Recent news about Amarin (AMRN) has plusses and minuses for rumored acquirer Pfizer (PFE).
On the one hand, Pfizer would love to add Ireland-based Amarin’s cardiovascular drug Vascepa to the fold. The fish oil-based treatment, which is already approved to reduce triglycerides, continues to drive Amarin sales, with promise of much more to come. That’s because Vascepa is likely to get FDA approval this fall to extend the drug's use to lower the risk of major cardiovascular events. That label expansion would greatly increase the market for the drug, perhaps into the billions, according to FiercePharma. Given the anticipated approval of the expanded use for Vascepa, Amarin is doubling its sales force to 800.
Increased Vascepa revenues are already responsible for boosting Amarin to record results for the first half of the year. Based on the the company's optimism about the drug, it upped its sales guidance for all of 2019 to $420 million from $380 million.
Pfizer would love to bring Amarin and Vascepa under the company tent. Pfizer is already a leader in cardiovascular, thanks in part to Lipitor, once the world’s best-selling drug. It hopes to add to its leadership with tafamidis, which is used to treat a rare heart disease. Vascepa would make a sweet addition to the group.
On the minus side, at least for Pfizer — and investors who don’t own shares — Amarin would be exponentially more expensive than it was last year. Since then, its market value has exploded by a factor of 10, to a lofty $7.6 billion. Its shares trade at $23.
The cost to acquire Amarin may be too rich for Pfizer, which has said before that while it’s always open to strategic buys, it would be reluctant to spend the kind of money it would take to add Amarin. New Pfizer CEO Albert Bourla said at January’s JPMorgan (JPM) Health Conference that he would prefer smaller deals, according to FiercePharma.
Can investors still ride the Amarin wave? It seems that way. The five analysts who cover the company all rate the shares a strong buy or a buy. The consensus target price is nearly $33.
Jefferies analyst Michael Yee said Amarin’s Vascepa’s sales could top $420 million this year, pushing past the high end of the company’s guidance, FierceBiotech reported. He thinks the FDA won’t convene a panel to talk about the drug’s label. But If they do, "the stock may pause due to recent strong run-up and rally,” he said in a note to investors, cautioning them that a panel review might give investors the jitters.
Disclosure: The author holds no positions in any of the stocks mentioned.
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