Biotech Stock Mailbag: Northwest Bio, Amarin, Titan Pharma

@big_abad asks, "I take it you fully agree with Alex Heisenberg's article last night on AMRN?"

No. I found Heisenberg's takedown of Amarin (AMRN) posted to Seeking Alpha on Wednesday night to be riddled with errors and faulty logic. I've done my share of stating the bear case on Amarin but Heisenberg gets a lot of stuff wrong.

Heisenberg's base assumption is that Amarin's prescription-grade fish-oil pill Vascepa is no different from the fish-oil supplements available in grocery stores. That's not true. Vascepa contains ultra-purified ethyl-EPA, an omega-3 fatty acid. The FDA reviewed and approved Vascepa as a pharmaceutical product, available by prescription only. Vascepa is a drug, just like GlaxoSmithKline's (GSK) Lovaza is a drug.

The fish-oil supplements available over the counter contain lesser amounts of EPA and at a degraded purity. These supplements have not been reviewed by FDA and are not drugs.

Heisenberg writes:

While it's true that the FDA did approve Vascepa, the approval was based on the phase III trial called the MARINE trial. In the trial, Vascepa (referred to as AMR101 in the trial) was compared to a placebo rather than other fish oil products available over the counter. There is no concrete clinical evidence that proves it's any better than other OTC fish oil supplements at achieving its primary endpoint in the trial which was merely to measure if after 12 weeks AMR101 lowered triglyceride levels versus placebo.

If FDA questioned whether Vascepa and OTC fish oil were the same, the agency could have demanded OTC fish oil be used as the comparator against Vascepa in the MARINE trial. The FDA didn't do that and approved Vascepa based on the positive results of the MARINE trial.

In MARINE, Vascepa significantly lowered triglyceride levels in patients with extremely high baseline levels. Heisenberg claims OTC fish oil can also lower triglycerides by an equal amount in these patients. I'm not aware of any such data and Heisenberg doesn't cite any studies.

Heisenberg:

With the same active ingredient as other cheap fish oil pills, there's no evidence nor reason to believe that Vascepa helps "lower risk of all-cause mortality, cardiac death, sudden death, myocardial infarction, or stroke" just as regular fish oil pills do.

Wrong. Published studies have not found regular fish-oil pills lower death rates or reduce heart-related disease. Vascepa might be different but we won't know until Amarin completes a large cardiovascular-outcomes study. Absent conclusive proof that Vascepa does lower the risk of heart-related illness or deaths, Amarin may have trouble turning the drug into a blockbuster. On this point, I agree with Heisenberg.

Heisenberg believes Amarin is a strong sell today. Meh, the stock is already well off the highs seen when Vascepa was approved last summer. A lot of the bad news and worries about the Vascepa launch are baked into the stock at this valuation. Heisenberg's bear call reminds me of an analyst who downgrades a stock after it's dropped 60%.

Looking ahead, there's more upside in Amarin if (and only if) the Vascepa launch goes well. That verdict is far from settled and my sense is investors are in "show me" mode. Amarin shares have traded in the narrow $8-$9 range since the beginning of the year.

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Jason M. writes, "Hey Adam I want to know if you would have the time or maybe shoot me a short email about the company Titan Pharmaceuticals (TTNP). I have been holding since the 3 cents per share and have been buying up and down ever since. I have a cost average of 40 cents per share now and I am still up pretty big. I want to know if you think the FDA will approve or reject this drug. ... I am thinking about getting out of Titan if we hit the $3 mark."

The doubling of Titan's stock price since December seems mostly attributable to the run-up trade into the FDA approval decision for Probuphine on April 30. Titan has said it expects FDA to convene an advisory panel in March to review Probuphine but no definitive word yet, which has me wondering if FDA decided a panel wasn't necessary.

My prediction: FDA approves Probuphine. I don't see any glaring problems with the results from the two phase III studies in opioid addiction. Probuphine is an implantable, long-acting form of buprenorphine, which in oral forms is already approved and widely used to treat opioid addiction.

I'm less confident about the commercial potential for Probuphine. Depending on how much Titan shares run into the April 30 FDA decision, you could easily see the stock sell off post-approval. Drug reformulations have a tough time garnering sales, particularly in markets where they compete against cheaper generics.

-- Reported by Adam Feuerstein in Boston

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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