AMARIN CORP PLC\UK 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This Quarterly Report on Form 10-Q, or this Quarterly Report, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements reflect our plans, estimates and beliefs. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Because of these risks and uncertainties, the forward-looking events and circumstances discussed in this report may not transpire. We discuss many of these risks in Part I, Item 1A under the heading “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, or our Annual Report, and under Part II, Item IA, “Risk Factors” of this Quarterly Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this document. You should read this document with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we do not undertake any obligation to publicly update or revise any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise. The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report, and the audited consolidated financial statements and accompanying notes, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report. 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 commercialized product, VASCEPA ® (icosapent ethyl) was first approved by the United States, or U.S., Food and Drug Administration, or U.S. FDA, for use as an adjunct to diet to reduce triglyceride, or TG, levels in adult patients with severe (≥500 mg/dL) hypertriglyceridemia, or the MARINE indication and we commercially launched in 2013. On December 13, 2019, the U.S. FDA approved an indication and label expansion for VASCEPA based on the landmark results of our cardiovascular outcomes trial, 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 European Union, or 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 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. On June 1, 2023, we announced that regulatory approval from the National Medical Products Administration, or NMPA, for VASCEPA in Mainland China was received by our partner for the MARINE indication. VASCEPA is currently available by prescription in the U.S. and certain other countries throughout the world, as described below. We are responsible for the supply of VASCEPA to all markets in which the branded product is sold, either to and through our collaborations with third-party companies or by us. 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 and no similar litigation is pending outside of the United States. Organizational Restructuring Program On July 18, 2023, we announced that we were implementing a new Organizational Restructuring Program, or the ORP, resulting in the elimination and consolidation of certain roles across our organization, both in the U.S. and abroad and representing a reduction of our total employee base by approximately 30%. The ORP was implemented following a review of our business and to better position the organization for a new strategic focus. We expect the ORP will reduce operating costs by approximately $40.0 million annually. Our refocused strategic priorities and restructuring plan focuses on three core areas: • Maximizing U.S. Cash Flow Through Streamlined Model: We have maintained VASCEPA as a cost-competitive option to generics despite the elimination of all U.S. sales force positions and approximately 30% of non-sales positions. We maintained our managed care and trade organization to support these efforts. We continue to explore innovative approaches to driving revenue to maintain our leadership position in the icosapent ethyl, or IPE, market. • European Redesign: We redesigned our commercial infrastructure in Europe to better align with pricing and reimbursement status, commercial progress to date, as well as streamline certain cross-geographic functions and better 24 leverage learnings across countries. In addition, we continue to advance our pricing and reimbursement activities to drive access in remaining geographies, including those where progress has been delayed. • Expanding Upon International Partnerships: We continue to work on generating revenue from our partnerships in key international markets, including Canada, the Middle East and North Africa, or MENA, China, South Korea, Australia and New Zealand and will continue to explore additional partnerships. United States VASCEPA is sold principally to a limited number of major wholesalers, as well as selected regional wholesalers and retail 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. Since VASCEPA was made commercially available in 2013, approximately 25 million estimated normalized total prescriptions of VASCEPA have been reported by Symphony Health. In 2020, following our unsuccessful appeals of a court ruling in favor of two generic drug companies, Dr. Reddy’s Laboratories, Inc., or Dr. Reddy’s, and Hikma Pharmaceuticals USA Inc., or Hikma, and certain of their affiliates, several of our patents covering the MARINE indication were declared invalid. As a result, the following generic versions of VASCEPA have obtained U.S. FDA approval with labeling consistent with the MARINE indication and have entered the U.S. market: Company FDA MARINE Indication Approval 1-gram Launch Date 0.5-gram Launch Date Hikma Pharmaceuticals USA Inc. May 2020 November 2020 March 2023 Dr. Reddy’s Laboratories, Inc. August 2020 June 2021 June 2023 Teva Pharmaceuticals USA, Inc. September 2020 January 2023 September 2022 Apotex, Inc. June 2021 January 2022 N/A Zydus Lifesciences April 2023 N/A N/A Strides Pharma September 2023 N/A April 2024 Epic Pharma December 2023 March 2024 N/A Ascent Pharmaceuticals, Inc. December 2023 April 2024 April 2024 We obtain data from a third party, Symphony Health, which collects and reports 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 products like VASCEPA during such periods. The vendor's estimate utilizes a proprietary projection methodology and is based on a combination of data received from pharmacies and other distributors, as well as historical data when actual data is unavailable. Based on data from Symphony Health, the below chart represents the estimated number of normalized total VASCEPA prescriptions. 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 previous calculations of prescription levels by this vendor 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 25 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 this vendor's information and we do not receive prescription data directly from retail pharmacies. Europe In 2021, we received marketing authorization and regulatory approval in the EU, England, Wales and Scotland. Launch of VAZKEPA in individual countries depends on the timing of achieving product reimbursement on a country-by-country basis. To date we have filed 15 dossiers to gain market access in European countries, including in all of the largest countries in Europe. 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 reimbursement. In countries where individual price reimbursement is allowed prior to national reimbursement, product can be made available on a patient-by-patient basis, while the national reimbursements negotiations are ongoing. 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. While we believe that we have strong arguments regarding the cost effectiveness of VAZKEPA, the success of such reimbursement negotiations have a significant impact on the assessment of the commercial opportunity of VAZKEPA in Europe. Through the date of this Quarterly Report, we received marketing authorization by the MHRA and the European Medicines Agency, or EMA, and subsequently we have made VAZKEPA available under individual reimbursement or received national reimbursement and launched commercial operations in the following countries, respectively. Country Individual Reimbursement National Reimbursement Product Availability Launch Date Sweden N/A March 2022 March 2022 March 2022 Finland N/A October 2022 December 2022 December 2022 England/Wales N/A July 2022 October 2022 October 2022 Spain N/A July 2023 September 2023 September 2023 Netherlands N/A August 2023 September 2023 September 2023 Scotland N/A August 2023 August 2023 September 2023 Austria September 2022 N/A September 2022 N/A Denmark June 2022 N/A June 2022 N/A We continue to advance our pricing and reimbursement activities to drive access in remaining geographies, including those where progress has been delayed. We are leveraging third-party relationships for various support activities and are implementing an impactful and cost-effective hybrid commercial model balancing optimally digital and face-to-face approach for more impact and cost efficiency, which is or will be utilized throughout Europe as launches are rolled out. Patients at high risk for cardiovascular disease tend to be treated more often by specialists, such as cardiologists, rather than by 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 than in the United States. However, this greater concentration of at-risk patients being treated by specialists in Europe should allow for more efficient promotion than in the United States. In Europe, VAZKEPA has the benefit of 10 years of market protection, and in April 2024, we were issued a patent that extended our exclusivity to 2039. Rest of World As discussed above, one of the core areas of focus from our ORP is continuing to work on generating revenue from our partnerships in key international markets, including Canada, MENA, China, Australia and New Zealand and we will continue to explore additional partnerships. China In February 2015, we entered into 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. 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. 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 had commenced. On February 23, 2022, the Hong Kong Department of Health completed their regulatory evaluation and approved the use of VASCEPA under the REDUCE-IT indication. In Mainland China, the NMPA 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 26 studies of VASCEPA. In China, on October 10, 2022, following the completion of product testing by the China National Institutes for Food and Drug Control, or NIFDC, the final NMPA review of the VASCEPA NDA was initiated. The Company announced on June 1, 2023 that Edding received approval from the NMPA for VASCEPA in Mainland China under the MARINE indication and launched commercially in October 2023. In October 2023, Edding's submission of a regulatory filing to the NMPA for VASCEPA under the REDUCE-IT indication was accepted. 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 2019 April 2021 N/A Bahrain April 2021 April 2022 N/A Kuwait December 2021 March 2023 September 2023 Saudi Arabia March 2022 June 2023 September 2023 VASCEPA is under registration in additional countries in the MENA region. Canada In September 2017, we entered into an agreement with HLS Therapeutics Inc., or HLS, to register, commercialize and distribute VASCEPA in Canada. In December 2019, HLS received formal confirmation from Health Canada that the Canadian regulatory authority 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 regulatory exclusivity designation and launched commercially in February 2020. In April 2022, HLS completed negotiations with Canada’s pan-Canadian Pharmaceutical Alliance for the terms and conditions under which VASCEPA would qualify for public market reimbursement in Canada. HLS has obtained reimbursement from all major private and public payors gaining access to a majority of eligible patients in Canada. 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 are in the final year of a three-year plan to submit and obtain regulatory approval in 20 or more additional countries and regions in order to ensure that patients in the top 50 cardiometabolic markets worldwide can benefit from VASCEPA. Through the date of this Quarterly Report, we have filed for regulatory review in 21 countries and regions and have received approval in 14 countries and regions outside of the United States and EMA regulatory approval authority, including in Switzerland, Australia, New Zealand and Israel, under the REDUCE-IT indication. In addition, VAZKEPA has been made available under individual pricing reimbursement in Switzerland. In February 2023, the Company entered into an agreement with CSL Seqirus, or CSL, to secure pricing and reimbursement, commercialize and distribute VAZKEPA in Australia and New Zealand. In July 2023, the Company entered into an agreement with Lotus Pharmaceuticals to commercialize and distribute VAZKEPA in South Korea and nine countries in Southeast Asia. In August 2023, the Company entered into an agreement with Neopharm (Israel) 1996 Ltd., or Neopharm, to distribute VAZKEPA in Israel, Gaza, West Bank, and the territories of the Palestinian Authority. The Company will be responsible for supplying finished product to these partners. We continue to assess other potential partnership opportunities for VASCEPA with companies outside of the United States and Europe with the intention of partnering in all other international markets where VASCEPA receives local regulatory approval. Research and Development Since its inception in 2011, 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 the study of the mechanism of action of the single active ingredient in VASCEPA, icosapent ethyl. 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. 27 Based on REDUCE-IT results, as of the date of the filing of this Quarterly Report, more than 40 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 Australia, Canada, China and the Middle East as well as guidelines or statements which were newly received during the first quarter of 2024 as listed below: • In January 2024, the American Diabetes Association updated their recommendations for risk management in patients with chronic kidney disease, or CKD, in their Standards of Care in Diabetes stating that patients with diabetes and CKD should be treated with moderate- or high-intensity statin as first-line therapy followed by ezetimibe, PCSK9 inhibitors or IPE if indicated based on atherosclerotic cardiovascular disease, or ASCVD, risk and lipid levels. • In February 2024, the Lipid Association of India published an update to their cardiovascular risk assessment algorithm for the prevention of ASCVD. This update included that in statin-treated patients at high risk for ASCVD, IPE should be used to treat patients with a TG level greater than 150 mg/dL, patients with recurring cardiovascular events despite low-density lipoprotein cholesterol, or LDL-C, around 30 mg/dL and in patients with a TG level greater than 500 mg/dL. • In February 2024, the President of the Saudi Heart Association posted a statement that experts agree on using IPE for secondary prevention in statin treated patients with elevated TG and patients with recent acute coronary syndrome and revascularization will benefit most from the addition of IPE. Further, the results shown on low attenuation plaque from the EVAPORATE trial further reinforce the benefit of IPE on coronary atherosclerosis. In February 2024, we supported our commercialization partners in Australia with an encore research presentation at the 4 Corners of Cardiology Meeting in Melbourne, Australia. This encore presentation included the REDUCE-IT mediation analysis report of the contribution of IPE and other biomarkers to major adverse cardiovascular events reduction. In April 2024, we highlighted three data presentations showcasing the mechanistic activity of Eicosapentaenoic acid, or EPA, at the American College of Cardiology scientific session. These presentations advanced the understanding of how EPA and VASCEPA work to reduce CV events in at-risk patients. In the first three months of 2024, Amarin and global medical and scientific collaborators supported seven publications inclusive of accepted abstracts, posters, and manuscripts. Commercial and Clinical Supply We manage the manufacturing and supply of VASCEPA and 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 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. Beginning in 2022, we reviewed our contractual supplier purchase obligations and began taking steps to amend supplier agreements to align supply arrangements with current and future market demand, while we decrease our current inventory levels primarily related to North America approved inventory. As of March 31, 2024, we had inventory of $329.5 million, of which 75% is inventory approved for use in North America. We continue to negotiate with our contract suppliers to align our supply arrangements with current and future global market demand. 28 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, VASCEPA is sold to three major wholesalers, as well as several regional wholesalers along with mail order pharmacy providers, or collectively, our distributors or our customers. Most of these customers resell VASCEPA to retail pharmacies for purposes of dispensing VASCEPA to patients. Revenues from VASCEPA sales are recognized upon delivery to the distributor or 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, may differ from period to period. During the quarters ended March 31, 2024 and 2023, our product revenue, net, included adjustment for co-pay mitigation rebates provided by us to commercially insured patients in the United States. 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 sales to our international commercial partners are recognized when the commercial partners obtain control of our product. 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. Licensing and royalty revenue . Licensing and royalty revenue currently consists of revenue attributable to receipt of upfront, 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. In the three months ended March 31, 2023, we incurred costs within cost of goods sold - restructuring inventory related to steps taken to amend supplier agreements to align supply arrangements with current and future market demand (none as of March 31, 2024). 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. Interest income, net and other income, net . Interest income, net, consists primarily of interest earned on our cash and cash equivalents, as well as our short-term and long-term investments. Other income, net, consists of foreign exchange losses and gains as well as sublease income. Income tax provision. Income tax provision, 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 2024 and 2023 are not more likely than not to be realized. 29 Critical Accounting Policies and Significant Judgments and Estimates Our discussion and analysis of our financial condition and results of operations is based on our unaudited condensed 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 condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. On an ongoing basis, estimates are assessed and adjusted based on historical experience and current market-specific indicators, environment and assumptions. Actual results may differ from these estimates under different assumptions or conditions. A summary of our critical accounting policies, significant judgments and estimates is presented in Part II, Item 7 of our Annual Report. There have been no material changes to our critical accounting policies, significant judgments and estimates described in our Annual Report. Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, see Note 2—Significant Accounting Policies in the accompanying Notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. Effects of Inflation We believe the impact of inflation on operations has been minimal during the past three years. Comparison of Three Months Ended March 31, 2024 and March 31, 2023 Total revenue, net. We recorded total revenue, net, of $56.5 million and $86.0 million during the three months ended March 31, 2024 and 2023, respectively, a decrease of $29.5 million, or 34%. 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 certain countries in Europe as well as certain countries outside of the United States and Europe, such as China and Canada, through collaborations with third-party companies. As further discussed below, the aforementioned decrease consists of a $34.2 million decrease in U.S. net product revenue offset in part by a $4.8 million increase in net product revenue outside of the United States. Product revenue, net. We recorded product revenue, net, of $55.2 million and $84.7 million during the three months ended March 31, 2024 and 2023, respectively, a decrease of $29.5 million, or 35%. This decrease was due primarily to a 41% decrease in VASCEPA sales in the United States. We recorded U.S. product revenue, net, of $48.1 million and $82.3 million during the three months ended March 31, 2024 and 2023, respectively. This decrease was due to a decline in net selling price as a result of the continued impact from generic competition in the market and changes in business mix. The overall icosapent ethyl market in the United States, based on prescription levels reported by Symphony Health, decreased for the three months ended March 31, 2024 by 4% as compared to the three months ended March 31, 2023. Our share of the icosapent ethyl market has remained relatively consistent at approximately 56% in the three months ended March 31, 2024 and approximately 57% in the three months ended March 31, 2023. Additionally, based on prescription levels reported by Symphony Health, VASCEPA-branded prescriptions decreased by 5% in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. In Europe, we recorded product revenue, net, of $1.9 million and $0.4 million during the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, we recorded $5.2 million of product revenue, net, from our collaboration partners outside of the United States and Europe compared to $1.9 million during the three months ended March 31, 2023. Despite the generic competition in the U.S., we remain confident that the global patient need for VASCEPA is high. In 2024, we will continue to focus on extending the lifecycle of VASCEPA in the U.S., obtaining pricing reimbursement and launching commercial operations in all remaining European markets as well as supporting our partners to advance access and growing commercial operations throughout the rest of the world. Licensing and royalty revenue . Licensing and royalty revenue during the three months ended March 31, 2024 and 2023 was $1.4 million and $1.3 million, respectively, an increase of $0.1 million, or 3%. Licensing and royalty revenue has remained consistent primarily due an increase in recognition of deferred milestone and upfront payments relating to Edding as well as royalties related to the commercial launch in China, offset by the recognition of CSL upfront payment and recognition of previously achieved milestone 30 payments from HLS in the prior year. Licensing and royalty revenue recognized in the current period relates to the recognition of amounts received in connection with the following VASCEPA licensing agreements: • Edding – a $15.0 million upfront payment received in February 2015, a $1.0 million milestone payment achieved in March 2016 following submission of the clinical trial application to the Chinese regulatory authority, a $5.0 million milestone payment achieved in June 2023 following NMPA approval of VASCEPA under the MARINE indication and a $3.0 million milestone payment achieved in October 2023 following a regulatory submission to the NMPA for VASCEPA under the REDUCE-IT indication. Licensing and royalty revenue recognized in the prior period relates to the recognition of the above as well as below amounts received in connection with the following VASCEPA licensing agreements: • HLS – a $5.0 million upfront payment which was received upon closing of the agreement in September 2017, a $2.5 million milestone payment that was received following achievement of the REDUCE-IT trial primary endpoint in September 2018, a $2.5 million milestone payment that was received following U.S. FDA approval of a new indication and label expansion in December 2019, and a $3.8 million milestone payment that was received as a result of obtaining a regulatory exclusivity designation in January 2020. All of which was fully recognized in 2023. • CSL – a $0.5 million upfront payment which was received upon closing of the agreement in January 2023. The upfront and milestone payments from Edding is being recognized over the estimated period in which we are required to provide regulatory and development support pursuant to the agreement. The upfront and milestone payments from HLS were being recognized over the estimated period in which we were required to provide regulatory and development support pursuant to the agreement which was satisfied in 2023. The upfront payments from CSL was recognized in January 2023 upon closing of the agreement as no regulatory and development support is required pursuant to the agreement. The amount of licensing and royalty revenue is expected to vary from period to period based on timing of milestones achieved and changes in estimates of the timing and level of support required. As part of our licensing agreements with certain territories outside of the United States, we are entitled to a percentage of revenue earned based on sales by our partners. The royalty payments are being recognized as earned based on revenue recognized by our current partners. Cost of goods sold. Cost of goods sold during the three months ended March 31, 2024 and 2023 was $24.6 million and $38.0 million, respectively, a decrease of $13.4 million, or 35%. 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. During the three months ended March 31, 2024 and 2023, we have taken steps to amend supplier agreements to align supply arrangements with current and future demand resulting in charges of nil and $12.3 million, respectively, which were recorded as cost of goods sold - restructuring inventory. During the three months ended March 31, 2024 and 2023, approximately $1.5 million and $2.3 million, respectively, of inventory was expensed through cost of goods sold due to both product dating and non-product dating unsellable inventory. The API included in the calculation of the average cost of goods sold during the three months ended March 31, 2024 and 2023 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. The average cost may be variable from period to period depending upon the timing and quantity of API purchased from each supplier. Our overall gross margin on product sales for each of the three months ended March 31, 2024 and 2023 was 55%. Excluding the restructuring inventory charges, gross margin was 70% for the three months ended March 31, 2023. The decrease is due to a decline in net selling price. Selling, general and administrative expense . Selling, general and administrative expense for the three months ended March 31, 2024 and 2023 was $39.9 million and $59.6 million, respectively, a decrease of $19.7 million, or 33%. Selling, general and administrative expenses for the three months ended March 31, 2024 and 2023 are summarized in the table below: Three months ended March 31, In thousands 2024 2023 Selling expense (1) $ 20,395 $ 32,154 General and administrative expense (2) 15,282 23,090 Non-cash stock-based compensation expense (3) 4,212 4,343 Total selling, general and administrative expense $ 39,889 $ 59,587 31 (1) Selling expense for the three months ended March 31, 2024 and 2023 was $20.4 million and $32.2 million, respectively, a decrease of $11.8 million, or 37%. This decrease is primarily due to a reduction in costs associated with our ORP resulting in decreased promotional initiatives, reduced travel and elimination of our U.S. sales force. (2) General and administrative expense for the three months ended March 31, 2024 and 2023 was $15.3 million and $23.1 million, respectively, a decrease of $7.8 million, or 34%. This decrease is primarily due to a decrease in employee-related costs as a result of the reduction in force from the ORP as well as advisory fees incurred in 2023 related to the previously held special shareholder's meeting. (3) 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. As part of our ORP announced in July 2023, we have redesigned our commercial infrastructure in Europe to better align with pricing and reimbursement status, commercial progress to date, as well as streamline certain cross-geographic functions. In addition, we are continuing to advance our pricing and reimbursement activities to drive access in remaining geographies, as well as advancing regulatory filings internationally and focusing on maximizing U.S. cash flow through a streamlined model. We will continue to evaluate all of our spending commitments and priorities based on our refocused strategic priorities and restructuring plan. Research and development expense . Research and development expense for the three months ended March 31, 2024 and 2023 was $5.6 million and $5.7 million, respectively, a decrease of $0.1 million, or 1%. Research and development expenses for the three months ended March 31, 2024 and 2023 are summarized in the table below: Three months ended March 31, In thousands 2024 2023 REDUCE-IT study and presentations (1) $ 886 $ 509 Fixed-dose combination (2) 44 274 Regulatory filing fees and expenses (3) 867 357 Non-clincial research activities (4) 377 108 Internal staffing, overhead and other (5) 2,418 3,220 Research and development expense, excluding non-cash expense 4,592 4,468 Non-cash stock-based compensation expense (6) 1,006 1,213 Total research and development expense $ 5,598 $ 5,681 (1) REDUCE-IT study and publications expenses consist primarily of costs incurred to maintain the REDUCE-IT trial data as well as support provided to present at conferences and providing data to be published in medical journals. The increase is as a result of additional conferences and publications in the U.S. and Europe to support the expansion and growth in the European markets. (2) Fixed-dose combination expenses are primarily related to cost associated with developmental activities of a fixed-dose combination of VASCEPA and a statin which began in 2022 and subsequently deprioritized during 2023. (3) Regulatory and quality filing fees are primarily related to the preparation, submission and review defense of regulatory filings as well as assistance with securing and maintaining regulatory approvals for qualifying suppliers for VASCEPA in the U.S. and Europe as well as regulatory expansion in the rest of the world. The increase is primarily due to the continued expansion within Europe and other countries throughout the world. (4) Non-clinical research activities are primarily related to ongoing experiments and analyses further exploring the potential biological activities of IPE. (5) Internal staffing, overhead and other research and development expenses primarily relate to the costs of our personnel employed to manage research, development and regulatory affairs activities and related overhead costs including consulting and other professional fees that are not allocated to specific projects. Also included are costs related to qualifying suppliers and costs associated with various other activities, including other costs in collaboration with Mochida. (6) 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. 32 We continuously evaluate all of our spending commitments and priorities and we plan to adjust our level of research and development activities based on various factors, including the impact of U.S. generic competition as well as timing of pricing reimbursements throughout Europe. Interest income, net . Interest income, net, for the three months ended March 31, 2024 and 2023 was $3.4 million and $2.2 million, respectively, an increase of $1.2 million, or 52%. Interest income, net, represents income earned on cash and investment balances. The increase is primarily due to higher interest rates in the current year period compared to the prior year period. Other income, net . Other income, net, for the three months ended March 31, 2024 and 2023 was $1.5 million and $0.6 million, respectively, an increase of $0.9 million, or 148%. Other income, net, primarily consists of the gains and losses on foreign exchange transactions and sublease income related to our Bridgewater, NJ facility. Income tax provision. Income tax provision for the three months ended March 31, 2024 and 2023 was $1.3 million and $2.0 million, respectively. The decrease compared to the prior year is primarily due to changes in the mix of jurisdictional income and in unrecognized tax benefits. Liquidity and Capital Resources As of March 31, 2024, our aggregate sources of liquidity include cash and cash equivalents and restricted cash of $214.5 million and short-term investments of $94.2 million. We have no indebtedness. Our cash and cash equivalents primarily include checking accounts and money market funds with original maturities of less than 90 days. Our short-term investments consist of securities that will be due in one year or less. 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 condensed consolidated statements of cash flows, are summarized in the following table: Three months ended March 31, In millions 2024 2023 Cash (used in) provided by: Operating activities $ (12.6 ) $ (7.0 ) Investing activities 28.7 (19.6 ) Financing activities (1.4 ) 0.4 Increase (decrease) in cash and cash equivalents and restricted cash $ 14.7 $ (26.2 ) Net cash used in operating activities increased during the three months ended March 31, 2024 as compared to the same period in 2023. This is primarily as a result of inventory purchases and restructuring payments made in 2024 which did not occur in the same period in 2023. Net cash provided by investing activities during the three months ended March 31, 2024 increased due primarily to proceeds from the maturity of $62.0 million in investment grade interest bearing instruments, partially offset by $33.3 million in purchases of the investment grade interest bearing instruments as compared to the same period in 2023 where proceeds from the maturity of investment grade interest bearing instruments was $32.9 million, partially offset by $52.5 million in purchases of investment grade interest bearing instruments. Net cash used in financing activities during the three months ended March 31, 2024 was $1.4 million as compared net cash provided by financing activities of $0.4 million during the same period in 2023. The change was primarily a result of a decrease in stock option exercises in 2024 due to stock option exercises by former executives in 2023. As of March 31, 2024, we had net accounts receivable of $115.8 million, current inventory of $255.3 million and long-term inventory of $74.2 million. We have incurred annual operating losses since our inception and, as a result, we had an accumulated deficit of $1.6 billion as of March 31, 2024. We anticipate that quarterly net cash outflows in future periods will continue to be variable as a result of the timing of certain items, including our purchases of API, the generic competition in the United States and pricing and reimbursement of VAZKEPA in Europe. In July 2023, we announced that we were implementing the ORP resulting in the elimination and consolidation of certain roles across the organization, both in the United States and abroad, representing a reduction of our total employee base by approximately 30%. In the U.S., all sales force positions were eliminated, with the managed care and trade organization continuing to support U.S. commercial efforts, and 30% of non-sales positions were eliminated, while in Europe we have redesigned our commercial infrastructure to better align with pricing and reimbursement status, commercial progress to date, as well as streamlining certain 33 cross-geographic functions and better leveraging learnings across countries. We expect these actions will reduce operating costs by approximately $40.0 million annually. On January 10, 2024, we announced plans to initiate a share repurchase program to purchase up to $50.0 million of the Company's ordinary shares held in the form of American Depository Shares. We received shareholder approval of the share repurchase plan in April 2024. The implementation will also require UK High Court approval, as required under UK company law. As of March 31, 2024, we had cash and cash equivalents of $213.9 million and short-term investments of $94.2 million. In accordance with ASC 205-40, management is required to evaluate our ability to continue as a going concern for at least one year after the date the financial statements are issued. We believe that our cash and cash equivalents and our short-term investments will be sufficient to fund our projected operations, including the share repurchase program, for at least one year from the issuance date of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report and are adequate to support continued operations 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 “Risk Factors” in this Quarterly Report and we could use our capital resources sooner than we expect or fail to achieve positive cash flow. Contractual Obligations Our contractual obligations consist mainly of payments related to purchase obligations with certain supply chain contracting parties and operating leases related to real estate used as office space. We do not have any special purpose entities or other off-balance sheet arrangements. Item 3. Quantitative and Qualitat ive Disclosures about Market Risk There have been no material changes with respect to the information appearing in Part II, Item 7A “Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report.