Tim
The recent history of Elan and Amarin is somewhat "intertwined". My guess is that Elan didn't want to add Amarine's woes to their own, but that they on the other hand have to make sure the company somehow survives. Some snips from a recent Amarin filing.
HISTORY AND DEVELOPMENT OF THE COMPANY
Amarin Corporation plc (formerly Ethical Holdings plc) was incorporated in England as a private limited company on March 1, 1989 under the Companies Act 1985 and re-registered in England as a public limited company on March 19, 1993.
Until late 1999, the Company's principal activity was the development of drug delivery technologies, and it generated revenue by licensing its technologies to other companies. In September 1999, the strategic acquisition of a portfolio of FDA approved products from Elan for US$25.2 million provided the foundation for the Company's restructuring of its business and growth as a specialty pharmaceutical company with a focus in the US. The acquisition of this product portfolio was also the first step towards building a sales and marketing capability in the US. The US represents the largest single market for pharmaceutical products in the world.
In December 1999 Amarin sold to Elan, at a sale price of US$20.25 million, its transdermal patch technology business which developed products designed to release medication through patches worn on the skin. This transaction, together with the acquisition of the product portfolio from Elan, shifted Amarin's primary therapeutic focus from hormone replacement therapy to, inter alia, the areas of neurology and pain management. In conjunction with the restructuring of its business focus the Company changed its name from Ethical Holdings plc to Amarin Corporation plc.
and
Permax (pergolide mesylate) tablets
Permax has been approved for marketing in the US as an adjunctive treatment for Parkinson's disease, a neurological disease characterized by a deficiency of dopamine, a neurotransmitter, in the brain. Permax is one of a class of drugs known as dopamine agonists, which mimic the action of dopamine at certain receptor sites in the brain. Stimulating these receptor sites can reduce the symptoms of Parkinson's disease, such as tremor, rigidity and shuffling gait. Other competing pharmaceutical products, including dopamine agonists and products having different mechanisms of action, have also been approved for treatment of the symptoms of Parkinson's disease. Permax had US revenues of approximately US$40 million in fiscal 2001 of which the Company accounted for approximately US$30 million following the acquisition of the marketing and distribution rights for Permax on May 17, 2001.
Our agreement for Permax, as amended and restated on September 28, 2001, gives us the exclusive US marketing, distribution and purchase option rights to this product. These rights were obtained from Elan which holds an exclusive license from Lilly, the holder of the NDA for Permax, to market and distribute this product in the US.
Under this agreement, we were appointed exclusive US distributor for Permax for a one-year period ending May 16, 2002, with an option to acquire outright Elan's entire rights in the product as Lilly's exclusive US licensee. Upon exercise, the option would extend our marketing and distribution rights for the duration of Elan's original license agreement with Lilly, which continues through April 1, 2008. As a part of the amended and restated marketing and distribution arrangement, we have made payments of approximately US$47.5 million to Elan in consideration for the purchase option. We have also agreed to pay Elan royalties on sales, with approximately US$3.2 million of royalty payments having been made from May 17, 2001 through March 31, 2002. The acquisition of the Permax option was partially funded by a loan from an affiliate of Elan in the amount of US$45 million which is due in full, with accrued interest, on September 30, 2002. As set out in "Liquidity and Capital Resources" management intends to finance the exercise of the Permax option partially with internally generated funds as well as with outside financing.
On March 11, 2002, the Board of Directors of the Company approved the exercise of the Permax option, which will be consummated upon obtaining Lilly's consent to our acquisition of Elan's rights. In return, we will pay Elan ongoing royalties from our sales of Permax and additional fixed payments totalling US$37.5 million. Our first payment of US$7.5 million will be made to Elan upon Lilly's consent to the transfer of these rights and subsequent payments will be made in twelve successive quarterly installments of US$2.5 million each. Our agreement provides that if net sales of Permax in 2003 and 2004 exceed specified dollar amounts, we will be required to pay Elan a percentage of the amount by which net sales exceed such levels. Conversely, if net sales in 2003 and 2004 fall below the specified levels, we will be entitled to credit against future royalties payable to Elan a percentage of the amount by which net sales fall short of such levels.
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Zelapar (selegiline HCl orally dissolving tablets)
At the same time as we entered into our Permax transaction with Elan, we entered into an agreement with Elan giving us the option to acquire exclusive rights to promote, sell and distribute Zelapar in the US. Elan is the exclusive licensee for Zelapar in the US under a license agreement with Scherer.
Zelapar is a novel and proprietary formulation of selegiline which uses Scherer's patented Zydis technology to provide a fast-dissolving product for treatment of the symptoms of Parkinson's disease. Selegiline reduces dopamine deficiency in certain areas of the brain by inhibiting the activity of the MAO-B enzyme that breaks down dopamine. Selegiline is generally used as an adjunct to synthetic forms of dopamine such as levodopa. The Zydis formulation allows selegiline to be administered in flash-dissolving tablet form, which is dispersed in the mouth in less than 10 seconds and absorbed without swallowing.
The US rights to Zelapar are currently licensed to Elan by Scherer. In consideration of the granting of the option to acquire these rights, we paid a non-refundable option fee of US$100,000. Our option is exercisable at any time up to 30 days after FDA approval of the NDA for Zelapar. The exercise of the option would require us to make four milestone payments plus running royalties to Elan based on a percentage of net sales of Zelapar in the US for the first eight years following exercise. The first milestone of US$10 million would be payable upon the closing of the exercise of the option. The second and third milestones would be in the aggregate amount of US$27.5 million, and each is contingent on certain revenue levels being achieved. The final milestone of US$15 million would be payable eight years from exercise of the option for Zelapar, subject to certain extension rights. This final payment will be reduced by the amount of all royalty payments made by us to Elan in the intervening period. Elan will pay all research and development costs including those of filing an NDA with and obtaining approval of the NDA by the FDA. It is anticipated that the NDA for Zelapar will be accepted for filing by the FDA in the first half of 2002.
Our exercise of the purchase option could be subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which we would pursue and have no reason to believe would not be approved.
Should we exercise the purchase option, our strategy would be to launch Zelapar upon FDA approval using existing clinical data that demonstrate significant improvement in the symptoms of Parkinson's disease. We believe that, in addition to other advantages, the convenience of the Zydis fast-dissolving tablet and oromucosal absorption make it a more convenient product for Parkinson's disease patients (many of whom have difficulty swallowing) than traditional capsules and tablets.
Zelapar is complementary to Permax and, if approved by the FDA and acquired by us, could allow us to leverage on the cost of establishing a specialist neurology sales organization and to continue to build upon our Parkinson's disease product sales base. However, there can be no assurance that any NDA filed for Zelapar will be approved by the FDA. We participate with but are reliant upon the efforts of Elan in obtaining FDA approval, as they have exclusive control over the application process. Additionally, even if an NDA is approved, the product may not gain acceptance in the marketplace or generate sufficient revenues to offset our acquisition and other ongoing costs.
And by the way. Thomas Lynch is the chairman of Amarin. Or at least he used to be.
As for ownership. Elan already has taken a position with a possibility to increase it towards 40 %.
To the Company's best knowledge, Elan held an aggregate of 26,538,190 Ordinary Shares at March 31, 2002, representing approximately 23.8% of the aggregate of the issued and outstanding Ordinary Shares of the Company including Ordinary Shares issuable upon the exercise of current options held by the Directors and officers of the Company ("D & O Option Shares"). Elan currently own an aggregate of 2,000,000 Preference Shares of the Company which are convertible into an aggregate of 20,000,000 Ordinary Shares. On March 28, 2002, Elan converted 2,129,819 of the Preference Shares into 21,298,190 Ordinary Shares in the capital of Amarin. This conversion was in accordance with the terms of the subscription agreement entered into by Elan and Amarin in November 1999. Upon the conversion of the remaining Preference Shares held by Elan, Elan and its subsidiaries would hold an aggregate of 46,538,190 Ordinary Shares representing approximately 39.4% of the aggregate of the issued and outstanding Ordinary Shares and the D & O Option Shares.
Ice |
