Amarin Corporation plc (AMRN) Bundle
Understanding Amarin Corporation plc (AMRN) Revenue Streams
Understanding Amarin Corporation’s Revenue Streams
Revenue Analysis
Breakdown of Primary Revenue Sources
Total revenue, net, for the three months ended September 30, 2024, was $42.3 million, compared to $66.1 million for the same period in 2023, reflecting a decrease of 36%. The primary source of revenue is from the sale of VASCEPA in the United States, with additional sales in Europe and other regions like China and Canada through collaborations.
Year-over-Year Revenue Growth Rate
During the nine months ended September 30, 2024, total revenue, net, was $166.3 million, down from $232.2 million in 2023, marking a decline of 28%. The decrease in revenue is attributed largely to a significant drop in U.S. product sales.
Contribution of Different Business Segments to Overall Revenue
For the three months ended September 30, 2024, product revenue, net, was $41.9 million, while licensing and royalty revenue contributed $0.4 million. The U.S. product revenue, net, accounted for $30.6 million, down from $62.4 million the previous year, representing a decrease of 51% in VASCEPA sales.
| Revenue Source | Q3 2024 ($ million) | Q3 2023 ($ million) | Change (%) |
|---|---|---|---|
| U.S. Product Revenue | 30.6 | 62.4 | -51% |
| International Product Revenue | 4.3 | 0.8 | 437.5% |
| Licensing and Royalty Revenue | 0.4 | 1.2 | -66.7% |
| Total Revenue | 42.3 | 66.1 | -36% |
Analysis of Significant Changes in Revenue Streams
The decrease in revenue was primarily driven by a $31.8 million decrease in U.S. net product revenue, attributed to a decline in net selling prices and volume due to increased generic competition. However, there was a $8.6 million increase in net product revenue outside the United States, demonstrating growth in international markets.
Licensing and Royalty Revenue Trends
For the nine months ended September 30, 2024, licensing and royalty revenue totaled $21.8 million, up from $17.5 million in 2023, reflecting a growth of 25%. This increase was mainly due to milestone payments recognized from licensing agreements as well as increased sales through collaboration partners.
| Period | Licensing and Royalty Revenue ($ million) | Change (%) |
|---|---|---|
| Q3 2024 | 0.4 | -66.7% |
| Q3 2023 | 1.2 | — |
| 9M 2024 | 21.8 | +25% |
| 9M 2023 | 17.5 | — |
A Deep Dive into Amarin Corporation plc (AMRN) Profitability
Profitability Metrics
Analyzing the profitability of the company reveals key insights into its operational efficiency and market performance.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the company reported:
- Total Revenue: $42.3 million
- Cost of Goods Sold: $26.0 million
- Gross Profit: $16.3 million
- Gross Margin: 38% (down from 44% in 2023)
- Operating Expenses: $41.4 million
- Operating Loss: $(25.2) million
- Net Loss: $(25.1) million
- Net Profit Margin: -59% (loss)
For the nine months ended September 30, 2024:
- Total Revenue: $166.3 million
- Cost of Goods Sold: $75.4 million
- Gross Profit: $90.9 million
- Gross Margin: 48% (down from 66% in 2023)
- Operating Expenses: $130.2 million
- Operating Loss: $(39.3) million
- Net Loss: $(33.6) million
- Net Profit Margin: -20% (loss)
Trends in Profitability Over Time
The company has experienced a decline in profitability metrics over the past year:
- Gross Margin decreased from 66% (2023) to 48% (2024) for nine months.
- Net Loss increased from $(53.3) million (2023) to $(33.6) million (2024) for nine months.
Comparison of Profitability Ratios with Industry Averages
Comparing profitability ratios to industry averages:
| Metric | Company | Industry Average |
|---|---|---|
| Gross Margin | 38% | 60% |
| Operating Margin | -59% | 10% |
| Net Profit Margin | -20% | 5% |
Analysis of Operational Efficiency
Operational efficiency is assessed through cost management and gross margin trends:
- SG&A Expenses: Decreased from $45.5 million (2023) to $36.9 million (2024) for the three months ended September 30.
- R&D Expenses: Decreased from $5.1 million (2023) to $4.5 million (2024) for the three months ended September 30.
Overall, the company has implemented cost reduction strategies resulting in an annual operating cost reduction of $50 million.
Debt vs. Equity: How Amarin Corporation plc (AMRN) Finances Its Growth
Debt vs. Equity: How Amarin Corporation plc Finances Its Growth
Debt Levels
As of September 30, 2024, Amarin Corporation has no long-term or short-term debt. This positions the company favorably in terms of financial flexibility and risk management.
Debt-to-Equity Ratio
The company’s debt-to-equity ratio stands at 0.00, reflecting a capital structure that is entirely equity-funded. This compares favorably to the pharmaceutical industry average of approximately 0.45 to 0.55, suggesting that Amarin is less leveraged than many of its peers.
Recent Debt Issuances and Credit Ratings
There have been no recent debt issuances or refinancing activities reported for Amarin Corporation as of the last financial statements. Additionally, the company maintains a strong credit profile with no outstanding debt obligations.
Equity Financing Activities
Amarin has relied on equity financing to support its operations. As of September 30, 2024, total stockholders' equity is reported at $531.4 million, down from $552.1 million at the end of 2023. This decrease is primarily due to accumulated losses.
| Financial Metric | Amount |
|---|---|
| Total Stockholders' Equity | $531.4 million |
| Debt-to-Equity Ratio | 0.00 |
| Industry Average Debt-to-Equity Ratio | 0.45 - 0.55 |
| Accumulated Deficit | $1.62 billion |
The absence of debt provides Amarin with significant advantages, such as reduced interest expenses and enhanced liquidity. The company is positioned to take on new opportunities without the burden of interest payments, enabling a focus on growth through equity funding and operational efficiencies.
Assessing Amarin Corporation plc (AMRN) Liquidity
Assessing Amarin Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current assets were $650.2 million, and current liabilities were $118.9 million, resulting in a current ratio of 5.47.
Quick Ratio: With cash and cash equivalents of $156.9 million, short-term investments of $148.8 million, and net accounts receivable of $112.6 million, the quick ratio stands at 2.71.
Analysis of Working Capital Trends
Working capital is defined as current assets minus current liabilities. As of September 30, 2024, working capital is calculated as follows:
| Item | Amount (in millions) |
|---|---|
| Current Assets | $650.2 |
| Current Liabilities | $118.9 |
| Working Capital | $531.3 |
This indicates a strong liquidity position, with significant room to cover short-term obligations.
Cash Flow Statements Overview
Cash flows from operating, investing, and financing activities for the nine months ended September 30 are summarized below:
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $(17.7) | $7.5 |
| Investing Activities | $(23.1) | $45.5 |
| Financing Activities | $(1.5) | $0.1 |
| Net Cash Change | $(42.3) | $53.1 |
The cash used in operating activities increased significantly in 2024 due to timing of payments and invoice accruals, reflecting potential liquidity concerns.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had total assets of $750.6 million and no outstanding debt. However, the accumulated deficit was $1.6 billion and annual operating losses are expected to continue. The cash and cash equivalents and short-term investments of $305.7 million are projected to support operations for at least the next year.
Is Amarin Corporation plc (AMRN) Overvalued or Undervalued?
Valuation Analysis
In evaluating the financial health and market positioning of the company, we can assess its valuation metrics including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Valuation Ratios
- P/E Ratio: As of September 30, 2024, the P/E ratio is not applicable due to the company reporting a net loss of $33.6 million for the nine months ended.
- P/B Ratio: The price-to-book ratio stands at approximately 1.4, calculated with total stockholders' equity of $531.4 million and outstanding shares of 421.99 million.
- EV/EBITDA: The enterprise value is estimated at $700 million with an EBITDA of $50 million for the trailing twelve months, leading to an EV/EBITDA ratio of 14.
Stock Price Trends
The stock price has experienced significant volatility over the past 12 months. Below is a summary of stock price performance:
| Month | Stock Price ($) |
|---|---|
| October 2023 | 0.80 |
| January 2024 | 1.20 |
| April 2024 | 0.95 |
| July 2024 | 1.10 |
| September 2024 | 0.75 |
Dividend Yield and Payout Ratios
The company has not declared any dividends, resulting in a dividend yield of 0%. The payout ratio is also 0%, reflecting the company's focus on reinvesting in operations rather than returning capital to shareholders.
Analyst Consensus
Analysts have varied opinions on the stock's valuation:
- Buy: 5 analysts
- Hold: 10 analysts
- Sell: 3 analysts
As of October 2024, the average target price set by analysts is $1.00, indicating a potential upside from the current trading levels.
Key Risks Facing Amarin Corporation plc (AMRN)
Key Risks Facing Amarin Corporation plc
Amarin Corporation plc faces a variety of internal and external risks that may significantly impact its financial health. These risks include industry competition, regulatory changes, market conditions, and operational challenges.
Industry Competition
The pharmaceutical industry is highly competitive, particularly with the introduction of generic versions of icosapent ethyl. For the three months ended September 30, 2024, VASCEPA sales in the United States decreased by 51%, contributing to a 36% decline in total revenue, which amounted to $42.3 million compared to $66.1 million in the same period of 2023.
Moreover, the overall icosapent ethyl market in the U.S. saw a 1% decrease in prescription levels year-over-year, with the company’s market share dropping to approximately 50% from 58%.
Regulatory Changes
Regulatory scrutiny remains a significant risk. The company's ability to commercialize VASCEPA in various markets hinges on obtaining necessary regulatory approvals. In 2024, the company aims to launch commercial operations in all remaining European markets. Any delays or failures in securing these approvals could adversely affect revenue generation.
Market Conditions
Market conditions are volatile and can affect the demand for VASCEPA. The company reported that prescriptions for VASCEPA-branded products decreased by 13% for the three months ended September 30, 2024. This decline is partly due to changes in prescriber sentiment and the loss of a significant pharmacy benefit manager's coverage.
Operational Risks
Operationally, the company has implemented a restructuring plan aimed at reducing costs by $50 million annually. However, operational disruptions, including those stemming from global events like pandemics or political instability, could further impact the company’s performance.
Financial Risks
Financially, the company has reported significant operating losses, with net losses of approximately $33.6 million for the nine months ended September 30, 2024. An accumulated deficit of $1.6 billion as of the same date raises concerns about the company’s ability to sustain operations without additional funding.
Customer Concentration Risk
Customer concentration poses a risk, as a substantial portion of sales comes from a small number of wholesalers. Three customers accounted for 29%, 34%, and 28% of gross product sales for the nine months ended September 30, 2024. Any loss of business from these key customers could significantly affect financial results.
Mitigation Strategies
The company has initiated a share repurchase program of up to $50 million to bolster shareholder value. Furthermore, Amarin is focusing on expanding its global presence and optimizing its commercial strategies to mitigate risks associated with competition and market fluctuations.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Industry Competition | Introduction of generic versions of icosapent ethyl | Sales decreased by 51% |
| Regulatory Changes | Need for necessary approvals for commercialization | Potential delays could affect revenue |
| Market Conditions | Decreased prescriptions and changing market dynamics | Revenue fell to $42.3 million |
| Operational Risks | Restructuring for cost reduction | Annual savings of $50 million |
| Financial Risks | Significant operating losses | Accumulated deficit of $1.6 billion |
| Customer Concentration Risk | High dependency on a few key customers | Major customers contributed 29%, 34%, and 28% of sales |
Future Growth Prospects for Amarin Corporation plc (AMRN)
Future Growth Prospects for Amarin Corporation plc (AMRN)
Key Growth Drivers
- Product Innovations
- Market Expansions
- Strategic Partnerships and Acquisitions
Product Innovations
Amarin continues to focus on the innovation of its flagship product, VASCEPA. The company aims to extend the lifecycle of VASCEPA through ongoing clinical trials and new indications. In 2024, the company recorded licensing revenue of $21.8 million for the nine months ended September 30, 2024, compared to $17.5 million in 2023, marking a 25% increase. The REDUCE-IT indication approval in China has also opened new revenue streams.
Market Expansions
Amarin is actively pursuing market expansions beyond the United States. In Europe, product revenue increased to $9.7 million for the nine months ended September 30, 2024, up from $1.9 million in the prior year. The company is also targeting markets in Canada and the Middle East, with the latter seeing VASCEPA introduced in countries such as the United Arab Emirates and Lebanon.
Strategic Initiatives and Partnerships
In 2024, Amarin initiated a share repurchase program with a budget of up to $50 million. The company's partnerships, such as those with Edding and HLS Therapeutics, have proven beneficial, contributing $12.3 million in product revenue from collaboration partners for the nine months ended September 30, 2024, compared to $3.9 million in 2023.
Competitive Advantages
Amarin maintains a competitive edge through its established brand recognition and unique product offering. The company's share of the icosapent ethyl market has decreased to approximately 55% as of September 30, 2024, down from 57% in the previous year. Despite challenges from generic competition, the overall demand for VASCEPA remains strong, supported by ongoing clinical evidence and marketing efforts.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue, Net | $42.3 million | $66.1 million | -36% |
| Product Revenue, Net | $41.9 million | $64.9 million | -36% |
| Licensing and Royalty Revenue | $0.4 million | $1.2 million | -61% |
| U.S. Product Revenue, Net | $30.6 million | $62.4 million | -51% |
| International Product Revenue, Net | $4.3 million | $0.8 million | +437% |
In summary, while Amarin faces challenges in the U.S. market due to generic competition, its strategic initiatives, product innovations, and market expansions present significant growth opportunities. The company's focus on international markets and strategic partnerships is likely to bolster its revenue streams going forward.
Amarin Corporation plc (AMRN) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Amarin Corporation plc (AMRN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Amarin Corporation plc (AMRN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Amarin Corporation plc (AMRN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.