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Commitments and Contingencies | 6 Months Ended
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Jun. 30, 2013
Commitments and Contingencies |
(7) | Commitments and Contingencies
Royalty and Milestone Obligations The Company is party to certain milestone and royalty obligations under several product development agreements, as follows:
| • |  | The 2010 active pharmaceutical ingredient, or API, supply agreement with Nisshin Pharma, Inc. (“Nisshin”), provides for minimum supply purchase obligations on behalf of the Company to enable Amarin to maintain exclusivity with each respective supplier, and to prevent potential termination of the agreement based on Company estimated minimum purchase requirements. As of June 30, 2013, the API aggregate minimum purchase obligations under this supply agreement had been achieved and as a result, the Company has no future minimum purchase obligation from Nisshin.
| • |  | In 2011, the Company entered into agreements with two additional suppliers, Chemport, Inc. (“Chemport”) and BASF (formerly Equateq Limited) for the supply of API materials for Vascepa. In 2012, the Company agreed to terms with a fourth API supplier, Slanmhor Pharmaceutical, Inc., or Slanmhor. These agreements include requirements for the suppliers to qualify their materials and facilities with applicable regulatory authorities including the FDA. The Company anticipates incurring certain costs associated with the qualification of product produced by these suppliers as described below. In each case, following qualification of the supplier for the manufacture of API for commercial sale, these agreements include annual purchase levels to enable Amarin to maintain exclusivity with each respective supplier, and to prevent potential termination of the agreements. The Company is not obligated to pay in cash any shortfall in the minimum purchase obligations pursuant to the Chemport and BASF agreements. The agreement with Slanmhor contains a provision requiring the Company to pay Slanmhor in cash for any shortfall in the minimum purchase obligations, which will become effective upon the approval for manufacture by the FDA of supply from Slanmhor. Chemport and BASF were approved by the FDA to manufacture API for commercial sale in April 2013. The Company has begun to purchase commercial supply from Chemport. BASF must complete production of validation batches before the Company will begin to purchase commercial supply. The 2011 supply agreements include commitments for the Company to fund (i) development fees up to a maximum of $0.5 million (ii) material purchases of up to $5.0 million for initial raw materials, which amount will be credited against future API purchases and (iii) a raw material purchase commitment of $1.1 million. The agreement with Slanmhor provides for development fees of up to $2.3 million and a commitment of up to $15.0 million, which will be credited against future API material purchases. Under this agreement, during the six months ended June 30, 2013, the Company made payments of $5.3 million to Slanmhor related to stability and technical batches and advances on future API purchases.
| • |  | Under the 2004 share repurchase agreement with Laxdale Limited, or Laxdale, upon approval of Vascepa by the FDA on July 26, 2012, the Company was required to make a milestone payment to Laxdale of £7.5 million. The Company made this payment in 2012 and capitalized this Laxdale milestone ($11.6 million on July 26, 2012) as an intangible asset. This long-term asset is being amortized over the estimated useful life of the intellectual property the Company acquired from Laxdale and the Company recognized amortization expense of $0.3 million during the six months ended June 30, 2013. Also under the Laxdale agreement, upon receipt of marketing approval in Europe for the first indication for Vascepa (or first indication of any product containing Amarin Neuroscience intellectual property acquired from Laxdale in 2004), the Company must make an aggregate stock or cash payment to the former shareholders of Laxdale (at the sole option of each of the sellers) of £7.5 million (approximately $11.4 million at June 30, 2013). Also under the Laxdale agreement, upon receipt of a marketing approval in the U.S. or Europe for a further indication of Vascepa (or further indication of any other product using Amarin Neuroscience intellectual property), the Company must make an aggregate stock or cash payment (at the sole option of each of the sellers) of £5 million (approximately $7.6 million at June 30, 2013) for each of the two potential market approvals (i.e. £10 million maximum, or approximately $15.2 million at June 30, 2013).
The Company has no provision for any of the obligations above since the amounts are either not probable or estimable at June 30, 2013.

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