FDA Rescinds SPA for Amarin’s Vascepa, Now What? Print
By Brian Wilson-Lead Contributor   
Thursday, 31 October 2013 07:56
Yesterday, the beaten down small pharmaceutical company Amarin (NASDAQ: AMRN) received word that the FDA had rescinded the Special Protocol Assessment (SPA) declaration that was originally given to Vascepa for the ANCHOR indication. This move, which reflects the sentiment that was given during the recent advisory committee meeting, essentially kills any remaining hope that the FDA might have approved Vascepa for the MARINE indication on December 20th, 2013. Understandably, the stock reverted to 52-week lows close to $1.80 per share.

Amarin can still market the drug into the MARINE indication, which lets the company sell the product as a triglyceride-lowering drug for patients with >500 mg/dL (very high levels). This allows the drug to effectively compete with GlaxoSmithKline’s Lovaza, which is another prescription omega-3 product that targets the same indication. However, it is generally agreed that this indication severely limits Amarin’s prospects in the long run. Based on the company’s own estimates, the ANCHOR indication is roughly ten times the size of the MARINE indication.

There are also questions emerging on whether Amarin can stay afloat after this setback. Amarin does hold a lot of cash, although the company has also issued a fair amount of debt that still creates a ~$450 M enterprise valuation. While cheap for a company with an FDA-approved drug, it’s worth noting that the margins on Vascepa are not very high. It would be hard to justify a higher valuation unless sales continued to grow going into 2014, which is why investors are not keen on buying AMRN shares - even at current prices.

To reach earnings-positive territory, the company has decided to eliminate about 50% of its workforce worldwide. High-performing sales professionals will remain, and the company intends to continue commercialization into the MARINE indication. It’s not fully determined what will happen to REDUCE-IT, although it’s still possible that the trial will eventually reach completion. Investors may also be pressuring the company to look for partnership arrangements, which may have been readily available to the company in previous years.

But what’s more important here is the impact that this has on the biotech space as a whole. Although a Special Protocol Assessment was given to Amarin, ANCHOR was thoroughly rejected by the advisory committee and is almost certain to be rejected by the FDA come the December PDUFA date. Although Amarin was successful in the trial, and essentially followed the rules, we saw retroactive changes made because of the outcomes of clinical trials performed by third parties. Although these trials did not determine that Vascepa was more risky than expected, the efficacy of the drug as a cardiovascular risk prevention medication was recently thrown into question.

The ANCHOR label included both the triglyceride-lowering indication (200-500 mg/dL) and the cardiovascular risk indication. We may see an attempt to market with the triglyceride indication alone at some point if REDUCE-IT is either unsuccessful or discontinued.

Overall, Vascepa still has a lot of potential as a triglyceride-lowering agent - although Amarin must first focus on streamlining its existing business. If the company can reach profitability next year, there is still potential to recover lost ground. However, it’s unlikely that this company will ever meet the expectations set by M&A speculators last year who were expecting an acquisition of the company in the $20-30 per share range.

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