Over the course of the first half of 2020, many pharmaceutical companies have seen their stocks soar but in the case of Amarin, the situation has been the opposite. Amarin Corporation plc (NASDAQ:AMRN) stock has actually declined substantially and through the first half of the year, recorded declines of as much as 67.7%.
What to Watch
The bulk of the decline was suffered during the course of the first quarter but the reason behind the remarkable crash was due to an intellectual property ruling that went against Amarin. Considering the sort of decline suffered by the company, it remains an open question of whether the stock is currently undervalued or not.
Earlier this year, the United States District Court for the District of Nevada ruled for two generic pharmaceutical companies with regards to the marketing of Vascepa, which is an important product for Amarin. That being said, it should be noted by investors that the ruling in question is the only application to the sales of products in the United States.
On top of that, Amarin has also appealed against the ruling. However, the market and Wall Street took a dim view of the situation, and soon enough the stock was sent crashing down over the course of the first half of the year. This has come about seen Wall Street analysts feel that this sort of a ruling is going to hit Amarin’s revenues to the tune of billions of dollars in the years to come.
Back in 2019, the United States Food and Drug Administration approved Vascepa as a product that could reduce risks of cardiovascular complications in specific patients. It was also believed that the medicine was going to be prescribed for all sorts of patients depending on the risk. Hence, there was a lot of optimism around Amarin at the time and analysts on Wall Street were projecting annual sales running into billions of dollars.
However, in March, Amarin took a big hit when the ruling went in favor of Dr. Reddy’s Laboratories and Hikma Pharmaceuticals. If the appeal from Amarin fails then it is also going to the company’s agreements with Apotex and Teva Pharmaceuticals, which forbids the companies from marketing generic versions of the product.
It is a problem for investors due to the sheer promise of the medicine and it can be best illustrated by the fact that in Q1 Amarin generated sales of $152 million from Vascepa. That being said, it is also important to acknowledge that the current valuation of the company of only $2.5 billion is an undervaluation and that is something that investors could take heart from.
Earlier this week, the company made a presentation from the REDUCE-IT clinical trial at the American Society for Preventive Cardiology Virtual Summit on CVD Prevention. It revealed that a dose of 4g/day of Amarin can help in reducing first coronary revascularizations by 34%.
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