UPDATE: Citi Starts Amarin (AMRN) at Buy; Sees Favorable Risk/Reward Even if 'Going Alone' on Vascepa

November 27, 2012 6:13 AM EST
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Price: $3.02 --0%

Rating Summary:
    8 Buy, 11 Hold, 0 Sell

Rating Trend: Up Up

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(Updated - November 27, 2012 11:30 AM EST)

Amarin (Nasdaq: AMRN) is ticking higher amid Citi starting coverage on the pharma at Buy with a price target of $20.

Oveall, Citi analyst Jonathan Eckard said valuation on Amarin has already priced in the three- versus five-year FDA decision over Vascepa. Eckard comments, "We believe the current risk/reward is favorable, viewing Vascepa to have >$1B commercial potential even if AMRN were to “go alone” and further upside if a large pharma partner ultimately became involved. We believe 5 yr exclusivity for Vascepa is on the table, and a strategic transaction is feasible even if not granted. The FDA’s delay will likely force AMRN to begin building a sales force and this increases chances of requiring additional capital to do so."

Aside from exclusivity, Eckard notes that there are other barriers between Vascepa and competition, "including nine issued and multiple pending patents covering Vascepa’s composition and use beyond 2030, and AMRN locking up leading global suppliers
of Vascepa’s raw material."

On the FDA decision, the analyst thinks that the delay is relatively uncommon. Thus, Eckard sees the delay as more favorable for Amarin given that an outright rejection wouldn't require much time. Eckard sees an update on the NCE status coming in around December. He notes that this time of year "remains...a busy part of large pharma’s business development cycle, when existing budgets are set to expire, or in the new year, when new funding becomes available, making a near-term deal still feasible in our view."

Shares of Amarin are up 4.4 percent on the session.

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 $11.49 yesterday.

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