Shares of Esperion Therapeutics lost more than half their value Thursday morning on fears the company may not get a $300 million milestone payment from Daiichi Sankyo.
At issue is the strength of data to support expanded use of Esperion’s cholesterol drug Nexletol. To qualify for the payment, Esperion needs to win European Union approval of new prescribing information that includes a certain magnitude of cardiovascular risk reduction.
The problem is the two companies disagree over which measure of cardiovascular risk reduction to use. Esperion contends it would meet the 20% or more threshold because its data showed a 23% reduction in the risk of heart attacks. But Daiichi is focused on the 13% reduction shown for the study’s primary goal, which featured a composite measure of cardiovascular complications.
“The company strongly disagrees,” Esperion said in a federal filing Wednesday, contending its agreement with Daiichi doesn’t refer to any primary endpoint. “If necessary, the company intends to enforce its contractual rights and seek the milestone payments it believes it is entitled to.”
Esperion still needs to win approval of the expanded label in the EU to qualify for the payment, and the company says it’s on track to submit filings in both the EU and U.S. in the first half of this year. But now, it faces the prospect of a legal fight delaying the payment or losing it altogether. The funds are critical for Esperion, which posted a $234 million net loss last year and had $125 million in cash and cash equivalent at the end of 2022.
Shares of Esperion dropped by as much as two-thirds in early trading Thursday.
Investors were already feeling jittery about Esperion’s data. When the company released the research earlier this month, analysts said shareholders had been looking for a more meaningful reduction in risk. But Esperion was optimistic, saying a new label could more than double the pool of patients eligible to take the pill.
According to the agreement with Daiichi, Esperion would qualify for the $300 million payment with a new EU label citing cardiovascular risk reduction of 20% or more. Risk reduction between 15% and 20% would qualify for a $200 million payment, Esperion said
Up to $140 million more would be due upon achievement of certain other milestones, among them inclusion of heart risk reduction data on the drug’s labeling in the U.S.