Amarin Corporation, Plc. (AMRN – Research Report) is up 467% since the end of September. Really, that’s the only way to start a story on this small biopharmaceutical company.

The stock had languished below $5 per share since 2007, and stayed that low during the whole seven years of the REDUCE-IT study, from November 2011 to this past autumn. When the study’s results became known, the stock skyrocketed. In recent days, it has slipped back from its $22 peak, and is now trading just under $17. That decline is likely a result of profit taking, as investors sold to take advantage of the massive gains.

Successful Clinical Trials Brought Results

The reason for those massive gains is simple. The REDUCE-IT clinical trial showed that Vascepa, Amarin’s sole product, was successful beyond the wildest dreams of its inventors and investors.

Vascepa is an Omega-3 fatty acid drug (the chemical name is ethyl eicosapentaenoic acid), derived from the fatty acids that occur naturally in some fish oils. It is not the actual fish oil, nor is it a dietary supplement. Vascepa is a medical drug, intended as a preventative treatment for cardiovascular disease and hypertriglyceridemia. Vascepa was approved by the FDA in 2012, but as the multi-year REDUCE-IT study was in its early stages, the drug found only limited distribution.

REDUCE-IT, with its spectacular results, promises to change that outlook. The study showed, over a seven year period, that Vascepa reduced cardiovascular death by 20%, reduced total heart attacks (fatal and non-fatal) by 31%, reduced total strokes (fatal and non-fatal) by 28%, and reduced hospitalizations for urgent or emergency cardiovascular care by more than 32%. In short, the RECUDE-IT study shows that Vascepa surpassed the target goal of 25% relative risk reduction.

Superb Upside for Investors

At this point, the question for investors is, “Is it too late to invest in Amarin?” The answer is simple: It is not. Despite AMRN’s 490% gain over the last few months, the stock still holds an impressive 105% upside potential. The average target price, $34.80, is more than double the current share price of $16.95.

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View AMRN Price Target & Analyst Ratings Detail

Underlying the optimistic outlook are analysts’ forward views of Vascepa’s sales potential in light of the successful study. Cantor Fitzgerald analyst Louise Chen (Track Record & Ratings) gives AMRN a price target of $35, right on the average, and says, “We reiterate our Overweight rating and 12-month price target of $35 on shares of AMRN. We continue to think that the peak sales opportunity for Vascepa, post positive REDUCE-IT results, is still underappreciated.” She titled her 30 November note on AMRN “Buckle Up – Because Vascepa Rxs Could Take Off Soon.”

Her notice of Vascepa’s ‘peak sales opportunity’ is important; other analysts have also noted the high profit potential for Vascepa’s future sales outlook. Citigroup’s Joel Beatty (Track Record & Ratings) in a review on 14 November set a $28 price target while noting that the REDUCE-IT results “paint an attractive drug profile for Vascepa,” and predicts that it will “reach mutli-billion-dollar peak sales.” In addition, Beatty also pointed out that AMRN has pulled back slightly from its peak price, making the current value an even more attractive entry point.

Watch for Future Sales

Amarin already brings in over $180 million in annual sales with Vascepa. Now that the study results have been made public, the company stands to see a ten-fold or more increase in sales revenue on its sole product, with more potential revenue available in off-brand licensing. The stock price and upside potential are only just beginning to reflect that.