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Amarin's (AMRN) Q3 Earnings Lag, Sales In Line, Stock Down

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Amarin Corporation PLC (AMRN - Free Report) reported third-quarter 2020 adjusted earnings of 1 cent (excluding stock-based compensation) per American depositary share, missing the Zacks Consensus Estimate of 3 cents. The company had recorded adjusted earnings of 2 cents in the year-ago period.

Revenues, primarily from its cardiovascular drug, Vascepa, were up almost 39.2% year over year to approximately $156 million in the quarter, in line with the Zacks Consensus Estimate.

Please note that the generic version of the company’s sole marketed drug can be launched anytime in the United States, following U.S. District Court ruling in favor of two generic companies in September. A generic launch will negatively impact Vascepa sales going forward. However, the company continues its education and promotional initiatives for the drug.

Shares of Amarin were down 9.6% on Nov 5, following the earnings announcement. The stock has declined 78.9% so far this year compared with the industry’s 1.1% decrease.


Quarter in Details

Product revenues, entirely from Vascepa, were $155.2 million, up 38.3% year over year. Strong demand for the drug continues to drive sales higher. Sales in ex-U.S. market were $0.5 million.

Per IQVIA, normalized prescriptions for Vascepa increased approximately 37% year over year in the United States. The increase in revenues was driven by strong prescription growth as well as recognition of higher net selling price for Vascepa during the quarter. However, demand for the drug was partially hurt due to the COVID-19 pandemic. There were lower face-to-face interactions of Amarin’s sales personnel with healthcare providers, which hurt promotion. Various state and local shelter-in-place and other travel restrictions led to lower patient visits to healthcare providers.

However, normalized prescriptions and patient visits improved significantly in September with gradual removal of restrictions. Meanwhile, we note that the majority of prescriptions during the quarter were for the new cardiovascular risk reduction indication approved based on REDUCE-IT study last year.

Licensing revenues were $1.3 million in the third quarter compared with $0.2 million in the year-ago period.

Adjusted selling, general and administrative expenses were up 45.4% to $110.2 million due to costs related to an expanded sales force and increase in promotional activity to support commercialization of Vascepa.

Adjusted research & development expenses increased 10.6% to $8.5 million due to further analysis of samples collected from REDUCE-IT patients, payment of milestone to its partner and costs to support various publications and pilot studies.

The company ended the quarter with $608 million in cash and investments, compared with $611.3 million as of Jun 30, 2020.

Vascepa Update

Although Vascepa demonstrated strong growth in the third quarter with normalized prescriptions reaching pre-COVID levels, uncertainty on the drug’s prospects continues due to ongoing pandemic and imminent generic competition. Amarin lost its trial against generic companies but has decided to continue with its promotional activities citing huge market opportunity. We note that one of the generic drugmakers in the trial, Hikma Pharmaceuticals launched a generic version of Vascepa in the United States on Nov 5 but in limited quantities.

Dr. Reddy's Laboratories (RDY - Free Report) , another trial participant, is yet to announce a launch date. Amarin previously settled a patent litigation with Teva Pharmaceuticals (TEVA - Free Report) and Apotex Pharmaceuticals related to generic Vascepa granting them right to launch on or after Aug 9, 2029. These two companies may also launch their generic version following the patent trial failure. However, Amarin is planning to appeal against the U.S. District Court ruling in the U.S. Supreme Court.

Due to the COVID-19 pandemic and generic competition, the company did not provide any guidance for the drug’s sales for 2020. Meanwhile, the company is anticipating a potential approval to its under review marketing authorization application for Vascepa in Europe in early 2021 and is currently building its commercial infrastructure to support the drug’s launch in the territory. Moreover, we note that the new cardiovascular risk reduction indication for the drug, launched in January 2020, will not face any generic competition now.

The company continues to pursue additional regulatory approvals for Vascepa in Europe, China and other countries in the Middle East. Amarin is also evaluating Vascepa in pilot studies for its impact on COVID-19 patients. The company does not face any generic threat for any approved indication of Vascepa outside the United States.

The impact of current promotional activities, launch in Europe and other countries, and continuation of demand in the expanded label remains to be seen.

Amarin Corporation PLC Price, Consensus and EPS Surprise

Amarin Corporation PLC Price, Consensus and EPS Surprise

Amarin Corporation PLC price-consensus-eps-surprise-chart | Amarin Corporation PLC Quote

Zacks Rank and Stock to Consider

Currently, Amarin is a Zacks Rank #3 (Hold) stock. BioLineRx Ltd. (BLRX - Free Report) is a better-ranked stock to consider from the drug sector carrying a Zacks Rank #2 ((Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BioLineRx loss per share estimates have narrowed from $1.44 to $1.36 for 2021 in the past 60 days. The company delivered an earnings surprise of 10.36%, on average, in the last four quarters. The stock has risen 19.1% so far this year.

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