Amarin (AMRN) investors received a nice gift going into the weekend, after shares of the biopharma increased by almost 12% on Friday. The boost came on the heels of Thursday’s FDA AdCom vote in favor of extending the label on the company’s flagship drug, Vascepa, to include patients at risk of a heart attack and other major adverse cardiovascular events. The FDA is set to make a final decision on December 28, 2019.
Vascepa is an FDA approved fish oil capsule used alongside a healthy diet to help lower fats (triglycerides) in the blood. The talk now turns to what level of risk the label should include. Although the panel was unanimous in its agreement on secondary prevention patients (patients already being treated for cardiovascular events), the panel was split on whether the label should include primary prevention patients (high risk patients yet to receive any treatment). The REDUCE-IT study on which the results were based wasn’t broad enough to adequately convince the panel that the label should include primary prevention for high risk patients.
Nevertheless, Stifel analyst Derek Archila thinks the AdCom’s vote is a positive one, noting, “We believe approval in secondary prevention alone offers an addressable market that is at least ~10-15 million patients for Vascepa making us comfortable with our ~$3 billion in peak sales estimate… Our diligence with regulatory experts gets us comfortable in an FDA approval for a Vascepa label expansion to include reduction in CV risk based on the REDUCE-IT results in early 2020, which should effectively increase its addressable market size by a factor of 20.” The analyst continued, “We remain buyers here as we see upside to to the mid-$20 range based on the positive panel and think if the FDA grants a label inclusive of primary prevention.”
To this end, Archila reiterated his buy rating on AMRN stock along with a price target of $26.00, which implies about 15% upside from current levels. (To watch Archila’s track record, click here)
4-star H.C. Wainwright analyst Andrew Fein further enhances the bull case, saying, “Based on: (1) the unanimously positive AdCom; and (2) revisiting our projections informed from our encouraging physician survey on market demand for an expanded label, our projected penetrations led us to the same $51 price target based on a more substantiated patient number, and did not differ significantly from our previous estimates. Based on these conclusions, our price target remains unchanged and we believe that with the momentum of the positive AdCom, anticipated expanded label approval could move the stock towards our $51 price target, in our view.”
If everything goes as Fein planned, AMRN stock could rise by a whopping 112% over the next 12 months. (To watch Fein’s track record, click here)
With a background like that, it’s no wonder that AMRN has attracted rave reviews from Wall Street analysts. The stock’s consensus rating is Strong Buy, with 7 analysts giving it the thumbs up in the last three months, while only 2 remain sidelined. Shares sell for $22.60, and the average price target is $29.56; this indicates a potential upside of 30%. (See Amarin stock analysis on TipRanks)