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Amarin has a big decision to make. How Sarissa Capital can help it move forward


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Company: Amarin Corporation Plc (AMRN)

Business: AmarinThe company is involved in developing and marketing therapeutics to treat cardiovascular disease in the United States. Its lead product is Vascepa, a prescription-only omega-3 fatty acid product, used as an adjunct to diet for reducing triglyceride levels in adult patients with severe hypertriglyceridemia. It sells its products primarily to specialty pharmacie providers and wholesalers. Mochida Pharmaceutical Co. Ltd. collaborates with the company to create and market drug products and indications that are based on Vascepa’s active pharmaceutical ingredient, which is the omega-3 and eicosapentaenoic acids.

Stock market valuePrice: $1.3B (or $3.36 per share).

Activist: Sarissa Capital Management

The percentage of ownership: 6.06%

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Average cost: $4.46

Commentary of an activist:Sarissa Capital Management (Agtivist Investor) is a focussed investor in the health-care industry. Alex Denner was the former senior managing director at Icahn Capital. It was established in May 2013. Denner led Icahn Capital’s investment in companies such as Biogen and Genzyme. He also served on the board of ImClone Pharmaceuticals, Biogen and Enzon. Denner is a biotech doctor. His unique combination of skills and experience in the sector as well as his analytical abilities, activism skills, and knowledge is rare. Sarissa was involved in multiple acquisitions of health-care businesses. Most notably, there is The Medicines Company, which was acquired by Novartis International AG, giving Sarissa a 138.43% 13D return versus 16.40% for the S&P 500 over the same period. There is also Ariad Pharmaceuticals Inc., which was acquired by Takeda Pharmaceutical, giving Sarissa a 529.39% 13D return versus 32.47% for the S&P 500 over the same period.

What’s Happening?

Sarissa has a position at 6.06% to invest in the company.

Behind the scenes:

Vascepa is Amarin’s leading product, which is a cholesterol-lowering medication for the heart. Vascepa’s brand is highly valued because it has been clinically proven to be effective, has received approval from the U.S. FDA (and the European Union), and aids in tackling the world’s No. The number one cause of death worldwide, Vascepa is the biggest drug category. In March 2020 however, Vascepa lost the company’s patents in the U.S. In March 2020, the company lost its patents to Vascepa in the U.S. This news dragged the stock down from $13.58 and $4.00 per day. It also closed at $24.12 per share on Dec. 13, 2019, the latest time it was traded. In June 2021 the Supreme Court rejected the company’s attempt to revive Vascepa Patents. They ruled in favor two generic producers of the drug. The lawsuit regarding patent infringement is ongoing. They announced that their latest plan was to launch generic drugs in Europe, compete against them and increase U.S. sales.

The court decision forced Vascepa to be withdrawn from the United States market and the sales team was restructured. The company still managed to make $600 millions in U.S. revenue despite all of this. The revenue is expected to decrease in the coming years due to generic competition. However, it’s not difficult to make the drug because of its unique formula and shortage. Vascepa, a well-known brand, should still be competitive in America. The company must also have a strong sales force to grow its revenue. Pfizer still makes approximately $2 billion annually in the United States every year, even though Lipitor was granted a patent in 2011. It also holds patent protection for generics in the EU. Therefore, they are able launch their products without having to compete with generic products. The current company plan calls for spending several hundred million dollars to hire a European sales force in addition the U.S. team.

This asset can be monetized in many more effective ways. Selling the company would be the easiest. It already has an extensive sales network and team all over the globe. The Medicines Company was able to do the same seven months after Sarissa’s 13D. Novartis purchased The Medicines Company in a deal worth $9.7billion. However, the company had no revenues (compared to Amarin’s $600m) and was not FDA approved at that time. Amarin is FDA and EU approved. Amarin, a highly-regarded drug, would make it a great target for Big Pharma.

Amarin’s second option would be to work with another company who could distribute the drug. Amarin will not need to hire a sales staff or invest in infrastructure. Amarin would rather collect royalties like Innoviva which has 13D filings and boards seats.

For the last resort, the company could build sales teams in Europe or the U.S. to distribute the drug. It would prove to be a costly, risky and time-consuming option that should be avoided.

It is obvious that a Novartis/MDCO deal would work well. If that is not possible, Vascepa’s sales could be increased to the billions by working with a company that employs a global sales team.

Sarissa’s industry contacts and knowledge are extensive. This would make it a great resource for the company to analyze its options and choose the best path. The stock price implies that shareholders are dissatisfied. A shareholder representative who has industry experience like Sarissa would be welcomed. It will be fascinating to see what happens for Sarissa if Amarin resists. Amarin was founded in England and Wales and has its principal offices in Ireland. Unusual provisions include the requirement that directors must retire at least three-quarters of their offices at each annual general meeting. However, retiring directors are eligible for re-election so despite this provision, as of the last annual meeting, all seven directors had been on the board for at least seven years – with a majority on for at least 11 years. Sarissa will not be able to gain significant representation on the board if it becomes confrontational because only two directors are elected each year.

Ken Squire, the president and founder of 13D Monitor is an institution research service that focuses on shareholder activism. He also founded and managed the portfolio for the 13D Activist Fund which invests in a range of activist 13D investments. The fund also owns Amarin.