Amarin is an interesting company – they have a product called Vascepa, which is essentially highly purified fish oil – it is different from omega-3 fish oil that is readily available on grocery stores because it is highly purified and only has icosapent ethyl.
See how clear the pill is?
The company ran a MASSIVE CARDIO-VASCULAR OUTCOME TRIAL – IT WAS A GROUND-BREAKING STUDY – such that it got published in the prestigious New England Journal of Medicine
As you can see in above charts, Vascepa (icosapent ethyl) showed significant separation from the placebo arm – showing that Vascepa can reduce overall cardiovascular events – including death.
Secondary endpoints all moved in favor of Vascepa – further validating enormous benefit that Vascepa brings.
As a result, demand for Vascepa and its generics should increase over time – just like statins, Vascepa / generics are expected to be one of core drugs for lipid management in order to reduce cardiovascular risk.
Given the attractive market, three generics have entered the market – Hikma, Apotex, and Dr. Reddy’s.
Usually generic entries cause catastrophic decline in share erosion, but we are not seeing that with Vascepa.
AND THAT’S BECAUSE OF THE UNIQUE PROFILE OF THE API OF VASCEPA – IT IS NATRUALLY SOURCED (NOT SYNTHESIZED) SO THERE IS NATRUAL CAPACITY CONSTRAINT ON RAW MATERIALS AND IT COSTS A LOT OF MONEY TO PURIFY THE PRODUCT.
Below workflow table shows just how complex the supply chain is –
Check out Hikma management team’s comment –
Yeah. So, if I take both products — so, in terms of Icosapent, the challenge here is we got
the third player in the market that’s now actively marketing at the moment, so Apotex
introduced by the end of last year as a new entrance to the market. We don’t know if Teva is
coming or not. They have approval in hand, but they haven’t launched the product. So, at
the same time, there’s still a shortage in — of supply in the market.
If you look at IQVIA for fourth quarter, you still see that Amarin remains about 80 percent.
Apotex is still at zero because they just launched by the end December, so they don’t
register yet, but they are active in the market in early this year. I think we came up 14
percent and Dr Reddy’s at six. So, you can still see that there is a shortage everywhere in
the market. We are working everywhere to increase our supply. I think, for the time being,
we expect increase a little bit through the year.
But the step-up in increase would mean, to our expectation, would mean a big step-up,
would mean that the FDA has to be inspected some sites for us and maybe for the others.
So, that’s the reason, because the queue at the FDA to get the quality inspection for foreign
plants is very long at the moment, and this is not the priority. So, there could be some time
until you see a big step up in the generics with a significant API supply in the market. So,
three-player market is quite competitive, but only about 20 percent of last year, probably a
little bit more now, in terms of business.
Key lessons are: SUPPLY / SUPPLY / SUPPLY PROBLEMS
THESE EVIDENCE SUPPORTS THE CASE THAT VASCEPA SHOULD NOT SUFFER CATASTROPHIC EROSION – DAMAGE MAY BE DONE AND HAS POTENTIAL FOR STABILIZATION FROM HERE.
At $3/share, current enterprise is $750M with $450M of cash while US business is stabilizing and EU business is just beginning.
At current run-rate of $400M of US sales, it implies 2x sales – when other companies with little to no growth with LOE overhangs tend to trade between 3-4x like $ACAD.
I see this as a potential tuck-in acquisition target for any pharma company with existing cardiovascular franchise or newly established consumer healthcare companies coming out of $GSK, $SNY, or $JNJ.
Looks like I am not the only one thinking like this – we now got Sarissa Capital Management (Alex Denner) chasing them – with 6% ownership of the company.
their recent purchases have started at >$3.50 per share per 13D
Stock has been sitting in the gutter – could take some time, but value is there.
*not investment advice
