Amarin Corporation plc (NASDAQ: AMRN) had a rough morning in the market this morning, and it’s being followed up by even more declines as we head into the afternoon. The drop is happening for good reason. The company announced an offering this morning that proved to be an overwhelmingly dilutive transaction. So, it’s no surpirse that upset investors are dragging the stock down. Today, we’ll talk about:
- The offering;
- what we’re seeing from AMRN stock as a result; and
- what we’ll be watching for ahead.
AMRN Falls Hard On Offering News
As mentioned above, Amarin Corporation is having a rough day in the market today after announcing an offering. In a press release issued this morning, the company announced the pricing of an underwritten public offering of American Depositary Shares. Through the offering, the company plans on raising $200 million in gross proceeds.
In the release, AMRN said that it is expecting for the offering to close on or about November 29, 2018. However, the transaction is still subject to customary closing conditions. On top of the initial $200 million, the company has granted the underwriters a 30-day option to purchase an additional $30 million of ADSs.
AMRN said that it plans to use the funds for three purposes:
- First and foremost, the company intends on using the funds to support the ongoing commercialization of Vascepa following the recent REDUCE-IT results. This includes seeking regulatory approval to expand the approved label for Vascepa based on the cardiovascular benefit shown in REDUCE-IT. The company will also use the funds to expand its Vascepa sales force and support expanded commercial operations.
- The company also plans on using the funds to increase the commercial supply of Vascepa from third-party drug product suppliers.
- Finally, AMRN will use the remaining funds for general corporate purposes.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to Amarin Corporation, the news was a bit rough to take. Sure, the funding from this transaction will likely help the company move forward in leaps and bounds with regard to Vascepa, but the transaction is also dilutive. It’s like bringing a cake that’s too small to a party and just cutting more slices. So, it’s not surprising to see that investors are reacting by pushing the stock down. As is normally the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (2:06), AMRN is trading at $17.11 per share after a loss of $2.28 per share or 11.76% so far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on AMRN. In particular, we’re interested in following the story surrounding the company’s commercialization efforts with regard to Vascepa. Should the company achieve the expanded label for the reduction of cardiovascular risk, sales could fly, making up for the dilution caused by the transaction announced today. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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