Esperion Therapeutics, Inc. (ESPR) Earnings Call Transcript

Okay. Good morning, everybody. I'm Kristen Kluska, one of the biotech analyst at Cantor. Thank you so much to the Esperion Therapeutics team for being here today. We have Sheldon Koenig, the CEO; and Ben Halladay, the CFO. Thanks again for being here.

Thanks for having us.

Good to be here. Thank you.

Yes, our first conference together. Cool. So maybe to start, can you just provide a very high-level overview, and then we'll get into some of the specifics.

Yes, we'll do. First of all, again, thank you for having us at the conference. And on behalf of all the employees, we're happy to be here and have the chance to chat, and thanks for all the attendees. Look, at Esperion, our mission is to essentially commercialize life-saving medications, which we're doing with NEXLIZET and NEXLETOL. We're also developing life-saving medications, what we think will be life-saving medications. We held an R&D Day back in April 24. You attended, and we have some interesting compounds. But right now, the focus is on commercializing NEXLIZET and NEXLETOL in the United States. You probably saw from our quarter 2 results, we have significant momentum, showing double-digit growth in all metrics. And we might get into this later, but we had a terrific European Society of Cardiology and the guidelines. So just really excited about the future and where we're heading.

That was a very exciting way to kick off a holiday weekend in the U.S. So thank you to our partners in Europe for that. So before we touch into some of the drugs, I think it's really important to talk a little bit about patient background. I think sometimes this is overlooked, right, but it's a critical part of the story. So when we think about these patients, how are physicians monitoring cardiovascular measures in the real world? And how do they then determine whether or not a patient is responding to a lipid-lowering therapy?

Yes. And I'll give you the -- really the real-world answer, not the academic answer, if you will. The real-world answer is there's a lot of, what I would call, fire and forget strategy with patients. Patient will go, get a lipid panel, will show elevated cholesterol and the physician will say, "I need to put you on the statin," and they put them on the statin. And they may or may not follow up. This is more in the primary care setting. I think cardiologists do more follow-up, but for primary care physicians, they really don't. And I think what you heard in ESC because I'll put this now, and I think where the world is going, it's about how do you treat stronger, faster, no longer can you get to goal on one product. A statin is not going to do it. So now it's about combination therapy, similar to where we've been with hypertension and diabetes for years. So a patient may come back after they get their lipid panel and they might need some additional LDL lowering. Doctor may add ezetimibe, may not, may say, let's wait another 6 months. And I think, personally, and that's why cardiovascular disease is the #1 killer not only in the world -- obviously, not only in the United States, but in the world, is because it's just somewhat laissez faire of treatment. And that's really unfortunate because you do have to treat fast, and that's the new emphasis.

I know one of the ways companies report data is by this whole notion of LDL-C lowering in percent. But how do we account for the fact that patients are obviously coming in with different baseline measures and levels of degree severity? Will the threshold of what really matters in the goals change depending on where they start off?

I think, look, we're -- what's happening right now is patients are coming in. As I mentioned earlier, they're coming in with elevated LDL. There's this notion of they're X percent away from goal. They're not at goal. You may recall in the United States back in -- I think it was 2016 with the revision of the AHA guidelines, they got rid of goals. That caused a lot of confusion in the United States. And what you saw is physicians, especially cardiologists look to Europe for what is a goal, and that became the 55 milligrams per deciliter. And I think you're going to see that's going to be more and more is how do I get more aggressive with patients, especially at high risk to get them to these lower goals of LDL. I went to a seminar at ESC. LDL cholesterol is what causes heart attacks and strokes. It's the buildup of that plaque. And there's other drugs out there to address CV risk, et cetera. All of them working together are trying to provide more protection for a patient, but you really have to get these physicians to realize they've got to get their patients to goal.

Okay. It's okay. So statins have been a great drug for several patients, but a lot of them don't tolerate it or they may not be responding. At what point are they going to their physician and saying, "Look, this isn't working for me. I need a new option." And how often is just changing statin actually solving the problem?

Yes. So usually, what happens is they present with some type of muscle ache or pain. And Ben and I are actually just talking today, not to violate HIPAA, but you may mind tell your story about rosuvastatin.

Yes, I'm on rosuvastatin and I've recently started feeling muscle pains, and I'm on the lowest dose of rosuvastatin 10 milligrams. And so Sheldon and I were talking earlier today, is this statin intolerance essentially?

And the same thing happened to me when I was originally put on atorvastatin. I'm a big runner or at least used to be, and I get this leg pain. And then my doctor would say, "Well, let's try you on a different statin at a lower dose." And that did help. But because it was just a low-dose statin, I couldn't get to goal. I think, as you know, I take NEXLIZET. And my cholesterol is a 40 milligram per deciliter. So I'm really excited about that. But I think the point is that patients will come to their physicians and say, "I cannot take a statin." And I think what happens there is then they consider, well, I could try another statin or I can also just maybe even use a drug like NEXLIZET, which we're seeing a lot of momentum with that.

I think one thing to keep in mind is LDL-C is an asymptomatic disease, right? You don't feel bad when your cholesterol is high. But for 30% of the U.S. population or the global population, by taking something and addressing your LDL-C, you're turning that asymptomatic into a symptomatic disease through muscle pains or myalgia or a lot of the different side effects of statins. And that's where I think there's a real opportunity for additional therapies to come in and help get those people to goal.

Yes. It's interesting, right, when you have a condition where technically, you feel fine, but all of a sudden, you're getting on a medicine and you don't feel fine. And even though you understand the importance of your heart health, it's a change for you, right?

Exactly.

Okay. So -- and then I guess, just help us understand, though, like at what point do physicians say, "Okay, look, we tried you on another statin. We tried messing with the dosage. Now, it's really time for me to maybe offer a new drug that has a different mechanism of action for you."

It happens pretty quickly, and we're seeing that now. We pivoted to a strategy to really establish this beachhead of going after statin-intolerant patients. That's 2 types of patients. Patients who one can't take a statin at all, and there's a lot of them. We know the NLA put out a paper in February, said 30% of patients can't take a statin at all. And then there's those patients who can only take a low-dose statin. And what's interesting, again, just to go back to the ESC guidelines and even our own data that we've shown is that with a low-dose statin and the SANTORINI study showed this as well by Daiichi Sankyo, a low-dose statin plus NEXLIZET gets close to 75% of patients to goal. So that's the beauty about NEXLIZET and NEXLETOL. You can use it with a statin or without a statin. And I think that's really important. And physicians have really picked up on that.

Okay. And then to the point earlier, part of this is like a lot of education because you're telling the patients they're at high risk. But again, they don't necessarily feel the aspects of their disease every day. So what does it take for -- like do you -- is it your understanding that these patients actually take that feedback quite seriously and they will do whatever it takes, if it means protecting their heart health, avoiding events?

If patients are educated appropriately, they will, especially if they have family history. It's something that motivates them. I'll just put in a quick commercial. We have a commercial that's going to be starting in about 20 days on connected TV directed to consumers. We're excited about it. So especially any of you Grey's Anatomy fans, they'll be running the new season, and we're -- that is going to also motivate consumers.

Okay. I am admittedly a Grey's Anatomy fan. So I look forward to seeing the commercials along with the, I don't know, 10-plus million people that are also still sticking with it after 20 seasons like me. So one source of pushback has been that statins are generic. So how does this play into the whole reimbursement dynamic?

Yes, it hasn't been an issue. Statins are always considered the cornerstone of therapy. If you look at our coverage, we have 92% favorable commercial coverage. If you look at Medicare, we're at 75%, again, preferred favorable coverage. So the co-pay is affordable. There's actually a really interesting paper that just came out in circulation about a month ago. I'm not sure if we sent it to you, but I will. But it basically shows what drives consumer preferences. And what drives is price and also convenience of dosing and hopefully an oral. We meet all of that criteria. So not only do we have this great reimbursement environment, we're oral, so you don't need to inject and it's easy. It's once a day with or without food.

Okay. So let's shift to some of the market initiatives now. Maybe just what's been your high-level strategy? You mentioned on your last earnings, this was a big inflection point in our view, at least so what's kind of been leading to that traction?

Yes. I think what's been leading to it is, again, we've been really out there messaging to physicians, similar to the questions that you asked is that we know you've got patients in your waiting room who can't take a statin who are not at goal because they can only take a partial dose of a statin. Why wouldn't you add NEXLIZET to them? You have 38% additional LDL efficacy. And that has really resonated with physicians. The other thing is, as you know, from the CLEAR Outcomes study, we have a very unique indication from a primary prevention perspective. We're the only ones who've studied a drug like this in statin-intolerant patients. So it's a message that we can own, and that's really resonating with physicians. And what we're seeing is they're saying, "Hey, if this is the efficacy I get without a statin, what would it be if I added a statin?" And so we're seeing more of that as well as we move across our segmentation.

Okay. So we often talk about the U.S. opportunity, but I think my entire coverage universe, maybe even, you've been very smart to leverage successful partnerships in regions where they already have expertise. And you've been very clear, like let the experts in those territories, they will have the best chance of getting our drug out there. So just before we jump into all of those, obviously, each country is a different size, but just like from a prevalence standpoint, is it similar to the U.S.? Are there regions where it's lower, higher?

Yes. So I think kind of going from top of list down to bottom, Europe, they've demonstrated a fantastic traction for this drug. The guidelines only reinforce that. I think I've had people tell me this will now just sell itself in Europe. That's been the biggest. We think, honestly, there's a good chance this could be 1:1 U.S. to Europe and a $1 billion product in both markets. I think after that, Japan is by far the biggest market. We think that's 1/3, and it's a close 1/3 to Europe. So there's a lot of opportunity. We know that statin intolerance is very prevalent in the Japanese population. You also tend to see more super responses than that. And the trial that Otsuka did to bridge that clearly define that. After that, we also have partnerships in Canada, Australia, Israel. And I think those are -- they're smaller markets, but I think there's still a lot of opportunity there. And they've made -- we recently had some very good progress on the regulatory process there moving those forward. And it's all incremental, right, especially in Canada. It's a very tough reimbursement market in Canada to get any sort of favorable access there. But what they've managed to do has just been incredible. And I think we will have a very good outcome from those launches that will put meaningful top line for this company.

On that note, do you mind sharing what these new guidelines are? I'm not sure if everybody is aware as it's, quite frankly, hot off the press.

Yes, sure. So we actually received a Class Ia recommendation, which is really the best you can get. And I think what was important is that bempedoic acid was the only new therapy that actually received its own section in the guidelines. And the focus was really on, again, how do you strike fast, strike quickly. I think what was important about the guidelines and during the review of bempedoic acid itself during the guidelines, I was there live, was the fact that these changes were made based upon data that was practice-changing and essentially life-saving. That's really important. And it's something that, as you know, we mentioned in our press release. It essentially demonstrates that bempedoic acid is a foundational therapy in treating patients. Again, as I said earlier, one drug doesn't get you to goal. And in every combination they showed, it was with bempedoic acid first. And then if you needed more to add more. But again, I'll say it again, the SANTORINI study showed that patients who are on a statin, are on bempedoic acid, 75% of them achieve goal. So there is room for other drugs, but for the majority of purposes, bempedoic acid is your partner of choice.

Okay. And then when we think about all these other geographies where you have existing partnerships, I know all of them are structured differently in terms of milestones and royalties, but what is the collective TAM or opportunity? And how is this going to keep the engine going for the U.S.?

Yes. I mean I think -- like I said before, I think Europe is definitely a $1 billion opportunity. I think from a TAM perspective, we -- 30% of the population is statin intolerant. And we think that there is a lot of opportunity to address that globally. We think that's consistent across all markets. The royalty streams are pretty consistent between each of the agreements, and that's just incremental top line to us addressing that 30% statin intolerance. So it's a pretty significant tailwind for the company that we expect over the years.

Overall, I think just from a collective TAM perspective, again, in the U.S., it's $70 million. Europe looks a lot like the U.S. This is one of the largest markets, one of the largest therapeutic markets in the world, no question about that.