Why Amarin Corporation Stock Is Surging Today

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What happened

Shares of the Irish biotech Amarin Corp. (NASDAQ: AMRN) rose by as much as 15.8% on sky-high volume in early-morning trading today. What's driving this double-digit move higher? Amarin reported before the bell that the cardiovascular-outcomes trial Reduce-It, for the prescription fish-oil pill Vascepa, has now exceeded 90% of the targeted 1,612 primary major adverse cardiovascular events. Reduce-It's top-line data should be available by the third quarter of this year, as scheduled.

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So what

If the Reduce-It trial results support the hypothesis that Vascepa can significantly reduce serious cardiovascular events like heart attack and stroke when used in conjunction with statins, the highly refined fish-oil pill should go on to achieve blockbuster status within the next few years. As an FDA-approved treatment for patients with severely high triglyceride levels, Vascepa is already on track to generate $270 million this year, and the Reduce-It data could open up a much larger target market.

Now what

Will Vascepa prevail in this large cardiovascular outcomes trial? Unfortunately, there's simply no way to know, or even to realistically handicap the possible outcome of this trial. The data from broadly similar trials, after all, has produced a mixed picture regarding the cardiovascular benefit of omega-3 supplements in general.

Reduce-It shouldn't necessarily be directly compared to these other trials, for a variety of reasons. But the take-home point is that the outcome is a high-risk event that shouldn't be taken lightly by investors. Over the past few months, the drugmaker's stock has started to heat up in anticipation of this forthcoming readout. So if Reduce-It is a failure, Amarin's shares will probably give back a significant portion of these gains.

All told, investors probably shouldn't chase this stock at this stage -- that is, unless they feel comfortable possibly losing a decent chunk of their capital in the event of a clinical setback.

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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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