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

Okay. Hey, everybody. I'm Marty Auster. I am the lead SMID cap biotech analyst here at Crédit Suisse. You are joining us for the Esperion presentation at the 29th Annual Crédit Suisse Healthcare Conference in the first, and hopefully, the only virtual health care conference we'll be hosting. I've got Tim Mayleben, CEO; and Rick Bartram, CFO, on the call today. And Tim, Rick, thanks a lot for joining us. Really happy to have you here. I'll let you kick off and say hi, and you can tell us what it was like trying to launch a drug during the pandemic.

Yes. Thanks, Marty. Thank you for hosting us today and definitely look forward to a nice conversation here this afternoon. I think maybe I'll just start out by saying, no denying, this has been a challenging unprecedented environment. I think we've exhausted superlatives and adjectives to describe what the COVID-19 pandemic has been. But I think we've always had a long-term focus on patients and patient needs. And so even though this pandemic has definitely stunted the near-term aspect of our launch, our commercial launch, our long-term and peak expectations haven't changed a bit. So what we've seen -- and again, I think it's been reported out as well, fewer primary care visits by patients, increased telemedicine visits. JAMA actually recently reported on this, that have led to limitations in assessing blood pressure, but in particular, cholesterol. No more traditional waiting rooms, as we highlighted on our call -- our quarterly call last week. And while physician offices in many regions are open now, they're not always open to industry representatives for us to be able to conduct in-person calls. And of course, that's the most highly effective way of promoting a new medicine. And then I think the only other thing I'd highlight is, and again, something we said on the call last week is that when you look at new prescriptions for LDL-cholesterol-lowering medicines, statins, everything else, they are down 30% this year. And if that's not a COVID-19-impacted headwind because in the almost 4 decades that statins have been around, I don't think there's ever been a year, where new prescriptions were down over the prior year. So that's really impactful. So despite all that though, we are seeing growth. We are able to create demand for our medicines. I think as we reported last week, we've seen 30%, 40%, 50% month-over-month growth. We've seen 500% quarterly growth from Q2 to Q3, again, admittedly off a small base, but being committed to a safe and conscientious launch. We certainly like the trajectory that we're on, even if we don't like the environment that we're operating in.

So all that said, today with the news of the first kind of the Pfizer, BioNTech vaccine showing effect and maybe some light at the end of the tunnel kind of starting to emerge now. I think you, more than most of the names in my coverage universe, anyways, have an opportunity to really benefit from a more normalized environment, and it's probably had the biggest impact on you than any of the companies I follow. So how are you feeling about that today? Is this -- do you feel like you've had a chance to play offense finally? Or how is the mood?

Yes -- Well, no, that's a -- really appreciate the question. The news, as you said, at Pfizer today was stunningly positive. And I think I would be remiss if I didn't remind everybody that we were born from Pfizer back in 2008. We were spun out of Pfizer. So a really good pedigree, of course, not only with that, but also with our Founder -- Scientific Founder being Roger Newton, who was the co-discover product champion for Lipitor, the best-selling statin ever. But I think we've been saying ours is a recovery story. As the economy improves, as the conditions, the environment improves, then we have a real opportunity to leverage that patients will come back to visiting their physicians in person. Prescriptions for LDL-cholesterol-lowering drugs will increase because patients will be treated by their physicians for cholesterol. And so we think that definitely bodes well for the future. And again, I think this is -- we are, as you noted, highly leveraged to the sort of recovery that their vaccine is going to stay.

Yes. Let's get granular. So you mentioned 30% drop in LDL-lowering prescriptions this year. What -- from your side, what have you seen? You've obviously been involved in commercialized products in the past. What are you seeing in terms of your ability to access physicians? And kind of -- I mean, you're in the launch phase of your product. What have you been able to do versus what you would expect in a more normalized environment? What's the gap? And what could be changed once there's an effective vaccine hopefully rolling out in 2021?

Yes. No, so we've been reporting through the course, and very transparently, reporting how our field sales team has been able to do. And if you remember, during Q2, it was as tough as an environment as anybody has ever seen, state lockdowns, stay-at-home orders, et cetera, through most of Q2. And I think what we learned there, of course, was that virtual promotion is great in concept, but not great in terms of implementation. As I was saying, just like it is for physicians treating a condition like cholesterol, it's best treated in the office setting and where lab values can be taken, et cetera. During Q3, what we saw was a return to some semblance of normal, where we were seeing 60%, 70% of the engagements with HCP or visits with physicians that we would have seen in a pre-COVID environment. But interestingly, what we've seen since that August, September time frame is a plateauing. It hasn't gotten any better. We -- I think back in the summer, we're projecting, given the trajectory that we were on that, we might see that improve to as much as 80% of pre-COVID levels. But instead, what we've seen is a plateauing at that 60% to 70% level. And again, this is -- all of our territory managers are in the field. They are in their territories. They are trying to, in a conscientious, safe, following all of the CDC protocols in a safe way and engage with physicians in their offices, outside their offices, other locations that they can meet a physician. But again, in a safe and socially distanced way. What we're seeing though is, as I said, they can maybe get 5 visits a day with physician offices, whereas the normal is about 8. So again, in line with that 60% to 70% of HCP engagement. So I think that is -- like I said, it's definitely having -- had a dampening effect on the overall launch volume metrics. But a couple of things that I would highlight is that when we are able to get to physicians and well, we reported last week, we have 5,000 physicians now writing prescriptions for our medicines, 5,000, even in the face of this pandemic. Over 2,000 patients per week that are taking our medicines. And so we're seeing physicians who started writing early, writing more and more prescriptions. And we're seeing patients and again, patients who have started on therapy refill their prescriptions. And so I think that all bodes well. That's supported, of course, foundationally by the managed care coverage, which we've talked a lot about. We have 90% of commercial lives covered with our medicines and this is at the preferred brand tier step edits to label. And then we're over 50% now on Medicare Part D as we come to the close of the year. So we definitely feel good about the launch trajectory, about the early metrics that we are seeing with the face -- with the physicians that we've been able to engage with.

So you kind of touch right there on both the breadth and depth of the launch. Can you get a little more specific in terms of kind of your successes in being able to kind of those early adopters or the clinicians maybe involved in the trials, who had some experience or some real knowledge of the drug, their willingness to kind of make this a meaningful part of their practice. And how that process is going? And then kind of from the other side, obviously, this needs to expand to a much broader prescriber base over time for it to kind of achieve your long-term goals. Kind of where are you at there? Which is the harder part right now? And where do you feel like you're at in the process?

Yes, thanks, Marty. So we definitely think the folks that started writing back in the summer, so in the July time frame. It's typically 2 to 3 months to get lab values back for the patients that they originally write for. So if we think of them being on a 3-month cycle, we're just now -- they are just now getting those lab values back. And again, the reports that we're getting anecdotally are ones that are saying, good tolerability and the plus is we're seeing even better LDL-cholesterol-lowering efficacy than the label would indicate. And you might say, "Okay, so why is that?" Well, a lot of times what we're hearing is physicians are first prescribing our medicines for their statin-intolerant patients. The patients that they can't get to take anything previously. So if you remember, when our medicines are prescribed on a -- for a patient who is not on a background of statin, we're seeing -- in our Phase II program, we saw LDL-cholesterol lowering of 25% to 30%, much better than the 18% that is in the label because most of those patients were on a background of statin in our Phase III clinical studies. So we're seeing -- we're hearing reports of better efficacy. We think it has to do with the lack of a background statin in statin-intolerant patients, at least at this early stage. So we think very good tolerability. What we're hearing now is, again, in past practice would certainly indicate that as physicians see success with the early patient or patients, that they, in turn, then are prescribing to more and more of patients in their practice. So we think that there's a flywheel effect here, Marty, where success with these early patients and getting the lab values back, which were, like I said, just starting to see and hear about now are really going to pay off here in the months ahead.

And that first wave then is more on the statin-intolerant patients? And you think that will then -- it will expand into the -- yes.

Yes. No. Again, so we've said, when you look at the 18 million patients in the U.S. who aren't at goal, about half of them are patients who are not taking a statin or because they can't or won't take a statin. And the other half are patients who are on that maximally or on a statin, but need non-statin means of lowering LDL cholesterol. And again, we've said many, many times, patients prefer an oral drug, especially for chronic asymptomatic conditions like atherosclerosis or high LDL-cholesterol levels.

Yes. So the -- kind of we watch the script trends every week, every Friday morning. And we've seen this kind of phenomenon, where you're kind of having like a -- you get to step forward, you get 2 steps sideways. You're going to step forward, 2 steps sideways. Is that a pattern you think just kind of continues as long as the pandemic persists? Is there anything that you detect in your kind of advanced data metrics maybe that kind of give you an indication that there's going to be a more meaningful inflection in the near term? Or what's reasonable with...

No. So what we've seen, I think, like you said, when you look at it week-to-week, it is -- we use the term choppy. It is flat sometimes, slightly down other times, up -- big in other weeks. But when you average it all out, whether it's 12 weeks, 8 weeks or 4 weeks, pretty steadily, it's somewhere between high single-digit percentage growth week-over-week and low double digits percentage growth week-over-week. So I think as you're saying, it's definitely growing. The trajectory is great. There's not that really meaningful inflection yet. But again, I think that really meaningful inflection is really only going to come when we see -- when we get into this recovery phase, if you will where...

Well, it's going to be expanding the prescriber base in a meaningful way. And then is the...

[indiscernible] as in more physicians.

Is it awareness? Is it pushback because there is an outcomes data? Is it -- I mean, it's a little bit everything. But how do you?

Yes. No. So very few, very few physicians anymore don't accept that if you lower LDL-cholesterol, you're going to get a CV risk reduction benefit. So that -- we don't -- plans, payers, except "the LDL-cholesterol-lowering hypothesis or thesis at this stage." So that's definitely not the issue, but it is awareness, getting access to physicians, getting more patients flowing through physician offices, waiting rooms, those -- it's volume. It is taking the model that is working early with the limited access to HCPs that we have and really just expanding that model to a much broader footprint. And like I said, our reps definitely have more capacity. They're operating at 60% to 70% capacity. So how much more effective are they going to be when they actually have more access to more physicians and can get them to start writing for more of their patients.

When we look forward later this year, Novartis' inclisiran, is potentially going to be approved. Can you talk through that, both as there's an opportunity from that, I guess, for you guys, and there's also some risk from that for you guys competitively. Can you kind of talk to both sides of that a little bit? And I have some specifics as well, but.

Yes. Yes. So what I would say is fundamentally -- again, we're talking about a not yet approved medicine. But I think, as you said, looks like it's going to be approved. But fundamentally, you have to believe when there's 18 million people in the U.S. that are not at their LDL-cholesterol lowering goal, that there is room for everyone. Keep in mind, too, again, things that we've been pounding the table on, it is crazy today to think that cardiovascular disease is still the #1 cause of death in the U.S. Of course, LDL-cholesterol levels are a well-established causal risk factor for that. So controlling cholesterol levels should be either job 1 or job 2 for all of us, especially those of us in the health care industry. And further, the CDC is -- in their most recent study, is suggesting that cardiovascular disease deaths are going to increase by 25% over the next 10 years. Your head should explode to that. And why? Because we're not doing a good job of managing cholesterol. So there's room for our medicines. There's room for other injectable PCSK9s. We have a serious health problem that needs to be addressed, and new therapies will certainly help to address that. So again, we welcome new additions into the space. I think if you look back historically, you will remember when the fifth statin was introduced, all of the rhetoric was that it's going to take market share from the existing statins. And instead, what happened, of course, is the market grew. Because one of the questions you were asking earlier, is it awareness? Yes. Why is cardiovascular disease still the #1 cause of death? There's not enough awareness of what people can do like taking NEXLETOL and NEXLIZET to address their high levels of cholesterol.

And so in terms of your ability as a smaller company to kind of get out there and introduce yourselves and introduce NEXLETOL and NEXLIZET versus what Novartis might be able to do, how do you -- kind of how do you see that relative size? And I guess, I understand you're also -- you're baking in the argument also, hey, the more they're out there, the more we're talking about this, the more it helps everybody. And that's fair. Do you think you can kind of compete in terms of a -- kind of a voice perspective? Are you targeting the same -- are you targeting the generally the same batches of physicians at large?

Yes. I think that's a great question. And I'll tell you why. Because I think when you look at the target HCPs, the target health care providers, that are going to be prescribing our medicines, about -- I think we've talked about this number of 36,000 to 38,000 HCPs that we're targeting. About 1/3 of those -- 30% of those are cardiologists. But the vast majority of our health care provider targets are primary care docs. And the reason for that is because our medicines are oral, once daily, convenient, they're easy to use, easy to access and they are familiar, right? They're familiar because they're already taking a statin or they're -- almost all of these patients have comorbidities. So they're already taking oral once-daily medicines for whether it's diabetes or blood pressure or any other condition. And so they're used to taking their medicines once a day, and that's who's going to be prescribing our medicines to the patients are the primary care docs. So certainly, we will see some awareness raising among cardiologists as a result of Novartis and inclisiran being in the market. But I think as we were talking about overall, that should create awareness, more generally, of the need to manage cholesterol. And among cardiologists, we'll continue to get our fair share, if you will, given the strengths that our medicine have. Easy accessible, oral, once-daily. And keep in mind, the efficacy of our medicines, in particular, in patients who are not on a background of statins is about the same as you see on our PCSK9 or with PCSK9, not on a background of statin.