Is Amarin Sitting on a Goldmine?

Vascepa could become a top-selling medication. Here's why.

George Budwell
George Budwell
Feb 28, 2019 at 10:30AM
Health Care

Stocks that skyrocket by nearly 500% in less than 12 months aren't normally bargains. Far from it. But the mid-cap biopharma Amarin (NASDAQ:AMRN) could be one of the few exceptions to this general rule of thumb. 

Amarin went from a largely forgotten small-cap biotech to the belle of the ball last year after the company released the top-line results from REDUCE-IT -- a large cardiovascular outcomes trial for the prescription omega-3 treatment Vascepa. This seven-year study demonstrated that Vascepa significantly lowers the risk of serious cardiovascular events -- such as heart attack, stroke, and even death -- in patients already on statins.

A glowing dollar sign hovering above a person's open hand.

Image source: Getty Images.

The big deal is that Vascepa's apparent cardioprotective effect is quite literally unprecedented. Amarin's management, in kind, thinks the sky is the limit for this prescription fish oil pill. Here's what you need to know right now.   

Vascepa's commercial opportunity may be severely understated

Prior to Vascepa's cardiovascular outcome results becoming public knowledge, Wall Street pegged the drug's peak sales to top out at about $2 billion. Amarin's management, though, seems to believe that analysts may now need to scale up these sales projections in a big way. During the company's fourth-quarter earnings call yesterday, for instance, CEO John Thero noted, "In the United States, approximately one in four patients have elevated triglycerides, a cardiovascular risk factor independent of LDL cholesterol, including more than 12 million patients in the United States on statin therapy."

In plain English, tens of millions of Americans may benefit from using Vascepa, which gives the drug an outside chance of breaking into the top five drugs in the world in terms of annual sales. In other words, Vascepa's peak sales might exceed $10 billion a year -- a figure that is five times higher than Wall Street's most optimistic take right now. And that's not even accounting for the drug's sizable commercial prospects in Europe and other parts of the world. The takeaway is that Vascepa's peak sales could turn out to be drastically larger than anyone outside the company ever predicted.  

Check out the latest Amarin earnings call transcript.

What's next?

Amarin plans on submitting Vascepa's supplemental New Drug Application to the Food and Drug Administration in March. With a standard 10-month review cycle, Vascepa's broader label -- assuming approval -- would go into effect in early 2020. The agency, though, might grant Vascepa a quicker six-month priority review, given the unprecedented nature of these trial results and the large unmet medical need the drug would address. In that case, the company would be allowed to expand its marketing efforts to include a direct-to-consumer campaign before year's end. 

In the interim, the market's appetite for this novel omega-3 therapy should become fairly evident over the remainder of 2019. Amarin is already touting the drug's cardiovascular outcome trial results to doctors using its expanded sales force. And Vascepa's cardiovascular outcome trial results aren't exactly a secret to caregivers and opinion leaders, thanks to a high-profile publication in the New England Journal of Medicine

So should investors buy the hype? Amarin's brass is clearly shooting for the stars with Vascepa. But this super-optimistic outlook shouldn't necessarily be tossed aside as typical executive salesmanship. After all, Amarin's leadership team has repeatedly been proven right about the drug's prospects, even as the naysayers mounted in numbers. This red-hot biotech stock, therefore, could still have a lot more upside to come.


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