RE: Aegerion Pharmaceuticals, Inc. (AEGR)
Matt Berry: November 11,
2013
Disclosure: After investigation,
I believe that AEGR is grossly overvalued, that its addressable market has been
exaggerated by 1,000%, and that its regulatory risks are not yet reflected in
the stock price. Consequently, I am short AEGR. I am not infallible. All claims
and references herein should be verified by the reader. All investors must do
their own due diligence. This report is
not a recommendation.
The Patient Count Controversy
“… consistent with our plan to discontinue offering specific
launch metrics other than sales, we no longer plan to provide guidance for the
number of patients on therapy at year end.” [1]
Why not?
With Aegerion’s decision to stop revealing patient counts,
we have only underlined an older suspicion: the estimate of HoFH patients in the USA as used by the very scientists
associated with Aegerion may be correct
and consequently, the actual U.S. HoFH patient count promoted by the CEO would
be a 1,000% exaggeration … 90% lower than
Aegerion’s promotional material suggests.
Aegerion relationship
|
Estimation of USA HoFH population
|
Marc Beer, CEO of
Aegerion
|
3,000
|
Dr. Marina Cuchel, top listed scientist on Aegerion’s phase 3 study
for Lomitapide.
|
300
|
DR. Daniel J. Rader, “the inventor of the patent."
|
300
|
The CEO says that he believes there might be 3,000; whereas scientists
associated with Aegerion have used numbers which amount to only 300.
Marc Beer, CEO of
Aegerion uses “3,000” which would be a prevalence of 1:100,000.
"... there may be as many as 15,000 potential patients appropriate for
lomitapide therapy in total on a global basis, with at least 3,000 of them
being in the U.S."[2]
“… I would emphasize that what we're seeing in the marketplace is just reconfirming that 3,000-plus U.S. number, that 15,000 -- approximately 15,000 patients globally, and we feel comfortable committing that we can get 4,000 to 5,000 patients on therapy globally and have this exceed $1 billion of revenue per year.”[3]
“… I would emphasize that what we're seeing in the marketplace is just reconfirming that 3,000-plus U.S. number, that 15,000 -- approximately 15,000 patients globally, and we feel comfortable committing that we can get 4,000 to 5,000 patients on therapy globally and have this exceed $1 billion of revenue per year.”[3]
Dr. Marina Cuchel, top listed scientist on Aegerion’s lomitapide
phase 3 study uses a prevalence of “1:1,000,000,” which comes out to
about 300 patients in the USA. [4]
See her YouTube presentation of Aegerion’s
Lomitapide, in which she also mentions HoFH prevalence in the first
minute. http://www.youtube.com/watch?v=_qMnZxvFFvU
DR. Daniel J. Rader, introduced by Aegerion as “the inventor of the patent," uses a prevalence of
“1:1,000,000,” which comes out to about 300 patients in the USA.
"The
estimated prevalence of homozygous FH is approximately 1 in a million
people."[5]
To see the relationship between AEGR
and Dr. Rader, see Aegerion press release at http://ir.aegerion.com/releasedetail.cfm?ReleaseID=572091.
Aegerion financially supported a study on the prevalence of
HoFH in Germany and that study estimated a prevalence of 1:860,000.[6] As of this writing, the U.S. population is
about 317 million.[7]
Even if this higher prevalence rate were
representative of U.S. rates, these numbers would still estimate the U.S. population
of HOFH patients to be somewhere between 300 and 400. That’s a serious drop
from Aegerion’s promotion of 3,000.
The scientific community generally uses the number 300 for
the U.S. -- that is, a prevalence rate of 1:1,000,000. This prevalence rate has
been widely accepted and published. It is even used by Nobel Prize winners, Michael S. Brown and Joseph L.
Goldstein. Their research, as
described on the official website for the Nobel Prize, mentions the prevalence
rate: “The severe form of FH (homozygous) is rare,
about one in a million people.“[8]
This latter number is even used in Michael Brown’s Nobel Prize acceptance speech:
Follow the link to the official website of the Nobel Prize
organization: http://www.nobelprize.org/mediaplayer/index.php?id=1676
-- the HoFH prevalence rate is mentioned
and illustrated 11:47 minutes into the video.)
Perhaps it’s possible that those with a Wall Street interest
in prevalence rates know more than the scientific community, or perhaps some
people just get high by smoking their own math. Me, I think I’ll bet on what
the scientists are saying.
What is AEGR worth with 3,000 U.S. and 15,000 global
patients? … but if investors have been misled and the number is actually 90%
less, what will we value AEGR’s stock price with a U.S. patient population of
only 300? Here is a claim made in the
third quarter conference call:
“… I would emphasize that what we're seeing in the marketplace is just
reconfirming that 3,000-plus U.S. number, that 15,000 -- approximately 15,000
patients globally, and we feel comfortable committing that we can get 4,000 to
5,000 patients on therapy globally and have this exceed $1 billion of revenue
per year.” [9]
But investors
currently value Aegerion at a 2 billion dollar market cap, about $70 - $80 per share
-- as if all of this has already happened
and as if there were no issue of an exaggerated patient count.
If the generally accepted prevalence rate
ends up being correct and if the market adjusts revenue estimates down 90%, what stock price will we
adjust to? Wouldn’t that pull the rug
out from under a $2 billion dollar fantasy?
90% down from here would be about $7 or $8 per share. That’s a serious drop.
The Danish studies: Extrapolating from the Extrapolation’s Extrapolation
multiplied by 2
Aegerion held its “Investor Day” on November 7, 2013.[10] In it CEO Mark Beer refers to a paper in the
European Heart Journal, which supports, by “extrapolation,” what Aegerion has
been trying to tell investors: there might be more HoFH patients than generally
accepted by the scientific community. [11]
In the presentation, CEO Beer said,
"We had nothing to do actually with this publication."[12]
This is clearly not the case. One only needs to scroll down to page 12 to see that Aegerion put up some money here.
“Conflict of interest: Consensus
Panel members have received lecture honoraria, consultancy fees and/or research
funding from Aegerion (M.J.C., R.D.S., M.A., A.L.C., K.G.P., E.B.) ~ , ….”11
Aegerion does not mention the original paper
The fact that the study focused on HeFH and not HoFH
is not a concern, since HoFH is a subset of HeFH.
“HeFH”
refers to Heterozygous FH (inherited
from only one parent) and HoFH, to Homozygous FH (inherited from both
parents). So when the study
challenges the widely accepted HeFH prevalence of 1:500 with the new
number 1:200, we should accept that, if true and representative of the general
population, this would have a bearing on HoFH prevalence rates. So far, so
good.
But why would Aegerion use the paper from the European Heart
Journal and not use the original paper
from which the European Heart Journal derived the information, lumping “Definite”
FH patients together with “Probable” FH patients. When we read the text we learn that the paper is recommending a scoring system
which will categorize candidates for FH according degrees of probability. Now we have several categories from which we can
lump “Definite” and “Probable” FH patients together and find a higher
prevalence rate. In the original paper you can also see these scores shown separately, and, surprise,
surprise, the prevalence for Definite FH is the same old 1:500. The European Heart Journal shows them lumped
together and naturally we are shown a higher prevalence rate.
·
Cited by Aegerion on Investor day:
Familial hypercholesterolaemia is underdiagnosed and undertreated in the
general population: guidance for clinicians to prevent coronary heart disease. (cited
by Aegerion on Investor Day)11
·
Source for paper cited by Aegerion on Investor
Day: Familial Hypercholesterolemia in the Danish General Population:
Prevalence, Coronary Artery Disease, and Cholesterol-Lowering Medication[13]
smaller one?
And do we really have a right to make assumptions on the
U.S. population of HoFH patients from this
particular study? There are several problems inherent in such an attempt.
What is not immediately apparent is that this was a very
specific study of “whites of Danish descent.”
“Estimates are shown for the theoretical frequency of heterozygous familial hypercholesterolaemia of 1/500 in the general population,1 as well as for the directly detected frequency of 1/200 in the Danish population,
a typical country in Northern Europe.”11 and that it is contradicted by a previous study of 10,000 Danish infants which estimated an HeFH prevalence of 1:995. There is a serious gap of several hundred percent between two different studies, both estimating Danish prevalence rates for HeFH.
“Estimates are shown for the theoretical frequency of heterozygous familial hypercholesterolaemia of 1/500 in the general population,1 as well as for the directly detected frequency of 1/200 in the Danish population,
a typical country in Northern Europe.”11 and that it is contradicted by a previous study of 10,000 Danish infants which estimated an HeFH prevalence of 1:995. There is a serious gap of several hundred percent between two different studies, both estimating Danish prevalence rates for HeFH.
(10,440 / 11 = 1 in 949)
From the same paper, Table
4, page 413:
Country/ethnicity
|
Estimated frequency of FH heterozygotes
|
Reference
|
Denmark/Danish
|
1/950 Individuals
|
Anderson,k et al., 1979
|
Another study which Aegerion did not mention is one which it also funded
and which determined an HoFH prevalence rate in neighboring Germany of
1:860,000.[15]
In fact, many studies have been done by others regarding the
prevalence rates for HeFH and HoFH.
“The prevalence of FH is
well-defined: it is one of the most common genetic disorders. Heterozygotes
number about 1:500 persons in the general population, increasing to 1:50 when a
founder effect is present, such as in French Canadian, Finnish, Christian
Lebanese and South African populations.”[16]
So we’re not without a sample of prevalence counts, none of
which should be taken off the table. A
study in the UK put the prevalence of HeFH at 1:623; in Japan, at 1:900. In the
illustration below, note that the numbers for the USA were derived from a Nobel
Prize winner’s research, Joseph L. Goldstein,[17]
and were estimated to be in a range of 1:500
and 1:1000.[18]
[5]
Presentation before the FDA committee: http://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/EndocrinologicandMetabolicDrugsAdvisoryCommittee/UCM340371.pdf
[6]
Homozygous familial
hypercholesterolemia (HoFH) in Germany: an epidemiological survey: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3647446/
[11]
Familial hypercholesterolaemia is underdiagnosed and undertreated in the
general population: guidance for clinicians to prevent coronary heart disease. (cited
by Aegerion on Investor Day) http://eurheartj.oxfordjournals.org/content/early/2013/08/15/eurheartj.eht273.full
[13] Familial Hypercholesterolemia in the Danish General Population: Prevalence, Coronary Artery Disease, and Cholesterol-Lowering Medication
http://jcem.endojournals.org/content/early/2012/08/13/jc.2012-1563.abstract
[14]
Genetic Causes of Monogenic Heterozygous Familial Hypercholesterolemia: A HuGE
Prevalence Review, Melissa A. Austin, et al.
http://aje.oxfordjournals.org/content/160/5/407
[15]
Homozygous familial
hypercholesterolemia (HoFH) in Germany: an epidemiological survey: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3647446/
[16]
Kaye-Eileen Willard,
MD, ABIM Medical Director for Chronic Disease Management Wheaton Franciscan
Healthcare All Saints Cardiovascular Institute https://www.lipid.org/communications/lipid_spin/2013W01
[18]
Genetic Causes of Monogenic Heterozygous Familial Hypercholesterolemia: A HuGE
Prevalence Review, Melissa A. Austin, et al. http://aje.oxfordjournals.org/content/160/5/407
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