This massive public offer fell by shareholders for two reasons. First, biopharma recently reported that the sale of its prescription omega-3 treatment, Vascepa, has gone strong ever since the drug showed a 25% relative risk reduction in the form of severe cardiovascular events in the result test known as Reduce-It.
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In turn, Amarin reported that the cash position was at a healthy $ 221 million at the end of June, thanks to Vascepa's strong sales project. This amount should have been sufficient to beat the company's expanded market efforts for Vascepa, especially with its drug sales growing over the past few quarters.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Other, Amgen Pfizer (NYSE: PFE) Novartis and Novo Nordisk were all rumors to be interested in making a bid for Amarin earlier this year. most spectators expected a formal purchase offer to be announced when Vascepa's Reduce-It indication was officially in the bag. & nbsp; So if bargaining negotiations were actually on track, a capital increase of this size would be both unnecessary and counterproductive from Investors, seemed to take this upturn as a sure sign that a buyout was no longer in the cards – at least at any time soon. " Novartis and Novo Nordisk  (NYSE: PFE)] were all rumored to be interested in making a bid for Amarin earlier this year. In fact, most spectators expected a formal purchase offer that was announced when Vascepa's Reduce-It indication was officially in the bag. So, if buying negotiations were actually on the right track, a capital increase of this size would be both unnecessary and counterproductive from a value creation perspective. Investors, in nature, seemed to take this upturn as a sure sign that a buyout was no longer in the cards – at least anytime soon.
Has Amarin lost her brilliance as a top buyer candidate? Let's dive deeper to find out.
Amarin shareholders obviously want to know why the company felt compelled to raise its cash position to an eye-catching $ 600 million over Vascepa's upcoming regulatory decision. The long and short is that Amarin's stock price was up with an overwhelming 695% over the last ten months, and biopharmas almost always raise capital under such circumstances for good reason. No one can predict the future after all. Vascepa seems to be willing to get OK from the FDA for the Reduce-It label extension, but it is not certain until the official word comes down from the agency later this year.
Furthermore, there is always the risk that most doctors will not seek prescribing the drug for this indication, or that a competing therapy currently under development may increase Vascepa's commercial pathway. So Amarin's decision to beat while the iron was hot was undoubtedly a gentle move. By doing so, the company has taken up its long-term capital needs so that it provides a much needed cushion in case something unexpected happens.
Is a buyout really off the table?
A buyout is definitely not off the table. If anything, this capital increase removed any influence potential buyers had in negotiating – in fact, Amarin did not have the financial resources to realize Vascepa's full commercial potential. Amarin, in kind, can now claim top dollar at hand or just redecorate these overtures from potential suitors. In the breath, a buyout is probably not even in the best interest of long-term shareholders at this stage.
<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Amarin shareholders would no doubt be better served by a Consensus Agreement in the same path as Pfizer's Cancer Diagnostic Specialist Agreement Exact Sciences . Such an agreement will greatly enhance Vaspasa's commercial reach through Pfizer's vast network, and may involve a license agreement by one or more more of the Pharma giant's early candidates, thus, Amarin could both capitalize on Vascepa's monstrous commercial potential and create profound value for its shareholders at the same time. & nbsp; "data-reaction time =" 33 "> Amarin shareholders will no doubt be better off served by a trade agreement in the same way as Pfizer's agreement with cancer diagnostic specialist Exact Sciences . Such an agreement will greatly enhance Vaspa's commercial reach through Pfizer's vast network, and may involve a licensing agreement by one or more of the pharma giant's early candidates. In this way, Amarin will be able to utilize both Vascepa's mouth-watering commercial potential and create deep value for its shareholders at the same time.
The key free thing here is that investors should not sweat the capital increase. Amarin has proven to be a winning game for biopharma investors, and this capital development only creates several paths for value creation in the years to come. Finally, there is no reason to believe that a capital increase has any impact on possible buying processes – other than that Amarin would now negotiate from a position of strength.
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<p class =" canvas-atom lerrettekst Mb (1.0em) Mb Mt (0.8em) – sm "type =" text "content = " George Budwell has no position in any of the aforementioned shares. Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy . " data-response time = "48"> George Budwell has no position in any of the aforementioned shares. Motley Fool recommends Novo Nordisk. Motley Fool has a disclosure policy.