Amarin (Nasdaq: AMRN) can see a clear path through 2030. That vision was boosted recently by a decision from the U.S. Patent and Trademark Office. The USPTO determined that patents can be granted for two key patent applications made by the biopharmaceutical company for its Vascepa drug. These patents provide protection through 2030.
What does this news really mean? Let's take a look.
Fat chance
First, these two patents add to the intellectual property protection Amarin has already obtained. The company announced in May that it received approval from the USPTO for its first patent application for Vascepa.
Vascepa (icosapent ethyl) is an ultra-pure omega-3 fatty acid. In other words, it's highly potent fish oil in a capsule. Vascepa is used for treating patients with high triglyceride levels. The drug received FDA approval in July.
Fish oil contains two main fatty acids: eicosapentaenoic acid and docosahexaenoic acid. Both EPA and DHA can lower triglyceride levels. However, several studies have found that DHA also increases cholesterol levels.
Over-the-counter fish oil pills typically comprise around 18% EPA and 12% DHA. Prescription fish oil capsule Lovaza, which is marketed by GlaxoSmithKline (NYSE: GSK), contains 47% EPA and 38% DHA.
If Amarin's Vascepa gains significant market share, it probably will result from the drug's high EPA content of 96%. Clinical trials showed that it not only lowered triglyceride levels but also lowered LDL cholesterol levels. This gives it a good chance of being a market winner.
Leaping lipids
The lipid-fighting drug market is definitely one worth trying to win.
Lovaza generates around $1 billion annually. Abbott (NYSE: ABT) makes TriCor, which generated sales of $320 million in 2011. These numbers remain strong despite competition from generic drugs. Teva Pharmaceuticals (Nasdaq: TEVA) makes Lofibra, which is in the same family of fenofibrate drugs like TriCor.
Around 3.8 million people in the U.S. have triglyceride levels higher than 500 mg/dL. The number of patients worldwide in this category is probably two to three times greater. The good news for Amarin is that, unlike Lovaza, Vascepa probably won't be limited to just this market.
Vascepa also helps with patients who have triglyceride levels below 500 mg/dL but higher than 200 mg/dL. There are about 36 million adults in the U.S. in this group.
Seeing clearly
Investors clearly have seen the bright prospects for Amarin. Shares are up 35% in the past year.
With a market cap still fairly low (around $2.2 billion) and the successes with Vascepa, Amarin could be in the sights for a larger company as an acquisition target. One possible suitor that comes to mind if Pfizer (NYSE: PFE).
Pfizer still needs help in replacing the loss of revenue resulting from Lipitor's patent expiration. The company is sitting on $24 billion in cash and equivalents, more than enough to buy an emerging star like Amarin.
Regardless of if it gets bought, I expect Amarin shares will continue to move higher. The latest patent news confirms the company is on the right track. It's too bad I didn't buy shares earlier this year -- but hindsight is 20/20.
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