Seeking Alpha
Long/short equity, special situations, growth at reasonable price, contrarian
Profile| Send Message|
( followers)  

In my most recent article on Amarin (NASDAQ:AMRN), I argued that its FDA-approved prescription-grade fish oil maker that has a treatment for "severe" levels of fat (triglycerides) in the blood isn't doing too well selling its drug that is mostly eicosapentaenoic acid (EPA). I recognized that Vasepa sales continue to show impressive percentage gains on average each week, but those gains were based on a low number.

The problem for my bear thesis now is the number is simply accelerating. Like the little engine that could, Vascepa new scripts and refills just keep going and going and at an ever-increasing rate. Last week saw the largest raw number of prescriptions rise yet, though it was compared to a holiday week the week before. Still, it was a record number (5,830 new scripts alone) along with a very high amount of refills (2,841) indicating that patients must be very happy with the drug.

In review:

1. In my first article I showed that Vascepa has EPA competition from over the counter EPA fish oil. Nobody cares. Three months later the refill rate has doubled and the new script rate is up 20% and showing no signs of slowing down. The script increases started out small and uninspiring, but clearly they are snowballing.

2. In my second article I argued that it wouldn't matter if Amarin got additional or expanded FDA approval for the treatment of only "high" levels of fat in the blood (and also on statin therapy) based on the successful results of its ANCHOR trial. I argued that if the more "severe" and ill population weren't taking Vascepa, that it would be an even harder sell to the "less sick" population. Well, now that Vascepa scripts continue to snowball, the basis to my theory gets thrown out the window.

3. My most recent article was about the new competition. I stated:

Amarin's number one competitor is and has been GlaxoSmithKline (NYSE:GSK), the maker of the only other prescription fish oil drug, Lovaza. On Thursday, September 12, an appeals court gave the green light to Teva Pharmaceuticals (NYSE:TEVA) and Par Pharmaceutical (NYSE:PRX) to go ahead and make a generic copy of Lovaza. As with virtually any generic drug that hits the market, the price comes down significantly making it extremely difficult for its close competitors to compete on both volumes sold and price. GlaxoSmithKline, through its partner Pronova BioPharma ASA (OTCPK:PVNAY), has sold billions of dollars worth of Lovaza. That likely means a lot of cheap prescription generic fish oil is about to flood the market.

I figured the news would immediately shy people away from Vascepa. Bulls argued that it simply means there's no longer a reason for Glaxo to continue to advertise and market Vascepa, as typical with many drugs when a generic alternative becomes available. The lack of commercials and the like means Vascepa has a more even playing field, which relies primarily on marketing to doctors directly rather than battling for attention straight from the patients who may have previously insisted on Lovaza against the advice of their doctors due to clever TV marketing. That's now changed.

I also argued that having a cheaper competitor as a generic would severely hurt Vascepa. The problem with my thinking there is that Vascepa markets itself, with hard data to back it up, as a very different formulation than Lovaza. Perhaps saying cheap Lovaza affects the success of Vascepa is like saying cheap aspirin will hurt the sales of Vicodin. Does cheap generic aspirin affect the sales of Vicodin? Maybe a little, but they are two very different drugs.

Finally, the most important thing I missed (and it seems even most bulls have missed) is that Amarin's army of sales people aren't just making current sales of Vascepa. They are building a sleeping army of doctors ready to unleash its might when the ANCHOR approval comes. Amarin doesn't have to "sell" or convince a doctor twice. If the doctor is on board already before ANCHOR approval, he is likely on board after approval and ready to prescribe to his much greater numbers of "high" blood fat levels patients. Much of the work is already done for Amarin that is normally required after FDA approval. I'm throwing in the towel on being an Amarin bear.

Source: This Amarin Bear Is Throwing In The Towel