Little drug firm may be big winner
Amarin, a small-cap orphan, pursues nerve disorders
By Thom Calandra, CBS.MarketWatch.com
Last Update: 11:00 AM ET Dec. 4, 2002
SAN FRANCISCO (CBS.MW) - Peter Lynch, the fund manager, once said he got really excited when hearing a Wall Street analyst made his last visit at a company three years ago.
These days, three-fourths of all public companies with market capitalizations below $100 million fit that category. Leave it to Wall Street, as it pursues the latest money flow, to ignore tomorrow's leaders.
The so-called world of small-cap stocks is almost always a source of adventure, especially toward year-end, when investors begin their search for new ideas. The payoffs can be enormous.
A year ago, no one on Wall Street or Main Street was willing to touch shares of Cray (CRAY: news, chart, profile), the supercomputer maker whose business seemed to be on the rocks. Executives pledged to turn a 2002 profit, raise $20 million or so and ship a new supercomputer that could rank as the world's most powerful.
No one cared. Cray's market worth at year-end 2001 was less than $95 million. Its market share for the monstrous computing machines employed by governments was tiny compared to IBM's 50 percent and greater share of the pie.
On Wall Street, Cray at this time a year ago was an orphan: Stuart Little without the Littles.
Almost 12 months later, a trickle of profits and burgeoning sales -- and some new, powerful products -- have turned the company's Nasdaq-traded shares into a monster, up almost fourfold to a market value of $350 million. Cray's executives expect sales of at least $200 million next year vs. about $150 million or so this year.
But this story is not about Cray. It's about one of the Crays that might lurk in the small-cap underbelly of the U.S. stock market.
First on my list is Amarin Corp., a $25 million British company that licenses and sells drugs to treat nerve disorders, like Parkinson's Disease. Amarin's chief executive, Rick Stewart, hails from SkyePharma (UK:SKP: news, chart, profile), a British drug developer.
Stewart tells me Amarin's research partner, Laxdale of Scotland, will follow up any day now on preliminary findings from a Phase III study of LAX-101, a treatment for Huntington's Disease. "This is the first time we have seen anything positive for Huntington's," says Stewart, who is shaking his head of the market's treatment of the preliminary findings.
The study of 83 qualifying patients took place at Harvard, Emory and John Hopkins universities, and in the United Kingdom and Canada. Huntington's, a genetic disorder, has been diagnosed in about 30,000 Americans, and an equal number of patients in Europe. The U.S. Food and Drug Administration has granted LAX-101 a so-called fast-track designation.
Stewart says investors are almost certainly awaiting the detailed findings of the late-stage clinical trial. Such findings, due out this month, will shed light on whether the drug regressed Huntington's symptoms in patients who are in varying stages of the disease.
"This is the first time we've had a genetic rating system for a pharmaceutical product," Stewart said in an interview. A genetic test determines the CAG score for Huntington's, which lays dormant for years. A score of 35 or higher indicates the presence of the disease. A score of 50 to 60 usually indicates a chronic case that will leave a patient with as little as five to eight years of life.
The executive says he would be ecstatic if the findings show that LAX-101 regresses symptoms in those with CAG repeat scores of less than 45. Laxdale will present the detailed findings to the FDA in late January.
"When you cut through all the detail, this could be a drug that is very significant for the treatment of Huntington's," he says. If the drug attains U.S. approvals, Amarin would receive 55 percent of all revenue, which its Marin County, Calif., sales force would generate.
Such a drug could fall into the $500 million yearly sales category, Stewart figures.
Stewart acknowledges his profitable company, whose shares trade on Nasdaq, has almost zero attention from Wall Street analysts. Amarin is forecasting sales of $65 million to $70 million for this year and earnings per share, after foreign-exchange gains, of 50 cents a share. The stock trades at $3, near an all-time low.
Stewart says investors may be wary of "the Elan overhang." Elan (ELN: news, chart, profile), an Irish company plagued by accounting troubles, owns shares in a number of small drug companies, including 39 percent of Amarin. Elan is under the gun to cut its roughly $3 billion of debt in half by year's end.
"We are on their books for $5 a share, and they are not going to sell it for a loss," says Stewart. Elan in late November sold majority-owned Athena Diagnostics to a private-equity firm for $122 million.
Stewart says he is confident his drug marketing company will benefit from several developments in coming months. Amarin owns the rights to Zelapar, a fast-dissolving lozenge that also is a therapeutic treatment for Parkinson's. Amarin's Swedish research partner is also developing a morphine product for possible sale in Japan.snip
marketwatch.com
___________________
edit:
Not sure I get it.
Amarin Corporation Announces Encouraging Preliminary Results of LAX-101 Pivotal Study in Huntington's Disease
Monday October 28, 8:45 am ET
LONDON, Oct. 28 /PRNewswire-FirstCall/ -- Amarin Corporation plc (Nasdaq: AMRN - News; Amarin) announced today the preliminary results of a Phase III study of LAX-101, an investigational, novel and proprietary product being developed for treating patients with Huntington's disease (HD).
ADVERTISEMENT
The primary variable in the trial was the change over a one-year period in the Total Motor Score 4 (TMS-4) subscale of the Unified Huntington's Disease Rating Scale (UHDRS), the standard rating scale for trials in this disease. Preliminary results indicate that evaluable patients taking LAX-101 (the per protocol group) reached statistical significance when compared to placebo, using one of the analytical methods specified in the protocol. In addition, a majority of assessments representing the secondary endpoints, including total UHDRS score improvement, showed trends in favor of LAX-101 but did not reach statistical significance.
In the intent-to-treat group (all patients entering the study, including those who dropped out or did not comply with the protocol), preliminary results indicate that measurement of the TMS-4 primary variable did not reach significance, though trends toward improvement were observed and favored LAX- 101. LAX-101 was found to be well tolerated by patients throughout the trial. The incidence and types of adverse events reported were similar in the placebo and drug groups.
The results are from a multi-center, double-blind, randomized, placebo-controlled study of LAX-101, which enrolled 135 patients with HD at six sites, located in the United States, Canada, U.K. and Australia. These results are also consistent with findings in Phase II studies previously reported by Amarin in January 2002.
snip |
