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3 Drugmakers Not Pleased With Amarin's Fish Oil Triumph

By Cory Renauer - Sep 26, 2018 at 10:17PM

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A new paradigm in the way we reduce cardiovascular risk could be bad news for these stocks.

It's a tough time to be a fish. Just when it seemed like we were losing interest in their oil, clinical-trial results suggest it really can save lives.

Results that show Amarin Corporation's ( AMRN 0.00% ) Vascepa brand of fish oil succeeded where similar attempts failed are terrific news for millions of patients at risk of heart attacks and strokes. It could also be great news for their insurers that don't want to cover pricey cholesterol drugs from Amgen, Inc. ( AMGN 0.63% )Sanofi ( SNY -1.30% ), and Regeneron ( REGN 0.18% ). Here's a look at the damper Amarin's surprising study could put on these three drugmaker stocks.

Laboratory worker holding four test tubes in front of their face.

Image source: Getty Images.

1. Sanofi: Another price cut ahead?

France's largest pharma company markets Praluent, which is a next-generation cholesterol-reducing injection that does the job when statins just aren't up to the task. Heart disease is still the leading cause of death in the U.S., but that didn't help Praluent's launch succeed. That's because insurers were extremely hesitant to pay for it due to a list price of $14,600 per year when it launched in 2015.

Sales of Praluent are still expected to climb from a meager $195 million in 2017 to perhaps $1 billion or more within a few years. That's because a leading pharmacy benefits managerExpress Scripts, recently decided to favor Praluent over a competing drug of the same class from Amgen after Sanofi slashed its cost to a range between $4,500 and $6,600 annually.

Vascepa is a single omega-3 acid that lowers triglycerides, but it can still make Praluent's relaunch extra challenging. A year of treatment with Vascepa capsules only costs around $1,500, and it looks like it's better at reducing the risk of major adverse cardiac events (MACEs) than Praluent is. During the Reduce-IT study, patients receiving Vascepa to lower their triglycerides plus statins for their LDL cholesterol were 25% less likely to suffer a MACE than those treated with statins and a placebo. During the Odyssey Outcomes trial, Praluent led to a 15% reduction of MACE risk. Patients with really high LDL despite statin treatment will still need a drug like Praluent, but it looks like Vascepa could become the go-to lifelong treatment for those with LDL scores closer to the normal range plus high triglyceride levels. 

EKG made of different pills.

Image source: Getty Images.

Like most big pharmaceutical companies, Sanofi could use another blockbuster drug, but a lack of success for Praluent won't be felt too strongly. The company is on pace to generate $38 billion in top-line revenue this year.

2. Regeneron Pharmaceuticals, Inc.: Partnership blues

Under their collaboration agreement, Regeneron splits U.S. profits, or losses, from sales of Praluent while Sanofi markets the drug outside the U.S. in return for a larger share of sales. Regeneron's product line isn't nearly as large as Sanofi's, but Regeneron is on pace to generate around $6.2 billion in total revenue this year. That means Praluent reaching $1 billion in annual global sales wouldn't send Regeneron's top line soaring. That said, the company really could use a more diverse product line.

Sales of Regeneron's macular degeneration treatment, Eylea, are on the rise, but the company leans on the injection for around 80% of total revenue. Earlier this year, the FDA refused to approve the higher of two doses of an arthritis drug from Regeneron and Sanofi that had much larger expectations than Praluent does at the moment. With the most effective dose of Olumiant unavailable in the important U.S. market and potential competition from Vascepa for Praluent's share of patients with elevated lipid profiles, heavy dependence on Eylea will probably continue.

3. Amgen Inc.: Repatha trouble ahead

Amgen markets a drug similar to Praluent called Repatha that helped a group of patients with cardiovascular disease reduce their MACE risk by 15% when added to statin treatment. That means Repatha could be in the same boat with Praluent if results for Vascepa's outcome study really are as good as the company's initial announcement suggests.

Lab scientist looking at a capsule.

Image source: Getty Images.

Amgen reported a huge 78% gain in second-quarter Repatha sales, but at an annualized run rate of $592 million, it makes up less than 3% of total revenue. Unlike Regeneron, Amgen's product lineup has a handful of potential growth drivers in a variety of settings. Vascepa's success probably won't help Repatha grow further, but Amgen's shareholders will hardly notice.

Exciting times for some

Unlike other fish oil supplements that failed to impress during their outcome studies, Vascepa only delivers one kind of omega-3 acid, which appears to make a big difference. With patent protection that runs through 2030 and possibly beyond, Vascepa has megablockbuster potential.  

Amarin will present detailed results from the Reduce-IT trial that could change how we feel about its potential at the American Heart Association's annual meeting in November. Before shareholders of these three companies get bent out of shape in the slightest, it's probably best to wait for more details.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Amarin Corporation plc Stock Quote
Amarin Corporation plc
AMRN
$3.57 (0.00%) $0.00
Sanofi Stock Quote
Sanofi
SNY
$47.07 (-1.30%) $0.62
Amgen Inc. Stock Quote
Amgen Inc.
AMGN
$202.44 (0.63%) $1.27
AstraZeneca PLC Stock Quote
AstraZeneca PLC
AZN
$54.23 (-1.02%) $0.56
Express Scripts Holding Company Stock Quote
Express Scripts Holding Company
ESRX
Regeneron Pharmaceuticals, Inc. Stock Quote
Regeneron Pharmaceuticals, Inc.
REGN
$635.16 (0.18%) $1.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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