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Esperion Prices Upsized $70M IPO for Statin Alternative Work

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By Jennifer Boggs
Managing Editor

Following in the footsteps of upsized initial public offerings (IPOs) from PTC Therapeutics Inc. and Bluebird Bio, Plymouth, Mich.-based Esperion Therapeutics Inc. priced an IPO to raise $70 million – $80.5 million if underwriters exercise overallotments in full – to support midstage testing of its lead compound, ETC-1002, as an alternative to statin therapy in lowering LDL-cholesterol (LDL-C). (See BioWorld Today, June 20, 2013, and June 21, 2013.)

Esperion increased the number of shares offered from 4.5 million to 5 million, pricing them at $14 each, the midpoint of its anticipated range. And, as with shares of both Bluebird and PTC, Esperion's stock (NASDAQ:ESPR) made a strong debut, peaking at $17.40, before dropping to close Wednesday at $14.50, up 50 cents.

With the latest pricing, the biotech industry has seen a total of 20 IPOs priced so far this year, according to BioWorld Snapshots, raising about $1.3 billion altogether and averaging about $76.62 million per transaction. That means this year likely will best the numbers for 2010. Previously the hottest IPO year in the current window, which opened in mid-2009, 2010 saw 19 biotechs price IPOs, with a total of $1.22 billion raised. The average offering haul was $64.25 million.

If the current pace keeps up, 2013 could potentially tie – or even beat – the IPO stats of 2007, the year before economists officially declared a recession, in which 41 biotechs priced initial offerings, raising a total of $1.86 billion and averaging $45.3 million per IPO.

As of Wednesday, BioWorld Snapshots listed a dozen biotechs with pending S-1s.

Esperion's pricing falls squarely in line with other biotech IPOs in the current window. Like other companies to file in the past year, the firm took advantage of the emerging growth company clause in the Jumpstart Our Business Startups Act passed last year. And, like most other biotechs pricing in the current IPO window, Esperion relied on insiders to purchase a significant chunk of offered shares. (See BioWorld Today, May 17, 2013.)

In its prospectus, the company disclosed that existing investors, including management and directors and institutional investors Alta Partners, Aisling Capital, Domain Partners, Arboretum Ventures and Longitude Capital, agreed to buy about 1.17 million shares, representing about 23 percent of the offering.

Proceeds from the IPO will add to Esperion's cash, which totaled about $3.9 million as of March 31, plus another $33 million in April from a preferred stock financing. Funds will boost work on ETC-1002, an oral small molecule designed to both activate AMP kinase and inhibit ATP citrate lyase. That dual mechanism is intended to regulate imbalances in both hepatic lipid and carbohydrate metabolism, knocking down cholesterol levels while dodging the side effects experienced by many users of traditional statins.

Drugs like Pfizer Inc.'s Lipitor (atorvastatin), for instance, have proved lucrative in the cholesterol-lowering market. But because of side effects, including muscle weakness, many patients – some estimates go up to 50 percent – opt to stop treatment. Esperion is taking aim initially at those patients who are intolerant to statins.

Earlier this month, the firm reported top-line data from a Phase IIa study showing that ETC-1002 met its primary endpoint of lowering LDL-C, which it did by an average of 32 percent. The drug also was well tolerated, and a Phase IIb trial is slated to start by year-end, with top-line results available by the end of 2014.

Funds raised in the IPO will support that upcoming study and should get the company through an end-of-Phase II meeting with the FDA, Esperion said in its prospectus. Remaining proceeds would go toward working capital and general corporate purposes.

But the firm has plans to expand ECT-1002's use beyond that initial indication, including patients who are unable to hit their LDL-C goals despite the use of statin therapy. Esperion also has tested ETC-1002 in diabetics. In January, it posted results from a Phase II trial in Type II diabetes subjects, showing LCL-C lowering of up to 43 percent compared to placebo. ECT-1002 therapy also was associated with improvements in control of additional cardiometabolic risk factors in that patient population.

Originally founded in 1998, Esperion went public for the first time via a $54 million IPO in 2000 and was acquired by Pfizer for $1.3 billion in 2004. Four years later, the New York-based big pharma decided not to take the product forward, instead spinning out the asset into a privately held firm, and Esperion was reborn. It closed at $22.8 million Series A round in 2008. (See BioWorld Today, Aug. 11, 2000, Dec. 23, 2003, and May 2, 2008.)

Pfizer has retained a financial stake in Esperion, holding about 10.1 percent of the firm prior to the IPO. After the offering, its holding is expected to drop to 6.6 percent.

After the offering, Esperion is expected to have about 14.6 million shares outstanding – 15.3 million if underwriters exercise their overallotment option in full. Credit Suisse Securities LLC and Citigroup Global Markets Inc. are acting as joint book-running managers, while JMP Securities LLC and Stifel, Nicolaus & Co. Inc. are serving as co-managers.

In other financings news:

• Numedii Inc., of Palo Alto, Calif., said it received $3.5 million in a Series A round led by Claremont Creek Ventures and Lightspeed Venture Partners, with participation by Life Science Angels and others. The company will use that initial funding to further develop its technology and prepare its first three internal drug development programs for clinical testing. Founded in 2008, Numedii uses a digital approach aimed at de-risking new drugs by translating its Big Data Technology into therapies with a higher probability of therapeutic success. In connection with the financing, the company added Ted Driscoll and Brad Webb, both of Claremont Creek, to its board.

• Soligenix Inc., of Princeton, N.J., said it closed its public offering, raising gross proceeds of about $7.1 million, which will be used to further develop its product candidates and for general corporate purposes. The final amount of securities issued consisted of about 6.8 million shares of company stock and five-year warrants to purchase up to 5.08 million shares. Investors included an affiliated fund of Third Security LLC, a venture capital firm founded by R.J. Kirk, as well as certain members of the company's management and board. Soligenix will appoint a Third Security designee to its board. Soligenix is developing two lead candidates: oral BDP (beclomethasone 17,21-dipropionate) for pediatric Crohn's disease and SGX942, an innate defense regulator, for oral mucositis.