Amarin's 475% Surge Leaves Its Holders Flush and Sellers Crushed

(Bloomberg) -- After a paradigm-shifting study of Amarin Corp.’s heart medicine caused the drugmaker’s stock to more than triple, bullish investors were likely popping champagne -- while those that called it quits were left crying in their beers.

Amarin’s market value ballooned to more than $3 billion on Monday from $886 million at Friday’s close, after a closely watched study showed that the company’s purified fish oil Vascepa sharply reduced the risk of cardiovascular problems for the most at-risk patients.

One big apparent winner was Baker Bros. Advisors. Known for making bets across the biotech spectrum, the investment firm held a $70 million stake in Dublin-based Amarin as of June 30, according to Bloomberg data. Baker Bros. is the largest Amarin shareholder and a long-term backer of the company, having held the stock since early 2015, Bloomberg data show.

The value of Baker Bros.’s reported stake rose from about $68 million at the close of trading on Friday to more than $253 million at the company’s peak share price in New York on Monday.

A representative for Baker Bros. didn’t immediately respond to requests for comment.

Consonance Capital Management wasn’t as lucky. The biopharmaceutical-focused fund had sold some 20 million Amarin shares this year as the outcome of the highly anticipated “Reduce-It” trial of Amarin’s therapy approached. Consonance first bought Amarin’s battered shares in 2016 but didn’t hold on as the readout of the nearly seven-year study loomed.

Others also had trimmed their exposure ahead of Monday’s data. Broadfin Capital and Alkeon Capital Management liquidated multi-million-dollar positions in the second quarter of this year. Amarin ranked among the most-sold health-care stocks during the three-month period, according to data compiled by Bloomberg.

Representatives of Consonance and Broadfin didn’t respond to requests for comment. Alkeon declined to comment.

Investor skittishness ahead of the trial results would be understandable. Numerous studies have shown that fish oil offers little to no benefit in squelching heart risks. A definitive review of the scientific evidence released by the Cochrane Library this summer concluded that the supplements don’t help fight heart disease, stroke or death.

Amarin says that Vascepa is a purified form of the omega-3 fatty acid that’s found in fish oil, and thus distinct from its failed competitors.

Many analysts projected that if Vascepa showed a 10 percent to 15 percent reduction in heart risks, it would be enough to significantly boost sales and Amarin’s shares. Instead, the study reflected a 25 percent decline in a person’s likelihood of having a heart attack, chest pain, stroke, artery-clearing procedure or dying from heart disease. The data will be presented at the American Heart Association’s annual meeting on Nov. 10.

A daily dose of Vascepa could be used by millions of patients already taking cholesterol-lowering drugs, generating $2 billion in annual sales, estimated Roger Song, an analyst at Jefferies Group. That could make Amarin a potential takeout target for drugmakers desperate for new sources of revenue.

©2018 Bloomberg L.P.