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Why One Analyst Says This Pharma Stock Will Jump More Than 260% In The Next 12 Months

Why One Analyst Says This Pharma Stock Will Jump More Than 260% In The Next 12 Months

The stock exploded higher this week on a big announcement, but it still has room to climb. Here’s why.

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Shares of biotech firm Amarin (NASDAQ: AMRN) have surged more than 370% this week after the Irish company announced that its fish oil capsule, Vascepa, had been found to reduce the risk of cardiovascular disease by 25% in high-risk patients without side effects.

Vascepa was designed to aide in reducing blood fats in patients with very high levels of triglycerides. The Reduce-It trial for the drug studied 8,179 patients who were already in treatment for elevated cardiovascular risk and taking statins.

The stunning clinical trial result upends years of skepticism surrounding the long-term cardiovascular benefits of products containing the omega-3 fatty acids found in fish oil as Vascepa was found to significantly reduce the risk of death, heart attack, stroke, and other serious cardiovascular events when compared to a placebo.



The company has spent nearly a decade trying to convince regulators of the efficacy of Vascepa. But after the failure of several fish oil trials for rival products, the FDA wouldn’t grant Vascepa more than a niche status.

However, the results of the Reduce-It study far surpassed all expectations. According to Jefferies analyst Roger Song, medical professionals had signaled that a 10% to 15% risk reduction would have been clinically meaningful, opening up Vascepa for use by millions of patients. The 25% risk reduction rate shown in the study blew those expectations out of the water.

On news of the results, analysts began penciling in sales of up to $2.7 billion for Vascepa, which is currently selling less than 10% of that figure.



“We are delighted with these topline study results,” said Amarin president and chief executive, John Thero. Prior to the announcement, the stock had closed at $2.99 and is currently sitting at $13.83 – a level not seen since 2012.

“Given Vascepa is affordably priced, orally administered and has a favorable safety profile, Reduce-It results could lead to a new paradigm in treatment to further reduce the significant cardiovascular risk that remans in millions of patients with LDL cholesterol controlled by statin therapy, as studied in Reduce-It,” Thero said, also noting that the company has already moved to build up its sales team in the U.S.

Citi analyst Joel Beatty said these trial results would “almost certainly” lead to an expanded label for the drug, and said that sales could rocket by $2.7 billion annually compared to around $230 million this year. According to Citi, this estimate assumes that just 2 million of the 50 to 70 million eligible patients would be treated with Vascepa.



Beatty also boosted his price target for the stock to $50 per share, 261% higher than Thursday’s closing price.

There’s buzz that Amarin may now be an attractive takeover target, though the management said in a call that they were not setting up for a sale. Beatty wrote in a note to clients that “There would be a strong cost synergy with a company with a cardiology/primary care sales force.”

While a takeover doesn’t seem to be in the cards for Amarin in the foreseeable future, the promise of this drug could very well push this stock much, much higher.


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