FBR Sees Low Probability of Successful Appeal for Amarin (AMRN); Sees Another Capital Raise

January 21, 2014 10:55 AM EST
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Price: $2.95 +2.43%

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    8 Buy, 11 Hold, 0 Sell

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FBR Capital analyst William Tanner, Ph.D reiterated his Market Perform rating and $2 price target on Amarin (NASDAQ: AMRN) after the FDA declined to reinstate the ANCHOR SPA. The analyst said Amarin will likely have to raise capital again.

"We believe Amarin will be unsuccessful in appealing the FDA's decision to rescind the ANCHOR SPA," Tanner comments. "Most likely, we believe the company will abandon attempts to gain approval for the indication meaning that Vascepa will only be approved for what appears to be a niche indication, treatment of patients with very high triglycerides. Even if the company discontinues the REDUCE-IT outcomes trial, we believe investors face significant future dilution."

On a possible capital raise, the analyst comments: "Amarin had $226M cash at the end of 3Q13 (~$1.30 per share) and anticipates an $80M cash burn rate for 2014. Our model contemplates cost cutting in 4Q13 that projects a cash balance of ~$190M (~$1.10 per share), consistent with company comments. At an $80M run-rate ($30-$40M attributed to REDUCE-IT), the company has approximately two years of cash. Even if the REDUCE-IT trial is substantially altered or discontinued, we doubt the company could achieve break-even status with just the MARINE indication. Management remarked that the current size of the sales force is appropriate for the MARINE indication, itself."

For an analyst ratings summary and ratings history on Amarin Corporation click here. For more ratings news on Amarin Corporation click here.

Shares of Amarin Corporation closed at $2.27 yesterday.

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