Amarin: Mr. NCE Guy Has Left The Building

| About: Amarin Corporation (AMRN)

The clock has struck nearly 12 months since Amarin (NASDAQ:AMRN) got its FDA approval for Vascepa (icosapent ethyl) capsules for the reduction of triglyceride Levels in adult patients with severe hypertriglyceridemia on July 26, 2012. Since then, every month the bulls have been singing the song "NCE status is coming" and every single month AMRN fails to be granted New Chemical Entity status by the FDA. This past Friday, AMRN failed once again to be granted NCE status.

I think it's time for the bulls to pack it in before the 12 month clock of no NCE status hits next month, the party ends, and AMRN longs wake up and realize AMRN turns back into a pumpkin. NCE isn't coming, and the stock price slide doesn't even begin to make AMRN a bargain yet (if ever). AMRN continues to sport a market cap over $1 billion even while having dismal sales, huge net losses, huge cash burn, and a highly disappointing commercial launch of Vascepa, which began last February. Sure, the stock price has already slid heavily in the last 12 months, but at $1 billion market value (not even including the dilutive effect of options and warrants); it still has a potential long ways to fall.

Chart forAmarin Corporation plc

AMRN bulls desperately need that NCE status to justify the existence and uniqueness of the product. They will claim that Vascepa contains the purest, yummiest, burp-free eicosapentaenoic acid (EPA) the world has ever seen. However, in the end, the active ingredient in its "drug" is the same EPA found in many over the counter fish oil products. Vascepa's claim to wannabe fame is that it is the only prescription-grade fish oil drug that doesn't contain docosahexaenoic acid (DHA). The key words there are "prescription grade." There are plenty of OTC EPA-only products with poor sales such as PLUSEPA, which contains no DHA, as well as ReNew LifeNorwegian Gold Omega EPA 1000 mg, which comes with the claim "the highest potency EPA-only fish oil." Incidentally, there's no evidence that consumers are lining up out the door to purchase either of these.

On Sunday, June 16, the weekly script numbers came out and were met with excitement and applause from the AMRN faithful. On the face of it, they look rather impressive: a 16.28% increase in scripts for the week and a 26.08% increase in new scripts. Wow, what fantastic numbers in only one week! However, a closer analysis is warranted. The week reported is being compared to the Memorial Day week prior, a day when almost every doctor office is closed. So there were 25% more business days available to write scripts for the week and only a 16.28% increase in scripts. The new script rate of 26.08% isn't terrible vs. 25% more doctor office hours. The problem becomes studying further into the chart the number of new scripts of 2,446 is barely any higher than 2,403 new scripts it achieved three weeks prior. What's going on? AMRN has hundreds of sales reps in the field trying to sign up doctors, yet there's basically no increase in the rate in 3 weeks. Once a doctor is convinced to write scripts for her patients, the sale is basically done. So what have the reps been doing the last 3 weeks? Did they not sign up any new doctors or did some of the current ones drop off or reduce their script writing? Were there just less patients going to the doctor in general? Bulls should be disturbed by the lack of growth so soon after a product launch with such a hard push to sell it. AMRN bears, however, should be salivating.

I believe AMRN is and will remain until further notice an excellent stock to short. Bear in mind that there are 25 million shares short that are part of the anti-ARMN party, and the stock is already down a lot, so there is always high short-term risk of profit taking by the shorts. If AMRN actually ever gets NCE, however remote that possibility, it could also potentially cause the shorts to get squeezed.

Disclosure: I am short AMRN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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