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This was already posted but with the message volume I guess good to post again
https://www.acc.org/latest-in-cardiology/ten-points-to-remember/2019/12/03/15/51/national-lipid-association-scientific-statement-on-icosapent-ethyl?utm_source=clinical_topics&utm_medium=email_digest&utm_campaign=clinical_topics#.Xee8_9rLDx8.twitter
This was form yesterday and was out well before the move up today but maybe it is related to move and news moves slowly, not sure.
I’d imagine they’d be based on annual or cumulative revenue of Vascepa
Maybe, but analysts and BP are not going to price more then 5 billion because of many, many reasons already discussed. It would be worth more faster under BP because they would lose all the sales force and admin costs Amarin has to pay so more money to bottom line, and BP already has the money to invest in supply growth. Have you run the #'s on $20 billion in supply? How many years to get there, how much monetary investment?
I get it, Statins sell well, but even Lipitor peaked at $13 billion.
I believe upside is likely around $10 billion peak sales. There is not a single analyst with more than 5 billion peak sales. So BP is not paying based on anything more than 5 billion peak sales outside of CVR's and the discussion has been about BO price and stock value the next 1-2 years.
My understanding of supply makes 3 billion tough in 2021, so 5 billion I don't see supply being available unless Amarin makes a huge investment in suppliers and soon.
Launching a large drug takes time and money, you cut down the time and you have the money with BP.
Not meeting demand in 2021 on revenue that is higher than most PEAK sales estimates today is not going to be very helpful to shorts.
Further stock price appreciation is coming the next year, GIA or BO scenario.
I think Raf is right on with his guess, if CVR we could get $40 plus milestones and if not $50 straight up BO.
I think GIA we see 30's next year, assuming label is reasonable and generics don't win the lawsuit, Epanova is less successful than RI and at that point it all comes down to revenue and supply as to where it goes 2021 and beyond.
I'd take the milestone payments and less up front, it's like GIA with a BO with admittedly less upside but zero risk. But, like anyone $50 a share would be a good chunk of change so not complaining either way in a BO. Amarin wont sell for less than that IMO.
IF Amarin let's generics get to court without paying them off I would think BO is not likely while that played out and I assume after January trial it would take a few months to get results so Q1 would be out for BO. So if Amarin has BO as the preferred path by management they will settle with the generics before trial, I know it takes two to settle so will be curious how aggressive Amarin is with paying them off. No advantage to them going to trial if a BO, only advantage with winning a trial is GIA scenario.
In GIA they partner Europe, get cash up front and royalties, with right partner they could generate good cash flow, if they do that then BO company most likely be that partner down the line or they are GIA. They should prep EU launch mid next year so everything points to GIA vs BO decision in 1H 2020. They would be 100% de-risked and ready to massively launch USA and determine EU strategy.
I think people confuse the potential value if the drug vs what Amarin can get out of it.
100 per share with future 425 million shares is 42.5 billion market cap.
Please explain the likely scenario in 1-2 years where WS prices Amarin with that market cap?
At 5 billion peak sales you might see 40 billion in revenue total by 2029 which is about 30 billion gross profit and about 23 billion after taxes, so double that to 10 billion peak sales, which nobody is going to model to in a BO or on the street but just say they did, you get 46 billion cash flow, nobody is paying or pricing Amarin at 40 billion to get 23 billion in cash flow and nobody is pricing or paying that for 46 in cash flow. so basically your scenario seems to be that within 2 years people will be pricing in peak revenue at 15-20 billion range, even though in 2 years they will be lucky to have supply and revenue above 3 billion, which means they have 7 years left coming off 3 billion in revenues and maybe 4 billion over 2 years. Which means they need to average 8 billion over last 7 years, and the market has to believe that will happen?
Yes, there should be residual OTC revenue past 2929 and is possible Amarin will lock up supply and generics will have a hard time supplying enough for years and in 2025 or later they may see a few years of possible larger revenues if some other indication shows success in trials but also short window from any other indication to generics. Then you want market or BO to price all this possible incredible future success before it comes to fruition?
If you throw out anticipated stock prices you should do the models involved to get those numbers. Then at least there is something to analyze.
Could Amarin get to 100 per share someday? Yes it could but odds are low because so much has to go right for that to happen. But a BO means it can never happen because nobody is paying that in the next 2 years.
Confirmation bias is responsible for so many bad decisions in the world. But it's hard wired in many, as they recently showed on brain scans the brain reacts as if threatened and takes a defensive position when presented with something opposed to their existing view if it is a strong belief. Obviously not everyone has this, maybe everyone is born with it and some overcome it and the majority do not? Maybe it's genetic?
If we could fix that part of most peoples brains the world would be more science based and thus arguments would be over how good is the science but for the most part people would be on the same page. It's definitely be a totally different world.
But expecting most people to not have confirmation bias is an expectation you have that will never be met. Accept it, understand it, and make money off it!
If CVR is achievable you probably want to make sure you own the CVR's. Obviously analyzing all the details would likely make the decision obvious.
If you own the calls you would sell them for profit and no CVR or you would convert to stock and pay for the shares at the strike price and get CVR's, you have to own stock to get CVR. BO would take like 6 months to close and once price is set options don't really sell at much premium especially as the date to close the deal gets closer.
Depending on what you did you may not be able to afford the stock and have to sell some calls and buy some shares but you only get the CVR if you own the stock at closing of deal.
You get a CVR, like an option at the closing so you need to hold the stock until deal closes to get the CVR.
CVRs can be either non-transferrable or traded on a stock exchange.
I know people seem to be into that, but you still have generics in 2029. I don't believe the extra indications, if any of them came to fruition, which is still years away, would prevent generics from taking over in 2029 assuming they can make Vascepa.
Of course if Vascepa is proven to delay Alzheimers and slow cancer growth the demand would be so high supply probably becomes the biggest issue, so we are back to who controls the supply. New indications, IMO will not stop generics from being prescribed for those indications in 2029 so trying to look beyond 2029.
Yes, look to expand Vascepa use, of course the company itself is not doing ANY trials right now, all trials are third party and years away and look to buy a pipeline with right deal, but i think the best play revolves around supply. But just theorizing not sure.
In regards to GIA pipeline, I saw some comments about how they would need to take much of the future cash flow and buy a pipeline.
With all the discussion about supply and the difficulty in producing EPA how many companies or segments of companies can actually produce Vascepa at a low cost? Would it make sense for Amarin to, instead of buying another company in hopes of replacing Vascepa revenue in 2029, take the cash flow and purchase or invest a majority into the largest suppliers of Vascepa?
Could they tie up the majority of inventory that way or is that not feasible, assuming multi billion a year in cash flow from Vascepa?
As we see from the recent acquisition, buying a pipeline is expensive and fraught with risk of failure.
If they GIA and IF they successfully get to minimum $5 billion peak sales they will have billions in cash flow before generics, what would really be the best use of these funds? R+D on Vascepa in other indications? Not sure what that gets them, they'd only have a few years before generics to cash in on most of those other indications if they come thru, and don't sell me they get exclusive years in new indications, good luck stopping generic prescriptions for those indications.
At least some of the Money might be better spent maximizing the Vascepa revenue as long as possible, and maybe have multi pronged approach, R&D Vascepa, acquisition of small pipeline AND lock up supply, all seems very expensive though.
Simple answer is the best offer is just not good enough. At that point GIA is the only option. Say the 2 rumors from awhile back that were out there were true. BP offered 12-13 billion, Amarin asked for 30. So if they both think that’s fair how do you get a deal, JT should just go down to 15 to get a deal? No way, can get there GIA with high odds.
BP, barring a bidding war, would not pay more than 20 billion IMO running various models. JT and board probably does that, but maybe not, maybe BP won’t go above 15.
Then you are into a BO with milestone payments which nobody really wants to do but may have to and now more complicated, complicated deals are hard.
So though BO logically is the path they seem to be heading towards it just may not transpire so they need to do everything they can to execute sales ASAP.
Good thing is management has hit on almost every decision the last year plus though I still question the amount of the last raise as cash flow should be positive next year but I get putting yourself in a good cash position. Otherwise management has proven itself very adept so far and whichever way it goes I have faith in them.
Amarin has not even forecasted 2020 sales yet never mind 2023-2024. They have stated they have run models that get them to 10 billion or more in peak sales but I'm sure they have run many different models and unclear which one they think is most likely.
Those peak sales would be numbers MDCO would throw out there, based on competitors and iffy outcome trial results Bp should have been modeling 1.5 billion peak. Based on your logic Amarin should be bought based on 10 billion peak sales. This is an overpay which is worse than 50/50 to pay back much in cash flow over the life of the drug.
That sounds made up, how would MM's know news is coming? If they were signaling each other in some code I would think it's only related to need to get or get rid of inventory.
I would think IF there are CVR's in a BO they are solely going to be revenue milestone based. With the ridiculous "potential" in various areas seems the only way a BO gets done is with milestone payment possibilities but I'm sure there is a price where that would not be used.
The Potential sales for 2020 are exciting and would blow away analysts expectations in a reasonable scenario.
However The YOY 2019 to 2018 increases could be skewed by the results of the study.
If you take the quarterly growth rates of 2019 and apply to 2020 you get about $700 million in 2020. You would THINK the growth rates would be more from expanded label in larger population than it was from RI results but no idea really, the RI results were instantly known, while getting word out on expanded label might be slower.
I still come back to $700+50 is $750 and that would be JT sales forecast high end and on the bright side would cause increases in analysts forecasted sales BUT I agree 1 billion is magic # for street to see, so I think if JT sees it that way they will defer on 2020 sales estimates until Q1 is complete, not sure how that would play but probably safer bet than any sales projection by management under 1 billion.
As usual Amarin will be very interesting the next year
Pretty sure that's you at the Jan 35 strike with over 42,000 open contracts.
True to a point, I was going off of the last 4 years of 50 million per year in growth. 80% growth rates off 200 million is not as easy as 80% of 400 million. You have to question within the current on label population how much more growth would they get out of the same sales force, the 550 is not counting any sales adds, any expanded labels etc...but point taken, a conservative number but I like conservative numbers.
With expanded label I would bet on 1 billion being possible, I think Amarin will not put higher than 750 million in a projection.
1: 1Q has always been lighter than 4Q, even 2018 to 2019 so 130 in 4Q 2019 is no more than 130 in 1Q 2020. I doubt a December 28 label expansion leads to a big 1Q, it takes time. Then we get tricky, when is the ramp up from expanded label taking hold?
If Q2 is at best 50% jump so 200 revenue max so you are needing 50% Q over Q jumps on a larger base. 50% again is $300 in Q3 and 50% again is $450 in Q4, so almost to 1.1 billion, 50% growth Q over Q is aggressive.
I like being conservative and I also like the fact 1.1 billion is not unreasonable.
Market is forward looking. To me $25 is fair price now GIA. I think they can earn $2 a share in 2021 and be growing fast so 20 P/E reasonable so $40 then, if they ramp sales sooner....., if it takes longer it gets to $40 later. If they can settle generic and get label exactly what they want the $30 is possible sooner due to the upside being higher.
If there is a BO that won't happen for less then $40 and that can happen anytime though more so early next year. Probably the #1 middle-large acquisition target out there in Biotech. That definitely props the price up but it's because the drug has great potential.
All adds to about $25 a share to me today and $30 a share maybe in a year and then $40 the next year after.
The potential is Huge but the situation is unique so really hard to understand how sales will actually accelerate. GIA would be fun/intriguing to watch play out. Not sure some people could handle long term GIA emotionally HA. I think by time Amarin is clearly going it alone, if they do, the sales will keep the stock price up.
I guess they will be lucky to hit 1 billion in 2020, just not great timing for the approval in December. I think first half will be slow ramp, second half will be large jump but overcoming the slow first half would be hard. Analysts average like $650, I think $750 very good target, how quickly 2H 2020 hockey stick happens determines if they get 1 billion IMO.
2021 to me is where everything aligns and real hockey stock growth happens. I expect them to be able to triple sales from 2020 to 2021. Everything will come together.
DCF is overrated in this scenario because the peak sales numbers have such a wide range. Also interest rates are extremely low so it factors in way less, we are not BP doing an incredibly detailed analysis to get an exact range to calculate a share price to offer, we are individual investors generalizing a reasonable BO price based on some high end numbers.
If these stocks sell for 3-5 times peak sales then the peak sales number is more important, # of other bidders is more important.
The last BO I was involved in they started at 70 million offer countered with 100 million and ended up at 93 million and had no competitive bidders. Company worth 150 million now. I saw the calculations and DCF is over-rated and not of much use for what we are doing on this board to estimate a price.
It's not hard, 40 billion in sales by 2030, is 30 billion in cash flow, so 20 billion seems right considering if your BP the potential is there for 80 billion in sales and half a billion a year forever as OTC. Odds are really high you recoup your investment, especially if some is paid in stock, and you have potential to really come out ahead. What's REALLY the only number that matters? How much revenue is reasonable by 2030. And that can range by 10-20 billion dollars which more than offsets any DCF adjustment.
If you have no idea what the company currently has for annual sales any analysis you do is rather meaningless.
They will be at $500 million run rate with 4Q revenue in the CURRENT population. Which means in current population with normal growth rates they get to $550 million in 2020 and you must assume reaching 20K more doctors and double sales force equates to at least $600 million in current population alone. Now you need to figure the growth from adding what is likely 10 times the current population and increased sales force and advertising.
Yes there is some off label use now, though without insurance coverage for it that's minimal. Insurance coverage is better now than ever and getting better, many update tiers a few times a year and others once a year so timing of late December expanded label not best for 2020 revenue. I would expect whatever sales they do in 2020 will triple in 2021 as they would have great insurance coverage, no coupons to pay, could increase price, full year of advertising, fully trained sales force etc.
So there is something to revenue disappointing in early 2020 that could hold back stock price in GIA scenario.
I guess if they do give sales estimate for 2020 in January it will disappoint as they are going to be conservative. In addition they won't fully release advertising blitz until 2H 2020. My guess is they defer on revenue estimate for 2020 until after Q1, which will get everyone all pissy.
However, there is a path to 1 billion in 2020 revenue. 50% increase in sales force, second half of the year full marketing blitz. Best insurance coverage in history, brand new much larger population, increased royalties from abroad including Canada, less coupons etc...I believe most of that jump comes in 2H 2020. Average analysts estimates are $650 million in 2020, they will beat that, I think $750 is more than reasonable. So fortunately we are looking at quarterly beats and estimated revenue raises by analysts all year long which is always good for stock price.
In GIA scenario getting to be $30 a share will likely take until 2H 2020 or 1H 2021 because it's about proving they can sell the drug at multi-billion dollar levels and they are not fully advertising until 2H 2020 and fully established with insurance until 2021 AND you add EU sales/royalties in 2021. IMO they are on pace for 2.5-3 billion in 2021 which is way, way above any analysts estimates.
Of course I believe they are bought out in 2020, announced in 1H latest but that's just based on a logical analysis, I'd be happy if they bucked the expected path and GIA, I can wait until 2021 or later to really, really cash in if I had to. Covered calls and no margin make waiting a bit easier.
So what I can agree with on the Oppenheimer stupidity is sales growth is going to be watched closely and low revenue estimate and 1H 2020 sales below 1 billion pace could hurt stock. Also agree IF they go past 1H 2020 without BO they are likely GIA long term so the window for BO will be closing, however, it never really opened at all until Adcom and doesn't open all the way until FDA label is finalized (maybe even after generics suit settled).
And I agree $20 billion is about the BO price a BP would pay in late 2019 early 2020.
That is definitely not in his conservative nature. BO rumors will heat up after label expansion if not sooner. Longs have won either way, all shorts/haters just don't know it yet.
You mean announce something Like unanimous Adcom vote and guaranteed label expansion? This was coordinated bear raid and now coupled with market turning south just have to wait it out, the people needing to get in long and out short will be done soon enough, it's true value today is still closer to $25 than whatever it ends today.
Unbelievable what longs have had to go through but soon enough it's just about sales and scripts and proving it will sell which WILL happen.
I wonder what analyses he did about off label use? We all know about the expensive cost off label and the doctors not wanting to go through hoops to prescribe. I'm sure he spent a ton of time on this analyses.
"omega-3 generics, dietary supplements, and foreseeable competition,” he wrote."
Ummm, What?
1-the population that the label will be for can get the drug cheaper through insurance in the future than they could even by OTC, if you are not able to get it because you don't qualify you may take OTC but nobody eligible for Vascepa would do OTC, they'd get the purified real thing.
2-There are no generics in the main population Vascepa will be prescribed for
3-There is no foreseeable competition
What a loser!
I've analyzed a number of Biotech's and the number I come up with is 30%. Amarin could get to 50% if they do absolutely no R&D and some other things but I like to go off historical data as much as possible and be conservative.
So 2.25 Billion to bottom line and 450 million share outstanding eventually is about $5 per share but I'm completely on-board with the way your analyzing it and the same way I've been doing it.
However BP would get the 75-80% margins and little other costs so.....
In May he out a 12 dollar price on OTLK which was under 2 bucks caused a 50 percent jump, from 2 to 2.50, under a buck today. He’s a stock manipulator.
Volatile stock, big moves, tell your clients to short, couple days later put out sell rating and leak it after hours not during day so low volume move can drop stock more, algorithms pick it up in am causing further drop, in a couple hours/days they cover, all manipulation. He doesn’t know crap about the stock.
I totally concur with your models, however there are ranges within those models and I believe those are the max numbers BO will pay barring a competitive bidding process. Obviously for that revenue they’d want to pay less but believe that can justify those prices at that revenue.
I’d be hard pressed to believe BP would go higher than 5 billion peak in any model.
But your absolutely correct in your post.
I'm sure like USA that's a goal date and not a guaranteed date but that's got to be pretty close, I thought JT mentioned December/January was the expectation though?
Except there are more questions going in
The only potential negative in the data for inclisiran comes from an exploratory endpoint that looked at adverse cardiovascular events. Numerically, more patients in the inclisiran group had a heart attack or stroke or died of cardiovascular causes. The differences between the arms are small but may raise doubts about the improved cardiovascular outcomes seen in the earlier phase 3 trial.
What a brilliant way to increase your Twitter followers LOL.
So much more comfortable. I feel like we won. No real fear at all now, stock is worth $25, so what can they take it down to? And I said in multiple posts was expecting unanimous Adcom but still way more comfortable now that it is over, De-Risk!
We know label is getting expanded and a large population regardless of details.
Generics will have more movement mid-December and to date all points positively for Amarin.
Of course they need to prove they can do a billion in sales and fast. Need to show peak sales will be higher than Citi estimated.
But all that seems likely, will we be in the $30's this year? Doubt it, but they execute then next year looks possible, BO price is at least $41 now, maybe as high as $51. So pretty confident 30's next year GIA and $40 minimum BO. Not a lot of scenarios where price is lower 6 months from now than it is now.
Let the momentum traders have their fun.
I sold this week's 27 calls, will keep selling calls as I feel comfortable. I think when smoke clears institutions will take positions and $25 is the price it will hover around so selling calls 25-27 probably the sweet spot.
It was a downgrade form Buy to Neutral but they increased price target to $27 from $24 so...not a strong downgrade
Great Video, great explanation, thanks for the link BB.
Then again this article comes out all positive so perhaps all the secondaries are meaningful.
https://www.fiercepharma.com/pharma/aha-amarin-s-vascepa-halts-progression-arterial-plaque-interim-imaging-data
I like this line:
There was a lot of tumult in the field this year, and I think it's incredibly healthy and representative of vigorous academic debate and dialogue to have a really open and democratic discussion on a worldwide basis … to put this data into context," Granowitz said. "The end result of that is I think there was a really broad consensus that these study results are real and these results are believable and profound."
Bear attack on the large gain last week, most trades during a day are not long term positions. High volume already back near 24, interesting battle today.
What it means is they should have waited to give results at 18 months because 9 month results are not conclusive yet. Not sure the need to get out late breaking interim data where primary is not significant and secondaries are.
What was the thought behind needing to release interim?