Amarin's Shares Down On Underperform Rating By Oppenheimer
Zacks Investment Research | Nov 20, 2019 08:23PM ET
Shares of Amarin Corporation PLC (NASDAQ:AMRN) fell 10.9% on Nov 20 following the initiation of coverage for the company with an Underperform rating by the independent financial advisory services firm, Oppenheimer. The advisory firm expects the company’s share price to decline to $7.00 in the next 12-18 months, compared to closing price of $20.26 as on Nov 20. Oppenheimer anticipates Amarin’s sole marketed drug, Vascepa, will likely generate lower-than-expected sales and profit over the next few years.
However, shares of Amarin have soared 48.9% so far this year compared with the industry ’s growth of 4.3%. The outperformance of the stock was primarily owing to progress with Vascepa.
Vascepa, an omega-3-based drug, is approved in the United States as an adjunct to diet to reduce triglyceride levels in adult patients with severe (≥500 mg/dL) hypertriglyceridemia. The drug generated sales of $285.3 million in the first nine months of 2019, reflecting a surge of 88.6% year over year.
Meanwhile, Amarin is looking to expand Vascepa’s label to include data from the REDUCE-IT cardiovascular outcomes study. The study evaluated the drug as a treatment to reduce cardiovascular risk in patients with persistent elevated triglycerides on statin therapy for LDL-C (bad cholesterol).The company has been actively hiring sales personnel to support the launch of the drug in the expanded label starting 2020, upon potential FDA approval.
Earlier this month, the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee voted unanimously in favor of the label expansion. A decision from the FDA is expected on Dec 28. Amarin anticipates sales of Vascepa to cross $2 billion by 2023-24, including sales in the expanded patient population.
The report by Oppenheimer, however, states that Vascepa sales will likely fall short of the anticipated range. Per the report, there is a sizable off-label use of the drug, which limits its growth potential following the label expansion. Moreover, continued use of the drug by patients is moderate and there are hurdles related to reimbursement. Oppenheimer’s report also stated that omega-3 is an emerging field, which can lead to the development of better products, going forward, which can increase competitive pressures for Vascepa.
The report also stated that competition is likely to increase with the availability of the data from the cardiovascular outcomes study on AstraZeneca’s (NYSE:AZN) omega-3 based drug, Epanova, in the fourth quarter of 2020. Epanova is also approved for a similar patient population as Vascepa. Additionally, the advisory firm anticipates Acasti Pharma Inc.’s (NASDAQ:ACST) late-stage candidate, CaPre, as potentially the best-in-class treatment for hypertriglyceridemia. A successful development of the candidate in the ongoing phase III study will further intensify competition for Vascepa.
Oppenheimer’s report also raises concerns related to rising marketing expenses for Vascepa due to recent sales force expansion by Amarin. Moreover, the company has to face competition from omega-3 generics, dietary supplements, and emerging and prevalent branded drugs in the cardiovascular drug segment. This will likely put pressure on the company’s top line while increasing selling expenses. This is expected to hurt the bottom line.
Key players in Vascepa’s targeted indication are Sanofi (NASDAQ:SNY) and Amgen’s PCSK9 inhibitors, Praluent and Repatha, respectively.
Reportedly, Amarin has pushed aside the concerns raised against Vascepa in the Oppenheimer report by stating that it is confident about significant growth following the drug’s label expansion. Moreover, the company stated that many products have failed to meet the levels achieved by Vascepa in the REDUCE-IT study and it will take a considerable time and funding for new products to show cardiovascular benefits in clinical studies.
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