A Brief Explanation
On November 14th, Bio-Wire held an interview with the private company Omthera Pharmaceutics, which allowed them to present a case in favor of their flagship drug Epanova. Their case also contained some unflattering points about competing drugs - particularly Vascepa.
While statements made by companies are intrinsically biased, I decided to present the data/argument to the Amarin (NASDAQ: AMRN) and GlaxoSmithKline (NYSE: GSK) community anyway, to show them an actual bearish argument for Amarin.
I was (and still remain) cautiously bullish on Amarin. Heck, I even made the cheesy bullish motto "stay long, stay strong" in one of my previous articles. Still, a lot of my readership seemed to misinterpret my most recent article, which was a summarization of the major points from the Omthera interview and did not contain my own views on AMRN.
Since I've covered the big potential for Vascepa ad nauseam, I figured that it was time to present and attempt to discredit the bearish argument. Anyone who is not looking at the other side of the argument is exhibiting major bias - something that should obviously be avoided when it comes to investing.
I think that these three things should be investigated to further solidify Vascepa's profile relative to omega-3 competitors.
1.) Omega-3 Bioavailability
Omthera's drug Epanova boasts superior bioavailability to GSK's Lovaza and Amarin's Vascepa. This is because the two active ingredients of omega-3's, eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA) are in free fatty acid form in Epanova. In Lovaza and Vascepa, they are in ethyl-ester form, which is harder for the body to absorb. Epanova, therefore, produces much higher EPA/DHA in patients' bloodstreams.
Omthera performed a head-to-head study against Lovaza to prove this. The results were released on January 9, 2012.
This increase in EPA/DHA happens because of the difference between the free fatty acid forms and ethyl-ester forms of the omega-3s. The pancreas has to convert the ethyl-ester form into the free fatty acid form for absorption.
Whether these higher levels of EPA/DHA in patients' bloodstream matters a whole lot is questionable, but worth considering.
2.) Vascepa's Ability To Lower LDL-C
Amarin was trading around $8.77/share on Friday, April 15 2011. The stock moved 95% higher on Monday, April 18 2011 ($17.10/share).
This press release, with the following headline, caused the monster rally:
Amarin's AMR101 Phase 3 ANCHOR Trial Meets all Primary and Secondary Endpoints with Statistically Significant Reductions in Triglycerides at Both 4 Gram and 2 Gram Doses and Statistically Significant Decrease in LDL-C.
Vascepa provides its efficacy in the lowering of triglycerides, for sure, but a lot of investors began to get ultra-bullish on this excerpt from Amarin's statements:
For the 4 grams per day AMR101 group, LDL-C decreased significantly by 6.2% from baseline versus placebo, demonstrating superiority over placebo (p=0.0067). For the 2 grams per day group, LDL-C decreased by 3.6% from baseline versus placebo (p=0.0867).
Amarin highlights LDL-C reduction versus placebo, which gave a great secondary efficacy endpoint statistic with a statistically significant p-value (p=0.0067), but this masked the rise in LDL cholesterol in both Vascepa arms versus baseline. The controversy comes in when you consider the baselines. The following data was taken from final ANCHOR results.
|Dosage/Time||4g Baseline||4g End||2g Baseline||2g End||Placbo Baseline||Placebo End|
|Median LDL Cholesterol (mg/dL)||82.0||83.0||82.0||87.0||84.0||88.5|
On the bright side, it seems that the negative LDL effect gets smaller as you increase dosage (median LDL mg/DL went up by only 1mg/dL in the 4g arm versus 5mg/dL in the 2g arm).
3.) Poor Outcomes For ANCHOR's Placebo Arm
Check Amarin's Q3 earnings release conference call, or read the transcript here to see that the first question that was asked was related to this controversial topic in particular:
This is Dewey Steadman for Chris Schott. I just have a quick question on a competitor. One of your competitors was out this week with data for its Omega-3 product and they commented that Vascepa results may be aided somewhat by the use of mineral oil as a placebo in the MARINE and ANCHOR studies. And can you just comment on the rationale behind the use of mineral oil instead of olive oil, like the competitor, or corn oil like the studies for Lovaza? And do you see your placebo choice as a marketing burden heading into the launch?
Joseph S. Zakrzewski - Executive Chairman and Chief Executive Officer:
Dewey, this is Joe. The FDA, through our SPAs, approved our placebo. And over the years, many companies have used olive oil, corn oil, mineral oil, we really think it's much ado about nothing. So we really don't see a difference.
The paraffin-related controversy is based on ANCHOR (and MARINE) data. There is no real explanation for the adverse effects (increases in triglycerides and cholesterol) seen in ANCHOR's placebo group at this time, but the paraffin-statin interaction idea is out there.
In ANCHOR, the placebo group (which took mineral oil) saw a 6% jump in triglyceride levels, and a 9% jump in LDL cholesterol levels. Particularly noticeable was the 15% jump in VLDL cholesterol.
There's a theory that paraffin caused this effect through interference with statin absorption (the patients in ANCHOR were all on statin therapy). Dr. Christie M. Ballantyne notes that the effect might've been a result of inflammation in the placebo patients on statin therapy, so there is an alternative that would favor the bulls.
The FDA has indeed approved Vascepa despite knowing this, although this doesn't completely eliminate the discrepancy between placebo-adjusted and baseline-adjusted performance for Vascepa at this time. If the FDA was completely risk-intolerant, Lovaza wouldn't have been approved either.
Omega-3 bioavailability is one thing we need more data on. Placebo-adjusted results from ANCHOR were better than baseline-adjusted results (fact), although this isn't enough to discredit the drug. Lastly, there's no confirmed explanation for the jump in triglycerides and bad cholesterols in ANCHOR's placebo arm.
AMRN is still a buy (especially after an unfairly large drop on Friday, December 7th) although I will suggest that selling covered calls is preferable to holding naked long positions.
Disclosure: I am long AMRN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.