Esperion Therapeutics Inc. got the last laugh. Twice.

In November, rumors about impending negative results from trials with its lead cardiovascular drug sent the company's shares down 26 percent. Later in the week, when the strongly positive Phase II data regarding ETC-216 were published, the shares jumped almost 35 percent.

"I guess we're not going to have to worry about that again," said Roger Newton, Esperion's president and CEO, recalling the roller coaster ride last week as the company recorded an even bigger triumph.

Pfizer Inc. said it had agreed to buy Esperion for $1.3 billion, adding to its basket ETC-216 and several other product candidates that emerged from the biotechnology company's research into raising high-density lipoprotein (HDL), or "good cholesterol."

Esperion's shares skyrocketed by more than 52 percent on news of the merger, which is expected to close at the end of next year's first quarter, after which the firm will operate as a division of the Pfizer Global Research and Development organization and remain in Ann Arbor.

George Farmer, analyst with Fortis Securities, acknowledged the nice fit of Esperion's drugs with Pfizer's marketed drug Lipitor (atorvastatin calcium), the world's most prescribed agent for reducing low-density lipoprotein (LDL, the "bad cholesterol"), but still was surprised.

"It's really amazing that Pfizer should step up the way they have now, especially since they had rights of first negotiations for ETC-216," he said. Pfizer merged with Pharmacia Corp. in a $60 billion deal disclosed in the summer of 2002, and Esperion earlier had granted Pharmacia the right of first refusal to market ETC-216, which recently completed a Phase II trial.

The drug, ApoA-I Milano/phospholipid complex, also known as AIM, is a variant ApolipoproteinA-I (ApoA-I), which is the major protein component of HDL.

ApoA-I Milano is prevalent in a small population of northern Italians with paradoxically low levels of HDL cholesterol. Though that normally would correlate with high risk for cardiovascular disease, carriers of the ApoA-I Milano gene show a reduced risk, an effect believed to be due to enhanced reverse lipid transport (RLT), which is the body's process of removing excess cholesterol and other lipids and transporting them to the liver for elimination.

ETC-216 is the human recombinant version of ApoA-I Milano, combined with a phospholipid to form a complex that imitates the structure and function of HDL, intended to mimic HDL's beneficial properties and enhance RLT.

Last month, the Journal of the American Medical Association published results from the 47-patient Phase II trial. Under the terms of the agreement between Esperion and Pharmacia, Farmer said, Pharmacia - now Pfizer - had six months to review the data after it was submitted and come up with an offer.

"Esperion hadn't even submitted the data," he said. "It seems like a very big gamble on Pfizer's part."

Pfizer could have reasoned that "buying [Esperion] now is better than waiting for what would probably have been only partial rights to ETC-216 alone," Farmer wrote in a research note.

Certainly, Esperion has more that must have seemed attractive to Pfizer, as the company seeks to gobble as much as possible of the $20 billion market for lipid-lowering drugs.

In Phase II trials is ETC-588, made of large unilamellar vesicles and described as a cholesterol sponge. Data from a Phase II study with acute coronary syndrome patients are expected in the first half of next year.

ETC-588 has a "slightly different mechanism [of action]," Newton said. "It actually partners with HDL. The LUVs are not small enough to get into the arterial wall," but HDL, unfortunately, is.

Farmer said Pfizer "probably saw that if they were going to buy ETC-216, they should buy ETC-588 as well. They're both in the clinic to do the same thing."

Another compound, ETC-642, has completed two Phase I trials in patients with stable atherosclerosis. Like ETC-216, the drug is a protein/phospholipid complex that mimics HDL. Another Phase I trial is under way, with data expected in the first quarter of next year.

ETC-1001 (formerly known as ESP-31015) is Esperion's oral small-molecule drug candidate for boosting HDL and reducing triglycerides as well as LDL. A Phase I dose-finding trial is complete, with a Phase I multidose trial expected in the first half of next year.

Pfizer also is developing as a regularly dosed oral drug Lipitor in combination with torcetrapib, an agent that inhibits the action of cholesterol ester transfer protein. Phase II data have shown the pair enhances the LDL-lowering effect of Lipitor while boosting HDL. Esperion's drugs are to be used intravenously in a hospital setting. Newton said Pfizer's combination pill likely would win approval first. He declined to speculate when a drug from Esperion's pipeline might hit the market, but noted that analysts have estimated about 2007.

"The high premium [paid] signals that Pfizer sees potential in ETC-588, a much more cost-effective drug to produce and in later-stage development than ETC-216," Farmer wrote. "Our model suggests that Pfizer would be paying fair value for Esperion, assuming a 100 percent chance that ETC-588 makes it to market and by gaining all rights to ETC-216."

Scientifically, that might be a lot to assume, he told BioWorld Financial Watch.

"ETC-216 was a shot in the dark, and it worked, to everyone's surprise," he said. "It seems like as good a bet as any in biotech. But ETC-588 is a lot riskier." That's because of the method used to measure plaque in the ETC-588, which is magnetic resonance imaging - "not nearly as sensitive" as the intravascular ultrasound used in the ETC-216 trial.

What's more, HDL-focused therapies themselves represent "a whole new can of worms," Farmer said. "No one knows if this is going to translate into a significant clinical benefit."