The appeal hearing for Amarin’s (AMRN) high triglyceride treatment Vascepa kicked off on Wednesday and ended on a negative note. The appeals court affirmed the district court's ruling invalidating Vascepa's patents in the US. Accordingly, shares took a merciless 37% plunge over the past two trading days.
As a reminder, in March, Amarin lost a patent court case against generic drug makers, Hikma Pharmaceuticals and Dr. Reddy’s, which are seeking to sell their own versions of Vascepa.
At the hearing’s conclusion, Stifel analyst Derek Archila bluntly stated, “We would not be buying shares here.”
The analyst further said, “Given Vascepa's complexity, we think this will likely be a limited generic market, and we think it will have some residual value. Based on losing the appeal, we expect the generics to launch in 2021 - recall Hikma has already received approval earlier this year for their generic Vascepa. RDY's and TEVA may not be far behind either. While there could be others down the road who seek to develop generic versions of Vascepa, given the complexity in manufacturing Vascepa, we think it's possible only major generics companies may have the capability to actually produce generics profitability, meaning this could be a limited competitive market, though we do expect overall Vascepa volumes to increase meaningfully once the generics enter the market."
As a result, Archila chopped his price target on AMRN to $5.00 (from $8.00), while keeping his rating at Hold. (To watch Archila’s track record, click here)
It remains to be seen whether more analysts revise their Amarin models over the coming days. Currently, AMRN has a Moderate Buy consensus rating based on 6 Buys and 4 Holds. At $14.75, the average price target could provide returns of 223% over the next 12 months. (See Amarin stock analysis on TipRanks)
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