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I doubt the on-going trial is the reason that suppresses the sp. The legal professionals on this board have already shared their opinions on the trial. Sounds like AMRN has a strong case. If so, winning the trial won't move the sp very much, but losing it will tank the sp.
GIA is not a believable story. AMRN will be able to achieve sales in billions in a couple of years or so, but it won't be able to build a balance sheet and the type of assets that most BPs have in the 9 or 10 years left before its patents expire. If it has a strong R&D and a pipeline of drug candidates, I would say Yes it can become a BP in 10 years. But it doesn't.
It is huge. AMRN sp was bumped up by over $1 during the day of AZN announcement. The reason that it went back and has been declining is because the market doesn't believe in GIA and is expecting an offer.
EPANOVA failure is good news not only for AMRN but also for the scientific community. It puts a conclusive end to the argument of EPA vs. DHA or EPA+DHA or the stupid theory of bioavailability. It will help uncover the molecular mechanism or MOA of EPA. It will help AMRN differentiate Vascepa from all the other omega-3 products (but EPA itself).
The one shiny spot in AZN's announcement to me is the reiteration of its commitment to the CVD market. Hopefully it can quickly clean up its mess of the omethera asset, and formulate a new strategy of growing its CVD portfolio. If so, AZN can be another strong suitor for AMRN.
Thanks. I don't know the reason for the size too. But knowing JT who was a seasoned CFO before becoming a CEO, I trust his calculation. It seems to me he is playing the long game.
Yes AMRN gestures GIA and sp tanks. But that's expected. I don't like it but I do expect it will happen.
As long as it's AMRN, it needs to aggressively grow sales just like any other companies. It shouldn't do anything different until it ceases exist.
I don't believe it will GIA all the way. I hope it won't take long for the BO to happen, but in reality, it will take however long it takes.
What do you mean "the raise"? another secondary offering? If so, is it your speculation or an official announcement by AMRN?
I am with Invest on the concern - the erosion of Vascepa sales from DS EPA sales.
Surprisingly and not so surprisingly, patients are very price sensitive. Just look at the size of the market of generic drugs, arbitraged drugs, and even counterfeit drugs.
Banned or not, DS EPA will always be available on the market, especially in the age of e-commerce which makes it so easy and cheap to sell things on internet. I think the stock market has factored lots of this in.
My personally view of EPA is AMRN owns the label and insurance reimbursement, high-end EPA suppliers own the product, and DS EPA sellers own people's wallet.
The adverse effect verbiages do sound scary when taken away from their context. Since Vascepa, like most other CV drugs, doesn't completely eradicate existing heart diseases, these wordings are reasonable. However most patients aren't savvy enough to understand this. So it will give more marketing opportunity to DS EPA sellers as their labeling requirements are minimum.
In semi-agreement with you.
You need both - a person who can execute, and a person who can evangelize. It will be great if a ceo can do both. If not, then there should be a delegate. JT has never been a good communicator. But he is a great leader and CEO who can deliver. What he needs to do is to delegate the public communication to someone who can inspire the listeners. Their CMO seems a better speaker. Why can't he be the spokesperson? Also they need a better PR agency who can write a script that just works! like their drug.
GS has a neutral recommendation. So it's not their clients.
IMO, the slight dip today is all because that super dull conference call this morning. Neither Steven Ketchum nor JT is a dynamic speaker who can inspire the audience. Craig Granowitz is better, but he came in too later and too short. They need to get JZ back!
I thought the market only expected the secondary in the label, but the price movement today seems indicating that it actually expected the RIT label. Looks like we will be stuck in the mid-20's for a while.
Thank you!
Thanks for confirming!
Both protein and lipid can be responsible for the smell and taste. I wasn't sure which one is responsible for the O3's. Now I know it's most likely not from EPA.
Agree. It took at least three refinery processes and two chemical reactions to turn raw fish oil into Vascepa API. Proteins which have very different chemical properties from lipids, won't survive these. Other lipids maybe.
Just curious - does Vascepa smell or taste fishy? I know most O3 gels do.
I will only call it amazing if/when the share price hits $30 next week. If not, then the market thinks it’s just a fair label and does not share the same enthusiasm with folks here.
I gather some of this labeling had already been baked into the share price. Still surprised to see the lack of bigger movement in share price on the approval.
Funny! My favorite Costanza's line: this thing is like an onion, the more you peel it, the more it stinks.
I feel a better analogy is house purchasing. The same house can have different values for you and me because we value it based on our own needs and we have different needs. For AMRN's case, a buyer who owns a statin can value AMRN higher than another one without statin, because the two drug's sales are synergistic. Share price or market cap is a valuation "assessed" by the market (i.e., sell-side & buy-side analysts, institutional and individual shareholders) as a stand alone entity most times until rumor or news of otherwise strikes.
Same here.
My understanding is BO offers are derived from the model built independently by the buyers (or the ibankers they hire). Share price or MarCap is public market's perceived value of the company, which could be very different from buyer's.
Private companies work in a similar way. All VC backed private companies have a price for their share and a valuation. They just can't be traded in the public market. Buyer will come up with its own ways of doing the valuation which could be all over the place. For instance, Facebook paid $19B in 2014 for Whatsapp which had probably a share price about $30/share (based on the valuation of $1.5B at its last raise). I was told that FB's valuation was based on the comp of SMS text market or a theme that messaging will replace SMS text, which turned out not quite the case. So FB overpaid for Whatsapp. However its $1B acquisition of Instagram which was valued at $0.5B at its last raise, turned out to be a great buy.
Yes, the $9.7B marcap has part of the labeling value baked in already, IMO.
I do know the gross margin for Claritin. It costs 3 cents to make a pill and it was sold around $1.50 per pill when it’s branded. I bet Lipitor is similar. Small molecule drug’s GM is unbeatable.
One thing I don’t see people talk about is the opportunity cost. Even a $15B price tag is a significant investment for any BP. The management team needs to think whether we put this money in AMRN or another company with a best-in class drug or first-in class drug of a different market so we can own that market. $15B can get you many options, good options too.
Yes, I believe anything close to or above $40 is an acceptable offer.
Personally I don't believe it will go to $50/share or above for the reasons that have been extensively discussed here in the past, supply, cost, competition, DS erosion, patent, etc.
At the end of the day, it's how many offers they get and how much they are.
This is fun. Here is mine:
1. Labeling: CRL, 0%, Secondary only 20%, RIT 50%, RIT + 30%.
90% Announced in December, 10% in January.
2. BO: made to public in H1 of 2020, $15B +/- 2, acquirer = FPE (50%), AZN (25%) or another BP (25%) who has a statin.
Since Vascepa is most likely approved as an adjunct therapy to statin, it doesn't make sense that any company without statin would buy AMRN. So GILD or AMGN is out. Vascepa is not a high margin drug (compared with Lipitor before generic) and if add a generic statin (low margin too), the margin is not there for any BP without statin to be interested. Most likely BP buys Vascepa to protect and gain market share.
JT needs to get the deal done soon after labeling. The longer he waits, the less hot the deal is. Plus the macroeconomic situation in H2 of 2020 is very unpredictable. He knows that and he is a pro as he has demonstrated it all along. If I were him, I would sell the company next year, take some time off, and then get back to the game to flip another company to make more $$$. He is the John Legere of Pharma.
Depends.
1% change of the cash in your wallet probably won't call your attention.
1% change of your entire asset will likely call your attention ( hopefully).
The production of fish oil for use in FDA-approved drugs and dietary supplements for human consumption represents less than 1% of fish oil use.
You need to read that in the context.
sts66 - both agree and disagree.
I agree with you that Amarin shouldn't own the supply chain for the last ten years and for the next 3 years or so or until it reaches multi-billion sales.
I disagree with you on Amarin or its acquirer on ever owning the supply chain when Vascepa becomes a blockbuster. IMO owning the supply chain can 1) serve as another moat for protecting its sales; 2) give more control of production, both of which are important for BPs.
Oneragman - Amarin, at the moment, can't afford the high-end EPA refiners. Contracting is a good strategy to get Amarin to the label expansion stage. From fish to Vascepa, there are at least two to three different extractors/refiners involved. The last step from 50-60% O3 to 98% EPA API is the most expensive step (i.e., > 5x price difference). Only a handful facilities can do this. My estimate is 6-ish or no more than 10. They are scattered across 3 different continents. They all have lots of IPs around their process. Each of them is worth somewhere between $0.5B and $1B. It's out of reach for Amarin for now.
The fundamental difference between my view and many others' in valuation is others think the value of Vascepa = the value of Amarin, but I think Vascepa's value > Amarin's. I don't think I am alone in this view.
Using the numbers tossed on this board to illustrate. Assuming that Vascepa can reach the status of Lipitor in sales (I totally believe this), Lipitor's peak sales is $12B/y and its life-time sales is $150B. Someone here said BP typically pays 3x of the peak sales. So that's $36B potential investment that a BP wants to outlay for owning Vascepa franchise in order to make 4x return (150/36) which is ok return. But if you add the sales and cost synergies with its statin, then $36B is more palatable.
However, BPs cannot just own the golden eggs and let the goose laying them out roaming in the wilderness. They have to "own" the supply chain to cement V's sales, which means they have to buy and possibly consolidate the high-end refiners, and also some extractors/O3 refiners. These additional acquisitions cost $$$ and take some money away from the $36B investment. The rest is what they're willing to pay for Amarin. It could still be a lot. That's why I think Amarin's value is only part of Vascepa's value.
As for the RL vs. Pharma topic, if you can talk to an investment banker, he or she can provide a better explanation than me. They're the ones that build the model for such valuation.
Afford - I don't know where to start, but you do need some help.
Apple outsourcing its manufacturing is a brilliant move because the value of its product is in the design, software and brand, not manufacturing or assembling in their case. Intel NEVER outsourcing its latest two generations of chips is also a smart decision because their design and manufacturing are the most valuable parts of the products. Smart business people know which part of their product and production needs to be closely held and which part doesn't. Mediocre business people follow others blindly.
Less risk? Could be or could not be. Are you following the news of trade war between US and China? Do you know how many times Tim Cook reached out to the White house regarding this? Why do GoPro and many other brands plan to move their production to Southeast Asia? Also, Within five years after iPhone 3G (the first blockbuster iPhone), there are dozens of smartphone brands in Asia who make phones just as good as iPhone (hardware-wise). Why is that?
Btw, I am planning to sell a meaningful chunk of my AMRN shares after labeling announcement, and most of the rest at the news of winning BO offer. I will sell 100% of my shares the next second after Amarin announces it will only GIA (which I doubt it will actually happen as there is always hostile takeover).
oneragman - thanks for sharing your view. The issue I have with the analog of luxury consumer goods vs. a pharmaceutical product is that
1) the IP ingredient is light in the former and very heavy in latter. Yes, there is design patent in consumer goods but all IP attorneys will tell you that design patent is generally weaker than utility patents. Luxury goods is all about brand. But pharmaceutical products are not quite. Ask folks on Vascepa on this board if Vascepa goes generic tomorrow, how much they care about it's branded as Amarin vs. Teva one of the largest generic drug makers, or how much more they would pay for Amarin's Vascepa vs. Teva's Vascepa?
2) Luxury goods like Ralph Lauren are not volume driven sales. On the contrary, rarity and exclusivity drives their prices. Vascepa and most of other drugs are not. That's why a broad label is important for its sales. In addition, how often does one buy a RL bag? one or two a year. How often does a patient take Vascepa? twice a day everyday for at least six months. The price sensitivity for RL bag is very different from that for Vascepa. People don't mind paying more for a RL bag because they don't buy it often. But patients would care a whole lot more to Vascepa's price because every $1 price increase per 1g capsule means $720 increase in the total cost of a 6-month regimen.
Yes it has a lot to do with the valuation because it impacts sales.
the case of Amarin vs a typical Pharma is similar to that of a coop apartment vs a condo. In NYC, a condo can fetch 50% higher price than a coop with the same condition. Big deal! If a buyer is to value BO offer for Amarin vs a NewCo owning both whatever rights Amarin owns for Vascepa AND its supply chain, then the NewCo can fetch a whole lot more price per share than Amarin.
L0tsaluck - there were many, many posts on this board discussing this topic.
For Vascepa, from manufacturing (or oil refining in V's case) to encapsulation, to bottling and packaging, to put labels on the bottles and packages, to distribution, are done by independent contractors that Amarin hires. Amarin does not own any part of this process. Amarin only owns the label content (what is written on the labels), the rights of selling V according to the label content, a bunch of patents to protect these rights and a bunch of agreements with those independent contractors. Amarin also owns its teams of salespeople, RA, clinical scientists, marketing, PR, etc. The trials were conducted by CRO obviously. In a sense, Amarin acts as a project manager coordinating all the parties to get things moving.
Hope this won't shock you. Happy Thanksgiving!
ORBAPU - Except for the ethyl group (CH3CH2-), the rest of Vascepa or EPA structure (C20H29O2) is made in algae through photosynthesis or converted from other fatty acids in fish via enzymatic process. So the only part is not natural is the ethyl group. Putting Vascepa in the synthetic category implies that the ethyl group is the part that accounts for the wonderful results from its three major trials. If that's true, the sp will drop to pennies.
But you have a good point. Amarin indeed needs to differentiate Vascepa from fish oil. Fish oil is a categorical name referring to many different fatty acids in collection. On the flip side, highlighting its natural root can also add more comfort to patients. But the latter is just my guess.
KevG - Same here. I've been an AMRN investor since 2010.
Who have more faith than us on this board? JT and the entire leadership team, AMRN long-time investors. Who doesn't have faith or give faith a crap? Food and Drug Admninistration staff(and its counterparts worldwide), most healthcare professionals (check their attitude towards dietary supplements), and the market. Did $1 or $2 sp in 2014-6 reflect a good faith in the company? Who has the biggest influence on Vascepa sales, AMRN sp? FDA et al. Faith doesn't lift sp, but trial data and FDA's nod do, at least for pharma business.
KevGee - neither did we. Many of us had the faith in this company and drug, but not the data needed to support it before 9/24/2018. Even after 9/24/2019, it still took months for many of us to fully understand what the results mean.
The market represents collections of information, knowledge and wisdom. It behaves in certain ways typically for a reason.
jfmcrr - yours is a very simplistic view.
For IP driven manufacturing, e.g., pharma or semicon, companies typically own the manufacturing for the first few years to protect its IP and margin. They only outsource older versions of products. Unless the company is a design only company, such as ARM or Amarin (could be), which strategically decides not to own manufacturing, and only takes licensing fee which is much low margin.
Some folks are wondering why the market doesn't get Amarin or Vascepa. Maybe a different question can be asked is what the market knows that most of us don't?
VuBru, your comment really hits the nail on the head for this, IMO.
Vascepa's natural root is the exact force holding the share price and valuation down, together with the reality that Amarin doesn't own anything alone the supply chain except for the supplier contracts (hopefully these are structured with defensive terms).
If V is a synthetic small molecule or even a man-made biologics, the share price could be 50-100% higher by this point. In most cases, pharma/biotech who invents the drug also owns the manufacturing process (patents and know-hows), production facility and personnel which are both valuable tangible and intangible assets. Whereas Amarin doesn't. In its current state, Amarin is a paper company with all its value in the intangible assets - patent, rights, labeling, etc.
AF - nice analysis.
All that volume up around 23-25 has created big resistance to higher prices so I dont see prices going higher than around 23-24 pre the FDA label announcement. Once announced and if positive, prices can then be marked up and over the resistance. The marketmakers know exactly where the resistance levels are, and so do I. A 50% mark up takes you into the 30s which is the perfect price range for a BO offer in the 40-50s wouldnt you agree?
CJR - thanks for the comparison. It puts this "event" into perspective.
Leland Gershell's statement is really out of blue and off the chart to the least. Hope someone on this board can find a copy of his report to share.
To me, it sounds like that he and his team consider Vascepa (or EPA) the same as O3, or probably a "high-end O3". If that's the case, his statement on sales and competition make sense.
In reality, EPA is different from O3 in both composition and "manufacturing" process, and therapeutic efficacy (as many believe). There will be erosion from DS (which I expect too), but it will be much less than what Gershell projected. I remember Kiwi on this board once said that V sales is also largely driven by reimbursement. I agree with him on this. If Amarin can get more insurances on board and more discount, it will counter the erosion from DS.
Regarding trial and competition, I am only aware of a couple of upcoming O3 trials. Anyone knows of EPA outcome trials other than Reduce It? The past O3 trials or metadata analyses haven't produced any significant CVD outcome results except for modulating subject's lipid profile. In addition, GSK has Lovaza a Rx grade O3. If GSK hasn't planned any trial for Lovaza, it's pretty telling that not every BP is convinced O3 is the worker here. I doubt AZN would have started a trial for EPANOVA if it had known the results of Reduce It. But let's see what STRENGHT and others can tell us.
As for buyout, the potential buyers should have their own due diligence teams to make their own assessment, not based on some analysts' report. Amarin was a bo target back in 2011-12. Assuming that many of the same BPs are still interested, I bet that none of them will buy into Gershell's analysis because if they still can't tell EPA from O3, then they shouldn't be looking into this deal.
SonamKapoor- sorry for my late response. Glad to know you're interested in the topic of alt-source of EPA. Shoot me an email at wfl1777@yahoo.com We can chat more there.
I haven't crunched numbers to see which one makes more economic sense for EPA production - fish farming or algae farming. But conceptually, algae sounds a more sustainable way to do so because it can be adapted to the industrialized production for scaling easier than fish. Plus there is already a successful precedent case - Martek Biosciences (now DSM) has done industrial algae culture for 20 years or so to produce DHA-enriched O3 for infant formula and others. Martek basically created the DHA-infant formula market ($100M or so), and has done studies showing the benefits on infant's brain development. Your second reference seems proving it. Since it's considered an ingredient for food, it only needs to go through the GRAS (or NDI) route with FDA, a more lenient path than drug. EPA has been living in the shadow of DHA because of lack of a market until AMR101 or Vascepa. I am sure after Reduce-It and label expansion, the EPA alt-source research will take off fast as the market is ready and big.
Sonam- Thanks. I'm in SF Bay. I go to Seattle from time to time. I'll reach out to you separately when I have my next trip scheduled. We can swap AMRN stories then.
Raf - yes, I think sp @24 has most of the secondary indications baked in. Now it's left for the primary.