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It's Cool Steve Rosenman Loves Amarin But His Math Is Screwy

Stocks in this article: AMRN

BOSTON ( TheStreet) -- No Amarin (AMRN) bull is more bullish than Steve Rosenman. His latest Seeking Alpha article makes the case for Amarin shares to quadruple in value this year. Amarin trades for $8 today, so Rosenman's year-end target is $32, or a sweet 300% gain.

The assumptions and math Rosenman relies upon to reach his price target prediction stretch credibility to the breaking point. I was also hoping Seeking Alpha's editors would ask Rosenman to explain or apologize for his many missed Amarin calls, mainly predictions about the company being acquired and the granting of Vascepa NCE status. Rosenman is an ardent supporter of Amarin and is enthusiastic about sharing his opinions but he's not big on accountability.

Under the heading "How will it quadruple in 2013?" Rosenman endorses the Amarin financial model published by Aegis Capital analyst Raghuram Selvaraju. Selvaraju has a buy rating and a $35 price target on the stock.

His model, which Rosenman includes in his Seeking Alpha article, forecasts 2013 Vascepa sales of $74 million. That's fairly reasonable, and isn't even high on the Street, according to Bloomberg.

Selvaraju's model gets wonky in 2014, however, when he predicts $687 million in Vascepa sales. That's a huge increase over 2013 and is more than double current Street consensus of around $300 million in 2014 Vascepa sales. Clearly, Selvaraju and Rosenman believe Vascepa sales take off like a rocket when FDA approves an expansion of the drug's label into the "mixed dyslipidemia" patient population, aka the "ANCHOR data" patients.

Rosenman is correct about the blockbuster potential for Vascepa given the millions of people with high triglycerides who aren't adequately helped by statins alone . However, Rosenman assumes doctors will prescribe (and insurance companies will reimburse) Vascepa by the truckload in the absence of beneficial cardiovascular outcomes data. I disagree there. I don't believe Vascepa sales take off, if ever, unless the ongoing REDUCE-IT study demonstrates a reduction in heart attacks, strokes or other serious cardiac-related side effects. We won't see data from this study for another three years. Without those data, I believe Amarin will struggle to sell Vascepa into an expanded patient population. I also believe Big Pharma agrees with me, which is why Amarin was forced to launch Vascepa on its own in the first place. (Not have NCE status for Vascepa played a big role, too.)

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