Rewind to the end of 2019, and in the dead of winter, the sun appeared to be shining on biotech Amarin (AMRN). Vascepa, the company’s high triglycerides treatment and only product, had just received label expansion approval from the FDA, and a large commercial opportunity beckoned.
But the rug was pulled out from underneath Amarin’s feet in one swift move. In March, the company lost a patent trial against two generic drug makers, Dr. Reddy’s and Hikma Pharmaceuticals, seeking to sell their own versions of Vascepa. Accordingly, a massive sell off ensued. Amarin has since filed its appeal, and the generic drug makers are expected to respond this month.
The bad news didn’t end there. Following Vascepa’s label expansion, Amarin intended to ramp up marketing spend with the deployment of a large sales force. However, as COVID-19 hit and stay-at-home measures were put into place, the move was aborted. With society opening up again, Amarin has just announced it intends to get its sales force out into the field by July, but Oppenheimer analyst Leland Gershell believes the move won’t turn the tides.
“While the pandemic has admittedly impacted Vascepa growth, the consistent trend of lackluster pickup since December’s label expansion fuels our concern that the return on sales from increased marketing spend will disappoint and ultimately hurt profitability,” said the 5-star analyst.
Gershell estimates the roughly $80 million in additional marketing spend implies approximately “17% SG&A increase in 2H20 vs. 1H20.”
What’s more, data indicates Vascepa sales have been sluggish, on track to show no growth in 2Q.
This is a worrisome trend for Gershell, who stated, “Vascepa weekly NRx scripts saw decline in latter part of March and through April with social distancing and patients skipping doctor’s visits. In May, weekly TRx stabilized around ~58,000 and NRx has slowly increased to ~22,500, which concerns us following the increase from 400 to 800 reps.”
Add to the mix the recent FDA approval for Hikma’s generic equivalent of Vascepa, as well as the fact that the trial’s final conclusion is still one to two years away, and the outlook becomes difficult to gauge.
Gershell, therefore, stays on the sidelines with a Perform rating. The analyst has no fixed price target. (To watch Gershell’s track record, click here)
On balance, the rest of the Street appears more optimistic. 7 Buys and 5 Holds add up to a Moderate Buy consensus rating. With an average price target of $16.29, the analysts forecast upside potential of 141% over the next 12 months. (See Amarin stock analysis on TipRanks)
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