Amarin Corporation (NASDAQ: AMRN) has been volatile as it prepares for take-off. The company has developed a new treatment for heart disease and the outlook for the company (and its stock) couldn’t be better.
Amarin’s sole product, Vascepa, is derived from fish oil. It has been proven in clinical trials to lower the risk of having a heart attack, stroke, or other heart-related event by lowering triglycerides. The FDA has now approved Vascepa for use by itself and in connection with statin therapy.
There are two major reasons why Amarin is rated a “STRONG BUY.” First, the market for Amarin is huge. About 1 in 3 deaths in the U.S. are caused by heart disease. According to The American Heart Association, 45% of Americans will be diagnosed with some form of heart disease by 2035. Heart disease is also a leading cause of death in other countries around the world.
Second, Amarin has a natural monopoly. They have the only product of its kind on the market, not for lack of trying by competitors. AstraZeneca and Acasti Pharma both failed their clinical trials with similar fish-oil products. AstraZeneca announced in January that they would not continue studies on their fish-oil drug.
AMRN stock dropped in July 2019 in response to the company issuing new shares of stock (dilution), but there is good news. The funds will be used to fund expansion: mostly hiring more salespeople and increasing production capacity. Diluting stock tends to be a short-term negative and, if used correctly, a long-term positive. Preparing to meet demand for a product with high demand worldwide – that qualifies as good use of additional funds.
Analysts are valuing AMRN at $33/share. It’s currently trading at $17.25 per share, so the stock could double by the end of 2020. It’s already up 5-fold from September 2018, when it traded at $3. Roth Capital Partners expects Vascepa to capture about 12% of the U.S. market over the next decade, forecasting peak annual sales of $3.2 billion by 2030.
Global markets are now opening for Vascepa as the company gains regulatory approval in Europe and Asia. Vascepa is expected to be available in Canada this month.
The Amarin rocket is taking off now and the sky is the limit. To investors: all aboard.
Disclosure: Gregg Killpack, the author, is long shares of Amarin Corporation. However, neither Matt Rego or Spotlight Growth has any position or relationship with the company. This article should not be taken as a solicitation to buy or sell any securities. Please conduct your own research and consult your financial advisor to determine your risk tolerance and investment path. We are not licensed brokers or investment advisors.
Article By: Greg Killpack