Coverage Update
Quick take by Cantor
REDUCE-IT Hits 80% of Cardiovascular Events, Continues to Track for Mid-2018 Data
Takeaways
¦ AMRN announced this morning that the REDUCE-IT outcomes study has
reached 80% of the required CV events.
¦ This milestone now triggers the pre-specified safety and efficacy analysis by the independent Data Monitoring Committee, with data expected in 3Q17.
¦ We reiterate our belief that due to a high statistical bar, REDUCE-IT will not be stopped early and continue to the full 1,612 required events.
¦ The study continues to track to have the final CV event near the end of 2017 with final results expected in mid-2018.
Summary
This morning AMRN announced the onset of 80% of the targeted aggregate number of primary major adverse cardiovascular events in the REDUCE-IT outcomes study. This event now triggers the pre-specified safety and efficacy interim analysis of the DMC. Data from this analysis is expected in 3Q17. Though the company continues to reiterate, as we do, the belief that REDUCE-IT will continue to the full 1,612 target events, we note that following the 60% target
event analysis in Sept. 2016, the stock experienced some weakness as we believe some investors look for the early stop. REDUCE-IT continues to track to have the final event near the end of 2017 with data being announced in mid-2018. AMRN also continues to educate cardiologists on the REDUCE-IT trial, having recently published an article in Clinical Cardiology on the rationale and design of the study.
Investment Thesis
We rate AMRN Overweight. Amarin currently markets Vascepa, a purified type of omega-3 for decreasing high triglyceride levels. We believe, however, that a potential positive read-out from the REDUCE-IT outcomes study expected in mid-2018 could not just expand the indicated patient population of ~4M to ~75M, but also for the first time have an outcomes study that draws a straight line between triglyceride levels and cardiovascular risk, possibly changing how cardiovascular risk is managed and treated, potentially creating a multi-billion dollar market opportunity.
Valuation Summary
Our $6 price target is based on a 2030 tax-adjusted, probability adjusted DCF with a conservative assumption of 55% probability of success for the REDUCE-IT trial.
Valuation
Our $6 12-month price target is based on a 2030 tax-adjusted, probability-adjusted DCF with a conservative assumption of 55% probability of success for the REDUCE-IT trial.
Risks
Amarin Corporation is a commercial stage company though still involved in the clinical pathway to expand the label for their currently approved product. As such, Amarin is subject to certain risks.
Clinical Risk: Amarin is exposed to clinical development risks. As Amarin is engaged in a first of its kind outcomes trial, these risks are inherent. Vascepa could fail to show efficacy or develop significant safety issues during the clinical trial process. Additionally, the distinction as to what is a clinically meaningful reduction is interpretable.
Regulatory Risk: Actual clinical results and the FDA’s conclusions may deviate from expectations. Many of our model assumptions are based on incomplete clinical data. Ultimately, it is the regulatory bodies of the Food & Drug Administration (FDA) and European Medicines Agency (EMA) that determine the approval process of the Axsome clinical findings.
Competition: There are a number of companies developing or marketing therapies for the treatment and management of triglycerides. In fact there are at least two approved, but not yet marketed products that we believe could take advantage and launch in the light of a positive outcomes read out. These companies may have more marketing resources than Amarin, which would create significant competition in the marketplace.
Patent Risk: Amarin has several rights and patents for its technology and compounds. There can be no assurances that such patents will not be subject to challenges.
