Biotech Stock Mailbag: Amarin

BOSTON ( TheStreet) -- With my apologies, last week's Biotech Stock Mailbag is a few days late.

"Patent" asks, "Your latest thoughts on Amarin ( AMRN)?"

The next challenge for Amarin and its ultra-purified fish oil AMR101 comes from Omthera Pharmaceuticals as it gets ready to announce late-stage study results from a potentially competitive omega-3 fatty acid product.

Omthera's Epanova is a purified mixture of 55% EPA and 20% DHA with boosted bio-availability that is supposed to more effectively lower trigylcerides (TG) and perhaps stunt increases in LDL (bad) cholesterol. Both EPA and DHA lower TG but DHA raises LDL.

By comparison, GlaxoSmithKline's ( GSK) Lovaza, the currently marketed prescription grade omega-3 fish oil product, consists of 46% EPA, 37% DHA. Amarin's AMR101 is 96% EPA.

Epanova is not being studied head-to-head against AMR101 but that won't stop investors (and everyone else) from comparing the Epanova data with that from Amarin's phase III "Marine" study given both trials enrolled identical populations of patients with very high levels of baseline triglycerides (equal to or greater than 500 md/dl.)

Omthera is expected to release the Epanova data before the end of April. Here are the relevant AMR101 data from the "Marine" trial for comparison:

The 2 mg and 4 mg doses of AMR101 resulted in a 20% and 33% reduction in TG levels, respectively, compared to placebo. Both results were statistically significant.

The low- and high-dose of AMR101 also resulted in an 8% and 18% reduction in non-HDL-C compared to placebo (statistically significant) and a 5.2% increase and 2.3% decrease in LDL-C (not statistically significant.)

One more important data point: The TG baseline for patients in the AMR101 2 mg dose arm was 657 mg/dl and 680 mg/dl for the AMR101 4 mg dose.

With the caveat of reading across different trials, the AMR101 data in the population of patients with very high TG is superior to comparable Lovaza results. Now, we wait to see how AMR101 stacks up against Epanova.

Carson K. asks, "Can you interpret the stocks which did best at the hepatitis C conference last week?"

Gilead Sciences ( GILD) emerged as the clear winner from the European Association for the Study of the Liver (EASL) annual meeting, says healthcare investor and TheStreet contributing columnist Nathan Sadeghi-Nejad.

Nate attended the EASL meeting in Barcelona last week. His assessment and grading of all the major hepatitis C drug stocks is published this morning, so definitely take a look. In addition to Gilead, Nate thinks Idenix Pharmaceuticals ( IDIX) and Abbott ( ABT) come out of EASL stronger, while questions swirl around Bristol-Myers Squibb ( BMY) and Achillion Pharmaceuticals ( ACHN). Vertex Pharmaceuticals ( VRTX) was a definite EASL loser, he says.

For more detail, please check out Nate's comprehensive EASL report.

@JonathanNovak1 asks, "Do you really think Vanda Pharmaceuticals ( VNDA) is a takeover target or were you referring to retail speculation?"

Jon is referring to a Thursday tweet of mine riffing off GlaxoSmithKline's unsolicited bid for Human Genome Sciences: "Inevitable takeout rumors you will hear today, if not already: $NVS-$VNDA, Bayer-$ONXX, Eisai-$ARNA, $DNDN-take your pick"

Novartis ( NVS) isn't buying Vanda Pharmaceuticals. I can't guarantee this prediction, of course, but I would be very surprised if Novartis wants to lose even more money on Vanda than it's already thrown away on this ill-advised partnership.

Fanapt, Vanda's schizophrenia drug that is sold by Novartis, is a commercial flop. Vanda is developing a long-acting version of Fanapt but the value of this product extension is highly questionable given tough competition from more entrenched antipsychotics and looming generics.

Vanda shares trade below cash value. I suppose that's an opportunity for some arbitrage except Vanda's management team seems intent on spending (wasting?) the company's cash on quixotic drug development projects.

On that note, watch to see if hedge fund manager Kevin Tang goes activist on Vanda after filing notice of a 6.9% ownership stake on Friday.

On a related topic, Ronald R. asks, "What's your assessment of the Human Genome Sciences ( HGSI) situation. Will the company be purchased for a higher price and by who?"

This isn't a unique view by any means, but I agree with the consensus that Glaxo is almost certainly the only logical buyer for Human Genome and that Glaxo can raise its $13-per-share bid. Obviously, the market thinks the same since Human Genome shares closed Friday at $14.36.

How much higher will Glaxo go with its bid? The "consensus guess" I hear from some on the buyside is $16-17 per share.

@US_proptrader asks, "Adam, what are your current thoughts on DNDN?"

I'm a long-term Dendreon ( DNDN) bear, mainly because I'm in the camp who believe Provenge use in the pre-chemo setting will be eclipsed by Johnson & Johnson's ( JNJ) Zytiga and later Medivation's ( MDVN) MDV3100. I'm skeptical of the "sequencing" argument -- using Provenge sequentially with Zytiga or MDV3100 -- espoused by Dendreon bulls, especially in the absence of clinical data demonstrating a benefit to this approach.

A survival benefit of four months or more with Zytiga or MDV3100 in pre-chemo prostate cancer patients will be a hindrance to Provenge growth. We'll see the first Zytiga data at the ASCO meeting in June. We already know the survival benefit trends in Zytiga's favor but is not statistically significant; the study was stopped early because of a strong, statistically significant benefit in progression-free survival.

Before ASCO, Dendreon will report first-quarter earnings on May 7. The company guided to quarter-over-quarter Provenge sales growth in the low single digits, which suggests first-quarter sales of $78-81 million. Consensus is $81 million, according to RBC Capital's Michael Yee.

Unless, of course, Dendreon was sandbagging Provenge guidance again...

Key detail on Dendreon's conference call, as it has been in the past, will be "same store" growth, meaning how many doctors who already prescribe Provenge and now starting to use it in additional patients. In order for Provenge to meet even its diminished revenue targets, "same store" growth needs to start kicking in ahead of "new store" growth i.e. doctors deciding to use Provenge for the first time.

@mintysaffron asks, "How does $SVNT look to you?"

Savient Pharmaceuticals ( SVNT) has been justifiably hammered for under-performing sales of its only product, the gout drug Krystexxa. 2011 net sales totaled $6.3 million -- very disappointing. Consensus for 2012 sales stands at $35 million, which seems high given the current run rate.

Savient ended the year with $170 million in cash but the company is also saddled with $175 million in convertible debt due in 2018 -- so net cash is actually negative.

European regulators have Krystexxa under review but if approved, Savient needs to find a marketing partner. Given the drug's poor showing in the U.S. (far fewer gout patients are eligible for the drug than Savient estimates), landing a lucrative European deal seems like a tough task.

Savient has the highest short interest among biotech and drug companies at 43% of its current float. At least some of this short interest comes from holders of the company's convertible debt.

@aschneidermd asks, "Do you think VVUS gets Avanafil approval? If so, any price-per-share estimate?"

Vivus ( VVUS) more than likely gets Avanafil approved but beyond being a short-term trading event, I'm not sure the erectile dysfunction drug is worth much.

Avanafil belongs to the same PDE5 inhibitor class of drugs as Pfizer's ( PFE) Viagra and Eli Lilly's ( LLY) Cialis, except it's more selective, which means it works faster. How much "speed to erection" really matters is up for debate. Vivus doesn't yet have a marketing partner for Avanafil, but better find one soon (and with deep pokets) if the company has any hope at all of making a dent in the market share of Viagra and Cialis.

At this point, analysts who cover Vivus aren't putting much weight behind Avanafil, certainly not compared to the potential of the company's obesity drug Qnexa. Wells Fargo has $9.4 million in Avanafil royalty revenue (not end-user sales) in 2013. Similarly, Lazard has $12.4 million Avanfil royalty revenue in 2013, growing to $13.4 million in 2015.

For the record, Avanafil's approval is forecast by 76% of the contestants in my FDA Drug Approval contest. The top six contestants are all predicting approval.

@CKtalon asks, "Approximately when do you think the discussion questions for $ARNA Adcomm will be released? Thanks!"

The FDA is convening an advisory panel to review Arena Pharmaceuticals' ( ARNA) obesity drug lorcaserin (for the second time) on May 10. The FDA's "briefing documents" -- including the agency's medical review of lorcaserin and the questions to be discussed and voted upon by the panel's experts, will be released publicly on May 8.

--Written 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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