Why Omthera Pharmaceuticals Hit a Daily Double

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Omthera Pharmaceuticals (UNKNOWN: OMTH.DL  ) , a developer of clinical therapies to treat cardiovascular diseases, doubled in intraday trading today following the announcement that AstraZeneca (NYSE: AZN  ) is purchasing the company.

So what: The details of the acquisition are that AstraZeneca will pay $323 million for Omthera, with the option of an additional $120 million in future payments based on the performance of Omthera's pipeline. The deal could therefore be worth as much as $443 million when all is said and done. The reasoning behind the acquisition is that it allows AstraZeneca to get in on the rapidly growing fish oil market designed to treat high levels of triglycerides and high-risk patients with cardiovascular disease. Omthera's most exciting product in development is Epanova, a fish oil capsule currently in late-stage trials.

Now what: Omthera shareholders certainly made out like bandits today, just a month after the company went public. While it's certainly a boost for Omthera with the financial backing of AstraZeneca, it's a crushing blow to Amarin (NASDAQ: AMRN  ) and its FDA-approved fish oil treatment Vascepa. Amarin has long been thought to be the buyout candidate based on its triglyceride-lowering fish oil treatment, yet Omthera, at roughly 45% of Amarin's market value, garnered the interest from big pharma. Worse yet, AstraZeneca can kick in its marketing expertise if Epanova is eventually approved. Today is certainly a case of one company's pain being another's gain!

Craving more input? Start by adding Omthera Pharmaceuticals to your free and personalized watchlist so you can keep up on the latest news with the company.

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  • Report this Comment On May 28, 2013, at 1:43 PM, jsIRA wrote:

    Actually this is not a bad news for AMRN. This validates the Vascepa's value and its leading position in this category.

  • Report this Comment On May 28, 2013, at 2:22 PM, hakujin wrote:

    exactly jsIRA. the funnier thing is anybody who has been watching this dog and pony show ought to have known since August of last year that AstraZeneca couldn't afford Amarin; why does this little fact escape all these faux pundits?

    Last week it was only a 'fish oil pill' BP doesn't want (never was a fish oil pill actually, lol); this week, sorry a$$ed OMTH is better, and the fish oil market is exploding?

    My lord... Amarin - HOLD; adding shares when it goes below 6. Who cares (but the emotional) when the net end is the same.

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