A lot is riding on Amarin's (NASDAQ:AMRN) long-awaited cardiovascular outcomes study for its triglyceride-lowering drug, Vascepa, and according to management, the trial's data should be available later this year. If the trial demonstrates that Vascepa reduces the risk of cardiovascular events, including death, then it could finally allow management to deliver on what were once blockbuster expectations for this drug.

An important market opportunity

Almost 800,000 Americans die because of cardiovascular disease every year, and, sadly, heart-disease relate events end someone's life in the U.S. every 38 seconds. Those statistics are especially discouraging given the widespread availability and use of statins that lower cardiovascular risks by reducing bad cholesterol levels.

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Undeniably, new treatment options that can reduce the risk of death caused by heart disease are needed, and perhaps data from Amarin's Reduce-It trial will demonstrate that it deserves to play a much more important role in treatment. 

If so, then there's reason for investor optimism. Americans spend over $300 billion annually treating cardiovascular disease and prior to top-selling statin brands losing their patent protection, that class of drugs was hauling in tens of billions of dollars in sales every year.

What's the backstory

Vascepa is a purified fish-oil pill that's FDA-approved for use to lower triglycerides in patients with very high triglyceride levels. Roughly 3.8 million Americans have triglyceride levels of 500 to 2,000 mg/dl, and of these patients only about 2% have historically been treated to reduce these elevated levels.

When Vascepa was approved, it was hoped that doctors would more readily consider recommending treatment for high triglycerides, especially after trials demonstrated that Vascepa not only helped reduce levels in patients with very high levels but also patients with moderately high levels of them. However, the FDA balked at approving Vascepa's use in moderately high patients and it forced Amarin to file a suit against it to allow Amarin's sales team to discuss Vascepa's efficacy in moderately high triglyceride patients.

The FDA's hesitancy stemmed from debate over the role that triglycerides play in cardiovascular disease, and, more specifically, whether lowering triglyceride levels actually results in a reduced risk of a major cardiac event, such as a heart attack, stroke, or death.

Recognizing Vascepa was unlikely to garner widespread use until this debate was put to rest, Amarin launched its Reduce-It cardiovascular outcomes study more than six years ago. Originally, it was thought that growing revenue from Vascepa could offset most of the study's cost, but Amarin's struggles in expanding the drug's use have cost the company and its investors significantly. For example, the company reported a loss of nearly $68 million last year and that was despite Vascepa's revenue rising $51 million to $181 million.

AMRN Net Income (TTM) Chart

AMRN Net Income (TTM) data by YCharts

Big news on tap

How broadly Vascepa is used to treat patients will hinge significantly on Reduce-It's results, and according to management, those results will become available in Q3 2018. Overall, the trial enrolled more than 8,000 patients and its primary endpoint is the time from randomization to the first occurrence of various cardiovascular events, including death, non-fatal stroke, and non-fatal heart attack.

The company's basing its third-quarter forecast on the fact that 97% of Reduce-It patients have either completed their final visit or scheduled it and an estimate that there have been 1,612 primary major adverse cardiovascular events (MACE) that have already occurred.

If Reduce-It's results show Vascepa reduces the likelihood of cardiovascular events, then Vascepa's use could become more mainstream. After all, the trial enrolled patients who were responding to statins that have a targeted mean triglyceride level of 200 mg/dl and that reflects an addressable market totaling in the tens of millions of people.

Moving the needle

Amarin's sales team has made significant progress growing Vascepa's revenue from $50 million in 2014 to an expected $230 million in 2018. That's great news because costs should fall as Reduce-It winds down, giving management more flexibility to improve its balance sheet, and that's no small task. Exiting 2017, it still owed $123 million in long-term debt, and as a result its debt-to-capital ratio is 213%. Given its indebtedness and the make-or-break implications associated with the Reduce-It results, buying Amarin's stock ahead of these trial results is unquestionably a risky bet.

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.