Amarin: Waiting For REDUCE-IT Results
- Amarin indicated that Q1 2018 net product revenues were approximately $43 million.
- This is short of its original guidance for $45 million to $48 million, although wholesaler inventory level changes negatively affected revenues by $2 million.
- I now expect 2018 revenues to be in-line with guidance, compared to previous expectations for exceeding guidance. Amarin will still have plenty of cash by REDUCE-IT results though.
- Top-line results for REDUCE-IT are expected by the end of Q3 2018. This will have a huge potential impact on Amarin's share price.
Amarin (NASDAQ:AMRN) provided an update on its Q1 2018 net product revenues recently and indicated that those revenues fell short of its previous guidance range. While Amarin did reiterate its full year guidance, it seems less likely that it will beat that guidance as I had previously thought. It appears that revenue growth is slowing, but while this is a bit disappointing, the REDUCE-IT results matter far more than current sales growth.
Amarin estimated that its Q1 2018 net product revenue ended up at around $43 million. This was a bit disappointing compared to its original guidance for $45 million to $48 million in net product revenue during the quarter. However, Amarin believes that a decrease in wholesaler inventory levels negatively affected net product revenue by $2 million. Without that impact, net product revenues would have been $45 million, reaching the low end of Amarin's original Q1 2018 guidance.
Based on script information, it does appear that Vascepa's year-over-year growth is slowing noticeably. Vascepa's NRx numbers are reaching new highs, but have been mostly stuck in the 9,000 to 10,000 per week range since July 2017. There is generally upward progress there, but the progress has been fairly slow recently. Amarin indicated that seasonal factors may have affected refills in Q1 2018.
As a result, I think that Amarin's reaffirmed guidance for $230 million in net product revenue during 2018 is still reasonable, but I am reducing my estimate for net product revenue down $10 million from $240 million.
This doesn't have a major impact on Amarin's financial situation, and it remains likely to have around $80 million in cash on hand at the end of 2018 without adjusting for REDUCE-IT results.
Amarin also mentioned that it was on track to report REDUCE-IT results before the end of Q3 2018 as expected. The REDUCE-IT results will potentially have a huge impact on the stock, and other items such as current Vascepa sales trends are of relatively minor importance compared to REDUCE-IT.
Amarin has also received approval for Vascepa in Lebanon, although this market is pretty small. The Lebanese pharmaceutical market is less than 1/250th of the size of the US pharmaceutical market. Vascepa may gain approval in other Middle Eastern and North African countries in upcoming months, although the size of the pharmaceutical market for that entire area combined is still only a fraction of the size of the US market. Approval for Lebanon may be worth a couple hundred thousand per year to Amarin, while the whole Biologix agreement may end up being worth a few million per year to Amarin.
Amarin has released a few pieces of news recently. These include Vascepa's approval in Lebanon and an update on Q1 2018 revenues. The Lebanese approval is a positive, but very minor in impact. The Q1 2018 revenue update is a bit disappointing, but also relatively modest in impact as Amarin's cash situation is fine even if revenue growth slows prior to REDUCE-IT results. Those results (with top-line results expected in Q3 2018) will have a very major impact on Amarin's stock. Most events that happen before those results can be considered to be mostly noise.
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