Vascepa’s Future Looks Rosy, But It Could Still Be Fishy for Amarin Stock

Estimating the value of Amarin's Vascepa is made difficult by potential competition

Since announcing the U.S. Food and Drug Administration approved its heart drug Vascepa, Amarin (NASDAQ:AMRN) has been a subject of fascination at InvestorPlace.

Amarin Stock is at Sky-High Levels Already Assumes All the Good News
Source: Pavel Kapysh / Shutterstock.com

Should you take profits? Will the stock keep powering higher? Risks are down, but how much reward is there? Should you buy now despite the short-term choppiness?

Speculation is rampant because Amarin has all the financial stability of a good pot stock. We’re talking about a market capitalization of $7.6 billion on estimated 2019 sales of $363 million. Amarin doesn’t make a profit, and its cash flow depends on issuing more stock.

It’s enough to give a nervous investor a heart palpitation. Especially this one.

New Indications

Vascepa makes me nervous because I may be a candidate for it.

I’ve taken statins — cholesterol-lowering drugs — for 20 years. Side effects, specifically muscle weakness, recently caused my doctor to suggest a vacation from them.

We’ll talk next week, but Vascepa may be his answer. As InvestorPlace’s Chris Markoch notes, Vascepa may now market itself as “an add-on drug to maximally tolerated statin therapy,” with the “potential to reduce the risk of cardiovascular events.” Until now, it was only seen as able to reduce highly elevated triglyceride levels. Mine are still a little high, even with generic Lipitor.

But Vascepa is not cheap. Drugs.Com notes a cash price of $380 for a two-month supply. The cost with insurance depends on your plan

I can’t tell you how many other boomers are nearly exhausted with statin therapy. I can’t even tell you if I’m in that situation. Maybe we can change to another statin. There are several, all generic. My family has a history of high cholesterol, and my dad had a heart attack at 47. I turn 65 next month and I’m still waiting for my first one. (Knock on wood).

It’s these kinds of calculations that have analysts putting a price of $20 billion on Amarin, with Pfizer (NYSE:PFE), Amgen (NASDAQ:AMGN) and Gilead Sciences (NASDAQ:GILD) all in the frame. Gilead may also see it as a partial solution for fatty liver disease, a condition called nonalcoholic steatohepatitis (NASH).

The Bear Side

Vascepa, which is derived from fish oil, cut the risks of heart attack by 25% in the recent REDUCE-IT trial, which caused the FDA to act.

But Vascepa isn’t the only potential solution. AstraZeneca (NYSE:AZN) will announce results on a similar drug called Epanova in 2020. Acasti Pharma (NASDAQ:ACST) will deliver results on its CaPre soon, based on a study called Trilogy 2. Matinas BioPharma Holdings (NYSEAMERICAN:MTNB) will release a study matching its MAT9001 against Vascepa later in the year.

Amgen also has a drug that operates in a different way, inhibiting the action of the PCSK9 gene. This drug is called Repatha. Sanofi (NASDAQ:SNY) and Regeneron (NASDAQ:REGN) have a similar compound called Praluent.

This means that, despite being approved for use in Europe as well as the United States, and clearing out fishy competitors through litigation, maximizing profit may not just mean hiking prices. Competition could cut Amarin’s value.

The Bottom Line on Amarin Stock

Obviously, my next doctor’s appointment will be an interesting one, but what about your investment in Amarin stock?

For Amarin, everything depends on estimating the market value of Vascepa. Sales for 2020 are estimated at $700 million. Some are estimating peak sales of $10 billion.

Drug companies are like old-fashioned oil companies, spending big in hopes of a gusher. But, again like oil companies, the value of such gushers may be reduced by market competition.

That’s what I suspect will happen here. Heart disease is a common affliction, which makes Vascepa’s future look rosy. Amarin stock is a good speculation, but only with money you can afford to lose.

Dana Blankenhorn is a financial and technology journalist. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in REGN.


Article printed from InvestorPlace Media, https://investorplace.com/2019/12/vascepa-future-amarin-stock-amrn-fishy/.

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