In a deal worth up to $46 million, Valeant Pharmaceuticals Inc. agreed to acquire Amarin Pharmaceuticals Inc., gaining two neurology products and other U.S. assets.

With completion of the acquisition expected in a few weeks, Valeant will hold all rights to Permax, a primary care portfolio with several indications and Zelapar, which has received an FDA approvable letter.

Valeant is paying $38 million in cash up front, and up to $8 million additional if Zelapar successfully completes clinical studies and becomes FDA approved.

"It's a solid strategic fit for us for two reasons," said Jeff Misakian, vice president of investor relations at Costa Mesa, Calif.-based Valeant. "It allows us to expand our product offering in one of our core therapeutic areas, while at the same time adding to our revenue base. And it gives us a stronger neurology platform in North America from which we hopefully will be able to leverage future sales and potential acquisitions down the road."

Both Permax and Zelapar are adjunct treatments for Parkinson's disease. Zelapar is an in-licensed late-stage candidate. Amarin plans to complete two safety studies of Zelapar sometime this year, earning a $3 million milestone payment from Valeant. It would earn another $5 million upon FDA approval of the drug.

In addition to the $46 million to be paid in total, Valeant will make a $10 million payment to Zelapar's developer once the drug reaches certain sales thresholds. Zelapar was developed by Elan Corp. plc, of Dublin, Ireland, and RP Scherer, a division of Cardinal Health Inc., of Dublin, Ohio.

Amarin, the U.S.-based subsidiary of Amarin Corp. plc, of London, retains financial responsibility up to $12.5 million relating to the Zelapar clinical safety studies and inventory management. Amarin will retain exclusive U.S. rights to LAX-101 for Huntington's disease.

As part of the acquisition, Amarin announced Thursday that it reached a final agreement settling its financial obligations with Elan, agreeing to pay $17.2 million in cash, plus another $1 million on the successful completion of Zelapar safety trials. Amarin also will issue to Elan a $5 million five-year 8 percent loan note to be repaid by January 2009. The loan note may be repaid, at Elan's option, from the $5 million milestone payment by Valeant on the new drug application approval of Zelapar. Amarin will issue 500,000 warrants to Elan, increasing Elan's ownership from 25.9 percent to 28 percent.

The agreement is conditional upon closing the sale of Amarin.

Valeant formerly was called ICN Pharmaceuticals Inc., which was founded in 1960. It changed its name in November and today has more than 5,000 employees and 575 branded products.

"We've got a broad-based product portfolio all centered around three therapeutic areas," Misakian told BioWorld Today. "The first one is neurology, which [the acquisition] would fit in nicely. The second is dermatology and the third is infectious disease."

Valeant's lead neurology product, Mestinon, is indicated for myasthenia gravis and had worldwide sales of $31.4 million in 2002.

"It was our largest-selling product that year," Misakian said.

Valeant will record a $10 million charge for research and development costs associated with Zelapar. Not including the charge, the company expects the acquisition to be earnings neutral in 2004.

Valeant's stock (NYSE:VRX) gained 25 cents Thursday to close at $22.53, while Amarin Corp.'s stock (NASDAQ:AMRN) closed at $1.90, up 9 cents.