Event – US filing is only part of the Amarin puzzle

Even if, as many analysts expect, Amarin’s purified fish-oil drug AMR101 secures US approval by the FDA’s July 26 action date, this alone will not solve all or even most of the company’s problems.

How big a niche in the lucrative triglyceride-lowering space the drug can carve out – and indeed whether a business case exists for it at all – depends on Amarin’s ability to keep the market largely to itself. Although the clouds are starting to clear the FDA has yet to decide whether AMR101 can be designated a new molecular entity (NME), and doubts remain over the strength of Amarin’s patent estate. Uncertainty will continue to overshadow the business until the missing pieces of this complex puzzle fall into place.

The US filing seeks permission to sell AMR101 for treating patients with very high triglycerides, above 500mg/dl. It is supported by data from two phase III studies, Anchor and Marine, in which AMR101 achieved all primary endpoints in patients with triglycerides of 200-500mg/dl and above 500mg/dl respectively, and was well tolerated (AHA 2011 – Amarin’s patent concerns set to prevail despite more strong data, November 17, 2011).

EvaluatePharma data, based on consensus analyst forecasts, suggest that the NPV of AMR101 is worth $2.8bn to Amarin. The gap between this and the originator’s market cap likely reflects natural sell-side bullishness on one hand and the significant risk that the market still attributes to the prospects of AMR101 on the other.

Company Amarin
Product AMR101
Market cap $2.1bn
Product NPV $2.8bn
% of market cap 133%
Event type PDUFA
Date July 26, 2012

Amarin’s share price has been on a rollercoaster ride over the past two years, since the current triglyceride-focused company was born following its failure in Huntington’s disease. AMR101’s success in Anchor and Marine propelled the stock from barely $2.50 in mid-2010 to over $19 a year ago, assisted by rumours of a deal or acquisition that the company did little to discourage.

However, the shares then fell into a declining spiral as it became apparent that Amarin’s patent portfolio might not have been all it was cracked up to be. By the time the FDA accepted the AMR101 filing last November the stock was languishing at around $7.

Patent progress

The fact that since then the shares have doubled is testament to the progress that Amarin made on the IP front; one new US patent has been issued and others have been allowed, boosting the chances of exclusivity being maintained until 2030. Analysts at Jefferies and Cannacord remain bullish on Amarin’s ability to build patent walls around AMR101 – its only product.

Still, this does raise the question of why the company is only now sorting out the patent estate when typically such bridges are crossed well before undertaking a drug’s late-stage development. Moreover, no one knows just how strong these patents are, even if in the end all are issued, and the outcome of any litigation in the event of a generics firm’s challenge is anybody's guess.

This is why designating AMR101 an NME, to provide a strong additional layer of protection, is vital. This issue will be determined by the FDA a month after its decision on the product’s approvability, and the resulting three to five years of exclusivity could give Amarin time to establish other defences.

The final piece of the puzzle is how AMR101 stacks up in price and efficacy against what is currently its only competitor, GlaxoSmithKline’s Lovaza, which sells almost $1bn a year; so far, clinical data have borne out AMR101’s superiority.

For a long time, the bulls had cited the possibility of Glaxo buying Amarin to get its hands on AMR101 and maintain its triglyceride-lowering franchise, which had faced a serious generics threat that only recently was put off until 2015 (End of Lovaza patent threat only one less worry for Pronova, May 30, 2012). Indeed, Amarin still openly highlights an M&A scenario as one path to selling AMR101.

But given the ongoing uncertainty of AMR101’s market exclusivity and lack of Lovaza generics, Amarin might find itself stuck with the drug for some time to come.

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