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Amarin (AMRN) is currently at a crucial stage in its development. It is building and training a salesforce adept in cardiovascular pharma sales to push its newly approved drug Vascepa. The company is on the cusp of attempting a massive global launch without a major pharmaceutical partner.

From its website, "Amarin Corporation is a biopharmaceutical company focused on the commercialization and development of therapeutics to improve cardiovascular health. Amarin's product development program leverages its extensive experience in lipid science and the potential therapeutic benefits of polyunsaturated fatty acids. Vascepa® (icosapent ethyl) is Amarin's first FDA approved product and is available in the United States by prescription."


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Amarin released its 2012 annual results yesterday in this PR. The company reported the following accomplishments for Q4:

    • Launched Vascepa® (icosapent ethyl) capsules in the United States on January 28, 2013 for the MARINE indication (use as an adjunct to diet to lower triglyceride levels in adult patients with severe (≥500 mg/dL) hypertriglyceridemia)

    • Hired and trained U.S. sales team, including 275 sales representatives with extensive cardiovascular selling experience and relationships with healthcare professionals targeted for Vascepa along with key sales and marketing hires for Amarin's commercial team

    • Stocked Vascepa at wholesalers and leading pharmacies

    • Achieved > 160 million lives covered by payors

    • Submitted sNDA (supplemental New Drug Application) seeking approval in the United States of Vascepa for use in a second indication (ANCHOR)

    • Submitted two sNDAs for additional active pharmaceutical ingredient ((API)) suppliers: Chemport and BASF

    • Strengthened supply chain with an exclusive agreement entered into by a consortium of companies, led by Slanmhor Pharmaceuticals, Inc., to be Amarin's fourth Vascepa API supplier

    • Increased patents issued or allowed to 18 in the United States, a majority of which have patent terms extending into 2030, with more than 30 additional U.S. patent applications being prosecuted

    • Completed dosing of a fixed-dose combination study with Vascepa and a leading statin

    • Publication of MARINE and ANCHOR Phase 3 trial results in The American Journal of Cardiovascular Drugs

    • Strengthened balance sheet through successful completion of a $100M non-dilutive, hybrid debt financing resulting in a year-end cash balance of $260.2 million

Analysis of Conference Call

The PR was subsequently followed by a conference call. Here's what I've gathered from the conference call. The transcript can be found here.

3 of the Good

1. Amarin's sales staff is onboard and trained. This was a huge obstacle that the company was going to face, bringing on 275 salespeople and getting them all on the same page to sell Vascepa. It seems to have done this efficiently and quickly. Now, it's up to it to perform.

The sales team has now been in the field for several weeks, meeting with clinicians. While it is too early in the process for retaining conclusions about our initial launch, we're pleased to-date with the progress that our sales representatives are making out in the field. - Joseph S. Zakrzewski - CEO

2. Initial data appears to be stronger than Lovaza.

"One look, and again I think if you look at the IMS data you compare the weekly you'll see that Vascepa at least for now is ahead of where Lovaza was initially in the first three weeks, not that, that means anything, again it's got to be the months, okay." - Joseph S. Zakrzewski - CEO

3. The company has increased patents and has $260 million in the bank to do their business with.

We increased patents issued or allowed to 18 in the United States, with a majority of the patent terms extending to 2030 and beyond. We are still prosecuting over 30 additional U.S. patent applications, completed dosing in a PK study or a fixed-dose combination of Vascepa and a leading statin. We published additional MARINE and ANCHOR Phase 3 trial results in The American Journal of Cardiovascular Drugs and strengthened our balance sheet through successful completion of a $100 million non-dilutive, hybrid debt financing resulting in a year-end cash balance of approximately $260 million. - Joseph S. Zakrzewski - CEO

3 of the Bad & Ugly

There were a number of cautious, bearish sounding indicators I gathered from the conference call. Here's just some, with my emphasis in bold:

1. There was absolutely zero Vascepa information offered in regards to 2013. No metrics, no prescription numbers, no guidance. This is the big piece of the puzzle for Amarin, and the biggest reason I still remain bearish here. It's going to be put up or shutup time soon for Vascepa data - until the market gets that, expect the stock price to continue to fall.

Amarin has not provided specific guidance regarding Vascepa sales targets and it is too early to make accurate assessments on the sales [front] of the product. - Joseph S. Zakrzewski - CEO

First, we do not believe that we can provide a reasonably accurate forecast of Vascepa revenues at this time and accordingly just consistent with the disclosures of most companies launching their first product we provide no quantifying guidance at this time with respect to anticipated 2013 revenue levels for Vascepa. - Frederick Ahlholm - VP, Finance and Administration

2. Stocking, sampling, incentives and discounts are costing the company a lot of money and are going to hurt margins in 2013.

The result of these factors is that as we move to 2013, we anticipate supply volume to increase, even if the actual dollar spent on a quarterly basis remain somewhat consistent. In addition, in order to help ensure the wholesalers and select pharmacies were adequately stocked with Vascepa, prior to our commercial launch, we offer these wholesalers and select pharmacies special stocking discounts. And as discussed earlier, we're offering cards to patients that reduce their co-pay amounts to $25 per retail during 2013, as we were to move fair coverage from Tier-3 to Tier-2.

For these reasons we anticipate that our gross margin for Vascepa sales will be significantly lower in 2013 than in subsequent years assuming that sales volumes increased. - Frederick Ahlholm - VP, Finance and Administration

I think as we get through the second quarter, into the second quarter at the end of the first quarter I think we'll get a real better handle there. The lessons there is plenty, for competitive reasons I can't comment on those, because there are others out there both following us and ahead of us and I want to make sure we're protecting that. And then in terms of sampling, we've done a lot, there's a lot of sampling out there. - Joseph S. Zakrzewski - CEO

3. Management sounded incredible unsure of themselves. The entire tone to the call sounded dull and grim, there was nary a spark of excitement from anyone that spoke. They used the word "pretty," as in "pretty good" a few times - that struck me as odd to hear:

But for the most part again, early indications anecdotal feel pretty good, but it's going to be a while before we know.

Again I think it's too early to really characterize and compare them beyond that, but we are pretty encouraged. Again we've been out for several weeks.

You can sort of go beyond the first quarter I think and even say well what's your script rate and you're sort of sitting here with your auditors making sure that you're not. The key here is to be conservative, not to be overly aggressive, right?

Again I want to remind everybody the first quarter will be those first two months. I think we'll have a better picture, even then I think you're going to need to actually continue to see where this sales trajectory goes. - Joseph S. Zakrzewski - CEO

Conclusion -- Why I'm short-term bearish, long-term undecided.

I've been on the fence about Amarin since I started looking into it. I've watched Feuerstein and Heisenberg battle each other over specifics regarding Vascepa and have watched the stock trickle down over the last few weeks.

The fact of the matter here is regardless of how Vascepa performs in the long term, Amarin stock is going to continue to fall without any type of sales data, which looks to be a few months off at best. It also appears that the company isn't excited about delivering initial data or margins due to the massive costs incurred with initial setup, so it'll likely be months from then when we are offered true, objective insight.

For the long term, I'm still on the fence. It's going to be a "show me the money" situation for Vascepa. But, in the short term, Amarin looks to this investor to be a safe stock to short. Best of luck.

Source: Amarin Q4 Call Leaves A Fishy Taste In My Mouth