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

Good morning. Welcome to the Jefferies London Healthcare Conference. My name is Dennis Ding, biotech analyst here at Jefferies. I have the pleasure of hosting Esperion Therapeutics and CFO, Ben Halladay here. Welcome.

Thank you for having us.

So before we kick it off, why don't you make some opening remarks in terms of just the progress over the last several years and importantly, what has happened this year, some of the accomplishments? And then how you're thinking about 2026?

Yes. There's a lot to unpack with that question. I'll do my best to keep it minimal. So I'll go back to April of 2024 when we received our cardiovascular outcomes trial updated label, which really kind of took the shackles off for how we could sell this drug and set up the uptake on that. It was a pretty watershed moment for the company, took our addressable market from about 10 million patients to 70 million. It's been really exciting since then. We've shown double-digit growth quarter-over-quarter. We've had on the heels of that major payers to the reimbursement landscape. We've gone from being a drug that was kind of a niche product in a smaller population to now what has been described as one of the most broadly labeled cardiovascular drugs out there. So we've really hit the ground running with that label update. Since then, I think we're showing that demonstrated growth. We're showing the progress against the payers that we would like to have. Selfishly also, we've done some really great work on the capital structure. We've been able to rightsize a lot of the debt that we have had in this company. And I'm happy to say with our $55 million stub, that has also been paid down. So we will end this year with less debt than we went into, which is kind of my goal every single year. And yes, it's really a great story that I think even though it's been phenomenal progress in the last year, the best is yet to come. We're looking at really down guidelines updates in early next year. This is the first time that we will have bempedoic acid in the new guidelines in the United States, and that's coming off the heels of spectacular guidelines in the European Union that candidly could not have been better had we written them ourselves. So it's an exciting time for Esperion. And yes, we've shown some really great progress over the last year. But I think the next year is -- the best is yet to come, let's put it that way.

Yes. And then maybe you can elaborate a little bit more on the guidelines and what's coming in the U.S. I feel like over the last several years, we've just been waiting for guidelines to get updated.

It's been a [ long wait ]. Yes.

Finally coming in early '26. So talk about what you expect there? Do you think that it will look in line with the European guidelines that just got updated? And just how much of a tailwind do you think it will be for the U.S. business?

Yes. I think, so a little bit of context. In Europe in September, ESC published their new guidelines, which gave bempedoic acid a Class Ia recommendation pretty much across the board by itself in combination. And the reason they did is because they put us in the same class as someone who has demonstrated benefit in both clinical and practice to show a reduction of cardiovascular risk, which is a very, very strong recommendation. We've been saying this for a while, but it's nice to have that external validation. When we look to the U.S., we expect guidelines to come out early 2026. So January, February time frame, they'll be published with ACC being the training ground for those guidelines. And I would expect in the U.S. that those guidelines would be pretty similar to Europe. There was kind of a disconnect the last time they put guidelines out, and it caused a lot of confusion, we'll put it that way. And so I think there's a strong push to make sure that they're very similar between both the U.S. and Europe in terms of how they're recommended, where drugs are placed and where we fit in the formulary. So even if they're half as good as Europe, we'll be in great shape, but we expect them to be very much in line with what we saw coming out of Europe.

Over the last few years, how much of a barrier has it been in terms of the guidelines, not including bempedoic acid? And do you think that this update will significantly unlock that potential there because there are millions and millions of patients in the U.S. with high cholesterol, right? Relative to your revenue base, which is growing double digits, which is great, but there's still a huge spread. So like how much of that opportunity do you think will be unlocked from these updated guidelines?

Yes. So as far as a barrier up to now, I wouldn't really call it a barrier. Where it really helps you is with the market access on the payer side, but we have a spectacular market access team that got us on that formulary and got us in that good placement even without the guidelines. So it helps us hold that position. It maybe helps us clean up some of the prior authorization and formulary. We're down to very few plans with a step edit it might help us there. But where it really helps us is on the awareness, to your point. If you go back to ACC 2023, when we announced the results of the cardiovascular outcomes trial, pre-label but when it was published, we saw almost a doubling of our adjunct share overnight because of that awareness from it. And I think having the guidelines update is -- it's a similar awareness event in that -- we're now front and center. And when people go to reference those guidelines, it's a simple choice.

Okay. And I remember the story over the last 12 to 18 months has just been around updating the UM criteria in the U.S. Are we there yet in terms of -- or are you guys there yet in terms of getting where you want to be in terms of access? How much room is there left going to 2026? Or is 2026 just more about execution and penetration into this market?

Yes. 2026 is 100% execution. And I'm actually joined here by John Harlow, new Chief Commercial Officer. And so I keep saying it's a John problem, execution. But no, it's entirely pull-through of those changes that we made to the managed care side this year and the second half of last year. So I've never seen a drug with better positioning and better access than this drug. The prior authorization process went from being the most burdensome barrier to any physician getting this to it's now just an afterthought. We have field reimbursement managers out there even helping in the situations where you do have a prior authorization. And our approval rates went -- we're in the high 80% for the majority of our plans in terms of an approval rate, which, in my mind, is unheard of. So from an access standpoint, I would say we're done. We've got it in place. Now we are at the point where it's about pull-through of those plans and making sure that we can give the physicians the confidence that when they know when they prescribe it, they'll get it. And I think we're there that we can start having that message out there.

Okay. Can you go into a little bit more detail in terms of where bempedoic acid is being used? Whether it's from PCPs or cardiologists, has that mix shifted over the last 12 months as well as just comments on like which types of patients are getting bempedoic acid?

Yes, it has shifted, and I think a lot of it comes from that label update now the prior April, given the sort of broadening of that label and the inclusion of statin intolerance. That was the key update to the label that we had. And so with that, we saw a shift from a majority cardiologists because prior to that, we were strictly ASCVD patients. Now it's anyone unwilling or unable to take a statin. And we're, I think, now at 60% primary care, about 40% cardiologists. And I would expect to continue to see that trend shift towards the primary care just given the type of patient we're going after, right? It's statin intolerant. We have -- our tagline that we use with physicians is after a statin, we're next. And plays on the names, it's very catchy. People like it. They were buttons about it. So I think with that, this is a tool that primary care physicians have wanted and have needed for a while because prior to us, your option was ezetimibe, which is not very favorably seen, has low LDL-C lowering has no outcomes benefit. But when used in conjunction with us, really can accelerate the benefits or PCSK9, which primary care physicians tend to have to refer to a cardiologist for so they lose the patient. So this is something they've been clamoring for. This is something they're excited about. And that's where a lot of our focus has been given both the new label and the primary prevention of cardiovascular events in our label.

How does your commercial team or sales force -- like how does it look like right now, given that it seems like the focus will be on PCPs going forward. Remind us how many reps you have? How many reimbursement managers? And do you plan on kind of expanding that or doubling down going after the PCPs?

Yes. So we have 155 sales representatives and 5, what I'll call key account managers, and that's -- their reps that kind of provide double coverage in some of the key territories. So we are looking at expanding that out given the fact that we have guidelines coming out in the next year, we really want to capitalize on that event. What that number exactly is, we're still figuring out internally. But I mean, there's a huge opportunity here. And I'll point out on top of guidelines, we also have had a lot of successful patent wins over the last year, which we think can also give us an opportunity to drive peak revenue longer, higher, better. So we're looking to expand past the 155. What that exact number is, like I said, we're not -- we're still figuring out internally. But even with the 155, we reach about 70% of the target market from an in-person personal marketing standpoint. And then with what is a very successful digital campaign on top of that, we're able to get that up to, I think, about 90% coverage of the potential market that this drug can be in.

And when you say 70% covered, what do you mean by that? And like how sensitive is this market to, I guess, repeat visits from a rep? You know I mean?

So 70% of the potential patients that are out there. And we've seen -- this is a very promotionally sensitive market. So having those repeat touches, and that's one of the reasons why we're looking at expanding to have more frequent hit points with a rep or with the digital hits because we've just seen phenomenal ROIs on that. But yes, it is very promotionally sensitive. There's a lot of touch points. But candidly, this is a drug that every physician should be writing every week. And that -- those frequent touch points help drive that.

Can you talk us through just the rationale or like maybe some of the pushes and pulls behind expanding the sales force, right? You said you have around 150, 155 right now, but like how do you think about expanding it to like 175 versus 225 or 250, et cetera? Like how are you thinking about that?

So we look at -- I go back to ECON 101 here. We do look at a marginal return on the sales reps, and we have a pretty robust model in terms of how we look at each incremental rep gives you certain incremental percentage of that target audience. And so we can really definitively say where does that marginal return crest and that's where we target. And the one thing that we do, given the updates to the coverage and given the updates to guidelines, that potential is higher, which is kind of why we're relooking at it now. So we'll take a good look at where that investment makes the most sense to top off.

Yes. And you can kind of sort of see where I'm going with this in terms of how do we think about the cost structure of the business today and then 2026. I know you probably won't give guidance in terms of OpEx today, but it seems like it would be incrementally higher than it is in 2025?

I think the keyword is incrementally, we're not going from 155 to 500 reps. I'll just -- let me say that very straightforward now. We're talking 30, 40 additional reps at most. So it's a few million more. It's not doubling, it's not tripling. It's a manageable -- I mean, I think we've known each other long enough that I'm not someone that loves to blow up the spend rate here, and we'll always manage expenses accordingly. But it's something that I think will be reasonable, but we can definitively say we'll come with the incremental revenue that can justify it.

Right. And then to sort of tie into that, you guys talked about getting to sustainable profitability in Q1. Is that already kind of like baked into some of those comments in terms of the sales force expansion?

Yes. I think the sales force expansion is incremental to that as long -- same with the guidelines, right? When we started making the profitability statements, we had not even seen or had any idea what the European guidelines would look like at that point. So all of that has not been factored in, I think, is incremental to kind of some of the statements that we've made. But yes, I mean, that's why I said the best is yet to come because we're -- we keep saying we're on the press becoming a legitimate company here. But yes, we will see a dramatic shift in being that cash burning company into one that's generating, I would say, pretty substantial return next year.

Okay. And then maybe talk a little bit about the Otsuka situation in terms of -- you guys got, I think, tentative pricing approval or final approval. So remind us of that situation and then the milestones that would be coming to Esperion?

Yes. So more exciting news over the course of this year. Japan received approval for bempedoic acid in their market in September, I believe, is when we got the formal approval of that. On the heels of that pricing also comes, which is the next big milestone for them. We received tentative pricing a few weeks ago. I think we're waiting on the final approval. Along with those regulatory steps, there are substantial milestones associated with them up to $120 million we will put a press release out in the coming days that kind of gives the final number along with a launch update in Japan. We'll do it in conjunction with Otsuka. But yes, we're very excited about that. It's the third largest lipid market in the world. The pricing we got was very good, and we are very excited for what will come from that market.

Okay. Perfect. And then I would have to ask around just the competitive landscape here. There are many other oral therapies coming on to the market, whether it's a PCSK9 or CTAP inhibitor, et cetera. Just how you -- and I totally appreciate the LOE situation being more like 2040s, which is great. But how are you thinking about the market over the next, let's call it, 3 to 5 years for bempedoic acid?

A few different ways. One, I will point out, we are on the market now. We have an outcomes trial and a very positive outcomes trial now that is in our label with the payer access that we would expect to come from that. So we're already out building market share and building that awareness. And the guidelines that I'll point to next year will include us. They will not include these new therapies. And the comment you made earlier about how it takes so long to get a guidelines update here that we can expect to be the only ones mentioned in guidelines for a while. So that helps. I think on top of that, our competitive landscape is one that we're keeping an eye on, but frankly, don't feel super threatened by. Back at AHA this last month, I think the Merck drug published a lot new data that kind of reinforced our confidence on that one. I think the big thing, the LDL-C lowering is where we expected it to be. But they have a massive food effect that is, I think, going to have a big problem in the real world in terms of getting patients to adhere to that. And we also learned it's not just food, it's also water. So not only can you not eat, you also can't drink in the fasting period for this drug. And the CETP inhibitor that's out there, I think we have a lot of question marks on that given the difficulties that class of drugs has shown, their data has been minimal that they've put out, but the data that we have seen just sort of reinforces that there's a long way for that drug to come in terms of showing that we would feel confident they'll show a positive outcomes benefit.

Yes. Okay. Now taking a step back, I mean, your revenue base is growing. You guys are going to get a significant amount of milestones. You guys are going to get to profitability in 2026. You guys will be generating cash flow -- sorry, in 2026. You guys have also mentioned about doing some BD in terms of leveraging your existing sales force. So how much of a priority is that in 2026? And like what type of asset would you be interested in?

Yes. It's been a priority in 2025 as well. And I think we've had a lot of very good conversation, a lot of good pathways of potential ways we could go. And we're looking at drugs that are either about to be approved or have already been approved, but whose companies need an infrastructure to sell, right? We have -- if you want to sell a drug, we have everything. We have reps, we have the compliance team, we have the supply chain team. Anything you could possibly need to commercialize a drug in the United States, we have those capabilities. And there are a lot of companies out there with one product and no infrastructure who are about to launch that could leverage our infrastructure. So I would say we're -- we have a couple of opportunities that we're in the final stages of that we're looking at. And in 2026, it will be about pulling those through and launching those potential products. So I'm very excited about this because this is all incremental to the top line, and we're looking at opportunities that would be a pretty straightforward plug and play with our -- wouldn't require additional investment. And it would just add to that top line and add to that value proposition next year.

Would you look at something specific to lipid-lowering therapies or maybe...

We're not pigeonholing ourselves to lipid-lowering therapies. And if we're just going to get in the guessing game of who we're talking to, welcome that, fine. But cardiometabolic is the way that we're approaching it. And I think more important than the indication is the call point overlap, right? We're calling on primary care. We're calling on cardiologists. And if it makes sense from a sales and marketing pitch to be able to have that conversation with a physician, then it makes sense to us. I think the indication itself, we're somewhat agnostic to as long as it makes sense from that commercialization effort.

Okay. Perfect. Now you guys also kind of announced some early pipeline this year, which has been quite a remarkable shift in terms of where Esperion was as a company 5 years ago and where it is today, right? And I appreciate that it's still early, but talk about the pipeline, why PSC? Where do you see the opportunity there for you guys?

Yes. So I'd encourage anyone listening to take a look at our R&D Day that we did back in April. I'm a commercial guy. I genuinely don't know what happens before Phase II, so I'm going to do my best to describe this. So we did an R&D Day on the PSC product. And just as a little bit of context, bempedoic acid is a first-in-class ATP citrate lyase inhibitor. And since launching bempedoic acid, we have learned a significant amount about the therapeutic potential in that class of drugs. And we have started coming up with new compounds that are targeted on much more specific areas outside of lipids. So the first one that we announced was PSC. The reason we're looking at PSC and the KOLs at R&D, they said it great. If you go back 25 years, they're having the exact same conversation about to a PSC patient 25 years ago as they are today. Really no developments in that area. It's a brutal condition that it's either liver transplant or death. And we believe that we have a compound that not only can help mitigate the symptoms of that, but actually reverse the damage done by PSC. So we think it's a multibillion-dollar opportunity given the market. It's a fast, relatively cheap compared to a 14,000-patient outcome trial path to market. So we're excited about the opportunity. We think we have something that's really valuable in this space that can help a lot of patients in a very, very nasty disease.

Okay. And when is that going to Phase I?

So we're in the IND-enabling work now. We will likely have that sometime in the next 12 months, and then Phase I would start immediately after that.

Okay. And should we be expecting more coming out of the pipeline?

We do have other assets that we will discuss. It's -- I think this is one of the coolest things that we do because there are very few companies out there that are both commercializing a product and have a pipeline. We do have other assets in the next -- we call it the next-gen program, in our next-gen program that target [ others, ] kidney being one of them. I would say stay tuned for those, but a similar thought and similar concept as the PSC.

Sort of very interesting because Esperion is a cardiovascular company, right? But then now you've got this pipeline going to essentially rare diseases.

Skipping our tone rare disease.

Which is very interesting and quite, I think, cost effective, relatively speaking. So is that kind of like more of a focus area for the company over the next 3 to 5 years? Just to kind of invest into the pipeline and rare diseases, et cetera.

Yes. Yes. I mean, look, bempedoic acid is still our bread and butter. We are still going to be focused on commercializing and a rising tide floats all boats. But over the next, call it, 5 to 10 years, I think you'll think of Esperion more holistically as just a pharmaceutical company than a cardiovascular company, given the shift into rare disease as well as cardiometabolic, I think we'll be touching across the value prop chain for patients in a variety of different indications.

Yes. Okay. In the last minute or 2, just remind us your cash position.

Yes. So pro forma after Q3, I think we're sitting at about $170 million. I think we'll be in very good shape from -- this is the first time I say we're well capitalized now, and we can execute on everything that we want to execute on. Like I said, the substantial milestones will be coming in, in the coming days. So we'll end the year with plenty of cash to be able to execute on everything I just spoke about.

Okay. Perfect. Well, thank you so much, Ben. Thanks for joining us.

Thanks for having us.