Wednesday, May 14, 2014

Why Aegerion's 10% sequential revenue growth disappointed investors

Disclosure: After investigation, I believe that AEGR is grossly overvalued, that its addressable market has been exaggerated by 1,000%, and that its regulatory investigations 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.

If blockbuster rivals – the anti-PCSK9 drugs – arrive at end of 2015, how can AEGR possibly close this gap?

Brazilian regulator – ANVISA – rejected AEGR’s drug. The “named patient option” remains, but requires the patient to take legal action.  Payments have been delayed due to the Brazilian Gov. investigation of AEGR via a new Anti-corruption law (enacted in Jan. 2014).  The law involves bribery. If AEGR sales depended on such, then prior sales numbers will probably not return. The penalty in Brazil is up to 20% of revenue.)

Due to AEGR’s botched dossier, German Regulator -- G-BA – classified the drug as having “no additional benefit.”

Europe is making no significant contributions to revenue, and is not expected to make an impact in the near future.

Japan has required additional study.

The sales force behind rival drug, Kynamro, has been increased by Genzyme and will directly compete with Aegerion’s Juxtapid … at a much cheaper price.

Management’s version of the addressable market is at odds with the very scientists working on its drug by 1,000%. Risk of off-label promotion.

The scientists on AEGR’s drug claim that there are approx. 300 US HoFH patients in the USA; commercial management claims there can be 3,000.  Even Nobel Prize winners use the number 300 when speaking of USA HoFH sufferers.

If the scientists are correct, and management incorrect, then AEGR’s proactive reach for more than 300 presents a serious risk of off-label marketing.
In fact, the Department of Justice is currently investigating Aegerion for its marketing and sales practices.
If sales depended on off-label promotion, then present scrutiny and a return to compliance could seriously reduce sales.
There has been no investor closure with the FDA Warning. If scrutiny is ongoing, sales efforts may be curtailed to insure compliance.

Aegerion Pharmaceuticals, Inc.
SEC 10-Q 1st Qtr 2014
Aegerion's addressable market at odds by 1,000%
Brazil Passes Landmark Anti-Bribery Law - Compliance Week
Sanofi/Genzyme planning to add more sales representatives

Friday, May 2, 2014

AEGR Problems

See slide at

What are the problems with AEGR?
RE: Aegerion Pharmaceuticals, Inc.

DOJ Investigation into AEGR sales and promotion practices

No closure with recent FDA warning

AEGR IR says FDA and DOJ problems are probably different

Shareholder lawsuit: "False and misleading statements"

Brazilian government investigation through anti-corruption law

If Brazil investigation yields evidence, threat of additional SEC/DOJ action via Foreign Corrupt Practices act

Straight-up sales practices?  Only Brazil and the US are making meaningful contributions to revenue, yet precisely these two are subject to Government investigations

Intense regulatory scrutiny may force AEGR to pull back current sales practices, reducing revenue

If sales flatten out or decrease, the stock price has a very long way to fall.
AEGR claims a USA patient population of 3,000, while the very scientists on their drug say there are only 300. Nobel Prize winners also say there are only 300.  If the scientists are correct, then AEGR's promotional attempt at more than 300 could constitute off-label marketing and could explain the current DOJ investigation.
European sales have yet to deliver any meaningful revenue.
“The non-U.S. patents directed to the composition of matter of lomitapide issued in Canada, Israel, Japan, and certain EU countries are scheduled to expire in 2016.” ~ AEGR SEC 10-K
The sales team and effort behind rival drug, Kynamro, has recently been increased -- perhaps to take advantage of AEGR's regulatory entanglements and the damage done to AEGR's reputation.
AMGN, REGN, PFE, etc. are showing good results with a possible new blockbuster rival: the anti-PCSK9 drug class.
AEGR claims that its commercial team has been managing drop out rates -- which ought to be subject to medical discipline, not commercial interests.