Wedbush analyst Akiva Felt today:
We are downgrading shares of Amarin from Outperfrom to Neutral as we view the risk/reward to be less favorable now that October is underway. In sum, the downgrade is based on our view that:
1) The absence of a deal by now suggests that any potential acquisition premium is unlikey to meet the Street's lofty expectations.2) A potential near-term announcement that Amarin has begun hiring a sales force for Vascepa represents a concrete negative catalyst, which management previously guided would occur in October (in the absence of a deal.) 3) Given the continued vacuum of information surrounding the status of Amarin's negotiations, we believe shares will trend lower as time passes in October as investors grow incrementally more fearful that a deal may fail to materialize. Well said, Akiva. He's come around to my argument: "If Amarin fails to gain NCE [New Chemical Entity] status, the odds increase that the company is forced to launch Vascepa on its own, without a major pharmaceutical partner or a buyer of the entire company. Wall Street investors aren't going to like a solo Vascepa launch at all." Felt, again, from today's downgrade: "In sum, if big pharma (collectively) does indeed view Amarin to be a high-priority acquisition target as we previously hypothesized, we believe a bidder willing to forego definitive resolution on the remaining uncertainties like NCE would step forward and offer a price inline with Street expectations. However, we believe such a transaction would most likely have occurred by now, and by mid-October at the latest." As the days click by, an Amarin takeout, if one were to occur, is more likely to be priced in the $15-20 per share range and not the $25-30 per share range that Amarin bulls expect, Felt adds. Amarin shares are down 5% to $11.76 in Wednesday trading. -- Reported by Adam Feuerstein in Boston. Follow @AdamFeuerstein
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