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Jefferies note - From Robcos on IV
Michael J. Yee, Andrew Tsai, Kelechi Chikere, Ph.D., Arshad Haider
Amarin Corporation (AMRN)
TICKER
AMRN
RATING
BUY
PRICE
$19.42^
PRICE TARGET (PT)
$30.00
MARKET CAP
$6.4B
Key Takeaway
Company continues to be bullish on accelerating market penetration and sales over the coming quarters. Co has noted the window for FDA to confirm any AdComm panel is narrowing, given priority review and PDUFA for Sep 28th. We think no panel and stock moves higher for straighter shot towards clean approval. In terms of patent litigation, a court date is set for Jan 2020....we think if any settlement comes, stock moves quickly higher towards $25+.
Insights
YTD the stock is up +42% (vs XBI +21%) as evidence of Vascepa's sales execution and potential (eg weekly script numbers) - continues mounting every week. Vascepa scripts recently hit record highs per third party data and even accelerated to +20% Q/Q vs +15% last quarter...all of this despite any formal FDA label expansion yet. Outside of Vascepa, the company has two key events/overhangs that could push stock higher towards $25+: (1) potential no AdComm could convince market that FDA has no major topics of debate and takes any headline or unpredictable panel risk off the table, and (2) clarity around generic filers as this uncertainty and patent decision in H1:20 makes it tough to own the stock for some investors, in our view. Hence for the stock, we think it goes higher on potential strong Q2 and possible guidance raise, pot'l no Adcom confirmation, and if they could secure a patent settlement by early 2020...so overall trend for stock is likely higher into year end....Trading risks seem to be: growing expectations on Q2 and risk/reward on prior quarters despite beats, panel is possible and stock pulls back despite panel highly likely to be OK, investor perception of further growing salesforce from 400 to 600+ at YE and upcoming DTC spend, no certainty on any litigation outcome.
Thus far, despite passing Day 60-74, FDA has not indicated whether it plans to hold an AdCom. We note there was no AdCom for the PCSK9 CV outcomes label expansion and AMGN was easily approved on time for their Priority Review too. Hence it's possible AMRN may not have a panel as there aren't any major debates here. We think 60% probability no panel and removes short-term headline risks. Mgmt commentary seems to be balanced noting FDA could always hold one to air public discussion, discuss differences of Vascepa vs other fish oils, and any relevance or not of triglycerides as a surrogate marker. Mgmt notes PDUFA is Sep so formal 55-60d notice to sponsor on any panel is coming up anyway by end of July...
Q2 looks good - note they could be increasing salesforce and preparing for DTC ads.. Scripts are hitting highs and math says we see Q2 north of $90-92M (vs cons $88M). Guidance could be raised on demand but also based on Standard Review not Priority Review. There is a growing view mgmt is preparing to pull forward and further increase salesforce from 400 to 600+ after PDUFA given promotional efforts are paying off and sales appear strong, and next is DTC being approved and planned for H1:20. Street probably needs to raise opex for 2020 for higher spend (but a positive to invest early) and there will probably be bull/bear investor debate on whether another salesforce increase and more opex spend is indicative of ongoing utilization.
Company Description
Amarin Corporation
Amarin Corporation, headquartered in Dublin, Ireland and Bedminster, New Jersey is a biopharmaceutical company focused on the commercialization and development of therapeutics to improve cardiovascular health. Amarin's approved drug, Vascepa, is an ultra-pure, EPA-only, omega-3 fatty acid, oral product for the treatment of severe high triglycerides and mixed dyslipidemia. The company’s cardiovascular programs capitalize on Amarin's expertise in the field of lipid science and the known therapeutic benefits of essential fatty acids in treating cardiovascular disease. AMRN reported a positive REDUCE-IT CVOT result in September 2018.
Company Valuation/Risks
Amarin Corporation
Our $30 PT is DCF-based. Risks: clinical, regulatory, and commercial.
Amgen, Inc.
Our price target of $230 is based on applying a 16-17x historical industry multiple to our 2019 non-GAAP EPS, and is supported by our DCF. Risks include IP litigation, biosimilars, pricing, and competition.
I am sure you have been told this before but you really have a way for going way out on a tangent.
"The day 74 letter likely included preliminary plans to hold an Advisory Committee (AC) but gave no date." You just make up what is likely included in a letter. This makes it an opinion and based on your other opinions it is nonsense.
From Goldman, June 12th.
Unidentified audience question -
John, could you comment on, there’s been some talk about generic competition or challenging your pattent, could you talk about your strategy there? And also, the production of Vascepa and what type of limits there are out there for you and for others?
John Thero
Yes. So, the question pertains to ANDA filers. This is out in the public record. There were four ANDA filers. One of those, Apotex removed themselves from the process and one of those is Teva. We did reach a mutual agreeable settlement with Teva that they could enter into the market in the second half of 2029, which is a little lower 10 years from now. There are two remaining filers that we have gone beyond the Markman hearings, which I think went largely, almost entirely in our favor. This is the claims construction hearings. More recently, we have been, the court has allowed us to introduce the results of the REDUCE-IT study and as which we believe are supportive of the uniqueness of Vascepa.
There is a court date scheduled date scheduled for opening hearings on January 13. If it goes to court, probably have a decision 2 to 3 months. After that we’ve asserted 14 of our Orange Book listed patents. They all have expiries in 2030. They all have multiple claims, and we intend to defend those patterns vigorously. This is a unique feel. This is not a drug that’s easily manufactured.
There is Lovaza out there, which is GSK's drug, which I think some of the generics on there probably have lost money because it's been difficult to manufacture and they’ve had some shortages over time with that drug. Our suppliers have spent tens of millions of dollars and with their expansions, I'm sure it will get up over to the multiple hundreds of millions of dollars investing in supply capacity and efficiency. You know the belief that we’re going to grow Vascepa in a multiple billion-dollar opportunity and of course Vascepa is more difficult to manufacture then is Lovaza.
So, we’ll see what happens relative to the end of litigation. I can't make any predictions there, other than stating that we intend to defend our patents vigorously, and we like our IP.
Unidentified Analyst
John, my question is sort of leading though, even if somebody does, you don't have some patent success, which seems unlikely. My question is, would they be able to produce them? Because it seems like you’ve locked up supply out there?
John Thero
It’s a very difficult product to manufacture. Again, it’s easier to manufacture than this product. People have had difficulty manufacturing that. The suppliers that are working with us are working with us on an exclusive basis. It’s not clear to us where others would get supply from or if they would be wanting to spend or who would want to be spending that level of investment to grow that level of manufacturing given a revenue base that right now is about 350 million is our target for this year.
We are investing with our suppliers into manufacturing expansion with the idea that we will continue to grow the market and often when something goes to generic doesn't grow, with the idea, it is going to be multiple billions in revenues, but whether somebody else would put that level of investment in or not, I can't speculate. That would be up to them, but it would not be an easy or an expensive path.
I think my clock is a run out. I thank you for your interest.
JT has discussed that it was favorable, very recently. He also said "I like our IP". He is so conservative he would not say that if he thought there was an issue. IMO, this is a primarily a made up overhang created by the Analyst to create controversy. They wanted to get into this stock at a lower price and given the recent move back higher they are not going to get there. None of them think that Hikma will win, they think it will be settled.
Here is the link I think this is referring to.
https://www.fda.gov/food/cfsan-constituent-updates/fda-announces-new-qualified-health-claims-epa-and-dha-omega-3-consumption-and-risk-hypertension-and
Hopefully those labeling high EPA formulations will take note. "Under the Dietary Supplement Health and Education Act of 1994, dietary supplements that are not adulterated, misbranded, or otherwise in violation of applicable laws and regulations are lawful for sale in the United States."
Vascepa pill manufacturer Catalent buys new plant in iIaly from BMY. It doesn't look like from the PR that they will be manufacturing Vascepa there but they will be freeing up capacity at other manufacturing plants. I think the Vascepa pills are still being manufactured at St Petersburg, FL plant(s).
https://investor.catalent.com/press-release/financial-news/catalent-purchase-bristol-myers-squibb-manufacturing-facility-anagni-it
Have you looked at Hikma's track record regarding how often they settle?
http://wsw.com/webcast/rj115/hls.v/
Presentation on this page. http://hlstherapeutics.investorroom.com/events
Everyone should listen to today's HLS presentation. Oh Canada! Oh Vascepa!
New York City, June 18 – HLS President & Chief Operating Officer Gilbert Godin will present at the Raymond James Life Sciences and MedTech Conference at 3:35 p.m. EDT at the Lotte New York Palace. Mr. Godin's presentation will be webcast at: http://wsw.com/webcast/rj115/hls.v/
The actual presentation is on their website here http://hlstherapeutics.investorroom.com/events
A little more info Amarin initiated with a Buy at Roth Capital Roth Capital analyst Yasmeen Rahimi started coverage of Amarin with a Buy rating and $31 price target. While it has gained $4.7B valuation in last nine months and investors may think they have missed the boat to invest in Amarin, the analyst disagrees with this outlook and views sNDA as the gatekeeper for M&A, soon to be open.
Read more at:
https://thefly.com/landingPageNews.php?id=2922775
Roth Capital Starts Amarin Corporation (AMRN) at Buy
June 17, 2019 7:50 AM EDT
Roth Capital analyst Yasmeen Rahimi initiates coverage on Amarin Corporation (NASDAQ: AMRN) with a Buy rating and a price target $31.
It's not Medicare.
15 days before the end of the quarter seems reasonable. We would start pulling reports and running estimates for quarterly results before the end of the last month. That way when the numbers were run after the end of the month we could true things up to see if things look reasonable. Many times it was just to make sure expenses looked reasonable. Make sure there was nothing double paid, look at accounts payable to make sure things were not double counted, estimate revenue. From someone who lived in the financial reporting area, It makes good sense to me that numbers would start getting thrown around about this time at the end of the quarter.
My BCBS Illinois Express scripts is $9 for the three months. It changed in February 2019. I was paying @ $200 a month. Vascepa went to Preferred status.
You might ask them if they had a blackout period when reduce-it results were being analyzed. Before they were released. I would bet they did. It may just be that they are starting to have conversations with the FDA regarding approval and they do not want any risk of impropriety.
2. that short interest % is probably coming from TDAmeritrade, which is incorrect.
It will be the only drug for the indication. It will help tremendously.
Do you still practice in a part of Florida, ( Ft Myers right) where most of the patients are on Medicare or Medicaid? That could explain much of this discrepancy.
This infomration is significant today but it will be useless once the label is expanded. Once the label is expanded, Vascepa will be the only drug for Triglycerides < 500. An insurance company will not allowed to have prior authorizations that require you to try generic Lovaza or Niacin or Fenefibrates first. It will be easy for physicians or patients or Amarin to stop this from occurring.
Those event costs are good to have.. Since Reduce-it captured subsequent events, I would think they will be able to add those costs in as well. The results should be eye popping.
I guess I read that to say that Further studies would be necessary for other triglyceride lowering treatments. They can't just change the recommendations for all triglyceride lowering treatments.
I don't see in the article where they called for another trial.
I don't think that was the organization speaking. It was just some residents giving their opinion on changes that would need to be made.
" came into the year with around one billion in capacity per the call around 22:00. " The transcript is incorrect. It seems to be a poor transcript overall as I have seen other errors. It is best to listen to the call.
GS did not even have an analyst in the room. I would not expect coverage in the morning.
Presentation is west coast time.
Is TEVA AMRN agreement non-transferable? TEVA seems to be having some financial difficulty related to the opioid settlements and general poor performance and may declare bankruptcy.
Short interest still going up. Man are they going to be surprised.
ttlement Date Short Interest Avg Daily Share Volume Days To Cover
5/31/2019 26,483,759 6,245,726 4.240301
5/15/2019 25,577,533 5,083,965 5.031021
4/30/2019 23,732,579 5,442,797 4.360365
4/15/2019 21,911,936 5,652,460 3.876531
3/29/2019 21,149,076 10,714,138 1.973941
3/15/2019 16,859,967 8,086,743 2.084890
There is no true deadline. If something comes up during the detailed review, an ADCOM can be called.
What evidence do you have of malabsorption in these patients. Would that have not lead to safety concerns? What type of weight loss and other malabsorption issues was seen in the placebo group? Don't you think if the patient had malabsorptions issues the y would have been taken out of the study? Do you really think people would have stayed in the placebo group and that these symptoms would have gone unnoticed? Do you really think physicians monitoring these patients would have allowed them to stay in the study?
Malabsorption causes abdominal discomfort, including gas and bloating.
Other symptoms you may have:
Frequent diarrhea
Bad-smelling and loose stool
Stools that are light in color or bulky
Stools that are hard to flush away because they float or stick to the toilet bowl
Weight loss
Scaly skin rashes
The target audience is endocrinologist who primarily just prescribe drugs to diabetics that lower A1c. He is asking them to go beyond that and look at the CVD risk. Many of them probably have not prescribed Vascepa.
The new sales rep job description that will target endocrinologist instead of cardiologist will be a wise move.
JL, thank you for your post. There is so much nonsense on this board it is easy to miss a great post like this. I don't want a quick buck that I have to sell and pay all those taxes is one year. I want a steady appreciation and great wealth built up over time. It is what we all should want. If one has to, they can sell a little over the years just to diversify but this is a great place to have a large stake. Even after the large increase, I can't think of anywhere I would rather have a large percentage of my wealth. The company is doing a great job. The KOLs that it has out there are doing a great job. Based on the MDmag article, the endocrinologist yesterday seems to have hit a home run.
Nonsense. Don't listen to this. These are traders trying to pump up the stock on potential buyout rumors only to trade it down later when the buyout doesn't occur.
GIA in US is going well and when expanded label hits and insurance coverage gets better, scripts are going to explode. This, in addition to news and upfront payments from other countries will be cause for further price appreciation.
My body didn't tolerate statins either until I started taking Co-Q-10 with it.
This should be a board about where the company is going. Someone should be able to come here and figure out whether the company is a good investment. It should not be about personalities and whether a poster got a call wrong a few years ago. The board should not be cluttered up with bickering.
When Amarin can get on the air and tout all of Vascepa's benefits and the lack of side effects it will be quite effective. Physicians, at these those in the know, are now starting to dismiss the fish oil supplements.
Buying calls in AMRN is for suckers. Buy the stock and have some patience. This is about the long term with this stock, not about where the stock price is in July.
Jefferies call going on now, please listen.