The stock of biotech company Amarin (Nasdaq: AMRN) has quadrupled this year. That’s because data released from the phase-three trial of its fish oil drug, AMR101, suggests that it may be a wonder drug with huge potential.
It seems the highly purified and concentrated fish oil lowered triglyceride levels by as much as 33 percent, without raising “bad” LDL cholesterol levels.
This isn’t great news for GlaxoSmithKline, which has a prescription-grade fish oil drug, Lovaza, on the market that has brought in $590 million through the first three quarters of 2010. Lovaza, however, raises bad cholesterol levels, which limits its use to just patients with very high triglyceride levels.
Amarin is running another phase-three trial now, with patients who have intermediately high triglyceride levels. Passing that trial could put AMR101 in the multibillion-dollar drug category.
The drug’s biggest issue may be patent protection. The company believes patent protection may be extended to 2030, but that may not happen. Thus, the biggest long-term winner from AMR101 may turn out to be generic-drug makers.
Investors can worry about that later, though. For now, let’s see whether this next trial turns out well. (The Fool owns shares of and has written covered calls on GlaxoSmithKline, which is a “Motley Fool Global Gains” pick.)
Ask the Fool
Q: Old Navy doesn’t seem to be a publicly traded stock. Am I out of luck regarding investing in it? – P.T., Syracuse, N.Y.
A: Nope. Do a little digging online (or just call the company and ask), and you’ll learn that Old Navy, along with Banana Republic, Athleta and Piperlime, belongs to the Gap.
Many companies are divisions of other companies. Pottery Barn is part of Williams Sonoma, as is west elm. T.J. Maxx owns T.J. Maxx, Marshalls, A.J. Wright and HomeGoods. Yum! Brands owns Taco Bell, Pizza Hut, KFC, Long John Silver’s, WingStreet and A&W Restaurants.
Berkshire Hathaway owns Dairy Queen, See’s Candy, GEICO, Benjamin Moore, Fruit of the Loom and The Pampered Chef, among many other companies. (Berkshire Hathaway is a “Motley Fool Inside Value” and “Motley Fool Stock Advisor” recommendation. The Fool owns shares of it and Yum! Brands.)
Q: What are “Spiders”? – J.K., Riverside, Calif.
A: “Spiders” is a nickname for Standard & Poor’s Depositary Receipts, or SPDRs. Investors who own Spiders own bits of all the companies in the S&P 500, such as Boeing, Comcast, Dell, Mattel, Motorola, RadioShack and Visa. Unlike index funds, which work like traditional mutual funds, Spiders are “exchange-traded funds” (ETFs), structured like shares of stock, with the ticker symbol “SPY.”
Whereas mutual funds sometimes require minimum investments of several thousand dollars, you can buy and sell as little as one Spider share at a time. (But aim to buy enough to spread the commission cost over at least several shares.)
Learn more at www.fool.com/etf/etf.htm and www.morningstar.com/ Cover/ETFs.aspx. We recommend Spiders and regular broad-market index funds for most, if not all, investors. They’re a simple way to own much of the U.S. stock market.
My dumbest investment
My dumbest investment ever was a stock recommended to me by someone who recommended another investment that I knew was a crock. So I should have known better. The story goes like this:
Back in 2002, I was dating this guy who recommended a stock that was going to open up after-hours trading to regular public investors. I worked in the securities industry and knew that the company’s plan, as described, wasn’t likely to succeed. I told him that the stock was a dog, and he asked me why I had to be so negative. So, to prove I wasn’t a negative person, I invested in his next idea. Well, that stock went from around $7 per share to $0.
It just goes to show – you have to be on guard all the time. Make sure your emotions aren’t spending your investment dollars, even when you know better. – U.P., online
The Fool responds: Emotions get a lot of investors in trouble. We sell at the wrong time out of fear and buy at the wrong time out of greed.