Vascepa sparkle set to light up Amarin's fourth quarter revenue
Basking in the glow of its keenly anticipated FDA approval for its fish oil pill in the blockbuster indication of reducing cardiovascular risk in patients already on statins, Amarin on Tuesday unveiled its preliminary fourth-quarter revenue that beat Wall Street estimates.
Amarin expects its total 2019 revenue to come in at, or slightly exceed, the upper end of its previously declared guidance of $410 million to $425 million, driven by the sales of its flagship drug, Vascepa. That works out to roughly $140 million for the fourth quarter, north of the consensus projection of $131 million and Jefferies’ estimate of $135 million, Jefferies analysts wrote in a note.
“Indeed, the company has generally met or exceeded consensus in each of the last 5+ quarters and has continually raised guidance,” they said. “We have confidence in our $3B+ peak estimate and believe the stock remains generally undervalued at its current $21 stock price, or $8.8B fully diluted, implying only around 3x peak sales. We think it’s worth more around $12B or 4x peak sales or another 25%+ upside from here.”
Amarin’s Vascepa, known chemically as icosapent ethyl, is an omega-3 fatty acid derived from fish oil that was originally endorsed by the US regulator as a treatment for elevated triglycerides. However, last month the FDA sanctioned its use in a much broader patient population after a landmark trial — REDUCE-IT — which showed the pill triggered a 25% reduction in the risk for the first occurrence of a major cardio event, and a 26% reduction for 3-point MACE, a composite of cardiovascular death, nonfatal heart attack and nonfatal stroke.
On Tuesday, Amarin reiterated its 2020 sales expectations of $650 million to $700 million and predicted that beyond this year, it expects its net revenue will grow into billions of dollars.
The company also expects its operating expenses to be higher by $200 million to $250 million this year, versus over 2019, triggered by costs associated with the company’s planned expansion of its sales team and REDUCE-IT promotional activities, including direct-to-consumer advertising. These opex estimates are higher than what Wall Street was expecting, but will likely be offset by sales outperformance, Stifel analysts wrote in a note.
One pressing issue for Amarin is the patent litigation it is currently involved in against generic drugmakers Reddy’s and Hikma. The trial begins on January 13, and is expected to last three weeks — a decision is expected by March/April, Jefferies analysts said. “Based on our expert conf calls and diligence, we are hopeful for a settlement before all of that or a positive patent victory which could clear a key overhang for investors,” they wrote.