Esperion Announces Monetization of European Royalties and Concurrent Payoff and Termination of Existing Revenue Interest Facility

Rhea-AI Summary

Esperion (Nasdaq: ESPR) announced a Royalty Purchase Agreement with OMERS Life Sciences, securing $304.7 million in cash for its European royalty rights on bempedoic acid products. OMERS will receive tiered royalties until it recoups 1.7 times its investment, after which royalties revert to Esperion. Additionally, Esperion retains rights to potential sales-based milestones up to $300 million. The funds were used to pay off and terminate an existing revenue interest facility with Oberland Capital. This strategic move aims to enhance Esperion's financial flexibility and unencumber its balance sheet, positioning the company to better focus on U.S. commercialization efforts.

Positive

• Esperion secures $304.7 million from OMERS Life Sciences.
• Pays off and terminates Oberland Capital revenue interest facility, reducing debt.
• Retains rights to potential future sales-based milestones up to $300 million.

Negative

• OMERS will receive tiered royalties until it recoups 1.7 times its investment, potentially delaying significant royalty revenue for Esperion.

Insights

Financial Analyst

The monetization of European royalties by Esperion through their agreement with OMERS Life Sciences provides a significant financial infusion of $304.7 million. This capital injection instantly improves their liquidity, enabling them to terminate their existing revenue interest facility with Oberland Capital. Paying off this facility early and at a discount, is an astute financial move, reducing future interest outflows and removing senior secured liens from their balance sheet.

Removing these liens enhances their financial flexibility, potentially lowering their cost of capital in future financing endeavors. The tiered royalty arrangement is also beneficial, as it ensures OMERS will receive 1.7 times its investment before royalties revert back to Esperion. This structured deal mitigates some risks while still allowing Esperion to capitalize on future European sales of bempedoic acid products once OMERS' threshold is met.

In the short-term, investors can view this as a positive move due to the immediate liquidity boost and improved balance sheet. Long-term, the potential milestone payments up to $300 million based on Daiichi Sankyo Europe's commercial performance add significant upside potential.

Market Research Analyst

This deal underscores the strategic importance of the European market for bempedoic acid products. By aligning with OMERS, Esperion leverages a partner with a strong presence and trust in the life sciences sector. OMERS' investment implicitly validates the market potential of bempedoic acid in Europe, which could further bolster investor confidence.

From a market perspective, the deal's structure—OMERS receiving 15-25% of net sales until they recoup 1.7 times their investment—demonstrates a commitment to shared risk and reward. This approach aligns well with industry norms for royalty financing, where investors often seek structured returns to mitigate market and commercialization risks.

The transaction's dual benefits of enhancing balance sheet strength while retaining milestone-driven upside highlight Esperion’s strategic planning. This could make Esperion more attractive to potential investors who prioritize both financial stability and growth potential.

It's also notable that retaining rights to future milestones keeps Esperion invested in the product’s success, offering a performance-based incentive that could drive continued innovation and market expansion efforts.

– OMERS Life Sciences to Purchase Esperion’s European Royalty on Bempedoic Acid Products for $304.7 Million with European Royalties Reverting to Esperion Once OMERS Receives 1.7 Times its Investment –

– Esperion Retains Rights to Receive all Potential Future Milestones of up to $300 Million Based on Commercial Performance from its Exclusive European Licensee, Daiichi Sankyo Europe –

– Agreement Provides Increased Operational and Financial Flexibility and Strategically Leverages an Asset to Unencumber Balance Sheet from Senior Secured Liens –

ANN ARBOR, Mich., June 28, 2024 (GLOBE NEWSWIRE) -- Esperion (Nasdaq: ESPR) announced today that it has entered into a Royalty Purchase Agreement (the Agreement) with OMERS Life Sciences (OMERS), under which Esperion received approximately $304.7 million in cash from OMERS in exchange for 100% interest, subject to a cap, in Esperion’s royalty entitlement on Daiichi Sankyo Europe’s (DSE) net sales of bempedoic acid products in the European territories for which DSE has an exclusive license from Esperion (see previous announcement here).

Under the terms of the Agreement, OMERS will receive this tiered royalty, which ranges from 15-25% of net bempedoic acid product sales in Europe, until it has received an aggregate amount equal to 1.7x investment. Thereafter, all future DSE royalties will revert back to Esperion. Esperion will continue to receive any earned sales-based milestone payments following the first achievement of defined net sales under the DSE agreement, which could cumulatively amount to up to $300 million in potential future payments.

Concurrently, the company announced that funds received from this transaction have been used for the early, discounted payoff and termination of the Oberland Capital revenue interest facility.

“This transformational transaction provides Esperion with increased operational and financial flexibility. It strategically unencumbers our balance sheet from senior secured liens and leverages what we believe is an undervalued asset that has not been fully recognized in the market,” stated Sheldon Koenig, President and CEO, Esperion. “Importantly, this mutually beneficial deal underscores the potential for our bempedoic acid products in Europe and allows us to benefit from the potential upside of the triple combination product our partner, DSE, is currently pursuing.”

“This agreement significantly enhances our balance sheet and better positions us to focus on optimizing our U.S. commercialization efforts as we build Esperion into a leading biopharmaceutical company bringing new medicines to patients that address unmet medical need,” commented Ben Halladay, Chief Financial Officer, Esperion.

“We are pleased to invest in the future European sales of bempedoic acid, a product which we expect to benefit millions of patients throughout Europe,” said Rob Missere, Managing Director & Head of Life Sciences. “This deal furthers our mandate to deliver an attractive source of long-term return for our more than 600,000 members.”

J. Wood Capital Advisors served as the financial advisor to the company on the royalty sale transaction.

About OMERS Life Sciences
OMERS Life Sciences provides royalty financings and other non-dilutive solutions to biopharma companies and academic institutions, supporting their efforts to address unmet medical needs and improve the quality of life of patients around the world.

OMERS is a jointly sponsored, defined benefit pension plan, with 1,000 participating employers ranging from large cities to local agencies, and over 600,000 active, deferred and retired members. Our members include union and non-union employees of municipalities, school boards, local boards, transit systems, electrical utilities, emergency services and children’s aid societies across Ontario. OMERS teams work in Toronto, London, New York, Amsterdam, Luxembourg, Singapore, Sydney and other major cities across North America and Europe – serving members and employers, and originating and managing a diversified portfolio of high-quality investments in bonds, public and private credit, public and private equity, infrastructure and real estate.

About Esperion Therapeutics
At Esperion, we discover, develop, and commercialize innovative medicines to help improve outcomes for patients with or at risk for cardiovascular and cardiometabolic diseases. The status quo is not meeting the health needs of millions of people with high cholesterol – that is why our team of passionate industry leaders is breaking through the barriers that prevent patients from reaching their goals. Providers are moving toward reducing LDL-cholesterol levels as low as possible, as soon as possible; we provide the next steps to help get patients there. Because when it comes to high cholesterol, getting to goal is not optional. It is our life’s work. For more information, visit esperion.com and esperionscience.com and follow us on X at twitter.com/EsperionInc.

Forward-Looking Statements 
This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the federal securities laws, including statements regarding marketing strategy and commercialization plans, current and planned operational expenses, future operations, commercial products, clinical development, including the timing, designs and plans for the CLEAR Outcomes study and its results, plans for potential future product candidates, financial condition and outlook, including expected cash runway, and other statements containing the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “suggest,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions. Any express or implied statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause Esperion’s actual results to differ significantly from those projected, including, without limitation, the net sales, profitability, and growth of Esperion’s commercial products, clinical activities and results, supply chain, commercial development and launch plans, the outcomes and anticipated benefits of legal proceedings and settlements, and the risks detailed in Esperion’s filings with the Securities and Exchange Commission. Any forward-looking statements contained in this press release speak only as of the date hereof, and Esperion disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this press release, other than to the extent required by law.

Esperion Contact Information:
Investors:
Alina Venezia
investorrelations@esperion.com
(734) 887-3903

Media:
Tiffany Aldrich
corporateteam@esperion.com
(616) 443-8438

FAQ

What did Esperion announce on June 28, 2024?

Esperion announced a Royalty Purchase Agreement with OMERS Life Sciences, securing $304.7 million for its European royalty rights on bempedoic acid products.

What is the financial impact of Esperion's deal with OMERS Life Sciences?

Esperion received $304.7 million in cash, which was used to pay off and terminate an existing revenue interest facility with Oberland Capital.

What is the tiered royalty structure in Esperion's agreement with OMERS Life Sciences?

OMERS will receive 15-25% of net sales of bempedoic acid products in Europe until it recoups 1.7 times its $304.7 million investment.

Does Esperion retain any future revenue potential from the deal with OMERS?

Yes, Esperion retains rights to potential future sales-based milestones up to $300 million.

How does the agreement with OMERS Life Sciences benefit Esperion?

The agreement provides increased financial flexibility, removes senior secured liens, and allows Esperion to focus on U.S. commercialization efforts.

What was the purpose of the funds received from OMERS Life Sciences?

The funds were used to pay off and terminate an existing revenue interest facility with Oberland Capital.