A new hope for Amarin? Vascepa generic settlement leaves analysts split on patent appeal success

Eyeing blockbuster sales for its cardiovascular drug Vascepa, Amarin took a nightmarish hit in March when a federal judge struck down key patents. Now, in its quest to overturn that ruling, the company has snagged a settlement with one generic challenger—but analysts are split on whether that deal portends a win for Amarin on appeal.

Amarin agreed Tuesday to a settlement with generics maker Apotex that would put off a Vascepa copycat until August 2029 if the New Jersey drugmaker wins its appeal to reinstate Vascepa’s underlying patents.

The deal will bring Apotex in line with Teva, which previously agreed to delay its Vascepa generic until 2029, SVB Leerink analyst Ami Fadia said in a Wednesday note to investors. If Amarin loses its appeal, Apotex would immediately be able to launch its generic without any new litigation.

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For Cantor analyst Louise Chen, the settlement suggested that Apotex might see a path to Amarin winning its appeal, despite investors’ lack of enthusiasm about the drugmaker’s chances.

“If Apotex thought [Amarin] would lose the appeal then it could have waited a few months for a near-term opportunity to launch versus waiting until 2029,” Chen wrote in a Wednesday note to clients. “We think this settlement could potentially move sentiment toward a potential win for [Amarin].”

Fadia, however, noted that a deal with Apotex––a generics maker that is not party to the patent lawsuit––didn’t mean much for Amarin’s patent appeal and represented a strategic “doubling down” on the outcome of the lawsuit.

“In our view, today’s settlement puts more at stake for Amarin, and reflects management doubling down on the strength of its appeal’s case, although we don’t disagree with the decision given the risk/reward on the appeal is heavily skewed to the upside,” Fadia wrote.

RELATED: Amarin’s Vascepa loses one more shield with Hikma’s generic approval

In May, the FDA approved a Vascepa generic from Hikma Pharmaceuticals, one of the drugmakers that’s party to the Amarin patent lawsuit.

Theoretically, Hikma could roll out its copy “at risk” now, but if Amarin prevailed on appeal, the generics maker would face the prospect of paying hefty damages. Its approval announcement didn’t specify any launch plans, only noted that the appeal is pending.

For Amarin, if the appeal fails, the company said it’ll reduce its marketing and commercial spend in the U.S. and consider launching its own generic, according to a quarterly SEC filing.

Amarin had big plans for the drug after it scored a landmark CV risk-reduction label expansion back in December. The company forecast 2020 sales of $650 million to $700 million with blockbuster hopes beyond that.

RELATED: Disaster at Amarin: Patent loss spurs stock spiral, but all hope might not be lost

The Nevada ruling in March came as a huge shock for both Amarin and its investors, but some analysts saw hope for the branded drug despite the monumental hit.

In a note to investors after the ruling, Jefferies analyst Michael Yee said there were “rays of light” in the long term for Amarin shareholders, but the short term looked grim with an appellate ruling likely taking at least nine months to come down.

“We were surprised by the patent ruling and loss as evidence suggested it was a high hurdle… but this is why companies try to enter into any settlement regardless and do what they can to try to protect shareholders from bad scenarios where possible,” Yee wrote.

Yee noted that would-be generics challengers still face obstacles on the way to market, not the least of which would be developing manufacturing facilities for pure EPA, the omega-3 fatty acid on which Vascepa is based.