Amarin Corp Plc (AMRN)

[Jt0082]

Nope, no mentioned at all of ex-US Canada or Europe.

Amarin Corp. (AMRN)
High commercial expectations ahead of AdCom; initiate at Neutral and $17 PT
AMRN
12m Price Target: $17.00
Price: $15.45
Upside: 10.0%
Bullish Street forecasts necessitate near-perfect commercial execution. We initiate coverage of AMRN with a Neutral rating and 12-month price target of $17, which implies 12% upside. Pending FDA approval, AMRN is poised to start promoting Vascepa (already approved for patients with hypertriglyceridemia) with an expanded label in a much broader population, which could drive significant sales growth over the next several years. AMRN filed an sNDA on the back of the positive REDUCE-IT study of Vascepa in patients with residual cardiovascular risk, which demonstrated an impressive MACE risk reduction of 25%. While we are fundamentally positive on the regulatory and commercial outlook for Vascepa given the strong data and our proprietary physician survey work, we believe that consensus expectations have set a high bar for initial uptake vs. prior cardiovascular launches, which could limit share outperformance over the next 12 months.
Catalysts: 1) FDA AdCom to discuss Vascepa sNDA (Nov. 14, 2019), 2) Vascepa PDUFA (Dec. 28, 2019), 3) earnings post-approval (1Q20).
Valuation: Our 12-month price target of $17 is based on a weighted average of our DCF value of $16 (85%) and M&A value of $24 (15%). Our DCF assumes an 11% WACC, consistent with our valuation of other biopharma companies in a similar stage of clinical development with an upcoming commercial launch, and a 0% LTGR given AMRN’s lack of additional pipeline assets. Our M&A value assumes 11x year 3 Vascepa sales in this new indication, consistent with the historical takeout multiple for SMID biotechs.
Key risks: (+/-) FDA approval or rejection of the REDUCE-IT indication for Vascepa, better or worse commercial uptake of Vascepa, and M&A.
Paul Choi
[phone] | [e-mail] Goldman Sachs & Co. LLC
Corinne Jenkins
[phone] | [e-mail] Goldman Sachs & Co. LLC
Aliza Seidenfeld
[phone] | [e-mail] Goldman Sachs & Co. LLC
Key Data
__________________________________
Market cap: $5.1bn Enterprise value: $4.7bn 3m ADTV: $127.5mn United States America-Small & Mid Cap Biotechnology M&A Rank: 2
________________________________
GS Forecast
Revenue ($ mn) EBITDA ($ mn) EBIT ($ mn) EPS ($)
P/E (X)
EV/EBITDA (X)
FCF yield (%) Dividend yield (%) Net debt/EBITDA (X)
EPS ($)
GS Factor Profile
12/ 18
229.2 (108.2) (108.2)
(0.39) NM NM (5.3) -- --
6/ 19
(0.01)
12/ 19E
401.8 (136.9) (137.0)
(0.39) NM NM (2.4) -- --
9/ 19E
(0.17)
12/ 20E
540.9 (150.6) (150.7)
(0.42) NM NM (2.8) -- --
12/ 19E
(0.15)
12/ 21E
656.3 (34.3) (34.6) (0.10)
NM NM (0.7)
-- --
3/ 20E
(0.15)
____________________________
Growth
Financial Returns
Multiple
Integrated
P ercentile 20th 40th 60th 80th 100th
AMRN relative to Americas Coverage
AMRN relative to Americas SMID Biotechnology

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.
Source: Company data, Goldman Sachs Research estimates. See disclosures for details.

67f6e530191a4ce08ededddbee1abd19
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Neutral
Goldman Sachs
Amarin Corp. (AMRN)
Neutral
Cash & cash equivalents Accounts receivable Inventory
Other current assets Total current assets Net PP&E
Net intangibles
Total investments Other long-term assets Total assets
Accounts payable Short-term debt Current lease liabilities Other current liabilities Total current liabilities
Long-term debt Non-current lease liabilities Other long-term liabilities Total long-term liabilities Total liabilities
Preferred shares
Total common equity Minority interest
Total liabilities & equity BVPS ($)
12/ 18 12/ 19E
249.2 549.7 66.5 96.3 57.8 51.6
4.4 10.8
378.0 708.4
0.1 0.9 -- -- 0.0 0.0 7.7 17.0 385.7 726.3
37.6 46.4 34.2 46.6 -- -- 85.4 116.1 157.3 209.1
46.1 23.2 -- -- 30.0 32.7 76.1 56.0 233.4 265.1 21.9 21.9 130.5 439.4 -- -- 385.7 726.3 0.44 1.23
12/ 20E
446.2 102.6 74.6 14.1 637.4 0.8 -- 0.0 17.0 655.2
59.7 49.0 -- 129.9 238.5
23.2 -- 32.7 56.0 294.5 21.9 338.9 -- 655.2 0.95
12/ 21E
460.0 98.7 80.9 16.7 656.3 0.6 -- 0.0 17.0 674.0
56.7 51.4 -- 133.7 241.7
23.2 -- 32.7 56.0 297.7 21.9 354.4 -- 674.0 0.99
Ratios & Valuation
P/E (X)
EV/EBITDA (X)
EV/sales (X)
FCF yield (%)
EV/DACF (X)
CROCI (%)
ROE (%)
Net debt/EBITDA (X)
Net debt/equity (%) Interest cover (X) Inventory days Receivable days
Days payable outstanding
Growth & Margins (%)
Total revenue growth EBITDA growth
EPS growth
DPS growth
Gross margin EBIT margin
Price Performance
12/ 18
NM NM 8.7 (5.3) NM (14,974.5) (567.8) -- (110.9) (12.2) 294.7 89.0 210.1
12/ 19E
NM NM 12.6 (2.4) NM
(5,823.1) (48.4) -- (104.0) (150.9) 234.1 74.0 179.9
12/ 20E
NM NM 9.6 (2.8) NM (19,890.9) (38.7) -- (103.7) -- 283.7 67.1 238.5
12/ 21E
NM NM 7.9 (0.7) NM (561.0) (10.0) -- (102.4) -- 433.5 56.0 324.2
Amarin Corp. (AMRN)
Rating since Oct 15, 2019
Balance Sheet ($ mn)
_____________________________________
Absolute
Rel. to the Russell 2000 Index
Income Statement ($ mn)
Total revenue
Cost of goods sold
SG&A (227.0) R&D (55.9)
(5.3)
434.2
300.5
(133.8) (0.38)
Other operating inc./(exp.)
EBITDA
Depreciation & amortization
EBIT
Net interest inc./(exp.) Income/(loss) from associates Pre-tax profit
Provision for taxes
Minority interest
Preferred dividends
Net inc. (pre-exceptionals)
Net inc. (post-exceptionals) EPS (basic, pre-except) ($)
EPS (diluted, pre-except) ($) EPS (ex-ESO exp., dil.) ($)
DPS ($)
Div. payout ratio (%)
Wtd avg shares out. (basic) (mn) Wtd avg shares out. (diluted) (mn)
--
(108.2)
(0.0)
(108.2)
(7.8) -- (116.3) (0.1) -- -- (116.4) (116.4) (0.39) (0.39) -- -- 0.0 297.2 297.2
15 October 2019
2
_______________________________________
____________________________________
12/ 18
26.6 (137.8) (56.2) NM 76.2 (47.2)
12/ 19E
75.3 (26.6) 1.1 NM 78.8 (34.1)
12/ 20E
34.6 (9.9) (8.9) NM 85.0
(27.9)
12/ 21E
21.3 77.2 77.1 NM 90.0 (5.3)
_______________________________________
Cash Flow ($ mn)
________________________________________
3m
(29.4)% (26.4)%
6m
(18.6)% (14.4)%
12m
(21.4)% (19.2)%
(116.4) (138.0) 0.0 0.1 -- -- 0.1 2.7 2.4 (132.8) (0.9) -- -- -- (0.1) (0.9) -- -- 283.6 439.5 -- --
Source: FactSet. Price as of 14 Oct 2019 close.
__________________________________
Cash flow from financing Total cash flow
Free cash flow
Free cash flow per share ($)
290.1
176.5
(113.6) (0.38)
12/ 18
12/ 19E
401.8
(85.3) (424.4) (29.1) -- (136.9) (0.1) (137.0) (0.9) -- (138.0) 0.0 -- -- (138.0) (138.0) (0.39) (0.39) -- -- 0.0 356.3 356.3
12/ 20E
540.9
(81.2) (584.3) (26.2) -- (150.6) (0.2) (150.7) 0.0 -- (150.7) 0.0 -- -- (150.7) (150.7) (0.42) (0.42) -- -- 0.0 357.4 357.4
12/ 21E
656.3
(65.5) (601.8) (23.6) -- (34.3) (0.2) (34.6) 0.0 -- (34.6) 0.0 -- -- (34.6) (34.6) (0.10) (0.10) -- -- 0.0 357.4 357.4
229.2 (54.5)
Source: Company data, Goldman Sachs Research estimates.
Net income
D&A add-back
Minority interest add-back
Net (inc)/dec working capital
Others 2.8 Cash flow from operations (113.5) Capital expenditures (0.1) Acquisitions -- Divestitures -- Others --
Cash flow from investing
Dividends paid
Share issuance/(repurchase)
Inc/(dec) in debt
Others 6.4
12/ 18 12/ 19E
12/ 20E
(150.7) 0.2 -- (5.5) 2.4 (153.6) (0.1) -- -- -- (0.1) -- 50.2 -- -- 50.2 (103.5) (153.7) (0.43)
12/ 21E
(34.6) 0.2 -- (4.3) 2.4 (36.3) (0.1) -- -- -- (0.1) -- 50.1 -- -- 50.1 13.8 (36.4) (0.10)
AMRN ($)
35 30 25 20 15 10
Russell 2000 Index
1,700 1,600 1,500 1,400 1,300 1,200
Jan-19
Apr-19
Jul-19
Oct-19
67f6e530191a4ce08ededddbee1abd19
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Goldman Sachs Amarin Corp. (AMRN)
Portfolio Manager Summary
Company background
Amarin Corporation is a commercial stage biopharmaceutical company that markets Vascepa for the treatment of patients with elevated triglycerides. The drug was approved in 2012 for patients with hypertriglyceridemia, defined as triglyceride levels >500 mg/dL, which is a relatively small indication (3-4mn people) in the US. However, the company recently filed an sNDA for Vascepa on the basis of strong results from its long-term CV outcomes study (REDUCE-IT), which demonstrated a 25% relative risk reduction of major adverse cardiovascular events (MACE) in patients with elevated risk even with LDL-C lowering therapy such as statins/ezetimibe. The FDA is currently reviewing the application, with an Advisory Committee meeting scheduled for November 14, 2019, ahead of a December 28, 2019 PDUFA date. If approved, the label expansion could greatly increase the size of the addressable market for Vascepa. It would also become the first therapy approved for MACE risk reduction in patients with residual cardiovascular risk remaining after cholesterol management.
Key questions and debates
1) What is the regulatory risk going into the AdCom? While our base case view is that Vascepa will be approved for label expansion in late December, the FDA has historically been cautious on approving Vascepa for this indication. The recently announced Advisory Committee, scheduled for November 14, 2019, has revived concerns that the FDA may potentially not be willing to approve the Vascepa sNDA. While AdComs are common for cardiovascular drugs, it is unclear why the FDA elected to host an AdCom given the overall strength of the REDUCE-It data, though we highlight historical controversy around the approval of Vascepa in this indication, the large patient population that could be affected by its decision, and ongoing questions about the mineral-oil placebo arm as potential reasons for the conservative approach. However, we note that in the past the FDA has guided that CV risk reduction is the clinical rationale for approval of a drug that lowers serum triglyceride levels, and REDUCE-IT clearly demonstrated this benefit. We therefore believe the data from REDUCE-IT supports the approval of the sNDA, but anticipate some noise heading into the event.
2) Can AMRN execute on the REDUCE-IT launch? In our view, the bigger question for the stock performance in the intermediate term concerns commercial execution. It has been historically challenging for a SMID biotech to commercialize a primary care drug given the size of the sales force required to adequately drive adoption in such a large market. However, we believe the data from REDUCE-IT, AMRN’s enhanced sales force, and high physician awareness and interest in the potential label expansion can drive a meaningful amount of share gains despite the availability of generic competition in the triglyceride lowering market. We assume a ramp in line with prior cardiovascular launches and estimate peak penetration of 20%, which implies peak sales of $2.5 bn (not including severe population). However, we believe that consensus expectations set a high bar for initial launch and see downside to near-term estimates, which could limit stock outperformance from here, informing our Neutral rating.
15 October 2019
3
67f6e530191a4ce08ededddbee1abd19
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Goldman Sachs
Amarin Corp. (AMRN)
Exhibit 1: AMRN overview
GS price target is a 12-month time frame
Key Catalysts
Advisory committee meeting Nov. 14, 2019 for the approval of Vascepa to reduce CV risk Vascepa PDUFA Dec. 28, 2019
Where we differ
Launch expectations set a high bar, positive on the long term outlook
Source: Goldman Sachs Global Investment Research, Company data, FactSet.
REDUCE-IT expands market opportunity
Neutral 7 $17 $51
0 0 $32 $26
GS
Consensus
Buy Hold Sell
PT
High Mean Low
Development Stage
Catalyst
Program
Trial
Peak Sales ($M)
PoS
Indication
PC IND Ph1 Ph2 Ph3 Approved
Event Timing
Vascepa
NA
$580
100%
Triglyceride lowering
3Q EPS 3Q19
REDUCE-IT
$2,500
100%
CV risk reduction
AdCom Nov. 2019
Total Opportunity
$3,080
15 October 2019
4
In the fall of 2018, AMRN announced results from its Phase 3 cardiovascular outcomes trial of Vascepa in patients with elevated triglyceride levels on baseline statin therapy (REDUCE-IT). The relative risk reduction (RRR) of 25% based on the 5 point MACE primary endpoint in this population has set a new bar for RRR in patients with residual CV risk on statin therapy, and the company subsequently filed an sNDA in March 2019 to include this indication in the label. With the data in hand, investor focus has shifted to the regulatory outlook and commercial viability of Vascepa in a less severe patient population. While we anticipate some noise and volatility heading into the November 14, 2019 Advisory Committee meeting, we ultimately expect Vascepa to be approved for CV risk reduction in patients with elevated triglycerides and estimate peak sales of over $3.0 bn (2030E). However, we are less positive than consensus on the near-term launch trajectory.
Stable business in hypertriglyceridemia market
Amarin’s first approval in 2012 was based on the Phase 3 MARINE study of Vascepa in patients with hypertriglyceridemia (>500 mg/dL triglyceride levels). There are an estimated 3-4 million Americans in this patient population (source: Christian, et al), and AMRN has successfully commercialized the drug in this market with consistent sequential TRx/sales growth for most of the past 26 quarters (ex-Q1 which is a seasonally weaker quarter). Vascepa has stabilized at approximately 10-12% market share in this population, where it competes with various generic fenofibrates, fibrates, omega-3s, and other products. We anticipate little change in this market from the label expansion, and estimate modest growth over the next several years driven by pricing/population growth rather than significant share gains. We therefore estimate peak sales approaching nearly $600 mn (2030E) in this population compared to management guidance for 2019 sales of $400 mn.
REDUCE-IT: Best-in-class RRR
Last November, Amarin reported topline results for REDUCE-IT, its cardiovascular outcomes trial of Vascepa in patients with residual cardiovascular risk remaining after cholesterol management. The study met its primary endpoint with a -25% relative risk
67f6e530191a4ce08ededddbee1abd19
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Goldman Sachs
Amarin Corp. (AMRN)
Biomarkers
Non-HDL-C (mg/dL)
HDL-C (mg/dL)
hsCRP (mg/L)
EPA (µg/mL)
Patients w/ event (5-point MACE)
Hazard Ratio
Number needed to treat (NNT)
Patients w/ CV death, MI, stroke
Hazard Ratio
Number needed to treat (NNT)
reduction (RRR) of the first occurrence of major adverse cardiovascular (CV) event (MACE) in the intent-to-treat population (n=8,179). Risk reduction was observed across all components of 5-point MACE including: CV death (-20%), fatal/non-fatal heart attack (-31%), fatal/non-fatal stroke (-28%), coronary revascularization (-35%), and hospitalization for unstable angina (-32%). The number needed to treat (NTT) for first occurrence of MACE (5-point) was 21. These results are the best observed for MACE relative risk reduction across a variety of cholesterol-lowering and other drugs on top of baseline statin therapy (which reduce relative risk of 5-point MACE by 25-35%). These results are partially attributed to Vascepa’s effect on triglyceride levels, which were reduced by -18.3% on one year of treatment vs. a +2.2% increase of triglycerides in the placebo are (p<0.001).
Vascepa was well-tolerated and, with the exception of MACE adverse events, there were no significant differences between the placebo + statin and Vascepa + statin arm. Adverse events that occurred more frequently in the Vascepa + statin vs. placebo + statin arm include: peripheral edema (6.5% vs. 5.0%), constipation (5.4% vs. 3.6%), and atrial fibrillation (5.3% vs. 3.9%). Based on these results, we see almost no risk to Vascepa usage vs. placebo, in contrast to other options for triglyceride lowering / CV risk reduction.
Exhibit 2: Biomarkers show improvement in serum levels with Vascepa over placebo
Triglycerides (mg/dL) LDL-C (mg/dL)
Apo B (mg/dL)
Log hsCRP (mg/L)
Source: Company data
Exhibit 3: Key primary / secondary endpoints were also met by Vascepa
n=4,089
23.0%
Baseline
216.5
118.0
74.0
40.0
82.0
2.2
0.8
26.1
Vascepa
0.75 (95% CI: 0.68-0.83)
(25.0%)
21 (95% CI: 15-33)
16.2%
0.74 (95% CI: 0.65-0.83)
(26.5%)
28 (95% CI: 20-47)
n=4,089
n=4,090
28.3%
20.0%
Year 1
175.0
113.0
77.0
39.0
80.0
1.8
0.6
144.0
Baseline
216.0
118.5
76.0
40.0
83.0
2.1
0.8
26.1
Placebo
n=4,090
Bleeding related disorders
Year 1
221.0
130.0
84.0
42.0
89.0
2.8
1.0
23.3
Treatment emergent adverse events
Subjects w/ at least 1 TEAE (%)
TEAE leading to death
Central nervous system bleeding
Most Frequent TEAE
Diarrhea
Constipation
Anemia
Median between group difference @ Year 1
Abs. change
<0.0001 <0.0001 <0.0001 <0.0001
Exhibit 4: Vascepa was well-tolerated, with the most significant TEAE imbalance vs. placebo being peripheral edema
(44.5)
(15.5)
(5.0)
(2.5)
(8.0)
(0.9)
(0.4)
114.9
% change
(19.7%)
(13.1%)
(6.6%)
(6.3%)
(9.7%)
(39.9%)
(22.5%)
358.8%
n=4,089
81.8% 81.3%
30.6% 30.7%
2.3%
2.7%
1.5% 1.1%
0.3%
1.0%
9.0%
6.5% 5.0%
5.4%
5.3%
4.7%
p-value
<0.0001
<0.0001
<0.0001
<0.0001
Relative risk reduction (RRR)
Relative risk reduction (RRR)
Source: Company data
Serious TEAE
Gastrointestinal bleeding Other bleeding
Peripheral edema Atrial fibrillation
Source: Company data
Vascepa
Placebo
Vascepa
Placebo
n=4,090
2.5%
2.1%
0.2%
0.7%
11.1%
3.6%
3.9%
5.8%
15 October 2019
5
67f6e530191a4ce08ededddbee1abd19
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Goldman Sachs
Amarin Corp. (AMRN)
15 October 2019
6
Approval likely; near-term volatility driven by Advisory Committee meeting
At the beginning of August 2019, AMRN announced that the FDA plans to host an Advisory Committee meeting to discuss the sNDA for Vascepa (Nov. 14, 2019), two months after the originally scheduled PDUFA date (Sept. 28, 2019). The FDA did not provide its reasoning for the addition of an AdCom or for delaying the PDUFA, and the stock underperformed on news of the delay and additional scrutiny (-17% vs. -1% for the XBI on the following day). While we cannot speculate as to the FDA’s reasoning, we note that the FDA has historically been cautious about approving Vascepa for this indication.
Vascepa was first approved in 2012, on the basis of results from the MARINE trial, which demonstrated a statistically significant reduction in triglyceride levels compared to placebo (mineral oil) without elevation of LDL-C in patients with hypertriglyceridemia (triglyceride >500 mg/dL). Amarin next sought approval, based on a Special Protocol Assessment (SPA) with the FDA, for label expansion to include patients with mixed dyslipidemia and triglyceride levels of 200-499 mg/dL as an adjunct to diet and exercise. The sNDA filed at the time was based on the ANCHOR trial, a study that hit on its primary endpoint of reduction in triglyceride levels. The FDA ruled to revoke the SPA and not review the sNDA for Vascepa because the clinical rationale for lowering triglyceride levels, reduction in CV risk, was indeterminate based on the results of ANCHOR. While the agency had previously guided that a CV-outcomes study (REDUCE-IT) would be required as a post-marketing study, in this decision it changed the requirement for approval of an sNDA to be positive results from REDUCE-IT. Given this background, we believe the additional scrutiny is consistent with the FDA’s prior decisions on the approval of Vascepa for an expanded indication. However, because the clinical rationale of CV risk-reduction was clearly demonstrated in these results, we believe it most likely that the AdCom recommendation and FDA decision will be for approval.
We expect the issue of mineral-oil activity in the placebo arm to feature in the Advisory Committee discussion, consistent with prior controversy on the mineral-oil control arm used across all Vascepa trials, as some have questioned the potential effect of mineral oil on CV outcomes / serum biomarkers. We believe that AMRN has sufficiently addressed these concerns with data from its MARINE/ANCHOR study and after several years of quarterly review by the Data Monitoring Committee for REDUCE-IT. We also note that, while it is possible that mineral oil had some biological effect on patients in the placebo arm, it is unlikely that mineral oil could account for the 25% difference in risk reduction between the Vascepa and placebo arms. We also anticipate a debate around the appropriate indication for Vascepa. We believe the primary debate will be whether triglyceride levels should be a factor on the label or if the indication should include coronary disease (i.e. a primary prevention vs. secondary prevention population) more broadly. Based on conversations with doctors, we think there is a strong case to be made that Vascepa should be approved for all patients with residual cardiovascular disease regardless of triglyceride level given the risk/benefit demonstrated across TG levels (below/above 200mg/dL).
67f6e530191a4ce08ededddbee1abd19
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Goldman Sachs
Amarin Corp. (AMRN)
15 October 2019
7
Commercial opportunity
If approved, Vascepa will be the first drug with a label that expressly indicates use for cardiovascular risk-reduction in patients who have residual risk of cardiovascular events beyond LDL-C. This encompasses approximately 25% of adults in the US (50-70mn) who have CV risk, 12mn of whom are already on baseline statin therapy, which is a much larger pool than the ~3-4mn who are currently indicated for Vascepa with triglyceride levels >500 mg/dL. Ahead of this label expansion, AMRN has doubled the size of its sales force with plans to target 70-80K physicians compared to 50K today, thereby increasing visit frequency in addition to the number of physicians visited. Based on our conversations with doctors, we understand that these sales efforts are already effectively building awareness of Vascepa among the physician community. Given the strength of the REDUCE-IT data, the likely expanded label, and these enhanced commercial efforts, we believe AMRN will successfully drive greater adoption of Vascepa.
Our conversations with physicians and our proprietary survey of primary care physicians and cardiologists indicate a high level of physician awareness/interest in the potential Vascepa approval. Our conversations indicate that physicians are excited to have such a low-risk tool for providing cardiovascular risk benefit. Compared to prior triglyceride-lowering alternatives (e.g., fenofibrates, niacin) and other options for cardiovascular risk reduction (aspirin, etc.), the safety profile of Vascepa is highly favorable with no major treatment-emergent adverse events in the long-term REDUCE-IT study. As a result, doctors may feel more comfortable prescribing Vascepa for a broad range of patients with coronary disease. One physician did highlight that the current payer environment is prohibitive to off-label Vascepa use, though they would expect that dynamic to improve following an FDA approval for a broader indication, and we would expect payer pushback to Vascepa to diminish over time following approval.
Survey results support good adoption
We conducted a physician survey of 25 doctors (40% primary care, 60% cardiology) to assess the awareness of and interest in Vascepa. Among the doctors surveyed, only 12% had never prescribed Vascepa, though all were aware of the drug. 40% were primarily prescribing Vascepa (on top of statins/ezetimibe) to address residual cardiovascular risk, which a significant portion of respondents (40%) believe 41-60% of their patients have. Aspirin is the second most commonly prescribed agent, but doctors noted efficacy as the most important reason driving a preference for Vascepa. Safety was deemed a less important factor, though the majority of doctors believe Vascepa’s safety is in line with other triglyceride-lowering drugs.
67f6e530191a4ce08ededddbee1abd19
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Goldman Sachs
Amarin Corp. (AMRN)
Exhibit 5: What is your experience with prescribing Vascepa?
Exhibit 6: What percentage of your patients on background therapy have residual CV risk?
88%
Heard of, no experience prescribing Have experience prescribing
12%
1% - 20%
21% - 40%
41% - 60%
61% - 80%
81% - 100%
20%
0%
40%
12%
28%
10/9/2019
Source: GLG
Exhibit 7: What do you primarily prescribe to address CV risk?
10/9/2019 Source: GLG
Exhibit 8: What is the most important factor in choosing Vascepa?
4% 4%
16%
0%
36%
Fenofibrates
40%
Niacin
Aspirin Vascepa Lovaza Other (Please specify):
22%
17% 61%
Efficacy Safety Pricing / reimbursement structure
10/9/2019
Source: GLG
10/9/2019 Source: GLG
Much of the prescribing clearly includes off-label use, and 60% of doctors surveyed indicated that they prescribe Vascepa off-label to 1-20% of their patients – less than 30% of doctors never prescribe Vascepa off-label. That said, it is clearly difficult to get reimbursement from payers for off-label Vascepa, as 100% of doctors acknowledged that it is at least moderately difficult to get reimbursement for off-label prescriptions. Over 20% classified it as very difficult, meaning that Vascepa is denied the majority of the time. These results were relatively consistent with doctors’ assessment of the difficulty in getting reimbursement for on-label use (triglyceride reduction).
15 October 2019
8
67f6e530191a4ce08ededddbee1abd19
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Goldman Sachs
Amarin Corp. (AMRN)
Exhibit 9: For what percentage of patients do you prescribe Vascepa off-label?
Exhibit 10: How difficult is it to get Vascepa reimbursed for on-label use (triglyceride lowering)?
4% 8%
60%
0% 1% - 20%
28%
21% - 40% 41% - 60%
Somewhat Difficult Moderately Difficult
9%
23%
41%
27%
Fairly Difficult Very Difficult
10/9/2019
Source: GLG
Exhibit 11: How difficult is it to get Vascepa reimbursed for off-label use (CV risk reduction)?
10/9/2019 Source: GLG
22%
44%
33%
Moderately Difficult Fairly Difficult Very Difficult
10/9/2019
Source: GLG
15 October 2019
9
Almost all of the doctors we surveyed believe approval of Vascepa for CV risk reduction would increase or significantly increase their prescribing habits. However, over half would apply a minimum triglyceride threshold before prescribing Vascepa, and about 50% would limit use to the secondary prevention patients.
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Amarin Corp. (AMRN)
Exhibit 12: Would you use Vascepa in secondary or primary prevention patients?
Exhibit 13: How would you change your prescribing behavior for Vascepa?
48%
Secondary prevention only Secondary prevention or primary prevention
52%
60%
4%
Significantly Increase Increase Neutral
36%
10/9/2019
10/9/2019 Source: GLG
15 October 2019
10
Sales ramp & peak penetration
We analyzed recent primary care and historical cardiovascular launches to inform our view of how the Vascepa sales trajectory could look upon approval of the REDUCE-IT indication. We included Tricor/Triliplex, Niaspan, Lipitor, and Entresto in our analysis of the first 8 years of sales post-FDA approval for each drug, and found that the ramp to peak sales was broadly consistent across the group (based on the percentage of peak sales reached each additional year after launch, Exhibit 14). In particular, we highlight the early commercialization efforts of Tricor/Niaspan, which were initially marketed with a triglyceride lowering indication by Kos Pharmaceuticals before its acquisition by Abbott Laboratories in 2006, as the most comparable triglyceride-lowering assets to Vascepa. In addition, we note that a doubling of the Niaspan sales force from 2001-2002 drove a near doubling in sales that also benefited from the approval of Advicor (extended release fixed dose combination of niacin + a statin), which suggests that sales force size can have an effect on the sales trajectory of triglyceride-lowering therapies. Our sales forecasts for Vascepa are in line with these historical comps for a CV launch.
With regard to peak penetration, we estimate Vascepa will ultimately reach 20% penetration in the high-triglyceride market, implying peak sales of $2.5 bn (not including severe hypertriglyceridemia patients). Our view incorporates Vascepa having MACE risk-reduction indication beyond statins on the label, and the relatively crowded market of generic triglyceride lowering drugs including other fenofibrates, omega-3s and others. Vascepa today has just over 10% market share in the severe triglyceridemia population seven years after approval, and with the increased sales force and expanded label, we expect the company to be able to drive adoption higher in a broader patient population. For reference, at its peak, Lipitor enjoyed just under 20% market share as the first-in-class statin in a similar (though larger) patient population. We acknowledge key differences, such as the number of branded competitive drugs in the LDL-C market at the time and PFE’s relative size vs. AMRN, but we believe Lipitor provides one of the best analogs for the potential of a first-in-class primary care drug with a MACE relative risk reduction indication.
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Amarin Corp. (AMRN)
Exhibit 14: Cardiovascular/primary care launches for the first 8 years post key approval
Percentage of peak sales reached each year after launch
Tricor
Niaspan
Entresto
Lipitor
Vascepa - GS
Vascepa - Cons.
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Note: FactSet consensus sales estimates used for Entresto as drug were launched in 2015 so 8 years of sales data not available.
Source: Company data, Goldman Sachs Global Investment Research
Exhibit 15: Lipitor: Launch trajectory and peak penetration
% of peak sales/patients (left axis); % penetration (right axis)
15 October 2019
11
Source: Company data, Goldman Sachs Global Investment Research, NCBI
GS vs. consensus
We assume the launch trajectory for Vascepa in this new indication will approximate prior CV and primary care launches, as described above, and find that GS estimates are 20+% lower than consensus in the near-term. While we are generally positive on the commercial opportunity and long-term success of Vascepa in this market, we believe that consensus estimates set a high bar for the early launch (which we have seen with prior cardiovascular launches) and may need to be reset lower post-approval and
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Amarin Corp. (AMRN)
REDUCE-IT launch. This is the primary driver of our Neutral view on the stock, as we see near-term downside to consensus estimates offset by the long-term opportunity and potential for M&A.
Exhibit 16: GS estimates for Vascepa sales vs. consensus
$ mn
$3,000 $2,500 $2,000 $1,500 $1,000
$500 $0
GS estimates
Consensus
Source: FactSet, Goldman Sachs Global Investment Research
Valuation & Risks
We derive our $17 12-month price target for AMRN using a blend of two methodologies: a fundamental value based on a discounted cash flow analysis ($16, 85% weighting) and an M&A value based on a target multiple on EV/Sales ($24, 15% weighting).
Discounted Cash Flow analysis
Our DCF valuation of $16 is based on a discounted cash flow analysis that assumes an 11% discount rate and 0% long term growth rate. Our discount rate is consistent with other companies with clinical candidates in a similar stage of development while our long-term growth rate reflects Vascepa being the only asset owned by Amarin and is consistent with other biotech companies with similar pipeline prospects.
Exhibit 17: AMRN DCF sensitivity analysis
AB=C
Discounted Discount rate Cash Flows
DTV at a perpetual growth rate of
(1%) 1%
Enterprise Value
(1%) 0%
1%
9% $5,377
10% $5,029
11% $4,708
12% $4,412
13% $4,137
$463 $519 $590 $376 $418 $469 $309 $340 $378 $255 $279 $308 $213 $231 $253
$5,840 $5,896 $5,405 $5,447 $5,017 $5,048 $4,667 $4,691 $4,350 $4,369
$5,967 $5,498 $5,086 $4,719 $4,390
0%
-
D
=
E
F
Discount rate
9% 10% 11% 12% 13%
Net Debt (Cash)
Equity Value
(1%) 0% 1%
Valuation per Share
(1%) 0% 1%
$18 $18 $18 $17 $17 $17 $16 $16 $16 $15 $15 $15 $14 $14 $14
($153) $5,993 ($153) $5,558 ($153) $5,170 ($153) $4,820 ($153) $4,503
$6,049 $6,120 $5,600 $5,651 $5,201 $5,239 $4,844 $4,872 $4,522 $4,544
Source: Goldman Sachs Global Investment Research
15 October 2019
12
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2020E
2021E
2022E
2023E
2024E
2025E

Goldman Sachs
Amarin Corp. (AMRN)
15 October 2019
13
M&A valuation analysis
M&A framework: Across our global coverage, we examine stocks using an M&A framework, considering both qualitative factors and quantitative factors (which may vary across sectors and regions) to incorporate the potential that certain companies could be acquired. We then assign an M&A rank as a means of scoring companies under our rated coverage from 1 to 3, with 1 representing high (30%-50%) probability of the company becoming an acquisition target, 2 representing medium (15%-30%) probability and 3 representing low (0%-15%) probability. For companies ranked 1 or 2, in line with our standard departmental guidelines, we incorporate an M&A component into our target price. An M&A rank of 3 is considered immaterial and therefore does not factor into our price target, and may or may not be discussed in research.
We assign AMRN a ranking of “2” (medium probability of M&A) under our departmental M&A valuation framework, as we believe that Vascepa could be an attractive asset for larger biopharmas. As a potentially blockbuster drug in the cardiovascular space, it would make the most sense for a company with an existing primary care/cardiovascular sales footprint where sales could be supported by existing infrastructure.
Over the past 10 years, SMID cap biotechnology companies have been acquired at an average of 11x EV/sales relative to the third or fourth year of sales following the launch of a company’s key asset (see Exhibit 18). In order to derive our theoretical M&A value for AMRN, we have applied this multiple to our estimate for the company’s 2022E Vascepa sales, which would be the third year following a potential launch in the REDUCE-IT indication. Applying this multiple to AMRN’s 2022 Vascepa sales and discounting it back to the present based on an 11% discount factor (in line with our DCF analysis), we derive an M&A value of $24.
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Goldman Sachs
Amarin Corp. (AMRN)
Exhibit 18: Table of historical M&A transactions 2007-2019
Date
1/29/2018 1/22/2018 8/28/2017 1/26/2017 1/9/2017 9/12/2016 8/22/2016 5/16/2016 5/9/2016 1/19/2016 11/6/2015 3/30/2015 3/4/2015 1/11/2015 12/8/2014 12/2/2014 11/24/2014 10/6/2014 8/24/2014 5/8/2014 11/26/2013 11/11/2013 9/5/2013 7/30/2013 7/30/2013 7/29/2013 6/30/2013 4/24/2013 1/22/2013 12/12/2012 6/29/2012 4/23/2012 4/19/2012 1/26/2012 1/7/2012 6/30/2010 3/1/2010 3/12/2009 4/10/2008 12/10/2007 11/19/2007
Cumulative value ($bn):
Deal Value ($m)
$4,820 $11,600 $11,900 $30,000 $5,200 $800 $14,000 $5,200 $275 $363 $2,700 $1,058 $20,989 $5,197 $9,519 $3,509 $840 $675 $8,401 $654 $2,720 $4,267 $911 $811 $796 $9,463 $10,248 $573 $958 $510 $7,094 $1,259 $3,560 $1,154 $2,533 $3,605 $4,078 $1,490 $8,446 $3,401 $2,682
$208.26
Target
Ablynx Bioverativ KITE
Actelion ARIAD Pharma Raptor Pharma Medivation Anacor
Ariad
Biotie Therap.
ZS Pharma Hyperion Pharmacyclics
NPS
Cubist
Avanir
Prosensa
Durata
InterMune
Chelsea
Algeta
ViroPharma
Astex
Optimer
Trius
Elan
ONYX
PROLOR
MAP
YM
Amylin
Ardea
Human Genome Sci. Micromet
Inhibitex
Abraxis
OSI
CV
Millennium
MGI
Pharmion
Acquiror
Sanofi
Sanofi
Gilead
Johnson & Johnson Takeda
Horizon
Pfizer
Pfizer
Incyte
Acorda Therap. AstraZeneca Horizon AbbVie
Shire Merck Otsuka BioMarin Actavis Roche
H Lundbeck
Bayer
Shire
Otsuka
Cubist
Cubist
Perrigo
Amgen
Opko Health Allergan
Gilead
Bristol-Myers Squibb AstraZeneca GlaxoSmithKline Amgen Bristol-Myers Squibb Celgene
Astellas Gilead Takeda Eisai Celgene
Median transaction multiple:
EV/NTM sales multiple
55x 9x 58x 12x 22x 5x 13x 63x 5x 35x 69x 8x 17x 15x 6x 16x 16x 6x 14x 5x 24x 9x 11x 2x 6x 26x 16x 20x 3x 9x 11x 5x 15x 4x 10x 10x 8x 10x 16x 10x 10x
Source: FactSet, Data compiled by Goldman Sachs Global Investment Research
Exhibit 19: AMRN M&A valuation sensitivity analysis
Source: Goldman Sachs Global Investment Research
11x
EV/Sale 2022E Discount Enterprise Net Debt Equity Diluted Valuation/ Multiple Sales ($mn) Rate Value (Cash) Value Shares (mn) Share
9.0x $909 0.791 $6,470 ($153) $6,623 331 $20
10.0x $909 0.791 $7,189 ($153) $7,342 331 $22
11.0x $909 0.791 $7,908 ($153) $8,061 331
$24
12.0x $909 0.791 $8,626 ($153) $8,780 331 $27
13.0x $909 0.791 $9,345 ($153) $9,498 331 $29
15 October 2019
14
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Amarin Corp. (AMRN)
Exhibit 20: AMRN valuations and price target
15 October 2019
15
Source: Goldman Sachs Global Investment Research
Key risks:
1) Better/worse than expected initial launch of Vascepa. The biggest risk for AMRN is the initial launch for Vascepa, which we are currently more cautious on compared to consensus estimates. If the initial sales growth post launch beats/misses expectations, it could shape investor views on the long-term commercial viability of Vascepa.
2) Regulatory risk. While we think it unlikely, there is always the risk that the FDA chooses not to approve the Vascepa sNDA for label expansion to include MACE risk reduction in patients with residual CV risk beyond statin therapy. Such a result would significantly reduce the market opportunity for Vascepa and drive meaningful downside to the stock, in our view.
3) M&A. As with any SMID biotech company, Amarin could be acquired by a larger biopharma, which would present upside to our current view. Potential acquirers would be most likely to purchase the company post-approval for the label expansion, in our view.