Buying a stock when it's dipped in value can be a great way to secure a low price and strong return, assuming that it recovers. Amarin's (NASDAQ: AMRN) stock didn't just dip in March; it crashed more than 70%.
When news broke on March 30 that a district judge in Nevada invalidated patents that protected its Vascepa drug on the grounds of "obviousness", its share price fell off a steep cliff. Vascepa is a fish-oil derivative pill that helps patients with high triglyceride levels and can reduce their risk of heart attack and stroke. The drug is a significant piece of the company's business, and Amarin is appealing the judge's decision. The big question is whether the stock can recover from this and if it's too risky to buy today. Let's take a closer look to find out.
If Amarin is unsuccessful in defending its patent, it will face competition from other drug companies in the U.S. market. No company is ready to launch a generic competitor to the market just yet, but the possibility is a huge uncertainty for the stock and several companies have generic versions in their pipelines. While it'll still control the international market, that's minimal consolation for the company, which depends on strong sales in the U.S.