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The biotechnology sector is rapidly evolving, and what was a near-guarantee of success of getting a drug approved by the Food and Drug Administration 10 years ago is no longer a guarantee. Although it takes a decade or longer to bring a drug from a laboratory setting to pharmacy shelves, this represents just half the battle. The other aspect to attaining success in the biotech sector is properly marketing and pricing a drug once it's approved. It may sound easy, but in practice, it's been a work-in-progress for many biotech companies.
Over the previous two days, we've looked at chronic weight management company VIVUS (NASDAQ: VVUS ) , and advanced prostate cancer treatment provider Dendreon (NASDAQOTH: DNDNQ ) , as two companies that missed the ball with their marketing and/or pricing. Both companies, I feel, would do well to seek out an experienced marketing partner to help increase product sales, and share in the costs of that marketing and production.
Today, in the third and final installment of three biotech companies that could desperately use a marketing partner, I would like to look more closely at Amarin (NASDAQ: AMRN ) , and discuss why I feel it would be wise to find a big pharma friend.
Fish out of water
Amarin's key drug is Vascepa, a fish oil capsule that was approved last July to reduce triglyceride levels in patients with hypertriglyceridemia. In late-stage trials, Vascepa delivered a placebo-adjusted median reduction in non-HDL cholesterol of 18%, and a 29% reduction in very-low-density lipoprotein cholesterol, or VLDL-C. Yesterday, an additional study from its Anchor trial demonstrated that, when combined with a statin therapy, Vascepa was effective in reducing VLDL-C by 12.2%, and small LDL particles by 13.5%, further adding to the thesis that it's an effective adjunctive therapy in terms of lowering bad cholesterol levels.
Admittedly, Amarin hasn't been given much of a chance to prove Vascepa's worth, with just four months of sales under its belt; however, I admit to being disappointed with just $2.34 million in recognized revenue in the first quarter. They did defer $2.9 million in additional sales to wholesalers, and the prescription trend is heading higher, but this launch is shaping up to be more of a saunter than a sprint.
Worries are mounting
In addition to concerns about Amarin marketing Vascepa on its own, and sales not exactly exploding out the gate, concerns persist about the effectiveness of omega3 fatty acid products in treating cardiovascular disease, and because of increasing competition.
As the Fool's Brian Orelli has previously pointed out, a study from The New England Journal of Medicine turned up inconclusive results with regard to the effectiveness of omega3 fatty acids in reducing the risk of heart attack or stroke. Similarly, last year, the Journal of the American Medical Association published the analysis of nearly 20 clinical trials, which concluded that there was no benefit provided by omega3 fatty acids in terms of heart attack, stroke, or death prevention. Amarin is clearly going to need to overcome this data if Vascepa is to be successful.
On top of this, competition in the fish oil pill space is increasing by the day. Earlier this week, Omthera Pharmaceuticals (UNKNOWN: OMTH.DL ) -- currently a clinical-stage biopharmaceutical company in the process of developing Epanova, a late-stage fish oil capsule – agreed to be purchased by AstraZeneca (NYSE: AZN ) for $323 million, with the option of receiving an additional $120 million in pipeline sales incentives. The deal is a crushing blow for Amarin, which had been rumored as a takeover candidate. The deal also priced at just 45% of the overall market value of Amarin.
Let's not forget that GlaxoSmithKline's (NYSE: GSK ) Lovaza rules this space. In 2012, Lovaza generated about $923 million in sales for Glaxo, with revenue increasing 5% from 2011. Despite owning a lion's share of the fish oil market, less disposable income for consumers because of austerity measures in Europe, and a weak U.S. economy, has resulted in fewer doctor visits and, thus, a declining overall market for adjunctive prescription-based fish oil therapies year-over-year.
With competition mounting, the economy not cooperating, and Vascepa's launch proving mediocre, at best, I think now is the time for Amarin to swallow its pride and seek out a marketing partner.
Amarin's perfect match
I know what you're probably thinking: Elan would make the perfect match here following comments made by its Chairman Robert Ingram during the company's annual meeting that, "Vascepa was an opportunity they are considering." However, even with Elan's boatload of cash on hand, and desperate desire to replenish its pipeline, I think a better partner is waiting in the wings.
Instead of Elan, I feel the struggling Forest Laboratories (UNKNOWN: FRX.DL ) would be the most qualified marketing partner to help Vascepa sales soar. Forest Labs is being hit hard by patent expirations, but would bring an experienced marketing staff to the table. In addition, it already has two FDA-approved cardiovascular drugs in Bystolic and Tiazac, which both work to treat high blood pressure. Partnering with Amarin would further strengthen its cardiovascular product offerings and help remove some of the marketing uncertainty and high costs currently plaguing Amarin's share price.
Can Amarin Beat the Odds?
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