REDUCE-IT study; and.
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the impact of the restructuring of the company implemented on October 22, 2013.
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We may require substantial additional resources to fund our operations. If we cannot find additional capital resources, we will
have difficulty in operating as a going concern and growing our business.
We currently operate with limited resources.
We believe that our cash and cash equivalents balance of $191.5 million at December 31, 2013 will be sufficient to fund our projected operations for at least the next twelve months.
In order to fully realize the market potential of Vascepa, we may need to enter into a strategic collaboration or raise additional
capital. We may also need additional capital to fully complete our REDUCE-IT cardiovascular outcomes trial.
Our future
capital requirements will depend on many factors, including:
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revenue generated from the commercial sale of Vascepa in the MARINE indication and, subject to FDA approval, the ANCHOR indication;
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the costs associated with commercializing Vascepa for the MARINE indication in the United States and for additional indications in the United States
and in jurisdictions in which we receive regulatory approval, if any, including the cost of sales and marketing capabilities, and the cost and timing of securing commercial supply of Vascepa and the timing of entering into strategic collaboration
with others relating to the commercialization of Vascepa, if at all, and the terms of any such collaboration;
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the continued cost associated with our REDUCE-IT cardiovascular outcomes study, if we continue that study;
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the time and costs involved in obtaining additional regulatory approvals for Vascepa;
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the extent to which we continue to develop internally, acquire or in-license new products, technologies or businesses; and
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the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
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If we require additional funds and adequate funds are not available to us in amounts or on terms acceptable to us or on a timely basis,
or at all, our commercialization efforts for Vascepa may suffer materially, and we may need to delay the advancement of the REDUCE-IT cardiovascular outcomes trial.
As a result of recent worldwide reductions in our workforce, we are in the process of reallocating certain employment responsibilities and may outsource certain corporate functions. As a result, we
may be more dependent on third parties to perform these corporate functions than we have been in the past.
As a result
of the recent worldwide reductions in our workforce, we have been required to outsource certain corporate functions. This has made us more dependent on third-parties for the performance of these functions. Our ongoing results of operations could be
adversely affected to the extent that we are unable to effectively reallocate employee responsibilities, retain key employees, maintain effective internal control over financial reporting and effective disclosure controls and procedures, establish
and maintain agreements with competent third-party contractors on terms that are acceptable to us, and effectively manage the work performed by any retained third-party contractors.
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Continued negative economic conditions would likely have a negative effect on our
ability to obtain financing on acceptable terms.
While we may seek additional funding through public or private
financings, we may not be able to obtain financing on acceptable terms, or at all. There can be no assurance that we will be able to access equity or credit markets in order to finance our current operations or expand development programs for
Vascepa, or that there will not be a further deterioration in financial markets and confidence in economies. We may also have to scale back or further restructure our operations. If we are unable to obtain additional funding on a timely basis, we
may be required to curtail or terminate some or all of our research or development programs or our commercialization strategies.
Raising additional capital may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights.
To the extent we are permitted under our Purchase and Sale Agreement with BioPharma, we may seek additional capital through a combination
of private and public equity offerings, debt financings and collaboration, strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will
be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder.
As
of December 31, 2013, there were warrants outstanding for the purchase of up to 9,789,776 ADSs each representing one of our ordinary shares, with a weighted average exercise price of $1.44 per share. We may issue additional warrants to purchase
ADSs or ordinary shares in connection with any future financing we may conduct. In addition, on January 9, 2012, we issued $150 million in aggregate principal amount of 3.50% exchangeable senior notes due 2032, or the notes. The notes are
exchangeable under certain circumstances into cash, our ADS, or a combination of cash and ADS, at our election, with a current exchange rate of 113.4752 ADS per $1,000 principal amount of notes. Although we intend to settle these notes in cash, if
we elected physical settlement, the notes would initially be exchangeable into 17,021,280 ADS.
Debt financing, if available,
may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration,
strategic alliance and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, Vascepa or product candidates beyond the rights we have already relinquished, or grant licenses on terms that are not
favorable to us.
Potential business combinations or other strategic transactions may disrupt our business or divert
managements attention.
On a regular basis, we explore potential business combination transactions, including an
acquisition of us by a third party, exclusive licenses of Vascepa or other strategic transactions or collaborations with third parties. The consummation and performance of any such future transactions or collaborations will involve risks, such as:
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diversion of managerial resources from day-to-day operations;
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exposure to litigation from the counterparties to any such transaction, other third parties or our shareholders;
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misjudgment with respect to the value;
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higher than expected transaction costs; or
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an inability to successfully consummate any such transaction or collaboration.
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As a result of these risks, we may not be able to achieve the expected benefits of any such transaction or collaboration or deliver the
value thereof to our shareholders. If we are unsuccessful in consummating any such transaction or collaboration, we may be required to reevaluate our business only after we have incurred substantial expenses and devoted significant management time
and resources.
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Risks Related to Ownership of our ADSs and Common Shares
The price of our ADSs and common shares may be volatile.
The stock market has from time to time experienced significant price and volume fluctuations that may be unrelated to the operating
performance of particular companies. In addition, the market prices of the securities of many pharmaceutical and medical technology companies have been especially volatile in the past, and this trend is expected to continue in the future.
As of February 20, 2014 we had 172,906,063 common shares outstanding including 172,440,210 shares held as ADSs and
465,853 held as common shares (which are not held in the form of ADSs). In our October 2009 private placement we issued 66.4 million ADSs and warrants to purchase an additional 33.2 million ADSs. There is a risk that there may not be
sufficient liquidity in the market to accommodate significant increases in selling activity or the sale of a large block of our securities. Our ADSs have historically had limited trading volume, which may also result in volatility. If any
of our large investors, such as the participants in our October 2009 private placement, seek to sell substantial amounts of our ADSs, particularly if these sales are in a rapid or disorderly manner, or other investors perceive that these sales could
occur, the market price of our ADSs could decrease significantly.
The market price of our ADSs and common shares may also be
affected by factors such as:
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developments or disputes concerning ongoing patent prosecution efforts and any future patent or proprietary rights;
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regulatory developments in the United States, the European Union or other countries;
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actual or potential medical results relating to our products or our competitors products;
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interim failures or setbacks in product development;
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innovation by us or our competitors;
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currency exchange rate fluctuations; and
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period-to-period variations in our results of operations.
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A share price of less than $1.00 may impact our NASDAQ listing.
As
of the date of this Quarterly Report, our ADSs are currently trading above $1.00; however, recent market activity has resulted in a decrease in our stock price, and our stock price may fall below the $1.00 threshold. If our closing bid price is less
than $1.00 for 30 consecutive trading days, we would receive a NASDAQ staff deficiency letter indicating that we are not in compliance with the minimum bid price requirement for continued listing. Such a letter would trigger an automatic 180
calendar day period within which the company could regain compliance. Compliance is regained at any time during this period if the Amarin closing bid price is $1.00 per share or more for a minimum of 10 consecutive trading days. If we do not regain
compliance during this period, our ADSs could be delisted from The NASDAQ Global Market, transferred to a listing on The NASDAQ Capital Market, or delisted from the NASDAQ markets altogether. The failure to maintain our listing on The NASDAQ Global
Market could harm the liquidity of our ADSs and could have an adverse effect on the market price of our ADSs.
Actual or
potential sales of our common shares by our employees, including members of our senior management team, pursuant to pre-arranged stock trading plans could cause our stock price to fall or prevent it from increasing for numerous reasons, and actual
or potential sales by such persons could be viewed negatively by other investors.
In accordance with the guidelines
specified under Rule 10b5-1 of the Securities and Exchange Act of 1934 and our policies regarding stock transactions, a number of our directors and employees, including members of
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our senior management team, have adopted and may continue to adopt pre-arranged stock trading plans to sell a portion of our common stock. Generally, sales under such plans by members of our
senior management team and directors require public filings. Actual or potential sales of our ADSs by such persons could cause the price of our ADSs to fall or prevent it from increasing for numerous reasons. For example, a substantial amount of our
ADSs becoming available (or being perceived to become available) for sale in the public market could cause the market price of our ADSs to fall or prevent it from increasing. Also, actual or potential sales by such persons could be viewed negatively
by other investors.
We may be a passive foreign investment company, or PFIC, which would result in adverse U.S. federal
tax consequences to U.S. investors.
Amarin Corporation plc and certain of our subsidiaries may be classified as
passive foreign investment companies, or PFICs, for U.S. federal income tax purposes. The tests for determining PFIC status for a taxable year depend upon the relative values of certain categories of assets and the relative amounts of
certain kinds of income. The application of these factors depends upon our financial results, which are beyond our ability to predict or control, and which may be subject to legal and factual uncertainties.
We believe it prudent to assume that we were classified as a PFIC in 2012. We do not believe that we were classified as a PFIC in 2013.
Our status as a PFIC is subject to change in future years.
If we are a PFIC, U.S. holders of notes, ordinary shares or ADSs
would be subject to adverse U.S. federal income tax consequences, such as ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting
requirements under U.S. federal income tax laws and regulations. Whether or not U.S. holders of our ADSs make a timely QEF election or mark-to-market election may affect the U.S. federal income tax consequences to U.S.
holders with respect to the acquisition, ownership and disposition of Amarin ADSs and any distributions such U.S. Holders may receive. A QEF election and other elections that may mitigate the effect of our being classified as a PFIC are unavailable
with respect to the notes. Investors should consult their own tax advisors regarding all aspects of the application of the PFIC rules to the notes, ordinary shares and ADSs.
Failure to meet our obligations under our Purchase and Sale Agreement with BioPharma could adversely affect our financial results and liquidity.
Pursuant to our December 2012 Purchase and Sale Agreement with BioPharma, we are obligated to make payments to BioPharma based on the
amount of our net product sales of Vascepa and any future products based on ethyl-EPA, or covered products, subject to certain quarterly caps.
Pursuant to this agreement, we may not, among other things: (i) incur indebtedness greater than a specified amount, which we refer to as the Indebtedness Covenant; (ii) pay a dividend or other
cash distribution, unless we have cash and cash equivalents in excess of a specified amount after such payment; (iii) amend or restate our memorandum and articles of association unless such amendments or restatements do not affect
BioPharmas interests under the transaction; (iv) encumber any of the collateral securing our performance under the agreement; and (v) abandon certain patent rights, in each case without the consent of BioPharma.
Upon a transaction resulting in a change of control of Amarin, as defined in the agreement, BioPharma will be automatically entitled to
receive any amounts not previously paid, up to our maximum repayment obligation. As defined in the agreement, change of control includes, among other things, (i) a greater than 50 percent change in the ownership of Amarin,
(ii) a sale or disposition of any collateral securing our debt with BioPharma and (iii), unless BioPharma has been paid a certain amount under the indebtedness, the licensing of Vascepa to a third party for sale in the United States. The
acceleration of the payment obligation in the event of a change of control transaction may make us less attractive to potential acquirers, and the payment of such funds out of our available cash or acquisition proceeds would reduce acquisition
proceeds for our stockholders.
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To secure our obligations under the agreement, we granted BioPharma a security interest in
our rights in patents, trademarks, trade names, domain names, copyrights, know-how and regulatory approvals related to the covered products, all books and records relating to the foregoing and all proceeds of the foregoing, which we refer to as the
collateral. If we (i) fail to deliver a payment when due and do not remedy that failure within specific notice period, (ii) fail to maintain a first-priority perfected security interest in the collateral in the United States and do
not remedy that failure after receiving notice of such failure or (iii) become subject to an event of bankruptcy, then BioPharma may attempt to collect the maximum amount payable by us under this agreement (after deducting any payments we have
already made).
There can be no assurance that we will not breach the covenants or other terms of, or that an event of default
will not occur under, this agreement and, if a breach or event of default occurs, there can be no assurance that we will be able to cure the breach within the time permitted. Any failure to pay our obligations when due, any breach or default of our
covenants or other obligations, or any other event that causes an acceleration of payment at a time when we do not have sufficient resources to meet these obligations, could have a material adverse effect on our business, results of operations,
financial condition and future viability.
Our existing indebtedness could adversely affect our financial condition.
Our existing indebtedness, which we entered into in January 2012, consists of $150.0 million in aggregate
principal amount of 3.50% exchangeable senior notes due 2032, with provisions for the notes to be called on or after January 19, 2017. Our indebtedness and the related annual debt service requirements may adversely impact our business,
operations and financial condition in the future. For example, they could:
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increase our vulnerability to general adverse economic and industry conditions;
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limit our ability to raise additional funds by borrowing or engaging in equity sales in order to fund future working capital, capital expenditures,
research and development and other general corporate requirements;
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require us to dedicate a substantial portion of our cash to service payments on our debt; or
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limit our flexibility to react to changes in our business and the industry in which we operate or to pursue certain strategic opportunities that may
present themselves.
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The accounting for convertible debt securities that may be settled in cash, such
as our notes, could have a material effect on our reported financial results.
Under the FASB Accounting Standards
Codification, or ASC, we are required to separately account for the liability and equity components of the convertible debt instruments (such as the notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects
the issuers economic interest cost. The effect of ASC on the accounting for our outstanding convertible notes may be that the equity component is required to be included in the additional paid-in capital section of stockholders
equity on our consolidated balance sheets and the value of the equity component would be treated as original issue discount for purposes of accounting for the debt component of the notes. As a result, we are required to record non-cash interest
expense as a result of the amortization of the discounted carrying value of the notes to their face amount over the term of the notes. We may be required to report higher interest expense in our financial results because ASC may require
interest to include both the current periods amortization of the debt discount and the instruments coupon interest, which could adversely affect our reported or future financial results and the trading price of our ADSs.
Servicing our debt may require a significant amount of cash, and we may not have sufficient cash flow from our business to provide the
funds sufficient to pay our substantial debt.
Our ability to make scheduled payments of the principal , to pay interest on or
to refinance our indebtedness, including the notes, depends on our future performance, which is subject to economic, financial, competitive and
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other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we
are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance
our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt
obligations, including the notes, and have a material adverse effect on the trading price of our ADSs.
We may be able to
incur substantial additional debt in the future, subject to the restrictions contained in our future debt instruments, if any, which would intensify the risks discussed above.
The conditional exchange feature of the notes, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional exchange feature of the notes is triggered, holders of notes will be entitled to exchange the notes at any
time during specified periods at their option. If one or more holders elect to exchange their notes, unless we elect to satisfy its exchange obligation by delivering solely the ADSs (other than cash in lieu of any fractional ADS), we would be
required to settle a portion or all of its exchange obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to exchange their notes, we could be required under applicable
accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
The fundamental change repurchase feature of the notes may delay or prevent an otherwise beneficial takeover attempt of us.
The indenture governing the notes will require us to repurchase the notes for cash upon the occurrence of a
fundamental change of Amarin and, in certain circumstances, to increase the exchange rate for a holder that exchanges its notes in connection with a make-whole fundamental change. A takeover of us may trigger the requirement that we purchase the
notes and/or increase the exchange rate, which could make it more costly for a potential acquirer to engage in a combinatory transaction with us. Such additional costs may have the effect of delaying or preventing a takeover of us that would
otherwise be beneficial to investors.
We do not intend to pay cash dividends on the ordinary shares in the foreseeable
future.
We have never paid dividends on ordinary shares and do not anticipate paying any cash dividends on the
ordinary shares in the foreseeable future. Under English law, any payment of dividends would be subject to relevant legislation and our Articles of Association, which requires that all dividends must be approved by our Board of Directors and, in
some cases, our shareholders, and may only be paid from our distributable profits available for the purpose, determined on an unconsolidated basis.
The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.
We are incorporated under English law. The rights of holders of ordinary shares and, therefore, certain of the rights of holders of ADSs, are governed by English law, including the provisions of the
Companies Act 2006, and by our Articles of Association. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations. The principal differences include the following:
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Under English law and our Articles of Association, each shareholder present at a meeting has only one vote unless demand is made for a vote on a poll,
in which case each holder gets one vote per share owned. Under U.S. law, each shareholder typically is entitled to one vote per share at all meetings.
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Under English law, it is only on a poll that the number of shares determines the number of votes a holder may cast. You should be aware, however, that the voting rights of ADSs are also governed
by the provisions of a deposit agreement with our depositary bank.
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Under English law, subject to certain exceptions and disapplications, each shareholder generally has preemptive rights to subscribe on a proportionate
basis to any issuance of ordinary shares or rights to subscribe for, or to convert securities into, ordinary shares for cash. Under U.S. law, shareholders generally do not have preemptive rights unless specifically granted in the certificate of
incorporation or otherwise.
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Under English law and our Articles of Association, certain matters require the approval of 75% of the shareholders who vote (in person or by proxy) on
the relevant resolution (or on a poll shareholders representing 75% of the ordinary shares voting (in person or by proxy)), including amendments to the Articles of Association. This may make it more difficult for us to complete corporate
transactions deemed advisable by our board of directors. Under U.S. law, generally only majority shareholder approval is required to amend the certificate of incorporation or to approve other significant transactions.
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In the United Kingdom, takeovers may be structured as takeover offers or as schemes of arrangement. Under English law, a bidder seeking to acquire us
by means of a takeover offer would need to make an offer for all of our outstanding ordinary shares/ADSs. If acceptances are not received for 90% or more of the ordinary shares/ADSs under the offer, under English law, the bidder cannot complete a
squeeze out to obtain 100% control of us. Accordingly, acceptances of 90% of our outstanding ordinary shares/ADSs will likely be a condition in any takeover offer to acquire us, not 50% as is more common in tender offers for corporations
organized under Delaware law. By contrast, a scheme of arrangement, the successful completion of which would result in a bidder obtaining 100% control of us, requires the approval of a majority of shareholders voting at the meeting and representing
75% of the ordinary shares voting for approval.
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Under English law and our Articles of Association, shareholders and other persons whom we know or have reasonable cause to believe are, or have been,
interested in our shares may be required to disclose information regarding their interests in our shares upon our request, and the failure to provide the required information could result in the loss or restriction of rights attaching to the shares,
including prohibitions on certain transfers of the shares, withholding of dividends and loss of voting rights. Comparable provisions generally do not exist under U.S. law.
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The quorum requirement for a shareholders meeting is a minimum of two shareholders entitled to vote at the meeting and present in person or by
proxy or, in the case of a shareholder which is a corporation, represented by a duly authorized officer. Under U.S. law, a majority of the shares eligible to vote must generally be present (in person or by proxy) at a shareholders meeting in
order to constitute a quorum. The minimum number of shares required for a quorum can be reduced pursuant to a provision in a companys certificate of incorporation or bylaws, but typically not below one-third of the shares entitled to vote at
the meeting.
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U.S. shareholders may not be able to enforce civil liabilities against us.
We are incorporated under the laws of England and Wales, and our subsidiaries are incorporated in various
jurisdictions, including foreign jurisdictions. A number of the officers and directors of each of our subsidiaries are non-residents of the United States, and all or a substantial portion of the assets of such persons are located outside the United
States. As a result, it may not be possible for investors to affect service of process within the United States upon such persons or to enforce against them judgments obtained in U.S. courts predicated upon the civil liability provisions of the
federal securities laws of the United States. We have been advised by our English solicitors that there is doubt as to the enforceability in England in original actions, or in actions for enforcement of judgments of U.S. courts, of civil liabilities
to the extent predicated upon the federal securities laws of the United States.
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U.S. holders of the ADSs or ordinary shares may be subject to U.S. federal income
taxation at ordinary income tax rates on undistributed earnings and profits.
There is a risk that we will be
classified as a controlled foreign corporation, or CFC, for U.S. federal income tax purposes. If we are classified as a CFC, any ADS holder or shareholder that is a U.S. person that owns directly, indirectly or by attribution, 10% or more of the
voting power of our outstanding shares may be subject to U.S. income taxation at ordinary income tax rates on all or a portion of our undistributed earnings and profits attributable to subpart F income. Such 10% holder may also be
taxable at ordinary income tax rates on any gain realized on a sale of ordinary shares or ADS, to the extent of our current and accumulated earnings and profits attributable to such shares. The CFC rules are complex and U.S. Holders of the ordinary
shares or ADSs are urged to consult their own tax advisors regarding the possible application of the CFC rules to them in their particular circumstances.