Esperion Therapeutics Inc (NASDAQ:ESPR): Get It While It’s Cheap

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At the end of last week, Amgen, Inc. (NASDAQ:AMGN) announced some data from its large-scale trial of its cardiovascular risk asset Repatha. The drug first picked up approval back in 2015, but the company has spent the time subsequent to this initial approval conducting studies in an attempt to expand its target market. The recently released data came from a study designed to do exactly that, and – if initial numbers are to be trusted – could expand the target population from around 1 million currently to more than 4 million in the US alone. That’s a big jump in potential revenues, and for a drug that has – so far, at least – disappointed from a sales perspective, could be a turning point.

However, on the back of the data, Amgen as taken a hit. Why? Well, because the numbers were positive, and the trial met its primary endpoint, but the data came out as not quite as positive as markets would have liked (or indeed, were expecting) and it is this disparity in expected versus reality of performance that is driving a selloff.

It’s not just Amgen, either. A number of companies are developing (or have completed the development of) drugs of the same or similar type as Repatha, and these companies are getting hit as well.

There is one, however, that seems counterintuitive.

The company is Esperion Therapeutics Inc (NASDAQ:ESPR).

Esperion closed out the session last Thursday at around $30 a share. By Friday morning, and subsequent to the Amgen release, the company went for as low as $20 a share – a more than 30% dip. By Friday close, Esperion had recovered to around $23 a share, and premarket on Monday this week, the company is up around the $26 mark, but still remains down on Amgen’s news.

In order to understand why this is counterintuitive, we must first understand exactly why Amgen sold off. Basically, the drug doesn’t seem to work quite as well as expected, and this is important because of its price point. At an annual cost of around $14,000 a year, the reduction brought about by the drug (around 15% in MACE hospitalizations) might not be enough to persuade insurers to cover it. If insurers refuse to cover the drug, the above-mentioned increase in target population becomes moot.

Markets are selling off on Esperion based on the idea that it’s drug, called bempedoic acid, aims to reduce cardiovascular risk through the same path – a reduction in LDL cholesterol.  However, while the two drugs do both aim to reduce LDL cholesterol, Esperion’s does so through a different mechanism of action than Repatha. This difference allows for a key difference in administration type – specifically, that it allows for bempedoic acid to be taken as an oral drug, while Amgen’s Repatha is an injectable.

This, in turn, makes bempedoic acid far cheaper than Repatha, or more accurately, will allow the company to charge far less for it if and when it hits markets. When looked at against the Amgen data, then, and taking the just discussed notion into consideration, we should be seeing some strength in Esperion, not a decline.

Why? Because the key takeaway from Amgen’s data is that the company has proven that a reduction in LDL can translate to a reduced cardiovascular risk. Now, all Esperion has to do is prove that it’s drug can reduce LDL, and the company is well on its way to doing this with an ongoing phase 3 trial. The phase 3 is targeting reduction in patients with higher LDL levels than Amgen was targeting, and as such, this has the potential to result in a larger impact as and when the numbers hit press. As reported just today, the FDA has given a green light for submission of an NDA based on Esperion’s proving that bempedoic acid reduces LDL,  and this gives both the company and the drug a clear pathway to FDA approval.

So what is the takeaway here? Well, that not only should Esperion not have seen a decline on the latest Amgen news, but it also should have gained strength. In turn, the current pricing looks to offer a discount exposure to bempedoic acid’s maturation through the development process.

Data is expected in 2018, with NDA submission. 2019.

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