Aegerion takes a 'haircut' to prove MTP doubters wrong

Analysis

Another IPO, another severe ‘haircut’. Aegerion Pharmaceuticals went public on the Nasdaq exchange on Friday, pricing its shares at $9.50, a significant discount, or so-called ‘haircut’, to the filed price of $14-16.

The average ‘haircut’ of eight pharma IPOs so far this year is 40%, and with the notable exception of Aveo Pharmaceuticals, subsequent share price performance has been lacklustre (see table below). The IPO window may be open but the sun has yet to shine in. For Aegerion it was third time lucky, having ditched two public attempts in 2007 and 2008. New shareholders will be betting its pipeline of novel cholesterol-lowering agents buck the trend of a poor track record in the class so far.

Short back and sides

Although Aegerion had to offer investors a discounted price to get its shares to float, at least the stock is experiencing a rising tide – in early trade Monday the price touched $11.50.

Given the weak performance of new listings this year, aside from Aveo (Bigger doors open for Aveo as Merck deal closes, October 7, 2010), shareholders will be hoping Aegerion’s shares build on an encouraging debut.

Pharma/Biotech listings on Nasdaq in 2010
Company Date Raised ($m) Float Price ($) Filed Price ($)  'Haircut' Share performance
Ironwood Pharmaceuticals (IRWD) 03 - Feb 203 11.25 14-16 -25% -6%
Anthera Pharmaceuticals (ANTH) 01 - Mar 54 7 13-15 -50% -3%
Aveo Pharmaceuticals (AVEO) 12 - Mar 73 9 13-15 -36% +69%
Tengion (TNGN) 09 - Apr 30 5 8-10 -44% -41%
Alimera Sciences (ALIM) 22 - Apr 72 11 15-17 -31% -4%
Trius Therapeutics (TSRX) 03 - Aug 45 5 12-14 -62% -20%
NuPathe (PATH) 06 - Aug 50 10 14-16 -33% -31%
Aegerion Pharmaceuticals (AEGR) 22 - Oct 48 9.5 14-16 -37% +14%
Average 72 8 14 -40% -3%

Established in 2005, Aegerion raised $22.5m in a Series A financing round, led by Advent International and included Index Ventures, Alta Partners, and MVM Life Science Partners.

Previous failures to go public forced the company to raise $17.5m in 2007, effectively a series B although not formally announced, and issue convertible notes over the last three years. As of the end of 2009 those convertible notes totalled $14.8m, were attracting an 8% interest and were payable by the end of 2010.

As such, a portion of the IPO proceeds, estimated at $55m including over-allotment options, will be used to pay off Aegerion’s debts. However, a decent amount will be left to get its lead pipeline candidate, lomitapide, through to reporting pivotal phase III data in the second half of 2011 and subsequent regulatory submissions in the US and Europe.

Tough market

Lomitapide is a microsomal triglyceride transfer protein (MTP) inhibitor, being developed as an oral, once-a-day treatment for patients with severe lipid disorders.

By blocking the action of MTPs, which produce lipoproteins containing apolipoprotein-B, levels of LDL, or 'bad cholesterol', and triglycerides can be reduced.

A phase III trial of lomitapide is ongoing for the treatment of patients with homozygous familial hypercholesterolaemia (HoFH), while Aegerion intends to initiate a phase II/III study in a severe genetic form of hypertriglyceridaemia, called familial chylomicronemia (FC), next year.

With the cholesterol-lowering market so dominated by statins such as Lipitor and Crestor, most new candidates have been forced to target these niche indications. As yet no drug has been approved for either HoFH or FC, although other novel approaches are currently being adopted. Isis Pharmaceuticals’ mipomersen for HoFH (Mipomersen reports soaring phase III data but future still up in the air, September 2, 2010) and Amsterdam Molecular Therapeutics’ Glybera for FC (EP Vantage Interview - AMT hoping to pop the cork with Glybera approval, August 25, 2010) are two such examples.

MTPs – a poor track record

The battle Aegerion faces is that MTP inhibitors have been around for some time, with limited clinical success, and have already been assessed and largely rejected by big pharma.

As the table below shows, no candidate has completed phase III trials and lomitapide is currently at the head of a thin-looking pipeline for this class of drug.

Both lomitapide and Aegerion’s other MTP inhibitor candidate, implitapide, were initially developed and then rejected by Bristol-Myers Squibb and Bayer, respectively. BMS abandoned development of lomitapide in the late-1990s when trial subjects stopped using the compound because of gastrointestinal side effects.

Aegerion licensed both candidates in 2006, only for the FDA to place a clinical hold on all MTP inhibitors in the summer of 2007, concerned with their long term potential to induce pulmonary phospholipidosis, a condition where phospholipids and large macrophages collect in the lungs, causing inflammation and breathing problems.

The hold on lomitapide was removed in February this year, although a partial clinical hold remains in place for implitapide. Meanwhile, little public information is available on the other MTP inhibitors in the pipeline; J&J’s usistapide recently completed phase II trials and seems to hold some potential in obese and diabetic patients, with some analysts predicting a launch in 2014.

Despite clearing a significant funding hurdle with its IPO, Aegerion faces some significant challenges if its new investors are to be rewarded for their support.

Portfolio of microsomal triglyceride transfer protein (MTP) inhibitors
Status Product Company Originator Therapeutic category Indication Summary
Phase III Lomitapide (AEGR-733) Aegerion Pharmaceuticals Bristol-Myers Squibb Anti-hyperlipidaemics Hyperlipidaemia [Phase III]
Phase II Usistapide (JNJ16269110) Johnson & Johnson Johnson & Johnson Anti-obesity agents Obesity [Phase II]; Diabetes, type II (maturity onset) [Phase II]
Implitapide (AEGR-427) Aegerion Pharmaceuticals Bayer Anti-hyperlipidaemics Hyperlipidaemia [Phase II]
JTT-130 Japan Tobacco/Torii Pharmaceutical Japan Tobacco Anti-hyperlipidaemics Hyperlipidaemia [Phase II]; Diabetes, type II (maturity onset) [Phase II]
SLx-4090 Surface Logix Surface Logix Anti-hyperlipidaemics Hyperlipidaemia [Phase II]; Obesity [Phase II]; Diabetes, type II (maturity onset) [Phase II]
Abandoned - Phase II CP-741952 Pfizer Pfizer Anti-obesity agents Obesity [Abandoned - Phase II]
Abandoned - Unclassified GW328713 GlaxoSmithKline GlaxoWellcome Anti-hyperlipidaemics Hyperlipidaemia [Abandoned - Unclassified]

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