Citi Downgrades Esperion As Hope Of Acquisition Dwindles

Esperion Therapeutics Inc ESPR is finishing research on its bemepedoic acid for lipid management, and while the Street expects success, the drug’s potential is weighted by a dearth of interested buyers.

The Rating

Citi analyst Joel Beatty downgraded Esperion to Neutral, but raised his price target from $77 to $96.

The Thesis

Esperion will release Phase 3 data for bemepedoic acid in March, May and September, and Citi expects positive reports resulting in an 80-percent probability of treatment approval by the Food and Drug Administration.

“We believe that ESPR is worth $118 per share if 100 percent credit is given for bempedoic acid, and about half of the difference between this price and the current stock price could come upon study 1 results in May,” Beatty wrote in a Monday note.

Sustained performance is seen to depend on either drug or company acquisition prospects by a large pharmaceutical — an event Citi doubts will occur over the next 12 months.

“We believe bempedoic acid is an attractive unencumbered asset that will compete well against PCSK9s, because of a lower price and oral method of delivery,” Beatty wrote. “However, we believe that both bempedoic acid and the currently approved PCSK9 antibody drugs will be outsold by inclisiran from MDCO.”

The Medicines Company MDCO’s inclisiran is also in Phase 3 studies and is expected to launch in 2020, but the analyst anticipates higher sales for its strength in lowering low-density lipoprotein and length of dose efficacy.

Price Action

Esperion's stock fell about 2 percent early Monday, but was trading nearly flat at $77.25 at time of publication.

Related Links:

Deutsche Bank's Take On Big Pharma: 3 Buys And A Hold

A Survey Of Celgene's M&A Strategy