amarin424b5_120407.htm


Prospectus Supplement
(To Prospectus Dated July 12, 2006)
 
16,290,900 Units Consisting of 16,290,900 Ordinary Shares and Warrants to Purchase
8,145,446 Ordinary Shares
and
8,145,446 Ordinary Shares Issuable on Exercise of Warrants
 
 
We are offering (i) 16,290,900 ordinary shares, ₤0.05 par value per share (each, an “Ordinary Share”), of Amarin Corporation plc (“Amarin”), each Ordinary Share represented by one American Depositary Share (each, an “ADS”) (collectively, the “Unit Shares”), and (ii) warrants (each, a “Warrant”) to purchase 8,145,446 Ordinary Shares, each Ordinary Share represented by one ADS (the “Warrant Shares”), in each case to selected investors (the “Unit Investors”) pursuant to this prospectus supplement and the accompanying core prospectus.  For purposes of this prospectus supplement, the term “Unit” refers to one Unit Share and one Warrant to purchase 0.50 of one Warrant Share.  The Units will be sold at the negotiated price of $0.33 per Unit (the “Unit Purchase Price”).  The Warrants will expire on December 5, 2012 unless earlier exercised or terminated.
 
We are also offering the 8,145,446 Warrant Shares referred to above pursuant to this prospectus supplement and the accompanying core prospectus.  The Warrant Shares will be sold at the negotiated exercise price per Warrant Share equal to $0.48 (the “Exercise Price”).
 
Concurrently with this offering, we are offering, by means of a separate prospectus supplement and accompanying core prospectus, (i) $2,750,000 aggregate principal amount of our 8% Convertible Debentures due 2010, convertible into 5,729,166 Ordinary Shares and (ii) warrants to purchase 2,291,666 Ordinary Shares, in each case to selected investors pursuant to a separate prospectus supplement and an accompanying core prospectus.  Each unit, composed of $1,000 principal amount of debentures and warrants to purchase 833.33 Ordinary Shares, will be sold at the negotiated price of $1,000 per unit.  This prospectus supplement and the accompanying core prospectus do not constitute an offer to sell or the solicitation of an offer to buy such units, which offer and solicitation shall occur only pursuant to such separate prospectus supplement and accompanying core prospectus.
 
Our ADSs are traded on the Nasdaq Capital Market, the principal trading market for our securities, under the symbol “AMRN.”  The closing price of our ADSs on December 4, 2007 was $0.36 per ADS.  We do not intend to apply for listing of the Units on any securities exchange or for inclusion thereof in any automated quotation system.
 
INVESTING IN THE UNITS AND THE WARRANT SHARES INVOLVES RISKS.  SEE “RISK FACTORS” BEGINNING ON PAGE S-7 OF THIS PROSPECTUS SUPPLEMENT.
 
   
Per Unit/Share(1)
   
Total (1)
 
Offering price of Units
  $
0.33
    $
5,376,000
 
Offering price of Warrant Shares
  $
0.48
    $
3,909,814
 
Offering fees and commission and expenses (2)
  $
0.0219
    $
535,585
 
Proceeds, after fees and commissions, to us
  $
0.358
    $
8,750,227
 

(1)
Assumes that all 8,145,446 Warrant Shares issuable upon exercise of the Warrants offered by this prospectus supplement are issued and sold in this offering.  There is no requirement that any minimum number of Warrant Shares or dollar amount of Warrant Shares be issued and sold in this offering and there can be no assurance that we will issue and sell all or any of the Warrant Shares being offered.
 
(2)
Reflects placement agent fees and finder’s fees totaling $196,300 and transfer agent fees, legal fees, accounting fees and other expenses totaling $339,285.  We have agreed to pay placement agent fees and finder’s fees as follows: Rodman & Renshaw, LLC, the exclusive placement agent in connection with this offering, will receive a fee of 5% for sales to Unit Investors not previously identified by us to them and a fee of 2.5% for sales to Unit Investors previously identified by us to them; J & E Davy will receive a finder’s fee of 5% for sales to Unit Investors identified by them to us; and ProSeed Capital Holdings CVA will receive a finder’s fee of 5% for sales to Unit Investors identified by them to us.  No other discounts, commissions, concessions or other compensation has been paid or will be paid to any underwriter, broker, dealer or agent in connection with the offering.
 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING CORE PROSPECTUS IS TRUTHFUL OR COMPLETE.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
The Units offered hereby are being issued directly to the Unit Investors on or about December 6, 2007.  The Warrant Shares offered hereby will be issued directly to the Unit Investors or their assigns on their date of issuance.
 
The date of this prospectus supplement is December 5, 2007.
 



TABLE OF CONTENTS
 

PROSPECTUS SUPPLEMENT
PAGE
ABOUT THIS PROSPECTUS SUPPLEMENT
S-1
NOTE REGARDING FORWARD-LOOKING STATEMENTS
S-2
RECENT DEVELOPMENTS
S-3
THE OFFERING
S-5
RISK FACTORS
S-7
USE OF PROCEEDS
S-12
CAPITALIZATION AND INDEBTEDNESS
S-13
DILUTION
S-14
PRICE HISTORY
S-15
UNAUDITED PRO FORMA FINANCIAL INFORMATION
S-16
DESCRIPTION OF UNITS
S-27
DESCRIPTION OF ORDINARY SHARES
S-27
DESCRIPTION OF AMERICAN DEPOSITARY SHARES
S-27
DESCRIPTION OF WARRANTS
S-27
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
S-32
PLAN OF DISTRIBUTION
S-37
LEGAL MATTERS
S-37
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
S-37
WHERE YOU CAN FIND MORE INFORMATION
S-38

 
CORE PROSPECTUS
PAGE
ABOUT THIS PROSPECTUS
1
AMARIN CORPORATION PLC
2
AMARIN FINANCE LTD.
2
RISK FACTORS
3
FORWARD-LOOKING STATEMENTS
16
PRESENTATION OF FINANCIAL INFORMATION
18
INCORPORATION BY REFERENCE
19
WHERE YOU CAN FIND MORE INFORMATION
20
ENFORCEABILITY OF CIVIL LIABILITIES
20
USE OF PROCEEDS
20
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE SHARE DIVIDENDS
21
CAPITALIZATION AND INDEBTEDNESS
21
PRICE HISTORY
23
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
24
DESCRIPTION OF ORDINARY SHARES
33
DESCRIPTION OF PREFERENCE SHARES
35
DESCRIPTION OF AMERICAN DEPOSITARY SHARES
37
CERTAIN PROVISIONS OF ENGLISH LAW AND OF THE COMPANY’S MEMORANDUM AND ARTICLES OF ASSOCIATION
44
DESCRIPTION OF WARRANTS
45
DESCRIPTION OF PURCHASE CONTRACTS
46
DESCRIPTION OF UNITS
47
TAXATION
47
PLAN OF DISTRIBUTION
47
EXPERTS
49
LEGAL MATTERS
50
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
50


-i-


ABOUT THIS PROSPECTUS SUPPLEMENT
 
This prospectus is in two parts.  The first part is this prospectus supplement, which describes the material terms of this offering, the Units and the Warrant Shares and adds to and updates information contained in or incorporated by reference into the accompanying core prospectus.  The second part is the accompanying core prospectus, which gives more information about us and the securities we may offer from time to time under the registration statement of which this prospectus supplement and accompanying core prospectus are a part.  To the extent there is a conflict between the information contained, or referred to, in this prospectus supplement, on the one hand, and the information contained, or referred to, in the accompanying core prospectus or any document incorporated by reference herein or therein, on the other hand, the information in this prospectus supplement shall control.
 
We have not authorized any broker, dealer, salesperson or other person to give any information or to make any representation.  You must not rely upon any information or representation not contained or incorporated by reference in this prospectus supplement or the accompanying core prospectus.
 
This prospectus supplement and the accompanying core prospectus do not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction nor do this prospectus supplement and the accompanying core prospectus constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.  You should not assume that the information contained in this prospectus supplement and the accompanying core prospectus is accurate on any date subsequent to the date set forth on the front of the document or that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated by reference, even though this prospectus supplement and any accompanying core prospectus are delivered securities are sold on a later date.
 
It is important for you to read and consider all information contained in this prospectus supplement and the accompanying core prospectus, including the documents we have referenced in the section entitled “Incorporation of Certain Information by Reference” in this prospectus supplement.
 
In this prospectus supplement and the accompanying core prospectus, “Amarin,” “Company,” “we,” “us” and “our” refer to Amarin Corporation plc and its consolidated subsidiaries.  References to “U.S. dollars,” “USD” or “$” are to the lawful currency of the United States and references to “pounds sterling,” “GBP£” or “£” are to the lawful currency of the United Kingdom.
 

S-1


NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This prospectus supplement and the accompanying core prospectus include forward-looking statements.  These forward-looking statements relate, among other things, to our future capital needs, our ability to acquire or develop additional marketable products, acceptance of our products by prescribers and end-users, competitive factors, and our marketing and sales plans.  In addition, we may make forward-looking statements in future filings with the Securities and Exchange Commission (the “SEC”) and in written material, press releases and oral statements issued by or on behalf of us.  Forward-looking statements include statements regarding our intent, belief or current expectations or those of our management regarding various matters, including statements that include forward-looking terminology such as “may,” “will,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “continues,” or similar expressions.
 
Forward-looking statements are subject to risks and uncertainties, certain of which are beyond our control.  Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the factors described in the “Risk Factors” section of this prospectus supplement.  Some, but not all, of these factors are the timing of our future capital needs and our ability to raise additional capital when needed, our ability to obtain regulatory approval for our products, uncertainty of market acceptance of our products, our ability to compete with other pharmaceutical companies, our ability to develop or acquire new products, problems with important third-party manufacturers on whom we rely, our ability to attract and retain key personnel, and implementation and enforcement of government regulations.  This list of factors is not exclusive and other risks and uncertainties may cause actual results to differ materially from those in forward-looking statements.
 
All forward-looking statements in this prospectus supplement and core prospectus are based on information available to us on the date hereof.  We may not be required to publicly update or revise any forward-looking statements that may be made by us or on our behalf, in this prospectus supplement and core prospectus or otherwise, whether as a result of new information, future events or other reasons.  Because of these risks and uncertainties, the forward-looking events and circumstances discussed in this prospectus supplement and core prospectus might not transpire.
 

S-2


RECENT DEVELOPMENTS
 
Acquisition of Ester
 
On December 5, 2007, we entered into a Stock Purchase Agreement (the “Acquisition Agreement”) with the selling shareholders named therein and the other parties thereto pursuant to which we will purchase all of the outstanding ordinary shares of Ester Neurosciences Ltd. (“Ester”), a private pharmaceutical development company based in Israel (the “Ester Acquisition”).  The acquisition is expected to close on December 6, 2007.  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 myasthenia gravis (“MG”) utilising this technology; and (iii) a preclinical program in neurodegenerative and inflammatory diseases.  Pursuant to the Acquisition Agreement, we will acquire 100% of the issued share capital of Ester for initial consideration of $15 million, of which $5 million is payable in cash and $10 million in Ordinary Shares, i.e., approximately 25 million Ordinary Shares.  Following the acquisition but before giving effect to this offering or the Concurrent Offering (as defined under “— Concurrent Offering” below), former Ester shareholders will own approximately 20% of our outstanding Ordinary Shares.  Additional contingent payments, valued at $17 million, are payable to former Ester shareholders on the successful completion of certain development-based milestones. This additional contingent consideration represents:
 
·  
two milestone payments totalling $11 million, are payable, at our option, in cash or in Ordinary Shares valued at $0.38 per share, the 10-day volume weighted average closing price of our ADSs on the Nasdaq Capital Market on December 4, 2007 (subject to an adjustment reducing the number of shares payable to former Ester shareholders if our ADS closing price on such milestone date is higher than $0.76 per share):
 
o  
$5 million is payable no earlier than April 5, 2008 on the achievement of certain efficacy data on completion of the ongoing Phase IIa study; and
 
o  
$6 million is due on successful completion of the Phase II program supporting progression to Phase III in the United States; and
 
·  
one cash milestone payment of $6 million is payable on successful completion of the Phase III program in the United States.
 
In addition, pursuant to the Acquisition Agreement we have assumed a single digit royalty obligation on net product sales of EN101.
 
Reverse Stock Split
 
As described in our Report of Foreign Private Issuer on Form 6-K furnished to the SEC on December 5, 2007, we announced on December 5, 2007 that we intend to send notice of an extraordinary general meeting (“EGM”) to our shareholders at which we will seek approval for a 1 for 10 reverse stock split of our Ordinary Shares; if approval of the Ordinary Share stock split is received, our ADSs will also be reverse split on a 1 for 10 basis.  It is estimated that the EGM will take place in January 2008.  To maintain the listing of our ADSs on the Nasdaq Capital Market, we must maintain a minimum bid share price of the ADSs of $1.00 per share.  In effecting the 1 for 10 reverse stock split, we expect the bid price of our ADSs to greatly exceed the minimum bid price requirement of $1 and thus regain and sustain compliance with the Nasdaq Capital Market’s listing requirements.  We have received a delisting notice from Nasdaq (see “Risk Factors — We have received a notice from Nasdaq that our ADSs will be delisted from the Nasdaq Capital Market”) and will make an appeal to a hearing panel on the basis of the our definitive plan to regain and sustain compliance, including the planned reverse stock split.
 
Concurrent Offering
 
Concurrently with this offering, we are offering, by means of a separate prospectus supplement and accompanying core prospectus, (i) $2,750,000 aggregate principal amount of our 8% Convertible Debentures due 2010,
 
S-3

convertible into 5,729,166 Ordinary Shares, and (ii) warrants to purchase 2,291,666 Ordinary Shares, in each case to selected investors pursuant to a separate prospectus supplement and an accompanying core prospectus (the “Concurrent Offering”).  Each unit, composed of $1,000 principal amount of debentures and warrants to purchase 833.33 Ordinary Shares, will be sold at the negotiated price of $1,000 per unit.
 
The debentures will be convertible into our ADSs on or after April 6, 2008 at a conversion price of $0.48 per Ordinary Share, which represents a 30% premium to the five-day volume weighted average price of our ADSs on December 3, 2007 of $0.366 per ADS.  The debentures bear an annual interest rate of 8%, payable quarterly in arrears.  The purchasers of the debentures will also receive five-year warrants to purchase that number of ADSs equal to 40% of the ADSs into which the debentures are initially convertible, with an exercise price of $0.48 per Ordinary Share.
 
The debentures will be required to be repaid from the proceeds of, and the initial holders of the convertible notes will have the right to participate in, future financings of the Company, with certain exceptions.
 
The proceeds from the Concurrent Offering will be to replenish cash on hand used for the Ester acquisition and for general corporate purposes, which may include making of milestone payments pursuant to the Acquisition Agreement, research and development costs and funding future acquisitions.  This prospectus supplement and the accompanying core prospectus do not constitute an offer to sell or the solicitation of an offer to buy such units, which offer and solicitation shall occur only pursuant to such separate prospectus supplement and accompanying core prospectus.
 

S-4


THE OFFERING
 
Shares Offered                                                            
 
16,290,900 Ordinary Shares, each Ordinary Share represented by one ADS.
 
Warrants Offered                                                            
 
Warrants to purchase 8,145,446 Ordinary Shares, each Ordinary Share represented by one ADS.
 
Warrant Shares                                                            
 
8,145,446 Ordinary Shares, each Ordinary Share represented by one ADS.
 
Ordinary Shares to be outstanding after issuance of the Shares and the Warrant Shares issuable upon exercise of the Warrants offered in this offering and Ordinary Shares issuable upon exercise of the warrants offered in the Concurrent Offering (excludes Ordinary Shares issuable upon conversion of debentures offered in the Concurrent Offering)
 
 
 
 
124,494,482 Ordinary Shares.
 
Warrant Exercise Price                                                            
 
$0.48 per Ordinary Share, subject to adjustment pursuant to the terms of the Warrants.
 
Expiration                                                            
 
December 5, 2012.
 
Mandatory Exercise                                                            
 
If, at any time after December 5, 2009, the volume weighted average price of the ADSs for any 20 consecutive trading day period is equal to or greater than $0.915, and through and including the date the Warrants are cancelled pursuant to this right the ADSs do not trade below the Exercise Price of the Warrants, then we at any time thereafter shall have the right, but not the obligation, within 10 trading days of the end of such 20-day period, to cancel all, but not less than all, of the unexercised Warrants.
 
Trading                                                            
 
The Units will be new securities for which no active trading market currently exists.  The Units will not be listed on any securities exchange or included in any automated quotation system.  See “Risk Factors — The Units are each a new issue of securities, and there is no existing market for the Units.”
 
Trading Symbol for Our ADSs                                                            
 
Our ADSs are traded on the Nasdaq Capital Market, the principal trading market for our securities, under the symbol “AMRN”.
 
Governing Law                                                            
 
The Units and the Warrant Shares will be governed by the laws of England and Wales.
 
Use of Proceeds                                                            
 
This offering is being made in connection with our acquisition of Ester.  See “Recent Developments — Acquisition of Ester” and “Use of Proceeds.”  We expect that the net proceeds from the sale of the Units and all Warrant Shares that may be offered hereby will be approximately $8.75 million, after fees, commissions and expenses; such amount represents approximately $4.9 million in net proceeds that we expect to receive from sale of the Units and approximately $3.8 million in net proceeds that we would receive from the sale of the Warrant Shares assuming that all Warrant Shares issuable upon exercise of the Warrants are issued and sold.
 

S-5



Risk Factors                                                            
 
You should carefully consider the information set forth under the heading “Risk Factors” in this prospectus supplement, as well as the other information contained or incorporated by reference in this prospectus supplement and the accompanying core prospectus, before making a decision to invest in the Units or the Warrant Shares.
 


S-6


RISK FACTORS
 
Investing in the Units and the Warrant Shares involves risks, including risks relating to our ADSs and Ordinary Shares.  You should carefully consider the risks described below as well as those set forth in our Report of Foreign Issuer on Form 6-K furnished to the SEC on May 9, 2007, which is incorporated herein by reference.  The risks and uncertainties described in this section 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 risks and uncertainties develop 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 the Units or the Warrant Shares could decline, and you might lose all or part of your investment.
 
Risks Related to the Company
 
In addition to those risks set forth in our Report of Foreign Issuer on Form 6-K furnished to the SEC on May 9, 2007, which is incorporated herein by reference, our company is subject to the risks set forth below.
 
We have received a notice from Nasdaq that our ADSs will be delisted from the Nasdaq Capital Market.
 
On June 6, 2007, we received a notice from Nasdaq that we had failed to meet the $1 minimum bid price requirement for a period of 30 consecutive business days required by Nasdaq Rule 4320.  The notice stated that if we did not regain compliance by December 3, 2007, then the staff of Nasdaq would determine whether we meet the Nasdaq Capital Market initial listing criteria in Marketplace Rule 4320(e), except for the minimum bid price requirement.  We received a notice on December 4, 2007 from the Nasdaq Stock Market indicating that we are not in compliance with the $1.00 minimum bid requirement for continued listing and, as a result, our ADSs are subject to delisting, unless we request a hearing by December 11, 2007 in accordance with the Nasdaq Marketplace Rules. We intend to request an appeal hearing prior to December 11, 2007 with the Nasdaq Listing Qualification Panel to review the delisting determination. There can be no assurance that the Panel will grant our request for continued listing. If the Panel denies the request, our ADSs will be delisted. The hearing date will be determined by Nasdaq and should occur within 45 calendar days from the request for hearing. Our hearing request will ‘stay’ the delisting of our ADSs pending the Panel’s decision. At the hearing, we will be required to provide a plan to regain compliance with the minimum bid price requirement, which will include our plan to seek shareholder approval for the reverse stock split in order to exceed the minimum bid price requirement.
 
Our indebtedness after the completion of the offering could adversely affect our financial condition and our ability to respond to changes in our business.
 
We will have debt service obligations following the completion of this offering.  These debt obligations could have significant negative consequences, including, but not limited to:
 
·  
increasing our vulnerability to general adverse economic and industry conditions;
 
·  
limiting our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other business purposes;
 
·  
limiting our flexibility to plan for, or react to, changes in our business and the industry in which we compete;
 
·  
placing us at a possible disadvantage to competitors with fewer debt obligations and competitors that have better access to capital resources; and
 
·  
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.
 

S-7


We may incur additional indebtedness.
 
The indenture governing the Debentures will 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.  The Debentures will limit the ability of our subsidiaries to incur indebtedness.  See “Description of Debentures — Additional Covenant — Limitation on Incurrence of Subsidiary Indebtedness.”  However, because they will not be guaranteed by our subsidiaries (or any other third party), the Debentures will be structurally subordinated to the indebtedness and other liabilities that our subsidiaries are permitted to incur.  In addition, the indenture will 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 Miraxion 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, 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 December 4, 2007 was approximately $2.06 per GBP£.
 
We are also committed to issue equity to the former shareholders of Ester Neuroscience Limited upon the successful achievement of specified milestones for the myasthenia gravis development program (subject to our right to choose cash payment in lieu of equity).  See “Unaudited Pro Forma Financial Information.”
 
At November 30, 2007, before giving effect to the offering or the Concurrent Offering, we had 10,391,123 warrants outstanding with a weighted average exercise price of $1.52 per share.  As at November 30, 2007, we also had outstanding employee options to purchase 11,638,184 Ordinary Shares at an average price of $1.64 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, convertible 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 in the Concurrent Offering 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 in the Concurrent Offering 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 the initial purchasers thereof.  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.
 

S-8


If we cannot find additional capital resources, we will have difficulty in operating as a going concern and growing our business.
 
At September 30, 2007, we had a cash balance of $20.7 million and based upon current business activities, we forecast having sufficient cash to fund the group’s operating activities into September 2008.  We intend to arrange to obtain additional funding through earning license fees from our partnering activities and/or completing further financings.  There can be no assurance, however, that our efforts to obtain additional funding will be successful.  If these efforts are unsuccessful, there is substantial uncertainty as to whether we will be able to fund our operations on an ongoing basis.  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.
 
Risks Related to this Offering
 
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.  We currently have 91,701,869 ADSs representing Ordinary Shares outstanding and 6,064,601 Ordinary Shares outstanding (which are not held in the form 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 November 30, 2007, the average daily trading volume for our ADSs was 1,123,489 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:
 
·  
the announcement of new products or technologies;
 
·  
innovation by us or our future competitors;
 
·  
developments or disputes concerning any future patent or proprietary rights;
 
·  
actual or potential medical results relating to our products or our competitors’ products;
 
·  
interim failures or setbacks in product development;
 
·  
regulatory developments in the United States, the European Union or other countries;
 
·  
currency exchange rate fluctuations; and
 
·  
period-to-period variations in our results of operations.
 

S-9


The trading prices for the Units will be directly affected by the trading prices for our ADSs and/or Ordinary Shares.  Volatility in the market price of our ADSs and/or Ordinary Shares could result in a lower trading price than your Exercise Price and could adversely impact the trading price of the Units.
 
Any decrease in the market price of our Ordinary Shares would likely adversely impact the trading price of the Units.  See “— The price of our ADSs and Ordinary Shares may be volatile” above.
 
The price of our Ordinary Shares could be affected by possible sales of our ADSs and/or Ordinary Shares by investors who view the Units as a more attractive means of equity participation in us and by hedging or arbitrage trading activity that may develop involving our ADSs and/or Ordinary Shares.  The hedging or arbitrage could, in turn, affect the trading prices of the Units.
 
In addition in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
 
The Units are each a new issue of securities, and there is no existing market for the Units.
 
We do not intend to apply for listing of the Units on any securities exchange or for quotation of the Units on any automated dealer quotation system.  A market may not develop for the Units, and, if a market does develop, it may not be sufficiently liquid for your purposes.  If an active, liquid market does not develop for the Units, the market price and liquidity of the Units may be adversely affected.  If any of the Units are traded after their initial issuance, they may trade at a discount from their initial offering price.
 
The liquidity of the trading market, if any, and future trading prices of the Units will depend on many factors, including, among other things, the market price of our ADSs and/or Ordinary Shares, prevailing interest rates, our operating results, financial performance and prospects, the market for similar securities and the overall securities market, and may be adversely affected by unfavorable changes in these factors.  Historically, the market for convertible debt has been subject to disruptions that have caused volatility in prices.  The market for the Units may be subject to disruptions that could have a negative effect on the holders of the Units, regardless of our operating results, financial performance or prospects.
 
The issuances of ADSs 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 in connection with the conversion of the debentures issued in the Concurrent Offering and exercise of the Warrants and the warrants issued in the Concurrent Offering will dilute the ownership interest of existing stockholders, including holders who had previously exercised their Warrants.  Any sales in the public market of the ADSs issuable upon such conversion or exercise could adversely affect prevailing market prices of our ADSs.
 
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 and adversely impact the trading price of the Units.
 
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 trading price of the Units and the market price of our ADSs and/or Ordinary Shares.
 
The Exercise Price of the Warrants may not be adjusted for all dilutive events.
 
The Exercise Price of the Warrants is subject to adjustment for certain events, including stock splits, reverse stock splits, stock dividends, subdivisions, split-ups, combinations of shares or other transactions having
 

S-10



similar effect, but will not be adjusted for other events that may adversely affect the trading price of the Warrants.  See “Description of Warrants — Adjustment of Exercise Price.”  Therefore, there can be no assurance that an event that adversely affects the value of the Warrants, but does not result in an adjustment to the Exercise Price, will not occur.
 
You may have to pay taxes if we adjust the Exercise Price of the Warrants in certain circumstances, even though you would not receive any cash.
 
We will adjust the Exercise Price of the Warrants for stock splits and combinations, stock dividends, certain cash dividends and certain other events that affect our capital structure. See “Description of the Warrants — Adjustments of Exercise Price.  Upon certain adjustments to (or certain failures to make adjustments to) the Exercise Price of the Warrants, you may be treated as having received a constructive distribution from us, resulting in taxable income to you for United States federal income tax purposes, even though you did not receive any cash in connection with the adjustment to (or failure to adjust) the Exercise Price of the Warrants and even though you might not exercise your Warrants.  Please consult your own tax advisors and read “Certain U.S. Federal Income Tax Considerations.”
 
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 recognize gains from the sale of appreciated stock, there is a risk that we will be considered a PFIC under the income test described above.  In addition, because of our cash position, 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 our 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 you are urged to consult your own tax advisors regarding the possible application of the PFIC rules to you in your particular circumstances.
 

S-11


USE OF PROCEEDS
 
This offering is being made in connection with our acquisition of Ester.  See “Recent Developments.”  We will fund the initial $5 million cash portion of the sales price with cash on hand.  We expect that the net proceeds from the sale of the Units and all Warrant Shares that may be offered hereby will be approximately $8.75 million, after offering fees, commissions and expenses; such amount represents approximately $4.9 million in net proceeds that we expect to receive from sale of the Units and approximately $3.8 million in net proceeds that we would receive from the sale of the Warrant Shares assuming that all Warrant Shares issuable upon exercise of the Warrants are issued and sold.  We intend to use these net proceeds from this offering and the Concurrent Offering to replenish cash on hand and for general corporate purposes, which may include making milestone payments pursuant to the Acquisition Agreement, research and development costs and funding future acquisitions.  We intend to use the net proceeds from the sales, if any, of the Warrant Shares and the shares issuable upon exercise of warrants issued in the Concurrent Offering for general corporate purposes, which may include making milestone payments pursuant to the Acquisition Agreement, research and development costs and funding future acquisitions.
 

S-12


CAPITALIZATION AND INDEBTEDNESS
 
The following table sets forth, on an International Financial Reporting Standards (“IFRS”) basis, our capitalization and indebtedness, as of September 30, 2007:
 
·  
on an actual basis;
 
·  
pro forma for the acquisition of Ester as if it had occurred on September 30, 2007; and
 
·  
on an as-adjusted basis to give effect to the sale of (i) 16,290,900 Ordinary Shares offered hereby and 8,145,446 Warrant Shares issuable upon exercise of the Warrants offered in this offering assuming all such Warrant Shares are issued and sold pursuant to this offering and (ii) Warrants to purchase 2,291,666 Ordinary Shares assuming all such Ordinary Shares are issued and sold pursuant to the Concurrent Offering.
 
The capitalization table as adjusted includes the issuance of the debentures in the Concurrent Offering net of the discount associated with the fair value of the Warrants issued in the Concurrent Offering.  Except as otherwise indicated or the context otherwise requires, the information above and elsewhere in this prospectus supplement regarding our outstanding Ordinary Shares is based on 97,766,470 shares outstanding as of September 30, 2007.
 
This table should be read in conjunction with our consolidated financial statements for the three years ended December 31, 2006 set forth in our Annual Report on Form 20-F for the fiscal year ended December 31, 2006, our Statutory Annual Report for the year ended December 31, 2006, included in our Report of Foreign Issuer on Form 6-K furnished to the SEC on May 9, 2007, our selected financial data for the three month period ended March 31, 2007 included in our Report of Foreign Issuer on Form 6-K furnished to the SEC on May 10, 2007, our selected financial data for the six month period ended June 30, 2007, included in our Report of Foreign Issuer on Form 6-K furnished to the SEC on August 1, 2007, our 2007 interim financial statements for the period ended June 30, 2007, included in our Report of Foreign Issuer on Form 6-K furnished to the SEC on August 14, 2007 and our selected financial data for the nine month period ended September 30, 2007, included in our Report of Foreign Issuer on Form 6-K furnished to the SEC on November 20, 2007.
 
As at September 30, 2007, we held $20.735 million of cash balances.
 
 
Actual
Pro forma for Ester
Acquisition(1)
As
Adjusted
 
$’000
Long -term debt issued in Concurrent Offering (net of discount associated with warrants issued in Concurrent Offering of $992)
1,759
       
Shareholders’ equity:
     
Called up share capital
8,691
11,246
14,012
Treasury shares
(217)
(217)
(217)
Capital redemption reserve
27,633
27,633
27,633
Foreign currency translation reserve
(2,087)
(2,087)
(2,087)
Fair value investment reserve
4
4
4
Share premium account
146,241
163,301
170,168
Profit and loss account — (deficit)
(164,103)
(173,577)
(173,577)
Total shareholders’ equity
16,162
26,303
35,936
Total capitalization
16,162
26,303
37,694
________________
 
(1)
Pro forma information for Ester Acquisition includes Amarin actual information as at September 30, 2007 and Ester actual information at June 30, 2007 because no historical financial statements are available for Ester at September 30, 2007.  We believe that there is no material difference between Ester actual information presented in this table at June 30, 2007 and September 30, 2007.
 

S-13


DILUTION
 
Under IFRS, the net tangible book value of our Ordinary Shares on September 30, 2007 was $5.8 million, or approximately $0.05 per Ordinary Share, based on 122,384,884 Ordinary Shares outstanding.  Net tangible book value per Ordinary Share represents the amount of our total tangible assets excluding intangible assets, less our total liabilities, divided by the total number of our Ordinary Shares outstanding.  Dilution in net tangible book value per Ordinary Share to new investors represents the difference between the amount per Ordinary Share paid by investors in this offering and the net tangible book value per Ordinary Share immediately afterwards.  Without taking into account any other changes in net tangible book value after September 30, 2007, other than to give effect to our receipt of the estimated net proceeds from the sale of (i) the Units and the Warrant Shares issuable upon the exercise of the Warrants offered in this offering and (ii) the units and the Ordinary Shares issuable upon the exercise of the warrants offered in the Concurrent Offering, in the case of each of the Warrant Shares and the Ordinary Shares issuable upon the exercise of the warrants offered in the Concurrent Offering, our net tangible book value as of September 30, 2007 after giving effect to the proceeds described above would have been approximately $15.4 million, or $0.10 per Ordinary Share.  This represents an immediate increase in net tangible book value of $0.05 per Ordinary Share to existing stockholders and an immediate dilution in net tangible book value of $0.23 per Ordinary Share to the Unit Investors.
 
The following table illustrates this per Ordinary Share dilution:
 
Offering price per Ordinary Share
 
$0.33
Net tangible book value per Ordinary Share as of September 30, 2007
$0.05
 
Increase per Ordinary Share attributable to new investors
$0.05
 
As adjusted net tangible book value per Ordinary Share after issuance of the Warrant Shares issuable upon exercise of the Warrants
 
$0.10
Dilution in net tangible book value per Ordinary Share to the Unit Investors
 
$0.23


S-14


PRICE HISTORY
 
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 markups, 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.
 
 
USD
High
USD
Low
Fiscal Year Ended
   
December 31, 2002
21.00
2.76
December 31, 2003
4.81
1.39
December 31, 2004
3.99
0.53
December 31, 2005
3.40
1.06
December 31, 2006
3.92
1.21
Fiscal Year Ended December 31, 2005
   
First Quarter
3.40
2.14
Second Quarter
2.36
1.06
Third Quarter
1.67
1.32
Fourth Quarter
1.45
1.07
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 Ending December 31, 2007
   
First Quarter
2.62
1.74
Second Quarter
3.78
0.55
Third Quarter
0.59
0.36
June 2007
0.61
0.52
July 2007
0.59
0.47
August 2007
0.51
0.36
September 2007
0.57
0.45
October 2007
0.45
0.36
November 2007
0.43
0.30

On December 4, 2007, the closing price of our ADSs as reported on the Nasdaq Capital Market was $0.36 per ADS.
 

S-15


UNAUDITED PRO FORMA FINANCIAL INFORMATION
 
Introductory Note
 
The following pro forma accounts should be read in conjunction with our consolidated financial statements for the three years ended December 31, 2006 set forth in our Annual Report on Form 20-F for the fiscal year ended December 31, 2006  filed with the SEC on March 5, 2007, our Statutory Annual Report for the year ended December 31, 2006 included in our Report of Foreign Issuer on Form 6-K furnished to the SEC on May 9, 2007, our selected financial data for the three month period ended March 31, 2007 included in our Report of Foreign Issuer on Form 6-K furnished to the SEC on May 10, 2007, our selected financial data for the six month period ended June 30, 2007 included in our Report of Foreign Issuer on Form 6-K furnished to the SEC on August 1, 2007, and our selected financial data for the nine month period ended September 30, 2007 included in our Report of Foreign Issuer on Form 6-K furnished to the SEC on November 20, 2007, in each case incorporated herein by reference.
 
On December 4, 2007, we entered into the Acquisition Agreement in connection with the acquisition of Ester.  See “Recent Developments — Acquisition of Ester.”
 
The purchase price for the acquisition of Ester comprises both upfront and contingent consideration in the form of both cash and stock payments.  Stock payments will be in the form of ADSs with each ADS representing one Ordinary Shares of £0.05 each in the capital of Amarin and certain success based milestone payments described below.
 
Pursuant to the Acquisition Agreement, we have agreed to pay to the sellers consideration as follows:
 
·  
$15 million on closing comprising $5 million in cash and $10 million in Amarin shares (i.e., 25 million Ordinary Shares).
 
·  
$5 million, payable, at Amarin’s option, (i) in 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) in cash, upon achievement of Milestone Ia – Monarsen Phase II in MG study meeting its study objectives, with no less than 18 patients: 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 $5 per Amarin Share, such excess shall be disregarded and the Milestone Ia Price shall be deemed to be $5 per Amarin Share.  If the Milestone Ia Price is less than the Closing Price no adjustment will be made to the First Share Amount.
 
·  
$6 million, payable, at Amarin’s option, (i) in Amarin shares at the Closing Price (“Second Share Amount”), subject to the adjustment described below or (ii) in cash, upon achievement of Milestone Ib – 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.  If the volume weighted average closing price for the 10-day trading period commencing immediately after the date of announcement of the achievement of Milestone Ib (“Milestone Ib Price”) exceeds twice the Closing Price by any amount (“Second Excess”), the Second Share Amount will be reduced by a percentage calculated by dividing 2/3rds of the Second Excess by the Milestone Ib Price provided that if the Milestone Ib Price exceeds $5 per Buyer Ordinary Share, such excess shall be disregarded and the Milestone Ib Price shall be deemed to be $5 per Amarin Share.  If the Milestone Ib Price is less than the Closing Price no adjustment will be made to the Second Share Amount.
 

S-16


·  
$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 $1, no Time Limit Date will apply.
 
The following unaudited pro forma combined condensed consolidated financial information gives effect to the acquisition by Amarin of all of the outstanding shares of Ester. The unaudited pro forma condensed combined balance sheet is based on the historical balance sheets of Amarin and Ester at June 30, 2007 and has been prepared to reflect the acquisition as if the acquisition of all of the outstanding shares of Ester had been consummated on June 30, 2007.  The unaudited pro forma condensed combined statements of operations combine the results of operations of Amarin and Ester for the year ended December 31, 2006 and the six months ended June 30, 2007, as if the acquisition had occurred on January 1, 2006.
 
The unaudited pro forma condensed combined financial information has been prepared from, and should be read in conjunction with, the respective historical consolidated IFRS financial statements of Amarin and Ester. Amarin’s historical consolidated financial statements for the year ended and as of December 31, 2006 can be found in Amarin’s Annual Report on Form 20-F filed with the SEC on March 5, 2007 and Amarin’s historical unaudited condensed consolidated financial statements for the six months ended and as of June 30, 2007 were included in the Report of Foreign Issuer on Form 6-K furnished to the SEC on Form 6-K on September 30, 2007.  Ester’s historical financial statements for the years ended and as of December 31, 2006, December 31, 2005 and the six months ended June 30, 2007 were included in the Report of Foreign Issuer on Form 6-K furnished to the SEC on December 5, 2007.
 
The historical profit and loss account and balance sheet of Ester has been prepared in accordance with IFRS.  For the purpose of presenting the unaudited pro forma condensed combined financial information, the profit and loss account and balance sheet relating to Ester have been adjusted to conform with U.S. GAAP as described in the notes to the unaudited pro forma condensed combined financial information.
 
The historical financial statements of Ester are presented in U.S. dollars.
 
Balance sheet information presented for both Amarin and Ester has been updated for material post balance sheet events.  These events are separate from the acquisition and are detailed in Table 1 to the unaudited pro forma combined condensed consolidated balance sheet as at June 30, 2007.
 
The preliminary pro forma acquisition adjustments described in the notes are based on available information and certain assumptions made by Amarin management and may be revised as additional information becomes available.  The unaudited pro forma condensed combined financial information is not intended to represent what Amarin’s financial position is or results of operations would have been if the acquisition had occurred on those dates or to project Amarin’s financial position or results of operations for any future period.  The unaudited pro forma condensed combined financial results may not be comparable to, or indicative of, future performance.
 
Preliminary Purchase Price
 
The unaudited pro forma condensed combined consolidated financial information reflects a preliminary purchase price of an upfront payment of $5 million in cash and $10 million in Ordinary Shares and a deferred Ordinary Share payment of $5 million (which is considered more probable than not) for 100% of the outstanding shares of Ester.  The estimated total purchase price for the acquisition of 100% of the outstanding shares of Ester is as follows (in thousands):
 

S-17



    $
’000
 
         
Fair value of Ordinary Shares to be issued
   
10,000
 
Fair value of cash payment
   
5,000
 
Fair value of Ordinary Shares to be issued under Milestone Ia
   
5,000
 
Estimated direct acquisition costs
   
700
 
         
Total estimated purchase price
   
20,700
 

The final purchase price is dependent on the actual number of shares of Ordinary Shares 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).
 
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT-FOR THE COMBINATION AT DECEMBER 31, 2006
 
 
Amarin
IFRS
Ester
IFRS
Combined
IFRS
Amarin adjustments between IFRS and U.S. GAAP
Combined
U.S. GAAP
 
$’000
$’000
$’000
$’000
$’000
 
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Turnover
500
-
500
(389)
-
-
-
-
111
Cost of sales
-
-
-
-
-
-
 -
-
Gross profit
500
-
500
(389)
-
-
-
-
111
Research & Development
(15,106)
(944)
(16,050)
-
7
-
34
-
(16,009)
Selling, general &
administrative
(13,462)
(65)
(13,527)
-
97
674
70
(267)
(12,953)
Operating expenses
(28,568)
(1,009)
(29,577)
-
104
674
104
(267)
(28,962)
Operating loss
(28,068)
(1,009)
(29,077)
(389)
104
674
104
(267)
(28,851)
Finance income
3,344
10
3,354
-
-
-
-
-
3,354
Finance expense
(2,826)
-
(2,826)
-
-
-
-
-
(2,826)
Loss before tax
(27,550)
(999)
(28,549)
(389)
104
674
104
(267)
(28,323)
Tax
799
-
799
-
       
799
Loss for the period
(26,751)
(999)
(27,750)
(389)
104
674
104
(267)
(27,524)
Earnings per share - basic
(0.32)
(0.04)
(0.26)
 
       
(0.26)
Earnings per share – diluted
(0.32)
(0.04)
(0.26)
         
(0.26)
Weighted number of shares
82,337,052
24,618,414
106,955,466
         
106,955,466

Loss per share has been calculated as the loss for the year divided by the number of shares in issue. The number of shares on combination represents Ordinary Shares at December 31, 2006 of 82,337,052 and 24,618,414 shares to be issued to Ester’s shareholders as part of the initial consideration for the transaction.
 
Notes to pro forma income statement for the year ended December 31, 2006
 
1.           This column represents the income statement from Amarin’s IFRS financial statements for the year ended December 31, 2006.
 
2.           This column represents the income statement extracted from Ester’s IFRS financial statements for the year ended December 31, 2006.
 
3.           This column shows the result of combining the effects of notes 1 and 2 above and forms the pro forma combined income statement for the acquisition of Ester by Amarin under IFRS.  Amarin’s adjustments between IFRS and U.S. GAAP are detailed in notes 4 to 8 below:
 
4.           Amarin received $500,000 in each of the years 2005 and 2006 on the licensing of certain rights to its LAX-202 candidate.  Under IFRS, this license fee was recognized as income in 2005 and 2006.  Under U.S. GAAP, under SAB 104, this fee is being deferred and amortized over LAX-202’s development period, which is estimated to be 5 years from January 1, 2006, upon the receipt of cash.
 

S-18


5.           Under IFRS, Amarin booked a charge of $104,000 relating to national insurance on stock options which would be payable on stock option gains at the time of exercise.  Under IFRS national insurance contributions are accrued over the vesting period of the underlying option.  Under U.S. GAAP payroll taxes on stock options are accrued when the liability is incurred.
 
6.           Under IFRS, Amarin capitalized an intangible asset of $9,636,000 and amortized annually.  Under U.S. GAAP, in-process R&D was written off on acquisition. $674,000 represents the 2006 amortization charge.
 
7.           IFRS requires that the fair value of share based payments is expensed to the income statement over the period the related services are received, together with an increase in equity.  Under U.S. GAAP, the Company adopted SFAS No. 123R, “Share-Based Payment”, using the modified-prospective transition method, effective January 1, 2006 and therefore began to expense the fair value of all outstanding options over their remaining vesting periods to the extent the options were not fully vested as of the adoption date and began to expense the fair value of all options granted subsequent to December 31, 2005 over their requisite service periods.  Since the adoption of SFAS No. 123R, the Binomial Lattice model has been applied to calculate the fair value of options.  We recognize compensation expense for the fair value of those awards which have graded vesting on an accelerated recognition basis. For options granted prior to January 1, 2006, the Black Scholes model was applied to calculate the fair value of options and expensed on a straight-line basis.
 
8.           Under IFRS, Amarin booked restructuring and property costs in 2005, part of these costs ($267,000) were not booked until 2006 under U.S. GAAP.
 
9.           This column represents the unaudited pro forma combined condensed consolidated income statement for Amarin’s acquisition of Ester under U.S. GAAP and reflects those items disclosed in notes 1 to 8.  The write-off, in accordance with U.S. GAAP, of the intangible that was created by the acquisition, is shown in note 11, table 3 below.  This write-off is not recorded as an adjustment in the income statement as it is a non-recurring charge attributable to the acquisition of Ester that will be included in the income statement of Amarin within 12 months following the acquisition.
 
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED INCOME STATEMENT – FOR THE COMBINATION FOR THE 6 MONTHS ENDED JUNE 30, 2007
 
 
Amarin
IFRS
Ester
IFRS
Combined
IFRS
Amarin adjustments between IFRS and U.S. GAAP
 
Combined
U.S. GAAP
 
$’000
$’000
$’000
$’000
$’000
 
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Turnover
-
-
-
-
-
-
111
111
Cost of sales
-
-
-
-
-
-
-
-
Gross Profit
-
-
-
-
-
-
111
111
Research & Development
(7,373)
(393)
(7,766)
-
(8)
-
-
(7,774)
Selling, General & Administrative
(18,737)
(42)
(18,779)
8,953
(111)
(122)
-
(10,059)
Operating expenses
(26,110)
(435)
(26,545)
8,953
(119)
(122)
-
(17,833)
Operating loss
(26,110)
(435)
(26,545)
8,953
(119)
(122)
111
(17,722)
Finance income
1,200
7
1,207
-
-
-
-
1,207
Finance expense
-
-
-
-
-
-
-
-
Loss before tax
(24,910)
(428)
(25,338)
8,953
(119)
(122)
111
(16,515)
Tax
486
-
486
-
-
-
-
486
Loss for the period
(24,424)
(428)
(24,852)
8,953
(119)
(122)
111
(16,029)
Earnings per share - basic
(0.27)
(0.02)
(0.22)
 
     
(0.14)
Earnings per share - diluted
(0.27)
(0.02)
(0.22)
       
(0.14)
Number of shares
90,684,230
24,618,414
115,302,644
       
115,302,644

Loss per share has been calculated as the loss for the six month period divided by the number of shares in issue. No dilution arose due to option grant prices being below market price.  The number of shares on combination represents Amarin’s number of shares at June 30, 2007 of 90,684,230 and 24,618,414 being the number of shares issued to Ester as part of the initial consideration for the transaction.
 

S-19


Notes to pro forma income statement for the period ended June 30, 2007
 
1.           This column represents the income statement as extracted from Amarin’s IFRS financial statements for the period ended June 30, 2007.
 
2.           This column represents the income statement extracted from Ester’s IFRS financial statements for the period ended June 30, 2007.
 
3.           This column shows the result of combining the effects of notes 1and 2 above and forms the pro forma combined income statement for the acquisition of Ester by Amarin under IFRS.  Amarin’s adjustments between IFRS and U.S. GAAP are detailed in notes 4 to 7 below:
 
4.           Under IFRS externally purchased rights associated with pharmaceutical products which are in clinical trials phase of development can be capitalized and amortized where there is a sufficient likelihood of future economic benefit.  Under U.S. GAAP specific guidance relating to pharmaceutical products in the development phase requires such amounts to be expensed unless they have attained regulatory milestones.  Under IFRS Amarin had capitalized $8,953,000 at December 31, 2006 relating to Miraxion.  This would have been expensed under U.S. GAAP. During the second quarter of 2007, Amarin impaired the Miraxion intangible in full.
 
5.           Under IFRS, Amarin recorded a provision of $nil relating to national insurance amounts due on stock options which would be payable on stock option gains at the time of exercise.  Under IFRS national insurance contributions are accrued over the vesting period of the underlying option. Under U.S. GAAP payroll taxes on stock options are accrued when the liability is incurred.
 
6.           IFRS requires that the fair value of share based payments is expensed to the income statement over the period the related services are received, together with an increase in equity.  Under U.S. GAAP, the Company adopted SFAS No. 123R, “Share-Based Payment”, using the modified-prospective transition method, effective January 1, 2006 and therefore began to expense the fair value of all outstanding options over their remaining vesting periods to the extent the options were not fully vested as of the adoption date and began to expense the fair value of all options granted subsequent to December 31, 2005 over their requisite service periods.  Since the adoption of SFAS No. 123R, the Binomial Lattice model has been applied to calculate the fair value of options.  We recognize compensation expense for the fair value of those awards which have graded vesting on an accelerated recognition basis.  For options granted prior to January 1, 2006, the Black Scholes model was applied to calculate the fair value of options and expensed on a straight-line basis.
 
7.           Amarin received $500,000 in each of the years 2005 and 2006 on the licensing of certain rights to its LAX-202 candidate.  Under IFRS, this license fee was recognized as income in 2005 and 2006.  Under U.S. GAAP, under SAB 104, this fee is being deferred and amortized over LAX-202’s development period, which is estimated to be 5 years from January 1, 2006, upon the receipt of cash.
 
8.           This represents the unaudited pro forma combined condensed consolidated income statement for Amarin’s acquisition of Ester under U.S. GAAP and reflects those items disclosed in notes 1 to 7.  The write-off, in accordance with U.S. GAAP, of the intangible that was created by the acquisition is shown in note 11, table 3 below.  This write-off is not recorded as an adjustment in the income statement as it is a non-recurring charge attributable to the acquisition of Ester that will be included in the income statement of Amarin within 12 months following the acquisition.
 
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2007
 
Below are several tables (Tables 1-3) showing the various steps in order to arrive at the unaudited pro forma combined condensed consolidated combined balance sheet under U.S. GAAP, as shown in the final column of Table 3.
 

S-20


Table 1 — Amarin at June 30, 2007, as adjusted for material post balance sheet events (“pbse”)
 
   
Amarin
IFRS
   
Amarin
IFRS
   
Amarin
IFRS
   
Amarin
IFRS
 
     
$000
     
$000
     
$000
     
$000
 
   
Note 1
   
Note 1a
   
Note 1b
   
Note 2
 
ASSETS
                               
Non-current assets
                               
Property, plant and equipment
   
643
     
-
     
-
     
643
 
Intangible assets
   
-
     
-
     
-
     
-
 
Available for sale investment
   
24
     
-
     
-
     
24
 
Total non-current assets
   
667
     
-
     
-
     
667
 
 
Current assets
                               
Current tax recoverable
   
1,363
     
-
     
-
     
1,363
 
Other current assets
   
1,434
     
-
     
-
     
1,434
 
Cash and cash equivalents
   
27,610
     
5,376
     
2,750
     
35,736
 
Total current assets
   
30,407
     
5,376
     
2,750
     
38,533
 
 
Total assets
   
31,074
     
5,376
     
2,750
     
39,200
 
 
LIABILITIES
                               
Non-current liabilities
                               
Financial liability
   
-
     
-
     
2,279
     
2,279
 
Other liabilities
   
92
     
477
     
-
     
569
 
Total non-current liabilities
   
92
     
477
     
2,279
     
2,848
 
 
Current Liabilities
                               
Trade payables
   
2,324
     
-
     
-
     
2,324
 
Deferred credit
   
-
     
-
     
-
     
-
 
Accrued expenses and other liabilities
   
7,919
     
-
     
-
     
7,919
 
Total current liabilities
   
10,243
     
-
     
-
     
10,243
 
Total liabilities
   
10,335
     
477
     
2,279
     
13,091
 
 
EQUITY
                               
Capital and reserves attributable to equity holders
                               
Share capital
   
8,691
     
1,686
     
-
     
10,377
 
Share premium
   
139,938
     
3,213
      (992 )    
142,159
 
Share based payment reserve
   
7,419
     
-
     
-
     
7,419
 
Warrant reserve
   
10,614
     
-
     
992
     
11,606
 
Capital redemption reserve
   
27,633
     
-
     
-
     
27,633
 
Convertible debentures equity component
   
-
     
-
     
471
     
471
 
Treasury shares
    (217 )    
-
     
-
      (217 )
Foreign currency translation adjustment
    (1,926 )    
-
     
-
      (1,926 )
Retained earnings
    (171,413 )    
-
     
-
      (171,413 )
Total capital and reserves
   
20,739
     
4,899
     
471
     
26,109
 
 
Total shareholders’ equity and liabilities
   
31,074
     
5,376
     
2,750
     
39,200
 

Notes to the pro forma balance sheet at June 30, 2007, as adjusted for post balance sheet events
 
1.           This column represents the balance sheet as extracted from Amarin’s IFRS interim financial statements as at June 30, 2007.
 

S-21


Amarin’s balance sheet at June 30, 2007 has been adjusted for the following material post balance events which occurred between the deemed reference date for Amarin, of June 30, 2007 and the consummation of the acquisition of Ester on December 5, 2007.
 
1a.           In conjunction with this transaction the Company expects to issue approximately of 16,290,900 Ordinary Shares in consideration for $5,376,000 (nominal value $1,686,000) and warrants to purchase 8,145,446 shares with an exercise price of $0.48 per share, the proceeds of which will be used to fund the combined operations of the Amarin group.
 
1b.           In conjunction with this transaction the Company expects to issue convertible debt of $2,750,000 with a conversion price of $0.48 and warrants to purchase 2,291,666 shares with an exercise price of $0.48 per share. Interest on the convertible debt will be charged at 8% per annum.
 
2.           The resulting balance sheet for Amarin under IFRS, as adjusted for material post balance sheet events from the starting for the unaudited pro forma combined condensed consolidated balance sheet, in Table 2.
 
Table 2 – Pro forma combined balance sheet at June 30, 2007 (IFRS)
 
   
Amarin
as adjusted
IFRS
   
Ester
as adjusted
IFRS
   
IFRS
   
Combined
IFRS
 
     
$’000
     
$’000
     
$’000
     
$’000
 
   
Note 3
   
Note 4
   
Note 5
   
Note 6
 
ASSETS
                               
Non-current assets
                               
Property, plant and equipment
   
643
     
5
     
-
     
648
 
Intangible assets
   
-
     
-
     
20,518
     
20,518
 
Available for sale investment
   
24
     
-
             
24
 
Total non-current assets
   
667
     
5
     
20,518
     
21,190
 
                                 
Current assets
                               
Current tax recoverable
   
1,363
     
-
     
-
     
1,363
 
Other current assets
   
1,434
     
51
     
-
     
1,485
 
Cash and cash equivalents
   
35,736
     
172
      (5,000 )    
30,908
 
Total current assets
   
38,533
     
223
      (5,000 )    
33,756
 
                                 
Total assets
   
39,200
     
228
     
15,518
     
54,946
 
                                 
LIABILITIES
                               
Non-current liabilities
                               
Financial Liability
   
2,279
     
-
     
4,818
     
7,097
 
Other liabilities
   
569
     
5
     
-
     
574
 
Total non-current liabilities
   
2,848
     
5
     
4,818
     
7,671
 
                                 
Current Liabilities
                               
Trade payables
   
2,324
     
55
     
-
     
2,379
 
Deferred Credit
   
-
     
-
     
-
     
-
 
Accrued expenses and other liabilities
   
7,919
     
27
     
700
     
8,646
 
Total liabilities
   
10,243
     
82
     
700
     
11,025
 
Total liabilities
   
13,091
     
87
     
5,518
     
18,696
 
                                 
EQUITY
                               
Capital and reserves attributable to equity holders
                               
Share capital
   
10,377
     
7
     
2,548
     
12,933
 
Share premium
   
142,159
     
9,608
     
7,452
     
159,218
 


S-22



   
Amarin
as adjusted
IFRS
   
Ester
as adjusted
IFRS
   
IFRS
   
Combined
IFRS
 
     
$’000
     
$’000
     
$’000
     
$’000
 
   
Note 3
   
Note 4
   
Note 5
   
Note 6
 
Share based payment reserve
   
7,419
     
566
     
-
     
7,985
 
Warrant reserve
   
11,606
     
-
     
-
     
11,606
 
Capital redemption reserve
   
27,633
     
-
     
-
     
27,633
 
Convertible debentures equity component
   
471
     
-
     
-
     
471
 
Treasury shares
   
(217)
     
-
     
-
     
(217)
 
Foreign currency translation adjustment
   
(1,926)
     
-
     
-
     
(1,926)
 
Retained earnings
   
(171,413)
     
(10,040)
     
-
     
(181,453)
 
Total capital and reserves
   
26,109
     
141
     
10,000
     
36,250
 
     
 
                         
Total shareholders’ equity and liabilities
   
39,200
 
   
228
     
15,518
     
54,946
 

Notes to pro forma balance sheet for the period ended June 30, 2007
 
3.           Amarin’s June 30, 2007 IFRS balance sheet as adjusted for any material post balance sheet events.
 
4.           Ester’s June 30, 2007 IFRS balance sheet as adjusted for any material post balance sheet events.
 
5.           This adjustment reflects the purchase of the intangible assets, tangible fixed asset and working capital items as financed by the issuance of shares and cash consideration, and the accrual for the fair value of milestone 1a - $5 million.  The following analyses the fair value accounting under IFRS.
 
   
Ester
   
Fair
value
adjustments
   
Acquisition
accounting
IFRS
   
Recognition
of milestone
Ia
   
Acquisition
Accounting after
recognition of
milestone Ia IFRS
 
     
        $’000
     
       $’000
     
        $’000
     
        $’000
     
       $’000
 
                                         
Intangible fixed assets
   
-
     
20,700
     
20,700
     
(182)
     
20,518
 
Tangible fixed assets
   
5
     
-
     
5
     
-
     
5
 
Net current assets
   
141
     
-
     
141
     
-
     
141
 
Non current liabilities
   
(5)
     
-
     
(5)
     
-
     
(5)
 
Financial liability
   
-
     
-
     
-
     
(4,818)
     
(4,818)
 
                                         
Net assets acquired
   
141
     
20,700
     
20,841
     
(5,000)
     
15,841
 
                                         
Consideration
                                       
                   
No. of Shares (‘000)
     
$
 
   
’000
 
Shares issued at fair value
                   
24,618
     
0.4062
     
10,000
 
Cash consideration
                                   
5,000
 
Deferred consideration
                                   
5,000
 
Estimated direct acquisition costs
                                   
700
 
Cost of investment
                                   
20,700
 

Fair value adjustments have been considered for all assets/liabilities present on Ester’s balance sheet at the date of acquisition (December 4 2007). For all asset classes other than intangible fixed assets, no fair value adjustment has been proposed due to materiality and specifically, the proximity to settlement for the other current assets and liabilities. Other acquisition liabilities have been considered but none have been noted that meet the requirements in IFRS 3.
 

S-23


The most significant fair value adjustment is the recognition of the intangible, representing intellectual property rights.  As this transaction is an asset acquisition under IFRS 3 - Business Combinations, the fair value of the intangible is deemed to be the fair value of the consideration paid and any costs directly attributable to the acquisition.  As detailed above, the fair value of the consideration to be paid is $19,818,000 and estimated costs of $700,000 are directly attributable to the acquisition.
 
IFRS 3 requires the intangible to be adjusted for any contingent consideration as soon as payment becomes probable and the amount can be measured reliably. Achievement of milestone Ia is considered to be more probable than not and payment can be measured reliably, and therefore milestone Ia has been included as a cost of acquisition. A description of the contingent consideration is described in detail above (see preliminary purchase price).
 
6.           This represents the unaudited pro forma combined condensed balance sheet for Amarin’s acquisition of Ester under IFRS and this forms the starting point for the following table of adjustments which shows the further adjustments required to arrive at the combined U.S. GAAP balance sheet.  See Table 3, below.
 
Table 3 – Pro forma combined balance sheet at June 30, 2007 (U.S. GAAP)
 
   
Combined
IFRS
   
Amarin
adjustments
between
IFRS and
U.S. GAAP
   
Amarin
adjustments
between
IFRS and
U.S. GAAP
   
Reversal of
acquisition
accounting
difference
between
IFRS and
U.S. GAAP
   
Acquisition
accounting
U.S. GAAP
   
Combined
U.S. GAAP
 
     
$’000
     
$’000
     
$’000
     
$’000
     
$’000
     
$’000
 
   
Note 7
   
Note 8
   
Note 9
   
Note 10
   
Note 11
   
Note 12
 
ASSETS
                                               
Non-current assets
                                               
Property, plant and equipment
   
648
     
-
     
-
     
-
     
-
     
648
 
Intangible assets
   
20,518
     
-
     
-
      (20,518 )    
-
     
-
 
Available for sale investment
   
24
     
-
     
-
     
-
     
-
     
24
 
Total non-current assets
   
21,190
     
-
     
-
      (20,518 )    
-
     
672
 
                                                 
Current assets
                                               
Current tax recoverable
   
1,363
     
-
     
-
     
-
     
-
     
1,363
 
Other current assets
   
1,485
     
-
     
-
     
-
     
-
     
1,485
 
Cash and cash equivalents
   
30,908
     
-
     
-
     
5,000
      (5,000 )    
30,908
 
Total current assets
   
33,756
     
-
     
-
     
5,000
      (5,000 )    
33,756
 
                                                 
Total assets
   
54,946
     
-
     
-
      (15,518 )     (5,000 )    
34,428
 
                                                 
LIABILITIES
                                               
Non-current liabilities
                                               
Financial liability
   
7,097
     
-
     
-
      (4,818 )    
4,818
     
7,097
 
Other liabilities
   
97
     
-
     
41,354
     
-
     
-
     
41,928
 
Total non-current liabilities
   
7,671
     
-
     
41,354
      (4,818 )    
4,818
     
49,025
 
                                                 
Current Liabilities
                                               
Trade payables
   
2,379
     
-
     
-
     
-
     
-
     
2,379
 
Deferred credit
   
-
     
-
     
-
     
-
     
-
     
-
 
Accrued expenses and other liabilities
   
8,646
     
778
     
-
      (700 )    
700
     
9,424
 
Total current liabilities
   
11,025
     
778
     
-
      (700 )    
700
     
11,803
 
Total liabilities
   
18,696
     
778
     
41,354
      (5,518 )    
5,518
     
60,828
 
                                                 
EQUITY
                                               
Capital and reserves attributable to equity holders
                                               
Share capital
   
12,933
     
-
     
-
      (2,548 )    
2,548
     
12,933
 
Share premium
   
159,218
     
-
     
-
      (7,452 )    
7,452
     
159,218
 
Share based payment reserve
   
7,985
     
-
     
-
     
-
     
-
     
7,985
 
Warrant reserve
   
11,606
     
-
     
-
     
-
     
-
     
11,606
 
Capital redemption reserve
   
27,633
     
-
     
-
     
-
     
-
     
27,633
 
Treasury shares
    (217 )    
-
     
-
     
-
     
-
      (217 )


S-24



   
Combined
IFRS
   
Amarin
adjustments
between
IFRS and
U.S. GAAP
   
Amarin
adjustments
between
IFRS and
U.S. GAAP
   
Reversal of
acquisition
accounting
difference
between
IFRS and
U.S. GAAP
   
Acquisition
accounting
U.S. GAAP
   
Combined
U.S. GAAP
 
     
$’000
     
$’000
     
$’000
     
$’000
     
$’000
     
$’000
 
   
Note 7
   
Note 8
   
Note 9
   
Note 10
   
Note 11
   
Note 12
 
Convertible debentures equity component
   
471
     
-
     
-
     
-
     
-
     
471
 
Foreign currency translation adjustment
    (1,926 )    
-
     
-
     
-
     
-
      (1,926 )
Retained earnings
    (181,453 )     (778 )     (41,354 )    
-
      (20,518 )     (244,103 )
Total capital and reserves
   
36,250
      (778 )     (41,354 )     (10,000 )     (10,518 )     (26,400 )
                                                 
Total shareholders’ equity and liabilities
   
54,946
      (778 )    
-
      (15,518 )     (5,000 )    
34,428
 

Notes to pro forma balance sheet for the period ended June 30, 2007
 
7.           Combined IFRS balance sheet adjusted for all material post balance sheet events
 
8.           Amarin received $500,000 in each of the years 2005 and 2006 on the out-licensing of certain IP rights.  Under IFRS, this license fee was recognized as income in 2005 and 2006.  Under U.S. GAAP, under SAB 104, this fee is being deferred and amortized over the development period.
 
9.           Under IFRS, no provision was required for contingent consideration relating to the acquisition of Amarin Neuroscience Limited (we availed of the exemption under IFRS 1- “First-time Adoption of International Financial Reporting Standards”.  Under U.S. GAAP, a deferred credit of $41,354k was recognized as the cap of negative goodwill.
 
10.           Reversal of IFRS acquisition accounting adjustment detailed in note 5 above.
 
11.           This adjustment reflects the purchase of the intangible assets, tangible fixed asset and working capital items as financed by the issuance of shares and cash consideration.  The following analyses the fair value accounting under U.S. GAAP in accordance with FAS 141 – Business Combinations.
 
Fair value adjustments have been considered for all assets/liabilities present on Ester’s balance sheet at the date of acquisition (December 4, 2007).  For all asset classes other than intangible fixed assets, no fair value adjustment has been proposed due to materiality and specifically, the proximity to settlement for the other current assets and liabilities.  Other acquisition liabilities have been considered but none have been noted.
 
The most significant fair value adjustment is the recognition of the intangible, representing intellectual property rights.  As this transaction is an asset acquisition under FAS 141 – Business Combinations, the fair value of the intangible is deemed to be the fair value of the consideration paid and any costs directly attributable to the acquisition.  As detailed above, the fair value of the consideration to be paid is $19,818,000 and estimated costs of $700,000 are directly attributable to the acquisition.
 
This table shows the intangible asset that was created by the acquisition was written off as in process research and development in accordance with U.S. GAAP
 
   
Ester
   
Fair
value
adjustments
   
Acquisition
accounting
   
Recognition
of milestone
Ia
   
Acquisition
accounting
after
recognition
of milestone Ia
   
Write-off of intangible asset as
in-process research & development
   
U.S. GAAP
acquisition
accounting
 
     
$’000
     
$’000
     
$’000
     
$’000
     
$’000
     
$’000
     
$’000
 
                                                         
Intangible fixed assets
   
-
     
20,700
     
20,700
      (182 )    
20,518
      (20,518 )    
-
 
Tangible fixed assets
   
5
     
-
     
5
     
-
     
5
     
-
     
3
 


S-25



   
Ester
   
Fair
value
adjustments
   
Acquisition
accounting
   
Recognition
of milestone
Ia
   
Acquisition
accounting
after
recognition
of milestone Ia
   
Write-off of intangible asset as
in-process research & development
   
U.S. GAAP
acquisition
accounting
 
     
$’000
     
$’000
     
$’000
     
$’000
     
$’000
     
$’000
     
$’000
 
                                                         
Net current assets
   
141
     
-
     
141
     
-
     
141
     
-
     
141
 
Non current liabilities
    (5 )    
-
      (5 )    
-
      (5 )    
-
      (5 )
Financial liability
   
-
     
-
     
-
      (4,818 )     (4,818 )    
-
      (5,000 )
                                                         
Net assets acquired
   
141
     
20,700
     
20,841
      (5,000 )    
15,841
      (20,518 )     (4,861 )
                                                         
Consideration