Esperion Therapeutics, Inc. (NASDAQ:ESPR) Q3 2023 Earnings Call Transcript

Esperion Therapeutics, Inc. (NASDAQ:ESPR) Q3 2023 Earnings Call Transcript November 7, 2023

Esperion Therapeutics, Inc. beats earnings expectations. Reported EPS is $-0.37, expectations were $-0.42.

Operator: Ladies and gentlemen, thank you for standing by and welcome to Esperion Therapeutics Third Quarter 2023 financial results call. At this time, all participants are in a lisen-only mode. Following the presentation, there will be a question-and-answer session. Please be advised that today’s conference may be recorded. I would now like to hand the conference over to Alexis Callahan, Head of Investor Relations at Esperion. Please go ahead, Alexis.

Alexis Callahan: Thank you, operator. Good morning and welcome to Esperion’s Third Quarter 2023 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. I want to remind callers that the information discussed on the call today is covered under the Safe Harbor provisions 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 November 7, 2023. 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 issued a press release earlier this morning detailing the content of today’s call. A copy can be found on the Investor page of our website. 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 Koenig, President and Chief Executive Officer.

Sheldon Koenig: Thank you, Alexis, and good morning everyone. Thank you for joining us today to discuss our third quarter results and the progress we continue to make. We are pleased to report another strong quarter. Total revenue was $34 million, which represents a 79% increase year-over-year. US net revenue came in at $20.3 million, which represents a 45% increase year-over-year, and was driven by a 33% year-over-year increase in retail prescription equivalents. We are proud of the continued strength of our US business into the second half of the year and believe this reflects the robustness of our clinical data the efficacy of our life-saving medications NEXLETOL and NEXLIZET, as well as disciplined execution of our commercial strategy.

We’re also pleased to build upon our momentum in new-to-brand prescriptions in the seven months following our CLEAR Outcomes readout at ACC in March, bolstered by the gains of additional impressive data releases and publications. Since then, most recently at the European Society of Cardiology Congress module from March through the end of September new-to-brand prescriptions grew 61% with momentum continuing from the second quarter into the third quarter. Next, let me walk through additional highlights from the quarter. As I already mentioned, we delivered continued RPE growth in the third quarter of 33% year-over-year demonstrating consistent growth even with our narrow indication, after submitting our regulatory filings to include cardiovascular risk reduction in NEXLETOL and NEXLIZET label last quarter.

We’re pleased to announce FDA acceptance of our submission with a producer or approval date of March 31, which is ahead of when we originally anticipated approval. Lastly, regulatory review our cardiovascular risk reduction label submission in the EU remains on track and we continue to anticipate its approval in the first half of 2024. During the third quarter, we continued to disseminate new data from CLEAR Outcomes to educate the market about the benefits of our products. We presented 2 new announcements at the European Society of Cardiology in August that further support cardiovascular risk reduction. The first analysis demonstrated that Bempedoic acid produces total major adverse cardiovascular events, reinforcing the value of long term Bempedoic acid used in reducing not just the first, but multiple events over time.

The second analysis also demonstrated that center drug asset reduces time to first major adverse cardiovascular events in patients with diabetes and does not increase the rate of new onset diabetes, which is a key differentiating feature compared to statins and underscores the safety and efficacy in patients both with and without diabetes. Patients with diabetes, who are at increased risk for cardiovascular events constituted a large proportion of the primary prevention population that we studied in CLEAR Outcomes. So the finding is important. These analyses continue to demonstrate the efficacy and safety of Bempedoic Acid, further differentiating it from existing LDL cholesterol-lowering therapy, and highlighting its first-in-class mechanism of action.

It is not an overstatement to say, that our focus is on expanding our label to include cardiovascular risk reduction, which is we’ve always said is the real growth catalyst. And following that is when we will begin to see accelerated prescription growth. To that end, our entire organization is now focused on preparing for this update and we’ve begun laying the groundwork to make changes to our sales organization so that we can hit the ground running, at the moment we receive approval of our newly expanded label. Next our ongoing conversations with payers are continuing to pay off with recent wins for improved coverage and utilization management criteria that aligns with clear outcomes data. It is encouraging to see these types of mid-cycle changes, with national and regional payers, which are not common and we look forward to continued progress.

Finally, we announced a strategic collaboration with ACC and Amgen to launch the cholesterol screening campaign, with the goal of increasing awareness of the importance of LDL screening, to help healthcare practitioners more easily identify patients at high risk of cardiac events, you could benefit from treatment. Based on our CLEAR outcomes data, we believe we have the potential to benefit a much larger group of patients than is characterized by our current label, which is quite narrow and indicated only for a small subset of patients. The label we anticipate receiving in March, will add a broad cardiovascular risk reduction indication in both primary and secondary population as well as remove current limitations. From a commercial perspective, our addressable patient population will significantly increase when we get our new CVOT label next year.

Right now, our therapies are only indicated for about 10 million secondary prevention patients, with documented ASCVD or HeFH and who are on maximally tolerated statin therapy. Our new label, that we anticipate by March 31, will reflect our CLEAR outcomes data and enable us to be indicated for an additional 20 million high-risk primary prevention patients. And any 30 million patients in total, will be our primary focus. There are another 40 million patients in the US, who are untreated and in high-risk for the event, and those patients represent additional potential upside. We look forward to being able to address the needs of millions of patients, who are currently still unable to achieve their LDL-cholesterol levels on current therapies alone.

With that, I will now hand it over to Ben Halladay, our Chief Financial Officer, for a more detailed overview of our third quarter performance.

Ben Halladay: Thank you, Sheldon. Earlier this morning, we issued a press release containing our financial results for the third quarter, which is available on the Investor page of our website. Please note, that unless otherwise specified, my comments reflect results for the third quarter ended September 30 2023. As Sheldon already mentioned, we posted strong overall third quarter results. We’re pleased to have delivered another quarter of continued growth in retail prescription equivalents, which increased 33% year-over-year and 8% quarter-over-quarter, which was accomplished even with our narrow indication and promotional footprint. Weekly RPE trend also shows persistent strength, largely remaining above the 10,000 RPE mark and repeatedly setting new weekly high.

Growth also continued globally, not just in the US. Our European partner again delivered another strong quarter of sales growth in its territories, which highlights the value our important medicines are bringing to patients worldwide. At the end of August, 158,000 patients have now been treated with our therapies in Europe representing sequential three months growth of 26% since May. I’ll also note, that the bulk of this growth, has come from existing territories versus newly launched territories making it even more impressive/. Three additional countries were granted approvals during the third quarter, the Netherlands, Slovakia and Spain and we look forward to reaching patients in these new markets, in the coming months. Turning to our full financial results for the quarter, we reported US product revenue of $20.3 million, representing an increase of 45% year-over-year.

Collaboration revenue which includes combined royalty and partner revenue was $13.7 million, an increase of approximately 174% year-over-year. Much of this increase was due to tablet shipments that were pushed from the second quarter to the third quarter, as we mentioned in our last earnings call. Finally, total revenue for the third quarter was $34 million, an increase of 79% year-over-year. Turning to expenses. Cost of goods sold from the third quarter was $13.4 million, an increase of 106% year-over-year also driven by the timing of tablet shipments as I just mentioned. R&D expense was $14.9 million, a decrease of 49% year-on-year, reflecting substantially lower costs following the close out of our CLEAR Outcome study. SG&A expense was $33.2 million, an increase of 33% year over year reflecting higher legal and promotional costs.

We continue to track in line with our guidance, expecting full year 2023 operating expenses to be between $225 million and $245 million, which is comprised of $100 million to $110 million in R&D expense and $125 million to $135 million in SG&A expense. Finally, cash equivalents and investment securities available for sale totaling $114.8 million as of September 30, 2023 compared with $166.9 million on December 31, 2022. I’ll note that we ended the quarter with a higher cash balance than we expected, which reflects the continuing dedication to disciplined expense management even while we continue to invest in initiatives to prepare us to capitalize on our new label as soon as we receive it. We believe we are currently well-positioned to have sufficient cash to continue funding operations and support our full-scale commercial launch next year.

We will continue to diligently manage expenses, look for ways to generate efficiencies and potentially slow spend in certain areas as needed. And with that, let me now hand it back over to you Sheldon.

Sheldon Koenig: Thank you, Ben. I’ll now provide additional corporate updates from the quarter. As some of you may have seen we filed a rule 12(c) motion two weeks ago in our litigation case, which asserts that the language in our license agreement is unambiguous and can be ruled on solely based on the contract itself and the pleadings filed today and request that ruling accordingly, permission to file this motion was a prerequisite and the fact that we were granted permission was a win for us. In terms of next steps. All filings are due by November 22nd, after which a ruling could occur in the days or weeks to follow, which means that we could potentially have any answer by the end of the year. I’ll just note that this motion does not affect our current case timeline and we remain scheduled for trial on April 15th.

Next, I remind you of our plan to reach blockbuster status for our franchise, which we have every confidence in achieving. In short, we have robust data generated through a landmark with 14,000 [ph] patient trial. That data is being used to support a highly differentiated label, which we anticipate approval by March 31st. In the meantime, we’re excited on a strategic plan to continue to drive growth and educate healthcare providers and payers alike ahead of that new label. I’ll wrap up our comments today by reiterating that we continue to deliver on the commitments the leadership team has made. We are steadily executing on our strategic plan to unlock the blockbuster potential of this franchise is capable of. We have more work to do but I’m pleased with the progress we’ve made and confident in our ability to succeed and look forward to demonstrating continued progress toward our goals, and with that 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

Sheldon Koenig: Hi, Dennis.

Dennis Ding: Good morning. Thanks for taking our questions. Two for me, if I may. Number one, just on the US basis, can you comment on from the underlying gross to net trends that may have impacted Q3 and maybe talk about your outlook for Q4? And then question number two is on the litigation case with Daiichi on appreciating that there could be a positive ruling on the rule 12(c) dynamic when could the milestone actually hit Esperion’s balance sheet given Daiichi will likely appeal after that. And we’ll get a lot of investor questions on how long would that appeal process actually take, and when couldn’t money actually hit Esperion’s balance sheet. So maybe just clarify that for us and investors? Thank you.

Ben Halladay: Hey, Dennis. It’s Ben. Great to talk to you. Thanks for the question. On gross-to-net, in Q3 we saw some typical seasonality that we’d expect from a product in this market. You all know we’ve done a good job improving gross to nets from last year into this year. And I think we’re in a pretty steady state at this point. Going forward there’s still room for improvement and looking into Q4 and beyond that will all come with volume. So I wouldn’t see that as an immediate term. But over the longer term we do expect it to continue to improve.

Sheldon Koenig: And Dennis, its Sheldon and I will take the second as it relates to the litigation. First of all, as a reminder as you mentioned we are able to win the motion as it relates to 12(c). That was a few weeks ago. The opposition has till November 22 to actually file their side of it. And then the court will make a ruling. Again, I just wanted to express our confidence in the case that we have here and we feel really good about it. As it relates to when we would see money et cetera, keep in mind that this milestone was not to be actually recognized until later in the first quarter of 2024 early second quarter. And so you’re right now if I think about the timeline. We don’t want to get it done because we have to take every day as it comes as it relates to litigation. But I’m confident that we will remain on that same timeline as it relates to us receiving the milestones.

Dennis Ding: Got it. Thank you.

Operator: Thank you. One moment for our next question, please. And the next question comes from the line of Tom Shrader with BTIG. Your line is now open.

Tom Shrader: Good morning. Thank you for taking the call. I wanted to ask a little bit about slide 5. It’s kind of striking. You’ve got this big bump at ACC where I think we all knew there was a fair bit of interest, but it’s been relatively flat. Does that speak to how hard it is to talk to physicians that aren’t converts already? And is that what you think the label will help with? And then maybe if you have any information do you have any way to attract physicians who at some level are interested in the drug, but won’t go through a slightly arduous payment process to do collect any of that data interest beyond people who actually get all the way through the reimbursement process? Thanks.

Eric Warren: Hey, Tom, it’s Eric. I’ll answer your question. So first of all the ACC a pop that we had was said was tremendous and we’ve been able to build upon that. And so quarter after quarter and we saw an increase in TRPE of 8%. I wanted to remind you that the team is unable to the commercial team is unable to talk about the new data. So you’re absolutely right when that label changes not only will we expand the population, but will unlock our ability to actually talk about these data. We’ve done quantitative research where we show significant changes in prescribers intent to prescribe and I believe Sheldon showed them at a meeting not too many months ago and ATU that we did that track the desire to and make our product standard of care and that’s it tremendously increases once we’re able to communicate those data. And once we have the managed care changes that ultimately align with those changes that we’ll have from us indication perspective.