Last week was quite decent for Amarin Corporation (Nasdaq: AMRN) investors, who saw a 6% rally last Friday in reaction to the company's Q1 2013 financial results. Of particular interest was the continued growth in Vascepa (icosapent ethyl) capsules, which were approved for hypertriglyceridemia patients with 500+ mg/dL concentration in mid-2012. The launch at the end of January 2013 went surprisingly well, although it seems that Wall Street is still underwhelmed by the numbers that have been posted up to this point.
In the first quarter of 2013 (or the quarter ended March 31st, 2013) Amarin reported $2.34 million in product revenues, although the company mentioned $2.9 million of deferred product revenue that will contribute to revenues in Q2 2013 results, which are due in August 2013. The company's total prescriptions have been growing consecutively each month:
The finalized figures from Amarin are in-line with analyst expectations and third party prescription data, and represent a slow but steady grind upwards for Amarin/Vascepa. Additional analyst estimates suggest that Amarin will operate at total losses of $220 M for the fiscal year of 2013, and similar figures in 2014 given that the company will prepare for and execute Vascepa's launch into the ANCHOR indication in early 2014.
Vascepa is on track to meet analyst expectations of ~$80M in total revenues for 2013, although we may see some surprises with the drug's overall trajectory after copayments are reduced by Vascepa's move into Tier 2 coverage. Since it is designed to be a long-term primary care drug that is meant to improve cardiovascular function over more drawn out periods of time, cost-related issues are expected to play a very important role in this drug's eventual success or failure. Lovaza, which generally costs between $280-520 per month (depending on the insurance), should also have problems justifying its price premium.
The ANCHOR indication, which is a nickname for the hypertriglyceridemia indication for patients with triglyceride levels between 200-500 mg/dL, is far larger than the MARINE indication (500+ mg/dL) which Vascepa markets into. The sNDA that was submitted for Vascepa in the ANCHOR indication was confirmed with a PDUFA goal date of December 20th, 2013.
It's generally agreed that Amarin would have an extremely difficult time targeting a patient population that is about ten times to size of its current ~4 million target population, which is why there are renewed expectations of a big pharma buyout or partnership with Amarin in the near future. Having said this, many analysts expect Vascepa sales to jump significantly in 2014 due to indication expansion for a drug that should be well-established at that point. This implies that Amarin should be able to reduce SG&A expenses and realize profits in 2015, or even the end of 2014 depending.
The relatively neutral Q1 results may have caused some disinterest amongst the short sellers, who have already made large profits since Q4 2012 when the company initially announced its intentions to market Vascepa in the MARINE indication without a partner.
Despite the potential of Vascepa - particularly after an indication expansion, the expectation is that Amarin's $202M in cash and cash equivalents will not carry the company quite far enough to realize a profit before a forced financing, even assuming that Vascepa continues to grow with consistency. Although the company was able to raise money last December in a non-dilutive financing, a public offering may hold more appeal for Amarin later on - depending on the situation. Another likely option is an offering of convertible notes.
Without any known catalysts before the PDUFA goal date for the ANCHOR indication (other than the FDA's NCE designation, which is yet to happen) investors should find a way to gauge Vascepa sales as we wait for Q2 2013 results, which will finalize the impact that Vascepa's shift to tier 2 coverage will have on TRx.