On the heels of positive trials involving thousands of patients, Esperion Therapeutics (NASDAQ: ESPR) is about to file its only drug, bempedoic acid, for approval. The company plans to submit an application to regulators soon, and it recently inked a nine-figure licensing deal to bempedoic acid's rights in Europe. Here's why 2019 is a pivotal year for this biotech.
More treatment options needed
Each year, over 700,000 Americans suffer heart attacks and over 600,000 die because of heart disease, according to the Centers for Disease Control and Prevention. That's particularly discouraging given that cholesterol-lowering statins are already being used by tens of millions of people.
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Although statins can reduce the risk of major cardiovascular events by 25%, many patients don't adequately respond to statins, and some discontinue them because of side effects, including muscle weakness.
To improve outcomes and provide another treatment option, Esperion Therapeutics has developed bempedoic acid, a drug that can lower bad cholesterol in an entirely new way. Bempedoic acid is a once-daily oral drug that works upstream of statins to reduce cholesterol production and increase the activity of cholesterol removal in the liver.
Delivering on promises
Esperion's founder is Roger Newton, one of the people behind the development of the most successful statin of all time, Lipitor. Newton left Warner-Lambert, where Lipitor was invented, in 1998 to found a start-up, also confusingly named Esperion, that he later sold to Pfizer (NYSE: PFE).
In 2008, Newton left his job as Pfizer's senior vice president for global R&D so he could start Esperion again. Initially, the company focused on research involving good cholesterol, but eventually pivoted to concentrate on bempedoic acid.
Last year, the company reported results from multiple phase 3 trials involving more than 4,000 people that validated that decision. In its studies, bempedoic acid decreased bad cholesterol by about 20% when added to statin therapy. The studies also showed that combining bempedoic acid with Zetia, a former blockbuster cholesterol-lowering drug that's since lost patent protection, lowered cholesterol by 35% in patients with stubbornly high cholesterol levels.
Cutting a deal
Esperion appears set to go it alone in commercializing bempedoic acid in the United States, but it has lined up a deep-pocketed partner to commercialize it in Europe.
On Jan. 4, the company reported that global pharmaceutical company Daiichi Sankyo agreed to license EU rights to bempedoic acid in exchange for hundreds of millions of dollars in up-front cash and potential milestones, plus what it describes as "substantial tiered royalties."
Specifically, Daiichi Sankyo is paying Esperion $150 million up front and has agreed to pay an additional $150 million upon the first sale in its licensed territories. Combined with sales-based and potential regulatory milestones, including the possibility of having data from Esperion's ongoing cardiovascular-outcomes study added to its label, Esperion could receive up to $900 million. As for royalties, it will collect from 15% to 25%, depending on sales levels.
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Capitalizing on its opportunity
An application for Food and Drug Administration approval is planned for Q1 2019, and an EU filing is planned for Q2. That timeline puts Esperion in a position to begin recording sales from bempedoic acid early in 2020.
In the U.S., the company is already knee-deep in commercial preparations, and following the European licensing deal, it will be able to fully concentrate on that effort. Importantly, the deal provides it with enough cash to tell investors it has no plans to issue more shares ahead of a potential approval. As of Dec. 31, Esperion had $285 million in cash on its balance sheet.
It's never easy making the jump from clinical-stage to commercial-stage biotech, but Esperion has a lot of experience in this indication. And it appears to have a solid game plan for driving demand, including pricing that should allow it to be used as a second-line therapy ahead of pricier alternatives, including PCSK9 inhibitors.
If so, bempedoic acid could be a billion-dollar blockbuster because Esperion Therapeutics estimates its addressable market exceeds 18 million people in the U.S. alone.
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Todd Campbell owns shares of Esperion Therapeutics and Pfizer. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.