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Amarin Is Just Running Up That Hill; Peak Sales Could Reach $10B, Says Analyst

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Biotech Amarin (AMRN) is one of Wall Street’s biggest standouts, with shares skyrocketing 577% in just the last year. Its fish-oil derivative drug Vascepa is already clinically proven to lower very high triglycerides without raising bad cholesterol. What’s more, recent trials revealed it could also cut cardiovascular risks by 25% in patients with abnormally high triglyceride levels. The FDA will either approve or reject this potentially very lucrative label expansion on September 28, and approval should send shares soaring.

An approval would make Vascepa the first therapy, as an adjunct to diet, proven to reduce cardiovascular events when used to treat patients with persistent elevated triglyceride levels and other cardiovascular risk factors. It is this large, unmet medical need for potentially tens of millions of patients which Vascepa has been targeting for many years.

Ahead of this key date, Cantor Fitzgerald analyst Louise Chen has just released a very bullish report on Amarin. She made the call following the company's recent equity raise. “The proceeds should help accelerate the growth of Vascepa, and we think the peak sales potential of this drug could be $5B-$10B” writes Chen. FactSet forecasts $2.1B of sales by 2024.

Indeed Amarin currently shows a ‘Strong Buy’ Street consensus with all six analysts covering the stock bullish. Meanwhile the average analyst price target of $33 suggests shares can surge over 80% from current levels.

On July 18, AMRN announced the pricing of the underwritten public offering of 22.2 million shares at a price of $18 per shares. The gross proceeds of this offering are expected to be ~$400 million, before deducting expenses. Note that Amarin has also granted the underwriters a 30-day option to purchase up to an aggregate of 3.3 million additional shares.

As the company’s press release reveals, AMRN intends to use the net proceeds from the offering for multiple purposes. These include: (1) doubling its existing sales force for Vascepa to 800, increasing advertising, and supporting expanded commercial operations; (2) increasing the commercial supply of Vascepa from third-party drug product suppliers; and (3) for general corporate purposes.

“Amarin also may use a portion of the net proceeds to acquire strategic assets, although it currently has no agreements or commitments in this regard” the statement says.

Looking ahead the next catalysts to keep an eye on are as follows: 1) as you would expect, the potential FDA approval AMRN's supplemental new drug application (sNDA) seeking an expanded indication for Vascepa in the US based on the positive results of AMRN's REDUCE-IT study, 2) pick up in sales from expanded label as well as increased sales and promotional efforts, and 3) Amarin becoming profitable by 2020 (according to the analyst’s estimate).

Net-net, Chen reiterates her buy rating with a $35 price target (93% upside potential). “We continue to think that AMRN is an interesting asset in a consolidating space” she says.