It was recently announced that Amarin Corporation (NASDAQ:AMRN) received marketing exclusivity for 3 years for its drug, Vascepa. Amarin was looking for marketing exclusivity of five years for its drug, and the company had been patient as the process took a considerable time. The delay in the decision for the marketing exclusivity has caused the stock price to fall by more than 77% over the last twelve months. The company had bet heavily on receiving marketing exclusivity of five years for Vascepa, and the decision to grant marketing exclusivity of three years to the drug is not going to impress the company or the market.
Impact of the Decision
As I mentioned above, marketing exclusivity for three yeas is not going to impress the company or the market. Vascepa has been approved in the U.S. as an adjunct to diet for reducing triglyceride levels in adults suffering from severe hypertriglyceridemia (triglyceride ≥ 500mg/dL). This condition is called MARINE indication. The argument here is that Vascepa is not a New Chemical Entity (NCE), so it should not be granted marketing exclusivity for five years. The generic manufacturers can argue that the drug is made from the fish oil and it can not be categorized as a New Chemical Entity and they have the right to manufacture it.
On the other hand, Amarin has been pushing hard for marketing exclusivity of five years saying that the drug is unique and the company should be allowed to market its drug with exclusivity. However, FDA is not satisfied with the evidence provided by the company, and the agency has decided to allow a shorter period of exclusivity for the drug - three years of marketing exclusivity comes with the New Product (NP) category. According to the marketing exclusivity decision, the company will be able to market the drug without competition from generic manufacturers till July 25, 2015, plus a 30-month that may be triggered if any other company applies for Abbreviated New Drug Application.
Moreover, the company is looking to expand the label of the drug with ANCHOR indication - the company is trying to receive approval for Vascepa to be used as an adjunct to diet for treating adults with high triglyceride levels (≥200 mg/dL and CHD), or a CHD risk equivalent. If the company receives approval, it will certainly increase the market size for the drug and will result in higher sales. At the moment, the sales for the first three quarters have been poor - the company reported $16.2 million in sales for the first nine months at the end of September. The full year sales are expected to remain in the region of $25 million.
Threat of Generic Manufacturers
Amarin will certainly sue any generic manufacturer as the company believes its patent portfolio gives its drug protection from the generic manufacturers well beyond the marketing exclusivity granted by the FDA. Keeping in mind the poor sales of Vascepa, Amarin may not see a challenge from the generic manufacturers. The company holds 40 issued and allowed patents for its drug Vascepa which protects the company from generic drug manufacturers till 2030. The patents portfolio of the company is very strong and it may be able to deal with the challenges from generic manufacturers in the future. However, the generic manufacturers usually target a drug with high volume of sales - at the moment, Vascepa sales are too small for the generic manufacturers to go through all the trouble to receive approval to manufacture the drug.
At the moment, the company should focus on marketing its drug better and receiving approval for the ANCHOR indication, which will considerably increase the target market for the company. If the company is unable to receive approval for ANCHOR condition, then the target market will be extremely restricted and Amarin's ability to grow its sales will be limited. As a result, the stock will continue to linger, in my opinion. At the current sales levels, Amarin should not be worried about the challenge from generic manufacturers, instead it should be worried about the limited target market.
At the moment, nothing suggests that the stock is ready to make a recovery in the short-term. In fact, almost all of the news has been negative for the company. Amarin had pinned its hopes on receiving five years of marketing exclusivity, and that decision has also gone against the company. As I mentioned above, the company should focus on better marketing of the drug - the decision about the ANCHOR indication will be important for the company. If Amarin fails to receive approval for ANCHOR condition,the growth opportunity will be severely affected for the company.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. IAEResearch is not a registered investment advisor or broker/dealer. This article was written by an analyst at IAEResearch and represents his/her personal opinion about the companies mentioned in the article. The article is for informational purposes only and it should not be taken as an investment advice. Investors are encouraged to conduct their own due diligence before making an investment decision. I am not receiving any compensation (other than from Seeking Alpha) for this article, and have no relationship with the companies mentioned in the article.