This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Biotech Stock Mailbag: More Amarin, MannKind, Orexigen

BOSTON (TheStreet) -- Welcome to the end of a crazy week. Some of you are still dealing with the lack of electricity or damage caused by Hurricane Sandy, but here's hoping the weekend starts to bring some relief.

This week's Biotech Stock Mailbag is a continuation of Tuesday's live chat. About 1,200 readers posted 390 comments and questions on a thoughtful variety of biotech stocks. A great turnout and much appreciated. Unfortunately, it was only possible for me to publish and respond to a fraction of those questions. (I published or answered 17% of the comments and questions sent to me Tuesday, to be precise.)

Let's see if I can improve upon that response rate today.

Amarin (AMRN) was definitely the most queried biotech stock during Tuesday's live chat.

Patrick writes: "Amarin is a definite takeout, not sure if the price will be in the mid-20s, though."

Bravo33: "You mentioned in commentary back in June that getting NCE for Amarin was more important than its targeted patents. That seems counterintuitive. Do you still hold that belief?"

The five years of market exclusivity that comes with New Chemical Entity (NCE) status and long-lived patents are important. The mistake Amarin bulls made was the belief that the NCE decision (or lack thereof) was insignificant.

Without NCE, Amarin can expect genetic drug makers to quickly file a challenge to Vascepa patents. Generic makers could also try to develop a prescription-grade fish-oil compound that works around Amarin's patents. It's true that these things could happen even if FDA grants Vascepa NCE status, but the timeline is accelerated without NCE. That's why the current NCE mess/delay has weighed heavily on Amarin's stock price.

David comments: "The new AstraZeneca (AZN) CEO suspended the stock buyback. Many believe he won't waste much time in putting that cash to use to address the dearth of AstraZeneca's late-stage assets. Forest Labs (FRX) is seen by some as a fit, Amarin potentially as well. Thoughts?"

We've seen a lot of speculation linking Amarin to a number of Big Pharma suitors, not just AstraZeneca. I can't sit here and say a deal will never happen, but at the same time, I'll remind you that Big Pharma tends to buy assets with maximum market exclusivity and long-lived patents. Patent expirations and generic competition are the reasons many Big Pharma companies are in trouble today, so the last thing they'll do today is buy a drug with a high risk of generic challenge.

MP asks: "How do you know Amarin patents are not important for NCE decision?"

Because I've read the FDA regulations explaining how the NCE decision is made. The decision boils down to whether the active moiety of a drug has received FDA approval previously. Patents don't play a role in the decision:

This is how FDA defines active moiety:

"The molecule or ion, excluding those appended portions of the molecule that cause the drug to be an ester, salt (including a salt with hydrogen or coordination bonds), or other non-covalent derivative (such as a complex, chelate, or clathrate) of the molecule, responsible for the physiological or pharmacological action of the drug substance."

Vascepa's active moiety is EPA -- same as GlaxoSmithKline's (GSK) Lovaza. Since Lovaza was previously approved and granted NCE status, FDA cannot grant NCE status to Vascepa. It doesn't matter that EPA concentrations and purity are higher in Vascepa than Lovaza, or that Amarin has granted patents on Vascepa.

FDA can make exceptions or Amarin can appeal a negative decision. My guess is the delay in making a final ruling on NCE since Vascepa was approved in July is due to the latter.

Zbyrnes asks: "Any theories behind the [Vascepa]NCE delay, particularly if the reasoning for a pending denial is so cut-and-dry?"

Yes, see above for an explanation.

Patrick states: "NCE is becoming less important with all the patents. Amarin will end up getting scooped."

Groman100: "Well, Adam, it looks like no one cares what you think." He also predicts, "Amarin will prove you wrong; NCE is a go."

Guest writes: "Completely agree on NCE but still believe Vascepa has huge market potential and should be very attractive for an acquistion."

We'll see. Hopefully, Amarin pulls back the curtain a bit on Vascepa's future when the company reports third-quarter results. At this point, we all deserve a bit more clarity.

John writes: "Vivus (VVUS) only got NME, not NCE, and it is doing fine."

True, Qsymia combines two generically available medicines so it was not eligible for the five years of market exclusivity as an NCE. Instead, FDA granted Vivus three years of market exclusivity to Qsymia as a New Molecular Entity. I take issue with your assertion that Qsymia is doing fine. The weight-loss drug's launch has been a disappointment, even if it's still in the early stages.

Stock quotes in this article: AMRN, MNKD, OREX, OSIR, ISIS 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs