Patent Lawsuit Loss Sends AMRN Stock Spiraling

Amarin is eyeing its worst day, and quarter, ever

Deputy Editor
Mar 31, 2020 at 10:37 AM
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On the charts, things are looking pretty bleak for Amarin Corporation plc (NASDAQ:AMRN) right now. The equity is down 68.4% at $4.29 during its first hour of trading -- on pace for its worst day in over 2 years -- after the biotech company lost a major U.S. patent lawsuit for its heart drug Vascepa, with Amarin initially claiming that Hikma Pharmaceuticals (HIK) and Dr. Reddy's Laboratories (DRREDY) both produced versions of the drug that infringed on six of its U.S. patents. Today's verdict will make it much easier for generic competition to tip over AMRN's main revenue contributor. 

Today's dip brings the equity's first-quarter deficit to 63.7% and sticks AMRN at a new two-year low, well below the $10 region, which provided solid support for the security during its mid-March pullback. The stock's bounce off this area was captured by its 30-day moving average, however, and now, for the year, AMRN is down 80.1%. 

Today's news sparked a flurry of price-target cuts. At least four analysts slashed their price targets, including Jefferies, which cut its estimate all the way to $4 from $30. Oppenheimer, meanwhile, lifted AMRN to "perform" from "underperform." This puts the consensus 12-month price target at $23.18, over five times the security's current perch. Coming into today, the majority in coverage were optimistic on Amarin, with seven calling it a "strong buy," compared to three saying "hold" or worse. 

The options pits are also incredibly bullish right now, per AMRN's 10-day call/put volume ratio of 8.44 at the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 93rd percentile of its annual range, suggesting long calls are being picked up at a much quicker clip than usual. 


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