This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, as amended.
These forward-looking statements reflect our plans, estimates and beliefs. These
statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, performance or achievements to be materially
different from any future results, performances or achievements expressed or
implied by the forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as "anticipates," "believes,"
"continue," "could," "estimates," "expects," "intends," "may," "plans,"
"potential," "predicts," "projects," "should," "would" and similar expressions
intended to identify forward-looking statements. Forward-looking statements
reflect our current views with respect to future events and are based on
assumptions and subject to risks and uncertainties. Because of these risks and
uncertainties, the forward-looking events and circumstances discussed in this
report may not transpire. We discuss many of these risks in Part I, Item 1A
under the heading "Risk Factors" of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2020 and below under Part II, Item IA, "Risk
Factors".
Given these uncertainties, you should not place undue reliance on these
forward-looking statements. Also, forward-looking statements represent our
estimates and assumptions only as of the date of this document. You should read
this document with the understanding that our actual future results may be
materially different from what we expect. Except as required by law, we do not
undertake any obligation to publicly update or revise any forward-looking
statements contained in this report, whether as a result of new information,
future events or otherwise.
Overview
This Management's Discussion and Analysis of Financial Condition and Results of
Operations, or MD&A, should be read in conjunction with the Part I, Item 1,
Business and Part II, Item 7, MD&A included in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2020 for additional information on our
business.
We are a pharmaceutical company focused on the commercialization and development
of therapeutics to improve cardiovascular, or CV, health and reduce CV risk. Our
lead product, VASCEPA® (icosapent ethyl) was first approved by the United States
Food and Drug Administration, or U.S. FDA, for use as an adjunct to diet to
reduce triglyceride, or TG, levels in adult patients with severe (?500 mg/dL)
hypertriglyceridemia. We launched VASCEPA in the United States, or U.S., in
January 2013. On December 13, 2019 the U.S. FDA approved an indication and label
expansion for VASCEPA based on the landmark results of our cardiovascular
outcomes trial of VASCEPA, REDUCE-IT®, or Reduction of Cardiovascular Events
with EPA - Intervention Trial. VASCEPA is the first and only drug approved by
the U.S. FDA as an adjunct to maximally tolerated statin therapy for reducing
persistent cardiovascular risk in select high risk-patients.
In August 2020, we announced our plans to launch icosapent ethyl under the brand
name VAZKEPA, hereinafter along with the U.S. brand name VASCEPA, collectively
referred to as VASCEPA, in major markets in Europe through our own new European
sales and marketing teams. On January 28, 2021, the Committee for Medicinal
Products for Human Use, or CHMP, of the European Medicines Agency, or EMA,
adopted a positive opinion, recommending that a marketing authorization be
granted to our drug, icosapent ethyl, in the European Union, or EU, for the
reduction of risk of cardiovascular events in patients with high cardiovascular
risk. On March 26, 2021, the European Commission, or EC, granted approval of the
marketing authorization application in the EU for VAZKEPA to reduce the risk of
cardiovascular disease or diabetes and at least one additional cardiovascular
risk factor. VAZKEPA is the first and only EC approved therapy to reduce
cardiovascular risk in high-risk statin-treated patient. The EC approval
provides ten years of market protection in the EU, and we have been issued a
patent that expires in 2033 with additional pending applications that could
extend exclusivity into 2039. On April 22, 2021, we announced that we received
marketing authorization from the Medicines and Healthcare Products Regulatory
Agency, or MHRA, for VAZKEPA in England, Wales and Scotland to reduce
cardiovascular risk through MHRA's new 'reliance' route following the end of the
BREXIT transition period.
In Europe, launch of VAZKEPA in individual countries is gated by timing of
achieving product reimbursement on a country-by-country basis as is typical for
new drugs. In seeking market access, we expect to file dossiers in ten European
countries in the coming months, including the largest countries in Europe.
Similar to our approach in launching VASCEPA in the United States, in Europe we
have been building a core team of experienced professionals and a highly capable
sales team, who are involved with pre-launch planning and other commercial
preparation activities and plan to leverage third-party relationships for
various support activities. We also have commenced training sales
representatives to advance pre-launch disease and brand awareness initiatives in
preparation for the planned commercial launch of VAZKEPA in Germany before the
end of Q3 2021. We expect to have approximately 150 sales representatives
deployed for pre-launch product and disease state awareness programs by mid-Q2
2021 and approximately 300 professionals by the end of 2021.
In November 2020, we announced statistically significant topline results from
the Phase 3 clinical trial of VASCEPA conducted by our partner in China. On
February 9, 2021, we announced that our partner in China commenced the
regulatory review processes in Mainland China and Hong Kong. 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 our prior studies of VASCEPA. We expect to receive a
decision from the NMPA in Mainland China near the end of 2021. The Hong Kong
Department of
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Health is evaluating VASCEPA based initially on current approvals in the United
States and Canada with subsequent notification of the EC approval. The review
process in Hong Kong is expected to conclude near the end of 2021.
In addition to the U.S., VASCEPA is currently available by prescription in
Canada, Lebanon and the United Arab Emirates. In Canada, VASCEPA has the benefit
of eight years of data protection afforded through Health Canada (until the end
of 2027), in addition to separate patent protection with expiration dates that
could extend into 2039. In China and the Middle East, we are pursuing such
regulatory approvals and subsequent commercialization of VASCEPA with commercial
partners.
Based on REDUCE-IT results, to-date 15 clinical treatment guidelines or position
statements from medical societies have been updated recommending the use of
icosapent ethyl in at-risk patients. Based on our analysis of branded
cardiovascular drugs in the United States which have positive cardiovascular
outcomes studies, we believe the wholesale acquisition cost of VASCEPA is the
lowest. In addition, while none of these other cardiovascular drugs compete
directly with VASCEPA and no head-to-head studies have been done between VASCEPA
and these other drugs and the length and construct of the respective outcomes
studies of these drugs vary, analysis of published clinical results from the
cardiovascular outcomes studies of these drugs indicates that the number needed
to treat, or NNT, for VASCEPA is as low or lower than for these other branded
cardiovascular drugs. NNT is a measure of how many patients need to be treated
before one patient benefits from the therapy. For VASCEPA, in this analysis, the
NNT was based on the 25% relative risk reduction demonstrated for the primary
endpoint of the study, the NNT for which is 21, as opposed to one fewer MACE on
average per six patients treated over the five-year study period based on total
events. The original pricing for VASCEPA in the United States was established
prior to results of the REDUCE-IT cardiovascular outcomes study during a
timeframe when VASCEPA was only approved for the original indication as an
adjunct to diet to reduce TG levels in adult patients with severe (TG ?500
mg/dL) hypertriglyceridemia. We believe that this relatively low price for
VASCEPA in the United States, together with the demonstrated efficacy and safety
of VASCEPA, will help lead to many at-risk patients being treated by VASCEPA.
On March 30, 2020, the United States District Court for the District of Nevada,
or the Nevada Court, ruled in favor of two generic companies in our patent
litigation related to their abbreviated new drug applications, or ANDAs, that
sought U.S. FDA approval for sale of generic versions of VASCEPA. On May 22,
2020 and August 10, 2020, the two generic companies, Hikma Pharmaceutical USA
Inc., or Hikma, and Dr. Reddy's Laboratories, Inc., or Dr. Reddy's, received
U.S. FDA approval to market its generic versions of VASCEPA for the original
indication of VASCEPA as an adjunct to diet to reduce TG levels in adult
patients with severe (?500 mg/dL) hypertriglyceridemia. On September 3, 2020,
the U.S. Court of Appeals for the Federal Circuit upheld the March ruling by the
Nevada Court in favor of the two generic companies. On October 2, 2020, we filed
a combined petition for panel rehearing or rehearing en banc. On November 4,
2020, our rehearing and en banc petitions were denied. On February 11, 2021, we
filed a petition for a writ of certiorari with the United States Supreme Court
to ask the Court to hear our appeal in this litigation, which is pending. We
intend to vigorously pursue this matter, but we cannot predict the outcome.
In November 2020, Hikma launched their generic version of VASCEPA on a limited
scale. On November 30, 2020 we filed a patent infringement lawsuit against Hikma
for making, selling, offering to sell and importing generic icosapent ethyl
capsules in and into the United States in a manner that we allege has induced
the infringement of patents covering the use of VASCEPA to reduce specified
cardiovascular risk. The earlier ANDA litigation did not pertain to our patents
covering cardiovascular risk reduction. On January 25, 2021 we expanded the
scope of the patent infringement lawsuit to include a health care insurance
provider, Health Net, LLC.
Although, to date, no generics other than Hikma have been launched, in addition
to ANDAs approved for Hikma and Dr. Reddy's, on September 11, 2020, Teva
Pharmaceuticals USA, Inc's., or Teva's, ANDA was approved by the U.S. FDA.
Apotex, Inc., or Apotex, has applied for ANDA approval and such application,
based on public records, has not yet been approved.
We intend to vigorously pursue these ongoing litigation matters, but cannot
predict the outcomes or the impact on our business. Geographies outside the
United States in which VASCEPA is sold and under regulatory review are not
subject to this U.S. patent litigation and judgment. No similar litigation
involving potential generic version of VASCEPA is pending outside the United
States.
We are responsible for supplying VASCEPA to all markets in which the branded
product is sold, including Canada, Lebanon and the United Arab Emirates where
the drug is promoted and sold via collaborations with third-party companies that
compensate us for such supply. Subject to commercial launch in Europe and
approval in China, we will be responsible for supplying products to those
markets as well. We are not responsible for providing any generic company with
drug product.
Commercialization
We commenced the commercial launch of VASCEPA in the United States in January
2013 based on the original indication for VASCEPA. In October 2016, in addition
to the original 1-gram capsule size for VASCEPA, we introduced a smaller
0.5-gram capsule size. The U.S. FDA-approved dosing for VASCEPA continues to be
4 grams per day, and as expected, the majority of new and existing patients
taking VASCEPA continue to be prescribed the 1-gram size VASCEPA capsule.
VASCEPA is sold principally to a limited number of major wholesalers, as well as
selected regional wholesalers and specialty pharmacy providers, or collectively,
our
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distributors or our customers, that in turn resell VASCEPA to retail pharmacies
for subsequent resale to patients and healthcare providers.
As a result of the COVID-19 pandemic and the related social distancing, in March
2020, we suspended face-to-face interactions between our sales representatives
and healthcare professionals. We resumed on a limited basis field-based,
face-to-face interactions with healthcare providers beginning in June 2020.
During the late part of the summer of 2020, substantially all of our field force
personnel were able to resume some level of face-to-face customer interactions
in a manner consistent with guidelines from local, state and government health
officials in the United States. In the fourth quarter of 2020 and continuing
into the first quarter of 2021, the impact of COVID-19 worsened in much of the
United States, with some physicians again limiting access to face-to-face
interactions with our field force personnel. Accordingly, in the United States,
we have intentionally slowed the hiring of replacements for certain of our open
positions which resulted from ordinary turnover. When we witness our sales
representatives increasingly able to resume direct interactions with healthcare
professionals, it is our intention to fill a significant number of these
positions, provided such replacements are then appropriate to meet our business
needs, which we continually evaluate.
Based on monthly compilations of data provided by a third party, Symphony
Health, the estimated number of normalized total VASCEPA prescriptions for the
three months ended March 31, 2021 and 2020 was approximately 1,064,000 and
1,061,000, respectively. According to data from another third party, IQVIA, the
estimated number of normalized total VASCEPA prescriptions for the three months
ended March 31, 2021 and 2020 was approximately 989,000 and
955,000, respectively. Normalized total prescriptions represent the estimated
total number of VASCEPA prescriptions dispensed to patients, calculated on a
normalized basis (i.e., one month's supply, or total capsules dispensed
multiplied by the number of grams per capsule divided by 120 grams). Inventory
levels at wholesalers tend to fluctuate based on seasonal factors, prescription
trends and other factors. Such third-party sources also report that the number
of patients visiting physicians remains well below pre-pandemic levels, with
such reported decline being particularly pronounced in some areas of the country
where there is greater awareness of VASCEPA, such as southern California. In
addition, these sources report lower levels of patient visits during the three
months ended March 31, 2021 in Texas and other parts of the United States which
experienced severe weather and power outages.
Companies such as Symphony Health and IQVIA collect and report estimates of
weekly, monthly, quarterly and annual prescription information. There is a
limited amount of information available to such companies to determine the
actual number of total prescriptions for prescription products like VASCEPA
during such periods. Each vendor's estimates utilize a proprietary projection
methodology and are based on a combination of data received from pharmacies and
other distributors, and historical data when actual data is unavailable. Their
calculations of changes in prescription levels between periods can be
significantly affected by lags in data reporting from various sources or by
changes in pharmacies and other distributors providing data. Such methods can
from time to time result in significant inaccuracies in information when
ultimately compared with actual results. These inaccuracies have historically
been most prevalent and pronounced during periods of time of inflections upward
or downward in rates of use. Further, data for a single and limited period may
not be representative of a trend or otherwise predictive of future results. Data
reported by Symphony Health and IQVIA is rarely identical. As such, the
resulting conclusions from such sources should be viewed with caution. We are
not responsible for the accuracy of these companies' information and we do not
receive prescription data directly from retail pharmacies.
We recognize revenue from product sales when the distributor obtains control of
our product, which occurs at a point in time, typically upon delivery to the
distributor. Timing of shipments to wholesalers, as used for revenue recognition
purposes, and timing of prescriptions as estimated by these third parties may
differ from period to period. Although we believe these data are prepared on a
period-to-period basis in a manner that is generally consistent and that such
results can be generally indicative of current prescription trends, these data
are based on estimates and should not be relied upon as definitive. While we
expect to be able to grow VASCEPA revenues over time, no guidance should be
inferred from the operating metrics described above. We also anticipate that
such sales growth will be inconsistent from period to period. 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,
quarterly changes in distributor purchases, and other factors. We believe
investors should consider our results over several quarters, or longer, before
making an assessment about potential future performance. In Europe, privacy laws
and other factors impact the availability of data to inform European commercial
operations at an individual physician level. Generally, less data is available
and at reduced frequencies as compared to the United States.
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We began 2020 by taking steps to further expand promotion of VASCEPA in the
United States, including direct to consumer advertising, based on the new
indication and label expansion of VASCEPA. Our field sales efforts are further
complemented by investments in digital and non-personal channels as well as
peer-to-peer (e.g., promotional medical education programs and product theaters)
initiatives to further increase VASCEPA brand awareness and clarify VASCEPA's
unique clinical profile. In January 2020, we launched an educational campaign,
True To Your Heart, to help people learn more about cardiovascular disease and
how to better protect against persistent cardiovascular risk. In the United
States, in July 2020 we launched our first television-based promotion of VASCEPA
emphasizing that it is the first and only U.S. FDA approved drug for its
indication. As the impact of COVID-19 on much of the United States worsened in
the fourth quarter of 2020, we suspended television-based promotion of VASCEPA
as we determined that the cost was not sufficiently justified in light of the
COVID-19 pandemic's impact on patient visits to doctors. We resumed on a very
limited basis, direct-to-consumer campaign in January 2021, including
television-based promotion, digital and social media promotion to continue to
grow consumer awareness of VASCEPA. As we witnessed the effect of COVID-19
persisting, we elected to keep the level of such promotion limited. We
anticipate that at-risk patients will increasingly resume visiting their doctors
for non-urgent medical care after they are vaccinated for COVID-19, however, we
cannot accurately predict when this resumption in visits to doctors will occur.
The timing is likely to vary by geography. As COVID-19 protocols ease and
ordinary course activities resume, we will seek to adjust our promotional
initiatives accordingly, including pursuing increased face-to-face interactions
with healthcare professionals and expanding various forms of direct-to-consumer
promotion.
Similar to our approach in launching VASCEPA in the United States, in Europe we
intend to build a core team of experienced professionals and a highly capable
sales team involved with pre-launch planning and other commercial preparation
activities and plan to leverage third-party relationships for various support
activities. In Europe, patients at high risk for cardiovascular disease tend, in
comparison to the United States, to be treated more often by specialists, such
as cardiologists rather than by physicians who are general practitioners. This
greater concentration of at-risk patients being treated by specialists in Europe
should allow for more efficient promotion in Europe than in the United States.
We have been active in preparing for reimbursement negotiations which we will
commence on a country-by-country basis in Europe, now that VAZKEPA received
marketing authorization on March 26, 2021. In most European countries, securing
product reimbursement is a requisite to launching. In all countries securing
adequate reimbursement is a requisite for commercial success of any therapeutic.
The time required to secure reimbursement tends to vary from country to country
and cannot be reliably predicted at this time. While we believe that we have
strong arguments regarding the cost effectiveness of VAZKEPA, the success of
such reimbursement negotiations could have a significant impact on our ability
to realize the commercial opportunity of VAZKEPA in Europe.
We plan to assess other potential partnership opportunities for licensing
VASCEPA to partners in other parts of the world. While we believe that there is
medical need and opportunity for VASCEPA elsewhere in the world, our current
priorities are the geographies described above.
Research and Development
The results of the REDUCE-IT STROKE subgroup analyses were presented at the
International Stroke Conference 2021 from March 17 - 19, 2021. The REDUCE-IT
STROKE analyses examined stroke rates across the enrolled patient population
(n=8179). Enrolled patients were required to be treated with statins and other
conventional therapies, and all patients had either established cardiovascular
disease or diabetes and had other cardiovascular risk factors such as elevated
triglyceride levels. Event rates for time to first fatal or nonfatal stroke were
2.4% for VASCEPA vs. 3.3% for placebo for a relative risk reduction of 28%
(p=0.01). Ischemic stroke time to first event rates were 2.0% for VASCEPA vs.
3.0% for placebo for a RRR of 36% (p=0.002). Hemorrhagic stroke occurred at low
rates with no significant difference for VASCEPA vs. placebo (0.3% vs 0.2%;
p=0.55).
Based on our current understanding of the biological effects of a COVID-19
infection, including that patients at high risk of cardiovascular disease are at
higher risk of mortality and severe effects from a COVID-19 infection, and based
on data related to the mechanism of action and effects of VASCEPA in lowering
cardiovascular risk in certain high-risk patients, we believe that VASCEPA could
play a beneficial clinical role in helping patients infected by the virus. We
are currently supporting investigator initiated studies by providing study drug
product and limited financial support to investigators in multiple pilot studies
designed to better understand the potential of VASCEPA and its potentially
beneficial role. On December 12, 2020, we announced at the National Lipid
Association Scientific Sessions 2020 positive clinical results from the first
study of VASCEPA in COVID-19 infected outpatients, CardioLink-9. If the results
of the other pilot studies are positive, we will evaluate whether additional
studies will be appropriate. The clinical effects of VASCEPA are
multi-factorial. Multiple mechanisms of action associated with VASCEPA from
clinical and mechanistic studies support the rationale to study its effects in
patients with the COVID-19 infection. Additional postulated mechanisms that
might play a role in the use of VASCEPA in the patients infected with COVID-19
include potential antiviral/antimicrobial effects, fibrosis and cardiac damage
mitigation in animal models and anti-inflammatory effects (acute) in
pulmonary/lung tissue.
Commercial and Clinical Supply
We manage the manufacturing and supply of VASCEPA internally and have done so
since we began clinical development of VASCEPA prior to the drug's marketing
approval by U.S. FDA in 2012. We rely on contract manufacturers in each step of
our
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commercial and clinical product supply chain. These steps include active
pharmaceutical ingredient, or API, manufacturing, encapsulation of the API,
product packaging and supply-related logistics. Our approach to product supply
procurement is designed to mitigate risk of supply interruption and maintain an
environment of cost competition through diversification of contract
manufacturers at each stage of the supply chain and lack of reliance on any
single supplier. We have multiple U.S. FDA-approved international API suppliers,
encapsulators and packagers to support the VASCEPA commercial franchise. We also
have multiple international API suppliers, encapsulators and packagers to
support the commercialization of VASCEPA in geographies where the drug is
approved outside the United States. Not all of our suppliers approved by the
U.S. FDA are approved in every other geography. In Europe, while certain of our
suppliers are approved, after the impact of COVID-19 subsides and more readily
allows for regulatory inspections, we will seek to expand the number of our
suppliers approved for use in further product sales in Europe. The amount of
supply we seek to purchase in future periods will depend on the level of growth
of VASCEPA revenues and minimum purchase commitments with certain suppliers.
While our current supply chain is scalable, we continue efforts to expand,
diversify and further enhance it.
Impact of COVID-19
As of March 31, 2021, approximately 16% of the U.S. population has been fully
vaccinated and approximately 30% of the U.S. population has received at least
one dose of a vaccine. Despite the growing vaccine rate and growing number of
those who are eligible to receive the vaccine, according to CDC data, as of
March 31, 2021, new cases of COVID-19 have been and continue to increase in the
U.S. and the pandemic's impact on global populations and economies continues to
remain. While we expect the number of new cases to decrease as more of the
population is vaccinated, we continue to evaluate the pandemic's effect on
patients, distributors, customers and our employees, as well as on our
operations and the operations of our business partners and communities. Given
the uncertainties regarding the scope, duration and impact of COVID-19 on our
sales, supply, research and development efforts and operations, and on the
operations of our customers, suppliers, distributors, other partners and
patients, the impact of COVID-19 could impact our current performance and
continues to represent a risk to our future performance.
Our ability to directly promote VASCEPA to healthcare professionals has been
limited due to appropriate social distancing practices associated with COVID-19
and by patients electing to forego visiting their doctors for non-urgent medical
examinations and/or choosing to not get blood tests which the results of these
tests provide useful information to the treatment of cardiovascular risk. These
limitations have had a significant impact on slowing VASCEPA prescription and
revenue growth. While COVID-19 continues to impact our promotion of VASCEPA, we
have seen signs of improvement. As a result of the COVID-19 pandemic and the
related social distancing, in March 2020, we suspended face-to-face interactions
between our sales representatives and healthcare professionals. We resumed on a
limited basis field-based, face-to-face interactions with healthcare providers
beginning in June 2020. During the late part of the summer of 2020,
substantially all of our field force personnel were able to resume face-to-face
customer interactions, in a manner consistent with guidelines from local, state
and government health officials in the United States. In the fourth quarter of
2020 and continuing into the first quarter of 2021, the impact of COVID-19
worsened in much of the United States with some physicians again limiting access
to face-to-face interactions with our field force personnel. Such access remains
variable and challenging due to COVID-19.
In the United States, in July 2020 we launched our first television-based
promotion of VASCEPA emphasizing that it is the first and only U.S. FDA approved
drug for the cardiovascular risk reduction indication. As the impact of COVID-19
on much of the United States worsened in the fourth quarter of 2020, we
suspended television-based promotion of VASCEPA judging that the cost was not
sufficiently justified. We resumed a limited direct-to-consumer campaign in
January 2021, including television-based promotion, digital and social media
promotion to continue to grow consumer awareness of VASCEPA. We anticipate that
at-risk patients will increasingly resume visiting their doctors for non-urgent
medical care after they are vaccinated for COVID-19. As more of the population
is vaccinated, COVID-19 protocols ease and ordinary course activities resume, we
will seek to adjust our promotional initiatives accordingly, including pursuing
increased face-to-face interactions with health care professionals and expanding
various forms of direct-to-consumer promotion.
Thus far, COVID-19 has not materially impacted our ability to secure and deliver
supply of VASCEPA. And, thus far, COVID-19 is not known to have significantly
impacted ongoing clinical trials of VASCEPA.
The ultimate impacts of COVID-19 on our business are unknown; however, we are
actively monitoring the situation and may take precautionary and preemptive or
reactive actions that we determine are in the best interests of our business. We
cannot predict the effects that such actions may have on our business or on our
financial results, in particular with respect to demand for or access to
VASCEPA.
We believe that the overall morale of our employees is good despite the
challenges associated with COVID-19. As a result of COVID-19 and its limitations
on our promotion of VASCEPA in the United States, we have intentionally slowed
the hiring of replacements for our open positions which resulted from ordinary
turnover. When we witness our sales representatives increasingly able to resume
direct interactions with healthcare professionals, it is our intention to fill a
significant number of these positions, provided such replacements are then
appropriate to meet our business needs, which we continually evaluate.
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Management Succession Plans
In April 2021, we announced that John Thero, President and Chief Executive
Officer, will retire from his positions as President and Chief Executive Officer
and member of the Board of Directors effective August 1, 2021 and will provide
phased transitional and consulting services to us thereafter. The Board of
Directors has appointed Karim Mikhail, currently our Senior Vice President,
Commercial Head Europe, to succeed Mr. Thero as our next President and Chief
Executive Officer, as well as, a member of the Board of Directors, effective
August 1, 2021. In April 2021, we also announced that Joseph Kennedy will retire
from his position as Executive Vice President, General Counsel. A search has
commenced to hire a new General Counsel with Mr. Kennedy also intending to
support this transition and to provide consulting support on certain legal
matters.
Financial Operations Overview
Product revenue, net. All of our product revenue is derived from product sales
of 1-gram and 0.5-gram size capsules of VASCEPA, net of allowances, discounts,
incentives, rebates, chargebacks and returns. In the United States, we sell
product to a limited number of major wholesalers, as well as selected regional
wholesalers and specialty pharmacy providers, or collectively, our distributors
or our customers, who resell the product to retail pharmacies for purposes of
their reselling the product to fill patient prescriptions. Revenues from product
sales are recognized when the Distributor obtains control of our product, which
occurs at a point in time, typically upon delivery to the Distributor. Timing of
shipments to wholesalers, as used for revenue recognition, and timing of
prescriptions as estimated by third-party sources such as Symphony Health and
IQVIA may differ from period to period. During the quarters ended March 31, 2021
and 2020, our Product revenue, net included adjustment for co-pay mitigation
rebates provided by us to commercially insured patients. Such support is
intended for offset for a portion of the out-of-pocket expense that patients are
required to pay for VASCEPA based upon the benefit design of their prescription
drug coverage. Our cost for these co-payment support payments in both of the
quarters ended March 31, 2021 and 2020 was up to $150 per 30-day prescription
filled and up to $450 90-day prescription filled.
Outside of the United States, currently all our product revenue is derived from
the sales of VASCEPA to our commercial partners based on the net price for
VASCEPA established in our contracts with such partners. These commercial
partners then resell the product in their agreed commercial territory. Revenues
from product sales to our international commercial partners are recognized when
the commercial partners obtain control of our product, which occurs at a point
in time, typically upon delivery to the commercial partner. The net price of
VASCEPA sold by us to our customers where we directly sell VASCEPA is generally
significantly higher than the net price of VASCEPA that we sell to commercial
partners who then incur the cost of promoting and reselling the product in their
territories. As a result, even when the net price of VASCEPA to patients is
similar in various parts of the world, our gross margin on sales is higher where
we sell VASCEPA directly. Currently the majority of our product revenue is
derived from direct sales of VASCEPA in the United States.
Licensing and royalty revenue. Licensing and royalty revenue currently consists
of revenue attributable to receipt of up-front, non-refundable payments,
milestone payments and sales-based payments related to license and distribution
agreements for VASCEPA outside the United States. We recognize revenue from
licensing arrangements as we fulfill the performance obligations under each of
the agreements.
Cost of goods sold. Cost of goods sold includes the cost of API for VASCEPA on
which revenue was recognized during the period, as well as the associated costs
for encapsulation, packaging, shipment, supply management, quality assurance,
insurance, and other indirect manufacturing, logistics and product support
costs. The cost of the API included in Cost of goods sold reflects the average
cost method of inventory valuation and relief. This average cost reflects the
actual purchase price of VASCEPA API. Our cost of goods sold is not materially
impacted by whether we sell VASCEPA directly in a country or we sell VASCEPA to
a commercial partner for resale in a country.
Selling, general and administrative expense. Selling, general and administrative
expense consists primarily of salaries and other related costs, including
stock-based compensation expense, for personnel in our sales, marketing,
executive, business development, finance and information technology functions.
Other costs primarily include facility costs and professional fees for
accounting, consulting and legal services.
Research and development expense. Research and development expense consists
primarily of fees paid to professional service providers in conjunction with
independent monitoring of our clinical trials and acquiring and evaluating data
in conjunction with our clinical trials, fees paid to independent researchers,
costs of qualifying contract manufacturers, costs associated with supporting
investigator initiated studies, services expenses incurred in developing and
testing products and product candidates, salaries and related expenses for
personnel, including stock-based compensation expense, costs of materials,
depreciation, rent, utilities and other facilities costs. In addition, Research
and development expenses include the cost to support current development
efforts, costs of product supply received from suppliers when such receipt by us
is prior to regulatory approval of the supplier, as well as license fees related
to our strategic collaboration with Mochida. We expense research and development
costs as incurred.
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Interest and other (expense) income, net. Interest expense consists of interest
incurred under our December 2012 royalty-bearing instrument financing
arrangement, which was calculated based on an estimated repayment schedule and
was paid in full in 2020. Interest income consists of interest earned on our
cash and cash equivalents, as well as our short-term and long-term investments.
Other (expense) income, net, consists primarily of foreign exchange losses and
gains.
Income tax (provision) benefit. Income tax (provision) benefit, deferred tax
assets and liabilities, and reserves for unrecognized tax benefits reflect
management's best assessment of estimated future taxes to be paid. We are
subject to income taxes in both the United States and foreign jurisdictions. In
applying guidance prescribed under ASC 740 and based on present evidence and
conclusions around the realizability of deferred tax assets, we determined that
any tax benefit related to the pretax losses generated for the first quarters of
2021 and 2020 are not more likely than not to be realized. On March 27, 2020,
the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was
enacted in the United States. Among other provisions, the CARES Act allows
businesses to carry back net operating losses arising in years 2018 to 2020 to
the five prior tax years.
Critical Accounting Policies and Significant Judgments and Estimates
Our discussion and analysis of our financial condition and results of operations
is based on our condensed consolidated financial statements and notes, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenue and expenses. On an ongoing basis, we evaluate our
estimates and judgments. We base our estimates on historical experience and on
various market-specific and other relevant assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Estimates are assessed each
period and updated to reflect current information. A summary of our critical
accounting policies, significant judgments and estimates is presented in Part
II, Item 7 of our Annual Report on Form 10-K for the year ended December 31,
2020. There were no material changes to our critical accounting policies,
significant judgments and estimates during the three months ended March 31,
2021.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 2-Significant
Accounting Policies in the accompanying Notes to Condensed Consolidated
Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q
for additional information.
Effects of Inflation
We believe the impact of inflation on operations has been minimal during the
past three years.
Results of Operations
Comparison of Three Months Ended March 31, 2021 and March 31, 2020
Total revenue, net. We recorded total revenue, net, of $142.2 million and $155.0
million during the three months ended March 31, 2021 and 2020, respectively, a
decrease of $12.8 million, or 8%. Total revenue, net consists primarily of
revenue from the sale of VASCEPA in the United States. In addition to the United
States, VASCEPA is currently available by prescription in Canada, Lebanon and
the United Arab Emirates through collaborations with third-party companies. As
further discussed below, this decrease consists of a $6.2 million decrease from
net product revenue from sales of VASCEPA outside of the United States, a $4.6
million decrease in U.S. net product revenue and a $2.0 million decrease in
licensing and royalty revenue.
Product revenue, net. We recorded product revenue, net, of $141.4 million and
$152.2 million during the three months ended March 31, 2021 and 2020,
respectively, a decrease of $10.8 million, or 7%. This decrease was driven
primarily by five factors, which are further described below: 1) effectively one
fewer week of shipments in the first quarter of 2021 as compared to the first
quarter of 2020; 2) COVID-19; 3) generic competition; 4) regional adverse
weather conditions and 5) timing of international sales. In addition, compared
with other quarters of the year, beginning of the year deductibles under patient
insurance plans, which are not unique to VASCEPA, tends to cause some patients
to not fill prescriptions particularly for asymptomatic medical conditions.
• Fewer weeks - Due to the timing of orders placed by customers and
related receipts, there was effectively one fewer weeks of product
shipments, 13 weeks, in the first quarter of 2021 compared to 14 weeks
in the first quarter of 2020, with the additional week of revenue in the
first quarter of 2020 representing approximately $10.8 million.
Excluding the additional week of revenue, U.S. net product revenue
during the three months ended March 31, 2021 increased by 5% as compared
to during the three months ended March 31, 2020 primarily due to
increased volume of VASCEPA sales to customers in the United States.
Additionally, in the United States, net pricing of VASCEPA remained
consistent, with increased coverage from payers in 2021.
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• COVID-19 - Prior to the onset of the severe impact of the COVID-19
pandemic late in March 2020, VASCEPA usage was growing rapidly. After
the impact of COVID-19 became pronounced, new prescriptions of VASCEPA
slowed considerably as many patients reduced their doctors visited for
non-urgent care, routine blood tests with lipid panels declined and
access of our sales professional to healthcare providers for
face-to-face interactions became more limited. Such limitations were
particularly pronounced in certain areas of the United States where
historical prescription levels of VASCEPA were robust such as Southern
California. In response, we adjusted our product promotion, including an
overall reduction in sales and marketing expenditures in the three
months ended March 31, 2021 compared to the same period in 2020.
In the fourth quarter of 2020, the impact of COVID-19 worsened in much of the
United States, with some physicians who began to allow access to our field based
personnel again limiting access to face-to-face interactions. For a U.S.
FDA-approved drug like VASCEPA to be prescribed, historically physicians need to
have met with their patients for an examination and have received blood test
results prior to prescribing the drug to the patient. The first quarter of 2020
included two weeks of significant COVID-19 related impact, while the full three
months of the first quarter of 2021 was impacted by COVID-19 and public reports
from IQVIA showed patient visits on average during the three months ended March
31, 2021 were down to approximately 78% of the first quarter 2020 pre-COVID
levels. We cannot predict the duration of this pandemic and we cannot quantify
the impact of COVID-19 on our business beyond March 31, 2021.
• Generic competition - Inclusive of generic icosapent ethyl, and
excluding the impact of the other effects listed herein, based on
prescription levels reported by Symphony Health the icosapent ethyl
market increased for the three months ended March 31, 2021 by 11% as
compared to the three months ended March 31, 2020. Based on available
data from Symphony Health, generic prescriptions of icosapent ethyl in
the three months ended March 31, 2021 were approximately 9% of total
icosapent ethyl prescriptions with branded VASCEPA prescriptions
representing the other icosapent ethyl prescriptions. In addition, based
on available information we believe that a significant number of
icosapent ethyl prescriptions have gone unfilled in the three months
ended March 31, 2021, due to general market disruption of order
fulfillment processes. These processes at the pharmacy level have
favored generic products in that in anticipation of receiving generic
supply, in certain circumstances pharmacists have opted to wait to fill
prescriptions with generic product by ordering product for later
fulfillment. In the case of icosapent ethyl, in many markets generic
product has been delayed or unavailable. In addition, we have heard
multiple reports of patients finding that the generic product is more
expensive than they have historically paid for the branded product
resulting in their refusal to fill their prescriptions.
• Regional adverse weather conditions - The 11% increase in overall
icosapent ethyl prescriptions was limited, in part, by severe winter
weather and related power outages in part of the United States during
the three months ended March 31, 2021. For example, in Texas, where
sales of VASCEPA have been historically strong, many doctors closed
their offices due to lack of electric power for a substantial portion of
February and March 2021.
• International sales - Further contributing to the decrease in net
product revenue during the three months ended March 31, 2021 was a
decline in net product revenue recognized from VASCEPA sales outside of
the United States. We recognized net product revenue of $0.5 million
during the three months ended March 31, 2021 as compared to $6.7 million
during the three months ended March 31, 2020, primarily as a result of
an initial order during the three months ended March 31, 2020 to ensure
availability of adequate product supply for the launch of VASCEPA in
Canada. VASCEPA promotion and use outside of the United States has also
been limited by the impact of the COVID-19 pandemic.
We remain confident that the patient need for VASCEPA is high and that a
significant portion of the slowing of VASCEPA growth is COVID-19 related. While
we are optimistic that the worst of the COVID-19 impact is behind us regarding
the levels of patients seeking ordinary course doctor visits and lab tests, we
expect that COVID-19 will continue, at least in the near term, to impact the
level of VASCEPA prescriptions and the degree and timing to which we can, if at
all, reaccelerate VASCEPA growth, particularly if there are resurgences in the
spread of the infection in various geographies and a reinforcement of social
distancing and other protocols. In addition, as patients, pharmacies and payers
adjust to the availability, pricing and label of generic competition variability
is expected. As a result of the uncertainty of the extent of COVID-19, the
impact of generic competition and challenges for most drugs seeking market
access in Europe, a process we were only able to formally commence following
product approval in March 2021, we are not providing quantified revenue guidance
at this time. We will consider resuming revenue guidance when there is greater
clarity on the impact of these issues.
Licensing and royalty revenue. Licensing and royalty revenue during the three
months ended March 31, 2021 and 2020 was $0.8 million and $2.8 million,
respectively, a decrease of $2.0 million, or 72%. Licensing and royalty revenue
relates to the recognition of amounts received in connection with the following
VASCEPA licensing agreements:
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• Edding - a $15.0 million up-front payment received in February 2015 and
a $1.0 million milestone payment achieved in March 2016.
• HLS - a $5.0 million up-front payment which was received upon closing of
the agreement in September 2017, a $2.5 million milestone payment that
was received following achievement of the REDUCE-IT trial primary
endpoint in September 2018, a $2.5 million milestone payment that was
received following U.S. FDA approval of a new indication and label
expansion in December 2019, and a $3.8 million milestone payment that
was received as a result of obtaining a regulatory exclusivity
designation in January 2020.
The up-front and milestone payments are being recognized over the estimated
period in which we are required to provide regulatory and development support
pursuant to the agreements. The amount of licensing and royalty revenue is
expected to vary from period to period based on timing of milestones achieved
and changes in estimates of the timing and level of support required.
As part of our licensing agreements with certain territories outside of the
United States, we are entitled to a percentage of revenue earned based on sales
by our partners. The royalty payments are being recognized as earned based on
revenue recognized by our current partners.
Cost of goods sold. Cost of goods sold during the three months ended March 31,
2021 and 2020 was $28.3 million and $34.8 million, respectively, a decrease of
$6.5 million, or 19%. Cost of goods sold includes the cost of API for VASCEPA on
which revenue was recognized during the period, as well as the associated costs
for encapsulation, packaging, shipment, supply management, insurance and quality
assurance. The cost of the API included in cost of goods sold reflects the
average cost of API included in inventory. This average cost reflects the actual
purchase price of VASCEPA API.
The API included in the calculation of the average cost of goods sold during the
quarters ended March 31, 2021 and 2020 was sourced from multiple API suppliers.
These suppliers compete with each other based on cost, consistent quality,
capacity, timely delivery and other factors. In the future, we may see the
average cost of supply change based on numerous potential factors including
increased volume purchases, continued improvement in manufacturing efficiency,
the mix of purchases made among suppliers, currency exchange rates and other
factors. We currently anticipate API average cost in 2021 to be similar to or
modestly lower than 2020. The average cost may be variable from period to period
depending upon the timing and quantity of API purchased from each supplier.
Our overall gross margin on product sales for each of the three months ended
March 31, 2021 and 2020 was 80% and 77%, respectively.
Selling, general and administrative expense. Selling, general and administrative
expense for the three months ended March 31, 2021 and 2020 was $105.8 million
and $133.9 million, respectively, a decrease of $28.1 million, or 21%. Selling,
general and administrative expenses for the three months ended March 31, 2021
and 2020 are summarized in the table below:
Three months ended March 31,
In thousands 2021 2020
Selling expense (1) $ 66,567 $ 102,459
General and administrative expense (2) 27,160 22,460
Non-cash stock-based compensation expense (3) 12,071 9,018
Total selling, general and administrative expense $ 105,798 $ 133,937
(1) Selling expense for the three months ended March 31, 2021 and 2020 was $66.6
million and $102.5 million, respectively, a decrease of $35.9 million, or
35%. This decrease is primarily due to a decrease in marketing and
direct-to-consumer promotions in 2021, as a result of the impact of COVID-19
and our focus on improving the profitability of our operations in the United
States. The decrease includes reduced promotional initiatives, reduced
travel and intentionally slowing the hiring of replacements for our open
positions which resulted from ordinary turnover.
(2) General and administrative expense for the three months ended March 31, 2021
and 2020 was $27.2 million and $22.5 million, respectively, an increase of
$4.7 million, or 21%. This increase is primarily due to increased personnel
costs related to preparing for expansion into Europe, offset by a decrease
in legal fees related to the ANDA patent litigation in the United States
during the three months ended March 31, 2020.
(3) Non-cash stock-based compensation expense for the three months ended
March 31, 2021 and 2020 was $12.1 million and $9.0 million, respectively, an
increase of $3.1 million, or 34%. Non-cash stock-based compensation expense
represents the estimated costs associated with equity awards issued to
internal personnel supporting our selling, general and administrative
functions. The increase is due to an increase in the number awards granted
to attract and retain employees in the United States and Europe as well as
timing of expenses.
We anticipate our selling, general and administrative expenses to increase
throughout 2021 primarily due to the costs associated with preparing VAZKEPA for
commercial launch in Europe and subject to market access, launching VAZKEPA in
one or more
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countries in Europe during 2021. We plan to expand to approximately 300
professionals by the end of 2021. As we work to increase revenue from VASCEPA,
we continuously evaluate all of our spending commitments and priorities and we
plan to adjust our level of education and promotional activities based on
various factors, including the impact of COVID-19 and generic competition.
Research and development expense. Research and development expense for the three
months ended March 31, 2021 and 2020 was $9.4 million and $10.3 million,
respectively, a decrease of $0.9 million, or 9%. Research and development
expenses for the three months ended March 31, 2021 and 2020 are summarized in
the table below:
Three months ended March 31,
In thousands 2021 2020
REDUCE-IT study (1) $ 1,015 $ 3,444
Regulatory filing fees and expenses (2) $ 341 405
Internal staffing, overhead and other (3) $ 6,167 4,856
Research and development expense, excluding non-cash
expense
$ 7,523 8,705
Non-cash stock-based compensation expense (4) 1,854 1,573
Total research and development expense $ 9,377 $ 10,278
(1) In September 2018, we announced landmark positive topline results of the
REDUCE-IT cardiovascular outcomes trial. The decrease in expenses is
primarily driven by the completion of certain analyses performed beyond the
REDUCE-IT cardiovascular outcomes trial.
(2) The regulatory filing fees in each of the quarters ended March 31, 2021 and
2020 included annual U.S. FDA fees for maintaining manufacturing sites. Such
fees primarily represent fees for qualification of new suppliers, including
increasing capacity capabilities, and fees to support international
regulatory review of VASCEPA, particularly in Europe, sites used for the
manufacture of product used in the REDUCE-IT clinical outcomes study.
(3) Internal staffing, overhead and other research and development expenses
primarily relate to the costs of our personnel employed to manage research,
development and regulatory affairs activities and related overhead costs
including consulting and other professional fees that are not allocated to
specific projects. Also included are costs related to qualifying suppliers.
We also exercised certain rights under our strategic collaboration agreement
with Mochida, resulting in payments of $1.0 million in each of January 2020,
and January 2021, respectively. Also included are costs associated with
various other investigations, including other costs in collaboration with
Mochida and pilot studies regarding VASCEPA.
(4) Non-cash stock-based compensation expense represents the estimated costs
associated with equity awards issued to personnel supporting our research and
development and regulatory functions.
We anticipate our research and development expenses to remain consistent in 2021
with the prior year. We continuously evaluate all of our spending commitments
and priorities and we plan to adjust our level of research and development
activities based on the impact of COVID-19 and generic competition.
Interest income, net. Net interest income for the three months ended March 31,
2021 and 2020 was $0.5 million and $1.2 million, respectively, a decrease of
$0.7 million, or 61%. Net interest income for the three months ended March 31,
2021 and 2020 is summarized in the table below:
Three months ended March 31,
In thousands 2021 2020
Debt from royalty-bearing instrument (1):
Cash interest - $ (764 )
Non-cash interest - (289 )
Total debt from royalty-bearing instrument
interest expense - (1,053 )
Other interest expense (54 ) (138 )
Total interest expense (54 ) (1,191 )
Interest income (2) 525 2,399
Total interest income, net $ 471 $ 1,208
(1) Cash and non-cash interest expense related to the December 2012
royalty-bearing instrument for the three months ended March 31, 2021 and 2020
was nil and $1.1 million, respectively. In November 2020, the Company made
the final payment on its royalty-bearing instrument and, as a result, no
interest from this instrument was recorded in 2021.
(2) Interest income for the three months ended March 31, 2021 and 2020 was $0.5
million and $2.4 million, respectively. Interest income represents income
earned on cash and investment balances. As a result of COVID-19 and the
related economic conditions, interest rates have decreased as compared to the
prior year, resulting in a decrease in interest income.
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Other expense, net. Other expense, net, for the three months ended March 31,
2021 and 2020 was expense of $142 thousand and $91 thousand, respectively. Other
expense, net, primarily consists of gains and losses on foreign exchange
transactions.
Income tax (provision) benefit. Income tax (provision) benefit for the three
months ended March 31, 2021 and 2020 was a provision of $0.6 million and benefit
of $2.4 million, respectively. The provision for the three months ended March
31, 2021 is the result of income generated by our U.S. operations for which tax
expense has been recognized based on a full year estimated U.S. income tax
liability. The income tax benefit recorded for the three months ended March 31,
2020 related to carrybacks of net operating losses as allowed under the CARES
Act.
Liquidity and Capital Resources
Our aggregate sources of liquidity as of March 31, 2021 are in excess of $500.0
million, with no debt. Our aggregate sources of liquidity include cash and cash
equivalents and restricted cash of $294.9 million, short-term investments of
$223.7 million and long-term investments of $24.0 million. Our cash and cash
equivalents primarily include checking accounts and money market funds with
original maturities less than 90 days. Our short-term investments consist of
held-to-maturity securities that will be due in one year or less. Our long-term
investments consist of held-to-maturity securities that will be due in more than
one year. We invest cash in excess of our immediate requirements, in accordance
with our investment policy, which limits the amounts we may invest in any one
type of investment and requires all investments held by us to maintain minimum
ratings from Nationally Recognized Statistical Rating Organizations so as to
primarily achieve our goals of liquidity and capital preservation.
Our cash flows from operating, investing and financing activities, as reflected
in the consolidated statements of cash flows, are summarized in the following
table:
Three months ended March 31,
In millions 2021 2020
Cash provided by (used in):
Operating activities $ (18.7 ) $ 4.1
Investing activities 127.9 (293.8 )
Financing activities (5.2 ) (25.9 )
Increase (decrease) in cash and cash equivalents and
restricted cash
$ 104.0 $ (315.5 )
Net cash used in operating activities during the three months ended March 31,
2021 as compared to the net cash provided by operating activities during the
same period in 2020 is primarily as a result of an increase in inventory
purchases during 2021 as well as costs associated with planning for commercial
launch in Europe.
Net cash provided by investing activities during the three months ended March
31, 2021 is primarily due to the proceeds from the maturity of $127.9 million in
investment-grade interest bearing instruments, with no purchases of additional
securities as compared to the same period in 2020 where approximately $310.6
million investment-grade interest bearing instruments were purchased, partially
offset by the proceeds from the maturity and sale of securities.
Net cash used in financing activities during the three months ended March 31,
2020 primarily reflects the payments made on our royalty-bearing instrument with
CPPIB, with the final payment made in the fourth quarter of 2020. In
December 2012, we entered into a financing agreement with BioPharma. Under this
agreement, we granted to BioPharma a security interest in future receivables and
all related rights to VASCEPA, in exchange for $100.0 million received at the
closing of the agreement which occurred in December 2012. In December 2017,
BioPharma assigned all rights under this agreement to CPPIB. In the fourth
quarter of 2020, we have repaid the remaining amounts outstanding of the agreed
upon $150.0 million.
As of March 31, 2021, we had net accounts receivable $151.3 million and
inventory of $230.9 million. We have incurred annual operating losses since our
inception and, as a result, we had an accumulated deficit of $1.4 billion as of
March 31, 2021. We anticipate that quarterly net cash outflows in future periods
will continue to be variable as a result of the timing of certain items,
including our purchases of API, the impact from COVID-19 on our operations, the
generic competition in the United States as a result of our ANDA litigation and
commercialization of VAZKEPA in Europe. For Europe, we commenced pre-launch
planning and other commercial preparation activities, with plans to expand to
approximately 300 professionals by the end of 2021.
We believe that our cash and cash equivalents of $291.0 million as of March 31,
2021 together with our short-term investments of $223.7 million as of March 31,
2021, will be sufficient to fund our projected operations for at least twelve
months and is adequate to achieve positive cash flow from VASCEPA based on our
current plans. We have based this estimate on assumptions that may prove to be
wrong, including as a result of the risks discussed under Part II, Item IA,
"Risk Factors", and we could use our capital resources sooner than we expect or
fail to achieve positive cash flow.
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Contractual Obligations
Our contractual obligations consist mainly of payments related to purchase
obligations with certain supply chain contracting parties and operating leases
related to real estate used as office space. There have been no material changes
during the three months ended March 31, 2021 to our contractual obligations as
presented in Part II, Item 7 of our Annual Report on Form 10-K for the year
ended December 31, 2020.
We do not have any special purpose entities or other off-balance sheet
arrangements.
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