Hanging Like a Fish on a Clothesline (AMRN)

In Iceland, they eat a delicacy known as rotted shark, where the fish is hung out to dry for several months in preparation for human consumption. Investors may conjure up the same vision when it comes to the Food and Drug Administration’s (FDA) ongoing delays in making an exclusivity ruling on Amarin’s (NASDAQ: AMRN) prescription-grade omega-3 fatty acid capsule known as Vascepa. Amarin made a request several months ago to the FDA for a five-year exclusive regarding its new product. The months of August and September came and went without a word from the government. The company and traders hope to hear a determination when the FDA issues its October publication due out in mid-October. At worst, Amarin expects to receive three years of exclusivity.

The company announced on July 26 that it had received approval from the FDA for the use of Vascepa as a dietary supplement in patients with severely elevated triglycerides levels. The news capped a two-month rally in the stock that saw share prices gain nearly 60% from $10.00 to a new 52-week high of $15.96. Now traders must wait for further news from the FDA, and waiting is one thing that traders do not particularly like to do. The annual low for the stock was set back in December when shares traded for $5.99.

Since the beginning of September, Amarin share prices have fallen over 25%. Gauging by today’s action, investors’ patience may be wearing a little thin. Sellers queued up before the opening of the market waiting to dump shares the moment the morning bell rang. The initial trade of the day saw the stock gap down 71 cents from last night’s close to start the session at $11.15. Share prices appeared to stabilize after the initial down draft until midday when a story from TheStreet.com seeded further doubt in investors’ minds. The investment website took note of a sentence contained in the company’s most recent 8-K filing. For the first time, Amarin admitted that the FDA might not be convinced to grant Vascepa any new chemical entity status (NCE) because the active chemical in the drug is too similar to GlaxoSmithkilines’s (NYSE: GSK) Lovaza. The stock traded to the lows of the day at $10.35 after the story hit the tape.

Buyers of the stock filed in after lunchtime and share prices rallied in in the afternoon portion of the trading session. When the day ended, Amarin shares finished just about where they began the day. The stock closed down 66 cents at $11.20 for a loss of 5.5% on the day. Traders exchanged shares at a brisk pace as volume on the day totaled 16 million shares, or over three times the number traded on an average day. The question for traders tonight is whether today’s action cleaned anxious sellers out of their stock.

Questions over exclusivity have not been the only nagging thought wandering through investors’ brains. A recent Greek study seemed to dismiss the positive effects of Omega-3 oils. Another report broadcasted by the Canadian Television Network countered the Greek study when krill oil was used.

Amarin Corporation is a biopharmaceutical company that focuses on developing treatments for cardiovascular diseases. The Dublin, Ireland, company was founded in 1989.



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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).