Amarin Corp Plc (AMRN)

[august1991]

http://seekingalpha.com/article/1774002-amarin-potentially-worth-3-to-4-without-expanded-approval


We believe that Amarin has become an interesting speculative play at its current price. Certainly there are a lot of potential pitfalls. REDUCE-IT may still not result in label expansion approval and the outcome of that study is not expected until 2016. It is uncertain what peak sales Vasecpa can achieve with only its MARINE indication. As well, Amarin may still need to raise additional capital as it attempts to complete the REDUCE-IT study while continuing to increase Vascepa prescriptions. Amarin may also conclude that it is better to focus all its resources on targeting the MARINE population rather than continuing with the REDUCE-IT study.

The FDA decision does seriously limit the approved target market for Vascepa. However, Vascepa is still approved for its MARINE indication, which could still eventually represent a peak market of $1.2 billion according to Leerink Swann. As well, Vascepa may still be approved for its ANCHOR indication after the REDUCE-IT study is completed. We are going to assess Amarin's value based on its current situation in further detail below.

Slow But Steady Growth In New Prescriptions

After some strong early growth in new Vascepa prescriptions, the rate of increase has slowed, but appears to be growing linearly still. Rolling four week new prescriptions (NRx) have increased from 10,054 during the four weeks ending July 12 to 12,392 for the four weeks ending October 4. Average new prescriptions have increased by around 50 per week over the last 12 weeks, with growth picking up in September.


Four Weeks Ending

NRx

Increase in NRx


February 22, 2013

1,981


March 22, 2013

4,466

2,485


April 19, 2013

6,566

2,100


May 17, 2013

9,057

2,491


June 14, 2013

9,252

195


July 12, 2013

10,054

802


August 9, 2013

10,545

491


September 6, 2013

11,165

620


October 4, 2013

12,392

1,227


Prescription numbers from Symphony

Solid Projected Refill Numbers

We have modeled prescription refill rates at 50% for new users and 70% for users who have already refilled once, with the refill decision time being approximately seven weeks after the last prescription. We have found that this is a fairly accurate fit to past data as the table below shows and will monitor the prediction accuracy going forward.

Projected and actual Vascepa refills based on the above formula


Four Weeks Ending

Projected

Actual


April 19, 2013

1,361

1,647


May 17, 2013

3,059

3,054


June 14, 2013

5,023

5,493


July 12, 2013

7,033

7,076


August 9, 2013

9,000

8,397


September 6, 2013

10,182

9,966


October 4, 2013

11,536

11,642


What this implies is that each new Vascepa user will account for approximately 2.67 prescriptions over their lifetime (also that TRx/NRx will eventually approach 2.67). This is quite similar to Lovaza's 2013 TRx/NRx ratio of 2.80). There may be some slight upside for Vascepa if