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Andrew Colburn
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I studied Political Science at Edinboro University with an interest in international relations (particularly China). My first year of investing (2012) I managed 280% growth.
  • Amarin's AdCom: Two Fish With One Hook 10 comments
    Jul 1, 2013 11:43 AM | about stocks: AMRN

    As outlined by CFO and President John Thero during the Jefferies 2013 Global Healthcare Conference, Amarin (NASDAQ:AMRN) will be going before an Advisory Committee (AdCom). Slated for October 16th, the AdCom will convene to review an expansion on Vascepa's current label to include the much larger Anchor indication (Triglycerides >200mg/dL and <500 mg/dL). While management expected this, bears like to paint a much narrower and sinister view to the reason Amarin will be going to before the AdCom. In the following I will lay out why the AdCom is overwhelmingly positive for two reasons while knocking down a bear thesis or two in the process.

    Bears like Adam Feuerstein wrap their thesis in a blanket of warm nothingness hoping it reaches beyond the void. So what are Adam Feuerstein's arguments for a negative AdCom review leading to a rejection of the Anchor indication?

    Feuerstein writes: I tend to believe FDA is convening this panel because it's wary of expanding Vascepa's use without definitive proof that fish oil reduces the risk of heart attack, strokes and other cardiovascular events.

    Vascepa will be first in class targeting the Anchor indication. As with all first in class drugs this must go before an AdCom. It explicitly states this in the FDA Fact Sheet:

    The guidance also proposes that, for all first-of-a-kind or first-in-class products for human use, FDA either refer the product to an advisory committee or provide in the action letter for that product a summary of the reasons why it did not refer the product to an advisory committee before approval.

    Since there has been no letter for Vascepa detailing the summary of reasons why it will not go before an AdCom (obviously), the REAL reason they have to go before an AdCom is because they are first in class. This is not up for debate. This is an indisputable fact.

    Feuerstein continues: I expect many of the experts, most notably the cardiologists, sitting on the Oct. 16 FDA panel will want to see Reduce-It trial data before agreeing to expand Vascepa's use. Too many large studies of fish-oil have failed recently to show any significant cardiovascular benefit for patients

    Feuerstein is right; the cardiologists would probably like to see the Reduce-It trial data before agreeing to expand Vascepa's use. However, under the new Performance Goals and Procedures for 2013 through 2017 the FDA cannot alter what was agreed to under the Special Protocol Assessment (NYSE:SPA) Agreements. It states the following:

    The fundamental agreement here is that having agreed to the design, execution, and analyses proposed in protocols reviewed under this process, the Agency will not later alter its perspective on the issues of design, execution, or analyses unless public health concerns unrecognized at the time of protocol assessment under this process are evident.

    What are the health concerns related to Vascepa? None. Side effect wise it is comparable to placebo in clinical data and thus far on the market. What are the health benefits of Vascepa? An arms length list of lowered biomarkers that signal the Reduce-It trial will be a success. It's a rather simple decision to make.

    Additionally, as previously shown in my last article: Amarin Investors Should Avoid The Bear Traps, the bears' well touted Dr. Eric Tropol had this to say about the latest OTC fish-oil study from the NEJM: These patients were not enrolled on the basis of significant hypertriglyceridemia. It remains to be seen if such patients are studied and treated with effective doses of fish oil whether a protective effect-and subsequent reduction of cardiovascular events-could be demonstrated. This is a scenario, which could be plausible.

    So again, enough of the one to one comparisons of Vascepa to this study or to all the recent OTC fish-oil studies, the arguments are dull, off base, and just plain wrong. The dosing is not in the same ballpark.

    Feuerstein states: Before today, Amarin bulls had insisted FDA would approve Vascepa for the Anchor indication because the application and the Reduce-It study are covered under a Special Protocol Assessment agreement. That argument no longer holds water.

    With the SPA agreement met (an enrollment requirement for the Anchor sNDA submission) it seems the argument in this matter that no longer holds water is Feuerstein's.

    On simply the side of speculation, I suggest the AdCom could possibly be a hook to ensnare more than just the one obvious fish. It not only serves the purpose of expanding the label beyond the currently marketed Marine indication but also possibly clears the way for the agency to finally make a decision on the New Chemical Entity status (NCE). Under section 505 (page 181, section s) of the Food, Drug, and Cosmetic Act all NCEs should be referred to an Advisory Committee. To be clear, not all AdCom reviews are NCEs though.

    This AdCom for the Anchor indication might finally open the door for a decision in the saga that is Amarin's exclusivity. If I am right, exclusivity should come in the 3-month window that is November-January. As October 16th is the AdCom date, the next Orange Book update to include that would be November. Also, December 20th is the PDUFA date for Anchor, that update would fall in January 2014. Again, if I am right, this could amplify the coming run-up from AdCom to the PUDFA date.

    As always, I will leave you with a few side notes.

    • In response to the article quoted above by Feuerstein:

    The only advantage of a single-pill combining Vascepa with a statin is convenience -- and that's not enough to make Big Pharma interested.

    And what about Pfizer (NYSE:PFE)? A lot of Amarin bulls believe Pfizer will buy Amarin to resurrect the Lipitor franchise. Doubtful. Lipitor is already generic. The days of blockbuster Lipitor sales are over. Even if Pfizer was foolish enough to partner up with Amarin, insurance companies will not reimburse for a premium-priced combo product when separate generic atorvastatin and Vascepa are available. Insurance companies don't care about convenience.

    Interestingly, I see that Adam never argues the synergetic effect EPA (Vascepa) has with a statin (it's hard to argue with physical results). Instead his arguments now lie with no Big Pharma wanting to purchase/invest in a Vascepa combo pill. However, what Adam doesn't see is brand recognition. A majority of major marketing is brand recognition, associating a particular brand with quality and/or results. You would be hard pressed to find someone on the street that has never heard of Lipitor or Crestor yet knows the generic names. AstraZeneca (NYSE:AZN) has seen this with their plans to market Omthera's (NASDAQ:OMTH) Epanova in combination with Crestor that goes off patent in January 2016.

    • Prescription growth continues to grow in a regular trend. The current trend suggests over an $183M run-rate starting 2014. At the avg ~30% month/month growth rate 5,166 weekly scripts adjusted for under reporting*1.3^5months remains in this year*$184wholesale*52weeks=$183M.

    (click to enlarge)Script Growth

    Chart courtesy Stocktwits' Bullrunner

    Disclosure: I am long AMRN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: My father is long AMRN as well.

    Themes: long-ideas Stocks: AMRN
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Comments (10)
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  • tgallo
    , contributor
    Comments (207) | Send Message
    goo article
    1 Jul 2013, 02:04 PM Reply Like
  • Deep.Blue
    , contributor
    Comments (131) | Send Message
    defend yourself feuerstein. c'mon. can you actually use facts to back up your off the cuff statements? can you do this feuerstein or will you just hide and wait to make up something else?
    1 Jul 2013, 02:26 PM Reply Like
  • Ladavis23
    , contributor
    Comments (13) | Send Message
    You should have included ALL this in your SPA discussion...


    Special Protocol Assessment


    B. Changes in Documented Special Protocol Assessments


    As stated in the PDUFA goals for special protocol assessment and agreement, having agreed to the design, execution, and analyses proposed in protocols reviewed under this process [i.e., carcinogenicity protocols, stability protocols, and phase 3 protocols for clinical trials that will form the primary basis of an efficacy claim], the Agency will not later alter its perspective on the issues of design, execution, or analyses unless public health concerns unrecognized at the time of protocol assessment under this process are evident.


    Thus, documented special protocol assessments should be considered binding on the review division and should not be changed at any time, except as follows:


    Failure of a sponsor to follow a protocol that was agreed upon with the Agency will be interpreted as the sponsor's understanding that the protocol assessment is no longer binding on the review division.


    If the relevant data, assumptions, or information provided by the sponsor in a request for special protocol assessment change are found to be false statements or misstatements or are found to omit relevant facts, the review division will not be bound by any assessment that relied on such data, assumptions, or information.


    A documented special protocol assessment can be modified if (1) FDA and the sponsor agree in writing to modify the protocol (section 505(b)(4)(C) of the Act) and (2) such modification is intended to improve the study. A special protocol 9 assessment modified in this manner will be considered binding on the review division, except under the circumstances described below.


    A clinical protocol assessment will no longer be considered binding if the director of the review division determines that a substantial scientific issue essential to determining the safety or efficacy of the drug has been identified after the testing has begun (section 505(b)(4)(C) of the Act). If the director of the review division makes such a determination, (1) the determination should be documented in writing for the administrative record and should be provided to the sponsor, and (2) the sponsor should be given an opportunity for a meeting at which the review division director will discuss the scientific issue involved (section 505(b)(4)(D) of the Act). This meeting will be a Type A meeting under the PDUFA goals for meeting management.
    1 Jul 2013, 02:49 PM Reply Like
  • Andrew Colburn
    , contributor
    Comments (140) | Send Message
    Author’s reply » I did not include the entire section because:


    1) It is extremely long. It would take up 50% of the article just quoting the SPA. I quoted what was relevant to the discussion.
    2) Since Anchor was allowed the sNDA, the following paragraphs beyond the first are moot. Additionally, any "break" in the SPA would be considered material to the stock. It would have to be disclosed by management.
    1 Jul 2013, 03:16 PM Reply Like
  • Deep.Blue
    , contributor
    Comments (131) | Send Message
    If FDA had changed their mind and was going to renege on the SPA, then they would have had to notify AMRN in writing and in turn AMRN would have to disclose this info.


    Given that - 1) FDA accepted the Anchor sNDA early and 2) we have heard nothing else - seems to clearly clearly point to the fact that FDA is standing behind the SPA.
    1 Jul 2013, 04:19 PM Reply Like
  • Ladavis23
    , contributor
    Comments (13) | Send Message
    I believe it is relevant to the discussion. There are many ways that the FDA can 'break' the SPA. I am not suggesting they will, and I believe they won't, but they still COULD. Yes it would be material, and yes, it would have to be disclosed, and it could still happen at any time leading up to the ADCOM. I think if you included the "lengthy" facts behind SPA's as per the FDA, it would allow the readers to re-vist all the facts regarding SPA's. I don't believe how safe Vascepa is has ever been in question in regards to Anchor approval. Even bears would agree on that. I think it's in the weeds of that "lengthy" additional reason's the FDA could decide to "break" the SPA that have some nervous. It's a grey area, and it proves that the FDA COULD alter the SPA for pretty much any reason they want. That is where the risk is IMO.
    1 Jul 2013, 04:54 PM Reply Like
  • Deep.Blue
    , contributor
    Comments (131) | Send Message
    of course they could change their mind, and if they do so they send big reverberations all through the drug development world. the fact is they want the Reduce IT data. getting that data is jeopardized by reneging on Anchor. FDA wants their own JELIS.
    1 Jul 2013, 05:28 PM Reply Like
  • Ambergris
    , contributor
    Comments (9) | Send Message
    Excellent article. The problem between many of the bear theses that have been written lately is that they have not contained comparisons of apples to apples and oranges to oranges. For example, many holding a bear position, will simply refer to Vascepa as "Fish Oil" as a pejorative term. While it is true that Vascepa IS sourced from fish oil, the fact remains that it is a very highly purified, concentrated form of EPA and is free from the substantial amounts of DHA found in other prescription and non-prescription Omega-3, fish oil products currently on the market. Thus, the comparisons that the bear side has been leaning heavily on (as well as the Italian study that they were touting several weeks ago) simply do not hold water. In fact, those arguments are somewhat like comparing aspirin to willow bark or penicillin to a piece of moldy bread.


    The fact is that a fair number of prescription drugs are sourced from natural feedstock materials that are sold under the heading of "Dietary Supplements". These substances are typically available in health food stores etc. and are not approved by the FDA for use as medicine and thus cannot be advertised or sold to treat any disease. While it's true that these "Supplements" may contain some active principle ingredients that have therapeutic properties, they are often only present in minute amounts and may have questionable oversight as to standardized potency, sourcing and certainly, efficacy.
    1 Jul 2013, 05:53 PM Reply Like
  • Steve Rosenman
    , contributor
    Comments (785) | Send Message
    A fine article, accurate and facts based. Well done and see you for the run-up.
    1 Jul 2013, 06:06 PM Reply Like
  • addamani
    , contributor
    Comments (2) | Send Message
    awesome Andrew
    2 Jul 2013, 12:45 AM Reply Like
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