Amarin (NASDAQ:AMRN) stock has been choppy for the past year, as the price has made multiple attempts to move above the $23-$24 range. However, this has been a stubborn line of resistance, considering the stock price is currently around $20.
Despite this, Amarin stock has still been a pretty good bet over the years. After all, the five-year average return is close to 80%.
So, what now? Could there be an opportunity with Amarin stock? Well, I think so.
To see why, let’s get a brief backgrounder on the company. Founded in 1993, Amarin is one of the leaders in leveraging lipid science and polyunsaturated fatty acids to create pharmaceuticals to improve heart health. The main drug is Vascepa, which has posted robust growth. In the latest quarter, revenues hit $112.4 million, up 103% on a year-over-year basis. This has been due to substantial increases in the number of subscribers and higher levels of prescriptions per prescriber.
However, the key for Amarin is that it recently gained FDA approval for wider applications for Vascepa. This decision, ironically enough, came on Friday the 13th last month — but of course, this really should be a very lucky day.
The new indication and label expansion — which is the result of a decade of research and development — is for a therapy to reduce “the risk of myocardial infarction, stroke, coronary revascularization, and unstable angina requiring hospitalization in adult patients with elevated triglyceride (TG) levels (≥150 mg/dL) and established cardiovascular disease or diabetes mellitus and two or more additional risk factors for cardiovascular disease.”
Yes, this is kind of medical jargon. But when boiling things down, the new use for Vascepa is a game changer.
According to Dr. Deepak Bhatt, an executive director of the Interventional Cardiovascular Programs at Brigham and Women’s Hospital Heart and Vascular Center, the treatment “represents one of the most important developments in the prevention and treatment of cardiovascular disease since statins…”
The market opportunity is enormous, as there — on average — one cardiovascular death occurring every 40 seconds in the U.S. Also, the financial costs of cardiovascular disease events are burdensome at about $500 billion a year — the most costly in the U.S.
There are a myriad of companies trying to do what Amarin has done; that is, using lipid therapies for cardiovascular disease. But, the science has proven quite complex and challenging.
Note that there have been some recent examples of Phase 3 trials that shown disappointing results, such as from AstraZeneca (NYSE:AZN) and Acasti Pharma (NASDAQ:ACST). In fact, since December, ACST has plunged from $2.87 to around $0.80 per share.
In fact, Cantor Fitzgerald analyst Louise Chen recently wrote after these companies’ failures that “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. We think the news today underscores our view that AMRN is an interesting asset in a consolidating space.”
Bottom Line On Amarin Stock
Last week, Amarin issued revised guidance for 2019. Revenues are now expected to range from $410 million to $425 million, which is at or slightly above the upper end of the prior forecast. The company also noted that beyond 2020, Vascepa’s total net revenue “will grow to reach multiple billions of dollars” because “the history of other therapies for chronic conditions suggests that growth builds over multiple years.”
Given this, the growth story should be robust for quite some time. This should also stir up mergers & acquisitions interest from the mega pharma companies like Pfizer (NYSE:PFE), Merck (NYSE:MRK) and even AZN.
Let’s face it, they need to fill their pipelines with blockbuster drugs — and these companies certainly have the resources to pay a premium price for Amarin.
Tom Taulli is the author of the book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.