NEWS & MEDIA
Amryt Pharma – Final Results for Year Ended 31 December 201630 March 2017
Amryt Pharma plc
Final Results for the year ended 31 December 2016
Amryt, the pharmaceutical company focused on best-in-class treatments for rare and orphan diseases, is pleased to present the Company’s final results for the year ended 31 December 2016.
Significant strategic and operational progress since RTO in April 2016
Transformational acquisition in December 2016, with in-licensing of Lojuxta (lomitapide), which treats a rare, life-threatening disorder that causes abnormally high levels of “bad” cholesterol
- current run rate revenues of c. €10.5m p.a., with significant growth potential
- immediately cash generative
- exclusive licence over certain territories including EU, MENA, Turkey and Israel
- sales and distribution infrastructure can be leveraged for other assets
Lead development asset, AP101 (Episalvan) (a potential treatment for rare, genetic skin condition, Epidermolysis Bullosa (“EB”)), made significant progress
- key patents secured in US and Europe, and in Japan post year end
- design of pivotal Phase 3 clinical trial agreed with Food and Drug Administration (“FDA”) and European Medicines Agency (“EMA”)
- phase 3 pivotal clinical trial (“EASE”) now commenced, with first patient to be initiated imminently
Pre-clinical asset, AP102, a potential treatment for rare neuroendocrine diseases, including acromegaly, progressing well towards clinical trials in humans
- orphan drug designation secured from FDA in November
- outcome of diabetic rat study met expectations
Non-dilutive funding secured from European Investment Bank of up to €20m
- secures the Company’s near and mid-term funding needs for AP101 as well as funds the on-going development of AP102
Board and Senior Management Team strengthened
Placing, with RTO, raised £10.0m (gross) (€12.6m) in April 2016
Revenues totalled €1.35m, in line with management expectations
- included one month’s revenue from Lojuxta which was in-licenced in December, and
- 5 months of contribution from Imlan following the acquisition of Birken
Operating loss before RTO and acquisition related expenses of €5.85m, including €0.23m of non-cash share based payments (2015: €0.6m)
Cash balances of €8.3m at 31 December (2015: €0.2m)
Board view prospects for Company’s ongoing development very positively
Joe Wiley, CEO of Amryt Pharma, said:
“It has been a tremendously exciting year for the Company. Amryt has made significant progress, both strategically and operationally. A landmark point came in December 2016 when we reached an agreement to in-license the drug, Lojuxta, which treats a rare, life-threatening disorder, HoFH. The agreement has provided us with a cash generative product, with untapped sales potential, as well as a pan-European infrastructure which we can use for other drug assets. Building Lojuxta sales will be a major focus for us over 2017.
We also made very good progress with our drug candidates – AP101, a potential treatment for EB, a rare and distressing skin disorder with no approved treatment, and AP102, an earlier stage asset with the potential to treat acromegaly. In December we secured a favourable funding facility from the EIB which will support our continuing development.
We have started the new financial year in excellent shape. Very encouragingly, since the year end we have continued to experience strong sales of Lojuxta and this week we announced the commencement of our pivotal trial, EASE. We expect to initiate the first patient imminently and anticipate the results of an interim analysis of this study in EB in early 2018.
We view prospects for the Company’s ongoing development very positively and look forward to providing further updates.”
|Amryt Pharma plc||C/o KTZ Communications|
|Joe Wiley, CEO
Rory Nealon, CFO/COO
|Shore Capital||+44 (0) 20 7408 4090|
|Nomad and Joint Broker|
|Bidhi Bhoma, Edward Mansfield|
|Davy||+353 (1) 679 6363|
|ESM Adviser and Joint Broker|
|John Frain, Anthony Farrell
|Stifel||+44 (0) 20 7710 7600|
|Jonathan Senior, Ben Maddison
|KTZ Communications||+44 (0) 20 3178 6378|
|Katie Tzouliadis, Emma Pearson|
Chairman and CEO’s Statement
We are pleased to present the annual report and consolidated financial statements of Amryt Pharma plc (“Amryt” or the “Company”) for the year ended 31 December 2016. The publication of this annual report follows the reverse takeover of Fastnet Equity plc by Amryt Pharmaceuticals DAC (“Amryt DAC”), the subsequent name change to Amryt Pharma plc and the re-admission of the shares to trading on AIM and ESM.
The financial results comprise the results of Amryt DAC for the period from 1 January 2016 to 18 April 2016 and those of the new consolidated Amryt group from 19 April 2016 to 31 December 2016.
Amryt is a specialty pharmaceutical company focused on developing and delivering innovative new treatments to help improve the lives of patients with rare or orphan diseases. The Company is building a diversified portfolio of best-in-class, proprietary new drugs to help address some of these rare and debilitating illnesses where there is significant unmet medical need.
Significant progress made to date
On 18 April 2016, Amryt DAC successfully completed the reverse takeover of Fastnet Equity plc (“RTO”) and raised £10 million before costs in a share placing. On the same date Amryt DAC completed the acquisitions of Birken AG (“Birken”) and SomPharmaceuticals (“SOM”) and Fastnet Equity plc was renamed Amryt Pharma plc.
Since the RTO, the Group has made excellent progress. This progress included advancing its existing product candidates, completing an exclusive licensing deal for a further commercial product, Lojuxta, and securing access to non-dilutive funding from the European Investment Bank (“EIB”) of up to €20 million.
In addition, the Company has continued to make strong progress in developing its lead product AP101 (Episalvan) as a new treatment for Epidermolysis Bullosa (“EB”). This is a rare and distressing genetic skin disorder which affects young children and adults. In March 2017, the Company reached an agreement with both the Food and Drug Administration (“FDA”) and the European Medicines Agency (“EMA”) for the design of a pivotal phase 3 clinical trial for AP101 in EB. We also appointed INC Research as the contract research organisation for this study which has now commenced with the first site initiated on 29 March 2017. Approximately 30 clinical trial sites in 15 countries have been pre-qualified. We expect the study to be completed within the next 18 months or so with top line data to be available in H2 2018. As part of the study an independent data monitoring committee will conduct an un-blinded interim efficacy analysis after 50% enrolment.
During the year, we secured key patents for AP101 in Europe and the US with expiry dates in 2030. Since the year end, we have secured a further patent for AP101 covering Japan, with the patent lasting until 2030. We believe that we have a very robust patent portfolio which will protect AP101 for a considerable period of time.
We also obtained orphan designation from the FDA for our pre-clinical asset, AP102. AP102 is a somatostatin analogue therapy with the potential to treat acromegaly, a disorder that results from excess growth hormone. In addition we conducted a pre-clinical study in diabetic rats that compared AP102 with pasireotide, an existing approved product for treating patients with resistant acromegaly. Significantly, AP102 did not demonstrate the potential to cause diabetes, an observation which if replicated in clinical studies, could be clinically beneficial in treating acromegaly.
Towards the end of the financial year in December 2016, the Company signed an exclusive licensing agreement with Aegerion Pharmaceuticals, Inc. (“Aegerion”). This was a transformational agreement and has secured us the exclusive rights to sell Lojuxta (lomitapide) across certain territories. Lojuxta is a drug therapy used to treat a very rare life-threatening disease called Homozygous Familial Hypercholesterolemia (“HoFH”), which causes excessive levels of LDL “bad” cholesterol. Our exclusive licence covers the treatment of adults with HoFH in the European Economic Area (predominantly the EU), the Middle East, North Africa, Turkey and Israel. The licensing deal is transformational because it makes Amryt into a fully-fledged commercial pharma company with a sales and distribution infrastructure that can also be leveraged for other assets, including AP101 in EB if the upcoming Phase 3 clinical trial is successful.
Our in-licensing agreement for Lojuxta has been immediately cash generative from the effective date of the agreement. Based on revenues from the first three months of operations, we believe it is capable of generating annualised revenues of approximately €10.5 million in 2017. The business is growing and we see good growth potential beyond 2017. We believe that this deal is indicative of the opportunities which Amryt can capitalise on in the coming years.
Corporate and Financial
Revenues for the year to 31 December 2016 totalled €1,351,000 and comprised approximately one month’s contribution from Lojuxta as well as well as a partial year’s contribution from Imlan, the Company’s derma-cosmetics range of products. The Lojuxta sales are for the period since the completion date on 2 December 2016 and totalled €775,000 in December. Very encouragingly, since the year end, Amryt recorded sales of €1,859,000 in January and February. Based on this, we expect Lojuxta to generate revenues of approximately €10.5 million on an annualised basis.
The loss for the year amounted to €7,804,000 (2015: loss of €1,194,000). This includes an operating loss before one-off items associated with the RTO and the acquisitions of Birken and SOM of €5,845,000. The operating loss of €5,845,000 includes non-cash share based payments of €229,000.
In April 2016, as part of the RTO, the Company successfully raised €12.6 million (£10 million) before costs. As at 31 December 2016 the Company had a strong balance sheet with €8.3 million in cash reserves (2015: €0.2 million). In December 2016, the Company entered into a €20 million facility agreement (“Facility”) with the EIB on highly attractive terms for the Company. The Facility is significant because it provides non-dilutive funding that secures the Company’s near and mid-term funding needs for its lead product, AP101. It also provides the funding required to progress the Company’s acromegaly drug compound, AP102, through pre-clinical development. The facility from the EIB has not yet been drawn down.
Senior Management and Board appointments
We strengthened the Board and senior management team with two appointments since completion of the RTO. In June 2016, we appointed Markus Ziener to the Board as a non-executive Director. Mr Ziener is the CFO of Software AG Stiftung, a 20.9% shareholder in Amryt. He has also been a long term supporter of the Birken business and was Chairman of the Birken Supervisory Board until the Company acquired the business on 18 April 2016.
In September 2016, we were delighted to welcome Dr Mark Sumeray as Chief Medical Officer of the Company. Dr Sumeray has over 17 years’ experience in the pharmaceutical, medical devices and biotech sectors both in the US and UK. Most recently, he spent approximately five years as Chief Medical Officer at Aegerion and has extensive knowledge of interacting with the FDA and EMA and managing late stage clinical trials. Dr Sumeray, is very familiar with Lojuxta, having previously led the clinical development and regulatory approval of the drug at Aegerion.
After the year end, in March 2017, we appointed David Allmond as Chief Commercial Officer. Mr. Allmond has over 20 years’ experience in the pharmaceutical industry in commercial roles. He joins the Company from Aegerion Pharmaceutials where he was President of EMEA and, in particular, involved in the commercialisation of Lojuxta (lomitapide), the drug used to treat Homozygous Familial Hypercholesterolemia (HoFH). Mr Allmond replaces Michele Bellandi.
Having served on Amryt’s Board for approximately a year, Cathal Friel is stepping down from the Board of Directors with effect from 28 March 2017. Cathal was one of the original founders of Fastnet Equity plc and instrumental to the RTO of Fastnet Equity plc and creation of Amryt in April 2016. We would like to thank him for his important contribution to the business and his guidance during our first year as a public company.
Future developments and outlook
The Company achieved important milestones in 2016 and we remain confident of continuing significant progress over 2017. Our Phase 3 clinical trial for our lead product AP101 has just commenced and we are optimistic of receiving top-line data in H2 2018. In the meantime, we will have the results of our interim analysis which will be an assessment of the progress of our study by an independent data safety monitoring board. We expect to have the results of this assessment in Q1 2018.
During 2017, our goal is to complete our pre-clinical assessment of AP102, our potential treatment for acromegaly, and to seek approval from the regulatory authorities to commence clinical trials in humans.
We also remain very excited about growth prospects for our Lojuxta business. Revenues for the first three months are exceeding our original expectations and we believe that there is a significant opportunity to grow revenues, with material untapped opportunities in our licenced territories. These will be a major focus for us over the coming quarters.
Amryt has made excellent operational and strategic progress to date and we look forward to reporting on further progress as we continue to develop the business.
30 March 2017
30 March 2017
In December 2016, we were delighted to reach an agreement with Aegerion Pharmaceuticals, Inc. (“Aegerion”), a NASDAQ-listed biopharmaceutical company, for the exclusive rights to sell Aegerion’s drug, Lojuxta (lomitapide) in certain territories. These territories comprise the European Economic Area (“EEA”), Middle East and North Africa (“MENA”), Turkey and Israel and our exclusive licence became effective on 2 December 2016. As anticipated, the licence agreement has been immediately cash generative for Amryt.
Lojuxta is used to treat a rare life-threatening disease called Homozygous Familial Hypercholesterolemia (“HoFH”) and was approved in the EU in late 2013. HoFH is a genetic life threatening disorder that impairs the body’s ability to remove LDL cholesterol (“bad” cholesterol) from the blood. This typically results in extremely high blood LDL cholesterol levels leading to aggressive and premature narrowing and blocking of arterial blood vessels manifesting as cardiovascular disease. If left untreated, heart attack or sudden death may occur in childhood or early adulthood.
Current treatment options include statin drugs, PCSK9 inhibitors and apheresis (a blood filtration technique similar to dialysis). However, they are not adequate to control LDL cholesterol levels in some patients, particularly those with the most severe genetic mutations. HoFH was historically estimated to occur in about 1 in 1,000,000 people worldwide although more recent studies suggest it may affect up to 1 in 300,000 people. Amryt believes that there is significant potential for the drug to become a mainstay treatment for patients with HoFH. Lojuxta is currently licenced for use in adults and as part of the post approval commitments with the EMA we will be conducting a paediatric study that if successful could extend the label to children also.
Licence Agreement Terms
Under the terms of our licence agreement, Amryt has the exclusive right to sell Lojuxta across its licenced territories in return for which Amryt will:
- make royalty payments to Aegerion, paid quarterly, based on a percentage of net sales during a calendar year. The royalty percentage is 18% of net sales of the product less than US$15,000,000 and 20% of net sales more than US$15,000,000;
- make once-off commercial milestone payments, subject to achieving certain sales targets. A one-off milestone payment of US$1,000,000 is due the first time that aggregate net sales in a calendar year equals US$20,000,000 with a further one-off US$1,500,000 milestone payment due on reaching US$30,000,000 net sales in a calendar year; and
- take on the ongoing regulatory and post-marketing obligations and commitments in support of Lojuxta as above.
Our licence agreement has an initial term until 1 January 2024 and we may, at our discretion, extend the licence agreement for a further five years, with the right to extend in further five year periods.
2016 Revenue and Plans
In December 2016, Lojuxta generated net product sales €775,000. Very encouragingly, since the year end Amryt recorded sales of €1,859,000 in January and February. Based on Lojuxta revenues for the first three months annualised revenues total €10.5 million.
We are currently establishing the relatively limited additional commercial, medical and regulatory infrastructure required to support the commercialisation of Lojuxta across our licenced territories. We will defer these costs until revenues increase so that, even during the roll-out of this infrastructure, the Lojuxta business will be a positive cash contributor to the Company. Furthermore the Company will also be in a position to leverage this pan-European and Middle-East infrastructure for other drug assets, in particular our lead development asset, AP101, if its Phase 3 clinical trial in EB proves to be successful.
Amryt’s lead product, AP101 (Episalvan), received marketing approval for the treatment of partial-thickness wounds (“PTWs”) from the European Commission in January 2016. Amryt intends to develop AP101 as a new treatment for Epidermolysis Bullosa (“EB”) and after the year end, on 27 March 2017, commenced a pivotal phase 3 trial, EASE, to examine AP101’s efficacy.
EB is a chronic and debilitating condition for which there is currently no approved product and significant unmet medical need. Reflecting the extremely fragile nature of their skin, children born with the condition are often referred to as ‘butterfly children’. All forms of the disorder are considered serious and the most severe are disfiguring and cause intense suffering. The patient advocacy group, Debra International, estimates that there are approximately 500,000 people living with EB worldwide, with some 30,000 in Europe. The Department of Dermatology at Stanford University estimates that there are 25,000 people living with EB in the US. The combined US and European market for a treatment in EB is estimated by management to be in excess of €1.3 billion.
AP101 has already demonstrated encouraging preliminary data in EB in a Phase 2a clinical trial completed in 2011. In addition, three successful phase 3 clinical studies in the broad indication partial thickness wounds (“PTWs”) have been conducted with AP101. In each of these studies, AP101 successfully demonstrated faster healing in both recent wounds and chronic wounds compared with standard of care therapy.
Extended patents and regulatory approvals
In January 2016, we secured approval from the European Medicines Agency (“EMA”) for the use of AP101 in the European Union for the treatment of all PTWs. We subsequently secured a European method of use patent for the treatment of EB in March 2016 and obtained a US method of use patent for the treatment of EB in September 2016.
After year end, in February 2017, Amryt was granted a patent in Japan by the Japanese Patent Office for AP101 for the treatment of EB. All these patents expire in 2030.
Forward plan and clinical trials
In Q1 2017, we completed discussions with the Food and Drug Administration (“FDA”) and EMA regarding the design of our pivotal phase 3 clinical trial for AP101 (Efficacy And Safety of Oleogel-S10 in EB, the “EASE Study”) as a potential treatment for EB. With these discussions now completed and the design of the clinical trial established, we initiated our first site for the EASE Study on 27 March 2017 and expect to have our first patient enrolled imminently.
We have appointed INC Research as the contract research organisation for the phase 3 EASE Study, and approximately 30 clinical trial sites in 15 countries have already been pre-qualified.
Adult and paediatric patients with EB will be enrolled into a randomised double blind placebo controlled trial. A total of 164 evaluable patients will be treated for a 90 day blinded period. The proportion of patients with completely healed target wounds within 45 days will be evaluated as the primary endpoint. Secondary endpoints include the time to achieve wound healing and changes in pain and pruritus (itch).
We have also agreed with the regulatory authorities to conduct some further non-clinical studies in parallel with this phase 3 study.
An important component of the phase 3 EASE Study is an independent data monitoring committee that will conduct an un-blinded interim efficacy analysis after 50% enrolment. The potential outcomes of this interim analysis include continuation of the study unchanged, discontinuation of the study for futility, or an increase in the number of patients in the study to preserve adequate statistical power.
AP102 is an early stage drug asset, which shows promise as a novel, next generation somatostatin analogue (“SSA”) peptide medicines for patients with rare neuroendocrine diseases, where there is a high unmet medical need, including acromegaly. Acromegaly is a rare endocrine disorder in which the body produces excessive growth hormone, leading to abnormal growth throughout the body over time.
In November 2016, we secured orphan drug designation for AP102 from the FDA. The FDA’s Orphan Drug Designation program provides orphan status to drugs and biologics that are being developed to address rare diseases or disorders that affect fewer than 200,000 people in the United States. With orphan designation, AP102 qualifies for various incentives, including tax credits for qualified clinical trials and market exclusivity upon regulatory approval.
After the year end, in February 2017, we received positive results from a pre-clinical study that compared AP102 with pasireotide, an approved product for treating patients with resistant acromegaly. Significantly, AP102 did not demonstrate the potential to cause diabetes, an observation which, if replicated in clinical studies, could be clinically beneficial in treating acromegaly. Amryt’s study used a well-established diabetic rat model to examine whether or not AP102 has an effect on glucose levels or on food/water intake compared with controls. The study results showed that AP102 had no effect on either in diabetic rats compared with controls. This indicates no impairment in glucose control in these diabetic animals when treated with AP102.
We will continue preparing AP102 for clinical trials in 2017 and anticipate submitting a request to conduct clinical trials in humans by the end of 2017.
Amryt has a range of dermo cosmetic products that we acquired with the Birken transaction, which are sold under the Imlan brand. Completely free of emulsifiers, preservatives, colorants and fragrances and other additives or irritants, Imlan is marketed as a treatment for sensitive, allergy-prone and dry skin. It is also recommended for the basic care of eczema or psoriasis.
In the period from the acquisition of Birken AG in April 2016 to 31 December 2016, Imlan generated €571,000 in gross revenues.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
31 December 2016
|For the period ended
31 December 2015
|Cost of sales||(586)||–|
|Administrative, selling and marketing expenses||(4,037)||(66)|
|Share based payment expenses||(229)||–|
|Reverse takeover and acquisition related costs||(867)||(484)|
|Non-cash deemed cost of reverse takeover||(971)||–|
|Total administrative, selling and marketing expenses||(6,104)||(550)|
|Research and development expenses||(2,344)||–|
|Operating loss before finance expense||(7,683)||(550)|
|Net finance expense||(121)||(644)|
|Loss on ordinary activities before taxation||(7,804)||(1,194)|
|Tax on loss on ordinary activities||–||–|
|Loss for the year attributable to the equity holders of the Company||(7,804)||(1,194)|
|Other comprehensive loss attributable to the equity holders of the Company|
|Exchange translation differences which may be reclassified through the profit and loss account||(5)||–|
|Total other comprehensive loss||(5)||–|
|Total comprehensive loss for the year attributable to the equity holders of the Company||(7,809)||(1,194)|
Loss per share:
|Loss per share – basic and diluted, attributable to ordinary equity holders of the parent (cent)||
Consolidated Statement of Financial Position
As at 31 December 2016
|Property, plant and equipment||1,183||–|
|Total non-current assets||53,704||–|
|Trade and other receivables||2,540||1,599|
|Cash and cash equivalents||8,271||171|
|Total current assets||11,581||1,770|
|Equity and liabilities|
|Equity attributable to owners of the parent|
|Deferred tax liability||5,384||–|
|Total non-current liabilities||28,698||–|
|Trade and other payables||3,550||2,963|
|Total current liabilities||3,550||2,963|
|Total equity and liabilities||65,285||1,770|
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
31 December 2016
|For the period ended
|Cash flows from operating activities|
|Loss on ordinary activities before taxation||(7,804)||(1,194)|
|Net finance expense||121||644|
|Depreciation and amortisation||194||–|
|Share based payment expense||229||–|
|Non-cash deemed cost of reverse takeover||971||–|
|Movements in working capital and other adjustments:|
|Change in trade and other receivables||(1,975)||(54)|
|Change in trade and other payables||2,236||322|
|Change in inventories||(83)||–|
|Net cash flow used in operating activities||(6,111)||(282)|
|Cash flow from investing activities|
|Cash consideration on acquisition of Birken AG||(10,150)||(1,000)|
|Cash consideration on acquisition of SOM||(89)||–|
|Cash inflow on acquisition of Birken AG||705||–|
|Cash inflow on reverse takeover of Fastnet Equity plc||11,993||–|
|Payments for property, plant and equipment||(12)||–|
|Cash inflow on sale of property, plant and equipment||10|
|Deposit interest received||1||–|
|Net cash flow from/(used in) investing activities||2,458||(1,000)|
|Cash flow from financing activities|
|Proceeds from issue of equity instruments – net of expenses||11,251||1|
|Issue of convertible debenture securities||545||1,455|
|Short term loans received||–||1,000|
|Repayment of short term loans||(47)||(1,003)|
|Net cash flow from financing activities||11,749||1,453|
|Exchange and other movements||4||–|
|Net change in cash and cash equivalents||8,100||171|
|Cash and cash equivalents at beginning of year/period||171||–|
|Cash and cash equivalents at end of year/period||8,271||171|
Statement of Changes in Equity
For the year ended 31 December 2016
Share based payment reserve
Reverse acquisition reserve
Exchange translation reserve
|Balance at 17 August 2015||–||–||–||–||–||–||–||–|
|Loss and total comprehensive loss for the period||–||–||–||–||–||–||(1,194)||(1,194)|
|Issue of shares||1||–||–||–||–||–||–||1|
|Balance at 31 December 2015||1||–||–||–||–||–||(1,194)||(1,193)|
|Balance at 1 January 2016||1||–||–||–||–||–||(1,194)||(1,193)|
|Loss for the year||–||–||–||–||–||–||(7,804)||(7,804)|
|Foreign exchange translation reserve||–||–||–||–||–||(5)||–||(5)|
|Total comprehensive income||–||–||–||–||–||(5)||(7,804)||(7,809)|
|Issue of share by Amryt DAC on acquisition of Birken||–||11,179||–||–||–||–||–||11,179|
|Issue of share by Amryt DAC on acquisition of SOM||–||3,715||–||–||–||–||–||3,715|
|Issue of share by Amryt DAC on conversion of convertible debenture securities||–||2,600||–||–||–||–||–||2,600|
|Issue of shares on acquisition of Amryt DAC||1,557||–||–||35,818||–||–||–||37,375|
|Issue of placing shares – net of costs||526||10,725||–||–||–||–||–||11,251|
|Issue of placing warrants||–||(2,251)||2,251||–||–||–||–||–|
|Share based payments||–||–||229||–||–||–||–||229|
|Reverse acquisition adjustment||18,335||17,727||1,735||–||(62,107)||–||–||(24,310)|
|Balance at 31 December 2016||20,419||43,695||4,215||35,818||(62,107)||(5)||(8,998)||33,037|
1 General information
Amryt Pharma plc (“Amryt” or the “Company”) is a company incorporated in England and Wales. The Company is listed on the AIM market of the London Stock Exchange (ticker: AMYT.L) and the Enterprise Securities Market of the Irish Stock Exchange (ticker: AYP). Amryt is a specialty biopharmaceutical company focused on the development and commercialisation of new medicines for rare conditions with unmet needs and is committed to bring new hope to people affected by these rare diseases.
2 Basis of preparation
The consolidated Financial Statements consolidate those of the Company and its subsidiaries (together the “Group”). The consolidated Financial Statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and their interpretations issued by the International Accounting Standards Board (“IASB”) as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The financial information for the year ended 31 December 2016 does not constitute statutory accounts as defined by section 435 of the Companies Act 2006 but is extracted from the audited accounts for the year. The 31 December 2015 accounts, which relate to Amryt Pharmaceuticals DAC, have been delivered to the Companies Registration Office in Ireland. The 31 December 2016 accounts will be delivered to Companies House within the statutory filing deadline. The auditors have reported on those accounts. Their report was unqualified and did not contain statements under Section 498 (2) of (3) of the Companies Act 2006.
On 18 April 2016 Fastnet Equity plc (“Fastnet”) became the legal parent company of Amryt Pharmaceuticals DAC (“Amryt DAC”) in a share for share transaction, and on the same date changed its name from Fastnet to Amryt Pharma plc (“Amryt”). On the same date Amryt DAC completed the acquisitions of Birken AG (“Birken”) and SomPharmaceuticals (“SOM”). The acquisition of Birken by Amryt DAC constitutes a business combination. Due to the relative size of Amryt DAC and Fastnet, Amryt DAC’s shareholders became the majority shareholders of the enlarged share capital (before a share placing on the same date). In addition, the Company’s continuing operations and executive management became those of Amryt DAC. Management considers that the acquisition constitutes a reverse acquisition of Fastnet by Amryt DAC. It would normally be necessary for the Company’s consolidated accounts to follow the legal form of the business combination – with Amryt DAC’s results from the acquisition date of 18 April 2016 consolidated into the Group results. In this case, the consolidated accounts have been treated as being a continuation of the accounts of Amryt DAC with Fastnet being treated for accounting purposes as the acquired entity.
As the consolidated group results represent a continuation of the financial statements of the legal subsidiary (Amryt DAC), the assets and liabilities of Amryt DAC have been recognised and measured in the consolidated results at their pre-combination carrying amounts. The accumulated deficit and other equity balances recognised are the accumulated deficit and other equity balances of Amryt DAC immediately before the business combination and the amount recognised as issued equity instruments has been determined by adding to the issued equity of Amryt DAC immediately before the business combination the cost of the combination, being the value of notional shares issued by Amryt DAC. To comply with UK company law, adjustments have been made to the consolidated reserves to reflect the equity structure of the legal parent company, Amryt Pharma Plc.
The comparative figures presented in the consolidated financial statements are those for Amryt DAC and relate to the period from incorporation on 17 August 2015 to 31 December 2015.
Except as indicated above, the financial statements have been prepared on a basis consistent with that reported for the period ended 31 December 2015.
Summary of Significant Accounting Policies
The costs relating to the development of products are accounted for in accordance with IAS 38 “Intangible Assets”, where they meet the criteria for capitalization.
Development costs are capitalised as an intangible asset if all of the following criteria are met:
- The technical feasibility of completing the asset so that it will be available for use or sale;
- The intention to complete the asset and use or sell it;
- The ability to use or sell the asset;
- The asset will generate probable future economic benefits and demonstrate the existence of a market or the usefulness of the asset if it is to be used internally;
- The availability of adequate technical, financial and other resources to complete the development and to use or sell it; and
- The ability to measure reliably the expenditure attributable to the intangible asset.
Research costs are expensed when they are incurred.
The assessment whether development costs can be capitalized requires management to make significant judgements. Management has reviewed the facts and circumstances of each project in relation to the above criteria and in management’s opinion, the criteria prescribed under IAS 38.57 “Intangible Assets” for capitalising development costs as assets have not yet been met by the Company in relation to AP101 or AP102. Accordingly, all of the Company’s costs related to research and development projects are recognised as expenses in the income statement in the period in which they are incurred. Management expects that the above criteria will be met on filing of a submission to the regulatory authority for final drug approval or potentially in advance of that on the receipt of information that strongly indicates that the development will be successful.
Revenue comprises the fair value of consideration received or receivable for the sale of products. Revenue is recorded immediately where substantially all the risks and rewards of ownership have transferred to the customer, this normally occurs on the despatch of products.
The Company uses third parties in the distribution of pharmaceutical products to its customers. The Company’s revenue recognition for these arrangements is the same as that which applies to direct product sales and normally occurs on the despatch of the products by the distributors to the customers.
Contingent consideration arising as a result of business combinations is initially recognised at fair value using a probability adjusted present value model. Key inputs in the model include the probability of success and the expected timing of potential revenues. The fair value of the contingent consideration will be updated at each reporting date. Adjustments to contingent consideration are recognised in the income statement.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. Fair values are attributed to the identifiable assets and liabilities and contingent considerations unless the fair value cannot be measured reliably, in which case the value is subsumed into goodwill. In the consolidated Financial Statements, acquisition costs incurred are expensed and included in general and administrative expenses.
Frequently, the acquisition of pharmaceutical patents and licences is effected through a non-operating corporate structure. As these structures do not represent a business, it is considered that the transactions do not meet the definition of a business combination. Accordingly, the transactions are accounted for as the acquisition of an asset. The net assets acquired are recognised at cost.
Acquired intangible assets
Acquired intangible assets are stated at the lower of cost less provision for amortisation and impairment or the recoverable amount. Acquired intangibles assets are amortised over their expected useful economic life on a straight line basis and are tested for impairment annually. In determining the useful economic life each acquisition is reviewed separately and consideration given to the period over which the Group expects to derive economic benefit.
Intangibles assets acquired during the current year as part of the acquisitions of Birken AG and SomPharmaceuticals are currently not being amortised as it is the Company’s policy not to amortise assets in development that are not ready for use.
Software that is purchased is valued at cost and amortized on a straight line basis over a useful economic life of three to ten years.
Only intangible assets acquired from third parties have been capitalised, as the conditions have not been met for the capitalisation of self-created intangible assets.
3 Loss per share – basic and diluted
The Group presents basic and diluted loss per share (“LPS”) data for its ordinary shares. Basic LPS is calculated by dividing the loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted LPS is determined by adjusting the loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise warrants and share options granted by the Company.
In the current year, the weighted average number of shares in the loss per share (“LPS”) calculation, reflects the legal subsidiary’s, Amryt Pharmaceuticals DAC (“Amryt DAC”), weighted average pre-combination ordinary shares multiplied by the exchange ratio established in the acquisition, and the weighted average total actual shares of the legal parent, Amryt Pharma plc (“Amryt”), in issue after the date of acquisition.
The comparative LPS figure is based on Amryt DAC’s reported loss for the period divided by the weighted average number of shares in issue in Amryt DAC for the period multiplied by the exchange ratio established in the acquisition.
Issued share capital – ordinary shares of £0.01 each
|Number of shares||Weighted average shares|
|17 August 2015 – Shares on Incorporation||11,615,044|
|24 August 2015 – Issue of shares by Amryt DAC 1||46,460,177|
|31 December 2015||58,075,221||55,683,886|
|18 April 2016 – Issue of shares by Amryt DAC on acquisition of Birken||37,048,622|
|18 April 2016 – Issue of shares by Amryt DAC on acquisition of SOM||12,277,102|
|18 April 2016 – Issue of shares by Amryt DAC on conversion of convertible debentures securities||8,590,365|
|19 April 2016 – Issue of shares by Amryt Pharma plc – share for share exchange on acquisition of Amryt DAC B ordinary shares 1||7,503,786|
|19 April 2016 – Issue of shares by Amryt Pharma plc – share consolidation||43,171,134|
|19 April 2016 – Issue of shares by Amryt Pharma plc – share placing||41,673,402|
|31 December 2016||208,339,632||163,336,437|
1 As part of the 24 August 2015 share placing, Amryt DAC issued B ordinary shares. These shares have not been included in the pre-acquisition weighted average number of shares as they did not carry rights to dividends or repayment of capital on the winding up of Amryt DAC.
The calculation of loss per share is based on the following:
31 December 2016
31 December 2015
|Loss after tax attributable to equity holders of the Company (€’000)||(7,804)||(1,194)|
|Weighted average number of ordinary shares in issue||163,336,437||55,683,886|
|Fully diluted average number of ordinary shares in issue||163,336,437||55,683,886|
|Basic and diluted loss per share (cent)||(4.78)||(2.14)|
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 31 December 2016 totalled 39,102,583 (31 December 2015: 1,307,466) and are potentially dilutive.
4 Business Combinations and Asset Acquisitions
Reverse Acquisition of Fastnet Equity Group plc by Amryt Pharmaceuticals DAC
On 16 October 2015, Fastnet Equity plc (“Fastnet”) signed non-binding heads of terms with Amryt Pharmaceuticals DAC (“Amryt DAC”), for the acquisition of Amryt DAC’s entire issued and to be issued share capital. The acquisition was completed on 18 April 2016 and on the same date Amryt DAC completed the acquisitions of Birken AG (“Birken”) and SomPharmaceuticals (“SOM”), for consideration satisfied by the issue of new ordinary shares in Amryt DAC. To complete the acquisition of Amryt DAC a total of 123,495,095 new ordinary shares of 1p in Fastnet were issued at an issue price of 24p per share (“Consideration Shares”).
As detailed in note 2 the acquisition by Fastnet of Amryt DAC has been treated for accounting purposes as a reverse acquisition by Amryt DAC of Fastnet. In a reverse acquisition, the cost of the business combination is deemed to have been incurred by the legal subsidiary (Amryt DAC) in the form of notional equity instruments issued to the owners of the legal parent. The value of the notional shares is calculated by reference to the proportion of shares that would be needed to be issued by Amryt DAC to Fastnet if the old shareholder base of Fastnet was to acquire the same percentage holding in Amryt DAC as it received in the combined Group.
The value of these notional shares issued by Amryt DAC was compared to the Net Asset value of Fastnet on the date of acquisition and the excess (€971,000) was charged to the Statement of Comprehensive Income as a deemed share based payment cost of the business combination.
In addition, €867,000 in professional fees was charged to the Statement of Comprehensive Income in the current year (2015: €484,000) as part of the costs associated with the reverse acquisition and acquisition of Birken and SOM (see details below). These costs include legal, due diligence, accounting and tax advisory and corporate finance.
Acquisition of Birken
Amryt DAC signed a conditional share purchase agreement to acquire Birken on 16 October 2015 (“Birken SPA”). The Birken SPA was completed on 18 April 2016 with Amryt DAC acquiring the entire issued share capital of Birken. The consideration comprises:
- Initial cash consideration of €1,000,000 (paid by Amryt DAC prior to its acquisition by the Company);
- Milestone payments of:
- €10,000,000 on receipt of first marketing approval by the EMA of Episalvan, paid on the completion date (18 April 2016);
- Either (1) €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 14 January 2016), €2,000,000 24 months after receipt of such approval 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 Epidermolysis Bullosa;
- €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 (18 April 2016);
- Royalties of 9% on sales of Episalvan products for 10 years from first commercial sale; and
- Shares in Amryt DAC that equated to a 30% equity shareholding prior to the acquisition of Amryt DAC by the Company. The Birken sellers received 37,048,622 in Consideration Shares (valued at €11.2 million) for their shareholding in Amryt DAC.
Provisional Fair Value Measurement of Contingent Consideration
Contingent consideration comprises the milestone payments and sales royalties detailed above. As at the acquisition date, the fair value of the contingent consideration was estimated to be €23,314,000. The fair value of the royalty payments was determined using probability weighted revenue forecasts and the fair value of the milestones payments was determined using probability adjusted present values. 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 drugs acquired in the Birken transaction. A discount rate of 28.5% was used in the calculation of the fair value of the contingent consideration and this was sense checked by Management against the implied rate of return (“IRR”) on the project. As noted earlier in the report the size of the market for the products under development provides a real opportunity to the Company to meet its forecast revenue targets and therefore the milestone targets which underpin the contingent consideration payments. At present management anticipate that AP101 for EB will be ready to launch in 2019. However, management note 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 contingent consideration.
Provisional Fair Value Measurement of Assets Acquired
A fair value exercise was performed on the identifiable assets and liabilities of Birken AG as at the acquisition date. An income based approach was used to value the intangible assets acquired. Key assumptions of the approach include the probability of success, the discount factor applied, the timing of future revenue flows, market penetration and peak sales and expenditure required to complete development.
Assets acquired and liabilities acquired:
|Provisional FV at date of acquisition|
|Property, plant and equipment||1,373|
|Cash and cash equivalents||705|
|Trade and other receivables||133|
|Accounts payable and accrued liabilities||332|
|Deferred tax liability||5,384|
|Total net assets||45,643|
|Issue of fully paid ordinary shares||11,179|
The fair values set out above are provisional figures which will be finalised in the 2017 interim financial statements following management’s final review of key judgemental areas relating to the business combination of Birken AG. Under IFRS 3, business combination accounting needs to be finalised within 12 months of the acquisition date.
Amryt DAC entered into conditional stock purchase agreements to acquire SomPharmaceuticals SA and SomTherapeutics, Corp on 15 December 2015 and 4 December 2015 respectively (“Som SPAs”). The aggregate consideration payable under the Som SPAs was US$4.25 million which was satisfied by the issue of US$4.15 million in new ordinary shares in Amryt DAC and US$100,000 (€89,000) in cash to the shareholders of SOM. The SOM SPAs were completed on 18 April 2016. The SOM sellers received 12,277,102 of Consideration Shares for their shareholding in Amryt DAC. The acquisition of SOM has been treated for accounting purposes as an asset acquisition with the value of the consideration issued, €4,062,000, recognised as an Intangible Asset.
5 Intangible Assets
In process R&D
|At 17 August 2015 and 31 December 2015||–||–||–|
|Acquired on acquisition of Birken||48,453||8||48,461|
|Acquired on acquisition of SOM||4,062||–||4,062|
|At 31 December 2016||52,515||8||52,523|
|At 17 August 2015 and 31 December 2015||–||–||–|
|At 31 December 2016||–||2||2|
|Net book value|
|Net book value at 17 August 2015||–||–||–|
|Net book value at 31 December 2015||–||–||–|
|Net book value at 31 December 2016||52,515||6||52,521|
The Company reviews the carrying amounts of its intangible assets to determine whether there are any indications that those assets have suffered an impairment loss. If any such indications exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Impairment indications include events causing significant changes in any of the underlying assumptions used in the income approach utilised in valuing in process R&D. These key assumptions are: the probability of success; the discount factor; the timing of future revenue flows; market penetration and peak sales assumptions; and expenditures required to complete development. During the year the Group did not identify any potential changes in the assumptions used in the assessment of the carrying value of the assets.
6 Share-based payments
The Company has issued share options as an incentive to certain senior management and staff. In addition, the Company has issued warrants to key consultants, advisers and suppliers in payment or part payment for services or supplies provided to the Group. All share options granted during the year were granted under the terms of the Amryt Share Option Plan and are subject to vesting conditions. All warrants granted during the year were granted under individual agreements as part of the April 2016 share placing. In addition to the share options and warrants granted during the year a total of 1,307,466 share options and warrants were in existence at 31 December 2015 that relate to the old oil and gas business.
Each share option and warrant converts into one ordinary share of Amryt Pharma plc on exercise and are accounted for as equity-settled share-based payments. The options and warrants may be exercised at any time from the date of vesting to the date of their expiry. The equity instruments granted carry neither rights to dividends nor voting rights.
Share options and warrants in issue:
|Units||Weighted average exercise price||Units||Weighted average exercise price|
|Balance at 17 August 2015||1,415,954||133.6p||661,512||120.8p|
|Lapsed during the period||(600,000)||201.6p||170,000)||176.0p|
|Balance at 31 December 2015||815,954||84.0p||491,512||102.4p|
|Exercisable at 31 December 2015||815,954||84.0p||491,512||102.4p|
|Balance at 1 January 2016||815,954||84.0p||491,512||102.4p|
|Granted during the year||15,451,564||19.1p||22,909,951||24.0p|
|Lapsed during the year||(472,204)||110.0p||(94,194)||112.0p|
|Balance at 31 December 2016||15,795,314||19.8p||23,307,269||25.3p|
|Exercisable at 31 December 2016||343,750||48.0p||21,234,014||25.4p|
1 Following the 19 April 2016 share consolidation, all existing rights attached to share options and warrants were amended to reflect the new share structure. The rights are now over Amryt Pharma plc new ordinary shares of 1p, with the original units divided by a factor of 8 and the original exercise price increased by a factor of 8. The pre 19 April 2016 numbers included in the table above have been adjusted to take into account the share consolidation.
The 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:
|Options Inputs||Warrant Inputs|
|Days to Expiry||2,555||1,006-1,844|
|Risk free interest rate||0.64%-0.82%||0.82%|
|Share price at grant||15.5p-24p||24p|
During the current year a total of 15,451,564 share options exercisable at a weighted average price of £0.191 were granted. The fair value of share options granted during the period is €1,642,000. The share options outstanding as at 31 December 2016 have a weighted remaining contractual life of 6.39 years with exercise prices ranging from £0.155 to £0.48.
During the current year, as part of the share placing that coincided with the completion of the reverse takeover of the Company, a total of 22,909,951 warrants exercisable at a weighted average price of £0.24 were granted. The fair value of warrants granted during the period is €2,251,000. The warrants outstanding as at 31 December 2016 have a weighted remaining contractual life of 2.19 years with exercise prices ranging from £0.24 to £1.12.
The value of share options and warrants charged to the Statement of Comprehensive Income during the year is as follows:
|12 months to
In addition to the above charges, a further €2,251,000 was charged to share premium during the year.
7 Annual Report and Annual General Meeting (“AGM”)
The Annual Report for the year ended 31 December 2016 will be posted to shareholders on 6 April 2017 and will be available to download from the Company’s website at www.amrytpharma.com on 6 April 2017.
Notice of the AGM will be posted to shareholders on 6 April 2017.
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