Aegerion Pharmaceuticals: Capitalize on Cholesterol

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 |  Includes: AEGR, AZN, BMY, GSK, MRK, NVS, PFE
by: Bryan Czyzewski

As of writing this analysis, Merck (NYSE:MRK) announced the results of its ENHANCE trial pitting their statin/ezetimibe combination drug Vytorin against statin alone in a patient population heterozygous for familial hypercholesterolaemia. Both treatments decreased serum LDL levels by 40-58 percent. Most people were surprised by the fact that the greater reduction in LDL by Vytorin did not result in a more pronounced decrease in carotid artery thickness. It should be noted that this population, even with the decrease in LDL, would still be considered at the top of the risk category. It should also be noted that the change in carotid thickness is statistically insignificant, a far cry from the “twice as bad” that the media is purporting.

An interesting editorial in the New York Times brings up the idea that we may be interpreting metabolic biomarkers incorrectly. Drug discovery can be so precise as to hone in on a certain indicator of disease and manipulate its levels. Recent research has begun to uncover that LDL-ladden ApoB is a better indicator of cardiovascular heart disease than pure LDL levels, which shines some light on the Isis-Genzyme 1.9 billion dollar deal, where Isis’ drug mipomersen decreases LDL-C by 70 percent with concomitant decreases in ApoB.

Cholesterol lowering drugs make up over 35 billion dollars in sales in 2006, more than ten percent of worldwide pharmaceutical company revenue. Healthcare companies on average spend over 80 dollars per member annually to fill cholesterol prescriptions; a whopping 11 percent of all prescription filled. The American Heart Association estimates that 34.5 million people in the US have high cholesterol and over 100 million are borderline high. Furthermore about 15 percent of people 20 and older and one in four people 65 and older are prescribed statins, one of the most common cholesterol medications. In short, cholesterol is big money and is the biggest chunk of money for the pharmaceutical industry. Aegerion (NASDAQ:AEGR) is looking for a piece of that money.

Cholesterwhat?

In order to understand the pharmaceutical atmosphere built around the hyperlipidemic market lets take a step back and understand what exactly the body is up against. High levels of cholesterol in the blood cause arteriosclerosis and heart disease. Since 1967 it has been known that drug assisted lowering of cholesterol will prevent coronary heart disease. In a nut shell, cholesterol medications make you live longer. The Adult Treatment Panel III [ATP III] of the National Cholesterol Education Program released guidelines on cholesterol management in 2001. Our target total cholesterol level is around 100-200 mg/dL, which are combined LDL and HDL.

Cholesterol and the disease pathologies associated with its metabolism are very well understood. Only 20 percent of cholesterol is absorbed through the foods we eat. The rest is synthesized in your body. It provides rigidity and support for the every cell in your body and is a key intermediate for the production of hormones. Cholesterol is not water soluble so it is packaged on lipoproteins that form three types of particles in the blood: high-density lipoproteins [HDL], low-density lipoproteins [LDL], and chylomicrons. HDL carries cholesterol from the tissues to the liver, where cholesterol is repackaged into LDL and is sent back to tissues. Chylomicrons transport cholesterol from the small intestine and exchange it to HDL particles. LDL particles are responsible for hyperlipidemic pathologies because of their ability to invade the blood vessel walls and form heart disease-causing plaques.

A higher intake of cholesterol from food results in a net decrease in the production of intracellular cholesterol, while higher intake has the opposite effect. Remember, more circulating LDL causes heart disease. Low levels of intracellular cholesterol triggers the formation of transcription factors that activate several key cholesterol synthesis and regulatory genes. These genes include the LDL receptor, which removes LDL particles from circulation and HMG-CoA reductase (the famous statin target) which is the rate limiting enzyme for the production of intracellular cholesterol. So basically a high cholesterol diet causes the shutdown of the system that removes LDL particles from your blood.

So who buys this stuff?

With the number of people having high cholesterol topping 100 million and growing, the market is quite sizeable. Table 1 describes the common treatments and target lipidic lowering percentages. Treatment guidelines are set by the National Cholesterol Education Program’s Adult Treatment Panel. These guidelines include four LDL cholesterol levels from optimal to very high and three LDL risk categories: Coronary Heart Disease [CHD], Multiple Risk Factors, and Zero Risk Factors. The highest risk individuals have a target LDL goal of less than 100 mg/dL. The higher your LDL levels or the greater your risk category (CHD being the highest), the more vigorous the treatment course.

[click all tables to enlarge]

Most of the treatments on the market focus on the lowering of LDL levels. Statins, the largest family of cholesterol inhibitors and for the longest time the most potent, directly inhibit HMG-CoA reductase, the rate limiting enzyme of cholesterol synthesis. Inhibition can cause myopathy, a severe muscle wasting condition, and elevated liver enzymes. The statin-intolerant market encompasses up to 2 million individuals. A far second to the statins are the fibrates at 4 percent market share. These are nuclear hormone agonists. They work by directly altering the transcription of many of the genes involved in cholesterol synthesis. Another treatment is bile acid sequesterants. These drugs are one of the oldest cholesterol medications, developed in the mid to late sixties. They work as molecular sponges, inhibiting the reabsorption of intestinal bile (the only mechanism of cholesterol excretion). Finally one of the least understood medications is niacin. Yep, good ole generic vitamin B3. With decreases in LDL of up to 25 percent, and a whopping 50 percent reduction in triglycerides, niacin can actually make you lose weight.

New drugs that have hit the market include cholesterol absorption inhibitors, such as Merck’s ezetimibe. Drugs in development include cholesterol-ester transfer protein inhibitors, squalene synthetase inhibitors, and Aegerion’s microsomal transfer protein inhibitor .

Peaking into Aegerion’s medicine cabinet…

So now that we understand the cholesterol back-story, let’s examine Aegerion’s role and its market potential. Aegerion filed for IPO on November 20, 2007 after withdrawing a previous filing in June 2007 and is backed by Piper Jaffray, Thomas Weisel Partners LLC, Collins Stewart LLC, and Lazard Capital Markets. Aegerion faces fierce competition from almost every major biopharma out there. Aegerion has positioned itself on the edge of the burgeoning combination pill market with the ultimate goal of treating three sub-groups of the cholesterol market: individuals afflicted with Familial Hypercholesterolaemia, individuals who are statin-intolerant, and individuals with high to very high cholesterol.

Aegerion relies on two drugs developed by Bristol-Myers Squibb (NYSE:BMY) in 1990, AEG-733 (formerly BMS-201038) and AEG-427 (implitapide). Both these drugs are microsomal transfer protein inhibitors. This class of drugs inhibits the transfer of lipids to apoB, the building block of LDL and chylomicrons. AEG-733 was donated to the University of Pennsylvania in 2003 and licensed to Aegerion in 2006. Early phase I and phase II clinical trials found increases in heptatic fat content and gastrointestinal disturbances, causing BMS to abandon further development.

From the clinic…

Together with the University of Pennsylvania, Aegerion published the results of Phase II clinical trial in patients with homozygous familial hypercholesterolemia (HoFH) in The New England Journal of Medicine. This trial demonstrated the reduction by up to 56% total and 51% LDL cholesterol levels at the maximal dosages with modest increases in hepatic fat content. In October 2007, the FDA granted AEGR-733 orphan drug status for the treatment of HoFH, allowing for future tax benefits, extended patent exclusivity and smaller phase III clinical trials.

In 2006, a Phase II clinical trial was initiated to evaluate AEGR-733 as monotherapy as well as in combination with Zetia (ezetimibe). These new trials were established to test the efficacy of AEGR-733 at lower dosages in order to avoid elevation of hepatic fat and hepatic toxicity. Preliminary results from these trials have shown reductions of up to 46.2% LDL cholesterol when AEGR-733 was administered in combination with Zetia, as opposed to 29.9% as monotherapy and 19.9% Zetia alone. These results indicate potential for AEGR-733 to benefit the statin-intolerant population by providing statin-like reductions in LDL-C.

A phase II clinical trial of AEGR-733 in combination with Lipitor, halted in 2007 due to microbial contamination, showed up to 73 percent decrease in LDL-C over a 4 week period. Further clinical trials with other statins could deliver unprecedented cholesterol reductions.

But can they make it?

In a nutshell Aegerion is part of recent class of pharmaceutical company whose focus is on clinically developing novel licensed therapeutics. They hold the intellectual property on their cholesterol lowering combination drug and have demonstrated that their drug has great potential in a small niche market of Familial Hypercholesterolaemia encompassing at least 30,000 extreme cases in the US and up to 300,000 individuals. This population is enough to generate blockbuster revenue.

Several potential developments would catapult AEGR-733 into serious consideration. First a nationwide obesity epidemic would need to take place with uncontrolled weight gain and widespread diabetes affecting millions of individuals. Second, if the National Cholesterol Education Program adopts new guidelines suggested by recent clinical updates (which look likely) concerning levels of LDL-C reduction of high and very high risk individuals to less than 70 mg/dL, then no current treatment will be efficacious enough to hit the necessary target. The AEGR-733/statin combination would be a contender. Third, the clinical trials would have to show no significant increase in liver toxicity and hepatic fat content. This final condition is hotly contested in that moderate and transient increases in hepatic fat levels have not been clinically linked to any pathological condition.

Other then the run of the mill problems that most small pharmaceutical and biotech companies endure (eg. sloppy CMO, small risk of pulmonary phospholipidosis) Aegerion looks well placed to take advantage of the coming cholesterol combination pill deluge. ­­­­­­­Currently there are probably a handful of drugs in listed in tables 1 and 3 that will have the cholesterol lowering capabilities of the AEGR-733/statin combination. Whether it can survive or be bought out by the big boys is another story.