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Andrew Colburn
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I studied Political Science at Edinboro University with an interest in international relations (particularly China). My first year of investing (2012) I managed 280% growth.
  • Amarin: Looking Into Q4 Earnings 3 comments
    Feb 10, 2014 12:54 AM | about stocks: AMRN

    Warning: The following is stream of consciousness writing at a late hour. It will be short, sporadic, and ADD-like.

    I'm still covering Amarin and here's a look at what to expect for Q4 earnings:

    In the investor presentation for Leerink, it was disclosed they ended the year with ~$190M in cash as of 12/31. At the start of the quarter, Amarin had $225.9M cash on hand. Simple subtraction shows a loss of $35.9M cash for Q4. Take into consideration the past burn rates of $44.9M in Q3 and $52.8M in Q2. Q3 to Q4 cash burn reduction was ~20%. Not a bad reduction, but they also let go 50% of their sales force at the end of October. This should translate to a slightly lower burn rate for Q1 2014. Prescriptions (scripts) have stayed in range and stagnated through much of Q4, bucking the trend they had established since launch. To calculate the estimated reported sales for Q4, I took the average of Q2 and Q3 % difference reported scripts (@184 wholesale/script) vs reported revenue and applied that average (30%) to Q4. My estimated Q4 reported revenue now stands at 10.3M compared to $8.4M of Q3 with an EPS around $-0.22.

    Raise the Jolly Roger:

    Amarin had ~$190M at the end of 2013 which means they will need to raise additional capital (by my estimates of avg cash burn 30M/Q) by the end of 2014 or very early in 2015. As a safe-guard they will most likely raise no matter what before the interim data expected in 2015. What share price that is triggered at will dictate how much dilution shareholders will receive.

    What this means for current shareholders:

    If Amarin is unable to successfully petition the FDA to reinstate the SPA, approve Anchor, or allow clinical data of Anchor to be shown to doctors, sales will likely continue to stagnate. Essentially, Anchor could anchor Amarin mid-voyage.

    To make matters worse, Epanova (via AZN) will likely receive FDA approval for TGs > 500 in May 2014. It will be even more difficult to compete with the massive sales force of AZN if no label change to Vascepa has been made.

    This is not a "bash", I have been and remain a shareholder for nearly 2 years now (reluctantly). I want you to consider the raise that will be necessary to keep Amarin afloat and the short-long term cost to you.

    Weigh your risks and benefits. I personally won't sink a single dime more into this company. Not with the current management and definitely not with FDA actions. I will however keep my existing shares. Not much left to lose at this point.

    RECAP of Earnings Estimates:

    10.3M Rev

    -0.22 EPS

    35.9M Burn

    190M Cash on hand

    Disclosure: I am long AMRN.

    Themes: Biotech, Biotechnology Stocks: AMRN
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Comments (3)
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  • vman-2
    , contributor
    Comments (177) | Send Message
     
    The new NHLBI treatment guidelines released late last year have further narrowed to market for fish oil and related drugs there is little likelihood this drug will ever have enough sales to bring this stock back to life unfortunately. They basically tell doctors to use statins and forget about fish oil, vibrates, niacin, etc.
    19 Feb 2014, 11:32 PM Reply Like
  • Andrew Colburn
    , contributor
    Comments (141) | Send Message
     
    Author’s reply » They need Anchor approval to make it through reduce-it. If Reduce-It shows a 19% or better reduction in CVEs then this will be a huge success. Waiting on the interim data to show a deviation from baseline is key now.
    20 Feb 2014, 09:46 AM Reply Like
  • vman-2
    , contributor
    Comments (177) | Send Message
     
    That would be huge no doubt, mainly because the experts don't think any of these meds outside of statins show any benefit and Vascepta would have proof that it does.
    20 Feb 2014, 12:35 PM Reply Like
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