It isn’t every day that you see a stock more than triple before the opening bell. But, that is exactly what happened on Monday, Sept. 24, when shares of bio-pharmaceutical company Amarin (NASDAQ:ARMN) more than tripled from $3 to $10 thanks to positive test results from the company’s leading product, fish oil pill Vascepa. A little context here is necessary to explain the big move higher in Amarin stock.
Cardiovascular health is a big and expensive problem in the biopharm world that affects a bunch of patients. The biopharm industry has long looked for an affordable solution to this problem via fish oil pills. But, clinical trials and studies to-date have proven inconclusive with respect to fish oil pills’ affect on improving cardiovascular health.
Data released from a recent and highly anticipated study of ARMN’s leading product, fish oil pill Vascepa, was very promising. Not only did Vascepa result in 25% relative risk reduction of a major cardiovascular event, but its safety profile was also deemed similar to that other other omega-3 fatty acids.
In other words, Amarin broke the fish oil code, and Amarin stock tripled in response.
The rally in Amarin stock is far from over. The company has a $3 billion market cap now on $230 million in projected sales this year. That seems rich. But, the cardiovascular health market measures $500 billion in the U.S. alone, and ARMN just unlocked the code to tap into a big portion of that market. Plus, the company doesn’t have much competition because they are the only ones with positive data.
From this perspective, a $3 billion market cap for a company tapping into a $500 billion industry doesn’t seem all that big. That is why I think Amarin stock can still go higher. Much higher, actually.
Vascepa Is a Breakthrough
Cardiovascular health is a big problem, and Amarin is gradually and efficiently solving it.
Currently, some 40 million Americans take statins — medicine aimed at lowering blood cholesterol — to cost efficiently offset the risk of cardiovascular issues. Yet, those statins don’t do much by the way of preventing a major cardiovascular event, as cardiovascular disease remains the number one killer of men and women globally. In the United States, cardiovascular disease is responsible for one out of every three deaths.
Clearly, a new solution is needed. And, because the problem is so widespread and affects individuals of all economic backgrounds, the solution needs to be cost effective.
That is why many biopharm companies have turned to fish oil pills. But, no one has really cracked the fish oil enigma. Despite murmurs that fish oil is supposed to be good for cardiovascular health, there haven’t been any clinical trials or studies to conclusively prove such murmurs. As such, fish oil pills have largely remained an afterthought when it comes to treating cardiovascular disease.
Amarin is changing that. The company appears to have cracked the fish oil code with Vascepa. Recent results from an 8,000-plus patient study showed that Vascepa reduced the risk of a cardiovascular event by 25%, and while doing so, maintained the same safety profile as other fish oil pills. In other words, Vascepa solved the fish oil efficacy problem without compromising safety.
That is a big deal. That means doctors and patients worldwide can now use Vascepa as a viable, cost-efficient and patient-convenient treatment for cardiovascular disease.
This is exactly what is already happening. Norman Lepor, a cardiologist at Cedars-Sinai Heart Institute and professor of medicine at UCLA, called this data a “game-changer” and that the results will “impact how I treat patients starting tomorrow.”
Amarin Stock Could Go Way Higher
The facts of this situation are that Amarin cracked the fish oil code, and Amarin’s market cap more than tripled. It is easy to say that after such a big rally, all fish-oil-related upside is priced in, and that you missed the big jump in Amarin stock.
But the easy way out here is not the profitable way out.
AMRN stock jumped to a market cap of $3 billion. The cardiovascular treatment industry in the U.S. is $500 billion alone. Vascepa projects to be a global solution. Thus, Amarin cracking the fish oil code means this company is tapping into a $500 billion-plus market.
From this perspective, a $3 billion market cap doesn’t seem like the end-goal.
Moreover, Amarin has a huge leg up on the competition. They are the only ones in the market with positive data for a fish oil pill. Until competitors catch up, Amarin is running in open fields in a huge market.
What does all that translate to? Likely billions of dollars in sales, and a market cap well north of $3 billion for Amarin stock.
Bottom Line on AMRN Stock
Amarin has cracked the fish oil code, and because of that, the party in Amarin stock is just getting started.
As of this writing, Luke Lango was long AMRN.