Most posts on this site seem to be convinced that the most frequent reasons biotechs sell out to drug companies is biotech management appreciates the fact BP can and will do a better job of marketing and selling the drug, they the biotech, developed...Furthermore, biotech management knows if the drug marketing and sales were left to the biotech...the drug would never reach its sales potential...
This is not the reason for sellouts in most cases...Publicly traded biotechs embarking on their first drug seldom have enough money, or the means to get enough money, to get through the lengthy and expensive FDA process. The normal method of raising revenue for these fledglings is a series of "offerings' (dilutions) ...These become less and less effective as the PPS falls...Most first drug Pbiotechs which are taken over by BP are taken over going into the Phase3 clinicals. Phase3 clinicals is when things really start getting expensive. So the reason they sell has nothing to do with their respect for the efficiencies of BPs, or their concerns over their own inefficiencies, but rather they sell because they lack the money to continue...In reality there is little to suggest BP, with its layers of bureaucracy , and many other interests, is going to do a better job furthering the new drug...It's really all about the money....
This board is getting farther and farther away from relevance. Posting random musings by analysts who have little knowledge or understanding about the company is little different than spamming. Comments like one posted that the granting the NCE could take the PPS up to $20 is ridiculous...The NCE will have little more than a momentary effect on the PPS... The big issue initially is whether or not the company will be sold...doubt there is anyone here who thinks a buyout would not have a huge effect on the PPS...No one outside the management knows exactly what the company's strategy is regarding a buyout...IMO...there are many reasons the company should delay the sale for some time, even if eventually they decide selling is the best option...the PPS will indeed fall as traders move out of the stock as their disappointment increases and the shorts do their thing....The next big thing will be the announcement of REDUCE-IT completing the "substantially underway condition. This will set the stage for the 35mil patient dyslipidemia indication which will be prettty much a shoo in to get the FDA approval. This should have a very big effect on the PPS. The next big thing will be how the medical community reacts to the drug once it goes to market...This might be 6 months off...but I am patient...
": ) JL
Sentiment: Strong Buy
By the way--Investors like Icahan are interested in making money fast.Private equity co.invest for 3-5 years(unless co.shows a promising drug in phase 2 trial with bil.$ potential--when they extend waiting period to 5-10 years).
I think-- private investors in Amarin-who are on Board of Directors--would like to sell sooner than later. So if they had an offer of 25-30$/share now--rather than wait for 45-50$ in 2014.
These private investors--keep deploying their Cash in new opportunities where they can buy shares for 2$ with the hope of selling for 10$ in 5 years.
30$ to 50$ in 2 years--is not their strategy(private equity)--- Yes Mutual funds like 30 to 50$
My point: These directors want to SELL now.
Biotech sales happen for these reasons.
1) Amylin-- Big pharma are starved for new opportunities--BMY,AZN bought it.
2) Amylin-- Initial bid by BMY was 22$/share in April,2012--but it was Icahan(large stock holder/Director) who pushed Amylin CEO to seek financial advisors to sell in May.Deal happened in July.
3) Gilead Science bought Pharmaccett for 11 bil.$--as their NEW HIV portfolio was drying up.
4) Pfizer bought Warner Lambert in 1999-when AHP(Wyeth) signed a binding deal secretively in 1999. Pfizer was marketing partner with WL on Lipitor launch in 2006.WL stock was shooting up from 2006 to 2007-- 330%-- Pfizer could have bought WL for 30 bil.$ in 1996--but it was satisfied with marketing-- When they realized-that they could loose this product-they paid 90 bil.$
GSK faces decline in Sales from Lovaza-they know Paul Huff's capabilities as Huff was there in Nov.2007 and stayed until 2008.They know he will do a great job with launch.
GSK paid 1.65 bil.$ for Lovaza for 2008-2012--5 years of Sales(total of 3.8 bil.$)
GSK could pay 4 bil.$ for Vascepa for sales WW--of at least 15 bil.$ cumulative--100 bil.$ cumulative over next 15 years.
Why would GSK let this slip away-either to Pfizer or Merck or having to pay far more in 2013 or 2014?
VIVUS stock is up 16% in last 3 days as the Prescription filled data was reported for 2 weeks by IMS. Same thing could happen to AMRN in early 2013.
Completition of enrollment for Reduce-IT study--I agree will boost the stock.Dr.Bhatt gave an update in Aug.2012--but without enrollment data.AMRN will announce it when they file with FDA for Anchor population-200-500mg population approval.
Over the next 45 days--news about CVS/Caremark,Walgreen,Express script signing up to sell Vascepa should be public along with massive publicity to doctors.
I think GSK management will act sooner than later.
Sound analysis however i think you are missing one point. This is a biotech company. Since they dont have a product line, by default they can no longer stay as a biotech company since they now have a approved product. This product is a sellable product which has a market. If you think about it you will understand where i am coming from. Approved Vascepa with Amarin is no different than a new invention in the hands of an inventor. An inventor has two options: sell the invention or become a salesman and sell it himself. To be able to sell their product i.e. Vascepa, Amarin will now have to change the business model completely from a Biotech to a Sales and Marketing company. Is Amarin ready to do that? Change the business model? My business opinion is that usually biotech companies dont change their business model. Biotech companies are best at what they do, develop biotechnologies. SInce Amarin is not developing any new bio technologies and I strongly believe they will not be changing their business model any time soon, they are preparing for an acqusition. Partnering is not a consideration here because of the same reason: they dont have any future products in the pipeline. The most i see happening is the sNDA for Anchor and thats it. The rest will be inherited in its current shape and form (bio tech staff) by the new company.
My prediction basesd on above: this will happen before end of this year.
Hope you don't mind if I reply....since I think they will be going alone initially and I think the market is digesting this probability.
I don't expect Amarin to be a stand alone company 2 -3 yrs from now . I expect Joe Z and Paul Huff to roughly follow the time line of Reliants Omacor / Lovaza launch and eventual sale/ merger.
If they can successfully launch , as I believe they will , and rapidly expand market share ,as I believe they will ....Amarin will sell for a lot higher then what many of you would accept ,if they sold by year end.
Thanks Doc. Appreciate quality posts, though they are getting harder to find in the cesspool of idiotic crap that is being posted here. My ignore button has taken a beating.
If you don't mind, I think I'll just keep bumping your post for a while so other longs have a chance to read something coherent today.
Sentiment: Strong Buy
Jesse, it's great to log on and find a post from you this AM. When you post, you always broaden my perspective on what you believe may be in the offing and why. You don't sugar coat anything - just offer information from your experience and perspective. I think most of the longs on the board really appreciate reading substantive and educational posts even when there is not a consensus of opinion amongst all longs. Thanks Jesse -as always- for posting. zg.
Sentiment: Strong Buy
Thanks for posting again JL
I don't mind waiting for the launch also , altho I hope it won't be six months away.
Frankly I'm stunned that so many seem to doubt that Joe Z and Paul Huff can launch Vascepa properly . If I was in either of their positions I would sure want to give it a try.
I believe they still have up to $250 m cash on hand . They don't need an army of sales reps to begin with ...Cardiologist probably won't meet with reps anyway as NM 10086 has admitted.
Amarin will be attending conferences like the CardioMetabolic congress conference starting today and their top guys will be presenting directly to many of the important people in the field .
Amarin is hosting the Friday nite dinner ( educational ) symposium.
So frankly I see today as a buying opportunity . The doubt about NCE status , going alone etc is being thoroughly vented in the market place. Anything lower then today's low's and I 'll be buying again and I'll wait for the 2013 launch.
Akanz and Epi...
Thnx for the support...
Gary, When I mention six months off, I'm considering a few months sales to get a grip on how the medical community is warming up to Vascepa, not the launch date,which should occur in Q1 2013.
Right now I do not see a sale in the next few months being a good idea for either the buyer or the seller. Although this company is a biotech, it more closely resembles a retailer and its value is going to be tied to revenue generation. Once the drug hits the market both parties will have a better idea of the company's value...which right now would just be a guess for either side.
Epi..Re the Quiet period....Have no information why this anomaly is taking place...Could be they are in discussion with a partner for marketing and sales with an eye to the future development of a combined statin-EPA drug....Doubt it's NCE related, or a buyout...
": ) JL
Sentiment: Strong Buy
Bitotechs do not always sell out because they rune out money to do trials. there are many instances where they sell out after getting FDA approvals. It has everything to do with efficiency and Dollars.
a BP like PFE, MRK or AZN has the infrastructure ( people, know-how, intl. presence, credibility etc.) in place to launch a CV drug quickly and efficiently. It cost them very little to launch a new product using their existing infrastructure.
However, AMRN has to reinvent the wheel to do so. It takes time and money. And the the cost of all this has to be borne by just ONE product (there is nothing else even in the horizon!). This affects AMRN's bottom line. In a competitive world, time is a valuable commodity too.
It is not about just launching a product. Any idiot can do that. It is about a launching a product in a timely fashion in the most efficient way so AMRN's bottom line is enhanced. It is the profitability that enhance the stock price not just sales! Some people here do not seem to understand this.
Wait, you can buy this at $7 the day they announce hiring sales people and going alone. That is my guess. It looks like they are getting close to this (language in the 8K) if no one makes an offer within a month to buy AMRN.
A company can run out $250mm very quickly launching a product and once they start hiring. Huff alone gets $8mm according to MTDS without making a $1 in sales. Interesting way to incentivize sales people!
Analysts who cover this company know something about biotech. They look at many companies and of course they are not accurate all the time. But this is what they do for living and their reputation/jobs are at stake whenever they make a wrong call. One should not just dismiss them as nothing.
Hey Jessie good to see you back...Miss reading your insightful posts......Still here and "ain't" selling a single share.....What are you thoughts on this "so called quiet period".......appreciate as always you feedback......god speed to ya....Dr Steve
Very good thread. Another tidbit. Many assume that AMRN thusfar has no offers. Actually they very well migh,, but not good enough in the opinion of management. One possible outcome, perhaps the most likely, is that management eventually crumbles ata lower than expected price.\I have always thought AMRN needs at least 2, or better 3 suitors to get the kind of price they think AMRn is worth. Could be just one making an offer at the present time. And it s too low, at least now. Get 2 or 3 BO possibles and that price could rise substantially. I believe AMRN will be sold during the next 6 months. I just do not know what that final price might be.. But I guarantee it will be substantially higher than current PPS. Could be anywhere from 16 to 28 depending on how many suitors get involved. Just my opimion. A one bidder auction is not so good. But good not to take first offer if it is too low. But eventually, they will sell, almost 100% certainty
I more or less agree with everything you said, except (what you said about) the NCE and Aegis analyst Selvaraju's opinion that w/ NCE AMRN's pps could move into the low 20s.
At first, that seems too high a move to be credible, but his observations was done with a broader context: everyone, including Selvaraju, knows that NCE alone, by itself, won't move AMRN's pps that much.... likely no more than 3-5.... but I think he said given the fact that most of the major IPs from the USPTO that would protect Vascepa for a number of years AFTER the NCE (if given) are moving along, with 889 being the most urgent right now and w/ it being more or less a done deal... that given that reality, that the NCE would move AMRN's pps substantially because, then, INVESTORS would have reason to believe (for now, until they change their minds later) that a buy-out is LIKELY to come to pass "soon"...
THAT, to me, was what Selvaraju was getting at: that traders would chase the PPS up into the low 20s...
Of course, when analysts say "it could be soon," it doesn't have to be overnight. It could take a couple months.... and from the time AMRN was approved, in late July, to, oh, say, the end of this year to early next... that could be considered "soon."