If there is one biotech with massive potential right now, it’s Amarin (AMRN), say top analysts. This is the Ireland-based biotech pioneering a fish oil revelation. We can see from TipRanks that the stock currently scores seven back-to-back buy ratings- hence its ‘Strong Buy’ Street consensus. And what’s more the $32 price target indicates compelling upside potential of 108%.
So what’s driving this wave of extremely positive sentiment? Let’s take a closer look now:
Vascepa- big FDA decision lies ahead
As you may well know, Amarin’s Vascepa drug- a purified fish oil derivative- is the first and only prescription EPA treatment approved by the FDA to lower very high triglycerides (without raising bad cholesterol). And now Vascepa is also on the cusp of another exciting- and potentially extremely lucrative- development. Amarin has submitted a supplemental new drug application (sNDA) to The US Food and Drug Administration (FDA) regarding Vascepa’s ability to reduce the risk of major adverse cardiovascular events based on the landmark REDUCE-IT study.
"We believe the unprecedented REDUCE-IT results position Amarin to lead a transformative change in clinical practice for preventative treatment of cardiovascular disease, the leading cause of death for both men and women in the United States" commented CEO John Thero on May 29. In REDUCE-IT, Vascepa achieved the primary endpoint with a 25% relative risk reduction compared to placebo in the first occurrence of a major adverse cardiovascular event (MACE) in the intent-to-treat population.
Indeed, the company has just announced that the FDA will hold an advisory committee meeting in mid-November to discuss this application. According to Amarin it is likely that the advisory committee meeting will extend the original Prescription Drug User Fee Act (PDUFA) date by about 3 months, from September 28 to late December. This is the date on which the FDA will reveal is if it has approved Vascepa for this additional indication- which could see a major spike in share price if all goes to plan.
Positive AHA Update
Ahead of this key date, Jefferies analyst Michael Yee reiterated his AMRN buy rating with a $30 price target (97% upside potential). Although investors were disappointed by the suggested PDUFA delay, Yee noted a new, and encouraging, development for the company. In short, the AHA (American Heart Association) issued an updated science advisory report for use of omega-3 fatty acids (fish oils) for management of hypertriglyceridemia.
The update stated that prescription n-3 fatty acids (which include Vascepa, a pure EPA product) “are clinically useful for reducing triglycerides, after any underlying causes are addressed and diet and lifestyle strategies are implemented, either as monotherapy or as an adjunct to other triglyceride-lowering therapies.” Notably, the advisory does appear to endorse using omega-3 fatty acids in people with triglycerides 200 and up, which is broader than the current labels recommending use to lower triglycerides 500 and up.
Following the news, Yee commented: "Although this is not a formal guideline update, we note AHA has historically been slow to update guidelines (took long time for PCSK9). Scripts continue to grow every week despite no label change and we think 2020 numbers are too low; we are positive but fully acknowledge investors remain nervous into a panel presumably in Nov."
Similarly, post-AHA update Roth Capital’s Yasmeen Rahimi also reiterated her AMRN buy rating. That came with a slightly higher price target of $31 (104% upside potential).
She didn’t hold back when she told investors: "this strong validation for Vascepa's TG reduction gives a sneak peek of the favorable cardiologists' view (3/8 voting docs are cardios) ahead of Nov. AdCom, and sets the stage for Vascepa to capture even greater market share". So watch this space.