Amarin Shares Rally Big; Will Fish Oil Pill Let People Eat What They Want?
Today, shares of Amarin (NASDAQ: AMRN) are up 16% after Leerink Swann analyst Joseph Schwartz released a note stating that the company's progress on obtaining a patent for AMR101 make the company a takeover candidate. The US Patent Office examined Amarin's application using an examiner's amendment, which is often used when minor issues remain.
AMR101 is composed of a purified, omega-3 fat acid compound and demonstrated strong safety and efficacy in a pair of Phase 3 trials in its ability to lower triglycerides in patients with high levels. In its initial MARINE study, AMR101 showed a decrease in TG levels of 45% for patients given a 4 gram dose, and 33% for patients given a 2 gram dose. The clinical benefit is crucial, as similar drugs such as GlaxoSmithKline's Lovaza have not been able to demonstrate the same result.
Amarin has submitted multiple method-of-use patent applications with the hopes of extending its 5 years of exclusivity for AMR101, as well as fending off generic competitors. However, multiple patent rejection letters, as well as comments from CEO Joe Zakrzewski that the small company may choose to market the drug itself has dealt swift blows to the stock price, as it now trades near 52-week lows, well off highs of $19.87.
AMR101's primary advantage against Lovaza stems from its superior cholesterol profile. Unlike Lovaza, AMR101 does not have the side effect of raising LDLs, or bad cholesterol. Lovaza has this side effect, which potentially requires patients to undergo additional treatments. AMR101 also demonstrated that it could reduce AMR markers, resulting in a reduction of total cholesterol levels.
In August, Amarin announced that it had reached a Special Protocol Assessment on how to potentially run an outcome study. The SPA meant that the FDA had examined the trial and was comfortable with its parameters and how it would be run. SPAs typically give drugs greater odds of approval, given that the FDA has already agreed upon the design of the respective trial.
Amarin's trial is particularly important, as its success would give the company permission to market AMR101 to reduce cardiovascular events such as heart attacks and strokes, in addition to treating high triglyceride levels. Unfortunately, the trial figures to last 6 years and enroll nearly 8,000 patients.
Amarin announced in September that it had submitted an NDA for potential AMR101 approval. The submission is based on the entire AMR101 data package, and highlights positive safety and efficacy data from the MARINE and ANCHOR Phase 3 trials. "The submission of this NDA moves AMR101 one step closer to commercial launch. If AMR101 is approved, we believe it can play a significant role in cardiovascular health management," said CEO Zakrzewski.
If you believe that Amarin will seek out a partner to help launch AMR101, you should consider these trades:
- Go long Amarin shares. Shares are trading well off their highs of near $20.00, which were established when Amarin takeover chatter was much more prevalent. Shares could reach similar levels if the company decides to find a partner.
- Purchase call options in Amarin. Options could provide a safer way to play Amarin's potential upside.
If you believe that Amarin will encounter more struggles in obtaining patent protection for AMR101, consider these trades:
- Go short Amarin. Amarin's stock has fallen into high $5 territory and could see those levels again if it is unable to secure an exclusivity extension.
- Consider put options in Amarin. While Amarin could fall again, the stock is trading well off its highs and many analysts believe the drug will obtain FDA approval, which would propel the stock much higher. Put options should be considered by investors who want to hedge their risk.
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