Shares of Amarin (AMRN) have been under pressure since the company announced that it received notice from the Food and Drug Administration that the agency plans to hold an advisory committee meeting, tentatively scheduled for November, in connection with its review of the pending supplemental new drug application for expansion of Vascepa labeling based on the REDUCE-IT cardiovascular outcomes study. Initiating coverage of the stock with an Outperform rating this week, Leerink analyst Ami Fadia said she sees the recent pullback in Amarin’s shares as offering a good entry point, an opinion shared by her peer at Jefferies.
ADVISORY COMMITTEE MEETING: A week ago, Amarin announced that it received notice from the FDA that the agency plans to hold an advisory committee meeting, tentatively scheduled for November 14, in connection with its review of the pending supplemental new drug application for expansion of Vascepa labeling based on the REDUCE-IT cardiovascular outcomes study. Accordingly, Amarin does not expect the FDA to take action on the supplemental new drug application by the previously announced September 28 PDUFA goal date. It said, "In light of the tentative AdCom date, Amarin anticipates that the PDUFA date will be extended, assuming a typical three-month extension, to a date in late December 2019. If so, this anticipated revised PDUFA date timing would offset three of the four months that were expected to be gained from FDA's earlier determination to conduct a priority review of the REDUCE-IT sNDA. Prior to such determination, Amarin had expected a PDUFA goal date in January 2020, based on a standard 10-month review. Amarin plans to update the investment community after appropriately definitive information is available related to a new PDUFA date." Amarin said it intends to continue to move forward with its plans to double the size of its sales force to support the launch of Vascepa.
PANEL NOT DUE TO NEGATIVE FINDINGS: In a research note to investors on Thursday, Cantor Fitzgerald analyst Louise Chen pointed out that the panel meeting for Amarin's Vascepa is not being held because the FDA found something negative in its review. Rather, the analyst thinks the FDA may be hosting an AdCom for Vascepa "because the drug will be used in a very large patient population." In a prior note, Chen had argued that the stock weakness in reaction to the news was overdone. The analyst reiterated an Overweight rating and a $35 price target on Amarin shares.
Noting that the American Diabetes Association has included Vascepa for CV risk reduction in its recommended treatment guidelines and the AdCom panel has a majority of endocrinologists, Roth Capital analyst Yasmeen Rahimi believes that "the committee is primed for a positive reception of Vascepa." Additionally, the analyst highlighted that the AdCom Chairperson, Kenneth Burman, previously voted in favor of Novo Nordisk's (NVO) insulin degludec and insulin degludec/aspart when chairing a prior meeting, which Rahimi reads as a strong sign that he is receptive to new therapies and as a positive for Vascepa's review. The analyst reiterated a Buy rating and a $31 price target on Amarin shares.
SELLOFF A BUYING OPPORTUNITY: SVB Leerink analyst Ami Fadia started coverage of Amarin on Wednesday with an Outperform rating and a $26 price target. The analyst told investors that she sees the recent 20% pullback in the stock following news that the FDA will hold an advisory committee meeting to review the supplemental new drug application for Vascepa as offering a good entry point, given she believes that the label expansion will be approved by the agency. If so, Vascepa sales can grow to over $4B in the U.S. at their peak, she contended. Fadia added that the November 14 FDA committee meeting and PDUFA date, which she thinks is likely to be rescheduled for late December, are two catalysts that could drive greater than 20% upside in Amarin shares.
Voicing a similar opinion, Jefferies analyst Michael Yee said he viewed the selloff in shares of Amarin as a buying opportunity and that it was reasonable to have a drug this big discussed in public forum. While the FDA panel brings "some new risk," the corresponding stock selloff more than reflecting this, he added. Yee reiterated a Buy rating and a $30 price target on the shares.
CONSERVATIVE APPROACH: Also commenting on the news, H.C. Wainwright analyst Andrew Fein argued that the FDA's decision could be driven more by the agency's conservative approach to an expanded cardiovascular event risk reduction label potentially impacting tens of millions of Americans than any immediate concerns regarding Amarin's REDUCE-IT results themselves. Management noted the expanded Vascepa label has the potential to be the first indication to impact as many as a third of American adults, and along these lines the FDA holding an AdCom "represents vigilance above all else," the analyst contended. Fein downplayed the significance of the AdCom in terms of "materially influencing" the overall approval path for Vascepa's expanded label and reiterated his belief of Vascepa "as a game changing drug." Further, he believes the AdCom timing can be quantifiably valued and is "only worth" approximately a $2-$3 potential hit to his price target of $51. Fein reiterated a Buy rating on Amarin.
PRICE ACTION: In morning trading, shares of Amarin are fractionally down to $14.77. Since the FDA announcement on August 8, the stock has dropped about 11%, plunging as much as 25% last Thursday in reaction to the AdCom news.
