Well, good afternoon, everyone, and thanks so much for joining us for our second day of the Bo f A Healthcare Conference. My name is Cameron Bozdog, and I'm a part of Jason Zemansky's MidCap Biotech team here. I have the pleasure of introducing Ben Halladay, Esperion's Chief Financial Officer, and Eric Warren, Chief Commercial Officer. Thanks so much for being here with us today.
Great. Thanks for having us.
Thank you.
Perfect. Well, it's definitely been a busy start of the year for Esperion, with much to discuss, so let's just jump right in. In early January, you resolved your contract litigation with Daiichi. Appreciating there were some questions at the time, but can you discuss how the deal maybe positions you well for success moving forward?
Yeah. I can say it not only positions us well, but I would say also positions our partner well. This is a very mutually beneficial settlement and agreement, and we're very excited for what it brings for the partnership. I would say there are three pillars to this. The easiest one to understand is the cash, which was a $125 million payment, $100 million of which we've already received, and $25 million which will come at the decision on the European label, which frankly could happen any second now. The other two pillars are one, they will develop a triple combination therapy through their own activities, which is a tremendous commercial opportunity in Europe, gives them a patent exclusivity extension at the end of their life, and really opens up a lot of opportunity for different marketing opportunities for them.
At the same time, we also have a tech transfer where they will take over the manufacturing of the tablets for the European and ASCA region, which is their smaller Asian markets. That one's actually very exciting. We currently manufacture all the tablets and sell to them at a loss, which is not necessarily something we want to be in the business of. Them taking it on frees up some working capital constraints as well as really opens up gross margin opportunity. That's going to take a little bit of time to unwind, but we expect sort of mid-2025 to start seeing some of those effects.
Yeah, perfect. I think a great segue into my next question. If you could maybe focus specifically on how impactful the manufacturing update is, what does it do to your expense outlook, and when do you start seeing these improvements?
Yeah. Tech transfers take a while. It's about an 18-month process to get through the whole thing. And I think we'll start seeing some of the benefits earlier on, but it'll really start hitting in 2025 when I mentioned those negative margins that tablet sales will be off our books. It's about a negative 30% margin. And I think overall you'll see an improvement there. But at the same time, to produce bempedoic acid and get it to a tablet form, it's about a 12-14-month process. So in order to sell them tablets a year from now, we're starting to spend money on that inventory now. So ultimately floating them a 12-14-month working capital, which we, again, sell at a loss.
You'll start to see that unwind, I think, towards the end of this year, but you'll really start seeing the gross margin sales benefit coming in next year.
Gotcha. And then looking at the triple combo, can you talk about why this is a longer-term driver?
Yeah. So they're very excited about the triple combination. They see a lot of doctors getting excited about this. We're excited about this because there's an opportunity for a significant exclusivity extension at the end. So they're about the same with the U.S., 2031. This could potentially take them to 2040 before loss of exclusivity. And they see a lot of their doctors moving towards this from both the single and the combination product once it's launched. Again, similar timeframe, it'll take about 2 years to run sort of a bioequivalent study with a filing shortly after and on the market relatively quick here.
Perfect. And then any potential you could bring this to other markets, including the U.S.?
So we looked at it for the U.S. Significantly more expensive. We would have to do an additional phase III trial to do it in the U.S. And at the same time, you don't have that patent exclusivity benefit at the tail end. So when we looked at it, the math just didn't make sense, and we scrapped the project. Daiichi Sankyo is also doing it in their ASCA region, which they also cover. But I would say that's probably what we're limited to at this point. We likely will not do it in the U.S.
Got it. And then certainly there's been a steady stream of updates from your partners' efforts to expand commercially in the E.U. Can you kind of give us a sense of how BA fits into DSC's portfolio and where does this franchise fit into their overall strategy?
Yeah. So we've had a lot of dialogue with them since the settlement and going through the triple combination and the tech transfer. And one of the things we learned is this is now considered a global product for Daiichi Sankyo, which really increases it on the priority list. And they talk about it on their earnings calls. They see this as a significant driver of growth both in the E.U. and in the ASCA region. And they have a lot of resources dedicated to this. They're very excited about it.
Gotcha. Makes total sense. And then turning to the other major development, you've received approval late March to expand the label of your BA portfolio to include the CLEAR data. And maybe for those who aren't as close to the story, what exactly does your new label include, and what are the implications from a commercial perspective?
Sure. Yeah. So thanks for the question. So cardiovascular risk reduction is part of this new label now. So in the past, before this label, our promotion was limited to the ASCVD population, which was core in the label. So those patients had to be ASCVD. They had to be on maximally tolerated statins, and they didn't need to be at their LDL-C goal, obviously. With the changes that we had as a result of CLEAR Outcomes, we have now outcomes data in that ASCVD population, but we've also pulled in the primary prevention patient. And we are the only LDL-C-lowering non-statin that has proven cardiovascular risk benefit in primary and secondary prevention patients. And that is huge. It's always good to have something that others don't have. And that really solidifies that position that we have as being next after statin.
To ask this question in a different way, prior to this label expansion, what was the biggest impediment to uptake?
Two things. So number one, we were limited to that ASCVD patient on max tolerated statin and not at goal. So that created just there was a desire to prescribe for other patients, namely the statin intolerant patient and the primary prevention patient. But the label didn't support that. And the payers defined utilization management criteria are basically the roadmap for how a physician can prescribe. And those aligned with that label. So you had the desire to use it in other populations, but the label that didn't support that, as well as payers, making it very difficult to try to go outside of the label.
And then were you surprised at all by the label? Certainly, FDA had loosened some restrictions last December, but is there anything that you weren't expecting or maybe you were less sure about?
I'll start off. I think we had always hoped to get this in both products, but it was never a given. We were very excited and very pleased to see that this was both in NEXLETOL and NEXLIZET and will easily benefit both products. Eric, anything else?
Yeah. I mean, I'll just say the label's fantastic, right? So CLEAR Outcomes had a unique design in that it had 30% primary prevention, 70% secondary prevention. So by having both of those study populations within the label, obviously creates the opportunity for us to promote that. So yeah. And we have the ability now to be used regardless of a patient's ability to tolerate statins. So whether they can tolerate no statin, some statin, or full statin, this label gives us the ability to go in any of those directions.
Perfect. Maybe just what's been the initial feedback from prescribers?
It's been great. I mean, so we're seeing physicians that we haven't been able to see for two years. In some cases, they're calling our representatives asking for time to discuss. I would say the most in addition to the quality of the outcomes data across both populations, there's even more desire from a primary prevention population. And that is because they haven't had an agent besides statins that was capable of providing that cardiovascular risk benefit. So it's been really overwhelmingly positive from an HCP perspective.
Perfect. And then maybe before we turn to commercial dynamics, where do you see the value proposition of BA in the current treatment paradigm? Who's the perfect candidate for Nexlizet and Nexletol, especially when there are other options like statins and PCSK9s available?
Yeah. Yeah. So I'll keep it to that simple statement as we're next after statins. So statins are definitely a key therapy, right? So everyone deserves a chance to try a statin. But unfortunately, about 10% of patients can't take statins at all. Another 20% can only take some or low doses of statins. So after a statin has been tried, we should be next for a patient that requires additional LDL-C lowering. And that puts us in, I think, a pretty wonderfully differentiated position. So right now, ezetimibe is the typical go-to agent after statin. PCSK9s are used more for the secondary prevention patient. As you know, they're injectable therapy. So the ability to go next after statin, potentially displace ezetimibe or mitigate the use of ezetimibe with an outcomes-proven agent is really a great opportunity.
You've estimated the new label has expanded the addressable population to around 70 million patients. Who are you specifically targeting over the near to mid-term? Fundamentally, appreciating many are eligible, what specific segments maybe represent the greatest near-term return on investment?
Yeah. So that 70 million represents 10 million ASCVD patients, roughly 20 million primary prevention and statin intolerant patients. And then the 40 million come from patients that haven't tried statins yet. So our focus is on that 30 million population initially. So obviously, the ASCVD population we've been playing in, now we have outcomes data to really kind of either equal the playing field or put us slightly ahead. And in that primary prevention population, again, that's a core element for us given this differentiated label that we have. Layer in those that cannot take statins or cannot tolerate more than limited doses. It puts us in a wonderful position with a sizable population. So 30 million is our current focus. That other 40 million will come into the funnel as clinicians start seeing the benefit, as patients start seeing the benefit, they start talking.
Those that are on the sidelines now because they're afraid of statin and haven't tried it will enter the treatment paradigm.
Maybe if you could elaborate a little bit more on specifically what you need to see to maybe get into that additional 40 million patients?
It's just as we gain additional momentum in the primary prevention population. So there hasn't really been a proven agent, again, that works in this statin intolerant population. We know it's a real population. I think there's often confusion because some people think it's only those that can tolerate none, but there are so many patients that can only tolerate some statins and are afraid to push it. So as clinicians start talking, as patients start talking, that's going to generate a lot of momentum.
Perfect. And then there's been some debate both among investors as well as in the literature regarding the issue of what truly is statin intolerance. Based on your market research, how many patients are incapable of achieving therapeutic levels of statins?
Yeah. It's up to 30% of patients. So again, 10%-ish are these cannot take any statins. And roughly 20% are capable of taking the lower dose of statin, but when they go to the higher doses, they experience the myalgias. So roughly 30% of patients aren't able to maximize the dose of statins.
I guess when you think about the nocebo effect, how does that kind of impact that 30%? Or does that impact your expectations there at all?
I mean, I think that 30% is real. If anything, there's more patients. I mean, every time I talk to somebody, they or their family or friends have had a negative experience from a titration perspective of statins.
Anecdotally, I'd say half the investors we spoke to at this conference said they were on a statin and feel muscle pain, which is.
Yeah. Totally makes sense. I guess can you talk about the puts and takes of going after primary versus secondary prevention when you think about the market approach there?
Yeah. I mean, they're both really important populations, right? I mean, secondary prevention patients, they've already had an event. So they're in tune to their cardiovascular health. They want to do more for themselves. Obviously, the clinicians want to do more for their patients. But equally, if not more important, is the concept of preventing an event from happening. And again, it's been an underserved population where after statins, you've been able to lower their LDL, but you haven't had an agent that's been proven to reduce their cardiovascular risk. So there's kind of pushes and pulls of both, but that primary prevention represents a very distinguished and differentiated population.
When you think about, I guess, the more practical considerations of primary prevention, there's a broader group of prescribers. Beyond cardiologists, there's PCPs, hospitalists, internists, a tech, etc., necessitating broader outreach. How does this factor into your commercial strategy?
Yeah. Yeah. We've done really good segmentation. So we know which physicians are more likely to respond and have these primary prevention patients who are more likely to take action with NEXLIZET or NEXLETOL. So that's factored into our ultimate deployment strategy. So right now, from a personal promotion perspective, we're focused on about 20,000 HCPs that are the ones, again, most likely to respond to our differentiated products, of which 10,000 are primary care, 10,000 are specialists.
And then when we talk to some of our experts in this space, they talk about how primary prevention isn't necessarily done well currently. Can you talk about maybe how that impacts your expectations and maybe does inclusion of BA as a primary prevention agent kind of work against that?
Well, I think it works in the favor of doing better for these patients. So you're right. So primary prevention isn't done great. Unfortunately, statins are employed not all the time, as mentioned by that 40 million patients that are kind of on the sideline. But there isn't a lot to go to after a statin. ezetimibe is the lion's share of what's added on, but it provides modest 15% LDL-C reduction and no incremental cardiovascular risk. So by having an oral agent, well-tolerated, not only capable of lowering your LDL significantly, but improving your cardiovascular risk, this is a game changer. So this will change the paradigm.
It really speaks to the significant unmet need that we've seen in the market that we are absolutely well-positioned to capitalize on.
Yeah. I guess when you think about moving into the frontline or opportunity there, does it change your commercial outlook, the fact that statins aren't really done well? Do you have to increase your commercial outlook there and find ways to?
No. I mean, we're the friend of a statin, right? Again, we want statins to be employed, but the problem is they're not fully maximized. And that's partially because of the statin, partly because of the patient. So having an agent that can add on and allow those lower doses of statins to kind of reach their true maximum benefit paired with bempedoic acid does a fantastic thing.
Perfect. And then can you maybe touch on your discussions with payers? How receptive have they been to bempedoic acid?
Yeah. So the payer team has done a great job. So they started discussions with payers when CLEAR Outcomes read. So after ACC of 2023, they had those clinical discussions paired with our medical folks. Great discussions, but the payers wanted to see the label change. They've been burned in the past, so they weren't going to make any wholesale changes until they saw that label. As soon as the label change went into effect, there was a re-engagement of the payers. And we've had now four plans that have already made changes, three on the Medicare side, one on the commercial side. And two of the changes are now in effect. The other two will be in effect June 1st. And we anticipate over the next few months, we'll see the vast majority of payers come on board.
It's not just coming on board, but it's coming on board with utilization management criteria that align with the new label and don't create an onerous situation for the HCP.
The burden that we've seen on the HCP to get through that prior authorization process has been a complete 180 in the updated criteria that we've had come into play already. So we're very excited about how much easier it will be for people to get their hands on the drug.
While the cost is certainly less than PCSK9s, statins are generic and highly effective. What sort of step edits are you seeing in practice here?
We're not. So that's another key thing is we, I mean, obviously, statins. So there should be an attempt to utilize a statin, no doubt about it, right? But unfortunately, as I mentioned, patients can't take them or they can't maximize them. So that is a valid step. We don't want to displace a statin, and we want to be the friend of a statin. But a lot of times, people can't tolerate them. But we're not seeing steps now. We won't accept steps with other agents. So if someone wanted to step us through ezetimibe, that wouldn't be acceptable. And payers aren't asking for that now.
Perfect. And then can you talk a little bit about the feedback you've been getting from the cardiologist community regarding BA? What have their experiences on the clinical front been as far as starting a patient on?
Yeah. It's been positive. I mean, they've had, obviously, some of the earlier experience with the compound, Nexlizet being kind of the favorite, if you will, because of the 38% LDL-C reduction. But the cardiology community is very pleased with the outcomes from CLEAR Outcomes. And they've been not only embracing but communicating that to their peers outside of the specialist community.
How challenging is it from a payer perspective currently to start a patient on bempedoic acid? And how is this likely to kind of evolve over the course of the next year or so?
It's getting a lot easier every day. So I'll just say that, yeah, as utilization management changes go into kind of full effect, it becomes very easy to get the product. But we didn't want to wait until the bulk of the happened before we were messaging to the new patient population. So we implemented kind of a solution, if you will. We call it ASPN Pharmacy. And after the clinical conversation with the HCP, after they're excited to use it in their patients, our sales team then talks about a solution. And that is ERXing to ASPN Pharmacy, which then pulls in the script, contacts the patient, works behind the scenes to get the script paid. If they're unable to do that within three days, they provide a free product to the patient, and they keep working behind the scenes.
We've created a seamless mechanism by which patients can get the product and by which physicians don't get the callbacks.
Great. And then maybe from a broader perspective, what are some of the open questions or concerns you have at this point? And what are the biggest impediments to use currently?
The quality of the data has been fantastic. The label has been fantastic. Obviously, there's been a historical kind of perception that, based upon kind of the prior label and some of the restrictions from a payer perspective, that it wasn't always easy to get access to. We're reestablishing that confidence, if you will, and bringing clinicians back to some of those patients that they wanted to use early on, but they weren't able to because of the label or the payer restrictions.
And then ultimately, as you're expanding this label into the next 40 million, 70 million patients, what do you expect are going to be the biggest commercial challenges? And what are your plans here to address them?
Yeah. Yeah. I mean, we're going to do things strategically. I mean, obviously, return on investment is top priority, and it's not because I'm sitting next to Ben. But I mean, as a small company, every dollar counts for us. So we've put forth a size and scale that makes sense today with runway preservation and maximizing revenue now. But as we start to gain additional momentum, become cash flow positive, we can look at expanding various areas. I never see us going to this ridiculous number of personal promotion. This isn't the Vioxx launch that is part of at Merck. This is a much more controlled market environment that we're in now. Digital HCP and digital consumer are areas where I see us pulling additional levers and putting additional dollars behind. Those have been high ROI investments that will continue to bear fruit.
That'll allow us to scale in a controlled way.
Yeah. We have years of experience now with this drug and seeing what works and what generates not just an ROI, but an immediate ROI. We are focused on investing in areas that only do that. Every project gets a thorough review from everyone on the executive leadership team. We know what areas are going to drive momentum and drive activities. We will always be very meaningful about where we spend our money.
Got it. Makes sense. And then I guess the team has kind of talked about this new label as effectively a relaunch here. What are your expectations in terms of uptake? And are you thinking this is going to be more of a slow and steady build, or do you expect dynamics to kind of inflect nearer term?
I think steady is the right word, but slow is not. We expect there to be an inflection here. We expect, as that criteria continues to update, that'll further fuel and drive momentum for this drug. But we do expect there to be some good, strong growth over the coming quarters. And it may not be a direct hockey stick up, but we do think it'll be increased in over what there was before and continue to grow as we see those criteria updated.
Got it. What do you think are going to be, I guess, the key drivers here in inflecting that near-term uptake?
It's going to be as the payers update their criteria, which I can very positively say. We've already seen some. And even just since getting to this conference here, we've received emails that more are coming online. So we've seen some very good momentum with the payers and getting the improved criteria even just in the week since earnings.
Yeah. I mean, obviously, having the discussions, reaching the key HCPs is important for us. Also, that e-prescribing to ASPN that I mentioned is a critical lever for us early. Pleased that we've seen really significant week-over-week growth from the prior week to last week, 70% increase in patients being e-prescribed through that ASPN.
Perfect. Looking here at maybe the commercial perspective, looking ahead a few years, there's going to be some additional competition here, including potentially the oral PCSK9s and then CETP inhibitors. How much of a challenge are these agents likely to be to bempedoic acid?
Yeah. I mean, I'm focused on making sure that we're as successful as possible today, right? So that means getting out there, having the right payer platform, making sure that we have the right level of differentiation. Obviously, it's a big market. It's 70 million patients, so there's room for other therapies. But we have a proven not only LDL-C-lowering agent, but an outcomes agent, a cardiovascular outcomes benefit that others won't have out of the gate as well. It will take years to have that. So my focus is on making sure that we're successful today. And obviously, competition is healthy. It's a big market and plenty of room. But having a unique indication is really important for us. And again, this ability to benefit the primary prevention patient where only statins do it now is critical for us.
Yeah. Totally hear you there. But I guess maybe recognizing it's longer term, which of these classes do you think represents the greatest threat longer term? And I guess how are you preparing for it at all?
Yeah. I wouldn't consider them a threat. I mean, again, it's welcome to have additional agents in the market. Obviously, we know the CETP story well from kind of history. So hoping that they're successful at demonstrating that LDL-C-lowering. And then obviously, they need to prove in outcomes trials that they're capable of providing a cardiovascular risk reduction. And then from an oral PCSK9 perspective, I mean, we know the intravenous PCSK9s. Obviously, there's some challenges from a dosing perspective with the oral PCSK9. And it's not until close to 2030 where there's outcome benefit. So that kind of hopefully gives you a sense for how I'm thinking about this.
Yeah. Super helpful. Thank you. And then I guess in our last couple of minutes here, if we could maybe switch to the outlook for guidelines, what are your expectations regarding bempedoic acid's placement in the treatment paradigm for both primary and secondary prevention guidelines?
Yeah. So guidelines, I think we think are a little ways off, right? We think 2025 is about when they'll be updated. I think we've seen some early indications in smaller guideline writers that position us specifically where we want to be, which is after the statin we're next. But it'll be a while until we see formal guideline updates. There may be consensus papers written in the meantime, but we don't see it as a hindrance to getting the payer access that we need. We've already seen the payer access that we need, and we can expect that to continue coming on. Obviously, it'll be a help to the commercial uptake, but it's not something that we think needs to be in place in order to see that inflection.
Gotcha. And then any precedents in prior CV launches that maybe inform your optimism here for inclusion in guidelines and what that looks like?
Ooh. It's tough to say because we're a very differentiated product. And I think especially when you look at this primary prevention space, I think it's something that people have kind of undervalued externally. And we see as a major source of value for this franchise. So I mean, they're.
Yeah. Yeah. I mean, and guidelines, I mean, obviously, there's a lot of folks involved. We're not one of them, right? So that's out of our hands. But not only are guideline committees trying to evaluate various scientific kind of parties, if you will, ACC, AHA, and NLA, all trying to coordinate, but they're also trying to look and see the entire landscape and coordinate when they're coming, when their outcomes data may be coming. So there's a lot of moving pieces to this one. But from my perspective, as Ben said, we're generating that momentum as additional plans come on board from a payer perspective. We'll continue to generate that. And then as they make these aligned decisions, we'll benefit from that as well.
Perfect. Well, thanks so much for such a great discussion. Looking forward to the next couple of months for Esperion. Thanks again, everyone, for joining us here today.
Thanks, Cam.
Thank you.
Perfect.