AMARIN CORP PLC\UK 10-K

Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Market Information Our ADSs are listed on The NASDAQ Global Market under the symbol “AMRN”. Each ADS represents one ordinary share. The following table sets forth the high and low prices for our ADSs in each of the quarters over the past two fiscal years, as quoted on The NASDAQ Global Market under the symbol “AMRN.” Common Stock Price Fiscal 2021 Fiscal 2020 High Low High Low First Quarter $ 9.25 $ 4.80 $ 21.84 $ 3.95 Second Quarter $ 6.58 $ 4.16 $ 8.46 $ 4.00 Third Quarter $ 5.97 $ 3.84 $ 7.90 $ 3.36 Fourth Quarter $ 5.24 $ 3.11 $ 5.57 $ 3.96 Shareholders As of January 31, 2022, there were approximately 340 holders of record of our ordinary shares. Because many ordinary shares are held by broker nominees, we are unable to estimate the total number of shareholders represented by these record holders. Our depositary, Citibank, N.A., constitutes a single record holder of our ordinary shares. Dividends We have never paid dividends on common shares and do not anticipate paying any cash dividends on the common shares in the foreseeable future. Under English law, any payment of dividends would be subject to relevant legislation and our Articles of Association, which requires that all dividends must be approved by our board of directors and, in some cases, our shareholders, and may only be paid from our distributable profits available for the purpose, determined on an unconsolidated basis. Performance Graph—5 Year The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing. The following graph compares the cumulative 5-year return provided to shareholders of our ADSs relative to the cumulative total returns of the NASDAQ Composite Index and the NASDAQ Biotechnology Index. We believe these indices are the most appropriate indices against which the total shareholder return of Amarin should be measured. The NASDAQ Biotechnology Index has been selected because it is an index of U.S. quoted biotechnology and pharmaceutical companies. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our ADSs and in each of the indices on December 30, 2016 and its relative performance is tracked through December 31, 2021. Included in this 5-year time period is the substantial positive impact on the price of Amarin’s ADSs in 2018 following presentation and publication of positive REDUCE-IT results and, in late 2019, following approval by the FDA of a new indication and label expansion for VASCEPA to reduce cardiovascular risk. Also included during this 5-year period is the substantial negative impact on the price of Amarin’s ADSs in 2020 following the loss of the Company’s patent litigation and subsequent appeal. During 79 the majority of this 5-year time period, cumulative total return for Amarin’s ADSs approximated or exceeded both the NASDAQ Composite Index and NASDAQ Biotechnology Index. Company/Market/Peer Company 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 Amarin Corporation PLC $ 130.19 $ 429.87 $ 699.68 $ 162.66 $ 109.42 NASDAQ Composite Index $ 128.24 $ 122.32 $ 167.31 $ 237.87 $ 290.63 NASDAQ Biotechnology Index $ 121.06 $ 107.67 $ 137.61 $ 176.79 $ 170.55 Information about Our Equity Compensation Plans Information regarding our equity compensation plans is incorporated by reference in Item 12 of Part III of this Annual Report on Form 10-K. Recent Sales of Unregistered Securities None Issuer Purchases of Equity Securities Shares purchased in the fourth quarter of 2021 are as follows: Period Total Number of Shares Purchased (1) Average Price Paid per Share October 1 – 31, 2021 4,446 $ 4.94 November 1 – 30, 2021 22,417 4.06 December 1 – 31, 2021 5,401 3.70 Total 32,264 $ 4.12 (1) Represents shares withheld to satisfy tax withholding amounts due from employees related to the exercise or vesting of equity awards. Taxation The following summary contains a description of material U.S., UK and Irish federal income tax consequences of the ownership and disposition of our ordinary shares or ADSs. This summary should not be considered a comprehensive description of all the tax considerations that may be relevant to beneficial owners of ordinary shares or ADSs. Certain Material U.S. Tax Considerations The following is a summary of certain U.S. federal income tax considerations with respect to the ownership and disposition of ordinary shares or ADSs by a U.S. Holder (as defined below). This summary applies to you only if you hold ordinary shares or ADSs as a capital asset. This summary is based upon the U.S. Internal Revenue Code of 1986, as amended, which is referred to herein as the Code, regulations promulgated under the Code and administrative rulings and judicial decisions as in effect on the date of this Annual 80 Report on Form 10-K, all of which are subject to change and to differing interpretations, possibly with retroactive effect, which could result in U.S. federal income tax considerations different from those summarized below. This summary is general in nature and does not address the effects of any state or local taxes, the tax consequences in jurisdictions other than the United States or any U.S. federal taxes other than income tax (such as estate or gift tax). In addition, it does not address U.S. federal income tax consequences that may be relevant to you in your particular circumstances, including alternative minimum tax consequences, nor does it apply to you if you are a holder with a special status, such as: • a person that owns, or is treated as owning under certain ownership attribution rules, 10% or more of the voting power or value of the stock of Amarin; • a broker, dealer or trader in securities or currencies; • a bank, mutual fund, life insurance company or other financial institution; • a tax-exempt entity; • a qualified retirement plan or individual retirement account; • a person that holds ordinary shares or ADSs as part of a straddle, hedge, constructive sale or other integrated transaction for tax purposes; • a partnership, S corporation or other pass-through entity; • an investor in a partnership, S corporation or other pass-through entity; • a person that is required to report income with respect to ordinary shares or ADSs no later than such income is reported on an “applicable financial statement;” • a person who received ordinary shares or ADSs in connection with the performance of services; and • a person whose functional currency for U.S. federal income tax purposes is not the U.S. dollar. If an entity treated as a partnership for U.S. federal income tax purposes holds ordinary shares or ADSs, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. A partner of a partnership that owns or disposes of ADSs should consult the partner’s tax advisor regarding the specific tax consequences of the ownership and disposition of ordinary shares or ADSs. YOU SHOULD CONSULT YOUR OWN ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF ORDINARY SHARES AND ADSS IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES. U.S. holders For purposes of this discussion, a U.S. Holder is any beneficial owner of an ordinary share or ADS that is, for U.S. federal income tax purposes: • an individual who is a citizen or resident of the United States, any state thereof or the District of Columbia; • a corporation created or organized under the laws of the United States, any state thereof or the District of Columbia; • an estate the income of which is subject to U.S. federal income taxation regardless of its source; or, • a trust (i) that validly elects to be treated as a U.S. person for U.S. federal income tax purposes, or (ii) the administration over which a U.S. court can exercise primary supervision and all of the substantial decisions of which one or more U.S. persons have the authority to control. Distributions Subject to the discussion under “—Passive Foreign Investment Company,” below, the gross amount of distributions, if any, payable on ordinary shares and ADSs generally would be treated as dividend income to the extent paid out of current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). A U.S. Holder would be required to include the amount of such distribution in gross income as a dividend (without reduction for any income tax withheld from such distribution). Because we do not maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should assume that any distribution by us with respect to the ordinary shares and ADSs will constitute ordinary dividend income. Subject to the discussion under “—Passive Foreign Investment Company,” below, as long as our ordinary shares or ADSs (as applicable) are treated as publicly traded on an established securities market, or we are eligible for the benefits of the U.S.-Irish Tax 81 Treaty, any distributions treated as dividends will generally be qualified dividend income in the hands of non-corporate U.S. Holders, provided that certain significant holding period and other requirements are met. Any dividends that are qualified dividend income will generally be taxed at preferential rates to a non-corporate U.S. Holder. Any dividends paid to a corporate holder will not be eligible for the dividends received deduction. U.S. Holders generally may claim the amount of Irish withholding tax withheld either as a deduction from gross income or as a credit against U.S. federal income tax liability. However, the foreign tax credit is subject to numerous complex limitations that must be determined and applied on an individual basis. Generally, the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s foreign source taxable income bears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either foreign source or U.S. source. In addition, this limitation is calculated separately with respect to specific categories of income. The amount of a distribution with respect to the ordinary shares or ADSs that is treated as a dividend may be lower for U.S. federal income tax purposes than it is for Irish income tax purposes, potentially resulting in a reduced foreign tax credit for the U.S. Holder. Each U.S. Holder should consult its own tax advisors regarding the foreign tax credit rules. The amount of a distribution paid to a U.S. Holder of ordinary shares or ADSs in foreign currency generally will be equal to the U.S. dollar value of such distribution based on the exchange rate applicable on the date of receipt. A U.S. Holder that does not convert foreign currency received as a distribution into U.S. dollars on the date of receipt generally will have a tax basis in such foreign currency equal to the U.S. dollar value of such foreign currency on the date of receipt. Such a U.S. Holder generally will recognize ordinary income or loss on the subsequent sale or other taxable disposition of such foreign currency (including an exchange for U.S. dollars). Sale or other disposition of ordinary shares or ADSs Subject to the discussion under “—Passive Foreign Investment Company,” below, in general, if you sell or otherwise dispose of ordinary shares or ADSs in a taxable disposition: • you will recognize gain or loss equal to the difference (if any) between the U.S. dollar value of the amount realized on such sale or other taxable disposition and your adjusted tax basis in such ordinary shares or ADSs; • any gain or loss will be capital gain or loss and will be long-term capital gain or loss if your holding period for the ordinary shares or ADSs sold or otherwise disposed of is more than one year at the time of such sale or other taxable disposition; and, • any gain or loss will generally be treated as U.S.-source income for U.S. foreign tax credit purposes, although special rules apply to U.S. Holders who have a fixed place of business outside the United States to which this gain is attributable. Under current law, long-term capital gains of non-corporate U.S. Holders are taxed at reduced rates. The deductibility of capital losses is subject to limitations. In certain circumstances, amounts received by a U.S. Holder upon the redemption of ordinary shares or ADSs may be treated as a dividend with respect to such ordinary shares or ADSs, rather than as a payment in exchange for such ordinary shares or ADSs that results in the recognition of capital gain or loss. In these circumstances, the redemption payment would be included in a U.S. Holder’s gross income as a dividend to the extent such payment is made out of our earnings and profits (as described above). The determination of whether redemption of ordinary shares or ADSs will be treated as a dividend, rather than as a payment in exchange for such ordinary shares or ADSs, will depend, in part, on whether and to what extent the redemption reduces the U.S. Holder’s ownership in us (including as a result of certain constructive ownership attribution rules). The rules applicable to redemptions are complex, and each U.S. Holder should consult its own tax adviser to determine the consequences of any redemption. Passive foreign investment company PFIC Rules Generally . U.S. Holders of ordinary shares and ADSs should be aware that each of Amarin and certain of its subsidiaries could constitute a PFIC for U.S. federal income tax purposes. The tests for determining PFIC status for a taxable year depend upon the relative values of certain categories of assets and the relative amounts of certain kinds of income. The application of these factors depends upon our financial results for the year, which are beyond our ability to predict or control, and the application of the relevant rules is subject to legal and factual uncertainties. Based on certain estimates of our gross income and gross assets, the latter determined by reference to the expected value of our ADSs and ordinary shares, we believe that we will not be classified as a PFIC for the taxable year ended December 31, 2021 and we do not expect to be treated as a PFIC in any future taxable year for the foreseeable future. However, there can be no assurance that we will not be classified as a PFIC for any taxable year. In general terms, we will be a PFIC for any taxable year in which either (i) 75% or more of its our gross income is passive income, or the income test, or (ii) the average percentage, by fair market value, of our assets that produce or are held for the 82 production of passive income is 50% or more, or the asset test. “Passive income” includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. If we are a PFIC for any year, subject to the discussion of QEF (as defined herein) and mark-to-market elections below, a U.S. taxpayer who disposes or is deemed to dispose of an ordinary share or ADS at a gain or who receives a distribution treated as an “excess distribution” on an ordinary share or ADS generally would be required to allocate such gain and distribution ratably to each day in the U.S. taxpayer’s holding period for the ordinary share or ADS in question. The portion of any excess distributions including gains, which are treated for all purposes as excess distributions, allocated to the current taxable year or to a year prior to the first year in which we were a PFIC would be includible as ordinary income in the current taxable year. In contrast, the portion of any excess distributions allocated to the first year in the U.S. Holder’s holding period in which we were a PFIC and any subsequent year or years (excluding the current year) would be taxed at the highest marginal rate applicable to ordinary income for each year (regardless of the U.S. Holder’s actual marginal rate for that year and without reduction by any losses or loss carryforwards) and would be subject to interest charges to reflect the value of the U.S. federal income tax deferral. In accordance with the rules above, if we are or were a PFIC at any time during the U.S. Holder’s holding period, none of the gain recognized on the sale or other disposition of an ordinary share or ADS would be eligible for the preferential long-term capital gains rate. In addition, dividends generally will not be qualified dividend income if in the year of payment or the preceding year we are a PFIC. Certain elections may sometimes be used to reduce the adverse impact of the PFIC rules on U.S. Holders qualifying electing fund, or QEF, and mark-to-market elections, but these elections may accelerate the recognition of taxable income and may result in the recognition of ordinary income. QEF Election. The rules described above for excess distributions would not apply to a U.S. Holder if the U.S. Holder makes a timely QEF election for the first taxable year of the U.S. Holder’s holding period for ordinary shares or ADSs during which we are a PFIC and we comply with specified reporting requirements. A timely QEF election for a taxable year generally must be made on or before the due date (as may be extended) for filing the taxpayer’s U.S. federal income tax return for the year. A U.S. Holder who makes a QEF election generally must report and include in income on a current basis a pro rata share of our ordinary earnings and net capital gain for any taxable year in which we are a PFIC, whether or not those earnings or gains are distributed. A U.S. Holder who makes a QEF election must file a Form 8621 with its annual income tax return. For U.S. Holders who seek to make a QEF election, with respect to our ordinary shares or ADSs, we will make available an information statement that will contain the necessary information required for making a QEF election and permit such U.S. Holders access to certain information in the event of an audit by the U.S. tax authorities. If a U.S. Holder does not make a QEF election for the first taxable year of the U.S. Holder’s holding period for ordinary shares or ADSs during which we are a PFIC, the QEF election will not be treated as timely and the adverse tax regime described above would apply to dispositions of or excess distributions on the ordinary shares or ADSs. In such case, a U.S. Holder may make a deemed sale election whereby the U.S. Holder would be treated as if the U.S. Holder had sold the ordinary shares or ADSs in a fully taxable sale at fair market value on the first day of such taxable year in which the QEF election takes effect. Such U.S. Holder would be required to recognize any gain on the deemed sale as an excess distribution and pay any tax and interest due on the excess distribution when making the deemed sale election. The effect of such further election would be to restart the U.S. Holder’s holding period in the ordinary shares or ADSs, subject to the QEF regime, and to purge the PFIC status of such ordinary shares or ADSs going forward. Mark-to-Market Election. If we are or become a PFIC, a U.S. Holder of ordinary shares or ADSs may elect to recognize any gain or loss on ordinary shares or ADSs on a mark-to-market basis at the end of each taxable year, so long as the ordinary shares and ADSs, respectively, are regularly traded on a qualifying exchange. The mark-to-market election under the PFIC rules is an alternative to the QEF election. A U.S. Holder who makes a mark-to-market election generally must recognize as ordinary income all appreciation inherent in the U.S. Holder’s investment in ordinary shares or ADSs on a mark-to-market basis and may recognize losses inherent in such ordinary shares or ADSs only to the extent of prior mark-to-market gain recognition. The income and deductions entailed by the mark-to-market regime will increase and decrease the U.S. Holder’s adjusted basis in its ordinary shares or ADSs. Upon a sale or other disposition of ordinary shares or ADSs that have been marked-to-market, any gain recognized will be treated as ordinary income. The mark-to-market election must be made by the due date (as may be extended) for filing the U.S. Holder’s federal income tax return for the first year in which the election is to take effect. If a mark-to-market election is made after the first taxable year of a U.S. Holder’s holding period, any gain recognized in the year of the election will be treated like an excess distribution (as described above). Whether or not the mark-to-market election is available will depend on whether the ordinary shares or ADSs are regularly traded on a qualifying exchange and we cannot provide assurance that the ordinary shares or ADSs will be considered regularly traded (which determination is based on the volume of trading of the ordinary shares or ADSs) for all years in which we may be a PFIC. 83 Rules for Lower-Tier PFIC Subsidiaries. Special adverse rules apply to U.S. Holders of ordinary shares or ADSs for any year in which we are a PFIC and have a non-U.S. subsidiary that is also a PFIC, or a lower-tier PFIC. If we are or become a PFIC and a U.S. Holder does not make a QEF election (as described above) in respect of any lower-tier PFIC, the U.S. Holder could incur liability for the deferred tax and interest charge described above if (i) we receive a distribution from, or disposes of all or part of our interest in, the lower-tier PFIC or (ii) the U.S. Holder disposes of all or part of its ordinary shares or ADSs. A QEF election that is made for ordinary shares or ADSs will not apply to a lower tier PFIC, although a separate QEF election may be made with respect to a lower-tier PFIC. For U.S. Holders who seek to make a QEF election, with respect to our ordinary shares or ADSs, we will make available an information statement that will contain the necessary information required for making a QEF election with respect to any lower-tier PFIC and permit such U.S. Holders access to certain information in the event of an audit by the U.S. tax authorities. For U.S. Holders that make a mark-to-market election for Amarin, if available, no such election may be made with respect to the stock of a lower-tier PFIC that a U.S. Holder is treated as owning if such stock is not marketable. Hence, the mark-to-market election will not be effective to eliminate a U.S. Holder’s liability for the deferred tax and interest charge described above with respect to deemed dispositions of lower-tier PFIC stock or distributions from a lower-tier PFIC. Taxpayer Reporting Obligations . A U.S. Holder’s ownership of ordinary shares or ADSs in a PFIC generally must be reported by filing Form 8621 with the U.S. Holder’s annual U.S. federal income tax return. Every U.S. Holder who is a shareholder in a PFIC must file an annual report containing the information required by the IRS. The PFIC rules are extremely complex, and U.S. Holders are urged to consult their own tax advisers regarding the potential tax consequences of Amarin being classified as a PFIC. Medicare tax Certain U.S. Holders that are individuals, estates or trusts are required to pay up to an additional 3.8% tax on the lesser of (i) the U.S. person’s net investment income (or undistributed net investment income in the case of an estate or trust) for the relevant taxable year and (ii) the excess of the U.S. person’s modified adjusted gross income (or adjusted gross income, in the case of an estate or trust) for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual’s circumstances). A U.S. Holder’s net investment income will include dividends and capital gains on the U.S. Holder’s ordinary shares and ADSs. U.S. Holders should consult their own tax advisors regarding the effect, if any, of the Medicare tax on the ownership and disposition of ordinary shares or ADSs. Taxpayer reporting obligations Certain U.S. Holders that hold certain foreign financial assets are required to report information relating to such assets to the IRS, subject to certain exceptions. U.S. Holders may also be required to make other tax filings with respect to their investments in our ordinary shares and ADSs, including IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation). Failure to provide such information could result in significant additional taxes and penalties. U.S. Holders should consult their own tax advisors regarding potential reporting obligations. U.S. Information reporting and backup withholding U.S. Holders of ordinary shares and ADSs may be subject to information reporting and may be subject to backup withholding on distributions on ordinary shares and ADSs or on the proceeds from a sale or other disposition of ordinary shares and ADSs paid within the United States. Payments of distributions on, or the proceeds from the sale or other disposition of ordinary shares and ADSs to or through a foreign office of a broker generally will not be subject to backup withholding, although information reporting may apply to those payments in certain circumstances. Backup withholding will generally not apply, however, to a U.S. Holder who: • furnishes a correct taxpayer identification number and certifies that the U.S. Holder is not subject to backup withholding on IRS Form W-9, Request for Taxpayer Identification Number and Certification (or substitute form); or • is otherwise exempt from backup withholding. Backup withholding is not an additional tax. Any amounts withheld from a payment to a holder under the backup withholding rules may be credited against the holder’s U.S. federal income tax liability, and a holder may obtain a refund of any excess amounts withheld by filing the appropriate claim for refund with the IRS in a timely manner. U.S. Holders should consult their own tax advisors regarding information reporting and potential back up withholdings. Certain Material UK Tax Considerations The following discussion is limited to an overview of the tax consequences of ownership and disposition of ordinary shares, or such shares represented by ADSs (those ordinary shares or ADSs deriving over 75% of their value otherwise than from United Kingdom land). Each shareholder should however seek individual tax advice as specific rules may apply in certain circumstances. 84 Capital gains If you are not resident in the United Kingdom, or UK, for UK tax purposes, you will not be liable for UK tax on capital gains realized or accrued on the sale or other disposition of ordinary shares or ADSs unless the ordinary shares or ADSs are held in connection with your trade carried on in the UK through a branch or agency and the ordinary shares or ADSs are or have been used, held or acquired for the purposes of such trade or such branch or agency. An individual holder of ordinary shares or ADSs who ceases to be resident in the UK for UK tax purposes for a period of less than five years and who disposes of ordinary shares or ADSs during that period may also be liable on returning to the UK for UK capital gains tax despite the fact that the individual may not be resident in the UK at the time of the disposal. Inheritance tax If you are an individual domiciled in the United States and are not a national of the UK for the purposes of the Inheritance and Gift Tax Treaty 1978 between the United States and the UK, any ordinary shares or ADS beneficially owned by you will not generally be subject to UK inheritance tax on your death or on a gift made by you during your lifetime, provided that any applicable United States federal gift or estate tax liability is paid, except where the ordinary share or ADS is part of the business property of your UK permanent establishment. Where the ordinary shares or ADSs have been placed in trust by a settlor who, at the time of the settlement, was domiciled in the United States and not a national of the UK, the ordinary shares or ADSs will not generally be subject to UK inheritance tax. Stamp duty and stamp duty reserve tax Transfer of ADSs and ADRs representing ADSs No UK stamp duty or stamp duty reserve tax will be payable on an instrument transferring an ADS or an American Depositary Receipt, or ADR, representing an ADS or on a written agreement to transfer an ADS or an ADR representing an ADS whether made in or outside the UK. Issue and transfer of ordinary shares The issue of ordinary shares by Amarin will not give rise to a charge to UK stamp duty or stamp duty reserve tax. Transfers of ordinary shares, as opposed to ADSs or ADRs representing ADSs, will generally attract ad valorem stamp duty at the rate of 0.5% of the amount or value of the consideration (or in some circumstances, the open market value of those ordinary shares, if higher). A charge to stamp duty reserve tax, at the rate of 0.5% of the amount or value of the consideration (or in some circumstances, the open market value of the ordinary shares, if higher), will generally arise on an agreement to transfer ordinary shares. The stamp duty reserve tax is payable on the seventh day of the month following the month in which the charge arises. Where an instrument of transfer is executed and duly stamped before the expiry of a period of six years beginning with the date of that agreement, any stamp duty reserve tax that has not been paid ceases to be payable. Taxation of dividends Under UK law, there is no withholding tax on dividends paid on the ordinary shares or ADSs. Certain Material Irish Tax Considerations The summary only applies to U.S. Holders that legally and beneficially hold their ordinary shares, or such shares represented by ADSs evidenced by ADRs as capital assets (i.e. investments) and does not address special classes of holders including, but not limited to, dealers in securities, insurance companies, pension schemes, employee share ownership trusts, collective investment undertakings, charities, tax-exempt organizations, financial institutions and close companies, each of which may be subject to special rules not discussed below. Solely for the purposes of this summary of Irish Tax Considerations, a U.S. Holder means a holder of shares or ADSs evidenced by ADRs that (i) beneficially owns the shares or ADSs registered in their name; (ii) is resident in the United States for the purposes of the Ireland-United States Double Taxation Convention, or the Treaty; (iii) in the case of an individual holder, is not also resident or ordinarily resident in Ireland for Irish tax purposes; (iv) in the case of a corporate holder, is not a resident in Ireland for Irish tax purposes and is not ultimately controlled by persons resident in Ireland; and (v) is not engaged in any trade or business and does not perform independent personal services through a permanent establishment or fixed base in Ireland; and (vi) is a qualified person as defined in Article 23 of the Treaty. For Irish taxation purposes, and for the purposes of the Treaty, U.S. Holders of ADSs will be treated as the owners of the shares represented by such ADSs. 85 The following discussion is limited to the tax consequences of ownership and disposition of shares or ADSs. Tax considerations applicable to other types of securities will be described in the related prospectus supplement. Taxation of dividends We do not expect to pay dividends in the foreseeable future. Should we begin paying dividends, such dividends will generally be subject to dividend withholding tax, or DWT, in Ireland at a rate of 25%. Where DWT applies, we will be responsible for withholding such tax at source. Dividends paid by us to U.S. Holders of shares or ADSs evidenced by ADRs will be exempt from DWT if, prior to the payment of such dividends, the recipient U.S. Holder delivers to us a declaration in the form prescribed by the Irish Revenue Commissioners. In addition, a certificate of residency in the form prescribed by the Irish Revenue Commissioners, will also be required if the U.S. holder is an individual. Where DWT is withheld from dividend payments to U.S. Holders of shares or ADSs evidenced by ADRs, such U.S. Holders can apply to the Irish Revenue Commissioners claiming a full refund of DWT paid by filing a declaration in the form prescribed by the Irish Revenue Commissioners. As above, a certificate of residency in the form prescribed by the Irish Revenue Commissioners, will also be required if the U.S. holder is an individual. The DWT rate applicable to U.S. Holders may be reduced under the terms of the Treaty, however, in the first instance, an exemption should be in place under Irish domestic legislation. Irish source income U.S. Holders will not be liable to Irish income tax on dividends paid by us. Capital gains on disposals of shares or ADSs U.S. Holders will not be subject to Irish capital gains tax, or CGT, on the disposal of shares or ADSs provided that such shares or ADSs are quoted on a stock exchange at the time of disposition such as Nasdaq. While it is our intention to continue the listing of ADSs on Nasdaq, no assurances can be given in this regard. If, for any reason, our ADSs cease to be listed on Nasdaq, U.S. Holders will not be subject to CGT on the disposal of their shares or ADSs provided that the shares or ADSs do not, at the time of the disposal, derive the greater part of their value from land, buildings, minerals, or mineral rights or exploration rights in Ireland. Irish Capital Acquisitions Tax (CAT) CAT comprises principally gift and inheritance tax. A gift or inheritance of shares or ADSs will come within the charge to CAT if either: (i) the disponer or the donee/successor in relation to the gift or inheritance is resident or ordinarily resident in Ireland (please note that special rules with regard to residence apply where an individual is not domiciled in Ireland); or (ii) the ordinary shares or ADSs are regarded as property situated in Ireland (e.g. shares would be regarded as Irish property if the share register is maintained in Ireland. ADSs, if registered, will be regarded as Irish property if the register is maintained in Ireland, or, if in bearer form, if the instrument of ownership is located in Ireland). On the basis that the shares or ADSs (assuming they are registered) should not be regarded as property situated in Ireland (given that the registers are not maintained in Ireland), a gift or inheritance of the shares or ADSs should only come within the charge to Irish CAT if either the disponer or donee/successor is resident or ordinarily resident in Ireland at the date of the gift or inheritance. The rate of CAT is currently 33% and is payable if the taxable value of the gift or inheritance exceeds certain tax-free thresholds. The appropriate tax-free threshold depends on the relationship between the disponer and the donee/successor. A gift or inheritance received from a spouse is exempt from CAT. The person who receives the gift or inheritance is generally accountable for any CAT due. Irish stamp duty No Irish stamp duty should arise on the issue or transfer for cash of shares or ADSs on the basis that such a transfer does not relate to stocks or marketable securities of an Irish registered company. 86 Item 6. [Reserved] 87 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This Annual Report on Form 10-K contains forward-looking statements concerning future events and our performance. When used in this Annual Report on Form 10-K, the words “may,” “would,” “should,” “could,” “expects,” “aims,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” or “continue” or the negative of these terms or other comparable terminology are included to identify forward-looking statements. These statements include but are not limited to statements regarding the commercial success of VASCEPA and factors that can affect such success; interpretation of court decisions; plans with respect to litigation; expectation on determinations and policy positions of the United States Food and Drug Administration, or U.S. FDA; the safety and efficacy of our product and product candidates; expectation regarding the potential for VASCEPA to be partnered, developed and commercialized outside of the United States; expectation on the scope and strength of our intellectual property protection and the likelihood of securing additional patent protection; estimates of the potential markets for our product candidates; estimates of the capacity of manufacturing and other facilities to support our products; our operating and growth strategies; our industry; our projected cash needs, liquidity and capital resources; and our expected future revenues, operations and expenditures. These forward-looking statements are based on our current expectations and assumptions and many factors could cause our actual results to differ materially from those indicated in these forward-looking statements. You should review carefully the factors identified in this Annual Report on Form 10-K in Item 1A, “Risk Factors”. We disclaim any intent to update or announce revisions to any forward-looking statements to reflect actual events or developments, except as required by law. Except as otherwise indicated herein, all dates referred to in this Annual Report on Form 10-K represent periods or dates fixed with reference to our fiscal year ended December 31, 2021. Overview 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 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, or the MARINE indication. We launched VASCEPA in the United States in January 2013. On December 13, 2019 the U.S. FDA approved another indication and label expansion for VASCEPA based on the landmark results of our cardiovascular outcomes trial, 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, or the REDUCE-IT indication. On March 26, 2021, the European Commission, or EC, granted approval of the marketing authorization application in the EU for VAZKEPA, hereinafter along with the U.S. brand name VASCEPA, collectively referred to as VASCEPA, which is the first and only EC approved therapy to reduce cardiovascular risk in high-risk statin-treated patients with elevated TG levels. On September 13, 2021, we launched VAZKEPA in Germany, representing our first European launch. 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. VASCEPA is currently available by prescription in the U.S., Germany, Canada, Lebanon and the United Arab Emirates. We are responsible for supplying VASCEPA to all markets in which the branded product is sold, either to and through our collaborations with third-party companies or by us. Subject to commercial launches in additional countries within Europe and approval in China and Hong Kong, we will be responsible for supplying products to those markets as well. We are not responsible for providing any generic company with drug product. Geographies outside the United States in which VASCEPA is sold and under regulatory review are not subject to the U.S. patent litigation and judgment described below. No similar litigation involving potential generic version of VASCEPA is pending outside the United States. United States We commenced the commercial launch of VASCEPA in the United States in January 2013 based on the MARINE indication for VASCEPA. In October 2016, in addition to the original 1-gram capsule size, 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 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 mail order pharmacy providers, or collectively, our distributors or our customers, most of whom in turn resell VASCEPA to retail pharmacies for subsequent resale to patients and healthcare providers. We employ various medical affairs and marketing personnel to support our commercialization of VASCEPA. 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, (formerly known as West-Ward), and certain of their affiliates, or, collectively, the Defendants, that declared as invalid several of our patents covering the MARINE indication for use to reduce severely high triglyceride levels. We sought appeals of the Nevada Court judgment up to the United States Supreme Court, but we were unsuccessful. Most recently, on June 18, 2021, we were notified that our petition for writ of certiorari to the United States Supreme Court was denied. 88 On May 22, 2020, Hikma received U.S. FDA approval to market its generic versions of VASCEPA for the MARINE indication of VASCEPA as an adjunct to diet to reduce TG levels in adult patients with severe (≥500 mg/dL) hypertriglyceridemia. 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. On January 4, 2022, the district court hearing the case granted Hikma's motion to dismiss. We intend to appeal the decision of the district court. We also intend to continue to vigorously pursue our ongoing litigation with Health Net, LLC, but cannot predict the outcome or the impact on our business. On August 10, 2020, Dr. Reddy's received U.S. FDA approval to market its generic version for the MARINE indication of VASCEPA. In June 2021, Dr. Reddy’s launched its generic version of VASCEPA with labeling that is substantially similar to labeling of the Hikma generic product. On September 11, 2020, Teva Pharmaceuticals USA, Inc.'s, or Teva's, ANDA was approved by the U.S. FDA and on June 30, 2021, Apotex, Inc.'s, or Apotex's, ANDA was approved by the U.S. FDA. In January 2022, Apotex launched its generic version of VASCEPA with labeling that is substantially consistent with the labeling of the Hikma and Dr. Reddy's generic product, not the cardiovascular risk reduction indication. We have continued to monitor the effect of COVID-19 and its impact on patient visits to doctors. Our level and type of promotion has varied during the pandemic based on the determination of whether the cost was justified in light of COVID-19's impact at a given time. 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 and, because many patients have multiple medical issues, we cannot predict the degree to which healthcare professionals will be proactive in seeking to reduce cardiovascular risk in at-risk patients when these patients resume visiting their doctors. The timing is likely to vary by geography. We resumed on a very limited basis, a direct-to-patient campaign in January 2021, including television-based promotion, digital and social media promotion to continue to grow consumer awareness of VASCEPA. In June 2021, we launched an educational campaign, It's Clear to Me Now , to help physicians and patients learn more about the differentiation between VASCEPA and fenofibrates for CV risk reduction. The differentiation is important for physicians and patients as the U.S. FDA removed use with statins for CV risk reduction from the fenofibrates' label based on a failed CV risk outcomes trial. In September 2021, we announced our Go-to-Market strategy to optimize provider engagement and drive demand for VASCEPA and contains three key strategic priorities: • Expanding healthcare provider engagement: Our omnichannel approach which is designed to enhance our reach to healthcare professionals, and aims to target a far greater number of the almost 700,000 statin prescribers through high frequency, and tailored messaging regarding the significant benefits of VASCEPA for CV risk reduction. We plan to optimize our U.S. field force and focus on the most productive territories. As a result, we reduced our U.S. field force to approximately 300 sales representatives who will remain a critical part of the commercial strategy going forward. • Enhancing managed care access: We plan to continue working with payers in an effort to enhance our managed care position and further remove barriers to VASCEPA prescriptions to ensure that patients in need of CV risk reduction receive proper therapy. Importantly, several large Commercial and Medicare Part D payers currently cover VASCEPA as the exclusive icosapent ethyl product. • Optimizing VASCEPA prescriptions for CV risk reduction: Branded VASCEPA remains the only available U.S. FDA approved icosapent ethyl medication for CV risk reduction. To prevent improper generic substitution for this indication, we continue to aggressively educate critical stakeholders in the prescribing continuum to ensure proper fulfillment at each step. Additionally, we continue to evaluate various innovative solutions designed to better manage prescriptions for CV risk reduction. As a result of our Go-to-Market strategy and our omnichannel approach, which we launched in the fourth quarter, we digitally approached a significant number of physicians across numerous digital channels. In addition, on November 1, 2021, we partnered with BlinkRx to provide patients an enhanced digital prescription fulfillment channel. As COVID-19 protocols ease and ordinary course activities continue to resume, we will continue to adjust our promotional initiatives accordingly, including pursuit of increased face-to-face interactions with healthcare professionals and expanding various forms of direct-to-patient promotion. We obtain data from two third parties, Symphony Health and IQVIA, who collect and report estimates of weekly, monthly, quarterly and annual prescription information. There is a limited amount of information available 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 89 when actual data is unavailable. Based on data from Symphony Health and IQVIA, the below chart represents the estimated number of normalized total VASCEPA prescriptions over the year ended December 31, 2021. 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. The resulting conclusions from Symphony Health and IQVIA are rarely identical and should be viewed with caution. The previous calculations of prescription levels by these vendors can change between periods and 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. We are not responsible for the accuracy of these companies’ information and we do not receive prescription data directly from retail pharmacies. Europe In December 2019, we announced that the EMA validated the marketing authorization application seeking approval for VAZKEPA. The validation confirmed the submission was sufficiently complete for the EMA to begin its review. In August 2020, we announced our plans to launch VAZKEPA in major markets in Europe through our own European sales and marketing team. Such an approach allows us to retain substantially all of the economic potential of VAZKEPA in Europe and helps ensure that VAZKEPA would get the highest level of priority and focus. On January 28, 2021, the Committee for Medicinal Products for Human Use, or CHMP, of the EMA adopted a positive opinion, recommending that a marketing authorization be granted to icosapent ethyl in the EU for the reduction of risk of cardiovascular events in patients at high cardiovascular risk, under the brand name VAZKEPA. On March 26, 2021, the EC granted approval of the marketing authorization application in the EU. 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 have filed ten dossiers in European countries, including in all of the largest countries in Europe, and expect to file additional dossiers in Europe and select other parts of the world in the first half of 2022. In most European countries, securing product reimbursement is a requisite to launching. In certain countries, such as Denmark, individual patient reimbursement is allowed prior to national, general organization reimbursement. 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 the assessment of the commercial opportunity of VAZKEPA in Europe. Additionally, we are continuing to grow our European staff by hiring Market access and Medical affairs teams, among others, across Europe. 90 On September 1, 2021, VAZKEPA was made available in Germany and was included in the country's electronic prescribing system as of October 1, 2021. The commercial launch in Germany was accompanied by a scientific conference in Berlin titled, “New therapeutic strategies for residual CV risk management,” which highlighted the scientific underpinnings and clinical benefits of VASCEPA/VAZKEPA in reducing cardiovascular risk. We are building a digitally native commercial model balancing optimally digital and face-to-face approach for more impact and cost efficiency, which will also be utilized as other countries throughout Europe are launched. In order to launch impactfully in other countries throughout Europe we are building a core team of experienced professionals and a highly capable commercial team involved with pre-launch planning and other commercial preparation activities and are leveraging third-party relationships for various support activities. In Europe, patients at high risk for cardiovascular disease tend, in contrast to the United States, to be treated more often by specialists, such as cardiologists rather than by physicians who are general practitioners. 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. However, 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. In Europe, VAZKEPA has the benefit of ten years of market protection, and we have been issued a patent that expires in 2033 with additional pending applications that could extend exclusivity into 2039. Rest of World China In February 2015, we announced an exclusive agreement with Eddingpharm (Asia) Macao Commercial Offshore Limited, or Edding, to develop and commercialize VASCEPA capsules in what we refer to as the China Territory, consisting of the territories of Mainland China, Hong Kong, Macau and Taiwan, for uses that are currently commercialized and under development by us in the United States. Edding, with our support, conducted a clinical trial of VASCEPA in China, which evaluated the effect of VASCEPA on patients with very high triglyceride levels (>500 mg/dL). In November 2020, we announced statistically significant topline positive results from this Phase 3 clinical trial of VASCEPA conducted by Edding. The study, which investigated VASCEPA as a treatment for patients with very high triglycerides (≥500 mg/dL), met its primary efficacy endpoint as defined in the clinical trial protocol and demonstrated a safety profile similar to placebo. Importantly, the VASCEPA 4 gram per day dose in this study appeared to be well-tolerated with a safety profile similar to placebo. There were no treatment-related serious adverse events in this study. On February 9, 2021, we announced that the regulatory review processes in Mainland China and Hong Kong have commenced. The National Medical Products Administration, or NMPA, has accepted for review the new drug application for VASCEPA, submitted by Edding, 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 in the second half of 2022. The Hong Kong Department of Health is evaluating VASCEPA based on current approvals in the United States and Canada. The review process in Hong Kong is expected to conclude in the second half of 2022. Middle East and North Africa (MENA) In March 2016, we entered into an agreement with Biologix FZCo, or Biologix, to register and commercialize VASCEPA in several Middle Eastern and North African countries. Biologix obtained approval of VASCEPA under the MARINE and REDUCE-IT indications, and subsequently launched commercially, 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 2018 April 2021 — Bahrain April 2021 — — Kuwait December 2021 — — Canada In September 2017, we entered into an agreement with HLS Therapeutics Inc., or HLS, to register, commercialize and distribute VASCEPA in Canada. In March 2019, HLS received formal confirmation from Health Canada that the Canadian regulatory authority has granted priority review status for the upcoming New Drug Submission, which was filed in April 2019, for VASCEPA. In December 2019, HLS received formal confirmation from Health Canada that the Canadian regulatory authority has granted approval for VASCEPA to reduce the risk of cardiovascular events (cardiovascular death, non-fatal myocardial infarction, non-fatal stroke, coronary revascularization or hospitalization for unstable angina) in statin-treated patients with elevated triglycerides, who are at high risk of cardiovascular events due to: established cardiovascular disease, or diabetes, and at least one other cardiovascular risk factor. In January 2020 HLS obtained a regulatory exclusivity designation and launched commercially in February 2020. In July 2020, the Canadian Agency for Drugs and Technologies in Health recommended that VASCEPA be reimbursed by participating public drug 91 plans for statin-treated patients with established cardiovascular diseases and elevated triglycerides. HLS also received notification by the Patented Medical Prices Review Board that, further to its review, VASCEPA’s price did not trigger the investigation criteria for excessive pricing. Coverage of patients with established cardiovascular disease represents a substantial portion of VASCEPA’s approved label in Canada. VASCEPA has the benefit 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. Other We plan to continue to assess other potential partnership opportunities for VASCEPA with partners outside of the United States and Europe with the intention of partnering in all other international markets. Our plan is to file three waves of regulatory submissions for approval of VASCEPA in 20 additional countries in order to ensure that patients in the top 50 cardiometabolic markets worldwide can benefit from VASCEPA. We have initiated the first wave of regulatory filings in 2022 and in February 2022 obtained acceptance of VASCEPA for regulatory review in Australia and Israel. Research and Development Since its inception in 2011, conduct of the REDUCE-IT cardiovascular outcomes study of VASCEPA has been the centerpiece of our research and development. Most of our other research and development during this period also pertained to VASCEPA, including study of the mechanism of action of the single active ingredient in VASCEPA, icosapent ethyl. The REDUCE-IT study was conducted based on a special protocol assessment, or SPA, agreement with the U.S. FDA. Based on the final positive results of REDUCE-IT, we sought additional indicated uses for VASCEPA in the United States and continue to pursue approval for VASCEPA around the world. We also anticipate continuing to publish additional details of the REDUCE-IT study to address scientific interest beyond the primary results of this study derived from the over 35,000 patient years of study experience which were accumulated in the REDUCE-IT study. The REDUCE-IT study topline results were made public in September 2018, and the primary results of the REDUCE-IT study were presented at the 2018 Scientific Sessions of the AHA on November 10, 2018 with such results concurrently published in The New England Journal of Medicine . The total (first and subsequent) cardiovascular events results of the REDUCE-IT study were presented at the American College of Cardiology’s 68 th Annual Scientific Session in March 2019 and concurrently published in the Journal of the American College of Cardiology. The U.S. FDA granted Priority Review designation to our March 2019 sNDA seeking an expanded indication for VASCEPA in the United States based on the positive results of the REDUCE-IT study. The U.S. FDA grants Priority Review designation to applications for drugs that, if approved, have the potential to offer significant improvements in the effectiveness and safety of the treatment of serious conditions when compared to standard applications. In November 2019, the U.S. FDA held an EMDAC meeting to review the REDUCE-IT sNDA. The EMDAC voted unanimously (16-0) to recommend approval of an indication and label expansion for VASCEPA to reduce cardiovascular events in high-risk patients based on the REDUCE-IT results. On December 13, 2019, the U.S. FDA approved an indication and related label expansion based on REDUCE-IT. VASCEPA is the first and only drug approved by the U.S. FDA as an adjunct to maximally tolerated statin therapy to reduce the risk of myocardial infarction, stroke, coronary revascularization, and unstable angina requiring hospitalization in adult patients with elevated TG levels (≥150 mg/dL) and either established cardiovascular disease or diabetes mellitus and two or more additional risk factors for cardiovascular disease. Reflecting the robust results of the clinical development program for VASCEPA, no additional post-approval clinical study or other special post-approval requirement (as often seen with other drug approvals) was requested by the U.S. FDA in conjunction with its approval of VASCEPA. Based on REDUCE-IT results, as of the date of the filing of this Annual Report on Form 10-K, 26 clinical treatment guidelines, consensus statements or scientific statements from medical societies or journals have been updated recommending the use of icosapent ethyl in appropriate at-risk patients, including those statements which we were informed of by our global partners in Canada, China and the Middle East as well as guidelines which were newly received during the fourth quarter of 2021 through the filing date of this Annual Report on Form 10-K as listed below: • The Polish Cardiac Society Working Group on Cardiovascular Pharmacotherapy, or SFSN PTK, published a consensus statement on the management of dyslipidemia. The statement by SFSN PTK recommends 4g of EPA, icosapent ethyl, daily in combination with statins for patients with TG levels 135–499 mg/dL in the high- and very-high-risk categories. The statement mentions that based on the REDUCE-IT study, 2g of icosapent ethyl twice daily in combination with statins significantly reduced the risk of CV events and lowered TG levels. SFSN PTK acknowledges that icosapent ethyl is not approved for use in Poland and data from REDUCE-IT cannot be extrapolated to other doses and formulation of omega-3s. • The Diabetes CardioRenal Metabolic Diseases, or DCRM, Task Force published practice recommendations for the management of DCRM. The practice recommendation recommends icosapent ethyl, VASCEPA, for the primary prevention of myocardial infarction, coronary artery disease, or stroke in patients with diabetes and for secondary prevention of these events in those with and without diabetes. DCRM further states that based on evidence from 92 REDUCE-IT, adding IPE to statin therapies further reduces the risk of ASCVD events in patients with TG levels 135–500 mg/dL (1.5–5.7 mmol/L) who have ASCVD or diabetes plus 2 major ASCVD risk factors. • The AHA issued a scientific statement on the comprehensive management of CV risk factors for adults with type 2 diabetes. The AHA statement recommends patients with diabetes and ASCVD or patients with diabetes at high risk for ASCVD with serum TG levels of 135–500 mg/dL despite maximally tolerated statin therapy, and addressing contributory factors including lifestyle modification, prescription IPE at a dose of 4 grams/day should be considered given the 30% additional CV risk reduction in the REDUCE-IT trial. AHA further states that for primary prevention in type 2 diabetes, a moderate-intensity statin should be considered based on age, absolute ASCVD risk, or the presence of risk-enhancing factors. Non-statin therapies including ezetimibe, PCSK9 inhibitors, IPE, bile acid resins, and fibrates should be considered after thorough evaluation of risk, LDL-C level after optimal statin therapy, and presence of hypertriglyceridemia. 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 have supported 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. On August 31, 2021 and November 16, 2021, we announced the results from the PREPARE-IT-1 and PREPARE-IT-2 studies on the effects of VASCEPA reducing COVID-19 infections and hospitalizations, respectively, neither of which met the primary and/or other endpoints studied. If the results of the other pilot study is 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. In June 2018, we entered into a multi-faceted 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. Among other terms in the agreement, we obtained an exclusive license to certain Mochida intellectual property to advance our interests in the United States and certain other territories. In addition, the parties will collaborate to research and develop new products and indications based on EPA for our commercialization in the United States 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, we made a non-refundable, non-creditable upfront payment of approximately $2.7 million. In addition, the agreement provides for milestone payments from us upon the achievement of certain product development milestones and royalties on net sales of future products arising from the collaboration, if any. During 2021, we added to our growing body of knowledge on VASCEPA as a result of our continued analysis of the REDUCE-IT trial results. The REDUCE-IT STROKE analyses examined stroke rates across the enrolled patient population, noting a relative risk reduction in strokes and ischemic stroke of 28% and 36%, respectively. The REDUCE-IT HEART FAILURE analyses examined the effects of icosapent ethyl on the incidence of the new heart failure by achieved on-treatment serum EPA levels, with further testing needed. We also analyzed the effect of VASCEPA on patients with prior myocardial infarction to determine if treatment reduced further ischemic events in those subjects, noting VASCEPA reduced first and total primary endpoints by 26% and 35%, respectively. Finally, we analyzed the effects of VASCEPA on patients with prior peripheral artery diseases to determine if it reduced further ischemic events, noting VASCEPA reduced first and total primary endpoints by 32%. On January 10, 2022, we announced that we have initiated development of a fixed dose combination product that has both icosapent ethyl and a statin. 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 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 93 outside the United States. Not all of our suppliers approved by the U.S. FDA are approved in every other geography. The regulatory process generally requires extensive details as part of the submission provided to a country or region in connection with a company's request for regulatory approval. Suppliers must be specifically identified as part of the submission for qualification and approval for commercialization in a country or region. As a result, only supply, as approved, may be used in finished goods available for sale in a specific country or region. 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 December 31, 2021, according to CDC data, approximately 60% of the U.S. population has been fully vaccinated, which does not include a booster shot, and approximately 75% of the U.S. population has received at least one dose of a vaccine. While according to CDC data, the population's vaccination rate has increased, the number of new cases increased at the end of 2021 and into early 2022, driven by the Omicron variant. 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. Although some of these restrictions were lifted throughout parts of 2021, in light of the increase in cases in the fourth quarter of 2021 due to the Omicron variant and despite the prevalence of the vaccines, many restrictions have been put back in place and access remains variable and challenging due to COVID-19. While COVID-19 continues to impact our promotion of VASCEPA, we have seen signs of improvement in access to face-to-face interactions with healthcare providers. In the United States, prior to the recent surge at the end of 2021, at-risk patients increasingly resumed visiting their doctors for non-urgent medical care after they are vaccinated for COVID-19 and we anticipate that to continue when the current surge in cases decreases. We continued to adjust our promotional initiatives throughout 2021 and plan to adjust throughout 2022, including pursuing increased face-to-face interactions with health care professionals and expanding various forms of direct-to-patient promotion based on COVID-19 protocols that are in place. In Europe, the rapid spread of the Omicron variant throughout Europe has led to a significant increase in COVID-19 related patients for healthcare professionals and hospitals. This has limited our access to and ability to directly promote VAZKEPA to healthcare professionals. We continue to explore other avenues, including digital, to reach and engage healthcare professionals despite the current restrictions and challenges. Thus far, while COVID-19 has created some added logistical challenges regarding supply deliveries, these challenges have been manageable and 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 extent to which COVID-19 impacts our business, results of operations and financial condition will depend on future developments, which, despite progress in vaccination efforts, are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may emerge concerning the severity of COVID-19, such as new strains of the virus, including the Delta and Omicron variants and any future variants that may emerge, which may impact rates of infection and vaccination efforts, developments or perceptions regarding the safety of vaccines and the extent and effectiveness of actions to contain COVID-19 or treat its impact, including vaccination campaigns and lockdown measures, among others. We are actively monitoring the situation and evaluating 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. We 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. Management Succession Plans As announced in April 2021, effective August 1, 2021, John Thero retired from his positions as President and Chief Executive Officer and member of our board of directors and is now providing phased transitional and consulting services to us. Effective August 1, 2021, our board of directors appointed Karim Mikhail, previously our Senior Vice President, Commercial Head Europe, to succeed Mr. Thero as our President and Chief Executive Officer, as well as, a member of our board of directors. In addition, we have announced the appointment of Laurent Abuaf as our new Senior Vice President, and President of Europe to fill the opening left by Mr. Mikhail's promotion. Effective August 1, 2021, Joseph Kennedy retired from his position of Executive Vice President and General Counsel. Our search to hire a new General Counsel was completed with Jason Marks joining the Company in August 2021, in the role of Senior Vice President and Chief Legal Officer with Mr. Kennedy supporting this transition and providing consulting support on certain legal matters. 94 In addition, we announced that Per Wold-Olsen joined our board of directors on January 10, 2022. 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 mail order pharmacy providers, or collectively, our distributors or our customers, most of whom 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 customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. 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 years ended December 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 to offset 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 years ended December 31, 2021 and 2020 was up to $150 per 30-day prescription filled and up to $450 per 90-day prescription filled. Outside of the United States, currently the majority of 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. We also derive product revenue from sales of our product to a limited number of wholesalers in Europe, most of whom in turn resell the product to pharmacies for purposes of their reselling the product to fill patient prescriptions. 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, 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. Restructuring expense. Restructuring expense consists of restructuring costs incurred under our September 2021 Go-to-Market strategy implementation, which consists of severance pay, incentive compensation, insurance benefits and stock-based compensation expense. 95 Interest and other (expense) income, net. Interest expense primarily 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 year-ended December 31, 2021 and 2020 are not more likely than not to be realized. On March 27, 2020, the 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 consolidated financial statements and notes, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. 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 Note 2—Significant Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. Revenue Recognition —In accordance with GAAP, under Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers , which we adopted on a modified retrospective basis effective January 1, 2018, we recognize revenue when our distributors obtain control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of Topic 606, we perform the following five steps: (i) identify the contract(s) with a Distributor; (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) we satisfy a performance obligation. We apply the five-step model to contracts only when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the Distributor. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract, determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. We recognized Total revenue, net of $583.2 million and $614.1 million during the years ended December 31, 2021 and 2020, respectively. For a complete discussion of our accounting for net product revenue and licensing and royalty revenues, which make up Total revenue, net, see Note 2—Significant Accounting Policies. We sell VASCEPA principally to a limited number of distributors that in turn resell VASCEPA to retail pharmacies that subsequently resell it to patients and healthcare providers. We began recognizing revenue from the sale of VASCEPA following our commercial launch in the United States in January 2013. Prior to 2013, we recognized no revenue from VASCEPA sales. In accordance with GAAP, we recognize revenue when the Distributor obtains control of our product, which occurs at a point in time, typically upon delivery to the Distributor. We recognized Product revenue, net of $580.3 million and $607.0 million based on sales to distributors during the years ended December 31, 2021 and 2020, respectively. We have written contracts with our distributors, and transfer of control typically occurs upon delivery of our product to the Distributor. We evaluate the creditworthiness of each of our distributors to determine whether revenues can be recognized upon delivery, subject to satisfaction of the other requirements, or whether recognition is required to be delayed until receipt of payment. We calculate gross product revenues based on the wholesale acquisition cost that we charge our distributors for VASCEPA. We estimate our Product revenue, net by deducting from our gross product revenues (a) trade allowances, such as invoice discounts for prompt payment and distributor fees, (b) estimated government and private payor rebates, chargebacks and discounts, such as Medicaid reimbursements, (c) reserves for expected product returns and (d) estimated costs of incentives offered to certain indirect customers, including patients. The gross to net deductions are estimated based on available actual information, historical data, known trends, and levels of inventory in the distribution channel. We rely on resale data provided by our distributors as well as prescription data provided by Symphony Health and IQVIA in estimating the level of inventory held in the distribution channel. A hypothetical 5% 96 change in estimated aggregate bottles of channel inventory would result in a change of less than 1% in net product revenues reported during each of the three and twelve months ended December 31, 2021 and 2020. When evaluating licensing arrangements, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. In determining performance obligations, we evaluate whether the license is distinct from the other performance obligations with the collaborative partner based on the consideration of the relevant facts and circumstances for each arrangement. Factors considered include the stage of development of the license delivered, research and development capabilities of the partner and the ability of partners to develop and commercialize VASCEPA independent of us. If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the Distributor and the Distributor is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. At the inception of each arrangement that includes development, regulatory and commercial milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the control of the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. We evaluate factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the respective milestone as well as the level of effort and investment required. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development, regulatory and commercial milestones and any related constraint, and if necessary, adjust its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect licensing revenues and earnings in the period of adjustment. We receive payments from our customers based on billing schedules established in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until we perform our obligations under these arrangements. Amounts are recorded as accounts receivable when our right to consideration is unconditional. We do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less. 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 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. We provide reserves for potential payments of tax to various tax authorities or do 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 us in our 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. Our policy is to record interest and penalties in the provision for income taxes. We assess our ability to realize deferred tax assets at each reporting period. The realization of deferred tax assets depends on generating future taxable income during the periods in which the tax benefits are deductible or creditable. When making our assessment about the realization of our deferred tax assets as of December 31, 2021, we considered all available evidence, placing particular weight on evidence that could be objectively verified. The evidence considered included the (i) historical taxable profitability of our U.S. operations, (ii) historical pre-tax book loss position, (iii) sources of future taxable income, giving weight to sources according to the extent to which they can be objectively verified, (iv) the provisions of the Tax Cuts and Jobs Act enacted in 2017 and their impact on our future taxable income, and (v) the risks to our business related to the commercialization and development of VASCEPA. Based on our assessment, we concluded that all of our net deferred tax assets are not more likely than not to be realizable as of both December 31, 2021 and 2020. Changes in historical earnings performance, future earnings projections, and changes in tax laws and tax rates, among other factors, may cause us to adjust our valuation allowance on deferred tax assets in the future, which would impact our income tax expense in the period in which we determine that these factors have changed. We intend to 97 maintain the valuation allowance until sufficient positive evidence exists to conclude that it is more likely than not that our deferred tax benefits will be realized. We will continue to monitor the need for valuation allowances in each jurisdiction and may adjust our positions in the future. 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 consolidated statement of operations. Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, see Note 2—Significant Accounting Policies in the accompanying Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. Effects of Inflation We believe the impact of inflation on operations has been minimal during the past three years. Results of Operations The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for fiscal years 2021 and 2020. For a comparison of our results of operations and financial condition for fiscal years 2020 and 2019, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2020 Annual Report on Form 10-K, filed with the SEC on February 25, 2021 . Comparison of Fiscal Years Ended December 31, 2021 and December 31, 2020 Total revenue, net. We recorded total revenue, net, of $583.2 million and $614.1 million during the years ended December 31, 2021 and 2020, respectively, a decrease of $30.9 million, or 5%. Total revenue, net consists primarily of revenue from the sale of VASCEPA in the United States. In addition to the United States, we also sell VASCEPA by prescription in Germany and is 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 $20.2 million decrease in U.S. product revenue, a decrease of $6.5 million in net product revenue from sales of VASCEPA outside of the United States and a $4.2 million decrease licensing and royalty revenue. Product revenue, net. We recorded product revenue, net, of $580.3 million and $607.0 million during the years ended December 31, 2021 and 2020, respectively, a decrease of $26.7 million, or 4%. This decrease was driven primarily by volume of VASCEPA sales to our customers in the United States, which was adversely impacted by generic availability in the U.S., as well as timing of sales outside the U.S., as further described below. • Generics in the U.S. - Inclusive of generic icosapent ethyl, based on prescription levels reported by Symphony Health, the icosapent ethyl market increased for the year ended December 31, 2021 by 11% as compared to the year ended December 31, 2020. Based on the available data from Symphony Health, generic prescriptions of icosapent ethyl for the year ended December 31, 2021 were approximately 15% of the total icosapent ethyl prescriptions, which includes the second generic entrant into the market, Dr. Reddy's, late in the second quarter of 2021 providing additional generic supply, further impacting the volume of branded sales during the year ended December 31, 2021. Product revenue, net in the fourth quarter of 2021 was flat as compared to the third quarter of 2021, following the launch of our Go-to-Market strategy which was announced on September 22, 2021. We will continue to monitor the generic prescription market in the U.S. and will vigorously protect our cardiovascular risk reduction patents, as deemed appropriate. In addition, based on available information, we believe that a significant number of icosapent ethyl prescriptions in the U.S. have gone unfilled during 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 U.S. 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. • In addition, we recognized net product revenue of approximately $2.4 million and $8.9 million as of December 31, 2021 and 2020, respectively for VASCEPA sales outside of the United States, primarily as a result of an initial order to ensure availability of adequate product supply for the launch of VASCEPA in Canada in 2020. We also recognized product revenue of $0.7 million related to VAZKEPA sales in Europe, where the launch of VAZKEPA occurred at the end of the third quarter of 2021. 98 Despite the generic competition in the U.S., including a third generic entrant in January 2022, we remain confident that the patient need for VASCEPA is high. We believe that our U.S. Go-to-Market strategy began showing early signs of positive results in the fourth quarter of 2021. We will continue to work closely with payers to ensure that VASCEPA maintains a net cost advantage compared to generic icosapent ethyl products. We have partnered with BlinkRx, a unique patient solution, to provide an enhanced, digital first prescription fulfillment channel. As a result of the continued uncertainty of the global impact of COVID-19, the impact of generic competition in the U.S. and challenges for most drugs seeking market access in Europe, we are not providing revenue guidance at this time. We will consider resuming revenue guidance when there is greater clarity on the impact of these items. Licensing and royalty revenue. Licensing and royalty revenue during the years ended December 31, 2021 and 2020 was $2.9 million and $7.0 million, respectively, a decrease of $4.2 million, or 59%. Licensing and royalty revenue relates to the recognition of amounts received in connection with the following VASCEPA licensing agreements: • 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 another 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 years ended December 31, 2021 and 2020 was $121.3 million and $131.4 million, respectively, a decrease of $10.1 million, or 8%. 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 years ended December 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 2022 to be similar to or modestly lower than 2021. The average cost may be variable from period to period depending upon the timing and quantity of API purchased from each supplier. Our gross margin on product sales for the years ended December 31, 2021 and 2020 was 79% and 78%, respectively. Selling, General and Administrative Expense. Selling, general and administrative expense for the years ended December 31, 2021 and 2020 was $408.3 million and $463.3 million, respectively, a decrease of $55.0 million, or 12%. Selling, general and administrative expenses for the years ended December 31, 2021 and 2020 are summarized in the table below: Year Ended December 31, In thousands 2021 2020 Selling expense (1) $ 266,474 $ 350,648 General and administrative expenses (2) 109,555 73,419 Non-cash stock-based compensation expense (3) 32,305 39,245 Total selling, general and administrative expense $ 408,334 $ 463,312 (1) Selling expense for the years ended December 31, 2021 and 2020 was $266.5 million and $350.6 million, respectively, a decrease of $84.2 million, or 24%. 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 also includes a reduction in costs associated with our Go-to-Market strategy resulting in decreased promotional initiatives, reduced travel and a decrease in our sales force. 99 (2) General and administrative expense for the years ended December 31, 2021 and 2020 was $109.6 million and $73.4 million, respectively, an increase of $36.1 million, or 49%. This increase is primarily due to increased personnel costs related to preparing for and commencing expansion into Europe. (3) Non-cash stock-based compensation expense for the years ended December 31, 2021 and 2020 was $32.3 million and $39.2 million, respectively, a decrease of $6.9 million, or 18%. 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 decrease is due to the reversal of certain performance-based awards as it was no longer deemed probable that the performance criteria for vesting would be achieved within the required timeframe and the reversal of expense associated with the reduction in U.S. field force. We are investing in building an appropriate foundation for the successful launch of VAZKEPA throughout Europe, advancing regulatory filings internationally and continuing our orchestrated omnichannel engagement for VASCEPA in the U.S. As a result, we will continue to evaluate all of our spending commitments and priorities as well as adjust our level of education and promotional activities based on various factors, including the impact of COVID-19 and U.S. generic competition. Research and Development Expense. Research and development expense for the years ended December 31, 2021 and 2020 was $29.3 million and $39.0 million, respectively, a decrease of $9.7 million, or 25%. Research and development expenses for the years ended December 31, 2021 and 2020 are summarized in the table below: Year Ended December 31, In thousands 2021 2020 REDUCE-IT study (1) $ 3,607 $ 10,777 Regulatory filing fees and expenses (2) 1,441 2,651 Internal staffing, overhead and other (3) 19,932 18,963 Research and development expense, excluding non-cash expense 24,980 32,391 Non-cash stock-based compensation expense (4) 4,327 6,568 Total research and development expense $ 29,307 $ 38,959 (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 years ended December 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, including costs associated with securing regulatory approvals for VAZKEPA in Europe as achieved in 2021. Also included are costs related to qualifying suppliers. 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 significantly increase in 2022 primarily due to our initiative to reduce residual cardiovascular risk by developing a fixed dose combination of VASCEPA and a statin. Restructuring expense . Restructuring expense for the years ended December 31, 2021 and 2020 was $13.7 million and nil, respectively. The charge is due to the launch of the Go-to-Market strategy announced on September 22, 2021, which primarily related to the reduction of our U.S. field force to approximately 300 sales professionals. Refer to Note 2 Significant Accounting Policies for additional information. 100 Interest Income, net. Net interest income for the years ended December 31, 2021 and 2020 was $1.1 million and $2.3 million, respectively, a decrease of $1.2 million, or 52%. Net interest income for the years ended December 31, 2021 and 2020 is summarized in the table below: Year ended December 31, In thousands 2021 2020 Debt from royalty-bearing instrument (1): Cash interest $ — $ (1,614 ) Non-cash interest — (635 ) Total debt from royalty-bearing instrument interest expense — (2,249 ) Other interest expense (129 ) (356 ) Total interest expense (129 ) (2,605 ) Interest income (2) 1,220 4,901 Total interest income, net $ 1,091 $ 2,296 (1) Cash and non-cash interest expense related to the December 2012 royalty-bearing instrument for the years ended December 31, 2021 and 2020 was nil and $2.2 million, respectively. In November 2020, we made the final payment on our royalty-bearing instrument and, as a result, no interest from this instrument was incurred in 2021. (2) Interest income for the years ended December 31, 2021 and 2020 was $1.2 million and $4.9 million, respectively. Interest income represents income earned on cash and investment balances. The decrease is a result of COVID-19 and the related economic conditions, including a reduction in interest rates in 2021 as compared to the prior year, resulting in a decrease in interest income, as well as, an overall decrease in our short-term and long-term investment balance during 2021. Other (expense) income, net . Other (expense) income, net, for the year ended December 31, 2021 and 2020 was expense of $0.3 million and income of $0.1 million, respectively. Other (expense) income, net, in the years ended December 31, 2021 and 2020 primarily consists of gains and losses on foreign exchange transactions. Provision for income taxes . Provision for income taxes for the year ended December 31, 2021 and 2020 was $3.6 million and $0.7 million, respectively. The increase in the provision for income taxes is due to a change in geographic mix of pre-tax income as well as an increase in our uncertain tax positions. Liquidity and Capital Resources Our aggregate sources of liquidity as of December 31, 2021 are approximately $490.0 million, with no debt. Our aggregate sources of liquidity include cash and cash equivalents and restricted cash of $223.4 million, short-term investments of $234.7 million and long-term investments of $35.0 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: Year Ended December 31, In millions 2021 2020 2019 Cash (used in) provided by: Operating activities $ (66.5 ) $ (21.7 ) $ (9.4 ) Investing activities 104.1 (377.0 ) (2.5 ) Financing activities (5.1 ) (58.9 ) 409.6 Increase (decrease) in cash and cash equivalents and restricted cash $ 32.5 $ (457.6 ) $ 397.7 Net cash used in operating activities during 2021 compared to 2020 increased primarily as a result of a decrease in product sales as well as due to costs associated with our expansion into Europe. Net cash provided by investing activities during the year ended December 31, 2021 is due to the proceeds from the maturity of our investment-grade interest bearing instruments of $394.3 million, partially offset by our purchase of approximately $290.2 million of securities during 2021. Net cash used in investing activities during the year ended December 31, 2020 is as a result of our purchasing approximately $678.7 million investment-grade interest bearing instruments during 2020, partially offset by $302.0 million in proceeds from the maturity and sale of securities. 101 Net cash used in financing activities during the year ended December 31, 2021 is primarily as a result of costs associated with our stock compensation plan. Net cash used in financing activities during the year ended December 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. Net cash provided by financing activities during the year ended December 31, 2019 is primarily due to completing a public offering of 22,222,223 ADS with each ADS representing one ordinary share at a price of $18.00 per ADS, $17.235 per ADS after commission, on July 18, 2019. In addition, we granted the underwriters a 30-day option to purchase up to an additional 3,333,333 ADS at the same price per ADS. On July 29, 2019, the underwriters exercised the full option. This public offering, including the exercised option, resulted in net proceeds of $440.1 million, after deducting customary commissions and offering expenses. As of December 31, 2021, we had net accounts receivable of $163.7 million and inventory of $355.9 million. We have incurred annual operating losses since our inception until this year and, as a result, we had an accumulated deficit of $1.4 billion as of December 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, promotional activities under our Go-to-Market strategy and the impact from COVID-19 on our operations and those of our customers, the generic competition in the United States as a result of our ANDA litigation and commercialization of VAZKEPA in Europe. We believe that our cash and cash equivalents of $219.5 million as of December 31, 2021 together with our short-term investments of $234.7 million as of December 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. We do not have any special purpose entities or other off-balance sheet arrangements. Item 7A. Quantitative and Qualitat ive Disclosures about Market Risk We are exposed to market risks, which include changes in interest rates. We do not use derivative financial instruments in our investment portfolio, and we do not enter into foreign exchange contracts. Our investments meet high credit quality and diversification standards, as specified in our investment policy. Foreign Currency Exchange Risk. Our results of operations and cash flows are subject to fluctuations due to changes in the Euro, Sterling, Swiss Franc and Yen. The majority of cash and cash equivalents, investments, and the majority of our vendor relationships are denominated in U.S. dollars. We therefore believe that the risk of a significant impact on our operating income from foreign currency fluctuations is not substantial. All of our investments are held in U.S. dollars. From time to time, we maintain a small amount of our cash and cash equivalents in Euro and Pound Sterling. We purchase a portion of our supply from Novasep based on a U.S. dollar to Euro exchange rate and, as such, remain subject to currency fluctuation risk for such purchases. Based on the size of our international operations and the amount of our expenses denominated in foreign currencies, currency fluctuation would not have a material effect on our financial position or results of operations. We believe the impact of inflation on operations has been minimal during the past three years. Interest Rate Risk. We believe that we are not exposed to significant interest rate risk through market value fluctuations of balance sheet items (i.e., price risk) or through changes in interest income or expenses (i.e., re-financing or re-investment risk). Interest rate risk mainly arises through interest bearing liabilities and assets. Our portfolio of held-to-maturity investments as of December 31, 2021 was composed of U.S. Treasury securities, commercial paper, corporate, CD and asset-backed securities and other government-related securities. At December 31, 2021 and 2020, we had short-term investments and long-term investments of $269.7 million and $376.4 million, respectively. We invest funds to have a continuous inflow of cash from diversified short-term and long-term investments, consisting primarily of investment grade securities. A hypothetical 10 percent change in interest rates would not result in a material decrease or increase in the fair value of our securities due to the balance and diversified investment portfolio. Credit Risk. We monitor our investments with our investment managers with the objective of minimizing concentrations of credit risks. 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. Additionally, our investment policy is to invest only in institutions that meet high credit quality and diversification standards and established limits on the amount and time to maturity of investments. 102 Item 8. Financial Statement s and Supplementary Data Our consolidated financial statements are annexed to this Annual Report on Form 10-K beginning on page F-1. Item 9. Changes in and Disagreements with Accou ntants on Accounting and Financial Disclosure None.