Seeking Alpha

Northwest Stock Maven

 
View as an RSS Feed
View Northwest Stock Maven's Comments BY TICKER:
Latest comments  |  Highest rated
  • Amarin: Management Is Acting Long Term, Which Makes It A Buy Now [View article]
    If anyone would understand what's involved in launching this particular stock, it's Amarin management. Many of them were senior management at Reliant, which also launched its Omega-3 product, Lovaza, prior to being bought out for $1.65 billion in 2007.

    A knee-jerk response to biotechs (e.g., ". People forget how much it costs to successfully launch a Primary Care product these days. You don't make money for years. This stock is way overrated." is accurate for the 'average' biotech--whatever that may be--but does not apply to Amarin when one analyzes its product, its management, its sales force, and its cash situation.

    However, even if I am totally wrong in my analysis, the power of Seeking Alpha is as a place where ideas can be vetted, argued, and where we can collectively gain a better understanding of our investments. If we don't write--and comment on articles--we all lose in the end. So thanks for commenting.
    Jan 7 04:25 PM | 10 Likes Like |Link to Comment
  • Forget Amarin: Buy Celsion For A Bigger Score [View article]
    Alex, your fundamental lack of due diligence leads to a misunderstanding of value, causing me to question any other assertions you make.

    In the article, you list six reasons why selling Amarin and buying Celsion makes sense right now:

    "(1) ...Although AMRN's market size isn't known yet, Vascepa's main competitor is a drug called Lovaza by GlaxoSmithKline (GSK). According to AMRN's 10K, the market size for Lovaza is $900 million in the US and $1.3 billion worldwide. This suggests the market for AMRN's Vascepa isn't very large. For example, if one took a ridiculously optimistic scenario and assumed AMRN would steal 80% of GSK's market share, the market size would at best be roughly the same size (of at least $1 billion) of CLSN's ThermoDox drug."
    You miss several key points here. First, Lovaza has some problems which Vascepa does not in the very high triglycerides target market (>500mg TGs), namely, Lovaza increases LDL profiles, which is a bad thing if you know anything about cardio risk factors. Vascepa is LDL-neutral. The probable market, though, is not just what Lovaza has captured--which itself is just a fraction of the very high TG patient population. Because of the downsides of Lovaza, its penetration is much shallower than is likely with Vascepa. But the larger market is the high TG (200-500mg TGs) market, which Vascepa is very, very likely to get approved for around February 2013. This population is 10 times the size of the VHTG group. There's more, but this gives readers a sampling of your lack of DD on point number 1.

    "(2) Despite the fact that the potential market size for both companies is similar (at best), their respective market caps are light years apart. AMRN trades for around a $1.5 billion market cap while CLSN trades for a far more humble $250 million. To put it in perspective, with CLSN trading at $7 and change, if its market cap were to merely equal AMRN's it would trade 500% higher over $35/share."
    While I think you meant 'at best' as a dig that maybe Vascepa's potential market is smaller than that for Thermadox, that pretty much got blown out opf the water in addressing your first reason, above. So, notwithstanding that Vascepa has a market potential of over 10 times that of Thermadox/Celsion, it also ignores the real risk of pre-approval products. There have been many, many cases where stage three findings came up short--they run the trials to be absolutely certain assumptions are borne out by real-world experience, kinda like elections. Mitt Romney and his pollsters knew he was going to win, or at least be competitive, but it turned out they made some fundamentally flawed assumptions, and they had a very nasty surprise election night. Vascepa is approved; Thermadox is not. There is a significant value bump for Amarin on that fact alone. I say that as someone who is sold on the prospects for Celsion, but who invests using analysis, not hopeful supposition.

    "(3) AMRN insiders have been selling their stock in the open market for quite a while now. Conversely, CLSN insiders have been buying their stock in the open market for a while now. While insider activity is no guarantee of future fundamental performance, I'd rather be betting on the same side as officers or directors of a company."
    You want to be an investor, you gotta dig a little more than this. AMRN officer sales were planned sales representing a small fraction of vested options. Many were held on behalf of early angel and VC investors, who have specific models for entry and exit that involve investing early,getting prospects to a good exit point, then selling off a significant stake, no matter what the prospects going forward. They do this because the returns they get from intelligent provision of early seed money gives returns that most of us dream of. The nedd to get that money back working for their intended purposes, and other investors, large and small, who play the current phase of Amarin and similar companies, step in. This is actually the point where retail investors who are good at analysis and diligence can ride along with the big boys. Others, not so knowledgable, may be thrown by poor analysis such as this article and bail precisely when they ought to hold or add.

    "(4) While AMRN has significant competition from the much bigger, experienced, well-capitalized GSK, CLSN's Thermodox has been described as a "...growing global unmet medical need in oncology, primary liver cancer. With a positive outcome, ThermoDox will become the most important 1st line therapy for patients with non-resectable disease." ... AMRN faces additional price competition when Lovaza becomes available as a generic by 2015 or sooner, warns AMRN's 10K. So not only does AMRN currently face competition from the brand name drug Lovaza, it will have to compete with the cheaper, generic copycat version of Lovaza when it becomes available."

    Here's the key point you glossed over: 'With a positive outcome...' With a positive outcome on my numbers guessing, I would have won the recent PowerBall jackpot...And you lack knowledge of Amarin's positioning with capital to caompete with Lovaza, particularly when it' peer-reviewed studies demonstrate to key audiences of cardio physicians the significant superiority of Vascepa versus Lovaza.

    "(5) AMRN has virtually zero shareholder equity while CLSN has over $13 million in equity. AMRN just announced this week its intention to tap yet another $100 million in debt. AMRN's balance sheet, based on the company's current cash burn rate and losses, is in the process of going from bad to worse. CLSN is well capitalized and not looking to raise money."
    Maybe you're someone who will put of fixing the roof with a rainstorm on the way, because it would require using credit, while you can pay cash if you wait six months. Of course, in six months a $500 job has grown to $5000, but hey, you saved $25 in interest expense...Amarin is judiciously using credit to move towards being cash-flow positive sooner rather than later. And btw, $13 is not a helluva lot of cash on hand. What matters is what your burn rate is, and when inflows will exceed outflows.

    "(6) AMRN has around 20 million shares short with many of them at a healthy profit and therefore under no pressure to cover. Conversely, CLSN shorts have been getting slaughtered considering the stock is up over 250% this year and hit a new 52 week high recently. At last count there were still over 5 million shares short in CLSN and a short interest ratio over 7, giving the potential for a short squeeze to take place for CLSN. "
    What a crock. Both stocks have a healthy short interest going on, meaning both are ripe for a squeeze if positive news hits. In both instances, shorts are betting that news or nerves will allow them to cover, and the volumes in CLSN suggest that most CLSN shorts established their positions during the recent runup, so theyt are not feeling a lot of pressure to close their positions, despite your wishing it was so.

    I am long both AMRN and CLSN, but am appalled at the lack opf thinking that went into this article. It would not encourage me to invest in or exit either equity on its own merits. Next time, dig a little more and put some thought into your analysis.
    Dec 11 03:33 AM | 5 Likes Like |Link to Comment
  • Amarin: A Physician's Perspective On Vascepa [View article]
    Pharmapro, you write suspiciously like some Pronova malcontents have in the past. You lose all credibility with these lines, back-to-back:

    "...You don't even know the most rudimentary basics here, so what is the point of writing this nonsense?

    Read Alex Heisenberg's articles instead for some reality based information..."

    While there are cautionary notes to counter some of the more ardent bulls' hubris--and DocRx repeatedly offers cautions in his article--suggesting that Heisenberg has a good grasp of reality does not bear up under even a cursory reading of his self-serving tripe.

    This is the guy who advised dumping Amarin and loading up on Celsion a few weks before CLSN crashed--and maintained his buy until the bitter end. That was followed with advocating for AFFY, again followed by a major crash-and-burn for his acolytes. So when he says AMRN is going to tank, well, it sounds pretty bullish to my ears, and your citing AH as an expert in 'reality based information' suggests your own grip on reality may be a tad weak...
    Feb 26 12:28 AM | 4 Likes Like |Link to Comment
  • The Price May Be Increasing For An Amarin Buyout [View article]
    Adam, I get that you don't like AMRN. I even think you have some valid criticisms of how management has communicated a variety of issues, which has impacted perceptions and share price, at least for the present. What I don't get is why you are so personally wrapped up in petty back-and-forth. And honestly, the whole 'chairs' discussion seems silly. Unless Joe Z was talking to three staffers, I doubt it mattered. Listening to the cc, it was clear there was a sizeable audience. Half-full, three fourths, maybe only one quarter of a big room--so what? I've been to packed presentations that sucked, that held no good information, and been at others where i was one of a dozen people who got great info, and those absent missed out. Hundreds of people listened to the podcast, live or later. The info was disseminated. What hapens with the roll out is key, not whether or not there were some empty seats.

    I've been a public figure; personal attacks go with the territory, warranted or not. But when you respond and add vitriol...well, it's been said that whenever mud is slung, it inevitably hits everyone.

    Write your columns, share your thoughts, engage in meaningful dialog about what the tea leaves portend--but you'll come out better in the long run if you act more professionally.

    Just a little unsolicited advice, worth every cent you paid for it.
    Jan 10 07:14 PM | 3 Likes Like |Link to Comment
  • The Price May Be Increasing For An Amarin Buyout [View article]
    YM, I am certain the FDA is getting significant pressure from interested parties (GSK, fibrate and niacin marketers, Mochida, Pronova) challenging whether or not Amarin has met the necessary requirements to obtain a particular patent. This is not unique to Amarin, but in this instance there are billions of dollars ate stake, so the attention and pressure is significantly heightened. Every step will be contested vigorously, and when a patent is granted, it is likely to be challenged in court.

    Fortunately for AMRN longs, the management team is experienced, and has obtained top-notch legal and scientific counsel to ensure that all i's have their jots and all t's their tiddles. At the 'Reasons for Allowance' stage, I believe the likelihood of moving on to 'Notice of Allowance' is 98-99%; from NOA to patent granting, its over 99%, and once the patent is granted, odds are infinitesimal, but still there, that the decision is overturned.

    These risks may seem like nothing, given the odds I've given, which I think are reasonably accurate. However, a 98% likelihood means one time out of 50, you fail (or succeed, if you are the challengers). With billions riding on the outcome, the effort is worthwhile for the challengers, and the risk, though small, is real for Amarin.
    Jan 10 04:04 PM | 3 Likes Like |Link to Comment
  • Amarin: Facts And Risk/Reward Suggests Current Pricing Is A Great Entry Point [View article]
    Thanks, Joe. I appreciate the good wishes, and note that skepticism is a good approach to the financial markets. I would encourage you to dig a bit deeper vis-a-vis AMRN, though; it's far from just fish oil. Diamonds are just carbon, too...
    Jan 3 04:43 AM | 3 Likes Like |Link to Comment
  • The Price May Be Increasing For An Amarin Buyout [View article]
    YM,
    JZ left Reliant in August 2007; the sale was completed in November.2007 Talks didn't just start in September, and Joe was COO at the time. And several other high-ranking Lovaza alums are on the Amarin team.

    This is, however, a test of patience. Knowing the facts is key to having appropriate confidence in one's investment, per Buffett.
    Feb 22 10:01 AM | 2 Likes Like |Link to Comment
  • Amarin: Management Is Acting Long Term, Which Makes It A Buy Now [View article]
    Listening to today's JPM Healthcare Conference presentation (webcast here shortly: http://bit.ly/V4GPUz) confirms my take on where AMRN is, and the value it currently offers.

    Reduce-It studies are key to opening an additional market of 70 million patients in the US alone, and has over 400 sites enrolled around the globe. Big opportunities, and a management team that's done it before, and is executing well here. Lot of emphasis on the issues Lovaza has, and how VASCEPA does not have the same problems.
    Jan 7 04:25 PM | 2 Likes Like |Link to Comment
  • The Price May Be Increasing For An Amarin Buyout [View article]
    Chunk, that YMB post is wishful thinking. I wish it was true; it would move things along in a hurry. Rather, the risks run along a continuum, and the therapies to deal with the risks are a complex mix of statins, Lovaza or Vascepa fish oil derivatives, fibrates, niacin, etc. Docs will go with what is familiar until they are educated that something else is better, or at least that what they are prescribing is not efficacious. The latter is causing both fibrates and niacin to lose favor, to the benefit of VASCEPA in the long run.
    Jan 30 12:30 AM | 1 Like Like |Link to Comment
  • The Price May Be Increasing For An Amarin Buyout [View article]
    I kind of like the symbolism of what an approval on the Ides of March would do to short positions, though I'm okay with an earlier approval...
    Jan 16 10:07 PM | 1 Like Like |Link to Comment
  • Amarin: Management Is Acting Long Term, Which Makes It A Buy Now [View article]
    Amarin bought out Laxdale to save the company (Amarin, that is), after a disastrous fall in the 1990s. Laxdale's founder (David Horrobin) was an intriguing combination of visionary and quack, but he recognized ahead of pretty much anyone else the role organic oils can play in addressing chronic health issues. Unfortunately, he was no scrupulous about following scientific protocols, and had a tendency to deny data which was at odds with his hypotheses.

    After Horrobin's death in 2003, Laxdale was sold to Amarin for its EPA-based drug, Miraxion. Miraxion showed some potential early in trials, but in the end failed in Phase III. However, its anti-inflammatory effects had broad potential value, if specific applications could be demonstrated. VASCEPA is essentially a variant on Miraxion, and a variant that is proving to be of value in some key cardio applications.

    Looks like that acquisition by Amarin could be brilliant.
    Jan 9 02:40 PM | 1 Like Like |Link to Comment
  • Amarin: Management Is Acting Long Term, Which Makes It A Buy Now [View article]
    FI,
    DSM is a supplier through its buyout of Ocean Nutrition Canada. "ONC is the world's largest supplier of Omega-3 EPA/DHA ingredients to dietary supplement and food manufacturing markets." http://bit.ly/U0KVL9

    Lovaza is in competition with VASCEPA, but is an imperfect substitute, and not allowed to compete in the largest patient populations due to significant negative impacts on LDL-C levels. As a result, the elasticity of demand for potential Lovaza patients deciding between Lovaza and VASCEPA is limited. I'd much rather be the company selling VASCEPA than the one selling Lovaza.

    I agree, Amarin is not competing with BASF; I think BASF bought Equateq as a strategic acquisition of a small company that owns important intellectual property in an area of growth opportunities, and that relates directly to the contracts with Amarin. Money may talk, but the law talks louder, and everyone in this game has enough money to protect their contracts. The fact that people keep suggesting abrogation of contracts as a viable business model has a whiff of desperation to it.
    Jan 8 09:26 AM | 1 Like Like |Link to Comment
  • Amarin: Management Is Acting Long Term, Which Makes It A Buy Now [View article]
    Pharmapro,
    I hope your PRON investment works out. As far as big versus small players, here's a listing of three suppliers of Omega-3 oils for Amarin and Lovaza (two fo Amarin's suppliers, and Pronova for Lovaza, to be clear), with their current enterprise values:

    Nisshin 2.3B
    Pronova .93 B
    DSM 10.35 B

    Notice which company has the lowest enterprise value?

    It will become increasingly clear this year that Lovaza and its generic equivalents are not fully competing with VASCEPA. In the US, at least, Lovaza is contraindicated for the high TG group--a much larger population than the very high tg group Lovaza and VASCEPA both compete in. VASCEPA has the larger market all to itself.

    In addition, it's just silly, and clearly demonstrates your bias, when you suggest that BASF will not honor Equateq contracts if pressured by 'the big boys.' Contracts wil be honored, just as Pronova contracts will be honored folowing the BASF acquisition, should it occur. By the way, I'm agnostic about that acquisition. I think it's a nice bump for shareholders, and gets Herkules out of a tough spot with a declining company, but beyond that, meh?

    You need better arguments.
    Jan 7 11:29 PM | 1 Like Like |Link to Comment
  • Amarin: Management Is Acting Long Term, Which Makes It A Buy Now [View article]
    PH, I'll try to address both your posts in one response. Taking the second first, Joe came to Reliant in 2005, and as this DailyFinance.com report indicates, "was at Reliant when the company was sold to GlaxoSmithKline (GSK) in 2007 for a hefty $1.65 billion." (http://aol.it/WpNdlf). The deal was set before Joe left Reliant.

    Regarding your first posts, you clearly either have no knowledge of patents, patent law, and the arsenal of patents Amarin has amassed to date to protect its VASCEPA franchise, or are choosing to be willfully ignorant. With eleven patents currently granted, or given Notice of Allowance--meaning unless some extraordinary new information occurs, the patent will be granted--Amarin has patents covering VASCEPA composition, method of use, and active ingredients.

    And your knowledge of sourcing seems skewed by your fondness for Pronova--which I expect will either be swallowed soon by BASF, or become inconsequential in the field. It's not just my opinion, the Pronova Board of Director's letter to shareholders on January 3, 2013, which urges acceptance of a buyout of Pronova by BASF, suggests much the same thing. And clearly you don't understand the value of multisourcing, avoiding capture by a single key ingredient maker. This is good management not only for purposes of avoiding challenging pricing negotiations with these entities, but also provides redundancy; in the event of a catastrophe which incapacitates production at one supplier, others can pick up the slack.

    I share this information not with any hope it will change your mind, but to clarify the situation, so folks unfamiliar with AMRN will not be overly confused by your misleading or inaccurate comments.
    Jan 7 10:44 PM | 1 Like Like |Link to Comment
  • Amarin: Facts And Risk/Reward Suggests Current Pricing Is A Great Entry Point [View article]
    Taking your points in the order you laid them out, here are my responses:
    Point one: “If a buyout @ ~$30 is such certainty, then the price would already be @ ~$28. This is the strongest signal an individual investor can get that institutional investors do not perceive such an event as a certainty. In order for a contrarian position to make sense (which is what a long position is), the investor should possess superior information. He should be confident that he knows something that the market does not. What is the nature of your proprietary information?”
    Market information is frequently imperfect, and even perfect information will yield differing responses from investors with different motivations, time horizons, and risk tolerances. For example, with Amarin, it’s a one-trick pony. If it fails, it is worth very little or nothing. A 90 percent chance of a $20 gain will not be worth it to some investors if it comes with a ten percent chance of a 100 percent loss. Indeed, there are few prudent investors who would ever risk everything on such a bet; to do so means you could end up totally broke. As a result of these facts, the price of AMRN today ought to be considerably less than $28 if it will have a 90 percent likelihood of being worth only $2 more in a year’s time. Additional value is subtracted for other reasons such as the impacts of short interest in driving down the price, the opacity of buyout negotiations, uncertainties about FDA NCE approval, outside concerns such as the fiscal cliff, etcetera. I would not argue the information I have is superior, but I am arguing that my analysis--based on the efficacy as proven in the MARINE data, the ANCHOR info to date, and the likelihood of positive REDUCE-IT outcomes—is a superior analysis to the cookie cutter analysis which has led to the, in my opinion, flawed valuation of AMRN.

    Point two: “Also, the salesforce's profile will look like this: 25 will be stars, 200 will be average/above average performers and 25 will be gone within a year. Hiring, training and deploying a sales organization and then launching a product is time consuming and a colossal amount of work. As such, it is imprudent to expect a rapid uptake by the market. This is why it will be so expensive. A slow launch (which is what this is going to be) is horrendously expensive because the major costs are on the back end. And don't forget that this a competitive environment. Do you expect the GSK sales organization to just sit passively aside and watch AMRN sweep in and convert all the Lovaza customers to Vascepa? Methinks not.”
    Oftentimes, I would agree with your off-the-cuff estimation, but for a couple of key reasons, in this instance I do not. Many firms have recently undergone deep layoffs of precisely the type of personnel Amarin is seeking to hire; most recently Pfizer. And the management team at Amarin has performed this type of operation before, with Lovaza at Reliant. There is no true therapeutic equivalent to Vascepa; Lovaza is a poor substitute. No one knows Lovaza better than the team that created it, and has now created a better alternative. While I am sure that Lovaza sales people will do tghier best, and win some skirmishes with individual doctors, doctors will want to prescribe the more efficacious and more easily tolerated therapy. The clinical data are clear; Vascepa is strongly superior. The uptake curve will be steep, once it gets going.

    Point three: “My impression of most of the AMRN articles and comments is that most of the authors and commenters are allowing their hopes of winning a big jackpot to cloud their judgment. Psychologists call this a confirmation bias. A strong desire for a particular outcome manifests itself in minimizing and/or ignoring information that does not support the desired event. In investing/trading, this is dangerous. I perceive that most AMRN longs are gambling, not investing or trading. There is nothing intrinsically wrong with this, though, as long as the investor is truthful with himself.”
    I see lots of confirmation bias in any equity message board, and certainly there is plenty to ga around among AMRN shareholders, including some authors at Seeking Alpha. By the same token, naysayers are equally vulnerable to confirmation bias. Where facts are at odds with my understanding of AMRN’s prospects, I welcome their introduction. We all learn when our biases are tested.

    Point four: “On a final note, your comment about NCE will protect AMRN from patent litigation for 5 years is news to me. NCE status, as I understand it, means that the FDA will not clear a competing product for 5 years. It has nothing to do with patent litigation per se. Generic competitors usually file suits quickly post-approval in order to get to the head of the line if and when they can market their own versions. Patent challenge suits usually take ~3 years so this is why they act quickly. Sans NCE, the FDA will not clear a competing product for 3 years. Maybe NCE makes it more difficult to challenge a patent. I don't know this for sure. A patent challenge is based on the details of the patent, not NCE status.”
    I could have been clearer, but the FDA does have some protective patent oversight which is relevent here. Under FDA rules, NDA petitioners are required to list all relevant patents to the NDA which patent any of the following:
    – Active ingredient (drug substance)
    – Formulation or composition (drug product)
    – Method of approved use
    Those patents are listed in the Orange Book, along with NCE status. If a product is approved for NCE designation, generic competitors are not allowed to file an ANDA for five years which infringes on any of the listed patents. The Hatch-Waxman Act provides for a transfer of patent enforcement from patent owners to FDA. Hatch Waxman directs the FDA to refrain from approving ANDAs during the patent term, excluding generic competitors until the patents listed in the Orange Book expire. This obviates
    the need for litigation by the patent holders; the FDA addresses the issue through blocking firms which seek to enter the market by upholding the rights of patent holders listed in the Orange Book against infringing ANDA filings.
    Jan 3 04:17 AM | 1 Like Like |Link to Comment
COMMENTS STATS
37 Comments
40 Likes