Where there's hope, there's a caution flag for investors

November 09, 2003|By JAY HANCOCK

ESPERION Therapeutics Inc. has never made a profit, never sold anything, actually. Pretty much its only revenue is the paltry interest it earns from a dwindling pot of cash.

Based in Ann Arbor, Mich., Esperion has managed to lose $130 million since its founding five years ago. It will not make money soon. Even the notions of sales and positive cash flow are flickering mirages.

Yet, its stock was selling last week for $24, which gave Esperion a Wall Street value of $800 million. That's a lot of money, almost enough to plug Michigan's budget deficit. But it's pennies compared with the benefits that will accrue to the economy and humans generally if Esperion can do what it and its investors hope it can do.

A study published last week in the Journal of the American Medical Association showed that one of Esperion's products stripped up to 4 percent of fatty deposits from coronary arteries after just five weekly infusions.

Cardiovascular disease is the top killer of Americans, dispatching almost a million of us a year, according to the American Heart Association. It costs the nation $350 billion annually, the AHA figures, which is a lot more than $800 million.

The main cardiovascular disease is atherosclerosis, in which sludge clogs corporeal plumbing.

There are several ways to deal with atherosclerosis medically. One is to administer drugs such as Lipitor, which can cost up to $100 a month, which often must be taken for life, which probably don't ameliorate atherosclerosis but which may keep it from getting worse.

Another is to hospitalize a patient, thread a cable up her femoral artery and through her abdominal aorta and crush the fatty junk flat with a mini-balloon. This can cost more than $10,000. Improvement is often only temporary.

Another is to lay the patient on a table, cleave his breastbone with a power saw, stop his heart and delicately splice on pieces of leg vein to relieve obstructed vessels. This can cost more than $30,000. Patients need at least a month to recover. Often they relapse, too.

Someday such practices will seem barbaric, the 20th-century equivalents of leech-craft. The Esperion study - one of several investigations into chemical artery-cleaning technologies - gives a glimmer of hope that some of us will see the day.

Esperion's artery Drano is derived from human high-density lipoprotein, or HDL, the "good" cholesterol that is believed to inhibit buildups of "bad" cholesterol and prevent heart disease. Comments on Esperion's study by researchers - "extraordinary," "unprecedented," "surprising to even the most optimistic supporters" - helped drive Esperion's stock back up by 37 percent last week after a brief dip. Do not buy the stock for $24. Positive stories, even in the Journal of the American Medical Association, are not the same as profits.

Esperion mania recalls the enthusiasm for stock in EntreMed Inc., a Rockville company that was supposed to have cured cancer by now. EntreMed's mice experiments were so impressive that its stock went from $10 a share in 1997 to almost $100 in 1999. Now it sells for less than $5.

Risks abound for Esperion. Its experiment might not be duplicated in larger-scale tests. The drug may cause bad side effects. Even if it shrinks artery plaque, it might not reduce sickness or death rates - the ultimate test for any medicine. Competitors could produce similar products.

Esperion won't be selling its medicine until 2008 at the earliest. And even then, a spokesman says, the main intended patients will be the acutely ill, not your neighbor with moderately high cholesterol and his more numerous co-sufferers.

Nevertheless, Esperion's drug reminds us that technology investment can produce more than pipe dreams and huge losses. With the Nasdaq down 60 percent from its peak, we needed a reminder.

For half a century, technologists have produced pills whose effects once would have been thought of as ridiculous fantasies. Alexander Fleming's discovery of penicillin and the subsequent development of other antibiotics show that miracles happen. Prozac and its cognates have brought millions out of darkness.

Esperion's drug or some similar product could potentially - potentially! - eliminate billions in costs and improve human existence, which, after all, should be and usually is the point of economic activity. Maybe there is such a thing as progress.

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