Amarin Receives Rejection on Heart Drug Patent Application

Amarin AMRN has received a rejection letter from the U.S. Patent & Trademark Office for its drug, AMR101, which treats high levels of triglycerides, a fatty blood substance that can lead to heart problems. It is projected to be a blockbuster drug, with potential annual sales of up to $2 billion. Amarin investors have been enthusiastic about the drug's prospects, as two highly successful Phase 3 trials showed that AMR101 lowered triglyceride levels without raising levels of LDL (bad) cholesterol. While Amarin shares fell on the news by 7 percent, the company taking a more conservative view. "The posting was a surprise, but a final rejection doesn't mean the ultimate rejection of the patent," stated Amarin spokesman David Schull. "The company is waiting to receive the letter and then will address the USPTO's concerns. This is part of the back-and-forth patent process and Amarin has a significant intellectual property portfolio." Amarin is seeking several method-of-use patents which would grant additional years of exclusivity to AMR101 to treat high triglyceride levels as a way to prevent generic competitors from stealing market share. While FDA law provides for 5 years of exclusivity, Amarin is seeking a much longer term, perhaps in an attempt to boost its prospects for potential buyers. "Amarin is not getting bought for $100 a share with eight years of exclusivity," stated Monness Crespi analyst Avik Roy. Amarin CEO Joe Zakrzewski has mentioned potential interest from many potential partners. "I have more companies interested in this asset than employees," he boasted at a January J.P. Morgan Healthcare Conference in San Francisco. While details of the rejection letter have not been made entirely clear, a previous rejection issued in June stated that Amarin's application was in conflict with another patent that was issued to Mochida, a Japanese drug firm, for its fish-oil drug Epadel. The company planned to appeal the decision, and a Canaccord Genuity analyst said in a Wednesday research note that issuance of an AMR101 patent could be delayed until the second half of 2012. While the rejection of Amarin's patent application is a short-term obstacle to the company, long-term prospects remain much more favorable. AMR101 remains as the most effective treatment of high triglycerides and the most likely to capture a large share of the market. Given that the stock has traded as high as $19.87 on favorable prospects and takeover rumors, there may be a buying opportunity as investors react harshly to the patent rejection. ACTION ITEMS Bullish: Traders who believe in AMR101's prospects will look to consider the following trading opportunities. • Amarin previously traded at nearly $20 on takeover speculation. While CEO Joe Zakrzewski has stated that such a takeover will not happen for another year, long-term investors may want to consider purchasing shares in advance of such news. • Amarin plans to appeal the patent rejection decision. If such a reversal were to occur, Amarin may recapture some of the losses incurred today. • Amarin plans on submitting an NDA before the end of September. If the company can obtain approval of its submission, then expect to see a PDFUA date set for the spring of 2012. Bearish: Traders who see the patent rejection as a major obstacle to AMR101's success will look to other options. • Amarin's stock has nearly tripled in the past year, as successful Phase 3 trials have boosted confidence in AMR101's approval odds. Investors may want to consider put options should the FDA cite any safety or efficacy issues that have not been made public. Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.