Scientist looking through a microscope.

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What happened

Shares of Esperion Therapeutics (NASDAQ:ESPR), a clinical-stage biopharma focused on developing drugs that treat cardiovascular disease, jumped 24% as of 3:15 p.m. EST in response to good clinical news from Amgen (NASDAQ:AMGN).

So what

Amgen announced on Thursday that its PCSK9 inhibitor Repatha met its primary and secondary endpoints in its FOURIER trial. This study was evaluating whether Repatha reduces the risk of cardiovascular events in patients with cardiovascular disease. Amgen said that Repatha "significantly reduced the risk of cardiovascular events," but the details from the trial won't be available until mid-march.

Traders are bidding up shares of Esperion in response to this news on the theory that Amgen's positive clinical data will increase the chance of Esperion's cholesterol-lowering drug, bempedoic acid (ETC-1002), winning FDA approval by 2020 once its Phase 3 safety and efficacy studies are completed, rather than needing its own cardiovascular outcomes study. Phase 3 results are expected to be available by mid-2018. If positive, Esperion's stock could be undervalued at today's levels.

That view is shared by a handful of analysts. JMP Securities reiterated its outperform rating on the company's stock today and restated its $41 price target. Chad Messer, an analyst at Needham & Company, also said that shares are "significantly undervalued" right now, even after accounting for today's gain.

Given the steam of bullishness, it's no wonder shares are rallying.

Now what

Esperion's stock has been under pressure over concerns that the FDA might not be willing to approve ETC-1002 without data to show that lowering LDL-C levels -- that's the bad kind of cholesterol -- leads to improved health outcomes. While the FOURIER study doesn't prove anything about ETC-1002's ability to do so, it's most certainly a good sign.

However, even with today's news, there are no guarantees that Esperion will go on to win approval for ETC-1002. Investors should proceed with caution.

Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.