(9) Commitments and Contingencies

Litigation

On May 7, 2015, the Company and a group of independent physicians filed a federal lawsuit to permit the Company to share truthful and non-misleading information, including, but not limited to, the ANCHOR trial clinical data, with healthcare professionals in the United States about certain uses of Vascepa not included with approved FDA labeling of Vascepa and thus not permitted under the FDA’s interpretation of applicable law. The lawsuit, captioned Amarin Pharma, Inc., et al. v. Food & Drug Administration, et al. (1:15-cv-03588-PAE), was filed in the United States District Court for the Southern District of New York and seeks a judicial declaration based on several legal theories. On August 7, 2015, the Court granted the Company’s request for preliminary relief in this litigation through a declaratory judgment that confirmed the Company may engage in truthful and non-misleading speech with healthcare professionals promoting the off-label use of Vascepa, i.e., to treat patients with persistently high triglycerides, and such speech may not form the basis of a misbranding action under the Federal Food and Drug Cosmetic Act. FDA did not appeal the Court’s preliminary ruling prior to the October 6, 2015 deadline for appeal. The underlying litigation has been stayed for settlement discussion and the parties are working toward settlement. The Company cannot predict the outcome of settlement negotiations or this litigation. On May 28, 2015, the U.S. District Court for the District of Columbia granted the Company’s motion for summary judgment in its lawsuit against the FDA, captioned Amarin Pharmaceuticals Ireland Ltd. v. Food & Drug Administration, et al., Civ. A. No. 14-0324 (D.D.C.). This lawsuit sought an order requiring FDA to recognize five-year, New Chemical Entity (“NCE”) marketing exclusivity for Vascepa. The decision vacated the FDA’s denial of the Company’s claim for such exclusivity and remanded to the FDA for proceedings consistent with the decision. FDA did not appeal the Court’s decision prior to the July 28, 2015 deadline for appeal. On July 22, 2015, Watson Laboratories Inc., the purported first Vascepa ANDA filer, sought to intervene and appeal the Court’s decision. The Company and FDA opposed this intervention effort. The applicable courts denied Watson the relief sought and appeal periods have expired. A new exclusivity determination by FDA has been pending since the May 28, 2015 District of Columbia court order setting aside FDA’s denial of NCE exclusivity for Vascepa. The Company believes Vascepa is entitled to NCE exclusivity, but cannot predict the outcome of FDA’s determination.

In March, April, and May 2014, the Company received paragraph IV certification notices from six companies contending to varying degrees that certain of its patents are invalid, unenforceable and/or will not be infringed by the manufacture, use, sale or offer for sale of a generic form of Vascepa as described in those companies’ abbreviated new drug applications, or ANDAs. The Company commenced patent infringement lawsuits against each of these ANDA applicants. In each of the lawsuits, Amarin sought, among other remedies, an order enjoining the defendants from marketing generic versions of Vascepa before the last to expire of the asserted patents expires in 2030. A summary of the lawsuits is below:

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In April 2014, Amarin filed lawsuits against Apotex, Inc. and Apotex Corporation, or collectively, Apotex, in the U.S. District Court for the District of New Jersey and the U.S. District Court for the Northern District of Illinois. The cases against Apotex are captioned Amarin Pharma, Inc. et al. v. Apotex, Inc. et al., Civ. A. No. 14-2550 (D.N.J) and Amarin Pharma, Inc. et al. v. Apotex, Inc. et al., Civ. A. No. 14-2958 (N.D. Ill.). On August 27, 2014, Amarin voluntarily dismissed the Northern District of Illinois case against Apotex in favor of the New Jersey case, which concerns identical allegations of patent infringement against Apotex.

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In April 2014, Amarin filed lawsuits against Roxane Laboratories, Inc., or Roxane, in the U.S. District Court for the District of New Jersey and the U.S. District Court for the Northern District of Ohio. The cases against Roxane are captionedAmarin Pharma, Inc. et al. v. Roxane Laboratories, Inc., Civ. A. No. 14-2551 (D.N.J) and Amarin Pharma, Inc. et al. v. Roxane Laboratories, Inc., Civ. A. No. 14-901 (N.D. Ohio). On May 7, 2014, Amarin voluntarily dismissed the Northern District of Ohio case against Roxane in favor of the New Jersey case, which concerns identical allegations of patent infringement against Roxane.

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In April 2014, Amarin also filed a lawsuit against Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories, Ltd., or collectively, Dr. Reddy’s, in the U.S. District Court for the District of New Jersey. The case against Dr. Reddy’s is captioned Amarin Pharma, Inc. et al. v. Dr. Reddy’s Laboratories, Inc. et al., Civ. A. No. 14-2760 (D.N.J.).

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In May 2014, Amarin also filed a lawsuit against Watson Laboratories, Inc. and Actavis, Inc., or Watson, in the U.S. District Court for the District of New Jersey. One of the Company’s directors, Patrick J. O’Sullivan, is also a director of Actavis, Inc. The case against Watson is captioned Amarin Pharma, Inc. et al. v. Watson Laboratories, Inc. et al., Civ. A. No. 14-3259 (D.N.J). On July 17, 2014, Amarin agreed to dismiss Actavis, Inc. from the case, and the Court accordingly dismissed Actavis, Inc. on November 3, 2014.

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In June 2014, Amarin also filed a case against Teva Pharmaceuticals USA, Inc., or Teva, in the U.S. District Court for the District of New Jersey. The case against Teva is captioned Amarin Pharma, Inc. et al. v. Teva Pharmaceuticals USA, Inc., Civ. A. No. 14-3558 (D.N.J.).

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In June 2014, Amarin also filed a lawsuit against Andrx Labs, LLC, Andrx Corporation, and Actavis plc, or collectively, Andrx, in the U.S. District Court for the District of New Jersey. The case against Andrx is captioned Amarin Pharma, Inc. et al v. Andrx Labs, LLC et. al., Civ. A. No. 14-3924 (D.N.J.).

As a result of the 30-month stay associated with the filing of these lawsuits under the Hatch-Waxman Act, the FDA cannot grant final approval to any ANDA before September 2016, unless there is an earlier court decision holding that the subject patents are not infringed and/or are invalid.

Based on the May 28, 2015 U.S. District Court for the District of Columbia order granting the Company’s motion for summary judgment in the NCE litigation, on June 26, 2015, the parties to the related ANDA litigation identified above agreed to a full stay of proceedings. FDA subsequently notified the ANDA filers that FDA had changed the status of their ANDAs to submitted, but no longer accepted. In rescinding acceptance of the ANDAs, the Company believed the statutory basis for the ANDA-related patent litigation (accepted ANDAs) no longer existed. Thus, on July 24, 2015, the Company moved to dismiss the pending patent infringement lawsuits against each of the Vascepa ANDA applicants in the U.S. District Court for the District of New Jersey. On January 22, 2016, the U.S. District Court for the District of New Jersey granted Amarin’s motion to dismiss all patent infringement litigation related to the 2014 acceptance by the FDA of ANDAs to Vascepa. With this dismissal, there is no pending patent litigation related to Vascepa. A notice of appeal of the court’s dismissal was filed by one ANDA filer in this case and the Company intends to continue to litigate vigorously in support of the court’s dismissal. The Company cannot predict the outcome of this litigation.

A new exclusivity determination by FDA has been pending since the May 28, 2015 District of Columbia court order setting aside FDA’s denial of NCE exclusivity for Vascepa. The Company believes Vascepa is entitled to NCE exclusivity, but cannot predict the outcome of FDA’s determination. The legal process can also be costly and time-consuming. The Company plans to defend the exclusivity of Vascepa through patent litigation after notification that FDA has accepted an ANDA application related to Vascepa. Assuming an NCE exclusivity determination from the FDA or no exclusivity determination, the Company expects notification of new ANDA submissions no sooner than in late July 2016, after the expiration of four years from the 2012 approval of Vascepa.

In addition to the above, in the ordinary course of business, the Company is from time to time involved in lawsuits, claims, investigations, proceedings, and threats of litigation relating to intellectual property, commercial arrangements and other matters.

Leases

The Company leases office space under operating leases. Future minimum lease payments under these leases, net of sublease rental income, as of December 31, 2015 are as follows (in thousands):


Year Ending December 31,	Operating
2016	$	523
2017		505
2018		127
2019-2020		—

Total	$	1,155

On September 30, 2011, the Company entered into an agreement for 320 square feet of office space at 2 Pembroke House, Upper Pembroke Street 28-32 in Dublin, Ireland. The office space was subsequently reduced to 270 square feet, effective November 1, 2013. The agreement began November 1, 2011 and terminates on October 31, 2016 and can be extended automatically for successive one year periods. Monthly rent is approximately €2,900 (approximately $3,200). The agreement can be terminated by either party with three months prior written notice.

On July 1, 2011, the Company leased 9,747 square feet of office space in Bedminster, New Jersey. The lease, as amended, terminates on March 31, 2018, and may also be terminated with six months prior notice. On December 6, 2011 the Company leased an additional 2,142 square feet of space in the same location. On December 15, 2012 and May 8, 2013, the Company leased an additional 2,601 and 10,883 square feet of space, respectively, in the same location. In January 2014 and April 2014, the Company entered into separate transactions with the landlord of this property to vacate approximately 2,142 and 2,000 square feet of space in exchange for discounts on contractual future rent payments. In January 2015, the Company executed an agreement to sublease approximately 4,700 square feet of this property to a third party, effective April 1, 2015. Additionally, in June 2015, the Company executed an agreement to sublease approximately 2,500 square feet of this property to a separate third party, effective June 16, 2015.

Total rent expense during the years ended 2015, 2014 and 2013 was approximately $0.8 million, $1.0 million, and $1.0 million, respectively.

Milestone and Supply Purchase Obligations

The Company entered into long-term supply agreements with multiple FDA-approved API suppliers and encapsulators. Certain supply agreements require annual minimum volume commitments by the Company and certain volume shortfalls may require payments for such shortfalls, as detailed below.

The Company entered into its initial Vascepa API supply agreement with Nisshin Pharma, Inc., or Nisshin, in 2010. In 2011, the Company entered into agreements with two additional suppliers, Chemport, Inc., or Chemport, and BASF (formerly Equateq Limited) for the supply of API. In 2012, the Company agreed to terms with a fourth API supplier, a consortium of companies led by Slanmhor Pharmaceutical, Inc. (Slanmhor). The API supply agreement with BASF terminated in February 2014. In July 2014, the Company terminated the supply agreement with Slanmhor and subsequently, in July 2015, entered into a new supply agreement with Finorga SAS (Novasep), a French company. These agreements included requirements for the suppliers to meet certain product specifications and qualify their materials and facilities with applicable regulatory authorities including the FDA. The Company has incurred certain costs associated with the qualification of product produced by these suppliers as described below.

Nisshin, Chemport and Novasep are currently the three manufacturers from which the Company purchases API. As of December 31, 2015, the Company has no royalty, milestone or minimum purchase commitments with Nisshin.

Chemport was approved by the FDA to manufacture API for commercial sale in April 2013 and the Company began purchasing commercial supply from Chemport in 2013. The agreement with Chemport contains a provision requiring the Company to pay Chemport in cash for any shortfall in the minimum purchase obligations.

The Company began purchasing commercial supply from Novasep in 2015. API manufactured by Novasep was previously approved by the FDA in July 2014. The 2015 supply agreement with Novasep includes commitments for the Company to fund API purchases and contains a provision requiring the Company to pay Novasep a cash remedy for any shortfall in the minimum purchase obligations.

Pursuant to the supply agreements, there is a total of $44.7 million that is potentially payable over the term of such agreements based on minimum purchase obligations. The Company continues to meet its contractual volume obligations.

Under the 2004 share repurchase agreement with Laxdale Limited, or Laxdale, upon receipt of marketing approval in Europe for the first indication for Vascepa (or first indication of any product containing Amarin Neurosciences Limited intellectual property acquired from Laxdale in 2004), the Company must make an aggregate stock or cash payment to the former shareholders of Laxdale (at the sole option of each of the sellers) of £7.5 million (approximately $11.1 million as of December 31, 2015). Also under the Laxdale agreement, upon receipt of a marketing approval in the United States or Europe for a further indication of Vascepa (or further indication of any other product using Amarin Neurosciences Limited intellectual property), the Company must make an aggregate stock or cash payment (at the sole option of each of the sellers) of £5 million (approximately $7.4 million as of December 31, 2015) for each of the two potential market approvals (i.e., £10 million maximum, or approximately $14.8 million as of December 31, 2015).

The Company has no provision for any of the obligations above since the amounts are either not probable or able to be estimated as of December 31, 2015.