Esperion: Rising Prospects in Lowering Cholesterol

11/11/2020 5:00 am EST


John McCamant

Editor, Medical Technology Stock Letter

Esperion (ESPR) just reported financials ($3 million in net sales) with the stock under pressure as the company continues to struggle with the new drug launch during the COVID-19 crisis, explains John McCamant, biotech sector expert and editor of The Medical Technology Stock Letter.

The company's recent conference call was laser focused on the burn rate and the potential of the company running out of money in the next 12 months.

There is no question that COVID-19 is the toughest environment we have witnessed to launch a new cholesterol lowering drug — that needs in person CV/GP  sales calls as well as normalized patient visits to execute effectively.

As a result and not that unexpected, initial sales for the NEXLETOL-NEXLEZET have been disappointing. Bigger picture, ESPR is almost completely de-risked with approvals in both the U.S. and E.U. for an inexpensive once-a-day cholesterol lowering pill.

Potential cash alternatives to a public offering are available to ESPR including a Rest of World (ROW) partnership expected by year end and there is a $50 million option from Oberlin (that requires $100 million in NEXLETOL-NEXLEZET worldwide sales in a six month period before the end of 2021).

The drugs were just launched in Germany and the approvals in the rest of the European Union will continue on a country by country basis.

To us, this increases the odds that ESPR will be deliver the $100 million of sales within six months that is required to trigger the $50 million Oberlin option, and the company has been successful at forming global marketing deals with strong non-dilutive cash payments.

Given the pullback due to COVID shutdowns, we are reducing our "buy" to under $35. Our upside target price is now $70. Lastly, at its current valuation one could easily see a takeover as ESPR is a de-risked asset with U.S. rights to two novel once-a-day cholesterol lowering pills.

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