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Monday, November 11, 2013

Estimates of Aegerion’s addressable market at odds by 1,000%.


3footcrowbar.com https://twitter.com/MattBerry01


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. 
 More detail:
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]
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]
Do we even need to mention that two of the authors on the original paper also received funds from pharmaceutical players?  Do we need to mention that these players have a financial interest in finding a larger pool of patients rather than a
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.
“11 infants were diagnosed with FH in a screening of 10,440 Danish newborns”[14]
(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]  





[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
[12] CEO Beer, Investor day. Time: 9:10 minutes into presentation http://wsw.com/webcast/cc/aegr/
[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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