What happened

Shares of mid-cap drugmaker Amarin (AMRN 0.42%) fell by 20.9% in February, according to data from S&P Global Market Intelligence.

The Irish biopharma hit the skids last month for two reasons.

First, investors apparently weren't entirely enthused with Amarin's fourth-quarter results released on Feb. 25. Even though the company beat Wall Street's consensus revenue figure for the three-month period by a healthy 4%, Amarin's shareholders were hoping to get an updated annual guidance to the upside. Unfortunately, the company simply maintained its 2020 annual guidance when it reported fourth-quarter results, calling for net total revenue of between $650 million to $700 million for the full year. 

Second, the COVID-19 illness also weighed on the drugmaker's shares toward the back end of February. Amarin's stock has been trading at a fairly rich premium ever since Vascepa's positive cardiovascular outcomes trial. Nearly every stock with a stretched valuation -- based on classic valuation metrics -- took a big step backward last month, however. Amarin was no exception in this regard.    

A blackboard with a chart showing a down arrow in white chalk.

Image source: Getty Images.

So what

Amarin's shares are now down by a whopping 36% from their 52-week high. That's an interesting turn of events given that nothing has fundamentally changed about the company's long-term value proposition. While a buyout doesn't seem likely in the short term, Vascepa is on track to quickly become a blockbuster product. What's more, it no longer has any significant competitive threats on the horizon. Vascepa, in turn, is poised to become a critical component of the treatment landscape for patients at risk of cardiovascular disease despite being on statin therapy. 

Now what

Can Amarin's shares rebound this year? If you're looking for a quick profit, Amarin probably isn't your best bet. This biopharma stock has transitioned into "prove it" mode following Vascepa's label expansion. If things go according to plan, however, this stock should turn out to be a bargain at current levels.