Stifel analyst Derek Archila sees Amarin shares rallying on failure of two potential competitors
Shares of Amarin (AMRN) are on the rise on Monday after AstraZeneca (AZN) said that it is closing a Phase 3 clinical trial of a fish-oil-derived heart drug, Epanova, after an independent Data Monitoring Committee concluded it was unlikely to demonstrate a benefit to patients. Meanwhile, Acasti Pharma (ACST) also reported that its Phase 3 TRILOGY 1 study results for lead candidate CaPre did not reach statistical significance on its primary endpoint. CaPre was also viewed as a potential competitor to Amarin's Vascepa.
ASTRAZENECA CLOSING PHASE 3 TRIAL FOR EPANOVA: Following the recommendation from an independent Data Monitoring Committee, AstraZeneca has decided to close the Phase 3 STRENGTH trial for Epanova -- omega-3 carboxylic acids -- due to its low likelihood of demonstrating a benefit to patients with mixed dyslipidaemia who are at increased risk of cardiovascular disease. STRENGTH is a large-scale, global CV outcomes trial designed to evaluate the safety and efficacy of Epanova compared to placebo, both in combination with standard-of-care statin medicines.
Full data will be presented at a forthcoming medical meeting. The company also said that a review is being undertaken of the ongoing value of the $533M Epanova intangible asset, and that any impairment will be treated as a non-core item in the fourth quarter of 2019. AstraZeneca also anticipates a write down of up to $100M relating to inventories will impact the Core earnings in the fourth quarter of 2019.
ACASTI’S CAPRE TRIAL: Acasti Pharma has also announced topline results for the primary endpoint from its Phase 3 TRILOGY 1 trial for the company's lead product candidate, CaPre. The company reported a 30.5% median reduction in triglyceride levels among all patients receiving CaPre, compared to a 27.5% median reduction in triglyceride levels among patients receiving placebo at 12 weeks. The company also reported a 42.2% median reduction in triglycerides among patients receiving CaPre while on background statin therapy at 12 weeks, compared to a 31.5% median reduction in triglyceride levels among patients receiving placebo and on background statin therapy. In addition, the company reported a 36.7% median reduction in triglyceride levels among patients receiving CaPre at 26 weeks, compared to a 28.0% median reduction in triglyceride levels among patients receiving placebo.
Both the placebo and CaPre study groups experienced significant reductions in triglycerides within the first four weeks from baseline, and even though the difference at 12 and 26 weeks was in favor of CaPre, due to the unexpectedly large placebo response, TRILOGY 1 did not reach statistical significance. The safety profile of CaPre in TRILOGY 1 was similar to placebo, as there were no significant difference in treatment-related serious adverse events in the trial.
EPANOVA DISCONTINUATION POSITIVE FOR AMARIN: In a research note to investors following AstraZeneca’s news, JPMorgan analyst Jessica Fye argued that the removal of Epanova is a positive for Amarin as it definitely removes a potential competitor from entering the market. While the analyst acknowledged that removing Epanova has relatively modest impact on her valuation, she argued that it is "nonetheless a clear upside." The failure of the STRENGTH trial further adds to the evidence that Vascepa has a differentiated clinical profile compared with Omega-3 mixtures, Fye contented. Net-net, the analyst sees Amarin’s Vascepa poised to achieve multi-billion dollar revenue with its new label. However, she sees current valuation largely reflecting what Fye projects will be a steady ramp to peak.
AMARIN SHARES SHOULD RALLY: Meanwhile, Stifel analyst Derek Archila told investors he expects shares of Amarin to be up on Monday on news that AstraZeneca discontinued Epanova's STRENGTH cardiovascular outcomes trial given the low likelihood it would demonstrate a cardiovascular benefit. While the STRENGTH study had a low probability of a positive outcome, its failure "no doubt reinforces the importance" of the pure eicosapentaenoic acid hypothesis and Vascepa's REDUCE-IT results, Archila contended.
In addition, the analyst noted that Acasti Pharma reported that its Phase 3 TRILOGY 1 study results for CaPre in patients with hypertriglyceridemia failed. The program was also viewed as a potential competitor to Amarin's Vascepa. The analyst believes that with both of these failures, investor fears over near-to-medium term branded competition to Vaspeca should subside. Archila has a Hold rating on Amarin with a $28 price target.
PRICE ACTION: In morning trading, shares of Amarin have gained almost 8% to $20.42. Meanwhile, Acasti has plunged $1.57, or 72%, lower to 61c per share.