Who Will Win This Small Drug Market?

Isis (NASDAQ: ISIS  ) and Sanofi (NYSE: SNY  ) received Food and Drug Administration approval this week for homozygous familial hypercholesterolemia (HoFH) treatment Kynamro. HoFH is a rare genetic disease that causes severely high LDL levels that pose cardiac risks. The patient pool resembles a puddle and already contains a contender:�Aegerion's (NASDAQ: AEGR  ) �Juxtapid received approval last month.

Who will win?

Close match
HoFH treatments qualify for orphan status, which means that the patient population is small but the drugs can carry a higher price tag to compensate. The battle between Kynamro and Juxtapid might never have a clear victor, though I'd personally consider Juxtapid the stronger candidate.

Juxtapid and Kynamro have run nearly parallel down the pipelines, and both have proven effective while also presenting comparable liver safety risks. But Kynamro had an additional health risk that raised questions last fall.

When Juxtapid went before an FDA panel, the vote was 13-2 in favor of approval. Kynamro's panel voted 9-6 the following day, citing concerns with the abnormal tissue growth that appeared in 3.1% of the trial's patients. Kynamro later received a negative recommendation from the European Medicines Agency, which disagreed with the FDA that the merits outweighed the cancer risks.

But both drugs might find a market. HoFH treatment often requires patients to try different drugs until striking upon the right combination. Kynamro seems at a disadvantage due to the safety issue, but Isis also has Sanofi in its corner.

Juxtapid is Aegerion's only drug, putting it in a particularly vulnerable position. The company announced a last-minute deal with its development partner Catalant, but that's not in the same league as Sanofi. A vague secondary offering was announced early this month to help fund Juxtapid's launch.

Another step back
Juxtapid could best Kynamro financially if Aegerion received an indication expansion to include heterozygous familial hypercholesterolemia (heFH) � the far more common genetic cholesterol condition. Juxtapid and Kynamro might face expansion difficulties due to their liver safety risks, but if one makes it through, it will probably be Juxtapid.

That market won't be an easy win either as it might become crowded with a new group of statin rivals running up the pipes. Statins like Pfizer (NYSE: PFE  ) 's off-patent Lipitor tend to lack the strength required to manage the severely high LDL levels associated with heFH or HoFH. While the companies pushing the potent new drugs openly pursue general high-cholesterol patients, these rare genetic conditions would make for an easier sell.

Foolish final thoughts
Juxtapid will likely sell well within its market. But the key question remains: What will Aegerion do next? Until the answer to that question becomes clear, I'm going to play the waiting game.

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