Amarin Corp Plc (AMRN)

[rogerm]

CITI on AMRN
16 September 2014
Continuing REDUCE-IT Will Burn Cash Runway

? Conclusion(s) — We believe AMRN’s announcement on the plans to complete the REDUCE-IT outcomes study could weigh on shares in the near-term. In our note last week (AMRN: FDA’s Denial Expected; Reaction Overdone) we outlined the continuation of REDUCE-IT trial absent of the expanded Vascepa label for the ANCHOR indication as a negative development as it could elevate a financing overhang for AMRN shares. Management said spending on REDUCE-IT trial will be ~$30M-$40M/year with an interim analysis during 2016, and final results in early 2018. We rate AMRN Neutral with a $1.75 TP, and will await management financial guidance during the 3Q:14 earnings call to assess any potential impacts to our estimates.

? Continuing REDUCE-IT Isn’t Cheap — The REDUCE-IT trial (n=8000) is expected to cost $30M-$40M/year with a most likely readout of the results in early 2018. A pre-specified interim analysis after 60% of total events (CV-related events) is expected in 2016, and results from the final analysis of 100% of events is expected in early 2018. We therefore estimate ~$50M-$80M in costs until the interim analysis (depending when in `16), or ~90M-120M in costs until the expected final result is available. AMRN reported $151M in cash and equivalents at the end of Q2, and the company expects cash outflows for 2014 to be < $80M. The cash runway will depend on the ramp and revenues of the ongoing launch of Vascepa in the currently approved setting. We await financial guidance during the 3Q:14 earnings call to gain a clearer picture of the potential financing needs.

?Expansion of Label to Include ANCHOR Indication Remains Unlikely — AMRN’s announcement that they are committed to finishing the REDUCE-IT trial comes after the FDA rejected of AMRN’s appeal of the rescission of the ANCHOR SPA agreement for the 3rd time last week. The FDA has not yet decided on the application for label expansion of Vascepa regarding the ANCHOR indication itself, though the company continues to characterize the chances for the expanded label as “an uphill battle” and we view the chances for a positive outcome as very low.