Amarin's Heart-Therapy Update Seen Triggering 36% Share Move

(Bloomberg) -- Amarin Corp. is scheduled to give a long-awaited presentation on its cardiovascular therapy Saturday, and options investors are bracing for a huge move in the shares by the end of next week.

Options expiring on Nov. 16 account for more than 42 percent of the total open interest. Calls are outnumbering puts by more than 2-to-1, and more than half of all the contracts have strike prices above $21, around the level where the shares closed on Friday. Current implied volatility has spiked to about 323 versus a three-month historical average of 252. That elevated volatility implies a move of about 36 percent, based on the Nov. 16 at-the-money straddle.

Amarin's Heart-Therapy Update Seen Triggering 36% Share Move

The drugmaker, whose shares have more than quadrupled this year, will present a deeper look at the effects of Vascepa, a purified fish oil that’s been shown to reduce heart risks. The stock sky-rocketed when the results of an earlier study were released in September.

Amarin has jumped to the top of analyst lists of potential takeout targets in the pharmaceutical industry given expectations that sales could top $3 billion a year.

Jefferies analyst Michael Yee wrote in a note earlier this week that shares could be worth $30 to $33 in a potential takeout, given an industry comparable multiple of four times peak sales. He underscored Eli Lilly & Co. and Merck & Co. as potential suitors given the need for a global force to maximize the drug’s potential.

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