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, 2024, 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, 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 Quarterly 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: 25 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 – 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 – – Spriaso LLC December 2024 – – (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. 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 26 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 – March 2022 March 2022 March 2022 Finland – October 2022 December 2022 December 2022 England/Wales – July 2022 October 2022 October 2022 Spain – July 2023 September 2023 September 2023 Netherlands – August 2023 September 2023 September 2023 Scotland – August 2023 August 2023 September 2023 Greece (1) – May 2024 June 2024 June 2024 Portugal – August 2024 August 2024 September 2024 Italy – December 2024 December 2024 January 2025 Austria September 2022 February 2025 September 2022 – Denmark June 2022 – June 2022 – (1) Vianex S.A will be the sole and exclusive distributor of VAZKEPA in the Greek territory to import, register, distribute and commercialize VAZKEPA. In addition, we received regulatory approval in Switzerland by the Swiss Agency for Therapeutic Products, or Swissmedic. VAZKEPA has been made available under individual reimbursement since January 2023. 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 commercial operations launch. 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. We and our partners have obtained varying levels of indication approvals and commercial launches in the respective territories. Through the date of this Quarterly 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. We have agreements in place with the following partners within the respective territories: Partner Agreement Date Country MARINE Approval REDUCE-IT Approval Launch Date Edding (1) "China Territory" February 2015 Mainland China June 2023 June 2024 October 2023 Hong Kong – February 2023 May 2024 Biologix FZCo "Biologix" (2) "MENA" March 2016 Lebanon March 2018 August 2021 June 2018 United Arab Emirates July 2018 October 2021 February 2019 Bahrain December 2019 April 2021 May 2022 Qatar April 2021 April 2022 September 2023 Kuwait December 2021 March 2023 September 2023 Saudi Arabia March 2022 June 2023 September 2023 HLS Therapeutics Inc. "HLS" September 2017 Canada – December 2019 February 2020 CSL Seqirus "CSL" February 2023 Australia – October 2024 October 2024 New Zealand – January 2023 – 27 Neopharm (Israel) 1996 Ltd. "Neopharm" (3) "Israel" August 2023 Israel – March 2023 May 2024 (1) - VASCEPA is under registration in Macau and Taiwan in the China Territory with Edding. (2) - VASCEPA is under registration in additional countries in the MENA region with Biologix. (3) - VASCEPA is under registration in additional countries in the Israel territory with Neopharm. Revenue earned from sales of VASECPA within the Israel territory are recorded within European revenue. In addition to the above partnerships, the Company partnered with Lotus Pharmaceuticals, or Lotus, in July 2023 to commercialize and distribute VAZKEPA in South Korea and nine other countries in Southeast Asia, or collectively ASEAN. 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. 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 Quarterly 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 first quarter of 2025 as listed below: • In January 2025, the American Diabetes Association, or ADA, updated their recommendations for risk management in patients with cardiovascular disease in their Standards of Care in Diabetes. The following information was included regarding IPE: o In individuals with ASCVD or other cardiovascular risk factors on a statin with managed LDL cholesterol but elevated triglycerides (150–499 mg/dL [1.7–5.6 mmol/L]), the addition of icosapent ethyl can be considered to reduce cardiovascular risk • In February 2025, the American Association of Clinical Endocrinology, or AACE, issued a focused update of the 2017 AACE Guidelines for Management of Dyslipidemia and Prevention of Cardiovascular Disease and provided evidence-based recommendations for the pharmacologic management of adults with dyslipidemia by clinicians and their care teams. The following recommendations were included for patients with CVD or at increased risk for ASCVD: o In adults with hypertriglyceridemia (150-499 mg/dL) who have cardiovascular disease or who are at increased risk for ASCVD, AACE suggests for the use of EPA (IPE) in addition to statins. o In adults with hypertriglyceridemia (150-499 mg/dL) who have cardiovascular disease or are at increased risk for cardiovascular disease, AACE suggests against the use of EPA plus DHA in addition to statin therapy. o In adults with hypertriglyceridemia (150-499 mg/dL) who have ASCVD or are at increased risk for ASCVD, AACE recommends against the use of niacin in addition to usual care. • In April of 2025, the National Heart Foundation of Australia & Cardiac Society of Australia and New Zealand issued a clinical guideline for diagnosing and managing acute coronary syndromes, or ACS. The following information was included regarding IPE as a practice point within the Post-ACS Pharmacotherapy section under lipid modifying therapies: o In people with ACS with triglyceride levels of 1.5–5.6 mmol/L and LDL-C 1.0–2.6 mmol/L despite statin therapy, consider adding icosapent ethyl [549]. Note that the current PBS eligibility criteria for icosapent ethyl is a triglyceride level of 1.7 mmol/L. In March 2025, at the American College of Cardiology, or ACC, Scientific Sessions, we supported two posters, one looking at the antioxidant and anti-inflammatory effects of EPA in combination with a GLP-1 agonist on endothelial cells, and another looking at the antioxidant effects of EPA on Lp(a) as compared to small, dense, LDL and TG rich lipoprotein. 28 In the first three months of 2025, we 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 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 March 31, 2025, we had inventory of $216.9 million, of which 52% 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 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. 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, 29 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 (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. Provision for income taxes. 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 2025 and 2024 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 unaudited condensed consolidated financial statements and notes, which have been prepared in accordance with accounting principles generally accepted in the U.S., 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. Results of Operations Comparison of Three Months Ended March 31, 2025 and March 31, 2024 Total revenue, net. We recorded total revenue, net, of $42.0 million and $56.5 million during the three months ended March 31, 2025 and 2024, respectively, a decrease of $14.5 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., during the three months ending March 31, 2025, we also sold 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 discussed below, the aforementioned decrease consists of a $12.5 million decrease in U.S. net product revenue and a $1.7 million decrease in net product revenue outside of the U.S., as well as a $0.4 million decrease in licensing and royalty revenue. Product revenue, net . We recorded product revenue, net, of $41.0 million and $55.2 million during the three months ended March 31, 2025 and 2024, respectively, a decrease of $14.1 million, or 26%. This decrease was due primarily to a 26% decrease in VASCEPA sales in the U.S.. We recorded U.S. product revenue, net, of $35.7 million and $48.1 million during the three months ended March 31, 2025 and 2024, respectively. This decrease was due to a decline in net selling price as a result of the impact from generic competition in the 30 market as well as a decrease in volume primarily related to the loss of a large national pharmacy benefit manager, or PBM, going from exclusive to no longer covering VASCEPA effective July 1, 2024. The overall icosapent ethyl market in the U.S., based on prescription levels reported by Symphony Health, increased for the three months ended March 31, 2025 by 3% as compared to the three months ended March 31, 2024. Our share of the icosapent ethyl market has decreased to approximately 42% in the three months ended March 31, 2025 compared to approximately 56% in the three months ended March 31, 2024. Additionally, based on prescription levels reported by Symphony Health, VASCEPA-branded prescriptions decreased by 24% in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. In Europe, we recorded product revenue, net, of $5.4 million and $1.9 million during the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025, we recorded nominal product revenue, net, from our collaboration partners compared to $5.2 million during the three months ended March 31, 2024. 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 three months ended March 31, 2025 and 2024 was $1.0 million and $1.4 million, respectively, a decrease of $0.4 million, or 28%. Licensing and royalty revenue has decreased primarily due to recognition of previously achieved milestone payments from Edding in the prior year. 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. Licensing and royalty revenue is expected to vary from period to period based on timing of milestones achieved and select partner sales within respective territories. Cost of goods sold. Cost of goods sold during the three months ended March 31, 2025 and 2024 was $16.9 million and $24.6 million, respectively, a decrease of $7.7 million, or 31%. Cost of goods sold includes the cost of API for VASCEPA on which revenue was recognized during the period, as well as the associated costs for encapsulation, packaging, shipment, supply management, insurance and quality assurance. The cost of the API included in cost of goods sold reflects the average cost of API included in inventory. This average cost reflects the actual purchase price of VASCEPA API. The API included in the calculation of the average cost of goods sold during the quarters ended March 31, 2025 and 2024 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 three months ended March 31, 2025 and 2024 was 59% and 55%, respectively. The increase in gross margin is primarily as a result of a change in customer mix. Selling, general and administrative expense . Selling, general and administrative expense for the three months ended March 31, 2025 and 2024 was $36.6 million and $39.9 million, respectively, a decrease of $3.3 million, or 8%. Selling, general and administrative expenses for the three months ended March 31, 2025 and 2024 are summarized in the table below: Three months ended March 31, In thousands 2025 2024 Selling expense (1) $ 16,921 $ 20,395 General and administrative expense (2) 16,124 15,282 Non-cash stock-based compensation expense (3) 3,528 4,212 Total selling, general and administrative expense $ 36,573 $ 39,889 (1) Selling expense for the three months ended March 31, 2025 and 2024 was $16.9 million and $20.4 million, respectively, a decrease of $3.5 million, or 17%. This decrease is primarily due to a reduction in costs associated with decreased promotional and marketing initiatives as well as other cost optimization initiatives. (2) General and administrative expense for the three months ended March 31, 2025 and 2024 was $16.1 million and $15.3 million, respectively, an increase of $0.8 million, or 6%. This increase is primarily due to fees associated with the ADS Ratio Change offset by a decrease in in branded pharma fees as a result of lower sales. 31 (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. 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 three months ended March 31, 2025 and 2024 was $5.3 million and $5.6 million, respectively, a decrease of $0.3 million, or 5%. Research and development expenses for the three months ended March 31, 2025 and 2024 are summarized in the table below: Three months ended March 31, In thousands 2025 2024 REDUCE-IT study and presentations (1) $ 247 $ 886 Fixed-dose combination (2) — 44 Regulatory filing fees and expenses (3) 527 867 Non-clinical research activities (4) 257 377 Internal staffing, overhead and other (5) 3,482 2,418 Research and development expense, excluding non-cash expense 4,513 4,592 Non-cash stock-based compensation expense (6) 799 1,006 Total research and development expense $ 5,312 $ 5,598 (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. (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. Interest income, net . Interest income, net, for the three months ended March 31, 2025 and 2024 was $2.9 million and $3.4 million, respectively, a decrease of $0.5 million, or 15%. Interest income, net, represents income earned on cash and investment balances. The decrease is primarily due to lower 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, 2025 and 2024 was $0.3 million and $1.5 million, respectively, a decrease of $1.3 million, or 84%. Other income, net, primarily consists of gains and losses on foreign exchange transactions and sublease income related to our Bridgewater, New Jersey facility. Provision for income taxes. Income tax provision for the three months ended March 31, 2025 and 2024 was $2.1 million and $1.3 million, respectively. The provision for the three months ended March 31, 2025 is the result of changes in income generated by our U.S. and foreign operations for which tax expense has been recognized based on a full year estimated U.S. and foreign income tax liability. 32 Liquidity and Capital Resources As of March 31, 2025, our aggregate sources of liquidity include cash and cash equivalents and restricted cash of $119.8 million and short-term investments of $162.3 million, aggregating $282.1 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 2025 2024 Cash (used in) provided by: Operating activities $ (12.5 ) $ (12.6 ) Investing activities 12.1 28.7 Financing activities (1.1 ) (1.4 ) (Decrease) increase in cash and cash equivalents and restricted cash $ (1.5 ) $ 14.7 Net cash used in operating activities remained consistent during the three months ended March 31, 2025 as compared to the same period in 2024. Net cash provided by investing activities during the three months ended March 31, 2025 decreased due primarily to the proceeds from the maturity of $55.0 million in investment grade interest-bearing instruments offset by purchases of $42.9 million of investment grade interest-bearing instruments as compared to the same period in 2024 where proceeds from the maturity of investment grade interest-bearing instruments were $62.0 million, partially offset by $33.3 million in purchases of investment-grade interest bearing instruments. Net cash used in financing activities during the three months ended March 31, 2025 as compared to net cash provided by financing activities during the same period in 2024 was primarily as a result of a decrease in taxes paid on stock based-awards. 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, or ADS. We received shareholder and UK High Court approval of the share repurchase plan in April and May 2024, respectively. The share repurchase program has a five-year approval window and can be deployed at any point until the second quarter of 2029. The Company has not commenced any share repurchases to date, but we will continue to monitor business and market conditions. As of March 31, 2025, we had net accounts receivable of $106.7 million, current inventory of $159.5 million and long-term inventory of $57.4 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 March 31, 2025. 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. As of March 31, 2025, we had cash and cash equivalents of $119.5 million and short-term investments of $162.3 million, aggregating $281.8 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 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 “Risk Factors” in this Quarterly Report and 2024 Annual 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. 33 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.