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Development, Commercialization and Supply Agreements | 9 Months Ended
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Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Development, Commercialization and Supply Agreements | (8) Development, Commercialization and Supply Agreements In-licenses Mochida Pharmaceutical Co., Ltd. In June 2018, the Company entered into a collaboration with Mochida Pharmaceutical Co., Ltd., or Mochida, related to the development and commercialization of drug products and indications based on the active pharmaceutical ingredient in VASCEPA, the omega-3 acid, EPA, or eicosapentaenoic acid. Among other terms in the agreement, the Company obtained an exclusive license to certain Mochida intellectual property to advance the Company’s interests in the U.S. and certain other territories and the parties will collaborate to research and develop new products and indications based on EPA for the Company’s commercialization in the U.S. and certain other territories. The potential new product and indication opportunities contemplated under this agreement are currently in early stages of development. Upon closing of the collaboration agreement, the Company made a non-refundable, non-creditable upfront payment of approximately $2.7 million. In addition, the agreement provides for the Company to pay milestone payments upon the achievement of certain product development milestones and royalties on net sales of future products arising from the collaboration, if any. In January 2024 and 2023, the Company exercised certain rights under the agreement, resulting in payments of $1.0 million in each of such periods to Mochida, which was recorded as research and development expense in the condensed consolidated statement of operations. Out-licenses Eddingpharm (Asia) Macao Commercial Offshore Limited In February 2015, the Company entered into a Development, Commercialization and Supply Agreement, or the DCS Agreement, with Edding, related to the development and commercialization of VASCEPA in Mainland China, Hong Kong, Macau and Taiwan, or collectively, the China Territory. Under the terms of the DCS Agreement, the Company granted to Edding an exclusive (including as to the Company) license with the right to sublicense development and commercialization of VASCEPA in the China Territory for uses that are currently commercialized and under development by the Company based on the Company’s MARINE, ANCHOR and REDUCE-IT clinical trials of VASCEPA. Under the DCS Agreement, Edding is solely responsible for development and commercialization activities in the China Territory and associated expenses. The Company provides development assistance and is responsible for supplying finished and later bulk drug product at defined prices under negotiated terms. The Company retains all VASCEPA manufacturing rights. Edding agreed to certain restrictions regarding the commercialization of competitive products globally and the Company agreed to certain restrictions regarding the commercialization of competitive products in the China Territory. The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, Edding, is a customer. The Company identified the following performance obligations at the inception of the DCS Agreement: (1) the exclusive license to develop and commercialize VASCEPA in the China Territory for uses that are currently commercialized and under development by the Company; (2) the obligation to participate in various steering committees; and (3) ongoing development and regulatory assistance. Based on the analysis performed, the Company concluded that the identified performance obligations are not distinct and therefore a combined performance obligation. The transaction price is comprised of the following upfront payments and milestones:
In thousands |  |  |  |  |
Transaction Price Components |  | Achieved |  | Amount |
Upfront fee |  | February 2015 |  | $ | 15,000 |
Submission of the CTA for the MARINE indication |  | March 2016 |  |  | 1,000 |
Approval of VASCEPA under the MARINE indication |  | March 2017 |  |  | 5,000 |
Submission of the CTA for the REDUCE-IT indication |  | October 2023 |  |  | 3,000 |
Approval of VASCEPA under the REDUCE-IT indication |  | June 2024 |  |  | 15,000 |
Regulatory Development Support |  | Various |  |  | 1,081 |
Total Transaction Price |  |  |  | $ | 40,081 |
In addition to the non-refundable, upfront and regulatory milestone payments described above, the Company is entitled to receive tiered double-digit percentage royalties on net sales of VASCEPA in the China Territory escalating to the high teens. The achievement of sales-based milestone events occur when annual aggregate net sales of VASCEPA in the China Territory equals or exceeds certain specified thresholds, and range from $5.0 million to $50.0 million, for a total of $120.0 million. Each such milestone payment shall be payable only once regardless of how many times the sales milestone event is achieved. Each such milestone payment is non-refundable and non-creditable against any other milestone payments. None of the other clinical or regulatory milestones has been included in the transaction price, as all milestone amounts are fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon success in future clinical trials and the licensee’s efforts. Any consideration related to sales-based milestones, including royalties, will be recognized when the related sales occur and therefore have also been excluded from the transaction price. The Company will reevaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. During the second quarter of 2023, Edding received regulatory approval in China under the MARINE indication and pursuit of additional indications outside of the REDUCE-IT indication was not probable. As a result, the Company reevaluated the performance period and determined that completion of the remaining performance obligations was estimated to be by the end of December 2025. The effect of this change in estimate from the previously received upfront payment and prior year milestone payments was an increase of $5.0 million in licensing revenue and a related reduction in net loss by $5.0 million in the nine months ended September 30, 2023. In addition, the Company recognized $3.9 million related to the milestone payment received in the second quarter of 2023 for the MARINE indication approval and the remaining $1.1 million would have been recognized over the remaining performance period through December 2025. The change in estimate in 2023 resulted in the remaining performance period decreasing from 11 years to three years for recognizing the remaining deferred revenue. During the second quarter of 2024, Edding received approval in China under the REDUCE-IT indication. The REDUCE-IT indication approval concludes the Company's support for regulatory activities and, as noted above, pursuit of additional indications was deemed to be not probable. As a result, the Company reevaluated the performance period and determined that all remaining performance obligations were satisfied as of June 30, 2024, resulting in a decrease of the previous performance period of two years. The effect of this change in estimate from the previously received upfront payment and prior year milestone payments was an increase of $4.0 million in licensing revenue and a related reduction in net loss by $4.0 million in the nine months ended September 30, 2024. In addition, the Company also recognized $15.0 million in the second quarter related to the REDUCE-IT indication approval milestone.
In thousands |  | Amount |
Licensing revenue recognized during the nine months ended September 30, 2024 (1) |  | $ | 19,426 |
Licensing revenue recognized during the nine months ended September 30, 2023 (1) |  |  | 9,400 |
Licensing revenue recognized from contract inception through September 30, 2024 |  |  | 40,081 |
Licensing revenue recognized from contract inception through December 31, 2023 |  | $ | 20,655 |
(1) Licensing revenue under the DCS Agreement is recognized concurrent with the input measure of support hours provided by Amarin to Edding in achieving the combined development and regulatory performance obligation, which in the Company’s judgment is the best measure of progress towards satisfying this performance obligation. As of December 31, 2023, the remaining transaction price of $4.4 million is recorded in deferred revenue on the condensed consolidated balance sheets. The Company fully recognized the transaction price as of June 30, 2024. The Company recognized net product revenue of $4.8 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively, and $8.2 million and $0.3 million for the nine months ended September 30, 2024 and 2023, respectively, related to sales to Edding. Biologix FZCo In March 2016, the Company entered into an agreement with Biologix FZCo, or Biologix, a company incorporated under the laws of the United Arab Emirates, to register and commercialize VASCEPA in several Middle Eastern and North African countries. Under the terms of the distribution agreement, the Company granted to Biologix a non-exclusive license to use its trademarks in connection with the importation, distribution, promotion, marketing and sale of VASCEPA in the Middle East and North Africa territory. Upon closing of the agreement, the Company received a non-refundable upfront payment, which has been fully recognized as of June 30, 2024. The Company is entitled to receive all payments based on total product sales and pays Biologix a service fee in exchange for its services, whereby the service fee represents a percentage of gross selling price which is subject to a minimum floor price. The Company received approval of VASCEPA under the MARINE and REDUCE-IT indications in the following countries:
Country |  | MARINE |  | REDUCE-IT |  | Launch Date
Lebanon |  | March 2018 |  | August 2021 |  | June 2018
United Arab Emirates |  | July 2018 |  | October 2021 |  | February 2019
Qatar |  | December 2019 |  | April 2021 |  | N/A
Bahrain |  | April 2021 |  | April 2022 |  | N/A
Kuwait |  | December 2021 |  | March 2023 |  | September 2023
Saudi Arabia |  | March 2022 |  | June 2023 |  | September 2023
The Company recognized net product revenue of $1.3 million and $1.4 million for the three months ended September 30, 2024 and 2023, respectively, and $1.3 million and $2.0 million for the nine months ended September 30, 2024 and 2023, respectively, related to sales to Biologix. HLS Therapeutics, Inc. In September 2017, the Company entered into an agreement with HLS Therapeutics, Inc., or HLS, a company incorporated under the laws of Canada, to register, commercialize and distribute VASCEPA in Canada. Under the agreement, HLS is responsible for regulatory and commercialization activities and associated costs. The Company is responsible for providing assistance towards local filings, supplying finished product under negotiated supply terms, maintaining intellectual property, and continuing the development and funding of REDUCE-IT related activities. The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, HLS, is a customer. The Company identified the following performance obligations at the inception of the contract: (1) license to HLS to develop, register, and commercialize VASCEPA in Canada; (2) support general development and regulatory activities; and (3) participate in various steering committees. Based on the analysis performed, the Company concluded that the identified performance obligations in the agreement are not distinct and therefore a combined performance obligation. The transaction price is comprised of the following upfront payments and milestones:
In thousands |  |  |  |  |
Transaction Price Components |  | Achieved |  | Amount |
Upfront fee |  | September 2017 |  | $ | 5,000 |
Achievement of the REDUCE-IT trial primary endpoint |  | September 2018 |  |  | 2,500 |
Approval from Health Canada |  | December 2019 |  |  | 2,500 |
Regulatory exclusivity from the Office of Patented Medicines and Liaison |  | January 2020 |  |  | 3,800 |
Total Transaction Price |  |  |  | $ | 13,800 |
In addition to the non-refundable, upfront and regulatory milestone payments just described, the Company is entitled to receive certain sales-based milestone payments of up to an additional $50.0 million, as well as tiered double-digit royalties on net sales of VASCEPA in Canada. None of the other clinical or regulatory milestones has been included in the transaction price, as all milestone amounts are fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon success in future clinical trials and the licensee’s efforts. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur and therefore have also been excluded from the transaction price. During the second quarter of 2023, the Company concluded support for regulatory activities and pursuit of additional indications was deemed to be not probable. As a result, the Company reevaluated the performance period and determined that all remaining performance obligations were satisfied as of June 30, 2023, resulting in a decrease of the previous performance period of eight years. The effect of this change in estimate was the remaining transaction price of $5.3 million being recognized in licensing revenue and a related reduction in net loss by $5.3 million in the nine months ended September 30, 2023 from the previously received upfront payment and prior year milestone payments. During the nine months ended September 30, 2023, the Company recognized $5.6 million as licensing revenue related to upfront and milestone payments received in connection with the HLS agreement. The Company fully recognized the transaction price as of June 30, 2023. The Company recognized net product revenue of nil for both of the three months ended September 30, 2024 and 2023, respectively, and $1.9 million and $1.6 million for the nine months ended September 30, 2024 and 2023, respectively, related to sales to HLS. CSL Seqirus In February 2023, the Company entered into an agreement with CSL Seqirus, or CSL, to secure pricing and reimbursement, commercialize and distribute VAZKEPA in Australia and New Zealand. The Company received an upfront payment of $0.5 million, which was fully recognized during the first quarter of 2023. In addition to the upfront payment, the Company will be eligible to receive event-related milestone payments of approximately $8.0 million and additional product-related milestone payments of approximately $4.0 million. The Company will be responsible for supplying finished product to CSL Seqirus at a price that is the greater of (i) a fixed transfer price, or (ii) a fixed percentage of the net selling price, as defined in the CSL agreement. The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, CSL, is a customer. The Company identified the following distinct performance obligations at the inception of the contract: an exclusive license to use its trademarks in connection with the importation, distribution, promotion, marketing and sale of VASCEPA in the Australia and New Zealand territories. The transaction price includes the $0.5 million upfront consideration. Any consideration related to event-based or product-based milestones will be recognized when the related milestone events occur and therefore have also been excluded from the transaction price. The Company will reevaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. During the three and nine months ended September 30, 2023, the Company recognized nil and $0.5 million, respectively, as licensing revenue related to the up-front payment received in connection with the CSL agreement (none in 2024). The Company recognized net product revenue of $0.8 million for both the three and nine months ended September 30, 2024 related to sales to CSL (none in 2023). Lotus In July 2023, the Company entered into a distribution agreement with Lotus Pharmaceuticals, or Lotus, to commercialize and distribute VAZKEPA in South Korea and nine countries in Southeast Asia. The Company received an upfront payment of $0.3 million and is eligible to receive event-related and product-related milestone payments. The Company will be responsible for supplying finished product to Lotus at a pre-defined supply price. The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, Lotus, is a customer. The Company identified the following distinct performance obligations at the inception of the contract: an exclusive license to use its trademarks in connection with the importation, distribution, promotion, marketing and sale of VASCEPA in the South Korea and Southeast Asian territories. The transaction price includes the $0.3 million upfront consideration. Any consideration related to event-based or product-based milestones will be recognized when the related milestone events occur and therefore have also been excluded from the transaction price. The Company will reevaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. During the three and nine months ended September 30, 2023, the Company recognized $0.3 million as licensing revenue related to the upfront payment received in connection with the Lotus agreement (none in 2024). The following table presents changes in the balances of the Company’s contract assets and liabilities during the nine months ended September 30, 2024 and 2023:
In thousands | Balance at Beginning of Period |  |  | Additions |  |  | Deductions |  |  | Balance at End of Period |
Nine months ended September 30, 2024: |  |  |  |  |  |  |  |  |  |  |
Contract assets | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Contract liabilities: |  |  |  |  |  |  |  |  |  |  |
Deferred revenue 1 | $ | 4,850 |  |  | $ | — |  |  | $ | (4,850 | ) |  | $ | — |
Nine months ended September 30, 2023: |  |  |  |  |  |  |  |  |  |  |
Contract assets | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Contract liabilities: |  |  |  |  |  |  |  |  |  |  |
Deferred revenue 2 | $ | 15,346 |  |  | $ | 5,000 |  |  | $ | (15,372 | ) |  | $ | 4,974 |
(1) The approximately $4.9 million reduction consists primarily of recognition of $4.0 million relating to the change in estimate for Edding during the three months ended June 30, 2024. (2) The approximately $15.0 million reduction consists of recognition of $5.0 million and $5.3 million relating to the change in estimate for Edding and HLS, respectively, as well as recognizing, based on the revised timeline, $3.9 million for the MARINE indication approval in China achieved during the three months ended June 30, 2023. During the nine months ended September 30, 2024 and 2023, the Company recognized the following revenues as a result of changes in the contract asset and contract liability balances in the respective periods:
In thousands | Nine months ended September 30, |
Revenue recognized in the period from: | 2024 |  |  | 2023 |
Amounts included in contract liability at the beginning of the period | $ | 1,180 |  |  | $ | 11,479 |
Performance obligations satisfied in previous periods | $ | 3,670 |  |  | $ | 1,722 |

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- Definition The entire disclosure for collaborative arrangements in which the entity is a participant, including a) information about the nature and purpose of such arrangements; b) its rights and obligations thereunder; c) the accounting policy for collaborative arrangements; and d) the income statement classification and amounts attributable to transactions arising from the collaborative arrangement between participants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -SubTopic 10 -Topic 808 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479402/808-10-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b) -SubTopic 10 -Topic 808 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479402/808-10-50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 808 -Publisher FASB -URI https://asc.fasb.org/808/tableOfContent + Details
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