I think you are coming from a perspective the generic suit is a big risk. It's a big overhang but I see it as a minor risk. No way IMO they raised money due to risk of generic suit.
They misread the uptick in scripts a bit, they did not do a good job of determining launch cost and timing (because of surprise Adcom and delay) so they thought they needed to cover expansion for 3 extra months and then they wanted a buffer for:
1) Negotiating from position of financial strength in BO
2) Not having to worry how much launch costs since so well funded
3)Money to pay generics in a settlement if it came to that
4)Street viewed them as low on cash, JT clearly made De-Risking huge priority which means they had to raise cash to de-risk
5) Bankers advised them they could raise more money than any other previous raise, I think they would have raised 2 billion dollars at 18 if there was a market, more money is more options down the line.
If generics actually wins the court case and Amarin feels they cannot win an appeal they immediately sell the company to highest bidder, at that point there is zero reason to GIA if generics are in the market in a couple years so raising money would be pointless. BP can pay 5-7 billion and recoup a lot of that in the next few years, BP could lock up supply at a cost generics will have trouble competing with to maximize the revenue, and then become the leading OTC supplier which could generate 500 million in current indication to 1 billion or more annually if other indications show success down the line.
IN terms of what worries you
1) SP dropping since label-the fear someone know something I believe does not apply, I think AMRN short is what many are doing and the herd is following, not uncommon in Biotech's and Amarin volume makes it more attractive.
2) Short interest is not that high as percent of float, there are many other BO's where the short interest was much higher, people have posted them here and other boards, also stock action similar after FDA approval in tocks that were then BO. Lots of short in number, yes, but not out of the ordinary for this type of stock. Most companies don't get bought out, shorts don't generally weigh that risk very high.
3) Generics will lose this case, I can't see a win by them, nobody has any argument that stands up where they win
4) Seems patents have not been weak, Teva settled quickly, they have filed a ton of patents, more than most companies their size, some will be weak but some are clearly strong
5) One statement like that out of context is not winning a court case but your other point is valid which leads to my list of things to worry about
1) I get the science, I get the potential in other indications but having the best drug in the world does not guarantee the company is the best investment. Amarin themselves are doing zero trials themselves, there are zero possible additional label usages in the next 3-4 years for sure and then who knows. They have the one partnership study with a different version of EPA, who knows how that will play out.
2) Street will continually discount sales as they rise because of the generics 2029 date. If they are doing $5 billion in 2026 and growing other companies would have a huge PE but Amarin will be very low due to the short window to generics. SO what is the real upside knowing you can't get a 20 P/E on your earnings, probably ever?
3)Some other drug comes and surprises with similar/better results-I see this as low but way higher than the generic suit risk. Science does not support this happening, the long time from statin to another drug that works(Vascepa) suggests it won't happen before 2029 but still over 9-10 years that is a risk.
That's basically it for me on GIA risk.
I'm still invested because outside of #3 shocking me the stock will be higher 2+ years from now despite the issues 1 and 2 cause. Just a question of how much higher and whether the upside with those main risks is big enough to stay here and not invest the money elsewhere.
I THINK they could sell for $40 today and also think it's 50/50 whether GIA ever results in a stock price above $40. Thus I believe BO is the way to go but also see where GIA is not ridiculous option.
This is the one decision management needs to get right.
AI
