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

All right. Hello, everybody. Thanks for joining us at the Needham Virtual Health Care Conference. My name is Chad Messer. I'm a senior biotech analyst here at Needham & Company. It is my pleasure to be speaking today with Tim Mayleben, CEO of Esperion, to discuss progress at the company. And I think we're just going to jump right into it. So good morning, Tim. I really want to start by congratulating Esperion for your execution over the last year. I mean we're in a global pandemic, but you guys launched 2 drugs. You delivered a Japanese deal, debt financing. How have you guys managed so well in this challenging environment?

Well, Chad, so first off, I just want to thank you for -- well, for you and your colleagues here at Needham for hosting us today. As you highlighted, 2020 was not the year any of us expected it to be. But I think one thing that has driven us for, well, most of the last decade, but especially during a period like 2020, was the fact that there are literally millions of patients with high levels of LDL cholesterol. You probably know cardiovascular disease remains the #1 even in COVID, even in the midst of this pandemic, it remains the #1 cause of death, not only in the U.S. but around the world. And of course, LDL cholesterol lowering is one of the key factors that can impact cardiovascular disease. And statins have been great, but people need, physicians need non-statin means of lowering their LDL cholesterol. And in particular, I think we've highlighted for many years the fate of patients who are statin intolerant, those who can't tolerate statins need convenient non-statin oral medicines that can help them lower their bad cholesterol. And just for some context, it's 35 million people considered statin intolerant in the U.S., the EU and Japan, where, of course, we have very capable partners in both the EU and Japan. But in the U.S. alone, there are an estimated 9 million patients, people, neighbors, relatives that can't tolerate statins. And of course, another 10 million patients that are taking statins, but need additional LDL cholesterol lowering to help manage their risks. So I think our job more than anything else now that our medicines have been approved is really just to create awareness for our medicines in the U.S. that we have these wonderful, convenient, oral, non-statin medicines that can help patients achieve their LDL cholesterol-lowering goals. Of course, in the near term, we're focused on commercial, operational excellence. Our team is doing -- under the leadership of Sheldon Koenig is doing everything that we can to accelerate growth now, especially that the pandemic is starting to recede. We've been prioritizing what we call high ROI, return on investment, commercial activities, while also monitoring and managing our spend. It's obviously a balancing act until the country fully emerges from the COVID pandemic. But obviously, it's patients that are -- have driven us, continued to drive us serving patients, getting our medicines in their hands, the hands of their physicians in order for them to benefit from them.

Yes. And the numbers associated with the problem are staggering. So thank you for laying those out. That said, there are some disruptions in normal cholesterol medication seeking just broadly during the pandemic. Have you seen signs that, that's picking back up and returning to, and I'll put this in quotes "normal?"

I think it's an excellent question. One of the things that we've been saying for months now is we are much better at analyzing what's happened than in predicting the future. So I think we also wonder what normal growth is going to be, what normal is going to be following the pandemic. And again, while it's not something that we can predict definitively, I think what we can say is that if you look at what we saw over the last several months here, so in the first few months here of 2021, we've seen consistent mid-single-digit percent growth week-over-week. And of course, at that level of compounding, you get 52 compoundings a year, that's pretty substantial growth even if week-to-week, like I said, is mid-single-digit week-over-week growth when you add that up or you do the math, it's pretty significant growth. So we're happy with that level of growth, but not satisfied. We expect that as the country continues to come out of the pandemic, as vaccines are distributed more broadly, then that growth should continue to accelerate. We have also pointed it out that statins -- new-to-brand prescriptions for statins are a leading indicator as that if you think about statins as sort of the category leader for LDL cholesterol-lowering drugs, as new-to-brand prescriptions are increasing that signals that patients are coming back to their physicians to get their LDL checked. And of course, almost every patient has to work through and demonstrate that they're intolerant of a statin, even if they were that -- described that way before, they have to reconfirm that. So as patients are coming back to their physicians' offices, they're progressing through a statin and then, obviously, they will move to non-statin LDL cholesterol-lowering drugs like NEXLETOL and NEXLIZET. So it's not an immediate return. Statins are the leading indicator. And then as statins recover, we will see more prescriptions written for our non-statin LDL cholesterol-lowering drugs because I think, as you know, the statistics are that 2 -- approximately 2 out of every 10 patients that is on a statin becomes or is statin intolerant. And so as you think about the new-to-brand prescriptions for statins, then we should see an increase in the uptake for our medicines as well.

Yes. Certainly a problem and a need. It's not going away. Has to come back at some time. [Operator Instructions] So we've talked a lot about the sort of need for additional cholesterol medications for patients. You put out a lot of good numbers around that. But what are you hearing from physicians right now in the middle of a pandemic? What are they telling you? How focused are they, I guess, on the need for new medications would be the question given distractions that they may have?

Yes. So I think everybody is anticipating the end of the pandemic, and as we were talking about this return to normal. So one indicator of that is we have developed a Speaker Bureau of national, regional and local KOLs. And the number of physicians that have signed up for that is even greater than it was when we first launched our medicines last year. And I think I would attribute that to enthusiasm and recognition that there is this unmet need that physicians need new options. And so we have physicians that are signing up to want to talk about our medicines, these new non-statin oral medicines with their peers. And by extension then they will talk to their peers, and we will see increased interest. We are seeing increased interest in learning about these new medicines because, like I said earlier, and I think you're well aware, Chad, that cardiovascular disease again, even as COVID has taken so many people over the last year, that still pales in comparison to the number of people who die from cardiovascular disease. And obviously, lowering LDL cholesterol can really help these patients live longer, healthier lives by reducing cardiovascular disease risk. Physicians know that. It's part of their training. And so there is this enthusiasm for learning about these new medicines that can help patients achieve their LDL cholesterol-lowering goals. As I said earlier, I think so much of our work, so much of the Speaker Bureau's work is simply just to raise awareness so that when a physician has the patient sitting in front of them, they're aware that there are these non-statin medicines. If a patient is saying, I can't tolerate the statin, I don't want to take a statin, you got to have something else for me, I don't want to take a shot. So I think the dialogues are starting to happen between patients and physicians. The awareness is being raised by not only the efforts of our field sales team, but also obviously, the Speaker Bureau that I mentioned earlier.

Yes So maybe just a minute on that field sales team, right? These are NEXLETOL, NEXLIZET launched on the cusp of a pandemic virtually. Where are you with your sales team, sort of, now in terms of numbers and their activities? And then if we do see things open up, how do you see managing that go forward? I know in the future, and we'll probably talk more about that later, some outcomes they'll come at maybe an inflection point. But how do you -- how are you thinking about where you are and how to manage the size and activities of your sales force?

Yes. Yes. So the sales force size is something that we continuously evaluate, Chad. It's obviously a balancing act between managing resources, being sensitive to what's going on with the pandemic and access to physician offices and then capitalizing on the growth potential as the pandemic recedes. So the commercial team has flexed to capture not only the value in the near-term, but also position us for the long term. So we went through some optimization of the organization due to the pandemic, I think, during the course of the year, as we rolled out the medicines. The importance of staying nimble, I think the pandemic taught us that or retaught us that. But we're going to be ready to accelerate as the country emerges from the pandemic. So as we -- as the country continues to progress to, again, I'm using "normal," we're certainly going to be looking for opportunities to capture additional growth, accelerate growth with our field sales force presence.

Okay. I was hoping to get your comments on a phenomenon we noticed, sort of looking at NEXLETOL and NEXLIZET. There is a little bit of a staggered launch. You actually worked to get them closer than the original plan because I know we've talked about in the past that combination fill, you really see it filling sort of heart of the need. But the 2 have kind of been going up in parallel, not -- no obvious preference for one yet at least in the numbers that I'm seeing. Can you just comment on that dynamic? And where you expect it to go? And just the 2 different pills and the different needs they may fill?

Yes. So I think the way we think about it, Chad, is that, as you noted, first of all, NEXLIZET launched about 3 months after NEXLETOL. And as we ended the year, as we are in the first quarter, we're seeing, I think, as you said, both NEXLIZET, NEXLETOL being prescribed approximately even. So -- evenly, so one-for-one, about 50% for each. As we continue with the rollout of the medicines, though, we do think that, that is going to shift more to NEXLIZET. And I think the phenomenon that we will see is physicians and their patients getting comfortable with NEXLETOL all on its own, and then realizing the benefits of the combination tablet, greater LDL cholesterol lowering, more convenience with a single tablet, getting either to goal or below LDL cholesterol-lowering goal with the combination. So we do think that the time is still in front of us when we will see NEXLIZET overtake NEXLETOL as the most preferred. But keep in mind, we're roughly a year into the availability of NEXLETOL. And I think as you and I have been talking about, that year was really significantly impacted in terms of the awareness, the usage of of NEXLETOL by the pandemic. But as we're coming out of this pandemic now, awareness will increase, usage will increase for both medicines, but then again, we will start to see, as physicians have developed comfort and experience with NEXLETOL, that they will prescribe NEXLIZET more frequently. And again, our projection is within a year or so that, that will be about a 2:1. So 2 prescriptions for every -- of NEXLIZET for every 1 of NEXLETOL. But the other thing that I would highlight is the medicines are priced at parity. The cost of the medicines are the same to us. So we are -- and that was all intentional, right? That was -- we wanted physicians to have optionality for determining the best medicine for their patients. For the patient sitting in front of them, what's the best medicine. Price should not be an issue. Access should not be an issue. Copay should not be an issue. They are priced the same so that physicians have that ultimate optionality to make the right treatment decision without regard to cost or other factors.

Yes. That's actually another important issue, and I know you guys spend a lot of time and were really thoughtful up to the launch on pricing these 2 products. One year into it, how do you feel about that? What's the feedback that you've gotten on it? Can you sort of evaluate that decision through the feedback of payers and patients with a year of experience?

Yes. So I would say this is one thing that we can point to and say, we got exactly right. The pricing strategy that we implemented was spot on. Payers, health care providers, patients, have all said that they like the pricing and have not -- more importantly, haven't complained about the pricing. So I think we feel really good about the pricing. One example of that, that I could point to is we have over 90% commercial covered lives for our medicines, Chad. And that's a preferred brand tier. This year, our focus is really on Medicare Part D. We achieved some success in Medicare Part D. But as you know, those plans approve new medicines on formulary less frequently and more slowly. But our emphasis this year is going to be on making sure that we improve the availability of our medicines on Medicare Part D, again, at preferred brand tier, so that our goal remains that patients will have access to our medicines. And -- of course, because no patient can benefit from a medicine that they can't access. So again, I think with the medicines priced at parity, NEXLETOL and NEXLIZET priced the same with a preferred brand tier, which means lowest copay, patients have access to our medicines and they're priced at a point that no one, no one is complaining about, which, of course, in an environment where there is tremendous rhetoric and complaining about pricing of pharmaceuticals, I think, is absolutely a huge win.

All right. So we're a year into launch here in the U.S., but it's not the only place where you can get these medications launched in Europe as well. And I think you recorded 4,000 patients on treatment in Europe, mainly Germany. I know this is with a partner, but how is the EU launch going? And what should we expect for the rollout?

Yes. I appreciate you asking. First of all, I would say, again, another thing that we got extraordinarily right is selecting Daiichi Sankyo as our partner in Europe. And some of the things that we highlighted when we announced that partnership, I'll just recap for folks, they had recent experience with launching a new cardiovascular medicine called LIXIANA, which was one of the novel oral anticoagulants factor Xa. They went from fourth to market to now second in terms of volume of revenue there. So they have done exceedingly well from launching in 2015 to now second in the market there. And as I think you know, the market for NOACs is highly, highly competitive, not only here in the U.S., but in Europe as well. So they had recent experience launching a really significant chronic cardiovascular medicine. Two, they had established relationships not only with cardiologists and other prescribing physicians, but also importantly, with, again, what we call the single-payer system here in -- or there in Europe. But it's really, what, 26 or 27 separate single-payer systems. But they had relationship with those payers, which is obviously very important when you're rolling out a new medicine. So early returns from the launch. And again, it's initially in Germany. Continues to be very strong. They're going to be launching in the U.K. here shortly. You may have also seen in addition to the EU approval that we achieved last March and April for what we call NUSTENDI and NILEMDO in Europe. We also achieved approval in Switzerland by the end of the year as well. So I think we have a lot of confidence in -- and maybe I'm understating that, a lot of confidence in the capabilities -- the commercial capabilities of Daiichi Sankyo in Europe. They're demonstrating those. They have demonstrated them with LIXIANA. They're continuing to demonstrate them with the launch of our product. They have a staggered rollout strategy. Again, began in Germany in November of last year, moving to the U.K. now and then they'll continue to roll out in other countries across Europe, as they had previously with LIXIANA. The final thing I'll say is Daiichi Sankyo has not given guidance that is revenue guidance for their expectations in Germany, at least not publicly. I would note, though, that in the Daiichi Sankyo presentation to investors that they did on, I think, about a week ago, April 5 or 6, they did highlight the NILEMDO, NUSTENDI product or franchise as contributing to their nononcology revenue and will be a significant amount of revenue for them in the years ahead. So we'll defer to Daiichi Sankyo to provide specific revenue guidance. You'll see the results. Investors will see the results here in the U.S. as we report our royalties from Daiichi Sankyo as they continue their roll up. But again, very strong positioning there and very strong performance to date.

Yes. And I would agree given just how European rollouts can go for branded chronic products. They'd seem to be pretty aggressive at least getting the medication out there. So we'll stay tuned and see how they do. So I guess the next thing I wanted to turn to is the CVOT, sort of an important evolution in both the label and the amount of information that we have for NEXLETOL and NEXLIZET. So maybe discuss that where it is? And when we can expect results? And what's the yardstick for our efficacy that we're hoping to see based on -- we've seen a bunch of these CVOTs now. So the world's experienced with looking at this data. What can we expect from your drug?

Yes. Thanks, Chad, for the question on the CVOT. I'll start out by saying, I think this is probably the most underappreciated aspect of the Esperion story. And just to refresh everybody, we're running a 14,000-patient CLEAR Outcomes study. This is a study that we designed in conjunction with Cleveland Clinic, and Steve Nissen launched it at the end of 2016. So we're almost 5 years into the study. This is a study that's being run globally. We've got 1,000 sites across the world or around the world. Perhaps, most importantly, every patient that is enrolled in this study is a patient considered statin intolerant. In the history of the world, there has never been an outcomes study in patients considered statin intolerant. And you heard me say earlier that there are -- in the U.S. alone, there are 9 million people, 9 million people in the U.S. that are considered statin intolerant. And this is the first time that anybody's thought enough to actually run a study with these -- and outcomes studies with these patients. Every other study has been a few hundred patients here or there, short duration studies measured in, in weeks, perhaps in months. So this is a landmark study, 14,000 patients. When a patient is considered statin intolerant, of course, they're not taking a statin. So what that implies is their LDL cholesterol levels, and we saw this in fact. In fact, there's a design paper that's going to be published in The American Heart Journal shortly, so it will be available for everybody to see. We've been talking about this. But these patients are at high risk. How do we know they're at high risk? Their LDL cholesterol levels at baseline when they enroll in the study is 140 mg per deciliter, 140 mg per deciliter. That compares to the IMPROVE-IT study, where it was about 70 mg per deciliter. So we're talking about an LDL cholesterol that is more than double the patients -- the level of the patients that were enrolled in the IMPROVE-IT study. Similarly, with the PCSK9 Outcomes studies that were done, the baseline LDL cholesterol levels there were 90 mg per deciliter. So this is a full 50 mg per deciliter greater. And I would just remind everybody that when you're measuring cardiovascular disease risk reduction, it is based not on the percentage LDL cholesterol lowering, which is, of course, what we mostly talk about when we're talking about LDL cholesterol lowering and, of course, what's in the label for every LDL cholesterol-lowering drug is the percent LDL cholesterol lowering. But what drives cardiovascular disease risk reduction is the absolute magnitude measured in mg per deciliter of LDL cholesterol lowering. So when you start with a 140 mg per deciliter baseline LDL cholesterol level and you lower it 25%, that's a significant mg per deciliter reduction, which we think is going to drive, and the study is powered to show a 15% -- approximately 15% reduction in cardiovascular disease risk. I would also highlight, as Steve Nissen does, who is the Chairman -- the Executive Chairman of the study, he highlights as well that patients enrolled in the study because they're not on a statin, they're at high cardiovascular disease risk, their levels of inflammation are quite high. So the level of -- the baseline level for inflammation for patients in this study is greater than 2.5 mg per liter. And again, greater than 2 is considered -- relatively considered inflamed. So these patients, and of course, our drug also lowers hsCRP in addition to LDL. So I think we have a really phenomenal opportunity to demonstrate not only cardiovascular disease risk reduction through the LDL cholesterol lowering, but also through the reduction in hsCRP. This study, as I said earlier, is a landmark study where we accumulated 50% of events last -- or at least we announced in September of last year that we had accumulated 50% of events. We've said that we will announce this year when we've accumulated 75% of events and we remain on track. The primary endpoint of the study is four-component MACE. We remain on track to have all -- 100% of the four-component MACE events accumulate in the second half of next year. So an exciting study, as I said. I think probably the most underappreciated aspect of the Esperion story. And really, this positions us to serve in a way that no one ever has this underserved patient population of statin-intolerant patients, of which, again, there are an estimated 9 million here in the U.S. alone. We do believe -- just to finish the thought, we do believe that with a positive outcome from this study that, that will drive a -- not only a label, an improved label for not only LDL cholesterol lowering, but CV risk reduction as well. But also an inflection in prescription volume, obviously, because the awareness of the power of our medicines will really be expanded.

Yes. So maybe just to follow up on a couple of things there. One, you brought up a CRP and NEXLETOL, NEXLIZET, bempedoic acid, as we called it for a long time, has some great effects there. It's not a measure that gets the most -- it's been known about a long time, it's not the measure that gets the lion's share of the attention. What's the state of awareness on that today? Is that part of the conversation for NEXLETOL and NEXLIZET? Or is that kind of a side story, if you will?

Yes. No. So I think it is definitely not the main attraction, as you said. But in the cardiology community, hsCRP is, by now, a well-accepted marker of cardiovascular disease risk. This so-called residual cardiovascular disease risk, not only managing a patient's LDL, but also managing their inflammation. And of course, statins, as you know well, do have the benefit of -- do demonstrate the benefit of reducing hsCRP as well. We've been saying for a long time that our drug is the only drug, the only LDL cholesterol-lowering drug besides a statin that provides hsCRP -- consistent and significant hsCRP reductions. PCSK9's don't provide that. Ezetimibe doesn't provide it. So we do think it's going to be -- continue to be an important story. It will be important for us to raise awareness about it as we get results from the CV Outcomes study. So I would say stay tuned, Chad, to you and everyone else for more on that because I think it's -- whereas the LDL cholesterol story is a very well-accepted narrative, everybody understands it. Everybody understands the benefit, the hsCRP is more of an evolving story and one that we expect that bempedoic acid is going to be able to help right.

Yes, I think it helps to have a marketed medication out there to talk to people about with that benefit to really bring that awareness out there. Talk about the label. And so many statins have run their outcomes study and that they get a label that goes from LDL reduction and now talks about benefits. Do you expect something similar to what we've seen before? Or as you mentioned, your study is focused on statin-intolerant patients? How do you see that information being incorporated, if at all?

Sure. So of course, I'll start out with the caveat that we won't know for sure until we're in front of the agency with the results and are having the conversation. But if you look at precedent, the precedent is that upon completion of a CV Outcomes trial, the label is very broad and regardless of the patient population or the background therapy. So we do think that the label will not only include statin-intolerant patients, but also more broadly all patients with high levels of LDL cholesterol.

Great. All right. Well, I've heard you call bempedoic acid, one and only multiple times, and I know it's a singular focus at the company. But there are some other things that you guys have done that are maybe worth talking -- touching on our final few minutes. And one of those was an oral PCSK9, preclinical, but an asset you in-licensed in January. Maybe discuss the rationale there? And how that fits in with full set at Esperion?

Yes. So we are -- Chad, I think you know well. We call ourselves the lipid management company. When we've said that, we've also said that we mean lipid management for everybody. And we have taken that to mean that, as I said earlier, patients can't benefit from medicines they can't access, or they don't want to access. We think PCSK9 is the -- well, we know it's the second most well-validated marker for lowering LDL cholesterol. HMG-CoA reductase, first and primate, which is, of course, the enzyme target for statins. But we now have 2 outcomes studies demonstrating that if you lower LDL cholesterol through PCSK9 inhibition that you get a cardiovascular disease risk reduction benefit. So it's a very well-validated target. The only issue with the PCSK9s -- well, 2 issues. One, they're expensive; and two, they're shots. And for a chronic medication -- a chronic disease area, you need to have a therapy that's convenient to take. And when we think about convenience, when the world thinks about convenience, they think once-daily medicines. So PCSK9, an exciting target, a very well-validated target. Our wheelhouse is really the development and approval of oral, non-statin LDL cholesterol-lowering drugs. And we can't think of a better target, a better use of our resources as we think about the next 10 years than to develop an oral PCSK9 that we can combine with bempedoic acid, NEXLETOL, at times to really form what we think will be the coup de grâce of oral non-statin LDL cholesterol-lowering drugs because we don't think that every 1 of the 9 million patients who can't tolerate statins is going to be served by NEXLETOL and NEXLIZET alone. They will need additional non-statin oral drugs. We want to be the ones to develop the next-generation oral PCSK9 that can be combined or dosed separately to really meet the needs of patients who have high levels of LDL cholesterol, can't tolerate statins, need non-statin means of lowering their LDL cholesterol.

That makes sense. More options can only be better. All right. So we talked about Europe. And I think maybe briefly, you mentioned at the beginning, you've also got a Japanese partner. You've talked about the rest of the world. So everything besides U.S., EU and Japan. And I know in the past, you've talked about being kind of advanced in some of those discussions. What's the update?

Yes, sure. So what I'll say, absolute confidence that we're going to complete a partnership in the near term. I know there's been a lot of chatter about this. One thing that I would just remind everybody is we ended the year with $300 million in cash. We have the latitude to be able to, again, do the right deal with the right partner. I tell our team internally we're not scheduling a doctor appointment here. We're actually negotiating a complex, multi-country collaboration with different parties, negotiating with different parties. So the fact that we're taking the additional time to do the right deal with the right partner, I understand people have this sense of urgency about it. But again, we have the cash now. We have plenty of cash now. This will add to our cash resources in the near term. So highly confident that we will get a deal done. I would also just remind everybody that I think as you highlighted at the beginning, that we got a Japan-only deal done long before anybody expected it in April of last year, and it was the most lucrative Japan-only deal in history. Prior to that, we had done the deal with -- the EU deal with Daiichi Sankyo, most lucrative EU-only deal ever. We've already received more than $350 million in milestones from our ex U.S. collaborations. And this next deal will only add to that. So we have an excellent record in business development. The next deal that we do, which, again, we're confident we'll get done here shortly, will, I think, similarly be one that folks will look at and say that's -- that was the right deal with the right group. And so again, we'll have an update for folks shortly on this, but very confident in getting that done. And again, like I said, getting it done the right way with the right partner.

All right. Well, it sounds like we've got that to look forward in the near term. We are at the end of our time. Tim, thank you very much for coming and talking to us about Esperion. You guys have had an incredible year.

Thank you, Chad. Great seeing you again. And again, thank you for hosting, and look forward to updating you here in a few weeks when we do our Q1 call.