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What's in Store for Aegerion (AEGR) this Earnings Season?

Zacks Equity Research
Updated

Aegerion Pharmaceuticals, Inc. AEGR is expected to report fourth-quarter 2015 and full-year results on Feb 25.

The company has beaten estimates in three of the last four trailing quarters, with a negative average surprise of 25.09%. Let’s see how things are shaping up for this announcement.

Will the New PCSK9 Inhibitors Continue to Affect Juxtapid Sales?

Although Juxtapid remains the growth engine at Aegerion, the company is facing challenges for the commercialization of the drug in the ex-U.S. markets. We note that Juxtapid is approved for the treatment of homozygous familial hypercholesterolemia (HoFH).

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The company expects net Juxtapid sales of $37.5–$39.5 million in the fourth quarter, while annual sales are projected to be $211–$213 million. The company reported that there were 615 active commercial patients on Juxtapid therapy globally, of which approximately 490 were in the U.S.

However, sales of Juxtapid were hurt by the entry of new PCSK9 inhibitors Repatha and Praluent. The company had reported higher-than-expected switches to PCSK9s in the third quarter. Hence, we expect Juxtapid sales in the U.S. to remain under pressure in the to-be-reported quarter.

On the other hand, sales of Myalept are projected between $8 million and $9 million in the fourth quarter, while annual sales are estimated to be $25.5–$26.5 million. As of Dec 31, 2015, the company had 79 active commercial patients on Myalept therapy globally, all of which were in the U.S. The company stated that longer reimbursement cycles have slowed the addition of Myalept patients in the fourth quarter.

The company also plans to submit a marketing authorisation application in the EU for Myalept for the treatment of generalized lipodystrophy by the end of 2016. Meanwhile, Aegerion is pursuing a label expansion for the drug for severe partial lipodystrophy patients, pending discussions with regulatory authorities in the U.S. and the EU.  We expect the company to further elaborate its strategic plans on growth opportunities for Myalept.

Earlier this month, Aegerion announced plans to reduce its global workforce by approximately 25% by the end of second-quarter 2016. We note that workforce reduction is part of the company’s strategy of lowering operating expenses and improving the cash position.

What Our Model Indicates

Our proven does not model conclusively show that Aegerion is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat earnings. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -72.20% as the Most Accurate estimate stands at a loss of $1.55 while the Zacks Consensus Estimate is a loss of 90 cents.

Zacks Rank: Though Aegerion’s Zacks Rank #1 increases the predictive power of the ESP, the company’s negative ESP makes a surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions.

Stocks That Warrant a Look

Here are a few health care stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter.

Aduro BioTech, Inc. ADRO has an Earnings ESP of +271.40% and a Zacks Rank #2. The company is expected to release results on Feb 22.

Achillion Pharmaceuticals, Inc. ACHN has an Earnings ESP of +44.44% and a Zacks Rank #2. The company is expected to release results on Mar 3.

Endo International plc ENDP has an Earnings ESP of +3.97% and carries a Zacks Rank #3. The company is scheduled to release fourth-quarter 2015 results on Feb 29.

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ACHILLION PHARM (ACHN): Free Stock Analysis Report
 
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