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.
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