Chardan: Esperion Therapeutics Still A Sell

In a report published Friday, Chardan Capital analyst Gbola Amusa reiterated a Sell rating on Esperion Therapeutics, Inc. ESPR, while lowering the price target from $45 to $40. The analyst believes that the failure of TAK475 does not bode well for ETC-1002.

The company reported its Q2 results, with EPS marginally better than the estimate, while share count was 9 percent above expectations. Esperion guided to non-cash expenses of about $12.5 million for 2015, up from the previous guidance of $10 million, and mainly consisting of stock based compensation.

“The timing of milestones was broadly unchanged, and ESPR produced new data on ETC-1002 efficacy and safety that do little to mitigate our concerns,” Amusa stated.

The analyst expressed concern regarding the failure of TAK-475, manufactured by Takeda Pharmaceutical Co. Ltd. (ADR) TKPYY, in 2008, the same year that Esperion Therapeutics bought ETC-1002 from Pfizer, Inc. PFE.

TAK-475 had failed to show superiority over existing therapies when tested with moderate intensity statins. The analyst believes that the placebo-subtracted efficacy of ETC-1009 would decline when ETC-1002 is added to high intensity statins.

The company has presented data to show that ETC-1002 led to LDL changes in low moderate intensity statin use. “We expect that as ETC-1002 is tested with high-intensity statin therapy, where its effects will likely reach saturation, there will be diminished efficacy,” according to the Chardan Capital report.

The TAK-475 precedent implies that the FDA requires drugs that address the issue upstream or downstream of statins need to prove their superiority over existing drugs in terms of both safety and efficacy.

“We caution that ETC-1002 has not been tested head-to-head against statins to confirm superiority "from both efficacy and safety viewpoints" and that risk will be high from a phase III program that likely greatly differs from phase II,” Amusa added.

Q2 Results

Esperion Therapeutics reported that its cash and cash equivalents and investment securities available for sale as of June 30, 2015, stood at $314.3 million, up from $141.6 million on December 31, 2014.

However R&D expenses were higher during 2Q15, as compared to 2Q14, driven largely by expenses related to the additional development of ETC-1002. General and administrative expenses also increased due to the cost of operating as a public company, increased headcount and other cost associated with the company’s growth.

For 2015, the company expects to use $42 million in net cash to fund its operating activities, with cash and cash equivalents and investment securities available for sale expected at $290 million at December 31, 2015. Esperion Therapeutics expects its current cash resources to be adequate to fund the company through 2018, as well as through the approval process of ETC-1002.

“Having successfully completed our Phase 2 program for ETC-1002, we are focused on the End-of-Phase 2 meeting with the FDA next week and the upcoming launch of a robust Phase 3 program,” President and CEO of Esperion Therapeutics, Tim M. Mayleben, said in the press release.