Amarin Hits Bumps in the Road
From Day, The (New London, CT) (January 6, 2012)
Jan. 06--Amarin Corp. plc, a promising biotechnology company whose research-and-development headquarters is moving from Mystic to Groton, has been hit hard in the past six months by patent questions and worries about why it hasn't yet formed a partnership agreement with a larger pharmaceutical firm to market its fish oil-derived heart medication.
In the past six months, Amarin's stock, which ended the day Thursday at $6.38 a share, has declined by more than half. It is only a third of the $18 price paid for the stock at its height in May of last year, after positive clinical study results of its heart drug AMR101 resulted in a wildly exuberant market reaction.
The stock was battered again this week, falling nearly 10 percent in premarket trading on a single day when Amarin chairman Joseph S. Zakrzewski once again offered no assurances that the company will complete a strategic alliance to market AMR101 if the U.S. Food and Drug Administration approves the therapy for lowering blood fat. An FDA decision on the new drug is expected sometime this year.
"We have held discussions about collaboration and other strategic opportunities with pharmaceutical companies in the past and plan to continue to hold such discussions in the future," Zakrzewski said in Amarin's annual letter to shareholders. "However, no assurance can be given that we will enter into any such strategic transaction."
Zakrzewski fed speculation by adding that he expects a self-launch of AMR101 would require an initial sales force of 250 to 300 representatives in the United States, with an annual sales goal of $1 billion. In addition, Amarin this week announced that it was planning to issue through its subsidiary Corsicanto Ltd. up to $172.5 million in American Depository Shares to help fund the launch of AMR101 and pay related expenses such as marketing and setting up manufacturing facilities.
"If we do launch AMR101 on our own, we expect to begin hiring a sales force close to the time of AMR101 approval and would seek to initially target the top prescribing clinicians," Zakrzewski said.
Wall Street analysts didn't react with glee to the announcements. Cannacord Genuity's Ritu Baral reaffirmed her belief that Amarin was still worth buying but reduced the company's price target from $35 a share to $25.
"We think Amarin now has enough cash to bankroll an optimal (AMR101) launch and strong leverage in partnership talks," she said in a note to clients. "We strongly believe Amarin remains committed to deal structures that leave the AMR101 asset and the company largely unencumbered."
But Baral added that the market will likely continue to be "jumpy" and "skeptical" in the next few months as Amarin works out intellectual-property issues with the U.S. Patent and Trademark Office.
Of the five analysts who have rated Amarin, the average price expectation is $21.33 a share, which would be more than triple what the stock is trading for today, according to streetinsider.com.
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Posted: January 2012