SaintCroix and I share in common two high conviction growth companies - Amarin Corporation PLC ADR (AMRN) and Carvana (CVNA) - that are outside of the current norm/sand box here. Amarin is a foreign bio-tech pharmaceutical company - not a PRC one that would be inappropriate here - that is a public limited company incorporated under the laws of England and Wales, with its principal offices located in Dublin, Ireland.
I first learned about and made my initial investment in Amarin back in August 2018, thanks to my first referral visit with a cardiologist who canceled my scheduled surgery due to an irregularity in my EKG that required further testing. One thing lead to another, ending up with an angiogram procedure that squelched false positives from prior tests, required no stents and gave the green light to proceed with my surgery. In the follow up consultation, my cardiologist revealed that although I had no serious plaque build up, he was prescribing a beta blocker to “relax” my blood vessels and required me to monitor my blood pressure. In reviewing my cardio management/maintenance regimen (medications, diet and exercise), when he brought up statins to manage my familial hypercholesterolaemia (aka inherited higher than normal levels of LDL “bad” blood cholesterol), I asked if there was any alternative for statins. He mentioned and explained a promising newly FDA approved product Amarin’s Vascepa that would be an add-on to statin treatment and might be suitable for patients with triglycerides of 200 mg/dL to less than 500 mg/dL. Since Vascepa was undergoing a major testing program and was not covered by my Medicare advantage plan and not listed in the VA formulary (I’m a Vietnam War veteran, disabled by exposure to Agent Orange), he suggested going with the combination of the beta blocker Carvedilol with my Simvastatin and baby aspirin for 6 months, after which he would consult with my primary care physician on what to do next. Thereafter, I thoroughly researched Vascepa and ended up conducting my due diligence on Amarin Corporation.
In September 2018, after a major study revealed that Vascepa reduced the risk of major adverse cardiovascular events by 25% in patients already taking statin drugs compared to those receiving a placebo, the stock price skyrocketed upward 314% in one day. [On Friday 9/21/18, Amarin stock price closed at $2.99. On Monday 9/24/2018, AMRN opened at 10.44, up 249% and closed at 12.40 for a one day whooping gain of 314%!]. Analysts estimate that Vascepa with approval of a broader label expansion in the U.S. could generate up to $2 billion in sales.
This explosive spike in stock price, in turn, caused drastic substantial changes in market cap, EV/EBITDA, EV/Revenue and P/S among others.
So here goes a long post on the current financial status of Amarin.
For a quick overview, here’s an excellent current March 2019 Investor Presentation: Leading a New Paradigm in Cardiovascular Health Management.
For more details, here’s an excerpt directly from the recently released 2018 10K report:
We are a pharmaceutical company with expertise in omega-3 fatty acids and lipid science focused on the commercialization and development of therapeutics to improve cardiovascular, or CV, health.
Our lead product, Vascepa® (icosapent ethyl) capsules, is approved by the U.S. Food and Drug Administration, or FDA, for use as an adjunct to diet to reduce triglyceride, or TG, levels in adult patients with severe (TG =500 mg/dL) hypertriglyceridemia. Triglycerides are the main constituent of body fat in humans. Hypertriglyceridemia refers to a condition in which patients have high levels of triglycerides in the bloodstream. The primary targeted clinical benefit of lowering triglycerides in adult patients with severe (TG =500 mg/dL) hypertriglyceridemia is to reduce the risk of pancreatitis. In January 2013, we began selling and marketing Vascepa in the United States based on the FDA-approved MARINE indication of patients with severely high (TG =500 mg/dL) triglyceride levels, a patient population of approximately 4 million people in the United States.
Our FDA-approved indication for Vascepa, known as the MARINE indication, is based primarily on the successful results from the MARINE study of Vascepa in the approved patient population. In considering this approval, the FDA also reviewed the successful results from our study of Vascepa in patients with high triglyceride levels (TG =200 mg/dL and <500 mg/dL) who are also on statin therapy for elevated low-density lipoprotein cholesterol, or LDL-C, levels which condition we refer to as mixed dyslipidemia or persistent high triglycerides. This study is known as the ANCHOR study.
In August 2015, in addition to our FDA-approved indication, we began promoting Vascepa to healthcare professionals, or HCPs, in the United States for the lowering of triglyceride levels and other lipid and lipoprotein parameters in treatment of the patient population studied in the ANCHOR study (persistent high triglycerides after statin therapy). It is estimated that one in four adults in the United States, or more than 50 million people, have elevated (>150 mg/dL) triglyceride levels. We also educated HCPs with supportive but not conclusive early stage and Japanese cardiovascular outcomes trial research on how the unique active ingredient in Vascepa, icosapent ethyl, might reduce the risk of coronary heart disease. This HCP promotion was based on an August 2015 federal court declaration and subsequent settlement with the FDA and U.S. government that we believe permits such promotion under the freedom of speech clause of the First Amendment to the United States Constitution. To remain truthful and non-misleading, as part of this promotion we educated HCPs on the continued uncertainty between lowering triglycerides and cardiovascular risk reduction based on the failure of other drugs (fenofibrate and formulations of niacin) to demonstrate incremental cardiovascular benefit from adding a second lipid-altering drug on top of standard of care statin therapy, despite such drugs reducing triglyceride levels and having other favorable effects on lipid and lipoprotein parameters. We believe that, in general, HCPs prefer to review and rely on robust cardiovascular outcomes trial results before changing prescribing practices.
Multiple primary and secondary prevention trials have shown a significant relative risk reduction, or RRR, of 25% to 35% in the risk of cardiovascular events with statin therapy, leaving significant persistent residual risk despite the achievement of target LDL-C levels. Worldwide, cardiovascular disease, or CVD, remains the number one killer of men and women. In the United States, CVD leads to one in every three deaths—one death approximately every 38 seconds—with annual treatment cost in excess of $500 billion. There is no FDA-approved therapy for lowering cardiovascular risk beyond therapies which target lowering of LDL-C levels.
Since our inception, we have devoted substantial resources to our research and development efforts, most significantly our Vascepa cardiovascular outcomes trial, REDUCE-ITTM, which we commenced in 2011 and was conducted based on a special protocol assessment, or SPA, agreement with the FDA. REDUCE-IT was a global study of 8,179 statin-treated adults with elevated cardiovascular risk. We announced topline results from the REDUCE-IT study on September 24, 2018. On November 10, 2018, we announced the more detailed, primary results from the REDUCE-IT study at the 2018 Scientific Sessions of the American Heart Association, or AHA, and the results were concurrently published in The New England Journal of Medicine. REDUCE-IT met its primary endpoint demonstrating a 25% relative risk reduction, or RRR, to a high degree of statistical significance (p<0.001), in first occurrence of major adverse cardiovascular events, or MACE, in the intent-to-treat patient population with use of Vascepa 4 grams/day as compared to placebo. Patients who were enrolled in REDUCE-IT needed to have LDL-C between 41-100 mg/dL (median baseline LDL-C75 mg/dL) controlled by statin therapy and various cardiovascular risk factors including persistent elevated triglycerides, or TG, between 135-499 mg/dL (median baseline 216 mg/dL) and either established cardiovascular disease (secondary prevention cohort) or be at least age 50 with diabetes mellitus and at least one other CV risk factor (primary prevention cohort). Approximately 59% of the patients had diabetes at baseline, approximately 71% of the patients had established cardiovascular disease at time of enrollment and approximately 29% were primary prevention subjects at high risk for cardiovascular disease. REDUCE-IT also showed a 26% RRR in its key secondary composite endpoint of cardiovascular death, heart attacks and stroke (p<0.001).
In September 2018, in connection with the public release of topline REDUCE-IT results, we commenced communications to healthcare professionals which were intended to ensure we meet our continuing obligation to update HCPs regarding off-label use of Vascepa to ensure that our communications remain truthful and non-misleading. We believe this promotion is consistent with the federal court approved settlement with the FDA and U.S. government. After publication of primary results of the REDUCE-IT study in The New England Journal of Medicine and the scientific presentation of REDUCE-IT results at the 2018 Scientific Sessions of the American Heart Association (AHA) on November 10, 2018, we updated and expanded our communication of REDUCE-IT results to include the publication and the peer-reviewed information presented in an effort to further ensure that our communications remain truthful and non-misleading. While we believe we are now permitted under the settlement and our First Amendment rights to more broadly promote Vascepa, the FDA-approved labeling for Vascepa has not changed as we have not yet applied for FDA approval for marketing claims related to REDUCE-IT. Also, neither government nor other third-party coverage or reimbursement to pay for the off-label use of Vascepa promoted was covered under the court declaration or settlement. We plan to submit a supplemental new drug application, or sNDA, to the FDA seeking revised labeling for Vascepa based on results of the REDUCE-IT study and, upon such expanded labeling, subject to FDA approval of such label, to further expand its promotion of Vascepa in the United States.
We sell Vascepa principally to a limited number of major wholesalers, as well as selected regional wholesalers and specialty pharmacy providers, or collectively, our Distributors or our customers, that in turn resell Vascepa to retail pharmacies for subsequent resale to patients and healthcare providers. We market Vascepa in the United States through our direct sales force. In March 2014, we entered into a co-promotion agreement in the United States with Kowa Pharmaceuticals America, Inc. under which Kowa Pharmaceuticals America, Inc. began to co-promote Vascepa in conjunction with its promotion of its primary product, a branded statin for patients with high cholesterol, which commenced in May 2014 and extended until the end of 2018. Amarin and Kowa Pharmaceuticals America, Inc. intentionally designed the co-promotion to naturally end as of December 31, 2018 and mutually agreed not to renew the agreement. Prior to the REDUCE-IT results topline announcement in September 2018, our direct sales force consisted of approximately 170 sales professionals, including sales representatives and their managers. We have recently increased the size of our sales force to approximately 440 sales professionals, including approximately 400 sales representatives, in the United States pursuant to positive REDUCE-IT results and are expanding our promotion of Vascepa. Such promotion, prior to results of the REDUCE-IT study, was based on demonstrated changes in biomarkers based on our MARINE and ANCHOR studies. Most healthcare professionals express that they prefer outcomes data to biomarker data. Because prior to results of the REDUCE-IT study we did not have outcomes data regarding the clinical effect of Vascepa and because a substantial portion of our resources were being spent on the REDUCE-IT study, prior to REDUCE-IT results our commercialization of Vascepa was somewhat limited. Subsequent to learning the positive cardiovascular outcomes results of the REDUCE-IT study, we have begun increasing our promotion of Vascepa.
In addition to promotion of Vascepa in the United States, we have entered into strategic partnerships and license arrangements in Asia, the Middle East, North Africa and Canada to further promote, develop and commercialize Vascepa. In February 2015, we entered into an exclusive agreement with Eddingpharm (Asia) Macao Commercial Offshore Limited, or Eddingpharm, to develop and commercialize Vascepa capsules in Mainland China, Hong Kong, Macau and Taiwan, or the China Territory. In March 2016, we entered into an agreement with Biologix FZCo, or Biologix, to register and commercialize Vascepa in countries within the Middle East and North Africa. In September 2017, we entered into an agreement with HLS Therapeutics Inc., or HLS, to register, commercialize and distribute Vascepa in Canada.
In June 2018, we entered into a collaboration with Mochida Pharmaceutical Co., Ltd., or Mochida, related to development and potential subsequent commercialization of drug products and indications based on the active pharmaceutical ingredient in Vascepa, the omega-3 acid, EPA (eicosapentaenoic acid). The potential new product and indication opportunities contemplated under this agreement are currently in early stages of development.
We continue to assess other collaboration opportunities to maximize the value of the Vascepa franchise globally.
Research and Development
Since our inception, we have devoted substantial resources to the research and development of Vascepa (icosapent ethyl) capsules. Vascepa is a single-molecule prescription product consisting of the omega-3 acid commonly known as EPA in ethyl-ester form. Vascepa is derived from fish through a stringent and complex FDA-regulated manufacturing process designed to effectively eliminate impurities and isolate and protect the single molecule active ingredient from degradation. Vascepa has been designated a new chemical entity by the FDA. Vascepa is known in scientific literature as AMR101.
Our most important clinical trials of Vascepa are summarized here and discussed in further detail below:
• The MARINE trial, a Phase 3, multi-center, placebo-controlled, randomized, double-blind, 12-week study in patients with very high (=500 mg/dL) triglycerides (TG) with the primary endpoint being the lowering of TG levels;
• The ANCHOR trial, a Phase 3 multi-center, placebo-controlled, randomized, double-blind, 12-week pivotal study in patients with high (=200 and <500 mg/dL) TGs who were also receiving optimized statin therapy with the primary endpoint being the lowering of TG levels; and
• The REDUCE-IT trial, a Phase 3 global study of 8,179 statin-treated adults with elevated cardiovascular risk with a primary endpoint being the first occurrence of major adverse cardiovascular events, or MACE, in the intent-to-treat patient population, patients with LDL-C between 41-100 mg/dL (median baseline LDL-C75 mg/dL) controlled by statin therapy and various cardiovascular risk factors including persistent elevated TG between 135-499 mg/dL and either established cardiovascular disease (secondary prevention cohort) or age 50 or more with diabetes mellitus and at least one other CV risk factor (primary prevention cohort).
The REDUCE-IT cardiovascular outcomes study of Vascepa has been the centerpiece of our research and development efforts. Prior research on Vascepa, such as the MARINE and ANCHOR trials, had been focused on the effects of the drug on biomarkers associated with increased risk of pancreatitis and increased risk of cardiovascular events. Other prior and ongoing research and development efforts include the study of potential mechanisms of action of Vascepa.
In June 2018, we entered into a multi-faceted collaboration with Mochida related to the development and commercialization of drug products and indications based on the active pharmaceutical ingredient in Vascepa, the omega-3 acid, EPA. Among other terms in the agreement, we obtained an exclusive license to certain Mochida intellectual property to advance our interests in the United States and certain other territories and the parties will collaborate to research and develop new products and indications based on EPA for our commercialization in the United States and certain other territories. The potential new product and indication opportunities contemplated under this agreement are currently in early stages of development.
Additional research and development opportunities beyond REDUCE-IT will be assessed more fully after giving priority to securing regulatory approval for Vascepa based on the REDUCE-IT results.
The following corporate financials for AMRN show the following:
• Explosive market cap growth of over 800% from $800 million in Q2 2018 to currently $7.34 billion on 3/5/19.
• Explosive share price increases: over 645% from $2.99 on 9/21/18 to $22.30 on 3/5/19; over 565% over the recent 52-week period; and 63.8% YTD.
• A projected 52% increase in guidance revenue of 350 million for FY 2019 that will significantly reverse a downward trend in what I consider excellent YoY gains in annual revenue of 59%, 39% and 27% for FY 2016, 2017 and 2018, respectively.
• No positive annual and quarterly net income and earnings.
• Excellent gains in annual gross margins, i.e., from 65.9% in 2015 to 76.2% in 2018.
• EV/Revenue jumped from 6.41 for FY2017 to 18.02 for FY 2018 and currently is at 30.18; P/S currently is at 28; all this resulting from the explosive spike in stock price back in September 2018.
• A solid capital structure.
**AMARIN** **3/5/2019** GICS SECTOR Healthcare SUB-INDUSTRY Biotechnology MARKET CAP $ 7.34 B Employees 539 52-WK HIGH 23.34 PRICE/SHARE 22.30 52-WK LOW 2.35 Price Y-T-D change 63.8% Price 52-wk change 565.7% S&P 500 52-wk change 2.4% EV/EBITDA (mrq) -64.43% P/E (ttm) N/A Fwd P/E 89.20 EV/Revenue (ttm) 30 P/S (ttm) 28
**MARKET Sequen- NET Diluted Closing** **AMARIN CAP REVENUE YoY tial INCOME EPS Price** **FY/QTR ($ B) ($ M) Change Change ( $ M) ($) ($)** **FY 19 est 350.000 52.7% 52.7%** **FY 2018 4.435 229.214 26.6% 26.6% (116.445) (0.39) 13.61** Q4 ‘18 4.435 77.330 43.6% 39.8% (33.670) (0.11) 13.61 Q3 ‘18 4.099 55.323 16.8% 5.1% (24.471) (0.08) 16.27 Q2 ‘18 0.807 52.643 16.4% 19.9% (34.210) (0.12) 3.09 Q1 ‘18 0.874 43.919 26.8% (18.5%) (24.095) (0.08) 3.01 **FY 2017 1.084 181.104 39.2% 39.2% (67.865) (0.25) 4.01** Q4 ‘17 1.084 53.866 39.2% 13.7% (22.465) (0.08) 4.01 Q3 ‘17 0.983 47.360 44.7% 4.7% (10.825) (0.04) 3.50 Q2 ‘17 0.950 45.241 36.6% 30.6% (13.634) (0.05) 4.03 Q1 ‘17 0.925 34.637 35.6% (10.5%) (20.941) (0.08) 3.20 **FY 2016 0.839 130.084 59.1% 59.1% (86.350) (0.41) 3.08** Q4 ‘16 0.839 38.696 (27.453) (0.10) 3.08 Q3 ‘16 0.602 32.734 (15.772) (0.08) 3.19 Q2 ‘16 0.390 33.111 (13.354) (0.07) 2.16 Q1 ‘16 0.276 25.543 (29.771) (0.16) 1.53 **FY 2015 0.345 81.756 50.8% (149.590) (0.83) 1.89** **FY 2014 0.174 54.202 (56.364) (0.36) 0.98**
In the above table, corporate guidance for FY 2019 revenue of $350 million is shown.
Amarin has realized vast improvements in gross margins to 76.2% in 2018 from 65.9% in 2015. Operating and profit margins were improving and trending upward from FY 2015 to 2017, but fell substantially in FY 2018.
**AMARIN** **MARGINS GROSS OPERATING PROFIT** FY 2018 76.2% (47.2%) (50.8%) FY 2017 75.2% (25.2%) (37.5%) FY 2016 73.6% (50.5%) (66.4%) FY 2015 65.9% (120.1%) (140.9%)
Amarin has a solid capital structure in place as of Q4 2018.
Cash & equivalents (mrq) $ 249.227 M Working Capital $ 220.734 M Current Ratio (mrq) 2.40 Long-Term Debt (mrq) $ 76.121 M Stockholders’ Equity (mrq) $ 152.330 M LT Debt/Equity (mrq) 50.0%
FY SBC/Revenue ratios are acceptable as long as these remain less than 10%.
**AMARIN SBC Revenue SBC/Revenue** **($ M) ($ M)** Q4 ‘18 4.770 77.330 6.2% Q3 ‘18 6.650 55.323 12.0% Q2 ‘18 3.620 52.643 6.9% Q1 ‘18 3.490 43.919 7.9% FY 2018 18.800 229.214 8.2% FY 2017 13.960 181.104 7.7% FY 2016 13.610 130.084 10.5% FY 2015 13.880 81.756 17.0%
On 2/27/2019, Amarin reaffirmed its corporate guidance for FY 2019.
Amarin today reaffirms that such earlier guidance has not changed, including its guidance regarding its planned sNDA and expected 2019 revenue as follows:
• sNDA Submission: Based on the unprecedented results from the REDUCE-IT cardiovascular outcomes study, Amarin intends to submit a supplemental new drug application (sNDA) to the U.S. Food and Drug Administration (FDA) seeking labeling for Vascepa which reflects the cardiovascular risk reduction results demonstrated in this landmark study. Amarin remains on-track to submit this sNDA before the end of the first quarter of 2019 (i.e. before the end of March 2019) with a normal 10-month regulatory review period assumed prior to a PDUFA date. While priority review for this sNDA is not currently assumed, after the sNDA is submitted, consistent with FDA practices, Amarin will seek to clarify whether priority review by the FDA is possible for this important submission. Amarin’s sNDA will consist of over 200,000 pages of data, all of which is undergoing extensive medical, statistical and quality review.
• 2019 Revenue: Net total revenue for 2019 is anticipated to increase by more than 50% over 2018 to approximately $350 million, mostly from U.S. sales of Vascepa. Amarin believes that continued quarterly variability in revenues is likely. This guidance assumes that the timing of the expanded label for Vascepa which Amarin is seeking, subject to FDA approval, will not be available until late 2019 or early 2020 such that the expanded label has little or no impact on revenue growth in 2019.
Here’s the recent 52-week performance of AMRN, crushing two of my favorite top performers TWLO and CVNA.
And the YTD performance in 2019, showing excellent results for all 3 of my holdings thus far.
Amarin Corp is another one of my diversified holdings and is a keeper in one of my family’s accounts.
As always, conduct your own due diligence and decision-making.
BTW, the 2019 formulary for my Medicare advantage plan still excludes Vascepa, but a customer service rep related that my physician can submit a special request to their Pharmacy unit and most likely get approval at their Tier 6 level at which I would pay 33% of their contracted rate.