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Amarin Still Playing the Dating Game

By Keith Speights - Nov 8, 2012 at 9:04PM

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Amarin's Q3 update shows the company is still waiting for a date.

Probably the best line in the 2000 movie Miss Congeniality was when Miss Rhode Island was asked to describe her idea of the perfect date. Her response: "April 25th -- because it's not too hot, not too cold. All you need is a light jacket."

Amarin ( AMRN 3.36% ) is still waiting for its date. Actually, it's waiting on two dates -- the kind Miss Rhode Island had in mind, and the kind that's more along the lines that her interviewer intended. The company announced quarterly results on Nov. 8. Here's what is happening with Amarin's version of the dating game.

Date number one
Uncle Sam has been a sweetheart to Amarin this year, for the most part. In July, the FDA approved Vascepa for use in lowering triglyceride in adult patients with very high levels. The U.S. Patent and Trademark Office issued its eighth patent for Vascepa in late October. But what Amarin really wants, as soon as possible, is a calendar date from the FDA.

That calendar date relates to whether or not Vascepa's active ingredient, EPA, gets five years or three years of exclusivity as a new chemical entity. The issue at hand is whether the active ingredient is new enough for a five-year exclusivity period. While EPA hasn't been previously approved by itself, the ingredient is included as a component in the active ingredient for Lovaza, the rival drug from GlaxoSmithKline ( GSK 1.49% ).

Amarin really isn't concerned too much either way, because it feels that the patents already obtained, and potential additional ones that have been filed, give it plenty of protection. The company's qualm is that the FDA's dilly-dallying is preventing it from getting a date of a different kind.

Date number two
This more important date is with a partner. The company is contemplating three options for commercializing Vascepa -- selling to an acquirer, establishing a strategic partnership, or going it alone. The FDA's slow-motion decision-making process has resulted in some possible partners getting jittery about moving too fast.

AstraZeneca ( AZN -1.17% ) could be the most likely suitor, according to a recent article in British newspaper The Daily Mail. The large pharma has been losing revenue lately with loss of exclusivity for some big-ticket drugs and has nearly $7 billion in cash. When asked about the possibility of AstraZeneca as a potential acquirer, Amarin CEO Joe Zakrzewski gave a quick "no comment" response. I'd say there's a fairly high chance that AstraZeneca is the bachelor behind door number one.

Amarin plans to launch Vascepa in first quarter 2013. Is there really enough time to go solo? The company thinks so.

While Amarin hasn't hired any of its sales force yet, Zakrzewski says that it will be ready to do so by the end of November. He stated that over 2,000 resumes have been received, many of which are from candidates with solid experience and established contacts with the physicians that the company would target.

The company has also been laying some groundwork for the first quarter launch. Amarin stated that it's building inventories to be ready to ship when Vascepa hits the market. The company has also been working the trade shows and hiring some key non-sales staff.

Quite congenial
Amarin reported a net loss of $0.18 per share in the third quarter. It had over $215 million in cash and equivalents going into fourth quarter. With no revenue yet, though, the main story for Amarin's quarter isn't really about the financials. It's all about the company's acquisition or partnership prospects.

So how did the market react to the continued dating game? Amarin's stock was down nearly 4.5% at the close, but after-hours trading following the company's earnings call nearly made up for the day's loss. We'll see how much that congeniality extends into next week.

My opinion is that the stock is a buy. I'm making a CAPScall for Amarin to be markedly higher within a few months. Even if the company takes Vascepa to market by itself at first, I suspect a suitor will be calling before too long.

Amarin could very well obtain approval for treating patients with high-but-not-astronomical triglyceride levels by the end of 2013. If that approval comes through, the company should be worth a lot more than the current $1.5 billion market cap.

I like the odds. I like Vascepa's potential. I like the prospects of an acquisition. It's sort of like April 25 -- not too hot and not too cold. 

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
$3.69 (3.36%) $0.12
GlaxoSmithKline plc Stock Quote
GlaxoSmithKline plc
$42.38 (1.49%) $0.62
AstraZeneca PLC Stock Quote
AstraZeneca PLC
$54.76 (-1.17%) $0.65

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