On Wednesday, Oppenheimer analysts reiterated their Hold rating for Amarin (NASDAQ: AMRN). It’s fitting, since the biopharmaceutical company is in a holding pattern of its own.

The Dublin, Ireland-based pharmaceutical company was a stock star last year, but has seen its fortunes reversed. Amarin’s potential blockbuster drug for cardiovascular disease, Vascepa, is under attack from two would-be generic competitors.

The Generic Threat

Vascepa has been around in the United States since 2013 to treat high triglycerides. It consists of one active ingredient, icosapent ethyl (IPE), which is an Omega-3 fatty acid derived from fish oil. It is the only drug of its kind on the market.

For years, Amarin wanted to say the drug could reduce the risk of heart attack or stroke. In December 2019, the Food and Drug Administration (FDA) finally OK’d that marketing. Amarin can now say: Taken with statins, Vascepa has been shown to reduce the risk of heart attack, and stroke. Back in December, the stock was trading in the $21-$24 range.

In January, two potential competing drugs, from AstraZeneca and Acasti Pharma, stumbled when large-scale clinical trials were scrapped.

But bad news hit a short while later when Amarin lost a major patent battle with two companies, Dr. Reddy’s Laboratories Inc. (NYSE: RDY) and Hikma Pharmaceuticals, that want to manufacture generic versions of Vascepa. The stock plunged nearly 70% after the court ruling.

Amarin has appealed the decision to a federal appeals court. All parties have requested the U.S. Court of Appeals for the Federal Circuit to approve an expedited schedule, including a briefing in the second quarter of 2020 and an expedited hearing. This should facilitate a hearing in the third quarter of 2020 (or perhaps early in the fourth quarter) and position the court to rule thereafter, potentially in 2020 or early 2021.

Meanwhile, Hikma Pharmaceuticals announced last month that the FDA has given it approval to sell a generic version of Vascepa. But it’s unclear when Hikma could actually begin producing and selling a generic. One analyst estimated that it would take roughly six months or more and cost about $100 million to outfit a manufacturing facility to produce a copycat version.

What the Analysts Say

As mentioned earlier, Oppenheimer this week reiterated its Hold recommendation for Amarin. Last month, Cowen reiterated its Buy rating, while Northland Securities initiated coverage of the stock with an Outperform rating. Overall, Amarin has eight Buy and five Hold recommendations.

Also last month, Aegis, SVB Leerink and Citigroup boosted their price targets. The average price target is $17.23.

Some analysts expect Amarin to eventually prevail in the patent case. At Northland Securities, Carl Byrnes thinks the first court got it wrong. He’s set a price target of $15.

In terms of the generic competition, Byrnes said “Amarin has secured the majority of existing capacity to produce FDA grade icosapent ethyl.” Byrnes added that “the costs associated with building out capacity to produce sufficient quantities of FDA-grade icosapent ethyl could easily exceed $750 million due to the complexity of the separation and purification technologies necessary to insure batch consistency, purity, stability, and other criteria, making it economically infeasible.”

Looking Forward

One month after the district court ruling, Amarin reported its first-quarter financial results, and they were incredibly positive. Net total revenue more than doubled year over year to a record level on the back of Vascepa prescription growth in the United States. Revenue increased 112% to $155.0 million, up from $73.3 million in the first quarter of last year.

This week, Amarin said it is going forward with an $80 million marketing effort. The campaign will include medical education for health professionals, social media posts, and advertisements on TV and other forms of media to target consumers. Earlier this year, Amarin suspended its original plans for a marketing campaign because of the pandemic and the uncertainty over the patent lawsuit. Now executives have decided the time is right to go big again.

“As early signs emerge of patients returning to physicians’ offices, Amarin plans to emphasize its key marketing messages including positioning Vascepa as the only FDA-approved drug for lowering the persistent cardiovascular risk beyond statin therapy for millions of high-risk patients,” the company said.

Earlier this year, Amarin doubled its salesforce to 800 representatives. They were forced to work remotely due to social distancing but may be getting back into the field as things reopen.

Perhaps of less interest to Wall Street is the new trial of Vascepa as a potential COVID-19 treatment. Scientists are studying dozens of drugs, so the chances of Vascepa being a game changer seem slim. Still, so much is unknown about the virus, including what may treat it.

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