Amarin Corporation PLC Reports Third Quarter 2005 Results
LONDON, November 9 /PRNewswire-FirstCall/ -- Amarin Corporation plc today reported financial results for the quarter ended September 30, 2005.
For the quarter ended September 30, 2005, Amarin reported a net loss of $4.6 million or 9 cents per American Depositary Share (ADS), compared with a net loss of $1.2 million or 6 cents per ADS in the quarter ended September 30, 2004. The increase is primarily due to Amarin's substantial investment in research and development and intellectual property, including the costs of preparing for and commencing phase III trials with Miraxion in Huntington's disease (HD). The financial results are set out in detail in the financial tables attached.
* SPA for Huntington's disease - On September 12, 2005, Amarin reached an agreement with the U.S. Food and Drug Administration (FDA) under the Special Protocol Assessment (SPA) procedure for the design of the phase III clinical trials. An SPA is the process under which the FDA provides evaluation and guidance on clinical trial protocols.
* First dosing - On September 21, 2005, patient enrollment and first dosing commenced in the US phase III trial. This study is being conducted by the Huntington Study Group. The European phase III trial will be conducted in collaboration with EURO-HD and Icon plc, a leading global contract research organization. Patient enrollment has begun and dosing in this trial is scheduled to commence in early December.
* Miraxion for depression - Earlier this year, Amarin announced positive data analysis from its phase II depression program with Miraxion. Amarin is making good progress in discussions with several development and marketing partners for this program for the US and EU markets.
* Appointments - Recently, Amarin made three senior management and board appointments, further strengthening the Amarin management team; Dr. Anthony Clarke as Vice President of Clinical Development; Dr. Prem Lachman as non-executive director; and Tom Maher as General Counsel with effect from February 2006.
Rick Stewart, chief executive officer of Amarin, commented "we continue to achieve our key objectives in our development programs. The commencement of dosing in the US clinical trial in Huntington's disease is a major milestone for the company and excellent progress is being made in preparing for the European trial. Outlicensing activities are showing a high level of enthusiasm from interested parties. The remaining EU rights for Miraxion in Huntington's and the global rights in depressive disorders are proving particularly attractive. We have additionally strengthened our management team to take advantage of future opportunities".
FINANCIAL RESULTS - INCOME STATEMENT
Three months ended September 30, 2005
The results for the quarter ended September 30, 2005 entirely represent continuing activities. The results for the comparative quarter ended September 30, 2004 reflect continuing and discontinued activities.
For the quarter ended September 30, 2005, the operating loss was $4.6 million, compared with an operating loss of $1.4 million from continuing activities for the same period in 2004. The increase is primarily due to Amarin's substantial investment in research and development and intellectual property, including the costs of preparing for and commencing the phase III trials with Miraxion in HD.
Research and development costs of $2.0 million reflect staff costs, third party research contract costs, preclinical study costs, clinical supplies and the costs of the phase III trials in HD, including the costs associated with the two organizations running the HD trials, namely, the Huntington's Study Group and Icon.
Selling, general and administrative costs of $2.6 million primarily represent Amarin's general and administrative costs, business and corporate development costs and the cost of maintaining and renewing Amarin's portfolio of intellectual property. The increase in selling, general and administrative costs was primarily due to the inclusion of Amarin Neuroscience's general and administrative costs of $0.3 million for the quarter, provisions for future expenses on vacant property under lease by Amarin, increased investment in intellectual property and an increase in professional fees. Selling, general and administrative costs in the third quarter are reduced from $2.8m in the second quarter of this year.
The results for the comparative quarter ended September 30, 2004 for continuing activities represent Amarin's head office operating expenses, including the cost of business and corporate development activities.
For the quarter ended September 30, 2005, there were no amounts relating to discontinued activities. For the quarter ended September 30, 2004, the profit before interest from discontinued activities was $0.3 million.
As previously disclosed, the results for discontinued activities for the comparative quarter ended September 30, 2004 reflect (i) the final costs incurred by Amarin relating to the completion of safety studies on Zelapar (the rights to which are owned by Valeant Pharmaceutical International), (ii) the settlement of the outstanding dispute with Valeant, (iii) the final $1 million payment to Elan Corporation plc and (iv) the receipt of the final installment of the proceeds of sale of Amarin's Swedish drug delivery business to Watson Pharmaceuticals Inc. in October 2003.
Nine months ended September 30, 2005
The results for the nine month period ended September 30, 2005 entirely represent continuing activities. The results for the comparative nine month period ended September 30, 2004 reflect continuing and discontinued activities.
For the nine month period ended September 30, 2005, the operating loss was $13.6 million, compared with an operating loss of $4.6 million from continuing activities for the same period in 2004. As for the third quarter, the increase is primarily due to Amarin's substantial investment in research and development and intellectual property, including the costs of commencing Miraxion's phase III trials in HD.
The results for the comparative nine month period ended September 30, 2004 for continuing activities represent Amarin's head office operating expenses, including the cost of business and corporate development activities.
For the nine month period ended September 30, 2005, there were no amounts relating to discontinued activities. For the comparative nine month period ended September 30, 2004, Amarin earned a profit before interest of $21.7 million on discontinued activities reflecting:
(1) The results of Amarin's disposed US business for the period from January 1, 2004 to February 25, 2004, being the date upon which the business was sold to Valeant.
(2) Research and development costs incurred by Amarin on behalf of Valeant of $2.5 million. Amarin has no further obligation to incur costs on Valeant's behalf.
(3) Other income of $2 million as Amarin settled its outstanding dispute with Valeant in September 2004. Under the main terms of the settlement agreement Amarin agreed to waive $6 million of the $8 million in contingent milestones due to Amarin from Valeant. The remaining $2 million was paid by Valeant to Amarin on November 30, 2004.
(4) An exceptional loss of $2.4 million on the disposal of Amarin's US operations and certain products to Valeant.
(5) An exceptional gain of $0.75 million, representing receipt of an installment of the proceeds of sale of our Swedish drug delivery business to Watson in October 2003.
(6) An exceptional gain of $24.6 million on the settlement of debt obligations to Elan in February 2004.
Also, a non-cash deferred tax accounting charge of $7.5 million arose in the comparative nine-month period on the exceptional gain in (6) above, which offset a deferred tax asset of an equivalent amount included in the balance sheet as at December 31, 2003.
FINANCIAL RESULTS - BALANCE SHEET
Intangible Fixed Assets
At September 30, 2005, Miraxion had an intangible carrying value of $9.8 million, an increase of $6.2 million from $3.6 million at September 30, 2004. The increase in the carrying value arises primarily from the acquisition accounting for Amarin Neuroscience in October 2004.
Under UK tax legislation, Amarin Neuroscience is eligible for research and development tax relief. As the company is loss making, it can elect to surrender its eligible research and development tax losses and in return receive a payment from the Inland Revenue in respect of this research and development tax relief. In the quarter ended September 30, 2005, Amarin recognized a tax credit of $0.16 million in respect of such research and development tax relief. Amarin also received $0.36 million as a payment on account in respect of the 2004 research and development tax claim. At September 30, 2005, included in debtors is a total research and development tax relief receivable of $1.2 million.
At September 30, 2005, Amarin had cash of $13.7 million compared to $2.8 million at September 30, 2004. The increase in cash balances is due to the proceeds raised from financings in October 2004 and May 2005.
At September 30, 2005, Amarin had no debt compared to $5.0 million at September 30, 2004. On May 24, 2005, simultaneous with the registered offering, Amarin's remaining $2 million loan notes, owed to Amarin's Chairman, Mr. Thomas Lynch, were redeemed for $2 million and the proceeds used by Mr. Lynch to subscribe for approximately 1.5 million ADS's. This followed the conversion of the first $3 million of loan notes to equity by Mr. Lynch on October 7, 2004. Amarin now has no debt other than working capital liabilities.
Amarin's future financing strategy will depend on the timing of research and development on its development pipeline and on the level of revenue generated from its licensing and partnering activities.
Amarin's strategy is to directly commercialize its neurology pipeline in the United States and to partner it for geographic markets outside the United States. For indications outside neurology, such as depression, Amarin intends to partner its pipeline globally. Amarin also intends to acquire and in-license neurology products that Amarin can develop and market directly in the United States.
Amarin's goal is to capitalize on its strong reputation in neuroscience and to become a leader in the development and commercialization of novel drugs that address unmet medical needs.
About Amarin Corporation
Amarin Corporation plc is a neuroscience company focused on the research, development and commercialization of novel drugs for the treatment of central nervous system disorders. Miraxion, Amarin's lead development compound, is in phase III development for Huntington's disease and in phase II development for depression.
Disclosure Note: The information contained in this document is as of November 9, 2005. Amarin assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments.
This document contains forward-looking statements about Amarin's financial condition, results of operations, business prospects and products in research that involve substantial risks and uncertainties. You can identify these statements by the fact that they use words such as "will", "anticipate", "estimate", "project", "intend", "plan", "believe" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or events. Among the factors that could cause actual results to differ materially from those described or projected herein are the following: the success of Amarin's research and development activities, including the phase III trials with Miraxion in Huntington's disease; decisions by regulatory authorities regarding whether and when to approve Amarin's drug applications, as well as their decisions regarding labeling and other matters that could affect the commercial potential of Amarin's products; the speed with which regulatory authorizations, pricing approvals and product launches may be achieved; the success with which developed products may be commercialized; competitive developments affective Amarin's products under development; the effect of possible domestic and foreign legislation or regulatory action affecting, among other things, pharmaceutical pricing and reimbursement, including under Medicaid and Medicare in the United States, and involuntary approval of prescription medicines for over-the-counter use; Amarin's ability to protect its patents and other intellectual property; claims and concerns that may arise regarding the safety or efficacy of Amarin's product candidates; governmental laws and regulations affecting Amarin's operations, including those affecting taxation; Amarin's ability to maintain sufficient cash and other liquid resources to meet its operating requirements; general changes in U.K. and U.S. generally accepted accounting principles; growth in costs and expenses; and the impact of acquisitions, divestitures and other unusual items, including Amarin's ability to integrate its acquisition of Amarin Neuroscience Limited. A further list and description of these risks, uncertainties and other matters can be found in Amarin's Annual Report on Form 20-F for the fiscal year ended December 31, 2004, as amended by Amendment No. 1 on Form 20-F/A, and in its Reports of Foreign Issuer on Form 6-K furnished to the SEC.
Amarin Corporation plc Period Ended 30 SEPTEMBER 2005 Selected Data (UK GAAP - UNAUDITED) Three months Nine months ended 30 Sept ended 30 Sept 2005 2004 2005 2004 Total Total Total Total $'000 $'000 $'000 $'000 Revenue: Revenues from - - - 1,017 discontinued activities Total revenues - - - 1,017 Cost of sales: Direct costs - - - 107 Cost of sales from - - - 107 discontinued activities Gross profit Discontinued - - - 910 activities Total gross profit - - - 910 Operating expenses: Research and 2,032 - 5,894 - development Selling, General & 2,432 1,207 7,183 4,169 Administrative Amortisation of 169 144 507 432 intangible assets Operating expenses 4,633 1,351 13,584 4,601 from continuing activities Selling, General & - - - 1,575 Administrative from discontinued activities Research & - 1,117 - 2,500 development from discontinued activities Other income - - (2,000) - (2,000) Valeant settlement Operating - (883) - 2,075 expenses/(income) from discontinued activities Total research & 2,032 1,117 5,894 2,500 development Total selling, 2,601 1,351 7,690 6,176 general & administrative Other income - - (2,000) - (2,000) Valeant settlement Total operating 4,633 468 13,584 6,676 expenses Operating (loss) (4,633) (1,351) (13,584) (4,601) from continuing activities Operating - 883 - (1,165) profit/(loss) on discontinued activities Total operating (4,633) (468) (13,584) (5,766) (loss) Exceptional income/(expense) - discontinued activities Escrow proceeds of - 400 - 750 Q4 2003 Swedish disposal (Loss) on disposal - (9) - (2,447) of US operations and certain products (Loss)/gain on - (1,000) - 24,572 settlement of debt on related sale of distribution rights (Loss)/profit on ordinary activities before interest Continuing (4,633) (1,351) (13,584) (4,601) activities Discontinued - 274 - 21,710 activities (4,633) (1,077) (13,584) 17,109 Net interest (99) (89) (458) (186) payable and similar charges (Loss)/income (4,732) (1,166) (14,042) 16,923 before taxes - Income tax 155 - 535 (7,500) credit/(expense) Net (loss)/income (4,577) (1,166) (13,507) 9,423 for the period Weighted average 51,248 17,940 44,064 17,940 shares - basic (Loss)/income per share: Basic (0.09) (0.06) (0.31) 0.53 Diluted (0.09) (0.06) (0.31) 0.53 Amarin Corporation plc Period Ended 30 June 2005 Selected Data (UK GAAP - UNAUDITED) Selected Income Statement Data - extract of continuing activities Three months ended Nine months 30 Sept ended 30 Sept 2005 2004 2005 2004 Total Total Total Total $'000 $'000 $'000 $'000 Operating expenses: Research and 2,032 - 5,894 - development Selling, General & 2,432 1,207 7,183 4,169 Administrative Amortisation of 169 144 507 432 intangible assets Operating expenses 4,633 1,351 13,584 4,601 from continuing activities Operating (loss) (4,633) (1,351) (13,584) (4,601) from continuing activities Selected Income Statement Data - extract of discontinued activities Three months ended Nine months 30 Sept ended 30 Sept 2005 2004 2005 2004 Total Total Total Total $'000 $'000 $'000 $'000 Revenue: Revenues from - - - 1,017 discontinued activities 1,017 Cost of sales: Cost of sales from - - - 107 discontinued activities Gross profit Discontinued - - - 910 activities Total gross profit - - - 910 Operating income/(expenses): Selling,General & - - - 1,575 Administrative Research & - 1,117 - 2,500 development Other (income) - (2,000) (2,000) Valeant settlement Total operating - (883) - 2,075 income/(expenses) from discontinued activities Total operating - 883 - (1,165) profit/(loss) from discontinued activities Exceptional income/(expense) - discontinued activities Escrow proceeds of - 400 - 750 Q4 2003 Swedish disposal Loss on disposal of - (9) - (2,447) US operations and certain products (Loss)/gain on - (1,000) - 24,572 settlement of debt on related sale of distribution rights (Loss)/profit on ordinary activities before interest - discontinued - 274 - 21,710 activities Amarin Corporation plc Period Ended 30 September 2005 Selected Data (UK GAAP - UNAUDITED) As at 30 Sept 2005 2004 $'000 $'000 1. Selected Balance Sheet Data Fixed assets Tangible 445 241 Intangible 9,796 3,611 10,241 3,852 Current assets Debtors 2,190 5,433 Cash 13,657 2,813 15,847 8,246 Creditors - due (5,423) (4,018) within one year Net current assets 10,424 4,228 Creditors - due (131) (5,000) after one year Provisions for liabilities and (546) - charges Net assets 19,988 3,080 Called up share capital 4,471 29,088 (ordinary shares) Treasury shares (217) - Capital redemption 27,633 - reserve Share premium 102,612 70,226 account Profit and loss reserve - (109,934) (95,068) brought forward (deficit) Profit and loss reserve - (4,577) (1,166) current period (loss) Shareholders' funds 19,988 3,080 Three months ended 30 Sept 2005 2004 2.EBITDA before $'000 $'000 exceptional items Operating (loss) (4,633) (468) for period amortisation 169 144 depreciation 32 20 EBITDA before (4,432) (304) exceptional items
3. The selected financial data set out above should be read in conjunction with our 2004 20-F Annual Report which is filed with the SEC.
4. (Loss)/income per share
Basic (loss)/income per share is calculated by dividing the net (loss)/income by the weighted average number of shares in issue in the year.
Fully diluted (loss)/income per share is calculated using the weighted average number of ordinary shares in issue adjusted to reflect the effect of exercising those share options and warrants where the exercise price is less than the average market price of the ordinary shares for the period. The Company reported a net loss from continuing operations in the three months and nine months ended 30 September 2004 and 2005. As a result the loss per share is not reduced by dilution.
5. Basis of preparation - Going Concern
As at 30 September 2005, Amarin had cash of $13.7 million. On the basis of forecasted cashflow information, Amarin is forecast to have sufficient cash to fund the group's operating activities into the second quarter of 2006.
Amarin intends to obtain additional funding through earning licensing fees from its partnering activities and/or completing further equity-based financings. There is no assurance that Amarin's efforts to raise additional funding will be successful. If efforts are unsuccessful, there is uncertainty as to whether Amarin will be able to fund its business through the second quarter of 2006 and beyond. These selected data do not include any adjustments that might be necessary should such funding not be available.
Amarin believes it will be successful in obtaining further funds as described above and the directors have therefore prepared the selected data on a going concern basis.
6. Future Investment Right
As part of the May financing, which raised gross proceeds of $17.78 million, investors were given a future investment right, described as follows -
If by March 15, 2006 the Company has not raised gross proceeds of at least $10 million (the "Future Financing Amount") from one, or any combination of, the following sources; (i) revenues from the licensing or partnering of the Company's intellectual property or proprietary information that are receivable prior to March 15, 2006; (ii) the issuance of Ordinary Shares at a price per Ordinary Share of at least $2.50; and/or (iii) funds received by the Company in connection with the exercise of outstanding warrants; then at any time between March 15, 2006 and March 31, 2006, the Investors shall have a pro rata right to make an equity investment in the Company, at a price per Ordinary Share equal to the lower of (a) $1.75; and (b) 84% of the volume weighted average of closing prices of the ADRs on NASDAQ over the thirty trading days ending on March 15, 2006, in an amount up to the Future Financing Amount, less any amounts actually raised pursuant to subsections (i)-(iii) above.
To the extent that any investor does not wish to take part in such financing, the unallocated portion of the Future Financing Amount will be allocated on a pro rata basis among those investors who have elected to take part in the financing until all of the Future Financing Amount has been allocated to investors that wish to take part in the financing. The Future Financing Amount shall be reduced on a dollar-for-dollar basis to the extent that the gross amount raised in the May Offering exceeds $15 million. As the gross proceeds in the offering were $17.78 million, or $2.78 million in excess of $15 million the Future Financing Amount of $10 million is reduced by $2.78 million to $7.22 million.
7. Permax Contingency
Amarin was responsible for the sales and marketing of Permax in the US from May 2001 until February 2004. On May 17, 2001, Amarin acquired the US sales and marketing rights to Permax from Elan. A subsidiary of Elan had previously licensed the rights to Permax from Ely Lilly and Company ("Ely Lilly") in January 1993. Ely Lilly originally obtained approval for Permax on December 30, 1988 and has been responsible for the manufacture and supply of Permax since that date. On February 25, 2004, Amarin sold its U.S. subsidiary, Amarin Pharmaceuticals Inc. ("API"), including the rights to Permax, to Valeant Pharmaceuticals International ("Valeant").
In late 2002, Eli Lilly & Co as the holder of the NDA for Permax, received a recommendation from the FDA to consider making a change to the package insert for Permax based upon the very rare observance of cardiac valvulopathy in patients taking Permax. While Permax has not been definitely proven as the cause of this condition, similar reports have been notified in patients taking other ergot-derived pharmaceutical products, of which Permax is an example. In early 2003, Lilly amended the package insert for Permax to reflect the risk of cardiac valvulopathy in patients taking Permax and also sent a letter to a number of US doctors describing this potential risk. Causation is not established but is consistent with other fibrotic side effects observed in Permax.
There are currently six different suits pending in the United states regarding Permax. The Company is a named defendant in five of the six suits although it has only received what purports to be effective service of court proceedings in three of these cases. The other defendants include Eli Lilly, Elan Pharmaceuticals, Inc., and Valeant.
The Company has reviewed the position and having taken external legal advice considers the potential risk of significant liability arising for Amarin from these legal actions to be remote.Amarin Corporation Plc
CONTACT: Contact:Amarin Corporation plc +44(0)207-907-2442, Rick Stewart,Chief Executive Officer, Alan Cooke, Chief Financial Officer,firstname.lastname@example.org; Powerscourt, +44(0)207-236-5615, RoryGodson, Victoria Brough,