It wasn’t too long ago that Aegerion Pharmaceuticals seemed to be a successful biotech turnaround story with its first drug on the market and optimism ahead. But just a few short years, a plummeting stock price and a new executive team later, Aegerion is about to merge with a Canadian biotech to survive.
Cambridge, MA-based Aegerion (NASDAQ: [[ticker:AEGR]]) is merging with Vancouver’s QLT (NASDAQ: [[ticker:QLTI]]). The combined company will be 67 percent owned by QLT stockholders, 33 percent owned by Aegerion stockholders, based in Vancouver, and named Novelion Therapeutics. Additionally, a syndicate of investors in both entities—as well as new backer Deerfield Management—will buy $22 million worth of Novelion shares for $1.76 apiece, leaving Novelion with $100 million in unrestricted cash. Novelion will still have operations in Cambridge, according to the statement.
Each Aegerion share will be swapped for 1.0256 shares of QLT. Aegerion and QLT shares closed at $1.33 and $1.46 apiece, respectively, on Tuesday. Aegerion shares surged about 36 percent in pre-market trading Wednesday morning, while QLT shares climbed 26 percent.
QLT will also loan Aegerion up to $15 million in conjunction with the merger. The boards of both companies have approved the deal—which has to be sanctioned by a majority of shareholders—and expect it to close later this year. Aegerion CEO Mary Szela will lead the combined company, which will have Aegerion’s two marketed drugs, lomitapide (Juxtapid) and metreleptin (Myalept), and an experimental eye drug from QLT called QLT091001.
The merger is the latest turn in what’s been a long roller-coaster ride for Aegerion. The company was nearly insolvent in 2010 when Marc Beer joined as CEO and steered it towards its first drug approval. In December 2012, Aegerion won FDA approval of lomitapide (Juxtapid), a once-daily pill for homozygous familial hypercholesterolemia, a rare genetic form of very high cholesterol. Shares of Aegerion more than tripled in early 2013 and closed as high as $97.24 apiece in September of that year as the company seemed in the midst of a huge turnaround. Aegerion had acquired lomitapide from the University of Pennsylvania in 2006, just a few years after Bristol-Myers Squibb effectively gave the drug away.
It’s been downhill for Aegerion ever since, however. Lomitapide’s sales didn’t live up to expectations, and Aegerion wasn’t able to build on the drug and diversify despite an acquisition in 2014 that gave the company metreleptin. Competition for lomitapide emerged via a new class of cholesterol-lowering drugs called PCSK9 inhibitors, and Beer, who was embroiled in some controversy, resigned in July 2015. Activist hedge fund Sarissa Capital Management took a stake, cut a deal to get some board seats, and shook things up. All the while, Aegerion’s stock price continued to fall. Now it’s merging with QLT, whose CEO Geoffrey Cox said in a statement is taking advantage of the commercial infrastructure already in place at Aegerion, rather than spending the cash to build it.
“I believe that this proposed merger represents a fresh start and an opportunity to create significant value, and I look forward to driving our programs forward,” Szela said in a statement.
Novelion aims to win approval for lomitapide in Japan and metreleptin in Europe. Meanwhile, QLT091001 is on the verge of a phase 3 trial, expected to start later this year, for an inherited form of blindness.
Aegerion and QLT will discuss the merger on a conference call this morning.
