Q1 2020 Earnings Call
[music].
Ladies and gentlemen, thanks for spending bite and welcome at this time, all participants Parnell listen only mode. After the speakers presentation. There will be a question and answer session. Please be advised that today's conference call may be recorded I would now like Santa conference call over to one of your speakers today Mr. Alex.
<unk> head of Investor Relations. Please go ahead Sir.
Thank you Felicia.
Good afternoon, ladies and gentlemen, welcome to experience first quarter financial results and company update conference call and webcast I'm out Schwartz head of Investor Relations at a spirit at this time all participants are in listen only mode. Later, we conducted question answer session and instructions will follow at that time, joining me for today's call or Tim Mayleben, President and Chief.
If executive Officer, Mark Liffmann, Chief Commercial officer, and Rick Bertram Chief Financial Officer.
I'd like to remind callers had 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 in FCC filings. The content of this conference call contain time sensitive information that is accurate as of the date of the side broadcast may six 2020, 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, at this conference call webcast are being recorded an archived we should a press release. This afternoon detailing the contents of today's call a copy can be found that experian dotcom within investors and media section.
We will begin with prepared comments and then open the call for your question.
Today's call the team will be available for follow up question. Please email investor relations at Experian Dotcom schedule 15 that for you to speak with the team.
I'd now like to turn the call over to our President and CEO, Tim Mayleben Tim.
Thank you Alex and thanks to all of you joining us on the first of what will be our regular quarterly update calls for a period.
And let me start by stating what we all know these are truly unprecedented times, we live in over the last few weeks almost everything in our personal and professional lives has changed around us and although we thankfully appear to have the worst days behind US we will all continue to live in a covert 19 world.
For many months to come.
Healthcare system globally have been tested like never before and we all know a great deal of gratitude to the heroes in our own communities, who have put themselves at risk for the benefit of all of us.
Now more than ever health.
Is top of mind for all of US while the world has been appropriately focused on combating the acute devastation wrought by covert 19 cardiovascular disease risk.
Remains as serious an underlying health problem as ever in fact, it remains the number one cause of death globally and the need for new therapies is as strong as ever.
The us very on team has always been focused on lowering LDL cholesterol, a key risk factor for cardiovascular disease, and we more than anyone to understand the importance of affordable convenient oral once daily non stat medicines for patients today. So they can best manage their bad.
Cholesterol.
I'm very proud of the continued accomplishments of our team. During these unprecedented times, they've continued to execute and really an extraordinary way.
As you know years of tremendous mission driven development work culminated in us approvals for both next with tall and next was that in late February as well as E. U approvals for both new 11, Doe and extending in early April.
Last month, we announced the largest ever Japan development and commercial collaboration agreement in history. All in Esperion has now attracted over one and a half billion dollars and current and future cash commitments with these precedent setting agree.
Since for the E U and Japan.
A true rest of World agreement is expected later this year all of these accomplishments showcase the global potential of our Lippitt management business over the long term as we continue to deliver upon our commitment to all of our stakeholders.
Transitioning to our US commercial efforts, we made next lets call commercially available on Monday March Thirtyth.
Our territory managers initiated outreach to healthcare providers the week of April Twentyth.
So we're just now seeing and realizing the benefits of their promotional efforts, which mark will talk about given the current environment were tremendously mindful of the circumstances and golfing many healthcare providers today weve respected their need.
Ties resources and safety as a result.
We pledged to conduct what we called a conscientious launch.
Mark will provide more details in his remarks, but what this means is that we're being very thoughtful about our interactions with healthcare providers and really tailoring our approach to the individual needs in individual geographies.
In fact, we're finding circumstances vary wildly and and while some healthcare providers are not available to US currently we have been able to begin to engage increasing numbers of health care providers, each day and expect to continue to gain momentum in the weeks and months ahead.
Ed.
We're also pleased to announce today that next lets that tablets the fixed dose combination of benzoic acid in is that am I.
We'll now be available.
On Monday June 4th and remember this is the first non stat and combination tablet for lowering bad cholesterol ever approved.
Turning now to the managed care front I just want to highlight really tremendous success here, we exceeded our highly ambitious managed care goals with over 50% commercial coverage and over 20% Medicare part D coverage.
I mean this is this is an amazing result, and Mark will discuss this more in a few minutes, but I want to emphasize that this is high quality formulary coverage next lets call and once its avail available. Early next month next lives that are preferred brand medicines with low patient out of pocket costs.
And prescribing our medicines requires minimal.
Healthcare provider effort.
In addition to the excitement around our us approvals and US next lets call launch. We've also made great progress in our global commercialization efforts last month, the European Commission granted full marketing approval turn in lumber mill Endo and new spending this melinda.
Is the first oral once daily nonstop LDL cholesterol lowering medicine approved in Europe in almost two decades for indicated patients and new steady is the first non staton LDL cholesterol lowering combination medicine ever approved in Europe.
Like their branded counterparts in the US these medicines represent significant advancements for patients healthcare providers and payers.
On our previous calls we spent a great amount of time on the U.S. labels. So let me just briefly walk you through the key differentiating features of the Eagles labels and Theres three so first.
Want to highlight.
That the M&A recognizes statin intolerance as a term to describe patients who can't or won't take status. So as a result, we see in the labels in the EU stat, and then tolerance used throughout and that indicated patients specifically includes Staten intolerant patients.
In the second.
I'd highlight that the label includes all four of our phase three clinical studies.
As a result, the efficacy of 11 Doe is quote up to 28% LDL cholesterol lowering unquote, rather than the 18% LDL cholesterol lowering efficacy that we see in the U.S. label why well, it's because in studies three and four from our phase three program patients.
No background stat and therapy and as you know from our prior reporting of these studies the LDL cholesterol lowering efficacy of benefit all gas. It is greater in fact up to 28% as stated in the label when a patient is not on background step therapy.
And finally, we're very pleased that the effects on lowering HB one see for both Lindo and new steady are included in the pharmacology sections of the labels as we've highlighted this is an important differentiator for our medicines and reflects the consistent positive effects.
On H.B. I want to see that we saw throughout our phase three clinical studies.
I want to turn now to our global partners, we have a strong experienced commercial partner in the EU Daiichi Sankyo Europe. They have been preparing for the launch of our medicines for over a year now and as a reminder, DSE has over 1000 professionals in Europe.
Dedicated to commercializing medicines for cardiovascular disease with deep expertise in reimbursement distribution and medical affairs in fact, they're responsible for one of the most successful recent cardiovascular launches in Europe.
Let's see on which is a factor Canadian inhibitor and launched in 2015 and last year.
Recorded over $500 million in product sales and I'd, just highlight thats in less than four years.
We have very high confidence in DSS commercial capabilities in the you and expect both Melinda and new study to be made available at the same time and key edu country markets starting next quarter.
Moving to Asia, we were excited to announce our newest collaboration agreement in Japan with Otsuka pharmaceutical is just a couple of weeks ago. This agreement nicely extends the global reach of our medicines.
It is a fantastic development and commercialization partner for us in Japan.
There are a top three pharmaceutical company there with a fully integrated commercial organization 1300 sales professionals deep expertise in reimbursement distribution and medical affairs.
There are particularly strong in cardio renal drug development and commercialization and have recent experience in commercializing a number of important medicines in Japan, including Samsung.
Genomic and most recently and trust stove.
Okay. So also shares our enthusiasm for the commercial potential for next Lutalo next lets is that in Japan.
Which we think is reflected in the significant and really precedent setting financial terms of the agreement and as a reminder, that includes $60 million upfront, which we've already received.
$510 million and total upfront and milestone payments.
$100 million of Japan specific R&D costs that Otsuka will fund and tiered royalties on product sales in Japan of between 15 and 30%.
Now moving onto the rest of the world. We continue to actively pursue opportunities to further the reach of our medicines globally and we expect to complete a true rest of world deal Nani EU non Japan non us.
By the end of the year.
Theres tremendous interest in the remaining rights to Mexico tall index was that in these rest of world geographies and we look forward to updating you later this year.
So with that I'd like to turn the call over to Mark Glickman, Our Chief Commercial officer, who will provide you an update on our us commercial activities Mark.
Thanks, Tim obviously at some highlighted this has been a challenging time for the world our country and our industry. Our Hearts go up all impacted by Cold 19, and we're grateful for their heroic efforts of health care providers and others, who continue to serve the community that the time, given this environment, which includes social distancing out.
Commercial team has been adapting extremely well.
Im tremendously proud of this very on team for our recent accomplishments.
First to rapidly adapting to the current environment, creating significant virtual tool and digital assets and beginning our conscientious virtual launch.
Our territory managers completed all that training the week of April 13th and I'm Happy to report started making virtual calls to healthcare providers. The week of April 20.
Second our managed care successes, we exceeded our gold at achieved over 50% commercial coverage and over 20% Medicare part D coverage.
Providing excellent initial formulary coverage and patient access our medicine and third we are beginning to see traction with health care providers with the high interest in peer to peer education on next Whats Hall and high interest in virtual meeting with our territory managers from healthcare providers.
From an over 30 years experience. These are early signals a success and why im energized by what AMC.
Our team has risen to challenge as we make this pivot into a fully integrated commercial organization. During this unique period of time and we're all looking forward to getting our medicine to patients that need them over the weeks mum and years ahead.
I'd like now give you an update on our key U.S. commercial priorities and activity.
First let me focus on our number one priority patient access and affordability of our medicine.
You first hurt by managed care team, Jerry Pen rich Gorilla and Roberta Peterson at Investor Day last year, well, we outlined our highly ambitious managed care gold having exits all its own compendium class achieving up to 50% commercial coverage and up to 20% Medicare part D coverage at launch as well as low patient.
Out of pocket comp.
We delivered on all key element.
For Compendia classification, as an Hcl inhibitor.
Favorable formulary position and broad coverage P eighta label and location out of pocket call.
Each of these elements is incredibly important to ensure patient access our medicine.
To date, we have CIT achieved managed care access for our medicine that we believe our industry leading level the patient access for newly launching medicine.
As I've already mentioned net as well has over 50% commercial formulary coverage and over 20% Medicare part D formulary coverage here in the U.S.
When launched early next month Nexpose that will also enjoy even greater levels of managed care coverage as we continue to broaden that coverage.
Not only of we secured a critical mass of formulary coverage for patient. The coverage is very high quality next to fall in that was that our preferred brand medicine meeting covered lives of mostly in tier one and some tier two mostly covered lives in Q2, I apologize with some tier three.
Most coverage requires only minimal to no steps to access Nexus fall and that was that a PD label, which for the majority patients will mean that patients have to be on their maxi salaries that were previously tried as that.
We have achieved low patient out of pocket costs. The average patient out of pocket cost is $10 or better the eligible commercial patients and its $45 for Medicare part D. A course for Medicare part D. The lowest possible co pay for brand to medicine is $45.
Overall prescribing our medicines requires minimal to no paperwork and finally, there are no moratoriums from the major plans at this time. So we believe that the vast majority patients will be able to access our medicine.
Early indications are that the percentage of successfully adjudicated prescriptions are significantly ahead of most recent launches.
In fact, we're showing adjudicated prescriptions that are approximately five times greater than recent cardiovascular launches in my personal experience. This is the best managed care coverage I've seen in the last 10 years bottom line the achieve formulary coverage patient access is beyond even our own very high.
Internal expectation.
Patients who are prescribed their medicines can access and readily and at a low coping.
Yes providers that prescribed our medicine to patients can do so confidently that is below three things first the prescription recovered since it has a high likelihood of being on formulary.
Second the healthcare practitioners have little to any paperwork its appeal to label and third their patients have a like high likelihood of being able to afford their medicine, because everything we've done ensures low out of pocket costs for the patients.
This is truly an incredible result deliver biomass care team also importantly, formulary coverage will still continue to improve in the month ahead.
Now I'd like to share with you our customer facing team and how we've adapted to the current environment.
As Tim highlighted earlier, we are currently living an unprecedented times due to a global pandemic.
Given the cobot 90 influence environment, which includes social distancing, we are taking debate of measures to engage our health care providers first we're giving the healthcare providers on the front lines of the cobot 19 prices this space they need to do their work.
In some geographies, where appropriate our territory managers are making virtual outreach to healthcare providers.
For these HCP is we're utilizing text email and phone outreach with health care providers, with whom we already have established relationship.
Personalized E mail and video introduction, so new health care providers that request information.
Digital welcome kit and digital lead behind.
Virtual detail running through our established CRM platform.
To quantify this view in a little over two weeks our territory managers have already virtually interacted with over 1500 healthcare providers across the us.
The healthcare providers ready to describe next that's all for their patients we're providing them one touch online in direct sample shipment co pay card so to patients and of course availability of next fall on pharmacy shells.
And finally, we're leveraging Speaker Bureau, what we call Smartcast and what meetings.
To pause for a moment at Speaker Bureau, this is where key opinion leaders provide peer to peer education on Nexus halt other healthcare providers.
We had our first Speaker Bureau web meeting last week, the K 12 doing peer to peer education next fall virtually through what we call Smartcast using technology solutions like zoom.
This is proven to be an amazing tool.
Over 150 healthcare providers have already participated in these wed meetings and we are seeing robust interest in these educational opportunities.
We have call that the conscientious law launch, we are thoughtfully and respectfully engage with health care providers at this challenging time understanding the individual needs and preferences. While also beginning the process of awareness building and education required to get Nexus halt indicated patients that could benefit from it.
One additional point, we built our commercial tiv unparalleled success.
We focused on experienced professionals, those with significant expertise and deep relationships with key healthcare providers.
We have highly tenured territory managers, who averaged 12 years of cardiovascular sales experience.
In this current environment. This deep experience has proven to be critical.
Our team has adopted extremely well to this time.
At the same time, we continue to make plans for traditional launch when we're all in a more normal environment.
We are starting to see some states are easing so called stay at home restrictions each week.
You may have heard comments from both Dr., Scott, Scott Leap and Dr. Bouchie that they expect some return to normalcy for many geographies across the U.S by sometime in June.
Overall I'd like to highlight that each state the geography is not the same and we will not treat them. The same some healthcare providers and their patients are experiencing minimal impact others like healthcare providers and patients in the New York area, our unbelievably impacted most healthcare providers and patients are experiencing some impact and that varies both by healthcare provider space.
We will see and by geography.
With these point the mine we have built we're referring to as a re entry plan broken down into three tiers.
The re entry plan reflect our assumptions about when and where face to face interactions are likely to resume.
When we talk about this re entry plan. We're also assuming social distancing measures will remain in place for an extended period of time and that most interactions will now be protected that is most people, including members of our team will use personal protective equipment or pp that his math glove hand, sanitizer disinfecting wipes all.
To ensure the safety of healthcare practitioners patient and our colleagues.
Tier one.
For this year you expected timing for the resumption of face to face interaction is mid may.
This year include states in geographies that have announced they are reopening have ended the so called stay at home orders, we estimate tier one represents approximately 25% of our target HCP audience.
Sure too so the second tier expected Tommy presumption of face to face interaction is June and include states and geography, the have announced or expected to announce the and the so called stay at home orders over the next 30 days or so.
We estimate tier two represent approximately an additional 40% of our target HCP audience.
Tier three.
This tier includes those states that are true hot spots around the United States. These states geography still have significant stay at home orders in place. We estimate this tier represents the final one third of our target HCP audience.
The fate interactions with these HCP will come at a later date instead, we will continue to rely on the virtual tools that we developed and refined interact with these HCP.
As I said earlier, we will ensure all of our territory managers utilized ERP and other safety measures to ensure colleague HCP and patient safety.
Turning now to net was that as Tim highlighted we're announcing today the acceleration of the availability of next was that the combination tablet event doke asset and is that am I to early June.
Recall this is the first non stat in combination tablet ever approved for lowering bad cholesterol and has even greater non that and LDL C. Lowering efficacy the next with all.
Our education efforts with HCP is about next would fall and its mechanism of action Hcl. His addition have gone very well. The first few weeks, we've had unbelievable interest in the digital materials and information on Netflix all especially the peer to peer education opportunities through the key opinion leader Speaker Bureau, I referred to earlier.
As a result, we're now confident that HCP is a well prepared to welcome the commercial availability of next was that on Monday June four.
And once we do with a few key points.
We are in the very early stages of our commercial launch we're just beginning to scratched the surface both in terms geographies and reaching our target healthcare providers and we're operating in an unprecedented period for which there is no comparison.
We are prepared to assist healthcare providers and patients in every way possible.
We have great managed care coverage, we have been heavily focused on healthcare provider education and this is paying off we're confident that when the current healthcare crisis passes healthcare providers will be fully educated and ready prescriber medicine.
We are starting to see signs of improvement in certain states and geographies healthcare providers already being responsive to our messaging and approach with the early work. Our team has done I believe when a great position for future success.
In summary, we price and positioned our mess it extremely well as a result, we have significant managed care formulary coverage from medicines.
As it further result, we had the lowest possible patient out of pocket cost and we have great HCP interest in peer to peer education with over 150, HCP participating and smartcast in less than two weeks and we've already achieved over 1500 HCP interaction.
As a result.
Confident that we will see a terrific trajectory on prescription activity in the weeks and months ahead.
With that let me turn the call over to Rick for Financial review Rick.
Thanks, Mark I'll now provide some comments on our financial results for the first quarter ended March 30, Onest 2020 as highlighted in our press release from earlier today.
First regarding revenue.
Total revenue for the first quarter was $1.8 million. This includes $1 million of collaboration revenue and a very significant milestone for the company, which was the recognition of approximately $900000 of net product sales revenue comes from Mexico.
This is the first time in our history that we are reporting net product sales revenue, while the amounts modest just under a million dollars the significant.
Since of this milestone and what it means for the company.
As a commercially thriving research driven pharmaceutical company cannot be overstated.
For comparison total revenue for the first quarter of 2019 was 150 $445.4 million, which was all collaboration revenue as a result from the recognition of the upfront payment from the Daiichi Sankyo Europe collaboration.
As a quick reminder, we recognize product sales revenue following us GAAP assay six so six X X factory and recognize product sales revenue at the point in time when customers wholesalers in our case received product at their warehouses.
More detailed information is provided in our form 10-Q filed with the SEC.
I want to remind everyone that experience is and has been a revenue generating company.
As I mentioned last year, we recorded $148 million of annual revenue.
This year, we're on track to record at least $200 million in total revenue.
An increase of more than 35%, even before factoring in any net product sales revenue.
These are diversified revenue streams, consisting of us net product sales.
Ex us collaboration and royalty revenues, which are also diversified geographically in some key markets, but not yet all worldwide markets.
This has been accomplished through our ability to over deliver and secure to precedent setting commercial collaborations for the EU and Japan on time and above expectations, all while maintaining 100% rights to the United States.
The most valuable market for our medicines in the world.
Next research and development expenses totaled $34.7 million for the first quarter compared to $46.3 million for the comparable period in 2019.
The decrease was primary primarily related to a decline in costs related to the enrollment completion of clear outcomes last year and a decrease in regulatory costs associated with the submission activities that were incurred last year.
As we've been saying for a couple of years now you can expect to see research and development expenses come to a lower steady state level in 2020, and 2021 as a result of clear outcomes being fully enrolled in August of last year.
Selling general and administrative expenses were $41.6 million for the first quarter compared to $12.2 million for the comparable period in 2019.
The increase was primarily related to cost to support the commercialization of next lets all in next lose that.
Increases in our head count, resulting from the build out of our 300 member customer facing team during the quarter.
Stock based compensation expense and other costs to support our rapid growth as a commercial organization.
Net loss was $78.2 million for the first quarter of 2020 compared to net income of $87.4 million for the comparable period in 2019.
Experian had a net loss per share of $2.84 for the first quarter of 2020 compared to a diluted net income per share of $3 in seven cents for the comparable period in 2019.
Let me make a few comments on our expectations about the future.
As you saw in our press release today, we are updating our full year 2020 expense guidance to reflect the expense experience. We saw in the first quarter and that we expect to continue into the second quarter.
Previously we were Guy guided research and development expenses for the full year to be $145 million to $155 million.
We are updating and slightly lowering our full year R&D expense estimates to be between $135 million to $145 million or a decrease of $10 million at the midpoint of the range.
In addition, we previously guided selling general and administrative expenses for the full year to be between $225 million to $235 million.
We now expect ex SGN, a expenses to be between $200 million to $210 million or $25 million lower at the midpoint of the range.
To be clear.
These updates to our expense guidance are not a result of us cutting programs personnel or planning to run the business any differently once we get back to normalcy.
However.
Due to the Kogut 19 pandemic there has been a natural slowing of operating expenses experienced in the first quarter and as we have skin in the second quarter as both R&D and SGN a have changed.
This includes adjustments to virtual launch programs.
Tools and marketing tactics versus in office promotional activities and as a result, we believe this revised spend guidance reflects how the full year is expected to play out.
Let me comment on liquidity and cash resources now.
Despite inherent challenges in the current cobot 19 environment, our balance sheet and future cash flows from our precedent setting partnerships remains very strong.
Our cash was most recently strengthened as a result of the Otsuka partnership we announced just last month.
As of March 30, Onest 2020, cash and investments available totaled $158.2 million I will note. This amount includes the 25 million dollar funding from Oberland capital upon FDA approval of next lets call, but does not.
Include the $60 million upfront payment we received from Otsuka.
In April.
Factoring in the recent payment from Otsuka, our pro forma cash balance as of March 30, Onest totals over $218 million.
Next quarter, we expect to received $150 million milestone payment from Daiichi Sankyo Europe. Upon first commercial sale in the EU, which will further strengthen our cash balance.
Keep in mind, we expect incremental capital to add to our already strong cash balances.
This will result from an upfront in near term payments from a true rest of World agreement ex US ex you ex Japan, which we expect to close before year end.
Having over delivered on the EU in Japan agreements over the past 16 months, you should have great confidence in our ability to deliver on this final agreement.
Finally recall there is an additional $50 million available at our option under the Oberland capital agreement that we expect in early 2021.
Given our current cash balances expected us product sales you royalties and future milestones, we remain confident that the cash resources available to us are sufficient to fund operations and will allow us to continue to over deliver on the business plan through profitability.
From a liquidity standpoint, I want to assure you that we're committed to maintaining the appropriate cash balances to support our rapidly growing business in the near term, we think that appropriate amount is greater than $100 million as we look towards the end of the year.
Finally, I want to comment on 2020 net product sales revenue expectations.
We have consistently said, we would not provide net revenue guidance for 2020 in normal times, we would maintain that position and as we as we know these are not normal times.
We're not providing formal us product sales revenue guidance for 2020 today, but I want to say that we are comfortable with current sell side consensus us product sales revenue estimates for 2020.
Sperry on has an unbelievably strong history of delivering results.
Our track record includes four product marketing approvals exceeding our own very high goals on the managed care coverage.
And the continued over performance on global business development.
Recall that in 2020, we delivered in 2019, we delivered the largest you licensing agreement in at least the last 10 years.
Already this year, we delivered the largest Japan licensing agreement history.
In all in we secured over $1.5 billion and current and future cash commitments from these collaborations just like we've delivered on these fronts you should have the confidence that will deliver on us net product sales revenue.
So with that I'll turn it back over to Tim for closing comments.
Thank you Rick.
Before we take your questions. Let me just recap todays first quarter update call.
So next lets call and next wells that were approved in the US in February and next lets call is available by prescription now in the us.
11, Doe and new steady received full marketing approval in Europe last month.
We've already achieved excellent managed care coverage in the us with over 50% commercial formulary coverage and over 20% Medicare part D formulary coverage.
Mark in our customer facing team have adapted extraordinarily well to the current environment with the implementation of a broad suite of virtual detailing and education tools.
And that began April twentyth.
We have a phased reentry plan as Mark described for our territory managers to be back in most healthcare providers offices in the month ahead.
As you heard from Rick we have a diversified and rapidly growing revenue stream almost $150 million in 2019 over $200 million. This year, consisting of us net product revenue ex us upfront and milestone revenue and of course.
Royalty revenues starting this year.
We also affirmed that we're comfortable with current consensus sell side net product sales revenue estimates for 2020, we remained very well funded with strong liquidity and capital resources available to us and our in an excellent position to execute on our business plans for the year.
Now looking ahead as Mark and I. Both highlighted next laws that is now going to be commercially available in the us on June 4th.
In the third quarter DSE will launch in 11, though and new steady in the EU and as a result, we're on track to receive the $150 million milestone payment from DSE at that time.
During the fourth quarter, we expect to complete a true rest of world development and commercial collaboration agreement and we look forward to connecting with many of you at upcoming virtual healthcare conferences in the weeks ahead.
So with that I'd like to ask Felicia to now open the line for your questions.
Lisa.
And ladies and gentlemen, if you have a question at this time. Please press the star in the number one key our Youll Touchtone telephone. If your question has been answered are you wish to remove gifts that from the Q. Please press the pound key and we will take a moment so similar to Q.
And your first question comes from the line of Geoff Meacham of Bank of America.
Hi, guys.
Thanks, So much of the question congrats on all the progress.
I Wonder if you.
Worker the decision behind the earlier was that loss.
And obviously.
It's very early gains, but would have been some of the takeaways from initial launch.
Lisa Tele medicine that maybe you can imply.
So the few months.
Yeah. Thanks for the question, Jeff and Mark why don't I tip that to you.
Please.
Yes, Jeff just clarify the question Im not sure understood. The question exactly hers index is that just clarify the question for me.
Just want to know the decision behind the earlier.
Moving up in Mexico Nexpose that.
And then just you commercial experience right.
And how can that be applied.
For launches for essentially both products for the balance of year. Thanks.
Okay sure. Thanks, Okay now influence and so now that was driven by few things as we said in the prepared statements. We do believe physicians have become.
They become quite confident about the ability to to launch two right next with hall. So that was that was we were looking for to see if there was a comfort level, but additionally, physicians right now they are the physicians were calling on our apparel be worried about cardiovascular disease and how cold it is going to affect overall lithobid and other.
Yes, so obviously with Nicklas Hall, we already have one product out there that could help and LDL with the feedback has been.
They feel as though this.
Environment, where people lock down a more sedentary lifestyle, there may be a need even earlier for more aggressive LDL lowering and that was part of the driving behind next was that as well, we just think that physicians need as many tools.
In the armamentarium to battle of the high cholesterol, especially now so we went ahead and moved it up so is the combination of comfort with next with hall, and which we want to see and then really the needs of the physicians asking for for more tools right now that's driving next was that.
We touch base with key opinion leaders from various specialties and geography is pretty pretty regularly and telemedicine is going to be here to stay one way or the other on the all agree whether its primary care cardiology academic based or office space.
That theres going to be a an aspect of telemedicine, that's going to be utilized for the foreseeable future.
I think it's in the early stages.
Comfortable.
I think did we lose mark.
Yes, I think we.
Part of the future of medicine, and physician seems to be adapting and patient fairly rapidly to this new to this new way of administering medicine the care.
Hey, Mark.
Everybody apologies, where like many of you all virtual and.
Often relying on on cell phone coverage, which I'm sure. You've all experienced is is sometimes spotty. So bear with US we will obviously do our best to.
To respond to questions, but if if you if you can't hear or we're not answering the question. Please.
Perseverate and.
And stick with us on it will definitely get to answer.
Mark you just blanked out for a little bit while you were talking.
Yes.
Felicia can we go to the next question Yes, Sir Your next question comes from the line of Michael Yee of Jefferies.
Thank you for the question Tim Hopefully you can you hear me okay.
Two questions. One is can you talk to somebody early third party script data how accurate you think that those are compared to what you're seeing whatever information you see with scripts and do you expect us to surpass.
Pcsknine scripts, which everyone I've looked at can try and translate sales from maybe talk to that dynamic.
Over the course of the next one two and three quarters to get to the consensus and then second question relates to sampling what do you know about sampling how much samplings going on out there versus the script numbers, which would be interesting because that's kind of at least leading indicator. Thanks, yes, yes, no. Thanks, thanks for the questions Mark.
Mike Sorry, I was going to tip.
The questions too to Mark.
Mark can you.
Can you hear that okay.
If we lose mark.
Maybe I can.
So I knew testing.
[laughter].
Yeah.
Let me let me go ahead and try to turn it on your question. So on on sampling. The second question. Your second question. We are seeing some some good sampling what I would say as as Mark was saying about the overall launch we're still in the early days yet.
But we've seen robust demand from physicians for samples along with the co pay cards I think one of the comments that Mark made in our prepared remarks was that he feels.
Confident and again he has been doing this for 30 years.
He is launched.
More than a handful of cardiovascular products chronic.
Chronic disease therapies, and so I think his insights about this are are really spot on.
But as I said, we're only I think in the third week of actual virtual detailing but.
And and then the other thing that I would say is it took an extra week for us to get a.
Well the.
Virtual sample ordering that that mark talked about so.
That has certainly facilitated increased sample demand and accounting when you're.
I think during the first we were doing it by paper. So it was a little bit less easy to follow but now we can track it and again, we're seeing we're seeing robust demand for samples I can't quantitate. It for you, but I would say agree with you that that it is a good but indicator as as a reminder to everybody.
We are we are sampling, but our samples are seven day blister packs.
So they will not show up in any of the data.
And of course, a seven day blister packs they will not replace.
30.
30 count bottle.
With respect to the Symphony data and I can give you a data that is that is publicly available as you mentioned, we're we're just in the.
Third week now I think on Friday, we will get our third or fourth week, rather of of data and where we're seeing nice progress there week to week and.
Certainly like the overall trajectory, it's it's lumpy because it's early it's small numbers because it's early but the HCP or healthcare provider engagement as Mark said earlier is really robust and and so with the combination of the state's real.
Opening and the engagement that we're getting with with health care providers, even through these virtual tools you know much less before our team gets out and starts engaging physically.
I think where we're encouraged but I think.
The tale of the tape, Mike I think for you and for everybody else. We said is going to be the prescription data that comes out week to week, and then month to month and of course quarter to quarter and while it's early we like the trajectory and.
We think that that is representing 90 plus percent of of the prescription volume.
You had asked.
How it compares to the Pcsknines and it caused me to smell a little bit because.
Recall that the Pcsknines did not launch during a pandemic.
And so.
Much less has a role to launch which we have highlighted that we'd like to have you and others use as a comparator for our launch once we get back to.
Some normal.
State of affairs, but I think.
If if you'd like me to.
Comment a little bit about how it compares with the Pcsknine launch I think a few things that I'd highlight one as Mark said, we have extraordinary.
Managed care coverage right from the launch and that is only going to gain momentum and I think as.
Most folks know that up to that have dealt with formulary coverage in the past once you reach a certain critical mass you effectively have.
The broadest coverage, even if it's increasing by 10 or 20% in future years.
So we I think the managed care coverage is is phenomenal.
And as it relates and Pcsknine I think as Mark said to the adjudicated prescriptions is five times, what what the Pcsknines, we're experiencing their their first during the first year of launch so that's a very bullish indicator as well.
But I think long term, we do not see the pcsknine launches as a good compare tore.
That.
We will.
We will we will far exceed what.
He's asking nines, we're able to do.
Okay. Thanks, so much tempur shit.
Yes, Thank you Mike.
Your next question comes from the line appreciate Latonia column.
Great. Thank you very much congratulations on all the updates and progress it sounds like you're making a lot of your objectives, Matt and to that extent and since we are all kind of milestone junkies, particularly the coverage front it sounds as if your goals at the beginning of the launch where to hit that 40% to 50% range and 20% on Mehdi.
On your part D certainly kudos to the team for achieving that.
Can you sort of bar for us for where you think you'll be say in three months and perhaps at the ended the year recognizing that there's a lot of uncertainties out there, but can you used the phrase a certain critical mass so when might we get there help us get a sense for what this could look like.
Sure Mark are you back on.
I am sorry about that guys yes.
It's nice to hear your clear voice, Okay. Why don't I went on I get that view.
Sure. Thanks, Chris Thanks for the question. So we had discussed earlier.
Before too long so we had anticipated for the year end to be in that 75 ish percent commercial and up 50% range for part D. I now expect that as opposed to ended the year to be some time on this quarter. So that's how ahead of schedule. We are right now for us. So a lot of work being completed so I think.
The next milestone will be and by the next call. We do anticipate will have very close so we were.
Communicating for year end sometime during this quarter.
Got it and on the Medicare part D coverage front, 20% can go to what.
We should see upwards of near 50% over that period of time.
Terrific I love the confidence and then to follow up again, you guys have been very successful in the partnership front again really matching your timelines, which is always kind of a delicate dance.
Curious to know I think you guys have talked about into us. How your initial focus is on more of a targeted physician launch with a 300 folks that you have the thinking longer term ultimately you could see.
The need to really expand that salesforce effort to go more towards the general practitioner to really broaden out the potential audience with physicians and patients can you help us understand.
Is there a revenue level is there a metric that we should be thinking about.
When thats something that you'll begin to contemplate E. When we should start by the new about whether that's something you're going to move forward on and I talk about this again since you seem to be so a student gauging, when where and how and timely execution on your partnerships. Thanks.
Yes, Thanks, Chris for the question I should say, thanks, I think for the question.
So the way.
The way, we think about business development as.
As it relates to this epidemic asset franchises I think as we said earlier first of all this year, we're focused on true rest of world deal non us non Japan non E U.
So that's going to occupy us for for this year and then of course on the commercial front.
We have built I think as.
As we've talked about we had this incredibly experienced.
Commercial team customer facing team.
The success that we've had on the managed care front I think exemplifies I think you heard mark stay last year that each of our each of the members of our managed care team have 30 years of experience and we had said.
With a little bit of pride, which had to be proven but a little bit of pride, saying, we think we have if not the best one of the best managed care teams in the industry and I think the this early result, as Mark said best managed care coverage that he's seen with a drug launch in at least the last 10 years.
We I think we would put our achievement on the managed care formulary side up against anybody and or any recent ease at recent drug launch and and of course, that's the result of pricing decisions positioning decisions.
Relationship decisions actually partnering with.
With payers and Thats, all part of our philosophy mine marks jerrys. The teams philosophy about about how to engage to maximize the benefit for for the overall industry.
And obviously, especially for patients so perhaps a different philosophy, but I think its yielding the result that we wanted and so.
Our our focus is to continue to let our team performed here in the us.
Everybody is going to be able to assess how we do because the prescription data is is going to be very broadly available and regularly available, but we have confidence in our team's ability to execute so we will come back to your question about partnering.
For the US it's not current top of mind for US, we certainly recognize that.
2021, 2022, we will have some business decisions to make about.
How we build our customer facing team, whether we do that.
Ourselves or whether we do that with a partner and and that's that's a future decision that I don't want to speculate on today. So.
It's.
Like I said, it's a future decision for US person I think one that we're just not prepared to make yet because we have tremendous confidence in in the performance capabilities of our team.
Got it thanks for your Gentleman's responds to my kind of but not with quest and appreciate it can great works of art.
Okay. Thank you Chris.
Your next question comes from the line will Tom Shrader of BTI gene.
Hi, good afternoon, congratulations must be great finally be selling this stuff.
I'm just wondering really for for Mark two questions now that you're on the ground you have a strong sense, which drug is going to be more important than do you have any sense that people are waiting for the combination bill.
Yeah Mark please.
Yes, Hey, Tom.
Doing well, yes, absolutely I mean, there's I, we started signaling few month back that we do anticipate next was that a will be more of the workforce and there are apps salute.
Few the key opinion leaders and top prescribers that.
We'll kind of aware that we were going to accelerate and may they are waiting for next was that to come out absolutely.
And just on your wish list is there any clinical data you wish you had beyond clear outcome is the diabetes signal worth chasing down or what's your thoughts on whether you'd like to see more data this itself.
So this is Tim.
One of the things that that where we have a very active program now on is.
The potential for investigator initiated studies and so we're getting some very interesting proposals Tom that were.
We're sifting through and Havent Havent reached a conclusion on but it's certainly one of the top of mind.
Things that that we're talking about of course.
That is talking about internally, we're getting input from those outside.
Our our MSL team is is talking to KolaĊĦin Medical affairs team and and again just hearing what they had to say about additional data that might might be interesting for them. So.
We're sifting through I would say stay tuned probably second half of the year, we'll have more to say about that Tom.
Great. Thanks, a lot and congratulations again.
Thank you.
Your next question comes from the line of Chad Messer Needham and company.
Let me on this would go on for Chad and I'd like to add my congratulations for.
The earlier availability of next those that.
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Kind of adding on all the other milestones and it seems like you have a pretty strong cash position.
Guys, considering further business development or acquisitions considered.
Gail. This is this is Tim I'll I'll take that so.
We are entirely focused on.
Executing on the successful US launch of next Lutalo next was that this year and and then of course, the the ex us Im sorry, excuse ex Japan ex U.S. So true rest of world deal from a business development standpoint.
So I would say.
An emphatic no at this point, but certainly as we continue to evolve the business get the traction that we're expecting this year that that those kinds of things.
We'll be.
We will be under consideration for us, but in the near term I think we've been incredibly successful by focusing on a few key things and we're going to continue to do what has driven our success historically, which is to bring that focus.
To these these few activities.
Thank you for that.
As to your interactions with physicians they face.
Do you believe that some of it has to do with affect the physicians are currently more available because they're not going into clinic.
That is a very good question Gail Mark can I get that to you.
Yes, Thanks Bill.
There's definitely some aspect of it but it really depends on the geography cardiologist into New York area are being what we're actually being called in to hospitals going to help on the front line, but I think in most parts of the country.
Yes that is definitely an aspect where the physicians a little more available.
Particularly with the with the Representatives again, they have the relationships with the physician so the comfort level there and then for the virtual speaker programs at night, Yes, I think what we've heard that.
Our target audience that really appreciating discussing something other than coded and this gives them that out that outlet to have those conversations. So I don't it's part of it maybe not being in clinic, but also being part of they need a break from the day to day from both patient the press and also their own pressures on dealing with cold. It. So I think it's all the above.
Don't we all.
Mark if I still have great point.
Great.
I think.
If they still have you gave a really great granularity regarding tier one and the different ages.
Cps and accessibility.
What are you guys thoughts about second wave.
Yes, Mark do you want to join to speculate on that a little.
The second wave what was the question second wave of what.
But overall.
Yes.
Uh huh.
I think the coastal come to that is again I want to go back to comment I made earlier physicians are prepared for this new environment for the foreseeable future, while they're opening up their offices.
Two patients now certain areas, it's very very restricted and I think it's going to stay that way, whether we havent second wave or not I think at treating it like a second wave so there'll be some return to normalcy, but what we're hearing is telemedicine.
And by nature tell detailing will be a part of the future.
And I think that there is planning on operating this way for a while until they could.
Take a crack to say now we're done I think they're all anticipating a second wave and I think thats why they believe this is the this is the.
This is the main stay for the foreseeable future.
Gotcha and money just last housekeeping question.
Did I hear you correctly about starting to recognize so royalties from the EU in the second quarter was as third quarter.
The second part, yes, sorry second half year.
Yep, Okay, Alright, that's it from me. Thank you very much for taking my questions.
Yes. Thank you.
Your next question comes from the line and Jason Butler, Jake MP security.
Hi, Brian for Jason Thanks for taking the questions I Might've missed this one earlier, but you guys have any early data on the co pay program.
Tentative prescriptions or even that program.
Oh, yes.
Mark is that is that something you can comment on.
Yes, absolutely.
Now for the thank them for the for the commercial side, a vast majority of the prescriptions are going through with the co pay card attached to it right now and any early launch that exactly we would anticipate until positions are comfortable with the coverage, they're going to make sure that the co pay card and keep in mind, we also make it available passively.
For eligible commercial patients. So you. They don't have the card, we're going to intervene anyway and that will stay until we are sure that all the contracts assigned and everything.
We indicated we're seeing is great adjudication as you get more confident.
That number will drop but right now a vast majority have them attached and that is as planned.
Got it and then another one from from Mark I guess, the so what the reimbursement coverage you have already achieved.
Can you give us a sense what the average co pay it's going to be with longer term.
Therapy after they get passed a co pay card. Thanks.
Yes, Mark.
Yes, so so of the co pay card we're going to continue.
Committed to be as low $10 for 90 days on the co pay card for the foreseeable future.
As far as co tiers, I think that we anticipate a majority of our of our let's say non card commercial coverage to be to be in tier two and those co pays it typically $25. So so but we do anticipate utilizing the carton passive programs and make showcase.
I have an affordable option, but the tier of second tier is typically $25 and third tier is typically $50, but we're shooting for as much tier two coverage as possible.
Regarding part D that branded co pay is $45 and that stays that way, there's no by down there.
Great. Thank you.
Thank you.
Your next question.
Justify of JP Morgan.
Hey, guys. Good evening guys. Two quick questions for me just about the model.
How much of the first quarter revenue was stocking and you trimmed R&D expense by 10 million I think you said something about it being related to the completion of.
Enrollment.
The outcomes trial. The I think that was known when you gave guidance so want to make sure I understand the reason behind the R&D guidance. Thank you.
Yes, Thanks, Jess Rick can I kept those questions to you.
Yes sure, yes, so just on the revenue front.
Since since next let's call it was available on the Thirtyth.
What what's reflective in the income statement is representative of those initial orders from our wholesalers and then on.
The R&D expense.
May have been a bit confusing in the prepared remarks year over year.
The cost expense have came down primarily related to the.
Completion of the outcomes trial last year in terms of.
Updates for the year.
We do expect.
Given the.
The co bid environment some of the pass through costs that we anticipated.
In.
In.
During this year related to those.
That study has had slowed a bit.
On on the higher end of the new range, it's consistent with the low end of our prior range, but.
We feel like it's it's reflective of where it will shake out for for the full year on the on the R&D side, primarily related to to the outcome study.
Okay. So it is related to how consulting expenses and not the result of length lower manufacturing spend running through that line prior to approval in the first quarter.
No so.
What we what we expect for the full year.
Is.
The primary expenses that are running through R&D, our outcomes related obviously, we have some.
Background R&D activities.
Timing of activities.
For for manufacturing.
Have moved around but it hasn't had a significant impact on cash burn or.
Or expenses that we expect to incur this year.
Got it thank you.
Hey, Thanks next question comes from Atlanta, Joel maybe.
Hi, Thanks for taking the questions and congrats on the launch. So first question is can you provide any information as context on the gross to net.
Revenue that you've been seeing or anticipate.
Yes, Rick can you take that.
Yes, sure. So Joe you know as Weve as we've said for.
Consistently for some time.
We havent disclosed gross to nets, and we we don't plan on disclosing gross to nets, no really that difference for competitive purposes.
We do expect our gross to nets to be comparative with other analogs in the space for oral once daily.
Small molecule chronic therapies.
But overall.
We won't be getting into the level of specificity.
On on hard and fast amounts.
Okay got it and that could you describe a typical.
First scribing experience for a physician or or where the typical ranges in terms of as easy as writing a script in most cases or or the amount of paperwork that's done.
Is that typically required before approval it would be interested to learn more about though.
Yes, I know, it's a it's a great question and one that Mark I'm going to ask you too.
Because I think you're you're closer to it and Ken can provide the right context around this but it is.
Joe. This is this is one that we smile about so.
Mark.
Hey, Joe Thanks for the question thank them.
Yeah. So it's really easy so right now I think with physicians are really doing everything, especially right now is electronics. So from the from the video conference with our representative to E prescribing and even the PA process and what we are hearing.
Prescribing physicians is that.
Everything that they real bar has gone through incredibly well, so we're not really seeing any any real.
Blockades or obstacles, we're not seeing any significant pj's outside of to label and this is early and we anticipate that keeping up so joel docket that physicians literally going into their iPhone or their or their EMR system that prescribing electronically, it's going right to the pharmacy appease could adjudicate electronically and it goes.
The pharmacy that way and then the patient has notified the attacks, it's really simple and we're really doing well I want also stressed here.
The way our our products are adjudicating right now is exactly what we had anticipated by pricing the right way I will say recent launches did not enjoy this level of ease and electronic Phd and things of that nature. It was much more off paper intensive and even going into clinical records. So this is very different and very rare.
Fresh and for the physicians.
Scripts and so far.
Great to hear and I know you mentioned earlier the the adjudicated prescription rate is around five times higher than Pcis canines can you help quantify what level of flows.
Yes, Mark.
Yes, so we're seeing right now we're seeing adjudications around that 50%.
Mark so successful adjudications going through and keep in mind. This is really early I mean, some contracts, we just signed last week.
The data that we have that is that utilizes jude occasion type messaging indicated that tcs canines during their launch worried about 10%.
Terrific. Thanks.
Thanks Joel.
And we will now conclude the Q and a portion of the call as mentioned earlier. Please E Mail Investor Relations Esperion dotcom to schedule a follow up call with management. If there any questions from today's discussion now I would like to turn the call back over to Tim Mayleben for closing remarks.
Thank you Alicia and in closing I want to thank everybody for joining our first.
Quarterly conference call and.
I, especially want to thank you for supporting Esperion. So.
Particular for our shareholders. We know that you make all of this possible your belief in our team. Our mission has brought us to this point, we've had a long relationship with many of you and candidly could not have done this without you.
For the Esperion team those that are listening or will listen there are no words or enough words to say how proud I am of your continue to comp complishments. During these unprecedented times marketing approvals precedent setting collaboration agreements.
Unparalleled patient access and now our commercial launch of next Lutalo next list that accomplishments that reinforce our focus on Lithobid management for everyone and I'm proud to be on this mission with you proud of what we've accomplished together.
For those just hearing about especially on for the first time I encourage you to get in touch with our team learn about how we can help.
So many patients in need together and even to our skeptics.
I hope you can see our unexpected accomplishments, our dedication and a word that I love our grid.
And see how we have overcome so many obstacles to be here today and hope you will have another discussion with us.
So with that we look forward to sharing further updates with you as the launches of our medicines progress in the weeks and months ahead. Thanks, again and have a good evening.
And ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.
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