No sooner do I get done writing my last article detailing why I wouldn't necessarily follow Amarin's (AMRN) CEO by buying shares on the open market, than Amarin updates shareholders with two pieces of news - both of which I have commentary on.
Interestingly enough, the first news was deemed good enough by Amarin to put out at 6AM pre-market on a Monday, and of the two news items, could arguably mean the less of the two.
On Monday morning, Amarin made the announcement of two more patents that the company has added to its portfolio for Vascepa. The press release read:
Amarin Corporation plc , a biopharmaceutical company focused on the commercialization and development of therapeutics to improve cardiovascular health, announced today that the United States Patent and Trademark Office (USPTO) has published notification of a Notices of Allowance for Amarin's U.S. Patent Applications Serial Numbers 13/685,281, and 13/685,291, each titled "Stable Pharmaceutical Composition and Methods of Using Same." The claims in these allowed applications cover methods of lowering triglycerides by administering a pharmaceutical composition comprised of a mixture of free fatty acids, including EPA (EPAZ) and/or DHA to varying degrees, to patients with severe hypertriglyceridemia (the MARINE population) and in patients with hypertriglyceridemia on concomitant statin therapy (the ANCHOR population). A Notice of Allowance is issued after the USPTO makes a determination that a patent can be granted from an application. The issued patents would have terms that expire no earlier than in 2030.
These applications are part of an expanding patent portfolio for Amarin with 38 patent applications now either issued or allowed with the USPTO and over 30 additional applications pending in the United States.
As the stock barged forward during the day to the tune of 8%, I found myself wondering what, exactly, the big deal is. The PR itself says that this is part of a portfolio of 38 patents. I know, from covering Vascepa, that the patent portfolio has been extensive all along. It's great that Amarin has a lockdown on the patents, but what does that mean now?
The only problem is that increasing the patent portfolio doesn't do anything for Amarin or its investors right now. It's not bad news, per se, but it sure isn't good enough to be catalyzing an 8% bull run on the stock. Towards the end of the day, Mr. Market seemed to figure this out - Amarin actually wound up closing down $0.05 for the day.
Again, it's great news that Amarin has an enormous patent portfolio for Vascepa, but that doesn't help Amarin at the stage they're at now. In other words, they may have the cart in front of the horse a bit. A patent portfolio like this would be a great selling point for a buyout or great protection for an increased patient population - neither of which are on the table for Amarin right now.
Before I could digest the trading related to the "no-news" news, the market had closed, and Amarin filed an 8-K, sans press release, announcing a new compensatory arrangement for certain officers of the company. The Board of Directors had approved a "special incentive bonus program " for several of the executives of the company:
Under the program, each of these executive officers will be eligible to receive a one-time, special bonus payment in the amount of: (I) $250,000, in the event the Company's sNDA for the ANCHOR indication is approved by the FDA on or before June 30, 2014; or (ii) $150,000, in the event the FDA approves the inclusion of the clinical data from the Company's ANCHOR Phase III clinical trial in the Vascepa label for the current (MARINE) indication on or before June 30, 2014; or (III) $150,000, in the event the Company successfully secures a declaratory judgment from a court of competent jurisdiction on or before June 30, 2014 confirming the Company's ability to inform physicians of the clinical data from the Company's ANCHOR Phase III clinical trial notwithstanding an FDA failure to approve the Company's sNDA for the ANCHOR indication by such date. All determinations concerning the above referenced criteria for payment will be made by the Company in its sole discretion.
While I don't take issue with the amount of the bonuses, this leaves me with a couple questions.
1. What are the odds of any of these three items actually occurring? They seem extremely slim. Are we looking at dangling a carrot on a mile long string here? And for what purpose?
2. Why would you file this after the bell, as only an 8-K? To the best of my knowledge, this hadn't been pre-announced to shareholders. So, from a market strategy perspective, if they're doing it to show shareholders they're still working at it, where's the PR? Furthermore, if it's to be construed as positive news for the company, why after the bell?
3. Why wouldn't you put a bonus program in place that would reward company profitability as a whole? Does Amarin still not acknowledge that at this point that's the best route for the company to go, while finishing REDUCE-IT?
Regardless, the 8-K concludes by stating that Amarin's CEO is not eligible for the program. An honorable move for a man that is also buying shares on the open market? Showing that he's a man of the people? Not quite. I don't have any personal beef with Joe Z., but as I pointed out in my last article, one needs to remember that upon Vascepa's FDA approval, when the whole retail world was just starting to believe a buyout was imminent, Amarin's CEO was one of the ones selling shares into the open market. Amarin has already made him a millionaire many times over, so abstaining from this bonus program isn't exactly "falling on his sword" for the shareholders.
Again, I continue to feel that Amarin remains an extremely speculative buy at this point. With waning prescription data, unlikely approval of ANCHOR and its focus not 100% on profitability, the company could be stuck in quicksand for the time being.
Best of luck to all investors.