Amarin emerges from Elan shadow with IEX listing

In recent years, Amarin Corporation has been best known to Irish investors as an Elan satellite company.

Rescued from financial difficulties in 1999 by the Athlone-based drugmaker, then at the height of its powers, the fortunes of the two companies became closely entwined.

Not only did Elan provide the funds to refinance Amarin, taking a significant shareholding in the process, it went on to supply the nascent neuroscience company with much of its top management talent.

In addition to being its largest shareholder, former Elan finance chief, Tom Lynch, is company chairman. Both chief financial officer Alan Cooke and the head of strategic development, Darren Cunningham, are also formerly of Elan.

Its ties to Elan have left the small London-based and Nasdaq-listed drug group with a number of other Irish links. As well as research ties to Trinity College Dublin, its shareholder register has a distinctly Irish feel.

Aside from Tom Lynch's 18 per cent stake, Dermot Desmond's investment vehicle, IIU, owns 3 per cent of the company.

Other Irish high net worth individuals, including Tony Ryan and Icon founder Dr John Climax, account for an estimated 14 per cent of the company's share capital.

In recognition of its large Irish shareholder base, the company is currently considering taking a dual listing on London's Aim and Dublin's IEX early next year in a bid to make life easier for European investors.

But if Elan's involvement with the company brought welcome relief in troubled times, it has become a mixed blessing in recent years as the dramatic decline in the drugmaker's fortunes have made life tough for its associates.

Or as Amarin chief executive Rick Stewart politely puts it: "For any company in any way associated with Elan, there was a tail wind that went with that."

Amarin finally severed its ties with Elan last September in a deal that saw Mr Lynch acquire Elan's equity and debt interests in the group, allowing it to emerge from under the larger company's shadow.

Since then, Amarin has made substantial progress on a number of fronts, or, in the words of Stewart, it has reached "an inflexion point".

The acquisition of its research and development partner, Scottish-based Laxdale, last October, was a key development. It gave the Amarin global rights to what is now its key drug, Miraxion, a treatment for Huntington's disease.

Last month, the company reached another milestone when it received the go-ahead from the US Food and Drug Administration (FDA) for two Phase 3 clinical trials of the drug.

Dosing began late last month in a 300-patient US study, which will be carried out over the next six months. Meanwhile, a 240-patient study is due to commence in Europe next month.

According to Stewart, Miraxion is currently the only potential treatment on the horizon for Huntington's, an inherited, degenerative brain disorder that is inevitably fatal.

There are currently around 30,000 diagnosed Huntington's sufferers in the US, with a further 40,000 in Europe, but up to 200,000 Americans are at risk of the disease because they have a parent who is a sufferer.

Amarin expects to complete the Phase 3 trials in December next year. After analysing the data, it hopes to submit it to the FDA at the start of the second quarter of 2007, with a fast-track response expected within six months.

If all goes well, the drug could be launched in 2008, making Amarin both cash generative and profitable, according to Davy Stockbrokers, which forecasts peak revenues of more than $150 million (€126 million) from Miraxion in the US alone.

If the company is starting to show signs of progress on the drugs front, it has also succeeded in placing itself on a more solid financial footing.

After several close brushes with collapse, Amarin is now debt-free, following a $17.8 million fundraising in May, which should help to partly fund the Huntington's trials.

Amarin hopes to raise further funds to finance the trials, which are expected to cost up to $20 million, from licensing agreements for research into Miraxion's potential in a number of other areas.

It is currently also in talks with a number of companies in relation to the use of Miraxion in the treatment of melancholic depression, a severe form of the illness.

It aims to conclude a deal in the early part of next year. Amarin believes that Miraxion may also have potential for use for another neurology indication and is expecting further news on this by year-end.

Stewart is keen to stress that while Miraxion may be Amarin's "crown jewel", it is not the only thing the company is working on. It is seeking to license in the rights to drugs in other areas of neurology such as Parkinson's, motor neurone disease and multiple sclerosis.

It is also conducting research into two other compounds, Lax-201 and Lax-202, for the treatment of depression in women and fatigue in multiple sclerosis respectively.

Nonetheless, given the early stage of its research in other fields, the long road to market for Miraxion and the obstacles that can suddenly appear, and, despite its potential, Amarin is not a stock for the faint of heart. As anyone who invested in Elan knows only too well.