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Biotech Stock Mailbag: Agenus, Aegerion, Ariad

I stand with the Aegerion bulls, mainly because the competitive risk posed by PCSK9 drugs isn't proven yet and at best is still 2-3 years away. Meantime, the Juxtapid launch continues to perform very well. Aegerion's second-quarter results were stellar and I expect more of the same when the company reports the September quarter results in November.

The biggest threat to Aegerion shares today is not PCSK9 drugs but increased investor expectations and the stock's red-hot performance year to date. Any squiggle can be an excuse for profit taking. AEGR Chart AEGR data by YCharts

In July, Aegerion raised its Juxtapid sales forecast for 2013 to a range of $30-35 million from $15-25 million. Current analyst consensus stands at $40 million for the year, the buyside "whisper number" is probably higher.

I expect another "beat and raise" quarter from Aegerion in November.

Juxtapid treats homozygous familial hypercholesterolemia (HoFH), a rare genetic disease that causes extremely high and potentially fatal levels of cholesterol to build up in patients' blood. A year of Juxtapid therapy costs $295,000.

The PCSK9 drugs under development by Amgen and others look very promising for patients who have at least partially functioning LDL receptors but still can't keep their cholesterol in check with statins. HoFH patients are different. They have no functional LDL receptors at all which is why their cholesterol levels are sky high and life threatening. From the data compiled so far, PCSK9 drugs are not effective enough to have a clinically meaningful effect on HoFH patients. For this reason alone, Juxtapid's place in treatment is secure for now.

The competitive battleground between Juxtapid and PCSK9 drugs could be in patients with partially functioning LDL receptors i.e. heterozygous FH patients. But Aegerion has a lot more HoFH patients to treat with Juxtapid before that should be a significant concern.

On Thursday, David Sobek rebutted the Ariad Pharmaceuticals' (ARIA - Get Report) short thesis that I explained in last week's Mailbag.

Here's the rebuttal of the rebuttal from one of the investors shorting Ariad quoted in my piece:

"If that's the other side of the story, I feel very comfortable with my short position" in Ariad, he says.

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