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TheStreet Open House

Biotech Stock Mailbag: Amarin, MannKind, Palatin

Stocks in this article: MNKDPTNAMRNIMMUSPPI

BOSTON ( TheStreet) -- This week's Biotech Stock Mailbag:

I need to elaborate on a point about Amarin (AMRN) I first made Tuesday on Twitter.

It didn't take long for responses to roll in...

No, I'm not.

Nope. I mean FDA will reject Vascepa for the "Anchor" mixed dyslipidemia indication. There will be no approval in December or earlier.

Thank you.

And if FDA rejects Vascepa for the "Anchor" indication -- as I believe the agency will do -- my "brass ones" will take on a high-gloss shine, right?

FDA will reject Vascepa for the "Anchor" indication because Amarin lacks clinical data demonstrating a cardiovascular benefit for its prescription-grade fish oil in this mixed dyslipidemia population. There is no urgent or unmet medical need for these people, but there is considerable doubt raised by recent published studies showing fish oil does nothing to reduce death, heart attacks or strokes.

FDA can ill afford a repeat of the niacin situation in which a heart drug ( Merck's (MRK) Tredaptive) is approved based solely on an improvement in a laboratory measurement. Then, years later, the drug is found to have no real clinical benefit.

Amarin wants FDA to approve an expansion of Vascepa's label to cover the treatment of 36 million Americans with mixed dyslipidemia. These are people already on cholesterol-lowering statins but who still have moderately elevated levels of triglycerides, a fatty substance found in the blood.

Right now, Amarin has zero data proving these patients benefit from taking a prescription-grade fish oil like Vascepa. The company's FDA submission is based on a phase III study dubbed "Anchor" showing reductions in measurements of triglycerides and "bad" cholesterol. That's not enough. FDA has no incentive and is under no pressure to approve Amarin's application without data demonstrating real clinical benefit. A Special Protocol Assessment (SPA) agreement between Amarin and FDA for the "Anchor" study does not compel the agency to approve Vascepa.

The wait for more definitive Vascepa outcomes data is not too long. Amarin's 8,000 patient "Reduce-It" study is expected to complete in 2016 and is designed to determine whether the addition of Vascepa to statin therapy reduces the risk of death or other major cardiovascular events like heart attack and stroke. If in two years Amarin demonstrates Vascepa significantly improves survival or reduces the rate of heart attacks and strokes in mixed dyslipidemia patients, then FDA will approve an expansion of the drug's label. If not, FDA won't need to waste its time.

I emailed Dr. Steve Nissen, well-known Cleveland Clinic cardiologist, to ask his opinion. Should FDA approve Vascepa for mixed dyslipidemia based solely on the data from the "Anchor" study?

Nissen's response:

Adam, I strongly oppose approval of fish oil for treatment of mixed dyslipidemia in the absence of outcome data. To date, all of the contemporary studies of fish oil have failed to show a cardiovascular benefit. The FDA should wait until the REDUCE IT trial is completed before considering this application. Similarly, physicians should not prescribe fish oil products except for the few patients with triglycerides about 500 mg/dL. Unfortunately, the prior fish oil products did not conduct any outcome trials, leaving the medical community with many questions, but no answers. We should not make the same mistake a second time.

I couldn't agree more, Dr. Nissen. And I believe FDA feels the same way. We'll know for sure in December.

An email from Tim:

You have recently written about the predicted failure of MannKind (MNKD) and its shares. You even used some diabetes "expert" to further your views. But, it seems you failed. The shares have exploded in the last 2 1/2 months. I suspect you have lost a lot of relevance (assuming you had some at some point). $1.75 Billion now.

Tim is correct, MannKind's stock price has increased dramatically. Here's a three-month chart comparing MannKind to the Nasdaq Biotechnology Index: ^NBI Chart ^NBI data by YCharts

MannKind's market value is now closer to $2 billion, making the stock even more over-valued than it was three months ago.

Tim mis-labels the speculative bubble in MannKind's market value for confirmation that the company's inhaled insulin product will be a commercial success. Sorry Tim, you've got it all wrong.

I'm certainly not surprised to see MannKind's stock price rise ahead of the Afrezza study results in August. This is a classic run-up, turbo-charged by the biotech bull market and retail investors' cultish adoration for Al Mann.

I called it last April, when I said to expect MannKind shares to trade higher:

Sure enough, the run up into the Afrezza data is under way, with MannKind shares closing in on $4. Enterprise value is now a ridiculously high $1.2 billion. Stupid but no surprise given the retail investor cult still worshiping at the feet of company founder Al Mann.

The MannKind bear thesis stands.

Ed S. emails:

"I wanted to get your thoughts on Palatin Technologies (PTN). Looks like they are going to phase 3 with their female sexual dysfunction drug. Thoughts? I think the stock is way undervalued due to its potential. Plus, I see no competitors in sight."

Palatin is developing bremalanotide for the treatment of female sexual dysfunction (FSD) -- a potentially lucrative and untapped commercial market but one that's also caused major headaches for Procter & Gamble (PG) and BioSante. Let's take a closer look at Palatin's effort.

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