Shares of Aegerion Pharmaceuticals (NASDAQ: AEGR) are down nearly 27% as of this writing after the company reported lackluster first-quarter earnings and lowered its full-year guidance last night.

Aegerion reported net product sales of $27 million, up from $1.2 million in the prior-year quarter, but missing the consensus estimate of $33.6 million. It reported a GAAP net loss of $0.54 per share, up from a net loss of $0.64 per share a year earlier. Analysts had anticipated a narrower loss of $0.35 per share.

AEGR Chart

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Looking ahead into the rest of fiscal 2014, Aegerion expects net product sales between $180 million to $200 million, revised downwards from its prior forecast of $190 million to $210 million. On the bright side, the company expects to achieve positive cash flow operations by the second half of the year. Aegerion finished the quarter with $117 million in cash and equivalents -- a 7% decrease from the first quarter of 2013.

A matter of trust
Aegerion has fallen more than 40% during the past six months due to concerns regarding its only marketed product, Juxtapid. The drug is one of the most expensive drugs in the world at nearly $300,000 per patient per year, and is a treatment for homozygous familial hypercholesterolemia (HoFH). HoFH is an extremely rare, inherited lipid disorder which only affects only one in a million people worldwide. Juxtapid was approved in the U.S. in December 2012, and in Europe in August 2013 as Lojuxta.

Aegerion started its dive last November after receiving a subpoena from the Department of Justice regarding its marketing practices and a warning letter from the FDA about some public comments CEO Marc Beer had made. There have also been questions regarding Aegerion's broad claim that Juxtapid could treat 300 to 3,000 HoFH patients in the U.S., because HoFH's one-in-a-million ratio suggests that there may be closer to 300 potential patients instead of 3,000.

Positive overseas catalysts
Despite Aegerion's unresolved issues in the U.S., which accounts for 96% of Juxtapid sales, the company recently reported several positive developments in foreign countries. Aegerion gained approval for Juxtapid in Mexico in January, in Canada in February, and initiated a phase 3 trial for the drug in Japan in April. Aegerion also reported robust demand for the drug in Brazil, although sales were adversely affected by pricing issues, order delays, and an anti-corruption investigation regarding prescriptions.

Expanding Juxtapid's overseas presence could give Aegerion an edge against its primary competitor in HoFH treatments, Sanofi (SNY -2.69%) and Isis Pharmaceuticals' (IONS -1.14%) Kynamro. Kynamro is considered a major threat to Juxtapid due to its much lower price tag of $176,000 per year.

The FDA approved Kynamro last January, although the Committee for Medicinal Products for Human Use (CHMP) in Europe issued a negative opinion of the drug last March due to safety concerns. Sanofi markets Kynamro in the U.S. and shares the profits with Isis. Isis gets a 30% cut of the profits, which could rise to 50% if revenue hits $2 billion annually.

However, neither Juxtapid nor Kynamro are expected to hit $2 billion in sales. Aegerion expects Juxtapid to potentially generate peak sales of $1 billion. Analysts expect Juxtapid to generate peak sales around $400 million -- which is the similar to the average estimate for Kynamro.

A matter of expenses
During the first quarter, Aegerion's expenses rose across the board. Selling, general, and adminstrative expenses rose 141% year-over-year to $31.8 million. The company attributed that increase the commercial launch of Juxtapid in the U.S., its global expansion, and an increased headcount as a result of both. Higher legal fees were also a factor. Research and development expenses climbed 36% to $7.9 million, due to higher expenses related to its development program for an indication for pediatric HoFH.

Looking ahead to the full year, management expects Aegerion's total GAAP operating expenses will be between $185 million to $195 million. Since the company expects net product sales of $180 million to $200 million for the year, Aegerion could possibly squeeze out a small profit by the end of the year.

The bottom line
In conclusion, there's a lot of drawbacks and few benefits to investing in Aegerion. The company's statements and marketing practices face scrutiny back at home, expenses are rising, and its top- and bottom-line growth are falling short of expectations. While Aegerion certainly has opportunities in overseas expansion, its could easily lose its early lead if Kynamro gains approval in additional markets.