Orelli: Me neither.
Macaluso: Let’s circle back to Vascepa’s launch. This is one of many biotechs getting its newly approved drug on the market and, looking at launches historically, it’s tremendously difficult for small companies to commercialize products without big pharma partners. Should investors see companies that are launching a drug as riskier investments than biotechs that are seeing FDA approval?
Orelli: It depends entirely on the size of the market. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN)s and Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) don’t need a big pharma to launch their orphan drugs. There just aren’t that many doctors to cover since there aren’t that many patients. For medium-sized markets like cancer drugs or Vascepa’s current indication, I think smaller biotechs can make it work. Launches are likely slower than they would be with a big pharma partner, but the biotechs that remain independent retain more of the economies of scale as sales increase.
Amarin Corporation plc (ADR) (NASDAQ:AMRN) will certainly need a partner for the expanded indication they just applied for. I’m a little surprised they didn’t get it done before launching. It should make investors worried that no big pharma partners have stepped up.
Macaluso: It was only a couple of months ago that investors were speculating that an acquisition by AstraZeneca plc (ADR) (NYSE:AZN) or Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) was just around the corner, and now those rumors have just disappeared. Interest has clearly died down, so it looks like the company just has to focus on sales right now.
Orelli: It seems reasonable to assume that there were potential partners taking a deeper look into Vascepa as a potential acquisition or licensing deal. The company said that it was exploring that option.
It kind of makes you wonder what they discovered. There are a lot of unknowns that can change the valuation: validity of patents, whether the FDA will approve the expansion into more patients, and whether the outcomes trial will come out positive.
Of course, it could be companies are interested and management is just driving a hard bargain. Hopefully it doesn’t backfire.
Macaluso: Like any biotech, there are plenty of risks and lots of uncertainty up ahead for Amarin, but I’m cautiously optimistic about their chances given the product’s efficacy and management’s experience in this space. What are your thoughts?
Orelli: Management’s experience with Lovaza shouldn’t be discounted. But I circle back around to the lack of a partner. Potential partners are getting more information about the drug from Amarin Corporation plc (ADR) (NASDAQ:AMRN) than you or I have. If they’re not willing to pull the trigger, that worries me.
Macaluso: That’s a great point to keep in mind.
Orelli: I thought Amarin would be sold by now. In fact, I have a script that formats a company’s name in the Fool format when I type in the ticker symbol. I never set up the shortcut for Amarin because I always figured it would get acquired soon.
The article Analyst Roundtable: Any Surprises in Amarin’s Fourth Quarter? originally appeared on Fool.com and is written by Brian Orelli.
Fool contributor Brian Orelli has no position in any stocks mentioned. Max Macaluso, Ph.D. has no position in any stocks mentioned. The Motley Fool recommends BioMarin Pharmaceutical.
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