The Tale of 2 Patents

Amarin's (Nasdaq: AMRN  ) announcement that it had been issued a patent for its triglyceride-reducing drug, AMR101, did nothing for the stock yesterday. The lack of a reaction -- the stock traded down slightly most of the day -- isn't surprising given that the company announced back in March that the U.S. Patent office had issued a Notice of Allowance for the patent. The issuance of the actual patent was widely expected.

But when patents held by Pronova BioPharma were upheld in court later in the day, shares rose quickly and ended with a 6% increase on the day.

Pronova BioPharma's patents don't have any bearing on how long Amarin's AMR101 remains free from direct generic competition, but it indirectly affects the drug. Pronova's patents protect Lovaza, AMR101's direct competitor that Pronova licensed to GlaxoSmithKline (NYSE: GSK  ) . Amarin's drug appears to be better, but if Teva Pharmaceuticals (Nasdaq: TEVA  ) and Par Pharmaceutical had won their court case, Amarin would have had a hard time launching with cheap generics of Lovaza on the market.

The upheld patents are set to expire in March 2013 and April 2017, but there will be a generic version of Lovaza on the market before then. Pronova settled with Apotex last year, allowing the generic-drug maker to sell its copycat beginning in the first quarter of 2015. With the win in court against the other generic-drug makers, settling with Apotex doesn't look like a particularly good move for Glaxo, Pronova, or even Amarin, but that's the way things go sometimes.

Assuming AMR101 is approved in July, there's plenty of time to get the drug established before it has to face generic competition. I wouldn't be shocked if the sales took a small hit at that point; the same phenomenon happened when Merck's (NYSE: MRK  ) Zocor went off patent, causing sales of Pfizer's (NYSE: PFE  ) Lipitor, which is arguably better, to slip. But the lack of generics now is certainly a plus as Amarin hopefully moves ahead with a launch.

Amarin is the prototypical multibagger, up more than 300% over the past two years. Fool analysts think they've found another health-care company with just as much upside. You can read about it in their new free report "Discover the Next Rule-Breaking Multibagger." Get your copy for free.

Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Pfizer. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (4) | Recommend This Article (2)

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 May 30, 2012, at 11:21 PM, yazzbro wrote:

    Brian, not really sure what you are talking about but Amarin was up $0.72 yesterday. That's a pretty big jump if you ask me. Of course, that was pretty much erased today because of what's happening in Europe.

  • Report this Comment On May 31, 2012, at 10:55 AM, skm1965 wrote:

    Question:

    What you describe is known to most security analysts who maintain a Buy rating with target price ranging from 14 to 28$/share.

    Even Jim Cramer rated it a Buy yesterday.

    Give us your rating and price target--so we can compare.

    Thanks.

  • Report this Comment On June 04, 2012, at 3:36 PM, b3058 wrote:

    Interesting all the hype with Amarin considering they do not any sales of product yet, just a lot of speculation. I am watching the new kid on the block, Pivotal Therapeutics, PVTTF:US who already have their Omega3 product being prescribed by doctors and are showing sales NOW! Very cheap stock since it is a new upstart, but do check out their management team & board, very impressive,,,,,could be a real sleeping giant.

  • Report this Comment On June 15, 2012, at 2:46 PM, michelva wrote:

    b3058 Interesting tip re PVTTF:US. What happens if Amarin gets NCE status for their drug?

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: 1899005, ~/Articles/ArticleHandler.aspx, 11/23/2014 6:25:01 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