Initial public offerings, or IPOs, usually garner lots of attention. And why not? Like sports teams jockeying for top prospects on draft day, investors line up to own a piece of the company as it commences trading. The company, its employees, and existing investors clamor to see whether the stock will jump or sink, adjusting their net worths accordingly.
IPOs carry tremendous amounts of risk, and trading publicly begins a new phase in the company's life. Drug development firms add in layers of additional risk -- clinical trial efficacy and safety risks, regulatory risk such as approval by the U.S. Food and Drug Administration (FDA), and reimbursement risk. Small drug developers endure twists, turns, setbacks, and reinventions along the road to hopefully achieving success. Investors in biotech companies aim to achieve outsized returns for assuming this multitude of risks.
Image source: Getty Images.
Virtually all biotech IPOs occur while the company is still in the research and development stage. The companies go public to raise money to fund that research. Amarin (NASDAQ:AMRN) is no exception. After completing its IPO in 1993, the Amarin that investors know today is unrecognizable as the company that went public in the early 1990s.
Known as Ethical Holdings, the company started as a transdermal patch drug delivery outfit that licensed its technology to other companies. Internally, it had focused on using the patch to administer hormone replacement therapy. In 1999, Amarin sold the patch technology and acquired rights to two drugs, one marketed and one in development, for treating symptoms of Parkinson's disease. The company changed its name to Amarin with this shift in business.
With a new therapeutic focus, Amarin set off to expand its pipeline. In 2000, the company licensed a drug for Huntington's disease and other neurological conditions. This drug went on to be the main focus of the company until it failed in 2007 in two phase 3 clinical trials for the treatment of Huntington's disease. The drug performed no better than placebo against the primary and secondary endpoints. Of course, the stock dropped like a bag of bricks, losing around 75% of its value.
However, in 2004, Amarin made a savvy acquisition of private company Laxdale Limited, which gave it (among other assets) a novel lipid technology platform. This platform would eventually lead to Amarin's currently approved cardiovascular disease drug Vascepa.
Amarin's stock price today is intimately connected to the success of Vascepa, which is derived from fish oil. When the FDA approved an expanded indication for the drug last December, the stock rose. However, when a district court ruled one of Vascepa's patents invalid at the end of March, opening the way for generic competition, the stock tanked.
Investors in Amarin's IPO have little to show for themselves despite holding the stock for 27 years. According to data from YCharts, an initial $10,000 investment would be worth roughly $127 today. Ouch! That's a testament to the continuous need for capital and therefore dilution to shareholders that can happen in the long, arduous road to successfully developing a drug.
Don't get me wrong. Plenty of biotech investors have made money owning Amarin stock over the years. This is a lesson for buy-and-hold investors. As the business undergoes significant changes, as it did over the life of Amarin, investors must reassess their investment thesis and time horizon.
If investors had instead put $10,000 into the 1993 IPO for the tech company Intuit (NASDAQ:INTU), those investors would be sitting pretty. That investment would be worth approximately $1.13 million today.
Image Source: YCharts
This isn't to say tech IPOs are better than biotech ones. It simply illustrates that after 27 years of being public, companies can be deemed successful or not. Amarin has an approved drug on pace to generate hundreds of millions in revenues this year -- but the stock performance does not always correlate.
See the rest here:
If You Invested $10,000 in Amarin's IPO, This Is How Much Money You'd Have Now - The Motley Fool
- Bio Identical Hormone replacement therapy "alternative medicine" OMT - June 1st, 2010 [June 1st, 2010]
- Healthbeat - Hormone Replacement Therapy - August 5th, 2010 [August 5th, 2010]
- Does Hormone Replacement Therapy increase breast cancer risks? - August 11th, 2010 [August 11th, 2010]
- Hormone replacement therapy increases risk of cancer - October 20th, 2010 [October 20th, 2010]
- Hormone Replacement Therapy Risky For Women - October 20th, 2010 [October 20th, 2010]
- Can Hormone Replacement Therapy Lead To Breast Cancer? - January 31st, 2011 [January 31st, 2011]
- Women Turning To Holistic Hormone Replacement Therapy - February 18th, 2011 [February 18th, 2011]
- Is Hormone Replacement Therapy Dangerous? - March 17th, 2011 [March 17th, 2011]
- Hormone Replacement Therapy Complications - May 8th, 2011 [May 8th, 2011]
- Hormone Replacement Therapy - May 10th, 2011 [May 10th, 2011]
- The New Growth Hormone Replacement Therapy - John Crisler, DO - May 13th, 2011 [May 13th, 2011]
- Suzanne Somers on hormone therapy for menopause, part 2 of 6 - May 20th, 2011 [May 20th, 2011]
- Symptoms of Menopause (Menopause #2) - May 20th, 2011 [May 20th, 2011]
- How to Relieve Menopause Symptoms : Hormonal Replacement Therapy for Menopause - May 20th, 2011 [May 20th, 2011]
- HRT - Hormone Replacement Therapy - May 20th, 2011 [May 20th, 2011]
- What is hormone replacement therapy? - May 20th, 2011 [May 20th, 2011]
- Hormone Replacement Therapy and Breast Cancer - May 20th, 2011 [May 20th, 2011]
- Natural Treatments Instead of Hormone Replacement Therapy - May 20th, 2011 [May 20th, 2011]
- Suzanne Somers on hormone therapy for menopause, part 1 of 6 - May 23rd, 2011 [May 23rd, 2011]
- Hormone Replacement Therapy for post-menopausal women - June 19th, 2011 [June 19th, 2011]
- Joe Rogan talking about hormone replacement therapy 6-14-2011 - June 25th, 2011 [June 25th, 2011]
- Hormone Replacement Therapy and Weight - June 25th, 2011 [June 25th, 2011]
- HRC Hormone Replacement Therapy - June 25th, 2011 [June 25th, 2011]
- Study Hormone Replacement Therapy Increases Breast Cancer Risk - kdka.com - June 25th, 2011 [June 25th, 2011]
- 020 - Neo Hormones - July 1st, 2011 [July 1st, 2011]
- Making Sense of Hormone Replacement Therapy - July 28th, 2011 [July 28th, 2011]
- HRT MTF Transition Report Week 10 - July 29th, 2011 [July 29th, 2011]
- Hormone Replacement - Part 2 - July 30th, 2011 [July 30th, 2011]
- Hormone Replacement - Part 1 - July 30th, 2011 [July 30th, 2011]
- Goldie Lookin Chain - HRT - August 9th, 2011 [August 9th, 2011]
- Natural Hormone Replacement Therapy - September 23rd, 2011 [September 23rd, 2011]
- Testosterone Replacement Therapy (TRT): Optimizing Clinical Outcomes - Michael Aziz, MD - September 24th, 2011 [September 24th, 2011]
- Thyroid Replacement Therapy - Ronald Rothenberg, MD - September 24th, 2011 [September 24th, 2011]
- Dr. Ralph Turner discusses Hormone Replacement Therapy. - September 24th, 2011 [September 24th, 2011]
- 1 year on HRT - September 24th, 2011 [September 24th, 2011]
- The Wiley Protocol - September 24th, 2011 [September 24th, 2011]
- My Journal with Low Testosterone TRT Replacement Therapy - September 24th, 2011 [September 24th, 2011]
- 12 years of HRT: My Transition in photos - September 24th, 2011 [September 24th, 2011]
- Dr. Steven Jepson talks about Bio-identical Hormone Replacment Therapy - September 25th, 2011 [September 25th, 2011]
- Estradiol Valerate Injection HRT (Part 3)of(3) - September 25th, 2011 [September 25th, 2011]
- Study: Post-Menopausal Hormone Therapy Increases Cancer Risk - September 25th, 2011 [September 25th, 2011]
- Bio-identical Hormone Replacement (anti-aging) Therapy - Westchase, Tampa, Florida - September 25th, 2011 [September 25th, 2011]
- natural hormone replacement - September 28th, 2011 [September 28th, 2011]
- 6 Month Hormone Effects (before and after) - September 28th, 2011 [September 28th, 2011]
- Jeff Life, MD - Cenegenics, Hormone Replacement Therapy - September 29th, 2011 [September 29th, 2011]
- Huge - September 30th, 2011 [September 30th, 2011]
- Transsexual hormones,Intramuscular injection, Progynon Depot,Estradiol - October 2nd, 2011 [October 2nd, 2011]
- Dr Whiting on Menopause and the Dangers of HRT - October 12th, 2011 [October 12th, 2011]
- Ahuviya Harel (ADF-Fuensalida) to Start Hormone Replacement Therapy - October 13th, 2011 [October 13th, 2011]
- Clomid Defined - Video - October 14th, 2011 [October 14th, 2011]
- Thyroid Hormone Replacement Therapy - Dr. Denis Rebic - Video - October 14th, 2011 [October 14th, 2011]
- Hormone Replacement Therapy - Video - October 14th, 2011 [October 14th, 2011]
- Dr. Pamela Smith - Bio-Identical Hormone Replacement - Video - October 15th, 2011 [October 15th, 2011]
- Jasper Carrott - Traffic - October 22nd, 2011 [October 22nd, 2011]
- VIDEO: Breast Cancer, Hormone Replacement Therapy Connection - Video - October 24th, 2011 [October 24th, 2011]
- Menopause and Hormone Replacement Therapy with Dr. Sulak - Video - October 24th, 2011 [October 24th, 2011]
- Menopause - October 24th, 2011 [October 24th, 2011]
- bio identical hormone replacement therapy raleigh durcham chaepl hill north carolina - Video - October 24th, 2011 [October 24th, 2011]
- Endocrine Related Hair Loss, Can Hormone Replacement Therapy Help Treat This? Friedman - Video - October 24th, 2011 [October 24th, 2011]
- Dr. Navarro Discusses Bio Identical Hormone Replacement Therapy - Video - October 24th, 2011 [October 24th, 2011]
- Hormone Replacement Therapy by the Book - Eldred Taylor, MD - Video - October 24th, 2011 [October 24th, 2011]
- Sangeeta Pati, MD, FACOG, discusses Hormone Replacement - Video - October 24th, 2011 [October 24th, 2011]
- Active Center's Dr. Gross Discusses Bio-Identical Hormone Replacement Therapy on NEWS 12 NJ - Video - October 28th, 2011 [October 28th, 2011]
- DALLAS ANTI-AGING MEDICINE BIO-IDENTICAL HORMONE THERAPY - Video - October 29th, 2011 [October 29th, 2011]
- Hormone Replacement Therapy and Menopause in Women - Video - November 8th, 2011 [November 8th, 2011]
- Amberen - Natural HRT Alternative Commercial - Video - November 9th, 2011 [November 9th, 2011]
- The Dangers of HRT - Video - November 11th, 2011 [November 11th, 2011]
- The Benefits and Risks of Male Hormone Replacement Therapy - Video - November 16th, 2011 [November 16th, 2011]
- Natural Menopause Treatment - Herbal HRT Alternative - Video - November 23rd, 2011 [November 23rd, 2011]
- Dr. Ian Thorneycroft - Hormone Replacement Therapy - Video - November 24th, 2011 [November 24th, 2011]
- Sarah,MTF Transgender 3months HRT - Video - November 24th, 2011 [November 24th, 2011]
- 26. ftm 1 month on t - Video - November 24th, 2011 [November 24th, 2011]
- Dr. Quint Jardine - Hormone Replacement Therapy with Pellets - Video - November 24th, 2011 [November 24th, 2011]
- 6 Month Changes MTF HRT - Video - November 24th, 2011 [November 24th, 2011]
- Medical Mondays: Will hormone replacement therapy increase my risk of breast cancer? - Video - December 6th, 2011 [December 6th, 2011]
- HRT EXPERIENCES NOT ALL GOOD - Video - December 8th, 2011 [December 8th, 2011]
- Sarah, MTF transgender 9 months HRT - Video - December 9th, 2011 [December 9th, 2011]
- Full: Effect of Testosterone Replacement Therapy on Prostate Tissue in Men with Late-Onset Hypogonadism (Dramatic Health) - Video - December 10th, 2011 [December 10th, 2011]
- Suzanne Somers on hormone therapy for menopause, part 3 of 6 - Video - December 11th, 2011 [December 11th, 2011]
- 1 Year HRT MTF Transition - Video - December 12th, 2011 [December 12th, 2011]