Approved Drug for Sale at Right Price

After Amarin (NAS: AMRN) got its triglyceride-lowering drug Vascepa passed by the Food and Drug Administration yesterday, the company laid out three scenarios for the launch of the drug early next year:

  • Selling the entire company, letting someone else deal with the launch.

  • A "strategic collaboration," which probably means handing over the launch to a big pharma.

  • Launch the drug itself, which could include renting a sales force from an outsourcing company.

In other words, the biotech is going to do something.

Investors seem less than thrilled with the lack of clarity on Amarin's plans. The stock is down about 10% today.

Listening to the conference call last night, it sounds like management is most interested in selling the company. That would be the cleanest pathway, given Amarin's lack of a pipeline. It just needs to find a buyer.

What's holding up the process? Most companies don't actively look for a buyer or partner right after an approval. Amarin could have sold after the phase 3 trials were successful. Everyone knew the drug was going to get approved.

It looks like potential acquirers -- and I'd throw Merck (NYS: MRK) , AstraZeneca (NYS: AZN) , and Abbott Labs (NYS: ABT) in there given their experience with heart drugs for the masses -- are waiting to see how much exclusivity Vascepa will get before generic competition begins. Amarin will find out next month if it received status as a new chemical entity, which would provide for five years of protection. Longer-term protection will come from patents, but method of use patents like Amarin's tend to be harder to defend than composition of matter patents.

Potential acquirers might also have been waiting for the FDA to issue the label to see how well the drug will be able to compete with GlaxoSmithKline's (NYS: GSK) Lovaza. Amarin scored a clear win there, getting the reduction of cholesterol and Apo B levels onto the label. All Lovaza does is reduce triglyceride levels.

Investors won't have to wait too long to see what Amarin will do. With a launch planned for early next year, the company will need to start hiring sales reps in the fourth quarter if it's going to proceed on its own.

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