Amarin Corporation (NASDAQ: AMRN) has been struggling a lot lately as retail channel prescription data for its EPA capsule Vascepa imply that the drug is starting to slow down its momentum in the MARINE indication (hypertriglyceridemia patients with >500 mg/dL). While the company has seen significant progress since the launch of the drug in January, it is still not causing any excitement in an investor base that wanted to see a big pharma buyout of the company ever since the company reported successful Phase III results.
Despite the incredible strength of the broader market and the biotech sector in particular this year, AMRN is down 14% YTD as of the time of writing. Since the company released Q1 2013 financial results (as discussed in a recent note), the company rallied all the way to $8.00/share before continuous selling brought shares back to the $7.00 per share level.
We also have yet to see the FDA make a decision regarding the NCE (New Chemical Entity) status of Vascepa, which will have a profound positive/negative impact on the value of Vascepa as a product and possibly on the chances for Amarin to receive an attractive partnership or buyout offer from a larger pharmaceutical company. CEO Joe Z's commentary seems to suggest that a partnership is needed prior to the prospective launch of Amarin into the ANCHOR indication due to the sheer number of sales reps that the company would need to market into such a huge primary care indication, although details are scarce for the time being.
Additionally, the market seems disinterested in more recent news which would normally generate some buying interest despite the mediocre market performance of Vascepa in its current disease indication. For instance, the market seemed to gloss over the recently released new data from the MARINE/ANCHOR Phase III trials that shows statistically significant reductions in Apolipoprotein C-III (Apo C-III), which is a lipoprotein that serves as a biomarker for poor cardiovascular health. This bodes well for the REDUCE-IT Phase III trial, which will transition Vascepa from a hypertriglyceridemia therapy into a preventative cardiovascular risk therapy that can be combined with standard statin regimens.
But in general, we haven't seen anything new with Amarin or Vascepa that should change one's opinion on the stock quite yet. The market seems much more preoccupied with oncology drug developers who will be presenting at ASCO 2013 - the American Society of Clinical Oncology meeting that will be held at Chicago between May 31st and June 4th, 2013.
This generally explains why AMRN has been more of a trader's stock than an investor's stock, making exaggerated movements in reaction to news that has little implications on the long term health of Amarin. Despite the volatility, Amarin seems to favor trading ranges which is why the company may be a good candidate for options trades that favor sideways trading within a predetermined range.
As mentioned in other notes, Amarin has a PDUFA goal date of December 20th 2013 for the sNDA that will significantly expand the size and scope of Vascepa's target indication. If Vascepa sales move in line with analyst expectations (which should ultimately approach ~$80M in sales revenues for FY 2013), we may see continued sideways trading in the stock as the market waits for further developments.
One particular strategy that takes advantage of neutral sentiment is the "Iron Butterfly" strategy, where one writes an at-the-money call and an at-the-money put while buying an out-of-the-money call and an out-of-the-money put. This could be very profitable, although the trade would likely go sour in the event that the FDA issues a decision on Vascepa's NCE status in one of its Orange Book updates. The same would also be true if the company announced any kind of partnership or acquisition offer, although a complete lack of any official information on this topic would push away M&A speculators.
Amarin, on the whole, seems to have fallen out of favor in the biotech investment community. This may change as we head closer to December 20th (or after an unexpected announcement), but without a tangible piece of news that can positively affect Vascepa's sales figures or its financial valuation, don't expect much more than a continuation of what we've seen this year.