AMRN - Sitting on a Gold Mine
Amarin (AMRN - NASDAQ) corporation is biopharmaceutical firm located in Ireland with expertise in lipid science to improve cardiovascular health. AMRN's product Vascepa® (icosapent ethyl) capsules is approved by the U.S. Food and Drug Administration for the use as an adjunct to diet to reduce triglyceride levels in adult patients with severe (TG>500mg/dL).
Amarin currently has 172 million outstanding shares with 31% Institutional ownership.
Cash collections for the sale of Vascepa in the first quarter of 2014 were approximately $11.6 million. Gross margin during the quarter ended March 31, 2014 was 61% as compared to 45% in Q1 2013 reflecting declining expenses. At the end of the first quarter of 2014 the company had $164 million cash. The company estimates cash outflows of 80 million dollars for 2014 and has reserves to make it until the year 2016
Alphabet Soup
To those of you who are new to the alphabet soup of governmental bureaucracy that surrounds the FDA let me try to give an explanation of the events that have placed AMARIN into its current situation .
AMARIN developed a refined fish oil called EPA - the medication is known as Vascepa. EPA has distinct benefits over its nearest exiting competitor Lovaza . Lovaza consists of both DHA and EPA. The DHA component of Lovaza raises LDL (Low density lipoprotein - which happens to be the major atherogenic (causing heart attacks - MI's) particle by 49% . Lovaza has only been approved for triglycerides over 500 mg dl to prevent pancreatitis which can be caused by highly elevated triglycerides.
Vascepa has also received approval from the FDA for the treatment of triglycerides > 500 mg / dl to prevent pancreatitis.
After receiving the above endorsement AMARIN petitioned the FDA to also obtain approval for the treatment of triglycerides in the 200- 500 mg/dl range as well. Note that the treatment of trigs in this range is NOT for pancreatitis but rather for the prevention of CAD ( coronary artery disease ie heart attacks). Most important is the fact that LOVAZA (Produced by GSK) could not apply for this indication since, as previously mentioned they raise the very atherogenic particle LDL by 49% . Many physicians , however, have been and continue to prescribe Lovaza for elevated triglycerides (>200 mg/dl) to prevent CAD and appear to be unaware of its effect on LDL , unknowingly perhaps contributing to the very disease they wish to prevent.
AMARIN petitioned the FDA for this new application of the drug in what is called an sNDA (Supplemental New Drug Approval). The FDA agreed to this new application with several stipulations - these stipulations are called a SPA (Special Protocol Agreement). These included that AMARIN :
1.) Perform a study called ANCHOR - this study was simply to show that the medication did lower triglycerides in patients with levels between 200- 500 mg/dl and was neutral or better on the LDL question
2.) Initiate a study called REDUCE -IT - this is an actual outcomes study to reveal that lowering triglycerides actually will prevent deaths due to CAD
AMARIN complied with these requirements and had a successful ANCHOR study proving what the FDA requested. In the meantime the REDUCE-IT trial was initiated as per FDA request. AMRN thus successfully complied with the SPA (Special Protocal Agreement) contract that they held with the FDA and which was constructed by the FDA .
The actual decision to approve VASCEPA for the treatment of trigs in the 200- 500 mg /dl range is called PDUFA . This stands for Prescription Drug User Fee Act - basically this is a law that was initiated to allow pharmaceutical firms to pay a fee to the FDA to have their medications reviewed in a timely manner.
AMRN shelled out over 1.7 million believe it or not for what has turned into a kangaroo court as described below.
Before actually deciding on the PDUFA the FDA holds an ADCOM (Advisory Committee Meeting). This is a meeting of various specialist in the fields as well as the pharmaceutical firm which is supposedly allowed to present their side of the issue.
Since AMRN had met all the requirements of the FDA's SPA successfully there appeared no reason why the ADCOM would not vote in favor of the sNDA. As a matter of fact as we review the science as outlined below , for an investor to have predicted that the ADCOM would fail to support the medication would leave one with the ff conclusions:
1.0) They totally misunderstood the science as did the FDA
2.0) Outside sources clued them in
Either one speaks poorly - yet I digress
The ADCOM voted NO Approval 9-2 and here is where the highly irregular leaps of faulty and bizarre logic begin as explained below. As of this writing the FDA has not finalized the PDUFA one way or the other. However, in what appears to be an illegal action the FDA has pulled the SPA agreement. Ie the FDA had a contract with AMRN in which both parties agreed that if the endpoints of the ANCHOR protocol were reached the company would receive the sNDA. The FDA can only renege on a SPA if there is proven danger to patients . There are no such dangers since the drugs side effect profile is almost equivalent to placebo.
IN summary ;
1.) FDA approves Vascepa for the treatment of trigs >500 mg/dl for the prevention of pancreatitis
2.) AMRN applies for sNDA for the treatment of trigs in the 200- 500 mg /dl range for the prevention of CAD
3.) FDA agrees to consider sNDA provided AMRN fulfills SPA via ANCHOR study which proves that Vascepa indeed lowers trigs in the 200- 500 mg /dl range and is at least neutral on LDL
4.) ANCHOR study is completed and meets all endpoints
5.) ADCOM committee votes 9-2 against recommending Vascepa for the sNDA (see below)
6.) FDA pulls SPA agreement despite the fact that all endpoints of SPA were met and the medication has no significant side effects
7.) PDUFA remains in limbo at this time despite the fact that the law guarantees a decision within a set time
The ADCOM Fiasco
As noted above since AMRN met all endpoints it appeared that approval of the sNDA by the ADCOM was guaranteed. The FDA however, had something else in mind for AMRN.
It is unclear what was the impetus for the FDA to not approve of Vascepa for the treatment of triglycerides in the 200- 500 mg / dl range, however, an understanding of the greater picture for the treatments of lipids to prevent CAD at the time of the meeting sheds light onto the matter.
Prior to the ADCOM meeting the standard of treatment for lipids was known as ATP (Adult Treatment Panel )III guidelines . Most practitioners were and many still are utilizing these guidelines. These guidelines indicate that first the practitioner should address the patients LDL level - unless triglycerides are greater than 500. However, after addressing LDL that practitioner then examines the triglyceride level. Triglyceride >200 mg/dl are considered to be elevated and are to be treated.
At the time of the ADCOM meeting the FDA was apparently aware that new guidelines were surfacing . The new guidelines focused entirely on risk factors and the use of statins. They simply did not address the issue of triglycerides - they neither supported nor refuted whether trigs should be treated they simply did not mention them . Of course this left many practitioners in a quandary and indeed many organizations especially those that deal with diabetes emphasized the need to continue treating triglycerides. Most practicing physicians took the stand that since there was no mention of triglycerides - the old standards regarding their treatment remained in effect and continue to treat them when >200 mg/dl . Indeed there was no mention to cease treating them and indeed the, major medical societies recognize the importance of TG elevation as a risk factor in CVD including but not limited to: The American Heart Association (AHA), American Diabetes Association (ADA), American Association of Clinical Endocrinologists (AACE), and American College of Cardiology (ACC) who recommend treatment of patients whose TG > 200 mg/dL. .
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The FDA however, in a meeting that became nothing short of a kangaroo court took the stance that triglycerides need not be treated. The irony of the situation was that instead of coming forth and stating that the new guidelines neither endorse or refute treatment of triglycerides they attempted to present studies to indicate that trigs in the 200- 500 mg/dl need not be treated. Apparently the FDA understood that if they indicated new guidelines make no mention of trigs it would be logical to assume that the old guideline with respect to triglycerides remain standing. So instead, for reasons which remain entirely unclear, the FDA did rather instantaneous retrospective research, and incorrectly analyzed previous studies, in an attempt to prove that trigs in the 200- 500 mg /dl need not be treated.
Of course this begs the question - why all of a sudden did the FDA become interested in proving that trigs in the 200 - 500 mg /dl range not be treated when new guidelines make no mention one way or the other ? ie since when did the FDA become a research organization ?
The FDA presented three studies which I will review, however, before doing so I will prove that no matter the results of these studies the FDA's logic in extrapolating from one medication to the next is clearly flawed.
Lets examine the medication Zetia which reduces LDL. Outcomes studies for ZETIA initially revealed it has no effect on reducing CAD (Another study is being conducted) . Consider if Zetia presented to the FDA prior to statins. The FDA would have concluded that lowering LDL has no effect on CAD. Utilizing this logic if statins then presented to the FDA they would have been rejected as the FDA concluded that lowering ldl has no effect on CAD.
Clearly it is contorted thought to conclude that because two medications have the same effect on one marker that the outcome studies of these medication will be the same . The FDA applied this reasoning to Vascepa in a glaring example of faulty logic - concluding that since other medications that lower trigs must not reduce CAD mortality.
Ironically the logical ineptitude ran even deeper as the conclusion were based on studies in which the patients triglyceride levels were not elevated in the 200- 500 mg / dl range ! (see below)
Can it get even worse? Most unfortunately for US citizens - YES! The FDA prevented a study (JELIS) which used the exact compound in question (EPA) and revealed a nearly 20 % reduction in CAD mortality from being utilized as evidence. So on one hand the FDA extrapolates information from different molecules equilibrating similar effects on markers as having similar outcomes, equilibrated lower levels of trigs as being the same risk as higher levels of trigs ( a logical dichotomy when juxtaposed against reason to perform the study) and then on the other hand indicated that a study with a compound of the exact same chemical structure is irrelevant. Lets look closer at the studies presented or rejected
1.) AIM-HIGH study - Presented by FDA
This study examined whether the combination of statin-niacin would provide a greater cardiovascular risk reduction in patients with coronary heart disease and atherogenic dyslipidemia vs statin alone .
The results concluded that Niacin had no effect on the rate of CAD. Of course since Niacin is not EPA this information is useless. (As noted above with Zetia it is scientifically flawed to assume that medications with different mechanisms but the same effects on markers will have the same outcomes studies) However, most amazingly the average triglyceride levels of the patients in this study was 162 mg/dl . This is not even in the range that AMRN requested Vascepa be considered for in the sNDA ( ie > 200 mg /dl) . This is equivalent to saying that since treating people with normal blood sugars or normal blood pressures had no effect on mortality therefore treating people with high BP or high BS will also have no effect on mortality - this is truly embarrassing for the FDA and the ADCOM panel, calling into question credibility or honesty. However, even more embarrassing is that a subgroup analysis revealed that individuals who do have triglyceride elevations in the range that AMRN sought their sNDA DID have a reduction of CAD risk by an amazing 37% !
2.) ACCORD study - Presented by the FDA
ACCORD was to determine Combination therapy with fenofibrate and simvastatin would reduce the risk of fatal cardiovascular events. The answer is it did not however, once again Vascepa is NOT a fibrate and equilibration of drugs with different mechanism is flawed. Ironically the average triglyceride level was once again 162 mg / dl - irrelevant to the group in question with respect to Vascepa's sNDA as outlined above. The same two identical logical flaws
More importantly , however as closer look at the data reveals that in a subgroup analysis, patients with higher baseline triglycerides 284 mg / dl and lower HDL-cholesterol levels benefited with a reduction of CAD risk by 28% This is within the range that AMRN requested for their sNDA!
Of course this is extremely embarrassing for the FDA when they propose that medication for the treatment of Triglycerides in the 200- 500 mg / dl range should be denied because another medication gave no benefit for patients with an average triglyceride level of 162 - but then conveniently ignore the fact that patients with a triglyceride level of 264 mg / dl did have benefit.
3.) HP2S Thrive - Presented by the FDA
This study was to determine if adding niacin to a statin would reduce CAD mortality . It did not . However, once again niacin is not EPA. Ironically the average triglyceride level in this study was 125+ 74. Once again not even in the range that AMRN requested.
Thus in all three studies that the FDA cited we see two consistent logical flaws
· Equilibrating drugs with different mechanism but the same effects on makers as having the same effect on mortality . Blatantly untrue as we revealed with Zetia
· Indicating that since lowering markers that are considered to be in a normal range had no effect on mortality lowering levels that are elevated would have no effect on disease mortality - begging the question as to why then do we then have any definitions of what elevated Blood sugar - blood pressure etc are? Apparently, since treating normal blood pressure has no benefit then neither does treating elevated blood pressure
But wait in a final Grand finale the FDA prevents JELIS study from being cited
4.) JELIS study - FDA Prevented this study from being presented
Performed in Japan to determine if EPA (The active ingredient in Vascepa) would reduce the incidence of CAD when added to a statin. Results revealed a 20% reduction in non fatal coronary artery events despite the fact that the triglyceride levels in question were beneath proposed study values and the recipients were given only half the proposed US dosage of the medication
Ironically this was the only study that utilized the compound in question (EPA) and
and thus was promptly rejected by the FDA. Most unbelievable one of the issues that the FDA presented was the fact that Japanese were already consuming a fair amount of EPA in their diets. This of course is another logical breakdown involving basic pharmacology, as it is generally true that compound naïve patients will have a greater benefit than those with compound already present - ie by doubling a drug dosage you rarely ever double efficacy - most efficacy is obtained in the first amount of compound ingested. Thus the FDA true to form initiates another logical fallacy . If anything, because Japanese already consumed EPA, one would have expected the benefit to be lessened
During the ADCOM meeting at about 22 minute the panelist are given four parameters to consider - one of them being the effect of EPA on CAD. However, one minute later when asked to vote are told to disregard that parameter. Not one panelist questioned this dichotomy
Summation of the Logical Fallacies :
SO lets summarize the broken reasoning and logical fallacies of the FDA;
1.) The FDA agreed to a contract (the SPA previously indicated) giving AMRN an approval of Vascepa for the treatment of trigs in 200- 500 mg/dl range if the guidelines constructed by the FDA (not AMRN ) were met.. AMRN met the guidelines and the FDA then rescinded the SPA contrary to existing law which states they could only do so if there were a medical threat or danger to patients from the medication
2.) The FDA analyzed three studies and in each inappropriately equilibrated drugs with different mechanism of actions as having the same end results. (The real question is are we disregarding the statin of triglycerides because of this fallacy ? think if zetia had come first and this logic was applied ! )
3.) The FDA analyzed three studies in which triglycerides levels were lower than the proposed range of treatment of Vascepa and then unbelievable indicated that if there was no benefit for treating normal levels there would be no benefit for treating elevated levels - which I guess makes it nearly impossible now to define most any 'disease'.
4.) The FDA rejected the only study that actually analyzed the compound being analyzed
5.) The FDA indicates that preexisting levels of compounds in the human body would increase effectiveness - when we know the opposite is usually true
Newest Studies:
The above information in itself clearly reveals severe deficiencies in the FDA's analysis of data - the reasons remain unclear - we either have an organization that is incompetent or malevolent - however, neither case is beneficial for the American public. However, if you are still not convinced that the treatment of triglycerides is warranted, the science has produced a continuous stream of article revealing the benefits of EPA. A few of these are as follows (If not interested please skip to next section)
Effect of purified eicosapentaenoic acid on red cell distribution width in patients with ischemic heart disease - Heart Vessels DOI 10.1007/s00380-014-0526-3 Feb 2014
Conclusion, highly purified EPA may reduce RDW a known risk factor for CAD) in IHD patients. This effect was particularly strong in diabetic patients with high levels of hs-CRP. IHD patients with high levels of RDW may be targeted for treatment with highly purified EPA.
Stabilizing effect of combined eicosapentaenoic acid and statin
therapy on coronary thin-cap fibroatheroma Atherosclerosis 234 (2014) 114e119
Conclusion : Although detailed mechanisms remain unclear, our results
suggest that EPA stabilizes TCFAs better than the statin alone
therapy through greater suppression of vascular inflammation.
Fish oil constituent eicosapentaenoic acid inhibits endothelin-induced 2 cardiomyocyte hypertrophy via PPAR-a Life Sciences xxx (2014)
In conclusion, the present study shows that ET-1 induces significant 380
cardiomyocyte hypertrophy, and that pretreatmentwith EPA attenuated 381
these remodeling events by up regulating levels of PPAR-a pathway
Effects of Eicosapentaenoic Acid Treatment on Epicardial and Abdominal Visceral Adipose Tissue Volumes in Patients with Coronary Artery Disease.
Conclusions: Oral intake of purified EPA appears to be associated with reductions in EAT (Epicardial Adipose tissue ) and AVAT (abdominal visceral adipose tissue) volumes. (both associated with higher incidences of CAD)
Inverse relationship between long chain n-3 fatty acids and risk of sudden cardiac death in patients starting hemodialysis Kidney Int. Jun 2013; 83(6): 1130-1135
In summary, long chain n-3 fatty acids are strongly associated with a lower risk of sudden cardiac death in incident hemodialysis patients during the entire first year of dialysis
Combination Eicosapentaenoic Acid and Statin Treatment Reversed Endothelial Dysfunction in HUVECs Exposed to Oxidized LDL
Poster presentation 1Brigham and Women's Hospital, Harvard Medical School, Boston, MA, USA; 2Elucida Research LLC, Beverly, MA, USA; 3Ohio University, Athens, OH, USA
The results of this study indicate that both EPA and statins have a beneficial effect on endothelial NO production while reducing cytotoxic ONOO- levels. Both EPA and statins improve endothelial function using complimentary pathways, including their ability to
(1) interfere with sources of reactive oxygen species (eNOS and NADPH) or (2) enhance eNOS coupling efficiency due to restored levels of essential co-factors. These data suggest that EPA and statin combination treatment may provide atheroprotective benefits by reducing oxidative stress and reversing endothelial dysfunction.
And many others which for the sake of time I will not post .
The Hammer Falls :
The aforementioned studies are interesting but certainly are not groundbreaking. However, the gavel fell several weeks ago when a landmark study revealed that individuals with a genetic defect that results in lower triglyceride levels have a 40 % reduction in CAD . For those in the know the trail of bread crumbs did indeed lead to what they knew all along - lowering triglycerides will reduce CAD.
Loss-of-Function Mutations in APOC3 and Risk of Ischemic Vascular Disease
Jørgensen AB, Frikke-Schmidt R, Nordestgaard BG, Tybjærg-Hansen A
N Engl J Med. 2014 Jun 18.
This study analyzed data from over 75.000 participants in two Danish prospective studies. The participants with the specific genetic defect that reduced triglycerides had substantially lower rates of CAD in proportion to the reduction of triglycerides.
Conclusion : Life-long low levels of non-fasting TGs due to one of three loss-of-function mutations in APOC3 are associated with lower risk of ischemic vascular disease and ischemic heart disease in the general population.
It may be argues that perhaps these genetic defest also effec other inflammatory markers which are no w considered by any to play a role int eh development of CAD . That may be the case ans therefore it is very important to note that unlike NIACIN , Fibrates and Lovaza) EPA ( Vascepa) has studies revealing reductions in VLDL, LDL, APO C-II, Lp-PLA2 and hsCRP. EPA (Vascepa) also reveals reduction of inflammatory markers similar to the mechanism of statins. (Once again explaining why it is a logical fallacy for the FDA to equilibrate drugs with different mechanism but the same effect on one marker as having the same outcomes .)
Where is the FDA ?
The FDA has been left in an extremely embarrassing position . Numerous logical flaws and misinterpretation of the science led to a ADCOM recommendation that made little sense to those with an understanding of the science at hand. With respect to those non FDA members who predicted that the FDA ADCOM would not support the recommendation for the sNDA they are left with a perhaps even more embarrassing scenario which I will let those with more nefarious minds examine
Suffice it to say that failure of the FDA to approve AMRN's PDUFA will only lead to a flurry of law suits which will be most difficult to defend. The science supported the PDUFA prior to the above landmark study - this study has only proven what JELIS suggested .
To argue the other side of the equation - is it possible that the REDUCE -IT study will fail to show results? Yes it certainly is however, at this time the overwhelming burden of evidence supports approval of AMRN sNDA until such time that REDUCE-IT proves the issue one way or the other.
For the FDA not to approve the PDUFA at this point would be a most egregious error.
THE GOLD MINE :
What does this mean to you the investor. The value of AMRN stock has been artificially deflated compared to its potential. The company continues to sell product for its niche of trig> 500 however, many physicians who understand the data continue prescribing off label to treat trigs in the 200- 500 mg / dl range .
Rx growth has been slow but steady and as KOWA co promotes numbers will continue to grow.
Basically there is not much more downside for AMRN - perhaps, further stock dilution of 20% due to recent financing but it appears that most investors have weighed that into the current price. However, the potential here is vast. The newest studies as mentioned above clearly show a link between lowering trigs and reducing mortality from CAD. It certainly may be argued that individuals with this genetic defect have other alteration in other markers which have not been measured that account for the benefit. However, that does not explain the benefit revealed in JELIS. Also remember EPA has a very favorable profile on these other markers The pieces of the puzzle are slipping together rather well suggesting that they do indeed fit. It is entirely reasonable at this time to argue that a reduction in trig by EPA will reduce CAD until such time that REDUCE -IT offers results. The risks of Vascepa are negligible. Therefore at this time the FDA has a duty to the American Public to allow this lifesaving medication to be utilized in the above arena. The potential for benefit has clearly been developed - the risks are negligible - not to approve the medication would again be an egregious failure and allows insurance companies to rationalize denying payment for the medication
What this means is that the new standard for treatment and reduction of CAD will not just be statins - it will be a combo of a statin and EPA. Doctors will no longer just prescribe Lipitor or Crestor etc - they will prescribe them with EPA - AMRN captures nearly the entire statin market! This is monstrous . The statin market can be estimated to be 35 billion worldwide. Lets say the VASCEPA only captures ¼ of that market used in combo with statins roughly 9 billion dollars of it. The company is currently burning 80 million per year . Quadruple or quintuple those expenses , that still leaves a potential of 8.5 billion per year on 180 million shares - of course that makes the stock invaluable.
As an investor looking at risk benefit ratio - I see very little downside left for AMRN. The science is strongly in support of EPA and statins becoming the new standard of care for the treatment of CAD. What happens if RECDUE-IT fails? AMRN continues to sell product for trigs > 500 mg /dl - the stock price may decrease some but again there is still intrinsic value in the company and the product - and if REDUCE-IT succeeds - a multibillion dollar market.
The issue has never been treating triglycerides - the issue is a new standard, statins and EPA for reducing CAD.
I am sorry that I do not have time to answer individual comments and questions , however (as opposed to the FDA) I do encourage a lively discussion by all interested parties
