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Aegerion Pharmaceuticals, Inc. is an emerging biotech company focusing on developing drugs for fatal rare diseases. Its sole drug candidate, lomitapide, is designed to treat Homozygous Familial Hypercholesterolemia (HoFH), an extremely rare and generally fatal disease for which there are no effective therapeutic options.
On April 30, 2012, the FDA accepted Aegerion's New Drug Application (NDA) for lomitapide for review. The company expects the FDA's Endocrinologic and Metabolic Drugs Advisory Committee to hold an advisory panel to review lomitapide along with competitor Isis Pharmaceuticals' KYNAMRO in September or October 2012. Until the companies are notified of a panel, they can only speculate as to if and when it will happen. Aegerion has a Prescription Drug User Free Act (PDUFA) date of December 29, 2012.
We believe, based on the high likelihood of approval and market adoptions, that the current valuation for shares of AEGR (P = $14.72; MC =$316.6MM; Cash = $63.5MM; EV = $269.9MM) is relatively low for the potential earnings of the company and that the stock should move significantly higher if lomitapide is approved in the US and EU.
Furthermore, lomitapide is a wholly owned asset, making AEGR an acquisition candidate. Aegerion will be required to make royalty payments to the University of Pennsylvania in a range of levels not greater than 10% on net sales of lomitapide. While a composition of matter patent is set to expire in the US in 2015, the company expects that an additional 5 years of protection will be granted under a Hatch-Watchman extension that will extend the patent life to 2020.
Additionally, Aegerion has been granted Orphan Drug Exclusivity, which grants market exclusivity until the end of 2019 (assuming December 2012 approval) in the US. Lomitapide qualifies as a new chemical entity in the EU, which grants it 8 years of data exclusivity upon marketing authorization and an additional 2 years of market exclusivity, protecting the product until FY2023 (assuming 2013 approval) in the EU. The company has, however, been issued a method of use patent for the titration of lomitapide, which extends the life to 2027 in the US.
Pivotal Phase III Trial in HoFH
Aegerion started a single-arm, long-term, open-label, Phase III study to evaluate long-term efficacy and safety of lomitapide for HoFH indication in December, 2007 and 78-week results were reported on January 6, 2012. Inclusion in the clinical trial was based on one of the following three clinical criteria: (1) documented functional mutation(s) in both LDL receptor alleles or alleles known to affect LDL receptor functionality, (2) skin fibroblast LDL receptor activity less than 20% normal; (3) untreated total cholesterol (TC) greater than 500 mg/dL and triglyceride less than 300 mg/dL with both parents having documented history of TC greater than 250 mg/dL.
Twenty-nine patients were enrolled in the Phase III study based on one of the three criteria with a mean LDL-C of 337 mg/dL (352 mg/dL for completers) on a variety of background lipid-lowering therapies. Patients consisted of adult males and females with a mean age of 31 years. The trial started with a 6-week run-in period on current lowering therapy to determine baseline measurements, followed by dose escalation of lomitapide over 26 weeks to a maximum tolerated dose (MTD) of up to 60 mg once daily, with dose titration employed as a means to reduce adverse effects. Patients then continued to be treated at the MTD of lomitapide for additional 52 weeks, to complete 78 weeks of treatment. After 78 weeks, patients had the option to continue the treatment in an open-label extension trial for an additional 48 weeks until regulatory approval is granted.
Figure 1 summarizes the trial data at time points of 26, 56, and 78 weeks. At week 26, the mean reduction in LDL-C levels were 40.1% and 50.2%, in intent-to-treat (ITT) (n=29) and completer (n=23) populations, respectively. This translates into mean LDL-C level reductions of 135 mg/dL/177 mg/dL for ITT/completer populations. Hepatic fat levels were elevated to 9.0% (n=22) from baseline levels of 1.0%, measured by magnetic resonance spectroscopy (MRS). It is likely that accumulation of liver fat is intrinsically linked to the mechanism of action of microsomal triglyceride transfer protein inhibitors, which is expected to be the limiting safety issue that is associated with this class of agents.[4]
At week 56, the remaining 23 patients experienced a mean reduction in LDL-C levels of 44%, resulting in 155 mg/dL of reduction from 352 mg/dL to 197 mg/dL. Approximately 35% of patients (8 out of 23) reached LDL-C levels of
At week 78, the 23 completers had a mean reduction of LDL-C levels of 38.4%, translating into a 135 mg/dL mean reduction from 352 mg/dL to 217 mg/dL. Over the 78-week period, 55% of patients reached LDL-C levels of
Of the 29 patients who participated in the trial, 4 patients discontinued the study due to adverse events, 3 of which were GI-related adverse effects (AES) and 2 patients withdrew participation during the first dose escalation period (26 weeks) due to non-medical reasons. The frequency of the GI-related AEs decreased after the dose escalation period was finished and patients were established on their MTDs.
In the first 56 weeks, 4 patients experienced consecutive aminotransferase (ALT or AST) elevations of between five times to eleven times the upper limit of normal (ULN). These four patients were able to keep on the therapy through dose titration period. Between week 56 and week 78, no additional patients experienced consecutive ALT or AST elevations of greater than five times ULN. No patients permanently discontinued treatment during the 78-week study due to liver function test (LFT) elevations. Mean hepatic fat remained stable between week 56 and week 78. Approximately 50% of apheresis patients either reduced or eliminated apheresis therapy.
Figure 1: Summary of Lomitapide HoFH Phase III Results
Protocol Phase
Week 26 (Efficacy Phase)
Week 56
(Safety Phase)
Week 78
(Safety Phase)
Background Therapy
Fixed
Reduction Allowed
Reduction Allowed
Patient Number
29[23]
23
23
Average Dose (MG)
38.4[44.6]
40.2
40.7
LDL-C
(mean % change from base line)
-40.1[-50.2]
-44.0
-38.4
Hepatic Fat
(mean %)
9.0*
(Baselin 1.0)
7.3**
(Baseline 1.2)
8.2**
(Baseline 1.2)
[ ] For Week 26, data in and out of bracket were completer analysis (CA) and intention-to-treat , respectively. For Weeks 56 and 78, CA and ITT were the same.
* Data were based upon 22 patients ** Data were based upon 21 patients
Source: Corporate Press Release
Phase II Trial
Prior to the pivotal Phase III trial, the UPenn sponsored a small, open-label, Phase II trial of 6 patients with HoFH phenotypes, which was completed in January 2007.[5] The patients received lomitapide at four different doses of 0.03, 0.1, 0.3 and 1.0 mg per kg of body weight per day, each for 4 weeks, and returned for a final visit after a 4-week drug washout period.
At the MTD of 1.0 mg per kg per day, LDL-C level was reduced by 50.9% from baseline and apolipoprotein B level was reduced by 55.6% from baseline, both of which were statistically significant with P
Other Clinical Trials
According to the AHA, lowering LDL-C significantly reduces the risk of cardiovascular disease. The current major therapies for HoFH are Statins, or hydroxyl-3-methylglutaryl-coenzyme (HMG-CoA) reductase inhibitors, and LDL apheresis. Neither of them has been proven effective in HoFH patients. Thus, alternative therapies are under development to further reduce LDL-C levels. Isis Pharmaceuticals' drug candidate, KYNAMRO, is the major competitor of lomitapide.
KYNAMRO™ (mipomersen) is a first-in-class, apolipoprotein-B (apo-B) synthesis inhibitor co-developed by Isis and Genzyme [subsidiary of Sanofi SA for both HoFH and FH indications. KYNAMRO reduces LDL-C and other key atherogenic lipids linked to cardiovascular disease by preventing apo-B formation, which is a key structural component for atherogenic lipids including LDL-C. KYNAMRO is an oligonucleotide therapy that is dosed through injection weekly.
Four randomized, double-blind, placebo-controlled, and multi-center Phase III trials have been carried out to test efficacy and safety of KYNAMRO in patients with HoFH, heterozygous FH (HeFH), severe hypercholesterolemia (HC), and high risk, respectively. In the HoFH Phase III trial, 51 HoFH patients were randomly assigned 2:1 to receive subcutaneous (SC) injection of 200mg KYNAMRO weekly or placebo weekly. [6]
At week 26, patients in the KYNAMRO arm experienced significant reduction in LDL-C (-24.7%; 95% CI: -31.6 to -17.7) than those in the placebo arm (-3.3%; CI: -12.1 to 5.5; PFigure 2. The response to KYNAMRO, however, was highly variable, with the reduction in LDL-C ranging from -80% to 0%. Lipoprotein(a) [Lp(a)] levels were significantly decreased from the mean reduction of -7.9% (P=0.001) in the placebo arm to -31.1% in the KYNAMRO arm.
A followed-up multi-center, phase III, open-label extension study was conducted at 33 sites in 7 countries. In total, 141 patients received SC injection of 200 mg KYNAMRO weekly, with 20 severe HeFH patients, 83 HeFH patients, and 38 HoFH patients. Among all patients, 111 patient data were available for 1-year efficacy evaluation with 53 patient data available for 2-year evaluation. The results were presented based upon the whole patient population at XVI International Symposium on Atherosclerosis on March 29, 2012. No detailed breakdown on efficacy among the three patient groups is yet available.
Figure 2: Summary of KYNAMRO Phase III trials for HoFH indication
Protocol Phase
Week 26
Background Therapy
Fixed
Patient Type/Number
HoFH/51
Average Dose Per Week
200
Average Baseline LDL-C (mg/dL)
426
Average LDL-C Reduction (mg/dL)
-106
Placebo %change in LDL-C
-3.3
KYNAMRO
% change in LDL-C
-24.7
Source: Raal FJ et al. Lancet 2010; 375:998-1006.
AEs associated with KYNAMRO have been frequent, among which, injective-site reactions were the most common. The other common AE is flu-like illness, occurring in up to 30-50% of patients. Twelve percent of patients experienced an increase in the concentration of alanine aminotransferase (≥3 times the upper limit of normal) at week 26. No clinical meaningful rises in bilirubin concentration was found. At week 26, 28 of 32 HoFH patients who received KYNAMRO treatment completed the trial. For the extension trial, 78 of 141 (55%) patients discontinued KYNAMRO treatment with 62 patients due to treatment-emergent adverse events. No details are available on how many of these dropouts are from the HoFH patient group.
AMG145 vs. REGN727: AMG145 and REGN727, two SC-administered Proprotein Convertase Subtilisin/Kexin Type 9 (PCSK9) inhibitors, are being developed by Amgen and Regeneron /Sanofi, respectively. The two PCSK9 inhibitors can potentially block the effects of PCSK9 and prevent the degradation of LDL receptors (LDLRs).
More LDLRs lead to more LDL-C in the liver, and therefore, lower LDL-C levels in the blood stream. A preliminary Phase I trial of AMG145 revealed that the treatment of AMG145 cut LDL-C levels by up to 64% compared to placebo in 54 men and two women - 18 to 45 years old - who were healthy and not taking other medications.
A combination of REGN727 and atorvastatin achieved an over 72.3% mean reduction in LDL compared to 17.7% reduction with atorvastatin alone in 92 patients with primary HC.[7] Amgen is currently recruiting 66 HoFH patients for a 2-part, randomized, placebo-controlled, Phase 2/3 study to evaluate AMG145's efficacy and safety for HoFH indication. REGN727 is currently in a placebo-controlled, double-blind, Phase III trial for HC indication.
ALN-PCS01 vs. BMS-PCSK9Rx: Two antisense drug candidates targeting PCSK9 mRNA, ALN-PCS01 and BMS-PCSK9Rx, are developed by Alnylam and Isis in collaboration with Bristol-Myers Squibb , respectively. Alnylam initiated a randomized, single-blind, placebo-controlled, Phase I trial with ALN-PCS01 in September 2011.
A total of 32 healthy volunteers with elevated baseline LDL-C (>116 mg/dL) were enrolled into six sequential dose cohorts ranging from 0.015 to 0.400 mg/kg. Results showed that mono-therapy ALN-PCS01signficantly reduced PCSK9 plasma levels by up to 84% and LDL-C levels by up to 50%. ALN-PCS01 was well tolerated in the study and no serious AEs were found to be related to the drug administration. The Phase I trial is currently still active but no longer enrolling. BMS-PCSK9Rx Phase I trial, however, was discontinued in early 2012 due to regulatory concerns.
Investor Focus
Ahead of an FDA advisory panel and decision later this year, investors are focused on the, efficacy, and safety of lomitapide, and they are also making comparisons to KYNAMRO.
Trial Design: There is a potential risk that a single-arm, open-label, 29-patient Phase III study is insufficient for lomitapide approval in HoFH. To address this concern, we looked at the orphan drugs approved from 2007 to present. There were 92 orphan drugs approved by the FDA during the period, 19 of which were approved based upon single-arm trials, accounting for approximately 21% of all approvals.
Among the 19 drugs, 10 drugs (52.6%) were approved with patient size comparable to that of lomitapide's Phase III trial, as shown in Figure 3. This suggests that FDA has great flexibility when it comes to approval of orphan drugs. It is worth noting that Aegerion initially designed a placebo-controlled, two-arm Phase III trial, but only changed it to a single-arm trial per the FDA's request mainly due to severity of HoFH patients. We believe that the clear efficacy of lomitapide in the context of the unmet medical need in HoFH, should outweigh the potential limitations of the trial design.
Efficacy: To date, no detailed data has been published for lomitapide's Phase III trial. Although the average LDL-C reduction looks impressive, the variation of the efficacy across the patients is important to determine whether the drug is effective across the board or it only works for a small subgroup. The publication of the complete data will be welcomed by investors who are interested in a peer-reviewed evaluation.
Safety Profile: One major concern associated with lomitapide is increase in hepatic fat. At week 26, average hepatic fat increased to 9% from a baseline of 1%. It then declined to 7.3% at week 56, but increased again to 8.2% at week 78. The hepatic fat levels at all three time points were over the threshold level (5%) for steatosis, a disease of the abnormal retention of lipids within a cell.[8] Fatty liver is a very serious AE. The drug also had GI-tolerability issues when patients were on non low-fat diets.
There are, however, a few drugs approved by the FDA, e.g. tamoxifen and amiodarone that were approved, despite the fact that they can cause fatty liver. This will almost certainly be a topic of discussion at the FDA advisory panel. Given the fatality of HoFH and the efficacy of lomitapide, we believe that the benefits of lomitapide outweigh the risk and that the FDA should approve this product. We expect that its usability will be limited to HoFH patients, due to the risks associated with steatosis.
Comparison with KYNAMRO: We do not believe that KYNAMRO poses a significant threat to lomitapide for three reasons. First, the average LDL-C reduction from its Phase III trial was -24.7% for KYNAMRO at week 26, versus -40.1% for lomitapide. The LDL-C reduction for lomitapide peaked at week 56 and slightly decreased at week 78, which further confirms the sustained efficacy of the drug. Isis presented KYNAMRO's 1-year and 2-year efficacy at XVI International Symposium on Atherosclerosis on March 29, 2012.
The average LDL-reductions from baseline at weeks 52 and 104 were -28% and -28%, based upon 111 patients and 53 patients, respectively. It should be noted that the evaluations were based upon the whole population including both HoFH and HeFH patients. Given the fact that HoFH is more severe than HeFH, we believe that the average LDL-C reduction for the HoFH subgroup should be higher than -28%. It is clear to us that lomitapide is more effective than KYNAMRO.
Secondly, lomitapide is dosed orally once-daily, whereas KYNAMRO is dosed weekly by subcutaneous (SC) injection. Thirdly, overall lomitapide and KYNAMRO showed similar increases of hepatic cells, as shown in Figure 4. Unless the mean hepatic cell level for lomitapide at week 104 is severely worsened, we do not see significant difference in liver safety profiles between two drugs.
Liver safety aside, KYNAMRO is plagued by injection site reactions, which is a notorious side effect for oligonucleotide-based drugs. Also, KNYAMRO has a very long half-life of 30 days, as opposed to 20 hours for lomitapide, which means that if a patient has a reaction the drug will be in their system for a long time. The observation that 55% of patients discontinued therapy during the extension phase of the trials, largely due to treatment-emergent adverse events, may shed some light on the tolerability this product.
Figure 4: Comparison of the hepatic fat between lomitapide and KYNAMRO
Compound Name
Patient Type
Hepatic Fat Increase
Week 26 (Efficacy Phase)
Week 56
(Safety Phase)
Week 78
(Safety Phase)
Week 104
(Safety Phase)
lomitapide
HoFH
Mean %
9.0
(Baseline 1.0) N=22
7.3
(Baseline 1.2) N=21
8.2
(Baseline 1.2)
N=21
n/a
KYNAMRO
HoFH/HeFH/Severe HeFH
Median %
5.0
N=60
13.0
N=31
7.0
N=45
(week 76)
5.0
N=39
Source: Aegerion and Isis Corporate Press Releases
Market Opportunities
In 2010, Aegerion commissioned LEK to assess the commercial HoFH and FH markets in the US and EU. LEK estimated that there are approximately 3000 HoFH patients in the US and 3000 HoFH patients in the EU Five (Germany, United Kingdom, France, Italy, and Spain).[9] Given the unmet medical need, lomitapide's efficacy/safety profile, and oral-dose feature, we believe that Aegerion should be able to establish a premium price for lomitapide.
At $300k per patient per year and 30% market penetration, we estimate that lomitapide can generate revenues of $270MM in the US and $270MM in the EU for HoFH indication alone. Aegerion is actively developing lomitapide for other indications, such as pediatric HoFH and FC and expects to commercialize the product globally. Phase III trials for FC and pediatric HoFH are expected to initiate in end-FY2012 and FY2013, respectively.
Milestones
On March 5, 2012, Aegerion announced that it submitted an NDA to the FDA in the US and a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) in EU seeking approval of lomitapide as an adjunct to a low fat diet and other lipid-lowing therapies to reduce cholesterol in adult patients with HoFH.
On April 30, 2012, the FDA accepted the Aegerion's NDA. With approximately 10-month review, the company expects that the FDA's Endocrinologic and Metabolic Drugs Advisory Committee will host an FDA panel to review lomitapide along with competitor Isis Pharmaceuticals ' KYNAMRO in September or October 2012. Lomitapide has a PDUFA date of December 29, 2012. The decision by the EU is expected in 1H2013.
Aegerion's major competitor, Isis, along with its major partner Genzyme, a subsidiary of Sanofi, filed an MAA for their candidate KYNAMRO to the EU EMA for HoFH and HeFH indications in July 2011. In March 2012, Isis filed an NDA to the US FDA for HoFH indication. We believe that lomitapide has a clear edge due to its efficacy, oral-dose formulation, and superior safety/tolerability profile.
Intellectual Property
Aegerion's lomitapide patent portfolio consists of five issued US patients and related issued patients in Europe, Canada, Israel, Japan and New Zealand, along with other pending applications. Aegerion holds an exclusive worldwide license from UPenn to these patents and patent applications. The U.S. patent covering the composition of matter of lomitapide is scheduled to expire in FY2015. The non-U.S. patents directed to the composition of matter of lomitapide are scheduled to expire in FY2016.
We believe, as does the company, that lomitapide will be eligible for 5-year patent extension under the Hatch-Waxman Act in the US and supplementary protection certificate (SPC) in the EU. In addition, lomitapide has 7-year orphan drug exclusivity (ODE) from launch in the US and 8-year data exclusivity upon marketing authorization and an additional 2-year market exclusivity in the EU (10-year total protection in EU).
Additionally, the company has been issued a method of use patent for the titration of lomitapide, which extends the life to 2027 in the US. If the drug is approved by the FDA in December 2012, we believe that lomitapide's exclusive rights in HoFH indication will last until FY2020 at a minimum, and likely until 2027 in the US, and until FY2023 in the EU, assuming 2013 approval there.
Stock Valuation
Aegerion had a total of cash, cash equivalent, and marketable securities of $63.51MM at end-1QFY2012. With a quarterly cash burn rate of approximately $10MM (based on cash burn rate in 1Q2012), we project that Aegerion will spend $43MM-48MM in cash this year. There is a risk that Aegerion will raise more particularly if there is any delay associated with lomitapide's FDA and EMA approvals. With a total diluted share count of 21.5MM and a stock price of $14.72, Aegerion has a market cap of $316.6MM and an enterprise value (EV) of 269.88M.
We assume that Aegerion will achieve sales of roughly $500MM in 2016, after gaining approval at around the end of 2012, net of its royalty payments. A very simple back of the envelope calculation suggests that Aegerion's stock should move substantially following an FDA approval and successful launch. For example if one puts a very conservative 5 multiple on 2016 net sales of $500MM, you get a $2.5B value, which if we discount back to 2013 at 30% per year, we get to $875MM. This translates into a share price of $41 (assumes 21.5MM shares outstanding). While this valuation is very crude, it illustrates that shares of Aegerion have the potential to generate significant return for shareholders. Overall, we believe that the stock should move higher by 100%+ if lomitapide is approved for HoFH indication by the FDA and EMA in 2013.
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