Analyst Roundtable: Any Surprises in Amarin Corporation plc (ADR) (AMRN)’s Fourth Quarter?

Page 1 of 2

Motley Fool health care analyst Max Macaluso and Fool contributor Brian Orelli sat down to discuss Amarin Corporation plc (ADR) (NASDAQ:AMRN) , a biotech that recently launched its first drug, Vascepa. Their conversation follows:

Max Macaluso: So, Brian, Amarin Corporation plc (ADR) (NASDAQ:AMRN) is a biotech company that we both follow very closely, and it reported its fourth-quarter results last week. To be honest, I found the conference call almost identical to the presentation management gave at the JPMorgan Healthcare Conference in January, and I actually found it a little boring. Were there any surprises in the report for you?

Amarin Corporation plc (ADR) (NASDAQ:AMRN)Brian Orelli: Not really. We knew we weren’t going to get any sales figures since the launch started in the first quarter. I would have liked to see more quantitative rather than qualitative information from management. A few times they mentioned not disclosing information for competitive reasons. That’s reasonable, but it doesn’t help investors value the company.

About the only thing I found interesting is that management mentioned that there were well over 300 attendees on the call. I’ve never heard a company mention that before, and it seems awfully low to me. The average volume for Amarin Corporation plc (ADR) (NASDAQ:AMRN) is 4.5 million shares — and only 300 people are listening on the call? Maybe that’s only call-ins and not people on the webcast like I was.

Macaluso: That’s an interesting point. I also agree that most investors weren’t expecting any earth-shattering news to be released, so I’m wondering why shares were down more than 6% after the report came out. Why do you think the market is responded this way?

Orelli: Biotechs move in weird ways, so it’s anyone’s guess. I heard IMS released sales figures for January, so that could be part of it. But with just three or four days worth of prescriptions — the launch happened on Jan. 28 — it would only be stocking, which only tells you what retailers were guessing demand would be before the launch started, not what the actual demand is.

Macaluso: Why do you think management is playing the Vascepa launch so close to the chest? I realize that they don’t want investors to have high expectations and then risk disappointing them when the initial results come in for Q1, but why not make conservative projections and offer reasonable guidance for 2013? Like you said, if it helps the market value the company more accurately, why not?

Orelli: If they’re conservative, and we know they’re conservative, what’s the point? Celgene Corporation (NASDAQ: CELG) routinely offers conservative annual guidance at the JPMorgan Conference, and everyone just ignores it and tacks on a little extra. And that’s a large biotech that can give accurate information. Amarin’s guidance would be a guess at best.

Macaluso: Management seemed loath to talk about New Chemical Entity (NCE) status for Vascepa last night… and I’m not thrilled that we’re still talking about it more than half a year after the drug was approved! But like it or not, this is still an important catalyst for the stock. Have you ever seen a situation like this, where a drug is approved and the FDA can’t decide whether it’s an NCE?

Orelli: I think there was one a few years ago that dragged on as long or longer than this, but I really don’t see the NCE status as a big deal. The exclusivity is designed for drugs that don’t have any patents. Amarin has patents that extend well beyond five years. Investors that think this is a catalyst are saying, by definition, that the patents might not be valid. If Vasepa is only going to have exclusivity for another 4.5 years, investors need to adjust their valuations.

But I agree that it would be nice for the FDA to just get it over with. If it’s going to say no, just do it and let Amarin Corporation plc (ADR) (NASDAQ:AMRN) sue if it wants to. I’m certainly sick of writing articles about it.

Macaluso: The example you might be thinking of is Sanofi SA (ADR) (NYSE:SNY)‘s Lovenox?

Orelli: I don’t remember if the NCE status was delayed, but it’s certainly a parallel to Vascepa: Lovenox is a purified heparin, which was previously approved, and Vascepa is a purified component of fish oil that was part of a previously approved product (GlaxoSmithKline plc (ADR) (NYSE:GSK)‘s Lovaza).

Macaluso: We’re in March now, so there’s another chance for Vascepa’s NCE status to be decided mid-month. Shakespeare wrote “beware the ides of March,” but I wouldn’t be surprised if another month passes by without a decision.

Page 1 of 2