How the FDA Ruined Amarin's Day

This episode of The Motley Fool's Market Checkup drills down on the hottest headlines and biggest market movers in the health-care sector. 

In this video, health-care analysts David Williamson and Max Macaluso discuss Amarin's (NASDAQ: AMRN  ) sudden 20% plunge, courtesy of the Food and Drug Administration. The small-cap stock's fish oil-based triglyceride fighter Vascepa is attempting increase its potential customer base from 4 million to roughly 36 million by expanding its treatment. This is incredibly important for the future of the company.

With that in mind, the FDA just released its briefing documents for the October 16 advisory committee review, and investors were not happy. It surprisingly raised questions about the mineral oil placebo potentially negatively impacting the control group data and consequentially overstating Vascepa's effectiveness. This review also comes at a time when a number of new studies have shown limited improvement of cardiovascular outcomes for patients taking fish oil.

Watch and find out more about the concerns raised in the report, what big Wall Street firm came to Amarin's defense, and possible outcomes for the drug and stock's future.

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  • Report this Comment On October 12, 2013, at 7:27 PM, ReadThisN0w wrote:

    Bear Raids allways happen BEFORE acual news


    Dndn spike down to 3$ before it got news and went to 20$.

    IF you are short.. you DO want to cover before binary event.. since it is just that.. a binary event

    Short intraday.. covered end of day and now LONG in November 6$ and 8$ calls.

    Will add on weakness on Monday if there is.

    Will it get approved? I DO NOT KNOW (no one does)

    Does risk favor long or short here now ? Time to cover or go long on this drop Less

  • Report this Comment On October 13, 2013, at 1:14 PM, frankposting wrote:

    FDA didn't ruin Amarin's day. Hedge Funds did. Not necessarily they were shorting. Actually some huge hedge funds may be long -- just getting cheap.

    FDA's Brief is well balanced (though with some mistakes). What you got depends on the angle you took. E.g., the "overestimated" issue. It is not a "death" or "alive," and it is easy to be corrected. First at all, mineral oil is the placebo approved by FDA in the study protocol. If FDA change mine. The possible "overestimation" can be easily corrected by one additional statistical analysis:

    At every time point, let

    PM: measurement from placebo (mineral oil) treatment;

    PB: measurement of placebo baseline;

    PR: the better measurement in PM and PB.

    The statistical analysis of Vascepa vs. PR will remove that "overestimated." And this analysis may "underestimate" the Vascepa treatment effect -- so it is a "prudent" approach.

    BTW, the "overestimated" wording in the Brief is lack of scientific support.

    Guys, please read the Brief in its entirety. Don't "shot from special interest."

    Good writer-ship!

  • Report this Comment On October 13, 2013, at 1:54 PM, frankposting wrote:

    I'd like to add one more comment:

    In Page 58 of the Brief, FDA addressed:

    "One patient in the placebo group died during the randomized treatment period." (Myocardial Infraction -- CVD)

    Another serious adverse event in Placebo Group was Multiple Myeloma.

    Yes, it was randomized. However, ANCHOR indication, or Vascepa, may have the potential of saving life.

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