One of the first instincts for any investor experiencing big losses on one investment is to ask why. The rapid decline in shares of Amarin (AMRN) since September began after doubt grew that the company would have exclusive marketing for Vascepa. In an 8-K released on October 10, the company said that it was waiting for the FDA to be permited to market Vascepa exclusively for five years.
Biopharmaceuticals with a market capitalization similar to Amarin are either dropping or are trading flat. Arena (ARNA), a company frequently covered on Kapitall, is very volatile. Its shares were bouncing between $8 and $9 for the last 3 months. Two additional pharmaceuticals, mentioned because they are holdings of Fund manager Seth Klarman, are performing far worse: AVEO Pharmaceuticals (AVEO) and Idenix Pharmaceuticals (IDIX). IDIX is less than 3% of Klarman’s portfolio. Theravance (THRX) is also a less risky holding in this space. Its shares peaked in mid-July, and are down around 20% from its 52-week high.
Aveo, Idenix, and Amarin are all trading below their 20 day simple moving average:
Companies like Amarin are inherently risky. Their fortunes depend on regulatory approvals, success in research and development, and success in product delivery. Investors need to stick to the same game plan, unless facts change negatively enough to justify reevaluating a holding.
Investors viewing Amarin’s delays as temporary might add to their position to lower the average price of shares. Investors neutral on Amarin should keep holding these shares.
Business Section: Investing Ideas
Here are the biopharmaceutical companies to start a watch list on that were mentioned in this article.
3. Idenix Pharmaceuticals Inc. (IDIX, Earnings, Analysts, Financials): Engages in the discovery and development of drugs for the treatment of human viral and other infectious diseases in the United States and Europe. Market cap at $561.45M, most recent closing price at $4.30.
4. Theravance Inc. (THRX, Earnings, Analysts, Financials): Engages in the discovery, development, and commercialization of small molecule medicines for various therapeutic areas, including respiratory disease, bacterial infections, and central nervous system (CNS)/pain. Market cap at $2.57B, most recent closing price at $26.57.
Written by Chris Lau. To interact and discuss these picks with users, attach your watch list or portfolio to your friends on Kapitall. Message the author. He is ranked sixth (by points) on the all-time leaderboard. The leaderboard is located on your score icon -> Leaderboard. Members on Kapitall earn free points, and even more points with every Kapitall Generation trade. These points may be redeemed for goods at the Kapitall store.
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Amarin Corporation plc (AMRN, Chart, Download SEC Filings)
- AVEO Pharmaceuticals, Inc. (AVEO, Chart, Download SEC Filings)
- Idenix Pharmaceuticals Inc. (IDIX, Chart, Download SEC Filings)
- Theravance Inc. (THRX, Chart, Download SEC Filings)
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