Esperion's Promising Drugs Under Review, Funds A Concern

We issued an updated research report on Esperion Therapeutics (NASDAQ:ESPR) on Nov 27. Shares of the company have gained 12.6% so far this year compared with the industry’s growth of 10.9%.

There is no marketed drug in the company’s portfolio. Meanwhile, it has filed regulatory applications for pipeline candidates — bempedoic acid as monotherapy and in combination with Merck’s (NYSE:MRK) Zetia (ezetimibe). The applications have been accepted and are under review in the United States as well as Europe. The company is looking to get the oral therapies approved for the treatment of elevated LDL-C (bad cholesterol) in patients with hypercholesterolemia receiving maximally-tolerated statins or Zetia and having an inadequate response.

A decision from the FDA on the monotherapy regimen is expected by Feb 21, 2020, while a decision on the combination therapy should come by Feb 26, 2020. The FDA has informed the company that it will not hold an advisory committee meeting for discussing the new drug applications, which is likely to accelerate the review process.

The regulatory applications were filed based on encouraging data from multiple pivotal studies evaluating bempedoic acid monotherapy and combination therapy.

Data from four phase III studies evaluating bempedoic acid monotherapy, presented previously, demonstrated that treatment with the therapy led to an additional 18% reduction in LDL-C over 31% LDL-C reduction in statin-treated patients on maximally tolerated statin.

Data from the phase III study evaluating bempedoic acid/Zetia combination pill showed that the regimen reduced bad cholesterol by 35% compared with 24% for Zetia (20mg) monotherapy, 20% for bempedoic acid and 3% for placebo in patients receiving maximally tolerated statins.

Moreover, the targeted indications represent a significant opportunity for the company. It is estimated that 78 million people in the United States have high levels of LDL-C, 73 million in Europe and 30 million in Japan. Of these, an estimated 40 million patients in the United States are using statins, which is intolerable in 5-20%. The company signed a deal with Daiichi Sankyo Europe in January for the commercialization of the candidates in the region. This deal has already boosted Esperion’s cash resources. A potential approval will likely drive the share price of the company. However, any regulatory setback related to the company’s pipeline candidates will be a major disappointment for the company.

Meanwhile, the company completed enrollment in the CLEAR cardiovascular outcomes study and expects to conclude the same in the second half of 2020. The study is evaluating bempedoic acid for the occurrence of major cardiovascular events in statin-averse patients with or at high risk of cardiovascular disease.

Esperion had $244.8 million as of Sep 30, sufficient to fund operations till operating cash flow remains positive. However, timely availability of funds is necessary for the successful commercialization of the company’s drugs, following a potential approval. In June, Esperion entered a revenue interest purchase agreement of $200 million with an investor group to extend its resources. However, these funds may prove inadequate for the successful launch of the drugs as the company’s operating expenses are significantly high.

Moreover, Esperion’s candidates will face significant competition from PCSK9 inhibitors — Sanofi (NASDAQ:SNY) /Regeneron’s (NASDAQ:REGN) Praluent and Amgen’s Repatha — already marketed for similar indications. The Medicines Company’s PCSK9 inhibitor, inclisiran, is under review in the United States, with a decision expected by year-end. Inclisran will also come with twice-a-year dosing benefit. Moreover, Novartis has offered to acquire The Medicines Company.

Zacks Rank

Esperion currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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