Amarin's Vascepa May Face Generic Competition In US Next Year After Patents Ruled Invalid
Executive Summary
Amarin had argued that Vascepa’s sales success showed that its patents were not obvious, but the court found otherwise, even as it concluded that Hikma, Dr. Reddy's and West-Ward has infringed on the fish oil pill's patents.
A court ruling invalidating Amarin Corp. PLC's Vascepa (icosapent ethyl) patents means generic companies could launch their versions of the fish oil pill at-risk once the US Food and Drug Administration approves their abbreviated new drug applications. But analysts predict they will wait to enter the market until sometime next year, at which time Amarin will have to rely on the market outside the US where the company has additional patent protection.
In a 30 March order, the US District Court for the District of Nevada concluded that Hikma Pharmaceuticals PLC, Dr. Reddy's Laboratories Ltd. and West-Ward Pharmaceuticals Corp. infringed six patents covering methods of treating hypertriglyceridemia, but that the patents are invalid for being obvious.
Generic competition for Vascepa had not been expected until 2029. Teva Pharmaceuticals USA Inc. and Amarin reached a patent litigation settlement agreement two years ago that permits Teva to begin selling its generic in August 2029, or earlier under certain circumstances.
Amarin said it would appeal the decision.
"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 is approved by FDA, prevent launch of generic versions of Vascepa in the United States," Amarin President and CEO John Thero said in a 30 March release. "We believe we are favorably situated to obtain an injunction against generic launch pending appeal, subject to our posting a bond to secure generics' lost profits in the event that generics prevail on appeal."
The company said it would continue to go forward with its educational and promotional efforts for Vascepa in treating patients at high risk of cardiovascular events, such as heart attack and stroke. Amarin said it expects to provide an update on how it would adjust certain promotional activities based on the outcome of its efforts to prevent a generic launch.
But unless the patent loss is reversed, it seems that Amarin's storied promotion of Vascepa – which saw the firm take on the FDA over off-label communication and win – will eventually be wound down. (Also see "Vascepa Advisory Committee Is Latest Outpost In Product's Remarkable Regulatory Journey" - Pink Sheet, 11 Sep, 2019.)
Sales Success Does Not Overcome Obviousness
Amarin cited the success of Vascepa as one reason why the patent claims are not obvious. The court noted that Vascepa's net sales increased from $26m in 2013 to $228m in 2018, an average annual increase of 54%. In addition, it said Vascepa's share of the market for omega-3 fatty acid drugs grew from 4% in 2013 to 32% in 2018. In contrast, the court said Lovaza's share of the market decreased from approximately 96% in 2013 to under 5% in 2018.
Chief US District Judge Miranda Du said the court found that Vascepa is a commercial success even though it has not yet turned a profit, and that there was a long felt need for a single pill that reduced TG levels without increasing LDL-C levels. But she said these secondary considerations do not overcome the court's finding that the asserted claims are prima facie obvious.
With regard to the finding of infringement, the court concluded that the labels proposed by the defendants will induce infringement of the patent claims.
"As defendants point out, the Court found in ruling on the parties' motions for summary judgment that there was nothing in the labeling that explicitly told doctors to prescribe the drugs in an infringing way," the order states. "But the Court finds – after receiving the benefit of testimony and evidence presented at trial – that the Clinical Studies section of the labeling recommends or encourages doctors to prescribe the applicable drug in a way that would, on average, infringe the asserted claims. Finding otherwise would essentially require finding that doctors would not read the Clinical Studies section of defendants' proposed labels."
Revenue Opportunity Outside US
The patent ruling in Amarin v. Hikma was a huge blow and sent shares plummeting 70% by close of US markets on 31 March.
Vascepa launched in 2013 following its approval by FDA for use as an adjunct therapy to diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia. The agency approved the indication for cardiovascular risk reduction in December.
Amarin reported that it was doubling its sales force to 800 representatives and rolling out a consumer advertising campaign. It forecast 2020 revenues of $650m-$700m in 2020, with most coming from Vascepa in the US. (Also see "J.P. Morgan Day 3: Skyrizi Momentum Builds, What's Next For Amarin, Viatris Debuts And More" - Pink Sheet, 16 Jan, 2020.)
SVB Leerink analysts said in a 31 March note that they assume Vascepa will face generic competition beginning next year, rather than 2029 as they previously estimated, "which means that aspiration of a >$4B peak US revenue opportunity is essentially off the table unless Amarin wins on appeal."
They said that even if an ANDA is approved, they believe an at-risk launch is unlikely given the risk around the launch and the ramp-up in manufacturing capabilities that would be required.
They noted that there should be no impact on the intellectual property or commercial potential in key regions outside the US, including Europe, China and Canada, where Amarin will have patents on reduction in cardiovascular risk.
Vascepa is available by prescription in Canada, Lebanon and the United Arab Emirates. Amarin said its patent protection in Canada could extend into 2039. The company is pursuing regulatory approvals in China, the European Union and the Middle East.
Cowen analysts also believe an at-risk launch is unlikely and expect generic competition will not begin until late 2021. They said there are grounds for Amarin to appeal but that the likelihood of reversal is low.
"The valuation will now for the most part be predicated on the potential rest-of-world opportunity," Cowen analysts stated. They said there are two potential pathways ex-U.S.: that Amarin licenses the product and secures an estimated 20% royalty, or takes the product to market themselves.
Jeffries analysts said it is not clear if generics have sourced any supplier or if FDA has approved a manufacturing site to make pure EPA as this requires specialized purification suites.
In addition, Jeffries analysts said generics may prefer to launch when the market is bigger rather than at current $700m levels. They said generic pricing may be 30-50% cheaper instead of the typical 90% given costs and margins for the dug. For example, they noted that GlaxoSmithKline's Lovaza (omega-3 acid ethyl esters) for hypertriglyceridemia was still doing 50% of its business a few years after generics launched in 2014.