Cantor coverage initiation Buy, $6 PT
Hook, Line, and Sinker: Connecting Triglycerides and CV Risk; Initiating BUY, $6PT
Investment Summary: We are initiating coverage of Amarin Corporation, Inc. (AMRN) with a BUY rating and a $6 price target. Amarin's lead product is Vascepa (icosopent ethyl), which is approved with a proper diet to reduce very high triglyceride levels. We believe, however, that a potential positive read-out from the REDUCE-IT outcomes study expected in late 2017 could not just expand the indicated patient population of ~4M to ~74M, but also for the first time have an outcomes study that draws a straight line between triglyceride levels and cardiovascular risk, potentially changing how cardiovascular risk is managed and treated and creating a multi-billion dollar market opportunity.
Outcomes Studies Dictate Real-World Adoption: The main reason to own the name, in our opinion, is the potential of positive data from the REDUCE-IT outcomes study. Within the treatment of cardiovascular risk, outcomes studies hold the greatest clinical weight and drive real-world therapeutic adoption. REDUCE-IT is the first prospective cardiovascular outcomes study of any drug in a population with high triglyceride levels despite statin therapy, which if successful, would draw a direct line from high triglyceride levels to cardiovascular risk. The last cardiac event is expected in 2H:17 with full results and publication in 2018.
¦ Going Where No Fish Has Gone Before: Lead product Vascepa differentiates from OTC supplements and other prescription omega-3 options, namely on its purity levels. Vascepa is 96% pure icosapent ethyl (EPA), removing DHA which is found in other omega-3 compositions and is believed to increase LDL-C levels. With a safety and tolerability profile close to placebo, it also bypasses the side effects of statins and fibrates which we believe will bode well in the market.
¦ Patient Population: With positive results from REDUCE-IT, Vascepa's label is likely to expand to not just the 36M with high levels but also to the 34M with borderline levels, for a total marketable patient population of ~74M, a market 18.5x larger than the current label, or 4M US adults.
¦ Commercial Infrastructure in Place: As Vascepa is already a marketed product, we like that the commercial infrastructure is already in place. Amarin has ~130 sales professionals and partnered with Kowa Pharma in mid-2014 for an additional 250. Though Amarin agrees that if the outcomes study is positive, they will have to expand the sales force, we believe that the current 380 should be able to capitalize on the results and drive increased revenue.
¦ Valuation: Our $6 price target is based on an average of a 2026 DCF analysis and a 2021 discounted sales multiple
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