Shares of America's favorite fish-oil stock, Amarin (NASDAQ:AMRN), have risen sixfold since the company released surprisingly positive results from the Reduce-It study last September. In a nutshell, the company's only product, a fish-oil capsule called Vascepa, appears to lower the risk of heart attacks for high-risk patients.
On Nov. 14, the company's proprietary formulation of fish oil will be the subject of an advisory committee meeting at the Food and Drug Administration. Here are six reasons investors are increasingly worried about the outcome of that meeting.
1. There's a lot on the line
Vascepa is officially approved for the treatment of a fairly small group of people with dangerously high triglyceride levels. Year over year, third-quarter sales of the drug more than doubled to an annualized $449 million, but the company still lost $0.01 per share.
Amarin's recent market cap is up around $6 billion -- in anticipation of an enormous sales bump, which won't happen unless the FDA approves an application to expand Vascepa's drug label to include patients at risk of a heart attack and other major adverse cardiovascular events (MACE). The FDA doesn't have to follow advisory committee suggestions, but it usually does. If the panel of independent experts votes against approving Vascepa for high-risk patients, Amarin's shares could lose half their value overnight.
2. The great unveiling
Reduce-It was a long-term clinical trial with 8,179 high-risk patients on statin therapy. Patients who added Vascepa to their statin regimen were 25% less likely to experience a MACE than patients treated with a placebo. With these results, approval to treat an enormous group of high-risk patients might seem like a slam dunk. Just below the surface, though, there are several concerns that could delay Vascepa's label expansion indefinitely.
About a week ahead of advisory committee meetings, the FDA distributes briefing documents that highlight the agency's concerns in detail. Since communications between drugmakers and the agency are confidential, we only know what Amarin has chosen to disclose.
Amarin received an advance copy of the soon-to-be-unveiled briefing document in October. In an unusual act of transparency, the company described several topics of concern that are likely to be discussed. While there could be more troublesome issues the company forgot to mention, the ones Amarin disclosed are serious enough to make investors sweat.
3. Different populations
Around 70% of patients enrolled in Reduce-It had already suffered their first MACE; within this group, investigators found risk of a second MACE reduced by 27% among patients treated with Vascepa versus a placebo. Unfortunately, Vascepa led to a less exciting 12% relative risk reduction among the patients who hadn't experienced their first MACE yet.
The observed difference between the secondary prevention group and the primary prevention group wasn't statistically significant, but it has raised eyebrows. That's because Amarin's seeking approval for all high-risk patients on statin therapy, not just those who have already suffered through their first MACE.
4. Mineral oil
Randomized, placebo-controlled studies are the best way to provide evidence of efficacy, but creating a placebo that fools patients and healthcare professionals can be a real challenge. For Reduce-It, Amarin used capsules filled with mineral oil as a placebo, and in hindsight, it was a terrible idea.
Mineral oil is an old-fashioned laxative that affects the absorption of some drugs, including statins. This could explain why investigators reported slightly increased blood concentrations of low-density lipoprotein (LDL) cholesterol among patients in the placebo group, even though they were continuing their regular statin therapy.
Although the placebo group's LDL cholesterol increase was probably too small to account for the overall 25% risk reduction in the group treated with Vascepa, we can't be absolutely certain it didn't play an important role without another long outcome study that employs a different placebo.
5. Bleeding events
The mineral-oil dilemma is the biggest problem facing Amarin, but it's not the only issue slated for discussion. The advisory panel will also consider the fact that 11.8% of patients taking Vascepa in the Reduce-It study experienced bleeding events, compared to just 9.9% of the placebo group.
Slightly increased risk of bleeding associated with Vascepa and other fish-oil capsules isn't a new revelation. In light of questionable efficacy results, though, it could be significant.
6. Irregular heartbeats
During Reduce-It, 3.1% of patients given Vascepa were hospitalized for an irregular heartbeat or atrial fibrillation, compared to 2.1% of the placebo group.
Fish-oil capsules, including Vascepa, have already been associated with an increased risk of hospitalization due to atrial fibrillation, but a 25% MACE risk reduction is well worth the slightly elevated risk. If the panel questions those efficacy results because of the mineral-oil placebo, though, the FDA could end up asking Amarin for more data.
The most likely scenario
Drug approvals are always made with the assumption that the observed benefits outweigh potential risks. The 12% relative risk reduction among people on statin therapy who haven't already experienced their first MACE is not a huge benefit, when measured against the increased risk of atrial fibrillation and bleeding events that come with long-term Vascepa treatment.
There's a chance that Vascepa will receive the giant indication Amarin has asked for, but more likely than not, the FDA will limit any approval to patients trying to prevent their second heart attack. That would hardly be the end of the world for Amarin, but it would almost certainly result in a severe market beatdown.