Simon Daly Blog | Esperion Therapeutic's ETC-1002 - an under appreciated late stage cholesterol drug | Talkmarkets
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Esperion Therapeutic's ETC-1002 - an under appreciated late stage cholesterol drug

Date: Tuesday, September 5, 2017 10:45 AM EDT

Background Story

Esperion Therapeutics (NASDAQ:ESPR) was founded in 1998 by current Chairman Roger Newton, after he achieved success with Lipitor at Warner-Lambert. After a successful Phase IIa clinical study in 2004 for a synthetic HDL-C therapy, Pfizer (NYSE:PFE) purchased Esperion for $1.3 billion. In the aftermath of the failure of Torcetrapib, Newton was able to persuade Pfizer's executives to sell some pre-clinical small molecules that the original Esperion had worked on. In May 2008, he raised $23 million from venture capital investors to buy the rights to the old Esperion Therapeutics (these investors remain ESPR's majority shareholders). ETC-1002's mechanism of action wasn't fully understood prior to being studied by the new Esperion. Esperion's sole drug is ETC-1002, and it owns its entire worldwide IP rights. It is a first-in-class, oral, small molecule pill which has a CoA derivative that inhibits ATP citrate lyase. The molecule acts to reduce cholesterol biosynthesis, upregulate LDL receptor expression in the liver and reduce circulating levels of LDL cholesterol. In Phase II trials, it has achieved an average 30% reduction in LDL-C, when used as a monotherapy and in patients on background statins. Used in combination with ezetimibe, it achieved an average 50% reduction.

Current Position

At year-end 2015, Esperion has successfully undertaken three Phase I and seven Phase II trials testing ETC-1002 in 727 patients, with the drug being well-tolerated and associated with no dose-limiting adverse events. Esperion has guided that its Phase III program and a CVOT will cost approximately $125 million up to 2018. The FDA has recommended that Esperion has the trial well underway (completion not a condition of approval) at the time of seeking approval in 2018. To achieve its full commercial potential, Esperion will have to license out to a larger pharmaceutical partner. Any potential partner would likely demand that a CVOT be completed to improve the commercial potential. Esperion hopes that commencing one before approval will "open the door" for label expansion based on positive, long-term data. While it is more likely that a potential deal maker will wait until the data plays out next year and in 2018, the CV/diabetes market is already served with large salesforces from several large pharmaceutical companies.


Risks to the Efficacy of ETC-1002

Esperion's share price alternated sharply between the extremes of over-expectation to under-expectation in 2015 (current share price factors very little future expectation). The speculative nature of the company appears to be the primary reason for this. Analysts are largely positive on the long-term potential of ETC-1002, but recognize that questions remain over certain areas of the data picture. These risks could be fatal and include:

  1. Efficacy when used in combination with high-dose statins.
  2. Potential unknown safety concerns as ETC-1002 was placed under two FDA partial clinical holds in 2013.
  3. Expression's characteristics of ACSVL1 in broader human test populations.

1. High-Dose Statin Efficacy

The HDS combination fear relates to the concern that prior doses of high-dose statins will "max out" the pathway preventing ETC-1002 from being effective. This fear might stem from failed development efforts undertaken by Bristol-Myers (NYSE:BMY), Merck (NYSE:MRK) and Takeda Pharmaceutical (OTCPK:TKPYY) to find complementary mechanisms of actions to HMG-CoA reductase further along the pathway. These efforts focused on inhibiting squalene synthesis (squalene being the final element on the pathway). When tested in rats, these compounds showed evidence of liver toxicity. Takeda's TAK-475 was the only one of these to reach late-stage development. Large-scale trials produced a dose-dependent (100 mg) increase in the enzyme alanine aminotransferase, along with a rare case of bilirubin, which indicated potential hepatic toxicity in two patients. Answering this safety question would have required further long-term studies before marketing. Whether this was a rare case where causality was difficult to establish (as is considered to be the case with reports from Atorvastatin's clinical trials) is impossible to tell. At Esperion's 2015 Investor Day presentation, Dr. Narendra Lalwani (Executive VP of R&D and COO), gave his view that ETC-1002 is complementary to statins and enhances the decrease in cholesterol biosynthetic activity on top of that produced by statins. He described how both drugs work to produce bottlenecks at different sites along the pathway where cholesterol is being synthesized, similar to the action of "putting a break on a wheel to slow down the synthesis in a factory production line to reduce output." Esperion is currently undertaking a Phase II study with high-dose statins (ETC-1002-035) and expects to have top-line results in Q3 2016.

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