This week, I’m turning my attention to the biotech arena in order to highlight one of 2013’s hottest stocks and CEOs, Marc Beer of Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR).
Kudos to you, Mr. Beer
Sometimes putting my foot in my mouth is part of being a Motley Fool contributor. Thus far I have been so wrong on Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) that it’s not even funny. With the stock approaching $100 per share, I’ve been decisively negative on the company since roughly the mid-$15 level. Yeah… it’s that bad. Despite still being personally skeptical of its valuation, I’m not too proud to give credit where credit is due — and that’s with Marc Beer and his research team.
The pinnacle of Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR)’s success has been the development and approval of Juxtapid in the U.S. by the Food and Drug Administration for the treatment of a rare disease known as homozygous familial hypercholesterolemia, or HoFH. It is a genetic disorder that affects how the body deals with cholesterol, resulting in high levels of LDL-cholesterol (the bad kind), which can lead to multiple cardiovascular complications and a significantly higher chance of premature death. Worldwide, about one in 500 people have the disease, but being based on genetics, having a direct relative (sibling, parent, or child) with the disease puts the odds of you having HoFH at 50-50.
Under normal circumstances, developing a rare disease drug is encouraged because there’s rarely any competition, resulting in uncontested demand and often high annual drug prices. As Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR)’s luck would have it, a competing drug for HoFH was developed at around the same time and approved by the FDA just weeks later.
Kynamro, developed by ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) and Sanofi SA (ADR) (NYSE:SNY), is an injectable medication designed to treat HoFH. From a logistics standpoint, I saw how Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR)’s pill to treat HoFH would steal the show from an ease-of-use standpoint, but I just couldn’t wrap my hands around the large price discrepancy between ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) and Sanofi SA (ADR) (NYSE:SNY)’s Kynamro, which was priced at $176,000 per year compared to Juxtapid at $235,000 per year. Then, just months ago, Beer decided to raise the price on Juxtapid to $295,000 per year from $235,000 per year which I felt would be the death knell for sales of the drug. Little did I know, convenience and safety have, for now, won out.
One of the biggest draws for patients and physicians alike in using Juxtapid has been its results during clinical trials. Both Juxtapid and Kynamro exhibited the potential for liver toxicity in trials; however, the Kynamro arm in late-stage trials also presented abnormal tissue growth (neoplasms) in 3.1% of patients. This finding didn’t stop Kynamro from being approved, but it did give an already easier-to-use drug like Juxtapid all the more reason to be priced at nearly $300,000 per year.
As of the second quarter, Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) reported an impressive 215 patients taking Juxtapid with a dropout rate of less than 10%. Remember, these figures come just six months after the drug was approved. In addition, the drug, known abroad as Lojuxta, was also approved to treat HoFH in the EU just days ago.
A step above his peers
Usually when I’m busy praising CEOs, I like to mention what they’ve done for shareholders in terms of introducing share buybacks or boosting a dividend. With Aegerion you don’t get either of those perks, but you get something even more impressive: huge share price appreciation and unwavering support from its CEO!
