Amarin Patent Appeal Is a Coin Toss With Billions on the Line

Amarin Corp. analysts say investors should bet on the drugmaker’s ability to overturn a devastating patent ruling despite odds that resemble a coin flip.

Analysts expect large gains for the shares if Amarin prevails in the Federal Circuit Court of Appeals, where oral arguments begin Wednesday. The company is challenging a U.S. judge’s decision in March to invalidate patents for its heart pill Vascepa, which wiped out $3.5 billion in market value.

The stock could surge toward $30 to $35 if Amarin prevails, while a loss would send the shares to the $2 to $4 range, Cantor Fitzgerald analyst Louise Chen wrote. The stock closed Monday at $7.76. That potential gain is worth the risk, according to analysts, with Chen advising clients to not “let this opportunity evaporate.”

Amarin Patent Appeal Is a Coin Toss With Billions on the Line

Options set to expire Sept. 4 suggest the shares could move 20% between now and Friday. Of the contracts expiring Friday, calls outweigh puts at a rate of 3.9-to-1, which on the surface is a bullish indicator. Implied volatility is 276%, compared with the three-month realized volatility of 47%.

The selection of who will serve on the three-judge panel is expected to have huge implications for investors trying to get a better read on the outcome. The identity of the three judges will be available Wednesday morning. A group of procedural or “pro-pharma” judges would be the most favorable outcome for Amarin, with 10 of the 18 eligible judges likely straddling that line, Piper Sandler analyst Yasmeen Rahimi wrote. Two judges are “pro-generic,” according to Rahimi: Circuit Court Judge Sharon Prost and Circuit Court Judge Jimmie V. Reyna. The remaining six are wild cards, she wrote.

Amarin has a “50/50 shot” of winning the appeal, according to two patent specialists that Stifel consulted. Those odds could swing between zero and 70% depending on who is on the panel, they said. There are a number of factors that make the case “very difficult to handicap,” Stifel analyst Derek Archila wrote.

Analysts expect a decision on the appeal later this year or in the first quarter of 2021.

Judge options
Seen as positive for AmarinRaymond ChenKimberly MoorePauline NewmanAlan LourieRichard TarantoKathleen O’MalleyTodd Hughes
Richard LinnKara Farnandez StollTimothy Dyk
Seen as negative for AmarinSharon ProstJimmie V. Reyna

Read more: Amarin Slides After Hikma Snags Generic Vascepa Approval

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