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The Race: FDA Approval or Buyout?

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Yesterday, Amarin (Nasdaq: AMRN  ) said it had completed the remaining studies needed to submit its marketing application for is triglyceride-fighting AMR101 to the Food and Drug Administration. The final studies required Amarin to confirm that AMR101 didn't affect the metabolism of other drugs that might be taken concurrently. It seems to have passed with flying colors.

With the pharmacology studies complete, Amarin expects to submit the application by the end of next month. Assuming a standard 10-month wait, AMR101 could be on the market this time next year.

An approval seems pretty likely. AMR101 reduced triglycerides in patients with high triglyceride levels, and in a second phase 3 trial, the drug helped patients with medium triglyceride levels that were already taking statins such as Pfizer's (NYSE: PFE  ) Lipitor, AstraZeneca's (NYSE: AZN  ) Crestor, and Merck's (NYSE: MRK  ) Zocor.

Who will be selling AMR101 when it's approved is a little less certain.

Amarin's shares dropped 2.4% yesterday, and while we could probably blame it on debt-ceiling anxiety, I think it's probably from the reminder that Amarin is closer to regulatory approval but hasn't found a buyer yet. Shares are well off the highs set after positive results from the second phase 3 trial.

What is big pharma waiting for? The risk of rejection is fairly minimal, so I don't see a point in waiting for the FDA's thumbs-up. My guess is potential acquirers are taking their time evaluating the patent protection of AMR101 and the potential impact of generic versions of GlaxoSmithKline's (NYSE: GSK  ) Lovaza, a competing -- albeit inferior -- drug.

Amarin could launch the drug on its own, but I think most investors hope and expect that it'll get bought out entirely. Unfortunately, the timing and price are still unknown, and investors hate uncertainty.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Click here to see his holdings and a short bio. The Motley Fool owns shares of GlaxoSmithKline. Motley Fool newsletter services have recommended buying shares of Pfizer and GlaxoSmithKline. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On August 02, 2011, at 9:00 PM, yazzbro wrote:

    Good article Brian. So far though Amarin has been a massive flop. This stock has come back almost 40% since its just under $20 high. Today closed at $12.61. Looks like it wants to head down further. I just don't think investors have a lot of faith in management and have headed for the exits on this one. Their CEO really made a massive mistake when he said they were looking for more of a partnership than a buyout. Pfizer's earnings didn't look so good and they will really miss having Lipitor in their line-up. Amarin would really fit nicely to replace Lipitor. The thing is this, with Amarin now being at $12.61 even if an offer comes up it wont be that high of an offer. Maybe $20 at this point. We can only hope for a buyout right now. If an offer doesn't come soon though say around the NDA filing, I don't see Amarin being bought. I really feel that a buyout probably would have happened already. So I think the FDA approval happens before a buyout for sure. Let's hope it gets bought though.

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