Esperion (NASDAQ:ESPR) Therapeutics has reported robust third-quarter results with a 79% YoY increase in total revenue, reaching $34 million. The strong performance was driven by a 33% rise in retail prescription equivalents, resulting in a 45% YoY increase in US net revenue, which stood at $20.3 million. The company anticipates FDA approval for its cardiovascular risk reduction submission for NEXLETOL and NEXLIZET by March 31, ahead of schedule.
Key highlights from the earnings call:
- Esperion's regulatory submission for cardiovascular risk reduction in NEXLETOL and NEXLIZET has been accepted by the FDA, with an expected approval date of March 31. Approval in the EU is anticipated in the first half of 2024.
- The company is focusing on expanding its label to include cardiovascular risk reduction, which it believes will accelerate prescription growth.
- Esperion announced a strategic collaboration with ACC and Amgen (NASDAQ:AMGN) to launch a cholesterol screening campaign to increase LDL screening awareness.
- The company is scheduled for trial in its litigation case with Daiichi on April 15. The litigation case milestone may impact Esperion's balance sheet after a ruling is made.
- Esperion has gained formulary coverage with almost 90% of payers and has seen high approval rates for its medications, reaching around 85% in commercial and Medicare markets.
During the earnings call, Sheldon Koenig, the President and CEO, highlighted the company's strong quarter and the upcoming FDA approval date for its medications. He also mentioned the trial date set for April 15 in the litigation case with Daiichi. JoAnne Foody, another participant, provided an update on the business front, stating that they have reached almost 90% of payers with CVOT data and have gained new formulary access.
Esperion also discussed its plan to reach blockbuster status for its franchise and anticipates label approval by March 31. The company expressed confidence in its ability to succeed and deliver on its goals. During the Q&A session, they discussed gross-to-net trends, the litigation case with Daiichi, and the potential impact of a label change on prescription numbers.
InvestingPro Insights
Drawing from real-time data and InvestingPro Tips, it's clear that Esperion Therapeutics is a dynamic player in the market. Despite the company not being profitable over the last twelve months, it has shown a significant return over the last week (InvestingPro Tip #2), reflecting the market's positive response to its strong Q3 results and anticipated FDA approval.
In terms of InvestingPro Data, the company's market cap stands at 110.2M USD, and it has seen a considerable revenue growth of 30.27% over the last twelve months as of Q2 2023. However, the company's P/E ratio stands at -0.428, indicating that it has been operating at a loss.
InvestingPro Tips suggest that Esperion operates with a poor return on assets (Tip #3) and suffers from weak gross profit margins (Tip #4). Yet, it's worth noting that the company's liquid assets exceed its short-term obligations (Tip #6), indicating a healthy short-term financial stability.
For those interested in a deeper dive into Esperion's financial health and market performance, InvestingPro offers an additional 8 tips. These insights can prove invaluable to investors seeking a comprehensive understanding of the company's position.
Full transcript - ESPR Q3 2023:
Operator: Ladies and gentlemen, thank you for standing by and welcome to Esperion Therapeutics Third Quarter 2023 financial results call. At this time, all participants are in a lisen-only mode. Following the presentation, there will be a question-and-answer session. Please be advised that today's conference may be recorded. I would now like to hand the conference over to Alexis Callahan, Head of Investor Relations at Esperion. Please go ahead, Alexis.
Alexis Callahan: Thank you, operator. Good morning and welcome to Esperion's Third Quarter 2023 Earnings Conference Call. With us today are Sheldon Koenig, President and CEO; and Ben Halladay, CFO. Other members of the executive team will be available for Q&A. Following our prepared remarks. I want to remind callers that the information discussed on the call today is covered under the Safe Harbor provisions 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 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. The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast November 7, 2023. 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 issued a press release earlier this morning detailing the content of today's call. A copy can be found on the Investor page of our website. 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 Koenig, President and Chief Executive Officer.
Sheldon Koenig: Thank you, Alexis, and good morning everyone. Thank you for joining us today to discuss our third quarter results and the progress we continue to make. We are pleased to report another strong quarter. Total revenue was $34 million, which represents a 79% increase year-over-year. US net revenue came in at $20.3 million, which represents a 45% increase year-over-year, and was driven by a 33% year-over-year increase in retail prescription equivalents. We are proud of the continued strength of our US business into the second half of the year and believe this reflects the robustness of our clinical data the efficacy of our life-saving medications NEXLETOL and NEXLIZET, as well as disciplined execution of our commercial strategy. We're also pleased to build upon our momentum in new-to-brand prescriptions in the seven months following our CLEAR Outcomes readout at ACC in March, bolstered by the gains of additional impressive data releases and publications. Since then, most recently at the European Society of Cardiology Congress module from March through the end of September new-to-brand prescriptions grew 61% with momentum continuing from the second quarter into the third quarter. Next, let me walk through additional highlights from the quarter. As I already mentioned, we delivered continued RPE growth in the third quarter of 33% year-over-year demonstrating consistent growth even with our narrow indication, after submitting our regulatory filings to include cardiovascular risk reduction in NEXLETOL and NEXLIZET label last quarter. We're pleased to announce FDA acceptance of our submission with a producer or approval date of March 31, which is ahead of when we originally anticipated approval. Lastly, regulatory review our cardiovascular risk reduction label submission in the EU remains on track and we continue to anticipate its approval in the first half of 2024. During the third quarter, we continued to disseminate new data from CLEAR Outcomes to educate the market about the benefits of our products. We presented 2 new announcements at the European Society of Cardiology in August that further support cardiovascular risk reduction. The first analysis demonstrated that Bempedoic acid produces total major adverse cardiovascular events, reinforcing the value of long term Bempedoic acid used in reducing not just the first, but multiple events over time. The second analysis also demonstrated that center drug asset reduces time to first major adverse cardiovascular events in patients with diabetes and does not increase the rate of new onset diabetes, which is a key differentiating feature compared to statins and underscores the safety and efficacy in patients both with and without diabetes. Patients with diabetes, who are at increased risk for cardiovascular events constituted a large proportion of the primary prevention population that we studied in CLEAR Outcomes. So the finding is important. These analyses continue to demonstrate the efficacy and safety of Bempedoic Acid, further differentiating it from existing LDL cholesterol-lowering therapy, and highlighting its first-in-class mechanism of action. It is not an overstatement to say, that our focus is on expanding our label to include cardiovascular risk reduction, which is we've always said is the real growth catalyst. And following that is when we will begin to see accelerated prescription growth. To that end, our entire organization is now focused on preparing for this update and we've begun laying the groundwork to make changes to our sales organization so that we can hit the ground running, at the moment we receive approval of our newly expanded label. Next our ongoing conversations with payers are continuing to pay off with recent wins for improved coverage and utilization management criteria that aligns with clear outcomes data. It is encouraging to see these types of mid-cycle changes, with national and regional payers, which are not common and we look forward to continued progress. Finally, we announced a strategic collaboration with ACC and Amgen to launch the cholesterol screening campaign, with the goal of increasing awareness of the importance of LDL screening, to help healthcare practitioners more easily identify patients at high risk of cardiac events, you could benefit from treatment. Based on our CLEAR outcomes data, we believe we have the potential to benefit a much larger group of patients than is characterized by our current label, which is quite narrow and indicated only for a small subset of patients. The label we anticipate receiving in March, will add a broad cardiovascular risk reduction indication in both primary and secondary population as well as remove current limitations. From a commercial perspective, our addressable patient population will significantly increase when we get our new CVOT label next year. Right now, our therapies are only indicated for about 10 million secondary prevention patients, with documented ASCVD or HeFH and who are on maximally tolerated statin therapy. Our new label, that we anticipate by March 31, will reflect our CLEAR outcomes data and enable us to be indicated for an additional 20 million high-risk primary prevention patients. And any 30 million patients in total, will be our primary focus. There are another 40 million patients in the US, who are untreated and in high-risk for the event, and those patients represent additional potential upside. We look forward to being able to address the needs of millions of patients, who are currently still unable to achieve their LDL-cholesterol levels on current therapies alone. With that, I will now hand it over to Ben Halladay, our Chief Financial Officer, for a more detailed overview of our third quarter performance.
Ben Halladay: Thank you, Sheldon. Earlier this morning, we issued a press release containing our financial results for the third quarter, which is available on the Investor page of our website. Please note, that unless otherwise specified, my comments reflect results for the third quarter ended September 30 2023. As Sheldon already mentioned, we posted strong overall third quarter results. We're pleased to have delivered another quarter of continued growth in retail prescription equivalents, which increased 33% year-over-year and 8% quarter-over-quarter, which was accomplished even with our narrow indication and promotional footprint. Weekly RPE trend also shows persistent strength, largely remaining above the 10,000 RPE mark and repeatedly setting new weekly high. Growth also continued globally, not just in the US. Our European partner again delivered another strong quarter of sales growth in its territories, which highlights the value our important medicines are bringing to patients worldwide. At the end of August, 158,000 patients have now been treated with our therapies in Europe representing sequential three months growth of 26% since May. I'll also note, that the bulk of this growth, has come from existing territories versus newly launched territories making it even more impressive/. Three additional countries were granted approvals during the third quarter, the Netherlands, Slovakia and Spain and we look forward to reaching patients in these new markets, in the coming months. Turning to our full financial results for the quarter, we reported US product revenue of $20.3 million, representing an increase of 45% year-over-year. Collaboration revenue which includes combined royalty and partner revenue was $13.7 million, an increase of approximately 174% year-over-year. Much of this increase was due to tablet shipments that were pushed from the second quarter to the third quarter, as we mentioned in our last earnings call. Finally, total revenue for the third quarter was $34 million, an increase of 79% year-over-year. Turning to expenses. Cost of goods sold from the third quarter was $13.4 million, an increase of 106% year-over-year also driven by the timing of tablet shipments as I just mentioned. R&D expense was $14.9 million, a decrease of 49% year-on-year, reflecting substantially lower costs following the close out of our CLEAR Outcome study. SG&A expense was $33.2 million, an increase of 33% year over year reflecting higher legal and promotional costs. We continue to track in line with our guidance, expecting full year 2023 operating expenses to be between $225 million and $245 million, which is comprised of $100 million to $110 million in R&D expense and $125 million to $135 million in SG&A expense. Finally, cash equivalents and investment securities available for sale totaling $114.8 million as of September 30, 2023 compared with $166.9 million on December 31, 2022. I'll note that we ended the quarter with a higher cash balance than we expected, which reflects the continuing dedication to disciplined expense management even while we continue to invest in initiatives to prepare us to capitalize on our new label as soon as we receive it. We believe we are currently well-positioned to have sufficient cash to continue funding operations and support our full-scale commercial launch next year. We will continue to diligently manage expenses, look for ways to generate efficiencies and potentially slow spend in certain areas as needed. And with that, let me now hand it back over to you Sheldon.
Sheldon Koenig: Thank you, Ben. I'll now provide additional corporate updates from the quarter. As some of you may have seen we filed a rule 12(c) motion two weeks ago in our litigation case, which asserts that the language in our license agreement is unambiguous and can be ruled on solely based on the contract itself and the pleadings filed today and request that ruling accordingly, permission to file this motion was a prerequisite and the fact that we were granted permission was a win for us. In terms of next steps. All filings are due by November 22nd, after which a ruling could occur in the days or weeks to follow, which means that we could potentially have any answer by the end of the year. I'll just note that this motion does not affect our current case timeline and we remain scheduled for trial on April 15th. Next, I remind you of our plan to reach blockbuster status for our franchise, which we have every confidence in achieving. In short, we have robust data generated through a landmark with 14,000 [ph] patient trial. That data is being used to support a highly differentiated label, which we anticipate approval by March 31st. In the meantime, we're excited on a strategic plan to continue to drive growth and educate healthcare providers and payers alike ahead of that new label. I'll wrap up our comments today by reiterating that we continue to deliver on the commitments the leadership team has made. We are steadily executing on our strategic plan to unlock the blockbuster potential of this franchise is capable of. We have more work to do but I'm pleased with the progress we've made and confident in our ability to succeed and look forward to demonstrating continued progress toward our goals, and with that operator we are now ready for Q&A.
Operator: Thank you. [Operator Instructions] Our first question comes from the line of Dennis Ding with Jefferies. Your line is open.
Sheldon Koenig: Hi, Dennis.
Dennis Ding: Good morning. Thanks for taking our questions. Two for me, if I may. Number one, just on the US basis, can you comment on from the underlying gross to net trends that may have impacted Q3 and maybe talk about your outlook for Q4? And then question number two is on the litigation case with Daiichi on appreciating that there could be a positive ruling on the rule 12(c) dynamic when could the milestone actually hit Esperion's balance sheet given Daiichi will likely appeal after that. And we'll get a lot of investor questions on how long would that appeal process actually take, and when couldn't money actually hit Esperion's balance sheet. So maybe just clarify that for us and investors? Thank you.
Ben Halladay: Hey, Dennis. It's Ben. Great to talk to you. Thanks for the question. On gross-to-net, in Q3 we saw some typical seasonality that we'd expect from a product in this market. You all know we've done a good job improving gross to nets from last year into this year. And I think we're in a pretty steady state at this point. Going forward there's still room for improvement and looking into Q4 and beyond that will all come with volume. So I wouldn't see that as an immediate term. But over the longer term we do expect it to continue to improve.
Sheldon Koenig: And Dennis, its Sheldon and I will take the second as it relates to the litigation. First of all, as a reminder as you mentioned we are able to win the motion as it relates to 12(c). That was a few weeks ago. The opposition has till November 22 to actually file their side of it. And then the court will make a ruling. Again, I just wanted to express our confidence in the case that we have here and we feel really good about it. As it relates to when we would see money et cetera, keep in mind that this milestone was not to be actually recognized until later in the first quarter of 2024 early second quarter. And so you're right now if I think about the timeline. We don't want to get it done because we have to take every day as it comes as it relates to litigation. But I'm confident that we will remain on that same timeline as it relates to us receiving the milestones.
Dennis Ding: Got it. Thank you.
Operator: Thank you. One moment for our next question, please. And the next question comes from the line of Tom Shrader with BTIG. Your line is now open.
Tom Shrader: Good morning. Thank you for taking the call. I wanted to ask a little bit about slide 5. It's kind of striking. You've got this big bump at ACC where I think we all knew there was a fair bit of interest, but it's been relatively flat. Does that speak to how hard it is to talk to physicians that aren't converts already? And is that what you think the label will help with? And then maybe if you have any information do you have any way to attract physicians who at some level are interested in the drug, but won't go through a slightly arduous payment process to do collect any of that data interest beyond people who actually get all the way through the reimbursement process? Thanks.
Eric Warren: Hey, Tom, it's Eric. I'll answer your question. So first of all the ACC a pop that we had was said was tremendous and we've been able to build upon that. And so quarter after quarter and we saw an increase in TRPE of 8%. I wanted to remind you that the team is unable to the commercial team is unable to talk about the new data. So you're absolutely right when that label changes not only will we expand the population, but will unlock our ability to actually talk about these data. We've done quantitative research where we show significant changes in prescribers intent to prescribe and I believe Sheldon showed them at a meeting not too many months ago and ATU that we did that track the desire to and make our product standard of care and that's it tremendously increases once we're able to communicate those data. And once we have the managed care changes that ultimately align with those changes that we'll have from us indication perspective.
Sheldon Koenig: And the conference was – 80 wing conference, Tom if you want to go back and take look at that. Its archived.
Tom Shrader: Got it. All right. Thank you.
Operator: Thank you. One moment for next question, please. And the next question comes from the line Troy Langford with TD Cowen. Your line is now open.
Troy Langford: Hi. Congrats on all the progress this quarter. And thanks so much for taking our questions. I have one about the label change next year. So when that does occur next year exactly how quickly do you think we could start to see that uptick in prescription numbers that you just mentioned? You know, do you think it will look more like the inflection that we saw after ACC or do you think it could take a couple of months after the sales team has the ability to formally promote the data before we see that more substantial increase?
Eric Warren: Thanks for your question, again. Its Eric again. So no doubt the team will be ready. The team has been spending the vast majority of their time now preparing for this label change there across every function ensuring that we're a well-oiled machined with these new -- new data and ultimately new indication. There does need to be some payer changes that happen in order to realize the full potential. So I would look for some improvements right away. But as we start unlocking that access that aligns with the broader label is when you can start to see the even greater changes that we anticipate? JoAnne.
JoAnne Foody: Thank you for the question this is JoAnne, Chief Medical Officer. The other thing that's really critical as we think about the label is timing that we've announced that the producer date is March 31 that precede the American College of Cardiology. And I think you all recognize how significant this year's American College of Cardiology has been. We're getting our message out. So we anticipate similarly having the opportunity with the American College of Cardiology in 2024 to leverage not only our playbooks, but all the noise. We had over 1 billion impressions from last year's ACC and we're looking forward to similar uptake. This year are coming year in 2024.
Troy Langford: Thanks.
Sheldon Koenig: Thank you.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Jason Zemansky with Bank of America (NYSE:BAC). Your line is now open.
Jason Zemansky: Perfect. Congrats on the quarter, and thanks so much for taking our questions. Wanted to ask a follow up on an earlier comment you've made obviously the 12(c) ruling was a win, but as acknowledged by your attorneys in the filing. There's a challenge to litigating indefinitely. And if the proceedings are extended for whatever reason be it and appeal or what not. Are there contingency plans in place to support the relaunch? And then a follow-up if I may in that sense?
Sheldon Koenig: Yes. happy to take that one Jason. So as far as kind of pushing out our cash runway and being able to help manage both the launch and funding that litigation. We have drivers that are ahead of and most of our spend next year hasn't even been contractually locked into. So we can delay spending like on preclinical pipeline some of our smaller R&D projects even with the sales force ramp up without fully hampering the commercial launch here. And he will always be trying to walk a fine line of funding the stuff that's going to show us an immediate return, but also managing that burn rate and managing those expectations from a cash standpoint. But truthfully the litigation is a cost. It is not doesn't compromise frankly I thought it would and we can manage to keep that going as needed.
Jason Zemansky: Got you. And thank you for the color. And then maybe as a follow-up on the business what does a typical patient starting bempedoic acid currently look like? Are they the primary prevention secondary? And then I mean how do you expect this to shift? When do you receive hopefully the label update?
Eric Warren: Yes, Jason, as so they're now aligned with our label there in ASCVD patients they're on a documented maximally tolerated statin dose and they're not at their LDL-C goal. So that is a typical approvable patient. Now I will say that there is a strong desire to prescribe us in a patient that has for a primary prevention. So they don't have active ASCVD, but they have risk factors. There's also a strong desire to prescribers and patients that are unable or unwilling to take statins. So, both of those will go away with the new label as we add in the primary prevention and as we remove that dependency on maximally tolerated statins.
Jason Zemansky: Great. Thanks guys.
Eric Warren: Great. Thanks a lot Jason.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Serge Belanger with Needham. Your line is now open.
Serge Belanger: Hi, good morning. A couple of questions. On the rule 12(c) motion. So you mentioned the trial date in mid-April is still on the calendar, does that remain on the calendar until there is a decision on this motion. And then in terms of the appeals process here, is it the same with the 12(c) motion as it would be if it went to a truck? Then I have a couple of follow-ups.
Sheldon Koenig: First of all, thank you Serge, and glad you could make the call. As it relates to the trial date of April 15 that will remain on the calendar as a matter of fact should the ruling that once a motion is reviewed and if there is no decision, then it no harm no foul. We remain on the same schedule, which is the April 13 trial date. And then your second was as it relates to appeals, as it relates to the appeal process, there is certainly the ability to appeal. Obviously, we've done some research in this area and we just have to take it day by day as it relates two what would happen in the case of an appeal.
Serge Belanger: Okay. And then on the business front maybe just update us on your prior outlook rate and whether you expect any additional formulary coverage ahead of March 31?
JoAnne Foody: So we've had the opportunity to get to almost 90% of the payers with the CVOT data. I'm pleased to say Sheldon had outlined as well not only have we had new formulary access with very large payers as well as small regional payers, but also the UM criteria has been aligning with the CVOT data already. With that our approval rates have also been quite well since that those presentations and since the CVOT data as well. So I can tell you that we're up to approval rates that are very much almost to the 85% range in commercial and equal to that in Medicare.
Serge Belanger: Thank you.
Sheldon Koenig: And sorry just one other note, I was thinking it might be easier to answer that question regarding your question about 12(c) motions and appeals. As I mentioned, we would have to see how it goes. But I think you would agree with me that if we win that motion. That's a big way. So we can worry about appeal as it comes. But it'll be a nice it's a nice indicator. It's a yes essentially the case that we have there.
Operator: And thank you. I would now like to turn the conference back to Mr. Sheldon Koenig President and Chief Executive Officer. For closing remarks.
Sheldon Koenig: Great. Thank you so much. And again, thank you for everyone for joining today for our Q3 2023 earnings. As you can see, I mean we're very excited. We have a great story. We had a strong quarter. We really built upon our post-ACC momentum for NEXLIZET and NEXLETOL these are life-saving medications. We're looking very forward to the PDUFA date or approval date of March 31. Again, as we mentioned, our litigation remains on track. We hope for a near term solution. However, again, if not the April 15 trial date. We will continue there. It's important to remember NEXLETOL and NEXLIZET are novel therapies with differentiated first-in-class mechanism of action. And again, we're a small company, but we're doing big pharma things and we continue to deliver on all of our commitments. So again, thank you everyone. Have a great day. Maybe see some of you at American Heart and we'll talk to you soon and take care.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.
InvestingPro Insights
Esperion Therapeutics has shown a dynamic presence in the market, as reflected by InvestingPro data and tips. Despite not turning a profit over the last twelve months, the company has seen a significant return over the last week (InvestingPro Tip #2). This positive market response is likely due to strong Q3 results and the anticipated FDA approval.
InvestingPro Data reveals that Esperion's market cap stands at $110.2M USD, and the company has experienced a substantial revenue growth of 30.27% over the last twelve months as of Q2 2023. However, the company's P/E ratio of -0.428 indicates that it has been operating at a loss.
InvestingPro Tips also highlight that Esperion operates with a poor return on assets (Tip #3) and has weak gross profit margins (Tip #4). However, the company's liquid assets exceed its short-term obligations (Tip #6), suggesting a healthy short-term financial stability.
Investors seeking a more in-depth understanding of Esperion's financial health and market performance can find an additional 8 tips on InvestingPro. These insights can provide a comprehensive understanding of the company's position and are invaluable for making informed investment decisions.
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