Amarin's (AMRN) Q1 Loss In Line With Estimates, Sales Beat
Amarin Corporation PLC AMRN reported first-quarter 2020 adjusted loss of 3 cents (excluding stock-based compensation) per American depositary share, in line with the Zacks Consensus Estimate. The company had recorded an adjusted loss of 5 cents in the year-ago period.
Revenues, primarily from its sole marketed drug Vascepa, were up almost 111.5% year over year to $155 million in the quarter, beating the Zacks Consensus Estimate of $144.13 million.
Despite decent first-quarter results, shares of Amarin were down 7.9% on Apr 30, presumably due to anticipated adverse impact of COVID-19 on future Vascepa sales. The stock has declined 64.5% so far this yearagainst the industry’s 2.7% increase.
Quarter in Details
Product revenues, entirely from Vascepa, were $152.2 million, up 109.3% year over year. Sales were up 7.2% sequentially. Strong demand for the drug continues to drive sales higher. Sales in ex-U.S. market, solely from Canada, were $6.7 million.
Per IQVIA, normalized prescriptions for Vascepa increased approximately 74% year over year to 962,000 in the United States.
Vascepa was initially approved by the FDA as an adjunct to diet to reduce triglyceride levels in adult patients with severe (≥500 mg/dL) hypertriglyceridemia.In December 2019, the FDA approved a label expansion for Vascepa as a treatment to reduce cardiovascular risk in patients with persistent elevated triglycerides on statin therapy for LDL-C (bad cholesterol). The approval was based on the results of the REDUCE-IT cardiovascular outcomes (“CVOT”) study. The drug is under review for a similar indication in Europe with a decision expected by the end of this year. Please note that the drug is not approved for any indication in Europe.
In December 2019, Health Canada approved Vascepa as a treatment to reduce the risk of cardiovascular events in statin-treated patients with elevated triglycerides based on REDUCE-IT study data. The company’s partner in Canada, HLS Therapeutics started promotion of the drug in the middle of the first quarter of 2020.
Licensing revenues were $2.8 million in the first quarter compared with $0.5 million in the year-ago period.
Adjusted selling, general and administrative expenses were up 89.2% to $124.9 million due to rise in commercial and other promotional costs to support launch of Vascepa in expanded label.
Adjusted research & development expenses surged45.9% to $8.7 million due to a decline in costs, following completion of REDUCE-IT study.
The company ended the quarter with $623.7 million in cash and investments, compared with $644.6 million as of Dec 31, 2019.
Vascepa Update
Amarin increased its sales force through 2019 to support the launch of Vascepa’s label expansion. It has doubled its sales team compared to 2019 and is planning to increase targeted healthcare professionals from 50,000 to 75,000.
Amarin’s payer coverage for Vascepa has improved so far in 2020 with expanded coverage by various payers in January and February. The company expects coverage to improve further in the coming months.
Patent Litigation
In March, Amarin announced that the United States District Court for the District of Nevada ruled in favor of the generic companies related to patent litigations against Vascepa’s hypertriglyceridemia indication. Please note that the patent litigations do not include Vascepa’s expanded label based on REDUCE-IT study.
However, the company has strongly opposed the court’s ruling and is planning to file an appeal against it this month. The company is also likely to file an injunction against generic companies, restricting them from launching a generic version of Vascepa until a decision related to its appeal is obtained.
Our Take
Amarin reported decent results with first-quarter earnings meeting estimates and sales beating the same. Moreover, sales of Vascepa continued to be strong. U.S. label expansion, Canadian approval and improved payer coverage for Vascepa as well as increased sales force support the strong outlook. The company believes Vascepa has multi-billion dollar potential.
Meanwhile, discontinuation of a CVOT study by AstraZeneca AZN in January on Epanova, an omega-3 based drug like Vascepa and a possible strong competitor, further boosts Vascepa's prospects.
However, Amarin stated on its first-quarter earnings call that reports of COVID-19 infection are most pronounced in areas where the company was relying for sales growth in 2020. Moreover, the company witnessed a decline in the rate of new prescriptions for Vascepa as it suspended in-person sales calls due to COVID-19 social distancing priorities. These developments will likely affect the drug’s sales future quarter of 2020. Moreover, the pending patent litigation is a major overhang.
Amarin Corporation PLC Price, Consensus and EPS Surprise
Amarin Corporation PLC price-consensus-eps-surprise-chart | Amarin Corporation PLC Quote
Zacks Rank and Other Stocks to Consider
Currently, Amarin is a Zacks Rank #2 (Buy) stock.
A couple of other stocks to consider from the biotech sector include Seattle Genetics, Inc. SGEN and Ultragenyx Pharmaceutical Inc. RARE, both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Seattle Genetics’ loss per share estimates have narrowed from $2.95 to $2.87 for 2020 in the past 30 days. The company’s average four-quarter positive earnings surprise is 11.66%. The stock is up 20.9% so far this year.
Ultragenyx’s loss per share estimates have narrowed from $6.17 to $6.03 for 2020 in the past 30 days. The company’s stock has surged 49% so far this year.
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