Amarin Releases Q3 Results: What You Need To Know

| About: Amarin Corporation (AMRN)

Many biotech investors noticed the impressive 9.3% rally staged by shares of Amarin Corporation (AMRN) last Friday, November 9th. In my ultra-brief recap of the the November 8th (after the bell) earnings release, I pointed towards the company's confirmation that the NCE status of Amarin's flagship drug Vascepa was interfering with M&A activity as the reasoning behind the big rally, but I think that there's room to elaborate.

For a recap on Amarin's situation, centered around the current frustration over the NCE designation that the FDA has not provided yet for Vascepa, here is another article I wrote recently to fill you in

The conference call provided a comprehensive overview for Amarin's current situation, and we did get some key details which made the situation much more clear:

  1. Amarin is still very confident about their patent protection for Vascepa, which almost makes the NCE designation a non-event in their eyes and makes their 8 existing patents and 30 pending patents their key to keep competition away.
  2. As expected, Vascepa will launch in Q1 2013. Amarin will be bought before that, or they will form a partnership with another company, or they will bring the drug to market alone (everyone's least favorite scenario, except for AMRN shorts of course).
  3. Amarin expects to breach the >500 mg/dL triglyceride population (~4 million Americans) relatively easily, but honestly needs help from a larger company to reach the >200 mg/dL (in-between) population (~40 million Americans).
  4. The company is ready to make offers about 250-300 highly experienced pharma sales reps by the end of November, which would allow Amarin to execute a Q1 2013 release of Vascepa if needed.
  5. The NCE decision has been a major factor, interfering with corporate discussions about acquisitions/mergers/partnerships, etc.

The fifth point is key, because Wall Street seems to have boiled Amarin down into a one-dimensional play on Vascepa. Either the company gets bought out at a premium (bullish, since it's estimated to happen in a wide range of $20-40/share) or it gets a very favorable partnership with a large pharmaceutical company that brings enormous royalty revenue - otherwise, the stock is a sell.

Regarding the NCE decision, I do sympathize with Amarin. They have become so frustrated with the FDA's indecision (and its effect on AMRN) that they basically prefer no NCE designation to a non-decision. This means that Vascepa would technically get 3 instead of 5 years of exclusivity, although Amarin (as mentioned earlier) is confident in its patent protection above all else.

The next FDA monthly update for its Orange Book is expected at the end of the 2nd full week of the month, meaning that an update is expected on November 16th. Amarin, Wall Street, thousands of traders and AMRN shareholders, and myself are all hoping for a decision to alleviate the pent-up frustration. Still, the FDA isn't very sensitive to the sentiments of the stock market and may actually not give a decision until December or later.

With everything that is happening around Vascepa as it prepares for its early 2013 launch, AMRN investors and traders need to keep track of the NCE status (when it comes) and watch the stock carefully. The potential for a last-minute M&A deal, especially after a yes or no on the NCE designation by the FDA, is there.

Disclosure: I am long 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.