Recently, Esperion Therapeutics (ESPR) announced the results from its third late-stage study treating patients with elevated low-density lipoprotein cholesterol (LDL-C). The primary endpoint of the study was met, and it was shown that bempedoic acid was able to reduce bad cholesterol by a greater amount than placebo. In addition, treatment with the drug was shown to be safe and tolerable. There are two more studies to be read out this year, and I believe they should also turn out to be positive as well. For these reasons, I believe that Esperion is a strong buy.
Phase 3 Data
This late-stage trial was known as Study 3. It recruited about 4,000 patients who were already on background lipid-modifying meds. This study compared 180 mg of bempedoic acid vs. placebo in high-risk patients with atherosclerotic cardiovascular disease (ASCVD), or those who were at high risk for ASCVD with hypercholesterolemia. In addition, these patients were those who could not tolerate the use of statins. The primary endpoint was achieved as bempedoic acid obtained LDL-C lowering of 23% at the 12-week mark, compared with only a 1% decrease for those on placebo. This value was statistically significant with a p-value of p < 0.001. This is a major difference between bempedoic acid and placebo. However, there was another important aspect of the study, that aspect being that those treated with bempedoic acid also achieved a statistically significant greater reduction of 25% in high-sensitivity C-reactive protein (hsCRP). This hsCRP is an important biomarker for the underlying inflammation that's associated with heart disease. Doctors measure hsCRP to determine a patient's future risk for heart disease. That means in the data noted above, a 25% reduction of hsCRP is highly associated with lowering the risk of heart disease. The placebo in the trial didn't even reduce the risk of heart disease. On the contrary, taking placebo increased such a risk by 3%. What this data means is that it is important that bempedoic acid was able to reduce bad cholesterol (LDL-C) by a huge margin when compared to placebo. However, the takeaway is that a more popular therapy that doctors will likely prescribe will be the one that reduces the risk for heart disease as well. Not just the lowering of bad cholesterol itself.
Safety Issues Overblown
Along with positive efficacy data in this phase 3 study, it was shown that bempedoic acid was safe and tolerable. This pales in comparison when the safety of Esperion's drug was overblown on May 2, 2018. Despite meeting the primary endpoint of the study (main goal of the study), analysts questioned the drug's safety and effectiveness. This caused the stock to tumble by 30%. My take on this is that taking an analysis of one study and concluding the totality of safety and efficacy was not the right thing to do. For one, safety data can vary from one study to the next. Secondly, the context was blown out of proportion. Analysts downgraded the stock immediately, but didn't conclude what actually occurred in the study in terms of safety. That's because it was noted that 0.9% of patients treated in the bempedoic acid arm alongside statins passed away, while on the other hand only 0.3% of patients had died in the placebo arm. This is what caused the stock to drop, but it was a quick reaction. That's because management later on in the day had provided detail surrounding the deaths of these patients. Esperion noted that its drug, bempedoic acid, didn't cause the patients' deaths. It stated that five out of the 13 deaths that occurred were related to cardiovascular disease. Another five were caused by cancer. Gastrointestinal problems, pancreatitis, and a neurological problem that led to a stroke led to the last three patients' deaths. My take on this is that treating this patient population, who are at high risk of other diseases, is what caused the deaths. Yet analysts still managed to downgrade Esperion regardless of the logical reasoning on what had actually occurred. A lot of times, patients treated in this sector are at high risk for mortality due to other diseases. It is not uncommon for a patient to suffer from multiple diseases at the same time. I think that Esperion was punished unjustly. This is another example of what I like to call "sell first, ask questions later" type of an event. I don't believe many took a thorough approach at first analyzing the safety data before dumping the stock.
The new results from Study 3 showed that bempedoic acid was safe and tolerable in statin-intolerant patients. There were no fatalities observed in either group. The most important thing to note is that muscle-related adverse events were lower in the bempedoic acid group compared to placebo. When it came to serious adverse events (SAEs) the bempedoic acid arm was 6% compared to 3.6% in the placebo arm. However, none of the SAEs that occurred were deemed to be related to patients taking bempedoic acid according to the study investigator. There are two more late-stage studies that are to be readout this year. One is for bempedoic acid/ezetimibe combo, and the other is phase 3 study for bempedoic acid alone as monotherapy. They are due to be read out by August and September of this year, respectively.
High Confidence
Despite what occurred on May 2, 2018, relating to the safety issues, a large holder bought more shares of Esperion's stock. BB Biotech, through its subsidiary known as Biotech Target, purchased 130,000 shares. These shares were purchased between May 18th to May 21st, and it paid on average $40.11 per share. BB Biotech is now the largest shareholder of Esperion with 11% ownership of its shares. BB Biotech owns 2.95 million shares. So why did this entity decide that it was best to buy more shares even after the safety issues that were brought up on May 2, 2018? That's because it doesn't believe that bempedoic acid was responsible for these patients' deaths. I believe the same thing as well, because the patients recruited into the study were at high risk to begin with. As I noted above five of them had cancer, and the others had cardiovascular disease to begin with. It seems premature to blame those patients' deaths on bempedoic acid. Especially, when the latest study (Study 3) I highlighted at the beginning of this article showed no deaths for those treated with bempedoic acid. It is severely bad that these 15 patients died, but as I pointed out they had other severe diseases they were dealing with while being treated with bempedoic acid. In addition, there were a total of 2,230 patients recruited into that study. That means many other patients greatly benefited from treatment with bempedoic acid. Especially in patients that need a new oral drug option who are intolerant to statins. These patients are at the last leg, and statins are just not achieving their goal in helping these patients to reduce their LDL-C.
Risks
The biggest risk is that the FDA may require the safety study to be concluded before it can approve the drug. That's the worst case scenario. It is believed that the safety study won't conclude until 2022. Now, if this happens it will not be good in the short term and the stock could tumble. As of right now, this risk has not yet been realized (FDA decision won't be known on the filing until later). Nobody knows at this point what regulators will decide to do. The most important thing to consider though about this risk is that there is still a path forward. Even if the FDA won't allow Esperion to file for approval until the safety study has been completed, it may still get approval later on regardless. It's just that it will take it a lot longer than expected. A couple of days after the data was released an analyst from Credit Suisse by the name of Martin Auster cut the price target on Esperion down to $73 per share from $108 per share. The important thing to note is that he had maintained an "Outperform rating." He had this to say:
"Can shares recover? We think there��s a path, we think investors�� heightened regulatory concerns are unlikely to abate fully or quickly."
It is important to note that this analyst still believes there is a path forward. I agree with this sentiment. As I have described above, Esperion stated that the drug bempedoic acid was not the root cause of the patients' deaths. But the analyst, just like I believe, states that the drug remains a buy. He set a price target for $73 per share. If it gets there from the current stock price, that would be a gain of 91.95%. For that to happen though, the FDA would have to allow Esperion to file early next year for regulatory approval of bempedoic acid. As I stated before, the worst-case scenario is that it will take longer if the safety study needs to conclude first.
Financials
As of March 31, 2018 Esperion Therapeutics has cash and cash equivalents, and investment securities available-for-sale totaling $239.6 million. It believes that it has enough cash to last through the potential approvals for the bempedoic acid/ezetimibe combination pill and bempedoic acid in the Q1 2020. Again, this depends on the FDA's decision on whether or not the safety issues will be a major burden for approval. If that happens, then Esperion will have to raise more cash to get through the finish line. That will not be an ideal situation, but it will be necessary for the company to succeed in its goal of getting bempedoic acid eventually approved.
Conclusion
Esperion obtained positive late-stage results for its third study in treating patients with atherosclerotic cardiovascular disease (ASCVD), or at high risk for ASCVD with hypercholesterolemia. Most notably this was achieved in patients who are intolerant to statins. Safety issues were raised about a month ago. However, Esperion has stated that the deaths were not caused because of the drug. The new safety data from Study 3, highlighted above, proves this statement as no deaths were reported on either arm. A large shareholder is fairly confident about Esperion's prospects, and thus bought more shares. All these reasons are why I believe that Esperion remains a strong buy. I believe that the safety issues were highly overblown.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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