Until late Monday, Amarin Corp. PLC (NASDAQ: AMRN) continued to get good news relevant to Vascepa (icosapent ethyl), the company’s treatment for cardiovascular disease. Last December, the U.S. Food and Drug Administration (FDA) approved Vascepa to reduce cardiovascular (CV) events in people with elevated triglyceride levels and either established CV disease or diabetes with other persistent cardiovascular risk factors. Vascepa has been shown to reduce the risk for heart attacks and stroke.

On Monday, the company reported that another study demonstrated that on-treatment serum EPA (eicosapentaenoic acid) levels from Vascepa, administered at 4 grams per day, strongly correlated with reductions in CV events in the previous study.

The big news, though, was lurking in Nevada federal district court, where a judge ruled late Monday in favor of two companies that had challenged Amarin’s patent on Vascepa.

Amarin shares rose about 2.6% Monday to close at $13.58. In Tuesday’s session, the stock traded fell to a new 52-week low of $3.95. Shares had traded at a 52-week high approaching $25.00 in late November, anticipating the FDA approval that arrived the following month.

What Just Happened

The plaintiffs in the Nevada case were generic drugmakers Dr. Reddy’s Laboratories Inc. (NYSE: RDY) and Hikma Pharmaceuticals. The firms had argued that Amarin’s patent claims were “obvious.” GlaxoSmithKline PLC (NYSE: GSK) already had received FDA approval for a similar product, Lovaza, as a treatment for high triglyceride levels.

The judge in Nevada upended the seeming safety of the Vascepa patent, declaring that even though generic versions of Vascepa would infringe on claims in Amarin’s patent, those claims were “obvious” and invalid. Amarin holds six patents on Vascepa, a synthetic formulation of fish oil.

In a press release following the Nevada ruling, the company said:

Amarin strongly disagrees with the ruling and will vigorously pursue all available remedies, including an appeal of the Court’s decision and a preliminary injunction pending appeal to, if an ANDA [abbreviated new drug application] is approved by FDA, prevent launch of generic versions of VASCEPA in the United States.

There are no pending ANDAs for generic versions of Vascepa, but both Dr. Reddy’s and Hikma are likely to have something set to go by later this year.

Volatility and Amarin’s Share Price

Since March 10, the stock had dropped nearly 28%, recovering nearly all that as of last Friday’s closing bell. That kind of share price movement suggests that something other than company fundamentals are in play.

Rounding up the usual suspects, the implied volatility of Amarin’s share price looks like the reason for last week’s big swing. For the April 9 contract expiring in eight days, the implied volatility on the $13.50 strike price was around 285% for a call option. The put option for the same day at $8.50 a share was more than 325%.

The volatility index (VIX) dropped nearly 14 points Monday to below 57. On March 18, the VIX was more than 85. The long-term average for the index is 19. A $2.2 trillion dollar economic relief package can do a lot to smooth out a bumpy price trajectory.

What Else Does Amarin Have in Its Product Pipeline?

Amarin does not have a pipeline so much as just the one potential blockbuster drug.

The company has more or less put all its eggs in one basket, and that basket is named Vascepa. This might seem like a gamble, and it is, in the sense that it’s a calculated risk. Yet, Amarin played this game before and won when the drug was approved last year. The hard part appeared to be over until Monday’s court ruling.

One major advantage that Amarin was believed to have had was a lack of competition for Vascepa on the horizon. Acasti Pharma Inc. (NASDAQ: ACST) and AstraZeneca PLC (NYSE: AZN) made attempts at this and devoted millions of dollars to create drugs that could take market share from Amarin. Neither of these attempts was successful.

An Acquisition May No Longer Be an Option

At the beginning of March, the company’s market cap was $5.7 billion, and at the latest look, the market cap is $1.5 billion. Last November, when Novartis A.G. (NYSE: NVS) agreed to splash out $9.7 billion for Medicines Co. (NASDAQ: MDCO), there was some speculation that Amarin and Vascepa would be swallowed up next. The acquisition of Medco brought the pharmaceutical giant a cholesterol-lowering drug for heart patients called inclisiran.

Vascepa has patent protection until 2029, and the CV medicine would fill a hole in the Pfizer Inc. (NYSE: PFE) lineup. Since losing patent protection on Lipitor in 2011, Pfizer has not had a cholesterol fighter. Among other prospective buyers mentioned at the time was Gilead Sciences Inc. (NASDAQ: GILD). It had recently added a Vascepa cohort to a phase 2 trial in nonalcoholic steatohepatitis (NASH).

In November, some Amarin bulls believed the company could fetch $20 billion. A more realistic estimate before Monday’s court ruling might have been $8 billion to $10 billion. But that included nine more years of remaining patent protection on Vascepa.

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