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Co-Promotion Agreement

9 Months Ended

Sep. 30, 2020

(8)	Co-Promotion Agreement

On March 31, 2014, the Company entered into a Co-Promotion Agreement, or the Agreement, with Kowa Pharmaceuticals America, Inc. related to the commercialization of VASCEPA capsules in the United States. The Co-Promotion Agreement, as amended in 2017, intentionally designed the co-promotion to naturally end as of December 31, 2018 and the companies mutually agreed not to renew the agreement.

During 2018, which was the last year of co-promotion of VASCEPA by Kowa Pharmaceuticals America, Inc., the Company incurred expense for co-promotion tail payments which are calculated as a percentage of the 2018 co-promotion fee, which was eighteen and a half percent (18.5%) of VASCEPA gross margin in 2018. The accrued tail payments are paid over three years with declining amounts each year. Kowa Pharmaceuticals America, Inc. was eligible to receive $17.8 million in co-promotion tail payments, the present value of which $16.6 million, was fully accrued as of December 31, 2018.

As of September 30, 2020 and December 31, 2019, a net payable to Kowa Pharmaceuticals America, Inc. of $5.2 million and $10.0 million, respectively, of which $3.9 million and $6.5 million, respectively, was classified as current on the condensed consolidated balance sheets, representing the remaining accrued co-promotion tail payments.