Amarin: Waiting For The FDA

Amarin’s (AMRN) potential blockbuster Vascepa (icosapent ethyl) is ostensibly due to be launched into the large US cardiovascular market in Q113, although how this will be achieved remains unresolved. Uncertainty over Vascepa’s market exclusivity and commercial strategy has weighed on the shares (-30%) since FDA approval in July 2012. Amarin is considering a trade sale, securing a partner or going it alone as the commercial option for Vascepa. The imminent FDA decision (expected in Dec 12) on Vascepa’s NCE status is a major potential catalyst and could set the shares on a new trajectory, although multiple FDA delays to this verdict do not bode well.

Vascepa could be a game changer
Vascepa (is an omega-3 fatty acid approved in the US as an adjunct therapy to reduce triglycerides (TG) in patients with very high TG levels. Launch is expected in Q113 and will compete against GSK’s omega-3 product Lovaza, with FY12 sales run-rate c $1bn. Vascepa also reduces LDL while Lovaza raises it. Based on this favourable profile, Vascepa could ultimately generate >$1bn in sales.

Vascepa patents are positive, but NCE status is the focus
Amarin has nine issued and allowed patents (+30 pending) for Vascepa that extend its US patent protection out to 2030. However, as the market is unsure whether these patents would be upheld if challenged, Vascepa’s new chemical entity (NCE) status has taken on new importance. If the FDA grants NCE status, Amarin would get at least five years of market exclusivity (only three years if not). The FDA previously delayed its NCE decision, which is now expected in December.

Multiple commercialisation options
Amarin’s options include launching Vascepa itself (with some third-party support), through a partnership with a larger pharma company (which would likely drive greater utilisation) or it may sell itself to another company. The outcome of the FDA’s NCE decision for Vascepa will largely determine how Amarin moves forward.

Valuation: Several near-term catalysts lie ahead
Amarin has an EV of c $1.5bn, reflective of the market’s high expectations for Vascepa. Near-term upside could come from a positive FDA NCE decision and subsequent partnering/acquisition. Downside would come from negative NCE news and/or Amarin launching on its own, putting pressure on its $215m cash reserves.

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