Why Amarin, Akebia Dipped Badly - InvestingChannel

Why Amarin, Akebia Dipped Badly

When Amarin (NASDAQ:AMRN) shares trended lower in 2020, falling from $20 to $10, investors should have braced for the bad news. By April, a court ruling against Vascepa sent the stock to below $5.

Amarin stock rebounded and held the $7.00. That ended, too, when the appeals court took only one day to affirm the ruling against Vascepa. The legal stumble suggests that investors should stay away from this company.

In general, a biotech company must have three things. First, it must prove the drug is safe. Second, it must have plenty of funding so that it does not seek the markets for cash. And third, its patents must hold up.

Akebia (NASDAQ:AKBA) is another biotech stock stumbling. On Sep. 3, the company posted mixed final results for Phase 3 clinical trials involving its kidney disease drug. Investors may want to consider AKBA stock at these levels. Its partners include Mitsubishi Tanabe Pharma and Vifor.

The addressable market for the drug could be in the billions. If the company gets approval for treating patients on dialysis, then the stock could rebound. If it does not get approval for patients not on dialysis, the potential sales drop by one-third. Conversely, the stock fell 80% from 52-week highs, suggesting an overreaction.

Biotech investors should look at Akebia as a speculative trade.