Original Recommendation

Amarin Corp.

Amarin Corp. (AMRN)

our opinion

buy

current price

$15.15

target price

$21.00

market cap

$5.4Bn

div yield

0%

  • AMRN's Vascepa drug is the only drug proven to reduce triglycerides without raising bad cholesterol levels. 
  • Amarin's addressable market is currently 600,000 patients annually. However, expanded labeling could increase their addressable market to nearly 10 million patients annually.
  • Vascepa scripts are exploding with or without international expansion

trade details

The market has made a mistake. One we’re going to capitalize on.

Recent events have caused investors to reduce their exposure and take profits in this company. The stock is down 34% over the past six weeks, yet the thesis for owning the stock hasn’t materially changed.

Which is where we come in.

Today, we’re going to buy Amarin Corp. (Nasdaq: AMRN).

Amarin is a pharmaceutical company which focuses on reducing the risk of cardiovascular disease.

Their leading drug candidate is Vascepa. Vascepa, comprised of only one active ingredient (icosapent ethyl) uses omega-3 fatty acids to lower very high triglycerides in adults. (Triglycerides are lipids stored in the blood and stored in your fat cells when your body doesn’t need them.)

So what’s special about Amarin’s Vascepa?

Vascepa is the only drug proven to reduce triglycerides without raising bad cholesterol levels. Amarin has studied lipid science for over a decade, and has over 200 patents covering their use of fatty acids and lipids to reduce triglyceride levels in the body.

The market for Amarin is massive. Cardiovascular disease is the leading killer in the United States. Over 700,000 people die of heart disease each year.

That’s where Amarin comes in.

Amarain’s Vascepa Will Take Huge Market Share.

Over $300 billion is spent each year on treating patients with cardiovascular issues like heart attacks and strokes. “At risk” patients need a solution like Vascepa to reduce the likelihood of experiencing events that cause hospitalization and expensive medical costs.

Amarin’s addressable market is currently 600,000 patients annually. However, expanded labeling could increase their addressable market to nearly 10 million patients annually.

We can look at the growth Vascepa is having even without the labeling. Just look at patient scripts. They’re exploding.

Vascepa scripts to patients grew 76% year-over-year (yr/yr) this past quarter – to 756,000 patients.

We expect huge growth as Amarin is just scratching the surface of the addressable market. And we’re not including projections of expanding internationally.

We’re not alone either. Analyst price targets all imply huge gains for Amarin.

SVB Leerink has an “Outperform” with a $25 price target – 65% upside.  Stifel has a “Buy” rating with a $26 price target – 71% upside. Cantor Fitzgerald has an “Overweight” rating and $35 price target – 131% upside.

The stock was in the mid-20s just two months ago. An unexpected Advisory Committee (AdCom) meeting sent the stock 15% lower in a single trading session. The AdCom will review Amarin’s expanded labeling along with their baseline (placebo) testing scenario used in their patient studies.

Cause for concern? Yes. The review pushed back FDA approval and puts in question their ability to treat patients with lower triglyceride levels.

But nothing else has changed about its efficacy. Or its entire business outlook (ie explosive growth).

The market has priced this in now. And it’s time to pounce.

Buy Amarin up to $16.00. Please do not put more than 2-3% of your portfolio into this position. (For example, put no more than $2-3,000 if you have a $100,000 portfolio). We’re going to set a volatility based stop on it (around 40-50%).

Our first price target is $20 – 32% upside. Our second price target is $24 – 58% upside.