Why Amarin's Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of drug developer Amarin (NAS: AMRN) were slumping today, losing as much as 12% in intraday trading after the company had its first drug approved by the U.S. Food and Drug Administration (yes, you read that right).

So what: An FDA approval for a small developer like Amarin would normally be cause for investors to party like it's 1999. So why in the world is Amarin's stock falling today? It would appear that investors may be disappointed at the restrictions that the FDA put on Amarin's drug, Vascepa. The restrictions will limit the overall addressable market for the drug out of the gate, which is an outcome that would understandably damper investor enthusiasm.

Now what: It's not like investors who have been riding Amarin recently haven't been rewarded -- the stock has roughly doubled so far this year (even after today's drop). The task now is for investors to go back to their spreadsheets and figure out what the longer-term financial implications are for the narrower market for Vascepa and determine whether the dip in the stock today provides is a good time to load up or join the rush to the exits.

Want to keep up to date on Amarin?Add it to your watchlist.

The article Why Amarin's Shares Dropped originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.