Amarin Corp Plc (AMRN)

[JRoon71]

The hurdle rate that a BP would use for "maybe" revenues is so high that it places very little value on those future revenue streams. And determining those revenue streams for a DCF calculation is difficult because Amarin is in the unenviable position of already broadcasting to the world that uptake is very challenging for Vascepa.

In other words, we actually have to at least get approvals/reimbursements done for a BP to buy-in to the story that Vascepa has legs.

The issue most investors miss in the BO calculation, is that BP's (or buyers of any company) value certainty over risk, and a clear path to revenue. This is why Sarissa will not just sell the company now. Because a BP simply won't place much value on "unknown" future revenues, especially with the headwinds that Amarin has put in place.

This is in contrast with a phase 3 drug, where a BP will be 100% responsible for the "buildout".

To put this in better context...BP seeks to buy a phase 3 drug used to treat kidney disease, that has just cleared final FDA approval. They know the number of folks impacted by kidney disease. They know what the historical uptake is for other kidney disease drugs, and how much people pay. They can extrapolate out those numbers to the new drug. Compare to Vascepa, where they really have no idea what could happen, because in addition to losing the U.S. patents, they face headwinds with worldwide approvals AND uptake, and also face headwinds because not all members of the medical and scientific community are on board with the efficacy of EPA (thanks Dr. Nissen). This all equals RISK, which they do not like. So even if they make an offer, the hurdle rates will be astronomical.