Pfizer Inc. (PFE), Merck & Co., Inc. (MRK), Aegerion Pharmaceuticals, Inc. (AEGR): Will This Speculative Cholesterol Treatment Pay Off?

A very high-priced treatment

Investors are waiting to see if Juxtapid can break out of its niche and become a mainstream high LDL treatment, but that kind of approval could be years away. For now, Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) can only treat its small group of patients suffering from homozygous familial hypercholesterolemia, which only affects one in a million people. Due to the rarity of the disease, a year’s supply of Juxtapid costs $295,000 — recently increased from $235,000.

Wall Street cheered that 25.5% price increase, bidding shares up 30% after the initial announcement on May 16. As a result, Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) expects global revenue to come in between $15 million to $25 million for fiscal 2013, from treating 250 to 300 patients by the end of the year. In the long term, Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) expects to treat a target population of 3,000 patients and generate $1 billion in annual revenue.

A Foolish final thought

In the end, Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) is a speculative biotech play. Its top and bottom line growth relies completely on the success of a single product, and its fundamentals are all over the map.

Source: Yahoo Finance, July 29, 2013

However, Aegerion’s business model of selling a single expensive drug for a rare disease could pay off in the long run. In my previous article, I noted how Alexion, which markets a single treatment for two rare diseases, is now exhibiting double-digit earnings and revenue growth and attracting the interest of larger pharmaceutical companies like Roche.

Considering that shares of Aegerion are up nearly 400% over the past twelve months, investors appear to believe that Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) could easily follow Alexion’s footsteps. It’s also easy to see former cholesterol treatment kings, Pfizer Inc. (NYSE:PFE) and Merck & Co., Inc. (NYSE:MRK), getting interested in acquiring Aegerion, which has a relatively small market cap of $2.6 billion — which will only grow larger if Juxtapid is approved as a more mainstream treatment for high LDL.

The article Will This Speculative Cholesterol Treatment Pay Off? originally appeared on Fool.com and is written by Leo Sun.

Leo Sun has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Leo is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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