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Amarin (NASDAQ:AMRN) longs don't really like me. The same kind of way that Carl Icahn and Bill Ackman "don't really" like each other.

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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After the drug's approval, the company decided to forgo any massive pharmaceutical partnerships, bring on their own sales staff, and have a go at launching their one product on their own.

Anyway, every couple of weeks I re-visit Amarin, check to see how the script numbers are coming in, and gather thoughts from other analysts. It's a story that's peaked my interest and I admittedly follow it closely.

I'm just an average investor who's taken notice of Amarin's situation and am offering my analysis. Some stocks I go long, some stocks I go short. Writing about the market helps you realize that in life, you really can't please everybody.

Amarin has enjoyed a significant downfall in price over the past few months, as longs and shorts battle it out over whether the company's "golden ticket" in Vascepa is going to ultimately pay dividends for the company and shareholders alike.

From a technical standpoint, the stock has continued its downtrend, but is showing a bit of a fight at current levels. This technical action has given me pause and made me step back from my 100% short position to ponder hedging.


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It's starting to look like if Amarin can hold the $7.50 level, it may have a chance.

Of late, I've started to look at my short position in Amarin and, while I'm convinced the company has a ton of work to do, I'm starting to think the upside potential might be there for Amarin in an extremely long-term situation ONLY IF it can execute. It is not a coincidence that this company is without a massive pharmaceutical partner and is going it alone after essentially being for sale for many months.

In my last article, I stated:

If you're long, why not consider a 2014 options spread? By then, we'll surely have the major answers that we're looking for about the company. If there was ever a reason to hedge or use caution against a long position, this is it. Amarin is a company built solely around Vascepa. If one fails, so does the other.

I will concede that so far, the script numbers (although not dazzling) have been commensurate with the minimum amount of growth the company wants to have to do $100 MM in sales in 2013. That is, also considering, that no prescriptions are offered at discounts or premiums and that growth does not decelerate. Scripts were up 16.9% week over week, which is still growth; barely adequate growth.


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Since looking at script data neither decelerating nor accelerating, it's made the little voice that hedges in my head think about downside vs. upside potential here. Noting how a recent hedge with Yelp (NYSE:YELP) calls saved my ass on a pretty heavy short position going into its last earnings, I pulled the trigger on some cheap Amarin calls. Oh, the seduction of the options spread; it had me at "hello."

So, we have a few catalysts coming up for Amarin:

  1. earnings on Thursday
  2. ANCHOR approval (?)
  3. subsequent NME status if approved
  4. continued Vascepa script data
  5. possible introduction of generics for MARINE use

The case here remains the same and is really rather simple. Amarin is either going to be an enormous success or an enormous failure, and it all hinges on how well it can continue to execute Vascepa's launch. The next major catalyst after earnings lies in the coming ANCHOR results, which are sure to propel the stock in one direction or the other. So much of the long argument focuses on the coming possibilities of ANCHOR approval; a miss with approval, and it's going to be a major storm for the exits.

Adam Feuerstein echoes some of my bearish concerns still. He recently, on the consensus approved, grammatically well-written article "How I Learned to Stop Worrying and Love Vascepa," commented:

FDA could have granted Vascepa NME already. It hasn't. I do agree with you that Anchor, if approved, is likely to get NME, but that doesn't prevent a generic carve out for the Marine indication.

Yes, generics are very much a threat to AMRN, which is why no partner or suitor has materialized. You're mistaken if you believe Big Pharma is just waiting patiently for FDA to approve Anchor before striking a deal. AMRN has been for sale since before Vascepa was approved with no takers. The company didn't launch Vascepa on its own by choice.

You fail to appreciate the backlash against prescription "fish oil" in the medical community, fueled by the failures like the niacin outcomes study. Demand is falling across the board for these drugs because of concerns that surrogate markers don't lead to real benefit. The Reduce-IT study is a huge risk for AMRN, and without positive data, Vascepa is going to have a hard time making inroads into the Anchor population.

Last week, Amarin announced it was going to be reporting this Thursday after hours.

Having been completely unhappy with the previous quarter's conference call, I'm going to be looking for a couple of things that could potentially turn me a bit more bullish on Amarin (I'm currently weighted about 3 to 1 puts to calls) :

  • an update on ANCHOR status
  • guidance for prescriptions/sales for rest of 2013
  • information regarding how many prescriptions of those out thus far in specific were offered either free, or for a discount
  • a non-funeral-like tone, like the one on the last call
  • progressions with intellectual property

Conclusion

In my world with Amarin, what's new? Script data continues to head up, and I hedged a bit. I bought some very cheap calls to have as a security blanket.

Not unlike The X-Files, part of me wants to believe in Vascepa. The bullish argument is one that could really stand out with the way this stock has dropped over the past few months. These would be considered discount prices. A lack of specific information with regards to Vascepa's launch, like the previous conference call, would be an absolute disaster at this point. They have some preliminary data, so tell me something good if you want me as a long.

I hope that Thursday, Amarin starts to take a stab at some of the caveats I have with the company. I'm investing this as a long-term options strangle, as I'm sure in the years to come Amarin is either going to flourish beautifully or go bankrupt. I don't see any middle ground for this company and I think you'd be hard pressed to find a bull or bear who thinks this stock is going to be trading at $7 a year from now.

Also, I wanted to encourage people, longs especially, in the comments section to let me know specifically what they're going to be listening for in this call. Not all Amarin longs are from the blind-support camp, and I'm sure longs have expectations of what they would like to hear as well. I'd love for longs to share some of those expectations with me.

I've opened my mind and am ready to hear Amarin's argument this Thursday - will it tell us something good?

Source: Can Amarin Make Me A Believer This Thursday?