AMARIN CORP PLC\UK 10-K

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, 2024. 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, Eddingpharm (Asia) Macao Commercial Offshore Limited, or Edding, for the MARINE indication and on June 28, 2024 for the REDUCE-IT indication. Through the date of this Annual Report we have received regulatory approval for VASCEPA under the REDUCE-IT indication in 49 countries, including the U.S. and 27 EU Member States. 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 U.S. 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 U.S.. 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 27 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 icosapent ethyl have obtained U.S. FDA approval with labeling consistent with the MARINE indication and have entered the U.S. market: 69 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 June 2024 Strides Pharma (1) September 2023 April 2024 April 2024 Epic Pharma December 2023 March 2024 N/A Ascent Pharmaceuticals, Inc. (2) December 2023 April 2024 April 2024 Qilu Pharmaceutical Co Ltd November 2024 N/A N/A Spriaso LLC December 2024 N/A N/A (1) Strides Pharma licensed its rights to the generic version of icosapent ethyl to Amneal Pharmaceuticals. (2) Ascent Pharmaceuticals, Inc. licensed its rights to the generic version of icosapent ethyl to Camber Pharmaceuticals, Inc. and XL Care Pharmaceuticals, Inc. 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 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. Europe In 2021, we received marketing authorization and regulatory approval in the EU, England, Wales and Scotland. 70 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 19 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 varies 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 Annual 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 Greece (1) N/A May 2024 June 2024 June 2024 Portugal N/A August 2024 August 2024 September 2024 Italy N/A December 2024 December 2024 N/A Austria September 2022 February 2025 September 2022 N/A Denmark June 2022 N/A June 2022 N/A (1) Vianex S.A will be the sole and exclusive distributor of VAZKEPA in the Greek territory to import, register, distribute and commercialize VAZKEPA. 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 approaches to drive greater impact and improved 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 U.S.. However, this greater concentration of at-risk patients being treated by specialists in Europe should allow for more efficient promotion than in the U.S.. 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 One of our core areas of focus is continuing to work on generating revenue from our partnerships in key international markets, including Canada, Middle East North Africa, or MENA, China, Australia and New Zealand and Association of Southeast Asian Nations, or ASEAN, and South Korea and we will continue to explore additional partnerships in other countries throughout the world. China In February 2015, we entered into an exclusive agreement with Edding to develop and commercialize VASCEPA 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). 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 studies of VASCEPA. In Mainland 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 New Drug Application, or 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 71 filing to the NMPA for VASCEPA under the REDUCE-IT indication was accepted. On June 28, 2024, Edding received approval from the NMPA for VASCEPA in Mainland China under the REDUCE-IT indication. 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 May 2022 Bahrain April 2021 April 2022 September 2023 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 completed 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 Annual Report, we have filed for regulatory review in 22 countries and regions and have received approval in 15 countries and regions outside of the U.S. and EMA regulatory approval authority, including in Mainland China, 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 October 2024, CSL obtained pricing approval and subsequently launched VAZKEPA in Australia. 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 U.S. and Europe with the intention of partnering in all other international markets where VASCEPA receives local regulatory approval. Management Updates As announced and effective on June 3, 2024, Patrick Holt voluntarily resigned as President and Chief Executive Officer and as a member of the Board of Directors. Effective June 4, 2024, the Board of Directors appointed Aaron Berg, previously our Executive Vice President, President U.S., to succeed Mr. Holt as our President and Chief Executive Officer, and as a member of the Board of Directors. As announced on October 7, 2024, Tom Reilly voluntarily resigned as Executive Vice President, Chief Financial Officer, effective October 23, 2024. Effective December 13, 2024, our Vice President, Global Controller and principal financial and accounting officer of the Company, Peter Fishman, has been appointed as Senior Vice President, Chief Financial Officer. 72 Organizational Restructuring Program On July 18, 2023, we announced that we were implementing a new Organizational Restructuring Program, or ORP, resulting in the elimination of our entire U.S. sales force and elimination and consolidation of certain other 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. The ORP resulted in an operating cost reduction of $50.0 million annually. 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. as well as the study of the mechanism of action of the single active ingredient in VASCEPA, icosapent ethyl, or IPE. Based on the final positive results of REDUCE-IT, we sought additional indicated uses for VASCEPA in the U.S. 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. Based on REDUCE-IT results, as of the date of the filing of this Annual Report, more than 50 clinical treatment guidelines, consensus statements, or scientific statements from global medical societies or journals have recognized the use of icosapent ethyl, or IPE, in appropriate at-risk patients for CV risk reductions, including those statements which we were informed of by our global partners in Canada, China, Southeast Asia, Australia, and the Middle East as well as guidelines which were newly received during the fourth quarter of 2024 as listed below: • In September 2024, the European Society of Cardiology, or ESC, updated their guidelines on the management of peripheral arterial and aortic disease to recommend IPE 2g BID in high-risk patients with comorbid hypertriglyceridemia (>1.5 mmol/L) despite lifestyle changes and statin therapy. This update is a Class IIb recommendation supported by Level B evidence. • In November 2024, the Taiwan Society of Cardiology updated their guidelines on the prevention of Atherosclerotic Cardiovascular Disease, or ASCVD, to recommend IPE 2-4g QD to patients receiving statin therapy with TG levels ≥150 mg/dL. Patients with very high TG levels ≥500 mg/dL with pancreatic risk may also benefit from IPE or EPA. • In December 2024, the Royal College of Physicians of Thailand, or RCPT, updated their guidelines on the management of dyslipidemia for ASCVD prevention to recommend IPE for risk reduction in patients age >40 years with type 2 diabetes, two or more risk factors for ASCVD, and persistently elevated TG levels even after achieving target LDL-C levels with statin therapy. During 2024, we announced the following data which added to our growing body of knowledge on VASCEPA as a result of our continued analysis of the REDUCE-IT trial results: • 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 four data presentations showcasing the mechanistic activity of EPA and one REUDCE-IT subgroup analysis presentation reporting the effect of VASCEPA in patients with elevated TG and high or low Lipoprotein(a) concentrations 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 May 2024, we supported two data presentations showcasing the mechanistic activity of EPA at the European Atherosclerosis Society, or EAS, scientific session in Lyon, France. These presentations may advance the understanding of how EPA and VASCEPA work to reduce CV events in at-risk patients. • In June 2024, we supported a poster with real world, observational, safety data of IPE from a U.S. database at the National Lipid Association, or NLA, scientific session in Las Vegas, Nevada. This presentation may advance the understanding of the safety profile of IPE in the real world and how it compares to the safety listed in the approved labeling and those from the large REDUCE-IT CV outcomes trial. • In June 2024, we supported an economic analysis of the budget impact of IPE in the prevention of cardiovascular events in Italy at the International Society for Pharmacoeconomics and Outcomes Research, or ISPOR, Italy meeting in Bologna, Italy. • In July 2024, we supported data presentations showcasing the mechanistic activity of EPA as well as encore data reporting on real world safety of IPE at the Heart UK scientific conference in Coventry, England. 73 • In August 2024, we provided support to our commercial partner in Australia to present sub-analyses from the REDUCE-IT study in endpoints such at ST-elevation myocardial infarction as well as analyses in patients with established cardiovascular disease and diabetes mellitus. These data presentations occurred at the Cardiac Society of Australia and New Zealand, or CSANZ, and at the Australian Diabetes Congress, or ADC. • In August and September 2024, we supported data presentations at both the ESC in London, UK, and the European Association for the Study of Diabetes, or EASD in Madrid, Spain. These presentations included sub-analyses from the REDUCE-IT trial, EPA mechanistic data, and data from Spanish hospitals reporting on the residual cardiovascular risk of elevated TG levels in patients with acute coronary syndrome, or ACS, as well as the eligibility of IPE in patients with ACS. • In October 2024, we supported our Canadian partner, HLS, with an encore REDUCE-IT subgroup analysis presentation reporting the effect of VASCEPA/VAZKEPA in patients with elevated triglycerides and high or low Lipoprotein(a) concentrations at the Canadian Cardiovascular Congress, or CCC, in Vancouver, BC. • In November 2024, we supported three data presentation at the AHA Scientific Sessions in Chicago, IL. One data presentation was a subgroup analysis from REDUCE-IT in patients with prior CV events regardless of coronary artery disease history, and the other two data presentations showed the mechanistic activity of EPA. • In November 2024, we supported two health economics and outcomes research, or HEOR, presentations in Barcelona, Spain, at the International Society for Pharmacoeconomics and Outcomes Research, or ISPOR, Europe meeting. These data presentations highlighted the value add and cost-effectiveness of VASCEPA/VAZKEPA in patients with recent acute coronary syndrome in the Catalonia region of Spain. • In December 2024, we recognized support from our partner in the Middle East, Biologix, for a data presentation at the 20th International Symposium on Atherosclerosis, or ISA, in Muscat, Oman. The presentation reported on the effectiveness of VASCEPA/VAZKEPA in middle eastern patients with dyslipidemia within cardiology and endocrinology clinics. In total, Amarin and global medical and scientific collaborators supported close to 45 publications inclusive of accepted abstracts, posters, and manuscripts for the year 2024. 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 U.S.. 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 December 31, 2024, we had inventory of $230.8 million, of which approximately 60% 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. 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 U.S., VASCEPA is sold to three major wholesalers, several regional wholesalers along with mail order pharmacy providers that in turn resell the product to retail pharmacies, as well as directly to select regional retail pharmacy chains, 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 74 timing of prescriptions as estimated by third-party sources such as Symphony Health may differ from period to period. Our product revenue, net included adjustment for co-pay mitigation rebates provided by us to commercially insured patients in the U.S.. Outside of the U.S., 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 U.S.. We recognize revenue from licensing arrangements as we fulfill the performance obligations under each of the agreements. As part of our licensing agreements with certain territories outside of the U.S., 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 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 years ended December 31, 2024 and 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. 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 July 2023 ORP, June 2022 Cost Reduction Plan, or CRP, and August 2022 discontinuation of German operations, which consists of severance pay, incentive compensation, insurance benefits, stock-based compensation expense and other contract related costs. Interest income, net and other income (expense), 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 (expense), 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 U.S. 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, 2024 and 2023, are not more likely than not to be realized. Critical Accounting Policies 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 U.S., or GAAP. The 75 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, 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 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 revenue is recognized when product has been delivered to the wholesaler, 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 $228.6 million and $306.9 million during the years ended December 31, 2024 and 2023, respectively, of which $204.6 million and $285.3 million, respectively, was based on product revenue sales. For a complete discussion of our accounting for net product revenue, licensing and royalty revenues, which make up Total revenue, net, see Note 2—Significant Accounting Policies . 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 charged to 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 healthcare discounts, such as Medicaid reimbursements, (c) 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 prescription data, historical industry 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% change in estimated aggregate bottles of channel inventory would result in a change of less than 1% in net product revenues reported during the years ended December 31, 2024 and 2023. 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 76 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. Upfront payments and fees are either recognized as licensing revenue or 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, 2024, 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, 2024 and 2023. 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 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 2024 and 2023. For a comparison of our results of operations and financial condition for fiscal years 2023 and 2022, see “ Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of our 2023 Annual Report on Form 10-K, filed with the SEC on February 29, 2024 . Comparison of Fiscal Years Ended December 31, 2024 and December 31, 2023 Total revenue, net. We recorded total revenue, net, of $228.6 million and $306.9 million during the years ended December 31, 2024 and 2023, respectively, a decrease of $78.3 million, or 26%. Total revenue, net consists primarily of revenue from the sale of VASCEPA in the U.S.. In addition to the U.S., we also sell VASCEPA by prescription in certain countries in Europe as well as certain countries outside of the U.S. and Europe, such as China and Canada, through collaborations with third-party companies. As further 77 discussed below, the aforementioned decrease consists of a $107.2 million decrease in U.S. net product revenue, offset by increases of $26.5 million in net product revenue from sales of VASCEPA outside of the U.S. and $2.4 million in licensing and royalty revenue. Product revenue, net. We recorded product revenue, net, of $204.6 million and $285.3 million during the years ended December 31, 2024 and 2023, respectively, a decrease of $80.7 million, or 28%. This decrease was due primarily to a 39% decrease in VASCEPA sales in the U.S.. We recorded U.S. product revenue, net, of $166.7 million and $273.9 million for the years ended December 31, 2024 and 2023, respectively. This decrease was due to a decline in net selling price as a result of the impact from generic competition in the market, a decrease in volume primarily related to the loss of a large national Pharmacy Benefit Managers, or PBM, going from exclusive to no longer covering VASCEPA, as well as a change in estimate adjustment made in 2023 primarily related to Medicaid rebates of $15.1 million. The overall icosapent ethyl market in the U.S., based on prescription levels reported by Symphony Health, decreased for the year ended December 31, 2024 by 2% as compared to the year ended December 31, 2023. Our share of the icosapent ethyl market has decreased to approximately 53% in the year ended December 31, 2024 from approximately 57% in the year ended December 31, 2023. Additionally, based on prescription levels reported by Symphony Health, VASCEPA branded prescriptions decreased by 9% in the year ended December 31, 2024 as compared to the year ended December 31, 2023. In Europe, we recorded product revenue, net, of $13.7 million and $3.3 million as of December 31, 2024 and 2023, respectively, primarily from the UK and Spain. For the year ended December 31, 2024, we recorded $24.2 million of product revenue, net, to our collaboration partners compared to $8.1 million during the year ended December 31, 2023. Despite the generic competition in the U.S., we remain confident that the global patient need for VASCEPA is high. In 2025, we will continue to focus on getting VASCEPA to as many patients as possible by continuing to advance our pricing and reimbursement and licensing activities to drive access in remaining geographies as well as being the market leader in the U.S. Licensing and royalty revenue. Licensing and royalty revenue during the years ended December 31, 2024 and 2023 was $24.0 million and $21.6 million, respectively, an increase of $2.4 million, or 11%. The current year licensing and royalty revenue is comprised primarily of the following: • $15.0 million milestone payment following NMPA approval in China of VASCEPA under the REDUCE-IT indication, • $4.0 million recognition of previously deferred revenue arising from a change in estimate, • $1.2 million milestone arising from the Pharmaceutical Benefits Scheme, or PBS, listing of VAZKEPA in Australia, and • royalties from sales of VASCEPA in select territories. The prior year licensing and royalty revenue is comprised of the following: • partial recognition of a $5.0 million milestone following NMPA approval in China of VASCEPA under the MARINE indication, • partial recognition of a $3.0 million milestone following regulatory submission in China of VASCEPA under the REDUCE-IT indication, • $10.3 million recognition of previously deferred revenue arising from a change in estimate, and • royalties from sales of VASCEPA in select territories. Refer to Note 13 Development, Commercialization and Supply Agreements for further details on our licensing agreements. As part of our licensing agreements with certain territories outside of the U.S., 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, 2024 and 2023 was $147.2 million and $141.4 million, respectively, an increase of $5.9 million, or 4%. 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 2024 and 2023, we have taken steps to amend supplier agreements to align supply arrangements with current and future demand resulting in charges of $36.5 million and $39.2 million, respectively, which were recorded as cost of goods sold - restructuring inventory. During 2024, approximately $8.0 78 million of inventory was expensed through cost of goods sold due to both product dating and non-product dating unsellable inventory. During 2023, approximately $5.1 million 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 years ended December 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 the years ended December 31, 2024 and 2023 was 28% and 50%, respectively. Excluding the restructuring inventory and inventory write-off charges, gross margin was 50% and 66% for the years ended December 31, 2024 and 2023, respectively. The remaining decrease in gross margin is primarily as a result of a decrease in net selling price. Selling, general and administrative expense. Selling, general and administrative expense for the years ended December 31, 2024 and 2023 was $152.3 million and $199.9 million, respectively, a decrease of $47.6 million, or 24%. Selling, general and administrative expenses for the years ended December 31, 2024 and 2023 are summarized in the table below: Year Ended December 31, In thousands 2024 2023 Selling expense (1) $ 79,587 $ 111,326 General and administrative expenses (2) 58,557 76,119 Non-cash stock-based compensation expense (3) 14,166 12,493 Total selling, general and administrative expense $ 152,310 $ 199,938 (1) Selling expense for the years ended December 31, 2024 and 2023 was $79.6 million and $111.3 million, respectively, a decrease of $31.7 million, or 29%. This decrease is primarily due to a reduction in costs associated with our ORP and cost reduction plans resulting in decreased promotional initiatives, reduced travel and elimination of our U.S. sales force. (2) General and administrative expense for the years ended December 31, 2024 and 2023 was $58.6 million and $76.1 million, respectively, a decrease of $17.6 million, or 23%. This decrease is primarily due to a decrease in employee-related costs as a result of the reduction in force from the ORP and cost reduction plans and decreased advisory fees related to the shareholder's special meeting in 2023. (3) Non-cash stock-based compensation expense for the years ended December 31, 2024 and 2023 was $14.2 million and $12.5 million, respectively, an increase of $1.7 million, or 13%. 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 increase is due to prior years reversal of expense associated with our former CEO's resignation, as well as certain performance-based awards as it was no longer deemed probable that the performance criteria for vesting would be achieved within the required timeframe. We are focused on getting VASCEPA to as many patients as possible by continuing to advance our pricing and reimbursement and licensing activities to drive access in remaining geographies, as well as advancing regulatory filings internationally. We will continue to evaluate all of our spending commitments and priorities based on this focus. Research and development expense. Research and development expense for the years ended December 31, 2024 and 2023 was $20.9 million and $22.2 million, respectively, a decrease of $1.4 million, or 6%. Research and development expenses for the years ended December 31, 2024 and 2023 are summarized in the table below: Year Ended December 31, In thousands 2024 2023 REDUCE-IT study and presentations (1) $ 1,202 $ 1,439 Fixed-dose combination (2) 44 1,064 Regulatory filing fees and expenses (3) 2,533 2,342 Non-clinical research activities (4) 2,534 1,248 Internal staffing, overhead and other (5) 11,017 11,939 Research and development expense, excluding non-cash expense 17,330 18,032 Non-cash stock-based compensation expense (6) 3,539 4,187 Total research and development expense $ 20,869 $ 22,219 79 (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 to provide data to be published in medical journals. (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 but was 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. 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. Restructuring expense . Restructuring expense for the years ended December 31, 2024 and 2023 was nil and $11.0 million, respectively, a decrease of $11.0 million, or 100%. The charge in the prior year is due to the implementation of the ORP which was approved in the second quarter 2023 and announced on July 18, 2023, which resulted in a reduction of our entire U.S. sales field force, with our managed care and trade organization continuing to support our U.S. commercial efforts, as well as a reduction of approximately 30% of non-sales positions. Refer to Note 2 Significant Accounting Policies for additional information. Interest income, net. Interest income, net, for the years ended December 31, 2024 and 2023 was $13.4 million and $11.9 million, respectively, an increase of $1.5 million, or 13%. 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 (expense), net . Other income (expense), net, for the year ended December 31, 2024 and 2023 was income of $1.2 million and $2.1 million, respectively. Other income (expense), net, primarily consists of the gains and losses on foreign exchange transactions and sublease income related to our Bridgewater, NJ facility. Provision for income taxes . Provision for income taxes for the year ended December 31, 2024 and 2023 was $5.0 million and $5.4 million, respectively. The decrease in the provision for income taxes is due to a change in geographic mix of pre-tax income. Liquidity and Capital Resources As of December 31, 2024, our aggregate sources of liquidity include cash and cash equivalents and restricted cash of $121.3 million and short-term investments of $173.2 million, aggregating $294.5 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 consolidated statements of cash flows, are summarized in the following table: Year Ended December 31, In millions 2024 2023 2022 Cash (used in) provided by: Operating activities $ (31.0 ) $ 6.9 $ (180.1 ) Investing activities (46.0 ) (25.5 ) 175.3 Financing activities (1.4 ) 0.2 (0.4 ) (Decrease) increase in cash and cash equivalents and restricted cash $ (78.4 ) $ (18.4 ) $ (5.2 ) 80 Net cash used in operating activities decreased during 2024 as compared to net cash provided by operating activities during the same period in 2023. This is primarily as a result of timing and payment of invoices and accruals in 2024 as well as a decrease in U.S. product revenue in 2024. Net cash used in investing activities decreased during the year ended December 31, 2024 compared to the same period in 2023. This is primarily due to the purchase of investment grade interest-bearing instruments of $278.8 million partially offset by $232.8 million from proceeds from the maturity of 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 $215.1 million, partially offset by $190.1 million in purchases of investment grade interest-bearing instruments. Net cash used in financing activities decreased during the years ended December 31, 2024 compared to net cash provided by financing activities during the same period in 2023, primarily as a result of a decrease in proceeds related to stock option exercises. As of December 31, 2024, we had net accounts receivable of $122.3 million, current inventory of $166.0 million and long-term inventory of $64.7 million. We have incurred annual operating losses since our inception and, as a result, we had an accumulated deficit of $1.7 billion as of December 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 U.S. 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 U.S. 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 cross-geographic functions and better leveraging learnings across countries. These actions reduced operating costs by $50.0 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 and UK High Court approval of the share repurchase plan in April and May 2024, respectively. The Company has not commenced any share repurchases to date, but we will continue to monitor business and market conditions. As of December 31, 2024, we had cash and cash equivalents of $121.0 million and short-term investments of $173.2 million, aggregating $294.2 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 audited consolidated financial statements included elsewhere in this Annual Report and is 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 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. We maintain a small amount of our cash and cash equivalents in Euro and from time to time, maintain a small amount of our cash and cash equivalents in other currencies. We purchase a portion of our supply 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., refinancing or reinvestment risk). Interest rate risk mainly arises through interest bearing liabilities and assets. Our portfolio of investments as of December 31, 2024 was 81 composed primarily of U.S. Treasury securities and other government-related securities. At December 31, 2024 and 2023, we had short-term investments of $173.2 million and $121.4 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 securities that mature 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. 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. 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.