3SOF

http://www.newratings.com/analyst_news/article_1515676.html

Goodbody Upgrade to BUY

Huntington's Disease awaiting treatment: Huntington's Disease is
an inherited neuro-degenerative disease that affects relatively few
people. There are c.40,000 sufferers in the EU and 30,000 in the US.
Given its hereditary nature, however, there are a further 400,000 people
"at risk" of developing the disease.

A genetic test can predict with 100%
accuracy whether a person with an HD parent will contract the disease.
A number of drugs are currently used to alleviate HD symptoms as they
develop but none have yet been approved for use against HD by the
FDA. None actually treat the disease. Amarin's Miraxion is the most
advanced of what is a relatively thin pipeline of drug candidates looking
to address this unmet medical need.

In a market where there are no
drugs currently treating the condition, there is scope for new treatments
to gain a substantial portion of what is estimated to be a c.$500m per
annum market.


• Miraxion has the potential: In an earlier Phase III trial, Miraxion was
found to be effective in a sub-set of patients. The current trials were run
within that sub-set of patients. In the US, the trial was established with a
Special Protocol Assessment in place, developed with the FDA. The drug
has been given orphan drug status in both the US and EU and has
priority review status in the US. Results from the two Phase III trials are
to be released next month. On the balance of probability, we forecast that
should Miraxion hit its Phase III endpoints and reach the market, it could
generate revenue of over $80m in FY'08, rising to $243.7m in FY'10.


• Valuation: The relatively transient nature of drugs makes the
determination of a meaningful terminal value for a DCF calculation
difficult. We have, therefore, valued Amarin relative to its peers on
traditional comparative metrics and on industry-accepted buyout
multiples. On these criteria, we currently value Amarin in the $7.95 to
$12.97 range (mid-point $10.46), which is considerably higher than
where it is currently trading. Given that: (i) Miraxion has completed two
Phase III trials without set back; (ii) the trials were designed with a
Special Protocol Assessment in place; (iii) the target population is the
sub-set of patients that responded to the drug in the first Phase III
trial; and (iv) there is no treatment on the market targeting HD, we
believe that the risk is to the upside that the drug will be approved for
the treatment of a sub-sector of HD patients.

With the caveat that the
stock remains high risk in nature, we are, therefore, upgrading our
recommendation to Buy from Add, with a price target of $5.70. This
represents the weighted combination of the minimum potential
upside ($7.95 @ 0.7 probability) and downside ($0.50 @ 0.3
probability) to the stock in this binary situation. Although this is c.90%
ahead of the current price, it would only have the stock trading at
16.1x FY08 earnings, a considerable discount to peers with drugs on
the market, who are trading at an average of c.30x FY08 earnings.

They are 'un-blinding' the trials on Friday
Results may be out as early as April 30.