The REDUCE-IT data presented in the NEJM was home-run. Big Pharma are collectively salivating over Vascepa now. Yesterday's price action in relation to the placebo was a shot across the bow to the Amarin board for me - sell the company or your share price is going to collapse.
Anyone harboring fantasies about Amarin going this alone and the share price rising to $100 and beyond between now and then is both highly delusional and very greedy in my opinion. Im not Adam Fueurstein's biggest fan but I know who he is and who he represents, and he talks a lot of sense in his latest piece. Management would be very wise to listen to him and respect him.
A share price is largely based on a companies profitability, and Amarin are significantly overvalued at $6B when you factor in that they are still making a loss as a company. With a very limited sales force and only $80 odd million in cash, it will be a long long time before a share price of $100 is ever reached if they go this alone. With the current amount of shares outstanding, $100 amounts to a valuation of around $30 odd billion. How exactly are Amarin going to pull in revenues of anywhere near that amount when the FDA has yet to even approve the drug and with all the other limitations that small biotech typically face?? Forget about it.
The current share price simply reflects Big Pharma's interest as it did after the ANCHOR results were announced. After Amarin declared that they were going it alone, the share price tanked, and the market cap ended up well under $1 billion. The exact same thing will happen here if they announce that they are going this alone.
As a long-term shareholder I would urge Amarin to sell the company. Analyst valuations range from around $35-$60 which values the company at between around $10B - $20B. Considering the quality of the REDUCE-IT data (the mineral oil is not an issue and will only become an issue with the FDA if Amarin fail to sell the company within the next few months), Vascepa's global revenue potential, and the amount of work Amarin has put in to all this, they will be offered a fair price. It's hard to put an exact figure on future peak sales but anywhere between $4B-$10B/year is entirely possible with data as good as they have, which at 4-5X peak sales values the company between $16B - $50B. This translates to a share price of between around $45 and $150. Personally im happy with $45 and anything over that im over the moon. So how do you sensibly value Amarin now?