Amarin plummets 31% after appeal hearing related to its heart drug is 'incrementally negative,' analyst says to not buy shares

• Amarin plummeted as much as 31% after its appeal hearing related to invalidated patents for its key drug was "incrementally negative," according to Stifel.
• Amarin received FDA approval for its fish-oil heart drug, Vascepa, in 2018.
• In March, Amarin lost a court battle with generic drug manufacturers who claimed Amarin's patents related to Vascepa were invalid, clearing the path for a generic version of Vascepa to hit the shelf.
• Today's appeal hearing of that March ruling lasted just 20 minutes and no questions were asked to the counsel of the generic drug companies involved in the case.
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Investors fled Amarin on Wednesday amid a court appeal hearing related to its invalidated patents for its key heart drug, Vascepa.

Shares traded down as much as 31%, to $5.01, on Wednesday.

Vascepa is a heart drug that is made up of fish oil. The drug received FDA approval to reduce the risk of stroke in patients in late 2018, and since then analysts have expected Vascepa to become a blockbuster drug with more than $1 billion in sales.

But a lawsuit that invalidated Amarin's Vascepa patents threw a wrench into those analyst projections.

In March, Amarin lost a key court battle with generic drug manufacturers who argued they should be allowed to begin selling a generic version of Vascepa due to invalid patents.

The court agreed with the generic companies, paving the way for Amarin's multi-year exclusive selling window to vanish overnight.

Today, the court held an appeal hearing related to the case.

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According to Stifel, the hearing was "incrementally negative" for Amarin and gave no confidence that Amarin will prevail in the trial. Stifel noted that the hearing lasted just 20 minutes, one of the 3 judges remained silent throughout the hearing, and no questions were asked to counsel representing the generic drug companies.

"Our take is that Judge Dyk is likely to rule against Amarin - which is consistent with our consultant feedback," Stifel noted, adding that its too tough to make a call on how the two other judges will rule.

A final decision in the patent case is expected in the fourth quarter of 2020 or early 2021, Stifel said. The firm expects Amarin to surge 299% from Wednesday's low to $20 if it prevails in the appeal case.

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But if Amarin loses the appeal, Stifel said shares could sink another 20% to $4 per share.

Despite the legal overhang for Vascepa, Amarin has managed to steadily build up sales of the drug. In its latest quarter, Vascepa recorded sales of $135.3 million, representing year-over-year growth of 34%.

"We would not be buying shares here," Stifel concluded. The firm has a Hold rating on the stock and an $8 price target.

Shares of Amarin are down 62% year-to-date.

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