A CEO who botches a major drug launch, runs afoul of the FDA, and persistently over-estimates a drug's sales potential?

Dude, that's just the start. With Aegerion Pharmaceuticals (NASDAQ: AEGR) shedding huge amounts of value since its high point, the current CEO's tenure is trying investors' patience. Aegerion's CEO Marc Beer has the dubious distinction of being a nominee for The Street's absolute worst biotech CEO of 2014. And Beer might achieve that distinction in 2015 as well, since he remains top dog at Aegerion, a Cambridge, Massachusetts-based biotech that focuses on rare diseases.

Despite Aegerion's board fully supporting him, Reuters recently reported that several of Aegerion's top ten investors are pushing the company to oust Beer. Shareholders are justifiably irritated with how little Beer has done to help Aegerion recover. The biotech reached its all-time high in mid-2013 and has since fallen like a stone.

The comedy of errors with Juxtapid
Aegerion's biggest asset is Juxtapid, a cholesterol-lowering drug approved in late 2012 to treat a rare disease called homozygous familial hypercholesterolemia, or HoFH. Beer promised that the drug would put Aegerion on the path to profitability by 2014, but he over-estimated the size of the commercial market. After initially forecasting that Juxtapid's yearly sales could range from $180 million to $200 million, the forecast was cut several times last year to a revised range of $150 million to $160 million.  

In addition, Beer ran afoul of the FDA for comments about Juxtapid made during appearances on CNBC. According to the WSJ, in November 2013, the Food and Drug Administration slapped him with a warning letter for public statements the agency claimed exaggerated the benefits of Juxtapid.

Patients with HoFD have excess cholesterol deposits that often lead to the patient's death in early adulthood. The FDA raised red flags around Beer's "misleading" CNBC comments, including what a claim that Juxtapid "would help patients with a fatal disease to live to be grandparents."  

The FDA noted that the drug's effect on cardiovascular disease "has not been determined." Juxtapid's FDA approval was based on data showing the drug lowers cholesterol levels, the data didn't prove effects on outcomes, such as a lower risk of heart attack or death. Subsequently, Aegerion aired a TV commercial correcting the statements.

On the heels of this controversy, the U.S. Department of Justice launched an investigation into Aegerion's marketing practices and materials. That was soon followed by an anti-corruption investigation by Brazilian authorities into Aegerion's selling practices, which hurt sales in this market, which is the drug's second-largest after the U.S.  

Aegerion on sale?
There has been a steady wave of M&A deals in the rare disease space. Recently, Alexion Pharmaceuticals (ALXN) acquired rare disease drugmaker Synageva BioPharma for $8.4 billion, more than twice its market value. In January, Irish drugmaker Shire acquired NPS Pharmaceuticals for $5.2 billion, a 51% increase over NPS's market cap before rumors of the deal surfaced.

According to sources quoted by Reuters, large shareholders looking to oust Beer believe Aegerion should sell itself to another company. The likely hope of these investors is that an acquirer would pay a high valuation, creating a nice windfall.

Myalept a mistake?
In January, Aegerion acquired rare disease drug Myalept from pharma giant AstraZeneca for $325 million. While the acquisition gives Aegerion something new to tell investors, the problem is that there's not much to tell.

Myalept's potential is questionable, since the FDA approved it as an adjunct to treat only one disease -- the ultra-rare condition of generalized lipodystrophy, or LD. LD is estimated to occur in just 1 in 1 million people worldwide. The FDA also required Myalept carry a "black box" warning for risk of lymphoma and is requiring several post-marketing studies.

While Aegerion projected between $200 and $250 million in peak net sales that seems pretty unattainable with the FDA putting such a big clamp on the drug.

When it divested Myalept, AstraZeneca had 35 total patients taking Myalept, according to Beer's statement, as reported in the Rare Disease Report. Even assuming Aegerion manages to get the drug approved for another very rare disease called partial LD, which is something AstraZeneca already tried and failed to do, Myalept's price would have to be raised well beyond AstraZeneca's eye-popping cost of $325,000  per patient, per year, in order to make a meaningful contribution to revenue.

All this happening without a hitch seems unlikely, which brings into question the wisdom of purchasing the drug in the first place.

What comes next?
Juxtapid was successful in a Phase 3 study in Japan not long ago, which is a positive. But when a company that was closing in on $100 a share in September 2013 is now teetering around $19, more is needed. With investor optimism about Aegerion continuing to dwindle, it may be high time to consider a change at the top.