Investors in Amarin Corporation (NASDAQ:AMRN) are once again anticipating news on Vascepa's new chemical entity (NCE) status. The FDA's August update to the Orange Book comes out on Friday September 14th. In a previous article published just before last month's orange book update, we wrote about how the NCE status is not likely to matter one way or another in terms of long term marketing potential of Vascepa. In this article we outline reasons why the NCE issue might still not be cleared up during this month's orange book update.
When the July orange book update came out, Vascepa was listed, and the listing cited AMRN's patent number 8,188,146 which is entitled "Highly Purified Ethly EPA and Other EPA Derivatives". The orange book database had no information regarding exclusivity status since the FDA had not finalized it's determination.
Since the August 17th orange book update, AMRN has announced that it has received Notification of Patent Allowance from the US Patent and Trademark Office for several patent applications as outlined below:
|Application Number||Title||Allowance Date|
|12/702,889||Methods of Treating Hypertriglyceridemia||9/6/12|
|13/282,145||Methods of Treating Hypertriglyceridemia||9/5/12|
|13/349,153||Methods of Treating Hypertriglyceridemia||9/6/12|
|13/284,408||Methods of Treating Hypertriglyceridemia||9/7/12|
|12/769,885||Stable Pharmaceutical Composition and Methods of Using the Same||7/3/12|
The '889 patent is the method patent that covers the approved indication for Vascepa based on the MARINE trial results. The '145 '153 and '408 patents are all continuation patents based on the '889 patent. The '885 patent is the composition of matter patent for a >95% Ethly-EPA formulation.
Notice of Allowance means that the USPTO has finished their patent examination and the patent will be issued; however, there are several steps between this notice and the final issuance of the patent. These steps involve paying the required fees, having the patent application go through final data capture, and then formal issuance and recording of the grant of patent. There can sometimes be a several week gap between the notice of allowance and the actual issuance of the patent.
No New Vascepa Patents in Upcoming Orange Book Update
In order for FDA to record new patent information in the orange book, the drug sponsor must submit FDA form 3542 which relies on details from the issued patent including, among other things, the patent number and patent issuance and expiration dates. Based on the information above, it is unlikely that any of the patents from the table will be reflected in the August orange book update because most of them will not actually be issued prior to 9/14.
When a patent application has been sent to final data capture, the patent number is assigned and the notice of patent issuance is typically sent out within about 10 days. The '885 patent was sent to final data capture on September 7th; therefore, this patent is likely to be the first of the above-listed patents that AMRN will file with the FDA.
If AMRN's last issued patent is any guide, there was a 7-day gap between patent number 8,188,146 being sent for final data capture, and the patent issuance letter being sent. Thus, it is reasonable to expect that the '885 patent will be issued sometime this week, possibly on Friday 9/14.
Effect on NCE Decision
It is unclear exactly what the FDA's NCE decision hinges upon; however, if the NCE decision was not dependent upon further changes in Vascepa's patent situation, the decision could have been made before the last orange book update on August 17th. The 8,188,146 patent issued on May 9th and was likely submitted to the FDA shortly thereafter. FDA had this patent information in-hand for over one month by the time Vascepa was approved on July 26th.
One reasonable scenario is that FDA may be awaiting AMRN having a composition of matter and/or method of use patent other than patent number 8,188,146 before making a final NCE determination.
On June 15th, when AMRN management met with the FDA, the '885 patent had received a "final rejection" and AMRN had amended the patent application for re-consideration. The amended application received reasons for allowance on June 22. Furthermore, the '889 patent covering methods of use received reasons for allowance on June 26th. Thus, it is possible that the June 15th meeting centered on the fact that AMRN management, based on discussions with the patent office, had good reason to believe that the '885 or '889 patents would eventually be issued.
If FDA is indeed awaiting additional patent information for Vascepa before making a final determination on NCE status, then the only way that the next orange book update will contain this information is if: the '885 patent issues by Thursday 9/13, AMRN immediately submits FDA form 3542 and the orange book staff processes this information within 24 hours. Barring this series of events, the '885 application's patent will not appear in the orange book prior to the next update.
Only the FDA knows exactly why it has not yet made it's decision on NCE status. Between the last orange book update and now Vascepa's patent situation has moved forward but none of the recent developments are at a stage where FDA can officially consider them. Therefore, it is quite possible that the August update to the orange book could leave the Vascepa NCE status unresolved.
In our last article, we recommended that investors who wish to acquire AMRN due to a potential buyout or partnership as the go-forward plan should begin scaling in to a position. At the time of this recommendation, AMRN was trading at $12.20. Since then the stock has gained 21% due to the positive patent news and anticipation of the next orange book update. Investors already holding the stock should feel comfortable continuing to hold while recognizing that if the scenario we outline above takes place, the stock could potentially revisit the $12 level as investors become disappointed with the lack of NCE news this Friday.
We expect AMRN to continue to run in the coming week, possibly revisiting its post-approval highs. Should NCE status be granted in this week's orange book update, AMRN will head higher, possibly after a brief sell-the-news consolidation, as buyout speculation heats up once again.
Investors who are still on the sidelines may find another buying opportunity if the NCE status remains unclear after Friday's orange book update, but scaling in now, ahead of Friday's update is still recommended since the exact driver of NCE status determination for Vascepa is unclear at this time.