Q3 2022 Esperion Therapeutics Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome at this time all participants are in a listen only mode. Following the presentation. There will be a question and answer session. Please be advised that today's conference call them either cold. It I would now like to hand, the conference over to Tiffany algae.
Associate director of corporate communication at Experian. Please go ahead.
Good morning, and welcome to a theory on third quarter 2022 financial results and company update conference call I'm, Tiffany Aldrich and I'm part of the corporate communications team here at Spirit Yun.
I want to remind callers that the information discussed on the call today is covered under the safe Harbor provisions of the private Securities Litigation Reform Act I caution listeners that management will be making forward looking statements.
Actual results could differ materially from those stated or implied by our forward looking statements due to risks and uncertainties associated with the business.
These forward looking statements are qualified in their entirety by the cautionary statements contained in today's press release, and our SEC filings. The content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast November <unk> 2022, we under.
Take no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this conference call and webcast.
As a reminder, this conference call and webcast are being recorded and archived we issued a press release. This morning detailing the content of today's call. A copy can be found at www Dot is theory on 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 for follow up questions. Please.
Please email corporate team at Experian Dot com to schedule, a time to speak with the team.
With us today are Sheldon Kenney, President and CEO , Dr. Joanne Foodie, Chief Medical Officer, Eric Warren Chief Commercial Officer, B, J Swartz, Chief strategy Officer, and Ben Holiday from our Finance Department I'll now turn the call over to Sheldon for some prepared remarks Sheldon.
Thank you Tiffany and good morning, everyone. Thank you for joining us today to review our recent progress in the third quarter of 2022 and reaffirm our goals for the remainder of the year.
This is an exciting time for spirit as we focus on clear outcomes.
Tire organization is working diligently on executing quality site closeout and ensuring accurate data collection.
In October 2022, we completed the last patient last visit in the study which is another important milestone and we are on track to report a brief topline announcement in January 2023.
We are targeting to present for all comprehensive results with Dr received methane the lead investigator of clear outcomes at the American College of Cardiology 70, <unk> annual scientific session in March 2023, while.
While we await the results of clear outcomes.
<unk> on our promise to drive consistent growth, while maintaining organizational efficiencies.
U S net product revenue grew 28% year over year to $14 million in Q3, 2022, while selling general and administrative expenses were lower by 36% year over year.
Additionally, we have reduced spend by $74 million in operating cash thus far in 2022 compared to the same period in 2021.
It's periodic continues to operate with a limited commercial footprint following last year's reorganization as we anticipate our commercial spend having a greater impact after the full data readout.
This quarter. We are also pleased to announce that temperature like asset was recommended as an important oral non statin therapy for LDL cholesterol lowering by the American College of Cardiology.
This APC recommendation reflects an important management strategy for individuals with <unk> and underscores the value of using export top index was at achieved LDL cholesterol bowls in high risk patients.
The clear path one pediatric clinical trial began activating tightened in August 2022 clear paths. One is a phase II clinical trial investigating <unk> in patients six to 17 years of age with heterozygous familial hypercholesterolemia.
Our partner Daiichi Sankyo continues to report strong Orlando and extend the growth in your European territory and have treated over 64400 patients in August .
Thank you. Thank you also presenting new data at the European Society of Cardiology Congress in August from a multinational prospective observational study to answer really demonstrating a persistent need among eligible patient population to obtain guideline recommended LDL cholesterol level.
Simulation study results further indicate that the addition of <unk> assets Unprofitably, Denmark could result in significantly more patients achieving recommended LDL cholesterol goal potentially reducing their risk of cardiovascular events.
Finally, we are pleased to invite you to our upcoming R&D day on November nine 2022.
We have two world renowned scientific experts joining us for the event, Dr. Peter Libby and Dr. Michael Gibson, we're excited to hear their insights I'm clear outcomes and our pipeline.
The upcoming clear outcomes readout represents the beginning of a significant inflection point in our growth trajectory.
A successful study has the potential to expand our current labeled indication, making <unk> acid. The only oral LDL lowering therapy since statin to be indicated for cardiovascular risk reduction importantly, a positive outcomes study has the potential to transform cardiovascular disease management.
For millions of patients around the world, who are struggling to meet their LDL cholesterol levels.
Earlier today, we issued a press release containing our financial results for the third quarter, which is available on our investor website.
Product revenue for the third quarter ended September 32022 was $14 million up 28% year over year and $40 9 million for the nine months ended September 32022 up 47% year over year retail prescription equivalents for the third quarter were in line with our expectation.
It was growing two 4% quarter over quarter.
Royalty revenue for the third quarter ended September 30 of 2022 was $1 6 million up 33% year over year and $4 2 million for the nine months ended September 32022 up 50.
<unk>, 50% year over year.
We expect our partner to continue launching the London and new standard to new markets in the next year.
Combined royalty and partner revenue was $5 million for the third quarter ended September 32022, an increase of 43% year over year and $15 8 million for the nine months ended September 32022, a decrease of 55% year over year.
The decrease for the nine months ended September 32022 is due to a onetime milestone payment from our collaboration partners in the second quarter of 2021.
Finally total revenue for the third quarter ended September 32022 was $19 million, an increase of 32% year over year and $56 $7 million for the nine months ended September 32022, a decrease of 10% year over year the decrease from <unk>.
Nine months ended September 32022, particularly a aforementioned onetime milestone payment.
Turning to expenses R&D expenses for the third quarter ended September 32022 were $29 1 million.
An increase of 15% year over year and $85 9 million for the nine months ended September 32022, an increase of 10% year over year.
The increase was primarily related to an increase in <unk> cost as we achieved 100% mace accumulation and continued closeout activity.
SG&A expenses were $25 million for the third quarter ended September 32022, a decrease of 36% year over year and $84 9 million for the nine months ended September 32022, a decrease of 42% year over year. These decreases reflect.
Savings from the transformation for long term success plan implemented in Q4 of 2021.
As of September 32022, cash cash equivalents restricted cash and investment securities available for sale totaled $239 $3 million compared with $309 3 million at December 31, 2021, we currently anticipate.
The fate that our cash runway extends beyond the anticipated completion and readout of clear outcomes.
Our operating expense guidance for the full year 2022 remains unchanged. We continue to anticipate full year 2022, R&D expenses to be between $100 million to $110 million.
And SG&A expenses to be between $120 million to $130 million.
These estimates are inclusive of approximately $25 million of noncash stock based compensation expense expected to be incurred during this year.
To close as new organization, we are committed to helping providers and patients reach their goal not only today with our crude products.
In the future with clear outcomes and additional pipeline program.
We look forward to updating you on our progress as we are a critical milestone in our journey and continue to help address the leading cause of death worldwide.
You will see the longer term vision for our pipeline as R&D day on November nine and we will be making a presentation at Jefferies London on November 16.
Thank you all for joining today and for your continued support and interest in this purion operator, we are now ready for Q&A.
Thank you and as a reminder to ask a question simply press Star one one on your telephone.
One moment for our first question please.
Our first question comes from the line of Mike <unk> from Jefferies. Please go ahead.
Hey, Sheldon it's Mike Good morning, how are you.
Hey, Mike good thanks, Great to hear your voice.
Great. Good congrats on the progress on the updates maybe just two from us.
You refine the timing or we're more specific about the January early January release, and we were you were pretty clear about.
A very short statement on the topline I guess positive or negative as it relates to the cardiovascular outcomes study.
Can you just confirm whether you would quantify or characterize the results in any way to help people out.
Whether they'd be clinically meaningful or you would literally say nothing just positive in and see you in March and.
And the reason I ask is just around <unk>.
Help because there.
There are different degrees of positive data.
To interpret the results. So that's question one and then the second question is related to.
The.
Milestones and the cash position.
Assuming you would not raise cash.
Until we had the presentation.
Where their warrants that were issued in the quarter.
And tell us about any other opportunities throughout 2023. Thank you.
Sure well there.
So let me start I'll answer the first part of the question and I'll turn it over to Ben holiday to answer the second part of the question.
As it relates to financing so as it relates to the top line I think our strategy, we're still considering exactly to your point what type of modifiers, we might add on we.
We wont be speaking specifically to a hazard ratio, we won't specifically speak to a.
Yes.
Essentially.
Any type of statistical significance of P value et cetera, and the reason for that just as a reminder.
Of course, we mentioned specifically will be presented here at ACC, we don't want to break our embargo. We're also targeting hopefully published a simultaneous publication in a top tier journal at the same time. So that's the reason for somewhat be providing information, but not providing all of the detail.
But as it relates to using words like clinical meaningful things such as that we are considering that.
And.
Of course, we have data, we'll have we'll apply those strategies when we actually issued the top line.
Ben do you want to speak to other question regarding financing as it relates to warrants and other financial or financing activities.
Yes. Good morning. Thanks for the question. So let me start by saying we are very happy with our current cash and funding position.
We ended the quarter very strong from from a cash standpoint.
As far as warrants, we have not had any of those exercise at this time, but we are actively keeping an eye out for those that would be a pretty significant tailwind for us just to remind us 309 million that would come into the company.
As far as looking to 2023.
Outcomes and publication is a major catalyst for this company.
So obviously thats going to put us in a very good position to assess what our options are with the milestones.
Yes.
We'll know what those are I don't know when those are coming in and I think that will just kind of open up what we can possibly do from any fund raising.
2023, and we will look to do basically what makes the most sense for us then.
Great. Thank you guys.
Great. Thanks, Mike.
Thank you for our next question please.
Our next question is from the line of search for longer with a neat Ham and company. Please go ahead.
Hi, good morning.
<unk> I guess one question.
Hi.
Just one question from us.
You've previously talked about some pretty significant milestones associated with the clear outcomes drops can you just talk about.
What triggers these milestones you need to reach a certain hazard ratio and risk reduction or is it just.
Inclusion of AR.
Label expansion.
Thanks Scott.
Yes, so as it relates to the milestone just as a reminder, it's a milestone with Daiichi sankyo up to $300 million, we have a separate milestone payment of up to $150 million with otsuka.
But in order to actually achieve that milestone as it relates to Daiichi Sankyo, Inc.
To include the clear outcomes data in the label the European label.
And that's where we are.
Again, it's based upon the.
Yes. The study results. The study again as reminder is powered for.
15% residual risk reduction is 90% powered for that and so.
Essentially the data from the clear outcomes study.
Being included into the label and Joanne do you have any further comments as it relates to that.
Sheldon one just clarify your surgeon that see the European the EMA label.
No other comments and thank you for the question.
One moment for our next question please.
Our next question comes from the line of Jessica Fye with Jpmorgan. Please proceed.
Good morning, guys. This is <unk> on for Jessica Fye.
Congratulations on the progress.
One question from me ahead of be clear outcome data what is your market research telling you in terms of.
What level of residual risk reduction the physicians are actually looking for I know your base case is a 15% risk reduction, but what does the homerun scenario and what kind of uptake can we anticipate from that thanks.
Before I turn it over to our Chief Commercial Officer, Eric Warren who has done a lot of work in that.
One thing I do want to say is that we believe achieving a 15% residual risk reduction of which the study is powered for will be a significant achievement for the organization, but.
But Eric can you talk about the other thresholds that we also tested Eric.
Thank you Sheldon and thanks for the question. So just to keep it simple 15% was deemed highly significant from our clinicians and our market research So <unk>.
15% very meaningful and had significant impact from a market share perspective, as well as a market access perspective in terms of quantity as well as the quality of access.
Greater than 15%.
Would create incremental value, but I just want to be very clear that at the base level of outcomes, 15%, we have incredibly significant value.
Okay.
Thanks, Eric.
Thank you one moment for our next question.
Our next question comes from the line of Tom Shrader with BT IGN. Please proceed.
Hi, good morning, Thanks for taking the question up clinical trials Dot Gov is incredibly sparse on details on this trial. There are no secondaries listed is that accurate does that limit your ability to get other aspects of the label and what I'm, particularly interested in is how much type two D. R.
Type two diabetes progression data are you collecting and do you think you can get that in the label and then finally with no statin in the control arm do you think the best case for diabetic progression is equal to the control arm.
Yes.
Sure.
So Tom Thank you so much for the question and to your point clinical trial Dot Gov. Just gave is really a very basic overview of the trial.
That being said, we have plenty of other secondary endpoints importantly to your point for both glycemic control and diabetics as well as progression to new onset diabetes and not having it in clinical trial Dot Gov does not in any way preclude a regulatory.
<unk> for that it is our hope and we anticipate that important.
Glucose information, whether it be glycemic control or progression to new onset diabetes would be included in the label. Obviously pending result, and we believe that that's a significant differentiator for the large proportion of patients with either diabetes or pre diabetes.
Clear outcomes that constitute 70% in total of our population now with respect to the second component of <unk>.
On a statin not on a statin remember that clear outcomes. It does focus on patients not able to tolerate statin, but also includes 20% of patients not able to maximize their statin. So we will have a significant number of individuals who were on a background statin.
As well as diabetic based on our pre diabetic based on the numbers. So we think we will have important clinical information for pre diabetic diabetics with or without statin and include that information in the label.
Great. Thank you.
Thanks, Tom.
Thank you one moment for our next question. Please.
Our next question comes from the line of Jeff Hung with Morgan Stanley . Please go ahead.
Hi, This is Mike <unk> on for Jeff hung Thanks for taking our two questions first could you talk about your current thinking and expectations on the cadence for increased adoption of Mexico next does that sales do you expect a fairly quick inflection in sales following the full data presentation or do you think it would be more gradual and take long.
<unk> and our second question is what are you hoping to see during a clearer path one pediatric clinical trial and how could that data would be implemented in the label. Thanks. So much.
Sure So Eric as you could take the first part regarding <unk> and Joanna if you can speak to the pediatric trial.
Great. Thanks, Mike for your question. So the answer is pretty straightforward again the growth will start.
With the release of the data that we will see the increased growth as you know now we have been committed to delivering consistent growth and we've been doing that.
Conserving dollars for post clear environment, so clear data come out.
Increase the level of growth that we're capable of delivering and then when we have that label.
It won't happen in the first half of 2024.
Expect to achieve even further or accelerated levels of growth Joanne.
So thank you Jeff.
Mike I guess for the question and with respect to clear path. One. This is a pediatric trial focused on individuals or children with familial.
Hypercholesterolemia and this is really as we know with genetically modified modified disease that runs in families. So our hope is that we can provide another oral option for the children that ultimately are at very high risk over their lifetime for cardiovascular disease.
With respect to a label, we would assume a pediatric indication.
And the potential to also increase our patent life with the study, but the real key is that this is a group of individuals with very high unmet need.
And there are no other oral options for these individuals can we hope to add to the armamentarium for children.
Okay, and Mike I, just wanted to add one more thing as it relates to growth.
Since we actually did our plan.
Savings in transformation last October one thing that we committed to was of course, not only preserving our burn rate, but also demonstrating continuous growth throughout the year the year defined it to 2022 and as Eric had mentioned as we have mentioned in our prepared remarks. This is with a very small footprint. So we've been very.
We're pleased with the fact that we've been able to deliver on what we said that we would deliver on and that will continue that and the second part of that is the fact that we are also always stated that clear outcomes and getting the label will be a significant inflection point for the organization.
Thank you again for your question.
One moment for our next question please.
Thank you and our next question is from the line of Joseph <unk> with Cowen. Please go ahead.
Good morning, and thank you for taking our questions.
The first one I know the study was fully enrolled ahead of any impacts from COVID-19, but.
Maybe what additional information have you been able to green during the conduct of the trial to make sure that curve. It didn't have a substantial impact in either the overall trial conduct or the interpretation of the results that would be helpful. And then maybe just to follow up a little bit on my first question, you did mentioned potentially indicating clinical meaningfulness in the top line release.
Is your interpretation of clinical meaningfulness of that 15% residual risk reduction or is there potentially another interpretation. Thank you.
So Andrew I'll speak to the Covid.
Absolutely good morning, Joe. Thank you for the question.
Well as a large randomized global trial of over 14000 patients. We would expect that the randomization would handle any confounding addressed by Covid.
We are certainly blinded with respect to any of the events, but in fact, the events continue to track across the study population consistent with what we had predicted prior to Covid.
Adjusting that we don't have any particularly different.
Accumulation of events or secondarily any difference in the proportion of so so again, we've been tracking this very closely as have the regulators and we've been in conversations with them and we don't see anything significant.
With respect to Covid that would be out of proportion or a concern.
Thanks, Joe and Joe regarding the second your second question I wasn't sure. If this is the first and second.
The topline if you had to use words, such as clinically meaningful what does that what does that necessarily mean and.
Yes, I think to us the fact that it's clinically meaningful then there is obviously a statistical significance.
So I think that's one way to think about it.
Okay, Perfect and then maybe just one more quick one because I know that the drug does also liver C. Reactive protein is there any way based on literature to sort of couple the CV benefit specifically due to C reactive protein lowering versus LDL reduction or how should people think about that thanks.
So Joseph Thank you again for the question, we believe the anti inflammatory effects of bumper delek asset are clinically relevant and meaningful.
I think the best way to think about it is to look to with study like the cantos trial using Kenny can you map, which had only an anti inflammatory effect and was able to significantly reduce cardiovascular events.
We also know that statin reduce C reactive protein and so some of their event reduction is because of that but importantly, we also know that PCF canine inhibitors.
And is that am I do not have significant effects on CRP. So perhaps this is why.
<unk> underperformed relative to their LDL reduction. So I think those are all ways to think about it.
Also encourage you to take a listen to our research and development day on November 9th Peter Libby really one of the world's experts in the linkage between inflammation and cardiovascular disease and beyond we'll be speaking with respect to inflammation and its potential across multiple disease.
States and I think youll find that helpful.
Perfect. Thank you very much.
Thank you one moment for our next question. Please.
And our next question comes from the line of Jason Butler with JMP Securities. Please proceed.
Alright, thanks for taking the questions.
You broke out the number of hard ischemic events and in the presentation. That's helpful. Can you just maybe comment on whether the rate of those individual events was in line with your expectations from the study design and then how how well powered EUR two to hit statistical significance on any of the components on a stand alone.
Most most specifically cardiovascular death right.
So thank you so much for the question as you mentioned, we have accumulated for Amit or over our 16 20 anticipated events.
Thereby allowing us to have our 90% power for 15%.
Risk reduction with respect to components of the composite and the numbers.
We do not have them, specifically, however, I can tell you that if we look at our May three which is predominantly the harder events.
Because it doesn't include coronary revascularization, we are nearly at.
140% of those events.
Very significant power around.
All of those are not a stroke MRI and gaps I can't give you specifically with respect to that although I know that that's your question, but I think you should have confidence in the fact that our <unk> three is well above the pre specified number giving us much greater power on those harder events.
Okay, Great. That's helpful. And then just on the commercial side can you speak broadly to the steps are how you gain the commercial build out after the topline in the whole data and ultimately label expansion.
Yes, Jason it's Eric Thanks for the question. So at this current point to our sales force is relatively modest less than 80 individuals we have been working very closely with Sds associates now.
To come up with a staging plan that optimizes the impact of those individuals but that helps from a runway preservation perspective as well. So rest assured we have a robust plan in the works that will create expansion, but at this point I'm not going to provide the specifics of that.
Okay, great. Thanks for taking the questions.
Thank you one moment for our next question. Please.
He comes from the line of Judah Frommer with credit Suisse. Please proceed.
Good morning, Thanks for taking the questions just kind of following up on the last one maybe asking it a little differently regarding the marketing message after a potential positive clear outcomes trial, how would that be different versus the initial launch of <unk>, which obviously happened during a difficult time, but what are you focused large.
Leon.
The clear outcomes benefits or would there also be.
A message that's similar to what the drug was launched with a couple of years ago.
Thanks, Jeff.
Right.
Eric I can I can start and then Joanne could that can layer on to that so.
The product was the products were launched initially.
Is that a lot of specificity and obviously the label.
Is that somewhat limiting the label aligns with CBD patient on maximally tolerated statin.
<unk> ldlc benefit, but has a very clear limitation that there is no outcomes benefit or no effect on morbidity and mortality. So in a world with clear outcomes, obviously, we're able to really enhance that.
The message having that outcomes.
Message integrated in to our clinical discussion.
Add significant value as I mentioned from the market research. We also anticipate losing that maximally tolerated statin limitation, which is a pretty significant limitation for us so enhanced clinical messaging, losing the limitations.
Also this translates into a payers and their willingness to not only enhance the percentage coverage, which is good now but to enhance the quality of coverage and to make that utilization management aligned with the enhanced label that we anticipate.
So hopefully that's clear Joanne if you want to provide any additional that would be great.
Yes, so Judy I think as we look to this right clear outcomes combined with all of the lifecycle management research that we've done gives US a label that is really quite simple. It basically would we would aspire to a label that would be for individuals at risk to lower LDL cholesterol.
To reduce event and I think as Eric mentioned it allows us to be much more expansive allows us.
To have this drug where clinicians want to use it.
As an early oral therapy to reduce LDL cholesterol and events I think what's important I think many of you have asked about an inflection and we can see that this is much more consistent with the existing <unk>.
Ex U S label. It doesn't include maximally tolerated statin and if we take a country like Germany. For example, with that kind of a label they've already cumulatively outstripped all of PCF canine utilization in the country. So I think that this is really a label that it's clinically relevant I think commercially.
Easier to market to and why.
Net providers and patients.
Provide the most benefit.
That's helpful. Thanks, and then just.
A quick question on the potential Dai Ichi milestone the language. It is up to $300 million is there anything you can share with us regarding you know how you get to the full $300 million aside from inclusion in the European label.
Uh huh.
Yeah, Judah we've never disclosed how do we get to the.
The additional $100 million, it's related to specific aspects of the study that we haven't made public as of yet.
Got it okay. Thank you.
Yes.
Thank you and our last question on the line. Please.
Our last question comes from the line of Paul Choi with Goldman Sachs. Please proceed.
Hi, good morning, and thanks for taking our questions. My first is on just.
Just what your market research suggests or indicates as to what uptake might look like among clinicians. If the primary endpoint is primarily driven by lower rates of cardiovascular revascularization versus sort of a hard mace endpoints.
And then my second question is with regards to the pediatric heterozygous familial hypercholesterolemia trial can you maybe just.
Give us some guide posts on as to what your regulatory feedback has been like I'm, just sort of what rough timelines might be for completion of that study or in that population in order to get the pediatric exclusivity for additional six months of patent life.
Thank you.
Eric before you go thanks, Paul for the question one of the things I think we really struggled but I think it kind of goes to the last question. Two was overall awareness of these brands and more and more we're starting to see and even in our prepared remarks, we've talked about the fact that the inclusion of <unk> advantage I gassy franchise.
In guidelines.
And we're seeing more and more key opinion leader scientific leaders throughout the United States, obviously throughout the World also speak about these products and where they sit and I think that's a good segue of what Eric's been seeing is.
This is market research that he conducted and potential uptake once we have a clear outcomes Eric.
Yes, Thanks, Sheldon and thanks, Paul and so Paulo with regards to the to the primary endpoint. So <unk> four is what we've evaluated that 15%.
Base level of.
The impact if you will.
What we've anchored at researcher on we've provided.
What kind of incremental.
Profiles, if you will to assess changes in value, but I'll, just say that again with our mates for benefit.
Correlate to a 15% relative risk reduction, we see very significant multiple folds improvements.
Market share penetration.
And we also have that significant payer benefit and we've tested that not only in quantitative and qualitative research, but we've also tested that with a Payor Advisory Committee.
Julian do you want to comment on the pediatric.
Yes, absolutely.
So thank you for the question.
As we've mentioned we've started our first patient in the study.
As you all understand from our Cbot. These trials can take time, although this one won't take that long.
We're anticipating a two.
<unk> 26, presumably opportunity to file with respect to conversations with the regulators.
They have been quite pleased with the study design with the targeting and the opportunity for us.
For a label update.
<unk> as well as a potential extension of the patent.
Great. Thank you very much.
Thank you and ladies and gentlemen, with that we conclude our Q&A and conference call. Thank you for participating and you may now disconnect. Good day.
Yeah.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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