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Generic Threat To Amarin's Vascepa Overrides Positive Sentiment On Coronavirus Announcement

Shanthi Rexaline

Amarin Corporation plc (NASDAQ: AMRN) shares, which were higher in after-hours trading Thursday following the company's announcement regarding a third-party pilot trial of its Vascepa in COVID-19, were giving back the gains Friday. 

First Vascepa Generic Greenlighted

The negative sentiment is attributable to another announcement by U.K.-based generic manufacturer Hikma Biologics that its U.S. subsidiary Hikma Pharmaceuticals USA has received FDA approval for a generic version of Amarin's Vascepa.

This makes Hikma the first to receive approval for an abbreviated new drug application for a generic version of Vascepa. 

Indian generic manufacturer Dr.Reddy's Laboratories Ltd (NYSE: RDY) has also filed an ANDA with the FDA for Vascepa.

Why A Vascepa Generic Launch Many Not Be Imminent 

Despite the generic approval, Hikma is unlikely to launch at-risk, SVB Leerink analyst Ami Fadia said in a Friday note. 

An at-risk generic launch occurs when a company introduces a generic drug even as litigation contesting validity and infringement of patents is still ongoing.

After the U.S. District Court for the District of Nevada invalidated six key Vascepa patents owned by Amarin in March, clearing the way for a generic launch, Amarin filed a notice of appeal. The company has suggested that, with an expedited appeal, a new ruling could come by the end of 2020 or in early 2021.

"While Hikma could theoretically launch its generic at-risk, we believe this is unlikely to occur, given both Amarin and the generic defendants Hikma and Dr. Reddy's have agreed to the expedited appeals process," Fadia said.

The analyst said Hikma is likely to let the process play out before potentially launching a generic.

 Manufacturing the product is complicated, and generics may take time to secure supply, she said. 

"What is uncertain is how difficult it will be for generics to ramp up supply, although we have made the assumption that sooner or later they can get there." 

Dr. Reddy's generic launch could come in the near-term, according to SVB Leerink. 

"Our understanding is that Dr. Reddy's has a goal date later this year for its generic, and the company doesn't foresee any challenges to the file," Fadia said. 

SVB Leerink has an Outperform rating on Amarin with a $9 price target. 

AMRN Price Action

At last check, Amarin shares were slipping 1.1% to $7.20. 

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Latest Ratings for AMRN

Date Firm Action From To
May 2020 Aegis Capital Maintains Buy
May 2020 SVB Leerink Maintains Outperform
Apr 2020 Citigroup Maintains Buy

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