Esperion Therapeutics, Inc. (ESPR) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the NEXLIZET FDA approval conference call. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Alex Schwartz, Head of Investor Relations. Please go ahead, sir.

Thank you, Olivia. Good morning, ladies and gentlemen, and welcome. I'm Alex Schwartz, Head of Investor Relations at Esperion. [Operator Instructions] Joining me for today's call are Tim Mayleben, President and Chief Executive Officer; Ashley Hall, Chief Development Officer; Mark Glickman, Chief Commercial Officer; Rick Bartram, Chief Financial Officer; and Bill Sasiela, Senior Vice President of Clinical Development. I'd like 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 as of the date of this live broadcast, February 26 (sic) [ 27 ]. We undertake no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call and webcast. As a reminder, this conference call and webcast are being recorded and archived. We issued a press release yesterday detailing the content of today's call. A copy can be found at esperion.com within the Investors & Media section. We will begin with prepared comments and then follow -- and then open the call for your questions. Following today's call, the team will be available for follow-up questions. Please e-mail investorrelations@esperion.com to schedule 15 minutes for you to speak with the team. I'd now like to turn the call over to our President and Chief Executive Officer, Tim Mayleben. Tim?

Hey, thank you, Alex. And good morning, everyone, and thank you for joining us again this week. I'm very excited to announce the approval of NEXLIZET. This is the first completely non-statin combination medicine for lowering bad cholesterol ever approved. And this approval announcement comes with a powerful upside. The NEXLIZET label provides 38% LDL-cholesterol lowering on top of maximally tolerated statin therapy. We believe this is an important medicine for the millions of adults with ASCVD and heterozygous FH in the U.S. that struggle with bad cholesterol. This is a hugely important day for patients, health care providers and payers. It's not often that you see any company receive approval for 2 different medicines within a week, and we are enormously pleased to see that our tireless efforts have come to fruition. But even more, we're pleased to be providing these medicines that are consistent with our mission to provide affordable, convenient, oral, once-daily, non-statin LDL-cholesterol-lowering options for the millions of indicated patients who need them. And like the NEXLETOL approval last Friday, this approval would not have been possible without the hard work, countless hours, perseverance and true grit from our team of lipid management experts. Grit, as you know, is the passion and perseverance to achieve long-term and meaningful goals, and this certainly qualifies. Our lipid management team at Esperion has grit. So let's turn now to the presentation on Slide 4. As we did earlier this week, I wanted to take a moment to just highlight our highly experienced leadership team at Esperion. The focus for today is, again, really, Ashley Hall, Bill Sasiela and Ken Fiorelli, who most recently led the highly successful approval for NEXLETOL, which was approved by the FDA last week and received positive CHMP opinion in the EU last month. And following, obviously, today, with NEXLIZET. Next, I want to recognize Mark Glickman and the amazing health care provider, payer and patient-facing teams he has built over the past almost 2 years and who is now accepting the proverbial baton from our development teams for both NEXLETOL and now NEXLIZET. And as you'll hear later on the call from Mark, we're totally focused on patient affordability and access to our medicines. And I'll also note that while these are Esperion's first NDA approvals, and these will be Esperion's first commercial launches, Mark and his team have led dozens of medicines through approval and commercialization. We're confident in the upcoming successful launches of both medicines. Our highly experienced and incredibly talented team is ready to lead us through the most anticipated launches of 2020. Let's turn now to Slide 5. And as we did earlier this week, let's look briefly at the current state of bad cholesterol in the U.S. As you see here, it's estimated that almost 100 million people in the U.S. have high levels of LDL-cholesterol or bad cholesterol. And of these, approximately 34 million people are taking a statin. Statins, as you know, are the gold standard for the treatment of the vast majority of patients with elevated LDL-cholesterol, and most people on our team were involved in the development of statins. We believe, in fact, that every person that can tolerate a statin should take a statin. They're effective, in most cases, generic and inexpensive. But here's the thing. Not everyone can or will take a statin. Additionally, not everyone who takes a statin can reach their LDL-cholesterol-lowering goal. So while statins help 8 out of 10 people lower their LDL-cholesterol and get to goal, 2 out of 10 people are not adequately helped by statins alone. And in the U.S., those 2, those 2 out of 10 people, represent 18 million adult patients. These are patients that need a non-statin, a non-statin way to lower their LDL-cholesterol. About 9 million people are not taking statins, most often due to tolerability. The other 9 million patients are taking a statin but still need more LDL-cholesterol lowering, non-statin LDL-cholesterol lowering, to achieve their doctor-recommended LDL-cholesterol goal. Of these patients, almost 15 million patients have ASCVD and/or heterozygous FH. And these patients represent our addressable population with NEXLETOL and NEXLIZET. These, these are the underserved patients who need additional non-statin LDL-cholesterol lowering. These are the patients who are not adequately managed with statins or other currently available lipid-modifying therapies. These are the patients who need the oral, once-daily, non-statin LDL-cholesterol lowering that comes with the approvals of both NEXLETOL and NEXLIZET. That's why it's so important for Esperion to be doing what we're doing. Our team does this for the millions of appropriate patients, the mothers, the fathers, the aunts, the uncles, the grandparents who need to get their cholesterol under control. So let's turn now to our product portfolio in the next slide. NEXLETOL, which we talked about earlier this week, was the first oral, once-daily, non-statin LDL-cholesterol-lowering medicine approved in the U.S. in almost 2 decades for ASCVD and heterozygous FH patients. But today, today, we're focused on NEXLIZET, which most of you know as the bempedoic acid/ezetimibe combination tablet. NEXLIZET is an oral, once-daily, non-statin LDL-cholesterol-lowering medicine. NEXLIZET contains both bempedoic acid and ezetimibe. Both drugs lower LDL-cholesterol. NEXLIZET is a completely non-statin LDL-cholesterol-lowering drug. A completely non-statin LDL-cholesterol-lowering drug. It lowers elevated LDL-cholesterol by 2 mechanisms: inhibition of cholesterol synthesis in the liver and cholesterol absorption in the intestine. NEXLIZET, just like NEXLETOL, is indicated as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with heterozygous familial hypercholesterolemia or established atherosclerotic cardiovascular disease who require additional lowering of LDL-cholesterol. However, it provides even greater LDL-cholesterol lowering, 38% LDL-cholesterol lowering, on maximally tolerated statin therapy. And again, NEXLIZET is the first completely non-statin combination medicine for lowering bad cholesterol ever approved in the history of the world. As I said earlier, these approvals are the result of many years of research and development and our tireless pursuit to bring these medicines to the patients who need them. This day would not be possible without the hundreds of health care providers, the thousands of support staff and, perhaps most importantly, the thousands of patients who participated in our clinical development programs. We thank them all from the bottom of our hearts. Let's turn now to Slide 7. And before I turn the call over to Ashley and Bill to talk about the label for NEXLIZET, I want to highlight that NEXLETOL will be available on March 30, 2020, just a few short weeks from today. NEXLIZET will be available by July of 2020. So let me emphasize a few key points about the profiles of both NEXLETOL and NEXLIZET. Our medicines are oral, once-daily pills, which we believe makes them convenient for patients. Importantly, these are non-statin, non-statin LDL-cholesterol-lowering medicines. These medicines both rely on the inhibition of ATP citrate lyase, or ACL, and this is a first-in-class mechanism that we have pioneered. These medicines offer appropriate patients additional LDL-cholesterol lowering as an adjunct to diet and maximally tolerated statin therapy. And finally, our medicines have safety profiles generally comparable to placebo. And with that, I'd like to pass the call over to Ashley Hall, our Chief Development Officer, who will briefly walk you through the FDA label for NEXLIZET. Ashley?

Great. Thank you, Tim. And thank you to everyone for joining us today. As established in our pivotal Phase III study, NEXLIZET provides an average of 38% LDL-cholesterol lowering on top of maximally tolerated statin therapy. Note that the LDL-C cholesterol-lowering efficacy of 38% reported in the NEXLIZET label exceeded expectations. As with NEXLETOL, the label for NEXLIZET also notes positive effects of other lipid parameters including non-HDL-C, ApoB and total cholesterol. These results were consistent across all age, gender and race subgroups. What this means is that our medicines lower LDL-C consistently across a wide range of patient demographics and baseline characteristics. On Slide 9, we highlight the important safety information for NEXLIZET. The safety of NEXLIZET was evaluated in the pivotal Phase III study conducted in more than 300 patients as well as safety data from NEXLETOL Phase III studies together with the existing ezetimibe label. The FDA determined that NEXLIZET has a positive benefit/risk profile in appropriate patients. And the label includes the following: NEXLIZET is contraindicated in patients with a history of hypersensitivity to ezetimibe tablets. In the warnings and precautions section, just as you saw with NEXLETOL, NEXLIZET may increase blood uric acid levels. Events of clinically significant hyperuricemia were 3.5% for bempedoic acid versus 1.1% for placebo. NEXLIZET is associated with increased risk of tendon rupture. The rates were very low at 0.5% for bempedoic acid versus 0% for placebo, and importantly, no causality has been established. I'd also like to highlight that the side effects were generally comparable to placebo. No dose adjustments are required in patients with renal impairment. NEXLIZET has once-daily dosing with or without food, which we believe will provide a convenient option for patients, along with simple, room-temperature storage conditions. Finally, I'll note that concomitant use with simvastatin greater than 20 milligrams or pravastatin greater than 40 milligrams should be avoided. Use with cyclosporines, fibrates or cholestyramine requires special consideration. The most common adverse events with NEXLIZET are upper respiratory tract infection, muscle spasm, hyperuricemia, back pain, abdominal pain or discomfort, bronchitis, pain in extremity, anemia, elevated liver enzymes, diarrhea, fatigue, influenza, sinusitis and arthralgia. With that, I would like to turn the call over to Mark Glickman, our Chief Commercial Officer, who will talk to you about how we are getting our medicines to patients. Mark?

Hey, thank you, Ashley, and hello again to everybody. We are very excited about the U.S. approvals for both NEXLETOL and now NEXLIZET. We've already built an incredibly experienced commercial team at Esperion, most recently, bringing on 300 best-in-class territory managers, along with 30 regional directors, with significant cardiovascular expertise and experience. We are in the process of onboarding those approximately 300 reps that have been recruited. I'll provide greater detail in just a few moments. Throughout our preparation for our commercial launch in the U.S., our team has conducted extensive market research so we best understand patient, health care provider and payer needs as well as inform our strategy for a successful launch. We believe that NEXLETOL and now NEXLIZET will provide a simple and convenient way to get patients with ASCVD or HeFH on maximally tolerated statins to their LDL-cholesterol goals. We are now focusing on NEXLETOL, as Tim had mentioned. However, soon, NEXLIZET will provide an even more powerful option for physicians and patients. As discussed earlier this week, patient access combines several key elements, which include compendia class, formulary position and coverage and list or WAC price and patient copays or out-of-pocket costs. Each of these elements is incredibly important when ensuring access to medicine in our health care system. We've been focused on each and every element with each of the different constituents in the health care system to ensure patients and their health care providers have access to both of our medicines. NEXLETOL and NEXLIZET are first-in-line medicines. They are ATP citrate lyase inhibitors, in the case of NEXLIZET, in combination with ezetimibe, which is a non-statin mechanism of action. As a result, we are confident that these therapies will be placed in their own compendia class, and this is critical. We have made the critical decision to price both products at parity, meaning available at the same WAC price. This access strategy continues our commitment that for patients who require the additional LDL-C lowering that either NEXLETOL or NEXLIZET provides, cost will not be an issue. Our expected compendia class, formulary positioning and coverage and pricing strategy bolster our confidence that we have broad patient access in both NEXLETOL and NEXLIZET. I would like to provide an update on where we are on the hiring process front. As previously discussed, we have determined the initial field commercial team of approximately 300 reps is ideal for the first phase of our launch. By being strategic, hiring highly experienced territory managers and regional directors as well as being highly focused on cardiologists, lipidologists, endocrinologists and high CV writing primary care health care providers, we will reach prescribers who account for 40% of the LDL-C cholesterol-lowering scripts. This amounts to 36,000 high-prescribing health care providers that we can educate. As a reminder, we have partnered with ZS Associates, an industry leader, to develop this extensive research, reach and frequency plan. At this point, we have over 270 representatives who have accepted the offer with the industry -- with industry tenure of about 13 years within cardiovascular field. 30 regional directors with an average of 15-year sales leadership experience will lead them. This team will be trained on NEXLETOL and NEXLIZET, with initial focus on NEXLETOL. Promotion of NEXLIZET will commence in early July. Our progress will be very transparent. You can look for prescription-buying data for NEXLETOL in both Symphony and IQVIA or -- on or about Friday, April 10. We expect these databases to initially capture 90% of all NEXLETOL scripts. To be clear, we'll be sampling to health care providers, but the samples will be 7-day blister packs and not be included in the prescription bottle you'll see in these databases. NEXLIZET should be visible approximately 3 months later. As you see on this slide, we have left no stone unturned in our plan for successful launches of NEXLETOL and NEXLIZET. We have a highly experienced launch team, and our early focus will be to increase awareness and drive adoption of both NEXLETOL and NEXLIZET. To date, we have built and are now ready to launch critical corporate advocacy campaigns, peer-to-peer educational programs, Congress exhibit and educational efforts and, finally, a full health care branded marketing initiative. As I said before, and believe me, this is not an all-inclusive list. This is a glimpse into the extensive effort going into these launches. Just as a clarifying note, while our multichannel approach includes direct to consumer, this is not traditional TV direct to consumer like you've seen in the past. This will be a highly targeted digital and print direct-to-consumer approach with TV potentially coming in the future. Through all these efforts, you can see we are 100% committed to ensure the right patients have access to NEXLETOL or NEXLIZET. At the end of the day, everything we do, every campaign we run, every call we make is to ensure the appropriate patients, the patients that will benefit from the LDL-C lowering provided by either NEXLETOL or NEXLIZET, will have access to these important medicines. Health care provider awareness and prescribing, pharmacy availability and managed care access are just a few areas we need to ensure we're working in conjunction to ensure patients can have access to NEXLETOL or NEXLIZET. A tremendous amount of research has gone into the preparation phase of launch. And as I've said in the past, we research to get to the truth. We have incredible medicines, and an experienced, successful, passionate, motivated team. There's a major need in the treatment paradigm for both NEXLETOL and NEXLIZET. After all of our research, we have a plan that will maximize the number of patients that will benefit from NEXLETOL or NEXLIZET. At peak, we believe 1.8 million patients will be on our medicine. While this is an impressive number, we believe with real-world use, the potential for our medicines may be much higher. Additionally, me, my team and Esperion will never be satisfied until every single patient that needs NEXLETOL or NEXLIZET will be able to benefit from these important medicines. As Tim has mentioned, this is a monumental day for millions of patients still in search of LDL-C cholesterol-lowering medicine that is accessible, convenient and effective. We believe NEXLETOL and NEXLIZET are a win-win-win: a win for health care providers as they offer new medicines for the toolkit for physicians; a win for patients because our medicines can provide affordable non-statin alternatives for those who are frustrated and, in some cases, giving up hope that they are not reaching their LDL-C goals with existing medicines, along with a low-cost option for eligible patients; and a win for payers as they provide solutions that address the need for efficacious, safe, tolerable and affordable LDL-C cholesterol management. Now that NEXLIZET is an approved medicine, I want to ask you to please look at the details of NEXLIZET's important safety information and visit our website at NEXLIZET -- for NEXLIZET's full prescribing information. And with that, I will turn this over to Rick Bartram to discuss our full year 2019 financial results that were issued via press release earlier today. Rick?

Thank you, Mark. As of December 31, 2019, Esperion had approximately $202 million in cash and investment securities. Revenue was $1 million for the fourth quarter of 2019 and $148.4 million for the year ended December 31, 2019, compared to no revenue for the comparable periods in 2018. Revenue was primarily attributable to the initial recognition of the upfront payment from the Daiichi Sankyo Europe collaboration agreement that we entered into in January 2019. Research and development expenses were $38.2 million for the fourth quarter of 2019 and $175.6 million for the year ended December 31, 2019, compared to $49.5 million and $171.5 million for the comparable periods in 2018. The slight increase in full year R&D expense was primarily attributable to the clinical development cost for bempedoic acid and its ongoing CLEAR Outcomes trial, commercial product manufacturing supply activities, regulatory submission activities and increases in our headcount. General and administrative expenses were $21.7 million for the fourth quarter of 2019 and $65.9 million for the year ended December 31, 2019, compared to $11.2 million and $33.1 million for the comparable period in 2018. The increase was primarily associated with costs to support precommercialization activities, public company operations, further increases in our head count and stock-based compensation expense. The net loss for the 3 months ended December 31, 2019, was $61.9 million and for the year ended December 31, 2019, was $97.2 million compared to a net loss of $60 million and a net loss of $201.8 million for the comparable periods in 2018. Esperion had a net loss per share of $2.26 for the fourth quarter of 2019 and $3.59 for the year ended December 31, 2019, compared to a net loss per share of $2.24 and $7.54 for the comparable periods in 2018. We currently have 27.5 million shares of common stock outstanding and another 4.9 million to be issued upon the exercise of options, investing of restricted stock units and $132.5 million of revenue interest liability outstanding as of December 31, 2019. Looking forward to 2020, we expect $175 million in cash proceeds from the Daiichi Sankyo Europe and Oberland Capital agreements, $150 million and $25 million, respectively. Keep in mind that these amounts do not include U.S. product sales, EU royalties or an upfront or milestone payments from a potential rest-of-world collaboration. Just to note, we will not be providing product sales revenue guidance during 2020. Research and development expenses for the full year 2020 are expected to be $145 million to $155 million. Selling, general and administrative expenses for the full year 2020 are expected to be $225 million to $235 million. Keep in mind that these amounts do not include $30 million in noncash stock comp expense, so those will need to be added back to your models for EPS calculation purposes. The increase in the expected operating expenses for the year are primarily associated to the anticipated commercialization activities for NEXLETOL and NEXLIZET. Just to reiterate, we expect that our current cash resources coupled with our expected future milestone payments under the Daiichi Sankyo license agreement and the Oberland Capital revenue-based funding agreement and NEXLETOL and NEXLIZET U.S. commercial net product sales are sufficient to fund our operations through profitability. So with that, I'll turn the call back over to Tim for closing remarks. Tim?

Hey, thank you, Rick. Before we take your questions, I want to just take a few minutes to summarize the highlights from today's NEXLIZET approval announcement along with a look at what's ahead. So first and foremost, we're enormously pleased to announce the FDA approval of NEXLETOL last week, also known as bempedoic acid, and now, today, the approval of NEXLIZET, also known as the bempedoic acid/ezetimibe combination. Both were approved with positive benefit/risk profiles for appropriate patients, confirming our internal expectations and, as you saw once again, exceeding external expectations. Second, as you heard from Mark, we are sprinting and our team is sprinting to make sure that NEXLETOL is available to patients in the U.S. by March 30 and NEXLIZET will be available by July of this year. NEXLETOL is the first once-a-day, non-statin LDL-cholesterol-lowering drug approved in the U.S. in almost 20 years for patients with ASCVD or heterozygous FH. NEXLIZET is the first non-statin LDL-cholesterol-lowering combination medicine ever approved. There are 2 key patient populations that are underserved as we highlighted: the millions of patients that can't take statins, that is, those patients for whom maximally tolerated statin is no statin at all; and secondly, the millions of patients currently taking their maximally tolerated debt but who need additional non-statin LDL-cholesterol lowering to get to their doctor-recommended goal. As you heard from Mark, we've addressed every key element to ensure that NEXLETOL and NEXLIZET will be both affordable and accessible for patients. As you've heard us say, it's lipid management for everyone. We plan to offer a low list price for both medicines. As you heard Mark say, we're going to price them at parity. We are confident that NEXLETOL and NEXLIZET will have their own compendia listings. We're confident that NEXLETOL as well as NEXLIZET will have attractive formulary positioning in both commercial plans and Medicare Part D. For both medicines, we're targeting 50% commercial formulary coverage and 25% Medicare Part D coverage at launch. What that means is for eligible commercial patients, we're targeting copays as low as $10 per prescription for up to a 3-month supply. And for Medicare, we're targeting the lowest-tier and related copay. Next, in terms of our cash position, as Rick highlighted, we are fully funded with over $200 million in cash on the balance sheet as of the end of 2019. As Rick noted, we'll receive another $175 million in cash from our collaborations within the next several months. All of this provides us funding through profitability. And as we said earlier today in one of the press releases, we remain on track to announce a rest-of-world deal for our medicines next quarter. Looking ahead, we look forward to seeing many of you at the Cowen and Barclays conferences over the next few weeks. Also coming up, the American College of Cardiology meeting is March 28 through the 31st in Chicago, and we'll have our first commercial presence there along with a number of data presentations. And finally, NEXLETOL will be commercially available in the U.S. by March 30, the Monday of ACC. NEXLIZET, just to confirm again, will be available for patients in the U.S. by July. Since today's call only follows a few days after NEXLETOL's approval announcement and conference call, during the question-and-answer session, we'll take up to 5 questions, so we're going to look to be super-efficient. If anyone has any additional questions after that, please reach out to us via e-mail as the operator had instructed, and we can follow-up with you directly. So with that, Olivia, if you would please poll for any questions.

[Operator Instructions] And our first question coming from the line of Michael Yee with Jefferies.

I'll keep it quick. With the reimbursement of the monotherapy pill and the combo pill, do you need to go back to payers for the combo? In other words, since you're launching in July, maybe you can talk about the staggering of that. And more important, the logistics of when you get these contracts, for a doctor, he -- would they have a 1-page doc attestation form like PCSK9s? Or could it even be simpler than that? So maybe just talk about the logistics of handling the contracts for both? And then what would the doctors need to do to actually get the drug?

Yes. No, I appreciate the question, Mike. Mark, can I tip it to you?

Sure. Thanks, Mike, for the question. So first, the conversations with Medicare have been with NEXLETOL and NEXLIZET from the beginning. So we have signaled to them parity pricing for some time. So where the team is now is we anticipate contract approval will be for both, although there's a stagnant launch of NEXLIZET. So we anticipate they'll be together, Michael. I don't expect a delay. Although NEXLIZET will hold off on the promotion for the first quarter, things may change. So we'll definitely negotiate and attempt to have both products on at the same time so we have full flexibility for both products. Michael, we'll know a lot more over the next couple of weeks about exactly where we stand. Some of the early feedback from our top payers is that based on the pricing and kind of the overall clinical profile that the PAs would -- if there was any prior auth, it would be to label. And you know as we know, although we have a fairly broad label, its exact patients that we're targeting out there. So at this point, I mean, the PCSK9s, when they launched, they had a lengthy attestation process to get to -- past any prior auth. Mike, I anticipate this to be fairly simple, if anything, just a simple check or maybe even an electronic look-back that the plans may be able to do, but we'll know more about that over the next 2 weeks. But I can't envision any plan having even close to the approval process the PCSK9s had.

Okay. That was a lot of the pushback that they got, and that's all the things we've heard. So if that's cleared up and easier, that would be a big thing.

And our next question coming from the line of Jason Butler with JPM Securities.

And congrats on the approval. Obviously, it's only been a few days, but I was wondering if you could share any feedback that you've received from physicians so far on the NEXLETOL label.

Yes, thank you. Mark, again, I'm going to ask you to take that one.