Amarin Moving Big And Other Healthcare Sector Notes

| About: Amarin Corporation (AMRN)
This article is now exclusive for PRO subscribers.

Amarin Corp (AMRN) has been a stock in the spotlight for the better part of July already as expectations rise regarding the pending FDA approval decision for AMR-101, Amarin's treatment for high triglycerides that proved to be very successful in multiple Phase III trials.

Aside from a brief period of pullback and retracement earlier this week, thanks in part to some speculation about the content of a meeting between Amarin officials and the FDA, AMRN shares were trucking along again on Thursday, moving higher on very heavy volume while setting a new 52-week high in the process.

The general consensus among investors and analysts who follow the healthcare sector and track FDA approvals is that AMR-101 is about as close to a "shoo-in" approval that you can get when dealing with the unpredictable and often finicky FDA. Shares have traded in kind, moving from prices of under ten bucks just a short time ago to pushing the high teens, as they are now.

While the share price is moving heavy based on the potential of AMR-101 on the open market - it's expected to become a quick blockbuster - the price appreciation also has a lot to do with buyout and/or partnership speculation. It's very much predicted that soon after the announcement of the FDA decision, when a potential buyer or partner knows for sure the outcome of the FDA decision, that Amarin will either look to partner or sell the company outright.

Such speculation drove the share price to nearly twenty bucks shortly after the Phase III data were announced when the Amarin CEO talked about the interest of numerous entities in Amarin and its lead drug candidate.

Given the potential for a nice premium in the event of a buyout - and a probable influx of cash in the case of a partnership - there's plenty of incentive for investors to play this stock, aside from just the pending approval alone - Hence the new 52-week high.

It's also likely, in my opinion, that Thursday's high will not be the cap when it's all said and done. There's little reason to believe, barring any surprising negative developments, that AMRN will not push the highs seen after the Phase III results were released and the buyout speculation ruled the day.

Roughly a week out now from D-Day with the FDA, Amarin is in prime position to move and steal the sector's headline thunder that has been, until Thursday, gone to Vivus Inc (VVUS) and Arena Pharmaceuticals (ARNA).

Until the decision is announced and a partnership or buyout materializes, expect some volatility to go along with a whole lot of investor and media attention.

Also of note in the healthcare sector:

Both Vivus and Arena continued to trade with extreme volatility following their respective weight-loss pill approvals from the FDA. Such action is partly the result of the day, swing and momentum/catalyst traders departing the stock while new, longer term-minded investors take up positions based on the potential of the products on the open market.

Both are expected to become billion-dollar products that will take advantage of America's fascination with the 'do-it-quick-and-magically' mentally - when dieting and exercise would accomplish the same goals in a safer manner - but because many weight-loss products ultimately become fads, there should be some questions raised about the longevity of such products. Even prescription ones.

Both companies are proven winners and have made significant bank for investors, and congrats, but I still couldn't buy into such a gimmick knowing that it is only pure laziness on the part of consumers that it would fuel sales.

In the medical device portion of the healthcare sector, both Sunshine Heart (SSH) and MRI Interventions (MRIC.OB) have declined rather significantly after registering some very impressive gains and are worth a look as mid to long term growth plays. Sunshine ran from the area of three bucks to over seventeen recently while MRI Interventions returned a clean triple shortly before. Both companies are developing products that have proven, thus far, to make highly complex and intrusive procedures much less intrusive and both should also be considered takeover targets by Boston Scientific (BSX) - with whom MRI already has a partnership - or another large player in the industry.

MRI Interventions' products are already gaining steam in the US while Sunshine expects CE Mark approval this year in Europe, has studies underway in Canada and expects to initiate US trials later this year.

Agenus Inc (AGEN) is another one worth taking a look at. The company released news this week regarding the potential widespread use of its popular QS-21 Stimulon vaccine adjuvant, especially by partner GlaxoSmithKline (NYSE:GSK), but Agenus also has the cancer vaccine candidate, Prophage, in Phase II trials. That product would be the real money-maker for Agenus, should early successes continue, and would likely become the primary target in any acquisition deal. Prophage is currently being tested in the treatment of glioma. Results from previous trials in the treatment of kidney cancer were unsuccessful.

Spectrum Pharmaceuticals (SPPI) is still an intriguing play, as well, with that extremely high short interest sparking a squeeze. Shares have been on the move this week - still - but looked to have taken somewhat of a breather on Thursday.

Many are expected the high teens -if not twenty dollar level - for this one as shorts cover in conjunction with earnings.

Disclosure: I am long AMRN.