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Is a Beat in Store for Amarin (AMRN) This Earnings Season?

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We expect Amarin Corporation PLC (AMRN - Free Report) to beat expectations when it reports third-quarter 2019 results on Nov 7, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 300.00%.

Shares of Amarin have outperformed the industry in the year so far. The stock has gained 21.6% against the industry’s decrease of 2.8%.

Notably, Amarin’s earnings history is decent with the pharmaceuticals company outpacing estimates in three out of the last four quarters with the average beat being 67.5%.

Factors at Play

Amarin’s Vascepa demonstrated solid sales on the back of strong demand and an expanded sales force promoting awareness for the drug in the first half of 2019. The drug is approved as an adjunct to diet to reduce triglyceride levels in severe hypertriglyceridemia patients. We expect the momentum to have continued in the third quarter. The Zacks Consensus Estimate for product sales, primarily comprising Vascepa, stands at $111 million.

The company earns fees from its licensed partners related to commercialization of Vascepa outside the United States, which is expected to have increased in the soon-to-be-reported quarter. The Zacks Consensus Estimate for licensing revenues for the quarter is $0.53 million.

In a major development, the company announced in August that the FDA is planning to hold an advisory committee meeting regarding the review of its pending supplemental new drug application (sNDA) for the label expansion of Vascepa to include data from REDUCE-IT cardiovascular outcomes study. The regulatory authority has set a tentative date of Nov 14 against the previously announced PDUFA date of Sep 28 for the sNDA. With the AdCom meeting being scheduled in November, the action date will now be postponed. Investors will likely ask questions on details related to the advisory committee meeting and impact of the delay in approval of Vascepa’s sNDA on the company’s outlook on the third-quarter earnings call.

Investor focus will be on updates on payer coverage for Vascepa, expansion in Canada and Europe, and the impact of competition from other approved drugs, especially Sanofi (SNY - Free Report) and Amgen’s (AMGN - Free Report) PCSK9 inhibitors, Praluent and Repatha, respectively on the third-quarter call.

Amarin has been actively hiring sales personnel to support the launch of Vascepa in the expanded label, following its approval. We expect this activity to have driven operating expenses higher in the soon-to-be reported quarter.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Amarin this time around.  The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (breakeven) and the Zacks Consensus Estimate (loss of 1 cent), stands at +100.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Amarin has a Zacks Rank #3.

Another Stock That Warrants a Look

Here is a biotech stock that you may also want to consider, as our model shows that it has the right combination of elements to deliver an earnings beat in its upcoming release.

AMAG Pharmaceuticals, Inc. (AMAG - Free Report) has an Earnings ESP of +9.76% and a Zacks Rank #2. The company is scheduled to release third-quarter results on Nov 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Sanofi (SNY) - free report >>

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Amarin Corporation PLC (AMRN) - free report >>

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