Lilly's (LLY) CETP Inhibitor Disappointment Seen as Positive for Esperion (EPSR) and PCSK-9, Says RBC (REGN) (AMGN) (SNY) (MDCO) (MRK)

News Eli Lilly (NYSE: LLY) plans to halt development of evacetrapib, a CETP inhibitor, has positive implications for PCSK-9 -related stocks and Esperion Therapeutics (NASDAQ: ESPR), said RBC analyst Michael J. Yee.

Yee explained, "The CETP class of drugs has been the primary competitive threat to other drugs like AMGN (Nasdaq: AMGN), REGN's (Nasdaq: REGN) PCSK-9 drugs now approved and ESPR's Phase III oral drug ETC-1002. Recall there is also one other key CETP inhibitor from Merck (NYSE: MRK) (anacetrapib) also in Phase III that has an interim analysis at the end of this year (they modified the endpoint in mid-year) and this drug has a much longer half-life which could be an impact to efficacy but also to safety, so the CETP class is not completely off the table yet but certainly expectations for this class will come down. We would point out LLY's outcome study was much smaller at 12k pts vs MRK's well over 25-30k+ pts we believe although they used different risk profile patients (smaller study used higher risk pts so there were faster events occurring) so they're not identical."

Discussing PCSK-9, Yee said, "The failure of LLY's drug is clearly an important fundamental positive for the PCSK-9 class as it removes a key competitor and increases visibility on long-term blockbuster peak sales for injectable PCSK-9's including AMGN'S Repatha and REGN Praluent and Phase II MDCO (Nasdaq: MDCO). We have been writing that we think consensus underestimates the long-term peak potential of PCSK-9 which could have AMGN Repatha at theoretically closer to $8-10B peak long term vs consensus $3-5B. Consensus believed CETP inhibitors were perhaps a 30-50% likelihood to succeed so given LLY's news, we have greater confidence in our estimates and the upside bull case. As a side note, recall AMGN just in-licensed a mid-stage CETP as well as a hedge in case the class works, so either way, AMGN had a partial hedge on results."

Commenting on Esperion Therapeutics, the analyst said, "The stock is currently trading up but has been volatile pre-market. We are bound to get both sides of the debate today on the LLY implications to ESPR. Bulls will say huge competitor off the table (CETP was an oral with big efficacy signals) and this makes pharma more likely to have to acquire an oral CV drug so ESPR is essentially the only oral Phase III candidate in the landscape and it's very cheap and different mechanism of action than CETP. Bears will say: LLY makes FDA more nervous to want outcomes studies pre-approval and the more modest ESPR LDL reduction would make FDA nervous after CETP. Also, ESPR was planning a 12k+ outcomes study too in higher risk pts which we do not agree with and really would like them to overpower it and spend the capital...and LLY has shown what happens with smaller studies."

You May Also Be Interested In

• Midday movers: Tesla, Li Auto and CNH Industrial fall; Salesforce rises
• Cardinal Health (CAH) shares down after losing OptumRx contracts
• Super Micro Computer (SMCI) now down nearly 20%