Esperion Still Bleeding Ahead of Secondary

The shares lose another 12.5% as the Durus Capital saga weighs heavily.
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Shares of

Esperion Therapeutics

(ESPR) - Get Report

continued to plunge Wednesday, placing in doubt a public offering of 4 million shares tentatively scheduled for later this week.

The Ann Arbor, Mich.-based company's stock fell 12.5%, losing $2.18 and closing at $15.20.

The stock closed at $20.08 on July 11, two hours before the company announced it had filed a registration statement with the

Securities and Exchange Commission

for a potential public offering of 4 million shares. If investor demand is heavy, the underwriters have the option of issuing another 600,000.

But reports that Durus Capital Management had "inadvertently" increased its stake in Esperion to 33% since November spooked investors in a company that has about 29.4 million common shares outstanding. Durus owns 9.73 million shares and is Esperion's largest shareholder.

Esperion wouldn't comment on the fate of the potential public offering, but it certainly wasn't happy about the publicity or the falling stock price.

Calling the falling stock price "a distraction," Frank Thomas, vice president for finance and investor relations, said in an interview that the publicity over Durus was taking investors' attention away from the company's progress in developing drugs to treat heart disease based on its research of how so-called good cholesterol works.

Thomas said Esperion was being unfairly paired with another company, Aksys Ltd., of Lincolnshire, Ill., the shares of which Durus also "inadvertently" bought. Durus has a 77% stake in Aksys, a maker of kidney dialysis systems.

"Thirty-three percent is not a majority stake," said Thomas. "Many companies have large shareholders. It's not that unusual."

Thomas said that Scott Sacane, the Durus fund manager, put in writing in November when his fund reached the 20% ownership threshold that Durus intended to be a passive investor and had "no intent to influence management or the management of the company."

Thomas said that until Durus' surprise announcement on Friday that its stake had grown to 33% of Esperion, there had been "nothing out of the ordinary" with Sacane's or Durus' relationship with the company.

Esperion held a hurriedly arranged conference call with investors and analysts Tuesday, saying that it had amended its antitakeover provisions to exclude Sacane's group from the legal definition of a potential corporate acquirer.

Esperion issued a statement late Wednesday saying that the Sacane Group agreed not to acquire beneficial ownership of more than 33% of Esperion's common stock and will not sell any shares prior to Oct. 29. After that, it will thereafter be subject to certain ongoing resale restrictions.

"The Sacane Group also agreed to certain voting restrictions, which generally require that any shares it beneficially owns that represent more than 20% of Esperion's outstanding voting securities, be voted in proportion to the votes cast by all of the other stockholders of Esperion other than the Sacane Group," the company said.

The lead underwriter for the 4-million share offering is Lehman Brothers; co-managers are Citigroup Global Markets, Needham & Co. and U.S. Bancorp Piper Jaffray.

Last week, Esperion, a development stage company that has no products and no revenue, said it lost $8.4 million, or 29 cents a share, for the second quarter ended June 30. It lost $7.8 million, or 27 cents a share, for the same period last year.