Why Is Amarin an Acquisition Target? Why Did Amarin Decide to Commercialize Vascepa?
Why Is Amarin an Acquisition Target?
Amarin is an attractive M&A target because its total market cap is $1.8 billion, and Vascepa's closest rival Lovaza is garnering annual sales of $1 billion. This M&A will also make more sense from a synergy point of view, as Big Pharma will be better able to commercialize Vascepa due to their better equipped sales force. Amarin's current CEO Joseph S. Zakrzewski has a track record of being involved in M&A activity because he was the one who sold Lovaza to Glaxo Smith Kline (GSK), through the sale of Reliant Pharmaceuticals.
Why Did Amarin Decide to Commercialize Vascepa?
The decision to commercialize Vascepa seems to be a strategic move by Zakrzewski. Investors should remember that prior to the sale of Reliant to GSK, the company had already commercialized Lovaza. Therefore, investor perception that Amarin is no longer an acquisition target is totally misplaced. I believe Zakrzewski is using it as a bargaining chip to speed up negotiations. The patents of Lovaza will start expiring as early as March 2013, giving way to cheaper generics.
Therefore, I believe GSK will be the most interested party in acquiring Amarin, in order to replenish its lost sales from Lovaza. The only wait is for the NCE decision to come though, because no one can buy what they can't value. The NCE decision is not a matter of "if" but "when," and once the NCE decision is out and potential acquirers can value the stock, AMRN will be a major acquisition target by large-cap pharmaceuticals.