Amarin Corporation AMRN

Investment Analysis Clubs Saul’s Investing Discussions
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Amarin Corporation AMRN

Amarin Corporation is a biopharmaceutical company founded in 1993 and headquartered in Bedminster, New Jersey. Amarin is a one trick pony company that produces a refined fish oil product (omega-3) that is only available by prescription in the U.S. The product is called Vascepa. Vascepa is a product that improves cardiovascular health and has patents thru 2030 according to the company. It has been proven to lower triglyceride levels in adults. Vascepa launched in 2013 and has been precribed ~3 million times.

In July 2012, Vascepa received FDA approval in the United States for use as an adjunct to diet to reduce triglyceride levels in adult patients with severe (=500 mg/dL) hypertriglyceridemia and is now available by prescription. The triglyceride lowering effect of Vascepa® is not associated with increases in LDL-C, bad cholesterol. The only reported adverse reaction with an incidence >2% and greater than placebo in Vascepa treated patients was arthralgia (2.3% for Vascepa vs. 1.0% for placebo).

Executive Team consists of bean counters and veterans of the pharmaceutical industry, together they own ~4% of the company.

The stock has risen from ~$3 to ~$20 in a month. What is going on (did they state they may get into the medical marjuana business??-joke)? They recently announced results of REDUCE-IT trial. -FDA has not yet reviewed and opined on these outcomes study results.

Vascepa had ~25% relative risk reduction in composite of major adverse cardvascular events above statin therapies. Currently $555 billion annually is spent on cardiovascular disease, this number expected to double over the next 20 years. CV is the #1 cause of death in the U.S. Over 38 million people are on statin therapy. Before going generic, statins sale were over $34 billion annually.

Vascepa competition have all failed to show any benefit over and above statin therapies. Closest potential competitor is AstraZeneca which predicts results of study in 2019-2020.
Vascepa is priced similarly to statins before they went generic. Typical cost $3 a month with co-pay commerical insurance.

Amarin is currently preparing for growth due to REDUCE-IT trial results. They are expanding manufacting capacity to go from $500 m annually in revenue to $1B annually. They are increasing sales force from 150 to 400 sales professionals. They are expanding into more international footprint.

Net Product Revenue HIstory (prior to new trial results)

2013		26.4m
2014		54.2m		  105%	
2015		81.0m		  49%
2016		129m		  59%
2017		179.8m	          39%

Gross margin on product revenue was 75% in 2017. Income has been NEGATIVE. They have been burning cash every quarter. They have ~102 million in cash.

My thoughts. This is a story stock as revenue growth has been occuring but should POTENTIALLY sky rocket based on these results. Obviously the stock has been on momentum fire as it is up ~ 550% in a month. This is a small company with around 50 employees. Its market cap now currently sits around 6B. Do I think this company is going to capture its potential? Heck no, its going to get bought out by some big player that has the manufacturing capacity and salesforce to blow this product up.

From what I understand, this product is an all natural derived product which is patented. It has no known drug interactions. It is showing a 25% improvement beyond currently prescribed statin drugs. Basically as I understand it, everyone who is on statin drugs would immediately benefit from starting on this product. Statin product sales from 2016 where 20B. Additionally those who do not want to start on statins but may have some risk of elevated triglyceride levels would benefit from this product. Truthfully it seems that any older adult would probably benefit from the product, but I am not qualified to make that statement, just from what I have read it seems that statement would be truthful.

I personally have no idea what the revenue potential of Vascepa is in the future. However if statin sales are 20 B annually as generics I would assume it has at least that potential. If you take into account the population beyond those taking statins but would benefit from Vascepa, it could be much higher. This all makes a great story. What will competition do? I have no idea.

How to value a company like this? Current P/S ratio is 33. Company itself says it cannot manufacture more than 500 m annual of sales product currently and will only be at 1 B potential in 2019. 1 billion in sales would represent a 456% increase in revenue from 2017. I think this company will definitely get bought out.

I have no positon currently in AMRN. I submitted it for group review, as I am interested in others feedback on the companies potential.

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Retirementdough,
I think AMRN is no joke. Providing Vascepa is priced appropriately, it should become a gold standard of care. Which is important to me because I had 4 bypasses 3 years ago.

I think a TAM for statins is around $18B, but there is a question about statins being over prescribed. I would use a SWAG of $5B TAM for Vascepta as reasonable. People can draw their own TAM conclusions from the article below.

https://jamanetwork.com/journals/jamacardiology/fullarticle/…

8X peak sales is a typical buy out price. That would put AMRN in the neighborhood of $40B, while its current market cap is $5.8B. Even if I am off by 50%, it could triple this year. Since Vascepa is purified EPA from fish oil, it is almost like consuming a food, but WAY stronger than fish oil. I consider this a very solid lead.

Thanks.

Best,

bulwnkl

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Providing Vascepa is priced appropriately, it should become a gold standard of care. … I think a TAM for statins is around $18B, but there is a question about statins being over prescribed. I would use a SWAG of $5B TAM for Vascepta as reasonable. People can draw their own TAM conclusions from the article below.

Hi Bulwinkl,

There are some things to keep in mind about Vascepta.

First is that it was approved for reducing triglyceride levels in people with very high levels, which is a small population. There is no claim that it reduces cholesterol, that I could see.

In the new study, it wasn’t tested AGAINST statins, it was tested as an adjunct, IN ADDITION, to statins. It’s not going to ever replace statins, just possibly be added to them.

It will probably sell at a considerably cheaper price than statins, and maybe not in all patients getting statins (some people take statins just for prophylaxis), so you have to take that into account when figuring its TAM.

It’s possible that it would only be used in statin patients who also have high triglycerides (and who may have been the ones who responded) in this new study. Otherwise, it’s hard to see how it worked in a general population of cardiac risk patients.

All of which doesn’t make it a poor investment, just maybe not one that is immediately going to the moon.

Best,

Saul

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Saul,
You just pointed out the key thing… in addition to statins. Although this affects triglycerides, the surprising results are how important triglycerides are so it may be significantly broader than people think. I don’t think the levels below are insanely high levels- though you would know better than I.

Patients enrolled in REDUCE-IT had LDL-C between 41-100 mg/dL (median baseline LDL-C 75 mg/dL) controlled by statin therapy and various cardiovascular risk factors including persistent elevated triglycerides (TGs) between 150-499 mg/dL (median baseline 216 mg/dL) and either established cardiovascular disease (secondary prevention cohort) or diabetes mellitus and at least one other CV risk factor (primary prevention cohort).

https://investor.amarincorp.com/news-releases/news-release-d…

I think a 25% reduction in CV outcome for this group is AMAZING.

Best,

bulwnkl

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Patients enrolled in REDUCE-IT had LDL-C … controlled by statin therapy and various cardiovascular risk factors including persistent elevated triglycerides between 150-499 mg/dL (median baseline 216 mg/dL)

Aha!!! So these were patients with elevated bad cholesterol AND persistent elevated triglycerides. The question is: What percent of cardiac risk patients are these (with persistently elevated triglycerides)? My guess is only 20% or less, and maybe 10% or less of all patients on statins (who are a bunch, I’ll admit).

But Bulwinkl, since you said you had four bypasses, you must be followed by a good cardiologist. (I don’t have one, and my primary doctor is a gastroenterologist, which doesn’t help). Could you ask your cardiologist what percent of all his patients on statins would have persistently elevated triglycerides (above 150mg/dL)? Just a rough estimate: 40%? 20%? 10%? 5%? I’d love to know. That would be key information. What I’m trying to find out is how large the population is that we are talking about, compared to all the patients on statins?

Best

Saul

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Not to belabor this but as a personal example: I’ve been on statins for about 25-30 years as a preventative, because my father had a heart attack at 52, and died at 62 from a third heart attack (but he smoked three packs a day, yes smoking does shorten your life!).

My cholesterol is in the desired range and my triglycerides have ranged between 58 and 92 over the past three or four years. So although I’ve been a long time statin user, I’d never be placed on this medicine. My persistent triglyceride average is about 70, and less than half of the threshold for inclusion in the study. How many statin users have triglycerides like me? That’s the question.

Saul

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Hi Saul,
Your right. I do have a very good cardiologist who is trying to figure me out. I had normal cholesterol, normal triglycerides, normal weight, and I ended up with four bypasses at age 51. Statistically, according to my primary, I had a 3% chance of trouble, yet there I was. I blame my teenagers :o) No trouble 3 years since. I will check with my cardiologist.

For outliers like me, they want us to do everything possible: statins, regular exercise, and my guess is that I will be on this medication soon too.

I do know that elevated cholesterol is anything above 200 mg/dl total cholesterol and elevated triglycerides is anything above 150. So here’s some stats I was able to dig up.

*33% of older Americans have are reported to have high triglycerides (> 150 mg/dl).

https://consumer.healthday.com/circulatory-system-informatio…

*37% of Americans had high cholesterol in 2012 (I can’t imagine that improving since then)

https://www.cdc.gov/cholesterol/facts.htm

What I can’t find is the overlap of these two populations. The other thing that I have seen is that high triglycerides in the absence of high cholesterol can be due to genetics or metabolic syndrome - which I think is a pre-diabetic condition. Sadly, these conditions are growing more prevalent.

Because the percentages of high cholesterol and high triglycerides are so high, I have to believe there is significant overlap.

Best,
bulwnkl

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First post on the board. Be gentle… I’ve been following AMRN Vascepa for about 5 years. It’s been a bumpy road but good to see this positive outcome finally. I just wanted to throw out another name that I’ve seen circulating in conjunction with AMRN. Matinas MTNB apparently conducted a head to head study in 2015 with their proprietary fish oil compound MAT 9001 versus Vascepa. The results indicated it as potentially superior to Vascepa based on 4 out of 6 data points. Just curious if any of you following AMRN are familiar with the study and if it presents an opportunity with MTNB or if it is just fluff. MAT 9001 has been shelved since then, lying dormant, as he company has been looking for a commercialization partner. Red flag that they’re not willing to move it along on their own dime. Regardless, interested in hearing thoughts from any familiar with the space. TIA.

-Ty

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I am not aware and have not been following AMRN but would like to bring to the boards attention to Esperion (ESPR). Statins are not tolerated well by 25-30% of the patients as it leads to muscular attrition. ESPR is currently running many Ph2 and Ph3 trials for bempedoic acid that have shown upto 30% reduction stand alone and more than 50% (I don’t remember exact number here) along with ezetemibe. The reason it has no side effects like statins is because it acts via a different pathway in the body. For a real alternative in the long run for lowering LDL-C with an oral tablet, bempedoic acid is most probably going to be the answer.

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Quoting from the article linked below, which is trying to assess Amarin’s potential valuation:

"More than 25% of adults in the U.S. have cardiovascular risk factors beyond bad cholesterol – between 50 million and 70 million have elevated TGs and most are already on statin therapy.

Amarin estimates that less than 4% of people with elevated TGs are on lipid-modifying therapies (excluding cholesterol-modifying therapies) and that’s a market sized north of $2 billion based on Vascepa’s current net price (according to Amarin). Vascepa’s share of the mentioned 4% market is approximately 5% which leaves substantial room for growth in the patient population currently on lipid-modifying therapy.

As far as the total addressable market, we can argue that it’s somewhere in the $50 billion range in the U.S. alone (if $2 billion is 4% of the market). Achieving double-digit penetration rates in the U.S. results in $5 billion in annual sales for Vascepa. And that’s without accounting for potential price increases and ex-U.S. sales."

https://seekingalpha.com/article/4209898-amarin-room-run-red…

If the above is true, then a buyout could occur at a price point around $35 to $40. The stock is currently trading at around $19. But please do your own due diligence. There is considerable risk in this type of investment. I personally went long at $13, and am holding.

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"Fresh clinical trial results released Saturday by high-flying biopharma Amarin have confirmed the heart-protecting benefits of Vascepa, its prescription drug derived from fish oil, suggesting it could become a blockbuster therapy, potentially prescribed to millions of Americans.

The company said in September that its treatment significantly reduced the risk of cardiovascular events compared with a placebo. Detailed results from the trial, known as REDUCE-IT, showed Vascepa cut the risk of death, heart attack, and stroke — the three most important cardiovascular events — by 26 percent.

At the same time, the company revealed a controversial blemish in the data that could spur debate over the drug’s future role in treating people with cardiovascular disease. Amarin’s stock price has already soared in anticipation of positive Vascepa study results, so what impact, if any, this question has on the company’s market value waits for Monday." :

https://www.statnews.com/2018/11/10/detailed-results-amarin-…

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