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A special protocol assessment is only as good as other people's data.
We've always known that, but it's still hard to see the brutal reality. Amarin (NASDAQ: AMRN ) is down about 60% after an advisory panel ignored the fact that the biotech had an SPA with the Food and Drug Administration and recommended 9-2 that the agency not approve the expanded indication for Amarin's lipid-lowering drug Vascepa.
During the panel, there was very little questioning of whether Vascepa lowers triglyceride levels. It's pretty clear the drug works quite well in laboratory testing.
The question is whether lowering triglycerides means anything clinically. Unfortunately, the jury is still out on that.
Of course, the jury was out when Amarin and the FDA set up the SPA, agreeing that the company only had to have its outcomes trial substantially enrolled before a receiving an agency approval. Amarin's downfall was that trials testing other triglyceride-lowering drugs failed to show a cardiovascular benefit.
The FDA argued that the results of the trials made it more imperative to wait for the outcomes data. An agency representative said multiple times during the meeting that if the trials had showed an effect, it would be a completely different discussion.
Still strong on surrogates
The FDA has clearly lightened up over the last few years on safety. You need to look no further than VIVUS (NASDAQ: VVUS ) and Arena Pharmaceuticals (NASDAQ: ARNA ) having their obesity drugs approved as proof. Both VIVUS' Qsymia and Arena Pharmaceuticals' Belviq were initially rejected based on their safety profile but were eventually approved without running any additional clinical trials. Sure, the companies submitted some laboratory data and post-hoc analysis, but I don't think either drug would get approved with that limited data in the regulatory environment of five years ago.
The FDA's stance on surrogate endpoints used for efficacy clearly hasn't followed the same cushy change. That's potentially bad news for a company such as Sarepta Therapeutics (NASDAQ: SRPT ) which may try for an accelerated approval of eteplirsen based on increases in dystrophin, a gene mutated in Duchenne muscular dystrophy patients. It's not clear that increased dystrophin is a validated surrogate endpoint for walking. Fortunately, unlike Amarin, Sarepta has a backup plan and might be able to get full approval based on its clinical data: The walking ability of boys taking the drug doesn't seem to be declining nearly as fast as you'd expect for untreated patients.
Next step for Vascepa
The drug should remain approved for patients with extremely high triglyceride levels, but there's no way the FDA will approve the drug for the expanded indication.
Ironically, being already on the market might have ultimately hurt Amarin because doctors can always prescribe it off-label for patients with moderately high triglyceride levels. That could be a saving grace for Sarepta's eteplirsen, which is treating a debilitating disease without any treatment options.
With a cost of $30 million-$40 million per year until the outcomes trial is enrolled and then north of $20 million per year after that, Amarin is in a tight spot financially. The biotech was counting on sales from the expanded indication to help fund the outcomes study.
At the beat-down price, Amarin might be a good buy, but you have to be willing to hold for years -- and expect share dilution over that time -- or be hoping for a buyout, which is a poor investment thesis.
If Amarin turns out be a multibagger from here, you can thank all those failed studies of other drugs.
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