Esperion Therapeutics, Inc. (NASDAQ:ESPR) Q1 2024 Earnings Call Transcript

Esperion Therapeutics, Inc. (NASDAQ:ESPR) Q1 2024 Earnings Call Transcript May 7, 2024

Esperion Therapeutics, Inc. beats earnings expectations. Reported EPS is $0.00032, expectations were $-0.17. ESPR isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Ladies and gentlemen, thank you for standing by and welcome. At this time, all participants are in a listen-only mode. Following the presentation, there will be a question-and-answer session. Please be advised that today’s conference call may be recorded. I would now like to hand the conference over to Tiffany Aldrich, Associate Director of Corporate Communications at Esperion. Please go ahead.

Tiffany Aldrich: Thank you, operator. Good morning and welcome to Esperion’s first quarter 2024 earnings conference call. With us today are Sheldon Koenig, President and CEO; and Ben Halladay, CFO. Other members of the executive team will be available for Q&A following our prepared remarks. We issued a press release earlier this morning detailing the content of today’s call. A copy of that release can be found on the Investor page of our website together with a copy of the presentation that we will also be referencing. I want to remind callers that the information discussed on the call today is covered under the Safe Harbor provision of the Private Securities Litigation Reform Act. I caution listeners that management will be making forward-looking statements.

Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today’s press release and in our SEC filings. The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, May 7, 2024. We undertake no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call and webcast. As a reminder, this conference call and webcast are being recorded and archived. We will begin the call with prepared remarks and then open the line for your questions.

I’ll now turn the call over to Sheldon.

Sheldon Koenig: Thank you, Tiffany and good morning everyone. Thank you for joining us today to discuss our first quarter results and the meaningful progress we continue to make. We are proud to report that we drove strong growth this quarter to start 2024, positioning us for long-term growth and success. In the first quarter, we delivered total revenue of $137.7 million. which includes the $100 million litigation-related settlement received from DSE in January. I’ll note that even excluding this payment, this was the highest revenue-generating quarter for ongoing business in our company’s history. U.S. net revenue was $24.8 million, which represents a 46% increase year-over-year, driven by a 43% increase in retail prescription equivalents.

On March 22nd, we received FDA approval of broad new labels for NEXLETOL and NEXLIZET that reflect new indications for cardiovascular risk reduction and expanded LDL-cholesterol lowering in both primary and secondary prevention patients. These new labels make NEXLETOL and NEXLIZET the only LDL-lowering non-statins approved for cardiovascular risk reduction in both primary and secondary prevention patients and can now be taken with or without a statin. With these differentiated profiles, we are confident that these new labels position NEXLETOL and NEXLIZET as the non-statins of first choice in treating patients with or at risk for cardiovascular disease. These new labels are also significant in their ability to bridge what we call the statin gap, which encompasses the tens of millions of patients at risk for cardiovascular disease who are unable or unwilling to take recommended statin therapy.

These approvals expand our potential addressable population to more than 70 million patients in the U.S. alone. The FDA approvals came on the heels of a positive CHMP opinion and we continue to anticipate a similar and positive decision from the European Commission based on the EMA assessment on our European cardiovascular risk reduction label submissions by the end of the second quarter 2024. And on the topic of ex-U.S. progress, I’ll note that we have initiated the tech transfer process with our partner DSE for the manufacturing and supply of our tablets in Europe and we expect that process to be complete in the second half of next year. Ahead of the highly anticipated FDA approvals, we were preparing on all fronts to be ready to capitalize on our new label the moment we have them and we have hit the ground running.

I’m pleased to share that all commercialization initiatives that we’ve previously mentioned are now in place. We launched our lipid lurkers consumer campaign and promotional digital tools. Our field teams have been fully trained and certified on our new indications and resources and participated in an in-person launch meeting last month. We initiated partnerships to bolster our patient services platform to ensure health care practitioners can prescribe for appropriate patients, while we await payer utilization management criteria changes which usually take one to two quarters. On that note, I am pleased to share that we recently received confirmation of utilization management updates aligning to our new label from two large payers, one commercial payer with 23 million lives that will reflect the new label June 1, and two of the largest Medicare payers that represent eight million and nine million lives each, immediately updated within a week of the label change.

We anticipate additional payers to align with our new labels on an ongoing weekly basis. In summary, we’ve made significant progress and while it’s still early we’re encouraged by the positive initial momentum we’ve seen thus far in the first weeks of the second quarter. With that, I will now hand it over to Ben for a more detailed review of our first quarter financial performance.

Ben Halladay: Thank you, Sheldon. Earlier this morning, we issued a press release containing our financial results for the first quarter, which is available on the Investor page of our website. Please note that unless otherwise specified my comments reflect results for the first quarter ended March 31, 2024. As Sheldon mentioned, we are proud of our performance and strong results we delivered in the first quarter including new-to-brand prescription. Our momentum continues to accelerate which underscores the fact that outcomes data matters and we’re thrilled that data is now incorporated into our new label, which means we can now actively promote that data for the first time and that we’ll now be able to reach millions more patients in need.

For the fifth quarter in a row, we again delivered continued growth in retail prescription equivalents which increased 43% year-over-year and 6% quarter-over-quarter. And as a reminder almost entirely dependent on our prior label and promotional footprint that has only recently ramped up. The weekly RPE trend again reflects this momentum and remained above the 12,000 RPE mark for all of March a new high for us. Growth outside the US also continued at an impressive clip. Our partner DSE delivered yet another strong quarter of sales growth in its territory, highlighting the value and growth of potential of our global franchise. At the end of February, approximately 255,000 patients have now been treated with our therapies in Europe representing a sequential three month growth of 26% since November.

While most of this growth was generated from existing territories DSE continues to expand launching in the Czech Republic in the first quarter. I’ll also note progress by our Asia region partner Daiichi Sankyo Companies Limited which gained approvals in Myanmar and Thailand in the first quarter. Turning to our financial results for the quarter. We reported US net product revenue of $24.8 million representing an increase of 46% year-over-year. Collaboration revenue which includes combined royalty and partner revenue was $113 million, an increase of 1,148% year-over-year. This growth includes the $100 million settlement received in January in connection with our litigation revolution, excluding milestone payments combined royalty and partner revenue grew 110% year-over-year.

Finally, total revenue for the first quarter was $137.7 million, an increase of 467% year-over-year. I’ll note that this includes the previously mentioned $100 million settlement excluding milestones total revenue grew 65% year-over-year. Turning to expenses. Cost of goods sold for the first quarter was $10.1 million, a decrease of 14% year-over-year driven primarily by lower unit tablet costs for sales in the US and supply to our international partners. R&D expense was $13.4 million, a decrease of 57% year-over-year reflecting substantially lower costs following the closeout of our CLEAR Outcomes trial. SG&A expense was $42 million an increase of 40% year-over-year reflecting higher head count as we began to ramp up our in-house sales force bonuses and promotional costs in anticipation of the launch of the expanded labels from NEXLETOL and NEXLIZET.

Finally, cash and cash equivalents totaled $226.6 million as of March 31, 2024 compared with $82.2 million on December 31, 2023 reflecting a strong balance sheet with sufficient capital to support our commercial operations and drive continued long-term growth. We also reiterate our 2024 expense guidance continuing to expect R&D expense to be between $45 million and $55 million SG&A expense to be between $180 million and $190 million and total OpEx expense to be between $225 million and $245 million. Although, we’ve meaningfully strengthened our balance sheet in the first quarter we will continue to remain disciplined with expense management ensuring sufficient returns are being generated across the company. And with that let me now hand it back over to you, Sheldon.

Sheldon Koenig : Thank you, Ben. In closing, we continue to deliver on our commitments and execute on our strategic plan to achieve the blockbuster status who we know our franchise is capable of. We delivered another strong quarter of growth and ended the quarter with sufficient capital to support our commercial initiatives and drive continued long-term growth. We received approval for broad new labels and launched commercial initiatives to capitalize on the opportunity we now have to reach the millions of patients in need of our therapies. In summary, I remain extremely confident that we will continue to drive patient and shareholder impact and value creation by capitalizing on this momentum throughout this year and into the future, and I thank the entire Esperion team for helping us get to this pivotal moment. Operator, we are now ready for Q&A.

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Dennis Ding with Jefferies. Your line is open.

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Q&A Session

Dennis Ding: Hi. Good morning and thanks for taking our questions. Two for me. Maybe one on the — if you guys can just comment on the prescription habits from doctors since the label update. Have you seen any shift in PCPs versus cardiologists that you want to call on and if you’re seeing any enthusiasm among the primary prevention doctors? And secondly the on scripts they’ve kind of look generally flat since the label update. So I’m just wondering if you have a comment on what happened over the last month? And when do you expect that script — the weekly script growth to reaccelerate? Thank you.

Eric Warren : And hi, Dennis, it’s Eric. I’ll take this one. So, first of all, yes, there’s a lot of enthusiasm for the new label. And that primary prevention is generating a lot of enthusiasm as well. Just a reminder that we are the only non-statin that’s FDA approved to lower LDL-C and to decrease the risk of MI and coronary revasc in those primary prevention as well as secondary prevention patients. So enthusiasm is strong. We see right now a balanced prescribing between primary care and then cardiologists, but I expect that primary care prescribing to increase. And remember it’s about utilization management criteria as well. So those progressive increases that we’ll see as payers start to enable prescribing for those populations.

I’m encouraged by the early qualitative feedback. And then the last two weeks as you’ve probably seen we have seen week-over-week growth. So expected to take a little bit of time but expect progressive increases again as those payer changes increase but customer enthusiasm is incredibly high.

Sheldon Koenig : And Dennis, I just wanted to add that we’re super early in the game. Our representatives were trained on the label actually received the first view of the label early April. And then they’re essentially off territory for two weeks in April because we had an all-company meeting, we also had our training, and they actually received the full detail aid in the third week of April. They were detailing off of the label. So just to reiterate what Eric is saying, we’re actually very encouraged in what we’re seeing right now. And as we said in our prepared remarks, we’re very confident about growth as we continue through the quarters.

Dennis Ding: Got it. And then maybe if I can follow-up. In terms of the script re-acceleration around when do you expect that to curve? Because when you look at the last two weeks, they have been growing 1% to 5%, but I’m just wondering if that could grow more and when the soonest that could happen? Thanks.

Eric Warren: Yes, Dennis, so again, progressive increases are what I would anticipate. And it really will be as the bulk of utilization management changes. We anticipate about two quarters to get the majority of UM aligned with the new label. So progressive increases with full growth realization when we have that UM alignment.

Dennis Ding: Got it. Thanks and congrats on the progress.

Eric Warren: Thanks, Dennis

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Serge Belanger with Needham. Your line is open.

Serge Belanger: Hi, good morning. Thanks for taking my questions. First one, as the utilization management gets updated across the payers with the new label. Can you just remind us what it’s going to look like and whether you expect it to be pretty standard across all the payers covering bempedoic acid? And secondly, I think Medicare coverage for the product has lagged the commercial coverage. Can you just give us an update on when you expect Medicare coverage to pick up on the product? Thanks.

Eric Warren: Yes. Thanks, Serge. So as you’re aware and as we’ve stated in the past that the prior utilization management criteria has required patients to have ASCVD or be a secondary prevention patient. When the utilization management changes start to happen, we will see the primary prevention patients included as well. We’ve also had pretty significant statin requirements or maximally tolerated statin requirements that we anticipate to ease as well based upon the outstanding new label that we have. With regards to Medicare as Sheldon mentioned in the opening remarks, we did see already a Medicare payer change and update their utilization management criteria. And there will be many more of those on the horizon over the course of the next two quarters. So very encouraging. And hopefully that answers your question, Serge.

Sheldon Koenig: Eric, if I could just add. This was a new — so we had one that updated the UM criteria and then we had one that is one of the largest Medicare providers. That was an absolute new win. So it gets our coverage closer to 50% in Medicare. So we’re very happy about that.

Serge Belanger: Great. And then maybe just one follow-up. So as the Medicare coverage ramps up, do you expect any impact to gross to net going forward?

Ben Halladay: Hey, Serge this is Ben. I’ll take that. Not a meaningful one. I would say Medicare coverage gap is always something that affects us it has in the past. But I think as a sort of distribution of the total, it’s not going to be a meaningful impact to gross than that.

Serge Belanger: Thank you.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Tom Shrader with BTIG. Your line is open.

Tom Shrader: Good morning. Congratulations. It looks like we’re close now. So I had a very general question. You’re in the market with a statin alternative, I think we all use this vague number of 10% of patients have some troubled statins. Do you have updates on that number? Are you finding that that number is close or very off or — and does it differ between under-treated and treated patients? I’m just wondering if we could borrow some of your market surveillance. Thank you.