Amarin Corp Plc (AMRN)

[beachboat983]

MEDACorp Lawyer Suggests Low Likelihood of AMRN Win on Appeal

• Bottom Line: Following our discussions with a MEDACorp lawyer,
we see a low likelihood of Amarin being able to reverse the District
Court ruling in an appeal. AMRN shares have gone up ~30% in the
last two trading days, with heightened optimism on the company's
chances of reversing the ruling upon appeal based on a potential
major procedural error, which relates to the process by which
Judge Du arrived at her obviousness conclusion. We do not come
to the same conclusion based on our work; however, we reiterate
our $7 PT and remain OP based on Vascepa's OUS opportunity,
which we view as underappreciated at current stock levels. Our
takeaways are as follows: (1) It is not obvious to us that Judge Du
committed a procedural error in arriving at her decision, and even if
such error did occur, we believe it may be an error of no consequence
to the final conclusion on obviousness. (2) Appeals Court rulings history
suggests that there is no consistent position on whether the prima facie
obviousness approach constitutes a major procedural error. The 12
Circuit Judges who could form the three person Appeals panel have had
different positions on the prima facie obviousness approach, and so the
composition of the panel could influence whether or not it deems Judge
Du's method of analysis a major procedural error. (3) We don't believe
that even if this is deemed a procedural error, this would give Amarin the
outright win. More likely this issue would be remanded back to the District
Court, and it's not clear that this would have enough bearing to change
Judge Du's decision, given her analysis still appears to have looked at
the four factors in totality. (4) On the matter of obviousness, aside from
the matter of law, the Appeals Court would defer to the District Court on
the finding of facts. Also, we believe generics do not have an insignificant
chance to win on infringement should they appeal that ruling, which would
be further risk to Amarin because they cannot lose on this point to prevail
on the patent litigation.
• Optimism of an Appeals win appears to be based on a potential
major procedural error, which relates to the process by which
Judge Du arrived at her obviousness conclusion. The standard for
obviousness has its genesis in the Graham v. John Deere Co. (1966)
decision which outlines an analysis of four factors: (1) the scope and
content of the prior art; (2) the level of ordinary skill in the pertinent art;
(3) the differences between the prior art and the claims at issue; and (4)
secondary considerations. The procedural error in question relates to how
the four factors were assessed, either: (A) All four factors are assessed
together in totality before reaching an obviousness conclusion, or (B)
the first three factors are assessed to reach a prima facie obviousness
conclusion, and the fourth factor of secondary considerations is assessed
in rebuttal to the prima facie case. In District Court litigation, the
standard for generics to win on obviousness is high because there is a
presumption of patent validity that must be proved otherwise, and by a
clear and convincing margin. While scenario (A) maintains this standard
for generics, scenario (B) may be a shortcut approach that shifts the
burden of proof to Amarin on the secondary considerations. Based on he

as scenario (B), but it also appears that all four factors were weighted in
totality to arrive at her conclusion.
• It is not obvious to us that Judge Du committed a procedural error
(i.e., did not look at all four factors in totality), and even if such
error occurred, it was an error of no consequence. The MEDACorp
lawyer noted that while Judge Du's explanation that she first discusses
the defendant's prima facie obviousness case was not appropriate, she
also explains later that she arrived at her decision in view of all four
Graham factors in totality. Further, she also indicated that the evidence
from secondary considerations was weak (two were in favor of Amarin,
four for the generics) and did not overcome the finding of prima facie
obviousness. The MEDACorp lawyer did not find issue with this teetertotter
approach of weighing the secondary considerations to assess its
overall strength. In essence, all four factors went into her final decision,
and therefore the question on whether the factors are looked at in
combination or sequentially may not be of consequence.
• Appeals Court rulings have not had a consistent position on
whether the prima facie obviousness approach constitutes a major
procedural error. Appeals Courts have not consistently deemed that
the use of prima facie obviousness constitutes a major procedural error.
For example, the case In re Cyclobenzaprine Hydrochloride Extended-
Release Capsule Patent Litigation (Fed. Cir. 2012) was a 3-0 decision
rejecting the prima facie approach, but Merck Sharp & Dohme Corp. v.
Hospira, Inc. (Fed. Cir. 2017) and Intercontinental Great Brands LLC v.
Kellogg North America Co. (Fed. Cir. 2017) both were ruled 2-1 in favor
of this approach. Furthermore, the Cyclobenzaprine case involves Judges
Newman, O'Malley, and Reyna, and it's this same subset of Judges who
formed the dissenting opinion in subsequent prima facie obviousness
procedural cases we highlight. The Merck case saw a different pair of
Judges forming the majority (Judges Lourie and Hughes) with Judge
Newman dissenting, and in the Kellogg case, yet another pair of Judges
formed the majority (Judges Prost and Taranto) with Judge Reyna
dissenting. All seven Judges we list above are active sitting Judges of
the 12 comprising the US Court of Appeals for the Federal Circuit who
could form the three Judge panel, and therefore we believe there is no
guarantee that the Amarin Appeals case would comprise a set of three
Judges that would in the majority deem this a major procedural error.
• Overall, based on our discussions with a MEDACorp lawyer, we
see little possibility of the District Court's decision being overturned
on appeal. Our reasons behind this conclusion are as follows: (1) It is
not apparent that the conclusion on obviousness will change even
if there was a procedural error. The MEDACorp KOL believes it is
unlikely Amarin could outright win based on this procedural error, with
the more likely option being that this issue gets remanded back to the
District Court. Furthermore, it's not clear that this would change Judge
Du's overall conclusion on obviousness. (2) The likelihood of an error in
fact finding are low. While the Appeals Court will determine obviousness
de novo, deference on the finding of facts will be given to the District
Court unless there was a clear error committed in fact finding, one of
which was not obvious to the MEDACorp lawyer. (3) Ruling on induced
infringement could be overturned on appeal. While Judge Du ruled in
favor of Amarin on induced infringement, generics will likely appeal this
ruling, and the MEDACorp KOL found that her argument was problematic
in that it noted that "on average" the Clinical Trials section would induce
infringement. Recall that Amarin needs to win on both infringement and
validity to prevail in the patent litigation.

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