Why Shares in Amarin Corporation Plc Are Soaring

A court decision is sparking enthusiasm for this maker of the triglyceride lowering drug Vascepa.

Todd Campbell
Todd Campbell
May 28, 2015 at 4:09PM
Health Care

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares in Amarin Corporation Plc (NASDAQ:AMRN) jumped by 15% earlier today after the company reported that a Federal district court judge granted the company's motion for summary judgment forcing the FDA to recognize five-year, new chemical entity marketing exclusivity for its triglyceride drug, Vascepa.

So What: Sales of Vacepa have fallen far shy of optimistic forecasts issued prior to its approval in 2012.

The main reason for Vascepa's slow sales pace stems from the fact that it's only approved to treat patients with ultra high triglyceride levels, or levels north of 500 mg/dl. The company's efforts to win a label expansion that would make Vascepa available to a larger patient pool of people fell short in 2013 when the FDA opted to wait for complete data from an ongoing cardiovascular trial.

Since that data won't be available until 2018, Amarin is under a lot of pressure to sure up its patent protection and keep competitors at bay for as long as possible.

Today's announced ruling appears to do that by preventing generic drugmakers from submitting abbreviated new drug applications, or ANDAs, for Vascepa until at least July 2016.

Now What: Based on Amarin's press release today, Amarin will file to dismiss litigation challenging the validity of its Vascepa patents, which cover the drug until 2030. That litigation stems from ANDAs that have been previously filed with the FDA.

Although this news is a plus, some big problems remain for Amarin that should probably make most investors think twice before buying. Specifically, without the expanded label, Vascepa's use is relegated to niche status and fighting to win that label expansion means that Amarin still has to spend big money on its ongoing trial. As a result, profit remains elusive and likely will remain that way for the foreseeable future and that's why I'm content to sit on the sidelines on this one, rather than chase it higher.