In late September of 2018, Dublin-based Amarin Corp. (NASDAQ: AMRN) first reported positive results from clinical trials of its product Vascepa. That is the company’s omega-3, fatty acid treatment for high levels of triglycerides that is derived from fish oil. The company’s stock rocketed by more than 400% in a few weeks, and it traded in a range of around $14 to $24 a share until March of this year.
That stock got a smaller, but still significant, boost in December of last year. That’s when the U.S. Food and Drug Administration (FDA) approved Vascepa to reduce cardiovascular events in people with either established cardiovascular disease or diabetes along with other persistent cardiovascular risk factors. Vascepa had been shown to reduce the risk for heart attacks and stroke, and the company’s patents do not expire until 2029.
Barely three months later, the bottom fell out. A federal district court judge in Nevada upended the seeming safety of Vascepa’s six patents, declaring that even though generic versions of Vascepa would infringe on claims in Amarin’s patent, those claims were “obvious” and invalid.
Shares of Amarin lost about two-thirds of their value following the ruling.
Where Vascepa Goes From Here
Amarin already has filed an appeal of the judge’s ruling in favor of generic drugmakers Dr. Reddy’s Laboratories Inc. (NYSE: RDY) and Hikma Pharmaceuticals, the victors in the Nevada court. The filing did not deter the FDA last week from granting Hikma approval to sell a generic version of Vascepa.
Hikma must still build or lease a manufacturing facility, something that is unlikely to happen until Amarin’s appeal is adjudicated. If the Nevada court’s ruling is reversed, Hikma and Dr. Reddy’s will have to decide whether to continue through the appeals process. Even if they win, it remains unlikely that either will spend to build a manufacturing facility while an appeal to the Supreme Court is on the table.
If Amarin can drag this out long enough, the company will eat up most of the patent protection period it has on Vascepa.
Amarin Suggests Another Potential Use for Vascepa
Last week, the company announced support for a trial of Vascepa as a COVID-19 treatment. Vascepa’s ability to lower cardiovascular risk in certain patients could prove effective, as patients at high risk for cardiovascular disease are also at a higher risk of dying from COVID-19.
The Canadian Medical and Surgical Knowledge Translation Research Group is sponsoring the trial. It aims to determine the effect of Vascepa versus standard care on certain protein levels from baseline to 14 days in adults with a positive COVID-19 diagnosis. The clinical study design also includes other endpoints that assess the rates and severity of COVID-19 infection in this high-risk group.
Will COVID-19 Really Help Amarin’s Stock Price?
Any drug that gets a nod from the FDA as a treatment for COVID-19 likely will see a startling, though probably temporary, spike in its share price. The operative word there is “temporary.”
With research labs and publicly traded companies pursuing a vaccine for COVID-19, it’s reasonably certain (though not a lead-pipe cinch) that a vaccine will become available sometime in the next 12 to 18 months. As more people are vaccinated against the virus, fewer contract COVID-19 and need to be treated for it diminishes.
A rock-solid patent on a medicine that promotes cardiovascular health is a completely different place to work from.
Fighting for the Long Term
While Amarin is right to support research into Vascepa’s possible use in treating COVID-19, the lasting financial benefits promise to be much greater if Vascepa’s patents are upheld. Of course, Wall Street will react with generous applause in the form of a rising share price in either case. Yet, the downside risk is much greater if the Vascepa patents eventually are rejected for being obvious.
On Thursday, Northland Capital analyst Carl Byrnes came down firmly on Amarin’s side of the court dispute. Byrnes pointed out what he called a “factual error,” along with other procedural errors, that he believes justifies a legal finding in favor of Amarin. Byrnes maintains a Buy rating on the stock and a 12-month price target of $15, more than double its Thursday closing price of $6.80.