Update: Amarin Earnings - Company Making Progress

| About: Amarin Corporation (AMRN)


Amarin announced earnings on August 7 and the company has made improvement in a number of areas.

The progress in Vascepa sales and prescriptions have altered our opinion about the stock.

We believe Amarin is currently an attractive speculative play.

Amarin (NASDAQ:AMRN) reported second quarter results on August 7, 2014 and the company has made considerable progress in a number of areas. The company reported basic EPS of $0.09 and diluted EPS of $0.08. However, for the six-month period, the net loss stands at $10.7 million. The most important number in the earnings announcement is the revenue from Vascepa, the lead drug of the company. During the second quarter, Amarin recorded 129% increase in revenues for the drug - Vascepa revenue went up from $5.5 million in the second quarter last year to $12.6 million this year.

On the other hand, cost of goods sold only increased 78.5% from $2.8 million to $5.0 million. As a result of this, the gross margin went up to 61%, compared to 48% for the same quarter last year. The major factor contributing to improvement in the gross margin was lower unit cost of API [Active Pharmaceutical Ingredient]. In simple words, it could simply be called economies of scale due to bulk purchases and lower fixed costs. Despite an increase in revenues, there has been a considerable decrease in operating expenses, including research and development costs - as a result, overall net loss has come down. In addition, there has been considerable improvement in the company's net cash outflow. In the second quarter, the net cash outflow from operations was $11.3 million compared to $27.5 million in the first quarter and $52.8 million in the second quarter of 2013. This represents a 59% sequential and 78.5% year-over-year decrease in net cash outflow.

Strong growth in prescriptions for Vascepa and solid progress in revenues from the drug has altered our view of the company - furthermore, the decline in price over the last few months have made it an attractive speculative play, in our opinion. Currently, the risk-return profile of the stock is looking attractive. The company has been able to control its operating expenses and grow revenues from its lead drug. However, the regulatory issues still remain - we talked about the company in this article, but we believe things have improved over the last few months and it might prove to be a good pick.

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