Esperion Therapeutics Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 12, 2024

There are 10 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Aspirin's Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. Following the presentation, there will be a question and answer session. Please be advised that today's conference call may be recorded. I would now like to turn the conference call over to Alina Venezia, Director of Investor Relations.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Good morning, and welcome to Experian's Q2 2024 Earnings Conference Call. With us today are Sheldon Koenig, President and CEO and Ben Halliday, CFO. Other members of the executive team will be available for Q and A following our prepared remarks. We issued a press release earlier this morning detailing the content of today's call.

Speaker 1

A copy can be found on our Investor page of our website together with a copy of the presentation that we will also be referencing. I wanted to remind callers that the information discussed on the call today is covered under the Safe Harbor provision of the Private Securities Litigation Reform Act. I caution listeners that management will be making forward looking statements. Actual results could differ materially from those stated or implied by our forward looking statements due to the risks and uncertainties associated with the business. These forward looking statements are qualified in their entirety by the cautionary statements contained in today's press release and in our SEC filings.

Speaker 1

The content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, August 12, 2024. We undertake no obligation to revise or update any forward looking statements to reflect events or circumstances after the date of this conference call and webcast. As a reminder, this conference call and webcast are being recorded and archived. We will begin the call with prepared remarks and then open the line for your questions. I'll now turn the call over to Sheldon.

Speaker 2

Thank you, Alina, and good morning, everyone. Thank you for joining us today to review the meaningful progress we have made during the Q2 and to review our plans moving forward to continue to cement Nexlutol and Nexlutet as cornerstone therapies in reducing cardiovascular risk. The Q2 was an undeniably watershed period as we successfully executed our strategic initiatives across all areas of the business, key to building Esperion into a leading biopharmaceutical company, improving outcomes for patients with or at risk for cardiovascular and cardiometabolic diseases. The 2nd quarter was highlighted by double digit increases to U. S.

Speaker 2

Product revenue, significant progress by our partners in expanding international access to Nalendo and YUSTENDI and importantly, the monetization of our European royalties from our partner, Daiichi Sankyo Europe or DSE, and the early discounted payoff and termination of our existing revenue interest purchase agreement or RIPA with Oberlin. This strategic transaction significantly enhances our balance sheet and better positions us to focus on optimizing our U. S. Commercialization efforts. Ben will discuss this transformational transaction in greater detail later.

Speaker 2

Now let me turn to our progress with our U. S. Commercialization efforts, which are gaining momentum as validated by U. S. Product revenue growth in the Q2 of 2024 of 14% sequential and 39% year over year growth.

Speaker 2

This growth was driven by the expanded new labels we received in late March. Our prior labels for nexlazet and nexlazetal were limited to LDL cholesterol reduction in a population of patients that already had a CD event and were on statin therapy. Our expanded labels have 3 significant differences: 1, includes CV risk reduction benefits 2, expands the patient population by including primary prevention and 3, enables use in patients that are unable to tolerate or maximize statin therapy. NexoTol and NexoZet are now the 1st oral non statin LDL cholesterol lowering drugs to be approved by the FDA to reduce the risk of CV events in both primary and secondary prevention patients. We have the opportunity to bring the benefits of Nexlutol and Nexlutet to the 70,000,000 patients eligible under the expanded new labels.

Speaker 2

To support these broad expanded labels and drive awareness and ultimately prescriptions, we increased our field sales team. Critical to continued growth in prescriptions and product sales is broadened payer access. Here, we have done excellent work partnering with major payers to update utilization management criteria to include the recent label updates. The majority of payer updates began on June 1st and we were finalized by mid July with more than 80% of criteria now in place. To date, I am pleased to report that more than 100 14,000,000 lives now have payer criteria updated to reflect the new label updates.

Speaker 2

We also continue to garner new formulary coverage resulting in 92% preferred commercial coverage and increased our Medicare preferred coverage to greater than 50%. This strong payer acceptance that aligns with our new outcomes label underscores the payers recognition of the clinical benefit and economic value our products bring to both patients and the healthcare system respectively. As a result of this enhanced patient access and streamlined prescription process, we expect increasing physician confidence in prescribing NexoPal and Nexlazette, which should translate into increasing product sales in the upcoming quarters and beyond. With payer access advancing, our next important commercial initiative is to ensure we are further educating our healthcare providers or HCPs. In tandem, we have a campaign aimed at empowering patients to talk their HCP about their CV risk.

Speaker 2

We are using a variety of digital and traditional sales and marketing tactics that are gaining traction. For example, our expanded sales force has been targeting specific subsets of primary care physicians and cardiologists with in person detailing. We also gained meaningful traction with our digital campaign, where the team utilized 8 digital channels, including search, email, peer to peer, EHR, point of care, banners and social media to reach over 90% of our targeted health care providers. As a result of these combined initiatives by our managed care, sales force and marketing teams, we now have more than 21,000 HCPs writing scripts and total retail prescription equivalents increasing approximately 11% in the last 4 weeks of June compared to the prior 4 weeks of May. I'll note that we use this comparison because there were 5 weeks in May this year.

Speaker 2

This is truly a herculean effort and we are proud of the tremendous progress we have made throughout the launch so far. We have a tremendous opportunity ahead of us and are well poised to build Nexotol and NexoVet into blockbuster products for a variety of reasons. 1st and foremost, we have compelling clinical data from the CLEAR OUTCOME study that supports and validates safety and efficacy in reducing cardiovascular risk reduction and lipid lowering in primary and secondary prevention patients. 2nd, there is a large underserved patient population of 70,000,000 people at risk who need better treatment options. Finally, we have the right people and programs to drive this market and are taking all the right steps to successfully penetrate it.

Speaker 2

I say this because we have a team who have all either led or been a part of successful pharmaceutical product launches during their careers and I'm confident in this team's strategy and execution capabilities. Importantly, we are managing this launch in a methodical way, understanding that we need to have all the pieces in place for payers, physicians and patients to be successful. We see this like a flywheel. The initial rotations take time and effort, but the subsequent rotations create momentum that compounds. We are off to a strong start and are confident that the work we are undertaking today will translate into increasing scripts and ultimately into accelerated product revenue.

Speaker 2

Let me now turn to the progress we and our partners are making internationally. Starting with the EU, where our partner DSC is making important strides. DSC received its approved expanded label for Nalemto and NUSTENDI from the European Commission, which reflects the new indications for cardiovascular risk reductions and expanded LDL cholesterol lowering in primary and secondary prevention patients. They have begun launching these new labels in European territories with most areas anticipated to be launched by year end 20 24 and Italy in 2025. We expect this to be a substantial market for DSC as up to 80% of patients in Europe are unable to reach guideline recommended levels for LDL cholesterol despite taking statins.

Speaker 2

We are confident that with the strength of the approved indications, DSC will be able to position Nalemto and Ustendi as the 1st and only non statin lipid lowering medicine approved for CD risk reduction, both in primary and secondary cardiovascular prevention in Europe. GSE will have a medical and commercial presence at the upcoming European Society of Cardiology Congress at the end of this month in London. This exciting Congress is the largest cardiovascular medical meeting of the year and is well attended by key opinion leaders from around the globe, including the United States. Consequently, we expect the efforts DSC will make at ESC to also benefit our efforts to enhance the awareness and visibility of our products among U. S.

Speaker 2

HCPs. Beyond Europe, our partner Daiichi Sankyo Company Limited or DS ASCA gained approval for NexoTol and NexoZet in Thailand and for Nolendo and YUSTENDI in Macau and submitted new drug applications in Korea. While these are smaller regions, we expect to see incremental growth in our royalties from these product launches. Our Japanese partner, Otsuka Pharmaceutical announced that the primary endpoint of LDL cholesterol reduction from baseline at week 12 was achieved in their Phase 3 clinical trial in Japan for bempitoic acid as a treatment for hypercholesterolemia. Otsuka plans to file a new drug application in Japan in the second half of twenty twenty four with expected approval at National Health insurance pricing anticipated in 2025.

Speaker 2

We are enthusiastic about the continued momentum in Japan as it is one of the largest markets for lipid lowering therapies. This could be a substantial market for Otsuka as well as a valuable royalty contributor for Experion growth in the future. Our Aspirion team continues to make strides expanding the global reach of bempedoic acid for use in cardiovascular risk reduction in patients with or at high risk for cardiovascular disease. We continue to advance our work to file new drug applications in Canada, Australia and Israel and are on track for these submissions by the end of this year. We are continually evaluating opportunities for additional collaborations and partnerships around the world and given the label expansions for bempedoyic acid and the worldwide total addressable market for cardiovascular risk reduction, we believe we are an attractive partner with a compelling value proposition.

Speaker 2

Finally, we continue to build a growing body of scientific and clinical knowledge that support the cardiovascular risk benefits of our bemphedoic acid products. To that end, we are pleased to have 2 datasets published in peer reviewed journals over the past months, including an article titled Comparative Cardiovascular Benefits of Bempedoic Acid and Statin Drugs that was published in the Journal of the American College of Cardiology. This analysis of clear outcomes data demonstrated the cardiovascular risk reduction benefit of bempedilic acid treatment predicted per unit decrease in LDL cholesterol is comparable to that seen in statin trials. Another article on the impact of the COVID-nineteen pandemic on conduct and results of clear outcomes trial was published in the Journal of Clinical Cardiology. This analysis confirms the benefit of bempedoic acid and suggests that the global COVID-nineteen pandemic may have underestimated the benefit of bempitotic acid on both MACE 4 and MACE 3 based on the contribution of undetermined deaths that likely represented COVID-nineteen infection or pandemic related fatalities.

Speaker 2

We will continue to publish our data and present it at key medical meetings and look forward to updating you on the progress over the months. With that overview of the business, let me turn the call over to Ben for a detailed review of our financial progress during the Q2. Ben?

Speaker 3

Thank you, Sheldon. Before I get into the details of the quarterly results, I want to highlight the transformational transaction we completed at the end of the quarter. We were excited to monetize our European royalty stream from DSE for a variety of reasons, not the least of which is it allows us more control to leverage our balance sheet and capital structure. As we reported proceeds from the royalty purchase agreement facilitated early payout and termination of the Oberland RIPA removing all liens and covenants associated with the agreement avoiding a significant headwind of payment step ups in 2025 and dramatically improving the liquidity outlook of the company. While we have made significant progress over the past 2 years in extending our cash runway, this is the single most important action we have taken to build our financial foundation for future growth.

Speaker 3

With that, let me now turn to our solid financial performance for the Q2 of 2024. I will provide a brief overview of the results, noting that additional information can be found in our press release issued early this morning and 10 Q that will be filed shortly. Please note that unless otherwise specified, my comments reflect results for the Q2 ended June 30, 2024. Total revenue for the Q2 of 2024 was $73,800,000 compared to $25,800,000 for the comparable period in 2023. U.

Speaker 3

S. Net product revenue was $28,300,000 compared to $20,300,000 for the comparable period in 2023, an increase of approximately 39%. Sequential quarterly net revenue growth was 14%. We believe this revenue growth, along with the total retail prescription equivalents growth in June that Sheldon just discussed are an early indicator of our progress with the launch and the potential for these drugs. Collaboration revenue was $45,500,000 compared to $5,500,000 for the comparable period in 2023, an increase of approximately 7 27%, primarily due to the revenue recognized from our settlement agreement with DSE for the European Commission approval, increased product sales to our collaboration partners and royalty sales growth within our partner territories.

Speaker 3

We are working with DSE on the tech transfer to support their ability to manufacture Nalemto and NUSTENDI on their own for European distribution. This will significantly reduce our future COGS for the product and reduce working capital costs once completed. We hope to complete this work in 2025 and for DSE to be producing their own product by the end of next year. Turning to the rest of the P and L for the Q2 2024, research and development expenses were $11,500,000 compared to $22,100,000 for the comparable period in 2023, a decrease of 48%, primarily attributable to our CLEAR outcome study that was completed in 2023. Selling, general and administrative expenses were $44,200,000 compared to $34,000,000 for the comparable period in 2023, an increase of 30%.

Speaker 3

The increase is primarily related to increased commercial headcount in addition to bonus payments and promotional costs. We continue to manage expenses prudently and expect expenses to remain similar to the current levels. The company incurred a one time loss on extinguishment of debt of $53,200,000 due to the accounting of the termination of the Overland RIPA. Total net loss for the quarter was $61,900,000 compared to a net loss of $49,900,000 for the comparable period in 2023. Basic and diluted net loss per share was $0.33 compared to a basic and diluted net loss of share of $0.46 for the comparable period in 2023.

Speaker 3

Turning to our balance sheet. As of June 30, 2024, we had $189,300,000 in cash and cash equivalents. By removing the Oberland RIPA, we are in a much better position to address the remaining debt on our balance sheet. We are reiterating our full year 2024 operating expense guidance, which is expected to be approximately $225,000,000 to $245,000,000 including $20,000,000 of non cash expenses related to stock compensation. Now let me turn the call back to Sheldon for final closing remarks.

Speaker 3

Sheldon?

Speaker 2

Thank you, Ben. In closing, we are proud of the tremendous progress we have made throughout the first half of twenty twenty four and we are looking forward to an exciting second half of the year as we continue to grow our U. S. Product sales, expand internationally and strive to reach our goals to create and deliver innovative options to reduce the risk of cardiovascular disease for patients around the globe. Our accomplishments to date are a culmination of the hard work of our talented and dedicated Experion team who are passionately committed to reaching goals and making a difference in patients' lives.

Speaker 2

Importantly, we could not have made these achievements without the ongoing support from our stakeholders. We are on an exciting journey together and I look forward to sharing more successes with you in the future. Again, we thank you for your ongoing trust and support. Operator, we are now ready for Q and A.

Operator

Thank you. First question coming from the line of Dennis Ding with Jefferies. Your line is open.

Speaker 4

Hi, good morning. Thanks for taking our questions. 2 for me. Maybe can you just share a little bit about the feedback from doctors who are on the ground around just getting PAs approved and if there's been any directional improvements recently? And has that been going to your expectations?

Speaker 4

And then number 2, just curious on your thoughts on the momentum after June 1 and what more work you need to do for scripts to pick up? Thank you.

Speaker 5

Eric, do

Speaker 2

you want to take that?

Speaker 5

I sure do. Good morning, Dennis. I get to hear your voice. So with regards to physicians on the ground, so clearly over the past 4 years prior to the label change, it wasn't always easy to get our products, especially for some of the patients that they wanted to use it in, specifically in the statin intolerant or in those primary prevention patients. But as a result of the label change and the work that Vijay and her team have done, progressively improving and as you noted, a pretty significant improvement in June 1.

Speaker 5

It takes a little time for clinicians to kind of regain that confidence, if you will, but they are progressively improving in their confidence. And I did see your primary care survey. I thought that was accurate. And that shows that there is still opportunity for us to reach these physicians, not only with the clinical message to get them excited about the brands, but also to get them over the edge from a prescribing and an access perspective. With regards to the momentum in June, so yes, as you saw, a great pickup in June directly related to sales force execution, but also the improvements that we had from a prior authorization, a perspective.

Speaker 5

I expect our growth to continue. I'm happy with that what we saw in June. I'm happy with the overall 14% that we delivered from Q1 to Q2, and I continue to expect progressive improvements in growth. Thank you.

Speaker 3

Thanks, Dennis.

Operator

Thank you. And our next question coming from the line of Serge Belanger with Needham. Your line is open.

Speaker 4

Hi, good morning.

Speaker 6

I'm back on the progress. A couple of questions for us. I guess, first on the coverage, looks like you've done some great work on the commercial side and are expanding on the Medicare side. Can you remind us what is the breakdown between those two segments for this market opportunity? And how much of a focus is it for the company to continue expanding on the Medicare coverage side?

Speaker 6

And then secondly, can you remind us of how many scripts are currently going through your specialty pharmacy, trying to figure out what we're missing out when we're looking at the IQOS data set? Thank you.

Speaker 2

So maybe I can start this and I'll turn it over to BJ. First of all, Serge, as you mentioned, our coverage is continuing to increase. Just from a commercial perspective, we have over 90% of the plans covered. From a Medicare perspective, we have over 50% covered. And we're pretty much there as far as maximizing all of our coverage.

Speaker 2

There's one Medicare account that we're still working with that we feel good about. So stay tuned there. But just from an overall coverage perspective, we're in a great place. And just to reiterate what Eric said earlier, as you know, one of our greatest headwinds previous to our new label were the utilization management criteria. That has gotten a lot easier.

Speaker 2

In some areas, there are for some accounts, there are no prior authorizations. As it relates to Aspen, what I would say is, remember, that was a bridge that we set up so that until we have this coverage, patients could get their medications until maybe their PA was approved, etcetera. So that was really a great stopgap measure from the team. And maybe I'll turn it over to BJ if she wants to add any more color as it relates to prescriptions going through Aspen, etcetera.

Speaker 7

Yes. Thank you, Sheldon. I would say Serge that Medicare is the most important channel to the adjunct lower lipid lowering treatments. And so we are laser focused to garner more coverage there and stay tuned. Positive negotiations continue there.

Speaker 7

So we're at 50% now. We continue to have that as a key focus going forward. Showing captured Aspen correctly, we use that. That was a great tactic for us to bridge patients while payers were updating their criteria. But we were so pleased that payers really accelerated those reviews.

Speaker 7

And so less and less patients went in there because of the payers now updating and we're getting patients on payer paid prescriptions. So hopefully that answers your question, Serge.

Speaker 6

Thank

Speaker 8

you. Thank

Operator

you. And our next question coming from the line of Jason Zumansky with Bank of America. Your line is open.

Speaker 9

Hey, good morning. This is Cameron on for Jason. Congrats on the quarter and thanks for taking our question. So with regards to BA, when you think about launches in the cardiovascular space, they often require sometimes longer to ramp relative to other indications like oncology. So I'm curious what you expect dynamics to look like here for uptake?

Speaker 9

Maybe do you expect growth to be continue to be more steady? Or are there factors that could potentially support a more near term inflection? Thank you.

Speaker 2

I'm happy to Sorry, Eric. I was going to just leave this off and then turn it over to you. I was on mute here.

Speaker 5

First of

Speaker 2

all, thanks for your question. I would refer you to Slide 9 of our corporate deck, which is available, which aligns to our prepared remarks. And again, what you'll see is this 14% growth. And we've shown double digit growth quarter over quarter. So we're seeing that ramp up now.

Speaker 2

And just taking a look at the launch angle that we have, we're going to continue to see that momentum and you're going to continue to see prescriptions go higher. And Eric, I'll turn it over to you because I know you've done some analysis.

Speaker 5

Yes. Yes. Thanks. And thanks for your questions. So absolutely, it takes a little bit more time than oncology to reach peak in this market.

Speaker 5

But we're confident in our ability to deliver continuous growth quarter over quarter, year over year. I did look at some other cardiovascular analogs products that had significant CBOT trials that resulted in a label change and looked at their growth over the course of 3 years, also looked at their 1 year growth. And we're tracking right on, if not ahead of where these competitive analogs are. Also remind you from a PCSK9 perspective in Repatha, they're 9 years into this mission and they're still not peaked yet. So really confident in our ability to deliver progressive continuous growth and realize the full potential of these molecules.

Operator

Thank you. And our next question coming from the line of Thomas Trender with BTIG. Your line is open.

Speaker 8

Hi, good morning. This is Saum on for Tom. Thanks for taking our questions. So two questions for us. So first, could you just provide any additional color on gross to net and any potential remaining headwind?

Speaker 8

And then for the second question, just wanted to ask about what the market dynamics in Japan is and what the unmet need related to statin intolerances? Thank you.

Speaker 2

So I'll go first with Japan and then we'll hand it over to Ben Halladay as it relates to GTN. The opportunity in Japan, Japan is as we've said in our prepared remarks, one of the largest markets that is out there. As a matter of fact with ZEDIA Byturen when I ran that brand, that was really kind of the number 3 market in the world. As it relates to satin intolerance, what we do know globally and there's a little bit debate around the percentages is that statin intolerance is anywhere between 15% to 20% of the population that could need a statin. And you've heard us talk about the millions of people out there that need LDL lowering.

Speaker 2

So just thinking about 15% to 20% of them, it's very big. But Japan is a great opportunity. Fortunate to have Otsuka as a partner and looking forward to their next steps in filing. Ben, do you want to speak to GTN?

Speaker 3

Yes. Thanks, Sheldon. So as far as gross to net goes, we've had a good year. Things have remained largely consistent with last year when we saw some significant

Speaker 2

I think we might have lost Ben Halliday.

Speaker 5

Yes, I think we have, Sheldon.

Speaker 2

Yes. So maybe I'll speak to chiqien. Sorry, I wasn't sure if the whole site had gone down and we are texting each other. We don't disclose our gross to net, but I would say is that we are at a steady state. We're comfortable where we are now, not only from what we do from a contracting perspective, what we do with wholesalers, etcetera.

Speaker 2

So we've been managing that appropriately. I think we can go on to the next question.

Operator

Thank you. I am showing no further questions in the queue at this time. Ladies and gentlemen, this does conclude today's conference call. Thank you all for

Powered by Quartr

Key Takeaways

  • U.S. net product revenue grew by 39% year-over-year and 14% sequentially in Q2, driven by expanded labels now allowing CV risk reduction, primary prevention and use in statin-intolerant patients.
  • The company monetized its European royalty stream and completed an early payoff of its Oberland RIPA, significantly strengthening its balance sheet and improving liquidity.
  • Payer access advanced with over 92% preferred commercial coverage and more than 50% Medicare preferred coverage, and updated utilization criteria now cover over 114 million lives.
  • International partners secured key approvals and launches: EU expanded label rollout by year-end, approvals in Thailand and Macau, and a successful Phase 3 trial in Japan with NDA filing planned for H2 2024.
  • Q2 total revenue was $73.8 million vs. $25.8 million a year ago, collaboration revenue rose 727%, R&D expenses fell 48%, SG&A increased 30%, and the net loss was $61.9 million with $189.3 million in cash.
A.I. generated. May contain errors.
Earnings Conference Call
Esperion Therapeutics Q2 2024
00:00 / 00:00