Why Amarin Shares Temporarily Plunged Then Rebounded

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 biopharmaceutical company Amarin (NASDAQ: AMRN  )  briefly screamed lower by as much as 10%, but now sits down less than 5% as of this writing, following the announcement of an additional supplier for its triglyceride-reducing drug, Vascepa.

So what: With Amarin shareholders still in limbo as they await word on a still-undecided new chemical entity status, or NCE, for Vascepa, it's easy to understand why any news not relating to that NCE is bound to irritate traders. Last week, the announcement that Amarin would take on $100 million in equity financing to hire a marketing staff for Vascepa crushed the share price. Today's announcement that it has added Slanmhor Pharmaceuticals to its active pharmaceutical ingredient supply chain for Vascepa simply wasn't enough to get investors' minds off that pesky NCE status.

Now what: Sales at VIVUS (NASDAQ: VVUS  ) and Dendreon (NASDAQ: DNDN  ) have limped out of the gate for VIVUS' Qsymia for chronic weight management and Dendreon's Provenge for advanced castration-resistant prostate cancer because they both lacked a marketing partner. Amarin shareholders have to be concerned that this could be their same fate given that Amarin is taking on debt to hire a marketing staff. In addition, with Vascepa's NCE status still up in the air, there's no guarantee that the drug will receive a five-year period of exclusivity which would be a major blow to the drugs' potential. While I agree that Vascepa has a lot of potential and that Amarin could be a buyout candidate, it's not a company I feel comfortable chasing at the moment.

The biotech space can make or break investors overnight, and while Amarin might not disappear into thin air, the success of Vascepa is key to the company's future success or failure. The company has huge potential, but don't invest a dollar before reading everything you need to know about Amarin. You can start now with top Fool.com analyst Max Macaluso's premium research report. Click here now to keep reading.


Read/Post Comments (3) | Recommend This Article (5)

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  • Report this Comment On December 11, 2012, at 5:14 PM, Dawgpac wrote:

    Not a bad stab at today's action. The reality is that Amarin already had announced agreeing to terms with their 4th API supplier in their Q3 10/Q on August 8th. They later commented that the supplier was located "in North America". Today's PR provided the name (Slanmhor, a spin-off of Ocean Nutrition) and location (Nova Scotia). NCE is still up in the air as are any potential partnership or buyout deals. Other events on the company's checklist for the remainder of 2012 are sNDAs for two more of their suppliers (BASF and Chemport) as well as the announcement of their Vascepa/statin combo pill study. AMRN's CEO has been coy when discussing just whose statin will be coupled with Vascepa, saying only "a leading statin".

  • Report this Comment On December 11, 2012, at 6:53 PM, asp924 wrote:

    AMRN went down simply because a fund had to liquidate its entire AMRN long position fast. This triggered sell stops and caused a bum rush for the doors. AMRN bounced back nicely from the dip and we will see that today's action signaled bottom. Read buyout prospects here: http://www.buyvascepa.com/is-amarin-going-it-alone-vascepa-b...

  • Report this Comment On December 11, 2012, at 8:58 PM, acur8 wrote:

    Your premise and facts are incorrect. The company announced they arranged for NON-EQUITY financing in the amount of $100 million, and IF they accesss it it doesn't become due until a year from now. The announcement of hiring 250 sales people was taken as a sign they won't be bought out right away which triggered selling, even though CEO stated it would be a mistake to think either of those things mean there are no ongoing buyout discussions. IMO both of these moves were brilliant strategically as they put pressure on BP. Unfortunately what also got lost in the last few days was the USPTO giving them a "reason for allowance" for two of their "Anchor" patents which wIill open up their market to 10 times what the FDA has approved them for currently (40 million patients in the US alone with triglycerides over 200). The Anchor patents and FDA approval of 200-500 trig. labeling (something Lovaza does not have) will ultimately prove to be much more important than NCE and this is why AMRN has not been in a rush to sell themselves for cheap. MF get your facts straight next time.

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