Aegerion Pharmaceuticals Lied About Sales Metrics
On September 22, 2017, the Securities and Exchange Commission (“SEC”) filed fraud charges against Aegerion Pharmaceuticals, a Massachusetts-based bio-pharmaceutical company, that exaggerated how many new patients actually filled prescriptions for an expensive drug that was its sole source of revenue.
Aegerion Pharmaceuticals, now a subsidiary of Novelion Therapeutics, has agreed to pay a $4.1 million penalty to settle the charges that it misled investors on multiple occasions in 2013. The SEC’s complaint alleges that Aegerion told investors that the number of unfilled prescriptions for Juxtapid was not material and the “vast majority” of patients receiving prescriptions went ahead and ultimately purchased the drug. The SEC alleges that Aegerion’s records reflect that it was actually around 50 percent of prescriptions that resulted in actual drug purchases.According to the SEC’s complaint, Juxtapid is used to treat a rare and potentially life-threatening genetic condition that causes extremely high cholesterol. In 2013 and 2014, it was priced at approximately $250,000 to $300,000 annually per patient. Following Juxtapid’s introduction in 2013, investors and investment analysts had little financial data to estimate Aegerion’s future revenues from sales of the drug.
Aegerion allegedly provided details on the number of Juxtapid prescriptions during several subsequent earnings calls, but this data alone was insufficient for analysts and investors trying to forecast the company’s future revenues because only prescriptions that were actually filled “converted” into sales. According to the SEC’s complaint, it wasn’t until October 2014 that Aegerion disclosed to investors that the conversion rate was actually in the range of 50 to 60 percent. But Aegerion allegedly failed to reveal to investors even then that the conversion rate had hovered around 50 percent since 2013.
The SEC’s complaint, filed in federal court in Boston, charges Aegerion with violating Sections 17(a)(2) and (3) of the Securities Act of 1933. Aegerion agreed to the settlement without admitting or denying the allegations. The settlement is subject to court approval.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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