Blogger Christiana Friedman says the FDA decision for Amarin’s (AMRN) drug Vascepa might not be the make or break for the company. In her words: “Amarin may have already won with Vascepa.” Vascepa is a fish-oil drug for those with lower blood triglycerides and currently is only labeled for people with extremely elevated levels, reaching over 500 mg. A label extension from the FDA would help get the medication to those with levels below 500 mg, despite being on statin therapy. Ultimately, the yes vote would also broaden the drug’s reach.
Amarin presented “REDUCE-IT,” revealing data about the product at a Chicago American Heart Association conference, which doctors responded extremely well to. Most said they planned to prescribe the drug. At the same time, the drug received some backlash over concerns that the results for patients were exaggerated, even though the data showed a reduction of cardiovascular events by 25%. This caused major fluctuation to the stock’s share price following the event.
“In my opinion, how the FDA rules at this point with regards to Amarin’s REDUCE-IT trial just completed is not as relevant as investors may believe at present,” Friedman said.
But Friedman doesn’t deny that the FDA response will wreak havoc, at least temporarily. “…granted that if the FDA does grant the label extension, it would surely benefit Amarin shares overnight and shares would skyrocket the next day. By the same token, if the FDA officially rejects Amarin’s request for an extension of Vascepa’s label, the stock would plummet the next day.”
Friedman says investors should look at the long term. She asserts that Vascepa’s sales and market will grow with the extended label approval more quickly if the FDA “aquiesces,” as Friedman puts it, to Amarin’s request. Nevertheless, levels will grow — just more slowly– if the FDA refuses.
So why does Friedman say it won’t make a difference?
“Because doctors are unlikely to be dissuaded by dubious placebo data implicating mineral oil when faced with a patient with high triglycerides looking for treatment when statins are insufficient. 85% of doctors polled have already indicated that they intend to prescribe Vascepa to their high-triglyceride patients regardless of the drug’s official label,” Friedman explains. She also notes patients have a low risk when taking Vascepa, being that fish oil is its main component.
But the blogger has more — referencing a 2016 Amarin lawsuit where the company sued the FDA and won for the right to advertise Vascepa for off-label use for the patient population they are currently targeting and seeking approval for. Amarin won the case using the First Amendment on the basis that the company has freedom of speech, so long as it markets based on truth.
“That said, there is still a risk of Amarin falling from here if the FDA rejects the request. That’s why hedging with put options on this play could be the best strategy,” Friedman concludes.
It is yet to be seen what will actually happen with Amarin, but in the meantime TipRanks is reviewing what analysts are saying about it. Out of 5 analysts, all are bullish on the stock. The consensus price target is $34.80, showing an 83% upside. (See AMRN’s price targets and analyst ratings on TipRanks)