Is Amarin Ready To Take Off???

Amarin Corporation plc, a pharmaceutical company, engages in the development and commercialization of therapeutics for the treatment of cardiovascular diseases in the United States. The company's lead product is Vascepa, a prescription-only omega-3 fatty acid capsule, used as an adjunct to diet for reducing triglyceride levels in adult patients with severe hypertriglyceridemia. It is also involved in developing Vascepa for the treatment of patients with high triglyceride levels who are also on statin therapy for elevated low-density lipoprotein cholesterol levels.

If you aren’t in the medical, such as myself, all this may sound like a foreign language. However, I’m sure everyone has heard of omega-3 fatty acids. Two crucial omega-3 fatty acids are EPA and DHA and are primarily found in certain fish like salmon and tuna. EPA and DHA come Although fish is a source of omega-3s, fish themselves do not produce them. Rather, they are obtained from the algae (microalgae in particular) and plankton consumed in their diets.

Some of the benefits of omega-3 fatty acids are:

1.Fish oil lowers the rate of heart disease by increasing the good cholesterol levels and decreasing blood pressure.

2.Since your brain is made up of over 50% fat which is mainly omega-3 fatty acids, fish oil helps maintain normal brain function.

3.The eye structure is made up of omega-3 fatty acids as well. Thus, fish oil is important in maintaining healthy eyes leading to better vision as you age.

4.Inflammation is the immune system's way of fighting infection and treating injury to the body. Fish oil has anti-inflammatory properties and can help treat diseases that involve chronic inflammation.

Vascepa, a drug derived from fish oil, has been on the market in the U.S. since 2012, but has only managed about $100 million in sales for in 2018 thus far. However, about a year ago, Amarin published results from a study that show patients who took Vascepa in addition to a statin experienced a 25% reduction in risk of a heart attack, stroke or other serious cardiac event, compared with patients who took a placebo instead of Vascepa. Thus, Amarin wants to get Vascepa approved for other use, which could potentially generate up $2 billion in sales.

Shares of Amarin Corp. jumped 21% on the likelihood that a U.S. Food and Drug Administration advisory committee will recommend that the regulator grant a broader indication for the company’s prescription fish oil-derived pill.

For the new indication that Amarin is seeking, the agency has in the past expressed concerns about the use of mineral oil as the placebo (and its potential interaction with statins commonly taken by these patients). That concern is expected to be less of a focus during Thursday’s FDA advisory committee meeting than previously anticipated, according to a research note from Leerink analyst Ami Fadia.

“The FDA has clearly taken its stance that mineral oil had minimal impact, which, in turn, likely makes it less likely the Vascepa discussion would go south on this discussion point,” she wrote on Tuesday after the meeting’s briefing document came out. “What does appear [to] be the main topic of discussion is how broad a label can Vascepa potentially get.”

The FDA is expected to make its decision on Vascepa by Dec. 28. It isn’t required to follow the guidance of the advisory committee, which is expected to vote on Thursday, but the regulator usually does.

Shares of Amarin are up 50% year-to-date, while the S&P 500 SPX, +0.16% is 23%.

Source

Now I see why the company is planning to double the size of its sales force to 800 from 400 in preparation of an approval. Doing some quick math, the market cap right now is 8 billion and the share price closed today at $22.00. Thus, there is about 300 million shares outstanding. Assuming avg P/E of 15-24 for companies in the pharmaceutical space, if Vascepa sales can reach $2 billion in the years to come, the stock would be worth approx $125. Thus, targets are the following:

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.