Wall Street Overreacting To Amarin Denial: Citigroup Analyst

Published: Sep 12, 2014

Wall Street Overreacting To Amarin Denial: Citigroup Analyst

September 12, 2014

By Riley McDermid, BioSpace.com Breaking News Sr. Editor

Wall Street is overreacting to the Food and Drug Administration’s denial of an appeal from Amarin's to appeal its prescription fish-oil pill Vascepa, a Citigroup analyst said Friday.

Amarin, a biopharmaceutical company focused on the commercialization and development of therapeutics to improve cardiovascular health, has tried three times now to approval for its ANCHOR clinical trial Special Protocol Assessment (SPA). The company said Thursday that the Office of New Drugs (OND) within the had denied Amarin's appeal of FDA's rescission of agreement.

News of the denial sent shares of Irish-based Amarin plummeting 23 percent over the last two trading sessions--which is a bearish overreaction, says Yaron Weber, an analyst who leads Citigroup's biotech research team.

“We believe this should have been expected,” wrote Weber in a note to investors. He added that Citi believes Amarin has plenty of mileage left in its plan for the drug to support a higher valuation.

“Overall, we expect AMRN to ultimately discontinue the large outcomes trial (REDUCE-IT), lowering burn, extending cash runway, and allowing focus on building sales of their cardiovascular drug, Vascepa, to levels that could support upside the current valuation,” he wrote.

Amarin has admitted in the past that it will be an uphill battle to gain SPA agreement reinstatement, but issued a statement saying continuing evaluation of the drug is in the interest of public health. The company continues to wait on a verdict from FDA on the pending ANCHOR supplemental new drug application (sNDA).

Vascepa remains FDA approved and marketed for use as an adjunct to diet to reduce triglyceride levels in adult patients with severe (>500 mg/dL) hypertriglyceridemia.

Citi’s analyst note said that “assuming AMRN ‘throws in the towel’ on further appeals” they expect three potential scenarios, with two of them being “net-positive” for the company.

“[One] FDA issues a Complete Response around ANCHOR, AMRN discontinues the REDUCE-IT trial, reduces burn by [less than] $35 [million] per year extending the cash runway, lowering a financing overhang, allowing focus on building sales in the current MARINE indication to levels to support upside to the valuation. (Modest positive, 85% probability),” Weber wrote. “[Two, the] FDA issues a Complete Response around ANCHOR, AMRN continues the REDUCE-IT trial, burn and financing concerns remain high.”

And thirdly, that the FDA approves the ANCHOR indication, but with a more restricted indication for use, AMRN continues the REDUCE-IT trial. “This is highly positive, [with a] 5 percent probability,” wrote Weber.

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