Q3 2021 Esperion Therapeutics Inc Earnings Call

November 2, 2021

Ladies and gentlemen, thank you for standing by and welcome at this time all participants.

Following the presentation there'll be a question answer session.

Please be advised that today's conference call maybe recorded.

And the conference call over to Dan Church, Investor Relations and corporate Communications at Experian. Please go ahead Sir.

Thank you operator, good morning, and welcome to <unk> third quarter 2021 financial results and company update conference call I'd been church, and I'm responsible for Investor Relations and corporate communications here at Experian.

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 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 2nd 2021, we undertake no obligation to revise or update any forward.

<unk> 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. This morning detailing the content of today's call. A copy can be found at www dot experienced dot com within the investors and media section. We will begin with prepared comments and then open the call for your questions. Following today's call the team will be available.

<unk> for follow up questions. Please email corporate team at Experian Dot com to schedule time to speak with our team with US today are Sheldon <unk>, President and see all the Sperry on Rick Bartram, Chief Financial Officer of Experian Doctor Joanne <unk>, our Chief Medical Officer, and Eric Warren our head of sales and marketing I'll now turn the call over to Sheldon for prepared remarks.

Sheldon.

Thanks, Brian and good morning, everyone. Thank you for joining us today to review our progress on our recent business update this periodically I am pleased to share all the significant strides taken by our team over these past months to position ourselves for long term success as a nimble and innovative organization dedicated to addressing cardiovascular.

<unk> disease, which remains the number one killer in the United States and worldwide.

As a reminder, we recently announced a transformative long term growth plans to strengthen the organizational structure and internal processes of the company to facilitate better alignment with the current healthcare environment and the constraints driven by the ongoing COVID-19 pandemic.

We believe that the changes we are implementing will enhance our ability to more efficiently deliver consistent growth in the near term and prepare us to scale up opportunistically in the future.

Had we anticipate steady consistent growth leading up to the top line readout of our clear outcome study during the first quarter of 2023, which if successful we believe will be a key inflection point in the demand for our commercial products next football and expose that.

I am also thrilled to announce that last week, we reached 80% of the required major adverse cardiac events accumulation signifying that the study is tracking in line with expectations.

We recently held an investor facing fireside chat with renowned Dr. Steven Nissan who is the lead investigator in the clear outcomes trial, who affirmed his confidence in the quality of the trial that our team has kept on target all throughout the pandemic.

By optimizing the organizational structure, we are also able to dramatically reduce our expense base, which Rick will touch upon shortly to ensure the appropriate allocation of resources to successfully complete the clear outcome study and advance the launch of our approved products.

Given the concentrated nature of our existing customers, we expect to retain the vast majority of our current prescription volume with this new plan focused on the 80 core territories that drive 90% of our prescription volume supported by increased utilization of non personal promotion with these additive tools, we will look to one <unk>.

<unk> integrated delivery networks that partner with key opinion leaders at the top institutions recognized for their comprehensive cardiac care centers to drive interactions with the top 10000 accessible providers, most likely to prescribe our medicines and three support peer to peer education and scientific exchange through proven very.

Full forums and medical meetings.

In the weeks ahead, we will continue to implement and execute these strategies along with those complementary initiatives, we put in place during the third quarter.

As we stated on October 18th there are two headwinds that led to next football index was that prescription growth of 10% during the third quarter.

Adequate access to Hcp's and prior authorizations.

We believe the sales force streamlining efforts to focus on only the most effective territories and ramp in utilization a supplementary non personal promotion tactics already underway are intended to address this first factor while our prescription support program with Smbs that was introduced in August will help alleviate the prior authorization burden.

Physicians previously avoided with a full buy downs co pay card.

This prescription support program will allow physicians to E prescribed <unk> to a centralized pharmacy that processes prior authorization easiest patient access and now with the medicine directly to the patient within a few days.

On the Medicare side, we continued to see payer coverage prescription volumes increase as pull through of our contracts improved, especially given the humana win earlier this year.

Even with shifts in patient volume mix third quarter net price remained stable quarter over quarter, and we continue to expect additional positive impact of net pricing over time as our plants fully implement coverage of NEC football index was at and volume scale up.

With our new strategic framework in place to more efficiently grow our commercial products and the groundbreaking clear outcome study underway. We believe we are poised to emerge as a leader in lipid management therapeutics with a keen focus on delivering benefits to patients.

Now I will turn it over to Rick to provide comments on our quarterly financial performance.

Thanks, Sheldon earlier today, we issued a press release containing our financial results for the third quarter, which is available on our investor website.

U S net product revenue was $10 $9 million for the third quarter compared to $3 $3 million generated in the third quarter of 2020 and $10 $6 million in the second quarter of this year.

Total revenue for the third quarter was $14 $4 million, which included $1 $2 million in royalty revenue from our partner Daiichi Sankyo.

As Sheldon mentioned net price for our medicine remained consistent quarter over quarter as the commercial team finalized the last planned changes to the co pay card program and rolled out our new prescription support program.

Over time, we expect our net price to continue to improve as plants fully implement coverage and volume scale up.

Unexpected R&D expense for the third quarter totaled approximately $25 $3 million flat compared to the second quarter.

SG&A expense was approximately $39 $3 million for the third quarter down 15% from the second quarter.

The sequential decline in SG&A expense was driven predominantly by cost reduction initiatives as we optimize the organizational structure.

Again through our announced organizational restructuring, we expect $80 million in annualized cost savings next year that will further extend our cash runway of the business and support the ongoing clear outcomes trial and commercialization of Mexico tall and excellence that.

As such we revised down our expected full year 2021, R&D expenses to be between $110 million to $115 million and SG&A expenses to be between $195 million to $200 million.

Looking ahead to next year, we expect 2022, R&D expenses to be between $100 million to $110 million and SG&A expenses to be between $120 million to $130 million.

As you can see we plan to maintain our R&D spend levels into next year as we continue to support the clear outcomes trial.

These estimates are inclusive of approximately $25 million of noncash stock based compensation expense expected to be incurred next year.

Our cash balance as of September 30th was approximately $154 million last week, we took the first step in creating a more advantageous capital structure by announcing a debt to equity exchange on our convertible notes.

We are confident that this decision provides the company with additional flexibility for potential future financing opportunities.

As you can see we remain steadfast on diligently managing our cash needs to support the crucial clear outcomes trial and the continued commercial launch of <unk> and <unk> and by maintaining this focus we're confident our financial position, we will continue to strengthen throughout the remainder of the year.

With that I'll turn it back to Sheldon for closing remarks.

Thank you Rick I want to reiterate my excitement for this new era of the spirit and everything we have planned for the future of this company, we believe our new organizational model Optimizes and transforms the business for the current and future environment, allowing us to maximize both the near and long term opportunities ahead, we are.

<unk> to bring additional funding into the organization to support our unprecedented clear outcome study, which we believe one successful what was driving the inflection in awareness and adoption of Netflix all end up with that.

Last week, we took the first steps in better positioning our capital structure for this next step.

And all our actions will enable us to effectively compete in the attractive cardiovascular market and positioning itself as a long term leader in cardiovascular disease prevention.

This is why you should be excited too.

We remain committed to our mission of making a lipid management accessible and convenient for all patients and driving greater public awareness to monitor lipid and talk to their doctors about lipid management.

Lastly, I would like to thank our colleagues and partners for their continued hard work and unwavering dedication to our mission and again. Thank you for joining today and for your continued support of and interest in this periodic operator, we're now ready for Q&A.

If you would like to ask a question. Please press Star then one.

If your question has been answered and you'd like to remove yourself from the queue press the pound key.

Our first question comes from Michael Yang with Jefferies. Your line is open.

Hi, Good morning, Thank you guys for the update and for all the color.

Particularly on the on the new guidance.

To reduce costs I had a two part question one was maybe first Sheldon just.

[noise] trajectory wise do you expect that.

The franchise will be a modestly growing franchised until we get to.

The outcomes result, and presumably possibly even until a formal label change can you maybe just describe how you expect that trajectory over the next one to two years and how the shape of that curve looks like.

And then secondly.

Maybe for the team related to that then again I think I'll just do some simple math, but looking at where the cash is now looking at the new guidance can you describe how you were thinking about various.

Capital access opportunities and what those might look like maybe describe some of the different things you look you could you could you.

Look at to help the balance sheet. Thank you so much.

Great. So first of all good morning, and thank you Mike for your question I'll start off and then turn it over to Rick So as it relates to growth of course, we have not given any type of formal guidance as it relates to growth, but we do know that we showed the 10% growth from second quarter to third quarter, and we know that we.

Can do better and we know we can do better based upon the way that we're moving forward. We know that these 80 representatives that we've retained still cover about 90% of our existing business and we think with the addition of our non personal promotion.

Also with the fact that we're also using a bit of a CRO.

Crow assistance as well that we can definitely continue to exhibit growth and I think it's beyond the 10% that we showed.

For this quarter I do think that the.

The growth will be a moderate growth and I think that growth will continue to lead up to the cbot I think as we gained more awareness as well of these products, which is something that we've been struggling with since the launch we have plans in place to make sure that there is more awareness generated we've seen some a weekly.

Highs even in October.

Relates to prescribing so were confident there and I think as there's more attention around the anticipation of a clear outcome study as we mentioned in our prepared remarks, the conversation that Dr. Foodie adds would steepness and that brought a lot of attention to what that study means for these two products to the second part of your first question.

Jen.

We know that we'll have some type of top line result in the first quarter of 2023.

And.

I think that's going to bring again, a tremendous amount of awareness and I do believe that will also create an inflection for us at that time of course, we would not be able to promote any of that information with our sales representatives, but that would be out in the public and I do think that would be an unprecedented event once we actually published.

That so with that I'll turn it over to Rick for the second part of the question. Thanks for taking the question.

Thanks, Mike.

So we acknowledge.

The need to raise additional capital I think everyone's doing the math, we've we've had.

Have a.

Our planned that.

We're moving forward on the first piece, obviously was two weeks ago aggressively managing our cash burn structure, we've put that in place.

We're going to continue to evaluate cost over.

The next.

Quarters over the quarters ahead, as we approach the clear outcomes.

Study and pull out additional costs.

The system if possible to further extend the runway.

In terms of bringing capital into the organization. We're evaluating all options that are ahead for the organization.

Traditional measures as well as.

Some of past transactions as we mentioned last week entered into a debt for equity exchange.

So we're focused on opportunistically.

Approaching.

Transactions evaluated transactions ones that may reduce debt.

And further improve our balance sheet. So we're.

We're we're cognizant of the cash need and we'll address that.

Our head.

Perfect. Thank you yes.

Our next question comes from Joseph Thome with Cowen Your line is open.

Good morning, and thank you for taking our questions. The first one just on sort of the impact of the outcomes data I guess right now in your conversations or are you encountering physicians that maybe won't use the drug until they see outcomes data or are there certain centers that won't use the drug until they see outcomes data or is it really just sort of awareness that wood.

That would spur adoption and then second point, maybe it's just as you compare I don't know if you have this information, but with what they actually think it was doing in Europe is it the same type of patient that seeing uptake in Europe and the U S are.

Are there any differences in sort of a when theyre getting mexicali Nichols.

Yes.

Yeah.

Thank you for the question with respect to the outcome study or resistance to utilizing next little and excellence that prior to that.

There are in general physicians do use the drug currently based on just an LDL indication I think our biggest resistance to not having outcomes data actually comes from the payers themselves.

And that has.

Been a challenge as they await the outcomes data I think there are probably some clinicians who also are awaiting outcome.

And looking at other alternatives as well.

Now the second to your second question with respect to differences on Daiichi Sankyo, and how they're looking at patient.

The label outside the U S is a bit broader than our label and does include in the label statin intolerant patients.

In outside the U S. There is a broader label, but in general as we look to utilization in the U S as well as outside the U S. Beyond that the patients are generally similar high risk.

S C B D patients who need additional LDL lowering.

And Eric if you want to add as well we have Eric Warren online.

Wonderful, Thanks, Sheldon and Joanne Yeah, and thanks for your question Joseph with regards to Cbot. So Joanne it's absolutely right I think there's four things that cbot does for us it expands the size of the population. It helps reduce the burden associated with prior authorizations, obviously it'd be really helpful from a guideline inclusion.

<unk> and to your point there are some clinicians still that until we have a hard outcome benefit arent willing to use the product so it'll unlocked for important doors for us.

That was very helpful. Thank you very much.

Our next question comes from Serge Belanger with Needham <unk> Company. Your line is open.

Hi, good morning.

A couple of questions for me the first one on payer coverage can you tell us if youre expecting changes in 2022 in terms of the level of coverage related to the step throughs and prior us and also whether we should expect any new coverage.

I know your Montana was a big win.

Earlier this year should we expect anything similar to that.

In 2022.

Hi, Serge. Thank you so much for your question so as it relates to coverage, we're always working with payers to.

Enhance our coverage we're always looking at our contracts, we're looking at ways to continually negotiate et cetera, but with that said in summary, we actually have terrific coverage, we have 95% commercial coverage for both of these products and from a Medicare perspective, we have 60% of our coverage and.

As you mentioned the biggest driver of that Medicare coverage was a win that we had in may with Humana.

Which is about $8 9 million eligible Medicare lives as we move into the into next year.

Currently all all of the if you will larger.

Medicare providers, we do have contracts with all of them. It's just a matter of them actually utilizing our contracts.

And typically what we hear is they wanted to see greater pull through or greater awareness of our products and utilization of our products. So what we're doing right now is really focusing on those Medicare providers, who have not yet engaged in the contracts that we have with them and really driving demand in those areas.

Where where they are.

We do have a plan to do that so it's really more of continuing the work that we're doing to generate uptake and awareness of these products, but from an overall coverage perspective, we do have favorable coverage and I'm again looking forward to further utilization of our products through these contracts.

Yeah.

Okay, Let me, let me squeeze in one more just.

In terms of Covid related impacts.

Obviously, it's been a significant headwind since you launched.

Can you.

Do you have any measure of.

With the current level of recovery is right now and when.

Do you think we could get back to normal if we ever get back to normal.

Yes.

Yeah, No I think that's I think that's the question everybody asks related to every business probably.

I do think that and this is more.

I think what I read in the news and probably what you hear is well Serge.

Think more and more what we're seeing is that Covid cases are decreasing throughout the United States children are going to be vaccinated. Soon I think that's going to be helpful. As well and I think we're confident that patient will continue to return back to their physician offices.

And essentially addressed their cardiovascular health.

We've been doing that that maybe some of you have noticed or not notice, but I'll say it now. So you will notice is we're putting it out there have you had your cholesterol numbers checked do you.

You know what your numbers are.

And we think this is important we're hoping this will gain traction so that people really understand what this what this means.

We did this the other day checking into for a meeting.

Our CFO here, Rick Bartram asked a few people checking us and do you know your cholesterol numbers and neither of them had had their cholesterol checked in two years and we've talked about the importance of that et cetera.

And I do think that it's just not top of mind because of Covid, but and I'll ask Joanne to comment as well as it relates to the environment for Covid, but.

I will say this and one of the reasons why we made the changes that we announced two weeks ago is that the new normal is the environment that we live in today and Thats, what we are adapting for it because that's going to be the long term environment that we'll have to operate from a business perspective.

Because COVID-19 is not going to go away and these will be the dynamics that we'll face in the pharmaceutical industry Joanne if you want to add anything.

You know for the last 18 months people have put their cardiovascular health on the back burner relative to Covid, but we're seeing now that people are beginning to come back patients providers refocusing on the preventive management, the non COVID-19 related medical condition, and we as an organization as Sheldon mentioned youre continuing to ing.

Increase awareness not only about our compounds, but also about the disease state and the importance of all of us knowing our cholesterol levels and having that urgency to treat it I think also we recognize that things may not return entirely to normal and that the new normal does incorporate a lot of digital approaches out.

Reach and so we are leveraging our novel digital technologies across our entire field facing organizations, including our medical organization to ensure that both patients and providers are aware of the importance of our therapies as well as the importance of modifying cholesterol.

Thank you.

Okay.

Next question comes from Jason Butler with JMP Securities. Your line is open.

Hi, Thanks for taking the questions a couple from from US. So first one just on the strategic fit.

<unk> financing options.

So to what extent is a U S partnership or some kind of co promote relationship.

Realistic scenario here or priority for you as you evaluate the alternatives.

And then on Europe can you just give us an update on where Dai ichi has from a reimbursement.

Perspective than what countries, we could see expansion of the launch two and 2022.

Great. So hi, Jason and thank you for your question related to strategic partner and we've been very consistent about this so we're always open to anyone that would be willing to help us get medicines quicker to physicians and therefore patients.

And this is a matter of folks approaching us and asking us.

If we'd be interested et cetera. So we're always open to listening as sort of as it relates to strategic partnerships, whether that be from a co promote perspective or an investment et cetera.

So just to state that as it relates to reimbursement in Europe. So again, just as a reminder, a daiichi sankyo launched both <unk> and <unk> in October and they're currently as we mentioned today in a press release 28000 patients.

<unk> now on therapy.

And not part of your question, but just wanted to state. This is that when you look at the use of PCF canines, which were launched almost about six years ago.

In total accumulation there is 28000 patients on PCF canine. So they essentially now have the same amount of patients on the <unk> gas franchise as PCF canine so really proud of their performance I know, they're really happy about it as well they were in a free market environment.

Up until about just recently in Germany, and as you know through Germany, you have to go through the <unk> process in order to gain pricing.

And they have been able to do that so it's a different type of reimbursement, they're not actually going through payers like we do here in the United States are going through this centralized health.

Health technology assessment, and Theyre through that and Theyre also through that in the U K with nice we'd actually had somewhat of a favorable review.

As far as launching in other markets.

I'll turn that over to Erik who sits on the joint commercialization sub team to talk about.

Any additional items that I may have missed.

Yeah, I think so but no I think you've covered it well I mean, obviously, Germany U K is the latest.

Endeavour and then obviously completing the ranks through the EU five and will be critical for our colleagues, but I just want to reinforce how how excellent and they've been doing from a patient uptake perspective and that is the strategy that we are following in the U S with regards to the appropriate sequencing.

Therapy.

And just one last aspect sorry, Jason I missed this as far as expansion to other markets. So this is typically what you see when you launch products in Europe, you go through that more defined HCA process of which Germany and the UK are the two most defined and now they'll move to Italy.

Spain, and France, those are a little bit more drawn out but they are in the two biggest markets right now and we can continue to update you over the next quarters.

Okay great.

Thanks Sheldon.

Thanks.

Our next question comes from Judah Frommer with credit Suisse. Your line is open.

Thanks for taking the questions first just a follow up on kind of timelines.

And marketability or around the C V O T. So in terms of maybe kind of unlocking those those four doors that you mentioned.

Do you do you need to wait for full results to kind of market the results to doctors and how and when can you start the conversation with payers and maybe with.

With the industry about changing prescription guidelines.

So Judah. Thank you for the question so with respect to unlocking the four points that Eric raised we can do a fair amount of work with payers prior to in fact.

Even publication of the results.

So they are in a privileged space that we can have those scientific exchanges present the data.

Well before in fact the publication.

Certainly from a promotional perspective, we the commercial team cannot promote until the label. However, our medical affairs team can leverage the tie in to well before that and be proactive and we would anticipate also with a variety of publications planned everything we would have a very robust.

Campaign that would through the medical and scientific exchange to do that prior to the actual label.

That makes sense and maybe I could just add maybe I could just add a couple of bullets as well and that is post the topline result, and again, we don't know anything about the study, but we have to operate and assume as though the study is robustly positive.

There'll be eventually a presentation of the data as Julian has mentioned previously and I want to remind everyone that Dr. Steven Nissen is the primary investigator of declare outcomes trial.

And I think you've seen in the past that Dr. Nissen is someone who is very passionate et cetera, and that will give us awareness again of the study and the result of the study even before it's within our label and that's that's very important as well. So this will be a very big opportunity for us.

To disseminate as much data as we can but again to Joanna point, our representatives will not be able to promote it but there's other ways that the information will be available to the public.

Got it.

Kind of on that topic I think you press released a few presentations at age or that are coming up. So kind of you know is that is that a new message is it more just an opportunity to see people I think in person again is the message changing.

Anyway, as you kind of get back out there at medical meetings.

Yes, so judy thank you so we do have.

Free sponsored abstracts at the American Heart Association, which is one of the largest cardiovascular congresses.

Globally in.

In addition, there was a very significant amount of non sponsored work regarding.

Ben but delek asset next Matala next was that I think the nice thing about all of these is that the science actually reinforces the utility of the therapies. It also highlights that there are unique individuals.

And responses that are actually well above where our current label is so.

So scientifically I think that helps clinicians figure out which patients they should be focusing on and the efficacy and safety of the compound in in other populations will continue to do that not only are we presenting at the American heart, we're presenting in multiple other congresses, including diabetes Congress.

Cardiovascular outcome Congresses. So continue to have a very robust publication and scientific platform to continue to support these compounds.

Thanks.

Our next question comes from Jessica Fye with Jpmorgan. Your line is open.

Hey, guys. Good morning, Thanks for taking my questions.

Three for me.

First you said continuing to observe positive momentum.

Metrics can you just elaborate on which commercial metrics you view as the key ones at this stage I can go into more detail.

Secondly, you alluded to potentially pulling out further costs going forward beyond what you've already outlined the big update a few weeks back.

And can you provide a little more color there.

You're thinking of.

So.

The gross to net discounts at least what we calculated this year have been running at north of 50% all year, so with the buyback.

Pay card program I know you talked about improvement.

How about gross.

Gross to nets, not long term, but rather than in 2022, as we think about the revenue that lineup with Opex guidance you provided for next year. Thank you.

Good morning, Jess Hi, let me to address your first question as it relates to metrics and positive metrics in how we're measuring those et cetera, I'm going to turn it over to Eric to have comment.

Wonderful. Thanks, Thanks, Sheldon I think Jessica and yeah.

Key metrics that we're looking at well, there's a lot of metrics that we're looking at but a few that pop out.

The number of weekly prescriptions, new Rx as well as T. Rx are critical for us.

Looking at the number of prescribers that we have there is also a critical metric looking at the depth of prescribing. So as we migrate into this new focus with an 80 person personal promotion footprint, we've really increased our focus on those prescribers so depth.

Prescribing is going to be really critical.

To us Oh.

Hey, rich.

Frequency metrics are important to us as well.

We're somewhere in the seven to eight calls per day.

And we were able to achieve somewhere in the neighborhood of 60% to 65% reach on our targets. So these are metrics that jump off as being critical and ones that are monitoring on a regular basis.

Thanks Harry.

Yeah. So so jess thanks for the questions. So in terms of the costs as I mentioned I think.

How you should think about that is.

One.

We aggressively manage the cost two weeks ago with right sizing the organization, which we do believe is right for the environment.

We have a historical mentality of interrogating all the costs that we have in our budgeted plan and if there is opportunity to further optimize costs without hurting the business or the trajectory of the brands, we're definitely going to do that.

In terms of gross to net discounts.

We're pleased with the improvements that we've made this year and in net price a couple of factors for next year key a key piece is volume growth as we highlighted in our prepared remarks.

As volumes increase we do expect that there's going to be improvement in net price.

But we're we're obviously.

<unk>.

<unk> and managing our gross to net costs and to the extent that we can improve those we will continue to do so.

Yeah.

Thank you.

Okay.

Our next question comes from Tom Shrader with <unk>. Your line is open.

Hi, good morning.

Related question, maybe a little more pointed can you give us a sense of how much it will cost to finish clear outcomes is that the majority of R&D.

Yeah. Thanks, Tom Yeah. So so it is if you look at the income statement.

For for this year.

<unk> associated in the R&D line are predominantly cost associated with clear outcomes, either direct or indirect costs associated with with the completion of that study and in the Opex guidance for next year, which we put out.

That is the same sort of case that is principally for the completion of clear outcomes and obviously as that study closes out.

We approached topline results the R&D expense for the organization is going to drift okay. Okay and then.

The prior off comments surprised me a little bit I thought based on your negotiated price you didn't have a big issue with prior off has something changed or were you simply stepping through the easier.

Payers first just whats going on to make prior offs.

An issue where you have to address it like this.

Eric do you want it yeah.

The prior ups are pretty common for branded products that are in an otherwise generic category. So no. Prior authorizations have been a regular player for us you'll recall in the past, though that we had that a copay card that was providing providing that full buy down for commercial.

<unk> potential.

Potentially circumventing the whole prior authorization process are negatively impacting our net price. So that's probably why you didn't hear as much about it in the past.

But prior authorizations and are definitely a common thread for branded products in our categories.

I do fully anticipate that the prescription support program will go a long way.

We will go a long way, we're already seeing some momentum and then ultimately cbot will help us ease the burden.

Great. Thanks.

Our next question comes from Jeff Hung with Morgan Stanley. Your line is open.

Thanks for taking the questions.

Any update on negotiations with Oberland on waiving the <unk> requirements for the $50 million and then are there specified net revenue requirement in the upcoming quarters for any of the remaining $104 million in cash and equivalents.

Yes, So let me start with this and I'll turn it over to Rick. So overland is a partner of ours and we work very actively with them we were always in discussions with them.

And we will continue to work with them, but I think it's important to know that.

All of US want the same thing we want to continued success of the organization, we want to reach to the conclusion of the clear outcomes trial and.

Therefore.

The partnership just continues to work on.

What we need to do in order to be successful and satisfy requirements of the agreement.

Yes, Jeff. This is this is Rick.

The the $15 million net U S threshold.

And that is that is the.

Revenue covenant that we are.

Related to the agreement and we're looking forward to satisfying our obligations under that agreement and growing net sales.

Yes.

So there are there are specified net revenue requirements for upcoming quarters or was it just that wasn't just a one time thing was it.

It was the $15 million per quarters ahead.

I see okay, and then what is the size of the milestone that you owe it to go when you achieve the primary mace and the outcome study and can you talk about the timing of that payment and whether there's any flexibility around that.

Well for the for the Otsuka agreement we.

We don't Otsuka any funds.

Would have a milestone payment to experian.

Upon the achievement of the cardiovascular outcomes trial and incorporation into the to the U S label that one is similar to the Dai Ichi agreement, where we have up to $50 million payable to xperia.

Okay. So theres no milestones you have to pay anyone.

I will now come study is completed.

No no all of the all of the milestones that we have tied to the outcomes study are payable milestones to experian from our partners.

Okay, great if I could sneak one last question Cogs came in a little bit higher in <unk> than before what do you attribute this to and should we view the higher Cogs as the new run rate or more of a onetime thing.

But we also have thanks, Jeff So we also have.

Supply.

Revenue to our partners.

That has an appropriate cogs.

Associated with that so if you're if you're looking at a pure net comparison to U S. Net revenue you do have to factor in supply cost.

Related to our partners there.

Thank you.

Our next question comes from Paul Choi with Goldman Sachs. Your line is open.

Thank you good morning, and thanks for taking our questions.

One modeling question for us as we think about our near term forecast switches.

I think the third party data sources like <unk> suggested that your prescription volumes grew low single digit percentage versus the 10% you reported here for the quarter.

So can you maybe just clarify if with the sales force changes or if there's any been any changes with regard to third party data reporting.

Just as we think about our models on the forward here and then I had a follow up question.

Hi, Paul Yes, I'm not aware of any changes as it relates to our third party data.

I think that's the best I can I can answer that.

We haven't been alerted to anything so.

What we're seeing is what we're seeing so it's been and it's been consistent.

Okay. Thanks for that and then one for Joanne pushes with the.

With 80% of events now accrued for the outcomes trial.

I would suspect youre in a pretty good position. If you were to take an interim look to have a sense of what <unk>.

But delek asset is doing here versus versus the control arm. So I wanted to just ask you and the team and what your thoughts are on potentially unwinding. The study earlier, just given us a high event accrual rate.

Versus the 2023 first quarter plan and potentially.

Our accelerated timeline for the outcomes data released them potentially applying it to the label.

Yeah. So thank you for the question at this at this time, we would not be looking for an interim look it's as we would have to spend to alpha.

Where that end and potential power of the study.

We are quite pleased however that with where we are tracking for events. In fact, it's 80% was achieved earlier than the anticipated December so right. Now we are leading this study run its course and to maintain the full integrity and power of the study.

And.

No intention of unblinded. However, we are quite pleased with this tracking a bit ahead, and we're doing everything in our power to pull this study and as early as possible, which includes really pushing timelines accelerating those timelines to the best of our ability.

Okay. Thank you very much.

Yes.

Thank you for participating in today's conference call. This does conclude the program and you may now disconnect everyone have a great day.

[music].

Ladies and gentlemen, thank you for standing by and welcome at this time all participants.

Following the presentation there'll be a question answer session.

Please be advised that today's conference call maybe recorded.

And the conference call over to Dan Church, Investor Relations and corporate Communications at Experian. Please go ahead Sir.

Thank you operator, good morning, and welcome to the Spirit <unk> third quarter 2021 financial results and company update conference call I've been church, and I'm responsible for Investor Relations and corporate communications here at Experian.

We're 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. This morning detailing the content of today's call a copy can be found at www Dot Experian dot com within the investors and media section. We will begin with prepared comments and then open the call for your questions. Following today's call the team will be.

For follow up questions. Please email corporate team at Experian Dot com to schedule time to speak with our team with US today are Sheldon canine president and see all the Sperry on Rick Bartram, Chief Financial Officer of Experian, Dr. Joanne Foodie, our Chief Medical Officer, and Eric Warren our head of sales and marketing I'll now turn the call over to Sheldon for prepared remarks.

Sheldon.

Thanks, Pat and good morning, everyone. Thank you for joining us today to review our progress on our recent business updates the spirit I am pleased to share all the significant strides taken by our team over these past months to position ourselves for long term success as a nimble and innovative organization dedicated to addressing cardiovascular.

<unk> disease, which remains the number one killer in the United States and worldwide.

As a reminder, we recently announced a transformative long term growth plans to strengthen the organizational structure and internal processes of the company to facilitate better alignment with the current health care environment and the constraints driven by the ongoing COVID-19 pandemic.

We believe that the changes we are implementing will enhance our ability to more efficiently deliver consistent growth in the near term and prepare us to scale up opportunistically in the future.

I am also thrilled to announce that last week, we reached 80% of the required major adverse cardiac events accumulation signifying that the study is tracking in line with expectations.

We recently held an investor facing fireside chat with the re now Doctor. Stephen Just then who is the lead investigator and declare outcomes trial, who affirmed his confidence in the quality of the trial that our team has kept on target all throughout the pandemic.

Given the concentrated nature of our existing customers, we expect to retain the vast majority of our current prescription volume with this new plan focused on the 80 core territories that drive 90% of our prescription volume supported by increased utilization of non personal promotion, where these additive tools, we will look to one <unk>.

<unk> integrated delivery networks that partnering with key opinion leaders at the top institutions recognized for their comprehensive cardiac care centers to drive interactions with the top 10000 accessible providers, most likely to prescribe our medicines and three support peer to peer education and scientific exchange through proven very.

Sure forums and medical meetings.

In the weeks ahead, we will continue to implement and execute these strategies along with those complementary initiatives, we put in place during the third quarter.

As we stated on October 18th there are two headwinds that led to an expert in Mexico that prescription growth of 10% during the third quarter.

Adequate access to Hcp's and prior authorizations.

We believe the Salesforce streamlining efforts to focus on only the most effective territories and ramp in utilization of supplementary non personal promotion tactics already underway are intended to address this first factor while our prescription support program with assembly that was introduced in August will help alleviate the prior authorization burden.

Physicians previously avoided with a full buy downs copay card.

This prescription support program will allow physicians to eat prescribed next football and therefore that to a centralized pharmacy that processes. Prior authorization easiest patient access and now with the medicine directly to the patient within a few days.

On the Medicare side, we continued to see payer coverage prescription volumes increase as pull through of our contracts improve especially given the humana win earlier this year.

Even with shifts in patient volume mix third quarter net price remained stable quarter over quarter, and we continue to expect additional positive impact of net pricing overtime as our plants fully implement coverage of next football and excellence that and volume scale up.

Now I will turn it over to Rick to provide comments on our quarterly financial performance.

Thanks, Sheldon earlier today, we issued a press release containing our financial results for the third quarter, which is available on our investor website.

U S net product revenue was $10 $9 million for the third quarter compared to $3 $3 million generated in the third quarter of 2020, and $10 6 million in the second quarter of this year.

Total revenue for the third quarter was $14 4 million, which included $1 $2 million in royalty revenue from our partner Daiichi Sankyo.

Over time, we expect our net price to continue to improve as plants fully implement coverage and volumes scale up.

Unexpected R&D expense for the third quarter totaled approximately $25 $3 million flat compared to the second quarter.

SG&A expense was approximately $39 3 million for the third quarter down 15% from the second quarter.

A sequential decline in SG&A expense was driven predominantly by cost reduction initiatives as we optimize the organizational structure.

As such we revised down our expected full year 2021, R&D expenses to be between $110 million to $115 million and SG&A expenses to be between $195 million to $200 million.

Looking ahead to next year, we expect 2022, R&D expenses to be between $100 million to $110 million and SG&A expenses to be between $120 million to $130 million.

As you can see we plan to maintain our R&D spend levels into next year as we continued to support the clear outcomes trial.

These estimates are inclusive of approximately $25 million of noncash stock based compensation expense expected to be incurred next year.

Our cash balance as of September 30 was approximately $154 million last week, we took the first step in creating a more advantageous capital structure by announcing a debt to equity exchange on our convertible notes.

We are confident that this decision provides the company with additional flexibility for potential future financing opportunities.

As you can see we remain steadfast on diligently managing our cash needs to support the crucial clear outcomes trial and the continued commercial launch of <unk> and <unk> and.

By maintaining this focus we're confident our financial position will continue to strengthen throughout the remainder of the year.

With that I'll turn it back to Sheldon for closing remarks.

To bring additional funding into the organization to support our unprecedented clear outcome study, which we believe when successful what was driving the inflection in awareness and adoption of Netflix Hulu and Netflix at <unk>.

Last week, we took the first steps in better positioning our capital structure for this next step in.

In all our actions will enable us periodically to effectively compete in the attractive cardiovascular market and positioning itself as a long term leader in cardiovascular disease prevention.

This is why you should be excited too.

We remain committed to our mission of making lipid management accessible and convenient for all patients and driving greater public awareness to monitor lipids and talk to their doctors about lipid management.

If you would like to ask a question. Please press Star then one if your question has been answered and you'd like to remove yourself from the queue press the pound key.

Our first question comes from Michael Yang with Jefferies. Your line is open.

Hi, Good morning, Thank you guys for the update and for all the color.

Particularly on the on the new guidance.

To reduce costs I had a two part question one was maybe first Sheldon just.

[noise] trajectory wise do you expect that.

The franchise will be a modestly growing franchised until we get to.

The outcomes result, and presumably you're possibly even until a formal label change can you maybe just describe how you expect the trajectory over the next one to two years and how the shape of that curve looks like and then secondly.

Maybe for the team related to that then again I think I'll just do some simple math, but looking at where the cash is now looking at the new guidance can you describe how youre thinking about various.

Capital access opportunities and what those might look like maybe describe some of the different things you could you can.

You can look at to help the balance sheet. Thank you so much.

Great. So first of all good morning, and thank you Mike for your question I'll start off and then turn it over to Rick So as it relates to the growth of course, we have not given any type of formal guidance as it relates to growth, but we do know that you know we showed the 10% growth from second quarter to third quarter, and we know that.

We can do better and we know we can do better based upon the way that we're moving forward. We know that these 80 representatives that we've retained still cover about 90% of our existing business and we think with the addition of our non personal promotion.

And also with the fact that we're also using a bit of.

Crow assistance as well that we can definitely continue to exhibit growth and I think thats beyond the 10% that we showed.

For this quarter I do think that the.

Hi is even in October as it relates to prescribing so were confident there and I think as there's more attention around the anticipation of a clear outcome study as we mentioned in our prepared remarks, the conversation that Dr. Food, He had which Steve Nissen that brought a lot of attention to what that study means for these two products.

To the second part of your first question.

We know that we'll have some type of top line result in the first quarter of 2023.

And you know I think that's going to bring again, a tremendous amount of awareness and I do believe that will also create an inflection for us at that time of course, we would not be able to promote any of that information with our sales representatives, but that would be out in the public and I do think that would be an unprecedented event once we.

Actually publish that so with that I'll turn it over to Rick for the second part of the question. Thanks for taking the question.

Mike Yes, so so we acknowledge.

The need to raise additional capital I think everyone's doing the math, we've we've had.

Have a.

Our planned that.

We're moving forward on the first piece, obviously was two weeks ago aggressively managing our cash burn structure, we've put that in place.

We're going to continue to evaluate costs over.

The next.

Orders over the quarters ahead, as we approach the clear outcomes.

The study and pull out additional costs within the system if possible to further extend the runway.

In terms of bringing capital into the organization. We're evaluating all options that are ahead for the organization.

Traditional measures as well as.

Some of past transactions as we mentioned last week entered into a debt for equity exchange.

So we're focused on opportunistically.

Approaching transactions evaluated transactions ones that may reduce debt.

And further improve our balance sheet. So we're.

We're we're cognizant of the cash need and we'll address that.

Our head.

Perfect. Thank you guys.

Our next question comes from Joseph Thome with Cowen Your line is open.

Hi, there good morning, and thank you for taking our questions. The first one just on sort of the the impact of the outcomes data I guess right now in your conversations or are you encountering physicians that maybe won't use the drug until they see outcomes data or are there certain centers that won't use the drug until they see outcomes data or is it really just sort of awareness that wood.

That would spur adoption and then second point, maybe just as you compare I don't know if you have this information, but with what they do you think it was doing in Europe is it the same type of patient that seeing uptake in Europe and the U S are.

Are there any differences in sort of a when theyre getting mexicali Nicholas.

So thank you for the question with respect to the outcome study or resistance to utilizing next photonics was that prior to that.

Is there are in general physicians do use the drug currently based on just an LDL indication I think our biggest resistance to not having outcomes data actually comes from the payers themselves.

And that has.

It's been a challenge as they await the outcome data I think there are probably some clinicians who also are awaiting outcome.

And looking at other alternatives as well.

Now the second to your second question with respect to differences on Daiichi Sankyo, and how they're looking at patient.

The label outside the U S is a bit broader than our label and does include in the label statin intolerant patients.

So in outside the U S. There is a broader label, but in general as we look to utilization in the U S as well as outside the U S. Beyond that the patients are generally similar high risk.

CBD patients who need additional LDL lowering.

And Eric if you want to add as well we have Eric Warren online.

Wonderful yeah, Thanks, Sheldon and Joanne Yeah, and thanks for your question Joseph with regards to Cbot. So Joanne it's absolutely right I think there's four things that cbot does for us it expands the size of the population. It helps reduce the burden associated with prior authorizations, obviously it'd be really helpful from a guideline inclusion purse.

<unk> and to your point there are some clinicians still that until we have a hard outcome benefit arch are willing to use the product so it'll unlocked for important doors for us.

That's very helpful. Thank you very much.

Our next question comes from Serge Belanger with Needham and company. Your line is open.

Hi, good morning.

A couple of questions for me the first one on payer coverage can you tell us if youre expecting any changes in 2022 in terms of the level of coverage related to the step throughs and prior us and also whether we should expect any new coverage.

I know your Montana was a big win.

Earlier this year should we expect anything similar to that.

In 2022.

Hi, Serge. Thank you so much for your question so as it relates to coverage, we're always working with payers to.

As you mentioned the biggest driver of that Medicare coverage was a win that we had in may with Humana.

Which is about $8 9 million eligible Medicare lives as we move into the into next year.

Currently all all of the if you will larger.

Medicare providers, we do have contracts with all of them. It's just a matter of them actually utilizing our contracts.

Where where they are.

Again looking forward to further utilization of our products through these contracts.

Okay, Let me, let me squeeze in one more.

Just in terms of Covid related impacts.

Obviously, it's been a significant headwind since you launched.

Can you.

Do you have any measure of.

With the current level of recovery is right now and when do.

Do you think we could get back to normal if we ever get back to normal.

Yeah, No I think that's I think that's the question everybody asks related to every business probably.

I do think that and this is more.

I think what I read in the news and probably what you hear is well Serge.

More and more what we're seeing is that Covid cases are decreasing throughout the United States children are going to be vaccinated. Soon I think that's going to be helpful. As well and I think we're confident that patients will continue to return back to their physician offices.

And essentially addressed their cardiovascular health.

We've been doing that that maybe some of you have noticed or not know this but I'll say it now. So you will notice is we're putting it out there of have you had your cholesterol numbers check.

Do you know what your numbers are and we think this is important we're hoping this will gain traction so that people really understand what this what this means.

We did this the other day checking into for meeting our CFO here, Rick Bartram asked a few people checking us and do you know your cholesterol numbers and neither of them had had their cholesterol checked in two years and we've talked about the importance of that et cetera.

And I do think that it's just not top of mind because of Covid, but and I'll ask Joanna to comment as well as it relates to the environment for Covid, but I.

I will say that and one of the reasons why we made the changes that we announced two weeks ago is that the new normal is the environment that we live in today and that's what we are adapting for it because that's going to be the long term environment that we'll have to operate from a business perspective.

Because COVID-19 is not going to go away and these will be the dynamics that we'll face in the pharmaceutical industry and Joanna it's worth it.

Add anything.

Thank you for the last 18 months people have put their cardiovascular health on the back burner relative to Covid, but we're seeing now that people are beginning to come back patients providers refocusing on the preventive management, the non COVID-19 related medical condition, and we as an organization as Sheldon mentioned Youre continuing to.

Reach and so we are leveraging.

Novel digital technologies across our entire field facing organizations, including our medical organization to ensure that both patients and providers.

The importance of our therapies as well as the importance of modifying cholesterol.

Thank you.

Our next question comes from Jason Butler with JMP Securities. Your line is open.

Hi, Thanks for taking the questions a couple from from US. So first one just on the strategic and.

Financing options.

So to what extent is a U S partnership or some kind of co promote relationship a.

Realistic scenario here or priority for you as you evaluate the alternatives.

And then on Europe can you just give us an update on where <unk> is from a reimbursement perspective, and what countries. We could see expansion of the launch two and 2022.

A matter of folks approaching us and asking us.

You know if we'd be interested et cetera. So we're always open to listening as sort of as it relates to strategic partnerships, whether that be from a co promote perspective or an investment et cetera.

So just to state that as it relates to reimbursement in Europe. So again, just as a reminder, a daiichi sankyo launched.

Both <unk> and <unk> in October.

And they're currently as we mentioned today in a press release 28000 patients now on therapy and not part of your question, but just wanted to state. This is that when you look at the use of PCF canines, which were launched almost about six years ago.

In total accumulation Theres 28000 patients on PCF canine. So they essentially now have the same amount of patients on the <unk> gas and franchise as PCF canine. So really proud of their performance I know, they're really happy about it as well they were in a free market environment.

Up until about just recently in Germany, and as you know through Germany, you have to go through the <unk> process in order to gain pricing.

And they have been able to do that so it's a different type of reimbursement, they're not actually going through payers like we do here in the United States are going through this centralized.

Health technology assessment, and Theyre through that and Theyre also through that in the U K with nice would actually had somewhat of a favorable review.

As far as launching in other markets.

I'll turn that over to Erik who sits on the joint commercialization sub team to talk about.

Any additional items that I may have missed.

Yeah, I think so but no I think you've covered it well I mean, obviously, Germany U K is the latest.

Endeavour and then obviously completing the ranks through the EU five and will be critical for our colleagues, but I just want to reinforce how how excellent they've been doing from a patient uptake perspective and that is the strategy that we are following in the U S with regards to the appropriate sequencing.

RFP.

Spain, and France, those are a little bit more drawn out but they are in the two biggest markets right now and we can continue to update you over the next quarters.

Okay great.

Thanks, Charlie.

Thanks.

Our next question comes from Judah Frommer with credit Suisse. Your line is open.

Thanks for taking the questions first just a follow up on kind of timelines.

Marketability or around the cbot. So in terms of maybe kind of unlocking those those four doors that you mentioned.

Do you do you need to wait for full results to kind of market the results to doctors and how and when can you start the conversation with payers and maybe with the industry.

History about changing prescription guidelines.

So Judy Thank you for the question so with respect to unlocking the four points that Eric raised we can do a fair amount of work with payers prior to in fact.

Even publication of the result.

So they are in a privileged space that we can have those scientific exchanges present the data.

Well before in fact the publication.

Certainly from a promotional perspective, we the commercial team cannot promote until the label. However, our medical affairs team can leverage this tie in to well before that and be proactive. We would anticipate also with a variety of publications planned everything we would have a very robust.

The campaign that was through the medical and scientific exchange to do that prior to the the actual label.

That makes sense and maybe I could just add maybe I could just add a couple of bullets as well, Matt as post the topline results and again, we don't know anything about the study, but we have to operate and assuming the study is robustly positive there'll be eventually a presentation of the data as Joanne as mentioned previously and I want to remind everyone.

One.

Dr. Stephen Nissan is the primary investigator of declare outcomes trial.

To disseminate as much data as we can but again to Joanne to point, our representatives will not be able to promote it but there's other ways that the information will be available to the public.

Got it thank you.

Kind of on that topic I think you press released a few presentations at age here that are coming up so kind of you know is that is that a new message is it more just an opportunity to see people I think in person again is the message changing.

Anyway, as you kind of get back out there at medical meetings.

Yes, so judy thank you so we do have.

Three sponsored abstracts at the American Heart Association, which is one of the largest cardiovascular congresses.

Globally in.

In addition, there was a very significant amount of non sponsored work regarding.

Benzoic acid next little index was that I think the nice thing about all of these is that the science actually.

Reinforces the utility of the therapies. It also highlights that there are unique individuals and.

And responses that are actually well above where our current label it so.

So scientifically I think this helps clinicians figure out which patients they should be focusing on and the efficacy and safety of the compound in in other populations will continue to do that not only are we presenting at the American heart, we're presenting in a multiple other congresses, including diabetes Congresses.

Cardiovascular outcome Congresses. So continue to have a very robust publication and scientific platform to continue to support these compounds.

Thanks.

Our next question comes from Jessica Fye with Jpmorgan. Your line is open.

Hey, guys. Good morning, Thanks for taking my questions.

Three for me.

First you said continuing to observe positive momentum in.

Key commercial metrics can you just elaborate on which.

Commercial metrics do you view as the key ones at this stage of launching go into more detail on how they're looking.

Greg you alluded to potentially pulling out further costs going forward beyond what you've already outlined this big update a few weeks back.

Can you provide a little more color there on what youre.

Thinking of and third the gross to net discount at least what we calculated this year, it's been running at north of 50% all year, so with the buy down.

Pay card program I know you talked about improvement.

Hi.

Gross to nets, not long term, but rather than in 2022, as we think about the revenue that lineup with that Opex guidance you provided for next year.

Good morning, Jess Hi, let me to address your first question as it relates to metrics and positive metrics in how we're measuring those et cetera, I'm going to turn it over to Eric to have comment.

Wonderful. Thanks, Thanks, Sheldon I think Jessica and yeah, there's a few.

Key metrics that we're looking at well, there's a lot of metrics that we're looking at but a few that pop out.

A number of weekly prescriptions, new Rx as well as T. Rx are critical for us.

Looking at the number of prescribers that we have is also a critical metric looking at the depth of prescribing. So as we migrate into this new focus with an 80 person personal promotion footprint, we've really increased our focus on those prescribers of depth.

Ascribing is going to be really critical.

To us either.

Hey, rich.

Frequency metrics are important to us as well.

We're somewhere in the seven to eight calls per day.

And we were able to achieve somewhere in the neighborhood of 60% to 65% reach on our targets. So these are metrics that jump off as being critical and ones that are monitoring on a regular basis.

Thanks Harry.

Yeah. So so jess thanks for the questions. So in terms of the costs as I mentioned I think.

How you should think about that is.

One.

We aggressively managed the cost two weeks ago with right sizing the organization, which we do believe is right for the environment.

We have a historical.

Mentality of interrogating all the costs that we have in our budgeted plan and if there is opportunity to further optimize costs without hurting the business or the trajectory of the brands, we're definitely going to do that.

In terms of gross to net discounts.

We're pleased with the improvements that we've made this year and in net price a couple of factors for next year.

A key piece is volume growth as we highlighted in our prepared remarks as volumes increase.

We do expect that there's going to be improvement in net price.

But we're we're obviously aggressively evaluating and managing our gross to net costs and to the extent that we can improve those we will continue to do so.

Okay.

Thank you.

Okay.

Our next question comes from Tom Shrader with BTG. Your line is open.

Hi, good morning.

Related question, maybe a little more pointed can you give us a sense of how much it will cost to finish clear outcomes is that the majority of R&D.

Yeah. Thanks, Tom Yeah. So so it is if you look at the income statement.

For for this year the cost associated in the R&D line are predominantly cost associated with clear outcomes, either direct or indirect costs associated with with the completion of that study and in the Opex guidance for next year, which we put out.

That is the same sort of case that is principally for the completion of clear outcomes and obviously as that study closes out.

And we approached topline results the R&D expense for the organization is going to drive okay. Okay and then.

Payers first just whats going on to make prior offs.

An issue where you have to address it like this.

Eric do you want it yeah.

The prior up to a pretty common for branded products that are in an otherwise generic category. So no. Prior authorizations have been a regular player for us you'll recall in the past, though that we had that a co pay card that was providing providing that full buy down for commercial.

Patients and potentially circumventing the whole prior authorization process are negatively impacting our net price. So that's probably why you didn't hear as much about it in the past.

But prior authorizations and are definitely a common thread for branded products in our categories I do fully anticipate that the prescription support program will go a long way.

We'll go a long way and we're already seeing some momentum and then ultimately cbot will help us.

The Burton.

Great. Thanks.

Yes.

Our next question comes from Jeff Hung with Morgan Stanley. Your line is open.

Thanks for taking the question.

Any update on negotiations with Oberlin on waiving, the <unk> requirements for the $50 million and then are there specified net revenue requirement in the upcoming quarters for any of the remaining $104 million in cash and equivalents.

Yes, So let me start with this and I'll turn it over to Rick. So overland is a partner of ours and we work very actively with them we were always in discussions with them.

And we will continue to work with them, but I think it's important to know that.

All of US wants the same thing we want to continued success of the organization, we want to reach to the conclusion of the clear outcomes trial and.

Therefore.

The partnership just continues to work on.

What we need to do in order to be successful and satisfy requirements of the agreement.

And Jeff. This is this is Rick.

The the $15 million net U S threshold.

That is that is the.

Revenue covenant that we are.

Related to the agreement and we're looking forward to satisfying our obligations under that agreement and growing net sales.

Yes.

So then are there specified net revenue requirements for upcoming quarters or was it just that wasn't just a one time thing was it.

It was the $15 million for quarters ahead.

I see okay, and then what is the size of the milestone that you owe it to go when you achieve the primary mace in the outcome study and can you talk about the timing of that payment and whether there's any flexibility around that.

Well for the for the Otsuka agreement we.

We don't owe otsuka any funds they would have a milestone payment to experian.

Upon the achievement of the cardiovascular outcomes trial and incorporation into the to the U S label that one is similar to the Dai Ichi agreement, where we have up to $50 million payable to <unk>.

Okay. So theres no milestones that you have to pay anyone when will now come study is completed.

No no all of the all of the milestones that we have tied to the outcome study are payable milestones to experian from our partners.

Okay, great if I could sneak one last question and Cogs came in a little bit higher in <unk> than before what do you attribute this to and should we view the higher Cogs as the new run rate or more of a onetime thing.

But we also have thanks, Jeff So we also have.

Supply.

Our revenue to our partners.

That has an appropriate cogs.

Associated with that so if you're if you're looking at a pure net comparison to U S. Net revenue you do have to factor in supply cost.

Related to our partners there.

Thank you.

Our next question comes from Paul Choi with Goldman Sachs. Your line is open.

Thank you good morning, and thanks for taking our questions.

One modeling question for us as we think about our near term forecast switches.

I think the third party data sources like <unk> suggested that your prescription volumes grew low single digit percentage versus the 10% you reported here for the quarter.

So can you maybe just clarify if with the sales force changes or if there's any been any changes with regard to third party data reporting.

Just as we think about our models on the forward here and then I had a follow up question.

Hi, Paul Yes, I'm not aware of any changes as it relates to our third party data.

I think thats the best I can I can answer that.

We haven't been alerted to anything so.

What we're seeing is what we're seeing so it's been and it's been consistent.

Okay. Thanks for that and then one for Joanne pushes with fee.

With 80% of events now accrued for the outcomes trial.

I would suspect you're in a pretty good position. If you were to take an interim look to have a sense of what <unk>.

<unk> acid is doing here versus versus the control arm. So how would you just ask you and the team you know what your thoughts are on potentially unwinding. The study earlier just given the high.

Event accrual rate.

Versus the 2023 first quarter plan and potentially.

Our accelerated timeline for the outcomes data released on potentially applying it to the label.

Yeah. So thank you for the question at this at this time, we would not be looking for an interim look it's as we would have to spend to alpha.

Where that end and potential power of the study.

And.

No intention of UN blinding. However, we are quite pleased with this tracking a bit ahead, and we're doing everything in our power to pull this study and as early as possible, which includes really pushing timeline accelerating those timelines to the best of our ability.

Okay. Thank you very much.

Yes.

Thank you for participating in today's conference call. This does conclude the program and you may now disconnect everyone have a great day.

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