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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 000-21392

 

Amarin Corporation plc

(Exact Name of Registrant as Specified in its Charter)

 

 

England and Wales

 

Not applicable

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

Iconic Offices, The Greenway, Block C Ardilaun Court,

112 – 114 St Stephens Green

 

Dublin 2, Ireland

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: +353 (0) 1 6699 020

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

American Depositary Shares (ADS(s)), each ADS
representing the right to receive one (1) Ordinary Share of

Amarin Corporation plc

AMRN

NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

403,828,955 common shares were outstanding as of October 21, 2022, including 383,347,128 shares held as American Depositary Shares (ADSs), each representing one Ordinary Share, 50 pence par value per share and 20,481,827 Ordinary Shares.

 

 

 


 

INDEX TO FORM 10-Q

 

 

 

 

 

Page

 

 

 

PART I – Financial Information

 

 

 

Item 1.

 

Financial Statements (unaudited):

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

 

3

 

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021

 

4

 

 

Condensed Consolidated Statement of Changes in Stockholders’ Equity for the nine months ended September 30, 2022 and 2021

 

5

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021

 

6

 

 

Notes to Condensed Consolidated Financial Statements

 

7

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

25

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

38

Item 4.

 

Controls and Procedures

 

38

 

 

 

PART II – Other Information

 

 

 

Item 1.

 

Legal Proceedings

 

39

Item 1A.

 

Risk Factors

 

39

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

82

Item 5.

 

Other Information

 

82

Item 6.

 

Exhibits

 

83

 

SIGNATURES

 

84

 

 

2


 

PART I

AMARIN CORPORATION PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share amounts)

 

 

 

 

September 30, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

240,498

 

 

$

219,454

 

Restricted cash

 

 

3,920

 

 

 

3,918

 

Short-term investments

 

 

63,203

 

 

 

234,674

 

Accounts receivable, net

 

 

123,379

 

 

 

163,653

 

Inventory

 

 

227,606

 

 

 

234,676

 

Prepaid and other current assets

 

 

27,914

 

 

 

22,352

 

Total current assets

 

 

686,520

 

 

 

878,727

 

Property, plant and equipment, net

 

 

999

 

 

 

1,425

 

Long-term investments

 

 

2,264

 

 

 

34,996

 

Long-term inventory

 

 

187,964

 

 

 

121,254

 

Operating lease right-of-use asset

 

 

8,462

 

 

 

7,660

 

Other long-term assets

 

 

456

 

 

 

456

 

Intangible asset, net

 

 

21,638

 

 

 

23,547

 

TOTAL ASSETS

 

$

908,303

 

 

$

1,068,065

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

93,157

 

 

$

114,922

 

Accrued expenses and other current liabilities

 

 

192,001

 

 

 

253,111

 

Current deferred revenue

 

 

2,198

 

 

 

2,649

 

Total current liabilities

 

 

287,356

 

 

 

370,682

 

Long-Term Liabilities:

 

 

 

 

 

 

Long-term deferred revenue

 

 

13,499

 

 

 

14,060

 

Long-term operating lease liability

 

 

9,924

 

 

 

8,576

 

Other long-term liabilities

 

 

9,697

 

 

 

7,648

 

Total liabilities

 

 

320,476

 

 

 

400,966

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Common stock, £0.50 par, unlimited authorized; 411,660,040 shares issued, 403,828,955 shares outstanding as of September 30, 2022; 404,084,775 shares issued, 396,598,008 shares outstanding as of December 31, 2021

 

 

298,596

 

 

 

294,027

 

Additional paid-in capital

 

 

1,878,923

 

 

 

1,855,246

 

Treasury stock; 7,831,085 shares as of September 30, 2022; 7,486,767 shares as of December 31, 2021

 

 

(61,585

)

 

 

(60,726

)

Accumulated deficit

 

 

(1,528,107

)

 

 

(1,421,448

)

Total stockholders’ equity

 

 

587,827

 

 

 

667,099

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

908,303

 

 

$

1,068,065

 

 

See notes to condensed consolidated financial statements.

3


 

AMARIN CORPORATION PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Product revenue, net

$

89,222

 

 

$

141,442

 

 

$

277,004

 

 

$

436,598

 

Licensing and royalty revenue

 

656

 

 

 

596

 

 

 

1,944

 

 

 

2,098

 

Total revenue, net

 

89,878

 

 

 

142,038

 

 

 

278,948

 

 

 

438,696

 

Less: Cost of goods sold

 

23,941

 

 

 

30,211

 

 

 

81,990

 

 

 

90,692

 

Less: Cost of goods sold - restructuring inventory

 

3,078

 

 

 

 

 

 

18,078

 

 

 

 

Gross margin

 

62,859

 

 

 

111,827

 

 

 

178,880

 

 

 

348,004

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

58,745

 

 

 

102,965

 

 

 

236,285

 

 

 

315,966

 

Research and development

 

5,765

 

 

 

7,820

 

 

 

25,172

 

 

 

23,554

 

Restructuring

 

3,493

 

 

 

14,115

 

 

 

13,706

 

 

 

14,115

 

Total operating expenses

 

68,003

 

 

 

124,900

 

 

 

275,163

 

 

 

353,635

 

Operating loss

 

(5,144

)

 

 

(13,073

)

 

 

(96,283

)

 

 

(5,631

)

Interest income, net

 

750

 

 

 

163

 

 

 

1,241

 

 

 

919

 

Other income (expense), net

 

511

 

 

 

(57

)

 

 

(1,990

)

 

 

(390

)

Loss from operations before taxes

 

(3,883

)

 

 

(12,967

)

 

 

(97,032

)

 

 

(5,102

)

Income tax provision

 

(1,257

)

 

 

(184

)

 

 

(9,627

)

 

 

(1,867

)

Net loss

$

(5,140

)

 

$

(13,151

)

 

$

(106,659

)

 

$

(6,969

)

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.01

)

 

$

(0.03

)

 

$

(0.27

)

 

$

(0.02

)

Diluted

$

(0.01

)

 

$

(0.03

)

 

$

(0.27

)

 

$

(0.02

)

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

404,614

 

 

 

396,618

 

 

 

399,944

 

 

 

395,681

 

Diluted

 

404,614

 

 

 

396,618

 

 

 

399,944

 

 

 

395,681

 

 

See notes to condensed consolidated financial statements.

4


 

AMARIN CORPORATION PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited, in thousands, except share amounts)

 

 

 

Common
Shares

 

 

Treasury
Shares

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Treasury
Stock

 

 

Accumulated
Deficit

 

 

Total

 

December 31, 2021

 

 

404,084,775

 

 

 

(7,486,767

)

 

$

294,027

 

 

$

1,855,246

 

 

$

(60,726

)

 

$

(1,421,448

)

 

$

667,099

 

Exercise of stock options

 

 

10,602

 

 

 

 

 

 

6

 

 

 

24

 

 

 

 

 

 

 

 

 

30

 

Vesting of restricted stock units

 

 

493,381

 

 

 

(161,083

)

 

 

331

 

 

 

(331

)

 

 

(535

)

 

 

 

 

 

(535

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

6,078

 

 

 

 

 

 

 

 

 

6,078

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,563

)

 

 

(31,563

)

March 31, 2022

 

 

404,588,758

 

 

 

(7,647,850

)

 

$

294,364

 

 

$

1,861,017

 

 

$

(61,261

)

 

$

(1,453,011

)

 

$

641,109

 

Issuance of common stock under employee stock purchase plan

 

 

265,214

 

 

 

 

 

 

166

 

 

 

217

 

 

 

 

 

 

 

 

 

383

 

Exercise of stock options

 

 

14,645

 

 

 

 

 

 

9

 

 

 

10

 

 

 

 

 

 

 

 

 

19

 

Vesting of restricted stock units

 

 

187,835

 

 

 

(61,551

)

 

 

120

 

 

 

(120

)

 

 

(158

)

 

 

 

 

 

(158

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

8,646

 

 

 

 

 

 

 

 

 

8,646

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(69,956

)

 

 

(69,956

)

June 30, 2022

 

 

405,056,452

 

 

 

(7,709,401

)

 

$

294,659

 

 

$

1,869,770

 

 

$

(61,419

)

 

$

(1,522,967

)

 

$

580,043

 

Issuance of common stock for milestone payment

 

 

5,817,942

 

 

 

 

 

 

3,461

 

 

 

4,742

 

 

 

 

 

 

 

 

 

8,203

 

Exercise of stock options

 

 

8,056

 

 

 

 

 

 

5

 

 

 

5

 

 

 

 

 

 

 

 

 

10

 

Vesting of restricted stock units

 

 

777,590

 

 

 

(121,684

)

 

 

471

 

 

 

(471

)

 

 

(166

)

 

 

 

 

 

(166

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

4,877

 

 

 

 

 

 

 

 

 

4,877

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,140

)

 

 

(5,140

)

September 30, 2022

 

 

411,660,040

 

 

 

(7,831,085

)

 

$

298,596

 

 

$

1,878,923

 

 

$

(61,585

)

 

$

(1,528,107

)

 

$

587,827

 

 

 

 

Common
Shares

 

 

Treasury
Shares

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Treasury
Stock

 

 

Accumulated
Deficit

 

 

Total

 

December 31, 2020

 

 

398,425,000

 

 

 

(5,886,919

)

 

$

290,115

 

 

$

1,817,649

 

 

$

(51,082

)

 

$

(1,429,177

)

 

$

627,505

 

Exercise of stock options

 

 

783,320

 

 

 

 

 

 

536

 

 

 

1,523

 

 

 

 

 

 

 

 

 

2,059

 

Vesting of restricted stock units

 

 

2,447,405

 

 

 

(1,003,965

)

 

 

1,709

 

 

 

(1,709

)

 

 

(7,252

)

 

 

 

 

 

(7,252

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

13,925

 

 

 

 

 

 

 

 

 

13,925

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,626

)

 

 

(1,626

)

March 31, 2021

 

 

401,655,725

 

 

 

(6,890,884

)

 

$

292,360

 

 

$

1,831,388

 

 

$

(58,334

)

 

$

(1,430,803

)

 

$

634,611

 

Issuance of common stock under employee stock purchase plan

 

 

226,402

 

 

 

 

 

 

161

 

 

 

867

 

 

 

 

 

 

 

 

 

1,028

 

Exercise of stock options

 

 

27,139

 

 

 

 

 

 

19

 

 

 

56

 

 

 

 

 

 

 

 

 

75

 

Vesting of restricted stock units

 

 

346,010

 

 

 

(142,204

)

 

 

242

 

 

 

(242

)

 

 

(677

)

 

 

 

 

 

(677

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

2,479

 

 

 

 

 

 

 

 

 

2,479

 

Income for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,808

 

 

 

7,808

 

June 30, 2021

 

 

402,255,276

 

 

 

(7,033,088

)

 

$

292,782

 

 

$

1,834,548

 

 

$

(59,011

)

 

$

(1,422,995

)

 

$

645,324

 

Exercise of stock options

 

 

184,462

 

 

 

 

 

 

128

 

 

 

353

 

 

 

 

 

 

 

 

 

481

 

Vesting of restricted stock units

 

 

332,491

 

 

 

(125,735

)

 

 

230

 

 

 

(230

)

 

 

(591

)

 

 

 

 

 

(591

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

10,432

 

 

 

 

 

 

 

 

 

10,432

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,151

)

 

 

(13,151

)

September 30, 2021

 

 

402,772,229

 

 

 

(7,158,823

)

 

$

293,140

 

 

$

1,845,103

 

 

$

(59,602

)

 

$

(1,436,146

)

 

$

642,495

 

 

See notes to condensed consolidated financial statements.

5


 

AMARIN CORPORATION PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

 

Nine months ended September 30,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(106,659

)

 

$

(6,969

)

Adjustments to reconcile loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

426

 

 

 

443

 

Amortization of investments

 

 

757

 

 

 

1,564

 

Stock-based compensation

 

 

19,601

 

 

 

26,836

 

Amortization of intangible asset

 

 

1,909

 

 

 

1,633

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

40,274

 

 

 

5,213

 

Inventory

 

 

(59,640

)

 

 

(120,404

)

Prepaid and other current assets

 

 

(5,706

)

 

 

9,601

 

Other long-term assets

 

 

 

 

 

(24

)

Interest receivable

 

 

483

 

 

 

723

 

Deferred revenue

 

 

(1,012

)

 

 

(1,500

)

Accounts payable and other current liabilities

 

 

(74,672

)

 

 

45,582

 

Other long-term liabilities

 

 

2,595

 

 

 

(995

)

Net cash used in operating activities

 

 

(181,644

)

 

 

(38,297

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Maturities of securities

 

 

240,614

 

 

 

312,150

 

Purchases of securities

 

 

(37,507

)

 

 

(233,067

)

Disposal of furniture, fixtures and equipment

 

 

 

 

 

4

 

Net cash provided by investing activities

 

 

203,107

 

 

 

79,087

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from the issuance of common stock, net of transaction costs

 

 

383

 

 

 

1,028

 

Proceeds from exercise of stock options, net of transaction costs

 

 

59

 

 

 

2,615

 

Taxes paid related to stock-based awards

 

 

(859

)

 

 

(8,520

)

Net cash used in financing activities

 

 

(417

)

 

 

(4,877

)

NET INCREASE IN CASH AND CASH EQUIVALENTS AND
   RESTRICTED CASH

 

 

21,046

 

 

 

35,913

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

 

 

223,372

 

 

 

190,879

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

244,418

 

 

$

226,792

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash (paid) received during the year for:

 

 

 

 

 

 

Income taxes

 

$

(1,490

)

 

$

3,670

 

Supplemental disclosure of non-cash transactions:

 

 

 

 

 

 

Initial recognition of operating lease right-of-use asset

 

$

1,148

 

 

$

 

Laxdale Milestone

 

$

 

 

$

12,000

 

 

See notes to condensed consolidated financial statements.

6


 

AMARIN CORPORATION PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For purposes of this Quarterly Report on Form 10-Q, ordinary shares may also be referred to as “common shares” or “common stock.”

(1) Nature of Business and Basis of Presentation

Nature of Business

Amarin Corporation plc, or Amarin, or the Company, is a pharmaceutical company focused on the commercialization and development of therapeutics to improve cardiovascular, or CV, health and reduce CV risk. Most of the Company’s historical revenue and sales, marketing and administrative activities and costs have been associated with commercial operations in the United States, or U.S. The Company has launched commercial operations in certain European countries, such as the United Kingdom, or the UK, and continues pre-launch commercial activities throughout the rest of Europe. The Company’s operations outside of the U.S. and Europe are in early stages of development with reliance on third-party commercial partners in select geographies, including China where regulatory approval for the Company’s lead product is being actively sought.

The Company’s lead product, VASCEPA® (icosapent ethyl), was first approved by the U.S. Food and Drug Administration, or U.S. FDA, in July 2012 for use as an adjunct to diet to reduce triglyceride, or TG, levels in adult patients with severe (>500 mg/dL) hypertriglyceridemia. In January 2013, the Company launched 1-gram size VASCEPA in the U.S. and in October 2016, introduced a smaller 0.5-gram capsule size. On December 13, 2019, the U.S. FDA approved another indication and label expansion for VASCEPA based on the results of the Company’s long-term cardiovascular outcomes trial, REDUCE-IT®, or Reduction of Cardiovascular Events with EPA – Intervention Trial. VASCEPA is approved by the U.S. FDA as an adjunct to maximally tolerated statin therapy for reducing persistent cardiovascular risk in select high risk patients.

On March 30, 2020, following conclusion of a trial in late January 2020, the U.S. District Court for the District of Nevada, or the Nevada Court, issued a ruling in favor of two generic drug companies, Dr. Reddy’s Laboratories, Inc., or Dr. Reddy’s, and Hikma Pharmaceuticals USA Inc., or Hikma, and certain of their affiliates, or, collectively, the Defendants, that declared as invalid several of the Company's patents covering the first U.S. FDA-approved use of its drug, for use to reduce severely high triglyceride levels, which is known as the MARINE indication. The Company sought appeals of the Nevada Court judgment up to the United States Supreme Court, but the Company was unsuccessful. On June 18, 2021, the Company was notified that its petition for writ of certiorari to the United States Supreme Court was denied. As a result, the following generic versions of VASCEPA have obtained U.S. FDA approval with labeling consistent with the MARINE indication of VASCEPA and have entered the U.S. market:

 

Company

 

FDA MARINE Indication Approval

 

Launch Date

Hikma Pharmaceuticals USA Inc.

 

May 2020

 

November 2020

Dr. Reddy’s Laboratories, Inc.

 

August 2020

 

June 2021

Teva Pharmaceuticals USA, Inc.

 

September 2020

 

September 2022 (1)

Apotex, Inc.

 

June 2021

 

January 2022

(1) - Teva's launch consisted only of a 0.5-gram capsule.

On March 26, 2021, the European Commission, or EC, approved the marketing authorization application for VAZKEPA, hereinafter along with the U.S. brand name VASCEPA, collectively referred to as VASCEPA, in the European Union, or EU, to reduce the risk of cardiovascular events in high-risk, statin-treated adult patients who have elevated triglycerides (>150 mg/dL) and either established cardiovascular disease or diabetes and at least one additional cardiovascular risk event. On April 22, 2021, the Company announced that the Medicines and Healthcare Products Regulatory Agency, or MHRA, approved VAZKEPA in England, Scotland and Wales to reduce cardiovascular risk through MHRA’s new ‘reliance’ route. Collectively CHMP, EMA, EC and MHRA are referred to herein as the European Regulatory Authorities.

In November 2020, the Company announced topline results from the Phase 3 clinical trial of VASCEPA conducted by the Company’s partner in China. On February 9, 2021, the Company announced that regulatory review processes for approval of VASCEPA in Mainland China and Hong Kong had commenced. The Chinese National Medical Products Administration, or NMPA, has accepted for review the new drug application for VASCEPA based on the results from the Phase 3 clinical trial and the results from the Company’s prior studies of VASCEPA. On February 23, 2022, the Hong Kong Department of Health concluded their evaluation and approved the use of VASCEPA under the REDUCE-IT indication.

The Company currently has strategic collaborations to develop and commercialize VASCEPA in select territories outside the United States. Amarin is responsible for supplying VASCEPA to all markets in which the product is sold, including the United States, the United Kingdom and Sweden, as well as, in Canada, Lebanon and the United Arab Emirates where the drug is promoted and sold via collaboration with third-party companies that compensate Amarin for such supply. Amarin is not responsible for providing any generic company with drug product. The Company operates in one business segment.

7


 

Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States, or GAAP, and pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC. Certain information in the footnote disclosures of the financial statements has been condensed or omitted where it substantially duplicates information provided in the Company’s latest audited consolidated financial statements, in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021, or the Form 10-K, filed with the SEC. The balance sheet amounts in this report were derived from the Company’s audited consolidated financial statements included in the Form 10-K.

The condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that, in the opinion of management, are necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods indicated. The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The results of operations for the three and nine months ended September 30, 2022 and 2021 are not necessarily indicative of the results for any future period. Certain numbers presented throughout this document may not add precisely to the totals provided due to rounding. Absolute and percentage changes are calculated using the underlying amounts in thousands. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying condensed consolidated financial statements of the Company and subsidiaries have been prepared on a basis which assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business, as well as the ongoing global pandemic, COVID-19.

At September 30, 2022, the Company had Total assets of $908.3 million, of which $306.0 million consisted of cash and liquid short-term and long-term investments. More specifically, the Company had Current assets of $686.5 million, including Cash and cash equivalents of $240.5 million, Short-term investments of $63.2 million, Accounts receivable, net, of $123.4 million and Inventory of $227.6 million. In addition, as of September 30, 2022, the Company had Long-term investments of $2.3 million and Long-term inventory of $188.0 million. As of September 30, 2022, the Company had no debt outstanding.

(2) Significant Accounting Policies

Revenue Recognition

In accordance with Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers, or Topic 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. For a complete discussion of accounting for net product revenue and licensing revenue, see Note 8—Revenue Recognition.

Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash, deposits with banks and short-term highly liquid money market instruments with original maturities at the date of purchase of 90 days or less. Restricted cash represents cash and cash equivalents pledged to guarantee repayment of certain expenses which may be incurred for business travel under corporate credit cards held by employees.

Accounts Receivable, net

Accounts receivable, net, comprised of trade receivables, are generally due within 30 days and are stated at amounts due from customers. The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of any recoveries. The allowance is based primarily on assessment of specific identifiable customer accounts considered at risk or uncollectible, as well as an analysis of current receivables aging and expected future write-offs. The expense associated with the allowance for doubtful accounts is recognized as Selling, general, and administrative expense. The Company has not historically

8


 

experienced any significant credit losses. All customer accounts are actively managed and no losses in excess of amounts reserved are currently expected; however, the Company is monitoring the potential negative impact of COVID-19 on the Company’s customers’ ability to meet their financial obligations.

The following table summarizes the impact of accounts receivable reserves on the gross trade accounts receivable balances as of September 30, 2022 and December 31, 2021:

 

In thousands

 

September 30, 2022

 

 

December 31, 2021

 

Gross trade accounts receivable

 

$

182,829

 

 

$

262,948

 

Trade allowances

 

 

(47,656

)

 

 

(86,636

)

Chargebacks

 

 

(10,849

)

 

 

(11,714

)

Allowance for doubtful accounts

 

 

(945

)

 

 

(945

)

Accounts receivable, net

 

$

123,379

 

 

$

163,653

 

 

Inventory

The Company states inventories at the lower of cost or net realizable value. Cost is determined based on actual cost using the average cost method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company classifies inventory as long-term inventory when consumption of the inventory is expected beyond the operating cycle. An allowance is established when management determines that certain inventories may not be saleable. If inventory cost exceeds expected net realizable value due to obsolescence, damage or quantities in excess of expected demand, changes in price levels or other causes, the Company will reduce the carrying value of such inventory to net realizable value and recognize the difference as a component of cost of goods sold in the period in which it occurs. The Company capitalizes inventory purchases of saleable product from approved suppliers while inventory purchases from suppliers prior to regulatory approval are included as a component of research and development expense. The Company expenses inventory identified for use as marketing samples when they are packaged. The average cost reflects the actual purchase price of VASCEPA active pharmaceutical ingredient, or API.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts and tax bases of assets and liabilities and operating loss carryforwards and other tax attributes using enacted rates expected to be in effect when those differences reverse. Valuation allowances are provided against deferred tax assets that are not more likely than not to be realized. Deferred tax assets and liabilities are classified as non-current in the condensed consolidated balance sheet.

The Company provides reserves for potential payments of tax to various tax authorities and does not recognize tax benefits related to uncertain tax positions and other issues. Tax benefits for uncertain tax positions are based on a determination of whether a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized, assuming that the matter in question will be decided based on its technical merits. The Company’s policy is to record interest and penalties in the provision for income taxes, as applicable.

The Company regularly assesses its ability to realize deferred tax assets. Changes in historical earnings performance, future earnings projections, and changes in tax laws, among other factors, may cause the Company to adjust its valuation allowance on deferred tax assets, which would impact the Company’s income tax expense in the period in which it is determined that these factors have changed.

Excess tax benefits and deficiencies that arise upon vesting or exercise of share-based payments are recognized as an income tax benefit and expense, respectively, in the condensed consolidated statement of operations. Excess income tax benefits are classified as cash flows from operating activities and cash paid to taxing authorities arising from the withholding of shares from employees are classified as cash flows from financing activities.

The Company’s and its subsidiaries’ income tax returns are periodically examined by various tax authorities, including the Internal Revenue Service, or IRS, and states. The Company is currently under audit by the IRS for the Company’s 2018 U.S. income tax return and by the New Jersey Department of Treasury for the years 2012 to 2015. Although the outcome of tax audits is always uncertain and could result in significant cash tax payments, the Company does not believe the outcome of these audits will have a material adverse effect on its consolidated financial position or results of operations.

Loss per Share

Basic net loss per share is determined by dividing net loss by the weighted average shares of common stock outstanding during the period. Diluted net loss per share is determined by dividing net loss by diluted weighted average shares outstanding. Diluted weighted average shares reflects the dilutive effect, if any, of potentially dilutive common shares, such as from the exercise of stock options and vesting of restricted stock units calculated using the treasury stock method. In periods with reported net operating losses, all stock options and restricted stock units outstanding are deemed anti-dilutive such that basic and diluted net loss per share are equal.

9


 

The calculation of net loss and the number of shares used to compute basic and diluted net loss per share for the three and nine months ended September 30, 2022 and 2021 are as follows:

 

For the Three Months Ended September 30,