Amarin Path Clearer After FDA Approval

A day after approval of Amarin's (AMRN) AMR-101 to help treat patients with very high triglycerides, the path forward seems more clear, with many potential catalysts identified on a conference call that happened just after 7pm on July 26. This brief covers where we are now and where the stock is heading.

AMRN just secured FDA approval to sell AMR-101. This will enable the company to compete in a $1.5-$2 billion space in 2013, and also set AMRN up to file an SNDA in 2013 for the much larger indication of patients with high triglycerides—an $8-$10 billion market. Investors should be evaluating AMRN's value based on the "Anchor" trial since it was highly successful.

The company awaits NCE (new chemical entity) status, but that is more perception than material for the long-term, as AMRN's patent protection has become very robust, protecting it from generics and competitors until at least 2030. NCE ruling is due mid August, and the approved AMR-101 label along with recent patents would support a positive ruling. The company also expects favorable ruling on at least two patents in coming weeks, one of which is a method of use and could add significant value to the stock.

More important to consider, the 7/26 conference call revealed some new information:

• Highly differentiated labeling vs. Lovaza drug—more benefits, less side effects
• CEO very much eliminated one of the three potential pathways to launch, saying "partnership would be highly complex" and alluding to a partnership as the last resort. In my view, a partnership doesn't work here—can't do it quickly and AMRN would need to retain all ownership.
• That leaves buyout or self launch with third party. The "third party" language was a net positive, as this means AMRN wouldn't really "go it alone".
• There was no mention of raising additional capital, and to hire a sales force, even with third party support, would require significant cash.
• A comment by the CEO about when the company would bring a sales force on suggested time frame for path forward decision would be within 2 months.
• Outcomes study enrollment on track for completion by the end of 2012

As a recent Barron's articlesuggested, any big pharma company will be a player here, with multiple bids likely.

Investors should be cautioned about articles that suggest Amarin did not get the label it wanted. There are some very misleading reports out there. By contrast, it got exactly what it applied for in the NDA and even more. Here is a linkfor the recorded conference call. Remember, this go around was for an NDA for Marine indications. Indication for expanded market takes place with next filing in 2013. It is amazing what gets published without doing due diligence on a stock—the Motley Fool stories in particular put the "Fool" in Motley Fool. In fact, CNBC's Mad Money program late Friday called out the inaccurate reports out there about AMRN not scoring the right label.

Look for AMRN to track upward toward $20 after some profit taking and short-term players exit the stock. NCE and patents should help the price build to the $20 range. With buyout talks getting more serious, it is reasonable for the stock to at least double, if not triple from current levels, as the second indication should value the company over $6 billion.

Disclosure: I am long AMRN.