Omthera Fish-Oil Drug Hooks AstraZeneca in $323M Buyout
By Randy Osborne
AstraZeneca plc's planned buyout of Omthera Pharmaceuticals Inc. to gain Phase III-validated Epanova, the anti-triglyceride therapy based on ultra-pure fish oil, puts the firm at a "distinct commercial advantage" over Amarin Corp. plc, with its recently launched Vascepa (icosapent ethyl), said Decision Resources (DR) analyst Paramjit Narang.
Agreeing to pay $12.70 per share for Omthera, London-based AstraZeneca pledges more potential upside that could value the deal as high as $443 million. The amount represents an 87 percent premium over Friday's closing price of $6.77, and works out to an enterprise value of $260 million, given Omthera's cash balance of $63 million largely from an initial public offering that Omthera, of Princeton, N.J., closed last month.
Omthera's stock (NASDAQ:OMTH) closed Tuesday at $13.51, up $6.74, up nearly 100 percent.
Each Omthera shareholder also gets contingent value rights of up to about $4.70 per share, totaling about $120 million, if milestones related to Epanova's further progress are reached, or if an undisclosed milestone related to global net sales is achieved.
Epanova, the purified mix of omega-3, free fatty acid forms of eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA), was proved safe and effective in a pair of Phase III experiments. At the 4-mg dose, Epanova brought a 7 percent reduction in non-HDL-cholesterol and a 21 percent drop in triglycerides, with a positive effect on the other markers of cardiovascular risk, including ApoC-III and LpPLA2. The 2-mg dose showed efficacy, too. The trials were conducted under a special protocol assessment with the FDA. (See BioWorld Today, March 12, 2013.)
Piper Jaffray analyst Edward Tenthoff wrote in a research report that his firm "had expected Omthera to seek a big pharma partner to conduct larger outcome trials to expand the label," which is exactly the strategy of AstraZeneca. Omthera aims to file a new drug application (NDA) in the U.S. for Epanova near the middle of this year for severe hypertriglyceridemia (triglyceride levels greater than or equal to 500 mg/dL), with regulatory filings in other markets to follow. AstraZeneca will file a supplemental NDA "as soon as possible," the company said in a press release. Epanova may work well in mixed dyslipidemia (triglyceride levels of 200-499 mg/dl), as well as in a fixed-dose combination with AstraZeneca's own Crestor (rosuvastatin calcium) for mixed dyslipidemia in those patients who are deemed at high risk of a cardiovascular event. The overseas firm also intends a large-scale cardiovascular outcomes trial for Epanova in combination with statins, too.
In the U.S., London-based GlaxoSmithKline plc's Lovaza (omega-3-acid ethyl esters) had been the sole prescription omega-3 fatty acid available for the treatment of severe hypertriglyceridemia. But January brought the launch of Amarin's Vascepa, "related to Lovaza, but consisting of the EPA fraction alone, rather than the Lovaza EPA/DHA formulation," said DR's Narang, who covers the space with analyst Graeme Green.
"Both drugs are initially competing for the same patient population, but Amarin is seeking to expand the label for Vascepa to treat patients with high triglycerides (>200 mg/dL), and eventually high-risk patients with borderline hypertriglyceridemia," Narang said. Fibrates such as Tricor (fenofibrate, Abbott) make up "the other drug class typically used in patients with elevated triglycerides, but these tend to be used to a lesser extent in those with very high hypertriglyceridemia," he said.
"We believe Epanova's clinical profile offers higher and more constant bioavailability, and arguably better efficacy on triglyceride lowering than Vascepa, and lacks the gastrointestinal side effects of the market incumbent Lovaza," Narang told BioWorld Today. Clinical signals, he added, suggested that Epanova's effect on dropping LDL-C, the "good" cholesterol, "are not as negative as those of Lovaza, with the drug showing equivalent efficacy on non-HDL-C [the "bad" cholesterol] to Vascepa and Lovaza."
Epanova's ultimate dosing regimen may turn out better, Narang said, if it's approved at 2 mg daily, compared to the other drugs' prescription of 4 mg daily. Piper Jaffray's Tenthoff pointed out that Epanova is cheaper to make and purify than Vascepa. Narang foresees significant expansion for Epanova. "Like Vascepa, Epanova is likely to be initially indicated for very high hypertriglyceridemia, with label expansion to follow pending the initiation of a cardiovascular outcomes trial," he said. The first label to be granted, for very high hypertriglyceridemia, would garner only a fairly small target dyslipidemia population, about 2 percent of the total.
"Even with a label expansion for patients with high hypertriglyceridemia in the offing, we don't expect significant patient share growth until the release of positive cardiovascular outcomes data," Narang said. "In the interim, generic Lovaza will enter the market in the U.S., and the drugs must also continue to compete against over-the-counter fatty acid supplements, and fibrate drugs, all of which present a lower cost option than the prescription omega-3 fatty acid brands."
With its smaller size and infrastructure, Narang said, Dublin, Ireland-based Amarin is "unlikely to have the reach" to get its compound to a broader cardiovascular population. "We would expect AstraZeneca to capitalize on its global footprint and launch Epanova in multiple markets," he said, affirming that the fixed-dose approach with Crestor is "a good life cycle management strategy for AstraZeneca," although "physicians may well prefer to use Epanova as an add-on to generic atorvastatin therapy, depending on the reimbursement environment." If Epanova does well in the cardiac outcomes trials, peak annual sales could exceed $1 billion, he said.
The boards of both companies have approved the terms, and Omthera stockholders representing about 60 percent of outstanding shares have agreed to vote in favor of the deal, which is expected to close in the third quarter of 2013.
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