Aegerion (AEGR) Misses Q1 Earnings Estimates, Cuts View

Aegerion Pharmaceuticals, Inc. AEGR reported a loss of $1.85 per share in the first quarter of 2016, much wider than both the Zacks Consensus Estimate of a loss of 54 cents and the year-ago loss of 20 cents.

In the reported quarter, net product sales were $35.7 million, below the Zacks Consensus Estimate of $43.5 million and down 39.8% year over year.

The Quarter in Detail

Net sales of Juxtapid declined 54.3% year over year to $26.2 million (including $23.6 million from prescriptions written in the U.S.) due to a reduction in patients on therapy in the U.S., along with a delay in timing of a bulk order of Juxtapid from the Brazilian Ministry of Health, which is now shifted to the second quarter. As of Mar 31, 2016, there were around 498 active commercial patients being treated with Juxtapid (approximately 490 of whom are U.S. patients), down from 615 patients at the end of the previous quarter.

Myalept's sales increased to $9.5 million from $2.1 million in the previous quarter. As of Mar 31, 2016, the company had 87 active generalized lipodystrophy (GL) patients on commercial therapy in the U.S., up from 79 GL patients at 2015 end.

Research and development (R&D) expenses were relatively flat at $9.9 million.

Selling, general and administrative (SG&A) expenses decreased 15.4% year over year to $39.7 million mainly due to lower salary and employee-related costs, and lower stock-based compensation due to a reduction in headcount in both the selling and administrative functions as part of the reduction in force in Feb 2016 and changes in executives. We note that the company reduced its global workforce by approximately 25% to lower its cost base in view of a decline in Juxtapid sales in the U.S. market.

Pipeline Update

Aegerion plans to initiate a study to evaluate Juxtapid in pediatric HoFH patients in the second quarter of 2016. The company expects a Japanese approval for Juxtapid in HoFH in the fourth quarter of 2016 (anticipated launch in early 2017). The company is also planning to submit a marketing authorisation application MAA for Myalept for the treatment of patients with GL in the EU by the year end. Aegerion is also planning for a label expansion of Myalept to include the treatment of patients with severe partial lipodystrophy.

2016 Outlook

Aegerion projects total sales in the range of $130 million to $150 million, down from its earlier projection of $160–$190 million. Juxtapid sales are now expected in the range of $90 million to $100 million, down from the prior expectation of $120–$140 million in 2016. Myalept sales are anticipated in the $40–$50 million band.

Our Take

Aegerion's first-quarter results were disappointing, with the company missing on both fronts by a wide margin. Launch of PCSK9 inhibitors in the U.S. market hurt Juxtapid sales and will continue to do so in the forthcoming quarters.  The lowered guidance was also disappointing.

The company also faced reimbursement hurdles for Myalept as prior authorizations are taking longer than expected and payers are requesting additional data. In fact, Myalept sales are expected to remain under pressure due to the payer mix.

Moreover, the company received a setback when it reached preliminary agreements with the U.S. Department of Justice (DoJ) and staff of the Securities and Exchange Commission (SEC) regarding a settlement of the ongoing investigations by the agencies into the company's sales activities and disclosures related to its lead drug, Juxtapid. Under the agreement, Aegerion will pay $40 million to the DoJ and the SEC over a period of five years in following tranches: approximately $3 million upon finalization of the settlement; around $3.7 million per year, payable quarterly, for three years following finalization of the settlement, and roughly $13 million per year, payable quarterly, during the fourth and fifth year after finalization of the settlement.

The dismal results could deal a blow to the company's shares.

Aegerion currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Pfizer Inc. PFE, Johnson & Johnson JNJ and Abbott Laboratories ABT. All three stocks carry a Zacks Rank #2 (Buy).

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