Credit Suisse: Esperion Therapeutics' Long-Term Potential Is 'Robust,' But More Clarity Needed

In a report published Wednesday, Credit Suisse analyst Vamil Divan assumed coverage of Esperion Therapeutics Inc ESPR with a Neutral rating, down from the previous rating of Outperform, while reducing the price target from $130 to $86.

“We are firm believers in the LDL-c hypothesis and are encouraged by the LDL-c reducing activity we have seen from ETC-1002 to date. We are cautious, however, until we are able to obtain more visibility on the upcoming FDA decision and product labels for the PCSK9s, output of ESPR's End of Phase 2 Meeting with the FDA in August, and publication of work ESPR has done in clearly defining the mechanism of action for ETC-1002 in November,” analyst Vamil Divan said.

In case these near-term events turn out favorable, there could be “blockbuster potential” for ETC-1002. However, more clarity is required “before we can recommend ESPR shares to investors with conviction, especially relative to other names in our coverage universe,” Divan commented.

In the report Credit Suisse noted the investment positives as:

• Lead asset ETC-1002 with “multi-billion dollar opportunity” in a substantial high cholesterol market
• Long-standing FDA support for LDL-c hypothesis providing “reason for optimism” for the approval of ETC-1002 in advance of readout of cardiovascular outcome study
• Strong management team with deep understanding of the cholesterol market

The report mentioned the investment risks as:

• “Relatively limited clinical database (especially around mechanism of action and longer-term safety) could raise questions as company discusses phase 3 plan with FDA”
• Need for outcomes study preapproval could be a challenge and may require additional financing
• Rapidly evolving and competitive cholesterol market could “potentially see two new classes enter (including oral CETP inhibitors) prior to ETC-1002's currently expected entry in 2018”