What: Shares of Amarin (NASDAQ:AMRN), a small-cap biopharmaceutical company focused on developing therapies that are designed to treat cardiovascular diseases, rocketed higher by 37% in November, according to data from S&P Capital IQ, after presenting new data on cholesterol-reducing drug Vascepa and following the release of its third-quarter results.
So what: Without a doubt, the big catalyst of the increase was the release of new data on Vascepa on Nov. 17 during an American Heart Association scientific session. This day alone accounted for the majority of Amarin's 37% monthly gain. The new data from the ANCHOR and MARINE trials showed that using Vascepa capsules significantly reduced remnant-like particle cholesterol levels in patients with triglyceride levels in excess of, or equal to, 200 mg/dL and 500 mg/dL. This also included patients that had received statin therapy. This is a solid finding considering that remnant-like particle cholesterol is one of many factors attributed to higher cardiovascular health risks.
In addition to Amarin's new data release, the company's third-quarter earnings results, while missing the mark slightly in terms of net loss, demonstrated a significant reduction in cash outflow from the year-ago period ($19.9 million versus $44.8 million), and highlighted 12% sales growth in Vascepa, which is currently approved to treat patients with high triglyceride levels equal to or in excess of 500 mg/dL.
Now what: Amarin shareholders haven't witnessed very many good months lately, and I'm still not convinced they'll see many more. Having the Food and Drug Administration require a long-term cardiovascular outcomes study (the REDUCE-IT trial) before it'll consider expanding Vascepa's usage to patients in the much larger 200 mg/dL to 499 mg/dL triglyceride level category pretty much dooms Amarin to ongoing losses for at least the next three years until the data is available in 2018. The end result I suspect is going to be Amarin seeking financing sooner rather than later, even with aggressive cost-cutting.
The concern here is that even if Vascepa gets its label expanded by 2018 or 2019, the market for cardiovascular risk-mitigating products might look wholly different. If anything I'd expect it to be far more competitive. With each passing day the window of opportunity closes a bit more for Amarin, and given that I'd suggest keeping a very safe distance away from this stock.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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