On May 16, 2012, Amarin Corp (NASDAQ:AMRN) submitted its "Response to Non-Final Office Action Dated March 2, 2012" to the United States Patent and Trademark Office. The information submitted was in regard to patent number 12/702,889. A response was also submitted for patent number 13/282,145 regarding a "Non-Final Office Action Dated February 23, 2012." As patent information is often confusing and inaccurately disseminated, I will attempt to distill the information Amarin submitted to the USPTO in hopes of clarifying this for readers. I will be primarily commenting on the 12/702,889 patent, as it has been the focus for investors over the past few months. You can read about AMRN in my previous article to gain background on the company.
- Amarin '889 Patent Background
The '889 patent looks to extend AMR101's exclusivity to 2030 and governs the application of highly purified EPA to lower triglycerides and Apolipoprotein B in the range from 500 to 2000 mg/dL. Amarin has received Non Final Rejections for the patent, submitted appeals, and recycled this process. Investors hope that this process is coming to its conclusion. The previous USPTO examiner stated that previous studies using highly purified EPA showed effectiveness from the 50 - 533 mg/dL range, which created a prima facie case of obviousness. In other words, the examiner argued that because previous data covered very similar TG levels, this would have prompted a person of ordinary skill in the relevant field to conclude that E-EPA would do the same for Amarin's target population of 500 - 2000 mg/dL. On May 1, 2012, Amarin had met with the supervisor of the current examiner at the USPTO. The recently submitted amendments are addressed to this supervisor and it seems as though he has taken over this case.
- Breakdown of Submitted Materials
Amarin submitted 90 pages to the USPTO - a link to download this in a simple condensed file is provided from my dropbox. I will attempt to break this down into a few paragraphs.
The first change that stands out is in Claim No. 1. It appears as though Amarin has removed the triglyceride lowering indication from its patent completely. This is not really the case, as claims No. 7 and No. 9 both include TG lowering. However, because TG lowering was removed from claim 1, it appears no longer directly linked to the 500 mg/dL to 2000 mg/dL TG target range in this patent alone; hint: this is where patent 13/282,145 comes into play. Patent 13/282,145 still includes the TG lowering effect in its primary claim No. 1 covered by the very high triglyceride range. Amarin appears to be slightly breaking up different sections of their patent application as to slowly get the drug covered for as many indications as possible. As the company has stated, there are over 16 patents outstanding, and '145 may be the next critical one in line for approval after '889.
Interestingly, it seems as though Amarin is now focusing heavily on the lowering of Apolipoprotein B (Apo B) without substantially increasing LDL-C in patients with TG levels between 500 and 2000 mg/dL. Other indications have been completely removed from the patent application so this has been narrowed significantly. I view this as a positive move for Amarin as nearly all previous literature that has been referenced by the USPTO has targeted the lowering of TGs within the 500-2000mg/dL range as being "obvious." This backs the USPTO into a smaller corner, as Apo B lowering is sparsely documented in anything the USPTO has brought to light so far. Three specific studies by Connor, Fisher and Park have been used in the past, and the Amarin amendment attempts to address these specifically.
In the previous Non-Final Rejection letter that Amarin received, on page 10 the USPTO stated:
Combined with the paragraph preceding this screenshot, in layman's terms, the USPTO determined that due to the specific wording of the patent document, the indication for reduction in Apolipoprotein B was not to be given any weight. Without getting into the technicality of it all, Amarin had to change "wherein" to "effect a reduction in" in regards to Apo B reduction to get a "functionality" patent versus a patent protecting the composition or ingredients of its product. This is based off historical legal proceedings and the wording should now allow Apo B reduction to stand up to be a patentable limitation based on another court case - Astrazeneca AB vs. Dr. Reddy's Laboratories, Ltd. If all of this seems a bit silly, well you can thank our convoluted system of law for that.
- Overlap of triglyceride Levels
A large portion of the patent amendment delves into the USPTO complaint of "overlapping" or "close ranges," perhaps the single biggest factor holding the patent back from being approved. The USPTO utilizes two primary sources to establish that when claimed ranges and prior art (previously published) ranges either overlap slightly or do not overlap but are "close enough that one skilled in the art would have expected them to have the same properties," a prima facie case of obviousness exists. Amarin employs three individuals to refute USPTO claims - Dr. Lavin, Dr. Weintraub, and Dr. Bays.
Two studies done by Hayashi and Okumura, studies heavily cited by the USPTO to determine overlap, are statistically refuted by the aforementioned doctors. Dr. Lavin concluded:
"That it was unlikely that even one individual in Hayashi or Okumura had an initial baseline triglyceride level above 400 mg/dL."
Okumura states that subjects had TGs between 150 and 500 mg/dL, or in other words, greater than 150 and less than 500 mg/dL. Hayashi states that subjects had TGs "up to 533 mg/dL." Dr. Lavin expects the likelihood of the study containing a subject with a starting TG value of >500mg/dL to be less than 0.015%.
This brings up the statistical analysis performed by Dr. Lavin. In his official declaration (page 43 of my download link), he states the following:
The actual analysis is shown here:
To understand the jumbled table of numbers, one must focus on the "EN>UB" column. In table 1, referring to the Hayashi study, the likelihood of a patient having greater than 450mg/dL TGs is 3%, greater than 500mg/dL .015%, and greater that 550mg/dL .00792%. In table 2, referring to the Okumura study, the likelihood of a patient having greater than 450mg/dL TGs is 0.25%, greater than 500mg/dL .006%, and greater that 550mg/dL .002%.
The conclusion here is that, with a high degree of confidence, there was no actual overlap between Okumura/Hayashi indication patients and Amarin's MARINE patients.
- Expectation of Similar Properties or Success
In a study performed by Katayama - again based on a drug nearly identical to AMR101 - subjects displayed baseline TG levels of 226.7 mg/dL. The USPTO believes that this study, along with Okumura and Hayashi, provides evidence that EPA given to patients with >500mg/dL TGs would have the same effect as on those with less than 500 mg/dL. In Dr. Weintraub's expert opinion, (you will see why I emphasize expert in a moment) the two ranges are materially different and as a medical expert, Dr. Weintraub expected that these different patient populations would have very different responses to triglyceride lowering therapy.
Not only this, but an increase in LDL-C levels was actually expected to occur as Dr. Weintraub states here with support from Dr. Bays:
In addition, Amarin "respectfully" requests that the USPTO cannot just conclude that using EPA at higher TGs will produce some/any benefit. There must be a "reasonable expectation of achieving a claimed invention including all limitations." After all, who's to say that based on previous studies alone it would not be reasonable to just conclude that TG lowering would be 5% in very high TG patients versus the 25%+ AMR101 provides? It is not reasonable, and to this Amarin has a great point.
Concerning claims of successful reductions in Apo B, Amarin cites three studies by Park, Connor, and Fisher. Dr. Bays refutes all three studies. In the study completed by Park using combination EPA and DHA, no statistically significant reduction in Apo B levels occurred - thus demonstrating that one would expect AMR101 to have no effect on Apo B levels (which has been proven untrue). The Connor study did display significant reductions in Apo B levels, but salmon oil was used, which contains less than 10% EPA, and only 20% were omega-3 fatty acids - so these results cannot be extrapolated to AMR101. Finally, the study completed by Fisher involved an in vitro process utilizing liver cells. As Dr. Bays declares,
"In my opinion, no conclusions can be drawn from the in vitro Fisher study regarding the effects of E-EPA on Apo B … A person trained in endocrinology and lipid disorders would not have known, for example, how the in vitro effects of EPA on sacrificed rat liver cells would affect Apo B levels in intact, living rats having other function organs integral to lipid metabolism."
Because of this evidence, no reasonable expectation of successfully achieving the claimed invention can be made, another strong conclusion by Amarin in my opinion.
- Further Arguments
One of the most entertaining paragraphs of the amendment - and the reason I emphasized the word "expert" before:
It seems as though Amarin is specifically calling out their previous examiner for not looking at the objectively evidence and instead forming his own opinion without being an expert in the field. The fact that the supervisor is now in charge is a great sign.
- Final Thoughts
As for the patent issues, with the new reviewer, significant edits, and narrowed focus, I continue to believe '889 will be approved. Based on previous turnaround of ~50 days on average, I would expect the next decision to be made between July 1 and July 10 (leaning more on the latter due to July 4th holiday). This will provide prime momentum going into the PDUFA.
With Amarin's closing price of $10.44 today, many are wondering what other problems plague the company? Until these patent issues are out of the way, Amarin will be a very volatile stock. Its PDUFA is July 26, but some are speculating it may get an extension. While I detailed in my previous article why that should not matter, people are still nervous. In my opinion, recent price action is due to Amarin's correlation with the broad market when there is no catalyst affecting it, as seen here:
I personally have had $10.50 marked as my entry point in the company, and will make that entry and average down if necessary after I liquidate some of my positions later next week, primarily in Celldex (NASDAQ:CLDX). Good luck to all.