Last year, a number of drugs received FDA approval. The drug authority has rolled out one approval after another, maybe to compensate for the patent cliff most large pharmaceuticals are facing. These approvals have a significant impact on single drug companies, such as Amarin Corporation plc (ADR) (NASDAQ:AMRN). The company’s stock has traded as high as $19.50 on positive expectations from its star drug Vascepa. Small biopharmaceuticals with approved candidates are an ideal target for big pharmaceuticals. This is because buying a company with an already approved drug allows them to evade the risk of R&D and also avoid investor speculation on approvals.
If we take into account the patent cliff, one would consider Amarin Corporation plc (ADR) (NASDAQ:AMRN) an ideal takeover target. Sadly for Amarin investors this eventuality has still not transpired due to an inherent difficulty in valuing Amarin. A lack of NCE classification is the primary reason for this as the the lack of such a classification increases the uncertainty for any potential acquirers. One would assume that even if it doesn’t get the NCE classification, a target price can be calculated on the basis of 3 year exclusivity. I believe this has still not happened because the executive management of Amarin Corporation plc (ADR) (NASDAQ:AMRN) doesn’t want a penny less than Vascepa’s true potential.
Due to these issues Amarin Corporation plc (ADR) (NASDAQ:AMRN) has decided to commercialize its drug and has already launched Vascepa in the United States. The most recent quarterly results and the conference call that followed gave investors more insight into Vascepa’s commercialization efforts. A major obstacle for in-house commercialization especially without support from an established partner is a lack of trained sales persons. Amarin has been lucky in this regard because a number of major drugs, such as Lipitor, are facing expiring patents leading to huge sales force layoffs. According to company disclosures, 275 sales representatives have been trained and are already in the field. I think the commercialization efforts for Vascepa have been a success. The IMS data shows that Vascepa is selling better than GlaxoSmithKline plc (ADR) (NYSE:GSK)’s Lovaza at the same point in time.
The company has once again easily beaten the street’s earnings estimates. The street was expecting Amarin Corporation plc (ADR) (NASDAQ:AMRN) to report an EPS of $-0.28, but the company reported a net loss of only $10.6 million or $0.07, comprehensively beating estimates. More importantly the results indicate that the cash position of Amarin has significantly improved with the company ending the quarter with cash and equivalents of $260.2 million. The total outflows during the quarter were $55.4 million. This includes a significant $12.1 million payout to the shareholders of Laxdale and $16 million to suppliers to build up an inventory level for Vascepa’s commercial launch. The company has spent $12.1 million more on SG&A expenses to prepare for the commercial launch of Vascepa.