HD Blog

Amarin Corporation Reports Second Quarter 2004 Financial Results
Thursday July 29, 8:18 am ET

LONDON, July 29 - Amarin Corporation plc (NASDAQ: AMRN - News) today reported a net loss for the quarter, including discontinued activities, of $3.2 million or $0.18 per American Depositary Share (ADS), compared with a net loss of $7.0 million or $0.39 per ADS in the second quarter of 2003.
Second Quarter Highlights

Laxdale acquisition - signature of a definitive agreement to acquire Laxdale Limited ("Laxdale"), a privately owned, neuroscience development company based in Stirling, Scotland. This transaction consolidates Amarin's position in neuroscience and represents an initial step in the implementation of its strategy to emerge as a leader in the development and commercialization of novel drugs for the treatment of neurological disorders affecting the central nervous system. In addition, the acquisition broadens Amarin's development pipeline to include rights to Miraxion for all central nervous system disorders, including Huntington's disease and treatment unresponsive depression, in the U.S., E.U. and Japan together with existing licensee relationships for the major European markets and Japan.
Miraxion progress - recent discussions with the United States Food and Drug Administration ("U.S. FDA") and with the European Medicines Evaluation Agency ("EMEA") have provided valuable information which will be used in designing the protocol for the planned phase III trials with Miraxion.
Additional positive clinical data analysis - additional analysis of the clinical data from the initial pivotal study identified a sub-set of Huntington's disease patients (with a specific gene variant) that responded to Miraxion with statistical significance at 6 months and at 12 months. This sub-set of patients represents a significant majority of the Huntington's disease patient population.
Announcement of corporate strategy - Amarin will develop its late-stage development pipeline initially focusing on Huntington's disease and treatment unresponsive depression, for which a development partner will be sought. Amarin will seek to directly commercialize its neurology products in the U.S. and out-license or partner them in Europe and Japan. Amarin will also out-license or partner its pipeline globally for indications outside neurology. Amarin intends to leverage its development capabilities by supplementing its internal development pipeline through acquiring and/or in-licensing products for direct marketing by Amarin in its core U.S. market and selected field of neuroscience.
Financial results - operating loss from continuing activities for the second quarter of 2004 of $1.6 million, compared with an operating loss of $1.9 million in the second quarter of 2003.
Commenting on the results and progress made by Amarin in the second quarter, Rick Stewart, Amarin's Chief Executive Officer said, "The completion of the Laxdale acquisition will be a major milestone for Amarin and represents a refocusing of Amarin's resources to progress Miraxion through phase III clinical trials in Huntington's disease. We are encouraged by the additional data from the initial Huntington's disease pivotal study and look forward to commencement of the phase III studies. Amarin now has a substantial development pipeline and will be seeking development partners for certain compounds outside our selected therapeutic area of neuroscience or geographic reach."

The results for the second quarter and for the six months ended June 30, 2004 are analyzed between continuing and discontinued activities and are set out in further detail in the three pages of financial tables attached. The Laxdale acquisition is contingent upon Amarin shareholder approval, completion by Amarin of a $15 million financing and other customary conditions. Amarin's reported results for the second quarter and six months ended June 30, 2004 do not include the results of Laxdale. The results of Laxdale will be consolidated with Amarin, if and when the acquisition closes later this year.

Continuing Activities

The operating loss from continuing activities for the second quarter of 2004 was $1.6 million, compared with an operating loss of $1.9 million in the second quarter of 2003. For the six months ended June 30, 2004, the operating loss from continuing activities was $3.3 million, compared with an operating loss of $3.8 million for the same period in 2003. This operating loss represents head office operating expenses, business and corporate development costs and Miraxion product rights amortization.

Discontinued Activities

The operating loss on discontinued activities for the second quarter of 2004 of $1.4 million (compared with an operating loss of $4.9 million in the second quarter of 2003) represents the cost of conducting safety studies on Zelapar. Following the sale of the majority of Amarin's U.S. operations to Valeant Pharmaceuticals International ("Valeant") in the first quarter of 2004, Amarin remains responsible for undertaking safety studies on Zelapar and is liable for up to $2.5 million of development costs. It is expected that the remaining development cost obligation of $1.1 million will be incurred in the third quarter.

Under the terms of the sale to Valeant, Amarin will be paid a contingent milestone of $3 million if the safety studies referred to above are successfully completed. Of the $3 million, Amarin would receive a net amount of $1.6 million after accounting for contingent obligations of Amarin that only arise if this milestone is earned. In addition, Amarin will be paid a further contingent milestone of $5 million if Zelapar is approved by the U.S. FDA. As discussed below, Elan Corporation plc. ("Elan") has the option to seek early repayment of its outstanding $5 million loan if Amarin receives this $5 million approval milestone from Valeant. Neither of these milestones was earned in the second quarter and will be recognized as income if and when they are achieved.

As set out in Amarin's 2003 Annual Report filed with the Securities and Exchange Commission under Form 20-F, following the sale of the majority of Amarin's U.S. operations to Valeant, Amarin and Valeant are disputing the responsibility for incremental product inventory of approximately $6 million held at wholesalers. No provision has been made with respect to this matter. It is our view that the additional inventory should not impact the consideration payable to Amarin, whether as a result of a purchase price adjustment or otherwise. We cannot predict how this matter will be resolved. The Company intends to take all appropriate action to protect its interests in the event any claims should be asserted against it. This matter and the closing balance sheet continue to be discussed between the two parties.

The operating loss on discontinued activities for the second quarter of 2003 includes the results of the U.S. operations sold to Valeant in the first quarter of 2004 and the results of Amarin Development AB sold to Watson Pharmaceuticals, Inc. in the fourth quarter of 2003.

For the six months ended June 30, 2004, Amarin earned a profit before interest and tax of $21.4 million on discontinued activities (compared with a loss of $6.3 million for the same period in 2003) which includes an exceptional loss of $2.4 million on disposal of the majority of its U.S. operations and certain products and an exceptional gain of $25.6 million on the renegotiation of debt obligations to Elan during the first quarter. A deferred tax charge of $7.5 million arose on this exceptional gain.

The loss before interest and tax of $6.3 million on discontinued activities for the six months ended June 30, 2003 included charges totaling $7.3 million relating to Permax inventory and deductions and a credit of $7.5 million relating to a waiver of part of Amarin's debt obligations.

Balance Sheet

In conjunction with the acquisition of Laxdale, Amarin agreed a loan facility of up to StgGBP0.95 million to Laxdale. This loan facility is secured by a floating charge against Laxdale's assets. At June 30, 2004, Laxdale had drawn down StgGBP0.3 million and currently has drawn down a total of StgGBP0.5 million. At the time of the original licensing of Miraxion from Laxdale in 2000, Amarin recorded transaction consideration as an intangible fixed asset. The amortized historical cost at June 30, 2004 was $3.8 million. No provision has been made against carrying value of the loan to Laxdale or the Miraxion intangible asset. The carrying value of the loan to Laxdale and the Miraxion intangible asset are potentially dependent upon the completion by Amarin of the contemplated financing (described below) and the subsequent closing of the acquisition of Laxdale.

Liquidity

At June 30, 2004 Amarin had cash of $7.2 million. This is expected to be sufficient for Amarin to continue in operation until mid 2005 based on estimated head office operating expenses, expected business and corporate development costs, remaining Zelapar development obligations and working capital movements.

Pursuant to the Share Purchase Agreement for Laxdale, Amarin intends raising $15-20 million in an equity financing to fund the combined entity through the end of 2005, including the planned phase III trials for Miraxion in Huntington's disease.

At June 30, 2004, Amarin had a $5 million 5-year loan note owing to Elan with capital repayments of $1.5 million due in January 2006 and July 2007 and $2 million due in January 2009. At Elan's option, the loan note can be repaid from proceeds that Amarin receives from a $5 million milestone payable by Valeant on the NDA approval of Zelapar by the US FDA. The loan note is redeemable by Amarin at any time and carries an interest rate of 8%.

Rick Stewart continued, "Amarin's strategy is to incrementally add differentiated neuroscience compounds to our development pipeline with the ultimate objective of commercializing using an Amarin sales and marketing infrastructure in the U.S.. We will seek collaborators to maximize the return on the products outside the U.S. and also where the U.S. opportunity extends into therapeutic markets requiring a substantial sales force."

About Amarin Corporation

Amarin Corporation is a neuroscience company focused on the development and commercialisation of novel drugs for the treatment of neurological disorders affecting the central nervous system.

For press releases and other corporate information, visit our website at http://www.amarincorp.com.

Statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties which may cause the Company's actual results in future periods to be materially different from any performance suggested herein. Such risks and uncertainties include, without limitation, the uncertainty of entering into and consummating a definitive agreement on terms acceptable to the parties, the inherent uncertainty of pharmaceutical research, product development and commercialisation, the impact of competitive products and patents, as well as other risks and uncertainties detailed from time to time in periodic reports. For more information, please refer to Amarin Corporation's Annual Report for 2003 on Form 20-F and its Form 6-Ks as filed with the U.S. Securities and Exchange Commission. The company assumes no obligation to update information on its expectations.

Amarin Corporation plc
Period Ended 30 June 2004 Selected Data (UK GAAP - UNAUDITED)

--------------------------------------------------
Three months ended 30 June
--------------------------------------------------
2004 2003
---------------------------------------- ---------
Pre Exceptional Exceptional Total Total

$'000 $'000 $'000 $'000

Revenue:
Revenue from
continuing activities - - - -
Revenues from
discontinued activities (29) - (29) 2,595
---------------------------------------- ---------
Total revenues (29) - (29) 2,595
---------------------------------------- ---------
---------------------------------------- ---------

Cost of sales:
Direct costs - - - 1,070
---------------------------------------- ---------
Cost of sales from
discontinued activities - - - 1,070
---------------------------------------- ---------
---------------------------------------- ---------

Gross (loss)/profit:
Continuing activities - - - -
Discontinued activities (29) - (29) 1,525
---------------------------------------- ---------
Total gross (loss)/profit (29) - (29) 1,525
---------------------------------------- ---------
---------------------------------------- ---------

Operating expenses/(income):
Selling, General &
Administrative 1,496 - 1,496 1,792
Amortisation of
intangible assets 144 - 144 125
---------------------------------------- ---------

Operating expenses
from continuing
activities 1,640 - 1,640 1,917

Selling, General &
Administrative - - - 3,537
Amortisation of
intangible assets - - - 1,223
Loss/(gain) on
renegotiation of
Elan debt - 14 14 -
---------------------------------------- ---------
Selling, General &
Administrative from
discontinued
activities - 14 14 4,760

Research &
development from
discontinued
activities 1,383 - 1,383 1,632
---------------------------------------- ---------
Operating
expenses/(income)
from discontinuing
activities 1,383 14 1,397 6,392

Total selling,
general &
administrative 1,640 14 1,654 6,677
Total research &
development 1,383 - 1,383 1,632

---------------------------------------- ---------

Total operating
expenses/(income) 3,023 14 3,037 8,309
---------------------------------------- ---------
---------------------------------------- ---------

Operating (loss)
from continuing
activities (1,640) - (1,640) (1,917)
Operating
(loss)/profit on
discontinued
activities (1,412) (14) (1,426) (4,867)

Total operating
(loss)/profit (3,052) (14) (3,066) (6,784)

Exceptional
income/(expense) -
discountinued
activities
Escrow proceeds of
Q4 2003 Swedish
disposal - -
Loss on disposal of
US operations and
certain products (62) -

(Loss)/profit on
ordinary activities
before interest
Continuing
activities (1,640) (1,917)
Discontinued
activities (1,488) (4,867)
-------- --------
(3,128) (6,784)

Net interest payable (68) (192)
-------- --------
(Loss)/income before taxes (3,196) (6,976)

Income tax (expense) - (41)
Dividends payable - -
-------- --------
Net (loss)/income
for the period (3,196) (7,017)
-------- --------
-------- --------

Weighted average
shares - basic 17,940 17,932
Weighted average
shares - diluted 17,940 18,791

(Loss)/income per share:
Basic (0.18) (0.39)
Diluted (0.18) (0.39)

--------------------------------------------------
Six months ended 30 June
--------------------------------------------------
2004 2003
---------------------------------------- ---------
Pre Exceptional Exceptional Total Total

$'000 $'000 $'000 $'000

Revenue:
Revenue from
continuing activities - - - -
Revenues from
discontinued activities 1,017 - 1,017 5,862
---------------------------------------- ---------
Total revenues 1,017 - 1,017 5,862
---------------------------------------- ---------
---------------------------------------- ---------

Cost of sales:
Direct costs 107 - 107 6,470
---------------------------------------- ---------
Cost of sales from
discontinued activities 107 - 107 6,470
---------------------------------------- ---------
---------------------------------------- ---------

Gross (loss)/profit:
Continuing activities - - - -
Discontinued activities 910 - 910 (608)
---------------------------------------- ---------
Total gross (loss)/profit 910 - 910 (608)
---------------------------------------- ---------
---------------------------------------- ---------
- - -
Operating expenses/(income): - - -
Selling, General &
Administrative 2,962 - 2,962 3,533
Amortisation of
intangible assets 288 - 288 250
---------------------------------------- ---------

Operating expenses
from continuing
activities 3,250 - 3,250 3,783
-
Selling, General &
Administrative 1,575 - 1,575 7,662
Amortisation of
intangible assets - - - 2,446
Loss/(gain) on
renegotiation of
Elan debt - (25,572) (25,572) (7,500)
---------------------------------------- ---------
Selling, General &
Administrative from
discontinued
activities 1,575 (25,572) (23,997) 2,608

Research &
development from
discontinued
activities 1,383 - 1,383 3,120
---------------------------------------- ---------
Operating
expenses/(income)
from discontinuing
activities 2,958 (25,572) (22,614) 5,728

Total selling,
general &
administrative 4,825 (25,572) (20,747) 6,391
Total research &
development 1,383 - 1,383 3,120

---------------------------------------- ---------

Total operating
expenses/(income) 6,208 (25,572) (19,364) 9,511
---------------------------------------- ---------
---------------------------------------- ---------

Operating (loss)
from continuing
activities (3,250) - (3,250) (3,783)
Operating
(loss)/profit on
discontinued
activities (2,048) 25,572 23,524 (6,336)

Total operating
(loss)/profit (5,298) 25,572 20,274 (10,119)

Exceptional
income/(expense) -
discountinued
activities
Escrow proceeds of
Q4 2003 Swedish
disposal 350 -
Loss on disposal of
US operations and
certain products (2,438) -

(Loss)/profit on
ordinary activities
before interest
Continuing
activities (3,250) (3,783)
Discontinued
activities 21,436 (6,336)
-------- --------
18,186 (10,119)

Net interest payable (97) (447)
-------- --------
(Loss)/income before taxes 18,089 (10,566)

- -
Income tax (expense) (7,500) (143)
Dividends payable - (24)
-------- --------
Net (loss)/income
for the period 10,589 (10,733)
-------- --------
-------- --------
-
Weighted average
shares - basic 17,940 16,250
Weighted average
shares - diluted 17,940 17,109
-
(Loss)/income per share: -
Basic 0.59 (0.66)
Diluted 0.59 (0.66)

As at 30 June
------------------------
------------------------
2004 2003
-------- --------
$'000 $'000

1. Select Balance Sheet Data
Net current assets/(liabilities) 5,230 (9,714)
- see note 4
Cash 7,211 11,232
Total assets - see note 5 12,140 68,311
Long term creditors and provisions
- see note 6 (5,000) (34,356)
Called up share capital
(ordinary shares) and capital
redemption reserve 29,088 29,076
Total shareholders' funds 4,246 2,982
-------- --------

Three months ended 30 June
----------------------------
----------------------------
2004 2003
-------- --------
2. EBITDA $'000 $'000
(Loss)/profit for period (3,196) (7,017)
amortisation 144 1,348
interest 68 192
taxation - 41
EBITDA (2,984) (5,436)

3. The selected financial data set out above should be read in
conjunction with Amarin's 2003 Annual Report filed with the Securities
and Exchange Commission under Form 20-F.

4. In conjunction with the acquisition of Laxdale, Amarin agreed a loan
facility of up to StgGBP0.95 million to Laxdale. This loan facility is
secured by a floating charge against Laxdale's assets. At June 30,
2004, Laxdale had drawn down StgGBP0.3million and currently has drawn
down a total of StgGBP0.5 million. The recoverability of this loan is
potentially dependent upon the completion by Amarin of a financing of
$15 million or more and the subsequent closing of the acquisition of
Laxdale.

5. At the time of the original licensing of Miraxion from Laxdale in
2000, Amarin recorded transaction consideration as an intangible fixed
asset. The amortized historical cost at June 30, 2004 was $3.8
million. The carrying value of the Miraxion intangible asset is
potentially dependent upon the completion by Amarin of a financing of
$15 million or more and the subsequent closing of the acquisition of
Laxdale.

6. At June 30, 2004, Amarin had a $5 million 5-year loan note owing to
Elan with capital repayments of $1.5 million due in January 2006 and
July 2007 and $2 million due in January 2009. At Elan's option, the
loan note can be repaid from proceeds that Amarin receives from a $5
million milestone payable by Valeant on the NDA approval of Zelapar by
the US FDA.

7. Shareholders' Equity 30-Jun-04
---------
$'m
UK GAAP 4.2
Lax-101 product rights (3.8)
Income recognition (0.6)
Preference dividends 0.5
---------
US GAAP 0.3
---------
---------

8. Basis of preparation - Going Concern

These selected financial data have been prepared on a going concern
basis, consistent with the basis of preparation of the Group's current
annual financial statements, filed with the SEC under form 20-F.

At June 30, 2004 Amarin had cash of $7.2 million. This is expected to
be sufficient for Amarin to continue in operation until mid 2005 based
on estimated head office operating expenses, expected business and
corporate development costs, remaining Zelapar development obligations
and working capital movements.

Pursuant to the Share Purchase Agreement for Laxdale, Amarin intends
raising $15-20 million in an equity financing to fund the combined
entity through the end of 2005, including the planned phase III trials
for Miraxion in Huntington's disease.

These selected financial data do not reflect the potential adjustments
that would be necessary should the Group cease to be a going concern.

Selected Income Statement Data - extract of continuing activities

----------------------- --------------------
Three months Six months
ended 30 June ended 30 June
----------------------- --------------------
2004 2003 2004 2003
------- ------- ------- -------
Total Total Total Total
$'000 $'000 $'000 $'000

Revenue:
Revenue from
continuing
activities - - - -
------- ------- ------- -------
- - - -

Operating
expenses/(income):
Selling, General &
Administrative 1,496 1,792 2,962 3,533
Amortisation of
intangible assets 144 125 288 250
------- ------- ------- -------
Operating expenses
from continuing
activities 1,640 1,917 3,250 3,783

Operating (loss)
from continuing
activities (1,640) (1,917) (3,250) (3,783)
------- ------- ------- -------

Selected Income Statement Data - extract of discontinued activities

----------------------- --------------------
Three months Six months
ended 30 June ended 30 June
----------------------- --------------------
2004 2003 2004 2003
------- ------- ------- -------
Total Total Total Total
$'000 $'000 $'000 $'000

Revenue:
Revenues from
discontinued
activities (29) 2,595 1,017 5,862
------- ------- ------- -------

Cost of sales:
Cost of sales from
discontinued
activities - 1,070 107 6,470
------- ------- ------- -------
------- ------- ------- -------

Gross (loss)/profit
Discontinued
activities (29) 1,525 910 (608)
------- ------- ------- -------
Total gross
(loss)/profit (29) 1,525 910 (608)
------- ------- ------- -------
------- ------- ------- -------

Operating
expenses/(income):
Selling, General &
Administrative - 3,537 1,575 7,662
Amortisation of
intangible assets - 1,223 - 2,446
------- ------- ------- -------
Selling,General &
Administrative
pre-exceptional item - 4,760 1,575 10,108
Exceptional
loss/(gain) on
renegotiation of
Elan debt 14 - (25,572) (7,500)
------- ------- ------- -------
Total selling,
general &
administrative from
discontinued
activities 14 4,760 (23,997) 2,608

Research &
development from
discontinued
activities 1,383 1,632 1,383 3,120
------- ------- ------- -------

Total operating
expenses/(income)
from discontinued
activities 1,397 6,392 (22,614) 5,728
------- ------- ------- -------
------- ------- ------- -------

Total operating
(loss)/profit on
discontinued
activities (1,426) (4,867) 23,524 (6,336)

Exceptional
income/(expense) -
discountinued
activities
Escrow proceeds of
Q4 2003 Swedish
disposal - - 350 -
Loss on disposal of
US operations and
certain products (62) - (2,438) -

------- ------- ------- -------
(Loss)/profit on
ordinary activities
before interest
Discontinued
activities (1,488) (4,867) 21,436 (6,336)
------- ------- ------- -------