Yesterday, Amarin (NASDAQ:AMRN) scored a major win. All 16 panelists on Vascepa's advisory committee voted in favor of the drug's cardioprotective benefit based on the unprecedented results of the cardiovascular outcomes study Reduce-It.

Wall Street, for its part, immediately chimed in on the potential impact of this favorable outcome. Analysts quickly noted that this label expansion could broaden the drug's target market to anywhere between 5 million to 15 million patients in the United States, depending on how broad of a label the FDA chooses to go with.

Wooden blocks that spell out "buy-out".

Image Source: Getty Images.

The quirky part of the story is that these same analysts suggested that Vascepa's peak sales could vary from a low of $1.5 billion to a high of $4 billion following this positive advisory committee vote -- again, reflecting the huge discrepancy in the drug's potential target market based on the uncertainty of its final label.

What the Street is really saying 

What's odd about these peak sales figures is that they simply don't make mathematical sense. To square this circle, we have to assume that Wall Street is either predicting that Amarin will significantly lower Vascepa's net selling price (it won't), or that the company will have a hard time servicing this massive target market (it might).

Breaking this down further, most industry insiders agree that Vascepa's Reduce-It indication should cover at least around 10 million people in the United States (i.e., patients presently on statin therapy but who still have trouble controlling their triglyceride levels). A $4 billion peak sales estimate thus implies a 25% penetration rate.

That's crazy low for a drug aimed at patients with an elevated risk of heart attack or stoke, and that are already receiving care in the form of statin therapy. Stated plainly, pharma reps aren't going to have to beat the bushes to identify the vast majority of these patients. 

What gives? Wall Street is basically saying that Amarin won't be able to handle the volume associated with this market -- and there's good reason to believe that a bottleneck effect could come into play. 

What's next?

To remedy this situation, Amarin has three clear choices to maximize shareholder value in the near-term:

  1. Aggressively build out its commercial infrastructure. Amarin has announced a doubling of its sales force, but it still has a long ways to go before it can fully cover this enormous patient population. This option also runs the risk of jacking up expenses well before the surge in demand fully materializes. That's not exactly prudent for a company finally on the cusp of becoming cash flow positive.  
  2. Enter into a co-promotional partnership with a big pharma like Pfizer (NYSE:PFE). Pfizer has the connections and commercial bandwidth to transform Vascepa into a juggernaut within a very short period of time. A co-promotional deal might also involve a significant equity stake from the likes of Pfizer or perhaps a large up-front cash infusion. Either way, Amarin's shareholders would benefit immensely from a partnering deal. 
  3. Put the company up for sale. Amgen, Pfizer, and Novartis have all been rumored to have interest in Amarin. An outright sale eliminates the inherent commercialization risk associated with a go-it-alone strategy, and it would almost certainly come at a healthy premium. 

What's the most likely outcome? A buyout. These types of megablockbuster drugs do not come around often, and there's just no way big pharma is going to let this opportunity pass them by. In fact, Pfizer has a Vascepa-sized hole in its product portfolio right now with the loss of exclusivity for its nerve pain medication Lyrica. Pfizer's management has also openly admitted to an interest in pursuing more bolt-on acquisitions. Amarin, in many ways, would be an ideal pick-up for Pfizer, especially with the big pharma's ongoing metamorphosis into a growth-oriented company.