Q3 2024 Esperion Therapeutics Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome. At this time, all participants are in listen-only mode.
Following the presentation, there will be a question and answer session. Please be advised that today's conference call may be recorded. I would like to hand the conference over to Alina Bencias, Director of Investor Relations for Experian Therapeutics. Please go ahead.
Alina Bencias: Thank you, operator. Good morning and welcome to Experian's third quarter 2024 earnings conference call.
Alina Bencias: With us today are Sheldon Koenig, President and CEO, and Ben Halladay, CFO. Other members of the executive team will be available for Q&A following our prepared remarks.
Alina Bencias: We issued a press release earlier this morning detailing the content of today's call. A copy can be found on the investor page of our website together with a copy of the presentation that we will also be referencing.
Alina Bencias: 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.
Alina Bencias: 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 the risks and uncertainties associated with the business.
Alina Bencias: These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and in our SEC filings.
Alina Bencias: The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 7, 2024.
Alina Bencias: We undertake no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call and webcast.
Alina Bencias: As a reminder, this conference call and webcast are being recorded and archived.
Alina Bencias: We will begin the call with prepared remarks and then open the line for your questions. I now turn the call over to Sheldon.
Sheldon: Thank you, Alina. Good morning, everyone, and thank you for joining us. As I look back over the past year, I continue to be so proud of all our team has accomplished.
Sheldon: It has truly been a watershed year for Esperion, in which we successfully expanded our Nexlitol and Nexlozet labels to include broad new indications for primary and secondary cardiovascular risk reduction.
Sheldon: Scaled up our commercial team and launched these new indications and broadened payer access and implemented marketing programs that have enhanced awareness of our new indications among health care providers to drive prescription growth.
Sheldon: As a result of our team's collective efforts, we have posted double-digit prescription growth in both quarters since the launch.
Sheldon: In addition, we've supported international growth and further expansion of Nalemdo and Nustendi, which continue to be impressive and support our continued confidence in the global market opportunity for our benpendoic acid products. And importantly, we substantially strengthened our balance sheet by monetizing the European royalties on our benpendoic acid product sales and allocated the proceeds for the early discounted payoff and termination of our previous revenue interest facility.
Sheldon: We also continue to focus on additional ways to fortify our capital structure.
Sheldon: Any one of these accomplishments would be meaningful on its own.
Sheldon: Collectively, they have transformed Espyria and laid a strong foundation from which to build and grow global revenues for our benpendoic acid product.
Sheldon: and to expand and advance our very promising clinical development program of ACLY inhibitors.
Sheldon: Now let me turn to our progress with our U.S. commercialization efforts which are gaining additional momentum as demonstrated by U.S. net product revenue growth of Nexozet and Nexotol in Q3 2024 of 10% sequential and 53% year-over-year growth.
Sheldon: These increases were driven by the meaningful progress we continue to make during the first six months of the launch for our label expansions.
Sheldon: As a reminder, our expanded labels have three significant differences. They now include CV risk reduction benefits, expand the patient population by including primary prevention, and enable use in patients that are unable to tolerate or maximize statin therapy.
Sheldon: We have done an exceptional job building a strong foundation with the three key pillars for success. Payers, physicians, and patients.
Sheldon: We understand the necessity to remain committed to addressing the needs of each of these constituencies in order to successfully bring the benefits of Nexlital and Nexlizet to the 70 million patients eligible under the expanded labels.
Sheldon: Starting with the payers, where we initially focused on making sure the Utilization Management Criteria, or UM, for the expanded labels were in place.
Sheldon: As of mid-July, more than 80% of UM criteria were updated to reflect the new label update, and more importantly, a significantly less burdensome prior authorization process was put in place.
Sheldon: These updates totaled more than 114 million lives. Since then, we have grown that number to more than 165 million patient lives across all payers who have updated their UM criteria.
Sheldon: This is a foundational building block to securing reimbursement and removing significant restrictions and barriers to access so physicians can now prescribe Nexlitol and Nexlizet with increased confidence.
Sheldon: Another milestone achievement on this front was the expansion of our commercial and Medicare formulary coverage for Nexlitol and Nexlizet.
Sheldon: In early September, we made new additions to Medicare formularies at Optum, United AARP, and CVS SilverScript.
Sheldon: Coupled with our earlier coverage with Humana, we currently have access to more than 65% of Medicare-insured lives and more than 92% of commercially-insured lives under the new labels and U.M. criteria.
Sheldon: Again, we expect this expanded payer coverage to drive further increases in physician confidence to prescribe Nexlital and Nexlizet, ultimately leading to higher product sales in the upcoming quarters and beyond.
Sheldon: In tandem, we further advanced our sales and marketing campaigns aimed at educating healthcare providers about the clinical benefits of Nexlitol and Nexlizet and empowering patients to talk with their clinicians about their cardiovascular risk.
Sheldon: We continue to optimize our commercial tactics and remain efficient in allocating resources to initiatives that are yielding the most favorable ROIs.
Sheldon: As a result of these combined initiatives by our managed care, sales force, and marketing teams in these first six months of launch, we now have nearly 24,000 healthcare practitioners writing scripts.
Sheldon: with total retail prescription equivalents increasing approximately 12% and new-to-brand prescriptions approximately 18% compared to the second quarter.
Sheldon: This is just the type of momentum we want to see in the first six months of launch to drive accelerated growth in the coming quarters and into the new year. In fact, our October 2024 results further validate this trajectory.
Sheldon: with total retail prescription equivalents up 17% and new to brand prescriptions rising 20% compared to the first four weeks of the third quarter.
Sheldon: This positive trend speaks to the effectiveness of our strategy, and we remain focused on sustaining this momentum to drive continued growth and long-term success.
Sheldon: Notably, the three reasons that give us continued confidence in the blockbuster opportunity for Nexlital and NexLivet and our ability to realize that potential remain unchanged.
Sheldon: 1. We have compelling data from the CLEAR Outcomes Study that support and validate the safety and efficacy of Nexotol and Nexovet to reduce cardiovascular risk.
Sheldon: Let me now shift to the tremendous international progress we and our partners are making. In Europe, our partner DSE continues to post strong prescription and revenue growth as evidenced by approximately 19% sequential increase in our royalty revenue, which was $8.9 million in the third quarter of 2024.
Sheldon: DSE received its approved expanded labels for Nalendo and Nustendi from the European Commission in May and consequently kicked off their country launches with the new indications for cardiovascular risk reduction and expanded LDL cholesterol lowering in primary and secondary prevention patients.
Sheldon: With up to 80% of patients in Europe unable to reach guideline recommended levels for LDL cholesterol despite taking satin, there is a meaningful market opportunity for DSE.
Sheldon: Beyond Europe, our partner Daiichi Sankyo Company Limited gained approval for Nalendo in Taiwan on October 7, 2024.
Sheldon: The totality of expected country launches enhances the global awareness of the cardiovascular benefits of our benpetoic acid product and is expected to incrementally contribute to royalty revenue over time.
Sheldon: Our Japanese partner, Otsuka Pharmaceutical, remains on track to file a new drug application in Japan by year-end 2024, with expected approval and national health insurance pricing anticipated in 2025.
Sheldon: We are enthusiastic about the continued momentum in Japan as it is one of the largest markets for lipid lowering therapies. This is a substantial market for Otsuka as well as a valuable royalty contributor for Aspirion growth in the future.
Sheldon: Turning to our own efforts internationally, we expect to file a new drug application for approval in Canada this month and are optimistic about finalizing a partnership soon. Additionally, we expect potential submissions and or partnerships in Australia and Israel in the first half of 2025.
Sheldon: Collectively, these advances expand the global commercial opportunity for our benpendoic acid products, incrementally add to growing global revenue and position Aspirion as an attractive potential partner with a compelling value position.
Sheldon: Finally, we continue to build a growing body of scientific and clinical knowledge that supports the cardiovascular risk reduction benefits of our products.
Sheldon: To that end, we are delighted to be presenting key data at the American Heart Association Scientific Session, which will be taking place next week in Chicago. The AHA Scientific Sessions draw approximately 18,000 healthcare providers, including primary care physicians from more than 100 countries.
Sheldon: This offers Aspirion an exceptional opportunity to showcase the clinical benefits of Nexotol and Nexozet before an audience of key physicians we aim to influence to prescribe our therapeutics.
Sheldon: We were honored to have been selected for an oral featured presentation in the Late Breaker Featured Science Track where our products will be highlighted in a presentation titled Bempatoic Acid and Limb Outcomes in Statin Intolerant Patients with Peripheral Artery Disease. New insights from the CLEAR Outcomes Trial.
We also have three poster presentations at AHA.
Sheldon: Statin intolerance due to muscle symptoms affects management of patient's insights from the CLEAR outcomes trial.
Sheldon: Liver steatosis and liver fibrosis predict major adverse cardiovascular events in the CLEAR outcomes trial and effectiveness of lipid-lowering therapy with benpedoic acid plus ezetimibe in a real-world cohort.
Speaker Change: In addition to these U.S. presentations, DSE had a strong medical and commercial showing at the European Society of Cardiology Congress, or ESC, in late August. ESC is the largest cardiovascular medical meeting of the year and is well attended by key opinion leaders from around the globe, including the United States.
Sheldon: Consequently, we expect the efforts DSE made at ESC will also benefit our efforts to enhance the awareness and visibility for our products among US healthcare practitioners.
Sheldon: Beyond ESC, DSE reported final two-year real-world results from the Milos German cohort at DGK Herzog 2024 in Hamburg, Germany in late September. The data demonstrated a strong increase in the achievement of LDL cholesterol goals with the addition of benpendoic acid.
Sheldon: The ongoing publication and presentation of data in support of the cardiovascular benefits of our products
Sheldon: strongly validates our clinical value proposition and enhances awareness of their benefits among a growing physician base who are responsible for prescribing our products to their patients.
Sheldon: We will look forward to updating you on our further progress over the coming months.
Speaker Change: Thank you, Sheldon. Good morning, everyone, and thank you for joining us today. As Sheldon mentioned earlier, we continue to build and solidify the foundation of our business, and this year has been a banner year for taking the right steps that will allow us to grow and succeed in the long term.
Speaker Change: Most notably, over the past six months, we focused on strengthening our balance sheet by monetizing the European royalties on our Bempidoc Acid product sales and allocating the proceeds for the early discounted payoff and termination of a previous revenue interest facility.
Speaker Change: This company will always be focused on solidifying our financial position, and that work continues into the fourth quarter.
Speaker Change: I will now provide a brief overview of the results, noting that additional information can be found in our press release issued earlier this morning and 10-Q that will be filed shortly. Please note that unless otherwise specified, my comments reflect results for the third quarter ended September 30, 2024.
Speaker Change: U.S. net product revenue was $31.1 million, compared to $20.3 million for the comparable period in 2023, an increase of approximately 53%.
Sheldon: Sequential quarterly net revenue growth was 10%. Our steady revenue growth, combined with a rise in total retail prescription equivalents and an 18% increase in new-to-brand prescriptions, speaks to the success of our launch and the potential of these drugs.
Sheldon: To date, we have expanded our coverage to include more than 165 million patient lives. We activated these managed care contracts with the understanding that we would face an immediate impact to our previously undiscounted business with the expectation that we will outpace this initial cost with significant future growth.
Sheldon: While we're feeling the gross to net headwinds of these changes now, the decisions we made are essential to building a pipeline of patients necessary for future growth.
Sheldon: We are expecting the pull-through to come from this effort in the coming quarters, with additional contracts serving as another key tactic to advance our brand strategy.
Sheldon: While it will take time, this approach sets us up for long-term success. We are already beginning to see acceleration in prescribing as a result of these recent Medicare contracts and our comprehensive marketing and sales strategy.
Sheldon: This approach is delivering results with recent data showing a 17% increase in total retail prescription equivalents and a 20% rise in new-to-brand prescriptions for the first four weeks of the fourth quarter compared to the first four weeks of the third quarter.
Speaker Change: Thank you for watching. Please subscribe to my channel. I hope to see you again soon.
Speaker Change: Collaboration revenue was $20.5 million, compared to $13.7 million for the comparable period in 2023, an increase of approximately 50%, primarily due to increased royalty sales growth within our partner territories and increased product sales to our collaboration partners from our supply agreements.
Speaker Change: We're making solid progress with DSC on the tech transfer to enable them to independently manufacture the LEMDO and NUSTENDI for European distribution.
Speaker Change: This will lead to a significant reduction in our future COGS for the product and reduce working capital costs once finalized.
Sheldon: Turning to the rest of the P&L, for the third quarter of 2024, research and development expenses were $10.4 million compared to $14.9 million for the comparable period in 2023, a decrease of 30%, primarily attributable to our clear outcome study that was completed in 2023.
Sheldon: Selling general and administrative expenses were $40 million compared to $33.2 million for the comparable period in 2023, an increase of 20%.
Sheldon: The increase is primarily related to increased commercial headcount in addition to bonus payments and promotional costs.
Sheldon: We continue to manage expenses prudently and expect expenses to remain similar to current levels.
Sheldon: Total net loss for the quarter was $29.5 million compared to a net loss of $41.3 million for the comparable period in 2023.
Sheldon: Turning to our balance sheet, as of September 30th, 2024, we had $144.7 million in cash and cash equivalents.
Sheldon Koenig: Now, let me turn the call back to Sheldon for closing remarks. Sheldon?
Sheldon Koenig: Thank you, Ben. We continue to be especially pleased with our progress advancing the launch of these expanded indications in cardiovascular risk reduction, confident that the foundation we are building today will serve to support significant future growth and expansion globally.
Sheldon: In the near term, we are laser-focused on ensuring the continued successful launch of our expanded labels in the U.S., while in tandem, expanding our global reach through partnerships and collaborations.
Sheldon: Longer term, we plan to advance our promising pipeline where we have the potential to leverage our established leadership in ACLY biology to explore new therapeutic opportunities and develop next-generation inhibitors optimized to address multiple life-threatening diseases.
Sheldon: We look forward to providing a detailed update on our plans and timelines for the development of our innovative pipeline as we move into 2025.
Sheldon: Looking ahead, we are confident in our strategy and our ability to deliver long-term value to both the patients we serve and to our shareholders. As always, we appreciate your continued support as we execute on these initiatives. Operator, we are now ready for Q&A.
Speaker Change: Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Thank you. Thank you. Thank you.
Speaker Change: First question comes from Linus Dennison of Jeffries. Your line is now open.
Linus Dennison: What's been driving that strength and do you think you can work through some of the headwinds in Q4, like from the holidays and even Hurricane Milton at the beginning of Q4? And what's your level of confidence that Q4 revenue will be higher than Q3, given some of the pricing headwinds towards the end of the year? Thank you.
Sheldon: Good morning, Dennis. It's Eric. Yes, yeah, absolutely. So Q3, again, double digit growth on all metrics. The start of Q4, really strong. You saw the metrics that we posted.
Sheldon: What's driving that? The pull-through of the access. So as we mentioned before, we've improved the quality and quantity of access.
Sheldon: It's taken a little bit for positions to believe it based upon
The prior years have more difficult access.
Sheldon: But now we're starting to see that increased momentum. I've been out in the field multiple times over the course of the last quarter, as have other members of the ELT.
Sheldon: and we're seeing the excitement of physicians and the ease in getting the product. So, very confident in what we're seeing and very confident that Q4 will be even better than Q3.
Speaker Change: And Dennis, I would just like to add that, you know, one thing that we've said for I think the past two years is that we will demonstrate growth, continued growth, and we've done that, and we will continue to do that.
Great, thank you.
Thank you. One moment for our next question.
Speaker Change: Our next question comes from the line of Serge Belanger of Needham. Your line is now open.
Serge Belanger: Good morning, congrats on the progress. A couple of questions from us.
Serge Belanger: I guess, now that utilization management criteria has been updated and we've seen an important uptick in prescription, just curious how
How different is the product being used now?
Serge Belanger: at this current time or that's when we flip the calendar to 2025. And I guess you expect to expand beyond that 65% over the next few months. Thanks.
Speaker Change: Good morning, Serge, Eric again. So, yes, thanks for noting the increased momentum that we've been seeing. Indeed, it's a function of physicians' increased confidence, the fact that prescribing has become easier.
Speaker Change: In terms of patients that are being utilized, so yeah, so we've seen that shift from
ASCBD patients, which were the patients that
Speaker Change: Our clinicians were bound to with the prior label in UM. We're seeing an increase in the primary prevention patient or the patient that hasn't had a prior event. We're also starting to see increase in the statin intolerant utilization.
Speaker Change: In terms of where we're seeing that utilization come from, we're seeing ezetimibe start to leak some share on its own. We've also seen about a one-point decrease in
Speaker Change: New to Brand Prescriptions or New to Brand Share for PCSK9s since we've had our label change.
Speaker Change: I just want to add one thing, sir, before I turn it over to BJ regarding Medicare, and that is, there is no doubt in our minds that the benpedoic acid products, that these are a recognized
Speaker Change: They are a recognized place in therapy and it's, you know, the awareness, you know, it just continues and continues to grow. BJ Menger And with that said, Sheldon, I think...
BJ Menger: contracts to come through and really activate them. But we also know that right now we're well poised between the three PBMs and having that coverage both commercially and with Medicare, we're basically covering 90 percent of the U.S. national lives with that coverage. So stay tuned, more to come.
Serge Belanger: Great. I guess one more for Sheldon. Can you just remind us of the structure of the milestone payments as part of the Otsuka collaboration and what those payments are contingent on?
Yeah, this is Ben. I'm happy to walk through that.
Ben Halladay: I don't think we've assigned specific amounts to each of the steps, but the steps are filing of the JNDA, approval of the JNDA.
There is a milestone based around what actually gets included
Ben Halladay: as well as a pricing milestone. So those will all come, I would say, by the end of 2025 is what we're expecting internally here. And we will have very shortly, I think, a lot more clarity on what that timing looks like.
Thank you.
Speaker Change: Our next question comes from the line of Jason Ziminski of Bank of America. Your line is now open.
Jason Ziminski: Good morning. Congratulations on the progress and thank you so much for taking our questions.
Jason Ziminski: I was hoping to provide some color on ongoing payer dynamics. I appreciate you may not be able to provide many details, but
Jason Ziminski: If you could please speak to whether there's been an increase in concessions given the expansion of lives covered. And then do you have a sense of what percentage of lives are not required to go through or step through a generic alternative like a statin? Thank you.
Speaker Change: Yeah, so I can take that. So, you know, Jason, I think, as we mentioned before, our biggest headwinds were that, you know, let me start with your second part of your question first, if you don't mind.
Jason Ziminski: You know, the biggest headwind was that the fact that, you know, patients had to go through maximum tolerated dose of a statin. That actually changed back in December. But I think the biggest headwind, it goes back to a question that was asked earlier.
Jason Ziminski: is that the utilization management, there is a step criteria through ezetimibe as well.
Jason Ziminski: as part of our new label and as part of our negotiations with payers.
Jason Ziminski: That was something that we demanded, is that U.M. criteria would be easier and that we would no longer have to be step-edited through ezetimibe, which again, is really the competition. 68% of the adjunct share is ezetimibe.
Jason Ziminski: the Medicare contracts that we have. As a matter of fact, this is quite interesting. In two very large accounts, we don't even have prior authorization. So SilverScripps Caremark, there's no prior authorization for a physician. Aetna, there's no prior authorization for a physician.
and our products.
Got it. Thank you so much for the color.
[inaudible]
Speaker Change: Our next question comes from the line of Jessica Fye of J.P. Morgan. The line is now open.
Jason Ziminski: Hey, good morning, everyone. This is Tanmayon for Jessica High, and thanks for taking our question.
Jason Ziminski: I guess the first thing I wanted to ask is how do you see the net price outlook from here and should we think of it as stable going forward? And can you also comment quickly on any inventory changes in the U.S. channel in 3Q? Thanks.
Speaker Change: Yeah, I'll jump in on both of those. Inventory changes, I will say non-existent, we were very stable for what was out in the channel at the end of the quarter compared to Q2 and Q1. So really no major changes there.
Jason Ziminski: As far as net price going forward, we will continue to see our standard Q4 cyclicality from the Medicare coverage gap this year.
Jason Ziminski: However, I think one thing that we're looking at next year as we go through the IRA and the benefits that
Jason Ziminski: For us, expected to hit is that we will see a smoothing out of the gross net over the course of the year.
Thank you.
Thank you. One moment for next question.
Jason Ziminski: Our next question comes from the line of Joe Patangas of H.T. Wainwright. Your line is now open.
Jason Ziminski: Hi, good morning, everyone. This is Lander, on for Joe. Thanks for taking our questions. So just curious about the market dynamics in Japan. What are the expectations in terms of confidence from payers and physicians for distribution and pricing and sales ramp in Japan? Anything different compared to the US, for example, that we should consider? Thank you.
Speaker Change: Yes, great. So again, just as a reminder, in Japan, our partner is Otsuka. And as we mentioned, they finished their phase three clinical trial, which showed statistical significance. And they are in the process right now of filing with the healthcare administration in Japan.
Jason Ziminski: Pricing and so forth will come later, but what I would like to remind you of is Japan is one of the largest lipid markets
in the entire world.
and the analog you can even look at is ezetimibe.
Jason Ziminski: So, more to come on Japan, but right now we're on track of what we need to do, and there's high expectations by our partner of ATSUKA, and as we mentioned in our preparing remarks, that really benefits us as well, that's a significant royalty stream to the organization.
Perfect. Thank you. Thank you. Congrats on the update.
Thank you. One moment for our next question.
Speaker Change: And our next question comes from the line of Tom Schrader of PTEIG. Your line is now open.
Tom Schrader: Good morning. Congratulations on the uptick and taking the question back to Medicare is part of the lag relative to commercial that you would negotiate very hard.
to be in the best year of Medicare.
Speaker Change: Do you know your average co-pay for a Medicare patient versus a commercial patient?
Yes, how are you Tom?
Speaker Change: We basically, for Medicare, it's all about out-of-pocket costs, and what was happening before, as you know, when we were non-preferred, those out-of-pocket costs were much higher. What we're able to do now with contracts, they're probably an average out-of-pay now with the preferred co-pay is $45, as opposed to going anywhere from $150 up to $200 before they even reach their deductible. So that's been a great benefit.
Speaker Change: plug for us and it's great with the physicians again to show this point previously is.
Speaker Change: Giving those physicians the confidence and then getting the product to the patients in the shortest period of time With commercial with our copay card that that ranges. We really have our copay card. So that that's probably more than $25 range for patients in commercial
Speaker Change: And if I may add, what's really interesting, Tom, is with these Medicare changes, you know, typically when Medicare makes a decision, they make a decision today.
to be implemented a year from now.
Speaker Change: These decisions were made today and implemented a week from now, a month from now. And again, it goes back to what I said earlier, it really shows the applicability of the clinical profile as a result of our new label from the Clear Outcomes Study. That was a huge win for us.
Speaker Change: And just to follow up, is the process in Medicare to get in and get an agreement at any price and then to provide data that it should be preferred, or is the initial agreement very important for the price for a significant duration, for the copay for a significant duration?
Speaker Change: Well, I think what it is, is that it's really more of the status and we're preferred in Medicare.
Speaker Change: I'm not sure if I'm following your question completely, but I'm just looking at the end result. And the end result is we have a copay that is acceptable for patients to pay.
Speaker Change: And we're in a preferred position. And I would say just thinking about our market access along commercial and Medicare, we are not disadvantaged to PCSK9, we are not disadvantaged to ezetimibe, etc. So that's also important.
Okay, great. Thanks for all the detail.
Speaker Change: Thank you. We are out of time. This concludes the question and answer session. I would now like to turn it back to Sheldon Koenig for closing remarks.
Sheldon Koenig: Thank you, Operator, and thank you all again for your time and attention this morning. We will be participating at the upcoming Jeffries London Healthcare Conference on November 19 in London and at the Pippa Sandler Healthcare Conference in New York on December 5.
Sheldon Koenig: So we hope to have the opportunity to connect with many of you at these events. And in the meantime, if you have any questions or would like to have a call with the team, just reach out to our Head of Investor Relations, Alina Venezia, and have a great day and thank you again.