No NCE Decision Yet; More Pressure On AMRN Expected

On Friday, the FDA updated its Orange Book listing of key patents and regulatory exclusivity designations for brand drugs and once again, no decision was made for Vascepa. The next FDA Orange Book update won’t occur until mid-December, leaving Amarin’s (NASDAQ:AMRN) story and investors in limbo. Because AMRN management stated on its recent earnings call that the decision on NCE status is important to its discussions with potential strategic partners or acquirers, it is unlikely that an announcement of a deal will come in the near-term. (Read more) While there continues to be no shortage of take out speculation noise from various internet websites, the NCE decision delay (which may continue though 2013) and the remaining risk of a negative decision (FDA says no to NCE status) will overhang shares of AMRN and will likely prevent any upside in the next few weeks (More on NCE status). Worse, AMRN aims to update investors on the launch plans for Vascepa later this month, and the risk that the company will take steps toward launching the drug on its own would be viewed as a significant negative by investors. Currently, expectations are for AMRN to hold off on any launch plans stoking the pressure for a sell off if the company indicates the opposite.

In this case, “No News Was Bad News”, and as a result, AMRN shares could remain under pressure until the NCE decision is cleared up. We continue to expect the shares to trade down to the $7-$8 range on a negative NCE decision, and up to the $16-$18 range if NCE status is granted.  Using options to create a position in AMRN or to hedge a long position in the stock is recommended given the potential volatility and binary nature of the NCE event.