BEDMINSTER, NJ (TheStreet) -- NPS Pharmaceuticals (NPSP) and Aegerion Pharmaceuticals (AEGR) secured U.S. approval for their respective rare-disease drugs within three days of each other in December 2012. Both medicines carried sky-high price tags. NPS Pharma chose to charge $300,000 per year for Gattex, a treatment for short-bowel syndrome. Aegerion's Juxtapid, a pill designed to lower cholesterol in patients with a rare genetic disease called homozygous familial hypercholesterolemia (HoFH), cost $250,000 at launch.
On Sunday, a little more than two years later, NPS Pharmaceuticals is being acquired by Shire (SHPG) for $5.2 billion, or $46 per share. If you bought a single share of NPS Pharma on the day Gattex was approved and held it, the value of your investment increased 405%.
Aegerion's market cap today: $630 million. A single Aegerion share bought the day Juxtapid was approved has lost 12% of its value.
* Doesn't include the value of Shire's takeout offer for NPS Pharma
Where did Aegerion go wrong? It didn't necessarily mis-price Juxtapid but company executives most certainly over-stated the size of the HoFH market. Before the drug was approved, the FDA and independent experts estimated there were just 300-400 HoFH patients in the U.S. Aegerion executives, however, put the number of HoFH patients in the U.S. in the range of 1,500 to 3,000.
Two years post launch, Juxtapid sales have fallen short of expectations, forcing Aegerion to cut 2014 revenue guidance. Not only is Aegerion finding HoFh patients in the U.S. and overseas harder to find, but existing patients are discontinuing therapy at higher rates than expected due to intolerable side effects.
In contrast, NPS Pharma kept its Gattex forecasts conservative and met or exceeded revenue expectations. Gattex sales are expected to grow from about $100 million this year to $200 million in 2015.
NPS Pharma also developed a second product, Natpara, which is expected to receive U.S approval later this month as a new treatment for hypoparathyroidism, a potentially fatal disease for which there are no currently approved drugs. Aegerion promised to diversify beyond Juxtapid but only recently acquired a second drug, well after investors had grown frustrated by management's operational mistakes.
Shire's decision to buy NPS Pharma as a way to grow its rare disease business unit was widely expected since December when rumors of a deal first surfaced. The $46-per-share purchase price is a smallish 9% premium to NPS Pharma's Friday closing price but 51% higher than where NPS Pharma was trading in mid-December.
Last October, Abbvie (ABBV) paid Shire a $1.6 billion breakup fee for failing to close on a proposed $54 billion merger. S hire was widely expected to use the Abbvie cash to acquire smaller biotech companies. On Sunday, Shire did just that (and may not be done buying yet.) Meantime, Aegerion continues to struggle, alone.