Amarin slumps as AstraZeneca buys potential rival

Amarin shares fall after AstraZeneca agrees to buy triglyceride drug developer Omthera

Associated Press

NEW YORK (AP) -- Shares of Amarin Corp. PLC fell Tuesday after British drugmaker AstraZeneca said it would buy Omthera Pharmaceuticals, a company that is developing a drug that could compete with Amarin's triglyceride drug Vascepa.

THE SPARK: AstraZeneca PLC said it will pay about $260 million for Omthera, which is developing a triglyceride treatment called Epanova. The deal totals about $323 million including Omthera's cash balances, and AstraZeneca could pay another $120 million based on development for the company's drug Epanova.

Epanova is a fish oil-based treatment coated in a soft gelatin capsule. Omthera plans to file for marketing approval by the middle of 2013.

THE BIG PICTURE: Amarin's Vascepa is a prescription form of fish oil designed to lower triglycerides, a type of fat in the bloodstream. The company is currently allowed to market the drug for use in patients with severely high levels of triglycerides, and it is seeking broader marketing approval.

The Bedminster, N.J., company considered several options as it prepared to start selling the drug, and announced on Dec. 6 that it would hire a sales force on its own. That disappointed investors who were hoping Amarin would be sold to a larger drug company.

Amarin reported its first-quarter results earlier in May, and said Vascepa prescriptions have grown steadily since its launch. It said about 11,800 prescriptions were filled in April.

The FDA is reviewing a request for broader marketing approval that would allow the company to market Vascepa for patients with triglyceride levels that are still elevated, but less severe. The agency is expected to make a decision on that application by Dec. 20. Amarin is conducting clinical trials that could allow it to file for additional marketing approvals.

THE ANALYSIS: Citi Investment Research analyst Jonathan Eckard said the purchase of Omthera is an endorsement of the drugs both Omthera and Amarin are developing.

"While the initial reaction may be 'why not Amarin?' we think a more meaningful take-away is the positive indication this deal reflects on future utility for this class of drugs," he wrote.

Eckard added that Amarin is a significantly larger company than Omthera. FactSet says Amarin has a market capitalization of a little more than $1 billion, and Eckard said it would probably cost at least $2 billion to acquire the company.

SHARE ACTION: Amarin stock lost 41 cents, or 6.1 percent, to $6.37 in afternoon trading, and earlier in the day the stock reached a year low of $6.25. Amarin shares have fallen 47 percent since Dec. 6.

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