What happened

After the company reported in September that its purified fish oil pill, Vascepa, reduced the likelihood of major cardiovascular events, including stroke, Amarin Corporation plc (AMRN -3.37%) shares had been on a tear. However, new data unveiled over the weekend has taken a little luster off the high-flying company, causing its shares to retreat 20% this week, including a 20% slide on Tuesday.

So what

Vascepa has been FDA approved for use in patients with very high triglyceride levels since 2012. However, the FDA balked at approving its use in patients with moderate to high triglyceride levels, choosing instead to wait until results from a long-term cardiovascular outcomes trial were available that could prove that lowering triglyceride levels actually lowers cardiovascular event risk.

A man in a suit bites his thumbnail.


Amarin's shareholders have waited years for those results, and when they became available, investors were rewarded for their patience with headline results revealing 4 grams of Vascepa daily reduced the risk of a major cardiovascular event by an additional 25% when used with statins, a class of drugs commonly prescribed to lower bad cholesterol levels.

The company's shares rallied to more than $22 from less than $3 following those results, but they're giving back some of those gains this week following the publication of additional data in the New England Journal of Medicine and a presentation over the weekend. Specifically, researchers noted an unexpected increase in bad cholesterol levels in the placebo group that could be due to the use of mineral oil in those patients. If mineral oil increased bad cholesterol levels, it may be making Vascepa's results look better than they would be otherwise.

The difference wouldn't be enough to derail the study's results, but it does create uncertainty that could potentially create a bumpier road to winning a label expansion from the FDA and, subsequently, widespread support for its use among doctors.

Now what

If the FDA approves expanding Vascepa's eligible patient population, it would be game changing for Amarin's financials. There are about 3.8 million Americans with triglyceride levels between 500 and 2,000 mg/dl, and only about 2% of those patients are currently being treated. Additionally, there are tens of millions of patients taking statins who also have elevated triglyceride levels and who conceivably could benefit from Vascepa.

The sheer size of the addressable market had most everyone projecting Vascepa sales to increase from their current pace of about $230 million per year to $1 billion or more. It's anyone's guess how the FDA will view the placebo group results or if doctors will look past their questions and prescribe it, but I think the odds are good that Vascepa will get a green light and that its sales growth will still impress. More than 800,000 people die from cardiovascular events every year in the U.S., so there's a big need for new treatments. Vascepa's got a solid safety profile that's bolstered by years of commercial use, and it's a low-cost drug that isn't likely to raise objections from insurers.

Having said that, the risk to owning Amarin is higher today than it was last week, so investors may want to watch and see what the FDA says about the Vascepa study before chasing this stock. After all, it has still more than quadrupled over the past six weeks, despite its recent dip.