Aegerion Vs. Isis: Which One Is The Buy?

Includes: IONS, NVLN
by: Rx Stocks

This is a unique week, as two drugs are being reviewed by a FDA advisory committee. Lomitapide by Aegerion Pharmaceuticals, Inc. (AEGR) and Mipomersen by Isis Pharmaceuticals (ISIS). Mipomersen is an antisense drug targeting apolipoprotein B. The briefing documents will likely be posted two days before the meetings on the FDA website (2012 Meeting Materials). Lomitapide, in a Phase III trial, did dramatically lower LDL cholesterol, although there was an increase in hepatic fat. Mean hepatic fat did seem to stabilize at the end of the trial. It seems that a key issue that will be addressed by the panel is whether there are concerns about liver diseases with long term use of Lomitapide. Isis' Mepomersen has a similar, perhaps less, LDL-C lowering effect, but also raises liver enzyme levels. Panel discussions will likely focus intensely on the potential for liver diseases with long term use of these drugs.

Cramer, on Mad Money, suggested that ISIS was the better buying opportunity compared to Aegerian, arguing that Isis has a much larger pipeline. There was another exceptionally insightful approach by other Seeking Alpha contributors; they conducted a survey of lipidologists where they report that Lomitapide will likely be used more than Mepomersen. The survey was completed by a small percentage of those polled, and combined with the putative lack of knowledge amongst physicians on a drug coming before the FDA for the first time, this renders projecting future sales from this data arguable. But this survey should definitely be part of the discussion on projecting sales. The same authors make a reasonable case that sales could be projected to be $407 million for Lomitapide. One other difference lies in the fact that Lomatapide is a once daily tablet, while Mepomersen is a once weekly subQ injection.

Aegerion has about 25 million shares outstanding, while Isis has about 100 million. Isis does have a platform, antisense technology, that is amenable to more rapid development of drugs for novel targets. Indeed, as Cramer mentioned, Isis does have a larger pipline. Isis has current annual revenue of about $100 million, whereas Aegerion has little annual revenue ($7 million).

Aegerion has less shares outstanding and a better shot at capturing more of this small market. ISIS, as Cramer said, has a larger pipeline and better long term prospects. But with the recent share price movement for both companies, it would seem that market investors are well aware of the upcoming meetings. Therefore, it may be that favorable review by the panels is priced in to share prices for both companies, for now. There is the chance-- albeit remote-- that news from the briefing documents or meetings could be more negative. Rather than buying or selling, it may be best to wait for the briefing documents and/or reports from the actual meetings, which will all happen this week, stay tuned.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AEGR, ISIS over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.