If you are looking for another successful biotech story in 2020, then look away now. Shares of Amarin (AMRN) have been under the cosh this year, as the company has battled its way through the courts to no avail.
Amarin lost a patent case, and then its appeal too, against generic drug makers Hikma Pharmaceuticals and Dr. Reddy’s, who have their own plans for versions of Amarin’s high triglyceride treatment Vascepa. Investors have jumped ship in the meantime, sending shares down by a mighty 80% year-to-date.
But conversely, if you are looking to pick up some shares on the cheap, SBV Leerink analyst Ami Fadia believes Amarin presents a compelling opportunity.
The analyst reiterated an Outperform (i.e. Buy) rating on AMRN shares, while raising the price target from $9 to $12. Investors are looking at hefty upside of 200% from current levels. (To watch Fadia’s track record, click here)
While Amarin’s hopes for a U.S. market dominated by Vascepa took a severe blow following the negative ruling, Fadia believes Vascepa’s commercial opportunity lies elsewhere, and is one which the rest of the Street is totally underestimating.
“For Vascepa EU sales, we are significantly above consensus (+67% vs consensus for 2023 international sales) and estimate un-risk adjusted peak sales in EU of $2.8B in 2033 driven by 20% penetration in a 9M patient TAM,” Fadia said. “We estimate a TAM in EU5 of ~81% that in the US and believe that Amarin will be able to obtain pricing in EU at parity with the US (we assume 15% discount to US net price). As we get clarity on the EU label through CHMP opinion (likely late 2020) and EMA approval (1Q21), and pricing (in 2021 post approval) we believe the value of the EU opportunity will be better appreciated.”
Overall, the EU opportunity makes up three quarters ($9) of Fadia’s price target. The final quarter is made up of $2 from the rest of the world and just $1 in the U.S.
Fadia expects Vascepa to retain 65% of the U.S. market in 2021, but believes the generics will improve supply in the long run and “meaningfully erode the market by 2022,” as reflected in the small part the U.S. plays in Fadia’s projected share price.
Among Fadia’s colleagues, rating wise, the bulls are slightly in front. AMRN's Moderate Buy consensus rating is based on 6 Buys and 4 Holds. However, the bulls are out in full force where the average price target is concerned; At $10.70, the analysts expect the stock to change hands for a 165% premium over the next 12 months. (See Amarin stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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