Amarin Corporation PLC (AMRN) - Q4 2019 - Seeking Alpha

Amarin Corporation PLC (AMRN)
            Q4 2019

Amarin Corporation PLC (AMRN) | 2

CONTENTS

Disclaimer                                                    3

Stock Performance & Financials                                4

 Stock Information                                             4

 Financial Statement                                           4

Company Fundamentals                                          5

 Thesis                                                        5

 Updates & Catalysts                                           7

Closing Remarks                                               7

Amarin Corporation PLC (AMRN) | 3

Disclaimer
The intention of this report is to provide insight, not investment advice. While the information provided in this
report is intended to be factual, there is no guarantee and prospect investors are encouraged to do their own
fact-checking and research before investing in a company. One must also consider one's own financial
standings, risk tolerance, portfolio diversification, etc. before making a decision to buy shares in a company.
Many of my reports detail biotechnology companies with little or no revenue. These stocks are, therefore,
speculative and volatile. Even when prospects seem promising, there is no predicting the future. Losses
incurred may be significant.

Amarin Corporation PLC (AMRN) | 4

Stock Performance & Financials
Stock Information                                                                                    5.8

                                                                                                     5.2
Outstanding Shares: 358,906,887

Price per share: $24.02
                                                                                                     4
Market capitalization: $8.62B

Cash & cash equivalents (as of Sept. 30): $673M

Debt: NA

Enterprise value: ~$8B                                                                               1.6

Cash burn per quarter: $5M-$10M (figures to decrease)   2011E        2012E         2013E        2014E

Estimated cash runway: Beyond 2022
                                                                RETAIL                 DINING
Accumulated deficit: $1,418,245,000
                                                                CULTURE                UNDEVELOPED

Financial Statement

Amarin Corporation PLC (AMRN) | 5

Company Fundamentals
Thesis                                                                             PRICE TARGET
Vascepa, icosapent ethyl, is currently FDA-approved for patients with severe
hypertriglyceridemia (TG >500 mg/dL). Amarin began marketing Vascepa for
this indication in January 2013. Two years later, Amarin began marketing
                                                                                  $35
                                                                                    Conservative estimates have Vascepa
Vascepa for patients with persistently high triglyceride levels (> 200 mg/dL)       securing near $3B in peak annual
despite statin therapy.                                                             revenue. Additionally, Vascepa appears
                                                                                    to be safe from “copycats” for, at least,
Vascepa saw humble, but consistent growth for this limited indication:              seven years following label expansion.
                                                                                    Assuming management is able to secure
                                                                                    a healthy label and executes on sale
                                                                                    fronts, there is no reason to believe
                                                                                    Amarin will not be valued well over $10B.
                                                                                    My price target may or may not change
                                                                                    following sNDA approval (when we get
                                                                                    an idea of how large the label is in terms
                                                                                    of the population Vascepa can be
                                                                                    prescribed to).
Figure 1: Vascepa revenues beginning to plateau (Source: Seeking Alpha)

At the same time and in hopes of securing a much larger indication, the
company began a cardiovascular outcome study named REDUCE-IT. The
                                                                                            Revenue
study assessed over 8,000 individuals with high cardiovascular event risk                  Estimates
despite statin therapy – mainly, these individuals had persistently elevated                  (in millions)
triglyceride levels (the average TG level in REDUCE-IT ended up being ~216).
                                                                                $2,500
Between 2012 and 2018, Amarin’s stock struggled to gain momentum as             $2,000
Vascepa revenue was far insufficient to offset dilution and battles between     $1,500
Amarin, the FDA (over who Amarin could market to), and other companies          $1,000                               $2,100
                                                                                                               $1,600
(concerning patents) ensued.                                                      $500              $986
                                                                                          $410 $650
                                                                                    $0
                                                                                          2019 2020 2021 2022 2023

Amarin Corporation PLC (AMRN) | 6

Figure 2: FDA-approval & marketization optimism spoiled by reality

Everything changed in late September 2018 when Amarin revealed that the
REDUCE-IT study results were a massive success. Amarin’s share price soared
from $3 to over $20 in a matter of days.

The data showed that Vascepa, in patients on statin therapy with residual
risk, reduced cardiovascular events by 25% with an extreme degree of
statistical significance (p=0.00000001). At that moment, Vascepa joined drug
classes like statins and PCSK9 inhibitors.

Figure 3: Vascepa joins some blockbuster classes (Source: Amarin Corporation)

As news of REDUCE-IT became increasingly available, Vascepa prescriptions
and revenue shot up:

Figure 4: REDUCE-IT data injects life into Vascepa revenues (Source: Seeking
Alpha)

Despite glowing and growing recommendations from the medical
community (e.g. ADA, NLA, ICER), concerns over an active placebo
influencing the study’s results hung over Amarin like a black cloud.

Amarin Corporation PLC (AMRN) | 7

Subsequent news of an Advisory Committee and sNDA delay saw shares
bleeding into the low teens.

Updates & Catalysts
The Advisory Committee summoned itself on November 14 and to the delight
of Amarin bulls, the Advisory Committee voted 16 to 0 in favor of the
cardiovascular benefit claim of Vascepa. It is believed that while Amarin’s
choice of placebo (mineral oil) may not have been inert, the data is far too
significant to not attribute the end result to Vascepa. This news saw shares of
Amarin reaching 52-week highs.

Moving forward, Amarin will present EVAPORATE data very shortly. This will
provide insight into the drug’s mechanism of action. I don’t expect this event
to be of great significance.

The PDUFA goal date is set for December 28, 2019. Amarin hopes to secure
the largest label possible. Another issue of contention is how large a label the
FDA will permit. A label only inclusive of patients with TG levels exceeding
200 mg/dL would be a bearish outcome. A label inclusive of patients with TG
levels exceeding 135 mg/dL would be a bullish outcome.

In the event of the former, my price target of $35/share would still likely be
appropriate. In event of the latter, my price target may need adjusting –
probably in the range of $45-$55 (supporting, essentially, $4-$5B estimate in
peak annual revenue).

It is my belief, based on my research, that the label will be favorable for
Amarin (TG levels of 135 to 200 included). Glancing at the data, cardiovascular
reduction benefit seems nearly independent of triglyceride level.

Closing Remarks
There is no way around it, REDUCE-IT is a landmark study in cardiology that is
bound to change the treatment landscape as we know it. For much of the
next 7-10 years, Amarin will dominate the landscape with the only drug of its
kind firmly in its hands. Furthermore, as we have already seen with rising
revenues pre-label expansion, Amarin has a good grip on the market already
and one can expect revenues to explode even further upon sNDA approval.
Amarin will quickly become a profitable company and will surely procure
hundreds of millions of dollars in cash.

Based upon REDUCE-IT data, one can expect a label that is favorable to
Amarin. Some risks include sNDA delay, new safety concerns over Vascepa,
competition, litigation, revenue misses, dilution, and market headwinds. A
full assessment of risk in an Amarin investment can be viewed within the
company’s latest annual filing.