Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Short interest for April 15 should be updated tomorrow latest (after 4 PM today sometime), was 21.1 million end of March, will see if it goes up.
Vascepa meets all the qualifications for Priority Review, FDA be hard pressed to say otherwise. A random broker with "word on the street" usually means a random broke trying to rationalize a stock price and guessing why it is what it is.
Maybe I missed it mentioned, what was your second question related to formularies?
I get between 75-83 Million if it drops the same $ per script as any of the last 3 years or falls anywhere in between.
FDA denies very few drugs, 10-20% in a given year. This is just expansion and has little side effects and even the harshest critic can only say: It works BUT results might be not as good as reported. Unless something comes out that we don’t know it’s a slam dunk.
Assuming Amarin does 2 billion in 2020 that would equate to Lipitor in 1998 (second year on market) and over the next 9 years (equivalent to 2029 generics) Lipitor did about 83 billion in sales over that period with pretty good increase in revenue. It would take until 2027-2028 to hit peak sales with similar growth from Vascepa as Lipitor had.
That's an important position, if they filled it, I would hope they would announce who it is once they start working.
I believe that is correct, they did not add in open market but had convertible shares that converted automatically for most of them.
Don't forget
Experience : A minimum of 10 years of pharmaceutical industry experience with at least a 5 year transactional experience in a business development or investment banking capacity, as is evidenced by a deal sheet.
And
Significant experience at evaluating companies and drug candidates for licensing, collaboration, or acquisitions.
Demonstrated experience working on deal teams and successful track-record in closing deals. Strong understanding of financial analyses, contract negotiations and oral / written communications.
They will need to raise more money if GIA, will they want more residuals from Europe and less up front? If they want a lot more money up front perhaps they can avoid dilution but think they would want bigger residual in the future with the great potential.
They compensate officers heavily with shares as the annual report states they want to align management goals with shareholders so stock options are intended to be a large portion of their earnings (Thus all the auto sells after they get them).
The filing also states they may need to raise money to market to the larger population if approved, same language used before they raised after RI results.
They will have other options to raise money, but they seem to like the shares option in the past, I would expect it again after FDA approval and be pleasantly surprised if they go a different route.
Dilution is not a bad thing in this case, gives them cash without debt, and they will get that back in spades if they use the money right but it is part of the growing pains of the GIA scenario.
If it is 2021 what period are they reporting 6 billion? I doubt if that's for FY 2020 that they can get enough inventory produced for half that, maybe by end of 2021 they can do that for 2022. They've been working hard the last year plus just to get vendors to 1 billion capability, if they need to increase that much AMRN will likely need to put some money up for that expansion which will cost money.
They probably have 500 million shares then, so about $2 billion profit is $4 per share profit with a fast growth rate a P/E of 20 can give you about $80 per share. But likely 2023 before that would happen with all the logistics involved, so 6 years before generics at that point could keep P/E lower than you would want. P/E ratio will come down to what they plan to do with the high cash flow. They could buy back shares, do a dividend, invest in acquisitions for a pipeline etc..
Still a 3-4 bagger in 3-4 years but assume no possible risks happen and they can reach 6 billion in earnings in a few years.
I agree in theory the upside is much bigger with GIA, though with CVR's you can moderate a lot of that and actually make more money in a BO with CVR's assuming a BO can get sales ramped faster, add additional indications faster with more money for other trials etc..
The downside is much bigger in GIA.
I think we are all here as investors because we think this is a blockbuster drug, I think different people have different views on how a 1 drug company, with no history of growing sales on a BB drug will succeed and how fast.
I think BO is no risk and possible high reward with CVR's and even without it is high return quickly with no risk.
GIA involves a degree of downside risk and a large upside, if they GIA the long haul I expect the stock to be high enough that if management fails for whatever reason it will become evident early enough to still get a good profit. SO GIA or BO from these levels things look good, if it could base above $30 a share that would definitely make everyone more comfortable to wait out the GIA pitfalls.
That does not mean anything, that's just assuming regular review period, since 1/3 of drugs get priority review the odds are it will take 10 months, there was no thought put into that last sentence other than that.
Vascepa will get priority review. That seems as no brainer as no brainer can be.
I don't know how the board can do their fiduciary duty and if they get a $30 billion offer they don't then go out and shop the company and if $30 billion is still the highest offer they would have a hard time arguing they did their proper fiduciary duty and don't sell it. They are bound by these duties to do what is best for shareholders.
To get a guaranteed 4-5 times return to shareholders requires an incredibly high level of burden to turn down. If they turn it down, when word gets out, they will be sued for not doing their fiduciary duty, which means they have to show third party analyses that the deal was not fair, despite the fact they shopped it to 9 other BP's that refused to pay that price.
I think there is a disconnect here between people looking at a huge "potential" market and the board of directors having to do what they can in doing their fiduciary duty. If they turn it down and 2 years from now sales are only 2 billion or peak sales end up 5 billion because another competing drug had success, FDA limited label to certain trig levels, generics were able to get through patents or the government in order to control drug prices allows generics on all drugs earlier and generics start in 2025, whatever it is, the board members would all be sued and lose, and yes they have insurance for that but board members don't want to deal with lawsuits of that ilk.
Board member ages: 69,59,69,67,56,77,58(Thero)
Management Age: 58,51,54,48,56
And have you seen what Thero, Kennedy, Ketchum and Kalb get for change of control?
Everyone should read the annual report risks, yes they can be low % chances but they are necessary reading because no business is guaranteed success, for example:
Other drug companies may challenge the validity, enforceability, or both of our patents and seek to design its products around our issued patent claims and gain marketing approval for generic versions of Vascepa or branded competitive products based on new clinical studies. The pharmaceutical industry is highly competitive and many of our competitors have greater experience and resources than we have. Any such competition could undermine sales, marketing and collaboration efforts for Vascepa, and thus reduce, perhaps materially, the revenue potential for Vascepa. Even if we are successful in enforcing our issued patents, we may incur substantial costs and divert management’s time and attention in pursuing these proceedings, which could have a material adverse effect on us. Patent litigation is costly and time consuming, and we may not have sufficient resources to bring these actions to a successful conclusion.
I think if they get such an offer not accepting it seems to go against everything the boards role and its fiduciary duty is designed for. If they really fear there is such gigantic upside they have to turn it down they could add milestone payments for those extremely high levels.
That looks like it’s from 2017?
Interesting stuff there, thanks for posting.
3-6x peak sales, so what are reasonable Amarin peak sales considered by BP?
Using high end of 400 million shares and middle# of 4.5 times peak sale BO
Peak Sales to Price
$3 Billion=$33.75/share
$4 Billion=$45/share
$5 Billion=$56.25/share
$6 Billion=67.5/Share
$7 Billion=78.75/Share
$8 Billion=90/Share
$9 Billion =101.25/Share
If you change it to 3 times multiple 5 billion would equate to $37.5/share
I know, Amarin would become particularly valuable in an environment with price controls BARRING some legislation that speeds up the generic drug timeline. As a low cost drug, that can do high volume Vascepa would not be effected otherwise. The MOST likely scenario that could actually pass legislation is making Medicare a buy in program down to age 55. Maybe putting some limits on older drugs and pricing. I just don't see an election getting either party enough control to do major overhauls.
Most of this computer trading day to day is not Amarin specific so it gets lumped in, in the long run sales will determine where it goes not the sector. There are positive moving stocks in a bear market, there can be positive moving biotech stocks when the sector is down
Just following IBB, once that gets oversold and bounces so will Amarin, but also think after priority review news we should see a small bounce. Even if IBB stays down, at some point the rapidly growing revenue and FDA approval will disconnect AMRN from the sector.
Investors are trading biotech sector like Bernie Sanders was elected and implemented Medicare for all, and limited prices on prescription drugs. None of that will happen and sector will take some time to realize this is overdone. Not buying opp. yet but will be a good sector buying opp. over the next couple months.
Pfizer, always being manipulated! LOL
I think the biggest reason is they think they have time.
They can put their money to work elsewhere and then get in when things are heading up.
Right now they know it’s a minimum six months till expanded label and might even be 10 months. I don’t believe Wall Street thinks that scripts will get to a level that justifies a much higher price in the short term.
The company has a sales estimate for all of 2019 that doesn’t exactly make people wanna jump in now.
A partner in Europe would move things assuming good cash and royalties but management has indicated that is not happening soon.
Management has done an excellent job of setting low expectations. Maybe too good a job. They put low revenue estimates, keep saying they expect an adcom and a normal review time of 10 months.
In the long run the low expectations is a good thing as you can then exceed those expectations and it’s always looked at positively. Again that’s great for the long run.
So for these investors what is their incentive to get in before the expanded label is closer to happening ?
There are past Biotech buyouts at premiums that would put and AMRN BO at $50+ which I believe is a reasonable area for BP and AMRN to discuss BO. In this case price should not be a big barrier to a BO.
They list there initial target market as 1.9 million patients, I think they have a bit of a different population.
Some interesting stuff in presentation
https://www.resverlogix.com/upload/button/3/b9c82f751024/2019-rvx-corp-pres-march-18.pdf
So 35 million on statins times 20% is 7 million on Vascepa times $143 a month is 12 Billion per year revenue, wow real easy to get peak sales, not sure why so many varied opinions on peak sales HA.
Just an FYI, Friday is a market holiday, options expire on Thursday next week.
If it closes below $19 today it's just coincidence, the Calls and Puts for today at 19 are very similar in open interest, the 50 day MA is 19.11 which would mean it could close near there based on end of week short covering and technical analysis based around the 50 day MA.
Next week is a short week and Thursday calls OI at 19 are way above puts and even moreso at 20, so next week would need some kind of big news to close above 20 and if it is near 19 on the last day it will be pushed under. For today I don't see any reason for MM's to care where the price ends up.
Anything is possible but JT said they would not let potential partners into the RI data because they did not want to distract from getting the filing done by end of Q1. I would assume that by saying partner that would also mean potential suitor.
Personally the direction of the company for the next year should be decided after Expedited review is likely granted, then whomever is going to be selling Vascepa after expended label will want to lay ground work, if Amarin is GIA they really need to start training and adding sales force well before expanded label.
I think we are in a bit of dead news spot until we get the FDA answer. Once that happens AMRN needs to decide on approach to marketing, Europe, potential BO etc...
I think shorts are pretty safe for the coming Monday even if BO is far along. Since sNDA is filed any suitor would want to do DD on that filing, and clearly they were not allowed access to it until after filing.
Since they did not know the date of filing they now have to free up the people doing the analysis, then do the analysis, then present results of analyses to management etc., easily a few weeks, maybe a month but odds of a BO being agreed to before the end of next week are just logistically very low.
Thus the advantage of being smarter than everyone else!
We all here strongly believe peak sales will be much higher, analyst will eventually up those target and price will go up accordingly.
However, Analyst also go off history, for example Statins are being taken today by 50% of the people that fall within the guidelines to take a statin, mainly because the doctors don't prescribe it to them.
So actual proof that doctors ignore cheap drugs that saves lives!
It seems This ramp up to peak sales is a crapshoot to many on Wall Street. Many think it will take many years to reach a few billion.
Analyst are conservative and very hindsight driven as they like to get facts and then change things instead of really guessing, I don't put much stock in them but it can give us a read into the psyche of other investors.
While watching the paint dry trying to summarize where street is at with Amarin-If you have data to fill in I don't have please do:
Analyst summary Price Targets:
H.C Wainwright A. Fein: $51 unchanged after 2019 sales forecast released
Jeffries Mike Lee: $30, unchanged
Citi Joel Beatty: $20, down from $28
Suntrust John Boris: $15 Down from $30
Stifel Nicolaus Derek Archila: $27 Coverage initiated March 22 with Buy
Cantor Fitzgerald Louise Chen: $35 Unchanged
Peak Sales Estimates:
Citi Joel Beatty: $2.5 billion down from $3.0 billion
Stifel Nicolaus Derek Archila: $2.5 Billion initiated March 22
-I know Andrew Fein has peak sales estimates because one of his risks to stock price is not reaching them but cannot find a number nor numbers from other analysts
Revenue Estimates:
4 analysts from yahoo Finance:
2019 High: $386 Million
2019 Low: $350 Million
2019 AvG: $365
2020 High: $663
2020 low: $515
2020 Avg: $567
All analyst project losses for 2019 and 2020 profit at an average of .24 cents before Stifel Nicolaus came out at .34 per share profit for 2020
So rather than stock manipulation it might just be the street has way less optimism on peak sales than those on this board and heavily invested in Amarin. If you start analyzing the stock price on the above #'s does the price seem wildly undervalued?
This could, and I think so since I'm invested, be a situation where those investing the proper time into AMRN can see where the street is off, only HC Wainwright seems to have upside potential like we discuss here. If I'm right this is exactly the type of stock you dream of finding. Nice to be smarter than the rest HA.
So it seems Amarin will need to prove sales can ramp up faster than street thinks, when it does price will accordingly rise with it. As analyst raise revenue targets and prices stock will continue to run as they continue to beat estimates.
I don't think Amarin will raise 2019 sales estimates UNTIL FDA notifies them of expedited review or not, its possible they do it at 1Q CC if no news on that by then, but then they'll be pressured to do it again a few weeks later. Seems logical to wait but if sales are $90 million IN Q1 they'd have to say they will beat $350 but if they are $80 they will probably defer guidance until FDA 74 Day Letter IMO. We'll see. If they are smart they will keep guidance low and then beat, that's key to helping stock price rise.
You only get taxed on withdrawals. Roth IRA you don't get taxed on withdrawals either assuming you reach age requirements
I am assuming 400 million shares, I believe 10 million shares go to JT if Change of control, might be others with shares so I like to be conservative, I think low end is more likely than high end, 50-80 per share would be my guess. However, nobody seems to have any idea what AMRN management and board believe a good price is. Would they accept less? I would not think so but when BO gets close they all start fantasizing about the payday so who knows.
There has been much talk on boards about CVR’s and no idea how that plays in, usually they are used in place of a higher stock price on BO due to risks, so If they determine a 50 per share BO is agreeable but want CVR it would probably be 40 up front and very reasonable cvr to 50 with harder to reach goals for higher. It is usually about risk control for buyer more than ability of sellers to make a killing down the line but in order to agree to one they need the possibility of down the line gains if really outperforms or else seller will just want the 50 up front.
At these values it’s never going to be all cash deal, without stock involved would never see a deal.
It’s going to be an interesting year regardless, GIA or BO.
I've been through 2 BO's where future revenue estimates were analyzed heavily due to short term turnaround of bookings. I have a good idea how the consultants or internal analyst would look at things.
The other indications would be discounted greatly because they are years down the line and completely unknown variables. They would count but very small amount. This is being sold on Cardio benefit with the hope of further upside but they work on hard numbers. They can't run too much analysis on potential markets without exact results.
How much penetration you going to get? Well how good are the results compared to other treatments? You can judge that on the cardio end but not the others.
If Amarin Management believes that is 60-7-% untapped gigantic potential they wont sell. BP won't pay for it. You'll likely find Amarin runs the same numbers the same way as BP, just slightly more bullish so they will discount that potential greatly as well when determining to sell or not,
If Vascepa did $10 Billion in average sales for the next 10 years(then generics) that would be $100 billion in revenue, even the best case scenario is $80 billion in profit, without factoring in any costs other than production and assuming a very high profit on production. Assuming BP has a sales force in place, there expense increase is commissions, some advertising, R&D related etc... even in most positive scenario for BP it's $70 billion to bottom line.
Now, Amarin will not have ability to generate inventory for $10 billion in 2020 and unlikely in 2021, so estimate $2 and $5 billion for those 2 years so now there are 8 years left needing 11.6 Billion average per year just to reach $100 billion.
I'm not even factoring in a discount of the $70 billion as it is future dollars or what they could make with the BO money if they try to get a return with it elsewhere.
Why would BP pay $75 billion and then go to shareholders and say it is a steal when they don't even think they will get the investment back within 10 years? I would guess strongly that neither BP nor Amarin has $100 billion sales in the expected sales models which makes it even more unlikely.
I think $20B is minimum to get a deal and $40B is maximum for a deal. You can't run numbers that make any sense at numbers higher than that and make a profit down the line based on what these companies will be modeling for peak sales.
There was an article on Seeking Alpha but is no longer free
https://seekingalpha.com/article/4225644-amarins-u-s-patent-protection-vascepa
That seemed to be the most detailed analysis I saw if you can find a copy, I do recall it really came down to a few key patents, I don't believe there was a conclusion one way or the other but I honestly don't recall how the article concluded.
If you have a subscription or maybe you can find a copy posted online
Average days before 74 day letter is sent is 60 days if Priority and 70 days if standard.
Very logical and realistic numbers. Good post.
I'd be very curious to see Amarin's internal estimates for future sales. I would wager they are very close to BP estimates.
Amarin has absolutely been running internal estimates and ranges, too bad we can't see them.
I don’t see that they went to this conference any other year but last year so it’s not a regular thing.
M&A I disagree on the logic, unless due diligence gives high chance of issues, unlikey BP will be afraid of either of those things, no way they wait until 2021, they have a few weeks to go through due diligence on sNDA filed and then when FDA letter comes with expedited timeline we will see if Amarin is going to GIA or BO, we should have that resolved before Adcom one way or the other. If Amarin goes to Adcom without putting in place the ramp up then they are poor managers or are not GIA.
If there is no BO by FDA expanded label date the risk a BO price dropping each year forward is relatively high. Baker Brothers have large input in this, like all investors of that ilk it is a complete risk-reward analysis. For BP a 1 drug company with known generic date is more valuable to them the sooner they take control.
So both sides have large incentive to do a deal this year. Amarin will be at peak BO value, unless you believe Amarin can execute at a level that 5 billion plus sales really are reached in 2021. Not likely based on history, but then again it’s a unique drug, even though it took statins years after study proving they worked to ramp up, so who knows, which I think is the point, too much risk they will ramp too slowly.
I think your idea is not ridiculous, I've seen a lot of stuff I thought was only in the movies, however, I do not see the value of the company for a BO having anything to do with stock price, or anything to do with scripts without expended label.
The valuation of the company is based on peak sales and timing of, whether scripts are 40,000 or 42,000 or whatever the trend is TODAY seems meaningless. It's solely what Amarin calculates for peak sales and timing and what BP calculates for same thing. I think they both would agree BP would reach peak sales faster, so Amarin would adjust for that in agreeing to a sell price.
If Amarin does not announce expanded sales force when they get priority review (since 33% of drugs get priority review Vascepa is highly likely to get that, it's not uncommon to get priority reviw) the BO is happening before FDA approval, FDA approval rate is close to 90% recently, even Amarin, before Anchor expected approval, was expanding in anticipation, there is no reason to wait to expand sales force other than knowing the timing of the expanded label. It would be stupid to wait for FDA approval and spend 6 months training people.
Since IMO there is a 95% chance of a BO within a year, the lack of increasing sales force after FDA priority review is granted would signal they would be bought before FDA approval.
This also leads to possible dilution before FDA approval.
Thus Another reason a BO make ssense, despite the ridiculously high peak numbers some think would happen, and the unlikely to happen idea that they could sell multi billions per year after generics come in, the business school-Private Equity ideology almost requires a BO to the highest bidder at this point, almost every model they run will tell them to do that. There is a 5% chance they ignore that and shoot for the moon, I just don't see it happening. I don't see JT with a Steve Jobs ego which is what it would take to GIA.
I believe PE (Private Equity) is looking at PRGO generic drug business not PFE
CIGNA IS Express Scripts
I wish I wrote that post, agree with all of it.