What happened
Shares of Esperion Therpeutics Inc. (ESPR 9.42%), a clinical-stage biotech, are bouncing back after a recent market beatdown. A dramatic price reduction is bringing bargain shoppers out of the woodwork. The stock rose as high as 17.1% in early morning trading, but has since settled to a 11.3% gain as of 12:10 p.m. EDT.
So what
Earlier in the week, Esperion stock tanked after the company revealed 13 patient deaths in a group of 1,487 who received the company's experimental cholesterol-lowering therapy, bempedoic acid, during a late-stage clinical trial. The deaths were considered unrelated to the treatment, but they occurred at a rate three times as high as the group taking statins plus a placebo. Fearing a holdup at the Food and Drug Administration, J.P. Morgan issued a downgrade that pushed the stock down to a level that apparently looks attractive to investors unfazed by the recent safety scare.
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Bempedoic acid is intended to be a treatment for patients that can't control their LDL cholesterol with cheap generic statins. Adding the drug to maximally tolerated statin therapy led to significant cholesterol reductions, which could make it an important weapon in a war against heart disease that claims the lives of around 600,000 Americans every year. Around 2,400 patients have been treated with bempedoic acid in mid- and late-stage trials and, taken on the whole, the safety data doesn't suggest Esperion's candidate is any more dangerous than the statins it could supplement.
Now what
Esperion is about to give us heaps more bempedoic trial data that could help regulators feel more confident about the drug's risk-to-benefit profile. Later this month, the company will release top-line results from a trial with high-risk patients that can't take statins, and results from a pivotal combination trial with Zetia are due in September.
With a market cap around $1.1 billion at the moment, this cholesterol drug stock could deliver monster gains if its candidate becomes a roaring success. If any severe event imbalances appear in upcoming readouts, though, Esperion could be in serious trouble. Bempedoic acid is the only drug candidate in its pipeline, and earning an approval might be the easy part.
If approved, a recent deal between Express Scripts, Sanofi, and Regeneron could result in Praluent, another next-generation cholesterol-lowering drug, which would compete fiercely with bempedoic acid. Even at today's prices, the risks facing Esperion are so great that I would only recommend it to the most adventurous investors.
