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

Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/research disclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have from Esperion, CEO, Sheldon Koenig; CFO, Rick Bartram; and CMO, Dr. Joanne Foody. Welcome.

Hey, Jeff. Thanks for having us.

Hi.

Thank you for joining. So for those who may not be familiar with Esperion, can you provide a brief introduction?

Yes. We'll do. First of all, on behalf of Esperion, I just wanted to thank you for having us at the Morgan Stanley Conference. I believe on the call today, it's myself and just Dr. Joanne Foody. And again, we'll be happy to answer any questions that you may have. But just some brief history on Esperion. Esperion is a company that was founded back in 2008. It was spun out of Pfizer. And as of last year, in March of 2020, they launched 2 products, NEXLIZET and NEXLETOL. The base product is bempedoic acid, which is next and NEXLETOL. And NEXLIZET is the unique combination of bempedoic acid plus ezetimibe, so 2 nonstatins that are put together. Our commitment is really around cardiovascular. As a matter of fact, we're probably one of the only companies that is solely focused on cardiovascular, specifically cholesterol and bad cholesterol defined as LDL cholesterol. So it's exciting for us to have the opportunity to share our story today, talk about these brands, talk about our CLEAR Outcomes study, which is a unique study involving over 14,000 patients. Joanne will probably speak more to that if you have questions about it today. But again, I look forward to the conversation.

Great. So Sheldon, you've been CEO for almost 4 months. Anything that surprised you during that time?

So I think what has surprised me so far is really just the fact that we have such a great opportunity here. Not to say that -- I didn't know that from before. But the more that I'm able to see all aspects of the organization as it relates to not only what we're doing from a commercialization perspective of NEXLIZET and NEXLETOL, but the opportunity that we have, even from a research and development perspective, I think we'd be remiss if we didn't talk about the fact that we have a second-generation ACL that's in development. This would be, if you will, the sister of bempedoic acid. As you may or may not be aware, we licensed in an oral PCSK9 back in late December. We haven't really had the opportunity to speak much about that product, but we will be in the future. We think this is a best-in-class platform. And so -- and I think the other thing is just -- and this is not a surprise at all, but just really to see the continued dedication of all of our employees. And our mantra here is really working as one team. We're a small biotech company. We can't afford to have silos like some of the larger companies I've come from in the past. This is all about being as a team, working as a team, everywhere from the person that's out in the field talking to physicians, to the folks that are working on closing out their outcomes trial, to the folks that are working on development programs. It's really been for me an honor to be in this role. It's exciting. It's exciting for all of us. And we feel we're doing a lot of great things here, and I'm sure we'll talk about those soon here.

So what significant changes have you implemented since you took over the CEO role? And are there any additional adjustments that you think still need to be made?

Yes. So the changes actually started when I became the Chief Operating Officer that was late December of 2020. Well, one big change, and I would love to have her comments in the fact that we didn't have a Chief Medical Officer, and we hired Joanne Foody. And I'll turn it over to Joanne in a minute. Maybe she could talk about herself and some of the changes that she's made and she will be making. So that was a big change, really, again, adding to the credibility of this organization and what we're trying to do. Some of the changes I started when we were -- when I just started as Chief Operating Officer, before I became the CEO, was really looking into what is our strategy around these brands, who are the right patients who should be taking these drugs, really positioning for physicians. What would be the right patient as well, so they would know. It was somewhat unclear to them because these drugs launched right in the middle of COVID. Another big change that I really put into place is making folks more aware of the CLEAR Outcomes study, which is something Joanne can speak to. I don't think we, as a small company, have gotten enough credit for the large investment we've made into the study. Other things have been really how do we talk more about health economics and outcomes research. How do we actually get involved with the registries of which we've done. We've been very involved. Now we actually started a registry in partnership with UT Southwest and Dr. Eric Peterson. We've been having conversations with Kaiser Permanente, who reached out to us regarding potential studies, the acute coronary syndrome patients. So really kind of just making it aware to everyone that Esperion Therapeutics is in the market to really address cholesterol. And that's something that when I joined a thought leader said to me, one of the things we wonder is, is Esperion in this or not in that. I didn't really know what he meant until I started working here more, and I said, we really need to make ourselves more prevalent. We need to get more credit for ourselves. And that's something we've been doing. We've been really out on discussions such as this with other people, really talking about our commitment to cardiovascular health. The fact that we have 2 commercialized products out there to really making ourselves available. And that's one thing that I've been committed to from a CEO perspective. And I take the fact that cardiovascular disease is still the #1 killer in the United States, pardon the pun, but to heart. And there's so much more that needs to be done. And we have some very valuable alternatives to really help there. And I'd like to, if you don't mind, just pass it to Joanne, so he can talk about her vision from a Chief Medical Officer perspective as well. Joanne?

Sheldon, thank you so much. And Jeff, thank you, and thank you to those who are listening and taking the time to learn a little bit more about Esperion. So just by way of quick introduction, I am a cardiologist who's practiced about 20 years in academic cardiology, served on faculty at Yale and Harvard before moving to industry, where I've worked at Merck, Janssen Pharmaceuticals before this, running large compounds like XARELTO and medical affairs. But really thrilled that the opportunity to come to with Esperion, a company that's solely committed to cardiovascular risk reduction and saw this as a tremendous opportunity. And as Sheldon mentioned, we did not have a CMO role before. And so one of my challenges is really to bring to light all the fantastic science, the expertise that this company has in the lipid lowering space as well as engaging the scientific and medical communities about our science and our compounds and framing the clinical value of these compounds. We'll talk a little bit more about the CLEAR Outcomes study and specific to NEXLETOL and NEXLIZET. But also, as Sheldon mentioned, we've got a great pipeline of oral options for patients with or at risk for cardiovascular disease, and hope to bring those important oral therapies to patients in the future. So Sheldon, I'll turn it back to you and Jeff.

So Sheldon, I guess you talked about how some of the adjustments were made previously. So I guess in terms of, one, the adjustments on the sales strategy, how far are you on implementing those changes? And when do you expect to see the impact from those?

Yes. Great. So it's really somewhat of a 2-part strategy. We implemented the strategy somewhere around near the end of April. Following with that, we also have some new brand and material, a brand-new campaign that we'll be launching very soon that goes along with the strategy. But with that said, the messaging has already started as it relates to our new positioning. We're actually starting to see improvements already. We were impressed with some of the smaller changes we even made going from first quarter to second quarter. Some of the things we discussed on was that we would improve our price, which we did in the second quarter. We had a notable improvement in our net price. We stated that we would continue to provide growth, and we grew by almost 30% as we went from first quarter to second quarter. We grew the number of riders that are out there, and we grew the number of patients that were out there. So we had all the arrows pointing in the right direction. Now we've talked about in the past that we would continue to see acceleration of growth in the second half of the year. And we have noticed that in July and August, it's been somewhat flat. We think this is due to a number of reasons. One of those reasons are the fact that people are actually kind of out there living their lives post last year being cooped inside because of COVID, and addressing their cardiovascular health has not necessarily been maybe top priority, and we're working with different foundations and physicians to make sure that people understand that. As a matter of fact, this month is National Cholesterol Month, and we're trying to partner with several organizations to make sure that people are getting back and addressing their cardiovascular health. And as we go into finishing third quarter or fourth quarter, we think we're going to see more and more patients going to their physicians and getting their lipids evaluated, et cetera. And so with that said, I think that in combination with our new strategy, somewhat of our new alignment of our field as well, these are all going to come together, and we're going to continue to see growth as we move forward.

Great. And as you hinted -- you said earlier this year that you hope growth would accelerate in the second half of the year. Now that we're a little over 1/3 of the way through the second half, what are you seeing? And how are things going relative to your prior expectations?

Yes. So we still think things are -- they're going well. As I mentioned, we have seen a bit of a flatness from a prescription perspective. What we've noticed is that office visits are down. It goes back to what I said earlier as it relates to patients not going and essentially going to their doctor to address their lipid. But again, we think, and we're confident that we are going to see patients, they are going to go back to their physicians, they're going to get their lipids addressed. End of one, I was getting a blood test yesterday. It wasn't my lipid panel, which I did do about 2 weeks ago, it was another routine blood test and at a very busy establishment here in University of Pennsylvania. And I actually asked them, have they been seeing more and more patients as it relates to getting their lipid panels. And what they acknowledge was that there is a slowness until this past Tuesday, where they've seen more and more patients post Labor Day than they've seen almost in the past 1.5 months. So it gives me confidence that patients are going to get back to their doctor, get a physical, get a lipid panel and get a prescription to address either their current therapy or if it's new therapy, et cetera. So we're very early still in our launch. And I say that because I still -- and you might have heard this before, we never really got the launch that we deserved back in March of 2020. And partially, that was due to really the products were launched during the overall COVID pandemic. I think we're emerging from COVID now. Obviously, the Delta variant is out there, and it's something that we're closely following. We have heard of offices closing in different parts of the country. But now for us, it's really about execution. It's about delivering our message, it's about identifying the right patients. And again, we're early. We're early in the game. So we have a long way to go. Our biggest issue is awareness. We're a small company playing in a large primary care market, and we have nothing but opportunity in front of us. I mentioned earlier, we've grown our patients from about 35,000 to 48,000 patients treated. We're just scratching the surface. We know there is close to 10 million patients out there who are taking a statin or taking the statin plus ezetimibe and still have an LDL abnormality. So we have a long ways to go yet, and we see a bright future as we continue to get out there and campaign our message.

Maybe if I can ask a follow-up on that in terms of the acceleration in the second half of the year. I guess do you still anticipate further acceleration by year-end? And what are the factors that might impact when that happens?

Well, we're still closely monitoring what our growth is. Obviously, we're in the third quarter right now. I don't want to give any type of forward statements. But again, I think we're confident that we have the right strategy that we're putting out there. We know that every day, we're seeing more and more awareness with physicians. We get reports from physicians, thought leaders, et cetera, who have tried this medication. They see better results than what they've seen in the past. So we think the combination of our current strategy to grow of short term is -- we're confident about that. Long term, I think we're even more confident as we get closer to the CLEAR Outcome study as well, which we'll see top line results in the first quarter of 2023. So that will be another event for us. So we still believe we can deliver growth as we continue until the end of the study until that top line report's out. And I think that's the best way of explaining it. Again, we have a long ways to go. We have a lot of patients out there that need to be treated, and we have 2 very efficacious and safe drugs.

And you talked about how in July and August that perhaps some of the patients are not going to see their cardiologists. Have you heard any anecdotal evidence from your sales force about the impact of the Delta variant on patients returning to see their cardiologists? Is that playing a big role? Or is it -- like you were saying earlier, is that more people living their lives? And is it separate from Delta variant?

I think it's more people living their lives. But I will tell you, I've heard, even as of today, folks, even some bankers we've talked to who have canceled trips, et cetera, they're being cautious because of the Delta variant. They don't want to travel. They don't want to go different places. They don't want to get sick, especially when their children are going back to school, et cetera. But right now, I mean, I think it's still hard to say what role the Delta variant is playing. We've heard of some offices closing in California. We heard of a couple that are closing in Virginia. But I mean, I think the way we're operating -- a matter of fact, Joanne and I had a meeting with one of our KOLs yesterday, and not to toot our own horn, but specific key opinion leaders said to us, you should be complemented on how you've handled COVID. You're one of the only companies out there that stayed out there during the pandemic, and that's true. When most companies have pulled back their sales forces, our sales force was out there. They're out there now. And in some cases, I do know it's frustrating for them because they'll go to a doctor's office where if yesterday, it was open, next month, it might be closed. It's a personal decision of the physician whether or not they're going to open the office or they don't want anyone but patients going because they're afraid of transmission. One thing that we made sure we did is that when vaccinations came out, we were able to craft the letter for our representatives and anyone that was customer-facing to go and be essentially in the 1A class for vaccination because they are seeing health care professionals, and they are doing the service. And that allowed a lot of our representatives to also get vaccinated, and that has removed the barrier for them. The other thing is for us is we've continued to do live programs, and we've seen a continued increase in the number of attendees at live programs. Three weeks ago, we had live programs, one on a Tuesday night and a Wednesday night with primary care physicians. And the 2 nights combined, we had over 850 physicians attend these programs. And these programs are held at a restaurant. So it's almost like a theater, where 20 or 30 physicians would go to a restaurant and watch a national broadcast. And we got great feedback on that. And there's nothing more valuable than a live interaction. So we're continuing regardless of the Delta variant to be out there, provide education about our brands and also about the disease.

Great. Maybe a couple of questions on the CLEAR Outcomes study. I guess the first was -- sorry, I think I misunderstood or misheard earlier. When did you say that the data are expected for the CLEAR Outcomes study?

I'll have Joanne address that. Joanne?

Yes. So the study will complete at the end of 2022, and we anticipate data to be out early 2023.

Okay. And that's a little bit later than previous -- I think earlier this year, you had said that it would be in the fall. Can you talk about the reasons for that getting pushed out?

Maybe I can answer that. I don't know where that came from. We've never really spoken to the fall. We've always said that it was going to be -- top line results would be either sometime at the end of 2022 or early 2023. As a matter of fact, I think Joanne can go into some specifics about how the CLEAR Outcomes trial has been a model -- a matter of fact, we had a discussion with Steve Nissen earlier today, has been a model of during COVID, where we've been able to keep everything on track, that there's been absolutely 0 slippage in time line. And Joanne, I don't know if you want to speak to that or not.

Yes, absolutely, Sheldon. And obviously, as we think about this trial, as Sheldon mentioned, this trial was fully enrolled 14,000 patients who are not optimized on their LDL cholesterol-lowering medication, fully enrolled pre-COVID in 2019. During the pandemic, very significant investment was made into risk mitigation against COVID. And in fact, this study is tracking on target as anticipated. And in fact, if anything is tracking ahead of target with respect to some of the key milestones with respect to endpoint. So we are thrilled at how this study is moving forward and fully expect the results as we laid out end of the year or early -- end of 2022 or early 2023.

And I think just for clarity, as related to Jeff, you've been speaking to was the fact that we would have made [ accumulation ] in the second half of 2022, which would be late 2022. Maybe that might be where the confusion was.

Okay. That's helpful. I guess the study was fully enrolled prior to COVID. Have you seen any impact on deaths from COVID?

Yes. So this is a great question. We've been having continued monitoring of the study, and we have not seen any significant impact on deaths from COVID, which is really great news. And so again, everything is really tracking quite positively. And in fact, tracking very in line to cardiovascular outcome trials that were performed pre-COVID. So really thrilled about that and that we are moving things forward as planned.

Okay. Great. Well, maybe if I can ask a question of Dr. Foody. Some physicians and investors argue that NEXLETOL and NEXLIZET are not well positioned in that patients who need more LDL lowering might as well go on to take PCSK9s. I guess even before you joined Esperion, what were your thoughts on the positioning of the bempedoic acid? And has that changed at all since joining the company?

Yes. So thank you for the question. And again, I -- as a preventive cardiologist and also working for other pharmaceuticals in competitive basis, was looking closely at this compound from the beginning. And what I can tell you is that when I was looking externally in, I felt that the original positioning did not take full advantage of the potential for the compound. And so in fact, that was one of the reasons that I joined the company because I think really the initial positioning, and Sheldon can speak a bit more to it, was not taking full advantage. And I saw a lot more opportunity. Now this other issue, well, why wouldn't you just go and take a PCSK9? Well, PCSK9 inhibitors sound great. But in reality, they're really not addressing the needs of patients to address the very significant gaps in LDL lowering for a variety of reasons, whether it's a cost issue, whether it's the fact that patients don't want to take injections or quite frankly, whether it's the fact that there are outcomes trials really underwhelm the community because they didn't achieve outcome reduction beyond just the LDL alone. So I think there's still very significant opportunity to have an oral [ patient-friendly ] option that gives you about a 40% reduction. And so the positioning of either NEXLETOL or NEXLIZET before a PCSK9 is really very important. And the big issue really for me is that despite all the therapies we have, studies from this year suggests that less than half of individuals with existing cardiovascular disease have their LDL at appropriate levels. So that's a huge opportunity. And I think we just really are in a great position with either NEXLETOL/NEXLIZET. We have also additional cardiometabolic benefits with reductions in inflammation and glucose that we're hopeful will provide additional benefits.

Great. Maybe I can ask one more question, Dr. Foody. What do you think Esperion does well? And what aspects can the company continue to improve upon?

Yes. So again, in coming to Esperion, what I recognize is there is a deep understanding, deep expertise in lipid management for many years. And we have really wonderful scientists and clinical folks doing these studies here in Esperion. I think what the company has to improve on is really ensuring that the external community understand the science, but importantly, the value of these compounds to make a difference for patients. And we appreciate that that's hard in COVID, but in just the last 2 months that I've been here, we're refocusing a lot of our efforts in increasing awareness and bringing more science around lipids to clinicians, as Sheldon mentioned, bringing more around the value with data-driven approaches and really thinking about how to be innovated in a post-COVID world to get to clinicians, get into systems to really ensure that we get the patients who were right for the therapy, on therapy to reduce their LDL cholesterol.

Great. I guess in the last few minutes, I do have a few questions or a couple of questions on the strategy. But before we get to that, there have been a number of questions from the audience. So I'm going to try to lump a few of them together and ask maybe a couple of questions from there. I guess the first is maybe in terms of cash, if you can talk about, I guess, your run rate and the plans for financing.

Yes. So right now, we have about $220 million on our balance sheet. We definitely realize that we do need to go out and raise more capital. We are definitely looking at every avenue to do that. Our mission is to make sure that we're fully funded to CVOT for all the reasons that we mentioned earlier of the importance of CVOT. And it's not lost upon us that this is something that we need to do. We're currently working on what that strategy is going to be. And once we have that ready, we'll definitely share that.

And if I can just to add -- I'm sorry, go ahead.

No, I was going to say, but we will be addressing the fact that we do need to get out there and essentially make sure that we're fully funded to finish our CLEAR Outcomes study.

Okay. And if I could just ask a follow-on on that in terms of -- with the $220 million in cash, and now if the CLEAR Outcomes is going to report out in early '23. Can you remind us how far the $220 million takes us? Does that get through to the data?

Yes. We don't really give any guidance of exactly how much the run rate, where it takes us. And unfortunately, Rick is not on the call today. He'd be happy to follow up with you on that. But I think, again, it just comes back to the original question. You can see what our quarterly burn is. And I think one of the things that we're trying to do also internally is look for where can we actually optimize our spend, where can we look to be making more choices on where we actually spend. And in the same token, what would be our strategy as we move forward to raise capital. But rest assured, I think that the answer I'd like to give today is the fact that we're focused on making sure that the money that we have today is put to good use and the money that we raise whatever mechanism that may be moving forward will be put to good use to complete the CVOT.

Okay. And there was another question we got from the audience that has to do with duration of therapy and how long, I guess, average on average patients are on NEXLETOL/NEXLIZET. But maybe can you just talk a little bit about that in terms of -- obviously, the new patients are joining, but then, I guess, what kind of duration are you seeing in terms of patients staying on therapy?

Yes. So we actually look at the -- what we actually look at is refill rates. And we benchmark that to other brands that are used quite often. Those being Jardiance, Xarelto, Eliquis. We've even looked at Rybelsus, which is a new GLP-1. And we look to see if our refill rates are similar to the refill rates of those brands, and they are. These are multibillion-dollar brands. So we've been very satisfied with the refill rates in patients continuing their therapy. Again, these are not only very efficacious, but they're also very safe drugs. So there's really no adverse events and unlike the statin, these are non-statin, so there's no muscle aches or anything associated with it. Also, we have done analysis to look at abandonment. Abandonment being described as prescription being filled but not being picked up, and that's very low. It would be at the same rate as other drugs that would be abandoned. So we're very satisfied with patient's adherence. So I think that's what we're talking about here.

Great. Maybe in the last 30 seconds or a minute, one question on strategy. I guess how do you think about the long-term strategy for Esperion? How do you and the rest of the management team think about that?

Yes. Our long-term strat is -- and I'm going to break it up in 2 areas, short term and long term. Short term right now is really focusing on continuing to drive revenue of NEXLIZET and NEXLETOL in the United States. And part of that is also as it relates to awareness. Also somewhat short term, [ pivoting ] for long term is really the CLEAR Outcome study and making sure that there's more awareness associated to the study and how this study can be practice changing in the management of LDL cholesterol. And then furthermore, our overall strategy is when you look across biotech companies, there's very few that have products that are commercialized and also an R&D arm. And I think what we want to make sure that we do is that we not only maximize our commercialized products so that we drive revenue. We drive revenue, it can continue to actually also fund or help fund development programs of our oral PCSK9 and our second-generation ACL, which again, we realize our best-in-class platform, that will just, again, take the practice of cholesterol management even further. So I think, overall, we have a very bright future. We definitely have been somewhat in a stage of rebuilding. And sometimes these things take time, but we're moving 1 million miles a second to really make ourselves known and to be recognized as a leader in -- essentially a biotech company that's addressing cardiovascular health, specifically as it relates to management of bad cholesterol.

Well, great. It looks like we'll have to leave it there. Thank you so much for the time. Appreciate it.

Great. Thanks, Jeff. Take care.

Thank you.

Thank you, again.

Thank you.

Bye-bye.