Analyst Defends Amarin (AMRN) Stock as EU Regulators Say Omega 3 is Ineffective


Amarin (AMRN) stock tumbled nearly 5% yesterday after European regulators deemed all Omega-3 fatty acid pills/medicines in Europe ineffective in preventing cardiovascular events. A research conducted by the European Medicines Agency (EMA) resulted in a statement from the department saying the European Society of Cardiology Congress found no benefit to Omega-3 supplements when it comes to cardiology. Moreover, the authority has forbidden Omega-3 fatty acid capsules from having labels suggesting it is effective in preventing cardiovascular events.

How does that affect the fish oil drug maker’s stock? Cantor analyst Louise Chen says she sees no reason for stock weakness and ultimately reiterates an Overweight rating with a price target of $35, which shows about 136% upside. (To watch Chen’s track record, click here)

Chen presents several reasons why this ruling should not affect Vascepa:

  • Vascepa is not commercially available in Europe and was not a part of the EMA review of effectiveness with mixture drugs in the omega-3 class, so it did not include REDUCE-IT data (An Amarin presentation sharing data showing Vascepa reduces cardiovascular events by 25%) which we think has clearly demonstrated that Vascepa reduced CV events in at-risk patients.
  • Also, the EMA review seems to have been conducted in follow-up to the results of the ASCEND study and other reports from earlier in 2018, all of which showed that omega-3 mixtures did not demonstrate significant cardioprotective effects. Vascepa is not an Omega-3 mixture. Icosapent ethyl is Vascepa’s unique single active ingredient.
  • If anything, if the EMA’s decision leads to future removal of omega-3 mixtures from the EU market, we believe that could provide upside to Vascepa’s ex-U.S. opportunity.

AMRN remains on track to submit a sNDA to expand its labeling for REDUCE-IT in early 2019, with approval expected in late 2019.

Overall, Wall Street is rooting for AMRN to be a winning stock pick, as TipRanks analytics showcase AMRN as a Strong Buy. Based on 5 analysts polled in the last 3 months, all 5 are bullish on the stock. The 12-month average price target stands at $34.80, marking about 135% upside from where the stock is currently trading. (See AMRN’s price targets and analyst ratings on TipRanks)

 

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