Why Aegerion Pharmaceuticals Inc. Shares Briefly Tumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Aegerion Pharmaceuticals , a biopharmaceutical company developing therapies to treat rare and fatal diseases, tumbled briefly by as much as 18% after reporting its fourth quarter earnings results before the opening bell. Shares have since recovered and are down approximately 7% at the time of this writing.

So what: For the quarter, Aegerion delivered $24.5 million in net product sales of Juxtapid, an LDL-cholesterol-reducing treatment for patients with homozygous familial hypercholesterolemia. Aegerion noted that 430 total patients were on the therapy, including 37 outside the U.S., with Juxtapid's U.S. revenue accounting for 87% of total sales. Adjusted net loss shrank considerably to just $0.14 per share from a loss of $0.71 per share in the prior year. By comparison, Aegerion's loss was narrower than Wall Street's estimate by $0.18 per share, but revenue was a smidge light with the consensus at $24.9 million. Looking ahead, Aegerion's forecast of $190 million-$210 million in net product revenue perfectly bracketed the $203.3 million consensus estimate and disappointed shareholders looking for an upside surprise.

Now what: On one hand, it's pretty clear that Juxtapid is still demonstrating solid growth in treating HoFH patients and that Kynamro by Isis Pharmaceuticals and Sanofi is a distant second. Then again, with Aegerion's share price having more than doubled over the past year, I'd expect more than just revenue meeting expectations. At its current valuation, Aegerion is worth about nine times the midpoint of next year's sales forecast and more than 200 times its projected EPS. That still seems like a particularly high price to pay for a limited market potential drug.