Shares (NASDAQ:ESPR) fell nearly 70 percent in after-hours trading Wednesday through Thursday to just $1.20 per share before recovering slightly to $2 per share in Thursday morning trading.
The drop came after Esperion revealed in a filing from the U.S. Securities and Exchange Commission on Wednesday that pharmaceutical conglomerate Daiichi Sankyo Europe GmbH disagreed with the company’s assumption that positive test results would trigger milestone payments in the company’s licensing deal.
Esperion believes it is entitled to $300 million in milestone payments after a study found that NEXLETOL reduced certain serious cardiovascular events by as much as 15 percent and the risk of heart attack by 23 percent.
Without the additional milestone payments, Esperion’s ability to raise future capital would be impaired, the company said in the filing. And if it doesn’t receive the payments, it could start a costly lawsuit.
“If necessary, the company intends to enforce its contractual rights and demand the milestone payments to which it believes it is entitled,” the SEC filing said. “Even if the Company succeeds in enforcing its rights, there may be a delay in the receipt of the milestone payments by the Company due to a dispute relating to such payments. Any non-receipt or any delay in receipt of the milestone payments can have a major impact on the company’s future capital needs.”
Esperion representatives declined to discuss the matter further with Crain’s.
Esperion and Daiicho Sankyo Europe closed the commercialization and licensing agreement in January 2019 in a deal that included $300 million in upfront payments with the potential of an additional $900 million in milestone payments, a common structure in the pharmaceutical world.
The deal gave Daiicho Sankyo exclusive rights to distribute Esperion’s cholesterol-lowering drugs in the European Economic Area and Switzerland, provided they pass European regulations.
Esperion was founded by entrepreneur Roger Newton, who worked for Pfizer Inc. worked on the development of Lipitor. The path to approval for his drugs took 20 years and two incarnations of the company. Newton retired from Esperion in 2019.
The company went public in January 2021 in a $225 million IPO.