Reasons to Buy This Pharmaceutical Company: Amarin Corporation plc (AMRN)

Valuations

Amarin is currently trading at a 60% discount to its mean sell side target price of $19.5 and at a 45% discount to its 52 weeks high. Research reveals that Vascepa can be a blockbuster product and can have a billion dollar sales potential from the US market alone. According to sell side estimates there are approximately 75 million people in the United States with triglycerides above 150 mg/dL. A very small percentage of these are being treated for VHTG. A primary reason for this low percentage is the doctor hesitation to prescribe medicines such as Lovaza that increase LDL levels. This is the reason I believe Vascepa can be such a big hit because it would be easier for doctors to prescribe Vascepa, enabling it to target an even larger market than Lovaza. The approval of supplement drug application based on Anchor results can significantly improve Amarin valuations.  I believe the stock can double once the FDA decision comes through making this an ideal entry point.

Risks

The main risk with an Amarin investment is its limited ability to market Vascepa. This can mean a slow start to Vascepa sales but this should not be a major concern for the long run. Another major concern is entry of new market players with their own omega-3 products. An interesting newcomer in this regard is Neptune’ CaPre. The candidate is a krill oil based drug being developed by Acasti, a subsidiary of Neptune. It is currently in Phase II trials and it’s too soon to determine the level of threat it can pose for Vascepa.

The article Reasons to Buy This Pharmaceutical Company originally appeared on Fool.com and is written by Mohsin Saeed.