Why Amarin will receive buyout offers before March 31
Despite recent articles undercutting the idea that Amarin will receive a buyout offer, it is the most logical outcome and therefore it has a very high probability of fruition. That does not mean, however, that Amarin management will accept an offer by 31 March. I would conjecture that Amarin has already been approach by a Big Pharma or two.
Some have argued that the it would make most sense for BP to bid after Amarin has made an sNDA application or even after it receives label expansion from the FDA. Amarin would be then totally de-risked (one exception – that Astra Zeneca’s trial comes in as equal to Vascepa.) There are several flaws was this thesis. First is that not only would Amarin be de-risked, but it would also be far more valuable, driving up the price Amarin would expect. Additionally, a positive ruling by the FDA, especially with the broadest label expansion, would motivate Amarin management to believe even more that GIA would be the most lucrative (longer term) for shareholders. So, the calculus for a BP competitor is to bid now with some risk or bid later at less risk, but much higher price.
The next reason for BP to bid now is to shepherd the sNDA application and negotiation with the FDA. In the hands of a seasoned team, the odds of receiving a fast-track status or eventual approval, with the widest possible label expansion, is more likely than with Amarin’s team. This is no slight to Amarin’s team; primarily they lack what is realistically an unsavory part of the business – insider connections within the FDA and the medical community – such as the hacks who often sit on ADCOMs. All one has to do is recall William Hiatt’s sabotaging the ADCOM in October 2013. Hiatt went out of his lane numerous times and never declared that he had been paid fees by AstraZeneca on his financial disclosure to the FDA. A BP would have more pull with the FDA to ensure a panel was stacked in its favor, whereas Amarin, will have to accept the panel it gets. Another thing for Amarin management to consider is the bad blood with the FDA – especially the humiliation of losing the freedom of speech case to Amarin. It would be only typical bureaucratic behavior for the FDA to stack a panel in such a way that Amarin does not prevail, or at a minimum is given a minimal label expansion – i.e. only for trigs above 150 and on statin treatment. This factor is probably the most critical for Amarin management accepting an offer in the next two months. The FDA could pull several tricks from its sleeve – 1. State that since the mechanism of action is unknown, a second smaller trial to confirm, or wait for AsraZeneca’s DHA/EPA mixture trial results. 2. State the mineral oil has clouded the RRR and that Amarin will have to run studies showing the effect of mineral oil on lipids and CV outcomes. (I have 30 years executive branch government service within the military and at a high policy level and have encountered numerous bureaucrats who do whatever they want without repercussion.) Amarin management must realize that a vindictive reaction by the FDA is possible, and frankly well above the level of remote.
Another reason for BP to bid now is intertwined with those in the paragraph above. By taking control of the sNDA process, a BP could ensure the full value of Vascepa's intellectual property is realized between now and 2030. Allowing Amarin to face the FDA on its own assumes the risk that some or all of Vascepa’s earnings potential is lost. Delay, denial, follow-up trials, or a mediocre label expansion are all possible outcomes. Taking control of Amarin now optimizes the chances of the most favorable outcome from the FDA. While analysts are predicting $ 1-2 billion sales per year for Vascepa, many with a better understanding of the market, see those figures as off by a factor of ten. BP realizes this as well – USA, Canada, EU, China – trigs above 150 and on statins could generate $30 billion per annum. Prescriptions for diabetics, high trigs but not on statins, etc. are only gravy. The limiting factor could possibly be supply, which could easily be outstripped by demand.
So, I believe BP has been or will be negotiating with Amarin between now and 31 March. The bigger unknown is if Amarin will accept. Price will likely be lower than what management wants, but fear of dealing with FDA may tip the balance toward accepting.
AI
