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Biotech Stock Mailbag: Amarin Pharma

Stocks in this article: AMRN AEZS KERX CTIC AGEN VNDA GSK

BOSTON ( TheStreet) -- Contrary to popular opinion, I am capable of saying something nice about biotech stocks. I'm not all doom and gloom. Don't believe me? Check this out:

"Adam, I recently bought some shares of Amarin (AMRN)," emails Santander S. "The stock is pretty cheap and it has two phase III studies for a fish oil drug that can address a big market. You seem not to like a lot of small biotech stocks, including ones that I do like, but maybe Amarin is a stock we can agree on. What do you think?"

Mailbag

I think we agree on Amarin. I like this stock. The company's lead drug is AMR 101, an ultra-purified form of the omega-3 fatty acid known as Ethyl EPA. Think of AMR 101 as medicinal-grade fish oil, which can be prescribed by doctors to treat patients with high levels of triglycerides.

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I was skeptical when I first looked into the Amarin story because my knee-jerk reaction was to scoff at any company developing prescription-grade fish oil. What's the point? Why can't people interested in lowering their triglyceride levels and improving heart health simply buy cheap fish oil capsules at their local health food store?

Not all fish oils are the same, I learned. The stuff you can buy retail doesn't contain pure omega-3s. By comparison, the manufacturing process Amarin uses for AMR 101 produces a drug that is almost pure ethyl EPA, which makes it more potent. And clinical studies have already demonstrated that higher levels of Omega-3s produce larger, more clinically significant reductions in triglyceride levels.

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More comforting is the fact that GlaxoSmithKline (GSK - Get Report) paid $1.6 billion in 2007 to purchase privately held Reliant Pharmaceuticals, makers of the first prescription fish-oil drug. That drug, Lovaza, generates more than $1 billion in worldwide annual sales for Glaxo, including more than $700 million annually in the U.S.

Who knew that fish oil could be such a big deal?

Amarin is conducting two placebo-controlled, double-blinded phase III studies of AMR 101, both operating under Special Protocol Assessments from the U.S. Food and Drug Administration. The MARINE study is enrolling 240 patients with very high triglyceride levels (>500 mg/dl). The second study, ANCHOR, is enrolling 650 patients with mixed lipid levels (triglycerides >200 mg/dl) who are also taking a statin to lower cholesterol.

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