Purchase ESPR Calls

Today the FDA cleared ESPR a new drug that has no statin side effects, which up to now caused problems to a lot of people. I think this drug will do a lot of good. However, some reservations about the drug were brought up which scared a lot of people:

Esperion Therapeutics (ESPR) has tumbled today after Regeneron’s (REGN) Praluent wasrecommended for approval by an FDA advisory panel but with some serious reservations.Chardan’s Gbola Amusa explains why:

The FDA panel’s backing of competitor Praluent included commentary that to us raises questions on the value proposition of ETC-1002. Yesterday, an FDA Advisory panel voted 13 to 3 that Regeneron and partner Sanofi(SNY) had established that cholesterol-lowering drug, Praluent (alirocumab), has a benefit-risk profile that supports approval in one or more patient populations. We believe panelists and/or the FDA itself challenged important concepts behind the proposed value proposition of ETC-1002, namely: (1) that LDL lowering alone is a surrogate for outcomes for non-statins drugs, and (2) the scope of patients that are truly statins intolerant and for that reason alone are in need of novel products like ETC-1002. We have incremental caution that FDA could require studies that derail consensus’ view of a 2018 ETC-1002 launch (versus our view of a 2020+ launch, if the product makes it to market). We therefore reduce our probability of success for ETC-1002 from 45% to 40%, resulting in our PT decreasing from $55 to $50.

RBC’s Michael Yee and John Chung don’t think the debate is so one sided. They explain why:

Lots of debate on Esperion and we think while not an easy straight-forward path, this drug will get approved pre-outcomes and upside potential, in our view, is significantly more than downside. Bulls say: Merck (MRK) Improve-it, PCSK-9, and all these other drugs all support LDL hypothesis, panel today was not sophisticated and FDA will approve and PCSK-9 outcomes will be positive too, further cementing the LDL hypothesis, and that will come before Esperion is approved in 2018, so it will be good for Esperion, plus mechanism is upstream of statins and same path – so similar to statins. If CETP works this too further cements the LDL hypothesis; Bears: if panel was this concerning for PCSK-9, it is more problematic for Esperion, LDL hypothesis weakening as more drugs approved and less unmet need in 2018, mechanism unclear and not as direct as PCSK-9, LDL reduction as monotherapy is weaker than PCSK-9, safety is still an uncertainty and the history/animal data could be concerning for panel and FDA; they also didn’t do HeFH/HoFh population which is unmet need and easy approval path like PCSK-9.

However here is the thing. The FDA just approved a drug that can help a lot of people get rid of thier statin drugs that cause a lot of undesirable side effects and I think the crowd was spooked by a warning that wasnt too solid. So we are going to take advantage of the crowd which just run to the safe side from mass fear, swoop in and buy flattened calls, and when the crowd and price comes back we will sell for a profit. Below is the order. We are in at 11.60.