Aegerion (AEGR) Q2 Loss Wider than Expected, View Intact

Aegerion Pharmaceuticals, Inc. AEGR reported a loss of 87 cents per share in the second quarter of 2016, which was much wider than the Zacks Consensus Estimate of a loss of 25 cents. The company had reported earnings of 4 cents in the year-ago period.

In the reported quarter, net product sales were $44.5 million, down 30.6% year over year.

Quarter in Detail

Net sales of Juxtapid declined 45.5% year over year to $31.1 million (including $20.4 million from prescriptions written in the U.S.) due to a reduction in patients on therapy in the U.S., as a result of the introduction of PCSK9 inhibitors in the region in the third quarter of 2015. This was, however, partially offset by higher international revenue due to a large shipment in Brazil.

As of Jun 30, 2016, there were around 423 active commercial patients being treated with Juxtapid (including approximately 296 U.S. patients), down from 498 patients at the end of the previous quarter.

Myalept sales amounted to $13.5 million, up 90.1% from the year-ago quarter. As of Jun 30, 2016, the company had 116 active generalized lipodystrophy (GL) patients on commercial therapy in the U.S., including approximately 94 U.S. patients.

Research and development (R&D) expenses were of $10.7 million, down 14.4% due to lower outside services and consulting expense.

Selling, general and administrative (SG&A) expenses decreased 5.4% year over year to $40.4 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 force reduction undertaken in Feb 2016 and changes in executives.

In June, Aegerion entered into a definitive merger agreement, under which it will combine with a wholly owned indirect subsidiary of QLT Inc., QLTI to form a global biopharmaceutical company, Novelion Therapeutics Inc. Novelion will focus solely on rare diseases. The transaction is expected to close late third-quarter 2016 or fourth-quarter 2016.

To mitigate the impact of persistent competitive pressures on Juxtapid, the company stated its plans to withdraw the drug from the EU and certain other global markets by the end of 2016, unless it finds suitable partners. As part of the company's strategy of lowering operating expenses and improving its cash position by 2017, Aegerion has trimmed its global workforce by approximately 13%.

Pipeline Update

Aegerion continues to expect a Japanese approval for Juxtapid in homozygous familial hypercholesterolemia (HoFH) in the fourth quarter of 2016. The company intends to submit a marketing authorisation application MAA for Myalept for the treatment of patients with GL and severe partial lipodystrophy in the EU by the end of 2016.

2016 Outlook

Aegerion has reiterated its guidance for 2016. The company continues to expect total sales in the range of $130 million to $150 million. Juxtapid sales are still projected in the range of $90 million to $100 million, while Myalept sales are anticipated in the $40–$50 million band.

AEGERION PHARMA Price and EPS Surprise

AEGERION PHARMA Price and EPS Surprise | AEGERION PHARMA Quote

Our Take

Aegerion's second-quarter results were disappointing, with the company reporting a wider-than-expected loss. Launch of PCSK9 inhibitors in the U.S. market hurt Juxtapid sales and will continue to do so in the forthcoming quarters.

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 decision to withdraw Juxtapid from the EU was disappointing.

Aegerion currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector are Geron Corp. GERN and ANI Pharmaceuticals, Inc. ANIP. Both stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>