Amarin's (AMRN) Fish Oil Treatment Might Go Belly Up Soon
Shares of Amarin (AMRN), a biotech company focusing on treatments for cardiovascular disease, plunged last week after a prior court ruling involving GlaxoSmithKline (GSK) and Pronova Biopharma was overturned, clearing the way for generic versions of Lovaza, which will compete against Amarin's only drug, Vascepa. Daily Chart
Amarin has been depending on sales of its omega-3 fish cholesterol pill, Vascepa (AMR-101), approved last July and launched in the United States in January, to fuel the company's top line growth.
Vascepa is considered a competitor to Lovaza. A prior court ruling had protected Lovaza from generic competition, but a recent reversal of that ruling has now cleared the way for generic versions of the drug from GSK and Pronova Biopharma. That prior ruling had favored Pronova's patent infringement claims made when Par Pharmaceuticals and Teva Pharmaceuticals attempted to make generic versions of Lovaza in 2009. Pronova had previously licensed the rights to Lovaza to GSK in the U.S. and Puerto Rico. Pronova also fought off Apotex in 2011, eventually reaching a deal to let the company sell a generic version starting in 2015. After Apotex agreed to the terms, some investors thought that other companies would follow suit with similar agreements, extending Lovaza's patent longevity. However, after Lovaza's first patent expired in March, other companies such as Teva and Par have been eager to appeal the prior ruling. After a Delaware appeals court overturned the prior ruling, it appears that generic Lovaza will hit the markets soon. The next patent for Lovaza will expire in 2017. The reason that Amarin shares were punished more severely than GSK or Pronova, which trades in the OTC markets, was due to its smaller size at $1.14 billion and its complete dependence on Vascepa sales for future growth. Now that the road has been paved for generic Lovaza, the market will become significantly more fragmented with similar omega-3 treatments, leveling the playing field and decreasing prices and margins across the board. This means that Amarin must find a way for Vascepa to stand out against Lovaza and its generic versions, or to pursue growth of in other products -- but unfortunately for Amarin, it doesn't have any other products in development. Vascepa was going to either make or break the company, and unfortunately it looks increasingly like the latter will happen. Sadly, it appears that investors knew this day would come -- the stock is down more than 50% over the past twelve months. Other News About AMRN Should a Generic Lovaza Worry Amarin Longs?
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Published on Sep 19, 2013
By Leo Sun