What happened

Shares of Amarin Corp. (NASDAQ:AMRN), a mid-cap Irish biopharma, fell by as much as 11.8% in pre-market trading Monday. The stock was down about 13% as of 10:30 a.m. EST. What's causing investors to hit the sell button?

Over the weekend, Amarin presented updated results from the large cardiovascular outcomes study, called Reduce-It, for its fish oil pill Vascepa in patients who have elevated triglyceride levels despite being on statin therapy, at the American Heart Association meeting in Chicago. While the results were overall positive, the presentation and an accompanying paper published in the New England Journal of Medicine seem to suggest that Vascepa's cardiovascular benefits might be overstated due to the use of mineral oil as the placebo. 

A doctor holding a red heart shape out in one hand.

Image source: Getty Images.

So what

In brief, patients receiving placebo exhibited an unexpected rise in so-called bad cholesterol levels, which may have exaggerated Vascepa's cardiovascular benefit in the study's patient population. This unintended result may give regulators pause when it comes to approving Vascepa's supplemental New Drug Application, slated to be submitted early next year. 

Now what

Should investors panic? Fortunately for shareholders, this placebo criticism doesn't appear to be enough to halt Vascepa's march toward another regulatory approval. Even the study's critics admitted that Vascepa does seem to provide some form of cardiovascular benefit; only the magnitude of this effect is in question. That fact alone should calm investors' collective nerves.  

And if that wasn't enough, H.C. Wainwright analyst Andrew Fein raised his 12-month price target on the stock to an eye-popping $51 a share (up from $31) after the conference presentation that's causing so much consternation this morning. In short, Amarin still has its fair share of bulls on Wall Street after this latest data release. Investors, therefore, may want to think twice before hitting the exits on this promising biopharma growth stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.