What happened

Shares of Amarin (NASDAQ:AMRN) dropped nearly 14% last month, according to data provided by S&P Global Market Intelligence. The company announced a stock offering that raised up to $230 million in gross proceeds. While investors rarely appreciate share dilution, this may be one of the rare exceptions.

That's because management wisely took advantage of a 315% year-to-date gain in the share price to raise much-needed capital for upcoming commercialization efforts. The new capital will bolster Amarin's cash position, which sat at $82 million at the end of September, as it looks to hit the ground running in expanding the market opportunity for its heart drug Vascepa. While a massive trial earlier this year appeared to demonstrate the drug's potential to benefit a broad population of individuals with elevated risk of cardiovascular disease, new data provoked more questions from investors last month.

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Image source: Getty Images.

So what

When Vascepa reported results from its latest studies, analysts were quick to anoint the drug as a future blockbuster. While that may very well be the case, it could take a lot more than $200 million in commercialization expenses to realize that potential. Therefore, investors shouldn't be surprised to see more fundraising activities down the road, either from share offerings or debt offerings, though it'd be good to see market traction before then.

More importantly, investors will want to keep an eye on a potential red flag raised by newly published data. The issue is that Amarin compared Vascepa to mineral oil (acting as the placebo) in its latest clinical trials, but mineral oil is known to raise levels of bad cholesterol. In other words, that could have contributed to the impressive showing for the drug, although the U.S. Food and Drug Administration has yet to weigh in on the matter.

Now what

Whether the statistically significant improvement observed for Vascepa depended on the use of mineral oil as placebo isn't yet known. Considering that the drug is the primary factor in the company's nearly $5.8 billion market cap right now, investors would be smart to avoid starting new positions in the stock until more clarity is provided. If it's determined that Vascepa still provides a significant benefit, the drug can start making good on its blockbuster potential. But if Vascepa is determined to have received a large boost from the use of mineral oil, then all bets are off.

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.