The terms of the financial transaction and the potential reasons for it are discussed in a BTIG report.
In a June 26 research note, BTIG analyst Thomas Shrader reported that Esperion Therapeutics Inc. (ESPR:NASDAQ) agreed to an "up to $200 capped, tiered and revenue-based funding arrangement with a New York-based investment firm."
This deal comes before Esperion's maiden commercial launch, of its lipid lowering agent bempedoic acid, and would boost the company's pro forma Q1/19 cash position to $355 million.
BTIG views the capital arrangement as "an insurance policy" for Esperion that "reflects a competitive landscape for bempedoic acid undergoing some flux," Shrader noted. He indicated potential headwinds to the commercial uptake of bempedeoic acid and the bempedeoic acid-ezetimibe combination tablet include "Amarin's Vascepa and recent price reductions of PCSK9s."
Per the financial agreement, Esperion will receive an upfront payment of $125 million, another $25 million upon U.S. Food and Drug Administration approval of bempedoic acid and another potential $50 million, by option, in the first two years after product launch when the company achieves certain, undisclosed revenue objectives.
The initial royalty rate is set at 7.5% on U.S. net revenue below $250 million from sales of bempedoic acid and bempedoic acid-ezetimibe. The rate will decrease to 2.5% in 2021 when Esperion hits those same revenue objectives. It will drop again to 0.4% in 2024 if the company, by then, has repaid all of the capital it received via the arrangement.
Shrader relayed that Esperion management remains confident it will commercially debut its product in the U.S. It guided to having up to 45% of commercial and 20% of Medicare Part D lives covered at the launch, up to 60% commercial and 40% Part D lives covered by six months and up to 75% commercial and 60% Part D lives covered by 12 months post launch.
Shrader pointed out that "Chief Commercial Officer Mark Glickman previously was vice president of sales and marketing at Kos Pharmaceuticals, arguably the only other company of comparable size to successfully compete in the lipid management space."
BTIG has a Buy rating and an $82 per share price target on Esperion, whose current share price is about $46.02.
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Disclosures from BTIG, Esperion Therapeutics Inc., June 26, 2019
Analyst Certification I, Thomas Shrader, PhD, CFA, hereby certify that the views about the companies and securities discussed in this report are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report.
I, Julian Harrison, hereby certify that the views about the companies and securities discussed in this report are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report.
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