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Why Amarin Stock Crushed the Market on Tuesday

By Eric Volkman – Nov 16, 2021 at 6:14PM

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An activist investor revealed that it held a small stake in the company.

What happened

Shares of biotech Amarin (AMRN 4.84%) shot more than 3% higher on Tuesday. That was on the reveal that an activist investor has taken an equity stake in the business.

So what

In a regulatory filing submitted after market hours on Monday, hedge fund Sarissa Capital Management revealed that as of Sept. 30, it held an 8.5 million share stake in Amarin. That represents roughly 2.1% of the biotech's current outstanding share count.

Elderly customer at a pharmacy.

Image source: Getty Images.

Activist investors like Sarissa Capital Management frequently take out small, anchor positions in companies to effect change and "unlock" purportedly dormant value in their shares.

Sarissa Capital Management has not yet publicly commented on its Amarin investment. The hedge fund specializes in taking stakes in healthcare companies and agitating for managerial and/or operational change. The firm's CEO and chief investment manager is Alex Denner, who was previously the healthcare portfolio manager of Icahn Capital, headed by famous and ever-busy activist investor Carl Icahn.

Amarin has also not yet issued an official statement on Sarissa Capital Management's buy-in.

Now what

At this point, Sarissa Capital Management's strategy behind the Amarin investment is hard to gauge. The biotech is certainly a juicy target -- its share price has generally headed south since the company lost a patent challenge to its cardiovascular drug, Vascepa, in 2020.

However, Vascepa remains hugely popular, even in the face of competition with generics. Recent data from Symphony Health Solutions indicate that the drug still had a very strong market share (89%) eight months after those generics hit the market.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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