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ESPR - Edison Research notes...

Esperion’s recent NASDAQ IPO raised $75m net (5.75m shares at $14/s),
providing the funds to advance its once-daily ETC-1002 through two Phase
IIb studies in hypercholesterolemia. ETC-1002 has shown LDL-C
reductions comparable to statins thus far in statin-intolerant (SI) patients,
which if repeated in future trials represents a potential blockbuster market
opportunity, although long-term safety must also be established.

ETC-1002 investigated as new cholesterol treatment
ETC-1002 is an oral small molecule, which inhibits ATP citrate lyase (ACL) and
activates AMP kinase, thereby enabling the liver to take up low-density lipoprotein
cholesterol (LDL-C) particles from the blood. Esperion’s initial strategy is to develop
ETC-1002 for patients with high LDL-C who are SI, for example due to muscle pain
or weakness, reflecting approximately two million adults in the US alone.
Competitive LDL-C reductions in Phase IIa studies

ETC-1002 lowered LDL-C by a mean 32% in an eight-week Phase IIa (n=56) trial in
SI patients and was well tolerated, with a similar incidence of muscle-related
adverse events as placebo. High-sensitivity C-reactive protein (hsCRP), a key
inflammation marker, was also reduced to levels comparable to statin therapy.

Esperion will start a 12-week Phase IIb trial (n=322) in this group in October
(results Q414) comparing ETC-1002 to ezetimibe. The most-prescribed LDL-C
lowering drugs in SI patients (ezetimibe or colesevelam) reported 15-18% mean
LDL-C reductions in pivotal trials (vs 35-60% for statins), with little effect on hsCRP.
Statin-resistant patients are a broader target market
Esperion is also advancing ETC-1002 as an add-on to statins in statin-resistant
hypercholesterolemia patients (c 11m adults in US alone). Results from a Phase IIa
(n=52) study of ETC-1002 with atorvastatin are expected in early September, a
significant near-term catalyst.

Valuation: $177m EV discounts development risk
We estimate Esperion’s post-IPO net cash at $91m. The two Phase IIb trials will
increase the burn rate (from $10.8m in FY12), but Esperion estimates it has
sufficient funds to complete these studies and start a Phase III trial in SI patients in
2015. The current EV of $177m discounts the multi-billion dollar sales opportunity,
hence confirmation of LDL-C reductions in Phase IIb and solid long-term animal
safety data should provide upside.

http://www.edisoninvestmentresearch.com/researchreports/Esperion140813qv.pdf