More Trouble Looming for Amarin Corporation?

Amarin Corp. (NASDAQ: AMRN  ) can't seem to catch a break these days. Almost immediately after inking a co-promotional deal for the company's lone commercial product, Vascepa, with Kowa Pharmaceuticals America, Teva Pharmaceuticals (NYSE: TEVA  ) announced yesterday they are launching a generic version of Lovaza. Lovaza is Vascepa's chief rival in the severe triglyceride market, and is manufactured by GlaxoSmithKline (NYSE: GSK  ) . This generic launch is presumably bad news for Amarin because it could hurt Vascepa's sales as well.

Source: Wikipedia.

Amarin's recent 10-K reported that Lovaza saw sales of $1.4 billion in 2013, whereas Vascepa generated $26.4 million in revenue for the year, most of which came in the fourth quarter, suggesting the drug was beginning to gain traction. Amarin bulls have long pointed to Lovaza's blockbuster status as evidence that Vascepa could be a commercial success as well, even after the drug failed to gain approval from the Food and Drug Administration for a label expansion as a treatment for moderately high triglycerides last year through the ANCHOR indication . As Amarin shares moved lower on the back of this news yesterday, I think it's important to consider how generic Lovaza could impact Vascepa going forward. 

Will generic Lovaza halt Vascepa's recent sales momentum?
To be up front, I don't think this question can be answered definitively right now. How generic Lovaza will impact this market is clouded, in my opinion, by two overhanging issues that are worth exploring in their own right. 

First off, although it seems straightforward that another player in the market with a cheaper price should translate into lower sales for higher-priced brand names, this is not always the case. For instance, Abbot Laboratories successfully fended off generic rivals to its cholesterol-lowering drug, Tricor, in patients at risk of cardiovascular disease for over a decade using a complex reformulation strategy. And Mylan has only recently started to cut into Tricor's sales with its generic version of the drug, showing the effectiveness of Abbot's strategy in warding off generic competitors. GlaxoSmithKline and/or Amarin could thus choose to follow in Abbot's footsteps in the wake of Teva's planned entry into the market with its generic. While I don't know what exactly they will do -- this is just one possible route -- I don't expect either company to remain complacent while Teva gobbles up market share. 

Secondly, we don't know how Kowa plans to market Vascepa. As Vascepa reportedly has a better efficacy profile in terms of lowering triglycerides than Lovaza, Kowa will probably use this information to its advantage. The goal will obviously be to differentiate Lovaza and Vascepa in the eyes of doctors, thus increasing the barrier for generic competition. Overall, there will probably be some impact from generic Lovaza on Vascepa, but there are too many moving parts to this story to panic just yet.  

Foolish takeaways
Amarin's management has been open about the potential impact of a generic launch of Lovaza for some time, and that day has finally arrived. Even so, I would caution investors from overreacting to this development. Kowa is a highly experienced marketing partner in the cholesterol drug market and there are potential avenues worth exploring that could create a lucrative niche for Vascepa even now. While I am not exactly bullish on Amarin shares, I don't see generic Lovaza as a "straw that broke the camel's back" type event, either. In short, we need data on sales going forward to truly assess the impact of generic Lovaza, which won't come for a few months.

Looking ahead, the more pressing issue is Amarin's ability to fund its pivotal REDUCE-IT study. Unless sales of Vascepa improve markedly over the next few quarters, the company will be forced to either raise funds or discontinue the study altogether. In short, Amarin does have bigger problems to worry about than generic Lovaza, some of which, like the financing of REDUCE-IT, are critical to the company's future prospects.

3 stocks poised to be multi-baggers
Amarin has a lot of question marks, and it's in a highly competitive industry -- but investors know that the one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multi-bagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.


Read/Post Comments (1) | 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.

  • Report this Comment On April 10, 2014, at 10:13 AM, sam2115 wrote:

    Thank you George for this article.

    I think we can expect to see this play out as a number of steps.

    1. Managed Care will focus on the big prize and that will be converting brand Lovaza patients to generic- they are pretty good at that task. Some patients will balk at going to a generic and this will initiate a conversation with the MD. Kowa can capitalize on this pointing out to the MD- if the patient is going to be changed,why not to a better drug? Vascepa can expect to find some incremental business in the short term here.

    2. Vascepa is on Tier 2 in many insurance plans offering them a level of protection from a "therapeutic substitution switch" - so although some Tier 3 plans will try - expect minimal effect.

    3. When the "noise level" rises on any class of drug- those who make the most cogent argument win. This is a big opportunity for Kowa / Amarin and they should be looking at this positively and a way to re-sell Vascepa's entire story almost as a launch strategy would. They have several months to do this before the generic becomes availble- enough time to hit all high prescribing docs twice. They should make maximum use of every day they have.

    4. Finally, might Glaxo finally take an interest in buying Vascepa ? I can't imagine a better time to get the best possible price for Amarin.

Add your comment.

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: 2908427, ~/Articles/ArticleHandler.aspx, 8/22/2014 2:56:43 AM

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...


Advertisement