Two Years After Rising from Ashes, Aegerion Preps for Drug Debut
When Marc Beer joined Cambridge, MA-based Aegerion Pharmaceuticals (NASDAQ:AEGR) as CEO in August 2010, the company was $4 million in debt, nearly insolvent, and “not following a clear path,” he says. By October of that year, Beer, a former Genzyme executive, had worked out a development plan for the Aegerion’s cholesterol-lowering drug and taken the company public, raising $48.8 million.
Since then, Beer and his growing team have been focusing on proving the value of the company’s lead drug, lomitapide, in treating a rare disease called homozygous familial hypercholesterolemia (HoFH). It only affects about 6,000 patients in the U.S. and Europe, but it’s effectively a death sentence: HoFH patients have as much as six times the normal amount of LDL, or “bad” cholesterol, in their blood, putting them at such a high risk for heart attacks most die before age 30. Statins and other cholesterol-lowering drugs don’t really work against the disease, leaving patients with few options.
On Wednesday, Beer told investors during Aegerion’s second-quarter conference call that the drug is on track to win FDA approval by year-end and that the company should be cash-flow positive in 2014. Lomitapide was granted “orphan” status by the FDA, guaranteeing Aegerion seven years of market exclusivity plus other benefits, such as tax credits. (Aegerion, however, isn’t alone in its pursuit of this patient population. Sanofi’s Genzyme unit and Carlsbad, CA-based Isis Pharmaceuticals are seeking FDA clearance of mipomersen as a cholesterol-lowering drug with a different way of working for tough-to-treat populations. They expect a verdict from the FDA in late January.)
Investors are clearly nervous about Aegerion’s near-term challenges: The company’s net loss in the second quarter widened to $13.9 million from $8.6 million in the same quarter last year, and Aegerion’s stock fell 10 percent to $13.37 after the earnings release.
Beer will have some obstacles to overcome if he’s to regain investors’ interest over the coming months. Lomitapide, designed to be taken as a once-daily pill, is the first in a class of drugs called MTP inhibitors. MTP (microsomal triglyceride transfer protein) is responsible for binding lipids and shuttling them around the body. Aegerion’s studies have shown that inhibiting the protein can lower blood levels of LDL in HoFH patients by around 40 percent. “This product has a significant ability to be disease-modifying in a patient population that has seen everything the medical community throws at them not succeed,” Beer says.
Like most companies seeking approval for a drug with a new mechanism of action, however, Aegerion will be facing an advisory panel meeting at the FDA sometime prior to December 29, when the agency is expected to render a verdict on whether to approve lomitapide. During the meeting, a panel of experts will fire questions at the company and then vote on whether or not the FDA should approve the drug. The agency doesn’t have to follow the advice of its advisory panels, but it generally does.
Th advisory panel meeting, which has not yet been scheduled, generated quite a few worries during Aegerion’s analyst call after the second-quarter earnings release. Several analysts pressed Beer and other executives to predict what topics might be discussed during the panel, and to explain how Aegerion was preparing for the grilling. Beer and his chief regulatory officer, Martha Carter, told the analysts the company has hired outside experts to help the company prepare, and that several mock panel meetings will be held between now and the real meeting to get Aegerion’s executives ready to answer any questions that might be lobbed at them.
The company expects that much of the advisory committee’s discussion will focus on side effects. Because lomitapide acts in the liver and produces some buildup of fat there, Beer predicts the committee will want to be sure patients won’t face liver problems either in the short or long term. “I feel we’re prepared, and that the committee will feel comfortable with the risk/benefit profile in this patient population, but there will be questions around that,” Beer says.
Mark Sumeray, Aegerion’s chief medical officer, adds that lomitapide works by reducing the body’s absorption of fat, which can cause stomach upset. That side effect was serious enough to prompt a handful of patients to drop out of the late-stage trials. “The important point is, are the symptoms manageable?” he says. “We lost a few patients early on, but most stayed in the trial for 18 months. That clearly demonstrates that with adherence to a low-fat diet, patients are able to manage the issues that sometimes happen.” Nevertheless, the advisory panel will likely ask for details about how the company will track and manage adverse events over time.
Aegerion’s executives are so confident they’ll come out of the advisory panel unscathed they’ve already started building up a sales force. The company plans to hire 15 salespeople—enough to target the small group of specialist physicians who treat HoFH. Half of them are already on the payroll, and even though they aren’t allowed to market the drug before it’s approved, there’s plenty they can do now, Beer says. “We can start talking about the disease, and profiling the top practices, and that’s what they’re out there doing,” he says.
Aegerion hasn’t revealed its pricing plan for lomitapide, but Beer says he expects it will fall in the range of $200,000 to $400,000 per patient per year. The consensus among the analysts covering the company is that Aegerion will bring in $26.5 million in sales next year, assuming the drug is approved by the FDA and starts generating sales early next year.
The company’s increased sales and marketing effort largely accounted for the widening loss reported in the second quarter, executives told analysts Wednesday. Aegerion raised $47.3 million in a stock offering on June 14, virtually guaranteeing the company will have enough cash to keep operations going until it reaches cash-flow-positive status. Some investors were not happy, because the offering of new shares enlarged the overall supply of shares in the market, and thereby diluted the value of existing shares. The dilution prompted Aegerion’s shares to drop from $16.53 before the offering to $14.72 after—but Beer is unapologetic. “This capital means the difference between going into the [lomitapide] launch with $80 million versus $25 million,” he says. “It was so important to raise that capital.”
Aegerion has not taken on a marketing or development partner for lomitapide, which means it stands to reap all the revenues and profits from the drug, should it be approved. The company is also planning to study the drug in children with HoFH, and in adults with another rare disease called familial chylomicronemia. Aegerion is busy exploring options for lomitapide overseas and has already identified Japan, Brazil, and Canada as prime markets, Beer says.
As for a long-term growth strategy, Beer says he plans to leverage his executive team’s track record in rare diseases and look for other drugs to buy and develop. Beer is a Genzyme veteran who previously founded ViaCell—a company that specialized in collecting umbilical cord stem cells—and sold it to PerkinElmer in 2007. He says he has spent much of the last two years building up Aegerion’s staff from “myself and my secretary” to 60 people, many of whom have worked in rare diseases before. He expects the company to grow to 100 employees by the end of the year.
Beer is well aware that small companies with late-stage product candidates are often snapped up by Big Pharma players looking to boost their pipelines, and he readily acknowledges Aegerion may be an acquisition target. “We’re probably on several radars, probably right in the bullseye,” Beer says. “But I’d hate to see us part of a bigger organization and will do everything I can to stay independent.”
For now, Beer keeps his troops motivated by introducing them to patients suffering from HoFH. One such patient, a 19-year-old man who found Aegerion on Facebook, has spoken at the company twice. “He said he gets up every day, brushes his teeth, and wonders, ‘Is today the day I’m going to have a heart attack?’” Beer says. “He knows he has the blood vessels of a 70-year-old. These patients are waiting for something to take them out of harm’s way. I look at this as a race against a disease.”