Amarin’s Multiple Positives And Other News: The Good, Bad, And Ugly Of Biopharma – Seeking Alpha

Posted: Published on January 25th, 2020

This post was added by Alex Diaz-Granados

Amarin Corporation PLC (AMRN) is currently on a roll as the company is gearing up for the expanded market launch of its potential blockbuster drug Vascepa, which is now the only drug approved in the United States for lowering the risk of cardiovascular events in conjunction with statin therapy. It is estimated that the drug may touch the peak sales volume of $3-4 billion a year. However, after certain developments in the market, some analysts are thinking that the drug may be able to garner even higher revenue.

While Vascepa received its product label expansion in December, further increasing its market reach, the drug was given another positive fillip recently as competitor AstraZeneca (AZN) reported shelving trials for its Epanova drug candidate. The decision is not only going to cost the company to the tune of $100 million in write-offs but has also opened up a wider market for Amarin's Vascepa. Epanova was being touted as a strong rival to Vascepa and was expected to be a major player in the fish oil drug market. With Epanova out of the scene, Vascepa does not have any significant competition in the market.

Epanova is for treating high TG levels in adult patients suffering from hypertriglyceridemia. Had the company been successful with its now-abandoned STRENGTH study, it would have been able to market the drug to a wider market with label expansion.

Similarly, Amarin received another positive push as Acasti Pharma Inc. (ACST) also posted negative developments regarding its CaPre drug candidate. The company reported that a phase 3 trial of the drug failed to meet its endpoint, which was of the reduction of triglycerides by 20% in comparison to placebo. The trial showed that the median triglyceride reduction in patients taking CaPre was 30.5% and the corresponding reduction in the placebo arm was 27.5 percent. Thus, the drug failed to make a significant reduction in TG levels, leading to the failure of the trial.

Acasti is currently looking into the reasons behind the failure and has held unexpectedly strong placebo effect to be a major factor. It will audit patient records and raw data from its five targeted locations for further analysis. While the results of the investigation will be out by next month, Amarin is still likely to remain a forerunner.

Following these positive news, CEO John Thero said at JPM2020 that Amarin has been approached by a number of companies to license the drug in Europe. Vascepa is currently awaiting approval for its launch in Europe. Apparently, Amarin believes that it will be in a better position to bargain as the approval process further proceeds in Europe.

Amarin stock has performed erratically in the market in the past one year. The stock price has been through lots of ups and downs and now is expected to show positive traction in the market. However, there are certain caveats that need to be kept in mind by potential investors. While the company now has few direct competitors in the market, it still has to fend itself against potential generics. This impediment will be particularly significant if its ongoing patent lawsuit does not end up favorably. The company is currently embroiled in a legal battle with multiple pharma companies including Dr. Reddy's Laboratories and Hikma Pharmaceuticals.

On the positive side, the company is poised to boost its revenue and recently announced that it plans to double its sales personnel to touch 800 employees. Amarin now expects its 2020 sales volume to be in the range of $600-700 million. With court decision expected in near future, Amarin stock is looking ahead to plenty of action.

Arena Pharmaceuticals (ARNA) received positive news as the company reported its lead drug candidate APD418 receiving Fast Track review from the FDA. The treatment is being developed for decompensated heart failure which denotes a sudden deterioration in various symptoms such as difficulty in breathing, fatigue, and swelling in the legs and feet.

APD418 is a 3-adrenergic receptor (AdrR) antagonist and cardiac myotrope. It aims to improve cardiac contractility without causing adverse impact on blood pressure, heart rate, and myocardial oxygen consumption connected to inotrope therapies.

Fast Track status by the FDA comes with several advantages such as more frequent interaction with the FDA review team. It also provides the benefit of rolling review of the marketing application. Chris Cabell, MD, MHS, FACC, Arena's Senior Vice President and Chief Medical Officer said, "With approximately 10 million DHF patient hospital visits expected in the US by 2025 and few viable treatment options, we believe that APD418 has the potential to make a significant impact for these patients."

Arena Pharmaceuticals focuses on developing pharmacology and pharmacokinetics based medicines. Apart from APD418, it has APD811, APD334, and APD371 in the pipeline.

Home healthcare service provider LHC Group (LHCG) received a setback as Spruce Point Management released a bearish report about its prospects. According to the report, the healthcare service provider may face a 40 to 60 percent downside risk with regard to its stock price. The report makes extensive use of financial analysis and forensic accounting. The downside is mainly on account of the company's 2018 merger with Almost Family, which seems to be underperforming expectations. It was estimated that the business will grow 5 to 6 percent per year. The report also found management to be reluctant to share updates regarding its Almost Family business.

The report further elucidates upon other concerning factors such as management selectively divesting underperforming locations to artificially inflate organic growth figures. The company also excluded Almost Family numbers from organic sales, leading to organic growth inflation by nearly 500 bps. The report notes that the bad debt allowance allocated to Almost Family has been gradually inflated from $27 million to $65 million.

LHC Group stock has grown over 40 percent in the past 12 months and, currently, is trading close to its highs.

Thanks for reading. At the Total Pharma Tracker, we do more than follow biotech news. Using our IOMachine, our team of analysts work to be ahead of the curve.

That means that when the catalyst comes that will make or break a stock, we've positioned ourselves for success. And we share that positioning and all the analysis behind it with our members.

Disclosure: I am/we are long AMRN, ACST. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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