The message from Esperion surprised the market yesterday, especially in light of Amgen's results from its large study of the drug Repatha. Despite earlier optimism, Repatha showed lower effects on cardiovascular events (angina, stroke etc) than the market had expected - especially in light of the cost of the drug which is estimated to an annual USD 14,000 per patient.

The market is now questioning whether the cost / benefit is attractive enough for wide insurance coverage and if health authorities will introduce refund schemes for this treatment. This has great significance for the size of the market for the drug. Amgen fell 6.4% on Friday after publication of the detailed data and Esperion was dragged down with -20%. Esperion’s announcement yesterday however, did take the market by surprise making the ESPR shares surge by 52% in just a few hours of trading.

Portfolio Manager Ulrica Bjerke explains that they predicted the development, and were surprised by the initial reaction on Esperion last week. With the recent reversal and positive share movement, she believes there is more to go in the stock. “We believe the company now is in a good spot for further development. Long-term investors have now got their eye on the price, and the FDA signals were no doubt a very positive indication for the candidate drug,” says Ulrica Bjerke.

Esperion is a 'one-product company’ that aims to reduce cardiovascular risk through reduction of LDL cholesterol  just as PCSK9 inhibitors (including Amgens’ Repatha). Esperion’s drug however has a different mechanism of action that make it possible for an alternative manner in which the drug is administered. The drug, bempedoic acid, can be taken orally, while Amgen’s Repatha is administered through injection. This in turn makes bempedoic acid more inexpensive than Repatha, and will enable the company to put a substantially lower price for it, if and when it reached the market.

The conclusion from the Amgen data shows that a reduction in LDL reduces mortality and saves lives. Esperion now need to prove that their product can reduce LDL, and the company has an ongoing Phase 3 study for this purpose. The study is aimed at reduction in patients with higher baseline LDL levels compared to the patients Amgen’s study , and as such, has the potential to result in a greater effect for this patient group than Amgen’s data. As Esperion reported yesterday, the FDA has given the green light for an upcoming market submission based LDL reduction after bempedoic acid treatment. In that case, the green light for approval of the drug given that there are no other factors showed in the upcoming study that speak against the overall risk profile of the product.

Arctic Aurora Life Science made its first investment in Esperion at the beginning of February this year and weights reach 3.0% of the portfolio[DB1] . Arctic Aurora LifeScience I share class is currently up 16,4% YTD, leading the table well ahead of 59 global competitors on morningstar.no. This is not included the latest rise in the share of Esperion.

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Arctic Aurora LifeScience is an equity fund investing in global biotechnology and pharmaceutical companies. The fund is run by former portfolio manager in the Swedish AP Fonder, Ulrica Bjerke, and Dr. Torbjørn Bjerke, both with 20 years of experience from the market. Arctic Aurora LifeScience was launched in May 2016 with both hedged and un-hedged share classes.

Past performance in Arctic Aurora LifeScience s no guarantee for future returns. Future returns depend on the market, fund manager skill, fund risk level, costs, among others. Performance in the fund may at times be negative and may for this fund vary considerably within periods. 

Source: MarketWatch, Arctic Securities, Arctic Fund Management