Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR)

zzlangerhans (99.78) Submitted: 7/25/2012 11:20:29 AM : Start Price: $13.81 AEGR Score: +316.94

I was watching Aegerion closely enough to get out of my underperform pick with a winning score in April, but didn't execute a flip turn like I should have. The stock zipped back from under 12 to almost 17 in two months, but has now retreated. Rather than being greedy, I'm going to settle for an entry price under 14 rather than one under 12. If I was wrong about 14 being a floor, then I might really buy this thing below 12.

Aegerion is a pretty good candidate for a run-up heading towards the lomitapide PDUFA on 12/29/12. If you have a couple of hours to waste there's a pretty good write-up on Seeking Alpha here: http://seekingalpha.com/article/645951-aegerion-pharmaceuticals-we-are-bullish-on-the-lomitapide-story .SA could actually be a decent resource if their editors could differentiate between real analysis and stock manipulation.

The lomitapide NDA is vulnerable on two major counts: Reliance on a single uncontrolled phase III study and a side effect of diarrhea. The diarrhea resulted in a significant number of trial dropouts and was the reason original developer Bristol-Myers Squibb kicked lomitapide to the curb. Even if approved, lomitapide will likely have to compete with Isis's mipomersen for the orphan indication of homozygous familial hypercholesterolemia.

I think the negatives of lomitapide are well-described and well-understood, which is why Aegerion has a cap below 300M today. The natural tendency of stocks is to rise before a major scheduled catalyst such as a PDUFA, and Aegerion is not already overbought given the commercial potential of lomitapide. The company has already raised capital and has sufficient cash to go into the launch. There will almost certainly be an advisory panel in September or October, which has historically been an easier bar to clear than the FDA. I'm not seeing any clear inhibitors of an upward leg prior to the PDUFA.