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Esperion Therapeutics Financial Management Misconduct Case
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On March 15, 2022, Esperion Therapeutics (NASDAQ: ESPR) announced that the Company’s CFO, Richard B. Bartram was stepping down from his position. In addition to his role as CFO, Bartram also functioned as the principal financial officer and principal accounting officer of the company.
Bartram’s departure came only a few weeks after the Company recorded over a threefold rise in net product sales for the past year exceeding analysts’ quarterly estimates.
Going back to 2021, the Company and Its Leaders announced many meaningful decisions regarding business, particularly in financial management matters:
- On December 3, 2021, Esperion announced a $225 Million Public Offering at a price of $7.00/share versus the previous close price of $8.97. On this news, ESPR stock dropped over 20%.
- On November 25, 2021, Esperion announced that it has entered into a private agreement with 2 holders of its convertible senior subordinated notes to convert those securities into common stock. In total, those investors hold notes with an aggregate principal value of $15 million. The number of shares those holders will receive in exchange for their notes "will be determined based upon the volume-weighted-average-price per share of Common Stock, subject to a floor of $5.62 per share." Investors were concerned about the dilutive effect of the new stock being issued, as the Company had a market capitalization of just under $209 million. They were also generally worried about Esperion's financial health. As a result, on this news ESPR stock dropped over 11%, wiping out more than $70 million of the Company's capitalization.
- On October 18, 2021, the Company unveiled its plans to cut organization-wide operational expenses with a 40% reduction of the corporate workforce and other cost-saving measures. The actions were taken following a systematic review of the challenges faced in launching NEXLETOL and NEXLIZET during the pandemic, Esperion said. Such a decision was made only a year and a half after the official start of the COVID pandemic, at the moment when it was at the final stage.
- On May 5, 2021, Esperion lost about 33% after Stifel downgraded the stock to hold from buy noting “we don't think this story gets any better soon.” Esperion’s Q1 2021 financials reported on May 4, 2021, came below expectations. Seeing little signs of sales acceleration for cholesterol therapies Nexletol and Nexlizet in the near term, analyst Derek Archila lowed the price target by ~45.9% to $20.
- On February 9, 2021, ESPR dropped 3.9% after Goldman Sachs downgraded the stock to sell from neutral, citing the potential headwinds to the market launch of Nexletol/Nexlizet. Based on channel checks, analyst Paul Choi and the team observe an ongoing low adoption as co-pay/patient affordability and payor dynamics remain barriers to utilization.
Taking into account all public facts, analysts' assessments, representation of the Company, and decisions of its Leaders on business and financial matters, Investors have every reason to suspect that the Company and its Leaders have been negligent in their key obligations, making untimely or not making decisions, diluting shareholders by depressive levels of the Company's valuation, which were caused by their actions or inactions, violating their fiduciary obligations, which led to the depreciation of joint-stock holdings.
Failure to Disclose,
Breach of Fiduciary duty,
Shock Event Date
15 March 2022