After updating investors this week on its strategy for tackling the blockbuster market for cholesterol lowering drugs, shares in Esperion Therapeutics (NASDAQ:ESPR) are rocketing higher.
Here's how the company plans to make its cholesterol-lowering drug, bempedoic acid, a commercial success someday.
First, a little background
Statins are commonly used to reduce bad cholesterol levels, and they're the most prescribed medicine on the planet. Tens of millions of patients in the U.S. alone take them every day, and at one point, sales of the most commonly used statin, Lipitor, exceeded $13 billion per year.
While the body needs some cholesterol to work properly, too much bad cholesterol can clog arteries and cause heart attack and stroke. Generally, when bad cholesterol levels get north of 160, patients need to take action to reduce their risk of cardiovascular disease. Unfortunately, more patients are discovering their bad cholesterol levels are too high, in part because diets have shifted to include more fatty foods.
Guidelines call for everyone over 20 years old to get their cholesterol levels screened at least every four years, however, the risk of high cholesterol increases with age, so many people are being screened more often than that, especially if they have a family history of heart disease.
Given a larger and longer-living population, and widespread screening, it's probably not shocking to learn that about one in five Americans between age 40 and 75 are now taking statins to keep their cholesterol in check. Despite widespread use, however, heart disease and stroke remain the biggest cause of death in the U.S., claiming more than 600,000 lives annually, according to the Centers for Disease Control and Prevention.
New ways to battle bad cholesterol
In 2015, Amgen Inc. (NASDAQ:AMGN) and Regeneron Pharmaceuticals (NASDAQ:REGN) won FDA approval for two drugs that lower cholesterol in an entirely new way. While statins reduce the body's production of cholesterol by inhibiting the HMG-CoA reductase enzyme, Amgen's Repatha and Regeneron Pharmaceuticals' Praluent inhibit the PCSK9 gene to increase the number of bad cholesterol receptors in the liver. In trials, adding a PCSK9 inhibitor to statin therapy reduced bad cholesterol levels in tough-to-treat patients by an additional 60%.
At Esperion Therapeutics, it's researchers are developing yet another way to lower cholesterol levels. Instead of targeting PCSK9, its bempedoic acid inhibits the activity of ATP-Citrate Lyase, an enzyme that's upstream of the HMG-CoA reductase enzyme. So far, that approach also appears effective. In phase 2 trials, adding bempedoic acid to statin therapy lowered bad cholesterol by an additional 20%.
Planning for success
Amgen and Regeneron Pharmaceuticals found out the hard way that efficacy alone doesn't guarantee commercial success in this indication. Although their PCSK9 drugs are highly effective, sales remain far south of billion dollar blockbuster territory. In Q1, Repatha and Praluent's global sales were only $50 million and $36 million, respectively.
If Esperion Therapeutics hopes to do better than that, it's going to have to approach the market differently than Amgen and Praluent did. Fortunately, that's exactly what management appears to be doing.
One way that Esperion Therapeutics hopes to win more meaningful market share is by pairing up bempedoic acid with Zetia, a commonly used cholesterol lowering medication that recently lost patent protection.
Esperion Therapeutics has developed a single-tablet combination of bempedoic acid and Zetia that can be taken with statins, and it's conducting a mid-stage trial to see if that one-two punch does better than Zetia alone. If it does, then an eventual phase 3 trial success could prompt doctors to switch from Zetia to Esperion Therapeutics combination tablet. If so, this strategy could translate into significant sales because Zetia and it's sister drug Vytorin were racking up about $5 billion in annual revenue at their peak.
Another way Esperion Therapeutics plans to win in this indication is by pricing bempedoic acid more competitively than PCSK9 inhibitors. PCSK9 inhibitors are complex biologics that are tough to make, and Amgen and Regeneron charge about $14,000 per year for them. That price is shocking when you consider that generic Lipitor can cost as little as $10 per month, according to GoodRx. Unsurprisingly, insurers have been reluctant to cover PCSK9 inhibitors, and that's crimped sales. To avoid that from happening to its drug, Esperion Therapeutics plan is to target volume over price.
Data on deck
Investors should find out soon whether or not Esperion Therapeutics' strategy of marrying bempedoic acid to Zetia is a good one. Phase 2 trial results for its combination tablet is fully enrolled, and management says top-line data from this study will be available in the third quarter.
Undeniably, a win in this trial improves bempedoic acid's odds of becoming a commercial success. However, investors should also know that a failure wouldn't be a death blow to this company. Esperion Therapeutics has other phase 3 trials underway evaluating bempedoic acid use alongside statins without Zetia, and results from those trials are expected in 2018. Assuming everything goes to plan, success in those trials will clear the way for an FDA filing for approval in 2019, and potential approval in 2020.
Todd Campbell has no position in any stocks mentioned. 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.