| May 11, 2020 AIM: AMYT Euronext Growth: AYP |
AMRYT PHARMA PLC
(“Amryt” or the “Company”)
Q1 2020 RESULTS
- $44.6M unaudited Q1 revenues representing a 30% increase on unaudited combined revenues of $34.3M in Q1 20191
- 10% quarter on quarter unaudited revenue growth in Q1 2020 versus Q4 2019 ($40.5M)
- $4.6M EBITDA2 delivered in Q1. Including non-cash items and share based compensation expenses, this results in an operating loss before finance expense for Q1 of $17.0M
- Cash generated from Operating Activities of $6.2M during Q1 2020
- Aegerion integration successfully completed ahead of schedule, delivering positive EBITDA a quarter ahead of plan
- Robust financial position with $67.0M in cash compared to $65.2M at December 31, 2019
- Enrolment in EASE global Phase 3 study concluded with top-line data expected in late Q3 / early Q4 2020
- FILSUVEZ® confirmed as the global brand name for AP101
- Confidentially submitted a draft registration statement on Form F-1 to the U.S. Securities and Exchange Commission ("SEC") on February 18, 2020 relating to the proposed listing of American Depositary Shares ("ADSs") representing Amryt ordinary shares on the Nasdaq stock market ("Nasdaq")
Amryt, a global, commercial-stage biopharmaceutical company dedicated to developing and commercializing novel therapeutics to treat patients suffering from serious and life-threatening rare diseases, today announces unaudited financial results for the first quarter ended March 31, 2020.
Joe Wiley, CEO of Amryt Pharma, commented: “The positive momentum we experienced during 2019 has continued into Q1 2020. Our performance so far is exceeding expectations this year as our business performs and grows across a host of metrics. Most importantly, we have experienced strong revenue growth and the business is significantly EBITDA positive a quarter ahead of schedule.
We believe Amryt is now very well positioned to execute on our strategy of becoming a global leader in rare and orphan diseases and most importantly, delivering therapies to patients with unmet needs. We look forward to the top-line data readout from our EASE study in late Q3 or early Q4 which will represent a significant milestone for Amryt.
During the COVID-19 pandemic, our primary focus remains the health and well-being of our team, patients, carers, partners and their families. Given that our business lends itself to remote working and the majority of our revenues are inherently recurring in nature, I am pleased to report that our business is proving resilient and performing well”.
Q1 Financial Highlights:
Revenues
·$44.6M unaudited Q1 revenues representing a 30% increase on unaudited combined revenues of $34.3M in Q1 20191
·10% quarter on quarter unaudited revenue growth in Q1 2020 versus Q4 2019 ($40.5M)
·Myalept® / Myalepta® (metreleptin) generated revenues of $26.9M in the quarter (Q1 2019: unaudited combined revenues1 $18.0M)
·Juxtapid®/Lojuxta® (lomitapide) generated revenues of $17.4M in the quarter (Q1 2019: unaudited combined revenues1 $16.2M)
·Strong US revenues in Q1 accounted for 55% of total global revenues
·EMEA revenues accounted for 32% of global revenues, driven by the continued rollout of metreleptin post EMA approval in 2018
·ROW revenue was bolstered by a $3.0M metreleptin order in LATAM during Q1 2020. Unlike in other regions, ordering patterns in LATAM can be sporadic in nature and therefore we do not expect this revenue to recur each quarter
1 Unaudited combined revenues for 2019 represent the combined unaudited revenues of the Company assuming the acquisition by Amryt of Aegerion happened on 1 January 2019. It also (i) excludes revenues from sales to end-users in Japan following the out-licencing of Juxtapid to Recordati in February 2019, (ii) excludes up-front payments from Recordati in 2019, and (iii) includes a 22.5% royalty on Japanese sales of Juxtapid from 1 January 2019 as if the Recordati agreement was in place from that date.
Statutory and adjusted Q1 results
| US$M | Q1 2019 (unaudited) | Q1 2020 (unaudited) | Q1 2020 Non-cash Items3 | Q1 2020 Non-GAAP Adjusted |
| Revenue | 4.5 | 44.6 | - | 44.6 |
| Gross profit | 2.7 | 12.0 | 20.7 | 32.7 |
| R&D | (1.5) | (8.9) | - | (8.9) |
| SG&A | (3.9) | (18.4) | 0.1 | (18.3) |
| Acquisition & severance related costs | - | (0.9) | - | (0.9) |
| Share based compensation expenses | (0.1) | (0.8) | 0.8 | - |
| Operating (loss) / profit before finance expense | (2.8) | (17.0) | 21.6 | 4.6 |
| Unrestricted Cash & cash equiv. | 11.4 | 67.0 | - | 67.0 |
2 EBITDA is earnings before interest, tax, depreciation, amorstisation and share based compensation expenses.
3 Non-cash items include amortisation of the acquired metreleptin and lomitapide intangible assets, amortisation of the inventory fair value step-up that was acquired at the acquisition date, depreciation and share based compensation expenses.
The Q1 operating loss of $17.0M includes the impact of non-cash items including amortisation, depreciation and the impact of share-based compensation expenses, plus acquisition & severance related costs associated with the Aegerion acquisition. Adjusting for these non-cash items, the Company delivered $4.6M of EBITDA2 for the quarter (or $5.5m if also adjusted for acquisition & severance related costs).
Financial Position:
Cash generated from operating activities in Q1 was $6.2M. During the quarter, the Company paid $1.4M in net finance payments and $0.1M in capital expenditure. At March 31, 2020, the Company had unrestricted cash and cash equivalents of $67.0M (unaudited), compared to unrestricted cash and cash equivalents at December 31, 2019 of $65.2M (audited).
Business Highlights:
- Aegerion integration completed successfully and ahead of schedule
- In February 2020, we announced that we had confidentially submitted a draft registration statement on Form F-1 to the SEC relating to the proposed listing of ADSs representing Amryt ordinary shares on the Nasdaq
- Enrolment concluded in EASE, a global pivotal Phase 3 trial in patients with dystrophic and junctional EB. Top-line data from this study is expected in late Q3 / early Q4 2020
- In May 2020, FILSUVEZ® was confirmed as the global brand name for AP101. Establishing the brand name for AP101 is another important step forward in ensuring readiness for the global launch of FILSUVEZ®
COVID-19 Update
The primary concern of all the Amryt team is to ensure the safety of our colleagues, their families and our patients and partners at this time. Global healthcare systems are operating at or close to full capacity and the focus within systems now is to treat those patients in need of acute care. Amryt’s business lends itself to remote working and in recent weeks, we have successfully transitioned appropriate functions to remote platforms exclusively without incident. The impact of COVID-19 to date on Amryt’s business has been minimized and this is a result of deploying contingency plans already in place for a variety of scenarios and challenges which may occur.
Amryt provides therapeutic products to Homozygous Familial Hypercholesterolaemia (“HoFH”) and lipodystrophy patients globally on a recurring basis. Once lomitapide (for the treatment of HoFH) or metreleptin (for the treatment of lipodystrophy) are prescribed by physicians, patients are typically on treatment over a long period of time with repeat prescriptions for each patient. As such, the majority of our revenues are recurring in nature. During the pandemic our sales teams’ deployment in the field is restricted and we continue to evaluate remote and virtual physician access as a means to identify new patients that may be suitable for treatment with our products.
Amryt has in excess of 12 months of labelled and unlabelled finished products on hand for both lomitapide and metreleptin. Our supply chain is robust and we are confident that we can continue to supply patients for the foreseeable future. We are taking additional steps to further strengthen our inventory levels of both metreleptin and lomitapide. To date, we have not experienced any significant logistical difficulties in delivering product to patients. In major markets such as the USA, the UK and Germany, product has historically been delivered direct to patients’ homes. In other markets, product has typically been delivered to local hospitals/distributors and we are continuing to explore opportunities to expand direct to home delivery in these markets.
Management will host a conference call for analysts and investors today at 14.30 BST. Dial in details for the call are as follows - Conference ID: 3725306 | Ireland: (01) 431 9615 | UK/International: + 44 (0) 2071 928000 | US: + 1 631 510 7495.
A playback facility will be available approximately 4 hours after the call ends through May 25, 2020. Playback details as follows: Conference ID: 3725306 | UK/International: +44 (0) 3333 00 9785 | US: + 1 917 677 7532.
Enquiries:
| Amryt Pharma plc | +353 (1) 518 0200 |
| Joe Wiley, CEO Rory Nealon, CFO/COO | |
| Shore Capital | +44 (0) 20 7408 4090 |
| NOMAD and Joint Broker | |
| Edward Mansfield, Daniel Bush, John More | |
| Stifel | +44 (0) 20 7710 7600 |
| Joint Broker | |
| Jonathan Senior, Ben Maddison | |
| Davy | +353 (1) 679 6363 |
| ESM Adviser and Joint Broker | |
| John Frain, Daragh O’Reilly | |
| Consilium Strategic Communications | +44 (0) 20 3709 5700 |
| Amber Fennell, Matthew Neal, Carina Jurs | |
| LifeSci Advisors, LLC | +1 (212) 915 2564 |
| Tim McCarthy |
About Amryt
Amryt is a biopharmaceutical company focused on developing and delivering innovative new treatments to help improve the lives of patients with rare and orphan diseases. Amryt comprises a strong and growing portfolio of commercial and development assets.
Amryt’s commercial business comprises two orphan disease products.
Juxtapid®/ Lojuxta® (lomitapide) is approved as an adjunct to a low-fat diet and other lipid-lowering medicinal products for adults with the rare cholesterol disorder, Homozygous Familial Hypercholesterolaemia ("HoFH") in the US, Canada, Columbia, Argentina and Japan (under the trade name Juxtapid®) and in the EU (under the trade name Lojuxta®). HoFH is a rare genetic disorder which impairs the body's ability to remove low density lipoprotein ("LDL") cholesterol ("bad" cholesterol) from the blood, typically leading to abnormally high blood LDL cholesterol levels in the body from before birth - often ten times more than people without HoFH - and subsequent aggressive and premature cardiovascular disease.
Myalept® / Myalepta® (metreleptin) is approved in the US (under the trade name Myalept®) as an adjunct to diet as replacement therapy to treat the complications of leptin deficiency in patients with congenital or acquired generalized lipodystrophy (GL) and in the EU (under the trade name Myalepta®) for the treatment of leptin deficiency in patients with congenital or acquired GL in adults and children two years of age and above and familial or acquired partial lipodystrophy (PL) in adults and children 12 years of age and above for whom standard treatments have failed to achieve adequate metabolic control. Metreleptin is also approved for lipodystrophy in Japan. Generalised and partial lipodystrophy are rare disorders characterised by loss or lack of adipose tissue resulting in the deficiency of the hormone leptin, produced by fat cells and are associated with severe metabolic abnormalities including severe insulin resistance, diabetes, hypertriglyceridemia and fatty liver disease.
Amryt's lead development candidate, FILSUVEZ® is a potential treatment for the cutaneous manifestations of Epidermolysis Bullosa ("EB"), a rare and distressing genetic skin disorder affecting young children and adults for which there is currently no approved treatment. FILSUVEZ® has been granted Rare Pediatric Disease Designation and has also received a Fast Track Designation from the U.S. Food and Drug Administration. The European and US market opportunity for EB is estimated by the Company to be in excess of $1.0 billion.
In March 2018, Amryt in-licenced a pre-clinical gene-therapy platform technology, AP103, which offers a potential treatment for patients with Recessive Dystrophic Epidermolysis Bullosa, a subset of EB, and is also potentially relevant to other genetic disorders.
For more information on Amryt, including products, please visit www.amrytpharma.com.
This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014.
Forward-Looking Statements
Statements in this announcement with respect to Amryt's business, strategies, timing for completion of and announcing results from the EASE study, the potential impact of closing enrollment in the EASE study, as well as other statements that are not historical facts are forward-looking statements involving risks and uncertainties which could cause the actual results to differ materially from such statements. Statements containing the words "expect", "anticipate", "intends", "plan", "estimate", "aim", "forecast", "project" and similar expressions (or their negative) identify certain of these forward-looking statements. The forward-looking statements in this announcement are based on numerous assumptions and Amryt's present and future business strategies and the environment in which Amryt expects to operate in the future. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. These statements are not guarantees of future performance or the ability to identify and consummate investments. Many of these risks and uncertainties relate to factors that are beyond each of Amryt's ability to control or estimate precisely, such as future market conditions, the course of the COVID-19 pandemic, currency fluctuations, the behaviour of other market participants, the outcome of clinical trials, the actions of regulators and other factors such as Amryt's ability to obtain financing, changes in the political, social and regulatory framework in which Amryt operates or in economic, technological or consumer trends or conditions. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. No person is under any obligation to update or keep current the information contained in this announcement or to provide the recipient of it with access to any additional relevant information that may arise in connection with it. Such forward-looking statements reflect the Company’s current beliefs and assumptions and are based on information currently available to management.
| Amryt Pharma plc Condensed Consolidated Statement of Financial Position | ||||||
| As at, | ||||||
| March 31, 2020 (unaudited) | December 31, 2019 (audited) | |||||
| Note | US$’000 | |||||
| Assets........................................................................................................................................... | ||||||
| Non-current assets............................................................................................................................................ | ||||||
| Goodwill | 7 | $ 30,813 | $ 30,813 | |||
| Intangible assets............................................................................................................................................ | 7 | 339,094 | 350,953 | |||
| Property, plant and equipment................................................................................................................................... | 2,862 | 3,036 | ||||
| Other non-current assets............................................................................................................................................ | 2,310 | 2,306 | ||||
| Total non-current assets............................................................................................................................................ | 375,079 | 387,108 | ||||
| Current assets............................................................................................................................................ | ||||||
| Trade and other receivables.................................................................................................................................. | 8 | 41,179 | 36,387 | |||
| Inventories.................................................................................................................................. | 33,904 | 43,623 | ||||
| Cash and cash equivalents, including restricted cash............................................................................................................................................... | 9 | 68,067 | 67,229 | |||
| Total current assets............................................................................................................................................ | 143,150 | 147,239 | ||||
| Total assets............................................................................................................................................ | 518,229 | 534,347 | ||||
| Equity and liabilities..................................................................................................................................... | ||||||
| Equity attributable to owners of the parent.......................................................................................................................................... | ||||||
| Share capital.......................................................................................................................................... | 10 | 11,918 | 11,918 | |||
| Share premium....................................................................................................................................... | 10 | 2,422 | 2,422 | |||
| Other reserves........................................................................................................................................ | 249,386 | 248,656 | ||||
| Accumulated deficit........................................................................................................................................... | (162,569 | ) | (133,674 | ) | ||
| Total equity........................................................................................................................................... | 101,157 | 129,322 | ||||
| Non-current liabilities..................................................................................................................................... | ||||||
| Contingent consideration.............................................................................................................................. | 5 | 106,145 | 102,461 | |||
| Deferred tax liability........................................................................................................................................ | 17,345 | 18,921 1 | ||||
| Long term loan............................................................................................................................................... | 11 | 82,989 | 81,610 | |||
| Convertible notes............................................................................................................................................. | 12 | 97,872 | 96,856 | |||
| Provisions and other liabilities..................................................................................................................................... | 13 | 1,014 | 4,963 | |||
| Total non-current liabilities..................................................................................................................................... | 305,365 | 304,811 | ||||
| Current liabilities..................................................................................................................................... | ||||||
| Trade and other payables....................................................................................................................................... | 87,575 | 76,596 | ||||
| Provisions and other liabilities..................................................................................................................................... | 13 | 24,132 | 23,618 | |||
| Total current liabilities..................................................................................................................................... | 111,707 | 100,214 | ||||
| Total liabilities..................................................................................................................................... | 417,072 | 405,025 | ||||
| Total equity and liabilities..................................................................................................................................... | $ 518,229 | $ 534,347 | ||||
| Amryt Pharma plc Condensed Consolidated Statement of Comprehensive Loss | ||||||||||
| Three months ended March 31, | ||||||||||
| 2020 (unaudited) | 2019 (unaudited) | |||||||||
| Note | US$’000 | |||||||||
| Revenue.......................................................................................................................... | 3 | $ 44,574 | $ 4,542 | |||||||
| Cost of sales................................................................................................................................. | (32,620 | ) | (1,830 | ) | ||||||
| Gross profit............................................................................................................................... | 11,954 | 2,712 | ||||||||
| Research and development expenses.......................................................................................................................... | (8,934 | ) | (1,505 | ) | ||||||
| Selling, general and administrative expenses.......................................................................................................................... | (18,406 | ) | (3,896 | ) | ||||||
| Acquisition and severance related costs................................................................................................................................. | (853 | ) | — | |||||||
| Share based payment expenses.......................................................................................................................... | 4 | (745 | ) | (91 | ) | |||||
| Operating loss before finance expense........................................................................................................................... | (16,984 | ) | (2,780 | ) | ||||||
| Non-cash change in fair value of contingent consideration................................................................................................................. | 5 | (4,354 | ) | (1,938 | ) | |||||
| Net finance expense........................................................................................................................... | (9,416 | ) | (661 | ) | ||||||
| Loss on ordinary activities before taxation.......................................................................................................................... | (30,754 | ) | (5,379 | ) | ||||||
| Tax credit/(charge) on loss on ordinary activities......................................................................................................................... | 1,857 | (6 | ) | |||||||
| Loss for the year attributable to the equity holders of the Company........................................................................................................................ | (28,897 | ) | (5,385 | ) | ||||||
| Exchange translation differences which may be reclassified through profit or loss | (13 | ) | 80 | |||||||
| Total other comprehensive (loss)/income.................................................................................................................. | (13 | ) | 80 | |||||||
| Total comprehensive loss for the year attributable to the equity holders of the Company........................................................................................................................ | $ (28,910 | ) | $ (5,305 | ) | ||||||
| Loss per share | ||||||||||
| Loss per share - basic and diluted, attributable to ordinary equity holders of the parent (US$)................................................................................................................................ | 6 | $ | (0.19 | ) | $ | (0.12 | ) | |||
| Amryt Pharma plc Condensed Consolidated Statement of Cash Flows | ||||||
| Three months ended March 31, | ||||||
| 2020 (unaudited) | 2019 (unaudited) | |||||
| Note | US$’000 | |||||
| Cash flows from operating activities | ||||||
| Loss on ordinary activities after taxation | $ (28,897 | ) | $ (5,385 | ) | ||
| Net finance expense | 9,416 | 661 | ||||
| Depreciation and amortization | 11,241 | 91 | ||||
| Amortization of inventory fair value step-up | 9,503 | — | ||||
| Share based payment expenses | 4 | 745 | 91 | |||
| Non-cash change in fair value of contingent consideration | 4,354 | 1,938 | ||||
| Deferred taxation credit | (1,576 | ) | — | |||
| Movements in working capital and other adjustments: | ||||||
| Change in trade and other receivables | (4,792 | ) | (754 | ) | ||
| Change in trade and other payables | 9,416 | (1,902 | ) | |||
| Change in provision and other liabilities | 13 | (3,435 | ) | — | ||
| Change in inventories | 216 | (255 | ) | |||
| Change in non-current assets | (4 | ) | 74 | |||
| Net cash flow from (used in) operating activities | 6,187 | (5,441 | ) | |||
| Cash flow from investing activities | ||||||
| Payments for property, plant and equipment | (79 | ) | (4 | ) | ||
| Deposit interest received | 66 | — | ||||
| Net cash used in investing activities | (13 | ) | (4 | ) | ||
| Cash flow from financing activities | ||||||
| Increase in long term debt | — | 5,679 | ||||
| Interest paid | (1,506 | ) | (4 | ) | ||
| Net cash (used in) flow from financing activities | (1,506 | ) | 5,675 | |||
| Exchange and other movements | (3,830 | ) | (74 | ) | ||
| Net change in cash and cash equivalents | 838 | 156 | ||||
| Cash and cash equivalents at beginning of the period | 67,229 | 11,226 | ||||
| Restricted cash at end of the period | 1,093 | — | ||||
| Cash at bank available on demand at end of the period | 66,974 | 11,382 | ||||
| Total cash and cash equivalents at end of the period | $ 68,067 | $ 11,382 | ||||
| Amryt Pharma plc Condensed Consolidated Statement of Changes in Equity For the period ended March 31, 2020 | ||||||||||||||||||||||||||
| Share capital | Share premium | Warrant reserve | Treasury shares | Share based payment reserve | Merger reserve | Reverse acquisition reserve | Equity component of convertible notes | Other distributable reserves | Currency translation reserve | Accumulated deficit | Total | |||||||||||||||
| Note | US$’000 | |||||||||||||||||||||||||
| Balance at January 1, 2020 (audited) | $ 11,918 | $ 2,422 | $ 29,523 | $ (7,534 | ) | $ 3,190 | $ 42,627 | $ (73,914 | ) | $ 29,210 | $ 217,634 | $ 7,920 | $ (133,674 | ) | $129,322 | |||||||||||
| Loss for the period | — | — | — | — | — | — | — | — | — | — | (28,897 | ) | (28,897 | ) | ||||||||||||
| Foreign exchange translation reserve | — | — | — | — | — | — | — | — | — | (13 | ) | — | (13 | ) | ||||||||||||
| Total comprehensive loss | — | — | — | — | — | — | — | — | — | (13 | ) | (28,897 | ) | (28,910 | ) | |||||||||||
| Transactions with owners | ||||||||||||||||||||||||||
| Share based payment expense | 5 | — | — | — | — | 745 | — | — | — | — | — | — | 745 | |||||||||||||
| Share based payment expense – Lapsed | — | — | — | — | (2 | ) | — | — | — | — | — | 2 | — | |||||||||||||
| Total transactions with owners | — | — | — | — | 743 | — | — | — | — | — | 2 | 745 | ||||||||||||||
| Balance at March 31, 2020 (unaudited) | $ 11,918 | $ 2,422 | $ 29,523 | $ (7,534 | ) | $ 3,933 | $ 42,627 | $ (73,914 | ) | $ 29,210 | $ 217,634 | $ 7,907 | $ (162,569 | ) | $101,157 | |||||||||||
| Amryt Pharma plc Condensed Consolidated Statement of Changes in Equity For the period ended March 31, 2019 | |||||||||||||||||||
| Share capital | Share premium | Share based payment reserve | Merger reserve | Reverse acquisition reserve | Currency translation reserve | Accumulated deficit | Total | ||||||||||||
| Note | US$’000 | ||||||||||||||||||
| Balance at January 1, 2019 (audited) | $ 25,198 | $ 68,233 | $ 6,473 | $ 42,627 | $(73,914 | ) | $ (51 | ) | $ (72,263 | ) | $ (3,697 | ) | |||||||
| Loss for the period | — | — | — | — | — | — | (5,385 | ) | (5,385 | ) | |||||||||
| Foreign exchange translation reserve | — | — | — | — | — | 80 | — | 80 | |||||||||||
| Total comprehensive loss | — | — | — | — | — | 80 | (5,385 | ) | (5,305 | ) | |||||||||
| Transactions with owners | |||||||||||||||||||
| Share based payment expense | 5 | — | — | 91 | — | — | — | — | 91 | ||||||||||
| Total transactions with owners | — | — | 91 | — | — | — | — | 91 | |||||||||||
| Balance at March 31, 2019 (unaudited) | $ 25,198 | $ 68,233 | $ 6,564 | $ 42,627 | $ (73,914 | ) | $ 29 | $ (77,648 | ) | $8,911 | |||||||||
1. General information
We are a global, commercial-stage biopharmaceutical company dedicated to commercializing and developing novel therapeutics to treat patients suffering from serious and life-threatening rare diseases.
As used herein, references to ‘‘we,’’ ‘‘us,’’ ‘‘Amryt’’ or the ‘‘Group’’ in these condensed consolidated interim financial statements shall mean Amryt Pharma plc and its global subsidiaries, collectively. References to the ‘‘Company’’ in these condensed consolidated interim financial statements shall mean Amryt Pharma plc.
Amryt Pharma plc is a company incorporated in England and Wales. The Company is listed on the AIM market of the London Stock Exchange (ticker: AMYT) and the Euronext Growth Exchange of the Irish Stock Exchange (ticker: AYP).
Aegerion Pharmaceuticals, Inc. (‘‘Aegerion’’), a former subsidiary of Novelion Therapeutics Inc. (‘‘Novelion’’), is a rare and orphan disease company with a diversified offering of multiple commercial and development stage assets. The acquisition of Aegerion by Amryt in September 2019 has given Amryt an expanded commercial footprint to market two U.S. and EU approved products, lomitapide (JUXTAPID (U.S.) / LOJUXTA (EU)) and metreleptin (MYALEPT (U.S.) / MYALEPTA (EU)).
On July 10, 2019, the shareholders of the Company approved a resolution to give authority to the Company to undertake a consolidation of the existing ordinary shares in the capital of the Company under which every six existing ordinary shares were consolidated into one ordinary share. The number of shares in issue at March 31, 2019 has been adjusted to reflect this share consolidation on July 10, 2019 for the purposes of the loss per share calculation. The number of share options outstanding at January 1, 2019 and the share options granted and lapsing during the three months ended March 31, 2019 have been restated to reflect the 2019 share consolidation.
On September 20, 2019, Amryt registered FILSUVEZ as the trademark name for the Group’s lead development asset, AP101, in the European Union. On February 18, 2020, Amryt also registered this trademark name in the United States and is in the process of registering the FILSUVEZ trademark in other key jurisdictions.
2. Accounting policies
Basis of preparation
The condensed consolidated interim financial statements of the Group have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with International Financial Reporting Standards (‘‘IFRS’’) and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2019. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the Group’s financial position and performance since the last annual financial statements. The accounting policies used in the preparation of the interim financial information are the same as those used in the Group’s audited financial statements for the year ended December 31, 2019 and those which are expected to be used in the financial statements for the year ending December 31, 2020.
Results for the three-month period ended March 31, 2020 are not necessarily indicative of the results that may be expected for the financial year ending December 31, 2020.
Basis of going concern
Having considered the Group’s current financial position and cash flow projections, the Board of Directors believes that the Group will be able to continue in operational existence for at least the next 12 months from the date of approval of these condensed consolidated interim financial statements and that it is appropriate to continue to prepare the condensed consolidated interim financial statements on a going concern basis.
A key consideration for the impact on going concern is the acquisition of Aegerion, which was completed in September 2019. This acquisition represents a significant step forward for Amryt and has created value for Amryt with immediate effect post-deal close through enhanced scale of the combined Group, which Amryt believes has the potential to drive revenues and deliver operational synergies through a combination of medical, commercial, clinical, development and regulatory infrastructure. Additionally, Amryt completed a US$60,000,000 fundraising as part of the acquisition of Aegerion.
Since a novel strain of coronavirus (SARS-CoV-2) causing a disease referred to as COVID-19 was first reported in December 2019, the disease has spread across the world, including countries in which we have patients and in which we have planned or active clinical trial sites. The outbreak and government measures taken in response have had a significant impact, both direct and indirect, on all businesses and commerce as supply chains have been disrupted, facilities and production have been suspended and demand for certain goods and services has spiked while demand for other goods and services has fallen. As COVID-19 continues to spread around the globe, Amryt may experience disruptions that could affect its business, preclinical studies and clinical trials.
Amryt provides therapeutic products to Homozygous Familial Hypercholesterolemia (‘‘HoFH’’) and lipodystrophy patients globally on a recurring basis. Once lomitapide (for the treatment of HoFH) or metreleptin (for the treatment of lipodystrophy) is prescribed by physicians, patients are typically on treatment over a long period of time with repeat prescriptions for each patient. To date the Company has seen minimal impact of the COVID-19 pandemic on the business given the majority of revenues are recurring in nature and the Company has a strong cash position and resources to support the Company’s ability to continue as a going concern.
Basis of consolidation
The condensed consolidated interim financial statements comprise the financial statements of the Group for the three months ended March 31, 2020. Subsidiaries are entities controlled by the Company. Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over an investee, exposure or rights to variable returns from its involvement with the investee and the ability to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Intergroup balances and any unrealized gains or losses, income or expenses arising from intergroup transactions are eliminated in preparing the consolidated financial statements.
Presentation of balances
The condensed consolidated interim financial statements are presented in U.S. dollars (‘‘US$’’) which is the functional currency and presentation currency of the Group.
The following table discloses the major exchange rates of those currencies other than the functional currency of US$ that are utilized by the Group:
| Foreign currency units to 1 US$ | € | £ | CHF | SEK | NOK | DKK | ||||||||||||
| Average period to March 31, 2019 (unaudited) | 0.8804 | 0.7683 | 0.9967 | 9.1704 | 8.5802 | 6.5711 | ||||||||||||
| At March 31, 2019 (unaudited) | 0.8915 | 0.7673 | 0.9953 | 9.2979 | 8.6271 | 6.6550 | ||||||||||||
| Foreign currency units to 1 US$ | € | £ | CHF | SEK | NOK | DKK | ||||||||||||
| Average period to December 31, 2019 (audited) | 0.8932 | 0.7836 | 0.9938 | 9.4533 | 8.7976 | 6.6690 | ||||||||||||
| At December 31, 2019 (audited) | 0.8929 | 0.7624 | 0.971 | 9.3282 | 8.8046 | 6.6698 | ||||||||||||
| Foreign currency units to 1 US$ | € | £ | CHF | SEK | NOK | DKK | ||||||||||||
| Average period to March 31, 2020 (unaudited) | 0.9068 | 0.7809 | 0.9679 | 9.6618 | 9.4731 | 6.7750 | ||||||||||||
| At March 31, 2020 (unaudited) | 0.9043 | 0.8068 | 0.9570 | 9.9977 | 10.5721 | 6.7517 | ||||||||||||
(€ = Euro; £ = Pounds Sterling, CHF = Swiss Franc, SEK = Swedish Kroner, NOK = Norwegian Kroner, DKK = Danish Kroner)
Changes in accounting policies and disclosures
There are no new standards and amendments to IFRS effective as of January 1, 2020 that are relevant to the Group.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and amounts reported in the financial statements and accompanying notes. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
The significant estimates, assumptions or judgements, applied in the condensed consolidated interim financial statements were the same as those applied in the Group’s audited financial statements for the year ended December 31, 2019.
Principal accounting policies
The condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the Group’s audited financial statements for the year ended December 31, 2019.
3. Segment information
The Group is a global, commercial-stage biopharmaceutical company dedicated to commercializing and developing novel therapeutics to treat patients suffering from serious and life-threatening rare diseases.
The Group currently operates as one business segment, pharmaceuticals, and is focused on the development and commercialization of two commercial products and two development products. The Group derives its revenues primarily from one source, the pharmaceutical sector with high unmet medical need.
The Group’s Chief Executive Officer, Joseph Wiley, is currently the Company’s chief operating decision maker (‘‘CODM’’). The Group does not operate any separate lines of business or separate business entities with respect to its products. Accordingly, the Group does not accumulate discrete financial information with respect to separate service lines and does not have separate reportable segments.
The following table summarizes total revenues from external customers by product and by geographic region, based on the location of the customer. Revenues represent the revenue from the Group for the three months ended March 31, 2020 and 2019. Revenue in the three months ended March 31, 2020 include revenues from the acquired Aegerion Group and associated products and regions.
| Three months ended March 31, 2020 (unaudited) | ||||||||
| U.S. | EMEA | Other | Total | |||||
| US$’000 | ||||||||
| Metreleptin......................................................................... | $ 14,914 | $ 8,628 | $ 3,385 | $ 26,927 | ||||
| Lomitapide......................................................................... | 9,470 | 5,233 | 2,718 | 17,421 | ||||
| Other.................................................................................... | — | 226 | — | 226 | ||||
| Total revenue................................................................................ | $ 24,384 | $ 14,087 | $ 6,103 | $ 44,574 | ||||
| Three months ended March 31, 2019 (unaudited) | ||||||||
| U.S. | EMEA | Other | Total | |||||
| US$’000 | ||||||||
| Metreleptin......................................................................... | $ — | $ — | $ — | $ — | ||||
| Lomitapide......................................................................... | — | 4,419 | — | 4,419 | ||||
| Other.................................................................................... | — | 123 | — | 123 | ||||
| Total revenue................................................................................ | $ — | $ 4,542 | $ — | $ 4,542 | ||||
Major Customers
For the three months ended March 31, 2020, one customer accounted for 55% of the Group’s net revenues and accounted for 39% of the Group’s March 31, 2020 accounts receivable balance. For the three months ended March 31, 2019, the Group generated over 72% of its lomitapide revenue in Italy, the Netherlands and Greece. The largest lomitapide customer in the three months ended March 31, 2019 was a distributor in Italy.
4. Share based payments
On July 10, 2019, the shareholders of the Company approved a resolution to give authority to the Company to undertake a consolidation of the existing ordinary shares in the capital of the Company under which every 6 existing ordinary shares were consolidated into one ordinary share.
Under the terms of the Company’s Employee Share Option Plan, options to purchase 17,154,554 shares were outstanding at March 31, 2020. Under the terms of this plan, options are granted to officers, consultants and employees of the Group at the discretion of the Remuneration Committee. A total of 2,687,000 share options were granted to employees in the three-month period ended March 31, 2020. For the year ended December 31, 2019, a total of 11,330,641 share options were granted to directors and employees.
Outstanding warrants at March 31, 2020 and December 31, 2019 consisted of 17,196,273 zero cost warrants with no expiration date that were issued to Aegerion creditors in connection with the acquisition of Aegerion. The remaining warrants consisting of 345,542 warrants were issued in connection with the admission to the AIM in 2016.
The number and weighted average exercise price (in Sterling pence) of share options and warrants per ordinary share is as follows:
| Share Options | Warrants | ||||||||||
| Units | Weighted average exercise price (Sterling pence) | Units | Weighted average exercise price (Sterling pence) | ||||||||
| Balance at January 1, 2019 (restated for 6:1 share consolidation) | 3,250,855 | 115.20p | 3,818,325 | 144.00p | |||||||
| Granted | 11,330,641 | 117.01p | 18,841,378 | — | |||||||
| Lapsed | (99,776) | 197.66p | (3,472,783) | 144.00p | |||||||
| Exercised | — | — | (1,645,105 | ) | — | ||||||
| Outstanding at December 31, 2019 (audited) (unaudited) | 14,481,720 | 116.00p | 17,541,815 | 0.03p | |||||||
| Exercisable at December 31, 2019 (audited) | 2,468,310 | 109.08p | 17,541,815 | 0.03p | |||||||
| Balance at January 1, 2020 | 14,481,720 | 116.00p | 17,541,815 | 0.03p | |||||||
| Granted | 2,687,000 | 123.50p | — | — | |||||||
| Lapsed | (14,166) | 75.84p | — | — | |||||||
| Exercised | — | — | — | — | |||||||
| Outstanding at March 31, 2020 (unaudited) | 17,154,554 | 117.21p | 17,541,815 | 0.03p | |||||||
| Exercisable at March 31, 2020 (unaudited) | 2,712,679 | 109.25p | 17,541,815 | 0.03p | |||||||
Fair value is estimated at the date of grant using the Black-Scholes pricing model, taking into account the terms and conditions attached to the grant. The following are the inputs to the model for the equity instruments granted during the year:
| March 31, 2020 Options Inputs (unaudited) | March 31, 2020 Warrant Inputs (unaudited) | December 31, 2019 Options Inputs (audited) | December 31, 2019 Warrant Inputs (audited) | ||||||||
| Days to Expiration | 2,555 | — | 2,555 | — | |||||||
| Volatility | 33% | — | 27% - 48% | — | |||||||
| Risk free interest rate | 0.46% | — | 0.38% - 0.83% | — | |||||||
| Share price at grant | 123.5p | — | 75.84p – 121.5p | — | |||||||
In the three months ended March 31, 2020, a total of 2,687,000 share options exercisable at a weighted average price of £1.235 were granted. The fair value of share options granted in the three months ended March 31, 2020 was £3,318,445/US$4,249,000. The share options outstanding as at March 31, 2020 have a weighted remaining contractual life of 6.08 years with exercise prices ranging from £0.76 to £1.55.
The 2016 warrants outstanding as at March 31, 2020 have a weighted remaining contractual life of 1.05 years with an exercise price of £1.44.
The value of share options charged to the Consolidated Statement of Comprehensive Loss during the three-month period is as follows:
| Three months ended March 31, | |||||
| 2020 (unaudited) | 2019 (unaudited) | ||||
| US$’000 | |||||
| Share option expense....................................................................................................................... | $ 745 | $ 91 | |||
| Total share option expense....................................................................................................................... | $ 745 | $ 91 | |||
5. Business combinations and asset acquisitions
Acquisition of Aegerion Pharmaceuticals
On May 20, 2019, Amryt entered into a Restructuring Support Agreement (as subsequently amended on June 12, 2019) and Plan Funding Agreement pursuant to which, among other matters, Amryt agreed to the acquisition of Aegerion, a former wholly-owned subsidiary of Novelion. On May 20, 2019, Aegerion and its U.S. subsidiary, Aegerion Pharmaceuticals Holdings, Inc., filed voluntary petitions under Chapter 11 of Title 11 of the U.S. Code in the Bankruptcy Court. On September 24, 2019, Amryt completed the acquisition of Aegerion. Amryt acquired Aegerion upon its emergence from bankruptcy in an exchange for ordinary shares and zero cost warrants in Amryt. Amryt issued 85,092,423 effective shares at US$1.793 per share, which is made up of 77,027,423 ordinary shares and 8,065,000 zero cost warrants, to acquire Aegerion for a value of US$152,615,000.
The acquired goodwill is attributable principally to the profit generating potential of the businesses, the assembled workforce and benefits arising from embedded infrastructure, that are expected to be achieved from integrating the acquired businesses into the Group’s existing business. No amount of goodwill is expected to be deductible for tax purposes.
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis due to the relative size of the acquisition and the timing of the transaction. Any amendments to these fair values within the twelve-month timeframe from the date of acquisition will be disclosed in the consolidated financial statements for the year ending December 31, 2020, as stipulated by IFRS 3 Business combinations.
Contingent Value Rights
Related to the transaction, Amryt issued Contingent Value Rights (‘‘CVRs’’) pursuant to which up to US$85,000,000 may become payable to Amryt’s shareholders and optionholders, who were on the register prior to the completion of the acquisition on September 20, 2019, if certain approval and revenue milestones are met in relation AP101, Amryt’s lead product candidate. If any such milestone is achieved, Amryt may elect to pay the holders of CVRs by the issue of Amryt shares or loan notes. If Amryt elects to issue Loan Notes to holders of CVRs, it will settle such loan notes in cash 120 days after their issue. If none of the milestones are achieved, scheme shareholders and optionholders will not receive any additional consideration under the terms of the CVRs. In these circumstances, the value of each CVR would be zero.
The terms of the CVRs are as follows:
- The total CVR payable is up to US$85,000,000
- This is divided into three milestones which are related to the success of AP101 (the Group’s lead development asset, currently in Phase 3 clinical trials)
- FDA approval
- US$35,000,000 upon FDA approval
- 100% of the amount due if approval is obtained before December 31, 2021, with a sliding scale on a linear basis to zero if before July 1, 2022
- EMA approval
- US$15,000,000 upon EMA approval
- 100% of the amount due if approval is obtained before December 31, 2021, with a sliding scale on a linear basis to zero if before July 1, 2022
- Revenue targets
- US$35,000,000 upon AP101 revenues exceeding US$75,000,000 in any 12-month period prior to June 30, 2024
- Payment can, at the Board’s discretion, be in the form of either:
- 120-day loan notes (effectively cash), or
- Shares valued using the 30 day / 45-day VWAP.
The CVRs were contingent on the successful completion of the acquisition and, accordingly, have been based on fair value as at September 24, 2019. In the Company-only accounts, the fair value of these CVRs have been classified as a financial liability in the Consolidated Statement of Financial Position and debited to cost of investment in subsidiary. On consolidation, given that CVRs were issued to legacy Amryt shareholders in their capacity as owners of the identified acquirer as opposed to the seller in the transaction, management concluded that the most appropriate classification would be to recognize the CVR as a distribution on consolidation instead of goodwill.
Fair value Measurement of CVRs
As at March 31, 2020, the fair value of the CVRs was estimated to be US$50,861,000 (December 31, 2019: US$49,413,000). The value of the potential payout was calculated using the probability expected returns method. Using this method, the potential payment amounts were multiplied by the probability of achievement and discounted to present value (see Note 14, Fair value measurement and financial risk management, for fair value hierarchy applied). The probability adjusted present values took into account published orphan drug research data and statistics which were adjusted by management to reflect the specific circumstances applicable to the type of product acquired in the Amryt GmbH transaction. A discount rate of 16.5% (December 31, 2019: 16.5%) was used in the calculation of the fair value of the CVR for the three months ended March 31, 2020. Management was required to make certain estimates and assumptions in relation to revenue forecasts, timing of revenues and probability of achievement of commercialization of AP101. However, management notes that, due to issues outside their control (i.e. regulatory requirements and the commercial success of the product), the timing of when such revenue targets may occur may change. Such changes may have a material impact on the assessment of the fair value of the CVRs.
Amryt reviews this contingent consideration on a regular basis as the probability adjusted fair values are being unwound as financing expenses in the Consolidated Statement of Comprehensive Loss over the life of the obligation. Contingent consideration is reviewed on a quarterly basis and the appropriate finance charge is booked in the consolidated statement of income on a quarterly basis. The Group expects to read out top-line data from the Phase 3 trial of AP101 in Epidermolysis Bullosa (‘‘EB’’) in the second half of 2020, followed by applications for approval from the FDA and the EMA, if top-line data is positive. Coupled with this, management has completed its annual forecast and revenues and costs reflect these current expectations.
The total non-cash finance charge recognized in the Condensed Consolidated Statement of Comprehensive Loss for the year ended March 31, 2020 is US$1,448,000 (March 31, 2019: US$nil).
Acquisition of Amryt AG (previously ‘‘Birken’’)
Amryt DAC signed a conditional share purchase agreement to acquire Amryt AG on October 16, 2015 (‘‘Amryt AG SPA’’). The Amryt AG SPA was completed on April 18, 2016 with Amryt DAC acquiring the entire issued share capital of Amryt GmbH. The consideration included contingent consideration comprising milestone payments and sales royalties as follows:
- Milestone payments of:
- €10,000,000 on receipt of first marketing approval by the EMA of Episalvan, paid on the completion date (April 18, 2016);
- Either (i) €5,000,000 once net ex-factory sales of Episalvan have been at least €100,000 or (ii) if no commercial sales are made within 24 months of EMA first marketing approval (being January 14, 2016), €2,000,000 24 months after receipt of such approval, which was paid in January 2018, and €3,000,000 following the first commercial sale;
- €10,000,000 on receipt of marketing approval by the EMA or FDA of a pharmaceutical product containing Betulin as its API for the treatment of EB;
- €10,000,000 once net ex-factory sales/net revenue in any calendar year exceed €50,000,000;
- €15,000,000 once net ex-factory sales/ net revenue in any calendar year exceed €100,000,000;
- Cash consideration of €150,000, due and paid on the completion date (April 18, 2016); and
- Royalties of 9% on sales of Episalvan products for 10 years from first commercial sale;
Fair Value Measurement of Contingent Consideration
As of March 31, 2020, the fair value of the contingent consideration was estimated to be US$55,284,000 (December 31, 2019: US$53,048,000). The fair value of the royalty payments was determined using probability weighted revenue forecasts and the fair value of the milestone payments was determined using probability adjusted present values (see Note 14, Fair value measurement and financial risk management, for fair value hierarchy applied). The probability adjusted present values took into account published orphan drug research data and statistics which were adjusted by management to reflect the specific circumstances applicable to the type of product acquired in the Amryt GmbH transaction. A discount rate of 24.4% (December 31, 2019: 24.4%) was used in the calculation of the fair value of the contingent consideration for the three months ended March 31, 2020. Management was required to make certain estimates and assumptions in relation to revenue forecasts, timing of revenues and probability of achievement of commercialization of AP101. However, management noted that due to issues outside their control, the timing of when such revenue targets may occur may change. Such changes may have a material impact on the assessment of the fair value of the contingent consideration.
In January 2019, the Group received the results of an unblinded interim efficacy analysis for the Phase 3 trial of AP101 in EB. This analysis was conducted by an independent data safety monitoring committee and recommended that the trial should continue with an increase of 48 patients in the study to a total of 230 evaluable patients in order to be able to achieve 80% statistical power. In April 2020, given that the EASE study was already close to full enrollment, the Group announced that it had taken advice from an independent expert and concluded that the statistical impact of further patient recruitment would most likely be negligible. Amryt therefore decided to close the EASE study to further enrollment. The Group expects to read out top-line data from this trial in the second half of 2020, followed by applications for approval from the FDA and the EMA, if top-line data is positive. Coupled with this, management has completed its annual forecast and revenues and costs have been amended to reflect current expectations. These factors have resulted in a change to the probability weighted revenue forecasts and the probability of the adjusted present values which are used in the calculation of the contingent consideration balance and impact the amount being unwound to the consolidated statement of comprehensive loss.
Amryt reviews the contingent consideration on a regular basis as the probability adjusted fair values are being unwound as financing expenses in the Consolidated Statement of Comprehensive Loss over the life of the obligation. The finance charge is being unwound as a financing expense in the Consolidated Statement of Comprehensive Loss on a quarterly basis.
The total non-cash finance charge recognized in the Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2020 is US$2,906,000 (March 31, 2019: US$1,938,000).
6. Loss per share - basic and diluted
The weighted average number of shares in the loss per share (‘‘LPS’’) calculation, reflects the weighted average total actual shares of Amryt Pharma plc in issue at March 31, 2020, as adjusted (see below).
Issued share capital - ordinary shares of £0.06 each
| Number of shares | Weighted average shares | ||||
| March 31, 2020 (unaudited)...................................................................................................... | 154,498,887 | 154,498,887 | |||
| March 31, 2019 (unaudited)...................................................................................................... | 274,817,283 | 274,817,283 | |||
| March 31, 2019, as adjusted (unaudited)...................................................................................................... | 45,802,880 | 45,802,880 | |||
The number of shares in issue at March 31, 2019 has been adjusted to reflect the share consolidation on July 10, 2019, whereby each ordinary shareholder received one ordinary share for every six shares held at that date.
The calculation of loss per share is based on the following:
| Three months ended March 31, | |||||
| 2020 (unaudited) | 2019 (unaudited) | ||||
| Loss after tax attributable to equity holders of the Company (US$’000) | $ (28,897 | ) | $ (5,385 | ) | |
| Weighted average number of ordinary shares in issue | 154,498,887 | 45,802,880 | |||
| Fully diluted average number of ordinary shares in issue | 154,498,887 | 45,802,880 | |||
| Basic and diluted loss per share (US$) | $ (0.19 | ) | $ (0.12 | ) | |
The basic and diluted loss per share as at March 31, 2020 of US$0.19 (March 31, 2019: US$0.12) was calculated using the post consolidation number of ordinary shares in issue.
Where a loss has occurred, basic and diluted LPS are the same because the outstanding share options and warrants are anti-dilutive. Accordingly, diluted LPS equals the basic LPS. The share options and warrants outstanding as at March 31, 2020 totalled 34,696,369 (March 31, 2019: 3,596,398 as adjusted) and are potentially dilutive.
7. Intangible assets and goodwill
The following table summarizes the Group’s intangible assets and goodwill:
| Developed technology - metreleptin | Developed technology - lomitapide | In process R&D | Other intangible assets | Total intangible assets | Goodwill | ||||||||||||
| US$’000 | |||||||||||||||||
| Cost | |||||||||||||||||
| At January 1, 2019 (audited) | $ — | $ — | $ 60,091 | $ 258 | $ 60,349 | $ — | |||||||||||
| Additions | — | — | — | 74 | 74 | — | |||||||||||
| Acquired assets | 185,000 | 123,000 | — | 374 | 308,374 | 30,813 | |||||||||||
| Impairment charge | — | — | (4,670 | ) | — | (4,670) | — | ||||||||||
| Foreign exchange movement | — | — | (1,160 | ) | (5 | ) | (1,165 | ) | — | ||||||||
| At December 31, 2019 (audited) | 185,000 | 123,000 | 54,261 | 701 | 362,962 | 30,813 | |||||||||||
| Foreign exchange movement | — | — | (685 | ) | (11 | ) | (696) | — | |||||||||
| At March 31, 2020 (unaudited) | $ 185,000 | $ 123,000 | $ 53,576 | $ 690 | $ 362,266 | $ 30,813 | |||||||||||
| Accumulated amortization | |||||||||||||||||
| At January 1, 2019 (audited) | — | — | — | 52 | 52 | — | |||||||||||
| Amortization charge | 7,688 | 4,143 | — | 126 | 11,957 | — | |||||||||||
| Foreign exchange movement | — | — | — | — | — | — | |||||||||||
| At December 31, 2019 (audited) | 7,688 | 4,143 | — | 178 | 12,009 | — | |||||||||||
| Amortization charge | 7,208 | 3,884 | — | 68 | 11,160 | — | |||||||||||
| Foreign exchange movement | — | — | — | 3 | 3 | — | |||||||||||
| At March 31, 2020 (unaudited) | $ 14,896 | $ 8,027 | $ — | $ 249 | $ 23,172 | $ — | |||||||||||
| Net book value | |||||||||||||||||
| At December 31, 2019 (audited) | $ 177,312 | $ 118,857 | $ 54,261 | $ 523 | $ 350,953 | $ 30,813 | |||||||||||
| At March 31, 2020 (unaudited) | $ 170,104 | $ 114,973 | $ 53,576 | $ 441 | $ 339,094 | $ 30,813 | |||||||||||
Developed technology on commercially marketed products
In connection with the acquisition of Aegerion in September 2019, the Group acquired developed technology, metreleptin and lomitapide. These intangible assets are amortized over their estimated useful lives and the remaining useful lives for metreleptin and lomitapide are approximately 5.9 and 7.4 years, respectively, as of March 31, 2020.
In-process R&D
As a result of the acquisition of Amryt GmbH, in 2016, the Group recognized in-process R&D costs of US$54,268,000 which is related to the Group’s lead development asset, AP101.
Goodwill
During 2019, the Group completed the acquisition of Aegerion, which resulted in aggregate goodwill of US$30,813,000.
The Group reviews events or changes in circumstances that may indicate a triggering event for impairment. Management applied its judgment in determining that there were no events or changes in circumstances causing any impairment triggers as of March 31, 2020. As such there was no impairment charge recorded during the three months ended March 31, 2020.
8. Trade and other receivables
| As at | |||||
| March 31, 2020 (unaudited) | December 31, 2019 (audited) | ||||
| US$’000 | |||||
| Trade receivables | $ 32,276 | $ 28,607 | |||
| Accrued income and other debtors | 5,556 | 5,934 | |||
| VAT recoverable | 3,347 | 1,846 | |||
| Trade and other receivables | $ 41,179 | $ 36,387 | |||
9. Cash and cash equivalents
| As at | |||||
| March 31, 2020 (unaudited) | December 31, 2019 (audited) | ||||
| US$’000 | |||||
| Cash at bank available on demand | $ 66,974 | $ 65,197 | |||
| Restricted cash | 1,093 | 2,032 | |||
| Total cash and cash equivalents | $ 68,067 | $ 67,229 | |||
Cash and cash equivalents include cash at bank available on demand and restricted cash.
At March 31, 2020, there was US$653,000 (December 31, 2019: US$1,219,000) of restricted cash predominantly consisting of cash held in an escrow account set-up in accordance with Aegerion’s bankruptcy plan as approved by the U.S. Bankruptcy Court to meet the costs associated with the bankruptcy process. Additionally, US$440,000 is cash held by a third-party distributor at March 31, 2020 (December 31, 2019: US$813,000); the funds from the third-party distributor were transferred to Amryt in April 2020.
10. Share capital and reserves
Details of issued ordinary shares with a nominal value of Sterling 6 pence (2019: 1 pence) each are in the table below.
| Date | Number of ordinary shares | Total Share Capital US$’000 | Total Share Premium US$’000 | |||
| At March 31, 2020 (unaudited) | 159,363,543 | $ 11,918 | $ 2,422 | |||
| At December 31, 2019 (audited) | 159,363,543 | $ 11,918 | $ 2,422 | |||
The number of ordinary shares issued at March 31, 2020 and December 31, 2019 includes treasury shares of 4,864,656.
Share Capital
Share capital represents the cumulative par value arising upon issue of ordinary shares of Sterling 6 pence each.
The ordinary shares have the right to receive notice of, attend and vote at general meetings and participate in the profits of the Company.
Share Premium
Share premium represents the consideration that has been received in excess of the nominal value on issue of share capital net of issue costs and transfers to distributable reserves.
Warrant reserve
The warrant reserve represents zero cost warrants issued as part of the equity raise on September 24, 2019 net of issue costs apportioned to warrants issued and additional warrants issued to certain shareholders on November 14, 2019. Each warrant entitles the holder to subscribe for one ordinary share at zero cost.
Treasury Shares
On November 14, 2019, the Company repurchased a combined 4,864,656 ordinary shares from certain shareholders. In exchange for the ordinary shares, these shareholders were issued an equivalent number of zero cost warrants. These ordinary shares are now held as treasury shares.
Share based payment reserve
Share based payment reserve relates to the charge for share based payments in accordance with IFRS 2.
Merger reserve
The merger reserve was created on the acquisition of Amryt DAC by Amryt Pharma plc in April 2016. Ordinary shares in Amryt Pharma plc were issued to acquire the entire issued share capital of Amryt DAC. Under section 612 of the UK Companies Act 2006, the premium on these shares has been included in a merger reserve.
Reverse acquisition reserve
The reverse acquisition reserve arose during the period ended December 31, 2016 in respect of the reverse acquisition of Amryt Pharma plc by Amryt DAC. Since the shareholders of Amryt DAC became the majority shareholders of the enlarged Group, the acquisition is accounted for as though there is a continuation of Amryt DAC’s financial statements. The reverse acquisition reserve is created to maintain the equity structure of Amryt Pharma plc in compliance with UK company law.
Equity component of convertible notes
The equity component of convertible notes represents the equity component of the US$125,000,000 convertible debt, that was issued on September 24, 2019, and is measured by determining the residual of the fair value of the instrument less the estimated fair value of the liability component. The equity component is recognized in equity and is not subsequently remeasured.
Other distributable reserves
Other distributable reserves comprise the following:
- Distribution of the share premium amount on November 6, 2019 of US$268,505,000.
- A deemed distribution of US$47,902,000 arising from the issuance of CVRs.
- A deemed distribution of US$2,969,000 arising from the scheme of arrangement in September 2019 whereby Amryt Pharma plc, which was incorporated in July 2019, became a 100% shareholder of Amryt Pharma Holdings Limited (formerly named Amryt Pharma plc) (the ‘‘Acquisition of subsidiary without a change of control’’).
Currency translation reserve
The currency translation reserve arises on the retranslation of non-U.S, dollar denominated foreign subsidiaries.
Accumulated deficit
Accumulated deficit represents losses accumulated in previous periods and the current year.
11. Long term loan
| As at | |||||
| March 31, 2020 (unaudited) | December 31, 2019 (audited) | ||||
| US$’000 | |||||
| Long term loan principal | $ 81,021 $ 81,021 | ||||
| Accrued unpaid interest | 2,789 1,435 | ||||
| Unamortized debt issuance costs | (821) (846) | ||||
| Long term loan | $ 82,989 | $ 81,610 | |||
As part of the acquisition of Aegerion on September 24, 2019, Aegerion entered into a new U.S. dollar denominated US$81,021,000 secured term loan debt facility (‘‘Term Loan’’) with various lenders. The Term Loan is made up of a US$54,469,000 loan that was in place prior to the acquisition which was refinanced as part of the acquisition and a US$26,552,000 additional loan that was drawn down on September 24, 2019. The Term Loan has a five-year term from the date of the draw down, September 24, 2019 and matures on September 24, 2024. Under the Term Loan, interest will be payable at the option of the Group at the rate of 11% per annum paid in cash on a quarterly basis or at a rate of 6.5% paid in cash plus 6.5% paid in kind that will be paid when the principal is repaid, which rolls up and is included in the principal balance outstanding, on a quarterly basis. The Term Loan may be prepaid, in whole or in part, by Aegerion at any time subject to payment of an exit fee, which depending on the stage of the loan term, ranges from 5.00% to 0.00% of the principal then outstanding on the Term Loan.
The Term Loan is guaranteed by Amryt and certain subsidiaries of the Group. In connection with the loan agreement, fixed and floating charges have been placed on property and undertakings of Amryt and certain subsidiaries of the Group.
The Term Loan agreement includes affirmative and negative covenants, including prohibitions on the incurrence of additional indebtedness, granting of liens, certain asset dispositions, investments and restricted payments, in each case, subject to certain exceptions set forth in the Loan Agreement. The Term Loan agreement also includes customary events of default for a transaction of this type, and includes (i) a cross-default to the occurrence of any event of default under material indebtedness of Aegerion and certain subsidiaries of the Group and Amryt, including the convertible notes, and (ii) Amryt or any of its subsidiaries being subject to bankruptcy or other insolvency proceedings. Upon the occurrence of an event of default, the lenders may declare all of the outstanding Term Loan and other obligations under the Term Loan agreement to be immediately due and payable and exercise all rights and remedies available to the lenders under the Term Loan agreement and related documentation. There have been no events of default or breaches of the covenants occurring for the three months ended March 31, 2020 and for year ended December 31, 2019.
12. Convertible notes
| As at | |||||
| March 31, 2020 (unaudited) | December 31, 2019 (audited) | ||||
| US$’000 | |||||
| Issuance of convertible notes.......................................................................................................................... | $ 125,000 | $ 125,000 | |||
| Amount classified as equity........................................................................................................................ | (29,210 | ) | (29,210 | ) | |
| Accreted interest...................................................................................................................... | 2,082 | 1,066 | |||
| Total convertible notes | $ 97,872 | $ 96,856 | |||
As part of the acquisition, Aegerion issued convertible notes with an aggregate principal amount of US$125,000,000 to Aegerion creditors.
The convertible notes are senior unsecured obligations and bear interest at a rate of 5.0% per year, payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2020. The convertible notes will mature on April 1, 2025, unless earlier repurchased or converted.
The convertible notes are convertible into Amryt’s ordinary shares at a conversion rate of 386.75 ordinary shares per US$1,000 principal amount of the convertible notes. If the holders elect to convert the convertible notes, Aegerion can settle the conversion of the convertible notes through payment or delivery of cash, common shares, or a combination of cash and common shares, at its discretion. As a result of the conversion feature in the convertible notes, the convertible notes were assessed to have both a debt and an equity component. The two components were assessed separately and classified as a financial liability and equity instrument. The financial liability component was measured at fair value based on the discounted cash flows expected over the expected term of the notes using a discount rate based on a market interest rate that a similar debt instrument without a conversion feature would be subject to. Refer to Note 10, Share capital and reserves, for further details on the equity component of the convertible notes.
From September 24, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their convertible notes, in multiples of US$1,000 principal amount, at the option of the holder.
The indenture does not contain any financial covenants and does not restrict the Group’s ability to repurchase securities, pay dividends or make restricted payments in the event of a transaction that substantially increases the Group’s level of indebtedness in certain circumstances.
The indenture contains customary terms and covenants and events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving Aegerion, Amryt and certain subsidiaries of the Group) occurs and is continuing, the trustee by notice to Aegerion, or the holders of at least 25% in principal amount of the outstanding convertible notes by written notice to Aegerion and the trustee, may declare 100% of the principal of and accrued and unpaid interest, if any, on all of the convertible notes to be due and payable. Upon such a declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving Aegerion, 100% of the principal and accrued and unpaid interest, if any, on the convertible notes will become due and payable automatically. Notwithstanding the foregoing, the indenture provides that, upon Aegerion’s election, and for up to 180 days, the sole remedy for an event of default relating to certain failures by Aegerion to comply with certain reporting covenants in the indenture consists exclusively of the right to receive additional interest on the convertible notes. There have been no events of default or breaches of the covenants occurring for the three months ended March 31, 2020 and for year ended December 31, 2019.
13. Provisions and other liabilities
| As at | |||||
| March 31, 2020 (unaudited) | December 31, 2019 (audited) | ||||
| US$’000 | |||||
| Non-current liabilities | |||||
| Provisions and other liabilities | $ — | $ 3,910 | |||
| Leases due greater than 1 year | 1,014 | 1,053 | |||
| 1,014 | 4,963 | ||||
| Current liabilities | |||||
| Provisions and other liabilities | 23,670 | 23,047 | |||
| Leases due less than 1 year............................................................................................................................ | 462 | 571 | |||
| 24,132 | 23,618 | ||||
| Total provisions and other liabilities.................................................................................................................. | $ 25,146 | $ 28,581 | |||
Legal matters
Prior to the acquisition of Aegerion by Amryt, Aegerion entered into settlement agreements with governmental entities including the Department of Justice (‘‘DOJ’’) and the FDA in connection with JUXTAPID investigations. The settlement agreements require Aegerion to pay specified fines and engage in regulatory compliance efforts. The settlements that remain due as a current liability and a non-current liability is $16,169,000 and $nil, respectively, as of March 31, 2020 (December 31, 2019: $15,547,000 and $3,910,000, respectively).
Other legal matters
The Group recognizes a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Group reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and the Group’s views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in the Group’s liability accrual would be recorded in the period in which such determination is made. At March 31, 2020 and December 31, 2019, the Group had recognized liabilities of US$7,500,000 in relation to ongoing legal matters.
14. Fair value measurement and financial risk management
Categories of financial instruments
| As at | ||||||
| March 31, 2020 (unaudited) | December 31, 2019 (audited) | |||||
| US$’000 | ||||||
| Financial assets (all at amortized cost): | ||||||
| Cash and cash equivalents............................................................................................................... | $ 68,067 | $ 67,229 | ||||
| Trade receivables................................................................................................................ | 32,276 | 28,607 | ||||
| Total financial assets.......................................................................................................................... | 100,343 | 95,836 | ||||
| Financial liabilities: | ||||||
| At amortized cost | ||||||
| Trade payables and accrued expenses.................................................................................................................... | 87,460 | 75,800 | ||||
| Lease liabilities | 1,476 | 1,624 | ||||
| Other liabilities | 16,169 | 19,457 | ||||
| Convertible notes........................................................................................................................... | 97,872 | 96,856 | ||||
| Long term loan............................................................................................................................ | 82,989 | 81,610 | ||||
| At fair value | ||||||
| Contingent consideration............................................................................................................ | 106,145 | 102,461 | ||||
| Total financial liabilities................................................................................................................... | 392,111 | 377,808 | ||||
| Net | $ (291,768 | ) | $ (281,972 | ) | ||
Financial instruments evaluated at fair value can be classified according to the following valuation hierarchy, which reflects the extent to which the fair value is observable:
- Level 1: fair value evaluations using prices listed on active markets (not adjusted) of identical assets or liabilities.
- Level 2: fair value evaluations using input data for the asset or liability that are either directly observable (as prices) or indirectly observable (derived from prices), but which do not constitute listed prices pursuant to Level 1.
- Level 3: fair value evaluations using input data for the asset or liability that are not based on observable market data (unobservable input data).
The contingent consideration has been valued using Level 3. The contingent consideration comprises:
a. Contingent consideration relating to the acquisition of Amryt GmbH (see Note 5, Business combinations and asset acquisitions) that was measured at US$55,284,000 as at March 31, 2020 (December 31, 2019: US$53,048,000). The fair value comprises royalty payments which was determined using probability weighted revenue forecasts and the fair value of the milestones payments which was determined using probability adjusted present values.
Impact of key unobservable input data
- An increase of 10% in estimated revenue forecasts would result in an increase to the fair value of US$3,900,000. A decrease would have the opposite effect.
- A 5% increase in the discount factor used would result in a decrease to the fair value of US$9,822,000. A decrease of 5% would result in an increase to the fair value of US$13,296,000.
- A six-month delay in the launch date for AP101 for EB would result in a decrease to the fair value of US$4,540,000.
- Contingent consideration relating to the acquisition of Aegerion that was measured at US$50,861,000 as at (December 31, 2019: US$49,413,000). The fair value comprises approval milestones which was determined using probability weighted revenue forecasts and the fair value of the revenue milestones which was determined using probability adjusted present values.
Impact of key unobservable input data
- An increase of 10% in estimated revenue forecasts would not result in any change to the fair value. A decrease would result in a decrease to the fair value of US$461,000.
- A 5% increase in the discount factors used would result in a decrease to the fair value of US$3,031,000. A decrease of 5% would result in an increase to the fair value of US$3,396,000.
- A six-month delay in the launch date for AP101 for EB would result in a decrease to the fair value of US$2,875,000.
15. Events after the reporting period
COVID-19
Since a novel strain of coronavirus (SARS-CoV-2) causing a disease referred to as COVID-19 was first reported in December 2019, the disease has spread across the world, including countries in which we have patients and in which we have planned or active clinical trial sites. The outbreak and government measures taken in response have had a significant impact, both direct and indirect, on all businesses and commerce as supply chains have been disrupted, facilities and production have been suspended and demand for certain goods and services has spiked while demand for other goods and services has fallen. As COVID-19 continues to spread around the globe, Amryt may experience disruptions that could affect its business, preclinical studies and clinical trials.
In response to the spread of COVID-19, Amryt has closed its executive offices with its administrative employees continuing their work outside of our offices and limited the number of staff in Amryt’s manufacturing facility in Germany. Amryt provides therapeutic products to HoFH and lipodystrophy patients globally on a recurring basis. Once lomitapide (for the treatment of HoFH) or metreleptin (for the treatment of lipodystrophy) is prescribed by physicians, patients are typically on treatment over a long period of time with repeat prescriptions for each patient.
Other
In May 2020, the Group entered into a 20-year term lease for its European operational office, located in Dublin, Ireland. The lease will commence in 2020 and contains an option to terminate after 12 years.