Friday's BioPharma Watch List: Amarin's Vascepa Approval - What This Now Means

by: StockMatusow

Amarin (AMRN) said shortly before 6 p.m. yesterday that the FDA has approved its drug Vascepa for the treatment of people with high levels of triglycerides.

So what will this mean for the stock price today? The last reported trade on Amarin before the stock was halted from trading yesterday was $15.31. Amarin's official last trade reported was $15.11, but this was a cancelled trade from earlier in the session according to

Vascepa will now compete against a similar prescription-grade fish oil pill marketed by GlaxoSmithKline (NYSE:GSK) known as Lovaza, which generates about $1 billion in annual sales.

Amarin is still waiting to hear whether Vascepa will be granted New Chemical Entity status (NCE), giving it a five-year window of exclusivity versus just three years of new product exclusivity. The company should hear news on this by the middle of next month. I see no reason why the drug will not receive NCE status. Lovazza is a similar formulation and was granted NCE status, so I expect the same with Vascepa.

Vascepa will also contain on its label Apolipoprotein B (apoB), which gives it further differentiation from Lovaza and potentially more patent protection.

ApoB is an important structural component of low-density lipoprotein cholesterol (LDL-C) and plays a key role in LDL-C transport and removal. Reduction in apoB synthesis is expected to reduce circulating LDL-C, a proven risk factor of cardiovascular disease. In the present study, we describe the outcome of the first-in-humans study on the safety and efficacy of an antisense oligonucleotide inhibitor of apoB.

Joseph Zakrzewski, Chairman and CEO of Amarin stated upon approval of Vascepa;

FDA approval of Vascepa represents the introduction of an important new treatment option for patients with severe hypertriglyceridemia. In Amarin's MARINE clinical trial, Vascepa demonstrated a statistically significant placebo-adjusted reduction in levels of triglycerides without elevation in levels of LDL-C, commonly referred to as 'bad cholesterol,'" stated . Amarin continues to anticipate commercial launch of Vascepa early in the first quarter of 2013, and we continue to consider three potential paths for the marketing and sale of the product: an acquisition of Amarin, a strategic collaboration, or self-commercialization, the latter of which could include third-party support. We are now focused on continued commercial preparations for Vascepa which includes, but is not limited to, finalizing the introduction of Vascepa to managed care plans to gain formulary access, building-up inventory levels and coordinating other pre-launch marketing activities.

Because the CEO has stated numerous times in the past that Amarin was interested in being acquired, I believe that in fact, the company will end up being acquired by Pfizer (PFE) for a price of $23 to $25 a share.

I am still playing Obagi (NASDAQ:OMPI) for its buyout potential which I think could happen as soon as this Monday, and for what I believe will be earnings that beat the street. Last quarter, Obagi did $119M in revenues, but missed on earnings. This was likely caused by the state of Texas placing a ban on most of its products going back to last year. On May 29th, Texas lifted the ban. Finished goods have been up the last 2 quarters because these were products waiting to be shipped to the state in anticipation of the ban being lifted. Texas sales make up 9% of Obagi's revenues, so having Texas back on line for Obagi should give both revenues and margins a boost, with finished goods inventory likely seeing a decline. I will not get into the buyout rumors anymore in my articles here on Seeking Alpha. It is up to the smarter money out there to do the intensive due diligence to see if any rumors concerning an Obagi acquisition hold water.

pSivida Corp. (NASDAQ:PSDV) announced yesterday that the Federal Ministry of Health of Germany (Bundesministerium fur Gesundheit, BfArM) has granted marketing authorization to ILUVIEN for the treatment of vision impairment associated with chronic diabetic macular edema (DME) considered insufficiently responsive to available therapies.

This marketing authorization follows the completion of the Decentralized Regulatory Procedure (DCP) in the European Union (EU), in which the Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom, serving as the Reference Member State (RMS), delivered a positive outcome for ILUVIEN along with six Concerned Members States (CMS), specifically Austria, France, Germany, Italy, Portugal and Spain. The German authorization is the fifth national approval in the EU, preceded by Austria, Portugal, the U.K. and France.

Last week, the company announced that the FDA cleared its experimental eye insert to skip initial studies and proceed directly to late-stage trials. The product is a sustained-release device which is injected into the back of the eye and aims to treat posterior uveitis, an inflammatory disease of one of the layers of the eye.

The condition is the third largest cause of blindness in the United States.

pSivida is one of the most undervalued small cap companies I have ever seen. I wrote an article back in April of this year where I interviewed the company CEO, Dr. Paul Ashton. I was very impressed with Dr. Ashton and what he has accomplished with pSivida since taking over the reins of the company. He single handily wiped off $40M in toxic debt off the books--left over from prior management. This is the type of management I look for in a small cap biopharma. I strongly feel this company will be a long term winner and I feel the company's leap to phase III with its back of the eye treatment is a lot bigger news than the market realizes.

Shares Outstanding: 20.80M
Float: 18.39M
Market Cap: 49.72M
Click to enlarge

In my opinion, the company is worth more than $50M dollars. pSividia has a royalty agreement with Alimera (NASDAQ:ALIM) for its Illuvien product in which the company receives 20% of the net sales on a country by country basis, and 33% of any royalty deal Alimera might make with a partner in any one of these countries--per country.

pSividia also has an agreement with Pfizer, who owns 10% of pSividia shares. Investors might want to dig deeper into the exact details of this agreement. I speculate that Pfizer owns its position in pSividia for the purpose of buying the company sometime in the future.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Family holds PSDV and OMPI stock.

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