Amarin (NASDAQ:AMRN) opens this morning up nearly 25% from this time last week, driven by anticipation of and ultimately receiving a big win on the path to drug approval. All of the 16 panelists on an advisory committee voted in favor of fish-oil derived Vascepa’s cardioprotective benefit after seeing what analysts have called “unprecedented results” from the cardiovascular analyses.
By making it cardioprotective, Amarin’s drug could now be expanded to as many as 15 million U.S. patients should the FDA expand the applications.
AMRN stock had been trading in a defined range of support and resistance for 2019. Even before Vascepa got the recommendation, some analysts were suggesting the stock could more than double from its current price.
Here’s What You Need to Know About Vascepa
Vascepa first received FDA approval in 2012. At that time, the drug was approved specifically to lower triglyceride levels, which have been linked to heart problems. A positive ruling from the FDA sub-committee would allow Amarin to state on the label that Vascepa “can reduce cardiovascular risks” such as a heart attack or stroke.
This would expand the current market for Vascepa by “tens of millions of patients” according to Amarin president and CEO John Thero.
Unlike other pharmaceutical companies, Vascepa is Amarin’s one and only drug in production. So the importance of this ruling can’t be overstated.
Is Vascepa Different From a Fish Oil Supplement?
I take a bee pollen supplement as a more-natural way to conquer a seasonal allergy. My doctor greeted this news with a noticeable eye roll, and a smirk. He simply said, “Well, it can’t hurt you and if you think it’s helping, I won’t tell you to stop.” Gee, thanks doc.
My point is that like bee pollen, fish oil is a supplement that is already providing benefits.
Fish oil produces Omega-3 fatty acids. Just a cursory internet search cited these benefits for Omega-3 fatty acids found in fish oil:
- Lower blood pressure
- Reduce triglycerides
- Slow the development of plaque in the arteries
- Reduce the chance of abnormal heart rhythm
- Reduce the likelihood of heart attack and stroke
- Lessen the chance of sudden cardiac death in people with heart disease
Pay attention to the two items in bold. They are the only two benefits that will potentially be on the label for Vascepa.
I’m all for finding ways to reduce the risk of heart attacks and strokes. And I’m sure that Vascepa has gone through rigorous FDA approval which will make it safer than any guarantee made by a supplement. In this way, I suppose, Vascepa is trying to play the same role as the CBD products being presented by the major cannabis companies.
But unlike cannabis, taking a fish oil supplement is not illegal in any state. And while a doctor may view supplements as a “black market,” patients know what works for them. There are some results that a supplement can’t fake. But that also begs the question of whether patients will be able to make a distinction between an FDA-approved drug and a supplement that they can buy in any pharmacy without a prescription and at a price that is 70% less than Vascepa.
What Does the Future Hold For Amarin Stock?
Regardless of the FDA decision, I have concerns about the future direction of Amarin stock. The approval for an expanded product label could expand AMRN’s potential market by roughly 9.5 million Americans.
But since this addressable market knows that the primary active ingredient in Vascepa is fish oil, would they have a compelling reason to get a prescription if they can take the supplement? I don’t know. It just seems that the company may be inviting competition that currently is hiding in plain sight. And that’s not good news for the long-term outlook for AMRN stock.
The way I see it, buying Amarin stock based on the potential for the benefits from Vascepa is not likely to end well in the long term. There is speculation that the end game is for Amarin to be bought out by one of the major pharmaceutical companies.
Amgen (NASDAQ:AMGN), Pfizer (NYSE:PFE), and Novartis (NYSE:NVG) have all been rumored to have interest in Amarin. This would make sense since, to date, Amarin does not have the infrastructure in place to support the potential addressable market.
As of this writing, Chris Markoch did not have a position in any of the aforementioned securities.