amarin20f_042208.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 20-F
o
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REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR 12(g)
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OF
THE SECURITIES EXCHANGE ACT OF 1934
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OR
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þ
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF
THE SECURITIES EXCHANGE ACT OF 1934
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FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2007
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OR
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF
THE SECURITIES EXCHANGE ACT OF 1934
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FOR
THE TRANSITION PERIOD FROM TO
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OR
|
o
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SHELL
COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF
THE SECURITIES EXCHANGE ACT OF 1934
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DATE
OF EVENT REQUIRING THIS SHELL COMPANY
REPORT
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Commission
file number 0-21392
AMARIN
CORPORATION PLC
(Exact
Name of Registrant as Specified in Its Charter)
England
and Wales
(Jurisdiction
of Incorporation or Organization)
First
Floor, Block 3, The Oval
Shelbourne
Road, Ballsbridge
Dublin
4, Ireland
(Address
of Principal Executive Offices)
SECURITIES
REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE
ACT:
Title of Each Class
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Name of Each Exchange on Which
Registered
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None
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None
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SECURITIES
REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE
ACT:
American
Depositary Shares, each representing one Ordinary Share
Ordinary
Shares, 5 pence par value per share
(Title
of Class)
SECURITIES FOR WHICH THERE IS A
REPORTING OBLIGATION PURSUANT TO SECTION 15(d) OF THE ACT:
None.
Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of the close of the period covered by the annual
report.
139,057,370
Ordinary Shares, 5 pence par value per share
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
YES o NO þ
If this
report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
YES o NO þ
Note —
Checking the box above will not relieve any registrant required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
their obligations under those Sections.
Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES þ NO
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
(Check one):
Large
accelerated filer o Accelerated
filer o Non-accelerated
filer þ
Indicate
by check mark which financial statement item the registrant has elected to
follow.
ITEM 17 o ITEM 18
þ
If this
is an annual report, indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO þ
TABLE
OF CONTENTS
INTRODUCTION
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3 |
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
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4 |
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PART I
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Item
1
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Identity
of Directors, Senior Management and Advisers
|
5
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Item
2
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Offer
Statistics and Expected Timetable
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5
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Item
3
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Key
Information
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5
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Item
4
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Information
on the Company
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20
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Item
4A
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Unresolved
Staff Comments
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29
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Item
5
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Operating
and Financial Review and Prospects
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29
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Item
6
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Directors,
Senior Management and Employees
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36
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Item
7
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Major
Shareholders and Related Party Transactions
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44
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Item
8
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Financial
Information
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46
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Item
9
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The
Offer and Listing
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48
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Item
10
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Additional
Information
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49
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Item
11
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Quantitative
and Qualitative Disclosures About Market Risk
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68
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Item
12
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Description
of Securities Other than Equity Securities
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69
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PART II
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Item
13
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Defaults,
Dividend Arrearages and Delinquencies
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69
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Item
14
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Material
Modifications to the Rights of Security Holders and Use of
Proceeds
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69
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Item15
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Controls
and Procedures
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69
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Item
16
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[Reserved]
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70
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Item
16A
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Audit
Committee Financial Expert
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70
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Item
16B
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Code
of Ethics
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70
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Item
16C
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Principal
Accountant Fees and Services
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70
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Item
16D
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Exemptions
from the Listing Standards for Audit Committees
|
71
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Item
16E
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Purchases
of Equity Securities by the Issuer and Affiliated
Purchasers
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71
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PART III
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Item
17
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Financial
Statements
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71
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Item
18
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Financial
Statements
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71
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Item
19
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Exhibits
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71
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SIGNATURES
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77
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INTRODUCTION
This
report comprises the annual report to shareholders of Amarin Corporation plc
(NASDAQCM: AMRN) and its annual report on Form 20-F in accordance with the
requirements of the United States Securities and Exchange Commission, or SEC,
for the year ended December 31, 2007.
As used
in this annual report, unless the context otherwise indicates, the terms
“Group”, “Amarin”, “we”, “us” and “our” refer to Amarin Corporation plc and its
wholly owned subsidiary companies. Laxdale Limited, a company which we acquired
in October 2004 and is now known as Amarin Neuroscience Limited, may be referred
to herein as “Amarin Neuroscience” or “Laxdale.” Ester Neurosciences Limited, a
company which we acquired in December 2007 may be referred to herein as “Ester
Neurosciences” or “Ester”.
Also, as
used in this annual report, unless the context otherwise indicates, the term
“Ordinary Shares” refers to our Ordinary Shares, par value 5 pence per share,
and the term “Preference Shares” refers to our authorized preference shares, par
value 5 pence per share. As of December 31, 2007, there were no
Preference Shares outstanding. Unless otherwise specified, all shares and share
related information (such as per share information and share price information)
in this annual report have been adjusted to give effect, retroactively, to our
one-for-ten Ordinary Share consolidation effective on July 17, 2002 whereby
ten ordinary shares of 10p each became one Ordinary Share of £1.00 each and to
the subsequent sub-division and conversion of each issued and outstanding
Ordinary Share of £1.00 each on June 21, 2004 into one ordinary share of 5
pence and one deferred share of 95 pence (and the subsequent purchase by the
Company and cancellation of all such deferred shares) and each of the authorized
but unissued Ordinary Shares of £1 each in the capital of the Company into 20
ordinary shares of 5 pence each.
In
addition, as used in this annual report, the term “Debentures” refers to our 8%
Convertible Debentures due 2010 which were issued on December 6, 2007 in
connection with the financing of our acquisition of Ester.
On
January 18, 2008, our Ordinary Shares were consolidated on a one-for-ten basis
whereby ten Ordinary Shares of 5p each became one Ordinary Share of 50p. Unless
otherwise specified, all shares and share related information (such as per share
information and share price information) in this annual report have not been
adjusted to give effect to this one-for-ten Ordinary Share
consolidation.
On May
14, 2008, we announced a private placement of Ordinary Shares for up to $60.0
million. The first tranche from new investors of $28.0 million closed on May 19,
2008. See Item 8B “Significant changes” for further
information.
In this annual
report, references to “pounds sterling,” “£” or “GBP£” are to U.K. currency,
references to “U.S. Dollars”, “$” or “US$” are to U.S. currency,
references to “euro” or “€” are to Euro currency and references to “New Israeli
Shekel”, “NIS” or “shekel” are to Israeli currency.
This
annual report contains trademarks, tradenames or registered marks owned by
Amarin or by other entities, including:
• Permax®,
which during the fiscal year covered by this report was registered in Eli Lilly
and Company or its affiliates, which we may refer to in this annual report as
“Lilly”.
• Nanocrystal®, which during the fiscal year covered by this report was
registered in Elan Corporation plc or its affiliates, which we may refer to in
this annual report as "Elan".
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
annual report contains forward-looking statements about our financial condition,
results of operations, business prospects and products in research and involve
substantial risks and uncertainties. You can identify these statements by the
fact that they use words such as “will”, “anticipate”, “estimate”, “project”,
“forecast”, “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 our research and development activities;
•
Decisions
by regulatory authorities regarding whether and when to approve our drug
applications, as well as their decisions regarding labeling and other matters
that could affect the commercial potential of our
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 affecting our 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;
•
Claims
and concerns that may arise regarding the safety or efficacy of our product
candidates;
•
Governmental
laws and regulations affecting our operations, including those affecting
taxation;
•
Our
ability to maintain sufficient cash and other liquid resources to meet operating
requirements and debt service requirements; general changes in International
Financial Reporting Standards (“IFRS”) as adopted by the European Union (“E.U.”)
and as issued by the International Accounting Standards Board
(“IASB”);
•
Patent
positions can be highly uncertain and patent disputes are not unusual. An
adverse result in a patent dispute can hamper commercialization of products or
negatively impact sales of future products or result in injunctive relief and
payment of financial remedies;
•
Uncertainties of the U.S. Food and Drug Administration ("FDA") approval
process and the regulatory approval processes in other countries, including,
without limitation, delays in approval of new products;
•
Difficulties
in product development. Pharmaceutical product development is highly uncertain.
Products that appear promising in development may fail to reach market for
numerous reasons. They may be found to be ineffective or to have harmful side
effects in clinical or pre-clinical testing, they may fail to receive the
necessary regulatory approvals, they may turn out not to be economically
feasible because of manufacturing costs or other factors or they may be
precluded from commercialization by the proprietary rights of
others; and
•
Growth in
costs and expenses; and the impact of acquisitions, divestitures and other
unusual items.
PART I
Item 1 Identity
of Directors, Senior Management and Advisers
Not
applicable.
Item 2 Offer
Statistics and Expected Timetable
Not
applicable.
Item 3 Key
Information
A. Selected
Financial Data
General
The
following table presents selected historical consolidated financial data. The
selected historical consolidated financial data as of December 31, 2007 and
2006 and for each of the years ended December 31, 2007 and 2006 have been
derived from our audited consolidated financial statements beginning on
page F-1 of this annual report, prepared in accordance with International
Financial Reporting Standards (“IFRS”) as adopted by the E.U. and as issued by
the International Accounting Standards Board (“IASB”), which have been audited
by PricewaterhouseCoopers, an independent registered public accountant firm, for
the years ended December 31, 2007 and 2006.
The
selected historical consolidated financial data as of December 31, 2005,
2004 and 2003 and for the years then ended has been derived from our audited
historical financial statements prepared in accordance with generally accepted
accounting principles in the United Kingdom (“U.K. GAAP”) which are not included
in these financial statements.
Unless
otherwise specified, all references in this annual report to “fiscal year” or
“year” of Amarin refer to a twelve-month financial period ended
December 31. We prepare our consolidated financial statements in accordance
with IFRS as adopted by the E.U. and as issued by the IASB.
We
adopted IFRS for the first time for our financial year ended December 31, 2007.
Our audited Consolidated Financial Statements as of and for the year ended
December 31, 2006 were originally prepared in accordance with U.K. GAAP. As part
of our adoption of IFRS, we have restated our Consolidated Financial Statements
in accordance with IFRS for comparative purposes.
During
2002 our Ordinary Shares were consolidated on a ten-for-one basis. Concurrently,
we amended the terms of our American Depositary Shares, or ADSs, to provide that
each ADS would represent one Ordinary Share. Previously each ADS had represented
ten ordinary shares of 10p each. The new conversion ratio has been reflected in
all years in the weighted average share numbers shown in the consolidated
statement of operations data below. In June 2004 we converted each of our £1
Ordinary Shares into one Ordinary Share of 5 pence and one deferred share of 95
pence (with such deferred shares having been subsequently cancelled). This share
conversion in 2004 did not affect the ratio as between our Ordinary Shares and
our ADSs but is recorded below in the year 2004.
On
January 18, 2008 our Ordinary Shares were consolidated on a one-for-ten basis
whereby ten Ordinary Shares of 5p each became one Ordinary Share of 50p
each.
On May
14, 2008, we announced a private placement of Ordinary Shares for up to $60.0
million. The first tranche from new investors of $28.0 million closed on May 19,
2008. See Item 8B “Significant changes” for further
information.
Selected
Consolidated Financial Data —
IFRS
|
|
2006
|
|
|
2007
|
|
|
|
(In
U.S. $, thousands except per share data and number of shares
information)
|
|
Statement
of Operations Data — IFRS
Net
sales revenues
|
|
|
500 |
|
|
|
— |
|
Total
loss from operations
|
|
|
(28,068 |
) |
|
|
(40,733 |
) |
Net
loss
|
|
|
(26,751 |
) |
|
|
(38,197 |
) |
Net
loss per Ordinary Share (basic – post share split**)
|
|
|
(3.25 |
) |
|
|
(3.90 |
) |
Net
loss per Ordinary Share (basic – pre share split**)
|
|
|
(0.33 |
) |
|
|
(0.39 |
) |
Net
loss per Ordinary Share (diluted – post share split**)
|
|
|
(3.25 |
) |
|
|
(3.90 |
) |
Net
loss per Ordinary Share (diluted – pre share split**)
|
|
|
(0.33 |
) |
|
|
(0.39 |
) |
Consolidated
balance sheet data - amounts
in accordance with IFRS
Working
capital assets
|
|
|
28,710 |
|
|
|
6,316 |
|
Total
assets
|
|
|
49,559 |
|
|
|
42,254 |
|
Long
term
obligations
|
|
|
(110 |
) |
|
|
(2,693 |
) |
Capital
stock (ordinary shares)
|
|
|
7,990 |
|
|
|
12,942 |
|
Total
shareholders’ equity
|
|
|
38,568 |
|
|
|
24,149 |
|
Number
of ordinary shares in issue (thousands – post share
split**)
|
|
|
9,068 |
|
|
|
13,906 |
|
Number
of ordinary shares in issue (thousands – pre share
split**)
|
|
|
90,684 |
|
|
|
139,057 |
|
Denomination
of each ordinary share (post share split**)
|
|
|
£0.50 |
|
|
|
£0.50 |
|
Denomination
of each ordinary share (pre share split**)
|
|
|
£0.05 |
|
|
|
£0.05 |
|
Selected
Consolidated Financial Data —
U.K. GAAP
|
|
Years
Ended December 31
|
|
|
|
2003
|
|
|
2004*
as
restated
|
|
|
2005*
as
restated
|
|
|
|
(In
U.S. $, thousands except per share data and number of shares
information)
|
|
Statement
of Operations Data — U.K. GAAP
Net
sales
revenues
|
|
|
7,365 |
|
|
|
1,017 |
|
|
|
500 |
|
Total
loss from
operations
|
|
|
(38,821 |
) |
|
|
(11,875 |
) |
|
|
(20,748 |
) |
Loss
from continuing
operations
|
|
|
(6,200 |
) |
|
|
(10,608 |
) |
|
|
(20,748 |
) |
Net
(loss)/income
|
|
|
(19,224 |
) |
|
|
3,229 |
|
|
|
(20,547 |
) |
Loss
from continuing operations per Ordinary Share (basic – post share
split**)
|
|
|
(3.63 |
) |
|
|
(4.71 |
) |
|
|
(4.45 |
) |
Loss
from continuing operations per Ordinary Share (basic – pre share
split**)
|
|
|
(0.36 |
) |
|
|
(0.47 |
) |
|
|
(0.45 |
) |
Net
(loss)/income per Ordinary Share (basic – post share
split**)
|
|
|
(11.25 |
) |
|
|
1.43 |
|
|
|
(4.41 |
) |
Net
(loss)/income per Ordinary Share (basic – pre share
split**)
|
|
|
(1.13 |
) |
|
|
0.14 |
|
|
|
(0.44 |
) |
Net
(loss)/income per Ordinary Share (diluted – post share
split**)
|
|
|
(11.25 |
) |
|
|
1.43 |
|
|
|
(4.41 |
) |
Net
(loss)/income per Ordinary Share (diluted – pre share
split**)
|
|
|
(1.13 |
) |
|
|
0.14 |
|
|
|
(0.44 |
) |
Consolidated
balance sheet data - amounts
in accordance with U.K. GAAP
Working
capital
(liabilities)/assets
|
|
|
(39,128 |
) |
|
|
8,651 |
|
|
|
28,673 |
|
Total
assets
|
|
|
47,377 |
|
|
|
23,721 |
|
|
|
46,760 |
|
Long
term
obligations
|
|
|
— |
|
|
|
(2,687 |
) |
|
|
(180 |
) |
Capital
stock (ordinary
shares)
|
|
|
29,088 |
|
|
|
3,206 |
|
|
|
6,778 |
|
Total
shareholders’
(deficit)/equity
|
|
|
(6,348 |
) |
|
|
16,693 |
|
|
|
38,580 |
|
Number
of ordinary shares in issue (thousands – post share
split**)
|
|
|
1,794 |
|
|
|
3,763 |
|
|
|
7,755 |
|
Number
of ordinary shares in issue (thousands – pre share
split**)
|
|
|
17,940 |
|
|
|
37,632 |
|
|
|
77,549 |
|
Denomination
of each ordinary share (post share
split**)
|
|
|
£10.00 |
|
|
|
£0.50 |
|
|
|
£0.50 |
|
Denomination
of each ordinary share (pre share
split**)
|
|
|
£1.00 |
|
|
|
£0.05 |
|
|
|
£0.05 |
|
For
previously reported 2006 financial information prepared under U.K. GAAP please
see our 2006 20-F filed with the SEC on March 5, 2007.
*
|
As
restated for the non-cash compensation expense due to the adoption of U.K.
GAAP, Financial Reporting Standard 20 “Share-based
payments”.
|
**
|
On
January 18, 2008, our Ordinary Shares were consolidated on a one-for-ten
basis whereby ten Ordinary Shares of 5p each became one Ordinary Share of
50p. Post-split shares and share information above has been adjusted to
reflect this share consolidation.
|
Exchange
Rates
We
changed our functional currency on January 1, 2003 from pounds sterling to
U.S. Dollars to reflect the fact that the majority of our transactions,
assets and liabilities were denominated in that currency. Consequently, all data
provided in this annual report is in U.S. Dollars from 2003.
As some
of our assets, liabilities and transactions are denominated in pounds sterling,
euro and shekel, the rate of exchange between pounds sterling and the
U.S. Dollar, between euro and U.S. Dollar and between shekel and U.S.
Dollar, which is determined by supply and demand in the foreign exchange markets
and affected by numerous factors, continues to impact our financial results.
Fluctuations in the exchange rates between the U.S. Dollar and pounds
sterling, between U.S. Dollar and euro and between the U.S. Dollar and
shekel may affect any earnings or losses reported by us and the book value of
our shareholders’ equity as expressed in U.S. Dollars, and consequently may
affect the market price for our ADSs.
The
following table sets forth, for the periods indicated, the average of the noon
buying rate on the last day of each month during the relevant period as
announced by the Federal Reserve Bank of New York for pounds sterling expressed
in U.S. Dollars per pound sterling:
Fiscal
Period
|
Average
Noon
Buying
Rate
|
|
(U.S. Dollars/pound
sterling)
|
12 months
ended December 31,
2003
|
1.6450
|
12 months
ended December 31,
2004
|
1.8356
|
12 months
ended December 31,
2005
|
1.8204
|
12 months
ended December 31,
2006
|
1.8434
|
12 months
ended December 31,
2007
|
2.0073
|
The
following table sets forth, for each of the last six months, the high and low
noon buying rate during each month as announced by the Federal Reserve Bank of
New York for pounds sterling expressed in U.S. Dollars per pound
sterling:
Month
|
High
Noon Buying Rate
|
Low
Noon Buying Rate
|
|
(U.S. Dollars/pound
sterling)
|
(U.S. Dollars/pound
sterling)
|
|
|
|
November
2007
|
2.1104
|
2.0478
|
December
2007
|
2.0658
|
1.9774
|
January
2008
|
1.9895
|
1.9515
|
February
2008
|
1.9923
|
1.9405
|
March
2008
|
2.0311
|
1.9823
|
April
2008 |
1.9994
|
1.9627
|
The noon
buying rate as of May 15, 2008 was 1.9488 U.S. Dollars per pound
sterling.
B. Capitalization
And Indebtedness
Not
applicable.
C. Reasons
For The Offer And Use Of Proceeds
Not
applicable.
D. Risk
Factors
RISK
FACTORS
You
should carefully consider the risks and the information about our business
described below, together with all the other information included in this annual
report. You should not interpret the order in which these considerations are
presented as an indication of their relative importance to you. The risks and
uncertainties described below are not the only ones that we face. Additional
risks and uncertainties not presently known to us or that we currently believe
to be immaterial may also adversely affect our business. If any of the following
risks and uncertainties develops into actual events, our business, financial
condition and results of operations could be materially and adversely
affected. In such an instance, the trading price of our ADSs and
Ordinary Shares could decline.
We
have a history of losses, and we may not be able to attain profitability in
the foreseeable
future.
We have
not been profitable in four of the last five fiscal years. For the fiscal years
ended December 31, 2003, 2004 and 2005, we reported (losses)/profits under
U.K. GAAP of approximately $(19.2) million, $3.2 million and
$(20.5) million respectively. For the fiscal years ended December 31, 2006
and 2007, we reported losses under IFRS of approximately $26.8 million and $38.2
million respectively. Unless and until marketing approval is obtained from
either the U.S. Food and Drug Administration, which we refer to as the FDA,
or European Medicines Evaluation Agency, which we refer to as the EMEA, for any
of our products, or we are otherwise able to acquire rights to products that
have received regulatory approval or are at an advanced stage of development and
can be readily commercialized, we may not be able to generate sufficient
revenues in future periods to enable us to attain profitability.
We
acquired Amarin Neuroscience (formerly Laxdale Limited) on October 8, 2004
and Ester Neurosciences Limited on December 5, 2007. We continue to have limited
operations, assets and financial resources. We currently have no marketable
products or other source of revenues other than the Multicell out-licensing
contract described herein. All of our current products are in the development
stage. The development of pharmaceutical products is a capital intensive
business. Therefore, we expect to incur expenses without corresponding revenues
at least until we are able to obtain regulatory approval and sell our future
products in significant quantities. This may result in net operating losses
until we can generate an acceptable level of revenues, which we may not be able
to attain. Further, even if we do achieve operating revenues, there can be no
assurance that such revenues will be sufficient to fund continuing operations.
Therefore, we cannot predict with certainty whether we will ever be able to
achieve profitability.
In
addition to advancing our existing development pipeline, we may also acquire
rights to additional products. However, we may not be successful in doing so. We
may need to raise additional capital before we can acquire any products. There
is also a risk that any of our development stage products we may acquire will
not be approved by the FDA or regulatory authorities in other countries on a
timely basis or at all. The inability to obtain such approvals would adversely
affect our ability to generate revenues.
The
likelihood of success of our business plan must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with developing and expanding early stage businesses
and the regulatory and competitive environment in which we operate.
Our
historical financial results do not form an accurate basis for assessing
our current
business.
As a
consequence of divestitures in 2003 and 2004 and our acquisition of Amarin
Neuroscience in October 2004 and Ester Neurosciences Limited in December 2007,
our historical financial results do not form an accurate basis upon which
investors should base an assessment of our business and prospects. We are now
focused on the research, development and commercialization of novel drugs for
the central nervous system and cardiovascular disease. Accordingly,
our historical financial results reflect a substantially different business from
that currently being conducted.
Our
indebtedness under our 8% Convertible Debentures due 2010 could adversely affect
our financial condition and our ability to respond to changes in our
business.
As
described in our Report of Foreign Issuer furnished to the SEC on December 12,
2007, on December 4, 2007, we issued $2.75 million aggregate principal amount of
our 8% Convertible Debentures due 2010 to finance, in part, our acquisition of
Ester Neurosciences Limited, a private pharmaceutical development company based
in Israel. We have debt service obligations under our
Debentures. These debt obligations could have significant negative
consequences, including, but not limited to:
·
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increasing
our vulnerability to general adverse economic and industry
conditions;
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·
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limiting
our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or other business
purposes;
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·
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limiting
our flexibility to plan for, or react to, changes in our business and the
industry in which we compete;
|
·
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placing
us at a possible disadvantage to competitors with fewer debt obligations
and competitors that have better access to capital resources;
and
|
·
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requiring
us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, thereby reducing the availability of our
cash flow to fund working capital expenditures, research and development
efforts and other general corporate
purposes.
|
We
may incur additional indebtedness.
The
indenture governing the Debentures does not prohibit us from incurring
substantial additional indebtedness in the future. Any such
additional indebtedness that is permitted to be secured would be effectively
senior to the Debentures to the extent of the assets securing such
indebtedness. As described under the heading “Description of
Debentures — Additional Covenant — Limitation on Incurrence of Subsidiary
Indebtedness” in our prospectus supplement filed with the SEC on December 5,
2007, the Debentures limit the ability of our subsidiaries to incur
indebtedness. However, because they are not guaranteed by our
subsidiaries (or any other third party), the Debentures are structurally
subordinated to the indebtedness and other liabilities that our subsidiaries are
permitted to incur. In addition, the indenture does not contain any
restrictive covenants limiting our ability to pay dividends, make any payments
on junior or other indebtedness or otherwise limit our financial
condition.
We
may have to issue additional equity, leading to shareholder
dilution.
We are
committed to issue equity to the former shareholders of Amarin Neuroscience upon
the successful achievement of specified milestones for the AMR101 development
program (subject to such shareholders’ right to choose cash payment in lieu of
equity). Pursuant to the Amarin Neuroscience share purchase
agreement, further success-related milestones will be payable as
follows:
Upon
receipt of marketing approval in the United States and Europe for the first
indication of any product containing Amarin Neuroscience intellectual property
as secured in the 2004 Laxdale acquisition, we must make an aggregate stock or
cash payment (at the sole option of each of the sellers) of GBP£7.5 million
for each of the two potential market approvals (i.e., GBP£15.0 million
maximum). In addition, upon receipt of a marketing approval in the
United States and Europe for any other product using Amarin Neuroscience
intellectual property as secured in the 2004 Laxdale acquisition or for a
different indication of a previously approved product, we must make an aggregate
stock or cash payment (at the sole option of each of the sellers) of
GBP£5.0 million for each of the two potential market approvals (i.e.,
GBP£10.0 million maximum). The exchange rate as of May 15,
2008 was approximately $1.9488 per GBP£.
As
described under the heading “Unaudited Pro Forma Financial Information” in our
Report of Foreign Issuers on Form 6-K filed with the SEC on December 5, 2007, if
the Monarsen Phase IIa in Myasthenia Gravis (“MG”) clinical study meets its
study objectives, we are committed to pay $5 million, at Amarin’s option, in
equity or cash, to the former shareholders of Ester Neurosciences Limited. In
addition, upon successful completion of the Monarsen Phase II
MG development program with adequate efficacy and safety data that fully
supports the commencement of a Phase III clinical study in the U.S., we are
committed to pay $6 million, at Amarin's option, in equity or cash, to
the former shareholders of Ester Neurosciences Limited.
In
December 2007, we issued $2.75 million in aggregate principal amount of
three-year convertible Debentures. The Debentures may be converted into 5.7
million ADSs commencing four months after the date of closing at a conversion
price of $0.48 per ADS. If, at any time prior to December 6, 2009, the Company
issues Ordinary Shares, securities convertible into ADSs or Ordinary Shares,
warrants to purchase ADSs or Ordinary Shares or options to purchase any of the
aforementioned convertible debentures at a price that is less than, or converts
at a price that is less than, $3.66 (“Down-round Price”), then the conversion
price shall be adjusted to equal 130% of the Down-round Price.
In
addition, the Debenture holders received five-year warrants to purchase 2.3
million ADSs at an exercise price of $0.48. If, at any time prior to December 6,
2009, the Company issues Ordinary Shares, securities convertible into ADSs or
Ordinary Shares, warrants to purchase ADSs or Ordinary Shares or options to
purchase any of the aforementioned warrants at a price that is less than, or
converts at a price that is less than, $3.66 (“Down-round Price”), then the
exercise price shall be adjusted to equal 130% of the Down-round
Price.
The
convertible Debentures will be required to be repaid from the proceeds of, and
the holders of the convertible Debentures will have the right to participate in,
future financings of the Company, with certain exceptions.
Taking
account for the one-for-ten consolidation of our Ordinary Shares on January 18,
2008, as at May 16, 2008 we had 2,052,473 warrants outstanding with a
weighted average exercise price of $8.70 per share. As at May
16, 2008, we also had outstanding employee options to purchase 1,475,481
Ordinary Shares at an average exercise price of $13.23 per share.
Additionally,
in pursuing our growth strategy we will either need to issue new equity as
consideration for the acquisition of products, or to otherwise raise additional
capital, in which case equity, debt convertible into equity or debt instruments
may be issued. The creation of new shares may lead to dilution of the
value of the shares held by our current shareholder base.
We
have granted the initial purchasers of the Debentures the right to participate
in certain of our future financings, which may restrict our ability to raise
capital.
So long
as the initial purchaser of a Debenture is the registered holder of the
Debenture, such initial purchaser shall have a right, subject to certain
exceptions, to participate in future equity or debt financings by us for cash on
terms equal to those of other investors in such future
financings. This right is not transferable upon the sale of the
Debentures by initial purchasers. This financing participation right
may restrict our ability to raise capital through equity financing in the future
as it may, among other things, make potential investors less likely to enter
into negotiations with us.
If
we cannot find additional capital resources, we will have difficulty in
operating as a going concern and growing our business.
At
December 31, 2007, we had a cash balance of approximately
$18.3 million. On May
14, 2008, we announced a private placement of Ordinary Shares for up to $60.0
million. The first tranche from new investors of $28.0 million closed on May 19,
2008. Based upon current business activities, we forecast having
sufficient cash to fund operations for at least the next 12 months from
May 19, 2008. We may also require further funds in the future to implement
our long-term growth strategy of acquiring additional development stage and/or
marketable products, recruiting clinical, regulatory and sales and marketing
personnel, and growing our business. Our ability to execute our
business strategy and sustain our infrastructure at our current level will be
impacted by whether or not we have sufficient funds. Depending on market
conditions and our ability to maintain financial stability, we may not have
access to additional funds on reasonable terms or at all. Any
inability to obtain additional funds when needed would have a material adverse
effect on our business and on our ability to operate on an ongoing
basis.
We
may be dependent upon the success of a limited range of products.
On April 24, 2007, we
reported top-line results from our two Phase III clinical trials of AMR101 to
treat Huntington’s disease. Study data showed no statistically
significant difference in either study between AMR101 and placebo with regard to
the primary and secondary endpoints at 6-months of treatment. The adverse
clinical trial data on AMR101 for Huntington’s disease could materially affect
our ability to develop the product for Huntington’s disease and for other
therapeutic indications. If development efforts for our products are
not successful for any indications or if they are not approved by the FDA, or if
adequate demand for our products are not generated, our business will be
materially and adversely affected. Although we intend to bring additional
products forward from our research
and development efforts, even if we are successful in doing so, the range of
products we will be able to commercialize may be limited. This could restrict
our ability to respond to adverse business conditions. If we are not successful
in developing any future product or products, or if there is not adequate demand
for any such products or the market for such product develops less rapidly than
we anticipate, we may not have the ability to shift our resources to the
development of alternative products. As a result, the limited range of products
we intend to develop could constrain our ability to generate revenues and
achieve profitability.
Our
ability to generate revenues depends on obtaining regulatory approvals
for our
products.
In order
to successfully commercialize a product, we will be required to conduct all
tests and clinical trials needed in order to meet regulatory requirements, to
obtain applicable regulatory approvals, and to prosecute patent applications.
The costs of developing and obtaining regulatory approvals for pharmaceutical
products can be substantial. Our ability to commercialize any of our products in
development is dependent upon the success of development efforts in clinical
studies. If these clinical trials fail to produce satisfactory results, or if we
are unable to maintain the financial and operational capability to complete
these development efforts, we may be unable to generate revenues. Even if we
obtain regulatory approvals, the timing or scope of any approvals may prohibit
or reduce our ability to commercialize products successfully. For example, if
the approval process takes too long, we may miss market opportunities and give
other companies the ability to develop competing products. Additionally, the
terms of any approvals may not have the scope or breadth needed for us to
commercialize products successfully.
We
may not be successful in developing or marketing future products if we cannot
meet extensive
regulatory requirements of the FDA and other regulatory agencies for
quality,
safety and efficacy.
Our
long-term strategy involves the development of products we may acquire from
third parties. The success of these efforts is dependent in part upon the
ability of the Group, its contractors, and its products to meet and to continue
to meet regulatory requirements in the jurisdictions where we ultimately intend
to sell such products. The development, manufacture and marketing of
pharmaceutical products are subject to extensive regulation by governmental
authorities in the United States, the European Union, Japan and elsewhere. In
the United States, the FDA generally requires pre-clinical testing and clinical
trials of each drug to establish its safety and efficacy and extensive
pharmaceutical development to ensure its quality before its introduction into
the market. Regulatory authorities in other jurisdictions impose similar
requirements. The process of obtaining regulatory approvals is lengthy and
expensive and the issuance of such approvals is uncertain. The commencement and
rate of completion of clinical trials may be delayed by many factors,
including:
•
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the
inability to manufacture sufficient quantities of qualified materials
under current good manufacturing practices for use in clinical
trials;
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slower
than expected rates of patient
recruitment;
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the
inability to observe patients adequately after
treatment;
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•
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changes
in regulatory requirements for clinical
trials;
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•
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the
lack of effectiveness during clinical
trials;
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•
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unforeseen
safety issues;
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•
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delay,
suspension, or termination of a trial by the institutional review board
responsible for overseeing the study at a particular study
site; and
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•
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government
or regulatory delays or “clinical holds” requiring suspension or
termination of a trial.
|
Even if
we obtain positive results from early stage pre-clinical or clinical trials, we
may not achieve the same success in future trials. Clinical trials that we
conduct may not provide sufficient safety and effectiveness data to obtain the
requisite regulatory approvals for product candidates. The failure of clinical
trials to demonstrate safety and effectiveness for our desired indications could
harm the development of that product candidate as well as other product
candidates, and our business and results of operations would
suffer.
Any
approvals that are obtained may be limited in scope, or may be accompanied by
burdensome post-approval study or other requirements. This could adversely
affect our ability to earn revenues from the sale of such products. Even in
circumstances where products are approved by a regulatory body for sale, the
regulatory or legal requirements may change over time, or new safety or efficacy
information may be identified concerning a product, which may lead to the
withdrawal of a product from the market. Additionally, even after approval, a
marketed drug and its manufacturer are subject to continual review. The
discovery of previously unknown problems with a product or manufacturer may
result in restrictions on that product or manufacturer, including withdrawal of
the product from the market, which would have a negative impact on our potential
revenue stream.
After
approval, our products will be subject to extensive government
regulation.
Once a
product is approved, numerous post-approval requirements apply. Among other
things, the holder of an approved NDA or other license is subject to periodic
and other monitoring and reporting obligations enforced by the FDA and other
regulatory bodies, including obligations to monitor and report adverse events
and instances of the failure of a product to meet the specifications in the
approved application. Application holders must also submit advertising and other
promotional material to regulatory authorities and report on ongoing clinical
trials.
Advertising
and promotional materials must comply with FDA rules in addition to other
potentially applicable federal and local laws in the United States and in other
countries. In the United States, the distribution of product samples to
physicians must comply with the requirements of the U.S. Prescription Drug
Marketing Act. Manufacturing facilities remain subject to FDA inspection and
must continue to adhere to the FDA’s current good manufacturing practice
requirements. Application holders must obtain FDA approval for product and
manufacturing changes, depending on the nature of the change. Sales, marketing,
and scientific/educational grant programs must also comply with the
U.S. Medicare-Medicaid Anti-Fraud and Abuse Act, as amended, the
U.S. False Claims Act, as amended and similar state laws. Pricing and
rebate programs must comply with the U.S. Medicaid rebate requirements of
the Omnibus Budget Reconciliation Act of 1990, as amended. If products are made
available to authorized users of the U.S. Federal Supply Schedule of the
General Services Administration, additional laws and requirements apply. All of
these activities are also potentially subject to U.S. federal and state
consumer protection and unfair competition laws. Similar requirements exist in
all of these areas in other countries.
Depending
on the circumstances, failure to meet these post-approval requirements can
result in criminal prosecution, fines or other penalties, injunctions, recall or
seizure of products, total or partial suspension of production, denial or
withdrawal of pre-marketing product approvals, or refusal to allow us to enter
into supply contracts, including government contracts. In addition, even if we
comply with FDA and other requirements, new information regarding the safety or
effectiveness of a product could lead the FDA to modify or withdraw a product
approval. Adverse regulatory action, whether pre- or post-approval, can
potentially lead to product liability claims and increase our product liability
exposure. We must also compete against other products in qualifying for
reimbursement under applicable third party payment and insurance
programs.
Our
future products may not be able to compete effectively against those of
our competitors.
Competition
in the pharmaceutical industry is intense and is expected to increase. If we are
successful in completing the development of any of our products, we may face
competition to the extent other pharmaceutical companies are able to develop
products for the treatment of similar indications. Potential competitors in this
market may include companies with greater resources and name recognition than
us. Furthermore, to the extent we are able to acquire or develop additional
marketable products in the future such products will compete with a variety of
other products within the United States or elsewhere, possibly including
established drugs and major brand names. Competitive factors, including generic
competition, could force us to lower prices or could result in reduced sales. In
addition, new products developed by others could emerge as competitors to our
future products. Products based on new technologies or new drugs could render
our products obsolete or uneconomical.
Our
potential competitors both in the United States and Europe may include large,
well-established pharmaceutical companies, specialty pharmaceutical sales and
marketing companies, and specialized neurology companies. In addition, we may
compete with universities and other institutions involved in the development of
technologies and products that may compete with ours. Many of our competitors
will likely have greater resources than us, including financial, product
development, marketing, personnel and other resources. Should a competing
product obtain marketing approval prior to any of our products, this would
significantly erode the projected revenue streams for our
product.
The
success of our future products will also depend in large part on the willingness
of physicians to prescribe these products to their patients. Our future products
may compete against products that have achieved broad recognition and acceptance
among medical professionals. In order to achieve an acceptable level of
subscriptions for our future products, we must be able to meet the needs of both
the medical community and end users with respect to cost, efficacy and other
factors.
Our
supply of future products could be dependent upon relationships with
manufacturers
and key suppliers.
We have
no in-house manufacturing capacity and, to the extent we are successful in
completing the development of our products and/or acquiring or developing other
marketable products in the future, we will be obliged to rely on contract
manufacturers to produce our products. We may not be able to enter into
manufacturing arrangements on terms that are favorable to us. Moreover, if any
future manufacturers should cease doing business with us or experience delays,
shortages of supply or excessive demands on their capacity, we may not be able
to obtain adequate quantities of product in a timely manner, or at all.
Manufacturers are required to comply with current NDA commitments and good
manufacturing practices requirements enforced by the FDA, and similar
requirements of other countries. The failure by a future manufacturer to comply
with these requirements could affect its ability to provide us with product. Any
manufacturing problem or the loss of a contract manufacturer could be disruptive
to our operations and result in lost sales.
Additionally,
we will be reliant on third parties to supply the raw materials needed to
manufacture our potential products. Any reliance on suppliers may involve
several risks, including a potential inability to obtain critical materials and
reduced control over production costs, delivery schedules, reliability and
quality. Any unanticipated disruption to future contract manufacture caused by
problems at suppliers could delay shipment of products, increase our cost of
goods sold and result in lost sales.
We
may not be able to grow our business unless we can acquire and market or
in-license
new products.
We are
pursuing a strategy of product acquisitions and in-licensing in order to
supplement our own research and development activity. For example, in December
2007, we acquired the entire issued share capital of Ester Neurosciences Limited
whose lead product, EN101, is currently in Phase IIa clinical development to
treat myasthenia gravis, a debilitating neuromuscular disease; in March 2007, we
acquired the global rights to a novel, nasal lorazepam formulation for the
out-patient treatment of emergency seizures in epilepsy patients, specifically
status epilepticus and acute repetitive seizures; and in May 2006, we acquired
the global rights to a novel formulation of apomorphine for the treatment of
“off” episodes in patients with advanced Parkinson’s disease. Our success in
this regard will be dependent on our ability to identify other companies that
are willing to sell or license product lines to us. We will be competing for
these products with other parties, many of whom have substantially greater
financial, marketing and sales resources than we do. Even if suitable products
are available, depending on competitive conditions we may not be able to acquire
rights to additional products on acceptable terms, or at all. Our inability to
acquire additional products or successfully introduce new products could have a
material adverse effect on our business.
In
order to commercialize our future products, we will need to establish a sales
and marketing
capability.
At
present, we do not have any sales or marketing capability since all of our
products are currently in the development stage. However, if we are successful
in obtaining regulatory approval for any product for any indication, we may
directly commercialize this product for that indication in the U.S. market.
Similarly, to the extent we execute our long-term strategy of expanding our
portfolio by developing or acquiring additional marketable products, we intend
to directly sell our neurology products in the United States. In order to market
new products, we will need to add marketing and sales personnel who have
expertise in the pharmaceuticals business. We must also develop the necessary
supporting distribution channels. Although we believe we can build the required
infrastructure, we may not be successful in doing so if we cannot attract
personnel or generate sufficient capital to fund these efforts. Failure to
establish a sales force and distribution network in the U.S. would have a
material adverse effect on our ability to grow our business.
The
planned expansion of our business may strain our resources.
Our
strategy for growth includes potential acquisitions of new products for
development and the introduction of these products to the market. Since we
currently operate with limited resources, the addition of such new products
could require a significant expansion of our operations, including the
recruitment, hiring and training of additional personnel, particularly those
with a clinical or regulatory background. Any failure to recruit necessary
personnel could have a material adverse effect on our business. Additionally,
the expansion of our operations and work force could create a strain on our
financial and management resources and it may require us to add management
personnel.
We
may incur potential liabilities relating to discontinued operations or
products.
In
October 2003, we sold Gacell Holdings AB, the Swedish holding company of Amarin
Development AB, which we refer to as ADAB, our Swedish drug development
subsidiary, to Watson Pharmaceuticals, Inc. In February 2004, we sold our
U.S. subsidiary, Amarin Pharmaceuticals Inc., and certain assets, to
Valeant. In connection with these transactions, we provided a number of
representations and warranties to Watson and Valeant regarding the respective
businesses sold to them, and other matters, and we undertook to indemnify Watson
and Valeant under certain circumstances for breaches of such representations and
warranties. We are not aware of any circumstances which could reasonably be
expected to give rise to an indemnification obligation under our agreements with
either Watson or Valeant. However, we cannot predict whether matters may arise
in the future which were not known to us and which, under the terms of the
relevant agreements, could give rise to a claim against us.
We
will be dependent on patents, proprietary rights and
confidentiality.
Because
of the significant time and expense involved in developing new products and
obtaining regulatory approvals, it is very important to obtain patent and trade
secret protection for new technologies, products and processes. Our ability to
successfully implement our business plan will depend in large part on our
ability to:
•
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acquire
patented or patentable products and
technologies;
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•
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obtain
and maintain patent protection for our current and acquired
products;
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•
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preserve
any trade secrets relating to our current and future
products; and
|
•
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operate
without infringing the proprietary rights of third
parties.
|
Although
we intend to make reasonable efforts to protect our current and future
intellectual property rights and to ensure that any proprietary technology we
acquire does not infringe the rights of other parties, we may not be able to
ascertain the existence of all potentially conflicting claims. Therefore, there
is a risk that third parties may make claims of infringement against our current
or future products or technologies. In addition, third parties may be able to
obtain patents that prevent the sale of our current or future products or
require us to obtain a license and pay significant fees or royalties in order to
continue selling such products.
We may in
the future discover the existence of products that infringe upon patents that we
own or that have been licensed to us. Although we intend to protect our trade
secrets and proprietary know-how through confidentiality agreements with our
manufacturers, employees and consultants, we may not be able to prevent our
competitors from breaching these agreements or third parties from independently
developing or learning of our trade secrets.
We
anticipate that competitors may from time to time oppose our efforts to obtain
patent protection for new technologies or to submit patented technologies for
regulatory approvals. Competitors may seek to challenge patent applications or
existing patents to delay the approval process, even if the challenge has little
or no merit. Patent challenges are generally highly technical, time consuming
and expensive to pursue. Were we to be subject to one or more patent challenges,
that effort could consume substantial time and resources, with no assurances of
success, even when holding an issued patent.
The
loss of any key management or qualified personnel could disrupt our
business.
We are
highly dependent upon the efforts of our senior management. The loss of the
services of one or more members of senior management could have a material
adverse effect on us. As a small company with a streamlined management
structure, the departure of any key person could have a significant impact and
would be potentially disruptive to our business until such time as a suitable
replacement is hired. Furthermore, because of the specialized nature of our
business, as our business plan progresses we will be highly dependent upon our
ability to attract and retain qualified scientific, technical and key management
personnel. There is intense competition for qualified personnel in the areas of
our activities. In this environment, we may not be able to attract and retain
the personnel necessary for the development of our business, particularly if we
do not achieve profitability. The failure to recruit key scientific, technical
and management personnel would be detrimental to our ability to implement our
business plan.
We
are subject to continuing potential product liability.
Although
we disposed of the majority of our former products during 2003 and 2004, we
remain subject to the potential risk of product liability claims relating to the
manufacturing and marketing of our former products during the period prior to
their divestiture. Any person who is injured as a result of using one of our
former products during our period of ownership may have a product liability
claim against us without having to prove that we were at fault. The potential
for liability exists despite the fact that our former subsidiary, Amarin
Pharmaceuticals Inc. conducted all sales and marketing activities with respect
to such products. Although we have not retained any liabilities of Amarin
Pharmaceuticals Inc. in this regard, as the prior holder of ownership rights to
such former products, third parties could seek to assert potential claims
against us. Since we distributed and sold our products to a wide number of end
users, the risk of such claims could be material.
We do not
at present carry product liability insurance to cover any such risks. If we were
to seek insurance coverage, we may not be able to maintain product liability
coverage on acceptable terms if our claims experience results in high rates, or
if product liability insurance otherwise becomes costlier or unavailable because
of general economic, market or industry conditions. If we add significant
products to our portfolio, we will require product liability coverage and may
not be able to secure such coverage at reasonable rates or at all.
Product
liability claims could also be brought by persons who took part in clinical
trials involving our current or former development stage products. A successful
claim brought against us could have a material adverse effect on our business.
Amarin does not carry product liability insurance to cover clinical
trials.
Amarin
was responsible for the sales and marketing of Permax from May 2001 until
February 2004. On May 17, 2001, Amarin acquired the U.S. sales and
marketing rights to Permax from Elan. An affiliate of Elan had
previously obtained the licensing rights to Permax from Eli Lilly and Company in
1993. Eli 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., including the rights to Permax, to
Valeant Pharmaceuticals International.
In late
2002, Eli Lilly, as the holder of the NDA for Permax, received a recommendation
from the U.S. Food and Drug Administration (“FDA”) to consider making a change
to the package insert for Permax based upon the very rare observation 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, Eli 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 doctors in the
United States describing this potential risk. Causation has not been
established, but is thought to be consistent with other fibrotic side effects
observed in Permax.
On March
29, 2007, the FDA announced that the manufacturers of pergolide drug products
will voluntarily remove these drug products, including Permax, from the
market. Further information about the removal of Permax and other
pergolide drug products is available on the FDA’s website.
During 2007, one lawsuit
alleging claims related to cardiac valvulopathy and Permax was pending in the
United States and currently remains pending. Eli Lilly, Elan,
Valeant, Amarin Pharmaceuticals Inc., Athena Neurosciences, Inc., and Amarin are
named as defendants in this lawsuit, and are defending against the claims and
allegations. The case is currently in discovery. In
addition, a lawsuit alleging claims related to cardiac valvulopathy and Permax
was filed in March 2008 and is currently pending in the United
States. Eli Lilly, Elan, Valeant, and Amarin are named as defendants
in this lawsuit. Amarin has not been formally served with the
complaint from this lawsuit.
Two other
claims related to cardiac valvulopathy and Permax and one claim related to
compulsive gambling and Permax are or were being threatened against Eli Lilly,
Elan, and/or Valeant, and could possibly implicate Amarin.
The group
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. No provision is booked in the accounts at
December 31, 2007.
The
price of our ADSs and Ordinary Shares may be volatile.
The stock
market has from time to time experienced significant price and volume
fluctuations that may be unrelated to the operating performance of particular
companies. In addition, the market prices of the securities of many
pharmaceutical and medical technology companies have been especially volatile in
the past, and this trend is expected to continue in the future. Our
ADSs may
also be
subject to volatility as a result of their limited trading market. At
December 31, 2007 we had 132,712,369 ADSs representing Ordinary Shares
outstanding and 6,345,001 Ordinary Shares outstanding (which are not held in the
form of ADSs). Taking account for the one-for-ten consolidation of our
Ordinary Shares on January 18, 2008 we currently have 25,339,642 ADSs
representing Ordinary Shares outstanding and 837,509 Ordinary Shares
outstanding (which are not held in the for of ADSs). There is a risk that
there may not be sufficient liquidity in the market to accommodate significant
increases in selling activity or the sale of a large block of our securities.
Our ADSs have historically had limited trading volume, which may also result in
volatility. During the twelve-month
period ending December 31, 2007, the average daily trading volume for our ADSs
was 1,161,203 ADSs.
If our
public float and the level of trading remain at limited levels over the long
term, this could result in volatility and increase the risk that the market
price of our ADSs and Ordinary Shares may be affected by factors such
as:
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the
announcement of new products or
technologies;
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innovation
by us or our competitors;
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developments
or disputes concerning any future patent or proprietary
rights;
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actual
or potential medical results relating to our products or our competitors’
products;
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interim
failures or setbacks in product
development;
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regulatory
developments in the United States, the European Union or other
countries;
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currency
exchange rate
fluctuations; and
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period-to-period
variations in our results of
operations.
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The
issuances of ADSs and Ordinary Shares upon the conversion or exercise of our
securities will dilute the ownership interest of existing stockholders,
including stockholders who had previously exercised their warrants.
The
issuances of ADSs and Ordinary Shares in connection with the conversion of our
Debentures and exercise of our warrants will dilute the ownership interest of
existing stockholders. Any sales in the public market of the ADSs and
Ordinary Shares issuable upon such conversion or exercise could adversely affect
prevailing market prices of our ADSs and Ordinary Shares.
Future
sales of our ADSs and/or Ordinary Shares in the public market could lower the
market price for our ADSs and/or Ordinary Shares.
In the
future, we may sell additional ADSs and/or Ordinary Shares to raise capital or
pursuant to contractual obligations. See “— We may have to issue
additional equity, leading to shareholder dilution.” We
cannot predict the size of future issuances or sales of our ADSs and/or Ordinary
Shares to raise capital or the effect, if any, that they may have on the market
price for our ADSs and/or Ordinary Shares. The issuances and sales of
substantial amounts of ADSs and/or Ordinary Shares, or the perception that such
issuances and sales may occur, could adversely affect the market price of our
ADSs and/or Ordinary Shares.
U.S. Holders
of our Ordinary Shares or ADSs could be subject to material adverse tax
consequences if we are considered a PFIC for U.S. federal income tax
purposes.
There is
a risk that we will be classified as a passive foreign investment company, or
“PFIC”, for U.S. federal income tax purposes. Our status as a
PFIC could result in a reduction in the after-tax return to U.S. Holders of
our Ordinary Shares or ADSs and may cause a reduction in the value of such
shares. We will be classified as a PFIC for any taxable year in which
(i) 75% or more of our gross income is passive income or (ii) at least
50% of the average value of all our assets produce or are held for the
production of passive income. For this purpose, passive income
includes interest, gains from the sale of stock, and royalties that are not
derived in the active conduct of a trade or business. Because we
receive interest and may receive royalties, there is a risk that we will be
considered a PFIC under the income test described above. In addition,
because of our cash position and our ownership of patents, there is a risk that
we will be considered a PFIC under the asset test described above. While we
believe that the PFIC rules were not intended to apply to companies such as us
that focus on research, development and commercialization of drugs, no assurance
can be given that the U.S. Internal Revenue Service or a U.S. court
would determine that, based on the composition of our income and assets, we are
not a PFIC currently or in the future. If we were classified as a
PFIC, U.S. Holders of our Ordinary Shares or ADSs could be subject to
greater U.S. income tax liability than might otherwise apply, imposition of
U.S. income tax in advance of when tax would otherwise apply, and detailed
tax filing requirements that would not otherwise apply. The PFIC
rules are complex and a U.S. Holder of our Ordinary Shares or ADSs is
urged to consult its own tax advisors regarding the possible application of the
PFIC rules to it in its particular circumstances.
U.S.
Holders of our Ordinary Shares or ADSs may be subject to U.S. income taxation at
ordinary income tax rates on undistributed earnings and profits.
Given our
current ownership, we expect that we will be a controlled foreign corporation,
(“CFC”) for the taxable year 2008 and we may be classified as a CFC in future
taxable years. If we are classified as a CFC for U.S. federal income tax
purposes, any shareholder that is a U.S. person that owns directly, indirectly
or by attribution, 10% or more of the voting power of our outstanding shares may
be subject to current U.S. income taxation at ordinary income tax rates on all
or a portion of the Company’s undistributed earnings and profits attributable to
“subpart F income.” Such 10% shareholder may also be taxable at ordinary income
tax rates on any gain realized on a sale of Ordinary Shares or ADSs to the
extent of the Company’s current and accumulated earnings and profits
attributable to such shares. The CFC rules are complex and U.S. Holders of our
Ordinary shares or ADSs are urged to consult their own tax advisors
regarding the possible application of the CFC rules to them in their particular
circumstances.
The
recent adverse clinical trial data on AMR101 for Huntington’s disease could
materially affect our ability to develop AMR101 for other therapeutic
indications.
On April
24, 2007, we reported top-line results from our two Phase III clinical trials of
AMR101 to treat Huntington’s disease (“HD”). We had conducted two
Phase III double-blind, placebo-controlled studies in which HD patients were
randomized to receive either placebo or 2 grams (1 gram twice daily) of AMR101
daily for six months. Study data showed no statistically significant
difference in either study between AMR101 and placebo with regard to the primary
and secondary endpoints at 6-months of treatment. These findings
were inconsistent with earlier clinical trial data that showed statistical
significance in a subset of HD patients with a CAG repeat length of less than or
equal to 44. This adverse clinical trial data on AMR101 for
Huntington’s disease could materially affect our ability to develop AMR101 for
other therapeutic indications.
The
rights of our shareholders may differ from the rights typically offered
to shareholders
of a U.S. corporation.
We are
incorporated under English law and our Ordinary Shares were admitted to trading
on the AIM market of the London Stock Exchange and the IEX market of the Irish
Stock Exchange on July 17, 2006. The rights of holders of Ordinary Shares
and, therefore, certain of the rights of holders of ADSs, are governed by
English law, including the provisions of the Companies Act 1985 (as amended)
that remain in force and the Companies Act 2006 (together the “Companies Acts”),
and by our memorandum and articles of association and the Group is subject to
the rules of AIM and IEX. These rights differ in certain respects from the
rights of shareholders in typical U.S. corporations. The principal
differences include the following:
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Under
English law, each shareholder present at a meeting has only one vote
unless a valid demand is made for a vote on a poll, in which each holder
gets one vote per share owned. Under U.S. law, each shareholder
typically is entitled to one vote per share at all meetings. Under English
law, it is only on a poll that the number of shares determines the number
of votes a holder may cast. You should be aware, however, that the voting
rights of ADSs are also governed by the provisions of a deposit agreement
with our depositary bank.
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Under
English law, each shareholder generally has pre-emptive rights to
subscribe on a proportionate basis to any issuance of shares. Under
U.S. law, shareholders generally do not have pre-emptive rights
unless specifically granted in the certificate of incorporation or
otherwise.
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Under
English law, certain matters require the approval of 75% of the
shareholders, including amendments to the memorandum and articles of
association. This may make it more difficult for us to complete corporate
transactions deemed advisable by our board of directors. Under
U.S. law, generally only majority shareholder approval is required to
amend the certificate of incorporation or to approve other significant
transactions. Under the rules of AIM and IEX, certain transactions require
the approval of 50% of the shareholders, including disposals resulting in
a fundamental change of business and reverse takeovers. In addition,
certain transactions with a party related to the Group for the purposes of
the AIM rules requires that the Group consult with its nominated adviser
as to whether the transaction is fair and reasonable as far as
shareholders are concerned.
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Under
English law, shareholders may be required to disclose information
regarding their equity interests upon our request, and the failure to
provide the required information could result in the loss or restriction
of rights attaching to the shares, including prohibitions on the transfer
of the shares, as well as restrictions on dividends and other payments.
Comparable provisions generally do not exist under
U.S. law.
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The
quorum requirements for a shareholders’ meeting is a minimum of two
persons present in person or by proxy. Under U.S. law, a majority of
the shares eligible to vote must generally be present (in person or by
proxy) at a shareholders’ meeting in order to constitute a quorum. The
minimum number of shares required for a quorum can be reduced pursuant to
a provision in a company’s certificate of incorporation or bylaws, but
typically not below one-third of the shares entitled to vote at the
meeting.
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U.S. shareholders
may not be able to enforce civil liabilities against us.
A number
of our directors and executive officers and those of each of our subsidiaries,
including Amarin Finance Limited, are non-residents of the United States, and
all or a substantial portion of the assets of such persons are located outside
the United States. As a result, it may not be possible for investors to affect
service of process within the United States upon such persons or to enforce
against them judgments obtained in U.S. courts predicated upon the civil
liability provisions of the federal securities laws of the United States. We
have been advised by our English solicitors that there is doubt as to the
enforceability in England in original actions, or in actions for enforcement of
judgments of U.S. courts, of civil liabilities to the extent predicated
upon the federal securities laws of the United States. Amarin Finance Limited is
an exempted company limited by shares organized under the laws of Bermuda. We
have been advised by our Bermuda attorneys that uncertainty exists as to whether
courts in Bermuda will enforce judgments obtained in other jurisdictions
(including the United States) against us or our directors or officers under the
securities laws of those jurisdictions or entertain actions in Bermuda against
us or our directors or officers under the securities laws of other
jurisdictions.
Foreign
currency fluctuations may affect our future financial results or cause us
to incur
losses.
We
prepare our financial statements in U.S. Dollars. Since our strategy
involves the development of products for the U.S. market, a significant
part of our clinical trial expenditures are denominated in U.S. Dollars and
we anticipate that the majority of our future revenues will be denominated in
U.S. Dollars. However, a significant portion of our costs are denominated
in pounds sterling, euro and shekel as a result of our being engaged in
activities in the United Kingdom, the European Union and Israel. As a
consequence, the results reported in our financial statements are potentially
subject to the impact of currency fluctuations between the U.S. Dollar on
the one hand, and pounds sterling, euro or shekel on the other hand. We are
focused on development activities and do not anticipate generating on-going
revenues in the short-term. Accordingly, we do not engage in significant
currency hedging activities in order to limit the risk of exchange rate
fluctuations. However, if we should commence commercializing any products in the
United States, changes in the relation of the U.S. Dollar to the pound
sterling, euro and/or the shekel may affect our revenues and operating margins.
In general, we could incur losses if the U.S. Dollar should become devalued
relative to pounds sterling, euro and/or the shekel.
We
do not currently have the capability to undertake manufacturing of any
potential products.
We have
not invested in manufacturing and have no manufacturing experience. We cannot
assure you that we will successfully manufacture any product we may develop,
either independently or under manufacturing arrangements, if any, with third
party manufacturers. To the extent that we enter into contractual relationships
with other companies to manufacture our products, if any, the success of those
products may depend on the success of securing and maintaining contractual
relationships with third party manufacturers (and any sub-contractors they
engage).
We
do not currently have the capability to undertake marketing, or sales of
any potential
products.
We have
not invested in marketing or product sales resources. We cannot assure you that
we will be able to acquire such resources. We cannot assure you that we will
successfully market any product we may develop, either independently or under
marketing arrangements, if any, with other companies. To the extent that we
enter into contractual relationships with other companies to market our
products, if any, the success of such products may depend on the success of
securing and maintaining such contractual relationships the efforts of those
other companies (and any sub-contractors they engage).
We
have limited personnel to oversee out-sourced clinical testing and the
regulatory approval
process.
It is
likely that we will also need to hire additional personnel skilled in the
clinical testing and regulatory compliance process if we develop additional
product candidates with commercial potential. We do not currently have the
capability to conduct clinical testing in-house and do not currently have plans
to develop such a capability. We out-source our clinical testing to contract
research organizations. We currently have a limited number of employees and
certain other outside consultants who oversee the contract research
organizations involved in clinical testing of our compounds.
We
cannot assure you that our limited oversight of the contract research
organizations
will suffice to avoid significant problems with the protocols and conduct
of the clinical trials.
We depend on contract
research organizations to conduct our pre-clinical and our clinical testing. We
have engaged and intend to continue to engage third party contract research
organizations and other third parties to help us develop our drug candidates.
Although we have
designed the clinical trials for drug candidates, the contract research
organizations will be conducting all of our clinical trials. As a result, many
important aspects of our drug development programs have been and will continue
to be outside of our direct control. In addition, the contract research
organizations may not perform all of their obligations under arrangements with
us. If the contract research organizations do not perform clinical trials in a
satisfactory manner or breach their obligations to us, the development and
commercialization of any drug candidate may be delayed or precluded. We cannot
control the amount and timing of resources these contract research organizations
devote to our programs or product candidates. The failure of any of these
contract research organizations to comply with any governmental regulations
would substantially harm our development and marketing efforts and delay or
prevent regulatory approval of our drug candidates. If we are unable to rely on
clinical data collected by others, we could be required to repeat, extend the
duration of, or increase the size of our clinical trials and this could
significantly delay commercialization and require significantly greater
expenditures.
Despite
the use of confidentiality agreements and/or proprietary rights agreements,
which themselves may be of limited effectiveness, it may be difficult for
us
to protect our trade secrets.
We rely
on trade secrets to protect technology in cases when we believe patent
protection is not appropriate or obtainable. However, trade secrets are
difficult to protect. While we require certain of our academic collaborators,
contractors and consultants to enter into confidentiality agreements, we may not
be able to adequately protect our trade secrets or other proprietary
information.
Potential
technological changes in our field of business create considerable uncertainty.
We are
engaged in the biopharmaceutical field, which is characterized by extensive
research efforts and rapid technological progress. New developments in research
are expected to continue at a rapid pace in both industry and academia. We
cannot assure you that research and discoveries by others will not render some
or all of our programs or product candidates uncompetitive or
obsolete.
Our
business strategy is based in part upon new and unproven technologies to the
development of biopharmaceutical products for the treatment of neurological and
cardiovascular disorders. We cannot assure you that unforeseen problems will not
develop with these technologies or applications or that commercially feasible
products will ultimately be developed by us.
Third-party
reimbursement and health care cost containment initiatives and treatment
guidelines
may constrain our future revenues.
Our
ability to market successfully our existing and future new products will depend
in part on the level of reimbursement that government health administration
authorities, private health coverage insurers and other organizations provide
for the cost of our products and related treatments. Countries in which our
products are sold through reimbursement schemes under national health insurance
programs frequently require that manufacturers and sellers of pharmaceutical
products obtain governmental approval of initial prices and any subsequent price
increases. In certain countries, including the United States, government-funded
and private medical care plans can exert significant indirect pressure on
prices. We may not be able to sell our products profitably if adequate prices
are not approved or reimbursement is unavailable or limited in scope.
Increasingly, third-party payers attempt to contain health care costs in ways
that are likely to impact our development of products including:
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failing
to approve or challenging the prices charged for health care
products;
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introducing
reimportation schemes from lower priced
jurisdictions;
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limiting
both coverage and the amount of reimbursement for new therapeutic
products;
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denying
or limiting coverage for products that are approved by the regulatory
agencies but are considered to be experimental or investigational by
third-party payers;
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refusing
to provide coverage when an approved product is used in a way that has not
received regulatory marketing
approval; and
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refusing
to provide coverage when an approved product is not appraised favorably by
the National Institute for Clinical Excellence in the U.K., or similar
agencies in other countries.
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We
are undergoing significant organizational change. Failure to manage disruption
to the
business or the loss of key personnel could have an adverse effect on our
business.
We are
making significant changes to both our management structure and the locations
from which we operate. As a result of this, in the short term, morale may be
lowered and key employees may decide to leave, or may be distracted from their
usual role. This could result in delays in development projects, failure to
achieve managerial targets or other disruption to the business which could have
material adverse affects on our business and results of operations.
Item 4 Information
on the Company
A. History
and Development of the Company
Amarin
Corporation plc (formerly Ethical Holdings plc) is a public limited company with
its primary stock market listing in the U.S. on the NASDAQ Capital Market
and secondary listings in the U.K. and Ireland on AIM and IEX, respectively.
Amarin was originally 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.
Our
registered office is located at 110 Cannon Street, London, EC4N 6AR, England.
Our principal executive offices are located at First Floor, Block 3, The Oval,
Shelbourne Road, Ballsbridge, Dublin 4, Ireland and our telephone number is
+353-1-6699010. The directors are responsible for the maintenance and integrity
of our website, www.amarincorp.com. Our principal research and development
facilities are located in Oxford, England.
In the
period from late 2003 through 2004, we executed a comprehensive restructuring of
our operations. In 2003, we disposed of our drug delivery business to Watson. In
2004, we sold our U.S. sales and marketing subsidiary and the majority of
our U.S. operations to Valeant and acquired the entire issued share capital
of Laxdale, a research and development based neuroscience company, with
particular expertise in lipid science.
During
2007, we initiated a cardiovascular development program, leveraging our
proprietary expertise and intellectual property in lipid science to target
billion dollar market opportunities such as dyslipidemia. We also focused on
expanding and strengthening our research and development management team. In
April 2007, we appointed Dr. Declan Doogan to the newly-created position of Head
of Research and Development. Dr. Doogan was previously Senior Vice President and
Head of Worldwide Development at Pfizer Global Research and Development. Since
joining Amarin, Dr. Doogan has been instrumental in transforming our research
and development organization and streamlining development activities from
translational research through clinical operations. Other recent
additions to our management team include Dr. Keith Wood, a thirty year industry
veteran as Head of Research and Development Operations and Stuart Sedlack
(formerly Global Head of Negotiations for a business unit of Novartis Pharma AG)
as Executive Vice President, Corporate Development.
In 2006
and 2007 we expanded our CNS pipeline through the acquisition of a global
license to a novel sublingual apomorphine for patients with advanced
Parkinson’s disease, a novel nasal formulation of lorazepam for the
out-patient treatment of emergency seizures in epilepsy patients and the
addition of EN101 for myasthenia gravis via the acquisition of Ester
Neurosciences Limited.
With
respect to our Huntington’s disease program, in late 2007 we met with the FDA
following the completion of a comprehensive analysis of the 12-month data from
the U.S. Phase III trial of AMR101 in HD showing a statistically significant
benefit with AMR101 over longer periods of treatment. The FDA indicated
that one additional Phase III trial demonstrating robust results, in conjunction
with the confirmatory evidence from the existing clinical data, may be
sufficient clinical data to support a New Drug Application. We are also in
discussions with EMEA.
On
December, 19, 2007, Mr. Thomas Lynch was appointed Chief Executive Officer
following the resignation of Mr. Richard Stewart. Mr.
Lynch joined us in January 2000 as Chairman of the Board. Between 1993 and 2004,
Mr. Lynch was with Elan Corporation plc where he held a number of positions
including Chief Financial Officer and Executive Vice Chairman. Also on December
19, 2007, Mr. Alan Cooke was appointed to the position of President and Chief
Operating Officer.
In the
period from late 2004 to late 2007, we completed a series of financings raising
aggregate gross proceeds of approximately $96.7 million, including
$18.5 million from our directors and officers.
Our
Business
We are
committed to improving the lives of patients suffering from central nervous
system and cardiovascular diseases. Our goal is to be a leader in the research,
development and commercialization of novel drugs that address unmet patient
needs.
Our
recently initiated cardiovascular program capitalizes on the known therapeutic
benefits of essential fatty acids in cardiovascular disease. Our CNS development
pipeline includes programs in myasthenia gravis, Huntington’s disease,
Parkinson’s disease, epilepsy and memory. We also have two proprietary
technology platforms: a lipid-based technology platform for the targeted
transport of molecules through the liver and/or to the brain, and a unique mRNA
technology based on cholinergic neuromodulation.
The
following table summarizes the status of our development pipeline:
AMR101
AMR101 is
a semi-synthetic, highly purified (greater than 96%) derivative of
(all-cis)-5,8,11,14,17-eicosapentaenoic acid (“ethyl-EPA”). It is a long chain
highly unsaturated fatty acid (often written in short as 20:5n-3 or 20: ω3).
AMR101
and Derivatives for Cardiovascular Disease
We have
initiated a cardiovascular development strategy to capitalize on the known
therapeutic benefits of unsaturated fatty acids in cardiovascular disease. We
plan to utilize our extensive know-how and experience in lipid science to
develop and advance these programs.
We are
planning to commence a series of clinical trials with AMR101 (ultra-pure
ethyl-EPA) in dyslipidemia, particularly the treatment of high triglycerides and
the evaluation of the effect of the co-administration and co-formulation of
AMR101 with other cardiovascular medications.
In excess
of two million patients in Japan have been prescribed ultra-pure EPA for the
treatment of high triglyceride levels (a component of dyslipidemia) since its
approval. The safety profile of ultra-pure EPA is very
good, especially in comparison to other triglyceride lowering agents such as
fibrates, statins and niacin.
We
believe that proof of concept with AMR101 in cardiovascular disease can be
established relatively quickly and inexpensively as efficacy is measured by well
defined biochemical endpoints. This would enable rapid progress of effective
compounds into the final stages of development.
In
addition, we intend to commence investigation of new compounds from our existing
development portfolio for the treatment of dyslipidemia and potentially other
cardiovascular related diseases.
AMR101
Clinical Development for HD
HD is
inherited as an autosomal dominant disease that gives rise to progressive,
selective (localized) neural cell death associated with choreic movements and
dementia. On April 24, 2007, we announced top line results from two Phase III
studies with AMR101 in HD. Study data showed no statistically significant
difference in either study between AMR101 and placebo with regard to the primary
and secondary endpoints at 6 months of treatment. These top-line
findings were inconsistent with data from an earlier 12-month 135 patient
clinical trial.
However,
on November 19, 2007, Amarin announced that analysis of a comprehensive review
of the 12-month data from the U.S. Phase III study showed a statistically
significant difference in TMS-4 between the long term AMR101 group (12-month
treatment) and those patients who had switched to AMR101 at
6-months.
In
November 2007, we met with the FDA following the completion of the comprehensive
review of all clinical data for AMR101 in HD. The FDA indicated that one
additional Phase III trial demonstrating robust results, in conjunction with the
confirmatory evidence from the existing clinical data, may be sufficient
clinical data to support a New Drug Application.
We have
also submitted the comprehensive review of all clinical data for AMR101 in HD to
EMEA and discussions are ongoing regarding next steps.
EN101
EN101 is
an orally available antisense oligonucleotide, specifically targeting the
“read-through” or “R” isoform (“AChE-R”) of acetylcholinesterase (“AChE”). The
molecule suppresses the production of the AChE-R protein without the negative
cholinergic effects currently observed with conventional
inhibitors.
Myasthenia
gravis, a debilitating neuromuscular disease, is the first target indication for
which EN101 is undergoing clinical development. A Phase Ib clinical
trial was conducted by Ester in 2002 to assess the safety, efficacy and
pharmacokinetics of oral EN101 in MG patients. In 2004, Ester commenced a Phase
IIa dose finding study in MG patients. Interim analysis from this study was
announced in May 2007. Based on the results of the Phase IIa interim analysis,
and the results of the Phase Ib study, EN101 appears to have a more favorable
safety and efficacy profile, as well as a more favorable dosing regimen compared
to the current standard of care, Mestinon (pyridostigmine).
We plan
to complete the Phase IIa study and other non-clinical studies before
progressing to a larger clinical study.
Sublingual
Apomorphine for Parkinson’s Disease
Our novel
sublingual (under the tongue) formulation of Apomorphine aims to achieve rapid
absorption directly into the bloodstream after sublingual administration.
Apomorphine is a particularly effective for the treatment of “off” episodes in
Parkinson’s disease patients. This novel formulation would offer patients
a more user friendly alternative to the currently available injectable
formulation of Apomorphine and we believe, could result in higher rates of
utilization.
The oral
bioavailability of our novel sublingual formulation had initially been
demonstrated by us in a proof of concept study in human volunteers, while also
showing it to being well tolerated. We subsequently progressed it through
further Phase I pharmacokinetic studies and the lead formulation has now been
selected for optimization in a final pharmacokinetic study.
Nasal
Lorazepam
Our
novel, nasal formulation of lorazepam is in development for the out-patient
treatment of emergency seizures in epilepsy patients. The only treatment
currently approved by the FDA for seizure emergencies in the out-patient setting
is a rectal gel formulation of the drug diazepam. Diazepam gel’s use is limited
by its rectal route of administration.
In early
2008, we announced the successful completion of an initial pre-clinical proof of
concept study with the novel formulation. The data generated supports its
further development as an out-patient treatment of emergency
seizures.
AMR101
for AAMI
Following
on from positive preclinical results with AMR101 in memory and cognition, in
January 2008 we commenced a Phase IIa trial with AMR101 in Age Associated Memory
Impairment (“AAMI”). The trial - randomized, double-blinded, and
placebo-controlled - will enrol 96 patient volunteers with AAMI. Three dose
strengths of AMR101 (1g, 2g, 4g) will be tested versus placebo using a
computer-derived cognitive batch of tests. Initial results from the study are
anticipated in the second half of 2008.
Targeted
Lipid Transport Technology (“TLT”) Platform (previously Combinatorial
Lipids)
We have
researched and patented how to use different types of chemical linkage to attach
a range of bioactive lipids either to other lipids or other drugs. The results
are novel single chemical entities with predictable properties, potentially
offering substantial and clinically relevant advantages over either compound
alone.
This
technology has application across a broad range of therapeutic areas including
CNS, cardiovascular, gastrointestinal and oncology. AMR103, a novel form of
levodopa in pre-clinical development for Parkinson's disease, is our lead
candidate utilizing this technology.
Cholinergic
Modulation and Inflammation
Ester,
which was acquired by us in December 2007, also has a platform messenger RNA
(“mRNA”) silencing technology based on novel and proprietary discoveries in the
field of AChE, developed by Professor Hermona Soreq of the Hebrew University of
Jerusalem.
Ester’s
technology platform exhibits anti-inflammatory effects, including an indirect
inhibitory effect on key pro-inflammatory cytokines via modulation of AChE-R, as
well as a direct anti-inflammatory effect via modulation of macrophage activity
mediated by interaction with the toll-like receptor or TLR signalling
pathway.
Our
Marketing Partners
AMR101
for HD has been partnered in the major E.U. markets with Scil Biomedical GmbH,
Juste S.A.Q.F. and Archimedes Pharma Ltd.
Additionally,
we are party to a license agreement dated July 21, 2003 with a marketing
partner in Japan to develop, use, offer to sell, sell and distribute products in
Japan utilizing certain of our intellectual property in the pharmaceutical
fields of HD, depression, schizophrenia, dementia and certain less significant
indications (by patient population) including the ataxias, for a period of
10 years from the date of first commercial sale or, if later, until patent
protection expires.
In
December 2005, Amarin Neuroscience entered into a worldwide exclusive license
with Multicell Technologies, Inc. (“Multicell”) pursuant to which Amarin
Neuroscience licensed the worldwide rights for MCT-125 to Multicell in return
for a series of development based milestones and a royalty on net sales.
Multicell is obliged to use reasonable good faith efforts to develop and
commercialize MCT-125. Multicell is currently planning a Phase IIb trial
with MCT-125 in the treatment of fatigue in patients suffering from
MS.
The
Financial Year
We had no
revenues in 2007. Our consolidated revenues in 2006 comprise milestone payments
received from Multicell and were derived from the licensing of exclusive,
worldwide rights to Multicell for MCT-125 (formerly LAX-202).
For the
year ended December 31, 2006, all revenues originated in the United
Kingdom. No revenues were generated from licensing, development or contract
manufacturing fees.
At
present all of our products are in the development stage and we therefore have
no products that can be marketed.
Competition
In
pursuing our strategy of acquiring marketable and/or development stage neurology
products, we expect to compete with other pharmaceutical companies for product
and product line acquisitions, and more broadly for the distribution and
marketing of pharmaceutical and consumer products. These anticipated competitors
include companies which may also seek to acquire branded or development stage
pharmaceutical products and product lines from other pharmaceutical companies.
Most of our potential competitors will likely possess substantially greater
financial, technical, marketing and other resources. In addition, we will
compete for supplier manufacturing capacity with other companies, including
those whose products are competing with ours. Additionally, our future products
may be subject to competition from products with similar qualities. See
Item 3 “Key Information — Risk Factors — Our future products may
not be able to compete effectively against those of our
competitors.”
Government
Regulation
Any
product development activities relative to AMR101 or products that we may
develop or acquire in the future will be subject to extensive regulation by
various government authorities, including the FDA and comparable regulatory
authorities in other countries, which regulate the design, research, clinical
and non-clinical development, testing, manufacturing, storage, distribution,
import, export, labeling, advertising and marketing of pharmaceutical products
and devices. Generally, before a new drug can be sold, considerable data
demonstrating its quality, safety and efficacy must be obtained, organized into
a format specific to each regulatory authority, submitted for review and
approved by the regulatory authority. The data are generated in two distinct
development stages: pre-clinical and clinical. For new chemical entities, the
pre-clinical development stage generally involves synthesizing the active
component, developing the formulation and determining the manufacturing process,
as well as carrying out non-human toxicology, pharmacology and drug metabolism
studies which support subsequent clinical testing. Good laboratory practice
requirements must be followed in order for the resulting data to be considered
valid and reliable. For established molecules this stage can be limited to
formulation and manufacturing process development and in vitro studies to
support subsequent clinical evaluation.
The
clinical stage of development can generally be divided into Phase I,
Phase II and Phase III clinical trials. In Phase I, generally, a
small number of healthy volunteers are initially exposed to a single dose and
then multiple doses of the product candidate. The primary purpose of these
studies is to assess the metabolism, pharmacologic action, side effect
tolerability and safety of the drug. Studies in volunteers are
also
undertaken to begin assessing the pharmacokinetics of the drug (e.g. the way in
which the body deals with the compound from absorption, to distribution in
tissues, to elimination).
Phase II
trials typically involve studies in disease-affected patients to determine the
dose required to produce the desired benefits. At the same time, safety and
further pharmacokinetic and pharmacodynamic information is collected.
Phase III trials generally involve large numbers of patients from a number
of different sites, which may be in one country or in several different
countries or continents. Such trials are designed to provide the pivotal data
necessary to establish the effectiveness of the product for its intended use,
and its safety in use, and typically include comparisons with placebo and/or
other comparator treatments. The duration of treatment is often extended to
mimic the actual use of a product during marketing.
Prior to
the start of human clinical studies of a new drug in the United States or,
generally, for submission in support of a U.S. marketing application, an
investigational new drug application, or IND, is filed with the FDA. Similar
notifications are required in other countries. The amount of data that must be
supplied in the IND application depends on the phase of the study. Earlier
investigations, such as Phase I studies, typically require less data than
the larger and longer-term studies in Phase III. A clinical plan must be
submitted to the FDA prior to commencement of a clinical trial. In general,
studies may begin in the U.S. without specific approval by the FDA 30-days
after submission of the IND. However, the FDA may prevent studies from moving
forward, and may suspend or terminate studies once initiated. Regular reporting
of study progress and adverse experiences is required. During the testing
phases, meetings can be held with the FDA to discuss progress and future
requirements for the NDA. Studies are also subject to review by independent
institutional review boards responsible for overseeing studies at particular
sites and protecting human research study subjects. An independent institutional
review board may prevent a study from beginning or suspend or terminate a study
once initiated. Studies must also be conducted and monitored in accordance with
good clinical practice and other requirements.
Following
the completion of clinical trials, the data must be thoroughly analyzed to
determine if the clinical trials successfully demonstrate safety and efficacy.
If they do the data can be filed with the FDA in an NDA along with proposed
labeling for the product and information about the manufacturing and testing
processes and facilities that will be used to ensure product quality. In the US,
FDA approval of an NDA must be obtained before marketing a developed product.
The NDA must contain proof of safety, purity, potency and efficacy, which
entails extensive pre-clinical and clinical testing.
Although
the type of testing and studies required by the FDA do not differ significantly
from those of other countries, the amount of detail required by the FDA can be
more extensive. In addition, it is likely that the FDA will re-analyze the
clinical data, which could result in extensive discussions between us and the
licensing authority during the review process. The processing of applications by
the FDA is extensive and time consuming and may take several years to complete.
The FDA’s goal generally is to review and make a recommendation for approval of
a new drug within ten months, and of a new “priority” drug within six months,
although final FDA action on the NDA can take substantially longer, may entail
requests for new data and/or data analysis, and may involve review and
recommendations by an independent FDA advisory committee. The FDA may conduct a
pre-approval inspection of the manufacturing facilities for the new product to
determine whether they comply with current good manufacturing practice
requirements, and may also audit data from clinical and pre-clinical
trials.
There is
no assurance that the FDA will act favorably or quickly in making such reviews
and significant difficulties or costs may be encountered by the Group in its
efforts to obtain FDA approvals. The FDA may also require post-marketing testing
and surveillance to monitor the effects of approved products or it may place
conditions on approvals including potential requirements or risk management
plans that could restrict the commercial promotion, distribution, prescription
or dispensing of products. Product approvals may be withdrawn if compliance with
regulatory standards is not maintained or if problems occur following initial
marketing.
In the
European Union, our future products may also be subject to extensive regulatory
requirements. As in the U.S., the marketing of medicinal products has for many
years been subject to the granting of marketing
authorizations by regulatory agencies. Particular emphasis is also being placed
on more sophisticated and faster procedures for reporting of adverse events to
the competent authorities.
In common
with the U.S., the various phases of pre-clinical and clinical research are
subject to significant regulatory controls. Although the regulatory controls on
clinical research are currently undergoing a harmonization process following the
adoption of the Clinical Trials Directive 2001/20/EC, there are currently
significant variations in the member state regimes. However, all member states
currently require independent institutional review board approval of
interventional clinical trials. With the exception of U.K. Phase 1 studies
in healthy volunteers, all clinical trials require either prior governmental
notification or approval. Most regulators also require the submission of adverse
event reports during a study and a copy of the final study report.
In the
European Union, approval of new medicinal products can be obtained through one
of three processes. The first such process is known as the mutual recognition
procedure. An applicant submits an application in one European Union member
state, known as the reference member state. Once the reference member state has
granted the marketing authorization, the applicant may choose to submit
applications in other concerned member states, requesting them to mutually
recognize the marketing authorizations already granted. Under this mutual
recognition process, authorities in other concerned member states have
55 days to raise objections, which must then be resolved by discussions
among the concerned member states, the reference member state and the applicant
within 90 days of the commencement of the mutual recognition procedure. If
any disagreement remains, all considerations by authorities in the concerned
member states are suspended and the disagreement is resolved through an
arbitration process. The mutual recognition procedure results in separate
national marketing authorizations in the reference member state and each
concerned member state.
The
second procedure in the European Union for obtaining approval of new medicinal
products is known as the centralized procedure. This procedure is currently
mandatory for products developed by means of a biotechnological process and
optional for new active substances and other “innovative medicinal products with
novel characteristics.” Under this procedure, an application is submitted to the
European Agency for the Evaluation of Medical Products. Two European Union
member states are appointed to conduct an initial evaluation of each
application. These countries each prepare an assessment report, which reports
are then used as the basis of a scientific opinion of the Committee on
Proprietary Medical Products. If this opinion is favorable, it is sent to the
European Commission which drafts a decision. After consulting with the member
states, the European Commission adopts a decision and grants a marketing
authorization, which is valid throughout the European Union and confers the same
rights and obligations in each of the member states as a marketing authorization
granted by that member state.
The
third, and most recently introduced procedure in the European Union, is known as
the decentralized procedure. This is similar to the mutual recognition procedure
described above, but with some differences: notably in the time key documents
are provided to concerned member states by the reference member state, the
overall timing of the procedure and the possibility of “clock stops” during the
procedure.
The
European Union is currently expanding, with a number of Eastern European
countries joining recently and expected to join over the coming years. Several
other European countries outside the European Union, particularly those
intending to accede to the European Union, accept European Union review and
approval as a basis for their own national approval.
Following
approval of a new product, a pharmaceutical company generally must engage in
various monitoring activities and continue to submit periodic and other reports
to the applicable regulatory agencies, including any cases of adverse events and
appropriate quality control records. Modifications or enhancements to the
products or labeling, or changes of site of manufacture are often subject to the
approval of the FDA and other regulators, which may or may not be received or
may result in a lengthy review process.
Prescription
drug advertising and promotion is subject to federal, state and foreign
regulations. In the U.S., the FDA regulates all company and prescription drug
product promotion, including direct-to-consumer
advertising. Promotional materials for prescription drug products must be
submitted to the FDA in conjunction with their first use. Use of volatile
materials may lead to FDA enforcement actions. Any distribution of prescription
drug products and pharmaceutical samples must comply with the
U.S. Prescription Drug Marketing Act, or the PDMA, a part of the
U.S. Federal Food, Drug, and Cosmetic Act.
In the
U.S., once a product is approved its manufacture is subject to comprehensive and
continuing regulation by the FDA. The FDA regulations require that products be
manufactured in specific approved facilities and in accordance with current good
manufacturing practices, and NDA holders must list their products and register
their manufacturing establishments with the FDA. These regulations also impose
certain organizational, procedural and documentation requirements with respect
to manufacturing and quality assurance activities. NDA holders using contract
manufacturers, laboratories or packagers are responsible for the selection and
monitoring of qualified firms. These firms are subject to inspections by the FDA
at any time, and the discovery of violative conditions could result in
enforcement actions that interrupt the operation of any such facilities or the
ability to distribute products manufactured, processed or tested by
them.
The
distribution of pharmaceutical products is subject to additional requirements
under the PDMA and equivalent laws and regulations in other jurisdictions. For
instance, states are permitted to require registration of distributors who
provide products within their state despite having no place of business within
the state. The PDMA also imposes extensive record-keeping, licensing, storage
and security requirements intended to prevent the unauthorized sale of
pharmaceutical products.
Manufacturing,
sales, promotion, and other activities following product approval are also
subject to regulation by numerous regulatory authorities in addition to the FDA,
including, in the U.S., the Centers for Medicare & Medicaid Services,
other divisions of the Department of Health and Human Services, the Drug
Enforcement Administration, the Consumer Product Safety Commission, the Federal
Trade Commission, and state and local governments. Sales, marketing and
scientific/educational programs must also comply with the
U.S. Medicare-Medicaid Anti-Fraud and Abuse Act and similar state laws.
Pricing and rebate programs must comply with the Medicaid rebate requirements of
the U.S. Omnibus Budget Reconciliation Act of 1990. If products are made
available to authorized users of the Federal Supply Schedule of the General
Services Administration, additional laws and requirements apply. The handling of
any controlled substances must comply with the U.S. Controlled Substances
Act and Controlled Substances Import and Export Act. Products must meet
applicable child-resistant packaging requirements under the U.S. Poison
Prevention Packaging Act. Manufacturing, sales, promotion and other activities
are also potentially subject to federal and state consumer protection and unfair
competition laws.
The
failure to comply with regulatory requirements subjects firms to possible legal
or regulatory action. Depending on the circumstances, failure to meet applicable
regulatory requirements can result in criminal prosecution, fines or other
penalties, injunctions, recall or seizure of products, total or partial
suspension of production, denial or withdrawal of product approvals, or refusal
to allow a firm to enter into supply contracts, including government contracts.
In addition, even if a firm complies with FDA and other requirements, new
information regarding the safety or effectiveness of a product could lead the
FDA to modify or withdraw a product approval. Prohibitions or restrictions on
sales or withdrawal of future products marketed by us could materially affect
our business in an adverse way.
Changes
in regulations or statutes or the interpretation of existing regulations could
impact our business in the future by requiring, for example:
·
|
changes
to our manufacturing arrangements;
|
·
|
additions
or modifications to product
labeling;
|
·
|
the
recall or discontinuation of our
products; or
|
·
|
additional
record-keeping requirements.
|
If any
such changes were to be imposed, they could adversely affect the operation of
our business.
Manufacturing
and Supply
Amarin
Neuroscience Limited is currently responsible for the supply of the clinical
supplies of AMR101, through its sub-contractors, and will be responsible for the
commercial manufacturing and supply of AMR101 should the FDA approve this
compound. All supplies of the bulk compound (ethyl-EPA), which constitutes the
only pharmaceutically active ingredient of AMR101, are currently purchased from
Nisshin Pharma, Inc., a currently qualified manufacturer, pursuant to a supply
agreement whereby the supply is at a fixed price. The main raw material that
constitutes ethyl-EPA is a naturally occurring substance which is sourced from
marine life. The manufacturing processes that are applied by Nisshin to such raw
material are proprietary to Nisshin and produce a pharmaceutical grade compound
at a level of purity of at least 95%. We are aware that certain other
manufacturers have the ability to produce ethyl-EPA to a similar level of
purity.
Patents
and Proprietary Technology
We
believe that patent protection of our technologies, processes and products is
important to our future operations. The success of our products may depend, in
part, upon our ability to obtain strong patent protection. There can however be
no assurance that:
•
|
any
additional patents will be issued for AMR101 or any other or future
products in any or all appropriate
jurisdictions;
|
•
|
any
patents that we or our licensees may obtain will not be successfully
challenged in the future;
|
•
|
our
technologies, processes or products will not infringe upon the patents of
third parties; or
|
•
|
the
scope of any patents will be sufficient to prevent third parties from
developing similar products.
|
When
deemed appropriate, we intend to vigorously enforce our patent protection and
intellectual property rights.
Our
strategy is to file patent applications where we think it is appropriate to
protect and preserve the proprietary technology and inventions considered
significant to our business. We have patents covering our various compounds and
their uses. These include use patents issued for the method of treating a number
of CNS and cardiovascular disorders with highly pure forms of EPA and
composition of matter patents relating to potential second generation technology
platforms. We will also rely upon trade secrets and know-how to retain our
competitive position. We will file patent applications either on a
country-by-country basis or by using the European or international patent
cooperation treaty systems. The existence of a patent in a country may provide
competitive advantages to us when seeking licensees in that country. In general,
patents granted in most European countries have a twenty-year term, although in
certain circumstances the term can be extended by supplementary protection
certificates. We may be dependent in some cases upon third party licensors to
pursue filing, prosecution and maintenance of patent rights or applications
owned or controlled by those parties.
It is
possible that third parties will obtain patents or other proprietary rights that
might be necessary or useful to us. In cases where third parties are first to
invent a particular product or technology, it is possible that those parties
will obtain patents that will be sufficiently broad so as to prevent us from
utilizing such technology. In addition, we may use unpatented proprietary
technology, in which case there would be no assurance that others would not
develop similar technology. See Item 3 “Key Information — Risk
Factors — We will be dependent on patents, proprietary rights and
confidentiality, and — Potential technological changes in our field of business
create considerable uncertainty”.
C. Organizational
Structure
At
December 31, 2007, we had the following subsidiary undertakings:
Subsidiary
Name
|
Country
of Incorporation or Registration
|
|
Proportion
of
Ownership Interest
and Voting Power
Held
|
Amarin
Neuroscience
Limited
|
Scotland
|
|
100%
|
Amarin
Pharmaceuticals Ireland
Limited
|
Ireland
|
|
100%
|
Amarin
Finance
Limited
|
Bermuda
|
|
100%
|
Ester
Neurosciences
Limited
|
Israel
|
|
100%
|
D. Property,
Plant and Equipment
The
following table lists the location, use and ownership interest of our principal
properties as of May 19, 2008:
Location
|
Use
|
|
Ownership
|
|
Size
(sq. ft.)
|
Ely,
Cambridgeshire, England
Ground
Floor
|
Offices
|
|
Leased
and sub-let
|
|
7,135
|
First
Floor
|
Offices
|
|
Leased
and sub-let
|
|
2,800
|
Godmanchester,
Cambridgeshire,
England
|
Offices
|
|
Leased
and sub-let
|
|
7,000
|
London,
England
|
Offices
|
|
Leased
|
|
2,830
|
Oxford,
England
|
Offices
|
|
Leased
|
|
3,000
|
Dublin,
Ireland
|
Offices
|
|
Leased
|
|
3,251
|
We
vacated the premises in Ely, Cambridgeshire in July 2001 and have sub-let the
lease for this space. We have sub-let the lease in Godmanchester to Phytopharm
plc who occupy the premises on a “held over” basis under the terms of a lease,
the term of which expired in January 2002.
On
April 27, 2001, we signed a lease covering approximately 2,830 square
feet of office space located at 7 Curzon Street, London, Mayfair, W1J 5HG,
England. This lease expires in March 2010.
On
July 4, 2006, we signed a lease covering approximately 3,000 square
feet of office space located at 1st Floor, Magdalen Centre North, Oxford
Science Park, Oxford, OX4 4GA, England. This lease expires in July
2009.
On
January 22, 2007, we signed a lease covering approximately
3,251 square feet of office space located at 1st
Floor, Block 3, The Oval, Shelbourne Road, Dublin 4, Ireland. This lease expires
December 2026 and can be terminated in 2012.
We have
no manufacturing capacity at any of the above properties.
Item 4A Unresolved
Staff Comments
None.
Item 5 Operating
and Financial Review and Prospects
A. Operating
Results
The following discussion of
operating results should be read in conjunction with our selected financial information set
forth in Item 3 “Key Information — Selected Financial Data” and our
consolidated financial statements and notes thereto beginning on page F-1 of this
annual report.
Comparison
of Fiscal Years Ended December 31, 2007 and December 31,
2006
Overview
We have
undergone significant change over the last two years, including the initiation
of a cardiovascular development program and the completion of a number of
acquisitions in the CNS area.
During
2007, we initiated a cardiovascular development program leveraging our
proprietary expertise and intellectual property in lipid science to target
billion dollar market opportunities such as dyslipidemia. We also focused on
expanding and strengthening our research and development management team. In
April 2007, we appointed Dr. Declan Doogan to the newly-created position of Head
of Research and Development. Dr. Doogan was Senior Vice President and Head of
Worldwide Development at Pfizer Global Research and Development. Since joining
Amarin, Dr. Doogan has been instrumental in transforming our research and
development organization and streamlining development activities from
translational research through clinical operations. Other recent additions to
our management team include Dr. Keith Wood, a thirty year industry veteran as
Head of Research and Development Operations and Stuart Sedlack, (formerly Global
Head of Negotiations for a business unit of Novartis Pharma AG), as Executive
Vice President, Corporate Development.
In 2007
and 2006 we expanded our CNS pipeline through the acquisition of a global
license to a novel sublingual apomorphine for the treatment of “off” episodes in
patients with advanced Parkinson’s disease, a novel nasal formulation of
lorazepam for the out-patient treatment of emergency seizures in epilepsy
patients and the acquisition of Ester Neurosciences Limited. Ester’s lead
product, EN101, an AChE-R mRNA inhibitor, currently in Phase IIa clinical
development, represents an important therapeutic approach to treat myasthenia
gravis, a debilitating neuromuscular disease. An interim analysis of this Phase
IIa study suggests EN101 may have superior efficacy, longer duration of action,
and a more favorable side effect profile and dosing regimen, as compared with
current first line treatment. The acquisition also provides Amarin with access
to a platform messenger RNA (mRNA) silencing technology which targets the
cholinergic pathway, and a promising preclinical program in neurodegeneration
and inflammation.
With
respect to our HD program, in late 2007, we met with the FDA following the
completion of a comprehensive analysis of the 12-month data from the U.S. Phase
III trial of AMR101 in Huntington’s disease showing a statistically significant
benefit with AMR101 over longer periods of treatment. The FDA indicated that one
additional Phase III trial demonstrating robust results, in conjunction with the
confirmatory evidence from the existing clinical data, may be sufficient
clinical data to support a New Drug Application. This positive analysis followed
the disappointing results announced in April 2007, which showed no difference
between AMR101 and placebo after six months of treatment. We are also in
discussions with EMEA.
On
December, 19, 2007, Mr. Thomas Lynch was appointed Chief Executive Officer
following the resignation of Mr. Richard Stewart. Mr. Lynch joined us in
January 2000 as Chairman of the Board. Between 1993 and 2004, Mr. Lynch was with
Elan Corporation plc where he held a number of positions including Chief
Financial Officer and Executive Vice Chairman. Also on December 19,
2007, Mr. Alan Cooke was appointed to the position of President and Chief
Operating Officer.
Revenue
We
recorded no revenue in 2007. During 2006, we earned milestone revenue of
$0.5 million under a license agreement signed with Multicell in 2005,
pursuant to which we granted the exclusive, worldwide rights to LAX-202 (renamed
MCT-125) for the treatment of fatigue in patients suffering from multiple
sclerosis.
Research
and Development
The U.S.
and E.U. AMR101 trials into Huntington’s disease were completed in the first
quarter of 2007 with final data available in November 2007. Research and
development expense decreased by $3.0 million to $12.1 million compared to
2006’s research and development expense of $15.1 million. The completion of the
AMR101 trials into Huntington’s disease was the primary reason for the fall in
research and development expense in 2007. The decrease in research and
development expense was partly offset by costs incurred on our two Parkinson’s
disease programs, our epilepsy and memory programs and the initiation of our new
cardiovascular program.
General
and Administrative
General
and administrative expenses were $28.6 million in 2007 compared with
$13.5 million in 2006, an increase of $15.1 million. The increase in
general and administrative expenses over 2006 is mainly due to the $8.8 million
impairment of intangible assets, an increase in share based compensation
expenses of $2.8 million, reorganization costs associated with the departure of
our former chief executive officer and the planned vacation of our offices in
London, increased personnel costs and the significant level of business
development activities during the year.
Finance
income
Finance
income for 2007 was $1.9 million compared to $3.3 million for 2006.
The 2007 finance income comprises interest and similar income of
$1.3 million which was earned from cash balances held on deposit. We hold
cash denominated in pounds sterling, U.S. Dollars and euro. In 2007, a gain
of $0.6 million was recorded from holding pounds sterling and euro as the
U.S. Dollar weakened relative to both currencies, compared to a $2.0
million gain in 2006. We manage foreign exchange risk by holding our cash in the
currencies in which we expect to incur future cash outflows.
Finance
costs
Finance
costs for 2007 were $0.2 million compared to $2.8 million for 2006.
Finance costs in 2007 relate to the fair value of interest expense on the
convertible debentures issued in December 2007. Finance costs for 2006 relate to
the future investment right which was granted under the May 2005 financing. The
future investment right was settled in March 2006. A charge of approximately
$2.8 million was recorded in 2006, being the movement in the fair value of the
future investment right from January 1, 2006 to March 15, 2006.
Taxation
A
research and development tax credit of $0.8 million was recognized in the
year ended December 31, 2007. An amount of $0.8 million was also recognized
in 2006. Under U.K. tax law, qualifying companies can surrender part of their
tax losses in return for a cash refund.
Critical
Accounting Policies
Our
significant accounting policies are described in Note 2 to the consolidated
financial statements beginning on page F-1 of this annual report. Our
consolidated financial statements are presented in accordance with IFRS as
adopted by the E.U. and as issued by the IASB. All professional accounting
standards effective as of December 31, 2007 have been taken into
consideration in preparing the consolidated financial statements. These
accounting principles require us to make certain estimates, judgments and
assumptions. We believe that the estimates, judgments and assumptions upon which
we rely are reasonable based upon information available to us at the time these
estimates, judgments and assumptions are made. These estimates, judgments and
assumptions can affect the reported amounts of assets and liabilities as of the
date of our consolidated financial statements, as well as the reported amounts
of revenues and expenses during the periods presented. To the extent there are
material differences between these estimates, judgments or assumptions and
actual results, our financial statements will be affected. The significant
accounting policies that we believe are the most critical to aid in fully
understanding and evaluating our reported financial results include the
following:
|
•
|
intangible
assets and research and development
expenditure;
|
Intangible
assets and research and development expenditure
In-process
research and development
Acquired
in-process research and development (“IPR&D”) is stated at cost less
accumulated amortization and impairments. Acquired IPR&D arising on
acquisitions is capitalized and amortized on a straight-line basis over its
estimated useful economic life. The useful economic life commences upon
generation of economic benefits relating to the acquired IPR&D.
Capitalization
policy
Costs
incurred on development projects (relating to the design and testing of new or
improved products) are recognized as intangible assets when the following
criteria are fulfilled: completing the asset so it will be available for use or
sale is technically feasible; management intends to complete the intangible
asset and use or sell it; an ability to use or sell the intangible asset; it can
be demonstrated how the intangible asset will generate probable future economic
benefits; adequate technical; financial and other resources to complete the
development and to use or sell the intangible asset are available; and the
expenditure attributable to the intangible asset during its development can be
reliably measured. To date, development expenditures have not met the criteria
for recognition of an internally generated intangible asset.
Intangible
assets not yet available for use are not subject to amortization but are tested
for impairment at least annually. An impairment loss is recognized if the
carrying amount of an asset exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in
use. Value in use is calculated by discounting the expected future cash flows
obtainable as a result of the asset’s continued use.
Research
and development expenditure
On an
ongoing basis the Group undertakes research and development, including clinical
trials to establish and provide evidence of product efficacy. Clinical trial
costs are expensed to the income statement on a systematic basis over the
estimated life of trials to ensure the costs charged reflect the research and
development activity performed. To date, all research and development costs have
been written off as incurred and are included within operating expenses, as
disclosed in Note 6. Research and development costs include staff costs,
professional and contractor fees, inventory, and external services.
Foreign
currency
Functional
and presentation currencies
Items
included in the financial statements of each of the Group’s entities are
measured using the currency of the primary economic environment in which the
entity operates (“the functional currency”). The Consolidated Financial
Statements are presented in U.S. Dollars, which is the Company’s functional and
presentation currency.
Transactions
and balances
Transactions
in foreign currencies are recorded at the exchange rate prevailing at the date
of the transaction. The resulting monetary assets and liabilities are
translated into the appropriate functional currency at exchange rates prevailing
at the balance sheet date and the resulting gains and losses are recognized in
the income statement. Foreign exchange gains and losses resulting from the
settlement of such transactions are recognized in the income
statement.
Group
companies
The
results and financial position of all the Group entities (none of which has the
currency of a hyper-inflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation
currency as follows:
(i)
|
assets
and liabilities for each balance sheet presented are translated at the
closing rate at the date of that balance
sheet;
|
(ii)
|
income
and expenses for each income statement are translated at average exchange
rates (unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in
which case income and expenses are translated at the rate on the dates of
the transactions); and
|
(iii)
|
all
resulting exchange differences are recognized as a separate component of
equity.
|
Monetary
items that are receivable or payable to a foreign operation are treated as a net
investment in the foreign operation by the Company as settlement is neither
planned nor likely to occur in the foreseeable future. On consolidation,
exchange differences arising from the translation of the net investment in
foreign operations, and of borrowings and other currency instruments designated
as hedges of such investments, are taken to shareholders’ equity. When a foreign
operation is partially disposed or sold, exchange differences that were recorded
in equity are recognized in the income statement as part of the gain or loss on
sale.
Goodwill
and fair value adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entity and translated at the
closing rate.
Revenue
Revenue
from the sale of goods is measured at the fair value of the consideration
received or receivable, net of returns and allowances, trade discounts and
volume rebates. Revenue is recognized when the significant risks and
rewards of ownership have been transferred to the buyer, recovery of the
consideration is probable, the associated costs and possible return of goods can
be estimated reliably, and there is no continuing management involvement with
the goods.
Revenue
from technology licensing to third parties is recognized when earned and
non-refundable, through the achievement of specific milestones set forth in the
applicable contract, when there is no future obligation with respect to the
revenue and receipt of the consideration is probable, in accordance with the
terms prescribed in the applicable contract.
Royalty
income is recognized when earned, based on related sales of products under
agreements providing for royalties.
Impact
of Inflation
Although
our operations are influenced by general economic trends, we do not believe that
inflation had a material impact on our operations for the periods
presented.
Foreign
Currency
The
U.S. Dollar is the functional currency for the Company. A percentage of our
expenses, assets and liabilities are denominated in currencies other than our
functional currency. Fluctuations in exchange rates may have a material adverse
effect on our consolidated results of operations and could also result in
exchange gains and losses. We cannot accurately predict the impact of future
exchange rate fluctuations on our consolidated results of operations. We aim to
minimize our foreign currency risk by holding cash balances in the currencies in
which we expect to incur future cash outflows.
Governmental
Policies
We are
not aware of any governmental, economic, fiscal, monetary or political policies
that have materially affected or could materially affect, directly or
indirectly, our operations or investments by
U.S. shareholders.
B. Liquidity
and Capital Resources
Our
capital requirements relate primarily to clinical trials, employee
infrastructure and working capital requirements. Historically, we have funded
our cash requirements primarily through the public and private sales of equity
and debt securities. As of December 31, 2007, we had approximately
$18.3 million in cash representing a decrease of $18.5 million
compared to December 31, 2006. On May
14, 2008, we announced a private placement of Ordinary Shares for up to $60.0
million. The first tranche from new investors of $28.0 million closed on May 19,
2008, see Item 8B - "Significant Changes" in this annual report for
further details. Based upon current business activities, we forecast having
sufficient cash to fund operations for at least the next 12 months from May 19,
2008.
Over the
two years ended December 31, 2007, we have received $34.0 million in
cash from the issuance of shares and $2.75 million in convertible
debentures, from equity and debt financings.
Cash
As of
December 31, 2007, we had approximately $18.3 million in cash compared
with $36.8 million as of December 31, 2006. Our cash has been invested
primarily in U.S. Dollar, pounds sterling and euro denominated money market
and checking accounts with financial institutions in the U.K., Ireland and
Israel, having a high credit standing.
Cash
flows expended on operating activities were $26.3 million for the year
ended December 31, 2007 as compared with $24.2 million for the year
ended December 31, 2006.
The
operating cash flows expended on operating activities reflect funding of the net
loss of $38.2 million adjusted for a non-cash impairment charge on
intangible assets of $8.8 million, non-cash depreciation and amortization of
$0.4 million, non-cash inflow in respect of share based compensation of
$5.3 million, net outflow of interest, foreign exchange and other items of
$1.6 million and net outflow on working capital of $0.8 million. In 2006,
the operating cash flows expended on operating activities reflect funding of the
net loss of $26.8 million adjusted for non-cash depreciation and
amortization of $0.8 million, a non-cash fixed asset impairment and
disposals of $0.3 million, a non-cash inflow in respect of share based
compensation of $2.2 million, net outflow of interest, foreign exchange and
other items of $3.4 million and a net inflow on working capital of
$3.0 million.
Cash out
flows expended on investing activities were $5.0 million in 2007 as
compared to cash inflows of $1.1 million generated in 2006. Our investing
activities related to the purchase of intangible assets, property, plant and
equipment and interest received.
Cash
inflows from financing activities in 2007, net of related expenses, were
$12.1 million, compared to cash inflows from financing activities in 2006
net of related expenses, of $24.0 million. Gross receipts from financing
activities in 2007 comprised two equity financings yielding $9.1 million,
gross proceeds on the issue of convertible debentures $2.75 million and other
warrant and option exercises of $0.6 million, offset by issuance costs of
$0.3 million. Net cash provided by financing activities in 2006 comprised
two financings yielding $20.8 million, shares issued pursuant to certain
pre-existing contractual commitments yielding $4.2 million and other
warrant and option exercises of $1.4 million, offset by issuance costs of
$2.5 million.
On
December 4, 2007, we accepted subscriptions of $5.4 million from
institutional and other accredited investors for approximately 16.3 million
Ordinary Shares in the form of ADSs in a registered direct offering at a
purchase price of $0.33 per share and issued warrants to purchase
approximately 8.1 million Ordinary Shares at an exercise price of $0.48 per
share. The net proceeds of our December registered offering (taking into account
professional advisers’ fees associated with filing the related registration
statement, cash fees of our placement agent and government stamp duty but not
our travel, printing or other expenses) were approximately
$5.1 million.
On June
1, 2007, we issued approximately 6.2 million ordinary shares and warrants to
purchase approximately 0.6 million shares with an exercise price of $0.72 per
share in a registered direct offering, in consideration for $3.7
million.
On
October 23, 2006, we accepted subscriptions of $18.7 million from
institutional and other accredited investors for approximately 9.0 million
Ordinary Shares in the form of ADSs in a registered direct offering at a
purchase price of $2.09 per share. The net proceeds of our October
registered offering (taking into account professional advisers’ fees associated
with filing the related registration statement, cash fees of our placement agent
and government stamp duty but not our travel, printing or other expenses) were
approximately $17.3 million.
On
March 31, 2006, we issued approximately 2.4 million Ordinary Shares in
the form of ADSs in consideration for $4.2 million raised in a registered
direct financing which was completed pursuant to pre-existing contractual
commitments arising from a previously completed financing in May
2005.
On
January 23, 2006, we issued a total of approximately 0.9 million
Ordinary Shares in the form of ADSs and issued warrants to purchase
approximately 0.3 million Ordinary Shares at an exercise price of $3.06 in
consideration for $2.1 million raised in the January 23, 2006, private
equity placement.
At
December 31, 2007, we had total debt of $2.75 million with a cash
maturity in 2010. We had no debt at December 31, 2006.
All
treasury activity is managed by the corporate finance group. Cash balances are
invested in short-term money market deposits, either U.S. Dollars, pounds
sterling, euro or shekel. No formal hedging activities are undertaken as cash
balances are maintained in currencies that match our anticipated financial
obligations and forecast cash flows.
C. Research
and Development
Amarin
has in-house research and development capability and expertise, supplemented by
retained external consultants. Costs classified as research and development are
written off as incurred, as are patent costs. Such costs include external trial
costs, clinical research organization costs, staff costs, professional and
contractor fees, materials and external services. Details of amounts charged in
the two years ended December 31, 2007 and December 31, 2006, are disclosed
above. Specifically, we incurred $12.1 million in 2007. In 2006, we
incurred costs of $15.1 million. Our expenditure will be increasingly
focused on the research, development and commercialization of novel drugs for
CNS disorders and cardiovascular diseases.
Amarin is
initiating a series of cardiovascular preclinical and clinical programs to
capitalize on the known therapeutic benefits of essential fatty acids in
cardiovascular disease. Amarin’s CNS development pipeline includes programs in
myasthenia gravis, Huntington’s disease, Parkinson’s disease, epilepsy and
memory. Amarin also has two proprietary technology platforms: a lipid-based
technology platform for the targeted transport of molecules through the liver
and/or to the brain, and a unique mRNA technology based on cholinergic
neuromodulation.
D. Trend
Information
In 2004,
we changed our business model and have had no other sources of revenue since
then other than revenue pursuant to our out-licensing contract with Multicell.
Until we are able to market a product or secure revenue from licensing sources,
this trend is expected to continue. We refer users to Items 4B “Business
Overview”, 5A “Operating Results” and 5B “Liquidity and Capital
Resources”.
E. Off
Balance Sheet Transactions
Although
there are no disclosable off balance sheet transactions, there have been
transactions involving contingent milestones — see “Note 30 —
Financial Commitments” in the financial statements.
F. Contractual
Obligations
The
following table summarizes our payment obligations as of December 31, 2007.
The operating lease obligations primarily represent rent payable on properties
leased by the Group. Some of the properties leased by the Group have been
sub-let and generate rental income. Purchase obligations relate to manufacturing
contracts with a third party for the production of our products.
|
Payments Due by Period
in $000’s
|
|
Total
|
|
Less
than
1 Year
|
|
1-2
Years
|
|
2-3
Years
|
|
3-4
Years
|
|
4-5
Years
|
|
Thereafter
|
Long-term
debt
|
2,750
|
|
—
|
|
—
|
|
2,750
|
|
—
|
|
—
|
|
—
|
Capital/finance
lease
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Operating
lease
|
4,529
|
|
1,278
|
|
1,145
|
|
755
|
|
572
|
|
283
|
|
496
|
Purchase
obligations
|
674
|
|
674
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Other
long-term creditors
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Total
|
7,953
|
|
1,952
|
|
1,145
|
|
3,505
|
|
572
|
|
283
|
|
496
|
There are
no capital commitments relating to the AMR101 development project. However,
under the purchase agreement for Laxdale, upon the attainment of specified
development milestones, we will be required to issue additional Ordinary Shares
to the selling shareholders or make cash payments (at the sole option of each of
the selling shareholders) and we will be required to make royalty payments of 6%
on future sales of AMR101 (consisting of 5% payable to Scarista Limited and 0.5%
payable to each of Dr. Malcolm Peet and Dr. Krishna Vaddadi). The
final purchase price will be a function of the number of Ordinary Shares of
Amarin issued at closing and actual direct acquisition costs, together with
contingent consideration which may become payable, in the future, on the
achievement of certain approval milestones. Upon receipt of marketing approval
in the United States and Europe for the first indication of any product
containing Amarin Neuroscience intellectual property, we must make an aggregate
stock or cash payment (at the sole option of each of the sellers) of
GBP£7.5 million for each of the two potential market approvals (i.e.,
GBP£15.0 million maximum). In addition, upon receipt of a
marketing approval in the United States and Europe for any other product using
Amarin Neuroscience intellectual property or for a different indication of a
previously approved product, we must make an aggregate stock or cash payment (at
the sole option of each of the sellers) of GBP£5.0 million for each of the
two potential market approvals (i.e., GBP£10.0 million maximum). The
exchange rate as of May 15, 2008 was approximately $1.9488 per GBP£.
Following
the acquisition of Ester Neurosciences Limited on December 5, 2007, if the
Monarsen Phase II in MG clinical study meets its study objectives we are
commmitted to pay $5 million at Amarin's option in equity
or cash, to the former shareholders of Ester Neurosciences Limited. In addition,
upon successful completion of the Monarsen Phase II MG study program with
adequate efficacy and safety data that fully supports the commencement of a
Phase III program in the U.S., we are committed to pay $6 million in equity or
cash, at Amarin’s option to the former shareholders of Ester Neurosciences
Limited. A further
$6 million will become payable on the successful completion of the U.S. Phase
III clinical trial program (to include successful completion of long term
studies) enabling NDA filing for Monarsen for MG in the U.S. Such additional
consideration may be paid in cash.
Final
payments due to the University of Rochester and Icon pursuant to the now
completed trials for AMR101 in HD are as follows:
|
Estimated Payments Due
by Period in $000’s from 1 January 2008
|
|
Total
|
|
Less
than
1 Year
|
|
1-2
Years
|
|
2-3
Years
|
|
3-4
Years
|
|
4-5
Years
|
|
Thereafter
|
Clinical
research
|
2,825
|
|
2,825
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Item 6 Directors,
Senior Management and Employees
A. Directors
and Senior Management
The
following table sets forth certain information regarding our officers and
directors as of December 31, 2007. A summary of the background and experience of
each of these individuals follows the table.
Name
|
|
Age
|
|
Position
|
Thomas
Lynch
|
|
51
|
|
Chairman
and Chief Executive Officer
|
Alan
Cooke
|
|
37
|
|
President,
Chief Operating Officer and Director*
|
Dr.
Declan Doogan
|
|
56
|
|
Head,
Research & Development and Director
|
John
Groom
|
|
69
|
|
Non-Executive
Director
|
Anthony
Russell-Roberts
|
|
62
|
|
Non-Executive
Director
|
Dr.
William Mason
|
|
56
|
|
Non-Executive
Director
|
Dr.
Simon Kukes
|
|
51
|
|
Non-Executive
Director
|
Dr.
Michael Walsh
|
|
56
|
|
Non-Executive
Director
|
Dr.
Prem Lachman
|
|
47
|
|
Non-Executive
Director
|
Dr.
John Climax
|
|
55
|
|
Non-Executive
Director
|
Prof.
William Hall
|
|
58
|
|
Non-Executive
Director
|
Tom
Maher
|
|
41
|
|
General
Counsel and Company Secretary
|
Conor
Dalton
|
|
43
|
|
Vice
President, Finance & Principal Accounting
Officer
|
* Mr.
Cooke also acts as Chief Financial Officer
Mr.
Thomas Lynch joined Amarin in January 2000 as Chairman of the Board. Between
1993 and 2004, Mr. Lynch was with Elan Corporation plc where he held a number of
positions including Chief Financial Officer and Executive Vice Chairman. Mr.
Lynch spear-headed Elan’s transition from a drug delivery technology provider to
a fully integrated pharmaceutical company, through a number of acquisitions,
including Athena Neurosciences, Inc. The Athena acquisition brought Elan its
programs in multiple sclerosis, autoimmune diseases and Alzheimer’s disease. Mr.
Lynch was also a founder of the specialty pharmaceutical company, Warner
Chilcott plc. Mr. Lynch is and has been a board member of a number of
biotechnology and healthcare companies.
Mr. Alan
Cooke joined Amarin in May 2004 as Chief Financial Officer and was subsequently
promoted to President and Chief Operating Officer. Prior to joining Amarin, he
held a number of positions over a period of approximately eight years at
Elan Corporation, plc, including Vice President, Global Strategic Planning. Mr
Cooke is a fellow of the Institute of Chartered Accountants (Ireland) and
worked four years with KPMG, Dublin. Mr. Cooke is a member of the Amarin Board
of Directors.
Dr.
Declan Doogan joined us on April 10, 2007 as Head, Research and Development and
was appointed as an Executive Director December 19, 2007. Prior to joining us,
Dr. Doogan was Senior Vice President and Head of Worldwide Development at Pfizer
Global Research & Development. In recent years, he held a number of senior
positions in Pfizer in the US and the UK. Dr. Doogan joined Pfizer in 1982,
where he led the Zoloft clinical development program. He held positions in the
UK and in Japan, where he was initially Medical Director and later head of the
company’s development organization. Dr. Doogan holds Visiting
Professorships at Harvard, Glasgow and Kitasato University in Japan. In
addition, Dr. Doogan holds a number of non-executive directorships in the US and
the U.K. Dr. Doogan received his medical degree from Glasgow University in
1975. He is a Fellow of the Royal College of Physicians of Glasgow and the
Faculty of Pharmaceutical Medicine in the U.K.
Mr. John
Groom joined us as a Non-Executive Director on May 29, 2001. Mr. Groom
served as President and Chief Operating Officer of Elan Corporation plc from
July 1996 until his retirement in January 2001. Mr. Groom was President,
Chief Executive Officer and Director of Athena Neurosciences, Inc. prior to its
acquisition by Elan in 1996. Mr. Groom serves on the board of directors of
Neuronyx Inc. and CV Therapeutics Europe Ltd.
Mr. Anthony
Russell-Roberts joined us as a Non-Executive Director on April 7, 2000. He
has held the position of Administrative Director of The Royal Ballet at the
Royal Opera House since 1983. Prior to that, he was Artistic Administrator of
the Paris Opera from 1981 after five years of work in the lyric arts in various
theatres. Mr. Russell-Roberts’ earlier business career started as a general
management trainee with Watney Mann, which was followed by eight years with Lane
Fox and Partners, as a partner specializing in commercial property development.
He holds an M.A. degree in Politics, Philosophy, and Economics from Oxford
University and was awarded a CBE in 2004.
Dr.
William Mason was appointed Lead independent Director on February 4, 2008. Dr.
Mason has served as a non-executive board member of Amarin since July 19, 2002,
is Chairman of the Company’s Audit Committee and a member of Amarin’s
Nominations Committee. Dr. Mason received his B.Sc. from Case Western Reserve
University in the United States and his doctorate in physiology from Trinity
College, Cambridge, UK in 1977. For twenty years he led a program of
neuroscience-focused medical research in Cambridge. Dr. Mason also played an
active role as a member of the Advisory Council on Science and Technology
(ACOST) in the UK Cabinet Office of HM Government, developing government policy
to create a highly qualified scientific and technical manpower base in the UK.
He has founded successful high technology biomedical companies and has extensive
commercial transactional experience in the healthcare and life sciences sector.
He maintains strong links with the healthcare investment community. Currently,
Dr. Mason is Chairman of OrthoMimetics Ltd., Zygem Ltd., Camlab Ltd. and Team
Consulting Ltd., and is a director of Sage Healthcare Ltd. and Sphere Medical
Ltd. He is also a member of the 3i Independent Director’s Program
Dr. Simon
Kukes was appointed a director on January 1, 2005. Dr. Kukes is an
American citizen. Dr. Kukes is the CEO at Samara-Nafta, a Russian oil
company, partnering with Hess Corporation; a U.S. based international oil
company. He was President and Chief Executive of Tyumen Oil Company (TNK) from
1998 until its merger with British Petroleum (BP) in 2003. He then joined Yukos
Oil as chairman. He also served as chief executive of Yukos from 2003 until June
2004. In 1999, he was voted one of the Top 10 Central European Executives by the
Wall Street Journal Europe and in 2003 he was named by The Financial Times and
PricewaterhouseCoopers as one of the 64 most respected business leaders in the
world. Dr. Kukes has a primary degree in Chemical Engineering from the Institute
for Chemical Technology, Moscow and a PhD in Physical Chemistry from the Academy
of Sciences, Moscow and was a Post-Doctoral Fellow of Rice University, Houston,
Texas. He is the holder of more than 130 patents and has published more than 60
scientific papers.
Dr. Michael
Walsh was appointed a director on January 1, 2005. Dr. Walsh is an
executive director of International Investment and Underwriting (“IIU”), a
private equity firm based in Dublin. Dr. Walsh is Chairman of Irish
Nationwide Building Society, one of Ireland’s main mortgage providers. He is a
non-executive director of a number of companies including Daon, a company
involved in biometric authentication and Atlantic Bridge Ventures technology
oriented venture capital company. Dr. Walsh has a Bachelor of Commerce and
a Master of Business Studies degrees from University College Dublin and MBA and
PhD degrees from the Wharton School, University of Pennsylvania. Prior to IIU,
he was an executive director of NCB Group Ltd, one of Ireland’s leading
stockbrokers. He was previously Professor of Banking and Finance at University
College Dublin.
Dr. Prem
Lachman was appointed a director on August 4, 2005. Dr. Lachman is a
founder and general partner of Maximus Capital, $100 million healthcare
investment management company focused on investments in the biotechnology and
pharmaceutical industries. Dr. Lachman was formerly a general partner at
the Galleon Group from 1998 until 2001 and prior to that was a managing director
in the Investment Research Department at Goldman Sachs & Co.
Dr. Lachman received his M.D. degree from the Mount Sinai School of
Medicine in May 1986.
Dr. John
Climax was appointed a non-executive director of Amarin on March 20, 2006.
Dr. Climax was a founder of Icon plc, serving as a Director and Chief
Executive Officer of Icon and its subsidiaries since June 1990. In November
2002, he was appointed Executive Chairman. Dr. Climax received his primary
degree in pharmacy in 1977 from the University of Singapore, his masters in
applied pharmacology in 1979 from the University of Wales and his PhD in
clinical pharmacology from the National University of Ireland in 1982.
Dr. Climax is an adjunct Professor at the Royal College of Surgeons, Dublin
and Chairman of the Human Dignity Foundation, a Swiss based
charity.
Professor
William Hall was appointed as a Non-Executive Director on February 23,
2007. Professor Hall is Professor of Medicine, School of Medicine and Medical
Sciences and Director of the National Virus Reference Library at University
College Dublin. Professor Hall completed his PhD at Queen’s University of
Belfast in 1974 and his M.D. at Cornell University Medical College, New York in
1984. Professor Hall held various Faculty positions at the Rockefeller
University in New York before returning to Ireland. Present positions held by
Professor Hall include Consultant Microbiologist, St Vincent’s University
Hospital, Dublin, Professor, and Professor of Medicine, School of Medicine and
Medical Sciences and Director of the Centre for Research in Infectious Diseases
and the National Virus Reference Laboratory. Professor Hall is a Fellow of the
American Academy of Microbiology, the Infectious Diseases Society of America,
the Royal College of Physicians (Ireland) and the Royal College of Pathologists
(U.K.).
Mr. Tom
Maher was appointed General Counsel and Company Secretary in February 2006,
having commenced working with the Group on a part-time basis in July 2005.
Mr. Maher was previously a partner at Matheson Ormsby Prentice
Solicitors, Dublin. Prior to Matheson Ormsby Prentice, Mr. Maher worked at
Elan Corporation plc where he held the position of Vice President of Legal
Affairs. Mr. Maher
commenced his legal career at A&L Goodbody Solicitors, Dublin. He holds a
law degree from Trinity College Dublin and is an Irish qualified
solicitor.
Mr. Conor
Dalton was appointed Vice-President, Finance in May 2005. Prior to joining
Amarin, Mr. Dalton spent approximately eight years with Elan Corporation, most
recently as Director of Finance. Mr. Dalton is a fellow of the Chartered
Association of Certified Accountants.
There is
no family relationship between any director or executive officer and any other
director or executive officer.
B. Compensation
General
Our
directors who serve as officers or employees receive no compensation for their
service as members of our board of directors. Directors who are not officers or
employees receive £25,000 ($50,000) per annum save for the Chairman of the Board
who receives £40,000 ($80,000), Chairman of the Audit Committee who receives
£40,000 ($80,000), Chairman of the Remuneration Committee who receives £40,000
($80,000) and Lead Independent Director who receives £20,000 ($40,000) and such
options to acquire Ordinary Shares for their service as non-executive members of
the board of directors as the Remuneration Committee of the board of directors
may from time to time determine. Mr. Lynch has to date waived all of his rights
with respect to option grants to directors that were proposed during his tenure
as a director. Mr. Groom waived emoluments in respect of the years ended
December 31, 2007 and 2006.
On December 19, 2007, Mr.
Richard Stewart resigned as Chief Executive Officer and Executive Director of
Amarin. Pursuant to the terms of a compromise agreement between Amarin and Mr.
Stewart, Amarin agreed to pay Mr. Stewart £402,500 ($804,000) in respect of a
termination payment and bonus, £10,673 ($21,000) in respect of 10 days accrued
but untaken holiday entitlement, other expenses of £4,000 ($8,000) and £37,338
($75,000) in respect of accrued pension entitlement up to the date of
termination, December 19, 2007. These
amounts are included in the table below.
For the year
ended December 31, 2007, all of our directors and senior management as a
group received total compensation of $4,569,000 and in addition, directors and
senior management were issued options to purchase a total of 1,025,000 Ordinary
Shares during such period. See “— Share Ownership” below for the specific
terms of the options held by each director and officer.
With the
exception of Mr. Stewart, Mr. Cooke and Dr. Doogan, there are no sums set aside
or accrued by us for pension, retirement or similar benefits for directors. We
do make contributions to certain of our employees’ and officers’ pensions during
the term of their employment with us.
Compensation
paid and benefits granted to our directors during the year ended
December 31, 2007 are detailed below:
Directors’
detailed emoluments
Name
|
|
Salary
&
fees
|
|
|
Benefits
in
kind
|
|
|
Annual
bonus
|
|
|
2007
Total
|
|
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
Thomas
Lynch (Chairman and Chief Executive Officer)*
|
|
|
482 |
|
|
|
— |
|
|
|
390 |
|
|
|
872 |
|
Richard
Stewart (Former Chief Executive Officer)**†
|
|
|
1,249 |
|
|
|
18 |
|
|
|
250 |
|
|
|
1,517 |
|
Alan
Cooke (President & Chief Operating Officer)**
|
|
|
401 |
|
|
|
4 |
|
|
|
227 |
|
|
|
632 |
|
Dr.
Declan Doogan (Head, Research & Development)**
|
|
|
140 |
|
|
|
— |
|
|
|
105 |
|
|
|
245 |
|
John
Groom
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Anthony
Russell-Roberts
|
|
|
100 |
|
|
|
— |
|
|
|
— |
|
|
|
100 |
|
Dr.
William Mason
|
|
|
80 |
|
|
|
— |
|
|
|
— |
|
|
|
80 |
|
Dr.
Simon Kukes
|
|
|
50 |
|
|
|
— |
|
|
|
— |
|
|
|
50 |
|
Dr.
Michael Walsh
|
|
|
50 |
|
|
|
— |
|
|
|
— |
|
|
|
50 |
|
Dr.
Prem Lachman
|
|
|
50 |
|
|
|
— |
|
|
|
— |
|
|
|
50 |
|
Dr.
John Climax
|
|
|
50 |
|
|
|
— |
|
|
|
— |
|
|
|
50 |
|
Prof.
William Hall
|
|
|
42 |
|
|
|
— |
|
|
|
— |
|
|
|
42 |
|
|
|
|
2,694 |
|
|
|
22 |
|
|
|
972 |
|
|
|
3,688 |
|
__________
Benefits
in kind include medical and life insurance for each executive director. No
expense allowances were provided to the directors during the year.
*
|
Fees
in respect of a Consultancy Agreement with Mr. Thomas Lynch. See
“Item 7B — Related Party Transactions. Included above is Mr.
Lynch’s bonus payment’s for 2006 and 2007.
|
|
|
**
|
In
addition to the above, Mr. Stewart, Mr. Cooke and Dr. Doogan had
pension contributions paid into their personal scheme or accrued by the
Group in 2007 of $60,000, $22,000 and $8,000 respectively. Mr. Stewart’s
payment, which is in excess of his normal entitlement under the Group’s
pension scheme arrangements, was approved by the Remuneration
Committee.
|
|
|
† |
On
December 19, 2007, Mr. Richard Stewart resigned as Chief Executive Officer
and Executive Director of Amarin. Pursuant to the terms of a compromise
agreement between Amarin and Mr. Stewart, Amarin agreed to pay Mr. Stewart
£402,500 ($804,000) in respect of a termination payment and bonus, £10,673
($21,000) in respect of 10 days accrued but untaken holiday entitlement,
other expenses of £4,000 ($8,000) and £37,338 ($75,000) in respect of
accrued pension entitlement up to the date of termination, December 19,
2007. These amounts are included in Mr. Stewart's emoluments
above. |
The
Amarin Corporation plc 2002 Stock Option Plan
The
Amarin Corporation plc 2002 Stock Option Plan came into effect on
January 1, 2002. The term of the plan is ten years, and no award shall be
granted under the plan after January 1, 2012.
The plan
is administered by the remuneration committee of our board of directors. A
maximum of 8,000,000 Ordinary Shares may be issued under the original plan. This
limit was increased to 8,986,439 Ordinary Shares by the remuneration committee
of the Group on December 6, 2006, pursuant to section 4(c) of the Plan
to prevent dilution of the potential benefits available under the Plan as a
result of certain discounted share issues. This limit was further increased to
12,000,000 Ordinary Shares at an Extraordinary General Meeting held on
January 25, 2007. This limit was further increased to 18,000,000 Ordinary
Shares at an Annual General Meeting held on July 19, 2007. Employees, officers,
consultants and independent contractors are eligible persons under the plan. The
remuneration committee may grant options to eligible persons. In determining
which eligible persons may receive an award of options and become participants
in the plan, as well as the terms of any option award, the remuneration
committee may take into account the nature of the services rendered to us by the
eligible persons, their present and potential contributions to our success or
such other factors as the remuneration committee, at its discretion, shall deem
relevant.
Two forms
of options may be granted under the plan: incentive stock options and
non-qualified stock options. Incentive stock options are options intended to
meet the requirements of Section 422 of the U.S. Internal Revenue Code
of 1986, as amended. Non-qualified stock options are options which are not
intended to be incentive stock options.
As a
condition to the grant of an option award, we and the recipient shall execute an
award agreement containing such restrictions, terms and conditions, if any, as
the remuneration committee may require. Option awards are to be granted under
the plan for no cash consideration or for such minimal cash consideration as may
be required by law. The exercise price of options granted under the plan shall
be determined by the remuneration committee; however the plan provides that the
exercise price shall not be less than 100% of the fair market value, as defined
under the plan, of an Ordinary Share on the date that the option is granted. The
consideration to be paid for the shares under option shall be paid at the time
that the shares are issued. The term of each option shall end ten years
following the date on which it was granted. The remuneration committee may
decide from time to time whether options granted under the plan may be exercised
in whole or in part.
No option
granted under the plan may be exercised until it has vested. The remuneration
committee will specify the vesting schedule for each option when it is granted.
If no vesting schedule is specified with respect to a particular option, then
the vesting schedule set out in the plan will apply so that 33% of the total
number of Ordinary Shares granted under the option shall vest on the first
anniversary of the date that the option was granted, a further 33% shall vest on
the second anniversary and the remaining 34% shall vest on the third
anniversary.
The plan
provides that the vesting of options shall be accelerated if we undergo a change
of control and at the discretion of the remuneration committee. In the event of
an offer to acquire all of our issued share capital or the acquisition of all of
our issued share capital in other specified circumstances, the option holder may
release its option in return for the grant of a new option over shares in the
acquiring company.
If a
participant’s continuous status as an employee or consultant, as defined under
the plan, is terminated for cause then his or her options shall expire
immediately. If such status is terminated due to death or permanent disability
and if options held by the participant have vested and are exercisable, they
shall remain exercisable for twelve months following the date of the
participant’s death or disability.
No option
award, nor any right under an option award, may be transferred by a participant
other than by will or by the laws of descent as specifically set out in the
plan. Participants do not have any rights as a shareholder of record in us with
respect to the Ordinary Shares issuable on the exercise of their options until a
certificate representing such Ordinary Shares registered in the participant’s
name has been delivered to the participant.
The plan
is governed by the laws of England.
C. Board
Practices
General
No
director has a service contract providing for benefits upon the termination of
service or employment.
Our
articles of association stipulate that the minimum number of directors shall be
two and the maximum number shall be fifteen. At December 31, 2007 we had eleven
directors. Directors may be elected by the shareholders at a general meeting or
appointed by the board of directors. If a director is appointed by the board of
directors, that director must stand for election at our subsequent annual
general meeting. At each annual general meeting, one-third of our directors must
retire and either stand, or not stand, for re-election. In determining which
directors shall retire and stand, or not stand, for re-election, first, we
include any director who chooses to retire and not face re-election and second,
we choose the directors who have served as directors for the longest period of
time since their last election.
At the
annual general meeting for 2007, Professor Hall and Messrs. Stewart, Cooke
and Groom retired by rotation, and were re-elected. Mr. Stewart subsequently
resigned as a director on December 19, 2007. On May 16, 2008, Drs. Doogan,
Kukes, Walsh and Lachman, Prof. Hall and Messrs. Cooke and Groom resigned from
the board. On the same date Drs. James Healy, Carl Gordon, Eric Aguiar and
Srinivas Akkaraju were appointed to the board, see Item 8B - "Significant
Changes" for further details. The new board appointments are effective
upon the closing of the first tranche of the financing. Assuming no further
directors choose to retire or resign and not stand for re-election at the annual
general meeting in 2008, we would expect Drs. Healy, Gordon, Aguiar, Akkaraju
and Climax to retire and stand for re-election at the 2008 annual general
meeting. See — “Directors and Senior Management” above for details of when
each of our directors joined our board of directors.
Audit
Committee
The audit
committee of the board of directors generally comprises three of our
non-executive directors and meets, as required, to review the scope of the audit
and audit procedures, the format and content of the audited financial statements
and the accounting principles applied in preparing the financial statements. The
audit committee also reviews proposed changes in accounting policies,
recommendations from the auditors regarding improving internal controls and the
adequacy of resources within the accounting function.
As of
December 31, 2007, the audit committee comprised the following
directors:
•
|
Dr. William
Mason (Chairman) (appointed October 22,
2002);
|
•
|
Dr. Simon
Kukes (appointed March 20, 2006, resigned May 16,
2008); and
|
•
|
Mr. John
Groom (Financial Expert) (appointed October 24, 2003, resigned
May 16, 2008).
|
On May 16, 2008, Dr.
Simon Kukes and Mr. John Groom resigned as directors of the Company.
Following an equity financing signed on May 13, 2008, certain investors
joined Amarin's board of directors (see Item 8B - "Significant
Chanages" in this annual report). The composition of the audit
committee will be determined at the earliest opportunity following the
appointment of new board members.
Remuneration
Committee
The
remuneration committee of the board of directors comprises three of our
non-executive directors. The remuneration committee’s primary responsibility is
to approve the level of remuneration for executive directors and key employees.
It may also grant options under our share option schemes to employees and
executive directors and must approve any service contracts for executive
directors and key employees. Non-executive directors’ remuneration is determined
by the full board of directors.
As of
December 31, 2007, the remuneration committee comprised the following
directors:
•
|
Mr. Anthony
Russell-Roberts (Chairman) (appointed July 19,
2002);
|
•
|
Dr. Michael
Walsh (appointed February 28, 2005, resigned May 16,
2008); and
|
•
|
Dr. Prem
Lachman (appointed March 20, 2006, resigned May 16,
2008).
|
On May 16, 2008, Drs.
Michael Walsh and Prem Lachman resigned as directors of the Company.
Following an equity financing signed on May 13, 2008, certain investors
joined Amarin's board of directors (see Item 8B - "Significant
Changes" in this annual report). The composition of the remuneration
committee will be determined at the earliest opportunity following the
appointment of new board members.
Lead
Independent Director
In
February 2008, our Board of Directors established the position of Lead
Independent Director and appointed current board member, Dr. William Mason, to
that role. In his capacity as Lead Independent Director, Dr. Mason will have the
authority to convene meetings of the independent directors, and will preside
over those meetings, will coordinate the activities of the independent
directors, and will act as a liaison between the independent directors, the
Board and the Chairman.
D. Employees
The
average numbers of employees employed by us during each of the past two
financial years are detailed below:
Employment
Activity
|
Number
of
Employees
12/31/07
|
|
Number of
Employees
12/31/06
|
Marketing
and Administration
|
17
|
|
12
|
Research
and Development
|
8
|
|
6
|
Total
|
25
|
|
18
|
The
average numbers of employees employed by us by geographical region for each of
the last two financial years are set forth below:
Country
|
|
Number
of
Employees
12/31/07
|
|
|
Number
of
Employees
12/31/06
|
|
U.K
|
|
|
11 |
|
|
|
10 |
|
Ireland
|
|
|
14 |
|
|
|
8 |
|
Total
|
|
|
25 |
|
|
|
18 |
|
E. Share
Ownership
The
beneficial ownership of Ordinary Shares by, and options granted to, our
directors or officers, including their spouses and children under eighteen years
of age, as of December 31, 2007 are presented in the table below. See also
“— Compensation — the Amarin Corporation plc 2002 Stock Option
Plan”.
Director/Officer
|
Note
|
Options/Warrants
Outstanding
to
Acquire
Number
of
Ordinary
Shares
|
Date
of Grant
(dd/mm/yy)
|
Exercise
Price
per
Ordinary
Share
|
Ordinary
Shares
or
ADS
Equivalents
Beneficially
Owned
|
Percentage
of
Outstanding
Share
Capital*
|
J.
Groom
|
1
|
15,000
|
23/01/02
|
$17.65
|
417,778
|
—
|
|
1
|
15,000
|
06/11/02
|
$3.10
|
|
|
|
1
|
25,000
|
21/07/04
|
$0.84
|
|
|
|
7
|
55,099
|
21/12/05
|
$1.43
|
|
|
|
1
|
20,000
|
11/01/06
|
$1.35
|
|
|
|
1&17
|
20,000
|
08/12/06
|
$0.44
|
|
|
T.
G.
Lynch
|
2
|
500,000
|
25/02/04
|
$1.90
|
10,729,060
|
7.7%
|
|
8
|
207,921
|
21/12/05
|
$1.43
|
|
|
|
11
|
12,480
|
01/6/07
|
$0.72
|
|
|
|
12
|
303,030
|
06/12/07
|
$0.48
|
|
|
|
|
|
|
|
|
|
Director/Officer
|
Note
|
Options/Warrants
Outstanding
to
Acquire
Number
of
Ordinary
Shares
|
Date
of Grant
(dd/mm/yy
|
Exercise
Price
per
Ordinary
Share
|
Ordinary
Shares
or
ADS
Equivalents
Beneficially
Owned
|
Percentage
of
Outstanding
Share
Capital*
|
|
|
|
|
|
|
|
W. Mason |
1
|
15,000
|
06/11/02
|
$3.10
|
—
|
—
|
|
1&3
|
25,000
|
21/07/04
|
$0.84
|
|
|
|
1&3
|
20,000
|
11/01/06
|
$1.35
|
|
|
|
1&17
|
20,000
|
08/12/06
|
$0.44
|
|
|
A.
Russell-Roberts
|
4
|
10,000
|
07/04/00
|
$3.00
|
2,350
|
—
|
|
4
|
10,000
|
19/02/01
|
$6.12
|
|
|
|
1
|
15,000
|
23/01/02
|
$17.65
|
|
|
|
1
|
15,000
|
06/11/02
|
$3.10
|
|
|
|
1
|
25,000
|
21/07/04
|
$0.84
|
|
|
|
1
|
20,000
|
11/01/06
|
$1.35
|
|
|
|
1&17
|
20,000
|
08/12/06
|
$0.44
|
|
|
S.
Kukes
|
7
|
519,802
|
21/12/05
|
$1.43
|
9,516,081
|
6.8%
|
|
1
|
20,000
|
11/01/06
|
$1.35
|
|
|
|
1&17
|
20,000
|
08/12/06
|
$0.44
|
|
|
|
13
|
33,278
|
01/6/07
|
$0.72
|
|
|
|
14
|
454,545
|
06/12/07
|
$0.48
|
|
|
M.
Walsh
|
7
|
38,119
|
21/12/05
|
$1.43
|
530,896
|
—
|
|
1
|
20,000
|
11/01/06
|
$1.35
|
|
|
|
1&17
|
20,000
|
08/12/06
|
$0.44
|
|
|
|
13
|
16,639
|
01/6/07
|
$0.72
|
|
|
|
14
|
208,333
|
06/12/07
|
$0.48
|
|
|
A.
Cooke
|
1
|
375,000
|
07/07/04
|
$0.85
|
270,211
|
—
|
|
6
|
200,000
|
10/06/05
|
$1.30
|
|
|
|
7
|
15,594
|
21/12/05
|
$1.43
|
|
|
|
1
|
200,000
|
16/01/06
|
$1.95
|
|
|
|
1&17
|
675,000
|
08/12/06
|
$0.44
|
|
|
P.
Lachman
|
1
|
20,000
|
11/01/06
|
$1.35
|
234,709
|
—
|
|
1&17
|
20,000
|
08/12/06
|
$0.44
|
|
|
|
13
|
8,320
|
01/6/07
|
$0.72
|
|
|
|
14
|
75,756
|
06/12/07
|
$0.48
|
|
|
J.
Climax
|
9
|
226,980
|
21/12/05
|
$1.43
|
9,440,160
|
6.8%
|
|
1
|
20,000
|
27/01/06
|
$2.72
|
|
|
|
1
|
20,000
|
20/03/06
|
$3.26
|
|
|
|
1&17
|
20,000
|
08/12/06
|
$0.44
|
|
|
|
15
|
33,278
|
01/6/07
|
$0.72
|
|
|
|
16
|
1,363,636
|
06/12/07
|
$0.48
|
|
|
W.
Hall
|
1&17
|
75,000
|
08/03/07
|
$0.44
|
—
|
—
|
T.
Maher
|
1
|
325,000
|
02/12/05
|
$1.16
|
19,802
|
—
|
|
7
|
6,931
|
21/12/05
|
$1.43
|
|
|
|
1&17
|
350,000
|
08/12/06
|
$0.44
|
|
|
|
1
|
150,000
|
02/08/07
|
$0.44
|
|
|
|
1
|
150,000
|
28/08/07
|
$0.46
|
|
|
D.
Doogan
|
1&17
|
650,000
|
09/04/07
|
$0.44
|
—
|
—
|
C.
Dalton
|
1
|
100,000
|
28/06/05
|
$1.09
|
—
|
—
|
|
1
|
50,000
|
12/01/06
|
$1.53
|
—
|
—
|
|
1&17
|
200,000
|
08/12/06
|
$0.44
|
—
|
—
|
Notes:
(1)
|
These
options are exercisable as to one third on each of the first, second and
third anniversaries of the date of grant and remain exercisable for a
period ended on the tenth anniversary of the date of
grant.
|
|
|
(2)
|
The
Ordinary Shares are held in the form of ADSs by Amarin Investment Holding
Limited. The warrants issued to Amarin Investment Holding Limited are
exercisable for up to 500,000 Ordinary Shares, on or before
February 25, 2009. Amarin Investment Holding Limited is an entity
controlled by our Chairman and Chief Executive Officer,
Mr. Thomas Lynch.
|
|
|
(3)
|
These
options were issued to Vision Resources Limited, a company wholly owned by
Dr. Mason.
|
|
|
(4)
|
These
options are currently exercisable and remain exercisable until ten years
from the date of grant.
|
|
|
(5)
|
When
granted 100,000 of these options were to become exercisable at an exercise
price of $25.00 in tranches upon the price of our Ordinary Shares
achieving certain pre-determined levels. On February 9, 2000, our
remuneration committee approved the re-pricing of these 100,000 options to
an exercise price of US$5.00 per Ordinary Share, exercisable
immediately and the Group entered into an amendment agreement on the same
day amending the exercise price from $25.00 to $5.00 and removing the
performance criteria attached to such options. These options are currently
exercisable and remain exercisable until 1st April
2009.
|
|
|
(6)
|
These
options are exercisable as to 50% on the second anniversary of grant, as
to 75% of the third anniversary of grant and in full on the fourth
anniversary of grant.
|
|
|
(7)
|
These
warrants were granted to all investors in the December 2005 private
placement including directors and are exercisable at anytime after
180 days from the grant date. If our trading market price is equal to
or above $10.20, as adjusted for any stock splits, stock combinations,
stock dividends and other similar events, for each of any twenty
consecutive trading days, then the Group at any time thereafter shall have
the right, but not the obligation, on 20 days’ prior written notice
to the holder, to cancel any unexercised portion of this warrant for which
a notice of exercise has not yet been delivered prior to the cancellation
date.
|
|
|
(8)
|
These
warrants were granted to all investors in the December 2005 private
placement including directors and are exercisable at anytime after
180 days from the grant date. The warrants were issued to Amarin
Investment Holding Limited which is an entity controlled by our Chairman
and Chief Executive Officer, Mr. Thomas Lynch. If our trading market
price is equal to or above $10.20, as adjusted for any stock splits, stock
combinations, stock dividends and other similar events, for each of any
twenty consecutive trading days, then the Group at any time thereafter
shall have the right, but not the obligation, on 20 days’ prior
written notice to the holder, to cancel any unexercised portion of this
warrant for which a notice of exercise has not yet been delivered prior to
the cancellation date.
|
|
|
(9)
|
The
Ordinary Shares are held in the form of ADSs by Sunninghill Limited. The
warrants granted to all investors in the December 2005 private placement
including directors are exercisable at any time after 180 days from
the grant date. These warrants were issued to Sunninghill Limited which is
an entity controlled by one of our non-executive directors Dr. John
Climax.
|
|
|
(10)
|
These
options were granted to Laxdale employees as replacement Laxdale options
due to the acquisition of Laxdale by Amarin. These options vested
immediately on granting and expire on 31 March
2009.
|
|
|
(11)
|
These
warrants were granted to all investors in the June 2007 registered direct
offering including directors and are exercisable immediately from the
grant date. The warrants were issued to Amarin Investment Holding Limited
which is an entity controlled by our Chairman and Chief Executive Officer,
Mr. Thomas Lynch.
|
|
|
(12)
|
These
warrants were granted to all investors in the December 2007 registered
direct offering including directors and are exercisable immediately from
the grant date. The warrants were issued to Amarin Investment Holding
Limited which is an entity controlled by our Chairman and Chief Executive
Officer, Mr. Thomas Lynch.
|
|
|
(13)
|
These
warrants were granted to all investors in the June 2007 registered direct
offering including directors and are exercisable immediately from the
grant date.
|
|
|
(14)
|
These
warrants were granted to all investors in the December 2007 registered
direct offering including directors and are exercisable immediately from
the grant date.
|
|
|
(15)
|
These
warrants were granted to all investors in the June 2007 registered direct
offering including directors and are exercisable immediately from the
grant date. These warrants were issued to Sunninghill Limited
which is an entity controlled by one of our non-executive directors
Dr. John Climax.
|
|
|
(16)
|
These
warrants were granted to all investors in the December 2007 registered
direct offering including directors and are exercisable immediately from
the grant date. These warrants were issued to Sunninghill Limited which is
an entity controlled by one of our non-executive directors Dr. John
Climax.
|
|
|
(17)
|
The
exercise price of all options granted between December 8, 2006 and April
11, 2007 were amended to $0.44 – see note 28 to the F-section in this
annual report for further details of the options
amendment.
|
|
|
*
|
This
information is based on 139,057,370 Ordinary Shares outstanding as of
December 31, 2007.
|
Item 7 Major
Shareholders and Related Party Transactions
A. Major
Shareholders
The
following table sets forth to the best of our knowledge certain information
regarding the ownership of our Ordinary Shares at December 31, 2007 by each
person who is known to us to be the beneficial owner of more than five percent
of our outstanding Ordinary Shares, either directly or by virtue of ownership of
ADSs.
Name of
Owner(1)
|
Number
of Ordinary
Shares
or
ADS Equivalents
Beneficially Owned
Capital
|
|
Percentage
of
Outstanding Share(2)
|
Amarin
Investment Holding
Limited(3)
|
11,752,491
|
|
6.9%
|
Sunninghill
Limited(5)
|
11,124,054
|
|
6.5%
|
Simon
G.
Kukes(4)
|
10,563,706
|
|
6.2%
|
Medica
Funds(6)
|
10,077,969
|
|
5.9%
|
__________
Notes:
(1)
|
Unless
otherwise noted, the persons referred to above have sole investment
power.
|
|
|
(2)
|
This
information is based on 139,057,370 Ordinary Shares outstanding,
20,838,235 warrants granted over Ordinary Shares and 10,804,850 share
options granted over Ordinary Shares as of December 31,
2007.
|
|
|
(3)
|
Includes
warrants to purchase 500,000 Ordinary Shares, which warrants are
exercisable on or before February 25, 2009 and warrants to purchase
523,431 Ordinary Shares, which are currently exercisable. Amarin
Investment Holding Limited is an entity controlled by our Chairman and
Chief Executive Officer, Mr. Thomas Lynch.
|
|
|
(4)
|
Includes
warrants to purchase 1,007,625 Ordinary Shares, which are currently
exercisable and options to purchase 40,000 Ordinary Shares of which 13,333
are currently exercisable.
|
|
|
(5)
|
Includes
warrants to purchase 1,623,894 Ordinary Shares, which are currently
exercisable and share options to purchase 60,000 Ordinary Shares of which
20,000 are currently exercisable. Sunninghill Limited is an entity
controlled by one of our non-executive directors, Dr. John
Climax.
|
|
|
(6)
|
This
information is based on the following
holdings:
|
Name of
Fund
|
Ordinary
Shares
|
Medica
II Investments International
LP
|
4,091,635
|
Medica
Investments Israel
LP
|
2,916,808
|
Medica
II Investments Israel
LP
|
1,524,010
|
Medica
II Investments PF Israel
LP
|
785,386
|
Medica
II Management
LP
|
413,666
|
Medica
II Baxter
LP
|
346,464
|
The
following table shows changes over the last two years in the percentage of the
issued share capital for the Group held by major shareholders, either directly
or by virtue of ownership of ADSs:
Name of
Owner(1)
|
2007
|
2006
|
|
|
|
Amarin
Investment Holding Limited
|
7.7
|
11.0
|
Simon
G. Kukes
|
6.8
|
8.3
|
Medica
Funds
|
7.2
|
—
|
Sunninghill
Limited
|
6.8
|
7.0
|
Southpoint
|
—
|
9.9
|
None of
the above shareholders has voting rights that differ from those of our other
shareholders. The total number of ADSs outstanding as of December 31, 2007 was
approximately 132.7 million. The ADSs represented approximately 95% of the
issued and outstanding Ordinary Shares as of such date. As at May 16, 2008,
to the best of our knowledge, we estimate that U.S. shareholders
constituted approximately 60% of the beneficial holders of both our Ordinary
Shares and our ADSs.
B. Related
Party Transactions
During
the year ended December 31, 2007, we entered into certain transactions,
with related parties. Details of such transactions are given below.
Icon
At
December 31, 2007 Sunninghill Limited, a company controlled by
Dr. John Climax, held 9.4 million Ordinary Shares and 1.6 million
warrants in Amarin (which was approximately 7% of Amarin’s entire issued share
capital) and Poplar Limited, a company controlled by Dr. Climax, held
approximately 5% of Icon plc. During 2005 the Group entered into an agreement
with Icon Clinical Research Limited (a company wholly owned by Icon plc) whereby
Icon was appointed as Amarin’s contract research organization to manage and
oversee its European Phase II study on AMR101 (Trend 2) and to assist
Amarin in conducting its U.S. Phase III on AMR101 (Trend 1). At
December 31, 2007, Amarin had incurred costs of $7.0 million
($1.9 million for the 12 months ended December 31, 2007) with
respect of direct costs to Icon. At the year end, no amount is included in
accruals or accounts payable for direct costs payable to Icon. In addition, the
Group also reimbursed Icon for $2.6 million of pass-through costs which Icon
settle on behalf of Amarin.
In
February 2007, our audit committee reviewed and approved Amarin Neuroscience
Limited, a subsidiary of the Group, entering into a supplemental agreement with
Icon Clinical Research Limited to amend the number and location of patient
activity in the E.U. Phase III clinical trial.
Our
Chairman and Chief Executive Officer, Mr. Thomas Lynch, has served as an
outside director of Icon since January 1996. He is also a member of Icon’s audit
committee, compensation committee and nominations committee. On March 20,
2006, Dr. Climax subsequently became a non-executive director of the
Group.
Mr.
Richard Stewart
On
December 19, 2007, Mr. Stewart resigned as Chief Executive Officer and Executive
Director of Amarin. Pursuant to the terms of a compromise agreement between
Amarin and Mr. Stewart, Amarin agreed to pay Mr. Stewart £402,500 ($804,000) in
respect of a termination payment and bonus, £10,673 ($21,000) in respect of 10
days accrued but untaken holiday entitlement, other expenses of £4,000 ($8,000)
and £37,338 ($75,000) in respect of accrued pension entitlement up to the date
of termination, December 19, 2007.
As at the
December 19, 2007 Mr. Stewart had 1,166,666 vested share options under our 2002
Stock Option Plan. Pursuant to the terms of the compromise agreement, Mr.
Stewart’s vested share options will be exercisable for a period of 12 months
following December 19, 2007 in accordance with the terms of our 2002 Stock
Option Plan and upon the expiration of such 12 month period, Mr. Stewart’s
vested options will cease to be exercisable and will expire.
As at
December 19, 2007 Mr. Stewart had 883,334 unvested share options under our 2002
Stock Option Plan. Pursuant to the terms of the compromise agreement, it was
provided that Mr. Stewart’s share options which were not vested as at December
19, 2007 would not vest and would not become exercisable after December 19, 2007
and accordingly, would expire on December 19, 2007.
The
compromise agreement was reviewed and approved by the members of our
remuneration committee.
Mr.
Thomas Lynch
In March
2007, our remuneration committee reviewed and approved a consultancy agreement
between Amarin and Dalriada Limited in relation to the provision by Dalriada
Limited to Amarin of corporate consultancy services, including consultancy
services relating to financing and other corporate finance matters, investor and
media relations and implementation of corporate strategy. Under the Consultancy
Agreement, Amarin pay Dalriada Limited a fee of £240,000 per annum for the
provision of the consultancy services.
An additional amount of £195,000 was also approved by the remuneration committee
of which £75,000 was paid during the year ended December 31, 2007 in respect of
consultancy services.
Dalriada
Limited is owned by a family trust, the beneficiaries of which include Mr.
Thomas Lynch, Amarin Chairman and Chief Executive Officer and family
members.
Elan
In
February 2007, our audit committee reviewed and approved, Amarin Pharmaceuticals
Ireland Limited (“APIL”), a subsidiary of the Group, entering into development
and license agreement with Elan Pharma International Limited, a subsidiary of
Elan Corporation, plc (“Elan”), ultimately signed on March 6, 2007, whereby APIL
licensed from Elan rights to develop and market a novel, NanoCrystal® nasal
formulation of lorazepam for the out-patient treatment of emergency seizures in
epilepsy patients. Mr. Shane Cooke, chief financial officer of Elan is a
connected person to Mr. Alan Cooke, our president and chief operating officer,
and under Nasdaq rules this transaction was deemed to be a related party
transaction. Under the terms of the agreement, we may pay Elan success based
development, filing and approval milestones totaling $5.2 million plus royalties
on net sales. No payments were made to Elan during the year ended December 31,
2007.
Financings
Registered
direct offering
Several
of the Company’s directors and officers subscribed for approximately 1.0 million
ordinary shares and warrants to subscribe for approximately 0.1 million ordinary
shares in June 2007 in a registered direct financing.
Public
offerings
Several
of the Company’s directors and officers subscribed for approximately 4.4 million
ordinary shares and warrants to subscribe for approximately 2.2 million ordinary
shares in a public offering in December 2007.
In a
second offering in December 2007, Dr. Michael Walsh, a director of the Company,
purchased $0.25 million in aggregate principal amount of three-year convertible
Debentures and IIU Limited, a company in which Dr. Walsh is a director,
purchased $2.5 million in aggregate principal amount of three-year convertible
Debentures. These Debentures may be converted into approximately 0.5
million and 5.2 million ordinary shares respectively, commencing four
months after the date of closing (December 6, 2007) at a conversion price of
$0.48 per ordinary share ($4.80 post share consolidation effective January 18,
2008), which is a 30% premium to the 5-day volume weighted average closing price
of our ordinary shares on December 3, 2007. The Debentures will bear interest at
a rate of 8% per annum, payable quarterly in arrears. In addition, the Debenture
holders will also receive five-year warrants to purchase approximately 0.2
million and 2.1 million ordinary shares respectively, at an exercise price
of $0.48 ($4.80 post share consolidation effective January 18,
2008). Per the
warrant agreement, if at any time prior to December 6, 2009, the Company issues
Ordinary Shares, securities convertible into ADSs or Ordinary Shares, warrants
to purchase ADSs or Ordinary Shares or options to purchase any of the foregoing
to a third party (other than any Exempt Issuance) at a price that is less than,
or converts at a price that is less than, $3.66 (such lesser price, the
“Down-round Price”), then the Exercise Price shall be adjusted to equal 130% of
the Down-round Price. On May
14, 2008, we announced a private placement of Ordinary Shares for up to $60.0
million. The first tranche from new investors of $28.0 million closed on May 19,
2008. These warrants have therefore been re-priced to $2.99 per share
from their original grant price of $4.80 per share (post share consolidation
effective January 18, 2008). The
convertible Debentures will be required to be repaid from the financing outlined
above.
C. Interests
of Experts and Counsel
Not
applicable.
Item 8 Financial
Information
A. Consolidated
Statements and Other Financial Information
See our
consolidated financial statements beginning at page F-1.
Legal
Proceedings
Permax
Litigation
Amarin
was responsible for the sales and marketing of Permax from May 2001 until
February 2004. On May 17, 2001, Amarin acquired the U.S. sales and
marketing rights to Permax from Elan. An affiliate of Elan had
previously obtained the licensing rights to Permax
from Eli Lilly and Company in 1993. Eli 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., including
the rights to Permax, to Valeant Pharmaceuticals
International.
In late
2002, Eli Lilly, 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 observation 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, Eli 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 doctors in the United States describing this
potential risk. Causation has not been established, but is thought to
be consistent with other fibrotic side effects observed in Permax.
On March
29, 2007, the FDA announced that the manufacturers of pergolide drug products
will voluntarily remove these drug products, including Permax, from the
market. Further information about the removal of Permax and other
pergolide drug products is available on the FDA’s website.
During
2007, one lawsuit alleging claims related to cardiac valvulopathy and Permax was
pending in the United States and currently remains pending. Eli
Lilly, Elan, Valeant, Amarin Pharmaceuticals Inc., Athena Neurosciences, Inc.,
and Amarin are named as defendants in this lawsuit, and are defending against
the claims and allegations. The case is currently in discovery. In
addition, a lawsuit alleging claims related to cardiac valvulopathy and Permax
was filed in March 2008 and is currently pending in the United
States. Eli Lilly, Elan, Valeant, and Amarin are named as defendants
in this lawsuit. Amarin has not been formally served with the
complaint from this lawsuit.
Two other
claims related to cardiac valvulopathy and Permax and one claim related to
compulsive gambling and Permax are or were being threatened against Eli Lilly,
Elan, and/or Valeant, and could possibly implicate Amarin.
We have
reviewed the position and having taken external legal advice consider the
potential risk of significant liability arising for Amarin from these legal
actions to be remote. No provision is booked in the accounts at
December 31, 2007.
Other
We are
not a party to any other legal or arbitration proceedings that may have, or have
had in the recent past, significant effects on our financial position or
profitability. No governmental proceedings are pending or, to our knowledge,
contemplated against us. We are not a party to any material proceedings in which
any director, member of senior management or affiliate of ours is either a party
adverse to us or our subsidiaries or has a material interest adverse to us or
our subsidiaries.
Policy
on Dividend Distributions
We have
never paid dividends on Ordinary Shares and do not anticipate paying any cash
dividends on the Ordinary Shares in the foreseeable future. Under English law,
any payment of dividends would be subject to relevant legislation and our
Articles of Association, which requires that all dividends must be approved by
our board of directors and, in some cases, our shareholders, and may only be
paid from our distributable profits available for the purpose, determined on an
unconsolidated basis. See Item 10 “Additional Information — Memorandum
and Articles of Association — Description of Ordinary Shares —
Dividends.”
B. Significant
Changes
On
January 18, 2008, our Ordinary Shares were consolidated on a one-for-ten basis
whereby ten Ordinary Shares of 5p each became one Ordinary Share of
50p.
On May
14, 2008 we announced a private placement of ADSs (each representing one
Ordinary Share) with several new institutional and accredited investors and
potentially certain current and former directors of the Company, for up to $60.0
million funded under two equal tranches.
The first first tranche from new investors closed on May 19, 2008 and was
settled by the issuance of 12,173,914 Ordinary Shares and 8 new Preference
Shares. For further information on Preference Shares, see Item 10B "Memorandum
and Articles of Association - The Series A Preference Shares". The investors
will have an option to provide up to $28.0 million in a second tranche upon
completion of certain business milestones by the Company, potentially over the
next 12 months. Certain current and former directors have indicated an interest
in investing up to $4.0 million in the placement, also over two tranches
bringing the potential total of the placement up to $60.0
million. For
further information regarding the private equity financing please see our Report
of Foreign Issuer on Form 6-K filed with the SEC on May 14, 2008. Certain
of the investors were entitled to join Amarin’s Board of Directors. On
May 16, 2008, Drs. Doogan, Kukes, Walsh and Lachman, Prof. Hall and
Messrs. Cooke and Groom resigned from the Board. On the same date Dr.
James Healy, Dr. Carl L. Gordon, Dr. Eric Aguiar and Dr. Srinivas Akkaraju were
appointed to the Board. The new board appointments are effective upon the
closing of the first tranche of the financing.
Jim
Healy, M.D., Ph.D. joined Sofinnova Ventures as a General Partner in
2000. Dr. Healy was a founding investor and board member of
Cellective (acquired by MedImmune), CoTherix (acquired by Actelion), Novacea
(Nasdaq: NOVC), and Intermune (Nasdaq: ITMN). He also serves on the
boards of directors of several private companies.
In the
pharmaceutical industry Dr. Healy held manufacturing positions at Bayer
Pharmaceuticals (Miles) and ISTA Pharmaceuticals prior to its initial public
offering. He began his private equity career at Sanderling.
Dr. Healy
earned B.A.s in Molecular Biology and Scandinavian Studies from the University
of California at Berkeley, where he graduated with Distinction in General
Scholarship, Honors, and received a Departmental Citation. He received
his M.D. from Stanford University’s School of Medicine through the Medical
Scientist Training Program, and earned his Ph.D. in Immunology from Stanford
University, where he was a Beckman Scholar and received a bursary award from the
Novartis Foundation. He teaches a course on entrepreneurship at Stanford
University, and is an active member of the BIO-NVCA Working
Group.
Carl L.
Gordon, Ph.D., CFA, is a founding General Partner of OrbiMed and Co-Head of
Private Equity. Mr. Gordon is active in both private equity and
small-capitalization public equity investments. He was a senior biotechnology
analyst at Mehta and Isaly from 1995 to 1997. He was a Fellow at The Rockefeller
University from 1993 to 1995. Mr. Gordon received a Ph.D. in Molecular Biology
from the Massachusetts Institute of Technology. His doctoral work involved
studies of protein folding and assembly. He received a Bachelors degree from
Harvard College.
Dr. Eric
Aguiar is a Partner at Thomas, McNerney & Partners in Stamford, Ct. He has
16 years of experience in the biopharmaceutical industry. From 2001 to 2007 he
was a Managing Director at HealthCare Ventures. Prior to joining
HealthCare Ventures, he was CEO of Genovo, Inc. Eric was an executive at
TheraTech, a drug delivery company that was sold to Watson Pharmaceuticals in
1997. He was a Managing Director and Vice President of Philadelphia Ventures in
the mid-90's. Prior board seats have included Cardiokine, SkinMedica,
Vaxinnate, Metaphore Pharmaceuticals, 3-D Pharmaceuticals and ThromboSys. He
graduated from Harvard Medical School and Cornell University with
honors.
Dr.
Akkaraju is a founding Managing Director of Panorama Capital and focuses
primarily on life sciences investments. Previously, he was with J.P. Morgan
Partners, serving as a Principal starting in April 2001 and becoming a Partner
in January 2005. From 1998 to 2001, Dr. Akkaraju was in Business and Corporate
Development at Genentech, Inc., most recently as Senior Manager responsible for
worldwide partnering activities, in-licensing of therapeutics, and out-licensing
of development projects. In addition to his business development role, Dr.
Akkaraju also served as a Project Team Leader for one of Genentech’s clinical
development products. During this time, he also was a founding member of
BioStreet, an online marketplace for biotech opportunities. Dr. Akkaraju holds
B.A. degrees in both Biochemistry and Computer Science from Rice University and
an M.D. and Ph.D. in Immunology from Stanford University School of Medicine. Dr.
Akkaraju currently serves on the board of directors of Presidio Pharmaceuticals,
Itero Biopharmaceuticals, Barrier Therapeutics, Inc., Phenomix Corporation,
Piramed Limited, Seattle Genetics, Inc., and Pharmos, Inc.
Item 9 The
Offer and Listing
A. Offer
and Listing Details
The
following table sets forth the range of high and low closing sale prices for our
ADSs for the periods indicated, as reported by the Nasdaq Capital Market. These
prices do not include retail mark-ups, markdowns, or commissions but give effect
to a change in the number of Ordinary Shares represented by each ADS,
implemented in both October 1998 and July 2002. Historical data in the table has
been restated to take into account these changes.
|
US$
High
|
US$
Low
|
Fiscal
Year Ended
December 31,
2003
|
4.81
|
1.39
|
December 31,
2004
|
3.99
|
0.53
|
December 31,
2005
|
3.40
|
1.06
|
December 31,
2006
|
3.74
|
1.27
|
December 31,
2007
|
3.78
|
0.23
|
Fiscal
Year Ended December 31, 2006
First
Quarter
|
3.74
|
1.27
|
Second
Quarter
|
3.10
|
1.93
|
Third
Quarter
|
2.96
|
2.23
|
Fourth
Quarter
|
2.67
|
1.96
|
Fiscal
Year Ended December 31, 2007
First
Quarter
|
2.62
|
1.74
|
Second
Quarter
|
3.78
|
0.52
|
Third
Quarter
|
0.58
|
0.36
|
Fourth
Quarter
|
0.45
|
0.23
|
Month
Ended
|
|
|
November
2007
|
0.43
|
0.30
|
December
2007
|
0.40
|
0.23
|
January
2008*
|
2.90
|
1.81
|
February
2008*
|
3.59
|
2.83
|
March
2008*
|
2.95
|
2.59
|
April
2008* |
3.07 |
2.60 |
*
|
Share
price information for 2008 has been adjusted for the one-for-ten stock
consolidation which became effective on January 18,
2007
|
On May 15,
2008, the closing price of our ADSs as reported on the Nasdaq Capital Market was
U.S. $2.69 per ADS.
B. Plan
of Distribution
Not
applicable.
C. Markets
Our ADSs,
which are evidenced by American Depositary Receipts, are traded on the Nasdaq
Capital Market, the principal trading market for our securities, under the
symbol “AMRN.” Each ADS represents one Ordinary Share. Our Ordinary Shares were
admitted to trading on the AIM market of the London Stock Exchange under the
symbol, “AMRN” and the IEX market of the Irish Stock Exchange, under the symbol
“H2E”, in each case on July 17, 2006.
NASD
Rule Election
Pursuant
to NASD Rule 4350(a)(1) for Foreign Private Issuers, we have elected to
follow the home country practice of the United Kingdom in lieu of the
shareholder approval requirements of NASD Rule 4350(i). Under NASD Rule
4350(i), issuers are required to obtain shareholder approval prior to the
issuance of securities, interalia; (A) in connection
with the establishment or material amendment of a stock option or purchase plan
or other equity compensation arrangement pursuant to which stock may be acquired
by officers, directors, employees or consultants of the issuer, subject to
certain exceptions; (B) when such issuance or potential issuance will result in
a change of control of the issuer; (C) in connection with the acquisition of the
stock or assets of another company if (i) any director, officer or substantial
shareholder of the issuer has a 5% or greater interest (or such persons
collectively have a 10% or greater interest), directly or indirectly, in the
company or assets to be acquired or in the consideration to be paid in the
transaction or series of related transactions and the present or potential
issuance of common stock, or securities convertible into or exercisable for
common stock, could result in an increase in outstanding common shares or voting
power of 5% or more or (ii) where, due to the present or potential issuance of
common stock, or securities convertible into or exercisable for common stock,
other than a public offering for cash (a) the common stock has or will have upon
issuance voting power equal to or in excess of 20% of the voting power
outstanding before the issuance of stock or securities convertible into or
exercisable for common stock or (b) the number of shares of
common
stock to be issued is or will be equal to or in excess of 20% of the number of
shares or common stock outstanding before the issuance of the stock or
securities; or (D) in connection with a transaction other than a public offering
involving (i) the sale, issuance or potential issuance of common stock (or
securities convertible into or exercisable for common stock) at a price less
than the greater of book or market value which together with sales by officers,
directors or substantial shareholders of the company equal to 20% or more of the
common stock or 20% or more of the voting power outstanding or (ii) the sale,
issuance or potential issuance of common stock (or securities convertible into
or exercisable for common stock) equal to 20% or more of the common stock or 20%
or more of the voting power outstanding before the issuance for less than the
greater of book or market value of the stock. The applicable laws of
England and Wales do not prohibit the issuance of securities without shareholder
approval in the circumstances described in NASDAQ
Rule 4350(i).
D. Selling
Shareholders
Not
applicable.
E. Dilution
Not
applicable.
F. Expenses
of the Issue
Not
applicable.
Item 10 Additional
Information
A. Share
Capital
Not
applicable.
B. Memorandum
and Articles of Association
Objects
and Purposes
We were
formed as a private limited company under the Companies Act 1985 and
re-registered as a public limited company on March 19, 1993 under
registered number 02353920. Under article 4 of our memorandum of
association, our objects are to carry on the business of a holding company and
to carry on any other business in connection therewith as determined by the
board of directors.
Directors
Directors’
Interests
A
director may serve as an officer or director of, or otherwise have an interest
in, any company in which we have an interest. A director may not vote (or be
counted in the quorum) on any resolution concerning his appointment to any
office or any position from which he may profit, either with us or any other
company in which we have an interest. A director is not prohibited from entering
into transactions with us in which he has an interest, provided that all
material facts regarding the interest are disclosed to the board of
directors.
A
director is not entitled to vote (or be counted in the quorum) on any resolution
relating to a transaction in which he has an interest which he knows is
material. However, this prohibition does not apply to any of the following
matters:
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he
or any other person receives a security or indemnity in respect of money
lent or obligations incurred by him or any other person at the request of
or for the benefit of us or any of our
subsidiaries;
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a
security is given to a third party in respect of a debt or obligation of
us or any of our subsidiaries which he has himself guaranteed or secured
in whole or in part;
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a
contract or arrangement concerning an offer or invitation for our shares,
debentures or other securities or those of any of our subsidiaries, if he
subscribes as a holder of securities or if he underwrites or
sub-underwrites in the offer;
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a
contract or arrangement in which he is interested by virtue of his
interest in our shares, debentures or other securities or by reason of any
interest in or through us;
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a
contract or arrangement concerning any other company (not being a company
in which he owns 1% or more) in which he is interested directly or
indirectly whether as an officer, shareholder, creditor or
otherwise;
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a
proposal concerning the adoption, modification or operation of a pension
fund or retirement, death or disability benefits scheme for both our
directors and employees and those of any of our subsidiaries which does
not give him, as a director, any privilege or advantage not accorded to
the employees to whom the scheme or fund
relates;
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an
arrangement for the benefit of our employees or those of any of our
subsidiaries which does not give him any privilege or advantage not
generally available to the employees to whom the arrangement
relates; and
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insurance
which we propose to maintain or purchase for the benefit of directors or
for the benefit of persons including
directors.
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Compensation
of Directors
Each
director is to be paid a director’s fee at such rate as may from time to time be
determined by the board of directors and which shall not exceed £500,000
(approximately USD$999,000 at year end exchange rates) in aggregate to all the
directors per annum. Any director who, at our request, goes or resides abroad
for any purposes or services which in the opinion of the board of directors go
beyond the ordinary duties of a director, may be paid such extra remuneration
(whether by way of salary, commission, participation in profits or otherwise) as
the board of directors may determine.
Any
executive director will receive such remuneration (whether by way of salary,
commission, participation in profits or otherwise) as the board of directors or,
where there is a committee constituted for the purpose, such committee may
determine, and either in addition to or in lieu of his remuneration as a
director.
Borrowing
Powers of Directors
The board
of directors has the authority to exercise all of our powers to borrow money and
issue debt securities. If at any time our securities should be listed on the
Official List of the London Stock Exchange, our total indebtedness (on a
consolidated basis) would be subject to a limitation of three times the total of
paid up share capital and consolidated reserves.
Retirement
of Directors
At every
annual general meeting, one-third of the directors must retire from office. In
determining which directors shall retire and stand, or not stand, for
re-election, first, we include any director who chooses to retire and not face
re-election and, second, we choose the directors who have served as directors
for the longest period of time since their last election. A director who has
elected to retire is not eligible for re-election. There is no age limit or
requirement that directors retire at a specified age. However, if a director
proposed for election or re-election has attained the age of 70, this fact must
be disclosed in the notice of the meeting. Directors are not required to hold
our securities.
Description
of Ordinary Shares
Our
authorized share capital is £100,000,000 divided into 155,914,406 Ordinary
Shares of 50p each (post share consolidation effective January 18, 2008 whereby
ten Ordinary Shares of 5p each became one Ordinary Share of 50p each) and
440,855,934 Preference Shares of 5p each. In the following summary, a
“shareholder” is the person registered in our register of members as the holder
of the relevant securities. For those Ordinary Shares that have been deposited
in our American Depositary Receipt facility pursuant to our deposit agreement
with Citibank N.A., Citibank or its nominee is deemed the
shareholder.
Dividends
Holders
of Ordinary Shares are entitled to receive such dividends as may be declared by
the board of directors. All dividends are declared and paid according to the
amounts paid up on the shares in respect of which the dividend is paid. To date
there have been no dividends paid to holders of Ordinary Shares.
Any
dividend unclaimed after a period of twelve years from the date of declaration
of such dividend shall be forfeited and shall revert to us. In addition, the
payment by the board of directors of any unclaimed dividend, interest or other
sum payable on or in respect of an Ordinary Share or a Preference Share into a
separate account shall not constitute us as a trustee in respect
thereof.
Rights
in a Liquidation
Holders
of Ordinary Shares are entitled to participate in any distribution of assets
upon a liquidation, subject to prior satisfaction of the claims of creditors and
preferential payments to holders of outstanding Preference Shares.
Voting
Rights
Voting at
any general meeting of shareholders is by a show of hands, unless a poll is
demanded. A poll may be demanded by:
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the
chairman of the meeting;
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at
least two shareholders entitled to vote at the
meeting;
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any
shareholder or shareholders representing in the aggregate not less than
one-tenth of the total voting rights of all shareholders entitled to vote
at the meeting; or
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any
shareholder or shareholders holding shares conferring a right to vote at
the meeting on which there have been paid up sums in the aggregate equal
to not less than one-tenth of the total sum paid up on all the shares
conferring that right.
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In a vote
by a show of hands, every shareholder who is present in person at a general
meeting has one vote. In a vote on a poll, every shareholder who is present in
person or by proxy shall have one vote for every share of which they are
registered as the holder. The quorum for a shareholders’ meeting is a minimum of
two persons, present in person or by proxy. To the extent the articles of
association provide for a vote by a show of hands in which each shareholder has
one vote, this differs from U.S. law, under which each shareholder
typically is entitled to one vote per share at all meetings.
Holders
of ADSs are also entitled to vote by supplying their voting instructions to
Citibank who will vote the Ordinary Shares represented by their ADSs in
accordance with their instructions. The ability of Citibank to carry out voting
instructions may be limited by practical and legal limitations, the terms of our
articles and memorandum of association, and the terms of the Ordinary Shares on
deposit. We cannot assure the holders of our ADSs that they will receive voting
materials in time to enable them to return voting instructions to Citibank a
timely manner.
Unless
otherwise required by law or the articles of association, voting in a general
meeting is by ordinary resolution. An ordinary resolution is approved by a
majority vote of the shareholders present at a meeting at which there is a
quorum. Examples of matters that can be approved by an ordinary resolution
include:
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the
election of directors;
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the
approval of financial statements;
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the
declaration of final dividends;
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the
appointment of auditors;
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the
increase of authorized share
capital; or
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the
grant of authority to issue shares.
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A special
resolution or an extraordinary resolution requires the affirmative vote of not
less than three-fourths of the eligible votes. Examples of matters that must be
approved by a special resolution include modifications to the rights of any
class of shares, certain changes to the memorandum or articles of association,
or our winding-up.
Capital
Calls
The board
of directors has the authority to make calls upon the shareholders in respect of
any money unpaid on their shares and each shareholder shall pay to us as
required by such notice the amount called on his shares. If a call remains
unpaid after it has become due and payable, and the fourteen days notice
provided by the board of directors has not been complied with, any share in
respect of which such notice was given, may be forfeited by a resolution of the
board.
Preference
Shares
As of
December 31, 2007, we had 440,855,934 Preference Shares of 5p each forming part
of our authorized share capital. Pursuant to an authority given by the
shareholders at the 2007 Annual General Meeting our board of directors has the
authority to issue up to 440,855,934 preference shares of 5p. Pursuant
to article 6 of the articles of association, the Preference Shares may be issued
in one or more separate series, each of which will constitute a separate class
of shares. The board of directors has the authority under article 5 of the
articles of association to issue Preference Shares with such rights and subject
to such restrictions and limitations as the directors shall
determine, including dividend rights, conversion rights, voting
rights, rights and terms of redemption, and liquidation preference, any or all
of which may be greater than the rights of the ordinary shares. As of December
31, 2007, our board of directors had not issued any such preference
shares.
The
issuance of preference shares could adversely affect the voting power of holders
of ordinary shares and reduce the likelihood that ordinary shareholders will
receive dividend payments and payments upon liquidation. The issuance could have
the effect of decreasing the market price of our ordinary shares. The issuance
of preference shares also could have the effect of delaying, deterring or
preventing a change in control of us.
Our
articles of association and English Law provide that the holders of preference
shares will have the right to vote separately as a class on any proposal
involving changes that would adversely affect the powers, preferences, or
special rights of holders of that of preference shares.
On May
16, 2008, pursuant to articles 5 and 6 of the articles of association, the board
of directors resolved that:
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80 of
the 5 pence Preference Shares be consolidated and divided into 8
Preference Shares with a nominal value of 50 pence each;
and
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the
Preference Shares with a nominal value of 50 pence each to be issued and
allotted to subscribers shall be known as "Series A Preference Shares" and
shall be issued with the rights, and subject to the restrictions and
limitations, set out in forms 128(1) and 128(4) filed with Companies House
in the U.K. in May 2008.
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The
Series A Preference Shares
Eight
Series A Preference Shares have been designated for issuance and were issued to
certain investors in the first tranche of a two-tranche private placement in May
of 2008.
Pursuant
to the rights of the Series A Preference Shares, the consent of the holders of
at least two-thirds of the Series A Preference Shares is required to increase
the number of members on our Board to more than eight (8) or, after the time the
additional director described below is required to be added to the Board, to
more than nine (9). Holders of the Series A Preference Shares are
entitled to elect four (4) members to our Board (the “Series A
Directors”). In voting for the Series A Directors other than at a
general meeting of shareholders, the voting power of the Series A Preference
Shares will be determined pro rata among the holders thereof based on each such
holder’s ownership of Ordinary Shares as a percentage of all Ordinary Shares
owned by the Series A Holders. In voting for the Series A Directors
at a general meeting, each holder of Series A Preference Shares will be entitled
to a number of votes equal to (x) five (5) times the number of Ordinary Shares
then outstanding times (y) such holder’s percentage ownership of all the
Ordinary Shares owned by the Series A Holders. Except as described
herein, the Series A Preference Shares do not entitle holders thereof to vote at
general meetings of shareholders.
If an
additional director who is mutually acceptable to the directors who are not
Series A Directors, on the one hand, and the majority of the Series A Directors,
on the other hand, is not appointed to the Board by August 22, 2008 or such a
mutually acceptable director ceases to serve on the Board and is not replaced
within 60 days, then the holders of the Series A Preference Shares will be
entitled to elect a fifth Series A Director to serve until replaced by such a
mutually acceptable director.
The
majority of the Series A Directors also have the right to approve the
composition of any committee of the Board, so long as such committee has an
equal number Series A Directors and directors who are not Series A
Directors. Consent of the majority of the Series A Directors will be
required in order to change the quorum necessary for transaction of business by
the Board to any number other than six (6), comprising three (3) Series A
Directors and three (3) directors who are not Series A Directors.
Each
holder of Series A Preference Shares has a right of first refusal to purchase
its pro rata share of any offering by us of Ordinary Shares or other capital
stock, or securities convertible or exchangeable therefor, on the same terms as
the other investors participating in such offering, subject to certain
exceptions (which include issuances pursuant to approved option plans or, in
certain cases, our existing equity line of credit).
The
consent of the holders of at least two-thirds of the Series A Preference Shares
is required to issue any additional Series A Preference Shares, amend or alter
the rights of the Series A Preference Shares, amend or alter certain of our
Articles of Association if the effect thereof would be adverse or inconsistent
with the specific rights of the Series A Preference Shares or authorize any
additional equity securities which would have the effect of amending, altering
or granting rights identical or superior to the specific rights of the Series A
Preference Shares.
The
Series A Preference Shares are not redeemable and rank pari passu with our Ordinary
Shares with respect to dividends and rights on a liquidation, winding-up or
dissolution.
Pre-emptive
Rights
English
law provides that shareholders have pre-emptive rights to subscribe to any
issuances of equity securities that are or will be paid wholly in cash. These
rights may be waived by a special resolution of the shareholders, either
generally or in specific instances, for a period not exceeding five years. This
differs from U.S. law, under which shareholders generally do not have
pre-emptive rights unless specifically granted in the certificate of
incorporation or otherwise. Pursuant to resolutions passed at our annual general
meeting on July 19, 2007, our directors are duly authorized during the
period ending on July 19, 2012 to exercise all of our powers to allot our
securities and to make any offer or agreement which would or might require such
securities to be allotted after that date. The aggregate nominal amount of the
relevant securities that may be allotted under the authority cannot exceed
£85,147,430 ((equivalent to 126,209,277 Ordinary Shares and 440,855,854
preference shares) post share consolidation effective January 18, 2008 whereby
ten Ordinary Shares of 5p each became one Ordinary Share of 50p each). Under
these resolutions, subject to the rights of the Series A Holders set out
above, we are empowered to allot equity securities as if English statutory
pre-emption rights did not apply to such issuance and, therefore, without first
offering equity securities to our existing shareholders.
Redemption Provisions
Subject
to the Companies Acts and with the sanction of a special resolution, shares in
us may be issued with terms that provide for mandatory or optional redemption.
The terms and manner of redemption would be provided for by the alteration of
our articles of association.
Subject
to the Companies Acts, we may also purchase in any manner the board of directors
considers appropriate any of our own Ordinary Shares, Preference Shares or any
other shares of any class (including redeemable shares) at any
price.
Variation
of Rights
If at any
time our share capital is divided into different classes of shares, the rights
of any class may be varied or abrogated with the written consent of the holders
of not less than 75% of the issued shares of the class, or pursuant to an
extraordinary resolution passed at a separate meeting of the holders of the
shares of that class. At any such separate meeting the quorum shall be a minimum
of two persons holding or representing by proxy one-third in nominal amount of
the issued shares of the class, unless such separate meeting is adjourned, in
which case the quorum at such adjourned meeting or any further adjourned meeting
shall be one person. Each holder of shares of that class has one vote per share
at such meetings.
Meetings
of Shareholders
The board
of directors may call general meetings and general meetings may also be called
on the requisition of our shareholders representing at least one tenth of the
voting rights in general meeting pursuant to section 303 of the Companies
Act 2006. Annual general meetings are convened upon advance notice of
21 days. Extraordinary general meetings are convened upon advance notice of
21 days or 14 days depending on the nature of the business to be
transacted. Notice to shareholders shall be supplied in electronic form by means
of our website to those shareholders who have not opted-out of the electronic
communications regime that we implemented by special resolution at our 2007
Annual General Meeting; those shareholders who did opt-out of this regime will
receive such notices in hard copy in the usual manner.
Citibank
will mail to the holders of ADSs any notice of shareholders’ meeting received
from us, together with a statement that holders will be entitled to instruct
Citibank to exercise the voting rights of the Ordinary Shares represented by
ADSs and information explaining how to give such instructions.
Limitations
on Ownership
There are
currently no U.K. foreign exchange controls on the payment of dividends on our
Ordinary Shares or the conduct of our operations. There are no restrictions
under our memorandum and articles of association or under English law that limit
the right of non-resident or foreign owners to hold or vote our Ordinary Shares,
Preference Shares or ADSs.
Change
of Control
Save as
expressly permitted by the Companies Acts, we shall not give financial
assistance, whether directly or indirectly, for the purposes of the acquisition
of any of our shares or for reducing or discharging any liability incurred for
the purpose of such acquisition.
Disclosure
of Interests
Under
English Law, any person who acquires an equity interest above a “notifiable
percentage” must disclose certain information to us regarding the person’s
shares. The applicable threshold is currently 3%. The disclosure requirement
applies to both persons acting alone or, in certain circumstances, with others.
After a person’s holdings exceed the “notifiable” level, similar notifications
must be made when the ownership percentage figure increases or decreases by a
whole number.
In
addition, Section 793 of the Companies Act of 2006 gives us the authority to
require certain disclosure regarding an equity interest if we know, or have
reasonable cause to believe, that the shareholder is interested or has within
the previous three years been interested in our share capital. Failure to supply
the information required may lead to disenfranchisement under our articles of
association of the relevant shares and a prohibition on their transfer and on
dividend or other payments. Under the deposit agreement with Citibank pursuant
to which the ADRs have been issued, a failure to provide certain information
pursuant to a similar request may result in the forfeiture by the holder of the
ADRs of rights to direct the voting of the Ordinary Shares underlying the ADSs
and to exercise
certain other rights with respect to the Ordinary Shares. The foregoing
provisions differ from U.S. law, which typically does not impose disclosure
requirements on shareholders.
Directors’
Indemnification
A special
resolution was passed at the 2006 Annual General Meeting to adopt new Articles
of Association amended to give effect to the U.K. Companies (Audit,
Investigations and Community Enterprise) Act 2004 (the “2004 Act”), pursuant to
which companies can take advantage of a specific exemption to indemnify
directors against liabilities to third parties, and can pay directors’ costs of
defence proceedings as they are incurred (subject to an obligation to repay if
the defence is not successful). This was to address concerns that directors of
companies whose shares are admitted on the securities markets of the United
States (including NASDAQ) may face class actions in the United States and to
help alleviate (at least in the short term) the cost to directors of court
proceedings in the United States pursuant to the 2004 Act.
Companies
can obtain liability insurance for directors and can also pay directors’ legal
costs if they are successful in defending legal proceedings.
Accordingly,
our board of directors has taken a decision that Amarin should so indemnify our
directors and officers and Amarin has entered into forms of indemnity with our
directors and officers which comply with the 2004 Act. In addition, Amarin
carries liability insurance for our directors and officers.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the Group
pursuant to the charter provision, by-law, contract, arrangements, statute or
otherwise, the Group acknowledges that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
C. Material
Contracts
We are
party to the following material contracts outside of the ordinary course of
business. Copies of these agreements are filed or incorporated by reference as
exhibits to this annual report.
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Clinical
Supply Agreement between Laxdale Limited (“Laxdale”) and Nisshin Flour
Milling Co., Limited (“Nisshin”) dated October 27, 1999 relating to
the supply of ethyl-eicosapentaenoate (ethyl-EPA) by Nisshin to Laxdale
whereby Nisshin is obliged to supply all Laxdale’s requirements of
ethyl-EPA to Laxdale for clinical supply to be used in clinical
trials.
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Asset
Purchase Agreement dated February 11, 2004 between Valeant
Pharmaceuticals International, (“Valeant”) and Amarin Corporation plc and
Amendment No.1 thereto dated February 25, 2004, which together
provide for the sale to Valeant of Amarin Pharmaceuticals, Inc. (a former
subsidiary), and our rights to Permax, Zelapar and the primary care
portfolio at a purchase price of $38 million paid at closing and
$8 million in contingent milestone
payments.
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Settlement
Agreement dated February 25, 2004 between Amarin Corporation plc,
Elan Corporation plc (“Elan”) and certain affiliates thereof, providing
for the restructuring of all of Amarin Corporation plc’s outstanding
obligations to Elan. In connection with the Settlement Agreement, Amarin
Corporation plc issued loan notes in the aggregate principal amount of
$5 million, bearing interest at 8% per annum with a maturity
date of February 25, 2009. Also in connection with the Settlement
Agreement, Amarin Corporation plc issued a warrant exercisable for 500,000
Ordinary Shares.
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Settlement
Agreement dated September 27, 2004 between Amarin Corporation plc,
Amarin Pharmaceuticals Company Limited (a former subsidiary) and Valeant
in respect of the full and final settlement of a contractual dispute as
between Valeant and Amarin Corporation plc arising out of the purchase by
Valeant of Amarin Pharmaceuticals Inc. Pursuant to this Settlement
Agreement, we agreed to forgo part of the contingent milestones payable by
Valeant to Amarin Corporation plc due under the Asset Purchase Agreement
for the Amarin Pharmaceuticals Inc. transaction, namely the entire
$5.0 million contingent milestone payable upon FDA approval of
Zelapar and $1.0 million of the $3.0 million contingent
milestone previously due when the remaining safety studies were
successfully completed. Also, Valeant has agreed that Amarin Corporation
plc is no longer required to purchase $414,000 of further inventory from
wholesalers and that the remaining $2.0 million contingent milestone
previously due when the remaining Zelapar safety studies were successfully
completed would be paid on November 30, 2004 without any such
contingency.
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Form
of Subscription Agreement dated October 7, 2004 between Amarin
Corporation plc and the Purchasers named therein. Amarin Corporation plc
entered into 14 separate Subscription Agreements on October 7, 2004
all substantially similar in form and content to this form of Subscription
Agreement pursuant to which we issued an aggregate of 13,474,945 Ordinary
Shares to such Purchasers including management. The purchase price was
$0.947 per share for Purchasers other than management based on the
average closing price of our American Depository Shares (“ADSs”) on the
Nasdaq SmallCap Market for the ten trading days ended October 6, 2004
and the purchase price was $1.04 per share for management investors
based on the average closing price of our ADSs on the Nasdaq SmallCap
Market for the five trading days ended October 6,
2004.
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Form
of Registration Rights Agreement dated October 7, 2004 between Amarin
Corporation plc and the Purchasers named therein. Amarin Corporation plc
entered into 14 separate Registration Rights Agreements on October 7,
2004 all substantially similar in form and content to this form of
Registration Rights Agreement. Pursuant to such Registration Rights
Agreements, Amarin Corporation plc agreed to use commercially reasonable
efforts to file a registration statement with respect to the securities
purchased pursuant to the Subscription Agreements dated October 7, 2004
and to use commercially reasonable efforts to cause the registration
statement to be declared effective and to remain effective for a period
ending with the first to occur of (i) the sale of all securities
covered by the registration statement and (ii) March 30,
2006.
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Share
Purchase Agreement dated October 8, 2004 between Amarin Corporation
plc, Vida Capital Partners Limited and the Vendors named therein relating
to the entire issued share capital of Laxdale. The purchase price for the
acquisition of Laxdale comprised an initial consideration of 3,500,000
ADSs representing 3,500,000 Ordinary Shares and certain success based
milestone payments payable on a pro rata basis to the shareholders of
Laxdale.
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Clinical
Trial Agreement dated March 18, 2005 between Amarin Neuroscience
Limited and the University of Rochester. Pursuant to this
agreement the University is obliged to carry out or to facilitate the
carrying out of a clinical trial research study set forth in a research
protocol on AMR101 in patients with Huntington’s
disease.
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Form
of Securities Purchase Agreement dated May, 2005 between Amarin
Corporation plc and the Purchasers named therein. Amarin Corporation plc
entered into 34 separate Securities Purchase Agreements in May, 2005
all substantially similar in form and content to this Securities Purchase
Agreement pursuant to which we issued an aggregate of 13,677,110 ordinary
shares to such Purchasers, including management. The purchase price was
$1.30 per ordinary share.
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Services
Agreement dated June 16, 2005 between Icon Clinical Research Limited
and Amarin Neuroscience Limited. Pursuant to this agreement, Amarin
Neuroscience Limited appointed Icon Clinical Research Limited as its
clinical research organization for the European arm of the Phase III
clinical trials relating to the use of AMR101 in Huntington’s
disease.
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Employment
Agreement dated May 12, 2004 and amended September 1, 2005 with
Alan Cooke.
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Clinical
Supply Extension Agreement dated December 13, 2005 between Amarin
Pharmaceuticals Ireland Limited and Amarin Neuroscience Limited and
Nisshin Flour Milling Co.
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Form
of Securities Purchase Agreement dated December 16, 2005 between
Amarin Corporation plc and the Purchasers named therein. Amarin
Corporation plc entered into 44 separate Securities Purchase Agreements on
December 16, 2005 all substantially similar in form and content to
this Securities Purchase Agreement pursuant to which we issued an
aggregate of 26,100,098 ordinary shares to such Purchasers, including
management. The purchase price was $1.01 per ordinary
share.
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Form
of Securities Purchase Agreement dated January 23, 2006 between
Amarin Corporation plc and the Purchasers named therein. The Company
entered into 2 separate Securities Purchase Agreements on
January 23, 2006 both substantially similar in form and content to
this Securities Purchase Agreement pursuant to which we issued an
aggregate of 840,000 ordinary shares to such Purchasers. The purchase
price was $2.50 per ordinary
share.
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Assignment
Agreement dated May 17, 2006 between Amarin Pharmaceuticals Ireland
Limited and Dr Anthony Clarke. Pursuant to this agreement, Amarin
Pharmaceuticals Ireland Limited acquired the global rights to a novel oral
formulation of Apomorphine for the treatment of “off” episodes in patients
with advanced Parkinson’s disease.
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Amendment
(Change Order Number 2), dated June 8, 2006 to Services Agreement dated
June 16, 2005 between Icon Clinical Research Limited and Amarin
Neuroscience Limited. Pursuant to this agreement, Icon Clinical
Research Limited revised the European Project Spceifications and related
costs.
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Lease
Agreement dated July 4, 2006 between Amarin Neuroscience Limited and
Magdalen Development Company Limited and Prudential Development Management
Limited. Pursuant to this agreement, Amarin Neuroscience Limited took a
lease of a premises at the South West Wing First Floor Office Suite, The
Magdalen Centre North, The Oxford Science Park, Oxford,
England.
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Form
of Securities Purchase Agreement dated October 18, 2006 between
Amarin Corporation plc and the Purchasers named therein. The Company
entered into 32 separate Securities Purchase Agreements on
October 18, 2006 all substantially similar in form and content to
this Securities Purchase Agreement pursuant to which we issued an
aggregate of 8,965,600 ordinary shares to such Purchasers. The purchase
price was $2.09 per ordinary share.
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Master
Services Agreement dated November 15, 2006 between Amarin
Pharmaceuticals Ireland Limited and Icon Clinical Research (U.K.) Limited.
Pursuant to this agreement, Icon Clinical Research (U.K.) Limited agreed
to provide due diligence services to Amarin Pharmaceuticals Ireland
Limited with respect to potential licensing opportunities on an ongoing
basis.
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Amendment
dated December 8, 2006 to Clinical Trial Agreement dated March 18, 2005
between Amarin Neuroscience Limited and the University of
Rochester.
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Agreement
dated January 18, 2007 between Neurostat Pharmaceuticals Inc.
(“Neurostat”), Amarin Pharmaceuticals Ireland Limited, Amarin Corporation
plc and Mr. Tim Lynch whereby the Company agreed to pay Neurostat a
finder’s fee relating to a potential licensing transaction and similar
payments comprising upfront and contingent milestones totaling $565,000
and warrants to purchase 175,000 ordinary shares with an exercise price of
$1.79 per ordinary share.
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Lease
Agreement dated January 22, 2007 between Amarin Corporation plc, Amarin
Pharmaceuticals Ireland Limited and Mr. David Colgan, Mr. Philip
Monaghan, Mr. Finian McDonnell and Mr. Patrick Ryan. Pursuant to
this agreement, Amarin Pharmaceuticals Ireland Limited took a lease of a
premises at The First Floor, Block 3, The Oval, Shelbourne Road,
Dublin 4.
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Amendment
(Change Order Number 4), dated February 15, 2007 to Services
Agreement dated June 16, 2005 between Icon Clinical Research Limited
and Amarin Neuroscience Limited. Pursuant to this agreement, Icon Clinical
Research Limited agreed to conduct for Amarin Neuroscience Limited a one
year E.U. open label follow-up study to the existing Phase III study in
Huntington’s Disease.
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Employment
Agreement Amendment dated February 21, 2007 with Alan
Cooke.
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Amendment
(Change Order Number 3), dated March 1, 2007 to Services
Agreement dated June 16, 2005 between Icon Clinical Research Limited
and Amarin Neuroscience Limited. Pursuant to this agreement, Icon Clinical
Research Limited agreed to increase the patient numbers to
290 patients from 240 patients (pursuant to the original
services agreement dated June 16, 2005 between Icon Clinical Research
Limited and Amarin Neuroscience
Limited).
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Development
and License Agreement dated March 6, 2007 between Amarin Pharmaceuticals
Ireland Limited and Elan Pharma International Limited. Pursuant
to this agreement, Amarin Pharmaceuticals Ireland Limited acquired global
rights to a novel nasal lorazepam formulation for the treatment of
emergency seizures in epilepsy
patients.
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Consultancy
Agreement dated March 9, 2007 between Amarin Corporation plc and
Dalriada Limited. Under the Consultancy Agreement, Amarin Corporation plc
will pay Dalriada Limited a fee of £240,000 per annum for the
provision of the consultancy services. Dalriada Limited is owned by a
family trust, the beneficiaries of which include our Chairman and Chief
Executive Officer, Mr. Thomas Lynch, and members of his
family.
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Form
of Securities Purchase Agreement dated June 1, 2007 between Amarin
Corporation plc and the Purchasers named therein. Amarin Corporation plc
entered into 11 separate Securities Purchase Agreements on June 1, 2007
all substantially similar in form and content to this Securities Purchase
Agreement pursuant to which we issued an aggregate of 6,156,406 ordinary
shares to such Purchasers, including management. The purchase price was
$0.60 per ordinary share.
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Equity
Credit Agreement dated June 1, 2007 between Amarin Corporation plc and
Brittany Capital Management. Pursuant to this agreement, Amarin
has an option to draw up to $15,000,000 of funding at any time over a
three year period solely at Amarin Corporation plc’s
discretion.
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Form
of Equity Securities Purchase Agreement dated December 4, 2007 between
Amarin Corporation plc and the Purchasers named therein. Amarin
Corporation plc entered into 19 separate Equity Securities Purchase
Agreements on December 4, 2007 all substantially similar in form and
content to this Equity Securities Purchase Agreement pursuant to which we
issued an aggregate of 16,290,900 ordinary shares to such Purchasers,
including management. The purchase price was $0.33 per ordinary
share.
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Form
of Debt Securities Purchase Agreement dated December 4, 2007 between
Amarin Corporation plc and the Purchasers named therein. Amarin
Corporation plc entered into 2 separate Debt Securities Purchase
Agreements on December 4, 2007 both substantially similar in form and
content to this Debt Securities Purchase Agreement pursuant to which we
issued an aggregate of $2,750,000 of 3 year convertible loan notes to such
Purchasers including management. The conversion price to convert the loan
notes into ordinary shares of Amarin Corporation plc is $0.48 per ordinary
share.
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Stock
Purchase Agreement dated December 5, 2007 between Amarin Corporation plc,
the selling shareholders of Ester Neurosciences Limited (“Ester”), Ester,
and Medica II Management L.P. pursuant to which Amarin Corporation plc
acquired the entire issued share capital of Ester. Pursuant to
this agreement, Amarin Corporation plc paid initial consideration of
$15,000,000, of which $5,000,000 was paid in cash and $10,000,000 was paid
through the issuance of shares of Amarin Corporation
plc. Additional contingent payments, valued at an aggregate of
$17,000,000 are payable in the event that certain development-based
milestones are successfully
completed.
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Letter
Agreement dated December 6, 2007 between Amarin Corporation plc and the
Seller’s Representatives of the selling shareholders of Ester pursuant to
which the definition of “Closing Date Average Buyer Stock Price” in the
Stock Purchase Agreement dated December 5, 2007 described above was
amended.
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Senior
Indenture dated December 6, 2007 between Amarin Corporation plc and
Wilmington Trust Company. Under this Indenture, Amarin
Corporation plc may issue one or more series of senior debt securities
from time to time.
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First
Supplemental Senior Indenture dated December 6, 2007 between Amarin
Corporation plc and Wilmington Trust Company. Under this
Supplemental Indenture, together with the senior debt indenture dated
December 6, 2007 described above, Amarin Corporation plc issued its 8%
Convertible Debentures due 2010.
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Compromise
Agreement dated December 19, 2007 between Amarin Corporation plc and
Richard Stewart.
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Collaboration
Agreement dated January 8, 2008 between Amarin Pharmaceuticals Ireland
Limited and ProSeed Capital Holdings (“ProSeed”). Pursuant to this
agreement, 975,000 ordinary shares in Amarin Corporation plc were issued
in the form of ADSs to ProSeed in respect of fees due for investment
banking advice provided to Amarin Corporation plc and Amarin
Pharmaceuticals Ireland Limited on the acquisition of
Ester.
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Amendment
No. 1 to Stock Purchase Agreement dated April 7, 2008 between Amarin
Corporation plc and Medica II Management L.P. pursuant to which the
definition of “Milestone II Time Limit Date” in the Stock Purchase
Agreement dated December 5, 2007 described above was
amended.
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Employment
Agreement dated April 28, 2008 with Dr Declan
Doogan.
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Form
of Equity Securities Purchase Agreement dated May 13, 2008 between Amarin
Corporation plc and the Purchasers named therein. Amarin Corporation plc
entered into 9 separate Equity Securities Purchase Agreements
on May 13, 2008 all substantially similar in form and content to this
Securities Purchase Agreement pursuant to which we issued an aggregate
of 12,173,914 Ordinary Shares and 8 Preference Shares to such
Purchasers. The purchase price was $2.30 per Ordinary
Share.
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D. Exchange
Controls
There are
currently no English exchange controls that may affect the export or import of
capital, including the availability of cash and cash equivalents for use by the
Group, or that affect the remittance of dividends, interest or other payments to
non-U.K. resident holders of Ordinary Shares or ADSs.
E. Taxation
U.K.
Tax Matters – Holders of Ordinary Shares or ADSs
The
following statements are intended only as a general guide to the U.K. tax
consequences of the acquisition, ownership and disposition of our Ordinary
Shares including shares represented by ADSs evidenced by American Depositary
Receipts. This summary applies to you only if you are a beneficial owner of
Ordinary Shares or ADSs and you are:
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an
individual citizen or resident of the
US;
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a
corporation organized under the laws of the U.S. or any state thereof
or the District of
Columbia; or
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otherwise
subject to U.S. federal income tax on a net income basis in respect
of the Ordinary Shares or ADSs.
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This
summary applies only to holders who will hold our Ordinary Shares or ADSs as
capital assets. This summary is based:
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upon
current U.K. tax law and Revenue and Customs practice and which may be
subject to change, perhaps with retroactive
effect; and
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in
part upon representations of Citibank, N.A., as depositary, and assumes
that each obligation provided for in or otherwise contemplated by the
deposit agreement between us and Citibank and any related agreement will
be performed in accordance with its respective
terms.
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The
following summary is of a general nature and does not address all of the tax
consequences that may be relevant to you in light of your particular situation.
For example, this summary does not apply to US expatriates, insurance companies,
investment companies, tax-exempt organizations, financial institutions, dealers
in securities, broker-dealers, investors that use a mark-to-market accounting
method, holders who hold ADSs or Ordinary Shares as part of hedging, straddle or
conversion transactions or holders who own directly, indirectly or by
attribution, 10% or more of the voting power of our issued share
capital.
In
addition, the following summary of U.K. tax considerations does not, except
where indicated otherwise, apply to you if:
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you
are resident or, in the case of an individual, ordinarily resident in the
U.K. for U.K. tax purposes;
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your
holding of ADSs or shares is effectively connected with a permanent
establishment in the U.K. through which you carry on business activities
or, in the case of an individual who performs independent personal
services, with a fixed base situated
therein; or
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you
are a corporation which, alone or together with one or more associated
corporations, controls, directly or indirectly, 10% or more of our issued
voting share capital.
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You
should consult your own tax advisers as to the particular tax consequences to
you under U.K., U.S. federal, state and local and other foreign laws, of
the acquisition, ownership and disposition of ADSs or Ordinary
Shares.
Taxation
of Dividends and Distributions
Under
current U.K. taxation legislation, no tax will be withheld by us at source from
cash dividend payments. A holder of Ordinary Shares or ADSs should consult his
own tax adviser concerning his tax liabilities on dividends received from
us.
U.K.
Taxation of Capital Gains
You will
not ordinarily be liable for U.K. tax on capital gains realized on the disposal
of Ordinary Shares or ADSs, unless, at the time of the disposal, you carry on a
trade, including a profession or vocation, in the U.K. through a branch or
agency and those Ordinary Shares or ADSs are, or have been, held or acquired for
the purposes of that trade or branch or agency.
A holder
of Ordinary Shares or ADSs who is an individual and who has on or after
March 17, 1998 ceased to be resident or ordinarily resident for tax
purposes in the U.K., but who again becomes resident or ordinarily resident in
the U.K. within a period of less than five years and who disposes of Ordinary
Shares or ADSs during that period may also be subject to U.K. tax on capital
gains, notwithstanding that he is not resident or ordinarily resident in the
U.K. at the time of the disposal.
Certain
disposals of assets (which could include our Ordinary Shares and ADSs) will give
rise to chargeable gains that are to be included in the computation of the
profits of a non-U.K. resident company. The provisions will only apply where the
disposal is made while the non-U.K. resident company is carrying on a trade in
the U.K. through a “permanent establishment”.
U.K.
Inheritance Tax
Ordinary
Shares or ADSs beneficially owned by an individual may be subject to U.K.
inheritance tax on the death of the individual or, in some circumstances, if the
Ordinary Shares or ADSs are the subject of a gift, including a transfer at less
than full market value, by that individual (and particular rules apply to gifts
where the donor reserves or retains some benefit). Inheritance tax is not
generally chargeable on gifts to individuals or on some types of settlement made
more than seven years before the death of the donor. Special rules apply to
close companies and to trustees of settlement who hold Ordinary Shares or ADSs.
Holders of Ordinary Shares or ADSs should consult an appropriate professional
adviser if they make a gift of any kind or intend to hold any Ordinary Shares or
ADSs through trust arrangements.
U.K.
Stamp Duty and Stamp Duty Reserve Tax
U.K.
stamp duty will (subject to specific exceptions) be payable at the rate of 1.5%
(rounded up to the nearest £5) of the value of shares in registered form on any
instrument pursuant to which shares are transferred:
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to,
or to a nominee or agent for, a person whose business is or includes the
provision of clearance
services; or
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to,
or to a nominee or agent for, a person whose business is or includes
issuing depositary receipts.
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Stamp
duty reserve tax, at the rate of 1.5% of the value of the shares, could also be
payable in these circumstances, and on the issue to such a person, but no stamp
duty reserve tax will be payable if stamp duty equal to that stamp duty reserve
tax liability is paid. In circumstances where stamp duty is not payable on the
transfer of shares in registered form at the rate of 1.5%, such as where there
is no chargeable instrument, stamp duty reserve tax will be payable to bring the
charge up to 1.5% in total. Stamp duty or stamp duty reserve tax, as the case
may be, will therefore be payable as a result of the issue of ADSs evidenced by
American Depositary Receipts at 1.5% of the value of the Ordinary Shares
underlying the ADSs at the time the Ordinary Shares are transferred to the
depositary bank or its nominee.
No U.K.
stamp duty will be payable on the acquisition of any ADS or on any subsequent
transfer of an ADS, provided that the transfer and any subsequent instrument of
transfer remains at all times outside the U.K. and that the instrument of
transfer is not executed in or brought into the U.K. and the transfer does not
relate to any matter or thing to be done in the U.K. An agreement to
transfer an ADS will not give rise to stamp duty reserve tax.
Subject
to some exceptions, a transfer or sale of Ordinary Shares in registered form
will attract ad valorem U.K. stamp duty at the rate of 0.5% (rounded up to the
nearest £5) of the dutiable amount, usually the cash consideration for the
transfer. Generally, ad valorem stamp duty applies neither to gifts nor on a
transfer from a nominee to the beneficial owner, although in cases of transfers
where no ad valorem stamp duty arises, a fixed U.K. stamp duty of £5 may be
payable. Stamp duty reserve tax at a rate of 0.5% of the amount or value of the
consideration for the transfer may be payable on an unconditional agreement to
transfer shares. If, within six years of the date of such agreement, an
instrument transferring the shares is executed and stamped, any stamp duty
reserve tax paid may be repaid or, if it has not been paid, the liability to pay
such tax, but not necessarily interest and penalties, would be cancelled. Stamp
duty reserve tax is chargeable whether such agreement is made or effected in the
U.K. or elsewhere and whether or not any party is resident or situated in any
part of the U.K.
The
statements in this paragraph headed “U.K. Stamp Duty and Stamp Duty Reserve Tax”
summarize the current position and are intended as a general guide only. Special
rules apply to agreements made by, amongst others, intermediaries, market
makers, brokers, dealers and persons connected with depositary arrangements and
clearance services and certain categories of person may be liable to stamp duty
or stamp duty reserve tax at higher rates or may, although not primarily liable
for the duty or tax, be required to notify and account for it under the U.K.
Stamp Duty Reserve Tax Regulations 1996.
U.K.
Tax Matters – Holders of Debentures
The
comments below are of a general nature based on current UK law and practice.
They do not necessarily apply where the income is deemed for tax purposes to be
the income of any other person. They relate only to the position of persons who
are the absolute beneficial owners of their Debentures or Ordinary Shares, and
hold those Debentures or Ordinary Securities as an investment. The comments
below may not apply to certain classes of persons such as dealers. Any holders
of Debentures or Ordinary Shares who are in doubt as to their personal tax
position should consult their professional advisers.
Payments of
Interest.
It is
considered that payments of interest on the Debentures will constitute “UK
source income” and accordingly may be subject to deduction of UK income tax at
source.
As a
general matter, debt securities will be exempt from withholding or deduction for
on account of UK tax under the provisions of UK tax law if the debt securities
are listed on a “recognized stock exchange” within the meaning of section 1005
of the Income Tax Act 2007.
In other
cases, and in particular if debt securities, such as the Debentures, are not
listed on a “recognized stock exchange”, interest will be paid after deduction
of UK income tax at the rate, currently, of 20%. Holders of such debt securities
who are not resident for tax purposes in the United Kingdom may be entitled to
exemption from (or reduction of) withholding tax if there is an appropriate
article in an applicable double tax treaty which provides for an application to
be made to HM Revenue & Customs ("HMRC) to make a
direction that interest may be paid without deduction of tax. Holders may also
be entitled to recover all or part of the tax that has been deducted from
interest payments already made.
Holders
of Debentures who are within the charge to UK tax will be subject to UK income
tax or corporation tax (as applicable) on interest arising in respect of the
Debentures.
E.U. Savings
Directive.
Under EC
Council Directive 2003/48/EC on the taxation of savings income, each Member
State is required to provide to the tax authorities of other Member States
details of payments of interest or other similar income paid by a person within
its jurisdiction to an individual or certain other residual entities resident in
that other Member State; for a transitional period, Austria, Belgium and
Luxembourg may instead apply a withholding tax system in relation to such
payments, deducting tax at rates rising over time to 35% unless during such
period they elect otherwise.
Provision of
Information.
Holders
of Debentures who are individuals should note that where any interest on
Debentures is paid to them (or to any person acting on their behalf) by any
person in the UK acting on behalf of the Issuer (a "paying agent"), or is
received by any person in the UK acting on behalf of the relevant holder (a
"collecting agent"), then the paying agent or the collecting agent (as the case
may be) may, in certain cases, be required to supply to HMRC details of the
payment and certain details relating to the holder (including the holder's name
and address). These provisions will apply whether or not the interest has been
paid subject to deduction of income tax at source and whether or not the holder
is resident in the UK for UK tax purposes. Where the holder is not so resident,
the details provided to HMRC may be passed to the tax authorities of the
jurisdiction in which the holder is resident for tax purposes.
Conversion,
Redemption and Disposal of Debentures.
Holders
of Debentures who are not resident or ordinarily resident for tax purposes in
the UK, and who do not carry on a trade, profession or vocation in the UK
through a branch or agency (in the case of an individual holder) or a permanent
establishment (in the case of a corporate holder) to which the Debentures are
attributable, will not be liable to UK taxation in relation to any profits or
gains realised on the sale or other disposal or redemption of the
Debentures.
The UK
tax treatment for holders of Debentures who are within the charge to UK
corporation tax will depend on, amongst other things, the accounting treatment
of the Debentures in the holder's hands, including whether or not the Debentures
are regarded as containing an "embedded derivative" as an accounting matter. The
accounting treatment will also affect the tax treatment of a disposal of the
Debentures (including a disposal occurring on conversion or redemption).
UK-resident corporate holders of Debentures should consult their tax advisers on
the tax liabilities that may arise as a result of concerting, redeeming or
disposing of Debentures.
Other UK
Taxpayers.
A
transfer of Debentures by a UK income tax payer may give rise to a charge to UK
income tax under the "accrued income scheme" as representing interest accrued on
the Debentures at the time of transfer.
If debt
securities are treated as "deeply discounted securities" for the purposes of
Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005, then
holders of Debentures who are not within the charge to UK corporation tax and
who are resident or ordinarily resident for tax purposes in the UK, or who carry
on a trade through a branch or agency to which the Debentures are attributable,
may be subject to UK tax on income on a disposal or redemption of the
Debentures.
If the
Debentures are treated as "deeply discounted securities", then the Debentures
will be deemed to be "qualifying corporate bonds" pursuant to section 117(2AA)
of the Taxation of Chargeable Gains Act 1992. Consequently, on conversion of the
Debentures, such holders of the Debentures will be treated as disposing of the
Debentures. The base cost for tax purposes of the Ordinary Shares received on
conversion of such Debentures will be the market value of the Debentures as
determined immediately before conversion.
Dividends on Ordinary
Shares.
Amarin
will not be required to withhold any amount for or on account of UK tax at
source when paying a dividend in respect of the Ordinary Shares.
An
individual holder of Ordinary Shares who is resident in the UK for tax purposes
and who receives a dividend from Amarin will be entitled to a tax credit which
such shareholder may set off against his or her total income tax liability on
the dividend. The tax credit will equate to one-ninth of the dividend
received.
Holders
of Ordinary Shares within the charge to UK corporation tax will generally not be
subject to corporation tax on dividends paid by Amarin.
Holders
of Ordinary Shares who are not resident in the UK for tax purposes should
consult their tax advisers concerning their tax liabilities on dividends
received from Amarin.
Disposals of Ordinary
Shares.
A
disposal of Ordinary Shares will constitute a disposal for the purposes of UK
taxation on chargeable gains, and accordingly may give rise to a liability to
taxation for holders who are resident or ordinarily resident in the UK for tax
purposes or who carry on a trade, profession or vocation in the UK through a
branch or agency (in the case of individual holders) or through a permanent
establishment (in the case of holders within the charge to UK corporation tax)
to which their Ordinary Shares are attributable.
Stamp Duty and Stamp Duty Reserve
Tax.
No UK
stamp duty or stamp duty reserve tax should be payable on the issue of the
Debentures.
Stamp
duty reserve tax, at the rate of 0.5% of the amount or value of the
consideration, will be payable on an agreement to transfer
Debentures.
No UK
stamp duty or stamp duty reserve tax should be payable by holders of Debentures
on the issue of Ordinary Shares upon conversion of the Debentures, other than an
issue to issuers of depositary receipts or providers of clearance services as
indicated below.
The
conveyance or transfer on sale of Ordinary Shares will be subject to ad valorem
stamp duty, generally at the rate of 0.5% of the amount or value of the
consideration for the transfer rounded-up to the nearest £5. The purchaser
normally pays the stamp duty.
Issues
(including on conversion of the Debentures) or transfers of Ordinary Shares (1)
to, or to a nominee or agent for, a person whose business is or includes issuing
depositary receipts within section 67 or section 93 of the Finance Act 1986 or
(2) to, or to a nominee or agent for, a person providing a clearance service
within section 70 or section 96 of the Finance Act 1986, will generally be
subject to stamp duty or stamp duty reserve tax at 1.5% of the amount or value
of the consideration unless, in the case of an issue or transfer to a clearance
service, the clearance service in question has made an election under section
97A of the Finance Act 1986 which applies to the Ordinary Shares. Under section
97A, a clearance service may, provided it meets certain conditions, elect for
the 0.5% rate of stamp duty or stamp duty reserve tax to apply to transfers of
securities within such service instead of the 1.5% rate applying to an issue or
transfer of such securities into such service.
Certain
U.S. Federal Income Tax Considerations
Subject
to the limitations described below, the following generally summarizes certain
material U.S. federal income tax consequences to a U.S. Holder (as defined
below) of the acquisition, ownership and disposition of Debentures, Warrants and
Ordinary Shares. This discussion assumes that the Debentures,
Warrants, or Ordinary Shares are held as capital assets (as defined in Section
1221 of the Code) by the U.S. Holders. The discussion is limited to the U.S.
federal income tax consequences to holders acquiring Debentures at original
issue for cash at the initial offering price. U.S. Holders of ADSs will be
treated for U.S. federal income tax purposes as owners of the Ordinary Shares
underlying the ADSs. Accordingly, except as noted, the U.S. federal
income tax consequences discussed below regarding Ordinary Shares apply equally
to ADSs. This discussion is limited to U.S. Holders who are
beneficial owners of the Debentures, Warrants or Ordinary Shares, and who hold
their Debentures,Warrants or Ordinary Shares as capital assets, within the
meaning of the U.S. Internal Revenue Code of 1986, as amended,
which we
refer to as the “Code.” For purposes of this summary, a “U.S. Holder”
is a beneficial owner of Debentures, Warrants or Ordinary Shares that does not
maintain a “permanent establishment” or “fixed base” in the U.K., as such terms
are defined in the double taxation convention between the U.S. and U.K. and that
is, for U.S. federal income tax purposes,
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an
individual who is a citizen or resident of the
U.S.;
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a
corporation (or other entity treated as a corporation for U.S. federal
income tax purposes) created or organized in the U.S. or under the laws of
the U.S. or of any state thereof or the District of
Columbia;
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an
estate, the income of which is includible in gross income for U.S. federal
income tax purposes regardless of its source;
or
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a
trust (i) if a court within the U.S. is able to exercise primary
supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the
trust or (ii) if it made a valid election to be treated as a U.S.
person.
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If a
partnership (including for this purpose any entity treated as a partnership for
U.S. federal income tax purposes) is a beneficial owner of Debentures, Warrants
or Ordinary Shares, the treatment of a partner in the partnership will generally
depend upon the status of the partner and the activities of the
partnership. Partnerships and partners in such partnerships should
consult their tax advisors about the U.S. federal income tax consequences of
owning and disposing of Debentures, Warrants or Ordinary Shares.
This
summary is for general information purposes only. It does not purport
to be a comprehensive description of all the U.S. federal income tax
considerations that may be relevant to each U.S. Holder’s decision in regard to
the Debentures, Warrants and Ordinary Shares. This discussion also
does not address any aspect of U.S. federal gift or estate tax, or any state,
local or non-U.S. tax laws. Prospective owners of Debentures,
Warrants or Ordinary Shares who are U.S. Holders are advised to consult their
own tax advisors with respect to the U.S. federal, state and local tax
consequences, as well as the non-U.S. tax consequences, of the acquisition,
ownership and disposition of Debentures, Warrants and Ordinary Shares applicable
to their particular tax situations.
This
discussion is based on current provisions of the Code, current and proposed U.S.
Treasury regulations promulgated thereunder, the double taxation convention
between the U.S. and U.K. entered into force on March 31, 2003, and
administrative and judicial decisions, each as of the date hereof, all of which
are subject to change or differing interpretation, possibly on a retroactive
basis. The new convention replaces the double taxation convention
between the U.S. and the U.K. entered into force on April 24,
1980. The new convention is effective, in respect of taxes withheld
at source, for amounts paid or credited on or after May 1,
2003. Other provisions of the new convention will take effect on
certain other dates. A U.S. Holder would, however, be entitled to
elect to have the old convention apply in its entirety for a period of twelve
months after the effective dates of the new convention. The following
discussion assumes that U.S. Holders are residents of the U.S. for purposes of
both the old convention and the new convention, and are entitled to the benefits
of those conventions.
This
discussion does not address all aspects of U.S. federal income taxation that may
be relevant to a particular U.S. Holder based on such holder’s individual
circumstances. In particular, this discussion does not address the
potential application of the alternative minimum tax nor does it address the tax
treatment of shareholders, partners or beneficiaries of a holder of Debentures,
Warrants or Ordinary Shares. In addition, this discussion does not
address the U.S. federal income tax consequences to U.S. Holders that are
subject to special treatment, including broker-dealers, including dealers in
securities or currencies; insurance companies; taxpayers that have elected
mark-to-market accounting; tax-exempt organizations; financial institutions or
“financial services entities”; taxpayers who hold Debentures, Warrants or
Ordinary Shares as part of a straddle, hedge or conversion transaction; U.S.
Holders owning directly, indirectly or by attribution at least 10% of our voting
power; U.S. Holders whose functional currency is not the U.S. Dollar; certain
expatriates or former long-term residents of the U.S.; and taxpayers who
acquired their Debentures, Warrants or Ordinary Shares as compensation. There
can be no assurances that the IRS will not challenge one or more of the tax
consequences described herein, and we have not obtained, nor do we intend to
obtain, a ruling from the IRS with respect to the U.S. federal income tax
consequences of purchasing, owning or disposing of the Debentures, Warrants, or
Ordinary Shares.
You
should consult your own tax advisors about the particular tax consequences to
you under U.K., U.S. federal, state and local and other foreign laws, of the
acquisition, ownership and disposition of Debentures, Warrants, ADSs or Ordinary
Shares.
Units
Allocation
of Purchase Price
A U.S.
Holder’s acquisition of a Unit will be treated as the acquisition of a Unit
consisting of a Debenture and a Warrant. The purchase price of each
Unit will be allocated between the Debentures and Warrants based upon their
relative fair market values on the Issue Date. This allocation will establish
the U.S. Holder’s initial tax basis in its Debenture and Warrant and the issue
price of the Debentures. We expect to treat the fair market value of
each Debenture as $752 and the fair market value of each Warrant as
$248. This allocation will be binding on each U.S. Holder (but not on
the IRS) unless it discloses otherwise in a timely filed U.S. federal income tax
return of the U.S. Holder for the taxable year in which it acquires the
Units. The remainder of this discussion assumes that this allocation
will be respected for U.S. federal income tax purposes.
Sale
or Exchange of Units
Subject
to the PFIC rules discussed below, the sale of a Unit will result in the
recognition of capital gain or loss to a U.S. Holder in a manner similar to that
described below under “Ordinary Shares—Sale or Exchange of Ordinary
Shares.”
Debentures
Payment
of Interest
Payment
of stated interest on a Debenture will be taxable as ordinary interest income at
the time it is received or accrued, depending upon the method of accounting
applicable to the U.S. Holder of the Debenture.
Original
Issue Discount
Because a
portion of the issue price of each Unit will be allocable to the Warrants, the
Debentures will be issued with OID in an amount equal to the excess of the
“stated redemption price at maturity” of the Debentures over their “issue
price.” For purposes of the foregoing, the general rule is that the
stated redemption price at maturity of a debt instrument is the sum of all
payments provided by the debt instrument other than payments of “qualified
stated interest” (generally interest that is unconditionally payable no less
frequently than annually at a single fixed rate). A U.S. Holder
generally must include OID in gross income as it accrues over the term of the
Debentures using the “constant yield method” without regard to its regular
method of accounting for U.S. federal income tax purposes, and in advance of the
receipt of cash payments attributable to that income.
The
amount of OID includible in income for a taxable year by a U.S. Holder will
generally equal the sum of the “daily portions” of the total OID on the
Debenture for each day during the taxable year (or portion thereof) on which
such holder held the Debenture. Generally, the daily portion of the
OID is determined by allocating to each day during an accrual period (generally
each semi-annual period during the term of the Debentures) a ratable portion of
the OID on such Debenture which is allocable to the accrual period in which such
day is included. The amount of OID allocable to each accrual period
will generally be an amount equal to the product of the “adjusted issue price”
of a Debenture at the beginning of such accrual period and its “yield to
maturity.” The “adjusted issue price” of a Debenture at the beginning
of any accrual period will equal the issue price increased by the total OID
accrued for each prior accrual period, less any payments made on such Debenture
(other than any payments of qualified stated interest) on or before the first
day of the accrual period. The “yield to maturity” of a Debenture
will be computed on the basis of a constant annual interest rate compounded at
the end of each accrual period.
Interest
income (including OID) on a Debenture generally will be foreign source “passive
category income” or, in the case of certain U.S. Holders, “general category
income” for purposes of computing the foreign tax credit allowable to U.S.
Holders under U.S. federal income tax laws.
Conversion
of the Debentures
A U.S.
Holder will generally not recognize income, gain or loss upon conversion of a
Debenture into Ordinary Shares except with respect to cash received in lieu of a
fractional Ordinary Share. A U.S. Holder's tax basis in the Ordinary
Shares received upon conversion will be the same as the U.S. Holder's tax basis
in the Debenture at the time of conversion reduced by any basis allocable to a
fractional Ordinary Share, and the holding period for the Ordinary Shares
received upon conversion will include the holding period of the Debenture
converted.
Cash
received in lieu of a fractional Ordinary Share upon conversion will be treated
as a payment in exchange for the fractional Ordinary
Share. Accordingly, the receipt of cash in lieu of a fractional
Ordinary Share generally will result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the U.S.
Holder’s adjusted tax basis in the fractional share).
Constructive
Distributions
The terms
of the Debentures allow for changes in the conversion rate of the Debentures
under certain circumstances. A change in conversion rate that allows
U.S. Holders to receive more Ordinary Shares on conversion may increase the U.S.
Holders’ proportionate interests in our earnings and profits or assets. In that
case, the U.S. Holders may be treated as though they received a taxable
distribution in the form of our Ordinary Shares. A taxable
constructive stock distribution would result, for example, if the conversion
rate is adjusted to compensate U.S. Holders for distributions of cash or
property to our stockholders. Not all changes in the conversion rate
that result in U.S. Holders’ receiving more Ordinary Shares on conversion,
however, increase the U.S. Holders’ proportionate interests in
us. For instance, a change in conversion rate could simply prevent
the dilution of the U.S. Holders’ interests upon a stock split or other change
in capital structure. Changes of this type, if made pursuant to a bona fide
reasonable adjustment formula, are not treated as constructive stock
distributions. Conversely, if an event occurs that dilutes the U.S.
Holders’ interests and the conversion rate is not adjusted, the resulting
increase in the proportionate interests of other stockholders may be treated as
a taxable stock distribution to the stockholders.
Any such
constructive distributions would be treated as a taxable dividend for U.S.
federal income tax purposes to the extent of our current or accumulated earnings
and profits (with the U.S. Holder’s tax basis in its Debenture or Ordinary
Shares (as the case may be) being increased by the amount of such
dividend). The passive foreign investment company rules discussed
below may apply to such constructive distribution. U.S. Holders
should consult their own tax advisors regarding whether any taxable constructive
stock dividend would be eligible for the reduced rate of tax generally
applicable to certain dividends paid to non-corporate U.S. Holders.
Sale
or Exchange of the Debentures
Subject
to the passive foreign investment company rules discussed below, upon a taxable
sale or exchange (including a redemption or retirement) of a Debenture, a U.S.
Holder will recognize gain or loss equal to the difference between the sum of
all cash plus the fair market value of all property received on such sale or
exchange (less any portion allocable to accrued but unpaid interest, which will
be treated as a payment of interest for U.S. federal income tax purposes) and
the U.S. Holder’s adjusted tax basis in the Debenture. A U.S.
Holder’s adjusted tax basis in a Debenture generally will be the U.S. Holder’s
cost therefor, increased by the amount of OID previously included in income by
the holder up through the date of the sale or exchange and decreased by the
amount of any payments on the Debenture other than any payments of qualified
stated interest.
Gain or
loss recognized by a U.S. Holder on the sale or exchange of a Debenture will be
capital gain or loss, and will be long-term capital gain or loss if the
Debenture has been held by the U.S. Holder for more than one year at the time of
the disposition. In the case of a non-corporate U.S. Holder,
long-term capital gain is currently subject to a maximum U.S. federal tax rate
of 15%. The deductibility of capital losses by U.S. Holders is
subject to certain limitations.
Warrants
Exercise
of Warrants
The
exercise of a Warrant will not be a taxable event for a U.S.
Holder. Subject to the passive foreign investment company rules
discussed below, a U.S. Holder will generally have a holding period in the
Ordinary Shares acquired upon exercise of a Warrant that begins on the day after
the date of exercise of the Warrant. The cost basis of the Ordinary
Shares acquired upon such exercise will equal the
sum of the U.S. Holder’s cost basis in the Warrant and the Exercise Price paid
upon the exercise of the Warrant. As further described below, gain or
loss will be recognized upon the subsequent sale or exchange of the Ordinary
Shares acquired by the exercise of the Warrant, measured by the difference
between the amount realized upon the sale or exchange and the cost basis of the
Ordinary Shares so acquired.
Lapse
of Warrants
If a
Warrant is allowed to lapse unexercised, a U.S. Holder would realize a capital
loss equal to such holder’s tax basis in the Warrant. A U.S. Holder’s
tax basis in a Warrant will equal the portion of the Unit Purchase Price
allocable to the Warrant, as described above under “Units — Allocation of
Purchase Price.”
Sale
or Exchange of Warrants
Subject
to the PFIC rules discussed below, the sale of a Warrant will result in the
recognition of capital gain or loss to a U.S. Holder in a manner similar to that
described below under “—Sale or Exchange of Ordinary Shares.”
Constructive
Distributions
An
adjustment to the Exercise Price of the Warrants, or the failure to make such
adjustments, may in certain circumstances result in constructive distributions
to U.S. Holders that could be taxable as dividends for U.S. federal income tax
purposes in the manner described above under “Debentures—Constructive
Distributions.”
Ordinary
Shares
Distributions
Subject
to the PFIC rules discussed below, the amount of any distributions (including,
provided certain elections are made, as discussed in “—U.K. Withholding
Tax/Foreign Tax Credits” below, the full tax credit amount deemed received) paid
out of current and/or accumulated earnings and profits, as determined under U.S.
tax principles, will be included in the gross income of a U.S. Holder on the day
such distributions are actually or constructively received, and will be
characterized as ordinary income for U.S. federal income tax
purposes. Dividends paid to noncorporate holders in taxable years
beginning before January 1, 2011 are subject to taxation at a reduced rate of
15% provided that the holder has held the shares for more than 60 days during
the 120-day period beginning 60 days before the ex-dividend date, the issuer is
a “qualified foreign corporation,” and certain other conditions are
met. A company is a “qualified foreign corporation” if the shares on
which the dividend is paid (or ADRs in respect of such shares) are listed on
certain securities markets, including the Nasdaq Stock Market, or if the
corporation is eligible for the benefits of a tax treaty determined to be
satisfactory by the U.S. Secretary of the Treasury. The income tax
treaty between the U.S. and the U.K. has been designated as satisfactory for
such purpose.
To the
extent that a distribution on Ordinary Shares exceeds our current and
accumulated earnings and profits, it will be treated as a non-taxable return of
capital to the extent of a U.S. Holder’s adjusted basis in the Ordinary Shares,
and thereafter as capital gain. We do not currently maintain
calculations of our earnings and profits under U.S. tax
principles. Dividends paid by us to corporate U.S. Holders will not
be eligible for the dividends-received deduction that might otherwise be
available if such dividends were paid by a U.S. corporation.
Foreign
Currency Considerations
Distributions
paid by us in pounds sterling will be included in a U.S. Holder’s income when
the distribution is actually or constructively received by the U.S.
Holder. The amount of a dividend distribution includible in the
income of a U.S. Holder will be the U.S. Dollar value of the pounds sterling,
determined by the spot rate of exchange on the date when the distribution is
actually or constructively received by the U.S. Holder, regardless of whether
the pounds sterling are actually converted into U.S. Dollars at such
time. If the pounds sterling received as a dividend distribution are
not converted into U.S. Dollars on the date of receipt, a U.S. Holder may
realize exchange gain or loss on a subsequent conversion of such pounds sterling
into U.S. Dollars. The amount of any gain or loss realized in
connection with a subsequent conversion will be treated as ordinary income or
loss, and generally will be treated as U.S. source income or loss for foreign
tax credit purposes.
U.K.
Withholding Tax/Foreign Tax Credits
A U.S.
Holder that elects to receive benefits under the old convention is, in
principle, entitled to claim a refund from the Revenue and Customs for (i) the
amount of the tax credit that a U.K. resident individual would be entitled to
receive with respect to a dividend payment, which we refer to as the “Tax Credit
Amount,” reduced by (ii) the amount of U.K. withholding tax, which we refer to
as “U.K. Notional Withholding Tax,” imposed on such dividend payment under the
old convention. The Tax Credit Amount will equal that amount of U.K.
Notional Withholding Tax imposed on dividends paid by us. As a
result, no such refund is available. However, a U.S. Holder may be entitled to
claim a foreign tax credit for the amount of U.K. Notional Withholding Tax
associated with a dividend paid by us by filing a Form 8833 in accordance with
U.S. Revenue Procedure 2000-13. U.S. Holders that file Form 8833 will be treated
as receiving an additional dividend from us equal to the Tax Credit Amount
(unreduced by the U.K. Notional Withholding Tax). Such additional
dividend must be included in the U.S. Holder’s gross income, and the U.S. Holder
will be treated as having paid the applicable U.K. Notional Withholding Tax due
under the old convention. For purposes of calculating the foreign tax
credit, dividends paid on the Ordinary Shares will be treated as non-U.S. source
income, and generally will constitute “passive category income” or, in the case
of certain U.S. Holders, “general category income.” In lieu of
claiming a foreign tax credit, a U.S. Holder may be eligible to claim a
deduction for foreign taxes paid in a taxable year. However, a
deduction generally does not reduce a U.S. Holder’s U.S. federal income tax
liability on a dollar-for-dollar basis as does a tax credit.
Under the
new convention, the Tax Credit Amount and U.K. Notional Withholding Tax
described above will no longer apply to U.S. Holders. The U.K. does
not currently apply a withholding tax on dividends under its internal tax
laws. Were such withholding imposed in the U.K., as permitted under
the new convention, the U.K. generally will be entitled to impose a withholding
tax at a rate of 15% on dividends paid to U.S. Holders. A U.S. Holder
who is subject to such withholding should be entitled to a credit for such
withholding, subject to applicable limitations, against such U.S. Holder’s U.S.
federal income tax liability.
The rules
relating to foreign tax credits are complex. U.S. Holders are urged
to consult their tax advisors to determine whether and to what extent a foreign
tax credit might be available in connection with dividends paid on the Ordinary
Shares.
Sale
or Exchange of Ordinary Shares
Subject
to the PFIC rules described below, a U.S. Holder generally will recognize
capital gain or loss on the sale or exchange of Ordinary Shares in an amount
equal to the difference between the amount realized in such sale or exchange and
the U.S. Holder’s adjusted tax basis in such Ordinary Shares. Such
capital gain or loss will be long-term capital gain or loss if a U.S. Holder has
held the Ordinary Shares for more than one year, and generally will be U.S.
source income for foreign tax credit purposes. Long-term capital
gains realized by an individual U.S. Holder on a sale or exchange of Ordinary
Shares are generally subject to reduced rates of taxation. The
deductibility of capital losses is subject to limitations.
A U.S.
Holder that receives foreign currency upon the sale or exchange of Ordinary
Shares generally will realize an amount equal to the U.S. Dollar value of the
foreign currency on the date of sale (or, if Ordinary Shares are traded on an
established securities market, in the case of cash basis tax payers and electing
accrual basis tax payers, the settlement date). A U.S. Holder will
have a tax basis in the foreign currency received equal to the U.S. Dollar
amount realized. Any gain or loss realized by a U.S. Holder on a
subsequent conversion or other disposition of foreign currency will be ordinary
income or loss, and will generally be U.S. source income for foreign tax credit
purposes.
Surrender
of ADSs for Ordinary Shares
The
surrender of ADSs for the underlying Ordinary Shares will not be a taxable event
for U.S. federal income tax purposes, and U.S. Holders will not recognize any
gain or loss upon such an exchange.
PFIC
Rules
Certain
adverse U.S. tax consequences apply to a U.S. shareholder in a company that is
classified as a passive foreign investment company, which is referred to herein
as a PFIC. We will be classified as a PFIC in a particular taxable
year if either (i) 75% or more of our gross income is passive income; or (ii)
the average percentage of the value of our assets that produce or are held for
the production of passive income is at least 50%. Cash balances, even
if held as working capital, are considered to be passive.
Because
we will receive interest income and may receive royalties, we may be classified
as a PFIC under the income test described above. In addition, as a
result of our cash position and our ownership of patents, we may be classified
as a PFIC under the asset test.
If we
were a PFIC in any year during which a U.S. Holder owned Ordinary Shares, the
U.S. Holder would generally be subject to special rules (regardless of whether
we continued to be a PFIC) with respect to (i) any “excess distribution”
(generally, distributions received by the U.S. Holder in a taxable year in
excess of 125% of the average annual distributions received by such holder in
the three preceding taxable years, or, if shorter, such holder’s holding period)
and (ii) any gain realized on the sale or other disposition of the Ordinary
Shares. Under these rules:
·
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the
excess distribution or gain would be allocated ratably over the U.S.
Holder’s holding period, including the holding period that the U.S. Holder
owned the Debentures or Warrants;
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·
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the
amount allocated to the current taxable year and any taxable year prior to
the first taxable year in which we are a PFIC would be taxed as ordinary
income; and
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·
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the
amount allocated to each of the prior taxable years would be subject to
tax at the highest rate of tax in effect for the taxpayer for that year,
and an interest charge for the deemed deferral benefit would be imposed
with respect to the resulting tax attributable to each such prior taxable
year.
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Although
not free from doubt, it is likely that proposed Treasury regulations would apply
the rules described above to gain on the disposition of Debentures or
Warrants. The proposed Treasury regulations regarding PFIC rules also
provide that the holding period of PIFC stock acquires upon the exercise of an
option (including conversion of a Debenture and the exercise of a Warrant) would
include the period the option (including the Debenture or Warrant) was
held.
U.S.
Holders who own ADSs (but not Ordinary Shares) generally should be able to avoid
the interest charge described above by making a mark-to-market election with
respect to such ADSs, provided that the ADSs are “marketable.” The
ADSs are marketable if they are regularly traded on certain U.S. stock
exchanges, or on a foreign stock exchange if:
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the
foreign exchange is regulated or supervised by a governmental authority of
the country in which the exchange is
located;
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the
foreign exchange has trading volume, listing, financial disclosure, and
other requirements designed to prevent fraudulent and manipulative acts
and practices, remove impediments to, and perfect the mechanism of, a free
and open market, and to protect
investors;
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·
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the
laws of the country in which the exchange is located and the rules of the
exchange ensure that these requirements are actually enforced;
and
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·
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the
rules of the exchange effectively promote active trading of listed
stocks.
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For
purposes of these regulations, the ADSs will be considered regularly traded
during any calendar year during which they are traded, other than in de minimis
quantities, on at least fifteen days during each calendar
quarter. Any trades that have as their principal purpose meeting this
requirement will be disregarded. If a U.S. Holder makes a
mark-to-market election, it will be required to include as ordinary income the
excess of the fair market value of such ADSs at year-end over its basis in those
ADSs. In addition, any gain that the U.S. Holder recognizes upon the
sale of such ADSs will be taxed as ordinary income in the year of
sale. A U.S. Holder of Debentures or Warrants may not make a
mark-to-market election with respect to the Debentures or Warrants it
holds. U.S. Holders should consult their tax advisors regarding the
availability of the mark-to-market election.
A U.S.
Holder of an interest in a PFIC can sometimes avoid the interest charge
described above by making a “qualified electing fund” or “QEF” election to be
taxed currently on its share of the PFIC’s undistributed ordinary
income. Such election must be based on information concerning the
PFIC’s earnings provided by the relevant PFIC to investors on an annual basis.
We will make such information available to U.S. Holders upon request, and
consequently U.S. Holders will be able to make a QEF election. A U.S.
Holder may not make a QEF election with respect to Debentures or
Warrants. As a result, if a U.S. Holder sells Debentures or Warrants,
any gain may be subject to the special tax and interest charge rules treating
the gain as an excess distribution, as described above, if the company is a PFIC
at any time during the period the U.S. Holder holds the Debentures or
Warrants. If a U.S. Holder that converts Debentures or exercises
Warrants properly makes a QEF election with respect to the newly acquired
Ordinary Shares, the adverse tax consequences under PFIC rules will continue to
apply with respect to the pre-QEF election period.
The
application of the PFIC and QEF rules to Debentures, Warrants, Ordinary Shares
and ADSs acquired upon conversion of the Debentures or exercise of Warrants is
subject to significant uncertainties. Accordingly, each U.S. Holder
should consult such holder’s tax advisor concerning the PFIC consequences of
holding Debentures, Warrants or Ordinary Shares acquired through the conversion
of Debentures or exercise of the Warrants. In addition, U.S. Holders
who hold ADSs or Ordinary Shares other than through exercise of
Warrants should consult their tax advisors regarding the U.S. federal income tax
considerations discussed above and the desirability of making a QEF
election.
CFC
Rules
We expect
that we will be classified as a CFC for the taxable year 2008 and we may be
classified as a CFC in future taxable years. We will be a CFC for any
year in which more than 50% of either the total combined voting power of our
outstanding shares entitled to vote or the total value of all of our outstanding
shares were owned, directly, indirectly or constructively, by citizens or
residents of the United States, U.S. partnerships or corporations, or U.S.
estates or trusts (as defined for U.S. federal income tax purposes), each of
which owned, directly, indirectly or constructively, 10% or more of the total
combined voting power of our outstanding shares entitled to vote.
The
classification as a CFC has many complex results, one of which is that if you
are a 10% U.S. Holder, you may be subject to current U.S. income taxation at
ordinary income tax rates on all or a portion of the Company’s undistributed
earnings and profits attributable to “subpart F income.” Your
adjusted tax basis in your shares would be increased to reflect any taxed but
undistributed earnings and profits. Any distribution of earnings and profits
that previously had been taxed would result in a corresponding reduction in your
adjusted tax basis in your shares and would not be taxed again when you receive
such distribution. You may also be taxable at ordinary income tax
rates on any gain realized on a sale of Ordinary Shares or ADSs to the extent of
the Company’s current and accumulated earnings and profits attributable to such
shares. In addition, special foreign tax credit rules would
apply. For any year in which we are both a PFIC and a CFC, if you are
a 10% U.S. Holder, you would be subject to the CFC rules and not the PFIC rules
with respect to your investment in shares.
Each U.S.
Holder should consult their own tax adviser to determine whether their
ownership interest in the Company would cause them or any affiliated person
to become a 10% shareholder, and to determine the potential gross income
inclusions and other tax consequences of that status.
U.S.
Backup Withholding and Information Reporting Requirements
Interest
paid on Debentures, dividends paid on the Ordinary Shares, and proceeds received
in connection with the sale or exchange of Debentures, Ordinary Shares or
Warrants may be subject to information reporting to the Internal Revenue Service
(the “IRS”) and backup withholding (currently imposed at a rate of
28%). Backup withholding will not apply, however, if a U.S. Holder
(i) is a corporation or comes within certain other exempt categories and, when
required, demonstrates such fact, or (ii) provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding and
otherwise complies with applicable backup withholding rules. Persons
required to establish their exempt status generally must provide certification
on IRS Form W-9 or Form W-8BEN (as applicable). Amounts withheld as
backup withholding may be credited against a holder’s U.S. federal income tax
liability. A holder may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for
refund with the IRS and timely furnishing any required information.
F. Dividends
and Paying Agents
Not
applicable.
G. Statement
of Experts
Not
applicable.
H. Documents
on Display
We file
reports, including this annual report on Form 20-F, and other information
with the SEC pursuant to the rules and regulations of the SEC that apply to
foreign private issuers. Any materials filed with the SEC may be inspected
without charge and copied at prescribed rates at its Public Reference Room at
100 F Street, N.E. Washington, D.C. 20549. Information on the operation of
the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
This annual report and subsequent public filings with the SEC will also be
available on the website maintained by the SEC at
http://www.sec.gov.
We
provide Citibank N.A., as depositary under the deposit agreement between us, the
depositary and registered holders of the American Depositary Receipts evidencing
ADSs, with annual reports, including a review of operations, and annual audited
consolidated financial statements prepared in conformity with IFRS. Upon receipt
of these reports, the depositary is obligated to promptly mail them to all
record holders of ADSs. We also furnish to the depositary all notices of
meetings of holders of Ordinary Shares and other reports and communications that
are made generally available to holders of Ordinary Shares. The depositary
undertakes to mail to all holders of ADSs a notice containing the information
contained in any notice of a shareholders’ meeting received by the depositary,
or a summary of such information. The depositary also undertakes to make
available to all holders of ADSs such notices and all other reports and
communications received by the depositary in the same manner as we make them
available to holders of Ordinary Shares.
Item 11 Quantitative
and Qualitative Disclosures About Market Risk
General
Historically,
our global operations and our existing liabilities were exposed to various
market risks (i.e. the risk of loss arising from adverse changes in market rates
or prices). Our principal market risks were:
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•
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foreign
exchange rates — generating translation and transaction gains and
losses; and
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•
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interest
rate risks related to financial and other
liabilities.
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We have
not entered into any market risk sensitive instruments for trading purposes. We
have not entered into any hedging or derivative instruments in respect of these
exposures.
Foreign
Exchange Rate Risks
We record
our transactions and prepare our financial statements in U.S. Dollars.
Since our strategy involves the development of products for the
U.S. market, a significant part of our clinical trial expenditures are
denominated in U.S. Dollars and we anticipate that the majority of our
future revenues will be denominated in U.S. Dollars. However, a significant
portion of our costs are denominated in pounds sterling, euro and shekel as a
result of our conducting activities in the United Kingdom, the European Union
and Israel. As a consequence, the results reported in our financial statements
are potentially subject to the impact of currency fluctuations between the
U.S. Dollar, pounds sterling, euro and shekel. We are focused on
development activities and do not anticipate generating on-going revenues in the
short-term. Accordingly, we do not engage in significant currency hedging
activities in order to restrict the risk of exchange rate fluctuations. However,
if we should commence commercializing any products in the U.S., changes in the
relation of the U.S. Dollar to the pound sterling, the euro and/or the
shekel may affect our revenues and operating margins. In general, we could incur
losses if the U.S. Dollar should become devalued relative to the pound
sterling, the euro and/or the shekel. We manage foreign exchange risk by holding
our cash in the currencies in which we expect to incur future cash
outflows.
Interest
Rate Risk
At
December 31, 2007, we had fixed rate convertible Debentures outstanding and are
therefore not subject to interest rate risk. Accordingly, we do not hedge any of
our interest rate risks.
Item 12 Description
of Securities Other than Equity Securities
Not
applicable.
PART II
Item 13 Defaults,
Dividend Arrearages and Delinquencies
None.
Item 14 Material
Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15 Controls
and Procedures
A. Disclosure
Controls and Procedures
Under the
supervision and with the participation of our management, including the Chief
Executive Officer and Chief Financial Officer, we have evaluated the
effectiveness of our disclosure controls and procedures pursuant to Exchange Act
Rule 13a-15(b) as of the end of the period covered by this report. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that these disclosure controls and procedures are effective. There
were no changes in our internal control over financial reporting during the year
ended December 31, 2007 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
B. Management’s
Annual Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company. Internal control over
financial reporting is a process to provide reasonable assurance regarding the
reliability of our financial reporting for external purposes in accordance with
IFRS. Internal control over financial reporting includes maintaining records
that in reasonable detail accurately and fairly reflect our transactions;
providing reasonable assurance that transactions are recorded as necessary for
preparation of our financial statements; providing reasonable assurance that
receipts and expenditures of company assets are made in accordance with
management authorization; and providing reasonable assurance that unauthorized
acquisition, use or disposition of company assets that could have a material
effect on our financial statements would be prevented or detected on a timely
basis. Because of its inherent limitations, internal control over financial
reporting is not intended to provide absolute assurance that a misstatement of
our financial statements would be prevented or detected.
The
audited consolidated financial statements of the Group include the results of an
acquisition completed during the year ended December 31, 2007. As permitted by
the SEC’s June 23, 2004 implementation guidance to issuers relating to the SEC’s
final rules on internal control over financial reporting, management’s
assessment does not include an assessment of the internal control over financial
reporting of this acquisition. The total assets of this acquisition represent
less than 1% of the related consolidated financial statements as of and for the
year ended December 31, 2007. The acquisition was not individually significant
to the Group’s financial position, results of operations or cash
flows.
Management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management concluded that the company’s
internal control over financial reporting was effective as of December 31,
2007.
This
annual report does not include an attestation report of the company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the company to provide only management’s report
in this annual report.
Item 16 [Reserved]
Item 16A Audit
Committee Financial Expert
Our Board
of Directors has determined that John Groom, a member of our audit committee, is
the audit committee financial expert and an independent director as defined in
the Nasdaq Marketplace Rules.
Item 16B Code
of Ethics
We have
adopted a written Code of Ethics that applies to all employees and executive
officers, including our Chief Executive Officer and Chief Financial Officer. A
copy of our Code of Ethics has been filed as Exhibit 11.1 to our 2006
annual report on Form 20-F.
Item 16C Principal
Accountant Fees and Services
PricewaterhouseCoopers
has served as our independent public auditor for each of the fiscal years ended
December 31, 2006 and 2007.
The
following table sets forth the aggregate fees billed by PricewaterhouseCoopers
for professional services in each of the last two fiscal years:
|
2007
|
|
2006
|
|
($’000)
|
|
($’000)
|
Audit
fees
|
516
|
|
357
|
Audit-related
fees
|
153
|
|
150
|
Tax
fees
|
43
|
|
18
|
All
other fees
|
88
|
|
105
|
Total
|
800
|
|
630
|
Audit
fees comprise the work undertaken in auditing the Group and issuing an audit
opinion on our U.K., Irish and Israeli statutory accounts and work on the
Group’s quarterly earnings. Audit related fees comprise work associated with SEC
regulatory compliance and work on the Group’s conversion to International
Financial Reporting Standards. Tax fees comprise work relating to tax filing
compliance. Other fees comprise work relating to tax advisory
services.
All
services provided by our auditor and companies affiliated with our auditor must
be pre-approved by the audit committee. The annual contract relating to the
audit of the financial statements of the Group must be approved by the audit
committee. Contracts for other non-audit services must also be approved by the
audit committee.
Any
requests for services to be provided by the auditor or an affiliate must be made
through our Chief Financial Officer, who will discuss and seek approval from the
audit committee. The Chief Financial Officer also notifies the audit committee
of the services provided,
monitors the costs incurred and notifies the chairman of the audit committee if
the costs are likely to materially exceed the estimated
amount.
In
accordance with Regulation S-X, Rule 2-01, paragraph (c)(7)(i) no
fees for services were approved pursuant to any waivers of the pre-approval
requirement.
Item 16D Exemptions
from the Listing Standards for Audit Committees
Not
Applicable.
Item 16E Purchases of
Equity Securities by the Issuer and Affiliated Purchasers
No
purchase of equity securities as registered by the Group pursuant to
section 12 of the Exchange Act were made by or on behalf of the
Group.
PART III
Item 17 Financial
Statements
We are
furnishing financial statements pursuant to the instructions of Item 18 of
Form 20-F.
Item 18 Financial Statements
See our
consolidated financial statements beginning at page F-1.
Item 19
Exhibits
Exhibits
filed as part of this annual report:
1.1
|
Memorandum
of Association of the Group(16)
|
1.2
|
Articles
of Association of the Group(17)
|
2.1
|
Form
of Deposit Agreement, dated as of March 29, 1993, among the
Group,Citibank, N.A., as Depositary, and all holders from time to time of
American Depositary Receipts issued thereunder(1)
|
2.2
|
Amendment
No. 1 to Deposit Agreement, dated as of October 8, 1998, among
the Group, Citibank, N.A., as Depositary, and all holders from time to
time of the American Depositary Receipts issued
thereunder(2)
|
2.3
|
Amendment
No. 2 to Deposit Agreement, dated as of September 25,2002 among
the Group, Citibank N.A., as depositary, and all holders from time to time
of the American Depositary Receipts issued
thereunder(3)
|
2.4
|
Form
of Ordinary Share certificate(10)
|
2.5
|
Form
of American Depositary Receipt evidencing ADSs (included in
Exhibit 2.3)(3)
|
2.6
|
Registration
Rights Agreement, dated as of October 21, 1998, by and among Ethical
Holdings plc and Monksland Holdings B.V.(10)
|
2.7
|
Amendment
No. 1 to Registration Rights Agreement and Waiver, dated
January 27, 2003, by and among the Group, Elan International
Services, Ltd. and Monksland Holdings B.V.(10)
|
2.8
|
Second
Subscription Agreement, dated as of November 1999, among Ethical Holdings
PLC, Monksland Holdings B.V. and Elan Corporation
PLC(4)
|
2.9
|
Purchase
Agreement, dated as of June 16, 2000, by and among the Group and the
Purchasers named therein(4)
|
2.10
|
Registration
Rights Agreement, dated as of November 24, 2000, by and between the
Group and Laxdale Limited(5)
|
2.11
|
Form
of Subscription Agreement, dated as of January 27, 2003 by and among
the Group and the Purchasers named therein(10) (The Group entered into
twenty separate Subscription Agreements on January 27, 2003 all
substantially similar in form and content to this form of Subscription
Agreement.).
|
2.12
|
Form
of Registration Rights Agreement, dated as of January 27, 2003
between the Group and the Purchasers named therein (10) (The Group entered
into twenty separate Registration Rights Agreements on January 27,
2003 all substantially similar in form and content to this form of
Registration Rights Agreement.).
|
2.13
|
Securities
Purchase Agreement dated as of December 16, 2005 by and among the
Group and the purchasers named therein(16)
|
4.1
|
Amended
and Restated Asset Purchase Agreement dated September 29, 1999
between Elan Pharmaceuticals Inc. and the
Group(10)
|
4.2
|
Variation
Agreement, undated, between Elan Pharmaceuticals Inc. and the
Group(10)
|
4.3
|
License
Agreement, dated November 24, 2000, between the Group and Laxdale
Limited(6)
|
4.4
|
Option
Agreement, dated as of June 18, 2001, between Elan Pharma
International Limited and the Group(7)
|
4.5
|
Deed
of Variation, dated January 27, 2003, between Elan Pharma
International Limited and the Group(10)
|
4.6
|
Lease,
dated August 6, 2001, between the Group and LB Strawberry
LLC(7)
|
4.7
|
Amended
and Restated Distribution Marketing and Option Agreement, dated
September 28, 2001, between Elan Pharmaceuticals, Inc. and the
Group(8)
|
4.8
|
Amended
and Restated License and Supply Agreement, dated March 29, 2002,
between Eli Lilly and Group and the Group(10)†
|
4.9
|
Deed
of Variation, dated January 27, 2003, between Elan Pharmaceuticals
Inc. and the Group(10)
|
4.10
|
Stock
and Intellectual Property Right Purchase Agreement, dated
November 30, 2001, by and among Abriway International S.A., Sergio
Lucero, Francisco Stefano, Amarin Technologies S.A., Amarin
Pharmaceuticals Company Limited and the Group(7)
|
4.11
|
Stock
Purchase Agreement, dated November 30, 2001, by and among Abriway
International S.A., Beta Pharmaceuticals Corporation and the
Group(7)
|
4.12
|
Novation
Agreement, dated November 30, 2001, by and among Beta Pharmaceuticals
Corporation, Amarin Technologies S.A. And the Group(7)
|
4.13
|
Loan
Agreement, dated September 28, 2001, between Elan Pharma
International Limited and the Group(8)
|
4.14
|
Deed
of Variation, dated July 19, 2002, amending certain provisions of the
Loan Agreement between the Group and Elan Pharma International Limited
(10)
|
4.15
|
Deed
of Variation No. 2, dated December 23, 2002, between The Group
and Elan Pharma International Limited(10)
|
4.16
|
Deed
of Variation No. 3, dated January 27, 2003, between the Group
and Elan Pharma International Limited(10)
|
4.17
|
The
Group 2002 Stock Option Plan(17)
|
4.18
|
Agreement
Letter, dated October 21, 2002, between the Group and Security
Research Associates, Inc.(10)
|
4.19
|
Agreement,
dated January 27, 2003, among the Group, Elan International Services,
Ltd. and Monksland Holdings B.V.(10)
|
4.20
|
Master
Agreement, dated January 27, 2003, between Elan Corporation,
plc.,Elan Pharma International Limited, Elan International Services, Ltd.,
Elan Pharmaceuticals, Inc., Monksland Holdings B.V. and the
Group(10)
|
4.21
|
Form
of Warrant Agreement, dated March 19, 2003, between the Group and
individuals designated by Security Research Associates, Inc.(10) (The
Group entered into seven separate Warrant Agreements on March 19,
2003 all substantially similar in form and content to this form of Warrant
Agreement).
|
4.22
|
Sale
and Purchase Agreement, dated March 14, 2003, between
F.Hoffmann — La Roche Ltd.,Hoffmann — La Roche Inc And
the Group(10)†
|
4.23
|
Share
Subscription and Purchase Agreement dated October 28, 2003 among the
Group, Amarin Pharmaceuticals Company Limited, Watson Pharmaceuticals,
Inc. and Lagrummet December NR 911 AB (under name change to WP Holdings
AB)(12)
|
4.24
|
Asset
Purchase Agreement dated February 11, 2004 between the Group, Amarin
Pharmaceuticals Company Limited and Valeant Pharmaceuticals
International(12)†
|
4.25
|
Amendment
No. 1 to Asset Purchase Agreement dated February 25, 2004
between the Group, Amarin Pharmaceuticals Company Limited and Valeant
Pharmaceuticals International(12)
|
4.26
|
Development
Agreement dated February 25, 2004 between the Group and Valeant
Pharmaceuticals International(12)
|
4.27
|
Settlement
Agreement dated February 25, 2004 among Elan Corporation plc, Elan
Pharma International Limited, Elan International Services, Ltd, Elan
Pharmaceuticals, Inc., Monksland Holdings BV and the
Group(12)
|
4.28
|
Debenture
dated August 4. 2003 made by the Group in favour of Elan Corporation
plc as Trustee(12)
|
4.29
|
Debenture
Amendment Agreement dated December 23, 2003 between the Group and
Elan Corporation plc as Trustee(12)
|
4.30
|
Debenture
Amendment Agreement No. 2 dated February 24, 2004 between the
Group and Elan Corporation plc as Trustee(12)
|
4.31
|
Loan
Instrument dated February 25, 2004 executed by Amarin in favor of
Elan Pharma International Limited(12)
|
4.32
|
Amended
and Restated Master Agreement dated August 4, 2003 among Elan
Corporation plc, Elan Pharma International Limited, Elan International
Services, Ltd., Elan Pharmaceuticals, Inc., Monksland Holdings BV and the
Group (11)(12)
|
4.33
|
Amended
and Restated Option Agreement dated August 4, 2003 between the Group
and Elan Pharma International Limited (11)(12)
|
4.34
|
Deed
of Variation No. 2, dated August 4, 2003, to the Amended and
Restated Distribution, Marketing and Option Agreement between Elan
Pharmaceuticals, Inc. and the Group(11)(12)
|
4.35
|
Deed
of Variation No. 4, dated August 4, 2003, to Loan Agreement
between the Group and Elan Pharma International Limited
(11)(12)
|
4.36
|
Amendment
Agreement No. 1, dated August 4, 2003, to Amended and Restated
Asset Purchase Agreement among Elan International Services, Ltd., Elan
Pharmaceuticals, Inc. and theGroup(11)(12)
|
4.37
|
Warrant
dated February 25, 2004 issued by the Group in favor of the Warrant
Holders named therein(12)
|
4.38
|
Amendment
Agreement dated December 23, 2003, between Elan Corporation plc, Elan
Pharma International Limited, Elan Pharmaceuticals, Inc., Monksland
Holdings BV and the Group(11)(12)
|
4.39
|
Bridging
Loan Agreement dated December 23, 2003 between the Group and Elan
Pharmaceuticals, Inc.(11)(12)
|
4.40
|
Agreement
dated December 23, 2003 between the Group and Elan Pharma
International Limited, amending the Amended and Restated Option Agreement
dated August 4, 2003(11)(12)
|
4.41
|
Form
of Subscription Agreement, dated as of October 7, 2004 by and among
the Group and the Purchasers named therein(13) (The Group entered into 14
separate Subscription Agreements on October 7, 2004 all substantially
similar in form and content to this form of Subscription
Agreement.)
|
4.42
|
Form
of Registration Rights Agreement, dated as of October 7, 2004 between
the Group and the Purchasers named therein(13) (The Group entered into 14
separate Registration Rights Agreements on October 7, 2004 all
substantially similar in form and content to this form of Registration
Rights Agreement.)
|
4.43
|
Share
Purchase Agreement dated October 8, 2004 between the Group,Vida
Capital Partners Limited and theVendors named therein relating to the
entire issued share capital of Laxdale Limited(13)
|
4.44
|
Escrow
Agreement dated October 8, 2004 among the Group, Belsay Limited and
Simcocks Trust Limited as escrow agent(13)
|
4.45
|
Loan
Note Redemption Agreement dated October 14, 2004 between
Amarin Investment Holding Limited and the Group(13)
|
4.46
|
Settlement
agreement dated 27 September 2004 between the Group and Valeant
Pharmaceuticals International(14)†
|
4.47
|
Exclusive
License Agreement dated October 8, 2004 between Laxdale and Scarista
Limited pursuant to which Scarista has the exclusive right to use certain
of Laxdale’s intellectual property(14)†
|
4.48
|
Clinical
Supply Agreement between Laxdale and Nisshin Flour Milling Co.,Limited
dated 27th October 1999(14)†
|
4.49
|
Clinical
Trial Agreement dated March 18, 2005 between Amarin Neuroscience
Limited and the University of Rochester. Pursuant to this agreement the
University is obliged to carry out or to facilitate the carrying out of a
clinical trial research study set forth in a research protocol on AMR 101
in patients with Huntington’s disease(14)†
|
4.50
|
Loan
Note Redemption Agreement dated May, 2005 between Amarin
Investment Holding Limited and the Group.(14)
|
4.51
|
Services
Agreement dated June 16, 2005 between Icon Clinical Research Limited
and Amarin Neuroscience Limited.(15)
|
4.52
|
Employment
Agreement with Alan Cooke, dated May 12, 2004 and amended
September 1, 2005.(16)
|
4.53
|
Clinical
Supply Extension Agreement dated December 13, 2005 to Agreement
between Amarin Pharmaceuticals Ireland Limited and Amarin Neuroscience
Limited and Nisshin Flour Milling Co.†(17)
|
4.54
|
Securities
Purchase Agreement dated May 20, 2005 between the Company and the
purchasers named therein. The Company entered into 34 separate
Securities Purchase Agreements on May 18, 2005 and in total issued
13,677,110 ordinary shares to management, institutional and accredited
investors. The purchase price was $1.30 per ordinary
share.(17)
|
4.55
|
Securities
Purchase Agreement dated January 23, 2006 between the Company and the
purchasers named therein. The Company entered into 2 separate
Securities Purchase Agreements on January 23, 2006 and in total
issued 840,000 ordinary shares to accredited investors. The purchase price
was $2.50 per ordinary
share.(17)
|
4.56
|
Assignment
Agreement dated May 17, 2006 between Amarin Pharmaceuticals Ireland
Limited and Dr Anthony Clarke, pursuant to which, Amarin
Pharmaceuticals Ireland Limited acquired the global rights to a novel oral
formulation of Apomorphine for the treatment of “off” episodes in patients
with advanced Parkinson’s disease.(17)
|
4.57 |
Amendment
(Change Order Numer 2), dated June 8, 2006 to Services Agreement dated
June 16, 2005 between Icon Clinical Research Limited and Amarin
Neuroscience Limited.* |
4.58
|
Lease
Agreement dated July 4, 2006 between Amarin Neuroscience Limited and
Magdalen Development Company Limited and Prudential Development Management
Limited. Pursuant to this agreement, Amarin Neuroscience Limited took a
lease of a premises at the South West Wing First Floor Office Suite, The
Magdalen Centre North, The Oxford Science Park, Oxford,
England.(17)
|
4.59
|
Securities
Purchase Agreement dated October 18, 2006 between the Company and the
purchasers named therein. The Company entered into 32 separate
Securities Purchase Agreements on October 18, 2006 and in total
issued 8,965,600 ordinary shares to institutional and accredited
investors. The purchase price was $2.09 per ordinary
share(17)
|
4.60
|
Master
Services Agreement
dated November 15, 2006 between Amarin Pharmaceuticals Ireland
Limited and Icon Clinical Research (U.K.) Limited. Pursuant to this
agreement, Icon Clinical Research (U.K.) Limited agreed to provide due
diligence services to Amarin Pharmaceuticals Ireland Limited on ongoing
licensing opportunities on an ongoing basis.(17)
|
4.61
|
Amendment
dated December 8, 2006 to Clinical Trial Agreement dated
March 18, 2005 between Amarin Neuroscience Limited and the University
of Rochester.†(17)
|
4.62 |
Agreement dated
January 18, 2007 between Neurostat Pharmaceuticals Inc. ("Neurostat"),
Amarin Pharmaceuticals Ireland Limited, Amarin Corporation plc and Mr. Tim
Lynch whereby the Company agreed to pay Neurostat a finder's fee
relating to a potential licensing transaction and similar payments
comprising upfront and contingent milestones totaling $565,000 and
warrants to purchase 175,000 ordinary shares with an exercise price of
$1.79 per ordinary share.* |
4.63
|
Lease
Agreement dated January 22, 2007 between the Company, Amarin
Pharmaceuticals Ireland Limited and Mr. David Colgan, Mr. Philip
Monaghan, Mr. Finian McDonnell and Mr. Patrick Ryan. Pursuant to
this agreement, Amarin Pharmaceuticals Ireland Limited took a lease of a
premises at The First Floor, Block 3, The Oval, Shelbourne Road,
Dublin 4, Ireland.(17)
|
4.64
|
Amendment
(Change Order Number 4), dated February 15, 2007 to Services
Agreement dated June 16, 2005 between Icon Clinical Research Limited
and Amarin Neuroscience Limited. (17)
|
4.65
|
Employment
Agreement Amendment with Alan Cooke, dated February 21,
2007.(17)
|
4.66
|
Amendment
(Change Order Number 3), dated March 1, 2007 to Services
Agreement dated June 16, 2005 between Icon Clinical Research Limited and
Amarin Neuroscience Limited.(17)
|
4.67
|
Development
and License Agreement dated March 6, 2007 between Amarin Pharmaceuticals
Ireland Limited and Elan Pharma International Limited. Pursuant
to this agreement, Amarin Pharmaceuticals Ireland Limited acquired global
rights to a novel nasal lorazepam formulation for the treatment of
emergency seizures in epilepsy patients.*†
|
4.68
|
Consultancy
Agreement dated March 9, 2007 between Amarin Corporation plc and
Dalriada Limited. Under the Consultancy Agreement, Amarin Corporation plc
will pay Dalriada Limited a fee of £240,000 per annum for the
provision of the consultancy services. Dalriada Limited is owned by a
family trust, the beneficiaries of which include our Chairman and Chief
Executive Officer, Mr. Thomas Lynch, and members of his
family.*
|
4.69
|
Form
of Securities Purchase Agreement dated June 1, 2007 between Amarin
Corporation plc and the Purchasers named therein. Amarin Corporation plc
entered into 11 separate Securities Purchase Agreements on June 1, 2007
all substantially similar in form and content to this Securities Purchase
Agreement pursuant to which we issued an aggregate of 6,156,406 ordinary
shares to such Purchasers, including management. The purchase price was
$0.60 per ordinary share.*
|
4.70
|
Equity
Credit Agreement dated June 1, 2007 between Amarin Corporation plc and
Brittany Capital Management. Pursuant to this agreement, Amarin
has an option to draw up to $15,000,000 of funding at any time over a
three year period solely at Amarin Corporation plc’s
discretion.(18)
|
4.71
|
Form
of Equity Securities Purchase Agreement dated December 4, 2007 between
Amarin Corporation plc and the Purchasers named therein. Amarin
Corporation plc entered into 19 separate Equity Securities Purchase
Agreements on December 4, 2007 all substantially similar in form and
content to this Equity Securities Purchase Agreement pursuant to which we
issued an aggregate of 16,290,900 ordinary shares to such Purchasers,
including management. The purchase price was $0.33 per ordinary
share.(19)
|
4.72
|
Form
of Debt Securities Purchase Agreement dated December 4, 2007 between
Amarin Corporation plc and the Purchasers named therein. Amarin
Corporation plc entered into 2 separate Debt Securities Purchase
Agreements on December 4, 2007 both substantially similar in form and
content to this Debt Securities Purchase Agreement pursuant to which we
issued an aggregate of $2,750,000 of 3 year convertible loan notes to such
Purchasers including management. The conversion price to convert the loan
notes into ordinary shares of Amarin Corporation plc is $0.48 per ordinary
share.(19)
|
4.73
|
Stock
Purchase Agreement dated December 5, 2007 between Amarin Corporation plc,
the selling shareholders of Ester Neurosciences Limited (“Ester”), Ester,
and Medica II Management L.P. pursuant to which Amarin Corporation plc
acquired the entire issued share capital of Ester. Pursuant to
this agreement, Amarin Corporation plc paid initial consideration of
$15,000,000, of which $5,000,000 was paid in cash and $10,000,000 was paid
through the issuance of shares of Amarin Corporation
plc. Additional contingent payments, valued at an aggregate of
$17,000,000 are payable in the event that certain development-based
milestones are successfully completed.(21)
|
4.74
|
Letter
Agreement dated December 6, 2007 between Amarin Corporation plc and the
Seller’s Representatives of the selling shareholders of Ester pursuant to
which the definition of “Closing Date Average Buyer Stock Price” in the
Stock Purchase Agreement dated December 5, 2007 described above was
amended.(22)
|
4.75
|
Senior
Indenture dated December 6, 2007 between Amarin Corporation plc and
Wilmington Trust Company. Under this Indenture, Amarin
Corporation plc may issue one or more series of senior debt securities
from time to time.(19)
|
4.76
|
First
Supplemental Senior Indenture dated December 6, 2007 between Amarin
Corporation plc and Wilmington Trust Company. Under this
Supplemental Indenture, together with the senior debt indenture dated
December 6, 2007 described above, Amarin Corporation plc issued its 8%
Convertible Debentures due 2010.(19)
|
4.77
|
Compromise
Agreement dated December 19, 2007 between Amarin Corporation plc and
Richard Stewart.(20)
|
4.78
|
Collaboration
Agreement dated January 8, 2008 between Amarin Pharmaceuticals Ireland
Limited and ProSeed Capital Holdings (“ProSeed”). Pursuant to this
agreement, 975,000 ordinary shares in Amarin Corporation plc were issued
in the form of ADSs to ProSeed in respect of fees due for investment
banking advice provided to Amarin Corporation plc and Amarin
Pharmaceuticals Ireland Limited on the acquisition of Ester.*†
|
4.79
|
Amendment
No. 1 to Stock Purchase Agreement dated April 7, 2008 between Amarin
Corporation plc and Medica II Management L.P. pursuant to which the
definition of “Milestone II Time Limit Date” in the Stock Purchase
Agreement dated December 5, 2007 described above was
amended.*
|
4.80
|
Employment
Agreement dated April 28, 2008 with Dr Declan Doogan.*
|
4.81
|
Form
of Equity Securities Purchase Agreement dated May 13, 2008 between
Amarin Corporation plc and the Purchasers named therein. Amarin
Corporation plc entered into 9 separate Equity Securities Purchase
Agreements on May 13, 2008 all substantially similar in form and
content to this Securities Purchase Agreement pursuant to which we issued
an aggregate of 12,173,914 Ordinary Shares and 8 Preference Shares to
such Purchasers. The purchase price was $2.30 per Ordinary
Share.*†
|
8.1
|
Subsidiaries
of the Group*
|
11.1
|
Code
of Ethics(17)
|
12.1
|
Certification
of Thomas G. Lynch required by Rl 15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002*
|
12.2
|
Certification
of Alan Cooke required by Rule 15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002*
|
13.1
|
Certification
of Thomas G. Lynch required by Section 1350 of Chapter 63 of
Title 18 of the United States Code, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002*
|
13.2
|
Certification
of Alan Cooke required by Section 1350 of Chapter 63 of
Title 18 of the United States Code, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002*
|
14.1
|
Consent
of PricewaterhouseCoopers *
|
*
|
Filed
herewith
|
|
|
†
|
Confidential
treatment requested (the confidential portions of such exhibits have been
omitted and filed separately with the Securities and Exchange
Commission)
|
|
|
(1)
|
Incorporated
herein by reference to certain exhibits to the Group’s Registration
Statement on Form F-1, File No. 33-58160, filed with the
Securities and Exchange Commission on February 11,
1993.
|
|
|
(2)
|
Incorporated
herein by reference to Exhibit (a)(i) to the Group’s Registration
Statement on Post-Effective Amendment No. 1 to Form F-6, File
No. 333-5946, filed with the Securities and Exchange Commission on
October 8, 1998.
|
|
|
(3)
|
Incorporated
herein by reference to Exhibit (a)(ii) to the Group’s Registration
Statement on Post-Effective Amendment No. 2 to Form F-6, File
No. 333-5946, filed with the Securities and Exchange Commission on
September 26, 2002.
|
|
|
(4)
|
Incorporated
herein by reference to certain exhibits to the Group’s Annual Report on
Form 20-F for the year ended December 31, 1999, filed with the
Securities and Exchange Commission on June 30,
2000.
|
|
|
(5)
|
Incorporated
herein by reference to certain exhibits to the Group’s Registration
Statement on Form F-3, File No. 333-13200, filed with the
Securities and Exchange Commission on February 22,
2001.
|
|
|
(6)
|
Incorporated
herein by reference to certain exhibits to the Group’s Annual Report on
Form 20-F for the year ended December 31, 2000, filed with the
Securities and Exchange Commission on July 2,
2001.
|
|
|
(7)
|
Incorporated
herein by reference to certain exhibits to the Group’s Annual Report on
Form 20-F for the year ended December 31, 2001, filed with the
Securities and Exchange Commission on May 9, 2002.
|
|
|
(8)
|
Incorporated
herein by reference to certain exhibits to the Group’s Registration
Statement on Pre-Effective Amendment No. 2 to Form F-3, File
No. 333-13200, filed with the Securities and Exchange Commission on
November 19, 2001.
|
|
|
(9)
|
Incorporated
herein by reference to certain exhibits to the Group’s Registration
Statement on Form S-8, File No. 333-101775, filed with the
Securities and Exchange Commission on December 11,
2002.
|
|
|
(10)
|
Incorporated
herein by reference to certain exhibits to the Group’s Annual Report on
Form 20-F for the year ended December 31, 2002, filed with the
Securities and Exchange Commission on April 24,
2003.
|
|
|
(11)
|
These
agreements are no longer in effect as a result of superseding agreements
entered into by the Group.
|
|
|
(12)
|
Incorporated
herein by reference to certain exhibits to the Group’s Annual Report on
Form 20-F for the year ended December 31, 2003, filed with the
Securities and Exchange Commission on March 31,
2004.
|
|
|
(13)
|
Incorporated
herein by reference to certain exhibits to the Group’s Registration
Statement on Form F-3, File No. 333-121431, filed with the
Securities and Exchange Commission on December 20,
2004.
|
|
|
(14)
|
Incorporated
herein by reference to certain exhibits to the Group’s Annual Report on
Form 20-F for the year ended December 31, 2004, filed with the
Securities and Exchange Commission on April 1,
2005.
|
|
|
(15)
|
Incorporated
herein by reference to certain exhibits to the Group’s Registration
Statement on Form F-3, File No. 333-131479 , filed with the Securities and
Exchange Commission on February 2, 2006.
|
|
|
(16)
|
Incorporated
by reference herein to certain exhibits in the Group’s Annual Report on
Form 20-F for the year ended December 31, 2005, filed with the
Securities and Exchange Commission on March 30, 2006 as amended on
Form 20-F/A filed October 13, 2006.
|
|
|
(17) |
Incorporated
by reference herein to certain exhibits in the Group's Annual Report on
Form 20-F for the year ended December 31, 2006, filed with the Securities
and Exchange Commission on March 5, 2007. |
|
|
(18) |
Incorporated
by reference herein to certain exhibits in the Group's Report of Foreign
Private Issuer filed on Form 6-K with the Securities and Exchange
Commission on June 1, 2007. |
|
|
(19) |
Incorporated
by reference herein to certain exhibits in the Group's Report of Foreign
Private Issuer filed on Form 6-K with the Securities and Exchange
Commission on December 17, 2007. |
|
|
(20) |
Incorporated
by reference herein to certain exhibits in the Group's Report of Foreign
Private Issuer filed on Form 6-K with the Securities and Exchange
Commission on December 19, 2007. |
|
|
(21) |
Incorporated
by reference herein to certain exhibits in the Group's Report of Foreign
Private Issuer filed on Form 6-K with the Securities and Exchange
Commission on January 28, 2008. |
|
|
(22) |
Incorporated
by reference herein to certain exhibits in the Group's Report of Foreign
Private Issuer filed on Form 6-K with the Securities and Exchange
Commission on February 1, 2008. |
SIGNATURES
The
registrant hereby certifies that it meets all of the requirements for filing on
Form 20-F and that it has duly caused and authorized the undersigned to
sign this annual report on its behalf.
AMARIN
CORPORATION PLC
__________
Thomas G.
Lynch
Chairman
and Chief Executive Officer
Date: May
19, 2008
Report
of Independent Registered Public Accounting Firm
To the
Board of Directors and Shareholders of Amarin Corporation plc:
In our
opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders’ equity, and cash flows present
fairly, in all material respects, the financial position of Amarin Corporation
plc and its subsidiaries at December 31, 2007 and
2006, and the results of their operations and their cash flows for each of
the two years in the period ended December 31, 2007 in conformity with
International Financial Reporting Standards as issued by the International
Accounting Standards Board and in conformity with International Financial
Reporting Standards as adopted by the European Union. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States) and International Standards on Auditing (UK and
Ireland). Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
PricewaterhouseCoopers
Dublin,
Ireland
May 19,
2008
Amarin
Corporation plc
Consolidated
Income Statement for year ended December 31, 2007
|
|
|
|
|
Total
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
$’000
|
|
|
|
$’000
|
|
Revenue
|
|
|
4 |
|
|
|
— |
|
|
|
500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
|
|
|
— |
|
|
|
500 |
|
Research
and development
expenses
|
|
|
6 |
|
|
|
(12,108 |
) |
|
|
(15,106 |
) |
Selling,
general and administrative
expenses
|
|
|
6 |
|
|
|
(19,841 |
) |
|
|
(13,462 |
) |
Impairment
of intangible
assets
|
|
|
5,
6 |
|
|
|
(8,784 |
) |
|
|
— |
|
Total
operating
expenses
|
|
|
|
|
|
|
(40,733 |
) |
|
|
(28,568 |
) |
Operating
loss
|
|
|
|
|
|
|
(40,733 |
) |
|
|
(28,068 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
|
9 |
|
|
|
1,882 |
|
|
|
3,344 |
|
Finance
costs
|
|
|
10 |
|
|
|
(183 |
) |
|
|
(2,826 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before
taxation
|
|
|
|
|
|
|
(39,034 |
) |
|
|
(27,550 |
) |
Tax
credit
|
|
|
12 |
|
|
|
837 |
|
|
|
799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
attributable to equity holders of the
parent
|
|
|
|
|
|
|
(38,197 |
) |
|
|
(26,751 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Cents
|
|
|
U.S. Cents
|
|
Basic loss per ordinary
share*
|
|
|
14 |
|
|
|
(3.90 |
) |
|
|
(3.25 |
) |
Diluted loss per
ordinary share*
|
|
|
14 |
|
|
|
(3.90 |
) |
|
|
(3.25 |
) |
The
accompanying notes on pages F-7 to F-60 are an integral part of the financial
statements.
* Basic
and diluted loss per share information is adjusted for our one-for-ten share
consolidation which is effective January 18, 2008. See note 14 for further
information.
Amarin
Corporation plc
Balance
Sheets at December 31, 2007
|
|
|
|
|
Group
|
|
|
Company
|
|
|
|
Note
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
$’000
|
|
|
|
$’000
|
|
|
|
$’000
|
|
|
|
$’000
|
|
Non-current
assets
Property,
plant and equipment
|
|
|
16
|
|
|
|
595 |
|
|
|
314 |
|
|
|
19 |
|
|
|
25 |
|
Intangible
assets
|
|
|
15
|
|
|
|
19,916 |
|
|
|
9,636 |
|
|
|
19,916 |
|
|
|
3,765 |
|
Investments
in subsidiaries
|
|
|
17
|
|
|
|
— |
|
|
|
— |
|
|
|
60,136 |
|
|
|
22,715 |
|
Available
for sale investments
|
|
|
20
|
|
|
|
15 |
|
|
|
18 |
|
|
|
15 |
|
|
|
18 |
|
Total
non-current assets
|
|
|
|
|
|
|
20,526 |
|
|
|
9,968 |
|
|
|
80,086 |
|
|
|
26,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
Inventory
|
|
|
18
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Current
tax recoverable
|
|
|
19 |
|
|
|
1,704 |
|
|
|
1,617 |
|
|
|
— |
|
|
|
— |
|
Other
current assets
|
|
|
19 |
|
|
|
1,721 |
|
|
|
1,172 |
|
|
|
1,059 |
|
|
|
770 |
|
Cash
and cash equivalents
|
|
|
|
|
|
|
18,303 |
|
|
|
36,802 |
|
|
|
17,298 |
|
|
|
34,719 |
|
Total
current assets
|
|
|
|
|
|
|
21,728 |
|
|
|
39,591 |
|
|
|
18,357 |
|
|
|
35,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
|
|
|
|
42,254 |
|
|
|
49,559 |
|
|
|
98,443 |
|
|
|
62,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
Borrowings
|
|
|
21 |
|
|
|
2,051 |
|
|
|
— |
|
|
|
2,051 |
|
|
|
— |
|
Provisions
|
|
|
24 |
|
|
|
606 |
|
|
|
110 |
|
|
|
606 |
|
|
|
110 |
|
Other
liabilities
|
|
|
23 |
|
|
|
36 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
non-current liabilities
|
|
|
|
|
|
|
2,693 |
|
|
|
110 |
|
|
|
2,657 |
|
|
|
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
|
|
|
|
|
3,462 |
|
|
|
2,096 |
|
|
|
841 |
|
|
|
396 |
|
Accrued
expenses and other liabilities
|
|
|
22 |
|
|
|
6,733 |
|
|
|
8,625 |
|
|
|
3,430 |
|
|
|
1,814 |
|
Provisions
|
|
|
24 |
|
|
|
5,217 |
|
|
|
160 |
|
|
|
5,217 |
|
|
|
160 |
|
Total
current
liabilities
|
|
|
|
|
|
|
15,412 |
|
|
|
10,881 |
|
|
|
9,488 |
|
|
|
2,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
|
|
|
|
18,105 |
|
|
|
10,991 |
|
|
|
12,145 |
|
|
|
2,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Capital
and reserves attributable to equity holders of the Company
Share
capital
|
|
|
26
|
|
|
|
12,942 |
|
|
|
7,990 |
|
|
|
12,942 |
|
|
|
7,990 |
|
Share
premium
|
|
|
|
|
|
|
147,171 |
|
|
|
139,313 |
|
|
|
147,171 |
|
|
|
136,587 |
|
Share
based payment reserve
|
|
|
28 |
|
|
|
10,175 |
|
|
|
4,824 |
|
|
|
10,175 |
|
|
|
4,824 |
|
Warrant
reserve
|
|
|
|
|
|
|
13,328 |
|
|
|
10,009 |
|
|
|
13,328 |
|
|
|
10,009 |
|
Equity
component of 8% convertible debt
|
|
|
|
|
|
|
145 |
|
|
|
— |
|
|
|
145 |
|
|
|
— |
|
Capital
redemption
reserve
|
|
|
|
|
|
|
27,633 |
|
|
|
27,633 |
|
|
|
27,633 |
|
|
|
27,633 |
|
Treasury
shares
|
|
|
|
|
|
|
(217 |
) |
|
|
(217 |
) |
|
|
— |
|
|
|
— |
|
Foreign
currency translation reserve
|
|
|
|
|
|
|
(1,836 |
) |
|
|
(1,261 |
) |
|
|
832 |
|
|
|
683 |
|
Retained
earnings
|
|
|
|
|
|
|
(185,192 |
) |
|
|
(149,723 |
) |
|
|
(125,928 |
) |
|
|
(128,194 |
) |
Total
shareholders’
equity
|
|
|
|
|
|
|
24,149 |
|
|
|
38,568 |
|
|
|
86,298 |
|
|
|
59,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders’ equity and liabilities
|
|
|
|
|
|
|
42,254 |
|
|
|
49,559 |
|
|
|
98,443 |
|
|
|
62,012 |
|
The
accompanying notes on pages F-7 to F-60 are an integral part of the financial
statements.
Amarin
Corporation plc
Consolidated
Statement of Changes in Equity for the year ended December 31, 2007
|
|
Share
capital
|
|
|
Share
premium
|
|
|
Share
based payment reserve
|
|
|
Warrant
reserve
|
|
|
Equity
component of 8% convertible debt
|
|
|
Capital
redemption reserve
|
|
|
Treasury
shares
|
|
|
Foreign
currency translation reserve
|
|
|
Retained
earnings
|
|
|
Total
|
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
January 1, 2006
|
|
|
6,778 |
|
|
|
113,239 |
|
|
|
2,623 |
|
|
|
9,620 |
|
|
|
— |
|
|
|
27,633 |
|
|
|
(217 |
) |
|
|
697 |
|
|
|
(122,972 |
) |
|
|
37,401 |
|
Share
issuances
|
|
|
1,212 |
|
|
|
25,212 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26,424 |
|
Share
issuance costs
|
|
|
— |
|
|
|
(2,450 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,450 |
) |
Share
based compensation
|
|
|
— |
|
|
|
— |
|
|
|
2,201 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,201 |
|
Fair
value of future investment right
|
|
|
— |
|
|
|
3,701 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,701 |
|
Warrant
issue/exercise
|
|
|
— |
|
|
|
(389 |
) |
|
|
— |
|
|
|
389 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Recognized income and
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,958 |
) |
|
|
— |
|
|
|
(1,958 |
) |
Net
loss recognized directly in equity
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,958 |
) |
|
|
— |
|
|
|
(1,958 |
) |
Loss
for the year
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26,751 |
) |
|
|
(26,751 |
) |
Total
recognized income and expense
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,958 |
) |
|
|
(26,751 |
) |
|
|
(28,709 |
) |
At
December 31, 2006 and
January
1, 2007
|
|
|
7,990 |
|
|
|
139,313 |
|
|
|
4,824 |
|
|
|
10,009 |
|
|
|
— |
|
|
|
27,633 |
|
|
|
(217 |
) |
|
|
(1,261 |
) |
|
|
(149,723 |
) |
|
|
38,568 |
|
Share
issuances
|
|
|
4,952 |
|
|
|
14,032 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18,984 |
|
Share
issuance costs
|
|
|
— |
|
|
|
(948 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(948 |
) |
Share
based compensation
|
|
|
— |
|
|
|
— |
|
|
|
5,351 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,351 |
|
Warrant
issue/exercise
|
|
|
— |
|
|
|
(2,498 |
) |
|
|
— |
|
|
|
3,319 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
821 |
|
Strike
off of subsidiary
|
|
|
— |
|
|
|
(2,728 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,728 |
|
|
|
— |
|
Fair
value of equity on 8%
convertible
debt
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
145 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
145 |
|
Recognized income and
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation
adjustment
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(575 |
) |
|
|
— |
|
|
|
(575 |
) |
Net
loss recognized directly in equity
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(575 |
) |
|
|
— |
|
|
|
(575 |
) |
Loss
for the year
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(38,197 |
) |
|
|
(38,197 |
) |
Total
recognized income and expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(575 |
) |
|
|
(38,197 |
) |
|
|
(38,772 |
) |
At
December 31, 2007
|
|
|
12,942 |
|
|
|
147,171 |
|
|
|
10,175 |
|
|
|
13,328 |
|
|
|
145 |
|
|
|
27,633 |
|
|
|
(217 |
) |
|
|
(1,836 |
) |
|
|
(185,192 |
) |
|
|
24,149 |
|
The
accompanying notes on pages F-7 to F-60 are an integral part of the financial
statements.
Amarin
Corporation plc
Company
Statement of Changes in Equity for the year ended December 31, 2007
|
Share
capital
|
|
Share
premium
|
|
Share
based payment reserve
|
|
Warrant
reserve
|
|
Equity
component
of 8% convertible debt
|
|
Capital
redemption reserve
|
|
Foreign
currency translation reserve
|
|
|
Retained
earnings
|
|
|
Total
|
|
|
US$’000
|
|
US$’000
|
|
US$’000
|
|
US$’000
|
|
US$’000
|
|
US$’000
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
January 1, 2006
|
|
6,778 |
|
|
110,513 |
|
|
2,623 |
|
|
9,620 |
|
|
— |
|
|
27,633 |
|
|
(235 |
) |
|
|
(120,842 |
) |
|
|
36,090 |
|
Share
issuances
|
|
1,212 |
|
|
25,212 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
26,424 |
|
Share
issuance costs
|
|
— |
|
|
(2,450) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
(2,450 |
) |
Share
based ompensation
|
|
— |
|
|
— |
|
|
2,201 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
2,201 |
|
Fair
value of future investment right
|
|
— |
|
|
3,701 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
3,701 |
|
Warrant
issue/exercise
|
|
— |
|
|
(389) |
|
|
— |
|
|
389 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Recognized income and
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
918 |
|
|
|
— |
|
|
|
918 |
|
Net
loss recognized directly in equity
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
918 |
|
|
|
— |
|
|
|
918 |
|
Loss
for the year
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
(7,352 |
) |
|
|
(7,352 |
) |
Total
recognized income and expense
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
918 |
|
|
|
(7,352 |
) |
|
|
(6,434 |
) |
At
December 31, 2006 and
January
1, 2007
|
|
7,990 |
|
|
136,587 |
|
|
4,824 |
|
|
10,009 |
|
|
— |
|
|
27,633 |
|
|
683 |
|
|
|
(128,194 |
) |
|
|
59,532 |
|
Share
issuances
|
|
4,952 |
|
|
14,032 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
18,984 |
|
Share
issuance costs
|
|
— |
|
|
(950) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
(950 |
) |
Share
based compensation
|
|
— |
|
|
— |
|
|
5,351 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
5,351 |
|
Warrant
issue/exercise
|
|
— |
|
|
(2,498) |
|
|
— |
|
|
3,319 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
821 |
|
Adjustment
on asset acquisition
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
(371 |
) |
|
|
(371 |
) |
Fair
value of equity on 8%
convertible
debt
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
145 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
145 |
|
Recognized income and
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation djustment
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
149 |
|
|
|
— |
|
|
|
149 |
|
Net
loss recognized directly in equity
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
149 |
|
|
|
— |
|
|
|
149 |
|
Profit
for the year
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
2,637 |
|
|
|
2,637 |
|
Total
recognized income and expense
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
149 |
|
|
|
2,637 |
|
|
|
2,786 |
|
At
December 31, 2007
|
|
12,942 |
|
|
147,171 |
|
|
10,175 |
|
|
13,328 |
|
|
145 |
|
|
27,633 |
|
|
832 |
|
|
|
(125,928 |
) |
|
|
86,298 |
|
The
accompanying notes on pages F-7 to F-60 are an integral part of the financial
statements.
Amarin
Corporation plc
Cash
Flow Statements for the year ended December 31, 2007
|
|
|
|
|
Group
|
|
|
Company
|
|
|
|
Note
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/Profit
after tax
|
|
|
|
|
|
(38,197 |
) |
|
|
(26,751 |
) |
|
|
2,637 |
|
|
|
(7,352 |
) |
Adjustments:
Depreciation
of property, plant and equipment
|
|
|
16
|
|
|
|
217 |
|
|
|
121 |
|
|
|
20 |
|
|
|
31 |
|
Amortization
of intangible assets
|
|
|
15
|
|
|
|
169 |
|
|
|
674 |
|
|
|
58 |
|
|
|
232 |
|
Impairment
of investment in subsidiary
|
|
|
17
|
|
|
|
— |
|
|
|
— |
|
|
|
4,593 |
|
|
|
— |
|
Impairment
of intangible assets
|
|
|
15
|
|
|
|
8,784 |
|
|
|
— |
|
|
|
3,707 |
|
|
|
— |
|
Impairment
of property, plant and equipment
|
|
|
|
|
|
|
— |
|
|
|
235 |
|
|
|
— |
|
|
|
151 |
|
Impairment
of available for sale investment
|
|
|
20
|
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
Share
based compensation
|
|
|
28,
17
|
|
|
|
5,001 |
|
|
|
2,201 |
|
|
|
(640 |
) |
|
|
2,201 |
|
Share
based compensation - warrants
|
|
|
28
|
|
|
|
275 |
|
|
|
— |
|
|
|
275 |
|
|
|
— |
|
Effect
of exchange rate changes on assets/liabilities and other
items*
|
|
|
|
|
|
|
(560 |
) |
|
|
(2,020 |
) |
|
|
(858 |
) |
|
|
1,867 |
|
Interest
received
|
|
|
9
|
|
|
|
(1,252 |
) |
|
|
(1,344 |
) |
|
|
(1,197 |
) |
|
|
(1,299 |
) |
Interest
expense
|
|
|
10
|
|
|
|
176 |
|
|
|
— |
|
|
|
176 |
|
|
|
— |
|
Interest
paid on finance leases
|
|
|
|
|
|
|
4 |
|
|
|
(2 |
) |
|
|
— |
|
|
|
— |
|
(Increase)/decrease
in other current assets
|
|
|
|
|
|
|
(250 |
) |
|
|
282 |
|
|
|
10 |
|
|
|
(75 |
) |
(Decrease)/increase
in current liabilities
|
|
|
|
|
|
|
(1,359 |
) |
|
|
2,690 |
|
|
|
1,238 |
|
|
|
(2,408 |
) |
(Decrease)
in other liabilities
|
|
|
|
|
|
|
— |
|
|
|
(49 |
) |
|
|
— |
|
|
|
— |
|
Gain
on strike off of subsidiaries
|
|
|
17
|
|
|
|
— |
|
|
|
— |
|
|
|
(14,085 |
) |
|
|
— |
|
Increase/(decrease)
in provisions
|
|
|
|
|
|
|
797 |
|
|
|
104 |
|
|
|
797 |
|
|
|
(35 |
) |
R&D
tax credit
|
|
|
12
|
|
|
|
(837 |
) |
|
|
(799 |
) |
|
|
— |
|
|
|
— |
|
Cash
expended on operating activities
|
|
|
|
|
|
|
(27,029 |
) |
|
|
(24,658 |
) |
|
|
(3,266 |
) |
|
|
(6,687 |
) |
Tax
refund
|
|
|
|
|
|
|
750 |
|
|
|
505 |
|
|
|
— |
|
|
|
— |
|
Net
cash outflow from operating activities
|
|
|
|
|
|
|
(26,279 |
) |
|
|
(24,153 |
) |
|
|
(3,266 |
) |
|
|
(6,687 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
Purchase
intangible assets
|
|
|
|
|
|
|
(5,810 |
) |
|
|
— |
|
|
|
(5,810 |
) |
|
|
— |
|
Interest
received
|
|
|
9
|
|
|
|
1,252 |
|
|
|
1,344 |
|
|
|
1,197 |
|
|
|
1,299 |
|
Investment
in subsidiaries
|
|
|
17
|
|
|
|
— |
|
|
|
— |
|
|
|
(22,288 |
) |
|
|
(19,524 |
) |
Purchases
of property, plant and equipment
|
|
|
|
|
|
|
(415 |
) |
|
|
(245 |
) |
|
|
(14 |
) |
|
|
(13 |
) |
Net
cash (outflow)/inflow from investing activities
|
|
|
|
|
|
|
(4,973 |
) |
|
|
1,099 |
|
|
|
(26,915 |
) |
|
|
(18,238 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
Proceeds
from issue of share capital
|
|
|
26
|
|
|
|
9,685 |
|
|
|
26,424 |
|
|
|
9,685 |
|
|
|
26,424 |
|
Proceeds
on the issue of convertible debentures
|
|
|
21
|
|
|
|
2,750 |
|
|
|
— |
|
|
|
2,750 |
|
|
|
— |
|
Expenses
on issue of share capital
|
|
|
|
|
|
|
(285 |
) |
|
|
(2,450 |
) |
|
|
(285 |
) |
|
|
(2,450 |
) |
Expenses
on issue of convertible debentures
|
|
|
|
|
|
|
(20 |
) |
|
|
— |
|
|
|
(20 |
) |
|
|
— |
|
Repayment
of finance lease
|
|
|
|
|
|
|
(7 |
) |
|
|
(25 |
) |
|
|
— |
|
|
|
— |
|
Net
cash inflow from financing activities
|
|
|
|
|
|
|
12,123 |
|
|
|
23,949 |
|
|
|
12,130 |
|
|
|
23,974 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease)/increase in cash and cash equivalents
|
|
|
|
|
|
|
(19,129 |
) |
|
|
895 |
|
|
|
(18,051 |
) |
|
|
(951 |
) |
Cash
and cash equivalents at the beginning of the year
|
|
|
|
|
|
|
36,802 |
|
|
|
33,907 |
|
|
|
34,719 |
|
|
|
33,691 |
|
Exchange
rate gains on cash and cash equivalents
|
|
|
|
|
|
|
630 |
|
|
|
2,000 |
|
|
|
630 |
|
|
|
1,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of year
|
|
|
|
|
|
|
18,303 |
|
|
|
36,802 |
|
|
|
17,298 |
|
|
|
34,719 |
|
*
|
Included
in the 2006 comparative figure is an amount of $2,818,000 reflecting the
loss arising from the movement in the fair value between January 1, 2006
and the date of settlement, March 15, 2006 of the Future Investment Right
negotiated as part of the May 2005
financing.
|
The
accompanying notes on pages F-7 to F-60 are an integral part of the financial
statements.
Amarin
Corporation plc
Notes
to the financial statements
for
the year ended December 31, 2007
1. Going
concern and basis of preparation
Going
concern and liquidity
At
December 31, 2007, Amarin had a cash balance of $18.3 million. On May
14, 2008, we announced a private placement of Ordinary Shares for up to $60.0
million. The first tranche from new investors of $28.0 million closed on May 19,
2008, see note 33 “Post balance sheet events”. Based upon current
business activities, the directors forecast Amarin having sufficient cash to
fund operations for at least the next 12 months from May 19, 2008. The directors
therefore believe that it is appropriate that these financial statements are
prepared on a going concern basis. This basis of preparation assumes that the
Group will continue in operational existence for the foreseeable
future.
Basis
of preparation
These
Consolidated Financial Statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
(“E.U.”) and International Financial Reporting Standards issued by the
International Accounting Standards Board (“IASB”). All International Financial
Reporting Standards issued by the IASB and effective at the time of preparing
these consolidated financial statements have been adopted by the E.U. through
the endorsement procedure established by the European Commission, with the
exception of the International Accounting Standard IAS 39 "Financial
Instruments: Recognition and Measurement" related to the hedging portfolio. Since the company is not
materially affected by the provisions regarding portfolio hedging that are not
required by the E.U.-endorsed version of IAS 39, the accompanying financial
statements comply with both International Financial Reporting Standards as
adopted by the European Union and International Financial Reporting Standards
issued by the IASB.
These are
our first Consolidated Financial Statements prepared in accordance with IFRS,
and comparative information, which was previously presented in accordance with
United Kingdom (“U.K.”) generally accepted accounting principles (“U.K. GAAP”)
for the year ended December 31, 2006 has been restated under IFRS as adopted by
the E.U. and as issued by the IASB. As these are our first Consolidated
Financial Statements prepared in accordance with IFRS as adopted by the E.U. and
issued by the IASB we have availed of the option to disclose two years of
financial information. Previously three years financial information was
disclosed.
In
December 2007 the Securities and Exchange Commission (“SEC”) adopted rules to
allow foreign private issuers to file financial statements prepared in
accordance with IFRS as issued by the IASB without reconciliation to United
States generally accepted accounting principles (“U.S. GAAP”), effective March
4, 2008. Therefore, we have not prepared reconciliations from IFRS to U.S.
GAAP.
An
explanation of the effect of the transition to IFRS is provided in Note 35 to
the Consolidated Financial Statements.
The
Consolidated and Parent Company Financial Statements are presented in U.S.
Dollars rounded to the nearest thousand, being the functional and presentation
currency of the Parent Company. They are prepared on the historical cost basis
of accounting as modified by the revaluation of available-for-sale financial
assets and financial liabilities (including the future investment right) at fair
value through profit or loss.
The
preparation of financial statements in conformity with IFRS as adopted by the
E.U. and as issued by the IASB requires the use of certain critical accounting
estimates. It also requires management to exercise its judgment in the process
of applying the Group’s accounting policies. The areas involving a higher degree
of judgment or complexity, or areas where assumptions and estimates are
significant to the Consolidated Financial Statements are disclosed in note
2.
Statement
of compliance
The
Consolidated and Parent Company Financial Statements have been prepared in
accordance with IFRS as adopted by the E.U. and as issued by the IASB that are
effective at December 31, 2007. These are our first Consolidated Financial
Statements prepared in accordance
with IFRS, and therefore, IFRS 1, “First-time Adoption of International
Financial Reporting Standards,” (“IFRS 1”), has been applied. For additional
information on the transition to IFRS, please refer to Note 35 to the
Consolidated Financial Statements.
Adoption
of new and revised standards
Standards,
amendments and interpretations effective in 2007
In the
current year, the Group has adopted IFRS 7 “Financial Instruments: Disclosures”
(“IFRS 7”) which is effective for annual reporting periods beginning on or after
January 1, 2007, and the complementary amendments to IAS 1 “Presentation of
Financial Statements” (“IAS 1”). The impact of the adoption of IFRS 7 and the
changes to IAS 1 has been to expand the disclosures provided in these financial
statements regarding the Group’s financial instruments and management of capital
(see note 25).
Four
interpretations issued by the IFRIC are effective for the current period. These
are: IFRIC 7, “Applying the Restatement Approach under IAS 29, Financial
Reporting in Hyperinflationary Economies”; IFRIC 8 “Scope of IFRS 2”, IFRIC 9
“Reassessment of Embedded Derivatives” and IFRIC 10 “Interim financial reporting
and impairment”. The adoption of these interpretations has not led to any
changes in the Group’s accounting policies.
Standards
and interpretations in issue not yet adopted
At the
date of authorization of these financial statements, other than the
Interpretation adopted by the Group in advance of the effective date the
following new standards and amendments relevant to the Group were in issue
but not yet effective:
·
|
IFRS
2 “Vesting conditions and cancellations - Amendment to IFRS 2 Share-based
Payment”, (effective for accounting periods beginning on or after January
1, 2009). The
amendment addresses two matters. It clarifies that vesting
conditions are service conditions and performance conditions only.
Other features of a share-based payment are not vesting conditions.
It also specifies that all cancellations, whether by the entity or
by other parties, should receive the same accounting treatment. The
Group will apply this revised standard from the effective date and is
currently assessing the impact on the Group’s financial
statements;
|
·
|
IAS
23, (Amendment), “Borrowing Costs” (effective for accounting periods
beginning on or after January 1, 2009). The amendment to the standard
requires an entity to capitalize borrowing costs directly attributable to
the acquisition, construction or production of a qualifying asset (one
that takes a substantial period of time to get ready for use or sale) as
part of the cost of that asset. The option of immediately expensing those
borrowing costs will be removed. The Group will apply IAS 23 (Amended)
from January 1, 2009 but is currently not applicable to the Group as there
are no qualifying assets;
|
·
|
IAS
32 and IAS 1 (Amendment) “Puttable financial instruments and obligations
arising on liquidation”, (effective for annual periods beginning on or
after 1 January 2009). The amendments require some puttable financial
instruments and some financial instruments that impose on the entity an
obligation to deliver to another party a pro rata share of net assets of
the entity only on liquidation to be classified as
equity;
|
·
|
IFRS
8, “Operating Segments” (effective for accounting periods beginning on or
after January 1, 2009). This standard will replace IAS 14 “Segment
Reporting”, and will require additional disclosures relating to operating
segments than those currently
required;
|
·
|
IFRS
3 (Revised), “Business combinations”, (effective for accounting periods
beginning on or after 1 July 2009). The standard continues to
apply the acquisition method to business combinations, with some
significant changes. These changes include a requirement that
all payments to purchase a business are to be recorded at fair value at
the acquisition date, with some contingent payments subsequently
re-measured through income. Goodwill may be calculated based on
the parent’s share of net assets or it may include goodwill related to
minority interest. All transactions costs will be
expensed;
|
·
|
IAS
27 (Revised), ‘Consolidated and separate financial statements’, (effective
for annual periods beginning on or after 1 July 2009). IAS 27
(revised) requires the effect of all transactions with non-controlling
interests to be recorded in equity if there is no change in
control. They will no longer result in goodwill or gains and
losses. The standard also specifies the accounting when control
is lost. Any remaining interest in the entity is re-measured to
fair value and a gain or loss is recognized in profit or
loss.
|
The Group
is currently assessing the impact of the adoption of these new standards and
amendments and currently believe they will have no material impact on the
Consolidated Financial Statements of the Group in the period of initial
application.
Interpretations
not yet effective
IFRIC 11,
“IFRS 2: Group and Treasury Share Transactions”, provides guidance on whether
share-based transactions involving treasury shares or involving group entities
should be accounted for as equity-settled or cash-settled share-based payment
transactions in the stand-alone accounts of the parent and group companies.
2. Summary
of significant accounting policies
The
financial statements have been prepared in accordance with U.K. Companies Acts
and applicable international financial reporting standards. The significant
accounting policies adopted by Amarin Corporation plc (“the Group”), are as
follows:
Basis
of consolidation
The
Consolidated Financial Statements include the parent and all its subsidiary
undertakings. Subsidiaries are entities controlled by the Company. Control
exists when the Company has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain benefits from the
entity’s activities. Control generally accompanies a shareholding of more than
one half of the voting rights. The financial statements of subsidiary companies
are included in the Consolidated Financial Statements from the date of
acquisition.
All
inter-company account balances, transactions, and any unrealized gains and
losses or income and expenses arising from inter- company transactions have been
eliminated in preparing the Consolidated Financial Statements. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
The
purchase method of accounting is used in accounting for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred at
the date of exchange, plus costs directly attributable to the acquisition. On
the acquisition of a business, fair values are attributed to the identifiable
assets, liabilities and contingent liabilities acquired. Goodwill
arises when the fair value of the consideration given for a business exceeds the
fair value of such assets, liabilities and contingent liabilities
acquired. Goodwill arising on acquisitions is capitalized and subject
to an impairment review, both annually and when there is an indication that the
carrying value may not be recoverable.
Contingent
consideration is recognized as an additional cost of an acquisition when it can
be measured reliably and it is probable that an outflow of economic benefit will
be required. The fair value of the contingent component is determined through
discounting the amounts payable to their present value using the binomial
model.
Intangible
assets and research and development expenditure
In-process
research and development
Acquired
in-process research and development (“IPR&D”) is stated at cost less
accumulated amortization and impairments. Acquired IPR&D arising on
acquisitions is capitalized and amortized on a straight-line basis over its
estimated useful economic life. The useful economic life commences upon
generation of economic benefits relating to the acquired IPR&D.
Capitalization
policy
Costs
incurred on development projects (relating to the design and testing of new or
improved products) are recognized as intangible assets when the following
criteria are fulfilled: completing the asset so it will be available for use or
sale is technically feasible; management intends to complete the intangible
asset and use or sell it; an ability to use or sell the intangible asset; it can
be demonstrated how the intangible asset will generate probable future economic
benefits; adequate technical; financial and other resources to complete the
development and to use or sell the intangible asset are available; and the
expenditure attributable to the intangible asset during its development can be
reliably measured. To date, development expenditures have not met the criteria
for recognition
of an internally generated intangible asset.
Intangible
assets not yet available for use are not subject to amortization but are tested
for impairment at least annually. An impairment loss is recognized if the
carrying amount of an asset exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in
use. Value in use is calculated by discounting the expected future cash flows
obtainable as a result of the asset’s continued use
Research
and development expenditure
On an
ongoing basis the Group undertakes research and development, including clinical
trials to establish and provide evidence of product efficacy. Clinical trial
costs are expensed to the income statement on a systematic basis over the
estimated life of trials to ensure the costs charged reflect the research and
development activity performed. To date, all research and development costs have
been written off as incurred and are included within operating expenses, as
disclosed in Note 6. Research and development costs include staff costs,
professional and contractor fees, inventory, and external services.
Foreign
currency
Functional
and presentation currencies
Items
included in the financial statements of each of the Group’s entities are
measured using the currency of the primary economic environment in which the
entity operates (“the functional currency”). The Consolidated Financial
Statements are presented in U.S. Dollars, which is the Company’s functional and
presentation currency.
Transactions
and balances
Transactions
in foreign currencies are recorded at the exchange rate prevailing at the date
of the transaction. The resulting monetary assets and liabilities are
translated into the appropriate functional currency at exchange rates prevailing
at the balance sheet date and the resulting gains and losses are recognized in
the income statement. Foreign exchange gains and losses resulting from the
settlement of such transactions are recognized in the income
statement.
Group
companies
The
results and financial position of all the Group entities (none of which has the
currency of a hyper-inflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation
currency as follows:
(i)
|
assets
and liabilities for each balance sheet presented are translated at the
closing rate at the date of that balance
sheet;
|
(ii)
|
income
and expenses for each income statement are translated at average exchange
rates (unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in
which case income and expenses are translated at the rate on the dates of
the transactions); and
|
(iii)
|
all
resulting exchange differences are recognized as a separate component of
equity.
|
Monetary
items that are receivable or payable to a foreign operation are treated as a net
investment in the foreign operation by the Company as settlement is neither
planned nor likely to occur in the foreseeable future. On consolidation,
exchange differences arising from the translation of the net investment in
foreign operations, and of borrowings and other currency instruments designated
as hedges of such investments, are taken to shareholders’ equity. When a foreign
operation is partially disposed or sold, exchange differences that were recorded
in equity are recognized in the income statement as part of the gain or loss on
sale.
Goodwill
and fair value adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entity and translated at the
closing rate.
Revenue
Revenue
from the sale of goods is measured at the fair value of the consideration
received or receivable, net of returns and allowances, trade discounts and
volume rebates. Revenue is recognized when the significant risks and
rewards of ownership have been
transferred to the buyer, recovery of the consideration is probable, the
associated costs and possible return of goods can be estimated reliably, and
there is no continuing management involvement with the goods.
Revenue
from technology licensing to third parties is recognized when earned and
non-refundable, through the achievement of specific milestones set forth in the
applicable contract, when there is no future obligation with respect to the
revenue and receipt of the consideration is probable, in accordance with the
terms prescribed in the applicable contract.
Royalty
income is recognized when earned, based on related sales of products under
agreements providing for royalties.
Property,
plant and equipment
Property,
plant and equipment are stated at cost of acquisition less accumulated
depreciation and impairment losses. Cost includes expenditures that
are directly attributable to the acquisition of the asset. Land is not
depreciated. The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
Subsequent
costs are included in the assets carrying amount or recognized as a separate
asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replaced part is derecognized. All
other repair and maintenance costs are charged to the income statement during
the financial period in which they are incurred.
An
asset’s carrying amount is written down immediately to its recoverable amount if
the asset’s carrying amount is greater than its estimated recoverable
amount.
Depreciation
is calculated using the straight line method to write down the value of assets
to their residual value over their estimated useful lives as
follows:
Plant
and equipment
|
5-10
years
|
Short
leasehold
|
5-10
years
|
Fixtures
and
fittings
|
5
years
|
Computer
equipment
|
3
years
|
Evaluation
of assets for impairment
Intangible
assets are subject to impairment testing at each balance sheet
date. All intangible assets are tested for impairment whenever events
or changes in circumstances indicate that the carrying value may not be
recoverable.
Goodwill,
intangible assets with an indefinite life and intangible assets not yet
available for use are not subject to amortization but are tested for impairment
at least annually. Additionally, non-current assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. The recoverable amount is the higher of an asset’s fair
value less costs to sell and value in use. Value in use is calculated by
discounting the expected future cash flows obtainable as a result of the asset’s
continued use. For the purposes of impairment, assets are grouped into
cash-generating units and an impairment charge is recognized whenever the
carrying amount of an asset or its cash-generating unit exceeds its recoverable
amount.
A
cash-generating unit is the smallest identifiable asset group that generates
cash flows that largely are independent from other assets and
groups. Impairment losses are recognized in the income
statement. Impairment losses recognized in respect of cash-generating
units are allocated first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying amount of the other
assets in the unit (group of units) on a pro-rata basis.
Impairment
losses in respect of goodwill are not reversed. For other assets, an impairment
loss may be reversed to the extent that the asset’s original carrying amount
does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been recognized.
Non-financial assets other than goodwill that suffer an impairment are reviewed
for possible reversal of the impairment at each reporting date.
Investments
in subsidiary undertakings
Investments
in subsidiary undertakings are shown at cost less any provision for impairment.
Cost includes loans advanced to/received from subsidiary undertakings that are
considered to form part of the net investment in the subsidiary undertakings.
Investments in subsidiaries also include the cost of recharges to
subsidiary undertakings for share based payment expense incurred by Amarin
Corporation plc.
Pre-launch
costs
Prior to
launch of a new pharmaceutical product, the Group may incur significant
pre-launch marketing costs. Such costs are expensed as incurred.
Advertising
costs
Advertising
costs are expensed as incurred.
Inventories
Inventories
are stated at the lower of cost and net realizable value. Cost is
calculated on a first-in, first-out basis and includes expenditure incurred in
acquiring the inventories and bringing them to their existing location and
condition (e.g. the purchase price, including import duties, transport and
handling costs and any other directly attributable costs, less trade
discount). Net realizable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion and selling
expenses. Inventory held for research and development is written off when
acquired unless capitalized as part an internally generated intangible asset in
accordance with our capitalization policy.
Leases
Property,
plant and equipment acquired under a lease that transfers substantially all of
the risks and rewards of ownership to the Group (finance lease), are
capitalized. Upon initial recognition, a finance lease is capitalized
at an amount equal to the lower of its fair value and the present value of the
minimum lease payments at inception of the lease. The discount rate
to be used in calculating the present value of the minimum lease payments is the
interest rate implicit in the lease. Subsequent to initial recognition the
property, plant and equipment acquired under the finance lease is accounted for
in accordance with the accounting policy applicable to the asset.
Each
lease payment is allocated between the liability and finance charges so as to
achieve a constant rate on the finance balance outstanding. Finance charges on
finance leases are expensed over the term of the lease to give a constant
periodic rate of interest charge in proportion to the capital balances
outstanding.
All other
leases which are not finance leases are considered operating
leases. Rental payments on operating leases are expensed on a
straight-line basis over the term of the lease.
Financial
assets
Available
for sale financial assets are non-derivative assets that are either designated
in this category or not classified in any other category. Equity securities are
classified as available for sale. They are measured on initial recognition and
subsequently at fair value within non-current assets. Fair value gains or losses
are recognized directly in shareholders’ equity. A significant or
prolonged decline in the fair value of the investment below its cost is
considered as an indicator that the investment is impaired. If any such evidence
exists, the accumulated fair value adjustments recognized in equity are included
in the income statement as gains or losses from
investments. Impairment losses recognized in the income statement on
available for sale securities are not reversed through the income statement if
there is a subsequent increase in value. Available for sale financial assets are
classified in non-current assets as management does not intend to dispose of the
assets during the next 12 months.
Current
and deferred taxation
Current
tax is the expected tax payable on the taxable income for the year using tax
rates enacted or substantively enacted at the balance sheet date, and any
adjustment to tax payable in respect of previous years.
Deferred
tax is calculated using the liability method, based on temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the tax bases. However, the deferred tax is not accounted for as it
arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities at rates expected to apply in the period when the
temporary differences reverse based on the laws that have been enacted or
substantively enacted by the reporting date.
A
deferred tax asset is recognized only to the extent that it is probable that
future taxable profits will be available against which the temporary differences
can be utilized.
No
deferred tax asset or liability is recognized in respect of temporary
differences associated with investments in subsidiaries where the Group is able
to control the timing of reversals of the temporary differences and it is
probable that the temporary differences will not reverse in the foreseeable
future.
Borrowings
Convertible
debentures
The fair
value of the liability portion of a convertible debenture is determined using a
market interest rate for an equivalent non-convertible debenture. This amount is
recorded as a liability on an amortized cost basis until extinguished on
conversion, redemption or maturity of the debentures. The remainder of the
proceeds is allocated to the conversion option. This is recognized and included
in shareholders’ equity, net of income tax effects.
Derivative
financial instruments
Financial
assets and liabilities are recorded at their fair value at each reportable
period end, with any gains and losses recorded in the income
statement.
Employee
benefits
Pension
obligations and vacation pay
The Group
accounts for pensions and other employee benefits under IAS 19 “Employee
benefits”. Short-term employee benefits including vacation pay are
accrued for in the period in which the related employee service is
rendered.
The Group
operates a defined contribution benefit plan. For defined contribution plans,
the Group pays contributions to publicly or privately administered pension
insurance plans on a mandatory, contractual or voluntary basis. The Group has no
further payment obligations once the contributions have been paid. The
contributions are recognized as employee benefit expense when they are due.
Prepaid contributions are recognized as an asset to the extent that a cash
refund or a reduction in the future payments is available. The Group provides no
other post retirement benefits to its employees.
Share
based compensation
The Group
operates an equity-settled, share based compensation plan. The fair value of the
employee services received in exchange for the grant of the options is
recognized as an expense. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options that are
expected to vest. At each balance sheet date, the entity revises its estimates
of the number of options that are expected to vest. It recognizes the
impact of the revision to original estimates, if any, in the income statement,
with a corresponding adjustment to equity.
When the
Group modifies share options and the fair value of the options granted
increases, the incremental fair value granted is recognized over the remaining
vesting period. The incremental fair value is calculated as the
difference between the fair value of the modified option and that of the
original option, both estimated at the date of the modification.
The
proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the options are
exercised.
The grant
by the Company of options over its equity instruments to the employees of
subsidiary undertakings is treated as a capital contribution in the books of the
subsidiary. The fair value of employee services received by the subsidiary,
measured by reference to the grant date fair value, is recognized over the
vesting period as an increase to investment in subsidiary undertakings, with a
corresponding credit to equity.
Provision
is made for employer’s National Insurance and similar taxes that arise on the
exercise of certain share options, calculated using the market price at the
balance sheet date.
In
transactions where the Group receive goods and services from non-employees in
exchange for its equity instruments, the corresponding increase in equity is
measured at the fair value of the goods and services received.
Termination
benefits
Termination
benefits are payable when employment is terminated by the Group before the
normal retirement date, or whenever an employee accepts voluntary redundancy in
exchange for these benefits. The Group recognizes termination benefits when it
is demonstrably committed to either: terminating the employment of current
employees according to a detailed formal plan without possibility of withdrawal:
or providing termination benefits as a result of an offer made to encourage
voluntary redundancy. Benefits falling due more than 12 months after the balance
sheet date are discounted to their present value.
Cash
and cash equivalents
Cash and
cash equivalents include cash in hand, deposits held at call with
banks, other short term highly liquid investments with original maturities
of three months or less and for the purposes of the cashflow statement, bank
overdrafts are included within cash and cash equivalents. Bank overdrafts are
shown within borrowings in current liabilities on the balance
sheet.
Provisions
and contingencies
A
provision is recognised in the balance sheet when there is a present legal or
constructive obligation as a result of a past event, it is probable that an
outflow of economic benefit will be required to settle the obligation and it is
reliably measured. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the
liability.
A
contingent liability is disclosed where the existence of the obligation is
considered more than remote.
Contingent
consideration payable under collaborative agreements is recognized when it is
probable that any cash flow of economic benefit will be required and can be
measured reliably. Payments relating to the funding of research are expensed and
payments relating to the acquisition of an asset are capitalized. Provisions
are re-measured at each balance sheet date based on the best estimate of the
settlement amount.
Finance
income and costs
Finance
income comprises interest income on cash and cash equivalents, gains on the
disposal of available for sale financial assets and foreign currency gains on
financing activities. Interest income is recognized on a time proportion basis
using the effective interest method.
Finance
costs comprise foreign currency losses incurred on financing activity,
impairment losses on financial assets and borrowing costs. Borrowing costs are
allocated to financial reporting periods over the effective life of the related
borrowings using the effective interest method.
Share
capital
(a)
Ordinary shares
Ordinary
shares are classified as equity. Incremental costs directly attributable to the
issue of new ordinary shares, options or warrants are recognized as a deduction
from share premium account in equity.
(b)Treasury
shares
When
share capital recognized as equity is repurchased, it is classified as treasury
shares, with the amount of the consideration paid, including directly
attributable costs, being recognized as a reduction from equity. When such
shares are subsequently re-issued, any consideration received, net of any
directly attributable incremental transaction costs, is included in
equity.
(c)
Warrants and options granted in connection with ordinary share
issuances
Where at
the time of an ordinary share issuance the Group grants shareholders warrants or
options to acquire additional shares, the total consideration received is
apportioned on a fair value basis between that relating to the issued shares,
which is recorded in share capital and share premium account, and the warrants
or options.
Where the
options or warrants give rise to an obligation for the Group to issue, if called
to do so, a fixed number of shares for a fixed amount of money in functional
currency terms then the options or warrants are classified into a separate
component in equity.
Where the
options and warrants give rise to obligations to issue ordinary shares other
than on the above basis they are classified as financial liabilities on the
balance sheet. Where these instruments meet the definition of
derivatives they are included at fair value on the balance sheet at each
reporting year end, with the resulting unrealised gains or losses being recorded
in the income statement.
In both
situations, at settlement date the carrying value of the options and warrants
are transferred to retained earnings. The cash proceeds received from
shareholders for additional shares are recorded in the share capital and share
premium account.
Earnings
per share
The Group
presents basic and diluted earnings per share (“EPS”) data for its own ordinary
shares. Basic EPS is calculated by dividing the profit or loss attributable to
ordinary shareholders of the Company by the weighted average number of ordinary
shares outstanding during the period. Diluted EPS is determined by adjusting the
profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares, which comprise convertible debentures, share options and
warrants granted. If the number of ordinary or potential ordinary shares
outstanding increases as a result of a capitalisation, bonus issue or share
split, or decreases as a result of a reverse share split, the calculation of
basic and diluted earnings per share for all periods presented shall be adjusted
retrospectively. If these changes occur after the balance sheet date but before
the financial statements are authorised for issue, the per share calculations
for those and any prior period financial statements presented shall be based on
the new number of shares.
Segment
reporting
A segment
is a distinguishable component of the Group that is engaged in either providing
related products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other
segments. The Group’s primary format for segment reporting is
currently based on geographic location.
Capital
redemption reserve
The
capital redemption reserve is comprised of deferred shares previously in issue,
which were cancelled.
Risks
and uncertainties
Intellectual
Property
The value
of the Group’s patent and proprietary rights will be affected by its ability to
obtain and preserve patent protection for its products and trade secrets, and by
the emergence of competing technologies over time. In particular, the value of
the intangible assets described in Note 3 could be severely affected by
changes in the status of the Group’s patent and proprietary rights.
Foreign
Exchange Rate Risks
We record
our transactions and prepare our financial statements in U.S. Dollars.
Since our strategy involves the development of products for the
U.S. market, a significant part of our clinical trial expenditures are
denominated in U.S. Dollars and we anticipate that the majority of our
future revenues will be denominated in U.S. Dollars. However, a significant
portion of our costs are denominated in pounds sterling, euro and shekel as a
result of our conducting activities in the United Kingdom, the European Union
and Israel. As a consequence, the results reported in our financial statements
are potentially subject to the impact of currency fluctuations between the
U.S. Dollar, pounds sterling, euro and shekel. We are focused on
development activities and do not anticipate generating on-going revenues in the
short-term. Accordingly, we do not engage in significant currency hedging
activities in order to restrict the risk of exchange rate fluctuations. However,
if we should commence commercializing any products in the U.S., changes in the
relation of the U.S. Dollar to the pound sterling, the euro and/or the
shekel may affect our revenues and operating margins. In general, we could incur
losses if the U.S. Dollar should become devalued relative to the pound
sterling, the euro and/or the shekel. We manage foreign exchange risk by holding
our cash in the currencies in which we expect to incur future cash
outflows.
Interest
Rate Risk
At
December 31, 2007 we had fixed rate convertible debentures and are therefore not
subject to interest rate risk. Accordingly, we do not hedge any of our interest
rate risks.
Patent
costs
The Group
undertakes to protect its intellectual property using patent applications. Costs
associated with such applications are written off as incurred where they relate
to ongoing development expenditure that is also not capitalized.
Acquired
patent costs arising on acquisitions are capitalized and amortized on a
straight-line basis over its estimated useful economic life. The useful economic
life commences upon generation of economic benefits relating to the acquired
patent.
Critical
accounting estimates and assumptions
The Group
makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The
estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Fair
value of intangible assets
Intangible
assets relate to the asset acquisition of Ester Neurosciences Limited on
December 5, 2007. The carrying value of the intangible asset comprises Amarin
Common Stock issued, cash paid and Amarin Common Stock to be issued under the
achievement of certain milestones. The Group used certain judgments when
determining the probability and timing of contingent consideration
payable.
The Group
reviews intangible assets not yet available for use for impairment at least
annually. An impairment loss is recognized if the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount of an intangible asset is
determined by discounting the expected future cash flows. The Group uses
significant assumptions and estimates in determining an intangible assets
recoverable amount.
Carrying
value of investment in subsidiaries
The
carrying value of the Company's investment in subsidiaries is tested at least
annually for impairment. The Company uses the present value of future cash flows
of their products to determine whether an impairment provision is required.
These cash flows assume the Company's products will be approved by the FDA and
will be capable of generating revenues. Management judgment is required in
forecasting the cash flows of each product and these cash flows are adjusted for
industry probability factors and the Group discount rate. During 2007, the
Company provided for $4,593,000 for impairment on AMR101 for HD related
investments.
3. Asset
acquisitions
On
December 5, 2007, Amarin Corporation plc, declared its offer for the shares
of Ester Neurosciences Limited (“Ester”) wholly unconditional and on that date
acquired 100% of the outstanding Ester shares (the “Acquisition”). Ester’s
principal assets include rights to intellectual property relating to the
treatment Myasthenia Gravis (“MG”). Ester has been accounted for as an asset
acquisition and as a result Ester’s net assets are included within the
consolidated balance sheet at December 31, 2007. The results of Ester from the
date of acquisition are included in the income statement for the Company which
has been consolidated into the Group income statement.
Ester’s
core assets include (i) a platform messenger RNA (mRNA) silencing technology
which targets the cholinergic pathway; (ii) EN101, a Phase II compound with
promising efficacy data for the treatment of MG utilizing this technology; and
(iii) a preclinical program in neurodegenerative and inflammatory
diseases.
.
|
Initial
consideration of approximately $15 million on closing comprising
$5.191 million in cash and $10 million in Amarin shares (subject to a
maximum of 25 million Ordinary
Shares).
|
.
|
$5
million, payable, at Amarin’s option in either, (i) Amarin shares at the
volume weighted average closing price for the 10-day trading period ending
the day before the Acquisition Agreement is signed (“First Share Amount”),
subject to the adjustment described below or (ii) cash, upon achievement
of Milestone Ia – Monarsen Phase II in MG study meeting its study
objectives: Efficacy – having a QMG score of one or more of the three
doses being superior to Mestinon as compared to the baseline by at least
10%; Safety – no major adverse drug related side effects. If
the weighted average closing price for the 10-day trading period
commencing immediately after the date of announcement of the achievement
of Milestone Ia (“Milestone Ia Price”) exceeds twice the Closing Price by
any amount (“First Excess”), the First Share Amount will be reduced by a
percentage calculated by dividing 2/3rds of the First Excess by the
Milestone Ia Price provided that if the Milestone Ia Price exceeds $50 per
Amarin Share ($5 per Amarin Share pre one-for-ten share consolidation
which became effective on January 18, 2008), such excess shall be
disregarded and the Milestone Ia Price shall be deemed to be $50 per
Amarin Share ($5 per Amarin Share pre one-for-ten share consolidation
which became effective on January 18, 2008). If the Milestone
Ia Price is less than the Closing Price no adjustment will be made to the
First Share Amount.
|
.
|
$6
million in cash on the achievement of Milestone II – successful completion
of the US Phase III clinical trial program (to include successful
completion of long term studies) enabling NDA filing for Monarsen for MG
in the US. If Milestone Ia is successfully achieved, a time
limit date is triggered for Milestone II being the date which falls two
years following the achievement of Milestone Ib (“Time Limit
Date”). If on the Time Limit Date, Milestone II has not yet
been achieved (other than by reason of failure to meet primary endpoints
in any Phase III Clinical Study or a delay in completing the U.S. Phase
III Clinical Study caused by certain Monarsen-related factors), Amarin
will pay the Sellers $3 million in cash with the remaining
$3 million being payable whenever Milestone II is achieved. In
addition, if the Milestone Ib Price is greater than or equal to $10 ($1
pre one-for-ten share consolidation which became effective on January 18,
2008), no Time Limit Date will
apply.
|
Amarin
also incurred approximately $1.3 million in transaction fees, including
legal, due diligence and accounting fees. The transaction has been accounted for
as an asset acquisition as it does not constitute a business under IFRS
3.
Preliminary
purchase price
The
preliminary purchase price of an upfront payment of $5.191 million in cash
and $10 million in common stock and contingent common stock payment of $5
million (which is considered probable) for 100% of the outstanding shares of
Ester. The fair value of the Amarin common stock issued was $9 million. This was
based on the issue of 25 million shares and the closing price of Amarin common
stock of $0.36, on December 5, 2007, the date of the acquisition. The
achievement of Milestone Ia is considered to be probable and therefore has been
recognized as a cost of investment. The fair value of Milestone Ia
(using a Monte Carlo model) has been valued at $4.8 million. As at
December 31, 2007, Milestone Ia has not been paid, therefore a provision has
been established for $4.8 million.
The total
purchase price for the acquisition of 100% of the outstanding shares of Ester is
as follows:
|
$’000
|
Fair
value of Amarin common stock issued
|
9,000
|
Fair
value of cash paid
|
5,191
|
Fair
value of Amarin common stock to be issued under Milestone
Ia
|
4,756
|
Direct
acquisition costs
|
1,340
|
|
|
Total
preliminary purchase price
|
20,287
|
The final
purchase price is dependent on the actual number of shares of Amarin common
stock issued and actual direct acquisition costs, together with contingent
consideration which may become payable, in the future, on the achievement of
certain Milestones (as outlined above). Such additional consideration may be
paid in cash or shares at the sole option of Amarin (with the exception of
Milestone II which is payable in cash) and would increase the carrying value of
the intangible fixed assets and result in an increased amortization charge over
the remaining useful economic life of these assets. Under the asset acquisition
method of accounting, the total estimated purchase price is allocated to Ester's
net tangible and intangible assets based on their relative fair value as of the
date of completion of the acquisition.
Allocation
of the costs of investment to the net assets
|
|
Ester
|
|
|
Adjustments
|
|
|
Acquisition
accounting
|
|
|
|
$'000
|
|
|
$'000
|
|
|
$'000
|
|
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
|
|
- |
|
|
|
19,916 |
|
|
|
19,916 |
|
Property,
plant and equipment
|
|
|
7 |
|
|
|
- |
|
|
|
7 |
|
Net
current assets
|
|
|
364 |
|
|
|
- |
|
|
|
364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets acquired
|
|
|
371 |
|
|
|
19,916 |
|
|
|
20,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No.
of Shares ('000)
|
|
|
|
$ |
|
|
$'000
|
|
Fair
value of Amarin common stock issued
|
|
|
25,000 |
|
|
|
0.36 |
|
|
|
9,000 |
|
Cash
payment
|
|
|
|
|
|
|
|
|
|
|
5,191 |
|
Fair
value of Amarin common stock to be issued under Milestone
Ia
|
|
|
|
|
|
|
|
|
|
|
4,756 |
|
Direct
acquisition costs
|
|
|
|
|
|
|
|
|
|
|
1,340 |
|
Cost
of investment
|
|
|
|
|
|
|
|
|
|
|
20,287 |
|
Adjustments
to allocate the cost of investment based on the relative fair values of the net
assets acquired have been considered for all assets/liabilities present on
Ester’s balance sheet at the date of acquisition (December 5, 2007). For all
asset classes other than intangible assets, no adjustment is required due to the
nature of the assets and liabilities acquired and the proximity to settlement
for the other current assets and liabilities. The most significant adjustment is
the recognition of the intangible asset based on its fair value, representing
intellectual property rights.
The
intangible asset is required to be adjusted for any contingent consideration as
soon as payment becomes probable and the amount can be measured reliably. A
description of the contingent consideration is described in detail above (see
preliminary purchase price).
4. Analysis
by segment
For
management purposes the Group is organized into two principal operating
divisions based on the geographic operations of the Group: U.K. and Ireland, and
Rest of World. The information in the tables below is based on the origin of
each segment’s activities and the location of their respective assets and
liabilities.
|
|
2007
|
|
|
2006
|
|
|
|
UK
& Ireland
|
|
|
Rest
of world
|
|
|
Total
|
|
|
UK
& Ireland
|
|
|
Rest
of world
|
|
|
Total
|
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
500 |
|
|
|
— |
|
|
|
500 |
|
Operating
expenses
|
|
|
(40,571 |
) |
|
|
(162 |
) |
|
|
(40,733 |
) |
|
|
(28,568 |
) |
|
|
— |
|
|
|
(28,568 |
) |
Operating
loss
|
|
|
(40,571 |
) |
|
|
(162 |
) |
|
|
(40,733 |
) |
|
|
(28,068 |
) |
|
|
— |
|
|
|
(28,068 |
) |
Finance
income
|
|
|
1,882 |
|
|
|
— |
|
|
|
1,882 |
|
|
|
3,344 |
|
|
|
— |
|
|
|
3,344 |
|
Finance
costs
|
|
|
(183 |
) |
|
|
— |
|
|
|
(183 |
) |
|
|
(2,826 |
) |
|
|
— |
|
|
|
(2,826 |
) |
Loss
before taxation
|
|
|
(38,872 |
) |
|
|
(162 |
) |
|
|
(39,034 |
) |
|
|
(27,550 |
) |
|
|
— |
|
|
|
(27,550 |
) |
Tax
credit
|
|
|
837 |
|
|
|
— |
|
|
|
837 |
|
|
|
799 |
|
|
|
— |
|
|
|
799 |
|
Loss
for the year
|
|
|
(38,035 |
) |
|
|
(162 |
) |
|
|
(38,197 |
) |
|
|
(26,751 |
) |
|
|
— |
|
|
|
(26,751 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
segment items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of intangible assets
|
|
|
(8,784 |
) |
|
|
— |
|
|
|
(8,784 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Impairment
of property, plant and equipment
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(235 |
) |
|
|
— |
|
|
|
(235 |
) |
Revenue
in 2006 originated in the U.K. and Ireland and related to one customer in the
U.S.
Assets
and liabilities
|
|
2007
|
|
|
2006
|
|
|
|
UK
& Ireland
|
|
|
Rest
of world
|
|
|
Total
|
|
|
UK
& Ireland
|
|
|
Rest
of world
|
|
|
Total
|
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
US$’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
assets
|
|
|
41,996 |
|
|
|
258 |
|
|
|
42,254 |
|
|
|
49,559 |
|
|
|
— |
|
|
|
49,559 |
|
Segment
liabilities
|
|
|
(17,876 |
) |
|
|
(49 |
) |
|
|
(17,925 |
) |
|
|
(10,838 |
) |
|
|
— |
|
|
|
(10,838 |
) |
Unallocated
liabilities:Income tax liabilities
|
|
|
(180 |
) |
|
|
— |
|
|
|
(180 |
) |
|
|
(153 |
) |
|
|
— |
|
|
|
(153 |
) |
Net
assets
|
|
|
23,940 |
|
|
|
209 |
|
|
|
24,149 |
|
|
|
38,568 |
|
|
|
— |
|
|
|
38,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
segment items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditure on property, plant and equipment
|
|
|
444 |
|
|
|
— |
|
|
|
444 |
|
|
|
245 |
|
|
|
— |
|
|
|
245 |
|
Capital
expenditure on intangible assets
|
|
|
20,287 |
|
|
|
— |
|
|
|
20,287 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Depreciation
|
|
|
217 |
|
|
|
— |
|
|
|
217 |
|
|
|
121 |
|
|
|
— |
|
|
|
121 |
|
The Group
operates as one business segment, research and development.
5. Exceptional
operating expenses
|
2007
|
2006
|
|
$’000
|
$’000
|
Impairment
of intangible assets
|
8,784
|
—
|
Redundancy
|
—
|
277
|
Property
|
—
|
19
|
Impairment
of property, plant and equipment
|
—
|
235
|
Total
|
8,784
|
531
|
On April
24, 2007, we announced top-line results from Amarin’s two Phase III trials of
AMR 101 to treat HD. Study data showed no statistically significant difference
in either study between AMR 101 and placebo with regard to the primary and
secondary endpoints.
While AMR
101 may have potential value in HD, central nervous system disorders and other
therapeutic indications, due to the results of the Phase III trials, it was
deemed appropriate to write off the AMR 101 intangible asset.
During
2006, the Group recorded reorganization charges to align the business for
maximum efficiency. Amarin’s reorganization plan, now completed, has resulted in
a reduction in headcount, the relocation of the research and development
function to Oxford, England and the consolidation of administrative functions in
Dublin, Ireland. In determining the charges to record, the directors made
certain estimates and judgments surrounding the amounts ultimately to be paid
for the actions the Group has taken or is committed to taking. As at
December 31, 2007, all payments in respect of exceptional operating
expenses have been made and there are no provisions in respect of exceptional
operating expenses.
6. Operating
expenses
|
|
Note
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
Selling,
general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
Administrative
and general expenses*
|
|
|
|
|
|
9,794 |
|
|
|
6,306 |
|
Employee
benefit expenses
|
|
|
|
|
|
4,736 |
|
|
|
3,535 |
|
Depreciation
of property, plant and equipment
|
|
|
|
|
|
217 |
|
|
|
121 |
|
Operating
lease expenses
|
|
|
|
|
|
1,260 |
|
|
|
820 |
|
Amortization
of intangible assets
|
|
|
|
|
|
169 |
|
|
|
674 |
|
Restructuring
costs
|
|
|
5
|
|
|
|
— |
|
|
|
531 |
|
Share
based compensation
|
|
|
28
|
|
|
|
3,665 |
|
|
|
1,475 |
|
|
|
|
|
|
|
|
19,841 |
|
|
|
13,462 |
|
Impairment
of intangible assets |
|
|
5
|
|
|
|
8,784 |
|
|
|
— |
|
Total
selling, general and administrative expenses
|
|
|
|
|
|
|
28,625 |
|
|
|
13,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
General
research and development expenses
|
|
|
|
|
|
|
8,563 |
|
|
|
12,831 |
|
Employee
benefit expenses
|
|
|
|
|
|
|
2,209 |
|
|
|
1,549 |
|
Share
based compensation
|
|
|
28
|
|
|
|
1,336 |
|
|
|
726 |
|
Total
research and development expenses
|
|
|
|
|
|
|
12,108 |
|
|
|
15,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
|
|
|
|
40,733 |
|
|
|
28,568 |
|
Research
and development costs include professional and contractor fees, materials and
external services.
*
Included in administrative and general expenses is a termination payment to a
former director and chief executive officer, Mr. Richard Stewart and a provision
relating to the lease of offices at Curzon Street, London, from which Amarin has
planned to vacate.
7. Directors’
emoluments
|
2007
|
2006
|
|
$’000
|
$’000
|
Aggregate
emoluments
|
3,688
|
2,097
|
Group
pension contributions to money purchase schemes
|
90
|
294
|
|
3,778
|
2,391
|
The Group
paid or accrued pension contributions to money purchase pension schemes on
behalf of three directors for December 31, 2007 (year to December 31, 2006: two
directors).
Mr. Groom
waived emoluments in respect of the year ended December 31, 2007 amounting to
$50,000 (year to December 31, 2006; $46,000).
Total
remuneration of directors (including benefits in kind) includes amounts paid
to:
Highest
paid director
|
2007
|
2006
|
|
$’000
|
$’000
|
Aggregate
emoluments*
|
1,517
|
815
|
Group
pension contributions to money purchase
schemes
|
60
|
169
|
|
1,577
|
984
|
*Included
in aggregate emoluments in 2007, is a termination payment of
$908,000.
During
each of the years ended December 31, 2007 and 2006 no director exercised
options.
Directors
emoluments and interests are presented in further detail in
“Item 6 — Directors, Senior Management and Employees” in the
front section of this document.
8. Employee
information
The
average monthly number of persons (including executive directors) employed by
the Group during the year was:
|
2007
Number
|
2006
Number
|
Marketing
and
administration
|
17
|
12
|
Research
and
development
|
8
|
6
|
|
25
|
18
|
|
2007
|
2006
|
|
$’000
|
$’000
|
Staff
costs (for the above persons):
|
|
|
Wages
and
salaries
|
6,075
|
4,228
|
Social
security
costs
|
566
|
453
|
Other
pension
costs
|
304
|
403
|
|
6,945
|
5,084
|
Share
based payment information is disclosed in note 28.
At the
end of 2007, the Group employed 28 people.
The
average monthly number of persons (including executive directors) employed by
the Company during the year was:
|
2007
Number
|
2006
Number
|
Marketing
and administration
|
2
|
3
|
|
2007
|
2006
|
|
$’000
|
$’000
|
Staff
costs (for the above persons):
|
|
|
Wages
and salaries
|
677
|
1,032
|
Social
security costs
|
121
|
87
|
Other
pension costs
|
68
|
181
|
|
866
|
1,300
|
At the
end of 2007, the Company employed 1 person.
9. Finance
income
|
2007
|
2006
|
|
$’000
|
$’000
|
Interest
income on short term bank
deposits
|
1,252
|
1,344
|
Foreign
exchange
gains
|
630
|
2,000
|
|
1,882
|
3,344
|
For the
years ended December 31, 2007 and 2006 the foreign exchange gain resulted
primarily from the weakening of the U.S. Dollar against sterling.
10. Finance
costs
|
2007
|
2006
|
|
$’000
|
$’000
|
On
future investment right
|
—
|
2,818
|
On
finance leases
|
4
|
2
|
On
8% convertible debentures
|
176
|
—
|
Impairment
on available for sale investments
|
3
|
6
|
|
183
|
2,826
|
On
December 4, 2007 we entered into an agreement to issue three year 8% convertible
debentures. Interest is payable quarterly in arrears. See note 21 for further
information.
On March
15, 2006 the future investment right which was granted under the May 2005
financing was settled. A charge of $2,818,000 was
recorded in 2006, being the movement in the fair value of the future investment
right from January 1, 2006 to March 15, 2006.
11. Loss
before taxation
|
2007
|
2006
|
|
$’000
|
$’000
|
Loss
before taxation is stated after charging/(crediting):
|
|
|
Depreciation/amortization
charge for the period:
|
|
|
Intangible
assets
|
169
|
674
|
Owned
property, plant and
equipment
|
207
|
111
|
Property,
plant and equipment held under finance
leases
|
10
|
10
|
Auditors
remuneration:
|
|
|
Auditor’s
remuneration for audit of Company and consolidated statutory
accounts*
|
444
|
408
|
Auditor’s
remuneration for audit of subsidiaries’ statutory
accounts*
|
72
|
69
|
Auditor’s
service for Sarbanes
Oxley
|
101
|
|
Other
advisory
services
|
52
|
4
|
Taxation
Compliance
services
|
43
|
19
|
Taxation
Advisory
services
|
88
|
85
|
Operating
lease
charges:
|
|
|
Plant
and
machinery
|
10
|
21
|
Other
operating lease
charges
|
1,250
|
799
|
Foreign
exchange
difference
|
(630)
|
(2,000)
|
*
Professional fees of $312,000 were paid to PricewaterhouseCoopers in respect to
the acquisition of shares in Ester Neurosciences Limited. These fees were
directly attributable to the transaction and have been capitalized.
In order
to maintain the independence of the external auditors, the Board has determined
policies as to what non-audit services can be provided by the Group’s external
auditors and the approval processes related to them.
12. Taxation
|
2007
|
2006
|
|
$’000
|
$’000
|
Tax
on loss before taxation:
|
|
|
United
Kingdom corporation tax at 30%:
|
|
|
current
year
|
(837)
|
(799)
|
|
|
|
Total
current tax
credit
|
(837)
|
(799)
|
|
|
|
Total
tax
credit
|
(837)
|
(799)
|
The
following items represent the principal reasons for the differences between
corporate income taxes computed at the U.K. statutory tax rate and the total tax
charge for the year.
|
2007
|
2006
|
|
$’000
|
$’000
|
Loss
before
taxation
|
(39,034)
|
(27,550)
|
Loss
on ordinary activities multiplied by standard rate of corporate tax in the
U.K. of 30%
|
(11,710)
|
(8,265)
|
Overseas
tax and adjustments in respect of foreign tax
rates
|
521
|
238
|
Unrecognized
accelerated capital allowances and other timing
differences
|
4,516
|
7,320
|
Research
and development tax credit relief (rate
differences)
|
734
|
1,079
|
Expenses
not deductible for tax
purposes
|
5,102
|
1,171
|
Total
tax
credit
|
(837)
|
(799)
|
In the
U.K., the applicable statutory rate for corporate income tax was 30% for the
years ended December 31, 2007 and 2006.
The
corporate tax rate in Ireland is 12.5% for profits on trading activities and 25%
for non-trading activities. The corporate tax rate in Israel is
27%.
Tax
losses carried forward in Amarin Corporation plc at December 31, 2007 were
$43,866,000 (December 31, 2006: $41,697,000) subject to confirmation by U.K. tax
authorities. Tax losses carried forward in Amarin Neuroscience Limited at
December 31, 2007 were $43,364,000 (December 31, 2006: $42,501,000) subject to
confirmation by U.K. tax authorities.
Tax
losses carried forward in Amarin Pharmaceuticals Ireland Limited at December 31,
2007 were $13,778,000 (December 31, 2006: $5,440,000) subject to confirmation by
Irish tax authorities.
Tax
losses carried forward in Ester Neurosciences Limited at December 31, 2007 were
$9,189,000 subject to confirmation by Israeli tax authorities.
Deferred
tax (Group)
The Group
has unrecognized deferred tax asset as follows:
|
2007
|
2006
|
|
$’000
|
$’000
|
Accelerated
capital allowances
|
(19,409)
|
(19,380)
|
Short
term timing differences
|
(3,446)
|
(1,143)
|
Losses
|
(32,499)
|
(26,772)
|
|
(55,354)
|
(47,295)
|
In 2007
and 2006 high levels of corporate tax losses carried forward and insufficient
certainty of future profitability resulted in unrecognized deferred tax
assets of $55,354,000 and $47,295,000 respectively. The deferred tax asset of
$32,499,000 in respect of losses includes $153,000 of capital loss that can only
be utilized against future capital gains.
During
the years ended December 31, 2007 and 2006 the reconciling items in arriving at
the current tax charge related to accelerated capital allowances, other short
term timing differences, tax losses carried forward and expenses not deductible
for tax purposes. The main
timing difference related to tax losses that were carried forward for set
off against future profits of the same trade.
The tax residency of Amarin Corporation plc migrated to Ireland in early
2008. Trading losses not utilized at the date of migration may no longer be
available for offset against taxable profits.
13. Profit/(Loss)
for the financial period
As
permitted by section 230 of the Companies Acts, the Company’s Income
Statement has not been included in these financial statements. Of the
consolidated loss attributable to the shareholders of Amarin Corporation
plc, a profit of $2,637,000 (December 31, 2006: loss of $7,352,000) has
been dealt with in the financial statements of the Company.
14. Loss
per ordinary share
The loss
per ordinary share is as follows:
|
|
2007
|
|
|
2006
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
Loss
for the financial year attributable to ordinary
shareholders
|
|
|
(38,197 |
) |
|
|
(26,751 |
) |
|
|
U.S. cents
|
|
|
U.S. cents
|
|
Basic
loss per ordinary
share
|
|
|
(3.90 |
) |
|
|
(3.25 |
) |
Diluted
loss per ordinary
share
|
|
|
(3.90 |
) |
|
|
(3.25 |
) |
|
|
Number
|
|
|
Number
|
|
Weighted
average number of ordinary shares in issue
|
|
|
9,783,595 |
|
|
|
8,233,705 |
|
Dilutive
impact of convertible debentures
|
|
|
— |
|
|
|
— |
|
Dilutive
impact of share options and warrants outstanding
|
|
|
— |
|
|
|
— |
|
Diluted
average number of ordinary shares in issue
|
|
|
9,783,595 |
|
|
|
8,233,705 |
|
Basic
Basic
loss per share is calculated by dividing the loss attributable to equity holders
by the weighted average number of ordinary shares in issue in the year. In 2007,
20,079 (2006: 20,079) shares have been deducted in arriving at the weighted
average number of ordinary shares in issue, being the weighted average number of
treasury shares for the year.
Diluted
Diluted
loss per share is calculated by dividing the loss for the year by the weighted
average number of ordinary shares outstanding and, when dilutive, adjusted for
the effect of all potentially dilutive shares, including share options, warrants
and convertible debt on an as-if-converted basis. The Group reported a net loss
from continuing operations in 2007 and 2006. As a result the loss per share is
not reduced by dilution. As at December 31, 2007, there were share options and
warrants outstanding of 3.2 million shares (2006: 1.9 million shares) which
could potentially have a dilutive impact in the future, but which were
anti-dilutive in 2007 and 2006. On December 6, 2007 we issued convertible
debentures which may be converted into 0.6 million ADSs commencing four months
after the date of closing. At December 31, 2007 the convertible debentures had
no dilutive effect, however they could potentially have a dilutive impact in the
future.
On
January 18, 2008 our Ordinary Shares were consolidated on a one-for-ten basis
whereby ten Ordinary Shares of 5p each became one Ordinary Share of 50p. The
shares and share information above has been adjusted to reflect this share
consolidation.
15. Intangible
assets
|
|
IPR&D
|
|
|
|
|
$’000 |
|
Group
Cost
At
January 1,
2006
|
|
|
12,753 |
|
Foreign
currency
adjustment
|
|
|
1,343 |
|
At
December 31, 2006 and at January 1,
2007
|
|
|
14,096 |
|
Acquisitions
|
|
|
19,916 |
|
Impairments
|
|
|
(14,096 |
) |
At
December 31,
2007
|
|
|
19,916 |
|
Amortization
At
January 1,
2006
|
|
|
3,361 |
|
Charge
for the
year
|
|
|
674 |
|
Foreign
currency
adjustment
|
|
|
425 |
|
At
December 31, 2006 and at January 1,
2007
|
|
|
4,460 |
|
Charge
for the
year
|
|
|
169 |
|
Eliminated
on
impairments
|
|
|
(4,629 |
) |
At
December 31,
2007
|
|
|
— |
|
Net
book value at December 31,
2007
|
|
|
19,916 |
|
Net
book value at December 31,
2006
|
|
|
9,636 |
|
Net
book value at January 1,
2006
|
|
|
9,392 |
|
Company
|
|
IPR&D
|
|
|
|
|
$’000 |
|
Cost
At
January 1,
2006
|
|
|
5,895 |
|
Foreign
currency
adjustment
|
|
|
1,343 |
|
At
December 31, 2006 and at January 1,
2007
|
|
|
7,238 |
|
Acquisitions
|
|
|
19,916 |
|
Impairments
|
|
|
(7,238 |
) |
At
December 31,
2007
|
|
|
19,916 |
|
Amortization
At
January 1,
2006
|
|
|
2,816 |
|
Charge
for the
year
|
|
|
232 |
|
Foreign
currency
adjustment
|
|
|
425 |
|
At
December 31, 2006 and at January 1,
2007
|
|
|
3,473 |
|
Charge
for the
year
|
|
|
58 |
|
Eliminated
on
impairments
|
|
|
(3,531 |
) |
At
December 31,
2007
|
|
|
— |
|
Net
book value at December 31,
2007
|
|
|
19,916 |
|
Net
book value at December 31,
2006
|
|
|
3,765 |
|
Net
book value at January 1,
2006
|
|
|
3,079 |
|
On
December 5, 2007, Amarin Corporation plc, declared its offer for the shares
of Ester wholly unconditional and on that date acquired 100% of the outstanding
Ester shares (the “Acquisition”). The acquisition was accounted for as an asset
acquisition, see note 3 for further information. The carrying value of the Ester
intangible asset (“EN101”) at December 5, 2007 was supported by a discounted
future cash flow model using a discount factor of 15%. EN101 is protected by a
granted composition of matter patent in the U.S. which extends to 2022. We
reviewed the carrying value of the Ester intangible asset at December 31, 2007
for impairment and no adjustments are required.
Intangible
assets not yet available for use (Ester IPR&D) are not subject to
amortization but are tested for impairment at least annually. An impairment loss
is recognized if the carrying amount of the asset exceeds its recoverable
amount. The recoverable amount is determined using a value in use methodology
which is arrived at by discounting the expected future cash flows of the
intangible asset.
On April
24, 2007, we announced top-line results from Amarin’s two Phase III trials of
AMR 101 to treat HD. Study data showed no statistically significant difference
in either study between AMR 101 and placebo with regard to the primary and
secondary endpoints. While AMR 101 may have potential value in HD, central
nervous system disorders and other therapeutic indications, due to the results
of the Phase III trials, it was deemed appropriate to write off the AMR 101
intangible asset. See note 5 for further information.
Of the
impairment of $9,467,000 above, $8,784,000 was recognized in the income
statement and $683,000 was recognized in the foreign currency translation
reserve.
16. Property,
plant and equipment
Group
Cost
|
|
Short
leasehold
|
|
|
Plant
and
equipment
|
|
|
Fixtures
and fittings
|
|
|
Computer
equipment
|
|
|
Total
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
At
January 1,
2006
|
|
|
409 |
|
|
|
37 |
|
|
|
192 |
|
|
|
341 |
|
|
|
979 |
|
Additions
|
|
|
102 |
|
|
|
11 |
|
|
|
21 |
|
|
|
111 |
|
|
|
245 |
|
Impairments
|
|
|
(408 |
) |
|
|
— |
|
|
|
(95 |
) |
|
|
— |
|
|
|
(503 |
) |
Disposals
|
|
|
— |
|
|
|
(33 |
) |
|
|
(90 |
) |
|
|
— |
|
|
|
(123 |
) |
Foreign
exchange
adjustments
|
|
|
6 |
|
|
|
1 |
|
|
|
1 |
|
|
|
24 |
|
|
|
32 |
|
At
December 31, 2006 and at 1 January 2007
|
|
|
109 |
|
|
|
16 |
|
|
|
29 |
|
|
|
476 |
|
|
|
630 |
|
Additions
|
|
|
152 |
|
|
|
76 |
|
|
|
8 |
|
|
|
232 |
|
|
|
468 |
|
Disposals
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Foreign
exchange
adjustments
|
|
|
3 |
|
|
|
3 |
|
|
|
5 |
|
|
|
19 |
|
|
|
30 |
|
At
December 31,
2007
|
|
|
264 |
|
|
|
95 |
|
|
|
42 |
|
|
|
727 |
|
|
|
1,128 |
|
Accumulated
depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
January 1,
2006
|
|
|
165 |
|
|
|
8 |
|
|
|
111 |
|
|
|
235 |
|
|
|
519 |
|
Charge
for the
year
|
|
|
17 |
|
|
|
13 |
|
|
|
21 |
|
|
|
70 |
|
|
|
121 |
|
Eliminated
on
disposals
|
|
|
— |
|
|
|
(18 |
) |
|
|
(38 |
) |
|
|
— |
|
|
|
(56 |
) |
Eliminated
on
impairments
|
|
|
(178 |
) |
|
|
— |
|
|
|
(90 |
) |
|
|
— |
|
|
|
(268 |
) |
At
December 31, 2006 and January 1, 2007
|
|
|
4 |
|
|
|
3 |
|
|
|
4 |
|
|
|
305 |
|
|
|
316 |
|
Charge
for the
year
|
|
|
40 |
|
|
|
17 |
|
|
|
12 |
|
|
|
148 |
|
|
|
217 |
|
Eliminated
on
disposals
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
At
December 31,
2007
|
|
|
44 |
|
|
|
20 |
|
|
|
16 |
|
|
|
453 |
|
|
|
533 |
|
Net
book value At December 31, 2007
|
|
|
220 |
|
|
|
75 |
|
|
|
26 |
|
|
|
274 |
|
|
|
595 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
December 31,
2006
|
|
|
105 |
|
|
|
13 |
|
|
|
25 |
|
|
|
171 |
|
|
|
314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
January 1,
2006
|
|
|
244 |
|
|
|
29 |
|
|
|
81 |
|
|
|
106 |
|
|
|
460 |
|
Plant and
equipment includes assets held under finance leases and purchase contracts as
follows:
Cost
|
|
|
$’000 |
|
At
January 1,
2006
|
|
|
33 |
|
Disposals
|
|
|
(33 |
) |
At
December 31, 2006 and January 1,
2007
|
|
|
— |
|
Additions
|
|
|
53 |
|
At
December 31,
2007
|
|
|
53 |
|
Accumulated
depreciation
At
January 1,
2006
|
|
|
8 |
|
Charge
for the
year
|
|
|
10 |
|
Disposals
|
|
|
(18 |
) |
At
December 31, 2006 and January 1,
2007
|
|
|
— |
|
Charge
for the
year
|
|
|
10 |
|
Disposals
|
|
|
— |
|
At
December 31,
2007
|
|
|
10 |
|
Net
book value At December 31,
2007
|
|
|
43 |
|
At
December 31,
2006
|
|
|
— |
|
During
2006, the Group recorded reorganization charges to align the business for
maximum efficiency. Amarin’s reorganization plan, now completed, involved the
relocation of the research and development function from Stirling, Scotland to
Oxford, England. Property, plant and equipment with a net book value of $235,000
was impaired as a result of the relocation of offices to
Oxford.
Company
Cost
|
|
Short
leasehold
|
|
|
Fixtures
and fittings
|
|
|
Computer
equipment
|
|
|
Total
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
At
January 1, 2006
|
|
|
293 |
|
|
|
95 |
|
|
|
246 |
|
|
|
634 |
|
Additions
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
|
|
13 |
|
Impairments
|
|
|
(293 |
) |
|
|
(95 |
) |
|
|
— |
|
|
|
(388 |
) |
At
December 31, 2006 and at January 1, 2007
|
|
|
— |
|
|
|
— |
|
|
|
259 |
|
|
|
259 |
|
Additions
|
|
|
— |
|
|
|
8 |
|
|
|
6 |
|
|
|
14 |
|
At
December 31, 2007
|
|
|
— |
|
|
|
8 |
|
|
|
265 |
|
|
|
273 |
|
Accumulated
depreciation
At
January 1, 2006
|
|
|
140 |
|
|
|
85 |
|
|
|
215 |
|
|
|
440 |
|
Charge
for the year
|
|
|
7 |
|
|
|
5 |
|
|
|
19 |
|
|
|
31 |
|
Eliminated
on impairments
|
|
|
(147 |
) |
|
|
(90 |
) |
|
|
— |
|
|
|
(237 |
) |
At
December 31, 2006 and at January 1, 2007
|
|
|
— |
|
|
|
— |
|
|
|
234 |
|
|
|
234 |
|
Charge
for the year
|
|
|
— |
|
|
|
1 |
|
|
|
19 |
|
|
|
20 |
|
At
December 31,
2007
|
|
|
— |
|
|
|
1 |
|
|
|
253 |
|
|
|
254 |
|
Net
book value
At
December 31, 2007
|
|
|
— |
|
|
|
7 |
|
|
|
12 |
|
|
|
19 |
|
At
December 31, 2006
|
|
|
— |
|
|
|
— |
|
|
|
25 |
|
|
|
25 |
|
The
Company had no property, plant or equipment under finance leases at December 31,
2007 or 2006.
17. Investments
in subsidiaries
Company
|
|
|
|
Cost
At
January 1, 2006
|
|
|
$'000 3,191 |
|
Inter
company movements during the year
|
|
|
19,524 |
|
At
December 31, 2006 and January 1, 2007
|
|
|
22,715 |
|
Gain
on strike off of Amarin Pharmaceuticals Company Limited
|
|
|
15,745 |
|
Loss
on strike off of Ethical Pharmaceuticals (U.K.)
Limited
|
|
|
(1,660 |
) |
Loss
on impairment of investment in subsidiary
|
|
|
(4,593 |
) |
IFRS
2 re-charges to subsidiaries during the period
|
|
|
5,641 |
|
Other
inter company movements during the year
|
|
|
22,288 |
|
At
December 31, 2007
|
|
|
60,136 |
|
Interest
in group undertakings at December 31, 2007
|
|
|
|
Proportion
of nominal
|
|
|
|
|
|
value
of issued share
|
|
|
Country
of
|
|
|
capital held by the
|
|
|
incorporation
|
|
|
|
|
Name of Undertaking
|
or registration
|
Description of shares held
|
|
Group
|
|
|
Company
|
|
|
|
|
|
%
|
|
|
%
|
|
Amarin
Neuroscience
Limited
|
Scotland
|
4,000,000
£1 ordinary shares
|
|
|
100
|
|
|
|
100
|
|
Amarin
Pharmaceuticals Ireland Limited
|
Ireland
|
100
€1 ordinary shares
|
|
|
100
|
|
|
|
100
|
|
Amarin
Finance
Limited
|
Bermuda
|
11,991
$1 ordinary shares
|
|
|
100
|
|
|
|
100
|
|
Ester
Neurosciences
Limited
|
Israel
|
1,320,264
NIS 0.01 ordinary shares
|
|
|
100
|
|
|
|
100
|
|
|
|
440,526
NIS 0.01 “A” redeemable convertible preference shares
|
|
|
100
|
|
|
|
100
|
|
|
|
1,121,145
NIS 0.01 “B” redeemable convertible preference shares
|
|
|
100
|
|
|
|
100
|
|
Ester
Neurosciences Limited was acquired on December 5, 2007 and was accounted for as
an asset acquisition (see note 3).
Amarin
Finance Limited was incorporated on June 23, 2006 as a fully owned subsidiary of
Amarin Corporation plc.
Group
undertakings during the year had the following nature of business:
Research
and development companies
Amarin
Neuroscience Limited.
Amarin
Pharmaceuticals Ireland Limited.
Ester
Neurosciences Limited.
Non
trading companies
Amarin
Finance Limited.
Ethical
Pharmaceuticals (U.K.) Limited. This company was struck off in March
2007.
Intermediate
holding company
Amarin
Pharmaceuticals Company Limited. This company was struck off in March
2007.
As a
result of the strike off of Amarin Pharmaceuticals Company and Ethical
Pharmaceuticals (U.K.) Limited, the Company recognized a net gain of $14,085,000
due to the cancellation of inter company loans.
18. Inventory
|
|
Group
|
|
|
Company
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
Raw
materials and
consumables
|
|
|
982 |
|
|
|
414 |
|
|
|
— |
|
|
|
— |
|
Provision
|
|
|
(982 |
) |
|
|
(414 |
) |
|
|
— |
|
|
|
— |
|
Net
realizable
value
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
At
December 31, 2007 full provision was made against raw materials and
consumables which comprise AMR 101 for commercial use. An amount of $568,000 was
expensed to the income statement in 2007 relating to the provision against AMR
101 raw materials and consumables.
19. Other
current assets
|
|
Group
|
|
|
Company
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation
tax receivable
|
|
|
1,704 |
|
|
|
1,617 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
debtors
|
|
|
840 |
|
|
|
456 |
|
|
|
625 |
|
|
|
271 |
|
Prepayments
and accrued income
|
|
|
881 |
|
|
|
716 |
|
|
|
434 |
|
|
|
499 |
|
|
|
|
1,721 |
|
|
|
1,172 |
|
|
|
1,059 |
|
|
|
770 |
|
Corporation
tax receivable relates to tax credits for research and development held within
Amarin Neuroscience Limited.
No
provision or charge against bad or doubtful debts has been made during 2007 or
2006. Included in prepayments at December 31, 2007 is an amount of $19,973 for
director’s fees paid in advance to one of our non-executive directors, Dr.
William Mason.
20. Available
for sale investments
|
$’000
|
At
January 1, 2006
|
24
|
Impairments
recorded in the income statement
|
(6)
|
At
December 31, 2006
|
18
|
Impairments
recorded in the income statement
|
(3)
|
At
December 31, 2007
|
15
|
The Group
holds an investment in Antares Pharma Inc. (“Antares”) (formerly Medi-Ject
Corporation), which is listed on the American Stock Exchange (AMEX) in the
United States. At December 31, 2007, the market value of this investment was
$15,000 (December 31, 2006: $18,000).
21. Borrowings
On
December 4, 2007, the company entered into an agreement to issue $2.75 million
8% convertible debentures. Net proceeds amounted to approximately $2.6 million
after deducting transaction costs. The holders of the debentures have the option
to convert their debentures into American Depository Shares (“ADSs”) at any time
on or after April 6, 2008 and up to December 6, 2010 at $0.48 per ADS ($4.80
post share consolidation effective January 18, 2008), a conversion rate of
2083.33 ADSs for every $1,000 principal amount of the debentures. The 8%
debentures may be redeemed at par at the company’s option at any time before
April 6, 2008. Mandatory redemption will occur if a financing takes place or
there is a change of control of the Company. If the debentures have not been
converted, they will be redeemed on December 6, 2010. Interest of 8% is paid
quarterly up until that settlement date. In addition, the debenture holders
received warrants to purchase 2.3 million ADSs at an exercise price of $0.48 per
ADS ($4.80 post share consolidation effective January 18, 2008). Notwithstanding
any redemption of the debentures, the warrants will remain
outstanding.
The fair
value of the liability component was calculated using a market interest rate for
an equivalent non-convertible debenture. The fair value of the Company's
redemption option was determined using a Monte Carlo model and was nil at
December 4, 2007 and December 31, 2007.
Gross
proceeds received from the issue of the convertible debentures have been split
between the liability element and an equity component, representing the fair
value of the embedded option to convert the liability into equity as
follows:
Group
and Company
|
|
|
2007
|
2006
|
|
$’000
|
$’000
|
Gross
proceeds of convertible debentures issued
|
2,750
|
—
|
Liability
component at the date of issue
|
(2,055)
|
—
|
Equity
and warrants component
|
695
|
|
|
|
|
Attributable
to:
|
|
|
Fair
value of warrants
component
|
550
|
—
|
Fair
value of equity
component
|
145
|
—
|
Liability
component at the date of
issue
|
695
|
—
|
The
difference between the carrying amount of the liability component at the date of
issue and the amount reported in the balance sheet at December 31, 2007
represents the change in amortized cost under the effective interest rate
method. The fair value of the liability component was calculated using three
years based on the terms of the contract. The expected life is four months from
the date of issue as management expect a financing to be completed by the end of
this period. Transaction costs of $217,000 have been allocated to the liability
and equity component based on the relative fair values of these components on
the date of issue.
22. Accrued
and other liabilities
|
|
Group
|
|
|
Company
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
creditors
|
|
|
3,462 |
|
|
|
2,096 |
|
|
|
841 |
|
|
|
396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
under finance leases
|
|
|
10 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Corporation
tax payable
|
|
|
— |
|
|
|
94 |
|
|
|
— |
|
|
|
94 |
|
Other
taxation and social security payable
|
|
|
180 |
|
|
|
153 |
|
|
|
60 |
|
|
|
45 |
|
Other
creditors
|
|
|
206 |
|
|
|
162 |
|
|
|
86 |
|
|
|
129 |
|
Accruals
and deferred income
|
|
|
6,337 |
|
|
|
8,216 |
|
|
|
3,284 |
|
|
|
1,546 |
|
|
|
|
6,733 |
|
|
|
8,625 |
|
|
|
3,430 |
|
|
|
1,814 |
|
Included
in accruals and deferred income is an amount for $941,000 which relates to a
termination payment to a former director and chief executive officer, Mr.
Richard Stewart.
23. Other
liabilities
|
|
Group
|
|
|
Company
|
|
|
|
|
|
2007 |
|
|
|
2006 |
|
|
|
2006 |
|
|
|
2007 |
|
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
Obligations
under finance
leases
|
|
|
36 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Analysis
of repayments
The
future minimum lease payments to which the Group and the Company are committed
under finance leases are as follows:
|
Group
|
Company
|
|
2007
|
2006
|
2007
|
2006
|
|
$’000
|
$’000
|
$’000
|
$’000
|
Not
later than one year
|
13
|
—
|
—
|
—
|
Later
than one year and not later than five years
|
40
|
—
|
—
|
—
|
Less:
future finance charges on finance leases
|
(7)
|
—
|
—
|
—
|
|
46
|
—
|
—
|
—
|
Less:
current maturities
|
(10)
|
—
|
—
|
—
|
Long-term
maturity
|
36
|
—
|
—
|
—
|
Finance
lease liabilities are in respect of office equipment with lease terms of five
years. Finance lease liabilities are effectively secured obligations, as the
rights to the leased asset revert to the lessor in the event of default. The
fair value of the finance lease liabilities is not materially different to their
carrying value.
24. Provisions
Group
and Company
|
|
Ester
milestone
|
|
|
Onerous
lease
|
|
|
National
insurance
|
|
|
Total
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
At
January 1,
2006
|
|
|
— |
|
|
|
220 |
|
|
|
15 |
|
|
|
235 |
|
Charged
to the income
statement
|
|
|
— |
|
|
|
— |
|
|
|
218 |
|
|
|
218 |
|
Released
to the income
statement
|
|
|
— |
|
|
|
(69 |
) |
|
|
(114 |
) |
|
|
(183 |
) |
At
December 31,
2006
|
|
|
— |
|
|
|
151 |
|
|
|
119 |
|
|
|
270 |
|
Capitalized
to intangible
assets
|
|
|
4,756 |
|
|
|
— |
|
|
|
— |
|
|
|
4,756 |
|
Charged
to the income
statement
|
|
|
— |
|
|
|
957 |
|
|
|
— |
|
|
|
957 |
|
Released
to the income statementts
|
|
|
— |
|
|
|
(41 |
) |
|
|
(119 |
) |
|
|
(160 |
) |
At
December 31,
2007
|
|
|
4,756 |
|
|
|
1,067 |
|
|
|
— |
|
|
|
5,823 |
|
At
December 31, 2007 provisions due within one year was $5,217,000 (December 31,
2006: $160,000). Provisions greater than one year was $606,000 (December 31,
2006: $110,000). The provision for the Ester milestone of $4,756,000 at December
31, 2007 relates to the fair value of the contingent consideration payable to
former Ester shareholders on the achievement of a certain milestone as a result
of the acquisition of Ester Neurosciences Limited on December 5, 2007. The
achievement of this milestone is considered to be probable and is recognized as
a liability. See note 3 for further information.
At
December 31, 2007 it was decided to vacate our premises at Curzon Street,
London. We are obliged to pay rent, service charges and rates to the end of the
lease which expires on March 20, 2010. We have fully provided for these
costs.
In
December 2005 we had a lease at a premises in Ely, Cambridgeshire which became
onerous. We are obliged to pay rent, service charges and rates to the end of the
lease which expires in November 2014. We have fully provided for these
costs.
The
provision for employer’s National Insurance contributions relates to amounts due
on the exercise of certain share options held by employees which will accumulate
over the vesting period of the relevant options. Due to the decline in the share
price during the year, there is no provision for National Insurance at December
31, 2007.
25. Financial
risk management
The Group
and Company’s activities expose it to a variety of financial risks: market risk
(including currency risk and interest rate risk), liquidity and credit risk.
There is no material price risk for the Group and Company. Details of the
Group’s financial instruments with regard to liquidity risk, interest rate risk
and foreign currency risk are disclosed in the following sections to this note.
It has been, and continues to be, the policy of the Board to minimize the
exposure of the Group to these risks.
The Group
and Company use certain derivative instruments to hedge exposures from time to
time.
The Group
has available financial instruments including borrowings, finance leases, cash
and other liquid resources, and various items, such as receivables, trade
payables, that arise directly from its operations.
The
balance sheet positions at December 31, 2007 and 2006 is representative of the
position throughout the period as cash and short-term investments, loans and
shares fluctuate considerably depending on when fund-raising activities have
occurred.
Liquidity
risk
The Group
has historically financed its operations through a number of equity finances.
The Group has, where possible, entered into long term borrowing facilities in
order to protect short term liquidity. More recently, Amarin has raised finance
by offerings of ordinary shares and convertible debentures and intends to obtain
additional funding through earning license fees from existing and new partners
for its drug development pipeline, the receipt of proceeds from the exercise of
outstanding warrants and options and/or completing further equity-based
financings.
The table
below analyses the Group and Company’s financial liabilities into relevant
maturity groupings based on the remaining period at the balance sheet date to
the contractual maturity date. With the exception of borrowings, all the amounts
disclosed in the table are equal to their carrying balances as the impact of
discounting is not significant. The amounts disclosed for borrowings are the
contractual undiscounted cash flows and hence will not agree to the amount
disclosed on the balance sheet.
Group
At
December 31 2007
|
Less
than
|
Between
1
|
Between
2
|
Over
5
|
|
1 year
|
and 2 years
|
and 5 years
|
years
|
|
$’000
|
$’000
|
$’000
|
$’000
|
Borrowings
|
220
|
220
|
2,970
|
—
|
Trade
and other payables
|
10,187
|
—
|
—
|
—
|
Finance
Leases
|
13
|
13
|
27
|
—
|
|
|
|
|
|
|
|
|
|
|
At
December 31 2006
|
Less
than
|
Between
1
|
Between
2
|
Over
5
|
|
1 year
|
and 2 years
|
and 5 years
|
years
|
|
$’000
|
$’000
|
$’000
|
$’000
|
Borrowings
|
—
|
—
|
—
|
—
|
Trade
and other payables
|
10,627
|
—
|
—
|
—
|
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
At
December 31 2007
|
Less
than
|
Between
1
|
Between
2
|
Over
5
|
|
1 year
|
and 2 years
|
and 5 years
|
years
|
|
$’000
|
$’000
|
$’000
|
$’000
|
Borrowings
|
220
|
220
|
2,970
|
—
|
Trade
and other payables
|
4,271
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
At
December 31 2006
|
Less
than
|
Between
1
|
Between
2
|
Over
5
|
|
1 year
|
and 2 years
|
and 5 years
|
years
|
|
$’000
|
$’000
|
$’000
|
$’000
|
Borrowings
|
—
|
—
|
—
|
—
|
Trade
and other payables
|
2,115
|
—
|
—
|
—
|
Credit
risk
The Group
and Company is exposed to credit-related losses in the event of non-performance
by third parties to financial instruments. Credit risk arises predominantly from
cash and cash equivalents. For banks and institutions, only independently rated
parties with a minimum rating of ‘A’ are accepted. All banks used by the Group
and Company are ‘AA’ rated.
Creditor
payment policy
It is
Amarin’s normal procedure to agree terms of transactions, including payment
terms, with suppliers in advance. Payment terms vary, reflecting local practice
throughout the world. It is Amarin’s policy that payment is made on time,
provided suppliers perform in accordance with the agreed terms.
Amarin’s
policy follows the DTI’s Better Payment Policy, copies of which can be obtained
from the Better Payments Group’s website.
Interest
rate risk profile of financial liabilities
The
Group’s financial liabilities comprised trade and other payables, borrowings and
finance leases.
|
|
2007
|
|
|
2006
|
|
|
|
Floating
Rate
|
|
|
Fixed
Rate
|
|
|
No
Interest
|
|
|
Total
|
|
|
Floating
Rate
|
|
|
Fixed
Rate
|
|
|
No
Interest
|
|
|
Total
|
|
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
Sterling
|
|
|
— |
|
|
|
46 |
|
|
|
5,144 |
|
|
|
5,190 |
|
|
|
— |
|
|
|
— |
|
|
|
6,795 |
|
|
|
6,795 |
|
Euro
|
|
|
— |
|
|
|
— |
|
|
|
2,290 |
|
|
|
2,290 |
|
|
|
— |
|
|
|
— |
|
|
|
1,300 |
|
|
|
1,300 |
|
U.S. Dollar
|
|
|
— |
|
|
|
2,750 |
|
|
|
2,704 |
|
|
|
5,454 |
|
|
|
— |
|
|
|
— |
|
|
|
2,532 |
|
|
|
2,532 |
|
NIS
|
|
|
— |
|
|
|
— |
|
|
|
49 |
|
|
|
49 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
|
|
|
— |
|
|
|
2,796 |
|
|
|
10,187 |
|
|
|
12,983 |
|
|
|
— |
|
|
|
— |
|
|
|
10,627 |
|
|
|
10,627 |
|
The
Company’s financial liabilities comprised trade and other payables, borrowings
and finance leases.
|
|
2007
|
|
|
2006
|
|
|
|
Floating
Rate
|
|
|
Fixed
Rate
|
|
|
No
Interest
|
|
|
Total
|
|
|
Floating
Rate
|
|
|
Fixed
Rate
|
|
|
No
Interest
|
|
|
Total
|
|
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
Sterling
|
|
|
— |
|
|
|
— |
|
|
|
1,972 |
|
|
|
1,972 |
|
|
|
— |
|
|
|
— |
|
|
|
1,833 |
|
|
|
1,833 |
|
Euro
|
|
|
— |
|
|
|
— |
|
|
|
813 |
|
|
|
813 |
|
|
|
— |
|
|
|
— |
|
|
|
130 |
|
|
|
130 |
|
U.S. Dollar
|
|
|
— |
|
|
|
2,750 |
|
|
|
1,486 |
|
|
|
4,236 |
|
|
|
— |
|
|
|
— |
|
|
|
152 |
|
|
|
152 |
|
Total
|
|
|
— |
|
|
|
2,750 |
|
|
|
4,271 |
|
|
|
7,021 |
|
|
|
— |
|
|
|
— |
|
|
|
2,115 |
|
|
|
2,115 |
|
Interest
rate risk profile of financial assets
The
Group’s financial assets comprise cash, other receivables, short-term deposits
and available for sale investments.
|
|
2007
|
|
|
2006
|
|
|
|
Floating
Rate
|
|
|
Fixed
Rate
|
|
|
No
Interest
|
|
|
Total
|
|
|
Floating
Rate
|
|
|
Fixed
Rate
|
|
|
No
Interest
|
|
|
Total
|
|
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
Sterling
|
|
|
9,046 |
|
|
|
— |
|
|
|
343 |
|
|
|
9,389 |
|
|
|
23,773 |
|
|
|
— |
|
|
|
288 |
|
|
|
24,061 |
|
Euro
|
|
|
606 |
|
|
|
— |
|
|
|
46 |
|
|
|
652 |
|
|
|
5,102 |
|
|
|
— |
|
|
|
50 |
|
|
|
5,152 |
|
U.S. Dollar
|
|
|
8,666 |
|
|
|
— |
|
|
|
79 |
|
|
|
8,745 |
|
|
|
7,945 |
|
|
|
— |
|
|
|
115 |
|
|
|
8,060 |
|
NIS
|
|
|
— |
|
|
|
— |
|
|
|
57 |
|
|
|
57 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
|
|
|
18,318 |
|
|
|
— |
|
|
|
525 |
|
|
|
18,843 |
|
|
|
36,820 |
|
|
|
— |
|
|
|
453 |
|
|
|
37,273 |
|
The
Company’s financial assets comprise cash, other receivables, short-term deposits
and available for sale investments.
|
|
2007
|
|
|
2006
|
|
|
|
Floating
Rate
|
|
|
Fixed
Rate
|
|
|
No
Interest
|
|
|
Total
|
|
|
Floating
Rate
|
|
|
Fixed
Rate
|
|
|
No
Interest
|
|
|
Total
|
|
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
|
|
$000 |
|
Sterling
|
|
|
8,950 |
|
|
|
— |
|
|
|
176 |
|
|
|
9,126 |
|
|
|
22,635 |
|
|
|
— |
|
|
|
133 |
|
|
|
22,768 |
|
Euro
|
|
|
173 |
|
|
|
— |
|
|
|
1 |
|
|
|
174 |
|
|
|
4,638 |
|
|
|
— |
|
|
|
14 |
|
|
|
4,652 |
|
U.S. Dollar
|
|
|
8,189 |
|
|
|
— |
|
|
|
79 |
|
|
|
8,268 |
|
|
|
7,464 |
|
|
|
— |
|
|
|
115 |
|
|
|
7,579 |
|
Total
|
|
|
17,312 |
|
|
|
— |
|
|
|
256 |
|
|
|
17,568 |
|
|
|
34,737 |
|
|
|
— |
|
|
|
262 |
|
|
|
34,999 |
|
The
floating rate financial assets comprise cash balances. The majority of cash is
generally held in floating rate accounts earning interest based on relevant
national LIBID equivalents.
Interest
sensitivity analysis
If
interest rates had been 50 base points higher/lower and all other variables were
constant, loss for the year ended December 31, 2007 would decrease/increase by
$119,000 (2006: decrease/increase by $166,000). This is attributable to the
Group and Company’s exposure to interest rates on its cash
balances.
Foreign
currency risk profile
The Group
and Company undertakes certain transactions denominated in foreign currencies.
Hence, exposures to exchange rate fluctuations arise.
The
carrying amounts of the group’s foreign currency denominated monetary assets and
liabilities at year ended December 31, 2007 are as follows:
|
|
Financial Assets
|
|
|
Financial Liabilities
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
Sterling
|
|
|
9,389 |
|
|
|
5,190 |
|
Euro
|
|
|
652 |
|
|
|
2,290 |
|
NIS
|
|
|
57 |
|
|
|
49 |
|
|
|
|
10,098 |
|
|
|
7,529 |
|
The
carrying amounts of the group’s foreign currency denominated monetary assets and
liabilities at year ended December 31, 2006 are as follows:
|
|
Financial Assets
|
|
|
Financial Liabilities
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
Sterling
|
|
|
24,061 |
|
|
|
6,795 |
|
Euro
|
|
|
5,152 |
|
|
|
1,300 |
|
NIS
|
|
|
— |
|
|
|
— |
|
|
|
|
29,213 |
|
|
|
8,095 |
|
The
carrying amounts of the Company’s foreign currency denominated monetary assets
and liabilities at year ended December 31, 2007 are as follows:
|
|
Financial Assets
|
|
|
Financial Liabilities
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
Sterling
|
|
|
9,126 |
|
|
|
1,972 |
|
Euro
|
|
|
174 |
|
|
|
813 |
|
|
|
|
9,300 |
|
|
|
2,785 |
|
The
carrying amounts of the Company’s foreign currency denominated monetary assets
and liabilities at year ended December 31, 2006 are as follows:
|
|
Financial Assets
|
|
|
Financial Liabilities
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
Sterling
|
|
|
22,768 |
|
|
|
1,833 |
|
Euro
|
|
|
4,652 |
|
|
|
130 |
|
|
|
|
27,420 |
|
|
|
1,963 |
|
Foreign
currency sensitivity analysis
The Group
and Company are mainly exposed to euro and sterling. The following table details
the group’s sensitivity to a ten per cent increase and decrease in the unit of
currency.
Impact
on Profit or Loss
of the
Group
|
|
|
|
|
2007 |
* |
|
|
2006 |
* |
|
|
|
$’000 |
|
|
|
$’000 |
|
Sterling
|
|
|
420 |
|
|
|
1727 |
|
Euro
|
|
|
164 |
|
|
|
385 |
|
NIS
|
|
|
1 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
Impact
on Profit or Loss
of
the Company
|
|
|
|
|
2007 |
* |
|
|
2006 |
* |
|
|
|
$’000 |
|
|
|
$’000 |
|
Sterling
|
|
|
715 |
|
|
|
2,094 |
|
Euro
|
|
|
64 |
|
|
|
452 |
|
* This is
mainly attributable to the exposure outstanding on sterling and
euro.
The Group
and Company expect the primary currency to continue to be U.S. Dollars as
the level of U.S. Dollar denominated financial assets and liabilities,
including cash balances, increases as a result of future equity financings
and/or license fees from partnering its drug development pipeline. We hold, and
will continue to hold funds in currencies other than the U.S. Dollar,
principally pounds sterling, euro and shekel to meet future expenditure
requirements.
Capital
risk management
The Group
and Company’s objective when managing capital are to safeguard the Group and
Company’s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
The Group
and Company is primarily funded through equity and debt financing. Management
believe that this method is sufficient to manage our capital
requirements.
Fair
values of financial assets and liabilities
The fair
values of financial assets and liabilities have been established using the
market rate where available. For those instruments without a market value a
discounted cash flow approach has been used based on a cost of capital of 15%.
There is no significant difference between the fair value and the carrying value
of the Group's financial assets and liabilities as at December 31,
2007.
At
December 31, 2007 and 2006, the Group had no overdraft facilities. The Group has
no undrawn committed borrowing facilities as at December 31, 2007.
26. Called-up
share capital
|
|
2007
|
|
|
2006
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
Authorized
1,559,144,066
ordinary shares of £0.05 each (1,559,144,066 ordinary shares of £0.05 each
for December 31, 2006)
|
|
|
125,319 |
|
|
|
125,319 |
|
440,855,934
preference shares of £0.05 (December 31, 2006:
440,855,434)
|
|
|
40,566 |
|
|
|
40,566 |
|
|
|
|
165,885 |
|
|
|
165,885 |
|
Allotted,
called up and fully paid
|
|
|
|
|
|
|
|
|
139,057,370
ordinary shares of £0.05 each (December 31, 2006:
90,684,230)
|
|
|
12,942 |
|
|
|
7,990 |
|
On
January 18, 2008 our Ordinary Shares were consolidated on a one-for-ten basis
whereby ten Ordinary Shares of £0.05 each became one Ordinary Share of £0.50.
The shares and share related information above and below has not been adjusted
to give effect to this one-for-ten Ordinary Share consolidation.
Issue
of share capital
In April
2007, the Company issued 420,000 shares due to the exercise of warrants of
nominal value $42,000 in aggregate for the total consideration of $600,600.
These warrants were issued as part of the financing completed in December
2005.
On June
1, 2007, the Company issued a total of 6,156,406 ordinary £0.05 shares in
consideration for $3,700,000 (nominal value $610,000) and warrants to purchase
615,643 shares with an exercise price of $0.72 per share in a registered direct
offering, the proceeds of which will be used to fund the combined operations of
the Amarin group.
On June
1, 2007, the Company and an affiliate of a former shareholder, Southridge
Capital entered into an equity line of credit agreement. A one time fee of
$300,000 was paid to Southridge in connection with the agreement through the
issuance of 499,168 ordinary shares (nominal value $49,000). The agreement
provides Amarin with the option to draw down up to a total of $15.0 million of
additional equity funding from time to time over a three year period. The
amounts to be drawn down under the equity line of credit agreement are
influenced by the average share price and traded share volumes in the valuation
period. As of December 31, 2007, no amounts have been drawn down on this
facility.
On
December 5, 2007, the Company issued a total of 16,290,900 ordinary £0.05 shares
in consideration for $5,376,000 (nominal value $1,677,000) and warrants to
purchase 10,437,112 shares with an exercise price of $0.48 per share in a
registered direct offering, the proceeds of which will be used to fund the
combined operations of the Amarin Group.
On
December 4, 2007, the Company issued a total of 25,000,000 ordinary £0.05 shares
in consideration for the acquisition of Ester Neurosciences Limited (nominal
value $2,574,000). See note 3 for further information.
In the
twelve months to December 31, 2007, the Company issued 6,666 shares due to the
exercise of share options of nominal value $600 in aggregate for a total
consideration of $8,000.
On
January 23, 2006, the Group issued a total of 840,000 ordinary £0.05 shares
in consideration for $2,100,000 (nominal value of $75,000) in a private equity
placement, the proceeds of which were used to fund the combined operations
of the Amarin Group.
On
March 31, 2006 the Group issued 2,383,293 ordinary £0.05 shares in
consideration for $4,171,000 (nominal value $207,000) raised in a registered
direct financing which was completed pursuant to pre-existing contractual
commitments arising from a previously completed financing in May 2005, the
proceeds of which were used to fund the combined operations of the Amarin
Group.
On
October 23, 2006 the Group issued 8,965,600 ordinary £0.05 shares in
consideration for $18,738,000 (nominal value $845,000) raised in a private
offering of equity, the proceeds of which were be used to fund the combined
operations of the Amarin Group.
In the
twelve months to December 31, 2006, the Group issued 694,693 shares
due to the exercise of share options of nominal value $62,000 in aggregate for a
total consideration of $1,037,000.
In the
twelve months to December 31, 2006, the Group issued 251,788 shares
due to the exercise of warrants of nominal value $23,000 in aggregate for a
total consideration of $360,000. These warrants were issued as part of the
financing completed in December 2005.
As at
December 31, 2007, Amarin had 440,855,934 Preference Shares of £0.05 each
forming part of its authorized share capital. Pursuant to an authority given by
the shareholders at the 2007 Annual General Meeting Amarin’s board of directors
has the authority to issue up to 440,855,934 preference shares of £0.05. Pursuant
to article 6 of the articles of association, the Preference Shares may be issued
in one or more separate series, each of which will constitute a separate class
of shares. The board of directors has the authority under article 5 of the
articles of association to issue Preference Shares with such rights and subject
to such restrictions and limitations as the directors shall
determine including dividend rights, conversion rights, voting
rights, rights and terms of redemption, and liquidation preference, any or all
of which may be greater than the rights of the ordinary shares. As at
December 31, 2007, Amarin’s board of directors had not issued any such
preference shares.
The
issuance of preference shares could adversely affect the voting power of holders
of ordinary shares and reduce the likelihood that ordinary shareholders will
receive dividend payments and payments upon liquidation. The issuance could have
the effect of decreasing the market price of our ordinary shares. The issuance
of preference shares also could have the effect of delaying, deterring or
preventing a change in control of the Group.
The
Group’s articles of association and English Law provide that the holders of
preference shares will have the right to vote separately as a class on any
proposal involving changes that would adversely affect the powers, preferences,
or special rights of holders of that preference share.
On May
16, 2008, pursuant to articles 5 and 6 of the articles of association, the board
of directors resolved that:
●
|
80 of
the 5 pence Preference Shares be consolidated and divided into 8
Preference Shares with a nominal value of 50 pence each;
and
|
●
|
the
Preference Shares with a nominal value of 50 pence each to be issued and
allotted to subscribers shall be known as "Series A Preference Shares" and
shall be issued with the rights, and subject to the restrictions and
limitations, set out in forms 128(1) and 128(4) filed with Companies House
in the U.K. in May 2008.
|
The
Series A Preference Shares
Eight
Series A Preference Shares have been designated for issuance and were issued to
certain investors in the first tranche of a two-tranche private placement in May
of 2008.
Pursuant
to the rights of the Series A Preference Shares, the consent of the holders of
at least two-thirds of the Series A Preference Shares is required to increase
the number of members on our Board to more than eight (8) or, after the time the
additional director described below is required to be added to the Board, to
more than nine (9). Holders of the Series A Preference Shares are
entitled to elect four (4) members to our Board (the “Series A
Directors”). In voting for the Series A Directors other than at a
general meeting of shareholders, the voting power of the Series A Preference
Shares will be determined pro rata among the holders thereof based on each such
holder’s ownership of Ordinary Shares as a percentage of all Ordinary Shares
owned by the Series A Holders. In voting for the Series A Directors
at a general meeting, each holder of Series A Preference Shares will be entitled
to a number of votes equal to (x) five (5) times the number of Ordinary Shares
then outstanding times (y) such holder’s percentage ownership of all the
Ordinary Shares owned by the Series A Holders. Except as described
herein, the Series A Preference Shares do not entitle holders thereof to vote at
general meetings of shareholders.
If an
additional director who is mutually acceptable to the directors who are not
Series A Directors, on the one hand, and the majority of the Series A Directors,
on the other hand, is not appointed to the Board by August 22, 2008 or such a
mutually acceptable director ceases to serve on the Board and is not replaced
within 60 days, then the holders of the Series A Preference Shares will be
entitled to elect a fifth Series A Director to serve until replaced by such a
mutually acceptable director.
The
majority of the Series A Directors also have the right to approve the
composition of any committee of the Board, so long as such committee has an
equal number Series A Directors and directors who are not Series A
Directors. Consent of the majority of the Series A Directors will be
required in order to change the quorum necessary for transaction of business by
the Board to any number other than six (6), comprising three (3) Series A
Directors and three (3) directors who are not Series A
Directors.
Each
holder of Series A Preference Shares has a right of first refusal to purchase
its pro rata share of any offering by us of Ordinary Shares or other capital
stock, or securities convertible or exchangeable therefor, on the same terms as
the other investors participating in such offering, subject to certain
exceptions (which include issuances pursuant to approved option plans or, in
certain cases, our existing equity line of credit).
The
consent of the holders of at least two-thirds of the Series A Preference Shares
is required to issue any additional Series A Preference Shares, amend or alter
the rights of the Series A Preference Shares, amend or alter certain of our
Articles of Association if the effect thereof would be adverse or inconsistent
with the specific rights of the Series A Preference Shares or authorize any
additional equity securities which would have the effect of amending, altering
or granting rights identical or superior to the specific rights of the Series A
Preference Shares.
The
Series A Preference Shares are not redeemable and rank pari passu with our Ordinary
Shares with respect to dividends and rights on a liquidation, winding-up
or dissolution.
27. Options
and warrants over shares of Amarin Corporation plc
Number
of share
options
outstanding
over
£0.05 Ordinary
Shares*
|
|
|
Note
|
|
Date
Option
Granted
|
|
Exercise
price per
Ordinary Share*
|
|
|
Number
of share
options
repriced
at
US$5.00 per
Ordinary Share
|
|
|
Number
of share
options
repriced
at
US$0.44 per
Ordinary Share
|
|
|
|
|
|
|
|
|
|
US$
|
|
|
(Note 1)
|
|
|
(Note 20)
|
|
|
100,000 |
|
|
|
1
|
|
|
23 November
1998
|
|
|
25.00 |
|
|
|
100,000 |
|
|
|
— |
|
|
250,000 |
|
|
|
2 |
|
|
23 November
1998
|
|
|
5.00 |
|
|
|
— |
|
|
|
— |
|
|
5,000 |
|
|
|
3 |
|
|
2 March
1999
|
|
|
7.22 |
|
|
|
— |
|
|
|
— |
|
|
5,500 |
|
|
|
4 |
|
|
7 September
1999
|
|
|
3.00 |
|
|
|
— |
|
|
|
— |
|
|
37,500 |
|
|
|
4 |
|
|
1 April
2000
|
|
|
3.00 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
3 |
|
|
7 April
2000
|
|
|
3.00 |
|
|
|
— |
|
|
|
— |
|
|
5,000 |
|
|
|
4 |
|
|
23 May
2000
|
|
|
3.00 |
|
|
|
— |
|
|
|
— |
|
|
3,293 |
|
|
|
4 |
|
|
26 September
2000
|
|
|
3.00 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
3 |
|
|
19 February
2001
|
|
|
6.13 |
|
|
|
— |
|
|
|
— |
|
|
45,000 |
|
|
|
6 |
|
|
4 June
2001
|
|
|
8.65 |
|
|
|
— |
|
|
|
— |
|
|
15,000 |
|
|
|
6 |
|
|
2 July
2001
|
|
|
10.00 |
|
|
|
— |
|
|
|
— |
|
|
6,000 |
|
|
|
6 |
|
|
27 July
2001
|
|
|
12.88 |
|
|
|
— |
|
|
|
— |
|
|
186,500 |
|
|
|
6,7 |
|
|
23 January
2002
|
|
|
17.65 |
|
|
|
— |
|
|
|
— |
|
|
80,000 |
|
|
|
8 |
|
|
18 February
2002
|
|
|
13.26 |
|
|
|
— |
|
|
|
— |
|
|
20,000 |
|
|
|
7 |
|
|
1 May
2002
|
|
|
19.70 |
|
|
|
— |
|
|
|
— |
|
|
15,000 |
|
|
|
7 |
|
|
1 May
2002
|
|
|
21.30 |
|
|
|
— |
|
|
|
— |
|
|
5,000 |
|
|
|
7 |
|
|
19 July
2002
|
|
|
8.81 |
|
|
|
— |
|
|
|
— |
|
|
15,000 |
|
|
|
7 |
|
|
5 September
2002
|
|
|
3.33 |
|
|
|
— |
|
|
|
— |
|
|
60,000 |
|
|
|
7 |
|
|
6 November
2002
|
|
|
3.46 |
|
|
|
— |
|
|
|
— |
|
|
221,667 |
|
|
|
9 |
|
|
6 November
2002
|
|
|
3.10 |
|
|
|
— |
|
|
|
— |
|
|
105,933 |
|
|
|
10 |
|
|
24 February
2003
|
|
|
3.17 |
|
|
|
— |
|
|
|
— |
|
|
40,000 |
|
|
|
6 |
|
|
29 April
2003
|
|
|
2.82 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
7 |
|
|
2 July
2003
|
|
|
3.37 |
|
|
|
— |
|
|
|
— |
|
|
70,000 |
|
|
|
6 |
|
|
21 November
2003
|
|
|
2.38 |
|
|
|
— |
|
|
|
— |
|
|
375,000 |
|
|
|
6 |
|
|
7 July
2004
|
|
|
0.85 |
|
|
|
— |
|
|
|
— |
|
|
170,000 |
|
|
|
11 |
|
|
21 July
2004
|
|
|
0.84 |
|
|
|
— |
|
|
|
— |
|
|
210,000 |
|
|
|
12 |
|
|
8 October
2004
|
|
|
1.25 |
|
|
|
— |
|
|
|
— |
|
|
19,125 |
|
|
|
13 |
|
|
8 October
2004
|
|
|
1.25 |
|
|
|
— |
|
|
|
— |
|
|
20,000 |
|
|
|
6 |
|
|
29 November
2004
|
|
|
2.40 |
|
|
|
— |
|
|
|
— |
|
|
100,000 |
|
|
|
14 |
|
|
28 February
2005
|
|
|
3.04 |
|
|
|
— |
|
|
|
— |
|
|
100,000 |
|
|
|
14 |
|
|
28 February
2005
|
|
|
3.04 |
|
|
|
— |
|
|
|
— |
|
|
350,000 |
|
|
|
15 |
|
|
28 February
2005
|
|
|
3.04 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
6 |
|
|
28 March
2005
|
|
|
2.43 |
|
|
|
— |
|
|
|
— |
|
|
150,000 |
|
|
|
21 |
|
|
10 June
2005
|
|
|
1.30 |
|
|
|
— |
|
|
|
— |
|
|
200,000 |
|
|
|
16 |
|
|
10 June
2005
|
|
|
1.30 |
|
|
|
— |
|
|
|
— |
|
|
200,000 |
|
|
|
17 |
|
|
28 June
2005
|
|
|
1.09 |
|
|
|
— |
|
|
|
— |
|
|
160,000 |
|
|
|
6 |
|
|
28 June
2005
|
|
|
1.09 |
|
|
|
— |
|
|
|
— |
|
Number
of share options
outstanding over
£0.05 Ordinary Shares*
|
|
|
Note
|
|
Date
Option
Granted
|
|
Exercise
price per
Ordinary Share*
|
|
|
Number
of share options
repriced at
US$5.00 per Ordinary Share |
|
|
Number
of share options
repriced at
US$0.44 per Ordinary Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Note 1)
|
|
|
|
(Note 20)
|
|
|
20,000 |
|
|
|
6 |
|
|
13 July
2005
|
|
|
1.37 |
|
|
|
— |
|
|
|
— |
|
|
20,000 |
|
|
|
6 |
|
|
1 September
2005
|
|
|
1.44 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
6 |
|
|
9 September
2005
|
|
|
1.42 |
|
|
|
— |
|
|
|
— |
|
|
20,000 |
|
|
|
6 |
|
|
20 September
2005
|
|
|
1.49 |
|
|
|
— |
|
|
|
— |
|
|
100,000 |
|
|
|
6 |
|
|
27 September
2005
|
|
|
1.50 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
18 |
|
|
28 October
2005
|
|
|
1.38 |
|
|
|
— |
|
|
|
— |
|
|
325,000 |
|
|
|
19 |
|
|
2 December
2005
|
|
|
1.16 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
6 |
|
|
12 December
2005
|
|
|
1.18 |
|
|
|
— |
|
|
|
— |
|
|
120,000 |
|
|
|
6 |
|
|
11 January
2006
|
|
|
1.35 |
|
|
|
— |
|
|
|
— |
|
|
431,000 |
|
|
|
6 |
|
|
12 January
2006
|
|
|
1.53 |
|
|
|
— |
|
|
|
— |
|
|
100,000 |
|
|
|
21 |
|
|
16 January
2006
|
|
|
1.95 |
|
|
|
— |
|
|
|
— |
|
|
200,000 |
|
|
|
6 |
|
|
16 January
2006
|
|
|
1.95 |
|
|
|
— |
|
|
|
— |
|
|
80,000 |
|
|
|
6 |
|
|
27 January
2006
|
|
|
2.72 |
|
|
|
— |
|
|
|
— |
|
|
100,000 |
|
|
|
6 |
|
|
3 February
2006
|
|
|
3.46 |
|
|
|
— |
|
|
|
— |
|
|
20,000 |
|
|
|
6 |
|
|
20 March
2006
|
|
|
3.26 |
|
|
|
— |
|
|
|
— |
|
|
30,000 |
|
|
|
5 |
|
|
7 April
2006
|
|
|
2.86 |
|
|
|
— |
|
|
|
— |
|
|
40,000 |
|
|
|
6 |
|
|
5 May
2006
|
|
|
2.95 |
|
|
|
— |
|
|
|
— |
|
|
20,000 |
|
|
|
6 |
|
|
6 June
2006
|
|
|
2.38 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
6 |
|
|
10 July
2006
|
|
|
2.40 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
6 |
|
|
28 July
2006
|
|
|
2.45 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
6 |
|
|
20 September
2006
|
|
|
2.65 |
|
|
|
— |
|
|
|
— |
|
|
10,000 |
|
|
|
6 |
|
|
25 October
2006
|
|
|
2.23 |
|
|
|
— |
|
|
|
— |
|
|
2,721,666 |
|
|
|
6,20 |
|
|
8 December
2006
|
|
|
2.30 |
|
|
|
— |
|
|
|
2,721,666 |
|
|
266,666 |
|
|
|
20,21 |
|
|
8 December
2006
|
|
|
2.30 |
|
|
|
— |
|
|
|
266,666 |
|
|
20,000 |
|
|
|
6,20 |
|
|
8 January
2007
|
|
|
2.27 |
|
|
|
— |
|
|
|
20,000 |
|
|
20,000 |
|
|
|
6,20 |
|
|
12
February 2007
|
|
|
1.87 |
|
|
|
— |
|
|
|
20,000 |
|
|
20,000 |
|
|
|
6,20 |
|
|
19
February 2007
|
|
|
1.83 |
|
|
|
— |
|
|
|
20,000 |
|
|
20,000 |
|
|
|
6,20 |
|
|
21
February 2007
|
|
|
1.87 |
|
|
|
— |
|
|
|
20,000 |
|
|
175,000 |
|
|
|
6,20 |
|
|
23
February 2007
|
|
|
1.80 |
|
|
|
— |
|
|
|
175,000 |
|
|
75,000 |
|
|
|
6,20 |
|
|
8
March 2007
|
|
|
1.82 |
|
|
|
— |
|
|
|
75,000 |
|
|
75,000 |
|
|
|
6,20 |
|
|
15
March 2007
|
|
|
2.49 |
|
|
|
— |
|
|
|
75,000 |
|
|
600,000 |
|
|
|
6,20 |
|
|
2
April 2007
|
|
|
2.30 |
|
|
|
— |
|
|
|
600,000 |
|
|
650,000 |
|
|
|
6,20 |
|
|
9
April 2007
|
|
|
2.49 |
|
|
|
— |
|
|
|
650,000 |
|
|
350,000 |
|
|
|
6,20 |
|
|
11
April 2007
|
|
|
3.00 |
|
|
|
— |
|
|
|
350,000 |
|
|
50,000 |
|
|
|
6 |
|
|
4
June 2007
|
|
|
0.60 |
|
|
|
— |
|
|
|
— |
|
|
450,000 |
|
|
|
6 |
|
|
2
August 2007
|
|
|
0.44 |
|
|
|
— |
|
|
|
— |
|
|
150,000 |
|
|
|
6 |
|
|
28
August 2007
|
|
|
0.46 |
|
|
|
— |
|
|
|
— |
|
|
30,000 |
|
|
|
6 |
|
|
11
September 2007
|
|
|
0.52 |
|
|
|
— |
|
|
|
— |
|
|
50,000 |
|
|
|
6 |
|
|
12
September 2007
|
|
|
0.54 |
|
|
|
— |
|
|
|
— |
|
|
10,804,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
4,993,332 |
|
Notes:
*
|
On
June 21, 2004, each of the issued ordinary shares of £1 each was
sub-divided and converted into one ordinary share of £0.05 and one
deferred share of £0.95. Additionally, each authorized but unissued share
of £1 each was sub-divided into 20 ordinary shares of £0.05
each.
|
A fresh
issue of one ordinary £0.05 share was made for a consideration of £1. These
proceeds were used by the Group to purchase the deferred shares in issue. The
deferred shares were then cancelled by the Group and accordingly a transfer was
made for the amount of $27,633,000 to the Capital Redemption Reserve. These
changes do not affect the exercise prices of options.
During
2002, the nominal value of ordinary shares was converted from 10p to £1 each,
resulting in the number of shares reducing by a factor of 10 and increasing the
exercise price by a factor of 10.
|
1.
|
When
granted these options were to become exercisable in tranches upon the
Group’s share price achieving certain pre-determined levels. On February
9, 2000, the Group’s remuneration committee approved the re-pricing of
these 100,000 options to an exercise price of US$0.50 per share
(US$5.00 per share following the conversion of the nominal value
of
|
|
ordinary
shares from 10p to £1 in 2002; the 2004 conversion discussed above has no
effect on the exercise price), and the Group entered into an amendment
agreement on the same day amending the exercise price and also removing
the performance criteria attached to such options. These options are
currently exercisable and remain exercisable until November 23,
2008.
|
|
2.
|
Of
these options 80% became exercisable immediately and 20% after six months
from date of grant and are exercisable until ten years from date of
grant.
|
|
3.
|
These
options are exercisable now and remain exercisable until November 30,
2008.
|
|
4.
|
These
options were granted to a former employee of Amarin Corporation plc, are
now exercisable and expire on November 30,
2008.
|
|
5.
|
These
options were granted to a former employee of Amarin Corporation plc. These
options became exercisable on the date of grant and expire on May 31,
2009.
|
|
6.
|
These
options become exercisable in tranches of 33% over three years on the
first, second and third anniversary of the date of grant and expire
10 years from the date of the
grant.
|
|
7.
|
These
options become exercisable in tranches of 33% over three years on the
first, second and third anniversary of the date employment commences. The
options expire 10 years from the date of the
grant.
|
|
8.
|
These
options became exercisable in October 2005 and expire on March 31,
2009.
|
|
9.
|
These
options become exercisable in tranches of 33% over three years on the
first, second and third anniversary of the date of grant and expire
10 years from the date of the grant. Of these options 26,667 were
immediately vested in October 2005 and expiry dated March 31,
2009.
|
|
10.
|
These
options become exercisable in tranches of 33% over three years on the
first, second and third anniversary of the date of grant and expire
10 years from the date of the grant. Of these options 65,933 were
immediately vested in October 2005 and expiry dated March 31,
2009.
|
|
11.
|
These
options become exercisable in tranches of 33% over three years on the
first, second and third anniversary of the date of grant and expire
10 years from the date of the grant. Of these options 125,000 were
immediately vested in October 2005 and expiry dated March 31,
2009.
|
|
12.
|
Of
these options, 40,000 were issued to a consultant and 170,000 were issued
to employees of Amarin Neuroscience Limited (formerly Laxdale
Limited) on the date of acquisition by the Group and become exercisable in
tranches of 33% over three years on the first, second and third
anniversary of the date of grant and expire 10 years from the date of
the grant. Of these options, 5,125 were immediately vested in June 2005
with expiry dated January 31, 2007.
|
|
13.
|
These
options were issued to employees of Amarin Neuroscience Limited (formerly
Laxdale Limited) on the date of acquisition by the Group in consideration
of the cancellation of a comparable number of stock options (in value
terms) previously held by these employees in Amarin Neuroscience Limited.
All these options are fully vested.
|
|
14.
|
These
options became exercisable on the date of grant and expire 10 years
from the date of the grant.
|
|
15.
|
These
options become exercisable, subject to performance criteria, in tranches
of 33% over three years on the first, second and third anniversary of the
date of grant and expire 10 years from the date of the
grant.
|
|
16.
|
These
options become exercisable in tranches of 50% on the second anniversary,
25% on the third anniversary and 25% on the fourth anniversary of the date
of grant and expire 10 years from the date of the
grant.
|
|
17.
|
These
options became exercisable on the date of grant and expire 4 years
from the date of grant.
|
|
18.
|
These
options became exercisable on the date of grant and expire 5 years
from the date of grant.
|
|
19.
|
These
options were granted prior to commencement of employment and become
exercisable in tranches of 33% over three years on the first, second and
third anniversary of the date of grant and expire 10 years from the
date of the grant.
|
|
20.
|
Following
the significant decline in the Company's stock price as a result of the
disappointing outcome of the two Phase III studies of AMR 101 conducted by
the Company in Huntington’s Disease, the Remuneration Committee (the
“Committee”) reviewed the effect of that decline on certain awards of
stock options previously made to Directors, employees and the Board's
Scientific Advisor under the Company's 2002 Stock Option Plan and has
determined that, in order to incentivise Directors, employees and the
Board's Scientific Advisor in relation to future performance and to
re-align their interests with those of the Company's shareholders, the
option exercise price stated in all Award Agreements relating to stock
options granted in the period from December 8, 2006 to April 11, 2007
should be amended so that it will be equal to the sale price of the
Company's American Depositary Receipts at market close on NASDAQ on the
last trading day preceding a meeting of the Committee to be convened as
soon as practicable following the AGM. The Committee was conscious that
shareholders may potentially be sensitive to the making of such amendments
to the Award Agreements and considers it appropriate that the shareholders
approve the Committee’s action in making such amendments. At
the Annual General Meeting held on July 19, 2007, a resolution to the
above affect was approved by the shareholders. On August 2, 2007 the
Remuneration Committee approved the amendment. The new strike price for
these stock options was set at
$0.44.
|
|
21.
|
On
December 19, 2007 (“Termination Date”), Rick Stewart, Amarin’s Chief
Executive Officer resigned. Mr Stewart’s vested options became exercisable
for a period of 12 months following the Termination Date in accordance
with the terms of the 2002 Stock Option Plan and upon the expiration of
such 12 month period, Mr. Stewart’s vested options shall cease to be
exercisable and shall expire. Mr Stewart’s options which had not vested as
at the Termination Date expired and accordingly are no longer exercisable
after the Termination Date and accordingly, expired on the Termination
Date.
|
Warrants
in shares of Amarin Corporation plc
At
December 31, 2007, warrants have been granted over ordinary shares as
follows:
Number of warrants
outstanding
|
Note
|
Date warrant granted
|
Exercise
price per
ordinary share
|
Share
price at date of
issue
|
Fair
value per warrant at date of
issue
|
313,234
|
1
|
27 January
2003
|
US$3.48
|
US$2.84
|
US$2.13
|
500,000
|
2
|
25 February
2004
|
US$1.90
|
US$1.68
|
US$1.28
|
8,463,246
|
3
|
21 December
2005
|
US$1.43
|
US$1.19
|
US$0.91
|
294,000
|
4
|
26 January
2006
|
US$3.06
|
US$2.72
|
US$2.10
|
175,000
|
5
|
27
April 2007
|
US$1.79
|
US$1.82
|
US$1.49
|
615,643
|
6
|
1
June 2007
|
US$0.72
|
US$0.60
|
US$0.49
|
30,000
|
7
|
21
June 2007
|
US$0.60
|
US$0.54
|
US$0.37
|
10,000
|
8
|
29
November 2007
|
US$0.34
|
US$0.36
|
US$0.30
|
10,437,112
|
9
|
4
December 2007
|
US$0.48
|
US$0.36
|
US$0.24
|
20,838,235
|
|
|
|
|
|
(1)
|
During
January 2003, 313,234 warrants were issued to Security Research Associates
Inc. and may be exercised between 27 January 2004 and 26 January
2008.
|
|
|
(2)
|
In
February 2004, all debt obligations due to Elan were settled by a cash
payment of $17,195,000 (part of which represented the cost of acquiring
Zelapar that was concurrently sold to Valeant) and the issuance of a loan
note for $5,000,000 and 500,000 warrants granted to Elan at a price of
$1.90 and exercisable from 25 February 2004 to 25 February 2009.
During September 2004, Elan sold its remaining interests in Amarin to
Amarin Investment Holding Limited, an entity controlled by Amarin’s
Chairman and Chief Executive Officer, Mr. Thomas Lynch. These interests
included Elan’s equity interest, the $5,000,000 loan note and the 500,000
warrants.
|
|
|
(3)
|
During
December 2005, 9,135,034 warrants were issued to those investors at a rate
of approximately 35% of shares acquired. These warrants were granted at a
price of $1.43 and are exercisable from 19 June 2006 to
21 December 2010. If our trading market price is equal to or above
$4.76, as adjusted for any stock splits, stock combinations, stock
dividends and other similar events, for each of any twenty consecutive
trading days, then the Group at any time thereafter shall have the right,
but not the obligation, on 20 days’ prior written notice to the
holder, to cancel any unexercised portion of this warrant for which a
notice of exercise has not yet been delivered prior to the cancellation
date.
|
|
|
(4)
|
During
January 2006, via the private placement referred to in note 26,
240,000 warrants were issued to those investors at a rate of approximately
35% of shares acquired. These warrants were granted at a price of $3.06
and are exercisable from 25 July 2006 to 26 January 2011. If our
trading market price is equal to or above $10.20, as adjusted for any
stock splits, stock combinations, stock dividends and other similar
events, for each of any twenty consecutive trading days, then the Group at
any time thereafter shall have the right, but not the obligation, on
20 days’ prior written notice to the holder, to cancel any
unexercised portion of this warrant for which a notice of exercise has not
yet been delivered prior to the cancellation date.
|
|
|
(5)
|
In
April 2007, 175,000 warrants were issued in consideration for termination
and release of certain contractual obligations and a license of certain
intellectual property rights pursuant to an agreement between NeuroStat,
Amarin Pharmaceuticals Ireland Limited, Amarin Corporation plc and Tim
Lynch. These warrants were granted at a price of $1.79 and are exercisable
from April 27, 2007 to January 17, 2014. The fair value of these warrants
were expensed to the income statement in accordance with IFRS
2.
|
|
|
(6)
|
During
June 2007, via the registered direct offering referred to in note 26,
615,643 warrants were issued to those investors at a rate of approximately
10% of shares acquired. These warrants were granted at a price
of $0.72 and are exercisable from June 1, 2007 to May 31, 2012. If our
trading market price is equal to or above $1.80, as adjusted for any stock
splits, stock combinations, stock dividends and other similar events, for
each of any twenty consecutive trading days, then the Group at any time
thereafter shall have the right, but not the obligation, on 20 days’
prior written notice to the holder, to cancel any unexercised portion of
this warrant for which a notice of exercise has not yet been delivered
prior to the cancellation date.
|
|
|
(7)
|
During
June 2007, 30,000 warrants were issued in consideration for advisory
services performed by ProSeed pursuant to an advisory services agreement
between ProSeed and Amarin Corporation plc. These warrants were
granted at a price of $0.60 and are exercisable from June 21, 2007 to June
20, 2010. The fair value of these warrants were expensed to the income
statement in accordance with IFRS 2. If our trading market price is equal
to or above $1.80, as adjusted for any stock splits, stock combinations,
stock dividends and other similar events, for each of any twenty
consecutive trading days, then the Group at any time thereafter shall have
the right, but not the obligation, on 20 days’ prior written notice
to the holder, to cancel any unexercised portion of this warrant for which
a notice of exercise has not yet been delivered prior to the cancellation
date.
|
|
|
(8)
|
During
November 2007, 10,000 warrants were issued in consideration for consulting
services performed by Strategic Pharmaceuticals Solutions, Inc., pursuant
to the Consulting Agreement, dated as of July 31, 2007, by and among
Amarin Pharmaceuticals Ireland Limited, a wholly owned subsidiary of the
Company, and the Strategic Pharmaceuticals Solutions, Inc. The fair value
of these warrants were expensed to the income statement in accordance with
IFRS 2. These warrants were granted at a price of $0.34 and are
exercisable from November 29, 2007 to November 28,
2012.
|
|
|
(9)
|
During
December 2007, via the registered direct offering referred to in note 26,
8,145,446 warrants were issued to those equity investors at a rate of
approximately 50% of shares acquired and 2,291,666 warrants were issued to
those convertible debt investors at a rate of approximately 40% of debt
acquired. These warrants were granted at a price of $0.48 and
are exercisable from December 4, 2007 to December 3, 2012. If our trading
market price is equal to or above $0.915, as adjusted for any stock
splits, stock combinations, stock dividends and other similar events, for
each of any twenty consecutive trading days, then the Group at any time
thereafter shall have the right, but not the obligation, on 20 days’
prior written notice to the holder, to cancel any unexercised portion of
this warrant for which a notice of exercise has not yet been delivered
prior to the cancellation date. Per the warrant agreement, if at any
time prior to December 6, 2009, the Company issues Ordinary Shares,
securities convertible into ADSs or Ordinary Shares, warrants to purchase
ADSs or Ordinary Shares or options to purchase any of the foregoing to a
third party (other than any Exempt Issuance) at a price that is less than,
or converts at a price that is less than, $3.66 (such lesser price, the
“Down-round Price”), then the Exercise Price shall be adjusted to equal
130% of the Down-round Price. On
May 14, 2008, we announced a private placement of Ordinary Shares for up
to $60.0 million. The first tranche from new investors of $28.0 million
closed on May 19, 2008 (see note 33 for further details).
These warrants have therefore been re-priced to $2.99 per share from their
original grant price of $4.80 per share (post share
consolidation effective January 18,
2008).
|
28.
Share-based compensation
The
Amarin Corporation plc 2002 Stock Option Plan came into effect on
January 1, 2002. The term of the plan is ten years, and no award shall be
granted under the plan after January 1, 2012.
The plan
is administered by the remuneration committee of our board of directors. A
maximum of 8,000,000 Ordinary Shares may be issued under the plan. This limit
was increased to 8,986,439 Ordinary Shares by the Remuneration Committee of the
Group on December 6, 2006, pursuant to section 4(c) of the Plan to
prevent dilution of the potential benefits available under the Plan as a result
of certain discounted share issues. This limit was further increased to
12,000,000 Ordinary Shares at an Extraordinary General Meeting held on
January 25, 2007. This limit was further increased to 18,000,000 Ordinary
Shares at an Annual General Meeting held on July 19, 2007. Directors, employees,
officers, consultants and independent contractors are eligible persons under the
plan.
Effective
January 1, 2006, IFRS 2 was adopted and the comparative amounts were
restated where applicable. The operating loss includes a non cash charge of
$5.0 million for the year ended December 31, 2007 in respect of share-based
compensation. The charge for the year is spilt $3.7 million and
$1.3 million between selling, general and administration and research and
development respectively. The corresponding figure the year ended December 31,
2006 is $2.2 million (spilt $1.5 million and $0.7 million between
selling, general and administration and research and development respectively).
The adoption of IFRS 2 has no impact on the net assets of the
Group.
Following
the significant decline in the Company's stock price as a result of the
disappointing outcome of the two Phase III studies of AMR 101 conducted by the
Company in Huntington’s disease, the Remuneration Committee (“Committee”)
reviewed the effect of that decline on certain awards of stock options
previously made to Directors, employees and the Board’s Scientific Advisor under
the Company's 2002 Stock Option Plan and has determined that, in order to
incentivise Directors, employees and the Board’s Scientific Advisor in relation
to future performance and to re-align their interests with those of the
Company's shareholders, the option exercise price stated in all Award Agreements
relating to stock options granted in the period from December 8, 2006 to April
11, 2007 should be amended so that it would be equal to the sale price of the
Company's American Depositary Receipts at market close on NASDAQ on the last
trading day preceding a meeting of the Committee to be convened as soon as
practicable following the 2007 Annual General Meeting (“2007 AGM”). The
Committee was conscious that shareholders might potentially be sensitive to the
making of such amendments to the Award Agreements and considered it appropriate
that the shareholders approve the Committee’s action in making such
amendments. At the 2007 AGM held on July 19, 2007, a resolution to
the above affect was approved by the shareholders. On August 2, 2007, the
Committee approved the amendment of the exercise price of 5,526,666 stock
options held by employees to $0.44 from original exercise prices ranging
between $1.80 and $3.00 per share. The incremental fair value was the fair
value of the options at the date of the amendment of the exercise price, based
on the new exercise price less the fair value of the options at the date of the
amendment of the exercise price, based on the original exercise price. This
incremental fair value was then expensed over the remaining vesting period of
the options, in addition to the expense originally recognized. As a result of the
amendment, under IFRS 2, the company has recognized incremental compensation
expense related to the increase in fair value due to the modification of
$143,000 in the twelve months to December 31, 2007. The total incremental
compensation expense at the date of modification was $368,000.
In
December 2007, we entered in to a Collaboration Agreement with ProSeed Capital
Holdings CVA (“Proseed”). Pursuant to this agreement we agreed to pay
Proseed 975,000 ordinary shares in consideration for advisory services performed
by Proseed in respect of the acquisition of Ester (see note 3). The fair
value of these shares is $350,000 which corresponds to 975,000 ordinary shares
at $0.36 per share determined with reference to the price of our ADSs on the
Nasdaq Capital Market on December 4, 2007, the date prior to the closing of the
Ester acquisition.
A summary
of activity under the 2002 Stock Option Plan for the years ended
December 31, 2007 and December 31, 2006 is as follows:
|
2007
Options
|
2007
Weighted
average
exercise
price
|
2006
Options
|
2006
Weighted
average
exercise
price *
|
|
|
$
|
|
$
|
Outstanding
at
January 1,
|
8,964,975
|
1.99
|
4,821,952
|
3.55
|
Granted
|
2,735,000
|
0.45
|
4,907,666
|
0.88
|
Exercised
|
(6,666)
|
1.25
|
(694,643)
|
1.49
|
Lapsed
|
(888,459)
|
0.93
|
(70,000)
|
8.79
|
Outstanding
at
December 31,
|
10,804,850
|
1.69
|
8,964,975
|
1.99
|
Exercisable
at
December 31,
|
5,113,073
|
2.75
|
2,677,308
|
4.28
|
*
Comparative information for December 31, 2006 has been updated to reflect the
option exercise price amendment described above.
During
the 12 months ended December 31, 2007 and December 31, 2006 all
options were granted at the market price. Options outstanding and exercisable at
the 12 months ended December 31, 2007 and December 31, 2006 had
the following attributes:
|
|
2007 options
|
|
|
2007
Weighted
average
exercise price
|
|
|
2006 options
|
|
|
2006
Weighted
average
exercise
price *
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
Outstanding
at December 31,
Options
granted at market
price
|
|
|
9,759,390 |
|
|
|
1.11 |
|
|
|
7,919,515 |
|
|
|
1.32 |
|
Options
granted at a discount to the market
price
|
|
|
697,793 |
|
|
|
8.01 |
|
|
|
697,793 |
|
|
|
8.01 |
|
Options
granted at a premium to the market
price
|
|
|
347,667 |
|
|
|
5.25 |
|
|
|
347,667 |
|
|
|
5.25 |
|
Exercisable
at December 31,
Options
granted at market
price
|
|
|
4,067,613 |
|
|
|
1.64 |
|
|
|
1,631,848 |
|
|
|
2.47 |
|
Options
granted at a discount to the market
price
|
|
|
697,793 |
|
|
|
8.01 |
|
|
|
697,793 |
|
|
|
8.01 |
|
Options
granted at a premium to the market
price
|
|
|
347,667 |
|
|
|
5.25 |
|
|
|
347,667 |
|
|
|
5.25 |
|
*
Comparative information for December 31, 2006 has been updated to reflect the
option exercise price amendment described above.
The
weighted average fair value of the stock options granted during the year ended
December 31, 2007 was $1.37 (December 31, 2006: $1.58).
For the
12 months ended December 31, 2007, we received $8,000 from the
exercise of share options. During the 12 months ended December 31, 2007, 888,459
options forfeited.
On
December 19, 2007, Richard Stewart, Amarin’s Chief Executive Officer resigned.
Mr. Stewart’s vested options became exercisable for a period of 12 months
following December 19, 2007 in accordance with the terms of the 2002 Stock
Option Plan and upon the expiration of such 12 month period, Mr. Stewart’s
vested options shall cease to be exercisable and shall be forfeited. Mr.
Stewart’s options which had not vested as at December 19, 2007 have forfeited
and accordingly are no longer exercisable.
The
following assumptions were used to estimate the fair values of options
granted:
|
Year
ended
December
31
2007
|
Year
ended
December
31
2006
|
Risk
free interest rate
(percentage)
|
4.58
|
4.47
|
Volatility
(percentage)
|
100%
|
98%
|
Expected
forfeiture rate
(percentage)
|
5%
|
5%
|
Dividend
yield
|
—
|
—
|
Expected
option
life
|
4
|
4
|
Forced
exercise rate
(percentage)
|
10%
|
10%
|
Minimum
gain for voluntary exercise rate
(percentage)
|
33%
|
33%
|
Voluntary
early exercise at a minimum gain rate
(percentage)
|
50%
|
50%
|
Employee
stock options generally vest over a three-year service period. Employee Stock
Options are equity settled. Compensation expense recognized for all option
grants is net of estimated forfeitures and is recognized over the awards’
respective requisite service periods. The fair values relating to all options
granted were estimated on the date of grant using the Binomial Lattice option
pricing model. Expected volatilities are based on historical volatility of our
stock and other factors, such as implied market volatility. This is based on
analysis of daily price changes over a four year measurement period from the
period end, December 31, 2007. We used historical exercise data based on
the age at the grant of the option holder to estimate the option’s expected
term, which represents the period of time that the options granted are expected
to be outstanding. The risk free rate for periods within the contractual life of
the option is based on the U.S. Treasury yield curve in effect at the time
of grant. We recognize compensation expense for the fair values of those awards
which have graded vesting on an accelerated recognition basis.
In 2007,
the Group did not accelerate the vesting of any options. In 2006, the Group
accelerated the vesting of 118,750 options held by terminated employees. The
Group recorded an expense of $84,000 in 2006 for options with accelerated
vesting terms. The unvested component of these options has been expensed in the
period in which the employees were terminated.
Exercise
price
($)
|
Date
of
Expiry
|
Number
Outstanding
at
December
31, 2007
|
Number
Exercisable
at
December
31, 2007
|
Number
Outstanding
at
December
31, 2006
|
Number
Exercisable
at
December
31, 2006
|
0.54
|
12-Sep-17
|
50,000
|
-
|
-
|
-
|
0.52
|
11-Sep-17
|
30,000
|
-
|
-
|
-
|
0.46
|
28-Aug-17
|
150,000
|
-
|
-
|
-
|
0.44
|
2-Aug-17
|
300,000
|
-
|
-
|
-
|
0.44
|
2-Aug-17
|
150,000
|
-
|
-
|
-
|
0.60
|
4-Jun-17
|
50,000
|
-
|
-
|
-
|
0.44
|
11-Apr-17
|
350,000
|
-
|
-
|
-
|
0.44
|
9-Apr-17
|
650,000
|
-
|
-
|
-
|
0.44
|
2-Apr-17
|
600,000
|
-
|
-
|
-
|
0.44
|
15-Mar-17
|
75,000
|
-
|
-
|
-
|
0.44
|
8-Mar-17
|
75,000
|
-
|
-
|
-
|
0.44
|
23-Feb-17
|
175,000
|
-
|
-
|
-
|
0.44
|
21-Feb-17
|
20,000
|
-
|
-
|
-
|
0.44
|
19-Feb-17
|
20,000
|
-
|
-
|
-
|
0.44
|
12-Feb-17
|
20,000
|
-
|
-
|
-
|
0.44
|
8-Jan-17
|
20,000
|
-
|
-
|
-
|
0.44
|
7-Dec-16
|
2,721,666
|
907,222
|
3,521,666
|
-
|
2.23
|
24-Oct-16
|
10,000
|
3,333
|
10,000
|
-
|
Exercise
price
($)
|
Date
of
Expiry
|
Number
Outstanding
at
December
31, 2007
|
Number
Exercisable
at
December
31, 2007
|
Number
Outstanding
at
December
31, 2006
|
Number
Exercisable
at
December
31, 2006
|
2.65
|
19-Sep-16
|
10,000
|
3,333
|
10,000
|
-
|
2.45
|
27-Jul-16
|
10,000
|
3,333
|
10,000
|
-
|
2.40
|
9-Jul-16
|
10,000
|
3,333
|
10,000
|
-
|
2.38
|
5-Jun-16
|
20,000
|
6,667
|
20,000
|
-
|
2.95
|
4-May-16
|
40,000
|
13,333
|
40,000
|
-
|
2.86
|
6-Apr-16
|
30,000
|
30,000
|
30,000
|
-
|
3.26
|
19-Mar-16
|
20,000
|
6,667
|
20,000
|
-
|
3.46
|
3-Feb-16
|
100,000
|
33,333
|
100,000
|
-
|
2.72
|
27-Jan-16
|
80,000
|
26,667
|
80,000
|
-
|
1.95
|
16-Jan-16
|
200,000
|
66,667
|
500,000
|
-
|
1.53
|
12-Jan-16
|
431,000
|
143,667
|
431,000
|
-
|
1.35
|
11-Jan-16
|
120,000
|
40,000
|
120,000
|
-
|
1.18
|
12-Dec-15
|
10,000
|
6,667
|
10,000
|
3,333
|
1.16
|
2-Dec-15
|
325,000
|
216,667
|
325,000
|
108,333
|
1.50
|
27-Sep-15
|
100,000
|
66,667
|
100,000
|
33,333
|
1.49
|
20-Sep-15
|
20,000
|
13,333
|
20,000
|
6,667
|
1.42
|
9-Sep-15
|
10,000
|
6,667
|
10,000
|
3,333
|
1.44
|
1-Sep-15
|
20,000
|
13,333
|
20,000
|
6,667
|
1.37
|
13-Jul-15
|
20,000
|
13,333
|
20,000
|
6,667
|
1.09
|
28-Jun-15
|
200,000
|
200,000
|
200,000
|
200,000
|
1.09
|
28-Jun-15
|
160,000
|
106,667
|
160,000
|
53,333
|
1.30
|
10-Jun-15
|
200,000
|
100,000
|
500,000
|
-
|
2.43
|
28-Mar-15
|
10,000
|
6,667
|
10,000
|
3,333
|
3.04
|
28-Feb-15
|
550,000
|
433,333
|
550,000
|
316,667
|
2.40
|
28-Nov-14
|
20,000
|
20,000
|
20,000
|
13,333
|
1.25
|
7-Oct-14
|
40,000
|
40,000
|
40,000
|
26,667
|
0.84
|
20-Jul-14
|
170,000
|
170,000
|
170,000
|
113,333
|
0.85
|
6-Jul-14
|
375,000
|
375,000
|
375,000
|
250,000
|
2.38
|
21-Nov-13
|
70,000
|
70,000
|
70,000
|
70,000
|
3.37
|
22-Jul-13
|
10,000
|
10,000
|
10,000
|
10,000
|
2.82
|
28-Apr-13
|
40,000
|
40,000
|
40,000
|
40,000
|
3.17
|
23-Feb-13
|
40,000
|
40,000
|
40,000
|
40,000
|
6.13
|
18-Feb-13
|
10,000
|
10,000
|
10,000
|
10,000
|
3.10
|
5-Nov-12
|
45,000
|
45,000
|
45,000
|
45,000
|
3.33
|
16-Aug-12
|
15,000
|
15,000
|
15,000
|
15,000
|
3.46
|
18-Jul-12
|
60,000
|
60,000
|
60,000
|
60,000
|
8.81
|
15-May-12
|
5,000
|
5,000
|
5,000
|
5,000
|
13.26
|
3-Mar-12
|
80,000
|
80,000
|
80,000
|
80,000
|
19.70
|
10-Feb-12
|
20,000
|
20,000
|
20,000
|
20,000
|
17.65
|
22-Jan-12
|
36,500
|
36,500
|
36,500
|
36,500
|
21.30
|
30-Sep-11
|
15,000
|
15,000
|
15,000
|
15,000
|
12.88
|
26-Jul-11
|
6,000
|
6,000
|
6,000
|
6,000
|
10.00
|
1-Jul-11
|
15,000
|
15,000
|
15,000
|
15,000
|
8.65
|
3-Jun-11
|
45,000
|
45,000
|
45,000
|
45,000
|
1.38
|
28-Oct-10
|
10,000
|
10,000
|
10,000
|
10,000
|
1.25
|
31-Mar-09
|
189,125
|
189,125
|
195,791
|
195,791
|
3.17
|
31-Mar-09
|
65,933
|
65,933
|
65,933
|
65,933
|
3.10
|
31-Mar-09
|
26,667
|
26,667
|
26,667
|
26,667
|
0.44
|
19-Dec-08
|
266,666
|
266,666
|
-
|
-
|
Exercise
price
($)
|
Date of
Expiry
|
Number Outstanding
at December 31, 2007 |
Number Exercisable
at December 31, 2007 |
Number Outstanding
at December 31, 2006 |
Number Exercisable
at December 31, 2006 |
1.95
|
19-Dec-08
|
100,000
|
100,000
|
-
|
-
|
1.30
|
19-Dec-08
|
150,000
|
150,000
|
-
|
-
|
3.10
|
19-Dec-08
|
150,000
|
150,000
|
150,000
|
150,000
|
17.65
|
19-Dec-08
|
150,000
|
150,000
|
150,000
|
150,000
|
7.22
|
30-Nov-08
|
5,000
|
5,000
|
5,000
|
5,000
|
3.00
|
30-Nov-08
|
51,293
|
51,293
|
51,293
|
51,293
|
3.00
|
30-Nov-08
|
10,000
|
10,000
|
10,000
|
10,000
|
5.00
|
23-Nov-08
|
250,000
|
250,000
|
250,000
|
250,000
|
5.00
|
23-Nov-08
|
100,000
|
100,000
|
100,000
|
100,000
|
1.25
|
31-Jan-07
|
-
|
-
|
5,125
|
5,125
|
|
|
|
|
|
|
|
|
10,804,850
|
5,113,073
|
8,964,975
|
2,677,308
|
29. Capital
commitments
Capital
expenditure that has been contracted for but has not been provided for in the
financial statements amounted to $nil at December 31, 2007 (December 31, 2006:
$nil).
30. Financial
commitments
The Group
and Company had future minimum payments under non-cancellable operating leases
as follows:
|
|
2007
Land and buildings
|
|
|
2006
Land and buildings
|
|
|
|
Group
|
|
|
Company
|
|
|
Group
|
|
|
Company
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
Not
later than one
year
|
|
|
1,278 |
|
|
|
715 |
|
|
|
1,235 |
|
|
|
687 |
|
Later
than one year and not later than five years
|
|
|
2,755 |
|
|
|
1,714 |
|
|
|
3,637 |
|
|
|
2,096 |
|
Later
then five
years
|
|
|
496 |
|
|
|
496 |
|
|
|
741 |
|
|
|
741 |
|
|
|
|
4,529 |
|
|
|
2,925 |
|
|
|
5,613 |
|
|
|
3,524 |
|
The Group
and Company’s minimum sublease payments receivable under non-cancellable
operating subleases are as follows:
|
|
2007
Land and buildings
|
|
|
2006
Land and buildings
|
|
|
|
Group
|
|
|
Company
|
|
|
Group
|
|
|
Company
|
|
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
|
|
$’000 |
|
Not
later than one
year
|
|
|
265 |
|
|
|
265 |
|
|
|
260 |
|
|
|
260 |
|
Later
than one year and not later than five years
|
|
|
562 |
|
|
|
562 |
|
|
|
812 |
|
|
|
812 |
|
Later
then five
years
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
827 |
|
|
|
827 |
|
|
|
1,072 |
|
|
|
1,072 |
|
On
April 27, 2001 the Group acquired a nine year lease for premises in London,
U.K. In prior years the rental was £105,500 per annum (approximately
$182,000). In November 2005, the rental on these premises was subject to review
and was increased to £112,000 per annum (approximately $193,000). There was
no increase during the financial year ended December 31, 2007.
The Group
has annual commitments under non-cancellable operating leases relating to plant
and machinery which expire between two and five years. The annual amount
payable, per annum for rent is £1,782 (approximately $3,600).
On
July 4, 2006 Amarin Neuroscience Limited entered into an operating lease
relating to land and buildings which expires on July 3, 2009. The annual amount
payable is £130,500 (approximately $256,000) with an annual increase of 2%
thereafter.
On
January 22, 2007 Amarin Pharmaceuticals Ireland Limited entered into a
twenty year operating lease relating to land and buildings which can be
cancelled after 5 years. The annual rent payable is £114,000 (approximately
($229,000).
Amarin
Neuroscience Limited has annual commitments under non-cancelable operating
leases relating to plant and machinery which will expire within one year. The
annual amount payable, per annum is £1,489 (approximately $3,000). This lease
expired on February 28, 2008.
Following
the acquisition of Laxdale Limited on October 8, 2004, further consideration may
become payable upon marketing approval being obtained for approval of products
(covered by Laxdale’s intellectual property) by the U.S. Food and Drug
Administration (“FDA”) and European Medicines Agency (“EMEA”) approval. The
first approval obtained in the U.S. and Europe would result in additional
consideration of £7,500,000 payable (approximately $14,980,000 at 2007 year
end exchange rates) for each approval to the vendors of Laxdale Limited. The
second approval obtained in the U.S. and Europe would result in additional
consideration of £5,000,000 payable (approximately $9,987,000 at 2007 year
end exchange rates) for each approval, to the vendors of Laxdale Limited. Such
additional consideration may be paid in cash or shares at the sole option of
each of the vendors.
In
November 2005 we entered into a supplemental manufacturing and supply agreement
with Nisshin Pharma Inc. for the production of materials required for our
products. The remaining purchase obligations at December 31, 2007 under this
agreement, was $674,000.
In May
2006, we signed an agreement with Dr. Anthony Clarke (a related party – see
note 34) in respect of certain patents and other intellectual property rights
relating to a formulation of the compound, Apomorphine. Under the assignment
agreement a total of £742,000 ($1,482,000) is payable on the achievement of
certain milestones.
In March
2007, we acquired a global license to develop and market a novel, nasal
lorazepam formulation for the out-patient treatment of emergency seizures in
epilepsy patients. This formulation utilizes the patent protected NanoCrystal®
Technology from Elan Corporation, plc ((“Elan”) a related party – see note 34).
Under the terms of the agreement, the Company will pay Elan success based
development, filing and approval milestones totaling $5.2 million plus royalties
on net sales.
Following
the acquisition of Ester Neurosciences Limited on December 5, 2007 further
consideration may become payable if the following milestones are
achieved:
·
|
$5
million, payable, at Amarin’s option, in cash or shares upon achievement
of Milestone Ia – Monarsen Phase II in MG study meeting its study
objectives: Efficacy – having a QMG score of one or more of the three
doses being superior to Mestinon as compared to the baseline by at least
10%; Safety – no major adverse drug related side effects. The fair value
of this milestone payment is included in accrued expenses and other
liabilities as it is probable that this milestone will be
achieved.
|
·
|
$6
million payable, at Amarin’s option, in cash or shares upon successful
completion of Monarsen Phase II MG study program with adequate efficacy
and safety data that fully supports the commencement of a Phase III
program in the U.S.
|
·
|
$6
million payable, in cash, upon successful completion of the U.S. Phase III
clinical trial program (to include successful completion of long term
studies) enabling NDA filing for Monarsen for MG in the U.S, Milestone
II.
|
If
Milestone Ia is successfully achieved, a time limit date is triggered for
Milestone II being the date which falls two years following the achievement of
Milestone Ib (“Time Limit Date”). If on the Time Limit Date,
Milestone II has not yet been achieved (other than by reason of failure to meet
primary endpoints in any Phase III Clinical Study or a delay in completing the
U.S. Phase III Clinical Study caused by certain Monarsen-related factors),
Amarin will pay the Sellers $3 million in cash with the remaining $3 million
being payable whenever Milestone II is achieved. In addition, if the
Milestone Ib Price is greater than or equal to $1 ($10 post share consolidation
effective January 18, 2008), no Time Limit Date will apply.
The
Company sublet properties under operating lease agreements which terminate in
2011. There are no contingent based rents included in the income
statement.
31. Contingent
liabilities
The Group
is not presently subject to any litigation where the potential risk of
significant liability arising from such litigation is considered to be more than
remote.
32. Pensions
The Group
operates a number of defined contribution money purchase pension schemes for
certain eligible employees. The assets of the schemes are held separately from
those of the Group in independently administered funds. The pension cost charge
represents contributions paid and payable by the Group to the fund and amounted
to $304,000 for the year ended December 31, 2007 (year to December 31,
2006: $403,000). At the year end there was a liability of $nil
(December 31, 2006: liability of $nil).
33. Post
balance sheet events
On
January 18, 2008 our Ordinary Shares were consolidated on a one-for-ten basis
whereby ten Ordinary Shares of 5p each became one Ordinary Share of
50p.
On March 3, 2008
we signed an exclusive license with Scarista Limited (“Scarista”) for the
development and commercialization rights to a broad intellectual property
portfolio in the field of lipid science. The transaction consideration comprises
an upfront fee to Scarista of $0.5 million and royalties upon
commercialization.
On May
14, 2008 we announced a private placement of ADSs (each representing one
Ordinary Share) with several new institutional and accredited investors and
potentially certain current and former directors of the Company, for up to $60.0
million funded under two equal tranches. The first tranche from new investors of
$28.0 million closed on May 19, 2008 and was settled by the issuance of
12,173,914 Ordinary Shares and 8 new Preference Shares. See Note 26 for further
details on Preference Shares.
The investors will have an option to provide up to $28.0 million in a second
tranche upon completion of certain business milestones by the Company,
potentially over the next 12 months. Certain current and former directors have
indicated an interest in investing up to $4.0 million in the placement, also
over two tranches bringing the potential total of the placement up to $60.0
million.
Certain
of the investors were entitled to join Amarin's board of directors. On
May 16, 2008, Drs. Doogan, Kukes, Walsh and Lachman, Prof. Hall and
Messrs. Cooke and Groom resigned from the board. On the same date Drs. James
Healy, Carl Gordon, Srinivas Akkaraju and Eric Aguiar were appointed to the
board. The new board appointments are effective upon the closing of the first
tranche of the financing.
34. Related
party transactions
We have a
related party relationship with our subsidiaries (see note 17), directors and
executive officers and certain parties outlined below. All transactions with
subsidiaries eliminate on consolidation and are not disclosed.
All of
the below transactions were approved in accordance with our policy for related
party transactions. Our policy in 2007 and 2006 was to require Audit Committee
review and approval of all transactions involving a potential conflict of
interest, followed by the approval of the Audit Committee or of a majority of
the board of directors who do not have a material interest in the
transaction.
All of
the related part transactions below are in respect of the Group and the Company
with the exception of (A) Elan and (D) Apomorphine which are in respect of the
Group only.
A. Elan
In
February 2007, our audit committee reviewed and approved, Amarin Pharmaceuticals
Ireland Limited (“APIL”), a subsidiary of the Group, entering into development
and license agreement with Elan Pharma International Limited, a subsidiary of
Elan Corporation, plc (“Elan”), ultimately signed on March 6, 2007, whereby APIL
licensed from Elan rights to develop and market a novel, NanoCrystal® nasal
formulation of lorazepam for the out-patient treatment of emergency seizures in
epilepsy patients. Mr. Shane Cooke, chief financial officer of Elan is a
connected person to Mr. Alan Cooke, our president and chief operating officer,
and under Nasdaq rules this transaction was deemed to be a related party
transaction. Under the terms of the agreement, we may pay Elan success based
development, filing and approval milestones totaling $5.2 million plus royalties
on net sales. No payments were made to Elan during the year ended December 31,
2007.
B. Financings
Future
investment right
Several
of the Group’s directors and officers subscribed for approximately
0.7 million ordinary shares in March 2006 in a registered direct financing.
The offer was completed pursuant to certain pre-existing contractual commitments
of the Group to investors that participated in a previously completed financing
in May 2005.
Registered
direct offering
Several
of the Company’s directors and officers subscribed for approximately 1.0 million
ordinary shares and warrants to subscribe for approximately 0.1 million ordinary
shares in June 2007 in a registered direct financing.
Public
offerings
Several
of the Company’s directors and officers subscribed for approximately 4.4 million
ordinary shares and warrants to subscribe for approximately 2.2 million ordinary
shares in a public offering in December 2007.
In a
second offering in December 2007, Dr. Michael Walsh, a director of the Company,
purchased $0.25 million in aggregate principal amount of three-year convertible
Debentures and IIU Limited, a company in which Dr. Walsh is a director,
purchased $2.5 million in aggregate principal amount of three-year convertible
Debentures. These Debentures may be converted into approximately 0.5
million and 5.2 million ordinary shares respectively, commencing four
months after the date of closing (December 6, 2007) at a conversion price of
$0.48 per ordinary share, ($4.80 post share consolidation effective Janaury 18,
2008) which is a 30% premium to the 5-day volume weighted average closing price
of our ordinary shares on December 3, 2007. The Debentures will bear interest at
a rate of 8% per annum, payable quarterly in arrears. In addition, the Debenture
holders will also receive five-year warrants to purchase approximately 0.2
million and 2.1 million ordinary shares respectively at an exercise price of
$0.48 ($4.80 post share consolidation effective Janaury 18, 2008).
Per the
warrant agreement, if at any time prior to December 6, 2009, the Company issues
Ordinary Shares, securities convertible into ADSs or Ordinary Shares, warrants
to purchase ADSs or Ordinary Shares or options to purchase any of the foregoing
to a third party (other than any Exempt Issuance) at a price that is less than,
or converts at a price that is less than, $3.66 (such lesser price, the
“Down-round Price”), then the Exercise Price shall be adjusted to equal 130% of
the Down-round Price. On May
14, 2008, we announced a private placement of Ordinary Shares for up to $60.0
million. The first tranche from new investors of $28.0 million closed on May 19,
2008 (see note 33 for further details). These warrants have
therefore been re-priced to $2.99 per share from their original grant price of
$4.80 per share (post share
consolidation effective January 18, 2008). The
convertible Debentures will be required to be repaid from the financing
outlinded above.
C. Icon
At
December 31, 2007 Sunninghill Limited, a company controlled by
Dr. John Climax, held 9.4 million shares and 1.6 million warrants
in Amarin (which was approximately 7% of Amarin’s entire issued share capital)
and Poplar Limited, a company controlled by Dr. Climax, held approximately
5% of Icon plc. During 2005 the Group entered into an agreement with Icon
Clinical Research Limited (a company wholly owned by Icon Plc) whereby Icon were
appointed as Amarin’s contract research organization to manage and oversee its
European Phase II study on AMR 101 (Trend 2) and to assist Amarin in
conducting its U.S. Phase III on AMR 101 (Trend 1). At
December 31, 2007 Amarin had incurred costs of $7.0 million
($1.9 million for the 12 months ended December 31, 2007) with
respect of direct costs to Icon. At the year end, no amount is included in
accruals or accounts payable for direct costs payable to Icon. In addition the
Group also reimbursed Icon for $2.6 million of pass-through costs which Icon
settle on behalf of Amarin.
Our
Chairman and Chief Executive Officer, Mr. Thomas Lynch has served as an
outside director of Icon since January 1996. He is also a member of Icon’s audit
committee, compensation committee and nominations committee. On March 20,
2006 Dr. Climax subsequently became a non-executive director of
Amarin.
In
November 2006, our audit committee reviewed and approved APIL, a subsidiary of
the Group entering into a Master Services Agreement with Icon Clinical Research
(U.K.) Limited whereby Icon Clinical Research (U.K.) would provide due diligence
services to Amarin Pharmaceuticals Ireland Limited on ongoing licensing
opportunities on an ongoing basis.
In
December 2006, our audit committee reviewed and approved Amarin Neuroscience
Limited, entering into a supplemental agreement with Icon Clinical Research
Limited whereby Icon Clinical Research Limited would conduct a one year E.U.
open label follow-up study to the Phase III study in Huntington’s
disease.
In
February 2007, our audit committee reviewed and approved Amarin Neuroscience
Limited, a subsidiary of the Group, entering into a supplemental agreement with
Icon Clinical Research Limited to amend the number and location of patient
activity in the E.U. Phase III clinical trial.
D. Apomorphine
In May
2006, our audit committee reviewed and approved an assignment agreement between
APIL and Dr. Anthony Clarke in respect of certain patents and other
intellectual property rights relating to a formulation of the compound,
Apomorphine. Dr. Clarke, who was our Vice President of Clinical
Development, was the developer of this target product opportunity independently
of the Group. Under the assignment agreement APIL agreed to pay Dr. Clarke
initial consideration of £42,000 ($84,000) and a further £742,000 ($1,484,000)
in milestone payments on the achievement of certain milestones. The assignment
agreement also provided for APIL to pay Dr. Clarke royalties as a
percentage of net sales if we were to sell or license the product. The royalty
percentages applicable are dependant on the level of net sales
achieved.
E. Transactions
with Directors and Executive Officers
The total
compensation of our key management, defined as directors and executive officers
was as follows:
|
2007
US$’000
|
2006
US$’000
|
Short-term
employee benefits
|
4,569
|
3,361
|
Post-employment
benefits
|
—
|
—
|
Share-based
compensation
|
2,300
|
1,045
|
Total
|
6,869
|
4,406
|
|
|
|
There are
no service contracts greater than one year in existence between any of the
directors and executive officers of Amarin.
Mr.
Thomas Lynch
In March
2007, Amarin’s remuneration committee reviewed and approved a consultancy
agreement between the Company and Dalriada Limited in relation to the provision
by Dalriada Limited to the Company of corporate consultancy services, including
consultancy services relating to financing and other corporate finance matters,
investor and media relations and implementation of corporate strategy. Under the
Consultancy Agreement, the Company pays Dalriada Limited a fee of £240,000 per
annum for the provision of the consultancy services. An additional amount of
£195,000 was also approved by the remuneration committee of which £75,000 was
paid during the year ended December 31, 2007 in respect of consultancy
services.
Dalriada
Limited is owned by a family trust, the beneficiaries of which include Mr.
Thomas Lynch, Amarin Chairman and Chief Executive Officer, and family
members.
Arrangements
with Former Directors
Mr.
Richard Stewart
On
December 19, 2007, Mr. Stewart resigned as Chief Executive Officer and Executive
Director of Amarin. Pursuant to the terms of a compromise agreement between
Amarin and Mr. Stewart, Amarin agreed to pay Mr. Stewart £402,500 ($804,000) in
respect of a termination payment and bonus, £10,673 ($21,000) in respect of 10
days accrued but untaken holiday entitlement, other expenses of £4,000 ($8,000)
and £37,338 ($75,000) in respect of accrued pension entitlement up to the date
of termination, December 19, 2007.
As at the
December 19, 2007 Mr. Stewart had 1,166,666 vested share options under our 2002
Stock Option Plan. Pursuant to the terms of the compromise agreement, Mr.
Stewart’s vested share options will be exercisable for a period of 12 months
following December 19, 2007 in accordance with the terms of our 2002 Stock
Option Plan and upon the expiration of such 12 month period, Mr. Stewart’s
vested options will cease to be exercisable and will expire.
As at
December 19, 2007 Mr. Stewart had 883,334 unvested share options under our 2002
Stock Option Plan. Pursuant to the terms of the compromise agreement, it was
provided that Mr. Stewart’s share options which were not vested as at December
19, 2007 would not vest and would not become exercisable after December 19, 2007
and accordingly, would expire on December 19, 2007.
The
compromise agreement was reviewed and approved by the members of our
remuneration committee.
Other
than the transactions listed above, there are no other related party
transactions with our Directors and Executive Officers or Former
Directors.
35. Reconciliations
on transition to IFRS
As stated
in Note 1, this is our first full set of consolidated and parent company
financial statements prepared in accordance with the recognition and measurement
principles of IFRS as adopted by the E.U. and as issued by the IASB. The
accounting policies set out in Note 2 have been applied in preparing the
consolidated financial statements for the years ended December 31, 2007 and
2006, and in the preparation of an opening balance sheet at January 1, 2006, our
date of transition.
The
transition date to IFRS for the Group is 1 January 2006 ("the Transition Date"),
being the start of the period of comparative information. IFRS 1 requires the
Group to determine its IFRS accounting policies and apply these retrospectively
to determine the opening balance sheet position at the date of transition to
IFRS. Details of the IFRS 1 exemptions being adopted are as
follows:
IFRS
3 “Business Combination”
The Group
has elected not to apply IFRS 3 “Business Combinations” to combinations which
took place prior to the Transition Date.
IFRS
2 “Share-Based Payments”
IFRS 1
provides an exemption which allows entities to only apply IFRS 2 “Share Based
Payments” to share based payment awards granted after November 7, 2002 and which
had not vested as at January 1, 2005. The Group has elected to apply this
exemption.
IFRS
5 “Asset available for sale”
IFRS 5
provides for an exemption which allows entities to apply the standard
prospectively. The Group has elected not to apply IFRS 5
retrospectively.
IAS
39 “Fair Value Measurement of Financial Assets and Liabilities”
IFRS 1
provides an exemption which allows the fair values of financial assets and
liabilities to be measured at time of initial recognition with no restatement.
The Group elected to apply this exemption.
The
following reconciliations provide a quantification of the effect of the
transition to IFRS from previously reported U.K. GAAP on:
(i) Consolidated
balance sheet at January 1, 2006
(ii) Consolidated
income statement for the year ended December 31, 2006
(iii) Consolidated
balance sheet at December 31, 2006
(iv) Parent
company balance sheet at January 1, 2006
(v) Parent
company balance sheet at December 31, 2006
(vi) Explanatory
notes
(i)
Reconciliation of impact of IFRS on the Consolidated Balance Sheet as at
January 1, 2006 (opening balance sheet at date of transition to
IFRS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
reported under UK GAAP
|
|
IAS
19 Employee Benefits
|
|
|
IAS
21 Foreign Currency
|
|
|
IAS
32/39 Financial Instruments
|
|
|
IAS
39 Financial Instruments
|
|
|
IAS
32/39 Financial Instruments
|
|
|
Cumulative
effect of Transition to IFRS at Jan 1, 2006
|
|
|
As
stated under IFRS
|
|
|
|
US$'000
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
BALANCE
SHEET
|
|
|
|
|
Note
1
|
|
|
Note
2
|
|
|
Note
3
|
|
|
Note
4
|
|
|
Note
5
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
460 |
|
|
|
- |
|
|
|
(7 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(7 |
) |
|
|
453 |
|
Intangible
assets
|
|
|
9,627 |
|
|
|
- |
|
|
|
(235 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(235 |
) |
|
|
9,392 |
|
Available
for sale investment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
24 |
|
|
|
- |
|
|
|
24 |
|
|
|
24 |
|
Total
non-current assets
|
|
|
10,087 |
|
|
|
- |
|
|
|
(242 |
) |
|
|
- |
|
|
|
24 |
|
|
|
- |
|
|
|
(218 |
) |
|
|
9,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
tax recoverable
|
|
|
1,312 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,312 |
|
Other
current assets
|
|
|
1,454 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,454 |
|
Cash
and cash equivalents
|
|
|
33,907 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
33,907 |
|
Total
current assets
|
|
|
36,673 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
36,673 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
46,760 |
|
|
|
- |
|
|
|
(242 |
) |
|
|
- |
|
|
|
24 |
|
|
|
- |
|
|
|
(218 |
) |
|
|
46,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions
|
|
|
15 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15 |
|
Other
liabilities
|
|
|
165 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
165 |
|
Total
non-current liabilities
|
|
|
180 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
|
779 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
779 |
|
Derivative
liability
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
883 |
|
|
|
- |
|
|
|
- |
|
|
|
883 |
|
|
|
883 |
|
Accrued
expenses and other liabilities
|
|
|
7,221 |
|
|
|
78 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
78 |
|
|
|
7,299 |
|
Total
current liabilities
|
|
|
8,000 |
|
|
|
78 |
|
|
|
- |
|
|
|
883 |
|
|
|
- |
|
|
|
- |
|
|
|
961 |
|
|
|
8,961 |
|
Total
liabilities
|
|
|
8,180 |
|
|
|
78 |
|
|
|
- |
|
|
|
883 |
|
|
|
- |
|
|
|
- |
|
|
|
961 |
|
|
|
9,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
and reserves attributable to equity holders of the
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
6,778 |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,778 |
|
Share
premium
|
|
|
124,097 |
|
|
|
- |
|
|
|
- |
|
|
|
(1,238 |
) |
|
|
- |
|
|
|
(9,620 |
) |
|
|
(10,858 |
) |
|
|
113,239 |
|
Share
based payments reserve
|
|
|
2,623 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,623 |
|
Warrant
reserve
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,620 |
|
|
|
9,620 |
|
|
|
9,620 |
|
Capital
redemption reserve
|
|
|
27,633 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
27,633 |
|
Treasury
shares
|
|
|
(217 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(217 |
) |
Foreign
currency translation reserve
|
|
|
- |
|
|
|
- |
|
|
|
697 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
697 |
|
|
|
697 |
|
Retained
earnings
|
|
|
(122,334 |
) |
|
|
(78 |
) |
|
|
(939 |
) |
|
|
355 |
|
|
|
24 |
|
|
|
- |
|
|
|
(638 |
) |
|
|
(122,972 |
) |
Total
shareholders' equity
|
|
|
38,580 |
|
|
|
(78 |
) |
|
|
(242 |
) |
|
|
(883 |
) |
|
|
24 |
|
|
|
- |
|
|
|
(1,179 |
) |
|
|
37,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity and liabilities
|
|
|
46,760 |
|
|
|
- |
|
|
|
(242 |
) |
|
|
- |
|
|
|
24 |
|
|
|
- |
|
|
|
(218 |
) |
|
|
46,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ii)
Reconciliation of impact of IFRS on the Consolidated Income Statement for
the year ended December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
reported under UK GAAP
|
|
|
IAS
19 Employee Benefits
|
|
|
IAS
21 Foreign Currency
|
|
|
IAS
32/39 Financial Instruments
|
|
|
IAS
39 Financial Instruments
|
|
|
Cumulative
effect of Transition to IFRS in the year
|
|
|
As
stated under IFRS
|
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
|
|
|
|
Note
1
|
|
|
Note
2
|
|
|
Note
3
|
|
|
Note
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
500 |
|
Research
& development
|
|
|
(17,186 |
) |
|
|
73 |
|
|
|
2,007 |
|
|
|
- |
|
|
|
- |
|
|
|
2,080 |
|
|
|
(15,106 |
) |
Selling,
general & administrative expenses
|
|
|
(14,475 |
) |
|
|
5 |
|
|
|
1,008 |
|
|
|
- |
|
|
|
- |
|
|
|
1,013 |
|
|
|
(13,462 |
) |
Operating
loss
|
|
|
(31,161 |
) |
|
|
78 |
|
|
|
3,015 |
|
|
|
- |
|
|
|
- |
|
|
|
3,093 |
|
|
|
(28,068 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
|
3,444 |
|
|
|
- |
|
|
|
(100 |
) |
|
|
- |
|
|
|
- |
|
|
|
(100 |
) |
|
|
3,344 |
|
Finance
costs
|
|
|
(2 |
) |
|
|
- |
|
|
|
- |
|
|
|
(2,818 |
) |
|
|
(6 |
) |
|
|
(2,824 |
) |
|
|
(2,826 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before taxation
|
|
|
(27,719 |
) |
|
|
78 |
|
|
|
2,915 |
|
|
|
(2,818 |
) |
|
|
(6 |
) |
|
|
169 |
|
|
|
(27,550 |
) |
Tax
credit
|
|
|
799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lossattributable
to equity holders of the parent
|
|
|
(26,920 |
) |
|
|
78 |
|
|
|
2,915 |
|
|
|
(2,818 |
) |
|
|
(6 |
) |
|
|
169 |
|
|
|
(26,751 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per Ordinary Share (pre-share consolidation)*
|
|
|
(0.33 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.32 |
) |
Loss
per Ordinary Share (post-share consolidation)*
|
|
|
(3.27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3.25 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
loss per Ordinary Share (pre-share consolidation)*
|
|
|
(0.33 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.32 |
) |
Diluted
loss per Ordinary Share (post-share consolidation)*
|
|
|
(3.27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3.25 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*On
January 18, 2008, our Ordinary Shares were consolidated on a one-for-ten
basis whereby ten Ordinary Shares of 5p each became one Ordinary Share of
50p.
|
|
The
shares and share information above has been adjusted to reflect this share
consolidation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(iii)
Reconciliation of impact of IFRS on the Consolidated Balance Sheet at
December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
reported under UK GAAP
|
|
Total
opening adjustment at Jan 1, 2006
|
|
|
IAS
19 Employee Benefits
|
|
|
IAS
21 Foreign Currency
|
|
|
IAS
32/39 Financial Instruments
|
|
|
IAS
39 Financial Instruments
|
|
|
IAS
32/39 Financial Instruments
|
|
|
Cumulative
effect of Transition to IFRS at Dec 31, 2006
|
|
|
As
stated under IFRS
|
|
|
|
US$'000
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
BALANCE
SHEET
|
|
|
|
|
|
|
|
Note
1
|
|
|
Note
2
|
|
|
Note
3
|
|
|
Note
4
|
|
|
Note
5
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
282 |
|
|
|
(7 |
) |
|
|
- |
|
|
|
39 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
32 |
|
|
|
314 |
|
Intangible
assets
|
|
|
8,953 |
|
|
|
(235 |
) |
|
|
- |
|
|
|
918 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
683 |
|
|
|
9,636 |
|
Available
for sale investment
|
|
|
- |
|
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6 |
) |
|
|
- |
|
|
|
18 |
|
|
|
18 |
|
Total
non-current assets
|
|
|
9,235 |
|
|
|
(218 |
) |
|
|
- |
|
|
|
957 |
|
|
|
- |
|
|
|
(6 |
) |
|
|
- |
|
|
|
733 |
|
|
|
9,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
tax recoverable
|
|
|
1,617 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,617 |
|
Other
current assets
|
|
|
1,172 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,172 |
|
Cash
and cash equivalents
|
|
|
36,802 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
36,802 |
|
Total
current assets
|
|
|
39,591 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
39,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
48,826 |
|
|
|
(218 |
) |
|
|
- |
|
|
|
957 |
|
|
|
- |
|
|
|
(6 |
) |
|
|
- |
|
|
|
733 |
|
|
|
49,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions
|
|
|
110 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
110 |
|
Total
non-current liabilities
|
|
|
110 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
|
2,096 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,096 |
|
Derivative
liability
|
|
|
- |
|
|
|
883 |
|
|
|
- |
|
|
|
- |
|
|
|
(883 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Accrued
expenses and other liabilities
|
|
|
8,625 |
|
|
|
78 |
|
|
|
(78 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,625 |
|
Provisions
|
|
|
160 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
160 |
|
Total
current liabilities
|
|
|
10,881 |
|
|
|
961 |
|
|
|
(78 |
) |
|
|
- |
|
|
|
(883 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
10,991 |
|
|
|
961 |
|
|
|
(78 |
) |
|
|
- |
|
|
|
(883 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
and reserves attributable to equity holders of the
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
7,990 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,990 |
|
Share
premium
|
|
|
146,859 |
|
|
|
(10,858 |
) |
|
|
- |
|
|
|
- |
|
|
|
3,701 |
|
|
|
- |
|
|
|
(389 |
) |
|
|
(7,546 |
) |
|
|
139,313 |
|
Share
based payment reserve
|
|
|
4,824 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,824 |
|
Warrant
reserve
|
|
|
- |
|
|
|
9,620 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
389 |
|
|
|
10,009 |
|
|
|
10,009 |
|
Capital
redemption reserve
|
|
|
27,633 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
27,633 |
|
Treasury
shares
|
|
|
(217 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(217 |
) |
Foreign
currency translation reserve
|
|
|
- |
|
|
|
697 |
|
|
|
- |
|
|
|
(1,958 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,261 |
) |
|
|
(1,261 |
) |
Retained
earnings
|
|
|
(149,254 |
) |
|
|
(638 |
) |
|
|
78 |
|
|
|
2,915 |
|
|
|
(2,818 |
) |
|
|
(6 |
) |
|
|
- |
|
|
|
(469 |
) |
|
|
(149,723 |
) |
Total
shareholders' equity
|
|
|
37,835 |
|
|
|
(1,179 |
) |
|
|
78 |
|
|
|
957 |
|
|
|
883 |
|
|
|
(6 |
) |
|
|
- |
|
|
|
733 |
|
|
|
38,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity and liabilities
|
|
|
48,826 |
|
|
|
(218 |
) |
|
|
- |
|
|
|
957 |
|
|
|
- |
|
|
|
(6 |
) |
|
|
- |
|
|
|
733 |
|
|
|
49,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(iv)
Reconciliation of impact of IFRS on the parent company balance sheet at
January 1, 2006 (opening balance sheet at date of transition to
IFRS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
reported under UK GAAP
|
|
|
IAS
21 Foreign Currency
|
|
|
IAS
39 Financial Instruments
|
|
|
IAS
32/39 Financial Instruments
|
|
|
IAS
32/39 Financial Instruments
|
|
|
Cumulative
effect of Transition to IFRS at Jan 1, 2006
|
|
|
As
stated under IFRS
|
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
|
|
|
|
Note
2
|
|
|
Note
4
|
|
|
Note
3
|
|
|
Note
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
SHEET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
194 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
194 |
|
Intangible
assets
|
|
|
3,314 |
|
|
|
(235 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(235 |
) |
|
|
3,079 |
|
Investment
in subsidiaries
|
|
|
3,191 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,191 |
|
Available
for sale investments
|
|
|
- |
|
|
|
- |
|
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
24 |
|
|
|
24 |
|
Total
non-current assets
|
|
|
6,699 |
|
|
|
(235 |
) |
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
(211 |
) |
|
|
6,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
current assets
|
|
|
695 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
695 |
|
Cash
and cash equivalents
|
|
|
33,691 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
33,691 |
|
Total
current assets
|
|
|
34,386 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
34,386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
41,085 |
|
|
|
(235 |
) |
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
(211 |
) |
|
|
40,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions
|
|
|
15 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15 |
|
Other
liabilities
|
|
|
151 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
151 |
|
Total
non-current liabilities
|
|
|
166 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
|
309 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
309 |
|
Accrued
expenses and other liabilities
|
|
|
3,426 |
|
|
|
- |
|
|
|
- |
|
|
|
883 |
|
|
|
- |
|
|
|
883 |
|
|
|
4,309 |
|
Total
current liabilities
|
|
|
3,735 |
|
|
|
- |
|
|
|
- |
|
|
|
883 |
|
|
|
- |
|
|
|
883 |
|
|
|
4,618 |
|
Total
liabilities
|
|
|
3,901 |
|
|
|
- |
|
|
|
- |
|
|
|
883 |
|
|
|
- |
|
|
|
883 |
|
|
|
4,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
and reserves attributable to equity holders of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
6,778 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,778 |
|
Share
premium
|
|
|
121,371 |
|
|
|
- |
|
|
|
- |
|
|
|
(1,238 |
) |
|
|
(9,620 |
) |
|
|
(10,858 |
) |
|
|
110,513 |
|
Share
based payment reserve
|
|
|
2,623 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,623 |
|
Foreign
currency translation reserve
|
|
|
- |
|
|
|
(235 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(235 |
) |
|
|
(235 |
) |
Warrants
reserve
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,620 |
|
|
|
9,620 |
|
|
|
9,620 |
|
Treasury
shares
|
|
|
27,633 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
27,633 |
|
Retained
earnings
|
|
|
(121,221 |
) |
|
|
- |
|
|
|
24 |
|
|
|
355 |
|
|
|
|
|
|
|
379 |
|
|
|
(120,842 |
) |
Total
shareholders' equity
|
|
|
37,184 |
|
|
|
(235 |
) |
|
|
24 |
|
|
|
(883 |
) |
|
|
- |
|
|
|
(1,094 |
) |
|
|
36,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity and liabilities
|
|
|
41,085 |
|
|
|
(235 |
) |
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
(211 |
) |
|
|
40,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(v)
Reconciliation of impact of IFRS on the parent company balance sheet at
December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously
reported under UK GAAP
|
|
|
Total
opening adjustment at Jan 1, 2006
|
|
|
IAS
21 Foreign Currency
|
|
|
IAS
39 Financial Instruments
|
|
|
IAS
39 Financial Instruments
|
|
|
IAS
39 Financial Instruments
|
|
|
Cumulative
effect of Transition to IFRS at Dec 31, 2006
|
|
|
As
stated under IFRS
|
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
Note
2
|
|
|
Note
3
|
|
|
Note
4
|
|
|
Note
5
|
|
|
|
|
|
|
|
BALANCE
SHEET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
25 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
25 |
|
Intangible
assets
|
|
|
3,082 |
|
|
|
(235 |
) |
|
|
918 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
683 |
|
|
|
3,765 |
|
Investment
in subsidiaries
|
|
|
22,715 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22,715 |
|
Available
for sale investments
|
|
|
- |
|
|
|
24 |
|
|
|
- |
|
|
|
|
|
|
|
(6 |
) |
|
|
- |
|
|
|
18 |
|
|
|
18 |
|
Total
non-current assets
|
|
|
25,822 |
|
|
|
(211 |
) |
|
|
918 |
|
|
|
- |
|
|
|
(6 |
) |
|
|
- |
|
|
|
701 |
|
|
|
26,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
current assets
|
|
|
770 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
770 |
|
Cash
and cash equivalents
|
|
|
34,719 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
34,719 |
|
Total
current assets
|
|
|
35,489 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
35,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
61,311 |
|
|
|
(211 |
) |
|
|
918 |
|
|
|
- |
|
|
|
(6 |
) |
|
|
- |
|
|
|
701 |
|
|
|
62,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
|
110 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
110 |
|
Total
non-current liabilities
|
|
|
110 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
|
396 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
396 |
|
Accrued
expenses and other liabilities
|
|
|
1,814 |
|
|
|
883 |
|
|
|
- |
|
|
|
(883 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,814 |
|
Provisions
|
|
|
160 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
160 |
|
Total
Current Liabilities
|
|
|
2,370 |
|
|
|
883 |
|
|
|
- |
|
|
|
(883 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
2,480 |
|
|
|
883 |
|
|
|
- |
|
|
|
(883 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
and reserves attributable to equity holders of the
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
7,990 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,990 |
|
Share
premium
|
|
|
144,133 |
|
|
|
(10,858 |
) |
|
|
- |
|
|
|
3,701 |
|
|
|
- |
|
|
|
(389 |
) |
|
|
(7,546 |
) |
|
|
136,587 |
|
Share
based payment reserve
|
|
|
4,824 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
4,824 |
|
Foreign
currency translation reserve
|
|
|
- |
|
|
|
(235 |
) |
|
|
918 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
683 |
|
|
|
683 |
|
Warrants
reserve
|
|
|
- |
|
|
|
9,620 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
389 |
|
|
|
10,009 |
|
|
|
10,009 |
|
Treasury
shares
|
|
|
27,633 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
27,633 |
|
Retained
earnings
|
|
|
(125,749 |
) |
|
|
379 |
|
|
|
- |
|
|
|
(2,818 |
) |
|
|
(6 |
) |
|
|
|
|
|
|
(2,445 |
) |
|
|
(128,194 |
) |
Total
shareholders' equity
|
|
|
58,831 |
|
|
|
(1,094 |
) |
|
|
918 |
|
|
|
883 |
|
|
|
(6 |
) |
|
|
- |
|
|
|
701 |
|
|
|
59,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity and liabilities
|
|
|
61,311 |
|
|
|
(211 |
) |
|
|
918 |
|
|
|
- |
|
|
|
(6 |
) |
|
|
- |
|
|
|
701 |
|
|
|
62,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(vi)
Explanatory notes
Note
1: IAS 19 Employee Benefits
IAS 19
requires companies to accrue for paid vacation leave in the period in which the
employees render the related employee service.
Typically
companies operating in a U.K. GAAP environment recorded holiday pay on an
incurred basis and did not establish accruals for the potential
liability. However, Amarin commenced accruing for vacation leave
entitlements in its U.K. GAAP financial statements in 2006. This
accrual comprised a catch-up for all unutilised leave
entitlements. Under IFRS, a vacation leave accrual is required in
each reportable period presented. Consequently, Amarin will be
required to accrue for paid vacation leave at January 1, 2006 (date of
transition to IFRS) and at each reportable period thereafter.
The
operating loss impact in 2006 of applying IAS 19 is a credit of US$78,000, being
the portion of the accrual recognized during the year ended December 31, 2006
under U.K. GAAP which relates to pre January 1, 2006 unutilized leave
entitlements. Therefore, an accrual of US$78,000 is recorded at
January 1, 2006 with a corresponding reduction in opening retained earnings upon
adoption of IAS 19.
Note
2: IAS 21 Effects of Changes in Foreign Exchange Rates
Part A: Determination of
functional currency
Under
U.K. GAAP, Amarin adopted the temporal method set out in SSAP 20 “Foreign Currency Translation”
to translate the results and the financial position of foreign
operations. This resulted in the operations of the Group’s
subsidiaries being deemed to be an extension of the parent company’s operations
and therefore the financial transactions of the subsidiary were recorded as if
they had been entered into by the parent. As the parent company’s
operational currency is the US Dollar this was also deemed to be the operational
currency of its subsidiary undertakings.
IAS 21
defines the functional currency of a company as the currency of the primary
economic environment in which the entity operates, and requires that a
determination of the appropriate functional currency of each Group company
should be made for at each reportable period.
IAS 21
prescribes a hierarchy of factors to consider when determining the functional
currency of a company. Having considered these factors, the
functional currencies of each Group company under IFRS are determined to be as
follows:
·
|
Amarin
Corporation plc: US$ (no change)
|
·
|
Amarin
Neuroscience Limited: Stg£ (previously US$ under U.K.
GAAP)
|
·
|
Amarin
Pharmaceuticals Ireland Limited: € (previously US$ under U.K.
GAAP)
|
Part B: Translation from
functional currency to presentation currency
Amarin
presents its annual report in US Dollars. IAS 21 prescribes the
manner in which the results of foreign subsidiaries are translated from their
functional currency into the presentation currency of the consolidated financial
statements, as follows:
Assets
and liabilities for each balance sheet presented shall be translated at the
closing rate at the date of that balance sheet
Income
and expenses for each income statement shall be translated at exchange rates at
the dates of the transactions
All
resulting exchange differences shall be recognized as a separate component of
equity
Applying
these rules gives rise to a reduction in the amount of US$2,915,000 of operating
loss for the year ended December 31, 2006, being the quantum of net foreign
currency unrealized gains and losses previously recorded in the subsidiary
income statements under U.K. GAAP which is now recognized in a separate
component of equity. In addition, a foreign currency reserve is
established of US$697,000 representing the opening foreign currency reserve of
subsidiary entities translated into dollars at the closing exchange
rates.
In
addition, as noted above, IAS 21 requires all assets and liabilities of each
subsidiary to be translated at the closing rate for the purpose of consolidation
in the Group accounts. Under the U.K. GAAP temporal method,
non-monetary items (such as property, plant and equipment) were translated using
the exchange rate at the date of transaction (i.e. historical
cost). This gives rise to an increase of US$39,000 to property plant
and equipment and an increase to intangible assets of US$918,000 at December 31,
2006.
Similarly,
opening retained earnings at January 1, 2006 are increased in the amount of
US$939,000 and the carrying value of property, plant and equipment and
intangible assets are reduced by US$7,000 and US$235,000
respectively.
Note
3: IAS 32/39 Financial Instruments
In May
2005, Amarin raised US$17.8 million by way of a share offering. In
addition, investors in the share offering were given a future investment right,
which, subject to certain conditions, would allow the investors subscribe for
additional shares at March 15, 2006 with a value up to a maximum of US$7.22
million.
In
accordance with IAS 32, the definition of a financial liability
includes:
·
|
A
contract that will or may be settled in the entity’s own equity
instruments and is:
|
·
|
A
non-derivative for which the entity is or may be obliged to deliver a
variable number of the entity’s own equity instruments;
or
|
·
|
A
derivative that will or may be settled other than by the exchange of a
fixed amount of cash or another financial asset for a fixed number of the
entity’s own equity instruments.
|
The
future investment right meets the definition of a derivative as:
·
|
There
is little or no upfront investment
|
·
|
The
value of the right moves in relation to the movement in the underlying
share price of the Company subject to a
cap
|
·
|
It
is settled at a future date; under IFRS, expiry at maturity date is a form
of settlement.
|
The terms
of the future investment right specified a share price for this offering equal
to the lower of (a) $1.75 or (b) 84% of the volume weighted average of closing
prices of the ADRs on the Nasdaq Stock Market over the thirty trading days
ending March 16, 2006. However, neither the number of shares nor the
expected proceeds to be raised in March 2006 were fixed in the agreement and
therefore this right meets the definition of a financial liability set out
above.
In
accordance with IAS 39, the financial liability is initially recorded at its
fair value in May 2005, with a corresponding entry to reduce share
premium. The financial liability is recorded at its fair value at
each subsequent reportable period end, with any gains and losses recorded in the
income statement. On settlement of the future investment right in
March 2006, the financial liability is derecognised and share capital and share
premium are adjusted according to the actual number of shares subscribed
for.
Consequently,
the opening IFRS balance sheet at January 1, 2006 has been adjusted to record
the fair value of the financial liability at that date which amounted to
US$883,000, a reduction of US$1,238,000 in share premium being the fair value of
the financial liability in May 2005, and a gain of US$355,000 credited to
retained earnings.
An
additional loss of US$2,818,000 is recorded in the IFRS income statement for the
year ended December 31, 2006, being the movement in the fair value of the
financial liability from January 1, 2006 to the settlement date in March
2006. On settlement of the future investment right in March 2006, the
financial liability amounting to US$3,701,000 is derecognized with a
corresponding entry to share capital and share premium.
Note
4: IAS 39 Financial Instruments
Amarin
holds an equity investment in Antares Pharma Inc which is listed on AMEX in the
United States. In 2002, the directors decided to write off the value
of this investment, which at the time amounted to US$66,000, to
nil.
IAS 39
defines available for sale financial assets as those non-derivative financial
assets that are designated as available for sale or are not classified into one
of the other available categories.
In
accordance with IAS 39, the investment in this company is classified as
available for sale and held at fair value, with changes in the fair value at
each reportable period recognised directly in equity unless the asset is
impaired (if the new fair value of the asset is less than its initial cost) in
which case the loss is reported in the income statement.
Consequently,
the opening IFRS balance sheet at January 1, 2006 has been adjusted to record
the fair value of this investment at that date of US$24,000 with a corresponding
entry to retained earnings. An additional impairment charge of US$6,000 is
recorded in the IFRS income statement for the year ended December 31,
2006.
Note
5: IAS 32/39 Financial Instruments
Amarin
has issued warrants which enable the holders to convert to ordinary shares at
pre-determined prices within specified periods of time.
IAS 39
provides examples of equity instruments which include “non-puttable ordinary
shares, some types of preference shares and warrants or written call options
that allow the holder to subscribe for or purchase a fixed number of
non-puttable ordinary shares in the issuing entity in exchange for a fixed
amount of cash or another asset. An entity's obligation to issue or purchase a
fixed number of its own equity instruments in exchange for a fixed amount of
cash or another financial asset is an equity instrument of the
entity.”
In
accordance with IAS 39, the fair value of the warrants on issue are recorded in
a warrant reserve with a corresponding entry to share premium account. On
settlement, the warrant reserve is derecognized with a corresponding entry to
share premium and share capital account.
Consequently,
the opening IFRS balance sheet at January 1, 2006 has been adjusted to record
the fair value of the equity instruments at that date which amounted to
US$9,620,000 in the warrant reserve, with a corresponding entry to the share
premium account.
An
additional amount of US$389,000 for the fair value of warrants issued in 2006
was recorded in the warrant reserve with a corresponding amount in the share
premium account.
36. Approval
of financial statements
The
Consolidated Financial Statements were approved on May 19,
2008.
F-60