Amarin Corp. PLC (NASDAQ: AMRN) has been right in the middle of this recent market sell-off, and while shares have been halved, the stock could be poised for a strong recovery. All the pieces seem to be there, with a critical FDA approval at the heart of it.

The Dow Jones industrial average, S&P 500 and Nasdaq are currently all in bear market territory as the result of the coronavirus outbreak. Each index has suffered since mid-February, and no single sector or industry in the stock market has not been touched. Amarin obviously has been hurt in this time, and after underperforming all of 2019, there are questions surrounding its valuation.

Amarin shares have declined about 48% in the past 52 weeks, although most of this drop has come over the past month. At this price level, this pharmaceutical company has a total market cap of $3.8 billion. With its triglyceride treatment winning another approval in December, Amarin could see a surge in revenue growth, which should only push its valuation higher.

Vascepa

Essentially, Amarin is a one-product company. At the center of all this is a treatment called Vascepa. In December, the U.S. Food and Drug Administration (FDA) approved Vascepa to reduce cardiovascular (CV) events in people with elevated triglyceride levels and either established CV disease or diabetes with other CV risk factors. To put it plainly, this drug reduces the risk for heart attacks and stroke.

Vascepa was approved in 2012 for the reduction of elevated triglycerides. The newest FDA approval is based largely on the Reduce-It trial, which found a 25% reduction in risk for major adverse CV events in patients like those in the indication versus placebo.

Keep in mind that like most drugs, Vascepa has side effects, and some of them are serious. They include muscle and joint pain; swelling of the hands, legs or feet; constipation; gout; atrial fibrillation; and serious bleeding.

The company said it would double the size of its sales force to get a wide distribution for Vascepa. The reaction to the news was less than muted, based on the stock price. Amarin estimates that Vascepa could treat millions of Americans with these risk profiles.

Pipeline?

Amarin also has several treatments in trial and study phases.

Its main focus is on the science associated with omega-3, fish oil and lipid disorders. The firm’s aim is to help improve patient care by evolving the science regarding management of lipids, lipoproteins and other cardioprotective factors. In terms of the specifics, Amarin’s therapeutic focus is on lipid disorders, currently hypertriglyceridemia and mixed dyslipidemia. So what is Amarin doing with all this tech?

The firm only has one ongoing clinical trial, which is for another indication for Vascepa. Amarin does not have a pipeline so much as just one blockbuster drug.

Here’s the thing. Amarin has more or less put all its eggs in one basket, and that basket is Vascepa. This might seem like a gamble (it is, in the sense that it’s a calculated risk), but Amarin has won on this before when the drug was approved. The hard part is over. Now, other related indications are being explored for Amarin’s Vascepa.

One major advantage that Amarin has is that no other competition for Vascepa is on the horizon. Acasti Pharma and AstraZeneca made attempts at this and devoted millions of dollars to create drugs that could take market share from Amarin, but neither of these attempts was successful.

Quarterly Fundamentals

Amarin released its 2019 fiscal year and fourth-quarter results late in February. For the quarter, the firm reported adjusted earnings per share of $0.04, beating Wall Street’s consensus of $0.01 per share. The same period of last year had a net loss of $0.09 per share.

Revenues saw massive growth as the result of its only marketed drug, Vascepa. Quarterly revenues increased about 85% year over year to $143 million, while the consensus estimate was $134 million.

Although results for the quarter were strong, Amarin stock still declined, but again this was in the middle of the big market sell-off related to the coronavirus.

Amarin reported fiscal 2019 revenues of $429.8 million, up about 87% year over year. Adjusted per-share earnings totaled $0.02 for the full year, which compares with a loss of $0.33 in the year-ago period.

It’s worth pointing out that revenues for the full year, as well as the reported quarter, were at the highest level recorded by the company.

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