Deja Vu: A 10% Jump for That?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Amarin (NASDAQ: AMRN  ) popped more than 10% on Thursday on seemingly no news.

As best I can tell, investors were jumping in ahead of the potential that  Amarin's lipid-lowering drug Vascepa will be given five years of exclusivity through new chemical entity status. The Food and Drug Administration updates the Orange Book, which lists exclusivities, on the Friday of the second full week of the month, which is today.

It's pretty common for binary events to attract last-minute buyers. NuPathe (UNKNOWN: PATH.DL  ) was up 15% yesterday as investors anticipated an approval of the biotech's migraine patch Zecuity. The positive news came after hours.

Some will claim that the price spikes indicate that the positive news was leaked. I'm a little more skeptical, figuring day traders are just waiting until the last minute to jump in. If they invested a week or a month early, they wouldn't be day traders, now would they?

Might Amarin gain NCE status this month? I certainly hope so, but it didn't during the updates in August, September, October, November, or December. I'm not sure why investors think it'll come in January.

Is NCE status for Vascepa worth $130 million, the value that Amarin went up yesterday? Let's hope not. Amarin's best case scenario is that the NCE status is completely worthless.

Let me explain. The NCE status gives new chemicals five years of exclusivity. The debate over whether Vascepa deserves it is because the drug is basically a purified version of GlaxoSmithKline's (NYSE: GSK  ) fish oil Lovaza.

But that NCE status runs concurrent to patents. If patents extend beyond the five years, which is often the case, the NCE exclusivity is essentially useless. If Amarin's claims of patents on Vascepa through 2030 hold up in court, the NCE status won't be worth much.

Where the NCE status might be useful is in securing a partner or an acquirer. The company has been looking for a suitor since Vascepa was approved back in July, probably longer. One theory, which seems reasonable to me, is that Amarin's management and potential acquirers -- Merck  (NYSE: MRK  ) , AstraZeneca, and Teva Pharmaceuticals (NYSE: TEVA  ) have been floated as potential acquirers -- can't agree on a price because valuing patent litigation risk is difficult. A decision on the NCE status would clear up that unknown, although it's no guarantee that a deal will eventually get done.

Nevertheless, let's hope a decision one way or the other is made today.

The biotech space can make or break investors overnight, and while Amarin might not disappear into thin air,  the success of Vascepa is key to the company's future success or failure. The company has huge potential, but don't invest a dollar before reading everything you need to know about Amarin. You can start now with top analyst Max Macaluso's premium research report. Click here now to keep reading.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2452436, ~/Articles/ArticleHandler.aspx, 9/27/2016 6:40:09 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:00 PM
AMRN $3.25 Up +0.13 +4.17%
Amarin CAPS Rating: ****
AZN $33.61 Up +0.06 +0.18%
AstraZeneca CAPS Rating: ****
GSK $43.32 Up +0.36 +0.84%
GlaxoSmithKline CAPS Rating: ***
MRK $62.57 Up +0.42 +0.68%
Merck and Co. CAPS Rating: ****
PATH.DL $0.00 Down +0.00 +0.00%
NuPathe Inc. CAPS Rating: *
TEVA $49.47 Down -0.80 -1.59%
Teva Pharmaceutica… CAPS Rating: ****