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Low Cholesterol, High Potential

06/27/2003 12:00 am EST


John McCamant

Editor, Medical Technology Stock Letter

"In the US, one person in four suffers from cardiovascular disease and  a major contributing factor is a build up of cholesterol," notes biotech expert and editor of The Medical Technology Stock Letter, John McCamant. " Last year, nearly $22 billion was spent on cholesterol- and triglyceride-reducing medications. This year, sales of that class of drugs are poised to become the largest selling class of drugs on the planet." Here he recommends a company working towards a new approach to cholesterol-lowering treatment.

"A well-functioning liver already makes all of the cholesterol a human body needs to carry out all of the processes mentioned above. Therefore virtually all of the cholesterol that we take in—by eating meat, dairy products, and other foods containing saturated fats—is extra. If we don’t need it, don’t use it, and don’t eliminate it, it hangs around and builds up over time in our blood vessels. The result can be hardening of the arteries, heart attack, or stroke. Historically, the therapeutic emphasis had been on lowering total cholesterol levels. Recent research has shifted our attention to the goal of lowering LDL (known as the 'bad cholesterol') and increasing HDL (known as the 'good cholesterol'). In 1987, Merck launched Mevacor, the first of a class of drugs called statins which have revolutionized the regulation of cholesterol.Pfizer’s Lipitor and Merck’s Zocor (simvastatin) have emerged to become the largest selling drugs in the world. Bristol-Myers Squibb’s Pravachol, Novartis’ Lescol and Mevacor complete the class. Statins have been shown in clinical trials to reduce a person’s risk of death from cardiovascular disease, as well as the risk of a second heart attack. On the down side, the side-effect profile from long-term use of statins remains incomplete. Liver toxicity over time remains a question, particularly for patients with a history of liver damage.

"We would like to introduce Esperion Therapeutics (ESPR NASDAQ), a new buy recommendation. Esperion is racing to cut cardiovascular disease off at the pass by developing compounds which enhance HDL, lower LDL, and reduce arterial plaques. The company’s technology platform has been built to enhance the reverse lipid transport (RLT) pathway in which cholesterol is removed from the body. Current cholesterol treatments focus on reducing the production of LDL and leave much to be desired in their treatment effect. Esperion came public in 2000, and despite its youth, has one of the most experienced management teams in the biotech sector. Its scientists have been instrumental in the discovery, development, and commercialization of several multi-billion-dollar drugs, most notably, Lipitor. In fact, the company’s CEO, Roger Newton, was the co-discoverer and product champion of the Lipitor team. In addition, management’s extensive experience working with cholesterol medications will assist them in positioning their complementary therapies with current cholesterol therapies.

"The reverse lipid transport (RLT) pathway forms the basis for ESPR’s technology. It is the pathway by which HDL removes cholesterol from the body’s peripheral tissues and organs and transports it to the liver where it can be eliminated. The RLT pathway exists in everyone. In some individuals, however, it is less than optimal. ESPR currently has three biopharmaceuticals in clinical development that could complement current standards of care in acute coronary syndromes and other forms of atherosclerosis, including stroke and peripheral artery disease. And perhaps more exciting long-term is the company’s oral small molecule program which could provide a new option for the chronic treatment of lipid disorders (i.e., drugs that could both replace and work in combination with statins). ETC-588 (LUV) is the company’s most clinically advanced compound; the drug is currently in two Phase II trials, with one Phase II already completed. If these trials produce positive data, the company would be in position to meet with the FDA in mid-2004 to discuss their Phase III trial design.

"We're impressed by the breadth and experience of ESPR’s management and believe this strength uniquely positions them above most biotechs and on even footing with the big pharmaceutical firms. In a sense, ESPR represents the best of both biotech and Big Pharma; they are focused and nimble like a biotech, and bring a wealth of Big Pharma drug development experience necessary to navigate the labyrinth of cardiovascular drug development. We believe the company poised for significant flow of news and we urge investors to establish positions in ESPR sooner rather than later. ESPR is a buy under $19 with a target of $30."

Editor's Note: As we go to press, ESPR has jumped sharply in price--up more than 20%--and we caution short-term investors against chasing strength. Nevertheless, for long-term investors, the stock does remain under McCamant's $19 buy limit.

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