Amarin Fish-Oil Heart Drug Will Be Big, Could Be Huge

Part of that question was answered Thursday after a panel of experts convened by the Food and Drug Administration reviewed Amarin's data. They voted 16 to 0 that Vascepa was safe and cuts cardiovascular events.


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16 November 2019



Big Picture Long Term November 15th 2019


Eoin Treacy's view

A link to this week's Big Picture Long-Term video is posted in the Subscriber's Area. 



CECL Symposium Highlights: Still More Questions Than Answers

Thanks to a subscriber for this report from Raymond James which is dated August 6th but makes a number of worthwhile points. Here is a section:

What is CECL?: CECL is a new accounting standard that modifies how companies estimate loan and lease losses, and affects all periods starting after December 15, 2019 (i.e., begins 1Q20). In the midst of the financial crisis in 2008, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) established the Financial Crisis Advisory Group (FCAG). FCAG believes it has identified a “weakness in current GAAP being the delayed recognition of credit losses that results in the potential overstatements of assets,” which ultimately led to its recommendation for this new standard. The new standard requires financial institutions to use a combination of historical information, current conditions and reasonable forecasts to estimate the expected losses over the life of a loan. This is a significant shift from the current methodology, which relies on incurred losses. We note on day one of implementation, there will be a balance sheet adjustment, creating additional general reserves for expected credit losses and negatively impacting capital levels, but implying limited income statement impacts.

Conclusion: We walked away with more questions than answers, and anticipate a significant amount of variability in disclosures amongst the banks given the latitude FASB has provided in the standards. While many questions remain, FASB officials, consultants and management teams alike continue to work through the issues and are refining models as overall understanding of the standards improves. Fortunately, we anticipate regulatory capital relief for the banks as necessary, since capital levels remain elevated and the intent of the new standards was not to increase capital levels at the banks. However, we believe there could be some unintended consequences and potential ripple effects that will create further disruption in the space, potentially shifting assets out of the banking space and into the non-bank space, which has continued to gain share. Ultimately, we remain concerned with the uncertainty around CECL, anticipated volatility around disclosures and capital impacts, as well as potential negative implications on industry demand will serve to provide one more reason for investors to not own the space.


Eoin Treacy's view

The Current Expected Credit Loss (CECL) regime is another piece of regulation imposed on the banking sector which serves to ensure the overleverage and inappropriate risk management that characterised the industry ahead of the financial crisis is not repeated. One of the primary results of successive waves of regulation has been to pile compliance costs onto the banks but it has also reduced their ability to leverage their balance sheets which has unintended consequences.



SoftBank Next 30-Year Vision

Thanks to a subscriber for this report which may be of interest.

This vision is designed with the time span of 300 years. The next 3 decades is merely the first step


Eoin Treacy's view

This report contains a number of truly inspiring ideas. Everything from universal happiness, to the power of computers to far exceed the computing power of the human brain, to tripling longevity, to creating a management structure capable of surviving all of this radical change. Some of these promises are still in the realm of the science fiction, some are a lot closer to reality than we might realise.



Amarin Fish-Oil Heart Drug Will Be Big, Could Be Huge

This article by Max Nisen for Bloomberg may be of interest to subscribers. Here is a section:   

Part of that question was answered Thursday after a panel of experts convened by the Food and Drug Administration reviewed Amarin's data. They voted 16 to 0 that Vascepa was safe and cuts cardiovascular events. The vote doesn’t bind the FDA, but the agency often follows panel recommendations, so it would be a surprise now if the drug isn’t made available to more Americans. That’s big news for Amarin — and for many patients. 

We still don't know exactly how good the news is, however, and won’t until the FDA makes a final decision by the end of the year. There was consensus on the drug’s overall effectiveness. Still, the panelists disagreed about how far that impact extends. Access for millions of additional patients and billions of potential sales are still up the air, which means there’s more volatility ahead for Amarin investors. The market seems focused on the positives for now: Amarin shares surged 7% in early trading Friday after rising more than 20% on Tuesday, when the FDA released briefing documents ahead of the panel that were seen as relatively supportive for the drug.


Eoin Treacy's view

Mrs. Treacy is genetically predisposed to pancreatitis during pregnancy and has had a couple of episodes in between pregnancies which have required hospitalisation. The cardiologist who implemented a treatment plan to contain her hypolipidemia during her last pregnancy prescribed a massive daily dose of fish oil and it worked. Every time since then she has found fish oil acts as a salve to pancreatic pain which has ensured she has not been hospitalised in six years.  



Weekend viewing, reading and listening November 15th 2019


Eoin Treacy's view

Fascinating: Moore’s Law predictions vs actual growth in transistor count 

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