Amarin to buy Israeli research firm for $32m

Pharmaceutical group Amarin is buying an Israeli research and development company for up to $32 million (€21.8 million).

The acquisition of Ester Neurosciences will give Amarin access to clinical technology relating to the treatment of Myasthenia Gravis, a chronic auto-immune condition.

The deal involves an initial $5 million cash payment to Ester shareholders and a further $10 million payment made through the issue of new Amarin shares. Additional payments totalling $17 million in cash and shares will be based on Ester meeting specified targets including the completion of trials in the US.

Funding for the deal will, in part, be provided by an $8.1 million financing, which Amarin expects to close this week. Directors and other executives have committed $1.7 million to this, while other key shareholders, including Dermot Desmond and Dr John Climax of Icon, are also thought to have provided support. Amarin is chaired by former Elan finance director Tom Lynch.

The $8.1 million financing is designed to allow Amarin to make the initial $5 million payment to Ester shareholders without the firm needing to access its cash reserves. The remaining $3.1 million will be used to integrate and advance Ester's technology within Amarin's business.

Rick Stewart, Amarin chief executive, said the Ester deal would allow the firm to "strengthen its scientific base" with a drug platform that had already proved itself through clinical data.

"It's a very exciting platform. This is good stuff," he said.

The market was not so convinced yesterday, however, with Amarin's shares trading almost 14 per cent lower at 36 US cents on the Nasdaq yesterday afternoon.

Amarin also said yesterday that it would be asking its shareholders to approve a one-for-10 stock split that would allow the firm to meet Nasdaq requirements for its shares to trade above $1. A stock trading below this level is liable to be delisted by Nasdaq.

Mr Stewart said the planned split would take the shares "way beyond" the $1 level.

Yesterday's deal comes eight months after almost €200 million was wiped off Amarin's value when it emerged that one of its drugs had failed in trials for the treatment of Huntington's Disease. More recently, the com-pany's Huntington's programme received a boost from US regulators, which said trial data could support a new drug application.