Amryt Announces 22% growth in FY 2021 Revenues to $222.5M
*Amryt Announces 22% growth in FY 2021 Revenues to $222.5M *
Issuing FY 2022 revenue guidance of $260M - $270M, representing 17%-21% YoY growth
Cash of $113.0M at December 31, 2021
Board approves stock repurchase program of up to $30M
8^th consecutive quarter of positive EBITDA generation
32% YoY growth in metreleptin revenues
Successful bioavailability study supporting development of Mycapssa® for carcinoid symptoms in NET
Global NET market opportunity is estimated to be approx. $1.9bn*
*Conference call and webcast today at 0830 EST / 1330 GMT*
*DUBLIN, Ireland, and Boston MA, March 9, 2022, *Amryt (Nasdaq: AMYT), a global, commercial-stage biopharmaceutical company dedicated to acquiring, developing and commercializing novel treatments for rare diseases, today provides a business update and unaudited financial results for Q4 2021 and the full year ended December 31, 2021.
*Joe Wiley, CEO of Amryt Pharma, commented:* “I am very pleased with today’s strong results for 2021 which demonstrate the positive performance and growth that our three commercial products are delivering across a host of metrics including revenue, EBITDA, cash generation and market expansion. Our revenues grew 22% in the year and in particular, metreleptin delivered very impressive 32% revenue growth in 2021. This strong revenue performance drove our eighth consecutive quarter of positive EBITDA and generated full year operating cash flows before Chiasma deal costs of $29.8M.
During the year, we completed the acquisition of Chiasma and I am pleased to report that the integration process is well advanced. We are making significant progress both with the relaunch of Mycapssa® and in advancing new growth opportunities for this key product. Yesterday, we announced the completion of a successful bioavailability study for Mycapssa®. These data support a planned Phase 3 study for Mycapssa® in the treatment of patients with carcinoid symptoms due to neuroendocrine tumors (NET). Mycapssa® is the only FDA approved oral formulation of octreotide for the treatment of acromegaly. The current pharmaceutical standard of care for NET patients with carcinoid symptoms is injectable somatostatin anologs (SSAs). This potential additional indication, if approved, creates a substantial new market opportunity for Amryt.
We also recently refinanced our term debt facilities which further strengthens our balance sheet, significantly reduces our interest costs and extends the maturity profile of those facilities through 2027.
Given the strength of our balance sheet and the sustained performance and growth of our business, the board has approved a share repurchase program of up to $30M that reflects the confidence we have in Amryt’s future.
Finally, today we are issuing revenue guidance for FY 2022 of $260M-$270M million which represents growth of 17%-21% on 2021.”
*FY 2021 Financial Highlights *
· 21.9% growth in FY 2021 revenues YoY to $222.5M (2020: $182.6M) driven by 32.2% increase in metreleptin revenues
· Operating loss before finance expense for FY 2021 of $71.2M (2020: $46.5M). Excluding non-cash items, acquisition and severance related costs and share based compensation expenses, EBITDA for FY 2021 amounted to $41.9M
· Strong cash generation during 2021 with $29.8M of cash from operating activities before Chiasma deal costs
· Cash of $113.0M at December 31, 2021 (2020: $118.8M)
*FY 2021 & Recent Business Highlights*
· Completed $125M non-dilutive debt refinancing - significantly reducing interest expense and cost of capital and extending term debt maturity through 2027
· Chiasma acquisition announced, completed and integration well advanced
· Completed AIM delisting
· Reimbursement approval for metreleptin in England, Wales and France
· Lancet Diabetes & Endocrinology publishes positive results for the MPOWERED Phase 3 trial for Mycapssa®
· Announced positive long-term safety and efficacy data confirming the role for Mycapssa® in the management of acromegaly patients who have responded to and tolerated treatment with octreotide and lanreotide
· Successful bioavailability study for Mycapssa® - global NET market opportunity is estimated to be approx. $1.9bn* with US market opportunity estimated to be approx. $1.0bn*
· Global Phase 3 study to support US label expansion for metreleptin in the treatment of partial lipodystrophy (PL) initiated in Q4
*Expected 2022 Newsflow*
· European Medicines Agency (EMA) review of Oleogel-S10 MAA ongoing. Ad-Hoc Expert Group scheduled Mar 15
· Oleogel-S10 End of Review conference with FDA anticipated Q2 2022
· Mycapssa® NET program - written responses to a Type C meeting request are anticipated to be received Q2 2022
· Lomitapide pediatric HoFH top-line data anticipated H2 2022
· Mycapssa® EMA MAA CHMP opinion for acromegaly indication anticipated H2 2022
· Mycapssa® NET program - Phase 3 study initiation anticipated Q4 2022
*IFRS and non-GAAP adjusted Q4 2021 & FY 2021 Results*
*US$M* *Q4 2020*
*(unaudited)*
* * *Q4 2021*
*(unaudited)* *Q4 2021*
*Non-cash adjustments^1* *Q4 2021 Non-GAAP Adjusted* *FY 2021 (unaudited)* *FY 2021 *
*Non-cash adjustments^2* *FY 2021 Non-GAAP Adjusted*
*Revenue* *42.5* 54.8 - *54.8* 222.5 - *222.5*
Gross profit 12.6 25.6 17.6 *43.2* 116.4 53.4 *169.8*
R&D (5.1) (9.3) - *(9.3)* (37.7) - *(37.7)*
SG&A (19.8) (29.6) 0.7 *(28.9)* (92.0) 1.8 *(90.2)*
Acquisition & severance related costs - (2.3) - *(2.3)* (16.9) - *(16.9)*
Share based compensation expenses (1.6) (2.4) 2.4 *-* (8.3) 8.3 *-*
Impairment charge - (32.6) 32.6 - (32.6) 32.6 -
*Operating (loss) / profit **before finance expense* *(13.9)* *(50.5)* *53.3* *2.7^3* *(71.2)* *96.1* *25.0^3*
*Operating (loss) / profit before finance expense and restructuring and severance related costs (EBITDA^3)* *(13.9)* *(48.2)* *53.3* *5.0^3* *(54.3)* *96.1* *41.9^3*
$50.5M operating loss before finance expense for Q4 2021 (Q4 2020: $13.9M operating loss). Excluding non-cash items, share based compensation expenses, impairment charges and Chiasma restructuring and acquisition costs, this resulted in EBITDA*^3 *before restructuring and acquisition costs of $5.0M*^3* for Q4 2021 and $41.9M*^3 *for FY 2021.
^1* *Non-cash items in Q4 include amortisation of the acquired metreleptin, lomitapide and Mycapssa® intangible assets ($14.8M), amortisation of the inventory fair value step-up related to the acquisition of Chiasma ($2.8M), depreciation and amortisation ($0.7M), impairment charge ($32.6M) and share based compensation expenses ($2.4M).
^2* *Non-cash items for FY21 include amortisation of the acquired metreleptin, lomitapide and Mycapssa® intangible assets ($49.0M), amortisation of the inventory fair value step-up related to the acquisition of Chiasma and Aegerion ($4.4M), depreciation and amortisation ($1.8M), impairment charge ($32.6M) and share based compensation expenses ($8.3M).
^3* *EBITDA, as applied in the above table, is defined as earnings before interest, tax, depreciation, amortisation, impairment, restructuring and severance related costs and share based compensation expenses. To supplement Amryt's financial results presented in accordance with IFRS generally accepted accounting principles, the Company uses EBITDA as a key measure of company performance as the Company believes that this measure is most reflective of the operational profitability or loss of the Company and provides management and investors with useful supplementary information which can enhance their ability to evaluate the operating performance of the business. EBITDA, as measured by the Company, is not meant to be considered in isolation or as a substitute to operating profit / loss attributable to Amryt and should be read in conjunction with the Company's condensed consolidated financial statements prepared in accordance with IFRS.
*Based on management estimates
*FY 2021 Commercial Product Performance*
*
** * *FY 2021 (unaudited)*
* * *US* *EMEA* *Other* *Total*
* * *US$’000* *US$’000* *US$’000* *US$’000*
Metreleptin 70,216 51,769 19,257 141,242
Lomitapide 32,901 28,601 12,365 73,867
Mycapssa® 6,407 — — 6,407
Other — 766 261 1,027
*Total revenue* *109,524* *81,136* *31,883* *222,543*
*
** * *FY 2020 (audited)*
* * *US* *EMEA* *Other* *Total*
* * *US$’000* *US$’000* *US$’000* *US$’000*
Metreleptin 60,568 32,494 13,810 106,872
Lomitapide 37,317 26,144 11,289 74,750
Mycapssa® — — — —
Other — 763 222 985
*Total revenue* *97,885* *59,401* *25,321* *182,607*
*Q4 2021 Commercial Product Performance*
*
** * *Q4 2021 (unaudited)*
* * *US* *EMEA* *Other* *Total*
* * *US$’000* *US$’000* *US$’000* *US$’000*
Metreleptin 17,490 12,175 2,265 31,930
Lomitapide 7,519 7,263 2,913 17,695
Mycapssa® 4,954 — — 4,954
Other — 184 67 251
*Total revenue* *29,963* *19,622* *5,245* *54,830*
*
** * *Q4 2020 (unaudited)*
* * *US* *EMEA* *Other* *Total*
* * *US$’000* *US$’000* *US$’000* *US$’000*
Metreleptin 15,111 6,261 796 22,168
Lomitapide 9,270 7,461 3,433 20,164
Mycapssa® — — — —
Other — 190 — 190
*Total revenue* *24,381* *13,912* *4,229* *42,522*
· 21.9% revenue growth in FY 2021 YoY to $222.5M (FY 2020: $182.6M)
· 28.9% revenue growth in Q4 2021 YoY to $54.8M (Q4 2020: $42.5M)
· 32.2% increase in metreleptin revenues to $141.2M in FY 2021 (2020: $106.9M)
· Metreleptin grew 15.9% annually in the US, 59.3% in EMEA and 39.4% in ROW
· US accounted for 49.7% of global metreleptin revenues and EMEA accounted for 36.7% in FY 2021
· Metreleptin revenues in Q4 2021 were $31.9M representing a 44.0% increase on Q4 2020 ($22.2M)
· Relaunch of Mycapssa® initiated - revenues in Q4 were $5.0M (Q3 2021: $1.4M), all of which were US based
· 1.2% decrease in lomitapide revenues to $73.9M in FY 2021 (2020: $74.8M )
· Lomitapide revenues in Q4 2021 were $17.7M (Q4 2020: $20.2M)
· EMEA lomitapide revenues grew 9.4% YoY in FY 2021 and ROW revenues increased by 9.5% YoY
· US accounted for 44.5% of global lomitapide revenues and EMEA accounted for 38.7% in FY 2021
*Oleogel-S10 *
On February 28, 2022, Amryt announced that the FDA communicated that it had completed its review of the NDA for Oleogel-S10 and has determined that the application cannot be approved in its present form. The FDA has asked Amryt to submit additional confirmatory evidence of effectiveness for Oleogel-S10 in EB. During Q2 2022, Amryt intends to discuss with the FDA the nature of the data required to address the Agency’s concerns. The EMA review process for Oleogel-S10 in EB is ongoing and Amryt has responded to outstanding questions. Given the rarity of the disease without any approved therapies, the EMA has proposed that an Ad-Hoc Expert Group, comprised of both EB clinical experts and patients with EB, be consulted to provide external and independent EB specific advice. The Ad-Hoc Expert Group is scheduled to meet on March 15, 2022.
*Financial Position*
In February 2022, the Company completed a $125M non-dilutive debt refinancing which will generate significant annual interest cost savings and extend the maturity of Amryt’s debt facilities through February 2027. The facilities also provide strategic flexibility as Amryt looks to grow its global rare disease presence.
Cash generated from operating activities before Chiasma deal costs in 2021 was $29.8M. During the year, the Company paid $12.3M in net finance payments, $3.9M in residual payments related to legacy fines levied on Aegerion, $116.6M on the payment of Chiasma related debt, $16.9M acquisition & restructuring costs and $1.5M in capital expenditure.
Cash of $113.0M at December 31, 2021 (2020: $118.8M) is after repayment of outstanding Chiasma debt, transaction and integration related costs in the period.
*Share Repurchase Program*
The board of directors has approved a stock repurchase program for the purchase of up to $30 million of the Company’s shares at any time. The shares may be repurchased from time to time in the open market or in privately negotiated transactions. The timing, number of shares repurchased, and prices paid for the stock under this program will depend on a variety of factors, including general business and market conditions as well as corporate and regulatory limitations. The Company anticipates funding for this program to come from available corporate funds, including cash on hand and future cash flow.
The term of the board authorization of the repurchase program is until March 8, 2023. There is no guarantee as to the number of shares that will be repurchased, and the repurchase program may be extended, suspended, or discontinued at any time without prior notice at the Company's discretion.
*Guidance & Outlook*
Given the continued strong performance of the Company’s three commercial products, the board is today issuing revenue guidance for FY 2022 in the range of $260M - $270M which represents growth of 17% to 21% on FY 2021.
*Conference Call & Webcast*
Amryt will host a conference call and webcast for analysts and investors today at* 0830 EST/1330 GMT. *Webcast Player
URL:* **https://edge.media-server.com/mmc/p/ebranod7 *
Telephone Dial in details*: *
United States +1 646 741 3167
United Kingdom +44 (0) 207 192 8338
Ireland +353 (1) 506 0650
*Confirmation Code* *3077366*
A playback facility will be available from March 9, 2022 at 1330 EST / 1830 GMT– March 16, 2022 at 1330 EST / 1830 GMT. Access details for the playback facility are as follows: Confirmation Code: 3077366 | US: + 1 917 677 7532 | UK: +44 (0) 333 300 9785 | Ireland : +353 (1) 553 8777.
*About Amryt *
Amryt is a global commercial-stage biopharmaceutical company focused on acquiring, developing and commercializing innovative 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 three orphan disease products – metreleptin (Myalept®/ Myalepta®); oral octreotide (Mycapssa®); and lomitapide (Juxtapid®/ Lojuxta®).
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®) as an adjunct to diet 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. For additional information, please follow this link.
Mycapssa® (octreotide capsules) is approved in the US for long-term maintenance therapy in acromegaly patients who have responded to and tolerated treatment with octreotide or lanreotide. Mycapssa® is the first and only oral somatostatin analogapproved by the FDA. Mycapssa® has also been submitted to the EMA and is not yet approved in Europe. For additional information, please follow this link.
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, Colombia, Argentina and Japan (under the trade name Juxtapid®) and in the EU, Israel, Saudi Arabia and Brazil (under the trade name Lojuxta®). For additional information, please follow this link.
Amryt's lead development candidate, Oleogel-S10 is a potential treatment for the cutaneous manifestations of Junctional and Dystrophic 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 selected as the brand name for Oleogel-S10. The product does not currently have regulatory approval to treat EB.
Amryt’s pre-clinical gene therapy candidate, AP103, offers a potential treatment for patients with Dystrophic EB, and the polymer-based delivery platform has the potential to be developed for the treatment of other genetic disorders.
Amryt also intends to develop oral medications that are currently only available as injectable therapies through its Transient Permeability Enhancer (TPE^®) technology platform. For more information on Amryt, including products, please visit www.amrytpharma.com.
*Forward-Looking Statements*
This announcement may contain forward-looking statements and 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 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.
*Contacts*
Joe Wiley, CEO / Rory Nealon, CFO/COO, +353 (1) 518 0200, ir@amrytpharma.com
Tim McCarthy, LifeSci Advisors, LLC, +1 (212) 915 2564, tim@lifesciadvisors.com
*Amryt Pharma plc
Condensed Consolidated Statement of Comprehensive Income/(Loss)*
* * *Three Months Ended *
*December 31,* * * *Year Ended *
*December 31,* *Note* *2021*
*(unaudited)* *2020*
*(unaudited)* * * *2021*
*(unaudited)* *2020*
*(audited)* * * *US$’000* *US$’000* *US$’000* *US$’000*
Revenue 3 54,830 42,522 222,543 182,607
Cost of sales (29,186) (29,881) (106,119) (119,029)
Gross profit 25,644 12,641 116,424 63,578
Research and development expenses (9,275) (5,137) (37,729) (27,618)
Selling, general and administrative expenses (29,557) (19,790) (91,995) (76,673)
Restructuring and acquisition costs 5 (2,268) (12) (16,947) (1,017)
Share based payment expenses 4 (2,436) (1,593) (8,341) (4,729)
Impairment charge 7 (32,623) — (32,623) —
*Operating loss before finance expense* (50,515) (13,891) (71,211) (46,459)
Non-cash change in fair value of contingent consideration 5 35,520 (19,677) 26,623 (27,827)
Non-cash contingent value rights gain/(loss) 5 48,198 (7,506) 42,683 (12,004)
Net finance expense - other (7,743) (4,077) (27,906) (19,569)
*Profit/(loss) on ordinary activities before taxation* 25,460 (45,151) (29,811) (105,859)
Tax (charge)/credit on loss on ordinary activities (3,086) (1,839) 11,640 1,332
*Profit/(loss) for the year attributable to the equity holders of the Company* 22,374 (46,990) (18,171) (104,527)
Exchange translation differences which may be reclassified through profit or loss 1,797 686 4,380 (2,164)
Total other comprehensive income/(loss) 1,797 686 4,380 (2,164)
*Total comprehensive income/(loss) for the year attributable to the equity holders of the Company* 24,171 (46,304) (13,791) (106,691)
*Earnings/(loss) per share*
Basic profit/(loss) per share attributable to ordinary equity holders of the parent (US$) 6 0.07 (0.28) (0.08) (0.66)
Diluted profit/(loss) per share attributable to ordinary equity holders of the parent (US$) 6 0.07 (0.28) (0.08) (0.66)
*Amryt Pharma plc
Condensed Consolidated Statement of Financial Position*
* * * * *As at December 31,* *Note* * * *2021*
*(unaudited)* * * * 2020*
*(audited)* * * * * *US$’000* * * *US$’000*
*Assets*
*Non-current assets*
Goodwill 7 56,688 19,131
Intangible assets 7 434,667 305,369
Property, plant and equipment 7,416 7,574
Other non-current assets 1,885 1,542
*Total non-current assets* 500,656 333,616
*Current assets*
Trade and other receivables 8 53,908 43,185
Inventories 9 115,769 40,992
Cash and cash equivalents, including restricted cash 10 113,032 118,798
*Total current assets* 282,709 202,975
*Total assets* 783,365 536,591
*Equity and liabilities*
*Equity attributable to owners of the parent*
Share capital 11 25,500 13,851
Share premium 11 318,153 51,408
Other reserves 11 246,260 236,488
Accumulated deficit (252,466) (235,605)
*Total equity* 337,447 66,142
*Non-current liabilities*
Contingent consideration and contingent value rights 5 71,723 148,323
Deferred tax liability 13,684 6,612
Long term loan 12 93,395 87,302
Convertible notes 13 105,788 101,086
Provisions and other liabilities 14 4,049 25,951
*Total non-current liabilities* 288,639 369,274
*Current liabilities*
Trade and other payables 15 149,734 90,236
Provisions and other liabilities 14 7,545 10,939
*Total current liabilities* 157,279 101,175
*Total liabilities* 445,918 470,449
*Total equity and liabilities* 783,365 536,591
*
*
*Amryt Pharma plc
Condensed Consolidated Statement of Cash Flows*
* * * * * * *Year ended December 31,*
* * *Note* * * *2021*
*(unaudited)* * * *2020*
*(audited)*
* * * * * * *US$’000* * * *US$’000*
*Cash flows from operating activities*
*Loss on ordinary activities after taxation* (18,171) (104,527)
Net finance expense - other 27,906 19,569
Depreciation and amortization 50,744 44,465
Amortization of inventory fair value step-up 4,418 27,617
Loss on disposal of fixed assets 173 133
Share based payment expenses 4 8,341 4,729
Non-cash change in fair value of contingent consideration 5 (26,623) 27,827
Non-cash contingent value rights (gain)/loss 5 (42,683) 12,004
Impairment of intangible asset 7 32,623 —
Deferred taxation credit (13,355) (535)
Movements in working capital and other adjustments: Change in trade and other receivables 8 (3,544) (7,685) Change in trade and other payables 11,758 8,909 Change in provision and other liabilities 14 (3,292) 4,663 Change in inventories (13,288) (10,609) Change in non-current assets 524 331
*Net cash flow from operating activities* 15,531 26,891
*Cash flow from investing activities*
Net cash received on acquisition of subsidiary, less acquisition costs 107,942 —
Payments for property, plant and equipment (729) (1,503)
Payments for intangible assets (816) (963)
Deposit interest received 5 87
*Net cash flow from/(used in) investing activities* 106,402 (2,379)
*Cash flow from financing activities*
Proceeds from issue of equity instruments 4,701 37,927
Repayment of long-term debt on acquisition of subsidiary 5 (116,629) —
Interest paid (12,283) (10,780)
Payment of leases (1,215) (1,119)
*Net cash flow (used in)/from financing activities* (125,426) 26,028
*Exchange and other movements* (2,273) 1,029
* *
*Net change in cash and cash equivalents* (5,766) 51,569
Cash and cash equivalents at beginning of the year 118,798 67,229
*Restricted cash at end of the period* 10 261 223
*Cash at bank available on demand at end of the year* 10 112,771 118,575
*Total cash and cash equivalents at end of the year* 10 113,032 118,798
*
*
*Amryt Pharma plc
Condensed Consolidated Statement of Changes in Equity*
*For the year ended December 31, 2021*
*Note* *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* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *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 7,894 (131,137) *131,833*
Loss for the year — — — — — — — — — — (104,527) *(104,527)*
Foreign exchange translation reserve — — — — — — — — — (2,164) — *(2,164)*
Total comprehensive loss — — — — — — — — — (2,164) (104,527) *(106,691)*
*Transactions with owners* * * * * * * * * * * * * * * * * * * * * * * * *
Issue of shares in exchange for warrants 11 630 14,131 (14,761) — — — — — — — — *—*
Issue of shares in equity fund raise 1,303 38,697 — — — — — — — — — *40,000*
Issue costs associated with equity fund raise — (3,848) — — — — — — — — — *(3,848)*
Issue of treasury shares for share options exercised — 6 — 113 — — — — — — — *119*
Share based payment expense 4 — — — — 4,729 — — — — — — *4,729*
Share based payment expense – Lapsed — — — — (59) — — — — — 59 —
*Total transactions with owners* 1,933 48,986 (14,761) 113 4,670 *—* *—* — — — 59 *41,000*
*Balance at December 31, 2020 (audited)* 13,851 51,408 14,762 (7,421) 7,860 42,627 (73,914) 29,210 217,634 5,730 (235,605) *66,142*
Balance at January 1, 2021 (audited) 13,851 51,408 14,762 (7,421) 7,860 42,627 (73,914) 29,210 217,634 5,730 (235,605) *66,142*
Loss for the year — — — — — — — — — — (18,171) *(18,171)*
Foreign exchange translation reserve — — — — — — — — — 4,380 — *4,380*
Total comprehensive loss — — — — — — — — — 4,380 (18,171) *(13,791)*
*Transactions with owners* * * * * * * * * * * * * * * * * * * * * * * * *
Issue of treasury shares in exchange for warrants 11 23 99 — 439 — — — — — — — *561*
Issue of treasury shares for share options exercised 11 25 89 — 465 (191) — — — — — — *388*
Issue of shares and treasury shares in exchange for warrants 11 749 7,496 (14,762) 6,517 — — — — — — — *—*
Issue of shares in consideration of Chiasma acquisition 5 10,547 249,789 — — — — — — — — — *260,336*
Share based payment reserve recognized on Chiasma acquisition 11 — — — — 10,157 — — — — — — *10,157*
Issue of shares for share options exercised and vesting of RSUs 11 305 9,272 — — (4,264) — — — — — — *5,313*
Share based payment expense 4 — — — — 8,341 — — — — — — *8,341*
Share based payment expense – Lapsed — — — — (1,310) — — — — — 1,310 *—*
*Total transactions with owners* 11,649 266,745 (14,762) 7,421 12,733 — — — — — 1,310 *285,096*
*Balance at December 31, 2021 (unaudited)* 25,500 318,153 — — 20,593 42,627 (73,914) 29,210 217,634 10,110 (252,466) *337,447*
*
*
*1. General information*
Amryt is a global commercial-stage biopharmaceutical company focused on acquiring, developing and commercializing innovative 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.
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 Nasdaq (ticker: AMYT).
Amryt acquired Chiasma, Inc. (“Chiasma”) in August 2021. The combined company will be a global leader in rare and orphan diseases with three on-market commercial products, a global commercial and operational footprint and a significant development pipeline of therapies with the financial flexibility to execute its growth plans. Amryt’s commercial business comprises three orphan disease products – metreleptin (Myalept®/ Myalepta®); oral octreotide (Mycapssa®); and lomitapide (Juxtapid®/ Lojuxta®).
Amryt's lead development candidate, Oleogel-S10 is a potential treatment for the cutaneous manifestations of Junctional and Dystrophic 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 selected as the brand name for Oleogel-S10. The product does not currently have regulatory approval to treat EB. On February 28, 2022, Amryt announced that the FDA communicated that it had completed its review of the NDA for Oleogel-S10 and has determined that the application cannot be approved in its present form. The FDA has asked Amryt to submit additional confirmatory evidence of effectiveness for Oleogel-S10 in EB. Amryt intends to discuss with the FDA the nature of the data required to address the Agency’s concerns. The European Medicines Agency (“EMA”) review process for Oleogel-S10 in EB is ongoing and Amryt has responded to outstanding questions. Given the rarity of the disease without any approved therapies, the EMA has proposed that an Ad-Hoc Expert Group, comprised of both EB clinical experts and patients with EB, be consulted to provide external and independent EB specific advice. The Committee for Medicinal Products for Human Use (“CHMP”) opinion is now anticipated in March 2022.
*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, 2020. 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, 2020, and those which are expected to be used in the financial statements for the year ended December 31, 2021.
*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.
As part of their inquiries, the Board of Directors reviewed budgets, projected cash flows, and other relevant information for a period not less than 12 months from the date of approval of the condensed consolidated interim financial statements for the year ended December 31, 2021.
*Basis of consolidation*
The condensed consolidated interim financial statements comprise the financial statements of the Group for the year ended December 31, 2021. 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 condensed consolidated interim financial statements.
*Presentation of balances*
The condensed consolidated interim financial statements are presented in U.S. dollars (‘‘US$’’), rounded to the nearest thousand, which is the functional currency of the Company 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$* *€* *£* *ILS* *NOK* *DKK*
Average three-month period to December 31, 2021 (unaudited) 0.8743 0.7420 3.1571 8.7336 6.5026
Average 12-month period to December 31, 2021 (unaudited) 0.8454 0.7271 3.2322 8.5975 6.2875
At December 31, 2021 (unaudited) 0.8830 0.7413 3.1115 8.8074 6.5664
*Foreign currency units to 1 US$* *€* *£* *ILS* *NOK* *DKK*
Average three-month period to December 31, 2020 (unaudited) 0.8391 0.7578 3.3123 9.0381 6.2461
Average 12-month period to December 31, 2020 (unaudited) 0.8777 0.7799 3.4351 9.4206 6.5432
At December 31, 2020 (unaudited) 0.8141 0.7365 3.2148 8.5671 6.0570
(€ = Euro; £ = Pounds Sterling, ILS = Israeli Shekel, 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, 2021, that are relevant to the Group.
*Critical accounting judgements and key sources of estimation uncertainty*
In preparing these condensed consolidated interim financial statements in conformity with IFRS management is required to make judgements, estimates and assumptions that affect the application of policies and amounts reported in the condensed consolidated interim 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, 2020.
*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, 2020.
*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 three commercial products and a number of development products. The Group derives its revenues primarily from one source, being 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. *Three months ended December 31, 2021 (unaudited)* *U.S.* *EMEA* *Other* *Total* *US$’000* *US$’000* *US$’000* *US$’000*
Metreleptin 17,490 12,175 2,265 *31,930*
Lomitapide 7,519 7,263 2,913 *17,695*
Mycapssa® 4,954 — — *4,954*
Other — 184 67 *251*
*Total revenue* *29,963* *19,622* *5,245* *54,830* *Three months ended December 31, 2020 (unaudited)* *U.S.* *EMEA* *Other* *Total* *US$’000* *US$’000* *US$’000* *US$’000*
Metreleptin 15,111 6,261 796 *22,168*
Lomitapide 9,270 7,461 3,433 *20,164*
Mycapssa® — — — *—*
Other — 190 — *190*
*Total revenue* *24,381* *13,912* *4,229* *42,522* *Year ended December 31, 2021 (unaudited)* *U.S.* *EMEA* *Other* *Total* *US$’000* *US$’000* *US$’000* *US$’000*
Metreleptin 70,216 51,769 19,257 *141,242*
Lomitapide 32,901 28,601 12,365 *73,867*
Mycapssa® 6,407 — — *6,407*
Other — 766 261 *1,027*
*Total revenue* *109,524* *81,136* *31,883* *222,543* *Year ended December 31, 2020 (audited)* *U.S.* *EMEA* *Other* *Total* *US$’000* *US$’000* *US$’000* *US$’000*
Metreleptin 60,568 32,494 13,810 *106,872*
Lomitapide 37,317 26,144 11,289 *74,750*
Mycapssa® — — — —
Other — 763 222 *985*
*Total revenue* *97,885* *59,401* *25,321* *182,607*
Major Customers
For the three months and year ended December 31, 2021, one customer accounted for 46% of the Group’s net revenues in both periods (2020: 57% and 54%, respectively) and accounted for 36% of the Group’s December 31, 2021, accounts receivable balance (December 31, 2020: 42%).
*4. Share based payments*
* *
*Share-based Compensation Plans*
*Amryt’s Equity Incentive Plan*
Amryt’s Equity Incentive Plan was established by a special resolution on September 23, 2019, and was subsequently amended by the Board on May 18, 2020, and August 3, 2021. The purpose of the Plan is to provide for the granting of Equity Incentives to Directors and Employees of, and Consultants to, the Company or any Associated Company.
*Chiasma Equity Incentive Plan*
When Amryt acquired Chiasma in August 2021, the Chiasma Stock Option and Incentive Plan transferred across to Amryt. Each outstanding and unexercised Chiasma Stock Option or RSU, whether vested or not vested, ceased to represent a right to acquire shares of Chiasma common stock and were converted into an option to purchase Amryt ADSs on the same terms and conditions as were applicable under such Chiasma Stock Option and Incentive Plan immediately prior to the acquisition.
No new stock option or RSUs will be granted under the Chiasma stock option and incentive plan.
*Terms and Conditions of New Grants and Grants Under the Chiasma Equity Incentive Plan*
The terms and conditions of new grants are as follows, whereby all options are settled by physical delivery of shares:
Vesting conditions
The employee share options vest following a period of service by the officer or employee. The required period of service is determined by the Remuneration Committee at the date of grant of the options (usually the date of approval by the Remuneration Committee). There are no market conditions associated with the share option vesting periods.
Contractual life
The term of an option is determined by the Remuneration Committee provided that the term may not exceed a period of seven to ten years from the date of grant. All options will terminate 90 days after termination of the option holder’s employment, service or consultancy with the Group except where a longer period is approved by the Board of Directors. Under certain circumstances involving a change in control of the Group, some options will automatically accelerate and become exercisable in full as of a date specified by the Board of Directors.
The number and weighted average exercise price (in Sterling pence) of share options per ordinary share granted under Amryt’s Equity Incentive Plan and the Chiasma stock option and incentive plan is as follows:
*Amryt Equity *
*Incentive Plan* *Chiasma Stock Option and Incentive Plan* *Units* *Weighted average exercise price (Sterling pence)* *Units* *Weighted average exercise price (Sterling pence)*
Balance at 1 January 2020 14,481,720 116.00p — —
Granted 4,432,000 144.76p — —
Lapsed (87,119) 113.42p — —
Exercised (72,953) 120.72p — —
*Outstanding at December 31, 2020 (audited)* *18,753,648* *122.79p* — —
*Exercisable at December 31, 2020 (audited)* *5,866,152* *114.24p* — — * * * * * * * *
Balance at January 1, 2021 18,753,648 122.79p — —
Granted 11,337,459 190.88p — —
Transferred to Amryt on acquisition — — 18,139,060 189.07p
Forfeited (1,288,165) 174.97p (4,098,425) 226.22p
Exercised (300,000) 93.00p (3,320,515) 116.35p
*Outstanding at December 31, 2021 (unaudited) * *28,502,942* *147.83p* *10,720,120* *197.40p*
*Exercisable at December 31, 2021 (unaudited)* *9,347,338* *118.87p* *8,005,390* *192.35p*
The fair value of the Amryt equity award 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 fair value of the Chiasma equity awards transferred to Amryt on acquisition were measured in accordance with IFRS 2. The portion of the value of the equity transferred to Amryt attributable to pre-combination service is included in the consideration at the date of acquisition. The portion of the equity awards transferred to Amryt attributable to post combination service is estimated at the date of transfer using 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 period: *December 31, *
*2021 *
*Options Inputs (unaudited)* *December 31, 2020 *
*Options Inputs (audited)*
Days to Expiration *2,555* *2,555*
Volatility *32% - 49%* *33% - 37%*
Risk free interest rate *0.77% - 1.33%* *0.39% - 0.46%*
Share price at grant per ordinary share *146.87 - 201.2p* *123.5p – 178.9p*
Share price at grant per ADS *29.37 - 40.2p* *24.7p – 35.78p*
In the year ended December 31, 2021, a total of 11,337,459 share options over ordinary shares exercisable at a weighted average price of £1.91 were granted. The fair value of share options granted in the year ended December 31, 2021, was £21,641,094/US$29,818,000.
The share options outstanding under the Amryt 2021 Equity Incentive Plan as at December 31, 2021 have a weighted remaining contractual life of 5.42 years with exercise prices ranging from £0.76 to £2.012 per ordinary share.
The share options outstanding under the Chiasma Share Option and Incentive Plan transferred across to Amryt on acquisition. As at December 31, 2021 they have a weighted remaining contractual life of 4.35 years with exercise prices ranging from £0.54 to £7.41 per ordinary share. No new share options will be granted under the Chiasma Stock Option and Incentive Plan.
*Restricted Share Units*
Under the terms of Amryt’s Equity Incentive Plan, restricted share units (“RSUs”) to purchase 1,568,755 ordinary shares were outstanding at December 31, 2021. Under the terms of this plan, RSUs are granted to officers, consultants and employees of the Group at the discretion of the Remuneration Committee. For the year ended December 31, 2021, a total of 625,205 RSUs were granted to employees of the Company. For the year ended December 31, 2020, a total of 1,556,960 RSUs were granted to employees of the Company. The fair value of the RSUs is based on the share price at the date of grant, with the expense spread over the vesting period. The fair value of RSUs granted in the year ended December 31, 2021, was US$1,636,000. At December 31, 2021, the total RSUs granted to date have a weighted remaining contractual life of 1.9 years.
Under the terms of Chiasma’s Stock Option and Incentive Plan transferred to Amryt on acquisition, restricted share units (“RSUs”) to purchase 106,560 ordinary shares were outstanding at December 31, 2021. At December 31, 2021, the total RSUs granted to date have a weighted remaining contractual life of 1.9 years. No new RSUs will be granted under the Chiasma Stock Option and Incentive Plan.
The following table summarizes the RSU activity per ordinary share for the period:
*Amryt Equity*
*Incentive Plan* *Chiasma Stock Option and Incentive Plan* *Units* *Weighted average fair value (US$)* *Units* *Weighted average fair value (US$)*
Balance at January 1, 2021 1,549,910 $2.34 — —
Granted 625,205 $2.62 — —
Transferred to Amryt on acquisition — — 202,145 $2.75
Lapsed (243,505) $2.35 (56,405) $2.75
Vested (362,855) $2.34 (39,180) $2.75
*Outstanding at December 31, 2021 (unaudited)* *1,568,755* *$2.44* *106,560* *$2.75*
*Warrants*
There are no outstanding warrants at December 31, 2021 (December 31, 2020: 9,312,062). In August 2021, an Amryt institutional investor exercised subscription rights relating to 8,966,520 zero cost warrants. These warrants were issued in September 2019 as part of the Company’s acquisition of Aegerion. Certain institutional investors elected to receive warrants to subscribe for new ordinary shares of £0.06 each in Amryt (“Ordinary Shares”), in place of the same number of Ordinary Shares, as consideration for the Company’s acquisition of Aegerion and their equity investments in the Company in September 2019. Each warrant entitled the holder to subscribe for one Ordinary Share for no additional consideration.
Separate warrants consisting of 345,542 as at December 31, 2020, which were issued in connection with the admission to the AIM in 2016, are no longer outstanding; 283,389 warrants were exercised in March 2021 and 62,153 warrants lapsed in April 2021. The number and weighted average exercise price (in Sterling pence) of warrants per ordinary share is as follows:
*Warrants* *Units* *Weighted average exercise price *
*(Sterling pence)*
Balance at January 1, 2020 17,541,815 0.03p
Granted — —
Lapsed — —
Exercised (8,229,753) —
*Outstanding at December 31, 2020 (audited)* *9,312,062* *0.05p*
*Exercisable at December 31, 2020 (audited)* *9,312,062* *0.05p*
Balance at January 1, 2021 9,312,062 0.05p
Granted — —
Lapsed (62,153) 1.44p
Exercised (9,249,909) 0.05p
*Outstanding at December 31, 2021 (unaudited)* — *0.00p*
The value of share options and RSU’s charged to the Condensed Consolidated Statement of Comprehensive Income/(Loss) during the period is as follows:
*Three months ended *
*December 31,* * * *Year ended *
*December 31,* *2021*
*(unaudited)* *2020*
*(unaudited)* * * *2021*
*(unaudited)* * * *2020*
*(audited)* *US$’000* *US$’000* * * *US$’000* * * *US$’000*
Share option expense 2,006 1,224 6,531 4,134
RSU expense 430 369 1,810 595
*Total s**hare option expense* *2,436* * * *1,593* * * *8,341* * * *4,729*
*5. Business combinations and asset acquisitions*
*Acquisition of Chiasma*
On May 5, 2021, Amryt announced that it had signed a definitive agreement to acquire Chiasma, Inc. (Nasdaq: CHMA) in an all-stock combination. Under the terms of the transaction, each share of Chiasma common stock issued and outstanding prior to the consummation of the transaction was exchanged for 0.396 Amryt American Depositary Shares (“ADSs”), each representing five Amryt ordinary shares.
On August 5, 2021, Amryt completed the acquisition of Chiasma, Inc. and, in conjunction with the completion, Amryt allotted and issued a total of 127,733,680 ordinary shares as consideration for the acquisition. Following the completion, shareholdings in Chiasma were rounded in being converted to Amryt shares using the exchange ratio of 0.396. Roundings in converting Chiasma shareholdings to Amryt shares were finalized in August 2021 and resulted in an additional 7,015 ordinary shares being allotted and issued by Amryt as consideration for the acquisition. In total, these ordinary shares were issued to the former Chiasma Shareholders in the form of 25,548,139 ADSs at US$10.19 per share, to acquire Chiasma for a value of US$260,336,000.
On August 5, 2021, Chiasma had outstanding equity awards that were held by Chiasma employees. The fair value of these awards transferred to Amryt on acquisition were measured in accordance with IFRS 2. The portion of the value of the equity transferred to Amryt attributable to pre-combination service is included in the consideration at the date of acquisition and this amounted to US$10,157,000.
On August 5, 2021, the Group repaid US$116,629,000 of Chiasma long term debt.
The combined company will be a global leader in rare and orphan diseases with three on-market commercial products, a global commercial and operational footprint and a significant development pipeline of therapies with the financial flexibility to execute its growth plans.
The table below reflects the fair value of the identifiable net assets acquired in respect of the acquisition completed during the period. Any amendments to fair values will be made within the twelve-month period from the date of acquisition, as permitted by IFRS 3: Business Combinations.
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.
In the post-acquisition period to December 31, 2021, the business acquired during the current year contributed revenue of US$6,407,000 and a trading loss of US$22,602,000 including restructuring and acquisition costs, to the Group’s results. The full year unaudited revenue and trading loss for the Group had the acquisitions taken place at the start of the year, would have been US$228,554,000 and US$82,532,000 respectively.
The gross contractual value of trade and other receivables as at the dates of acquisition amounted to US$7,180,000, which approximated the fair value of these accounts as the amount not expected to be collected was insignificant.
The Group incurred acquisition and restructuring related costs of US$2,268,000 and US$16,947,000 for the three-month period and year ended December 31, 2021, respectively, relating to external legal fees, advisory fees, due diligence costs and severance costs related to the acquisition of Chiasma. These costs have been included in operating costs in the Condensed Consolidated Statement of Comprehensive Income/(Loss).
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis due to the relative size of the acquisition and the timing of the transaction. Any amendments to these fair values within the twelve-month timeframe from the date of acquisition will be disclosed in the 2022 consolidated financial statements, as stipulated by IFRS 3.
* * * * *Provisional Fair Value as at August 5, 2021 *
*(unaudited)* * * * * *US$’000*
*Assets*
*Non-current assets*
Intangible assets 215,000
Property, plant and equipment 950
Other non-current assets 866
*Total non-current assets* 216,816
*Current assets*
Trade and other receivables 7,180
Inventories 65,907
Cash and cash equivalents, including restricted cash 107,942
*Total current assets* 181,029
*Total assets* 397,845
*Non-current liabilities*
Deferred tax liability 21,478
*Total non-current liabilities* 21,478
*Current liabilities*
Trade and other payables 144,482
*Total current liabilities* 144,482
*Total liabilities* 165,960
*Total identifiable net assets at fair value* *231,885*
Goodwill arising on acquisition 38,608
*Consideration* *270,493*
*Consideration*
Issue of fully paid up ordinary shares 260,336
Chiasma equity awards recognized as consideration transferred upon the acquisition of Chiasma 10,157
*Total consideration* *270,493*
*
*
*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 Pharmaceuticals, Inc. (‘‘Aegerion’’, subsequently renamed as Amryt Pharmaceuticals Inc.), a former wholly-owned subsidiary of Novelion Therapeutics Inc. (‘‘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.
As part of the acquisition of Aegerion, it was agreed, for certain Aegerion creditors who wished to restrict their percentage share interest in Amryt’s issued share capital, to issue to the relevant Aegerion creditor, as an alternative to Amryt’s ordinary shares, an equivalent number of new zero cost warrants to subscribe for Amryt’s ordinary shares to be constituted on the terms of the zero cost warrant. As at December 31, 2021, no zero cost warrants were remaining.
During the three-month period and year ended December 31, 2021, the Group incurred no additional acquisition and restructuring related costs relating to external legal fees, advisory fees, due diligence costs and severance costs related to the acquisition of Aegerion (December 31, 2020: US$12,000 and US$1,017,000, respectively).
*Contingent Value Rights*
Related to the Aegerion acquisition, 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 Oleogel-S10, 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 Oleogel-S10 (the Group’s lead development asset)
· 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 Oleogel-S10 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. The CVRs have been classified as a financial liability in the Condensed Consolidated Statement of Financial Position. 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.
*Measurement of CVRs*
As at December 31, 2021, the carrying value of the CVRs was US$18,734,000 (December 31, 2020: US$61,417,000). The value of the potential payout was calculated using the probability-weighted expected returns method. Using this method, the potential payment amounts were multiplied by the probability of achievement and discounted to present value. 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. The probability chance of success, based on management’s expertise and experience for orphan drugs and taking into account the unique circumstances applying to approval process of this product, was estimated at 60% in the year ended December 31, 2021 (2020: 89%). This estimate reflects the current facts and circumstances at the time of preparation of the unaudited Condensed Consolidated Financial Statements and may change for updated facts and circumstances up until the point in time of filing the Group’s audited annual Consolidated Financial Statements for the year ended December 31, 2021. Discount rates of 10% and 16.5%, as applicable, were used in the calculation of the present value of the estimated contractual cash flows for the year ended December 31, 2021, based on the applicable rates determined on the acquisition date. Management was required to make certain estimates and assumptions in relation to revenue forecasts, timing of revenues and probability of achievement of commercialization of Oleogel-S10. 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 expected cash flows of the CVRs. The impact of a 20% increase in the probability of success used would result in an increase to the fair value of US$6,245,000, whereas a decrease would have the opposite effect.
Amryt reviews the expected cash flows on a regular basis as the discount on initial recognition is being unwound as financing expenses in the Condensed Consolidated Statement of Comprehensive Income/(Loss) over the life of the obligation. It is reviewed on a quarterly basis and the appropriate finance charge or gain is booked in the Condensed Consolidated Statement of Comprehensive Income/(Loss) on a quarterly basis. The Group received positive topline data from the phase 3 EASE trial of Oleogel-S10 in September 2020. The product does not currently have regulatory approval to treat EB but has been submitted to the FDA for approval and in June 2021, Amryt received confirmation from the FDA that its NDA for Oleogel-S10 had been accepted and granted priority review. On February 28, 2022, Amryt announced that the FDA communicated that it had completed its review of the NDA for Oleogel-S10 and has determined that the application cannot be approved in its present form. The FDA has asked Amryt to submit additional confirmatory evidence of effectiveness for Oleogel-S10 in EB. Amryt intends to discuss with the FDA the nature of the data required to address the Agency’s concerns. In Europe, a MAA for Oleogel-S10 was accepted for assessment by the EMA in March 2021. The EMA review process for Oleogel-S10 in EB is ongoing and Amryt has responded to outstanding questions. Given the rarity of the disease without any approved therapies, the EMA has proposed that an Ad-Hoc Expert Group, comprised of both EB clinical experts and patients with EB, be consulted to provide external and independent EB specific advice. The CHMP opinion is now anticipated in March 2022.
The total non-cash gain recognized in the Condensed Consolidated Statement of Comprehensive Income/(Loss) for the three months and year ended December 31,