Amarin Corporation plc (ADR) (NASDAQ:AMRN) Is A Big Winner For Us; Here's What's Next

Back on May 30, 2017, we published this piece expressing our opinion on biotechnology company Amarin Corporation plc (ADR) (NASDAQ:AMRN).We suggested that the company was trading at a considerable discount to a number of its peers (similar size, similar pipeline progress) and that a couple of near-term catalysts could serve to balance out this discrepancy. Additionally, we noted that, as the company moves towards said catalysts, it would likely draw a degree of speculative volume from traders and investors loading up ahead of the catalysts hitting press in anticipation of the just noted revaluation.At the time, the company was trading for around $2.95 a share.Subsequent to our coverage, Amarin has traded pretty much exactly as we suggested it might, rising from $2.95 a share back at the end of May to close out the session on July 3 for $4.21 a share – a 43% premium across the period.Markets are now asking, what's next. A scan of the message boards suggests certain shareholders are getting caught up in the minutiae of this company, and specifically its lead development asset's clinical development pathway, as opposed to stepping back and looking at the bigger picture. This misguided focus is leading some to suggest the company is overbought and due a severe correction, absent of any major developments hitting press over the coming month or so.We disagree with this bias.Before getting into why, let's quickly bring newer readers up-to-date with the company and the asset on which we are focusing. Amarin is trying to bring a drug to market, Vascepa, in a target indication of MACE risk patients, with the goal being to have the drug serve as an adjuvant to the current standard of care treatment, statins. Vascepa is actually already approved in the US, but only as an adjunct to diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia, which is a patient population that totals around 2 million in the US right now. If the company can pick up an approval in the extended population, as an adjuvant to statins, the total market would come in at around 20 million patients in the US alone.So that is what is at stake.There's an ongoing trial called REDUCE-IT that has recruited more than 8,000 patients and is seeking to demonstrate that the addition of Vascepa to a regimen of statins in cardiovascular risk patients can improve time to MACE events as compared to patients receiving statins and placebo.As we outlined last time, there is an interim analysis set for release during the third quarter of this year and we should see a secondary interim release at some point during the fall of 2017. Topline isn't set to be reported until 2018.So, what's the driver behind the suggestion that the company is overbought? Well, certain shareholders are resting their bias on the potential for an early completion of the trial, as recommended by a data monitoring board. If we were to see an early completion, it would bring any approval forward in time and would therefore obviously be an attractive outcome for both the company and its shareholders. In the same vein, however, we see an early completion as being not entirely beneficial.With a drug like this, a company needs an incredibly strong data set in order to achieve successful commercialization. Investors need to remember that it is not just about getting this one past the FDA – it's also about getting physicians to prescribe it and patients being willing to basically double up on the amount of medication they are taking daily in their efforts to stave off cardiovascular events. The longer the trial goes on, the stronger the data becomes in terms of statistical significance. Stronger statistical significance, as relates to clinical benefit, makes for a stronger sales pitch to physicians, and – in turn – a stronger incentive for patients to take the drug on a daily basis.As such, we would love to see some indication of clinical benefit come interim release, but we are not particularly incentivized to chase an early finish for the trial. We are aware that a large portion of investors may be, however, and we are looking at this as a potential opportunity to pick up some cheap shares as and when the numbers hit. In other words, if the company doesn't report an early finish recommendation, there is a good chance that we will see market sell-off on Amarin in line with short-term disappointment. This dip could be a great chance to load up in anticipation of an eventual approval – one supported by a wealth of strong data.That's assuming, of course, the numbers we see are indicative of efficacy.Catch up with the whole story: check out our previous coverage of AMRN here. We will be updating our subscribers as soon as we know more. For the latest updates on AMRN, sign up below!Image courtesy of Ed Uthman via FlickrDisclosure: We have no position in AMRN and have not been compensated for this article.