A court decision regarding Amarin's ongoing patent litigation with generic companies is expected in March
Shares of Amarin (AMRN) are under pressure on Wednesday despite the company delivering better than expected quarterly revenue on strong demand for the company's fish-oil drug Vascepa that has recently won U.S. approval for expanded heart benefit claims.
RESULTS: On Tuesday after market close, Amarin reported fourth quarter adjusted earnings per share of 2c and revenue of $143.28M, both above consensus of (2c) and $136.01M, respectively. "Our record 2019 revenue levels, together with the recent FDA-approved Vascepa label expansion, excellent employees and strong third-party support, all position Amarin for considerably further growth in 2020 and beyond. Based on feedback thus far, we are confident that healthcare professionals will appreciate the clinical effectiveness and safety profile of Vascepa and that they will agree that many patients can benefit from this unique product," commented John Thero, Amarin's president and CEO.
The company also backed its fiscal year 2020 revenue view of $650M-$700M, with consensus at $695.43M, and said it remains “engaged in ongoing patent litigation with generic pharmaceutical companies." Amarin added, "The trial portion of the litigation was completed in late January. Post-trial briefs are expected to be publicly available on the court docket on February 28th. Owing to the ongoing nature of this litigation, Amarin does not plan to provide commentary on the litigation outside of its court filings until publication of the court's decision, which, based on court proceedings, is expected near the end of March."
Commenting on the quarterly results, H.C. Wainwright analyst Andrew Fein noted that Amarin has asserted its confidence both in its intellectual property and its intention to vigorously defend its patents. The analyst also pointed out that two of the original four Abbreviated New Drug Application filers currently remain, Dr. Reddy's (RDY) and Hikma (HKMPY), while Teva (TEVA) has settled with Amarin to enter the market in August 2029 and Apotex has determined not to litigate. Fein continues to believe in the feasibility of a settlement with a court decision expected in March. Meanwhile, Vascepa's positive commercial traction as an omega-3 therapeutic "represents the tip of the iceberg for the treatment," the analyst contended. Fein reiterated a Buy rating and a $51 price target on Amarin's shares.
'VALUATION OPPORTUNITY': In her own research note to investors, JPMorgan analyst Jessica Fye said she views shares of Amarin as "more interesting" following the recent pullback. Vascepa is poised to achieve blockbuster status "and then some," ramping to $5B global 2028 revenue, the analyst contended, adding that she sees a "valuation opportunity" following the recent share pullback assuming Amarin's intellectual property holds. With encouraging script trends and an "uneventful" fourth quarter update, the analyst believes investor focus remains squarely on the upcoming outcome of Amarin's patent litigation. The stock has been weak ahead of the court ruling, but Amarin is likely to prevail, she argued. The analyst kept a Neutral rating and a $22 price target on the stock.
SHARES CAN RALLY 20% ON LITIGATION WIN: Keeping a Buy rating and a $24 price target on the shares following the company’s fourth quarter results, Citi analyst Joel Beatty said he believes Amarin will be successful in its Vascepa patent litigation and that he sees 20% upside upon the court's decision in March. Nonetheless, the analyst acknowledged that the stock can drop 50% on a negative ruling. Additionally, Beatty told investors that he believes Vascepa sales growth will be strong throughout 2020.
The biggest factor impacting Amarin's stock price over the next year is monetizing the European rights to Vascepa, and the implied valuation of the total company from any type of partnership or other transaction that takes place, the analyst contended, adding that an outright acquisition of Amarin would likely be the best near-term outcome for stockholders. However, if the end of 2020 is reached without some sort of European partnership appearing imminent, it is unlikely the stock price will be much higher at year-end compared to today, he argued.
PRICE ACTION: In morning trading, shares of Amarin has dropped about 5% to $16.63.