Why Amarin Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of cardiovascular-focused biotechnology firm Amarin (Nasdaq: AMRN  ) popped as much as 19% today after reporting its second-quarter results and providing a pipeline update.

So what: As a purely clinical stage company, Amarin reported no revenue for the second quarter and a loss of $0.38 while ending the period with $250.3 million in cash. The big news moving the stock is the company's operational update regarding its recently FDA-approved drug Vascepa, which is used in combination with a diet to reduce triglyceride levels in patients with severe hypertriglyceridemia. Amarin notes that commercial development for the drug should begin in early 2013, and it is making significant progress in securing its patent rights for the drug in both the U.S. and Europe. Amarin also announced the possibility of seeking out a marketing partner for Vascepa with its intentions of expanding the drug's indications by the end of 2013.

Now what: Breaking this down even further, the key takeaway here is that Amarin is once again on every biotech investors' radar as either a major buyout candidate, or at least deserving of a big marketing partnership. Amarin is well-capitalized and Vascepa has wide commercial appeal. It also doesn't hurt that at a valuation of $1.8 billion, Amarin is in the sweet spot where many biotech acquisitions occur. Vascepa has the potential to make Amarin very profitable within a few years, but after witnessing multiple blockbuster failures, notably from Human Genome Sciences (Nasdaq: HGSI  ) and Dendreon (Nasdaq: DNDN  ) whose products Benlysta and Provenge, limped out of the gate after FDA approval, I'd rather wait on the sidelines until we know who its marketing partner will be. This situation does bearing close watching, however, and I would recommend adding Amarin to your Watchlist.

Craving more input? Start by adding Amarin to your free and personalized Watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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Read/Post Comments (3) | Recommend This Article (2)

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  • Report this Comment On August 09, 2012, at 2:21 PM, dragon888777 wrote:

    Yes and by that time , what I'm going to gain? It's like you tell me to watch for apple until you see how well it will sell it's I phone then buy it at 3 times more. I like the way you are thinking , (to be sure) ,but when it comes to the stock market , your way ain't going to work .

  • Report this Comment On August 09, 2012, at 3:39 PM, skm1965 wrote:

    Reason for up:

    CEO Joe's comment--I sold 5% of my holdings.

    That is minute %.

    Adam Feuerstein and others caused a panic when Joe sold.

    Joe is fully committed.

    This time he was very clear about Amarin's future,but he was clear on July 26th also.

    I think 5% selling was not known.Only that he sold Which was not properly reported by many.

    As far as NCE--Joe said same thing-nothing new.

  • Report this Comment On August 09, 2012, at 10:58 PM, PhDLongStrong wrote:

    Run up today was a cause of the public knowing about the HUGE enormouse opportunity with Amarin proceeding to start a clinical study for a combo drug (use with a well-known statin). That shows that they are indeed in talks with big pharma and a partnership or buyout is most likely to occur. You can read more AMRN buyout news here: http://www.buyvascepa.com/vascepa-being-eyed-by-big-pharma/

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