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Why Amarin's Positive Trial Results Sets The Cat Among The Pigeons

|Includes:Amarin Corporation PLC (AMRN), GSK

Shares of Nasdaq listed Amarin Corp. (AMRN) skyrocketed nearly 67 % after its closely watched heart pill AMR101 (the company’s only medicine in late-stage trials) hit targets in a pivotal clinical study, giving the Ireland based pharma company enough ammunition to take on GlaxoSmithKline's popular Lovaza, considered to be the most popular and effective therapy of late For patients with hypertriglyceridemia, a dangerous condition characterized by a triglyceride level over 500 mg/dL.

It was obviously a make-or-break day for Amarin Corp. plc (AMRN) while it was reporting the top-line results of it fat-lowering AMR101, an omega-3 fatty acid-based drug, which is a semi-synthetic, ultra pure (>96%) ethyl ester of eicosapentaenoic acid (ethyl-EPA).

GlaxoSmithKline's (NYSE:GSK) sales of Lovaza which has witnessed a sales hike of 31 percent to 450 million pounds ($702 million) in 2009 is still a frontrunner and is expected to sell around $1 billion by 2011, but these results of the latest III study, involving 229 patients, on a 4 gram dose of AMR101 experienced a 33 percent decrease in blood triglyceride levels after 12 weeks compared with patients given a placebo, Amarin. Pharams experts feel that the absence of DHA confers distinct advantages to Amarin in the quest to lower high triglycerides that can give the medicine a distinct advantage over its more popular rival.

Amarin Vs Lovaza
: According to Amarin, AMR101 is different from GlaxoSmithKline's Lovaza in that Lovaza contains ethyl esters of EPA and DHA while AMR101 contains ethyl ester of only EPA. DHA is known to elevate LDL cholesterol (bad cholesterol) levels. Therefore, AMR101, which is devoid of DHA, may not have the LDL effect. The daily dose of Lovaza is 4 grams (or 4 capsules) per day for patients with severe elevations of triglycerides of 500 mg/dl or above, while the daily dose of AMR101 is likely to be only half that of Lovaza.

Although GSK declined the opportunity to make any public statement, citing company policy not to comment on products that are not yet at market. The positive phase III data could not have come at a better time as in 2009, Dublin-based Amarin's net loss had widened to $59.3 million or $1.40 per share from $20 million or $0.91 per share in 2008. The last time the company reported revenue was in 2006 and it was $500,000 for that year. Meanwhile Shares of Mystic, Conn.-based Amarin (NASDAQ:AMRN) closed at $5.85, a gain of $2.30, or 64.8 percent Monday. The positive news has prompted the company to bring forward plans to file AMR101 for U.S. regulatory approval to 2011 that it had previously indicated to file in 2012.

Global Pharmaceutical Sales 2011: According to an annual forecast by IMS Health, global pharmaceutical sales are expected to increase by 5 to 7 percent to as much as $890 billion in 2011, while the China market is seen growing at a torrid pace.

The U.S. however is likely to remain by far the world's largest market, with sales forecast to reach $320 billion to $330 billion in 2011. But that represents growth of just 3 to 5 percent. The top five European markets of Germany, France, Italy, Spain and Britain will collectively grow at an even more anemic pace of 1 to 3 percent to $135 billion to $145 billion, as government pricing pressures limit growth.

Disclosure: No Positions

Stocks: AMRN, GSK