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

My name is Jess Fye, I'm a biotech analyst at JPMorgan, and we're continuing the 43rd Annual Healthcare Conference today with Esperion. So first, you're going to hear a presentation from the company, and then we're going to have time for Q&A. So if you have a question in the room, raise your hand, someone will bring you a microphone, or if you want to submit your questions electronically, they'll pop up for me on the iPad up here. So with that, let me pass it over to Esperion's CEO, Sheldon Koenig.

Great. Thank you, Jess. Good afternoon, everyone. On behalf of Esperion and company, we are very thankful for JPMorgan to have this opportunity to present what is a very exciting story and what a difference a year makes from when I stood up here a year ago. If you see me punching this, I was told to hit this really deliberately to make sure the slide goes forward. So here we go. Forward-looking statements. So again, last year, if you think about last year, where we were, we had a lot of things in front of us. We had just settled the Daiichi Sankyo Europe litigation. We still have the Oberland RIPA agreement that we are dealing with. That was about $465 million of debt. We had convertibles of over $265 million. And we are still waiting for the CLEAR Outcomes label. So we came to this meeting with kind of those 4 unknowns. So 2024 has been a very transformational year. I would actually say a watershed year for us where we have really identified and have turned the company around. So for instance, in the U.S., we expanded the market. We strengthened our domestic growth, increased market penetration and strategic initiatives, and we demonstrated this with double-digit growth quarter after quarter, and I will go into the details of that later in the presentation. Rest of the world and partnerships, we'll go over what our partners at Daiichi Sankyo Europe did. As you know, they were able to expand their label with the CLEAR Outcomes study. And what we announced in December is that Otsuka just recently filed their NDA for bempedoic acid in Tokyo. So they've just applied, and they will launch sometime in September or October of next year. And we really strengthened our financial base, and we'll go into that. So we expanded our sales force to 150 representatives back in January of last year. We essentially went from 70 reps to 155 reps. I've talked about the fact of what Otsuka did. In April of last year, end of March, we received our FDA approval for our label expansion, and we are off to the races. And I've talked about the fact that Daiichi Sankyo did the same. What was really important and it's a message that we put forward last year at this time was that not only would we get our label, but we would show an inflection point in growth. And we would also work with payers to get a streamlined utilization management criteria and allow physicians to get our drug much easier. And we'll go to an example of what those results were later in the presentation. Most recently, we also partnered with Neopharm in Israel, and I'll mention later our partnership initiatives in Australia and also Canada. And last but not least, in the last week or so of December, we closed a $150 million senior secured term loan with Athyrium and a credit facility with a new $100 million convertible bond where we also brought in approximately $40 million of fresh cash into the organization. So we are extremely proud of what we did in 2024. It has established a base of strength, and I think what it will also be is leading to additional value in the future for the organization. So I'm going to talk to you about 3 different, if you will, pillars today. One is around durable growth. And if you want to look at the definition of durable growth, it's something that essentially can't be broken, something that just continues on and on, and we'll demonstrate that. We're well positioned against potential competitors, I'll cover that; and we have a very exciting future ahead. So durable growth, this is a very large unmet need with a growing population. As I mentioned, we've achieved double-digit growth since the U.S. label expansion, and it's been supported also by global partnerships. I think something to keep in mind is that, yes, Esperion is responsible for the United States. This was one of the largest markets in the world for cardiovascular disease. But keep in mind, we're partnered with Daiichi Sankyo and Otsuka. These are 2 very large pharmaceutical companies, and we all think together of what is the global worldwide strategy of bempedoic acid and how do we leverage each other's resources to essentially grow even more. We are very differentiated based upon our label. Keep in mind that we are indicated in both not only secondary prevention, but also primary prevention, and we've demonstrated long-term safety. We have an exciting future ahead, and I'll go into it -- into you in detail the development of our next-generation ACLY inhibitors and the areas that we plan to study later in the presentation. But first, let's just focus on durable growth. So despite statins, we know that there is an ongoing need for oral therapies that remain. Cardiovascular disease still remains the #1 killer in the United States and the world. And we know that there's close to 44% of U.S. adults who are at high risk and have experienced a CV event. 53% of U.S. adults are at high risk and are not at the recommended LDL levels. High levels of LDL are the main risk of cardiovascular disease. It's been well established since the introduction of lovastatin, the first statin in 1991. And here's a number that's relatively new from the National Lipid Association, and that is approximately 30% of patients cannot take a recommended statin dose. Statins alone are not enough to optimize LDL-C and prevent cardiovascular disease. Now how has the label evolved for us from a available patients, if you will, or TAM? It's a significant and growing U.S. market opportunity. I would say that cardiovascular disease is probably one of the largest therapeutic markets out of all areas of drug development with an addressable population of many millions of patients. Originally, under our old label, we were really restricted to just the ASCVD patient population of 10 million patients. With the addition of our new label, we now have over 70 million patients at risk who are undertreated or not treated, and these patients all fall within our label. There's been a rising demand in double-digit growth in the nonstatin market. So these -- we like to call the adjunct market. So drugs like PCSK9, ezetimibe, ourselves, are in this market. And branded nonstatin therapies are leading the growth in the nonstatin market. So again, this is a market that is rich in opportunity. If you look at it globally, this is a $14 billion-plus market globally. And we've got the drug to address it. The next step in cardiovascular risk reduction is NEXLIZET and NEXLETOL. We presented the 14,000-patient CLEAR Outcomes study. This was a breakthrough study. It was actually presented at ACC in April of 2023. As I mentioned, we received our new label at the end of March of last year. And let me just review with you some of the key takeaways. First of all, the primary end point, we reduced nonfatal MI by 27%. So you can imagine a physician is able to give this message to a patient, what if I could reduce your opportunity or the possibility that you'd have a nonfatal MI essentially by almost 30%. We cut coronary revascularization by 19%. Primary prevention. So keep in mind, our study studied both secondary and primary prevention. And we are the only, again, the only nonstatin to have indication in both secondary and primary prevention. 30% of the patients enrolled in the CLEAR study met this criteria. Our MACE-4 was a 32% risk reduction in primary prevention. NEXLIZET lowers LDL cholesterol by 38%. I, myself, I think many of you heard, I do take NEXLIZET. And we've heard of stories where some patients have seen reduction of much greater than 38%; hyper-responders, almost 50%. Additional benefits of bempedoic acid is that we are not activated in the skeletal muscle. So unlike statins, you don't have that muscle pain myalgia, et cetera. We do not raise glucose. So unlike statins, you don't have to worry about going from that threshold of prediabetic to diabetes. We reduced a key marker of hsCRP, as a matter of fact. At the measurement of the 6-month endpoint, we reduced hsCRP by 22%. And another beauty of our label is the fact that you can use this drug with a statin or without a statin. And we've actually have done some pilots, and we'll be launching in February an initiative. We're not only are we talking about adding our drug to a statin, but that for those patients who are statin-intolerant, this would be a good choice for those individuals. Remember the 30% that I showed you earlier. So we are definitely filling the treatment gap. Physicians, we had found, when we did psychological behavior research years ago, is that physicians are frustrated, especially primary care physicians. They can give a statin, they can give ezetimibe, but there's still a long way to go in reducing that LDL burden. And now we have something, as I just mentioned, that they can add and remove that frustration and make them feel as though I've done something more. This specifically is true with primary care physicians because it's very difficult for primary care to actually prescribe a PCSK9. Many times, they actually have to look for a reference or a referral from a cardiologist, and that patient gets treated somewhere else. So now we've given the power back to a primary care physician to do something. And if you take a look at this cartoon, if you will, I'll address your attention to the red Xs that you will see, and let's just look at primary prevention. Again, as I mentioned, the only drugs indicated for primary prevention are NEXLETOL and NEXLIZET. PCSK9s are not. Ezetimibe is not. Also keep in mind, ezetimibe did an Outcomes study. However, that Outcomes study was never actually incorporated into the label. So they, in fact, don't really truly have Outcomes from the IMPROVE-IT study. From an LDL-lowering perspective, again, with ezetimibe, they showed about 25% lowering. We show up to a 38% lowering with NEXLIZET. And for the most part, I can tell you, NEXLIZET is really the brand that we really promote. And the majority of patients really only need that type of LDL lowering. So it's very powerful. And it's a small molecule. So it's not complicated from an injectable perspective, no training necessary, et cetera. So how have we been really busy as it relates to executing the focus and result-driven commercial strategy? I really have to compliment Eric Warren, our Chief Commercial Officer; also Lisa Schafer, who runs our marketing group; and the rest of the team who've really developed, what I would say, an omnichannel approach in addressing the market. The days of having 1,000, 2,000, 500, 600 representatives are over ever since COVID. So this going-to-market initiative has changed from long ago. We've had very targeted expansion, focusing on both primary care physicians and cardiologists, probably spending a little more time at the primary care physicians. Physician engagement. We've maximized digital outreach, and that's been very effective. Years ago, pre-COVID, I would tell you that was not effective. But now it is, whether that's through electronic prescribing and showing banner ads, whether it's sending e-mails, et cetera. We also use LinkedIn. We use any type of digital resource you can think of that physicians use to reach them. And we measure each one of these initiatives every -- dollar from an ROI perspective. I can tell you in digital, it's a 4:1 return in digital. Patient awareness, you can see our lipid lurker peeking through. If you haven't seen a lipid lurker run across your iPhone or whatever phone you use or your iPad, et cetera, you will. And if you do, that means you're a targeted patient, and you should probably get your lipid panel done. We're really proud of the lipid lurkers, and it's a unique way and a cute way to say the patient, say, this may be an asymptomatic disease, but you should really get it checked out. And then from a reimbursement perspective, a year ago, we were heavily restricted. Where we are today is that we've removed many of the significant barriers. We actually have a promotional piece that actually states getting NEXLIZET just got easier. It used to be you had to step through maximum tolerated dose of statins, you had to also try and fail ezetimibe. That's not the case anymore. It's very easy for physicians to get this drug. They have to fill out a very simplified prior authorization. I can tell you for plans like Aetna and Caremark, there's no prior authorizations, it's even that much easier. Just an example, in Germany, in Germany, you cannot use a PCSK9 unless you've actually tried and failed the bempedoic acid. So it really shows how well bempedoic acid has established itself in one of the largest European markets. So let's break this down. And what does it mean? How does it look by the numbers? I gave you the qualitative examples, but let's look at some numbers. So from an access perspective, we have over greater than 65% of Medicare lives insured; over 173 million lives covered when you combine both commercial and Medicare lives, which is, in commercial, greater than 92% coverage. And we're exactly where we need to be in order to continue the successful growth of these products. And when we speak about growth, we've had a 50%, 5-0, 50% increase in retail prescriptions equivalent year-over-year; 52% increase in new-to-brand prescriptions year-over-year; and greater than a 40% NBRx share and volume growth since expanded label. I talked about the adjunct market earlier. The market for us, the competition is ezetimibe. That's about 65% to 70% of the opportunity is ezetimibe. Injectable PCSK9 is about 12%. Now with that said, we've actually have seen with NBRx this inverse curve where we've seen PCSK9 and NBRx decreasing and bempedoic acid increasing. And as I mentioned earlier, this double-digit growth that we've talked about and that we've shown will continue into 2025. And long into the future, we don't see any growth. And to further supplement that, let's take a look at what the growth looks like. And then -- you may, if I direct your attention to the left of this graph, you'll see from Q3 '24, this is one of the first Q4 '24 numbers that we're releasing, we actually grew 12% in RPEs. And you can see on the weekly basis that we continue to grow consistently. We added the line on the top of the slide, if I address your attention to the left, so you can really see how dramatic a slope this is. And this is all we need. This is the type of slope that we need to have continuous, steady growth that will make these products billion-dollar assets within the intellectual property time that we have today. We have strategic partnerships, as I mentioned, driving global reach. Again, in Europe, our partner, Daiichi Sankyo, continue to do a great job. They're showing growth in high double digits. I've talked about the fact that Japan has submitted their drug application. Keep in mind, Japan is the third largest market in the world. And we also will receive royalty payments between 15% and 20% from Japan. In Europe, as you know, we monetized our European royalties. We think those will come back to us in 2028. But with that said, Daiichi Sankyo is also developing a triple combination therapy which will launch sometime in probably the end of 2027, and we'll get between 15% to 20% royalties from them as well. Daiichi Sankyo has also launched in many different product companies -- sorry, in the Asia and South America. Israel, I mentioned earlier, there'll be tiered royalties and additional milestones, albeit this is a small market. In Canada, we're evaluating partner opportunities. I think we're getting closer and closer. We are in the process of submitting our application to Canada, and that's going very well. And then I made this comment yesterday, just to relate some of our marketing activities. But if you take our marketing activities, our strategic partnerships, et cetera, we have a lot of tributaries, if you will, flowing to us, whether they be royalties, milestones, the growth that we have in the United States, to our bottom line. So again, just reinforcing the financial strength of our company. So I want to touch on competition because this is something that, obviously, we hear a lot. Current day, current day competition, as I mentioned, is really ezetimibe. It's generic ezetimibe. But what's on the horizon? Let's explore this. So I'll go over 2 slides. The first one is the comparison versus CETP, and the second one will be oral PCSK9. I'll address your attention to the CETP column because I think we've exhausted all of the commercial differentiations associated with bempedoic acid. Now keep in mind, these competitors are potential competitors. It's a high bar to have drugs approved in the cardiovascular space. So CETP, the next one on the horizon is obicetrapib. Four other CETP inhibitors have come and failed. I actually worked on one called anacetrapib with Merck. Torcetrapib was the first. And unfortunately, we don't really know how obicetrapib, how the LDL lowering is actually being measured. There's been 3 studies that have been presented. The BROOKLYN study, the TANDEM study and the BROADWAY study. So if we take a look here, we're using the direct methodology of measuring LDL lowering. And what you'll see is that for the most part, the LDL lowering of obicetrapib, evacetrapib and the anacetrapib, I think you would all agree, is relatively the same. Now if you take a look at CV risk reduction, obicetrapib, their trial, the PREVAIL trial, will not be completed until around Q4 of 2026. Torcetrapib, they actually looked at and did Outcomes and also did an IVUS trial. So they did an IVUS trial. That's intravascular ultrasound. It's an imaging trial. It's not represented on this slide. And that trial failed. Torcetrapib actually showed a 25% harm in patients with an off-target aldosterone effect. Dalcetrapib and evacetrapib showed no change from an Outcomes perspective. Anacetrapib had a relatively small change with the residual risk reduction of about 9%. And it was decided by Merck not to actually launch the drug due to the relative risk reduction, but also the fact that the drug accumulates in the adipose tissue for a very long time. And there's also questions about macular degeneration. So we really have to wait and see what obicetrapib shows. I think making any comparisons right now or speaking about residual risk reduction based off of a Phase III study with a data point that is not statistically powered and is speculative is probably not the most appropriate way to represent what the studies could show. And so we'll have to wait. And I think what we also have to wait for is with the studies that have been conducted, we've yet to see a publication. So we really need to understand all the facts related to the new CETP inhibitor that potentially may be entering the market. Let's take a look at PCSK9, and this is the oral PCSK9 that's being developed by Merck. This is MK-661 (sic) [ MK-0616 ]. I unfortunately cannot pronounce the generic name. But I like to say -- or 616, not -- 661 was another Merck product that I think I worked on. Their CV risk reduction, their Outcomes study, which is the CORALreef study, will not be available until the third quarter of 2029. Keep in mind, our patent expiry is June of 2031, albeit we're working on the strategy to actually extend our intellectual property. More to come to that at the end of 2027. This is an oral PCSK9. We don't know too much more about it with the exception of you do have to fast 8 hours prior to taking the drug. And you have to -- then you have to fast a half hour after you take the drug. This is a peptide. It's a very difficult drug to make. Again, long-term safety is not established, and we'll really have to wait and see until they have their Outcomes study what is the full effect of this product. The one thing I want to keep in mind with both of the competitors, and we showed this with bempedoic acid. It's very difficult, if not impossible, to actually get reimbursement with payers until you have Outcomes data. And that Outcomes data needs to be in the label. It just can't be the study presentation, et cetera. So these are potential competitors. They're far off. We're on the market now. As you've seen, we've been growing significantly from a double-digit perspective. We're out there having a meaningful impact on reducing cardiovascular death. And we'll continue that mission. And regardless of what competition comes out, we'll have a very well-established drug. One last comparison I would make to both CETP and PCSK9, and this is an ongoing theme you'll find with me, is the fact that we are the only nonstatin to be indicated in primary prevention. Neither of these drugs are studying primary prevention. So if you remember the patient funnel I showed you earlier, they're somewhat stuck in that 10 million bucket. We have 70 million patients that we can address. So we have a really exciting future ahead, and I really want to get into our pipeline in the last few minutes that we have remaining. But let me first say what our vision for growth is. Further sales growth and reimbursement, we see no slowing down of our future sales. We plan to advance our innovation and pipeline. We are also looking for -- and we've been very busy at this meeting, not only holding Investor Relations. This has been our busiest JPMorgan meeting with almost 45 investor meetings. We've also had 3 full days of business development meetings. There's been, I would say, a lot of inbound interest in companies who have assets that they think that we could help them commercialize. There's also been a lot of inbound interest in our pipeline, which I'll briefly cover in a few moments. We believe there's an opportunity to add to our portfolio and bring in something that's in the cardiometabolic area, whether that be diabetes, cholesterol, obesity, et cetera. And we are actively doing a landscape analysis to find what is a late stage 3 product or product that is about to be launched or it could be on the market that we could supplement our bag and bridge us to our pipeline. I wanted to draw your attention to the right side and our guidance for key financial data. Our R&D guidance is from $55 million to $65 million; SG&A guidance, $160 million to $170 million; our OpEx guidance, $215 million to $235 million. No surprise, as Ben would say, it looks a lot like last year. It's actually a little bit less. So we're happy where we are with our current numbers and the budget in order to support everything that we're doing. Quickly on our pipeline. 5 more minutes, Jess. Proven science, innovative pipeline, our second-generation ATP-citrate lyase inhibitor. Again, we're already marketing NEXLETOL and NEXLIZET. We have new molecules based upon this pathway. They are looking at both liver, kidney. And yes, we have oncology noted here, but we're not experts in oncology. But this is something that partners may be interested in. So we're identifying some novel biology. We're developing these therapies in an area of high unmet need. And I can tell you the areas that we're looking at are both rare and orphan disease. We plan to utilize strategic partnerships for R&D synergy. Keep in mind, again, the interest that we've already had. And to give you an example of what we're doing, this is our team, by the way, over probably 200 years of experience. I want you to first focus on the fact that we will be doing an R&D Day on Thursday, April 24 at 9:30 a.m. This will take place in New York. But topics to be covered is the first molecule that we will introduce. We'll introduce the pathway to IND. This molecule will have a number. It will be ESP dash something, something, something. We're focusing on an orphan disease in liver. It's not MASH. And this would be actually a first-in-class, best-in-class, only-in-class molecule in a market that is greater than a $2 billion market opportunity. We will not only have our head of R&D there, but we'll have KOLs there that we've been working with in development of this product. So if you think back to what I said earlier, adding additional products to our bag, developing our pipeline, this is something now that we can do based upon the fact that we have a strong financial base that we've shown the significant growth in the bempedoic acid franchise, which, by the way, will always be our #1 priority. And last year this time, we did have the ability to do this and now we can. And this is a way to grow the company, and again, create more value for Esperion. So we're very proud of this opportunity and the ability to do that. And the last point, as I mentioned, our #1 priority is always, always growing the franchise of NEXLIZET and NEXLETOL. Next Wednesday, we'll have a key opinion leader day. It will be hosted by our Head of Clinical Development, LeAnne Bloedon, and she'll have Patrick Moriarty, who is a physician out in Kansas City, and he'll give real-world testimony on his usage and efficacy of NEXLETOL and NEXLIZET. There will be the ability to ask questions as well, and we're really looking forward to doing this. And we'll also make some comments on potential new products coming in the future. So with that, I hope you can be as excited as I am on the future of Esperion. Again, this is a company that's turned around. This has been a story that has had many bumps, but all of the overhang, significant overhangs that we have had in the future, are gone. And we, as an organization, feel not only happy, but very confident in the future of this company. So with that, open up to questions. Thank you.

Thanks for the presentation. You highlighted the volume growth you're seeing with the NEXLETOL franchise. How do you think about the product growth developing in 2025? How are you going to capitalize on the opportunity?

Yes. So we actually see the growth in 2025 to continue to be this double-digit growth. We've seen double-digit growth now between 12% and 15% on a quarter-to-quarter basis. I think it's always going to stay somewhat in that range, maybe a little higher. The one thing I failed to mention also is we're seeing growth in prescribers. So almost every quarter, we're seeing a 10% growth in prescribers. As a matter of fact, third quarter to fourth quarter, we saw another 10% growth in prescribers. I was just talking to Steve Nissen last week over another matter. And he said to me, I am seeing more and more referrals of bempedoic acid come through the Cleveland Clinic. He said the awareness seems higher than ever. So we have a lot of momentum, and we're going to continue that.

And remind me, how large is the U.S. sales force currently? And is it sufficient in size in your view?

Yes, the U.S. sales force is 150 representatives. We also have 5 key account managers. And these are based in statistical metropolitan areas where there's high volume. So for example, Texas, New York, Miami, et cetera. We have found that the 150 is the optimum size. And we don't see any variation in that. And I think it goes back to what I said earlier. The world has changed. There's no need to have 300, 500, 600 people. It's really what's that right balance between the number of representatives and these other promotional assets that I covered and also targeting consumers as well. So we're really focusing on all the different leverage points to drive patients into physicians' offices.

I'm glad I haven't seen a lipid lurker jump into my phone yet.

Yes. We can make that happen probably so. Just give me the phone number.

What about Japan heading into that approval? How do you think about the opportunity in that country? And can you just take us through the near-term milestones associated with that approval and pricing?

Sure. Yes. First, let me start, I mentioned that Japan is probably the third largest market in the world for lipid lowering. I can tell you, when I ran ZETIA VYTORIN for a number of years at Merck, it was always United States, Germany and Japan. So it's interesting. Otsuka has over 700 people focused on this product in Japan. Esperion, just so everyone knows, is 305. It's not 305 patients, but 305 employees. As far as milestones, upon filing, they owed us a $10 million milestone. They filed, as I mentioned in the presentation, and they paid that milestone on December 20, exactly soon after they had filed. Once they get approval and pricing, it's an additional $130 million of milestones, and that would be late third quarter, maybe early fourth quarter of next year. It really depends when they get their approval and usually price comes about 2 months after.

This year, right?