Net Present Value range:
Amarin – Net Present Value
Assumptions:
Current Cost of Goods (COGS) will remain stable; they will rise in price directly with the inflation rate. (This assumption is a worst case scenario; with economies of scale COGS could actually drop. (COGs are currently 25% of revenue – generating 75% gross margins – all of which is being eaten by Admin, Sales, Research, and Development.)
Inflation from 2019 – 2030 will be offset – any increases in COGS / Admin and sales will be covered by corresponding increases in revenue through increased prices for Vascepa.
Amarin will remain the sole licensed vendor of Vascepa in the U.S. until August 2029 (TEVA agreement) and Amarin will maintain patent protection in similar to U.S– sized markets, globally until 2030.
U.S. corporate tax rates will remain unchanged.
AstraZeneca’s Epanova will not have RRR as high as Vascepa and the gastro-intestinal side-effects – mainly diarrhea – will make Vascepa the standard of care for statin-add on care.
Vascepa will have 7-8 years (from 2022-2029) of peak sales after three year ramp up.
25% of 38 million statin-treated people have TG greater than 150. (Market of 9.5 million people in U.S. if Vascepa approved only as a statin add on by FDA.)
Best case scenario: Vascepa is approved for additional 50-70 million people in U.S. with high TG, as a method of CV treatment, regardless of stain add-on. (This scenario would likely occur only if exceptional hard MACE RRR announced at AHA.)
Best case scenario: Vascepa has a global market similar in size to the U.S. market.
Share count will be 370 million.
The range of scenarios:
Doomsday scenario: Amarin has 6 million patients (1/3 of possible statin add on market, U.S. and another 3 million abroad) and generates only 10% net profit (i.e. selling and admin continues to take almost all of gross revenue.) In this scenario Amarin generates $1.44 billion in profit per annum for total net profit through 2029 of $11.52 billion. Net Present Value with float of 370 million shares - $31 dollars per share.
Poor case scenario: Amarin has same market share but reduces admin and sales to the point that net profit is 25% of sales – Net Present Value - $78 dollars per share.
Good scenario: Amarin gets 9 million patients U.S. and 9 million abroad – i.e. the entire statin treated population with high TG. At 10% net profit NPV is $93 per share.
Same scenario of 18 million patients but net profit of 25% - NPV is $233 per share.
Great scenario – same patient population but admin and sales reduced to a net 40% profit – NPV is $373 per share.
Amazing scenario – 50 million patients (half of total possible high TG patients – assuming Vascepa is granted status as a stand-alone treatment for non- statin treated people.) At a 25% net profit – NPV is $649 dollars per share.
Blow-out scenario – 50 million patients and 40% net profit – NPV is $1037 per share. Nearly $400 billion in profits (in current dollars).
So, whether you are just like us holding shares or a Pharma exec looking at acquiring Amarin - the value ranges from $31 per share at worst to over $1000 per share. In a "dream" scenario of 100 million patients, Vascepa could even generate $800 billion or $2000 a share.
I think that great results announced at AHA and we are in the good scenario or better - at least 5 times higher than current share price. Very worst, and we are up only 40-50% from here and I think that really is not that likely. If CANTOR and CITI have done any real analysis of the revenue stream this could generate, I don't understand how they have such conservative price targets of 60 and 50. I think 90-100 per share is a "conservative" PT!
Best regards,
AI
