Aegerion: Addressable Market At Odds By 1,000%

RE: Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR)

Summary:

Aegerion is trying to convince investors that there can be a population of 3,000 HoFH patients in the US for its drug, "lomitapide"; Nobel Prize winners and scientists associated with Aegerion use numbers that are closer to 300.

Background:

Aegerion is in a race against Isis, Amgen, Sanofi and others to provide another treatment for those afflicted with Homozygous Familial Hypercholesterolemia (HoFH), an extremely rare, yet very serious disease leading to excessive levels of cholesterol. Before modern treatments, such as apheresis and statins, most patients did not live beyond 30 years of age. Isis' new drug, called "Mipomersen," has just been approved this year by the FDA. Competing with this new drug is Aegerion's drug, "Lomitapide."

AEGR Market Cap versus 2013 RevenueAegerion has only one drug on the market. As the SEC filings put it, "Our business currently depends entirely on the success of JUXTAPID." (AKA, "lomitapide.") ~ (AEGR 2012 10-K)

Aegerion currently has a market cap of about $2 billion, with "full year 2013 revenue guidance for net product sales to $45 to $50 million …" ("Aegerion Pharmaceuticals Announces Third-Quarter 2013 Financial Results")

A controversy surrounds Aegerion's claimed patient population: management has been promoting the idea that there are 3,000 HoFH cases in the USA; scientists associated with Aegerion put the number closer to 300. That is a 1,000% difference.

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." (Q2 2013 Conference Call)

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
Click to enlarge

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." (Q2 2013 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." (Q3 2013 Conference Call)

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. (To see her relationship to Aegerion, follow the links to Dr. Cuchel's presentation poster | Lancet)

  • See her YouTube presentation of Aegerion's Lomitapide, in which she also mentions HoFH prevalence in the first minute. Quote from 0:30 into the video:

"... for a very rare disease: that is Homozygous Familial Hypercholesterolemia. The incidence is calculated to be one in a million, so about 300 patients in the United States."

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." (Presentation before the FDA committee)

To see the relationship between AEGR and Dr. Rader, follow this link: Aegerion's press release.

AEGR Dr Rader citing prevalence of 1 in a million in FDA meetingClick to enlarge

Aegerion financially supported a study on the prevalence of HoFH in Germany and that study estimated a prevalence of 1:860,000.(Homozygous familial hypercholesterolemia (HoFH) in Germany: an epidemiological survey) As of this writing, the U.S. population is about 317 million. (US Census Population Clock) Even if this
German study and its 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."(The Official Web Site of the Nobel Prize)

This latter number is even used in Michael Brown's Nobel Prize acceptance speech:

Nobel Prize winner Michael Brown citing HoFH prevalence rate in acceptance speechClick to enlarge

Follow the link to the official website of the Nobel Prize organization: Video of Nobel Prize winner, Michael Brown, using prevalence rate of 1:1,000,000 for HoFH. The 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." (Conference Call Q3 2013)

But investors currently value Aegerion at a 2 billion dollar market cap, about $70 ~ $80 per share -- as if all of these sales have already taken place and as if there were no issue of an exaggerated patient population. 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? 90% down from here would be about $7 or $8 per share. That'd be a serious drop.

AEGR Market Cap Chart

I called Investor Relations at Aegerion and did not receive any information that was not already made available through filings, conference calls, and the Investor Day presentation. To sum up the conversation, Aegerion held to the 3,000 patient count. Their data is "proprietary," and there is no "third party peer reviewed" information that I could receive. A patient tracker was said to list 1,500 patients, with the "vast majority" being from the United States. Based on this tracker, contact with doctors, and other data, they are deriving their 3,000 patient count for the US. This data is not publicly available, so we are left with trusting management for both the data and the method of calculation. When I asked for publicly available sources, they pointed out the European Heart Journal article featured on Investor Day. Let's take a look at that article.

Aegerion held its "Investor Day" on November 7, 2013. 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. (CEO Beer Investor day. Time: 9:10 minutes into presentation)

9:10 minutes into the presentation, CEO Beer. said,

"We had nothing to do actually with this publication."

This is clearly not the case. One only needs to scroll down to page 12 to see that Aegerion put up some money here.

CEO Beer claims Aegerion had nothing to do with the paper cited on Investor dayClick to enlarge

"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.) ~ , …." (European Heart Journal paper cited on Investor Day)

What about the original paper?

Familiar Hypercholesterolemia (NASDAQ:FH) has a severe form, HeFH, and an extremely severe and extremely rare form, HoFH. The fact that the study focused on HeFH and not HoFH is not a concern, since HoFH is related to 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.

On Investor Day, this new prevalence rate of 1:200 for HeFH is extrapolated into a prevalence rate for HoFH of 1:160,000, ending with an patient population of 2,000 in the U.S. But how did we get this rate 1 in 200?

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 into degrees of probability. Now we can lump "probable patients" with "definite patients" and show everyone a higher prevalence rate. In the original paper, however, you can see these scores separately, and, surprise, surprise, the prevalence for Definite FH is the same old 1:500. Lumped together in the European Heart Journal we naturally come up with a higher prevalence rate.

Prevalence rate for the Danish study was actually the traditional 1 in 500 for Definite FHClick to enlarge

Original paper was also funded by pharmaceutical players in this marketDo 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 there are players here who 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?

What is not immediately apparent is that this was a very specific study of "whites of Danish descent." How representative would that be of a melting pot such as the U.S. population? Additionally, the findings are 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" (Genetic Causes of Monogenic Heterozygous Familial Hypercholesterolemia: A HuGE Prevalence Review, Melissa A. Austin, et al.)

(10,440 / 11 = 1 in 949)

From the same source, Table 4, page 413:

Country/ethnicity Estimated frequency of FH heterozygotes Reference
Denmark/Danish 1/950 Individuals Anderson,k et al., 1979
Click to enlarge

(Ibid.)

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. (Homozygous familial hypercholesterolemia (HoFH) in Germany: an epidemiological survey)

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." (Kaye-Eileen Willard, MD, ABIM Medical Director for Chronic Disease Management Wheaton Franciscan Healthcare All Saints Cardiovascular Institute)

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, and were estimated to be in a range of 1:500 and 1:1000. (Genetic Causes of Monogenic Heterozygous Familial Hypercholesterolemia: A HuGE Prevalence Review)

There have many studies on HeFH prevalenceClick to enlarge

AEGR Market Cap data by YCharts

The Danish studies cited by Aegerion on Investor Day:

Disclosure: I am short AEGR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.