Amarin Stock Will Deliver More Upside for Patient Investors

For investors in search of the biotech sector’s life-changing gains, Amarin (NASDAQ:AMRN) isn’t your destination this year. But that’s not a bleak prognosis. There is in fact upside to be had with the maker of the fish oil-based Vascepa.

Amarin Stock is Still Fully Valued Despite All the Good News

Source: Pavel Kapysh /

A selloff that started in December and extended into the early parts of this month is now finally abating. With AMRN stock up about 7% over the past week, it may be safe to say previously bearish traders have departed for greener pastures.

Most recently, rivals’ misfortunes have boosted Amarin shares as both AstraZeneca (NYSE:AZN) and Acasti Pharma (NASDAQ:ACST) revealed disappointing trial results for fish and krill oil-based cardiovascular treatments. With these would-be rivals vanquished, Amarin can add to its dominant market position.

“AMRN has been the only company in its class with an outcomes study (REDUCE-IT) that has shown a statistically significant benefit in reducing [cardiovascular] disease,” Cantor Fitzgerald analyst Louise Chen wrote in a recent note to clients.

The Road Ahead for Vascepa

The notion of fish oil being an adequate treatment of cardiovascular ailments remains a hotly debated topic. As recently as last year, Harvard Medical School debunked fish oil supplements as a way of boosting heart health.

“But the evidence for improving heart health is mixed,” Dr. Howard LeWine wrote. “In November 2018, a study reported in the New England Journal of Medicine found that omega-3 fatty acid supplements did nothing to reduce heart attacks, strokes, or deaths from heart disease in middle-age men and women without any known risk factors for heart disease. Earlier research reported in the same journal in 2013 also reported no benefit in people with risk factors for heart disease.”

However, there’s a big difference between over-the-counter fish oil pills and Amarin’s prescription Vascepa. The latter is a treatment that has gained credibility in the clinical community.

“With this drug, we are not only preventing that first heart attack, but potentially the second stroke and maybe that third fatal event,” Harvard Medical School’s Deepak Bhatt said. “Prevention of such subsequent cardiovascular events could improve patient outcomes and quality of life and may lower the total cost burden of medical care.”

Vascepa has been around since 2012. The U.S. Food and Drug Administration initially approved it to lower high triglycerides, but its uses are growing. Last month, the FDA granted approval for patients at risk of developing cardiovascular issues — despite taking cholesterol-lowering statins — to take Vascepa. This presents Amarin with a potentially sizable long-term opportunity.

The Bottom Line on AMRN Stock

Just how big is this opportunity? One firm forecasts peak annual sales of $3.2 billion by 2030. That same firm also estimates that Vascepa will capture 12% of the entire U.S. market in that time frame.

Yes, 2030 is a long way away and yes, $3.2 billion isn’t a massive amount of money. But that projected revenue is a significant portion of Amarin’s current market capitalization, which sits at $7.3 billion. It is also well above trailing 12-month sales of $364 million.

AMRN stock is still pricey at 20 times sales and the company is cash flow negative. Those are certainly two statistics likely to deter some investors.

Conversely, the full Vascepa opportunity may not be adequately reflected in AMRN stock at current levels and it’s hard to forget takeover chatter, which has been somewhat persistent.

A buyout may not materialize over the near term, but more upside in the stock can.

As of this writing, Todd Shriber did not own any of the aforementioned securities.

Article printed from InvestorPlace Media,

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