Jefferies analyst Michael Yee provided his takeaways from a recent call with a patent lawyer related to ongoing generics litigation for Amarin’s (NASDAQ: AMRN) Vascepa. AMDA litigation between Amarin and generic filers Reddy’s and Hikma has come into focus amid the approval of the sNDA for Vascepa and a trial is set to start on 1/13/20.
Yee said they came away from the expert call positive as many generic claims have already abandoned or invalidated by the court and, in the opinion of the patent attorney, a settlement or outright win by Amarin is probable.
The analyst said a settlement would be a positive outcome and could potentially push the stock to $25-30 as a key overhang is removed.
“We still think a settlement would be a great outcome as it would benefit all parties involved, including removing an overhang on AMRN and the generics potentially getting ~6 months of limited exclusivity in a $5B+ mkt later in 2029, which is worth a lot to generic companies,” Yee commented. “We estimate that every six mos of generic entry earlier than 2029 equates to $2/share, though Teva has already settled for 2029.”
If a settlement is not reached, the expert still thinks Amarin would likely win the case outright.
“Our DCF suggests the stock is worth $30 on peak sales of $3-4B, and every $1B higher peak flows to the bottom line and is worth $5/sh upside,” Yee commented.
In addition to the takeaways on the generics litigation, Yee previewed upcoming competitor data. While data from competitor fish oils over the next 12 months could result in some headline noise, the big picture shouldn’t affect Amarin, he said.
The analyst reiterated a Buy rating and $30.00 price target on AMRN.
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