Shares of Amarin Corporation AMRN were up 16.2% on Jan 10 after management announced its preliminary total revenue figures for fourth-quarter and full-year 2022.
Amarin recorded preliminary total revenues of $88-$90 million, constituting the company’s total revenues for fourth-quarter 2022. These preliminary figures beat both the Zacks Consensus Estimate and our model estimate of $85.7 million and $85.0 million, respectively.
For the full year, management expects to record $367-$369 million in total revenues. Per management, the cash and cash equivalents as of at the end of December 2022 stand at nearly $310 million.
Nearly all of the revenues are generated by Amarin from the product sales of its sole marketed drug, Vascepa(icosapent ethyl). Vascepa was initially approved by the FDA in 2012 as an adjunct to diet for treating severe hypertriglyceridemia or elevated triglyceride (TG) levels. Amarin lost patent protection for Vascepa in 2021. Since then, the drug has been facing generic competition in the United States.
The above-mentioned preliminary figures continue to reflect the ongoing stabilization of the U.S. business achieved by Amarin for Vascepa.
Vascepa was subsequently approved in the United States in 2019 to reduce cardiovascular risk (CV) in patients with persistently elevated triglycerides on statin therapy for LDL-C. Amarin is pursuing commercialization in this indication and aims to establish itself as a diversified cardiometabolic player.
Shares of Amarin have declined 49.6% in the past year compared with the industry’s 17.7% fall.
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Prior to this recent announcement, Amarin did not issue revenue guidance for 2022 due to the uncertainty related to the COVID-19 pandemic, generic competition for Vascepa in the United States and challenges in achieving market access reimbursement for the drug in Europe. As of 2022-end, Amarin has secured reimbursement in five European markets(England & Wales, Sweden, Austria, Denmark and Finland).
Amarin’s growth is solely dependent on the prospects of Vascepa. Although the company is looking to expand in other countries, generic competition for Vascepa’s hypertriglyceridemia indication in the United States is rising. Currently, four generic versions of Vascepa are available in the country.
Any potential launch of new Vascepa generics will worsen the scenario further. A potential failure of Amarin to create sufficient awareness for Vascepa’s CV risk reduction indication may induce further erosion of the drug’s sales going forward, which is a major concern.
Last year in June, Amarin implemented a comprehensive cost and organizational restructuring plan addressing the rising generic competition for Vazkepa in the United States. In third-quarter 2022, the company started to witness the benefits of the restructuring program. Amarin expects to reduce its total operational expenditure over the next 12 months by approximately $100 million. This will enable Amarin to maintain a positive contribution margin in the U.S. while continuing to invest in its imminent European market launches and global expansion.
Based on these initiatives, our model estimates an 11% p.a. decline in the company’s total operating expenses over a three-year period. Management has also initiated several awareness programs and product campaigns over the past years.
Amarin currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the overall healthcare sector include Allogene ALLO, Novo Nordisk NVO and Sanofi SNY, each of which currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, estimates for Allogene’s 2022 loss per share have narrowed from $2.39 to $2.38. In the same period, the loss per share estimate for 2023 has narrowed from $2.84 to $2.82. Shares of Allogene have declined 50.6% in the past year.
Earnings of Allogene beat estimates in each of the last four quarters, witnessing an earnings surprise of 9.44%, on average. In the last reported quarter, Allogene’s earnings beat estimates by 6.45%.
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Earnings of Sanofi beat estimates in each of the last four quarters, witnessing an earnings surprise of 9.50%, on average. In the last reported quarter, Sanofi’s earnings beat estimates by 9.85%.
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