While Amarin Corp. (NASDAQ: AMRN) investors await the outcome of a crucial patent lawsuit, Wall Street analysts have a positive view on the stock. Of 13 analysts following Amarin, eight have advised Buy while five suggest Hold. The average price target is $17.23

Amarin was trading at $7.42 Tuesday morning, down 2.82%. The S&P 500 was down about 1.5%. Year to date, Amarin is down about 65%, but it’s fared better in recent weeks.

The Fundamentals

So what’s so great about Amarin, a Dublin, Ireland-based drug manufacturer? The company essentially only sells one product, Vascepa, which earned FDA approval in December to reduce the risk of cardiovascular disease. But some analysts think Vascepa is a winner.

Comprised of an omega-3 fatty acid found in fish oil, Vascepa is designed to reduce triglycerides. High levels of triglycerides can lead to hardening of artery walls, which endangers cardiovascular health.

Vascepa is designed to supplement other statin therapy and lifestyle changes for patients with cardiovascular risk, one of the top killers. Someone has a heart attack every 40 seconds in the U.S., and strokes occur at similar rates.

Last week, Amarin touted new study results showing the drug led to a 34% reduction in coronary revascularizations, which includes stents and heart bypass operations. The study was presented by Benjamin E. Peterson, M.D., Brigham and Women’s Hospital Heart & Vascular Center and Harvard Medical School.

Vascepa is currently approved for sale in the United States, Canada, Lebanon and the United Arab Emirates. There’s huge growth potential if other markets open up for the medication. Overseas Vascepa sales hit $6.7 million during the first quarter of 2020, up from $300,000 in the first quarter of  2019.

Amarin’s partner in China is nearing completion of a clinical trial, with results expected to come out later this year. This timeline assumes there will be limited impact from COVID-19.

The marketing authorization application for Vascepa with the European Medicines Agency (EMA) is undergoing review. Amarin expects an approval recommendation near the end of 2020, and associated European Union (EU) approval is expected promptly thereafter, assuming continued limited impact of COVID-19 on the review.

Amarin’s first quarter results, released as April drew to a close, were very positive. Net total revenue more than doubled year over year to a record level on the back of Vascepa prescription growth in the United States. Revenue increased 112% to $155.0 million, up from $73.3 million in the first quarter of last year.

The company reported cash equivalents of $329 million in the first quarter, and liquid short-term and long-term investments of $213.2 million and $81.5 million respectively.

Amarin has also seen success in getting its drug approved by big insurance groups. For example, Vascepa won preferred coverage by “Anthem for Blue Cross Blue Shield plans in 14 states, including California, as well as the insurance plans managed by CVS and certain other insurers,” said CFO Michael W. Kalb.

Pandemic Challenges

The company also increased the size of its U.S. sales force for Vascepa in the first quarter to approximately 800 representatives plus their managers. All these new hires completed training and are interacting with healthcare providers. Commencing in mid-March, those interactions were transitioned to telephonic or other forms consistent with social distancing practices due to the COVID-19 pandemic. But the inability to meet directly with doctors could hamper the efforts of Vascepa reps.

Another potential stumbling block for all pharmaceutical sales is the huge drop of patients seeing primary care physicians. Alarmed by COVID-19, many doctors have moved to telemedicine appointments. But a number of patients simply aren’t seeing their doctors at all. That creates fewer opportunities to address problems with new prescriptions.

A Harvard University study found that primary care visits have dropped by about 50%. Some specialists have seen even bigger declines. Cardiologists have seen visits drop by 61%.

Amarin reports that prescriptions remained at normal rates in the initial days of the crisis, in March. But by April, the company was seeing Vascepa prescriptions dip. “The decline in new prescriptions is not, in our view, a reflection of reduced need for Vascepa but rather a reflection that patients are not going to their doctors for routine visits,” Kalb said in an analysts call on April 30.

COVID-19 has had a huge impact on medical services in urban areas, which Amarin is counting on for sales growth.

The Court Case

The dark cloud hanging over Amarin is a patent lawsuit brought by drugmakers Dr. Reddy’s Laboratories Inc. (NYSE: RDY) and Hikma Pharmaceuticals. Both companies want to make generic versions of Vascepa. But Amarin says its drug is protected by several patents.

Amarin lost the first round back in March when a federal district court in Nevada ruled against it. The case has been appealed to a federal appeals court.

All parties have requested the U.S. Court of Appeals for the Federal Circuit approve an expedited schedule, including a requested briefing in the second quarter of 2020 and an expedited hearing. This proposed timing should facilitate a hearing in the third quarter of 2020 (or perhaps early in the fourth quarter) and position the court to rule thereafter, potentially in 2020 or early 2021.

While Amarin awaits the court decision, it has suspended plans for a big consumer advertising campaign originally scheduled for the middle of this year. “If we win our appeal on the patent litigation, we intend to launch this campaign at that time,” Kalb said.

Of course if Amarin ultimately loses its court battle, everything will be off the table for this company.

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